Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 13, 2023 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 | RIDEQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,953,212 | |
Entity Central Index Key | 0001759546 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Balance Sheets
Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 93,653 | $ 121,358 |
Short-term investments | 100,297 | |
Inventory, net | 13,672 | |
Prepaid expenses | 6,340 | 5,032 |
Other current assets | 774 | 15,516 |
Total current assets | 100,767 | 255,875 |
Property, plant and equipment, net | 193,780 | |
Assets held for sale | 6,477 | |
Other non-current assets | 728 | 2,657 |
Total Assets | 107,972 | 452,312 |
Current Liabilities | ||
Accounts payable | 1,430 | 12,801 |
Accrued salaries, wages and benefits | 4,969 | 5,051 |
Accrued legal and professional | 13,336 | 38,398 |
Accrued expenses and other current liabilities | 2,845 | 12,584 |
Total current liabilities | 22,580 | 68,834 |
Liabilities subject to compromise | 38,985 | |
Warrant and other non-current liabilities | 603 | 1,446 |
Total liabilities | 62,168 | 70,280 |
Mezzanine equity | ||
Series A Convertible Preferred stock, $0.0001 par value, 12,000,000 shares authorized; 300,000 shares issued and outstanding as of September 30, 2023 and December 31, 2022 | 32,113 | 30,261 |
Stockholders' equity | ||
Class A common stock, $0.0001 par value, 450,000,000 shares authorized; 15,953,212 and 15,928,299, as adjusted reflecting the May 2023 1:15 reverse stock split, shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively | 24 | 24 |
Additional paid in capital | 1,183,596 | 1,178,960 |
Accumulated deficit | (1,169,929) | (827,213) |
Total stockholders' equity | 13,691 | 351,771 |
Total liabilities and stockholders' equity | $ 107,972 | $ 452,312 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) | May 24, 2023 | May 22, 2023 | Sep. 30, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | Aug. 17, 2022 $ / shares shares |
Consolidated Balance Sheets | |||||
Temporary equity par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Temporary equity shares authorized | 12,000,000 | 12,000,000 | 12,000,000 | ||
Temporary equity, shares issued | 300,000 | 300,000 | |||
Temporary equity shares outstanding | 300,000 | 300,000 | |||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Common stock, shares authorized | 450,000,000 | 450,000,000 | 450,000,000 | ||
Common stock, shares issued | 15,953,212 | 15,928,299 | |||
Common stock, shares outstanding | 15,953,212 | 15,928,299 | |||
Reserve stock split | 0.067 | 0.067 |
Statements of Operations
Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Consolidated Statements of Operations | ||||
Net sales | $ 2,340 | |||
Cost of sales | 91,550 | |||
Operating Expenses | ||||
Selling, general and administrative expense | $ (2,600) | $ 60,145 | 69,775 | $ 116,105 |
Research and development expenses | 5,716 | 19,839 | 32,445 | 92,213 |
Reorganization items | 13,641 | 13,641 | ||
Impairment of property plant & equipment and intangibles | 738 | 74,865 | 140,219 | 74,865 |
Total operating expenses | 17,495 | 154,849 | 256,080 | 283,183 |
Loss from operations | (17,495) | (154,849) | (345,290) | (283,183) |
Other income (expense) | ||||
(Loss) gain on sale of assets | (175) | (2,784) | 101,736 | |
Other (expense) income | (240) | (643) | (83) | (144) |
Investment and interest income | 1,404 | 1,062 | 5,440 | 1,187 |
Loss before income taxes | (16,506) | (154,430) | (342,717) | (180,404) |
Net loss | (16,506) | (154,430) | (342,717) | (180,404) |
Less preferred stock dividend | (630) | (1,852) | ||
Net loss attributable to common shareholders | $ (15,876) | $ (154,430) | $ (340,865) | $ (180,404) |
Net loss per share attributable to common shareholders | ||||
Basic (in dollars per share) | $ (1.03) | $ (10.93) | $ (21.38) | $ (13.32) |
Diluted (in dollars per share) | $ (1.03) | $ (10.93) | $ (21.50) | $ (13.32) |
Weighted-average number of common shares outstanding | ||||
Basic (in shares) | 15,953 | 14,130 | 15,942 | 13,543 |
Diluted (in shares) | 15,953 | 14,130 | 15,942 | 13,543 |
Statements of Stockholders' Equ
Statements of Stockholders' Equity/(Deficit) - USD ($) $ in Thousands | Preferred stock | Common Stock Equity Funding Agreement With Y A | Common Stock | Additional Paid-In Capital Equity Funding Agreement With Y A | Additional Paid-In Capital | Accumulated Deficit | Equity Funding Agreement With Y A | Total |
Beginning balance at Dec. 31, 2021 | $ 19 | $ 1,084,390 | $ (544,809) | $ 539,600 | ||||
Beginning Balance (in Shares) at Dec. 31, 2021 | 196,391,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of Class A Common stock | $ 2 | $ 1 | $ 40,437 | 1,852 | $ 40,439 | 1,853 | ||
Issuance of Class A Common stock (in shares) | 17,464,000 | 1,106,000 | 17,500,000 | |||||
Restricted stock vesting (in shares) | 1,944,000 | |||||||
Stock compensation | 10,949 | 10,949 | ||||||
Net income (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 | 216,905,000 | |||||||
Ending Balance at Dec. 31, 2022 | $ 30,261 | $ 30,261 | ||||||
Ending Balance (in Shares) at Dec. 31, 2022 | 300,000 | 300,000 | ||||||
Beginning balance at Dec. 31, 2021 | $ 19 | 1,084,390 | (544,809) | $ 539,600 | ||||
Beginning Balance (in Shares) at Dec. 31, 2021 | 196,391,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of Class A Common stock | $ 40,400 | |||||||
Issuance of Class A Common stock (in shares) | 17,500,000 | |||||||
Ending balance at Dec. 31, 2022 | $ 24 | 1,178,960 | (827,212) | 351,771 | ||||
Ending Balance (in Shares) at Dec. 31, 2022 | 15,928,000 | |||||||
Beginning balance at Jun. 30, 2022 | $ 21 | 1,106,521 | (570,783) | 535,759 | ||||
Beginning Balance (in Shares) at Jun. 30, 2022 | 205,871,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of Class A Common stock | $ 1 | $ 26,704 | $ 26,705 | |||||
Issuance of Class A Common stock (in shares) | 10,902,000 | |||||||
Restricted stock vesting (in shares) | 132,000 | |||||||
Stock compensation | 4,403 | 4,403 | ||||||
Net income (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 | 216,905,000 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||
Accrual of Preferred stock dividends | $ 1,852 | |||||||
Ending Balance at Sep. 30, 2023 | $ 32,113 | $ 32,113 | ||||||
Ending Balance (in Shares) at Sep. 30, 2023 | 300,000 | 300,000 | ||||||
Beginning balance at Dec. 31, 2022 | $ 24 | 1,178,960 | (827,212) | $ 351,771 | ||||
Beginning Balance (in Shares) at Dec. 31, 2022 | 15,928,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Restricted stock vesting | (65) | (64) | ||||||
Stock compensation | 6,553 | 6,553 | ||||||
Stock compensation (in shares) | 25,000 | |||||||
Accrual of Preferred stock dividends | (1,852) | (1,852) | ||||||
Net income (loss) | (342,717) | (342,717) | ||||||
Ending balance at Sep. 30, 2023 | $ 24 | 1,183,596 | (1,169,929) | 13,691 | ||||
Ending Balance (in Shares) at Sep. 30, 2023 | 15,953,000 | |||||||
Beginning Balance at Jun. 30, 2023 | $ 31,483 | |||||||
Beginning Balance (in Shares) at Jun. 30, 2023 | 300,000 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||
Accrual of Preferred stock dividends | $ 630 | 600 | ||||||
Ending Balance at Sep. 30, 2023 | $ 32,113 | $ 32,113 | ||||||
Ending Balance (in Shares) at Sep. 30, 2023 | 300,000 | 300,000 | ||||||
Beginning balance at Jun. 30, 2023 | $ 24 | 1,182,371 | (1,153,423) | $ 28,972 | ||||
Beginning Balance (in Shares) at Jun. 30, 2023 | 15,953,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock compensation | 1,855 | 1,855 | ||||||
Accrual of Preferred stock dividends | (630) | (630) | ||||||
Net income (loss) | (16,506) | (16,506) | ||||||
Ending balance at Sep. 30, 2023 | $ 24 | $ 1,183,596 | $ (1,169,929) | $ 13,691 | ||||
Ending Balance (in Shares) at Sep. 30, 2023 | 15,953,000 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Cash flows from operating activities | |||||
Net loss | $ (342,717) | $ (180,404) | |||
Adjustments to reconcile net loss to cash used by operating activities: | |||||
Stock-based compensation | 6,553 | 10,949 | |||
Loss (gain) on disposal of fixed assets | $ 175 | 2,784 | (101,736) | ||
Impairment of property plant and equipment and intangible assets | 738 | $ 74,865 | 140,219 | 74,865 | |
Depreciation of property plant and equipment | 54,407 | ||||
Write down of inventory and prepaid inventory | 24,105 | 25,624 | |||
Other non-cash changes | (2,183) | 484 | |||
Changes in assets and liabilities: | |||||
Inventory | (10,537) | (36,695) | |||
Prepaid expenses and other assets | 13,337 | 10,289 | |||
Accounts payable | (11,353) | 5,120 | |||
Accrued salaries, wages, and benefits | (82) | (3,560) | |||
Accrued legal and professional | (25,061) | 37,903 | |||
Accrued expenses and other liabilities | 30,522 | (13,861) | |||
Net Cash used in operating activities | (120,006) | (171,022) | |||
Cash flows from investing activities | |||||
Purchases of property plant and equipment | (10,152) | (50,563) | |||
Purchases of short-term investments | (32,147) | (49,304) | |||
Maturities of short-term investments | 134,203 | ||||
Investment in Foxconn Joint Venture | (13,500) | ||||
Proceeds from the sale of fixed assets | 397 | 38,813 | |||
Net Cash provided by (used in) investing activities | 92,301 | (74,554) | |||
Cash flows from financing activities | |||||
Proceeds from notes payable for Foxconn Joint Venture | 13,500 | ||||
Down payments received from Foxconn | 100,000 | ||||
Issuance of Class A common stock | 1,853 | ||||
Proceeds from Equity Purchase Agreement, net of issuance costs | 40,439 | ||||
Net Cash provided by financing activities | 155,792 | ||||
Decrease in cash and cash equivalents | (27,705) | (89,784) | |||
Cash and cash equivalents, beginning balance | 121,358 | 244,016 | $ 244,016 | ||
Cash and cash equivalents, ending balance | $ 93,653 | $ 154,232 | $ 93,653 | 154,232 | $ 121,358 |
Non-cash items | |||||
Capital assets acquired with payables | $ 2,162 |
DESCRIPTION OF ORGANIZATION AND
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 9 Months Ended |
Sep. 30, 2023 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Description of Business On June 27, 2023, Lordstown Motors Corp., a Delaware corporation, together with its subsidiaries (“Lordstown,” the “Company,” “the Debtors” or “we”), filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). In connection with the Chapter 11 Cases, we ceased production and sales of our flagship vehicle, the Endurance, and new program development and began a comprehensive marketing and sale process for all, substantially all or some of the Company’s assets in order to maximize the value of those assets. Furthermore, we continued our aggressive cost cutting actions that included significant personnel reductions. On September 29, 2023, we entered into an agreement to sell specified assets related to the design, production and sale of electric light duty vehicles focused on the commercial fleet market free and clear of liens, claims, encumbrances, and other interests, and assumed certain specified liabilities of the Company for a total purchase price of approximately $10.2 million in cash in a transaction that closed on October 27, 2023 (discussed below under “Voluntary Chapter 11 Petition ,” Note 7 – Commitments and Contingencies and Note 9 - Subsequent Events). As a result of these actions, the Company has no remaining revenue-producing operations and its primary operations consist of expenses associated with completing the Chapter 11 Cases, including resolving substantial litigation, and preparing for emergence as contemplated in the Proposed Plan described below. Prior to the consummation of the Chapter 11 Cases, the Company was an original equipment manufacturer (“OEM”) of electric light duty vehicles focused on the commercial fleet market and, since inception, had been developing the Endurance. The Company’s strategy was designed to accelerate the launch of new commercial electric vehicles (“EVs”). This included working on its own vehicle programs as well as partnering with third parties, including Foxconn and its affiliates (as defined below), as the Company sought to leverage its vehicle development experience, its proprietary and open-source code and other non-proprietary technologies, its existing Endurance vehicle platform, and potential new vehicle platforms to drive commonality and scale, and more efficiently develop and launch EVs, to enhance capital efficiency and achieve profitability. In the third quarter of 2022, the Company started commercial production of the Endurance and began to record sales in the fourth quarter of 2022. Engineering readiness, quality and part availability governed the initial timing and speed of the Endurance launch. The rate of Endurance production remained very low in 2023 until June 2023, when management made the decision to cease production and file the Chapter 11 Cases. Leading up to filing the Chapter 11 Cases (as further discussed below), it became apparent that we would be unable to effectively implement and realize the anticipated benefits of the Foxconn Transactions (as defined below) as Foxconn failed to meet funding commitments and refused to engage with the Company on various initiatives contemplated by the Foxconn Transactions that were essential to sustain ongoing operations. Due to the failure to identify a strategic partner for the Endurance, lack of expected funding and other support from Foxconn (as discussed in more detail below) and extremely limited ability to raise sufficient capital in the current market environment, we determined it was in the best interests of the Company’s stakeholders to take aggressive actions to cut costs and preserve cash, file the Chapter 11 Cases and cease production of the Endurance and new program development. As part of these initial actions, two notices were provided to a substantial number of employees under the Worker Adjustment and Retraining Notification Act (“WARN Act”) in May 2023, for job eliminations occurring during the third quarter of 2023. We have fewer than 20 employees as of November 13, 2023, with additional employees anticipated to leave the Company by December 1, 2023. During the nine months ended September 30, 2023, we sold 35 Endurance trucks to customers. Voluntary Chapter 11 Petition On June 27, 2023, the Debtors filed voluntary petitions for relief under Chapter 11 in the Bankruptcy Court. Additional information about the Chapter 11 Cases, including access to documents filed with the Bankruptcy Court, is available online at https://www.kccllc.net/lordstown/document/list, a website administered by Kurtzman Carson Consultants LLC ("KCC"), a third-party bankruptcy claims and noticing agent. The information on this website is not incorporated by reference and does not constitute part of this Form 10-Q. The Bankruptcy Court has approved certain motions filed by the Debtors under which they were authorized to conduct their business activities in the ordinary course, including to, among other things and subject to the terms and conditions of such orders: (i) pay employees’ wages and related obligations; (ii) pay certain taxes; (iii) pay critical vendors; (iv) continue to honor certain customer obligations; (v) maintain their insurance program; (vi) continue their cash management system and (v) establish certain procedures to protect any potential value of the Company’s net operating loss carryforwards and other tax attributes (the “NOLs”). As part of the Chapter 11 Cases, on August 8, 2023, the Bankruptcy Court approved procedures (the “Bidding Procedures Order”) for the Debtors to conduct a comprehensive marketing and sale process for all, substantially all or some of their assets in order to maximize the value of those assets. The Debtors’ investment banker, Jefferies LLC (“Jefferies”), and other professionals conducted a comprehensive marketing process for the sale of assets consistent with the Bidding Procedures Order. In connection with that marketing and sale process, the Debtors received a “Qualified Bid” (as defined in the Bidding Procedures Order) from LAS Capital LLC, a Delaware limited liability company (“LAS Capital”) to purchase certain specified assets of Debtors. Although the Debtors received several non-binding proposals for the purchase of specified assets, the Debtors through their Board of Directors, determined that none of these other proposals was a Qualified Bid in accordance with the Bidding Procedures and determined LAS Capital to be the successful bidder under the Bidding Procedures. As a result, the Debtors cancelled the auction in accordance with the Bidding Procedures, and proceeded to seek Bankruptcy Court approval of the sale. On September 29, 2023, the Debtors entered into an Asset Purchase Agreement (the “LandX Asset Purchase Agreement”) with LAS Capital LLC, a Delaware limited liability company (“LAS Capital”), and Mr. Stephen S. Burns, an individual, as guarantor of certain obligations of LAS Capital under the LandX Asset Purchase Agreement . The LandX Asset Purchase Agreement was assigned to LAS Capital’s affiliate, LandX Motors Inc., a Delaware corporation (the assignee and “Purchaser”) and approved by the Bankruptcy Court on October 18, 2023. The closing of the transactions contemplated by the LandX Asset Purchase Agreement occurred on October 27, 2023, at which time the Purchaser acquired substantially all of the assets held for sale of the Debtors related to the design, production and sale of electric light duty vehicles focused on the commercial fleet market free and clear of liens, claims, encumbrances, and other interests, and assumed certain specified liabilities of the Debtors for a total purchase price of approximately $10.2 million in cash. Upon consummation of the sale, Jefferies became entitled to a Transaction Fee (as defined below) of $2.0 million after crediting the Monthly Fees (as defined below) paid to Jefferies since entering into the Engagement Letter and, subject to payment of the $2.0 million Transaction Fee, no further amounts will be payable to Jefferies under the Engagement Letter. See Note 7 – Commitments and Contingencies and Note 9 - Subsequent Events. The Debtors have a limited amount of assets remaining (other than cash on hand, the claims asserted in the Foxconn Litigation and other potential claims that the Company may have against other parties, and tax attributes) following the closing under the LandX Asset Purchase Agreement. The sale of any remaining assets (whether in whole or in part) may not be consummated and would not result in any meaningful proceeds. No assurance can be made regarding the sufficiency of the Debtor’s assets to complete the Chapter 11 