Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Jan. 31, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-37673 | ||
Entity Registrant Name | WORKHORSE GROUP INC. | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Tax Identification Number | 26-1394771 | ||
Entity Address, Address Line One | 3600 Park 42 Drive, Suite 160E | ||
Entity Address, City or Town | Sharonville | ||
Entity Address, State or Province | OH | ||
Entity Address, Postal Zip Code | 45241 | ||
City Area Code | 1-888 | ||
Local Phone Number | 646-5205 | ||
Title of 12(b) Security | Common Stock, $0.001 par value per share | ||
Trading Symbol | WKHS | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 399,380,509 | ||
Entity Common Stock, Shares Outstanding | 171,167,673 | ||
Entity Central Index Key | 0001425287 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Auditor Information [Abstract] | |
Auditor Name | GRANT THORNTON LLP |
Auditor Location | Cincinnati, Ohio |
Auditor Firm ID | 248 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 99,276,301 | $ 201,647,394 |
Accounts receivable, less allowance for credit losses of $0 at December 31, 2022 and 2021 | 2,079,343 | 149,776 |
Other receivable | 15,000,000 | 0 |
Inventory, net | 8,850,142 | 10,067,367 |
Prepaid expenses and other current assets | 14,152,481 | 4,357,829 |
Total current assets | 139,358,267 | 216,222,366 |
Property, plant and equipment, net | 21,501,095 | 7,897,807 |
Investment in Tropos | 10,000,000 | 0 |
Lease right-of-use assets | 11,706,803 | 1,538,852 |
Other assets | 176,310 | 2,479,865 |
Total Assets | 182,742,475 | 228,138,890 |
Current liabilities: | ||
Accounts payable | 11,891,279 | 7,849,607 |
Accrued liabilities and other | 44,551,497 | 14,752,827 |
Deferred revenue, current | 3,375,000 | 0 |
Warranty liability | 2,207,674 | 4,583,916 |
Current portion of lease liability | 1,285,032 | 363,714 |
Total current liabilities | 63,310,482 | 27,550,064 |
Deferred revenue, long-term | 2,005,000 | 0 |
Lease liability, long-term | 8,840,062 | 1,191,053 |
Convertible notes, at fair value | 0 | 24,705,000 |
Total Liabilities | 74,155,544 | 53,446,117 |
Commitments and contingencies | ||
Stockholders’ Equity: | ||
Series A preferred stock, par value of $0.001 per share, 75,000,000 shares authorized, zero shares issued and outstanding at December 31, 2022 and 2021 | 0 | 0 |
Common stock, par value of $0.001 per share, 250,000,000 shares authorized, 165,605,355 and 151,915,455 shares issued and outstanding at December 31, 2022 and 2021, respectively | 165,605 | 151,916 |
Additional paid-in capital | 736,070,388 | 686,318,201 |
Accumulated deficit | (627,649,062) | (510,374,844) |
Accumulated other comprehensive loss | 0 | (1,402,500) |
Total stockholders' equity | 108,586,931 | 174,692,773 |
Total Liabilities and Stockholders' Equity | $ 182,742,475 | $ 228,138,890 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 0 |
Preferred stock, par value per share (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value per share (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 250,000,000 | 250,000,000 |
Common stock, shares issued (in shares) | 165,605,355 | 151,915,455 |
Common stock, shares outstanding (in shares) | 165,605,355 | 151,915,455 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Sales, net of returns and allowances | $ 5,023,072 | $ (851,922) | $ 1,392,519 |
Cost of sales | 37,672,308 | 132,492,110 | 13,067,108 |
Gross loss | (32,649,236) | (133,344,032) | (11,674,589) |
Operating expenses | |||
Selling, general and administrative | 73,220,088 | 40,160,795 | 20,157,658 |
Research and development | 23,213,540 | 11,610,027 | 9,148,931 |
Total operating expenses | 96,433,628 | 51,770,822 | 29,306,589 |
Loss from operations | (129,082,864) | (185,114,854) | (40,981,178) |
Interest expense, net | 1,837,882 | 12,644,164 | 190,520,337 |
Other income (loss) | 13,646,528 | (225,432,884) | 323,111,944 |
(Loss) income before (benefit) provision for income taxes | (117,274,218) | (423,191,902) | 91,610,429 |
(Benefit) provision for income taxes | 0 | (21,847,089) | 21,833,930 |
Net (loss) income | $ (117,274,218) | $ (401,344,813) | $ 69,776,499 |
Net (loss) income attributable to common stockholders per share - basic (in usd per share) | $ (0.74) | $ (3.12) | $ 0.75 |
Net (loss) income attributable to common stockholders per share - diluted (in usd per share) | $ (0.74) | $ (3.12) | $ 0.70 |
Weighted average number of common shares outstanding - basic (in shares) | 158,576,305 | 128,676,131 | 92,871,936 |
Weighted average number of common shares outstanding - diluted (in shares) | 158,576,305 | 128,676,131 | 99,949,868 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net (loss) income | $ (117,274,218) | $ (401,344,813) | $ 69,776,499 |
Other comprehensive loss | |||
Change in fair value of convertible notes attributable to credit spread | 1,402,500 | (1,402,500) | 0 |
Comprehensive (loss) income | $ (115,871,718) | $ (402,747,313) | $ 69,776,499 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity (Deficit) - USD ($) | Total | Common Stock | Series A Preferred Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | |
Common stock, beginning balance (in shares) at Dec. 31, 2019 | 67,105,000 | ||||||
Beginning balance at Dec. 31, 2019 | $ (34,913,110) | $ 67,105 | $ 0 | $ 143,826,315 | $ (178,806,530) | $ 0 | |
Preferred stock, beginning balance (in shares) at Dec. 31, 2019 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock options and warrants exercised and vesting of restricted shares (in shares) | 33,932,827 | ||||||
Stock options and warrants exercised, and vesting of restricted shares | 82,093,632 | $ 33,933 | 82,059,699 | ||||
Common stock issued for preferred stock dividend (in shares) | 920,901 | ||||||
Common stock issued for preferred stock dividends | 1,491,860 | $ 922 | 1,490,938 | ||||
Conversion of convertible notes (in shares) | 19,605,013 | ||||||
Conversion of convertible notes | 270,794,684 | $ 19,605 | 270,775,079 | ||||
Common stock issued for interest on convertible notes (in shares) | 358,791 | ||||||
Common stock issued for interest on convertible notes | 1,939,964 | $ 358 | 1,939,606 | ||||
Stock-based compensation | 4,020,805 | 4,020,805 | |||||
Net (loss) income | 69,776,499 | 69,776,499 | |||||
Common stock, ending balance (in shares) at Dec. 31, 2020 | 121,922,532 | ||||||
Ending balance at Dec. 31, 2020 | 395,204,334 | $ 121,923 | $ 0 | 504,112,442 | (109,030,031) | 0 | |
Preferred stock, ending balance (in shares) at Dec. 31, 2020 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Stock options and warrants exercised and vesting of restricted shares (in shares) | [1] | 2,281,393 | |||||
Stock options and warrants exercised, and vesting of restricted shares | [1] | (4,429,163) | $ 2,281 | (4,431,444) | |||
Conversion of convertible notes (in shares) | 27,711,530 | ||||||
Conversion of convertible notes | 181,721,535 | $ 27,712 | 181,693,823 | ||||
Stock-based compensation | 4,943,380 | 4,943,380 | |||||
Net (loss) income | (401,344,813) | (401,344,813) | |||||
Other comprehensive (loss) income | $ (1,402,500) | (1,402,500) | |||||
Common stock, ending balance (in shares) at Dec. 31, 2021 | 151,915,455 | 151,915,455 | |||||
Ending balance at Dec. 31, 2021 | $ 174,692,773 | $ 151,916 | $ 0 | 686,318,201 | (510,374,844) | (1,402,500) | |
Preferred stock, ending balance (in shares) at Dec. 31, 2021 | 0 | 0 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common stock issued under ATM (in shares) | 4,889,986 | ||||||
Common stock issued under ATM | $ 12,884,243 | $ 4,890 | 12,879,353 | ||||
Common stock issued for service providers (in shares) | 244,035 | ||||||
Common stock issued for service providers | 599,982 | $ 244 | 599,738 | ||||
Stock options and warrants exercised and vesting of restricted shares (in shares) | [1] | 722,213 | |||||
Stock options and warrants exercised, and vesting of restricted shares | [1] | (559,637) | $ 721 | (560,358) | |||
Conversion of convertible notes (in shares) | 7,833,666 | ||||||
Conversion of convertible notes | 25,381,077 | $ 7,834 | 25,373,243 | ||||
Stock-based compensation | 11,460,211 | 11,460,211 | |||||
Net (loss) income | (117,274,218) | (117,274,218) | |||||
Other comprehensive (loss) income | $ 1,402,500 | 1,402,500 | |||||
Common stock, ending balance (in shares) at Dec. 31, 2022 | 165,605,355 | 165,605,355 | |||||
Ending balance at Dec. 31, 2022 | $ 108,586,931 | $ 165,605 | $ 0 | $ 736,070,388 | $ (627,649,062) | $ 0 | |
Preferred stock, ending balance (in shares) at Dec. 31, 2022 | 0 | 0 | |||||
[1]Net of tax payments related to shares withheld for option exercises and vested stock. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net (loss) income | $ (117,274,218) | $ (401,344,813) | $ 69,776,499 |
Adjustments to reconcile net (loss) income to net cash used in operations: | |||
Depreciation | 1,945,212 | 1,908,419 | 809,645 |
Amortization of discount and debt issuance costs on convertible notes and long-term debt | 0 | 0 | 6,550,212 |
Amortization of discount and loss on redemption of mandatorily redeemable Series B preferred stock | 0 | 0 | 5,857,092 |
Change in fair value of convertible notes and loss on conversion to common stock | 1,769,857 | 7,324,035 | 160,749,118 |
Change in fair value of warrant liability | 0 | 0 | 12,176,690 |
Change in fair value of investment in LMC | 0 | 225,429,997 | (318,361,944) |
Deferred revenue | 500,000 | 0 | 0 |
Dividends for mandatorily redeemable Series B preferred stock paid in common stock | 0 | 0 | 1,491,860 |
Gain on sale of property, plant & equipment | 379,406 | 0 | 0 |
Interest on convertible notes paid in common stock | 0 | 0 | 1,939,964 |
Stock-based compensation | 11,460,211 | 4,943,380 | 4,020,805 |
Reserve of inventory and prepaid purchases | 17,716,995 | 98,918,102 | 0 |
Impairment of property, plant and equipment | 0 | 6,803,280 | 0 |
Forgiveness of PPP Term Note | 0 | (1,411,000) | 0 |
Deferred tax (benefit) expense | 0 | (21,833,930) | 21,833,930 |
Non-cash lease expense | 1,092,473 | 0 | 0 |
Other non-cash items | 599,982 | 102,858 | 350,500 |
Effects of changes in operating assets and liabilities: | |||
Accounts receivable | (16,929,567) | 982,388 | (961,966) |
Inventory | (16,629,172) | (69,606,432) | (13,668,866) |
Prepaid expenses and other current assets | (9,665,250) | 4,489,362 | (27,947,128) |
Other assets | (84,401) | (91,909) | 0 |
Accounts payable and accrued liabilities | 33,676,050 | 11,832,284 | 5,499,464 |
Warranty liability | (2,376,242) | (816,084) | (601,864) |
Other long-term liabilities | 0 | (207,040) | 207,040 |
Net cash used in operating activities | (93,818,664) | (132,577,103) | (70,278,949) |
Cash flows from investing activities: | |||
Capital expenditures | (17,496,795) | (5,314,198) | (5,728,130) |
Investment in Tropos | (5,000,000) | 0 | 0 |
Proceeds from sale of fixed assets | 2,477,276 | 0 | 0 |
Proceeds from sale of Investment in LMC | 0 | 105,126,747 | 0 |
Net cash (used in) provided by investing activities | (20,019,519) | 99,812,549 | (5,728,130) |
Cash flows from financing activities: | |||
Proceeds from notes payable and debt | 0 | 0 | 1,411,000 |
Redemptions of mandatorily redeemable Series B preferred stock | 0 | 0 | (25,000,000) |
Proceeds from issuance of convertible notes | 0 | 0 | 262,374,788 |
Proceeds from issuance of common stock | 12,884,243 | 0 | 0 |
Exercise of warrants and options and restricted share award activity | (559,637) | (4,429,163) | 53,581,942 |
Other | (857,516) | (2,387,956) | 0 |
Net cash provided by (used in) financing activities | 11,467,090 | (6,817,119) | 292,367,730 |
Change in cash, cash equivalents and restricted cash | (102,371,093) | (39,581,673) | 216,360,651 |
Cash, cash equivalents and restricted cash, beginning of the year | 201,647,394 | 241,229,067 | 24,868,416 |
Cash, cash equivalents and restricted cash, end of the year | 99,276,301 | 201,647,394 | $ 241,229,067 |
Supplemental disclosure of non-cash activities | |||
Investment in Tropos in exchange for non-cash deferred revenue | 5,000,000 | 0 | |
Fee paid to service partners in common stock | $ 599,891 | $ 0 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Cash Flows [Abstract] | |||
Interest paid | $ 0.3 | $ 8.2 | $ 12.7 |
Interest paid, convertible notes | 7.6 | ||
Interest paid, loss on redemption | 4.7 | ||
Interest paid, financing fees | $ 0.4 | ||
Conversion of convertible notes (in shares) | 7.8 | 27.7 | |
Conversion of convertible notes | $ 25.4 | $ 181.7 |
SUMMARY OF BUSINESS AND SIGNIFI
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES | SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES Overview We are an American technology company with a vision to pioneer the transition to zero-emission commercial vehicles. Our primary focus is to provide sustainable and cost-effective solutions to the commercial transportation sector. We design and manufacture all-electric delivery trucks and drone systems, including the technology that optimizes the way these vehicles operate. We are focused on our core competency of bringing our electric delivery vehicle platforms to market. Liquidity and Capital Resources The Company had revenues of $5.0 million for the period ended December 31, 2022. As of December 31, 2022, the Company had $99.3 million in cash and cash equivalents, positive working capital of $74.9 million, accumulated deficit of $627.6 million, and during the year ended December 31, 2022 incurred a net loss of $117.3 million and used $93.8 million of cash in operating activities. As the Company has made significant progress executing on its revised strategic product roadmap for our electric vehicle delivery offerings, we expect to generate additional sales revenue within the next twelve months which will help support our operations. Additionally, Management plans to reduce its discretionary spend related to non-contracted capital expenditures and other expenses, if necessary. These plans alleviated the substantial doubt about the Company’s ability to continue as a going concern caused by the significant losses from operations and cash used in operating activities. However, if the expected sales are not generated and Management is not able to control capital expenditures and other expenses, we will continue to incur substantial operating losses and negative cash flows from operations. There can be no assurance that the Company will be successful in implementing its plans or acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years. The Company’s future liquidity and working capital requirements will depend on numerous factors, including, the ability to generate sales, the ability to control capital expenditures and other expenses, and the ability to raise funds via private or public placement of our equity securities. The Company intends to raise additional funds through issuance of equity, including through the At-The-Market Program. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future vehicle program production and sales. Failure to obtain additional equity financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, any equity financings would likely have a dilutive effect on the holdings of the Company’s existing stockholders. Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and reflect our accounts and operations and those of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts used for, but not limited to, collectability of accounts receivable, inventory valuation, warranties, leases and related disclosures in the accompanying notes. We have assessed the impact of the COVID-19 pandemic and are not aware of any specific events or circumstances that required an update to our estimates and assumptions or materially affected the carrying value of our assets or liabilities as of the date of this Annual Report on Form 10-K. These estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions and conditions. Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less at the date of acquisition are considered cash equivalents. Accounts Receivable and Allowance for Credit Loss Accounts receivable primarily include amounts related to sales of our products and services rendered. We provide an allowance against accounts receivable for the amount we expect to be uncollectible. We write-off accounts receivable against the allowance when they are deemed uncollectible. Inventory Valuation Inventories are stated at the lower of cost or net realizable value. We write-down inventory for any excess or obsolete inventories or when we believe the net realizable value of inventories is less than the carrying value. We review our inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. This requires us to determine the estimated selling price of our inventory based on market conditions. Once inventory is written-down, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Should our estimates of future inventory usage or selling prices change, additional and potentially material increases to this reserve may be required. A small change in our estimates may result in a material charge to our reported financial results. The Company has a bill and hold arrangement related to the sale of inventory during the year ended December 31, 2022. Other income was recognized when control transfers to the purchaser, as the bill-and-hold arrangement is requested from the customer, the product is identified as belonging to the customer and is ready for physical transfer, and the product cannot be directed for use by anyone other than the purchaser. See Note 2, Inventory , of the Consolidated Financial Statements for additional information on the sale of inventory. Property, Plant and Equipment, Net Property, plant and equipment, net, including leasehold improvements, are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, as follows: Buildings and improvements 15 - 39 years Land improvements 15 years Equipment and vehicles 3 - 7 years Tooling 5 years Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or the term of the related leases. Upon the retirement or sale of our property, plant and equipment, the cost and associated accumulated depreciation are removed from the consolidated balance sheet, and the resulting gain or loss is reflected on the consolidated statement of operations. Maintenance and repair expenditures are expensed as incurred while major improvements that increase the functionality, output or expected life of an asset are capitalized and depreciated ratably over the identified useful life. Impairment of Long-Lived Assets Long-lived assets, such as property, plant, and equipment are reviewed for potential impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. Valuation of Investment As permitted under ASC 321, Equity Securities, the Company has elected to account for its investment in Tropos, an equity investment without a readily determinable fair value, at its cost minus impairment, which there is none. In accordance, with ASC 321, the Company evaluates the investment for impairment each period and reassess if the equity security does not have a readily determinable fair value. We had an investment in Class A Common Stock of Lordstown Motor Corp. (“LMC”) which began trading on the Nasdaq Global Select market under the ticker symbol “RIDE” on October 26, 2020. We sold our investment during the third quarter of 2021. Warranty Liability We generally offer warranty coverage for our products. We accrue warranty related costs under standard warranty terms and for certain claims outside the contractual obligation period that we choose to pay as accommodations to our customers. Provisions for estimated assurance warranties are recorded at the time of sale and are periodically adjusted to reflect actual experience. The amount of warranty liability accrued reflects management’s best estimate of the expected future cost of honoring Company obligations under the warranty plans. Historically, the cost of fulfilling the Company’s warranty obligations has principally involved replacement parts, towing and transportation costs, labor and sometimes travel for any field retrofit campaigns. The Company’s estimates are based on historical experience, the extent of pre-production testing, the number of units involved and the extent of features/components included in product models. The Company reviews actual warranty claims experience to determine if there are systemic defects that would require a field campaign. Although we believe the estimates and judgments discussed herein are reasonable, actual results could differ and we may be exposed to increases or decreases in our warranty liability accrual that could be material. Activity for the Company's warranty liability accrual is as follows: December 31, 2022 2021 Balance, beginning of year $ 4,583,916 $ 5,400,000 Accrual for warranty (1) (987,701) 1,045,578 Warranty costs incurred (1,388,541) (1,861,662) Balance, end of year $ 2,207,674 $ 4,583,916 (1) The decrease to the warranty liability accrual in 2022 primary relates to a decreased volume of vehicles covered under warranty as well as a lower liability per vehicle as compared to 2021. Fair Value Option As permitted under ASC 825, Financial Instruments , the Company elected the fair value option to account for its convertible notes. In accordance with ASC 825, the Company recorded its convertible notes at fair value with changes in fair value recorded in Interest Expense in the Consolidated Statement of Operations. As a result of applying the fair value option, direct costs and fees related to the convertible notes were recognized in earnings as incurred and not deferred. During 2022, the Company exchanged the aggregate principal of the 2024 Notes for shares of the Company’s common stock, resulting in a contractual principal balance of the 2024 Notes as of December 31, 2022 of zero. Income Taxes We file a consolidated U.S. federal income tax return and separate state and local income tax returns. We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax benefit carryforwards. Deferred tax assets and liabilities at the end of each period are determined using enacted tax rates. A valuation allowance is established or maintained when, based on currently available information, it is more likely than not all or a portion of a deferred tax asset will not be realized. We recognize the tax benefit from an uncertain tax position claimed or expected to be claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the Consolidated Financial Statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Revenue Recognition Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs when we transfer control of our vehicles, parts, or accessories, or provide services. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. For the majority of sales, this occurs when products are shipped from our manufacturing facility. At the time of revenue recognition, we reduce the transaction price and record a sales return reserve against revenue for estimated variable considerations related to future product returns. Such estimates are based on an analysis of known pending returns and historical experience. We adjust our estimate of revenue at the earlier of when the value of consideration we expect to receive changes or when the consideration becomes fixed. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The expected costs associated with our base warranties and field service actions are recognized as expense when the products are sold. We do not have any material significant payment terms as payment is received at or shortly after the point of sale. Revenue related to extended service contracts are recognized over the term of the agreement in proportion to the costs we expect to incur in satisfying the contract obligations. We have elected to recognize the cost for freight and shipping when control over vehicles, parts, or accessories have transferred to the customer as an expense in Cost of Sales. Deferred revenue is related to any non-refundable amounts that are collected from customers related to our unsatisfied assembly services. Deferred revenue is recognized as revenue as the performance obligations are satisfied. Deferred revenue is equivalent to the total service fee allocated to the assembly service performance obligations that are unsatisfied as of the balance sheet date. Cost of Sales Cost of sales include direct parts, material and labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistics costs, and reserves for estimated warranty expenses. Cost of sales also includes charges to write down the carrying value of our inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasted demand. Research and Development Costs Research and development costs are expensed as incurred. Marketing, Promotional and Advertising Costs Marketing, promotional and advertising costs are expensed as incurred and are included as an element of selling, general and administrative expense in the consolidated statement of operations. Comprehensive Income (Loss) Comprehensive income (loss) is comprised of adjustments to the fair value of our convertible notes due to changes in credit risk. Stock-Based Compensation We recognize compensation expense for costs related to all stock-based arrangements, including stock options, restricted stock awards (“RSA”) and performance-based share units (“PBSUs).” The fair value of stock option awards with only service conditions is estimated on the grant or offering date using the Black-Scholes option-pricing model. The fair value of RSAs is measured on the grant date based on the closing fair market value of our common stock. The fair value of PBSUs is estimated using a Monte-Carlo simulation model. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, net of actual forfeitures in the period. As we issue additional employee stock-based awards over time and as we incorporate additional market data related to our common stock, we may calculate significantly different volatilities and expected lives, which could materially impact the valuation of our stock-based awards and the stock-based compensation expense that we will recognize in future periods. Stock- based compensation expense is recorded in Selling, General and Administrative Expense in the Consolidated Statements of Operations. Net Income (Loss) per Share of Common Stock Basic income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average shares outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards and warrants using the treasury stock method, and convertible notes using the if-converted method, are included when calculating the diluted net loss per share of common stock when their effect is dilutive. The following table presents the reconciliation of net (loss) income and reconciliation of basic and diluted weighted average shares outstanding used in computing diluted net loss per share of common stock: Year Ended December 31, 2022 2021 2020 Net (loss) income $ (117,274,218) $ (401,344,813) $ 69,776,499 Basic weighted average shares outstanding 158,576,305 128,676,131 92,871,936 Dilutive effect of options and warrants — — 1,410,605 Dilutive effect of convertible notes — — 5,667,327 Diluted weighted average shares outstanding 158,576,305 128,676,131 99,949,868 The following table presents the potentially dilutive shares that were excluded from the computation of diluted net (loss) income per share of common stock, because their effect was anti-dilutive: Year Ended December 31, 2022 2021 2020 Stock-based awards and warrants 6,159,285 3,152,059 1,041,531 Convertible notes — 779,258 — |
INVENTORY
INVENTORY | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
INVENTORY | INVENTORY Our inventory consisted of the following: December 31, 2022 2021 Raw materials $ 42,500,878 $ 66,238,615 Work in process 25,210,131 20,826,644 Finished goods 301,645 — 68,012,654 87,065,259 Less: inventory reserve (59,162,512) (76,997,892) Inventory, net $ 8,850,142 $ 10,067,367 We reserve inventory for any excess or obsolete inventories or when we believe the net realizable value of inventories is less than the carrying value. The year over year decrease to inventory reserves was primarily driven by the continued decrease in C1000 production in 2022 culminating in the Company's decision to discontinue the program at the end of 2022. As the Company began to sell and dispose of C1000 inventory, the accompanying inventory reserves also decreased. During the year ended December 31, 2022, we sold inventory which was being carried at zero cost as it had been fully reserved for in prior periods in connection with the Company's decision regarding the future of the C1000 vehicle platform. The Company recognized a gain on the sale of $13.4 million, net of $0.5 million of selling costs, which is recorded in Other Income in the Consolidated Statements of Operations. The selling costs of $0.5 million represent a commission paid to a related party who was a former executive of the Company. |
CONTRACT MANUFACTURING SERVICES
CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS | CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS The Company has a minority ownership in Tropos Technologies, Inc. (“Tropos”) with a value of $10.0 million as of December 31, 2022. The minority ownership was obtained pursuant to the transaction with Tropos as described below. On August 8, 2022, the Company entered into an Assembly Services Agreement (the “Assembly Agreement”) with Tropos. Under the Assembly Agreement, the Company will provide services required to assemble a minimum annual quantity of 2,000 vehicles in 2023, 2,000 vehicles in 2024, and 250 vehicles in 2025 for a total of 4,250 vehicles during the term of the agreement at our Union City, Indiana manufacturing facility. In exchange for the assembly services, the Company will receive a service fee from Tropos. On August 23, 2022, the Company entered into a Preferred Stock Purchase Agreement (the “Stock Purchase Agreement”) with Tropos. Under the Stock Purchase Agreement, the Company received 605,811 shares of Series B Preferred Stock in Tropos with an option to purchase an additional 424,068 shares of Series B Preferred Stock for an exercise price of $16.51 per share in exchange for a cash payment of $5.0 million, and a $5.0 million contribution of non-cash consideration representing a deposit from Tropos for future assembly services. During the fourth quarter of 2022, the Company received $0.5 million cash payment from Tropos for additional assembly services. See Note 6, Revenue , of the Consolidated Financial Statements for treatment of the $5.0 million of non-cash consideration and $0.5 million of cash received as of December 31, 2022. The Company utilized the measurement alternative allowed under GAAP to record the investment of the Series B Preferred Stock at cost, less any impairment, as of December 31, 2022. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following: December 31, 2022 2021 Prepaid purchases $ 34,611,649 $ 24,101,695 Less: prepaid purchases reserve (22,163,338) (23,912,025) Prepaid purchases, net 12,448,311 189,670 Prepaid insurance 1,198,769 2,205,608 Right of return asset — 1,620,000 Other 505,401 342,551 Prepaid expenses and other current assets $ 14,152,481 $ 4,357,829 The Company's prepaid purchases balance consists of deposits made to our suppliers for non-recurring engineering costs and production parts. As of December 31, 2022 and 2021, the prepaid purchases balances primarily consisted of deposits made in connection with the production of our W4 CC vehicles. As of the year ended December 31, 2022 and 2021, we had reserves of $22.2 million and $23.9 million, respectively, which were primarily driven by the Company's decision to produce the C1000 vehicle platform at low-volume before discontinuing the program as the Company transitions to its new vehicle platforms. The reserve represents our best estimate of deposits on orders that we do not expect to recover. |
INVESTMENT IN LORDSTOWN MOTORS
INVESTMENT IN LORDSTOWN MOTORS CORP. (“LMC”) | 12 Months Ended |
Dec. 31, 2022 | |
Investments, All Other Investments [Abstract] | |
