UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 20222023
ORor
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to ______________
Commission File Number: 001-40209
Heliogen, Inc.
(Exact name of registrant as specified in its charter)
| | | | | |
Delaware | 85-4204953 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
130 West Union Street, Pasadena, California | 91103 |
(Address of Principal Executive Offices) | (Zip Code) |
(626) 720-4530
Registrant's telephone number, including area codecode: (626) 720-4530
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, $0.0001 par value per share | | HLGN | | New York Stock ExchangeExchange* |
Warrants, each whole warrant35 warrants exercisable for sharesone share of Commoncommon stock at an exercise price of $11.50$402.50 per share | | HLGN.W | HLGN.W | New York Stock ExchangeExchange* |
Preferred Share Purchase Rights | | N/A | | New York Stock Exchange* |
* The registrant’s common stock and warrants began trading exclusively on the over-the-counter market on November 8, 2023 under the symbols HLGN and HLGNW, respectively.
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 o
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. Yes x No o
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.
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Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | x | Smaller reporting company | x |
| | Emerging growth company | x |
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.x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
TheAs of November 9, 2023, the registrant had 191,442,3045,908,645 shares of common stock, outstanding as of November 4, 2022.par value $0.0001 per share outstanding.
Table of Contents
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Part I - Financial Information | |
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Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this Quarterly Report on Form 10-Q regarding our future financial performance, as well as our strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. Any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” or the negative of such terms or other similar expressions. These forward-looking statements are based on management’s current expectations, assumptions, hopes, beliefs, intentions and strategies regarding future events and are based on currently available information as to the outcome and timing of future events. We caution you that these forward-looking statementsAlthough we believe such expectations and assumptions to be reasonable, they are subject to allinherently uncertain and involve a number of the risks and uncertainties most of which are difficult to predict and many of whichthat are beyond our control, incidentcontrol. In addition, management’s assumptions about future events may prove to our business.be inaccurate. All readers are cautioned that the forward-looking statements contained in this Quarterly Report are not guarantees of future performance and we cannot assure any reader that such statements will be realized or that the forward-looking events and circumstances will occur.
As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:
•our ability to recognize the anticipated benefits of the business combination (the “Business Combination”) with Athena Technology Acquisition Corp (“Athena”), which may be affected by, among other things, our ability to grow and manage growth profitably;
•our financial and business performance, including risk of uncertainty in our financial projections and business metrics and any underlying assumptions thereunder;
•the suspension of trading of our common stock, and the commencement of delisting proceedings, on the New York Stock Exchange (the “NYSE”) and the commencement of trading of our common stock in the over-the-counter (“OTC”) market;
•changes in our business and strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;
•our ability to execute our business model, including market acceptance of our planned products and services and achieving sufficient production volumes at acceptable quality levels and prices;
•changes in domestic and foreign business, market, financial, political, legal conditions and applicable laws and regulations;
•our ability to grow market share in our existing markets or any new markets we may enter;
•our ability to achieve and maintain profitability in the future;
•our ability to access sources of capital to finance operations, growth and future capital requirements;
•our ability to maintain and enhance our products and brand, and to attract and retain customers;
•our ability to find new partners for product offerings;
•the success of strategic relationships with third parties;
•our ability to scale in a cost-effective manner;
•developments and projections relating to our competitors and industry;
•the impact of the COVID-19 pandemic and Russia’s invasion of Ukraine on our business, including, but not limited to, supply chain disruptions;
•our ability to protect our intellectual property (“IP”);
•the actions of stockholders and the related impact on the price of our common stock;
•expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rightstime during which we will be an emerging growth company under the Jumpstart Our Business Startups Act of others;2012, as amended;
•our ability to find and retain critical employee talent and key personnel;
•our ability to successfully manage the transition process to a new executive team;
•the possibility that we may be adversely impacted by other economic, business, and/or competitive factors;
•the possibility that our remediation plan may not successfully address the underlying causes of the material weaknesses in our internal control over financial reporting;
•future exchange and interest rates;
•the outcome of any known and unknown litigation and regulatory proceedings; and
•other risks and uncertainties, including those disclosed under “Item 1A. Risk Factors” contained in Part I of our latest Annual Report on Form 10-K/A,10-K for the year ended December 31, 2022 (our “Annual Report”) filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2023, as supplemented by the risk factors disclosed in Part II, Item 1A. Risk Factors in our Quarterly Report for the period ended March 31, 2023 and in this Quarterly Report, and the risk factors and other cautionary statements contained in other filings that have been made or will be made with the Securities and Exchange CommissionSEC by the Company.
Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Should one or more of the risks or uncertainties described in this Quarterly Report, on Form 10-Q, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact the operations and projections discussed herein are disclosed under “Item 1A. Risk Factors” contained in Part I of our latest Annual Report on Form 10-K/A and in our periodic filings with the SEC. Our SEC filings are available publicly on the SEC’s website at www.sec.gov.
You should read this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity and performance as well as other events and circumstances may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Part I - Financial Information
Item 1. Financial InformationStatements
Heliogen, Inc.
Condensed Consolidated Balance Sheets
($ in thousands, except share data)
(Unaudited) | | | | | | | | | | | |
| September 30, 2023 | | December 31, 2022 |
ASSETS | | | |
Cash and cash equivalents | $ | 63,386 | | | $ | 45,719 | |
Short-term restricted cash | 500 | | | 655 | |
Investments | 28,236 | | | 97,504 | |
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Receivables, net | 5,271 | | | 9,195 | |
Inventories | 4,983 | | | 2,442 | |
Prepaid and other current assets | 3,910 | | | 3,306 | |
Total current assets | 106,286 | | | 158,821 | |
Operating lease right-of-use assets | 13,698 | | | 14,772 | |
Property, plant and equipment, net | 6,263 | | | 7,071 | |
Goodwill and intangible assets, net | 92 | | | 1,160 | |
Long-term restricted cash | 1,000 | | | 1,500 | |
Collaboration Warrants, non-current | 3,796 | | | 5,282 | |
Other long-term assets | 4,764 | | | 3,013 | |
Total assets | $ | 135,899 | | | $ | 191,619 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
Trade payables | $ | 1,795 | | | $ | 6,921 | |
Contract liabilities | 13,170 | | | 10,348 | |
Contract loss provisions | 26,648 | | | 28,418 | |
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Accrued expenses and other current liabilities | 9,440 | | | 5,602 | |
Total current liabilities | 51,053 | | | 51,289 | |
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Operating lease liabilities, non-current | 12,718 | | | 13,921 | |
Warrant liabilities | 316 | | | 642 | |
Other long-term liabilities | 1,712 | | | 443 | |
Total liabilities | 65,799 | | | 66,295 | |
Commitments and contingencies (Note 15) | | | |
| | | |
Shareholders’ equity | | | |
Preferred stock, $0.0001 par value; 10,000,000 shares authorized and no shares outstanding as of September 30, 2023 and December 31, 2022 | — | | | — | |
Common stock, $0.0001 par value; 500,000,000 shares authorized and 5,908,724 shares issued and outstanding as of September 30, 2023; 5,511,839 shares issued and outstanding (excluding restricted shares of 1,733) as of December 31, 2022 (1) | 1 | | | 1 | |
Additional paid-in capital (1) | 429,984 | | | 434,496 | |
Accumulated other comprehensive loss | (508) | | | (593) | |
Accumulated deficit | (359,377) | | | (308,580) | |
Total shareholders’ equity | 70,100 | | | 125,324 | |
Total liabilities and shareholders’ equity | $ | 135,899 | | | $ | 191,619 | |
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| September 30, | | December 31, |
| 2022 | | 2021 |
| | | (As Restated) |
ASSETS | | | |
Cash and cash equivalents | $ | 35,444 | | | $ | 190,081 | |
Restricted cash | 655 | | | — | |
Investments, available-for-sale (amortized cost of $129,344 and $32,349, respectively) | 124,034 | | | 32,332 | |
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Receivables | 6,585 | | | 3,896 | |
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Prepaid and other current assets | 6,121 | | | 874 | |
Total current assets | 172,839 | | | 227,183 | |
Operating lease right-of-use assets | 15,165 | | | 16,093 | |
Property, plant, and equipment, net of accumulated depreciation of $2,012 and $707, respectively | 10,092 | | | 4,102 | |
Goodwill | 926 | | | 4,204 | |
Intangible assets, net of accumulated amortization of $579 and $27, respectively | 3,232 | | | 147 | |
Restricted cash | 1,500 | | | 1,500 | |
Other long-term assets | 13,809 | | | 4,219 | |
Total assets | $ | 217,563 | | | $ | 257,448 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
Trade payables | $ | 2,335 | | | $ | 4,645 | |
Contract liabilities | 8,540 | | | 513 | |
Contract loss provisions | 30,526 | | | 397 | |
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Accrued expenses and other current liabilities | 7,410 | | | 6,974 | |
Total current liabilities | 48,811 | | | 12,529 | |
Debt | 22 | | | 35 | |
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Operating lease liabilities, net of current portion | 14,361 | | | 14,183 | |
Warrant liability | 1,885 | | | 14,563 | |
Other long-term liabilities | 1,233 | | | 2,080 | |
Total liabilities | 66,312 | | | 43,390 | |
Commitments and contingencies (see Note 9) | | | |
Convertible preferred stock – $0.0001 par value; 10,000,000 shares authorized and no shares outstanding as of September 30, 2022 and December 31, 2021 | — | | | — | |
Shareholders’ equity | | | |
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Common stock, $0.0001 par value; 500,000,000 shares authorized; 191,269,480 shares issued and outstanding (excluding restricted shares of 135,271) as of September 30, 2022 and 183,367,037 shares issued and outstanding (excluding restricted shares of 481,301) as of December 31, 2021 | 19 | | | 18 | |
Additional paid-in capital | 425,851 | | | 380,624 | |
Accumulated other comprehensive loss | (1,025) | | | (4) | |
Accumulated deficit | (273,594) | | | (166,580) | |
Total shareholders’ equity | 151,251 | | | 214,058 | |
Total liabilities, convertible preferred stock and shareholders’ equity | $ | 217,563 | | | $ | 257,448 | |
(1)Periods presented have been adjusted to reflect the 1-for-35 reverse stock split on August 31, 2023. See Note 1—Organization and Basis of Presentation—Reverse Stock Split, for additional information.
The accompanying notes are an integral part of these condensedunaudited consolidated financial statements.
Heliogen, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
($ in thousands, except per share and share data)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | | September 30, | | September 30, |
| | 2022 | | 2021 | | 2022 | | 2021 | | | 2023 | | 2022 | | 2023 | | 2022 |
Revenue: | Revenue: | | | | | | | | | Revenue: | | | | | | | |
Services revenue | Services revenue | $ | 1,367 | | | $ | 2,202 | | | $ | 4,375 | | | $ | 3,563 | | | Services revenue | $ | 1,096 | | | $ | 1,367 | | | $ | 2,874 | | | $ | 4,375 | |
Grant revenue | Grant revenue | 1,733 | | | — | | | 4,656 | | | — | | | Grant revenue | 1,177 | | | 1,733 | | | 2,730 | | | 4,656 | |
Total revenue | Total revenue | 3,100 | | | 2,202 | | | 9,031 | | | 3,563 | | | Total revenue | 2,273 | | | 3,100 | | | 5,604 | | | 9,031 | |
Cost of revenue: | Cost of revenue: | | | | | | | | | Cost of revenue: | | | | | | | |
Cost of services revenue (excluding depreciation and amortization) | 1,690 | | | 1,375 | | | 5,668 | | | 2,736 | | | |
Cost of services revenue (including depreciation) | | Cost of services revenue (including depreciation) | 1,220 | | | 1,690 | | | 3,221 | | | 5,668 | |
Cost of grant revenue | Cost of grant revenue | 1,733 | | | — | | | 4,656 | | | — | | | Cost of grant revenue | 1,177 | | | 1,733 | | | 2,690 | | | 4,656 | |
Provision for contract losses | — | | | — | | | 33,737 | | | — | | | |
| Contract loss (adjustments) provisions | | Contract loss (adjustments) provisions | (538) | | | — | | | (148) | | | 33,737 | |
Total cost of revenue | Total cost of revenue | 3,423 | | | 1,375 | | | 44,061 | | | 2,736 | | | Total cost of revenue | 1,859 | | | 3,423 | | | 5,763 | | | 44,061 | |
Gross profit (loss) | Gross profit (loss) | (323) | | | 827 | | | (35,030) | | | 827 | | | Gross profit (loss) | 414 | | | (323) | | | (159) | | | (35,030) | |
| Operating expenses: | Operating expenses: | | | Operating expenses: | |
Selling, general, and administrative | 18,268 | | | 8,687 | | | 60,733 | | | 15,099 | | | |
Selling, general and administrative | | Selling, general and administrative | 14,997 | | | 18,268 | | | 36,814 | | | 60,733 | |
Research and development | Research and development | 11,168 | | | 4,618 | | | 26,448 | | | 8,891 | | | Research and development | 5,162 | | | 11,168 | | | 15,368 | | | 26,448 | |
| Impairment charges | | Impairment charges | — | | | — | | | 1,008 | | | — | |
Total operating expenses | Total operating expenses | 29,436 | | | 13,305 | | | 87,181 | | | 23,990 | | | Total operating expenses | 20,159 | | | 29,436 | | | 53,190 | | | 87,181 | |
Operating loss | Operating loss | (29,759) | | | (12,478) | | | (122,211) | | | (23,163) | | | Operating loss | (19,745) | | | (29,759) | | | (53,349) | | | (122,211) | |
| Interest income, net | Interest income, net | 259 | | | 197 | | | 666 | | | 407 | | | Interest income, net | 335 | | | 259 | | | 888 | | | 666 | |
SAFE instruments remeasurement | — | | | (15,533) | | | — | | | (62,993) | | | |
Gain (loss) on warrant remeasurement | 369 | | | (322) | | | 12,679 | | | (2,604) | | | |
Other income (expense), net | 1,256 | | | (140) | | | 1,071 | | | (312) | | | |
| Gain on warrant remeasurement | | Gain on warrant remeasurement | 74 | | | 369 | | | 326 | | | 12,679 | |
Other income, net | | Other income, net | 767 | | | 1,256 | | | 1,341 | | | 1,071 | |
Net loss before taxes | Net loss before taxes | (27,875) | | | (28,276) | | | (107,795) | | | (88,665) | | | Net loss before taxes | (18,569) | | | (27,875) | | | (50,794) | | | (107,795) | |
Income tax benefit | 46 | | | — | | | 781 | | | — | | | |
(Provision) benefit for income taxes | | (Provision) benefit for income taxes | (1) | | | 46 | | | (3) | | | 781 | |
Net loss | Net loss | (27,829) | | | (28,276) | | | (107,014) | | | (88,665) | | | Net loss | $ | (18,570) | | | $ | (27,829) | | | $ | (50,797) | | | $ | (107,014) | |
Other comprehensive income (loss), net of taxes | | | |
Unrealized (losses) gains on available-for-sale securities | (18) | | | 7 | | | (524) | | | (7) | | | |
Cumulative translation adjustment | (173) | | | (57) | | | (497) | | | (57) | | | |
Total comprehensive loss | $ | (28,020) | | | $ | (28,326) | | | $ | (108,035) | | | $ | (88,729) | | | |
| | Loss per share: | Loss per share: | | | Loss per share: | |
Loss per share – Basic and Diluted | $ | (0.14) | | | $ | (2.45) | | | $ | (0.57) | | | $ | (8.32) | | | |
| Weighted average number of shares outstanding – Basic and Diluted | 192,580,125 | | | 11,545,919 | | | 188,827,770 | | | 10,650,897 | | | |
| Loss per share – Basic and Diluted (1) | | Loss per share – Basic and Diluted (1) | $ | (3.13) | | | $ | (5.06) | | | $ | (8.81) | | | $ | (19.82) | |
Weighted average number of shares outstanding – Basic and Diluted (1) | | Weighted average number of shares outstanding – Basic and Diluted (1) | 5,935,823 | | | 5,502,183 | | | 5,765,356 | | | 5,398,872 | |
(1)Periods presented have been adjusted to reflect the 1-for-35 reverse stock split on August 31, 2023. See Note 1—Organization and Basis of Presentation—Reverse Stock Split, for additional information.
The accompanying notes are an integral part of these condensedunaudited consolidated financial statements.
