Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 26, 2024 | Jun. 30, 2023 | |
Document and Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 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 Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction | false | ||
Entity Shell Company | true | ||
Entity Public Float | $ 34 | ||
Entity Common Stock, Shares Outstanding | 15,953,212 | ||
Auditor Name | KPMG LLP | ||
Auditor Firm ID | 185 | ||
Auditor Location | Cleveland, Ohio | ||
Entity Central Index Key | 0001759546 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 87,096 | $ 121,358 |
Short-term investments | 100,297 | |
Inventory, net | 13,672 | |
Prepaid expenses | 4,027 | 19,510 |
Other current assets | 1,016 | 1,038 |
Total current assets | 92,139 | 255,875 |
Property, plant and equipment, net | 193,780 | |
Other non-current assets | 30 | 2,657 |
Total Assets | 92,169 | 452,312 |
Current Liabilities | ||
Accounts payable | 933 | 12,801 |
Accrued legal and professional | 12,815 | 38,398 |
Accrued expenses and other current liabilities | 1,650 | 17,635 |
Total current liabilities | 15,398 | 68,834 |
Liabilities subject to compromise | 30,467 | |
Warrant and other non-current liabilities | 1,446 | |
Total liabilities | 45,865 | 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 December 31, 2023 and December 31, 2022 | 32,755 | 30,261 |
Stockholders' equity | ||
Class A common stock, $0.0001 par value, 450,000,000 shares authorized;,15,953,212 and 15,928,299 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively | 24 | 24 |
Additional paid in capital | 1,183,804 | 1,178,960 |
Accumulated deficit | (1,170,279) | (827,213) |
Total stockholders' equity | 13,549 | 351,771 |
Total liabilities and stockholders' equity | $ 92,169 | $ 452,312 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2023 | Dec. 31, 2022 | Aug. 17, 2022 |
Consolidated Balance Sheets | |||
Temporary equity par value | $ 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 | |
Preferred stock, share issued | 300,000 | ||
Common stock, par value | $ 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 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Consolidated Statements of Operations | ||
Net sales | $ 2,340 | $ 194 |
Cost of sales | 91,550 | 30,023 |
Operating Expenses | ||
Selling, general and administrative expenses | 54,413 | 138,270 |
Research and development expenses | 33,343 | 107,816 |
Reorganization items | 31,206 | |
Impairment of property plant & equipment and intangibles | 140,726 | 111,389 |
Total operating expenses | 259,688 | 357,475 |
Loss from operations | (348,898) | (387,304) |
Other income (expense) | ||
(Loss) gain on sale of assets | (916) | 100,906 |
Other income | 123 | 788 |
Investment and interest income | 6,625 | 3,206 |
Loss before income taxes | (343,066) | (282,404) |
Income tax expense | 0 | 0 |
Net loss | (343,066) | (282,404) |
Less preferred stock dividend | 2,494 | 261 |
Net loss attributable to common shareholders | $ (345,560) | $ (282,665) |
Net loss per share attributable to common shareholders | ||
Basic (in dollars per share) | $ (21.67) | $ (20.32) |
Diluted (in dollars per share) | $ (21.67) | $ (20.32) |
Weighted-average number of common shares outstanding | ||
Basic (in shares) | 15,945 | 13,912 |
Diluted (in shares) | 15,945 | 13,912 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Preferred stock Foxconn investment transactions for preferred stock | Preferred stock | Common Stock Sales Agreement | Common Stock Foxconn investment transactions for class A stock | Common Stock | Additional Paid-In Capital Sales Agreement | Additional Paid-In Capital Foxconn investment transactions for class A stock | Additional Paid-In Capital | Accumulated Deficit | Equity Funding Agreement With Y A | Sales Agreement | Foxconn investment transactions for class A stock | Total |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||||
Issuance of stock | $ 30,000 | ||||||||||||
Issuance of stock (in shares) | 300,000 | ||||||||||||
Accrual of convertible preferred stock paid-in-kind dividends | $ 261 | ||||||||||||
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 | 13,092,000 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Issuance of Common stock | $ 2 | $ 1 | $ 12,418 | $ 21,722 | 2,113 | $ 40,400 | $ 12,418 | $ 21,724 | 2,114 | ||||
Issuance of Common stock (in shares) | 518,000 | 861,000 | 74,000 | 17,500,000 | |||||||||
Restricted stock vesting | (684) | (684) | |||||||||||
Restricted stock vesting (in shares) | 219,000 | ||||||||||||
Class A Common stock issued under the Equity Purchase Agreement | $ 2 | 40,436 | 40,438 | ||||||||||
Class A Common stock issued under the Equity Purchase Agreement (in shares) | 1,164,000 | ||||||||||||
Accrual of convertible preferred stock paid-in-kind dividends | (261) | (261) | |||||||||||
Stock compensation | 18,826 | 18,826 | |||||||||||
Net loss | (282,404) | (282,404) | |||||||||||
Ending balance at Dec. 31, 2022 | $ 24 | 1,178,960 | (827,213) | 351,771 | |||||||||
Ending Balance (in Shares) at Dec. 31, 2022 | 15,928,000 | ||||||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||||||
Accrual of convertible preferred stock paid-in-kind dividends | $ 2,494 | 2,500 | |||||||||||
Ending Balance at Dec. 31, 2023 | $ 32,755 | $ 32,755 | |||||||||||
Ending Balance (in Shares) at Dec. 31, 2023 | 300,000 | 300,000 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||
Issuance of Common stock | $ 40,400 | ||||||||||||
Issuance of Common stock (in shares) | 0 | ||||||||||||
Restricted stock vesting | (65) | $ (65) | |||||||||||
Restricted stock vesting (in shares) | 25,000 | ||||||||||||
Accrual of convertible preferred stock paid-in-kind dividends | (2,494) | (2,494) | |||||||||||
Stock compensation | 7,403 | 7,403 | |||||||||||
Net loss | (343,066) | (343,066) | |||||||||||
Ending balance at Dec. 31, 2023 | $ 24 | $ 1,183,804 | $ (1,170,279) | $ 13,549 | |||||||||
Ending Balance (in Shares) at Dec. 31, 2023 | 15,953,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Cash flows from operating activities | ||
Net loss | $ (343,066) | $ (282,404) |
Adjustments to reconcile net loss to cash used by operating activities: | ||
Stock-based compensation | 7,403 | 18,826 |
Loss (gain) on disposal of fixed assets | 916 | (100,906) |
Impairment of property plant and equipment and intangible assets | 140,726 | 111,389 |
Write-off of prepaid royalty | 4,728 | |
Depreciation of property plant and equipment | 54,407 | 8,476 |
Write down of inventory and prepaid inventory | 24,105 | 48,529 |
Other non-cash changes | (2,183) | (384) |
Changes in assets and liabilities: | ||
Accounts receivables | 204 | (203) |
Inventory | (10,537) | (54,646) |
Prepaid expenses and other assets | 15,742 | 10,648 |
Accounts payable | (11,940) | 2,527 |
Accrued expenses and other liabilities | (12,940) | 19,657 |
Net Cash used in operating activities | (137,163) | (213,764) |
Cash flows from investing activities | ||
Purchases of property plant and equipment | (10,152) | (54,567) |
Purchases of short-term investments | (32,147) | (100,297) |
Maturities of short-term investments | 134,203 | |
Investment in Foxconn Joint Venture | (13,500) | |
Return of investment in Foxconn Joint Venture | 13,500 | |
Proceeds from the sale of fixed assets | 11,000 | 39,960 |
Net Cash provided by (used in) investing activities | 102,904 | (114,904) |
Cash flows from financing activities | ||
Proceeds from notes payable for Foxconn Joint Venture | 13,500 | |
Settlement of notes payable for Foxconn Joint Venture | (13,500) | |
Down payments received from Foxconn | 100,000 | |
Issuance of Class A common stock | 2,114 | |
Tax withholding payments related to net settled restricted stock compensation | (684) | |
Proceeds from Equity Purchase Agreement, net of issuance costs | 40,438 | |
Net Cash provided by financing activities | 206,010 | |
Decrease in cash and cash equivalents | (34,259) | (122,658) |
Cash and cash equivalents, beginning balance | 121,358 | 244,016 |
Cash and cash equivalents, ending balance | $ 87,099 | 121,358 |
Non-cash items | ||
Capital assets acquired with payables | 200,000 | |
Foxconn investment transactions for class A stock | ||
Cash flows from financing activities | ||
Issuance of Class A common stock | 21,724 | |
Foxconn investment transactions for preferred stock | ||
Cash flows from financing activities | ||
Proceeds from issuance of preferred stock | 30,000 | |
At Market Offering | ||
Cash flows from financing activities | ||
Issuance of Class A common stock | $ 12,418 |
DESCRIPTION OF ORGANIZATION AND
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 12 Months Ended |
Dec. 31, 2023 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1 – DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS Description of Business Overview 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 some, all, or substantially all of the Company’s operating assets in an effort 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 the LandX Asset Purchase 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 the purchaser assumed certain specified liabilities of the Company for a total purchase price of $10.2 million in cash in a transaction that closed on October 27, 2023 (discussed below ” ), and is included under investing activities in the consolidated statement of cash flows. Upon the date that the Proposed Plan, which remains subject to Bankruptcy Court approval, becomes effective (the “Effective Date”), and subject to the effectiveness of the Proposed Plan, it is contemplated that the near term operations of the Company (also referred to as the “Post-Effective Date Debtors”) will consist of (a) claims administration under the Proposed Plan, (b) addressing the Foxconn Litigation, (c) prosecuting, pursuing, compromising, settling, or otherwise disposing of other retained causes of action, (d) defending the Company against any counterclaims, (e) attempting to realize value, if any, from our NOLs and (f) filing Exchange Act reports and satisfying other regulatory requirements. In the future, the Post-Effective Date Debtors expect to explore potential business opportunities, including strategic alternatives or business combinations, including those designed to maximize the Company’s tax attributes, including maximizing realization of its NOLs. No assurance can be made that the Proposed Plan will become effective or that we will be successful in prosecuting any claim or cause of action or that any strategic alternative or business combination will be identified and/or would result in profitable operations or the ability to realize any value from the NOLs. See – “Expected Operations Following the Effective Date” and Part I – Item 1A - Risk Factors. Unless the context indicates otherwise, all shares of the Company’s Class A common stock are presented after giving effect to the 1:15 reverse stock split of the outstanding Class A common stock, which became effective as of 12:01 a.m. Eastern Time on May 24, 2023. Prior Operations and Cessation of Production and Development Prior to the consummation of the Chapter 11 Cases, the Company was an original equipment manufacturer (“OEM”) of electric light duty vehicles (“EVs”) focused on the commercial fleet. This included working on its own vehicle programs as well as partnering with third parties, including Foxconn and its affiliates, as the Company sought to leverage its capabilities, assets and resources to 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 file the Chapter 11 Cases and cease production. We sold 38 Endurance trucks to customers, of which 35 have been repurchased from customers as of the date hereof. Leading up to filing the Chapter 11 Cases and the Foxconn Litigation (each 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), continuing costs of outstanding litigation and extremely limited ability to raise sufficient capital in the then current market environment, we determined it was in the best interests of the Company’s stakeholders to take aggressive actions to cut costs, preserve cash, file the Chapter 11 Cases and Foxconn Litigation and cease production of the Endurance and new program development. As part of these initial actions, 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 beginning in the third quarter of 2023. After the filing of the Chapter 11 Cases, we provided additional notices under the WARN Act for job eliminations. As of December 31, 2023, we had 9 employees, all of whom have been terminated or are expected to be terminated on the Effective Date. The Chapter 11 Cases On June 27, 2023, (“Petition Date”) the Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Bankruptcy Court 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 NOLs. The Company has also been seeking to use the tools of Chapter 11 to fully, finally, and efficiently resolve its contingent and other liabilities before the Bankruptcy Court and to pursue the Foxconn Litigation, as further discussed below. The Bankruptcy Court established October 10, 2023, as the general bar date for all creditors (except governmental entities) to file their proofs of claim or interest, and December 26, 2023, as the bar date for all governmental entities, which was extended until January 5, 2024, in the case of the Securities and Exchange Commission (“SEC”). 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, as applicable, 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. Finally, pursuant to the Proposed Plan, the deadline for parties to file administrative claims against the Debtors (i.e., claims for costs and expenses of administration of the Debtors’ estates, including (i) the actual and necessary costs and expenses incurred after the Petition Date and through the Effective Date of preserving the estates and operating the businesses of the Debtors; (ii) professional fee claims; and (iii) fees and charges payable to the United States Trustee for the District of Delaware (the “U.S. Trustee”)) is 30 days following the Effective Date. Claimants may have the ability to amend their proofs of claim that could significantly increase the total claims, beyond our estimates or reserve. Furthermore, proofs of claim have been filed asserting unliquidated damages or claims in respect of certain indemnification obligations or otherwise, that we may not be able to estimate, or may be materially more than we estimate. Pursuant to the terms of the Proposed Plan, and subject to its confirmation and effectiveness, a significant amount of the cash on hand as of the Effective Date will be used to settle outstanding claims against the Company, including litigation claims. Pursuant to the Bankruptcy Code, the Company is first required to pay all administrative claims in full. The Proposed Plan also requires that the Company establish a reserve (the “Claims Reserve”) for allowed and disputed claims of general unsecured creditors, inclusive of million the Company would be required to pay into escrow on the Effective Date for the cash portion of the Ohio Securities Litigation Settlement (as defined and discussed below). The aim of the Claims Reserve is to facilitate payment in full, with interest, of such creditors’ allowed claims as contemplated by the Proposed Plan (although there can be no assurance the Company will be able to pay such claims in full with interest). The initial amount of the Claims Reserve is currently anticipated to be approximately $45 million, as agreed upon by the official committee of equity security holders (the “Equity Committee”) and the official unsecured creditors’ committee (the “UCC” and together with the Equity Committee, the “Committees”) and approved by the Bankruptcy Court. The amount of the Claims Reserve is subject to change and could increase materially. The Claims Reserve could also be adjusted downward as claims are resolved or otherwise as a result of the claims resolution process, or as the Claims Ombudsman and the Post-Effective Date Debtors deem appropriate. Furthermore, the amount of the Claims Reserve will be limited to amounts payable for allowed claims of general unsecured creditors but to the extent that the Claims Reserve is insufficient to pay general unsecured creditors in full with interest, such deficiency will be payable from all assets of the Post-Effective Date Debtors, as set forth in the Proposed Plan. There are additional liabilities, including but not limited to administrative claims and claims by holders of our Class A common stock and Preferred Stock among other potential classes of claimants whose claims, if allowed, will not be included in the Claims Reserve. There can be no assurance regarding the amount of claims that may be allowed for distributions under the Proposed Plan or that such claims will not be significantly greater than may be anticipated which could, in turn, result in the value of distributions to stakeholders being delayed, reduced, or eliminated entirely. Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate results and total amount of claims against us. Moreover, additional claims may be filed in the Chapter 11 Cases, including on account of rejection damages for executory contracts and unexpired leases rejected pursuant to the Proposed Plan and administrative claims, for each of which the deadlines to file proofs of claim have not yet passed as of the date of this report. Such claims may be substantial and may result in a greater amount of allowed claims than estimated. No assurance can be made regarding the confirmation or effectiveness of the Proposed Plan, the sufficiency of the Debtors’ assets to provide estimated recoveries to claimants and fund anticipated post-emergence activities. The Post-Effective Date Debtors and the Claims Ombudsman, as applicable, will review and analyze all claims. Pursuant to the terms of the Proposed Plan, which includes certain exceptions, the Claims Ombudsman will have the authority to settle, litigate or otherwise resolve general unsecured Claims against the Debtors. Sale of Certain Assets to LandX 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 some, all, or substantially all of the Company’s operating 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 the Debtors. Although the Debtors received several non-binding proposals for the purchase of specified assets, the Debtors through their Boards 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 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 EVs 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 $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. The Transaction Fee was classified within accrued legal and professional on the consolidated balance as of December 31, 2023, and was paid to Jefferies in January 2024 and no further amounts are payable to Jefferies under the Engagement Letter. The Debtors’ remaining assets following the closing of the LandX Asset Purchase Agreement consist largely of cash on hand, the claims and causes of action asserted in the Foxconn Litigation and that the Company may have against other parties, and the NOLs. Confirmation of the Chapter 11 Plan and Effective Date On September 1, 2023, the Debtors filed a Joint Plan of Lordstown Motors Corp. and Its Affiliated Debtors and a related proposed disclosure statement (the “Disclosure Statement”), which were amended and modified on each of October 24, 2023, October 29, 2023, and October 30, 2023. 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”). After obtaining Bankruptcy Court approval, the Debtors promptly began soliciting votes from their creditors and shareholders for approval of the Proposed Plan pursuant to the Solicitation and Voting Procedures. After the solicitation process was complete, the Debtors’ court-authorized claims and noticing agent (Kurtzman Carson Consultants LLC) submitted a declaration with the Bankruptcy Court reporting the outcome of voting on the Proposed Plan. The voting results reflected that Classes 3, 7, and 10 accepted the Proposed Plan and Class 8 (holders of 510(b) Claims, described below) rejected the Proposed Plan. No holders of claims in Class 9 voted on the Proposed Plan, and, accordingly, Class 9 was deemed eliminated from the Proposed Plan for purposes of voting and determining acceptance or rejection of the Proposed Plan by such class. Classes 1, 2, 4, 5, and 6 are unimpaired pursuant to the Proposed Plan and deemed to accept it. On January 31, 2024, the Debtors filed the Second Modified First Amended Joint Plan of Lordstown Motors Corp. and Its Affiliated Debtors . The modifications to the Proposed Plan since the previously filed version incorporated, among other things, a settlement (the “Ohio Securities Litigation Settlement”) of claims against the Debtors and certain directors and officers of the Debtors that were serving in such roles as of December 12, 2023 (the “Ohio Released Directors and Officers”), asserted in, or on the same or similar basis as those claims asserted in, the securities class action captioned In re Lordstown Motors Corp. Securities Litigation, Case No. 4:21-cv-00616 (DAR) (the “Ohio Securities Litigation”). The Proposed Plan also included, as a condition to confirmation of the Proposed Plan, that the SEC approve an offer of settlement (the “Offer”) submitted by the Debtors to resolve the proof of claim filed by the SEC against the Debtors, which, as previously disclosed, was filed in the face amount of million (the “SEC Claim”) as set forth in an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order (the “OIP”). We expect the Offer to be considered by the SEC in the near future. The Debtors have scheduled a hearing with the Bankruptcy Court on March 5, 2024, to consider confirmation of the Proposed Plan and will ask the Bankruptcy Court to enter an order confirming the Proposed Plan (the “Confirmation Order”), which among other things, would authorize the Debtors to effectuate the Proposed Plan, subject to satisfaction or waiver of the conditions precedent to the occurrence of Effective Date set forth in the Proposed Plan. If the Proposed Plan is confirmed, the Debtors will seek to have such conditions satisfied or waived in order for the Effective Date to occur promptly after entry of the Confirmation Order. The Bankruptcy Code generally provides that the confirmation of a Chapter 11 plan discharges a debtor from substantially all debts arising prior to consummation of such plan. Here, the United States Trustee has objected to the Debtors’ entitlement to a discharge. The objection is expected to be heard at the hearing to consider the Confirmation Order. If the United States Trustee’s objection is overruled, then, with few exceptions, all claims against the Debtors that arose prior to the consummation of the Proposed Plan (i) would be subject to compromise and/or treatment under the Proposed Plan and/or (ii) would be discharged in accordance with the Bankruptcy Code and the terms of the Proposed Plan. However, the outcome and timing of any claims not ultimately discharged is uncertain, and it is possible material costs, penalties, fines, sanctions, or injunctive relief could result from such a matter. The Proposed Plan, among other provisions: ● provides an orderly structure for distributions to holders of claims of creditors and treatment of equity interests of shareholders (“Interests”), ● incorporates the resolution of claims asserted in the Ohio Securities Litigation and, in connection with the Offer and OIP, by the SEC, ● preserves retained causes of action, including against Foxconn, to be pursued by the Post-Effective Date Debtors, ● seeks to preserve the value of the Company’s NOLs, by leaving preferred and common equity Interests in the Post-Effective Date Debtors in place, and instituting certain trading restrictions, and ● provides that the Post-Effective Date Debtors may engage in such business operations as may be determined by the New Board. Pursuant to, and subject to the confirmation and effectiveness of, the Proposed Plan, effective as of the Effective Date (i) an ombudsman (the “Claims Ombudsman”) will be appointed to oversee the administration of claims asserted against the Debtors by general unsecured creditors and (ii) a trustee (the “Litigation Trustee”) will be appointed to oversee a litigation trust (the “Litigation Trust”) formed pursuant to the Proposed Plan, which will be funded with certain retained causes of action of the Debtors, as will be determined by the Equity Committee. We cannot provide any assurances that we will have sufficient cash on hand to provide for the required payments to be made on the Effective Date or to satisfy the Claims Reserve, Post-Effective Date Debtor Amount (as defined below) or other reserves as may be required. Pursuant to, and subject to the confirmation and effectiveness of, the Proposed Plan, the Debtors will be allocated an amount (the “Post-Effective Date Debtor Amount”) which will be used to fund (a) the fees and expenses of the Post-Effective Date Debtors in performing their duties under the Proposed Plan, (b) expenses of the Claims Ombudsman appointed under the Proposed Plan and (c) future operational expenses of the Post-Effective Date Debtors, as permitted by the Proposed Plan. Pursuant to the Proposed Plan, the Post-Effective Date Amount may be increased from time to time after notice and an opportunity to object is provided to the Claims Ombudsman. All distributions under the Proposed Plan would come from all assets of the Debtors (including, without limitation, cash generated by or that constitutes the proceeds of assets acquired by the Post-Effective Date Debtors after the Effective Date), which include, but are not limited to, (i) cash on hand as of the Effective Date, (ii) proceeds from the sale of the Debtors’ assets, (iii) proceeds from causes of action retained by the Debtors pursuant to the Proposed Plan, and (iv) insurance proceeds received by the Post-Effective Date Debtors. Subject to the terms of the Proposed Plan, any distributions to classes of claims and Interests will generally be made in order of their respective priorities under the Bankruptcy Code. Specifically, the Proposed Plan provides for the distributions for the claims and Interests in order of priority as follows (with capitalized terms not otherwise defined having the meaning set forth in the Proposed Plan): ● Holders of Allowed Administrative Claims, Allowed Priority Tax Claims, and Allowed Other Priority Claims (each as defined in the Proposed Plan) are to be paid in full in cash before other payments can be made. ● Holders of Allowed Secured Claims (as defined in the Proposed Plan) would either retain their lien on the collateral, be paid in full in cash, or receive the collateral securing such Allowed Secured Claim. ● Holders of Allowed General Unsecured Claims would receive a pro rata share of the Debtors’ cash after all Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Other Priority Claims, and Allowed Secured Claims are satisfied and the Professional Fee Escrow Account (as defined in the Proposed Plan) is funded. If the Debtors have sufficient cash on hand to pay all Allowed General Unsecured Claims plus interest in full, then the holders of the Allowed General Unsecured Claims would also receive post-petition interest on their claim amount at the Federal Judgment Rate. If the Debtors do not have sufficient cash on hand to pay in full such post-petition interest, then the holders of the Allowed General Unsecured Claims would receive their pro rata share of any post-petition interest that can be paid. ● Allowed Intercompany Claims would be reinstated under the Proposed Plan. ● Allowed Foxconn Preferred Stock Interests would be reinstated, which includes that all outstanding shares of Preferred Stock will remain outstanding, subject to the terms of the New Organizational Documents (as defined below). In the event any distribution is to be made to holders of Allowed Foxconn Preferred Stock Interests, such distribution would be from cash remaining after the payment or reserving for the treatment under the Proposed Plan of Allowed Administrative Claims, Allowed Other Priority Claims, Allowed Secured Claims, Allowed General Unsecured Claims, and the Post-Effective Date Debtor Amount (“Post-Effective Date Debtor Cash”). In addition, any such distribution to Holders of the Allowed Foxconn Preferred Stock Interests would be subject to the backstop obligation under the Ohio Securities Litigation Settlement. ● Allowed Common Stock Interests would be reinstated, which includes that all outstanding shares of Class A common stock remain outstanding, subject to the terms of the New Organizational Documents (as defined below). ● Allowed claims relating to securities actions against the Debtors that are subordinated to General Unsecured Claims by section 510(b) of the Bankruptcy Code (other than section 510(b) Claims that are (i) subject to the Ohio Securities Litigation Settlement or (ii) are claims filed against the Debtors on the same or similar basis as those set forth in the Post-Petition Securities Action (as defined below) (such claims, the “RIDE Section 510(b) Claims”), would receive 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. ● Allowed claims, if any, 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), Chief Financial Officer (Adam Kroll), and Executive Chairman (Daniel Ninivaggi) in the Post-Petition Securities Action (defined below) may recover solely from available insurance coverage from applicable insurance policies until such insurance policies have been completely exhausted. The Debtors dispute the merits of any such claims. ● Allowed claims of the Ohio Securities Litigation Lead Plaintiff (defined below) would receive treatment pursuant to the Ohio Securities Litigation Settlement incorporated in the Proposed Plan (as described below). Pursuant to the Ohio Securities Litigation Settlement incorporated into the Proposed Plan, the Debtors would pay $3 million into escrow on the Effective Date for the benefit of the putative class members in the Ohio Securities Litigation. In addition, such putative class members would be entitled to receive a portion of any proceeds from litigation and other causes of action being retained by the Debtors following the Effective Date (net of actual reasonable costs incurred in prosecuting such retained causes of action) in an amount equal to the lesser of (a) million. Pursuant to the Proposed Plan and Confirmation Order, if entered, the Confirmation Order would constitute a preliminary approval of the Ohio Securities Litigation Settlement. The Ohio Securities Litigation Settlement would be effective on the Effective Date, and the Ohio Securities Litigation Lead Plaintiff, through counsel, would be responsible for pursuing final approval of the proposed settlement thereafter. Members of the putative settlement class would be provided with the option to op-out of the settlement class pursuant to the provisions of the Confirmation Order. In addition, pursuant to the Proposed Plan, a portion of any recoveries from litigation or other causes of action retained by the Debtors that would be owed to putative class members in connection with the Ohio Securities Litigation Settlement would be backstopped by Foxconn through Foxconn’s agreement to permit 16% of any payments made on account of Foxconn’s Preferred Stock, up to $5 million, to be paid into a reserve for the benefit of such class members. Further, the Proposed Plan contemplates, and includes as a condition to confirmation of the Proposed Plan, that the SEC approve the Offer submitted by the Debtors to resolve the SEC Claim as would be, if approved, set forth the OIP. We do not anticipate seeking confirmation of the Proposed Plan by the Bankruptcy Court until the Offer and OIP are mutually agreed with the SEC and binding. Subject to receipt of necessary approvals and satisfaction of each of the terms of the Offer and the OIP, the Proposed Plan provides that following confirmation and the effectiveness of the Proposed Plan incorporating the Ohio Securities Litigation Settlement, the SEC would withdraw the SEC Claim. Any potential settlement with the SEC or other parties for related securities claims or other matters is subject to significant uncertainty, there can be no assurance as to the timing or outcome of the resolution of these matters, and any settlement or claim amount remains subject to approval by the Bankruptcy Court and other regulatory approvals, as applicable. The Debtors cannot provide any assurances regarding what the Company’s total actual liabilities based on the SEC Claim, or other claims asserted in the Chapter 11 Cases, will be. On the Effective Date, the Proposed Plan would provide certain 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. As approved by the Bankruptcy Court, 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. In addition, pursuant to, and subject to the confirmation and effectiveness of, the Proposed Plan, the members of the settlement class in the Ohio Securities Litigation will also be releasing parties pursuant to the Proposed Plan and be bound by the release, discharge, and injunction provisions set forth in the Proposed Plan. The Proposed Plan remains subject to the entry of the Confirmation Order and it could change as a result of amendments, supplements, or other modifications to the Proposed Plan. The Proposed Plan is available, and any amendments, supplements and modifications will be made available, Plan is not binding on any party, including the Debtors, until it is consummated and the Effective Date has occurred. The Plan. The failure of the Proposed Plan to be confirmed and become effective, or any delay thereof, will significantly and adversely affect the likelihood of a Chapter 11 reorganization and could lead to a liquidation. Expected Operations Following the Effective Date If the ● the Foxconn Litigation and other retained causes of action of the Debtors would be preserved and may be prosecuted, ● 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, ● distributions to holders of allowed claims and allowed Interests would be made subject to the provisions of the Proposed Plan , and ● the Debtors will continue to conduct business and may enter into transactions, including business combinations, or otherwise, that could permit the Post-Effective Date Debtors to make use of the NOLs, if preserved. 