INVESTMENT IN LORDSTOWN MOTORS CORP. (“LMC”) | INVESTMENT IN LORDSTOWN MOTORS CORP. (“LMC”) As of December 31, 2022, the Company owned zero shares of LMC Class A Common Stock. During the third quarter of 2021, the Company sold its Investment in LMC at an average price of $6.42 per share. Proceeds from the sale, net of transaction expenses and broker commissions, were approximately $105.1 million. The Company recognized a loss of approximately $76.5 million in connection with the sale, which is recorded in Other Loss on the Consolidated Statements of Operations. The following table sets forth a reconciliation of our investment in LMC: December 31, 2022 2021 Balance, beginning of year $ — $ 330,556,744 Change in fair value — (225,429,997) Sales of investment — (105,126,747) Balance, end of year $ — $ — LMC Transaction On November 7, 2019, the Company entered into a transaction with LMC (the “LMC Transaction”) in which the Company granted LMC a perpetual and worldwide license to certain intellectual property relating to the Company’s W-15 electric pickup truck platform and its related technology in exchange of consideration as described below: • A ten percent ownership interest in the common stock of LMC in exchange for the Company’s obligations under the Intellectual Property License Agreement (the "Agreement") • One percent of the aggregate debt and equity commitments funded to LMC upon completion of a capital raise (the “Royalty Advance”). • A one percent royalty on the gross sales price of the first 200,000 vehicles sold by LMC, to the extent that the aggregate amount of such royalty fees exceeds the amount paid as the Royalty Advance. The consideration included fixed and variable components. The fixed components consisted of the ten percent ownership interest in LMC and amounts received under the Royalty Advance. The variable component consists of the one percent royalty on the gross sales price of the first 200,000 vehicles sold by LMC. Variable consideration will be recognized when each vehicle for which a royalty is sold. On January 27, 2023, we received a letter (the “Notice”) from LMC purporting to terminate the Agreement, effective March 27, 2023. The Company believes that the Agreement provides that LMC’s obligation to pay the Royalties survives termination of the Agreement and that, notwithstanding LMC’s termination of the Agreement, the Royalties would still be due and payable if LMC sells vehicles. LMC has not informed the Company that it has sold any applicable vehicles since the date of the Agreement. The Company cannot currently predict to what extent, if at all, LMC will sell any such vehicles, whether LMC will pay the applicable Royalties on any such vehicles it does sell, or whether the amount of any such Royalties will be material. |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE The following table provides a summary of sales activity: Years Ended December 31, 2022 2021 2020 Sales, net of returns and allowances $ 4,385,975 $ (994,187) $ 1,357,157 Other sales 637,097 142,265 35,362 Total sales, net of returns and allowances $ 5,023,072 $ (851,922) $ 1,392,519 The majority of sales recognized during 2022 relate to the Company's vehicle sales, primarily of sales of W4 CC vehicles, while the other sales consist of delivery service, parts sales and other services. During 2021, the Company announced its decision to suspend deliveries of our C1000 vehicles and recall previously delivered vehicles. In connection with the recall, the Company agreed to refund our customers for all C1000 vehicles previously purchased by them. The Company determines its allowance for estimated returns based on known pending returns and historical trends in product returns. The refund liability as of December 31, 2022 and 2021 was zero and $2.4 million, respectively. The Company also records an asset for our right to recover products from customers settling a refund liability. The Company measures the asset at the asset's former carrying amount, less any expected costs to recover, and updates the measurement of the asset arising from changes in expectations about products to be returned. The asset for recovery as of December 31, 2022 and 2021 was zero and $1.6 million, respectively. Deferred revenue, which is equivalent to the total service fee allocated to the assembly service performance obligations that are unsatisfied as of the balance sheet date, was $5.4 million and zero as of December 31, 2022 and 2021, respectively. |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT, NET | PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consists of the following: December 31, 2022 2021 Land and improvements $ 875,182 $ 861,175 Buildings and improvements 8,167,736 6,396,800 Equipment and vehicles 8,183,089 3,603,655 Tooling 689,286 1,467,712 Construction in progress 9,027,020 927,537 26,942,313 13,256,879 Less: accumulated depreciation (5,441,218) (5,359,072) Property, plant and equipment, net $ 21,501,095 $ 7,897,807 Construction in progress is primarily comprised of equipment and tooling related to the manufacturing of our products. Completed assets are transferred to their respective asset classes, and depreciation begins when an asset is ready for its intended use. Depreciation expense during the years ended December 31, 2022, 2021 and 2020 was $1.9 million, $1.9 million, and $0.8 million respectively. |
ACCRUED LIABILITIES AND OTHER C
ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES | ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES Accrued liabilities and other current liabilities consisted of the following: December 31, 2022 2021 Legal reserve (Note 17) $ 35,000,000 $ — Accrued commissions — 4,000,000 Compensation and related costs 4,967,187 4,030,085 Refund liability (Note 6) — 2,410,000 Accrued interest — 232,222 Other 4,584,310 4,080,520 Accrued liabilities and other current liabilities $ 44,551,497 $ 14,752,827 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT A reconciliation of the fair value of the convertible notes is as follows: December 31, 2022 2021 Fair value of convertible notes, beginning of year $ 24,705,000 $ 197,700,000 Change in fair value of convertible notes (1) 367,357 (27,600,000) Change in fair value of convertible notes attributable to credit risk (2) — 10,200,000 Fair value of convertible notes exchanged for common stock (25,072,357) (155,595,000) Fair value of convertible notes, end of year $ — $ 24,705,000 ( 1) The Company recognizes changes in fair value of convertible notes for common stock in Interest Expense, Net (2) The Company recognizes changes in fair value of convertible notes attributable to credit risk in Other Comprehensive Loss. During the years ended December 31, 2022 and 2021, the Company reclassified zero and $8.8 million, respectively, of the changes in fair value of convertible notes attributable to credit risk previously recognized in Other Comprehensive Loss to Interest Expense (Income). The net amount of changes in fair value of convertible notes attributable to credit risk recognized in Other Comprehensive Income (Loss) for the years ended December 31, 2022 and 2021 was approximately $1.4 million and $1.4 million loss, respectively. 4.0% Senior Secured Convertible Notes Due 2024 On October 14, 2020 the Company issued $200.0 million par value convertible notes (the “2024 Notes”) due October 14, 2024. The 2024 Notes were a senior secured obligation of the Company, and ranked senior to all unsecured debt of the Company. The 2024 Notes were guaranteed by all the Company’s current and future subsidiaries and were secured by substantially all the assets of the Company and its subsidiaries. Interest was payable quarterly beginning on January 15, 2021 at a rate of 4.0% per annum. The 2024 Notes were convertible at a rate of $35.29 per share, subject to change for anti-dilution adjustments and adjustments for certain corporate events. The Company paid fees in connection with the issuance of the 2024 Notes of $6.6 million, resulting in net proceeds of $193.4 million. As we have elected to account for our convertible notes using the fair value option allowed under GAAP, all direct costs related to the issuance of our convertible notes were recognized in Interest Expense in the Consolidated Statements of Operations for the year ended December 31, 2020. In the fourth quarter of 2021, the Company entered into securities exchange agreements with certain holders of its 2024 Notes, to exchange $172.5 million in principal amount of the notes for 27.7 million shares of common stock. In connection with the exchanges, the Company recognized a loss on exchange of $34.9 million, which included $8.8 million of the fair value adjustments attributable to changes in credit risk previously recorded in Other Comprehensive Loss. The loss on exchange was recorded in Interest Expense in the Consolidated Statements of Operations. On April 21, 2022, we exchanged the remaining $27.5 million in aggregate principal of the 2024 Notes for 7.8 million shares of the Company’s common stock. The number of shares issued was calculated by dividing $29.4 million, which represents 107% of the principal amount of the notes, plus $0.3 million of interest accrued on the notes, by the average of the daily VWAPS for the 10 days immediately preceding April 21, 2022. The Company recognized a loss of $1.8 million in 2022, which included a $0.4 million adjustment to the fair value of the convertible notes to the value of the shares issued under the exchange and a $1.4 million adjustment related the amount previously recognized in Accumulated Other Comprehensive Loss. The total loss was recorded in Interest Expense in the Consolidated Statements of Operations. After the exchange, the Company has no convertible notes outstanding and the indenture and related security agreement under which the 2024 Notes were issued have been terminated. PPP Term Note On April 14, 2020, the Company entered into a Paycheck Protection Program Term Note (“PPP Note”) under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The Company received proceeds of $1.4 million from the PPP Note, which was due on April 13, 2022. In accordance with the requirements of the CARES Act, the Company used the proceeds primarily for payroll costs. Interest accrued on the PPP Note at the rate of 1.0% per annum. The Company elected to account for the PPP Term Note as debt and accrued interest over its term. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | LEASES We have entered into various operating and finance lease agreements for offices, manufacturing and warehouse facilities. We determine if an arrangement is a lease, or contains a lease, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for our use by the lessor. We have elected not to disclose in the Consolidated Balance Sheet leases with a lease term of 12 months or less at lease inception that do not contain a purchase option or renewal term provision we are reasonably certain to exercise. All other lease right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Our leases may include options to extend the lease term for up to 5 years. Some of our leases also include options to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Lease expense for operating leases is recognized on a straight-line basis over the lease term as cost of sales or operating expenses depending on the nature of the lease right-of-use asset. Years Ended December 31, 2022 2021 2020 Short-term lease expense $ 589,969 $ 599,129 $ 145,585 Operating lease expense 1,782,332 58,224 — Total lease expense $ 2,372,301 $ 657,353 $ 145,585 Lease right-of-use assets consisted of the following: December 31, 2022 2021 Operating leases $ 5,884,865 $ 1,538,852 Finance leases 5,821,938 — Total lease right-of-use assets $ 11,706,803 $ 1,538,852 Lease liabilities consisted of the following: December 31, 2022 2021 Operating leases $ 6,977,896 $ 1,554,767 Finance leases 3,147,198 — Total lease liabilities 10,125,094 1,554,767 Less: current portion (1,285,032) (363,714) Long-term portion $ 8,840,062 $ 1,191,053 Other information related to leases is as follows: As of December 31, 2022 2021 2020 Weighted-average remaining lease term Operating leases 6.0 years 4.0 years N/A Financing leases 2.0 years N/A N/A Weighted-average interest rate Operating leases 10.0 % 10.0 % N/A Financing leases 10.0 % N/A N/A Supplemental cash flow information related to leases where we are the lessee is as follows: Years Ended December 31, 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 770,642 $ 657,353 $ 145,585 Operating cash outflows from finance leases (interest payments) 369,976 — — Financing cash outflows from finance leases 857,516 — — Leased assets obtained in exchange for finance lease liabilities 6,022,694 — — Leased assets obtained in exchange for operating lease liabilities 5,631,558 1,577,774 — As of December 31, 2022, the maturities of our operating and finance lease liabilities (excluding short-term leases) are as follows: Operating Finance 2023 $ 1,356,374 $ 879,444 2024 1,589,805 2,752,862 2025 1,458,783 — 2026 1,503,068 — 2027 1,316,387 — Thereafter 2,295,179 — Total minimum lease payments 9,519,596 3,632,306 Less: Interest 2,541,700 485,108 Present value of lease obligations 6,977,896 3,147,198 Less: Current portion 686,018 599,014 Long-term portion of lease obligations $ 6,291,878 $ 2,548,184 |
LEASES | LEASES We have entered into various operating and finance lease agreements for offices, manufacturing and warehouse facilities. We determine if an arrangement is a lease, or contains a lease, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for our use by the lessor. We have elected not to disclose in the Consolidated Balance Sheet leases with a lease term of 12 months or less at lease inception that do not contain a purchase option or renewal term provision we are reasonably certain to exercise. All other lease right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Our leases may include options to extend the lease term for up to 5 years. Some of our leases also include options to terminate the lease prior to the end of the agreed upon lease term. For purposes of calculating lease liabilities, lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Lease expense for operating leases is recognized on a straight-line basis over the lease term as cost of sales or operating expenses depending on the nature of the lease right-of-use asset. Years Ended December 31, 2022 2021 2020 Short-term lease expense $ 589,969 $ 599,129 $ 145,585 Operating lease expense 1,782,332 58,224 — Total lease expense $ 2,372,301 $ 657,353 $ 145,585 Lease right-of-use assets consisted of the following: December 31, 2022 2021 Operating leases $ 5,884,865 $ 1,538,852 Finance leases 5,821,938 — Total lease right-of-use assets $ 11,706,803 $ 1,538,852 Lease liabilities consisted of the following: December 31, 2022 2021 Operating leases $ 6,977,896 $ 1,554,767 Finance leases 3,147,198 — Total lease liabilities 10,125,094 1,554,767 Less: current portion (1,285,032) (363,714) Long-term portion $ 8,840,062 $ 1,191,053 Other information related to leases is as follows: As of December 31, 2022 2021 2020 Weighted-average remaining lease term Operating leases 6.0 years 4.0 years N/A Financing leases 2.0 years N/A N/A Weighted-average interest rate Operating leases 10.0 % 10.0 % N/A Financing leases 10.0 % N/A N/A Supplemental cash flow information related to leases where we are the lessee is as follows: Years Ended December 31, 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 770,642 $ 657,353 $ 145,585 Operating cash outflows from finance leases (interest payments) 369,976 — — Financing cash outflows from finance leases 857,516 — — Leased assets obtained in exchange for finance lease liabilities 6,022,694 — — Leased assets obtained in exchange for operating lease liabilities 5,631,558 1,577,774 — As of December 31, 2022, the maturities of our operating and finance lease liabilities (excluding short-term leases) are as follows: Operating Finance 2023 $ 1,356,374 $ 879,444 2024 1,589,805 2,752,862 2025 1,458,783 — 2026 1,503,068 — 2027 1,316,387 — Thereafter 2,295,179 — Total minimum lease payments 9,519,596 3,632,306 Less: Interest 2,541,700 485,108 Present value of lease obligations 6,977,896 3,147,198 Less: Current portion 686,018 599,014 Long-term portion of lease obligations $ 6,291,878 $ 2,548,184 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | . INCOME TAXES For the years ended December 31, 2022, 2021 and 2020, with the exception of the impact from non-deductible inventory and prepaid purchases reserves, the Company has taxable losses primarily due to operations and stock compensation related deductions and thus has no current federal tax expense recorded. The taxable income generated by non-deductible inventory in the current year is fully offset by available net operating losses. As of December 31, 2021, the Company has increased the valuation allowance recorded against its deferred tax assets due to the sale of LMC shares during the year and the uncertainty about our ability to utilize our remaining deferred tax assets in future years. The Company continued to record a valuation allowance against all of its deferred tax assets as of December 31, 2022. The components of the (benefit) provision for income taxes are as follows: Years Ended December 31, 2022 2021 2020 Current: Federal $ — $ — $ — State and Local — (13,159) — Total Current — (13,159) — Deferred: Federal — (21,864,569) 21,864,569 State and Local — 30,639 (30,639) Total Deferred — (21,833,930) 21,833,930 Total (benefit) provision for income taxes $ — $ (21,847,089) $ 21,833,930 The reconciliation of taxes at the federal statutory rate to our provision for income taxes was as follows: Years Ended December 31, 2022 2021 2020 Federal tax benefit at statutory rates 21.0 % 21.0 % 21.0 % State and local tax at statutory rates — % 0.1 % (0.1) % Fair value adjustments on warrant liability — % — % 37.1 % Fair value adjustments on convertible notes (0.3) % (0.4) % 2.8 % Tax gain on sale of investment — % (0.6) % — % Stock-based compensation deductions (1.7) % 0.2 % (6.6) % Research and development credits 0.3 % 1.2 % — % Other permanent differences and credits (0.5) % (0.2) % — % Change in valuation allowance (18.8) % (16.1) % (30.4) % Total tax benefit — % 5.2 % 23.8 % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. When realization of the deferred tax asset is more likely than not to occur, the benefit related to the deductible temporary differences attributable to operations is recognized as a reduction of income tax expense. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of December 31, 2022 and 2021, our ability to realize our net deferred tax asset is not more likely than not to occur and the valuation allowance reduces the deferred tax asset to zero. Significant components of the Company’s deferred tax assets and liabilities are as follows: December 31 2022 2021 Deferred Tax (Liabilities) Assets: Accrued expenses and reserves $ 4,528,418 $ 590,340 Warranty reserve 470,342 976,956 Inventory and prepaid purchase reserves 17,326,397 21,506,626 Non-qualified stock options (328,410) (160,921) Property, plant and equipment (1,955,842) 54,556 Research and experimental costs 4,435,891 — Lease right-of-use assets (2,515,792) — Lease liability 2,175,883 — Issuance fees on convertible notes 343,886 687,772 Federal tax credits 5,099,750 4,873,099 Net operating losses 66,112,929 45,143,740 Total Deferred Tax (Liabilities) Assets 95,693,452 73,672,168 Valuation Allowance (95,693,452) (73,672,168) Total Deferred Tax Assets (Liabilities), net of valuation allowance $ — $ — As of December 31, 2022 and 2021, the Company has approximately $81.8 million and $81.8 million of federal net operating loss (“NOL”) carry-forwards which expire through 2037. Additionally, at December 31, 2022 and 2021, the Company had approximately $228.4 million and $128.9 million of federal NOLs that carry-forward indefinitely, and approximately $1.0 million and $0.9 million of state and local NOL carry-forwards, which expire through 2037. The NOL carry-forwards may be limited in certain circumstances, including changes in ownership. Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carry-forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Certain tax attributes are subject to an annual limitation as a result of certain cumulative changes in ownership interest of significant shareholders which could constitute a change of ownership as defined under Internal Revenue Code Section 382. The Company completed a full analysis of historical ownership changes and determined that a portion of the NOLs to-date have a limitation on future deductibility. Approximately $8.4 million of NOLs incurred prior to 2014 will be unable to offset future taxable income and have been reserved via a valuation allowance to reduce the deferred tax asset to the expected realizable amount. The following table presents a reconciliation of unrecognized tax benefits: 2022 2021 Unrecognized tax benefits - January 1 $ 805,392 $ 1,163,282 Gross increases - tax positions in prior period — — Gross decreases - tax positions in prior period — (357,890) Gross increases - tax positions in current period — — Settlement — — Lapse of statute of limitations — — Unrecognized tax benefits - December 31 $ 805,392 $ 805,392 The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2022, and 2021, due to the Company’s continued losses, no amounts of interest and penalties have been recognized in the Company’s Consolidated Statements of Operations. If the unrecognized tax benefits were reversed, a deferred tax asset and corresponding valuation allowance would be recorded, and thus the reversal would have no impact on the effective rate. The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and local jurisdictions. Generally, the Company’s 2019 through 2021 tax years remain open and subject to examination by federal, state and local |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1 — Quoted market prices in active markets for identical assets or liabilities. Level 2 — Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3 — Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities measured at fair value and fair value measurement level were as follows: December 31, 2022 December 31, 2021 Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Convertible notes $ — $ — $ — $ — $ 24,705,000 $ — $ — $ 24,705,000 Total liabilities at fair value $ — $ — $ — $ — $ 24,705,000 $ — $ — $ 24,705,000 Convertible Notes The Company's convertible notes were measured at fair value using Level 3 inputs upon issuance and at each reporting date. Considerable judgment was required in interpreting market data to develop the estimates of fair value. Accordingly, the Company’s estimates are not necessarily indicative of the amounts that the Company, or holders of the instruments, could realize in a current market exchange. Significant assumptions used in the fair value model included estimates of the redemption dates, credit spreads and the market price and volatility of the Company’s common stock. The use of different assumptions and/or estimation methodologies could have a material effect on the estimated fair values. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The Company maintains, as approved by the board of directors, the 2017 Incentive Stock Plan and the 2019 Stock Incentive Plan (the “Plans”) providing for the issuance of stock-based awards to employees, officers, directors or consultants of the Company. Non-qualified stock options may only be granted with an exercise price equal to the market value of the Company’s common stock on the grant date. The Company may issue various types of awards under the Plans, including options, restricted stock and performance units. The Plans have authorized 13.0 million shares for issuance of stock-based awards. As of December 31, 2022 there were approximately 2.0 million shares available for issuance of future stock awards under the Plans. Stock-based compensation expense The following table summarizes stock-based compensation expense: Years Ended December 31, 2022 2021 2020 Stock options $ 978,696 $ 526,125 $ 792,055 Restricted stock awards 7,767,114 4,227,252 3,228,750 Performance-based restricted stock 2,714,401 190,003 — Total stock-based compensation expense $ 11,460,211 $ 4,943,380 $ 4,020,805 Stock options A summary of stock option activity for the year ended December 31, 2022 is as follows: Number of Options Weighted Weighted Weighted Options outstanding as of December 31, 2021 495,836 $ 6.8 — 6.5 Granted — — — — Exercised — — — — Forfeited (69,710) 1.5 — — Expired (2,500) 22.3 — — Options outstanding as of December 31, 2022 423,626 7.6 — 6.7 Options exercisable as of December 31, 2022 218,006 $ 5.5 — 4.6 As of December 31, 2022, unrecognized compensation expense was $1.6 million for unvested options, which is expected to be recognized over the next 1.7 years. The fair value for the stock option issued in 2021 was estimated on the grant date using a Black-Scholes valuation model that uses the assumptions of expected volatility, expected term, and the expected risk-free rate of return. The expected volatility was estimated by management as 135% based on our historical results adjusted for any expected future changes. The Company uses the simplified method in determining the expected term of the stock option grant awarded in 2021. The simplified method was used because the Company does not believe its historical data provides a reasonable basis for the expected term of the 2021 grant, due primarily to the limited number of grants of stock options awarded to date. The risk-free rate of return was based on market yields in effect on the date of each grant for United States Treasury debt securities with a maturity equal to the expected term of the award. Restricted stock awards Restricted stock awards generally vest in equal installment periods of six months to three years. Restricted stock awards are valued based on the closing price of the Company's common stock on the date prior of grant, and compensation cost is recorded on a straight-line basis over the share vesting period net of actual forfeitures in the period. A summary of restricted stock activity for the year ended December 31, 2022 is as follows: Number of Unvested Shares Weighted Average Grant Date Fair Value per Share Unvested restricted stock as of December 31, 2021 1,617,192 $ 9.3 Granted 2,959,966 3.1 Vested (883,908) 6.8 Forfeited (167,919) 6.3 Unvested restricted stock as of December 31, 2022 3,525,331 $ 4.9 As of December 31, 2022, unrecognized compensation expense was $13.7 million for unvested restricted stock, which is expected to be recognized over the next 1.9 years. Performance-based restricted stock awards On February 23, 2022 the Company issued 0.9 million PSUs in addition to the 0.3 million PSUs issued on November 5, 2021 to certain executives. The vesting of the PSUs is conditioned upon achievement of certain performance objectives over a performance period ending December 31, 2024 as defined in each award agreement. Fifty percent of the PSUs vest based upon the Company’s total shareholder return as compared to a group of peer companies (“TSR PSUs”), and fifty percent of the PSUs vest based upon the Company’s performance on certain measures including a cumulative adjusted EBITDA target (“EBITDA PSUs”). Depending on the actual achievement on the performance objectives, the grantee may earn between 0% and 200% of the target PSUs. A summary of the activity for PSU awards with total shareholder return performance objectives for the year ended December 31, 2022 is as follows: Number of Unvested Shares Weighted Average Grant Date Fair Value per Share Balance, December 31, 2021 306,197 $ 11.79 Granted 454,832 11.79 Forfeited (22,278) 11.79 Balance, December 31, 2022 738,751 $ 11.79 The grant date fair value of $11.79 per TSR PSU was estimated using a Monte-Carlo simulation model using a volatility assumption of 117% and risk-free interest rate of 0.69%. As of December 31, 2022, unrecognized compensation expense was $5.9 million, which is expected to be recognized over the next 2.0 years. A summary of the PSU awards with cumulative adjusted EBITDA targets for the year ended December 31, 2022 is as follows: Number of Unvested Shares Balance, December 31, 2021 — Granted 454,822 Forfeited (22,276) Balance, December 31, 2022 432,546 |
RECENT PRONOUNCEMENTS
RECENT PRONOUNCEMENTS | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT PRONOUNCEMENTS | RECENT PRONOUNCEMENTS Accounting Standards and Pronouncements Recently Adopted There are no accounting standards or pronouncements recently adopted impacting the Company. Accounting Standards and Pronouncements Not Yet Adopted There are no accounting standards or pronouncements not yet adopted impacting the Company. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | STOCKHOLDERS' EQUITY Preferred Stock The Company has authorized 75.0 million shares of Series A Preferred Stock, par value $0.001 per share. The Company's certificate of incorporation provides that shares of preferred stock may be issued from time to time in one or more series. The Company's Board of Directors is authorized to fix the voting rights, if any, designations, powers, preferences, qualification, limitations and restrictions thereof, applicable to the shares of preferred stock. As of December 31, 2022 and December 31, 2021, there were no shares of Series A Preferred Stock issued and outstanding. Common Stock The Company has one class of common stock, par value $0.001 per share. Each share of the Company's common stock is entitled to one vote on all matters submitted to stockholders. Common Stock Held in Escrow On October 31, 2019, the Company and ST Engineering Hackney, Inc. (“Hackney”) entered into an Asset Purchase Agreement to purchase certain assets and assume certain liabilities of Hackney. The purchase price for the acquired assets was $7.0 million and the Company deposited $1.0 million of cash and approximately 2.3 million shares of its common stock originally valued at $6.6 million into an escrow account as collateral. The $1.0 million of cash was paid to Hackney in January 2020, and the remaining $6.0 million was payable in cash within 45 days if certain conditions were met. The 2.3 million shares of common stock remained in escrow as of December 31, 2022. However, as we believe the conditions were not met, we do not expect to make further payments to Hackney in connection with the Asset Purchase Agreement and we expect the shares to be released from escrow in 2023. Warrants In connection with the issuance of debt, common stock and preferred stock, the Company has issued warrants to purchase shares of the Company's common stock. As of December 31, 2022 and 2021, respectively, the Company has approximately 1.0 million and 1.0 million warrants outstanding. |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTIES | CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS The Company has a minority ownership in Tropos Technologies, Inc. (“Tropos”) with a value of $10.0 million as of December 31, 2022. The minority ownership was obtained pursuant to the transaction with Tropos as described below. On August 8, 2022, the Company entered into an Assembly Services Agreement (the “Assembly Agreement”) with Tropos. Under the Assembly Agreement, the Company will provide services required to assemble a minimum annual quantity of 2,000 vehicles in 2023, 2,000 vehicles in 2024, and 250 vehicles in 2025 for a total of 4,250 vehicles during the term of the agreement at our Union City, Indiana manufacturing facility. In exchange for the assembly services, the Company will receive a service fee from Tropos. On August 23, 2022, the Company entered into a Preferred Stock Purchase Agreement (the “Stock Purchase Agreement”) with Tropos. Under the Stock Purchase Agreement, the Company received 605,811 shares of Series B Preferred Stock in Tropos with an option to purchase an additional 424,068 shares of Series B Preferred Stock for an exercise price of $16.51 per share in exchange for a cash payment of $5.0 million, and a $5.0 million contribution of non-cash consideration representing a deposit from Tropos for future assembly services. During the fourth quarter of 2022, the Company received $0.5 million cash payment from Tropos for additional assembly services. See Note 6, Revenue , of the Consolidated Financial Statements for treatment of the $5.0 million of non-cash consideration and $0.5 million of cash received as of December 31, 2022. The Company utilized the measurement alternative allowed under GAAP to record the investment of the Series B Preferred Stock at cost, less any impairment, as of December 31, 2022. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES General Matters The Company is party to various negotiations and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity. Federal Motor Vehicle Safety Standards (“FMVSS”) Certification and Other Regulatory Matters On September 22, 2021, we announced the Company decided to suspend deliveries of C1000 vehicles and recall the vehicles we had already delivered to customers. The Company determined additional testing and modifications to existing vehicles were required to bring the C1000 vehicles into full compliance with FMVSS. The Company further announced that it filed a report with the National Highway Traffic Safety Administration (“NHTSA”) regarding the need for additional testing and vehicle modifications to bring our C1000 vehicles into full compliance with FMVSS. We indicated our previous statements related to the C1000’s compliance with NHTSA standards cannot be relied upon and so notified the Securities and Exchange Commission. We also disclosed we identified a number of enhancements to our production process and the design of the C1000 vehicles to address customer feedback, primarily related to payload capacity. The certification testing was completed in February 2022. Upon completion of this review, the C1000 platform was determined to be eligible for certification and reintroduction as a limited production vehicle with constrained cargo capacity. In 2022, Workhorse decided to repurchase all of the C-1000 vehicles involved in the recall announced in September 2021 instead of repairing them and so notified NHTSA. Because the Company repurchased all of the C1000 vehicles involved in the recall, it has no further obligations under the recall. Due to the uncertainties and many variables involved in NHTSA matters, we cannot estimate the ultimate resolution of this matter and whether it will have a material adverse effect on the Company's financial position, results of operations, cash flows or liquidity. We cooperated with NHTSA with respect to the now-completed recall announced in September 2021. However, we cannot assure that NHTSA or other government authorities will not attempt to impose potentially significant fines and penalties in response to the recall. On October 19 and November 1, 2021, the Company received letters from the SEC requesting that it voluntarily provide information relating to (a) the events and trading in its securities leading up to the announcement of the award of a contract by the U.S. Postal Service (the “USPS”) for the manufacture of a postal service vehicle fleet and (b) recognition of revenue, if any, related to purchases of vehicles by certain of the Company’s customers. On November 5, 2021, the Department of Justice (“DOJ”) orally informed the Company that it had a related open investigation covering the Company. On May 9, 2022, the Company received a letter from the SEC requesting that it voluntarily provide information relating to certain customer sales and customer complaints. Since the initial phone call on November 5, 2021, the Company has not received any subpoena or other request for documents or other information from the DOJ with respect to this investigation. On December 20, 2022, the SEC notified the company that it had concluded its investigation and, based on the information it had as of the date of its notice, that the SEC does not intend to recommend an enforcement action by the Commission against the Company. At this time, the Company cannot predict the ultimate scope, duration, or outcome of these matters. During the second quarter of 2021, the Company became aware of a regulatory compliance issue related to our E-Series vehicles that will require retrofitting of such vehicles. Management continues to work on remediation of this issue and does not expect it to have a material impact on the Company’s financial condition and operations. Due to the uncertainties and many variables involved in regulatory matters, we cannot estimate the ultimate resolution of this issue and actual results may differ from our expectations. Legal Proceedings Securities Litigation The Company, Duane Hughes, Steve Schrader, Robert Willison and Gregory Ackerson are defendants in a putative class action (the “Securities Class Action”) brought in the Central District of California (Case No.2:21-cv-02072) on behalf of purchasers of the Company’s securities from March 10, 2020 through May 10, 2021. The amended complaint in this action, filed by lead plaintiff, Timothy M. Weis, on July 16, 2021, alleges the defendants violated the federal securities laws by intentionally or recklessly making material misrepresentations and/or omissions regarding the Company’s participation in the bidding process to manufacture the new fleet of USPS next generation delivery vehicles, the prospect of the USPS awarding the contract to Workhorse given alleged deficiencies in Workhorse’s proposal, the Company’s manufacturing abilities generally and the Company’s nonbinding “backlog” in its vehicles. Lead plaintiff seeks certification of a class and monetary damages in an indeterminate amount. The Court denied the Company’s motion to dismiss in substantial part, and the Securities Class Action is currently scheduled to begin trial on March 19, 2024. On October 24, 2022, the Company entered into a binding term sheet to resolve this litigation as well as the related Shareholders Derivative Litigation described below. On January 13, 2023, the parties executed a Stipulation of Settlement setting forth the terms of the settlement of the class action and resolution of all claims. Under these terms, Workhorse will pay $15 million in cash, which is expected to be funded fully by proceeds of available insurance, and $20 million payable in shares of Workhorse stock. A Motion for Preliminary Approval of Class Action Settlement was filed on January 13, 2023, and the Court granted preliminary approval of the settlement on February 14, 2023. The Court set the final approval hearing for July 24, 2023. The settlement is subject to approval by the Court, and there can be no assurance that the settlement will be approved on those terms or at all. The Company recorded a $15 million insurance receivable in Other receivable and a $35 million legal reserve in Accrued liabilities and other in the Consolidated Balance Sheet at December 31, 2022. The Company also recognized a $20 million expense which was recognized in Selling, general and administrative of the Consolidated Statements of Operations for the year ended December 31, 2022. Shareholder Derivative Litigation A total of eight substantively similar derivative actions were originally filed for breach of fiduciary duty and unjust enrichment against Duane Hughes, Steve Schrader, Stephen Fleming, Robert Willison, Anthony Furey, Gregory Ackerson, H. Benjamin Samuels, Raymond J. Chess, Harry DeMott, Gerald B. Budde, Pamela S. Mader, Michael L. Clark and Jacqueline A. Dedo in state court in Nevada, state court in Ohio, and federal courts in Nevada, Ohio and California (collectively, the "Shareholder Derivative Litigation"). In these actions, the plaintiffs allege the defendants breached their fiduciary duties by allowing or causing the Company to violate the federal securities laws as alleged in the Securities Class Action discussed above and by selling Company stock and receiving other compensation while allegedly in possession of material non-public information about the prospect of the USPS awarding the contract to an electric vehicle manufacturer given electrifying the USPS’s entire fleet allegedly have been impractical and expensive. The plaintiffs seek damages and disgorgement in an indeterminate amount. The three derivative cases filed in the Central District of California were consolidated into a single action on June 21, 2021 (under Case No. 2:21-cv-04202). On April 18, 2022, the plaintiffs filed their consolidated amended complaint in the consolidated action. On June 2, 2022, the defendants filed motions to dismiss, which the Company joined in with respect to the arguments related to the plaintiffs’ lack of standing, as well as a motion to stay the case pending resolution of the Securities Class Action. On October 3, 2022, the Court granted the Defendants’ motion to stay the action pending resolution of the Securities Class Action. A fourth case, originally filed in the Southern District of Ohio, was transferred to the Central District of California on November 5, 2021 (under Case No. 2:21-cv-08734) and assigned to the same judge who presides over the Securities Class Action and the consolidated Central District of California derivative action. Plaintiffs filed their first amended complaint on May 2, 2022. On July 22, 2022, the Court granted the Defendants’ motion to stay the action pending resolution of the Securities Class Action. Two further actions, both filed in the Eight Judicial District Court of the State of Nevada in and for Clark County, were consolidated on January 7, 2022 (under Case No. A-21-833050-B). On January 24, 2022, the plaintiffs in the consolidated action in Nevada state court filed their consolidated amended complaint, which was also revised to include the additional allegations made in the Amended Complaint in the Securities Class Action discussed above. On March 22, 2022, the defendants and the Company filed a motion to stay the Nevada state court consolidated action, and the defendants filed motions to dismiss the consolidated action, which the Company joined in with respect to the arguments related to the plaintiffs’ lack of standing. Plaintiffs’ oppositions to these motions were filed on June 3, 2022. Defendants’ replies were filed on July 15, 2022. On August 4, 2022, the court denied the defendants' motion to dismiss the consolidated action, but granted the defendants' motion to stay the action pending resolution of the Securities Class Action. While the case remains stayed, on August 25, 2022 the board member defendants, including Raymond J. Chess, Gerald B. Budde, H. Benjamin Samuels, Harry DeMott, Michael L. Clark, Pamela S. Mader, and Jacqueline A. Dedo filed a Petition for Writ of Mandamus in The Supreme Court of the State of Nevada (“Writ”), arguing that the District Court erred when it applied Delaware law in holding that the plaintiffs adequately pleaded demand futility and denied defendants’ motion to dismiss. The Company filed an answer stating that it does not support or oppose the Writ on November 7, 2022. On November 18, 2022, the Court granted the parties’ joint motion for stay of the Writ proceedings pending resolution of the Securities Class Action. The seventh shareholder derivative action was filed on June 22, 2022 in the United States District Court for the District of Nevada under Case No. 2:22-cv-00980. On October 17, 2022, the Court granted the parties’ stipulation to stay the case pending resolution of the Securities Class Action. The eighth shareholder derivative action was filed on August 19, 2022 in the Common Pleas Court of Hamilton County, Ohio under Case No. A 2203019. On December 12, 2022, the trial court granted the parties’ joint stipulation and order to stay the case pending consideration and final approval of the proposed settlement in the Nevada action. On October 24, 2022, the Company and the individual defendants entered into a binding term sheet to resolve all of the shareholder derivative actions described above. The settlement will be subject to final documentation, public notice and court approval by the State District Court of Nevada. The parties have agreed to promptly request that the courts in such actions stay all proceedings and/or enter an order enjoining all other stockholders of the Company from commencing, instituting, or prosecuting any similar claims. Although these actions purport to seek recovery on behalf of the Company, the Company will incur certain expenses due to indemnification and advancement obligations with respect to the defendants. The Company understands that defendants believe these actions are without merit and intends to support them as they pursue all legal avenues to defend themselves fully. Products Liability Litigation On September 20, 2022, Reinier Angulo filed a Complaint in the United States District Court for the Southern District of Florida (Civil Action No. 1:22-cv-22489-CMA) against the Company in connection with injuries suffered while operating a W-62 truck on February 5, 2020, claiming strict liability, negligence, and negligent failure to warn. The Company does not believe it manufactured the W-62 that is the subject to the Complaint. On October 27, 2022, the Company timely filed a motion to dismiss for lack of personal jurisdiction, advising the court and the Plaintiff that the Company had insufficient contacts with the state of Florida to justify the exercise of jurisdiction in Florida and was not the manufacturer of the subject W-62 truck. On October 31, the Court denied the Company’s motion to dismiss, without prejudice, and granted the Plaintiff leave to file an amended complaint. The Plaintiff filed an amended complaint on November 1, 2022. On November 15, 2022, the Plaintiff voluntarily dismissed the Company from the lawsuit. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS The Company has evaluated subsequent events for potential recognition and disclosures through the date the accompanying consolidated financial statements were filed. |
SUMMARY OF BUSINESS AND SIGNI_2
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Overview | Overview We are an American technology company with a vision to pioneer the transition to zero-emission commercial vehicles. Our primary focus is to provide sustainable and cost-effective solutions to the commercial transportation sector. We design and manufacture all-electric delivery trucks and drone systems, including the technology that optimizes the way these vehicles operate. We are focused on our core competency of bringing our electric delivery vehicle platforms to market. Liquidity and Capital Resources The Company had revenues of $5.0 million for the period ended December 31, 2022. As of December 31, 2022, the Company had $99.3 million in cash and cash equivalents, positive working capital of $74.9 million, accumulated deficit of $627.6 million, and during the year ended December 31, 2022 incurred a net loss of $117.3 million and used $93.8 million of cash in operating activities. As the Company has made significant progress executing on its revised strategic product roadmap for our electric vehicle delivery offerings, we expect to generate additional sales revenue within the next twelve months which will help support our operations. Additionally, Management plans to reduce its discretionary spend related to non-contracted capital expenditures and other expenses, if necessary. These plans alleviated the substantial doubt about the Company’s ability to continue as a going concern caused by the significant losses from operations and cash used in operating activities. However, if the expected sales are not generated and Management is not able to control capital expenditures and other expenses, we will continue to incur substantial operating losses and negative cash flows from operations. There can be no assurance that the Company will be successful in implementing its plans or acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years. The Company’s future liquidity and working capital requirements will depend on numerous factors, including, the ability to generate sales, the ability to control capital expenditures and other expenses, and the ability to raise funds via private or public placement of our equity securities. The Company intends to raise additional funds through issuance of equity, including through the At-The-Market Program. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future vehicle program production and sales. Failure to obtain additional equity financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, any equity financings would likely have a dilutive effect on the holdings of the Company’s existing stockholders. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) and reflect our accounts and operations and those of our wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts used for, but not limited to, collectability of accounts receivable, inventory valuation, warranties, leases and related disclosures in the accompanying notes. We have assessed the impact of the COVID-19 pandemic and are not aware of any specific events or circumstances that required an update to our estimates and assumptions or materially affected the carrying value of our assets or liabilities as of the date of this Annual Report on Form 10-K. These estimates may change as new events occur and additional information is obtained. Actual results could differ from these estimates under different assumptions and conditions. |
Cash and Cash Equivalents | Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less at the date of acquisition are considered cash equivalents. |
Accounts Receivable and Allowance for Credit Loss | Accounts Receivable and Allowance for Credit Loss Accounts receivable primarily include amounts related to sales of our products and services rendered. We provide an allowance against accounts receivable for the amount we expect to be uncollectible. We write-off accounts receivable against the allowance when they are deemed uncollectible. |
Inventory Valuation | Inventory Valuation Inventories are stated at the lower of cost or net realizable value. We write-down inventory for any excess or obsolete inventories or when we believe the net realizable value of inventories is less than the carrying value. We review our inventory to determine whether its carrying value exceeds the net amount realizable upon the ultimate sale of the inventory. This requires us to determine the estimated selling price of our inventory based on market conditions. Once inventory is written-down, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Should our estimates of future inventory usage or selling prices change, additional and potentially material increases to this reserve may be required. A small change in our estimates may result in a material charge to our reported financial results. |
