UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________
FORM 10-Q
______________________
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the quarterly period ended September 30, 2021March 31, 2022
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period fromto
_________ to _________
Commission file number:
001-39160
______________________
FISKER INC.
(Exact name of registrant as specified in its charter)
______________________
Delaware | 82-3100340 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
1888 Rosecrans Avenue, Manhattan Beach, CA 90266
(Address of principal executive offices)
(833)
434-7537
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
______________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||||
Class A Common Stock, par value of $0.00001 per share | FSR | New York Stock Exchange | ||||||||||||||
Securities registered pursuant to Section 12(g) of the Act: None
______________________
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation(§ (§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 ☒ No ☐
S-T
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 Rule12b-2
of the Exchange Act.| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||
| Non-accelerated filer | ☐ | |||||||||||||
| Smaller reporting company | ||||||||||||||
| Emerging growth company | ||||||||||||||
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. ☐
¨Indicate by check mark whether the registrant is a shell company (as defined in
Rule
). Yes ☐ No ☒12b-2
of the Exchange ActAs of November 11, 2021,May 5, 2022, the registrant had 163,840,984164,857,357 shares of Class A Common Stock and 132,354,128 shares of Class B Common Stock, par value $0.00001 per share,
outstanding.TABLE OF CONTENTS
2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on(this (this “report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are forward-looking and as such are not historical facts. These forward-looking statements include, without limitation, statements regarding future financial performance, business strategies, expansion plans, future results of operations, estimated revenues, losses, projected costs, prospects, plans and objectives of management. These forward-looking statements are based on our management’s current expectations, estimates, projections and beliefs, as well as a number of assumptions concerning future events, 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, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would” and variations thereof and similar words and expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about:
Form 10-Q
•our ability to grow and manage growth profitably;
•our ability to continue to enter into binding contracts with OEMs
or tier-one
suppliers in order to execute on our business plan;•our ability to execute our business model, including market acceptance of our planned products and services;
•our expansion plans and opportunities;
•our expectations regarding future expenditures;
•our ability to raise capital in the future;
•our ability to attract and retain qualified employees and key personnel;
•the possibility that we may be adversely affected by other economic, business or competitive factors;
•changes in applicable laws or regulations;
•the outcome of any known and unknown litigation and regulatory proceedings;
•our ability to maintain the listing of our Class A common stock, par value $0.00001 per$0.00001per share (“("Class A Common Stock”Stock") on the NYSE;
•the possibility
that COVID-19,
the Russian-Ukraine war or rising inflation may adversely affect the results of our operations, financial position and cash flows; and•other factors described in this report, including those described in the section entitled “” under Part I, Item 1A of our most recent Annual Report on Form10-K/A 10-K for the year ended December 31, 20202021 filed with the U.S. Securities and Exchange Commission (“SEC”) on May 17, 2021,February 28, 2022, as supplemented by Quarterly Reports on Formand subsequently filed with the SEC.
Risk Factors
10-Q
The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled “” under Part I, Item 1A of our Annual Report on Form10-K/A 10-K for the year ended December 31, 20202021 filed with the SEC on May 17, 2021.February 28, 2022. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the effect of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
Risk Factors
The forward-looking statements made by us in this report speak only as of the date of this report. Except to the extent required under the federal securities laws and rules and regulations of the SEC, we disclaim any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect
3
the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.
WEBSITE AND SOCIAL MEDIA DISCLOSURE
We use our website (www.fiskerinc.com) and various social media channels as a means of disclosing information about the company and its products to its customers, investors and the public (e.g., @fiskerinc, @fiskerofficial, #fiskerinc, #henrikfisker and #fisker on Twitter, Facebook, Instagram, YouTube, TikTok and LinkedIn). The information posted on social media channels is not incorporated by reference in this report or in any other report or document we file with the SEC. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press
releases, SEC filings and public conference calls and webcasts. In addition, you may automatically.
receive e-mail
alerts and other information about the Company when you enrollyour e-mail address
by visiting the “Investor Email Alerts” section of our website at www.investors.fiskerinc.com. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automaticallyreceive e-mail
alerts and other information about the Company when you enrollyour e-mail
address by visiting the “Investor Email Alerts” section of our website atwww.investors.fiskerinc.com.
ADDITIONAL INFORMATION
Unless the context indicates otherwise, references in this report to the “Company,” “Fisker,” “we,” “us,” “our” and similar terms refer to Fisker Inc. (f/k/a Spartan Energy Acquisition Corp.) and its consolidated subsidiaries (including Fisker Group Inc. or Legacy Fisker). References to “Spartan” refer to our predecessor company prior to the consummation of the Business Combination (as defined below).
4
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets
Fisker Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
As of March 31, 2022 | As of December 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,042,562 | $ | 1,202,439 | |||||||
| Prepaid expenses and other current assets | 32,192 | 30,423 | |||||||||
| Total current assets | 1,074,754 | 1,232,862 | |||||||||
| Non-current assets: | |||||||||||
| Property and equipment, net | 122,662 | 85,643 | |||||||||
| Intangible assets | 238,219 | 231,525 | |||||||||
| Right-of-use assets, net | 17,385 | 18,285 | |||||||||
| Equity investment | 15,120 | — | |||||||||
| Other non-current assets | 24,393 | 24,637 | |||||||||
| Total non-current assets | 417,779 | 360,090 | |||||||||
| TOTAL ASSETS | $ | 1,492,533 | $ | 1,592,952 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 10,890 | $ | 28,143 | |||||||
| Accrued expenses | 102,377 | 79,634 | |||||||||
| Lease liabilities | 4,612 | 4,552 | |||||||||
| Total current liabilities | 117,879 | 112,329 | |||||||||
| Non-current liabilities: | |||||||||||
| Customer deposits | 11,055 | 6,300 | |||||||||
| Lease liabilities | 14,021 | 14,933 | |||||||||
| Convertible senior notes | 659,552 | 659,348 | |||||||||
| Total non-current liabilities | 684,628 | 680,581 | |||||||||
| Total liabilities | 802,507 | 792,910 | |||||||||
| COMMITMENTS AND CONTINGENCIES (Note 13) | 0 | 0 | |||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $0.00001 par value; 15,000,000 shares authorized; no shares issued and outstanding as of March 31, 2022 and December 31, 2021 | — | — | |||||||||
| Class A Common stock, $0.00001 par value; 750,000,000 shares authorized; 164,836,936 and 164,377,306 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively | 2 | 2 | |||||||||
| Class B Common stock, $0.00001 par value; 150,000,000 shares authorized; 132,354,128 shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 1 | 1 | |||||||||
| Additional paid-in capital | 1,431,342 | 1,419,284 | |||||||||
| Accumulated deficit | (741,319) | (619,245) | |||||||||
| Total stockholders’ equity | 690,026 | 800,042 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,492,533 | $ | 1,592,952 | |||||||
As of September 30, 2021 | As of December 31, 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,400,411 | $ | 991,158 | ||||
Prepaid expenses and other current assets | 22,856 | 9,872 | ||||||
Total current assets | 1,423,267 | 1,001,030 | ||||||
Non-current assets: | ||||||||
Property and equipment, net | 18,558 | 945 | ||||||
Intangible assets | 200,089 | 58,041 | ||||||
Right-of-use | 19,178 | 2,548 | ||||||
Other non-current assets | 1,352 | 1,329 | ||||||
Total non-current assets | 239,177 | 62,863 | ||||||
TOTAL ASSETS | $ | 1,662,444 | $ | 1,063,893 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 13,142 | $ | 5,159 | ||||
Accrued expenses | 60,198 | 7,408 | ||||||
Lease liabilities | 4,023 | 655 | ||||||
Total current liabilities | 77,363 | 13,222 | ||||||
Non-current liabilities: | ||||||||
Customer deposits | 5,085 | 3,527 | ||||||
Warrants liability | 0 | 138,102 | ||||||
Lease liabilities | 15,831 | 1,912 | ||||||
Convertible senior notes | 659,129 | 0 | ||||||
Total non-current liabilities | 680,045 | 143,541 | ||||||
Total liabilities | 757,408 | 156,763 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 13) | 0 | 0 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.00001 par value; 15,000,000 shares authorized;0 shares issued and outstanding as of September 30, 2021 and December 31, 2020 | 0 | 0 | ||||||
Class A Common stock, $0.00001 par value; 750,000,000 shares authorized; 163,816,328 and 144,912,362 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | 2 | 1 | ||||||
Class B Common stock, $0.00001 par value; 150,000,000 shares authorized; 132,354,128 shares issued and outstanding as of September 30, 2021 and December 31, 2020 | 1 | 1 | ||||||
Additional paid-in capital | 1,385,846 | 1,055,128 | ||||||
Accumulated deficit | (480,813 | ) | (147,904 | ) | ||||
Receivable for warrant exercises | 0 | (96 | ) | |||||
Total stockholders’ equity | 905,036 | 907,130 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,662,444 | $ | 1,063,893 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
5
Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Months ended March 31, 2022 and Nine Months ended September 30, 2021 and 2020
(In thousands, except share and per share data)
(Unaudited)
Three-Months Ended March 31, | ||||||||||||||
| 2022 | 2021 | |||||||||||||
| Revenue | $ | 12 | 22 | |||||||||||
| Cost of goods sold | 11 | 17 | ||||||||||||
| Gross margin | 1 | 5 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||
| General and administrative | 21,992 | $ | 5,832 | |||||||||||
| Research and development | 101,460 | 27,271 | ||||||||||||
| Total operating costs and expenses | 123,452 | 33,103 | ||||||||||||
| Loss from operations | (123,451) | (33,098) | ||||||||||||
| Other income (expense): | ||||||||||||||
| Other income (expense) | (371) | 75 | ||||||||||||
| Interest income | 265 | 156 | ||||||||||||
| Interest expense | (4,383) | — | ||||||||||||
| Change in fair value of derivatives | — | (145,249) | ||||||||||||
| Foreign currency gain | 746 | 1,273 | ||||||||||||
| Unrealized gains recognized on equity securities | 5,120 | — | ||||||||||||
| Total other income (expense) | 1,377 | (143,745) | ||||||||||||
| Net loss | $ | (122,074) | $ | (176,843) | ||||||||||
| Net loss per common share | ||||||||||||||
| Net loss per share attributable to Class A and Class B Common shareholders- Basic and Diluted | $ | (0.41) | $ | (0.63) | ||||||||||
| Weighted average shares outstanding | ||||||||||||||
| Weighted average Class A and Class B Common shares outstanding- Basic and Diluted | 296,508,619 | 279,837,563 | ||||||||||||
Three-Months Ended September 30, | Nine-Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenue | $ | 15 | 0 | $ | 65 | 0 | ||||||||||
Cost of goods sold | 16 | 0 | 47 | 0 | ||||||||||||
Gross margin | (1 | ) | 0 | 18 | 0 | |||||||||||
Operating costs and expenses: | ||||||||||||||||
General and administrative | 10,273 | $ | 6,521 | 24,012 | 8,056 | |||||||||||
Research and development | 99,291 | 3,402 | 171,807 | 3,963 | ||||||||||||
Total operating costs and expenses | 109,564 | 9,923 | 195,819 | 12,019 | ||||||||||||
Loss from operations | (109,565 | ) | (9,923 | ) | (195,801 | ) | (12,019 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Other income (expense) | (84 | ) | 6 | (98 | ) | 15 | ||||||||||
Interest income | 155 | 8 | 415 | 13 | ||||||||||||
Interest expense | (2,147 | ) | (765 | ) | (2,147 | ) | (1,326 | ) | ||||||||
Change in fair value of derivatives | 0 | (29,149 | ) | (138,436 | ) | (29,409 | ) | |||||||||
Foreign currency gain (loss) | 1,797 | 159 | 3,158 | 122 | ||||||||||||
Total other income (expense) | (279 | ) | (29,741 | ) | (137,108 | ) | (30,585 | ) | ||||||||
Net loss | $ | (109,844 | ) | $ | (39,664 | ) | (332,909 | ) | (42,604 | ) | ||||||
Net loss per common share | ||||||||||||||||
Net loss per share attributable to Class A and Class B Common shareholders- Basic and Diluted | $ | (0.37 | ) | $ | (0.38 | ) | $ | (1.15 | ) | $ | (0.40 | ) | ||||
Weighted average shares outstanding | ||||||||||||||||
Weighted average Class A and Class B Common shares outstanding- Basic and Diluted | 296,133,530 | 105,549,787 | 290,445,265 | 105,476,293 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Temporary Equity and Stockholders’ Equity (Deficit)
(In thousands, except share data)
(Unaudited)
| Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Receivable For Warrant Exercises | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | 144,912,362 | $ | 1 | 132,354,128 | $ | 1 | $ | 1,055,128 | $ | (96) | $ | (147,904) | $ | 907,130 | |||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | 817 | — | — | 817 | |||||||||||||||||||||||||||||||||||||||
| Exercise of stock options and issuance of restricted stock unit awards, net of statutory tax withholdings | 163,397 | — | — | — | 106 | (5) | — | 101 | |||||||||||||||||||||||||||||||||||||||
| Exercise of warrants | 24,140,361 | 1 | — | — | 341,400 | (288) | — | 341,113 | |||||||||||||||||||||||||||||||||||||||
| Shares surrendered upon exercise of warrants | (8,008,697) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | (176,843) | (176,843) | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2021 | 161,207,423 | $ | 2 | 132,354,128 | $ | 1 | $ | 1,397,451 | $ | (389) | $ | (324,747) | $ | 1,072,318 | |||||||||||||||||||||||||||||||||
| Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Receivable For Warrant Exercises | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | 164,377,306 | $ | 2 | 132,354,128 | $ | 1 | $ | 1,419,284 | $ | — | $ | (619,245) | $ | 800,042 | |||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | 5,065 | — | — | 5,065 | |||||||||||||||||||||||||||||||||||||||
| Exercise of stock options and issuance of restricted stock unit awards, net of statutory tax withholdings | 459,630 | — | — | — | 298 | — | — | 298 | |||||||||||||||||||||||||||||||||||||||
| Net Loss | — | — | — | — | — | — | (122,074) | (122,074) | |||||||||||||||||||||||||||||||||||||||
| Recognition of Magna Warrants | — | — | — | — | 6,695 | — | — | 6,695 | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2022 | 164,836,936 | $ | 2 | 132,354,128 | $ | 1 | $ | 1,431,342 | $ | — | $ | (741,319) | $ | 690,026 | |||||||||||||||||||||||||||||||||
Series A Convertible Preferred | Series B Convertible Preferred | Founders Convertible Preferred | Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Receivable For Warrant Exercises | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | — | $ | — | — | $ | — | — | $ | — | 163,711,901 | $ | 2 | 132,354,128 | $ | 1 | $ | 1,481,556 | $ | — | $ | (370,969 | ) | $ | 1,110,590 | ||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | 1,043 | — | — | 1,043 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options and issuance of restricted stock unit awards, net of statutory tax withholdings | — | — | — | — | — | — | 104,427 | — | — | — | 35 | — | — | 35 | ||||||||||||||||||||||||||||||||||||||||||
Purchase of capped call options | — | — | — | — | — | — | — | — | — | (96,788 | ) | — | (96,788 | ) | ||||||||||||||||||||||||||||||||||||||||||
Net Loss | — | — | — | — | — | — | — | — | — | — | — | — | (109,844 | ) | (109,844 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | — | $ | — | — | $ | — | — | $ | — | 163,816,328 | $ | 2 | 132,354,128 | $ | 1 | $ | 1,385,846 | $ | — | $ | (480,813 | ) | $ | 905,036 | ||||||||||||||||||||||||||||||||
