Fisker (FSRNQ) Financial Report Summaries

Risks

• There is substantial doubt about our ability to continue as a going concern.
• Our ability to develop, manufacture and obtain required regulatory approvals for a car of sufficient quality and appeal to customers on schedule and on a large scale is unproven.
• We are substantially reliant on our relationships with suppliers and service providers for the parts and components in our vehicles, as well as for the manufacture of our initial vehicles. If any of these suppliers or service partners choose to not do business with us, then we would have significant difficulty in procuring and producing our vehicles and our business prospects would be significantly harmed.
• Our relationship with automotive suppliers is integral to our platform procurement and manufacturing plan, and we may not be able to obtain such commitments in the future. We therefore may seek alternative arrangements with a number of component suppliers, and contract manufacturers, which we may not be successful in obtaining.
• If we are unable to continue to contract with OEMs or suppliers on manufacturing of our future vehicles, we would need to develop our own platform and manufacturing facilities, which may not be feasible and, if feasible at all, would significantly increase our capital expenditure and would significantly delay production of our vehicles.
• Manufacturing in collaboration with partners is subject to risks.
• There are complex software and technology systems that need to be developed in coordination with vendors and suppliers in order to reach production for our electric vehicles, and there can be no assurance such systems will be successfully developed.
• We may experience significant delays in the design, manufacture, regulatory approval, launch and financing of our vehicles, which could harm our business and prospects.
• Our vehicles make use of lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.
• We have a limited operating history and face significant challenges as a new entrant into the automotive industry.
• We are an early-stage company with a history of losses, and we expect to incur significant expenses and continuing losses in the future.
• We may not be able to accurately estimate the supply and demand for our vehicles, which could result in a variety of inefficiencies in our business and hinder our ability to generate revenue. If we fail to accurately predict our manufacturing requirements, we could incur additional costs or experience delays.
• Our limited operating history makes evaluating our business and future prospects difficult and will increase the risk of investing in us.
• If our vehicles fail to perform as expected, our ability to develop, market, and sell or lease our electric vehicles could be harmed.
• Our services may not be generally accepted by our users. If we are unable to provide quality customer service, our business and reputation may be materially and adversely affected.
• Reservations for our vehicles are cancellable.
• If we fail to manage our future growth effectively, we may not be able to market and sell or lease our vehicles successfully direct to consumers or through dealerships.
• We may not succeed in establishing, maintaining and strengthening our brand, which would materially and adversely affect customer acceptance of its vehicles and components and its business, revenues and prospects.
• We depend on revenue generated from a single model and in the foreseeable future will be significantly dependent on a limited number of models.
• We are highly dependent on the services of Henrik Fisker, our Chief Executive Officer.
• Our business depends substantially on the continuing efforts of our executive officers and qualified personnel, and our operations may be severely disrupted if we lose their services.
• Failure of information security and privacy concerns could subject us to penalties, damage our reputation and brand, and harm our business and results of operations.
• Any unauthorized control or manipulation of our vehicles’ systems could result in loss of confidence in us and our vehicles and harm our business.
• Interruption or failure of our information technology and communications systems could impact our ability to effectively provide our services.
• We need to continue to improve our operational and financial systems to support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition and any inability to do so will adversely affect our billing and reporting.
• Our management has limited experience in operating a public company.
• Our asset-light business model is unique in the automotive industry and any failure to commercialize our strategic plans would have an adverse effect on our operating results and business, harm our reputation and could result in substantial liabilities that exceed our resources.
• We could experience cost increases or disruptions in supply of raw materials or other components used in our vehicles.
• The automotive market is highly competitive, and we may not be successful in competing in this industry.
• The automotive industry and its technology are rapidly evolving and may be subject to unforeseen changes. Developments in alternative technologies, including but not limited to hydrogen, may adversely affect the demand for our electric vehicles.
• We may be subject to risks associated with autonomous driving technology.
• Our future growth is dependent on the demand for, and upon consumers’ willingness to adopt, electric vehicles.
• Doing business internationally creates operational and financial risks for our business.
• Our business may be adversely affected by labor and union activities.
• We face risks related to public health issues, including the recent COVID-19 pandemic, which could have a material adverse effect on our business and results of operations.
• We face risks related to natural disasters, health epidemics and other outbreaks, which could significantly disrupt our operations.
