Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 07, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
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 | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 216,976,245 | |
Entity Central Index Key | 0001759546 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 154,232 | $ 244,016 |
Short-term investments | 49,304 | |
Inventory, net | 11,180 | |
Prepaid expenses and other current assets | 37,462 | 47,121 |
Total current assets | 252,178 | 291,137 |
Property, plant and equipment | 220,020 | 382,746 |
Intangible assets | 1,000 | 1,000 |
Other non-current assets | 27,882 | 13,900 |
Total Assets | 501,080 | 688,783 |
Current Liabilities | ||
Accounts payable | 15,634 | 12,098 |
Accrued and other current liabilities | 57,014 | 35,507 |
Purchase price down payment from Foxconn | 100,000 | |
Note payable to Foxconn | 13,500 | |
Total current liabilities | 86,148 | 147,605 |
Warrant and other non-current liabilities | 2,495 | 1,578 |
Total liabilities | 88,643 | 149,183 |
Stockholders' equity | ||
Class A common stock, $0.0001 par value, 450,000,000 shares authorized; 216,904,965 and 196,391,349 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 22 | 19 |
Additional paid in capital | 1,137,628 | 1,084,390 |
Accumulated deficit | (725,213) | (544,809) |
Total stockholders' equity | 412,437 | 539,600 |
Total liabilities and stockholders' equity | $ 501,080 | $ 688,783 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Balance Sheets | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 216,904,965 | 196,391,349 |
Common stock, shares outstanding | 216,904,965 | 196,391,349 |
Statements of Operations
Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Operating expenses | ||||
Selling, general and administrative expenses | $ 60,145 | $ 31,281 | $ 116,105 | $ 79,468 |
Research and development expenses | 19,839 | 56,890 | 92,213 | 225,246 |
Impairment of fixed assets | 74,865 | 74,865 | ||
Amortization of intangible assets | 11,111 | 11,111 | ||
Gain on sale | (101,736) | |||
Total operating expenses | 154,849 | 99,282 | 181,447 | 315,825 |
Loss from operations | (154,849) | (99,282) | (181,447) | (315,825) |
Other (expense) income | ||||
Other (expense) income | (643) | 3,467 | (144) | (13,788) |
Interest income | 1,062 | 9 | 1,187 | 396 |
Loss before income taxes | (154,430) | (95,806) | (180,404) | (329,217) |
Net loss | $ (154,430) | $ (95,806) | $ (180,404) | $ (329,217) |
Income (loss) per share attributable to common shareholders | ||||
Basic (in dollars per share) | $ (0.73) | $ (0.54) | $ (0.89) | $ (1.86) |
Weighted-average number of common shares outstanding | ||||
Basic (in shares) | 211,946 | 178,761 | 203,147 | 176,573 |
Diluted (in shares) | 211,946 | 178,761 | 203,147 | 176,573 |
Statements of Operations (Paren
Statements of Operations (Parenthetical) $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Statements of Operations | |
Reimbursement expense | $ 18.4 |
Statements of Stockholder's Equ
Statements of Stockholder's Equity (Deficit) - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
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, value | 3,822 | 3,822 | ||
Issuance of common stock (in shares) | 2,136 | |||
Common stock issued for exercise of warrants | $ 1 | 194,797 | 194,798 | |
Common stock issued for exercise of warrants (in shares) | 7,984 | |||
Common stock issued under Equity Purchase Agreement | 20,000 | 20,000 | ||
Common stock issued under Equity Purchase Agreement (in shares) | 3,947 | |||
Stock compensation | 12,365 | 12,365 | ||
Net loss | (329,217) | (329,217) | ||
Ending balance at Sep. 30, 2021 | $ 18 | 996,146 | (463,658) | 532,506 |
Ending balance (in shares) at Sep. 30, 2021 | 182,075 | |||
Beginning balance at Jun. 30, 2021 | $ 18 | 966,837 | (367,852) | 599,003 |
Beginning balance (in shares) at Jun. 30, 2021 | 176,606 | |||
Issuance of common stock, value | 2,724 | 2,724 | ||
Issuance of common stock (in shares) | 1,522 | |||
Common stock issued under Equity Purchase Agreement | 20,000 | 20,000 | ||
Common stock issued under Equity Purchase Agreement (in shares) | 3,947 | |||
Stock compensation | 6,585 | 6,585 | ||
Net loss | (95,806) | (95,806) | ||
Ending balance at Sep. 30, 2021 | $ 18 | 996,146 | (463,658) | 532,506 |
Ending balance (in shares) at Sep. 30, 2021 | 182,075 | |||
Beginning balance at Dec. 31, 2021 | $ 19 | 1,084,390 | (544,809) | 539,600 |
Beginning balance (in shares) at Dec. 31, 2021 | 196,391 | |||
Issuance of common stock, value | $ 1 | 1,852 | 1,853 | |
Issuance of common stock (in shares) | 1,106 | |||
RSU Vesting (in shares) | 1,944 | |||
Common stock issued under Equity Purchase Agreement | $ 2 | 40,437 | 40,439 | |
Common stock issued under Equity Purchase Agreement (in shares) | 17,464 | |||
Stock compensation | 10,949 | 10,949 | ||
Net loss | (180,404) | (180,404) | ||
Ending balance at Sep. 30, 2022 | $ 22 | 1,137,628 | (725,213) | 412,437 |
Ending balance (in shares) at Sep. 30, 2022 | 216,905 | |||
Beginning balance at Jun. 30, 2022 | $ 21 | 1,106,521 | (570,783) | 535,759 |
Beginning balance (in shares) at Jun. 30, 2022 | 205,871 | |||
RSU Vesting (in shares) | 132 | |||
Common stock issued under Equity Purchase Agreement | $ 1 | 26,704 | 26,705 | |
Common stock issued under Equity Purchase Agreement (in shares) | 10,902 | |||
Stock compensation | 4,403 | 4,403 | ||
Net loss | (154,430) | (154,430) | ||
Ending balance at Sep. 30, 2022 | $ 22 | $ 1,137,628 | $ (725,213) | $ 412,437 |
Ending balance (in shares) at Sep. 30, 2022 | 216,905 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities | ||
Net loss | $ (180,404) | $ (329,217) |
Adjustments to reconcile net loss to cash used by operating activities: | ||
Stock-based compensation | 10,949 | 12,365 |
Gain on disposal of fixed assets | (101,736) | |
Impairment of fixed assets | 74,865 | |
Amortization of intangible assets | 11,111 | |
Other non-cash changes | 26,108 | 13,903 |
Changes in assets and liabilities: | ||
Accounts receivables | 21 | |
Inventory | (36,695) | |
Prepaid expenses and other assets | 10,289 | (3,001) |
Accounts payable | 5,120 | 10,929 |
Accrued expenses and other liabilities | 20,482 | 37,649 |
Net Cash used by operating activities | (171,022) | (246,240) |
Cash flows from investing activities | ||
Purchases of capital assets | (50,563) | (255,528) |
Purchases of short-term assets | (49,304) | |
Investment in Foxconn Joint Venture | (13,500) | |
Proceeds from the sale of capital assets | 38,813 | |
Net Cash used by investing activities | (74,554) | (255,528) |
Cash flows from financing activities | ||
Proceeds from notes payable | 13,500 | 82,016 |
Down payments received from Foxconn | 100,000 | 82,000 |
Issuance of common stock | 1,853 | 3,822 |
Proceeds from Equity Purchase Agreement with YA, net of issuance costs | 40,439 | 20,000 |
Net Cash provided by financing activities | 155,792 | 105,838 |
Decrease in cash and cash equivalents | (89,784) | (395,930) |
Cash and cash equivalents, beginning balance | 244,016 | 629,761 |
Cash and cash equivalents, ending balance | 154,232 | 233,831 |
Non-cash items | ||
Derecognition of Foxconn down payments for sale of capital assets | 200,000 | |
Capital assets acquired with payables | $ 2,162 | $ 10,793 |
ORGANIZATION AND DESCRIPTION OF
ORGANIZATION AND DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2022 | |
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,” the “Company” or “we”), is an original equipment manufacturer (“OEM”) of electric light duty vehicles focused on the commercial fleet market. Since inception, we have been developing our flagship vehicle, the Endurance, an electric full-size pickup truck. In September of 2022, the Company started commercial production of the Endurance with the first two vehicles completing assembly. Production volume is expected to ramp slowly primarily as a result of supply chain constraints, with engineering readiness, quality, and part availability continuing to govern the speed of launch. We anticipate sales starting in the fourth quarter of 2022 subject to full homologation, testing and required certification. We intend to design, develop, engineer, test and industrialize all-electric commercial vehicles (“EC Vehicles”) leveraging the Foxconn ecosystem, including its Mobility-in-Harmony (“MIH”) consortium, which would also be built at the Foxconn Ohio plant. Foxconn Transactions The Company has entered into a series of transactions with affiliates of Hon Hai Technology Group (“HHTG”; either HHTG or applicable affiliates of HHTG are referred to herein as “Foxconn”), beginning with the Agreement in Principal that was announced on September 30, 2021, pursuant to which we entered into definitive agreements to sell our manufacturing facility in Lordstown, Ohio under an Asset Purchase Agreement, outsource manufacturing of the Endurance to Foxconn under a Contract Manufacturing Agreement, and established the Foxconn Joint Venture (as defined below) for the development of other electric vehicles that included $100 million of capital commitment from Foxconn, of which $45 million was made available to us to fund our 45% share under the Notes (as defined below), each discussed in greater detail below. On November 7, 2022, we entered into an Investment Agreement with Foxconn under which Foxconn agreed to purchase $70 million of our Class A common stock and up to $100 million in convertible preferred stock, subject to certain conditions, including regulatory approvals and achievement of vehicle development milestones established by the parties (the “Investment Agreement”). Pursuant to the Investment Agreement, the parties have agreed to terminate the Foxconn Joint Venture and cause development activities to be undertaken directly by us. (See Note 8 – Subsequent Events.) The Asset Purchase Agreement, Contract Manufacturing Agreement, the Joint Venture Agreement, Note, Security and Guarantee Agreement and the Investment Agreement together are herein referred to as the “Foxconn Transactions.” Closing of the APA with Foxconn On May 11, 2022, Lordstown EV Corporation, a Delaware corporation and wholly-owned subsidiary of the Company (“Lordstown EV”), closed the transactions contemplated by the asset purchase agreement with Foxconn EV Technology, Inc., an Ohio corporation, and an affiliate of HHTG, dated November 10, 2021 (the “Asset Purchase Agreement” or “APA” and the closing of the transactions contemplated thereby, the “APA Closing”). Pursuant to the APA, Foxconn purchased Lordstown EV’s manufacturing facility located in Lordstown, Ohio. Lordstown EV continues to own our hub motor assembly line, as well as our battery module and pack line assets, certain tooling, intellectual property rights and other excluded assets, and outsourced all of the manufacturing of the Endurance to Foxconn under the Contract Manufacturing Agreement (defined below). Lordstown EV also entered into a lease pursuant to which Lordstown EV leases space located at the Lordstown, Ohio facility from Foxconn for its Ohio-based employees for a term equal to the duration of the Contract Manufacturing Agreement plus 30 days. The right of use asset and liability related to this lease is immaterial. The purchase price for the Lordstown facility consisted of $230 million and a reimbursement payment for certain operating and expansion costs incurred by Lordstown EV from September 1, 2021 until the APA Closing. Foxconn made down payments of the purchase price totaling $200 million through April 15, 2022, of which $100 million was received during the nine months ended September 30, 2022. The $30 million balance of the purchase price and a reimbursement payment of approximately $27.5 million were paid at the APA Closing; $17.5 million was attributable to the reimbursement of certain operating expenses reported in research and development and $10 million was attributable to expansion costs. Under the terms of the APA, the $17.5 million reimbursement costs were an estimate which was subsequently increased to $18.4 million as of September 30, 2022. Research and development costs are presented net of the $18.4 million reimbursement of costs by Foxconn for the nine months ended September 30, 2022. Included in the $18.4 million reimbursement were approximately $7.7 million of research and development costs incurred in 2021. Of the $10 million expansion costs, $7.5 million is attributable to assets sold to Foxconn at the APA Closing with the remaining $2.5 million being a prepayment for open purchase orders as of the APA Closing related to expansion costs. Also in connection with the APA Closing, the Company issued warrants to Foxconn that are exercisable until the third anniversary of the APA Closing for 1.7 million shares of Class A common stock at an exercise price of $10.50 per share (the “Foxconn Warrants”). In October 2021, prior to entering into the APA, Foxconn purchased 7.2 million shares of the Company’s Class A common stock for approximately $50.0 million. Contract Manufacturing Agreement On May 11, 2022, Lordstown EV and Foxconn entered into a manufacturing supply