Series A Convertible Preferred | Series B Convertible Preferred | Founders Convertible Preferred | Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Receivable For Warrant Exercises | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | — | $ | — | — | $ | — | — | $ | — | 144,912,362 | $ | 1 | 132,354,128 | $ | 1 | $ | 1,055,128 | $ | (96 | ) | $ | (147,904 | ) | $ | 907,130 | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | 4,078 | — | — | 4,078 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options and issuance of restricted stock unit awards, net of statutory tax withholdings | — | — | — | — | — | — | 1,095,446 | — | — | — | (53 | ) | — | — | (53 | ) | ||||||||||||||||||||||||||||||||||||||||
Exercise of warrants | 27,751,587 | 1 | — | — | 365,463 | 458 | — | 365,922 | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares surrendered upon exercise of warrants | — | — | — | — | — | — | (9,943,067 | ) | — | — | — | — | (384 | ) | — | (384 | ) | |||||||||||||||||||||||||||||||||||||||
Purchase of capped call option | — | — | — | — | — | — | — | — | — | — | (96,788 | ) | — | — | (96,788 | ) | ||||||||||||||||||||||||||||||||||||||||
Stock issuance costs and redemption payments | — | — | — | — | — | — | — | — | — | — | (22 | ) | 22 | — | — | |||||||||||||||||||||||||||||||||||||||||
Vesting of Magna warrants | — | — | — | — | — | — | — | — | — | — | 58,040 | — | — | 58,040 | ||||||||||||||||||||||||||||||||||||||||||
Receivable for warrant exercises collected | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net Loss | — | — | — | — | — | — | — | — | — | — | — | — | (332,909 | ) | (332,909 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | — | $ | — | — | $ | — | — | $ | — | 163,816,328 | $ | 2 | 132,354,128 | $ | 1 | $ | 1,385,846 | $ | — | $ | (480,813 | ) | $ | 905,036 | ||||||||||||||||||||||||||||||||
Series A Convertible Preferred | Series B Convertible Preferred | Founders Convertible Preferred | Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Receivable For Warrant Exercises | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 16,983,241 | $ | 4,634 | 3,765,685 | $ | 6,386 | 27,162,191 | $ | — | 266,015 | $ | — | 105,191,937 | $ | 1 | $ | 849 | $ | — | $ | (20,840 | ) | $ | (19,990 | ) | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | 264 | — | — | 264 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of stock option | — | — | — | — | — | — | 91,832 | — | — | — | 60 | — | — | 60 | ||||||||||||||||||||||||||||||||||||||||||
Net Loss | — | — | — | — | — | — | — | — | — | — | — | — | (39,664 | ) | (39,664 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | 16,983,241 | $ | 4,634 | 3,765,685 | $ | 6,386 | 27,162,191 | $ | — | 357,847 | $ | — | 105,191,937 | $ | 1 | $ | 1,173 | $ | — | $ | (60,504 | ) | $ | (59,330 | ) | |||||||||||||||||||||||||||||||
Series A Convertible Preferred | Series B Convertible Preferred | Founders Convertible Preferred | Class A Common Stock | Class B Common Stock | Additional Paid-in Capital | Receivable For Warrant Exercises | Accumulated Deficit | Stockholders’ Deficit | ||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019 | 16,983,241 | $ | 4,634 | 3,765,685 | $ | 6,386 | 27,162,191 | $ | — | 210,863 | $ | — | 105,191,937 | $ | 1 | $ | 756 | $ | — | $ | (17,900 | ) | $ | (17,143 | ) | |||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | — | — | — | — | 334 | — | — | 334 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of stock option | — | — | — | — | — | — | 146,984 | — | — | — | 83 | — | — | 83 | ||||||||||||||||||||||||||||||||||||||||||
Net Loss | — | — | — | — | — | — | — | — | — | — | — | — | (42,604 | ) | (42,604 | ) | ||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2020 | 16,983,241 | $ | 4,634 | 3,765,685 | $ | 6,386 | 27,162,191 | $ | — | 357,847 | $ | — | 105,191,937 | $ | 1 | $ | 1,173 | $ | — | $ | (60,504 | ) | $ | (59,330 | ) | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, except share data)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net loss | $ | (122,074) | $ | (176,843) | |||||||
| Reconciliation of net loss to net cash used in operating activities: | |||||||||||
| Stock-based compensation | 5,065 | 817 | |||||||||
| Depreciation | 379 | 93 | |||||||||
| Amortization of right-of-use asset | 900 | 182 | |||||||||
| Accretion of debt issuance costs | 204 | — | |||||||||
| Change in fair value of derivative liabilities | — | 145,249 | |||||||||
| Unrealized gains recognized on equity securities | (5,120) | — | |||||||||
| Unrealized foreign currency gain | (744) | — | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Prepaid expenses and other assets | (1,524) | 2,469 | |||||||||
| Accounts payable and accrued expenses | 13,024 | (1,513) | |||||||||
| Customer deposits | 4,755 | 855 | |||||||||
| Change in operating lease liability | (853) | (119) | |||||||||
| Net cash used in operating activities | (105,988) | (28,810) | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Acquisition of equity investment | (10,000) | — | |||||||||
| Purchases of property and equipment and intangible asset | (45,750) | (65,665) | |||||||||
| Net cash used in investing activities | (55,750) | (65,665) | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Proceeds from the exercise of warrants | — | 88,638 | |||||||||
| Proceeds from the exercise of stock options | 1,861 | 101 | |||||||||
| Net cash provided by financing activities | 1,861 | 88,739 | |||||||||
| Net decrease in cash and cash equivalents | (159,877) | (5,736) | |||||||||
| Cash and cash equivalents, beginning of the period | 1,202,439 | 991,158 | |||||||||
| Cash and cash equivalents, end of the period | $ | 1,042,562 | $ | 985,422 | |||||||
| Supplemental disclosure of cash flow information | |||||||||||
| Cash paid for interest | $ | 9,642 | $ | — | |||||||
Nine- Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net loss | $ | (332,909 | ) | $ | (42,604 | ) | ||
Reconciliation of net loss to net cash used in operating activities: | ||||||||
Stock-based compensation | 4,078 | 334 | ||||||
Depreciation | 397 | 26 | ||||||
Amortization of right-of-use | 1,683 | 101 | ||||||
Accretion of debt issuance costs | 153 | 1,091 | ||||||
Change in fair value of derivative liabilities | 138,436 | 29,409 | ||||||
Reclassification of expensed payments to arrangers of convertible security | 0 | 3,500 | ||||||
Unrealized loss on foreign currency transactions | (1,693 | ) | 12 | |||||
Changes in operating assets and liabilities: | ||||||||
Prepaid expenses and other assets | (12,945 | ) | (745 | ) | ||||
Accounts payable and accrued expenses | 41,891 | (952 | ) | |||||
Customer deposits | 1,558 | 1,994 | ||||||
Change in operating lease liability | (1,026 | ) | (107 | ) | ||||
Net cash (used in) provided by operating activities | (160,377 | ) | (7,941 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Purchases of property and equipment and intangible asset | (81,828 | ) | (224 | ) | ||||
Net cash used in investing activities | (81,828 | ) | (224 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from the issuance of bridge notes | 0 | 5,371 | ||||||
Proceeds from issuance of convertible notes | 667,500 | 46,500 | ||||||
Payments for debt issuance costs | (8,523 | ) | 0 | |||||
Payments for capped call option | (96,788 | ) | 0 | |||||
Payments of deferred offering costs | 0 | (671 | ) | |||||
Proceeds from the exercise of warrants | 89,023 | 0 | ||||||
Payments for redemption of unexercised warrants | (22 | ) | 0 | |||||
Payments to tax authorities for statutory tax withholdings | (4,891 | ) | 0 | |||||
Proceeds from the exercise of stock options | 5,159 | 83 | ||||||
Net cash provided by financing activities | 651,458 | 51,283 | ||||||
Net increase (decrease) in cash and cash equivalents | 409,253 | 43,118 | ||||||
Cash and cash equivalents, beginning of the period | 991,158 | 1,858 | ||||||
Cash and cash equivalents, end of the period | $ | 1,400,411 | $ | 44,976 | ||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for interest | $ | 0 | $ | 0 | ||||
Cash paid for income taxes | $ | 0 | $ | 0 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
Fisker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(In thousands, except share data)
(Unaudited)
1. Overview of the Company
Fisker Inc. (“Fisker” or the “Company”) was originally incorporated in the State of Delaware
on
October 13, 2017 as a special purpose acquisition company under the name Spartan Energy Acquisition Corp. (“Spartan”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses. Spartan completed its Initial Public Offering in August 2018. On October 29, 2020, Spartan’s wholly-owned subsidiary merged with and into Fisker Holdings Inc. (f/k/a Fisker Inc.), a Delaware corporation (“Legacy Fisker”), with Fisker Holdings Inc. surviving the merger as a wholly-owned subsidiary of Spartan (the “Business Combination”). In connection with the Business Combination, Spartan changed its name to Fisker Inc.Legacy Fisker was incorporated in the State of Delaware on September 21, 2016. In connection with its formation, the Company entered into stock purchase agreements with the Company’s founders, whereby the founders contributed certain intellectual property (primarily trademarks) and interests in Platinum IPR LLC. Platinum IPR LLC was an entity solely owned by the Company’s founders, which held Fisker trademarks registered in a variety of jurisdictions around the world. The founders’ transfer of its interest in Platinum IPR LLC and the transfer of trademarks was accounted for as a transfer of assets between entities under common control. The carrying amount of the transferred assets is recorded based on the prior carrying value, which was de minimis.
The Company’s common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “FSR”. The Company’s warrants previously traded on the New York Stock Exchange under the symbol “FSR WS” and on April 19, 2021, the NYSE filedthereafter (refer to Note 8 for further information).thereafter.
a Form 25-NSE with
respect to the warrants; the formal delisting of the warrants became effective ten days 2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”).
Unaudited Interim Financial Statements
The condensed consolidated balance sheet as of September 30, 2021,March 31, 2022, the condensed consolidated statements of operations, and the condensed consolidated statements of changes in temporary equity and stockholders’ equity, (deficit) for the three-months and nine-months ended September 30, 2021 and 2020, and the condensed consolidated statements of cash flows for the nine-monthsthree-months ended September 30,March 31, 2022 and 2021, and 2020, as well as other information disclosed in the accompanying notes, are unaudited. The consolidated balance sheet as of December 31, 20202021 was derived from the audited consolidated financial statements as of that date. The interim condensed consolidated financial statements and the accompanying notes should be read in conjunction with the annual consolidated financial statements and the accompanying notes contained in our Annual Report on20202021 filed with the SEC on May 17, 2021.February 28, 2022.
Form 10-K/A
10-K for the year ended December 31, Comprehensive loss is not separately presented as the amounts are equal to net loss for the three-months ended March 31, 2022 and nine-months ended September 30, 2021 and 2020.2021.
The interim condensed consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The condensed consolidated financial statements for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future years or interim periods.
Going Concern, Liquidity and Capital Resources
The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern over the next twelve months from the date of filing this report. Since inception, the Company has incurred significant accumulated losses of approximately $481 million.$741 million . As of September 30, 2021,March 31, 2022, the Company had approximately $1,400$1,043 million in cash and cash equivalents. The Company expects to continue to incur significant operating losses for the foreseeable future. Proceeds from the Business Combination, issuance of convertible senior notes and exercised public warrants and optionsexercise provide the Company the liquidity and capital resources to fund its operating expenses and capital expenditure requirements for at least the next 12 months from issuance.
Supplier Risk
The Company continuedfinalized nomination of suppliers with an accelerated phase during the quarter for engineering, development, testing, tooling and production of components for serial production of its vehicles. As of September 30, 2021,March 31, 2022, these supplier contracts do not represent unconditional purchase obligations withor specified minimum quantities provisions.provisions with the exception of an agreement securing battery capacity for the Fisker Ocean SUV. Under the terms of the agreement, the battery supplier will deliver 2 different battery solutions for the Fisker Ocean SUV, with an initial battery capacity of over 5 gigawatt-hours annually, from 2023 through 2025.
take-or-pay
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP required management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the condensed consolidated financial statements and accompanying notes. The Company bases these estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.
Fair Value Measurements
The Company follows the accounting guidance in ASC 820,, for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
Fair Value Measurement
The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices, for similar assets or liabilities that are directly or indirectly observable in the marketplace.
Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Income Taxes
Income taxes are recorded in accordance with ASC 740,(“ (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
Income Taxes
10
reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
There are transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. As of September 30, 2021,March 31, 2022, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2020.2021.
The Company’s income tax provision consists of an estimate for U.S. federal, foreign and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. The Company maintains a valuation allowance against the full value of its U.S. and state net deferred tax assets because the Company believes the recoverability of the tax assets is not more likely than not as of September 30, 2021.March 31, 2022.
Derivative Liability
The Company accounts for its public and private warrants as a derivative liability initially measured at its fair values and remeasured in the condensed consolidated statements of operations at the end of each reporting period. When the warrants are exercised, the corresponding derivative liability isderecognizedde-recognized derivative liability results in an increase in additional paid in capital equal to the difference between the fair value of the underlying Class A common stock and its par value. A cashless exercise results in the warrant holder surrendering Class A common stock equal to the stated warrant exercise price based on the contractual terms in the warrant agreement that govern the cashless conversion.
de-recognized
at the underlying fair value of the Class A common stock that is issued to the warrant holder less any cash paid in accordance with the warrant agreement. Upon either cash or cashless exercise, the Equity Awards
The grant date for an option or stock award is established when the grantee has a mutual understanding of the key terms and conditions of the option or award, the award is authorized, including all the necessary approvals unless approval is essentially a formality or perfunctory, and the grantee begins to benefit from, or be adversely affected by, underlying changes in the price of the Company’s Class A common shares. An award or option is authorized on the date that all approval requirements are completed (e.g., action by the compensation committee approving the award and the number of options, restricted shares or other equity instruments to be issued to individual employees).
Net Loss per Share of Common Stock
Basic net loss per share of common stock is calculated using the
two-class
method under which earnings are allocated to both common shares and participating securities. Undistributed net losses are allocated entirely to common shareholders since the participating security has no contractual obligation to share in the losses. Basic net loss per share is calculated by dividing the net loss attributable to common shares by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share of common stock is computed by dividing the net loss using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of stock-based compensation awards and warrants to purchase common stock (using the treasury stock method).Recently adopted accounting pronouncements
In December 2019,2020, the FASB issued ASU, which is intended to simplify various aspects related to accounting for income taxes. ASU2021.2022.
