Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 12, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-38821 | |
Entity Registrant Name | Lordstown Motors Corp. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-2533239 | |
Entity Address, Address Line One | 2300 Hallock Young Road | |
Entity Address, City or Town | Lordstown | |
Entity Address State Or Province | OH | |
Entity Address, Postal Zip Code | 44481 | |
City Area Code | 234 | |
Local Phone Number | 285-4001 | |
Title of 12(b) Security | Class A Common Stock | |
Trading Symbol | RIDE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 176,579,376 | |
Entity Central Index Key | 0001759546 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 587,043 | $ 629,761 |
Accounts receivable | 5 | 21 |
Prepaid expenses and other current assets | 25,989 | 24,663 |
Total current assets | 613,037 | 654,445 |
Property, plant and equipment | 154,934 | 101,663 |
Intangible assets | 11,111 | 11,111 |
Total Assets | 779,082 | 767,219 |
Current Liabilities | ||
Accounts payable | 58,961 | 32,536 |
Accrued and other current liabilities | 8,041 | 1,538 |
Total current liabilities | 67,002 | 34,074 |
Note payable | 1,015 | 1,015 |
Warrant liability | 7,750 | 101,392 |
Total liabilities | 75,767 | 136,481 |
Stockholders' equity | ||
Class A common stock, $0.0001 par value, 300,000,000 shares authorized; 176,579,376 and 168,007,960 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 18 | 17 |
Additional paid in capital | 962,949 | 765,162 |
Accumulated deficit | (259,652) | (134,441) |
Total stockholders' equity | 703,315 | 630,738 |
Total liabilities and stockholder's equity | $ 779,082 | $ 767,219 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Balance Sheets | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 176,579,376 | 168,007,960 |
Common stock, shares outstanding | 176,579,376 | 168,007,960 |
Statements of Operations
Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Operating expenses | ||
Selling and administrative expenses | $ 14,394 | $ 3,522 |
Research and development expenses | 91,812 | 8,468 |
Total operating expenses | 106,206 | 11,990 |
Loss from operations | (106,206) | (11,990) |
Other income (expense) | ||
Other expense | (19,132) | 126 |
Interest income (expense) | 127 | (1) |
Loss before income taxes | (125,211) | (11,865) |
Net loss | $ (125,211) | $ (11,865) |
Loss per share attributable to common shareholders | ||
Basic & Diluted (in dollars per share) | $ (0.72) | $ (0.16) |
Weighted average number of common shares outstanding | ||
Basic & Diluted (in shares) | 174,325 | 71,911 |
Statements of Stockholder's Equ
Statements of Stockholder's Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2019 | $ 7 | $ 18,940 | $ (10,391) | $ 8,556 |
Beginning balance (in shares) at Dec. 31, 2019 | 68,279 | |||
Issuance of common stock | $ 1 | 6,403 | 6,404 | |
Issuance of common stock (in shares) | 4,701 | |||
Stock compensation | 130 | 130 | ||
Net loss | (11,865) | (11,865) | ||
Ending balance at Mar. 31, 2020 | $ 8 | 25,473 | (22,256) | 3,225 |
Ending balance (in shares) at Mar. 31, 2020 | 72,980 | |||
Beginning balance at Dec. 31, 2020 | $ 17 | 765,162 | (134,441) | 630,738 |
Beginning balance (in shares) at Dec. 31, 2020 | 168,008 | |||
Issuance of common stock | 1,050 | 1,050 | ||
Issuance of common stock (in shares) | 587 | |||
Common stock issued for exercise of warrants | $ 1 | 194,797 | 194,798 | |
Common stock issued for exercise of warrants (in shares) | 7,984 | |||
Stock compensation | 1,940 | 1,940 | ||
Net loss | (125,211) | (125,211) | ||
Ending balance at Mar. 31, 2021 | $ 18 | $ 962,949 | $ (259,652) | $ 703,315 |
Ending balance (in shares) at Mar. 31, 2021 | 176,579 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (125,211) | $ (11,865) |
Adjustments to reconcile net loss to cash used by operating activities: | ||
Stock-based compensation | 1,940 | 130 |
Non-cash charge related to change in fair value of warrants | 19,138 | |
Changes in assets and liabilities: | ||
Accounts receivables | 16 | |
Prepaid expenses | (1,325) | (55) |
Accounts payable | 27,418 | 3,944 |
Accrued expenses and due to related party | 6,504 | (9) |
Cash used by operating activities | (71,520) | (7,855) |
Cash flows from investing activities | ||
Purchases of capital assets | (54,264) | |
Cash used by investing activities | (54,264) | |
Cash flows from financing activities | ||
Cash proceeds from exercise of warrants | 82,016 | |
Issuance of common stock | 1,050 | 6,125 |
Cash provided by financing activities | 83,066 | 6,125 |
Decrease in cash and cash equivalents | (42,718) | (1,730) |
Cash and cash equivalents, beginning balance | 629,761 | 2,159 |
Cash and cash equivalents, ending balance | 587,043 | $ 429 |
Non cash items | ||