• Our dual class structure may depress the trading price of our Class A Common Stock.
• Henrik Fisker and Dr. Geeta Gupta-Fisker are married to each other. The separation or divorce of the couple in the future could adversely affect our business.
• Future sales of shares by existing stockholders may adversely affect the market price of our Class A common stock.
• If securities or industry analysts do not continue to publish research or reports about our business or publish negative reports about our business, our share price and trading volume could decline.
• The issuance of shares of our Class A Common Stock upon the conversion of the 2025 Notes or the exercise of the outstanding Magna Warrants would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
• Our operating and financial results forecast relies in large part upon assumptions and analyses developed by us. If these assumptions or analyses prove to be incorrect, our actual operating results may be materially different from our forecasted results.
• The unavailability, reduction or elimination of government and economic incentives could have a material adverse effect on our business, prospects, financial condition and operating results.
• Retail vehicle sales depend significantly on affordable interest rates and availability of credit for vehicle financing and a substantial increase in interest rates could adversely affect our business, prospects, financial condition, results of operations, and cash flows.
• Insufficient warranty reserves to cover future warranty claims could materially adversely affect our business, prospects, financial condition and operating results.
• Our business plans require a significant amount of capital. In addition, our future capital needs are likely to require us to sell additional equity or debt securities that may dilute our stockholders or introduce covenants that may restrict our operations or our ability to pay dividends.
• Absent relief, as a result of our failure to timely file a periodic report with the SEC, we are currently ineligible to file a registration statement on Form S-3, which is likely to impair our ability to raise capital on terms favorable to us, in a timely manner or at all.
• Our Class A Common Stock is currently traded on the OTC Market Pink Sheets, which may have an unfavorable impact on our stock price and liquidity.
• We retain certain information about our users and may be subject to various privacy and consumer protection laws.
• We may need to defend against patent or trademark infringement claims brought against us, which may be time-consuming and would cause us to incur substantial costs.
• We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position.
• Our patent applications may not issue as patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.
• As our patents may expire and may not be extended, our patent applications may not be granted and our patent rights may be contested, circumvented, invalidated or limited in scope, our patent rights may not protect us effectively. In particular, we may not be able to prevent others from developing or exploiting competing technologies, which could have a material and adverse effect on our business operations, financial condition and results of operations.
• We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees’ former employers.
• Our vehicles are subject to motor vehicle standards and the failure to satisfy such mandated safety standards would have a material adverse effect on our business and operating results.
• We are subject to substantial regulation and unfavorable changes to, or our failure to comply with, these regulations could substantially harm our business and operating results.
• We will face risks associated with potential international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm our business.
• Our business could be adversely affected by trade tariffs or other trade barriers.
• We may become subject to product liability claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
• We are or will be subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject us to administrative, civil and criminal fines and penalties,
• collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.
• Our Certificate of Incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a chosen judicial forum for disputes with us or our directors, officers, employees or stockholders.
• Charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.
• Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
• The dual class structure of our Common Stock has the effect of concentrating voting with Henrik Fisker and Dr. Geeta Gupta-Fisker, our co-founders, members of our Board of Directors and Chief Executive Officer and Chief Financial Officer, respectively. This may limit or preclude other stockholders' ability to influence corporate matters, including the outcome of important transactions, including a change in control.
• Our ability to utilize our net operating loss and tax credit carryforwards to offset future taxable income may be subject to certain limitations.
• Changes to applicable U.S. tax laws and regulations may have a material adverse effect on our business, financial condition and results of operations.
• We may be unable to raise the funds necessary to repurchase the 2026 Notes for cash following a fundamental change (as defined in the Indenture) or to pay any cash amounts due upon conversion, and our other indebtedness limits our ability to repurchase the 2026 Notes or pay cash upon their conversion.
• Our indebtedness and liabilities could limit the cash flow available for our operations, expose us to risks that could adversely affect our business, financial condition, and results of operations and impair our ability to satisfy our obligations under the Notes.
• The accounting method for the 2026 Notes could adversely affect our reported financial condition and results.
• The Capped Call transactions may affect the value of the 2026 Notes and our common stock.
• We are subject to counterparty risk with respect to the Capped Call transactions, and the Capped Calls may not operate as planned.
• The issuance or sale of shares of our common stock, or rights to acquire shares of our common stock, could depress the trading price of our common stock and our notes.