Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q/A
Amendment No. 1
FORM
10-Q______________________
(Mark One)
☒
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JuneSeptember 30, 2021
OR
☐
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
__________ to
__________
______________________
Hyzon Motors Inc.
(Exact name of registrant as specified in its charter)
______________________
Delaware
001-39632
001-39632
82-2726724
(State or other jurisdiction
of incorporation)
(Commission

File Number)
(I.R.S. Employer

Identification No.)
475 Quaker Meeting House Road

Honeoye Falls, NY
14472
(Address of principal executive offices)
(Zip Code)

(585)-484-9337
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
______________________
Securities registered pursuant to Section 12(b) of
the
Act:
Title of each class
Trading
Symbol(s)
Trading
Symbol(s)
Name of each exchange
on which registered
Common Stock, par value $0.0001 per share
HYZN
Nasdaq Capital Market
Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share
HYZNW
Nasdaq Capital Market
______________________
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒o    No  ☐
x
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒o    No  ☐x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
Large accelerated filero☐Accelerated filer☐o
Non-accelerated
filer		x☒Smaller reporting company☒x
Emerging growth company☒x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  ☐
o    No  ☒x
As of
August 11, 2021,
247,215,716
March 1, 2023, 244,559,301 shares of Class A Common Stock, par value $0.0001 per share, were issued and outstanding.
1
EXPLANATORY NOTE

Hyzon Motors Inc. (“Hyzon”, the “Company”, “we”, “our” or “us”) filed our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 (the “Original Filing”) with the Securities and Exchange Commission ("SEC") on November 15, 2021. This Amendment No. 1 on Form 10-Q/A (this "Form 10-Q/A") is being filed to amend and restate certain items contained in the Original Filing (the "Restatement").

Restatement Background

As previously reported in the Company's Current Report on Form 8-K filed with the SEC on August 17, 2022, the Audit Committee of the Board of Directors (the “Board”) of the Company (the "Audit Committee"), based on the recommendation of management, determined that the Company's previously issued financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the Company’s previously issued financial statements included in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2022 should no longer be relied upon and require restatement because of issues regarding revenue recognition and internal controls and procedures, primarily pertaining to our China operations.

As further previously reported in the Company's Current Report on Form 8-K filed with the SEC on February 9, 2023, the Audit Committee, based on the recommendation of management, determined that the Company’s previously issued financial statements included in the Company’s Original Filing should no longer be relied upon and also require restatement primarily because of issues regarding revenue recognition relating to its European joint venture operations.

For a more detailed discussion of the Restatement, refer to Note 2. Restatement of Previously Issued Financial Statements to the condensed consolidated financial statements of the Company included herein.

Special Committee Investigation

As previously reported in the Company's Current Report on Form 8-K filed with the SEC on August 4, 2022, in connection with the preparation of the Company's financial results for the period ended June 30, 2022, the Board appointed a committee of Board members (the "Special Committee") to investigate, with the assistance of outside counsel and other advisors, the issues described above regarding revenue recognition and internal controls and procedures that were brought to the attention of the Board by management (the "Investigation"). The preliminary findings of the Investigation were completed in January 2023, and the final findings were issued in March 2023 as discussed in this Explanatory Note below.

Investigation with Respect to China Operations

On January 12, 2022, the Company announced the delivery of 87 fuel cell powered heavy-duty vehicles in 2021, which included 82 vehicles delivered to customers in China. In July 2022, management discovered and brought to the attention of the Board that certain vehicles may not have met the criteria necessary to recognize revenue as of December 31, 2021. The Special Committee was formed to conduct an investigation regarding the Company’s revenue recognition timing and internal controls and procedures, primarily pertaining to the Company’s China operations during the second half of 2021 and the first half of 2022.

Based on the Investigation's findings, the Company concluded that the Company's contractual performance obligation to deliver functioning fuel cell electric vehicles (“FCEVs”) was not fully satisfied for revenue recognition purposes under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers ("ASC 606"). Correction of the errors is reflected in the restated annual financial statements for the year ended December 31, 2021 included in the Company’s amended Annual Report on Form 10-K/A and the interim financial statements for the period ended March 31, 2022 included in the Company's amended Quarterly Report on Form 10-Q/A.

Investigation with Respect to European Operations

The Special Committee identified certain issues associated with Hyzon Motors Europe B.V. ("Hyzon Europe"), the Company's European joint venture. The Investigation revealed that certain former members of Hyzon Europe's senior management team created a workplace culture where employees did not feel comfortable raising concerns. Additionally, the Investigation revealed that for five vehicles for which Hyzon Europe recognized revenue in 2021, Hyzon Europe subsequently performed various levels of work and repair efforts on such vehicles after revenue had been recognized.

2
Consequently, the Company conducted an internal accounting review for its European customer arrangements. This internal accounting review concluded that for the Hyzon Europe customer contracts which were assumed from Holthausen Clean Technology B.V. in July 2021, the Company did not appropriately analyze and record revenue and related balances associated with these arrangements.More specifically, the Company determined that instead of manufacturing or assembling FCEVs that it owned for sale to customers, Hyzon Europe was providing these customers with vehicle retrofit services to convert the customers' internal combustion engine ("ICE") powered vehicles to hydrogen FCEVs. Therefore, Hyzon Europe should have recognized revenue over time utilizing an input method rather than recording revenue at a point in time. For additional information regarding the corrections to the financial statements, refer to Note 2. Restatement of Previously Issued Financial Statements to the condensed consolidated financial statements of the Company included herein. Correction of the errors is also reflected in the restated annual financial statements for the year ended December 31, 2021 included in the Company’s amended Annual Report on Form 10-K/A and the interim financial statements for the period ended March 31, 2022 included in the Company's amended Quarterly Report on Form 10-Q/A.

Transaction Costs

On July 16, 2021, our predecessorlegacy Hyzon Motors Inc. ("Legacy Hyzon") and now named Hyzon Motors USA Inc. consummated the transactions contemplated by the Business Combination Agreement and Plan of Reorganization (the “Business Combination”), dated February 8, 2021, with Decarbonization Plus Acquisition Corporation a Delaware corporation (“DCRB”), consummated the previously announced to effect a business combination withbetween DCRB and Legacy Hyzon Motors, Inc., a Delaware corporation (“Legacy Hyzon”), pursuant to whichwith DCRB Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of DCRB, (“Merger Sub”) mergedmerging with and into Legacy Hyzon, with Legacy Hyzon surviving the merger (the “Merger”, and togetheras a wholly owned subsidiary of DCRB. The Company has adjusted its prior allocation of transaction costs incurred in connection with the related transactions, the “Business Combination”). Upon consummation of the Business Combination Legacy Hyzon became a direct wholly-owned subsidiaryto reflect the allocation of DCRB,the correct balance of Company incurred transaction costs between the liability classified earnout arrangement and DCRB was renamed Hyzon Motors, Inc. (“New Hyzon” or “Hyzon”). Unless stated otherwise, this report contains information about DCRB before the Business Combination. References to the “Company”newly issued equity instruments in this report refer to DCRB before the consummation of the Business Combination in the third quarter of 2021. The adjustment resulted in a reduction of amounts previously allocated to the earnout liability and recognized as expense, offset by an equal increase of transaction costs allocated to the newly issued equity instruments and recorded against additional paid-in capital. For additional information regarding the corrections to the financial statements, refer to Note 2. Restatement of Previously Issued Financial Statements to the condensed consolidated financial statements of the Company included herein. Correction of the errors is also reflected in the restated annual financial statements for the year ended December 31, 2021 included in the Company’s amended Annual Report on Form 10-K/A and the interim financial statements for the period ended March 31, 2022 included in the Company's amended Quarterly Report on Form 10-Q/A.

Other Immaterial Errors    

In addition to the errors described above, the Company’s previously issued financial statements included in the Company’s Original Filing and the Company's previously issued audited annual financial information included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2021 and for the Company’s previously issued unaudited quarterly financial information included in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2022, have been corrected in the amended filings to include previously unrecorded immaterial adjustments (the “Other Immaterial Errors”). For additional information regarding the Other Immaterial Errors, refer to Note 2. Restatement of Previously Issued Financial Statements to the condensed consolidated financial statements of the Company included herein.

The errors described above and the Other Immaterial Errors in this amended Quarterly Report on Form 10-Q/A did not impact cash or New Hyzon after the Business Combination,economics of the Company's existing commercial arrangements.

Internal Control Considerations

In connection with the Restatement, the Company has concluded there were material weaknesses in the Company’s internal control over financial reporting as of September 30, 2021 and its disclosure controls and procedures were not effective as of September 30, 2021. Management is taking steps to remediate the context suggests.material weaknesses in our internal control over financial reporting.

For a discussion of management’s consideration of our disclosure controls and procedures, internal control over financial reporting, and the material weaknesses identified, see Part I, Item 4. Controls and Procedures of this Form 10-Q/A.

3
Items Amended in this Form 10-Q/A

This Form 10-Q/A presents the Original Report, amended and restated with modifications as necessary to reflect the correction of Restatement Items and Other Immaterial Errors. The following items have been amended:
•Part I - Item 1. Financial Statements
•Part I - Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
•Part I - Item 4. Controls and Procedures
•Part II - Item 1A. Risk Factors
•Part II - Item 6. Exhibits

Except as described above and in Note 17. Subsequent Events, this Form 10-Q/A does not amend, update or change any other items or disclosures in the Original Filing and does not purport to reflect any information or events subsequent to the filing thereof. As such, this Form 10-Q/A speaks only as of the date the Original Filing was filed, and the Company has not undertaken herein to amend, supplement, or update any information contained in the Original Filing to give effect to any subsequent events. Among other things, forward-looking statements made in the Original Filing have not been revised to reflect events, results or developments that occurred or facts that became known to us after the date of the Original Filing, other than the Restatement. In addition, in accordance with SEC rules, this Form 10-Q/A includes updated certifications from our Chief Executive Officer as Exhibits 31.1 and 32.1dated as of the filing date of this Form 10-Q/A. Accordingly, this Form 10-Q/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Filing, including any amendments to those filings.
DECARBONIZATION PLUS ACQUISITION CORPORATION
4
Hyzon Motors, Inc.
Quarterly Report on Form
10-Q
Table of Contents
Page No.
Item 1.
1
6
Condensed Balance Sheets (unaudited)
1
Condensed Statements of Operations (unaudited)
2
Condensed Statements of Changes in Stockholder’s Equity (unaudited)
3
Condensed Statements of Cash Flows (unaudited)
4
Notes to Condensed Financial Statements (unaudited)
5
Item 2.
19
33
Item 3.
4.
22
Item 4.
Controls and Procedures
22
48
50
Item 1.
1A.
Legal Proceedings50
24
Item 1A.
6.
Risk Factors52
24
Item 2.
SIGNATURE
Unregistered Sales of Equity Securities and Use of Proceeds53
24
Item 3.
Defaults Upon Senior Securities
24
Item 4.
Mine Safety Disclosures
24
Item 5.
Other Information
24
Item 6.
Exhibits.
25
SIGNATURE
26
5
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HYZON MOTORS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)
September 30, 2021December 31, 2020
(As Restated)
ASSETS
Current assets
Cash$498,014 $17,139 
Accounts receivable5,991 — 
Inventory12,691 — 
Prepaid expenses and other current assets24,695 848 
Total current assets541,391 17,987 
Property, plant, and equipment, net8,878 418 
Right-of-use assets7,962 1,656 
Deferred merger transaction costs— 732 
Restricted cash and other assets7,755 212 
Total Assets$565,986 $21,005 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable$2,851 $215 
Accrued professional fees1,003 900 
Other accrued expenses3,205 162 
Related party payables4,554 560 
Horizon IP agreement payable10,000 — 
Contract liabilities7,846 2,608 
Current portion of lease liabilities1,164 618 
Total current liabilities30,623 5,063 
Long term liabilities
Lease liabilities7,111 1,181 
Private placement warrant liability11,781 — 
Earnout liability115,014 — 
Other liabilities316 — 
Total liabilities$164,845 $6,244 
Commitments and contingencies (Note 12)
Stockholders’ Equity
Common stock, $0.0001 par value; 400,000,000 shares authorized, 247,500,505 and 166,125,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.25 17 
Additional paid-in capital400,021 29,122 
Retained earnings (accumulated deficit)2,782 (14,271)
Accumulated other comprehensive loss(327)(16)
Total Hyzon Motors Inc. stockholders’ equity402,501 14,852 
Noncontrolling interest(1,360)(91)
Total Stockholders’ Equity401,141 14,761 
Total Liabilities and Stockholders’ Equity$565,986 $21,005 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
PART I—FINANCIAL INFORMATION
Item 1.
Interim Financial Statements
Decarbonization Plus Acquisition Corporation
BALANCE SHEETS
   
June 30, 2021

(unaudited)
  
December 31,
2020
 
ASSETS:
 
Current assets:
         
Cash
  $167,284  $—   
Investment held in Trust Account
   225,734,427   225,727,721 
Prepaid insurance
   769,425   1,062,000 
   
 
 
  
 
 
 
Total current assets
   226,671,136   226,789,721 
   
 
 
  
 
 
 
Total assets
  $226,671,136  $226,789,721 
   
 
 
  
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
         
Current liabilities:
         
Accrued offering costs
  $175,000  $175,000 
Accounts payable—affiliate
   3,375,977   1,324,257 
Accrued expenses
   3,533,899   3,572,935 
   
 
 
  
 
 
 
Total Current Liabilities
   7,084,876   5,072,192 
Warrant liabilities
   40,763,719   33,600,270 
Deferred underwriting fee payable
   7,900,376   7,900,376 
   
 
 
  
 
 
 
Total liabilities
   55,748,971   46,572,838 
   
 
 
  
 
 
 
COMMITMENTS AND CONTINGENCIES
  0  0   
Class A common stock subject to possible redemption, 16,592,216 and 17,521,688
shares at June 30, 2021 and December 31, 2020,
respectively, at $10.00 per share
   165,922,160   175,216,880 
Stockholders’ equity:
         
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0ne issued and outstanding
   0—     0—   
Class A common stock, $0.0001 par value, 250,000,000 shares authorized; 5,980,286 and 5,050,814 shares, respectively, issued and outstanding (excluding 16,592,216 and 17,521,688 shares subject to possible redemption) at
June 30
, 2021 and December 31, 2020, respectively
   598   505 
Class B common stock, $0.0001 par value, 20,000,000 shares authorized, 5,643,125
 
s
hares issued and outstanding at
June
 3
0
, 2021 and December 31, 2020
   564   564 
Additional
paid-in
capital
   36,135,858   26,841,231 
Accumulated deficit
   (31,137,015)   (21,842,297) 
   
 
 
  
 
 
 
Total stockholders’ equity
   5,000,005   5,000,003 
   
 
 
  
 
 
 
Total liabilities and stockholders’ equity
  $ 226,671,136  $ 226,789,721 
   
 
 
  
 
 
 
1
6
HYZON MOTORS INC. AND SUBSIDIARIES
Decarbonization Plus Acquisition Corporation
UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
   
For the Three
Months Ended June
30, 2021
  
For the Three
Months Ended June
30, 2020
  
For the Six Months
Ended June 30, 2021
  
For the Six Months
Ended June 30, 2020
 
Operating expenses:
                 
General and administrative expenses
  $1,361,853  $860  $2,137,975  $1,719 
   
 
 
  
 
 
  
 
 
  
 
 
 
Loss from operations
   (1,361,853)   (860)   (2,137,975)   (1,719) 
Other Income
                 
Interest earned on marketable securities held in Trust Account
  $3,372  $—    $6,706  $—   
Change in fair value of warrant liabilities
   (6,824,865)   —     (7,163,449)   —   
   
 
 
  
 
 
  
 
 
  
 
 
 
                  
Net loss
  $ (8,183,346)  $(859)  $ (9,294,718)  $(1,719) 
   
 
 
  
 
 
  
 
 
  
 
 
 
Weighted average shares outstanding of Class A redeemable common stock, basic and diluted
   22,572,502   —     22,572,502   —   
   
 
 
  
 
 
  
 
 
  
 
 
 
Basic and diluted net income per common share, Class A redeemable common stock
  $—    $—    $0.00  $—   
   
 
 
  
 
 
  
 
 
  
 
 
 
Weighted average shares outstanding of Class B non-redeemable common stock, basic and diluted (1) (2)
   5,643,125   5,643,125   5,643,125   5,643,125 
   
 
 
  
 
 
  
 
 
  
 
 
 
Basic and diluted net loss per common share, Class B non-redeemable common stock
  $0    $(0.00)  $(1.65)  $(0.00) 
   
 
 
  
 
 
  
 
 
  
 
 
 
(in thousands, except per share amounts)
Three Months Ended September 30,
Nine Months Ended
September 30,
2021
For the period
January 21, 2020
(Inception) –
September 30,
2020
20212020
(As Restated)(As Restated)
Revenue$89 $— $89 $— 
Operating expense:
Cost of revenue204 — 204 — 
Research and development3,982 104 8,081 163 
Selling, general and administrative42,661 436 51,607 670 
Total operating expenses46,847 540 59,892 833 
Loss from operations(46,758)(540)(59,803)(833)
Other income (expense):
Change in fair value of private placement warrant liability7,614 — 7,614 — 
Change in fair value of earnout liability73,359 — 73,359 — 
Foreign currency exchange loss and other expense(116)(1)(175)(1)
Interest expense, net(254)(15)(5,249)(20)
Total other income (expense)80,603 (16)75,549 (21)
Net income (loss)$33,845 $(556)$15,746 $(854)
Net loss attributable to noncontrolling interest(776)— (1,307)— 
Net income (loss) attributable to Hyzon$34,621 $(556)$17,053 $(854)
Comprehensive income (loss):
Net income (loss)$33,845 $(556)$15,746 $(854)
Foreign currency translation adjustment(187)— (273)— 
Comprehensive income (loss)$33,658 $(556)$15,473 $(854)
Comprehensive loss attributable to noncontrolling interest(749)— (1,269)— 
Comprehensive income (loss) attributable to Hyzon$34,407 $(556)$16,742 $(854)
Net income (loss) per share attributable to Hyzon:
Basic$0.15 $— $0.09 $(0.01)
Diluted$0.14 $— $0.08 $(0.01)
Weighted average common shares outstanding:
Basic234,091 148,405 189,101 148,405 
Diluted246,480 148,405 200,984 148,405 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
7
HYZON MOTORS INC. AND SUBSIDIARIES
Decarbonization Plus Acquisition Corporation
UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
(in thousands, except share data)
Legacy Common
Stock		Common Stock
Class A		Additional
Paid-in
Capital		Retained
Earnings
(Accumulated
Deficit)		Accumulated
Other
Comprehensive
Loss		Total Hyzon
Motors Inc.
stockholders’
Equity (Deficit)		Noncontrolling
Interest		Total
Stockholders’
Equity (Deficit)
SharesAmountSharesAmount
Balance as of December 31, 202093,750,000 $94 — $— $29,045 $(14,271)$(16)$14,852 $(91)$14,761 
Retroactive application of recapitalization(93,750,000)(94)166,125,000 $17 77 — — — — — 
Adjusted balance, beginning of period— — 166,125,000 17 29,122 (14,271)(16)14,852 (91)14,761 
Exercise of stock options— — 132,900 — 190 — — 190 — 190 
Stock-based compensation— — — — 816 — — 816 — 816 
IP transaction – deemed distribution— — — — (10,000)— — (10,000)— (10,000)
Net loss attributable to Hyzon— — — — — (17,568)— (17,568)— (17,568)
Net loss attributable to noncontrolling interest— — — — — — — — (531)(531)
Foreign currency translation loss— — — — — — (79)(79)11 (68)
Balance as of June 30, 2021— — 166,257,900 17 20,128 (31,839)(95)(11,789)(611)(12,400)
Reverse recapitalization transaction, net (Note 4)— — 73,502,303 7 351,498 — — 351,505 — 351,505 
Issuance of common stock— — 7,234,006 1 (1)— — — — — 
Vesting of RSUs— — 284,796 — — — — — — — 
Exercise of stock options— — 221,500 — 250 — — 250 — 250 
Stock-based compensation— — — — 28,146 — — 28,146 — 28,146 
Net income (loss) attributable to Hyzon— — — — — 34,621 — 34,621 — 34,621 
Net loss attributable to noncontrolling interest— — — — — — — — (776)(776)
Foreign currency translation loss— — — — — — (232)(232)27 (205)
Balance as of September 30, 2021 (As Restated)— $— 247,500,505 $25 $400,021 $2,782 $(327)$402,501 $(1,360)$401,141 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
For the period from January 1,
20218
to June 30,
2021
                                                                                                                                                    
   
Class A Common Stock
   
Class B Common Stock
   
Additional
Paid-in
  
Accumulated
  
 
Stockholders’ 
 
   
Shares
   
Amount
   
Shares (1) (2)
   
Amount
   
Capital
  
Deficit
  
Equity
 
Balances
 as of
January 1, 202
1
   5,050,814   $
505
    5,643,125   $564   $26,841,231   $(21,842,297) $5,000,003 
Common stock subject to possible redemptio
n
  
111,137
   
11
   
—
 
 
   
—
 
 
   
1,111,359
   
—
 
 
   
1,111,370
 
Net loss
   —      —      —      —      —      (1,111,372)   (1,111,372) 
Balances
 as of
March 31, 202
1
  
 
5,161,951
 
  
$
516
 
  
 
5,643,125
 
  
$
564
 
  
$
27,952,590
 
 
$
(22,953,669
) 
 
$
5,000,001
 
Common stock subject to possible redemptio
n
  
818,335
   
82
   
—  
   
—
 
 
   
8,183,268
  
—
 
 
   
8,183,350
 
Net loss
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
 
 
(8,183,346
) 
 
 
(8,183,346
) 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balances as of June 30, 202
1
   
 5,980,286
   $
  
598
    5,643,125   $564   $36,135,858  $(31,137,015)  $5,000,005 
For the period from January 1,
2020
to June 30,
2020
                                                                                                                                                    
   
Class A Common Stock
   
Class B Common Stock
   
Additional
Paid-in
   
Accumulated
  
Stockholder’s
 
 
   
Shares
   
Amount
   
Shares (1) (2)
   
Amount
   
Capital
   
Deficit
  
Equity
 
Balances
 as of
January 1, 202
0
   —     $—      5,750,000   $575   $243,447   $(219,422)  $24,600 
Net loss
   —      —      —      —      —      (859)   (859) 
Balances as of March 31, 202
0
  
 
—  
 
  
$
—  
 
  
 
5,750,000
 
  
$
575
 
  
$
243,447
 
  
(220,281
) 
 