Capital assets acquired with payables | $ 4,599 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and cash equivalents Cash includes cash equivalents which are highly liquid investments that are readily convertible to cash. The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. The Company presents cash and cash equivalents within Cash and cash equivalents on the Balance Sheet. The Company maintains its cash in bank deposit accounts which, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts and management believes it is not exposed to significant credit risk. Property, plant and equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Determination of useful lives and depreciation will begin once the assets are ready for their intended use. Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repair expenditures are expensed as incurred, while major improvements that increase functionality of the asset are capitalized and depreciated ratably to expense over the identified useful life. Further, interest on any debt financing arrangement is capitalized to the purchased property, plant, and equipment if the requirements for capitalization are met. Long-lived assets, such as property, plant, and equipment are reviewed for potential impairment whenever events or changes in circumstances indicate that 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. Intangible assets other than goodwill Intangible assets include patents, copyrights, trade secrets, know-how, software, and all other intellectual property and proprietary rights connected with the electric pickup truck and other electric vehicle technology owned by Workhorse and contributed in exchange for equity in the Company. Determination of useful lives will be over the period of economic benefit and the related amortization will begin once the intangible assets are placed in use. The intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Upon indications of impairment, assets and liabilities are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The asset group would be considered impaired when the estimated future net undiscounted cash flows generated by the asset group are less than its carrying value. Impairment losses are measured by comparing the estimated fair value of the asset group to its carrying value. Research and development costs The Company expenses research and development costs as they are incurred. Research and development costs consist primarily of personnel costs for engineering and research, prototyping costs, and contract and professional services. Stock-based compensation The Company has adopted ASC Topic 718, Accounting for Stock-Based Compensation The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. Further, pursuant to ASU 2016-09 – Compensation – Stock Compensation (Topic 718) Warrants The Company accounts for its Public and Private Warrants as described in Note 3 in accordance with the guidance contained in ASC Topic 815-40-15-7D and 7F under which the Public Warrants and Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Public and Private Warrants as liabilities at their fair value and adjusts the Public and Private Warrants to fair value at each reporting period or at the time of settlement. Any change in fair value is recognized in the statement of operations. Income taxes Income taxes are recorded in accordance with ASC Topic 740, Income Taxes The Company accounts for uncertain tax positions in accordance with the provisions of ASC Topic 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense. Recent accounting pronouncements In February 2016, the FASB issued ASU 2016-02, Leases |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2021 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 3 — FAIR VALUE MEASUREMENTS The Company follows the accounting guidance in ASC Topic 820 for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes when inputs should be used in measuring fair value, is comprised of: (Level I) observable inputs such as quoted prices in active markets; (Level II) inputs other than quoted prices in active markets that are observable either directly or indirectly and (Level III) unobservable inputs for which there is little or no market data. The fair value hierarchy requires the use of observable market data when available in determining fair value. The Public and Private Warrants are classified as a liability with any changes in the fair value recognized immediately in our condensed consolidated statements of operations. The following table summarizes the net (loss) gain on changes in fair value (in thousands) related to the Public and Private Warrants: Three months ended March 31, 2021 Public Warrants $ (27,180) Private Warrants 8,042 Net loss on changes in fair value $ (19,138) Observed prices for the Public Warrants are used as Level 1 inputs as they were actively traded until being redeemed in January 2021. The Private Warrants are measured at fair value using Level 3 inputs. These instruments are not actively traded and are valued using a Monte Carlo option pricing model that uses observable and unobservable market data as inputs. A Monte Carlo model was used to simulate a multitude of price paths to measure fair value of the Private Warrants. The Monte Carlo models two possible outcomes for the stock price each trading day – up or down – based