Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 31, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-37673 | |
Entity Registrant Name | WORKHORSE GROUP INC. | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 26-1394771 | |
Entity Address, Address Line One | 3600 Park 42 Drive | |
Entity Address, Address Line Two | Suite 160E | |
Entity Address, City or Town | Sharonville | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 45241 | |
City Area Code | 888 | |
Local Phone Number | 646-5205 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | WKHS | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 260,923,427 | |
Entity Central Index Key | 0001425287 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 38,865,065 | $ 99,276,301 |
Accounts receivable, less allowance for credit losses of zero as of September 30, 2023 and December 31, 2022, respectively | 7,424,346 | 2,079,343 |
Other receivable | 0 | 15,000,000 |
Inventory, net | 40,783,292 | 8,850,142 |
Prepaid expenses and other current assets | 10,705,904 | 14,152,481 |
Total current assets | 97,778,607 | 139,358,267 |
Property, plant and equipment, net | 37,465,094 | 21,501,095 |
Investment in Tropos | 0 | 10,000,000 |
Lease right-of-use assets | 10,878,500 | 11,706,803 |
Other assets | 176,310 | 176,310 |
Total Assets | 146,298,511 | 182,742,475 |
Current liabilities: | ||
Accounts payable | 11,936,156 | 10,235,345 |
Accrued and other current liabilities | 5,858,754 | 46,207,431 |
Deferred revenue, current | 4,736,831 | 3,375,000 |
Warranty liability | 1,777,520 | 2,207,674 |
Current portion of lease liabilities | 1,561,769 | 1,285,032 |
Total current liabilities | 25,871,030 | 63,310,482 |
Deferred revenue, long-term | 0 | 2,005,000 |
Lease liability, long-term | 7,658,788 | 8,840,062 |
Total Liabilities | 33,529,818 | 74,155,544 |
Commitments and contingencies (Note 13) | ||
Stockholders’ Equity: | ||
Series A preferred stock, par value $0.001 per share, 75,000,000 shares authorized, zero shares issued and outstanding as of September 30, 2023 and December 31, 2022 | 0 | 0 |
Common stock, par value $0.001 per share, 450,000,000 shares authorized, 255,382,128 shares issued and outstanding as of September 30, 2023 and 250,000,000 shares authorized, 165,605,355 shares issued and outstanding as of December 31, 2022 | 255,382 | 165,605 |
Additional paid-in capital | 818,824,798 | 736,070,388 |
Accumulated deficit | (706,311,487) | (627,649,062) |
Total stockholders’ equity | 112,768,693 | 108,586,931 |
Total Liabilities and Stockholders’ Equity | $ 146,298,511 | $ 182,742,475 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 0 |
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 450,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 255,382,128 | 165,605,355 |
Common stock, shares outstanding (in shares) | 255,382,128 | 165,605,355 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Sales, net of returns and allowances | $ 3,028,545 | $ 1,548,798 | $ 8,688,423 | $ 1,575,652 |
Cost of sales | 6,557,358 | 9,515,547 | 20,312,854 | 16,459,102 |
Gross loss | (3,528,813) | (7,966,749) | (11,624,431) | (14,883,450) |
Operating expenses | ||||
Selling, general and administrative | 11,756,291 | 34,753,017 | 40,448,651 | 59,693,419 |
Research and development | 5,771,588 | 6,126,951 | 18,056,182 | 15,165,946 |
Total operating expenses | 17,527,879 | 40,879,968 | 58,504,833 | 74,859,365 |
Loss from operations | (21,056,692) | (48,846,717) | (70,129,264) | (89,742,815) |
Interest income (expense), net | 410,980 | 27,716 | 1,466,839 | (2,290,993) |
Other income (loss) | (10,000,000) | 13,413,500 | (10,000,000) | 13,413,500 |
Loss before benefit for income taxes | (30,645,712) | (35,405,501) | (78,662,425) | (78,620,308) |
Benefit for income taxes | 0 | 0 | 0 | 0 |
Net loss | $ (30,645,712) | $ (35,405,501) | $ (78,662,425) | $ (78,620,308) |
Net loss per share of common stock | ||||
Basic (in usd per share) | $ (0.14) | $ (0.22) | $ (0.41) | $ (0.50) |
Diluted (in usd per share) | $ (0.14) | $ (0.22) | $ (0.41) | $ (0.50) |
Weighted average shares used in computing net loss per share of common stock | ||||
Basic (in shares) | 215,878,517 | 160,213,944 | 189,756,837 | 157,117,380 |
Diluted (in shares) | 215,878,517 | 160,213,944 | 189,756,837 | 157,117,380 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders’ Equity - USD ($) | Total | At Market Offering | Common Stock | Common Stock At Market Offering | Additional Paid-in Capital | Additional Paid-in Capital At Market Offering | Accumulated Deficit | Accumulated Other Comprehensive Loss | |
Common stock, beginning balance (in shares) at Dec. 31, 2021 | 151,915,455 | ||||||||
Beginning balance at Dec. 31, 2021 | $ 174,692,773 | $ 151,916 | $ 686,318,201 | $ (510,374,844) | $ (1,402,500) | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Common stock issued in exchange of convertible notes (in shares) | 7,833,666 | ||||||||
Common stock issued in exchange of convertible notes | 25,381,078 | $ 7,834 | 25,373,244 | ||||||
Common stock issued through At-The-Market offering (in shares) | 98,986 | ||||||||
Common stock issued through At-The-Market offering | $ 248,695 | $ 99 | $ 248,596 | ||||||
Stock options and vesting of restricted shares (in shares) | [1] | 599,970 | |||||||
Stock options and vesting of restricted shares | [1] | (466,532) | $ 599 | (467,131) | |||||
Stock-based compensation | 8,627,977 | 8,627,977 | |||||||
Net loss | (78,620,308) | (78,620,308) | |||||||
Other comprehensive loss | 1,402,500 | 1,402,500 | |||||||
Common stock, ending balance (in shares) at Sep. 30, 2022 | 160,448,077 | ||||||||
Ending balance at Sep. 30, 2022 | 131,266,183 | $ 160,448 | 720,100,887 | (588,995,152) | 0 | ||||
Common stock, beginning balance (in shares) at Jun. 30, 2022 | 160,058,512 | ||||||||
Beginning balance at Jun. 30, 2022 | 163,828,453 | $ 160,059 | 717,258,045 | (553,589,651) | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Stock options and vesting of restricted shares (in shares) | [1] | 389,565 | |||||||
Stock options and vesting of restricted shares | [1] | (142,044) | $ 389 | (142,433) | |||||
Stock-based compensation | 2,985,275 | 2,985,275 | |||||||
Net loss | (35,405,501) | (35,405,501) | |||||||
Common stock, ending balance (in shares) at Sep. 30, 2022 | 160,448,077 | ||||||||
Ending balance at Sep. 30, 2022 | $ 131,266,183 | $ 160,448 | 720,100,887 | (588,995,152) | 0 | ||||
Common stock, beginning balance (in shares) at Dec. 31, 2022 | 165,605,355 | 165,605,355 | |||||||
Beginning balance at Dec. 31, 2022 | $ 108,586,931 | $ 165,605 | 736,070,388 | (627,649,062) | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Common stock issued for securities litigation settlement (in shares) | 25,380,711 | ||||||||
Common stock issued for securities litigation settlement | 20,000,000 | $ 25,381 | 19,974,619 | ||||||
Common stock issued through At-The-Market offering (in shares) | 116,347 | 63,323,352 | |||||||
Common stock issued through At-The-Market offering | 200,000 | 52,789,512 | $ 116 | $ 63,323 | 199,884 | 52,726,189 | |||
Stock options and vesting of restricted shares (in shares) | [2] | 956,363 | |||||||
Stock options and vesting of restricted shares | [2] | (467,214) | $ 957 | (468,171) | |||||
Stock-based compensation | 10,321,889 | 10,321,889 | |||||||
Net loss | $ (78,662,425) | (78,662,425) | |||||||
Common stock, ending balance (in shares) at Sep. 30, 2023 | 255,382,128 | 255,382,128 | |||||||
Ending balance at Sep. 30, 2023 | $ 112,768,693 | $ 255,382 | 818,824,798 | (706,311,487) | 0 | ||||
Common stock, beginning balance (in shares) at Jun. 30, 2023 | 205,221,154 | ||||||||