No. 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
No. 2019-12
removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. This guidance had no effect on the Company’s condensed consolidated financial statements upon adoption in In September 2020,March 2021, the FASB issued ASU. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU eliminates the current models that require separation of beneficial conversion and cash
2020-06,
Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic815-40)
11
conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The ASU also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. The ASU amends the diluted earnings per share guidance, including the requirement to use
if-converted
method for all convertible instruments and an update for instruments that can be settled in either cash or shares. We early adopted ASU2020-06
effective on January 1, 2021 applying the modified retrospective method. Since the Company does not have any financial instruments as of January 1, 2021 within the scope of ASU2020-06,
early adoption had no effect on the Company’s condensed consolidated financial statements.In June 2016, the FASB issued ASU. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. This ASU also provides updated guidance regarding the impairment ofdebt securities and includes additional disclosure requirements. The new guidance is effective forTheOn December 31, 2021, the Company is currently evaluatingbecame a large accelerated filer, as defined by the SEC, and, as a result, adopted this guidance effective January 1, 2021, which did not have a material impact of this standard on its condensedthe Company's consolidated financial statements.
No. 2016-13,
Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
available-for-sale
non-public
companies, and public business entities that meet the definition of a Smaller Reporting Company as defined by the Securities and Exchange Commission (SEC), for interim and annual periods beginning after December 15, 2022. 3. Business Combination and Recapitalization
The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):
| Fair Value Measured as of March 31, 2022: | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets included in: | |||||||||||||||||||||||
| Money market funds included in cash and cash equivalents | $ | 882,894 | $ | — | $ | — | $ | 882,894 | |||||||||||||||
| Equity investment | $ | 15,120 | $ | — | $ | — | $ | 15,120 | |||||||||||||||
| Total fair value | $ | 898,014 | $ | — | $ | — | $ | 898,014 | |||||||||||||||
| Fair Value Measured as of December 31, 2021: | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets included in: | |||||||||||||||||||||||
| Money market funds included in cash and cash equivalents | $ | 1,191,079 | $ | — | $ | — | $ | 1,191,079 | |||||||||||||||
| Total fair value | $ | 1,191,079 | $ | — | $ | — | $ | 1,191,079 | |||||||||||||||
Fair Value Measured as of September 30, 2021: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets included in: | ||||||||||||||||
Money market funds included in cash and cash equivalents | $ | 1,394,181 | $ | — | $ | — | $ | 1,394,181 | ||||||||
Total fair value | $ | 1,394,181 | $ | — | $ | — | $ | 1,394,181 | ||||||||
Fair Value Measured as of December 31, 2020: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets included in: | ||||||||||||||||
Money market funds included in cash and cash equivalents | $ | 987,728 | $ | — | $ | — | $ | 987,728 | ||||||||
Total fair value | $ | 987,728 | $ | — | $ | — | $ | 987,728 | ||||||||
Liabilities included in: | ||||||||||||||||
Warrants liability | $ | 90,487 | $ | — | $ | 47,615 | $ | 138,102 | ||||||||
Total fair value | $ | 90,487 | $ | — | $ | 47,615 | $ | 138,102 | ||||||||
The fair value of the Company’s money market funds is determined using quoted market prices in active markets for identical assets.
The carrying amounts included in the Condensed Consolidated Balance Sheets under Current assets approximate fair value because of the short maturity of these instruments.
12
On July 28, 2021, the Company made a commitment for a private investment in public equity (PIPE) supporting the planned merger of European EV charging network, Allego B.V. (“Allego”) with Spartan Acquisition Corp. III (NYSE: SPAQ), a publicly-listed special purpose acquisition company. Fisker Inc. is the exclusive electric vehicle automaker in the PIPE and, in parallel, agreed to terms to deliver a range of charging options for its customers in Europe. On March 16, 2022, the merger closed and the Company delivered cash of $10 million in exchange for 1,000,000 shares of Allego's Class A common stock (NYSE:ALLG). The Company's ownership percentage is less than 5% and does not result in significant influence. The shares acquired by Fisker were not registered with the SEC as of March 31, 2022. Allego is required to file with the SEC a registration statement registering the resale of the shares acquired (the “Registration Statement”). The Company cannot sell its shares until the Registration Statement is declared effective by the SEC. As the Company cannot predict when the Registration Statement will be declared effective, it has classified its equity investment in Allego as a noncurrent asset. Unrealized gains recognized during the three-months ended March 31, 2022 on equity securities still held as of March 31, 2022 totaled $5.1 million as shown separately in the Condensed Consolidated Statement of Operations. Subsequent to March 31, 2022, the fair value measurement of the Company's equity investment declined to $10.2 million based on the closing market price of ALLG Class A common stock of $10.20 on May 6, 2022..
We carry the convertible senior notes at face value less the unamortized debt issuance costs on our consolidated balance sheets and present that fair value for disclosure purposes only. As of September 30, 2021,March 31, 2022, the fair value of the 2026 Notes was $649.1$564.9 million. The estimated fair value of the convertible notes, which are classified as Level 2 financial instruments, was determined based on the estimated or actual bid prices of the convertible notes in anmarket on the last business day of the period.
over-the-counter
non-operating
expense. For the Balance as of December 31, 2020 | $ | 47,615 | ||
Change in fair value | 63,526 | |||
Cashless exercise of warrants | (111,141 | ) | ||
Balance as of September 30, 2021 | $ | 0 | ||
The Company has the following intangible assets (in thousands):
As of September 30, 2021 | ||||||||||||||||
Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||
Capitalized cost - manufacturing | 8 years | $ | 200,089 | $ | 0 | $ | 200,089 | |||||||||
| $ | 200,089 | $ | 0 | $ | 200,089 | |||||||||||
| As of March 31, 2022 | |||||||||||||||||||||||
| Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||
| Capitalized cost - manufacturing | 8 years | $ | 238,219 | $ | — | $ | 238,219 | ||||||||||||||||
| $ | 238,219 | $ | — | $ | 238,219 | ||||||||||||||||||
| As of December 31, 2021 | |||||||||||||||||||||||
| Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||
| Capitalized cost - manufacturing | 8 years | $ | 231,525 | $ | — | $ | 231,525 | ||||||||||||||||
| $ | 231,525 | $ | — | $ | 231,525 | ||||||||||||||||||
As of December 31, 2020 | ||||||||||||||||
Amortization Period | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||
Capitalized cost - manufacturing | 8 years | $ | 58,041 | $ | 0 | $ | 58,041 | |||||||||
| $ | 58,041 | $ | 0 | $ | 58,041 | |||||||||||
The Company did0t not amortize the capitalized cost associated with the warrants vested and exercisable bygranted to Magna International, Inc. (“Magna”) for the yearthree-months ended DecemberMarch 31, 20202022 as amortization will commence on a straight-line basis with the start of production for the Fisker Ocean which is expected to occur in the fourth quarter of 2022. The Company expects to amortize the intangible asset over eight years
but will continually assess the reasonableness of the estimated life. Refer to
13
Note 89 for additional information regarding the capitalization of costs upon issuance of warrants to Magna. Also, the Company capitalized certain costs associated with manufacturing of the Fisker Ocean and production of parts in 2021, including
Property and equipment, net, consists of the following (in thousands):
| March 31, 2022 | December 31, 2021 | ||||||||||
| Machinery and equipment | $ | 1,242 | $ | 1,174 | |||||||
| Furniture and fixtures | 450 | 307 | |||||||||
| IT hardware and software | 5,047 | 3,778 | |||||||||
| Leasehold improvements | $20 | 20 | |||||||||
| Construction in progress | 117,078 | 81,160 | |||||||||
| Total property and equipment | 123,837 | 86,439 | |||||||||
| Less: Accumulated depreciation and amortization | (1,175) | (796) | |||||||||
| Property and equipment, net | $ | 122,662 | $ | 85,643 | |||||||
September 30, 2021 | December 31, 2020 | |||||||
Machinery and equipment | $ | 1,094 | $ | 130 | ||||
Furniture and fixtures | 189 | 67 | ||||||
IT hardware and software | 2,516 | 820 | ||||||
Leasehold improvements | 20 | 26 | ||||||
Construction in progress | 15,233 | 0 | ||||||
Total property and equipment | 19,052 | 1,043 | ||||||
Less: Accumulated depreciation and amortization | (494 | ) | (98 | ) | ||||
Property and equipment, net | 18,558 | $ | 945 | |||||
As of September 30, 2021,March 31, 2022, accounts payable and accrued expenses includes acquired property and equipment of $0.9$27.0 million compared to $35.4 million as of December 31, 2021, which is excluded from net cash used in investing activities as reported in the condensed consolidated statement of cash flows for the nine-monthsthree-months ended September 30, 2021.
6. Accrued Expenses
| March 31, 2022 | December 31, 2021 | ||||||||||
| Accrued vendor liabilities | $ | 97,506 | $ | 67,293 | |||||||
| Accrued payroll | 2,757 | 1,989 | |||||||||
| Accrued professional fees | 1,107 | 3,579 | |||||||||
| Accrued interest | 695 | 6,165 | |||||||||
| Accrued other | 312 | 608 | |||||||||
| Total accrued expenses | $ | 102,377 | $ | 79,634 | |||||||
Accrued expenses include amounts owed to vendors but not yet invoiced in exchange for vendor purchases and research and development services. Certain estimates of accrued vendor expenses are based on costs incurred to date.
7. Customer Deposits
Customer deposits consists of the following (in thousands):
| March 31, 2022 | December 31, 2021 | ||||||||||
| Customer reservation deposits | $ | 10,301 | $ | 5,546 | |||||||
| Customer SUV option | 754 | 754 | |||||||||
| Total customer deposits | $ | 11,055 | $ | 6,300 | |||||||
September 30, 2021 | December 31, 2020 | |||||||
Customer reservation deposits | $ | 4,331 | $ | 2,773 | ||||
Customer SUV option | 754 | 754 | ||||||
Total customer deposits | $ | 5,085 | $ | 3,527 | ||||
2026 Notes
In August 2021, we issued an aggregate of $667.5 million principal amount of 2.50% convertible senior notes due in September 2026 (the “2026 Notes”) in a private warrants outstandingoffering to purchase shares of the Company’s common stock that were issued by Spartan priorqualified institutional buyers pursuant to the Business Combination. Each whole warrant entitles the registered holder to purchase one whole share of the Company’s Class A Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, 30 days after the Closing, provided that the Company has an effective registration statementRule 144A under the Securities Act coveringof 1933, as amended. The 2026 Notes have been designated as green bonds, whose proceeds will be allocated in accordance with the Company’s green bond framework. The 2026 Notes consisted of a $625 million initial placement and an over-allotment option that provided the initial purchasers of the 2026 Notes with the option to purchase an additional $100.0 million aggregate principal amount of the 2026 Notes, of which $42.5 million was exercised. The 2026 Notes were issued pursuant to an indenture dated August 17, 2021. The net proceeds from the issuance of the 2026 Notes were $562.2 million, net of debt issuance costs and cash used to purchase the capped call transactions (“2026 Capped Call Transactions”) discussed below. The debt issuance costs are amortized to interest expense.
The 2026 Notes are unsecured obligations which bear regular interest at 2.50% annually and will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2022. The 2026 Notes will mature on September 15, 2026, unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The 2026 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 50.7743 shares of Class A Common Stock issuable upon exercisecommon stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $19.70 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2026 Notes. We may redeem for cash all or any portion of the warrants2026 Notes, at our option, on or after September 20, 2024 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Holders of the 2026 Notes may convert all or a current prospectus relatingportion of their 2026 Notes at their option prior to them is available and such shares are registered, qualified or exempt from registrationJune 15, 2026, in multiples of $1,000 principal amounts, only under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A Common Stock. The warrants will expire five yearsfollowing circumstances:
•during any calendar quarter commencing after the completioncalendar quarter ending on September 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Business Combination, or earlier upon redemption or liquidation. The Private Placement Warrants are identical to the Warrants, except that the Private Placement Warrants and the Class A common stock issuable upon exercisefor at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the Private Placement Warrantsimmediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•during the five-business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the 2026 Notes on such trading day;
•if we call such 2026 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called (or deemed called) for redemption; or
•on the occurrence of specified corporate events.
On or after June 15, 2026, the 2026 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Holders of the 2026 Notes who convert the 2026 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2026 Notes, or in connection with a redemption may be entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change, holders of the 2026 Notes may require us to repurchase all or a portion of the 2026 Notes at a price equal to 100% of the principal amount of 2026 Notes, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
We accounted for the issuance of the 2026 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.
15
As of March 31, 2022, the 2026 Notes consisted of the following (in thousands):
| Principal | $ | 667,500 | |||
| Unamortized debt issuance costs | (7,948) | ||||
| Net carrying amount | $ | 659,552 | |||
Interest expense related to the amortization of debt issuance costs was $0.2 million for the three months ended March 31, 2022. Contractual interest expense was $4 million for the three months ended March 31, 2022.
As of March 31, 2022, the if-converted value of the 2026 Notes did not exceed the principal amount. The 2026 Notes were not eligible for conversion as of March 31, 2022.No sinking fund is provided for the 2026 Notes, which means that we are not required to redeem or retire them periodically.
Capped Call Transactions
In connection with the offering of the 2026 Notes, we entered into the 2026 Capped Call Transactions with certain counterparties at a net cost of $96.8 million. The 2026 Capped Call Transactions are purchased capped call options on $33.9 million shares Class A common stock, that, if exercised, can be net share settled, net cash settled, or settled in a combination of cash or shares consistent with the settlement elections made with respect to the 2026 Notes if converted. The cap price is initially $32.57 per share of our Class A common stock and subject to certain adjustments under the terms of the 2026 Capped Call Transactions. The strike price is initially $19.70 per share of Class A common stock, subject to customary anti-dilution adjustments that mirror corresponding adjustments for the 2026 Notes.
The 2026 Capped Call Transactions are intended to reduce potential dilution to holders of our Class A common stock upon conversion of the 2026 Notes and/or offset any cash payments we are required to make in excess of the principal amount, as the case may be, with such reduction or offset subject to a cap. The cost of the Capped Call Transactions was recorded as a reduction of our additional paid-in capital in our consolidated balance sheets. The Capped Call Transactions will not be transferable, assignable or salable until 30 days after the completion of an Initial Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will benon-redeemablesoremeasured as long as they are held bycontinue to meet the Sponsor or any of its permitted transferees. If theconditions for equity classification.
9. Warrants
Public and Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants.
