UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~June~~September 30, 2023

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

For the transition period from to

Commission File No. 001-38823

HYLIION HOLDINGS CORP.

(Exact Name of Registrant as Specified in Its Charter)


Delaware						83-2538002
(State or Other Jurisdiction of Incorporation)						(IRS Employer Identification No.)

1202 BMC Drive, Suite 100, Cedar Park, TX						78613
(Address of Principal Executive Offices)						(Zip Code)

(833) 495-4466

(Registrant’s telephone number, including area code)

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


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

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

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

HYLN

The New York Stock Exchange

As of ~~July 28,~~October 31, 2023, ~~181,220,377~~182,789,454 shares of common stock, par value $0.0001 per share, were issued and outstanding.

Table of Contents

HYLIION HOLDINGS CORP.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~JUNE~~SEPTEMBER 30, 2023

TABLE OF CONTENTS

INDEX


		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1314
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2225
Item 4.	Controls and Procedures	2225

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	2326
Item 1A.	Risk Factors	2326
Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	2327
Item 3.	Defaults Upon Senior Securities	2327
Item 4.	Mine Safety Disclosures	2328
Item 5.	Other Information	2328
Item 6.	Exhibits	2329

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HYLIION HOLDINGS CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except share data)


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
		(Unaudited)					(Unaudited)
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	48,205	$	119,468	Cash and cash equivalents	$	28,600	$	119,468
Accounts receivable	Accounts receivable	804		1,136		Accounts receivable	140		1,136
Inventory	Inventory	892		74		Inventory	139		74
Prepaid expenses and other current assets	Prepaid expenses and other current assets	15,853		9,795		Prepaid expenses and other current assets	11,509		9,795
Short-term investments	Short-term investments	183,440		193,740		Short-term investments	153,625		193,740
Total current assets	Total current assets	249,194		324,213		Total current assets	194,013		324,213

Property and equipment, net	Property and equipment, net	8,942		5,606		Property and equipment, net	11,076		5,606
Operating lease right-of-use assets	Operating lease right-of-use assets	7,908		6,470		Operating lease right-of-use assets	7,494		6,470
Intangible assets, net	Intangible assets, net	237		200		Intangible assets, net	200		200
Other assets	Other assets	1,946		1,686		Other assets	2,038		1,686
Long-term investments	Long-term investments	122,694		108,568		Long-term investments	141,324		108,568
Total assets	Total assets	$	390,921	$	446,743	Total assets	$	356,145	$	446,743

Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	2,087	$	2,800	Accounts payable	$	3,507	$	2,800
Current portion of operating lease liabilities	Current portion of operating lease liabilities	768		347		Current portion of operating lease liabilities	807		347
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	15,581		11,535		Accrued expenses and other current liabilities	8,867		11,535
Total current liabilities	Total current liabilities	18,436		14,682		Total current liabilities	13,181		14,682

Operating lease liabilities, net of current portion	Operating lease liabilities, net of current portion	7,899		6,972		Operating lease liabilities, net of current portion	7,354		6,972
Other liabilities	Other liabilities	1,441		1,515		Other liabilities	1,248		1,515
Total liabilities	Total liabilities	27,776		23,169		Total liabilities	21,783		23,169

Commitments and contingencies (Note 10)
Commitments and contingencies (Note 11)						Commitments and contingencies (Note 11)

Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Common stock, $0.0001 par value; 250,000,000 shares authorized; 181,152,151 and 179,826,309 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		18		18
Common stock, $0.0001 par value; 250,000,000 shares authorized; 182,716,445 and 179,826,309 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively						Common stock, $0.0001 par value; 250,000,000 shares authorized; 182,716,445 and 179,826,309 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	18		18
Additional paid-in capital	Additional paid-in capital	401,439		397,810		Additional paid-in capital	402,978		397,810
(Accumulated deficit) retained earnings	(Accumulated deficit) retained earnings	(38,312)		25,746		(Accumulated deficit) retained earnings	(68,634)		25,746
Total stockholders’ equity	Total stockholders’ equity	363,145		423,574		Total stockholders’ equity	334,362		423,574
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	390,921	$	446,743	Total liabilities and stockholders’ equity	$	356,145	$	446,743

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

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HYLIION HOLDINGS CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar amounts in thousands, except share and per share data)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Revenues	Revenues									Revenues
Product sales and other	Product sales and other	$	266	$	172	$	576	$	512	Product sales and other	$	96	$	499	$	672	$	1,011
Total revenues	Total revenues	266		172		576		512		Total revenues	96		499		672		1,011
Cost of revenues	Cost of revenues									Cost of revenues
Product sales and other	Product sales and other	307		2,145		998		4,244		Product sales and other	677		2,916		1,675		7,160
Total cost of revenues	Total cost of revenues	307		2,145		998		4,244		Total cost of revenues	677		2,916		1,675		7,160
Gross loss	Gross loss	(41)		(1,973)		(422)		(3,732)		Gross loss	(581)		(2,417)		(1,003)		(6,149)
Operating expenses	Operating expenses									Operating expenses
Research and development	Research and development	27,439		20,057		48,357		35,865		Research and development	25,115		52,678		73,472		88,543
Selling, general and administrative	Selling, general and administrative	11,098		12,167		22,079		21,991		Selling, general and administrative	8,186		10,264		30,265		32,255
Total operating expenses	Total operating expenses	38,537		32,224		70,436		57,856		Total operating expenses	33,301		62,942		103,737		120,798
Loss from operations	Loss from operations	(38,578)		(34,197)		(70,858)		(61,588)		Loss from operations	(33,882)		(65,359)		(104,740)		(126,947)

Interest income	Interest income	3,349		855		6,811		1,140		Interest income	3,534		1,926		10,345		3,066
(Loss) gain on disposal of assets		(1)		(133)		1		(135)
Other income (expense), net		3		—		(12)		—
Gain (loss) on disposal of assets										Gain (loss) on disposal of assets	—		46		1		(89)
Other income, net										Other income, net	26		—		14		—
Net loss	Net loss	$	(35,227)	$	(33,475)	$	(64,058)	$	(60,583)	Net loss	$	(30,322)	$	(63,387)	$	(94,380)	$	(123,970)

Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.19)	$	(0.19)	$	(0.35)	$	(0.35)	Net loss per share, basic and diluted	$	(0.17)	$	(0.36)	$	(0.52)	$	(0.71)

Weighted-average shares outstanding, basic and diluted	Weighted-average shares outstanding, basic and diluted	180,966,908		173,897,517		180,544,821		173,741,910		Weighted-average shares outstanding, basic and diluted	181,641,060		174,345,022		180,914,250		173,945,156

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

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HYLIION HOLDINGS CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollar amounts in thousands, except share data)


		Six Months Ended June 30, 2023															Nine Months Ended September 30, 2023
		Common Stock			Additional Paid-In Capital				(Accumulated Deficit) Retained Earnings				Total Stockholders’ Equity				Common Stock							Additional Paid-In Capital		(Accumulated Deficit) Retained Earnings		Total Stockholders’ Equity
		Shares	Amount								Shares								Amount
Balance at December 31, 2022	Balance at December 31, 2022	179,826,309	$	18			$	397,810			$	25,746			$	423,574		Balance at December 31, 2022	179,826,309			$	18			$	397,810	$	25,746	$	423,574
Exercise of common stock options and vesting of restricted stock units, net	Exercise of common stock options and vesting of restricted stock units, net	869,263	—		(176)				—				(176)		Exercise of common stock options and vesting of restricted stock units, net		869,263			—				(176)		—		(176)
Share-based compensation	Share-based compensation	—	—		2,040				—				2,040		Share-based compensation		—			—				2,040		—		2,040
Net loss	Net loss	—	—		—				(28,831)				(28,831)		Net loss		—			—				—		(28,831)		(28,831)
Balance at March 31, 2023	Balance at March 31, 2023	180,695,572	18		399,674				(3,085)				396,607		Balance at March 31, 2023		180,695,572			18				399,674		(3,085)		396,607
Exercise of common stock options and vesting of restricted stock units, net	Exercise of common stock options and vesting of restricted stock units, net	456,579	—		44				—				44		Exercise of common stock options and vesting of restricted stock units, net		456,579			—				44		—		44
Share-based compensation	Share-based compensation	—	—		1,721				—				1,721		Share-based compensation		—			—				1,721		—		1,721
Net loss	Net loss	—	—		—				(35,227)				(35,227)		Net loss		—			—				—		(35,227)		(35,227)
Balance at June 30, 2023	Balance at June 30, 2023	181,152,151	$	18	$	401,439			$	(38,312)			$	363,145	Balance at June 30, 2023		181,152,151			18				401,439		(38,312)		363,145

Exercise of common stock options and vesting of restricted stock units, net															Exercise of common stock options and vesting of restricted stock units, net		1,564,294			—				130		—		130
Share-based compensation															Share-based compensation		—			—				1,409		—		1,409
Net loss															Net loss		—			—				—		(30,322)		(30,322)
Balance at September 30, 2023															Balance at September 30, 2023		182,716,445			$	18			$	402,978	$	(68,634)	$	334,362

		Six Months Ended June 30, 2022															Nine Months Ended September 30, 2022
		Common Stock			Additional Paid-In Capital				Retained Earnings				Total Stockholders’ Equity				Common Stock							Additional Paid-In Capital		Retained Earnings		Total Stockholders’ Equity
		Shares	Amount								Shares								Amount
Balance at December 31, 2021	Balance at December 31, 2021	173,468,979	$	17			$	374,795			$	179,103			$	553,915		Balance at December 31, 2021	173,468,979			$	17			$	374,795	$	179,103	$	553,915
Exercise of common stock options and vesting of restricted stock units, net	Exercise of common stock options and vesting of restricted stock units, net	336,155	—		(92)				—				(92)		Exercise of common stock options and vesting of restricted stock units, net		336,155			—				(92)		—		(92)
Share-based compensation	Share-based compensation	—	—		1,563				—				1,563		Share-based compensation		—			—				1,563		—		1,563
Net loss	Net loss	—	—		—				(27,108)				(27,108)		Net loss		—			—				—		(27,108)		(27,108)
Balance at March 31, 2022	Balance at March 31, 2022	173,805,134	17		376,266				151,995				528,278		Balance at March 31, 2022		173,805,134			17				376,266		151,995		528,278
Exercise of common stock options and vesting of restricted stock units, net	Exercise of common stock options and vesting of restricted stock units, net	193,834	—		15				—				15		Exercise of common stock options and vesting of restricted stock units, net		193,834			—				15		—		15
Share-based compensation	Share-based compensation	—	—		1,922				—				1,922		Share-based compensation		—			—				1,922		—		1,922
Net loss	Net loss	—	—		—				(33,475)				(33,475)		Net loss		—			—				—		(33,475)		(33,475)
Balance at June 30, 2022	Balance at June 30, 2022	173,998,968	$	17	$	378,203			$	118,520			$	496,740	Balance at June 30, 2022		173,998,968			17				378,203		118,520		496,740

Issuance of common stock for acquisition															Issuance of common stock for acquisition		5,500,000			1				16,114		—		16,115
Exercise of common stock options and vesting of restricted stock units, net															Exercise of common stock options and vesting of restricted stock units, net		146,905			—				(15)		—		(15)
Share-based compensation															Share-based compensation		—			—				1,783		—		1,783
Net loss															Net loss		—			—				—		(63,387)		(63,387)
Balance at September 30, 2022															Balance at September 30, 2022		179,645,873			$	18			$	396,085	$	55,133	$	451,236

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

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HYLIION HOLDINGS CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar amounts in thousands)


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net loss	Net loss	$	(64,058)	$	(60,583)	Net loss	$	(94,380)	$	(123,970)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	1,132		554		Depreciation and amortization	1,796		823
Amortization and accretion of investments, net	Amortization and accretion of investments, net	(789)		1,043		Amortization and accretion of investments, net	(1,821)		1,300
Noncash lease expense	Noncash lease expense	658		613		Noncash lease expense	1,072		922
Inventory write-down	Inventory write-down	231		3,313		Inventory write-down	992		5,634
(Gain) loss on disposal of assets	(Gain) loss on disposal of assets	(1)		135		(Gain) loss on disposal of assets	(1)		89
Share-based compensation	Share-based compensation	3,761		3,485		Share-based compensation	5,170		5,268

Acquired in-process research and development						Acquired in-process research and development	—		28,752
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	332		(44)		Accounts receivable	996		(824)
Inventory	Inventory	(1,049)		(3,375)		Inventory	(1,057)		(5,660)
Prepaid expenses and other assets	Prepaid expenses and other assets	(5,763)		595		Prepaid expenses and other assets	(1,200)		3,097
Accounts payable	Accounts payable	(713)		(4,794)		Accounts payable	555		(5,201)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	3,418		4,024		Accrued expenses and other liabilities	(3,295)		7,228
Operating lease liabilities	Operating lease liabilities	(748)		(537)		Operating lease liabilities	(1,254)		(900)
Net cash used in operating activities	Net cash used in operating activities	(63,589)		(55,571)		Net cash used in operating activities	(92,427)		(83,442)

Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Purchase of property and equipment and other	Purchase of property and equipment and other	(3,952)		(559)		Purchase of property and equipment and other	(6,755)		(2,621)
Proceeds from sale of property and equipment	Proceeds from sale of property and equipment	2		—		Proceeds from sale of property and equipment	2		33

Purchase of in-process research and development						Purchase of in-process research and development	—		(14,428)
Payments for security deposit, net	Payments for security deposit, net	(45)		—		Payments for security deposit, net	(45)		—
Purchase of investments	Purchase of investments	(99,193)		(106,797)		Purchase of investments	(170,197)		(160,116)
Proceeds from sale and maturity of investments	Proceeds from sale and maturity of investments	95,646		104,492		Proceeds from sale and maturity of investments	178,556		156,382
Net cash used in investing activities		(7,542)		(2,864)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	1,561		(20,750)

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities

Proceeds from exercise of common stock options	Proceeds from exercise of common stock options	84		54		Proceeds from exercise of common stock options	230		65
Taxes paid related to net share settlement of equity awards	Taxes paid related to net share settlement of equity awards	(216)		(131)		Taxes paid related to net share settlement of equity awards	(232)		(157)

Net cash used in financing activities	Net cash used in financing activities	(132)		(77)		Net cash used in financing activities	(2)		(92)

Net decrease in cash and cash equivalents and restricted cash	Net decrease in cash and cash equivalents and restricted cash	(71,263)		(58,512)		Net decrease in cash and cash equivalents and restricted cash	(90,868)		(104,284)
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	120,133		259,110		Cash and cash equivalents and restricted cash, beginning of period	120,133		259,110
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	$	48,870	$	200,598	Cash and cash equivalents and restricted cash, end of period	$	29,265	$	154,826

Supplemental disclosure of noncash investing and financing activities:	Supplemental disclosure of noncash investing and financing activities:					Supplemental disclosure of noncash investing and financing activities:

Common stock issued for purchase of assets						Common stock issued for purchase of assets	$	—	$	16,115
Acquisitions of property and equipment included in accounts payable and other	Acquisitions of property and equipment included in accounts payable and other	$	554	$	66	Acquisitions of property and equipment included in accounts payable and other	$	512	$	66
Right-of-use assets obtained in exchange for lease obligations	Right-of-use assets obtained in exchange for lease obligations	$	2,096	$	—	Right-of-use assets obtained in exchange for lease obligations	$	2,096	$	—

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

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HYLIION HOLDINGS CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except as separately indicated)

Note 1. Overview

Hyliion Holdings Corp. is a Delaware corporation headquartered in Cedar Park, ~~Texas.~~Texas, that designs and develops stationary power applications and electric powertrain systems. References to the “Company,” “Hyliion,” “we,” or “us” in this report refer to Hyliion Holdings Corp. and its ~~wholly-owned~~wholly owned subsidiary, unless expressly indicated or the context otherwise requires.