on the prior day’s price. The calculations underlying the model specify the implied risk-neutral probability that the stock price will move up or down, and the magnitude of the movements, given the stock’s volatility and the risk-free rate. This analysis simulates possible paths for the stock price over the term of the Private Warrants. For each simulated price path, we evaluate the conditions under which the Company could redeem each Private Warrant for a fraction of whole shares of the underlying as detailed within the Warrant Agreement. If the conditions are met, we assume redemptions would occur, although the Private Warrant holders would have the option to immediately exercise if it were more advantageous to do so. For each simulated price path, if a redemption does not occur the holders are assumed to exercise the Private Warrants if the stock price exceeds the exercise price at the end of the term. Proceeds from either the redemption or the exercise of the Private Warrants are reduced to a present value amount at each measurement date using the risk-free rate for each simulated price path. Present value indications from iterated priced paths were averaged to derive an indication of value for the Private Warrants. At each measurement date, we use a stock price volatility input of 50%. This assumption considers observed historical stock price volatility of other companies operating in the same or similar industry as the Company over a period similar to the remaining term of the Private Warrants, as well as the volatility implied by the traded options of the Company. The risk-free rates utilized were 0.886% and 0.413% for the valuations as of March 31, 2021 and December 31, 2020, respectively. The following tables summarize the valuation of our financial instruments (in thousands): Total Quoted prices in Prices with Prices with unobservable inputs March 31, 2021 Cash and cash equivalents $ 587,043 $ 587,043 $ — $ — Public Warrants — — — — Private Warrants 7,750 — — 7,750 Total Quoted prices in Prices with Prices with unobservable inputs December 31, 2020 Cash and cash equivalents $ 629,761 $ 629,761 $ — $ — Public Warrants 57,515 57,515 — — Private Warrants 43,877 — — 43,877 The following table summarizes the changes in our Level 3 financial instruments (in thousands): Balance at December 31, 2020 Additions Settlements Loss / (Gain) on fair Balance at March 31, 2021 Private Warrants $ 43,877 — (28,085) (8,042) $ 7,750 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2021 | |
PROPERTY, PLANT AND EQUIPMENT | |
PROPERTY, PLANT AND EQUIPMENT | NOTE 4 — PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net, consisted of the following: (in thousands) March 31, 2021 December 31, 2020 Property, Plant & Equipment Land $ 326 $ 326 Buildings 6,223 6,223 Machinery and equipment 38,443 38,443 Vehicles 142 142 Construction in progress 109,800 56,529 $ 154,934 $ 101,663 Less: Accumulated depreciation — — Total $ 154,934 $ 101,663 Construction in progress is primarily comprised of retooling and construction at the Company's facility in Lordstown, Ohio to ready the plant to begin the manufacturing of electric vehicles. The Company is currently reengineering its production process, bringing acquired assets up to the level needed for production and evaluating assets that will be necessary in the production of the Endurance pickup truck. Completed assets will be transferred to their respective asset classes and depreciation will begin when an asset is ready for its intended use. As of March 31, 2021, manufacturing has not begun and thus no depreciation was recognized in 2021 or 2020. Property, plant and equipment consist of an idle assembly and manufacturing plant in Lordstown, Ohio. The facility is equipped with the tooling necessary to begin production of the Endurance pickup truck along with all personal property, purchased from GM in November 2019 for $20 million, recorded as a Note Payable. In early 2019, GM made the decision to halt manufacturing on its Chevrolet Cruze sedan which was manufactured at its Lordstown plant. The plant remained closed with no production until GM and the Company were able to agree on the terms of the asset purchase, which resulted in a purchase price significantly lower than the fair market value of the assets acquired. The cost of property, plant and equipment includes the value of the $20.0 million Note Payable, along with any directly attributable costs of bringing the asset to its working condition and location for intended use, including direct acquisition costs and capitalized interest. The Company recorded $0.1 million of capitalized during 2019 and $0.3 million during the quarter ended March 31, 2021 as the facility assets underwent activities necessary to bring them to their intended use. Beginning April 1, 2020, activity on the facility stopped due to the shutdown caused by the COVID-19 pandemic. As these activities were no longer ongoing, interest capitalization on the Note Payable was suspended. Therefore, interest from April 1, 2020 through