agreement (the “Contract Manufacturing Agreement” or “CMA”) in connection with the APA Closing. Pursuant to the Contract Manufacturing Agreement, Foxconn will (i) manufacture the Endurance at the Lordstown facility for a fee per vehicle, (ii) following a transition period, procure components for the manufacture and assembly of the Endurance, subject to sourcing specifications provided by Lordstown EV, and (iii) provide certain post-delivery services. The CMA provides us with an entirely variable manufacturing cost structure and alleviates us of the burden to invest in and maintain the facility. The CMA requires Foxconn to use commercially reasonable efforts to assist with reducing component and logistics costs, and otherwise improving the commercial terms of procurement with suppliers, and the parties to work together to reduce the overall bill of materials cost of the Endurance. Foxconn conducts testing in accordance with procedures established by us and we are generally responsible for all motor vehicle regulatory compliance and reporting. The Contract Manufacturing Agreement also allocates responsibility between the parties for other matters, including component defects, quality assurance and warranties of manufacturing and design. Foxconn invoices us for manufacturing costs on a fee per vehicle produced basis, and to the extent purchased by Foxconn, component and other costs. Production volume and scheduling are based upon rolling weekly forecasts we provide that are generally binding only for a twelve-week period, with some ability to vary the quantities of vehicle type. The CMA became effective on May 11, 2022 and continues for an initial term of 18 months plus a 12-month notice period in the event either party seeks to terminate the agreement. In the event no party terminates the Contract Manufacturing Agreement following the initial term, it will continue on a month-to-month basis unless terminated upon 12 months’ prior notice. The CMA can also be terminated by either party due to a material breach of the agreement and will terminate immediately upon the occurrence of any bankruptcy event. Foxconn Joint Venture Agreement Also in connection with the APA Closing, Lordstown EV and Foxconn entered into a Limited Liability Company Agreement (the “Foxconn Joint Venture Agreement”) and filed a Certificate of Formation on May 11, 2022 to form MIH EV Design LLC, a Delaware limited liability company, as a joint venture to design, develop, test and industrialize EC Vehicles (the “Foxconn Joint Venture”). Foxconn committed $100 million to the Foxconn Joint Venture, consisting of $55 million in the form of direct capital contributions, and a $45 million loan to Lordstown EV pursuant to and on the conditions set forth in the Notes (as defined below), the proceeds of which are only to be used to fund our capital contributions to the Foxconn Joint Venture. Initially, Foxconn has an ownership interest in the Foxconn Joint Venture of 55% and Lordstown EV has a 45% interest. On June 24, 2022, Foxconn made its initial investment totaling million, was invested with proceeds from issuance of the Notes on June 27, 2022. The initial funding was provided in anticipation of funding to be agreed upon vehicle development activities. Pursuant to the Investment Agreement entered into on November 7, 2022, the parties have agreed to terminate the Foxconn Joint Venture and will no longer be subject to their capital commitments. In connection with the termination, all remaining funds held by the Foxconn Joint Venture will be distributed to Foxconn as a distribution for amounts contributed by it and as a repayment in full of any loans advanced by it to Lordstown EV. (See Note 8 – Subsequent Events.) The following description of the Foxconn Joint Venture and the Notes reflect the terms in effect until the termination of the obligations of the parties with respect to the Foxconn Joint Venture is effected by the parties as a condition to the closing of the initial funding under the Investment Agreement. The Foxconn Joint Venture Agreement contemplates a license to the Foxconn Joint Venture to use certain intellectual property owned by Foxconn and its affiliated entities relating to certain automotive related designs (the “FX IP”) to develop EC Vehicles, with the Foxconn Joint Venture owning all intellectual property rights it develops (other than the FX IP). The Foxconn Joint Venture Agreement also contemplates an exclusive license of all intellectual property owned by the Foxconn Joint Venture relating to any EC Vehicle designed by the Foxconn Joint Venture to Lordstown EV for use in the North American commercial market, and to Foxconn for use outside of North America, each subject to customary and reasonable licensing fees. The parties have not yet entered into these licensing arrangements. The Foxconn Joint Venture Agreement provides for oversight of the Foxconn Joint Venture by a five-person management board with Foxconn initially having the right to appoint three members and Lordstown EV initially having the right to appoint two members. Certain major decisions, including, but not limited to, the approval of budgets, raising additional equity, incurring third party indebtedness, mergers, related party transactions, dissolution and increases in the size of the management board, require the consent of at least one member of the management board appointed by Lordstown EV for so long as we own at least 30% of the Foxconn Joint Venture. Other than with respect to certain customary permitted transfers, neither Lordstown EV nor Foxconn is permitted to transfer its interest in the Foxconn Joint Venture for a period of three years following the formation of the Foxconn Joint Venture. Thereafter, each party has a right of first refusal and a tag-along right with respect to any proposed transfer by the other party. Under the Foxconn Joint Venture Agreement, we are designated as Foxconn’s primary development partner in North America. The Foxconn Joint Venture Agreement provides for our development of a portfolio of electric vehicles targeting commercial fleet customers, built at the Lordstown, Ohio plant using the advanced designs from Foxconn and its affiliates. The agreement also provides that Foxconn will supply the FX IP for the vehicles to be customized for and homologated in North America by the Foxconn Joint Venture, along with certain vehicle components and subsystems, enabling us to leverage Foxconn’s manufacturing expertise, supply-chain network and extensive experience in software development and integration (key capabilities in the production of EVs) to complement our EV design, development, engineering and homologation contributions. Note, Guaranty and Security Agreements The Foxconn Joint Venture Agreement provides that Lordstown EV, as the issuer, and guaranteed by our wholly-owned subsidiary Lordstown EV Sales LLC, and the Company (collectively, the “Note Parties”), will enter into note, guaranty and security agreements (the “Notes”) with Foxconn, as the payee, pursuant to which Foxconn makes term loans to Lordstown EV in an aggregate original principal amount not to exceed $45 million as advances are requested by Lordstown EV. On June 27, 2022, Foxconn funded $13.5 million in exchange for Lordstown EV delivering a Note in such amount. The proceeds were used for our initial investment in the Foxconn Joint Venture. To secure its obligations under the Notes, Lordstown EV has granted Foxconn a security interest in (i) all of Lordstown EV’s equity interests in the Foxconn Joint Venture, and (ii) personal property constituting the hub motor, battery module and battery pack assembly lines, among other assets. We may use the proceeds only to fund our capital commitment of $45 million to the Foxconn Joint Venture, pursuant to the Foxconn Joint Venture Agreement. Pursuant to the Investment Agreement, the parties have agreed to terminate the Foxconn Joint Venture and the parties will no longer be subject to their capital commitments. In connection with the termination, all remaining funds held by the Foxconn Joint Venture will be distributed to Foxconn as a distribution for amounts contributed by it and as a repayment in full of any loans advanced by it to Lordstown EV and the security interest in the assets of the Company will be released. The Notes will accrue interest at a rate of 7.0% per annum, to be paid-in-kind, and are due on the earlier of (i) the first anniversary of issuance and (ii) December 31, 2025, unless earlier terminated in the event of a default. Pursuant to the Foxconn Joint Venture Agreement, each Note maturing before December 31, 2025 will be refinanced by Foxconn with a new Note in the principal amount equal to the outstanding principal amount of the refinanced Note, plus accrued and unpaid interest thereon, and will have terms substantively identical to the terms of the refinanced Note. Events of default include, among other things, the breach of certain covenants or representations, defaults under other loans or obligations, judgments, orders or claims not vacated or otherwise paid, involvement in bankruptcy proceedings, an occurrence of a change of control or the loss of any material collateral (as such terms are defined in the Notes). Each Note is to contain negative covenants which, while in effect, restrict the Note Parties from, among other things, incurring certain types of other debt (subject to various baskets), making certain expenditures or investments, any mergers or other fundamental changes, or changing the character of the Note Parties’ businesses. While it is not intended that any amounts will become due under the Notes prior to December 31, 2025, each Note has a term of one year and the refinancing of each Note is subject to certain conditions, including the absence of an event of default. Given the risk of the incurrence of an event of default, we classified the Notes as a current liability. Each Note and all accrued but unpaid interest thereon may be prepaid, in whole or in part, at any time or from time to time, without any penalty or premium. Lordstown EV is required to prepay each Note and all accrued but unpaid interest thereon with proceeds received upon distributions from the Foxconn Joint Venture or cash proceeds of certain asset dispositions. Ongoing Operations We need additional funding to execute our business plan that includes scaling production of the Endurance and developing other vehicles, due to the capital required to complete testing and validation, purchase the raw materials and vehicle components for saleable vehicles, invest in the hard tooling to lower our bill of materials cost and fund future engineering and corporate expenditures. By entering into the Investment Agreement with Foxconn, subject to the conditions set forth in the Investment Agreement, we expect to receive approximately million is restricted for use in connection with the planning, designing, developing, engineering, testing, industrializing, certifying, homologating and launching one or more electric vehicles in collaboration with Foxconn (the “EV Program”). The additional capital that may be available to us under the Investment Agreement is subject to regulatory approvals and achieving certain program milestones, among other conditions. Notwithstanding this funding arrangement, we will continue to require substantial additional capital in order to fulfill our business plans under the EV Program and otherwise. As discussed under Note 8 – Subsequent Events and Part II, Item 5. Other Events, on November 7, 2022, the Company entered into an Open Market Sales Agreement (the “Sales Agreement”) with Jefferies LLC, as agent (“Jefferies”), pursuant to which the Company may offer and sell up to approximately 50.2 million shares of its Class A common stock from time to time through Jefferies (the “ATM Offering”). The Company intends to file a prospectus supplement, concurrent with this Form 10-Q, with the Securities and Exchange Commission in connection with the ATM Offering (the “Prospectus Supplement”) under the Company’s existing shelf Registration Statement on Form S-3 (File No. 333-267052), which became effective on September 2, 2022 (the “Registration Statement”). The Company is not obligated to make any sales of shares of Class A common stock under the Sales Agreement. Actual sales will depend on a variety of factors and no assurance can be given that the Company will sell any shares of Class A common stock under the Sales Agreement, or, if it does, as to the price or amount of the shares that it sells or the dates when such sales will take place and, even if funds are raised under the ATM Offering, the Company will require additional financing to execute its business plan. It is expected that the Sales Agreement will replace our existing Equity Purchase Agreement (as defined below) with YA II PN, LTD. (“YA”). See Note 8 – Subsequent Events and Part II, Item 5. Other Events for additional information. We continue to explore all financing alternatives as our operations are anticipated to require significant capital for the foreseeable future, along with maintaining liquidity in excess of our targeted minimum liquidity of $75 million to $100 million. We are also seeking strategic partners, including other automakers, to provide additional capital and other support to enable us to scale the Endurance program and to develop new vehicle programs in coordination with Foxconn or otherwise. 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. Basis of Presentation The accompanying unaudited condensed consolidated interim financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“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. 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. Liquidity and Going Concern The accompanying unaudited condensed consolidated interim financial statements have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these unaudited condensed consolidated interim 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 (“FASB”) 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 unaudited condensed consolidated interim 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 unaudited condensed consolidated interim financial statements are issued. When substantial doubt exists, 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 unaudited condensed consolidated interim 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 unaudited condensed consolidated interim financial statements are issued. We had an accumulated deficit of $725.2 million at September 30, 2022 and a net loss of $180.4 million for the nine months ended September 30, 2022. Since inception, we have been developing our flagship vehicle, the Endurance, an electric full-size pickup truck. In September of 2022, the Company started commercial production of the Endurance with the first two vehicles completing assembly. Production volume is expected to ramp slowly primarily as a result of supply chain constraints, with engineering readiness, quality, and part availability continuing to govern the speed of launch. We anticipate sales starting in the fourth quarter of 2022 subject to full homologation, testing and required certification. The Company’s ability to continue as a going concern is dependent on our ability to effectively implement and realize the benefits of the Foxconn Transactions, raise substantial additional capital, complete the development of the Endurance, obtain regulatory approval, launch the sale of the Endurance and develop additional vehicles. The Company’s current level of cash and cash equivalents are not sufficient to execute our business plan, achieve scaled production of the Endurance due to the substantial additional capital required to complete testing and validation, purchase the raw materials and vehicle components for saleable vehicles, invest in the hard tooling to lower our bill of materials cost and fund future engineering and corporate expenditures. For the foreseeable future, we will incur significant operating expenses, capital expenditures and working capital funding that will deplete our cash on hand. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of at least from the date of issuance of these condensed consolidated financial statements. As a result of having insufficient capital to execute our business plan, we have substantially limited investments in tooling and other aspects of the Endurance and our operations. The trade-offs we are making, including related to hard tooling, are likely to result in higher costs for the Company in the future and are likely to slow or impair future design enhancements or options we may otherwise seek to make available to Endurance customers. Our research and development expenses and capital expenditures are significant due to spending needed to achieve certification, homologation and all the related activities to commence commercial sale of the Endurance. During 2021, we experienced the stress that the COVID-19 pandemic put on the global automotive supply chain. Furthermore, in 2021 and 2022, we have incurred significant freight charges due in part to the COVID-19 pandemic and challenging logistics that created delays and higher pricing on standard freight, as well as substantially higher expedited freight charges to mitigate delays. The Company expects continued supply chain constraints including the availability of and long lead times for components, as well as raw materials and other pricing pressures that are likely to negatively impact our cost structure and production timeline. We also have meaningful exposure to material losses and costs related to ongoing litigation for which insurance has been denied for certain claims and may be unavailable for those and other claims. See Note 5 – Commitments and Contingencies for additional information. In an effort to alleviate these conditions, management continues to seek and evaluate opportunities to raise additional funds through the issuance of equity or debt securities, asset sales, through arrangements with strategic partners or through financing from government or financial institutions. We have engaged a financial advisor to advise the Company on additional financing alternatives . No assurances can be given that any such financing will be available on commercially reasonable terms or at all. As further described in Note 7, on July 23, 2021, the Company entered into the Equity Purchase Agreement with YA, pursuant to which YA has committed to purchase up to $400 million of its Class A common stock, at the Company’s direction from time to time, subject to the satisfaction of certain conditions (the “Equity Purchase Agreement”). During the nine months ended September 30, 2022, the Company issued 17.5 million shares to YA and received $40.4 million, net of equity issuance costs. During the nine months ended September 30, 2021, the Company issued million, net of equity issuance costs. The actual amount that the Company may raise under this agreement will depend on market conditions and limitations in the agreement. In particular, without stockholder approval, the amount of shares the Company can issue would be limited to up to million shares due to the conditions described above. In addition, it is expected that the Sales Agreement will replace the Equity Purchase Agreement as the means for the Company to obtain financing through the periodic sale of Class A common stock in at-the-market transactions, subject to various conditions and limitations, and the Equity Purchase Agreement will be terminated. See Note 8 – Subsequent Events and Part II, Item 5. Other Events for additional information. On May 11, 2022, pursuant to the APA Closing, the Company sold Closing of the APA with Foxconn ). Foxconn made down payments of the purchase price totaling $200 million through April 15, 2022, of which $100 million was received during the nine months ended September 30, 2022, and the $30 million balance of the purchase price as well as a reimbursement payment of approximately $27.5 million were paid at the APA Closing. Under the terms of the APA, the $17.5 million reimbursement costs were an estimate which was subsequently increased to $18.4 million as of September 30, 2022, and on October 13, 2022, the final settlement payment was received. In addition to providing the Company with additional capital, the Foxconn Transactions provide opportunity for the benefits of scaled manufacturing, more cost-effective access to certain raw materials, components and inputs, and will reduce the overhead costs associated with the Lordstown facility that were previously borne by the Company. In connection with the Foxconn Joint Venture Agreement, Foxconn committed to make term loans to Lordstown EV exclusively to fund our capital commitments to the Foxconn Joint Venture in an aggregate original principal amount not to exceed $45 million pursuant to Notes. As of September 30, 2022, million was borrowed by Lordstown EV under a Note dated June 24, 2022. Under the Investment Agreement, the parties have agreed to terminate the Foxconn Joint Venture and the parties will no longer be subject to their capital commitments. In connection with the termination, all remaining funds held by the Foxconn Joint Venture will be distributed to Foxconn as a distribution for amounts contributed by it and as a repayment in full of any loans advanced by it to Lordstown EV. By entering into the Investment Agreement with Foxconn, subject to the conditions set forth in the Investment Agreement, we expect to receive approximately $52.7 million from the issuance of our Class A common stock and Preferred Stock in the fourth quarter of 2022, of which approximately $22.7 million can be used for general corporate purposes and $30 million is restricted for use in connection with the EV Program. The additional capital that may be available to us under the Investment Agreement is subject to regulatory approvals and achieving certain program milestones, among other conditions. Notwithstanding this funding arrangement, we will continue to require substantial additional capital in order to fulfill our business plans under the EV Program and otherwise. (See Note 8 - Subsequent Events for additional information.) As we seek additional sources of financing and strategic partners, there can be no assurance that such financing would be available to us on favorable terms or at all. The Company’s ability to obtain additional financing is subject to several factors, including market and economic conditions, the significant amount of capital required, the fact that the Endurance bill of materials cost is currently, and expected to continue to be, substantially higher than the anticipated selling price of the Endurance, uncertainty surrounding regulatory approval and the performance of the vehicle, meaningful exposure to material expenses and losses related to ongoing litigation, the market price of our stock, our performance and investor sentiment with respect to the Company and our business and industry, as well as our ability to effectively implement and realize the expected benefits of the Foxconn Transactions. As a result of these uncertainties, and notwithstanding management’s plans and efforts to date, there continues to be substantial doubt about the Company’s ability to continue as a going concern. If we are unable to raise substantial additional capital in the near term, our operations and production plans will be scaled back or curtailed. If the funds raised are insufficient to provide a bridge to full commercial production at a profit, our operations could be severely curtailed or cease entirely |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates in Financial Statement Preparation The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, if any, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Asset impairment loss calculations require us to apply judgment in estimating asset group fair values and future cash flows, including periods of operation, projections of product pricing, production levels, product costs, market supply and demand, inflation, projected capital spending and, specifically for fixed assets acquired, assigned useful lives, functional obsolescence, asset condition and discount rates. When performing impairment tests, we estimate the fair values of the assets using management’s best assumptions, which we believe would be consistent with the assumptions that a hypothetical marketplace participant would use. Estimates and assumptions used in these tests are evaluated and updated as appropriate. The assessment of whether an asset group should be classified as held and used or held for sale requires us to apply judgment in estimating the probable timing of the sale, and in testing for impairment loss, judgment is required in estimating the net proceeds from the sale. Actual asset impairment losses could vary considerably from estimated impairment losses if actual results are not consistent with the assumptions and judgments used in estimating future cash flows and asset fair values. Cash, cash equivalents and short-term investments 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. At September 30, 2022 our cash and cash equivalents totaled approximately $154.2 million. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Our short-term investments consist primarily of liquid investment grade commercial paper, which are diversified among individual issuers, including non-U.S. governments, non-U.S. governmental agencies, supranational institutions, banks and corporations. At September 30, 2022, we had short-term investments with a fair value of approximately million with maturities in January and February of 2023. The short-term investments are accounted for as available-for-sale securities. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities. The Company maintains its cash in bank deposit and securities accounts that exceed federally insured limits. We have not experienced significant losses in such accounts and management believes it is not exposed to material credit risk. Inventory and Inventory Valuation Inventory is stated at the lower of cost or net realizable value (“LCNRV”). Net realizable value (“NRV”) is the estimated future selling price of the inventory in the ordinary course of business. Non-cash charges to reflect the NRV of inventory on hand are recorded within Selling, General & Administrative expenses in the Company’s condensed consolidated statement of operations. Property, plant and equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation will be computed using the straight-line method over the estimated useful lives of the related assets. 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. See Note 4 for details regarding our impairment. Equity-Method Investments We recognize our investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence but not control, under the equity method of accounting. We initially record our investments based on our cash invested. 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, testing and manufacturing costs, along with expenditures for prototype manufacturing, testing, validation, certification, contract and other professional services and costs associated with operating the Lordstown facility, prior to its sale. 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 the Public Warrants (as defined below), the Private Warrants (as defined below) and the Foxconn 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, the Private Warrants and the Foxconn Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Public Warrants, the Private Warrants and the Foxconn Warrants as liabilities at their fair value and adjusts the Public Warrants, the Private Warrants and the Foxconn 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. The Company accounts for the BGL Warrants as equity as these warrants qualify as share-based compensation under ASC Topic 718. 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. The Company does not have material uncertain tax positions. Recent accounting pronouncements In February 2016, FASB issued ASU 2016-02, Leases organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted ASC 842 effective January 1, 2021, but there was no material impact on the condensed consolidated financial statements. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2022 | |
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 Company has short-term investments which are primarily commercial paper that are classified as Level II. The valuation inputs for the short-term investments are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets. The Company has issued the following warrants: (i) warrants (the “Public Warrants”) to purchase shares of Class A common stock with an exercise price of $11.50 per share, (ii) warrants (the “Private Warrants”) to purchase Class A common stock with an exercise price of $11.50 per share, (iii) warrants (the “BGL Warrants”) to purchase Class A common stock with an exercise price of $10.00 per share, and (iv) the Foxconn Warrants to purchase shares of Class A common stock with an exercise price of $10.50. The BGL Warrants are classified as equity as they qualify as share-based compensation under ASC Topic 718. During the nine months ended September 30, 2021, approximately 6.7 million Public Warrants and 0.6 million of the Private Warrants were exercised which resulted in cash proceeds of $82.0 million. As of December 31, 2021 and September 30, 2022, there were 2.3 million Private Warrants, 1.6 million BGL Warrants and no Public Warrants outstanding. Additionally, as of September 30, 2022, there were also 1.7 million Foxconn Warrants outstanding. The fair value of the Foxconn Warrants was $0.3 million at issuance. The Public Warrants, the Private Warrants and the Foxconn 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 Warrants, the Private Warrants, and the Foxconn Warrants: Three months ended Three months ended Nine months ended Nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Public Warrants $ — $ — $ — $ (27,180) Private Warrants (523) 3,344 (246) 12,263 Foxconn Warrants (238) — (238) — Net (loss) gain on changes in fair value $ (761) $ 3,344 $ (484) $ (14,918) 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 and the Foxconn 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 and Black Scholes option pricing model, respectively, that use 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 model simulates risk-neutral stock price paths utilizing two parameters – a drift term (based on the risk-free rate and assumed volatility) and an error term (determined using a random number and assumed volatility). 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 applicable 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. The Foxconn Warrants do not have any redemption features and their fair value was measured using the Black-Scholes closed-form option pricing model. Inputs to the model include remaining term, prevailing stock price, strike price, risk-free rate, and volatility. The stock price volatility rates utilized were 90% and 50% for the valuations as of September 30, 2022 and December 31, 2021, respectively. 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 and the Foxconn Warrants, as well as the volatility implied by the traded options of the Company. The risk-free rates utilized were 4.173% and 1.123% for the valuations as of September 30, 2022 and December 31, 2021, respectively, for the Private Warrants. The risk-free rate utilized for the valuation of the Foxconn Warrants as of September 30, 2022 was 4.173%. The following tables summarize the valuation of our financial instruments (in thousands): Total Quoted prices in active markets (Level 1) Prices with observable inputs (Level 2) Prices with unobservable inputs (Level 3) September 30, 2022 Cash and cash equivalents $ 154,232 $ 154,232 $ — $ — Short-term investments 49,304 — 49,304 — Private Warrants 731 — — 731 Foxconn Warrants 561 — — 561 Total Quoted prices in active markets (Level 1) Prices with observable inputs (Level 2) Prices with unobservable inputs (Level 3) December 31, 2021 Cash and cash equivalents $ 244,016 $ 244,016 $ — $ — Short-term investments — — — — Private Warrants 485 — — 485 The following table summarizes the changes in our Level 3 financial instruments (in thousands): Balance at December 31, 2021 Additions Settlements Loss on fair value adjustments included in earnings Balance at September 30, 2022 Private Warrants $ 485 — — 246 $ 731 Foxconn Warrants — 323 — 238 561 |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2022 | |
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) September 30, 2022 December 31, 2021 Property, Plant & Equipment Land $ — $ 326 Buildings — 6,223 Machinery and equipment 43,723 39,073 Tooling 127,225 — Construction in progress 49,072 337,124 $ 220,020 $ 382,746 Less: Accumulated depreciation — — Total $ 220,020 $ 382,746 As of December 31, 2021, construction in progress included manufacturing equipment, operating equipment and other general assets, retooling and construction at the Company's facilities in Lordstown, Ohio, Farmington Hills, Michigan, and Irvine, California, along with tooling held at various supplier locations. During the nine months ended September 30, 2022, the Company sold its manufacturing facility, certain equipment, and other assets located in Lordstown, Ohio and recorded a gain of $101.7 million. We continue to own our hub motor assembly line, as well as our battery module and pack line assets, certain tooling and other excluded assets. As all of our fixed assets currently support the production of the Endurance, we determined that our assets represent one asset group as this is the lowest level for which identifiable cash flows are available. In September of 2022, we began commercial production with two vehicles completing assembly and completed assets were transferred to their respective asset classes. Depreciation during the quarter ended September 30, 2022 was immaterial. As of the end of the fiscal years ended December 31, 2020 and December 31, 2021, the Company determined that there was a substantial doubt in our ability to continue as a going concern. Our capital constraints have li mited our ability to: (a) invest in hard tooling for scaled production of the Endurance and (b) establish multi-year production volumes consistent with our suppliers’ expectations. These factors together result in a bill of materials (“BOM”) cost for the Endurance that is significantly higher than the expected selling price. As of September 30, 2022, property, plant, and equipment was reviewed for potential impairment for recoverability by comparing the carrying amount of our asset group to estimated undiscounted future cash flows expected to be generated by the asset group. As the carrying amount of our asset group exceeds its estimated undiscounted future cash flows, we recognized a $74.9 million charge based on the difference between the carrying value of the fixed assets and their fair value. The fair value was based on total enterprise value using level 1 inputs as we believe this technique results in the highest and best use of a hypothetical marketplace participant. Additional impairments could occur in future periods. As of September 30, 2022, construction in progress primarily includes certain production equipment and tooling not yet placed in service and uninstalled equipment acquired for higher capacity production, and general assets at Farmington Hills, Michigan, and Irvine, California. We outsource all of the manufacturing of the Endurance and operation of certain remaining assets to Foxconn under the Contract Manufacturing Agreement. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 5 — COMMITMENTS AND CONTINGENCIES The Company has entered into a supply agreement with Samsung to purchase lithium-ion cylindrical battery cells. The agreement provides for certain pricing and minimum quantity parameters, including our obligation to purchase such minimum amounts, subject to change for increases in raw material pricing. The agreement was amended for 2022 such that our minimum obligations for the year were satisfied as of September 30, 2022. The Company is subject to extensive pending and threatened legal proceedings arising in the ordinary course of business and we have already incurred, and expect to continue to incur, significant legal expenses in defending against these claims . The Company records a liability for loss contingencies in the condensed consolidated interim financial statements when a loss is known or considered probable and the amount can be reasonably estimated. The Company has and may in the future enter into discussions regarding settlement of these matters, and may enter into settlement agreements if it believes it is in the best interest of the Company. Settlement by the Company or adverse decisions with respect to the matters disclosed, individually or in the aggregate, may result in liability material to the Company’s condensed consolidated results of operations, financial condition or cash flows. During the three and nine months ended September 30, 2022, the Company recorded accruals of $30.0 million and $32.0 million, respectively, for certain of its outstanding legal proceedings within Accrued and other current liabilities on its Consolidated Balance Sheet. The accrual is based on current information, legal advice and the potential impact of the outcome of one or more claims on related matters and may be adjusted in the future based on new developments This accrual does not reflect a full range of possible outcomes for these proceedings or the full amount of any damages alleged, which are significantly higher. Furthermore, the Company may use Class A common stock as consideration in any settlement. While the Company believes that additional losses beyond current accruals are likely, and any such additional losses may be significant, it cannot presently estimate a possible loss contingency or range of reasonably possible loss contingencies beyond current accruals. Estimating probable losses requires the analysis of multiple forecasted factors that often depend on judgments and potential actions by third parties. Lordstown was notified by its primary insurer under our post-merger directors and officers insurance policy that the insurer is taking the position that no coverage is available for the consolidated securities class action, various shareholder derivative actions, the consolidated stockholder class action, various demands for inspection of books and records, the SEC investigation, and the investigation by the United States Attorney’s Office for the Southern District of New York described below, and certain indemnification obligations, under an exclusion to the policy called the “retroactive date exclusion.” The insurer has identified other potential coverage issues as well. Excess coverage attaches only after the underlying insurance has been exhausted, and generally applies in conformance with the terms of the underlying insurance. Lordstown is analyzing the insurer’s position, and intends to pursue any available coverage under this policy and other insurance. As a result of the denial of coverage, no or limited insurance may be available to us to reimburse our expenses or cover any potential losses for these matters, which could be significant. The insurers in our Side A D&O insurance program, providing coverage for individual directors and officers in derivative actions and certain other situations, have not denied coverage on this basis or otherwise. Legal fees and costs of litigation or an adverse judgment or settlement in any one or more of our ongoing litigation matters that are not insured or that is in excess of insurance coverage could significantly exceed our current accrual and ability to pay. This would have a material adverse effect on our financial position and results of operations and could severely curtail or cause our operations to cease entirely. On October 30, 2020, the Company, together with certain of its current and former executive officers including Mr. Burns, Mr. LaFleur, Mr. Post and Mr. Schmidt, and certain of our other current and former 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. 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 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 based on a variety of claims and theories asserting very substantial losses by Karma and/or improper benefit to the Company that significantly exceed the Company’s accrual with respect to the matter and ability to pay. The Company has opposed Karma’s damages claims on factual and legal grounds, including lack of causality. The Company is vigorously challenging Karma’s asserted damages. After several months of discovery, Karma filed a motion for preliminary injunction on August 8, 2021, seeking to temporarily enjoin the Company from producing any vehicle that incorporated Karma’s alleged trade secrets. On August 16, 2021, Karma also moved for sanctions for spoliation of evidence. On September 16, 2021, the District Court denied Karma’s motion for a preliminary injunction, and denied, in part, and granted, in part, Karma’s motion for sanctions. As a result of its partial grant of Karma’s sanctions motion, the District Court awarded Karma a permissive adverse inference jury instruction, the scope of which will be determined at trial. On January 14, 2022, Karma filed a motion for terminating sanctions (i.e., judgment in its favor on all claims) against the Company and defendant, Darren Post, as a result of Mr. Post’s handling of documents subject to discovery requests. The Company and Mr. Post opposed the request for sanctions. On February 18, 2022, the Court granted in part Karma’s motion for sanctions against Mr. Post and the Company, finding that Karma was entitled to reasonable attorneys’ fees and costs incurred as a result of Mr. Post’s and the Company’s failure to comply with the Court’s discovery orders. Karma’s request for terminating sanctions was denied. As a result of the Court’s order, on March 4, 2022, Karma submitted its application for attorneys’ fees and costs in the amount of On July 22, 2022, Karma filed a second motion for terminating sanctions against the Company and against Mr. Post based upon Mr. Post’s installation of anti-forensic software on his personal computers following his second deposition. Karma has requested that the Court enter default judgment on all claims against Mr. Post and the Company. Karma also asks that, in the event terminating sanctions are not issued, the Court order a negative adverse inference on “remaining issues,” specifically that “Defendants Lordstown Motors Corp. and Darren Post shall be presumed to have misappropriated Karma’s trade secrets and confidential information, used Karma’s trade secrets and confidential information, and deliberately and maliciously destroyed evidence of their misappropriation and use of Karma’s trade secrets and confidential information in considering all damages and maliciousness.” The Court denied Karma’s second request for terminating sanctions in all respects. On September 27, 2022, Karma filed an ex parte application to continue the trial date until January 2023. The Company opposed the request. On September 28, 2022, the Court denied Karma’s request to continue the trial. However, on October 26, following the receipt of the parties’ pretrial filings, the Court, on its own initiative vacated the December 6, 2022 trial date. The case will be rescheduled for a trial date in 2023. The Company and the individual defendants have moved for summary judgment on many of the claims and issues in the case. A hearing on the summary judgment motions is scheduled for November 14, 2022.The Company is continuing to evaluate the matters asserted in the lawsuit and is vigorously defending against Karma’s claims. The Company continues to believe that there are strong defenses to the claims and any damages demanded. 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 Holdings Corp. (“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. (Case No. 21-cv-616); Palumbo v. Lordstown Motors Corp., et al. (Case No. 21-cv-633); Zuod v. Lordstown Motors Corp., et al. (Case No. 21-cv-720); Brury v. Lordstown Motors Corp., et al. (Case No. 21-cv-760); Romano v. Lordstown Motors Corp., et al., (Case No. 21-cv-994); and FNY Managed Accounts LLC v. Lordstown Motors Corp., et al. (Case No. 21-cv-1021)). The matters have been consolidated and the Court appointed George Troicky as lead plaintiff and Labaton Sucharow LLP as lead plaintiff’s counsel. On September 10, 2021, lead plaintiff and several additional named plaintiffs filed their consolidated amended complaint, asserting violations of federal securities laws under Section 10(b), Section 14(a), Section 20(a), and Section 20A of the Exchange Act and Rule 10b-5 thereunder against the Company and certain of its current and former officers and directors. The complaint generally alleges that the Company and individual defendants made materially false and misleading statements relating to vehicle pre-orders and production timeline. Defendants filed a motion to dismiss, which is fully briefed as of March 3, 2022. A hearing on the motion to dismiss has not been scheduled and a decision has not yet been rendered. We intend to vigorously defend against the claims. The proceedings are subject to uncertainties inherent in the litigation process. 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); and Sarabia v. Burns, et al. (Case No. 21-cv-1010)). The derivative actions in the District Court of Delaware have been consolidated. On August 27, 2021, plaintiffs filed a consolidated amended complaint, asserting violations of Section 10(b), Section 14(a), Section 20(a) and Section 21D of the Exchange Act and Rule 10b-5 thereunder, breach of fiduciary duties, insider selling, and unjust enrichment, all relating to vehicle pre-orders, production timeline, and the merger with DiamondPeak. On October 11, 2021, defendants filed a motion to stay this consolidated derivative action pending resolution of the motion to dismiss in the consolidated securities class action. On March 7, 2022, the court granted in part defendants' motion to stay, staying the action until the resolution of the motion to dismiss in the consolidated securities class action, but requiring the parties to submit a status report if the motion to dismiss was not resolved by September 3, 2022. The court further determined to dismiss without a motion on the grounds that the claim was premature plaintiffs' claim for contribution for violations of Sections 10(b) and 21D of the Exchange Act without prejudice. The parties filed a joint status report as required because the motion to dismiss in the consolidated securities class action was not resolved as of September 3, 2022. The parties filed another court-ordered joint status report on October 28, 2022. Another related stockholder derivative lawsuit was filed in U.S. District Court for the Northern District of Ohio on June 30, 2021 (Thai v. Burns, et al. (Case No. 21-cv-1267)), asserting violations of Section 10(b), Section 14(a), Section 20(a) and Section 21D of the Exchange Act and Rule 10b-5 thereunder, breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste, based on similar facts as the consolidated derivative action in the District Court of Delaware. On October 21, 2021, the court in the Northern District of Ohio derivative action entered a stipulated stay of the action and scheduling order relating to defendants’ anticipated motion to dismiss and/or subsequent motion to stay that is similarly conditioned on the resolution of the motion to dismiss in the consolidated securities class action. We intend to vigorously defend against the claims. The proceedings are subject to uncertainties inherent in the litigation process. Another related stockholder derivative lawsuit was filed in the Delaware Court of Chancery on December 2, 2021 (Cormier v. Burns, et al. (C.A. No. 2021-1049)), asserting breach of fiduciary duties, insider selling, and unjust enrichment, based on similar facts as the federal derivative actions. An additional related stockholder derivative lawsuit was filed in the Delaware Court of Chancery on February 18, 2022 (Jackson v. Burns, et al. (C.A. No. 2022-0164)), also asserting breach of fiduciary duties, unjust enrichment, and insider selling, based on similar facts as the federal derivative actions. On April 19, 2022, the parties in Cormier and Jackson filed a stipulation and proposed order consolidating the two actions, staying the litigation until the resolution of the motion to dismiss in the consolidated securities class action and appointing Schubert Jonckheer & Kolbe LLP and Lifshitz Law PLLC as Co-Lead Counsel. On May 10, 2022, the court granted the parties’ proposed stipulation and order to consolidate the actions, and to stay the consolidated action pending the resolution of the motion to dismiss in the consolidated securities class action. Two putative class action lawsuits were filed against former DiamondPeak directors and DiamondPeak Sponsor LLC on December 8 and 13, 2021 in the Delaware Court of Chancery (Hebert v. Hamamoto, et al. (C.A. No. 2021-1066); and Amin v Hamamoto, et al. (C.A. No. 2021-1085)). The plaintiffs purport to represent a class of investors in DiamondPeak and assert breach of fiduciary duty claims based on allegations that the defendants made or failed to prevent alleged misrepresentations regarding vehicle pre-orders and production timeline, and that but for those allegedly false and misleading disclosures, the plaintiffs would have exercised a right to redeem their shares prior to the de-SPAC transaction. On February 9, 2022, the parties filed a stipulation and proposed order consolidating the putative class action lawsuits, appointing Hebert and Amin as co-lead plaintiffs, appointing Bernstein Litowitz Berger & Grossmann LLP and Pomerantz LLP as co-lead counsel and setting a briefing schedule for the motions to dismiss and motions to stay. The motions to stay were fully briefed as of February 23, 2022 and the court held oral argument on February 28, 2022. On March 7, 2022, the court denied the motion to stay. On March 10, 2022, defendants filed their brief in support of their motion to dismiss. The motion to dismiss was fully briefed on April 27, 2022, and was scheduled for oral argument on May 10, 2022. On May 6, 2022, defendants withdrew the motion to dismiss without prejudice. On July 22, 2022, co-lead plaintiffs filed an amended class action complaint asserting similar claims. Defendants filed a motion to dismiss the amended class action complaint on October 14, 2022. Plaintiffs’ answering brief and Defendants’ reply brief are due on November 18 and December 9, 2022, respectively. Oral argument on the motion to dismiss has been scheduled for January 6, 2022. The defendants intend to vigorously defend against the claims. The proceedings are subject to uncertainties inherent in the litigation process. In addition, between approximately March 26, 2021 and September 23, 2021, LMC received eight 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. A lawsuit to compel inspection of books and records under 8 Del. C. § 220 was filed against the Company on May 31, 2022 in the Delaware Court of Chancery (Turner v. Lordstown Motors Corp. (C.A. No. 2022-0468)). The plaintiff seeks production of documents related to, among other things, vehicle pre-orders, production timeline, and stock sales by insiders. The parties are engaged in discussions to resolve or narrow this action and do not have a schedule for responding to the complaint. We intend to vigorously defend against this action to the extent it is not resolved. The proceedings are subject to uncertainties inherent in the litigation process. 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 Lordstown EV Corporation (formerly known as Lordstown Motors Corp.), a Delaware corporation (“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. On March 24, 2022, the Company received a letter addressed to its Board from the law firm of Purcell & Lefkowitz LLP (“Purcell”) on behalf of three purported stockholders. The stockholder letter alleged that we would be required by Rules 14a-4(a)(3) and (b)(1) of the Exchange Act to present two separate proposals at the annual meeting of stockholders held on May 19, 2022 (the “2022 Annual Meeting”) relating to the proposed amendment of our Second Amended and Restated Certificate of Incorporation, as amended (the “Charter”) to increase the number of authorized shares, such that separate votes could be cast on a proposed increase in the number of shares of Class A common stock and a proposed increase in the number of shares of preferred stock. The Company does not believe that separate proposals would be required by the Exchange Act. Irrespective of the position asserted in the stockholder letter, the Company no longer believes an increase in the shares of preferred stock is needed and did not include this aspect of the proposal in the definitive proxy statement for the 2022 Annual Meeting filed with the SEC on April 8, 2022, as supplemented on May 9, 2022 (the “2022 Proxy Statement”). The stockholder letter also addressed the approval of the Charter at the special meeting of stockholders held on October 22, 2020 (the “2020 Special Meeting”), which included a 200 million share increase in the number of authorized shares of Class A common stock and was approved by majority of the then-outstanding shares of both series of the Company’s common stock, voting as a single class. The stockholder letter alleged that the Charter approval required a separate vote in favor by at least a majority of the outstanding shares of Class A common stock under Section 242(b)(2) of the Delaware General Corporation Law (“DGCL”), and that the 200 million shares in question are thus unauthorized. The stockholder letter requested that the Company present a proposal at the 2022 Annual Meeting seeking ratification of the number of shares of Class A common stock authorized under the Company’s current Charter. The Board has completed its review of the matters raised by the stockholder letter with the assistance of outside counsel not involved in the underlying transactions at issue and determined, (a) in reliance upon, among other things, advice of several law firms including a legal opinion of Delaware counsel, that the assertions regarding DGCL Section 242(b)(2) are wrong and that a separate class vote of the Class A common stock was not required to approve the amendment of the Charter at the 2020 Special Meeting to increase the shares of Class A common stock, and (b) that the remaining allegations therein are without merit. However, no assurances can be made regarding the outcome of any claims, proceedings or litigation regarding the authorization of our Class A common stock, including the claims raised by the stockholder letter. Any proceedings on these matters would be subject to uncertainties inherent in the litigation process. Claims alleging that a portion of our Class A common stock was not authorized could lead to shares of our Class A common stock being voidable and have a material adverse effect on the Company and its prospects. On May 20, 2022, the Company received a second letter addressed to its Board from Purcell on behalf of the same three purported stockholders regarding the vote at the 2022 Annual Meeting to approve the amendment to our Charter to increase the total number of authorized shares of Class A common stock from 300 million shares to 450 million shares (the “Charter Amendment”), as further described in the 2022 Proxy Statement. The letter asserted, among other things, that that in connection with the vote at the Annual Meeting to approve the Charter Amendment, brokers had cast discretionary votes on such proposal despite a statement in the 2022 Proxy Statement that they would not have authority to do so. The Proxy Statement erroneously indicated that brokers would not have discretionary authority to vote with respect to the proposal to approve the Charter Amendment and that if beneficial owners did not provide direction to their broker as to how to vote, a broker non-vote would result that would have the effect of a vote cast against such proposal. The Company’s Current Report on Form 8-K filed with the SEC on May 19, 2022 reported that the Charter Amendment was approved at the Annual Meeting and that the Charter was thereby amended, as the Charter Amendment had been filed with the Secretary of State of the State of Delaware. The Company’s Current Report on Form 8-K filed on May 23, 2022 reported that the Purcell letter had been received (and filed it as an exhibit), that the report of the votes at the Annual Meeting regarding the approval of the Charter Amendment was not considered final and that, to date, none of the shares authorized by the Charter Amendment had been issued. On May 31, 2022, after further review by the Company and its Board of the votes on the proposal to approve the Charter Amendment, due to uncertainty in counting the number of votes cast “for” by brokers exercising discretion without direction from the beneficial owner, the Board determined not to consider the Charter Amendment approved by the Company’s stockholders and we filed a Certificate of Correction with the Secretary of State of the State of Delaware, voiding the Charter Amendment and causing the number of authorized shares of Class A common stock to remain at 300 million. The Company’s Form 8-K/A filed with the SEC on June 1, 2022, amending and supplementing the Forms 8-K filed by the Company on May 19, 2022, and May 23, 2022, reported that the Company had filed the Certificate of Correction and announced that the Board had called a special meeting of stockholders to be held on August 17, 2022 (“2022 Special Meeting”), to resubmit for approval an amendment to our Charter to increase the number of authorized shares of our Common Stock from 300 million to 450 million shares (the “Certificate of Amendment”). On July 7, 2022, we filed a definitive proxy statement for the 2022 Special Meeting and, at the 2022 Special Meeting, our stockholders approved the Certificate of Amendment. The parties have reached a settlement agreement to resolve the issues raised in both of the letters from Purcell. The amount of the settlement is not material to the Company. Except as described above, the Company is not a party to any material legal proceedings and is not aware of any pending or threatened material 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 | 9 Months Ended |
Sep. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 6 — RELATED PARTY TRANSACTIONS 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 represented an advance on the royalties discussed above. The upfront royalty payment was recorded as other non-current assets as of September 30, 2022 and December 31, 2021. During the nine months ended September 30, 2021, we continued to refine the design of the Endurance and considered technologies we would use in future vehicles. Given the lack of Workhorse technology used in the Endurance and new management’s strategic direction of the Company, inclusive of the transactions contemplated with Foxconn as detailed in Note 1, we deemed it appropriate to change the useful life of the technology we acquired from Workhorse to zero months. As such, we recorded accelerated amortization of $11.1 million during the third quarter of 2021. As of September 30, 2021, Workhorse Group was no longer determined to be a related party. As described in Note 1, the Company invested $13.5 million into the Foxconn Joint Venture, of which the Company owns 45%. Pursuant to the Investment Agreement, the Company will be reimbursed for certain costs incurred by the Company on behalf of the Foxconn Joint Venture (See Note 8 – Subsequent Events). The Company has adopted a related party transaction policy that instituted a process to review and approve all material transactions between the Foxconn Joint Venture and the Company. The Company intends to modify this policy to apply to those transactions contemplated by the Investment Agreement. |
CAPITAL STOCK AND LOSS PER SHAR
CAPITAL STOCK AND LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2022 | |
CAPITAL STOCK AND LOSS PER SHARE | |
CAPITAL STOCK AND LOSS PER SHARE | NOTE 7 — CAPITAL STOCK AND LOSS PER SHARE Our Charter provides for 462 million authorized shares of capital stock, consisting of (i) 450 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 216.9 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 September 30, 2022, our share equivalent included 0.3 million options,1.6 million BGL Warrants, 2.3 million Private Warrants, and 1.7 million Foxconn Warrants outstanding. For the three months ended September 30, 2021, our share equivalent included 3.1 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 nine months ended September 30, 2022 and 2021 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 Nine months ended Nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Basic and diluted weighted average shares outstanding 211,946 178,761 203,147 176,573 O n July 23, 2021, the Company entered into the 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 Equity 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 Equity 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 Equity Purchase Agreement, we will not sell to YA shares of our Class A common stock in excess of 35.1 million shares, or the Exchange Cap, which is 19.9% of the shares of Class A common stock outstanding immediately prior to the execution of the Equity 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 Equity 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 Equity Purchase Agreement; or (ii) the average Nasdaq Official Closing Price of the Class A common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the Equity 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 $400 million commitment under the Equity Purchase Agreement. We may direct YA to purchase amounts of our Class A common stock under the Equity 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 without YA’s consent 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 or waiver of the conditions under the Equity Purchase Agreement, we may deliver Advance Notices from time to time, provided that we have delivered all shares relating to all prior Advance Notices, and the purchase price of the shares of Class A common stock will be equal to 97% of the simple average of the daily volume weighted average prices for the three trading days following the Advance Notice as set forth in the Equity 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 Equity Purchase Agreement, upon execution of the Equity Purchase Agreement, the Company issued 0.4 million shares of its Class A common stock to YA (the “Commitment Shares”). During the nine months ended September 30, 2021, inclusive of the 0.4 million Commitment Shares, we issued 3.9 million shares to YA and received $20.0 million cash . During the nine months ended September 30, 2022, we issued 17.5 million shares to YA and received $40.4 million cash, net of equity issuance costs. As of September 30, 2022, we were in compliance with the terms and conditions of the Equity Purchase Agreement and the remaining availability under the Equity Purchase Agreement was $309.1 million which is subject to certain limitations as described above. It is expected that the Equity Purchase Agreement will be terminated as the Sales Agreement will be used as the means for the Company to obtain financing through the periodic sale of the Class A common stock in at the-market transactions, subject to various conditions and limitations. See Note 8 – Subsequent Events and Part II, Item 5. Other Events for additional information. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates in Financial Statement Preparation | Use of Estimates in Financial Statement Preparation The preparation of financial statements in accordance with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, if any, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash, cash equivalents and short-term investments | Cash, cash equivalents and short-term investments 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. At September 30, 2022 our cash and cash equivalents totaled approximately $154.2 million. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Our short-term investments consist primarily of liquid investment grade commercial paper, which are diversified among individual issuers, including non-U.S. governments, non-U.S. governmental agencies, supranational institutions, banks and corporations. At September 30, 2022, we had short-term investments with a fair value of approximately million with maturities in January and February of 2023. The short-term investments are accounted for as available-for-sale securities. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities. The Company maintains its cash in bank deposit and securities accounts that exceed federally insured limits. We have not experienced significant losses in such accounts and management believes it is not exposed to material credit risk. |
Inventory and Inventory Valuation | Inventory and Inventory Valuation Inventory is stated at the lower of cost or net realizable value (“LCNRV”). Net realizable value (“NRV”) is the estimated future selling price of the inventory in the ordinary course of business. Non-cash charges to reflect the NRV of inventory on hand are recorded within Selling, General & Administrative expenses in the Company’s condensed consolidated statement of operations. |
Property, plant and equipment | Property, plant and equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation will be computed using the straight-line method over the estimated useful lives of the related assets. 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. See Note 4 for details regarding our impairment. |
Equity-Method Investments | Equity-Method Investments We recognize our investments in unconsolidated entities over whose operating and financial policies we have the ability to exercise significant influence but not control, under the equity method of accounting. We initially record our investments based on our cash invested. |
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, testing and manufacturing costs, along with expenditures for prototype manufacturing, testing, validation, certification, contract and other professional services and costs associated with operating the Lordstown facility, prior to its sale. |
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 the Public Warrants (as defined below), the Private Warrants (as defined below) and the Foxconn 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, the Private Warrants and the Foxconn Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, the Company classifies the Public Warrants, the Private Warrants and the Foxconn Warrants as liabilities at their fair value and adjusts the Public Warrants, the Private Warrants and the Foxconn 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. The Company accounts for the BGL Warrants as equity as these warrants qualify as share-based compensation under ASC Topic 718. |
Income taxes | 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. The Company does not have material uncertain tax positions. |
Recent accounting pronouncements | Recent accounting pronouncements In February 2016, FASB issued ASU 2016-02, Leases organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The Company adopted ASC 842 effective January 1, 2021, but there was no material impact on the condensed consolidated financial statements. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
FAIR VALUE MEASUREMENTS | |
Summary of the net (loss) gain on changes in fair value related to warrants | The following table summarizes the net (loss) gain on changes in fair value (in thousands) related to the Public Warrants, the Private Warrants, and the Foxconn Warrants: Three months ended Three months ended Nine months ended Nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Public Warrants $ — $ — $ — $ (27,180) Private Warrants (523) 3,344 (246) 12,263 Foxconn Warrants (238) — (238) — Net (loss) gain on changes in fair value $ (761) $ 3,344 $ (484) $ (14,918) |
Summary of the valuation of financial instruments | The following tables summarize the valuation of our financial instruments (in thousands): Total Quoted prices in active markets (Level 1) Prices with observable inputs (Level 2) Prices with unobservable inputs (Level 3) September 30, 2022 Cash and cash equivalents $ 154,232 $ 154,232 $ — $ — Short-term investments 49,304 — 49,304 — Private Warrants 731 — — 731 Foxconn Warrants 561 — — 561 Total Quoted prices in active markets (Level 1) Prices with observable inputs (Level 2) Prices with unobservable inputs (Level 3) December 31, 2021 Cash and cash equivalents $ 244,016 $ 244,016 $ — $ — Short-term investments — — — — Private Warrants 485 — — 485 |
Schedule of loss on fair value recognized in earnings | The following table summarizes the changes in our Level 3 financial instruments (in thousands): Balance at December 31, 2021 Additions Settlements Loss on fair value adjustments included in earnings Balance at September 30, 2022 Private Warrants $ 485 — — 246 $ 731 Foxconn Warrants — 323 — 238 561 |
PROPERTY, PLANT AND EQUIPMENT (
PROPERTY, PLANT AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
PROPERTY, PLANT AND EQUIPMENT | |
Summary of property, plant and equipment, net | Property, plant and equipment, net, consisted of the following: (in thousands) September 30, 2022 December 31, 2021 Property, Plant & Equipment Land $ — $ 326 Buildings — 6,223 Machinery and equipment 43,723 39,073 Tooling 127,225 — Construction in progress 49,072 337,124 $ 220,020 $ 382,746 Less: Accumulated depreciation — — Total $ 220,020 $ 382,746 |
CAPITAL STOCK AND LOSS PER SH_2
CAPITAL STOCK AND LOSS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
CAPITAL STOCK AND LOSS PER SHARE | |
Schedule of the weighted-average number of shares outstanding for basic and diluted loss per share | 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 Nine months ended Nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Basic and diluted weighted average shares outstanding 211,946 178,761 203,147 176,573 |
ORGANIZATION AND DESCRIPTION _2
ORGANIZATION AND DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (Details) $ / shares in Units, $ in Thousands, shares in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Nov. 08, 2022 USD ($) shares | Nov. 07, 2022 USD ($) | Jun. 24, 2022 USD ($) | May 11, 2022 USD ($) | Sep. 30, 2021 USD ($) | Jul. 23, 2021 USD ($) shares | Oct. 31, 2021 USD ($) shares | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) person item $ / shares shares | Sep. 30, 2021 USD ($) shares | Dec. 31, 2021 USD ($) $ / shares | Sep. 29, 2022 USD ($) | Apr. 15, 2022 USD ($) | |
Business Acquisition | |||||||||||||||
Research and development expenses | $ 19,839 | $ 56,890 | $ 92,213 | $ 225,246 | |||||||||||
Reimbursement expense | 18,400 | ||||||||||||||
Proceeds from stock issuance | $ 1,853 | 3,822 | |||||||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||||||||
Issuance of common stock, value | 2,724 | $ 1,853 | 3,822 | ||||||||||||
Warrant and other non-current liabilities | $ 2,495 | 2,495 | $ 1,578 | ||||||||||||
Cash and cash equivalents | 154,232 | 154,232 | 244,016 | ||||||||||||
cash, cash equivalents and short-term investments | 203,500 | 203,500 | |||||||||||||
Accumulated deficit | 725,213 | 725,213 | 544,809 | ||||||||||||
Net loss | 154,430 | 95,806 | $ 180,404 | 329,217 | |||||||||||
Substantial Doubt about Going Concern, within One Year [true false] | true | ||||||||||||||
Foxconn | |||||||||||||||
Business Acquisition | |||||||||||||||
Research and development expenses | $ 18,400 | 18,400 | |||||||||||||
Foxconn | Foxconn Joint Venture | |||||||||||||||
Business Acquisition | |||||||||||||||
Capital Commitment Contributions | $ 100,000 | $ 100,000 | 100,000 | 100,000 | |||||||||||
Percentage of ownership in joint venture | 55% | ||||||||||||||
Period of restriction to transfer interest in joint venture | 3 years | ||||||||||||||
Number of persons in management board. | person | 5 | ||||||||||||||
Number of members that can be appointed to board | item | 3 | ||||||||||||||
Joint Venture, Direct Capital Commitment Contributions | $ 55,000 | ||||||||||||||
Joint Venture, Initial Investment for Capital Commitment | $ 16,500 | ||||||||||||||
Lordstown EV Corporation | Foxconn | Foxconn Joint Venture | |||||||||||||||
Business Acquisition | |||||||||||||||
Amount of capital commitment contributions from joint venture for funding notes payable | $ 45,000 | $ 45,000 | $ 45,000 | 45,000 | |||||||||||
Percentage of ownership in joint venture | 45% | 45% | 45% | ||||||||||||
Number of members that can be appointed to board | item | 2 | ||||||||||||||
Initial advance | $ 13,500 | $ 13,500 | |||||||||||||
Contract Manufacturing Agreement | Lordstown EV Corporation | |||||||||||||||
Business Acquisition | |||||||||||||||
Initial term | 18 months | ||||||||||||||
Notice period | 12 months | ||||||||||||||
Minimum | |||||||||||||||
Business Acquisition | |||||||||||||||
Target minimum liquidity | 75,000 | $ 75,000 | |||||||||||||
Minimum | Lordstown EV Corporation | Foxconn | Foxconn Joint Venture | |||||||||||||||
Business Acquisition | |||||||||||||||
Number of members must consent for certain major decisions | item | 1 | ||||||||||||||
Members consent for major decisions, threshold ownership percent | 30% | ||||||||||||||
Maximum | |||||||||||||||
Business Acquisition | |||||||||||||||
Target minimum liquidity | $ 100,000 | $ 100,000 | |||||||||||||
Equity Funding Agreement With Y A | |||||||||||||||
Business Acquisition | |||||||||||||||
Proceeds from stock issuance | $ 40,400 | $ 20,000 | |||||||||||||
Common stock issued (in shares) | shares | 0.4 | 17.5 | 3.9 | ||||||||||||
Issuance of common stock, value | $ 400,000 | $ 40,400 | $ 20,000 | ||||||||||||
Exchange cap (in shares) | shares | 35.1 | 35.1 | |||||||||||||
Equity Funding Agreement With Y A | Minimum | |||||||||||||||
Business Acquisition | |||||||||||||||
Shares issued price per share | $ / shares | $ 7.48 | $ 7.48 | |||||||||||||
Equity Funding Agreement With Foxconn | |||||||||||||||
Business Acquisition | |||||||||||||||
Purchase price for sale of assets | $ 230,000 | ||||||||||||||
Research and development expenses | $ 7,700 | ||||||||||||||
Down payments received | $ 200,000 | ||||||||||||||
Proceeds from sale of assets | $ 100,000 | ||||||||||||||
Balance of purchase price | $ 30,000 | 30,000 | |||||||||||||
Reimbursement payment receivable on closing | 27,500 | 27,500 | |||||||||||||
Reimbursable operating expenses receivable | 18,400 | 18,400 | $ 17,500 | ||||||||||||
Reimbursable expansion cost receivable | 10,000 | 10,000 | |||||||||||||
Reimbursable expansion cost receivable attributable to assets sold at closing | 7,500 | 7,500 | |||||||||||||
Reimbursable expansion cost receivable attributable to prepayment of open purchase orders receivable | 2,500 | 2,500 | |||||||||||||
Proceeds from stock issuance | $ 50,000 | ||||||||||||||
Common stock issued (in shares) | shares | 7.2 | ||||||||||||||
Equity Funding Agreement With Foxconn | Lordstown EV Corporation | Foxconn | |||||||||||||||
Business Acquisition | |||||||||||||||
Principal amount | $ 45,000 | 45,000 | |||||||||||||
Initial advance | $ 13,500 | ||||||||||||||
Equity Funding Agreement With Foxconn | Joint Venture Agreement | Lordstown EV Corporation | Foxconn | |||||||||||||||
Business Acquisition | |||||||||||||||
Paid in kind interest rate | 7% | 7% | |||||||||||||
Scenario, Plan | |||||||||||||||
Business Acquisition | |||||||||||||||
Warrants to purchase common stock | shares | 1.7 | 1.7 | |||||||||||||
Warrant exercise price | $ / shares | $ 10.50 | $ 10.50 | |||||||||||||
Scenario, Plan | Equity Funding Agreement With Y A | |||||||||||||||
Business Acquisition | |||||||||||||||
Common stock issued (in shares) | shares | 8 | ||||||||||||||
Issuance of common stock, value | $ 400,000 | $ 309,100 | |||||||||||||
Forecast | Investment agreement | Foxconn | |||||||||||||||
Business Acquisition | |||||||||||||||
Proceeds from stock issuance | $ 52,700 | ||||||||||||||
Payments for general corporate purposes | 22,700 | ||||||||||||||
Restricted Cash | $ 30,000 | ||||||||||||||
Subsequent event | Open Market Sales Agreement | Maximum | Jefferies LLC | |||||||||||||||
Business Acquisition | |||||||||||||||
Number of shares to be issued | shares | 50.2 | ||||||||||||||
Subsequent event | Investment agreement | Foxconn | |||||||||||||||
Business Acquisition | |||||||||||||||
Aggregate value of shares for issuance | $ 100,000 | ||||||||||||||
Notes Guaranty and Security Agreements | Lordstown EV Corporation | Foxconn | |||||||||||||||
Business Acquisition | |||||||||||||||
Amount outstanding | $ 45,000 | 45,000 | |||||||||||||
Principal amount | $ 45,000 | $ 45,000 | |||||||||||||
Class A common stock | Equity Funding Agreement With Y A | |||||||||||||||
Business Acquisition | |||||||||||||||
Common stock issued (in shares) | shares | 27.1 | ||||||||||||||
Class A common stock | Subsequent event | Foxconn | |||||||||||||||
Business Acquisition | |||||||||||||||
Issuance of common stock, value | $ 70,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash, cash equivalents and short-term investments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Cash and cash equivalents | $ 154,232 | $ 244,016 |
Short-term investments with a fair value | $ 49,300 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) $ / shares in Units, $ in Thousands, shares in Millions | 9 Months Ended | ||
Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) shares | Dec. 31, 2021 shares | |
FAIR VALUE MEASUREMENTS | |||
Down payments received from Foxconn | $ | $ 100,000 | $ 82,000 | |
Public Warrants | |||
FAIR VALUE MEASUREMENTS | |||
Warrant exercise price | $ / shares | $ 11.50 | ||
Common stock issued for exercise of warrants (in shares) | 6.7 | ||
Warrants outstanding | 0 | 0 | |
Private Placement Warrants | |||
FAIR VALUE MEASUREMENTS | |||
Warrant exercise price | $ / shares | $ 11.50 | ||
Common stock issued for exercise of warrants (in shares) | 0.6 | ||
Warrants outstanding | 2.3 | 2.3 | |
BGL Warrants | |||
FAIR VALUE MEASUREMENTS | |||
Warrant exercise price | $ / shares | $ 10 | ||
Warrants outstanding | 1.6 | 1.6 | |
Foxconn Warrants | |||
FAIR VALUE MEASUREMENTS | |||
Warrant exercise price | $ / shares | $ 10.50 | ||
Warrants outstanding | 1.7 | ||
Fair value of warrants | $ | $ 300 | ||
Derivative Liability, Measurement Input | 4.173 | ||
Measurement Input, Price Volatility | |||
FAIR VALUE MEASUREMENTS | |||
Derivative Liability, Measurement Input | 0.90 | 0.50 | |
Measurement Input, Risk Free Interest Rate | |||
FAIR VALUE MEASUREMENTS | |||
Derivative Liability, Measurement Input | 4.173 | 1.123 |
FAIR VALUE MEASUREMENTS - Net g
FAIR VALUE MEASUREMENTS - Net gain (loss) on change in fair value (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
FAIR VALUE MEASUREMENTS | ||||
Net (loss) gain on changes in fair value | $ (761) | $ 3,344 | $ (484) | $ (14,918) |
Public Warrants | ||||
FAIR VALUE MEASUREMENTS | ||||
Net (loss) gain on changes in fair value | (27,180) | |||
Private Placement Warrants | ||||
FAIR VALUE MEASUREMENTS | ||||
Net (loss) gain on changes in fair value | (523) | $ 3,344 | (246) | $ 12,263 |
Foxconn Warrants | ||||
FAIR VALUE MEASUREMENTS | ||||
Net (loss) gain on changes in fair value | $ (238) | $ (238) |
FAIR VALUE MEASUREMENTS - Valua
FAIR VALUE MEASUREMENTS - Valuation of financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
FAIR VALUE MEASUREMENTS | ||
Short-term investments with a fair value | $ 49,300 | |
Foxconn Warrants | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 300 | |
Fair Value, Inputs, Level 3 | Private Placement Warrants | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 731 | $ 485 |
Fair Value, Inputs, Level 3 | Foxconn Warrants | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 561 | |
Fair Value, Recurring | ||
FAIR VALUE MEASUREMENTS | ||
Cash and Cash Equivalents | 154,232 | 244,016 |
Short-term investments with a fair value | 49,304 | |
Fair Value, Recurring | Private Placement Warrants | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 731 | 485 |
Fair Value, Recurring | Foxconn Warrants | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 561 | |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | ||
FAIR VALUE MEASUREMENTS | ||
Cash and Cash Equivalents | 154,232 | 244,016 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | ||
FAIR VALUE MEASUREMENTS | ||
Short-term investments with a fair value | 49,304 | |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Private Placement Warrants | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 731 | $ 485 |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Foxconn Warrants | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | $ 561 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets, Liabilities, Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Loss on fair value adjustments included in earnings | $ 761 | $ (3,344) | $ 484 | $ 14,918 |
Foxconn Warrants | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Loss on fair value adjustments included in earnings | 238 | 238 | ||
Derivative liability, ending balance | 300 | 300 | ||
Private Placement Warrants | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Loss on fair value adjustments included in earnings | 523 | $ (3,344) | 246 | $ (12,263) |
Fair Value, Inputs, Level 3 | Foxconn Warrants | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Additions | 323 | |||
Loss on fair value adjustments included in earnings | 238 | |||
Derivative liability, ending balance | 561 | 561 | ||
Fair Value, Inputs, Level 3 | Private Placement Warrants | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Derivative liability, beginning balance | 485 | |||
Loss on fair value adjustments included in earnings | 246 | |||
Derivative liability, ending balance | $ 731 | $ 731 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
PROPERTY, PLANT AND EQUIPMENT | |||
Property, Plant and Equipment, Gross | $ 220,020 | $ 220,020 | $ 382,746 |
Total | 220,020 | 220,020 | 382,746 |
Gain on disposal of fixed assets | 101,736 | ||
Impairment charge | 74,865 | 74,865 | |
Land | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, Plant and Equipment, Gross | 326 | ||
Buildings | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, Plant and Equipment, Gross | 6,223 | ||
Machinery and equipment | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, Plant and Equipment, Gross | 43,723 | 43,723 | 39,073 |
Tooling | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, Plant and Equipment, Gross | 127,225 | 127,225 | |
Construction in progress | |||
PROPERTY, PLANT AND EQUIPMENT | |||
Property, Plant and Equipment, Gross | $ 49,072 | $ 49,072 | $ 337,124 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 2 Months Ended | 9 Months Ended | |||||
Mar. 21, 2022 USD ($) | Mar. 04, 2022 USD ($) | Jul. 09, 2021 lawsuit | May 14, 2021 lawsuit | Sep. 30, 2022 USD ($) lawsuit | Dec. 13, 2021 lawsuit | Apr. 16, 2021 employee item | |
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||
Aggregate reserve within Accrued and other current liabilities | $ | $ 32 | ||||||
Accrued and Other Current Liabilities | |||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||
Aggregate reserve within Accrued and other current liabilities | $ | $ 30 | ||||||
Lawsuit Alleging Misappropriation Of Trade Secrets | |||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||
Number of employees | employee | 2 | ||||||
Number of company contractors | item | 2 | ||||||
Number of counts in amended complaint | item | 28 | ||||||
Class Action Lawsuits Alleging Securities Laws Violations | |||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||
Number of suits or actions filed | lawsuit | 6 | ||||||
Stockholder Derivative Complaints | |||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||
Number of suits or actions filed | lawsuit | 4 | ||||||
S E C Inquiry Relating To Merger | |||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||
Number of subpoenas received | lawsuit | 2 | ||||||
Class Action Lawsuits Alleged Misrepresentations | |||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||
Number of putative class action lawsuits filed | lawsuit | 2 | ||||||
Karma Agreement | |||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||
Litigation amount sought | $ | $ 0.1 | ||||||
Litigation settlement amount | $ | $ 0.1 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Nov. 07, 2019 item | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Nov. 30, 2020 USD ($) | |
RELATED PARTY TRANSACTIONS | |||||
Amortization | $ 11,111 | $ 11,111 | |||
Investment in joint venture | $ 13,500 | ||||
Transaction with Workhorse Group Inc | |||||
RELATED PARTY TRANSACTIONS | |||||
Percentage ownership conveyed in connection with license agreement | 10% | ||||
Royalty percentage | 1% | ||||
Number of vehicles subject to royalty | item | 200,000 | ||||
Prepaid Royalties | $ 4,750 |
CAPITAL STOCK AND LOSS PER SH_3
CAPITAL STOCK AND LOSS PER SHARE (Details) - $ / shares | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Nov. 30, 2022 | Nov. 08, 2022 | Dec. 31, 2021 | |
CAPITAL STOCK AND LOSS PER SHARE | |||||||
Shares authorized per Charter | 462,000,000 | 462,000,000 | |||||
Common stock, shares authorized | 450,000,000 | 450,000,000 | 450,000,000 | ||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Preferred stock shares authorized | 12,000,000 | 12,000,000 | |||||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | |||||
Common stock, shares issued | 216,904,965 | 216,904,965 | 196,391,349 | ||||
Common stock, shares outstanding | 216,904,965 | 216,904,965 | 196,391,349 | ||||
Weighted-average number of shares outstanding | |||||||
Basic (in shares) | 211,946,000 | 178,761,000 | 203,147,000 | 176,573,000 | |||
Diluted (in shares) | 211,946,000 | 178,761,000 | 203,147,000 | 176,573,000 | |||
Stock options | |||||||
CAPITAL STOCK AND LOSS PER SHARE | |||||||
Share equivalents | 300,000 | 3,100,000 | |||||
BGL Warrants | Warrant | |||||||
CAPITAL STOCK AND LOSS PER SHARE | |||||||
Share equivalents | 1,600,000 | 1,600,000 | |||||
Private Placement Warrants | Warrant | |||||||
CAPITAL STOCK AND LOSS PER SHARE | |||||||
Share equivalents | 2,300,000 | 2,300,000 | |||||
Foxconn Warrants | Warrant | |||||||
CAPITAL STOCK AND LOSS PER SHARE | |||||||
Share equivalents | 1,700,000 | ||||||
Series A Convertible Preferred | Subsequent event | |||||||
CAPITAL STOCK AND LOSS PER SHARE | |||||||
Preferred stock shares authorized | 1,000,000 | 1,000,000 |
CAPITAL STOCK AND LOSS PER SH_4
CAPITAL STOCK AND LOSS PER SHARE - Purchase Agreements (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | ||
Jul. 23, 2021 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CAPITAL STOCK AND LOSS PER SHARE | ||||
Issuance of common stock, value | $ 2,724 | $ 1,853 | $ 3,822 | |
Equity Funding Agreement With Y A | ||||
CAPITAL STOCK AND LOSS PER SHARE | ||||
Issuance of common stock, value | $ 400,000 | $ 40,400 | $ 20,000 | |
Exchange cap (in shares) | 35.1 | 35.1 | ||
Exchange cap, as percentage of outstanding shares | 19.90% | |||
Minimum share price | $ 7.48 | |||
Advance Notice maximum percentage | 30% | |||
Advance Notice maximum requirement | $ 30,000 | |||
Advance Notice share price, as percentage of VWAP | 97% | |||
Common stock issued (in shares) | 0.4 | 17.5 | 3.9 | |
Equity Funding Agreement With Y A | Class A common stock | ||||
CAPITAL STOCK AND LOSS PER SHARE | ||||
Common stock issued (in shares) | 27.1 | |||
Equity Funding Agreement With Y A | Minimum | ||||
CAPITAL STOCK AND LOSS PER SHARE | ||||
Shares issued price per share | $ 7.48 | |||
Equity Funding Agreement With Y A | Scenario, Plan | ||||
CAPITAL STOCK AND LOSS PER SHARE | ||||
Issuance of common stock, value | $ 400,000 | $ 309,100 | ||
Agreement Term | 36 months | |||
Common stock issued (in shares) | 8 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Nov. 22, 2022 | Nov. 08, 2022 | Nov. 07, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Nov. 30, 2022 | |
SUBSEQUENT EVENTS | |||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | ||||||
Issuance of common stock | $ 1,853 | $ 3,822 | |||||
Issuance of common stock, value | $ 2,724 | $ 1,853 | $ 3,822 | ||||
Preferred stock shares authorized | 12,000 | ||||||
Common stock | |||||||
SUBSEQUENT EVENTS | |||||||
Issuance of common stock (in shares) | 1,522 | 1,106 | 2,136 | ||||
Issuance of common stock, value | $ 1 | ||||||
Subsequent event | Series A Convertible Preferred | |||||||
SUBSEQUENT EVENTS | |||||||
Preferred stock shares authorized | 1,000 | 1,000 | |||||
Accrued unpaid dividends (per share) | $ 100 | ||||||
Percentage of receive dividends at a rate | 8% | ||||||
Subsequent event | Common stock | |||||||
SUBSEQUENT EVENTS | |||||||
Issuance of common stock, value | $ 70,000 | ||||||
Subsequent event | Foxconn | Common stock | |||||||
SUBSEQUENT EVENTS | |||||||
Issuance of common stock (in shares) | 26,900 | ||||||
Shares issued price per share | $ 1.76 | ||||||
Subsequent event | Investment agreement | |||||||
SUBSEQUENT EVENTS | |||||||
Threshold sale of assets as percent of consolidated assets for acquisition proposal | 30% | ||||||
Threshold issuance of securities as percent of equity securities for acquisition proposal | 15% | ||||||
Threshold beneficial ownership of equity securities for acquisition proposal | 15% | ||||||
Threshold consolidated assets representing merger, dissolution or similar transaction for acquisition proposal | 30% | ||||||
Subsequent event | Investment agreement | Foxconn | |||||||
SUBSEQUENT EVENTS | |||||||
Aggregate value of shares for issuance | $ 100,000 | ||||||
Preferred stock, par value (in dollars per share) | $ 0.0001 | ||||||
Voting rights (as a percent) | 0.25% | ||||||
Subsequent event | Investment agreement | Foxconn | Lordstown EV Corporation | |||||||
SUBSEQUENT EVENTS | |||||||
Payment for services | $ 400 | ||||||
Expenses reimbursement | $ 100 | ||||||
Subsequent event | Investment agreement | Foxconn | Prior to CFIUS Clearance | |||||||
SUBSEQUENT EVENTS | |||||||
Voting rights (as a percent) | 9.99% | ||||||
Subsequent event | Investment agreement | Foxconn | Prior to Requisite Stockholder Approval | |||||||
SUBSEQUENT EVENTS | |||||||
Voting rights (as a percent) | 19.99% | ||||||
Subsequent event | Investment agreement | Foxconn | CFIUS Clearance and Requisite Stockholder Approval | |||||||
SUBSEQUENT EVENTS | |||||||
Voting rights (as a percent) | 24% | ||||||
Subsequent event | Investment agreement | Foxconn | Common stock | |||||||
SUBSEQUENT EVENTS | |||||||
Issuance of common stock (in shares) | 12,900 | ||||||
Shares issued price per share | $ 1.76 | ||||||
Issuance of common stock | $ 22,700 | ||||||
Subsequent event | Investment agreement | Foxconn | Preferred stock | |||||||
SUBSEQUENT EVENTS | |||||||
Issuance of common stock (in shares) | 300 | ||||||
Shares issued price per share | $ 100 | ||||||
Proceeds from issuance of preferred stock | $ 30,000 | ||||||
Subsequent event | Open Market Sales Agreement | Maximum | Jefferies LLC | |||||||
SUBSEQUENT EVENTS | |||||||
Number of shares to be issued | 50,200 |