Heliogen, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Shareholders’ Equity (Deficit)Comprehensive Loss
($ in thousands, except share data)thousands)
(Unaudited)
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| | | | | | Shareholders’ Equity (Deficit) |
| Convertible Preferred Stock | | | Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total |
| Shares | | Amount | | | Shares | | Amount | | | | |
| | | | | | | | | | | | | | | | |
June 30, 2022 | — | | | $ | — | | | | 190,093,226 | | | $ | 19 | | | $ | 415,526 | | | $ | (834) | | | $ | (245,765) | | | $ | 168,946 | |
Net loss | — | | | — | | | | — | | | — | | | — | | | — | | | (27,829) | | | (27,829) | |
Other comprehensive loss | — | | | — | | | | — | | | — | | | — | | | (191) | | | — | | | (191) | |
Share-based compensation | — | | | — | | | | 723,878 | | | — | | | 9,972 | | | — | | | — | | | 9,972 | |
Shares issued for stock options exercised | — | | | — | | | | 452,376 | | | — | | | 142 | | | — | | | — | | | 142 | |
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Issuance of warrants in connection with vendor agreements | — | | | — | | | | — | | | — | | | 80 | | | — | | | — | | | 80 | |
Issuance of warrants in connection with customer agreements | — | | | — | | | | — | | | — | | | 131 | | | — | | | — | | | 131 | |
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September 30, 2022 | — | | | $ | — | | | | 191,269,480 | | | $ | 19 | | | $ | 425,851 | | | $ | (1,025) | | | $ | (273,594) | | | $ | 151,251 | |
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December 31, 2021 (As Restated) | — | | | $ | — | | | | 183,367,037 | | | $ | 18 | | — | | $ | 380,624 | | | $ | (4) | | | $ | (166,580) | | | $ | 214,058 | |
Net loss | — | | | — | | | | — | | | — | | | — | | | — | | | (107,014) | | | (107,014) | |
Other comprehensive loss | — | | | — | | | | — | | | — | | | — | | | (1,021) | | | — | | | (1,021) | |
Share-based compensation | — | | | — | | | | 971,954 | | | — | | | 34,478 | | | — | | | — | | | 34,478 | |
Shares issued for stock options exercised | — | | | — | | | | 6,930,479 | | | 1 | | | 1,056 | | | — | | | — | | | 1,057 | |
Shares issued for stock warrants exercised | — | | | — | | | | 10 | | | — | | | — | | | — | | | — | | | — | |
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Issuance of warrants in connection with vendor agreements | — | | | — | | | | — | | | — | | | 134 | | | — | | | — | | | 134 | |
Issuance of warrants in connection with customer agreements | — | | | — | | | | — | | | — | | | 9,559 | | | — | | | — | | | 9,559 | |
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September 30, 2022 | — | | | $ | — | | | | 191,269,480 | | | $ | 19 | | | $ | 425,851 | | | $ | (1,025) | | | $ | (273,594) | | | $ | 151,251 | |
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| | | | | | Shareholders’ Equity (Deficit) |
| Convertible Preferred Stock | | | Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total |
| Shares | | Amount | | | Shares | | Amount | | | | |
| | | | | | | | | | | | | | | | |
June 30, 2021 | 117,886,982 | | | $ | 45,932 | | | | 10,684,355 | | | $ | 1 | | | $ | 2,134 | | | $ | (14) | | | $ | (89,561) | | | $ | (87,440) | |
Net loss | — | | | — | | | | — | | | — | | | — | | | — | | | (28,276) | | | (28,276) | |
Other comprehensive loss | — | | | — | | | | — | | | — | | | — | | | (50) | | | — | | | (50) | |
Share-based compensation | — | | | — | | | | — | | | — | | | 1,485 | | | — | | | — | | | 1,485 | |
Shares issued for stock options exercised | — | | | — | | | | 1,302,054 | | | 1 | | | 123 | | | — | | | — | | | 124 | |
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September 30, 2021 | 117,886,982 | | | $ | 45,932 | | | | 11,986,409 | | | $ | 2 | | | $ | 3,742 | | | $ | (64) | | | $ | (117,837) | | | $ | (114,157) | |
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December 31, 2020, as reported | 58,554,536 | | | $ | 45,932 | | | | 4,053,489 | | | $ | 4 | | | $ | 1,306 | | | $ | — | | | $ | (29,172) | | | $ | (27,862) | |
Retroactive application of Exchange Ratio | 59,332,446 | | | — | | | | 4,107,339 | | | (3) | | | 3 | | | — | | | — | | | — | |
December 31, 2020 | 117,886,982 | | | $ | 45,932 | | | | 8,160,828 | | | $ | 1 | | | $ | 1,309 | | | $ | — | | | $ | (29,172) | | | $ | (27,862) | |
Net loss | — | | | — | | | | — | | | — | | | — | | | — | | | (88,665) | | | (88,665) | |
Other comprehensive loss | — | | | — | | | | — | | | — | | | — | | | (64) | | | — | | | (64) | |
Share-based compensation | — | | | — | | | | — | | | — | | | 2,049 | | | — | | | — | | | 2,049 | |
Shares issued for stock options exercised | — | | | — | | | | 3,626,266 | | | 1 | | | 354 | | | — | | | — | | | 355 | |
Shares issued for stock warrants exercised | — | | | — | | | | 199,315 | | | — | | | 30 | | | — | | | — | | | 30 | |
September 30, 2021 | 117,886,982 | | | $ | 45,932 | | | | 11,986,409 | | | $ | 2 | | | $ | 3,742 | | | $ | (64) | | | $ | (117,837) | | | $ | (114,157) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Net loss | $ | (18,570) | | | $ | (27,829) | | | $ | (50,797) | | | $ | (107,014) | |
Other comprehensive income (loss), net of taxes: | | | | | | | |
Unrealized gains (losses) on available-for-sale securities | 72 | | | (18) | | | 270 | | | (524) | |
Cumulative translation adjustment | (124) | | | (173) | | | (185) | | | (497) | |
Total other comprehensive income (loss), net of taxes | (52) | | | (191) | | | 85 | | | (1,021) | |
Comprehensive loss | $ | (18,622) | | | $ | (28,020) | | | $ | (50,712) | | | $ | (108,035) | |
The accompanying notes are an integral part of these condensedunaudited consolidated financial statements.
Heliogen, Inc.
Condensed Consolidated Statements of Cash FlowsShareholders’ Equity
($ in thousands)thousands, except share data)
(Unaudited)
| | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 | | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |
Net loss | $ | (107,014) | | | $ | (88,665) | | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | |
Depreciation and amortization | 2,289 | | | 272 | | | |
Share-based compensation | 34,478 | | | 2,049 | | | |
SAFE instruments remeasurement | — | | | 62,993 | | | |
Change in fair value of warrants | (12,679) | | | 2,604 | | | |
Change in fair value of contingent consideration | (1,063) | | | — | | | |
Deferred income taxes | (781) | | | — | | | |
Non-cash operating lease expense | 1,199 | | | — | | | |
Other non-cash operating activities | 90 | | | 947 | | | |
Changes in assets and liabilities: | | | | | |
Receivables | (2,778) | | | (140) | | | |
| | | | | |
Prepaid and other current assets | (1,706) | | | 1,170 | | | |
Other long-term assets | 392 | | | (3,864) | | | |
Trade payables | (1,061) | | | 1,347 | | | |
Accrued expenses and other current liabilities | 1,128 | | | 1,921 | | | |
Contract liabilities | 8,535 | | | 1,660 | | | |
Contract loss provisions | 30,235 | | | — | | | |
Operating lease liabilities | (810) | | | (510) | | | |
Other long-term liabilities | 1 | | | 69 | | | |
Net cash used in operating activities | (49,545) | | | (18,147) | | | |
| | | | | |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | |
Capital expenditures | (7,313) | | | (1,428) | | | |
Purchases of available-for-sale investments | (237,986) | | | (41,647) | | | |
Maturities of available-for-sale investments | 75,300 | | | 4,300 | | | |
Sales of available-for-sale investments | 65,817 | | | — | | | |
Acquisition of HelioHeat, net of cash acquired | — | | | (1,684) | | | |
| | | | | |
Net cash used in investing activities | (104,182) | | | (40,459) | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | |
| | | | | |
Proceeds from SAFE instruments, net of issuance costs of $30 thousand | — | | | 83,411 | | | |
Transaction costs paid related to the Business Combination with Athena | (1,274) | | | — | | | |
| | | | | |
Repayments on Paycheck Protection Program loan | — | | | (411) | | | |
Proceeds from exercise of stock options | 1,019 | | | 355 | | | |
Proceeds from exercise of common stock warrants | — | | | 30 | | | |
Other financing costs | — | | | (1,487) | | | |
Net cash (used in) provided by financing activities | (255) | | | 81,898 | | | |
| | | | | |
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (153,982) | | | 23,292 | | | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF THE PERIOD | 191,581 | | | 18,334 | | | |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF THE PERIOD | $ | 37,599 | | | $ | 41,626 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Three Months Ended September 30, 2023 |
| | | Common Stock (1) | | Additional Paid-in Capital (1) | | Accumulated Other Comprehensive Income (Loss) | | Accumulated Deficit | | Total |
| | | | | Shares | | Amount | | | | |
Balance as of June 30, 2023 | | | | | 5,844,979 | | | $ | 1 | | | $ | 429,581 | | | $ | (456) | | | $ | (340,807) | | | $ | 88,319 | |
Net loss | | | | | — | | | — | | | — | | | — | | | (18,570) | | | (18,570) | |
Other comprehensive loss | | | | | — | | | — | | | — | | | (52) | | | — | | | (52) | |
Share-based compensation | | | | | — | | | — | | | 305 | | | — | | | — | | | 305 | |
| | | | | | | | | | | | | | | |
Vesting of restricted stock units | | | | | 62,888 | | | — | | | — | | | — | | | — | | | — | |
Exercise of stock options | | | | | 1,652 | | | — | | | 10 | | | — | | | — | | | 10 | |
| | | | | | | | | | | | | | | |
Payment for fractional shares in connection with the reverse stock split | | | | | (795) | | | — | | | (7) | | | — | | | — | | | (7) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Vesting of warrants issued in connection with customer agreements | | | | | — | | | — | | | 95 | | | — | | | — | | | 95 | |
| | | | | | | | | | | | | | | |
Balance as of September 30, 2023 | | | | | 5,908,724 | | | $ | 1 | | | $ | 429,984 | | | $ | (508) | | | $ | (359,377) | | | $ | 70,100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Three Months Ended September 30, 2022 |
| | | Common Stock (1) | | Additional Paid-in Capital (1) | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total |
| | | | | Shares | | Amount | | | | |
Balance as of June 30, 2022 | | | | | 5,431,149 | | | $ | 1 | | | $ | 415,544 | | | $ | (834) | | | $ | (245,765) | | | $ | 168,946 | |
Net loss | | | | | — | | | — | | | — | | | — | | | (27,829) | | | (27,829) | |
Other comprehensive loss | | | | | — | | | — | | | — | | | (191) | | | — | | | (191) | |
Share-based compensation | | | | | — | | | — | | | 10,052 | | | — | | | — | | | 10,052 | |
Vesting of restricted stock units | | | | | 10,771 | | | — | | | — | | | — | | | — | | | — | |
Exercise of stock options | | | | | 22,752 | | | — | | | 142 | | | — | | | — | | | 142 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Vesting of warrants issued in connection with customer agreements | | | | | — | | | — | | | 131 | | | — | | | — | | | 131 | |
Balance as of September 30, 2022 | | | | | 5,464,672 | | | $ | 1 | | | $ | 425,869 | | | $ | (1,025) | | | $ | (273,594) | | | $ | 151,251 | |
(1)Periods presented have been adjusted to reflect the 1-for-35 reverse stock split on August 31, 2023. See Note 1—Organization and Basis of Presentation—Reverse Stock Split, for additional information.
The accompanying notes are an integral part of these condensedunaudited consolidated financial statements.
Heliogen, Inc.
Condensed Consolidated Statements of Cash FlowsShareholders’ Equity (continued)
($ in thousands)thousands, except share data)
(Unaudited)
Supplemental Cash Flow Information
The following reconciles cash, cash equivalents and restricted cash: | | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 | | |
| | | | | |
Cash and cash equivalents | $ | 35,444 | | | $ | 40,126 | | | |
Restricted cash (current and long-term) | 2,155 | | | 1,500 | | | |
Total cash, cash equivalents and restricted cash | $ | 37,599 | | | $ | 41,626 | | | |
Cash flows related to interest, leases and other non-cash investing and financing activities were as follows:
| | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2022 | | 2021 | | |
Supplemental disclosures: | | | | | |
Cash paid for interest | $ | — | | | $ | 3 | | | |
Cash paid for amounts included in the measurement of operating lease liabilities | — | | | 483 | | | |
Non-cash investing and financing activities: | | | | | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 201 | | | $ | 16,685 | | | |
Right-of-use asset removed upon lease termination | 306 | | | — | | | |
Fair value of vendor warrants recognized in equity | 134 | | | — | | | |
Fair value of Project Warrants and Collaboration Warrants recognized in equity | 9,559 | | | — | | | |
| | | | | |
| | | | | |
Transaction costs incurred but not yet paid | — | | | 369 | | | |
Capital expenditures incurred but not yet paid | 522 | | | 231 | | | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Nine Months Ended September 30, 2023 |
| | | Common Stock (1) | | Additional Paid-in Capital (1) | | Accumulated Other Comprehensive Income (Loss) | | Accumulated Deficit | | Total |
| | | | | Shares | | Amount | | | | |
Balance as of December 31, 2022 | | | | | 5,511,839 | | | $ | 1 | | | $ | 434,496 | | | $ | (593) | | | $ | (308,580) | | | $ | 125,324 | |
Net loss | | | | | — | | | — | | | — | | | — | | | (50,797) | | | (50,797) | |
Other comprehensive income | | | | | — | | | — | | | — | | | 85 | | | — | | | 85 | |
Share-based compensation | | | | | — | | | — | | | (6,078) | | | — | | | — | | | (6,078) | |
Issuance of common stock under employee stock purchase plan | | | | | 19,284 | | | — | | | 168 | | | | | | | 168 | |
Vesting of restricted stock units | | | | | 122,524 | | | — | | | — | | | — | | | — | | | — | |
Exercise of stock options | | | | | 255,872 | | | — | | | 1,171 | | | — | | | — | | | 1,171 | |
| | | | | | | | | | | | | | | |
Payment for fractional shares in connection with the reverse stock split | | | | | (795) | | | — | | | (7) | | | — | | | — | | | (7) | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Vesting of warrants issued in connection with customer agreements | | | | | — | | | — | | | 234 | | | — | | | — | | | 234 | |
| | | | | | | | | | | | | | | |
Balance as of September 30, 2023 | | | | | 5,908,724 | | | $ | 1 | | | $ | 429,984 | | | $ | (508) | | | $ | (359,377) | | | $ | 70,100 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Nine Months Ended September 30, 2022 |
| | | Common Stock (1) | | Additional Paid-in Capital (1) | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total |
| | | | | Shares | | Amount | | | | |
Balance as of December 31, 2021 | | | | | 5,239,070 | | | $ | 1 | | | $ | 380,641 | | | $ | (4) | | | $ | (166,580) | | | $ | 214,058 | |
Net loss | | | | | — | | | — | | | — | | | — | | | (107,014) | | | (107,014) | |
Other comprehensive loss | | | | | — | | | — | | | — | | | (1,021) | | | — | | | (1,021) | |
Share-based compensation | | | | | — | | | — | | | 34,612 | | | — | | | — | | | 34,612 | |
Vesting of restricted stock units | | | | | 17,832 | | | — | | | — | | | — | | | — | | | — | |
Exercise of stock options | | | | | 207,770 | | | — | | | 1,057 | | | — | | | — | | | 1,057 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Vesting of warrants issued in connection with customer agreements | | | | | — | | | — | | | 9,559 | | | — | | | — | | | 9,559 | |
Balance as of September 30, 2022 | | | | | 5,464,672 | | | $ | 1 | | | $ | 425,869 | | | $ | (1,025) | | | $ | (273,594) | | | $ | 151,251 | |
(1)Periods presented have been adjusted to reflect the 1-for-35 reverse stock split on August 31, 2023. See Note 1—Organization and Basis of Presentation—Reverse Stock Split, for additional information.
The accompanying notes are an integral part of these condensedunaudited consolidated financial statements.
Heliogen, Inc.
Consolidated Statements of Cash Flows
($ in thousands)
(Unaudited) | | | | | | | | | | | |
| Nine Months Ended |
| September 30, |
| 2023 | | 2022 |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
Net loss | $ | (50,797) | | | $ | (107,014) | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | |
Depreciation and amortization | 1,692 | | | 2,289 | |
Impairment charges | 1,008 | | | — | |
Share-based compensation | (6,078) | | | 34,612 | |
| | | |
Change in fair value of warrants | (326) | | | (12,679) | |
Change in fair value of contingent consideration | 1,289 | | | (1,063) | |
Deferred income taxes | 3 | | | (781) | |
Non-cash operating lease expense | 1,261 | | | 1,199 | |
Other non-cash operating activities | (1,489) | | | 90 | |
Changes in assets and liabilities: | | | |
Receivables, net | 3,556 | | | (2,778) | |
Inventories | (2,450) | | | — | |
Prepaid and other current assets | (605) | | | (1,706) | |
Trade payables and accrued liabilities | (1,789) | | | 67 | |
Contract liabilities | 3,056 | | | 8,535 | |
Change in contract loss provisions, net | (1,776) | | | 30,235 | |
Other non-current assets and liabilities | (1,477) | | | (551) | |
Net cash used in operating activities | (54,922) | | | (49,545) | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
Capital expenditures | (1,146) | | | (7,313) | |
Purchases of available-for-sale securities | (89,856) | | | (237,986) | |
Maturities of available-for-sale securities | 161,600 | | | 75,300 | |
Sales of available-for-sale securities | — | | | 65,817 | |
| | | |
| | | |
Net cash provided by (used in) investing activities | 70,598 | | | (104,182) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| | | |
Proceeds from exercise of stock options | 1,175 | | | 1,019 | |
Proceeds from issuance of common stock under employee stock purchase plan | 168 | | | — | |
Payment for fractional shares in connection with the reverse stock split | (7) | | | — | |
| | | |
Other financing costs | — | | | (1,274) | |
Net cash provided by (used in) financing activities | 1,336 | | | (255) | |
Increase (decrease) in cash, cash equivalents and restricted cash | 17,012 | | | (153,982) | |
Cash, cash equivalents and restricted cash at the beginning of the period | 47,874 | | | 191,581 | |
Cash, cash equivalents and restricted cash at the end of the period | $ | 64,886 | | | $ | 37,599 | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Heliogen, Inc.
Consolidated Statements of Cash Flows (continued)
($ in thousands)
(Unaudited)
| | | | | | | | | | | |
| Nine Months Ended |
| September 30, |
| 2023 | | 2022 |
Reconciliation of cash, cash equivalents and restricted cash: | | | |
Cash and cash equivalents | $ | 63,386 | | | $ | 35,444 | |
Short-term restricted cash | 500 | | | 655 | |
Long-term restricted cash | 1,000 | | | 1,500 | |
Total cash, cash equivalents and restricted cash | $ | 64,886 | | | $ | 37,599 | |
| | | |
| | | |
| | | |
| | | |
Non-cash investing and financing activities: | | | |
| | | |
| | | |
Fair value of Project Warrants and Collaboration Warrants recognized in equity | $ | 234 | | | $ | 9,559 | |
Capital expenditures incurred but not yet paid | $ | 83 | | | $ | 522 | |
| | | |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
Heliogen, Inc.
Notes to the CondensedUnaudited Consolidated Financial Statements
(Unaudited)
1. Note 1—Organization and Basis of Presentation
Background
Heliogen, Inc., along with and its subsidiaries (collectively, “Heliogen” or the “Company”), is involved in the development and commercialization of next generation concentrated solar energy. We are developing a modular, artificial intelligence (“AI”)-enabled, concentrated solar energy thermal energy plant that will use an array of mirrors to reflect sunlight and capture, concentrate, store and convert it into cost-effective energy on demand. Unless otherwise indicated or the context requires otherwise, references in our consolidated financial statements to “we,” “our,“us,” “us”or “our” and similar expressions refer to Heliogen.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and include the accounts of Heliogen and the subsidiaries it controls. All material intercompany balances are eliminated in consolidation. These condensedfor interim financial information. Accordingly, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements anddo not include all information or notes thereto included in Heliogen’s Annual Report on Form 10-K/Arequired by GAAP for the year ended December 31, 2021 filed on May 23, 2022.
Certain information and disclosures normally included in annual financial statements have been condensed or omitted in these interim financial statements. In ourthe opinion of management, the unaudited interimconsolidated financial statements have been prepared on the same basis as the annual financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary for fair statement.
The results of operations for the nine months ended September 30, 2022,reported in these unaudited consolidated financial statements are not necessarily indicative of the results of operations tothat may be expectedreported for the full year ending December 31, 2022.