the date of the Business Combination which totaled $0.4 million was expensed as incurred. As of the date of the Business Combination, our Note Payable totaled $20.8 million and was settled as part of the Business Combination. During the quarter ended March 31, 2020, the Company also purchased property from GM for $1.2 million which was recorded to construction in progress. The corresponding Due to related party balance was satisfied with equity at the consummation of the Business Combination as described in Note 1. See Note 7 for further details on the Due to related party balance. During the fourth quarter of 2020, we also recognized an additional $23.2 million of property that was exchanged for common stock as part of the Business Combination. See Note 7 for further details regarding this exchange. |
NOTE PAYABLE
NOTE PAYABLE | 3 Months Ended |
Mar. 31, 2021 | |
NOTE PAYABLE | |
NOTE PAYABLE | NOTE 5 — NOTE PAYABLE On April 17, 2020, LMC entered into a Promissory Note with The Huntington National Bank, which provides for a loan in the amount of $1 million (the “PPP Loan”) pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP Loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Paycheck Protection Program provides that the PPP Loan may be partially or wholly forgiven if the funds are used for certain qualifying expenses as described in the CARES Act. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 — COMMITMENTS AND CONTINGENCIES The Company has entered into supply agreements with Samsung and LG Energy Solution to purchase lithium-ion cylindrical battery cells. The agreements generally have initial four terms, subject to earlier termination rights. The agreements also provide for certain pricing and minimum quantity parameters, including our obligation to purchase such minimum amounts which total approximately million in 2021, 2022, and 2023, respectively, subject to change for increases in raw material pricing. The Company is subject to various pending and threatened legal proceedings arising in the ordinary course of business. The Company records a liability for loss contingencies in the consolidated financial statements when a loss is known or considered probable and the amount can be reasonably estimated. Our provisions are based on historical experience, current information and legal advice, and they may be adjusted in the future based on new developments. Estimating probable losses requires the analysis of multiple forecasted factors that often depend on judgments and potential actions by third parties. On October 30, 2020, the Company, together with executive officers Mr. Burns, Mr. LaFleur, Mr. Post and Mr. Schmidt, and certain of our employees, were named as defendants in a lawsuit filed by Karma Automotive LLC (“Karma”) in the United States District Court for the Central District of California (“District Court”). On November 6, 2020, the District Court denied Karma’s request for a temporary restraining order. The parties engaged in discovery in anticipation of Karma seeking a preliminary injunction. To date, Karma has not moved for a preliminary injunction. Karma retained new counsel in March 2021. On April 16, 2021, Karma filed an Amended Complaint that added additional defendants (two Company employees and two Company contractors that were previously employed by Karma) and a number of additional claims alleging generally that the Company unlawfully poached key Karma employees and misappropriated Karma’s trade secrets and other confidential information. The Amended Complaint contains a total of 28 counts, including: (i) alleged violations under federal law of the Computer Fraud and Abuse Act and the Defend Trade Secrets Act, (ii) alleged violations of California law for misappropriation of trade secrets and unfair competition; (iii) common law claims for breach for breach of contract and tortious interference with contract; (iv) common law claims for breach of contract, including confidentiality agreements, employment agreements and the non-binding letter of intent; and (v) alleged common law claims for breach of duties of loyalty and fiduciary duties. The Amended Complaint also asserts claims for conspiracy, fraud, interstate racketeering activity, and violations of certain provisions of the California Penal Code relating to unauthorized computer access. Karma is seeking permanent injunctive relief and monetary damages. The Company is continuing to evaluate the matters asserted in the lawsuit, but intends to vigorously defend against these claims and believes there are strong defenses to the claims and the damages demanded. At this time, however, the Company cannot predict the outcome of this matter or estimate the possible loss or range of possible loss, if any. The proceedings are subject to uncertainties inherent in the litigation process. Between March 18 and April 8, 2021, four related putative class action lawsuits were filed against us and certain of our officers in the U.S. District Court for the Northern District of Ohio (“N.D. Ohio”) (Case Nos. 21-cv-616, 