Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 09, 2021 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 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 | 176,977,772 | |
Entity Central Index Key | 0001759546 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 365,900 | $ 629,761 |
Accounts receivable | 2 | 21 |
Prepaid expenses and other current assets | 19,188 | 24,663 |
Total current assets | 385,090 | 654,445 |
Property, plant and equipment | 286,303 | 101,663 |
Intangible assets | 11,111 | 11,111 |
Other non-current assets | 4,750 | |
Total Assets | 687,254 | 767,219 |
Current Liabilities | ||
Accounts payable | 48,785 | 32,536 |
Accrued and other current liabilities | 32,593 | 1,538 |
Total current liabilities | 81,378 | 34,074 |
Note payable | 1,015 | |
Warrant liability | 6,873 | 101,392 |
Total liabilities | 88,251 | 136,481 |
Stockholders' equity | ||
Class A common stock, $0.0001 par value, 300,000,000 shares authorized; 176,606,440 and 168,007,960 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 18 | 17 |
Additional paid in capital | 966,837 | 765,162 |
Accumulated deficit | (367,852) | (134,441) |
Total stockholders' equity | 599,003 | 630,738 |
Total liabilities and stockholder's equity | $ 687,254 | $ 767,219 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 | Oct. 23, 2020 |
Balance Sheets | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 | |
Common stock, shares issued | 176,606,440 | 168,007,960 | |
Common stock, shares outstanding | 176,606,440 | 168,007,960 |
Statements of Operations
Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Operating expenses | ||||
Selling and administrative expenses | $ 33,793 | $ 5,155 | $ 48,187 | $ 8,677 |
Research and development expenses | 76,544 | 4,786 | 168,356 | 13,254 |
Total operating expenses | 110,337 | 9,941 | 216,543 | 21,931 |
Loss from operations | (110,337) | (9,941) | (216,543) | (21,931) |
Other income (expense) | ||||
Other income (expense) | 1,877 | 2,346 | (17,255) | 2,472 |
Interest income (expense) | 260 | (363) | 387 | (364) |
Loss before income taxes | (108,200) | (7,958) | (233,411) | (19,823) |
Net loss | $ (108,200) | $ (7,958) | $ (233,411) | $ (19,823) |
Loss per share attributable to common shareholders | ||||
Basic & Diluted (in dollars per share) | $ (0.61) | $ (0.11) | $ (1.33) | $ (0.27) |
Weighted average number of common shares outstanding | ||||
Basic & Diluted (in shares) | 176,585 | 73,951 | 175,595 | 72,931 |
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 | 1,314 | 1,314 | ||
Net loss | (19,823) | (19,823) | ||
Ending balance at Jun. 30, 2020 | $ 8 | 26,657 | (30,214) | (3,549) |
Ending balance (in shares) at Jun. 30, 2020 | 72,980 | |||
Beginning balance at Mar. 31, 2020 | $ 8 | 25,473 | (22,256) | 3,225 |
Beginning balance (in shares) at Mar. 31, 2020 | 72,980 | |||
Stock compensation | 1,184 | 1,184 | ||
Net loss | (7,958) | (7,958) | ||
Ending balance at Jun. 30, 2020 | $ 8 | 26,657 | (30,214) | (3,549) |
Ending balance (in shares) at Jun. 30, 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 | 1,098 | 1,098 | ||
Issuance of common stock (in shares) | 614 | |||
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 | 5,780 | 5,780 | ||
Net loss | (233,411) | (233,411) | ||
Ending balance at Jun. 30, 2021 | $ 18 | 966,837 | (367,852) | 599,003 |
Ending balance (in shares) at Jun. 30, 2021 | 176,606 | |||
Beginning balance at Mar. 31, 2021 | $ 18 | 962,949 | (259,652) | 703,315 |
Beginning balance (in shares) at Mar. 31, 2021 | 176,579 | |||
Issuance of common stock | 48 | 48 | ||
Issuance of common stock (in shares) | 27 | |||
Stock compensation | 3,840 | 3,840 | ||
Net loss | (108,200) | (108,200) | ||
Ending balance at Jun. 30, 2021 | $ 18 | $ 966,837 | $ (367,852) | $ 599,003 |
Ending balance (in shares) at Jun. 30, 2021 | 176,606 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (233,411) | $ (19,823) |
Adjustments to reconcile net loss to cash used by operating activities: | ||
Stock-based compensation | 5,780 | 1,314 |
Gain on disposal of fixed assets | (2,346) | |
Non-cash charge related to change in fair value of warrants | 18,261 | |
Gain on forgiveness of debt | (1,015) | |
Changes in assets and liabilities: | ||
Accounts receivables | 19 | (13) |
Prepaid expenses | 726 | (91) |
Accounts payable | 7,209 | 4,003 |
Accrued expenses and due to related party | 31,057 | 5,568 |
Cash used by operating activities | (171,374) | (11,388) |
Cash flows from investing activities | ||
Purchases of capital assets | (175,601) | |
Proceeds from the sale of capital assets | 2,396 | |
Cash (used by) provided by investing activities | (175,601) | 2,396 |
Cash flows from financing activities | ||
Proceeds from notes payable | 1,015 | |
Cash proceeds from exercise of warrants | 82,016 | |
Issuance of common stock | 1,098 | 6,403 |
Cash provided by financing activities | 83,114 | 7,418 |
Decrease in cash and cash equivalents | (263,861) | (1,574) |
Cash and cash equivalents, beginning balance | 629,761 | 2,159 |
Cash and cash equivalents, ending balance | $ 365,900 | $ 585 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2021 | |
ORGANIZATION AND DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | |
ORGANIZATION AND DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Lordstown Description of Business Lordstown Motors Corp., a Delaware corporation (“Lordstown” or the “Company”), is an automotive company with the goal of becoming an original equipment manufacturer (OEM) of electrically powered pickup trucks and vehicles for fleet customers in pursuit of accelerating the sustainable future and setting new standards in the industry. The Company is in its initial design and testing phase related to its production of the Endurance pickup truck and has yet to bring a completed product to market. Business Combination and Basis of Presentation The unaudited condensed consolidated interim financial statements of Lordstown have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the instructions to the Quarterly Report on Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to these rules and regulations. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with our audited consolidated financial statements and related notes included in our Form 10-K/A. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments necessary for a fair presentation of our interim financial results. All such adjustments are of a normal and recurring nature. The results of operations for any interim period are not indicative of results for the full fiscal year. The accompanying unaudited condensed consolidated interim financial statements include our accounts and those of our controlled subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the dates of the financial statements and the amounts of expenses during the reporting periods. Actual amounts realized or paid could differ from those estimates. On October 23, 2020 (the “Closing Date”), Diamond Peak Holdings Corp. (“DiamondPeak”) consummated the transactions contemplated by the agreement and plan of merger (the “Merger Agreement”), dated August 1, 2020, among DiamondPeak, Lordstown EV Corporation (formerly known as Lordstown Motors Corp.), a Delaware corporation (“Legacy LMC”), and DPL Merger Sub Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), pursuant to which Merger Sub merged with and into Legacy LMC with Legacy LMC surviving the merger (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). On the Closing Date, and in connection with the closing of the Business Combination (the “Closing”), DiamondPeak changed its name to Lordstown Motors Corp (the “Company”) and Legacy LMC became a wholly owned subsidiary of the Company. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of common stock, par value $0.0001 per share, of Legacy LMC (“Legacy LMC Common Stock”) was converted into 55.8817 shares (the “Exchange Ratio”) of Class A common stock, par value $0.0001 per share, of the Company (“Class A common stock”), resulting in an aggregate of 75,918,063 shares of Class A common stock issued to Legacy LMC stockholders. At the Effective Time, each outstanding option to purchase Legacy LMC Common Stock (“Legacy LMC Options”), whether vested or unvested, was automatically converted into an option to purchase a number of shares of Class A common stock equal to the product of (x) the number of shares of Legacy LMC Common Stock subject to such Legacy LMC Option and (y) the Exchange Ratio, at an exercise price per share equal to (A) the exercise price per share of Legacy LMC Common Stock of such Legacy LMC Option immediately prior to the Effective Time divided by (B) the Exchange Ratio. Pursuant to the Company’s Amended and Restated Certificate of Incorporation, as in effect prior to the Closing, each outstanding share of DiamondPeak’s Class B common stock, par value $0.0001 per share, was automatically converted into one share of the Company’s Class A common stock at the Closing, resulting in an issuance of 7 million shares of Class A common stock in the aggregate. In connection with the Closing, the Company (a) issued and sold an aggregate of 50 million shares of Class A common stock for $10.00 per share at an aggregate purchase price of $500 million pursuant to previously announced subscription agreements with certain investors (the “PIPE Investors”), (b) issued an aggregate of approximately 4 million shares of Class A common stock to holders of $40 million in aggregate principal amount plus accrued interest, of Legacy LMC convertible promissory notes at a conversion price of $10.00 per share upon automatic conversion of such notes (the “Note Conversions”), and (c) issued warrants to purchase 1.6 million shares of Class A common stock (“BGL Warrants”) a purchase price of $10.00 per share to a third party. Additionally, the Company assumed 9.3 million Public Warrants (as defined below) and 5.1 million Private Warrants (as defined below) both of which were originally issued by DiamondPeak with an exercise price of $11.50. In December 2020, 2.7 million of the Public Warrants were exercised which resulted in $30.7 million in proceeds. In January 2021, a significant portion of the remaining Public Warrants and 0.6 million of the Private Warrants were exercised upon payment of the cash exercise price, which resulted in cash proceeds of $82.0 million. As of June 30, 2021, there were 2.3 million Private Warrants, 1.6 million BGL Warrants and no Public Warrants outstanding. See further discussion related to the accounting of the Public Warrants and Private Warrants in Note 3. Pursuant to the Business Combination, the merger between a DiamondPeak and Legacy LMC was accounted for as a reverse recapitalization in accordance with GAAP (the “Reverse Recapitalization”). Under this method of accounting, Legacy LMC was deemed to be the accounting acquirer for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Legacy LMC issuing stock for the net assets of DiamondPeak, accompanied by a recapitalization. The net assets of DiamondPeak are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Legacy LMC. The shares and corresponding capital amounts and earnings per share available for common stockholders, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination. As part of the Business Combination, we recorded $644.6 million in equity for the recapitalization, net of transaction costs and $100.9 million in liabilities related to the Public and Private Warrants described in Note 3. The Company received cash proceeds of $701.5 million as a result of the Business Combination which was net of the settlement of the $20.8 million related party note payable and $23.2 million in property purchased through equity both as described in Note 4. Additionally, a $5 million Convertible Note and the $5.9 million amount in Due to related party as described in Note 7 were also settled in conjunction with the Business Combination. Liquidity and Going Concern The accompanying unaudited condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern and in accordance with generally accepted accounting principles in the United States of America. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. Pursuant to the requirements of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) Topic 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued. This evaluation does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented or are not within control of the Company as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. The Company had and an accumulated deficit of $367.9 million at June 30, 2021 and a net loss of $233.4 million for the six months ended June 30, 2021. In an effort to alleviate these conditions, management is currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from government or financial institutions. As part of our funding efforts and as further described in Note 9, o n July 23, 2021, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with YA II PN, LTD. (“YA”), pursuant to which YA has committed to purchase up to $400 million of our Class A common stock, at our direction from time to time, subject to the satisfaction of certain conditions. The actual amount that we raise under this facility will depend on market conditions and other financing alternatives that we are exploring, as well as limitations in the agreement. As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all. Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry. As a result of these uncertainties, and notwithstanding management’s plans and efforts to date, there continues to be substantial doubt about our ability to continue as a going concern. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Immaterial Correction of Error The Company’s previously issued financial statements have been revised to remove non-cash activity that were inappropriately presented within the consolidated condensed statement of cash flows. This resulted in the removal of $3.5 million of cash provided by from financing activities with a corresponding increase in cash provided by investing activities of $1.2 million and a decrease in cash used by operating activities of $2.3 million. The Company, in consultation with the Audit Committee of the Board of Directors, evaluated the effect of these adjustments on the Company’s consolidated financial statements under ASC 250, Accounting Changes and Error Corrections Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements Reclassification The Company reclassified $2.3 million of gain on sale of fixed assets to other income 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 the statement of 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 assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has recorded a full valuation allowance against its deferred tax assets. 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 | 6 Months Ended |
Jun. 30, 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 gain (loss) on changes in fair value (in thousands) related to the Public and Private Warrants: Three months ended Six months ended June 30, 2021 June 30, 2021 Public Warrants $ — $ (27,180) Private Warrants 877 8,919 Net gain (loss) on changes in fair value $ 877 $ (18,261) Observed prices for the Public Warrants were 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 0.824% and 0.413% for the valuations as of June 30, 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 June 30, 2021 Cash and cash equivalents $ 365,900 $ 365,900 $ — $ — Public Warrants — — — — Private Warrants 6,873 — — 6,873 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 June 30, 2021 Private Warrants $ 43,877 — (28,085) (8,919) $ 6,873 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 6 Months Ended |
Jun. 30, 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) June 30, 2021 December 31, 2020 Property, Plant & Equipment Land $ 326 $ 326 Buildings 6,223 6,223 Machinery and equipment 38,608 38,443 Vehicles 373 142 Construction in progress 240,773 56,529 $ 286,303 $ 101,663 Less: Accumulated depreciation — — Total $ 286,303 $ 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 June 30, 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 related party 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 related party 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 interest capitalized during 2019 and $0.3 million during the quarter ended March 31, 2020 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 related party 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 related party 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 quarter ended June 30, 2020, the Company sold equipment which it determined was not necessary for production which resulted in a gain on sale of the asset for $2.3 million. 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. |
NOTE PAYABLE
NOTE PAYABLE | 6 Months Ended |
Jun. 30, 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 had a two-year term and bears interest at a rate of 1.0% per annum. 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. During the quarter ended June 30, 2021, our $1.0 million loan was forgiven. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 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 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 current and former 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. Six related putative securities class action lawsuits were filed against the Company and certain of its current and former officers and directors and former DiamondPeak directors between March 18, 2021 and May 14, 2021 in the U.S. District Court for the Northern District of Ohio ( Rico v. Lordstown Motors Corp., et al. Palumbo v. Lordstown Motors Corp., et al. Zuod v. Lordstown Motors Corp., et al. Brury, et al. v. Lordstown Motors Corp., et al. Romano et al v. Lordstown Motors Corp., et al., FNY Managed Accounts LLC, et al. v. Lordstown Motors Corp. et al., Four related stockholder derivative lawsuits were filed against certain of the Company’s officers and directors, former DiamondPeak directors, and against the Company as a nominal defendant between April 28, 2021 and July 9, 2021 in the U.S. District Court for the District of Delaware ( Cohen, et al. v. Burns, et al. (Case No. 21-cv-604); Kelley, et al. v. Burns, et al. (Case No. 12-cv-724); Patterson, et al. v. Burns, et al. (Case No. 21-cv-910); Sarabia v. Burns, et al . (Case No. 21-cv-1010)), asserting violations of Sections 14(a) and 20(a) the Exchange Act, breach of fiduciary duty under Brophy , breach of fiduciary duty, insider selling, unjust enrichment, and waste and in two of those cases ( Cohen and Kelley ), violations of Sections 10(b) and 20 of the Exchange Act, and Rule 10b-5, all relating to vehicle pre-orders, production timeline, and the merger between DiamondPeak and Legacy Lordstown. Another related stockholder derivative lawsuit was filed in U.S. District Court for the Northern District of Ohio on June 30, 2021 ( Thai et al. v. Burns, et al. (Case No. 21-cv-1267)), asserting violations under the Sections 10(b), 14(a), 20, 21D of the Exchange Act and Rule 10b-5, breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste, based largely on the same alleged facts as the other derivative lawsuits. The first two filed derivative actions, Cohen and Kelley , were consolidated on June 10, 2021 and Johnson Fistel, LLP and Glancy Prongay & Murray LLP were appointed as co-lead counsel for plaintiffs in the consolidated derivative action. The consolidation and appointment of lead counsel both occurred prior to the filing of Patterson and Sarabia . It is unclear whether or to what extent the filing of Patterson and Sarabia will affect the consolidated matter or the status of the lead counsel. In addition, between approximately March 26, 2021 and June 24, 2021, LMC received five demands for books and records pursuant to Section 220 of the Delaware General Corporation Law from stockholders who state they are investigating whether to file similar derivative lawsuits, among other purposes. On or around July 26, 2021, the Company received a stockholder litigation demand that the Company’s board of directors investigate and commence legal proceedings against certain current and former officers and directors based on alleged breaches of fiduciary duties, corporate waste, and unjust enrichment . We intend to vigorously defend against the claims. The proceedings are subject to uncertainties inherent in the litigation process. We cannot predict the outcome of these matters or estimate the possible loss or range of possible loss, if any . 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 , and the Company has been informed by the U.S. Attorney’s Office for the Southern District of New York that it is investigating these matters. The Company has cooperated, and will continue to cooperate, with these and any other regulatory or governmental investigations and inquiries . 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 | 6 Months Ended |
Jun. 30, 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 related party 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 related party 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 six months ended June 30, 2020 on the Statement of Operations. Additionally, during the six months ended June 30, 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. The upfront royalty payment was recorded as a prepaid expense as of December 31, 2020, but reclassified to other non-current assets as of June 30, 2021 based on our revised production timeline. These amounts will be amortized as a percent of each vehicle sold. |
CAPITAL STOCK AND LOSS PER SHAR
CAPITAL STOCK AND LOSS PER SHARE | 6 Months Ended |
Jun. 30, 2021 | |
BASIC AND DILUTED LOSS PER SHARE | |
CAPITAL STOCK AND LOSS PER SHARE | NOTE 8 — CAPITAL STOCK AND LOSS 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 176.6 million and 168.0 million shares of common stock 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 June 30, 2021, our share equivalent included 3.8 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 three and six months ended June 30, 2021 and June 30, 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 Six months ended Six months ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Basic and diluted weighted average shares outstanding 176,585 73,951 175,595 72,931 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 6 Months Ended |
Jun. 30, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENT | NOTE 9 — SUBSEQUENT EVENT O n July 23, 2021, the Company entered into an equity purchase agreement with YA, pursuant to which YA has committed to purchase up to $400 million of our Class A common stock, at our direction from time to time, subject to the satisfaction of certain conditions. 36-month period commencing on the date of the Purchase Agreement, provided that a registration statement covering the resale by YA of the shares of Class A common stock purchased from us is declared effective by the SEC and the other conditions set forth in the Purchase Agreement are satisfied. We filed the registration statement with the SEC on July 30, 2021, and it was declared effective on August 11, 2021. Under applicable Nasdaq rules and the Purchase Agreement, we will not sell to YA shares of our Class A common stock in excess of 35,144,690 shares (the “Exchange Cap”), which is 19.9% of the shares of Class A common stock outstanding immediately prior to the execution of the Purchase Agreement, unless (i) we obtain stockholder approval to issue shares of Class A common stock in excess of the Exchange Cap or (ii) the average price of all applicable sales of shares of Class A common stock under the Purchase Agreement (including the Commitment Shares described below in the number of shares sold for these purposes) equals or exceeds $7.48 per share (which represents the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the Purchase Agreement; or (ii) the average Nasdaq Official Closing Price of the Common Shares (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Purchase Agreement). At current market prices of our shares of Class A common stock, without stockholder approval, the Exchange Cap would limit the amount of funds we are able to raise to significantly less than the We may direct YA to purchase amounts of our Class A common stock under the Purchase Agreement that we specify from time to time in a written notice (an “Advance Notice”) delivered to YA on any trading day. The maximum amount that we may specify in an Advance Notice is equal to the lesser of: (i) an amount equal to thirty percent (30%) of the Daily Value Traded of the Class A common stock on the trading day immediately preceding an Advance Notice, or (ii) $30.0 million. For these purposes, “Daily Value Traded” is the product obtained by multiplying the daily trading volume of our Class A common stock by the volume weighted average price for that trading day. Subject to the satisfaction of the conditions under the Purchase Agreement, we may deliver Advance Notices from time to time, provided that we have delivered all shares relating to all prior Advance Notices. The purchase price of the shares of Class A common stock will be equal to 97% of the simple average of the daily VWAPs for the three trading days following the Advance Notice as set forth in the Purchase Agreement. As consideration for YA’s irrevocable commitment to purchase shares of the Company’s Class A common stock upon the terms of and subject to satisfaction of the conditions set forth in the Purchase Agreement, upon execution of the Purchase Agreement, the Company issued 371,287 shares of its Class A common stock to YA (the “Commitment Shares”). |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Reclassification | Reclassification The Company reclassified $2.3 million of gain on sale of fixed assets to other income |
Cash and cash equivalents | Immaterial Correction of Error The Company’s previously issued financial statements have been revised to remove non-cash activity that were inappropriately presented within the consolidated condensed statement of cash flows. This resulted in the removal of $3.5 million of cash provided by from financing activities with a corresponding increase in cash provided by investing activities of $1.2 million and a decrease in cash used by operating activities of $2.3 million. The Company, in consultation with the Audit Committee of the Board of Directors, evaluated the effect of these adjustments on the Company’s consolidated financial statements under ASC 250, Accounting Changes and Error Corrections Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements Reclassification The Company reclassified $2.3 million of gain on sale of fixed assets to other income 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 the statement of 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 | 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 Income taxes are recorded in accordance with ASC Topic 740, Income Taxes assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has recorded a full valuation allowance against its deferred tax assets. 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 | Recent accounting pronouncements In February 2016, the FASB issued ASU 2016-02, Leases |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 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 Six months ended June 30, 2021 June 30, 2021 Public Warrants $ — $ (27,180) Private Warrants 877 8,919 Net gain (loss) on changes in fair value $ 877 $ (18,261) |
Summary of the valuation of financial instruments | Total Quoted prices in Prices with Prices with unobservable inputs June 30, 2021 Cash and cash equivalents $ 365,900 $ 365,900 $ — $ — Public Warrants — — — — Private Warrants 6,873 — — 6,873 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 June 30, 2021 Private Warrants $ 43,877 — (28,085) (8,919) $ 6,873 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
PROPERTY, PLANT AND EQUIPMENT | |
Summary of property, plant and equipment, net | June 30, 2021 December 31, 2020 Property, Plant & Equipment Land $ 326 $ 326 Buildings 6,223 6,223 Machinery and equipment 38,608 38,443 Vehicles 373 142 Construction in progress 240,773 56,529 $ 286,303 $ 101,663 Less: Accumulated depreciation — — Total $ 286,303 $ 101,663 |
CAPITAL STOCK AND EARNINGS PER
CAPITAL STOCK AND EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
CAPITAL STOCK AND EARNINGS PER SHARE | |
Schedule of the weighted-average number of shares outstanding for basic and diluted loss per share | Three months ended Three months ended Six months ended Six months ended June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Basic and diluted weighted average shares outstanding 176,585 73,951 175,595 72,931 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) $ / shares in Units, $ in Thousands | Jul. 23, 2021USD ($)shares | Oct. 23, 2020USD ($)$ / sharesshares | Jan. 31, 2021USD ($)shares | Dec. 31, 2020USD ($)$ / sharesshares | Jun. 30, 2021USD ($)$ / sharesshares | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)$ / sharesshares | Jun. 30, 2020USD ($) |
Business Acquisition [Line Items] | ||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Exchange ratio | 55.8817 | |||||||
Shares issued per share tendered in conversion | shares | 1 | |||||||
Shares issued in conversion | shares | 7,000,000 | |||||||
Common stock issued | shares | 50,000,000 | |||||||
Shares issued price per share | $ / shares | $ 10 | |||||||
Proceeds from stock issuance | $ 500,000 | $ 1,098 | $ 6,403 | |||||
Shares issued upon notes conversion | shares | 4,000,000 | |||||||
Value of shares issued upon notes conversion | $ 40,000 | |||||||
Conversion price per share | $ / shares | $ 10 | |||||||
Warrants to purchase common stock | shares | 1,600,000 | |||||||
Warrant exercise price | $ / shares | $ 11.50 | |||||||
Common stock issued for exercise of warrants (in shares) | shares | 600,000 | 2,700,000 | ||||||
Cash proceeds from exercise of warrants | $ 82,000 | $ 30,700 | 82,016 | |||||
Common stock issued in recapitalization, net of redemptions and transaction costs | $ 644,600 | |||||||
Warrant liability | 100,900 | 101,392 | $ 6,873 | 6,873 | ||||
Cash received in recapitalization, net of transaction costs | 701,500 | |||||||
Cash and cash equivalents | 629,761 | 365,900 | 365,900 | |||||
Accumulated deficit | 134,441 | 367,852 | 367,852 | |||||
Net loss | 108,200 | $ 7,958 | 233,411 | 19,823 | ||||
Issuance of common stock | $ 48 | $ 1,098 | $ 6,404 | |||||
Subsequent Event [Member] | Equity Funding Agreement With Y A [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Common stock issued | shares | 371,287 | |||||||
Subsequent Event [Member] | Scenario, Plan [Member] | Equity Funding Agreement With Y A [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Issuance of common stock | $ 400,000 | |||||||
GM | ||||||||
Business Acquisition [Line Items] | ||||||||
Due to related parties | $ 5,900 | |||||||
Merger Agreement With Diamond Peak Holdings Corp [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Shares issued in merger | shares | 75,918,063 | |||||||
Property acquired in business combination | $ 23,200 | $ 23,200 | ||||||
Merger Agreement With Diamond Peak Holdings Corp [Member] | Convertible Note | ||||||||
Business Acquisition [Line Items] | ||||||||
Liabilities settled | 5,000 | |||||||
Merger Agreement With Diamond Peak Holdings Corp [Member] | GM | Note Payable to GM | ||||||||
Business Acquisition [Line Items] | ||||||||
Liabilities settled | $ 20,800 | |||||||
B G L Warrants [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Warrants outstanding | shares | 1,600,000 | 1,600,000 | ||||||
Public Warrants [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Warrants outstanding | shares | 9,300,000 | 0 | 0 | |||||
Private Placement Warrants [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Warrants outstanding | shares | 5,100,000 | 2,300,000 | 2,300,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net Cash Provided by (Used in) Financing Activities | $ 83,114 | $ 7,418 | ||
Net Cash Provided by (Used in) Investing Activities | (175,601) | 2,396 | ||
Net Cash Provided by (Used in) Operating Activities | (171,374) | (11,388) | ||
Other income (expense) | $ 1,877 | $ 2,346 | (17,255) | $ 2,472 |
Revision of Prior Period, Error Correction, Adjustment [Member] | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net Cash Provided by (Used in) Financing Activities | (3,500) | |||
Net Cash Provided by (Used in) Investing Activities | 1,200 | |||
Net Cash Provided by (Used in) Operating Activities | 2,300 | |||
Revision of Prior Period, Reclassification, Adjustment [Member] | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Gain on sale of assets | (2,300) | |||
Other income (expense) | $ 2,300 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021USD ($) | Jun. 30, 2021USD ($) | Dec. 31, 2020 | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Net loss on fair value adjustment | $ 877 | $ (18,261) | |
Private Placement Warrants [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Net loss on fair value adjustment | $ 877 | 8,919 | |
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 | 0.50 |
Measurement Input, Risk Free Interest Rate [Member] | |||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |||
Derivative Liability, Measurement Input | 0.00824 | 0.00824 | 0.00413 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets, Liabilities, Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Loss / (Gain) on fair value adjustments included in earnings | $ (877) | $ 18,261 | |
Private Placement Warrants [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Loss / (Gain) on fair value adjustments included in earnings | (877) | (8,919) | |
Public Warrants [Member] | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Loss / (Gain) on fair value adjustments included in earnings | 27,180 | ||
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 | 6,873 | 6,873 | $ 43,877 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Derivative liability, beginning balance | 43,877 | ||
Settlements | (28,085) | ||
Loss / (Gain) on fair value adjustments included in earnings | (8,919) | ||
Derivative liability, ending balance | 6,873 | 6,873 | |
Fair Value, Recurring [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and Cash Equivalents, Fair Value Disclosure | 365,900 | 365,900 | 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 | 6,873 | 6,873 | 43,877 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Derivative liability, beginning balance | 43,877 | ||
Derivative liability, ending balance | 6,873 | 6,873 | |
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, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Derivative liability, beginning balance | 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 | 365,900 | 365,900 | 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, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Derivative liability, beginning balance | 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 | 6,873 | 6,873 | $ 43,877 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Derivative liability, beginning balance | 43,877 | ||
Derivative liability, ending balance | $ 6,873 | $ 6,873 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 7 Months Ended | 12 Months Ended | ||||
Nov. 30, 2019 | Mar. 31, 2021 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Oct. 23, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Nov. 07, 2019 | |
Property, Plant and Equipment | |||||||||
Property, Plant and Equipment, Gross | $ 286,303 | $ 101,663 | |||||||
Total | 286,303 | 101,663 | |||||||
Depreciation expense | 0 | $ 0 | |||||||
Purchase of property, plant and equipment | $ 20,000 | ||||||||
Proceeds from the sale of capital assets | 2,396 | ||||||||
Gain on disposal of fixed assets | $ 2,300 | 2,346 | |||||||
Merger Agreement With Diamond Peak Holdings Corp [Member] | |||||||||
Property, Plant and Equipment | |||||||||
Property acquired in business combination | $ 23,200 | 23,200 | |||||||
GM | |||||||||
Property, Plant and Equipment | |||||||||
Purchase of property, plant and equipment | $ 1,200 | ||||||||
GM | Note Payable to GM | |||||||||
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 | 38,608 | 38,443 | |||||||
Vehicles | |||||||||
Property, Plant and Equipment | |||||||||
Property, Plant and Equipment, Gross | 373 | 142 | |||||||
Construction in progress | |||||||||
Property, Plant and Equipment | |||||||||
Property, Plant and Equipment, Gross | $ 240,773 | $ 56,529 | |||||||
Purchase of property, plant and equipment | $ 1,200 |
NOTE PAYABLE (Details)
NOTE PAYABLE (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Apr. 17, 2020 | |
Debt Instrument [Line Items] | ||||
Loan amount | $ 1,015 | |||
Debt forgiven | $ 1,015 | |||
PPP Loan | ||||
Debt Instrument [Line Items] | ||||
Loan amount | $ 1,000 | |||
Loan term | 2 years | |||
Debt forgiven | $ 1,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | Jun. 10, 2021item | Jul. 09, 2021item | May 14, 2021item | Jun. 24, 2021item | Jun. 30, 2021USD ($)item | Apr. 16, 2021employeeitem |
Lawsuit Alleging Misappropriation Of Trade Secrets [Member] | ||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||
Number of employees | employee | 2 | |||||
Number of company contractors | 2 | |||||
Number of counts in amended complaint | 28 | |||||
Class Action Lawsuits Alleging Securities Laws Violations [Member] | ||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||
Number of suits or actions filed | 6 | |||||
Stockholder Derivative Complaints [Member] | ||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||
Number of suits or actions filed | 4 | |||||
Number of cases consolidated by the court | 2 | |||||
Number of demands for books and records | 5 | |||||
S E C Inquiry Relating To Merger [Member] | ||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||
Number of subpoenas received | 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 ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) | Jun. 30, 2021 | Oct. 23, 2020USD ($) | May 28, 2020USD ($) | Feb. 01, 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 to GM | ||||||||||||
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 LOSS PER SH_2
CAPITAL STOCK AND LOSS PER SHARE (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Oct. 23, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Shares authorized per Charter | 312,000,000 | 312,000,000 | ||||
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 | 300,000,000 | |||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Preferred Stock, Shares Authorized | 12,000,000 | 12,000,000 | ||||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 | ||||
Common stock, shares issued | 176,606,440 | 176,606,440 | 168,007,960 | |||
Common stock, shares outstanding | 176,606,440 | 176,606,440 | 168,007,960 | |||
BASIC AND DILUTED LOSS PER SHARE | ||||||
Basic and diluted weighted average shares outstanding | 176,585,000 | 73,951,000 | 175,595,000 | 72,931,000 | ||
Stock options | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Share equivalents | 3,800,000 | |||||
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 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 23, 2021 | Oct. 23, 2020 | Jun. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Subsequent Event [Line Items] | |||||
Issuance of common stock | $ 48 | $ 1,098 | $ 6,404 | ||
Common stock issued | 50,000,000 | ||||
Subsequent Event [Member] | Equity Funding Agreement With Y A [Member] | |||||
Subsequent Event [Line Items] | |||||
Agreement Term | 36 months | ||||
Exchange cap (in shares) | 35,144,690 | ||||
Exchange cap, as percentage of outstanding shares | 19.90% | ||||
Minimum share price | $ 7.48 | ||||
Advance Notice maximum percentage | 30.00% | ||||
Advance Notice maximum requirement | $ 30,000 | ||||
Advance Notice share price, as percentage of VWAP | 97.00% | ||||
Common stock issued | 371,287 | ||||
Subsequent Event [Member] | Equity Funding Agreement With Y A [Member] | Scenario, Plan [Member] | |||||
Subsequent Event [Line Items] | |||||
Issuance of common stock | $ 400,000 |