Cases, provide estimated recoveries to claimants and fund anticipated post-emergence activities. Further, the assets included in this report or in any filing we make with the Bankruptcy Court may not reflect the fair values thereof during the pendency of or following the Chapter 11 Cases or the value of our assets in light of the uncertainty of the estimates and assumptions used in the applicable reporting principles, and such values may be higher or lower as a result. The Company has also been seeking to use the tools of Chapter 11 to fully, finally, and efficiently resolve its contingent and other liabilities and to pursue the Foxconn Litigation before the Bankruptcy Court. However, the Company provides no assurance as to the timing or outcome of the resolution of these matters by the Bankruptcy Court or any other court in which these matters may be adjudicated, including as a result of the proceedings that will occur outside of the Bankruptcy Court prior to a final disposition by the Bankruptcy Court. The Bankruptcy Court established October 10, 2023, as the deadline by which parties were required to file proofs of claim in the Chapter 11 Cases and December 26, 2023 for all governmental entities to file their proofs of claim. In addition, additional claims may be filed for executory contracts and unexpired leases rejected pursuant to the Proposed Plan. The Company cannot provide any assurances regarding what the Company’s total actual liabilities based on such claims will be. On September 1, 2023, the Debtors filed a Joint Plan of Lordstown Motors Corp. and Its Affiliated Debtors and a related proposed disclosure statement. On October 24, 2023, the Debtors filed the First Amended Joint Plan of Lordstown Motors Corp. and Its Affiliated Debtors (the “First Amended Plan”) and a related proposed disclosure statement (the “First Amended Disclosure Statement”) with the Bankruptcy Court. On October 29, 2023, the Debtors made certain modifications to the First Amended Plan and First Amended Disclosure statement based on negotiations with parties and filed with the Bankruptcy Court Modified First Amended Joint Plan of Lordstown Motors Corp. and Its Affiliated Debtors (the “Proposed Plan”) and a related proposed modified disclosure statement (the “Disclosure Statement”). On October 30, 2023, the Debtors further revised the Proposed Plan and Disclosure Statement. On October 31, 2023, the Bankruptcy Court held a hearing on the approval of the Disclosure Statement and the procedures to solicit votes to accept or reject the Proposed Plan. The Bankruptcy Court announced, among other things, that it would approve the Debtors’ Disclosure Statement and the procedures to be used in connection with the solicitation of votes on the Proposed Plan (the “Solicitation and Voting Procedures”). On November 1, 2023, the Bankruptcy Court entered an order approving the Disclosure Statement and the Solicitation and Voting Procedures (the “Disclosure Statement Order”). The Bankruptcy Court’s entry of the Disclosure Statement Order does not constitute the Bankruptcy Court’s confirmation or acceptance of the Proposed Plan and the Company can provide no assurance that the Proposed Plan will be accepted by creditors or stakeholders, who may object to the Proposed Plan, or confirmed by the Bankruptcy Court (or, even if confirmed, that the Proposed Plan will become effective). The Debtors are authorized to solicit votes from their creditors and the Company’s shareholders for approval of the Proposed Plan. The Proposed Plan (and its consummation) remain subject to Bankruptcy Court approval and satisfaction of other conditions contained in the Proposed Plan. A hearing to consider confirmation of the Proposed Plan is scheduled for December 19, 2023, but may be rescheduled. The Proposed Plan and Disclosure Statement describe, among other things, the terms of the Proposed Plan; the events leading to the Chapter 11 Cases; the treatment of claims and Interests under the Proposed Plan; certain events that have occurred or are anticipated to occur during the Chapter 11 Cases, including the process for the solicitation of votes to approve the Proposed Plan from certain of the Debtors’ creditors and Interest holders; and certain other aspects of the Proposed Plan. The Proposed Plan would, among other provisions: (i) provide an orderly structure for distributions to holders of claims of creditors (“Claims”) and treatment of equity interests of shareholders (“Interests”), (ii) preserve retained causes of action, including against Foxconn, to be pursued by the post-effective date Company, and (iii) seek to preserve the value of the Company’s NOLs, by leaving preferred and common equity Interests in the post-effective Company in place. All distributions under the Proposed Plan would come from the Debtors’ cash on hand and other assets, which would generally be distributed, subject to the terms of the Proposed Plan, to classes of Claims and Interests in order of their respective priorities under the Bankruptcy Code. The Disclosure Statement provides disclosures regarding the anticipated recoveries to holders of Claims and Interests pursuant to the Proposed Plan, including holders of the Class A common stock, which remain to be determined. No assurance can be made with respect to any distributions or recoveries with respect to Claims or Interests under the Proposed Plan. The Proposed Plan provides for the treatment of Claims filed against the Debtors in the securities class action captioned In re Lordstown Motors Corp. Securities Litigation, Case No. 4:21-cv-00616 (DAR) (the “Ohio Securities Class Action”), with holders of allowed Claims (if any) in the applicable class (if any) receiving Class A common stock in an amount calculated pursuant to the formula set forth in the Proposed Plan, after accounting for any recoveries from applicable insurers or other third parties and subject to the post-effective date Debtors’ election to cash out such Class A common stock Interests. Alternatively, the Proposed Plan provides for an elective class that permits the Ohio Securities Action lead plaintiff (the “Ohio Lead Plaintiff”) to elect to receive a $1.0 million settlement on behalf of a putative class of claimants in lieu of the treatment set forth in the preceding sentence. If the Ohio Lead Plaintiff elects to accept such treatment, a putative class will be sought to be certified solely for purposes of receiving distributions under the Proposed Plan and to the extent that such class is certified members of such class who do not opt-out will receive their pro rata share of the settlement amount, subject to the terms of the Proposed Plan. There is no guarantee that the proposed settlement will be accepted or that a settlement class would be certified even if the proposed settlement were accepted. The Proposed Plan also provides for the treatment of Claims filed against the Debtors on the same or similar basis as those set forth in the putative securities class action filed against the Debtors’ current Chief Executive Officer (Edward Hightower) and Chief Financial Officer (Adam Kroll) in the United States District Court for the Northern District of Ohio, styled Bandol Lim v. Edward Hightower et al., No.: 4:23-cv-01454-BYP (N.D. Ohio), which alleges claims arising from the purchase or acquisition of securities of Lordstown Motors Corp. between August 4, 2022 through and including June 26, 2023. The Proposed Plan limits recoveries (if any) from the Debtors on account of such Claims to available insurance. The Debtors dispute the merits of any such claims. Holders of Claims and Interest in the Debtors that are in a class that is impaired under the Proposed Plan are entitled to vote to accept or reject the Proposed Plan unless their class is deemed to accept or reject pursuant to the terms of the Proposed Plan. After the approval of the Disclosure Statement on November 1, 2023, the Company promptly began soliciting votes on the Proposed Plan pursuant to the Solicitation Procedures approved by the Bankruptcy Court. The Proposed Plan contemplates releases to directors and officers of the Debtors that served in the capacity as a director or officer of any of the Debtors at any time from the Petition Date through the effective date of the Proposed Plan. Subject to the Bankruptcy Court’s approval, the releases would be binding on holders of Claims and Interests (a) that affirmatively vote to accept the Proposed Plan or (b) are entitled to vote on the Proposed Plan, vote to reject the Proposed Plan, and check a box on their ballot opting into the releases. The releases are also binding on related parties to those described in (a) and (b) ( e.g. , affiliates, predecessors, successors, and related parties as set forth in the Proposed Plan), but only to the extent the parties in (a) and (b) have authority to bind such persons or entities to the releases. Pursuant to the Proposed Plan, the Company would emerge from the bankruptcy proceedings and the Foxconn Litigation and other causes of action of the Debtors would be preserved and continue (and proceeds therefrom would be generated, if any), Claims filed in the Chapter 11 cases would continue to be resolved pursuant to the claims resolution process with allowed claims being treated in accordance with the Proposed Plan, the Debtors’ tax attributes would be preserved, distributions to holders of allowed Claims and allowed Interests would be made , and the Debtors’ ability to conduct business and enter into one or more transactions after the bankruptcy proceedings to maximize value would be preserved as set forth in the Proposed Plan, including transactions that could permit the post-bankruptcy Debtors to make use of substantial tax attributes. At this time, however, the Debtors do not know what the post-effective date operations will include and no assurances can be provided that the Proposed Plan would generate any value for the Company’s post-effective date equity holders. The Proposed Plan provides for the appointment of new members to serve on the Company’s board of directors (the “New Board”) as of the effective date of the Proposed Plan. The New Board will be identified by the equity committee appointed by the Bankruptcy Court to represent the equity Interests in the Chapter 11 Cases (the “Equity Committee”) with the consent of the Debtors (such consent not to be unreasonably withheld). The New Board will, among other things, oversee and direct the administration of the post-effective date Debtors’ operations in accordance with the Proposed Plan. On the effective date, or as soon as is reasonably practicable thereafter, the New Board will establish such procedures and protocols as it deems necessary to carry out its duties and appoint officers of the Debtors. The officers of the post-effective date Debtors will have the rights and responsibilities set forth in the new organizational documents of the Post-Effective Date Debtors, which may include the NOL Trading Restrictions to facilitate the preservation of the Company’s NOLs. Neither the Debtors’ filing of the Proposed Plan and Disclosure Statement, nor this report, is a solicitation of votes to accept or reject the Proposed Plan. Votes on the Proposed Plan will be solicited in accordance with the Solicitation and Voting Procedures approved by the Bankruptcy Court and applicable law. See Note 9 – Subsequent Events. The description of the Proposed Plan and Disclosure Statement contained in this report is qualified in its entirety by reference to the full text of the solicitation versions of the Proposed Plan and Disclosure Statement, copies of which are filed with this Quarterly Report on Form 10-Q as Exhibit 10.2 and are incorporated herein by reference. Information contained in the Proposed Plan and the Disclosure Statement is subject to change substantially, whether as a result of amendments, supplements, or other modifications to the Proposed Plan, third-party actions, including governmental claims, or otherwise. The Proposed Plan is not binding on any party, including the Debtors, unless and until it is approved by the stakeholders entitled to vote and confirmed by the Bankruptcy Court and consummated. Information in the Disclosure Statement is subject to change and may be further supplemented. Neither the Debtors’ filing of the Proposed Plan and Disclosure Statement, nor this report, is a solicitation of votes to accept or reject the Proposed Plan. Votes on the Proposed Plan will be solicited in accordance with the solicitation and voting procedures filed with and approved by the Bankruptcy Court and applicable law. Foxconn Litigation On June 27, 2023, the Company commenced an adversary proceeding against Foxconn (the “Foxconn Litigation”) in the Bankruptcy Court seeking relief for fraudulent and tortious conduct as well as breaches of the Investment Agreement (as defined below), the parties’ joint venture agreement, the Foxconn APA (as defined below), and the CMA (as defined below) that the Company believes were committed by Foxconn. As set forth in the complaint relating to the adversary proceeding, Foxconn’s actions have caused substantial harm to the Company’s operations and prospects and significant damages. See “Foxconn Transactions” above and Note 7 – Commitments and Contingencies for additional information. The Foxconn Litigation is Adversary Case No. 23-50414. Cessation of Production Shortly after commencing the Chapter 11 Cases, the Company ceased production of the Endurance and new program development. As a result of closing the transactions contemplated by the LandX Asset Purchase Agreement, the Company has no remaining revenue-producing operations and its primary operations consist of expenses associated with completing the Chapter 11 Cases. Accordingly, the Company lacks any revenue related to selling vehicles, and may have substantial contingent obligations related to those vehicles we sold (see “NHTSA Matters” under Note 7 – Commitments and Contingencies for additional information). Our ongoing operations during the third quarter of 2023 primarily included support of vehicles that had been delivered to customers, custody and maintenance of our assets for prospective sale under the process established in the Chapter 11 Cases or otherwise (which sale was completed on October 27, 2023), support for the sale process, legal matters, and administration and facilitation of the Chapter 11 Cases and related proceedings. Foxconn Transactions The Company 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 the Foxconn APA (as defined below) and outsource manufacturing of the Endurance to Foxconn under the CMA. On November 7, 2022, we entered into an Investment Agreement with Foxconn under which Foxconn agreed to make additional equity investments in the Company (the “Investment Agreement”). The Foxconn APA, the CMA and the Investment Agreement together are herein referred to as the “Foxconn Transactions.” Investment Agreement Under the Investment Agreement, Foxconn agreed to make additional equity investments in the Company through the purchase of $70 million of Class A common stock, $0.0001 par value per share (“Class A common stock”), and up to $100 million in Series A Convertible Preferred Stock, $0.0001 par value per share (the “Preferred Stock”), subject to certain conditions, including, without limitation, regulatory approvals and, with regard to the Preferred Stock, satisfaction of certain EV Program (as defined herein) budget and EV Program milestones established by the parties. The Preferred Stock funding could only be used in connection with planning, designing, developing, engineering, testing, industrializing, certifying, homologating and launching one or more EVs in collaboration with Foxconn (the “EV Program”). On November 22, 2022, the parties completed the initial closing under the Investment Agreement, pursuant to which Foxconn purchased approximately $22.7 million of Class A common stock and $30 million of Preferred Stock (the “Initial Closing”). The Investment Agreement provided for the second closing of Class A common stock (the “Subsequent Common Closing”), at which time, the Company maintains that Foxconn was required to purchase approximately 10% of the Class A common stock for approximately $47.3 million. The Subsequent Common Closing was to occur within 10 business days following the parties’ receipt of a written communication from the U.S. government’s Committee on Foreign Investment in the United States (“CFIUS”) that CFIUS has concluded that there are no unresolved national security concerns with respect to the transactions (“CFIUS Clearance”) and subject to satisfaction of the other conditions set forth in the Investment Agreement (which the Company believes were or would have been satisfied). CFIUS Clearance was received on April 25, 2023, which means the Subsequent Common Closing was to occur on or before May 8, 2023. The Company was ready, willing and able to complete the Subsequent Common Closing on a timely basis. In addition, following the parties’ agreement to the EV Program budget and the EV Program milestones and satisfaction of those EV Program milestones and other conditions set forth in the Investment Agreement, Foxconn was to purchase in two tranches, a total of 0.7 million additional shares of Preferred Stock at a purchase price of $100 per share for aggregate proceeds of $70 million (the “Subsequent Preferred Funding”). The parties agreed to use commercially reasonable efforts to agree upon the EV Program budget and EV Program milestones no later than May 7, 2023. The completion of the Subsequent Common Closing and the Subsequent Preferred Funding would have provided critical liquidity for the Company’s operations. Since April 21, 2023, Foxconn has disputed its obligations under the Investment Agreement to consummate the Subsequent Common Closing and to use necessary efforts to agree upon the EV Program budget and EV Program milestones to facilitate the Subsequent Preferred Funding. Foxconn initially asserted that the Company was in breach of the Investment Agreement due to the Company’s previously disclosed receipt of a notice (the “Nasdaq Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”), which Nasdaq Notice indicated that the Company’s Class A common stock price dropped below the $1.00 per share threshold set forth in Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Requirement”) and that the Company had a 180 -day period to remedy the drop in the stock price. As previously disclosed, Foxconn purported to terminate the Investment Agreement if that purported breach was not cured within 30 days . The Company continues to believe that the breach allegations by Foxconn are without merit, and that Foxconn was obligated to complete the Subsequent Common Closing on or before May 8, 2023. Despite the Company taking action to satisfy the Bid Price Requirement as of June 7, 2023, and discussions between the parties to seek a resolution regarding the Investment Agreement, Foxconn did not proceed with the Subsequent Common Closing or any Subsequent Preferred Funding. As a result of Foxconn’s actions, the Company was deprived of critical funding necessary for its operations. To seek relief for Foxconn’s contractual breaches and other fraudulent and tortious conduct the Company believes were committed by Foxconn, the Company commenced the Foxconn Litigation. Closing of the Foxconn APA 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 “Foxconn Asset Purchase Agreement” or “Foxconn APA” and the closing of the transactions contemplated thereby, the “Foxconn APA Closing”). Pursuant to the Foxconn APA, Foxconn purchased Lordstown EV’s manufacturing facility located in Lordstown, Ohio. Lordstown EV had continued 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 had outsourced all of the manufacturing of the Endurance to Foxconn under the Contract Manufacturing Agreement. Lordstown EV also entered into a lease pursuant to which Lordstown EV had leased space located at the Lordstown, Ohio facility from Foxconn for Lordstown EV’s Ohio-based employees for a term equal to the duration of the Contract Manufacturing Agreement plus 30 days. We received $257 million in proceeds related to the sale, consisting of the $230 million initial purchase price for the assets, plus $8.9 million for expansion investments and an $18.4 million reimbursement payment for certain operating costs incurred by us from September 1, 2021 through the Foxconn APA Closing. Foxconn made down payments of the purchase price totaling $200 million through April 15, 2022, of which $100 million was received in both 2022 and 2021. The $30 million balance of the purchase price and a reimbursement payment of approximately $27.5 million were paid at the Foxconn 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 Foxconn APA, the $17.5 million reimbursement costs were an estimate which upon final settlement was subsequently increased to $18.4 million. Research and development costs are presented net of the $18.4 million reimbursement of costs under the Foxconn APA 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. Also, in connection with the Foxconn APA Closing, the Company issued the Foxconn Warrants (as defined herein), which are exercisable until the third anniversary of the Foxconn APA Closing for 0.13 million shares of Class A common stock at an exercise price of $157.50 per share (the “Foxconn Warrants”). In October 2021, prior to entering into the Foxconn APA, Foxconn purchased 0.48 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 “CMA” or “Contract Manufacturing Agreement”) in connection with the Foxconn APA Closing. Pursuant to the CMA, Foxconn was to (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. Foxconn did not provide the aforementioned procurement and post delivery services. The CMA was intended to provide us with an almost entirely variable manufacturing cost structure and to alleviate the burden to invest in and maintain the Lordstown facility. The CMA required Foxconn to use commercially reasonable efforts to assist with reducing component and logistics costs and reducing the overall bill of materials (“BOM”) cost of the Endurance, and otherwise improving the commercial terms of procurement with suppliers. However, we did not realize any materi |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
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 condensed consolidated financial statements in accordance with GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions that affect the reported amounts in the consolidated financial statements, and related disclosures in the accompanying notes to the financial statements. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of changes are reflected in the condensed consolidated Financial Statements in the period they are determined to be necessary. The Chapter 11 Cases will result in continuous changes in facts and circumstances that will cause the Company’s estimates and assumptions to change, potentially materially. We undertake no obligation to update or revise any of the disclosures, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. There have been no material changes to the critical accounting policies and estimates described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, except for the areas noted below, primarily driven by the filing of the Chapter 11 Cases. Liabilities Subject to Compromise As noted above, since filing the Chapter 11 petitions, the Company has operated as debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. In the accompanying Balance Sheet, the “Liabilities subject to compromise” line is reflective of expected allowed claim amounts in accordance with ASC 852-10 and are subject to change materially based on the proceedings and continued consideration of claims that may be modified, allowed, or disallowed. Refer to Note 7 – Commitments and Contingencies for further detail. Reorganization Items Reorganization items represent the expenses directly and incrementally resulting from the Chapter 11 cases and are separately reported as Reorganization items in our statements of operations. Inventory and Inventory Valuation Substantially all of the Company’s inventory is specific to the production of the Endurance and is stated at the lower of cost or net realizable value (“NRV”). NRV is the estimated value of the inventory in the context of the Chapter 11 Cases, which is minimal due to its unique nature. In addition to the NRV analysis, the Company recognizes an excess inventory reserve to adjust for inventory quantities in excess of anticipated Endurance production. As discussed above, the Company ceased production of the Endurance in June 2023. There were no NRV and excess inventory charges for the three months ended September 30, 2023, and $24.1 million for the nine months ended September 30, 2023. NRV and excess inventory charges are recorded within Cost of Sales in the Company’s Condensed Consolidated Statement of Operations. No such charges were recognized for the three and nine months ended September 30, 2022, as the Company had not yet commenced commercial production of the Endurance. As of September 30, 2023, inventory is presented as assets held for sale on the Company’s Balance Sheet. All of our inventory was sold pursuant to closing the LandX Asset Purchase Agreement in the fourth quarter of 2023, the effect of which is not reflected in these financial statements (See Note 9 – Subsequent Events). Property, plant and equipment Property and equipment are stated at cost less accumulated depreciation and impairment charges. Depreciation is computed using the straight-line method over the estimated useful lives and residual values of the related assets. Upon retirement or sale, the cost and related accumulated depreciation and impairments 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. Due to the failure to identify a strategic partner for the Endurance, lack of expected funding and other support from Foxconn (as discussed in more detail above and elsewhere in this report) and extremely limited ability to raise sufficient capital in the current market environment, we determined it was in the best interests of the Company’s stakeholders to take aggressive actions to cut costs and preserve cash, file the Chapter 11 Cases and cease production of the Endurance and new program development. As of September 30, 2023, property, plant and equipment is presented as assets held for sale on the Company’s Balance Sheet. Substantially all of our property, plant and equipment was sold pursuant to closing the LandX Asset Purchase Agreement in the fourth quarter of 2023, the effect of which is not reflected in these financial statements (See Note 9 – Subsequent Events and Note 4 – Property, Plant and Equipment and Assets Held for Sale for details regarding our classification of assets held for sale). Valuation of Long-Lived and Intangible Assets 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. Asset impairment 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, residual values 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. Changes in these estimates and assumptions could materially affect the determination of fair value and any impairment charge. For assets to be held and used, including identifiable intangible assets and long-lived assets subject to amortization, we initiate our review whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability of a long-lived asset subject to amortization is measured by comparison of its carrying amount to the expected future undiscounted cash flows that the asset is expected to generate. Any impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Significant management judgment is required in this process. The uncertainties regarding the ability to determine the realizable value for our property, plant and equipment, including in light of the timing of the filing of the Chapter 11 Cases and lack of available reference data for market transactions, particularly with respect to Endurance-specific assets, resulted in a determination by the Company of the fair value of the assets based on their estimated residual or salvage values as of June 30, 2023. For the quarter ended September 30, 2023, the Company recognized an impairment charge of $0.7 million to adjust the carrying value of its right of use assets. The Company also evaluated the decision to actively market the sale of its long-lived fixed assets in connection with the Chapter 11 Cases, against ASC Topic 360-10-45-9 “Long-Lived Assets to Be Disposed of By Sale.” See Note 4 – Property, Plant and Equipment and Assets Held for Sale for details regarding our impairment assessment and classification of assets held for sale. Warrants As a result of the Chapter 11 Cases, the fair value of the Company’s warrants was deemed to be zero and adjusted accordingly as of June 30, 2023 . Recently issued accounting pronouncements There are no recently issued, but not yet adopted, accounting pronouncements which are expected to have a material impact on the Company’s Condensed Financial Statements and related disclosures. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2023 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 3 — FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements The Company follows the accounting guidance in ASC Topic 820, Fair Value Measurements 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 (with exercise prices shown in pre-Reverse Stock Split amounts): (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 were issued as part of the Business Combination in October 2020 and classified as equity as they qualified as share-based compensation under ASC Topic 718, Compensation – Stock Compensation (“ASC Topic 718”) until they expired in October 2023. As of September 30, 2023, following the Reverse Stock Split, we had 0.113 million Foxconn Warrants with an exercise price of $157.50 , 0.153 million Private Warrants with a strike price of $172.50 and 0.17 million BGL Warrants with a strike price of $150.00 outstanding. As of September 30, 2022, on a pre-Reverse Stock Split basis, we had outstanding 2.3 million Private Warrants and 1.6 million BGL Warrants. The fair value of the Foxconn Warrants was $0.3 million at issuance. The Private Warrants and the Foxconn Warrants were classified as a liability with any changes in the fair value recognized immediately in our condensed consolidated statements of operations. As a result of the Chapter 11 Cases, the fair value of the Company’s warrants was deemed to be zero and adjusted accordingly as of June 30, 2023. The following table summarizes the net gain on changes in fair value related to the Private Warrants and the Foxconn Warrants: (in thousands) Three months ended Three months ended Nine months ended Nine months ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Private Warrants $ — $ (523) $ — $ (246) Foxconn Warrants — (238) — (238) Net gain on changes in fair value $ — $ (761) $ — $ (246) The Private Warrants and the Foxconn Warrants were measured at fair value using Level 3 inputs. These instruments are not actively traded and were valued as of September 30, 2022 using a Monte Carlo option pricing model and Black-Scholes option pricing model, respectively, that use observable and unobservable market data as inputs. The stock price volatility rate utilized was 90% for the valuation as of September 30, 2022. This assumption considered observed historical stock price volatility of other companies operating in the same or similar industry as the Company over a period similar to the remaining term of the Private Warrants, as well as the volatility implied by the traded options of the Company. The risk-free rate utilized was 4.173% for the valuation three and nine months ended September 30, 2022 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, 2023 Cash and cash equivalents $ 93,653 $ 93,653 $ — $ — Short-term investments — — — — Private Warrants — — — — Foxconn Warrants — — — — Total Quoted prices in active markets (Level 1) Prices with observable inputs (Level 2) Prices with unobservable inputs (Level 3) December 31, 2022 Cash and cash equivalents $ 121,358 $ 121,358 $ — $ — Short-term investments 100,297 — 100,297 — Private Warrants 254 — — 254 Foxconn Warrants 170 170 The following table summarizes the changes in our Level 3 financial instruments (in thousands): Balance at December 31, 2022 Additions Settlements Loss on fair value adjustments included in earnings Balance at September 30, 2023 Private Warrants $ 254 — — — $ 254 Foxconn Warrants 170 — — 170 Non-Recurring Fair Value Measurements At September 30, 2023, the Company had assets held for sale that have been adjusted to their fair value as the carrying value exceeded the estimated fair value. There was no further impairment loss related to the valuation of assets held for sale during the three months ended September 30, 2023. However, for the quarter ended September 30, 2023, the Company recognized an impairment charge of $0.7 million to adjust the carrying value of its right of use assets. The categorization of the framework used to value the assets is Level 3 given the significant unobservable inputs used to determine fair value. Refer to Note 4 – Property, Plant and Equipment and Assets Held for Sale for further detail. |
PROPERTY, PLANT AND EQUIPMENT A
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE | 9 Months Ended |
Sep. 30, 2023 | |
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE | |
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE | NOTE 4 — PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE Due to the failure to identify a strategic partner for the Endurance, lack of expected funding and other support from Foxconn (as discussed in more detail above and elsewhere in this report) and extremely limited ability to raise sufficient capital in the current market environment, we determined it was in the best interests of the Company’s stakeholders to take aggressive actions to cut costs and preserve cash, file the Chapter 11 Cases and cease production of the Endurance and new program development. During the first quarter of 2023, the Company lowered Endurance production targets, accelerating the depreciable lives of its manufacturing assets to July 31, 2023. During the second quarter of 2023 management made the decision to cease production of the Endurance. As of September 30, 2023, the Company had recognized total property, plant and equipment impairment charges of $229.1 million. The Company has determined that its property, plant, and equipment represent one asset group which is the lowest level for which identifiable cash flows are available. Historically, fair value of the Company’s property, plant, and equipment was derived from the Company’s enterprise value at the time of impairment as the Company believed it represented the most appropriate fair value of the asset group in accordance with accounting guidance. In light of the Chapter 11 Cases, as discussed above, the Company valued its property, plant and equipment based on their estimated residual value as of June 30, 2023. Accordingly, there was no property, plant and equipment or assets held for sale impairment charge recognized the quarter ended September 30, 2023 . During the three and nine months ended September 30, 2023, the Company recognized an impairment loss of $0.7 million on its right of use assets as these assets were not assumed in the LandX Purchase Agreement. The fair values were estimated using a cost approach based on the rejection damages on unexpired leases, considering that such damages reasonably approximate the cost to enter into a new lease for the remaining time period. As of September 30, 2023, $0.7 million of right of use assets remained on the balance sheet in Other non-current assets. In conjunction with the Chapter 11 Cases, the Company commenced a comprehensive marketing and sale process for the Endurance and related assets to maximize the value of those assets. The Company evaluated this decision against ASC Topic 360-10-45-9 “Long-Lived Assets to Be Disposed of By Sale” and determined that all criteria were met to present property, plant and equipment as “assets held for sale”, as of September 30, 2023. Based on the fact that there are significant unobservable inputs used to determine fair value, this is categorized as a Level 3 fair value measurement. Specifically, in this case since the assets were in most cases considered “Endurance-specific,” the estimates were primarily focused on residual or salvage value where appropriate. As noted above, the Company had already recorded an impairment charge to reduce the assets to the lower of carrying or fair value less costs to sell. In light of these uncertainties, limited market data and estimates used in the valuation, the assets included in this report or in any filing we make with the Bankruptcy Court may not reflect the fair values thereof during the pendency of or following the Chapter 11 Cases or the value of our assets in an organized sale process, and such values may be higher or lower as a result. |
MEZZANINE EQUITY
MEZZANINE EQUITY | 9 Months Ended |
Sep. 30, 2023 | |
MEZZANINE EQUITY | |
MEZZANINE EQUITY | NOTE 5 – MEZZANINE EQUITY On November 7, 2022, the Company issued 0.3 million shares of Preferred Stock for $100 per share to Foxconn, resulting in gross proceeds of $30 million. In addition, following the parties’ agreement to the EV Program budget and the EV Program milestones and satisfaction of those EV Program milestones and other conditions set forth in the Investment Agreement, Foxconn was to purchase in two tranches, a total of 0.7 million additional shares of Preferred Stock at a purchase price of $100 per share for aggregate proceeds of $70 million. The first tranche was to be in an amount equal to 0.3 million shares for an aggregate purchase price of $30 million; the second tranche was to be in an amount equal to 0.4 million shares for an aggregate purchase price of $40 million. The parties agreed to use commercially reasonable efforts to agree upon the EV Program budget and EV Program milestones no later than May 7, 2023. The completion of the Subsequent Preferred Funding would have provided critical liquidity for the Company’s operations. Since April 21, 2023, Foxconn has disputed its obligations under the Investment Agreement to consummate the Subsequent Common Closing and to use necessary efforts to agree upon the EV Program budget and EV Program milestones to facilitate the Subsequent Preferred Funding. Foxconn initially asserted that the Company was in breach of the Investment Agreement due to the Company’s previously disclosed receipt of the Nasdaq Notice regarding the Bid Price Requirement. As previously disclosed, Foxconn purported to terminate the Investment Agreement if that purported breach was not cured within 30 days . The Company continues to believe that the breach allegations by Foxconn are without merit, and that Foxconn was obligated to complete the Subsequent Common Closing on or before May 8, 2023. Despite the Company taking action to satisfy the Bid Price Requirement as of June 7, 2023, and discussions between the parties to seek a resolution regarding the Investment Agreement, Foxconn did not proceed with the Subsequent Common Closing or any Subsequent Preferred Funding. As a result of Foxconn’s actions, the Company was deprived of critical funding necessary for its operations. On June 27, 2023, the Company filed its Chapter 11 Cases and on that same date the Company commenced the Foxconn Litigation in the Bankruptcy Court seeking relief for fraudulent and tortious conduct as well as breaches of the Investment Agreement, the parties’ joint venture agreement, the Foxconn APA, and the CMA that the Company believes were committed by Foxconn. As set forth in the complaint relating to the adversary proceeding, Foxconn’s actions have caused substantial harm to the Company’s operations and prospects and significant damages. See “Foxconn Transactions” above and Note 7 – Commitments and Contingencies for additional information. The Foxconn Litigation is Adversary Case No. 23-50414. The descriptions herein with respect to the Preferred Stock and any rights thereunder do not account for the potential effects of the Chapter 11 Cases or the Foxconn Litigation on the Preferred Stock or any rights thereunder. The Company reserves all claims, defenses, and rights with respect to the Chapter 11 Cases, the Foxconn Litigation, the Preferred Stock, and any treatment of Preferred Stock or other interests held by Foxconn or any other party and the descriptions below do not account for the impact of any relief should it be granted. Under the Proposed Plan, as of the date of this report, we expect the Preferred Stock to remain outstanding and be unimpaired as of the effective time of the Proposed Plan. The Preferred Stock, with respect to dividend rights, rights on the distribution of assets on any liquidation, dissolution or winding up of the affairs of the Company and redemption rights, ranks: (a) on a parity basis with each other class or series of any equity interests (“Capital Stock”) of the Company now or hereafter existing, the terms of which expressly provide that such class or series ranks on a parity basis with the Preferred Stock as to such matters (such Capital Stock, “Parity Stock”); (b) junior to each other class or series of Capital Stock of the Company now or hereafter existing, the terms of which expressly provide that such class or series ranks senior to the Preferred Stock as to such matters (such Capital Stock, “Senior Stock”); and (c) senior to the Class A common stock and each other class or series of Capital Stock of the Company now or hereafter existing, the terms of which do not expressly provide that such class or series ranks on a parity basis with, or senior to, the Preferred Stock as to such matters (such Capital Stock, “Junior Stock”). While Foxconn’s beneficial ownership of our Class A common stock meets the 25% Ownership Requirement (defined below), Parity Stock and Senior Stock can only be issued with Foxconn’s consent. The Certificate of Designation provides that, in the event of any liquidation, dissolution or winding up of the affairs of the Company, the holders of Preferred Stock are entitled, out of assets legally available therefor, before any distribution or payment to the holders of any Junior Stock, and subject to the rights of the holders of any Senior Stock or Parity Stock and the rights of the Company’s existing and future creditors, to receive in full a liquidating distribution in cash and in the amount per share of Preferred Stock equal to the greater of (1) the sum of $100 per share plus the accrued unpaid dividends with respect to such share, and (2) the amount the holder would have received had it converted such share into Class A common stock immediately prior to the date of such event. All holders of shares of Preferred Stock are entitled to vote with the holders of Class A common stock on all matters submitted to a vote of stockholders of the Company as a single class with each share of Preferred Stock entitled to a number of votes equal to the number of shares of Class A common stock into which such share could then be converted; provided, that no holder of shares of Preferred Stock will be entitled to vote to the extent that such holder would have the right to a number of votes in respect of such holder’s shares of Class A common stock, Preferred Stock or other capital stock that would exceed the limitations set forth in clauses (i) and (ii) of the definition of Ownership Limitations. The Certificate of Designation provides that, commencing on November 7, 2023 (the “Conversion Right Date”), and subject to the Ownership Limitations, the Preferred Stock became convertible at the option of the holder into a number of shares of Class A common stock obtained by dividing the sum of the liquidation preference (i.e., $100 per share) and all accrued but unpaid dividends with respect to such share as of the applicable conversion date by the conversion price as of the applicable conversion date. The conversion price currently is $29.04 per share and it is subject to customary adjustments. At any time following the third anniversary of the date of issuance, the Company can cause the Preferred Stock to be converted if the volume-weighted average price of the Class A common stock exceeds 200% of the Conversion Price for a period of at least twenty trading days in any period of thirty consecutive trading days. Foxconn’s ability to convert is limited by clauses (i) and (ii) of the definition of the Ownership Limitations. Upon a change of control (as defined in the Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock filed by the Company with the Secretary of State of the State of Delaware (the “Certificate of Designations”) , Foxconn can cause the Company to purchase any or all of its Preferred Stock at a purchase price equal to the greater of its liquidation preference (including any unpaid accrued dividends) and the amount of cash and other property that it would have received had it converted its Preferred Stock prior to the change of control transaction (the “Change of Control Put”). The terms of the Company’s Preferred Stock do not specify an unconditional obligation of the Company to redeem the Preferred Stock on a specific or determinable date, or upon an event certain to occur. The Company notes the Change of Control Put; however, this is contingent on the occurrence of the change of control event, which is not a known or determinable event at time of issuance. Therefore, the Preferred Stock is not considered to be mandatorily redeemable. The conversion of the Preferred Stock is based on fixed conversion price rather than a fixed conversion amount. The value of the Preferred Stock obligation would not vary based on something other than the fair value of the Company’s equity shares or change inversely in relation to the fair value of the Company’s equity shares. Based on these factors, Preferred Stock does not require classification as a liability in accordance with the provisions in ASC 480 “Distinguishing Liabilities from Equity”. The Preferred Stock is not redeemable at a fixed or determinable date or at the option of the holder. However, the Preferred Stock does include the Change of Control Put, which could allow the holder to redeem the Preferred Stock upon the occurrence of an event. As the Company cannot assert control over any potential event which would qualify as a change of control, the event is not considered to be solely within the control of the issuer, and would require classification in temporary equity (as per ASC 480-10-S99-3A(4)). Accordingly, the Preferred Stock is classified as temporary equity and is separated from permanent equity on the Company’s Balance Sheet. The Company believes that the transaction price associated with the sale of the Preferred Stock to Foxconn was representative of fair value and serves as the basis for initial measurement. The Preferred Stock issued by the Company accrues dividends at the rate of 8% per annum whether or not declared and/or paid by the Company (cumulative dividends). In addition, the dividends will compound on a quarterly basis (upon each Preferred Dividend Payment Date (as defined in the Certificate of Designations)) to the extent they are not paid by the Company. The Company records the dividends (effective PIK dividends) as they are earned, based on the fair value of the Preferred Stock at the date they are earned. In addition, the holders of the Preferred Stock participate with any dividends payable in respect of any Junior Stock or Parity Stock. The Company accrued $0.6 million in dividends during the three months ended September 30, 2023 and had accrued $1.9 million in aggregate dividends as of such date, which represented the estimated fair value to Preferred Stock with a corresponding adjustment to additional-paid-in-capital common stock in the absence of retained earnings. While the Company concluded above that accretion to redemption value of the Preferred Stock was not required as the Preferred Stock is not currently redeemable or probable of becoming redeemable, it is noted that the recognition of the dividends will not necessarily reflect the redemption value at any time (given the ‘greater of’ language included as part of the determination of redemption value per above). As of September 30, 2023, the Company did not consider change of control to be probable. The Company notes that there is significant uncertainty regarding the effects and outcome of the Chapter 11 Cases and the Foxconn Litigation which may impact the foregoing determination, and that the Company can provide no assurance regarding such determination. The Company reserves all rights with respect to the amounts and the effects of the Chapter 11 Cases and the Foxconn Litigation. |
CAPITAL STOCK AND LOSS PER SHAR
CAPITAL STOCK AND LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2023 | |
CAPITAL STOCK AND LOSS PER SHARE | |
CAPITAL STOCK AND LOSS PER SHARE | NOTE 6 — CAPITAL STOCK AND LOSS PER SHARE On August 17, 2022, the Company held a special meeting of stockholders whereby our stockholders voted to amend the Charter to increase our authorized shares of capital stock from 312 million to 462 million, 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 . At the 2023 Annual Meeting, the stockholders of the Company approved a proposal to amend the Charter to effect a reverse split of the Company’s outstanding shares of Class A common stock at a ratio within a range of between 1: 3 and 1: 15 , with the timing and the exact ratio of the reverse split to be determined by the Board in its sole discretion. The Board authorized the Reverse Stock Split at a 1: 15 ratio, which became effective as of 12:01 a.m. Eastern Time on May 24, 2023, or the Effective Time. The Company filed the Amendment to the Charter on May 22, 2023, which provided that, at the Effective Time, every fifteen We had approximately 16.0 million and 15.9 million issued outstanding a All equity awards that remain outstanding and have not yet vested as of the effective date of the Proposed Plan will remain outstanding and vest in accordance with their terms and the terms of the Proposed Plan. All vested options to purchase Class A common stock that remain outstanding as of the effective date of the Proposed Plan will also remain outstanding in accordance with their terms and the terms of the Proposed Plan. We had The weighted-average number of shares outstanding for basic and diluted loss per share of Class A common stock is as follows: (in thousands) Three months ended Three months ended Nine months ended Nine months ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Basic weighted average shares outstanding 15,953 14,130 15,942 13,543 Diluted weighted average shares outstanding 15,953 14,130 15,942 13,543 For the three and nine months ended September 30, 2023 and for the nine months ended September 30, 2022 share awards and warrants were excluded from the calculation of diluted earnings per share as their inclusion would have been anti-dilutive. For the three months ended September 30, 2022, the calculation of diluted weighted average shares outstanding included, on a pre-Reverse Stock Split basis, 0.3 million share awards, 1.6 million BGL Warrants, 2.3 million Private Warrants, and 1.7 million Foxconn Warrants outstanding. For the three months ended September 30, 2022, the calculation of diluted weighted average shares outstanding included 0.3 million shares (on a pre-Reverse Stock Split basis) related to share awards. Investment Transactions On November 7, 2022, the Company entered into the Investment Agreement under which Foxconn agreed to make additional equity investments (collectively, the “Investment Transactions”) in the Company through the purchase of $70 million of Class A common stock and up to $100 million in Preferred Stock, subject to certain conditions, including, without limitation, regulatory approvals and, with regard to the Preferred Stock, satisfaction of certain EV Program budget and EV Program milestones established by the parties. The Company can use any proceeds from the sale of the Class A common stock for general corporate purposes as determined by the Board and the proceeds from the sale of the Preferred Stock was to be limited to funding the EV Program or any substitute or replacement electric vehicle program as agreed to by Foxconn and the Company. On November 22, 2022, the Company completed the Initial Closing under the Investment Agreement, at which Foxconn purchased (a) approximately 1.8 million shares of Class A common stock at a purchase price of $26.40 per share (such amount giving effect to the Reverse Stock Split), and (b) 0.3 million shares of Preferred Stock at a purchase price of $100 per share, for an aggregate purchase price of approximately $52.7 million. The Investment Agreement provided for the Subsequent Common Closing, at which time Foxconn was required, the Company maintains, to purchase approximately 10% of the Class A common stock for approximately $47.3 million. The Subsequent Common Closing was to occur on or before May 8, 2023. The Company was ready, willing and able to complete the Subsequent Common Closing on a timely basis. In addition, following the parties’ agreement to the EV Program budget and the EV Program milestones and satisfaction such milestones and other conditions set forth in the Investment Agreement, Foxconn was to purchase in the Subsequent Preferred Funding two tranches equal to 0.7 million additional shares of Preferred Stock at a purchase price of $100 per share for aggregate proceeds of $70 million. The parties agreed to use commercially reasonable efforts to agree upon the EV Program budget and EV Program milestones no later than May 7, 2023. Foxconn has failed to proceed with the Subsequent Common Closing or any Subsequent Preferred Funding. As a result of Foxconn’s actions, the Company was deprived of critical funding necessary for its operations. The Company commenced the Foxconn Litigation in the Bankruptcy Court seeking relief for wrongful conduct as well as breaches of the Investment Agreement, the parties’ joint venture agreement, the Foxconn APA, and the CMA that the Company believes were committed by Foxconn. As set forth in the complaint relating to the adversary proceeding, Foxconn’s actions have caused substantial harm to the Company’s operations and prospects and significant damages. See Note 1 – Description of Organization and Business Operations – Description of Business and Note 7 – Commitments and Contingencies for additional information. As previously disclosed, the Investment Agreement also contains the following additional terms with respect to Foxconn’s ownership of the Company’s securities. However, as detailed herein, Foxconn has refused to fulfill its obligations under the Investment Agreement, and those breaches and the effect of Foxconn’s actions on its rights and the Company’s obligations with respect to the Company’s securities are among several matters at issue in the Foxconn Litigation. ● Board Representation : Foxconn would have the right to appoint two designees to the Board subject to the resolution of our dispute with Foxconn and the consummation of the Subsequent Common Closing. Foxconn would relinquish one Board seat if it did not continue to beneficially own shares of Class A common stock, Preferred Stock and shares of Class A common stock issued upon conversion of shares of Preferred Stock that represent (on an as-converted basis) at least 50% of the number of shares of Class A common stock (on an as-converted basis) acquired by Foxconn in connection with the Investment Transactions and would relinquish its other Board seat if it did not continue to beneficially own at least 25% of the number of shares of Class A common stock (on an as-converted basis) acquired by Foxconn in connection with the Investment Transactions (the “ 25% Ownership Requirement”). ● Termination of Foxconn Joint Venture : The Company and Foxconn terminated the Joint Venture Agreement, the Note, dated June 24, 2022, issued by Lordstown EV and guaranteed by the Company and Lordstown EV Sales (the “Note”), and all liens on assets of Lordstown EV and the Company. All remaining funds held by the Foxconn Joint Venture were distributed to Foxconn EV Technology, Inc. as a distribution for amounts contributed by it and as a repayment in full of any loans advanced by it to Lordstown EV under the Note. ● Standstill : Until the date that is the later of December 31, 2024 and 90 days after the first day on which no Foxconn-appointed director serves on the Board and Foxconn no longer has a right to appoint any directors, without the approval of the Board, Foxconn would not (A) acquire any equity securities of the Company if after the acquisition Foxconn and its affiliates would own (i) prior to the Subsequent Common Closing, 9.99% of the capital stock of the Company that is entitled to vote generally in any election of directors of the Company (“Voting Power”), (ii) prior to the time the Company obtains the approval of stockholders contemplated by Rule 5635 of the Nasdaq listing rules as in effect on November 7, 2022 with respect to certain equity issuances (the “Requisite Stockholder Approval”), 19.99% of the Voting Power, and (iii) at all times following the Subsequent Common Closing and the Requisite Stockholder Approval, 24% of the Voting Power (collectively, the “Ownership Limitations”), or (B) make any public announcement with respect to, or offer, seek, propose or indicate an interest in, any merger, consolidation, business combination, tender or exchange offer, recapitalization, reorganization or purchase of more than 50% of the assets, properties or securities of the Company, or enter into discussions, negotiations, arrangements, understandings, or agreements regarding the foregoing. ● Exclusivity : Prior to the Subsequent Common Closing, (i) without Foxconn’s consent, the Company had agreed not to (A) encourage, solicit, initiate or facilitate any Acquisition Proposal (as defined below), (B) enter into any agreement with respect to any Acquisition Proposal or that would cause it not to consummate any of the Investment Transactions or (C) participate in discussions or negotiations with, or furnish any information to, any person in connection with any Acquisition Proposal, and (ii) the Company had agreed to inform Foxconn of any Acquisition Proposal that it received. An “Acquisition Proposal” means any proposal for any (i) sale or other disposition by merger, joint venture or otherwise of assets of the Company representing 30% or more of the consolidated assets of the Company, (ii) issuance of securities representing 15% or more of any equity securities of the Company, (iii) tender offer, exchange offer or other transaction that would result in any person beneficially owning 15% or more of any equity securities of the Company, (iv) merger, dissolution or similar transaction involving the Company representing 30% or more of the consolidated assets of the Company, or (v) combination of the foregoing. As discussed herein, the Company sought and received approval from the Bankruptcy Court to pursue a sale of some, all, or substantially all of its assets, which resulted in the closing of the transactions contemplated by the LandX Purchase Agreement on October 27, 2023, of which Foxconn received notice and did not object, other than with respect to the cure amount owed to Foxconn in connection with potential assumption and assignment of the CMA. The Company had also agreed that, while the Preferred Stock is outstanding, it would not put in place a poison pill arrangement that applies to Foxconn to the extent of its ownership of shares of Preferred Stock or Class A common stock that it acquired from the Company as of the date such arrangement is adopted by the Company. ● Voting Agreement and Consent Rights : The terms of the Investment Agreement and Certificate of Designations provide that, until the later of (i) December 31, 2024 and (ii) 90 days after the first day on which no Foxconn-appointed director serves on the Board and Foxconn no longer has a right to appoint any directors, Foxconn agreed to vote all of its shares of Class A common stock and Preferred Stock (to the extent then entitled to vote) in favor of each director recommended by the Board and in accordance with any recommendation of the Board on all other proposals that are the subject of stockholder action (other than any action related to any merger or business combination or other change of control transaction or sale of assets). So long as the 25% Ownership Requirement is satisfied, without the consent of the holders of at least a majority of the then-issued and outstanding Preferred Stock (voting as a separate class), the Company agreed not to (i) amend any provision of the Charter or the Company’s amended and restated bylaws in a manner that would adversely affect the Preferred Stock or increase or decrease the number of shares of Preferred Stock, (ii) authorize or create, or increase the number of shares of any parity or senior securities other than securities on parity with the Preferred Stock with an aggregate liquidation preference of not more than $30 million, (iii) increase the size of the Board, or (iv) sell, license or lease or encumber any material portion of the Company’s hub motor technology and production line other than in the ordinary course of business. ● Participation Rights : If Foxconn were to complete the Subsequent Common Closing, then after such closing and until Foxconn no longer has the right to appoint a director to the Board, other than with respect to certain excluded issuances, Foxconn would have the right to purchase its pro rata portion of equity securities proposed to be sold by the Company; provided, that the Company is not required to sell Foxconn securities if the Company would be required to obtain stockholder approval under any applicable law or regulation. The Investment Agreement also contains closing conditions. The Investment Agreement provides for termination by mutual agreement of the parties to amend the Investment Agreement to allow such a termination, and cannot otherwise be terminated by either party following the Initial Closing. Registration Rights Agreement On November 22, 2022, the Company and Foxconn entered into the Registration Rights Agreement pursuant to which the Company agreed to use reasonable efforts to file and cause to be declared effective a registration statement with the SEC registering the resale of the Class A common stock issued to Foxconn, including any shares of Class A common stock issuable upon conversion of the Preferred Stock under the Investment Agreement, which was to be filed promptly following May 7, 2023. Foxconn also has customary demand and piggyback registration rights with respect to the shares of Class A common stock issued or issuable under the Investment Agreement, and indemnification rights. The Company filed a registration statement on Form S-3 with the SEC on May 11, 2023; however, has not sought to have the filing declared effective by the SEC in light of the Chapter 11 Cases, the Foxconn Litigation, the delisting of the Class A common stock and other factors. Sales Agreement and ATM Offering 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 could offer and sell up to approximately 50.2 million shares of our Class A common stock, from time to time through Jefferies (the “ATM Offering”). During 2022, Jefferies sold approximately 7.8 million shares of Class A common stock, which resulted in net proceeds of $12.4 million. There were no shares sold in the quarter ending September 30, 2023. As a result of our delisting from Nasdaq, we do not anticipate any transactions under the ATM Offering in the future. We entered into an equity purchase agreement (“Equity Purchase Agreement”) with YA II PN, LTD. (“YA”) on July 23, 2021, pursuant to which YA had committed to purchase up to $400 million of our Class A common stock, at our direction from time to time, subject to the satisfaction of certain conditions. The Equity Purchase Agreement was terminated on November 22, 2022. 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. During the year ended December 31, 2022, we issued 17.5 million shares to YA and received $40.4 million cash, net of equity issuance costs. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 – COMMITMENTS AND CONTINGENCIES Voluntary Chapter 11 Proceedings, Liabilities Subject to Compromise and Other Potential Claims On June 27, 2023, the Company and its subsidiaries commenced the Chapter 11 Cases in the Bankruptcy Court. See Note 1 – Description of Organization and Business Operations – Description of Business – Voluntary Chapter 11 Proceedings. Since filing the Chapter 11 petitions, the Company has operated as debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. The Company received the Bankruptcy Court’s approval of its customary motions filed on June 27, 2023, which authorized the Debtors to conduct their business activities in the ordinary course, including among other things and subject to the terms and conditions of such orders: (i) pay employees’ wages and related obligations; (ii) pay certain taxes; (iii) pay critical vendors; (iv) continue to honor certain customer obligations; (v) maintain their insurance program; (vi) continue their cash management system; and (vii) establish certain procedures to protect any potential value of the Company’s NOLs. On August 8, 2023, the Bankruptcy Court approved procedures for the Debtors to conduct a comprehensive marketing and sale process for some, all, or substantially all of their assets in order to maximize the value of those assets. The marketing process culminated in the Debtors entering into the LandX Asset Purchase Agreement on September 29, 2023, providing for the sale of specified assets of the Company related to the design, production and sale of electric light duty vehicles focused on the commercial fleet market free and clear of liens, claims, encumbrances, and other interests, and assume certain specified liabilities of the Company for a total purchase price of $10.2 million in cash. This transaction closed on October 27, 2023. See Note 9 – Subsequent Events. The Company has been subject to extensive pending and threatened legal proceedings arising in the ordinary course of business and has already incurred, and expects to continue to incur, significant legal expenses in defending against these claims. The Company has sought and may continue to seek to achieve resolution of these matters with respect to the Company as part of the Chapter 11 Cases and has and may in the future enter into further discussions regarding settlement of these matters, and may enter into settlement agreements if it believes it is in the best interest of the Company’s stakeholders. The Company records a liability for loss contingencies in the Condensed Consolidated Financial Statements when a loss is known or considered probable and the amount can be reasonably estimated. Legal fees and costs of litigation, settlement by the Company or adverse decisions with respect to the matters disclosed may result in liability that is not insured or that is in excess of insurance coverage and could significantly exceed our current accrual and ability to pay and be, individually or in the aggregate, material to the Company’s consolidated results of operations, financial condition or cash flows, impair our ability to sell certain assets and diminish or eliminate any assets available for any distribution to creditors and Interest holders in the Chapter 11 Cases. The filing of the Chapter 11 Cases resulted in an initial automatic stay of legal proceedings against the Company, as further described below. On July 27, 2023, the Bankruptcy Court modified the automatic stay that was in effect at the time of filing the Chapter 11 Cases to allow the Karma Action (defined below) to proceed against the Company in the District Court (defined below) and that matter was settled, as further described below. With respect to the stockholder derivative suits filed on behalf of the Company against certain of its officers and directors and certain former DiamondPeak directors prior to the Chapter 11 Cases, the derivative claims asserted in those suits became the property of the Debtors’ estate. Accordingly, the Company has appointed an independent committee of directors to evaluate such claims with the assistance and advice of special litigation counsel. That committee will make a recommendation as to the disposition of such claims, including, among other things, whether to pursue or release some or all of those claims against some or all of those officer and directors. With respect to the Ohio Securities Class Action, the Post-Petition Securities Action and any other similar claims for damages arising from the purchase or sale of the Class A common stock, Section 510(b) the Bankruptcy Code treats such claims as subordinated to all claims or Interests that are senior to the Class A common stock and having the same priority as the Class A common stock. Estimated amounts accrued as of September 30, 2023 by the Company with respect to these securities class action matters do not reflect this impact of the Bankruptcy Code, or the applicable terms of the Proposed Plan discussed below, which remains subject to approval of the Bankruptcy Court and may change. The Bankruptcy Court established October 10, 2023 as the deadline by which parties are required to file proofs of claim in the Chapter 11 Cases and December 26, 2023 for all governmental entities to file their proofs of claim, which includes any claim asserted by the SEC with respect to the matter described under “SEC Matter” below or that may arise due to our obligations under the Highway Safety Act of 1970 (the “Safety Act”) administered by the National Highway Traffic Safety Administration (“NHTSA”) described under “NHTSA Matters” below. In addition, the deadline for parties to file proofs of claim arising from the Debtors’ rejection of an executory contract or unexpired lease is the later of (a) the general bar date or the governmental bar date (if a governmental unit is the counterparty to the applicable executory contract or unexpired lease) and (b) 5:00 p.m. (ET) on the date that is 30 days after the service of an order of the Bankruptcy Court authorizing the Debtors’ rejection of the applicable executory contract or unexpired lease. Any such additional losses or claims may be significant. There is substantial risk of additional litigation and claims against the Company or its indemnified directors and officers, as well as other claims by third parties that may be known or unknown and the Company does not have the resources to adequately defend or dispute such claims due to the Chapter 11 Cases. The Company cannot provide any assurances as to what the Company’s total actual liabilities will be based on such claims. In accordance with ASC 852, in the accompanying September 30, 2023 Condensed Consolidated Balance Sheet, the caption “Liabilities subject to compromise” reflects the expected allowed amount of the pre-petition claims that are not fully secured and that have at least a possibility of not being repaid at the full claim amount. “Liabilities subject to compromise” at September 30, 2023 consisted of the following: (in thousands) September 30, 2023 Accounts payable $ 2,767 Accrued expenses and other current liabilities 3,085 Accrued vendor claims 13,133 Accrued legal liabilities 20,000 Liabilities subject to compromise $ 38,985 “Liabilities subject to compromise” are recorded at the expected or estimated amount of the total allowed claim, however, the ultimate settlement of these liabilities remains subject to analysis and negotiation, approval of the Bankruptcy Court and the other factors discussed above, and they may be settled or resolved for materially different amounts. These amounts are also subject to adjustments if we make changes to our assumptions or estimates related to claims as additional information becomes available to us. Such adjustments may be material, and the Company will continue to evaluate the amount and classification of its pre-petition liabilities. Any additional liabilities that are subject to compromise will be recognized accordingly, and the aggregate amount of “Liabilities subject to compromise” may change materially. As a result of the Chapter 11 Cases and ceasing production of the Endurance, the Company has received claims from its suppliers and vendors for amounts those parties believe the Company owes. We are conducting an extensive claims reconciliation process to analyze approximately $25.6 million of claims that does not reflect potential material government claims. The Company and its advisors are analyzing the claims for validity and intends to vigorously defend against claims it believes are invalid. We have accounts payable and accrued vendor claims of approximately $15.9 million as of September 30, 2023, which reflect both undisputed and partially disputed amounts we may owe, reported in Liabilities subject to compromise. The remainder is disputed for one or more reasons, including a lack of information provided by the claimant. The Company had accruals of $20.0 million and $35.9 million, for the periods ending September 30, 2023 and December 31, 2022, respectively, for certain of its outstanding legal proceedings and potential related obligations within Liabilities subject to compromise and Accrued and other current liabilities on its Condensed Consolidated Balance Sheet. Our liabilities for legal proceedings and potential related obligations may include amounts for the securities litigation, government claims and indemnification obligations described in more detail below or other claims that may be asserted against us and may or may not be offset by insurance. The amount accrued as of September 30, 2023 was estimated based on available information and legal advice, the potential resolution of these matters in light of historical negotiations with the parties, and the potential impact of the outcome of one or more claims on related matters, but does not take into account the impact of the applicable provisions of the Bankruptcy Code, the terms of the Proposed Plan, ongoing discussions with the parties thereto and other stakeholders or actual amounts that may be asserted in Claims submitted in the Chapter 11 Cases or for indemnification as these factors cannot yet be determined and are subject to substantial uncertainty. Accordingly, the accrued amount may be adjusted in the future based on new developments and it does not reflect a full range of possible outcomes for these proceedings, or the full amount of any damages alleged, which are significantly higher. A number of additional claims may be filed in the Chapter 11 Cases, including on account of (i) rejection damages for executory contracts and unexpired leases rejected pursuant to the Proposed Plan and (ii) claims of governmental units, for each of which the deadlines to file proofs of claim have not yet passed as of the date of this report, which may be substantial and may result in a greater amount of allowed Claims than estimated in the Disclosure Statement. Any such additional losses or claims may be significant; however, the Company 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. Insurance Matters The Company was notified by its primary insurer under its post-merger directors and officers insurance policy that the insurer is taking the position that no coverage is available for the Ohio 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. The Company 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 issued a reservation of rights letter which, while not denying coverage, has cast doubt on the availability of coverage for at least some individuals and/or claims. Changes in our operations in connection with the Chapter 11 Cases has reduced our need to maintain insurance coverage at previous levels or to carry certain insurance policies. Insurance we presently have, including product liability coverage, may expire and we may not be able to obtain replacement policies or such policies may only be available at a substantially higher cost. If we reduce or no longer maintain insurance coverage, we may be subject to increased or additional potential losses and liabilities. Karma Litigation 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 (the “Karma Action”) 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 contained 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 asserted claims for conspiracy, fraud, interstate racketeering activity, and violations of certain provisions of the California Penal Code relating to unauthorized computer access. Karma sought permanent injunctive relief and monetary damages in excess of $900 million 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 opposed Karma’s damages claims on factual and legal grounds, including lack of causality and vigorously challenged Karma’s asserted damages. The District Court initially stayed the Karma Action in light of the automatic stay imposed by the commencement of the Chapter 11 Cases. However, the Bankruptcy Court granted Karma relief from the automatic stay on July 31, 2023 to allow the multi-week trial in the Karma Action to proceed, which trial was scheduled for trial in California beginning on September 12, 2023. On August 14, 2023, the Company and Karma entered into a Settlement Agreement and Release memorializing an agreement to consensually resolve the claims asserted in the Karma Action (the “Settlement Agreement”) . The Settlement Agreement terms include: (i) a $40 million settlement payment by the Company to Karma (the “Karma Settlement Payment”), of which $5 million is allocated to a royalty with respect to the license described in (ii) of this paragraph, (ii) a worldwide, non-exclusive, transferable, royalty-free (except for the full Karma Settlement Payment including the License Payment or Royalty therein (as defined in the Settlement Agreement)), fully paid-up, sublicensable, perpetual and irrevocable license granted by Karma to the Company and any of the Company’s assignees, which license will permit the Company or its assigns to use the intellectual property and technology, including patents, copyrights, software rights, know-how, design rights, database rights, and trade secrets, which Karma alleged in the Karma Action that the Company has misappropriated, (iii) mutual releases, and (iv) dismissal of the Karma Action, with prejudice as to all defendants after the final approval order by the Bankruptcy Court is no longer subject to any appeal. On August 28, 2023, the Bankruptcy Court issued an order approving the Settlement Agreement and the Debtors made the Karma Settlement Payment. Ohio Securities Class Action Six related putative securities class action lawsuits were filed against the Company and certain of its current and former officers and directors and former DiamondPeak directors between March 18, 2021 and May 14, 2021 in the U.S. District Court for the Northern District of Ohio (Rico v. Lordstown Motors Corp., et al. (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 (the “Ohio Securities Class Action”). 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. The Company filed a suggestion of bankruptcy on June 28, 2023, and filed an amended suggestion of bankruptcy on July 11, 2023, which notified the court of the filing of the Chapter 11 Cases and resulting automatic stay; however the ultimate scope and effect of the stay remains subject to further proceedings before the Bankruptcy Court. On August 28, 2023, the court denied the pending motion to dismiss, without prejudice, given the notice of the automatic stay, subject to potential re-filing by the Defendants following the lifting of the stay. The Proposed Plan provides for the treatment of Claims filed against the Debtors in the Ohio Securities Class Action, with holders of allowed Claims (if any) in the applicable class (if any) receiving Class A common stock in an amount calculated pursuant to the formula set forth in the Proposed Plan, after accounting for any recoveries from applicable insurers or other third parties and subject to the post-effective date Debtors’ election to cash out such Class A common stock Interests. Alternatively, the Proposed Plan provides for an elective class that permits the Ohio Lead Plaintiff to elect to receive a $1.0 million settlement on behalf of a putative class of claimants in lieu of the treatment set forth in the preceding sentence. If the Ohio Lead Plaintiff elects to accept such treatment, a putative class will be sought to be certified solely for purposes of receiving distributions under the Proposed Plan and to the extent that such class is certified members of such class who do not opt-out will receive their pro rata share of the settlement amount, subject to the terms of the Proposed Plan. There is no guarantee that the proposed settlement will be accepted or that a settlement class would be certified even if the proposed settlement were accepted. To the extent that we do not reach a mutually agreeable resolution of the Ohio Securities Class Action, including through the terms of the Proposed Plan, we intend to vigorously defend against the claims. The proceedings are subject to uncertainties inherent in the litigation process. Derivative Litigation 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 additional court-ordered joint status reports on October 28, 2022, January 6, 2023 and April 3, 2023. On April 4, 2023, the Court ordered the parties to submit a letter brief addressing whether the Court should lift the stay. On April 14, 2023, the parties submitted a joint letter requesting that the Court not lift the stay. On April 17, 2023, the court lifted the stay and ordered the parties to meet and confer by May 8, 2023 and submit a proposed case-management plan. On May 9, 2023, the court reinstated the stay and ordered the parties to advise the court of any developments in the consolidated securities class action or material changes to Lordstown’s condition. The Company filed a suggestion of bankruptcy on June 27, 2023, which notified the court of the filing of the Chapter 11 Cases and resulting automatic stay; however the ultimate scope and effect of the stay remains subject to further proceedings before the Bankruptcy Court. The court entered an order acknowledging the effect of the automatic stay on June 28, 2023. An independent committee of directors is evaluating the derivative claims with the assistance and advice of special litigation counsel and will make a recommendation as to the disposition of such claims. The proceedings are subject to uncertainties inherent in the litigation process. 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. The Company filed a suggestion of bankruptcy on June 28, 2023, and filed an amended suggestion of bankruptcy on July 19, 2023, which notified the court of the filing of the Chapter 11 Cases and resulting automatic stay; however, the ultimate scope and effect of the stay remains subject to further proceedings before the Bankruptcy Court. An independent committee of directors is evaluating the derivative claims with the assistance and advice of special litigation counsel and will make a recommendation as to the disposition of such 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. While the action remains stayed, on June 24, 2022, the plaintiffs filed a consolidated complaint asserting similar claims, and substituting a new plaintiff (Ed Lomont) for Cormier, who no longer appears to be a named plaintiff in the consolidated action. On June 27, 2023, the Company filed a suggestion of bankruptcy, which notified the court of the filing of the Chapter 11 Cases and resulting automatic stay; however the ultimate scope and effect of the stay remains subject to further proceedings before the Bankruptcy Court. An independent committee of directors is evaluating the derivative claims with the assistance and advice of special litigation counsel and will make a recommendation as to the disposition of such claims. The proceedings are subject to uncertainties inherent in the litigation process. DiamondPeak Delaware Class Action Litigation 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)) (collectively, the “Delaware Class Action Litigation”). 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 two 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 were due on November 18 and December 9, 2022, respectively. Oral argument on the motion to dismiss was scheduled for January 6, 2023. On January 5, 2023, the defendants withdrew their motion to dismiss. On February 2, 2023, the court issued a case scheduling order setting forth pre-trial deadlines and a date for trial in March 2024. On February 3, 2023, defendants filed their answer to plaintiffs’ amended class action complaint. On February 7, 2023, plaintiffs served the Company, as a non-party, with a subpoena for certain information, which the Company responded to on February 21, 2023. On June 9, 2023, the court granted in part and denied in part the plaintiffs’ motion to compel regarding the appropriate scope of the Company’s response to the subpoena. On July 5, 2023, in the Chapter 11 Cases, the Company filed (i) an adversary complaint seeking injunctive relief to extend the automatic stay to the plaintiffs in the Delaware Class Action Litigation, initiating the adversary proceeding captioned Lordstown Motors Corp. v. Amin , Adv. Proc. No. 23-50428 (Bankr. D. Del.) and (ii) a motion and brief in support thereof, seeking a preliminary injunction extending the automatic stay to the Delaware Class Action Litigation. On August 3, 2023, the Bankruptcy Court denied the Company’s preliminary injunction motion. On July 21, 2023, plaintiffs filed a motion for class certification in the Delaware Class Action Litigation. The parties have advised the Company that they have reached an agreement in principle to resolve this matter, subject to negotiation of final documentation, and the former DiamondPeak directors are expected to seek indemnification from the Company with respect to a portion of the settlement amount. The proceedings remain subject to uncertainties inherent in the litigation process. SEC Matter The Company has also received two subpoenas from the SEC for the production of documents and information, including relating to the merger between DiamondPeak and Legacy Lordstown and pre-orders of vehicles, and the Company has been informed by the U.S. Attorney’s Office for the Southern District of New York that it is investigating these matters. The Company has cooperated, and will continue to cooperate, with these and any other regulatory or governmental investigations and inquiries. The SEC may make a governmental claim by the December 26, 2023 deadline established in the Chapter 11 Cases, which claim amount may be material. Indemnification Obligations The Company has potential indemnification obligations with respect to the current and former directors named in the above-referenced actions, which obligations may be significant and may not be covered by the Company’s applicable directors and officers insurance. Foxconn Litigation On June 27, 2023, the Company commenced the Foxconn Litigation in the Bankruptcy Court seeking relief for breaches of the Investment Agreement and other agreements and fraudulent and tortious actions that the Company believes were committed by Foxconn, which have caused substantial harm to our operations and prospects and significant damages. On September 29, 2023, Foxconn filed a motion to dismiss all counts of the Foxconn Litigation and brief |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 8 — RELATED PARTY TRANSACTIONS The Company’s Board has adopted a written Related Party Transaction Policy that sets forth policies and procedures for the review and approval or ratification of any transaction, arrangement or relationship in which the Company or any of its subsidiaries was, is or will be a participant, the amount of which exceeds $120,000 and in which any director, executive officer or beneficial owner of 5% or more of the Class A common stock had, has or will have a direct or indirect material interest (a “Related Party Transaction”). Pursuant to this policy, the Audit Committee of the Board (the “Audit Committee”) reviews and approves any proposed Related Party Transaction, considering among other factors it deems appropriate, whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction. The Audit Committee may then approve or disapprove the transaction in its discretion. Any related person transaction will be disclosed in the applicable SEC filing as required by the rules of the SEC. Pursuant to the Investment Agreement described in Note 6 – Capital Stock and Loss Per Share, Foxconn’s beneficial ownership of Class A common stock exceeded 5% in November 2022 causing Foxconn to become a related party. The Company has entered into the Foxconn Transactions with Foxconn described under Note 1 – Description of Organization and Business Operations – Description of Business – Foxconn Transactions. See Note 7 – Commitments and Contingencies for additional information regarding the status of the Foxconn Transactions. In August 2020, we entered into an emissions credit agreement with GM pursuant to which, and subject to the terms of which, until the completion of the first three annual production/model years wherein we produce vehicles at least ten months out of the production/model year, the counterparty will have the option to purchase such emissions credits as well as emissions credits from any other U.S. state, country or jurisdiction generated by vehicles produced by us not otherwise required by us to comply with emissions laws and regulations at a purchase price equal to 75% of the fair market value of such credits. Shortly after filing the Chapter 11 Cases, the Company ceased production of the Endurance and new program development. In November 2020, we prepaid a royalty payment of $4.75 million to Workhorse Group, representing an advance on royalties pursuant to a license agreement between Legacy Lordstown and Workhorse Group. Given that Workhorse Group technology is not being used in the Endurance and our strategic direction, inclusive of the transactions contemplated with Foxconn, we deemed it appropriate to terminate the license agreement during 2022. As such, we recorded a charge of $4.75 million during the year ended December 31, 2022 to write-off prepaid royalty. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 9 — SUBSEQUENT EVENTS LandX Asset Purchase Agreement Closing The closing of the transactions contemplated by the LandX Asset Purchase Agreement occurred on October 27, 2023, at which time the Purchaser acquired specified assets of the Debtors related to the design, production and sale of electric light duty vehicles focused on the commercial fleet market free and clear of liens, claims, encumbrances, and other interests, and assumed certain specified liabilities of the Debtors for a total purchase price of approximately $10.2 million in cash. Upon consummation of the transactions under the LandX Asset Purchase Agreement, Jefferies became entitled to a Transaction Fee of $2.0 million after crediting the Monthly Fees paid to Jefferies since entering into the Engagement Letter and, subject to payment of the $2.0 million Transaction Fee, no further amounts will be payable to Jefferies under the Engagement Letter. Proposed Plan/Bankruptcy Court Approval of Disclosure Statement On October 30, 2023, the Debtors filed the Proposed Plan and accompanying Disclosure Statement with the Bankruptcy Court. The Disclosure Statement describes, among other things, the terms of the Proposed Plan; the events leading up to the Chapter 11 Cases; certain events that have occurred or are anticipated to occur during the Chapter 11 Cases, including the anticipated solicitation of votes to approve the Proposed Plan from certain of the Debtors’ creditors and Interest holders; and certain other aspects of the Proposed Plan. See Note 1 – Description of Organization and Business Operations – Description of Business – Voluntary Chapter 11 Petition. After a hearing on October 31, 2023, on November 1, 2023, the Bankruptcy Court entered an order approving the Disclosure Statement and the procedures in connection with the solicitation of votes on the Proposed Plan. The Debtors are authorized to solicit votes to accept or reject the Proposed Plan and promptly began soliciting votes on the Proposed Plan pursuant to the Solicitation Procedures approved by the Bankruptcy Court. The Bankruptcy Court’s approval of the Disclosure Statement does not constitute the Bankruptcy Court’s approval or confirmation of the Proposed Plan. The Proposed Plan remains subject to material change and approval by the Bankruptcy Court as set forth in more detail herein and therein. A hearing in the Bankruptcy Court for the confirmation of the Proposed Plan is scheduled for December 19, 2023, which may be rescheduled. The description of the Proposed Plan and Disclosure Statement contained in this report is qualified in its entirety by reference to the full text of the solicitation versions of the Proposed Plan and Disclosure Statement, copies of which are filed with this Quarterly Report on Form 10-Q as Exhibit 10.2 and are incorporated herein by reference. Information contained in the Proposed Plan and the Disclosure Statement is subject to change substantially, whether as a result of amendments, supplements, or other modifications to the Proposed Plan, third-party actions, including governmental claims, or otherwise. The Proposed Plan is not binding on any party, including the Debtors, unless and until it is approved by the stakeholders entitled to vote and confirmed by the Bankruptcy Court and consummated. Information in the Disclosure Statement is subject to change and may be further supplemented. Neither the Debtors’ filing of the Proposed Plan and Disclosure Statement, nor this report, is a solicitation of votes to accept or reject the Proposed Plan. Votes on the Proposed Plan will be solicited in accordance with the solicitation and voting procedures that were filed and approved by the Bankruptcy Court and applicable law. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates in Financial Statement Preparation | Use of Estimates in Financial Statement Preparation The preparation of condensed consolidated financial statements in accordance with GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions that affect the reported amounts in the consolidated financial statements, and related disclosures in the accompanying notes to the financial statements. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of changes are reflected in the condensed consolidated Financial Statements in the period they are determined to be necessary. The Chapter 11 Cases will result in continuous changes in facts and circumstances that will cause the Company’s estimates and assumptions to change, potentially materially. We undertake no obligation to update or revise any of the disclosures, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. There have been no material changes to the critical accounting policies and estimates described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, except for the areas noted below, primarily driven by the filing of the Chapter 11 Cases. |
Liabilities Subject to Compromise | Liabilities Subject to Compromise As noted above, since filing the Chapter 11 petitions, the Company has operated as debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. In the accompanying Balance Sheet, the “Liabilities subject to compromise” line is reflective of expected allowed claim amounts in accordance with ASC 852-10 and are subject to change materially based on the proceedings and continued consideration of claims that may be modified, allowed, or disallowed. Refer to Note 7 – Commitments and Contingencies for further detail. |
Reorganization Items | Reorganization Items Reorganization items represent the expenses directly and incrementally resulting from the Chapter 11 cases and are separately reported as Reorganization items in our statements of operations. |
Inventory and Inventory Valuation | Inventory and Inventory Valuation Substantially all of the Company’s inventory is specific to the production of the Endurance and is stated at the lower of cost or net realizable value (“NRV”). NRV is the estimated value of the inventory in the context of the Chapter 11 Cases, which is minimal due to its unique nature. In addition to the NRV analysis, the Company recognizes an excess inventory reserve to adjust for inventory quantities in excess of anticipated Endurance production. As discussed above, the Company ceased production of the Endurance in June 2023. There were no NRV and excess inventory charges for the three months ended September 30, 2023, and $24.1 million for the nine months ended September 30, 2023. NRV and excess inventory charges are recorded within Cost of Sales in the Company’s Condensed Consolidated Statement of Operations. No such charges were recognized for the three and nine months ended September 30, 2022, as the Company had not yet commenced commercial production of the Endurance. As of September 30, 2023, inventory is presented as assets held for sale on the Company’s Balance Sheet. All of our inventory was sold pursuant to closing the LandX Asset Purchase Agreement in the fourth quarter of 2023, the effect of which is not reflected in these financial statements (See Note 9 – Subsequent Events). |
Property, plant and equipment | Property, plant and equipment Property and equipment are stated at cost less accumulated depreciation and impairment charges. Depreciation is computed using the straight-line method over the estimated useful lives and residual values of the related assets. Upon retirement or sale, the cost and related accumulated depreciation and impairments 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. Due to the failure to identify a strategic partner for the Endurance, lack of expected funding and other support from Foxconn (as discussed in more detail above and elsewhere in this report) and extremely limited ability to raise sufficient capital in the current market environment, we determined it was in the best interests of the Company’s stakeholders to take aggressive actions to cut costs and preserve cash, file the Chapter 11 Cases and cease production of the Endurance and new program development. As of September 30, 2023, property, plant and equipment is presented as assets held for sale on the Company’s Balance Sheet. Substantially all of our property, plant and equipment was sold pursuant to closing the LandX Asset Purchase Agreement in the fourth quarter of 2023, the effect of which is not reflected in these financial statements (See Note 9 – Subsequent Events and Note 4 – Property, Plant and Equipment and Assets Held for Sale for details regarding our classification of assets held for sale). |
Valuation of Long-Lived and Intangible Assets | Valuation of Long-Lived and Intangible Assets 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. Asset impairment 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, residual values 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. Changes in these estimates and assumptions could materially affect the determination of fair value and any impairment charge. For assets to be held and used, including identifiable intangible assets and long-lived assets subject to amortization, we initiate our review whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability of a long-lived asset subject to amortization is measured by comparison of its carrying amount to the expected future undiscounted cash flows that the asset is expected to generate. Any impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Significant management judgment is required in this process. The uncertainties regarding the ability to determine the realizable value for our property, plant and equipment, including in light of the timing of the filing of the Chapter 11 Cases and lack of available reference data for market transactions, particularly with respect to Endurance-specific assets, resulted in a determination by the Company of the fair value of the assets based on their estimated residual or salvage values as of June 30, 2023. For the quarter ended September 30, 2023, the Company recognized an impairment charge of $0.7 million to adjust the carrying value of its right of use assets. The Company also evaluated the decision to actively market the sale of its long-lived fixed assets in connection with the Chapter 11 Cases, against ASC Topic 360-10-45-9 “Long-Lived Assets to Be Disposed of By Sale.” See Note 4 – Property, Plant and Equipment and Assets Held for Sale for details regarding our impairment assessment and classification of assets held for sale. |
Warrants | Warrants As a result of the Chapter 11 Cases, the fair value of the Company’s warrants was deemed to be zero and adjusted accordingly as of June 30, 2023 . |
Recently issued accounting pronouncements | Recently issued accounting pronouncements There are no recently issued, but not yet adopted, accounting pronouncements which are expected to have a material impact on the Company’s Condensed Financial Statements and related disclosures. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
FAIR VALUE MEASUREMENTS | |
Summary of the net gain on changes in fair value related to warrants | (in thousands) Three months ended Three months ended Nine months ended Nine months ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Private Warrants $ — $ (523) $ — $ (246) Foxconn Warrants — (238) — (238) Net gain on changes in fair value $ — $ (761) $ — $ (246) |
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, 2023 Cash and cash equivalents $ 93,653 $ 93,653 $ — $ — Short-term investments — — — — Private Warrants — — — — Foxconn Warrants — — — — Total Quoted prices in active markets (Level 1) Prices with observable inputs (Level 2) Prices with unobservable inputs (Level 3) December 31, 2022 Cash and cash equivalents $ 121,358 $ 121,358 $ — $ — Short-term investments 100,297 — 100,297 — Private Warrants 254 — — 254 Foxconn Warrants 170 170 |
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, 2022 Additions Settlements Loss on fair value adjustments included in earnings Balance at September 30, 2023 Private Warrants $ 254 — — — $ 254 Foxconn Warrants 170 — — 170 |
CAPITAL STOCK AND LOSS PER SH_2
CAPITAL STOCK AND LOSS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
CAPITAL STOCK AND LOSS PER SHARE | |
Schedule of the weighted-average number of shares outstanding for basic and diluted loss per share | (in thousands) Three months ended Three months ended Nine months ended Nine months ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Basic weighted average shares outstanding 15,953 14,130 15,942 13,543 Diluted weighted average shares outstanding 15,953 14,130 15,942 13,543 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of liability subject to compromise | (in thousands) September 30, 2023 Accounts payable $ 2,767 Accrued expenses and other current liabilities 3,085 Accrued vendor claims 13,133 Accrued legal liabilities 20,000 Liabilities subject to compromise $ 38,985 |
DESCRIPTION OF ORGANIZATION A_2
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||
Oct. 27, 2023 USD ($) | May 24, 2023 | May 22, 2023 shares | Apr. 21, 2023 $ / shares | Nov. 22, 2022 USD ($) D tranche $ / shares shares | Nov. 07, 2022 USD ($) tranche $ / shares shares | May 11, 2022 | Oct. 11, 2021 USD ($) | Jul. 23, 2021 USD ($) | Oct. 31, 2021 USD ($) shares | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2023 USD ($) item $ / shares shares | Sep. 30, 2022 USD ($) shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) | Nov. 13, 2023 employee | May 07, 2023 USD ($) | Dec. 30, 2022 USD ($) | Aug. 17, 2022 $ / shares | Apr. 15, 2022 USD ($) | |
Business Acquisition | |||||||||||||||||||||
Number of endurance truck | item | 35 | ||||||||||||||||||||
Number of notices Provided to employees | item | 2 | ||||||||||||||||||||
Net loss | $ 16,506 | $ 154,430 | $ 342,717 | $ 180,404 | |||||||||||||||||
Research and development expenses | $ 5,716 | 19,839 | $ 32,445 | 92,213 | |||||||||||||||||
Proceeds from stock issuance | 1,853 | ||||||||||||||||||||
Exchange ratio | 0.067 | 0.067 | |||||||||||||||||||
Shares issued in conversion | shares | 1 | ||||||||||||||||||||
Issuance of Class A Common stock | $ 1,853 | ||||||||||||||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||||||
cash, cash equivalents and short-term investments | $ 93,700 | $ 93,700 | |||||||||||||||||||
Accumulated deficit | 1,169,929 | 1,169,929 | $ 827,213 | ||||||||||||||||||
Convertible preferred shares, shares issued | shares | 300,000 | ||||||||||||||||||||
Claims recognized | 25,600 | ||||||||||||||||||||
Accounts payable and accrued liabilities | 15,900 | 15,900 | |||||||||||||||||||
Accounts payable and accrued liabilities | 15,900 | 15,900 | |||||||||||||||||||
Pending litigation | Ohio Lead Plaintiff | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Litigation reserve | $ 1,000 | $ 1,000 | |||||||||||||||||||
Common Stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Stock issued in aggregate purchase | shares | 1,106,000 | ||||||||||||||||||||
Issuance of Class A Common stock | $ 70,000 | $ 1 | |||||||||||||||||||
Foxconn | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Number of days to remedy drop in stock price | 180 days | ||||||||||||||||||||
Minimum bid price | $ / shares | $ 1 | ||||||||||||||||||||
Threshold period for termination of investment agreement if the breach not cured | 30 days | ||||||||||||||||||||
Contract Manufacturing Agreement | Lordstown EV Corporation | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Initial term | 18 months | ||||||||||||||||||||
Notice period | 12 months | ||||||||||||||||||||
Minimum | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Exchange ratio | 0.33 | ||||||||||||||||||||
Maximum | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Exchange ratio | 0.067 | 0.067 | |||||||||||||||||||
Equity Funding Agreement With Y A | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Aggregate value of shares for issuance | $ 400,000 | ||||||||||||||||||||
Stock issued in aggregate purchase | shares | 17,500,000 | 17,500,000 | |||||||||||||||||||
Issuance of Class A Common stock | $ 26,705 | $ 40,439 | $ 40,400 | ||||||||||||||||||
Equity Funding Agreement With Y A | Common Stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Stock issued in aggregate purchase | shares | 10,902,000 | 17,464,000 | |||||||||||||||||||
Issuance of Class A Common stock | $ 1 | $ 2 | |||||||||||||||||||
Equity Funding Agreement With Foxconn | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Purchase price for sale of assets | $ 230,000 | ||||||||||||||||||||
Research and development expenses | $ 18,400 | $ 7,700 | |||||||||||||||||||
Down payments received | $ 200,000 | ||||||||||||||||||||
Proceeds from sale of assets | 100,000 | $ 100,000 | |||||||||||||||||||
Total proceeds from sale of assets | 257,000 | ||||||||||||||||||||
Proceeds from Sale of Assets for Expansion Investments | 8,900 | ||||||||||||||||||||
Proceeds from Sale of Assets for Reimbursement Payments | $ 18,400 | ||||||||||||||||||||
Balance of purchase price | 30,000 | ||||||||||||||||||||
Reimbursement payment receivable on closing | 27,500 | ||||||||||||||||||||
Reimbursable operating expenses receivable | 18,400 | $ 17,500 | |||||||||||||||||||
Reimbursable expansion cost receivable | $ 10,000 | ||||||||||||||||||||
Stock issued in aggregate purchase | shares | 480,000 | ||||||||||||||||||||
Proceeds from stock issuance | $ 50,000 | ||||||||||||||||||||
Equity Funding Agreement With Foxconn | Foxconn | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Threshold period for subsequent common closing from the receipt of written communication | D | 10 | ||||||||||||||||||||
Open Market Sales Agreement | Jefferies LLC | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Stock issued in aggregate purchase | shares | 0 | 7,800,000 | |||||||||||||||||||
Proceeds from stock issuance | $ 12,400 | ||||||||||||||||||||
Open Market Sales Agreement | Maximum | Jefferies LLC | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Number of shares to be issued | shares | 50,200,000 | ||||||||||||||||||||
Investment agreement | Foxconn | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Aggregate value of shares for issuance | $ 100,000 | ||||||||||||||||||||
Preferred stock, par value | $ / shares | $ 0.0001 | ||||||||||||||||||||
Proceeds from stock issuance | $ 47,300 | ||||||||||||||||||||
Investment agreement | Foxconn | Common Stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Shares available for issuance (as a percent) | 10% | ||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 47,300 | ||||||||||||||||||||
Stock issued in aggregate purchase | shares | 1,800,000 | ||||||||||||||||||||
Issuance of Class A Common stock | $ 22,700 | $ 70,000 | |||||||||||||||||||
Shares issued price per share | $ / shares | $ 26.40 | ||||||||||||||||||||
Investment agreement | Foxconn | Preferred stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Aggregate value of shares for issuance | 100,000 | ||||||||||||||||||||
Issuance of Class A Common stock | $ 30,000 | ||||||||||||||||||||
Shares issued price per share | $ / shares | $ 100 | ||||||||||||||||||||
Number of tranches of share issue | tranche | 2 | ||||||||||||||||||||
Convertible preferred shares, shares issued | shares | 300,000 | ||||||||||||||||||||
Scenario, Plan | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Warrants to purchase common stock | shares | 130,000 | 130,000 | |||||||||||||||||||
Warrant exercise price | $ / shares | $ 157.50 | $ 157.50 | |||||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Equity Funding Agreement With Foxconn | Foxconn | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Subsequent preferred funding | $ 70,000 | ||||||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Investment agreement | Preferred stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 70,000 | ||||||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Investment agreement | Foxconn | Preferred stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 70,000 | ||||||||||||||||||||
Shares issued price per share | $ / shares | $ 100 | $ 100 | |||||||||||||||||||
Number of tranches of share issue | tranche | 2 | ||||||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Investment agreement | Maximum | Foxconn | Preferred stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Convertible preferred shares, shares issued | shares | 700,000 | 700,000 | |||||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Investment Agreement First Tranche | Foxconn | Preferred stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 30,000 | ||||||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Investment Agreement First Tranche | Maximum | Foxconn | Preferred stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Convertible preferred shares, shares issued | shares | 300,000 | ||||||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Investment Agreement Second Tranche | Foxconn | Preferred stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Convertible preferred shares, shares issued | shares | 400,000 | ||||||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Investment Agreement Second Tranche | Maximum | Foxconn | Preferred stock | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Proceeds from issuance of preferred stock | $ 40,000 | ||||||||||||||||||||
Subsequent event | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Number of employees | employee | 20 | ||||||||||||||||||||
Subsequent event | LandX asset purchase agreement | |||||||||||||||||||||
Business Acquisition | |||||||||||||||||||||
Total purchase price | $ 10,200 | ||||||||||||||||||||
Transaction Fee | $ 2,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Inventory Adjustments | $ 24,105 | $ 25,624 | ||
Impairment charge of Intangible right of use assets | $ 700 | |||
Assets impairment charge | $ 0 | $ 0 | ||
Impairment charges | 700 | 700 | ||
Cost of sales | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Inventory Adjustments | $ 0 | $ 24,100 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2023 USD ($) $ / shares shares | Sep. 30, 2022 shares | |
FAIR VALUE MEASUREMENTS | |||
Impairment charges | $ | $ 0.7 | $ 0.7 | |
Private warrants to purchase common stock | |||
FAIR VALUE MEASUREMENTS | |||
Warrant exercise price | $ 11.50 | $ 11.50 | |
Strike price per warrant | $ 172.50 | $ 172.50 | |
Warrants outstanding | shares | 153 | 153 | |
BGL Warrants - SBC - Equity | |||
FAIR VALUE MEASUREMENTS | |||
Warrant exercise price | $ 10 | $ 10 | |
Strike price per warrant | $ 150 | $ 150 | |
Warrants outstanding | shares | 170 | 170 | |
Warrants issued to Foxconn | |||
FAIR VALUE MEASUREMENTS | |||
Warrant exercise price | $ 157.50 | $ 157.50 | |
Warrants outstanding | shares | 113 | 113 | |
Public warrants | |||
FAIR VALUE MEASUREMENTS | |||
Warrant exercise price | $ 11.50 | $ 11.50 | |
Private warrants to purchase common stock | |||
FAIR VALUE MEASUREMENTS | |||
Warrants outstanding | shares | 2,300 | ||
BGL Warrants - SBC - Equity | |||
FAIR VALUE MEASUREMENTS | |||
Warrants outstanding | shares | 1,600 | ||
Warrants issued to Foxconn | |||
FAIR VALUE MEASUREMENTS | |||
Warrant exercise price | $ 10.50 | $ 10.50 | |
Fair value of warrants | $ | $ 0.3 | $ 0.3 | |
Volatility | |||
FAIR VALUE MEASUREMENTS | |||
Derivative Liability, Measurement Input | 0.90 | ||
Risk Free Interest Rate | |||
FAIR VALUE MEASUREMENTS | |||
Derivative Liability, Measurement Input | 0.04173 |
FAIR VALUE MEASUREMENTS - Net g
FAIR VALUE MEASUREMENTS - Net gain on changes in fair value (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
FAIR VALUE MEASUREMENTS | ||
Net gain on changes in fair value | $ (761) | $ (246) |
Private warrants to purchase common stock | ||
FAIR VALUE MEASUREMENTS | ||
Net gain on changes in fair value | (523) | (246) |
Warrants issued to Foxconn | ||
FAIR VALUE MEASUREMENTS | ||
Net 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, 2023 | Dec. 31, 2022 |
Warrants issued to Foxconn | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | $ 300 | |
Fair Value, Inputs, Level 3 | Private warrants to purchase common stock | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 254 | $ 254 |
Fair Value, Inputs, Level 3 | Warrants issued to Foxconn | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 170 | 170 |
Fair Value, Recurring | ||
FAIR VALUE MEASUREMENTS | ||
Cash and Cash Equivalents | 93,653 | 121,358 |
Short-term investments with a fair value | 100,297 | |
Fair Value, Recurring | Private warrants to purchase common stock | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 254 | |
Fair Value, Recurring | Warrants issued to Foxconn | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 170 | |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | ||
FAIR VALUE MEASUREMENTS | ||
Cash and Cash Equivalents | $ 93,653 | 121,358 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | ||
FAIR VALUE MEASUREMENTS | ||
Short-term investments with a fair value | 100,297 | |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Private warrants to purchase common stock | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | 254 | |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Warrants issued to Foxconn | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability | $ 170 |
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, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Loss on fair value adjustments included in earnings | $ 761 | $ 246 |
Warrants issued to Foxconn | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Loss on fair value adjustments included in earnings | 238 | 238 |
Private warrants to purchase common stock | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Loss on fair value adjustments included in earnings | $ 523 | $ 246 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | |
PROPERTY, PLANT AND EQUIPMENT | ||
Impairment charges | $ 0.7 | $ 0.7 |
Property, Plant and Equipment, Gross | 229.1 | $ 229.1 |
Impairment charges | $ 0 |
MEZZANINE EQUITY (Details)
MEZZANINE EQUITY (Details) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | |||
Nov. 22, 2022 USD ($) tranche $ / shares shares | Nov. 07, 2022 USD ($) tranche $ / shares shares | Sep. 30, 2023 USD ($) $ / shares | Sep. 30, 2023 USD ($) D $ / shares | Apr. 21, 2023 $ / shares | |
Business Acquisition [Line Items] | |||||
Convertible preferred shares, shares issued | shares | 0.3 | ||||
Temporary Equity, Share Price | $ / shares | $ 100 | ||||
Proceeds from Issuance of Convertible Preferred Stock | $ 30,000 | ||||
Percentage of receive dividends at a rate | 8% | ||||
Temporary Equity Conversion Price | $ / shares | $ 29.04 | $ 29.04 | |||
Convertible, threshold percentage of stock price trigger | 200% | ||||
Convertible, threshold trading days | D | 20 | ||||
Convertible, threshold consecutive trading days | D | 30 | ||||
Beneficial ownership (as a percent) | 25% | ||||
Accrual of Preferred stock dividends | $ 600 | ||||
Liquidation preference per share | $ / shares | $ 100 | $ 100 | |||
Aggregate value of dividends of Preferred Stock | $ 1,900 | $ 1,900 | |||
Series A Convertible Preferred | |||||
Business Acquisition [Line Items] | |||||
Accrued unpaid dividends (per share) | $ / shares | $ 100 | ||||
Preferred stock | |||||
Business Acquisition [Line Items] | |||||
Accrual of Preferred stock dividends | $ 630 | $ 1,852 | |||
Investment agreement | Foxconn | |||||
Business Acquisition [Line Items] | |||||
Beneficial ownership (as a percent) | 25% | ||||
Investment agreement | Preferred stock | Scenario, EV Program Milestone Achievement [Member] | |||||
Business Acquisition [Line Items] | |||||
Proceeds from issuance of preferred stock | $ 70,000 | ||||
Investment agreement | Preferred stock | Foxconn | |||||
Business Acquisition [Line Items] | |||||
Convertible preferred shares, shares issued | shares | 0.3 | ||||
Shares issued price per share | $ / shares | $ 100 | ||||
Number of tranches of share issue | tranche | 2 | ||||
Investment agreement | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement [Member] | |||||
Business Acquisition [Line Items] | |||||
Shares issued price per share | $ / shares | $ 100 | $ 100 | |||
Proceeds from issuance of preferred stock | $ 70,000 | ||||
Number of tranches of share issue | tranche | 2 | ||||
Investment agreement | Maximum | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement [Member] | |||||
Business Acquisition [Line Items] | |||||
Convertible preferred shares, shares issued | shares | 0.7 | 0.7 | |||
Investment Agreement First Tranche | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement [Member] | |||||
Business Acquisition [Line Items] | |||||
Proceeds from issuance of preferred stock | $ 30,000 | ||||
Investment Agreement First Tranche | Maximum | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement [Member] | |||||
Business Acquisition [Line Items] | |||||
Convertible preferred shares, shares issued | shares | 0.3 | ||||
Investment Agreement Second Tranche | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement [Member] | |||||
Business Acquisition [Line Items] | |||||
Convertible preferred shares, shares issued | shares | 0.4 | ||||
Investment Agreement Second Tranche | Maximum | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement [Member] | |||||
Business Acquisition [Line Items] | |||||
Proceeds from issuance of preferred stock | $ 40,000 |
CAPITAL STOCK AND LOSS PER SH_3
CAPITAL STOCK AND LOSS PER SHARE (Details) | May 24, 2023 | May 22, 2023 | Sep. 30, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | Aug. 17, 2022 $ / shares shares | Aug. 16, 2022 shares |
CAPITAL STOCK AND LOSS PER SHARE | ||||||
Shares authorized per charter | 462,000,000 | 312,000,000 | ||||
Common stock, shares authorized | 450,000,000 | 450,000,000 | 450,000,000 | |||
Temporary equity shares authorized | 12,000,000 | 12,000,000 | 12,000,000 | |||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Temporary equity par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Exchange ratio | 0.067 | 0.067 | ||||
Common stock, shares issued | 15,953,212 | 15,928,299 | ||||
Common stock, shares outstanding | 15,953,212 | 15,928,299 | ||||
Shares issuable under equity awards | 211,666 | |||||
Temporary equity, shares issued | 300,000 | 300,000 | ||||
Temporary equity shares outstanding | 300,000 | 300,000 | ||||
Minimum | ||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||
Exchange ratio | 0.33 | |||||
Maximum | ||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||
Exchange ratio | 0.067 | 0.067 |
CAPITAL STOCK AND LOSS PER SH_4
CAPITAL STOCK AND LOSS PER SHARE - Basic and diluted net loss per share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Basic weighted average shares outstanding | 15,953 | 14,130 | 15,942 | 13,543 |
Diluted weighted average shares outstanding | 15,953 | 14,130 | 15,942 | 13,543 |
Class A common stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Basic weighted average shares outstanding | 15,953 | 14,130 | 15,942 | 13,543 |
Diluted weighted average shares outstanding | 15,953 | 14,130 | 15,942 | 13,543 |
CAPITAL STOCK AND LOSS PER SH_5
CAPITAL STOCK AND LOSS PER SHARE - Anti-dilutive effect on dilutive net loss per share (Details) shares in Millions | 3 Months Ended |
Sep. 30, 2022 shares | |
Share awards | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Anti-dilutive securities, earnings per share amount | 0.3 |
Warrants issued to Foxconn | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Anti-dilutive securities, earnings per share amount | 1.7 |
BGL Warrants | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Anti-dilutive securities, earnings per share amount | 1.6 |
Private warrants to purchase common stock | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Anti-dilutive securities, earnings per share amount | 2.3 |
CAPITAL STOCK AND LOSS PER SH_6
CAPITAL STOCK AND LOSS PER SHARE - Purchase Agreements (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Nov. 22, 2022 USD ($) tranche item $ / shares shares | Nov. 07, 2022 USD ($) tranche $ / shares shares | Jul. 23, 2021 USD ($) | Sep. 30, 2023 shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2023 | Sep. 30, 2022 USD ($) shares | Dec. 31, 2022 USD ($) shares | |
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Issuance of Class A Common stock | $ 1,853 | |||||||
Aggregate share purchase price | shares | 300 | |||||||
Issuance of Class A common stock | 1,853 | |||||||
Beneficial ownership (as a percent) | 25% | |||||||
Maximum | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Aggregate liquidation preference | $ 30,000 | |||||||
Common Stock | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Issuance of Class A Common stock | $ 70,000 | $ 1 | ||||||
Stock issued in aggregate purchase | shares | 1,106 | |||||||
Equity Funding Agreement With Y A | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Issuance of Class A Common stock | $ 26,705 | $ 40,439 | $ 40,400 | |||||
Aggregate value of shares for issuance | $ 400,000 | |||||||
Stock issued in aggregate purchase | shares | 17,500 | 17,500 | ||||||
Equity Funding Agreement With Y A | Common Stock | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Issuance of Class A Common stock | $ 1 | $ 2 | ||||||
Stock issued in aggregate purchase | shares | 10,902 | 17,464 | ||||||
Investment agreement | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
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% | |||||||
Investment agreement | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Aggregate value of shares for issuance | $ 100,000 | |||||||
Percentage of common stock to be acquired | 10% | |||||||
Issuance of Class A common stock | $ 47,300 | |||||||
Proceeds from sale of equity | $ 52,700 | |||||||
Beneficial ownership (as a percent) | 25% | |||||||
Investment agreement | Minimum | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Interest on asset purchase restriction | 50% | |||||||
Investment agreement | Prior to CFIUS Clearance | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Voting rights (as a percent) | 9.99% | |||||||
Investment agreement | Prior to Requisite Stockholder Approval | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Voting rights (as a percent) | 19.99% | |||||||
Investment agreement | CFIUS Clearance and Requisite Stockholder Approval | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Voting rights (as a percent) | 24% | |||||||
Investment agreement | Common Stock | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Issuance of Class A Common stock | $ 22,700 | 70,000 | ||||||
Shares issued price per share | $ / shares | $ 26.40 | |||||||
Proceeds from issuance of preferred stock | $ 47,300 | |||||||
Stock issued in aggregate purchase | shares | 1,800 | |||||||
Number of members that can be appointed to board | item | 2 | |||||||
The threshold percent of beneficial ownership for relinquishment of first board seat | 50% | |||||||
Investment agreement | Common Stock | Scenario, Plan | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Beneficial ownership (as a percent) | 25% | |||||||
Investment agreement | Preferred stock | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Issuance of Class A Common stock | $ 30,000 | |||||||
Shares issued price per share | $ / shares | $ 100 | |||||||
Aggregate value of shares for issuance | $ 100,000 | |||||||
Aggregate share purchase price | shares | 300 | |||||||
Number of tranches of share issue | tranche | 2 | |||||||
Investment agreement | Preferred stock | Scenario, EV Program Milestone Achievement [Member] | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Proceeds from issuance of preferred stock | $ 70,000 | |||||||
Investment agreement | Preferred stock | Scenario, EV Program Milestone Achievement [Member] | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Shares issued price per share | $ / shares | $ 100 | $ 100 | ||||||
Proceeds from issuance of preferred stock | $ 70,000 | |||||||
Number of tranches of share issue | tranche | 2 | |||||||
Investment agreement | Preferred stock | Scenario, EV Program Milestone Achievement [Member] | Maximum | Foxconn | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Aggregate share purchase price | shares | 700 | 700 | ||||||
Open Market Sales Agreement | Jefferies LLC | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Stock issued in aggregate purchase | shares | 0 | 7,800 | ||||||
Issuance of Class A common stock | $ 12,400 | |||||||
Open Market Sales Agreement | Maximum | Jefferies LLC | ||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||
Number of shares to be issued | shares | 50,200 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 9 Months Ended | ||||||||||||
Oct. 27, 2023 USD ($) | Aug. 14, 2023 USD ($) | Jul. 26, 2023 USD ($) item | Dec. 06, 2022 lawsuit | Jul. 09, 2021 lawsuit | May 14, 2021 lawsuit | Oct. 30, 2020 USD ($) | Sep. 30, 2023 USD ($) D | Nov. 13, 2023 employee | Aug. 28, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 13, 2021 lawsuit | Apr. 16, 2021 employee item | |
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||||||||
Litigation amount sought | $ 900,000 | ||||||||||||
Claims recognized | $ 25,600 | ||||||||||||
Accrued vendor claims | 13,133 | ||||||||||||
Accounts payable and accrued liabilities | $ 15,900 | ||||||||||||
Number of days for filing claim arising | D | 30 | ||||||||||||
Number of debtors named | item | 0 | ||||||||||||
Debtor reorganization items, monthly fee payable | $ 200 | ||||||||||||
Debtor reorganization items, transaction fee payable | $ 3,000 | ||||||||||||
Engagement letter termination term | 5 days | ||||||||||||
Term of occurrence of transaction | 12 months | ||||||||||||
Accrued and Other Current Liabilities | |||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||||||||
Aggregate reserve within Accrued and other current liabilities | $ 20,000 | $ 35,900 | |||||||||||
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 | ||||||||||||
Litigation reserve | $ 1,000 | ||||||||||||
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 | ||||||||||||
Delaware Class Action Litigation | Pending litigation | |||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||||||||
Number of putative class action lawsuits filed | lawsuit | 2 | ||||||||||||
Karma Relief Case | Settled Litigation | |||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||||||||
Litigation settlement amount | $ 40,000 | ||||||||||||
Allocated to royalty | $ 5,000 | ||||||||||||
Subsequent event | |||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||||||||
Number of employees | employee | 20 | ||||||||||||
Subsequent event | LandX Asset Purchase Agreement [Member] | |||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | |||||||||||||
Total purchase price | $ 10,200 | ||||||||||||
Transaction Fee | $ 2,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Liabilities subject to compromise (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
COMMITMENTS AND CONTINGENCIES | |
Accounts payable | $ 2,767 |
Accrued expenses and other current liabilities | 3,085 |
Accrued vendor claims | 13,133 |
Accrued legal liabilities | 20,000 |
Liabilities subject to compromise | $ 38,985 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Nov. 30, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | Nov. 30, 2020 | |
Transaction with Workhorse Group Inc | ||||
RELATED PARTY TRANSACTIONS | ||||
Prepaid Royalties | $ 4,750 | $ 4,750 | ||
Minimum | ||||
RELATED PARTY TRANSACTIONS | ||||
Threshold beneficial ownership percentage | 5% | |||
Threshold related party transaction amount | $ 120,000 | |||
Minimum | Foxconn | ||||
RELATED PARTY TRANSACTIONS | ||||
Related party beneficial ownership percentage | 5% |
SUBSEQUENT EVENTS (Detail)
SUBSEQUENT EVENTS (Detail) - Subsequent event - LandX Asset Purchase Agreement [Member] $ in Millions | Oct. 27, 2023 USD ($) |
Subsequent Event [Line Items] | |
Total purchase price | $ 10.2 |
Transaction Fee | $ 2 |