21-cv-633, 21-cv-720 and 21-cv-760), asserting violations of federal securities laws under Section 10(b) and Section 20(a) of the Exchange Act. The complaints generally allege that the Company and individual defendants made materially false and misleading statements relating to the vehicle pre-orders and production timeline. On May 13, 2021, a fifth putative class action was filed against us and certain current and former officers and directors in the N.D. Ohio (Case no. 21-cv-994), asserting similar securities laws violations as the first four class Rico v. Lordstown Motors Corp. et al. , 21-cv-616 (N.D. Ohio). Lead Plaintiff motions are also currently pending before the court. On April 28, 2021 and May 21, 2021, two stockholder derivative complaints were also filed against certain current and former officers and directors of the Company and DiamondPeak in the U.S. District Court for the District of Delaware (Case Nos. 21-cv-604 and 21-cv-724). These derivative complaints purport to bring claims on behalf of the Company against certain defendants for violations of the Exchange Act, breach of fiduciary duty, unjust enrichment, and insider trading, relating to the vehicle pre-orders, production timeline or Merger . The Company has also received two subpoenas from the SEC for the production of documents and information, including relating to the merger between DiamondPeak and Legacy Lordstown and pre-orders of vehicles. The Company is responding to the SEC’s requests and is cooperating with its inquiry. Except as described above, the Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time however, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 7 — RELATED PARTY TRANSACTIONS On November 7, 2019, the Company entered into an Asset Transfer Agreement, Operating Agreement and separate Mortgage Agreement (collectively, the “Agreements”) with GM. Pursuant to the Agreements, the Company incurred debt to GM recorded as a Note Payable in the principal amount of $20.0 million, secured by the real property described in Note 4. The Company had imputed interest of 5% on the Note Payable until February 1, 2020 when the stated interest rate of 7% began per the terms of the Agreement. Interest for the three months ended March 31, 2020 totaled $0.3 million which was capitalized as part of PP&E as described in Note 4. This note which totaled $20.8 million as of the date of the Closing, was converted to equity during the Business Combination described in Note 1. In conjunction with the Operating Agreement described above, the Company was also required to reimburse GM for expenditures related to general plant maintenance and compliance associated with the Lordstown facility. The Company recorded expenses of $2.1 million during the three months ended March 31, 2020 on the Statement of Operations. Additionally, during the quarter ended March 31, 2020, the Company purchased property from GM for $1.2 million which was recorded to CIP. As of the date of the Closing described in Note 1, we had accrued a total of $5.9 million as a Due to Related Party liability which was converted to equity as part of the Business Combination. On May 28, 2020, the Company entered into a Convertible Promissory Note (the “Convertible Note”) with GM that provided financing to the Company of up to $10.0 million secured by the Company’s property, plant and equipment and intangible assets. Pursuant to the terms of the Convertible Note, the Company had the ability to periodically draw down on the Convertible Note to meet its working capital needs. The balance of this note was converted to equity at closing of the Business Combination described in Note 1. In August 2020, we entered into an emissions credit agreement with GM pursuant to which, and subject to the terms of which, during the first three three ten As of December 31, 2020, GM was no longer determined to be a related party. On November 7, 2019, the Company entered into a transaction with Workhorse Group Inc., for the purpose of obtaining certain intellectual property. In connection with granting this license, Workhorse Group received 10% of the outstanding Legacy Lordstown common stock and was entitled to royalties of 1% of the gross sales price of the first 200,000 vehicle sales. In November 2020, we pre-paid a royalty payment to Workhorse Group in the amount of $4.75 million. The upfront royalty payment represents an advance on royalties due on 1% of the gross sales price of the first 200,000 vehicles sold, but only to the extent that the aggregate amount of such royalty fees exceeds the amount paid upfront. As of March 31, 2021 and December 31, 2020, the royalties are recorded as prepaid expenses. These amounts will be amortized as a percent of each vehicle sold. |
CAPITAL STOCK AND EARNINGS PER
CAPITAL STOCK AND EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2021 | |
BASIC AND DILUTED LOSS PER SHARE | |