Beginning balance at Jun. 30, 2023 | 107,387,721 | $ 205,221 | 782,848,275 | (675,665,775) | 0 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Common stock issued for securities litigation settlement (in shares) | 25,380,711 | ||||||||
Common stock issued for securities litigation settlement | 20,000,000 | $ 25,381 | 19,974,619 | ||||||
Common stock issued through At-The-Market offering (in shares) | 24,639,221 | ||||||||
Common stock issued through At-The-Market offering | $ 12,497,904 | $ 24,639 | $ 12,473,265 | ||||||
Stock options and vesting of restricted shares (in shares) | [2] | 141,042 | |||||||
Stock options and vesting of restricted shares | [2] | 8,376 | $ 141 | 8,235 | |||||
Stock-based compensation | 3,520,404 | 3,520,404 | |||||||
Net loss | $ (30,645,712) | (30,645,712) | |||||||
Common stock, ending balance (in shares) at Sep. 30, 2023 | 255,382,128 | 255,382,128 | |||||||
Ending balance at Sep. 30, 2023 | $ 112,768,693 | $ 255,382 | $ 818,824,798 | $ (706,311,487) | $ 0 | ||||
[1]Net of tax payments related to shares withheld for option exercises and vested stock.[2]Net of tax payments related to shares withheld for option exercises and vested stock. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (78,662,425) | $ (78,620,308) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,468,832 | 1,378,365 |
Change in fair value and loss on exchange of convertible notes | 0 | 1,769,857 |
Deferred revenue | (143,169) | 0 |
Stock-based compensation | 10,321,889 | 8,627,977 |
Impairment of investment in Tropos | 10,000,000 | 0 |
Change in inventory and prepaid purchases reserve | 550,090 | 5,196,774 |
Non-cash lease expense | 583,348 | 855,119 |
Other non-cash items | 200,000 | 175,750 |
Effects of changes in operating assets and liabilities: | ||
Accounts receivable | (5,295,003) | (16,398,420) |
Inventory | (28,492,532) | (6,969,095) |
Prepaid expenses and other current assets | (1,083,886) | (10,317,025) |
Other assets | 0 | (84,401) |
Accounts payable, accrued liabilities and other | (5,563,625) | 29,650,491 |
Warranty liability | (430,154) | (1,244,432) |
Net cash used in operating activities | (95,546,635) | (65,979,348) |
Cash flows from investing activities: | ||
Capital expenditures | (16,527,317) | (9,708,699) |
Investment in Tropos | 0 | (5,000,000) |
Net cash used in investing activities | (16,527,317) | (14,708,699) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 52,789,512 | 248,695 |
Payments on finance lease | (659,582) | (623,648) |
Exercise of options and restricted share award activity | (467,214) | (466,532) |
Net cash provided by (used in) financing activities | 51,662,716 | (841,485) |
Change in cash and cash equivalents | (60,411,236) | (81,529,532) |
Cash and cash equivalents, beginning of the period | 99,276,301 | 201,647,394 |
Cash and cash equivalents, end of the period | $ 38,865,065 | $ 120,117,862 |
SUMMARY OF BUSINESS AND SIGNIFI
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES | SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES Overview We are an American technology company with a vision to pioneer the transition to zero-emission commercial vehicles. Our primary focus is to provide sustainable and cost-effective solutions to the commercial transportation sector. We design and manufacture all-electric delivery trucks and drone systems, including the technology that optimizes the way these vehicles operate. We are focused on our core competency of bringing our electric delivery vehicle programs to market. Basis of Presentation and Consolidation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting and include the accounts and operations of the Company and those of our wholly-owned subsidiaries. Accordingly, they do not include all of the information and footnotes required by GAAP for annual audited financial statements. All intercompany balances and transactions have been eliminated upon consolidation. In the opinion of our management, the unaudited Condensed Consolidated Financial Statements have been prepared on a basis consistent with the audited consolidated financial statements and include all adjustments necessary for the fair presentation of Workhorse’s financial condition, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal, recurring nature. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. Reference should be made to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022. Liquidity and Going Concern The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP applicable to a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these unaudited Condensed Consolidated Financial Statements are issued and will be able to realize assets and discharge its liabilities and commitments in the normal course of business. Pursuant to the requirements of the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - Going Concern (“ASC 205-40”), management must evaluate whether there are conditions and events, considered in aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date these unaudited Condensed Consolidated Financial Statements are issued. In accordance with ASC 205-40, management’s analysis can only include the potential mitigating impact of management’s plans that have not been fully implemented as of the issuance date if (a) it is probable that management’s plans will be effectively implemented on a timely basis, and (b) it is probable that the plans, when implemented, will alleviate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. We had sales of $8.7 million, incurred a net loss of $78.7 million and used $95.5 million of cash in operating activities during the nine months ended September 30, 2023. As of September 30, 2023, the Company had total working capital of $71.9 million, including $38.9 million of cash and cash equivalents, and an accumulated deficit of $706.3 million. As a result of our recurring losses from operations, accumulated deficit, projected capital needs, and delays in bringing our vehicles to market and, accordingly, lower than expected revenues from vehicle sales, substantial doubt exists regarding our ability to continue as a going concern within one year after the issuance date of the accompanying unaudited Condensed Consolidated Financial Statements. Our ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve the Company’s liquidity and working capital, which includes, but is not limited to: • Generating revenue by increasing sales of our vehicles, delivery and other services. • Reducing expenses and limiting non-contracted capital expenditures. • Raising capital to fund operations through the issuance of debt or equity securities, including through our at-the market offering program (“ATM Program)”, the sale of assets, or other strategic transactions. It is essential that we have access to capital as we bring our existing line of vehicles to market, scale up production and sales of such vehicles and continue to develop our next generation of vehicles. There is no assurance that we will be successful in implementing management’s plans to generate liquidity to fund these activities or other aspects of our short and long-term strategy, that our projections of our future capital needs will prove accurate or that any additional funding would be available or sufficient to continue operations in future periods. The unaudited Condensed Consolidated Financial Statements do not include any adjustments that may result from the outcome of this uncertainty. Reclassifications Certain prior period balances have been reclassified to conform to the current year presentation in the unaudited Condensed Consolidated Financial Statements and the accompanying notes. These reclassifications have no effect on previously reported results of operations or stockholders’ equity. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes. |