Athena Business Combination
On December 30, 2021 (the “Closing Date”), Heliogen, Inc., a Delaware corporation (“Legacy Heliogen”), Athena Technology Acquisition Corp., a Delaware corporation (“Athena”), and HelioMax Merger Sub, Inc. (“Merger Sub”), Athena’s direct, wholly-owned subsidiary, consummated the closing of transactions contemplated by the business combination agreement, dated July 6, 2021, by and among Athena, Merger Sub, and Legacy Heliogen (the “Business Combination”).
The Business Combination was accounted for as a reverse recapitalization in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations, pursuant to which Athena was treated as the “accounting acquiree” and Legacy Heliogen as the “accounting acquirer” for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as Legacy Heliogen issuing equity for the net assets of Athena, followed by a recapitalization. The consolidated assets, liabilities, and results of operations of Legacy Heliogen comprise the historicalentire year. These unaudited consolidated financial statements of the post combination company, and Athena’s assets, liabilities and results of operations are consolidated with Legacy Heliogen beginning on the acquisition date. Accordingly, for accounting purposes, the condensed consolidated financial statements of the post combination company represent a continuation of the historical consolidated financial statements of Legacy Heliogen, and the net assets of Athena are stated at historical cost, with no goodwill or other intangible assets recorded.
In accordance with accounting guidance applicable to these circumstances, the equity structure has been recastshould be read in all comparative periods up to the Closing Date to reflect the number of shares of the Company’s common stock, $0.0001 par value per share, issued to Legacy Heliogen’s stockholders in connectionconjunction with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Heliogen redeemable convertible preferred stock, common stock, warrants, options, and restricted stock units (“RSU”) prior to the Business Combination have been retroactively recast as shares reflecting the exchange ratio of 2.013 established in the Business Combination.
Heliogen, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in our consolidatedannual financial statements and notes thereto included in our Annual Report on Form 10-K for the accompanying notes. On an ongoing basis, we evaluate our estimates, including those related to inputs used to recognize revenue over time, accounting for income taxes,year ended December 31, 2022, filed with the fair values of share-based compensation, lease liabilities, warrant liabilities,Securities and long-lived asset impairments. Despite our intention to establish accurate estimates and reasonable assumptions, actual results could differ materially from such estimates and assumptions.
ReclassificationsExchange Commission (the “SEC”) on March 29, 2023.
Certain immaterial prior period amounts have been reclassified to conform to current period presentation. Such changes did not have a material impact on our financial position or results of operation.operations.
Reverse Stock Split
On August 31, 2023, the Company effected a 1-for-35 reverse stock split of the Company’s common stock. As a result of the reverse stock split, every 35 shares of the Company’s issued and outstanding common stock as of 5:00 p.m. (Eastern Time) on August 31, 2023 was automatically combined into one issued and outstanding share of common stock, with no change in par value per share. No fractional shares of common stock were issued as a result of the reverse stock split. Any fractional shares in connection with the reverse stock split were rounded down to the nearest whole share and cash payments were made to the stockholders. The reverse stock split had no impact on the number of shares of common stock or preferred stock that the Company is authorized to issue pursuant to its certificate of incorporation. Proportional adjustments were made to the number of shares of common stock issuable upon exercise or conversion of the Company's equity awards and warrants, as well as the applicable exercise price. All dollar amounts (other thanshare and per share amounts)information included in this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the impact of the reverse stock split.
Liquidity
The Company has evaluated whether there were conditions and events, considered in the aggregate, which raise substantial doubt as to the Company’s ability to continue as a going concern within one year after the original issuance date of the unaudited consolidated financial statements. During the nine months ended September 30, 2023 and the year ended December 31, 2022, the Company incurred net losses of $50.8 million and $142.0 million, respectively. The Company expects to continue to generate operating losses in the next few years.
As of September 30, 2023, the Company had liquidity of $91.6 million, consisting of $63.4 million of cash and cash equivalents and $28.2 million of investments, and no substantial debt. Management believes it has the ability to manage operating costs and capital expenditures such that its existing cash, cash equivalents and investments will be sufficient to fund its operations and capital expenditures for the next twelve months following disclosures arethe filing of this Quarterly Report on Form 10-Q.
Heliogen, Inc.
Notes to the Unaudited Consolidated Financial Statements
The Company’s long-term liquidity will depend on its ability to (i) successfully complete current projects within budget, (ii) raise additional capital through the issuance of additional equity or debt securities, (iii) sign additional projects at a profit, (iv) obtain funding and receive payment for research and development (“R&D”) projects, (v) implement project cost reductions to reduce the expected cash outflows and (vi) manage operating costs. There is no assurance that the Company will be successful in thousandsachieving all or any of United States dollars, unless otherwise indicated.these items. If the Company is unsuccessful in achieving all or any of these items, the Company may be forced to delay, reduce or eliminate some or all of its R&D programs, product expansion or commercialization efforts, any of which could adversely affect its business prospects, or the Company may be unable to continue operations.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and the accompanying notes. Despite our intention to establish accurate estimates and reasonable assumptions, actual results could differ materially from such estimates and assumptions.
Recent Accounting PronouncementsStandards
In August 2020,January 2017, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2020-06,2017-04, Debt—Debt with ConversionIntangibles - Goodwill and Other Options (Subtopic 470-20) and Derivatives and Hedging(Topic 350): Simplifying the Test for Goodwill Impairment—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The amendments eliminate two, which eliminates the second step of the three accounting models that require separate accountingprevious two-step quantitative test of goodwill impairment. Under the new guidance, the quantitative test consists of a single step in which the carrying amount of the reporting unit is compared to its fair value. An impairment charge would be recognized for convertible featuresthe amount by which the carrying amount exceeds the reporting unit’s fair value; however, the amount of debt securities, simplify the contract settlementimpairment would be limited to the total amount of goodwill allocated to the reporting unit. The guidance does not affect the existing option to perform the qualitative assessment for equity classification, requirea reporting unit to determine whether the use of the if-converted methodquantitative impairment test is necessary. The new guidance will be effective for all convertible instruments in the diluted earnings per share calculation and expand disclosure requirements. Wesmaller reporting companies for fiscal years beginning after December 15, 2022. The Company adopted ASU 2020-06this guidance on January 1, 2022 with no2023 and it did not have a material impact on our condensedthe Company’s consolidated financial statements.
2. Note 2—Revenue
Disaggregated Revenue
We disaggregate revenue into theThe following revenue categories:table provides information about disaggregated revenue:
| | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | September 30, | | September 30, |
$ in thousands | $ in thousands | 2022 | | 2021 | | 2022 | | 2021 | $ in thousands | 2023 | | 2022 | | 2023 | | 2022 |
Project revenue | Project revenue | $ | 1,324 | | | $ | — | | | $ | 4,207 | | | $ | — | | Project revenue | $ | 950 | | | $ | 1,324 | | | $ | 2,401 | | | $ | 4,207 | |
Other services revenue | 43 | | | 2,202 | | | 168 | | | 3,563 | | |
Engineering services revenue | | Engineering services revenue | 146 | | | 43 | | | 473 | | | 168 | |
Total services revenue | Total services revenue | 1,367 | | | 2,202 | | | 4,375 | | | 3,563 | | Total services revenue | 1,096 | | | 1,367 | | | 2,874 | | | 4,375 | |
Grant revenue | Grant revenue | 1,733 | | | — | | | 4,656 | | | — | | Grant revenue | 1,177 | | | 1,733 | | | 2,730 | | | 4,656 | |
Total revenue | Total revenue | $ | 3,100 | | | $ | 2,202 | | | $ | 9,031 | | | $ | 3,563 | | Total revenue | $ | 2,273 | | | $ | 3,100 | | | $ | 5,604 | | | $ | 9,031 | |
Services Revenue
Project revenue consists of amounts recognized under contracts with customers for the development, construction and delivery of commercial-scale concentrated solar energy facilities. OtherThe Company’s recognized project revenue is associated with a commercial-scale demonstration agreement (“CSDA”) executed with Woodside Energy (USA) Inc. (“Woodside”) in March 2022.
Heliogen, Inc.
Notes to the Unaudited Consolidated Financial Statements
Engineering services revenue consists of amounts recognized under contracts with customers for the provision of engineering, research and developmentR&D, or other similar services in our field of expertise. Engineering service contracts can be short-term or span several years and we recognize revenue over time as customers receive and consume the benefit of such services.
Revenue recognized during 2022 and 2021 includes commercial, non-governmental customers in the United States and Europe.
Pursuant to the terms of the commercial-scale demonstration agreement (the “CSDA”) executed with Woodside Energy (USA) Inc. (“Woodside”) in March 2022, Heliogen will complete the engineering, procurement, and construction of a new 5 MWe concentrated solar energy facility to be built in Mojave, California (the “Facility”) for the customer’s use in testing, research and development. Pursuant to the CSDA, the customer will pay up to $50 million to Heliogen to complete the Facility. The total transaction price for the CSDA is $45.5 million reflecting a reduction in contract price for the fair value of the Project Warrants (defined and discussed further in Note 3) granted to the customer in connection with the CSDA. The CSDA modified and replaced a limited notice to proceed executed in October 2021. For the three and nine
Heliogen, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
months ended September 30, 2022, the CSDA contributed $1.3 million and $4.2 million, respectively, or 97% and 96%, respectively, to total services revenue.
During the three and nine months ended September 30, 2023 and 2022 includes customers in the Company recognizedUnited States (“U.S.”) and Europe.
Grant Revenue
The Company’s grant revenue underis primarily related to the Company’s award from the U.S. Department of Energy’s Solar Energy Technology Office (the “DOE Award”) of $1.7 million and $4.7 million, respectively, related to costs incurred during such periods that are reimbursable under the DOE Award.
DuringContract Loss Provisions (Adjustments)
As of September 30, 2023, the Company does not anticipate incurring additional costs associated with our projects in Germany. As a result, during the three and nine months ended September 30, 2021, the Company2023, we recognized $2.2a reduction in contract loss provision of $0.5 million and $3.6$0.1 million respectively associated with several engineering and design contracts which was largely related to a predecessor contract to the CSDA.
Provision for Contract Losses
Forour projects in Germany. During the nine months ended September 30, 2022, we recognized a total provision for contract losses of $33.7 million driven primarily by the CSDA, as estimated costs to satisfy performance obligationsCSDA. No provision for the remainder of those contracts exceeded consideration to be received from the customers. The Company recognized total contract losses of $32.9 million related to the CSDA reflecting the Company’s estimate of the full expected loss on the design, engineering, and construction of the Facility given the consideration expected to be realized under the CSDA (net of the fair value of the Project Warrants) and the DOE Award.
Wewas recognized no provisions for contract losses during the three months ended September 30, 20222022.
We amortized $0.3 million and $1.6 million during the three and nine months ended September 30, 2021.
2023, respectively, and $0.3 million and $3.5 million during the three and nine months ended September 30, 2022, respectively, of the previously recognized contract loss provisions as a reduction to cost of services revenue incurred during the periods based on percentages of completion.
Performance Obligations and Contract Liabilities
Revenue recognized under contracts with customers, relatewhich excludes amounts to be received from government grants, relates solely to the performance obligations satisfied in 2022. On September 30, 2022, we had approximately $41.3 million of the transaction price allocated to remaining performance obligations through 2025.
As of September 30, 2022 and December 31, 2021, our contract liabilities were $8.5 million and $0.5 million, respectively. Activity included in contract liabilities during the nine months ended September 30, 20222023 with no revenue recognized from performance obligations satisfied in prior periods. As of September 30, 2023, we had approximately $36.0 million of transaction prices allocated to remaining performance obligations from our customer contracts. Based on our current forecast, we expect to recognize approximately 82% as revenue over the next 12 months and the remainder to be recognized thereafter through 2026.
Receivables, Net
Receivables, net consisted of additions for deferred revenue of $12.9 million offset by revenue recognized of $4.4 million, and other activity of $0.5 million.the following:
Receivables | $ in thousands | | $ in thousands | September 30, 2023 | | December 31, 2022 |
| | | September 30, | | December 31, | |
$ in thousands | 2022 | | 2021 | |
| Trade receivables | Trade receivables | | | | Trade receivables | $ | 866 | | | $ | 1,119 | |
Grant receivables: | | Grant receivables: | |
Billed | Billed | $ | — | | | $ | 900 | | Billed | 1,421 | | | — | |
Unbilled | Unbilled | 334 | | | 1,123 | | Unbilled | 2,791 | | | 5,610 | |
Total trade receivables | 334 | | | 2,023 | | |
Grant receivables | | | | |
Billed | 1,399 | | | — | | |
Unbilled | 4,698 | | | 1,442 | | |
Other grant receivables | | Other grant receivables | — | | | 1,578 | |
Total grant receivables | Total grant receivables | 6,097 | | | 1,442 | | Total grant receivables | 4,212 | | | 7,188 | |
Other | 154 | | | 431 | | |
Contract assets | | Contract assets | — | | | 560 | |
Other receivables | | Other receivables | 391 | | | 328 | |
Total receivables | Total receivables | $ | 6,585 | | | $ | 3,896 | | Total receivables | 5,469 | | | 9,195 | |
Allowance for doubtful accounts | | Allowance for doubtful accounts | (198) | | | — | |
Total receivables, net | | Total receivables, net | $ | 5,271 | | | $ | 9,195 | |
Heliogen, Inc.
Notes to the CondensedUnaudited Consolidated Financial Statements
(Unaudited)Contract Assets and Liabilities
The following table outlines the activity related to contract assets, which is included in total receivables on our consolidated balance sheets:
| | | | | |
$ in thousands | |
| |
| |
| |
| |
Balance as of December 31, 2022 | $ | 560 | |
Additions to unbilled receivables | 177 | |
Amounts billed to customers | (729) | |
Foreign currency translation adjustments | (8) | |
| |
Balance as of September 30, 2023 | $ | — | |
The following table outlines the activity related to contract liabilities:
| | | | | | |
$ in thousands | | |
| | |
| | |
| | |
Balance as of December 31, 2022 | $ | 10,348 | | |
Payments received in advance of performance | 5,460 | | |
Revenue recognized | (2,401) | | |
Recognition of consideration payable associated with Project Warrants | (234) | | |
Other | (3) | | |
Balance as of September 30, 2023 | $ | 13,170 | | |
During the three and nine months ended September 30, 2023, we recognized revenue of $1.0 million and $2.4 million, respectively, that was included in contract liabilities as of December 31, 2022.
Customer Concentrations
For the three months ended September 30, 2023 and 2022, two customers, including governmental entities, each comprised greater than 10% of our total revenue and collectively represented 94% and 99%, respectively, of our total revenue. For the nine months ended September 30, 2023 and 2022, two customers, including governmental entities, each comprised greater than 10% of our total revenue and collectively represented 91% and 98%, respectively, of our total revenue.
As of September 30, 2023 and December 31, 2022, two customers, including governmental entities, each comprised greater than 10% of our total receivables and represented 90% and 90%, respectively, of our total receivables.
3. Note 3—Warrants
Public Warrants and Private Warrants
The Company’s warrant liabilityliabilities as of September 30, 2022 includes2023 include public warrants (the “Public Warrants”) and private placement warrants (the “Private Warrants,” and together with the Public Warrants, the “Public and Private Warrants”). The Public Warrants and Private Warrants permit warrant holders to purchase in the aggregate 8,333,333238,095 shares and 233,3336,667 shares, respectively, of the Company’s common stock at an exercise price of $11.50$402.50 per share. The Public Warrants and the Private Warrants became exercisable on March 16,18, 2022 and expire on December 30, 2026, or earlier upon redemption or liquidation. The Company has the ability to redeem outstanding Public Warrants prior to their expiration, at a price of $0.01 per warrant, provided that the last reported sales price of the Company’s common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the notice date of redemption. In addition, the Company has the ability to redeem all (but not less than all) of the outstanding Public Warrants and Private Warrants prior to their expiration, at a price of $0.10 per warrant if the last reported sales price of the Company’s common stock equals or exceeds $10.00are recorded as liabilities on the trading day prior to the date of the notice. The Company evaluated the Public Warrants and Private Warrants and concluded that a provision in the underlying warrant agreement dated March 16, 2022, by and between Athena and Continental Stock Transfer & Trust Company, related to certain tender or exchange offers precludes both the Public Warrants and Private Warrants from being accounted for as components of equity. As both the Public Warrants and Private Warrants meet the definition of a derivative, they are recorded on the condensed consolidated balance sheets as liabilities and measured at fair value at each reporting date, with the change in fair value reported in gain (loss) on warrant remeasurement on the condensed consolidated statements of operations and comprehensive loss.operations.
Heliogen, Inc.
Notes to the Unaudited Consolidated Financial Statements
Project Warrants
In connection with the concurrent execution of the CSDA with Woodside in March 2022, the Company issued warrants permitting Woodside to purchase approximately 0.91 million26,068 shares of the Company’s common stock at an exercise price of $0.01$0.35 per share (the “Project Warrants”). These warrantsThe Project Warrants expire upon the earlier of a change in control of the Company or March 28, 2027 and vest pro rata with certain payments required to be made by the customer under the CSDA. The fair value of the Project Warrants upon issuance was $4.96$173.60 per warrant based on the closing price of the Company’s sharescommon stock on March 28, 2022, less the exercise price.
The Project Warrants were determined to be consideration payable to a customer or non-employeeare recorded as equity on the consolidated balance sheets.
During the three and are equity-classified pursuant to the guidance in ASC 718, Stock Compensation (“ASC 718”). For the Project Warrants, the total consideration payable to the customer of approximately $4.5nine months ended September 30, 2023, $0.1 million reduced the transaction price associated with the customer’s contract and the Company recognized $0.2 million, respectively, was recognized as an increase to additional paid-in-capitalpaid-in capital related to the vesting of Project WarrantsWarrants. During the three and nine months ended September 30, 2022, $0.1 million and $0.5 million, respectively, was recognized as additional paid-in capital related to reflect the attributionvesting of the Project Warrants’ fair value in a manner similar to revenue recognized under the customer’s contract.Warrants. As of September 30, 2022, none2023, vested Project Warrants were exercisable for 17,243 shares of the Project Warrants have vested or become exercisable.Company’s common stock.
Collaboration Warrants
In connection with the concurrent execution of a collaboration agreement (the “Collaboration Agreement”) with Woodside in March 2022, the Company issued warrants permitting Woodside to purchase approximately 3.65 million104,275 shares of the Company’s common stock at an exercise price of $0.01$0.35 per share (the “Collaboration Warrants”). These warrantsUnder the Collaboration Agreement, Woodside will assist us in defining product offerings that use our modular technology for potential customers in Australia. The Collaboration Warrants expire upon the earlier of a change in control of the Company or March 28, 2027. Of these warrants, (i) 1.825 millionapproximately half of the warrants vested immediately upon execution of the Collaboration Agreement, to purchase 52,138 shares of the Company’s common stock and (ii) 1.825 millionthe remaining warrants will vest based on certain specified performance goals under the Collaboration Agreement relating to towers contracted.Agreement. The fair value of the Collaboration Warrants upon issuance was $4.96$173.60 per warrant based on the closing price of the Company’s sharescommon stock on March 28, 2022, less the exercise price.