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 will generate any value for the Company’s post-Effective Date equity holders or that any distributions will be made to such equity holders. See “Risk Factors”, including under the heading “Risks Related to Our Post-Effective Date Operations and Financial Condition.” On and after the Effective Date, pursuant to applicable non-bankruptcy law and subject to confirmation of the Proposed Plan, the Company and its subsidiaries will |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 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 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 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. Segment Information Our chief operating decision maker reviews financial information presented on an aggregated and consolidated basis, principally to make decisions about how to allocate resources and measure our performance. Accordingly, we have determined that we have one reportable and Liabilities Subject to Compromise As noted above, since filing the Chapter 11 petitions, the Company has operated as a 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 our current estimate of the potential allowed asserted pre-petition claims that are not fully secured and that have at least a possibility of not being repaid at the full claim amount 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 9 – Commitments and Contingencies for further detail. Reorganization Items Reorganization items of $31.2 million represent the expenses directly and incrementally resulting from the Chapter 11 Cases and are separately reported as Reorganization items in our statements of operations. Of this amount $29.5 million was paid in 2023 and is reflected in operating activities within the consolidated statement of cash flows and the remaining amount is included within accrued legal and professional on the consolidated balance sheet as of December 31,2023. Our reorganization costs are significant and currently represent the substantial majority of our ongoing total operating expenses. These costs are subject to uncertainties inherent in the bankruptcy process and we cannot predict the duration of the Chapter 11 Cases or the extent of the associated costs. Inventory and Inventory Valuation During the year ended December 31, 2023, the Company reclassified its inventory to assets held for sale in connection with our Chapter 11 bankruptcy proceedings. Substantially all of the Company’s inventory was specific to the production of the Endurance and was 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 recognized excess inventory reserves to adjust for inventory quantities in excess of anticipated Endurance production. As discussed above, the Company ceased production of the Endurance in June 2023. NRV and excess inventory charges totaled $24.1 million for the year ended December 31, 2023, and are recorded within Cost of Sales in the Company’s Consolidated Statement of Operations. No such charges were recognized for the year ended December 31, 2022, as the Company had not yet commenced commercial production of the Endurance. All of our Endurance inventory was sold pursuant to closing the LandX Asset Purchase Agreement in the fourth quarter of 2023. Property, plant and equipment During the year ended December 31, 2023, the Company reclassified its property, plant, and equipment to assets held for sale in connection with our Chapter 11 bankruptcy proceedings. Historically, property, plant, and equipment were stated at cost less accumulated depreciation. Depreciation was computed using the straight-line method over the estimated useful lives of the related assets. Upon retirement or sale, the cost and related accumulated depreciation were removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repair expenditures were expensed as incurred, while major improvements that increased functionality of the asset were capitalized and depreciated ratably to expense over the identified useful life. Long-lived assets, such as property, plant, and equipment were reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used was measured by a comparison of the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. Substantially all of our property, plant and equipment was sold pursuant to closing the LandX Asset Purchase Agreement in the fourth quarter of 2023. Valuation of Long-Lived and Intangible Assets Long-lived assets, including intangible assets, were 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 required 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 estimated 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 initiated 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 recognized was measured by the amount by which the carrying amount of the asset exceeded its fair value. Significant management judgment is required in this process. 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 The Company accounted for its warrants in accordance with the guidance contained in ASC Topic 815-40-15-7D and 7F under which the warrants did not meet the criteria for equity treatment and were recorded as liabilities at their fair value at each reporting period. Any change in fair value was recognized in the statement 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. Cash, cash equivalents and short-term investments Cash includes cash equivalents which are highly liquid investments that are readily convertible to cash. The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Our short-term investments consist primarily of liquid investment grade commercial paper, which are diversified among individual issuers, including non-U.S. governments, non-U.S. governmental agencies, supranational institutions, banks and corporations. The short-term investments are accounted for as available-for-sale securities. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities. The Company maintains its cash in bank deposit and securities accounts that exceed federally insured limits. We have not experienced significant losses in such accounts and management believes it is not exposed to material credit risk. Revenue Recognition Revenue was recognized when control of a promised good or service was transferred to a customer in an amount that reflects the consideration the Company expects to receive in exchange for the good or service. Our performance obligations were satisfied at a point in time. We recognized revenue when the customer confirmed acceptance of vehicle possession. Costs related to shipping and handling activities are a part of fulfillment costs and are therefore recognized under cost of sales. Our sales are final and do not have a right of return clause. There are limited instances of sales incentives offered to fleet management companies. The incentives offered are of an immaterial amount per vehicle, and there were no sales incentives recognized during 2023. The Company did not offer financing options therefore there is no impact on the collectability of revenue. As a result of the Chapter 11 Cases, the Debtors received authorization from the Bankruptcy Court to repurchase all vehicles that were in the possession of our customers. We have repurchased and destroyed all but Product Warranty The estimated costs related to product warranties were accrued at the time products were sold and are charged to cost of sales which included our best estimate of the projected costs to repair or replace items under warranties and recalls if identified. As a result of the Chapter 11 Cases, the Debtors received authorization from the Bankruptcy Court to repurchase all vehicles that were in the possession of our customers. We have repurchased and destroyed all but Prepaid Expenses Prepaid expenses include prepaid inventory component purchases, insurance, and information technology subscriptions and licenses. Early in the development stage of the Endurance, we made commitments to purchase inventory component volumes consistent with plans for higher productions and\or minimum order quantities required by suppliers. Given that our anticipated production volumes were not as anticipated and our decision to cease production in June 2023, and file for Chapter 11 bankruptcy protection, the Company determined it appropriate to impair prepaid expenses and recorded a charge of $6.0 million and $14.8 million for the years ended December 31, 2023, and 2022, respectively. Research and development costs The Company expenses research and development costs as they are incurred. Research and development costs consist primarily of personnel costs for engineering, testing and manufacturing costs, along with expenditures for prototype manufacturing, testing, validation, certification, contract and other professional services and costs. U ntil we commenced commercial release production of the Endurance, late in the third quarter of 2022, the costs associated with operating the Lordstown, Ohio manufacturing facility were included in R&D as they related to the design and construction of beta and pre-production vehicles, along with manufacturing readiness activities. For the year ended 2023, R&D activities also included the costs to support the sale of manufacturing assets and related technology during our bankruptcy process. Stock-based compensation The Company has adopted ASC Topic 718, Accounting for Stock-Based Compensation The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. Further, pursuant to ASU 2016-09 – Compensation – Stock Compensation (Topic 718) Income taxes Income taxes are recorded in accordance with ASC Topic 740, Income Taxes The Company accounts for uncertain tax positions in accordance with the provisions of ASC Topic 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense. 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 Financial Statements and related disclosures. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 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 (“ASC Topic 820”) for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes when inputs should be used in measuring fair value, is comprised of: (Level I) observable inputs such as quoted prices in active markets; (Level II) inputs other than quoted prices in active markets that are observable either directly or indirectly and (Level III) unobservable inputs for which there is little or no market data. The fair value hierarchy requires the use of observable market data when available in determining fair value. As of December 31, 2022, the Company had short-term investments which were commercial paper that are classified as Level II. The Company had no such investments as of December 31,2023. 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 December 31, 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. 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 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 June 30, 2023. The following table summarizes the net gain on changes in fair value related to the Private Warrants and the Foxconn Warrants: Year ended Year ended December 31, 2023 December 31, 2022 Private Warrants $ 254 $ 231 Foxconn Warrants 170 153 Net gain on changes in fair value $ 424 $ 384 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 using a Monte Carlo option pricing model and Black-Scholes option pricing model, respectively, that use observable and unobservable market data as inputs. Due to the fact that the fair value of the warrants were deemed to be zero at December 31, 2023, no valuations were performed as of December 31, 2023.The stock price volatility rate utilized was 90% for the valuation as of December 31, 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 4.237% for the valuation three year ended December 31, 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) December 31, 2023 Cash and cash equivalents $ 87,096 $ 87,096 $ — $ — 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 Gain on fair value adjustments included in earnings Balance at December 31, 2023 Private Warrants $ 254 — — (254) $ — Foxconn Warrants 170 — (170) — Non-Recurring Fair Value Measurements During the year ended December 31, 2023, the Company had assets held for sale that had been adjusted to their fair value as the carrying value exceeded the estimated fair value, less disposal costs. The categorization of the framework used to value the assets is Level 3 given the significant unobservable inputs used to determine fair value. As of December 31, 2023, assets held for sale were either disposed of or sold to LandX under the Asset Purchase Agreement which closed in October 2023. 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 | 12 Months Ended |
Dec. 31, 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 Property, plant and equipment, net, consisted of the following: December 31, 2023 December 31, 2022 Property, Plant & Equipment Tooling — 160,878 Construction in progress — 41,378 $ — $ 202,256 Less: Accumulated depreciation — (8,476) Total $ — $ 193,780 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. The Company 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, less disposal costs. , the Company recognized an impairment loss to write off its right of use assets as these assets were not assumed in the LandX Asset 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. 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. On October 27, 2023, we closed the transactions contemplated by 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 the purchaser assumed certain specified liabilities of the Company for a total purchase price of $ 10.2 million in cash. The Company evaluated the decision to pursue the asset sale 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”. 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. For the year ended December 31, 2023, the Company recognized property, plant and equipment impairment and right of use asset impairment charges of $133.5 million and $1.3 million, respectively. The Company recognized $95.6 million in property, plant and equipment charges for the year ended December 31, 2022. There was no right of use asset impairment charge recognized for the year ended December 31, 2022. For the year ended December 31, 2023, the Company recognized a net loss on the sale of property, plant and equipment and assets held for sale of $0.9 million. During the year ended December 31, 2022, the Company recognized a gain on the sale of property, plant and equipment of $100.9 million related to the sale of its manufacturing facility, certain equipment, and other assets located in Lordstown, Ohio. |
MEZZANINE EQUITY
MEZZANINE EQUITY | 12 Months Ended |
Dec. 31, 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 and other agreements, 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 9 – 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 date 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 $2.5 million in dividends for the year ended December 31, 2023, and had accrued $2.8 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 December 31, 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 EARNINGS PER