INVENTORY, NET
INVENTORY, NET | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORY, NET | INVENTORY, NET Inventory, net consisted of the following: September 30, 2023 December 31, 2022 Raw materials $ 24,032,324 $ 42,500,878 Work in process 1,516,984 25,210,131 Finished goods 1 17,745,316 301,645 43,294,624 68,012,654 Less: inventory reserves (2,511,332) (59,162,512) Inventory, net $ 40,783,292 $ 8,850,142 (1) Finished goods inventory includes new vehicles available for sale. We reserve inventory for any excess or obsolete inventories or when we believe the net realizable value of inventories is less than the carrying value. As of September 30, 2023 and December 31, 2022, the Company recorded inventory reserves of $2.5 million and $59.2 million, respectively. The period over period decrease in inventory reserves was primarily driven by our efforts to sell and dispose of C-Series vehicle program inventory, which was fully reserved as the program was discontinued at the end of 2022. The sale and disposal activity did not have a material impact on the Company’s results of operations during the nine months ended September 30, 2023. |
CONTRACT MANUFACTURING SERVICES
CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS | CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS We have a minority ownership investment in Tropos Technologies, Inc. (“Tropos”). The investment was obtained during the third quarter of 2022 in exchange for a cash payment of $5.0 million and a $5.0 million contribution of non-cash consideration representing a deposit from Tropos for future assembly services under an Assembly Services Agreement. The $5.0 million non-cash consideration was recorded as deferred revenue and is recognized as revenue over time as assembly service performance obligations are satisfied. We record our investment at cost less impairment, if applicable. In accordance with FASB ASC Topic 321, Investments - Equity Securities, we assess our investment for impairment at each reporting period to determine if the fair value has declined below its cost basis and if the impairment is other-than-temporary. As of September 30, 2023, we determined that our investment in Tropos is impaired based on the economic conditions and uncertainties that have significantly affected Tropos' performance and financial position. The impairment is considered to be other-than-temporary as the decline in fair value of the investment is not expected to recover in the foreseeable future. The impairment charge recognized for our investment is $10.0 million, which represents the difference between the original cost of the investment and its fair value as of the impairment assessment date. The impairment loss was recognized in Other Income (Loss) in the unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following: September 30, 2023 December 31, 2022 Prepaid purchases (1) $ 26,252,384 $ 34,611,649 Less: prepaid purchases reserve (2) (17,419,622) (22,163,338) Prepaid purchases, net 8,832,762 12,448,311 Prepaid insurance 1,260,313 1,198,769 Other 612,829 505,401 Prepaid expenses and other current assets $ 10,705,904 $ 14,152,481 (1) The Company’s prepaid purchases consist primarily of deposits made to our suppliers for non-recurring engineering costs, capital expenditures, and production parts. The decrease in prepaid purchases as compared to December 31, 2022 is primarily due to receiving inventory on supplier orders related to our W4 CC, W750 and W56 vehicle programs, with limited new supplier orders requiring prepayment. Additionally, we wrote-off prepaid purchases related to the C-Series vehicle program, which were fully reserved as the program was discontinued in 2022. (2) We record reserves on prepaid purchases that are significantly aged, for balances that represent deposits for certain production parts related to the Company’s C-Series vehicle program, and for balances specifically identified as having a carrying value in excess of net realizable value. The reserve represents our best estimate of deposits on orders that we do not expect to recover. The decrease in the reserve was a result of the write-off of prepaid purchases related to the C-Series vehicle program, which was fully reserved as the program was discontinued in 2022. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Revenue Recognition The following table provides a summary of sales activity for the periods indicated: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Sales, net of returns and allowances $ 2,570,250 $ 1,336,792 $ 7,292,417 $ 1,336,792 Other sales 458,295 212,006 1,396,006 238,860 Total sales, net of returns and allowances $ 3,028,545 $ 1,548,798 $ 8,688,423 $ 1,575,652 Sales for the three months ended September 30, 2023 included the reversal of a $2.4 million sales allowance related to W4 CC vehicle sales. Sales for the nine months ended September 30, 2023 and 2022 consisted primarily of W4 CC vehicle sales. Other sales for the three and nine months ended September 30, 2023 consisted of delivery services, service parts and other services. Deferred revenue is equivalent to the total service fee allocated to the assembly service performance obligations that are unsatisfied as of the balance sheet date. Deferred revenue was $4.7 million and $5.4 million as of September 30, 2023 and December 31, 2022, respectively. Revenue recognized from the deferred revenue balance was $0.1 million and $0.2 million for the three and nine months ended September 30, 2023, respectively, and zero for the three and nine months ended September 30, 2022. |
ACCRUED AND OTHER CURRENT LIABI
ACCRUED AND OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
ACCRUED AND OTHER CURRENT LIABILITIES | ACCRUED AND OTHER CURRENT LIABILITIES Accrued and other current liabilities consisted of the following: September 30, 2023 December 31, 2022 Legal reserve (Note 13) $ — $ 35,000,000 Compensation and related costs 2,852,605 4,967,187 Other 3,006,149 6,240,244 Total accrued and other current liabilities $ 5,858,754 $ 46,207,431 Warranties Warranty liability activity consisted of the following for the periods indicated: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Warranty liability, beginning of period $ 1,922,580 $ 3,322,212 $ 2,207,674 $ 4,583,916 Warranty costs incurred (289,404) (387,584) (884,717) (1,086,542) Provision for warranty 144,344 404,856 454,563 (157,890) Warranty liability, end of period $ 1,777,520 $ 3,339,484 $ 1,777,520 $ 3,339,484 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASES We have entered into various operating and finance lease agreements for offices, manufacturing and warehouse facilities. We determine if an arrangement is a lease, or contains a lease provision, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for our use by the lessor. We have elected not to disclose in the unaudited Condensed Consolidated Balance Sheets leases with a lease term of 12 months or less at lease inception that do not contain a purchase option or renewal term provision we are reasonably certain to exercise. All other lease right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Our leases may include options to extend the lease term for up to 5 years. Some of our leases also include options to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain we will exercise such options. Three Months Ended Nine Months Ended 2023 2022 2023 2022 Short-term lease expense $ 74,058 $ 179,704 $ 200,733 $ 603,712 Operating lease expense 614,060 521,566 1,754,557 1,284,533 Total lease expense $ 688,118 $ 701,270 $ 1,955,290 $ 1,888,245 Lease right-of-use assets consisted of the following: September 30, 2023 December 31, 2022 Operating leases $ 5,207,130 $ 5,884,865 Finance leases 5,671,370 5,821,938 Total lease right-of-use assets $ 10,878,500 $ 11,706,803 Lease liabilities consisted of the following: September 30, 2023 December 31, 2022 Operating leases $ 6,516,981 $ 6,977,896 Finance leases 2,703,576 3,147,198 Total lease liabilities 9,220,557 10,125,094 Less: current portion (1,561,769) (1,285,032) Long-term portion $ 7,658,788 $ 8,840,062 |