23,741
 
Net loss
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
(860
) 
 
 
(860
) 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
  
 
 
 
Balances as of June 30, 202
0
   —     $—      5,750,000   $575   $243,447   $(221,141)  $22,881 
3
HYZON MOTORS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
(in thousands, except share data)
Legacy
Common Stock		Common Stock
Class A		Additional
Paid-in
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total Hyzon
Motors Inc.
stockholders’
Equity (Deficit)		Noncontrolling
Interest		Total
Stockholders’
Equity (Deficit)
SharesAmountSharesAmount
Balance as of January 21, 2020 (Inception)83,750,000 $84 — $— $— $— $— $84 $— $84 
Retroactive application of recapitalization(83,750,000)(84)148,405,000 $15 69 — — — — — 
Adjusted balance, beginning of period— $— 148,405,000 $15 69 — — 84 — $84 
Net loss attributable to Hyzon— — — — — (296)— (296)— (296)
Balance as of June 30, 2020— $— 148,405,000 $15 69 (296)— (212)— $(212)
Net loss attributable to Hyzon— — — — — (556)— (556)— (556)
Balance as of September 30, 2020— $— 148,405,000 $15 $69 $(852)$— $(768)$— $(768)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9
Decarbonization Plus Acquisition Corporation
Table of Contents
HYZON MOTORS INC. AND SUBSIDIARIES
UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
   
For the Six
Months Ended
June 30, 2021
  
For the Six
Months Ended
June 30, 2020
 
Cash flow from operating activities:
         
Net loss
  $(9,294,718)  $(1,719) 
Adjustments to reconcile net loss to net cash used in operating activities:
         
Change in fair value of warrant liabilities
   7,163,449     
Interest
earned on marketable securities held in Trust Account
   (6,706)   —   
Changes in operating assets and liabilities:
         
Accounts payable
   2,051,720   1,719 
Accrued expenses
   (39,036)   —   
Prepaid insurance
   292,575   —   
   
 
 
  
 
 
 
Net cash used in operating activities
   167,284   —   
   
 
 
  
 
 
 
          
Net increase in cash
   167,284   —   
Cash at beginning of period
   —     315,600 
   
 
 
  
 
 
 
Cash at end of period
  $167,284  $315,600 
   
 
 
  
 
 
 
          
Supplemental disclosure of
non-cash
financing activities:
         
Change in value of Class A common stock subject to possible redemption
  $(9,294,720)  $—   
   
 
 
  
 
 
 
(in thousands)
Nine Months Ended
September 30, 2021
For the period
January 21, 2020
(Inception) -
September 30, 2020
(As Restated)
Cash Flows from Operating Activities:
Net income (loss)$15,746 $(854)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization671 99 
Stock-based compensation29,023 — 
Loss on extinguishment of convertible notes107 — 
Noncash interest expense5,449 — 
Fair value adjustment of private placement warrant liability(7,614)— 
Fair value adjustment of earnout liability(73,359)— 
Changes in operating assets and liabilities:
Accounts receivable(5,712)— 
Inventory(12,008)— 
Prepaid expenses and other current assets(19,638)— 
Other assets(150)(14)
Accounts payable3,371 — 
Accrued professional fees and other current liabilities3,082 17 
Operating lease liabilities(187)— 
Related party payables3,821 756 
Contract liabilities4,845 — 
Other liabilities311 — 
Net cash (used in) provided by operating activities(52,242)4 
Cash Flows from Investing Activities:
Purchases of property and equipment(8,810)(133)
Advanced payments for capital expenditures(3,999)— 
Investment in equity securities(4,826)— 
Net cash used in investing activities(17,635)(133)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock— 84 
Proceeds from Business Combination, net of redemption and transaction costs (Note 4)508,993 — 
Exercise of stock options440 — 
Payment of finance lease liability(135)(12)
Debt issuance costs(133)— 
Proceeds from issuance of convertible notes45,000 500 
Net cash provided by financing activities554,165 572 
Effect of exchange rate changes on cash(853)1 
Net change in cash and restricted cash483,435 444 
Cash—Beginning17,139 — 
Cash and restricted cash —Ending$500,574 $444 
Supplemental schedule of non-cash investing activities and financing activities:
Lease assets obtained in exchange for lease obligations:
Operating leases6,803 — 
Finance leases— 886 
Conversion of Legacy Hyzon common stock73 — 
Recognition of earnout liability in Business Combination188,373 — 
Recognition of private placement warrant liability in Business Combination19,395 — 
Horizon license agreement payable10,000 — 
Conversion of convertible notes for common stock50,198 — 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
10
HYZON MOTORS INC. AND SUBSIDIARIES
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — 1. Nature of Business and Basis of Presentation

Description of Organization and Business Operations
Organization and General

Silver Run Acquisition Corporation IIIHyzon Motors Inc. (“Hyzon” or the “Company”), formerly known as DCRB, headquartered in Honeoye Falls, New York, was incorporated in the State of Delaware on September 7, 2017.January 21, 2020. The Company is majority-owned by Hymas Pte. Ltd. (“Hymas”), which is majority-owned but indirectly controlled by Horizon Fuel Cell Technologies PTE Ltd., a Singapore company (“Horizon”). Hyzon focuses on accelerating decarbonization starting with mobility through the manufacturing and supply of hydrogen fuel cell-powered commercial vehicles across the North American, European, and Australasian regions. In addition, Hyzon focuses on building and fostering a clean hydrogen supply ecosystem with leading partners from feedstocks through production, dispensing and financing.

On February 8, 2021, Legacy Hyzon Motors Inc., now Hyzon Motors USA Inc. (“Legacy Hyzon”), entered into a Business Combination Agreement and Plan of Reorganization (the “Business Combination”) with DCRB to effect a business combination between DCRB and Legacy Hyzon with DCRB Merger Sub Inc., a wholly owned subsidiary of DCRB, merging with and into Legacy Hyzon, with Legacy Hyzon surviving the merger as a wholly owned subsidiary of DCRB. The transaction was formed for the purposeunanimously approved by DCRB’s Board of effectingDirectors and was approved at a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similarspecial meeting of DCRB’s stockholders on July 15, 2021. On July 16, 2021, Legacy Hyzon completed its business combination with one or more businesses (the “Initial Business Combination”). The Company is an “emerging growth company,” as defined in Section 2(a)DCRB. Concurrent with the completion of the Securities Act of 1933, as amended, or the “Securities Act,” as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). On August 18, 2020, the Company changed its name from Silver Run Acquisition Corporation III to Decarbonization Plus Acquisition Corporation (the “Company”
 o
r “DCRB”). Following the consummation of the Business Combination on July 16, 2021,business combination, DCRB changed its name to Hyzon“Hyzon Motors Inc.
” and Legacy Hyzon changed its name to “Hyzon Motors USA Inc.”.
At June 30, 2021, the Company had not commenced an
y
 operations. All activity through June 30, 2021 relates to the Company’s formation and initial public offering (“Initial Public Offering”), which is described below, as well as the identification and evaluationBasis of prospective acquisition targets for an Initial Business Combination and ongoing administrative and compliance matters. The Company will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest which is discussed in Note 8. The Company will generate
non-operating
income in the form of interest income from the proceeds derived from the Initial Public Offering.Presentation
The registration statement for the Initial Public Offering was declared effective on October 19, 2020. On October 22, 2020, the Company consummated the Initial Public Offering of 22,572,502 units (the “Units” and, with respect to the Class A common stock included in the Units sold, the “Public Shares”), which includes the partial exercise by the underwriters of their over-allotment option in the amount of 2,572,502 units (the “Over-allotment Units”) on November 12, 2020, at $10.00 per Unit, generating gross proceeds of $225,725,020, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private sale of 6,514,500 warrants (the “Private Placement Warrants”), including 514,500 warrants as a result of the underwriters’ partial exercise of their over-allotment option on November 12, 2020, at a price of $1.00 per Private Placement Warrant in a private placement to Decarbonization Plus Acquisition Sponsor, LLC (the “Sponsor”), the Company’s independent directors and an affiliate of the Company’s chief executive officer, generating gross proceeds of $6,514,500, which is described in Note 4.
Transaction costs amounted to $12,969,969, consisting of $4,514,500 of underwriting fees, $7,900,376 of deferred underwriting fees and $555,093 of
other offering costs. In addition, at June 30, 2021, there was $167,284 of cash held outside of the Trust Account (as defined below) available for working capital purposes, but the Company has access to working capital loans from the Sponsor, which is described in Note 4.
Following the closing of the Initial Public Offering on October 22, 2020 and the partial exercise of the underwriters’ over-allotment option on November 12, 2020, an amount of $225,725,020 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) located in the United States. The proceeds held in the Trust Account will be invested only in U.S. government treasury bills with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule
2a-7
under the Investment Company Act of 1940 and that invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of the Initial Business Combination or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.
The Company’s amended and restated certificate of incorporation prior to the Business Combination provides that, other than the withdrawal of interest to pay taxes, if any, none of the funds held in the Trust Account will be released until the earlier of: 
(i) the completion of the Initial Business Combination; (ii) the redemption of any Public Shares being sold in the Initial Public Offering that have been properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of its obligation to redeem 100% of Public Shares if it does not complete the Initial Business Combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provision relating to the rights of holders of Public Shares or
pre-Initial
Business Combination activity; and (iii) the redemption of 100% of the Public Shares if the Company is unable to complete an Initial Business Combination within 24 months from the closing of the Initial Public Offering (subject to the requirements of law). The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.
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Table of Contents
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
Initial Business Combination
The following description relates to the Company prior to the consummation of the Business Combination.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering, although substantially all of the net proceeds of the Initial Public Offering are intended to be generally applied toward consummating an Initial Business Combination. The Initial Business Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the Initial Business Combination. 
The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of the Initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Initial Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable, or (ii) provide stockholders with the opportunity to sell their Public Shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable. The decision as to whether the Company will seek stockholder approval of the Initial Business Combination or will allow stockholders to sell their Public Shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval, unless a vote is required by law or under the Nasdaq Capital Market rules. If the Company seeks stockholder approval, it will complete its Initial Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Initial Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Initial Business Combination, and instead may search for an alternate Initial Business Combination.
If the Company holds a stockholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a public stockholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable. As a result, such shares of Class A common stock will be recorded at redemption amount and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity”(“ASC 480”).
Pursuant to the Company’s amended and restated certificate of incorporation prior to the Business Combination, if the Company is unable to complete
the Initial Business Combination within 24 months from the closing of the Initial Public Offering, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, 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 earned on the funds held in the Trust Account and not previously released to us to pay the Company’s franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholder’s 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 Sponsor and the Company’s independent directors and an affiliate of the Company’s chief executive officer have entered into a letter agreement with the Company, pursuant to which they have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined below) held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Initial Public Offering. However, if the Sponsor or any of the Company’s directors, officers or affiliates acquires shares of Class A common stock in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the Initial Business Combination within the prescribed time period.
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Table of Contents
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
In the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject to the limitations described herein.
Going Concern and Liquidity
As of June 30, 2021, the Company had a cash balance of $167,284, but the Company h
a
d
 access to working capital loans from the Sponsor, which is described in Note 4, to partially cover the working capital deficit of $6.9 million as of June 30, 2021. This excludes interest income of approximately $6,706 from the Company’s investment in the Trust Account which is available to the Company for tax obligations. Through June 30, 2021, the Company has not withdrawn any interest income from the Trust Account t
o
 pay its income and franchise taxes.
Prior to the consummation of an Initial Business Combination (which was consummated on July 16, 2021, as discussed in Note 8), the Company used funds held outside of the Trust Account for paying existing accounts payable, identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Initial Business Combination.
As discussed in Note 8, the Company consummated a business combination that was approved by shareholders of the Company on July 16, 2021.
Note 2 — Summary of Significant Accounting Policies
Principles of Consolidation
Theaccompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary since its formation. All material intercompany balances and transactions have been eliminated in consolidation.
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Table of Contents
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
Basis of Presentation
The accompanying unaudited condensed consolidated financial statementsrelated disclosures have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rulesrequirements and regulationsrules of the SEC. Accordingly, they do not include all of theSEC for interim reporting. Certain notes or other information and footnotesthat are normally required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a fair presentationU.S. GAAP have been included. Operating results foromitted if they substantially duplicate the three and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or any future period.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensationdisclosures contained in the Company’s periodic reports and proxy statements, and exemptions fromannual audited consolidated financial statements. Accordingly, the requirements of holding a
non-binding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of 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 a 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 an 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 the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
The accompanying unaudited condensed consolidated financial statements should be read in conjunctionconnection with the Company’s audited financial statements and related notes theretoas of and for the year ended December 31, 2020, included in the Amendment No. 1Definitive Proxy Statement (the “Proxy”) of the Form
10-K/A
DCRB filed by the Company with the SEC on May 13,June 21, 2021.

Principles of Consolidation
Net Loss Per Common Share
The Company’s condensed consolidated financial statements include the accounts and operations of the Company and its wholly owned subsidiaries including a variable interest entity of which the Company is the primary beneficiary. All intercompany accounts and transactions are eliminated in consolidation.

Unaudited Interim Financial Information

In the opinion of management, in addition to the adjustments to record the Business Combination, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation for the periods presented. Results of operations reported for interim periods presented are not necessarily indicative of results for the entire year or any other periods.

Variable Interest Entities (VIE)

On October 30, 2020, Hyzon entered into a joint venture agreement (the “JV Agreement”) with Holthausen Clean Technology Investment B.V. (“Holthausen”) (together referred to as the “Shareholders”) to establish a venture in the Netherlands called Hyzon Europe. The Shareholders combined their resources in accordance with the JV Agreement to mass commercialize fuel cell trucks within the European Union and nearby markets such as the United Kingdom, the Nordic countries, and Switzerland through Hyzon Europe. Hyzon and Holthausen have 50.5% and 49.5% ownership interest in the equity of Hyzon Europe, respectively.

Net loss per common share11
The Company has determined that it is computed by dividing net loss applicablethe primary beneficiary of Hyzon Europe. As a result, the Company’s Condensed Consolidated Balance Sheets include assets of $29.6 million and $1.0 million as of September 30, 2021, and December 31, 2020, respectively, and liabilities of $14.0 million and $1.2 million as of September 30, 2021, and December 31, 2020, respectively, related to common stockholders byHyzon Europe.

Segment Information

The Company’s chief operating decision maker (“CODM”), who makes operating decisions, reviews financial information presented on a consolidated basis for the weighted average numberpurposes of common shares outstanding duringallocating resources and evaluating financial performance. Accordingly, management has determined that the period, excluding sharesCompany operates as one operating and reportable segment.

Liquidity

As of common stock subject to forfeiture, plus, to the extent dilutive, the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock method. For the three months and six months ended JuneSeptember 30, 2021, the Company has approximately $498.0 million in unrestricted cash. Cash flows used in operating activities was $52.2 million for the nine months ended September 30, 2021. On July 16, 2021, the Company received $509.0 million in cash, net of redemption and transaction costs as a result of the Business Combination (see Note 4. Business Combination). Management expects that the Company’s cash will be sufficient to meet its liquidity requirements for at least one year from the issuance date of these condensed consolidated financial statements.

Risks and Uncertainties

The Company is subject to a variety of risks and uncertainties common to early-stage companies that have not consideredyet commenced principal operations including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and the effectability to secure additional capital to fund operations.

12

Note 2. Restatement of Previously Issued Financial Statements

Management, in concurrence with the Company’s Audit Committee, concluded that the Company's previously issued financial statements included in the Initial Public OfferingCompany’s Annual Report on Form 10-K for the year ended December 31, 2021 and private placementthe Company's previously issued unaudited interim financial information included in the calculation of diluted income (loss) per share since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. For the three months and six months ended June 30, 2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company under the treasury stock method. As a result, diluted loss per common share is the same as basic loss per common share for the periods.
The Company’s statements of operations include a presentation of income (loss) per share for common stock in a manner similar to the
two-class
method of income per share. Net income per common share, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earnedQuarterly Reports on the Trust Account (net of applicable franchise and income taxesForm 10-Q for the periods ended JuneSeptember 30, 2021)2021 and March 31, 2022 (collectively the “Affected Financials Statements”) should no longer be relied upon. Details of the restated condensed consolidated financial statements as of and for the periods ended September 30, 2021 are provided below (“Restatement Items”). The Company evaluated the materiality of these errors both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality andSAB No. 108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements, and determined the effect of the corrections was material to the Affected Financial Statements. As a result of the material misstatements, the Company has restated its Affected Financial Statements, in accordance with ASC 250, Accounting Changes and Error Corrections.

The Restatement Items primarily reflect adjustments to correct errors related to the recognition of revenue and associated balances for European FCEV transactions, and adjustments to correct errors related to the transaction costs incurred in connection with the Business Combination. In addition to the correction of the errors discussed above, the Company has corrected for Other Immaterial Errors in all Affected Financial Statements.

The Company has also updated all accompanying footnotes and disclosures affected by the weighted average numberRestatement Items and Other Immaterial Errors, respectively, within Note 1. Nature of Class A redeemable common stock outstandingBusiness and Basis of Presentation, Note 3. Summary of Significant Accounting Policies, Note 4. Business Combination, Note 5. Revenue, Note 6. Prepaid Expenses and Other Current Assets, Note 10. Income Taxes, Note 11. Fair Value Measurements, Note 13. Stock-based Compensation Plans, Note 15. Related Party Transactions, and Note 16. Earnings (Loss) per Share.

Restatement Items

A.Hyzon Europe revenue transactions - In July 2022, management discovered and brought to the attention of the Board that certain vehicles in China may not have met the criteria necessary to recognize revenue as of December 31, 2021. The Special Committee was formed to conduct an investigation regarding the Company’s revenue recognition timing and internal controls and procedures for both China and Europe operations. The Investigation revealed that for five vehicles for which Hyzon Europe recognized revenue in 2021, Hyzon Europe subsequently performed various levels of work and repair efforts on such vehicles after revenue had been recognized. Consequently, the Company conducted an internal accounting review for its European customer arrangements. The Company determined that the accounting analysis previously applied to certain Hyzon Europe customer contracts, which were assumed from Holthausen Clean Technology B.V. in July 2021, was incorrect. More specifically, the Company previously determined that Hyzon Europe had acquired title to work-in-process vehicles from Holthausen Clean Technology B.V. and had been manufacturing and assembling these FCEVs for subsequent sale to customers. Hyzon Europe had instead assumed service contracts related to the retrofit services to convert the customers' own ICE powered vehicles to hydrogen FCEVs. Therefore, the Company revised its revenue recognition analysis and concluded that Hyzon Europe should not have recorded the assumption of these contracts as inventory and associated contract liabilities, and also should have recognized revenue related to these service contract arrangements on an over-time basis utilizing an input method rather than recording revenue at a point in time. Correction of the error decreased Revenue by $0.9 million, Cost of revenue by $0.8 million, Research and development expense by $0.8 million, increased Selling, general and administrative expense by $0.1 million, Prepaid expenses and other current assets by $0.1 million, decreased Inventory by $2.6 million and Contract liabilities by $3.1 million.

B.Transaction costs - The Company has adjusted its prior allocation of transaction costs incurred in connection with the Business Combination to reflect the allocation of the correct balance of Company incurred transaction costs between the liability classified earnout arrangement and the newly issued equity instruments in the Business Combination in the third quarter of 2021. The adjustment resulted in a reduction of amounts previously allocated to the earnout liability and recognized as expense, offset by an equal increase of transaction costs allocated to the newly issued equity instruments and recorded against additional paid-in capital. Correction of the error decreased Selling, general, and administrative expense and Additional paid-in capital by $3.1 million.

13
Other Immaterial Errors

In addition to the Restatement Items, the Company has corrected Other Immaterial Errors. While these Other Immaterial Errors are quantitatively and qualitatively immaterial, individually and in the aggregate, because the Company is correcting for the material errors, the Company has decided to correct these Other Immaterial Errors as well. Additionally, certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation in the condensed consolidated financial statements and the accompanying notes.

These Other Immaterial Errors include adjustments related to the following:

•Hyzon Europe lease modification - In connection with the preparation of the Company’s financial results for the year ended December 31, 2021, management identified that one of the Company’s European facility leases was modified in August 2021 and not reflected in the September 30, 2021 balance sheet. The recording of the impact of the lease modification resulted in an increase of Right-of-use assets by $5.6 million, Current portion of lease liabilities by $0.4 million, and Lease liabilities by $5.2 million.

•Miscellaneous immaterial errors - Correction of miscellaneous immaterial errors increased Selling, general, and administrative by $0.9 million, decreased Change in fair value of earnout liability by $0.3 million, and increased Earnout liability by $0.3 million and Additional paid-in capital by $0.9 million.

14

Summary Impact of Restatement Items and Other Immaterial Errors

The following tables present the effect of the Restatement Items, as well as Other Immaterial Errors, on the Company’s condensed consolidated balance sheet for the period or since original issuance. Net lossindicated (in thousands, except share and per common share basic and diluted for Class B
non-redeemable
common stock is calculated by dividing the net income (loss), less income attributable to Class A redeemable common stock, by the weighted average number of Class B non-redeemable common stock outstanding for the period. Class B
Non-redeemable
common stock includes the Founder Shares (as defined below) as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.
amounts):
As of September 30, 2021
ASSETSAs Previously ReportedRestatement AdjustmentsRestatement ReferencesAs Restated
Current assets
Cash$498,014 $— $498,014 
Accounts receivable5,991 — 5,991 
Inventory15,260 (2,569)(A)12,691 
Prepaid expenses and other current assets24,555 140 (A)24,695 
Total current assets543,820 (2,429)541,391 
Property, plant, and equipment, net8,878 — 8,878 
Right-of-use assets2,365 5,597 7,962 
Restricted cash and other assets7,755 — 7,755 
Total Assets$562,818 $3,168 $565,986 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable$2,851 — $2,851 
Accrued professional fees1,003 — 1,003 
Other accrued expenses3,154 51 3,205 
Related party payables4,554 — 4,554 
Horizon IP agreement payable10,000 — 10,000 
Contract liabilities10,984 (3,138)(A)7,846 
Current portion of lease liabilities748 416 1,164 
Total current liabilities33,294 (2,671)30,623 
Long term liabilities
Lease liabilities1,930 5,181 7,111 
Private placement warrant liability11,781 — 11,781 
Earnout liability114,758 256 115,014 
Other liabilities316 — 316 
Total liabilities$162,079 $2,766 $164,845 
Commitments and contingencies
Stockholders’ Equity
Common stock, $0.0001 par value; 400,000,000 shares authorized, 247,500,505 and 166,125,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.25 — 25 
Additional paid-in capital402,211 (2,190)(B)400,021 
Retained earnings (accumulated deficit)515 2,267 2,782 
Accumulated other comprehensive loss(326)(1)(327)
Total Hyzon Motors Inc. stockholders’ equity402,425 76 402,501 
Noncontrolling interest(1,686)326 (1,360)
Total Stockholders’ Equity400,739 402 401,141 
Total Liabilities and Stockholders’ Equity$562,818 $3,168 $565,986 



815

Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
The following table reflectstables present the calculationeffect of basicthe Restatement Items, as well as Other Immaterial Errors, on the Company’s condensed consolidated statements of operations and diluted net loss per common sharecomprehensive income (loss) for the periods indicated (in dollars,thousands, except per share amounts):
Three Months Ended
September 30, 2021		Nine Months Ended
September 30, 2021
As Previously ReportedRestatement AdjustmentsRestatement ReferencesAs RestatedAs Previously ReportedRestatement AdjustmentsRestatement ReferencesAs Restated
Revenue$962 $(873)(A)$89 $962 $(873)(A)$89 
Operating expense:
Cost of revenue968 (764)(A)204 968 (764)(A)204 
Research and development4,822 (840)(A)3,982 8,921 (840)(A)8,081 
Selling, general and administrative44,784 (2,123)(A) , (B)42,661 53,730 (2,123)(A) , (B)51,607 
Total operating expenses50,574 (3,727)46,847 63,619 (3,727)59,892 
Loss from operations(49,612)2,854 (46,758)(62,657)2,854 (59,803)
Other income (expense):
Change in fair value of private placement warrant liability7,614 — 7,614 7,614 — 7,614 
Change in fair value of earnout liability73,615 (256)73,359 73,615 (256)73,359 
Foreign currency exchange loss and other expense(110)(6)(116)(169)(6)(175)
Interest expense, net(254)— (254)(5,249)— (5,249)
Total other income (expense)80,865 (262)80,603 75,811 (262)75,549 
Net income$31,253 $2,592 $33,845 $13,154 $2,592 $15,746 
Net loss attributable to noncontrolling interest(1,101)325 (776)(1,632)325 (1,307)
Net income attributable to Hyzon$32,354 $2,267 $34,621 $14,786 $2,267 $17,053 
Comprehensive income:
Net income$31,253 $2,592 $33,845 $13,154 $2,592 $15,746 
Foreign currency translation adjustment(205)18 (187)(293)20 (273)
Comprehensive income$31,048 $2,610 $33,658 $12,861 $2,612 $15,473 
Comprehensive loss attributable to noncontrolling interest(1,075)326 (749)(1,594)325 (1,269)
Comprehensive income attributable to Hyzon$32,123 $2,284 $34,407 $14,455 $2,287 $16,742 
Net income per share attributable to Hyzon:
Basic$0.14 $0.01 $0.15 $0.08 $0.01 $0.09 
Diluted$0.13 $0.01 $0.14 $0.07 $0.01 $0.08 
Weighted average common shares outstanding:
Basic234,464 234,091 189,226 189,101 
Diluted246,263 246,480 200,968 200,984 


16

The following table presents the effect of the Restatement Items, as well as Other Immaterial Errors, on the Company’s condensed consolidated statement of changes in stockholders' equity (in thousands, except share data):

Common Stock Class ARetained Earnings (Accumulated Deficit)Accumulative Other Comprehensive IncomeTotal Hyzon Motors Inc. Stockholders' Equity (Deficit)Noncontrolling InterestTotal Stockholders' Equity
Shares AmountAdditional Paid-in Capital
Balance as of September 30, 2021 (As Previously Reported)247,500,505 $25 $402,211 $515 $(326)$402,425 $(1,686)$400,739 
Cumulative adjustments— — (2,190)2,267 (1)76 326 402 
Balance as of September 30, 2021 (As Restated)247,500,505 $25 $400,021 $2,782 $(327)$402,501 $(1,360)$401,141 


17
The following tables present the effect of the Restatement Items, as well as Other Immaterial Errors, on the Company’s condensed consolidated statement of cash flows (in thousands):
Nine Months Ended
September 30, 2021
As Previously ReportedRestatement Adjustments***As Restated
Cash Flows from Operating Activities:
Net income$13,154 $2,592 $15,746 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization671 — 671 
Stock-based compensation28,084 939 29,023 
Loss on extinguishment of convertible notes107 — 107 
Noncash interest expense5,449 — 5,449 
Fair value adjustment of private placement warrant liability(7,614)— (7,614)
Fair value adjustment of earnout liability(73,615)256 (73,359)
Changes in operating assets and liabilities:
Accounts Receivable(5,712)— (5,712)
Inventory(14,577)2,569 (12,008)
Prepaid expenses and other current assets(19,549)(89)(19,638)
Other assets(150)— (150)
Accounts payable2,558 813 3,371 
Accrued professional fees and other current liabilities3,031 51 3,082 
Operating lease liabilities(187)— (187)
Related party payables3,821 — 3,821 
Contract liabilities7,982 (3,137)4,845 
Other liabilities311 — 311 
Net cash used in operating activities(56,236)3,994 (52,242)
Cash Flows from Investing Activities:
Purchases of property and equipment(8,810)— (8,810)
Advanced payments for capital expenditures(3,948)(51)(3,999)
Investment in equity securities(4,826)— (4,826)
Net cash used in investing activities(17,584)(51)(17,635)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock— — — 
Proceeds from Business Combination, net of redemption and transaction costs512,936 (3,943)508,993 
Exercise of stock options440 — 440 
Payment of finance lease liability(135)— (135)
Debt issuance costs(133)— (133)
Proceeds from issuance of convertible notes45,000 — 45,000 
Net cash provided by financing activities558,108 (3,943)554,165 
Effect of exchange rate changes on cash(853)— (853)
Net change in cash and restricted cash483,435 — 483,435 
Cash—Beginning17,139 — 17,139 
Cash and restricted cash —Ending$500,574 $— $500,574 
Supplemental schedule of non-cash investing activities and financing activities:
Lease assets obtained in exchange for lease obligations:
Operating leases1,206 5,597 6,803 
Finance leases— — — 
Conversion of Legacy Hyzon common stock73 — 73 
Recognition of earnout liability in Business Combination188,373 — 188,373 
Recognition of private placement warrant liability in Business Combination19,395 — 19,395 
Horizon license agreement payable10,000 — 10,000 
Conversion of convertible notes for common stock50,198 — 50,198 

*** The adjustments within the condensed consolidated statement of cash flows for the nine months ended September 30, 2021 were due to the reconciliation of the changes in account balances used in preparing the statement of cash flows resulting from the various error corrections included in the above financial statements.
18
   
Three Months Ended
   
Three Months Ended
   
Six Months Ended
   
Six Months Ended
 
   
June 30,
   
June 30,
   
June 30,
   
June 30,
 
   
2021
   
2020
   
2021
   
2020
 
Class A Redeemable Common Stock
                    
Numerator: Earnings allocable to Class A Redeemable Common Stock
                    
Interest Income
   3,372    —      6,706    —   
Income and Franchise Tax
   (3,372)    —      (6,706)    —   
Redeemable 
Net Loss
   0      0      0      0   
Denominator: Weighted Average Class A Redeemable Common Stock
                    
Class A Redeemable Common Stock, Basic and Diluted
   22,572,502    —      22,572,502    —   
Income (Loss)/Basic and Diluted Class A Redeemable Common Stock
             0      —   
Class B Non-Redeemable Common Stock
                    
Numerator: Net Loss minus Class A Redeemable Net Loss
                    
Net Loss
   (8,183,346)    (860)    (9,294,718)    (1,719) 
Class A Redeemable Net Loss
 
   0—      0—      —      —   
Class B Non-Redeemable Net Loss
   (8,183,346)    (860)    (9,294,718)    (1,719) 
Denominator: Weighted Average Class B Non-Redeemable Common Stock
                    
Class B Non-Redeemable Common Stock, Basic and Diluted
   5,643,125    5,000,000    5,643,125    5,000,000 
Loss/Basic and Diluted Class B Non-Redeemable Common Stock
   (1.45)    (0.00)    (1.65)    (0.00) 
Note 3. Summary of Significant Accounting Policies
Note: For the three months ended and six months ended June 30, 2021 and 2020, basic and diluted shares
The Company’s significant accounting policies are the same as there are no securities that are dilutivedescribed in Note 2. Summary of Significant Accounting Policies, to the Company’s common stockholders underconsolidated annual financial statements for the treasury method.​​​​​​​
year ended December 31, 2020, included in the Proxy. There have been no material changes to the significant accounting policies during the three-month and nine-month periods ended September 30, 2021, except for the new or updated policies noted.
Concentration of Credit Risk

Financial instruments that potentially subject th
e
 Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Corporation coverag
Revenue
e of $250,000.
The Company has not experienced lossesaccounts for revenue in accordance with ASC 606. Revenue is based on these accounts and management believesthe amount of transaction price to which the Company is entitled, subject to the allocation of the transaction price to distinct performance obligations. The Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration for which the Company expects to receive in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

When it determines it is not exposedprobable that it will collect all of the consideration to which it will be entitled under a customer contract, the Company concludes the contract existence criteria under ASC 606 are not met. In these cases, the Company recognizes revenue to the extent of consideration received provided the amounts are non-refundable, the Company has transferred control of the goods or services to which the consideration relates, the Company has stopped transferring goods or services, and there is no obligation to transfer additional services ("Alternative Method for Revenue Recognition").

The Company recognizes the incremental costs of obtaining contracts, including commissions, as an expense when incurred as the contractual period of the Company's arrangements are expected to be one year or less. Amounts billed to customers related to shipping and handling are classified as revenue, and the Company has elected to recognize the cost for freight and shipping when control over vehicles, parts, or accessories has transferred to the customer as an expense in Cost of revenue.

Product Sales

The Company enters into sales contracts with customers for the purchase of the Company’s products and services including fuel cell systems, FCEVs, parts, product support, and other related services. The Company considers order confirmations or purchase orders, which in some cases are governed by master vehicle supply agreements, to be contracts with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of product(s) or service to a customer. On standard vehicle sales contracts, revenues are recognized at a point in time when customers obtain control of the vehicle, which among other indicators, is generally when transfer of title and risks and rewards of ownership of goods have passed and when the Company has a present right to payment. Provisions for warranties are made at the time of sale. Sales, value-added, and other taxes collected concurrent with revenue producing activities are excluded from revenue.

Payment terms for sales of FCEVs to certain customers have included installment billing terms to fund the Company’s working capital requirements. The Company does not adjust the transaction price for a significant risksfinancing component when the performance obligation is expected to be fulfilled within a year as the amount is not material.

In China, the Company has granted extended payment terms to customers, which resulted in the Company concluding collection of all of the consideration under the contract is not probable. As a result, the contract existence criteria is not met and revenue is recognized under the Alternative Method of Revenue Recognition, which may not be in the same period that control of the related goods is transferred to the customers (see Note 5. Revenue). The Company does not include a right of return on such accounts.its products other than rights related to standard warranty provisions that permit repair or replacement of defective goods.

19
Retrofit Services

The Company also enters into contracts with customers to retrofit ICE vehicles to FCEVs. In general, the customer controls any work in process arising from the Company’s performance; and the Company has in effect agreed to sell its rights to the work as it performs on a continuous basis. Revenue from these contracts is generally recognized over time utilizing an input method. Under the input method, the extent of progress towards completion is measured based on the ratio of normal costs incurred to date to the total estimated costs at completion of the performance obligation. Unexpected amounts of wasted materials, labor or other resources are excluded from the cost-to-cost measure of progress. The Company believes that this method is the most accurate representation of the Company's performance, because it directly measures the value of the services transferred to the customer over time as the Company incurs costs on its contracts. Contract costs include all direct materials, labor, and indirect costs related to contract performance, which may include indirect labor, supplies, tools, repairs and depreciation costs. The amount of revenue recognized for these contracts in a period is dependent on our ability to estimate total contract costs. The Company continually evaluates its estimates of total contract costs based on available information and experience.

Warranties

In most cases, products that customers purchase from the Company are covered by one to six-year limited product warranty. At the time revenue is recognized, the Company estimates the cost of expected future warranty claims and accrues estimated future warranty costs. These estimates are based on industry information, actual claims incurred to date and an estimate of the nature, frequency and costs of future claims. These estimates are inherently uncertain given the Company’s relatively short history, and changes to the historical or projected warranty experience may cause changes to the warranty reserve when the Company accumulates more actual data and experience in the future. The Company will periodically review the adequacy of its product warranties and adjust, if necessary, the warranty percentage and accrued warranty liability for actual historical experience. Accrued warranty obligations are recorded within Other liabilities and warranty expenses are recorded within Cost of revenue.

Restricted Cash

Restricted cash consists of funds that are contractually restricted as to usage or withdrawal. The Company presents restricted cash separately from unrestricted cash on the Condensed Consolidated Balance Sheets. As of September 30, 2021, the Company has $2.6 million in restricted cash included within Restricted cash and other assets, the balance is primarily comprised of $2.4 million in certain letters of credit. The Company had no restricted cash as of December 31, 2020.

Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method (“FIFO”) for all inventories. As of September 30, 2021, the Company had inventory comprised of raw materials and work in process of $11.5 million and $1.2 million, respectively. The Company had no inventory as of December 31, 2020.

Warrant Liabilities

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in the Financial Accounting Standards Board (“FASB”) ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815.815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional
paid-in
capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance and adjusted to the current fair value at each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a
non-cash
gain or loss on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (see Note 14. Warrants).
20

Earnout liability

As a result of the Business Combination, the Company recognized earnout shares to Legacy Hyzon’s common stockholders as a liability. Pursuant to ASC 805-10, Business Combinations (“ASC 805”) the Company determined that the initial fair value of the earnout shares should be recorded as a liability with the offset going to Additional paid-in capital and with subsequent changes in fair value recorded in the statement of operations at each reporting period. The earnout shares to other holders of outstanding equity awards are accounted for under ASC 718, Stock Compensation (“ASC 718”), as these earnout shares are compensatory in nature and relate to services provided or to be provided to the Company.

Note 4. Business Combination

As discussed in Note 1. on July 16, 2021, Legacy Hyzon consummated the transaction contemplated by the Business Combination. Immediately upon the completion of the Business Combination and the other transactions contemplated by the Business Combination, Legacy Hyzon became a direct, wholly owned subsidiary of DCRB. In connection with these transactions, DCRB changed its name to “Hyzon Motors Inc.”

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP, with no goodwill or other intangible assets recorded and the net assets of Legacy Hyzon consolidated with DCRB at historical cost. Under this method of accounting, DCRB is treated as the “acquired” company for financial reporting purposes. The reverse recapitalization is retrospectively adjusted in the consolidated statements of operations. changes in stockholders’ equity to reflect the Company’s equity structure for all periods presented.

As a result of the Business Combination, each share of common stock of Legacy Hyzon, par value $0.001 per share, was converted to 1.772 shares of Class A common stock (the “Exchange Ratio”), par value $0.0001 per share of the Company, resulting in the issuance of approximately 173.4 million shares of Class A common stock. Additionally, the Company reserved for issuance approximately 21.7 million shares of Class A common stock in respect to outstanding options and restricted stock units (“RSUs”) issued in exchange for options, RSUs and warrants of the Company.

Immediately prior to the Business Combination, Legacy Hyzon issued to Hymas approximately 4.1 million shares of Legacy Hyzon common stock without any consideration, which was converted to approximately 7.2 million of Class A common stock.

DCRB held subscription agreements with certain investors to issue and sell an aggregate of 35,500,000 shares of Class A common stock of DCRB for $10.00 per share for an aggregate commitment of $355,000,000 (the “PIPE Financing”). At the closing of the Business Combination, DCRB consummated the PIPE Financing, and those proceeds became part of the Company’s capital.

Pursuant to the terms of the Convertible Notes described in Note 8, immediately prior to the Business Combination the outstanding principal of $45 million as well as the accrued interest on the Convertible Notes automatically converted into shares of the Company at a price per share equal to 90% of the price per share paid by the PIPE Financing investors, and upon the closing, converted into 5,022,052 shares of common stock of the post-combination company.

In accordance with an agreement executed in July 2020, Ascent Funds Management LLC (“Ascent”) was granted options to purchase shares of Legacy Hyzon common stock (the “Ascent Options”) at an exercise price of $2.73 per share. Immediately prior to the consummation of the Business Combination, the Ascent Options were automatically exercised in full on a cashless basis into approximately 3.9 million shares of Legacy Hyzon common stock, which converted into approximately 6.9 million shares of Class A common stock in connection with the Business Combination.

Immediately after giving effect to the Business Combination, PIPE Financing, Convertible Note conversion, and Ascent Options exercise described above, there were 246,994,209 shares of Class A common stock of the Company issued and outstanding.
21
The number of shares of common stock issued immediately following the consummation of the Business Combination:
Shares
Common stock of DCRB20,483,179 
DCRB founders5,643,125 
Total DCRB26,126,304
Conversion of Ascent Options (post-cashless exercise)6,871,667 
Conversion of convertible notes5,022,052 
PIPE shares35,500,000 
Reverse capitalization transaction73,520,023
Legacy Hyzon shares after conversion (1)
173,474,186
Total shares of Common Stock immediately after Business Combination246,994,209
(1)The number of Legacy Hyzon shares was determined from the 97,897,396 shares of Legacy Hyzon common stock outstanding immediately prior to the closing of the Business Combination converted at the Exchange Ratio of 1.772. All fractional shares were rounded down.

The following table reconciles the elements of the Business Combination to the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 (in thousands):

Recapitalization
Cash – DCRB trust and cash, net of redemptions and liabilities recorded by DCRB of $24.9 million$179,727 
Cash – PIPE Financing, net of transaction costs of $14.2 million340,797 
Less: transaction costs allocated to equity(11,531)
Effect of Business Combination, net of redemption and transaction costs$508,993

The Company utilizedissued equity classified common shares and certain liability classified earnout shares. Transaction costs of $3.3 million attributable to the liability classified earnout shares were expensed. The rest was attributable to the equity classified common shares and recorded as a Monte Carlo simulation modelreduction to valueAdditional paid-in capital in the Condensed Consolidated Balance Sheets.

The following table reconciles the elements of the Business Combination to the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2021 (in thousands):
Recapitalization
Cash – DCRB trust and cash, net of redemptions and liabilities recorded by DCRB of $24.9 million$179,727 
Cash – PIPE Financing, net of transaction costs of $14.2 million340,797 
Conversion of convertible notes into common stock50,198 
Recognize earnout liability(188,373)
Recognize Private Placement Warrants liability(19,395)
Recapitalization of Legacy Hyzon common shares75 
Less: transaction costs allocated to equity(11,531)
Effect of Business Combination, net of redemption and transaction costs$351,498
22

Warrants

On October 22, 2020, DCRB consummated the Initial Public Warrant liabilities atOffering of 22,572,502 units and each unit consists of one share of Class A common stock and one-half of one public warrants (the “Public Warrants”). Simultaneously with the dateclosing of the Initial Public Offering, DCRB consummated the private sale of 6,514,500 warrants (the “Private Placement Warrants”), including 514,500 warrants as a result of the underwriters’ partial exercise of their over-allotment option on November 12, 2020, at a price of $1.00 per Private Placement Warrant in a private placement to Decarbonization Plus Acquisition Sponsor, LLC (the “Sponsor”), DCRB’s independent directors and thenan affiliate of DCRB’s chief executive officer. At the unadjusted, quotedclosing of the Business Combination, DCRB and the Sponsor entered into a note agreement, whereby the Sponsor agreed to loan DCRB an aggregate of $1,500,000 to cover working capital requirements. The note agreement converted at the Business Combination date into 1,500,000 additional Private Placement Warrants. Upon the closing of the Business Combination, Hyzon assumed these outstanding warrants. See Note 16. Shareholders’ Equity.

Earnout

Following the closing of the Business Combination, holders of the Company’s legacy common stock and outstanding equity awards (including warrant, stock option and RSU holders) were granted the right to receive up to an aggregate amount of 23,250,000 shares of Class A common stock that would vest in in three tranches of (i) 9,000,000, (ii) 9,000,000 and (iii) 5,250,000 shares if the trading price listed onof the NASDAQ Capital Marketcommon stock of the Company achieves $18, $20, and $35, respectively, as its last reported sales price per share for each subsequent reportingany 20 trading days within any 30 consecutive trading day period within five years following the closing date of the Business Combination, provided that in no event will the issuance of the 5,250,000 earnout shares occur prior to the one-year anniversary of the closing date. Upon forfeiture of underlying unvested equity awards prior to occurrence of targeted trading price noted above, the associated earnout shares shall be allocated pro-rata among the remaining eligible Company’s common stock and utilizesequity awards holders.

The Company recognized earnout shares to Legacy Hyzon’s common stockholders as a Black-Scholes model to valueliability. The earnout liability was $115.0 million and $188.4 million as of September 30, 2021 and at the Private Warrant liabilities that are categorized within Level 3 at each reporting period, with changesclose of the Business Combination, respectively. The change in fair value recognizedearnout liability was recorded as other income in theCondensed Consolidated Statements of Operations (see Note 7)and Comprehensive Income (Loss). The Company recognized the earnout shares to other equity holders as separate and incremental awards from other equity holders’ underlying stock-based compensation awards in accordance with ASC 718.

9
TableCertain earnout awards accounted for under ASC 718 were vested at the time of Contents
grant, and therefore recognized immediately as compensation expense. Certain other earnout awards accounted for under ASC 718 contained performance and market-based vesting conditions, and as the performance conditions are not deemed probable at September 30, 2021, no compensation expense has been recorded related to these awards. Total compensation expense recorded in the three and nine months ended September 30, 2021 related to earnout awards was $14.0 million.
Dearbonization Plus Acquisition Corporation

NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
Note 5. Revenue

Financial Instruments
Contract Liabilities

The fair valueContract liabilities relate to the advance consideration received from customers for products and services prior to satisfying a performance obligation or in excess of the Company’s assets andamounts allocated to a previously satisfied performance obligation. These amounts are included within Contract liabilities which qualify as financial instruments under ASC 820, approximates the carrying amounts represented in the accompanying Condensed Consolidated Balance Sheets.
condensed
consolidated balance sheets, primarily due to their short term nature. ASC 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability
The carrying amount of Contract liabilities included in the Company’s principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the useaccompanying Condensed Consolidated Balance Sheets was $7.8 million and $2.6 million as of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entity’s own assumptions based on market data and the entity’s judgments about the assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information available in the circumstances.
The valuation hierarchy is composed of three levels. The classification within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. See Note 7 for the levels within the valuation hierarchy, as well as additional information on assets and liabilities measured at fair value.
Use of Estimates
The preparation of these Condensed consolidated financial statements in conformity with 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 these financial statements and the reported amounts of expenses during the reporting periods. Accordingly, the actual results could differ from those estimates.
Cash and cash equivalents
Cash includes amounts held at banks with an original maturity of less than three months. As of JuneSeptember 30, 2021, and December 31, 2020, respectively.