CAPITAL STOCK AND EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2023 | |
CAPITAL STOCK AND EARNINGS PER SHARE | |
CAPITAL STOCK AND LOSS PER SHARE | NOTE 6 — CAPITAL STOCK AND EARNINGS 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 Date. The Company filed the Amendment to the Charter on May 22, 2023, which provided that, at the Effective Date, every 15 We had approximately 16.0 million and 15.9 million a The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share and per share amounts): Year ended Year ended December 31, 2023 December 31, 2022 Numerator Net loss from continuing operations $ (343,066) $ (282,404) Less: Accrual of convertible preferred stock paid-in-kind dividends 2,494 261 Net loss attributable to common stockholders (345,560) (282,665) Denominator Weighted average number of common shares outstanding 15,945 13,908 Weighted average number of vested shares not yet issued — 4 Weighted average number of common shares - Basic 15,945 13,912 Dilutive common stock outstanding — — Weighted average number of common shares -Diluted 15,945 13,912 Net loss per share Net loss per share attributable to common stockholders, basic $ (21.67) $ (20.32) Net loss per share attributable to common stockholders, diluted $ (21.67) $ (20.32) The following outstanding potentially dilutive common stock equivalents have been excluded from the computation of diluted net loss per share attributable to common shareholders for the periods presented due to their anti-dilutive effect. Year ended Year ended December 31, 2023 December 31, 2022 Foxconn Preferred Stock 1,128 1,033 Share awards — 24 Foxconn Warrants 113 113 BGL Warrants — 110 Private Warrants 154 154 Total 1,395 1,434 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 could 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 fraudulent and tortious conduct as well as breaches of the Investment Agreement and other agreements, 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 9 – 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 other agreements, 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 operating 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 year ending December 31, 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 year ended December 31, 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, 2023, there were no shares issued to YA under the Equity Purchase Agreement. 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. During the year ended December 31, 2021, inclusive of the 0.4 million Commitment Shares, we issued 9.6 million shares to YA and received $49.4 million cash, net of equity issuance costs. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2023 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 7— STOCK-BASED COMPENSATION At the Company’s special meeting of stockholders held on October 22, 2020, the stockholders approved the 2020 Equity Incentive Plan (as amended, the “2020 Plan”). The aggregate number of additional shares authorized for issuance under the 2020 Plan was increased from 866,667 to 1.3 million at the 2022 annual meeting on March 21, 2022, and by an additional 533,333 shares at the annual meeting on May 22, 2023. The 2020 Plan provides for the grant of incentive stock options (“ISOs”) or non-qualified stock options (“NQSOs”), collectively “stock options”, restricted stock, restricted stock units (“RSUs”), stock appreciation rights, and performance stock units (“PSUs”), and performance shares intended to attract, retain, incentivize, and reward employees, directors or consultants. Legacy LMC’s 2019 Stock Option Plan (the “2019 Plan”) provided for the grant of stock options to purchase Legacy LMC common stock to officers, employees, directors, and consultants of Legacy LMC. Each Legacy LMC option from the 2019 Plan that was outstanding immediately prior to the Business Combination, whether vested or unvested, was converted into an option under the 2020 Plan to purchase a number of shares of Class A common stock (each such option, an “Exchanged Option”) equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Legacy LMC common stock subject to such Legacy LMC option immediately prior to the Business Combination and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such Legacy LMC option immediately prior to the consummation of the Business Combination, divided by (B) the Exchange Ratio. Except as specifically provided in the Business Combination Agreement, following the Business Combination, each Exchanged Option will continue to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Legacy LMC option immediately prior to the consummation of the Business Combination. All stock option activity was retroactively restated to reflect the exchanged options. Total stock-based compensation expense for the years ended December 31, 2023, 2022, and 2021, was $7.4 million, $18.8 million, and $18.7 million, respectively. The Company did not grant any awards under its stock plan during 2023. In early 2022, the Company notified employees it would modify awards to accelerate the vesting i n conjunction with obtaining full certification and homologation, that enabled us to begin selling the Endurance to customers, so long as it took place prior to December 31, 2022. As a result of the Company achieving the milestone in November 2022, we modified approximately The Severance Agreements the Company has entered into and is expected to enter into with its named executive officers provide that, subject to the confirmation and effectiveness of the Proposed Plan (a) any unvested RSUs and options held by the named executive officers as of the Effective Date of the Proposed Plan will vest in full, (b) PSUs held as of such date by Ms. Leonard and Mr. Kroll will vest in full, while those held by Messrs. Ninivaggi and Hightower will terminate, and (c) vested options will remain exercisable for three months following the named executive officer’s termination dates. Options The options are time-based and vest over the defined period in each individual grant agreement. The date at which the options are exercisable is defined in each agreement. The Board establishes the exercise price of the shares subject to an option at the time of the grant, provided, however, that (i) the exercise price of an option shall not be less than 100% of the estimated fair value of the shares on the date of grant, and (ii) the exercise price of an ISO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. Options generally become exercisable between one seven The Company recognizes compensation expense for the shares equal to the fair value of the option at the time of grant. There were no option grants during 2023. The expense is recognized on a straight-line basis over the vesting period of the awards. The weighted-average grant date fair value of stock options granted to employees in 2022, and 2021 was, $18.30 per share, and $86.40 per share, respectively. The estimated fair value of each stock option grant was computed using the following weighted average assumptions: December 31, December 31, December 31, 2023 2022 2021 Risk-free interest rate — % 2.85 % 0.39 % Expected term (life) of options (in years) — 3.11 3.86 Expected dividends — % — % — % Expected volatility — % 77 % 50 % The risk-free rate of return was based on market yields in effect on the date of each grant for United States Treasury debt securities with a maturity equal to the expected term of the award. The expected dividends are zero as the Company has not historically paid dividends. The expected life of options granted in 2022 was estimated based on historical option exercise data as compared to previous years when the expected term of the awards granted was assumed to be the contract life of the option. The expected volatility for 2022 and 2021 were estimated by management given Lordstown’s stock volatility. The activities of stock options are summarized as follows: (in thousands except for per option values and years) Weighted Average Aggregate Number of Exercise Weighted Average Intrinsic Value Options Price Term (Years) ($000's) Outstanding, December 31, 2020 358 $ 26.85 9.0 $ — Granted 370 220.80 Exercised (237) 26.85 Forfeited (41) 338.85 Outstanding, December 31, 2021 450 $ 158.40 5.18 $ — Granted 159 39.75 Exercised (73) 26.85 Forfeited (44) 234.15 Expired (97) 247.05 Outstanding, December 31, 2022 395 $ 106.80 7.44 $ — Granted — — Exercised — — Forfeited (95) 109.81 Expired (39) 190.92 Outstanding, December 31, 2023 261 $ 93.04 5.62 $ — Exercisable, December 31, 2023 167 $ 83.84 4.81 $ — *The aggregate intrinsic value is calculated as the difference between the market value of our Class A common stock as of December 31, 2023, and the respective exercise prices of the options. The market value as of December 31, 2023, was $1.20 per share, which is the closing sale price of our Class A common stock on December 31, 2023, as reported by the OTC Market. Further details of our exercisable stock options and stock options outstanding are summarized as follows: (in thousands except for per exercise prices and years) Options Outstanding Options Exercisable Weighted Average Weighted Average Weighted Average Range of Options Remaining Exercise Options Exercise Exercise Prices Outstanding Contractual Term Price Exercisable Price $24.60 — $26.55 6,444 2.89 $25.29 4,222 $25.66 $26.85 — $26.85 32,860 3.69 $26.85 32,860 $26.85 $33.75 — $35.85 23,843 3.46 $35.30 23,644 $35.29 $51.75 — $51.75 44,387 4.30 $51.75 22,057 $51.75 $61.65 — $81.75 18,949 7.08 $76.52 13,203 $76.40 $82.65 — $82.65 46,666 7.65 $82.65 31,112 $82.65 $85.35 — $85.35 36,846 7.86 $85.35 24,562 $85.35 $87.75 — $154.65 3,504 1.23 $129.58 3,304 $128.06 $171.15 — $171.15 33,333 7.45 $171.15 0 $0.00 $243.30 — $401.55 13,586 1.18 $400.05 12,421 $399.91 $24.60 $401.55 260,418 5.62 $93.04 167,385 $83.84 RSUs We calculate the grant date fair value of RSUs using the closing sale price of our Class A common stock on the grant date, as reported by the Nasdaq Global Select Market. The fair value of the unvested RSUs is recognized on a straight-line basis over the respective requisite service period. The activities of RSUs are summarized as follows: (in thousands except for fair values) Weighted Average Grant Date Aggregate Shares Fair Value Intrinsic Value Outstanding, December 31, 2021 417 $ 139.50 $ 313,665 Awarded 304 31.80 Released (262) 143.25 Forfeited (112) 137.85 Outstanding, December 31, 2022 347 $ 43.05 $ — Awarded 10 3.80 Released (33) 44.23 Forfeited (131) 29.63 Outstanding, December 31, 2023 193 $ 50.09 $ 231,308 *The aggregate intrinsic value is calculated using the market value of our Class A common stock as of December 31, 2023. The market value as of December 31, 2023, was $1.20 per share, which was the closing sale price of our Class A common stock on December 31, 2023, as reported by the Nasdaq Global Select Market. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 8 — INCOME TAXES The reconciliation of the statutory federal income tax with the provision for income taxes is as follows at December 31: (in thousands except for rate) 2023 Rate 2022 Rate Federal tax benefit as statutory rates $ (72,044) 21.0 % $ (59,305) (21.0) % Stock based compensation 4,073 (1.2) 731 0.2 Other permanent differences 57 — 77 — Research and development credit — — — — Other (4,515) 1.3 (1,947) (0.7) Rate difference (8,250) 2.4 — — State & local taxes (15,936) 4.6 (672) (0.1) Change in valuation allowance 96,615 (28.2) 61,115 21.64 Total tax benefit $ — — % $ — — % Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided against deferred tax assets when, based on all available evidence, it is considered more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. The Company cannot be certain that future taxable income will be sufficient to realize its deferred tax assets, and accordingly, a full valuation allowance has been provided on its deferred tax assets. Components of the Company's deferred tax assets are as follows at December 31: 2023 2022 Deferred tax assets: Share based compensation $ 1,391 $ 2,831 Intangible and other assets — 745 Inventory 11,059 — Fixed Assets — 19,193 Capitalized research and development 20,271 — 13,292 Accruals and other reserves 9,914 7,514 Net operating losses 233,493 135,948 Total deferred tax assets 276,128 179,523 Valuation allowance (276,128) (179,523) Total deferred tax assets, net of valuation allowance $ — $ — At December 31, 2023 and 2022, respectively, the Company had $993.2 million and $629.6 million of federal net operating losses that carry forward indefinitely. State and local net operating losses totaled $880.3 million and $372.2 million for 2023 and 2022, respectively. At end of the 2023, total state net operating losses of two |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 9 — 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 Part I – Item 1 – “Business – Voluntary Chapter 11 Proceedings.” Since filing the Chapter 11 Cases, the Company has operated as a 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 operating 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 1 – Description of Organization and Business Operations - Description of Business. The Company has been subject to extensive pending and threatened legal proceedings and has already incurred, and may to continue to incur, significant legal expenses in defending against these claims. The Company has also been seeking to use the tools of Chapter 11 to fully, finally, and efficiently resolve its contingent and other liabilities before the Bankruptcy Court and to pursue the Foxconn Litigation and has entered 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 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, 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 appointed an independent committee of directors to evaluate certain of these claims with the assistance and advice of special litigation counsel. The special litigation counsel recommended and the Board approved the release of certain officers and directors from the derivative claims as part of the Chapter 11 Cases, and the retention of the derivative claims against all other defendants in the Derivative Actions (defined below), as further discussed below. The Proposed Plan incorporates the Ohio Securities Litigation Settlement with respect to the resolution of the Ohio Securities Litigation and the Offer and OIP with respect to the SEC Claim, which take effect if and when the SEC approves the Offer and OIP and the Proposed Plan is confirmed by the Bankruptcy Court and becomes effective on the Effective Date, as discussed further below. The Bankruptcy Court established October 10, 2023, as the general bar date for all creditors (except governmental entities) to file their proof of claim or interest, and December 26, 2023, as the bar date for all governmental entities, which was extended until January 5, 2024, in the case of the SEC. On January 4, 2024, the SEC filed the SEC Claim with respect to the matter described under “SEC Matter” 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, as applicable, 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. Finally, pursuant to the Proposed Plan, the deadline for parties to file administrative claims against the Debtors (i.e., claims for costs and expenses of administration of the Debtors’ estates, including (i) the actual and necessary costs and expenses incurred after the Petition Date and through the Effective Date of preserving the estates and operating the businesses of the Debtors; (ii) professional fee claims; and (iii) fees and charges payable to the United States Trustee) is 30 days following the Effective Date. Claimants may have the ability to amend their proofs of claim that could significantly increase the total claims, beyond our estimates or reserve. Furthermore, proofs of claim have been filed asserting unliquidated damages or claims in respect of certain indemnification obligations or otherwise, that may be materially more than we estimate. indemnified directors and officers 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 any such claims. Pursuant to the terms of the Proposed Plan, and subject to its confirmation and effectiveness, a significant amount of the cash on hand as of the