LEASES | LEASES We have entered into various operating and finance lease agreements for offices, manufacturing and warehouse facilities. We determine if an arrangement is a lease, or contains a lease provision, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for our use by the lessor. We have elected not to disclose in the unaudited Condensed Consolidated Balance Sheets leases with a lease term of 12 months or less at lease inception that do not contain a purchase option or renewal term provision we are reasonably certain to exercise. All other lease right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Our leases may include options to extend the lease term for up to 5 years. Some of our leases also include options to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain we will exercise such options. Three Months Ended Nine Months Ended 2023 2022 2023 2022 Short-term lease expense $ 74,058 $ 179,704 $ 200,733 $ 603,712 Operating lease expense 614,060 521,566 1,754,557 1,284,533 Total lease expense $ 688,118 $ 701,270 $ 1,955,290 $ 1,888,245 Lease right-of-use assets consisted of the following: September 30, 2023 December 31, 2022 Operating leases $ 5,207,130 $ 5,884,865 Finance leases 5,671,370 5,821,938 Total lease right-of-use assets $ 10,878,500 $ 11,706,803 Lease liabilities consisted of the following: September 30, 2023 December 31, 2022 Operating leases $ 6,516,981 $ 6,977,896 Finance leases 2,703,576 3,147,198 Total lease liabilities 9,220,557 10,125,094 Less: current portion (1,561,769) (1,285,032) Long-term portion $ 7,658,788 $ 8,840,062 |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION We maintain, as approved by the board of directors and the stockholders, the 2017 Incentive Stock Plan, the 2019 Incentive Stock Plan and the 2023 Long-Term Incentive Plan (the “Plans”) providing for the issuance of stock-based awards to employees, officers, directors or consultants of the Company. Non-qualified stock options may only be granted with an exercise price equal to the market value of our common stock on the grant date. Awards under the Plans may be either vested or unvested options, or unvested restricted stock. The Plans have authorized 17.5 million shares for issuance of stock-based awards. As of September 30, 2023 there were approximatel y 2.9 million shares available for issuance of future stock awards under the Plans. Stock-based compensation expense The following table summarizes stock-based compensation expense for the periods indicated: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Stock options $ 244,887 $ 245,867 $ 727,996 $ 732,830 Restricted stock awards 2,385,351 2,047,989 6,952,423 5,954,098 Performance-based restricted stock awards 890,166 691,419 2,641,470 1,941,049 Total stock-based compensation expense $ 3,520,404 $ 2,985,275 $ 10,321,889 $ 8,627,977 Stock options A summary of stock option activity for the nine months ended September 30, 2023 is as follows: Number of Options Weighted Weighted Balance, December 31, 2022 423,626 $ 7.6 6.7 Exercised (50,200) 1.1 Forfeited (80,997) 1.7 Balance, September 30, 2023 292,429 $ 10.3 8.3 Number of options exercisable at September 30, 2023 204,213 $ 10.3 8.3 As of September 30, 2023, unrecognized compensation expense was $0.9 million for unvested options which is expected to be recognized over the next 0.9 years. Restricted stock awards A summary of restricted stock award activity for the nine months ended September 30, 2023 is as follows: Number of Unvested Shares Weighted Average Grant Date Fair Value per Share Balance, December 31, 2022 3,525,331 $ 4.9 Granted 3,962,731 1.5 Vested (1,516,409) 4.5 Forfeited (311,998) 2.7 Balance, September 30, 2023 5,659,655 $ 2.7 As of September 30, 2023, unrecognized compensation expense was $11.7 million for unvested restricted stock awards which is expected to be recognized over the next 1.6 years. Performance share units ( “ PSUs ” ) As of September 30, 2023, the number of unvested PSUs was 3.1 million. The vesting of the PSUs is conditioned upon achievement of certain performance objectives over performance periods ending December 31, 2024 and 2025 as defined in each award agreement. Fifty percent of the PSUs vest based upon the Company’s total shareholder return as compared to a group of peer companies (“TSR PSUs”), and fifty percent of the PSUs vest based upon our performance on certain measures including a cumulative adjusted EBITDA target (“EBITDA PSUs”). Depending on the actual achievement of the performance objectives, the grantee may earn between 0% and 200% of the target PSUs. A summary of the activity for PSU awards with total shareholder return performance objectives for the nine months ended September 30, 2023 is as follows: Number of Unvested Shares Weighted Average Grant Date Fair Value per Share Balance, December 31, 2022 738,751 $ 11.8 Granted 986,144 1.9 Forfeited (22,278) 1.9 Balance, September 30, 2023 1,702,617 $ 6.2 The grant date fair value of $1.88 per TSR PSU for the awards issued in 2023 was estimated using a Monte-Carlo simulation model using a volatility assumption of 109% and risk-free interest rate of 3.77%. The grant date fair value of $11.79 per TSR PSU for the awards issued in 2022 was estimated using a Monte-Carlo simulation model using a volatility assumption of 117% and risk-free interest rate of 0.69%. As of September 30, 2023, unrecognized compensation expense was $5.0 million for unvested TSR PSUs, which is expected to be recognized over the next 1.5 years. A summary of the PSU awards with cumulative adjusted EBITDA targets for the nine months ended September 30, 2023 is as follows: Number of Unvested Shares Balance, December 31, 2022 432,546 Granted 986,144 Forfeited (22,278) Balance, September 30, 2023 1,396,412 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS ’ EQUITY Securities Litigation Settlement On September 1, 2023, we issued 25.4 million shares of common stock with an aggregate value of $20.0 million in connection with the settlement of the Securities Litigation as described below in Note 13, Commitments and Contingencies . The number of shares was based on the market price per share of our common stock on August 31, 2023. This transaction was recorded as a noncash operating activity. As a result of the settlement, we no longer have any obligation related to the securities litigation and, as such, the $15.0 million insurance receivable previously recorded in Other Receivable and $35.0 million legal reserve previously recorded in Accrued and Other Current Liabilities were zero as of September 30, 2023. At-The-Market Sales Agreement On March 10, 2022, we entered into the ATM Program, under which we may offer and sell shares of our common stock having an aggregate sales price of up to $175.0 million. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESAs of September 30, 2023 and December 31, 2022, the Company's deferred tax liability was zero. Cumulative deferred tax assets are fully reserved as there is not sufficient evidence to conclude it is more likely than not the deferred tax assets are realizable. No current liability for federal or state income taxes has been included in these unaudited Condensed Consolidated Financial Statements due to the loss for the periods. |