Remaining Performance Obligations

The transaction price associated with remaining performance obligations for commercial vehicles and other contracts with customers was $14.6 million as of September 30, 2021, of which the Company expects to recognize as revenue over the next 12 months.

23

Note 6. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):
September 30, 2021December 31, 2020
Deposit for fuel cell components (Note 15)$5,000 $— 
Vehicle inventory deposits5,996 577 
Production equipment deposits3,948 — 
Other prepaid expenses1,050 271 
Prepaid Insurance7,505 — 
VAT receivable from government1,196 — 
Total prepaid expenses and other current assets24,695 848 

Note 7. Property, Plant, and Equipment, net

Property, plant, and equipment, net consisted of the following (in thousands):

September 30, 2021December 31, 2020
Land and building$2,424 $— 
Machinery and equipment5,728 371 
Software168 — 
Leasehold improvements358 — 
Construction in progress663 60 
Total Property, plant, and equipment9,341 431 
Less: Accumulated depreciation and amortization(463)(13)
Property, plant and equipment, net$8,878 $418 

Depreciation and amortization expense totaled $0.2 million and $0.5 million for the three months and nine months ended September 30, 2021. Depreciation and amortization expense was negligible for the three months ended September 30, 2020, and the period from inception (January 21, 2020) to September 30, 2020.

Note 8. Convertible Notes

In February 2021, the Company held $167,284entered into a Convertible Notes Purchase Agreement with certain investors for the purchase and $0, respectively,sale of $45 million in cash.Convertible Notes (the “Convertible Notes”). The Convertible Notes accrued interest at an annual rate of 1% commencing upon issuance and compounding semi-annually on each August 1 and February 1. Interest was payable by increasing the principal amount of the Convertible Notes (with such increased amount accruing interest as well) on each interest payment due date.

As the Convertible Notes contained various settlement outcomes, the Company held 0 cash equivalentsevaluated each scenario for accounting purposes. The conversion features settled at June 30,discounts upon certain financing events were determined to be redemption features and were evaluated as embedded derivatives and bifurcated from the Convertible Notes due to the substantial premium to be paid upon redemption. At issuance, option-based features were determined to have a de minimis fair value, and non-option-based features were bifurcated assuming the issuance fair value was zero. Changes in the derivative liability fair values were reported in operating results each reporting period, prior to the close of the Business Combination.

The period from July 1, 2021 or December 31, 2020.to the close date of the Business Combination the Company recorded de minimis amount of interest expense related to the stated interest for the Convertible Notes and $0.3 million related to the change in the value of the bifurcated embedded derivative within interest expense.

Common24
The period from February 2021 to the close date of the Business Combination the Company recorded $0.2 million of interest expense related to the stated interest for the Convertible Notes and $5.0 million related to the change in the value of the bifurcated embedded derivative within interest expense.

Upon the closing, the Convertible Notes and the accrued interest automatically converted into 5,022,052 shares of common stock subject to possible redemption
of the Company (see Note 4. Business Combination).

Note 9. Investments in Equity Securities

The Company accounts for itshas certain equity security investments which are included in Restricted cash and other assets on the Condensed Consolidated Balance Sheets.

The Company owns common stock subjectshares, participation rights, and options to possible redemptionpurchase additional common shares in accordance withGlobal NRG H2 Limited (“NRG”). The Company does not have control and does not have the guidance in ASC 480. Common stock subjectability to mandatory redemption is classified as a liability instrumentexercise significant influence over the operating and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the controlfinancial policies 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.this entity. The Company’s common stock features certain redemption rights that are consideredinvestment totaled $0.1 million as of December 31, 2020 and increased to be outside$2.5 million as of September 30, 2021.

On July 29, 2021, the Company entered into a Master Hub Agreement with Raven SR, LLC (“Raven SR”) whereby Raven SR granted to the Company a right of first refusal to co-invest in up to 100 of Raven SR’s first 200 solid waste-to-hydrogen generation and production facilities hubs), and up to 150 of Raven SR’s gas-to-hydrogen generation and production facilities across the United States on a hub-by-hub basis. In connection with this agreement, Hyzon invested $2.5 million on July 30, 2021, to acquire a minority interest in Raven SR.

The Company’s control and subject to occurrencetotal investments in equity securities as of uncertain future events. Accordingly, at JuneSeptember 30, 2021, and December 31, 2020, were $5.0 million and $0.1 million, respectively.
2020, 16,592,216 and 17,521,688 shares of
Class
A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed consolidated balance sheets.

Offering Costs
Note 10. Income Taxes
Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that are directly related to the Initial Public Offering. The Company incurred offering costs amounting to $11,555,093 upon the completion of the Initial Public Offering. In connection with the sale of the Over-allotment Units, the Company incurred an additional $514,500 of underwriting fees and $900,376 of deferred underwriting fees.

The Company complies withdid not record a provision for income taxes for the requirements of ASC
340-10-S99-1
three or nine months ended September 30, 2021, because it expects to generate a loss for the year ending December 31, 2021, and SEC Staff Accounting Bulletin Topic 5A—Expenses of Offering. Offering costs directly attributable to the issuance of an equity contractCompany’s net deferred tax assets continue to be classified in equity are recorded asfully offset by a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately. The Company recorded $12,315,313 of offering costs as a reduction of equity in connection with the Public Shares included in the Units. The Company immediately expensed $654,656 of offering costs in connection with the Public Warrants included in the Units that were classified as liabilities.valuation allowance.

10
Table of Contents
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
As of JuneSeptember 30, 2021, and December 31, 2020, the Company had 0
deferred offering costs on the accompanying
condensed
consolidated balance sheets.
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 for the estimated future tax consequences attributable to differences between these 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 onnet deferred tax assets of approximately $12.2 million and liabilities$3.1 million, respectively, each of which was fully offset by a change invaluation allowance. During the three months ended September 30, 2021, and September 30, 2020, the Company did not record an income tax rates is recognized in income inbenefit (expense) as a result of the full valuation allowances recorded against its deferred tax assets. During the nine months ended September 30, 2021, and the period that includedfrom inception (January 21, 2020) to September 30, 2020, the enactment date. ValuationCompany did not record an income tax benefit (expense) as a result of the full valuation allowances are established, when necessary, to reducerecorded against its deferred tax assets to the amount expected to b
e
 realized.
assets.

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 0no unrecognized tax benefits deferred tax assets or valuations against themand no amounts accrued for interest and penalties as of JuneSeptember 30, 2021, and December 31, 2020, respectively. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. NaN
 amounts were accrued for the payment of interest and penalties for the three months ended and six months ended June 30, 2021 and 2020, respectively.2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.positions. The Company is subject to income tax examinations by major taxing authorities in the countries in which it operates since inception.

Note 11. Fair Value Measurements

The Company had 0 taxfollows the guidance in ASC 820, Fair Value Measurement. For assets and liabilities measured at fair value on a recurring and nonrecurring basis, a three-level hierarchy of measurements based upon observable and unobservable inputs is used to arrive at fair value. The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability asin the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of June 30, 2021 and December 31, 2020, respectively.the following levels:

•Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Recent Accounting Pronouncements25
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.Table of Contents
Note 3 — Public Offering
Pursuant to•Level 2 inputs: Other than quoted prices included in Level 1 inputs that are observable for the Initial Public Offering,asset or liability, either directly or indirectly, for substantially the Company sold 22,572,502 Units, at a purchase price of $10.00 per Unit, which includes the partial exercise by the underwriters of their over-allotment option in the amount of 2,572,502 Over-allotment Units at $10.00 per Unit. Each Unit consists of one share of Class A common stock and
one-half
of one Public Warrant. Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).
Note 4 — Related Party Transactions
Founder Shares
On September 12, 2017, the Sponsor purchased 11,500,000 shares of Class B common stock (the “Founder Shares”) for an aggregate price of $25,000, or approximately $0.002 per share. As used herein, unless the context otherwise requires, “Founder Shares” shall be deemed to include the shares of Class A common stock issuable upon conversion thereof. The Founder Shares are identical to the Public Shares except that the Founder Shares automatically convert into shares of Class A common stock at the timefull term of the Company’s Initial Business Combination and are subjectasset or liability.

•Level 3 inputs: Unobservable inputs for the asset or liability used to certain transfer restrictions, as described in more detail below. Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time. On September 18, 2020, the Sponsor agreed to return 2,875,000 Founder Shares to the Company at no cost. In October 2020, the Sponsor agreed to return an additional 2,875,000 Founder Shares to the Company at no cost. The Sponsor and an affiliate of the Company’s chief executive officer agreed to forfeit up to an aggregate of 750,000 Founder Sharesmeasure fair value to the extent that the over-allotment option wasobservable inputs are not exercisedavailable, thereby allowing for situations in full by the underwriters. The forfeiture would be adjusted to the extent that the over-allotment option was not exercised in full by the underwriters so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. As a result of the underwriters’ partial exercise their over-allotment option on November 12, 2020, 643,125 Founder Shares are no longer subject to forfeiture. The over-allotment option expired on December 3, 2020, resulting in the forfeiture of 106,875 Founder Shares to the Company at no cost.
11
Table of Contents
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
The Sponsor and the Company’s officers, directors and an affiliate of the Company’s chief executive officer have waived their redemption rights with respect to any Founder Shares and any Public Shares held by them in connection with the completion of an Initial Business Combination. If the Initial Business Combinationwhich there is not completed within 24 months from the closing of the Initial Public Offering, the Sponsor and the Company’s officers, directors and an affiliate of the Company’s chief executive officer have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them.
The Company’s initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the Initial Business Combination or (B) subsequent to the Initial Business Combination, (x) if the last sale price of the Company’s Class A 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, 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 Warrants
Simultaneously with the closing of the Initial Public Offering, the Sponsor and the Company’s independent directors and an affiliate of the Company’s chief executive officer purchased 6,000,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $6,000,000. The Sponsor and an affiliate of the Company’s chief executive officer agreed to purchase up to an additional 600,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, or an aggregate additional $600,000, to the extent the underwriter’s over-allotment option was exercised in full. Simultaneously with the closing of the sale of the Over-allotment Units, the Sponsor and the affiliate of the Company’s chief executive officer purchased an additional 514,500 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, generating gross proceeds of approximately $514,500 (see Note 2 for further information regarding the accounting treatment of the Private Placement Warrants).
Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from the Private Placement Warrants 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 24 months from the closing of the Initial Public Offering, the proceeds of the sale of the Private Placement Warrants held in the Trust Account will be used to partially fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants and all underlying securities will expire worthless. The Private Placement Warrants will be
non-redeemable
and exercisable on a cashless basis so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees.
The Sponsor and the Company’s officers, directors and an affiliate of the Company’s chief executive officer have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the Initial Business Combination.
Registration Rights
Pursuant to a Registration Rights Agreements entered into on October 19, 2020, the holders of Founder Shares, Private Placement Warrants and Warrants that may be issued upon conversion of Working Capital Loans (as defined below),little, if any, are entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Class A common stock). These holders are entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
12
Table of Contents
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
Related Party Loans
On September 12, 2017, the Company and the Sponsor entered into a loan agreement, whereby the Sponsor agreed to loan the Company an aggregate of $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). This loan is
non-interest
bearing and payable on the earlier of December 31, 2020 (as amended) or the completion of the Initial Public Offering (the “Maturity Date”). On September 13, 2017, the Company drew down $300,000 on this Note. On October 21, 2020, the Company paid back the Sponsormarket activity for the full amount of the outstanding
Note. The Note is no longer available to the Company.
asset or liability at measurement date.
In addition to the Note, the Sponsor paid certain costs related to formation and offering for the Company. Costs in the amount of $219,022 were forgiven by the Sponsor in December 2019 and have been recorded within additional
paid-in
capital.
As of JuneSeptember 30, 2021, and December 31, 2020, the carrying amount of accounts receivable, prepaid expenses and other current assets, restricted cash and other assets, accounts payable, and accrued professional fees and other accrued expenses approximated their estimated fair value due to their relatively short maturities.

The Company owe
d
did not have warrant liabilities or earnout liabilities as of December 31, 2020. The following table presents information about the Sponsor $3,375,977Company’s assets and $1,324,257, respectively, for additional expenses paidliabilities that are measured at fair value on its behalf,a recurring basis as of which $0 and $0 at JuneSeptember 30, 2021 and
December 31, 2020, respectively are related to indicates the Working Capital Loans.
Related Party Note
On July 16, 2021,fair value hierarchy of the valuation inputs the Company andutilized to determine such fair value (in thousands):

Fair Value Measurements on a Recurring Basis
Level 1Level 2Level 3Total
Warrant liability – Private Placement Warrants$— $— $11,781 $11,781 
Earnout shares liability— — 115,014 115,014 

Private Placement Warrants

The estimated fair value of the Sponsor entered into a note agreement, whereby the Sponsor agreed to loan the Company an aggregate of $1,500,000 to cover working capital requirements. The note agreement c
o
nverted at the business combination date into 1,500,000 additional private placement warrants.
Advance from Related Party
Aswarrants (the “Private Placement Warrants”) is determined using Level 3 inputs by using the binominal lattice model (“BLM”). The application of October 22, 2020,BLM requires the Sponsoruse of several inputs and affiliatesignificant unobservable assumptions, including volatility. Significant judgment is required in determining the expected volatility of the Company’s chief executive officer advanced $600,000 tocommon stock. The following table provides quantitative information regarding Level 3 fair value measurement inputs:
September 30, 2021July 16, 2021
Stock price$6.94 $10.33 
Exercise price (strike price)$11.50 $11.50 
Risk-free interest rate0.9 %0.8 %
Volatility60.00 %34.20 %
Remaining term (in years)4.795.00

The following table presents the Company to coverchanges in the purchase of additionalliability for Private Placement Warrants ifduring the over-allotment is exercised in full. Simultaneously with the closing of the sale of the Over-allotment Units, the Company utilized the advance from the Sponsor and the affiliate of the Company’s chief executive officer to issue an additional 514,500 Private Placement Warrants at a price of $1.00 per Private Placement Warrant (see Note 2 for further information regarding the accounting treatment of the Private Placement Warrants). The over-allotment option expired on December 3, 2020, resulting in the return of $85,500 of the advancement not utilized. As of Junenine months ended September 30, 2021 and December 31, 2020, there were 0 advances outstanding.(in thousands):

Balance as of July 16, 2021$19,395 
Change in estimated fair value(7,614)
Balance as of September 30, 2021$11,781 
Administrative Support Agreement26
The Company has agreed to pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three months ended and six months ended June 30, 2021,
the Company
incurred
$30,000 and $60,000,
respectively, of monthly fees to the affiliate of the Sponsor, of which $60,000 remained outstanding at June 30, 2021. There were 0 such fees for the three and six months ended June 30, 2020, and 0 amounts due at December 31, 2020.
Working Capital Loans
In addition, in order to finance transaction costs in connection with an Initial 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 an Initial Business Combination, the Company would repay the Working Capital Loans. In the event that an Initial 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. If the Sponsor makes any working capital loans, up to $1,500,000 of such loans may be converted into warrants of the post business combination entity at the price of $1.00 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants, including as to exercise price, exercisability and exercise period. As of June 30, 2021 and December 31, 2020, the Company had $0 and $0 borrowings under the Working Capital Loans.
13

Earnout
The fair value of the earnout shares was estimated by utilizing a Monte-Carlo simulation model. The inputs into the Monte-Carlo pricing model included significant unobservable inputs. The following table provides quantitative information regarding Level 3 fair value measurement inputs:
Dearbonization Plus Acquisition Corporation
September 30, 2021July 16, 2021
Stock price$6.94 $10.33 
Risk-free interest rate0.9 %0.8 %
Volatility90.00 %90.00 %
Remaining term (in years)4.795.00
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
The following table presents the changes in earnout liability during the nine months ended September 30, 2021 (in thousands):
Balance as of July 16, 2021$188,373 
Change in estimated fair value(73,359)
Balance as of September 30, 2021$115,014 
The Company performs routine procedures such as comparing prices obtained from independent sources to ensure that appropriate fair values are recorded.

Note 5 —12. Commitments and Contingencies

Underwriting Agreement
Legal Proceedings

The underwriters are entitledFrom time to a deferred fee of $0.35 per Unit,time, the Company may become involved in legal proceedings or $7,900,376be subject to claims in the aggregate. The deferred fee will become payableordinary course of business. While the Company is a party to current legal proceedings as discussed more fully below, the Company does not believe that these proceedings, if determined adversely to the underwriters from the amounts heldCompany, would individually or in the Trust Account solely inaggregate have a material adverse effect on the event thatCompany’s business, financial condition, or results of operations. Regardless of outcome, such proceedings or claims can have an adverse impact on the Company completes an Initial Business Combination, subjectbecause of legal defense and settlement costs, diversion of resources and other factors, and there can be no assurances that favorable outcomes will be obtained.
Prior to the termscompletion of the underwriting agreement.
Business Combination Agreement
On February 8, 2021, the Company entered into a business combination agreement and plan of reorganization (the “Business Combination Agreement”) with DCRB Merger Sub Inc., a Delaware corporation and our wholly owned subsidiary (“Merger Sub”), and Hyzon Motors, Inc., a Delaware corporation (“Legacy Hyzon”), pursuant to which Merger Sub will be merged with and into Legacy Hyzon (the “Merger,” together with the other transactions related thereto, the “Proposed Transactions”), with Legacy Hyzon surviving the Merger as our wholly owned subsidiary. The parties completed the Proposed Transactions on July 16, 2021 following the Company’s stockholders approval of the Proposed Transactions on July 15, 2021.
Please see the Form
8-K
filed with the SEC on July 16, 2021 for additional information.
In connection with the Business Combination, certain of DCRB’s purported DCRB stockholders filed lawsuits against DCRB and its directors asserting claims for breaches of fiduciary duty:
duty (Lanctot v. Decarbonization Plus Acquisition Corp. et al
.al., Index No. 652070/2021 (N.Y. Sup. Ct., N.Y. Cnty.) and
County); Pham v. Decarbonization Plus Acquisition Corp. et al
.al., Case No. 21-CIV-01928No.21-CIV-01928 (Cal. Sup. Ct., San Mateo Cnty.County)). These complaints allege that the DCRB board members breached their fiduciary duties by in connection with the merger by allegedly agreeing to the transaction following an inadequate process and at an unfair price, and by allegedly disseminating inaccurate or incomplete information concerning the transaction. These complaints seek, among other things, injunctive relief, damages, and an award of attorneys’ fees. The defendants in these cases have not yet answered these complaints and we believethe Company believes that these pending and threatened lawsuits are without merit.

On September 28, 2021, Blue Orca Capital released a report indicating that it held a short position in the Company’s stock and making numerous allegations about the Company. On October 5, 2021, the Company issued a press release denying the allegations and correcting numerous false claims and assertions in the report. Two related putative securities class action lawsuits were filed against the Company, certain of its current officers and directors and certain officers and directors of DCRB between September 30, 2021, and October 13, 2021, in the U.S. District Court for the Western District of New York (Kauffmann v. Hyzon Motors Inc., et al. (No.6:21-cv-06612-CJS); Brennan v. Hyzon Motors Inc., et al. (No.6:21-cv-06636-CJS)) asserting violations of federal securities laws under Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 thereunder. The complaints generally allege that the Company and individual defendants made materially false and misleading statements relating to the nature of its customer contracts, vehicle orders and sales and earnings projections, based on allegations in the Blue Orca Capital report. The Company intends to vigorously defend against these claims.

Risks and Uncertainties27
The proceedings are subject to uncertainties inherent in the litigation process. The Company continues to evaluatecannot predict the impactoutcome of the
COVID-19
pandemic onthese matters or estimate the industrypossible loss or range of possible loss, if any.

Note 13. Stock-based Compensation Plans

2020 Stock Incentive Plan

In January 2020, Legacy Hyzon adopted the 2020 Stock Incentive Plan (the “2020 Plan”) under which employees, directors, and has concluded that while itconsultants may be granted various forms of equity incentive compensation including incentive and non-qualified options.

A total number of 16,250,000 shares of common stock were reserved for awards under the 2020 Plan. Shares of common stock issued under the Plan may be either authorized but unissued shares or reacquired common stock of Legacy Hyzon. Under the 2020 Plan, the exercise period of options is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of operations and/or search for a target company, the specific impact was not readily determinable as ofdetermined when granted, and options expire no later than fifteen years from the date of these condensed consolidated financial statements. These condensed consolidated financial statements dogrant, subject to terms and limitations relative to termination of service and ownership percentages of the voting power of all classes of Legacy Hyzon’s stock.
The 2020 Plan was terminated in connection with the Business Combination in July 2021, and Legacy Hyzon will not includegrant any adjustments that might resultadditional awards under the 2020 Plan. Any ungranted shares under the 2020 plan expired. However, the 2020 Plan will continue to govern the terms and conditions of the outstanding awards previously granted under it. At the closing of the Business Combination, the outstanding awards under the 2020 Plan were converted at an Exchange Ratio of 1.772. Share and per share information below have been converted from historical disclosure based on the outcomeExchange Ratio.

