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

(Address, including zip code, and telephone number, including

area ~~code: (~~~~212~~) ~~220-9503~~

code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

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 S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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,”~~company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 12b-2 of the Exchange Act). Yes ☒☐ No ☐

~~Securities registered pursuant to Section 12(b)~~☒

As of November 8, 2021, 134,137,938 shares of the ~~Act:~~

~~Title of Each Class:~~	~~Trading Symbol(s)~~	~~Name of Each Exchange on Which Registered:~~
~~Units, each consisting of one Class A common stock, $0.0001 par value, and one-third of one warrant to purchase one Class A common stock~~	~~RMG~~	~~New York Stock Exchange~~
~~Class A common stock, par value $0.0001 per share~~	~~RMG.UN~~	~~New York Stock Exchange~~
~~Warrants to purchase Class A common stock~~	~~RMG.WT~~	~~New York Stock Exchange~~

~~Securities registered pursuant to Section 12(g) of the Act: None~~

~~As of~~ ~~November 9,~~ ~~2020, 23,000,000 shares of Class A~~registrant’s common stock, $0.0001 par value, ~~and 5,750,000 shares of Class B common stock, $0.0001 par value,~~were issued and outstanding.

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~Form 10-Q~~

~~For the Quarter Ended September 30, 2020~~

~~Table of Contents~~


		~~Page No.~~

~~PART I. FINANCIAL INFORMATION~~

Table of Contents


~~Item 1.~~			~~Financial Statements~~Page No	3
Part I- Financial Information				2
Item 1. Financial Statements			2
Condensed Consolidated Balance Sheets ~~as of September 30, 2020~~ (Unaudited) ~~and December 31, 2019~~			3 2

	Condensed Consolidated Statements of Operations ~~for the three~~ and ~~nine months ended September 30, 2020 and 2019~~Comprehensive (Loss) Income (Unaudited)	4 3

	Condensed Consolidated Statements of Changes in Stockholders’ Equity ~~for the three and nine months ended September 30, 2020 and 2019~~(Deficit) (Unaudited)	5 4

	Condensed Consolidated Statements of Cash Flows ~~for the nine months ended September 30, 2020 and 2019~~ (Unaudited)	7 6

	Notes to Condensed Consolidated Financial Statements ~~(Unaudited)~~	8

Item 2.	~~Management’s~~ Management's Discussion and Analysis of Financial Condition and Results of Operations	23 28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29 44

Item 4.	Controls and Procedures	29 44

~~PART II. OTHER INFORMATION~~Part II - Other Information			46
Item 1. Legal Proceedings				46
Item 1.1A. Risk Factors			~~Legal Proceedings~~46	30

~~Item 1A.~~	~~Risk Factors~~	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds ~~from Registered Securities~~	30 46

Item 3.	Defaults Upon Senior Securities	30 46

Item 4.	Mine Safety Disclosures	30 46
Item 5. Other Information				47
Item 5.6. Exhibits			~~Other Information~~51	30
Signatures
~~Item 6.~~52	~~Exhibits~~	31

~~Table of Contents~~

~~PART I—FINANCIAL INFORMATION~~

Part I - Financial Statements

Item 1. Financial Statements

~~RMG ACQUISITION CORP.~~

~~CONDENSED BALANCE SHEETS~~

September 30, 2020

December 31, 2019

(unaudited)

Assets:




Current assets:




Cash

$
315,502

$
1,175,207
Prepaid expenses and other assets

144,188

176,403
Total current assets

459,690

1,351,610
Restricted cash equivalents held in Trust Account

234,179,516

233,232,730
Total Assets

$
234,639,206

$
234,584,340

Liabilities, Redeemable Class A Common Stock and Stockholders’ Equity:




Current liabilities:




Accounts payable

$
6,490

$
133,562
Accrued expenses

202,344

50,000
Franchise tax payable

150,050

200,000
Income tax payable

—

88,057
Total current liabilities

358,884

471,619
Deferred legal fees

450,000

450,000
Deferred underwriting commissions

8,050,000

8,050,000
Note payable

41,666

—
Total liabilities

8,900,550

8,971,619

Commitments and contingencies




Class A common stock, $0.0001 par value; 22,073,865 and 22,061,272 shares subject to possible redemption at $10 per share at September 30, 2020 and December 31, 2019, respectively

220,738,650

220,612,720

Stockholders’ Equity:




Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding

—

—
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 926,135 and 938,728 shares issued and outstanding (excluding 22,073,865 and 22,061,272 shares subject to possible redemption) at September 30, 2020 and December 31, 2019, respectively

93

94
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

575

575
Additional paid-in capital

7,326,942

4,749,168
Retained earnings (Accumulated deficit)

(2,327,604)

250,164
Total stockholders’ equity

5,000,006

5,000,001
Total Liabilities, Redeemable Class A Common Stock and Stockholders’ Equity

$
234,639,206

$
234,584,340


Condensed Consolidated Balance Sheets As of September 30, 2021 and December 31, 2020 (Unaudited) (In thousands, except share and per share data)

September 30, 2021 December 31, 2020
Assets
Current assets
Cash and cash equivalents $ 53,278 $ 292,442
Investments 127,798 —
Accounts receivable, net of allowance for expected credit loss of $117 and $238 at September 30, 2021 and December 31, 2020, respectively 2,623 841
Inventories, net 15,256 4,937
Insurance receivable 6,000 6,000
Deferred costs 88 —
Prepaid inventories 11,891 493
Prepaid expenses and other current assets 4,893 776
Total current assets 221,827 305,489
Restricted cash 3,000 1,500
Property, plant and equipment, net 10,618 5,484
Equity method investments 37,183 35,000
Operating lease right-of-use assets 5,287 5,469
Deferred assets 5,018 —
Prepayment - long-term supply agreement 64,703 —
Other noncurrent assets 2,807 3,100
Total assets $ 350,443 $ 356,042
Liabilities and stockholders’ equity
Current liabilities
Accounts payable $ 10,287 $ 2,900
Accrued expenses 9,595 2,844
Contract liabilities 709 815
Current maturities of long-term debt 10 2,260
Operating lease liabilities, current 855 853
Legal settlement payable 6,000 6,000
Other current liabilities 1,120 384
Total current liabilities 28,576 16,056
Long-term debt, net of current portion 32 1,082
Public and private placement warrants 3,718 138,466
Operating lease liabilities, net of current portion 4,533 4,723
Other noncurrent liabilities — 17
Total liabilities 36,859 160,344
Commitments and contingencies (Note 15) 0 0
Stockholders’ equity
Preferred stock ($0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020) — —
Common stock ($0.0001 par value, 250,000,000 shares authorized, 134,096,818 and 126,911,861 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively) 13 12
Additional paid-in capital 447,684 377,253
Accumulated other comprehensive loss (55) —
Accumulated deficit (134,058) (181,567)
Total stockholders’ equity 313,584 195,698
Total liabilities and stockholders’ equity $ 350,443 $ 356,042

The accompanying notes are an integral part of these ~~unaudited~~ condensed consolidated financial statements.

~~Table~~


Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income For The Three and Nine Months Ended September 30, 2021 and 2020 (Unaudited) (In thousands, except share and per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
Product revenues	$	2,740	$	51	$	3,818	$	2,097
Service revenues	3,019		624		3,921		2,229

Total revenues (1)	5,759		675		7,739		4,326

Cost of revenues:
Product cost	7,904		716		17,884		5,182
Service cost	2,565		1,080		3,357		2,669

Total cost of revenues	10,469		1,796		21,241		7,851











Gross loss	(4,710)		(1,121)		(13,502)		(3,525)

Operating expenses:
Research and development	4,732		1,817		10,295		5,213
Selling, general and administrative	17,607		4,945		54,393		10,303
Total operating expenses	22,339		6,762		64,688		15,516
Operating loss	(27,049)		(7,883)		(78,190)		(19,041)

Interest expense	(4)		(265)		(16)		(783)

Change in fair value of public and private placement warrants	6,134		—		124,254		—
Gain from extinguishment of PPP loan	3,300		—		3,300		—
Investment gain (loss), net	266		—		(23)		—
Other expense	—		(228)		—		(1,614)
(Loss) income before income taxes and loss in equity method investments	(17,353)		(8,376)		49,325		(21,438)
Loss in equity method investments	(611)		(540)		(1,817)		(1,272)
Benefit from income taxes	11		—		1		—
Net (loss) income	(17,953)		(8,916)		47,509		(22,710)

Other comprehensive income (loss)
Available-for-sale debt investments:
Change in net unrealized losses, net of income taxes	(61)		—		(369)		—
Net losses reclassified to earnings, net of income taxes	161		—		314		—
Total other comprehensive income (loss), net of income taxes	100		—		(55)		—
Comprehensive (loss) income	$	(17,853)	$	(8,916)	$	47,454	$	(22,710)

Net (loss) income per share
Basic	$	(0.13)	$	(0.11)	$	0.36	$	(0.30)
Diluted	$	(0.13)	$	(0.11)	$	0.35	$	(0.30)
Weighted average number of shares outstanding
Basic	134,017,528		78,639,037		131,307,617		76,900,247
Diluted	134,017,528		78,639,037		135,342,504		76,900,247

(1) Total revenues included related party revenues of ~~Contents~~$449 and $558 fo

r the three months ended September 30, 2021 and 2020, respectively, and $1,735 and $2,027 for the nine months ended September 30, 2021 and 2020, respectively. See Note 14.

~~RMG ACQUISITION CORP.~~

~~UNAUDITED CONDENSED STATEMENTS OF OPERATIONS~~

For the three months ended

For the nine months ended

September 30,

September 30,

2020

2019

2020

2019

General and administrative expenses

$
589,274

$
210,806

$
1,049,053

$
668,222

Franchise tax expense

50,000

50,000

150,169

150,000

Loss from operations

(639,274)

(260,806)

(1,199,222)

(818,222)

Interest income

13

8,839

1,111

22,725

Interest earned on restricted cash equivalents held in Trust Account

28,551

—

1,153,171

—

Gain on marketable securities (net), and dividends held in Trust Account

—

1,142,497

—

3,299,930

Interest expense

(104)

—

(104)

—

(Loss) income before income tax expense (benefit)

(610,814)

890,530

(45,044)

2,504,433

Income tax expense (benefit)

(119,129)

232,380

(170,979)

668,514

Net (loss) income

$
(491,685)

$
658,150

$
125,935

$
1,835,919

Weighted average shares outstanding of Class A common stock

23,000,000

23,000,000

23,000,000

22,909,091

Basic and diluted net income per share, Class A

$
—

$
0.04

$
0.05

$
0.11

Weighted average shares outstanding of Class B common stock

5,750,000

5,750,000

5,750,000

5,750,000

Basic and diluted net loss per share, Class B

$
(0.10)

$
(0.04)

$
(0.18)

$
(0.11)

The accompanying notes are an integral part of these ~~unaudited~~ condensed consolidated financial statements.

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY~~


Condensed Consolidated Statements of Changes in Stockholders’ Equity For The Three and Nine Months Ended September 30, 2021 (Unaudited) (In thousands, except share data)

~~Table of Contents~~


	Common Stock			APIC		Notes Receivable from Stockholders		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount

Balance—June 30, 2021	132,995,060	$	13	$	429,946	$	—	$	(155)	$	(116,105)	$	313,699
Issuance of common stock	1,101,758	—		6,275		—		—		—		6,275
Proceeds received for common stock issuance in the prior quarter	—	—		7,148		—		—		—		7,148

Stock based compensation	—	—		4,315		—		—		—		4,315
Other comprehensive income	—	—		—		—		100		—		100
Net loss	—	—		—		—		—		(17,953)		(17,953)
Balance—September 30, 2021	134,096,818	$	13	$	447,684	$	—	$	(55)	$	(134,058)	$	313,584

~~RMG ACQUISITION CORP.~~

~~UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED)~~

Retained

Common Stock

Earnings

Total

Class A

Class B

Additional Paid-In

(Accumulated

Stockholders’


Shares

Amount

Shares

Amount

Capital

Deficit)

Equity
Balance - December 31, 2018

—

$
—

5,750,000

$
575

$
24,425

$
(2,555)

$
22,445
Issuance of Class B common stock to Anchor Investors

—

—

575,000

58

2,255

—

2,313
Forfeiture of Class B common stock from Sponsor

—

—

(575,000)

(58)

58

—

—
Sale of units in initial public offering, gross

23,000,000

2,300

—

—

229,997,700

—

230,000,000
Offering costs

—

—

—

—

(13,448,120)

—

(13,448,120)
Sale of private placement warrants to Sponsor and Anchor Investors in private placement

—

—

—

—

6,900,000

—

6,900,000
Class A common stock subject to possible redemption

(21,880,163)

(2,188)

—

—

(218,799,442)

—

(218,801,630)
Net income

—

—

—

—

—

324,994

324,994
Balance - March 31, 2019

1,119,837

112

5,750,000

575

4,676,876

322,439

5,000,002
Class A common stock subject to possible redemption

(85,277)

(9)

—

—

(530,322)

(322,439)

(852,770)
Net income

—

—

—

—

—

852,775

852,775
Balance - June 30, 2019

1,034,560

103

5,750,000

575

4,146,554

852,775

5,000,007
Class A common stock subject to possible redemption

(65,815)

(6)

—

—

194,631

(852,775)

(658,150)
Net income

—

—

—

—

—

658,150

658,150
Balance - September 30, 2019

968,745

$
97

5,750,000

$
575

$
4,341,185

$
658,150

$
5,000,007


	Common Stock			APIC		Notes Receivable from Stockholders		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount

Balance—December 31, 2020	126,911,861	$	12	$	377,253	$	—	$	—	$	(181,567)	$	195,698
Issuance of common stock	6,534,957	1		50,480		—		—		—		50,481

Issuance of common stock as contract consideration	650,000	—		5,018		—		—		—		5,018
Stock based compensation	—	—		14,933		—		—		—		14,933
Other comprehensive loss	—	—		—		—		(55)		—		(55)
Net income	—	—		—		—		—		47,509		47,509
Balance—September 30, 2021	134,096,818	$	13	$	447,684	$	—	$	(55)	$	(134,058)	$	313,584

The accompanying notes are an integral part of these ~~unaudited~~ condensed consolidated financial statements.

~~Table of Contents~~


Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity For The Three and Nine Months Ended September 30, 2020 (Unaudited) (In thousands, except share data)

~~RMG ACQUISITION CORP.~~

~~UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS~~

Common Stock APIC Notes Receivable from Stockholders Accumulated Other Comprehensive Loss Accumulated Deficit Total
Shares Amount
Balance—June 30, 2020 78,638,872 $ 8 $ 187,252 $ (9,175) $ — $ (183,620) $ (5,535)
Issuance of common stock 2,173 — 8 — — — 8
Stock based compensation — — 132 — — — 132
Net loss — — — — — (8,916) (8,916)
Balance—September 30, 2020 78,641,045 $ 8 $ 187,392 $ (9,175) $ — $ (192,536) $ (14,311)

For the nine months ended

September 30, 2020

September 30, 2019

Cash Flows from Operating Activities:





Net income

$
125,935

$
1,835,919

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Gain on marketable securities (net), and dividends held in Trust Account

—

(3,299,930)

Changes in operating assets and liabilities:





Prepaid expenses

115,187

(172,974)

Accounts payable

(127,072)

109,264

Accrued expenses

152,344

13,000

Due to related parties

—

(40,381)

Franchise tax payable

(49,950)

150,000

Income tax payable

(171,029)

591,258

Net cash provided by (used in) operating activities

45,415

(813,844)

Cash Flows from Investing Activities





Purchase of marketable securities held in Trust Account

—

(575,947,949)

Proceeds received from sales, redemptions and maturities of marketable securities held in Trust Account

—

346,951,000

Net cash provided by investing activities

—

(228,996,949)

Cash Flows from Financing Activities:





Proceeds received under loans from related parties

—

38,501

Repayment of amounts due to related parties

—

(113,501)

Proceeds from issuance of Class B common stock to anchor investors

—

2,313

Proceeds received from initial public offering, gross

—

230,000,000

Proceeds received from private placement

—

6,900,000

Proceeds received under PPP loan from Small Business Administration

41,666

—

Offering costs paid

—

(4,758,272)

Net cash provided by financing activities

41,666

232,069,041

Net increase in cash and cash equivalents

87,081

2,258,248

Cash - beginning of the period

234,407,937

37,044

Cash and restricted cash equivalents held in Trust Account - end of the period

$
234,495,018

$
2,295,292

Supplemental disclosure of noncash investing and financing activities:





Offering costs included in accrued expenses

$
—

$
100,000

Forfeiture of Class B common stock from Sponsor

$
—

$
58

Deferred underwriting commissions in connection with the initial public offering

$
—

$
8,050,000

Deferred legal fees in connection with the initial public offering

$
—

$
150,000

Reclassification of deferred offering costs to equity upon completion of the initial public offering

$
—

$
670,220

Value of common stock subject to possible redemption

$
125,930

$
220,312,550

Supplemental cash flow disclosure:

Cash paid for income taxes

$
—

$
77,257


	Common Stock			APIC		Notes Receivable from Stockholders		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total
	Shares	Amount

Balance—December 31, 2019	74,449,847	$	7	$	181,567	$	(9,175)	$	—	$	(169,826)	$	2,573
Issuance of common stock	4,191,198	1		5,041		—		—		—		5,042
Stock based compensation	—	—		784		—		—		—		784
Net loss	—	—		—		—		—		(22,710)		(22,710)
Balance—September 30, 2020	78,641,045	$	8	$	187,392	$	(9,175)	$	—	$	(192,536)	$	(14,311)

The accompanying notes are an integral part of these ~~unaudited~~ condensed consolidated financial statements.

~~Table~~


Condensed Consolidated Statements of Cash Flows For The Nine Months Ended September 30, 2021 and 2020 (Unaudited) (In thousands)


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	47,509	$	(22,710)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization	1,833		1,404
Amortization of investment premium paid	1,486		—
Stock-based compensation	14,933		784
Inventory provision	1,617		—
Change in fair value of public and private placement warrants	(124,254)		—
Gain from extinguishment of PPP loan	(3,300)		—
Loss in equity method investments	1,817		1,272
Non-cash lease expense - operating leases	182		176
Non-cash lease expense - finance leases	212		211
Derivative expense	—		1,614
Other	303		—
Changes in operating assets and liabilities:
Accounts receivable	(1,782)		(689)
Inventories	(11,936)		(1,902)

Prepaid and other current assets	(14,930)		(218)
Prepayment - long-term supply agreement	(64,703)		—
Accounts payable	7,014		2,734
Accrued expenses	5,415		2,163
Interest accrued on notes payable	—		741
Deferred costs	(88)		—
Contract liabilities	(106)		458
Operating lease liabilities	(188)		(165)
Other, net	189		1
Net cash used in operating activities	(138,777)		(14,126)

Cash flows from investing activities:
Purchase of investments	(308,970)		—
Proceeds from maturities of investments	120,030		—
Proceeds from sales of investments	59,296		—
Equity method investment	(4,000)		—
Capital expenditures	(4,998)		(561)
Net cash used in investing activities	(138,642)		(561)

Cash flows from financing activities:
Issuance of convertible notes	—		1,924
Issuance of term notes	—		4,450
Proceeds from PPP loan	—		3,300
Issuance of common stock	—		5,027
Exercise of stock options	18,481		15
Exercise of stock warrants	21,580		—
Warrant redemption payments	(72)		—
Principal portion of finance lease liabilities	(234)		(212)
Net cash provided by financing activities	$	39,755	$	14,504

(Continued)


Condensed Consolidated Statements of Cash Flows For The Nine Months Ended September 30, 2021 and 2020 (Unaudited) (In thousands)


	Nine Months Ended September 30,
	2021		2020
Net change in cash, cash equivalents and restricted cash	$	(237,664)	$	(183)
Cash, cash equivalents and restricted cash, beginning of period	293,942		1,929
Cash, cash equivalents and restricted cash, end of period	$	56,278	$	1,746

Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	$	53,278	$	246
Restricted cash	3,000		1,500
Total cash, cash equivalents and restricted cash	$	56,278	$	1,746





Supplemental cash flow information:
Cash paid for interest	$	—	$	—
Cash paid for income taxes	$	10	$	—

Supplemental disclosure of non-cash investing and financing activities:
Purchases of property, plant and equipment in accounts payable and accrued expenses at the end of period	$	2,292	$	686
Deferred offering costs in accounts payable and accrued expenses at period end	$	—	$	2,804
Issuance of common stock as contract consideration	$	5,018	$	—
Extinguishment of PPP loan	$	3,300	$	—

(Concluded)

The accompanying notes are an integral part of ~~Contents~~

~~RMG ACQUISITION CORP.~~

these condensed consolidated financial statements.

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~Note 1 — Description of Organization, Business Operations and Basis of Presentation~~

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Romeo Power, Inc. (f/k/a RMG Acquisition Corp.) was originally incorporated under the name RMG Acquisition Corp. ~~(the “Company”~~(“RMG”) isas a blank check company incorporated in Delaware on October 22, 2018 ~~(date of inception)~~ for the purpose of effecting a merger, capital ~~stock exchange,~~stock-exchange, asset acquisition, share purchase, reorganization, or similar business combination.

On October 5, 2020, RMG and RMG Merger Sub, Inc. a Delaware corporation and a wholly owned subsidiary of RMG (“Merger Sub”), entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”) with Romeo Systems, Inc., a Delaware corporation (“Legacy Romeo”). On December 29, 2020, pursuant to the terms of the Merger Agreement, the business combination with ~~one or more businesses~~Legacy Romeo was effected through the merger of Merger Sub with and into Legacy Romeo, with Legacy Romeo continuing as the surviving company and as our wholly owned subsidiary (the “Merger” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”). While the Company may pursue an acquisition opportunity in any business, industry, sector or geographical location, it intends to focus its search for a target business in the diversified resources and industrial materials sectors. The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging growth companies.

As of September 30, 2020, the Company had not commenced any operations. All activity for the period from October 22, 2018 (date of inception) through September 30, 2020 relates to the Company’s formation, the preparation for the initial public offering (“Initial Public Offering”), and since the Initial Public Offering, the search for a target for a Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company has selected December 31 as its fiscal year end.