LOSS PER SHARE
LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | LOSS PER SHARE Basic loss per share of common stock is calculated by dividing net loss by the weighted-average shares outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards and warrants using the treasury stock method, and convertible notes using the if-converted method, are included when calculating the diluted net loss per share of common stock when their effect is dilutive. The following table presents the potentially dilutive shares that were excluded from the computation of diluted net loss per share of common stock, because their effect was anti-dilutive: Three Months Ended September 30, Nine Months Ended 2023 2022 2023 2022 Stock-based awards and warrants 10,094,146 3,364,289 10,094,146 10,129,870 Convertible notes (1) — — — 7,833,666 |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Accounting Standards and Pronouncements Recently Adopted There are no accounting standards or pronouncements recently adopted impacting the Company. Accounting Standards and Pronouncements Not Yet Adopted There are no accounting standards or pronouncements not yet adopted impacting the Company. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES General Matters The Company is party to various negotiations and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity. Federal Motor Vehicle Safety Standards (“FMVSS”) Certification and Other Regulatory Matters For information regarding certain regulatory matters, see Note 17, “Commitments and Contingencies – Federal Motor Vehicle Safety Standards (“FMVSS”) Certification and Other Regulatory Matters” included in Item 8, “Financial Statements and Supplementary Data” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Legal Proceedings Securities Litigation On October 24, 2022, the Company entered into a binding term sheet to resolve the putative class action (the “Securities Class Action”) brought in the Central District of California (Case No.2:21-cv-02072) on behalf of purchasers of the Company’s securities from March 10, 2020 through May 10, 2021. On January 13, 2023, the parties executed a Stipulation of Settlement setting forth the terms of the settlement of the class action and resolution of all claims. On July 28, 2023 (the “Judgment Date”), the Court entered an order (the “Order”) granting final approval of the Stipulation of Settlement, resolving the Securities Class Action. Pursuant to the Stipulation of Settlement, in exchange for a release of all claims and dismissal with prejudice of the Securities Class Action, the Company agreed to create a settlement fund with an escrow agent (the “Settlement Fund”), consisting of $15.0 million in cash and $20.0 million in shares of common stock of the Company (the “Settlement Shares”) from which class members will receive payment. The escrow agent may sell the Settlement Shares and deposit the proceeds from such sales into the Settlement Fund or may distribute the Settlement Shares to class members. Pursuant to the Stipulation of Settlement, the number of Settlement Shares to be issued was based on the volume weighted average price (“VWAP”) of the Company’s common stock for the 15 trading days immediately preceding the Judgment Date. The VWAP would be adjusted if, at market close on the trading day before the date the Company deposits the Settlement Shares, the market price per share of the Company’s common stock deviated more than 25% above or below the VWAP Price. Upon such deviation, the number of Settlement Shares would be adjusted, upward or downward, such that the aggregate value of the Settlement Shares equals $20.0 million. Consistent with the foregoing, the Company issued 25,380,711 shares of its common stock into the Settlement Fund as Settlement Shares in September 2023. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | DEBT On August 10, 2023, the Company entered into a Floorplan and Security Agreement (the “Agreement”) with Mitsubishi HC Capital America, Inc. Pursuant to this arrangement, the Company has obtained a revolving floorplan line of credit with a maximum borrowing limit of $5.0 million, which remained undrawn and fully available as of September 30, 2023. The floorplan line of credit allows the Company to finance the acquisition of inventory, which is primarily intended for use in our manufacturing and sales of our W4 CC and W750 vehicles. Under this arrangement, the Company can borrow funds up to the specified borrowing limit to acquire eligible inventory. As the inventory is sold, the Company is required to repay the borrowings from the proceeds of the sales. The terms of the floorplan lending line of credit include interest charged on the outstanding borrowings and may also include other fees and covenants. Interest is typically charged at a variable rate based on a reference interest rate, such as the Secured Overnight Financing Rate (“SOFR”), plus 4.86%. The floorplan lending line of credit is secured by a security interest in the eligible inventory. The term of the Agreement is one year and is subject to automatic renewal on an annual basis. The Company believes that the Agreement provides a valuable source of financing to support its inventory management and sales operations. However, the Agreement also exposes the Company to risks related to changes in interest rates, inventory values, and the availability of eligible inventory. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net loss | $ (30,645,712) | $ (35,405,501) | $ (78,662,425) | $ (78,620,308) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF BUSINESS AND SIGNI_2
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Overview | Overview We are an American technology company with a vision to pioneer the transition to zero-emission commercial vehicles. Our primary focus is to provide sustainable and cost-effective solutions to the commercial transportation sector. We design and manufacture all-electric delivery trucks and drone systems, including the technology that optimizes the way these vehicles operate. We are focused on our core competency of bringing our electric delivery vehicle programs to market. |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting and include the accounts and operations of the Company and those of our wholly-owned subsidiaries. Accordingly, they do not include all of the information and footnotes required by GAAP for annual audited financial statements. All intercompany balances and transactions have been eliminated upon consolidation. |