2021 Equity Incentive Plan

The 2021 Equity Incentive Plan (the “2021 Plan”) was approved by the Board of this uncertainty.
Note 6 — Stockholders’ Equity
Common Stock
On October 19, 2020,Directors on June 24, 2021, and subsequently approved by the Company amendedstockholders on July 15, 2021. The 2021 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, RSU and restated its certificate of incorporationperformance awards to among other things, increase the Company’s employees, directors, and consultants. The number of authorizedshares of the Company’s common stock reserved for issuance under the 2021 Plan is 23,226,543 shares. In connection with the Business Combination, 21,339,493 shares of Class A common stock from 200,000,000subject to 250,000,000.outstanding equity awards granted under the 2020 Plan are converted into equity awards under the 2021 Plan. The authorized common stock of the Company includes up to 250,000,000 shares of Class A common stock with a par value of $0.0001 per share and 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. If the Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business Combination) be required to increase the number of shares of Class A common stock whichavailable for issuance under the 2021 Plan will also include an annual increase on the first day of each year beginning in 2022 and ending in 2031, equal to the lesser of (A) two and one-half percent of the shares outstanding on the last day of the immediately preceding fiscal year and (B) such smaller number of shares as determined by the Board of Directors.
Former CTO Retirement Agreement

In September 2021, the Company is authorizedand former Chief Technology Officer (“former CTO”) entered into a Letter Agreement (the “Agreement”) concerning the former CTO’s retirement and separation from Hyzon. Pursuant to issue at the same timeAgreement, for a period of 24 months commencing on September 18, 2021 (the “Initial Consulting Period”), he will serve as the Company’s stockholders vote ona consultant to Hyzon. In exchange for services provided during the Initial Business CombinationConsulting Period, he will receive $20,000 per month. Subject to conditions of the Letter Agreement, the 1,772,000 stock options previously granted pursuant to his employment agreement with the Company will continue to vest annually in equal installments from April 1, 2022 through April 1, 2025. He also will be entitled to receive 250,000 RSUs of Hyzon, half of which vested after his retirement date and half of which will vest on or after the one-year anniversary of his retirement date. The service condition in the Agreement related to the extentvesting of these awards was determined to be non-substantive, and therefore, the Company seeks stockholder approvalrecognized stock-based compensation expense of $13.4 million immediately in connectionSeptember 2021. In addition, the Company recognized salary expense of $0.5 million related to his monthly consulting payments.

Stock-based Compensation Activities

During the three months ended September 30, 2021, the Company did not grant any stock options. During the nine months ended September 30, 2021, the Company granted 134,672 stock options with a weighted average grant date fair value of $1.68 per share that vest over five years. During the Initial Business Combination. Holdersthree months ended September 30, 2021, 221,500 options were exercised resulting in proceeds of $0.3 million, and 107,206 options were forfeited or replaced. During the nine months ended September 30, 2021, 354,409 options were exercised resulting in proceeds of $0.4 million, and 174,542 options were
28
forfeited or replaced. There was no option activity in the three months ended September 30, 2020, or the period from inception (January 21, 2020) to September 30, 2020.

During the three months ended September 30, 2021, the Company granted 864,765 RSUs with a weighted average grant date fair value of $8.04 per share. During the three months ended September 30, 2021, 450,643 RSUs were forfeited. During the nine months ended September 30, 2021, the Company granted 2,622,589 RSUs with a weighted average grant date fair value of $4.44 per share. The RSUs granted during the three months and nine months ended September 30, 2021, vest over periods ranging from four to five years. The Company did not grant RSUs in the three months ended September 30, 2020, or the period from inception (January 21, 2020) to September 30, 2020.

As of September 30, 2021, there were 19,757,800 options with a weighted average exercise price of $1.13, and 2,171,946 RSUs outstanding. There were no stock options or RSUs outstanding as of September 30, 2020.

The Company recognized stock-based compensation expense, inclusive of all employees, former CTO’s awards, and earnout shares to other equity holders, of $28.1 million and $29.0 million for the three and nine months ended September 30, 2021, respectively. As of September 30, 2021, the total remaining unrecognized compensation expense related to nonvested stock-based compensation awards was $12.6 million, which is expected to be recognized over the remaining vesting period of the Company’s common stock are entitled to one vote for each sharerespective grants, through the third quarter of common stock. At June2026.

Note 14. Warrants

As of September 30, 2021, and December 31, 2020, there were 22,572,502 and 22,572,502 shares, respectively, of Class A common stock issued and19,300,742 warrants outstanding, of which 17,410,55111,286,242 are public warrants (the “Public Warrants”) and 17,521,688 shares, respectively,8,014,500 were subject to possible redemption. At June 30, 2021 and December 31, 2020, there were 5,643,125 shares of Class B common stock issued and outstanding, which reflects that on September 18, 2020, October 7, 2020, October 8, 2020 and December 3, 2020, the Sponsor returned 2,875,000, 1,437,500, 1,437,500 and 106,875 Founder Shares, respectively, to the Company at no cost.
The Sponsor and an affiliate of the Company’s chief executive officer agreed to forfeit up to an aggregate of 750,000 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters. The forfeiture would be adjusted to the extent that the over-allotment option was not exercised in full by the underwriters so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. As a result of the underwriters’ election to partially exercise their over-allotment option, 106,875 Founder Shares were forfeited.
14
Table of Contents
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
Preferred Stock
The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At June 30, 2021 and December 31, 2020, there were 0 shares of preferred stock issued or outstanding.
Warrants
Private Placement Warrants. Each whole Warrantwarrant entitles the registered holder thereof to purchase one share of the Company’s Class A common stock at a price of $11.50 per share, subject to adjustment as described in the prospectus for the Initial Public Offering.discussed below. Only whole Warrantswarrants are exercisable. The Warrantswarrants will become exercisableexpire on the laterearlier to occur of: (i) the fifth anniversary of 30 days after the completion of an Initial Business Combination or 12 months from the closing of the Initial Public Offering, and will expire five years after the completion of the InitialCompany’s Business Combination, or earlier upon(ii) their redemption or liquidation, as described in(iii) the prospectus for the Initial Public Offering. No fractional Warrants will be issued upon separationliquidation of the units and only whole Warrants will trade.
Company.
The exercise price of each Warrant is $11.50 per share, subject to adjustment as described in the prospectus for the Initial Public Offering. In addition, if the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of an Initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by th
e
 Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “newly issued price”), the exercise price of the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the newly issued price.
The Warrants will become exercisable on the later of:
30 days after the completion of the Initial Business Combination or,
12 months from the closing of the Initial Public Offering.
provided in each case that we have an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder (or the Company permits holders to exercise their Warrants on a cashless basis under the circumstances specified in the Warrant agreement).
As of June 30, 2021, the Company had not registered the shares of Class A common stock issuable upon exercise of the Warrants. However, the Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of an Initial Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Warrants in accordance with the provisions of the Warrant agreement. Notwithstanding the above, if the Company’s Class A common stock is at the time of any exercise of a Warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at the Company’s option, require holders of the Public Warrants who exercise their Warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
The Warrants will expire at 5:00 p.m., New York City time, five years after the completion of an Initial Business Combination or earlier upon redemption or liquidation. On the exercise of any Warrant, the Warrant exercise price will be paid directly to the Company and not placed in the Trust Account.
Once the Warrantswarrants become exercisable, the Company may redeem the outstanding Warrantswarrants for cash (except as described in the prospectus for the Initial Public Offering with respect to the Private Placement Warrants):
cash:

15
Table of Contents
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
In•in whole and not in part;

At•at a price of $0.01 per Warrant;
warrant;
Upon•upon a minimum of 30 days’ prior written notice of redemption, referredwhich the Company refers to as the
30-day
“30-day redemption period;period”; and

•if, and only if, the last reported sale price of the Company’s Class A common stock equals or exceedshas been at least $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for anyon each of 20 trading days within a
the 30-trading
day period ending on the third tradingbusiness day prior to the date on which the Company sends the notice of redemption to the warrantholders.
is given.

The Company will not redeem the Warrants for cash unless a registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the
30-day
redemption period. If and when the Warrants become redeemable by the Company, the Company may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Except as described in the prospectus for the Initial Public Offering, none of the Private Placement Warrants will be redeemable by the Company so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees.
Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described in the prospectus for the Initial Public Offering with respect to the Private Placement Warrants):
common stock:

•in whole and not in part;

•at a price of $0.10 per Warrant, provided that holders will be able to exercise their Warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock determined by reference to the table set forth in the warrant agreement based on the redemption date and the “fair market value” of the Company’s Class A common stock (as defined below) except as otherwise described in the warrant agreement;
warrant;

•upon a minimum of 30 days’ prior written notice of redemption;
•if, and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrantholders;is given; and

•if the last sale price of the Company’s Class A common stock on the trading day prior to the date on which the Company sends the notice of redemption to the warrantholdersis given is less than $18.00 per share (as adjusted for stock splits, stock dividends,
29
reorganizations, recapitalizations, and the like), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Warrants, as described above.
Public Warrants.

The “fair market value”terms of the Company’s Class A common stock shall mean the average reported last sale price of the Company’s Class A common stock for the 10 trading days immediately following the date on which the notice of redemption is sent to the holders of Warrants.
No fractional shares of Class A common stock will be issued upon redemption. If, upon redemption, a holder would be entitled to receive a fractional interest in a share, the Company will round down to the nearest whole number the number of shares of Class A common stock to be issued to the holder.
As of June 30, 2021 and December 31, 2020, there
were 11,286,251 Public Warrants and 6,514,500 Private Placement Warrants outstanding. The Company classifies the outstanding Public Warrants and Private Placement Warrants as warrant liabilities on the Balance Sheet in accordance with the guidance contained in ASC
815-40.
The Warrant liabilities are initially measured at fair value upon the closing of the Initial Public Offering and subsequently
re-measured
at each reporting period using a Monte-Carlo model. The Public Warrants were recorded as a liability at fair value. The Company recognized gains (losses) in connection with changes in the fair value of Warrant liabilities
of $6,824,865 and $7,163,449
within change in fair value of Warrant liabilities in the condensed consolidated Statements of Operations during the three months ended and six months ended June 30, 2021, respectively.
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering,as described above, except that the Private Placement Warrants and the common shares issuable upon the exercise of the Private Placement Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and will be non-redeemableredeemable (except as described above) so long as they are held by the initial purchaserssponsor or theirits permitted transferees. If

The Public Warrants are classified as equity and subsequent remeasurement is not required. The Private Placement Warrants are classified as liabilities and are initially recorded at their fair value, within warrant liability on the Condensed Consolidated Balance Sheets, and remeasured at each subsequent reporting date. Changes in the fair value of these instruments are recognized within Change in fair value of warrant liabilities in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The fair value of the Private Placement Warrants on July 16, 2021, in the amount of $19.4 million was recorded as a Private placement warrant liability and a reduction to Additional paid-in capital on the Condensed Consolidated Balance Sheets. The change in fair value for the three and nine months ended September 30, 2021, in the amount of $7.6 million was recorded as a reduction in Private placement warrant liability on the Condensed Consolidated Balance Sheets and a gain from change in fair value of private placement warrant liability on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Note 15. Related Party Transactions

Horizon IP Agreement

In January 2021, the Company entered into an intellectual property agreement (the “Horizon IP Agreement”) with Jiangsu Qingneng New Energy Technologies Co., Ltd. and Shanghai Qingneng Horizon New Energy Ltd. (together, “JS Horizon”) both of which are heldaffiliates of the Company’s ultimate parent, Horizon. Under the Horizon IP Agreement, JS Horizon assigned to the Company a joint ownership interest in certain intellectual property rights previously developed by someoneJS Horizon (“Background IP”), and each of Hyzon and JS Horizon granted to the other, thanwithin such other party’s field of use, exclusive licenses under their respective joint ownership rights in the initial purchasers orBackground IP, as well as their permitted transferees,rights in improvements made in the Private Placement Warrants will be redeemablefuture with respect to such Background IP. Under that agreement, the Company also grants JS Horizon a perpetual non-exclusive license under certain provisional patent applications (and any patents issuing therefrom), as well as improvements thereto. On September 27, 2021, the Horizon IP Agreement was amended to add Jiangsu Horizon Powertrain Technologies Co. Ltd. (“JS Powertrain”) as a party.

The Horizon IP Agreement revised and clarified the intellectual property arrangements existing as of the Company’s inception, as set forth under two previous agreements. Under a license agreement made effective at the time of the Company’s inception (the “License Agreement”), the Company received an exclusive license under certain of the Background IP. That agreement was later terminated and replaced with a Partial Assignment Agreement of Fuel Cell Technology, dated November 19, 2020 (the “Partial Assignment Agreement”), which contemplated a joint ownership structure with respect to certain of the Background IP similar to the structure set forth under the now existing Horizon IP Agreement. Both the original License Agreement and Partial Assignment Agreement have been superseded by the Horizon IP Agreement.

Under the terms of the Horizon IP Agreement, the Company will pay JS Horizon and exercisable byJS Powertrain $10 million as consideration for the rights it receives under the Background IP and improvements thereto. Subsequent to September 30, 2021, $6.9 million was paid and the remainder is expected to be paid in December 2021.

Because the Company is under common control with Horizon and JS Horizon, the cost of the intellectual property transferred should equal the historical cost of the Company’s ultimate parent, Horizon. Due to the creation of the Background IP through research and development over a long period of time, the historical cost of the intellectual property acquired is zero. As such, holdersno asset was recorded for the Background IP on the same basisCompany’s balance sheet. The difference between the fixed amounts payable to JS Horizon and JS Powertrain and the historical cost is treated as a deemed distribution to Horizon, given the Public Warrants.
common control.
1630

Related Party Payables and Receivables

Horizon Fuel Cell Technologies and Related Subsidiaries

Hyzon utilizes Horizon to supply certain fuel cell components. In March 2021, the Company made a deposit payment to Horizon in the amount of $5.0 million to secure fuel cell components. This payment is included in prepaid expenses as none of the components have yet been received.
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
Note 7 — Fair Value Measurements
At JuneCertain employees of Horizon and its affiliates provide services to the Company. Based on an analysis of the compensation costs incurred by Horizon and an estimate of the proportion of effort spent by such employees on each entity, an allocation of approximately $1.2 million and $0.1 million was recorded in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) related to such services for the three months ended September 30, 2021, and September 30, 2020, respectively. An allocation of approximately $1.8 million and $0.4 million was recorded in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) related to such services for the nine months ended September 30, 2021, and the period from inception (January 21, 2020) to September 30, 2020, respectively. The related party liability to Horizon and affiliates is $3.8 million and $0.6 million as of September 30, 2021, and December 31, 2020, assets heldrespectively.

Holthausen and Affiliates

The Company entered into a joint venture agreement in the Trust Account were comprised
October 2020 to create Hyzon Europe with Holthausen. As Hyzon Europe builds out its production facilities, it relies on Holthausen for certain production resources that result in related party transactions. In addition, both companies rely on certain suppliers, including Horizon.

In July 2021, Hyzon Europe assumed certain retrofit service contracts from Holthausen Clean Technology B.V. The Company incurred $0.1 million to acquire these contracts.

As of $225,734,427
and $225,727,721, respectively, in money market funds which are invested in U.S. Treasury Securities. Through JuneSeptember 30, 2021, the Company has not withdrawn any interest earned ona net related party payable in the Trust Accountamount of $0.8 million due to pay its franchise and income tax obligations.
Holthausen.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring th
e
 fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets an
d
 liabilities:
Level 1:
Note 16. Earnings (Loss) per Share
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:
Unobservable inputs based on our assessment of the assumptions that market participants would use in    pricing the asset or liability.
The following table presents the information aboutused in the calculation of the Company’s assetsbasic and liabilities that are measureddiluted earnings (loss) per share attributable to Hyzon common stockholders (in thousands, except per share data):
Three Months Ended September 30,Nine Months Ended
September 30,
Inception
(January 21,
2020) to
September 30,
2021202020212020
Net income (loss) attributable to Hyzon$34,621 $(556)$17,053 $(854)
Weighted average shares outstanding:
Basic234,091 148,405 189,101 148,405 
Effect of dilutive securities12,389 — 11,883 — 
Diluted246,480 148,405 200,984 148,405 
Earnings (loss) per share attributable to Hyzon:
Basic$0.15 $— $0.09 $(0.01)
Diluted$0.14 $— $0.08 $(0.01)

The weighted average number of shares outstanding prior to Business Combination were converted at fair value on a recurring basis at June 30, 2021 and December 31, 2020 and indicates the fair value hierarchyan Exchange Ratio of the valuation inputs the Company utilized to determine such fair value:
1.772.
Description
  
Amount at
Fair Value
   
Level 1
   
Level 2
   
Level 3
 
June 30, 2021
                    
Assets:
                    
Marketable securities held in Trust Account—U.S. Treasury Securities Money Market Fund
   225,734,427    225,734,427    —      —   
Liabilities:
                    
Warrant Liability—Public Warrants
   25,845,515    25,845,515    —        
Warrant Liability—Private Placement Warrants
   14,918,205    —      —      14,918,205 
December 31, 2020
                    
Assets:
                    
Marketable securities held in Trust Account—U.S. Treasury Securities Money Market Fund
   225,727,721    225,727,721    —        
Liabilities:
                    
Warrant Liability—Public Warrants
   20,766,705    20,766,705    —        
Warrant Liability—Private Placement Warrants
   12,833,565    —      —      12,833,565 
The Company utilized a Monte Carlo simulation model to value the Public Warrant liabilities at the date of the Initial Public Offering and then the unadjusted, quoted price listed on the NASDAQ Capital Market for each subsequent reporting period, and utilizes a Black-Scholes model to value the Private Warrant liabilities that are categorized within Level 3 at each reporting period, with changes in fair value recognized in the Statements of Operations. The estimated fair value of the warrant liability on the Private Warrants is determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury
zero-coupon
yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.

1731
Dearbonization Plus Acquisition Corporation
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
The significant unobservable inputs usedfollowing shares were not included in the Black-Scholes model to measure the warrant liabilities that are categorized within Level 3calculation of the fair value hierarchyweighted average diluted shares outstanding as the effect would have been anti-dilutive or the shares are as follows:
contingently issuable, but all necessary conditions have not been satisfied for the periods indicated (in thousands):
   
As of
June 30,
2021
  
As of
December 31,
2020
 
Stock price
   10.31   10.60 
Strike price
   11.50   11.50 
Term (in years)
   5.1   5.4 
Volatility
   30.0%   27.8% 
Risk-free rate
   0.9%   0.4% 
Dividend yield
   0.0%   0.0% 
Fair value of warrants
   2.29   1.97 
The following table provides a summary of the changes in fair value of the warrant liabilities that are measured at fair value on a recurring basis:
Three Months Ended September 30,Nine Months Ended
September 30,		Inception
(January 21,
2020) to
September 30,
2021202020212020
Stock options and restricted stock units426 — 426 — 
Stock options with market and performance conditions5,538 — 5,538 — 
Private placement warrants8,015 — 8,015 — 
Public Warrants11,286 — 11,286 — 
Earnout shares23,250 — 23,250 — 
Ardour warrants326— 326— 

Private
Placement
(Level 3)
Public
(Level 1)
Warrant
Liabilities
Fair value as of December 31, 2020
   12,833,565    20,766,705    33,600,270 
Change in valuation inputs or other assumptions
   2,084,640    5,078,810    7,163,449 
   
 
 
   
 
 
   
 
 
 
Fair value as of June 30, 2021
   14,918,205    25,845,515    40,763,719 
   
 
 
   
 
 
   
 
 
 
There were 0 transfers between Levels 1, 2 or 3 duringIn the three months and sixnine months ended JuneSeptember 30, 2021.2020, the weighted average number of shares outstanding used to calculate both basic and diluted net loss per share attributable to common shares is the same because the Company reported a net loss for each of these periods and the effect of inclusion would be antidilutive. There were no warrants issuedpotentially dilutive securities for the three months and six monthsended September 30, 2020 or the period from inception (January 21, 2020) to September 30, 2020.

Note 17. Subsequent Events

Global NRG H2 Limited

During the quarter ended June 30, 2020.
2022, the Company determined that there was a full impairment of the Company’s $2.5 million investment in NRG. For additional information regarding the NRG investment refer to Note 8 — Subsequent Events
Management has evaluated9. Investments in Equity Securities to the impact of subsequent events through the date these condensed consolidated financial statements were available to be issued. All subsequent events required to be disclosed are included in these condensed consolidated financial statements.

Holthausen and Affiliates
Business Combination

In December 2022, the Company acquired the remaining 49.5% stake, or 1,485,000 A Shares par value €0.01 in Hyzon Europe from Holthausen. The Company now holds 100% ownership in Hyzon Europe. The consideration paid by the Company to Holthausen was €5.52 million (approximately $5.84 million in USD), consisting of €4.50 million (approximately $4.76 million in USD) in cash, including prepaid balances, and €1.02 million (approximately $1.08 million in USD) (excluding any VAT) of certain inventory. In addition, Hyzon Europe transferred all of the assumed retrofit service contracts including after-sales obligations back to Holthausen Clean Technology B.V. upon closing of the transaction.

Delaware Court of Chancery Section 205

On July 16, 2021 (the “Closing Date”)February 13, 2023, the Company filed a petition under the caption In re Hyzon Motors Inc., we consummatedC.A. No. 2023-0177-LWW (Del. Ch) in the previously announced business combination (the “Business Combination”)Delaware Court of Chancery pursuant to that certain business combination agreement, dated February 8, 2021 (the “Business Combination Agreement”), with Merger Sub and Legacy Hyzon, pursuant to which Merger Sub was merged with and into Legacy Hyzon, with Legacy Hyzon surviving the Merger as a wholly owned subsidiary of DCRB. On the Closing Date, the DCRB changed its name from Decarbonization Plus Acquisition Corporation to Hyzon Motors, Inc. (“New Hyzon”).
At the effective timeSection 205 of the Merger (the “Effective Time”Delaware General Corporation Law (“DGCL”), each sharewhich permits the Court of Legacy Hyzon’s Common Stock, par value $0.001 per share (“Legacy Hyzon Common Stock”) issued and outstanding immediately priorChancery, in its discretion, to validate potentially defective corporate acts due to developments regarding potential interpretations of the Effective Time (including any shares of Legacy Hyzon Common Stock resultingDGCL stemming from the conversionCourt’s recent decision in Garfield v. Boxed, Inc., 2022 WL 17959766 (Del. Ch. Dec. 27, 2022). On March 6, 2023, the Court of the options to purchase outstanding shares of Legacy Hyzon Common Stock (“Ascent Option”), but excludingChancery granted our petition, holding that any shares of Legacy Hyzon Common Stock resulting from the conversion of Legacy Hyzon’s outstanding convertible notes (the “Convertible Notes”)) was converted into the right to receive 1.7720 shares of Class A Common Stock, par value $0.0001 per share, of New Hyzon (“New Hyzon Class A Common Stock”) (the “Exchange Ratio”) and the contingent right to receive additional shares of New Hyzon Class A Common Stock as additional consideration upon the occurrence of certain triggering events (“Earnout Shares”). Additionally, each share of common stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time was converted and exchanged for one validly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of Legacy Hyzon.
Earnout
During the five-year period following the Closing Date (the “Earnout Period”), the Company will issue to eligible holders of securities of New Hyzon up to 23,250,000 Earnout Shares, in three tranches of 9,000,000, 9,000,000 and 5,250,000 Earnout Shares, respectively, upon the Company achieving $18, $20 or $35 as its last reported sales price per share for any twenty (20) trading days within any thirty (30) consecutive trading day period within the Earnout Period; provided,defects that in no event will the issuance of the 5,250,000 Earnout Shares occur prior to July 16, 2022, which is the one year anniversary of the date of the Closing Date.
PIPE Financing
On July 16, 2021, a number of purchasers (each, a “Subscriber”) purchased an aggregate of 35,500,000 shares of DCRB Class A Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $355,500,000 (the “PIPE Financing”), pursuant to separate subscription agreements (each, a “Subscription Agreement”) entered into on February 8, 2021. Pursuant to the Subscription Agreements, we gave certain registration rights to the Subscribersmay have existed with respect to the PIPE shares. The purposeconduct of the PIPE Financing wasSpecial Meeting of Shareholders held on July 15, 2021 to raise additionalapprove the increase in the Company’s authorized share capital for use by the combined company following the Closing Date. Concurrently with the closingwere ratified as of the PIPE Financing,meeting.

The Company continues to believe that, notwithstanding the Convertible Notes automatically converted to approximately 5.02 million sharesrelief the Delaware Court of New Hyzon Class A Common Stock.
In July 2021, the Sponsor transferred $1,332,715 of working capital loansChancery granted to the Company to reimburse costsunder Section 205, at the time of an affiliate.DCRB Shareholder Meeting on July 16, 2021, the increase in the Company’s authorized share capital was validly approved by DCRB’s shareholders under Delaware law.

32
18
Table of Contents
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
References to the “Company,” “our,” “us” or “we” refer to Hyzon Motors, Inc. (f/k/a Decarbonization Plus Acquisition Corporation), except where the context requires otherwise. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto contained in Item 1. of this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form
10-Q
includesreport contains forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amendedamended. These statements include, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this report, the words “could,” “should”, “will,” “may,” “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” “project,” the negative of such terms and other similar expressions are intended to identify forward looking statements, although not all forward-looking statements contain such identifying words. Such forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.
Except with respect to statements in this Form 10-Q/A revised or provided to reflect the effects of the Restatement, forward-looking statements herein are as of the Original Filing, filed with the SEC on November 15, 2021, unless specifically stated to be made as of a different date, and the Company has not updated forward-looking statements or information to reflect events occurring after the Original Filing.

Forward-looking statements are subject to a number of risks and uncertainties including, but not limited to, those described below and under the sections entitled “Risk Factors “and “Cautionary Note Regarding Forward-Looking Statements” included in the Definitive Proxy Statement (the “Exchange Act”“Proxy”). We have based these of DCRB filed with the SEC on June 21, 2021 and in subsequent reports that we file with the SEC, including this Form 10-Q/A for the quarter ended September 30, 2021.

•our ability to commercialize our strategic plans, including our ability to establish facilities to produce our vehicles or secure hydrogen supply in appropriate volumes, at competitive costs or with competitive emissions profiles;

•our ability to effectively compete in the heavy-duty transportation sector, and intense competition and competitive pressures from other companies worldwide in the industries in which we operate;

•our ability to maintain the listing of our common stock on Nasdaq;
•our ability to raise financing in the future;

•our ability to retain or recruit, or changes required in, our officers, key employees or directors; and

•our ability to protect, defend or enforce intellectual property on which we depend

Should one or more of the risks or uncertainties described above, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.

The forward-looking statements contained in this report are based on our current expectations and projections aboutbeliefs concerning future events. These forward-lookingdevelopments and their potential effects on us and speak only as of the date of this report. Except as otherwise required by applicable law, we disclaim any duty to update any forward looking statements, all of which are subjectexpressly qualified by the statements in this section, to knownreflect events or circumstances after the date of this report. You should, however, review additional disclosures we make in subsequent filings with the SEC.

The following discussion and unknown risks, uncertaintiesanalysis provides information that management believes is relevant to an assessment and assumptions about us that may causeunderstanding of our actualconsolidated results levels of activity, performance or achievementsoperations and financial condition. This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto included as a part of the Form 10-Q/A to be materially different from any future results, levelswhich this Management’s Discussion and Analysis of activity, performance or achievements expressed or implied by such forward-lookingFinancial Condition and Results of Operation is attached. Unless the context otherwise requires, all references in this section to “Hyzon,” “we,” “us,” and “our” are intended to mean the business and operations of Hyzon Motors Inc. and its consolidated subsidiaries following the consummation of the Business Combination and to Legacy Hyzon and its consolidated subsidiaries prior to the Business Combination.

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Restatement

The accompanying Management’s Discussion and Analysis (“MD&A”) of Financial Condition and Results of Operations has been adjusted to give effect to the Restatement of the unaudited condensedconsolidated financial statements for the periods ended September 30, 2021. For additional information and a detailed discussion of the Restatement, refer to the Explanatory Note and Note 2. Restatement of Previously Issued Financial Statements to the condensed consolidated financial statements. In some cases, you can identify forward-looking statements by terminology

Overview

Headquartered in Rochester, New York, with operations in North America, Europe, and Australasia, Hyzon is an energy transition accelerator and technology innovator, providing end-to-end solutions primarily for the commercial mobility sector. We operate two lines of businesses: commercial vehicles and hydrogen supply infrastructure.

Our commercial vehicle business is focused primarily on assembling and supplying battery-electric vehicles and FCEVs, such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,”heavy-duty (Class 8) trucks, medium-duty (Class 6) trucks, light-duty (Class 3) trucks, and 40- and 60-foot (12 and 18-meter) city and coach buses to commercial vehicle operators. We also provide services that retrofit ICE vehicles to FCEVs.

On-road, our potential customers include shipping and logistics companies and retail customers with large distribution networks, such as grocery retailers, food and beverage companies, waste management companies, and municipality and government agencies around the world. Off-road, our potential customers include mining and port equipment manufacturers and operators. These strategic customer groups generally employ a ‘back-to-base’ model where their vehicles return to a central base or depot between operations, thereby allowing operators to have fueling independence as the negativenecessary hydrogen can be produced locally at or proximate to the central base and dispensed at optimally-configured hydrogen refueling stations. Our fuel cell technologies are also compatible with light commercial vehicles among other applications. Hyzon plans to expand its range of such terms orproducts and hydrogen solutions if the transportation sector increasingly adopts hydrogen power and investments are made in hydrogen production and related infrastructure in accordance with our expectations.

In addition, we perform integration for rail and aviation customers and plan to expand our integration activities across maritime and other similar expressions. Factors that might cause or contributeapplications in the future. We expect the opportunities in these sectors to suchcontinue to expand with the rapid technological advances in hydrogen-powered fuel cells and the increasing investments in hydrogen production, storage and refueling infrastructure around the world.

Our hydrogen supply infrastructure business is focused on building and fostering a discrepancy include, but are not limitedclean hydrogen supply ecosystem with leading partners from feedstock through hydrogen production, dispensing and financing. We collaborate with strategic partners on development, construction, operation, and ownership of hydrogen production facilities and refueling stations in each major region of our operations, which intends to those described incomplement our other Securitiesback-to-base model and Exchange Commission (“SEC”) filings.
Overview
We are a former blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.near-term fleet deployment. On July 16,29, 2021, we consummatedthe Company entered into a Master Hub Agreement with Raven SR, LLC (“Raven SR”) whereby Raven SR granted to the Company a right of first refusal to co-invest in up to 100 of Raven SR’s first 200 solid waste-to-hydrogen production hubs, and up to 150 of Raven SR’s gas-to-hydrogen production hubs across the United States on a hub-by-hub basis. In connection with this agreement, Hyzon invested $2.5 million on July 30, 2021, to acquire a minority interest in Raven SR. We expect near-term realization of the first waste-to-hydrogen production hub constructed by Raven SR coming online in Richmond, CA, with 5 tons per day of zero Carbon Intensity green hydrogen available for our near-term back-to-base fleets at diesel parity, in 2022.

Business Combination

On February 8, 2021, Legacy Hyzon, now Hyzon Motors USA Inc. (“Legacy Hyzon”) entered into the Business Combination with Legacy Hyzon.
Recent Developments
Business Combination
On July 16, 2021 (the “Closing Date”), we consummated the previously announced business combinationAgreement and Plan of Reorganization (the “Business Combination”) pursuant to that certain business combination agreement, dated February 8, 2021 (the “Business Combination Agreement”),with DCRB and Merger Sub and Legacy Hyzon, pursuant to which Merger Sub was merged with and into Legacy Hyzon, with Legacy Hyzon surviving the Mergermerger as a wholly owned subsidiary of DCRB. OnThe transaction closed on July 16, 2021. Following the Closing Date,close of the business combination, DCRB changed its name from Decarbonization Plus Acquisition Corporation tohas been named Hyzon Motors Inc. (“New Hyzon”).
At, began trading on Nasdaq, and its common stock and warrants trade under the effective timesymbols “HYZN” and “HYZNW”, respectively. The Business Combination generated proceeds of the Merger (the “Effective Time”), each shareapproximately $509.0 million cash, net of Legacy Hyzon’s Common Stock, par value $0.001 per share (“Legacy Hyzon Common Stock”) issuedtransaction costs allocated to equity and outstanding immediately prior to the Effective Time (including any sharesredemptions by DCRB’s public stockholders. This includes an aggregate of Legacy Hyzon Common Stock resulting$355 million of gross proceeds from the conversion of the optionsPIPE Financing at $10.00 per PIPE Share. Hyzon’s cash on hand after giving effect to purchase outstanding shares of Legacy Hyzon Common Stock (“Ascent Option”), but excluding any shares of Legacy Hyzon Common Stock resulting from the conversion of Legacy Hyzon’s outstanding convertible notes (the “Convertible Notes”)) was converted into the rightthis transaction, including transaction costs and expenses, is expected to receive 1.7720 shares of Class A Common Stock, par value $0.0001 per share, of New Hyzon (“New Hyzon Class A Common Stock”) (the “Exchange Ratio”) and the contingent right to receive additional shares of New Hyzon Class A Common Stock as additional consideration upon the occurrence of certain triggering events (“Earnout Shares”). Additionally, each share of common stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time was converted and exchangedbe used for one validly issued, fully paid and nonassessable share of common stock, par value $0.001 per share, of Legacy Hyzon.
general corporate
Earnout34
During the five-year period following the Closing Date (the “Earnout Period”), the Company will issue to eligible holders of securities of New Hyzon up to 23,250,000 Earnout Shares, in three tranches of 9,000,000, 9,000,000 and 5,250,000 Earnout Shares, respectively, upon the Company achieving $18, $20 or $35 as its last reported sales price per share for any twenty (20) trading days within any thirty (30) consecutive trading day period within the Earnout Period; provided, that in no event will the issuance of the 5,250,000 Earnout Shares occur prior to July 16, 2022, which is the one year anniversary of the date of the Closing Date.
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Table of Contents
purposes, including developing infrastructure and supply chain, acquiring and leasing equipment for manufacturing, and investing in research and development.

COVID-19 Pandemic
The COVID-19 pandemic is currently impacting countries, communities, supply chains, and the global financial markets. Governments have imposed laws requiring social distancing, travel restrictions, shutdowns of businesses and quarantines, among others, and these laws may limit our ability to meet with potential customers or partners, or affect the ability of our personnel, suppliers, partners and customers to operate in the ordinary course of business. Although the economy has begun to recover, the severity and duration of the related global economic crisis is not fully known. The COVID-19 pandemic is expected to continue to have residual negative impacts, in particular the supply chain continues to face disruptions. Rebounding demand in key components challenge the supply base and supply chain with short notice and increasing volume levels. The supply constraints include overseas freight congestion causing extended lead times, semiconductor allocation, other raw/component material shortages and supplier staffing challenges.

The COVID-19 pandemic and measures to prevent its spread have had the following impact on our business:

•Our workforce. Employee health and safety is our priority. In response to COVID-19, we established new protocols to help protect the health and safety of our workforce. We will continue to stay up-to-date and follow local, CDC, or WHO guidelines regarding safe work environment requirements.
•Operations and Supply Chain. We continue to experience some delays in our supply chains which may temporarily limit our ability to outfit vehicles and fuel cell systems with key components. However, our global footprint has allowed us to leverage our strategic partnerships and to meet customer demands for zero emission heavy commercial vehicles despite these challenges. In the future, we may experience supply chain disruptions from related or third-party suppliers and any such supply chain disruptions could cause delays in our development and delivery timelines. We continue to monitor the situation for any potential adverse impacts and execute appropriate countermeasures, where possible.

While we have experienced some operational challenges, the long-term implications of the COVID-19 pandemic on our workforce, operations and supply chain, as well as demand remain uncertain. These factors may in turn have a material adverse effect on our results of operations, financial position, and cash flows.

Key Trends and Uncertainties

We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section entitled “Risk Factors — Risks Related to Hyzon” included in the Proxy of DCRB filed with SEC on June 21, 2021.

Commercial Launch of Hyzon-branded commercial vehicles and other hydrogen solutions

Our business model has yet to be tested. Prior to full commercialization of our commercial vehicle business at scale, we must complete the construction of required manufacturing facilities and achieve research and development milestones. We must establish and operate facilities capable of producing our hydrogen fuel cell systems or assembling our hydrogen-powered commercial vehicles in appropriate volumes and at competitive costs.

Until we can generate sufficient additional revenue from our commercial vehicle business, we expect to finance our operations through equity and/or debt financings. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts. We expect that any delays in the successful completion of our manufacturing facilities, availability of critical parts, and/or validation and testing will impact our ability to generate revenue.

Hydrogen Production & Supply Infrastructure

We continue to develop an end-to-end hydrogen ecosystem delivery model, with a partner-driven approach to design, build, own & operate hydrogen production hubs and downstream dispensing infrastructure expected to provide zero-to-
PIPE Financing35
negative carbon intensity hydrogen at below diesel-parity cost structures supporting Hyzon vehicle fleet deployments. We intend to continue forming additional partnerships across the full hydrogen feedstock, production & dispensing lifecycle in each major region in which we operate, designed to ensure that the hydrogen fuel required is available at the cost and carbon intensity requirements to drive fleet conversions to Hyzon hydrogen fuel cell commercial vehicles. Given we have a partner-driven approach, we are naturally reliant upon our partners’ performance in fulfilling the obligations that we depend on for delivery of each segment of that value chain. Additionally, consistent with other construction projects there are risks related to realized construction cost and schedule that can impact final cost to produce and deliver hydrogen and timing of that delivery, along with the availability of feedstock near our vehicle fleet deployments. We intend to manage these risks by partnering with high quality and high performing partners with a track record of timely delivery and instituting commercial agreements to drive down construction cost and on-time schedule performance.

Continued Investment in Innovation

We believe that we are the industry-leading hydrogen technology company with the most efficient and reliable fuel cell powertrain technologies and an unmatched product and service offering. Our financial performance will be significantly dependent on our ability to maintain this leading position. We expect to incur substantial and increasing research and development expenses and stock-based compensation expenses as a result. We dedicate significant resources towards research and development and invest heavily in recruiting talent, especially for vehicle design, vehicle software, fuel cell system, and electric powertrain engineers. We will continue to recruit and retain talented engineers to grow our strength in our core technologies. We expect to incur additional stock-based compensation expenses as we support our growth and status as a publicly traded company. We expect our strategic focus on innovation will further solidify our leadership position.

Customer Demand

We have received significant interest in our commercial vehicles and are able to convert non-binding letters of intent or memoranda of understanding into binding orders or sales. However, while we are continually seeking to expand our customer base, we depend on a few major customers and we expect this will continue for the next several years. As of September 30, 2021, a number of purchasers (each, a “Subscriber”) purchasedHyzon has received orders from customers in an aggregate value of 35,500,000 shares of DCRB Class A Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per shareapproximately $14.6 million from companies around the world, and an aggregate purchase price of $355,500,000 (the “PIPE Financing”), pursuant to separate subscription agreements (each, a “Subscription Agreement”) entered into on February 8, 2021. Pursuant to the Subscription Agreements, we gave certain registration rights to the SubscribersHyzon’s customers have paid $7.8 million in deposits with respect to such orders.

Supplier Relationships

We also depend on third parties, including our majority beneficial shareholder and parent company Horizon, for supply of key inputs and components for our products, such as fuel cells and automotive parts. We intend to negotiate potential relationships with industry-leading original equipment manufacturers (“OEMs”) to supply chassis for our Hyzon-branded vehicles but do not yet have any binding agreements and there is no guarantee that definitive agreements will be reached. Such suppliers, including Horizon, may be unable to deliver the PIPE shares. inputs and components necessary for us to produce our hydrogen-powered commercial vehicles or hydrogen fuel cell systems at prices, volumes, and specifications acceptable to us. If we are unable to source required inputs and other components from third parties on acceptable terms, it could have a material adverse effect on our business and results of operations.

The purposeautomotive industry continues to face supply chain disruption. We are experiencing increases in both the cost and time to receive of raw materials, such as semiconductors or chassis. Any such increase or supply interruption could materially negatively impact our business, prospects, financial condition and operating results. Many of the PIPE Financing wasparts for our products are sourced from suppliers in China and the manufacturing situation in China remains uncertain.

Market Trends and Competition

The last ten years have seen the rapid development of alternative energy solutions in the transportation space. We believe this growth will continue to raiseaccelerate as increased product offerings, technological developments, reduced costs, additional capital for usesupporting infrastructure, and increased global focus on climate goals drive broader adoption.
We believe that commercial vehicle operators, its initial target market, will be driven towards hydrogen-powered commercial vehicles predominantly by the combinedneed to decarbonize activities, but also by the potential for lower total cost of ownership in comparison to the cost of ownership associated with traditional gasoline and diesel ICE vehicles. Our fuel cell
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technology can be deployed across a broad range of mobility applications, including on-road, off-road, rail, maritime and aviation.

The competitive landscape for our commercial vehicles ranges from vehicles relying on legacy ICEs, to extended range electric and battery electric engines, to other hydrogen fuel cell and alternative low-to-no carbon emission propulsion vehicles. Competitors include well established vehicle companies already deploying vehicles with internal fuel cell technology and other heavy vehicle companies that have announced their plans to offer fuel cell trucks in the future. We also face competition from other fuel cell manufacturers. We believe that our company followingis well positioned to capitalize on growth in demand for alternative low-to-no carbon emission propulsion vehicles due to the Closing Date. Concurrentlynumerous benefits of hydrogen power, including hydrogen’s abundance and ability to be produced locally and the generally faster refueling times for hydrogen-powered commercial vehicles, as compared to electricity-powered vehicles. However, in order to successfully execute on our business plan, we must continue to innovate and convert successful research and development efforts into differentiated products, including new commercial vehicle models.

Our current and potential competitors have greater financial, technical, manufacturing, marketing and other resources. Our competitors may be able to deploy greater resources to the design, development, manufacturing, distribution, promotion, sales, marketing and support of their internal combustion, alternative fuel and electric truck programs.
Regulatory Landscape

We operate in a highly regulated industry. The failure to comply with laws or regulations, including but limited to rules and regulations covering vehicle safety, emissions, dealerships, and distributors, could subject us to significant regulatory risk and changing laws and regulations and changing enforcement policies and priorities could adversely affect our business, prospects, financial condition and operating results. We may be also required to obtain and comply with the closingterms and conditions of multiple environmental permits, many of which are difficult and costly to obtain and could be subject to legal challenges. We depend on global customers and suppliers, and adverse changes in governmental policy or trade regimes could significantly impact the PIPE Financing,competitiveness of our products. Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability. See the Convertible Notes automatically converted to approximately 5.02 million shares of Newsection entitled “Information about Hyzon Class A Common Stock.
– Government Regulations” in the Proxy.

Results of Operations

Three Months Ended September 30, 2021 and 2020

Hyzon was formed and commenced operations on January 21, 2020. As a result, we have a very limited operating history from inception and limited prior period comparable information available to be presented in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Hyzon.”

Revenue. Revenue for the three months ended September 30, 2021 represents $0.1 million of revenue from retrofit services performed by Hyzon Europe.
Operating Expenses. Operating expenses for the three months ended September 30, 2021 were $46.8 million compared to $0.5 million for the three months ended September 30, 2020. Operating expenses consist of cost of revenue, research and development expenses and selling, general and administrative expenses.

Cost of Revenue. Cost of revenue includes direct materials, labor costs, allocated overhead costs related to retrofitting of hydrogen FCEVs, and estimated warranty costs. Cost of revenue for the three months ended September 30, 2021 was $0.2 million. We did not record revenue or cost of revenue for the three months ended September 30, 2020.

Research and Development Expenses. Research and development expenses represent costs incurred to support activities that advance the development of current and next generation hydrogen powered fuel cell systems, the design and development of ePowertrain, and the integration of those systems into various mobility applications. Our research and development expenses consist primarily of employee-related personnel expenses, prototype materials and tooling, design expenses, consulting and contractor costs and an allocated portion of overhead costs.

Research and development expenses were $4.0 million and $0.1 million in the three months ended September 30, 2021 and September 30, 2020, respectively. The increase was primarily due to $3.0 million in higher personnel costs in developing
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Priorour research and development expertise for our global customer base. We expect research and development expenses to increase significantly and become a larger percentage of our operating expenses going forward as we build out our research facilities and expand headcount to advance our development of current and next generation hydrogen powered fuel cell systems, the completiondesign and development of ePowertrain, and the integration of those systems into various mobility applications.

Selling, General and Administrative Expenses. Selling expenses consist primarily of employee-related costs for individuals working in our sales and marketing departments, third party commissions, and related outreach activities. General and administrative expenses consist primarily of personnel-related expenses associated with our executive, finance, legal, information technology and human resources functions, as well as professional fees for legal, audit, accounting and other consulting services, and an allocated portion of overhead costs.
Selling, general and administrative expenses were $42.7 million and $0.4 million in the three months ended September 30, 2021 and September 30, 2020, respectively. The increase is comprised of $27.7 million related to stock compensation expense, $13.4 million of which is triggered by a key executive retirement arrangement (see Note 13. Stock-based Compensation Plans) and $14.0 million relates to earnout equity awards pursuant to the Business Combination we neither engaged(see Note 4. Business Combination). Salary and related expenses were $3.3 million in any significant operations nor generated any operating revenue. Our only activities from inception through the closingthree months ended September 30, 2021 compared to $0.3 million in the three months ended September 30, 2020. The additional increase of approximately $11.6 million in selling, general and administrative expense was due to building out the Company’s corporate infrastructure and legal and accounting costs associated with the Business Combination relatedfor the three months ended September 30, 2021 compared to our formation and$0.4 million in the initial public offering, as well as due diligence costs incurred. As a result of the closing of the Business Combination, our business has substantially changed and is now that of New Hyzon. Accordingly, we expectthree months ended September 30, 2020. We also continue to incur increased expenses, as a resultincluding accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements; director and officer insurance costs; and investor and public relations costs.