The Collaboration Warrants were determined to be consideration payable to a customer or non-employeeare recorded as equity on the consolidated balance sheets and are equity-classified under ASC 718. For the Collaboration Warrants, the Company recognized a prepaidrelated expense of $9.1 million, of which $2.6 million was classified as current and $6.5 million was classified as long-term, with a corresponding increase to additional paid-in-capital related to the Collaboration Warrants that immediately vested. This amount will beis being recognized ratably as selling, general and administrative (“SG&A”) expense beginning April 2022 for marketing services to be provided over the estimated service period. As of September 30, 2023, the Company has a prepaid expense of $5.8 million for the Collaboration Warrants, of which $2.0 million was classified as current and $3.8 million was classified as long-term. The Company recognized SG&A expense, related to the vesting of the Collaboration Warrants, of $0.5 million and $0.6 million during the three months ended September 30, 2023 and 2022, respectively, and $1.5 million and $1.3 million during the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the remaining estimated period is approximately 2.9 years.
Note 4—Investments
The following table summarizes our investments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2023 | | December 31, 2022 |
$ in thousands | | Amortized Cost | | Unrealized Losses | | Fair Value | | Amortized Cost | | Unrealized Losses | | Fair Value |
| | | | | | | | | | | | |
Corporate bonds | | $ | — | | | $ | — | | | $ | — | | | $ | 3,997 | | | $ | (22) | | | $ | 3,975 | |
Commercial paper | | 990 | | | (1) | | | 989 | | | 10,837 | | | (3) | | | 10,834 | |
U.S. treasury bills | | 27,285 | | | (38) | | | 27,247 | | | 82,979 | | | (284) | | | 82,695 | |
Total investments | | $ | 28,275 | | | $ | (39) | | | $ | 28,236 | | | $ | 97,813 | | | $ | (309) | | | $ | 97,504 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
As of September 30, 2023 and December 31, 2022, all of our investments are classified as available-for-sale, have original maturities of one year or less and are disclosed as investments on our consolidated balance sheets.
Heliogen, Inc.
Notes to the CondensedUnaudited Consolidated Financial Statements
(Unaudited)
The cost of securities sold is based on the specific-identification method. During the nine months ended September 30, 2023, there were no sales of investments. During the nine months ended September 30, 2022, we realized losses of $0.2 million on the sale of investments, included in other income, net on our consolidated statements of operations related to $65.8 million in proceeds from the sale of investments.period is approximately four years. ForThere were no credit losses recognized during the three and nine months ended September 30, 2023 and 2022 we recognized approximatelyand no allowance for credit losses as of September 30, 2023 and December 31, 2022.
Note 5—Fair Value of Financial Instruments
The Company’s assets and liabilities measured at fair value on a recurring basis are summarized in the following table by fair value measurement level:
| | | | | | | | | | | | | | | | | | | | |
$ in thousands | | Level | | September 30, 2023 | | December 31, 2022 |
Assets: | | | | | | |
Investments | | 1 | | $ | 28,236 | | | $ | 97,504 | |
Liabilities: | | | | | | |
Public Warrants (1) | | 1 | | $ | 307 | | | $ | 625 | |
Private Warrants (1) | | 2 | | 9 | | | 17 | |
Contingent consideration (2) | | 3 | | 1,642 | | | 353 | |
________________(1)Included in warrant liabilities on the consolidated balance sheets.
(2)Included in other long-term liabilities on the consolidated balance sheets.
Private Warrants. The fair value of the Private Warrants approximates the fair value of the Public Warrants due to the existence of similar redemption provisions. As a result, the Company has determined that the fair value of the Private Warrants at a specific date would be similar to that of the Public Warrants, and thus their fair value is determined by using the closing price of the Public Warrants, which was $0.04 as of September 30, 2023.
Contingent Consideration. The contingent consideration was measured at fair value using a probability-weighted cash-flow method. The key inputs used in the valuation for the contingent consideration as of September 30, 2023 included the timing and probability of payment.
The following table summarizes the activities of our Level 3 fair value measurement:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
$ in thousands | 2023 | | 2022 | | 2023 | | 2022 |
Beginning balance | $ | 1,590 | | | $ | 2,062 | | | $ | 353 | | | $ | 2,009 | |
| | | | | | | |
Change in fair value (1) | 52 | | | (1,116) | | | 1,289 | | | (1,063) | |
| | | | | | | |
Ending balance | $ | 1,642 | | | $ | 946 | | | $ | 1,642 | | | $ | 946 | |
________________(1)The changes in the fair value of the contingent consideration are reported in other income (expense), net on our consolidated statements of operations.
Heliogen, Inc.
Notes to the Unaudited Consolidated Financial Statements
Note 6—Inventories
| | | | | | | | | | | |
$ in thousands | September 30, 2023 | | December 31, 2022 |
Raw materials | $ | 2,908 | | | $ | 2,442 | |
Finished goods | 1,926 | | | — | |
Work in process | 149 | | | — | |
Total inventories | $ | 4,983 | | | $ | 2,442 | |
Note 7—Property, Plant & Equipment
Major classes of property, plant and equipment, consisted of the following:
| | | | | | | | | | | | | | | | | |
$ in thousands | Estimated Useful Lives in Years | | September 30, 2023 | | December 31, 2022 |
Leasehold improvements | 5 — 7 | | $ | 3,107 | | | $ | 2,931 | |
Computer equipment | 2 — 3 | | 2,151 | | | 2,124 | |
Machinery, vehicles and other equipment | 5 — 10 | | 4,079 | | | 3,528 | |
Furniture and fixtures | 2 — 5 | | 664 | | | 646 | |
Construction in progress | | | 538 | | | 419 | |
Total property, plant and equipment | | | 10,539 | | | 9,648 | |
Accumulated depreciation | | | (4,276) | | | (2,577) | |
Total property, plant and equipment, net | | | $ | 6,263 | | | $ | 7,071 | |
Depreciation expense for property, plant and equipment was $0.5 million and $0.6 million for the three months ended September 30, 2023 and 2022, respectively, and $1.6 million and $1.3 million as SG&A expense related tofor the vesting of the Collaboration Warrants. Additional vesting of the Collaboration Warrants will be recognized as deferred contract acquisition costs upon execution of an applicable customer contract as defined in the Collaboration Agreement and will be amortized to expense over the term of the applicable customer contract.
Vendor Warrants
On April 19, 2022, the Company issued warrants to purchase 76,923 shares of the Company’s common stock, at an exercise price of $0.01 per share (“Vendor Warrants”), to a vendor as compensation for services to be performed by the vendor. The Vendor Warrants vest in 12 equal installments monthly, subject to continued service by the vendor, and are completely vested upon the one-year anniversary of issuance. The Vendor Warrants were determined to be consideration payable to a customer or non-employee and are equity-classified under ASC 718. The Vendor Warrants had a fair value upon issuance of $0.3 million, which will be recognized ratably over one year as SG&A expense. For the three and nine months ended September 30, 2023 and 2022, the Company recognized approximately $0.1 millionrespectively, and $0.1 million, respectively, asis recorded in SG&A expense relatedwith a portion allocated to the portioncost of the Vendor Warrants that vested during the period. The fair value of the Vendor Warrants upon issuance was $4.18 per warrant based on the closing price of the Company’s shares on April 19, 2022 less the exercise price.services revenue.
4. AcquisitionNote 8—Goodwill and Intangible Assets
In September 2021, Heliogen acquired 100% ofGoodwill
The Company had goodwill related to the equity interestsacquisition of HelioHeat GmbH, (“HelioHeat”), a private limited liability company in Germany engaged in the development, planning and construction of renewable energy systems and components, including a novel solar receiver (the “HelioHeat Acquisition”).receiver.
The componentsDuring the first quarter of 2023, the Company performed a goodwill impairment assessment driven by the sustained decline in the Company’s market capitalization below the Company’s carrying value. Management concluded that it is more likely than not that the fair value of consideration transferredour reporting unit was less than its carrying amount as of March 31, 2023. As a result, the Company fully impaired goodwill and recognized a $1.0 million charge during the three months ended March 31, 2023. The Company had no impairments of goodwill recognized during the nine months ended September 30, 2022.
The changes in the carrying amount of goodwill are as follows ($ in thousands):follows:
| | | | | |
Cash paid at closing$ in thousands | |
| |
| |
| |
| |
Balance as of December 31, 2022 | $ | 1,7141,004 | |
| |
| |
Contingent consideration Currency translation adjustments(1) | 2,0094 | |
Settlement of pre-existing relationshipImpairment | 45 (1,008) | |
Total fair valueBalance as of consideration transferredSeptember 30, 2023 | $ | 3,768— | |
________________
(1)See Note 11— Fair Value of Financial Instruments for additional information.
Heliogen, Inc.
Notes to the CondensedUnaudited Consolidated Financial Statements
(Unaudited)Intangible Assets
Intangible assets consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| | | September 30, 2023 | | December 31, 2022 |
$ in thousands | Useful Life in Years | | Gross Carrying Amounts | | Accumulated Amortization | | Intangible Assets, Net | | Gross Carrying Amounts | | Accumulated Amortization and Impairment | | Intangible Assets, Net |
Acquired developed technology rights (1) | 5 | | $ | — | | | $ | — | | | $ | — | | | $ | 3,799 | | | $ | (3,799) | | | $ | — | |
Software licenses | 3 | | 259 | | | (167) | | | 92 | | | 259 | | | (103) | | | 156 | |
Total | | | $ | 259 | | | $ | (167) | | | $ | 92 | | | $ | 4,058 | | | $ | (3,902) | | | $ | 156 | |
________________(1)Gross carrying amount for December 31, 2022 reflects currency translation adjustments of $0.4 million.
Amortization expense related to intangible assets was $64 thousand and $0.6 million for the nine months ended September 30, 2023 and 2022, respectively.
Note 9—Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following:
| | | | | | | | | | | |
$ in thousands | September 30, 2023 | | December 31, 2022 |
Payroll and other employee benefits | $ | 1,758 | | | $ | 811 | |
Professional fees | 2,661 | | | 729 | |
Research, development and project costs | 2,499 | | | 1,313 | |
Inventory in-transit | 18 | | | 654 | |
Operating lease liabilities, current portion | 1,737 | | | 1,570 | |
Other accrued expenses | 767 | | | 525 | |
Total accrued expenses and other current liabilities | $ | 9,440 | | | $ | 5,602 | |
Note 10—Equity
Common Stock
The Company is authorized to issue 500,000,000 shares of common stock, $0.0001 par value per share. As of September 30, 2023 and December 31, 2022, there were 5,908,724 and 5,511,839 shares of common stock issued and outstanding, respectively.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock, $0.0001 par value per share. As of September 30, 2023, no shares of preferred stock have been issued. The Company’s Board of Directors (the “Board”) has the authority to issue shares of preferred stock and to determine the rights, preferences, privileges and restrictions, including voting rights, of those shares.
Heliogen, Inc.
Notes to the Unaudited Consolidated Financial Statements
ATM Agreement
On September 13, 2023, the Company entered into a Sales Agreement with The Benchmark Company, LLC, as agent (“Benchmark”), pursuant to which the Company may, from time to time, offer and sell shares of the Company’s common stock in an at-the-market offering program through or to Benchmark as its sales agent or principal (the “ATM Agreement”). The offer and sale of the Company’s common stock will be made pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-271170) initially filed by the Company with the SEC on April 6, 2023 and declared effective by the SEC on July 18, 2023, as supplemented by a prospectus supplement dated September 13, 2023 and filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended. Under the ATM Agreement, the Company will pay Benchmark an aggregate commission of up to 3% of the aggregate gross proceeds of any shares of the Company’s common stock sold under the ATM Agreement in an amount of up to $40.0 million. As of September 30, 2023, no shares of common stock were sold under the ATM Agreement.
The Company may not utilize the ATM Agreement while trading of its common stock is suspended or delisted from the NYSE. On November 7, 2023, the Company received a letter from the NYSE that it had determined to commence proceedings to delist the Company’s common stock from the NYSE, and trading of the Company’s common stock was immediately suspended. Refer to Note 16—Subsequent Events for additional information.
Stockholders Rights Plan
On April 16, 2023, the Company’s Board declared a dividend of one preferred share purchase right (“Right”) for each outstanding share of the Company’s common stock to the stockholders of record as of the close of business on April 28, 2023, and adopted a limited duration stockholder rights plan, effective immediately, as set forth in the Rights Agreement, dated as of April 16, 2023 (the “Rights Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as rights agent. The Rights will be exercisable only if a person or group (an “acquiring person”) acquires or launches a tender or exchange offer to acquire beneficial ownership (which includes certain synthetic equity interests) of 12.5% or more of the Company’s outstanding common stock (20% for certain passive institutional investors as described in the Rights Agreement). Once the Rights become exercisable, each Right will entitle its holder (other than the acquiring person, whose rights will become void) to purchase for $122.50, subject to adjustment, additional shares of our common stock having a market value of twice such exercise price. In addition, the Rights Agreement has customary flip-over and exchange features. The Rights will expire on April 17, 2024 unless the rights are earlier redeemed or exchanged by the Company. The Rights Agreement will reduce the likelihood that any entity, person or group gains control of Heliogen through open market accumulation without paying all stockholders an appropriate control premium or without providing our Board sufficient time to make informed judgments and take actions that are in the best interests of all stockholders.
Heliogen, Inc.
Notes to the Unaudited Consolidated Financial Statements
Note 11—Loss per Share
Basic and diluted losses per share (“EPS”) were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
$ in thousands, except share and per share data | 2023 | | 2022 | | 2023 | | 2022 |
Numerator: | | | | | | | |
Net loss | $ | (18,570) | | | $ | (27,829) | | | $ | (50,797) | | | $ | (107,014) | |
Denominator: | | | | | | | |
Weighted-average common shares outstanding | 5,865,954 | | | 5,443,501 | | | 5,698,405 | | | 5,360,895 | |
Weighted-average impact of warrants (1) | 69,869 | | | 58,682 | | | 66,951 | | | 37,977 | |
Denominator for basic EPS – weighted-average shares | 5,935,823 | | | 5,502,183 | | | 5,765,356 | | | 5,398,872 | |
Effect of dilutive securities | — | | | — | | | — | | | — | |
Denominator for diluted EPS – weighted-average shares | 5,935,823 | | | 5,502,183 | | | 5,765,356 | | | 5,398,872 | |
| | | | | | | |
EPS – Basic and Diluted | $ | (3.13) | | | $ | (5.06) | | | $ | (8.81) | | | $ | (19.82) | |
________________(1)Warrants that have a $0.35 exercise price allocationper common share are assumed to be exercised when vested because common shares issued for little consideration upon exercise are included in outstanding shares for the HelioHeat Acquisition was finalizedpurposes of computing basic and diluted EPS.
The following securities were excluded from the calculation of losses per share as their impact would be anti-dilutive:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Stock options | 239,424 | | | 942,853 | | | 239,424 | | | 942,853 | |
Shares issuable under the employee stock purchase plan | 18,103 | | | — | | | 18,103 | | | — | |
Unvested restricted stock units | 447,286 | | | 327,974 | | | 447,286 | | | 327,974 | |
Restricted shares issued upon the early exercise of unvested stock options | — | | | 3,886 | | | — | | | 3,886 | |
Unvested warrants | 61,533 | | | 71,347 | | | 61,533 | | | 71,347 | |
Vested warrants | 244,762 | | | 244,762 | | | 244,762 | | | 244,762 | |
Note 12—Share-based Compensation
The Heliogen, Inc. 2021 Equity Incentive Plan aims to incentivize employees, directors and consultants who render services to the Company through the granting of March 31, 2022. stock awards, including stock options, stock appreciation right awards, restricted stock awards, restricted stock unit (“RSU”) awards, performance awards, and other stock-based awards.
Heliogen, Inc.
Notes to the Unaudited Consolidated Financial Statements
The following table summarizes our share-based compensation expense by the affected line on our consolidated statements of operations:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
$ in thousands | 2023 | | 2022 | | 2023 | | 2022 |
Cost of services revenue | $ | 197 | | | $ | 330 | | | $ | 442 | | | $ | 1,321 | |
Selling, general and administrative | 199 | | | 7,641 | | | (7,344) | | | 28,830 | |
Research and development | (91) | | | 2,081 | | | 824 | | | 4,461 | |
Total share-based compensation expense | $ | 305 | | | $ | 10,052 | | | $ | (6,078) | | | $ | 34,612 | |
The following table summarizes our share-based compensation expense by grant type:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
$ in thousands | 2023 | | 2022 | | 2023 | | 2022 |
Stock options | $ | 172 | | | $ | 4,251 | | | $ | (11,883) | | | $ | 16,227 | |
Restricted stock units | 75 | | | 5,721 | | | 5,449 | | | 18,251 | |
Employee stock purchase plan | 49 | | | — | | | 240 | | | — | |
Vendor Warrants | 9 | | | 80 | | | 116 | | | 134 | |
Total share-based compensation expense | $ | 305 | | | $ | 10,052 | | | $ | (6,078) | | | $ | 34,612 | |
Stock Options
The following table summarizes the purchase price allocationCompany’s stock option activity:
| | | | | | | | | | | | | | | | | | | | | | | |
$ in thousands, except share and per share data | Number of Shares | | Weighted Average Exercise Price ($) | | Weighted Average Remaining Contractual Life (Years) | | Aggregate Intrinsic Value ($) |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Outstanding balance as of December 31, 2022 | 891,509 | | | $ | 107.85 | | | 7.62 | | $ | 10,725 | |
| | | | | | | |
Exercised | (254,139) | | | 4.57 | | | | | |
Forfeited | (312,046) | | | 215.87 | | | | | |
Expired | (85,900) | | | 291.31 | | | | | |
Outstanding balance as of September 30, 2023 | 239,424 | | | $ | 12.65 | | | 6.34 | | $ | 31 | |
Exercisable as of September 30, 2023 | 165,947 | | | $ | 11.29 | | | 5.92 | | $ | 31 | |
During the nine months ended September 30, 2023, we recognized a net reduction of $12.5 million in share-based compensation expense, included in SG&A, as a result of 279,589 stock options forfeited in connection with the acquisition date andtermination of our former Chief Executive Officer in the adjustments recorded duringfirst quarter of 2023. As of September 30, 2023, the measurement period.
| | | | | | | | | | | | | | | | | |
| As of | | | | |
| December 31, 2021 | | Measurement Period Adjustments | | |
$ in thousands | Preliminary Valuation | | | Final Valuation |
Cash and cash equivalents | $ | 30 | | | $ | — | | | $ | 30 | |
Prepaid and other current assets | 33 | | | — | | | 33 | |
Property, plant and equipment, net | 6 | | | — | | | 6 | |
Intangible asset | — | | | 4,204 | | | 4,204 | |
Goodwill | 4,204 | | | (3,093) | | | 1,111 | |
Total assets acquired | 4,273 | | | 1,111 | | | 5,384 | |
| | | | | |
Accrued expenses and other current liabilities | 74 | | | — | | | 74 | |
Contract liabilities | 390 | | | — | | | 390 | |
Debt | 41 | | | — | | | 41 | |
Deferred tax liabilities | — | | | 1,111 | | | 1,111 | |
Total liabilities assumed | 505 | | | 1,111 | | | 1,616 | |
Net assets acquired | $ | 3,768 | | | $ | — | | | $ | 3,768 | |
The Company recorded measurement period adjustments based on the valuation of the intangible assetunrecognized compensation cost related to developed technology associated with HelioHeat’s solar receiver technology and the related deferred tax impact. The purchase price allocation resulted in the recognition of $1.1stock options was $0.9 million in goodwill, which includes measurement period adjustments, of which none is expected to be tax deductible. Goodwill representsrecognized over a weighted-average period of 1.5 years.