The Company’s sponsor is RMG Sponsor, LLC, a Delaware limited liability company (the “Sponsor”). The Company’s ability to commence operations is contingent upon obtaining adequate financial resources. The registration statement for the Company’s Initial Public Offering was declared effective on February 12, 2019. On February 12, 2019, the Company consummated its Initial Public Offering of 20,000,000 units (“Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), and on February 19, 2019, the underwriters fully exercised their over-allotment option to purchase 3,000,000 additional Units to cover over-allotments at $10.00 per Unit, generating aggregate gross proceeds of $230 million, and incurring offering costs of approximately $13.4 million, inclusive of $8.05 million in deferred underwriting commissions (Note 7).

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 4,000,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to the Sponsor and the Anchor Investors (as defined in Note 3), generating gross proceeds of $6.0 million (Note 4). In connection with the full exercise of the over-allotment option by the underwriters, the Sponsor and the Anchor Investors purchased an additional 600,000 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, which generated additional gross proceeds of $900,000.

Upon the closing of the ~~Initial Public Offering~~Business Combination, we changed our name to Romeo Power, Inc.

Romeo Power, Inc. designs, engineers, and ~~Private Placement, $230 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering~~manufactures lithium ion cylindrical battery packs for electric vehicles and the Private Placement was placed in a trust account (the “Trust Account”), located at Deutsche Bank Trust Company Americas, with American Stock Transfer & Trust Company acting as trustee, and were invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”),energy storage solutions, with a ~~maturity of 180 days~~focus on battery innovation, functionality, energy density, safety, and performance. We are headquartered in Vernon, California.

Unless the context otherwise requires, “Romeo,” the “Company,” “we,” “us,” or ~~less, until~~“our” refers to the ~~earlier of: (i)~~combined company and its subsidiaries following the ~~completion of a~~ Business Combination and ~~(ii)~~“Legacy Romeo” refers to Romeo Systems, Inc.

In 2019, Legacy Romeo and BorgWarner, Inc. (“BorgWarner”) formed BorgWarner Romeo Power LLC (the “Joint Venture” or “JV”) of which we own 40%. The Joint Venture was intended to accelerate our reach into international regions in a capital efficient way. See Note 17 - Subsequent Events for further information on BorgWarner’s election to sell its ownership in the ~~distribution of the Trust Account as described below.~~

~~The Company’s management has broad discretion with respect~~JV to the ~~specific application~~Company.

Basis of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete aPresentation

The Business Combination ~~successfully. The Company must complete one or more initial~~ was accounted for as a reverse recapitalization (the “Recapitalization Transaction”) in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations ~~having an aggregate fair market value of at least 80% of~~. For accounting and financial reporting purposes, Legacy Romeo was considered the ~~assets held in~~acquirer based on facts and circumstances, including the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only completefollowing:

• Legacy Romeo’s former stockholders hold a ~~Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling~~majority ownership interest in the ~~target sufficient for it not~~combined company;

• Legacy Romeo’s senior management team became the senior management of the combined company;

• Legacy Romeo was the larger of the companies based on historical operating activity and employee base; and

• Legacy Romeo’s operations comprise the ongoing operations of the combined company.

Accordingly, all historical financial information presented in these condensed consolidated financial statements represents the accounts of Legacy Romeo and its wholly owned subsidiaries “as if” Legacy Romeo is the predecessor and legal successor. The historical operations of Legacy Romeo are deemed to be ~~required to register as an investment company under the Investment Company Act.~~

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)~~

~~The Company will provide its holders~~those of the Company. Thus, the financial statements included in this report reflect (i) the historical operating results of Legacy Romeo prior to the Business Combination; (ii) the combined results of RMG and Legacy Romeo following the Business Combination on December 29, 2020; and (iii) RMG’s equity structure for all periods presented. No step-up basis of RMG’s assets and liabilities and no intangible assets or goodwill were recorded in connection with the Business Combination transaction consistent with the treatment of the transaction as a reverse recapitalization.

In connection with the Business Combination each share of Legacy Romeo common stock and preferred stock issued and outstanding ~~Class A~~immediately prior to the Business Combination (with each share of Legacy Romeo preferred stock being treated as if it were converted into Legacy Romeo common stock immediately prior to the Business Combination) converted into the right to receive 0.121730 shares (the “Exchange Ratio”) of common stock, par value $0.0001 ~~sold in the Initial Public Offering~~ (the ~~“public stockholders”~~“Common Stock”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially at $10.00 per Public Share). The per-share amount to be distributed to public stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 7). These Public Shares were recorded at a redemption value and classified as temporary equity upon the completionrecapitalization of the Initial Public Offering. In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transactions is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined below in Note 6) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the Sponsor has agreed to waive its redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

Notwithstanding the foregoing, the Company’s amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% or more of the Class A common stock sold in the Initial Public Offering, without the prior consent of the Company.

The Sponsor and the Company’s officers and certain directors have agreed not to propose an amendment to the Company’s amended and restated certificate of incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their Class A common stock in conjunction with any such amendment.

If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or February 12, 2021 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income taxes as well as expenses relating to the administration of the Trust Account (less up to $100,000 of interest released to the Company to pay dissolution expenses), divided by the number of ~~then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right~~shares of Common Stock attributable to ~~receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject~~Legacy Romeo is reflected retroactively to the ~~approval of~~earliest period presented based upon the ~~Company’s remaining stockholders~~Exchange Ratio and ~~its Board, dissolve and liquidate, subject~~is utilized for calculating earnings per share in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless if the Company fails to complete its Business Combination within the prescribed time period.

all prior periods presented.

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(UNAUDITED)~~

- CONTINUED

The ~~Sponsor, officers~~accompanying condensed consolidated financial statements include the results of Romeo Power, Inc. and ~~certain directors~~its wholly owned subsidiaries. All intercompany transactions and balances have ~~agreed to waive their liquidation rights with respect to~~been eliminated and the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor, officers or directors acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriterseffect of ~~the Initial Public Offering~~variable interest entities have ~~agreed to waive their rights to its deferred underwriting commission (see Note 7) held~~been considered in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

~~Basis of Presentation~~

consolidation.

Unaudited Interim Financial Information

The accompanying ~~unaudited~~ condensed ~~interim~~consolidated financial statements ~~are presented~~have been prepared in ~~U.S. dollars in conformity~~accordance with generally accepted accounting principles ~~generally accepted~~ in the United States of America (“~~U.S.~~ GAAP”) for interim financial information, the instructions to Form 10-Q, and ~~pursuant to~~ the rules and regulations of the ~~SEC. Accordingly, they do~~Securities and Exchange Commission (“SEC”). The condensed consolidated financial statements presented herein have not been audited by an independent registered public accounting firm, but include all material adjustments (consisting of ~~the information and footnotes required by U.S. GAAP. In~~normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for the ~~unaudited condensed~~period. These results are not necessarily indicative of results for any other interim period or for the full fiscal year.

Certain information and footnote disclosures normally included in financial statements ~~reflect all adjustments, which include only normal recurring adjustments necessary~~prepared in accordance with GAAP have been omitted pursuant to the rules of the SEC. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the ~~fair statement~~year ended December 31, 2020, as filed with the SEC on April 15, 2021 (the “2020 Form 10-K”).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. Actual amounts could differ from these estimates. The condensed consolidated financial statements have been prepared under the assumption that Romeo will continue as a going concern.

Reclassification of Presentation in Our Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

Revenues of comparative prior periods in our condensed consolidated statements of operations and comprehensive (loss) income are reclassified to conform with our current revenue presentation. In the condensed consolidated statements of operations, we’ve combined related party revenues with product revenues and service revenues and disclosed the amount of related party revenues in a captioned note.

Reclassification of Presentation in Note 3 of our Condensed Consolidated Financial Statements

Revenues of comparative prior periods presented in Note 3 of our condensed consolidated financial statements are reclassified to conform with our current revenue presentation. Since April 1, 2021, we have presented disaggregated revenue by product and service instead of further disaggregating product by battery packs and modules.

Immaterial Correction of Previously Issued Consolidated Financial Statements

During the quarter ended September 30, 2021, we identified a misstatement in our accounting for performance and market-based options granted in 2020 to our former Chairman and Chief Executive Officer (“CEO”), who was awarded 4,633,978 stock options at an exercise price of $6.69 per share. All shares covered by such award were subject to time based, performance and market condition vesting requirements.

As of December 29, 2020, the date of the ~~balances~~Business Combination, the performance condition was satisfied (the “Performance Condition Date”), and ~~results~~we began recognizing stock-based compensation expense, based on the fair value of the award at August 12, 2020 which was the stock option grant date (the “Grant Date”). We recognized expense prospectively, over the remaining requisite service period, which was six months from the date of the Business Combinationand included the period of December 29, 2020 through June 27, 2021.

However, in accordance with ASC 718, Compensation—Stock Compensation, we should have recognized a cumulative catch-up adjustment upon the performance condition being satisfied on December 29, 2020 for the services rendered from the

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Grant Date through the Performance Condition Date. This resulted in an understatement of $4.1 million in stock-based compensation expense, included within selling, general and administrative expense and additional paid-in capital as of December 31, 2020 and a subsequent overstatement of stock-based compensation expense, included within selling, general and administrative expense, during the interim periods ~~presented.~~ended March 31, 2021 and June 30, 2021.

The Company evaluated the materiality of the error both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, and SAB No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements, and determined the effect of the correction was not material to the previously issued financial statements.

Therefore, to correct the misstatements, we have elected to correct on a prospective basis our previously issued consolidated financial statements as of and for the year ended December 31, 2020 and our unaudited interim condensed consolidated financial statements as of and for the quarter and year-to-date periods ended March 31, 2021 and June 30, 2021. Further information regarding the misstatements and related prospective corrections is included in Part II, Item 5 - Other Information of this Quarterly Report on Form 10-Q.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except as described below, no material changes have been made to our significant accounting policies disclosed in Note 2 of the notes to consolidated financial statements in Part II, Item 8 of the 2020 Form 10-K.

Change in Segments — During the third quarter of 2021, we hired a new CEO who became our Chief Operating ~~results~~Decision Maker (“CODM”), in place of the previous senior leadership team which consisted of 2 individuals. Our new CODM changed how we manage our business and allocate resources, which resulted in modifications to our organizational and segment structure. As a result, we reorganized from 2 segments (Romeo Power North America and Joint Venture Support) to a single operating segment for the consolidated business. Our operations are now comprised of a single reportable segment. As a result, the note on segment information is not presented in this Quarterly Report on Form 10-Q.

The CODM evaluates and monitors performance primarily through consolidated sales and gross profit. Asset information is not regularly reported to the CODM for purposes of the allocation of resources or assessing segment performance.

All of our revenues (based on location of customer) and long-lived assets were within North America for the three and nine months ended September 30, ~~2020~~2021 and 2020.

Available-for-Sale Debt Investments — We classify our investments in fixed income debt securities as available-for-sale debt investments. Our available-for-sale debt investments primarily consist of U.S. government securities, municipal securities, corporate debt, commercial paper, and U.S. agency mortgage-backed securities. These available-for-sale debt investments are ~~not necessarily indicative~~primarily held in the custody of a major financial institution. These investments are reported on the condensed consolidated balance sheets at fair value. Unrealized gains and losses on these investments, to the extent the investments are unhedged, are included as a separate component of accumulated other comprehensive loss, net of tax. A specific identification method is used to determine the cost basis of available-for-sale debt investments and any realized gains or losses when sold. We classify our investments as current based on the nature of the ~~results that may~~investments and their availability for use in current operations.

Deferred Assets — Deferred assets represent upfront payments of the Company’s common stock issued to a customer and will be ~~expected~~amortized as a reduction of revenue as the related products or services are provided to the customer.

Prepayment for Long-Term Supply Agreement — Prepayment for long-term supply agreement represents an upfront cash payment to a major supplier, which will be applied as an advance for the ~~year ended December 31, 2020, or any future period. These unaudited condensed financial statements should~~cells to be ~~read in conjunction with the audited financial statements contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2020.~~

~~Emerging Growth Company~~

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”),purchased from July 1, 2023 through June 30, 2028. See Note 15 - Commitments and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has irrevocably elected to opt

Contingencies for further information.

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(UNAUDITED)~~

- CONTINUED

~~out~~Recently Adopted Accounting Pronouncements

In January 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-01, ASC subtopic 825-10, Financial Instruments - Overall: Recognition and Measurement of ~~such extended transition period,~~Financial Assets and Financial Liabilities, which ~~means that when~~revised an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. This accounting guidance also amended certain disclosure requirements associated with the fair value of financial instruments. Under ASU No. 2016-01, entities must measure certain equity investments at fair value and recognize any changes in fair value in net income, unless the investments qualify for a ~~standard~~new practicality exception. ASU 2016-01 is ~~issued or revised and it has different application dates~~effective for public or private companies, the Company, as an emerging growth company, will adopt the new or revised standard at the time public companies adopt the new or revised standard. This may make comparison of the Company’s financial statements ~~with another emerging growth~~issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We adopted the standard on January 1, 2021, when we began making significant investments in available-for-sale debt securities and formulating a company ~~which has not opted out~~investment policy to support the use and management of ~~using the extended transition period difficult or impossible because of the potential differences in accounting standards used.~~

~~Going Concern Consideration~~

As of September 30, 2020, the Company had approximately $316,000 in its operating bank account held outside of the Trust Account, and approximately $4.2 million of investment income earned on money market funds and marketable securities held in the Trust Account available to pay franchise tax and income tax obligations. The Company will use the funds available outside of the Trust Account primarily to meet the Company's operating cash flow and working capital needs.

Through September 30, 2020, the Company’s liquidity needs have been satisfied through receipt of a $25,000 capital contribution from the Sponsor in exchange for the issuance of the Founder Shares (as defined in Note 6), approximately $153,000 received from the Sponsor under Expenses Reimbursement arrangement in 2019 (see Note 6), the proceeds from the consummation of the Private Placement not held in the Trust Account and the loan proceeds under the PPP Note (see Note 5) received in June 2020. The Company fully repaid the loans from the Sponsor in 2019. The Company intends to use substantially all of the funds held in the Trust Account, including any amounts representing investment income earned on the Trust Account (less amounts released to the Company for taxes payable, expenses relating to the administration of the Trust Account and deferred underwriting commissions) to complete the Initial Business Combination.

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position and cash flows may be materially adversely affected.

In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Updated (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, management has determined that the mandatory liquidation and subsequent dissolution related to the Combination Period described above raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after February 12, 2021.

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

~~Net Income per Common Stock~~

Net income per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of 12,266,666 Class A common stock in the calculation of diluted earnings per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted earnings per ordinary share is the same as basic earnings per ordinary share for the periods presented.

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)~~

The Company’s statements of operations include a presentation of income per share for common stock subject to redemption in a manner similar to the two-class method of income per share. Net income per common stock, basic and diluted for Class A common stock is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of Class A common stock outstanding for the periods. Net loss per common stock, basic and diluted for Class B common stock is calculated by dividing the net income, less income attributable to Class A common stock and any working capital loans, by the weighted average number of Class B common stock outstanding for the periods presented.

The Company’s net income is adjusted for the portion of income that is attributable to Class A common stock subject to redemption, as these shares only participate in the earnings of the Trust Account (less applicable taxes) and not the income or losses of the Company. Accordingly, basic and diluted income per Class A common stock is calculated as follows:

For the three months ended

For the nine months ended

September 30, 2020

September 30, 2019

September 30, 2020

September 30, 2019

Interest income on restricted cash equivalents held in Trust Account

$
28,551

$
5,321

$
1,153,171

$
12,025

Gain on marketable securities (net), and dividends held in Trust Account

—

1,142,497

—

3,299,930

Expenses available to be paid with interest income from Trust

69,129

(282,380)

20,810

(818,514)

Net income available to holders of Class A common stock

97,680

865,438

1,173,981

2,493,441

Net (loss) income

(491,685)

658,150

125,935

1,835,919

Less: Income attributable to Class A common stock

(97,680)

(865,438)

(1,173,981)

(2,493,441)

Net loss attributable to holders of Class B common stock

$
(589,365)

$
(207,288)

$
(1,048,046)

$
(657,522)

Weighted average shares outstanding of Class A common stock

23,000,000

23,000,000

23,000,000

22,909,091

Basic and diluted net income per share, Class A

$
-

$
0.04

$
0.05

$
0.11

Weighted average shares outstanding of Class B common stock

5,750,000

5,750,000

5,750,000

5,750,000

Basic and diluted net loss per share, Class B

$
(0.10)

$
(0.04)

$
(0.18)

$
(0.11)

~~Use of Estimates~~

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

~~Concentration of Credit Risk~~

Financial instruments that potentially subject the Company to credit risk consist principally of cash, restricted cash equivalents held in the Trust Account, and marketable securities held in the Trust Account. Cash and restricted cash equivalents are maintained in accounts with financial institutions, which, at times may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant. As of September 30, 2020 and December 31, 2019, the balance of restricted cash equivalents held in the Trust Account are

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)~~

comprised entirely of an investment in a single money market fund which invests all of its assets in cash, U.S. Treasury bills, notes, and other obligations issued or guaranteed as to principal and interest by the U.S. Treasury. As of September 30, 2020 and December 31, 2019, the Company had 0 investments in marketable securities.

~~Cash and Cash Equivalents~~

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had approximately $234.2 million and $233.2 million in restricted cash equivalents held in the Trust Account as of September 30, 2020 and December 31, 2019, respectively.

~~The following table provides a reconciliation of cash and cash equivalents reported within the financial statements:~~

September 30, 2020

December 31, 2019

Cash

$
315,502

$
1,175,207

Restricted cash equivalents held in Trust Account

234,179,516

233,232,730

Total cash and restricted cash equivalents held in Trust Account shown in the statement of cash flows

$
234,495,018

$
234,407,937

~~Marketable Securities Held in the Trust Account~~

At times, the Company invests in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less, classified as trading securities. Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in gain on marketable securities (net), dividends and interest, held in the Trust Account in the accompanying statements of operations. The estimated fair values of marketable securities held in the Trust Account are determined using available market information. As of September 30, 2020, and December 31, 2019, the Company had 0 investments in marketable securities.

~~Fair Value of Financial Instruments~~

Fair value measurements are based on the premise that fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the following three-tier fair value hierarchy has been used in determining the inputs used in measuring fair value (see Note 9):

~~Level 1 – Quoted prices in active markets for identical assets or liabilities on the reporting date.~~

Level 2 – Pricing inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Pricing inputs are generally unobservable and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require management’s judgment or estimation of assumptions that market participants would use in pricing the assets or liabilities. The fair values are therefore determined using factors that involve considerable judgment and interpretations, including but not limited to private and public comparables, third-party appraisals, discounted cash flow models, and fund manager estimates.

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)~~

As of September 30, 2020, and December 31, 2019, the recorded values of cash and restricted cash equivalents held in the Trust Account, prepaid expenses, accounts payable, and accrued expenses approximate the fair values due to the short-term nature of the instruments.

~~Offering Costs~~

Offering costs consist of legal, accounting, underwriting fees and other costs incurred of approximately $13.4 million that are directly related to the Initial Public Offering. These costs were charged to stockholders’ equity upon the completion of the Initial Public Offering in February 2019. As of December 31, 2019, the Company had $50,000 of accrued offering costs in the accompanying balance sheet. During the three months ended September 30, 2020, the Company reversed the remaining accrued offering costs against additional paid-in-capital in the accompanying balance sheet.

~~Income Taxes~~

The Company follows the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Management has determined that a full valuation allowance on the deferred tax asset (related to start-up costs) is appropriate at this time after consideration of all available positive and negative evidence related to the realization of the deferred tax asset.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were 0 unrecognized tax benefits as of September 30, 2020 and December 31, 2019. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. NaN amounts were accrued for the payment of interest and penalties as of September 30, 2020 and December 31, 2019. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

~~Class A Common Stock Subject to Possible Redemption~~

Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class A common stock are classified as stockholders’ equity. The Company’s Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at September 30, 2020 and December 31, 2019, 22,073,865 and 22,061,272 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.

~~Recent Accounting Pronouncements~~

In December 2019, the FASB issued ASU No. 2019-12, ~~“Income~~ASC 740, Income Taxes ~~(Topic~~(ASC 740): Simplifying the Accounting for Income ~~Taxes” (“ASU 2019-12”)~~Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ~~Topic~~ASC 740 and also clarifies and amends existing guidance to improve consistent application. ~~This~~The guidance is effective for ~~fiscal years, and interim periods within those~~

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)~~

all public business entities for fiscal years beginning after December 15, 2020, ~~with early~~including interim periods therein. Early adoption is also permitted. ~~The Company is currently evaluating~~We adopted the ~~impact of this~~ standard on ~~its~~January 1, 2021 and the adoption of the new guidance does not have a material impact on our financial position, operating results or cash flows.

Other recently issued accounting updates are either not expected to have a material impact or are not relevant to our condensed consolidated financial ~~statements~~statements.

3. REVENUES

Contract Liabilities—Contract liabilities in the accompanying condensed consolidated balance sheets relate to payments received in advance of satisfying performance obligations under our contracts and are realized when the associated revenue is recognized under the contracts. During the three and nine months ended September 30, 2021, changes in contract liabilities were as follows (in thousands):


	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Beginning balance	$	3,123	$	815
Revenues recognized	(2,791)		(3,610)
Increase due to billings	377		3,504
Ending balance	$	709	$	709

Contract liabilities are earned as services and prototypes are transferred to the customer. The remaining contract liability balance as of September 30, 2021 is expected to be earned and recognized as revenue within the next twelve months.

As of September 30, 2021, we had executed certain contracts with customers to deliver specific battery packs, modules, and battery management system and software services. These contracts contain minimum quantity purchase requirements that are non-cancellable (other than for a breach by Romeo), and we have enforceable rights to pursue payments due under these contracts under make-whole provisions, or through customary remedies for breach of contract if the minimum quantities are not ordered. The following table presents the non-cancellable minimum purchase commitments under such contracts as of September 30, 2021 (in thousands):


	Contractual Minimum Purchase Commitments
Purchase contracts with make-whole provisions (1)	$	310,269
Purchase contracts with provisions of customary remedies for breach of contract (2)	236,686
Total	$	546,955

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

(1) For the $310.3 million of unsatisfied performance obligations related ~~disclosures.~~

~~In July 2017,~~to minimum quantity purchase commitments, if the ~~FASB issued ASU 2017-11,~~ ~~Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives~~customers do not follow through on their minimum purchase commitments, we would receive a maximum of $290.8 million under certain make-whole provisions included in these contracts.

(2) For the remaining $236.7 million of unsatisfied performance obligations related to minimum quantity purchase commitments included in these contracts, if the customers do not follow through on their minimum purchase commitments, we would seek damages through customary remedies for breach of contract.