Liquidity and Capital Resources | Liquidity and Going Concern The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP applicable to a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these unaudited Condensed Consolidated Financial Statements are issued and will be able to realize assets and discharge its liabilities and commitments in the normal course of business. Pursuant to the requirements of the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - Going Concern (“ASC 205-40”), management must evaluate whether there are conditions and events, considered in aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date these unaudited Condensed Consolidated Financial Statements are issued. In accordance with ASC 205-40, management’s analysis can only include the potential mitigating impact of management’s plans that have not been fully implemented as of the issuance date if (a) it is probable that management’s plans will be effectively implemented on a timely basis, and (b) it is probable that the plans, when implemented, will alleviate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern. We had sales of $8.7 million, incurred a net loss of $78.7 million and used $95.5 million of cash in operating activities during the nine months ended September 30, 2023. As of September 30, 2023, the Company had total working capital of $71.9 million, including $38.9 million of cash and cash equivalents, and an accumulated deficit of $706.3 million. As a result of our recurring losses from operations, accumulated deficit, projected capital needs, and delays in bringing our vehicles to market and, accordingly, lower than expected revenues from vehicle sales, substantial doubt exists regarding our ability to continue as a going concern within one year after the issuance date of the accompanying unaudited Condensed Consolidated Financial Statements. Our ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve the Company’s liquidity and working capital, which includes, but is not limited to: • Generating revenue by increasing sales of our vehicles, delivery and other services. • Reducing expenses and limiting non-contracted capital expenditures. • Raising capital to fund operations through the issuance of debt or equity securities, including through our at-the market offering program (“ATM Program)”, the sale of assets, or other strategic transactions. |
Reclassifications | Reclassifications Certain prior period balances have been reclassified to conform to the current year presentation in the unaudited Condensed Consolidated Financial Statements and the accompanying notes. These reclassifications have no effect on previously reported results of operations or stockholders’ equity. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes. |
Revenue Recognition | Deferred revenue is equivalent to the total service fee allocated to the assembly service performance obligations that are unsatisfied as of the balance sheet date. |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Accounting Standards and Pronouncements Recently Adopted There are no accounting standards or pronouncements recently adopted impacting the Company. Accounting Standards and Pronouncements Not Yet Adopted There are no accounting standards or pronouncements not yet adopted impacting the Company. |
INVENTORY, NET (Tables)
INVENTORY, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory, net consisted of the following: September 30, 2023 December 31, 2022 Raw materials $ 24,032,324 $ 42,500,878 Work in process 1,516,984 25,210,131 Finished goods 1 17,745,316 301,645 43,294,624 68,012,654 Less: inventory reserves (2,511,332) (59,162,512) Inventory, net $ 40,783,292 $ 8,850,142 (1) Finished goods inventory includes new vehicles available for sale. |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid and Other Current Assets | Prepaid expenses and other current assets consisted of the following: September 30, 2023 December 31, 2022 Prepaid purchases (1) $ 26,252,384 $ 34,611,649 Less: prepaid purchases reserve (2) (17,419,622) (22,163,338) Prepaid purchases, net 8,832,762 12,448,311 Prepaid insurance 1,260,313 1,198,769 Other 612,829 505,401 Prepaid expenses and other current assets $ 10,705,904 $ 14,152,481 (1) The Company’s prepaid purchases consist primarily of deposits made to our suppliers for non-recurring engineering costs, capital expenditures, and production parts. The decrease in prepaid purchases as compared to December 31, 2022 is primarily due to receiving inventory on supplier orders related to our W4 CC, W750 and W56 vehicle programs, with limited new supplier orders requiring prepayment. Additionally, we wrote-off prepaid purchases related to the C-Series vehicle program, which were fully reserved as the program was discontinued in 2022. (2) We record reserves on prepaid purchases that are significantly aged, for balances that represent deposits for certain production parts related to the Company’s C-Series vehicle program, and for balances specifically identified as having a carrying value in excess of net realizable value. The reserve represents our best estimate of deposits on orders that we do not expect to recover. The decrease in the reserve was a result of the write-off of prepaid purchases related to the C-Series vehicle program, which was fully reserved as the program was discontinued in 2022. |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Sales Activity | The following table provides a summary of sales activity for the periods indicated: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Sales, net of returns and allowances $ 2,570,250 $ 1,336,792 $ 7,292,417 $ 1,336,792 Other sales 458,295 212,006 1,396,006 238,860 Total sales, net of returns and allowances $ 3,028,545 $ 1,548,798 $ 8,688,423 $ 1,575,652 |
ACCRUED AND OTHER CURRENT LIA_2
ACCRUED AND OTHER CURRENT LIABILITIES - (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued and other current liabilities consisted of the following: September 30, 2023 December 31, 2022 Legal reserve (Note 13) $ — $ 35,000,000 Compensation and related costs 2,852,605 4,967,187 Other 3,006,149 6,240,244 Total accrued and other current liabilities $ 5,858,754 $ 46,207,431 |
Schedule of Product Warranty Liability | Warranty liability activity consisted of the following for the periods indicated: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Warranty liability, beginning of period $ 1,922,580 $ 3,322,212 $ 2,207,674 $ 4,583,916 Warranty costs incurred (289,404) (387,584) (884,717) (1,086,542) Provision for warranty 144,344 404,856 454,563 (157,890) Warranty liability, end of period $ 1,777,520 $ 3,339,484 $ 1,777,520 $ 3,339,484 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Lease, Cost | Three Months Ended Nine Months Ended 2023 2022 2023 2022 Short-term lease expense $ 74,058 $ 179,704 $ 200,733 $ 603,712 Operating lease expense 614,060 521,566 1,754,557 1,284,533 Total lease expense $ 688,118 $ 701,270 $ 1,955,290 $ 1,888,245 Lease right-of-use assets consisted of the following: September 30, 2023 December 31, 2022 Operating leases $ 5,207,130 $ 5,884,865 Finance leases 5,671,370 5,821,938 Total lease right-of-use assets $ 10,878,500 $ 11,706,803 |
Schedule of Lease Liabilities | Lease liabilities consisted of the following: September 30, 2023 December 31, 2022 Operating leases $ 6,516,981 $ 6,977,896 Finance leases 2,703,576 3,147,198 Total lease liabilities 9,220,557 10,125,094 Less: current portion (1,561,769) (1,285,032) Long-term portion $ 7,658,788 $ 8,840,062 |
STOCK-BASED COMPENSATION - (Tab
STOCK-BASED COMPENSATION - (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Based Compensation Activity | The following table summarizes stock-based compensation expense for the periods indicated: Three Months Ended Nine Months Ended 2023 2022 2023 2022 Stock options $ 244,887 $ 245,867 $ 727,996 $ 732,830 Restricted stock awards 2,385,351 2,047,989 6,952,423 5,954,098 Performance-based restricted stock awards 890,166 691,419 2,641,470 1,941,049 Total stock-based compensation expense $ 3,520,404 $ 2,985,275 $ 10,321,889 $ 8,627,977 |
Schedule of Stock Option Activity | A summary of stock option activity for the nine months ended September 30, 2023 is as follows: Number of Options Weighted Weighted Balance, December 31, 2022 423,626 $ 7.6 6.7 Exercised (50,200) 1.1 Forfeited (80,997) 1.7 Balance, September 30, 2023 292,429 $ 10.3 8.3 Number of options exercisable at September 30, 2023 204,213 $ 10.3 8.3 |