The Company designs and develops hybrid and fully electric powertrain systems for Class 8 semi-trucks, which modify semi-tractors into hybrid and range-extending electric vehicles, respectively. The Hypertruck ERXTM system utilizes an intelligent electric powertrain with advanced algorithms to optimize emissions performance and efficiency with no new infrastructure required. The Hypertruck ERX system enables fleets to reduce the cost of ownership while providing the ability to deliver net-negative carbon emissions when fueled by renewable natural gas, and operate fully electric when needed.

We have begun the build of our first production unit of the Hypertruck ERX system 12-liter variant as of mid-2023. Additionally, in 2022 the Company acquired new fuel agnostic capable generator technology with which it plans to develop and commercialize ~~as the Hypertruck KARNO system and~~ a ~~KARNO~~fuel-agnostic generator (the “KARNO generator”) to be used in stationary power applications. ~~Finally,~~The Company believes the ~~Company recently announced an agreement with Hyzon Motors USA Inc. (“Hyzon”)~~KARNO generator is well positioned to ~~jointly develop a prototype fuel cell powered vehicle, with limited research and development in~~address the ~~first phase.~~rising strain on electrical infrastructure, notably from electric vehicles.

The Company ~~is currently selling~~announced a strategic review of alternatives for its ~~hybrid~~electric powertrain business (the “Powertrain Business”) on October 10, 2023 citing lower than expected industry adoption of electric trucks, significant increases in component costs, changing regulatory requirements, and uncertainty about its ability to raise additional needed capital for ongoing investment in the business as reason for undertaking this strategic review. On November 7, 2023, our board of directors determined that the Company would discontinue operating the Powertrain Business. Hyliion intends to retain the technology of the Powertrain Business technology and will continue to explore potential sales or future use of both the technology and tangible assets from the Powertrain Business.

Note 2. Subsequent Events

On November 7, 2023, the board of directors (the “Board”) of the Company approved a strategic plan to wind down its Powertrain Business and preserve technology relating to the Powertrain Business, to better align its workforce with the Company’s future needs, and to reduce the Company’s operating costs (the “Plan”). As part of the Plan, the Company will continue to focus on commercialization of its KARNO generator technology. Following completion of the Plan, we no longer expect to recognize revenue on products not related to KARNO technology, including the Company’s Hypertruck ERX system ~~which utilizes intelligent electric drive axles with advanced algorithms~~(“Hypertruck ERX”) and ~~battery technology to optimize vehicle performance, enabling fleets to access an easy, efficient way to decrease fuel expenses, lower emissions and/or improve vehicle performance~~Hyliion Hybrid system (“Hybrid”).The Company is evaluating opportunities to monetize certain of the assets and technology relating to the Business, but no assurances can be provided that any such opportunities will be realized. The Company expects the wind-down to be completed by the end of the Company’s first quarter of fiscal year 2024. In connection with the Plan, the Company expects to incur total charges and expenses of approximately $18.4 million.

The Plan includes a reduction of the Company’s workforce by approximately 175 people, or 67%, with some expected to be provided transition packages that will provide for continued services through various dates of the Company’s fiscal year 2024. The Company expects the Plan will result in (i) charges consisting of approximately $1.4 million in employee severance and retention payments and $0.9 million in non-cash stock-based compensation expense related to vesting of share-based awards, and (ii) cash expenditures of approximately $13.9 million for contract terminations, with up to an additional $9.0 million depending on the outcome of supplier negotiations and other estimates and uncertainties.

The Company expects the majority of the charges and expenses related to the Plan to be incurred in the Company’s fourth quarter of fiscal year 2023.

The above estimates of the cash expenditures and charges that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions and actual amounts may differ materially from estimates. For example, potential employee reductions are subject to legal requirements, which may extend the reduction process beyond that expected in certain cases. In addition, the Company may incur other cash expenditures or charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Plan or otherwise.

Note 2.3. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Hyliion Holdings Corp. and its ~~wholly-owned~~wholly owned subsidiary. Intercompany transactions and balances have been eliminated upon consolidation. The condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”), which permit reduced disclosure for interim periods. The condensed consolidated balance sheet at December 31, 2022 was derived from audited financial statements for the fiscal year then ended, but does not include all necessary disclosures required with respect to annual financial statements. In the opinion of the Company, these condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the

Company’s 2022 Annual Report. Results for interim periods are not necessarily indicative of the results to be expected for a full fiscal year or for any future period.

These condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company is an early-stage growth company and has generated negative cash flows from operating activities since inception. At ~~June~~September 30, 2023, the Company had total equity of ~~$363.1~~$334.4 million, inclusive of cash and cash equivalents of ~~$48.2~~$28.6 million and total investments of ~~$306.1~~$294.9 million. Based on this, the Company has sufficient funds to continue to execute its business strategy for the next twelve months from the issuance date of the financial statements included in this Quarterly Report on Form 10-Q.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of expenses during the reporting period. The Company’s most significant estimates and judgments involve revenue recognition, inventory, warranties, acquisitions, income taxes and valuation of share-based compensation. 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 differ from those estimates, and such differences could be material to the Company’s condensed consolidated financial statements.

Concentration of Supplier Risk

The Company is dependent on certain suppliers, the majority of which are single source suppliers, and the inability of these suppliers to deliver necessary components of the Company’s products in a timely manner at prices, quality levels and volumes

that are acceptable, or the Company’s inability to efficiently manage these components from these suppliers, could have a material adverse effect on the Company’s business, prospects, financial condition and operating results.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity date of 90 days or less at the time of purchase to be cash and cash equivalents only if in checking, savings or money market accounts. Cash and cash equivalents include cash held in banks and money market accounts and are carried at cost, which approximates fair value. The Company maintains cash in excess of federally insured limits at financial institutions which it believes are of high credit quality and has not incurred any losses related to these balances to date. The Company believes its credit risk, with respect to these financial institutions to be minimal.

Restricted Cash

The Company has provided its corporate headquarters lessor with a letter of credit for $0.7 million to secure the performance of the ~~Company's~~Company’s lease obligations, backed by a restricted cash deposit to pay any draws on the letter of credit by the lessor. Total cash and cash equivalents and restricted cash as presented in the condensed consolidated statements of cash flows is summarized as follows:


		June 30, 2023		December 31, 2022		June 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022		September 30, 2022		December 31, 2021
Cash and cash equivalents	Cash and cash equivalents	$	48,205	$	119,468	$	199,933	$	258,445	Cash and cash equivalents	$	28,600	$	119,468	$	154,161	$	258,445
Restricted cash included in other assets	Restricted cash included in other assets	665		665		665		665		Restricted cash included in other assets	665		665		665		665
		$	48,870	$	120,133	$	200,598	$	259,110		$	29,265	$	120,133	$	154,826	$	259,110

Accounts Receivable

Accounts receivable are stated at a gross invoice amount, net of an allowance for doubtful accounts. The allowance for doubtful accounts is maintained at a level considered adequate to provide for potential account losses on the balance based on the Company’s evaluation of the anticipated impact of current economic conditions, changes in the character and size of the balance, past and expected future loss experience and other pertinent factors. At ~~June~~September 30, 2023 and December 31, 2022, accounts receivable included amounts receivable from customers of ~~$0.3~~$0.1 million and $1.1 million, respectively. At ~~June~~September 30, 2023 and December 31, 2022, allowance for doubtful accounts on customer receivables was ~~$0.1 million~~nil and $0.1 million, respectively.

The portion of our net accounts receivable from significant customers is summarized as follows:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Customer A	Customer A	55	%	82	%	Customer A	100	%	82	%
Customer C	Customer C	—		12		Customer C	—		12
Customer G		24		—
Customer H		21		—
		100	%	94	%		100	%	94	%

Investments

The Company’s investments consist of corporate bonds, U.S. treasury and agency securities, state and local municipal bonds and commercial paper, all of which are classified as held-to-maturity, with a maturity date of 36-months or less at the time of purchase. The Company determines the appropriate classification of investments at the time of purchase and re-evaluates such designation as of each balance sheet date. Investments are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, along with interest, is included in interest income. The Company uses the specific identification method to determine the cost basis of securities sold.

Investments are impaired when a decline in fair value is judged to be other-than-temporary. The Company evaluates investments for impairment by considering the length of time and extent to which market value has been less than cost or amortized cost, the financial condition and near-term prospects of the issuer as well as specific events or circumstances that may influence the operations of the issuer and the Company’s intent to sell the security or the likelihood that it will be required to sell the security before recovery of the entire amortized cost. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to other income (expense) and a new cost basis in the investment is established.

Fair Value Measurements

ASC 820, Fair Value Measurements, clarifies 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 upon assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level I: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company can access at the measurement date;

Level II: Significant other observable inputs other than level I prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data; and

Level III: Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company believes its valuation methods are appropriate and consistent with other market participants, however the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The Company’s financial instruments consist of cash and cash equivalents and restricted cash, accounts receivable, investments, accounts payable and accrued expenses. The carrying value of cash and cash equivalents and restricted cash, accounts receivable, accounts payable and accrued expenses ~~approximates~~approximate fair value because of the short-term nature of those instruments. The fair value of investments ~~are~~is based on quoted prices for identical or similar instruments in markets that are not active. As a result, investments are classified within Level II of the fair value hierarchy.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including property and equipment and intangible assets with definite lives, for impairment whenever events or changes in circumstances indicate that an asset group’s carrying amount may not be recoverable. The Company conducts its long-lived asset impairment analysis in accordance with ASC 360-10, Impairment or

Disposal of Long-Lived Assets, which requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset group is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value.

The Company performed a test of recoverability of its long-lived assets and determined that all long-lived assets were recoverable as of September 30, 2023. As of September 30, 2023, long-lived assets associated with the powertrain business had a recorded amount of $4.2 million and associated probability-weighted estimated future cash flows of $4.4 million. If the Company is unable to sell long-lived assets associated with the powertrain business at a sufficient price, it will record associated impairment charges in future periods. Estimated future cash flows for all other long-lived assets substantially exceeded recorded amounts.

Revenue

The Company follows five steps to recognize revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers, which are:

•Step 1: Identify the contract(s) with a customer;

•Step 2: Identify the performance obligations in the contract;

•Step 3: Determine the transaction price;

•Step 4: Allocate the transaction price to the performance obligations in the contract; and

•Step 5: Recognize revenue when (or as) a performance obligation is satisfied.

Revenue is comprised of sales of Hybrid systems for Class 8 semi-trucks, Class 8 semi-trucks outfitted with Hybrid systems and specific other features and services that meet the definition of a performance obligation, including internet connectivity and data processing. We provide installation services for the Hybrid system onto the customers’ vehicle. The Company’s products are marketed and sold to end-user fleet customers in North America. When our contracts with customers contain multiple performance obligations and where material, the contract transaction price is allocated on a relative standalone selling price basis to each performance obligation.

We recognize revenue on Hybrid system sales and Class 8 semi-trucks outfitted with Hybrid systems upon delivery to, and acceptance of the vehicle by, the customer, which is when control transfers. Contracts are reviewed for significant financing components and payments are typically received within 30 days of delivery. The sale of a Hybrid system to an end-use fleet customer consists of a completed modification to the customer vehicle and the installation services involve significant integration of the Hybrid system with the customer’s vehicle. Installation services are not distinct within the context of the contract and together with the sale of the Hybrid system represent a single performance obligation. We do not offer any sales returns. Amounts billed to customers related to shipping and handling are classified as revenue, and we have elected to recognize the cost for freight and shipping when control has transferred to the customer as a cost of revenue. Our policy is to exclude taxes collected from customers from the transaction price of contracts. In the fourth quarter of fiscal 2021, we began

taking deposits to secure future Hypertruck ERX production slots. Such deposits were immaterial at ~~June~~September 30, 2023 and December 31, 2022.

When a Class 8 semi-truck with a Hybrid system upfit is sold to a customer, judgment is required to determine if we are the principal or agent in the arrangement. We consider factors such as, but not limited to, which entity has the primary responsibility for fulfilling the promise to provide the specified good or service, which entity has inventory risk before the specified good or service has been transferred to a customer and which entity has discretion in establishing the price for the specified good or service. We have determined that we are the principal in transactions involving the resale of Class 8 semi-trucks outfitted with the Hybrid system.

The disaggregation of our revenue sources is summarized as follows and is attributable to the U.S.:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Hybrid systems and other	Hybrid systems and other	$	266	$	172	$	320	$	512	Hybrid systems and other	$	96	$	243	$	416	$	755
Class 8 semi-truck prepared for Hybrid system upfit	Class 8 semi-truck prepared for Hybrid system upfit	—		—		256		—		Class 8 semi-truck prepared for Hybrid system upfit	—		256		256		256
Total product sales and other	Total product sales and other	$	266	$	172	$	576	$	512	Total product sales and other	$	96	$	499	$	672	$	1,011

The portion of our revenues from significant customers is summarized as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Customer A	Customer A	28	%	—	%	60	%	18	%	Customer A	94	%	69	%	65	%	43	%
Customer B	Customer B	—		61		—		35		Customer B	—		6		—		21
Customer D		—		—		—		17
Customer E		—		—		—		11
Customer G	Customer G	62		—		29		—		Customer G	—		—		25		—
		90	%	61	%	89	%	81	%		94	%	75	%	90	%	64	%

Warranties

We provide limited assurance-type warranties under our contracts and do not offer extended warranties or maintenance contracts. The warranty period typically extends for the lesser of two years or 200,000 miles following transfer of control and solely relates to correction of product defects during the warranty period. We recognize the cost of the warranty upon transfer of control based on estimated and historical claims rates and fulfillment costs, which are variable. Should product failure rates and fulfillment costs differ from these estimates, material revisions to the estimated warranty liability would be required. Warranty expense is recorded as a component of cost of revenue.

Research and Development Expense

Research and development costs did not meet the requirements to be recognized as an asset as the associated future benefits were at best uncertain and there was no alternative future use at the time the costs were incurred. Research and development costs include, but are not limited to, outsourced engineering services, allocated facilities costs, depreciation on equipment utilized in research and development activities, internal engineering and development expenses, materials, ~~internally-developed~~internally developed software and employee related expenses (including salaries, benefits, travel, and share-based compensation) related to development of the Company’s products and services.

Note 3.4. Investments

The amortized cost, unrealized gains and losses, fair value and maturities of our held-to-maturity investments at ~~June~~September 30, 2023 and December 31, 2022 are summarized as follows:


				Fair Value Measurements at June 30, 2023									Fair Value Measurements at September 30, 2023
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Commercial paper	Commercial paper	$	50,913	$	—	$	(81)	$	50,832	Commercial paper	$	51,420	$	—	$	(74)	$	51,346
U.S. government agency bonds	U.S. government agency bonds	17,691		—		(386)		17,305		U.S. government agency bonds	22,606		—		(356)		22,250
State and municipal bonds	State and municipal bonds	35,221		—		(259)		34,962		State and municipal bonds	15,221		—		(215)		15,006
Corporate bonds and notes	Corporate bonds and notes	202,309		1		(2,149)		200,161		Corporate bonds and notes	205,702		7		(1,705)		204,004
		$	306,134	$	1	$	(2,875)	$	303,260		$	294,949	$	7	$	(2,350)	$	292,606


			Fair Value Measurements at December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Commercial paper	$	36,675	$	2	$	(161)	$	36,516
U.S. government agency bonds	12,441		6		(328)		12,119
State and municipal bonds	40,104		28		(628)		39,504
Corporate bonds and notes	213,088		76		(3,344)		209,820
	$	302,308	$	112	$	(4,461)	$	297,959


		June 30, 2023				December 31, 2022					September 30, 2023				December 31, 2022
		Amortized Cost		Fair Value		Amortized Cost		Fair Value			Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	Due in one year or less	$	183,440	$	182,117	$	193,740	$	191,094	Due in one year or less	$	153,625	$	152,826	$	193,740	$	191,094
Due after one year through five years	Due after one year through five years	122,694		121,143		108,568		106,865		Due after one year through five years	141,324		139,780		108,568		106,865
		$	306,134	$	303,260	$	302,308	$	297,959		$	294,949	$	292,606	$	302,308	$	297,959

Note 4.5. Fair Value Measurements

The fair value measurements of our financial assets at ~~June~~September 30, 2023 and December 31, 2022 are summarized as follows:


		Fair Value Measurements at June 30, 2023									Fair Value Measurements at September 30, 2023
		Level I		Level II		Level III		Total			Level I		Level II		Level III		Total
Cash and cash equivalents	Cash and cash equivalents	$	48,205	$	—	$	—	$	48,205	Cash and cash equivalents	$	28,600	$	—	$	—	$	28,600
Restricted cash	Restricted cash	665		—		—		665		Restricted cash	665		—		—		665
Held-to-maturity investments:	Held-to-maturity investments:									Held-to-maturity investments:
Commercial paper	Commercial paper	—		50,832		—		50,832		Commercial paper	—		51,346		—		51,346
U.S. government agency bonds	U.S. government agency bonds	—		17,305		—		17,305		U.S. government agency bonds	—		22,250		—		22,250
State and municipal bonds	State and municipal bonds	—		34,962		—		34,962		State and municipal bonds	—		15,006		—		15,006
Corporate bonds and notes	Corporate bonds and notes	—		200,161		—		200,161		Corporate bonds and notes	—		204,004		—		204,004
		$	48,870	$	303,260	$	—	$	352,130		$	29,265	$	292,606	$	—	$	321,871

910


	Fair Value Measurements at December 31, 2022
	Level I		Level II		Level III		Total
Cash and cash equivalents	$	119,468	$	—	$	—	$	119,468
Restricted cash	665		—		—		665
Held-to-maturity investments:
Commercial paper	—		36,516		—		36,516
U.S. government agency bonds	—		12,119		—		12,119
State and municipal bonds	—		39,504		—		39,504
Corporate bonds and notes	—		209,820		—		209,820
	$	120,133	$	297,959	$	—	$	418,092

Note 5.6. Inventory

The carrying value of our inventory at ~~June~~September 30, 2023 and December 31, 2022 is summarized as follows:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Raw materials	Raw materials	$	761	$	—	Raw materials	$	—	$	—

Work in process						Work in process	47		—
Finished goods	Finished goods	131		74		Finished goods	92		74
		$	892	$	74		$	139	$	74

During the three and ~~six~~nine months ended ~~June~~September 30, 2023, we recorded inventory write-downs of ~~nil~~$0.8 million and ~~$0.2~~$1.0 million, respectively. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, we recorded inventory write-downs of ~~$2.0~~$2.3 million and ~~$3.3~~$5.6 million, respectively. These write-downs are included in cost of revenues.

Note 6.7. Property and Equipment, Net

Property and equipment, net at ~~June~~September 30, 2023 and December 31, 2022 is summarized as follows:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Production machinery and equipment	Production machinery and equipment	$	8,479	$	5,897	Production machinery and equipment	$	10,077	$	5,897
Vehicles	Vehicles	2,013		817		Vehicles	2,013		817
Leasehold improvements	Leasehold improvements	1,304		1,002		Leasehold improvements	2,124		1,002
Office furniture and fixtures	Office furniture and fixtures	223		162		Office furniture and fixtures	223		162
Computers and related equipment	Computers and related equipment	1,604		1,367		Computers and related equipment	1,947		1,367
		13,623		9,245			16,384		9,245
Less: accumulated depreciation	Less: accumulated depreciation	(4,681)		(3,639)		Less: accumulated depreciation	(5,308)		(3,639)
Total property and equipment, net	Total property and equipment, net	$	8,942	$	5,606	Total property and equipment, net	$	11,076	$	5,606

Note 7.8. Share-Based Compensation

During the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the Company granted ~~2.5~~2.2 million and ~~2.1~~2.2 million, respectively, restricted stock units which will vest over a period of one to three years, some of which include performance criteria based on the achievement of key Company milestones. During the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, 0.6 million and ~~0.5~~0.8 million,, respectively, of restricted stock units and options were forfeited. Share-based compensation expense for the three and ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$1.7~~$1.4 million and ~~$3.8~~$5.2 million, respectively. Share-based compensation expense for the three and ~~six~~nine months ended ~~June~~September 30, 2022 was ~~$1.9~~$1.8 million and ~~$3.5~~$5.3 million, respectively.

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Note 8.9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities at ~~June~~September 30, 2023 and December 31, 2022 are summarized as follows:


		June 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Accrued professional services and other	Accrued professional services and other	$	11,041	$	5,834	Accrued professional services and other	$	4,610	$	5,834
Accrued compensation and related benefits	Accrued compensation and related benefits	3,581		4,773		Accrued compensation and related benefits	3,448		4,773
Other accrued liabilities	Other accrued liabilities	959		928		Other accrued liabilities	809		928
		$	15,581	$	11,535		$	8,867	$	11,535

Note 9.10. Warranties

The change in warranty liability for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 is summarized as follows and included within accrued expenses and other current liabilities and other liabilities in the condensed consolidated balance sheets:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Balance at beginning of period	Balance at beginning of period	$	535	$	238	$	527	$	44	Balance at beginning of period	$	566	$	348	$	527	$	44
Accrual for warranties issued	Accrual for warranties issued	120		124		153		331		Accrual for warranties issued	65		186		218		517
Net changes in accrual related to pre-existing warranties	Net changes in accrual related to pre-existing warranties	(23)		9		(23)		—		Net changes in accrual related to pre-existing warranties	(131)		—		(154)		—
Warranty charges	Warranty charges	(66)		(23)		(91)		(27)		Warranty charges	(64)		(122)		(155)		(149)
Balance at end of period	Balance at end of period	$	566	$	348	$	566	$	348	Balance at end of period	$	436	$	412	$	436	$	412

Note ~~10.~~11. Commitments and Contingencies

Legal Proceedings

The Company is periodically involved in legal proceedings, legal actions and claims arising in the normal course of business, including proceedings relating to product liability, intellectual property, safety and health, employment and other matters. The Company believes that the outcome of such legal proceedings, legal actions and claims will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows.

Note ~~11.~~12. Net Loss Per Share

The computation of basic and diluted net loss per share for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 is summarized as follows (in thousands, except share and per share data):


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022			2023		2022		2023		2022
Numerator:	Numerator:									Numerator:
Net loss attributable to common stockholders	Net loss attributable to common stockholders	$	(35,227)	$	(33,475)	$	(64,058)	$	(60,583)	Net loss attributable to common stockholders	$	(30,322)	$	(63,387)	$	(94,380)	$	(123,970)

Denominator:	Denominator:									Denominator:
Weighted average shares outstanding, basic and diluted	Weighted average shares outstanding, basic and diluted	180,966,908		173,897,517		180,544,821		173,741,910		Weighted average shares outstanding, basic and diluted	181,641,060		174,345,022		180,914,250		173,945,156

Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.19)	$	(0.19)	$	(0.35)	$	(0.35)	Net loss per share, basic and diluted	$	(0.17)	$	(0.36)	$	(0.52)	$	(0.71)

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Potential common shares excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect for the three and ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 are summarized as follows:


		Three and Six Months Ended June 30,			Three and Nine Months Ended September 30,
		2023	2022		2023	2022
Unexercised stock options	Unexercised stock options	2,053,599	2,761,006	Unexercised stock options	683,090	2,682,228
Unvested restricted stock units*	Unvested restricted stock units*	4,063,027	4,154,423	Unvested restricted stock units*	3,976,223	3,808,665
		6,116,626	6,915,429		4,659,313	6,490,893

* Potential common shares from unvested restricted stock units for the periods ended ~~June~~September 30, 2023 and 2022 include ~~649,584~~653,334 and ~~1,361,667~~1,261,667 shares, respectively, where no accounting grant date has been established.

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

References to the “Company,” “Hyliion,” “we,” or “us” in this report refer to Hyliion Holdings Corp. and its wholly-owned subsidiary Hyliion Inc., unless expressly indicated or the context otherwise requires. The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this report and our audited consolidated financial statements and related notes thereto in our 2022 Annual Report.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form 10-Q”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q are forward-looking statements, including, but not limited to, statements regarding our strategy, prospects, plans, objectives, future operations, future revenue and earnings, projected margins and expenses, markets for our services, potential acquisitions or strategic alliances, financial position, and liquidity and anticipated cash needs and availability. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” variations of such words and similar expressions or the negatives thereof are intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These forward-looking statements represent our management’s expectations as of the date of this filing and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that results and events could differ materially and adversely from those contained in the forward-looking statements due to a number of risks and uncertainties including, but not limited to, those described in the section entitled “Risk Factors” included in our 2022 Annual Report on Form 10-K, this Quarterly Report on Form 10-Q, and in other documents we file from time to time with the U.S. Securities and Exchange Commission (the “Commission” or the “SEC”) that disclose risks and uncertainties that may affect our business. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report on Form 10-Q and in other documents we file from time to time with the Commission. Furthermore, such forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we do not undertake, and expressly disclaim any duty, to publicly update or revise these statements, whether as a result of new information, new developments, or otherwise and even if experience or future changes make it clear that any projected results expressed in this Quarterly Report on Form 10-Q or future quarterly reports, press releases or company statements will not be realized. Unless specifically indicated otherwise, the forward-looking statements in this Quarterly Report on Form 10-Q do not reflect the potential impact of any divestitures, mergers, acquisitions or other business combinations that have not been completed as of the date of this filing. In addition, the inclusion of any statement in this Quarterly Report on Form 10-Q does not constitute an admission by us that the events or circumstances described in such statement are material. We qualify all of our forward-looking statements by these cautionary statements. In addition, the industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors including those described in the section entitled “Risk Factors” included in our 2022 Annual Report on Form ~~10-K.~~10-K and in this Quarterly Report on Form 10-Q. These and other factors could cause our results to differ materially from those expressed in this Quarterly Report on Form 10-Q.

Overview

~~Our mission~~Hyliion is committed to creating innovative solutions that enable clean, flexible and affordable electricity production. The Company’s primary focus is to ~~be the leading provider of electrified solutions for~~provide distributed power generators that can operate on various fuel sources to future-proof against an ever-changing energy economy. Headquartered in Austin, Texas, and with research and development in Cincinnati, OH, Hyliion is addressing the commercial space first with a locally deployable generator that can offer prime power, peak shaving, and renewables matching. As the Company goes forward, it plans to scale its generator solution to also address household applications. This approach enables consumers to produce their own electricity while utilizing the grid as a backup source. Beyond stationary power, Hyliion will address mobile applications such as vehicles and marine. The KARNO generator is a fuel-agnostic solution, enabled by additive manufacturing, that leverages a linear heat generator architecture. The Company aims to offer innovative, yet practical solutions that contribute positively to the environment in the energy economy.

Strategic Business Developments

During the quarter, Hyliion offered the Hyliion Hybrid system (“Hybrid”), an electrified powertrain system that augments existing Class 8 semi-trucks to improve vehicle ~~industry as well as other industries. Our goal is~~performance or reduce fuel usage, depending on application. The Hybrid system can be installed on new vehicles prior to ~~reduce~~entering service, or retrofit onto existing in-service vehicles, allowing customers to use their preferred vehicle brands and maintain their existing fleet maintenance and operations strategies. The Company began selling the ~~carbon intensity and greenhouse gas (“GHG”) emissions~~Hybrid system in late 2021, with deployments to fleets in the transportation and logistics sector ~~by providing electrified solutions for Class 8 vehicles that aim to reduce the cost of operation while utilizing existing fueling infrastructure and allowing for the use of~~in a variety of ~~fuels. Our solutions help support our customers’ pursuit~~duty cycles, use cases, and geographical regions. The Company also continued development of sustainability and financial goals by reducing GHG emissions and operating costs. Our current products and products under development utilize control software, data analytics, battery systems, fully integrated electric motors, and power electronics to produce our electrified powertrain systems.

its Hypertruck ERX ~~System~~

~~Late in 2023 we plan to begin selling the Hypertruck ERX~~

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powertrain platform (“Hypertruck ~~ERX system”~~ERX”), ~~with estimated sales in the year of 30 units. The Hypertruck ERX system is~~ a complete electrified powertrain system leveraging an onboard ~~CNG-fueled~~compact-natural-gas-fueled generator to supplement battery range to transform an OEM platform into a ~~range-extended~~range extended electric ~~vehicle (“REEV”). The Hypertruck ERX system leverages~~vehicle.

Companies in the ~~experience~~truck electrification space (including Hyliion) have continued to face a number of challenges and ~~operating data from our Hybrid system to offer a solution to replace~~headwinds as they develop and scale the ~~traditional diesel or CNG powertrain installed in~~production of new ~~vehicles. Its onboard CNG generator functions~~clean vehicles, and as an electric range-extender, addressing the market need of having a fully electric drive truck that can travel long distance between refuels as there is not yet a national reliable electric recharging network for battery electriccustomers employ these vehicles ~~(“BEV”) do. The system’s batteries are recharged by the onboard CNG generator, which when fueled by renewable natural gas (“RNG”), can offer commercial vehicle owners a reduction~~ in their ~~GHG emissions and potentially~~fleets. For Hyliion, these challenges have included, among others, a ~~net-carbon-negative-capable electrified powertrain option.~~

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We believe CNG/RNG is the appropriate fuel source today, as it is cleaner and less expensive than diesel and broadly available. Over time, other fuels are expected to become available to reduce emissions, including hydrogen. Therefore, we have showcased a multistage roadmap that starts with utilizing a CNG/RNG generator and evolves into offering fuel-agnostic and hydrogen-based solutions. The control software driving the Hypertruck system is designed to be adaptable to different fuel and generator types in accordance with customer and regulatory requirements, thereby reducing future capital investment and time to market.

For long-haul trucking, an electric powertrain with a CNG-fueled range extender generator is preferable today to a pure BEV due to both the comparable cost of fuels and existing availability of CNG fueling infrastructure comparedslower-than-anticipated market transition to electric ~~battery charging infrastructure. Class 8 semi-trucks can currently be refueled with CNG through an existing, geographically diverse, public~~commercial truck fleets, escalating component and ~~truck-accessible network of natural gas refueling stations established across North America. Globally, RNG, CNG~~production costs and liquified natural gas (“LNG”) are also widely used for land-based transport and trucking. We believe there is a greater opportunity for more rapid adoption of our electrified powertrain solutions compared to pure electric solutions, because of the extended range available between refueling events and due to the greater availability of refueling infrastructure compared to other electrified solutions.

~~We plan to begin delivering trucks with the Hypertruck ERX system to customers inlate 2023 and our first application will be deployed on a Class 8 Peterbilt 579 sleeper semi-truck utilizing a 12-liter generator. The Cummins 12-liter~~delays, new California Air Resources Board (“CARB”) ~~certification will expire at~~mandates for fleet adoption of electric trucks, the ~~end of 2023. As a result, we have begun work on integrating a Cummins 15-liter generator, expected~~need to ~~be released in 2024, on~~reduce the next variant of the Hypertruck ERX system, which also includes cost-and-weight-saving design changes. We expect the Hypertruck ERX system with the 15-liter generator to be available in late 2024 or early 2025. We expect that the 12-liter variant of the Hypertruck ERX system will be able to be sold in all states except California in 2024.

~~We also announced during the second quarter that the next version~~cost and weight of the Hypertruck ERX platform, ~~will~~continued work by OEMs to de-content Tier 1 components that their Tier 1 suppliers are providing, and the expectation that the Company would be ~~a day cab model which is expected~~required to ~~be ready for commercialization in 2025. We have received broad customer interest in a day cab variant due~~raise substantial additional capital to address and overcome these challenges.

In light of these challenges to the ~~challenges fleets have experienced~~business and other considerations, the Company’s board of directors, with ~~plug-in electric day cab trucks, including cost, limited battery~~the support of its expert advisors, explored a range ~~and difficulty obtaining vehicle charging infrastructure. We have heard from fleets~~of strategic alternatives for its electrified powertrain systems business. At the conclusion of that strategic review following the ~~additional weight~~end of the quarter, the board of directors determined that discontinuing operating the electrified powertrain systems business and focusing exclusively on the development and commercialization of the Company’s fuel-agnostic KARNO generator technology would be the most effective use of the Company’s capital and in the best interests of the Company’s shareholders.

Hyliion intends to retain the powertrain technology enabling the Company to explore a sale or future use of the technology and the tangible assets from the powertrain division. Tangible assets include the first 30 Hypertruck ERX ~~sleeper variant will hinder its ability~~production trucks which Hyliion no longer plans to ~~operate in heavy-haul applications. Therefore, for the day cab variant, we are exploring ways to reduce battery~~recognize revenue on and ~~tank sizes to remove weight in addition to the weight savings of moving to a day cab.~~

~~Additionally, the CARB's recently-enacted Advanced Clean Fleets Regulation (“ACF”) includes earlier mandates as soon as 2027 for converting day cab trucks to cleaner alternatives including~~ the Hypertruck ~~ERX system.~~Fuel Cell prototype truck that Hyliion successfully completed in the third quarter of this year in collaboration with Hyzon Motors.

KARNO Generator System

In September 2022 we acquired assets including new hydrogen and fuel-agnostic-capable generator technology from General Electric ~~Company's~~Company’s GE Additive business (“KARNO generator”). The KARNO generator emerged out of GE’s long-running research and development investments in aerospace engines and metal additive manufacturing across multiple industries and in areas such as generator thermal and performance design. ~~Initial testing indicates~~We initially envisioned utilizing the KARNO generator as new range-extending power source for the Hypertruck powertrain system, given its ability to operate on a wide range of fuel sources, including natural gas and hydrogen. We now believe that the unique capabilities of the KARNO generator will also make it competitive in the stationary power market, competing favorably against conventional electrical generating systems and opening up potential new markets to enhance grid power availability and reliability. The KARNO generator technology, including the technology that was acquired from GE and the technology developed by Hyliion subsequent to the acquisition, is protected by numerous patents and trademarks which we believe provide Hyliion extensive and lasting protection for its intellectual property.

Benefits of the KARNO Generator Versus Conventional Competitors

We believe the versatility and operating characteristics of the KARNO generator make it an ideal system for a variety of conventional and emerging electrical generating applications. Key attributes of the KARNO generator distinguish it from its conventional generator counterparts, which may open new market opportunities:

•Generator Efficiency: The anticipated operating efficiency of the KARNO generator results in lower cost of electricity versus conventional generating systems and, in many markets, grid power.

•Low Maintenance: With only a single moving part per shaft, the simplicity of the KARNO generator is expected to ~~comply with emissions standards of CARB~~reduce both periodic maintenance expenses and ~~the U.S. Environmental Protection Agency (“EPA”), even when utilizing conventional fuels. The technology is also~~ expected overhaul costs.

•Fuel Agnostic: While many traditional generators operate on a single fuel source or require system modification to achieve ~~a meaningful efficiency improvement over today’s conventional internal combustion engine (“ICE”) generators and could be more efficient than most available~~ fuel ~~cells. We expect these efficiency improvements to in turn enable fuel cost reductions and improved vehicle range while reducing operating costs.~~

The technology should also provide for significant reductions in maintenance costs, noise and vibration compared to conventional ICE generators due to its unique design and single moving part per generator shaft. Theflexibility, the KARNO generator is ~~expected~~truly fuel-agnostic, and can switch between fuel choices during operation.

•Low Noise and Vibration: Unlike conventional generators, the KARNO generator operates without internal combustion, resulting in a significantly lower noise level of approximately 67 decibels at six feet, which is approximately equivalent to ~~be capable of operating with over 20 different fuel types including hydrogen, natural gas, propane, ammonia~~a typical conversation.

•Higher Power Density: The unique architecture and conventional fossil fuels. The technology uses heat to drive a sealed linear generator to produce electricity. The heat is produced by reacting fuels through a flameless oxidation process. We are currently advancing developmentfeatures of the KARNO generator ~~technology and plan for it~~that are enabled by advances in additive manufacturing, enable the generator to ~~be the primary~~achieve a high level of power source for the Hypertruck KARNO powertrain system (“Hypertruck KARNO system”) which we expect to commercialize in the coming years, with early fleet trials expected in 2026. We are currently completing assemblydensity. For example, a 200kW generator occupies less than a cubic meter of ~~an operational Hypertruck KARNO system prototype, which we expect to demonstrate with potential customers in the second half~~volume.

•Modularity: The power output of ~~2023.~~

~~Finally, we are pursuing commercialization of the~~a KARNO generator ~~for stationary~~can be modulated by changing the level of heat applied to the system. For larger power ~~generation~~ applications ~~as well, particularly for electric vehicle charging, conversion of waste and flare gas to electricity, renewables matching and for primary~~above 200kW, systems with six or backup power in buildings, data centers and other applications that could benefit from a low-cost, low-emissions, micro-grid power source. We expect deployments of KARNO generator stationary units in 2024 in initial revenue generating operations. We anticipate that the KARNO generator used in the Hypertruck KARNO system and in stationary applications willmore shafts can be ~~nearly identical.~~utilized or, multiple

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~~Hypertruck Fuel Cell System~~KARNO generators can be assembled to operate as a single unit. For megawatt applications, individual generators can be turned on or off to adjust the total power output of the system.

•Fast Startup Time: It is anticipated that the KARNO generator will be able to begin generating electricity from a cold start in approximately 30 to 60 seconds. Additionally, full power can be achieved in a matter of minutes. Conversely, some generating systems, such as solid oxide fuel cells, require a warm-up period of up to 30 minutes.

KARNO Generator Development

Our ongoing efforts with the KARNO generator encompass activities such as its design, development and rigorous testing, along with the development of essential balance-of-plant systems including cooling and controls systems. Notably, we have reached a significant milestone by constructing the 125 kW ALPHA generator which we are currently testing in our development facility. Simultaneously, we are in the final stages of designing a 200kW BETA generator, which is poised to serve as our initial production design for initial commercial deployments. We have also showcased the KARNO generator with potential powertrain and stationary power customers. Moreover, we successfully demonstrated the KARNO generator’s capability to feed power back to the electric grid from our Cincinnati, Ohio facility, using an ALPHA KARNO generator unit.

As we progress toward our anticipated initial stationary generator deployments, scheduled for late 2024, pivotal development activities are underway, including enhancements to the linear generator system and its controls, rigorous validation of essential operating parameters, including efficiency, emissions and reliability, and build-out of balance-of-plant systems and controls. These initial generator deployments, coupled with our ongoing testing and development endeavors, will play a vital role in the validation of other critical design specifications, including the generator’s projected operating life, maintenance requirements and durability.

We expect to achieve efficiencies over time, leading to a reduction in the manufacturing and assembly costs associated with the KARNO generator. These efficiencies will predominantly stem from advancements in the speed and capacity of additive manufacturing machines offered by GE and other vendors. The pace of advancements in additive technology is rapid, with the output of machines we intend to acquire over the next three to four years projected to increase by nearly a factor of ten compared to machines available today. Additionally, we are actively pursuing design modifications that will enable specific components to be produced through conventional manufacturing processes. Moreover, for less critical components, we are exploring utilization of lower-cost and lightweight materials like aluminum. Lastly, we anticipate that economies of scale will play a pivotal role in reducing system component costs as manufacturing output scales up progressively.

We plan to initiate the printing and assembly of the first production units of the KARNO generator at our facilities in Austin, Texas and Cincinnati, Ohio. As production volumes rise, we will also consider outsourcing the printing, manufacturing and assembly of specific components or the entire generator to third parties. We will also design and manufacture or purchase components for balance-of-plant and electrical systems for the initial production units while considering outsourcing options over time. In ~~March 2023,~~our initial deployment phase, we ~~announced~~intend to collaborate closely with customers, overseeing the installation, monitoring and maintenance of KARNO generator systems. Additionally, we will consider options for integrating our products into existing sales and distribution channels and forging partnerships with established manufacturers, vendors, developers and distributors as we continue to grow and evolve.

KARNO Generator Applications

The U.S. electrical grid is facing a ~~new agreement with Hyzon Motors USA Inc. (“Hyzon”)~~multitude of challenges as it strives to ~~develop a fuel cell powered vehicle. This development~~manage the escalating demand for electricity while adapting to evolving generating resources. The electrification of transportation, particularly the growing adoption of electric vehicles, is adding substantial load to the grid. Additionally, the integration of renewable energy sources such as solar and wind power introduces variability and necessitates grid modernization and storage solutions for stability. Hyliion believes that localized grid generation will become an increasing part of the ~~third step in our multi-stage product roadmap towards~~solution to these challenges and that the KARNO generator can address many concerns that inhibit consumers from adopting onsite generating systems today, including cost, maintenance needs, noise, versatility and emissions.

Hyliion believes that the KARNO generator is suitable for wide range of electrical power generating applications and that it can penetrate the market for these applications due to its highly differentiated characteristics versus conventional generators. Key differentiating attributes include low maintenance, lower operating costs due to efficiency, low noise and emissions, and fuel versatility.

Planned initial KARNO generators that are both power dense and mobile, are expected to include an approximate three cubic meter, single four-shaft 200kW generating unit, including balance-of-plant components. Later planned developments include an over-2 megawatt system with multiple KARNO generators inside the footprint of a ~~hydrogen future. The vehicle will use Hyliion’s electric powertrain system~~20 foot shipping container. Over time, we expect larger and ~~Hyzon’s fuel cell technology as~~smaller capacity versions of the ~~generator. The powertrain~~KARNO generator will be ~~integrated into a Peterbilt chassis~~offered with power levels varying based on the number of generator shafts included or the size of component parts. Consequently, we expect the KARNO generator to initially

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compete effectively in the market for power applications between 200kW to 5MW and ~~may be~~later extending to smaller power configurations.

We are currently working with potential customers for initial generator deployments. The primary purpose of these deployments is to further test and validate KARNO generator product attributes including efficiency, emissions, maintenance requirements, durability, control systems and other parameters. We expect to receive compensation for these initial deployments as we believe the ~~predecessor of a future production truck (“Hypertruck Fuel Cell”). Completion~~generator will provide tangible benefits to customers. We also expect that early deployments will demonstrate the effectiveness of the ~~prototype vehicle~~KARNO generator in a wide range of electrical generating applications. Target markets include:

•Waste Gas Power Generation: Natural gas sourced from waste sites like landfills, water treatment plants and dairy farms is ~~expected in~~a growing market as producers seek to capture sources of methane emissions that would otherwise be released into the ~~fourth quarter of 2023.~~

~~Hybrid System~~

atmosphere or flared. Also known as renewable natural gas, most sources are typically treated to remove impurities such as carbon dioxide, hydrogen sulfide and moisture before the gas can be utilized or injected into natural gas pipelines. We ~~currently offer~~believe the ~~Hyliion Hybrid (“Hybrid”) system, which is an electrified powertrain system that augments existing Class 8 semi-trucks and aims~~KARNO generator will compete effectively as a power generator using waste gas sources. Its modularity, coupled with its capability to improve vehicle performance or reduce fuel usage, depending on application. The Hybrid system can either be installed on a new vehicle prior to entering service or retrofit onto an existing in-service vehicle. This feature gives our customers the flexibility to continue using their preferred vehicle brands and maintain their existing fleet maintenance and operations strategies.

~~We began selling the Hybrid system in late 2021 and it has been installed on~~oxidize a variety of ~~our customers’~~fuel sources and mixtures without the need for prior gas processing, positions it as an efficient and adaptable power generator for waste gas sources.

•Flare Gas: Similarly, natural gas extracted from gas or oil wells frequently requires processing to remove natural gas liquids and impurities. At remote well sites, gas may be flared, or burned, due to insufficient pipeline capacity for transmission to consuming markets. The KARNO generator creates a new opportunity – to transform flare gas into valuable electricity, destined either for integration into the electric grid or for localized consumption. As with RNG, the KARNO generator is anticipated to use flare gas without the need for pre-treatment by a gas processing facility.

•Vehicle Charging: The rapid growth of electric vehicles is increasingly straining grid capacity and reliability, both domestically and internationally. The introduction of commercial ~~vehicles, utilizing multiple original equipment manufacturer (“OEM”) platforms. Our Hybrid system deployments~~EVs, such as buses, delivery vans and large trucks is expected to intensify this challenge given their substantial power requirements during charging. Many commercial operators cite the lack of generating capacity as the primary obstacle to expanding their electric vehicle fleets. Here, the KARNO generator is a unique solution compared to conventional generators, offering a localized and versatile source of electrical power for vehicle charging. In addition to its flexibility in fuel sources, including the capacity to utilize hydrogen, and its superior environmental performance with lower emissions and noise levels compared to internal combustion generators, the KARNO generator’s ability to modulate power without efficiency loss is a pivotal advantage. Power out can be adjusted by activating or deactivating individual generators and by regulating the heat input to each generator. Finally, KARNO’s high power density allows it to be deployed as a localized power source for vehicle charging without consuming valuable parking space.

•Prime Power: Most consumers prefer to use grid power over localized generator source due to its inherent advantages in terms of simplicity, convenience, scalability and cost effectiveness. For critical applications such as hospitals, data centers and refrigerated warehouses, the availability of local generators in case of a grid power failure is indispensable. The advent of the KARNO generator introduces the opportunity for certain power consumers to rethink their primary and secondary power sources. Due to its unique attributes in comparison to conventional generators, which include consistently high efficiency across all power levels, minimal maintenance requirements, and reduced level of noise and emissions, the KARNO generator stands as a potentially more cost-effective base load power source for consumers, who would then utilize the electric grid as a backup source of power. This arrangement holds particular appeal for consumers facing high grid electrical costs and low fuel costs, such as for natural gas.

•Peak Shaving: “Peaking charges” also referred to as “demand charges” are fees imposed by utilities on consumers based on their highest recorded electricity usage during a billing cycle, often measured over a short interval, such as 15 minutes. These charges serve to recuperate the expenses associated with ~~innovative fleets~~maintaining grid capacity during periods of peak demand. For consumers with substantial peak demand, such as large industrial facilities and data centers, peaking charges can significantly inflate their electric bills. Additionally, time-based electricity rates are now very common to reduce demand on the grid during peak times. Peak rates can be two to three times higher than base rates, increasing electricity charges even further for consumers. In this context, distributed generation sources like the KARNO generator can play a pivotal role in mitigating the financial impact of peaking charges and rates by supplementing grid power during peak consumption periods.

•Backup Power: The market for local backup power generators is well established but also poised for growth due to reduced reliability of the power grid, a greater share of intermittent renewable sources of electricity, the frequency and severity of extreme weather events and the need for continuous power supply in critical applications. Generator emissions are a growing concern in the ~~transportation~~backup power market due to increased focus on the health impacts of harmful compounds such as nitrogen oxides (“NOx”), carbon monoxide and ~~logistics sector~~volatile organic compounds (“VOCs”). To address these concerns, emissions control technologies are incorporated for conventional generators and ~~include~~alternative sources of

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fuel like natural gas are replacing diesel, which is also a ~~variety~~source of ~~duty cycles, use cases~~particulate matter (“PM”) emissions if exhaust gases are untreated. The backup power market is another opportunity for the KARNO generator which is particularly attractive for its low level of emissions and ~~geographical regions. A common application~~low noise level while in operation. The KARNO generator is expected to ~~install~~reduce CO and NOx emissions by over 95% compared to diesel generators, and potentially without the ~~Hybrid~~need for exhaust aftertreatment.

Following initial deployments, we expect to ramp up commercialization of the KARNO generator including expansion of production capacity and establishment of sales and distribution channels, potentially including market collaborations and extending our reach outside of the U.S. In the future we intend to develop KARNO generators of different sizes and configurations to capitalize on KARNO’s unique advantages and extend these advantages across a broader range of market opportunities.

The Science of KARNO

The KARNO generator is distinguished from conventional generating systems that rely on reciprocating internal combustion engines or gas turbines to drive a rotating shaft. In contrast, the KARNO generator harnesses the power of a heat engine to propel a linear generating system. This innovative generator derives its linear motion from temperature differences inside the engine. The generation of heat within the system occurs through flameless oxidation of fuels, like natural gas, hydrogen, or propane. This thermal energy causes helium gas enclosed within a sealed cylinder to expand, thereby propelling linear motion in a connected piston-shaft system which includes a sequence of permanent magnets situated on the shaft passing through electrical coils. Subsequently, the counter-motion generated by a piston at the opposite end of the shaft flows the helium gas to the cold side of a piston in an adjacent shaft, where excess heat is efficiently dissipated. This cyclical process continues, resulting in a continuous source of electrical power for so long as heat is supplied to the generator.

Linear generators present several advantages over conventional generators, with key benefits including reduced maintenance, attributable to their simplified design with few moving parts. Additionally, they exhibit high power density and higher efficiency by circumventing the mechanical losses linked to rotating components such as bearings and gears while producing less noise and vibration. In the case of KARNO, each shaft of the generator relies on a ~~compressed~~single moving part and utilizes a pressurized helium bearing system in place of oil-based lubricants.

Heat engines offer the advantages of fuel flexibility and high operating efficiency. The KARNO generator stands out for its ability to achieve exceptional efficiency by maximizing heat transfer between components and working fluids. Enabled by advances in additive manufacturing systems, parts are designed with a large number of intricate flow channels for the movement of heat, cooling water, helium and exhaust gases such that contact surface areas for heat transfer are maximized. This enables the KARNO generator to achieve exceptional levels of efficiency.

The KARNO generator is expected to surpass the efficiency of conventional generating systems when employing various fuel sources and even outperform fuel cells when using hydrogen. Notably, its high efficiency remains consistent across a broad range of output power levels. In contrast, fuel cells reach peak efficiency at low power levels but experience diminishing efficiency as output increase towards full power. Internal combustion engines typically achieve peak efficiency within a limited operational output range and may suffer increased wear at low power levels. The KARNO generator offers a distinct advantage in power adjustment by modulating the rate of heat introduction, enabling seamless power adjustments without compromising the generator’s efficiency.

We anticipate that the KARNO generator will achieve an electrical generating efficiency of nearly 50%, calculated by considering the usable output power in relation to the energy from the fuel source. High efficiency is expected to remain consistent across a wide range of output power levels, spanning from tens of kilowatts to multiple megawatts. In contrast, internal combustion diesel generators typically operate within an efficiency range of 25% to 40% over a similar power spectrum, while the U.S. electrical power grid is estimated to operate at an efficiency between 33% and 40%. Notably, best-in-class grid-level gas turbine powerplants can obtain efficiencies ranging between 45% to 55%. However, they incur transmission and distribution losses between 5% and 10% which the KARNO generator can circumvent by being strategically located near the point of power consumption.

Conventional generators emit pollutants as a result of incomplete combustion of fuel-air mixtures, with the formation of nitrous-oxide compounds being particularly prominent. Unlike conventional generators, which often employ internal combustion engines operating at high temperatures with rapid and incomplete fuel combustion, the KARNO generator is designed for continuous fuel oxidation at lower temperatures than internal combustion engines and extended burn times. This is achieved partly through the recirculation of exhaust gases, which serves to prolong combustion duration and by pre-heating incoming air. As a result, the KARNO generator is anticipated to achieve remarkably low levels of emissions, with CO and

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NOx emissions expected to be reduced by over 95% compared to best-in-class diesel engines and targeting CARB 2027 standards without the need for aftertreatment.

One of the notable advantages of the KARNO generator, in comparison to traditional generating units, is the expected significant reduction in maintenance requirements and cost. Conventional generators typically incur periodic and usage-based maintenance expense that can range between 5% to 20% of their total operating cost throughout their lifespan, influenced by factors such as utilization and operating parameters. KARNO’s primary advantage arises from having only a single moving linear actuator per shaft (4 shafts per 200kW generator), which glides linearly on low friction helium bearings. This innovative design significantly mitigates efficiency losses attributed to friction, enhances the system’s operational longevity and eliminates the need for oil-based lubricants commonly found in conventional generators. Furthermore, internal combustion engines require extensive overhauls after specific operating periods which are costly, require specialized expertise, and result in prolonged downtime. Conversely, the KARNO generator is projected to require less costly and simplified maintenance service than internal combustion engines, translating into both cost savings and reduced downtime.

The KARNO generator, functioning as a heat engine, derives significant advantages from its expected capability to operate across a diverse spectrum of over 20 available fuel sources and fuel mixtures. These include natural gas, ~~(“CNG”) powered truck with~~propane, gasoline, jet fuel, and alternative fuels like bio-diesel, hydrogen and ammonia. Moreover, the generator can seamlessly transition between these fuels or fuel blends, requiring no physical modifications to its flameless oxidation system. This versatility enables a ~~conventional drivetrain. The Hybrid system aims~~single generator to ~~improve performance by giving~~adapt to different use cases. For example, the generator may operate on natural gas for prime power generation when a ~~power boost~~pipeline connection is available and on waste gas near a landfill or dairy. Furthermore, as hydrogen becomes more widely available, the KARNO generator can seamlessly adapt to this cleaner fuel. As the ~~CNG drivetrain when needed, along with regenerative braking and an optional fully electric auxiliary power system. Across these customer installations, and over~~energy landscape evolves, the ~~entire Hyliion fleet, we have accumulated millions of real-world road miles on Class 8 semi-trucks.~~

~~As we continue our journey of developing and delivering electrified Class 8 semi-truck powertrain solutions, we have seen~~KARNO generator’s fuel-agnostic nature positions it as a ~~market shift and greater demand from fleets toward fully-electrified powertrain solutions, such as the Hypertruck ERX, as opposed~~future-proof solution to hybrid solutions. We are continuing to deliver our Hybrid system at low volumes to fleets that are requesting it, however are directing development and fleet discussions toward the Hypertruck ERX powertrain portfolio.electricity generation needs.

Key Factors Affecting Operating Results

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including but not limited to current economic uncertainties, supply chain disruptions, inflation and rising interest rates as well as those discussed below and referenced in Item 1A. “Risk Factors.”

Successful Commercialization of KARNO Generator

Our ~~Drivetrain Solutions~~

~~We began selling our Hybrid system~~focus in the ~~fourth quarter~~remainder of ~~2021. Our first early~~2023 will be on continuing development ~~Hypertruck ERX showcase unit was unveiled on August 31, 2021 at the ACT Expo in Long Beach, California~~ and ~~we’ve offered potential customers the opportunity to experience its operation in demonstration events and in real-world applications hauling freight for shippers.~~

The Hybrid system offers fleets a solution that is easy to install, service and operate. It draws upon the real-world feedback we have received from customers and the millions of miles logged with the system. In addition, we continually assess the potential demand impact for the Hybrid system offering in light of recent changes within the competitive landscape.

In November 2021, we began our Hypertruck ERX roadshow, which consists of numerous technology fleet experiences focused on demonstrating the features and benefits of the electric powertrain firsthand. The roadshow consists of “Ride and Drive” events and in-depth product education of the Hypertruck ERX system's features and benefits, including how it enables fleet decarbonization goals while also reducing total cost of ownership. Our development timeline will continue through 2023 as we place verification trucks into extended fleet trials with potential customers, seek certificationtesting of our ~~powertrain from regulators,~~fuel-agnostic KARNO stationary generator and ~~as we approach first customer deliveries late in the year.~~

We have been tracking key development milestones on a roadmap that we first laid out in late 2021. We completed assembly of the first verification vehicles in early 2022 that we subsequently used for design validation, on-road testing, customer Ride and Drive events and fleet trials with customers. We successfully completed summer testing of the Hypertruck ERX system with rigorous operations in high temperature conditions. We also deployed verification vehicles into controlled fleet trialsdeploying initial revenue-generating units with customers ~~accompanied by Hyliion engineering personnel, where the trucks are used~~ in standard freight hauling operations with the fleets’ customers. In late 2022 we began subjecting verification vehicles to winter testing where we observed system operation in extremely cold conditions.

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Supply chain constraints in 2022 were widespread in the trucking industry, causing shortages or longer-lead times for key components needed for truck production and delays in our originally anticipated timeline. While such constraints have lessened in recent quarters, we continue to experience unexpected delays receiving critical components needed for assembly of our latest verification vehicle model, including wiring harnesses. As a result, we had fewer verification vehicles available during the second quarter than we anticipated and are requiring additional time to confirm operational reliability. Consequently, we delayed the start of extended customer fleet trials from the second quarter of 2023 to the third quarter.

We have worked with Peterbilt to secure build slots for this calendar year to mitigate the risk of supply chain impacts to our Hypertruck ERX development and production schedule. We also continue to work closely with our extended supply base to ensure the delivery of components needed for the quarters ahead and are diligently seeking alternative sources of supply for components that meet our technical specifications with shorter lead times.

We plan to release the Hypertruck ERX system into commercial production for delivery to customers in late 2023 leveraging a 12-liter natural gas engine as the onboard generator. At the end of the second quarter of 2023, we began assembly of the first production truck by installing our Hypertruck ERX powertrain system into a de-contented chassis from Peterbilt. Prior to delivering production trucks to customers, we plan to complete extended fleet trials with customers and finalize powertrain certifications with CARB, the EPA and the National Highway Traffic Safety Administration.

Companies, including Hyliion, in the truck electrification space face a number of challenges as they develop and scale the production of new clean vehicles and as customers employ these vehicles in their fleets. We continue to assess our business model and strategic priorities to ensure we are utilizing capital as effectively as possible. Our initial plan was to quickly ramp up Hypertruck ERX powertrain production and full truck sales. However, after assessing the costs and growth in working capital that we would incur by executing this plan, we have begun to shift to more capital-efficient ways to achieve growth in customer demand over the long-term while consuming less cash in the short-term. Our new goal is to continue the installation of production powertrain systems into trucks that we began late in the second quarter of 2023 while slowing the growth rate of production and sales that we originally anticipated. At the same time, we are investing in powertrain cost and weight reduction enhancements, which customers will demand, and planning a more rapid shift to selling powertrains versus full trucks. Our new strategy was developed in light of market conditions in order to remain conservative with our existing cash and investment balances. We expect to delivery 30 Hypertruck ERX systems by the end of 2023.

We plan to begin by selling the entire vehicle directly to customers but then begin shifting to become a powertrain company and to sell our solutions directly to the OEMs for them to integrate into their production facilities. OEM industry trends indicate that vehicle manufacturers will work to de-content components that their Tier 1 suppliers are providing as they work to vertically integrate. We plan to continually improve and differentiate our product offerings in an effort to offer the OEMs differentiated solutions and reduce the ability to de-content.

In 2024, we plan to complete our fuel agnostic Hypertruck KARNO system integration design, on our journey to a hydrogen-based future. We will also explore other adjacent markets to leverage the KARNO generator technology for cost savings and emissions reductions including stationary power generation. Ultimately, we plan to release a fuel cell powered vehicle that also uses Hyliion’s electric powertrain system.

2024. We anticipate that a substantial portion of our capital resources and efforts in the near future will be focused on the continued development and commercialization of our drivetrain solutions, the development of the KARNO generator, and for working capital purposes as we ramp up production volumes of the Hypertruck ERX system.these activities. The amount and timing of our future funding requirements, if any, will depend on many factors, including but not limited to the pace of completing initial KARNO generator design, testing and validation, the pace at which we ~~shift~~introduce initial generator units to ~~selling powertrains versus trucks,~~ the ~~scope and results of~~market, our ~~research and development efforts,~~strategies for manufacturing KARNO generator components (whether in-house or through outsourcing to third parties), the ~~breadth~~range of product offerings we plan to ~~commercialize, as well as~~bring to market and external market factors ~~that are outside of~~beyond our control.

~~Customer Demand~~Wind-down of Powertrain Business

~~In 2022, we announced our Founders Program, which comprised a group of initial customers that committed~~We no longer expect to ~~purchase~~recognize revenue on products not related to KARNO, including the ~~first 210~~ Hypertruck ERX ~~units. Delivery~~and Hybrid.The Company is evaluating opportunities to monetize certain of ~~these units was expected~~the assets and technology relating to ~~occur between~~ the ~~fourth quarter of 2023 and~~Business, but no assurances can be provided that any such opportunities will be realized. The Company expects the wind-down to be completed by the end of the Company’s first quarter of ~~2024. Recently, we began revisiting these initial agreements with customers, which are non-binding~~fiscal year 2024 and ~~subject to finalization of terms, with~~will include a ~~goal of restructuring and simplifying the Founders program. Specifically, we are seeking to improve economic terms for Hyliion, including having fleets absorb more~~reduction of the ~~component cost inflation we’ve experienced over~~Company’s workforce by approximately 175 people, or 67%, with some expected to be provided transition packages that will provide for continued services through various dates of the ~~past year. Sales negotiations are ongoing, with the likely outcome that the first 30 production trucks will be delivered to customers by~~Company’s fiscal year ~~end.~~2024.

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We also believe that the successful completion of testing, validation, and certification work that is ongoing will be an inflection point for orders as some customers are waiting for final development and powertrain certification before placing orders. As these milestones are achieved, we expect to continue to grow our order backlog for additional truck deliveries in 2024 and beyond. We will assess our production plans for 2024 as we receive feedback from fleet trials and initial deliveries. We continue to target leaders in the trucking industry with aggressive sustainability initiatives for inclusion in our early adopter programs.

The Inflation Reduction Act of 2022 was signed into law in August 2022, under which the Hypertruck ERX system will qualify fleets to receive a 30% tax credit up to $40,000 per vehicle adopted. We expect this incentive to drive further interest in and demand for the Hypertruck ERX system.

We began selling the Hybrid system in the fourth quarter of 2021 and generated $2.1 million in revenue in 2022 from selling Hybrid systems, where our powertrain technology is retrofitted onto existing trucks, and full trucks with the Hybrid system pre-installed. We recorded $576 thousand in Hybrid sales in the six months ended June 30, 2023, which included a full truck with a Hybrid system installed and other Hybrid systems.

Key Components of Statements of Operations

Revenue

We ~~currently generate~~historically generated revenues from sales of Hybrid systems for Class 8 semi-trucks and limited quantities of Class 8 semi-trucks outfitted with the Hybrid system. As a result of the strategic review and decision to discontinue the powertrain business, we do not anticipate generating future revenues until we begin commercialization of our KARNO generators.

Cost of Revenue

Cost of revenue includes all direct costs such as labor and materials, overhead costs, warranty costs and any write-down of inventory to net realizable value.

Research and Development Expense

Research and development expenses consist primarily of costs incurred for the discovery and development of our KARNO stationary generator and electrified powertrain solutions, which include:

•personnel-related expenses including salaries, benefits, travel and share-based compensation, for personnel performing research and development activities;

•fees paid to third parties such as contractors for outsourced engineering services and to consultants;

•expenses related to ~~truck~~ components for development and ~~test vehicles,~~testing, materials, supplies and other third-party services;

•depreciation for equipment used in research and development activities;

•acquired in-process research and development from asset acquisition; and

•allocation of general overhead costs.

We expect to continue to invest in research and development activities to achieve operational and commercial goals, though we expect a reduction in research and development expenses on a go-forward basis as ~~we develop new platforms that incorporate~~a result of discontinuing our ~~Hypertruck ERX system.~~powertrain business.

Selling, General and Administrative Expense

Selling, general and administrative expenses consist of personnel-related expenses for our corporate, executive, finance, sales, marketing and other administrative functions, expenses for outside professional services, including legal, audit and accounting services, as well as expenses for facilities, depreciation, amortization, travel, sales and marketing costs. Personnel-related expenses consist of salaries, benefits and share-based compensation. Factors that also affect selling, general and administrative expense include the total number of employees, costs incurred as a result of operating as a public company, including compliance with the rules and regulations of the U.S. Securities and Exchange Commission, legal, audit, insurance, investor relations activities and other administrative and professional services.

We expect a reduction in selling, general and administrative expenses on a go-forward basis as a result of discontinuing our powertrain business.

Other Income (Expense)

Other income currently consists primarily of interest income earned on our investments. As a result of our acquisition of the KARNO generator technology, we plan to assume a government contract with the United States Office of Naval Research that is not expected to have a material impact on our business. We plan to seek additional government contracts in the future and may reassess the classification of such contracts as revenue based on business strategy.

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Results of Operations

Comparison of Three Months Ended ~~June~~September 30, 2023 to Three Months Ended ~~June~~September 30, 2022

Our results of operations for the three months ended ~~June~~September 30, 2023 (the “current quarter”) and 2022 on a consolidated basis are summarized as follows (in thousands, except share and per share data):


		Three Months Ended June 30,									Three Months Ended September 30,
		2023		2022		$ Change		% Change			2023		2022		$ Change		% Change
Revenues	Revenues									Revenues
Product sales and other	Product sales and other	$	266	$	172	$	94	54.7	%	Product sales and other	$	96	$	499	$	(403)	(80.8)	%
Total revenues	Total revenues	266		172		94		54.7	%	Total revenues	96		499		(403)		(80.8)	%
Cost of revenues	Cost of revenues									Cost of revenues
Product sales and other	Product sales and other	307		2,145		(1,838)		(85.7)	%	Product sales and other	677		2,916		(2,239)		(76.8)	%
Total cost of revenues	Total cost of revenues	307		2,145		(1,838)		(85.7)	%	Total cost of revenues	677		2,916		(2,239)		(76.8)	%
Gross loss	Gross loss	(41)		(1,973)		1,932		(97.9)	%	Gross loss	(581)		(2,417)		1,836		(76.0)	%
Operating expenses	Operating expenses									Operating expenses
Research and development	Research and development	27,439		20,057		7,382		36.8	%	Research and development	25,115		52,678		(27,563)		(52.3)	%
Selling, general and administrative expenses	Selling, general and administrative expenses	11,098		12,167		(1,069)		(8.8)	%	Selling, general and administrative expenses	8,186		10,264		(2,078)		(20.2)	%
Total operating expenses	Total operating expenses	38,537		32,224		6,313		19.6	%	Total operating expenses	33,301		62,942		(29,641)		(47.1)	%
Loss from operations	Loss from operations	(38,578)		(34,197)		(4,381)		12.8	%	Loss from operations	(33,882)		(65,359)		31,477		(48.2)	%

Interest income	Interest income	3,349		855		2,494		291.7	%	Interest income	3,534		1,926		1,608		83.5	%
Loss on disposal of assets		(1)		(133)		132		(99.2)	%
Gain on disposal of assets										Gain on disposal of assets	—		46		(46)		(100.0)	%
Other income, net	Other income, net	3		—		3		N/A		Other income, net	26		—		26		N/A
Net loss	Net loss	$	(35,227)	$	(33,475)	$	(1,752)	5.2	%	Net loss	$	(30,322)	$	(63,387)	$	33,065	(52.2)	%

Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.19)	$	(0.19)	$	—	—	%	Net loss per share, basic and diluted	$	(0.17)	$	(0.36)	$	0.19	(52.8)	%

Weighted-average shares outstanding, basic and diluted	Weighted-average shares outstanding, basic and diluted	180,966,908		173,897,517		7,069		4.1	%	Weighted-average shares outstanding, basic and diluted	181,641,060		174,345,022		7,296		4.2	%

See Part I, Item 1. “Note 2. Subsequent Events” and Part II, Item 5. for discussion of estimated charges and pro forma financial statements.

Revenue

Sales associated with our Hybrid products ~~increased $0.1~~decreased $0.4 million. ~~While~~As a result of our strategic review and decision to discontinue our powertrain business, we ~~continue toexpect additional Hybrid system sales for the remainder~~do not anticipate further revenue until we begin commercialization of ~~2023, we anticipate reduced sales of the Hybrid product following the start of Hypertruck ERX system deliveries late in 2023.~~our KARNO generator.

Cost of Revenues

Cost of revenues associated with our Hybrid products decreased ~~$1.8~~$2.2 million. We expect a difference in timing between recognition of revenues and cost of revenues due to write-down of inventory to net realizable value in periods generally when the components are received, which may not coincide with the period in which sales of systems with those components installed are realized. The decrease in cost of revenues includes:

•A decrease in inventory write-downs of ~~$2.0~~$1.5 million attributable to inventory on hand that had a cost higher than its expected net realizable value as we purchased less inventory in the current quarter; ~~partially offset by~~

•~~An increase~~A decrease in costs associated with sales of Hybrid systems of ~~$0.1 million.~~

~~Research and Development~~

~~Research and development expenses increased $7.4 million due to:~~

•~~An increase of $3.7 million for the design and testing of our Hypertruck KARNO system which was acquired in September 2022;~~$0.4 million; and

•An increase of $3.7 million for the design and testing of our Hypertruck ERX system variants, excluding Hypertruck KARNO system, including an increase of production truck components which were expensed to Research and Development as they were received before the beginning of Hypertruck ERX system commercialization and a decrease

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~~in expenses related to validation vehicle components, services and personnel as we approach commercialization of the Hypertruck ERX powertrain system.~~

~~Selling, General and Administrative~~

~~Selling, general, and administrative expenses decreased $1.1 million primarily due to:~~

•~~A decrease of $1.1 million in professional services; and~~

•~~A decrease of $0.7 million for insurance costs; partially offset by~~

•~~An increase of $0.6 million in personnel and benefits due to workforce growth over the past year and inflation; and~~

•~~An increase of $0.3 million in marketing and advertising as we exhibited our Hypertruck KARNO system.~~

~~Other Income (Expense)~~

~~Total other income increased $2.6 million primarily due to an increase in interest income on investments.~~

~~Comparison of Six Months Ended June 30, 2023 to Six Months Ended June 30, 2022~~

The following table summarizes our results of operations on a consolidated basis for the six months ended June 30, 2023 (the “current six months”) and 2022 (in thousands, except share and per share data):

Six Months Ended June 30,
2023 2022 $ Change % Change
Revenues
Product sales and other $ 576 $ 512 $ 64 N/A
Total revenues 576 512 64 N/A
Cost of revenues
Product sales and other 998 4,244 (3,246) N/A
Total cost of revenues 998 4,244 (3,246) N/A
Gross loss (422) (3,732) 3,310 N/A
Operating expenses
Research and development 48,357 35,865 12,492 34.8 %
Selling, general and administrative expenses 22,079 21,991 88 0.4 %
Total operating expenses 70,436 57,856 12,580 21.7 %
Loss from operations (70,858) (61,588) (9,270) 15.1 %
Interest income 6,811 1,140 5,671 497.5 %
(Gain) loss on disposal of assets 1 (135) 136 N/A
Other expense, net (12) — (12) N/A
Net loss $ (64,058) $ (60,583) $ (3,475) 5.7 %
Net loss per share, basic and diluted $ (0.35) $ (0.35) $ — — %
Weighted-average shares outstanding, basic and diluted 180,544,821 173,741,910 6,803 3.9 %

~~Revenue~~

~~Sales associated with our Hybrid products increased $0.1 million. While we continue toexpect additional Hybrid system sales for the remainder of 2023, we anticipate reduced sales of the Hybrid product following the start of Hypertruck ERX system deliveries late in 2023.~~

~~Cost of Revenues~~

Cost of revenues associated with our Hybrid products decreased $3.2 million. We expect a difference in timing between recognition of revenues and cost of revenues due to write-down of inventory to net realizable value in periods generally when the components are received, which may not coincide with the period in which sales of systems with those components installed are realized. The decrease in cost of revenues includes:

•A decrease in inventory write-downs of $3.1 million attributable to inventory on hand that had a cost higher than its expected net realizable value as we purchased less inventory in the current six months; and

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•A decrease in warranty costs of ~~$0.2~~$0.3 million for estimated costs to administer and maintain the warranty program for labor, transportation and parts, excluding any contribution from vendors as we sold fewer Hybrid systems in the current ~~six~~nine months.

Research and Development

Research and development expenses ~~increased $12.5~~decreased $27.6 million due to:

•~~An increase~~A decrease of ~~$7.1~~$28.8 million ~~for the design~~related to hydrogen and ~~testing of our Hypertruck KARNO system which was~~fuel agnostic capable generator technology (“KARNO”) acquired in September ~~2022;~~2022 from General Electric Company’s GE Additive business to develop and commercialize the fuel agnostic KARNO generator; and

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•~~An increase~~A decrease of ~~$5.4~~$1.4 million for the design and testing of our Hypertruck ERX ~~system variants, excluding Hypertruck~~system; offset by

•An increase of $2.6 million for the design and testing of our KARNO ~~system, including~~stationary generator.

Selling, General and Administrative

Selling, general, and administrative expenses decreased $2.1 million primarily due to:

•A decrease of $1.6 million in personnel and benefits primarily due to the prior year departure of our previous Chief Financial Officer;

•A decrease of $0.6 million for insurance costs; and

•A decrease of $0.2 million in marketing and advertising; partially offset by

•An increase of $0.2 million in professional services;

Other Income

Total other income increased $1.6 million primarily due to an increase in interest income on investments.

Comparison of ~~production truck components which were expensed~~Nine Months Ended September 30, 2023 to Nine Months Ended September 30, 2022

The following table summarizes our results of operations on a consolidated basis for the nine months ended September 30, 2023 (the “current nine months”) and 2022 (in thousands, except share and per share data):


	Nine Months Ended September 30,
	2023		2022		$ Change		% Change
Revenues
Product sales and other	$	672	$	1,011	$	(339)	N/A
Total revenues	672		1,011		(339)		N/A
Cost of revenues
Product sales and other	1,675		7,160		(5,485)		N/A
Total cost of revenues	1,675		7,160		(5,485)		N/A
Gross loss	(1,003)		(6,149)		5,146		N/A
Operating expenses
Research and development	73,472		88,543		(15,071)		(17.0)	%
Selling, general and administrative expenses	30,265		32,255		(1,990)		(6.2)	%
Total operating expenses	103,737		120,798		(17,061)		(14.1)	%
Loss from operations	(104,740)		(126,947)		22,207		(17.5)	%

Interest income	10,345		3,066		7,279		237.4	%
Gain (loss) on disposal of assets	1		(89)		90		N/A
Other income, net	14		—		14		N/A
Net loss	$	(94,380)	$	(123,970)	$	29,590	(23.9)	%

Net loss per share, basic and diluted	$	(0.52)	$	(0.71)	$	0.19	(26.8)	%

Weighted-average shares outstanding, basic and diluted	180,914,250		173,945,156		6,969		4.0	%

See Part I, Item 1. “Note 2. Subsequent Events” and Part II, Item 5. for discussion of estimated charges and pro forma financial statements.

Revenue

Sales associated with our Hybrid products increased $0.3 million. As a result of our strategic review and decision to discontinue our powertrain business, we do not anticipate further revenue until we begin commercialization of our KARNO generator.

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Cost of Revenues

Cost of revenues associated with our Hybrid products decreased $5.5 million. The decrease in cost of revenues includes:

•A decrease in inventory write-downs of $4.6 million attributable to inventory on hand that had a cost higher than its expected net realizable value as we purchased less inventory in the current nine months;

•An decrease in costs associated with sales of Hybrid systems of $0.4 million; and

•A decrease in warranty costs of $0.5 million for estimated costs to administer and maintain the warranty program for labor, transportation and parts, excluding any contribution from vendors as we sold fewer Hybrid systems in the current nine months.

Research and Development ~~as they were received before the beginning~~

Research and development expenses decreased $15.1 million due to:

•A decrease of ~~Hypertruck ERX system commercialization and a decrease in expenses~~$28.8 million related to ~~validation vehicle components, services~~KARNO technology acquired in September 2022 from General Electric Company’s GE Additive business to develop and ~~personnel as we approach commercialization~~commercialize the fuel agnostic KARNO generator; offset by

•An increase of $9.3 million for the design and testing of our KARNO stationary generator; and

•An increase of $4.4 million for the design and testing of our Hypertruck ERX ~~powertrain~~ system.

Selling, General and Administrative

Selling, general, and administrative expenses ~~increased $0.1~~decreased $2.0 million primarily due to:

•A decrease of $2.0 million for insurance costs; and

•A decrease of $0.9 million in professional services; partially offset by

•An increase of ~~$2.3~~$0.9 million in personnel and benefits due to workforce growth over the past year and ~~inflation; and~~

•~~An increase~~inflation, offset by the prior year departure of ~~$0.3 million in marketing and advertising as we exhibited~~ our ~~Hypertruck KARNO system; partially offset by~~

•~~A decrease of $1.4 million for insurance costs; and~~

•~~A decrease of $1.1 million in professional services.~~previous Chief Financial Officer.

Other Income (Expense)

Total other income increased ~~$5.8~~$7.4 million primarily due to an increase in interest income on investments.

Liquidity and Capital Resources

At ~~June~~September 30, 2023, our ~~current~~current assets were ~~$249.2~~$194.0 million, consisting primarily of cash and cash equivalents of ~~$48.2~~$28.6 million, short-term investments of ~~$183.4~~$153.6 million and prepaid expenses of ~~$15.9~~$11.5 million. Our current liabilities were ~~$18.4~~$13.2 million primarily comprised of accounts payable, accrued expenses and operating lease liabilities. We also had $141.3 million of investments in longer-term liquid securities which we maintain to generate higher income on capital that we do not expect to spend in the next 12 months.

We believe the credit quality and liquidity of our investment portfolio at ~~June~~September 30, 2023 is strong and will provide sufficient liquidity to satisfy operating requirements, working capital purposes and strategic initiatives. The unrealized gains and losses of the portfolio may remain volatile as changes in the general interest rate environment and supply and demand fluctuations of the securities within our portfolio impact daily market valuations. To mitigate the risk associated with this market volatility, we deploy a relatively conservative investment strategy focused on capital preservation and liquidity whereby no investment security may have a final maturity of more than 36 months from the date of acquisition or a weighted average maturity exceeding 18 months. Eligible investments under the Company’s investment policy bearing a minimum credit rating of A1, A-1, F1 or higher for short-term investments and A2, A, or higher for longer-term investments include money market funds, commercial paper, certificates of deposit and municipal securities. Additionally, all of our debt securities are classified as held-to-maturity as we have the intent and ability to hold these investment securities to maturity, which minimizes any realized losses that we would recognize prior to maturity. However, even with this approach we may incur investment losses as a result of unusual or unpredictable market developments, and we may experience reduced investment earnings if the yields on investments deemed to be low risk remain low or decline further due to unpredictable market developments. In addition, these unusual and unpredictable market developments may also create liquidity challenges for certain of the assets in our investment portfolio.

Based on our past performance, we believe our current and long-term assets will be sufficient to continue and execute on our business strategy and meet our capital requirements for the next twelve months. We ~~have no plans~~do not expect to need to raise additional capital ~~in 2023 and have flexibility into 2025, although we may opportunistically raise additional capital in 2024 or later if market conditions strengthen to fund our planned development roadmap.~~for the foreseeable future. Our primary short-term cash needs are ~~Hypertruck ERX product development~~ costs ~~and components purchased to support~~associated with the ~~start~~exit of ~~production,~~our powertrain business and KARNO generator development ~~costs, operating expenses and production and related costs~~costs. Longer term, our capital needs will be determined by our go-to-market strategy, which may include development of ~~Hybrid systems. We plan~~our own KARNO generator manufacturing capacity or outsourcing this work to ~~stay asset-light and utilize OEMs and~~ third parties ~~to perform assembly and manufacturing at scale.~~or business partners. Finally, based on current projections of operating expenses, capital spending and working

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capital growth, we expect to have approximately ~~$275~~$285 million in cash, short-term and long-term investments remaining on our balance sheet at the end of 2023.

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We expect to continue to incur net losses in the short term, as we continue to execute on our strategic initiatives by completing the development and commercialization of the ~~electrified drive systems for Class 8 semi-trucks and scaling the Company’s operations to meet anticipated demand. Further, we plan to develop and commercialize (i) the fuel agnostic Hypertruck~~ KARNO ~~system~~generator with anticipated ~~fleet trials~~initial customer deployments in ~~2026 and (ii) a fuel cell powered vehicle using Hyliion’s electric powertrain system.~~late 2024. However, actual results could vary materially and negatively as a result of a number of factors including, but not limited to, those discussed in Part II, Item 1A. “Risk Factors.”

We have begun taking actions to reduce the rate of spending as we continue to advance our solutions. These actions include reducing capital spending, hiring and other expenses, renegotiating agreements with Founders program customers to improve financial terms for Hyliion, and scaling back the ramp up of truck production to reduce losses and the need for increased working capital. These actions are expected to extend the timeline that existing capital resources can fund company operations prior to reaching profitability or needing to raise additional capital. The amount and timing of our future funding requirements, if any, will depend on many factors, including the pace and results of our research and development efforts, the breadth of product offerings we plan to commercialize, the pace of sales, and ~~production growth,~~our long-term plan manufacturing plan for the KARNO generator, as well as factors that are outside of our control.

During the periods presented, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.

Cash Flows

Net cash, cash equivalents and restricted cash provided by or used in operating activities, investing activities and financing activities for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 is summarized as follows (in thousands):


		Six Months Ended June 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
Cash from operating activities	Cash from operating activities	$	(63,589)	$	(55,571)	Cash from operating activities	$	(92,427)	$	(83,442)
Cash from investing activities	Cash from investing activities	(7,542)		(2,864)		Cash from investing activities	1,561		(20,750)
Cash from financing activities	Cash from financing activities	(132)		(77)		Cash from financing activities	(2)		(92)
		$	(71,263)	$	(58,512)		$	(90,868)	$	(104,284)

Cash from Operating Activities

For the ~~six~~nine months ended ~~June~~September 30, 2023, cash flows used in operating activities were ~~$63.6~~$92.4 million. Cash used primarily related to a net loss of ~~$64.1~~$94.4 million, adjusted for a ~~$4.5~~$5.3 million change in working capital accounts and ~~$5.0~~$7.2 million in certain non-cash expenses (including $5.2 million related to share-based compensation, partially offset by $2.7 million related to accounts payable, accrued expenses and other liabilities and ~~$3.8 million related to share-based compensation, partially offset by $5.8~~$1.2 million related to prepaid expenses and other ~~assets and $0.8 million related to inventory purchases)~~assets).

For the ~~six~~nine months ended ~~June~~September 30, 2022, cash flows used in operating activities were ~~$55.6~~$83.4 million. Cash used primarily related to a net loss of ~~$60.6~~$124.0 million, adjusted for a ~~$4.1~~$2.3 million change in working capital accounts and ~~$9.1~~$42.8 million in certain non-cash expenses (including ~~$3.5~~$28.8 million related to acquired in-process research and development, $5.3 million related to share-based compensation, ~~$1.6~~$3.1 million related to prepaid expenses and other assets, $3.0 million related to depreciation, amortization and accretion charges and ~~$0.6 million related to prepaid expenses and other assets, partially offset by $0.8~~$2.0 million related to accounts payable, accrued expenses and other liabilities).

Cash from Investing Activities

For the ~~six~~nine months ended ~~June~~September 30, 2023, cash flows ~~used in~~provided by investing activities were ~~$7.5~~$1.6 million. Cash ~~used~~provided related to the sale or maturity of investments of $178.6 million, partially offset by the purchase of investments of ~~$99.2~~$170.2 million and acquired property and equipment of ~~$4.0 million, partially offset by the sale or maturity of investments of $95.6~~$6.8 million.

For the ~~six~~nine months ended ~~June~~September 30, 2022, cash flows used in investing activities were ~~$2.9~~$20.8 million. Cash used primarily related to the purchase of investments totaling ~~$106.8~~$160.1 million, ~~partially~~acquired in-process research and development of $14.4 million and property and equipment of $2.6 million, offset by the sale or maturity of investments of ~~$104.5~~$156.4 million.

Cash from Financing Activities

For the ~~six~~nine months ended ~~June~~September 30, 2023, cash flows used in financing activities were nil.

For the nine months ended September 30, 2022, cash flows used in financing activities were $0.1 million. Cash flows were primarily due to payment of taxes related to net share settlement of equity awards of $0.2 million.

For the six months ended June 30, 2022, cash flows used in financing activities were $0.1 million. Cash flows were primarily due to payment of taxes related to net share settlement of equity awards of $0.1 million.

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Critical Accounting Policies and Estimates

In preparing our condensed consolidated financial statements, we applied the same critical accounting policies as described in our 2022 Annual Report that affect judgments and estimates of amounts recorded for certain assets, liabilities, revenues and expenses.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A description of the market risks associated with our business is contained in the “Quantitative and Qualitative Disclosures About Market Risk” section of our 2022 Annual Report. There have been no material changes to our market risks as therein previously reported.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Based on our management’s evaluation (with the participation of our Principal Executive Officer and Principal Financial Officer) of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, our Principal Executive Officer and Principal Financial Officer have concluded that, at ~~June~~September 30, 2023, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~June~~September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time in the ordinary course of business, the Company may be named as a defendant in legal proceedings related to various issues, including workers’ compensation claims, tort claims, or contractual disputes. We are not currently involved in any material legal proceedings.

ITEM 1A. RISK FACTORS

~~A description of~~Investing in our securities involves risks. Before you make a decision to buy our securities, in addition to the ~~risk factors associated with our business is contained~~risks and uncertainties discussed above under “Cautionary Note Regarding Forward-Looking Statements,” and in ~~the “Risk Factors” section of~~ our 2022 Annual ~~Report.~~Report on Form 10-K you should carefully consider the specific risks set forth herein. If any of these risks actually occur, it may materially harm our business, financial condition, liquidity and results of operations. As a result, the market price of our securities could decline, and you could lose all or part of your investment. Additionally, the risks and uncertainties described are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business.

Our KARNO business strategy may not succeed.

As discussed under Part II. Item 5 of this quarterly report on Form 10-Q, the Company is undertaking a significant shift in its business strategy by discontinuing operations related to the electrified powertrain systems business and focusing on the development and commercialization of the Company's fuel-agnostic KARNO generator technology.

We have historically incurred net losses ($153.4 million for the year ended December 31, 2022 and cumulative net operating losses of $277.3 million during the previous three years ended December 31, 2022). We believe that we will continue to incur significant operating and net losses each quarter until we are generating positive gross margins from sales of KARNO generator products. We do not expect to achieve this level of financial performance in 2023, and we may never achieve such performance.

Additionally, in connection with our new business strategy, we expect to adopt initiatives in an effort to improve operating efficiencies and lower our cost structure. There may be unanticipated difficulties in implementing one or more of these initiatives, and we may not ultimately realize the full benefits of, or be able to sustain the benefits anticipated by, these initiatives.

We will require significant capital to develop and grow our business, including developing, producing and servicing KARNO generators and our brand. We expect to incur significant expenses, which will impact our profitability and available capital, including costs for research and development efforts, component and service procurement, sales, general and administrative costs, and production, distribution and support.

Our ability to become profitable in the future will require us to complete the design, development and testing of our KARNO generator while achieving projected performance criteria. We must also successfully market our KARNO generator and related services to customers, sell our systems at prices needed to achieve positive gross margins, and control operating and production costs. We may need to sell our products at a loss or discounted prices in the short term in order to win initial customer orders and gain the confidence of potential customers. If we are unable to efficiently design, produce, market, sell, distribute and service our KARNO generator, our margins, profitability, and long-term prospects will be materially and adversely affected.

Significant markets for our KARNO generator may never develop or may develop more slowly than we anticipate. This would significantly harm our revenues and may cause us to be unable to recover the losses we have ~~been no material changes~~incurred and expect to incur in the development of our products.

The distributed power generation industry is still an emerging market in an otherwise mature and heavily regulated energy utility industry, and we cannot be sure that potential customers will accept distributed generation broadly, or stationary power generators including our KARNO generators, specifically. Significant markets for distributed power generation may never develop or they may develop more slowly than we anticipate. Enterprises may be unwilling to adopt our KARNO generator technology over traditional or competing power sources like electricity from the grid, for any number of reasons, including the perception that our technology or our Company is unproven, lack of confidence in our business model, the unavailability of third-party service providers to operate and maintain KARNO generators, and lack of awareness of our product or their perception of regulatory or political headwinds.

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Market opportunity estimates and growth forecasts, whether obtained from third-party sources or developed internally, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. In particular, estimates and forecasts relating to the size and expected growth of electricity demand in our target markets, our capacity to address this demand, the adoption of our KARNO generator technology, and our pricing may prove to be inaccurate. Any inaccuracies or errors in our estimates or third-party estimates of market opportunity may cause us to misallocate capital and other business resources, which could harm our business. The addressable market we estimate may not materialize for many years, if ever, and even if the markets in which we compete meet size estimates and growth forecasts, our business could fail to grow at similar rates, if at all.

Any such delay or failure in the development of potential markets would significantly harm our revenues and we may be unable to recover the losses we have incurred and expect to continue to incur in the acquisition and development of KARNO generator technology. If this were to occur, we may never achieve profitability and our business could fail. Whether or not end-users will want to implement and use stationary power generators other distributed generation technologies may be affected by many factors, some of which are beyond our control, including: the emergence of more competitive technologies and products; alternative technologies and products that could render our products obsolete; the future cost of fuels used by our products; the regulatory requirements of agencies with respect to energy products; government support by way of legislation, tax incentives, policies or otherwise, relating to our ~~Risk Factors~~technology; the manufacturing and supply costs for components and systems for the KARNO generator; the perceptions of consumers regarding the safety of our products; the willingness of consumers to try new technologies; and the continued development and improvement of existing power technologies.

We expect to face significant competition in the distributed generation market.

Our KARNO generators will compete with a broad range of companies and technologies, including traditional energy suppliers, such as ~~therein previously reported.~~public utilities, and other energy providers utilizing traditional co-generation systems, nuclear, hydro, coal or geothermal power, companies utilizing intermittent solar or wind power paired with storage, and other commercially available stationary power generation technologies, including fuel cells and diesel generators.

Many of our competitors, such as traditional utilities and other companies offering distributed generation products, have longer operating histories, customer incumbency advantages, access to and influence with local and state governments, and access to more capital resources than us. Significant developments in alternative technologies, such as energy storage, wind, solar or hydro power generation, or improvements in the efficiency or cost of traditional energy sources, including coal, oil, natural gas used in combustion, or nuclear power, may materially and adversely affect our business and prospects in ways we cannot anticipate. We may also face new competitors who are not currently in the market, including companies with newer or better technologies or products, larger providers or traditional utilities or other existing competitors that may enter our market segments. If we fail to adapt to changing market conditions and to compete successfully with grid electricity or new competitors, our growth will be limited, which would adversely affect our business results.

We may experience significant delays in the design, production and launch of the KARNO generator which could harm our business, prospects, financial condition and operating results.

The KARNO generator is still in the development and testing phase, and commercial deliveries are not expected to begin until late 2024 or later, and may not occur at all. Any delay in the financing, design, production and launch of the KARNO generator, would materially damage our brand, business, prospects, financial condition and operating results.

We have no experience manufacturing the KARNO generator on a large-scale basis and if we do not develop adequate manufacturing processes and capabilities to do so, or if we fail to identify qualified outsourced manufacturing partners, in a timely manner, we will be unable to achieve our growth and profitability objectives.

We have not yet manufactured the KARNO generator on a large scale but in order to produce the generator at affordable prices, we will have to manufacture at scale. We do not know whether our plans to scale the product will be implemented such that they will satisfy the requirements of our customers and the anticipated markets for the KARNO generator. If the Company is unable to develop these manufacturing capabilities internally, we may be unable to identify outsourced manufacturing partners who have the technical capability to produce KARNO generators or who can do so on commercially acceptable terms. Our failure to develop manufacturing processes and capabilities in a timely manner could prevent us from achieving our growth and profitability objectives.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, ~~AND~~ USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

~~None.~~Costs Associated with Exit or Disposal Activities

On November 7, 2023, the board of directors (the “Board”) of the Company approved a strategic plan to wind-down its electric powertrain business (the “Powertrain Business”) and preserve technology relating to the Powertrain Business, to better align its workforce with the Company’s future needs, and to reduce the Company’s operating costs (the “Plan”). As part of the Plan, the Company will continue to focus on commercialization of its KARNO generator technology (“KARNO”). Following completion of the Plan, we no longer expect to recognize revenue on products not related to KARNO, including the Company’s Hypertruck ERX system (“Hypertruck ERX”) and Hyliion Hybrid system (“Hybrid”).The Company is evaluating opportunities to monetize certain of the assets and technology relating to the Business, but no assurances can be provided that any such opportunities will be realized. The Company expects the wind-down to be completed by the end of the Company’s first quarter of fiscal year 2024. In connection with the Plan, the Company expects to incur total charges and expenses of approximately $18.4 million.

The Company expects the majority of the charges and expenses related to the Plan to be incurred in the Company’s fourth quarter of fiscal year 2023.

Pro Forma Financial Information

The following unaudited pro forma financial information of the Company is filed as Exhibit 99.1 to this Quarterly Report on Form 10-Q and is incorporated herein by reference:

•Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2023;

•Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine Months Ended September 30, 2023;

•Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2022; and

•Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

The pro forma financial statements are presented for informational purposes only and do not purport to represent what the Company’s results of operations or financial position would have been had the discontinuation of the Business and other transactions reflected occurred on the dates indicated or to project the Company’s financial position as of any future date or the Company’s results of operations for any future period.

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing

On November 2, 2023, Hyliion Holdings Corp. (the “Company”) received notice (the “Delisting Notice”) from the New York Stock Exchange (the “NYSE”) that because the average per share closing price of its common stock (the “Common Stock”) over a 30 consecutive trading-day period ended November 1, 2023 was below $1.00 (the “Minimum Price Requirement”), the Company was not in compliance with Section 802.01C of the NYSE’s Listed Company Manual.

The Company plans to notify the NYSE within 10 business days of its receipt of the Delisting Notice of its intent to cure the deficiency and will consider a number of alternatives to regain compliance with the Minimum Price Requirement. Pursuant to Section 802.01C, the Company has a period of six months following receipt of the Delisting Notice (the “Cure Period”) to regain compliance with the Minimum Price Requirement. Compliance with the Minimum Price Requirement can be regained at any time during the Cure Period if on the last trading day of any calendar month during the Cure Period or on the last day of the

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Cure Period, the Company has both (i) a closing price of at least $1.00 per share of Common Stock, and (ii) an average closing price of at least $1.00 per share of Common Stock over the thirty trading-days ended that day.

The Delisting Notice has no immediate impact on the listing of the Common Stock, which will continue to be listed and traded on the NYSE under the symbol “HYLN” during the Cure Period, subject to the Company’s compliance with the other continued listing requirements of the NYSE. The Delisting Notice does not affect the ongoing business operations of the Company or its reporting requirements with the Securities and Exchange Commission. However, failure to regain compliance with the Minimum Price Requirement within the Cure Period or to satisfy other NYSE listing standards could lead to the initiation of suspension and delisting procedures by the NYSE.

A copy of the press release announcing the Company’s receipt of the Delisting Notice is furnished herewith as Exhibit 99.2 and is incorporated by reference herein.

ITEM 6. EXHIBITS


Exhibit Number						Description
~~10.1~~3.1						~~Hyliion Holdings Corp. Executive Severance Plan~~Second Amended and Restated Certificate of Incorporation of the Company, dated October 1, 2020 (incorporated by reference to Exhibit ~~10.1~~3.1 to the Company’s ~~Quarterly~~Current Report on Form ~~10-Q for the period ended March 31, 2023~~8-K (File No. 001-38823) filed with the SEC on ~~May 9, 2023)~~October 7, 2020).
~~10.2~~3.2						~~Form~~Amended and Restated Bylaws of ~~Change in Control Agreement~~the Company, dated October 1, 2020 (incorporated by reference to Exhibit ~~10.2~~3.2 to the Company’s ~~Quarterly~~Current Report on Form ~~10-Q for the period ended March 31, 2023~~8-K (File No. 001-38823) filed with the SEC on ~~May 9, 2023)~~October 7, 2020).
31.1*						Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*						Unaudited condensed consolidated financial statements.
99.2**						Press Release of Hyliion Holdings Corp., dated November 8 , 2023
101.INS*						XBRL Instance Document
101.SCH*						XBRL Taxonomy Extension Schema Document
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*						XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibits 101)

* Filed herewith.

** Furnished herewith.

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SIGNATURES

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


Date: ~~August~~November 8, 2023	HYLIION HOLDINGS CORP.

	/s/ Thomas Healy
	Name:	Thomas Healy
	Title:	Chief Executive Officer (Principal Executive Officer)

	/s/ Jon Panzer
	Name:	Jon Panzer
	Title:	Chief Financial Officer (Principal Financial Officer)

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