Effective Date will be used to settle outstanding claims against the Company, including litigation claims. Pursuant to the Bankruptcy Code, the Company is first required to pay all administrative claims in full. The Proposed Plan also requires that the Company establish the Claims Reserve for allowed and disputed claims of general unsecured creditors, inclusive of $3 million the Company would be required to pay into escrow on the Effective Date for the cash portion of the Ohio Securities Litigation Settlement. The aim of the Claims Reserve is to facilitate payment in full, with interest, of such creditors’ allowed claims as contemplated by the Proposed Plan (although there can be no assurance the Company will be able to pay such claims in full with interest). The initial amount of the Claims Reserve is currently anticipated to be approximately $45 million, as agreed upon by the Committees and approved by the Bankruptcy Court. The amount of the Claims Reserve is subject to change and could increase materially. The Claims Reserve could also be adjusted downward as claims are resolved or otherwise as a result of the claims resolution process, or as the Claims Ombudsman and the Post-Effective Date Debtors deem appropriate. Furthermore, the amount of the Claims Reserve will be limited to the amounts payable for allowed claims of general unsecured creditors but to the extent that the Claims Reserve is insufficient to pay general unsecured creditors in full with interest, such deficiency will be payable from all assets of the Post-Effective Date Debtors, as set forth in the Proposed Plan. There are additional liabilities, including but not limited to administrative claims and claims by holders of our Class A common stock and Preferred Stock among other potential classes of claimants whose claims, if allowed, will not be included in the Claims Reserve. The Bankruptcy Code generally provides that the confirmation of a Chapter 11 plan discharges a debtor from substantially all debts arising prior to consummation of such plan. Here, the United States Trustee has objected to the Debtors’ entitlement to a discharge. The objection is expected to be heard at the hearing to consider the Confirmation Order. If the United States Trustee’s objection is overruled, then, with few exceptions, all claims against the Debtors that arose prior to the consummation of the Proposed Plan (i) would be subject to compromise and/or treatment under the Proposed Plan and/or (ii) would be discharged in accordance with the Bankruptcy Code and the terms of the Proposed Plan. However, the outcome and timing of any claims not ultimately discharged is uncertain, and it is possible material costs, penalties, fines, sanctions, or injunctive relief could result from such a matter. Pursuant to the Proposed Plan, (which includes certain exceptions) effective as of the Effective Date (i) the Claims Ombudsman will be appointed to oversee the administration of claims asserted against the Debtors by general unsecured creditors and (ii) the Litigation Trustee will be appointed to oversee the Litigation Trust, which will be funded with certain retained causes of action of the Debtors, as will be determined by the Equity Committee. 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. Specifically, the Proposed Plan provides for the distributions for the claims and Interests in order of priority as follows: ● Holders of Allowed Administrative Claims, Allowed Priority Tax Claims, and Allowed Other Priority Claims are to be paid in full in cash before other payments can be made. ● Holders of Allowed Secured Claims would either retain their lien on the collateral, be paid in full in cash, or receive the collateral securing such Allowed Secured Claim. ● Holders of Allowed General Unsecured Claims would receive a pro rata share of the Debtors’ cash after all Allowed Administrative Claims, Allowed Priority Tax Claims, Allowed Other Priority Claims, and Allowed Secured Claims are satisfied and the Professional Fee Escrow Account is funded. If the Debtors have sufficient cash on hand to pay all Allowed General Unsecured Claims plus interest in full, then the holders of the Allowed General Unsecured Claims would also receive post-petition interest on their claim amount at the Federal Judgment Rate. If the Debtors do not have sufficient cash on hand to pay in full such post-petition interest, then the holders of the Allowed General Unsecured Claims would receive their pro rata share of any post-petition interest that can be paid. ● Allowed Intercompany Claims would be reinstated under the Proposed Plan. ● Allowed Foxconn Preferred Stock Interests would be reinstated, which includes that all outstanding shares of Preferred Stock will remain outstanding, subject to the terms of the New Organizational Documents. In the event any distribution is to be made to holders of Allowed Foxconn Preferred Stock Interests, such distribution would be from the Post-Effective Date Debtor Cash. In addition, any such distribution to Holders of the Allowed Foxconn Preferred Stock Interests would be subject to the backstop obligation under the Ohio Securities Litigation Settlement. ● Allowed Common Stock Interests would be reinstated, which includes that all outstanding shares of Class A common stock remain outstanding, subject to the terms of the New Organizational Documents. ● Allowed claims relating to securities actions against the Debtors that are subordinated to General Unsecured Claims by Section 510(b) of the Bankruptcy Code (other than Section 510(b) Claims that are (i) subject to the Ohio Securities Litigation Settlement or (ii) the RIDE Section 510(b) Claims would receive 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. ● Allowed claims, if any, against the Debtors on the same or similar basis as those set forth in the Post-Petition Securities Action may recover solely from available insurance coverage from applicable insurance policies until such insurance policies have been completely exhausted. The Debtors dispute the merits of any such claims. ● Allowed claims of the Ohio Securities Litigation Lead Plaintiff would receive treatment pursuant to the Ohio Securities Litigation Settlement incorporated in the Proposed Plan. As of December 31, 2023, we had recorded $30.5 million as “Liabilities subject to compromise,” in the accompanying December 31, 2023 Consolidated Balance Sheet, which reflects, in accordance with ASC 852, our current estimate of the potential allowed asserted pre-petition claims that are not fully secured and that have at least a possibility of not being repaid at the full claim amount. Under the Proposed Plan, the Company and the Committees have agreed to establish an initial $45 million Claims Reserve for the settlement of General Unsecured Claims. The Claims Reserve may be increased or decreased during the claims resolution process. The ultimate settlement of these liabilities remains subject to further analysis and is subject to the claims resolution process included in the Proposed Plan. The actual amount of allowed General Unsecured Claims may be materially different than the amount recorded by the Company as of December 31, 2023, or the initial Claim Reserve. The amount recorded is 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. With respect to the Ohio Securities Litigation, 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) of 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 December 31, 2023, by the Company with respect to these securities actions do not reflect this impact of the Bankruptcy Code. The plaintiffs in the Ohio Securities Litigation have reached a settlement with the Debtors, which is documented through the treatment of Ohio Securities Litigation Claims under the Proposed Plan, which settlement remains subject to Bankruptcy Court approval and effectiveness of the Proposed Plan. “Liabilities subject to compromise” at December 31, 2023, consisted of the following: (in thousands) December 31, 2023 Accrued vendor claims 23,967 Accrued legal liabilities 6,500 Liabilities subject to compromise $ 30,467 Within Liabilities subject to compromise, as of December 31, 2023, the Company had accruals of $6.5 million for certain of its outstanding legal proceedings and potential related obligations, including the stockholder and securities actions, government claims and indemnification obligations described in more detail in Note 9 – Commitments and Contingencies and may or may not be offset by insurance. As of December 31, 2022, these amounts totaled $35.9 million and were recorded within accrued and other liabilities. The accruals do not include potential legal fees and other costs or obligations that may be incurred by the Company in connection with such matters. The amount accrued as of December 31, 2023, reflects the settlement terms contained in the Proposed Plan for the Ohio Securities Litigation and the Offer and OIP with the SEC, as well as the indemnification claims that are subject to proofs of claim filed by the defendants in the Delaware Class Action Litigation. The accrual does not include potential legal fees and other costs that may be incurred by the Company in connection with such matters. Upon effectiveness of the Proposed Plan, and the releases provided to the Company as part of the Proposed Plan and the SEC’s obligation to withdraw its proof of claim (for which the Company has been advised that the conditions thereto would be satisfied), the Company currently expects its obligations for these matters to be limited to the $3 million it will have contributed into escrow for the Ohio Securities Litigation and a potential indemnification obligation claim of $3.5 million (excluding potential legal fees); provided, however, (a) the Company has not determined whether it will object to some or all of the indemnification claims and these claims are subject to dispute as part of the Chapter 11 claims administration process (b) the Company potentially could have indemnification obligations to individual defendants not released under the settlement (as the treatment of such claims and their amounts are not known, the Company has not recorded any reserve with respect to such obligations), and (c) the failure to obtain the SEC and Bankruptcy Court approvals in a timely manner would have a material adverse effect on the Company and its ability to reorganize under Chapter 11 of the Bankruptcy Code. Additional potential recovery by the plaintiffs in the Ohio Securities Litigation would occur if proceeds are received from litigation and other causes of action being retained by the Debtors following the Effective Date (net of actual reasonable costs incurred in prosecuting such retained causes of action) in an amount of up to $7 million; however, the potential outcome of such matters, and whether any proceeds will be received, cannot be predicted at this time. With respect to other current and potential legal claims and obligations, the Company continues to evaluate the potential resolution and impact of these matters in light of the applicable provisions of the Bankruptcy Code, indemnification rights and the terms of the Proposed Plan (which in some cases may limit any recovery to available insurance coverage), ongoing discussions with the parties to such matters and other stakeholders, or the actual amounts that may be asserted in claims submitted in the Chapter 11 Cases 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. Upon the Effective Date, the Proposed Plan would provide certain 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. If approved by the Bankruptcy Court and the Proposed Plan becomes effective, 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 would also be binding on related parties to those described in (a) and (b) ( e.g. Although we have established the reserves described above to pay allowed claims under the Proposed Plan, and although we intend to pay all allowed claims in full with interest as provided by the Proposed Plan, there can be no assurance that the Claims Reserve, the Post-Effective Date Debtors’ other assets or the Post-Effective Date Debtor Amount will be sufficient to do so given the uncertainties and risks of the claims dispute and settlement process. There can be no assurance regarding the amount of claims allowed for distributions under the The Claims Reserve could also be adjusted downward as claims are resolved or otherwise as a result of the claims resolution process. Insurance Matters The Company was notified by its primary insurer under the 2020 D&O Program that the insurer is taking the position that no coverage is available for the Ohio Securities Litigation, various shareholder derivative actions, 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 primary insurer under the 2020 D&O Program 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 matters , which have been significant. The insurers in the Side A D&O portion of the , providing coverage for individual directors and officers in derivative actions and certain other situations , have denied coverage, which 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. The limited insurance that we carry has expired, in the case of product liability coverage, and other 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 “Karma 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 Karma Settlement Agreement and the Debtors made the Karma Settlement Payment. Ohio Securities Class Litigation 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 (the “Ohio Securities Litigation Lead Plaintiff”) and Labaton Sucharow LLP as lead plaintiff’s counsel. On September 10, 2021, the Ohio Securities Litigation 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 was 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. 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. Pursuant to the Ohio Securities Litigation Settlement incorporated into the Proposed Plan, if the Proposed Plan becomes effective, the Debtors will pay $3 million into escrow on the Effective Date for the benefit of the putative class members in the Ohio Securities Litigation. In addition, such putative class members would be entitled to receive a portion of any proceeds from litigation and other causes of action being retained by the Debtors following the Effective Date (net of actual reasonable costs incurred in prosecuting such retained causes of action) in an amount equal to million. Pursuant to the Proposed Plan and upon receipt of the Confirmation Order, the Confirmation Order would constitute a preliminary approval of the Ohio Securities Litigation Settlement. The Ohio Securities Litigation Settlement would be effective on the Effective Date, and the Ohio Securities Litigation Lead Plaintiff, through counsel, would be responsible for pursuing final approval of the proposed settlement thereafter. Members of the putative settlement class would be provided with the option to op-out of the settlement class pursuant to the provisions of the Confirmation Order. In addition, pursuant to the Proposed Plan, a portion of any recoveries from litigation or other causes of action retained by the Debtors that would be owed to putative class members in connection with the Ohio Securities Litigation Settlement would be backstopped by Foxconn through Foxconn’s agreement to permit 16% of any payments made on account of Foxconn’s Preferred Stock up to $5 million to be paid into a reserve for the benefit of such class members. There is no guarantee that the Proposed Plan, which incorporates the Ohio Securities Litigation Settlement, will be confirmed by the Bankruptcy Court or become effective. To the extent that the Ohio Securities Litigation Settlement does not become effective, 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 Sarabia v. Burns, et al. In re Lordstown Motors Corp. Shareholder Derivative Litigation 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 Ohio Securities Litigation 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 Delaware District 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 reinst |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 10 — 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 9 – 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. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates in Financial Statement Preparation | Use of Estimates in Financial Statement Preparation The preparation of financial statements in accordance with GAAP 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 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. |