Schedule of Restricted Stock Activity | A summary of restricted stock award activity for the nine months ended September 30, 2023 is as follows: Number of Unvested Shares Weighted Average Grant Date Fair Value per Share Balance, December 31, 2022 3,525,331 $ 4.9 Granted 3,962,731 1.5 Vested (1,516,409) 4.5 Forfeited (311,998) 2.7 Balance, September 30, 2023 5,659,655 $ 2.7 |
Schedule of Nonvested Performance-Based Units Activity | A summary of the activity for PSU awards with total shareholder return performance objectives for the nine months ended September 30, 2023 is as follows: Number of Unvested Shares Weighted Average Grant Date Fair Value per Share Balance, December 31, 2022 738,751 $ 11.8 Granted 986,144 1.9 Forfeited (22,278) 1.9 Balance, September 30, 2023 1,702,617 $ 6.2 A summary of the PSU awards with cumulative adjusted EBITDA targets for the nine months ended September 30, 2023 is as follows: Number of Unvested Shares Balance, December 31, 2022 432,546 Granted 986,144 Forfeited (22,278) Balance, September 30, 2023 1,396,412 |
LOSS PER SHARE - (Tables)
LOSS PER SHARE - (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents the potentially dilutive shares that were excluded from the computation of diluted net loss per share of common stock, because their effect was anti-dilutive: Three Months Ended September 30, Nine Months Ended 2023 2022 2023 2022 Stock-based awards and warrants 10,094,146 3,364,289 10,094,146 10,129,870 Convertible notes (1) — — — 7,833,666 |
SUMMARY OF BUSINESS AND SIGNI_3
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Sales, net of returns and allowances | $ 3,028,545 | $ 1,548,798 | $ 8,688,423 | $ 1,575,652 | |
Net loss | (30,645,712) | $ (35,405,501) | (78,662,425) | (78,620,308) | |
Net cash used in operating activities | (95,546,635) | $ (65,979,348) | |||
Working capital | 71,900,000 | 71,900,000 | |||
Cash and cash equivalents | 38,865,065 | 38,865,065 | $ 99,276,301 | ||
Accumulated deficit | $ (706,311,487) | $ (706,311,487) | $ (627,649,062) |
INVENTORY, NET - Schedule of In
INVENTORY, NET - Schedule of Inventory (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 24,032,324 | $ 42,500,878 |
Work in process | 1,516,984 | 25,210,131 |
Finished goods | 17,745,316 | 301,645 |
Gross inventory | 43,294,624 | 68,012,654 |
Less: inventory reserves | (2,511,332) | (59,162,512) |
Inventory, net | $ 40,783,292 | $ 8,850,142 |
INVENTORY, NET - Additional Inf
INVENTORY, NET - Additional Information (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory Disclosure [Abstract] | ||
Inventory valuation reserve | $ 2,511,332 | $ 59,162,512 |
CONTRACT MANUFACTURING SERVIC_2
CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS (Details) - Tropos Trechnologies, Inc. - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Short-Term Debt [Line Items] | ||||
Equity method investment, impairment loss | $ 10 | $ 10 | ||
Affiliated Entity | ||||
Short-Term Debt [Line Items] | ||||
Payment to acquire preferred stock | $ 5 | |||
Non-cash consideration | $ 5 | |||
Affiliated Entity | Deposit For Future Services | ||||
Short-Term Debt [Line Items] | ||||
Amount of transaction | $ 5 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid purchases | $ 26,252,384 | $ 34,611,649 |
Less: prepaid purchases reserve | (17,419,622) | (22,163,338) |
Prepaid purchases, net | 8,832,762 | 12,448,311 |
Prepaid insurance | 1,260,313 | 1,198,769 |
Other | 612,829 | 505,401 |
Prepaid expenses and other current assets | $ 10,705,904 | $ 14,152,481 |
REVENUE - Schedule of Sales Act
REVENUE - Schedule of Sales Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total sales, net of returns and allowances | $ 3,028,545 | $ 1,548,798 | $ 8,688,423 | $ 1,575,652 |
Sales, net of returns and allowances | ||||
Disaggregation of Revenue [Line Items] | ||||
Total sales, net of returns and allowances | 2,570,250 | 1,336,792 | 7,292,417 | 1,336,792 |
Other sales | ||||
Disaggregation of Revenue [Line Items] | ||||
Total sales, net of returns and allowances | $ 458,295 | $ 212,006 | $ 1,396,006 | $ 238,860 |
REVENUE - Additional Informatio
REVENUE - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Disaggregation of Revenue [Line Items] | |||||
Total sales, net of returns and allowances | $ 3,028,545 | $ 1,548,798 | $ 8,688,423 | $ 1,575,652 | |
Deferred revenue | 4,700,000 | 4,700,000 | $ 5,400,000 | ||
Contract with customer, liability, revenue recognized | 100,000 | $ 0 | $ 200,000 | $ 0 | |
Sales Allowance | |||||
Disaggregation of Revenue [Line Items] | |||||
Total sales, net of returns and allowances | $ 2,400,000 |
ACCRUED AND OTHER CURRENT LIA_3
ACCRUED AND OTHER CURRENT LIABILITIES - Accrued And Other Current Liabilities (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Legal reserve | $ 0 | $ 35,000,000 |
Compensation and related costs | 2,852,605 | 4,967,187 |
Other | 3,006,149 | 6,240,244 |
Total accrued and other current liabilities | $ 5,858,754 | $ 46,207,431 |
ACCRUED AND OTHER CURRENT LIA_4
ACCRUED AND OTHER CURRENT LIABILITIES - Accrued Warranty Activity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Movement in Extended Product Warranty Accrual [Roll Forward] | ||||
Warranty liability, beginning of period | $ 1,922,580 | $ 3,322,212 | $ 2,207,674 | $ 4,583,916 |
Warranty costs incurred | (289,404) | (387,584) | (884,717) | (1,086,542) |
Provision for warranty | 144,344 | 404,856 | 454,563 | (157,890) |
Warranty liability, end of period | $ 1,777,520 | $ 3,339,484 | $ 1,777,520 | $ 3,339,484 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Sep. 30, 2023 |
Leases [Abstract] | |
Lessee, operating lease, renewal term | 5 years |
LEASES - Lease Expense For Oper
LEASES - Lease Expense For Operating Leases (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||||
Short-term lease expense | $ 74,058 | $ 179,704 | $ 200,733 | $ 603,712 |
Operating lease expense | 614,060 | 521,566 | 1,754,557 | 1,284,533 |
Total lease expense | $ 688,118 | $ 701,270 | $ 1,955,290 | $ 1,888,245 |
LEASES - Right of Use Assets -
LEASES - Right of Use Assets - (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Operating leases | $ 5,207,130 | $ 5,884,865 |
Finance leases | 5,671,370 | 5,821,938 |
Lease right-of-use assets | $ 10,878,500 | $ 11,706,803 |
LEASES - Lease Liabilities - (D
LEASES - Lease Liabilities - (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Operating leases | $ 6,516,981 | $ 6,977,896 |
Finance leases | 2,703,576 | 3,147,198 |
Total lease liabilities | 9,220,557 | 10,125,094 |
Less: current portion | (1,561,769) | (1,285,032) |
Long-term portion | $ 7,658,788 | $ 8,840,062 |
STOCK BASED COMPENSATION - Addi
STOCK BASED COMPENSATION - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized (in shares) | 17,500,000 | ||
Shares available for grant (in shares) | 2,900,000 | ||
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation expense, options | $ 0.9 | ||
Unrecognized compensation expense, recognition period | 10 months 24 days | ||
Restricted stock awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation expense, recognition period | 1 year 7 months 6 days | ||
Unrecognized compensation expense | $ 11.7 | ||
Shares outstanding (in shares) | 5,659,655 | 3,525,331 | |
Performance-based restricted stock awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation expense, recognition period | 1 year 6 months | ||
Unrecognized compensation expense | $ 5 | ||
Shares outstanding (in shares) | 3,100,000 | ||
Performance-based restricted stock awards | 1.88$ | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Closing price (in usd per share) | $ 1.88 | ||
Volatility assumption | 109% | ||
Share-based compensation risk free interest rate | 3.77% | ||
Performance-based restricted stock awards | 11.79$ | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Closing price (in usd per share) | $ 11.79 | ||
Volatility assumption | 117% | ||
Share-based compensation risk free interest rate | 0.69% | ||
Performance-based restricted stock awards | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of awards ultimately vest | 0% | ||
Performance-based restricted stock awards | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of awards ultimately vest | 200% | ||
PSUs With Total Shareholder Return Performance Objective | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares outstanding (in shares) | 1,702,617 | 738,751 | |
Vesting percent | 50% | ||
EBITDA target performance share units (EBITDA PSUs) | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares outstanding (in shares) | 1,396,412 | 432,546 | |
Vesting percent | 50% |
STOCK BASED COMPENSATION - Shar
STOCK BASED COMPENSATION - Share Based Compensation Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 3,520,404 | $ 2,985,275 | $ 10,321,889 | $ 8,627,977 |
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 244,887 | 245,867 | 727,996 | 732,830 |
Restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 2,385,351 | 2,047,989 | 6,952,423 | 5,954,098 |
Performance-based restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 890,166 | $ 691,419 | $ 2,641,470 | $ 1,941,049 |
STOCK BASED COMPENSATION - Stoc
STOCK BASED COMPENSATION - Stock Option Activity (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Number of Options | ||
Beginning balance (in shares) | 423,626 | |
Exercised (in shares) | (50,200) | |
Forfeited (in shares) | (80,997) | |
Ending balance (in shares) | 292,429 | 423,626 |
Number of options exercisable (in shares) | 204,213 | |
Weighted Average Exercise Price per Option | ||
Beginning balance (in usd per share) | $ 7.6 | |
Exercised (in usd per share) | 1.1 | |
Forfeited (in usd per share) | 1.7 | |
Ending balance (in usd per share) | 10.3 | $ 7.6 |
Weighted Average Exercise Price per Option (in usd per share) | $ 10.3 | |
Weighted Average Remaining Contractual Life (Years) | ||
Weighted Average Remaining Contractual Life (Years) | 8 years 3 months 18 days | 6 years 8 months 12 days |
Options exercisable, Weighted Average Remaining Contractual life (Years) | 8 years 3 months 18 days |
STOCK BASED COMPENSATION - Rest
STOCK BASED COMPENSATION - Restricted Stock (Details) - Restricted stock awards | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Number of Unvested Shares | |
Beginning balance (in shares) | shares | 3,525,331 |
Granted (in shares) | shares | 3,962,731 |
Vested (in shares) | shares | (1,516,409) |
Forfeited (in shares) | shares | (311,998) |
Ending balance (in shares) | shares | 5,659,655 |
Weighted Average Grant Date Fair Value per Share | |
Beginning balance (in usd per share) | $ / shares | $ 4.9 |
Granted (in usd per share) | $ / shares | 1.5 |
Vested (in usd per share) | $ / shares | 4.5 |
Forfeited (in usd per share) | $ / shares | 2.7 |
Ending balance (in usd per share) | $ / shares | $ 2.7 |
STOCK BASED COMPENSATION - Perf
STOCK BASED COMPENSATION - Performance Shares, Outstanding Activity (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Performance-based restricted stock awards | |
Number of Unvested Shares | |
Ending balance (in shares) | 3,100,000 |
PSUs With Total Shareholder Return Performance Objective | |
Number of Unvested Shares | |
Beginning balance (in shares) | 738,751 |
Grants in period (in shares) | 986,144 |
Forfeited (in shares) | (22,278) |
Ending balance (in shares) | 1,702,617 |
Weighted Average Grant Date Fair Value per Share | |
Beginning balance (in usd per share) | $ / shares | $ 11.8 |
Granted (in usd per share) | $ / shares | 1.9 |
Forfeited (in usd per share) | $ / shares | 1.9 |
Ending balance (in usd per share) | $ / shares | $ 6.2 |
EBITDA target performance share units (EBITDA PSUs) | |
Number of Unvested Shares | |
Beginning balance (in shares) | 432,546 |
Grants in period (in shares) | 986,144 |
Forfeited (in shares) | (22,278) |
Ending balance (in shares) | 1,396,412 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 01, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Mar. 10, 2022 | |
Loss Contingencies [Line Items] | |||||||
Shares issued for litigation settlement | $ 20,000,000 | $ 20,000,000 | |||||
Other | $ 3,006,149 | $ 3,006,149 | $ 6,240,244 | ||||
Authorized amount | $ 175,000,000 | ||||||
Shares issued in public offering (in shares) | 24,600,000 | 100,000 | 63,300,000 | 100,000 | |||
Consideration received | $ 12,500,000 | $ 200,000 | $ 52,800,000 | $ 200,000 | |||
Remaining authorized amount | $ 108,000,000 | 108,000,000 | |||||
Common stock issued through At-The-Market offering | $ 200,000 | ||||||
Common Stock | |||||||
Loss Contingencies [Line Items] | |||||||
Shares issued during period, litigation settlement (in shares) | 25,380,711 | 25,380,711 | |||||
Shares issued for litigation settlement | $ 25,381 | $ 25,381 | |||||
Common stock issued through At-The-Market offering (in shares) | 116,347 | ||||||
Common stock issued through At-The-Market offering | $ 116 | ||||||
Securities Litigation Settlement | |||||||
Loss Contingencies [Line Items] | |||||||
Insurance receivable | 15,000,000 | 15,000,000 | |||||
Cash paid for legal settlement | 35,000,000 | ||||||
Other | $ 0 | $ 0 | |||||
Securities Litigation Settlement | Common Stock | |||||||
Loss Contingencies [Line Items] | |||||||
Common stock issued through At-The-Market offering (in shares) | 25,400,000 | ||||||
Common stock issued through At-The-Market offering | $ 20,000,000 |
INCOME TAXES - (Details)
INCOME TAXES - (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Income Tax Disclosure [Abstract] | ||
Deferred tax liability | $ 0 | $ 0 |
LOSS PER SHARE - Computation of
LOSS PER SHARE - Computation of Diluted Net Loss Per Share of Common Stock, Because Their Effect was Anti-Dilutive- (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock-based awards and warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive options and warrants excluded from diluted average shares outstanding (in shares) | 10,094,146 | 3,364,289 | 10,094,146 | 10,129,870 |
Convertible notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive options and warrants excluded from diluted average shares outstanding (in shares) | 0 | 0 | 0 | 7,833,666 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 3 Months Ended | 9 Months Ended | |
Jul. 28, 2023 USD ($) d | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) shares | |
Loss Contingencies [Line Items] | |||
Shares issued for litigation settlement | $ 20,000,000 | $ 20,000,000 | |
Case No.2:21-cv-02072 | Settled Litigation | |||
Loss Contingencies [Line Items] | |||
Cash paid for legal settlement | $ 15,000,000 | ||
Shares issued for litigation settlement | $ 20,000,000 | ||
Litigation settlement, threshold trading days | d | 15 | ||
Litigation settlement, price differential to calculation price | 25% | ||
Shares issued during period, litigation settlement (in shares) | shares | 25,380,711 |
Debt - (Details)
Debt - (Details) - Revolving Credit Facility $ in Millions | Aug. 10, 2023 USD ($) |
Debt Instrument [Line Items] | |
Letter of credit | $ 5 |
SOFR | |
Debt Instrument [Line Items] | |
Variable rate | 4.86% |