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net Property, plant and equipment, net, including leasehold improvements, are recognized at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, as follows: Buildings and improvements 15 - 39 years Land improvements 15 years Equipment and vehicles 3 - 7 years Tooling 5 years Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or the term of the related leases. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, such as property, plant, and equipment are reviewed for potential impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. |
Valuation of Investment | Valuation of Investment As permitted under ASC 321, Equity Securities, the Company has elected to account for its investment in Tropos, an equity investment without a readily determinable fair value, at its cost minus impairment, which there is none. In accordance, with ASC 321, the Company evaluates the investment for impairment each period and reassess if the equity security does not have a readily determinable fair value. |
Warranty Liability | Warranty Liability We generally offer warranty coverage for our products. We accrue warranty related costs under standard warranty terms and for certain claims outside the contractual obligation period that we choose to pay as accommodations to our customers. Provisions for estimated assurance warranties are recorded at the time of sale and are periodically adjusted to reflect actual experience. The amount of warranty liability accrued reflects management’s best estimate of the expected future cost of honoring Company obligations under the warranty plans. Historically, the cost of fulfilling the Company’s warranty obligations has principally involved replacement parts, towing and transportation costs, labor and sometimes travel for any field retrofit campaigns. The Company’s estimates are based on historical experience, the extent of pre-production testing, the number of units involved and the extent of features/components included in product models. The Company reviews actual warranty claims experience to determine if there are systemic defects that would require a field campaign. Although we believe the estimates and judgments discussed herein are reasonable, actual results could differ and we may be exposed to increases or decreases in our warranty liability accrual that could be material. |
Fair Value Option | Fair Value Option As permitted under ASC 825, Financial Instruments , the Company elected the fair value option to account for its convertible notes. In accordance with ASC 825, the Company recorded its convertible notes at fair value with changes in fair value recorded in Interest Expense in the Consolidated Statement of Operations. As a result of applying the fair value option, direct costs and fees related to the convertible notes were recognized in earnings as incurred and not deferred. During 2022, the Company exchanged the aggregate principal of the 2024 Notes for shares of the Company’s common stock, resulting in a contractual principal balance of the 2024 Notes as of December 31, 2022 of zero. Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1 — Quoted market prices in active markets for identical assets or liabilities. Level 2 — Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3 — Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets. |
Income Taxes | Income Taxes We file a consolidated U.S. federal income tax return and separate state and local income tax returns. We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax benefit carryforwards. Deferred tax assets and liabilities at the end of each period are determined using enacted tax rates. A valuation allowance is established or maintained when, based on currently available information, it is more likely than not all or a portion of a deferred tax asset will not be realized. We recognize the tax benefit from an uncertain tax position claimed or expected to be claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the Consolidated Financial Statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. |
Revenue Recognition | Revenue Recognition Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs when we transfer control of our vehicles, parts, or accessories, or provide services. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. For the majority of sales, this occurs when products are shipped from our manufacturing facility. At the time of revenue recognition, we reduce the transaction price and record a sales return reserve against revenue for estimated variable considerations related to future product returns. Such estimates are based on an analysis of known pending returns and historical experience. We adjust our estimate of revenue at the earlier of when the value of consideration we expect to receive changes or when the consideration becomes fixed. Sales and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expense. The expected costs associated with our base warranties and field service actions are recognized as expense when the products are sold. We do not have any material significant payment terms as payment is received at or shortly after the point of sale. Revenue related to extended service contracts are recognized over the term of the agreement in proportion to the costs we expect to incur in satisfying the contract obligations. We have elected to recognize the cost for freight and shipping when control over vehicles, parts, or accessories have transferred to the customer as an expense in Cost of Sales. Deferred revenue is related to any non-refundable amounts that are collected from customers related to our unsatisfied assembly services. Deferred revenue is recognized as revenue as the performance obligations are satisfied. Deferred revenue is equivalent to the total service fee allocated to the assembly service performance obligations that are unsatisfied as of the balance sheet date. Cost of Sales Cost of sales include direct parts, material and labor costs, manufacturing overhead, including depreciation costs of tooling and machinery, shipping and logistics costs, and reserves for estimated warranty expenses. Cost of sales also includes charges to write down the carrying value of our inventory when it exceeds its estimated net realizable value and to provide for obsolete and on-hand inventory in excess of forecasted demand. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Marketing, Promotional and Advertising Costs |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is comprised of adjustments to the fair value of our convertible notes due to changes in credit risk. |
Stock-Based Compensation | Stock-Based Compensation We recognize compensation expense for costs related to all stock-based arrangements, including stock options, restricted stock awards (“RSA”) and performance-based share units (“PBSUs).” The fair value of stock option awards with only service conditions is estimated on the grant or offering date using the Black-Scholes option-pricing model. The fair value of RSAs is measured on the grant date based on the closing fair market value of our common stock. The fair value of PBSUs is estimated using a Monte-Carlo simulation model. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period, net of actual forfeitures in the period. As we issue additional employee stock-based awards over time and as we incorporate additional market data related to our common stock, we may calculate significantly different volatilities and expected lives, which could materially impact the valuation of our stock-based awards and the stock-based compensation expense that we will recognize in future periods. Stock- |
Net Income (Loss) per Share of Common Stock | Net Income (Loss) per Share of Common Stock Basic income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted-average shares outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding stock-based awards and warrants using the treasury stock method, and convertible notes using the if-converted method, are included when calculating the diluted net loss per share of common stock when their effect is dilutive. |
Accounting Standards and Pronouncements Recently Adopted and Accounting Standards and Pronouncements Not Yet Adopted | Accounting Standards and Pronouncements Recently Adopted There are no accounting standards or pronouncements recently adopted impacting the Company. Accounting Standards and Pronouncements Not Yet Adopted There are no accounting standards or pronouncements not yet adopted impacting the Company. |
SUMMARY OF BUSINESS AND SIGNI_3
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Estimated Useful Lives | Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets, as follows: Buildings and improvements 15 - 39 years Land improvements 15 years Equipment and vehicles 3 - 7 years Tooling 5 years |
Schedule of Warranty Liability Accrual | Activity for the Company's warranty liability accrual is as follows: December 31, 2022 2021 Balance, beginning of year $ 4,583,916 $ 5,400,000 Accrual for warranty (1) (987,701) 1,045,578 Warranty costs incurred (1,388,541) (1,861,662) Balance, end of year $ 2,207,674 $ 4,583,916 (1) The decrease to the warranty liability accrual in 2022 primary relates to a decreased volume of vehicles covered under warranty as well as a lower liability per vehicle as compared to 2021. |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the reconciliation of net (loss) income and reconciliation of basic and diluted weighted average shares outstanding used in computing diluted net loss per share of common stock: Year Ended December 31, 2022 2021 2020 Net (loss) income $ (117,274,218) $ (401,344,813) $ 69,776,499 Basic weighted average shares outstanding 158,576,305 128,676,131 92,871,936 Dilutive effect of options and warrants — — 1,410,605 Dilutive effect of convertible notes — — 5,667,327 Diluted weighted average shares outstanding 158,576,305 128,676,131 99,949,868 |
Schedule of Computation of Diluted Net (Loss) Income Per Share of Common Stock | The following table presents the potentially dilutive shares that were excluded from the computation of diluted net (loss) income per share of common stock, because their effect was anti-dilutive: Year Ended December 31, 2022 2021 2020 Stock-based awards and warrants 6,159,285 3,152,059 1,041,531 Convertible notes — 779,258 — |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Our inventory consisted of the following: December 31, 2022 2021 Raw materials $ 42,500,878 $ 66,238,615 Work in process 25,210,131 20,826,644 Finished goods 301,645 — 68,012,654 87,065,259 Less: inventory reserve (59,162,512) (76,997,892) Inventory, net $ 8,850,142 $ 10,067,367 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following: December 31, 2022 2021 Prepaid purchases $ 34,611,649 $ 24,101,695 Less: prepaid purchases reserve (22,163,338) (23,912,025) Prepaid purchases, net 12,448,311 189,670 Prepaid insurance 1,198,769 2,205,608 Right of return asset — 1,620,000 Other 505,401 342,551 Prepaid expenses and other current assets $ 14,152,481 $ 4,357,829 |
INVESTMENT IN LORDSTOWN MOTOR_2
INVESTMENT IN LORDSTOWN MOTORS CORP. (“LMC”) (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investments, All Other Investments [Abstract] | |
Schedule of Reconciliation of Investment in LMC | The following table sets forth a reconciliation of our investment in LMC: December 31, 2022 2021 Balance, beginning of year $ — $ 330,556,744 Change in fair value — (225,429,997) Sales of investment — (105,126,747) Balance, end of year $ — $ — |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Sales Activity | The following table provides a summary of sales activity: Years Ended December 31, 2022 2021 2020 Sales, net of returns and allowances $ 4,385,975 $ (994,187) $ 1,357,157 Other sales 637,097 142,265 35,362 Total sales, net of returns and allowances $ 5,023,072 $ (851,922) $ 1,392,519 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property, plant and equipment, net consists of the following: December 31, 2022 2021 Land and improvements $ 875,182 $ 861,175 Buildings and improvements 8,167,736 6,396,800 Equipment and vehicles 8,183,089 3,603,655 Tooling 689,286 1,467,712 Construction in progress 9,027,020 927,537 26,942,313 13,256,879 Less: accumulated depreciation (5,441,218) (5,359,072) Property, plant and equipment, net $ 21,501,095 $ 7,897,807 |
ACCRUED LIABILITIES AND OTHER_2
ACCRUED LIABILITIES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities and Other Current Liabilities | Accrued liabilities and other current liabilities consisted of the following: December 31, 2022 2021 Legal reserve (Note 17) $ 35,000,000 $ — Accrued commissions — 4,000,000 Compensation and related costs 4,967,187 4,030,085 Refund liability (Note 6) — 2,410,000 Accrued interest — 232,222 Other 4,584,310 4,080,520 Accrued liabilities and other current liabilities $ 44,551,497 $ 14,752,827 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Fair Value, Liabilities Measured on a Recurring Basis | A reconciliation of the fair value of the convertible notes is as follows: December 31, 2022 2021 Fair value of convertible notes, beginning of year $ 24,705,000 $ 197,700,000 Change in fair value of convertible notes (1) 367,357 (27,600,000) Change in fair value of convertible notes attributable to credit risk (2) — 10,200,000 Fair value of convertible notes exchanged for common stock (25,072,357) (155,595,000) Fair value of convertible notes, end of year $ — $ 24,705,000 ( 1) The Company recognizes changes in fair value of convertible notes for common stock in Interest Expense, Net (2) The Company recognizes changes in fair value of convertible notes attributable to credit risk in Other Comprehensive Loss. During the years ended December 31, 2022 and 2021, the Company reclassified zero and $8.8 million, respectively, of the changes in fair value of convertible notes attributable to credit risk previously recognized in Other Comprehensive Loss to Interest Expense (Income). The net amount of changes in fair value of convertible notes attributable to credit risk recognized in Other Comprehensive Income (Loss) for the years ended December 31, 2022 and 2021 was approximately $1.4 million and $1.4 million loss, respectively. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of Lease, Cost | Lease expense for operating leases is recognized on a straight-line basis over the lease term as cost of sales or operating expenses depending on the nature of the lease right-of-use asset. Years Ended December 31, 2022 2021 2020 Short-term lease expense $ 589,969 $ 599,129 $ 145,585 Operating lease expense 1,782,332 58,224 — Total lease expense $ 2,372,301 $ 657,353 $ 145,585 Lease right-of-use assets consisted of the following: December 31, 2022 2021 Operating leases $ 5,884,865 $ 1,538,852 Finance leases 5,821,938 — Total lease right-of-use assets $ 11,706,803 $ 1,538,852 Other information related to leases is as follows: As of December 31, 2022 2021 2020 Weighted-average remaining lease term Operating leases 6.0 years 4.0 years N/A Financing leases 2.0 years N/A N/A Weighted-average interest rate Operating leases 10.0 % 10.0 % N/A Financing leases 10.0 % N/A N/A |
Schedule of Cash Flow, Supplemental Disclosures | Supplemental cash flow information related to leases where we are the lessee is as follows: Years Ended December 31, 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 770,642 $ 657,353 $ 145,585 Operating cash outflows from finance leases (interest payments) 369,976 — — Financing cash outflows from finance leases 857,516 — — Leased assets obtained in exchange for finance lease liabilities 6,022,694 — — Leased assets obtained in exchange for operating lease liabilities 5,631,558 1,577,774 — |
Schedule of Maturities of our Operating Lease Liabilities | As of December 31, 2022, the maturities of our operating and finance lease liabilities (excluding short-term leases) are as follows: Operating Finance 2023 $ 1,356,374 $ 879,444 2024 1,589,805 2,752,862 2025 1,458,783 — 2026 1,503,068 — 2027 1,316,387 — Thereafter 2,295,179 — Total minimum lease payments 9,519,596 3,632,306 Less: Interest 2,541,700 485,108 Present value of lease obligations 6,977,896 3,147,198 Less: Current portion 686,018 599,014 Long-term portion of lease obligations $ 6,291,878 $ 2,548,184 |