Heliogen, Inc.
Notes to the valueUnaudited Consolidated Financial Statements
Restricted Stock Units
The following table summarizes the Company’s RSU award activity:
| | | | | | | | | | | | | |
| Number of Shares | | Weighted Average Grant Date Fair Value ($) | | |
Unvested as of December 31, 2022 | 327,141 | | | $ | 153.12 | | | |
Granted | 341,242 | | | 9.88 | | | |
Vested | (122,524) | | | 114.77 | | | |
Forfeited | (98,573) | | | 112.81 | | | |
Unvested as of September 30, 2023 | 447,286 | | | $ | 61.87 | | | |
As of September 30, 2023, the unrecognized compensation cost related to unvested RSU awards was $17.5 million which is expected to be received fromrecognized over a weighted-average period of 1.3 years.
Employee Stock Purchase Plan
Under the synergiesHeliogen, Inc. 2021 Employee Stock Purchase Plan (the “2021 ESPP”), eligible employees may elect to purchase the Company’s common stock at the end of integrating HelioHeat’s operations with Heliogen’s operationseach offering period, which will generally be six months, at a 15% discount to expand commercial opportunities and the assembled workforce in place.
The fair valuemarket price of the intangible asset was estimated usingCompany’s common stock. As of September 30, 2023, 19,284 shares have been issued under the replacement cost approach, which was based on Level 3 inputs, which is defined in Note 11—Fair Value of Financial Instruments. Significant valuation assumptions include management’s estimated costs to reproduce HelioHeat solar receiver technology if the Company had developed the technology using its own resources, developer’s profit margin based on estimated market participants’ required margin, and an estimated discount for economic obsolescence. The intangible asset will be amortized over its estimated useful life of five years through June 2026.2021 ESPP.
5. Note 13—Income Taxes
We calculate our quarterly tax provision pursuant to the guidelines in ASCAccounting Standards Codification (“ASC”) 740, Income Taxes. ASC 740 requires companies to estimate the annual effective tax rate for current year ordinary income. In calculating the effective tax rate, permanent differences between financial reporting and taxable income are factored into the calculation, and temporary differences are not. The estimated annual effective tax rate represents the Company’s estimate of the tax provision in relation to the best estimate of pre-tax ordinary income or loss. The estimated annual effective tax rate is then applied to year-to-date ordinary income or loss to calculate the year-to-date interim tax provision. The relationship between our income tax provision or benefit and our pre-tax book income or loss can vary significantly from period to period considering, among other factors, the overall level of pre-tax book income or loss and changes in the blend of jurisdictional income or loss that is taxed at different rates and changes in valuation allowances. The income tax provision was $1 thousand and $3 thousand for the three and nine months ended September 30, 2023, respectively. The income tax benefit of $46 thousand and $0.8 million for the three and nine months ended September 30, 2022, respectively, wasis primarily attributable to our HelioHeat operations. We incurred no income tax benefit or provision for the three and nine months ended September 30, 2021.operations in Germany. Any income tax benefit associated with the pre-tax loss for the three and nine months ended September 30, 2023 and 2022, resulting primarily from the U.S. jurisdiction, is offset by a full valuation allowance.
In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the analysis of federal and state deferred tax balances, future tax projections and availability of taxable income in the
Heliogen, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
carryback period, we recorded a full valuation allowance against the federal and state deferred tax assets as offor the nine months ended September 30, 20222023 and the year ended December 31, 2021.2022.
Heliogen, Inc.
Notes to the Unaudited Consolidated Financial Statements
The Company is subject to the provisions of ASC Subtopic 740-10, Accounting for Uncertainty in Income Taxes. This standard defines the threshold for recognizing the benefits of tax return positions in the financial statements as more-likely-than-not to be sustained by the relevant taxing authority and requires measurement of a tax position meeting the more-likely-than-not criterion, based on the largest benefit that is more than 50% likely to be realized. If upon performance of an assessment pursuant to this subtopic, management determines that uncertainties in tax positions exist that do not meet the minimum threshold for recognition of the related tax benefit, a liability is recorded in the condensed consolidated financial statements. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. We do not have material unrecognized tax benefits for uncertain tax positions.
6. Share-Based Compensation
The Heliogen, Inc. 2021 Equity Incentive Plan aims to incentivize employees, directors and consultants who render services to the Company through the granting of stock awards, including options, stock appreciation right (“SARs”) awards, restricted stock awards, RSU awards, performance awards, and other stock-based awards.
During the three and nine months ended September 30, 2022, we granted 6,207,165 and 8,317,780 RSU awards, respectively, at a weighted average grant date fair value per share of $2.34 and $2.83, respectively.
Our total share-based compensation expense, including the affected line on the condensed consolidated statements of operations and comprehensive loss, is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | | |
$ in thousands | | 2022 | | 2021 | | 2022 | | 2021 | | |
Cost of services revenue (excluding depreciation and amortization) | | $ | 330 | | | $ | — | | | $ | 1,321 | | | $ | — | | | |
Selling, general and administrative | | 7,562 | | | 1,346 | | | 28,696 | | | 1,729 | | | |
Research and development | | 2,080 | | | 139 | | | 4,461 | | | 320 | | | |
Total share-based compensation expense | | $ | 9,972 | | | $ | 1,485 | | | $ | 34,478 | | | $ | 2,049 | | | |
Heliogen, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
7. Loss Per Share
Basic and diluted losses per share were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | |
$ in thousands, except per share and share data | 2022 | | 2021 | | 2022 | | 2021 | | |
Numerator | | | | | | | | | |
Net loss | $ | (27,829) | | | $ | (28,276) | | | $ | (107,014) | | | $ | (88,665) | | | |
Denominator | | | | | | | | | |
Weighted-average common shares outstanding | 190,526,219 | | | 11,545,919 | | | 187,633,327 | | | 10,650,897 | | | |
Weighted-average impact of warrants(1) | 2,053,906 | | | — | | | 1,194,443 | | | — | | | |
Denominator for basic EPS – weighted-average shares | 192,580,125 | | | 11,545,919 | | | 188,827,770 | | | 10,650,897 | | | |
Effect of dilutive securities | — | | | — | | | — | | | — | | | |
Denominator for diluted EPS – weighted-average shares | 192,580,125 | | | 11,545,919 | | | 188,827,770 | | | 10,650,897 | | | |
| | | | | | | | | |
Loss per share – Basic | $ | (0.14) | | | $ | (2.45) | | | $ | (0.57) | | | $ | (8.32) | | | |
Loss per share – Diluted | $ | (0.14) | | | $ | (2.45) | | | $ | (0.57) | | | $ | (8.32) | | | |
________________
(1)Warrants that have a $0.01 exercise price are assumed to be exercised when vested because common shares issued for little consideration upon exercise are included in outstanding shares for the purposes of computing basic and diluted EPS.
The following securities were excluded from the calculation of Loss per share as their impact would be anti-dilutive:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | |
| 2022 | | 2021 | | 2022 | | 2021 | | |
Stock options | 32,999,878 | | | 31,492,075 | | | 32,999,878 | | | 31,492,075 | | | |
Unvested restricted stock units | 11,479,099 | | | — | | | 11,479,099 | | | — | | | |
Restricted shares issued upon the early exercise of unvested options | 135,271 | | | 1,338,710 | | | 135,271 | | | 1,338,710 | | | |
Unvested warrants | 2,497,171 | | | — | | | 2,497,171 | | | — | | | |
Vested warrants | 8,566,656 | | | 229,841 | | | 8,566,656 | | | 229,841 | | | |
Preferred stock warrants, on an “as converted” basis | — | | | 381,306 | | | — | | | 381,306 | | | |
Convertible preferred shares, on an “as converted” basis (1) | — | | | 121,040,751 | | | — | | | 121,040,751 | | | |
________________(1) For the three and nine months ended September 30, 2021, there were 117,886,982 convertible preferred shares outstanding.
8. Note 14—Related Party Transactions
Idealab
TheBill Gross, our former Chief Executive Officer, of our Company also serves as the chairman of the board of directors of Idealab, a California Corporation (“Idealab”). Idealab, a minority ownerholder of more than 5% of Heliogen’s outstanding voting stock through its wholly-owned subsidiary, Idealab Holdings, LLC, is a party to a lease with the Company and provides various administrative services through service agreements which include accounting, human resources, legal, information technology, marketing, public relations, and certain other operational support and executive advisory services. Since the closing of the Business Combination on December 30, 2021, as discussed in Note 1, the reliance on Idealab for these services has reduced significantly as the
Heliogen, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Company increased headcount related to administrative functions.support. All expenses or amounts paid to Idealab pursuant to these agreements are reported within SG&A expense inon the condensed consolidated statements of operations and comprehensive loss.
operations. The amounts charged to us or reimbursed by us under these agreements were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | |
$ in thousands | 2022 | | 2021 | | 2022 | | 2021 | | |
Administrative services provided by Idealab | $ | 133 | | | $ | 314 | | | $ | 436 | | | $ | 1,066 | | | |
| | | | | | | | | |
| | | | | | | | | |
was $54 thousand and $133 thousand for the three months ended September 30, 2023 and 2022, respectively, and $0.2 million and $0.4 million for the nine months ended September 30, 2023 and 2022, respectively.In May 2021, Heliogen sub-leased a portion of its office space in Pasadena, CACalifornia to Idealab for a term of seven years. The sub-lease hasIdealab. In March 2023, Heliogen entered into an initial annual base rent of approximately $150 thousand and contains a 3% per annum escalation clause. The sub-lease is subjectamendment to termination by either party upon six months prior written notice. Concurrently with the parties’ entering into the sub-lease agreement, Idealab and Heliogen also entered into certain property management and shared facilities staffing agreements, which provide that Heliogen pays Idealab approximately $3 thousand per month for building management services and approximately $13 thousand per month for shared facilities staff and services (with proportional reimbursement of salaries). Such agreements are subject to termination right by either party with 90 days prior written notice.
Idealab. The Company recognized rental revenue of $45 thousand and $35 thousand for the three months ended September 30, 2023 and 2022, respectively, and $114 thousand and $82 thousand for the nine months ended September 30, 2023 and 2022, respectively, from Idealab within other income, net inon our condensed consolidated statements of operationsoperations.
NantG Power, LLC
On March 24, 2023, Heliogen entered into an agreement with NantG Power, LLC (“NantG”), an affiliated sister-company to Nant Capital LLC, a holder of more than 5% of Heliogen’s outstanding voting stock, to provide front-end concept design and comprehensive loss as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | |
$ in thousands | 2022 | | 2021 | | 2022 | | 2021 | | |
Rental revenue | $ | 35 | | | $ | 314 | | | $ | 82 | | | $ | 1,066 | | | |
| | | | | | | | | |
R&D engineering services. During the three and nine months ended September 30, 2023, the Company recognized $15 thousand of services revenue from NantG.
9. Note 15—Commitments and Contingencies
We are involved in various claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims and other miscellaneous claims. We recognize a liability when we believe the loss is probable and reasonably estimable. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our condensed consolidated financial statements as of and for the three and nine months ended September 30, 2022.
Although we cannot predict the outcome of legal or other proceedings with certainty, when it is probable that a loss has been incurred and the amount is reasonably estimable, U.S. GAAP requires us to accrue an estimate of the probable loss or range of loss or make a statement that such an estimate cannot be made. We follow a thorough process in which we seek to estimate the reasonably possible loss or range of loss, and only if we are unable to make such an estimate do we conclude and disclose that an estimate cannot be made. Accordingly, unless otherwise indicated below in our discussion of legal proceedings, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated.
On August 30, 2021, the Company's predecessor, Athena, received a litigation demand letter (the “Class Vote Demand”) on behalf of Athena’s stockholder FWD LKNG GDD Irrevocable Trust. The Class Vote Demand alleged that Athena violated Section 242(b)(2) of the Delaware General Corporation Law (the “DGCL”) by not requiring separate class votes for holders of the Athena Class A and Class B Common Stock in connection with certain aspects of the business combination between Athena and Heliogen. According to the Class Vote Demand, a class vote was required under Section 242(b)(2) because consideration to the stockholders of Heliogen was to be paid in newly issued common stock, following elimination of the Class B Common Stock. While such separate class vote is not required pursuant to Section 242(b)(2) of the DGCL, Athena concluded that such separate class vote was advisable to prevent disruption to the proposed transaction with Heliogen, and to avoid the delay and expense of potential litigation and amended its Form S-4 Registration Statement to reflect that change. On January 20, 2022, the stockholders’ counsel asserted entitlement to an award of attorneys’ fees to
Heliogen, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)2023.
reflect the benefit it purportedly obtained for all Athena stockholders. This matter was resolved in March 2022 with final settlement paid in April 2022 and no material impact to our financial condition or results of operations.
10. Accumulated Other Comprehensive Loss
Changes in Accumulated Other Comprehensive Loss (“AOCL”), net of tax, by component were as follows:
| | | | | | | | | | | | | | | | | |
$ in thousands | Changes in fair value of investment securities | | Accumulated foreign currency translation adjustments | | Total |
Balance at June 30, 2022 | $ | (523) | | | $ | (311) | | | $ | (834) | |
Other comprehensive loss adjustments before reclassifications | (18) | | | (173) | | | (191) | |
Amounts reclassified from AOCL | — | | | — | | | — | |
Net other comprehensive loss | (18) | | | (173) | | | (191) | |
Balance at September 30, 2022 | $ | (541) | | | $ | (484) | | | $ | (1,025) | |
| | | | | |
Balance at December 31, 2021 | $ | (17) | | | $ | 13 | | | $ | (4) | |
Other comprehensive loss adjustments before reclassifications | (681) | | | (497) | | | (1,178) | |
Amounts reclassified from AOCL | 157 | | | — | | | 157 | |
Net other comprehensive loss | (524) | | | (497) | | | (1,021) | |
Balance at September 30, 2022 | $ | (541) | | | $ | (484) | | | $ | (1,025) | |
| | | | | | | | | | | | | | | | | |
$ in thousands | Changes in fair value of investment securities | | Accumulated foreign currency translation adjustments | | Total |
Balance at June 30, 2021 | $ | (14) | | | $ | — | | | $ | (14) | |
Other comprehensive loss adjustments before reclassifications | 7 | | | (57) | | | (50) | |
Amounts reclassified from AOCL | — | | | — | | | — | |
Net other comprehensive loss | 7 | | | (57) | | | (50) | |
Balance at September 30, 2021 | $ | (7) | | | $ | (57) | | | $ | (64) | |
| | | | | |
Balance at December 31, 2020 | $ | — | | | $ | — | | | $ | — | |
Other comprehensive loss adjustments before reclassifications | (7) | | | (57) | | | (64) | |
Amounts reclassified from AOCL | — | | | — | | | — | |
Net other comprehensive loss | (7) | | | (57) | | | (64) | |
Balance at September 30, 2021 | $ | (7) | | | $ | (57) | | | $ | (64) | |
There were no tax impacts related to the Company’s other comprehensive loss items at September 30, 2022 and December 31, 2021.
Heliogen, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Reclassifications out of AOCL, net of tax, by component were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | Affected line item on the Condensed Consolidated Statements of Operations |
$ in thousands | 2022 | | 2021 | | 2022 | | 2021 | |
Changes in fair value on investment securities | | | | | | | | | |
Reclassification of realized losses | $ | — | | | $ | — | | | $ | 157 | | | $ | — | | | Other (expense) income, net |
Tax benefit (provision) | — | | | — | | | — | | | — | | | Benefit for income taxes |
Net changes in fair value on investment securities | $ | — | | | $ | — | | | $ | 157 | | | $ | — | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
11. Fair Value of Financial Instruments
Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and is generally classified in one of the following categories:
Level 1 — Fair value is based on quoted prices for identical instruments in active markets.
Level 2 — Fair value is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
Level 3 — Fair value is based on valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
The Company’s assets and liabilities measured at fair value on a recurring basis are summarized in the following table by fair value measurement level:
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
$ in thousands | | Level | | September 30, 2022 | | December 31, 2021 |
Assets: | | | | | | |
Investments | | 1 | | $ | 128,803 | | | $ | 32,332 | |
Liabilities: | | | | | | |
| | | | | | |
Public Warrants | | 1 | | $ | 1,834 | | | $ | 14,167 | |
Private Warrants | | 2 | | $ | 51 | | | $ | 396 | |
Contingent consideration (1) | | 3 | | $ | 946 | | | $ | 2,009 | |
| | | | | | |
________________
(1)Included in other long-term liabilities on the condensed consolidated balance sheet.
Heliogen, Inc.
Notes to the CondensedUnaudited Consolidated Financial Statements
(Unaudited)Note 16—Subsequent Events
Stockholder Matters
On November 7, 2023, the NYSE notified the Company that it had determined to commence proceedings to delist the Company’s common stock and Public Warrants from the NYSE. Trading in these securities was immediately suspended. The NYSE reached its decision to delist these securities pursuant to Section 802.01B because the Company had fallen below the NYSE’s continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day period of at least $15 million. The Company intends to appeal the delisting determination. On November 8, 2023, the Company’s common stock and Public Warrants began trading on the OTC market.