CAPITAL STOCK AND EARNINGS PER SHARE | NOTE 8 — CAPITAL STOCK AND EARNINGS PER SHARE Our Charter provides for 312 million authorized shares of capital stock, consisting of (i) 300 million shares of Class A common stock and (ii) 12 million shares of preferred stock each with a par value of $0.0001 . We had issued outstanding a FASB ASC Topic 260, Earnings Per Share, requires the presentation of basic and diluted earnings per share (EPS). Basic EPS is calculated based on the weighted average number of shares outstanding during the period. Dilutive EPS is calculated to include any dilutive effect of our share equivalents. For the three months ended March 31, 2021, our share equivalent included 4.5 million options,1.6 million BGL Warrants, and 2.3 million Private Warrants outstanding. None of the stock options or warrants were included in the calculation of diluted EPS because we recorded a net loss for the quarters ended March 31, 2021 and March 31, 2020 as including these instruments would be anti-dilutive. The weighted-average number of shares outstanding for basic and diluted loss per share is as follows: (in thousands) Three months ended Three months ended March 31, 2021 March 31, 2020 Basic and diluted weighted average shares outstanding 174,325 71,911 |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Cash and cash equivalents | Cash and cash equivalents Cash includes cash equivalents which are highly liquid investments that are readily convertible to cash. The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. The Company presents cash and cash equivalents within Cash and cash equivalents on the Balance Sheet. The Company maintains its cash in bank deposit accounts which, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts and management believes it is not exposed to significant credit risk. |
Property, plant and equipment | Property, plant and equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Determination of useful lives and depreciation will begin once the assets are ready for their intended use. Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repair expenditures are expensed as incurred, while major improvements that increase functionality of the asset are capitalized and depreciated ratably to expense over the identified useful life. Further, interest on any debt financing arrangement is capitalized to the purchased property, plant, and equipment if the requirements for capitalization are met. Long-lived assets, such as property, plant, and equipment are reviewed for potential impairment whenever events or changes in circumstances indicate that 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. |
Intangible assets other than goodwill | Intangible assets other than goodwill Intangible assets include patents, copyrights, trade secrets, know-how, software, and all other intellectual property and proprietary rights connected with the electric pickup truck and other electric vehicle technology owned by Workhorse and contributed in exchange for equity in the Company. Determination of useful lives will be over the period of economic benefit and the related amortization will begin once the intangible assets are placed in use. The intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Upon indications of impairment, assets and liabilities are grouped at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The asset group would be considered impaired when the estimated future net undiscounted cash flows generated by the asset group are less than its carrying value. Impairment losses are measured by comparing the estimated fair value of the asset group to its carrying value. |
Research and development costs | Research and development costs The Company expenses research and development costs as they are incurred. Research and development costs consist primarily of personnel costs for engineering and research, prototyping costs, and contract and professional services. |
Stock-based compensation | Stock-based compensation The Company has adopted ASC Topic 718, Accounting for Stock-Based Compensation The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. Further, pursuant to ASU 2016-09 – Compensation – Stock Compensation (Topic 718) Warrants The Company accounts for its Public and Private Warrants as described in Note 3 in accordance with the guidance contained in ASC Topic 815-40-15-7D and 7F under which the Public Warrants and Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Public and Private Warrants as liabilities at their fair value and adjusts the Public and Private Warrants to fair value at each reporting period or at the time of settlement. Any change in fair value is recognized in the statement of operations. Income taxes Income taxes are recorded in accordance with ASC Topic 740, Income Taxes The Company accounts for uncertain tax positions in accordance with the provisions of ASC Topic 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense. |
Income taxes | Warrants The Company accounts for its Public and Private Warrants as described in Note 3 in accordance with the guidance contained in ASC Topic 815-40-15-7D and 7F under which the Public Warrants and Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Public and Private Warrants as liabilities at their fair value and adjusts the Public and Private Warrants to fair value at each reporting period or at the time of settlement. Any change in fair value is recognized in the statement of operations. |