Segment Information | Segment Information Our chief operating decision maker reviews financial information presented on an aggregated and consolidated basis, principally to make decisions about how to allocate resources and measure our performance. Accordingly, we have determined that we have one reportable and |
Liabilities Subject to Compromise | Liabilities Subject to Compromise As noted above, since filing the Chapter 11 petitions, the Company has operated as a 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 our current estimate of the potential allowed asserted pre-petition claims that are not fully secured and that have at least a possibility of not being repaid at the full claim amount 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 9 – Commitments and Contingencies for further detail. |
Reorganization Items | Reorganization Items Reorganization items of $31.2 million represent the expenses directly and incrementally resulting from the Chapter 11 Cases and are separately reported as Reorganization items in our statements of operations. Of this amount $29.5 million was paid in 2023 and is reflected in operating activities within the consolidated statement of cash flows and the remaining amount is included within accrued legal and professional on the consolidated balance sheet as of December 31,2023. Our reorganization costs are significant and currently represent the substantial majority of our ongoing total operating expenses. These costs are subject to uncertainties inherent in the bankruptcy process and we cannot predict the duration of the Chapter 11 Cases or the extent of the associated costs. |
Inventory and Inventory Valuation | Inventory and Inventory Valuation During the year ended December 31, 2023, the Company reclassified its inventory to assets held for sale in connection with our Chapter 11 bankruptcy proceedings. Substantially all of the Company’s inventory was specific to the production of the Endurance and was 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 recognized excess inventory reserves to adjust for inventory quantities in excess of anticipated Endurance production. As discussed above, the Company ceased production of the Endurance in June 2023. NRV and excess inventory charges totaled $24.1 million for the year ended December 31, 2023, and are recorded within Cost of Sales in the Company’s Consolidated Statement of Operations. No such charges were recognized for the year ended December 31, 2022, as the Company had not yet commenced commercial production of the Endurance. All of our Endurance inventory was sold pursuant to closing the LandX Asset Purchase Agreement in the fourth quarter of 2023. |
Property, plant and equipment | Property, plant and equipment During the year ended December 31, 2023, the Company reclassified its property, plant, and equipment to assets held for sale in connection with our Chapter 11 bankruptcy proceedings. Historically, property, plant, and equipment were stated at cost less accumulated depreciation. Depreciation was computed using the straight-line method over the estimated useful lives of the related assets. Upon retirement or sale, the cost and related accumulated depreciation were removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repair expenditures were expensed as incurred, while major improvements that increased functionality of the asset were capitalized and depreciated ratably to expense over the identified useful life. Long-lived assets, such as property, plant, and equipment were reviewed for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of assets to be held and used was measured by a comparison of the carrying amount of an asset or asset group to estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset or asset group exceeds the fair value of the asset or asset group. Substantially all of our property, plant and equipment was sold pursuant to closing the LandX Asset Purchase Agreement in the fourth quarter of 2023. |
Valuation of Long-Lived and Intangible Assets | Valuation of Long-Lived and Intangible Assets Long-lived assets, including intangible assets, were 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 required 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 estimated 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 initiated 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 recognized was measured by the amount by which the carrying amount of the asset exceeded its fair value. Significant management judgment is required in this process. 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 The Company accounted for its warrants in accordance with the guidance contained in ASC Topic 815-40-15-7D and 7F under which the warrants did not meet the criteria for equity treatment and were recorded as liabilities at their fair value at each reporting period. Any change in fair value was recognized in the statement 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. |
Cash, cash equivalents and short-term investments | Cash, cash equivalents and short-term investments Cash includes cash equivalents which are highly liquid investments that are readily convertible to cash. The Company considers all liquid investments with original maturities of three months or less to be cash equivalents. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Our short-term investments consist primarily of liquid investment grade commercial paper, which are diversified among individual issuers, including non-U.S. governments, non-U.S. governmental agencies, supranational institutions, banks and corporations. The short-term investments are accounted for as available-for-sale securities. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities. The Company maintains its cash in bank deposit and securities accounts that exceed federally insured limits. We have not experienced significant losses in such accounts and management believes it is not exposed to material credit risk. |
Revenue Recognition | Revenue Recognition Revenue was recognized when control of a promised good or service was transferred to a customer in an amount that reflects the consideration the Company expects to receive in exchange for the good or service. Our performance obligations were satisfied at a point in time. We recognized revenue when the customer confirmed acceptance of vehicle possession. Costs related to shipping and handling activities are a part of fulfillment costs and are therefore recognized under cost of sales. Our sales are final and do not have a right of return clause. There are limited instances of sales incentives offered to fleet management companies. The incentives offered are of an immaterial amount per vehicle, and there were no sales incentives recognized during 2023. The Company did not offer financing options therefore there is no impact on the collectability of revenue. As a result of the Chapter 11 Cases, the Debtors received authorization from the Bankruptcy Court to repurchase all vehicles that were in the possession of our customers. We have repurchased and destroyed all but |
Product Warranty | Product Warranty The estimated costs related to product warranties were accrued at the time products were sold and are charged to cost of sales which included our best estimate of the projected costs to repair or replace items under warranties and recalls if identified. As a result of the Chapter 11 Cases, the Debtors received authorization from the Bankruptcy Court to repurchase all vehicles that were in the possession of our customers. We have repurchased and destroyed all but |
Prepaid Expenses | Prepaid Expenses Prepaid expenses include prepaid inventory component purchases, insurance, and information technology subscriptions and licenses. Early in the development stage of the Endurance, we made commitments to purchase inventory component volumes consistent with plans for higher productions and\or minimum order quantities required by suppliers. Given that our anticipated production volumes were not as anticipated and our decision to cease production in June 2023, and file for Chapter 11 bankruptcy protection, the Company determined it appropriate to impair prepaid expenses and recorded a charge of $6.0 million and $14.8 million for the years ended December 31, 2023, and 2022, respectively. |
Research and development costs | Research and development costs The Company expenses research and development costs as they are incurred. Research and development costs consist primarily of personnel costs for engineering, testing and manufacturing costs, along with expenditures for prototype manufacturing, testing, validation, certification, contract and other professional services and costs. U ntil we commenced commercial release production of the Endurance, late in the third quarter of 2022, the costs associated with operating the Lordstown, Ohio manufacturing facility were included in R&D as they related to the design and construction of beta and pre-production vehicles, along with manufacturing readiness activities. For the year ended 2023, R&D activities also included the costs to support the sale of manufacturing assets and related technology during our bankruptcy process. |
Stock-based compensation | Stock-based compensation The Company has adopted ASC Topic 718, Accounting for Stock-Based Compensation The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. Further, pursuant to ASU 2016-09 – Compensation – Stock Compensation (Topic 718) |
Income taxes | Income taxes Income taxes are recorded in accordance with ASC Topic 740, Income Taxes The Company accounts for uncertain tax positions in accordance with the provisions of ASC Topic 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes any interest and penalties accrued related to unrecognized tax benefits as income tax expense. |
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 Financial Statements and related disclosures. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
FAIR VALUE MEASUREMENTS | |
Summary of the net gain on changes in fair value related to warrants | Year ended Year ended December 31, 2023 December 31, 2022 Private Warrants $ 254 $ 231 Foxconn Warrants 170 153 Net gain on changes in fair value $ 424 $ 384 |
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) December 31, 2023 Cash and cash equivalents $ 87,096 $ 87,096 $ — $ — 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 Gain on fair value adjustments included in earnings Balance at December 31, 2023 Private Warrants $ 254 — — (254) $ — Foxconn Warrants 170 — (170) — |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE | |
Summary of property, plant and equipment, net | December 31, 2023 December 31, 2022 Property, Plant & Equipment Tooling — 160,878 Construction in progress — 41,378 $ — $ 202,256 Less: Accumulated depreciation — (8,476) Total $ — $ 193,780 |
CAPITAL STOCK AND EARNINGS PE_2
CAPITAL STOCK AND EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
CAPITAL STOCK AND EARNINGS PER SHARE | |
Schedule of computation of basic and diluted loss per share | The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except per share and per share amounts): Year ended Year ended December 31, 2023 December 31, 2022 Numerator Net loss from continuing operations $ (343,066) $ (282,404) Less: Accrual of convertible preferred stock paid-in-kind dividends 2,494 261 Net loss attributable to common stockholders (345,560) (282,665) Denominator Weighted average number of common shares outstanding 15,945 13,908 Weighted average number of vested shares not yet issued — 4 Weighted average number of common shares - Basic 15,945 13,912 Dilutive common stock outstanding — — Weighted average number of common shares -Diluted 15,945 13,912 Net loss per share Net loss per share attributable to common stockholders, basic $ (21.67) $ (20.32) Net loss per share attributable to common stockholders, diluted $ (21.67) $ (20.32) |
Schedule of computation of diluted net loss per share to common shareholders for their anti-dilutive effect | Year ended Year ended December 31, 2023 December 31, 2022 Foxconn Preferred Stock 1,128 1,033 Share awards — 24 Foxconn Warrants 113 113 BGL Warrants — 110 Private Warrants 154 154 Total 1,395 1,434 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
STOCK-BASED COMPENSATION | |
Schedule of fair value assumptions | December 31, December 31, December 31, 2023 2022 2021 Risk-free interest rate — % 2.85 % 0.39 % Expected term (life) of options (in years) — 3.11 3.86 Expected dividends — % — % — % Expected volatility — % 77 % 50 % |
Schedule of stock option activity | The activities of stock options are summarized as follows: (in thousands except for per option values and years) Weighted Average Aggregate Number of Exercise Weighted Average Intrinsic Value Options Price Term (Years) ($000's) Outstanding, December 31, 2020 358 $ 26.85 9.0 $ — Granted 370 220.80 Exercised (237) 26.85 Forfeited (41) 338.85 Outstanding, December 31, 2021 450 $ 158.40 5.18 $ — Granted 159 39.75 Exercised (73) 26.85 Forfeited (44) 234.15 Expired (97) 247.05 Outstanding, December 31, 2022 395 $ 106.80 7.44 $ — Granted — — Exercised — — Forfeited (95) 109.81 Expired (39) 190.92 Outstanding, December 31, 2023 261 $ 93.04 5.62 $ — Exercisable, December 31, 2023 167 $ 83.84 4.81 $ — *The aggregate intrinsic value is calculated as the difference between the market value of our Class A common stock as of December 31, 2023, and the respective exercise prices of the options. The market value as of December 31, 2023, was $1.20 per share, which is the closing sale price of our Class A common stock on December 31, 2023, as reported by the OTC Market. |
Schedule of range of exercise prices | Further details of our exercisable stock options and stock options outstanding are summarized as follows: (in thousands except for per exercise prices and years) Options Outstanding Options Exercisable Weighted Average Weighted Average Weighted Average Range of Options Remaining Exercise Options Exercise Exercise Prices Outstanding Contractual Term Price Exercisable Price $24.60 — $26.55 6,444 2.89 $25.29 4,222 $25.66 $26.85 — $26.85 32,860 3.69 $26.85 32,860 $26.85 $33.75 — $35.85 23,843 3.46 $35.30 23,644 $35.29 $51.75 — $51.75 44,387 4.30 $51.75 22,057 $51.75 $61.65 — $81.75 18,949 7.08 $76.52 13,203 $76.40 $82.65 — $82.65 46,666 7.65 $82.65 31,112 $82.65 $85.35 — $85.35 36,846 7.86 $85.35 24,562 $85.35 $87.75 — $154.65 3,504 1.23 $129.58 3,304 $128.06 $171.15 — $171.15 33,333 7.45 $171.15 0 $0.00 $243.30 — $401.55 13,586 1.18 $400.05 12,421 $399.91 $24.60 $401.55 260,418 5.62 $93.04 167,385 $83.84 |
Schedule of RSUs activity | The activities of RSUs are summarized as follows: (in thousands except for fair values) Weighted Average Grant Date Aggregate Shares Fair Value Intrinsic Value Outstanding, December 31, 2021 417 $ 139.50 $ 313,665 Awarded 304 31.80 Released (262) 143.25 Forfeited (112) 137.85 Outstanding, December 31, 2022 347 $ 43.05 $ — Awarded 10 3.80 Released (33) 44.23 Forfeited (131) 29.63 Outstanding, December 31, 2023 193 $ 50.09 $ 231,308 *The aggregate intrinsic value is calculated using the market value of our Class A common stock as of December 31, 2023. The market value as of December 31, 2023, was $1.20 per share, which was the closing sale price of our Class A common stock on December 31, 2023, as reported by the Nasdaq Global Select Market. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
Schedule of reconciliation of the statutory federal income tax | 2023 Rate 2022 Rate Federal tax benefit as statutory rates $ (72,044) 21.0 % $ (59,305) (21.0) % Stock based compensation 4,073 (1.2) 731 0.2 Other permanent differences 57 — 77 — Research and development credit — — — — Other (4,515) 1.3 (1,947) (0.7) Rate difference (8,250) 2.4 — — State & local taxes (15,936) 4.6 (672) (0.1) Change in valuation allowance 96,615 (28.2) 61,115 21.64 Total tax benefit $ — — % $ — — % |
Schedule of deferred tax assets | 2023 2022 Deferred tax assets: Share based compensation $ 1,391 $ 2,831 Intangible and other assets — 745 Inventory 11,059 — Fixed Assets — 19,193 Capitalized research and development 20,271 — 13,292 Accruals and other reserves 9,914 7,514 Net operating losses 233,493 135,948 Total deferred tax assets 276,128 179,523 Valuation allowance (276,128) (179,523) Total deferred tax assets, net of valuation allowance $ — $ — |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of liability subject to compromise | (in thousands) December 31, 2023 Accrued vendor claims 23,967 Accrued legal liabilities 6,500 Liabilities subject to compromise $ 30,467 |