The following table summarizes the reconciliation of our Level 3 fair value measurements:
| | | | | | | | | | | | | | | | | | | |
($ in thousands) | SAFE Instruments (3) | | Legacy Heliogen Preferred Stock Warrants (3) | | Contingent Consideration (2) | | |
Three Months Ended September 30, 2022 |
Beginning of period | $ | — | | | $ | — | | | $ | 2,062 | | | |
Net realized decrease in fair value | — | | | — | | | (1,116) | | | |
| | | | | | | |
| | | | | | | |
End of period | $ | — | | | $ | — | | | $ | 946 | | | |
| | | | | | | |
Nine Months Ended September 30, 2022 |
Beginning of period | $ | — | | | $ | — | | | $ | 2,009 | | | |
Net realized decrease in fair value | — | | | — | | | (1,063) | | | |
| | | | | | | |
| | | | | | | |
End of period | $ | — | | | $ | — | | | $ | 946 | | | |
| | | | | | | |
Three Months Ended September 30, 2021 |
Beginning of period | $ | 130,871 | | | $ | 2,329 | | | $ | — | | | |
Net realized increase in fair value | 15,533 | | | 321 | | | — | | | |
| | | | | | | |
Acquisition | — | | | — | | | 2,009 | | | |
| | | | | | | |
End of period | $ | 146,404 | | | $ | 2,650 | | | $ | 2,009 | | | |
| | | | | | | |
Nine Months Ended September 30, 2021 |
Beginning of period | $ | — | | | $ | 46 | | | $ | — | | | |
Net realized increase in fair value | 62,993 | | | 2,604 | | | — | | | |
Issuances (1) | 83,411 | | | — | | | — | | | |
Acquisition | — | | | — | | | 2,009 | | | |
| | | | | | | |
End of period | $ | 146,404 | | | $ | 2,650 | | | $ | 2,009 | | | |
__________________
(1)Net of issuance costs.
(2)The changes in the fair value of the contingent consideration are reported in our Condensed Consolidated Statements of Operations and Comprehensive Loss in other income (expense), net.
(3)On December 30, 2021, immediately prior to the Business Combination, the SAFE Instruments and preferred stock warrants were converted into common stock.
The contingent consideration was measured at fair value using a probability-weighted cash-flow method. The key inputs used in the valuation for the contingent consideration as of September 30, 2022 included the timing and probability of payment.
The SAFE Instruments and Legacy Heliogen preferred stock warrants were measured at fair value using a probability-weighted method considering two potential outcomes: a Special Purpose Acquisition Company (“SPAC”) exit
Heliogen, Inc.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
scenario and a stay private scenario. The table below summarizes key inputs used in the valuation for the SAFE Instruments and warrants as of September 30, 2021:
| | | | | | | | | | | | | | | | | |
| | | Private Scenario |
| SPAC Scenario | | Safe Instruments | | Warrants |
Scenario probability weighting | 85 | % | | 15 | % | | 15 | % |
Expected term (in years) | 0.6 | | 2.1 | | 2.1 |
Expected volatility | 55.0 | % | | 20.0 | % | | 102.5 | % |
Risk-free interest rate | 0.1 | % | | 0.3 | % | | 0.3 | % |
Dividend yield | — | | | — | | | — | |
12. Investments
Investments in fixed maturity securities as of September 30, 2022 and December 31, 2021 are classified as available-for-sale and are summarized in the following table below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2022 | | December 31, 2021 |
$ in thousands | | Amortized Cost | | Unrealized Losses | | Fair Value | | Amortized Cost | | Unrealized Losses | | Fair Value |
Short-term investments | | | | | | | | | | | | |
Corporate bonds | | $ | 10,508 | | | $ | (83) | | | $ | 10,425 | | | $ | 32,349 | | | $ | (17) | | | $ | 32,332 | |
Commercial paper | | 17,493 | | | (33) | | | 17,460 | | | — | | | — | | | — | |
U.S. treasury bills | | 96,460 | | | (311) | | | 96,149 | | | — | | | — | | | — | |
Total short-term investments | | 124,461 | | | (427) | | | 124,034 | | | 32,349 | | | (17) | | | 32,332 | |
| | | | | | | | | | | | |
Long-term investments | | | | | | | | | | | | |
U.S. treasury bills | | 4,883 | | | (114) | | | 4,769 | | | — | | | — | | | — | |
Total long-term investments | | 4,883 | | | (114) | | | 4,769 | | | — | | | — | | | — | |
| | | | | | | | | | | | |
Total | | $ | 129,344 | | | $ | (541) | | | $ | 128,803 | | | $ | 32,349 | | | $ | (17) | | | $ | 32,332 | |
There were no credit losses recognized for the three and nine months ended September 30, 2022 and 2021, and there was no allowance for credit losses as of September 30, 2022 and December 31, 2021.
We incurred no realized losses on the sale of investments during the three months ended September 30, 2022. We incurred realized losses of approximately $0.2 million on the sale of investments during the nine months ended September 30, 2022. There were no realized gains or losses on investments during the three and nine months ended September 30, 2021.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following management’s discussion and analysis (“MD&A”) provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition, andcondition. The following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. assumptions, including those described in “Cautionary Note Regarding Forward-Looking Statements” included in the fore-part in this Quarterly Report on Form 10-Q (our “Quarterly Report”) and included in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022 (our “Annual Report”), as filed with the SEC on March 29, 2023, as supplemented by the risk factors disclosed in Part II, Item 1A. Risk Factors in our Quarterly Report for the period ended March 31, 2023 and in this Quarterly Report.
The following MD&A should be read in conjunction with our condensed consolidated financial statements and related notes included in Part I Item 1 in this Quarterly Report on Form 10-Q, and the section titled “Cautionary Note Regarding Forward-Looking Statements”our audited consolidated financial statements as of December 31, 2022, included in the forepart in this Quarterly Report on Form 10-Q.our Annual Report.
Overview
Heliogen, Inc. and its subsidiaries (collectively, “Heliogen,” the “Company,” “we,” “us,” or “our”) is a leader in next generation concentrated solar energy technology.energy. We are developing a modular, artificial intelligence (“AI”)-enabled,AI-enabled, concentrated solar energy plant that will use an array of mirrors to reflect sunlight and capture, concentrate, store and convert it into cost-effective energy on demand. Our uniqueproduct offering will deliver industrial process steam around the clock using thermal energy storage based on proven technology. This steam can also be used to produce green hydrogen when coupled with a solid oxide electrolyzer. Our next generation system will have the ability to cost-effectively generate and store thermal energy at very high temperatures.temperatures, which enables cost-effective production of electricity and higher temperature industrial process heat. The ability to produce high-temperature heat, and the inclusion of a thermal energy storage system distinguishes our solution from clean energy provided by typical photovoltaic (“PV”) and wind installations which do not produce thermal energy and are only able to produce energy intermittently unless battery storage is added. The system will be configurable for several applications, including the carbon-free generation of clean power (electricity), industrial-grade heat and steam (for use in industrial processes), clean power (electricity), and generation of green hydrogen, based on a customer’s needs.
We have developed innovationsRecent Developments
Texas Steam Plant. In October 2023, we executed a land lease in Plains, Texas and initiated construction on a Heliogen steam plant in the processPermian Basin. The plant is expected to achieve mechanical completion by the end of concentrating sunlight which we believe fundamentally improve2024. The plant will demonstrate the potential to efficientlyoperation of our technology at a larger scale than our current R&D facility in Lancaster, California and cost effectively collectwill demonstrate the operation of our internally designed steam-generating receiver integrated with our heliostat field and deliver energy to industrial processes. We believe wecontrol system. The plant will be oneoperated daily allowing us to collect operational data in support of future commercial projects. Additionally, we are evaluating commercial opportunities associated with this plant.
Executed Cost Reduction Plan. In October 2023, we developed and executed on an $8 million annual operating cost reduction plan. This plan includes a reduction in force and a focus on costs while considering ongoing investment and operating needs.
Stockholder Matters. On November 7, 2023, we received a letter from the first technology providersNYSE notifying us that it had determined to commence proceedings to delist our common stock and Public Warrants from the NYSE pursuant to Section 802.01B. Trading in these securities was immediately suspended. We intend to appeal the delisting determination. On November 8, 2023, our common stock and Public Warrants began trading on the OTC market. We intend to continue to comply with public company SEC regulations and other NYSE listing requirements, including filing quarterly financial statements, having independently audited financials, and maintaining an independent Board of Directors with corporate governance rules and oversight committees.
Results of Operations
Heliogen is undergoing a significant transition as it moves from design to testing and implementation of its innovative supercritical CO2 power generation system. In March 2022, we secured a contract to engineer and construct a 5 MWe commercial-scale concentrated solar energy facility with Woodside Energy (USA) Inc. (“Woodside”) in Mojave, California with a total transaction price of $45.5 million and received an award from the abilityU.S. Department of Energy (the “DOE”) of $39.0 million (the “DOE Award”) to deliver cost-effective renewable energy capablesupport the project, of replacing fossil fuels usedwhich $3.9 million will be paid directly by the DOE to another party providing services under the DOE Award at our direction. We remain in industrial processes that require high temperature heat and/or nearly 24/7 operation. In addition, we believe our disruptive, patented design and A.I. technology will address a fundamental problem confronted by many renewable sourcesthe early stages of energy: intermittency. An intermittent power supply does not match the continuous power demand of industry and the grid. Without storage, wind and PV-based renewable energy generation may rapidly fluctuate between over-supply and under-supply based on resource availability. As the grid penetration of intermittent resources increases, these fluctuations may become increasingly extreme. We believecommercializing our technology will contributeand investing in research and development (“R&D”) and infrastructure necessary to solving this problem. Our solar plants willachieve these goals. As a result, we have the abilityhistorically incurred operating losses. However, we remain focused on achieving sufficient scale and efficiency improvements through technological progress and additional learning to store very high temperature energy in solid media. This energy will then be dispatchable, including during times without sunlight, to cost-effectively deliver near 24/7 carbon-free energy in the form of heat, electric power or green hydrogen fuel.
The three use categories for the backbone of three business lines will be configured as follows:
HelioHeat — The production of heat or steam for use in industrial processes will be enabled by the baseline system.ultimately achieve profitability.
HelioPower — With the baseline system as the foundation, the addition of a turbine generator system will then enable power generation.How We Generate Revenue
HelioFuel — Building on the Power system described above, hydrogen fuel production will be enabledWe primarily generate revenue by further adding an electrolyzer system to the baseline system.
Our technological innovations will enable the delivery of our HelioHeat, HelioPower and HelioFuel solutions to customers. HelioHeat plants will produce carbon-free heat (e.g., process steam or hot air) to support industrial processes. HelioPower plants will deliver solar thermal energy to a heat engine to produce electrical power. HelioFuel plants will couple a HelioPower plant with an electrolyzer to produce green Hydrogen fuel. All three solutions will be enabled by Heliogen’s proprietary heliostat design and AI technology, and will integrate thermal energy storage to enable operation nearly 24/7, overcoming the intermittency of other solar energy technologies.
For each of the three above solutions, we are offering multiple support models to customers looking to deploy Heliogen’s technology:
•Contractingcontracting with owner-operators to build turnkey facilities that deploy Heliogen’s technology (Heliogen will contract with engineering, procurement and construction (“EPC”) partners for constructing the facility);
•Selling heliostats (and associated software control systems) to owner-operators and/or EPC contractors;
•Providing asset maintenance supporttechnology. Our services during operation, for completed facilities that use Heliogen’s technology; and
•Providing project development support services to help customers advance readiness to break ground in advance of final investment decisions.
In the future, we will also be prepared to offer Heliogen’s intellectual property through a licensing model to third parties interested in manufacturing and installing the hardware or may enter into long-term power or steam purchase agreements with customers and sell the project to third parties.
Recent Developments
Memorandum of Understanding for Green Hydrogen Generation Facility
On November 7, 2022, Heliogen announced it entered into a non-binding memorandum of understanding (“MOU”) with the City of Lancaster, California to deploy Heliogen’s technology for a green hydrogen production facility. The facilityrevenue, which is expected to generate up to 1500 metric tons per year of carbon-free hydrogen, which can be sold to industrial customers in Lancaster and the greater Los Angeles area. This relationshipderived from customer contracts, is expected to accelerate the novel use of concentrating solar thermal energy for a commercial hydrogen generation facility. The MOU is subject to negotiation and of execution of a definitive agreement.
U.S. Department of Energy Award
On September 27, 2022, Heliogen was selected to receive a $4.1 million award from the U.S. Department of Energy Solar Energy Technologies Office to accelerate the large-scale development and deployment of concentrated solar-thermal power (CSP) technology for industrial decarbonization and electrical power generation and storage. This project will aim to demonstrate a first-of-its-kind CSP process for decarbonizing the heating of limestone to 950°C, which could reduce the carbon emissions associated with cement manufacturing.
Letter of Intent with a Sustainable Fuels Company
On August 8, 2022, Heliogen announced it had entered into a non-binding letter of intent (“LOI”) with a sustainable fuels company (“SFC”) to jointly produce sustainable aviation fuel (“SAF”) at Heliogen’s concentrated solar thermal demonstration facility in Lancaster, California. This first-of-its-kind collaboration aims to synthesize sustainable jet fuel from sunlight and air to enable the rapid decarbonization of the aviation industry.
The companies will work to deploy Heliogen’s proprietary, AI-powered HelioHeat™ technology to convert sunlight directly into thermal energy in the form of high temperature steam and air that will be used to produce green hydrogen for SFC’s Reactor platform. The hydrogen will be produced leveraging the previously announced successful demonstration of Heliogen’s concentrated solar technology. As part of the collaboration between Heliogen and SFC, the LOI includes a goal of building a fully integrated ~1 barrel per day drop-in ready SAF demonstration. The parties expect a demonstration project to be a first step to develop a pipeline for approximately 3 million barrels of fuel over the next ten years. The LOI is subject to negotiation and execution of a definitive agreement and we cannot provide any assurances that we will be able to do so.
Brenda Solar Energy Zone
In December 2021, the U.S. Bureau of Land Management (the “BLM”) awarded the Company the exclusive right to lease land in the Brenda Solar Energy Zone (the “Brenda SEZ”). Heliogen intends to develop a green hydrogen facility on the Brenda site, capable of producing approximately 20,000 metric tons of hydrogen per year. The Brenda SEZ is an ideal location for commercial-scale green hydrogen production due to the ample local water supply and its close proximity to potential offtake partners and key distribution channels.
In April 2022, the Company’s wholly-owned subsidiary, Heliogen SR2, LLC, executed a right-of-way lease agreement with the BLM for 3,343 acres within the Brenda SEZ. As of June 30, 2022, the right-of-way lease had not commenced. In October 2022, the lease payments were finalized.
Installation of Fourth Generation Heliostats
In July 2022, Heliogen completed the installation of its new fourth generation heliostats at its demonstration facility in Lancaster, California. As with the previous generations of our heliostats, each successive iteration is designed to be less expensive and more efficient to manufacture, install and maintain, while also improving performance and reliability of the solar field. These heliostats were produced on our pilot lines as part of the manufacturing validation process. We also installed them in Lancaster using the same installation methods and equipment that we plan to use for our first commercial-scale HelioHeat facility.
Autonomous Cleaning Functionality Testing
In September 2022, Heliogen completed its latest round of testing on its ChariotAV autonomous cleaning vehicle, which validated the design of the vehicle and proved its ability to navigate the heliostat field autonomously while effectively cleaning the mirrors. Heliogen is confident in the vehicle’s ability to accurately and repeatedly clean the mirrors to maintain optimal light reflectivity.
Key Factors and Trends Affecting our Business
Inflation Reduction Act
The Inflation Reduction Act of 2022 (“IRA”) was signed into law on August 16, 2022. The IRA contains many provisions intended to incentivize domestic clean energy investment, clean energy production and manufacturing of necessary components, specifically: (a) the extension and enhancement of the Investment Tax Credit (“ITC”) program, which the IRA extends to thermal energy storage equipment; (b) the addition of Production Tax Credits (“PTC”) of $3.00 per kilogram for clean hydrogen and a three-year extension and modification of PTCs for facilities that begin construction before December 31, 2024; (c) the creation of the Advanced Manufacturing Production Credit that applies to the solar components we plan to manufacture at our facility in Long Beach, California; (d) the creation of a new tax credit for sustainable aviation fuel up to $1.75 per gallon, depending on the lifecycle carbon emissions reduction of the fuel; and (e) the increase in total funds available for the U.S. Department of Energy’s Title 17 loan guarantee program by $3.6 billion, bringing the total to $40 billion. The ITC and PTC amount can be increased if certain domestic content requirements are satisfied or if a project is located in (i) an “energy community” or (ii) low-income community, each as defined in the IRA. Heliogen is continuing to evaluate the IRA to understand the full impact of these provisions and additional potential benefits and believes many of these provisions will drive increased demand for its renewable energy technology and related products while helping the United States to reduce its carbon footprint more rapidly.
Global Events including the COVID-19 Pandemic
Our operations have been and may in the future be impacted by several global events including changes to existing geopolitical dynamics such as Russia’s invasion of Ukraine, social and economic instability, and the impact of the COVID-19 pandemic, which have resulted in increased market volatility, changes to the labor market, inflation, which has resulted in increased commodity prices, and supply chain constraints. Recently, we have seen a recovery in shipping costs and lower commodity prices, however, the future remains uncertain. The ultimate extent the impact these global events and economic conditions will have on our businesses, operating results, cash flows, liquidity and financial condition will be driven primarily by the severity and duration of the direct impact on products in our supply chain and the broad impact to the U.S. and global economies.
Results of Operations
Key Components of Our Results of Operations
Revenue - For our contracts with customers, we recognize revenuerecognized over time using the incurred costs method for our contracts with customers that include projects under development and engineering and design services. ForEngineering service contracts can be short-term or span several years and we recognize revenue over time as customers receive and consume the benefit of such services. Additionally, we have government grants we recognizewhich are accounted for as grant revenue based on the amounts determined to be reimbursable for costs, including permitted indirect costs, incurred during a given period for which we haveand are recognized only when there is reasonable assurance ofthat the entity will comply with any conditions attached to the grant and the grant funds being received under the grant.will be received.
Cost of Sales - Conducting Our Business
Cost of salesrevenue consists primarily of direct material, labor and direct external vendorsubcontractor costs related to our revenue contracts. No allocation of depreciationAdditionally, we have indirect costs related to contract performance, such as indirect labor, supplies, tools and amortization has been recognized due to the nature of work being performed.
Selling, General and Administrative Expense - Selling, general and administrative (“SG&A”) expense consists primarily of salaries, share-based compensation, and other personnel-related costs, professional fees, insurance costs, and other business development and selling expenses.