Change in Fair Value. Change in fair value represents non-cash gains or losses in estimated fair values of being a public operating company.
Forthe private placement warrant and earnout liabilities required to be remeasured at each balance sheet date. Change in estimated fair value of private placement warrant and earnout liabilities for the three months ended JuneSeptember 30, 2020, we had a net loss of approximately $1,000 which consisted of approximately $1,000 in general2021, were $7.6 million and administrative expenses.
For$73.4 million gains, respectively. There were no equivalent instruments requiring fair value remeasurement during the three months ended JuneSeptember 30, 2020.

Foreign Currency Exchange Gain (Loss). Foreign currency exchange gain (loss) represents exchange rate gains and losses related to all transactions denominated in a currency other than our or our subsidiary’s functional currencies. Foreign currency exchange loss was $0.1 million in the three months ended September 30, 2021 compared to negligible expense in the three months ended September 30, 2020, as there were few transactions in foreign currencies in the prior period. We expect the volume of foreign currency transactions to grow significantly in the future as we had acontinue to expand our geographic footprint.

Interest Expense, net. Interest expense, net loss of approximately $8.2 million, which consisted of approximately $1.4was $0.3 million in general and administrative expenses, including due diligence costs incurredthe three months ended September 30, 2021, compared to negligible expense in the pursuit of our acquisition plans, $6.8 million duethree months ended September 30, 2020. Interest expense relates primarily to the changeconvertible debt issued in February 2021 and is comprised primarily of changes in the fair value of warrant liabilities, offset bythe embedded derivative associated with the automatic conversion provision of the convertible note. Upon close of the Business Combination in July 2021, the convertible debt and accrued interest earned on marketable securities held in DCRB’s trust account with Continental Stock and Transfer & Trustconverted into shares of common stock of the Company acting as trustee (the “Trust Account”) of $3,000.
For(see Note 4. Business Combination). There was no debt outstanding during the sixthree months ended JuneSeptember 30, 2020.

Net Income (Loss) Attributable to Noncontrolling Interests. Net income (loss) attributable to noncontrolling interests represents results attributable to third parties in our operating subsidiaries. Net income (loss) is generally allocated based on such ownership interests held by third parties with respect to each of these entities.

Net loss attributable to noncontrolling interests was $0.8 million for the three months ended September 30, 2021, compared to zero in the three months ended September 30, 2020. The change in the comparative periods is the result of our entering into a joint venture agreement with Holthausen to establish a venture in the Netherlands in October of 2020.
Nine Months Ended September 30, 2021 and Period from January 21, 2020 we had a net loss(Inception) to September 30, 2020

Revenue. Revenue for the nine months ended September 30, 2021 represents $0.1 million of approximately $2,000 which consistedrevenue from retrofit services performed by Hyzon Europe.
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Operating Expense. Operating expenses for the nine months ended September 30, 2021 were $59.9 million compared to $0.8 million for the period from January 21, 2020 (Inception) to September 30, 2020. Operating expenses consist of cost of revenue, research and development expenses and selling, general and administrative expenses.

ForCost of Revenue. Cost of revenue for the sixnine months ended JuneSeptember 30, 2021 we had a net losswas $0.2 million. We did not record revenue or cost of approximately $9.2revenue for the period from January 21, 2020 (Inception) to September 30, 2020.

Research and Development Expenses. Research and development expenses were $8.1 million which consisted of approximately $2.1and $0.2 million in the nine months ended September 30, 2021 and the period from January 21, 2020 (Inception) to September 30, 2020, respectively. The increase was primarily due to $5.4 million in higher personnel costs in developing our research and development expertise for our global customer base. We expect research and development expenses to increase significantly and become a larger percentage of our operating expenses going forward as we build out our research facilities and expand headcount to advance our development of current and next generation hydrogen powered fuel cell systems and the design and development of ePowertrain, and the integration of those systems into various mobility applications.

Selling, General and Administrative Expenses. Selling, general and administrative expenses including due diligence costs incurredwere $51.6 million and $0.7 million in the pursuitnine months ended September 30, 2021 and the period from January 21, 2020 (Inception) to September 30, 2020, respectively. The increase is comprised of our acquisition plans, $7.2$28.1 million related to stock compensation expense, $13.4 million of which is triggered by a key executive retirement arrangement (see Note 13. Stock-based Compensation Plans) and $14.0 million relates to earnout equity awards pursuant to the Business Combination (see Note 4. Business Combination). Salary and related expenses were $5.7 million in the nine months ended September 30, 2021 compared to $0.5 million in the period ended September 30, 2020. The additional increase of approximately $17.6 million in Selling, general and administrative expense was due to building out the changeCompany’s corporate infrastructure and legal and accounting costs associated with the Business Combination for the nine months ended September 30, 2021 compared to $0.2 million for the period from January 21, 2020 (Inception) to September 30, 2020. We also expect to continue to incur increased expenses, including accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements; director and officer insurance costs; and investor and public relations costs.

Change in Fair Value. Change in estimated fair value of private placement warrant and earnout liabilities for the nine months ended September 30, 2021, were $7.6 million and $73.4 million gains, respectively. There were no equivalent instruments requiring fair value remeasurement during the period January 21, 2020 (Inception) to September 30, 2020.

Foreign Currency Exchange Gain (Loss). Foreign currency exchange loss was $0.2 million in the nine months ended September 30, 2021 compared to negligible expense in the period January 21, 2020 (Inception) to September 30, 2020, as there were few transactions in foreign currencies in the prior period. We expect the volume of foreign currency transactions to grow significantly in the future as we continue to expand our geographic footprint.

Interest Expense, net. Interest expense, net was $5.2 million in the nine months ended September 30, 2021 compared to negligible expense in the period January 21, 2020 (Inception) to September 30, 2020. Interest expense in 2021 relates primarily to the convertible debt issued in February 2021 and is comprised primarily of changes in the fair value of warrant liabilities, offset by interest earned on marketable securities held in the Trust Account of $7,000.
Liquidity and Capital Resources
Followingembedded derivative associated with the consummation of our initial public offering, our liquidity needs have been satisfied through the net proceeds of approximately $2.0 million from the sale of equity securities held outsideautomatic conversion provision of the Trust Account as well as a $1.5 million proceeds from a unsecured promissory note (the “Note”) issued by DCRB to Decarbonization Plus Acquisition Sponsor, LLC (the “Sponsor”) which was converted into warrantsconvertible note. Upon close of New Hyzon at Closing.
In addition, in the short term and the long term, in order to finance transaction costs in connection with a business combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors could have, but were not obligated to, loan us additional funds as may be required. As of June 30, 2020, $1.5 million was outstanding under the Note.
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On February 8, 2021, we entered into the Business Combination Agreement with Merger Subin July 2021, the convertible debt and Legacy Hyzonaccrued interest converted into shares of common stock of the Company (see Note 4. Business Combination). Interest expense in 2020 relates primarily to the convertible debt issued on August 24, 2020 and converted to 250,000 common shares on July 16,October 19, 2020 upon the Company’s closing of Qualified Financing.

Net Income (Loss) Attributable to Noncontrolling Interests. Net loss attributable to noncontrolling interests was $1.3 million for the nine months ended September 30, 2021 we closed the Business Combination. Approximately $20.89 million of funds heldcompared to zero in the Trust Account were also usedperiod from January 21, 2020 (Inception) to fundSeptember 30, 2020. The change in the redemptioncomparative periods is the result of 2,089,323 sharesour entering into a joint venture agreement with Holthausen to establish a venture in the Netherlands in October of DCRB Class A Common Stock.
2020.
Critical Accounting Policies
Non-GAAP Financial Measures
The preparation of financial statements and related disclosures
In addition to our results determined in conformityaccordance with accounting principles generally accepted in the United States of America (“GAAP”), we believe the following non-GAAP measures are useful in evaluating our operational performance.
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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 or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation expense, change in fair value of private placement warrant liability, change in fair value of earnout liability and other special items determined by management, if applicable. EBITDA and Adjusted EBITDA are intended as supplemental measures of our performance that are 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 income (loss) to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.

The following tables reconcile net income (loss) to EBITDA and Adjusted EBITDA (in thousands):
Three Months Ended September 30,
20212020
Net income (loss)$33,845 $(556)
Interest expense, net254 15 
Income tax expense (benefit)— — 
Depreciation and amortization30275 
EBITDA$34,401 $(466)
Change in fair value of private placement warrant liability(7,614)— 
Change in fair value of earnout liability(73,359)— 
Stock-based compensation14,766 — 
Executive transition charges(1)
13,860 — 
Business combination transaction expenses(2)
3,404 — 
Regulatory and legal matters(3)
111 — 
Adjusted EBITDA$(14,431)$(466)

(1)Executive transition charges include stock-based compensation costs of $13.4 million and salary expense of $0.5 million related to former CTO’s retirement.
(2)Transaction costs of $3.3 million attributable to the liability classified earnout shares and $0.1 million of write-off of debt issuance costs.
(3)Regulatory and legal matters include legal, advisory, and other professional service fees incurred in connection with the short-seller analyst article from September 2021, and investigations and litigation related thereto.
40
Nine Months Ended
September 30, 2021
For the period
January 21, 2020
(Inception) –
September 30, 2020
Net income (loss)$15,746 $(854)
Interest expense, net5,249 20 
Income tax expense (benefit)— — 
Depreciation and amortization67199 
EBITDA$21,666 $(735)
Change in fair value of private placement warrant liability(7,614)— 
Change in fair value of earnout liability(73,359)— 
Stock-based compensation15,644 — 
Executive transition charges(1)
13,860 — 
Business combination transaction expenses(2)
3,404 — 
Regulatory and legal matters(3)
111 — 
Adjusted EBITDA$(26,288)$(735)

(1)Executive transition charges include stock-based compensation costs of $13.4 million and salary expense of $0.5 million related to former CTO’s retirement.
(2)Transaction costs of $3.3 million attributable to the liability classified earnout shares and $0.1 million of write-off of debt issuance costs.
(3)Regulatory and legal matters include legal, advisory, and other professional service fees incurred in connection with the short-seller analyst article from September 2021, and investigations and litigation related thereto.

Liquidity and Capital Resources

As of September 30, 2021, we had $498.0 million in unrestricted cash, positive working capital of $510.8 million, and retained earnings of $2.8 million. The Business Combination closed on July 16, 2021, generated proceeds of approximately $509.0 million of cash, net of transaction costs and redemptions. We believe that our current cash balance will provide adequate liquidity during the 12-month period following September 30, 2021.

Our future capital requirements will depend on many factors, including, but not limited to, the rate of our growth, our ability to generate sufficient revenue from commercial vehicle sales and leases to cover operating expenses, working capital expenditures, and additional cash resources due to changed business conditions or other developments, including supply chain challenges, disruptions due to COVID-19, competitive pressures, and regulatory developments, among other developments. Further, we may enter into future arrangements to acquire or invest in businesses, products, services, strategic partnerships, and technologies. As such, we may be required to seek additional equity and/or debt financing. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations may be materially and adversely affected.

Debt

As of September 30, 2021 we have no debt. The Convertible Notes and accrued interest were converted to 5,022,052 shares of common stock upon close of the Business Combination.

41
Cash Flows

Cash Flows for the nine Months Ended September 30, 2021 and for the Period from January 21, 2020 (Inception) through September 30, 2020

Cash Flows from Operating Activities

Net cash used in operating activities was $52.2 million for the nine months ended September 30, 2021, as compared to negligible cash provided for the period from January 21, 2020 (Inception) through September 30, 2020. The cash flows used in operating activities for the nine months ended September 30, 2021 was driven by net income of $15.7 million and adjusted for certain non-cash items and changes in operating assets and liabilities. Non-cash gain adjustments primarily consisted of changes in fair value of the private placement warrant of $7.6 million and earnout liabilities of $73.4 million. These non-cash gain adjustments were partially offset by $29.0 million stock-based compensation expense and $0.7 million in depreciation and amortization. Changes in operating assets and liabilities were primarily driven by $25.3 million in prepayments for vehicle inventory, production equipment, other supplier deposits and D&O insurance, and $12.0 million in inventory purchases. The cash flows provided by operating activities for the period from January 21, 2020 (Inception) through September 30, 2020 was driven by recording a net loss of $0.9 million, slightly outweighed by changes in operating assets and liabilities.

Cash Flows from Investing Activities
Net cash used in investing activities was $17.6 million for the nine months ended September 30, 2021, as compared to $0.1 million for the period from January 21, 2020 (Inception) through September 30, 2020. The cash flows used in investing activities for the nine months ended September 30, 2021 were primarily due to $7.2 million in capital expenditures, as well as, $4.0 million in machinery and equipment deposits to begin production of hydrogen fuel cell systems and assembly of hydrogen storage systems, and $4.9 million investments in equity securities of NRG and Raven SR. The $7.2 million in capital expenditures were comprised of approximately $2.3 million related to acquiring a facility near Rochester, NY, $3.0 million in machinery equipment and $1.9 million in R&D assets. There were no similar purchases or investments in the period January 21, 2020 (Inception) through September 30, 2020.

Cash Flows from Financing Activities

Net cash provided by financing activities was $554.2 million for the nine months ended September 30, 2021, as compared to $0.6 million for the period from January 21, 2020 (Inception) through September 30, 2020. The cash flows provided by financing activities for the nine months ended September 30, 2021 was due primarily to $509.0 million in proceeds from the Business Combination, net of transaction costs allocated to equity and redemption and $45.0 million in proceeds from issuance of convertible debt. The cash flows provided by financing activities for the period from January 21, 2020 (Inception) through September 30, 2020 was due primarily to $0.5 million in proceeds from issuance of convertible debt.

Contractual Obligations and Commitments

Hyzon’s contractual obligations and other commitments as of September 30, 2021, include payments totaling $10.0 million in the aggregate due in 2021 to JS Horizon and JS Powertrain, pursuant to the terms of the Horizon IP Agreement. Please see the section below entitled “Intellectual Property” for additional information concerning the Horizon IP Agreement. This liability is reported under Horizon license agreement payable on the Condensed Consolidated Balance Sheets as of September 30, 2021. Subsequent to September 30, 2021, $6.9 million was paid and the remainder is expected to be paid in December 2021.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to have a material current or future effect upon our financial condition or results of operations.

42
Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and liabilities, disclosureexpenses. These estimates and assumptions are affected by management’s applications of contingent assetsaccounting policies. Certain policies are particularly important to the portrayal of our financial position and liabilitiesresults of operations and require the application of significant judgment by management to determine appropriate assumptions to be used in certain estimates; as a result, they are subject to an inherent degree of uncertainty and are considered critical. Accordingly, we believe the following policies are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

Revenue

The Company accounts for revenue in accordance with ASC 606. Revenue is based on the amount of transaction price to which the Company is entitled, subject to the allocation of the transaction price to distinct performance obligations. The Company recognizes revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration for which the Company expects to receive in exchange for those goods or services. To determine revenue recognition, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

When it determines it is not probable that it will collect all of the consideration to which it will be entitled under a customer contract, the Company concludes the contract existence criteria under ASC 606 are not met. In these cases, the Company recognizes revenue to the extent of consideration received provided the amounts are non-refundable, the Company has transferred control of the goods or services to which the consideration relates, the Company has stopped transferring goods or services, and there is no obligation to transfer additional services.

The Company recognizes the incremental costs of obtaining contracts, including commissions, as an expense when incurred as the contractual period of the Company's arrangements are expected to be one year or less. Amounts billed to customers related to shipping and handling are classified as revenue, and the Company has elected to recognize the cost for freight and shipping when control over vehicles, parts, or accessories has transferred to the customer as an expense in cost of revenue.

Product Sales

The Company enters into sales contracts with customers for the purchase of the Company’s products and services including fuel cell systems, FCEVs, parts, product support, and other related services. The Company considers order confirmations or purchase orders, which in some cases are governed by master vehicle supply agreements, to be contracts with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of product(s) or service to a customer. On standard vehicle sales contracts, revenues are recognized at a point in time when customers obtain control of the vehicle, which among other indicators, is generally when transfer of title and risks and rewards of ownership of goods have passed and when the Company has a present right to payment. Provisions for warranties are made at the datetime of sale. Sales, value-added, and other taxes collected concurrent with revenue producing activities are excluded from revenue.

Payment terms for sales of FCEVs to certain customers have included installment billing terms to fund the Company’s working capital requirements. The Company does not adjust the transaction price for a significant financing component when the performance obligation is expected to be fulfilled within a year as the amount is not material.

In China, the Company has granted extended payment terms to customers, which resulted in the Company concluding collection of all of the financial statements,consideration under the contract is not probable. As a result, the contract existence criteria is not met and income and expenses duringrevenue is recognized under the periods reported. Actual results could materially differ from those estimates. We have identifiedAlternative Method of Revenue Recognition, which may not be in the following critical accounting policies:same period that control of the related goods is transferred to the customers. The Company does not include a right of return on its products other than rights related to standard warranty provisions that permit repair or replacement of defective goods.

Principles43
Contents
Retrofit Services

The consolidated financial statementsCompany also enters into contracts with customers to retrofit ICE vehicles to FCEVs. In general, the customer controls any work in process arising from the Company’s performance; and the Company has in effect agreed to sell its rights to the work as it performs on a continuous basis. Revenue from these contracts is generally recognized over time utilizing an input method. Under the input method, the extent of progress towards completion is measured based on the ratio of normal costs incurred to date to the total estimated costs at completion of the performance obligation. Unexpected amounts of wasted materials, labor or other resources are excluded from the cost-to-cost measure of progress. The Company believes that this method is the most accurate representation of the Company's performance, because it directly measures the value of the services transferred to the customer over time as the Company incurs costs on its contracts. Contract costs include all direct materials, labor, and indirect costs related to contract performance, which may include indirect labor, supplies, tools, repairs and depreciation costs. The amount of revenue recognized for these contracts in a period is dependent on our ability to estimate total contract costs. The Company continually evaluates its estimates of total contract costs based on available information and experience.

Share-based Compensation

We measure and recognize compensation expense for all stock options and restricted stock awards based on the accountsestimated fair value of DCRBthe award on the grant date. The fair value is recognized as expense over the requisite service period, which is generally the vesting period of the respective award, on a straight-line basis when the only condition to vesting is continued service. If vesting is subject to a market or performance condition, recognition is based on the derived service period of the award. Expense for awards with performance conditions is estimated and its wholly owned subsidiary since its formation. All material intercompany balances and transactions have been eliminated.
adjusted based upon the assessment of the probability that the performance condition will be met.

BasisWe use the Black-Scholes option pricing model to estimate the fair value of Presentation
stock option awards with service and/or performance conditions. The preparation of condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of AmericaBlack-Scholes option pricing model requires management to make a number of assumptions, including the expected life of the option, the volatility of the underlying stock, the risk-free interest rate and expected dividends. The assumptions used in our Black-Scholes option-pricing model represent our best estimates at the time of grant. These estimates involve a number of variables, uncertainties and assumptions and the application of our judgment, as they are inherently subjective. If any assumptions change, our stock-based compensation expense could be materially different in the future.

These assumptions are estimated as follows:

•Fair Value of Common Stock. The grant date fair value of our common stock utilized in the calculation of share-based compensation was determined using valuation methodologies which utilize certain assumptions, including observations of comparable equity values and transactions, probability weighting of events, time to liquidation, a risk-adjusted interest rate, and assumptions regarding our projected future cash flows and growth potential.

•Expected Term. The expected term represents the period that affectour stock options are expected to be outstanding.

•Expected Volatility. We determine the reported amountsprice volatility factor based on the historical volatilities of assetsour publicly traded peer group as Hyzon does not have a long trading history for our common stock. Industry peers consist of several public companies in the automotive and liabilities, disclosureenergy storage industry that are similar to Hyzon in size, stage of contingent assetslife cycle, and liabilitiesfinancial leverage.

•Risk-Free Interest Rate. The risk-free interest rate was based on U.S. Treasury zero-coupon securities with maturities consistent with the estimated expected term.

•Expected Dividend Yield. We have not paid dividends on our common stock nor do we expect to pay dividends in the foreseeable future.

44
Warrant Liabilities

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date ofwhile the financial statements, and expenses during the periods reported. Actual results could materially differ from those estimates.
warrants are outstanding.
Warrant Liabilities

We account for the warrants issuedPublic Warrants as equity and account for the Private Placement Warrants, in connection with our initial public offering inthe Business Combination, as liabilities. In accordance with Accounting Standards Codification (“ASC”)
815-40,
Derivatives and Hedging—Contracts in Entity’s Own Equity
(“ASC 815”), under which815, the warrantsPrivate Placement Warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrantsPrivate Placement Warrants meet the definition of a derivative as contemplated in ASC 815, the DCRB’s warrants are measured at fair value at inception and remeasured at each reporting datedate.
We, with the assistance of third-party valuations, utilize the binominal lattice valuation model (“BLM”) to estimate the fair value of Private Placement Warrants at each reporting date. The application of the BLM utilizes significant unobservable assumptions, including volatility. Significant judgment is required in determining the expected volatility of our common stock.

Earnout Liability

The earnout shares with Legacy Hyzon’s common stockholders are accounted for as a liability. In accordance with ASC 815, the earnout shares with Legacy Hyzon common stockholders do not meet the criteria for equity classification and must be recorded as liabilities. Pursuant to ASC 805 initial measurement of these earnout shares are measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. As these earnout shares meet the definition of a derivative as contemplated in ASC 815, they are remeasured at each reporting date. Changes in fair value are recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The earnout shares to other holders of outstanding equity awards are accounted for in accordance with ASC 820,
Fair Value Measurement
718, Stock Compensation, as they relate to stock-based compensation awards issued in exchange for service provided or to be provided to the Company. We recognized the earnout shares to other equity holders as separate and incremental awards from other equity holders’ underlying stock-based compensation awards. Upon the close of the Business Combination, we became contingently obligated to issue earnout shares if the vesting conditions were met. However, for unvested equity awards and where grant date was not established, we did not recognize any expense.

We, with changes inthe assistance of third-party valuations, utilize the Monte-Carlo valuation model to estimate the fair value recognizedof earnout shares at each reporting date. The application of the Monte-Carlo pricing model utilizes significant unobservable assumptions, including volatility. Significant judgment is required in determining the expected volatility of our common stock. Monte Carlo analysis simulates the future path of the Company’s stock price over the earnout period. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability’s estimated value.

Equity Valuations

For all periods prior to the consummation of the Business Combination, there was not a market for our equity. Accordingly, valuations of our equity instruments require the application of significant estimates, assumptions, and judgments. These valuations impact share-based compensation reported in our condensed consolidated financial statements. The following discussion provides additional details regarding the significant estimates, assumptions, and judgments that impact the determination of the fair values of share-based compensation awards and the common stock that comprises our capital structure. The following discussion also explains why these estimates, assumptions, and judgments could be subject to uncertainties and future variability.

45
Common Stock Valuations

We use valuations of our common stock for various purposes, including, but not limited to, the determination of the exercise price of stock options and inclusion in the StatementsBlack-Scholes option pricing model. As a privately held company, the lack of Operationsan active public market for our common stock requires our management and board of directors to exercise reasonable judgment and consider a number of factors in order to make the periodbest estimate of change.
Impactfair value of
COVID-19
We continue to evaluate our equity. As our capital structure consists of a single class of equity, Hyzon, with the impactassistance of a third-party valuation specialist, estimates the fair value of our total equity value using a combination of the
COVID-19
pandemic comparable sales method (a market approach) and has concluded that while it is reasonably possible that the virus could haveexcess earnings method (an income approach). Estimating our total equity value requires the application of significant judgment and assumptions. Factors considered in connection with estimating these values include:

•Recent arms-length transactions involving the sale or transfer of our common stock;

•Our historical financial results and future financial projections;

•The market value of equity interests in substantially similar businesses, which equity interests can be valued through nondiscretionary, objective means;

•The lack of marketability of our common stock;

•The likelihood of achieving a negative effect onliquidity event, such as the business combination, given prevailing market conditions;

•Industry outlook; and

•General economic outlook, including economic growth, inflation and unemployment, interest rate environment and global economic trends.

The fair value ultimately assigned to our financial position and/common stock may take into account any number or resultscombination of operations, the specific impact is not readily determinablevarious factors described above, based upon their applicability at the time of measurement. Determination of the fair value of our common stock also may involve the application of multiple valuation methodologies and approaches, with varying weighting applied to each methodology as of the balancegrant date.
Recent Accounting Pronouncements
We do not believe Application of these approaches involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses, and future cash flows; discount rates; market multiples; the selection of comparable companies; and the probability of possible future events. Changes in any recently issued, but not yet effective, accounting pronouncements, if currently adopted, wouldor all of these estimates and assumptions or the relationships between those assumptions impact our valuations as of each valuation date and may have a material impact on the valuation of our financial statements.
common stock.
Off-Balance
Sheet Arrangements

As of November 12, 2020, the dateestimated fair value of our common stock was $2.00 per share. In making this Quarterly Report,determination, we did not have any
off-balance
sheet arrangementsrelied upon the previous Round A equity financing, which closed on November 12, 2020 as definedbeing the only reliable indication of fair value of our common stock before (and including) December 1, 2020. The price of the Round A capital raise was $2.00 per share of our common stock.

The estimated fair value of our common stock was $4.45 per share as of December 31, 2020. The increase in Item 303(a)(4)(ii)fair value was primarily due to our making progress and taking necessary steps to prepare for the Business Combination. The necessary steps undertaken to prepare for the Business Combination included meeting with DCRB and financial advisors, discussing timing expectations, negotiating a non-binding letter of Regulationintent and signing a binding exclusivity agreement between DCRB and Hyzon. As our ongoing negotiations related to the Business Combination reflected an increased likelihood of a near-term exit transaction and/or liquidity event, the valuation of our equity as of December 31, 2020 took into consideration the indicated equity value implied by the negotiations. While the December 31, 2020 valuation incorporated indicated equity values based upon traditional income and market approaches, consisting of the excess earnings method and comparable sales method. the valuation also incorporated the equity value implied by the business combination. Accordingly, the valuation applied the probability-weighted expected return method (PWERM) to weight the indicated equity value determined under the traditional income and market approaches and the equity value implied by our expected business combination with DCRB. Due to the proximity in time and observability, management placed the most significant weighting on the value as implied by the comparable sales method.
S-K.

JOBS Act46
On April 5, 2012,
Table of Contents
The estimated fair value of our common stock was $9.90 per share as of June 30, 2021. The increase in fair value from December 31, 2020 to June 30, 2021 was primarily due to Hyzon executing a non-binding letter of intent with DCRB in January 2021 and signing a Business Combination Agreement with DCRB as well as issuing a convertible note payable in the Jumpstart Ouramount of $45 million in February 2021. In addition, Hyzon made progress in procuring new orders from customers during the six months ended June 30, 2021.

As of June 30, 2021, the estimated fair value of our common stock was $9.90 per share, which equates to an implied equity value of $1.0 billion. The primary difference between the fair value derived on June 30, 2021 and the fair value implied by the Business Startups ActCombination is that the fair value implied by the Business Combination is based only upon a scenario in which the parties complete the Business Combination and is not probability weighted, in contrast to the June 30, 2021 valuation, which considered multiple potential outcomes, some of 2012 (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirementswhich would have resulted in a lower value of our common stock than its implied transaction value.

Following the Business Combination with DCRB, it is no longer necessary for qualifyingour management and its board of directors to estimate the fair value of our common stock, as the Class A common stock is traded in the public companies. We qualify as an “emerging growth company” undermarket.

Emerging Growth Company Status

Section 102(b)(1) of the JOBS Act and are allowedexempts emerging growth companies from being required to comply with new or revised financial accounting pronouncements based onstandards 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 effective date for private (not publicly traded) companies. We electedExchange Act) are required to delaycomply with the adoption of new or revised financial accounting standards,standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and as a result, we may not comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. Hyzon 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, Hyzon, as an emerging growth company, can adopt the new or revised accounting standards onstandard at the relevant dates on which adoption of such standards is required for
non-emerging
growth companies. As a result, our financial statements may not be comparable totime private companies that comply withadopt the new or revised accounting pronouncementsstandard, until such time Hyzon is no longer considered to be an emerging growth company. At times, Hyzon may elect to early adopt a new or revised standard.

In addition, Hyzon intends 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 of publican emerging growth company, effective dates.
21
Table of Contents
As an “emerging growth company,” we areHyzon intends to rely on such exemptions, Hyzon is not required to, among other things, (i)things: (a) provide an auditor’s attestation report on ourHyzon’s system of internal controlscontrol over financial reporting (ii)pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosure that may be required of
non-emerging
growth public companies (iii)under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (c) 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 the financial statements (auditor discussion and analysis),; and (iv)(d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the CEO’sChief Executive Officer’s compensation to median employee compensation. These exemptions

Hyzon will apply for a periodremain an emerging growth company under the JOBS Act until the earliest of five years(a) the last day of Hyzon’s first fiscal year following the completionfifth anniversary of our Public Offeringthe closing of DCRB’s initial public offering, (b) the last date of Hyzon’s fiscal year in which Hyzon has total annual gross revenue of at least $1.07 billion, (c) the date on which Hyzon is deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates or until we otherwise no longer qualify as(d) the date on which Hyzon has issued more than $1.0 billion in non-convertible debt securities during the previous three years.

Material Transactions with Related Parties

Horizon IP Agreement

In January 2021, Hyzon entered into the Horizon IP Agreement with JS Horizon, part of the Horizon group of Companies, and in September 2021 JS Powertrain was an “emerging growth company.”added party to the agreement. Pursuant to the agreement the parties convey to each other certain rights in intellectual property relating to Hyzon’s core fuel cell and mobility product technologies, under which Hyzon will pay JS Horizon and JS Powertrain a total fixed payment of $10.0 million in 2021. Subsequent to September 30, 2021, $6.9 million was paid and the remainder is expected to be paid in December 2021.

Item 3. Quantitative47
Table of Contents
Horizon Supply Agreement

In January 2021, Hyzon entered into a supply agreement with Jiangsu Horizon New Energy Technologies Co. Ltd, a wholly owned subsidiary of Horizon, to supply certain fuel cell components. During the three months ended March 31, 2021, the Company made a deposit payment to Horizon in the amount of $5.0 million for long lead time components. This payment is included in prepaid expenses as none of the components have yet been received as of September 30, 2021.

Holthausen and Qualitative Disclosures About Market Risk
Affiliates
We are
The Company entered into a smaller reporting company as definedjoint venture agreement in RuleOctober 2020 to create Hyzon Europe with Holthausen. As Hyzon Europe builds out its production facilities, it relies on Holthausen for certain production resources that result in related party transactions. In addition, both companies rely on certain suppliers including Horizon.
12b-2
under
In July 2021, Hyzon Europe assumed certain retrofit service contracts from Holthausen Clean Technology B.V. The Company incurred $0.1 million to acquire these contracts.

As of September 30, 2021, the Exchange Act. AsCompany has a result, pursuantnet related party payable in the amount of $0.8 million due to Item 305(e) of Regulation
S-K,
we are not required to provide the information required by this Item.Holthausen.

Item 4.    Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

DisclosureThe term disclosure controls and procedures aremeans controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls 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 management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As requiredWe do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all instances of fraud due to inherent limitation of internal controls. Because of these inherent limitations there is a risk that material misstatements will not be prevented or detected on a timely basis by Rules
13a-15
and
15d-15
underinternal control over financial reporting. However, these inherent limitations are known features of the Exchange Act, ourfinancial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Our Chief Executive Officer and Chief Financial Officer carried out an evaluation ofhas evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of JuneSeptember 30, 2021. Based upon thison such evaluation, our Chief Executive Officer and Chief Financial Officerhas concluded that as of September 30, 2021 our disclosure controls and procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act) were not effective asbecause of June 30, 2021 due solely tothe material weaknesses in internal control over financial reporting described below.

In light of the material weaknesses described below, our restatementmanagement has performed additional analyses, reconciliations, and other post-closing procedures and has concluded that, notwithstanding the ineffectiveness of our financial statements to reclassify our warrants as described under “Restatement of Previously Issued Financial Statements”.
We do not expect that our disclosure controls and procedures as well as material weaknesses in our internal control over financial reporting as of September 30, 2021, the condensed consolidated financial statements for the periods covered by and included in this Form 10-Q/A fairly present, in all material respects, our financial position, results of operations and cash flows as of and for the periods presented in conformity with U.S. GAAP.

(b) Material Weaknesses in Internal Control over Financial Reporting

While preparing the Company’s condensed consolidated financial statements, our management identified the following material weaknesses in internal control over financial reporting:

•The Company did not demonstrate a commitment to attract, develop, and retain competent individuals in alignment with objectives and accordingly did not have sufficient qualified resources.

•The Company did not have an effective risk assessment process that successfully identified and assessed risks of material misstatement to ensure controls were designed and implemented to respond to those risks.
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•The Company did not have an effective internal information and communication process to ensure that relevant and reliable information was communicated on a timely basis across the organization, to enable financial personnel to effectively carry out their financial reporting and internal control roles and responsibilities.

•The Company did not sufficiently establish structures, reporting lines and appropriate authorities and responsibilities in the pursuit of objectives.

As a consequence, the Company did not effectively design, implement and operate process-level control activities related to revenue recognition, complex accounting transactions, and the financial close process to mitigate risks to an acceptable level.

Those control deficiencies resulted in material misstatements that were identified and corrected in the condensed consolidated financial statements as of and for the periods ended September 30, 2021 primarily affecting revenue, cost of revenue, inventory, contract liabilities, and selling, general, and administrative expenses, as further described in Note 2. Restatement of Previously Issued Financial Statements to the condensed consolidated financial statements. Because there is a reasonable possibility that material misstatement of the condensed consolidated financial statements will prevent all errorsnot be prevented or detected on a timely basis, we concluded that these deficiencies represent material weaknesses in our internal control over financial reporting and all instancesthat our internal control over financial reporting was not effective as of fraud.September 30, 2021.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. These deficiencies could result in misstatements to our financial statements that would be material and would not be prevented or detected on a timely basis.

(c) Remediation Plan and Status

With oversight from the Audit Committee and input from the Board of Directors, management has begun designing and implementing changes in processes and controls to remediate the material weaknesses described above. Management and the Board of Directors, including the Audit Committee, are working to remediate the material weaknesses identified herein. While the Company expects to take other remedial actions, actions taken to date include:

•appointed new Chief Executive Officer and created a new role of President of International Operations;

•hired additional finance and accounting personnel over time to augment our accounting staff, including third-party resources with the appropriate technical accounting expertise;

•engaged with external consultants with public company and technical accounting experience to facilitate accurate and timely accounting closes and to accurately prepare and review the consolidated financial statements and related footnote disclosures;

•enhanced existing Disclosure Committee responsibilities through a formal review and sign off process; and

•implemented a formal regional general manager financial statement review and certification process for each SEC filing.

In addition to the remedial actions taken to date, the Company is taking, or plans to take, the following actions to remediate the material weaknesses identified herein:

•designing and implementing a comprehensive and continuous risk assessment process to identify and assess risks of material misstatements and to ensure that the impacted financial reporting processes and related internal controls are properly designed, maintained, and documented to respond to those risks in our financial reporting;

•further developing and implementing formal policies, processes and documentation procedures relating to financial reporting, including revenue recognition and other complex accounting matters, and consulting with independent accounting experts and advisors;

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•formalizing the design of the processes and controls related to sales of our products and services, as well as vendor contracting, fuel cell acceptance, transfer of control of our products to customers, tracking our vehicles' post-sale performance, and archiving documentation in a central system; and

•completing ethics training globally and in addition, providing general public company periodic training for Company personnel, including on potential topics such as the responsibilities of a public company, the core values of the Company’s accounting and finance function, and best practices to implement those values.

As we work to improve our internal control over financial reporting, we will report regularly to the Company’s Audit Committee on the progress and results of the remediation plan, including the identification, status, and resolution of internal control deficiencies. We may modify our remediation plan and may implement additional measures as we continue to review, optimize and enhance our financial reporting controls and procedures no matter how well conceivedin the ordinary course. We will not be able to fully remediate these material weaknesses until these steps have been completed and operated, can provide only reasonable,have been operating effectively for a sufficient period of time. If we are unable to successfully remediate the material weakness, or if in the future, we identify further material weaknesses in our internal control over financial reporting, we may not absolute, assurance that the objectives of the disclosure controlsdetect errors on a timely basis and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits mustour consolidated financial statements may be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
materially misstated.

(d) Changes in Internal Control over Financial Reporting
Due solely
There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2021, that have materially affected, or are reasonably likely to the events that led toaffect, our restatement of ourinternal control over financial statements on Form
10-K/A
filed with the SEC on May 13, 2021 (the “Restatement”), management identified a material weakness in internal controls related to the accounting for Warrants issued in connection with our Public Offering, as described below under “Restatement of Previously Issued Financial Statements.”reporting.
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In light of the Restatement of our financial statements, we enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. We have provided enhanced access to accounting literature, research materials and documents, performed an analysis to ensure that our financial statements are in accordance with generally accepted accounting principles and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan continue to be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
Restatement of Previously Issued Financial Statements
On May 13, 2021, we revised our prior position on accounting for Warrants and restated our financial statements as of December 31, 2020 and for the period ended December 31, 2020 to reclassify the Company’s warrants as described in the Restatement. However, the non-cash adjustments to the financial statements did not impact the amounts previously reported for our cash and cash equivalents, total assets, revenue or cash flows.
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PART II – OTHER INFORMATION

Item 1.
Legal Proceedings
From time to time, we may become involved in legal proceedings or be subject to claims in the ordinary course of business. We are not currently a party to any material legal proceedings. Regardless of outcome, such proceeding or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors and there can be no assurances that favorable outcomes will be obtained.
Item 1A.    Risk Factors
In connection with the Business Combination, certain of DCRB’s purported stockholders filed lawsuits against DCRB and its directors asserting claims for breaches of fiduciary duty:
Lanctot

 v. Decarbonization Plus Acquisition Corp. et al.,
Index No. 652070/2021 (N.Y. Sup. Ct., N.Y. Cnty.);
Pham
 v. Decarbonization Plus Acquisition Corp. et al.,
Case No.
21-CIV-01928
(Cal. Sup., San Mateo Cnty.). These complaints allege that the DCRB board members breached their fiduciary duties by in connection with the merger by allegedly agreeing to the transaction following an inadequate process and at an unfair price, and by allegedly disseminating inaccurate or incomplete information concerning the transaction. These complaints seek, among other things, injunctive relief and an award of attorneys’ fees. The defendants in these cases have not yet answered these complaints and we believe that these pending and threatened lawsuits are without merit.
Item 1A.
Risk Factors
As a result of the closing of the Business Combination on July 16, 2021, the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form
10-K/A
for the fiscal year ended December 31, 2020, no longer apply. For risk factors relating to our business following the Business Combination, please refer to the section entitled “
Risk Factors
” in our Definitive Proxy Statement (file
No. 001-39632)
filed with the SEC on June 21, 2021. Additional risk factors not presently known to us or that we deem immaterial may also impair our business or results of operations. Other than as set forth below, there have been no material changes to the risk factors disclosed in our Definitive Proxy Statement.

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, two related putative securities class action lawsuits were filed against the Company, certain of its current officers and directors and certain officers and directors of DCRB between September 30, 2021, and October 13, 2021, in the U.S. District Court for the Western District of New York (Kauffmann v. Hyzon Motors Inc., et al. (No. 6:21-cv-06612-CJS); and Brennan v. Hyzon Motors Inc., et al. (No. 6:21-cv-06636-CJS)) asserting violations of federal securities laws. The complaints generally allege that the Company and individual defendants made materially false and misleading statements relating to the nature of its customer contracts, vehicle orders and sales and earnings projections, based on allegations in a report released on September 28, 2021 by Blue Orca Capital, an investment firm that indicated that it held a short position in our stock and made numerous allegations about the Company. The proceedings are subject to uncertainties inherent in the litigation process. We cannot predict the outcome of these matters or estimate the possible loss or range of possible loss, if any. We have incurred and may further incur substantial expenses as a result of regulatory and legal matters related to the Blue Orca Capital report and other similar research reports.

The outcome of litigation and other legal proceedings, including the other claims described under Legal Proceedings in Note 12. Commitments and Contingencies, to the condensed consolidated financial statements included elsewhere in this Current Report on Form 10-Q and incorporated by reference herein, 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 are subject to future developments and management’s view of these matters may change in the future.
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Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
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We have identified material weaknesses in our internal control over financial reporting which, if not corrected, could affect the reliability of our condensedconsolidated financial statements, affect our ability to record, process, and report financial information accurately, impair our ability to prepare financial statements, negatively affect our relationships with suppliers and customers, negatively affect investor confidence, cause reputational harm, and have other adverse consequences. Additionally, failure to timely implement and maintain adequate financial, information technology and management processes, controls and procedures could result in further material weaknesses which could lead to errors in our financial reporting and adversely affect our business.

We are subject to the SEC’s internal control over financial reporting requirements and may become subject to the auditor attestation requirements as of the end of the 2022 fiscal year. Prior to the Business Combination, we were a special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more operating businesses. As a result, previously existing internal controls are no longer applicable or comprehensive enough as of September 30, 2021, as our operations prior to the Business Combination were insignificant compared to those of the consolidated entity post-Business Combination. The design of internal control over financial reporting for our business post-Business Combination has required and will continue to require significant time and resources from management and other personnel.

Effective internal controls are necessary for us to provide reliable and accurate financial reporting and financial statements for external purposes in accordance with generally accepted accounting principles. A failure to maintain effective internal control processes could lead to violations, unintentional or otherwise, of laws and regulations. As disclosed in the Explanatory Note and Part I, Item 4 “Controls and Procedures,” the Company has determined that there were material weaknesses in its internal control over financial reporting at the time of the preparation of its financial statements for the period ended September 30, 2021. As a result, the Company concluded that its internal control over financial reporting continued to be ineffective as of September 30, 2021. The Company is implementing remedial measures to address the material weaknesses and, while there can be no assurance that the efforts will be successful, the Company plans to remediate the material weaknesses as expeditiously as possible. If the Company is unable to remediate the material weaknesses, or is otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, its ability to record, process, and report financial information accurately, and to prepare financial statements within required time periods, is expected to be adversely affected. Litigation, government investigations, or regulatory enforcement actions arising out of such failure or alleged failure to comply with applicable laws and regulations could subject us to civil and criminal penalties that could materially and adversely affect our reputation, financial condition, and operating results. The material weaknesses, remediation efforts, and any related litigation or regulatory inquiries will require management attention and resources, and could result in unanticipated cost which could negatively affect our relationships with suppliers and customers, and may also negatively affect investor confidence in the Company’s financial statements, cause it reputational harm, and raise other risks to its operations. In addition, the costs and other effects of defending litigation or addressing regulatory enforcement actions against us may be difficult to determine and could adversely affect our financial condition and operating results.

Our restatement of certain of our previously issued financial statements may impose unanticipated costs, affect investor confidence, and cause reputational harm.

As discussed in the Explanatory Note and Part I, Item 1 Financial Statements Note 2. Restatement of Previously Issued Financial Statements to the condensed consolidated financial statements, this Form 10-Q/A amends the Original Filing to correct (1) the errors related to the recognition of revenue and associated balances for China FCEV transactions, and errors related to the recognition of revenue and associated balances for European FCEV transactions; and (2) the Evaluation of Disclosure Controls and Procedures included under Item 4. As a result, the Company has incurred, and may continue to incur, unanticipated costs in connection with or related to the Special Committee investigation and the Restatement, as well as any litigation or regulatory inquiries that may result and have resulted therefrom. In addition, the investigation, the Restatement, and related media coverage may negatively affect our relationships with suppliers and customers and may also negatively affect investor confidence in the accuracy of the Company’s financial disclosures and cause it reputational harm.


None.
Item 3.
Defaults Upon Senior Securities
None.
Item 4.
Mine Safety Disclosures
Not applicable.
Item 5.
Other Information
None.
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Item 6.Exhibits
Exhibit
Item 6.
Number
Exhibits.
Description
Exhibit
Number
3.1
Description
3.1Second Amended and Restated Certificate of Incorporation of New Hyzon (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 22, 2021)
3.2
10.14.1
10.1
10.210.2#
10.310.3#
10.410.4#
10.510.5#
31.110.6#
31.1
31.232.1*
32.1Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350
32.2Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350
101.INSInline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
_________________________
*    This information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act
#    Indicates management contract or compensatory arrangement.
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SIGNATURE

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.
Hyzon Motors Inc.
Date: August 13, 2021March 14, 2023By:By:
/s/ Mark Gordon
Parker Meeks
Name:Name:Mark GordonParker Meeks
Title:Title:
Chief FinancialExecutive Officer
(Principal Financial Officer)
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