On March 19, 2021, the Company announced that it would redeem all of its outstanding warrants (the “Public Warrants”) to purchase shares of the Company’s Class A common stock, par value $0.00001 per share (the “Common Stock”), that were issued under the Warrant Agreement, dated August 9, 2018 (the “Warrant Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agent”), as part of the units sold in the Company’s initial public offering (the “IPO”), for a redemption price of $0.01 per Public Warrant (the “Redemption Price”), that remained outstanding at 5:00 p.m. New York City time on April 22, 2021 (the “Redemption Date”). The Private Placement Warrants were not subject to this redemption. In addition, in accordance with the Warrant Agreement, the Company’s board of directors elected to require that, upon delivery of the notice of redemption, all Public Warrants were to be exercised only on a “cashless basis.” Accordingly, holders could not exercise Public Warrants and receive Common Stock in exchange for payment in cash of the $11.50 per warrant exercise price. Instead, a holder exercising a Public Warrant was deemed to pay the $11.50 per warrant exercise price by the surrender of 0.5046 of a share of Common Stock that such holder would have been entitled to receive upon a cash exercise of a Public Warrant. Accordingly, by virtue of the cashless exercise of the Public Warrants, exercising warrant holders received 0.4954 of a share of Common Stock for each Public Warrant surrendered for exercise. For the unexercised 225,906 Public Warrants outstanding at the Redemption Date, the Company paid $2,259 to redeem the unexercised warrants in the second quarter of 2021. There are no Public Warrants outstanding as of September 30,March 31, 2022 and December 31, 2021.
During March 2021, the 9,360,000 warrants to purchase Common Stock that were originally issued under the Warrant Agreement in a private placement simultaneously with the IPO were exercised by the Company’s former sponsor on a cashless basis for 4,907,329 shares of Common Stock (4,452,671 shares of Common Stock surrendered) and are no longer outstanding.
Public warrants | Private warrants | Total | ||||||||||
December 31, 2020 | 18,391,587 | 9,360,000 | 27,751,587 | |||||||||
Shares issued for cash exercises | (7,733,400 | ) | (7,733,400 | ) | ||||||||
Shares issued for cashless exercises | (5,167,791 | ) | (4,907,329 | ) | (10,075,120 | ) | ||||||
Shares surrendered upon cashless exercise | (5,264,490 | ) | (4,452,671 | ) | (9,717,161 | ) | ||||||
Shares redeemed by Company for cash | (225,906 | ) | (225,906 | ) | ||||||||
September 30, 2021 | 0 | 0 | 0 | |||||||||
Cashless exercises of public and private warrants increased additionalnine-monthsthree-months ended September 30, 2021, respectively.March 31, 2021.
paid-in
capital by $277 million for the 16
Magna Warrants
On October 29, 2020, the Company granted Magna up to 19,474,454 warrants, each with an exercise price of $0.01, to acquire underlying shares of Class A common stock of Fisker, which represented approximately 6%6.0% ownership in Fisker on a fully diluted basis as of the grant date. The right to exercise vested warrants expires on October 29, 2030. The warrants are accounted for as an award issued tothree3 interrelated performance conditions that are separately evaluated for achievement.
non-employees
measured on October 29, 2020 with | Milestone | Percentage of Warrants that Vest Upon Achievement | Number of Warrants that Vest Upon Achievement | ||||||||||||
| (a) (i) Achievement of the “preliminary production specification” gateway as set forth in the Development Agreement; (ii) entering into the Platform Agreement; and (iii) entering into the Initial Manufacturing Agreement | 33.3 | % | 6,484,993 | |||||||||||
| (b) (i) Achievement of the “target agreement” gateway as set forth in the Development Agreement and (ii) entering into the Detailed Manufacturing Agreement, which will contain terms and conditions agreed to in the Initial Manufacturing Agreement | 33.3 | % | 6,484,993 | |||||||||||
| (c) Start of pre-serial production | 33.4 | % | 6,504,468 | |||||||||||
| 19,474,454 | ||||||||||||||
The cost upon achievement of each milestone is capitalizedrecognized when it is probable that a milestone iswill be met. The cost for awards to nonemployees is recognized in the same period and in the same manner as if the Company had paid cash for the goods or services. On June 12, 2021, Fisker Group Inc., a Delaware corporation, a wholly-owned subsidiary of Fisker Inc., entered into a detailed manufacturing agreement with Magna Steyr Fahrzeugtechnik AG & Co KG, a limited liability partnership established and existing under the laws of Austria, an affiliate of Magna, and achieved the second milestone resulting in $58 millionnon-cashincreases of intangible assets and additionalpaid-in-capitalin the condensed consolidated balance sheet. As of September 30, 2021,At March 31, 2022, Magna satisfied the first and second milestones and the Company capitalized costs of $116 million as an intangible asset representing the future economic benefit to Fisker Inc. As of December 31, 2021 and March 31, 2022, the Company determined the third milestone is probable of achievement and capitalized a portion of the award's fair value corresponding to the service period beginning at the grant date and ending in the fourth quarter of 2022. The unrecognized portion of the award will be recognized ratably over the remainder of the service period ending upon start of pre-serial production, which is estimated to occur in the fourth quarter of 2022. Changes in the estimated timing of start of pre-serial production will require a cumulative adjustment for a change in accounting estimate. For the three months ended March 31, 2022, recognized cost of $6.7 million associated with services rendered increased capitalized cost - manufacturing to $238.2 million as of March 31, 2022. Because there are multiple milestones to achieve, the intangible asset is under development and will be complete when start of pre-serial production begins. The Company will amortize the aggregate capitalized cost in a systematic and rational manner. Throughout its useful life, including the period of time before completion, the Company will assess the intangible asset for impairment. If an indicator of impairment exists, the undiscounted cash flows will be estimated and then if the carrying amount of the intangible asset is not recoverable, determine its fair value and record an impairment loss. At March 31, 2022, no indicator of impairment exists.
The fair value of each warrant is equal to the intrinsic value (e.g., stock price on grant date less exercise price) as the exercise price is $0.01. The terms of the warrant agreement require net settlement when exercised. Using the measurement date stock price of $8.96 for a share of Class A common stock, the warrant fair values for each tranche is shown below. Capitalized cost also results in an increase to additional paid in capital equal to the fair value of the vested warrants. Awards vest when a milestone if met. Magna has 12,969,986 vested and exercisable warrants to acquire underlying Class A common stock of Fisker as of September 30, 2021. The third milestone is startMarch 31, 2022, none ofpre-serialproduction, which is not probable of being met as of September 30, 2021.are exercised.
| Fair value | Capitalized at March 31, 2022 | ||||||||||
| Milestone (a) | $ | 58,041 | $ | 58,041 | |||||||
| Milestone (b) | 58,041 | 58,041 | |||||||||
| Milestone (c) | 58,215 | 38,131 | |||||||||
| $ | 174,297 | $ | 154,213 | ||||||||
September 30, 2021 | December 31, 2020 | |||||||
Accrued payroll | $ | 1,086 | $ | 686 | ||||
Accrued professional fees | 134 | 468 | ||||||
Accrued other | 2,195 | 254 | ||||||
Accrued vendor expenses | 56,783 | 0 | ||||||
Accrued legal cost | 0 | 6,000 | ||||||
Total accrued expenses | $ | 60,198 | $ | 7,408 | ||||
10. Convertible Senior Notes
Principal | $ | 667,500 | ||
Unamortized debt issuance costs | (8,371 | ) | ||
Net carrying amount | $ | 659,129 | ||
The Company computes earnings (loss) per share of Class A Common Stock and Class B Common Stock using the
two-class
method required for participating securities. Basic and diluted earnings per share was the same for each period presented as the inclusion of all potential Class A Common Stock and Class B Common Stock outstanding would have been anti-dilutive. Basic and diluted earnings per share are the same for each class of common stock because they are entitled to the same liquidation and dividend rights. The following table sets forth the computation of basic and diluted loss per Class A Common Stock and Class B Common Stock:Three-months Ended September 30, | |||||||||||||||||||
2021 | 2020 | Three-months Ended March 31, | |||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||
Numerator: | Numerator: | ||||||||||||||||||
Net loss | $ | (109,844 | ) | $ | (39,664 | ) | Net loss | $ | (122,074) | $ | (176,843) | ||||||||
Denominator: | Denominator: | ||||||||||||||||||
Weighted average Class A common shares outstanding | 163,779,402 | 357,850 | Weighted average Class A common shares outstanding | 164,154,491 | 147,483,435 | ||||||||||||||
Weighted average Class B common shares outstanding | 132,354,128 | 105,191,937 | Weighted average Class B common shares outstanding | 132,354,128 | 132,354,128 | ||||||||||||||
Weighted average Class A and Class B common shares outstanding- Basic and Diluted | 296,133,530 | 105,549,787 | Weighted average Class A and Class B common shares outstanding- Basic and Diluted | 296,508,619 | 279,837,563 | ||||||||||||||
Net loss per share attributable to Class A and Class B Common shareholders- Basic and Diluted | $ | (0.37 | ) | $ | (0.38 | ) | |||||||||||||
| Net loss per share attributable to Class A and Class B Common shareholders- Basic | Net loss per share attributable to Class A and Class B Common shareholders- Basic | $ | (0.41) | $ | (0.63) | ||||||||||||||
| Net loss per share attributable to Class A and Class B Common shareholders- Diluted | Net loss per share attributable to Class A and Class B Common shareholders- Diluted | $ | (0.41) | $ | (0.63) | ||||||||||||||
Nine-months Ended September 30, | ||||||||
2021 | 2020 | |||||||
Numerator: | ||||||||
Net loss | $ | (332,909 | ) | $ | (42,604 | ) | ||
Denominator: | ||||||||
Weighted average Class A common shares outstanding | 158,091,137 | 284,356 | ||||||
Weighted average Class B common shares outstanding | 132,354,128 | 105,191,937 | ||||||
Weighted average Class A and Class B common shares outstanding- Basic and Diluted | 290,445,265 | 105,476,293 | ||||||
Net loss per share attributable to Class A and Class B Common shareholders- Basic and Diluted | $ | (1.15 | ) | $ | (0.40 | ) | ||
The following table presents the potential common shares outstanding that were excluded from the computation of diluted net loss per share of common stock as of the periods presented because including them would have been antidilutive:
| As of March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Convertible senior notes | 33,891,845 | — | |||||||||
| Stock options and warrants | 30,560,564 | 29,048,269 | |||||||||
| Total | 64,452,409 | 29,048,269 | |||||||||
As of September 30, | ||||||||
2021 | 2020 | |||||||
Series A Convertible Preferred Stock | — | 16,983,241 | ||||||
Series B Convertible Preferred Stock | — | 3,765,685 | ||||||
Founders Convertible Preferred Stock | — | 27,162,191 | ||||||
Bridge notes | — | 5,947,731 | ||||||
Convertible equity security | — | 5,882,352 | ||||||
Convertible senior notes | 33,891,845 | — | ||||||
Stock options and warrants | 31,185,282 | 18,920,177 | ||||||
Total | 65,077,127 | 78,661,377 | ||||||
Stock-based compensation expense is as follows (in thousands):
| Three-months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| General and administrative expense | $ | 1,773 | $ | 174 | |||||||
| Research and development | 3,292 | 643 | |||||||||
| Total | $ | 5,065 | $ | 817 | |||||||
Three-months Ended September 30, | ||||||||
2021 | 2020 | |||||||
General and administrative expense | $ | 209 | $ | 140 | ||||
Research and development | 834 | 124 | ||||||
Total | 1,043 | 264 | ||||||
Nine-months Ended September 30, | ||||||||
2021 | 2020 | |||||||
General and administrative expense | $ | 816 | $ | 178 | ||||
Research and development | 3,262 | 156 | ||||||
Total | 4,078 | 334 | ||||||
Stock options
Options under the Plan may be granted at prices as determined by the Board of Directors, provided, however, that (i) the exercise price of an ISO and NSO shall not be less than 100% of the estimated fair value of the shares on the date of grant, and (ii) the exercise price of an ISO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. The fair value of the shares is determined by the Board of Directors on the date of grants. Stock options generally have a contractual life of 10 years. Upon exercise, the Company issues new shares.
18
In 2016 and 2017, the Company’s founders were granted an aggregate of 15,882,711 options which are fully vested and are not related to performance. Options granted to other employees and consultants become vested and are exercisable over a range of up to six years from the date of grant.
The following table summarizes option activity under the Plan:
| Options | Weighted Average Exercise Price | Weighted Average Contractual Term (in Years) | |||||||||||||||
| Balance as of December 31, 2021 | 17,695,560 | 1.44 | 5.6 | ||||||||||||||
| Granted | 128,700 | 13.45 | |||||||||||||||
| Exercised | (95,900) | 2.45 | |||||||||||||||
| Forfeited | (137,782) | 12.27 | |||||||||||||||
| Balance as of March 31, 2022 | 17,590,578 | 1.43 | 5.4 | ||||||||||||||
Options | Weighted Average Exercise Price | Weighted Average Contractual Term (in Years) | ||||||||||
Balance as of January 1, 2021 | 18,724,096 | 0.69 | 6.5 | |||||||||
Granted | 920,443 | 16.00 | ||||||||||
Exercised | (977,952 | ) | 0.25 | |||||||||
Forfeited | (510,235 | ) | 7.21 | |||||||||
Balance as of September 30, 2021 | 18,156,352 | 1.31 | 5.8 | |||||||||
The fair value of each stock option grant under the Plan was estimated on the date of grant using the Black-Scholes option pricing model, with the following range of assumptions:
Three Months Ended | ||||||
Expected term (in years) | 6.3 | |||||
Volatility | ||||||
Dividend yield | 0.0% | |||||
Risk-free interest rate | 1.55% to 2.16% | |||||
| Common stock price | ||||||
The Black-Scholes option pricing model requires various highly subjective assumptions that represent management’s best estimates of the fair value of the Company’s common stock, volatility, risk-free interest rates, expected term, and dividend yield. As the Company’s shares have actively traded for a short period of time subsequent to the Business Combination, volatility is based on a benchmark of comparable companies within the automotive and energy storage industries.
The expected term represents the weighted-average period that options granted are expected to be outstanding giving consideration to vesting schedules. Since the Company does not have an extended history of actual exercises, the Company has estimated the expected term using a simplified method which calculates the expected term as the average of theand the contractual life of the awards. The Company has never declared or paid cash dividends and does not plan to pay cash dividends in the foreseeable future; therefore, the Company used an expected dividend yield of zero. The risk-free interest rate is based on U.S. Treasury rates in effect during the expected term of the grant. The expected volatility is based on historical volatility of publicly-traded peer companies.
time-to-vesting
Restricted stock awards
During the ninethree months ended September 30, 2021,March 31, 2022, the Company granted employees, who rendered services during the year ended December 31, 20202021 and were employees of the Company on the grant date, a restricted stock unit (“RSU”) award based in proportion to the service period beginning from the employee’s hire date to the end of 2020.the year. The restricted stock unit awards vested on the grant date which resulted in the release of 36,025339,340 shares of Class A common stock net of 20,232 shares withheld to pay for statutory withholding taxes, equal to stock-based compensation expense of $0.7$1.5 million recognized in the nine-monthsthree-months ended September 30, 2021.March 31, 2022. The Company’s founders declined to receive an award related to performance in 2020.2021. In accordance with the Company’s Outside Director Compensation Policy, each outside Board of Directors member receivedwill receive an annual RSU equal to $200,000 granted on June 8, 2021 (thethe date of the Company’s annual shareholders’ meeting) or 15,723 shares of Class A common stockmeeting which vests in 25% increments at the end of each calendar quarter. Each Outside Director may elect to convert all or a portion of his or her annual Board of Directors retainer, excluding any annual retainer that an Outside Director may receive for serving as Lead Director and any annual retainers for committee service, into RSUs in lieu of the applicable cash retainer payment (“RSU Election”).