Schedule of Maturities of our Finance Lease Liabilities | As of December 31, 2022, the maturities of our operating and finance lease liabilities (excluding short-term leases) are as follows: Operating Finance 2023 $ 1,356,374 $ 879,444 2024 1,589,805 2,752,862 2025 1,458,783 — 2026 1,503,068 — 2027 1,316,387 — Thereafter 2,295,179 — Total minimum lease payments 9,519,596 3,632,306 Less: Interest 2,541,700 485,108 Present value of lease obligations 6,977,896 3,147,198 Less: Current portion 686,018 599,014 Long-term portion of lease obligations $ 6,291,878 $ 2,548,184 |
Lease liabilities | Lease liabilities consisted of the following: December 31, 2022 2021 Operating leases $ 6,977,896 $ 1,554,767 Finance leases 3,147,198 — Total lease liabilities 10,125,094 1,554,767 Less: current portion (1,285,032) (363,714) Long-term portion $ 8,840,062 $ 1,191,053 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule Of (Benefit) Provision For Income Taxes | The components of the (benefit) provision for income taxes are as follows: Years Ended December 31, 2022 2021 2020 Current: Federal $ — $ — $ — State and Local — (13,159) — Total Current — (13,159) — Deferred: Federal — (21,864,569) 21,864,569 State and Local — 30,639 (30,639) Total Deferred — (21,833,930) 21,833,930 Total (benefit) provision for income taxes $ — $ (21,847,089) $ 21,833,930 |
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation of taxes at the federal statutory rate to our provision for income taxes was as follows: Years Ended December 31, 2022 2021 2020 Federal tax benefit at statutory rates 21.0 % 21.0 % 21.0 % State and local tax at statutory rates — % 0.1 % (0.1) % Fair value adjustments on warrant liability — % — % 37.1 % Fair value adjustments on convertible notes (0.3) % (0.4) % 2.8 % Tax gain on sale of investment — % (0.6) % — % Stock-based compensation deductions (1.7) % 0.2 % (6.6) % Research and development credits 0.3 % 1.2 % — % Other permanent differences and credits (0.5) % (0.2) % — % Change in valuation allowance (18.8) % (16.1) % (30.4) % Total tax benefit — % 5.2 % 23.8 % |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities are as follows: December 31 2022 2021 Deferred Tax (Liabilities) Assets: Accrued expenses and reserves $ 4,528,418 $ 590,340 Warranty reserve 470,342 976,956 Inventory and prepaid purchase reserves 17,326,397 21,506,626 Non-qualified stock options (328,410) (160,921) Property, plant and equipment (1,955,842) 54,556 Research and experimental costs 4,435,891 — Lease right-of-use assets (2,515,792) — Lease liability 2,175,883 — Issuance fees on convertible notes 343,886 687,772 Federal tax credits 5,099,750 4,873,099 Net operating losses 66,112,929 45,143,740 Total Deferred Tax (Liabilities) Assets 95,693,452 73,672,168 Valuation Allowance (95,693,452) (73,672,168) Total Deferred Tax Assets (Liabilities), net of valuation allowance $ — $ — |
Schedule of Unrecognized Tax Benefits Roll Forward | The following table presents a reconciliation of unrecognized tax benefits: 2022 2021 Unrecognized tax benefits - January 1 $ 805,392 $ 1,163,282 Gross increases - tax positions in prior period — — Gross decreases - tax positions in prior period — (357,890) Gross increases - tax positions in current period — — Settlement — — Lapse of statute of limitations — — Unrecognized tax benefits - December 31 $ 805,392 $ 805,392 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement. Assets and liabilities measured at fair value and fair value measurement level were as follows: December 31, 2022 December 31, 2021 Fair Value Level 1 Level 2 Level 3 Fair Value Level 1 Level 2 Level 3 Liabilities Convertible notes $ — $ — $ — $ — $ 24,705,000 $ — $ — $ 24,705,000 Total liabilities at fair value $ — $ — $ — $ — $ 24,705,000 $ — $ — $ 24,705,000 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Share-based Compensation Arrangements | The following table summarizes stock-based compensation expense: Years Ended December 31, 2022 2021 2020 Stock options $ 978,696 $ 526,125 $ 792,055 Restricted stock awards 7,767,114 4,227,252 3,228,750 Performance-based restricted stock 2,714,401 190,003 — Total stock-based compensation expense $ 11,460,211 $ 4,943,380 $ 4,020,805 |
Schedule of Share-based Compensation, Stock Options | A summary of stock option activity for the year ended December 31, 2022 is as follows: Number of Options Weighted Weighted Weighted Options outstanding as of December 31, 2021 495,836 $ 6.8 — 6.5 Granted — — — — Exercised — — — — Forfeited (69,710) 1.5 — — Expired (2,500) 22.3 — — Options outstanding as of December 31, 2022 423,626 7.6 — 6.7 Options exercisable as of December 31, 2022 218,006 $ 5.5 — 4.6 |
Schedule of Restricted Stock | A summary of restricted stock activity for the year ended December 31, 2022 is as follows: Number of Unvested Shares Weighted Average Grant Date Fair Value per Share Unvested restricted stock as of December 31, 2021 1,617,192 $ 9.3 Granted 2,959,966 3.1 Vested (883,908) 6.8 Forfeited (167,919) 6.3 Unvested restricted stock as of December 31, 2022 3,525,331 $ 4.9 |
Schedule of Nonvested Performance-Based Units Activity | A summary of the activity for PSU awards with total shareholder return performance objectives for the year ended December 31, 2022 is as follows: Number of Unvested Shares Weighted Average Grant Date Fair Value per Share Balance, December 31, 2021 306,197 $ 11.79 Granted 454,832 11.79 Forfeited (22,278) 11.79 Balance, December 31, 2022 738,751 $ 11.79 A summary of the PSU awards with cumulative adjusted EBITDA targets for the year ended December 31, 2022 is as follows: Number of Unvested Shares Balance, December 31, 2021 — Granted 454,822 Forfeited (22,276) Balance, December 31, 2022 432,546 |
SUMMARY OF BUSINESS AND SIGNI_4
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES - Narrative (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Sales, net of returns and allowances | $ 5,023,072 | $ (851,922) | $ 1,392,519 | |
Cash, cash equivalents and restricted cash | 99,276,301 | 201,647,394 | 241,229,067 | $ 24,868,416 |
Working capital | 74,900,000 | |||
Accumulated deficit | 627,649,062 | 510,374,844 | ||
Loss from operations | 117,274,218 | 401,344,813 | (69,776,499) | |
Cash used in operating activities | $ 93,818,664 | $ 132,577,103 | $ 70,278,949 |
SUMMARY OF BUSINESS AND SIGNI_5
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES - Estimated Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Buildings and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 15 years |
Buildings and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 39 years |
Land improvements | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 15 years |
Equipment and vehicles | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Equipment and vehicles | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 7 years |
Tooling | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
SUMMARY OF BUSINESS AND SIGNI_6
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES - Warranty Liability Accrual (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Balance, beginning of year | $ 4,583,916 | $ 5,400,000 |
Accrual for warranty | (987,701) | 1,045,578 |
Warranty costs incurred | (1,388,541) | (1,861,662) |
Balance, end of year | $ 2,207,674 | $ 4,583,916 |
SUMMARY OF BUSINESS AND SIGNI_7
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES - Fair Value Option (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Convertible notes | |||
Fair Value, Option, Quantitative Disclosures [Line Items] | |||
Fair value of convertible notes | $ 0 | $ 24,705,000 | $ 197,700,000 |
SUMMARY OF BUSINESS AND SIGNI_8
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES - Basic and Diluted Earnings Per Share (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Net (loss) income | $ (117,274,218) | $ (401,344,813) | $ 69,776,499 |
Basic weighted average shares outstanding (in shares) | 158,576,305 | 128,676,131 | 92,871,936 |
Dilutive effect of options and warrants (in shares) | 0 | 0 | 1,410,605 |
Dilutive effect of convertible notes (in shares) | 0 | 0 | 5,667,327 |
Diluted weighted average shares outstanding (in shares) | 158,576,305 | 128,676,131 | 99,949,868 |
SUMMARY OF BUSINESS AND SIGNI_9
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES - Computation of Diluted Net Loss per Share of Common Stock (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-based awards and warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 6,159,285 | 3,152,059 | 1,041,531 |
Convertible notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 779,258 | 0 |
INVENTORY - Schedule of Invento
INVENTORY - Schedule of Inventory (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 42,500,878 | $ 66,238,615 |
Work in process | 25,210,131 | 20,826,644 |
Finished goods | 301,645 | 0 |
Gross inventory | 68,012,654 | 87,065,259 |
Less: inventory reserve | (59,162,512) | (76,997,892) |
Inventory, net | $ 8,850,142 | $ 10,067,367 |
INVENTORY - Narrative (Details)
INVENTORY - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Inventory [Line Items] | |||
Other income | $ 13,646,528 | $ (225,432,884) | $ 323,111,944 |
C100 Vehicle Platform | |||
Inventory [Line Items] | |||
Other income | 13,400,000 | ||
C100 Vehicle Platform | Former Executive/VP | Affiliated Entity | Commission | |||
Inventory [Line Items] | |||
Expense from transaction with related party | $ 500,000 |
CONTRACT MANUFACTURING SERVIC_2
CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS (Details) | 3 Months Ended | 12 Months Ended | 36 Months Ended | |||||||
Dec. 31, 2022 USD ($) | Aug. 23, 2022 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) | Dec. 31, 2025 vehicle | Dec. 31, 2024 vehicle | Dec. 31, 2023 vehicle | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2025 vehicle | |
Short-Term Debt [Line Items] | ||||||||||
Payment to acquire preferred stock | $ 0 | $ 0 | $ 25,000,000 | |||||||
Affiliated Entity | Tropos Trechnologies, Inc. | Deposit For Future Services | ||||||||||
Short-Term Debt [Line Items] | ||||||||||
Amount of transaction | $ 500,000 | $ 5,000,000 | $ 5,000,000 | |||||||
Affiliated Entity | Tropos Trechnologies, Inc. | Additional Deposit For Future Services | ||||||||||
Short-Term Debt [Line Items] | ||||||||||
Amount of transaction | 500,000 | |||||||||
Affiliated Entity | Tropos Trechnologies, Inc. | Series B Preferred Stock | ||||||||||
Short-Term Debt [Line Items] | ||||||||||
Shares repurchased during period (in shares) | shares | 605,811 | |||||||||
Option to repurchase shares (in shares) | shares | 424,068 | |||||||||
Option to repurchase additional exercise price (In dollars per share) | $ / shares | $ 16.51 | |||||||||
Payment to acquire preferred stock | $ 5,000,000 | |||||||||
Affiliated Entity | Forecast | ||||||||||
Short-Term Debt [Line Items] | ||||||||||
Agreement term, minimum quantity | vehicle | 250 | 2,000 | 2,000 | 4,250 | ||||||
Tropos Trechnologies, Inc. | ||||||||||
Short-Term Debt [Line Items] | ||||||||||
Minority ownership | $ 10,000,000 | $ 10,000,000 | $ 10,000,000 |
PREPAID EXPENSES AND OTHER CU_3
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid purchases | $ 34,611,649 | $ 24,101,695 |
Less: prepaid purchases reserve | (22,163,338) | (23,912,025) |
Prepaid purchases, net | 12,448,311 | 189,670 |
Prepaid insurance | 1,198,769 | 2,205,608 |
Right of return asset | 0 | 1,620,000 |
Other | 505,401 | 342,551 |
Prepaid expenses and other current assets | $ 14,152,481 | $ 4,357,829 |
PREPAID EXPENSES AND OTHER CU_4
PREPAID EXPENSES AND OTHER CURRENT ASSETS - Narrative (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Less: prepaid purchases reserve | $ 22,163,338 | $ 23,912,025 |
INVESTMENT IN LORDSTOWN MOTOR_3
INVESTMENT IN LORDSTOWN MOTORS CORP. (“LMC”) (Details) $ / shares in Units, $ in Millions | 3 Months Ended | ||
Nov. 07, 2019 order | Sep. 30, 2021 USD ($) $ / shares | Dec. 31, 2022 shares | |
Lordstown Motors Corp | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Ownership percentage | 10% | ||
Lordstown Motors Corp | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Royalty advance on debt and equity | 1% | ||
Royalty on sales | 1% | ||
Number of vehicles sold | order | 200,000 | ||
Common Class A | Lordstown Motors Corp | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Sale of stock (in usd per share) | $ / shares | $ 6.42 | ||
Proceeds | $ 105.1 | ||
Loss on sale | $ 76.5 | ||
Common Class A | Lordstown Motors Corp | |||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
Investment owned (in shares) | shares | 0 |
INVESTMENT IN LORDSTOWN MOTOR_4
INVESTMENT IN LORDSTOWN MOTORS CORP. (“LMC”) - Rollforward (Details) - Lordstown Motors Corp - Collaborative Arrangement, Transaction with Party to Collaborative Arrangement - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity Method Investment [Roll Forward] | ||
Balance, beginning of year | $ 0 | $ 330,556,744 |
Change in fair value | 0 | (225,429,997) |
Sales of investment | 0 | (105,126,747) |
Balance, end of year | $ 0 | $ 0 |
REVENUE - Schedule of Sales Act
REVENUE - Schedule of Sales Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Sales, net of returns and allowances | $ 5,023,072 | $ (851,922) | $ 1,392,519 |
Sales, net of returns and allowances | |||
Disaggregation of Revenue [Line Items] | |||
Sales, net of returns and allowances | 4,385,975 | (994,187) | 1,357,157 |
Other sales | |||
Disaggregation of Revenue [Line Items] | |||
Sales, net of returns and allowances | $ 637,097 | $ 142,265 | $ 35,362 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |||
Refund liability | $ 0 | $ 2,400,000 | |
Asset recovery | 0 | $ 1,600,000 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Deferred revenue | 5,400,000 | 0 | |
Negative sales | (5,023,072) | $ 851,922 | $ (1,392,519) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |||
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |||
Revenue, remaining performance obligation, amount | $ 3,400,000 | ||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 26,942,313 | $ 13,256,879 | |
Less: accumulated depreciation | (5,441,218) | (5,359,072) | |
Property, plant and equipment, net | 21,501,095 | 7,897,807 | |
Depreciation | 1,900,000 | 1,900,000 | $ 800,000 |
Land and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 875,182 | 861,175 | |
Buildings and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 8,167,736 | 6,396,800 | |
Equipment and vehicles | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 8,183,089 | 3,603,655 | |
Tooling | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 689,286 | 1,467,712 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 9,027,020 | $ 927,537 |
ACCRUED LIABILITIES AND OTHER -
ACCRUED LIABILITIES AND OTHER - Accrued Liabilities And Other Current Liabilities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Legal reserve (Note 17) | $ 35,000,000 | $ 0 |
Accrued commissions | 0 | 4,000,000 |
Compensation and related costs | 4,967,187 | 4,030,085 |
Refund liability (Note 6) | 0 | 2,410,000 |
Accrued interest | 0 | 232,222 |
Other | 4,584,310 | 4,080,520 |
Accrued liabilities and other current liabilities | $ 44,551,497 | $ 14,752,827 |
DEBT - Fair Value Of The Conver
DEBT - Fair Value Of The Convertible Notes (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Fair value, liability, recurring basis, unobservable input reconciliation, liability, gain (loss), statement of other comprehensive income or comprehensive income [extensible enumeration] | Change in fair value of convertible notes attributable to credit spread | ||
Fair value, liability, recurring basis, unobservable input reconciliation, gain (loss), statement of income or comprehensive income [extensible enumeration] | Interest Income (Expense), Net | Interest Income (Expense), Net | |
Convertible notes | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Fair value of convertible notes, beginning of year | $ 24,705,000 | $ 197,700,000 | |
Change in fair value of convertible notes | 367,357 | (27,600,000) | |
Change in fair value of convertible notes attributable to credit risk | $ 8,800,000 | 0 | 10,200,000 |
Fair value of convertible notes exchanged for common stock | (25,072,357) | (155,595,000) | |
Fair value of convertible notes, end of year | $ 24,705,000 | 0 | 24,705,000 |
Reclassification our of AOCI | 0 | 8,800,000 | |
Fair value gain (loss) after reclassification | $ 1,400,000 | $ (1,400,000) |
DEBT - Additional Information (
DEBT - Additional Information (Details) - USD ($) $ / shares in Units, shares in Millions | 3 Months Ended | 12 Months Ended | ||||||