Recent accounting pronouncements | Recent accounting pronouncements In February 2016, the FASB issued ASU 2016-02, Leases |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
FAIR VALUE MEASUREMENTS | |
Summary of the net gain on changes in fair value (in thousands) related to the Public and Private Warrants | Three months ended March 31, 2021 Public Warrants $ (27,180) Private Warrants 8,042 Net loss on changes in fair value $ (19,138) |
Summary of the valuation of financial instruments | Total Quoted prices in Prices with Prices with unobservable inputs March 31, 2021 Cash and cash equivalents $ 587,043 $ 587,043 $ — $ — Public Warrants — — — — Private Warrants 7,750 — — 7,750 Total Quoted prices in Prices with Prices with unobservable inputs December 31, 2020 Cash and cash equivalents $ 629,761 $ 629,761 $ — $ — Public Warrants 57,515 57,515 — — Private Warrants 43,877 — — 43,877 |
Schedule of gain (loss) in fair value recognized in earnings | Balance at December 31, 2020 Additions Settlements Loss / (Gain) on fair Balance at March 31, 2021 Private Warrants $ 43,877 — (28,085) (8,042) $ 7,750 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
PROPERTY, PLANT AND EQUIPMENT | |
Summary of property, plant and equipment, net | March 31, 2021 December 31, 2020 Property, Plant & Equipment Land $ 326 $ 326 Buildings 6,223 6,223 Machinery and equipment 38,443 38,443 Vehicles 142 142 Construction in progress 109,800 56,529 $ 154,934 $ 101,663 Less: Accumulated depreciation — — Total $ 154,934 $ 101,663 |
CAPITAL STOCK AND EARNINGS PE_2
CAPITAL STOCK AND EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
BASIC AND DILUTED LOSS PER SHARE | |
Schedule of computation of basic and diluted loss per share | Three months ended Three months ended March 31, 2021 March 31, 2020 Basic and diluted weighted average shares outstanding 174,325 71,911 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Oct. 23, 2020 | |
Business Acquisition [Line Items] | ||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||
Aggregate purchase price | $ 1,050 | $ 6,125 | ||
Cash proceeds from exercise of warrants | 82,016 | |||
Warrants | $ 7,750 | $ 101,392 | ||
GM | Note Payable | ||||
Business Acquisition [Line Items] | ||||
Amount outstanding | $ 20,800 |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Cash and cash equivalents | $ 587,043 | $ 629,761 | |
Accumulated deficit | (259,652) | $ (134,441) | |
Net loss | $ (125,211) | $ (11,865) |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021USD ($) | Dec. 31, 2020 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Net loss on fair value adjustment | $ (19,138) | |
Private Placement Warrants [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Net loss on fair value adjustment | 8,042 | |
Public Warrants [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Net loss on fair value adjustment | $ (27,180) | |
Measurement Input, Price Volatility [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Liability, Measurement Input | 0.50 | 0.50 |
Measurement Input, Risk Free Interest Rate [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Derivative Liability, Measurement Input | 0.00886 | 0.00413 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets, Liabilities, Movement (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Private Placement Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability | $ 7,750 | $ 43,877 |
Fair Value, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and Cash Equivalents, Fair Value Disclosure | 587,043 | 629,761 |
Fair Value, Recurring [Member] | Private Placement Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability | 7,750 | 43,877 |
Fair Value, Recurring [Member] | Public Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability | 57,515 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and Cash Equivalents, Fair Value Disclosure | 587,043 | 629,761 |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Public Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability | 57,515 | |
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Private Placement Warrants [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative Liability | $ 7,750 | $ 43,877 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes in Level 3 financial instruments (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Line Items] | |
Loss / (Gain) on fair value adjustments included in earnings | $ 19,138 |
Private Placement Warrants [Member] | |
Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Line Items] | |
Derivative liability, beginning balance | 43,877 |
Settlements | (28,085) |
Loss / (Gain) on fair value adjustments included in earnings | (8,042) |
Derivative liability, ending balance | $ 7,750 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 7 Months Ended | 12 Months Ended | |||