The following table presents the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of September 30, 2021 (in thousands):


	Revenues Expected To be Recognized
October 1, 2021 through December 31, 2021	$	9,825
January 1, 2022 through December 2023	447,852
Thereafter	89,278
Total	$	546,955

This backlog includes the total value of our existing customer contracts and ~~Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement~~includes products that are within the scope of the ~~Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception. The ASU allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed~~license granted to the ~~entity’s own stock. As~~JV, based on the types of customer vehicles in which the products will be used. To the extent that those product deliveries are fulfilled by the JV, or pursuant to an agreement with the JV, we may not recognize the full amount of such contracted backlog as revenue. The realization and timing of the recognition of our backlog is dependent, among other things, on our ability to obtain and secure a ~~result, financial instruments (or embedded conversion features)~~sufficient supply of battery cells from our suppliers as well as our ability to meet the acceptance requirements in contracts, such as design and quality tests.

In addition, these amounts exclude any potential adjustments for variable consideration which could arise from provisions in our contracts where the price for a product or service can change based on future events. Based on practical expedient elections permitted by ASC 606, Revenue from Contracts with ~~down round features may no longer be required to be accounted classified as liabilities. A company will recognize~~Customers, the Company does not disclose the value of unsatisfied performance obligations for variable consideration that is allocated entirely to a ~~down round feature only~~wholly unsatisfied performance obligation.

Disaggregation of Revenues—We earn revenue through the sale of products and services. Product and service lines are the disaggregation of revenues primarily used by management, as this disaggregation allows for the evaluation of market trends, and certain product lines and services vary in recurring versus non-recurring nature. We do not have any material sales outside of North America.

The following tables disaggregate revenues by type of revenues for the three and nine months ended September 30, 2021 and 2020 (in thousands):


	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Product revenues
Total product revenues	$	2,740	$	3,818
Service revenues
Total service revenues	3,019		3,921
Total revenues	$	5,759	$	7,739

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED


	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Product revenues
Total product revenues	$	51	$	2,097
Service revenues
Total service revenues	624		2,229
Total revenues	$	675	$	4,326

The following table disaggregates revenues by when itcontrol is ~~triggered~~transferred for the three and nine months ended September 30, 2021 and 2020 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Point in time	$	5,328	$	117	$	6,406	$	2,299
Over time	431		558		1,333		2,027
Total	$	5,759	$	675	$	7,739	$	4,326

4. INVENTORY

As of September 30, 2021 and December 31, 2020, inventory consisted of the following (in thousands):



	September 30, 2021		December 31, 2020
Raw materials	$	13,400	$	4,064
Work-in-process	1,280		531
Finished goods	576		342
Total inventories	$	15,256	$	4,937

We provide inventory write downs for slow-moving and obsolete inventory items when the net realizable value of inventory items is less than their carrying value. During the three months ended September 30, 2021 and 2020, we recorded $0.4 million and no inventory provision, respectively, in cost of revenues. During the nine months ended September 30, 2021 and 2020, we recorded $1.6 million and no inventory provision, respectively, in cost of revenues.

5. EQUITY METHOD INVESTMENTS

BorgWarner Romeo Power LLC

Legacy Romeo and BorgWarner formed BorgWarner Romeo Power LLC on June 28, 2019. Legacy Romeo and BorgWarner received a 40% interest and 60% interest in the Joint Venture, respectively. Subsequently, Legacy Romeo and BorgWarner agreed to contribute an additional $10.0 million in total to the Joint Venture which represented funding for 2021 capital needs. In January 2021, we invested $4.0 million in the Joint Venture, which represented our pro rata share of the agreed upon funding. During the three months ended September 30, 2021 and 2020, and the ~~strike price has been adjusted downward. For equity-classified freestanding financial instruments, such as warrants, an entity will treat the value~~nine months ended September 30, 2021 and 2020, we recorded our share of the ~~effect~~net loss of the ~~down round, when triggered,~~JV as “Loss in equity method investments” in our condensed consolidated statements of operations and comprehensive (loss) income. For information on our transactions with the JV, see Note 14 - Transactions with Related Parties. See Note 17 - Subsequent Events for further information on BorgWarner’s election to sell its ownership in the JV to the Company.

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Heritage Battery Recycling, LLC

On October 2, 2020, we entered into a ~~dividend~~Battery Recycling Agreement (the “Battery Recycling Arrangement”) with Heritage Battery Recycling, LLC (“HBR”), an affiliate of Heritage Environmental Services, Inc. (“HES”). Under the Battery Recycling Arrangement, HBR has agreed to design, build and operate a ~~reduction~~system for redeploying, recycling or disposing of ~~income available~~lithium-ion batteries (the “System”) to ~~common shareholders~~be located at HES’s facility in ~~computing basic earnings per share. For convertible instruments~~Arizona. Immediately following the Business Combination on December 29, 2020, we contributed $35.0 million to HBR, a related party to an investor in Legacy Romeo and an investor of $25.0 million in the private placement of shares of Common Stock (the “PIPE Shares”) that were sold in connection with ~~embedded conversion features~~the Business Combination. While the arrangement is in effect, it establishes a strategic arrangement with HES for the collection of our battery packs for recycling, and it gives our customers priority at the recycling facility. We also have agreed to fund, in principal, up to $10.0 million for a pilot program that, if successful, could lead to the purchase of commercial vehicles containing ~~down round provisions, entities will recognize the value~~Romeo batteries by HBR’s affiliate. The terms of the ~~down round as a beneficial conversion discount~~pilot program have not yet been finalized and reflected in an executed agreement.

As of September 30, 2021, HBR had not yet begun construction of the battery recycling facility or begun operation of the System. Therefore, during the three and nine months ended September 30, 2021 there are no profits or losses from our equity method investment to be ~~amortized to earnings. The guidance~~recognized in ~~ASU 2017-11 is effective for fiscal years beginning after December 15, 2018,~~our condensed consolidated statement of operations and ~~interim periods within those fiscal years. The Company adopted this guidance. As a result, the warrants issued in~~comprehensive (loss) income.

6. PUBLIC AND PRIVATE PLACEMENT WARRANTS

In February 2019, in connection with the ~~Initial~~RMG initial public offering (the “RMG IPO”), RMG issued 7,666,648 warrants (the “Public Warrants”) to purchase shares of Common Stock at $11.50 per share. Simultaneously with the consummation of the RMG IPO, RMG issued 4,600,000 warrants (the “Private Placement Warrants” and, together with the Public ~~Offering~~Warrants, the “Public and Private Placement ~~were equity-classified.~~

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

~~Note 3 — Initial Public Offering~~

On February 12, 2019, the Company sold 20,000,000 Units at a purchase price of $10.00 per Unit in the Initial Public Offering. Each Unit consists of one share of Class A common stock and one-third of one redeemable warrant (“Public Warrant”Warrants”)~~. On February 19, 2019, the underwriters fully exercised their over-allotment option~~ to purchase ~~3,000,000 additional Units to cover over-allotments~~shares of Common Stock at ~~$10.00 per Unit, generating additional gross proceeds of $30.0 million. Each whole Public Warrant will entitle the holder to purchase one Class A common stock at an exercise price of~~ $11.50 per share, ~~subject~~ to ~~adjustment (see Note 8).~~

~~Of the Units sold in the Initial Public Offering, an aggregate of 2,530,000 Units were purchased by~~RMG Sponsor, LLC (the “Sponsor”), certain funds and accounts managed by subsidiaries of BlackRock, Inc., and certain funds and accounts managed by Alta Fundamental Advisers ~~LLC (together, the “Anchor Investors”).~~

~~Note 4 — Private Placement~~

LLC.

On February ~~12, 2019,~~16, 2021, we announced the ~~Company sold 4,000,000 Private Placement~~redemption of all of the outstanding Public Warrants to purchase shares of our Common Stock, that were issued under the ~~Sponsor~~Warrant Agreement, dated February 7, 2019, by and between RMG and American

Stock Transfer & Trust Company, LLC, as warrant agent. All Public Warrants could be exercised until April 5, 2021 to purchase shares of our Common Stock, at the ~~Anchor Investors~~exercise price of $11.50 per share, and any Public Warrants that remained unexercised were voided and no longer exercisable. On April 5, 2021, 7,223,683 Public Warrants were redeemed at ~~$1.50~~the redemption price of $0.01 per ~~warrant, generating gross proceeds~~Public Warrant. The Company paid Public Warrant holders a total of ~~$6.0 million in the Private Placement. On February 19, 2019,~~$72,237 in connection with the ~~full exercise~~redemption.

The Public and Private Placement warrants are recorded as liabilities in our condensed consolidated balance sheets. As of September 30, 2021, we had 3,178,202 Private Warrants and no Public Warrants outstanding. As of December 31, 2020, we had 4,600,000 Private Warrants and 7,666,648 Public Warrants outstanding.

7. STOCK-BASED COMPENSATION

We estimate the grant date fair value of stock options containing only a service condition using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs such as the fair value of our Common Stock, the risk-free interest rate, expected term, expected dividend yield and expected volatility. Prior to the Business Combination, when there was no public market for Legacy Romeo’s common stock, the fair value of its common stock was estimated with the assistance of an independent third-party valuation firm using a combination of a market and income approach. The risk-free interest rate assumption is determined by using the U.S. Treasury rates of the ~~over-allotment~~same period as the expected option term of each stock option. We use the simplified method to calculate the expected term. The dividend yield assumption is based on the dividends expected to be paid over the expected life of the stock option. Our volatility is derived from several publicly traded peer companies, due to our limited history as a publicly traded company. The grant date fair value of awards with market conditions is estimated using a Monte Carlo simulation or other appropriate fair value method with the assistance of an independent third-party valuation firm. The fair value of our restricted stock units (“RSUs”) and performance-related restricted stock units (“PSUs”) is based on the closing price of our Common Stock on the date of grant.

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

2016 Stock Plan

Following the Business Combination, the outstanding stock options issued under the Romeo Systems, Inc. 2016 Stock Plan may be exercised (subject to their original vesting, exercise and other terms and conditions) to purchase a number of shares of Common Stock equal to the number of shares of Legacy Romeo common stock subject to such Legacy Romeo options multiplied by the ~~underwriters,~~Exchange Ratio (rounded down to the ~~Sponsor~~nearest whole share) at an exercise price per share divided by the Exchange Ratio (rounded up to the nearest whole cent). The information presented herein is as if the exchange of stock options and Common Stock occurred as of the earliest period presented.

Time-based awards

During the nine months ended September 30, 2021 we did not grant any stock options to employees. During the three months ended September 30, 2021, our employees exercised stock options totaling 958,815 shares for total proceeds of $6.3 million. During the nine months ended September 30, 2021, our employees exercised stock options totaling 3,607,851 shares for total proceeds of $18.5 million.

The fair value of the time-based stock options granted during the nine months ended September 30, 2020 was determined using the following assumptions:


	Assumption Range
Fair Value Assumptions:	Minimum		Maximum
Risk-free interest rate	0.28%	~	0.92%
Expected term (in years)	5.5	~	6.5
Expected volatility	60.0%	~	77.0%
Dividend yield	0%
Grant date fair value per share	$1.48	~	$8.63

Performance and market-based option award

In August 2020, we awarded 4,633,978 stock options to our then Chairman and CEO at an exercise price of $6.69 per share. All of the shares covered by such award are subject to time-based, performance and market condition vesting requirements. As of December 29, 2020, the date of the Business Combination, the performance condition was satisfied, and we began recognizing stock-based compensation expense based upon the grant date fair value of the award. We recognized the stock-based compensation expense over the requisite service period, which was from August 12, 2020 through June 27, 2021. We estimated the grant date fair value of the award to be $9.6 million, which was determined using a Monte Carlo simulation with the assistance of an independent third-party valuation firm. Out of the $9.6 million stock-based compensation expense, $4.1 million was recognized at December 29, 2020. Also see Note 1 – “Immaterial Correction of Previously Issued Consolidated Financial Statements” for further discussion regarding this stock option award.

According to the table of exercisable shares below and the ~~Anchor Investors purchased 600,000 additional~~average of the closing price per share of our Common Stock on each of the five trading days immediately following the vesting date of June 27, 2021, 926,795 shares of the performance and market-based option became exercisable when the six-month lockup period assigned to Legacy Romeo stockholders in connection with the Business Combination expired. On July 6, 2021, all 926,795 shares of such option were exercised.


Average Closing Share Price:						Cumulative Number Of Shares
$6.6869 - $8.9452						926,795
$8.9453 - $11.9272						1,853,591
$11.9273 - $14.9092						3,243,781
$14.9093						4,633,978

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

2020 Stock Plan

On December 29, 2020, our stockholders approved the Romeo Power, Inc. 2020 Long-Term Incentive Plan (the “2020 Plan”).The purpose of the 2020 Plan is to attract, retain, incentivize and reward top talent through stock ownership, to improve operating and financial performance and strengthen the mutuality of interest between eligible service providers and stockholders. As of September 30, 2021, we have granted RSUs and PSUs under the 2020 Plan, as described further

below.

RSUs and PSUs

On June 11, 2021, we granted 1,411,961 RSUs to employees, 133,492 RSUs to our directors, and 1,354,313 PSUs to certain executives. On July 26, 2021, we granted 308,067 RSUs to employees and 327,468 PSUs to certain executives. On August 16, 2021, we granted 269,709 RSUs and 588,458 PSUs to our new CEO.

The RSUs granted to our employees are generally eligible to vest over three years from the commencement date, subject to continued employment on each vesting date. One third of these shares vest on the one-year anniversary of the vesting commencement date the remaining shares vest equally over eight quarters thereafter. The RSUs granted to our directors on June 11, 2021 vested in full on July 1, 2021.

The PSUs vest after three years from the commencement date based on the achievement of certain predetermined performance and market goals and are payable in cash or shares of our Common Stock, at our election. The market based goal will be measured by reference to the highest 100-consecutive-trading-day average closing price for our Common Stock through December 31, 2023. The performance-based goal will be measured by the achievement of certain backlog targets and percentage reductions in bill-of-material costs per Kilowatt-Hour by December 31, 2021. The actual number of shares to be issued for the PSUs will be the higher of the market-based vesting percentage or the performance-based vesting percentage, subject to a market-based limitation, and can range from 0% to 200% of the target number of shares set at the time of grant. Stock-based compensation expense for the PSUs is recognized on a straight-line basis over the service period based upon the value determined using the Monte Carlo valuation method for the market goal plus an incremental value, if any, determined by expected achievement of the performance-based goals. The Monte Carlo valuation method incorporates stock price correlation and other variables over the time horizons matching the performance periods. Management will review and assess the achievement of the performance-based goals quarterly through the performance assessment period ending December 31, 2021.

The grant date fair value of the PSUs granted on June 11, 2021, July 26, 2021 and August 16, 2021 derived from the Monte Carlo simulation, was based, in part, on the following assumptions:


	Assumption Range
Fair Value Assumptions:	Minimum		Maximum
Grant date stock price	$5.82	~	$9.23
Risk-free interest rate	0.24%	~	0.29%
Simulation term (in years)	2.4	~	2.6
Expected volatility	63.7%	~	64.4%
Dividend yield	0%
Grant date fair value per share	$2.60	~	$9.23

During the three months ended September 30, 2021, we recorded $3.3 million of stock-based compensation expense related to RSUs and PSUs. For the nine months ended September 30, 2021, we recorded $5.1 million of stock-based compensation expense related to RSUs and PSUs. At September 30, 2021, the unrecognized stock-based compensation related to RSUs and PSUs was $25.1 million which is expected to be recognized over a weighted-average period of 1.76 years.

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

RSU and PSU activity during the nine months ended September 30, 2021 was as follows:


	Shares	Weighted Average Fair Value
Outstanding at December 31, 2020	—	$	—
Granted	4,393,468	$	7.18
Vested	(142,943)	$	9.23
Forfeited	(152,342)	$	9.04
Outstanding at September 30, 2021	4,098,183	$	7.04

The fair value of all RSUs and PSUs granted during the nine months ended September 30, 2021 was $31.5 million.

Award modification

On August 6, 2021 our Board of Directors announced that our former CEO would resign from the Company, effective August 16, 2021. In connection with the former CEO’s cessation of employment we agreed to modify the terms of 81,153 unvested stock options to allow the shares to continue vesting during the former CEO’s consulting period. In connection with the modification, we recorded a reduction of $0.3 million in stock-based compensation expense.

Stock-based compensation expense

During the three months ended September 30, 2021 and 2020, we recognized a total of $4.3 million and $0.1 million, respectively, of stock-based compensation expense related to the vesting of stock options, RSUs and PSUs. During the nine months ended September 30, 2021 and 2020, we recognized a total of $14.9 million and $0.8 million, respectively, of stock-based compensation expense related to the vesting of stock options, RSUs and PSUs.

The following table summarizes our stock-based compensation expense by line item in the condensed consolidated statements of operations and comprehensive income (loss) (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of revenues	$	289	$	47	$	451	$	277
Research and development	819		—		1,386		—
Selling, general, and administrative	3,207		85		13,096		507
Total	$	4,315	$	132	$	14,933	$	784

8. INCOME TAXES

Our income tax provision consists of federal and state income taxes. The tax provision for the three and nine months ended September 30, 2021 and 2020 was based on the estimated effective tax rates applicable for the three and nine months ended September 30, 2021 and 2020. The Company’s overall effective tax rate of zero percent is different than the federal statutory tax rate because the Company has established a full valuation allowance against its net deferred income tax assets. As of September 30, 2021, the Company continued to record a full valuation allowance against the deferred tax asset balance as realization was uncertain.

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

9. INVESTMENTS

Available-for-sale debt investments

The following table summarizes our available-for-sale debt investment holdings at September 30, 2021 (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized and Credit Losses		Fair Value
U.S. government securities	$	38,009	$	6	$	(4)	$	38,011
Municipal securities	44,039		56		(34)		44,061
Corporate debt securities	23,480		1		(38)		23,443
Asset-backed securities	9,295		—		(7)		9,288
U.S. agency mortgage-backed securities	6,539		—		(42)		6,497
Commercial paper	6,491		7		—		6,498

Total (1)	$	127,853	$	70	$	(125)	$	127,798

(1) There were no unsettled sales of available-for-sale debt investments at September 30, 2021.

The following table presents the gross realized gains and gross realized losses related to available-for-sale debt investments for the three and nine months ended September 30, 2021(in thousands):


	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Gross realized gains	$	25	$	62
Gross realized losses	(186)		(376)
Gross realized loss, net	$	(161)	$	(314)

The following tables present the breakdown of the available-for-sale debt investments with gross unrealized losses and the duration that those losses had been unrealized at September 30, 2021 (in thousands):


	Unrealized Losses Less than 12 Months				Unrealized Losses 12 Months or Greater				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. government securities	$	14,000	$	(4)	$	—	$	—	$	14,000	$	(4)
Municipal securities	31,702		(34)		—		—		31,702		(34)
Corporate debt securities	21,041		(38)		—		—		21,041		(38)
Asset-backed securities	7,988		(7)		—		—		7,988		(7)
U.S. agency mortgage-backed securities	6,497		(42)		—		—		6,497		(42)


Total	$	81,228	$	(125)	$	—	$	—	$	81,228	$	(125)

The following table summarizes the maturities of our available-for-sale debt investments at September 30, 2021 (in thousands):


	Amortized Cost		Fair Value
Less than 1 year	$	55,850	$	55,855
1 year through 5 years	65,464		65,446


Mortgage-backed securities with no single maturity	6,539		6,497
Total	$	127,853	$	127,798

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.

10. FAIR VALUE

Fair Value of Financial Instruments — The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and establishes the disclosure requirements regarding fair value measurements. Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date.

Level 2 Inputs—Inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 Inputs—Unobservable inputs reflecting our assessment of assumptions that market participants would use in pricing the asset or liability. We develop these inputs based on the best information available.

Our available-for-sale debt investments are measured at fair value on a recurring basis, consisting of investment grade high quality fixed income assets, which are priced using quoted market prices for similar instruments or unbinding market prices that are corroborated by observable market data.

The Public and Private Placement Warrants are measured at fair value on a recurring basis. We will continue to adjust these liabilities for changes in the fair value of the Public and Private Placement Warrants until the warrants are exercised, redeemed or cancelled. Prior to the redemption of the Public Warrants on April 5, 2021, the Public Warrants were traded on the NYSE and were recorded at fair value using the closing stock price as of the measurement date, which represents a Level 1 fair value measurement.

The fair value of the Private Placement Warrants is established using both Level 1 and Level 2 inputs and determined using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs such as the fair value of our Common Stock, the risk-free interest rate, expected term, expected dividend yield and expected volatility. The fair value of our Common Stock is considered a Level 1 input as our Common Stock is freely traded on the NYSE. The risk-free interest rate assumption is determined by using the U.S. Treasury rates of the same period as the expected term of the Private Placement Warrants, which ~~generated additional gross proceeds of $900,000.~~

~~Each Private Placement Warrant~~ is ~~exercisable~~4.25 years. The dividend yield assumption is based on the dividends expected to ~~purchase one share of Class A common stock at $11.50 per share. A portion~~be paid over the expected life of the ~~net proceeds~~warrant. Our volatility is derived from several publicly traded peer companies.

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

As of September 30, 2021 and December 31, 2020, assets and liabilities measured at fair value on a recurring basis were as follows (in thousands):


	September 30, 2021
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents:
Money market funds	$	263	$	263	$	—	$	—





Subtotal	263		263		—		—
Available-for-sale debt investments:
U.S. government securities	38,011		—		38,011		—
Municipal securities	44,061		—		44,061		—
Corporate debt securities	23,443		—		23,443		—
Asset-backed securities	9,288		—		9,288		—
U.S. agency mortgage-backed securities	6,497		—		6,497		—
Commercial paper	6,498		—		6,498		—

Subtotal	127,798		—		127,798		—
Total	$	128,061	$	263	$	127,798	$	—

Financial Liabilities:

Private Placement Warrants	$	3,718	$	—	$	3,718	$	—
Total	$	3,718	$	—	$	3,718	$	—


	December 31, 2020
	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents:
U.S. Treasury Bills	$	16,000	$	16,000	$	—	$	—
Total	$	16,000	$	16,000	$	—	$	—

Financial liabilities:
Public Warrants	$	71,453	$	71,453	$	—	$	—
Private Placement Warrants	67,013		—		67,013		—
Total	$	138,466	$	71,453	$	67,013	$	—

The key assumptions used to determine the ~~Private Placement was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period,~~fair value of the Private Placement Warrants ~~will expire worthless.~~

as of September 30, 2021 and December 31, 2020 using the Black-Scholes model were as follows:

~~Note 5 — Notes Payable~~

~~On June 24,~~


Fair Value Assumptions	September 30, 2021	December 31, 2020
Risk-free interest rate	0.81%	0.17%
Expected term (in years)	4.25	5
Expected volatility	58%	57%
Dividend yield	—	—
Fair value of common stock	$4.95	$22.49

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

11. ACCRUED EXPENSES

As of September 30, 2021 and December 31, 2020, accrued expenses consisted of the following (in thousands):



	September 30, 2021		December 31, 2020
Accrued professional service fees	$	4,941	$	1,130
Accrued payroll expenses	1,576		617
Accrued construction in progress	1,336		—
Accrued tax liabilities	427		—
Accrued warranty expenses	295		103
Other accrued expenses	1,020		994
Total accrued expenses	$	9,595	$	2,844

12. NET (LOSS) INCOME PER SHARE

The basic and diluted net (loss) income per share is computed by dividing our net loss or net income by the weighted average shares outstanding during the period. The calculation of basic and diluted net (loss) income per share for the three and nine months ended September 30, 2021 and 2020 is presented below (in thousands, except share and per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net (loss) income	$	(17,953)	$	(8,916)	$	47,509	$	(22,710)

Weighted average common shares outstanding – basic	134,017,528		78,639,037		131,307,617		76,900,247
Dilutive effect of potentially issuable shares	—		—		4,034,887		—
Weighted average common shares outstanding – diluted	134,017,528		78,639,037		135,342,504		76,900,247

Basic net (loss) income per share	$	(0.13)	$	(0.11)	$	0.36	$	(0.30)
Diluted net (loss) income per share	$	(0.13)	$	(0.11)	$	0.35	$	(0.30)

Potentially dilutive shares that were considered in the determination of diluted net (loss) income per share include stock options and warrants to purchase our Common Stock as well as RSUs and PSUs. Antidilutive shares excluded from the calculation of diluted net (loss) income per share were 10,763,171 and 25,167,451, respectively, for the three months ended September 30, 2021 and 2020, and 7,200,464 and 23,125,325, respectively, for the nine months ended September 30, 2021 and 2020. As the inclusion of common stock share equivalents in the calculation of diluted loss per share would be anti-dilutive for the three months ended September 30, 2021 and the three and nine months ended September 30, 2020, diluted net loss per share was the same as basic net loss per share.

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

13. DEBT

As of September 30, 2021 and December 31, 2020, our debt is comprised of the following (in thousands):


	September 30, 2021		December 31, 2020
Paycheck Protection Program (“PPP”) issued June 2020, interest rate fixed at 1%. Principal and interest are due in installments starting 6 months after issuance through maturity in June 2022	$	—	$	3,300
PPP loan issued June 2020, interest rate fixed at 1%. Principal and interest are due in installments starting 16 months after issuance through maturity in June 2025	42		42
Total debt	42		3,342

Less: debt, current portion	(10)		(2,260)
Debt, non-current portion	$	32	$	1,082

PPP Loans

In March 2020, the ~~Company~~World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. As a result of COVID-19, we faced risks to raising necessary capital which could significantly disrupt our business. To help mitigate those risks and support our ongoing operations, in June 2020, we received ~~loan~~ proceeds ~~in the amount of $41,666~~totaling $3.34 million for 2 loans granted under the ~~Paycheck Protection Program~~U.S. Small Business Administration’s (“~~PPP Note”~~SBA”) ~~from Canandaigua National Bank & Trust (“Lender”).~~PPP. The PPP, ~~Note was~~ established as part of the

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)~~

Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll ~~expenses of the qualifying business.~~expenses. The ~~PPP Note bears~~loans and accrued interest at 1.00% per annum, payable monthly beginning October 18, 2021, and is due on June 18, 2025. The PPP Note may be repaid at any time without penalty. Under the Payroll Protection Program, the Company will be eligible for loan forgiveness up to the full amount of the PPP Note and any accrued interestare forgivable after 24 weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. ~~No assurance is provided~~The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the forgiveness period. For the $3.30 million PPP loan, any unforgiven portion would be payable over two years, at an interest rate of 1%, with a deferral of payments for the first six months. For the $0.04 million PPP loan, any unforgiven portion would be payable over five years, at an interest rate of 1%, with a deferral of payments for the first sixteen months. We currently believe that the Company will obtain forgiveness under the PPP Note in whole or in part. The PPP Note contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties, or provisionsour use of the ~~promissory note. The occurrence of an event of default may result~~loan proceeds through the forgiveness period has been in ~~a claim~~compliance with the conditions for ~~the immediate repayment of all amounts outstanding under the PPP Note.~~

~~Note 6 — Related Party Transactions~~

~~Founder Shares~~

~~On November 6, 2018, the Sponsor purchased 7,187,500 shares (the “Founder Shares”)~~forgiveness of the Company’s Class B common stock, par value $0.0001 per share (the “Class B common stock”), for an aggregate price of $25,000. On December 17, 2018, the Company effectuated an 0.8-for-1 reverse split of the Founder Shares, resulting in an aggregate outstanding amount of 5,750,000 Founder Shares. In January 2019, the Sponsor forfeited to the Company 575,000 Founder Shares and the Anchor Investors purchased from the Company 575,000 Founder Shares for cash consideration of approximately $2,300. Additionally, the Sponsor had agreed to forfeit up to 750,000 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters. On February 19, 2019, the underwriters fully exercised its over-allotment option; thus, these shares were no longer subject to forfeiture.

The Founder Shares will automatically convert into Class A common stock on a 1-for-one basis at the time of the Company’s initial Business Combination and are subject to certain transfer restrictions.

~~Related Party Reimbursements and Loans~~

The Sponsor and the management agreed to cover for certain general and administrative expenses and offering costs in connection with the Initial Public Offering (“Expenses Reimbursement”), and expected to be reimbursed upon the completion of the Initial Public Offering. The Company borrowed approximately $153,000 under the Expenses Reimbursement and fully repaid this amount to the related parties in 2019.

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds held in the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination is not completed, the Company may use a portion of the proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.50 per warrant. The warrants would be identical to the Private Placement Warrants. To date, except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Note 7 — Commitments & Contingencies~~

~~Registration Rights~~

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, will be entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to Class A common stock) pursuant to a registration and shareholder rights agreement. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriting Agreement~~

The Company granted the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 3,000,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts and commissions. On February 19, 2019, the underwriters fully exercised its over-allotment option.

The underwriters were entitled to an underwriting discount of $0.20 per unit, or $4.6 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition, $0.35 per unit, or $8.05 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred underwriting commissions will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject toloan. Per the terms of the ~~underwriting agreement.~~

~~Lease Agreement~~

PPP loans, payments are deferred for borrowers who apply for loan forgiveness until the SBA makes a determination on the loan amount to be forgiven. We applied for forgiveness of the loans following the covered period of the loans. In ~~November 2018,~~August 2021, we received a notice from the Company entered into a lease agreement for its office space in New York starting in January 2019, which called for a monthly rent of $10,000 and a security deposit of $20,000. Effective December 2019, the Company entered into an annual lease agreement for its new office space. The agreement called for a security deposit of approximately $12,000 and a monthly rent of approximately $8,000. In May 2020, the Company cancelled the lease and in August 2020 received the security deposit back, net of repair costs.

SBA that our $3.3 million PPP loan was fully forgiven. As of September 30, ~~2020,~~2021, we had not made any payments against our remaining PPP loan.

At September 30, 2021, the $0.04 million PPP loan remained outstanding. The expected maturities associated with the outstanding PPP loan as of September 30, 2021 were as follows (in thousands):


October 2021 through September 2022	$	10
October 2022 through September 2023	11
October 2023 through September 2024	12
October 2024 through June 2025	9
Total	$	42

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

14. TRANSACTIONS WITH RELATED PARTIES

In the ordinary course of business, the Company enters into transactions with related parties to sell products and services. The following table presents the net revenues and cost of revenues associated with our related parties, which are included in our condensed consolidated statement of operations and comprehensive (loss) income (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Related party revenues - product revenues	$	38	$	—	$	407	$	—
Related party revenues - service revenues	411		558		1,328		2,027
Total related party revenues	449		558		1,735		2,027

Costs associated with related party revenues - product revenues	38		—		309		—
Costs associated with related party revenues - service revenues	357		505		1,154		1,750
Total costs associated with related party revenues	395		505		1,463		1,750

Gross profit associated with related party revenues	$	54	$	53	$	272	$	277

Transactions with BorgWarner and the Joint Venture — In connection with Legacy Romeo’s investment in the Joint Venture formed on June 28, 2019 (Note 5), Legacy Romeo entered into a services agreement to provide various professional services to the Joint Venture. We have also sold certain products directly to a subsidiary of BorgWarner. Revenues earned for services rendered to the Joint Venture and products sold to BorgWarner were presented in the table above. Accounts receivable from BorgWarner was $0.3 million and zero at September 30, 2021 and December 31, ~~2019, approximately $12,000~~2020, respectively.

Transactions with Heritage Environmental Services and ~~$32,000~~its related parties — On October 2, 2020, we entered into the Battery Recycling Arrangement with HBR, an affiliate of HES, a related party to an investor in Legacy Romeo and an investor of $25.0 million in the ~~security deposit was recorded~~PIPE Shares. Immediately following the Business Combination on December 29, 2020, we contributed $35.0 million to HBR. See Note 5 - Equity Method Investments for additional information relating to our contribution to HBR.

In connection with the Battery Recycling Arrangement, we also agreed to fund up to $10.0 million to purchase 10 battery electric vehicle (“BEV”) trucks and the charging infrastructure for a one-year pilot program to determine the feasibility of transitioning HES’s or its affiliates’ fleet of trucks from diesel powered vehicles to BEVs. If such pilot program is successful, the parties would enter into an agreement for the procurement through us of at least 500 BEVs on terms acceptable to HBR, HES and us. The participants in ~~Prepaid expenses~~the pilot program have been selected, and ~~other assets, respectively. For~~the parties are beginning to work towards an agreement to fund and support the pilot program. During the three months ended September 30, ~~2020~~2021, we accrued a $0.9 million payment to HES for the pilot program.

Transactions with Michael Patterson and ~~2019,~~related parties — On April 15, 2021, Michael Patterson ended his employment with Romeo, resigned from all positions he used to hold in the Company, ~~recorded rent expense~~the Board of ~~approximately $38,000~~Directors and ~~$32,000 in~~ the ~~accompanying statements~~BorgWarner JV board of ~~operations, respectively. For the nine months ended September 30, 2020~~directors, and ~~2019, the Company recorded rent expense of approximately $61,000 and $61,000 in the accompanying statements of operations, respectively.~~

~~Deferred legal fees~~

~~The Company~~we entered into ~~an engagement letter~~a consulting agreement with him for services to ~~obtain legal advisory services, pursuant~~be provided through the end of 2021. On May 5, 2021, we signed a non-binding Memorandum of Understanding with Crane Carrier Company (“CCC”) to ~~which~~explore the ~~legal counsel agreed to defer all fees until the closing~~terms of a ~~Business Combination. As~~potential commercial relationship in which we would supply batteries to CCC for its electric refuse trucks. CCC was recently acquired by Battle Motors, a company founded by Michael Patterson, and Mr. Patterson is the Chief Executive Officer of ~~September 30, 2020,~~both CCC and ~~December 31, 2019, the Company recorded an aggregate of $450,000 in connection with such arrangement in deferred~~Battle Motors.

15. COMMITMENTS AND CONTINGENCIES

Litigation

We are subject to certain claims and legal ~~fees in the accompanying balance sheet, respectively.~~

~~Litigation~~

To our knowledge, there is no litigation currently pending or contemplated against the Company, any of its officers or directors in their capacity as such or against any of the Company’s property. From time to time, the Company could become involved in disputes and various litigation matters that arise in the normal course of business. ~~These may include disputes~~Management does not expect any such claims and ~~lawsuits related~~legal actions to ~~intellectual property, licensing, contract law and employee relations matters. Periodically,~~

have a material adverse effect on our financial position, results of operations or liquidity, except the following:

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(UNAUDITED)~~

- CONTINUED

A police officer was injured in connection with of an automobile accident resulting from an allegedly intoxicated Legacy Romeo employee driving following his departure from a 2017 company holiday party that occurred after hours and not on our premises. We terminated the employee’s employment shortly after the incident occurred. This matter resulted in a personal injury lawsuit (Chelico et al. v. Romeo Systems, Inc., et al., Case # 18STCV04589, Los Angeles County), for which we are a named defendant. In July 2020, we settled this matter in principle and agreed to pay a settlement of $6.0 million. Correspondence that we believe constituted a legally enforceable agreement was exchanged on July 22, 2020. Our business and umbrella insurance carriers agreed to cover the cost of damages owed. As a result, we accrued $6.0 million as a legal settlement payable with a corresponding insurance receivable for $6.0 million as of September 30, 2021 and December 31, 2020. Because the plaintiff had not proceeded to finalize the settlement transaction due to a dispute with the City of Los Angeles related to the allocation of the global settlement payment between the plaintiff and the LAPD (unrelated to Romeo), we filed a claim for breach of contract against the plaintiff in Romeo Systems et al. v. Chelico, Case # 21STCV20701. The cases have been deemed related and are now both pending before Hon. Mark Epstein. Further proceedings are set for late November 2021.

Wage and Hour Litigation

In October 2020, a wage-and-hour class action was filed in Los Angeles Superior Court on behalf of all current and former non-exempt employees in California from October 2016 to present. The allegations include meal and rest period violations and various related claims. The parties met and mediated on October 7, 2021. The parties were unable to come to agreement to settle the case; however, negotiations are ongoing. The case is currently stayed until the initial status conference, which is scheduled for November 22, 2021. If a settlement cannot be reached, we intend to defend ourselves against these claims and the possible range of loss, if any, cannot currently be estimated.

On February 26, 2021, plaintiff Lady Benjamin PD Cannon f/k/a Ben Cannon filed a complaint (the “Cannon Complaint”) against Romeo and Michael Patterson (“Patterson”) in the Court of Chancery for the State of Delaware.The Cannon Complaint includes claims for declaratory relief (against Romeo and Patterson), non-compliance with Article 9 of the Delaware UCC (against Patterson), conversion (against Romeo and Patterson), and breach of contract (against Romeo).Generally, plaintiff alleges that the transfer to Patterson of a warrant for 1,000,000 shares of Romeo’s Common Stock, which plaintiff pledged as security for a loan, is invalid, that Patterson improperly accepted that warrant in satisfaction of the loan, and that she, not Patterson, holds the right to exercise that warrant and to purchase the equivalent of 1% of Romeo’s Common Stock. The relief sought by plaintiff includes declaratory relief, return of the warrant, specific performance on the warrant, money damages, cost of suit, and attorneys’ fees. On May 4, 2021, Romeo filed a motion to dismiss all claims against it under Delaware Chancery Rule 12(b)(6); on May 17, 2021, plaintiff filed a motion for partial summary judgment; and on June 16, 2021, Romeo and Patterson filed a joint Rule 56(f) motion for discovery.

On September 24, 2021, the Court granted Romeo’s motion to dismiss plaintiff’s claim for conversion against the Company, ~~reviews~~but otherwise denied Romeo’s motion. The Court also deferred a ruling on plaintiffs’ motion for partial summary judgment and Romeo and Patterson’s Rule 56(f) motion for discovery.

On October 8, 2021, the ~~status of significant matters, if any exist, and assesses its potential financial exposure. If~~Court granted the ~~potential loss from any claim or legal claim is considered probable~~parties’ stipulation pursuant to which plaintiff withdrew her motion for partial summary judgment without prejudice, the parties agreed that plaintiff would file a first amended complaint, and the ~~amount can be estimated,~~parties agreed to a schedule for Romeo and Patterson to file Answers to that first amended complaint and a date by when the ~~Company accrues~~parties would complete certain discovery. Plaintiff filed her first amended complaint on October 18, 2021, removing her claim for conversion against Romeo and adding a ~~liability~~claim against Romeo for alleged violation of 6 Del. C. § 8-404(a) on account of the same allegedly improper transfer of a warrant from plaintiff to Patterson. Romeo and Patterson filed Answers to that amended complaint on October 28, 2021 denying plaintiff’s claims.

The parties are entering the discovery phase of litigation, and we intend to defend ourselves vigorously against plaintiff’s claims. The outcome of any complex legal proceeding is inherently unpredictable and subject to significant uncertainties. Given the early stage of the litigation and based upon information presently known to management, we are not currently able to estimate the outcome of this proceeding or a possible range of loss, if any.

Nichols and Toner Complaints

On April 16, 2021, plaintiff Travis Nichols filed a class action complaint (the “Nichols Complaint”) against Romeo, in the U.S. District Court for the ~~estimated loss. Legal~~Southern District of New York. The Nichols Complaint alleges that defendants made false and

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

misleading statements regarding the supply of battery cells, which are components of Romeo’s products, and the Company’s ability to meet customer demand and achieve its revenue forecast for 2021. On May 6, 2021, plaintiff Victor J. Toner filed a second class action complaint (the “Toner Complaint”) against Romeo, in the U.S. District Court for the Southern District of New York. The allegations in the Toner Complaint are substantially similar to the allegations in the Nichols Complaint. The relief sought by both plaintiffs includes money damages, reimbursement of expenses, and equitable relief. On July 15, 2021, the Court consolidated the 2 pending cases and appointed a lead plaintiff. The lead plaintiff filed his consolidated amended complaint on September 15, 2021. We intend to defend ourselves vigorously against these claims, and we have filed a motion to dismiss all claims. All other proceedings in the case are stayed pending resolution of our motion to dismiss. This litigation is at preliminary stages and the outcome of any complex legal proceeding is inherently unpredictable and subject to ~~uncertainties,~~significant uncertainties. Based upon information presently known to management, we are not currently able to estimate the outcome of this proceeding or a possible range of loss, if any.

Unconditional Purchase Obligations

An unconditional purchase obligation is defined as an agreement to purchase goods or services that is enforceable and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. As additional information becomes available, the Company reassesses the potential liability, if any, related to pending claims and litigation.

~~Note 8 — Stockholder’s Equity~~

~~Common stock~~

~~Class A Common stock~~ ~~— The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share.~~legally binding (non-cancelable, or cancelable only in certain circumstances). As of September 30, 2020, and December 31, 2019, there were 23,000,000 shares of Class A common stock issued or outstanding, including 22,073,865 and 22,061,272 share of Class A common stock subject to possible redemption, respectively.

~~Class B Common stock~~ — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. On December 17, 2018, the Company effectuated an 0.8-for-1 reverse split of the Founder Shares, resulting in an aggregate outstanding amount of 5,750,000 Founder Shares. Of the 5,750,000 Class B common stock outstanding, up to 750,000 shares were subject to forfeiture to the Company by the Sponsor for no consideration to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the holders2021, we have met all of the Company’s ~~Class B common stock would have collectively owned 20.0%~~minimum 2021 annual purchase commitments. We estimate our total unconditional purchase commitments (for those contracts with terms in excess of one year) are $512.9 million through the ~~Company’s issued~~end of 2025 and ~~outstanding common stock after~~$472.4 million thereafter. However, the ~~Initial Public Offering. On February 19, 2019, the underwriters~~amount of our purchase commitments subsequent to September 30, 2021 is not fully ~~exercised its over-allotment option; thus, 750,000 shares of Class B common stock were no longer~~fixed and is subject to ~~forfeiture. As~~change based on changes in certain raw materials indexes as well the quantities of purchases we actually make. These commitments relate to our inventory purchases.

Effective August 10, 2021, we entered into a ~~result, there were 5,750,000 shares~~long-term supply agreement (the “Supply Agreement”) for the purchase of ~~Class B common stock outstanding as of September~~lithium-ion battery cells with a Tier 1 battery cell and materials manufacturer (“Supplier”). Under the Supply Agreement, Supplier is committed to supplying cells to us, at escalating annual minimums, through June 30, ~~2020~~2028. Supplier's minimum total supply commitment to us, and ~~December 31, 2019.~~

~~Common stockholders of record are entitled to one vote~~our minimum purchase obligation, is for ~~each share held on all matters to be voted on by stockholders. Holders of the Class A common stock~~8 GWh, and ~~holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders, except as required by law.~~

The Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combination on a 1-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment.

~~Preferred Stock~~ — The Company is authorized to issue 1,000,000 shares of preferred stock, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2020 and December 31, 2019, there were 0 shares of preferred stock issued or outstanding.

~~Warrants —~~ Upon the closing of the Initial Public Offering and Private Placement, the Company issued the Public Warrants and the Private Placement Warrants. Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The CompanySupplier has agreed ~~that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, the Company will~~to use its best ~~efforts~~effort to ~~file with the SEC~~allocate additional cells to us through 2023.

To facilitate Supplier’s supply of cells, we agreed to pay Supplier by December 31, 2021 a ~~registration statement~~deposit of $1.5 million, which will be applied as an advance for cells purchased in 2021 and 2022 (the “Deposit”), and a prepayment of approximately $64.7 million by September 10, 2021 (the “Prepayment”), which will be applied as an advance for the ~~registration, under the Securities Act, of the Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts~~cells to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. If a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the sixtieth (60th) day after the closing of the initial Business

be purchased from July 1, 2023 through June 30, 2028.

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)~~

Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor and the Company’s officers and directors or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

~~The Company may call the Public Warrants for redemption (except with respect to the Private Placement Warrants):~~

●

~~in whole and not in part;~~

●

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

●

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

●

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

Additionally, commencing ninety days after the Public Warrants become exercisable, the Company may redeem the outstanding Public Warrants (except with respect to the Private Placement Warrants) in whole and not in part, for the number of Class A common stock determined by reference to the table set forth in the Company’s prospectus relating to the Initial Public Offering based on the redemption date and the “fair market value” of the Class A common stock, upon a minimum of 30 days’ prior written notice of redemption and if, and only if, the last sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted per share splits, share dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the Public Warrant holders. The “fair market value” of the Class A common stock is the average last reported sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Public Warrants.

If the Company ~~calls~~breaches its minimum volume commitment during any applicable year or portion thereof, Supplier is entitled to retain, as liquidated damages, the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

~~The exercise price and number of Class A common stock issuable upon exercise~~remaining balance of the ~~warrants may be adjusted in certain circumstances including~~Deposit or Prepayment for that year, as applicable. If Supplier materially breaches its minimum volume commitment during any applicable year or portion thereof, or in the event of a ~~share capitalization, or recapitalization, reorganization, merger or consolidation. If, in connection with~~force majeure, Supplier will be required to return the ~~closing~~remaining balance of the ~~initial Business Combination,~~Deposit or Prepayment for that year, as applicable.

16. CONCENTRATION OF RISK

Customer Concentration and Accounts Receivable

We had certain customers whose revenue individually represented 10% or more of our total revenue, or whose accounts receivable balances individually represented 10% or more of our total accounts receivable, as follows:

For the ~~Company issues additional shares~~three months ended September 30, 2021, total revenue recognized included 68% from one major customer and 10% from a second major customer, together representing 78% of common stock or securities convertible into or exercisable or exchangeable for shares of common stock for capital raising purposes at an issue price or effective issue price of less than $9.20 per share,our total revenue. For the warrant exercise price will be adjusted to be equal to 115% of the price received in the new issuance. The Company adopted the provisions of ASU 2017-11 effective January 1, 2019. As a result, this exercise price reset provision was excludedthree months ended September 30, 2020, total revenue recognized included 83% from the ~~assessment~~Joint Venture engineering services.

For the nine months ended September 30, 2021, total revenue recognized included 51% from one major customer, 11% from a second major customer and 17% from the Joint Venture engineering services, together representing 79% of ~~whether~~our total revenue. For the ~~warrants are considered indexed to~~nine months ended September 30, 2020, total revenue recognized included 47% from one major customer, and 47% from the ~~Company’s own stock. The warrants otherwise meet the requirements for equity classification, as such were initially classified in stockholder’s equity. The Company will recognize the value~~Joint Venture engineering services, together representing 94% of ~~the exercise price reset provision if and when it becomes triggered, by recognizing the value of the effect of the exercise~~

our total revenue.

~~RMG ACQUISITION CORP.~~

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(UNAUDITED)~~

- CONTINUED

We rely on third-party suppliers for the provision and development of many of the key components and materials used in our battery modules and packs, such as ~~a deemed dividend~~battery cells, electrical components, electromechanical components, mechanical components and ~~a reduction~~enclosure materials. Some of ~~income available~~the components used in our battery modules and packs are purchased by us from single sources. While we believe that we may be able to ~~common shareholders in computing basic earnings per share.~~

~~Additionally, in no event will the Company~~establish alternative supply relationships and can obtain or engineer replacement components for our single-sourced components, we may be ~~required to net cash settle the warrants shares. If the Company is~~ unable to ~~complete a Business Combination within the Combination Period and the Company liquidates the funds held~~do so in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.

~~Note 9 — Fair Value Measurements~~

~~The following table presents information about the Company’s assets~~short term (or at all) at prices or quality levels that are ~~measured at fair value~~favorable to us, which could have a material adverse effect on our business, financial condition, operating results, and future prospects. Furthermore, in certain cases, the establishment of an alternative supply relationship could require us to visit a ~~recurring basis as of September 30, 2020~~new supplier’s facilities in order to qualify the supplier and ~~December 31, 2019~~perform supplier quality audits, and, ~~indicates~~over the ~~fair value hierarchy of~~past twelve months, our ability to travel and qualify new suppliers has been directly impacted by COVID-19. During the ~~valuation techniques that the Company utilized to determine such fair value.~~

September 30, 2020

Quoted Prices in

Active

Significant Other

Significant Other

Markets

Observable Inputs

Unobservable Inputs
Description

(Level 1)

(Level 2)

(Level 3)
Assets held in Trust:




U.S. Treasury Securities

$
—

$
—

$
—
Cash equivalents - money market funds

234,179,516

—

—

$
234,179,516

$
—

$
—

December 31, 2019

Quoted Prices in

Active

Significant Other

Significant Other

Markets

Observable Inputs

Unobservable Inputs
Description

(Level 1)

(Level 2)

(Level 3)
Assets held in Trust:




U.S. Treasury Securities

$
—

$
—

$
—
Cash equivalents - money market funds

233,232,730

—

—

$
233,232,730

$
—

$
—

~~Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were 0~~ ~~transfers~~ ~~between~~ ~~levels~~ ~~for~~ three and nine months ended September 30, ~~2020.~~

~~Level~~2021, respectively, three third-party suppliers of key single-sourced components and materials used in our battery modules and packs represented 12% and 17% of our total purchases during the period.

We are dependent on the continued supply of battery cells for our products, and we will require substantially more cells to grow our business according to our plans. Currently, the overall supply of battery cells that we utilize in our manufacturing process has been constrained by high market demand. We currently purchase our cylindrical battery cells from two Tier 1 ~~instruments include investments~~cylindrical battery cell suppliers, whose cells are qualified for use in ~~money market funds~~electric vehicle (“EV”) applications. To date, we have only fully qualified a very limited number of additional suppliers and ~~U.S. Treasury securities. The Company uses inputs such~~have limited flexibility in changing battery cell suppliers, though we are actively engaged in activities to qualify additional battery cell suppliers for use in EV applications. During the three and nine months ended September 30, 2021, respectively, 73% and 58% of our total purchases for components of our products were for battery cells, of which 79% and 85% of the battery cell purchases were concentrated with two Tier 1 suppliers. We may purchase our battery cells either directly from the cell supplier or through a distributor.

Effective as ~~actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value~~ of ~~its investments.~~

~~Note 10 — Subsequent Events~~

~~The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued.~~

~~Proposed Business Combination~~

On October ~~5, 2020,~~1, 2021, the Company entered into ~~an Agreement~~a Single-Tenant Commercial Lease (the “Lease”), with Warland Investments Company (the “Landlord”) relating to approximately 215,000 square feet of office, assembly, storage, warehouse and ~~Plan~~distribution space located at 5560 Katella Avenue, Cypress, California 90630 (the “Premises”). The Company intends to use the Premises for its corporate headquarters. The Lease will commence on the earliest of ~~Merger (the “Merger Agreement”), by and among~~(i) twelve (12) weeks after the ~~Company, RMG Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary~~Landlord tenders possession of the Company (“Merger Sub”), and Romeo Systems, Inc., a Delaware corporation (“Romeo”), which provides for, among other things the merger of Merger Sub with and into Romeo, with Romeo continuing as the surviving corporation (the “Merger” ~~and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”). As a result of the~~

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Transactions, Romeo will become a wholly-owned subsidiary of the Company, with the stockholders of Romeo becoming stockholders of the Company~~. The transactions set forth in the Merger Agreement, including the Merger, will constitute a “Business Combination” as contemplated by the Company’s Amended and Restated Certificate of Incorporation.

Under the Merger Agreement, the stockholders of Romeo will receive a number of shares of the Company’s common stock based on an exchange ratio (the “Exchange Ratio”), the numerator of which is equal to $900 million (plus net cash of Romeo less debt of Romeo, plus the aggregate exercise price of all Romeo options and warrants (all calculated at the closing of the Merger)) divided by $10.00, and the denominator of which is equal to the number of outstanding shares of Romeo, including shares issuable upon conversion of outstanding convertible notes. The holders of Romeo options and warrants will receive the Company’s options and warrants equal to the number of shares of Romeo Common Stock subject to the Romeo options and warrants multiplied by the Exchange Ratio at an exercise price per share divided by the Exchange Ratio.

In connection with the Transactions, the Sponsor, agreed to enter into a lock-up agreement, pursuant to which the Company’s common stock received upon conversion of the shares of the Company’s Class B common stock held by the Sponsor will be subject to transfer restrictions until the earlier of (i) one year from the closing of the Merger,Premises, (ii) the date on which the ~~last sales price of~~Company commences any business use at the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing 150 trading days after the closing of the MergerPremises, and (iii) the date ~~on which~~of substantial completion pursuant to the work letter agreement between the Company ~~completes a liquidation, merger, capital stock exchange or other similar transaction that results in all~~and the Landlord.

Under the terms of the ~~Company’s stockholders having~~Lease, the ~~right~~Company is obligated to ~~exchange their shares~~pay the Landlord an initial base monthly rent of ~~common stock~~$210,700, or $0.98 per square foot. The monthly base rent will increase annually by approximately three percent of the then-current base rent. The Company will also be responsible for ~~cash, securities or other property,~~its proportional share of operating expenses, real estate tax expenses, insurance charges and maintenance costs, each as defined in the ~~warrants held by~~Lease, associated with the ~~Sponsor will be~~ownership, operation, maintenance, and repair of the Premises, subject to ~~transfer restrictions until~~certain exclusions provided in the ~~date that is 30 days following the closing~~Lease.The term of the ~~Merger.~~

~~Certain stockholders of Romeo receiving shares~~Lease is 97 calendar months. The Company may, at its option, extend the term of the ~~Company’s common stock in connection with~~Lease for five (5) additional years on the ~~Merger will~~same terms and conditions, except that the base monthly rent shall be ~~subject~~adjusted to ~~a 180-day lockup period for all shares~~the “fair rental value” of the ~~Company’s common stock held by such persons.~~Premises.

The ~~Merger Agreement~~Lease contains ~~certain representations and warranties~~customary default provisions allowing the Landlord to terminate the Lease if the Company fails to remedy a breach of any of its obligations under the Lease within specified time periods, or upon bankruptcy or insolvency of the ~~parties to the Merger Agreement and consummation~~Company. The Lease also contains other customary provisions for real property leases of ~~the Transactions is conditioned on approval thereof by the Company’s stockholders and is further conditioned upon, representations and warranties of the parties and other closing conditions.~~

~~The Merger Agreement may be terminated at any time, but not later than the closing of the Merger, as follows:~~

●

~~by mutual written consent of the Company and Romeo;~~

●

by either the Company or Romeo if the Transactions are not consummated on or before the later of February 12, 2021 and such later date as the Company’s stockholders may approve, provided that the terminating party shall not have been the primary cause of the failure to close by such date;

●

by either the Company or Romeo if consummation of the Transactions is permanently enjoined or prohibited by the terms of a final, non-appealable order, decree or ruling of a governmental entity or a statute, rule or regulation, provided that the terminating party shall not have been the primary cause of thereof;

●

by either the Company or Romeo if the other party has breached any of its representations, warranties or covenants, such that the closing conditions would not be satisfied at the closing, and has not cured such breach within 45 days of notice from the other party of its intent to terminate, provided that the terminating party is itself not in breach;

●

~~by the Company if Romeo stockholder approval of the Transactions has not been obtained within~~ ~~three~~ ~~business days following the date that the Registration Statement is disseminated by Romeo to its stockholders; or~~

●

by either the Company or Romeo if, at the Company’s shareholder meeting, the Transactions shall fail to be approved by the required vote described herein (subject to any adjournment or recess of the meeting).

At the closing of the Merger, certain of Romeo’s stockholders and other parties thereto will enter into an Amended and Restated Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which the Company agreed to file a shelf registration statement with respect to the registrable securities under the Registration Rights

this type.

~~Table of Contents~~

~~RMG ACQUISITION CORP.~~

ROMEO POWER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(UNAUDITED)~~

- CONTINUED

On October 25, 2021, BorgWarner elected to ~~provide customary “piggyback” registration rights.~~exercise a right under the Joint Venture Operating Agreement, dated May 6, 2019 (the “Operating Agreement”), to put its 60% ownership stake in the JV to the Company.

Pursuant to the terms of the Operating Agreement, upon exercise of a party’s put right, the Company and BorgWarner are required to select a nationally recognized valuation firm to determine the market value of the JV as of the date the put is exercised using comparable company, discounted cash flow and other standard valuation methodologies used in such valuations (the “Joint Venture Valuation”). We will be required to pay BorgWarner 95% of the market value of its stake based upon the Joint Venture Valuation. The ~~Registration Rights Agreement also provides~~parties will be obligated to consummate Romeo’s purchase of BorgWarner’s ownership stake in the Joint Venture within 30 days of the Joint Venture Valuation being determined. As a result of our purchase of BorgWarner’s ownership stake in the JV, we believe that the Company will ~~pay certain expenses relating~~(1) own 100% and fully consolidate the JV, (2) reacquire control of all of our intellectual property, and (3) be relieved of various contractual geographic, product and manufacturing limitations on our business and limitations on our research and development activities. We currently are unable to ~~such registrations and indemnify~~estimate the ~~stockholders against certain liabilities.~~

Atrange of our obligation to purchase BorgWarner’s ownership stake in the ~~closing of~~JV.

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

References to “we”, “us”, “our” or the “Company” are to RMG Acquisition Corp., except where the context requires otherwise. The following discussion should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this report.

~~Cautionary Note Regarding Forward-Looking Statements~~

This Quarterly Report ~~on Form 10-Q includes forward-looking~~contains “forward-looking statements” relating to our future financial performance, the market for our services and our expansion plans and opportunities. Any statements ~~within the meaning~~that refer to projections, forecasts or other characterizations of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future ~~events. These forward-looking statements~~events or circumstances, including any underlying assumptions, are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “contemplate,” “intend,” “believe,” “estimate,” “continue,” “goal,” “project” or the negative of such terms or other similar ~~expressions. There can be no assurance~~terms. These statements are subject to known and unknown risks, uncertainties and assumptions that could cause actual results ~~will not~~to differ materially ~~differ~~ from ~~expectations. Such~~those projected or otherwise implied by the forward-looking statements, ~~include, but~~including the following:

We believe that our performance and future success depend on a number of factors that present significant opportunities for us, but also pose risks and challenges, including those discussed below and in the section titled “Risk Factors” in the 2020 Form 10-K.

COVID-19 Pandemic Update

On March 11, 2020, the World Health Organization (“WHO”) declared the COVID-19 outbreak a pandemic. The COVID-19 pandemic has adversely impacted economic activity and conditions worldwide, including workforces, liquidity, capital markets, consumer behavior, supply chains, and macroeconomic conditions. Some locales continue to impose prolonged quarantines and restrict travel. These restrictions have impacted and continue to impact the ability of our employees to get to their places of work to produce products, our ability to obtain sufficient components or raw materials and component parts on a timely basis or at a cost-effective price, and our ability to keep our products moving through the supply chain. We took temporary precautionary measures intended to help minimize the risk of the virus to our employees, including temporarily requiring some employees to work remotely and implementing social distancing protocols for all work conducted onsite. We continue to suspend non-essential travel worldwide for employees, and we are discouraging employee attendance at other gatherings.

For the nine months ended September 30, 2021, there has been a trend in many parts of the world of increasing availability and administration of vaccines against COVID-19, as well as an easing of restrictions on social, business, travel and government activities and functions. On the other hand, infection rates and regulations continue to fluctuate and are increasing in various regions. There are ongoing global impacts resulting from the pandemic, including challenges and increases in costs for logistics and supply chains, such as increased port congestion and intermittent supplier delays. To date, COVID-19 has had a limited adverse impact on our operations, supply chains, and distribution systems, but has resulted in higher costs for, increased lead times and increased scarcity of raw materials than previously expected. Our efforts to qualify certain new suppliers, particularly in Asia, have been hampered which has required us to continue using higher cost components for our products. Because of travel restrictions, we are unable to visit many prospective customers in person, which could delay the sales conversion cycle. Due to these precautionary measures and resulting global economic impacts, we may experience significant and unpredictable reductions in demand for certain of our products. The degree and duration of disruptions to future business activities are unknown at this time. Ultimately, we cannot predict the duration of the COVID-19 pandemic. We will continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, and

we will have to accurately project demand and infrastructure requirements and deploy our production, workforce and other resources accordingly.

Global Battery Cell Shortage

The cost of battery cells manufactured by our suppliers, depends in part upon the prices and availability of raw materials such as lithium, nickel, cobalt and/or other metals. Costs for these raw materials have increased due to higher production costs and demand surges in the electric vehicle (“EV”) market. The prices for these materials fluctuate, and their available supply may be unstable, depending on market conditions and global demand, including as a result of increased global production of electric vehicles and energy storage products. A rise in the number of EV start-up companies in the United States that received substantial funding pursuant to capital markets transactions via mergers with special purpose acquisition companies (SPACs) in 2020 also has contributed to increases in demand. Any reduced availability of these materials may impact our access to cells, and any increases in their prices may reduce our profitability if we cannot recoup the increased costs through the pricing of our products or services. The availability and price of cylindrical cells, which is the form we use in our products, is particularly sensitive to the demand surge since most of the supply of other cell forms, such as pouch and prismatic cells, has been allocated previously, in some cases several years in advance.

Our current products are designed around cylindrical cells because such cells allow for optimal energy density, longest life, and the highest level of safety. There are only three battery cell suppliers for cylindrical cells (“Tier 1 Suppliers”) whose cells are qualified for use in EV applications because of their superior quality, performance, and safety standards. Other battery cell suppliers who manufacture cylindrical cells are emerging as potentially qualified sources for EV applications. We are conducting our rigorous qualification and validation process on these alternative cell suppliers in order to introduce more sourcing options into our product without sacrificing necessary performance and safety. Increased demand for electric vehicles globally has outpaced the cell production capacity of the Tier 1 Suppliers. While the Tier 1 Suppliers are increasing their output capacity in Asia and in the United States, electric vehicle battery pack manufacturers are competing for a severely limited supply of battery cells in the short and medium term. As a result of the increased demand and higher raw material costs, battery cell pricing has increased for cell purchases between 2021 and 2023. Pricing indications from our cell suppliers indicate demand may start to stabilize in 2023 although we cannot be certain this will occur.

Effective August 10, 2021, we entered into a long-term supply agreement (the “Supply Agreement”) for the purchase of lithium-ion battery cells with a Tier 1 battery cell and materials manufacturer (“Supplier”). Under the Supply Agreement, the Supplier is committed to supplying cells to us, at escalating annual minimum quantities, through June 30, 2028. For further discussion of the Supply Agreement please see Note 15 - Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements.

Key Components of Operating Results

The following discussion describes certain line items in our condensed consolidated statements of operations and comprehensive (loss) income.

We primarily generate revenue from the sale of battery modules, battery packs, and BMS, as well as the performance of engineering services, inclusive of the development of prototypes. Revenue generated from the sale of our battery modules, battery packs, and BMS under standard supply or production contracts is presented as product revenue in our condensed consolidated statements of operations and comprehensive (loss) income. Revenue generated from the production of prototypes is included in services revenue in our condensed consolidated statements of operations and comprehensive (loss) income, when prototypes are developed as a part of broader engineering services contracts, which are commonly entered into prior to signing a full production contract with a customer. Services revenue also includes revenue earned for engineering services provided to the BorgWarner JV.

Cost of Revenue and Gross Loss

Cost of revenue is comprised primarily of product costs, personnel costs (e.g., for production line and production management employees), logistics and freight costs, depreciation and amortization of manufacturing and test equipment, and allocation of fixed overhead expenses. Our product costs are impacted by technological innovations, such as advances in battery controls and battery configurations, new product introductions, economies of scale that result in lower component costs, and improvements in and automation of our production processes. Our production line and production management personnel costs

are primarily impacted by (1) changes in headcount, number of shifts, and number of production lines that will be required to meet our anticipated future production levels, and (2) compensation and benefits.

Gross profit or loss may vary between periods and is primarily affected by production volumes, product costs, including costs for raw materials, components and labor, product mix, customer mix, and warranty costs.

Operating expenses primarily consist of research and development costs and selling, general, and administrative costs. Personnel-related costs are the most significant component of each of these expense classifications and include salaries, benefits, payroll taxes, sales commissions, incentive compensation, and stock-based compensation.

Research and Development Expense

Research and development expense includes personnel-related costs, third-party design and development costs, testing and evaluation costs, and other indirect costs. Research and development employees are primarily engaged in the design and development of cell science design and engineering, battery module related technology and electro-mechanical engineering, thermal engineering, and BMS engineering. We devote substantial resources to research and development programs that focus on both enhancements to, and cost efficiencies in, existing products and the timely development of new products that utilize technological innovation to drive down product costs, improve product functionality, and enhance product safety and reliability. We intend to continue to invest resources in research and development efforts on an on-going basis, as we believe this investment is critical to maintaining and strengthening our competitive position.

Selling, General, and Administrative Expense

Selling, general, and administrative expense includes both sales and marketing costs and general and administrative costs associated with ~~emerging growth companies. Our sponsor is~~back-office functions. Sales and marketing expense includes personnel-related costs, as well as marketing, customer support, trade show, and other indirect costs. We expect to continue to make the necessary sales and marketing investments to enable the execution of our strategy, which includes increasing market penetration geographically, and entering into new markets. We currently offer products to electrify commercial trucks, buses, mining and agricultural equipment, and watercraft. We expect to expand the geographic reach of our product offerings and explore new revenue channels in our addressable markets in the future.

General and administrative expense includes personnel-related costs attributable to our executive, finance, human resources, and information technology organizations; certain facility costs; and fees for professional services. Fees for professional services consist primarily of outside legal and accounting, consulting, audit and tax costs.

Interest expense recognized during the three and nine months ended September 30, 2020, primarily consisted of interest incurred under Legacy Romeo’s outstanding notes. As Legacy Romeo’s outstanding notes were converted into our Common Stock or extinguished upon consummation of the Business Combination, we have not incurred material interest expense subsequent to the Business Combination.

Change in Fair Value of Public and Private Placement Warrants

In February 2019, RMG issued 7,666,648 warrants (the “Public Warrants”) to purchase shares of Common Stock at $11.50 per share. Simultaneously, RMG issued 4,600,000 warrants (the “Private Placement Warrants” and, together with the Public Warrants, the “Public and Private Placement Warrants”) to purchase shares of Common Stock at $11.50 per share to RMG Sponsor, LLC, ~~a Delaware limited liability company (the “sponsor”).~~

On February 12, 2019, we consummated our initial public offering (“initial public offering”) of 20,000,000 units (“units” and, with respect to the Class A common stock included in the units being offered, the “public shares”) at $10.00 per unit, generating gross proceeds of $200 million. On February 19, 2019, the underwriters fully exercised their over-allotment option to purchase 3,000,000 additional units to cover over-allotments at $10.00 per unit, which generated additional gross proceeds of $30.0 million. We incurred offering costs of approximately $13.4 million, inclusive of $8.05 million in deferred underwriting commissions.

Simultaneously with the closing of the initial public offering, we consummated the private placement (“private placement”) of 4,000,000 warrants (each, a “private placement warrant” and collectively, the “private placement warrants”) at a price of $1.50 per private placement warrant in a private placement to the sponsor and the certain funds and accounts managed by subsidiaries of BlackRock, Inc., and certain funds and accounts managed by Alta Fundamental Advisers ~~LLC (together,~~LLC. The Company re-measures the ~~“Anchor Investors”), generating gross proceeds of $6.0 million. In connection with the full exercise~~fair value of the ~~over-allotment option by~~Public and Private Placement Warrants at each reporting period.

On February 16, 2021, we announced the ~~underwriters, the sponsor and the Anchor Investors purchased an additional 600,000 private placement warrants at a price~~redemption of ~~$1.50 per private placement warrant, which generated additional gross proceeds of $900,000.~~

~~Upon the closing~~all of the ~~initial public offering~~outstanding Public Warrants to purchase shares of our Common Stock. The Public Warrants were issued under the Warrant Agreement, dated February 7, 2019, by and ~~private placement (including the exercise of the over-allotment option), $230.0 million ($10.00 per unit) of the net proceeds of the sale of the units in the initial public offering~~between RMG and ~~the private placement was placed in a trust account (the “Trust Account”), located at Deutsche Bank Trust Company Americas, with~~ American Stock Transfer & Trust Company, ~~acting~~LLC, as ~~trustee, and were invested in U.S. government securities, within the meaning set forth in Section 2(a)(16)~~warrant agent, as part of the ~~Investment~~units sold in the initial public offering of RMG. On April 5, 2021, 7,223,683 Public Warrants were redeemed at the redemption price of $0.01 per Public Warrant. The Company paid Public Warrant holders a total of $72,237 in connection with the redemption.

Gain from extinguishment of PPP loan

As a result of COVID-19, we faced risks to raising necessary capital which could significantly disrupt our business. To help mitigate those risks and support our ongoing operations, we received loan proceeds from two loans totaling $3.34 million under the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act ~~of 1940, as amended (the “Investment Company~~(“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses. The loans and accrued interest are forgivable after 24 weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. We applied for forgiveness of the loans following the covered period of the loans. In August 2021, we received a notice from the SBA that our $3.3 million PPP loan was fully forgiven. At September 30, 2021, the $0.04 million PPP loan remained outstanding.

Investment gain (loss), net primarily includes realized gains or losses recognized in connection with our available-for-sale debt investments.

In April 2020, Legacy Romeo agreed to cancel $1.8 million of $9.1 million stockholder notes receivable outstanding as of December 31, 2019, in the event of a ~~maturity~~sale of ~~180 days~~Legacy Romeo or ~~less, until~~an initial public offering. As a result, we recorded $1.6 million in other expense for the ~~earlier of: (i)~~nine months ended September 30, 2020, which represented the estimated fair value of the derivative liability as of September 30, 2020.

Loss in Equity Method Investments

Loss in equity method investments reflects the recognition of our proportional share of the net losses of our equity method investments. For the three and nine months ended September 30, 2021 and 2020, these losses relate only to the BorgWarner JV, in which we hold a 40% ownership interest. As of September 30, 2021, there was no activity related to Heritage Battery Recycling, LLC (“HBR”). Therefore, during the three and nine months ended September 30, 2021, there are no profits or losses from our equity method investment in HBR to be recognized.

Benefit from Income Taxes

The effective tax rate realized for each period was significantly below the Federal statutory rate of 21.0%, as we incurred significant operating losses during each reporting period and did not recognize an income tax benefit associated with these losses because a full valuation allowance is maintained against our net deferred income tax assets. Amounts reflected in benefit from income taxes generally represent various state and local taxes and consist primarily of California franchise tax.


	Three Months Ended September 30,				$		%
	2021		2020		Change		Change
Revenues:	(dollars in thousands)
Product revenues	$	2,740	$	51	$	2,689	5273	%
Service revenues	3,019		624		2,395		384	%




Total revenues	5,759		675		5,084		753	%
Cost of revenues:
Product cost	7,904		716		7,188		1004	%
Service cost	2,565		1,080		1,485		138	%




Total cost of revenues	10,469		1,796		8,673		483	%
Gross loss	(4,710)		(1,121)		(3,589)		320	%
Operating expenses:
Research and development	4,732		1,817		2,915		160	%
Selling, general, and administrative	17,607		4,945		12,662		256	%
Total operating expenses	22,339		6,762		15,577		230	%
Operating loss	(27,049)		(7,883)		(19,166)		243	%
Interest expense	(4)		(265)		261		(98)	%

Change in fair value of public and private placement warrants	6,134		—		6,134		NM
Gain from extinguishment of PPP loan	3,300		—		3,300		NM
Investment gain, net	266		—		266		NM
Other expense	—		(228)		228		(100)	%
Loss before income taxes and loss in equity method investments	(17,353)		(8,376)		(8,977)		107	%
Loss in equity method investments	(611)		(540)		(71)		13	%
Benefit from income taxes	11		—		11		NM
Net loss	$	(17,953)	$	(8,916)	$	(9,037)	101	%


	Nine Months Ended September 30,				$		%
	2021		2020		Change		Change
Revenues:	(dollars in thousands)
Product revenues	$	3,818	$	2,097	$	1,721	82	%
Service revenues	3,921		2,229		1,692		76	%




Total revenues	7,739		4,326		3,413		79	%
Cost of revenues:
Product cost	17,884		5,182		12,702		245	%
Service cost	3,357		2,669		688		26	%




Total cost of revenues	21,241		7,851		13,390		171	%
Gross loss	(13,502)		(3,525)		(9,977)		283	%
Operating expenses:
Research and development	10,295		5,213		5,082		97	%
Selling, general, and administrative	54,393		10,303		44,090		428	%
Total operating expenses	64,688		15,516		49,172		317	%
Operating loss	(78,190)		(19,041)		(59,149)		311	%
Interest expense	(16)		(783)		767		(98)%

Change in fair value of public and private placement warrants	124,254		—		124,254		NM
Gain from extinguishment of PPP loan	3,300		—		3,300		NM
Investment loss, net	(23)		—		(23)		NM
Other expense	—		(1,614)		1,614		(100)	%
Income (loss) before income taxes and loss in equity method investments	49,325		(21,438)		70,763		330	%
Loss in equity method investments	(1,817)		(1,272)		(545)		43	%
Benefit from income taxes	1		—		1		NM
Net income (loss)	$	47,509	$	(22,710)	$	70,219	309	%


	Three Months Ended September 30,
	2021				2020
	Amount		%		Amount		%
	(dollars in thousands)
Product revenues	$	2,740	48	%	$	51	8	%
Service revenues	3,019		52	%	624		92	%
Total revenues	$	5,759	100	%	$	675	100.0	%

Product revenues increased approximately $2.7 million, or 5273% , for the three months ended September 30, 2021, as compared to product revenues for the same period in the prior year. The increase in product revenues relates to increased delivery of commercial vehicle battery packs and modules under four active supply contracts. We expect the current volume of our commercial vehicle battery pack and module production and delivery activity to continue growing as we increase delivery on the four supply contracts that started production and delivery during 2021. Additionally, during the three months ended September 30, 2021 we completed production and delivery on an engineering and prototype development agreement that is

subsequently described in the discussion of service revenues. The engineering and prototype agreement was the precursor to a current product supply agreement, for which we recognized $0.9 million of revenue for product deliveries during the period.

We expect to continue to produce and deliver battery modules and packs at greater scale in accordance with our more recently signed customer supply contracts, certain of which provide for minimum take or pay order commitments. Minimum quantity commitments related to contracts signed through September of 2021 are approximately $547.0 million of backlog.

Service revenues increased approximately $2.4 million, or 384%, for the three months ended September 30, 2021, as compared to service revenues for the same period in the prior year. The increase is primarily related to the recognition of $2.6 million of service revenues due to the completion of an ~~initial business combination~~engineering and ~~(ii)~~prototype development agreement. In accordance with our accounting policy, revenue for this arrangement was deferred until the ~~distribution~~final developed prototype was delivered, which occurred during the three months ended September 30, 2021. This increase was offset partially by a $0.1 million reduction in engineering labor services provided to the BorgWarner JV.


	Three Months Ended September 30,
	2021				2020
	Amount		%		Amount		%
	(dollars in thousands)
Cost of revenues – product cost	$	7,904	75	%	$	716	40	%
Cost of revenues – service cost	2,565		25	%	1,080		60	%
Total cost of revenues	$	10,469	100	%	$	1,796	100	%

Cost of revenues associated with product revenue increased approximately $7.2 million, or 1004%, for the three months ended September 30, 2021, as compared to the same period in the prior year. This increase is largely a result of the ~~Trust Account~~$2.7 million increase in product revenues during the period, as described ~~below.~~

~~If we are unable~~above. Cost of revenues associated with product sales increased due to complete an initial business combination within 24 months from the closing of the initial public offering, or February 12, 2021 (the “Combination Period”), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equalhigher production direct labor headcount and other operating costs attributable to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay our franchise and income taxes as well as expenses relating to the administration of the Trust Account (less up to $100,000 of interest released to us to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and its Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Although we have no present intention to do so, at some point in the future we may ask our shareholders to approve an amendment to our charter that would extend the length of the Combination Period, but there are no assurances that such extension will be granted. There

~~Table of Contents~~

will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless if we fail to complete the initial business combination within the prescribed time period.

~~Proposed Business Combination~~

On October 5, 2020, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, RMG Merger Sub, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“Merger Sub”), Romeo Systems, Inc., a Delaware corporation (“Romeo”), which provides for, among other things the merger of Merger Sub with and into Romeo, with Romeo continuing as the surviving corporation, ~~as further described in Note 10 to the financial statement included in Item 1 of this Quarterly Report on Form 10-Q.~~

~~Results of Operations~~

Our entire activity since inception was in preparation for our initial public offering, and since such offering, our activity has been limited to the search for a prospective initial business combination and the activitiesproduction-related personnel incurred in connection with the ~~Merger described above,~~ramp-up of shipments to support larger supply contracts. In addition, a portion of the increase in product costs of revenues can be attributed to a higher volume of materials consumed. The increase in material costs also reflects procuring some key components at higher than standard costs and ~~we will not be generating any operating revenues until~~ the ~~closing~~incurrence of delivery expediting costs due to scarcity of supply.

In addition, during the three months ended September 30, 2021, a $0.4 million increase in expense resulted from the write-down of excess and ~~completion~~obsolete inventory primarily due to obsolescence of our initial business combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cashcertain raw materials and ~~cash equivalents. We expect to incur increased expenses~~work-in-progress inventory as a result of technological advances and excess inventory from purchased quantities exceeding amounts originally expected to be consumed. We did not record any inventory write-downs during the same period in the prior year.

Overhead costs included in cost of revenues associated with product revenues increased period over period. A significant portion of the overhead costs that we incurred in both periods include facility rent, utilities, and depreciation of manufacturing equipment and tooling, which are fixed or semi-fixed in nature. As manufacturing activities under our supply contracts increase we would expect to achieve improved leverage on fixed and semi-fixed overhead.

Cost of revenues – service cost

Cost of revenues associated with service revenues increased approximately $1.5 million, or 138%, for the three months ended September 30, 2021, as compared to cost of revenues associated with service revenues for the same period in the prior year. During the period we recognized $2.6 million of revenue and the related costs associated with the completion of deliveries for a significant engineering and prototype contract, for which revenue and costs previously were deferred, in accordance with our accounting policy, until all engineering services were complete and all prototypes had been delivered. This increase was offset partially by a $0.1 million reduction in the cost of engineering labor services provided to the BorgWarner JV.

Research and Development Expense

Research and development expense increased approximately $2.9 million, or 160%, for the three months ended September 30, 2021, as compared to the same period in the prior year. The increase was primarily attributable to the following items (in thousands):


Primary Driver	Increase / (Decrease)
Compensation and benefit costs	$	2,367
Materials and consumables	592
Primary drivers of the total increase in research and development expense	$	2,959

The $2.4 million increase in compensation and benefit costs, was due to a 34% increase in department headcount as a result of increased research and development activities to support ongoing technology and product development. In addition to the increase in compensation and benefits costs, materials and consumables increased $0.6 million, due to a higher volume of materials consumed. The increase in materials and consumables also reflects rising costs and the incurrence of delivery expediting costs due to scarcity of supply.

Selling, General, and Administrative Expense

Selling, general, and administrative expense increased approximately $12.7 million, or 256%, for the three months ended September 30, 2021, as compared to the same period in the prior year. The increase was primarily attributable to the following items (in thousands):


Primary Drivers	Increase / (Decrease)
Compensation and benefit costs (excluding stock-based compensation)	$	6,099
Stock-based compensation expense*	3,038
HES pilot program	866
Professional fees	688
Insurance	1,415
Primary drivers of the total increase in selling, general and administrative expense	$	12,106

* Amounts have been recast to reflect the corrections described in Note 1 to the Condensed Consolidated Financial Statements.

Compensation and benefits increased $6.1 million due to an 18% increase in departmental headcount and annual compensation increases. The $3.0 million increase in stock-based compensation is related to vesting of stock options, RSUs and PSUs granted under our stock incentive plans. We accrued a $0.9 million payment to Heritage Environmental Services (“HES”) for the pilot program that started during the three months ended September 30, 2021 (For further discussion of the HES pilot program, see Note 14 - Transactions with Related Parties in the Notes to the Condensed Consolidated Financial Statements). Professional fees increased $0.7 million primarily as a result of legal, audit and accounting fees associated with new public company accounting and regulatory reporting requirements, as well as additional consulting services obtained to assist with our transition to being a public company. Insurance expense increased approximately $1.4 million reflecting the impact of company ~~(for legal, financial reporting, accounting~~growth and ~~auditing compliance),~~associated with being a publicly traded company. As discussed in the ‘Overview’ section, we expect selling, general, and administrative expense to be higher as ~~well~~compared to historical periods now that the Business Combination has been completed. The higher costs are expected to be attributable to a variety of factors including: increased investment in marketing, advertising, and the sales and distribution infrastructure related to our products and services; increased personnel and other costs supporting internal functions such as ~~for due diligence expenses. We are also incurring expenses in~~operations, finance, and information technology and systems; cost to support our requirements as a publicly traded company.

Interest Expense

In connection with the ~~Merger.~~

Business Combination, we repaid or converted all outstanding debt, except for our loans from the U.S. SBA’s PPP. The decrease in interest expense reflects the payoff or conversion of substantially all of our debt on December 29, 2020. We did not incur any new debt during the three months ended September 30, 2021.

Change in Fair Value of Public and Private Placement Warrants

For the three months ended September 30, ~~2020, we had a net loss of approximately $492,000, which consisted of approximately $28,000 interest income (of which approximately all was for interest earned on restricted cash equivalents held~~2021, the change in Trust Account) and a tax benefit of approximately $119,000, offset by approximately $589,000 in general and administrative expenses and $50,000 in franchise tax expense. Included in general and administrative expenses are approximately $445,000 of costs incurred as partfair value of the ~~proposed~~Public and Private Placement Warrants was a decrease of $6.1 million, resulting in the recognition of a gain related to the reduction of the carrying value of the associated liability. The Company re-measures the fair value of the Public and Private Placement Warrants at each reporting period. The decrease in the fair value of the Public and Private Placement Warrants was primarily due to the decrease in the price of our Common Stock. Romeo did not become subject to the recognition of gains and losses from changes in the fair value of the Public and Private Placement Warrants until after the Business ~~Combination.~~

~~For~~Combination and, accordingly, no gain or loss related to such warrants was recognized during the three months ended September 30, 2020.

Gain from Extinguishment of PPP Loan

Gain from extinguishment of PPP loan for the three months ended September 30, 2021 was $3.3 million and represents the amountof one of our two PPP loans which was forgiven by the SBA in August 2021. We did not have a similar gain during the same period in the prior year.

Investment Gain, net

Investment gain, net for the three months ended September 30, 2021 was approximately $0.3 million, which primarily represents realized gains incurred in connection with our available-for-sale debt investments. We did not have similar activity during the same period in the prior year due to the change in our investment position subsequent to the Business Combination.

Other Expense

In April 2020, Legacy Romeo agreed to cancel $1.8 million of $9.1 million stockholder notes receivable outstanding as of December 31, 2019, in the event of a sale of Legacy Romeo or an initial public offering. As a result, we ~~had net income of approximately $658,000, which consisted of approximately $1.1~~recorded $0.2 million in other expense for the three months ended September 30, 2020, which represented the estimated change in fair value of the derivative liability during the period. The non-recurring cancellation of the amount due to us under the stockholder notes receivable was settled during the quarter ended December 31, 2020, and we did not incur similar losses during the same period in the current year.

Loss in Equity Method Investments

We account for our investment in the BorgWarner JV under the equity method of accounting and, accordingly, recognize our proportionate share of the joint venture’s earnings and losses. The amounts recognized as loss in equity method investments for the three months ended September 30, 2021 and 2020 represent our 40% share of the losses recognized by the joint venture for the corresponding period.

Net Loss

We reported a net ~~gains, dividends~~loss of $18.0 million for the three months ended September 30, 2021, as compared to a net loss of $8.9 million for the same period in the prior year. The increase in the net loss recognized for the three months ended September 30, 2021 was due to the factors discussed above.

Nine Months Ended September 30, 2021 Compared with Nine Months Ended September 30, 2020

Revenues


	Nine Months Ended September 30,
	2021				2020
	Amount		%		Amount		%
	(dollars in thousands)
Product revenues	$	3,818	49	%	$	2,097	48	%
Service revenues	3,921		51	%	2,229		52	%
Total revenues	$	7,739	100	%	$	4,326	100	%

Product revenues

Product revenues increased approximately $1.7 million, or 82%, for the nine months ended September 30, 2021, as compared to the same period in the prior year. The increase in product revenues relates primarily to increased delivery on the four supply contracts that started production and ~~interest income from marketable securities held~~delivery during 2021 resulting in ~~Trust Account,~~recognition of $1.3 million of product revenues. The term of the four supply contracts run through our fiscal years ending December 31, 2024. Additionally, we have completed production and delivery on an engineering and prototype development agreement that is subsequently described in the discussion of service revenues. The engineering and prototype agreement was the precursor to a current product supply agreement, for which we recognized $0.9 million of revenue for product deliveries during the period. During the nine months ended September 30, 2021, the average selling prices per unit did not have a significant impact on revenues, as compared to the same period in the prior year.

Minimum quantity commitments related to contracts signed through September of 2021 is approximately ~~$9,000~~$547.0 million of backlog. With the completion of the delivery of engineering and prototype services, we expect to recognize approximately $9.8 million of this backlog revenue during the remainder of our fiscal year ending December 31, 2021.

Service revenues

Service revenues increased approximately $1.7 million, or 76%, for the nine months ended September 30, 2021, as compared to the same period in ~~interest income,~~the prior year. The increase is primarily related to the recognition of $2.6 million of service revenues due to the completion of an engineering and prototype development agreement. In accordance with our accounting policy, revenue for this arrangement was deferred until the final developed prototype was delivered, which occurred during the current year. This increase was partially offset by a $0.7 million reduction in engineering labor services provided to the BorgWarner JV.

Cost of Revenues


	Nine Months Ended September 30,
	2021				2020
	Amount		%		Amount		%
	(dollars in thousands)
Cost of revenues – product cost	$	17,884	84	%	$	5,182	66	%
Cost of revenues – service cost	3,357		16	%	2,669		34	%
Total cost of revenues	$	21,241	100	%	$	7,851	100	%

Cost of revenues – product cost

Cost of revenues associated with product revenues increased approximately ~~$211,000~~$12.7 million, or 245%, for the nine months ended September 30, 2021, as compared to the same period in the prior year. Our costs of product revenue increased, in part as a result of an increase of $1.7 million in product revenues recognized during the period. Cost of revenues associated with product sales further increased due to higher production labor headcount and other operating costs attributable to production-related personnel incurred in connection with the ramp-up of shipments to support larger supply contracts. In addition, a portion of the increase in product costs of revenues can be attributed to a higher volume of materials consumed. The increase in material costs also reflects procuring some key components at higher than standard costs and the incurrence of delivery expediting costs due to scarcity of supply.

In addition to the above drivers, we realized a $1.6 million increase in expense resulting from the write-down of excess and obsolete inventory during the nine months ended September 30, 2021, primarily due to obsolescence of certain raw materials and work-in-progress as a result of technological advances and excess inventory from final purchase orders differing from our estimates. We did not record any inventory write-downs during the same period in the prior year.

Overhead costs remained consistent period over period. A significant portion of the overhead costs that we incurred in both periods include facility rent, utilities, and depreciation of manufacturing equipment and tooling, which are fixed or semi-fixed in nature. As manufacturing activities under our supply contracts increase, we would expect to achieve improved leverage on fixed and semi-fixed overhead costs.

Cost of revenues – service cost

Cost of revenues associated with service revenues increased approximately $0.7 million, or 26%, for the nine months ended September 30, 2021, as compared to cost of revenues associated with service revenues for the same period in the prior year. Cost of revenues associated with service revenue increased due to the completion of engineering and prototype contracts for which revenue and costs are deferred until all engineering services are complete and all prototypes have been delivered. This increase was partially offset by the cost of revenue attributable to providing engineering services to the BorgWarner JV which decreased by $0.6 million during the period due to decreased services provided to the BorgWarner JV during the period.

Research and Development Expense

Research and development expense increased approximately $5.1 million, or 97%, for the nine months ended September 30, 2021, as compared to the same period in the prior year. The increase was primarily attributable to the following item (in thousands):


Primary Driver	Increase / (Decrease)
Compensation and benefit costs	$	4,382
Materials and consumables	630
Primary drivers of the total increase in research and development expense	$	5,012

The $4.4 million increase in compensation and benefit costs, was due to a 49% increase in department headcount as a result of increased research and development activities to support ongoing technology and product development. In addition to the increase in compensation and benefits costs, materials and consumables increased $0.6 million, due to a higher volume of materials consumed. The increase in materials and consumables also reflects rising costs and the incurrence of delivery expediting costs due to scarcity of supply.

Selling, General, and Administrative Expense

Selling, general, and administrative expense increased approximately $44.1 million, or 428%, for the nine months ended September 30, 2021, as compared to the same period in the prior year. The increase was primarily attributable to the following items (in thousands):


Primary Drivers	Increase / (Decrease)
Compensation and benefit costs (excluding stock-based compensation)	$	12,791
Professional fees	7,519
Stock-based compensation*	12,589
Insurance	4,027
HES pilot program	866
Primary drivers of the total increase in selling, general and administrative expense	$	37,792

* Amounts have been recast to reflect the corrections described in Note 1 to the Condensed Consolidated Financial Statements.

The $12.6 million increase in stock-based compensation expense was driven primarily by the performance and market-based stock option grant awarded to our former chairman and CEO, for which we recognized $5.3 million of stock-based compensation expense during the period. The additional stock-based compensation expense is related to vesting of stock options, RSUs and PSUs granted under our stock incentive plans. Professional fees increased $7.5 million primarily as a result of legal, audit and accounting fees associated with new public company accounting and regulatory reporting requirements and additional consulting services obtained to assist with our transition to being a public company. Compensation and benefits increased $12.8 million due to a 25% increase in departmental headcount, annual compensation increases, and compensation expense related to retention bonuses awarded to five members of our executive team. Insurance expense increased approximately $4.0 million, reflecting the impact of company growth and associated with being a publicly traded company. As discussed in the ‘Overview’ section, we expect selling, general, and administrative expense to be higher as compared to historical periods now that the Business Combination has been completed. The higher costs ~~$50,000~~are expected to be attributable to a

variety of factors, including: increased investment in ~~franchise tax~~marketing, advertising, and the sales and distribution infrastructure related to our products and services; increased personnel and other costs supporting in internal functions such as operations, finance, and information technology and systems; cost to support our requirements as a publicly traded company. We accrued a $0.9 million payment to HES for the pilot program that started during the nine months ended September 30, 2021 (For further discussion of the HES pilot program, see Note 14 - Transactions with Related Parties in the Notes to the Condensed Consolidated Financial Statements).

Interest Expense

In connection with the Business Combination, we repaid or converted all outstanding debt, except for our PPP loans. The decrease in interest expense reflects the payoff or conversion of substantially all of our debt on December 29, 2020. We did not incur any new debt during the nine months ended September 30, 2021.

Change in Fair Value of Public and ~~approximately $232,000 in income tax expense~~

Private Placement Warrants

For the nine months ended September 30, ~~2020, we had net income of approximately $125,000, which consisted of approximately $1.1 million~~2021, the change in interest income (of which approximately all was for interest earned on restricted cash equivalents held in Trust Account) and a tax benefit of approximately $171,000, offset by approximately $1.1 million in general and administrative costs and $150,000 in franchise tax expense. Included in general and administrative expenses are approximately $445,000 of costs incurred as partfair value of the ~~proposed~~Public and Private Placement Warrants was a decrease of $124.3 million, resulting in the recognition of a substantial gain related to the reduction of the carrying value of the associated liability. The Company re-measures the fair value of the Public and Private Placement Warrants at each reporting period. The decrease in the fair value of the Public and Private Placement Warrants was primarily due to the decreases in the price of our Common Stock and the Public Warrants subsequent to the Business ~~Combination.~~

~~For~~Combination as well as the Public Warrant redemption that occurred on April 5, 2021. Romeo did not become subject to the recognition of gains and losses from changes in the fair value of the Public and Private Placement Warrants until after the Business Combination and, accordingly, no gain or loss related to such warrants was recognized during the nine months ended September 30, 2020.

Gain from Extinguishment of PPP Loan

Gain from extinguishment of PPP loan for the nine months ended September 30, 2021 was $3.3 million, which represents amounts of one of our two PPP Loans forgiven by the SBA in August 2021. We did not have a similar gain during the same period in the prior year.

Other Expense

In April 2020, Legacy Romeo agreed to cancel $1.8 million of $9.1 million stockholder notes receivable outstanding as of December 31, 2019, in the event of a sale of Romeo or an initial public offering.As a result, Romeo recorded $1.6 million in Other expense for the nine months ended September 30, 2020, which represented the estimated fair value of the derivative liability as of September 30, 2020.The non-recurring cancellation of the amount due to us under the stockholder notes receivable ultimately was settled during the quarter ended December 31, 2020, and we ~~had~~did not incur similar losses during the same period in the current year.

Loss in Equity Method Investments

We account for our investment in the BorgWarner JV under the equity method of accounting and, accordingly, recognize our proportionate share of the joint venture’s earnings and losses. The amounts recognized as loss in equity method investments for the nine months ended September 30, 2021 and 2020 represent our 40% share of the losses recognized by the joint venture for the corresponding period.

Net Income (Loss)

We reported net income of ~~approximately $1.8~~$47.5 million ~~which consisted~~for the nine months ended September 30, 2021, as compared to a net loss of ~~approximately $3.3~~$22.7 million for the same period in the prior year. The increase in the net ~~gains, dividends~~income recognized for the nine months ended September 30, 2021 was due to the change in fair value of our Public and ~~interest income from marketable securities held in Trust Account, approximately $23,000 in interest income,~~Private Placement Warrants, partially offset by ~~approximately $668,000 in general and administrative costs, $150,000 in franchise tax expense, and approximately $669,000 in income tax expense~~

~~Going Concern Consideration~~

~~As of September 30, 2020, we had approximately $316,000 in our operating bank account held outside of~~ the Trust Account, and approximately $4.2 million of investment income earned on money market funds and marketable securities held in the Trust Account available to pay franchise tax and income tax obligations. We will use the funds available outside of the Trust Account primarily to meet our operating cash flow and working capital needs.

Through September 30, 2020, our liquidity needs have been satisfied through receipt of a $25,000 capital contribution from our sponsor in exchange for the issuance of the founder shares, approximately $153,000 received from our sponsor under Expenses Reimbursement arrangement in 2019, the proceeds from the consummation of the private placement not

factors discussed above.

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~~held in the Trust Account and the loan proceeds under the PPP Note received in June 2020. We fully repaid the loans from our sponsor in 2019. We intend~~

Non-GAAP Financial Measures

In addition to use substantially all of the funds held in the Trust Account, including any amounts representing investment income earned on the Trust Account (less amounts released to us for taxes payable, expenses relating to the administration of the Trust Account and deferred underwriting commissions) to complete the Initial Business Combination.

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on our results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, our results of operations, financial position and cash flows may be materially adversely affected.

~~In connection with our assessment of going concern considerations~~determined in accordance with Financial Accounting Standard Board’s Accounting Standards Updated (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, management has determined that the mandatory liquidation and subsequent dissolution related to the Combination Period described above raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after February 12, 2021.

~~Related Party Transactions~~

~~Founder Shares~~

On November 6, 2018, the sponsor purchased 7,187,500 shares (the “founder shares”) of the Company’s Class B common stock, par value $0.0001 per share (the “Class B common stock”), for an aggregate price of $25,000. On December 17, 2018, the Company effectuated an 0.8-for-1 reverse split of the founder shares, resulting in an aggregate outstanding amount of 5,750,000 founder shares. In January 2019, the sponsor forfeited to the Company 575,000 founder shares and the Anchor Investors purchased from the Company 575,000 founder shares for cash consideration of approximately $2,300. Additionally, the sponsor had agreed to forfeit up to 750,000 founder shares to the extent that the over-allotment option is not exercised in full by the underwriters. On February 19, 2019, the underwriters fully exercised their over-allotment option; thus, these founder shares were no longer subject to forfeiture.

The founder shares will automatically convert into Class A common stock on a one-for-one basis at the time of the Company’s initial business combination and are subject to certain transfer restrictions.

~~Related Party Reimbursements and Loans~~

The sponsor agreed to cover expenses related to our formation and the initial public offering (“expenses reimbursement”), and expected to be reimbursed upon the completion of the initial public offering. We borrowed approximately $153,000 under the expenses reimbursement and fully repaid this amount to the related parties in 2019.

In addition, in order to finance transaction costs in connection with an initial business combination, the sponsor or an affiliate of the sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (“working capital loans”). If we complete an initial business combination, we would repay the working capital loans out of the proceeds held in the Trust Account released to us. Otherwise, the working capital loans would be repaid only out of funds held outside the Trust Account. In the event that an initial business combination is not completed, we may use a portion of the proceeds held outside the Trust Account to repay the working capital loans but no proceeds held in the Trust Account would be used to repay the working capital loans. Except for the foregoing, the terms of such working capital loans, if any, have not been determined and no written agreements exist with respect to such loans. The working capital loans would either be repaid upon consummation of an initial business combination, without interest, or, at the lender’s discretion, up to $1.5 million of such working capital loans may be convertible into warrants of the post initial

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business combination entity at a price of $1.50 per warrant. The warrants would be identical to the private placement warrants. To date, except for the foregoing, the terms of such working capital loans, if any, have not been determined and no written agreements exist with respect to such loans.

~~Off-Balance Sheet Arrangements; Commitments and Contractual Obligations; Quarterly Results~~

As of September 30, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations other than obligations disclosed herein. No unaudited quarterly operating data is included in this annual report, as we have conducted no operations to date.

~~Contractual Obligations~~

We engaged financial advisors to provide advisory services to us in connection with our initial Business Combination, such as holding meetings with our stockholders to discuss a potential Business Combination and the target business’s attributes, introducing us to potential investors that are interested in purchasing our securities in connection with the potential Business Combination, assisting us in obtaining stockholder approval for the potential Business Combination and assisting us with our press releases and public filings in connection with the potential Business Combination. We will pay such financial advisors cash fees for such services upon the consummation of our initial Business Combination.

~~Critical Accounting Policies and Estimates~~

~~The preparation of financial statements and related disclosures in conformity~~ with accounting principles generally accepted in the United States ~~requires~~of America (GAAP), our management utilizes certain non-GAAP performance measures, EBITDA and Adjusted EBITDA, for purposes of evaluating our ongoing operations and for internal planning and forecasting purposes. We believe that these non-GAAP operating measures, when reviewed collectively with our GAAP financial information, provide useful supplemental information to investors in assessing our operating performance.

EBITDA and Adjusted EBITDA

“EBITDA” is defined as earnings before interest income and expense, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” has been calculated using EBITDA adjusted for, stock-based compensation, a gain on the change in fair value of the Public and Private Placement Warrants, a gain on the extinguishment of a PPP loan, gain or loss on our investments, net and derivative expense. We believe that both EBITDA and Adjusted EBITDA provide additional information for investors to use in (1) evaluating our ongoing operating results and trends and (2) comparing our financial performance with those of comparable companies which may disclose similar non-GAAP financial measures to investors. These non-GAAP measures provide investors with incremental information for the evaluation of our performance after isolation of certain items deemed unrelated to our core business operations.

EBITDA and Adjusted EBITDA are presented as supplemental measures to our GAAP measures of performance. When evaluating EBITDA and Adjusted EBITDA, you should be aware that we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Furthermore, our computation of Adjusted EBITDA may not be directly comparable to similarly titled measures computed by other companies, as the nature of the adjustments that other companies may include or exclude when calculating Adjusted EBITDA may differ from the adjustments reflected in our measure. Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation, nor should these measures be viewed as a substitute for the most directly comparable GAAP measure, which is net income (loss). We compensate for the limitations of our non-GAAP measures by relying primarily on our GAAP results. You should review the reconciliation of our net income (loss) to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our performance.

The following table reconciles net (loss) income to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2021 and 2020 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net (loss) income	$	(17,953)	$	(8,916)	$	47,509	$	(22,710)
Interest expense	4		265		16		783
Benefit from income taxes	(11)		—		(1)		—
Depreciation and amortization expense	834		454		1,833		1,404
EBITDA	(17,126)		(8,197)		49,357		(20,523)
Stock-based compensation	4,315		132		14,933		784
Change in fair value of public and private placement warrants	(6,134)		—		(124,254)		—
Gain from extinguishment of PPP loan	(3,300)		—		(3,300)		—
Investment (gain) loss, net	(266)		—		23		—
Derivative expense	—		228		—		1,614
Adjusted EBITDA	$	(22,511)	$	(7,837)	$	(63,241)	$	(18,125)

Liquidity and Capital Resources

Our continuing short-term and long-term liquidity requirements are expected to be impacted by the following, among other things:

•the timing and the costs involved in bringing our products to market;

•the expansion of production capacity;

•our ability to manage the costs of manufacturing our product, including the cost of materials;

•the availability of trade credit associated with the purchase of materials;

•capital commitments that may be required to secure long-term cell supply arrangements;

•general business liabilities, including the cost of warranty and quality claims, commercial disputes, and potential business litigation costs and liabilities;

•the scope, progress, results, costs, timing and outcomes of our research and development for our battery modules and battery packs;

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

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

•our ability to collect revenues from start-up companies operating in a relatively new industry;

•the global battery cell shortage;

•our obligation to fund our proportional share of the operating expenses, working capital, and capital expenditures of the BorgWarner JV;

•our obligation to purchase BorgWarner’s ownership interest in the BorgWarner JV; and

•other risks discussed in the section titled “Risk Factors.”

Liquidity Requirements

As of September 30, 2021, our current assets were approximately $221.8 million, consisting primarily of cash and cash equivalents, available-for-sale debt investments, inventory, prepaid expenses and other current assets, and an insurance receivable. As of September 30, 2021, our current liabilities were approximately $28.6 million, consisting primarily of accounts payable, accrued expenses, and a legal settlement amount. This strong liquidity position resulted from the Business Combination, which raised $345.8 million in cash that is being used by the Company to fund both operations and strategic initiatives.

As described in more detail in Note 15 - Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements, we signed a Supply Agreement effective August 10, 2021 with a Supplier for the purchase of battery cells over the period of 2021 through 2028. As part of the Supply Agreement, we made a $64.7 million prepayment to the Supplier and agreed to pay an additional $1.5 million deposit by December 31, 2021 to secure the supply of cells through the term of the contract. The prepaid amounts will be recouped through credits received as cells are purchased. If we breach our minimum volume commitments during any applicable year, the Supplier will be entitled to keep the remaining balance of the prepaid amounts, as applicable.

As described in more detail in Note 17 - Subsequent Events in the Notes to the Condensed Consolidated Financial Statements, on October 25, 2021 BorgWarner decided to exercise a right under the Joint Venture Operating Agreement, dated May 6, 2019 (the “Operating Agreement”), to put its ownership stake in the BorgWarner JV to Romeo. We will have to pay BorgWarner 95% of the market value of its 60% stake in the BorgWarner JV. The transaction will be consummated within 30 days of a nationally recognized valuation firm completing its market value analysis of the BorgWarner JV.

Other strategic initiatives, which may or may not be similar in nature to the new cell supply agreement, will continue to be assessed in the context of balancing business value and our liquidity position. We may consider future strategic initiatives which in our assessment may lead to opportunities to maximize value of the business and require significant investment. Management anticipates that, in addition to possible strategic initiatives, our other ongoing liquidity and capital needs will relate primarily to capital expenditures for the expansion and support of production capacity, investment related to continue to reduce the cost of our product, working capital to support increased production and sales volume, and general overhead and personnel expenses to support continued growth and scale. As a result, it is possible we may decide to raise additional capital and liquidity to be prepared to support and fund such initiatives and growth.

If we choose to raise additional capital in the future, the method and form of raising such capital has yet to be determined, but could range from debt to equity capital, or possibly both. If we raise funds by issuing debt securities or incurring loans, this form of financing would have rights, preferences, and privileges senior to those of holders of our Common Stock. The availability and the terms under which we can borrow additional capital could be disadvantageous, and the terms of debt securities or borrowings could impose significant restrictions on our operations. Macroeconomic conditions and credit markets could also impact the availability and cost of potential future debt financing. If we raise capital through the issuance of additional equity, such sales and issuance would dilute the ownership interests of the existing holders of the Company’s

Common Stock. There can be no assurances that any additional debt or equity financing would be available to us or if available, that such financing would be on favorable terms to us.

As of September 30, 2021, we have met all of the Company’s minimum 2021 annual purchase commitments. We estimate our total unconditional purchase commitments (for those contracts with terms in excess of one year) are $512.9 million through the end of 2025 and $472.4 million thereafter. However, the amount of our purchase commitments subsequent to September 30, 2021 is not fully fixed and is subject to change based on changes in certain raw materials indexes as well the quantities of purchases we actually make. These commitments relate to our inventory purchases.

Cash Flow Analysis

The following table provides a summary of cash flow data for the nine months ended September 30, 2021 and 2020 (in thousands):


	Nine Months Ended September 30,

	2021		2020
Cash, cash equivalents and restricted cash at beginning of period	$	293,942	$	1,929
Operating activities:
Net income (loss)	47,509		(22,710)
Non-cash adjustments	(105,171)		5,461
Changes in working capital	(81,115)		3,123
Net cash used in operating activities	(138,777)		(14,126)
Net cash used in investing activities	(138,642)		(561)
Net cash provided by financing activities	39,755		14,504
Net change in cash, cash equivalents, and restricted cash	(237,664)		(183)
Cash, cash equivalents and restricted cash at end of period	$	56,278	$	1,746

Cash Flows used in Operating Activities

Net cash used in operating activities was approximately $138.8 million for the nine months ended September 30, 2021. Significant cash outflows include changes in operating assets and liabilities totaling approximately $81.1 million. These net cash outflows were primarily the result of cash outlays for our Supply Agreement prepayment, pre-paid expenses and inventory purchases as well as an increase in our accounts receivable balance. Cash outflows for prepaid expenses consisted primarily of payments for higher insurance coverage due to company growth and associated with being a publicly traded company and prepayments for inventory to secure supply of certain key materials and to avoid supply scarcity. The aforementioned cash outflows were offset by increases in accounts payable and accrued expenses of $12.4 million.

Significant non-cash items included in net income which affected operating activities include, adjustments for stock-based compensation, non-cash equity-method loss, inventory write downs, the gain on extinguishment of our PPP Loan and the change in fair value of our Public and Private Placement Warrants.

For the nine months ended September 30, 2020, net cash used in operating activities was approximately $14.1 million. Cash inflows resulting from changes in operating assets and liabilities totaling approximately $3.1 million, were offset by our loss after adjustment for non-cash items, which approximated $17.2 million.

Cash Flows used in Investing Activities

For the nine months ended September 30, 2021, net cash used in investing activities was approximately $138.6 million and was primarily related to $309.0 million used to purchase investments, our contribution of $4.0 million to the BorgWarner JV to fund operating activities, and $5.0 million for capital expenditures. Cash used for investing activities was partially offset by $179.3 million provided from sales and maturities of investments.

For the nine months ended September 30, 2020, net cash used in investing activities was approximately $0.6 million, primarily driven by our capital expenditures for property and equipment.

Cash Flows from Financing Activities

For the nine months ended September 30, 2021, net cash provided by financing activities of approximately $39.8 million was related to $40.1 million of proceeds from the exercise of stock options and warrants, offset by principal payments for finance leases and the redemption of our Public Warrants.

For the nine months ended September 30, 2020, net cash provided by financing activities of approximately $14.5 million was primarily reflective of approximately $6.4 million from the issuance of convertible and term notes, $5.0 million from the issuance of common stock, and $3.3 million from a PPP Loan, offset by principal payments for finance leases.

Contractual Obligations and Commitments

For the nine months ended September 30, 2021, there have been no material changes to our significant contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, except as described above in the section titled “Liquidity Requirements”.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP. These principles require us to make certain estimates and assumptions. These estimates and assumptions ~~that~~ affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities ~~at the date~~as of the ~~financial statements, and income~~balance sheet date, as well as reported amounts of revenue and expenses during the ~~periods reported.~~reporting period. Our most significant estimates and judgments involve our equity method investments, revenue recognition, equity valuations, public and private placement warrants, and inventory. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could ~~materially~~ differ from those estimates. ~~The Company has identified~~

There have been no substantial changes to these estimates, or the ~~following as its critical accounting policies:~~

~~Fair Value~~policies related to them during the nine months ended September 30, 2021. For a full discussion of these estimates and policies, see “Management’s Discussion and Analysis of Financial ~~Instruments~~

~~Fair value measurements are based~~Condition and Results of Operations - Critical Accounting Policies” in Item 7 of our Annual Report on Form 10-K for the premise that fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the following three-tier fair value hierarchy has been used in determining the inputs used in measuring fair value:

year ended December 31, 2020.

~~Level 1~~

Recent Accounting Pronouncements

See Note 2 –~~Quoted prices in active markets for identical assets or liabilities on the reporting date.~~

~~Level 2~~–Pricing inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable Summary of Significant Accounting Policies included in the ~~market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.~~

~~Level 3~~–Pricing inputs are generally unobservable and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require management’s judgment or estimation of assumptions that market participants would use in pricing the assets or liabilities. The fair values are therefore determined using factors that involve considerable judgment and interpretations, including but not limitedNotes to ~~private and public comparables, third-party appraisals, discounted cash flow models, and fund manager estimates.~~

As of September 30, 2020 and December 31, 2019, the recorded values of cash and restricted cash equivalents held in the Trust Account, prepaid expenses, accounts payable, and accrued expenses approximate the fair values due to the short-term nature of the instruments.

our Condensed Consolidated Financial Statements included herein.

~~Class A Common Stock Subject to Possible Redemption~~

Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A common stock are classified as stockholders’ equity. Our Class A common stock feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at September 30, 2020 and December 31, 2019, 22,073,865 and 22,061,272 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.

~~Net Income Per Common Stock~~

Net income per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. We have not considered the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of 12,266,666 Class A common stock in the calculation of diluted earnings per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted earnings per ordinary share is the same as basic earnings per ordinary share for the periods presented.

Our statements of operations include a presentation of income per share for common stock subject to redemption in a manner similar to the two-class method of income per share. Net income per common stock, basic and diluted for Class A common stock is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of Class A common stock outstanding for the period. Net loss per common stock, basic and diluted for Class B common stock is calculated by dividing the net income, less income attributable to Class A common stock and any working capital loans, by the weighted average number of Class B common stock outstanding for the periods presented.

~~Offering Costs~~

~~JOBS Act~~

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected to irrevocably opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time public companies adopt the new or revised standard. This may make comparison of our financial statements with another emerging growth company that has not opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the

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audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.

Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk~~

Risk.

We are a smaller reporting company, as defined by Rule ~~12b-2~~12b 2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not required to provide the information ~~otherwise~~ required under this item.

Item 4. Controls and ~~Procedures~~

Procedures.

Evaluation of Disclosure Controls and Procedures

~~Under the supervision and~~

Our management, with the participation of our ~~management, including our principal executive officer~~Chief Executive Officer and ~~principal financial and accounting officer, we conducted an evaluation~~Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report, the effectiveness of our disclosure controls and procedures ~~as of the end of the fiscal quarter ended September 30, 2020, as such term is~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange ~~Act.~~Act of 1934, as amended, or the Exchange Act). Based on ~~this~~that evaluation, our Chief Executive Officer and Chief Financial Officer ~~have~~ concluded that ~~during the period covered by this report,~~ our disclosure controls and procedures were ~~effective.~~

~~Disclosure~~not effective at the reasonable assurance level as of September 30, 2021.

In designing and evaluating the disclosure controls and procedures, management recognized that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company will be detected.

Material Weakness Remediation Plan

As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, we determined that we had material weaknesses in our internal control over financial reporting. These material weaknesses related to (i) inadequate segregation of duties, including review and approval of journal entries; and (ii) lack of sufficient technical accounting resources.

We are ~~designed~~focusing on the design and implementation of processes and procedures to ~~ensure~~improve our internal control over financial reporting and to remediate our material weaknesses. We have already expanded our governance and risk management leadership by hiring a Chief Financial Officer and a Chief Accounting Officer and engaged a reputable accounting advisory firm to assist with the documentation, evaluation, remediation, and testing of our internal control over financial reporting. Our additional planned activities include:

•designing and implementing additional review procedures to include more comprehensive documentation and formalization of internal control operations;

•recruiting additional personnel, in addition to utilizing a third-party accounting advisory firm, to more effectively segregate key functions within our business and financial reporting processes;

•designing and implementing information technology general controls and business process application controls in our financial system to support our information processing objectives; and

•enhancing our financial system security role definition and implementing workflow controls, to improve the reliability of our systems process and related reporting.

The actions that ~~information~~we are taking are subject to ongoing senior management review, as well as audit committee oversight. We will not be able to conclude whether the steps we are taking will fully remediate the material weaknesses until we have completed our validation and testing of the design and operating effectiveness of the internal controls and that they have been in place for a sufficient period. We may also conclude that additional measures may be required to ~~be disclosed by us~~remediate the material weaknesses in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principalinternal control over financial ~~officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.~~

reporting.

Changes in Internal Control over Financial Reporting

~~There~~

We are taking actions to remediate the material weaknesses relating to our internal control over financial reporting, as described above. Except as otherwise described herein, there was no change in our internal control over financial reporting that occurred during the ~~fiscal quarter ended September 30, 2020~~period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART ~~II—~~II. OTHER INFORMATION

Item 1. Legal ~~Proceedings~~

~~None.~~

Proceedings.

See Note 15 - Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements contained within this Quarterly Report for a discussion of our legal proceedings.

Item 1A. Risk ~~Factors~~

~~The significant~~Factors.

In evaluating us and our common stock, we urge you to carefully consider the risks and other information in this Quarterly Report, as well as the risk factors disclosed in Item 1A. to Part I of the Form 10-K, and other reports that we have filed with the SEC. Any of the risks discussed in such reports, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our ~~business,~~results of operations, financial condition or prospects. During the period covered by this Quarterly Report, there have been no material changes in our risk factors as previously disclosed except the following.

We may need to raise additional funds and these funds may not be available to us when we need them. If we cannot raise additional funds when we need them, our business, prospects, financial condition and operating results could be negatively affected.

As a company still in the early stages of growth, we are ~~described in~~consuming cash on a net basis and may need to raise additional capital to fund our ~~Annual Report~~ongoing operations, continue research, development and design efforts, and improve infrastructure. In addition, as previously disclosed, on ~~Form 10-K filed with the SEC on March 16, 2020 and our Quarterly Report on Form 10-Q filed with the SEC on August 6, 2020~~October 25, 2021, BorgWarner elected to exercise a right under the ~~sections entitled Forward-Looking Statements~~Operating Agreement to put its 60% ownership stake in the JV to the Company. Pursuant to the terms of the Operating Agreement, upon exercise of a party’s put right, the Company and ~~Risk Factors.~~

BorgWarner are required to select a nationally recognized valuation firm to determine the market value of the JV as of the date the put is exercised using comparable company, discounted cash flow and other standard methodologies used to value companies (the “Joint Venture Valuation”). We will be required to pay BorgWarner 95% of the market value of its stake of the JV based upon the Joint Venture Valuation. The parties will be obligated to consummate Romeo’s purchase of BorgWarner’s ownership stake in the Joint Venture within 30 days of the Joint Venture Valuation being determined.

As of September 30, 2021, our cash, cash equivalents and available-for-sale investments were approximately $181.1 million. Although we currently are unable to estimate the range of prices we may need to pay to purchase BorgWarner’s ownership stake in the JV, we may need to raise additional funds in order to satisfy such obligation, fund our ongoing operations, continue research, development and design efforts, and improve infrastructure. To be prepared to continue funding the various key initiatives supporting growth of the business, we are assessing various options associated with our capital structure and may seek additional capital over the next several months. We cannot be certain that additional funds will be available to us on favorable terms when required, or at all. If we cannot raise additional funds when we need them, our financial condition, results of operations, business and prospects could be materially adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds from Registered Securities~~

~~None.~~

Proceeds.

There were no sales of unregistered securities during the quarter that were not previously reported on a Current Report on Form 8-K

Item 3. Defaults Upon Senior ~~Securities~~

Securities.

None.

Item 4. Mine Safety ~~Disclosures~~

~~None.~~

Disclosures.

Not applicable.

Item 5. Other ~~Information~~

~~None.~~

Information.

As disclosed in Note 1 – Immaterial Correction of Previously Issued Consolidated Financial Statements of the Notes to the Condensed Consolidated Financial Statements contained within this Quarterly Report, during the quarter ended September 30,

2021, we identified a misstatement in our accounting for stock-based compensation expense. We have determined, based on consideration of quantitative and qualitative factors, that the error had an immaterial impact on our previously issued consolidated financial statements. As such, we have corrected the accounting for stock-based compensation expense in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.The following tables provide the impact of the correction on our previously issued consolidated financial statements.

Immaterial Correction of 2020 Form 10-K:


Consolidated Balance Sheets	As of December 31, 2020

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)








Additional paid-in capital	$	373,129	$	4,124	$	377,253
Accumulated deficit	(177,443)		(4,124)		(181,567)


Consolidated Statements of Operations	For the Year Ended December 31, 2020

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands, except share and per share data)



Selling, general and administrative expenses	$	17,338	$	4,124	$	21,462
Total operating expenses	25,333		4,124		29,457
Operating loss	(34,324)		(4,124)		(38,448)
Loss before income taxes and loss in equity method investments	(5,135)		(4,124)		(9,259)
Net loss	(7,617)		(4,124)		(11,741)

Net loss per share
Basic	$	(0.10)	$	(0.05)	$	(0.15)
Diluted	(0.10)		(0.05)		(0.15)


Consolidated Statement of Stockholders’ Equity	For the Year Ended December 31, 2020

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)
Stock-based compensation	$	3,567	$	4,124	$	7,691
Additional paid-in capital, Balance - December 31, 2020	373,129		4,124		377,253

Net Loss	(7,617)		(4,124)		(11,741)
Accumulated deficit, Balance - December 31, 2020	(177,443)		(4,124)		(181,567)


Consolidated Statement of Cash Flows	For the Year Ended December 31, 2020

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)
Cash flows from operating activities:
Net Loss	$	(7,617)	$	(4,124)	$	(11,741)
Adjustments to reconcile net loss to net cash used for operating activities:
Stock-based compensation	3,567		4,124		7,691

Immaterial Correction of 2021 First Quarter Form 10-Q:


Condensed Consolidated Balance Sheets	As of March 31, 2021

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)
Additional paid-in capital	$	416,308	$	2,027	$	418,335
Accumulated deficit	(87,431)		(2,027)		(89,458)


Consolidated Balance Sheets	As of December 31, 2020

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)








Additional paid-in capital	$	373,129	$	4,124	$	377,253
Accumulated deficit	(177,443)		(4,124)		(181,567)


Condensed Consolidated Statements of Operations	For the Three Months Ended March 31, 2021

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands except share and per share data)



Selling, general and administrative expenses	$	17,999	$	(2,097)	$	15,902
Total operating expenses	21,770		(2,097)		19,673
Operating loss	(25,543)		2,097		(23,446)
Income before income taxes and loss in equity method investments	90,665		2,097		92,762
Net Income	90,012		2,097		92,109

Net income per share
Basic	$	0.70	$	0.02	$	0.72
Diluted	0.66		0.02		0.68
Weighted average number of shares outstanding

Diluted	135,812,697		78,022		135,890,719


Condensed Consolidated Statement of Stockholders’ Equity	For the Three Months Ended March 31, 2021

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)
Additional paid-in capital - December 31, 2020	$	373,129	$	4,124	$	377,253
Stock-based compensation	6,553		(2,097)		4,456
Additional paid-in capital, Balance - March 31, 2021	416,308		2,027		418,335
Accumulated deficit - December 31, 2020	(177,443)		(4,124)		(181,567)
Net income	90,012		2,097		92,109
Accumulated deficit, Balance - March 31, 2021	(87,431)		(2,027)		(89,458)


Condensed Consolidated Statement of Cash Flows	For the Three Months Ended March 31, 2021

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)
Cash flows from operating activities:
Net income	$	90,012	$	2,097	$	92,109
Adjustments to reconcile net income to net cash used for operating activities:
Stock-based compensation	6,553		(2,097)		4,456

Immaterial Correction of 2021 Second Quarter Form 10-Q:


Consolidated Balance Sheets	As of December 31, 2020

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)








Additional paid-in capital	$	373,129	$	4,124	$	377,253
Accumulated deficit	(177,443)		(4,124)		(181,567)


Condensed Consolidated Statements of Operations	For the Three Months Ended June 30, 2021

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands except share and per share data)
Selling, general and administrative expenses	$	22,911	$	(2,027)	$	20,884
Total operating expenses	24,703		(2,027)		22,676
Operating loss	(29,722)		2,027		(27,695)

Loss before income taxes and loss in equity method investments	(28,111)		2,027		(26,084)
Net loss	(28,674)		2,027		(26,647)

Net loss per share
Basic	$	(0.22)	$	0.02	$	(0.20)
Diluted	(0.22)		0.02		(0.20)


Condensed Consolidated Statements of Operations	For the Six Months Ended June 30, 2021

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands except share and per share data)



Selling, general and administrative expenses	$	40,910	$	(4,124)	$	36,786
Total operating expenses	46,473		(4,124)		42,349
Operating loss	(55,265)		4,124		(51,141)

Income before income taxes and loss in equity method investments	62,554		4,124		66,678
Net income	61,338		4,124		65,462

Net income per share
Basic	$	0.47	$	0.03	$	0.50
Diluted	0.45		0.03		0.48
Weighted average number of shares outstanding

Diluted	135,021,296		62,531		135,083,827


Condensed Consolidated Statement of Stockholders’ Equity	For the Three Months Ended June 30, 2021

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)
Additional paid-in capital, Balance - March 31, 2021	$	416,308	$	2,027	$	418,335
Stock-based compensation	8,189		(2,027)		6,162
Accumulated deficit, Balance - March 31, 2021	(87,431)		(2,027)		(89,458)
Net loss	(28,674)		2,027		(26,647)


Condensed Consolidated Statement of Stockholders’ Equity	For the Six Months Ended June 30, 2021

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)
Additional paid-in capital - December 31, 2020	$	373,129	$	4,124	$	377,253
Stock-based compensation	14,742		(4,124)		10,618
Accumulated deficit - December 31, 2020	(177,443)		(4,124)		(181,567)
Net income	61,338		4,124		65,462


Condensed Consolidated Statement of Cash Flows	For the Six Months Ended June 30, 2021

	As Reported		Stock-based Compensation Adjustment		As Corrected
	(In thousands)
Cash flows from operating activities:
Net income	$	61,338	$	4,124	$	65,462
Adjustments to reconcile net income to net cash used for operating activities:
Stock-based compensation	14,742		(4,124)		10,618

~~Table of Contents~~

Item 6. Exhibits.

Exhibit
~~Number~~

No.

Description

Incorporation by Reference

10.1#

Executive Employment Agreement, dated August 5, 2021, by and between Romeo Power, Inc. and Susan Brennan.

Exhibit 10.1 to the Form 8-K filed on August 6, 2021

~~2.1~~

10.2#

Consulting Agreement, dated August 5, 2021, by and ~~Plan of Merger, dated as of October 5, 2020,~~between Romeo Power, Inc. and Lionel E. Selwood, Jr.

Exhibit 10.2 to the Form 8-K filed on August 6, 2021

10.3*

Supplemental Agreement, effective August 10, 2021, by and among ~~RMG Acquisition Corp., RMG Merger Sub,~~Romeo Power, Inc. and ~~Romeo Systems, Inc. (incorporated by reference to Exhibit 2.1 to RMG Acquisition Corp.’s Current Report on Form 8-K (File No. 001-38795) filed with the SEC on October 5, 2020).~~LG Energy Solution, Ltd.

~~10.1~~

~~Form of Subscription Agreement (incorporated by Reference to~~ Exhibit 10.1 to ~~RMG Acquisition Corp.’s Current Report on~~the Form 8-K ~~(File No. 001-38795)~~ filed ~~with the SEC~~ on ~~October 5, 2020).~~August 13, 2021

10.4#

Romeo Power, Inc. Executive Severance and Change in Control Plan, effective August 30, 2021.

Exhibit 10.1 to the Form 8-K filed on September 3, 2021

~~31.1~~

10.5

Single-Tenant Commercial Lease, effective October 1, 2021, by and between Romeo Power, Inc. and Warland Investments Company.

Filed herewith

31.1

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

Filed herewith

31.2

Certification of the Principal Financial Officer required by Rule 13a 14(a) or Rule 15d 14(a), as adopted pursuant to Section 302 of the Sarbanes Oxley Act of 2002

Filed herewith

32.1

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

Furnished herewith

32.2

Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Furnished herewith

101.INS

Inline XBRL Instance Document ~~- the~~(the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL ~~document~~document)

101.SCH

~~101.SCH~~

Inline XBRL Taxonomy Extension Schema Document

101.CAL

~~101.CAL~~

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

~~101.DEF~~

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

~~101.LAB~~

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

~~101.PRE~~

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

~~104~~

Cover ~~Page~~page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

# Indicates a management contract or compensatory plan

* Pursuant to Item 601(b)(10) of Regulation S-K, certain confidential portions of this exhibit were omitted by means of marking

such portions with an asterisk because the Company customarily and actually treats the information contained in such portions

as private or confidential and such information is not material.

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of ~~Section 13 or 15(d) of~~ the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ROMEO POWER, INC.


~~Date: November 9, 2020~~ By:			~~RMG Acquisition Corp.~~ /s/ Susan S. Brennan
				Susan S. Brennan
			~~By:~~	~~/s/ Robert S. Mancini~~
	~~Name:~~	~~Robert S. Mancini~~
	~~Title:~~	President and Chief Executive Officer
				(Principal Executive Officer)

By:			/s/ Kerry A. Shiba
			Kerry A. Shiba
			Chief Financial Officer and Treasurer
			(Principal Financial Officer)

Date: November 15, 2021


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	RMO	New York Stock Exchange


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


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒


	September 30, 2020		December 31, 2019
		(unaudited)

Assets:
Current assets:
Cash	$	315,502	$	1,175,207
Prepaid expenses and other assets		144,188		176,403
Total current assets		459,690		1,351,610
Restricted cash equivalents held in Trust Account		234,179,516		233,232,730
Total Assets	$	234,639,206	$	234,584,340

Liabilities, Redeemable Class A Common Stock and Stockholders’ Equity:
Current liabilities:
Accounts payable	$	6,490	$	133,562
Accrued expenses		202,344		50,000
Franchise tax payable		150,050		200,000
Income tax payable		—		88,057
Total current liabilities		358,884		471,619
Deferred legal fees		450,000		450,000
Deferred underwriting commissions		8,050,000		8,050,000
Note payable		41,666		—
Total liabilities		8,900,550		8,971,619

Commitments and contingencies
Class A common stock, $0.0001 par value; 22,073,865 and 22,061,272 shares subject to possible redemption at $10 per share at September 30, 2020 and December 31, 2019, respectively		220,738,650		220,612,720

Stockholders’ Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued and outstanding		—		—
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; 926,135 and 938,728 shares issued and outstanding (excluding 22,073,865 and 22,061,272 shares subject to possible redemption) at September 30, 2020 and December 31, 2019, respectively		93		94
Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,750,000 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		575		575
Additional paid-in capital		7,326,942		4,749,168
Retained earnings (Accumulated deficit)		(2,327,604)		250,164
Total stockholders’ equity		5,000,006		5,000,001
Total Liabilities, Redeemable Class A Common Stock and Stockholders’ Equity	$	234,639,206	$	234,584,340


	September 30, 2021		December 31, 2020
Assets

Current assets
Cash and cash equivalents	$	53,278	$	292,442
Investments	127,798		—
Accounts receivable, net of allowance for expected credit loss of $117 and $238 at September 30, 2021 and December 31, 2020, respectively	2,623		841
Inventories, net	15,256		4,937
Insurance receivable	6,000		6,000
Deferred costs	88		—
Prepaid inventories	11,891		493
Prepaid expenses and other current assets	4,893		776
Total current assets	221,827		305,489
Restricted cash	3,000		1,500
Property, plant and equipment, net	10,618		5,484
Equity method investments	37,183		35,000
Operating lease right-of-use assets	5,287		5,469
Deferred assets	5,018		—
Prepayment - long-term supply agreement	64,703		—
Other noncurrent assets	2,807		3,100
Total assets	$	350,443	$	356,042

Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	10,287	$	2,900
Accrued expenses	9,595		2,844
Contract liabilities	709		815
Current maturities of long-term debt	10		2,260
Operating lease liabilities, current	855		853
Legal settlement payable	6,000		6,000
Other current liabilities	1,120		384
Total current liabilities	28,576		16,056
Long-term debt, net of current portion	32		1,082
Public and private placement warrants	3,718		138,466
Operating lease liabilities, net of current portion	4,533		4,723
Other noncurrent liabilities	—		17
Total liabilities	36,859		160,344
Commitments and contingencies (Note 15)	0		0

Stockholders’ equity
Preferred stock ($0.0001 par value, 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and December 31, 2020)	—		—
Common stock ($0.0001 par value, 250,000,000 shares authorized, 134,096,818 and 126,911,861 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively)	13		12
Additional paid-in capital	447,684		377,253
Accumulated other comprehensive loss	(55)		—
Accumulated deficit	(134,058)		(181,567)
Total stockholders’ equity	313,584		195,698
Total liabilities and stockholders’ equity	$	350,443	$	356,042


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
General and administrative expenses	$	589,274	$	210,806	$	1,049,053	$	668,222
Franchise tax expense		50,000		50,000		150,169		150,000
Loss from operations		(639,274)		(260,806)		(1,199,222)		(818,222)
Interest income		13		8,839		1,111		22,725
Interest earned on restricted cash equivalents held in Trust Account		28,551		—		1,153,171		—
Gain on marketable securities (net), and dividends held in Trust Account		—		1,142,497		—		3,299,930
Interest expense		(104)		—		(104)		—
(Loss) income before income tax expense (benefit)		(610,814)		890,530		(45,044)		2,504,433
Income tax expense (benefit)		(119,129)		232,380		(170,979)		668,514
Net (loss) income	$	(491,685)	$	658,150	$	125,935	$	1,835,919

Weighted average shares outstanding of Class A common stock		23,000,000		23,000,000		23,000,000		22,909,091
Basic and diluted net income per share, Class A	$	—	$	0.04	$	0.05	$	0.11
Weighted average shares outstanding of Class B common stock		5,750,000		5,750,000		5,750,000		5,750,000
Basic and diluted net loss per share, Class B	$	(0.10)	$	(0.04)	$	(0.18)	$	(0.11)


									Retained
	Common Stock								Earnings		Total
	Class A			Class B			Additional Paid-In		(Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit)		Equity
Balance - December 31, 2019	938,728	$	94	5,750,000	$	575	$	4,749,168	$	250,164	$	5,000,001
Class A common stock subject to possible redemption	(62,237)		(6)	—		—		1,463,719		(2,086,083)		(622,370)
Net income	—		—	—		—		—		622,375		622,375
Balance - March 31, 2020	876,491		88	5,750,000		575		6,212,887		(1,213,544)		5,000,006
Class A common stock subject to possible redemption	475		—	—		—		627,125		(622,375)		4,750
Net loss	—		—	—		—		—		(4,755)		(4,755)
Balance - June 30, 2020	876,966		88	5,750,000		575		6,840,012		(1,840,674)		5,000,001
Class A common stock subject to possible redemption	49,169		5	—		—		486,930		4,755		491,690
Net loss	—		—	—		—		—		(491,685)		(491,685)
Balance - September 30, 2020	926,135	$	93	5,750,000	$	575	$	7,326,942	$	(2,327,604)	$	5,000,006


	For the nine months ended
	September 30, 2020		September 30, 2019
Cash Flows from Operating Activities:
Net income	$	125,935	$	1,835,919
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Gain on marketable securities (net), and dividends held in Trust Account		—		(3,299,930)
Changes in operating assets and liabilities:
Prepaid expenses		115,187		(172,974)
Accounts payable		(127,072)		109,264
Accrued expenses		152,344		13,000
Due to related parties		—		(40,381)
Franchise tax payable		(49,950)		150,000
Income tax payable		(171,029)		591,258
Net cash provided by (used in) operating activities		45,415		(813,844)

Cash Flows from Investing Activities
Purchase of marketable securities held in Trust Account		—		(575,947,949)
Proceeds received from sales, redemptions and maturities of marketable securities held in Trust Account		—		346,951,000
Net cash provided by investing activities		—		(228,996,949)

Cash Flows from Financing Activities:
Proceeds received under loans from related parties		—		38,501
Repayment of amounts due to related parties		—		(113,501)
Proceeds from issuance of Class B common stock to anchor investors		—		2,313
Proceeds received from initial public offering, gross		—		230,000,000
Proceeds received from private placement		—		6,900,000
Proceeds received under PPP loan from Small Business Administration		41,666		—
Offering costs paid		—		(4,758,272)
Net cash provided by financing activities		41,666		232,069,041

Net increase in cash and cash equivalents		87,081		2,258,248

Cash - beginning of the period		234,407,937		37,044
Cash and restricted cash equivalents held in Trust Account - end of the period	$	234,495,018	$	2,295,292

Supplemental disclosure of noncash investing and financing activities:
Offering costs included in accrued expenses	$	—	$	100,000
Forfeiture of Class B common stock from Sponsor	$	—	$	58
Deferred underwriting commissions in connection with the initial public offering	$	—	$	8,050,000
Deferred legal fees in connection with the initial public offering	$	—	$	150,000
Reclassification of deferred offering costs to equity upon completion of the initial public offering	$	—	$	670,220
Value of common stock subject to possible redemption	$	125,930	$	220,312,550
Supplemental cash flow disclosure:
Cash paid for income taxes	$	—	$	77,257


September 30, 2020	Quoted Prices in
	Active		Significant Other		Significant Other
	Markets		Observable Inputs		Unobservable Inputs
Description	(Level 1)		(Level 2)		(Level 3)
Assets held in Trust:
U.S. Treasury Securities	$	—	$	—	$	—
Cash equivalents - money market funds		234,179,516		—		—
	$	234,179,516	$	—	$	—