Research and Development Expense - Research and development (“R&D”) expense consists primarily of salaries, share-based compensation and other personnel-related costs; the cost of products, materials, and outside services used in our R&D activities.allocated depreciation.
Comparison of the Three and Nine Months Ended September 30, 20222023 and 20212022
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | |
| | Three Months Ended September 30, | | | | Nine Months Ended September 30, | | | September 30, | |
$ in thousands | $ in thousands | | 2022 | | 2021 | | $ Change | | | | 2022 | | 2021 | | $ Change | $ in thousands | 2023 | | 2022 | | $ Change | | % Change |
Revenue: | Revenue: | | | | | | | | | | | | | | | Revenue: | | | | | |
Services revenue | Services revenue | | $ | 1,367 | | | $ | 2,202 | | | $ | (835) | | | | | $ | 4,375 | | | $ | 3,563 | | | $ | 812 | | Services revenue | $ | 1,096 | | | $ | 1,367 | | | $ | (271) | | | (20) | % |
Grant revenue | Grant revenue | | 1,733 | | | — | | | 1,733 | | | | | 4,656 | | | — | | | 4,656 | | Grant revenue | 1,177 | | | 1,733 | | | (556) | | | (32) | % |
Total revenue | Total revenue | | 3,100 | | | 2,202 | | | 898 | | | | | 9,031 | | | 3,563 | | | 5,468 | | Total revenue | 2,273 | | | 3,100 | | | (827) | | |
Cost of revenue: | Cost of revenue: | | | | | | | | | | | | | | | Cost of revenue: | | | | | | |
Cost of services revenue (excluding depreciation and amortization) | | 1,690 | | | 1,375 | | | 315 | | | | | 5,668 | | | 2,736 | | | 2,932 | | |
Cost of services revenue (including depreciation) | | Cost of services revenue (including depreciation) | 1,220 | | | 1,690 | | | (470) | | | (28) | % |
Cost of grant revenue | Cost of grant revenue | | 1,733 | | | — | | | 1,733 | | | | | 4,656 | | | — | | | 4,656 | | Cost of grant revenue | 1,177 | | | 1,733 | | | (556) | | | (32) | % |
Provision for contract losses | | — | | | — | | | — | | | | | 33,737 | | | — | | | 33,737 | | |
Total cost of revenue | | 3,423 | | | 1,375 | | | 2,048 | | | | | 44,061 | | | 2,736 | | | 41,325 | | |
Contract loss (adjustments) provisions | | Contract loss (adjustments) provisions | (538) | | | — | | | (538) | | | n/m |
| Gross profit (loss) | Gross profit (loss) | | (323) | | | 827 | | | (1,150) | | | | | (35,030) | | | 827 | | | (35,857) | | Gross profit (loss) | 414 | | | (323) | | | 737 | | |
| Operating expenses: | Operating expenses: | | | | | Operating expenses: | |
Selling, general, and administrative | | 18,268 | | | 8,687 | | | 9,581 | | | | | 60,733 | | | 15,099 | | | 45,634 | | |
Selling, general and administrative | | Selling, general and administrative | 14,997 | | | 18,268 | | | (3,271) | | | (18) | % |
Research and development | Research and development | | 11,168 | | | 4,618 | | | 6,550 | | | | | 26,448 | | | 8,891 | | | 17,557 | | Research and development | 5,162 | | | 11,168 | | | (6,006) | | | (54) | % |
Total operating expenses | | 29,436 | | | 13,305 | | | 16,131 | | | | | 87,181 | | | 23,990 | | | 63,191 | | |
| Operating loss | Operating loss | | (29,759) | | | (12,478) | | | (17,281) | | | | | (122,211) | | | (23,163) | | | (99,048) | | Operating loss | (19,745) | | | (29,759) | | | 10,014 | | |
| Other income (expense), net: | | | | | |
Interest income, net | Interest income, net | | 259 | | | 197 | | | 62 | | | | | 666 | | | 407 | | | 259 | | Interest income, net | 335 | | | 259 | | | 76 | | | 29 | % |
SAFE instruments remeasurement | | — | | | (15,533) | | | 15,533 | | | | | — | | | (62,993) | | | 62,993 | | |
Gain (loss) warrant remeasurement | | 369 | | | (322) | | | 691 | | | | | 12,679 | | | (2,604) | | | 15,283 | | |
| Gain on warrant remeasurement | | Gain on warrant remeasurement | 74 | | | 369 | | | (295) | | | (80) | % |
Other income, net | Other income, net | | 1,256 | | | (140) | | | 1,396 | | | | | 1,071 | | | (312) | | | 1,383 | | Other income, net | 767 | | | 1,256 | | | (489) | | | (39) | % |
Net loss before taxes | Net loss before taxes | | (27,875) | | | (28,276) | | | 401 | | | | | (107,795) | | | (88,665) | | | (19,130) | | Net loss before taxes | (18,569) | | | (27,875) | | | 9,306 | | |
Income tax benefit | | 46 | | | — | | | 46 | | | | | 781 | | | — | | | 781 | | |
(Provision) benefit for income taxes | | (Provision) benefit for income taxes | (1) | | | 46 | | | (47) | | | (102) | % |
Net loss | Net loss | | $ | (27,829) | | | $ | (28,276) | | | $ | 447 | | | | | $ | (107,014) | | | $ | (88,665) | | | $ | (18,349) | | Net loss | $ | (18,570) | | | $ | (27,829) | | | $ | 9,259 | | |
________________n/m — not meaningful.
Revenue and Gross Profit (Loss)
During the three and nine months ended September 30, 2022,2023, we recognized total revenue of $2.3 million, a decrease of $0.8 million compared to total revenue of $3.1 million and $9.0 million, respectively,for the three months ended September 30, 2022. The decrease was primarily driven primarily by project revenue for work associated with the development and planned deployment of our technology and product offerings on a commercial scale, including $1.7 million and $4.7 million, respectively, of grant revenue recognized under the U.S. Department of Energy Solar Energy Technologies Office (the “DOE Award”). Pursuantreduction in costs incurred related to the termsproject to develop a commercial-scale facility for the three months ended September 30, 2023 compared to the same period in 2022, as a result of the scope of work and engineering services performed to support the front-end engineering design phase of the project during each respective period. As a result, we recognized a decrease in services revenue of $0.3 million related to the commercial-scale demonstration agreement (the “CSDA”(“CSDA”) executed with Woodside Energy (USA) Inc. (“Woodside”)and a decrease in March 2022, we will completegrant revenue of $0.6 million related to the engineering, procurement, and construction of a new 5 MWe concentrated solar energy facility to be built in Mojave, California (the “Facility”)reimbursable costs incurred under the DOE Award for the customer’s usethree months ended September 30, 2023 compared to the same period in testing, research and development. The Facility is expected to serve as a fully operational model for the customer’s use in demonstrating the Company’s technology and product offerings on a commercial scale to aid in the development, engineering, and construction of larger, commercial scale facilities under separate agreements between the Company and the customer or other third-party customers.2022.
During the three months ended September 30, 2022,2023, we recognized a gross profit of $0.4 million, a change of $0.7 million compared to gross loss of $0.3 million for the three months ended September 30, 2022. The change was primarily driven by the recognition of a reduction in our contract loss provision of $0.5 million associated with our projects in Germany.
Selling, General and Administrative
The following table summarizes selling, general and administrative (“SG&A”) expenses:
| | | | | | | | | | | | | | | | | |
| Three Months Ended | | |
| September 30, | | |
$ in thousands | 2023 | | 2022 | | $ Change |
Employee compensation, excluding share-based compensation | $ | 5,721 | | | $ | 3,330 | | | $ | 2,391 | |
Share-based compensation | 199 | | | 7,641 | | | (7,442) | |
Collaboration Warrants | 496 | | | 646 | | | (150) | |
Other selling, general and administrative | 8,581 | | | 6,651 | | | 1,930 | |
Total selling, general and administrative | $ | 14,997 | | | $ | 18,268 | | | $ | (3,271) | |
During the three months ended September 30, 2023, we recognized SG&A expense of $15.0 million, a decrease of $3.3 million compared to SG&A expense of $18.3 million for the three months ended September 30, 2022. The decrease was primarily driven by a reduction in share-based compensation as a result of no longer recognizing expense due to forfeitures and graded vesting schedules for awards issued prior to our business combination with Athena Technology Acquisition Corp. (“Athena”). The decrease was partially offset by an increase of $2.4 million in employee compensation primarily driven by headcount growth to support our commercial operations and increases in professional and consulting services of $2.0 million.
Research and Development
The following table summarizes R&D expenses:
| | | | | | | | | | | | | | | | | |
| Three Months Ended | | |
| September 30, | | |
$ in thousands | 2023 | | 2022 | | $ Change |
Employee compensation, excluding share-based compensation | $ | 3,653 | | | $ | 3,595 | | | $ | 58 | |
Share-based compensation | (91) | | | 2,081 | | | (2,172) | |
Other research and development | 1,600 | | | 5,492 | | | (3,892) | |
Total research and development | $ | 5,162 | | | $ | 11,168 | | | $ | (6,006) | |
During the three months ended September 30, 2023, we recognized R&D expense of $5.2 million, a decrease of $6.0 million compared to R&D expense of $11.2 million for the three months ended September 30, 2022. The decrease was primarily driven by a reduction of $3.9 million in other R&D direct costs due to focusing our R&D efforts on select strategic priorities and a decrease of $2.2 million in share-based compensation expense. This was offset by an increase of $0.1 million in employee compensation primarily driven by headcount growth.
Warrant Remeasurement
During the three months ended September 30, 2023, we recognized a gain of $0.1 million, a decrease of $0.3 million compared to a gain of $0.4 million for the three months ended September 30, 2022, related to the change in fair value of our outstanding Public and Private Warrants. The change in fair value of the Public and Private Warrants are highly correlated to changes in our stock price.
Other Income, Net
During the three months ended September 30, 2023, we recognized other income of $0.8 million, a decrease of $0.5 million compared to other income of $1.3 million for the three months ended September 30, 2022. The change is primarily attributable to a gain of $52 thousand for the three months ended September 30, 2023 in the estimated fair value of the contingent consideration associated with the CSDA. acquisition of HelioHeat GmbH based on the revised probability of payment compared to a loss of $1.1 million for the three months ended September 30, 2022. This change was partially offset by an increase of $0.4 million in accretion given the rising interest rate environment for our investments in available-for-sale securities.
Comparison of the Nine Months Ended September 30, 2023 and 2022
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Nine Months Ended | | | | |
| | | | | | | September 30, | | | | |
$ in thousands | | | | | | | | | 2023 | | 2022 | | $ Change | | % Change |
Revenue: | | | | | | | | | | | | | | | |
Services revenue | | | | | | | | | $ | 2,874 | | | $ | 4,375 | | | $ | (1,501) | | | (34) | % |
Grant revenue | | | | | | | | | 2,730 | | | 4,656 | | | (1,926) | | | (41) | % |
Total revenue | | | | | | | | | 5,604 | | | 9,031 | | | (3,427) | | | |
Cost of revenue: | | | | | | | | | | | | | | | |
Cost of services revenue (including depreciation) | | | | | | | | | 3,221 | | | 5,668 | | | (2,447) | | | (43) | % |
Cost of grant revenue | | | | | | | | | 2,690 | | | 4,656 | | | (1,966) | | | (42) | % |
Contract loss (adjustments) provisions | | | | | | | | | (148) | | | 33,737 | | | (33,885) | | | (100) | % |
| | | | | | | | | | | | | | | |
Gross profit (loss) | | | | | | | | | (159) | | | (35,030) | | | 34,871 | | | |
| | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | |
Selling, general and administrative | | | | | | | | | 36,814 | | | 60,733 | | | (23,919) | | | (39) | % |
Research and development | | | | | | | | | 15,368 | | | 26,448 | | | (11,080) | | | (42) | % |
| | | | | | | | | | | | | | | |
Impairment charges | | | | | | | | | 1,008 | | | — | | | 1,008 | | | n/m |
| | | | | | | | | | | | | | | |
Operating loss | | | | | | | | | (53,349) | | | (122,211) | | | 68,862 | | | |
| | | | | | | | | | | | | | | |
Interest income, net | | | | | | | | | 888 | | | 666 | | | 222 | | | 33 | % |
| | | | | | | | | | | | | | | |
Gain on warrant remeasurement | | | | | | | | | 326 | | | 12,679 | | | (12,353) | | | (97) | % |
Other income, net | | | | | | | | | 1,341 | | | 1,071 | | | 270 | | | 25 | % |
Net loss before taxes | | | | | | | | | (50,794) | | | (107,795) | | | 57,001 | | | |
(Provision) benefit for income taxes | | | | | | | | | (3) | | | 781 | | | (784) | | | (100) | % |
Net loss | | | | | | | | | $ | (50,797) | | | $ | (107,014) | | | $ | 56,217 | | | |
________________n/m — not meaningful.
Revenue and Gross Loss
During the nine months ended September 30, 2023, we recognized total revenue of $5.6 million, a decrease of $3.4 million compared to total revenue of $9.0 million for the nine months ended September 30, 2022. The decrease was primarily driven by a reduction in costs incurred related to the project to develop a commercial-scale facility for the nine months ended September 30, 2023 compared to the same period in 2022, as a result of the scope of work and engineering services performed to support the front-end engineering design phase of the project during each respective period. As a result, we recognized a decrease in services revenue of $1.5 million related to the CSDA with Woodside and a decrease in grant revenue of $1.9 million related to the reimbursable costs incurred under the DOE Award for the nine months ended September 30, 2023 compared to the same period in 2022.
During the nine months ended September 30, 2023, we recognized a gross loss of $0.2 million, a change of $34.9 million compared to gross loss of $35.0 million for the nine months ended September 30, 2022. The change was primarily driven primarily by the recognition of a contract loss of $32.9 million related toprovision during the CSDA and Facility. The contract loss reflects our best estimate of the full expected loss on the Facility given the consideration expected to be realized under the CSDA (net of the fair value of related warrants granted to the customer) and the DOE Award relative to the total cost at completion. Revenue expected to be recorded for the Mojave, California project is approximately $84.5 million over the full term of the project, consisting of $45.5 million for the CSDA, of which $40.4 million is identified as noncancellable at September 30, 2022, and the DOE Award of $39.0 million. Our cost estimates as of September 30, 2022 for the anticipated final scope of
the Facility are subject to further refinement as we continue detailed engineering and design with the customers, obtain firm pricing from subcontractors, order long-lead items, and better understand short- and long-term commodity and market impacts on cost inputs to the CSDA and Facility. As a result, the actual loss for the CSDA and Facility could vary from our current estimates.
During the three and nine months ended September 30, 2021, we recognized revenue of $2.2 million and $3.6 million, respectively, and $0.8 million gross profit associated with engineering and design services contracts which was largely related to a predecessor contract to the CSDA.
Selling, General, and Administrative Expense
For the three and nine months ended September 30, 2022 of $33.7 million primarily related to the CSDA and a decrease of $0.9 million in share-based compensation expense attributable to employees working directly on the project.
Selling, General and Administrative
The following table summarizes SG&A expenses:
| | | | | | | | | | | | | | | | | |
| Nine Months Ended | | |
| September 30, | | |
$ in thousands | 2023 | | 2022 | | $ Change |
Employee compensation, excluding share-based compensation | $ | 16,952 | | | $ | 9,787 | | | $ | 7,165 | |
Share-based compensation | (7,344) | | | 28,830 | | | (36,174) | |
Collaboration Warrants | 1,486 | | | 1,293 | | | 193 | |
Other selling, general and administrative | 25,720 | | | 20,823 | | | 4,897 | |
Total selling, general and administrative | $ | 36,814 | | | $ | 60,733 | | | $ | (23,919) | |
During the nine months ended September 30, 2023, we recognized SG&A expense increased $9.6of $36.8 million, and $45.6a decrease of $23.9 million respectively, compared to SG&A expense of $60.7 million for the same periodsnine months ended September 30, 2022. The decrease was primarily driven by a reduction in 2021,share-based compensation as a result of no longer recognizing expense due to forfeitures during the nine months ended September 30, 2023 and a net reduction of $12.5 million during the first quarter of 2023, as a result of stock options forfeited in connection with the termination of our former Chief Executive Officer. The remaining decrease in share-based compensation expense was a result of an expected reduction in expense over time due to graded vesting schedules for awards issued prior to our business combination with Athena. The decrease was partially offset by an increase of $7.2 million in employee compensation primarily driven primarily by ourheadcount growth to support our commercial operations resultingand increases in higher headcount and related employee expenses of $8.0 million and $35.4 million, respectively, with the most notable increase being non-cash share-based compensation expense of $6.3 million and $27.0 million, respectively. For the same comparative periods, professional and consulting services increased by $0.3 million and $4.7 million, respectively, associated primarily with being a newly public company and the corresponding need to support and develop our accounting, legal, and information technology infrastructures. Facilities and office related expenses increased by $1.3 million and $5.5 million, respectively, to support space requirements for our manufacturing facility in Long Beach, California and corporate headquarters in Pasadena, California.of $4.8 million.
Research and Development Expense
ForThe following table summarizes R&D expenses:
| | | | | | | | | | | | | | | | | |
| Nine Months Ended | | |
| September 30, | | |
$ in thousands | 2023 | | 2022 | | $ Change |
Employee compensation, excluding share-based compensation | $ | 10,425 | | | $ | 7,374 | | | $ | 3,051 | |
Share-based compensation | 824 | | | 4,461 | | | (3,637) | |
Other research and development | 4,119 | | | 14,613 | | | (10,494) | |
Total research and development | $ | 15,368 | | | $ | 26,448 | | | $ | (11,080) | |
During the threenine months ended September 30, 2023, we recognized R&D expense of $15.4 million, a decrease of $11.1 million compared to R&D expense of $26.4 million for the nine months ended September 30, 2022. The decrease was driven by a reduction of $10.5 million in other R&D direct costs due to focusing our R&D efforts on select strategic priorities, a decrease of $3.6 million in share-based compensation expense and was offset by an increase of $3.1 million in employee compensation primarily driven by headcount growth.
Impairment Charges
During the first quarter of 2023, we fully impaired goodwill, resulting in a $1.0 million impairment charge due to a sustained decrease in our market capitalization. We had no impairment charges for the nine months ended September 30, 2022. Refer to Note 8—Goodwill and Intangible Assets for additional information.
Warrant Remeasurement
During the nine months ended September 30, 2023, we recognized a gain of $0.3 million, a decrease of $12.4 million compared to a gain of $12.7 million for the nine months ended September 30, 2022, R&D expense increased $6.6 million and $17.6 million, respectively, comparedrelated to the same periodschange in 2021, primarily due to headcount growthfair value of our outstanding Public and related consulting services associated with our efforts to ramp up and further develop our commercial-scale offering.