Nov. 30, 2019 | Mar. 31, 2021 | Mar. 31, 2020 | Oct. 23, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Nov. 07, 2019 | |
Property, Plant and Equipment | |||||||
Property, Plant and Equipment, Gross | $ 154,934 | $ 101,663 | |||||
Total | 154,934 | 101,663 | |||||
Depreciation expense | 0 | $ 0 | |||||
Purchase of property, plant and equipment | $ 20,000 | ||||||
Property acquired in business combination | 23,200 | ||||||
GM | |||||||
Property, Plant and Equipment | |||||||
Purchase of property, plant and equipment | 1,200 | ||||||
GM | Note Payable | |||||||
Property, Plant and Equipment | |||||||
Note Payable issued | $ 20,000 | ||||||
Interest expense capitalized | 300 | 300 | $ 100 | ||||
Interest expense | $ 400 | ||||||
Amount outstanding | $ 20,800 | ||||||
Land | |||||||
Property, Plant and Equipment | |||||||
Property, Plant and Equipment, Gross | 326 | 326 | |||||
Buildings | |||||||
Property, Plant and Equipment | |||||||
Property, Plant and Equipment, Gross | 6,223 | 6,223 | |||||
Machinery and equipment | |||||||
Property, Plant and Equipment | |||||||
Property, Plant and Equipment, Gross | 38,443 | 38,443 | |||||
Vehicles | |||||||
Property, Plant and Equipment | |||||||
Property, Plant and Equipment, Gross | 142 | 142 | |||||
Construction in progress | |||||||
Property, Plant and Equipment | |||||||
Property, Plant and Equipment, Gross | $ 109,800 | $ 56,529 | |||||
Purchase of property, plant and equipment | $ 1,200 |
NOTE PAYABLE (Details)
NOTE PAYABLE (Details) - USD ($) $ in Thousands | Apr. 17, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Instrument [Line Items] | |||
Loan amount | $ 1,015 | $ 1,015 | |
PPP Loan | |||
Debt Instrument [Line Items] | |||
Loan amount | $ 1,000 | ||
Loan term | 2 years | ||
Stated interest rate (as a percent) | 1.00% | ||
Principal and interest deferment period | 6 months |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2021USD ($)item | Apr. 16, 2021employeeitem | |
Supply Commitment [Line Items] | ||
Number of Employees | employee | 2 | |
Number of company contractors | item | 2 | |
Number of counts in amended complaint | item | 28 | |
Number of subpoenas received | item | 2 | |
Supply Agreement with Samsung and LG Energy Solution | ||
Supply Commitment [Line Items] | ||
2021 | $ | $ 16.3 | |
2022 | $ | 139.4 | |
2023 | $ | $ 273.6 | |
Minimum | Supply Agreement with Samsung and LG Energy Solution | ||
Supply Commitment [Line Items] | ||
Supply agreement term | 4 years | |
Maximum | Supply Agreement with Samsung and LG Energy Solution | ||
Supply Commitment [Line Items] | ||
Supply agreement term | 5 years |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | Nov. 07, 2019USD ($)item | Nov. 30, 2020USD ($)item | Aug. 31, 2020 | Nov. 30, 2019USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Oct. 23, 2020USD ($) | May 28, 2020USD ($) | Jan. 31, 2020 |
Related Party Transaction [Line Items] | ||||||||||
Purchase of property, plant and equipment | $ 20,000 | |||||||||
GM | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Related party expense | $ 2,100 | |||||||||
Purchase of property, plant and equipment | 1,200 | |||||||||
Due to related parties | $ 5,900 | |||||||||
Agreement Term | 3 years | |||||||||
Agreement Term Qualifier Period | 10 months | |||||||||
Percentage of market price | 75.00% | |||||||||
GM | Convertible Note | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Maximum borrowing capacity | $ 10,000 | |||||||||
GM | Note Payable | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Principal amount | $ 20,000 | |||||||||
Interest rate stated percentage | 7.00% | 5.00% | ||||||||
Interest cost capitalized as part of PPE | $ 300 | $ 300 | $ 100 | |||||||
Amount outstanding | $ 20,800 | |||||||||
Transaction with Workhorse Group Inc | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Percentage ownership conveyed in connection with license agreement | 10.00% | |||||||||
Royalty percentage | 1.00% | 1.00% | ||||||||
Prepaid Royalties | $ 4,750 | |||||||||
Number of vehicles subject to royalty | item | 200,000 | 200,000 |
CAPITAL STOCK AND EARNINGS PE_3
CAPITAL STOCK AND EARNINGS PER SHARE (Details) - $ / shares | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Shares authorized per Charter | 312,000,000 | ||
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | |
Preferred Stock, Shares Authorized | 12,000,000 | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | ||
Common stock, shares issued | 176,579,376 | 168,007,960 | |
Common stock, shares outstanding | 176,579,376 | 168,007,960 | |
BASIC AND DILUTED LOSS PER SHARE | |||
Basic and diluted weighted average shares outstanding | 174,325,000 | 71,911,000 | |
Stock options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Share equivalents | 4,500,000 | ||
B G L Warrants [Member] | Warrant [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Share equivalents | 1,600,000 | ||
Private Placement Warrants [Member] | Warrant [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Share equivalents | 2,300,000 |