The number of Class A common shares granted to Outside Directors annually are based on the
30-day
average closing trading price of Class A common stock on the day preceding the grant date (“RSU Value”). When an Outside19
Director exercises his or her RSU Election, the number of Class A common shares equal the amount of cash subject to such RSU Election divided by the applicable RSU Value and are fully vested.
The following table summarizes RSU activity under the Plan:
| RSU Awards | Weighted Average Grant Date Fair Value | |||||||||||||
| Unvested as of December 31, 2021 | 17,174 | $ | 13.47 | |||||||||||
| Awarded | 360,582 | 12.43 | ||||||||||||
| Vested | (353,160) | 11.54 | ||||||||||||
| Forfeited | (1,016) | 11.46 | ||||||||||||
| Unvested as of March 31, 2022 | 23,580 | $ | 12.72 | |||||||||||
Performance-based restricted stock awards
In the third quarter of 2021, the Company’s compensation committee ratified and approved performance-based restricted stock units (“PRSUs”) to all employees (“Grantee”) the value of which is determined based on the Grantee’s level within the Company (“PRSU Value”). Each PRSU is equal to one1 underlying share of Class A common stock. Also, PRSUs will be awarded to any new employee hired in the fourth quarter of 2021 and during 2022 and 2023 on aSeptember 30, 2021,March 31, 2022, the Company has approved and authorized PRSUs equal to2,009,967 2,388,389 shares of Class A common stock with a PRSU value of $27.8$33.7 million. Recognition of stock-based compensation occurs when the grant date is determined, and performance conditions are probable of achievement. Measurement of stock-based compensation attributed to the PRSU awards will be based on the fair value of the underlying Class A common stock once the grant date is determined (e.g., variable accounting).
pro-rata
basis based on a reduction in time of service. The number of shares subject to a Grantee’s PRSU award equals the Grantee’s PRSU Value divided by the closing price per Class A common share on the service inception date, or if the service inception date is not a trading day, the closing price per Share on the closest trading day immediately prior to the service inception date; in each case rounded down to the nearest whole number. Each PRSU award shall vest as to 50% of the PRSU Value upon the Committee’s determination, in its sole discretion, and certification of the occurrence of the Ocean Start of Production and shall vest as to 50% of the PRSUs upon the first anniversary of the Ocean Start of Production, in each case, subject to (i) the Grantee’s continuous service through the applicable vesting date, (ii) the Grantee’s not committing any action or omission that would constitute Cause for termination through the applicable vesting date, as determined in the sole discretion of the Company, and (iii) the Ocean Start of Production occurring on or before December 31, 2022. The compensation committee has discretion to reduce or eliminate the number of PRSUs that shall vest pursuant to each PRSU award upon the certification of the occurrence of the Ocean Start of Production and/or upon the first anniversary of the Ocean Start of Production, after considering, any factors that it deems relevant, which could include but are not limited to (i) Company performance against key performance indicators, and (ii) departmental performance against goals. The service inception date precedes the grant dates for both performance conditions. The grant date for each of the performance conditions is the date Grantees have a mutual understanding of the key terms and conditions of the PRSU, which will occur when each performance conditions is achieved, and the compensation committee has determined whether it will exercise its discretion to adjust the PRSU award. As of On March 8, 2021, the Company appointed Mitchell Zuklie to its Board of Directors and granted him a restricted stock unit representing 2,711 shares of Class A common stock, which vested on the date of the Company’s annual meeting held on June 8, 2021.. Mr. Zuklie is the chairman of the law firm of Orrick, Herrington & Sutcliff LLP (‘‘Orrick’’), which provides various legal services to the Company. During the three-months ended June 30,March 31, 2022 and 2021, and 2020, the Company incurred expenses for legal services rendered by Orrick totaling approximately $1.7 million and $0.3 million, and $0.1 million, respectively, and $0.4 million and $0.2 million for thesix-monthsended June 30, 2021 and 2020. Mr. Zuklie also held 54,461 shares of Class A Common Stock at the time of his appointment to the Board of Directors. Under the Company’s Outside Director Compensation Policy, Mr. Zuklie received an annual Board of Directors restricted stock unit award for 15,723 shares of Class A common stock vesting quarterly over twelve months from the date of the Company’s annual shareholders’ meeting on June 8, 2021.respectively.
The Company is not a party to any material legal proceedings and is not aware of any pending or threatenedthreatened material claims. From time to time however, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and the related notes included elsewhere in this report.
OVERVIEW
Fisker is building a technology-enabled, asset-light automotive business model that it believes will be among the first of its kind and aligned with the future state of the automotive industry. This involves a focus on vehicle development, customer experience, sales and service intended to change the personal mobility experience through technological innovation, ease of use and flexibility. The Company combines the legendary design and engineering expertise of Henrik Fisker to develop high quality electric vehicles with strong emotional appeal. Central to Fisker’s business model is the Fisker Flexible Platform Agnostic
Design (“FF-PAD”),
a proprietary process that allows the development and design of a vehicle to be adapted to any given electric vehicle (“EV”) platform in the specific segment size. The process focuses on selecting industry leading vehicle specifications and adapting the design to crucial hard points on a third-party supplied EV platform and outsourced manufacturing to reduce development cost and time to market. The first example of this is Fisker’s work to adapt the Fisker Ocean design to a base vehicle platform developed by Magna Steyr Fahrzeugtechnik AG & Co KG, a limited liability partnership established and existing under the laws of Austria (“Magna Steyr”), an affiliate of Magna International, Inc. (“Magna”). This development with Magna Steyr began in September 2020 and passed the first and second engineering gateways in November 2020 and March 2021, respectively.respectively and we are currently in the prototype building phase for production in November 2022. Fisker believes it is well-positioned through its global premium EV brand, its renowned design capabilities, its sustainability focus, and its asset-light and low overhead, direct to consumer business model which enables products like the Fisker Ocean to be priced roughly equivalent to internal combustion engine-powered SUV’s from premium brand competitors.
The Fisker Ocean is targeting a large and rapidly expanding “premium with volume” segment (meaning a premium automaker producing more than 100,000 units of a single model such as the BMW X3 Series or Tesla Model Y) of the electric SUV market. Fisker expects to begin production of the Ocean inas early as the fourth quarter of 2022.
The Fisker Ocean, a five-passenger electric SUV,vehicle with potentially a 250- to over 350-mile range and state-of-the-art advanced driver assistance capabilities, will be differentiated in the marketplace by its innovative and timeless design and true SUV shape (compared to primarily hatchback EV competitors), advanced powertrain technology (estimated range of up to 250 miles for base version and approximately 300 to 350 miles for higher trim levels, final EPA test results to be verified and may vary), state of the art advanced driver assistance system (“ADAS”) capabilities,interface, compelling price as compared to EV competitors, sustainability focus beyond simply zero emission driving, and Fisker-unique optional features such as California Mode (patent pending) and a solar photovoltaic roof.interface. The Fisker Ocean is designed for a high degree of sustainability, with anSome of these differentiating factorsThe optional features for the Ocean, including California Mode (patent pending) and a solar photovoltaic roof resulted in the Fisker Ocean prototype being the most awarded new automobile at CES 2020 by Time, Newsweek, Business Insider, CNET and others.
a re-imagined customer
experience delivered through an advanced software-based user using recycled rubber, eco-suede interior
trim made from recycled polyester, and carpeting from fishing nets and plastic bottles recycled from ocean waste, among many other sustainable features. Fisker believes its innovative business model,will revolutionize how consumers view personal transportation and car ownership. Over time, Fisker plans to combine a customer-focused experience with flexible leasing options, affordable monthly payments and no fixed lease terms, in addition tosales. Through an innovative platform sharing partnership strategy, Fisker believes that it will be able to significantly reduce the capital intensity and development time typically associated with developing and manufacturing vehicles, while maintaining flexibility and optionality in component sourcing and manufacturing due to Steyr to develop a proprietary electric vehicle platform called FM29 that will underpin Fisker Ocean and at least one additional nameplate. Fisker is currently also working with Foxconn and its subsidiariesintends to develop an additional proprietary electric vehicle platform that will underpin Fisker PEAR. Fisker may cooperate with one or more additional industry-leading original equipment manufacturers (“OEMs”), technology companies, platform sharing and access to procurement networks, while focusing on key differentiators in innovative design, software and user interface. Multiple platform-sharing partners is intended to accelerate growth in Fisker’s portfolio of electric vehicle offerings and support a portfolio of four vehicles by 2025.offerings. Fisker envisionswithsales, loan financing approvals, leasing, and service management, with limited reliance onnetworks. Fisker believes that this customer-focused approach will drive revenue, user satisfaction and higher margins than competitors.
including E-Mobility-as-a-Service“E-Mobility-as-a-Service” (“EMaaS”),
direct-to-consumer
Fisker’s FF-PAD proprietary
process. ThroughFisker’s FF-PAD proprietary
process, Fisker is currently working with Magnaand/or tier-one automotive
suppliers fora go-to-market strategy
both web- and app-based digital
traditional brick-and-mortar “sales-and-service” dealer
The Business Combination
Fisker was originally incorporated in the State of Delaware in October 13, 2017 as a special purpose acquisition company under the name Spartan Energy Acquisition Corp. (“Spartan”), formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination
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with one or more businesses. Spartan completed its IPO in August 2018. In October 2020, Spartan’s wholly-owned subsidiary merged with and into Fisker Holdings, Inc. (f/k/a Fisker Inc.) a Delaware corporation (“Legacy Fisker”), with Legacy Fisker surviving the merger as a wholly-owned subsidiary of Spartan (the “Business Combination”). In connection with the consummation of the Business Combination (the “Closing”), Spartan changed its name to Fisker Inc.
The Business Combination was accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, Spartan was treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of Legacy Fisker issuing stock for the net assets of Spartan, accompanied by a recapitalization, whereby no goodwill or other intangible assets was recorded. Operations prior to the Business Combination are those of Legacy Fisker.
Key Trends, Opportunities and Uncertainties
Fisker is10-K/A 10-K for the year ended December 31, 20202021 filed with the SEC on May 17, 2021February 28, 2022 titled “.”
a pre-revenue company
and believes that its future performance and success depends to a substantial extent on the ability to capitalize on the following opportunities, which in turn is subject to significant risks and challenges, including those discussed below and in the section of our Annual Report on FormRisk Factors
Partnering with Industry-Leading OEMs
and/or Tier-One Automotive
SuppliersMagna Steyr / FM29 Platform (Fisker Ocean)
On October 14, 2020, Fisker and Spartan entered into a Cooperation Agreement with Magna setting forth certain terms for the development of a full electric vehicle (the “Cooperation Agreement”). That Cooperation Agreement sets out the main terms and conditions of operational phase agreements (the “Operational Phase Agreements”) that were subsequently entered into by and between Fisker and Magna (or its affiliates). On December 17, 2020, Fisker entered into the platform-sharing and initial manufacturing Operational Phase Agreements referenced in the Cooperation Agreement. On June 12, 2021, Fisker entered into the detailed manufacturing agreement referenced in the Cooperation Agreement. We are creating FM29, a unique EV platform, that will have unique Fisker intellectual property. By working with a proven contract manufacturer such as Magna Steyr, we can accelerate our time to market, reduce vehicle development costs, and gain access to an established global supply chain. Our proprietary FF-PAD process is hardware agnostic which will enable us to collaborate with multiple EV platform developers for the production of future vehicles and develop rapid derivatives and improvements to our current FM29 Platform. Since the inception of our Cooperation Agreement, we have added significant certified content and tailored the FM29 platform into a proprietary Fisker platform where we can leverage our intellectual property and technology for certain systems and subsystems in future vehicles and will increase efficiency in vehicle development and speed to bring vehicles to market.
Hon Hai Technology Group (Fisker Pear)
On May 13, 2021, the Company announced it signed framework agreements with Hon Hai Technology Group (Foxconn) supporting the joint development and manufacturing of project ‘PEAR’ (Personal Electric Automotive Revolution), a project to develop a new breakthrough electric vehicle. Under the agreements, the Company and Foxconn will jointly invest into Project PEAR, with each company taking proceeds from the successful delivery of the program. Following an extensive review of manufacturing sites, the two companies will make significant efforts to develop and execute a manufacturing plan capable of supporting the planned start of production.
These
co-operations
allow Fisker to focus on vehicle design, supply chain / procurement, vehicle integration, strong brand affiliation and a differentiated customer experience. Fisker intends to leverage multiple EV platforms and Fisker intellectual property to accelerate its time to market, rapidly expand its product portfolio, reduce vehicle development costs and gain access to an established global supply chain of batteries and other components.Fisker believes that its business model will reduce the considerable execution risk typically associated with new car companies. Through suchFisker's proprietary platform, sharing, component sourcing and manufacturing partnerships, Fisker believes it will be able to accelerate its time to market and reduce vehicle development costs. Fisker remainson November 17, 2022 and intends to meet timing, cost and quality expectations while optimally matching its cost structure with its projected production ramp by leveraging such partnerships and trained workforces. Remaining hardware agnostic allows for selection of partners, components, and manufacturing decisions to be based on both timeline and cost advantages and enables Fisker to focus on delivering truly innovative design features, a superior customer experience, and a leading user interface that leverages sophisticated software and other technology advancements.
on-track
for Fisker Oceanstart-of-production
Fisker has entered into agreements covering the Magna baseFM29 platform, development and engineering services, and manufacturing, among others. Extended negotiation of the specific project-related agreements, the sourcing of components or labor at higher than anticipated cost, or any delays in sourcing suppliers of sustainable parts may delay Fisker’s commercialization plans or require it to change the anticipated pricing of its vehicles. Such delays could be caused by a variety of factors, some of which may be out of Fisker’s control. For example, the outbreak ofthe COVID-19 pandemicseverely restricted international travel in recent months, which may make it more difficult for Fisker to conclude agreements with partners outside the United States. See “Risk Factors—Risks Related to Fisker—Fisker faces risks related to health epidemics, including the Unanticipated events, delays in negotiations by third parties and any required changes in Fisker’s current business plans could materially and adversely affect its business, margins and cash flows.
recent COVID-19 pandemic,
which could have a material adverse effect on its business and results of operations.”23
Market Trends and Competition
Fisker anticipates robust demand for the Fisker Ocean, based on its award-winning design, its unique sustainability features, the management team’s experiencewell-abovewell above Fisker Ocean. Fisker believes the market will be broken down into three primary consumer segments: the white space segment, the value segment, and the conservative premium segment. See “.” Fisker expects to sell approximately 50% of its vehicles within the white space segment, appealing to customers who want to be part of the new EV movement and value sustainability and environmental, social, and governance (“ESG”) initiatives. This is supported by a survey of Fisker’s current reservation-holders which found that over 50% currently own(i.e. (i.e. cars, hatchbacks, minivans, etc.). Fisker believes that it will be well positioned to be the primary alternative to Tesla in this segment with the Ocean priced around the base price of the Model 3 and below the base price of the Model Y. While Fisker will compete with other EV startups, many of them are moving into the higher luxury priced segments due to the lack of volume pricing of components that Fisker expects to obtain through platform sharing partnerships with industry-leading OEMs
and know-how and,
in particular, the growing acceptance of and demand for EVs as a substitute for gasoline-fueled vehicles. Many independent forecasts are assuming that EV’s as percentage of global auto sales will grow from less than 3% in 2020 to more than 20% in 2030. One such report from RBC, published in October 2020, assumes sales of EV’s to grow from less than 2.0 million units globally (less than 3% of total volume) to 25 million units in 2030 (approximately 25% of total volume), a 29% CAGR. The EV market is highly competitive, but Fisker believes it will remain less competitive than the ICE market for some time. For example, there are 79 nameplates sold in the US market within the compact and midsize SUV category currently, while most observers expect no more than10-20
EV’s in those segments at the time Fisker launches, most of which are expected to be priced Information About Fisker—Sales – Go to Market Strategy
non-premium
branded vehicles and over 50% currently ownnon-SUV’s
and/or tier-one automotive
suppliers. To expand market share and attract customers from competitors, Fisker must continue to innovate and convert successful research and development efforts into differentiated products, including new EV models.Fisker is also working to quantify the sustainability advancements and claims that the Fisker brand would produce the most sustainable vehicles in the world, which it believes will be an increasingly important differentiator among a growing subset of consumers. To this end, an internal analysis resulted in an announcement in June 2021 that Fisker aims to produce a 100% climate-neutral vehicle, without the use of purchased carbon offsets, in 2027. In Fisker’s pursuit of these objectives, it will be in competition with substantially larger and better capitalized vehicle manufacturers. While Fisker believes thatprovides the Company with an advantage relative to traditional and other established auto manufacturers, Fisker’s better capitalized competitors may seek to undercut the pricing or compete directly with Fisker’s designs by replicating their features. In addition, while Fisker believes that its strong management team forms the necessary backbone to execute on its strategy, the Company expects to compete for talent, as Fisker’s future growth will depend on hiring qualified and experienced personnel to operate all aspects of the business as it prepares to launch commercial operations.
the low-capital-intensity platform
sharing partnership strategy, togetherwith direct-to-customer commercialization,
Commercialization
Fisker currently anticipates commencing production of the Fisker Ocean in the fourth quarter of 2022, with initial customer deliveries in late 2022 at the earliest.
As of NovemberMay 2, 2021,2022, we are over 18,60045,000 retail reservations and 1,4001,600 fleet reservations. This is after accounting for about 2,0004,100 retail customers who have canceled over time. Since we first opened our reservation system for the Ocean, we have offered prospective customers the opportunity to make a reservation with the flexibility to cancel at any time. Our retail reservation system is driven through our app and website, with each vehicle reservation requiring a $250 deposit and limited to one reservation per registered cellphone number. In the event that someone wishes to cancel, there is a 10% charge ($25) to cover third party and administrative costs for processing the refunds in a timely and secure manner. The retail reservations and cancellations are enabled by our mobile and web Fisker Flexee app, and our potential customers make their reservation and cancellation directly on these automated platforms. A second type of reservation are those made by corporations and fleet operators. We devote significant time and resources to our fleet customers, ensuring the Ocean is the right choice for their business and completing an MOU. As we make more details of the Ocean available and our brand profile increases, we would expect both retail and fleet reservations to organically increase. Further, as we get closer to launch, we will be working with our prospective customers to transition their reservation into a contracted order. This would include the detailed vehicle specification (model series, color etc.) and delivery date. We will continue to share our reservation and contracted order data transparently through frequent updates to the market.
Fisker plans to initially market its vehicles throughmodel, leveraging its proprietary Flexee app, which will serve as
its direct-to-consumer sales
a one-stop-shop for
all components of its EMaaS business model. Over time, Fisker plans to develop Fisker Experience Centers in select cities in North America and Europe, which will enable prospective customers to experience Fisker vehicles through test drives and virtual and augmented reality. Fisker also intends to enter, in each launch market, into third-party service partnerships with credible vehicle service organizations with established service facilities, operations and technicians. These companies’ services will be integrated into and booked via the Flexee app in order to create ahassle-free, app-based service
experience for Fisker’s customers delivered at home, at work, or witha pick-up and
delivery service booked online. For North America and United Kingdom, as examples, Fisker has entered intonon-exclusive Memorandum
of Understandings with divisions of Cox Automotive related to fleet management services. Fisker will continue to seek opportunities to build the service partnership model.Over time, Fisker aims to transform the EV sales model through the flexible lease model, under which customers will be able to utilize a vehicle onat an anticipated initial cost of $379 per month for the base model, with the ability to terminate the lease or upgrade their vehicle at any time. Development of a fleet of high value, sustainable EVs will allow Fisker to offer these flexible lease options to capture more customers. Fisker intends to requireof $3,000 under the flexible lease model, which the Company believes will reduce its
a month-to-month basis
a non-refundable up-front payment
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cash flow risk and incentivize customers to keep their vehicles for a period of time. Fisker anticipates that, over time, it will acquire a substantial fleet of used EVs available for sale or further flexible lease by Fisker, which it believes will enhance its ability to maintain its premium brand and pricing.
Fisker believes itsmodel reflects today’s changing consumer preferences and is less capital intensive and expensive than the traditional automotive sales models. Fisker’s commercialization strategy is, however, relatively novel for the car industry, which has historically relied on extensive advertising and marketing, as well as relationships with physical car dealership networks. Should Fisker’s assumptions about the
digital, direct-to-consumer sales
commercialization of its vehicles prove overly optimistic or if the Company is unable to develop, obtain or maintainor service technology upon which its prospective customer base would rely, Fisker may incur delays to its ability to commercialize the Fisker Ocean. This may also lead Fisker to make changes in its commercialization plans, which could result in unanticipated marketing delays or cost overruns, which could in turn adversely impact margins and cash flows or require Fisker to change its pricing. Further, to the extent that Fisker doesn’t generate the margins it expects upon commercialization of the Fisker Ocean, Fisker may be required to raise additional debt or equity capital, which may not be available or may only be available on terms that are onerous to Fisker and its stockholders.
the direct-to-consumer marketing
Regulatory Landscape
Fisker operates in an industry that is subject to and benefits from environmental regulations, which have generally become more stringent over time, particularly across developed markets. Regulations in Fisker’s target markets include economic incentives to purchasers of EVs, tax credits for EV manufacturers, and economic penalties that may apply to a car manufacturer based on its fleet-wide emissions ratings. See “.” For example, a federal tax credit of $7,500 may be available to U.S. purchasers of Fisker vehicles, which would bring the effective estimated purchase price of the base Fisker Ocean model to approximately $30,000. On August 5, 2021, President Biden announced an executive order aimed at making half of all new vehicles sold in 2030 electric. Fisker recently issued a call to action to implement a program called “75 And More For 55 And Less”, which would include arebate (as opposed to the current tax credit) of $7,500 plus $10 for every mile ofwillmay have the opportunity to monetize the ZEV technology through fleet emissions pooling arrangements with car manufacturers that may not otherwise meet their CO2 emissions targets. While Fisker expects environmental regulations to provide a tailwind to its growth, it is possible for certain regulations to result in margin pressures. For example, regulations that effectively impose EV production quotas on auto manufacturers may lead to an oversupply of EVs, which in turn could promote price decreases. As a pure play EV company, Fisker’s margins could be particularly and adversely impacted by such regulatory developments. Trade restrictions and tariffs, while historically minimal between the European Union and the United States where most of Fisker’s production and sales are expected, are subject to unknown and unpredictable change that could impact Fisker’s ability to meet projected sales or margins.
Information about Fisker—Government Regulation and Credits
point-of-sale
EPA-certified
driving range, for any EV priced at $55,000 and less. Fisker believes this type of program would focus EV purchase support towards consumers that most require an incentive and would also incentivize all OEM’s to focus development efforts on affordable EV’s, as Fisker has done. Further, the registration and sale of Zero Emission Vehicles (“ZEVs”) in California will earn Fisker ZEV credits, which it may be able to sell to other OEMsor tier-one automotive
suppliers seeking to access the state’s market. Several other U.S. states have adopted similar standards. In the European Union, where European car manufacturers are penalized for excessive fleet-wide emissions on the one hand and incentivized to produce low emission vehicles on the other, Fisker believes it Key trends and economic factors affecting the automotive industry
Recent outbreaks in certain regions, including China where lock-downs due to COVID-19 have been imposed in more than 40 cities, may cause intermittent COVID-19-related disruptions in our supply chain. Though we have no operations or suppliers, who will produce Fisker Ocean components, located in Russia or Ukraine, our FM29 platform used to manufacture the Fisker Ocean is located in Graz, Austria and some of our key supplier operations are located in European countries. Actions taken by Russia in Ukraine could impact our suppliers, particularly our lower tier suppliers.
Globally, prices for commodities remain volatile for base metals (e.g., steel and aluminum), precious metals (e.g., palladium), and raw materials that are used in batteries for electric vehicles (e.g., lithium, cobalt, and nickel for batteries). Our Fisker Ocean is comprised mainly of steel which has experienced less volatility compared to aluminum. Further, we have agreed to our pricing in 2021 and early 2022 for our components under our long-term supply contracts, which reduces our exposure to commodity volatility and inflation in 2022. Our battery chemistries consist of a high-capacity pack that uses a lithium nickel manganese cobalt (NMC) cell chemistry with the second high-value pack based on lithium-ion phosphate (LFP) chemistry. We expect most of our vehicles sold in 2022 and 2023 will have premium trim levels, where margins are less sensitive, and NMC battery packs compared to our base model Sport which uses the LFP battery packs that do not contain nickel or cobalt.
25
Basis of Presentation
Fisker currently conducts its business through one operating segment. As a company with no commercial operations and limited revenues derived from merchandise sales, which is not core to our ongoing business, Fisker’s activities to date have been limited and were conducted primarily in the United States and its historical results are reported under U.S. GAAP and in U.S. dollars. Upon commencement of commercial operations, Fisker expects to expand its global operations substantially, including in the USA and the European Union, and as a result Fisker expects its future results to be sensitive to foreign currency transaction and translation risks and other financial risks that are not reflected in its historical financial statements. As a result, Fisker expects that the financial results it reports for periods after it begins commercial operations will not be comparable to the financial results included in this report or Fisker’s Annual Report on Form10-K/A 10-K for the year ended December 31, 20202021 filed with the SEC on May 17, 2021.February 28, 2022.
Components of Results of Operations
Fisker is an early stage company and its historical results may not be indicative of its future results for reasons that may be difficult to anticipate. Accordingly, the drivers of Fisker’s future financial results, as well as the components of such results, may not be comparable to Fisker’s historical or projected results of operations.
Revenues
Fisker has not begun its primary commercial operations which will focus on the production and sale of its vehicles.currently does not generate any revenue from vehicle sales. Once Fisker commences production and commercialization of its vehicles, it expects that the significant majority of its revenue will be initially derived from direct sales of Fisker Ocean SUVs and, subsequently, from flexible leases of its vehicles. In 2021, Fisker launched its merchandise “Fisker Edition” where it sells direct to consumers Fisker branded apparel and goods. While merchandise sales are not intended to be significant portion of Fisker’s results once production of vehicles begins, Fisker generatedit will generate revenue from such sales during 2021.pre-production.
Cost of Goods Sold
To date, Fisker has not recorded cost of goods sold from its vehicle sales, as it has not recorded commercial revenues from the sales of its vehicles.sales. Once Fisker commences the commercial production and sale of its vehicles, it expects cost of goods sold to include mainly vehicle components and parts, including batteries, direct labor costs, amortized tooling costs and capitalized costs associated with the Magna warrants, and reserves for estimated warranty expenses. Fisker realized cost of goods sold in 2021 relatedRelated to the 2021 launch of “Fisker Edition” apparel and goods.goods, Fisker will realize cost of goods sold.
General and Administrative Expense
General and administrative expenses consist mainly of personnel-related expenses for Fisker’s executive and other administrative functions and expenses for outside professional services, including legal, accounting and other advisory services.
Fisker is rapidly expanding its personnel headcount, in anticipation of the start of production of its vehicles. Accordingly, Fisker expects its general and administrative expenses to increase significantly in the near term and for the foreseeable future. For example, the company expects general and administrative expenses, excluding stock-based compensation expenses (refer to non-GAAP financial measure discussed below), in the year ended December 31, 2021,2022 to be in the range of$22.3$42.4 million in the year ended December 31, 2020, as we plan for expenses related to the2021. Upon commencement of commercial operations, such asFisker also expects general and administrative expenses to include facilities, marketing and advertising costs.
$105-$45-$50120 million
as compared to 26
Research and Development Expense
To date, Fisker’s research and development expenses have consisted primarily of external engineering services in connection with the design of the Fisker Ocean model and development of the first prototype. As Fisker ramps up for commercial operations, it anticipates that research and development expenses will increase for the foreseeable future as the Company expands its hiring of engineers and designers and continues to invest in new vehicle model design and development of technology. For example, the company expects research and development expenses, excluding stock-based compensation expenses (refer to non-GAAP financial measure discussed below), in the year ended December 31, 2021,2022 to be in the range of $280 - $290$330-$380 million as compared to $21.1$286.9 million in the year ended December 31, 2020.2021.
Income TaxesTax Expense / Benefit
Fisker’s income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. Fisker maintains a valuation allowance against the full value of its U.S. and state net deferred tax assets because Fisker believes the recoverability of the tax assets is not more likely than not.
Interest Expense
Interest expense consists primarily of interest expense associated with the convertible senior notes.
Income Tax Expense / Benefit
Fisker’s income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. Fisker maintains a valuation allowance against the full value of its U.S. and state net deferred tax assets because Fisker believes the recoverability of the tax assets is not more likely than not.
Results of Operations
Comparison of the Three-Months Ended September 30, 2021March 31, 2022 to the Three-Months Ended September 30, 2020March 31, 2021
The following table sets forth Fisker’s historical operating results for the periods indicated:
Three-Months Ended March 31, | |||||||||||||||||||||||
| 2022 | 2021 | $ Change | % Change | ||||||||||||||||||||
| (dollar amounts in thousands) | |||||||||||||||||||||||
| Revenue | $ | 12 | 22 | $ | (10) | (45) | % | ||||||||||||||||
| Cost of goods sold | 11 | 17 | (6) | (35) | % | ||||||||||||||||||
| Gross Margin | 1 | 5 | (4) | (80) | % | ||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| General and administrative | 21,992 | $ | 5,832 | 16,160 | 277 | % | |||||||||||||||||
| Research and development | 101,460 | 27,271 | 74,189 | 272 | % | ||||||||||||||||||
| Total operating costs and expenses | 123,452 | 33,103 | 90,349 | 273 | % | ||||||||||||||||||
| Loss from operations | (123,451) | (33,098) | (90,353) | 273 | % | ||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Other income (expense) | (371) | 75 | (446) | n.m. | |||||||||||||||||||
| Interest income | 265 | 156 | 109 | 70 | % | ||||||||||||||||||
| Interest expense | (4,383) | — | (4,383) | n.m. | |||||||||||||||||||
| Change in fair value of derivatives | — | (145,249) | 145,249 | n.m. | |||||||||||||||||||
| Foreign currency gain | 746 | 1,273 | (527) | (41) | % | ||||||||||||||||||
| Unrealized gain recognized on equity securities | 5,120 | — | 5,120 | n.m. | |||||||||||||||||||
| Total other income (expense) | 1,377 | (143,745) | 145,122 | n.m. | |||||||||||||||||||
| Net Loss | $ | (122,074) | $ | (176,843) | $ | 54,769 | (31) | % | |||||||||||||||
Three-Months Ended September 30, | ||||||||||||||||
2021 | 2020 | $ Change | % Change | |||||||||||||
(dollar amounts in thousands) | ||||||||||||||||
Revenue | $ | 15 | — | $ | 15 | n.m. | ||||||||||
Cost of goods sold | 16 | — | 16 | n.m. | ||||||||||||
Gross Margin | (1 | ) | — | (1 | ) | n.m. | ||||||||||
Operating costs and expenses: | ||||||||||||||||
General and administrative | 10,273 | 6,521 | 3,752 | n.m. | ||||||||||||
Research and development | 99,291 | 3,402 | 95,889 | n.m. | ||||||||||||
Total operating costs and expenses | 109,564 | 9,923 | 99,641 | n.m. | ||||||||||||
Loss from operations | (109,565 | ) | (9,923 | ) | (99,642 | ) | n.m. | |||||||||
Other income (expense): | ||||||||||||||||
Other income (expense) | (84 | ) | 6 | (90 | ) | n.m. | ||||||||||
Interest income | 155 | 8 | 147 | n.m. | ||||||||||||
Interest expense | (2,147 | ) | (765 | ) | (1,382 | ) | n.m. | |||||||||
Change in fair value of derivatives | — | (29,149 | ) | 29,149 | n.m. | |||||||||||
Foreign currency gain (loss) | 1,797 | 159 | 1,638 | n.m. | ||||||||||||
Total other income (expense) | (279 | ) | (29,741 | ) | 29,462 | n.m. | ||||||||||
Net Loss | $ | (109,844 | ) | (39,664 | ) | (70,181 | ) | n.m. | ||||||||
n.m. = not meaningful.
Revenue and cost of goods sold
During the three-months ended September 30, 2021,March 31, 2022, Fisker launched its merchandise “Fisker Edition” where it sells direct to consumers Fisker branded apparel and goods. Sales of branded apparel and goodsgoods totaled $15,000$12,000 with related costs of goods sold of $16,000$11,000 resulting in a gross lossprofit of $1,000 during the three-month period. Merchandise sales are ancillary revenues that will continue in the future but are not expected to constitute a significant portion of operations once Fisker commences production and commercialization of its vehicles.
General and Administrative
General and administrative expenses increased by $3.8$16.2 million or 277% from $6.5$5.8 million during the three-months ended September 30, 2020March 31, 2021 to $10.3$22.0 million during the three-months ended September 30, 2021,March 31, 2022, primarily due to increased salaried employee headcount, improved benefits in line with our human capital and ESG goals designed to offer potential employees competitive compensation packages, and stock based compensation. Marketing and advertising efforts resulted in expense of $4.5 million for the first quarter of 2022 compared to minimal efforts in the corresponding first quarter of 2021 as the Company implemented its marketing strategies in the fourth quarter of 2021. General and administrative expenses includes stock-based compensation expense of $209,000$1.8 million and $140,000$0.2 million for the three monthsthree-months ended September 30,March 31, 2022 and 2021, and 2020, respectively. General and administrative expenses will increase induring the fourth quarterremainder of 2021the 2022 fiscal year as the Company continues to increase its workforce, engage with advisors to establish global strategies for direct and indirect taxes, and planning for entity-wide changes in its IT systems. Overall, total headcount for the Company increased to over 300455 employees as of NovemberMay 2, 2021,2022, compared to 101169 employees as of DecemberMarch 31, 2020 and 81 employees as of October 29, 2020, the date of the closing of our reverse merger.
2021.Research and Development
Research and development expenses increased by $95.9$74.2 million or 272% from $3.4$27.3 million during the three-months ended September 30, 2020,March 31, 2021, to $99.3$101.5 million during theSeptember 30, 2021.March 31, 2022. The increase primarily relates to an increasehigher headcount and achievement of key milestones in headcountengineering and development of full-time employeesthe design of components as the Company moves towards the start of September 30, 2021,production. In the first quarter of 2022, we continued the development phase of our prototype Fisker Oceans, which includes the purchase and expense of $39.5 million of prototype parts, and testing and validation. The first quarter of 2022 reflects higher research and development expenses as our last major design milestones were met and the Company transitions to prototype production and preparation for start of production. Reductions in research and development efforts for the Fisker Ocean over the remainder of 2022 are expected to be offset by increases in the development efforts associated with the Ocean and PEAR vehicle programs, and payments to suppliers indicating progress on serial design and development of unique components.Fisker PEAR. Research and development expenses includes stock-based compensation expense of $834,000$3.3 million and $124,000$0.6 million for the three-months ended September 30,March 31, 2022 and 2021, and 2020, respectively.
three-months
ended Interest Expense
Interest expense increased by $1.3 million from $0.8amounted to $4.4 million during the three-months ended September 30, 2020, to $2.1 million during the three-months ended September 30, 2021,March 31, 2022 due to the sale, in August 2021, of $667.5 million principal amount of 2.50% convertible senior notes compared tonotes. No interest expense from bridge note financing inwas recognized during the third quarter of 2020 leading up to the completion of the Business Combination.three-months ended March 31, 2021. Interest expense in the fourth quarter of 2021 and subsequent three-month periods throughout calendar year 2022 will approximate $4.5 million, including accretion of debt issuance costs.
Change in Fair Value of DerivativesDerivative
During three-months ended March 31, 2021, the Company’s public and Convertible Security
Foreign Currency Gain (Loss)
The Company recorded foreign currency gains of $0.7 million during the three-months ended September 30, 2020. No gain or loss recognized during the three-months ended September 30, 2021.
Unrealized Gains Recognized on Equity Securities
Unrealized gains recognized on equity securities still held as of March 31, 2022 totaled $5.1 million for the three-months ended March 31, 2022.
Net Loss
Net loss was $122.1 million during the three-months ended March 31, 2022, a decrease of approximately $54.8 million from a net loss was $109.8of $176.8 million during the three-months ended September 30,March 31, 2021, an increase of $70.2 million from a net loss of $39.6 million during the three-months ended September 30, 2020, for the reasons discussed above.
Nine-Months Ended September 30, | ||||||||||||||||
2021 | 2020 | $ Change | % Change | |||||||||||||
(dollar amounts in thousands) | ||||||||||||||||
Revenue | $ | 65 | — | $ | 65 | n.m. | ||||||||||
Cost of goods sold | 47 | — | 47 | n.m. | ||||||||||||
Gross Margin | 18 | — | 18 | n.m. | ||||||||||||
Operating costs and expenses: | ||||||||||||||||
General and administrative | 24,012 | 8,056 | 15,956 | n.m. | ||||||||||||
Research and development | 171,807 | 3,963 | 167,844 | n.m. | ||||||||||||
Total operating costs and expenses | 195,819 | 12,019 | 183,800 | n.m. | ||||||||||||
Loss from operations | (195,801 | ) | (12,019 | ) | (183,782 | ) | n.m. | |||||||||
Other income (expense): | ||||||||||||||||
Other income (expense) | (98 | ) | 15 | (113 | ) | n.m. | ||||||||||
Interest income | 415 | 13 | 402 | n.m. | ||||||||||||
Interest expense | (2,147 | ) | (1,326 | ) | (821 | ) | n.m. | |||||||||
Change in fair value of derivatives | (138,436 | ) | (29,409 | ) | (109,027 | ) | n.m. | |||||||||
Foreign currency gain (loss) | 3,158 | 122 | 3,036 | n.m. | ||||||||||||
Total other income (expense) | (137,108 | ) | (30,585 | ) | (106,523 | ) | n.m. | |||||||||
Net Loss | $ | (332,909 | ) | (42,604 | ) | (290,305 | ) | n.m. | ||||||||
Liquidity and Capital Resources
As of the date of this Form
10-Q,
Fisker has yet to generate any revenue from its core business operations. To date, Fisker has funded its capital expenditures and working capital requirements through equity and convertible notes, as further discussed below. Fisker’s ability to successfully commence it primary commercial operations and expand its business will depend on many factors, including its working capital needs, the availability of equity or debt financing and, over time, its ability to generate cash flows from operations.As of September 30, 2021,March 31, 2022, Fisker’s cash and cash equivalents amountedamounted to $1,400$1,043 million.
29
In August 2021, we entered into a purchase agreement for the sale of an aggregate of $667.5 million principal amount of convertible senior notes due in 2026. The net proceeds from the issuance of the 2026 Notes were $562.2 million, net of debt issuance costs and the 2027 Capped Call Transactions discussed further in Note 10.8. The 2026 Notes mature on September 15, 2026, unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The 2026 Notes were not convertible as of September 30, 2021.
March 31, 2022.Fisker expects its capital expenditures and working capital requirements to increase substantially in 2021,2022, as it progresses toward production of the Fisker Ocean EV model, develop its customer support and marketing infrastructure and expand its research and development efforts. Fisker believes that its cash on hand following the consummation of the Business Combination and issuance of the convertible senior notes will be sufficient to meet its working capital and capital expenditure requirements for a period of at least twelve months from the date of this Form
10-Q
and sufficient to fund its operations until it commences production of the Fisker Ocean. Fisker may, however, need additional cash resources due to changed business conditions or other developments, including unanticipated delays in negotiations with OEMsand tier-one automotive
suppliers or other suppliers, supply chain challenges, disruptions dueto COVID-19, competitive
pressures, and regulatory developments, among other developments such as the collaboration on “Project PEAR” with Foxconn announced in February 2021. To the extent that Fisker’s current resources are insufficient to satisfy its cash requirements, Fisker may need to seek additional equity or debt financing. If the financing is not available, or if the terms of financing are less desirable than Fisker expects, Fisker may be forced to decrease its level of investment in product development or scale back its operations, which could have an adverse impact on its business and financial prospects.Cash Flows
The following table provides a summary of Fisker’s cash flow data for the periods indicated:
Three-Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
(dollar amounts in thousands) | |||||||||||
| Net cash used in operating activities | (105,988) | (28,810) | |||||||||
| Net cash used in investing activities | (55,750) | (65,665) | |||||||||
| Net cash provided by financing activities | 1,861 | 88,739 | |||||||||
Nine-Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
(dollar amounts in thousands) | ||||||||
Net cash used in operating activities | (160,377 | ) | (7,941 | ) | ||||
Net cash used in investing activities | (81,828 | ) | (224 | ) | ||||
Net cash provided by financing activities | 651,458 | 51,283 | ||||||
Cash Flows used in Operating Activities
Fisker’s net cash flows used in operating activities to date have been primarily comprised of costs related to research and development, payroll and other general and administrative activities. As Fisker continues to accelerate hiring in line with development and production of the Ocean, Fisker expects its cash used in operating activities to increase significantly before it starts to generate any material cash flows from its business. Operating leaseLease commitments as of September 30, 2021,March 31, 2022, will result in cash payments of $0.6$6.7 million for the remainder of 2021 and $4.6 million for 2022, and $17.6$9.2 million for 2023, and thereafter. Fisker’s new headquarters, Inception, located in Manhattan Beach, California, commenced in May 2021 resulting incremental operating lease commitments of $0.5$30.7 million for the remainder of 2021, $3.8 million for 2022, and $16 million for 20232024 and thereafter. It is expected thatStructural improvements are required before Fisker will commence new leases forcan use its experience centers in the U.S. and Europe during eitherfor its intended purposes. The timing for completion of the fourth quarter of 2021 or first quarterstructural improvements is expected in the second half of 2022. In total, Fisker is projecting to use cash in excess of $325$435 million for combined SG&A and R&D activities during 2021.2022.
Net cash used in operating activities increased by $152.4$77.2 million from $7.9$28.8 million during the nine-monthsthree-months ended September 30, 2020March 31, 2021 to $160.3$106.0 million during the nine-monthsthree-months ended September 30, 2021.March 31, 2022.
Cash Flows used in Investing Activities
Fisker’s cash flows used in investing activities, historically, have been comprised mainly of purchases of property and equipment. During the nine-monthsthree-months ended September 30, 2021,March 31, 2022, the Company acquired intangible assets related to development of the Fisker Ocean and production of its parts and capitalized certain expenditures associated with R&D capital assets that benefit our vehicle program development in future periods that totaled $81.8 million.$45.8 million compared to $65.7 during the three-months ended March 31, 2021. Fisker continues to expect 20212022 capital expenditures for manufacturing and development, testing and validation, tooling, manufacturing equipment, software licenses, and IT infrastructure to range between $165$280 million and $190$290 million of which we expect at least 50% is denominated in foreign currencies, as serial production tooling and equipment begins to be installed at both vehicle assembly and supplier facilities over the remainder of 2021.2022 .
30
Fisker used cashcash of $81.8$55.8 million forfor investing activities during the nine-monthsthree-months ended September 30, 2021,March 31, 2022, compared to $0.2$65.7 million during the corresponding nine-month periodthree-months ended September 30, 2020.March 31, 2021.
On July 28, 2021, the Company made a $10 million commitment for a private investment in public equity (PIPE) supporting the planned merger of leading European EV charging network, Allego B.V. (“Allego”) with Spartan Acquisition Corp. III (NYSE: SPAQ), a publicly-listed special purpose acquisition company. The planned merger is expected to closeclosed in the fourth quarter of 2021 or first quarter of 2022 which will triggertriggered our investment commitment.commitment resulting in a $10 million cash payment to acquire 1,000,000 class A common shares of Allego (NYSE: ALLG). Fisker is the exclusive electric vehicle automaker in the PIPE and, in parallel, has agreed to terms on a strategic partnership to deliver a range of charging options for its customers in Europe.
Cash Flows from Financing Activities
Through September 30, 2021,March 31, 2022, Fisker has financed its operations primarily through the sale of equity securities and convertible senior notes.
Net cash from financing activities was $651.4$1.9 million during the nine-monthsthree-months ended September 30,March 31, 2022, which was entirely due to the proceeds from the exercise of stock options and collection of related statutory withholding taxes due for payment and accrued as of March 31, 2022. Net cash from financing activities was $88.7 million during the three-months ended March 31, 2021 reflecting the proceeds of $89$88.6 million from public warrant holders who exercised 7,733,400 warrants to acquire a corresponding equal number of Class A common stock and proceeds of $667.5 million from the sale of convertible senior notes due in 2026, before payments for debt issuance costs of $8.5 million and $96.8 million for the purchase of a capped call option. Net cash from financing activities was $51.3 million during the nine-months ended September 30, 2020 primarily derived from proceeds received for the issuance of bridge notes and a convertible equity security.
Off-Balance
Sheet ArrangementsFisker is not a party to
any off-balance sheet
arrangements, as defined under SEC rules.Non-GAAP
Financial MeasureThe accompanying table referencesmeasuremeasures to the most directly comparable GAAP measure in the tables below.
non-GAAP
adjusted loss from operations. Thisnon-GAAP
financial measure differs from the directly comparable GAAP financial measure due to adjustments made to exclude stock-based compensation expense. Thisnon-GAAP
financial measure is not a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles in the United States (GAAP) and should not be considered as an alternative to any other performance measures derived in accordance with GAAP. The Company believes that presenting thisnon-GAAP
financial measure provides useful supplemental information to investors about the Company in understanding and evaluating its operating results, enhancing the overall understanding of its past performance and future prospects, and allowing for greater transparency with respect to key financial metrics used by its management in financial and operational-decision making. However, there are a number of limitations related to the use of anon-GAAP
measure and its nearest GAAP equivalents. For example, other companies may calculatenon-GAAP
measures differently, or may use other measures to calculate their financial performance, and therefore anynon-GAAP
measures the Company uses may not be directly comparable to similarly titled measures of other companies. Therefore, both GAAP financial measures of Fisker’s financial performance and the respectivenon-GAAP
measures should be considered together. Please see the reconciliation ofnon-GAAP
financial Three-Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| GAAP Loss from operations | (123,451) | (33,098) | |||||||||
| Add: stock based compensation | 5,065 | 817 | |||||||||
| Non-GAAP Adjusted loss from operations | $ | (118,386) | $ | (32,281) | |||||||
Three-Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
GAAP Loss from operations | $ | (109,565 | ) | $ | (9,923 | ) | ||
Add: stock based compensation | 1,043 | 264 | ||||||
Non-GAAP Adjusted loss from operations | $ | (108,522 | ) | $ | (9,659 | ) | ||
Nine-Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
GAAP Loss from operations | $ | (195,801 | ) | $ | (12,019 | ) | ||
Add: stock based compensation | 4,078 | 334 | ||||||
Non-GAAP Adjusted loss from operations | $ | (191,723 | ) | $ | (11,685 | ) | ||
Critical Accounting Policies and Estimates
Fisker’s financial statements have been prepared in accordance with GAAP. In the preparation of these financial statements, Fisker is required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Fisker considers an accounting judgment, estimate or
31
assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on the condensed consolidated financial statements.
For a description of our critical accounting policies and estimates, refer to Part II, Item 7, Critical Accounting Policies and Estimates in our Annual Report on20202021 filed with the SEC on May 17, 2021.February 28, 2022. There have been no material changes to our critical accounting policies and estimates since our Annual Report on20202021 filed with the SEC on May 17, 2021.February 28, 2022.
Form 10-K/A
10-K for the year ended December 31, Form 10-K/A
10-K for the year ended December 31, Emerging Growth Company Status
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply
to non-emerging growth
companies, and any such election to not take advantage of the extended transition period is irrevocable.Prior to December 31, 2021, Fisker iswas an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. Fisker expects to continue to takehas taken advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting standards to the extent permitted by such standards. This may make it difficult or impossible to compare Fisker’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.
Effective December 31, 2021, Fisker exited its emerging growth company status and met the definition of a large accelerated filer, as defined under Rule 12b-2 of the Exchange Act. The accommodations afforded to an emerging growth company will no longer apply.Recent Accounting Pronouncements
See Note 2 to the condensed consolidated financial statements included elsewhere in this Form
10-Q
for more information about recent accounting pronouncements, the timing of their adoption, and Fisker’s assessment, to the extent it has made one, of their potential impact on Fisker’s financial condition and its results of operations and cash flows.Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Fisker has not, to date, been exposed to material market risks given its early stage of operations. Upon commencing commercial operations, Fisker expects to be exposed to foreign currency translation and transaction risks and potentially other market risks, including those related to interest rates or valuation of financial instruments, among others.
Foreign Currency Risk
Fisker’s functional currency is the U.S. dollar, while certain of Fisker’s current and future subsidiaries are expected to have functional currencies in Euro, British Pound Sterling, Indian Rupee, and Chinese Yuan Renminbi reflecting their principal operating markets. Once Fisker commences commercial operations, it expects to be exposed to both currency transaction and translation risk. For example, Fisker expects its contracts withTo date, Fisker has not had material exposureThe Company assesses whether opportunities exist to purchase foreign currencies with U.S. dollars to take advantage of favorable exchange rates. In April 2022, the Company purchased 130.1 million Euros for 140 million U.S. dollars, a currency exchange rate of 1 U.S. dollar for 1.076 Euro, which is designed to provide an economic hedge against future foreign currency fluctuations and has not hedged such exposure, although it may do so in the future.
OEMs and/or tier-one automotive
suppliers to be transacted in Euro or other foreign currencies. In addition, Fisker expects that certain of its subsidiaries will have functional currencies other than the U.S. dollar, meaning that such subsidiaries’ results of operations will be periodically translated into U.S. dollars in Fisker’s condensed consolidated financial statements, which may result in revenue and earnings volatility from period to period in response to exchange rates fluctuations. Management, including the participation of our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation (pursuant to Rule 13a-15(b)under the Exchange Act) of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that our management is required underRules 13a-15(e)under the Exchange Act as of September 30, 2021.procedures relative to their costs. Based on thatthis evaluation, theour Chief Executive Officer and Chief Financial Officer have concluded that, theseas of March 31, 2022, the Company’s disclosure controls and procedures were not effective as of September 30, 2021 due toat the material weakness in internal control over financial reporting described below.reasonable level.
to apply its judgment in evaluating the benefits of possible controls and 15d-15(e)
Changes in Internal Control over Financial Reporting
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
For a description of our material pending legal proceedings, please see Note 13, Commitments and Contingencies, to the unaudited condensed consolidated financial statements included elsewhere in this report.
From time to time, we may become involved in legal proceedings arising in the ordinary course of business. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, negative publicity and reputational harm and other factors.
Item 1A. Risk Factors
In addition to the information set forth below and other information contained elsewhere in this report, you should carefully consider the factors discussed in Part I, Item 1A. in our most recent Annual Report filed on Form10-K/A 10-K for the year ended December 31, 20202021 filed with the SEC on May 17, 2021,February 28, 2022, which could materially affect our business, financial condition or future results.
Risk Factors
We continue to face risks related to health epidemics, including the
recent COVID-19
pandemic, which could have a material adverse effect on our business and results of operations.We continue to face various risks related to public health issues, including epidemics, pandemics, and other outbreaks, including the recent pandemic of respiratory illness caused by a novel coronavirus known
as COVID-19.
The impactof COVID-19,
including changes in consumer and business behavior, pandemic fears and market downturns, and restrictions on business and individual activities (such as the ongoing lockdowns in Shanghai, China), has created significant volatility in the global economy and led to reduced economic activity. The spreadof COVID-19
has also created a disruption in the manufacturing, delivery and overall supply chain of vehicle manufacturers and suppliers, and has led to a global decrease in vehicle sales in markets around the world.The pandemic has resulted in government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions,and business shutdowns. These measures may adversely impact our employees and operations and the operations of its customers, suppliers, vendors and business partners, and may negatively impact our sales and marketing activities. In addition, various aspects of our business cannot be conducted remotely. These measures by government authorities may remain in place in certain areas for a significant period of time and they may continue to adversely affect our manufacturing plans, sales and marketing activities, business and results of operations.
quarantines, stay-at-home
or shelter-in-place orders,
The spread(including employee travel, recommendingand we may take further actions as may be required by government authorities or thatall non-essentialpersonnel work from home we determine is in the best interest of our employees, customers, suppliers, vendors and cancellation or reduction of physical participation in sales activities, meetings, events and conferences).business partners. There is no certainty that such actions will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. If significant portions of our workforce are unable to work effectively, including due to illness, quarantines, social distancing, government actions, challenges relating to the return to an office environment, or due toother restrictions in connection with
of COVID-19
caused us to modify our business practices, the COVID-19
pandemic, our operations will be impacted.The full extent to whichitsour business as a result of itsthe pandemic's global economic impact, including any recession that has occurred or may occur in the future.
the COVID-19
pandemic impacts our business, prospects and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including the duration and spread of the pandemic, its severity, the emergence of variants, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating activities can resume. Even afterthe COVID-19
pandemic has substantially subsided, we may continue to experience an adverse impact to Specifically, difficult macroeconomic conditions, such as decreases in per capita income and level of disposable income, increased and prolonged unemployment, or a decline in consumer confidence as a result of
the COVID-19
pandemic could have a material adverse effect on the demand for our vehicles. Under difficult economic conditions,34
potential customers may seek to reduce spending by forgoing our vehicles for other traditional options or may choose to keep their existing vehicles and cancel reservations.
There are no comparable recent events that may provide guidance as to the effect of the spread
of COVID-19
and a pandemic, and, as a result, the ultimate impact ofthe COVID-19
pandemic or a similar health epidemic is highly uncertain.We are dependent on our suppliers, a significant number of which are single or limited source suppliers, and the inability of these suppliers to deliver necessary components of our vehicles in a timely manner and at prices and volumes acceptable to us could have a material adverse effect on its business, prospects and operating results.
While we plan to obtain components from multiple sources whenever possible, many of the components used in our vehicles will be purchased by us from a single source. While we believe that we may be able to establish alternate supply relationships and can obtain or engineer replacement components for our single source components, we may be unable to do so in the short term (or at all) at prices or quality levels that are acceptable to us. In addition, we could experience delays if our suppliers do not meet agreed upon timelines or experience capacity constraints.
Any disruption in the supply of components, including chip shortages, whether or not from a single source supplier, could temporarily disrupt production of our vehicles until an alternative supplier is able to supply the required material. Changes in business conditions, unforeseen circumstances, governmental changes, and other factors beyond our control or which we do not presently anticipate, could also affect our suppliers’ ability to deliver components to us on a timely basis. Any of the foregoing could materially and adversely affect our results of operations, financial condition and prospects.
The 2026 Notes are unsecured obligations which bear regular interest at 2.50% annuallymilitary conflict between Russia and will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2022. The 2026 Notes will mature on September 15, 2026, unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The 2026 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 50.7743 shares of Class A common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $19.70 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2026 Notes. We may redeem for cash all or any portion of the 2026 Notes, at our option, on or after September 20, 2024 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
In response to the military conflict between Russia and Ukraine, the U.S., U.K. E.U., and others have imposed significant new sanctions and export controls against Russia and certain Russian individuals and entities. This conflict has also resulted in significant volatility and disruptions to the global markets. It is not possible to predict the short- or long-term implications of this conflict, which could include but are not limited to further sanctions, uncertainty about economic and political stability, increases in inflation rates and energy prices, supply chain challenges and adverse effects on currency exchange rates and financial markets. In addition, the U.S. government has reported that U.S. sanctions against Russia in response to the conflict could lead to an increased threat of cyberattacks (including increased risk of data breach and other threats from ransomware, destructive malware, distributed denial-of-service attacks, as well as fraud, spam, and fake accounts, or other illegal activity conducted generally by bad actors seeking to take advantage of us, our partners or end-customers) against U.S. companies. These increased threats could pose risks to the security of our information technology systems, our network and our product offerings and/or service offerings for our products, as well as the confidentiality, availability and integrity of our data.
We have operations, and impair our ability to satisfy our obligations underas well as potential new customers, in Europe. If the Notes.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
In August 2021, we entered into a purchase agreement with certain counterparties for the sale of an aggregate of $667.5 million principal amount of 2.50% convertible senior notes due in September 2026 (the “2026 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2026 Notes have been designated as green bonds, whose proceeds will be allocated in accordance with the Company’s green bond framework. The 2026 Notes consisted of a $625 million initial placement and an over-allotment option that provided the initial purchasers of the 2026 Notes with the option to purchase an additional $100.0 million aggregate principal amount of the 2026 Notes, of which $42.5 million was exercised. The 2026 Notes were issued pursuant to an indenture dated August 17, 2021. The net proceeds from the issuance of the 2026 Notes were $562.2 million, net of debt issuance costs and cash used to purchase the capped call transactions (“2026 Capped Call Transactions”) discussed below. The debt issuance costs are amortized to interest expense using the effective interest rate method.
The 2026 Notes are unsecured obligations which bear regular interest at 2.50% annually and will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2022. The 2026 Notes will mature on September 15, 2026, unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The 2026 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 50.7743 shares of Class A common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $19.70 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2026 Notes. We may redeem for cash all or any portion of the 2026 Notes, at our option, on or after September 20, 2024 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Holders of the 2026 Notes may convert all or a portion of their 2026 Notes at their option prior to June 15, 2026, in multiples of $1,000 principal amounts, only under the following circumstances:
•during any calendar quarter commencing after the calendar quarter ending on September 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
•during the five-business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the 2026 Notes on such trading day;
•if we call such 2026 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called (or deemed called) for redemption; or
•on the occurrence of specified corporate events.
On or after June 15, 2026, the 2026 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Holders of the 2026 Notes who convert the 2026 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2026 Notes, or in connection with a redemption may be entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change, holders of the 2026 Notes may require us to repurchase all or a portion of the 2026 Notes at a price equal to 100% of the principal amount of 2026 Notes, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
Item 3. Defaults Upon Senior Securities.
Not applicable
Item 4. Mine Safety Disclosures
Not applicable
Item 6. Exhibits.
| Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
| Exhibit No. | Exhibit Title | Form | File No. | Exhibit No. | Filing Date | Filed or Furnished Herewith | ||||||||||||||||||||||||||||||||
| 31.1 | X | |||||||||||||||||||||||||||||||||||||
| 31.2 | X | |||||||||||||||||||||||||||||||||||||
| 32.1 | X | |||||||||||||||||||||||||||||||||||||
| 32.2 | X | |||||||||||||||||||||||||||||||||||||
| 101.INS | XBRL Instance Document. | X | ||||||||||||||||||||||||||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||||||||||||||||||||||||||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | X | ||||||||||||||||||||||||||||||||||||
| 104 | Coverpage Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | X | ||||||||||||||||||||||||||||||||||||
Incorporated by Reference | ||||||||||||||||||||||
Exhibit No. | Exhibit Title | Form | File No. | Exhibit No. | Filing Date | Filed or Furnished Herewith | ||||||||||||||||
4.1 | Indenture, dated as of August 17, 2021 between Fisker Inc., as issuer, and U.S. Bank National Association, as trustee | 8-K | 001-38625 | 10.1 | 8/12/21 | |||||||||||||||||
31.1 | X | |||||||||||||||||||||
31.2 | X | |||||||||||||||||||||
32.1 | X | |||||||||||||||||||||
32.2 | X | |||||||||||||||||||||
101.INS | XBRL Instance Document. | X | ||||||||||||||||||||
101.SCH | XBRL Taxonomy Extension Schema Document. | X | ||||||||||||||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||||||||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||||||||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | X | ||||||||||||||||||||
104 | Coverpage Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | X | ||||||||||||||||||||
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 on November 15, 2021.
May 9, 2022
| FISKER INC. | ||||||||
| By: | /s/ Dr. Geeta Gupta-Fisker | |||||||
| Name: | Dr. Geeta Gupta-Fisker | |||||||
| Title: | Chief Financial Officer and Chief Operating Officer | |||||||