Apr. 21, 2022 | Oct. 14, 2020 | Apr. 14, 2020 | Mar. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of convertible notes | $ 0 | $ 0 | $ 262,374,788 | |||||
Loss on extinguishment of debt | 0 | (1,411,000) | 0 | |||||
Accrued interest | $ 232,222 | 0 | 232,222 | |||||
Paycheck Protection Program Term Note | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 1% | |||||||
CARES Act, proceeds from loans payable | $ 1,400,000 | 1,400,000 | ||||||
Convertible notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Change in fair value of convertible notes attributable to credit risk | 8,800,000 | 0 | 10,200,000 | |||||
Change in fair value of convertible notes | (367,357) | 27,600,000 | ||||||
Fair value of convertible notes | 24,705,000 | 0 | $ 24,705,000 | $ 197,700,000 | ||||
Convertible notes | Senior Secured Convertible Notes Due 2024 | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 4% | |||||||
Face amount | $ 200,000,000 | |||||||
Conversion price (in usd per share) | $ 35.29 | |||||||
Payments of debt issuance costs | $ 6,600,000 | |||||||
Proceeds from issuance of convertible notes | $ 193,400,000 | |||||||
Debt conversion, amount | $ 27,500,000 | $ 172,500,000 | ||||||
Convertible debt, shares issued on conversion (in shares) | 7.8 | 27.7 | ||||||
Loss on extinguishment of debt | $ 34,900,000 | |||||||
Long-term debt, gross | $ 29,400,000 | |||||||
Redemption percentage | 107% | |||||||
Accrued interest | $ 300,000 | |||||||
Loss of VWAPS | $ 1,800,000 | |||||||
Change in fair value of convertible notes | $ 400,000 | |||||||
Convertible notes | Senior Secured Convertible Notes Due 2024 | Reclassification out of Accumulated Other Comprehensive Income | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest expense, net | $ 1,400,000 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Dec. 31, 2022 |
Leases [Abstract] | |
Renewal term (up to) | 5 years |
LEASES - Lease Expense For Oper
LEASES - Lease Expense For Operating Leases (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Short-term lease expense | $ 589,969 | $ 599,129 | $ 145,585 |
Operating lease expense | 1,782,332 | 58,224 | 0 |
Total lease expense | $ 2,372,301 | $ 657,353 | $ 145,585 |
LEASES - Right of Use Assets -
LEASES - Right of Use Assets - (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating leases | $ 5,884,865 | $ 1,538,852 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total lease right-of-use assets | Total lease right-of-use assets |
Finance leases | $ 5,821,938 | $ 0 |
Total lease right-of-use assets | $ 11,706,803 | $ 1,538,852 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total lease right-of-use assets | Total lease right-of-use assets |
LEASES - Lease Liabilities - (D
LEASES - Lease Liabilities - (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Operating leases | $ 6,977,896 | $ 1,554,767 |
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Total lease liabilities | Total lease liabilities |
Finance leases | $ 3,147,198 | $ 0 |
Total lease liabilities | 10,125,094 | 1,554,767 |
Less: current portion | (1,285,032) | (363,714) |
Long-term portion | $ 8,840,062 | $ 1,191,053 |
LEASES - Other Information (Det
LEASES - Other Information (Details) | Dec. 31, 2022 | Dec. 31, 2021 |
Weighted-average remaining lease term | ||
Operating leases | 6 years | 4 years |
Financing leases | 2 years | |
Weighted-average interest rate | ||
Operating leases | 10% | 10% |
Financing leases | 10% |
LEASES - Supplemental cash flow
LEASES - Supplemental cash flow (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash outflows from operating leases | $ 770,642 | $ 657,353 | $ 145,585 |
Operating cash outflows from finance leases (interest payments) | 369,976 | 0 | 0 |
Financing cash outflows from finance leases | 857,516 | 0 | 0 |
Leased assets obtained in exchange for finance lease liabilities | 6,022,694 | 0 | 0 |
Leased assets obtained in exchange for operating lease liabilities | $ 5,631,558 | $ 1,577,774 | $ 0 |
LEASES - Maturities of our Oper
LEASES - Maturities of our Operating and Finance Lease (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Operating Leases | ||
2023 | $ 1,356,374 | |
2024 | 1,589,805 | |
2025 | 1,458,783 | |
2026 | 1,503,068 | |
2027 | 1,316,387 | |
Thereafter | 2,295,179 | |
Total minimum lease payments | 9,519,596 | |
Less: Interest | $ 2,541,700 | |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Lease Liability Current, Long-term portion | |
Present value of lease obligations | $ 6,977,896 | $ 1,554,767 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Lease Liability Current | Lease Liability Current |
Less: Current portion | $ 686,018 | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Long-term portion | Long-term portion |
Long-term portion of lease obligations | $ 6,291,878 | |
Finance Leases | ||
2023 | 879,444 | |
2024 | 2,752,862 | |
2025 | 0 | |
2026 | 0 | |
2027 | 0 | |
Thereafter | 0 | |
Total minimum lease payments | 3,632,306 | |
Less: Interest | 485,108 | |
Present value of lease obligations | 3,147,198 | $ 0 |
Current portion of lease liability | 599,014 | |
Long-term portion of lease obligations | $ 2,548,184 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | |||
Deferred tax assets | $ 95,693,452 | $ 73,672,168 | |
Interest and penalties | 0 | 0 | |
Domestic Tax Authority | |||
Operating Loss Carryforwards [Line Items] | |||
Current tax expense | 0 | 0 | $ 0 |
Operating loss carryforward subject to expiration | 81,800,000 | 81,800,000 | |
Operating loss carryforward not subject to expiration | 228,400,000 | 128,900,000 | |
Deferred tax assets | 8,400,000 | ||
State and Local | |||
Operating Loss Carryforwards [Line Items] | |||
Operating loss carryforward subject to expiration | $ 1,000,000 | $ 900,000 |
INCOME TAXES - Components of Lo
INCOME TAXES - Components of Loss Before Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
Federal | $ 0 | $ 0 | $ 0 |
State and Local | 0 | (13,159) | 0 |
Total Current | 0 | (13,159) | 0 |
Deferred: | |||
Federal | 0 | (21,864,569) | 21,864,569 |
State and Local | 0 | 30,639 | (30,639) |
Total Deferred | 0 | (21,833,930) | 21,833,930 |
Total (benefit) provision for income taxes | $ 0 | $ (21,847,089) | $ 21,833,930 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Statutory Federal Income Tax (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Federal tax benefit at statutory rates | 21% | 21% | 21% |
State and local tax at statutory rates | 0% | 0.10% | (0.10%) |
Fair value adjustments on warrant liability | 0% | 0% | 37.10% |
Fair value adjustments on convertible notes | (0.30%) | (0.40%) | 2.80% |
Tax gain on sale of investment | 0% | (0.60%) | 0% |
Stock-based compensation deductions | (1.70%) | 0.20% | (6.60%) |
Research and development credits | 0.30% | 1.20% | 0% |
Other permanent differences and credits | (0.50%) | (0.20%) | 0% |
Change in valuation allowance | (18.80%) | (16.10%) | (30.40%) |
Total tax benefit | 0% | 5.20% | 23.80% |
INCOME TAXES - Deferred Tax Ass
INCOME TAXES - Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax (Liabilities) Assets: | ||
Accrued expenses and reserves | $ 4,528,418 | $ 590,340 |
Warranty reserve | 470,342 | 976,956 |
Inventory and prepaid purchase reserves | 17,326,397 | 21,506,626 |
Non-qualified stock options | (328,410) | (160,921) |
Property, plant and equipment | 54,556 | |
Property, plant and equipment | (1,955,842) | |
Research and experimental costs | 4,435,891 | 0 |
Lease right-of-use assets | (2,515,792) | 0 |
Lease liability | 2,175,883 | 0 |
Issuance fees on convertible notes | 343,886 | 687,772 |
Federal tax credits | 5,099,750 | 4,873,099 |
Net operating losses | 66,112,929 | 45,143,740 |
Total Deferred Tax (Liabilities) Assets | 95,693,452 | 73,672,168 |
Valuation Allowance | (95,693,452) | (73,672,168) |
Total Deferred Tax Assets (Liabilities), net of valuation allowance | $ 0 | $ 0 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits - January 1 | $ 805,392 | $ 1,163,282 |
Gross increases - tax positions in prior period | 0 | 0 |
Gross decreases - tax positions in prior period | 0 | (357,890) |
Gross increases - tax positions in current period | 0 | 0 |
Settlement | 0 | 0 |
Lapse of statute of limitations | 0 | 0 |
Unrecognized Tax Benefits - December 31 | $ 805,392 | $ 805,392 |
FAIR VALUE MEASUREMENTS- Assets
FAIR VALUE MEASUREMENTS- Assets and Liabilities Measured at Fair Value (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Liabilities | ||
Convertible notes | $ 0 | $ 24,705,000 |
Fair Value, Recurring | ||
Liabilities | ||
Convertible notes | 0 | 24,705,000 |
Total liabilities at fair value | 0 | 24,705,000 |
Level 1 | Fair Value, Recurring | ||
Liabilities | ||
Convertible notes | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Level 2 | Fair Value, Recurring | ||
Liabilities | ||
Convertible notes | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Level 3 | Fair Value, Recurring | ||
Liabilities | ||
Convertible notes | 0 | 24,705,000 |
Total liabilities at fair value | $ 0 | $ 24,705,000 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Feb. 23, 2022 | Nov. 05, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized (in shares) | 13,000,000 | |||
Shares available for issuance (in shares) | 2,000,000 | |||
Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Nonvested award, cost not yet recognized | $ 1.6 | |||
Unrecognized compensation expense, recognition period | 1 year 8 months 12 days | |||
Volatility assumption | 135% | |||
Restricted stock awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense, recognition period | 1 year 10 months 24 days | |||
Unrecognized compensation expense | $ 13.7 | |||
Granted (in usd per share) | $ 3.1 | |||
Restricted stock awards | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 6 months | |||
Restricted stock awards | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Vesting period | 3 years | |||
Performance-based restricted stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense, recognition period | 2 years | |||
Volatility assumption | 117% | |||
Unrecognized compensation expense | $ 5.9 | |||
Shares issued (in shares) | 900,000 | 300,000 | ||
Vesting percent | 50% | |||
Granted (in usd per share) | $ 11.79 | $ 11.79 | ||
Share-based compensation risk free interest rate | 0.69% | |||
Performance-based restricted stock | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of awards ultimately vest | 0% | |||
Performance-based restricted stock | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of awards ultimately vest | 200% |
STOCK-BASED COMPENSATION - Shar
STOCK-BASED COMPENSATION - Share Based Compensation Expense (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 11,460,211 | $ 4,943,380 | $ 4,020,805 |
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | 978,696 | 526,125 | 792,055 |
Restricted stock awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | 7,767,114 | 4,227,252 | 3,228,750 |
Performance-based restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 2,714,401 | $ 190,003 | $ 0 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Options | ||
Options outstanding, beginning balance (in shares) | 495,836 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Forfeited (in shares) | (69,710) | |
Expired (in shares) | (2,500) | |
Options outstanding, ending balance (in shares) | 423,626 | 495,836 |
Number of options exercisable (in shares) | 218,006 | |
Weighted Average Exercise Price | ||
Option outstanding, beginning balance (in usd per share) | $ 6.8 | |
Granted (in usd per share) | 0 | |
Exercised (in usd per share) | 0 | |
Forfeited (in usd per share) | 1.5 | |
Expired (in usd per share) | 22.3 | |
Option outstanding, ending balance (in usd per share) | 7.6 | $ 6.8 |
Weighted average exercise price per option, exercisable (in usd per share) | 5.5 | |
Weighted Average Grant Date Fair Value per Option | ||
Option outstanding, beginning balance (in usd per share) | 0 | |
Granted (in usd per share) | 0 | |
Exercised (in usd per share) | 0 | |
Forfeited (in usd per share) | 0 | |
Expired (in usd per share) | 0 | |
Option outstanding, ending balance (in usd per share) | 0 | $ 0 |
Weighted average grant date fair value per option, exercisable (in usd per share) | $ 0 | |
Weighted average remaining contractual life, outstanding | 6 years 8 months 12 days | 6 years 6 months |
Weighted average remaining contractual life, exercisable | 4 years 7 months 6 days |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Awards (Details) - Restricted stock awards | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of Unvested Shares | |
Beginning balance (in shares) | shares | 1,617,192 |
Granted (in shares) | shares | 2,959,966 |
Exercised (in shares) | shares | (883,908) |
Forfeited (in shares) | shares | (167,919) |
Ending balance (in shares) | shares | 3,525,331 |
Weighted Average Grant Date Fair Value per Share | |
Beginning balance (in usd per share) | $ / shares | $ 9.3 |
Granted (in usd per share) | $ / shares | 3.1 |
Forfeited (in usd per share) | $ / shares | 6.3 |
Vested (in usd per share) | $ / shares | 6.8 |
Ending balance (in usd per share) | $ / shares | $ 4.9 |
Stock Based Compensation - Perf
Stock Based Compensation - Performance Shares, Outstanding Activity (Details) - Performance-based restricted stock - $ / shares | 12 Months Ended | |
Feb. 23, 2022 | Dec. 31, 2022 | |
Number of Unvested Shares | ||
Beginning balance (in shares) | 306,197 | |
Granted (in shares) | 454,832 | |
Forfeited (in shares) | (22,278) | |
Ending balance (in shares) | 738,751 | |
Weighted Average Grant Date Fair Value per Share | ||
Beginning balance (in usd per share) | $ 11.79 | |
Granted (in usd per share) | $ 11.79 | 11.79 |
Forfeited (in usd per share) | 11.79 | |
Ending balance (in usd per share) | $ 11.79 |
Stock Based Compensation - EBIT
Stock Based Compensation - EBITDA PSUs (Details) - EBITDA Target Performance Share Units (EBITDA PSUs) [Member] | 12 Months Ended |
Dec. 31, 2022 shares | |
Number of Unvested Shares | |
Beginning balance (in shares) | 0 |
Granted (in shares) | 454,822 |
Forfeited (in shares) | (22,276) |
Ending balance (in shares) | 432,546 |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) $ / shares in Units, $ in Millions | Oct. 31, 2019 USD ($) shares | Dec. 31, 2022 USD ($) vote class_of_stock $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Jan. 31, 2020 USD ($) |
Class of Stock [Line Items] | ||||
Preferred stock, shares authorized (in shares) | shares | 75,000,000 | 75,000,000 | ||
Preferred stock, par value per share (in usd per share) | $ / shares | $ 0.001 | $ 0.001 | ||
Preferred stock, shares outstanding (in shares) | shares | 0 | 0 | ||
Preferred stock, shares issued (in shares) | shares | 0 | 0 | ||
Number of classes of stock | class_of_stock | 1 | |||
Number of votes per share | vote | 1 | |||
Warrants outstanding | $ 1 | $ 1 | ||
ST Engineering Hackney, Inc. | ||||
Class of Stock [Line Items] | ||||
Cash payments for acquired assets | $ 7 | |||
Share held in escrow | shares | 2,300,000 | |||
ST Engineering Hackney, Inc. | First Payment | ||||
Class of Stock [Line Items] | ||||
Liabilities payable for assets acquired | $ 1 | $ 1 | ||
Escrow deposit | 6.6 | $ 2.3 | ||
ST Engineering Hackney, Inc. | Second Payment | ||||
Class of Stock [Line Items] | ||||
Liabilities payable for assets acquired | $ 6 | |||
Production payment payable period | 45 days |
RELATED PARTIES (Details)
RELATED PARTIES (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Assured Partners LP | |||
Related Party Transaction [Line Items] | |||
Premiums paid | $ 0.3 | $ 0.2 | $ 0.1 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 12 Months Ended | ||||
Oct. 24, 2022 claim | Jan. 07, 2022 claim | Jun. 21, 2021 claim | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Loss Contingencies [Line Items] | |||||
Legal reserve (Note 17) | $ 35,000,000 | $ 0 | |||
Breach Of Fiduciary Duty | |||||
Loss Contingencies [Line Items] | |||||
Number of filed detivative actions | claim | 8 | ||||
Case No.2:21-cv-02072 | Pending Litigation | Violation Of Federal Securities Laws | |||||
Loss Contingencies [Line Items] | |||||
Settlement paid in cash | 15,000,000 | ||||
Settlement paid in stock | 20,000,000 | ||||
Insurance receivable | 15,000,000 | ||||
Legal reserve (Note 17) | 35,000,000 | ||||
Litigation settlement, expense | $ 20,000,000 | ||||
Case No. 2:21-cv-04202 | Breach Of Fiduciary Duty | |||||
Loss Contingencies [Line Items] | |||||
Number of consolidated claims | claim | 3 | ||||
Case No. A-21-833050-B | Breach Of Fiduciary Duty | |||||
Loss Contingencies [Line Items] | |||||
Number of consolidated claims | claim | 2 |