SAFE Instruments Remeasurement
In the first half of 2021, we entered into Simple Agreements for Future Equity (“SAFE Instruments”) financing transactions with third party investorsPrivate Warrants. The change in connection with a private round of funding to provide investors an opportunity to convert the SAFE Instruments into common or preferred stock upon defined triggering events. Pursuant to the terms of these agreements, the SAFE Instruments were converted to common stock immediately prior to the closingfair value of the Business Combination on December 30, 2021. DuePublic and Private Warrants are highly correlated to the terms of the SAFE Instruments, the SAFE Instruments were measured at fair value at each reporting period resulting in the recognition of losses of $15.5 million and $63.0 million during the three and nine months ended September 30, 2021, respectively.
Warrant Remeasurement
As part of the Business Combination, we assumed the outstanding public and private warrants of Athena, which are accounted for at fair value based on the closing share price of the Company’s common stock. The warrant remeasurement gains of $0.4 million and $12.7 million for the three and nine months ended September 30, 2022, respectively, and losses of $0.3 million and $2.6 million for the three and nine months ended September 30, 2021, respectively, are associated primarily with changes in the Company's closing shareour stock price. The Company’s share price declined from $15.52 on December 31, 2021 to $1.86 on September 30, 2022 and the Company’s share price increased from $9.61 on May 7, 2021, the date of Athena’s initial public offering, to $9.93 on September 30, 2021.
Liquidity and Capital Resources
Heliogen’sOur principal sourcesources of liquidity has historically been proceedsare cash and investments on hand, which are short-term in duration and highly liquid, and cash receipts from private investors through the issuance of SAFE Instruments, preferred stock,customers and common stock. Upon closing of the Business Combination with Athena completed in December 2021, Heliogen received net cash proceeds of $159.4 million. In March 2022, Heliogen entered a series of commercial agreements with a customer for the commercial-scale demonstration and deployment of Heliogen’s AI-enabled concentrated solar energy technology in California and the marketing of Heliogen’s technology in Australia and is in the process of negotiating further revenue contracts. These contracts will provide a significant source of cash for the Company.government grants. Our principal uses of cash are for project-related expenditures related to project development and completion, as well as R&D and SG&A and R&D expenditures in support of Heliogen’sour technology development of its technology and operational support and growth efforts. To date, Heliogen has not had any material bank debt and has no material outstanding debt on the balance sheet as of September 30, 2022.
Total liquidity, for Heliogen, including cash and cash equivalents and available-for-sale investments and other liquid securities with maturities greater than one year isare as follows:
| $ in thousands | $ in thousands | | September 30, 2022 | | December 31, 2021 | $ in thousands | | November 9, 2023 | | September 30, 2023 |
Cash and cash equivalents | Cash and cash equivalents | | $ | 35,444 | | | $ | 190,081 | | Cash and cash equivalents | | $ | 55,088 | | | $ | 63,386 | |
Investments, available for sale (maturities less than one year) | | 124,034 | | | 32,332 | | |
Investments | | Investments | | 28,227 | | | 28,236 | |
| LT investments, available for sale (maturities greater than one year)(1) | | 4,769 | | | — | | |
| Total liquidity | Total liquidity | | $ | 164,247 | | | $ | 222,413 | | Total liquidity | | $ | 83,315 | | | $ | 91,622 | |
________________
(1)For more information on other liquid securities with maturities greater than one year, see Note 12We have evaluated whether there were conditions and events, considered in the aggregate, which raise substantial doubt as to our condensed consolidated financial statements.
With the funds raised in connection with the Business Combination, we believe that our existing liquidity should provide the ability to meet our contractual obligations and continue our current R&D efforts and development of our first commercial facilities and will be sufficient to meet our cash requirements for the next 12 months. However, we could potentially use these available financial resources sooner than expected due to delays in project execution or higher than anticipated costs and therefore may need to incur additional indebtedness or issue additional equity to meet our operating needs. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in developing our new technologies, this could reduce our ability to compete successfully and harm our business, growth and results of operations. While we believe we will meet longer-term expected future cash requirements and obligations throughcontinue as a combinationgoing concern within one year after the original issuance date of our existing cashunaudited consolidated financial statements. During the nine months ended September 30, 2023 and cash equivalent balances, cash flow from operations, and issuances of equity securities or debt offerings, our future capital requirements and the adequacy of available funds will depend on many factors, including those disclosed in Part I, Item 1A Risk Factors in our 2021 Form 10-K/A for the year ended December 31, 2021.2022, the Company incurred net losses of $50.8 million and $142.0 million, respectively. We expect to continue to generate operating losses in the next few years.
Our liquidity as of November 9, 2023 was $83.3 million, compared to $91.6 million as of September 30, 2023. The decrease in our liquidity is due to funding our operations and continued work on our projects. We believe we have the ability to manage our operating costs and capital expenditures such that our existing cash, cash equivalents and investments will be sufficient to fund our operations and capital expenditures for the next twelve months following the filing of this Quarterly Report.
Our long-term liquidity will depend on our ability to (i) successfully complete current projects within budget, (ii) raise additional capital through the issuance of additional equity or debt securities, (iii) sign additional projects at a profit, (iv) obtain funding and receive payment for R&D projects, (v) implement project cost reductions to reduce the expected cash outflows and (vi) manage operating costs. There is no assurance that we will be successful in achieving all or any of these items. If we are unsuccessful in achieving all or any of these items, we may be forced to delay, reduce or eliminate some or all of our R&D programs, product expansion or commercialization efforts, any of which could adversely affect our business prospects, or we may be unable to continue operations.
Summary of Cash Flows
AThe following table provides a summary of the Company’sour cash flows from operating, investing and financing activities is presented in the following table:flows:
| | | | | | | | | | | | | | | | Nine Months Ended |
| | Nine Months Ended September 30, | | September 30, |
$ in thousands | $ in thousands | | 2022 | | 2021 | | $ in thousands | | 2023 | | 2022 |
Net cash used in operating activities | Net cash used in operating activities | | $ | (49,545) | | | $ | (18,147) | | | Net cash used in operating activities | | $ | (54,922) | | | $ | (49,545) | |
Net cash used in investing activities | | (104,182) | | | (40,459) | | | |
Net cash (used in) provided by financing activities | | (255) | | | 81,898 | | | |
Net cash provided by (used in) investing activities | | Net cash provided by (used in) investing activities | | 70,598 | | | (104,182) | |
Net cash provided by (used in) financing activities | | Net cash provided by (used in) financing activities | | 1,336 | | | (255) | |
Net Cash from Operating Activities
Activities. Net cash used in operating activities was $54.9 million for the nine months ended September 30, 2023 compared to net cash used in operating activities of $49.5 million for the nine months ended September 30, 2022 compared to $18.12022. The $5.4 million increase in the net cash used in operating activities was primarily driven by higher operating costs related to the growth of our operations and costs incurred related to our projects.
Net Cash from Investing Activities. Net cash provided by investing activities was $70.6 million for the nine months ended September 30, 2021, resulting in a $31.4 million increase in use of operating cash. Cash flows2023 compared to net cash used in operatinginvesting activities result primarilyof $104.2 million for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, we received net proceeds from Heliogen’s ramp-upthe maturities of commercial operations and increases in headcount and are also affected by changes in operating assets and liabilities which consist primarilyavailable-for-sale securities of working capital balances for$71.7 million to fund our projects. Working capital levels may vary and are impacted byoperations.
the stage of completion and commercial terms of projects. The primary components of our working capital accounts are accounts receivable, contract assets, accounts payable, and contract liabilities.
Net Cash from Investing Activities
For the nine months ended September 30, 2022, cash used in investing activities was $104.2 million and consisted mostly ofwe had net cash invested in available-for-sale debt securities of $238.0$96.9 million offset by proceedsas we invested the funds received in 2021 from maturitiesthe closing of the business combination with Athena and sales of available-for-sale debt securities of $75.3 million and $65.8 million, respectively. We also incurred capital expenditures of $7.3 million during the period, driven primarilyin construction in progress to support growth in ourthe ramp-up of commercial operations, machinery, equipment and improvements for our new Long Beach manufacturing facility, and office and computer equipment to support our headcount growth.
Net Cash used in investingfrom Financing Activities. Net cash provided by financing activities was $1.3 million for the nine months ended September 30, 2021 was $40.5 million and primarily represents2023 compared to net cash invested in available-for-sale debt securities of $41.6 million offset by proceeds from maturities of available-for-sale debt securities of $4.3 million, and cash consideration paid for the HelioHeat acquisition, net of acquired cash, of $1.7 million.
Net Cash from Financing Activities
Cash used in financing activities totaledof $0.3 million for the nine months ended September 30, 2022,2022. The change was primarily driven primarily by $1.3 million in transactionof other financing costs paid related to the Business Combination, which were previously accrued at December 31, 2021, offset by $1.0 million in cash received from the exercise of stock options. Cash provided by financing activities totaled $81.9 million for the nine months ended September 30, 20212022 in connection with the business combination with Athena.
Cash Requirements
Our material cash requirements from known contractual and was dueother obligations consist of our long-term operating leases, which are primarily for real estate. Refer to $83.4 millionNote 12—Leases to our consolidated financial statements in cash received from the issuancePart II, Item 8 of the SAFE instruments slightly offset by financing costsour Annual Report, for additional information regarding maturity analysis of $1.5 million.our operating leases.
Critical Accounting Estimates
There have been no material changes to our discussion of critical accounting estimates from those set forth in our 2021 Annual Report on Form 10-K/A for the year ended December 31, 2021.Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Item 10 of Regulation S-K and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
In connection with the preparation and audit of our financial statements as of and for the fiscal year ended December 31, 2021, we identified certain material weaknesses in our internal control over financial reporting, which is an integral component of our disclosure controls and procedures. The material weaknesses existing at December 31, 2021, for which remediation is ongoing at September 30, 2022, are as follows:
•We did not design or maintain an effective control environment specific to the areas of financial reporting and our close process, including effective review of technical accounting matters.
•We did not design or maintain an effective control environment to ensure proper segregation of duties, including separate review and approval of journal entries and access within our accounting system.
In addition to the actions we took during 2021 to remediate the deficiencies in our internal control over financial reporting we are implementing additional processes and controls designed to address the underlying causes associated with the above-mentioned deficiencies. We are committed to remediating the deficiencies described above in a timely manner.
Our incremental efforts taken in 2022 to implement measures designed to improve our internal control over financial reporting to remediate these deficiencies include, but are not limited to, the following:
•During the three months ended September 30, 2022, we continued the implementation of additional functionality within our company-wide enterprise resource planning system.
•We engaged a large multinational accounting firm to provide certain advisory and internal audit services, under the oversight of the audit committee of our board of directors, including, but not limited to, advising on the remediation of the material weaknesses identified above, performing a comprehensive internal controls gap assessment, assist in further enhancement and development of the Company’s business processes, and perform testing of internal controls, as applicable. We expect all of these services will significantly enhance our internal controls environment and provide a basis on which management can assess and conclude upon the remediation of the material weaknesses.
•We developed and improved recurring accounting processes providing more timely and detailed review of complex and routine areas, including internal stakeholder engagement to timely and accurately identify new or complex transactions.
•We hired additional full-time personnel to strengthen the review process, improve segregation of duties, provide additional oversight and support of the financial and accounting systems and assist in the design and implementation of internal controls.
These additional resources, policies and procedures are designed to enable us to broaden the scope and quality of our internal review of underlying information related to financial reporting and to formalize and enhance our internal control over financial reporting environment. We are committed to continue to take steps to address the underlying causes of the material weaknesses in a timely manner and will continue to monitor the effectiveness of our remediation plan and will refine as appropriate. While we are undertaking efforts to remediate these material weaknesses, the material weaknesses will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively.
With the foregoing in mind, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act),. Based on that evaluation, and as a result of the end of the period covered by this Quarterlymaterial weaknesses in our internal control over financial reporting described in our Annual Report, on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2022,2023, our disclosure controls and procedures were not effective at a reasonable assurance level, as a result of the material weaknesses previously discussed. Notwithstanding the existence of the material weaknesses described above, management believes that the condensed consolidated financial statements in this Quarterly Report on Form 10-Q fairly state, in all material respects, the Company’s financial position, results of operations and cash flows for all periods and dates presented in accordance with U.S. GAAP.effective.
Changes in Internal Control over Financial Reporting
The Company had a change in the executive team and on February 5, 2023, our Chief Accounting Officer was appointed to Interim Chief Financial Officer. In July 2023, the Company hired a Chief Financial Officer and the previous Interim Chief Financial Officer continued to serve as our Chief Accounting Officer. Other than in connection with changes in personnel and executing upon the implementation of the remediation measures as described above,in our Annual Report and the associated changes to our internal control over financial reporting, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three monthsquarter ended September 30, 20222023 that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.
Part II - Other Information
Item 1. Legal Proceedings
Information relating to various commitments and contingencies is described in Note 915—Commitments and Contingencies to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.Report.
Item 1A. Risk Factors
There are no material changes from the risk factors previously disclosed in Part I, Item 1A1A. Risk Factors in our Annual Report, on Form 10-K/Aas supplemented by the risk factor previously disclosed in Part II, Item 1A. Risk Factors in our Quarterly Report for the yearperiod ended DecemberMarch 31, 2021.2023 other than as set forth below.
Our common stock and public warrants have been suspended from trading on, and may be delisted from, the NYSE and are not listed on any other national securities exchange.
On November 7, 2023, we received a letter from the staff of NYSE Regulation notifying us that it had determined to commence proceedings to delist our common stock and public warrants. Trading in these securities was immediately suspended. The NYSE Regulation reached its decision to delist these securities pursuant to Section 802.01B of the NYSE’s Listed Company Manual because we had fallen below the NYSE’s continued listing standard requiring listed companies to maintain an average global market capitalization over a consecutive 30 trading day period of at least $15 million. We intend to appeal the NYSE’s determination to delist our common stock and public warrants, but unless our appeal is ultimately successful, our common stock and public warrants will be delisted after the completion of the NYSE’s application to the SEC.
Should our securities be delisted from the NYSE, we can provide no assurance that we will be able to, re-list our common stock or the public warrants on a national securities exchange or that there will be an active market for these securities on the OTC market. Moreover, without an active trading market, the market price of our securities may be extremely volatile and not reflective of the market price that would be seen on a more active trading market. For so long as our common stock is suspended from trading on the NYSE, which suspension will become permanent if our common stock is ultimately delisted from the NYSE, we and our stockholders could face significant negative consequences including:
•limited availability of market quotations for our securities;
•a reduction in the number of investors willing to hold or acquire our common stock, which would negatively impact our ability to access equity markets and obtain financing;
•a determination that the common stock is a “penny stock” which would require brokers trading in the common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of common stock;
•a limited amount of analyst coverage;
•a decreased ability to issue additional securities or obtain additional financing in the future; and
•an impairment of our ability to provide equity incentives to our employees.
On November 8, 2023, our common stock and public warrants began trading on OTC market under the symbols HLGN and HLGNW, respectively.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.None.
Item 3. Defaults Upon Senior Securities
Not applicable.None.
Item 4. Mine Safety Disclosures
Not applicable.None.
Item 5. Other Information
On November 3, 2022, the board of directors of the Company approved and adopted the Second Amended and Restated Bylaws (the “Bylaws”), which became effective the same day, in order to, among other things, address recently adopted amendments to Rule 14a-19 under the Exchange Act, as amended, by clarifying that no person may solicit proxies in support of a director nominee other than the Board’s nominees unless such person has complied with Rule 14a-19, and that any person soliciting proxies in support of a director nominee other than the Board’s nominees must comply with the requirements to provide notices required under Rule 14a-19 in a timely manner and deliver reasonable evidence that the Rule 14a-19 requirements have been met. The preceding summary of the amendments to the Bylaws is qualified in its entirety by reference to, and should be read in connection with, the complete copy of the Second Amended and Restated Bylaws filed herewith as Exhibit 3.2.None.
Item 6. Exhibits
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exhibit Number | | Description | | Incorporated by Reference |
| | | | Form | | File No. | | Exhibit | | Filing Date |
3.1 | | | | 8-K | | 001-40209 | | 3.1 | | January 6, 2022 |
3.2* | | | | | | | | | | |
31.1* | | | | | | | | | | |
31.2* | | | | | | | | | | |
32.1** | | | | | | | | | | |
32.2** | | | | | | | | | | |
101.INS* | | Inline XBRL Instance Document | | | | | | | | |
101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | |
101.SCH* | | Inline XBRL Taxonomy Extension Schema Document. | | | | | | | | |
101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | |
101.LAB* | | Inline XBRL Taxonomy Extension Labels Linkbase Document | | | | | | | | |
101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | |
104* | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | | | | | | | | |
____________ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exhibit Number | | Description | | Incorporated by Reference |
| | | | Form | | File No. | | Exhibit | | Filing Date |
3.1 | | | | 8-K | | 001-40209 | | 3.1 | | January 6, 2022 |
3.2 | | | | 8-K | | 001-40209 | | 3.1 | | August 31, 2023 |
3.3 | | | | 10-Q | | 001-40209 | | 3.2 | | November 8, 2022 |
3.4 | | | | 8-K | | 001-40209 | | 3.1 | | April 17, 2023 |
4.1 | | | | 8-K | | 001-40209 | | 4.1 | | April 17, 2023 |
10.1 | | | | 8-K | | 001-40209 | | 10.1 | | July 10, 2023 |
10.2 | | | | 8-K | | 001-40209 | | 1.1 | | September 13, 2023 |
31.1* | | | | | | | | | | |
31.2* | | | | | | | | | | |
32.1** | | | | | | | | | | |
32.2** | | | | | | | | | | |
101.INS* | | Inline XBRL Instance Document | | | | | | | | |
101.CAL* | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | |
101.SCH* | | Inline XBRL Taxonomy Extension Schema Document. | | | | | | | | |
101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | | | | |
101.LAB* | | Inline XBRL Taxonomy Extension Labels Linkbase Document | | | | | | | | |
101.PRE* | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | |
104* | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | | | | | | | | |
________________* Filed herewith.
** Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.
herewith.
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.authorized on November 14, 2023.
| | | | | | | | |
| | Heliogen, Inc. |
| | |
| | /s/ Bill GrossBy: |
| | Bill Gross |
| | Chief Executive Officer |
Dated: | November 8, 2022 | (Principal Executive Officer) |
| | |
| | /s/ Christiana Obiaya |
| | Christiana Obiaya |
| | Chief Executive Officer (Principal Executive Officer) |
| | |
| By: | /s/ Sagar Kurada |
| | Sagar Kurada |
| | Chief Financial Officer |
Dated: | November 8, 2022 | (Principal Financial Officer and Principal Accounting Officer)) |
.