DESCRIPTION OF ORGANIZATION A_2
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||||||||||||||||||||
Jan. 04, 2024 USD ($) | Oct. 27, 2023 USD ($) | May 24, 2023 | May 22, 2023 | Apr. 21, 2023 $ / shares | Nov. 22, 2022 USD ($) $ / shares | Nov. 22, 2022 USD ($) $ / shares | Nov. 22, 2022 USD ($) $ / shares shares | Nov. 22, 2022 USD ($) D $ / shares | Nov. 22, 2022 USD ($) tranche $ / shares | Nov. 07, 2022 USD ($) $ / shares shares | May 11, 2022 | Nov. 10, 2021 USD ($) | Jul. 23, 2021 USD ($) shares | Oct. 31, 2021 USD ($) shares | Dec. 31, 2023 USD ($) D $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) shares | Dec. 30, 2022 USD ($) | Aug. 17, 2022 $ / shares | May 07, 2022 USD ($) | Apr. 15, 2022 USD ($) | |
Business Acquisition | ||||||||||||||||||||||
Number of days for filing claim arising | D | 30 | |||||||||||||||||||||
Amount of claim | $ 45,000 | |||||||||||||||||||||
Net operating loss carryforwards | 993,200 | $ 629,600 | ||||||||||||||||||||
Issuance of Class A Common stock | 2,114 | |||||||||||||||||||||
Convertible preferred shares, shares issued | shares | 300,000 | |||||||||||||||||||||
Net loss | 343,066 | 282,404 | ||||||||||||||||||||
Research and development expenses | $ 33,343 | 107,816 | ||||||||||||||||||||
Proceeds from stock issuance | $ 2,114 | |||||||||||||||||||||
Exchange ratio | 0.067 | |||||||||||||||||||||
Common stock, par value | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||||||||||||||||||
cash, cash equivalents and short-term investments | $ 87,100 | |||||||||||||||||||||
Accumulated deficit | 1,170,279 | $ 827,213 | ||||||||||||||||||||
Aggregate liquidation preference | 30,000 | |||||||||||||||||||||
Claims Reserve | 45,000 | |||||||||||||||||||||
Domestic Tax Authority [Member] | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Net operating loss carryforwards | 993,200 | |||||||||||||||||||||
State and local | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Net operating loss carryforwards | 880,300 | 372,200 | ||||||||||||||||||||
Class Action Lawsuits Alleging Securities Laws Violations | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Accrued contingency amount | 3,000 | |||||||||||||||||||||
Claims recognized | $ 3,000 | |||||||||||||||||||||
Percentage of net proceeds | 25% | |||||||||||||||||||||
Retained amount from debtor reorganizations | $ 7,000 | |||||||||||||||||||||
LandX asset purchase agreement | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Total purchase price | $ 10,200 | |||||||||||||||||||||
Transaction Fee | $ 2,000 | |||||||||||||||||||||
Common Stock | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Issuance of Class A Common stock | $ 70,000 | $ 1 | ||||||||||||||||||||
Stock issued in aggregate purchase | shares | 74,000 | |||||||||||||||||||||
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 | |||||||||||||||||||||
Foxconn | Class Action Lawsuits Alleging Securities Laws Violations | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Amount paid into debtors reserve (in percentage) | 16% | |||||||||||||||||||||
Amount paid into debtors reserve | $ 5,000 | |||||||||||||||||||||
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 | |||||||||||||||||||||
Aggregate liquidation preference | $ 30,000 | $ 30,000 | $ 30,000 | $ 30,000 | $ 30,000 | |||||||||||||||||
Equity Funding Agreement With Y A | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Issuance of Class A Common stock | $ 40,400 | $ 40,400 | $ 49,400 | |||||||||||||||||||
Aggregate value of shares for issuance | $ 400,000 | |||||||||||||||||||||
Stock issued in aggregate purchase | shares | 400,000 | 0 | 17,500,000 | 9,600,000 | ||||||||||||||||||
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 | ||||||||||||||||||||||
Preferred stock, par value | $ / shares | $ 0.0001 | |||||||||||||||||||||
Aggregate value of shares for issuance | $ 100,000 | |||||||||||||||||||||
Proceeds from stock issuance | 47,300 | |||||||||||||||||||||
Investment agreement | Foxconn | Common Stock | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Issuance of Class A Common stock | 22,700 | 70,000 | ||||||||||||||||||||
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 | |||||||||||||||||||||
Shares issued price per share | $ / shares | $ 26.40 | $ 26.40 | $ 26.40 | $ 26.40 | $ 26.40 | |||||||||||||||||
Investment agreement | Foxconn | Preferred stock | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Issuance of Class A Common stock | $ 30,000 | |||||||||||||||||||||
Proceeds from issuance of preferred stock | 30,000 | |||||||||||||||||||||
Convertible preferred shares, shares issued | shares | 300,000 | |||||||||||||||||||||
Aggregate value of shares for issuance | $ 100,000 | |||||||||||||||||||||
Shares issued price per share | $ / shares | $ 100 | $ 100 | $ 100 | 100 | $ 100 | $ 100 | ||||||||||||||||
Number of tranches of share issue | 2 | 2 | ||||||||||||||||||||
Scenario, Plan | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Warrants to purchase common stock | shares | 130,000 | |||||||||||||||||||||
Warrant exercise price | $ / shares | $ 157.50 | |||||||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Maximum | Foxconn | Preferred stock | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Convertible preferred shares, shares issued | shares | 700,000 | |||||||||||||||||||||
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 | $ 100 | $ 100 | $ 100 | |||||||||||||||||
Scenario, EV Program Milestone Achievement [Member] | Investment agreement | Maximum | Foxconn | Preferred stock | ||||||||||||||||||||||
Business Acquisition | ||||||||||||||||||||||
Convertible preferred shares, shares issued | shares | 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 | ||||||||||||||||||||||
Amount of claim | $ 45,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | |
Dec. 31, 2023 USD ($) segment item | Dec. 31, 2022 USD ($) | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Inventory Adjustments | $ 24,105,000 | $ 48,529,000 |
Impairment of prepaid and assets | 6,000,000 | 14,800,000 |
Sales incentives | 0 | |
Impairment charges | $ 133,500,000 | $ 95,600,000 |
Number of reportable segments | segment | 1 | |
Number of operating segments | segment | 1 | |
Reorganization items | $ 31,206,000 | |
Payment for debtor | $ 29,500,000 | |
Number of Vehicles Repurchased | item | 2 | |
Cost of sales | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Inventory Adjustments | $ 24,100,000 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) $ / shares in Units, shares in Thousands, $ in Millions | Dec. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 |
Private warrants | ||
FAIR VALUE MEASUREMENTS | ||
Warrant exercise price | $ 11.50 | |
Strike price per warrant | $ 172.50 | |
Warrants outstanding | shares | 153 | |
BGL Warrants | ||
FAIR VALUE MEASUREMENTS | ||
Warrant exercise price | $ 10 | |
Strike price per warrant | $ 150 | |
Warrants outstanding | shares | 170 | |
Foxconn warrants | ||
FAIR VALUE MEASUREMENTS | ||
Warrant exercise price | $ 157.50 | |
Warrants outstanding | shares | 113 | |
Public warrants | ||
FAIR VALUE MEASUREMENTS | ||
Warrant exercise price | $ 11.50 | |
Foxconn warrants | ||
FAIR VALUE MEASUREMENTS | ||
Warrant exercise price | $ 10.50 | |
Fair value of warrants | $ | $ 0.3 | |
Volatility | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability, Measurement Input | 90 | |
Risk Free Interest Rate | ||
FAIR VALUE MEASUREMENTS | ||
Derivative Liability, Measurement Input | 4.237 |
FAIR VALUE MEASUREMENTS - Net g
FAIR VALUE MEASUREMENTS - Net gain on changes in fair value (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
FAIR VALUE MEASUREMENTS | ||
Net gain on changes in fair value | $ 424 | $ 384 |
Private warrants | ||
FAIR VALUE MEASUREMENTS | ||
Net gain on changes in fair value | 254 | 231 |
Foxconn warrants | ||
FAIR VALUE MEASUREMENTS | ||
Net gain on changes in fair value | $ 170 | $ 153 |
FAIR VALUE MEASUREMENTS - Valua
FAIR VALUE MEASUREMENTS - Valuation of financial instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Foxconn warrants | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of warrants | $ 300 | |
Fair Value, Inputs, Level 3 | Private warrants | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of warrants | $ 254 | |
Fair Value, Inputs, Level 3 | Foxconn warrants | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of warrants | 170 | |
Fair Value, Recurring | ||
FAIR VALUE MEASUREMENTS | ||
Cash and Cash Equivalents | 87,096 | 121,358 |
Short-term investments | 100,297 | |
Fair Value, Recurring | Private warrants | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of warrants | 254 | |
Fair Value, Recurring | Foxconn warrants | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of warrants | 170 | |
Fair Value, Recurring | Fair Value, Inputs, Level 1 | ||
FAIR VALUE MEASUREMENTS | ||
Cash and Cash Equivalents | $ 87,096 | 121,358 |
Fair Value, Recurring | Fair Value, Inputs, Level 2 | ||
FAIR VALUE MEASUREMENTS | ||
Short-term investments | 100,297 | |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Private warrants | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of warrants | 254 | |
Fair Value, Recurring | Fair Value, Inputs, Level 3 | Foxconn warrants | ||
FAIR VALUE MEASUREMENTS | ||
Fair value of warrants | $ 170 |
FAIR VALUE MEASUREMENTS - Asset
FAIR VALUE MEASUREMENTS - Assets, Liabilities, Rollforward (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Gain on fair value adjustments included in earnings | $ (424) | $ (384) |
Foxconn warrants | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Derivative liability, ending balance | 300 | |
Fair Value, Inputs, Level 3 | Private warrants | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Derivative liability, beginning balance | 254 | |
Gain on fair value adjustments included in earnings | (254) | |
Derivative liability, ending balance | 254 | |
Fair Value, Inputs, Level 3 | Foxconn warrants | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Derivative liability, beginning balance | 170 | |
Gain on fair value adjustments included in earnings | $ (170) | |
Derivative liability, ending balance | $ 170 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Oct. 27, 2023 | |
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE | |||
Property, Plant and Equipment, Gross | $ 202,256 | ||
Less: Accumulated depreciation | (8,476) | ||
Total | 193,780 | ||
Impairment charges | $ 133,500 | 95,600 | |
Loss (gain) on disposal of fixed assets | 916 | (100,906) | |
Operating lease impairment loss | $ 1,300 | 0 | |
LandX asset purchase agreement | |||
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE | |||
Purchase Price | $ 10,200 | ||
Tooling | |||
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE | |||
Property, Plant and Equipment, Gross | 160,878 | ||
Construction in progress | |||
PROPERTY, PLANT AND EQUIPMENT AND ASSETS HELD FOR SALE | |||
Property, Plant and Equipment, Gross | $ 41,378 |
MEZZANINE EQUITY (Details)
MEZZANINE EQUITY (Details) $ / shares in Units, $ in Thousands, shares in Millions | 12 Months Ended | ||||||
Nov. 22, 2022 USD ($) $ / shares | Nov. 22, 2022 $ / shares | Nov. 22, 2022 $ / shares shares | Nov. 22, 2022 tranche $ / shares | Nov. 07, 2022 USD ($) $ / shares shares | Dec. 31, 2023 USD ($) D $ / shares | Dec. 31, 2022 USD ($) | |
Business Acquisition [Line Items] | |||||||
Convertible preferred shares, shares issued | shares | 0.3 | ||||||
Percentage of receive dividends at a rate | 8% | ||||||
Temporary Equity Conversion Price | $ / shares | $ 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 | $ 2,500 | ||||||
Liquidation preference per share | $ / shares | $ 100 | ||||||
Aggregate value of dividends of Preferred Stock | $ 2,800 | ||||||
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 | $ 2,494 | $ 261 | |||||
Maximum | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Convertible preferred shares, shares issued | shares | 0.7 | ||||||
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 | $ 100 | $ 100 | $ 100 | $ 100 | ||
Proceeds from issuance of preferred stock | $ 30,000 | ||||||
Number of tranches of share issue | 2 | 2 | |||||
Investment agreement | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Shares issued price per share | $ / shares | $ 100 | $ 100 | $ 100 | $ 100 | |||
Proceeds from issuance of preferred stock | $ 70,000 | ||||||
Investment agreement | Maximum | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Convertible preferred shares, shares issued | shares | 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 EARNINGS PE_3
CAPITAL STOCK AND EARNINGS PER SHARE (Details) | May 24, 2023 | May 22, 2023 | Dec. 31, 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 | |||||
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 | ||||
Preferred stock, share issued | 300,000 | |||||
Minimum | ||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||
Exchange ratio | 0.33 | |||||
Maximum | ||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||
Exchange ratio | 0.067 |
CAPITAL STOCK AND EARNINGS PE_4
CAPITAL STOCK AND EARNINGS PER SHARE - Basic and diluted net loss per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Numerator | ||
Net Income (Loss) | $ (343,066) | $ (282,404) |
Less: Accrual of convertible preferred stock paid-in-kind dividends | 2,494 | 261 |
Net loss attributable to common shareholders | $ (345,560) | $ (282,665) |
Denominator | ||
Weighted average number of common shares outstanding | 15,945 | 13,908 |
Weighted average number of vested shares not yet issued | 4 | |
Weighted average number of common shares - Basic | 15,945 | 13,912 |
Weighted average number of common shares - Diluted | 15,945 | 13,912 |
Net loss per share | ||
Net loss per share attributable to common shareholders, basic | $ (21.67) | $ (20.32) |
Net loss per share attributable to common shareholders, diluted | $ (21.67) | $ (20.32) |
CAPITAL STOCK AND EARNINGS PE_5
CAPITAL STOCK AND EARNINGS PER SHARE - Anti-dilutive effect on dilutive net loss per share (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities, earnings per share amount | 1,395 | 1,434 |
Foxconn convertible preferred shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities, earnings per share amount | 1,128 | 1,033 |
Employee Stock Option | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities, earnings per share amount | 24 | |
Warrants issued to Foxconn | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities, earnings per share amount | 113 | 113 |
BGL Warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities, earnings per share amount | 110 | |
Private warrants to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities, earnings per share amount | 154 | 154 |
CAPITAL STOCK AND EARNINGS PE_6
CAPITAL STOCK AND EARNINGS PER SHARE - Purchase Agreements (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |||||||||
Nov. 22, 2022 USD ($) $ / shares shares | Nov. 22, 2022 USD ($) $ / shares | Nov. 22, 2022 USD ($) $ / shares | Nov. 22, 2022 USD ($) tranche $ / shares | Nov. 22, 2022 USD ($) item $ / shares | Nov. 07, 2022 USD ($) $ / shares shares | Jul. 23, 2021 USD ($) shares | Dec. 31, 2023 USD ($) shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) shares | |
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Issuance of Class A Common stock | $ 2,114 | |||||||||
Aggregate share purchase price | shares | 300,000 | |||||||||
Issuance of Class A common stock | 2,114 | |||||||||
Beneficial ownership (as a percent) | 25% | |||||||||
Aggregate liquidation preference | $ 30,000 | |||||||||
Maximum | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Aggregate liquidation preference | $ 30,000 | $ 30,000 | $ 30,000 | $ 30,000 | $ 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 | 74,000 | |||||||||
Preferred stock | Foxconn | Maximum | Scenario, EV Program Milestone Achievement | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Aggregate share purchase price | shares | 700,000 | |||||||||
Equity Funding Agreement With Y A | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Issuance of Class A Common stock | $ 40,400 | $ 40,400 | $ 49,400 | |||||||
Aggregate value of shares for issuance | $ 400,000 | |||||||||
Stock issued in aggregate purchase | shares | 400,000 | 0 | 17,500,000 | 9,600,000 | ||||||
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 | |||||||||
Proceeds from sale of equity | 52,700 | |||||||||
Percentage of common stock to be acquired | 10% | |||||||||
Issuance of Class A common stock | 47,300 | |||||||||
Beneficial ownership (as a percent) | 25% | |||||||||
Investment agreement | Foxconn | Prior to CFIUS Clearance | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Voting rights (as a percent) | 9.99% | |||||||||
Investment agreement | Foxconn | Prior to Requisite Stockholder Approval | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Voting rights (as a percent) | 19.99% | |||||||||
Investment agreement | Foxconn | CFIUS Clearance and Requisite Stockholder Approval | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Voting rights (as a percent) | 24% | |||||||||
Investment agreement | Foxconn | Minimum | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Interest on asset purchase restriction | 50% | |||||||||
Investment agreement | Common Stock | Foxconn | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Issuance of Class A Common stock | $ 22,700 | 70,000 | ||||||||
Stock issued in aggregate purchase | shares | 1,800,000 | |||||||||
Shares issued price per share | $ / shares | $ 26.40 | $ 26.40 | $ 26.40 | $ 26.40 | $ 26.40 | |||||
Proceeds from issuance of preferred stock | $ 47,300 | |||||||||
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 | Foxconn | Scenario, Plan | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Beneficial ownership (as a percent) | 25% | |||||||||
Investment agreement | Preferred stock | Scenario, EV Program Milestone Achievement | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Proceeds from issuance of preferred stock | 70,000 | |||||||||
Investment agreement | Preferred stock | Foxconn | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Issuance of Class A Common stock | $ 30,000 | |||||||||
Aggregate value of shares for issuance | $ 100,000 | |||||||||
Shares issued price per share | $ / shares | $ 100 | $ 100 | $ 100 | $ 100 | $ 100 | $ 100 | ||||
Aggregate share purchase price | shares | 300,000 | |||||||||
Number of tranches of share issue | 2 | 2 | ||||||||
Proceeds from issuance of preferred stock | $ 30,000 | |||||||||
Investment agreement | Preferred stock | Foxconn | Scenario, EV Program Milestone Achievement | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Shares issued price per share | $ / shares | $ 100 | $ 100 | $ 100 | $ 100 | $ 100 | |||||
Proceeds from issuance of preferred stock | $ 70,000 | |||||||||
Investment agreement | Preferred stock | Foxconn | Maximum | Scenario, EV Program Milestone Achievement | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Aggregate share purchase price | shares | 700,000 | |||||||||
Open Market Sales Agreement | Jefferies LLC | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Stock issued in aggregate purchase | shares | 0 | 7,800,000 | ||||||||
Issuance of Class A common stock | $ 12,400 | |||||||||
Open Market Sales Agreement | Jefferies LLC | Maximum | ||||||||||
CAPITAL STOCK AND LOSS PER SHARE | ||||||||||
Number of shares to be issued | shares | 50,200,000 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | May 22, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized | 533,333 | |||
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Minimum exercise price, as a percent of grant date fair value | 100% | |||
Minimum exercise price, as a percent of grant date fair value, awards to 10% shareholders | 110% | |||
Weighted-average grant date fair value (in dollars per share) | $ 39.75 | $ 220.80 | ||
Employee Stock Option [Member] | Employees | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Weighted-average grant date fair value (in dollars per share) | $ 18.30 | $ 86.40 | ||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized | 866,667,000,000 | |||
Exercisable period | 7 years | |||
Minimum | Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Exercisable period | 1 year | |||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized | 1,300,000 | |||
Maximum | Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expiration period | 10 years | |||
Exercisable period | 4 years |
STOCK-BASED COMPENSATION - Weig
STOCK-BASED COMPENSATION - Weighted average assumptions (Details) - Employee Stock Option [Member] | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Weighted average assumptions | ||
Risk-free interest rate | 2.85% | 0.39% |
Expected term (life) of options (in years) | 3 years 1 month 9 days | 3 years 10 months 9 days |
Expected volatility | 77% | 50% |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock option activity (Details) - Employee Stock Option [Member] - $ / shares | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Options | ||||
Outstanding, beginning of period (in shares) | 395 | 450 | 358 | |
Granted (in shares) | 159 | 370 | ||
Exercised (in shares) | (73) | (237) | ||
Forfeited (in shares) | (95) | (44) | (41) | |
Expired (in shares) | (39) | (97) | ||
Outstanding, end of period (in shares) | 261 | 395 | 450 | 358 |
Exercisable (in shares) | 167 | |||
Weighted Average Grant Date Fair Value per Option | ||||
Outstanding, beginning of period | $ 106.80 | $ 158.40 | $ 26.85 | |
Granted | $ 39.75 | $ 220.80 | ||
Exercised | 26.85 | 26.85 | ||
Forfeited | $ 109.81 | $ 234.15 | $ 338.85 | |
Expired | 190.92 | 247.05 | ||
Outstanding, end of period | $ 93.04 | $ 106.80 | $ 158.40 | $ 26.85 |
Exercisable (in dollars per share) | $ 83.84 | |||
Weighted Average Remaining Contractual Life (in years) | ||||
Outstanding | 5 years 7 months 13 days | 7 years 5 months 8 days | 5 years 2 months 4 days | 9 years |
Exercisable (in years) | 4 years 9 months 21 days | |||
Share Price | $ 1.20 |
STOCK-BASED COMPENSATION - Exer
STOCK-BASED COMPENSATION - Exercisable stock options (Details) - Employee Stock Option [Member] shares in Thousands | 12 Months Ended |
Dec. 31, 2023 $ / shares shares | |
STOCK-BASED COMPENSATION | |
Lower range limit | $ 24.60 |
Upper range limit | $ 401.55 |
Options outstanding | shares | 260,418 |
Weighted Average Remaining Contractual Term | 5 years 7 months 13 days |
Weighted Average Exercise Price | $ 93.04 |
Exercisable, Number of options | shares | 167,385 |
Exercisable, Weighted Average Exercise Price | $ 83.84 |
Exercise Price $1.63 - $1.77 [ Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 24.60 |
Upper range limit | $ 26.55 |
Options outstanding | shares | 6,444 |
Weighted Average Remaining Contractual Term | 2 years 10 months 20 days |
Weighted Average Exercise Price | $ 25.29 |
Exercisable, Number of options | shares | 4,222 |
Exercisable, Weighted Average Exercise Price | $ 25.66 |
Exercise Price $1.79 - $1.79 [Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 26.85 |
Upper range limit | $ 26.85 |
Options outstanding | shares | 32,860 |
Weighted Average Remaining Contractual Term | 3 years 8 months 8 days |
Weighted Average Exercise Price | $ 26.85 |
Exercisable, Number of options | shares | 32,860 |
Exercisable, Weighted Average Exercise Price | $ 26.85 |
Exercise Price $1.90 - $2.35 [Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 33.75 |
Upper range limit | $ 35.85 |
Options outstanding | shares | 23,843 |
Weighted Average Remaining Contractual Term | 3 years 5 months 15 days |
Weighted Average Exercise Price | $ 35.30 |
Exercisable, Number of options | shares | 23,644 |
Exercisable, Weighted Average Exercise Price | $ 35.29 |
Exercise Price $2.39 - $2.39 [Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 51.75 |
Upper range limit | $ 51.75 |
Options outstanding | shares | 44,387 |
Weighted Average Remaining Contractual Term | 4 years 3 months 18 days |
Weighted Average Exercise Price | $ 51.75 |
Exercisable, Number of options | shares | 22,057 |
Exercisable, Weighted Average Exercise Price | $ 51.75 |
Exercise Price $3.45 - $3.45 [Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 61.65 |
Upper range limit | $ 81.75 |
Options outstanding | shares | 18,949 |
Weighted Average Remaining Contractual Term | 7 years 29 days |
Weighted Average Exercise Price | $ 76.52 |
Exercisable, Number of options | shares | 13,203 |
Exercisable, Weighted Average Exercise Price | $ 76.40 |
Exercise Price $4.11 - $5.45 [Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 82.65 |
Upper range limit | $ 82.65 |
Options outstanding | shares | 46,666 |
Weighted Average Remaining Contractual Term | 7 years 7 months 24 days |
Weighted Average Exercise Price | $ 82.65 |
Exercisable, Number of options | shares | 31,112 |
Exercisable, Weighted Average Exercise Price | $ 82.65 |
Exercise Price $5.51 - $ 5.51 [Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 85.35 |
Upper range limit | $ 85.35 |
Options outstanding | shares | 36,846 |
Weighted Average Remaining Contractual Term | 7 years 10 months 9 days |
Weighted Average Exercise Price | $ 85.35 |
Exercisable, Number of options | shares | 24,562 |
Exercisable, Weighted Average Exercise Price | $ 85.35 |
Exercise Price$5.69 - $5.85 [Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 87.75 |
Upper range limit | $ 154.65 |
Options outstanding | shares | 3,504 |
Weighted Average Remaining Contractual Term | 1 year 2 months 23 days |
Weighted Average Exercise Price | $ 129.58 |
Exercisable, Number of options | shares | 3,304 |
Exercisable, Weighted Average Exercise Price | $ 128.06 |
Exercise Price $6.84 - $11.41 [Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 171.15 |
Upper range limit | $ 171.15 |
Options outstanding | shares | 33,333 |
Weighted Average Remaining Contractual Term | 7 years 5 months 12 days |
Weighted Average Exercise Price | $ 171.15 |
Exercisable, Number of options | shares | 0 |
Exercisable, Weighted Average Exercise Price | $ 0 |
Exercise Price $16.22 - $ 26.77 [Member] | |
STOCK-BASED COMPENSATION | |
Lower range limit | 243.30 |
Upper range limit | $ 401.55 |
Options outstanding | shares | 13,586 |
Weighted Average Remaining Contractual Term | 1 year 2 months 4 days |
Weighted Average Exercise Price | $ 400.05 |
Exercisable, Number of options | shares | 12,421 |
Exercisable, Weighted Average Exercise Price | $ 399.91 |
STOCK-BASED COMPENSATION - Acti
STOCK-BASED COMPENSATION - Activities of RSUs (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Shares | |||
Beginning outstanding (in shares) | 347 | 417 | |
Awarded (in shares) | 10 | 304 | |
Released (in shares) | (33) | (262) | |
Forfeited (in shares) | (131) | (112) | |
Ending outstanding (in shares) | 193 | 347 | |
Weighted Average Grant Date Fair Value | |||
Beginning outstanding (in dollars per share) | $ 43.05 | $ 139.50 | |
Awarded (in dollars per share) | 3.80 | 31.80 | |
Released (in dollars per share) | 44.23 | 143.25 | |
Forfeited (in dollars per share) | 29.63 | 137.85 | |
Ending outstanding (in dollars per share) | $ 50.09 | 43.05 | |
Aggregate Intrinsic Value | |||
Ending outstanding | $ 231,308 | $ 313,665 | |
RSU | |||
Aggregate Intrinsic Value | |||
Share price | $ 1.20 |
STOCK-BASED COMPENSATION - Expe
STOCK-BASED COMPENSATION - Expense and Unrecognized (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Nov. 22, 2022 | Nov. 30, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
STOCK-BASED COMPENSATION | |||||
Stock-based compensation expense | $ 4.8 | $ 7.4 | $ 18.8 | $ 18.7 | |
Unrecognized compensation expense | $ 10.3 | $ 33.9 | $ 63.7 | ||
Number of shares modified for awards | 93,000,000,000 | ||||
Share based payment award | 30 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the statutory federal income tax (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Amount | ||
Federal tax benefit as statutory rates | $ (72,044) | $ (59,305) |
Stock-based compensation | 4,073 | 731 |
Other permanent differences | 57 | 77 |
Other | (4,515) | (1,947) |
Rate difference | (8,250) | |
State & Local Taxes | (15,936) | (672) |
Change in valuation allowance | 96,615 | 61,115 |
Total tax benefit | $ 0 | $ 0 |
Rates | ||
Federal tax benefit as statutory rates | (21.00%) | (21.00%) |
Stock-based compensation, rates | (1.20%) | 0.20% |
Other, rates | (1.30%) | 0.70% |
Rate difference, rates | 2.40% | |
State & Local Taxes, rates | 4.60% | (0.10%) |
Change in valuation allowance, rate | (28.20%) | 21.64% |
Total tax benefit, rate | 0% | 0% |
INCOME TAXES - Deferred tax ass
INCOME TAXES - Deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Share based compensation | $ 1,391 | $ 2,831 |
Intangible and other assets | 745 | |
Inventory | 11,059 | |
Fixed Assets | 19,193 | |
Capitalized research and development | 20,271 | 13,292 |
Accruals and other reserves | 9,914 | 7,514 |
Net operating losses | 233,493 | 135,948 |
Total deferred tax assets | 276,128 | 179,523 |
Valuation allowance | (276,128) | (179,523) |
Total deferred tax assets, net of valuation allowance | $ 0 | $ 0 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 993.2 | $ 629.6 |
Federal income taxes | 0 | 0 |
Domestic Tax Authority [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 993.2 | |
State and local | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 880.3 | $ 372.2 |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 322.3 | |
Operating loss carried forward | 10 years | |
Local | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | $ 558 | |
Local | Minimum | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carried forward | 2 years | |
Local | Maximum | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carried forward | 5 years |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 12 Months Ended | |||||||||||
Jan. 04, 2024 USD ($) | Oct. 27, 2023 USD ($) | Aug. 14, 2023 USD ($) | Dec. 06, 2022 lawsuit | Jul. 09, 2021 lawsuit | May 14, 2021 lawsuit | Oct. 30, 2020 USD ($) | Dec. 31, 2023 USD ($) D shares | Dec. 31, 2022 USD ($) shares | Aug. 17, 2022 shares | Dec. 13, 2021 lawsuit | Apr. 16, 2021 employee item | |
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||||||||
Amount of claim | $ 45,000 | |||||||||||
Litigation amount sought | $ 900,000 | |||||||||||
Claims accrued | 30,500 | |||||||||||
Accrued bankruptcy claims and settlements | $ 23,967 | |||||||||||
Number of days for filing claim arising | D | 30 | |||||||||||
Claim reserve | $ 45,000 | |||||||||||
Common Stock, Shares Authorized | shares | 450,000,000 | 450,000,000 | 450,000,000 | |||||||||
Indemnification obligation agreement | ||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||||||||
Accrued contingency amount | $ 3,500 | |||||||||||
LandX Asset Purchase Agreement [Member] | ||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||||||||
Total purchase price | $ 10,200 | |||||||||||
Transaction Fee | $ 2,000 | |||||||||||
Accrued and Other Current Liabilities | ||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||||||||
Aggregate reserve within Accrued and other current liabilities | 6,500 | $ 35,900 | ||||||||||
Lawsuit Alleging Misappropriation Of Trade Secrets | ||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||||||||
Number of employees | employee | 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 | |||||||||||
Accrued contingency amount | 3,000 | |||||||||||
Retained amount from debtor reorganizations | $ 7,000 | |||||||||||
Percentage of net proceeds | 25% | |||||||||||
Claims recognized | $ 3,000 | |||||||||||
Class Action Lawsuits Alleging Securities Laws Violations | Foxconn | ||||||||||||
Loss Contingency, Information about Litigation Matters [Abstract] | ||||||||||||
Amount paid into debtors reserve | $ 5,000 | |||||||||||
Amount paid into debtors reserve (in percentage) | 16% | |||||||||||
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] | ||||||||||||
Amount of claim | $ 45,000 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Liabilities subject to compromise (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
COMMITMENTS AND CONTINGENCIES | |
Accrued bankruptcy claims and settlements | $ 23,967 |
Accrued legal liabilities | 6,500 |
Liabilities subject to compromise | $ 30,467 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2022 | Dec. 31, 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% |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Pay vs Performance Disclosure | ||
Net Income (Loss) | $ (343,066) | $ (282,404) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |