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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________
FORM 10-Q
______________________
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the transition period from _________ to _________
Commission file number: 001-39160
______________________
FISKER INC.
(Exact name of registrant as specified in its charter)
______________________
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Delaware |
82-3100340 |
(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1888 Rosecrans Avenue, Manhattan Beach, CA 90266
(Address of principal executive offices)
(833) 434-7537
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
______________________
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
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Trading
symbol(s)
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Name of each exchange
on which registered
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Class A Common Stock, par value of $0.00001 per share |
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FSR |
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New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
None
______________________
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes
☒
No
☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes
☒
No
☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer |
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Accelerated filer |
☐
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Non-accelerated filer |
☐
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Smaller reporting company |
☐
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Emerging growth company |
☐
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
¨
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule
12b-2
of the Exchange Act).
Yes
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No
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As of August 4, 2022, the
registrant had 166,350,671 shares of Class A Common Stock and
132,354,128 shares of Class B Common Stock, par value $0.00001 per
share, outstanding.
TABLE OF CONTENTS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “report”) contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), that are forward-looking and as such are not
historical facts. These forward-looking statements include, without
limitation, statements regarding future financial performance,
business strategies, expansion plans, future results of operations,
estimated revenues, losses, projected costs, prospects, plans and
objectives of management. These forward-looking statements are
based on our management’s current expectations, estimates,
projections and beliefs, as well as a number of assumptions
concerning future events, and are not guarantees of performance.
Such statements can be identified by the fact that they do not
relate strictly to historical or current facts. When used in this
report, words such as “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,”
“potential,” “predict,” “project,” “seek,” “should,” “would” and
variations thereof and similar words and expressions are intended
to identify such forward-looking statements, but the absence of
these words does not mean that a statement is not forward-looking.
Forward-looking statements in this report may include, for example,
statements about:
•our
ability to grow and manage growth profitably;
•our
ability to continue to enter into binding contracts with OEMs or
tier-one suppliers in order to execute on our business
plan;
•our
ability to execute our business model, including market acceptance
of our planned products and services;
•our
expansion plans and opportunities;
•our
expectations regarding future expenditures;
•our
ability to raise capital in the future;
•our
ability to attract and retain qualified employees and key
personnel;
•the
possibility that we may be adversely affected by other economic,
business or competitive factors;
•changes
in applicable laws or regulations;
•the
outcome of any known and unknown litigation and regulatory
proceedings;
•our
ability to maintain the listing of our Class A common stock, par
value $0.00001per share ("Class A Common Stock") on the
NYSE;
•the
possibility that COVID-19, the Russian-Ukraine war or rising
inflation may adversely affect the results of our operations,
financial position and cash flows; and
•other
factors described in this report, including those described in the
section entitled “Risk
Factors”
under Part I, Item 1A of our most recent Annual Report on Form 10-K
for the year ended December 31, 2021 filed with the U.S. Securities
and Exchange Commission (“SEC”) on February 28, 2022, as
supplemented by Quarterly Reports on Form 10-Q subsequently filed
with the SEC.
The forward-looking statements contained in this report are based
on our current expectations and beliefs concerning future
developments and their potential effects on our business. There can
be no assurance that future developments affecting our business
will be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which
are beyond our control) or other assumptions that may cause actual
results or performance to be materially different from those
expressed or implied by these forward-looking statements. These
risks and uncertainties include, but are not limited to, those
factors described in the section entitled “Risk
Factors”
under Part I, Item 1A of our Annual Report on Form 10-K for the
year ended December 31, 2021 filed with the SEC on February 28,
2022 and those factors described in the section entitled
“Risk
Factors”
under Part II, Item 1A of this Quarterly Report on Form 10-Q.
Moreover, we operate in a very competitive and rapidly changing
environment. New risks and uncertainties emerge from time to time
and it is not possible for us to predict all such risk factors, nor
can we assess the effect of all such risk factors on our business
or the extent to which any factor or combination of factors may
cause actual results to differ materially from those contained in
any forward-looking statements. Should one or more of these risks
or uncertainties materialize, or should any of the assumptions
prove incorrect, actual results may vary in material respects from
those projected in these forward-looking statements.
The forward-looking statements made by us in this report speak only
as of the date of this report. Except to the extent required under
the federal securities laws and rules and regulations of the SEC,
we disclaim any obligation to update any forward-looking statement
to reflect events or circumstances after the date on which the
statement is made or to reflect
the occurrence of unanticipated events. In light of these risks and
uncertainties, there is no assurance that the events or results
suggested by the forward-looking statements will in fact occur, and
you should not place undue reliance on these forward-looking
statements.
WEBSITE AND SOCIAL MEDIA DISCLOSURE
We use our website (www.fiskerinc.com) and various social media
channels as a means of disclosing information about the company and
its products to its customers, investors and the public (e.g.,
@fiskerinc, @fiskerofficial, #fiskerinc, #henrikfisker and #fisker
on Twitter, Facebook, Instagram, YouTube, TikTok and LinkedIn). The
information posted on social media channels is not incorporated by
reference in this report or in any other report or document we file
with the SEC. The information we post through these channels may be
deemed material. Accordingly, investors should monitor these
channels, in addition to following our press releases, SEC filings
and public conference calls and webcasts. In addition, you may
automatically receive e-mail alerts and other information about the
Company when you enroll your e-mail address by visiting the
“Investor Email Alerts” section of our website at
www.investors.fiskerinc.com. Accordingly, investors should monitor
these channels, in addition to following our press releases, SEC
filings and public conference calls and webcasts. In addition, you
may automatically receive e-mail alerts and other information about
the Company when you enroll your e-mail address by visiting the
“Investor Email Alerts” section of our website at
www.investors.fiskerinc.com.
ADDITIONAL INFORMATION
Unless the context indicates otherwise, references in this report
to the “Company,” “Fisker,” “we,” “us,” “our” and similar terms
refer to Fisker Inc. (f/k/a Spartan Energy Acquisition Corp.) and
its consolidated subsidiaries (including Fisker Group Inc. or
Legacy Fisker). References to “Spartan” refer to our predecessor
company prior to the consummation of the Business Combination (as
defined below).
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets
Fisker Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
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As of
June 30, 2022
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As of
December 31, 2021
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
851,939 |
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$ |
1,202,439 |
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Prepaid expenses and other current assets |
39,611 |
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30,423 |
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Equity investment |
5,090 |
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— |
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Total current assets |
896,640 |
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1,232,862 |
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Non-current assets: |
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Property and equipment, net |
177,929 |
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85,643 |
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Intangible assets |
244,914 |
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231,525 |
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Right-of-use assets, net |
27,350 |
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18,285 |
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Other non-current assets |
42,104 |
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24,637 |
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Total non-current assets |
492,297 |
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360,090 |
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TOTAL ASSETS |
$ |
1,388,937 |
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$ |
1,592,952 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
22,590 |
|
|
$ |
28,143 |
|
Accrued expenses |
56,827 |
|
|
79,634 |
|
Lease liabilities |
5,811 |
|
|
4,552 |
|
Total current liabilities |
85,228 |
|
|
112,329 |
|
Non-current liabilities: |
|
|
|
Customer deposits |
14,450 |
|
|
6,300 |
|
Lease liabilities |
22,916 |
|
|
14,933 |
|
Convertible senior notes |
659,973 |
|
|
659,348 |
|
Total non-current liabilities |
697,339 |
|
|
680,581 |
|
Total liabilities |
782,567 |
|
|
792,910 |
|
COMMITMENTS AND CONTINGENCIES (Note 13) |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.00001 par value; 15,000,000 shares authorized;
no shares issued and outstanding as of June 30, 2022 and
December 31, 2021
|
— |
|
|
— |
|
Class A Common stock, $0.00001 par value; 750,000,000 shares
authorized; 166,279,680 and 164,377,306 shares issued and
outstanding as of June 30, 2022 and December 31, 2021,
respectively
|
2 |
|
|
2 |
|
Class B Common stock, $0.00001 par value; 150,000,000 shares
authorized; 132,354,128 shares issued and outstanding as of
June 30, 2022 and December 31, 2021
|
1 |
|
|
1 |
|
Additional paid-in capital |
1,453,662 |
|
|
1,419,284 |
|
Accumulated deficit |
(847,295) |
|
|
(619,245) |
|
Total stockholders’ equity |
606,370 |
|
|
800,042 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
1,388,937 |
|
|
$ |
1,592,952 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three and Six Months ended June 30, 2022 and
2021
(In thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended June 30,
|
|
Six-Months Ended June 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Revenue |
$ |
10 |
|
|
$ |
27 |
|
|
$ |
22 |
|
|
$ |
49 |
|
Cost of goods sold |
8 |
|
|
14 |
|
|
19 |
|
|
31 |
|
Gross margin |
2 |
|
|
13 |
|
|
3 |
|
|
18 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
General and administrative |
17,521 |
|
|
7,908 |
|
|
39,513 |
|
|
13,740 |
|
Research and development |
71,160 |
|
|
45,245 |
|
|
172,620 |
|
|
72,516 |
|
Total operating costs and expenses |
88,681 |
|
|
53,153 |
|
|
212,133 |
|
|
86,256 |
|
Loss from operations |
(88,679) |
|
|
(53,140) |
|
|
(212,130) |
|
|
(86,238) |
|
Other income (expense): |
|
|
|
|
|
|
|
Other income (expense), net |
(452) |
|
|
(89) |
|
|
(823) |
|
|
(13) |
|
Interest income |
1,353 |
|
|
105 |
|
|
1,618 |
|
|
261 |
|
Interest expense |
(4,751) |
|
|
— |
|
|
(9,134) |
|
|
— |
|
Change in fair value of derivatives |
— |
|
|
6,814 |
|
|
— |
|
|
(138,436) |
|
Foreign currency gain (loss) |
(3,417) |
|
|
88 |
|
|
(2,671) |
|
|
1,361 |
|
Unrealized loss recognized on equity securities |
(10,030) |
|
|
— |
|
|
(4,910) |
|
|
— |
|
Total other income (expense) |
(17,297) |
|
|
6,918 |
|
|
(15,920) |
|
|
(136,827) |
|
Net loss |
$ |
(105,976) |
|
|
$ |
(46,222) |
|
|
$ |
(228,050) |
|
|
$ |
(223,065) |
|
Net loss per common share |
|
|
|
|
|
|
|
Net loss per share attributable to Class A and Class B Common
shareholders- Basic and Diluted |
(0.36) |
|
|
$ |
(0.16) |
|
|
(0.77) |
|
|
$ |
(0.78) |
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
Weighted average Class A and Class B Common shares outstanding-
Basic and Diluted |
298,269,801 |
|
|
295,275,773 |
|
|
297,558,618 |
|
|
287,589,053 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’
Equity
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Common Stock |
|
Class B
Common Stock |
|
Additional
Paid-in
Capital |
|
Accumulated
Deficit |
|
Stockholders’
Deficit |
Three Months Ended June 30, 2022 |
Shares |
|
Amount |
|
Shares |
|
Amount |
|
|
|
Balance at March 31, 2022 |
164,836,936 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,431,342 |
|
|
$ |
(741,319) |
|
|
$ |
690,026 |
|
Stock-based compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,195 |
|
|
— |
|
|
$ |
1,195 |
|
Exercise of stock options and issuance of restricted stock unit
awards, net of statutory tax withholdings |
54,593 |
|
|
— |
|
|
— |
|
|
— |
|
|
216 |
|
|
— |
|
|
$ |
216 |
|
Recognition of Magna warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6,694 |
|
|
— |
|
|
$ |
6,694 |
|
Shares issued under "At-the-market" offering, net of stock issuance
costs |
1,388,151 |
|
|
— |
|
|
— |
|
|
— |
|
|
14,215 |
|
|
— |
|
|
$ |
14,215 |
|
Net Loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(105,976) |
|
|
$ |
(105,976) |
|
Balance at June 30, 2022 |
166,279,680 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,453,662 |
|
|
$ |
(847,295) |
|
|
$ |
606,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Common Stock |
|
Class B
Common Stock |
|
Additional
Paid-in
Capital |
|
Accumulated
Deficit |
|
Stockholders’
Deficit |
Six Months Ended June 30, 2022 |
Shares |
|
Amount |
|
Shares |
|
Amount |
|
|
|
Balance at December 31, 2021 |
164,377,306 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,419,284 |
|
|
$ |
(619,245) |
|
|
$ |
800,042 |
|
Stock-based compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6,260 |
|
|
— |
|
|
6,260 |
|
Exercise of stock options and issuance of restricted stock unit
awards, net of statutory tax withholdings |
514,223 |
|
|
— |
|
|
— |
|
|
— |
|
|
514 |
|
|
— |
|
|
514 |
|
Recognition of Magna warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13,389 |
|
|
— |
|
|
13,389 |
|
Shares issued under "At-the-market" offering, net of stock issuance
costs |
1,388,151 |
|
|
— |
|
|
— |
|
|
— |
|
|
14,215 |
|
|
— |
|
|
14,215 |
|
Net Loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(228,050) |
|
|
(228,050) |
|
Balance at June 30, 2022 |
166,279,680 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,453,662 |
|
|
$ |
(847,295) |
|
|
$ |
606,370 |
|
The accompanying notes are an integral part of these consolidated
financial statements.
Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Stockholders’
Equity
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Common Stock |
|
Class B
Common Stock |
|
Additional
Paid-in
Capital |
|
Receivable
For
Warrant
Exercises |
|
Accumulated
Deficit |
|
Stockholders’
Deficit |
|
Three Months Ended June 30, 2021 |
Shares |
|
Amount |
|
Shares |
|
Amount |
|
|
|
|
|
Balance at March 31, 2021 |
161,207,423 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,397,451 |
|
|
$ |
(389) |
|
|
$ |
(324,747) |
|
|
$ |
1,072,318 |
|
|
Stock-based compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,218 |
|
|
— |
|
|
— |
|
|
2,218 |
|
|
Exercise of stock options and issuance of restricted stock unit
awards, net of statutory tax withholdings |
827,622 |
|
|
— |
|
|
— |
|
|
— |
|
|
(194) |
|
|
5 |
|
|
— |
|
|
(189) |
|
|
Exercise of warrants |
3,611,226 |
|
|
— |
|
|
— |
|
|
— |
|
|
24,062 |
|
|
362 |
|
|
— |
|
|
24,424 |
|
|
Shares surrendered upon exercise of warrants |
(1,934,370) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Stock issuance costs and redemption of unexercised
warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22) |
|
|
22 |
|
|
— |
|
|
— |
|
|
Recognition of Magna warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
58,041 |
|
|
— |
|
|
— |
|
|
58,041 |
|
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(46,222) |
|
|
(46,222) |
|
|
Balance at June 30, 2021 |
163,711,901 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,481,556 |
|
|
$ |
— |
|
|
$ |
(370,969) |
|
|
$ |
1,110,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Common Stock |
|
Class B
Common Stock |
|
Additional
Paid-in
Capital |
|
Receivable
For
Warrant
Exercises |
|
Accumulated
Deficit |
|
Stockholders’
Deficit |
Six Months Ended June 30, 2021 |
Shares |
|
Amount |
|
Shares |
|
Amount |
|
|
|
|
Balance at December 31, 2020 |
144,912,362 |
|
|
$ |
1 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,055,128 |
|
|
$ |
(96) |
|
|
$ |
(147,904) |
|
|
$ |
907,130 |
|
Stock-based compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
3,035 |
|
|
— |
|
|
— |
|
|
3,035 |
|
Exercise of stock options and issuance of restricted stock unit
awards, net of statutory tax withholdings |
991,019 |
|
|
— |
|
|
— |
|
|
— |
|
|
(88) |
|
|
— |
|
|
— |
|
|
(88) |
|
Exercise of warrants |
27,751,587 |
|
|
1 |
|
|
— |
|
|
— |
|
|
365,462 |
|
|
74 |
|
|
— |
|
|
365,537 |
|
Shares surrendered upon exercise of warrants |
(9,943,067) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Stock issuance costs and redemption of unexercised
warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(22) |
|
|
22 |
|
|
— |
|
|
— |
|
Recognition of Magmna warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
58,041 |
|
|
— |
|
|
— |
|
|
58,041 |
|
Net loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(223,065) |
|
|
(223,065) |
|
Balance at June 30, 2021 |
163,711,901 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,481,556 |
|
|
$ |
— |
|
|
$ |
(370,969) |
|
|
$ |
1,110,590 |
|
Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
Cash Flows from Operating Activities: |
|
|
|
Net loss |
$ |
(228,050) |
|
|
$ |
(223,065) |
|
Reconciliation of net loss to net cash used in operating
activities: |
|
|
|
Stock-based compensation |
6,260 |
|
|
3,035 |
|
Depreciation |
584 |
|
|
233 |
|
Amortization of right-of-use asset |
2,043 |
|
|
794 |
|
Accretion of debt issuance costs |
625 |
|
|
— |
|
Change in fair value of derivative liabilities |
— |
|
|
138,436 |
|
Unrealized loss recognized on equity securities |
4,910 |
|
|
— |
|
Unrealized foreign currency loss |
4,078 |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
Prepaid expenses and other assets |
(26,655) |
|
|
(13,773) |
|
Accounts payable and accrued expenses |
(25,547) |
|
|
36,790 |
|
Customer deposits |
8,150 |
|
|
1,296 |
|
Change in operating lease liability |
(1,866) |
|
|
(673) |
|
Net cash used in operating activities |
(255,468) |
|
|
(56,927) |
|
Cash Flows from Investing Activities: |
|
|
|
Acquisition of equity investment |
(10,000) |
|
|
— |
|
Purchases of property and equipment and intangible
asset |
(99,911) |
|
|
(65,990) |
|
Net cash used in investing activities |
(109,911) |
|
|
(65,990) |
|
Cash Flows from Financing Activities: |
|
|
|
Proceeds from the exercise of warrants |
— |
|
|
89,023 |
|
Payment for stock issuance costs and redemption of unexercised
warrants |
(353) |
|
|
(22) |
|
Proceeds from the exercise of stock options |
2,079 |
|
|
5,124 |
|
Payments for statutory withholding taxes |
(1,415) |
|
|
— |
|
Proceeds from stock issuance under "At-the-market"
offering |
14,568 |
|
|
— |
|
Net cash provided by financing activities |
14,879 |
|
|
94,125 |
|
Net decrease in cash and cash equivalents |
(350,500) |
|
|
(28,792) |
|
Cash and cash equivalents, beginning of the period |
1,202,439 |
|
|
991,158 |
|
Cash and cash equivalents, end of the period |
$ |
851,939 |
|
|
$ |
962,366 |
|
Supplemental disclosure of cash flow information |
|
|
|
Cash paid for interest |
9,642 |
|
|
$ |
— |
|
The accompanying notes are an integral part of these consolidated
financial statements.
Fisker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(In thousands, except share data)
(Unaudited)
1. Overview of the Company
Fisker Inc. (“Fisker” or the “Company”) was originally incorporated
in the State of Delaware on October 13, 2017 as a special purpose
acquisition company under the name Spartan Energy Acquisition Corp.
(“Spartan”) for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, recapitalization,
reorganization or similar business combination with one or more
businesses. Spartan completed its Initial Public Offering in August
2018. On October 29, 2020, Spartan’s wholly-owned subsidiary merged
with and into Fisker Holdings Inc. (f/k/a Fisker Inc.), a Delaware
corporation (“Legacy Fisker”), with Fisker Holdings Inc. surviving
the merger as a wholly-owned subsidiary of Spartan (the “Business
Combination”). In connection with the Business Combination, Spartan
changed its name to Fisker Inc.
Legacy Fisker was incorporated in the State of Delaware on
September 21, 2016. In connection with its formation, the Company
entered into stock purchase agreements with the Company’s founders,
whereby the founders contributed certain intellectual property
(primarily trademarks) and interests in Platinum IPR LLC. Platinum
IPR LLC was an entity solely owned by the Company’s founders, which
held Fisker trademarks registered in a variety of jurisdictions
around the world. The founders’ transfer of its interest in
Platinum IPR LLC and the transfer of trademarks was accounted for
as a transfer of assets between entities under common control. The
carrying amount of the transferred assets is recorded based on the
prior carrying value, which was de minimis.
The Company’s common stock is listed on the New York Stock Exchange
(“NYSE”) under the symbol “FSR”. The Company’s warrants previously
traded on the New York Stock Exchange under the symbol “FSR WS” and
on April 19, 2021, the NYSE filed a Form 25-NSE with respect to the
warrants; the formal delisting of the warrants became effective ten
days thereafter.
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s condensed consolidated financial statements have been
prepared in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) as determined by
the Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) and pursuant to the regulations of
the U.S. Securities and Exchange Commission (“SEC”).
Unaudited Interim Financial Statements
The condensed consolidated balance sheet as of June 30, 2022,
the condensed consolidated statements of operations and the
condensed consolidated statements of changes in stockholders’
equity for the three-months and six-months ended June 30, 2022
and 2021, and the condensed consolidated statements of cash flows
for the six-months ended June 30, 2022 and 2021, as well as
other information disclosed in the accompanying notes, are
unaudited. The consolidated balance sheet as of December 31,
2021 was derived from the audited consolidated financial statements
as of that date. The interim condensed consolidated financial
statements and the accompanying notes should be read in conjunction
with the annual consolidated financial statements and the
accompanying notes contained in our Annual Report on Form 10-K for
the year ended December 31, 2021 filed with the SEC on
February 28, 2022.
Comprehensive loss is not separately presented as the amounts are
equal to net loss for the three and six-months ended June 30,
2022 and 2021.
The interim condensed consolidated financial statements and the
accompanying notes have been prepared on the same basis as the
annual consolidated financial statements and, in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary for a fair statement of the
results of operations for the periods presented. The condensed
consolidated financial statements for any interim period are not
necessarily indicative of the results to be expected for the full
year or for any other future years or interim periods.
Going Concern, Liquidity and Capital Resources
The Company evaluated whether there are any
conditions and events, considered in the aggregate, that raise
substantial doubt about its ability to continue as a going concern
over the next twelve months from the date of filing this report. As
of June 30, 2022, the Company had approximately
$852 million in cash and cash equivalents. The Company
believes that its cash on hand will be sufficient to meet its
working capital and capital expenditure requirements for a period
of at least twelve months from the date of the filing of this Form
10-Q.
Since inception, the Company has yet to generate any revenue from
its core business operations and has incurred significant
accumulated losses of approximately $847 million.
The Company expects to continue to incur significant operating
losses for the foreseeable future. The Company expects its capital
expenditures and working capital requirements to increase
substantially in the second half of 2022 and beyond, as it
progresses toward production of the Fisker Ocean EV model, develop
its customer support and marketing infrastructure and expand its
research and development efforts. The Company may, however, need
additional cash resources, including proceeds up to
$335 million from the sale of Class A common stock under its
at-the-market equity program, to fund its operations until it
commences serial production levels of the Fisker Ocean and achieves
a level of production and sales that provide for operating
profitability. To the extent that Fisker’s current resources are
insufficient to satisfy its cash requirements, the Company may need
to seek additional equity or debt financing and there can be no
assurance that the Company will be successful in its efforts. If
the financing is not available, or if the terms of financing are
less desirable than the Company expects, the Company may be forced
to decrease its planned level of investment in product development
or scale back its operations, which could have an adverse impact on
its business and financial prospects.
Supplier Risk
The Company finalized nomination of suppliers during the quarter
for engineering, development, testing, tooling and production of
components for serial production of its vehicles. As of
June 30, 2022, these supplier contracts do not represent
unconditional purchase obligations with take-or-pay or specified
minimum quantities provisions with the exception of an agreement
securing battery capacity for the Fisker Ocean SUV. Under the terms
of the agreement, the battery supplier will deliver two different
battery solutions for the Fisker Ocean SUV, with an initial battery
capacity of over 5 gigawatt-hours annually, from 2023 through
2025.
Use of Estimates
The preparation of the condensed consolidated financial statements
in conformity with GAAP required management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities in the condensed consolidated financial statements and
accompanying notes. The Company bases these estimates on historical
experience and on various other assumptions that it believes are
reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying amounts of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ materially from these
estimates.
Fair Value Measurements
The Company follows the accounting guidance in ASC 820
Fair Value Measurement
("ASC 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 accounting guidance requires fair value measurements be
classified and disclosed in one of the following three
categories:
Level 1: Quoted prices in active markets for identical assets or
liabilities.
Level 2: Observable inputs other than Level 1 prices, for similar
assets or liabilities that are directly or indirectly observable in
the marketplace.
Level 3: Unobservable inputs which are supported by little or no
market activity and that are financial instruments whose values are
determined using pricing models, discounted cash flow
methodologies, or similar techniques, as well as instruments for
which the determination of fair value requires significant judgment
or estimation.
The fair value hierarchy also requires an entity to maximize the
use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. Assets and liabilities measured
at fair value are classified in their entirety based on the lowest
level of input that is significant to the fair value
measurement.
Income Taxes
Income taxes are recorded in accordance with ASC 740,
Income Taxes
(“ASC 740”), which provides for deferred taxes using an asset and
liability approach. The Company recognizes deferred tax assets and
liabilities for the expected future tax consequences of events that
have been included in the condensed consolidated financial
statements or tax returns. Deferred tax assets and liabilities are
determined based on the difference between the consolidated
financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences
are expected to reverse. Valuation allowances are provided, if
based upon the weight of available evidence, it is more likely than
not that some or all of the deferred tax assets will not be
realized.
There are transactions that occur during the ordinary course of
business for which the ultimate tax determination is uncertain. As
of June 30, 2022, there were no material changes to either the
nature or the amounts of the uncertain tax positions previously
determined for the year ended December 31, 2021.
The Company’s income tax provision consists of an estimate for U.S.
federal, foreign and state income taxes based on enacted rates, as
adjusted for allowable credits, deductions, uncertain tax
positions, changes in deferred tax assets and liabilities, and
changes in the tax law. The Company maintains a valuation allowance
against the full value of its U.S. and state net deferred tax
assets because the Company believes the recoverability of the tax
assets is not more likely than not as of June 30,
2022.
Derivative Liability
The Company accounts for its public and private warrants as a
derivative liability initially measured at its fair values and
remeasured in the condensed consolidated statements of operations
at the end of each reporting period. When the warrants are
exercised, the corresponding derivative liability is de-recognized
at the underlying fair value of the Class A common stock that is
issued to the warrant holder less any cash paid in accordance with
the warrant agreement. Upon either cash or cashless exercise, the
de-recognized derivative liability results in an increase in
additional paid in capital equal to the difference between the fair
value of the underlying Class A common stock and its par value. A
cashless exercise results in the warrant holder surrendering Class
A common stock equal to the stated warrant exercise price based on
the contractual terms in the warrant agreement that govern the
cashless conversion.
Equity Awards
The grant date for an option or stock award is established when the
grantee has a mutual understanding of the key terms and conditions
of the option or award, the award is authorized, including all the
necessary approvals unless approval is essentially a formality or
perfunctory, and the grantee begins to benefit from, or be
adversely affected by, underlying changes in the price of the
Company’s Class A common shares. An award or option is authorized
on the date that all approval requirements are completed (e.g.,
action by the compensation committee approving the award and the
number of options, restricted shares or other equity instruments to
be issued to individual employees).
Net Loss per Share of Common Stock
Basic net loss per share of common stock is calculated using the
two-class method under which earnings are allocated to both common
shares and participating securities. Undistributed net losses are
allocated entirely to common shareholders since the participating
security has no contractual obligation to share in the losses.
Basic net loss per share is calculated by dividing the net loss
attributable to common shares by the weighted-average number of
shares of common stock outstanding for the period. The diluted net
loss per share of common stock is computed by dividing the net loss
using the weighted-average number of common shares and, if
dilutive, potential common shares outstanding during the period.
Potential common shares consist of stock-based compensation awards
and warrants to purchase common stock (using the treasury stock
method).
Foreign Currency Remeasurement and Transactions
The functional currency of the Company’s U.K., German, Indian and
Austrian subsidiaries is the U.S. Dollar. For this subsidiary,
monetary assets and liabilities denominated in non U.S. currencies
are re-measured to U.S. Dollars using current exchange rates in
effect at the balance sheet date. Non-monetary assets and
liabilities denominated in non-U.S. currencies are maintained at
historical U.S. Dollar exchange rates. Expenses are re-measured at
average U.S. Dollar monthly rates.
Foreign currency transaction gains and losses are a result of the
effect of exchange rate changes on transactions denominated in
currencies other than the functional currency. Transaction gains
and losses are immaterial for all periods presented.
In April and July 2022, the Company purchased 130.1 million Euros
for 140.0 million U.S. dollars, a currency exchange rate of 1 U.S.
dollar for 1.076 Euro and 50.0 million Euros for 50.9 million U.S.
dollars, a currency exchange rate of 1 U.S. dollar for1.018 Euro,
which are designed to provide an economic hedge against future
foreign currency exposures.
Recently Adopted Accounting Pronouncements
In December 2020, the FASB issued ASU No. 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income
Taxes,
which is intended to simplify various aspects related to accounting
for income taxes. ASU No. 2019-12 removes certain exceptions to the
general principles in ASC 740 and also clarifies and amends
existing guidance to improve consistent application. This guidance
is effective for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2020, with early
adoption permitted. This guidance had no effect on the Company’s
condensed consolidated financial statements upon adoption in
2022.
In June 2021, the FASB issued ASU 2020-06,
Debt with Conversion and Other Options (Subtopic 470-20) and
Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic
815-40).
This ASU simplifies the accounting for certain financial
instruments with characteristics of liabilities and equity,
including convertible instruments and contracts on an entity’s own
equity. The ASU eliminates the current models that require
separation of beneficial conversion and cash conversion features
from convertible instruments and simplifies the derivative scope
exception guidance pertaining to equity classification of contracts
in an entity’s own equity. The ASU also introduces additional
disclosures for convertible debt and freestanding instruments that
are indexed to and settled in an entity’s own equity. The ASU
amends the diluted earnings per share guidance, including the
requirement to use if-converted method for all convertible
instruments and an update for instruments that can be settled in
either cash or shares. We early adopted ASU 2020-06 effective on
January 1, 2021 applying the modified retrospective method. Since
the Company does not have any financial instruments as of January
1, 2021 within the scope of ASU 2020-06, early adoption had no
effect on the Company’s condensed consolidated financial
statements.
In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments—Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments.
This guidance introduces a new model for recognizing credit losses
on financial instruments based on an estimate of current expected
credit losses. This ASU also provides updated guidance regarding
the impairment of available-for-sale debt securities and includes
additional disclosure requirements. The new guidance is effective
for non-public companies, and public business entities that meet
the definition of a Smaller Reporting Company as defined by the
Securities and Exchange Commission (SEC), for interim and annual
periods beginning after December 15, 2022. On December 31, 2021,
the Company became a large accelerated filer, as defined by the
SEC, and, as a result, adopted this guidance effective January 1,
2021, which did not have a material impact on the Company's
consolidated financial statements.
3. Fair Value Measurements
The Company’s financial assets and liabilities subject to fair
value measurements on a recurring basis and the level of inputs
used for such measurements were as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measured as of June 30, 2022:
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets included in: |
|
|
|
|
|
|
|
Money market funds included in cash and cash
equivalents |
$ |
700,237 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
700,237 |
|
Equity investment |
$ |
5,090 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,090 |
|
Total fair value |
$ |
705,327 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
705,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measured as of December 31, 2021:
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets included in: |
|
|
|
|
|
|
|
Money market funds included in cash and cash
equivalents |
$ |
1,191,079 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,191,079 |
|
Total fair value |
$ |
1,191,079 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,191,079 |
|
The fair value of the Company’s money market funds is determined
using quoted market prices in active markets for identical assets.
The carrying amounts included in the Condensed Consolidated Balance
Sheets under Current assets approximate fair value because of the
short maturity of these instruments.
On July 28, 2021, the Company made a commitment for a private
investment in public equity (PIPE) supporting the planned merger of
European EV charging network, Allego B.V. (“Allego”) with Spartan
Acquisition Corp. III (NYSE: SPAQ), a publicly-listed special
purpose acquisition company. Fisker Inc. is the exclusive electric
vehicle automaker in the PIPE and, in parallel, agreed to terms to
deliver a range of charging options for its customers in Europe. On
March 16, 2022, the merger closed and the Company delivered cash of
$10 million in exchange for 1,000,000 shares of Allego's Class
A common stock (NYSE:ALLG). The Company's ownership percentage is
less than 5% and does not result in significant influence. Allego
filed with the U.S. Securities and Exchange Commission ("SEC") a
registration statement registering the resale of the shares
acquired (the “Registration Statement”) that was declared effective
by the SEC during the second quarter of 2022. The Company has
classified its equity investment in Allego as a current asset.
Unrealized losses recognized during the three and six-months ended
June 30, 2022 on equity securities still held as of
June 30, 2022 totaled 10.0 million and
$4.9 million, respectively
as shown separately in the Condensed Consolidated Statement of
Operations.
We carry the convertible senior notes at face value less the
unamortized debt issuance costs on our consolidated balance sheets
and present that fair value for disclosure purposes only. As of
June 30, 2022, the fair value of the 2026 Notes
was
$399.2 million. The
estimated fair value of the convertible notes, which are classified
as Level 2 financial instruments, was determined based on the
estimated or actual bid prices of the convertible notes in an
over-the-counter market on the last business day of the
period.
For the six-months ended June 30, 2021, the Company measured
its derivative liability for its private and public warrants at
fair value on a recurring basis. The private warrants fair value is
determined based on significant inputs not observable in the
market, which caused it to be classified as a Level 3 measurement
within the fair value hierarchy. The Company used an option pricing
simulation model for the valuation of the private warrants, which
used assumptions the Company believed would be made by a market
participant in making the same valuation. all of which were
exercised in March 2021. The public warrants fair value is
determined using its publicly traded prices (Level 1). All of the
public and private warranted were exercised or redeemed in 2021.
Changes in the fair value of the derivative liability related to
updated assumptions and estimates are recognized within the
Condensed Consolidated Statements of Operations as a non-operating
expense. For the six-months ended June 30, 2021, the changes
in the fair value of the derivative liability resulted from changes
in the fair values of the underlying Class A common shares and its
associated volatility upon exercise in March 2021.
4. Intangible Assets
The Company has the following intangible assets (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2022
|
|
Amortization Period |
|
Gross
Carrying
Amount |
|
Accumulated
Amortization |
|
Net |
Capitalized cost - manufacturing |
8 years |
|
$ |
244,914 |
|
|
$ |
— |
|
|
$ |
244,914 |
|
|
|
|
$ |
244,914 |
|
|
$ |
— |
|
|
$ |
244,914 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2021
|
|
Amortization
Period |
|
Gross
Carrying
Amount |
|
Accumulated
Amortization |
|
Net |
Capitalized cost - manufacturing |
8 years |
|
$ |
231,525 |
|
|
$ |
— |
|
|
$ |
231,525 |
|
|
|
|
$ |
231,525 |
|
|
$ |
— |
|
|
$ |
231,525 |
|
The Company did not amortize the capitalized cost associated with
the warrants granted to Magna International, Inc. (“Magna”) for the
six-months ended June 30, 2022 as amortization will commence
on a straight-line basis with the start of production for the
Fisker Ocean which is expected to occur in the fourth quarter of
2022. The Company expects to amortize the intangible asset over
eight years but will continually assess the reasonableness of the
estimated life. Refer to Note 9 for additional information
regarding the capitalization of costs upon issuance of warrants to
Magna. Also, the Company capitalized certain costs associated with
manufacturing of the Fisker Ocean and production of parts , which
will be amortized beginning with the start of production for the
Fisker Ocean over eight years.
5. Property and Equipment, Net
Property and equipment, net, consists of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2022 |
|
December 31, 2021 |
Machinery and equipment |
$ |
1,242 |
|
|
$ |
1,174 |
|
Furniture and fixtures |
450 |
|
|
307 |
|
IT hardware and software |
3,544 |
|
|
3,778 |
|
Leasehold improvements |
90 |
|
|
20 |
|
Construction in progress |
174,267 |
|
|
81,160 |
|
Total property and equipment |
179,593 |
|
|
86,439 |
|
Less: Accumulated depreciation and amortization |
(1,664) |
|
|
(796) |
|
Property and equipment, net |
$ |
177,929 |
|
|
$ |
85,643 |
|
As of June 30, 2022, accounts payable and accrued expenses
includes acquired property and equipment
of $28.4 million
compared to $35.4 million as of December 31, 2021, which
is excluded from net cash used in investing activities as reported
in the condensed consolidated statement of cash flows for the
six-months ended June 30, 2022.
6. Accrued Expenses
A summary of the components of accrued expenses is as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2022 |
|
December 31, 2021 |
Accrued vendor liabilities |
$ |
46,435 |
|
|
$ |
67,293 |
|
Accrued payroll |
2,756 |
|
|
1,989 |
|
Accrued professional fees |
2,550 |
|
|
3,579 |
|
Accrued interest |
4,867 |
|
|
6,165 |
|
Accrued other |
219 |
|
|
608 |
|
Total accrued expenses |
$ |
56,827 |
|
|
$ |
79,634 |
|
Accrued expenses include amounts owed to vendors but not yet
invoiced in exchange for vendor purchases and research and
development services. Certain estimates of accrued vendor expenses
are based on costs incurred to date.
7. Customer Deposits
Customer deposits consists of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2022 |
|
December 31, 2021 |
Customer reservation deposits |
$ |
13,696 |
|
|
$ |
5,546 |
|
Customer SUV option |
754 |
|
|
754 |
|
Total customer deposits |
$ |
14,450 |
|
|
$ |
6,300 |
|
8. Convertible Senior Notes
2026 Notes
In August 2021, we issued an aggregate of $667.5 million principal
amount of 2.50% convertible senior notes due in September 2026 (the
“2026 Notes”) in a private offering to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended. The 2026 Notes have been designated as green bonds, whose
proceeds will be allocated in accordance with the Company’s green
bond framework. The 2026 Notes consisted of a $625 million initial
placement and an over-allotment option that provided the initial
purchasers of the 2026 Notes with the option to purchase an
additional $100.0 million aggregate principal amount of the 2026
Notes, of which $42.5 million was exercised. The 2026 Notes were
issued pursuant to an indenture dated August 17, 2021. The net
proceeds from the issuance of the 2026 Notes were $562.2 million,
net of debt issuance costs and cash used to purchase the capped
call transactions (“2026 Capped Call Transactions”) discussed
below. The debt issuance costs are amortized to interest
expense.
The 2026 Notes are unsecured obligations which bear regular
interest at 2.50% annually and will be payable semiannually in
arrears on March 15 and September 15 of each year, beginning on
March 15, 2022. The 2026 Notes will mature on September 15, 2026,
unless repurchased, redeemed, or converted in accordance with their
terms prior to such date. The 2026 Notes are convertible into cash,
shares of our Class A common stock, or a combination of cash and
shares of our Class A common stock, at our election, at an initial
conversion rate of 50.7743 shares of Class A common stock per
$1,000 principal amount of 2026 Notes, which is equivalent to an
initial conversion price of approximately $19.70 per share of our
Class A common stock. The conversion rate is subject to customary
adjustments for certain events as described in the indenture
governing the 2026 Notes. We may redeem for cash all or any portion
of the 2026 Notes, at our option, on or after September 20, 2024 if
the last reported sale price of our Class A common stock has been
at least 130% of the conversion price then in effect for at least
20 trading days at a redemption price equal to 100% of the
principal amount of the 2026 Notes to be redeemed, plus accrued and
unpaid interest to, but excluding, the redemption
date.
Holders of the 2026 Notes may convert all or a portion of their
2026 Notes at their option prior to June 15, 2026, in multiples of
$1,000 principal amounts, only under the following
circumstances:
•during
any calendar quarter commencing after the calendar quarter ending
on September 30, 2021 (and only during such calendar quarter),
if the last reported sale price of the Class A common stock for at
least 20
trading days (whether or not consecutive) during a period of 30
consecutive trading days ending on, and including, the last trading
day of the immediately preceding calendar quarter is greater than
or equal to 130% of the conversion price on each applicable trading
day;
•during
the
five-business day period after any
ten consecutive trading day period (the “measurement
period”) in which the trading price per $1,000 principal amount of
the 2026 Notes for each trading day of the measurement period was
less than 98% of the product of the last reported sale price of our
Class A common stock and the applicable conversion rate of the 2026
Notes on such trading day;
•if
we call such 2026 Notes for redemption, at any time prior to the
close of business on the scheduled trading day immediately
preceding the redemption date, but only with respect to the notes
called (or deemed called) for redemption; or
•on
the occurrence of specified corporate events.
On or after June 15, 2026, the 2026 Notes are convertible at any
time until the close of business on the second scheduled trading
day immediately preceding the maturity date. Holders of the 2026
Notes who convert the 2026 Notes in connection with a make-whole
fundamental change, as defined in the indenture governing the 2026
Notes, or in connection with a redemption may be entitled to an
increase in the conversion rate. Additionally, in the event of a
fundamental change, holders of the 2026 Notes may require us to
repurchase all or a portion of the 2026 Notes at a price equal to
100% of the principal amount of 2026 Notes, plus any accrued and
unpaid interest to, but excluding, the fundamental change
repurchase date.
We accounted for the issuance of the 2026 Notes as a single
liability measured at its amortized cost, as no other embedded
features require bifurcation and recognition as
derivatives.
As of June 30, 2022, the 2026 Notes consisted of the following
(in thousands):
|
|
|
|
|
|
Principal |
$ |
667,500 |
|
Unamortized debt issuance costs |
(7,527) |
|
Net carrying amount |
$ |
659,973 |
|
Interest
expense related to the amortization of debt issuance costs for the
three and six-months ended June 30, 2022 was $0.4 million and
$0.6 million, respectively.
Contractual interest expense for the three and six-months ended
June 30, 2022
was $4.1 million and $8.2 million, respectively.
As of June 30, 2022,
the if-converted value of the 2026 Notes did not exceed the
principal amount. The
2026 Notes were not eligible for conversion as of June 30,
2022.No sinking fund is provided for the 2026 Notes, which means
that we are not required to redeem or retire them
periodically.
Capped Call Transactions
In connection with the offering of the 2026 Notes, we entered into
the 2026 Capped Call Transactions with certain counterparties at a
net cost of $96.8 million. The 2026 Capped Call Transactions are
purchased capped call options on $33.9 million shares Class A
common stock, that, if exercised, can be net share settled, net
cash settled, or settled in a combination of cash or shares
consistent with the settlement elections made with respect to the
2026 Notes if converted. The cap price is initially $32.57 per
share of our Class A common stock and subject to certain
adjustments under the terms of the 2026 Capped Call Transactions.
The strike price is initially $19.70 per share of Class A common
stock, subject to customary anti-dilution adjustments that mirror
corresponding adjustments for the 2026 Notes.
The 2026 Capped Call Transactions are intended to reduce potential
dilution to holders of our Class A common stock upon conversion of
the 2026 Notes and/or offset any cash payments we are required to
make in excess of the principal amount, as the case may be, with
such reduction or offset subject to a cap. The cost of the Capped
Call Transactions was recorded as a reduction of our additional
paid-in capital in our consolidated balance sheets. The Capped Call
Transactions will not be remeasured as long as they continue to
meet the conditions for equity classification.
9. Common Stock and Warrants
Public and Private Warrants
On March 19, 2021, the Company announced that it would redeem
all of its outstanding warrants (the “Public Warrants”) to purchase
shares of the Company’s Class A common stock, par value $0.00001
per share (the “Common Stock”), that were issued under the Warrant
Agreement, dated August 9, 2018 (the “Warrant Agreement”), by and
between the Company and Continental Stock Transfer & Trust
Company, as warrant agent (the “Warrant Agent”), as part of the
units sold in the Company’s initial public offering (the “IPO”),
for a redemption price of $0.01 per Public Warrant (the “Redemption
Price”), that remained outstanding at 5:00 p.m. New York City time
on April 22, 2021 (the “Redemption Date”). The Private Placement
Warrants were not subject to this redemption. In addition, in
accordance with the Warrant Agreement, the Company’s board of
directors elected to require that, upon delivery of the notice of
redemption, all Public Warrants were to be exercised only on a
“cashless basis.” Accordingly, holders could not exercise Public
Warrants and receive Common Stock in exchange for payment in cash
of the $11.50 per warrant exercise price. Instead, a holder
exercising a Public Warrant was deemed to pay the $11.50 per
warrant exercise price by the surrender of 0.5046 of a share of
Common Stock that such holder would have been entitled to receive
upon a cash exercise of a Public Warrant. Accordingly, by virtue of
the cashless exercise of the Public Warrants, exercising warrant
holders received 0.4954 of a share of Common Stock for each Public
Warrant surrendered for exercise. For the unexercised 225,906
Public Warrants outstanding at the Redemption Date, the Company
paid $2,259 to redeem the unexercised warrants in the second
quarter of 2021. There are no Public Warrants outstanding as of
June 30, 2022 and December 31, 2021.
During March 2021, the 9,360,000 warrants to purchase Common Stock
that were originally issued under the Warrant Agreement in a
private placement simultaneously with the IPO were exercised by the
Company’s former sponsor on a cashless basis for 4,907,329 shares
of Common Stock (4,452,671 shares of Common Stock surrendered) and
are no longer outstanding. During the six-months ended
June 30, 2021, the Company received cash
proceeds
of $89 million
upon the exercise
of 7,733,400 Public
Warrants immediately prior to the announcement to redeem the Public
Warrants. Cashless exercises of public and private warrants
increased additional paid-in capital
by $24 million and $277 million, respectively, for
the three and six-months ended June 30, 2021.
Magna Warrants
On October 29, 2020, the Company granted Magna up to
19,474,454 warrants, each with an exercise price of $0.01, to
acquire underlying shares of Class A common stock of Fisker, which
represented approximately 6.0% ownership in Fisker on a fully
diluted basis as of the grant date. The right to exercise vested
warrants expires on October 29, 2030. The warrants are
accounted for as an award issued to non-employees measured on
October 29, 2020 with three interrelated performance conditions
that are separately evaluated for achievement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Milestone |
|
Percentage of
Warrants that
Vest Upon
Achievement |
|
Number of
Warrants that
Vest Upon
Achievement |
(a) (i) Achievement of the “preliminary production specification”
gateway as set forth in the Development Agreement; (ii) entering
into the Platform Agreement; and (iii) entering into the Initial
Manufacturing Agreement |
|
33.3 |
% |
|
6,484,993 |
|
(b) (i) Achievement of the “target agreement” gateway as set forth
in the Development Agreement and (ii) entering into the Detailed
Manufacturing Agreement, which will contain terms and conditions
agreed to in the Initial Manufacturing Agreement |
|
33.3 |
% |
|
6,484,993 |
|
(c) Start of pre-serial production |
|
33.4 |
% |
|
6,504,468 |
|
|
|
|
|
19,474,454 |
|
The cost upon achievement of each milestone is recognized when it
is probable that a milestone will be met. The cost for awards to
nonemployees is recognized in the same period and in the same
manner as if the Company had paid cash for the goods or services.
At June 30, 2022, Magna satisfied the first and second
milestones and the Company capitalized costs as an intangible asset
representing the future economic benefit to Fisker Inc. As of
June 30, 2022, the Company determined the third milestone is
probable of achievement and capitalized a portion of the award's
fair value corresponding to the service period beginning at the
grant date and ending in the fourth quarter of 2022. The
unrecognized portion of the award will be recognized ratably over
the remainder of the service period ending upon start of pre-serial
production, which is estimated to occur in the fourth quarter of
2022. Changes in the estimated timing of start of pre-serial
production will require a cumulative adjustment for a change in
accounting estimate. For the six-months ended June 30, 2022, a
recognized
cost of
$13.4 million associated
with services rendered increased capitalized cost -
manufacturing
to $244.9 million as
of June 30, 2022. Because there are multiple milestones to
achieve, the intangible asset is under development and will be
complete when start of pre-serial production begins. The Company
will amortize the aggregate capitalized cost in a systematic and
rational manner. Throughout its useful life, including the period
of time before completion, the Company will assess the intangible
asset for impairment. If an indicator of impairment exists, the
undiscounted cash flows will be estimated and then if the carrying
amount of the intangible asset is not recoverable, determine its
fair value and record an impairment loss. At June 30, 2022, no
indicators of impairment exists.
The fair value of each warrant is equal to the intrinsic value
(e.g., stock price on grant date less exercise price) as the
exercise price is $0.01. The terms of the warrant agreement require
net settlement when exercised. Using the measurement date stock
price of $8.96 for a share of Class A common stock, the warrant
fair values for each tranche is shown below. Capitalized cost also
results in an increase to additional paid in capital equal to the
fair value of the vested warrants. Awards vest when a milestone if
met. Magna has
12,969,986 vested
and exercisable warrants to acquire underlying Class A common stock
of Fisker as of June 30, 2022, none of which are
exercised.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value |
|
Capitalized at June 30, 2022 |
Milestone (a) |
$ |
58,041 |
|
|
$ |
58,041 |
|
Milestone (b) |
58,041 |
|
|
58,041 |
|
Milestone (c) |
58,215 |
|
|
44,826 |
|
|
$ |
174,297 |
|
|
$ |
160,908 |
|
At-the-market Equity Program
In May, 2022, we entered into an at-the-market distribution
agreement, dated May 24, 2022 with J.P. Morgan Securities LLC and
Cowen and Company, LLC as the sales agents (the "Distribution
Agreement"), pursuant to which the Company established an
at-the-market equity program (the “ATM Program”). Pursuant to the
ATM Program, Fisker may, at its discretion and from time to time
during the term of the Distribution Agreement, sell, through the
Agents, shares of its Class A Common Stock, par value $0.00001 (the
“Class A Common Stock”) as would result in aggregate gross proceeds
to the Company of up to
$350 million
by any method permitted by law deemed to be an “at-the-market
offering” as defined in Rule 415 of the Securities Act of 1933, as
amended, including without limitation sales made directly on the
New York Stock Exchange, on any other existing trading market for
the Class A Common Stock or to or through a market maker. In
addition, the sales agents may also sell the shares of Class A
Common Stock by any other method permitted by law, including, but
not limited to, negotiated transactions. The Class A Common Stock
sold under the ATM Program
is registered with the SEC under the Company's effective shelf
registration statement that permits the Company to issue various
securities for proceeds of up to $2.0 billion. The Company issued
1,388,157 shares of Class A common stock during the three-months
ended June 30, 2022 for gross proceeds of $14.9 million, before
$0.4 million of commissions and other direct incremental issuance
costs, and, as of June 30, 2022, $335 million of Class A Common
Stock is available for sale under the ATM Program. As of June 30,
2022, the Company may issue securities in the future for up to
$1.65 billion under its shelf-registration statement, subject to
customary underwriting and due diligence procedures.
10. Loss Per Share
The Company computes earnings (loss) per share of Class A Common
Stock and Class B Common Stock using the two-class method required
for participating securities. Basic and diluted earnings per share
was the same for each period presented as the inclusion of all
potential Class A Common Stock and Class B Common Stock outstanding
would have been anti-dilutive. Basic and diluted earnings per share
are the same for each class of common stock because they are
entitled to the same liquidation and dividend rights. The following
table sets forth the computation of basic and diluted loss per
Class A Common Stock and Class B Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended June 30, |
|
2022 |
|
2021 |
Numerator: |
|
|
|
Net loss |
$ |
(105,976) |
|
|
$ |
(46,222) |
|
Denominator: |
|
|
|
Weighted average Class A common shares outstanding |
165,915,673 |
|
|
162,921,645 |
|
Weighted average Class B common shares outstanding |
132,354,128 |
|
|
132,354,128 |
|
Weighted average Class A and Class B common shares outstanding-
Basic and Diluted |
298,269,801 |
|
|
295,275,773 |
|
Net loss per share attributable to Class A and Class B Common
shareholders- Basic and Diluted |
$ |
(0.36) |
|
|
$ |
(0.16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
Numerator: |
|
|
|
Net loss |
$ |
(228,050) |
|
|
$ |
(223,065) |
|
Denominator: |
|
|
|
Weighted average Class A common shares outstanding |
165,204,490 |
|
|
155,234,925 |
|
Weighted average Class B common shares outstanding |
132,354,128 |
|
|
132,354,128 |
|
Weighted average Class A and Class B common shares outstanding-
Basic and Diluted |
297,558,618 |
|
|
287,589,053 |
|
Net loss per share attributable to Class A and Class B Common
shareholders- Basic and Diluted |
$ |
(0.77) |
|
|
$ |
(0.78) |
|
The following table presents the potential common shares
outstanding that were excluded from the computation of diluted net
loss per share of common stock as of the periods presented because
including them would have been antidilutive:
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, |
|
2022 |
|
2021 |
Convertible senior notes |
33,891,845 |
|
|
— |
|
Stock options and warrants |
30,561,179 |
|
|
31,185,282 |
|
Total |
64,453,024 |
|
|
31,185,282 |
|
11. Stock Based Compensation
The 2020 Equity Incentive Plan (the “Plan”) is a stock-based
compensation plan which provides for the grants of options and
restricted stock to employees and consultants of the Company.
Options granted under the Plan may be either incentive options
(“ISO”) or nonqualified stock options (“NSO”). Also, the Company
established a 2020 Employee Stock Purchase Plan (the “ESPP”) under
which Class A Common Stock may be issued. As of June 30, 2022,
no shares have been issued under the ESPP.
Stock-based compensation expense is as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-months Ended June 30, |
|
2022 |
|
2021 |
General and administrative expense |
$ |
418 |
|
|
$ |
444 |
|
Research and development |
777 |
|
|
1,774 |
|
Total |
$ |
1,195 |
|
|
$ |
2,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-months Ended June 30, |
|
2022 |
|
2021 |
General and administrative expense |
$ |
2,191 |
|
|
$ |
617 |
|
Research and development |
4,069 |
|
|
2,418 |
|
Total |
6,260 |
|
|
3,035 |
|
Stock options
Options under the Plan may be granted at prices as determined by
the Board of Directors, provided, however, that (i) the exercise
price of an ISO and NSO 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. The fair value of the shares is determined by the
Board of Directors on the date of grants. Stock options generally
have a contractual life of 10 years. Upon exercise, the Company
issues new shares.
In 2016 and 2017, the Company’s founders were granted an aggregate
of 15,882,711 options which are fully vested and are not related to
performance. Options granted to other employees and consultants
become vested and are exercisable over a range of up to six years
from the date of grant.
The following table summarizes option activity under the
Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
Weighted
Average
Exercise
Price |
|
Weighted
Average
Contractual
Term (in
Years) |
Balance as of December 31, 2021 |
17,695,560 |
|
|
1.44 |
|
|
5.6 |
Granted |
261,300 |
|
|
11.87 |
|
|
|
Exercised |
(144,313) |
|
|
2.65 |
|
|
|
Forfeited |
(221,354) |
|
|
11.50 |
|
|
|
Balance as of June 30, 2022 |
17,591,193 |
|
|
1.46 |
|
|
5.2 |
The fair value of each stock option grant under the Plan was
estimated on the date of grant using the Black-Scholes option
pricing model, with the following range of
assumptions:
|
|
|
|
|
|
|
Six-months Ended June 30, 2022 |
Expected term (in years) |
6.3 |
Volatility |
79.7% to 81.4%
|
Dividend yield |
0.0% |
Risk-free interest rate |
2.82% to 3.26%
|
Common stock price |
$9.03 to $12.24
|
The Black-Scholes option pricing model requires various highly
subjective assumptions that represent management’s best estimates
of the fair value of the Company’s common stock, volatility,
risk-free interest rates, expected term, and dividend yield. As the
Company’s shares have actively traded for a short period of time
subsequent to the Business Combination, volatility is based on a
benchmark of comparable companies within the automotive and energy
storage industries.
The expected term represents the weighted-average period that
options granted are expected to be outstanding giving consideration
to vesting schedules. Since the Company does not have an extended
history of actual exercises, the Company has estimated the expected
term using a simplified method which calculates the expected term
as the average of the time-to-vesting and the contractual life of
the awards. The Company has never declared or paid cash dividends
and does not plan to pay cash dividends in the foreseeable future;
therefore, the Company used an expected dividend yield of zero. The
risk-free interest rate is based on U.S. Treasury rates in effect
during the expected term of the grant. The expected volatility is
based on historical volatility of publicly-traded peer
companies.
Restricted stock awards
During the six-months ended June 30, 2022, the Company granted
employees, who rendered services during the year ended
December 31, 2021 and were employees of the Company on the
grant date, a restricted stock unit (“RSU”) award based in
proportion to the service period beginning from the employee’s hire
date to the end of the year. The restricted stock unit awards
vested on the grant date which resulted in stock-based compensation
expense
of $4.0 million recognized
in the six-months ended June 30, 2022. The Company’s founders
declined to receive an award related to performance in 2021. In
accordance with the Company’s Outside Director Compensation Policy,
each outside Board of Directors member will receive an annual RSU
equal to $200,000 granted on the date of the Company’s annual
shareholders’ meeting which vests in 25% increments at the end of
each calendar quarter. Each Outside Director may elect to convert
all or a portion of his or her annual Board of Directors retainer,
excluding any annual retainer that an Outside Director may receive
for serving as Lead Director and any annual retainers for committee
service, into RSUs in lieu of the applicable cash retainer payment
(“RSU Election”).
The number of Class A common shares granted to Outside Directors
annually are based on the 30-day average closing trading price of
Class A common stock on the day preceding the grant date (“RSU
Value”). When an Outside Director exercises his or her RSU
Election, the number of Class A common shares equal the amount of
cash subject to such RSU Election divided by the applicable RSU
Value and are fully vested.
The following table summarizes RSU activity under the
Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU Awards |
|
Weighted Average Grant Date Fair Value |
|
Unvested as of December 31, 2021 |
17,174 |
|
|
$ |
13.47 |
|
|
Awarded |
372,484 |
|
|
10.67 |
|
Vested |
(376,890) |
|
|
11.38 |
|
Forfeited |
(1,016) |
|
|
11.46 |
|
Unvested as of June 30, 2022 |
11,752 |
|
|
$ |
12.72 |
|
|
Performance-based restricted stock awards
In the third quarter of 2021, the Company’s compensation committee
ratified and approved performance-based restricted stock units
(“PRSUs”) to all employees (“Grantee”) the value of which is
determined based on the Grantee’s level within the Company (“PRSU
Value”). Each PRSU is equal to one underlying share of Class A
common stock. Also, PRSUs will be awarded to any new employee hired
during 2022 and 2023 on a pro-rata basis based on a reduction in
time of service. The number of shares subject to a Grantee’s PRSU
award equals the Grantee’s PRSU Value divided by the closing price
per Class A common share on the service inception date, or if the
service inception date is not a trading day, the closing price per
Share on the closest trading day immediately prior to the service
inception date; in each case rounded down to the nearest whole
number. Each PRSU award shall vest as to 50% of the PRSU Value upon
the Committee’s determination, in its sole discretion, and
certification of the occurrence of the Ocean Start of Production
and shall vest as to 50% of the PRSUs upon the first anniversary of
the Ocean Start of Production, in each case, subject to (i) the
Grantee’s continuous service through the applicable vesting date,
(ii) the Grantee’s not committing any action or omission that would
constitute Cause for termination through the applicable vesting
date, as determined in the sole discretion of the Company, and
(iii) the Ocean Start of Production occurring on or before December
31, 2022. The compensation committee has discretion to reduce or
eliminate the number of PRSUs that shall vest pursuant to each PRSU
award upon the certification of the occurrence of the Ocean Start
of Production and/or upon the first anniversary of the Ocean Start
of Production, after considering, any factors that it deems
relevant, which could include but are not limited to (i) Company
performance against key performance indicators, and (ii)
departmental performance against goals. The service inception date
precedes the grant dates for both performance conditions. The grant
date for each of the performance conditions is the date Grantees
have a mutual understanding of the key terms and conditions of the
PRSU, which will occur when each performance conditions is
achieved, and the compensation committee has determined whether it
will exercise its discretion to adjust the PRSU award. As of
June 30, 2022, the Company
has approved and authorized PRSUs equal to 2,563,913 shares of
Class A common stock with a PRSU value of $34.0 million.
Recognition
of stock-based compensation occurs when the grant date is
determined, and performance conditions are probable of achievement.
As a grant date has not yet been determined, stock-based
compensation costs related to PRSU awards have not yet been
recognized. Measurement of stock-based compensation attributed to
the PRSU awards will be based on the fair value of the underlying
Class A common stock once the grant date is determined (e.g.,
variable accounting).
12. Related Party Transactions
On March 8, 2021, the Company appointed Mitchell Zuklie to its
Board of Directors . Mr. Zuklie is the chairman of the law firm of
Orrick, Herrington & Sutcliff LLP (‘‘Orrick’’), which provides
various legal services to the Company. During the
three-months
ended June 30, 2022 and 2021, the Company incurred expenses
for legal services rendered by Orrick totaling approximately $1.4
million and $0.3 million, respectively,
and $3.1 million and $0.4 million for the six-months ended
June 30, 2022 and 2021, respectively.
13. Commitments and Contingencies
The Company is not a party to any material legal proceedings and is
not aware of any pending or threatened material claims. From time
to time however, the Company may be subject to various legal
proceedings and claims that arise in the ordinary course of its
business activities.
In July 2022, the Company began accepting pre-ordered deposits of
$5,000 or equivalent currency for Fisker Ocean Ones, a
limited-edition trim level of the Fisker Ocean. All 5,000 Fisker
Ocean Ones have been pre-ordered with a payment of $5,000 or
equivalent currency for each order. The deposited amounts will be
applied to the sales price of the vehicle and
recognized as revenue when the vehicle is sold and delivered to the
customer. The Company has an agreement with a financial institution
that holds cash received from pre-order deposits made through
credit card transactions until the vehicle is delivered to the
customer at which time the cash is deposited into the Company's
bank account and available for its use. Deposits paid directly to
the Company via ACH or other direct payment mechanism are received
in the Company bank account and available for its use within 15
days after the end of the month in which the pre-order was
placed.
On April 04, 2022, the Company entered into a lease agreement with
Shamrock (La Palma) Properties II, LLC as a tenant at 14
Centerpointe Drive located in the City of La Palma, California. The
agreement provides for, among other things, (a) approximately
78,980 of rentable square feet (b) a lease commencement date on
May 1, 2022, and will continue for 7 years thereafter, with an
option to extend the term by one additional period of 5 years (c)
minimum base monthly rental amount of $78,980. Monthly rental
payments are adjusted annually based on a pre-determined schedule
and are recognized on a straight-line basis over the term of the
lease. Upon commencement of the lease, the Company recognized a
non-cash right-of-use asset and corresponding lease liability of
$11.1 million using an estimate of its incremental borrowing rate
of 6.00%.
Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
Overview
The following discussion and analysis should be read in conjunction
with the condensed consolidated financial statements and the
related notes included elsewhere in this report.
OVERVIEW
Fisker is building a technology-enabled, asset-light automotive
business model that it believes will be among the first of its kind
and aligned with the future state of the automotive industry. This
involves a focus on vehicle development, customer experience, sales
and service intended to change the personal mobility experience
through technological innovation, ease of use and flexibility. The
Company combines the legendary design and engineering expertise of
Henrik Fisker to develop high quality electric vehicles with strong
emotional appeal. Central to Fisker’s business model is the Fisker
Flexible Platform Agnostic Design (“FF-PAD”), a proprietary process
that allows the development and design of a vehicle to be adapted
to any given electric vehicle (“EV”) platform in the specific
segment size. The process focuses on selecting industry leading
vehicle specifications and adapting the design to crucial hard
points on a third-party supplied EV platform and outsourced
manufacturing to reduce development cost and time to market. The
first example of this is Fisker’s work to adapt the Fisker Ocean
design to a base vehicle platform developed by Magna Steyr
Fahrzeugtechnik AG & Co KG, a limited liability partnership
established and existing under the laws of Austria (“Magna Steyr”),
an affiliate of Magna International, Inc. (“Magna”). This
development with Magna Steyr began in September 2020 and passed the
first and second engineering gateways in November 2020 and March
2021, respectively and we are currently in the prototype building
phase for production in November 2022. Fisker believes it is
well-positioned through its global premium EV brand, its renowned
design capabilities, its sustainability focus, and its asset-light
and low overhead, direct to consumer business model which enables
products like the Fisker Ocean to be priced roughly equivalent to
internal combustion engine-powered SUV’s from premium brand
competitors.
The Fisker Ocean is targeting a large and rapidly expanding
“premium with volume” segment (meaning a premium automaker
producing more than 100,000 units of a single model such as the BMW
X3 Series or Tesla Model Y) of the electric SUV market. Fisker
expects to begin production of the Ocean as early as the fourth
quarter of 2022. The Fisker Ocean, a five-passenger vehicle with
potentially a 250- to over 350-mile range and state-of-the-art
advanced driver assistance capabilities, will be differentiated in
the marketplace by its innovative and timeless design and a
re-imagined customer experience delivered through an advanced
software-based user interface. The Fisker Ocean is designed for a
high degree of sustainability, using recycled rubber, eco-suede
interior trim made from recycled polyester, and carpeting from
fishing nets and plastic bottles recycled from ocean waste, among
many other sustainable features. The optional features for the
Ocean, including California Mode (patent pending) and a solar
photovoltaic roof resulted in the Fisker Ocean prototype being the
most awarded new automobile at CES 2020 by Time, Newsweek, Business
Insider, CNET and others.
Fisker believes its innovative business model, including
“E-Mobility-as-a-Service” (“EMaaS”), will revolutionize how
consumers view personal transportation and car ownership. Over
time, Fisker plans to combine a customer-focused experience with
flexible leasing options, affordable monthly payments and no fixed
lease terms, in addition to direct-to-consumer sales. Through an
innovative partnership strategy, Fisker believes that it will be
able to significantly reduce the capital intensity typically
associated with developing and manufacturing vehicles, while
maintaining flexibility and optionality in component sourcing and
manufacturing due to Fisker’s FF-PAD proprietary process. Through
Fisker’s FF-PAD proprietary process, Fisker is currently working
with Magna to develop a proprietary electric vehicle platform
called FM29 that will underpin Fisker Ocean and at least one
additional nameplate. Fisker intends to cooperate with one or more
additional industry-leading original equipment manufacturers
(“OEMs”), technology companies, and/or tier-one automotive
suppliers for access to procurement networks, while focusing on key
differentiators in innovative design, software and user interface.
Multiple platform-sharing partners is intended to accelerate growth
in Fisker’s portfolio of electric vehicle offerings. Fisker
envisions a go-to-market strategy with both web- and app-based
digital sales, loan financing approvals, leasing, and service
management, with limited reliance on traditional brick-and-mortar
“sales-and-service” dealer networks. Fisker believes that this
customer-focused approach will drive revenue, user satisfaction and
higher margins than competitors.
The Business Combination
Fisker was originally incorporated in the State of Delaware in
October 13, 2017 as a special purpose acquisition company under the
name Spartan Energy Acquisition Corp. (“Spartan”), formed for the
purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, recapitalization, reorganization or
similar business combination
with one or more businesses. Spartan completed its IPO in August
2018. In October 2020, Spartan’s wholly-owned subsidiary merged
with and into Fisker Holdings, Inc. (f/k/a Fisker Inc.) a Delaware
corporation (“Legacy Fisker”), with Legacy Fisker surviving the
merger as a wholly-owned subsidiary of Spartan (the “Business
Combination”). In connection with the consummation of the Business
Combination (the “Closing”), Spartan changed its name to Fisker
Inc.
The Business Combination was accounted for as a reverse
recapitalization, in accordance with GAAP. Under this method of
accounting, Spartan was treated as the “acquired” company for
financial reporting purposes. Accordingly, the Business Combination
was treated as the equivalent of Legacy Fisker issuing stock for
the net assets of Spartan, accompanied by a recapitalization,
whereby no goodwill or other intangible assets was recorded.
Operations prior to the Business Combination are those of Legacy
Fisker.
Key Trends, Opportunities and Uncertainties
Fisker is a pre-revenue company and believes that its future
performance and success depends to a substantial extent on the
ability to capitalize on the following opportunities, which in turn
is subject to significant risks and challenges, including those
discussed below and in the section of our Annual Report on Form
10-K for the year ended December 31, 2021 filed with the SEC on
February 28, 2022 titled “Risk
Factors.”
Partnering with Industry-Leading OEMs and/or Tier-One Automotive
Suppliers
Magna Steyr / FM29 Platform (Fisker Ocean)
On October 14, 2020, Fisker and Spartan entered into a Cooperation
Agreement with Magna setting forth certain terms for the
development of a full electric vehicle (the “Cooperation
Agreement”). That Cooperation Agreement sets out the main terms and
conditions of operational phase agreements (the “Operational Phase
Agreements”) that were subsequently entered into by and between
Fisker and Magna (or its affiliates). On December 17, 2020, Fisker
entered into the platform-sharing and initial manufacturing
Operational Phase Agreements referenced in the Cooperation
Agreement. On June 12, 2021, Fisker entered into the detailed
manufacturing agreement referenced in the Cooperation Agreement. We
are creating FM29, a unique EV platform, that will have unique
Fisker intellectual property. By working with a proven contract
manufacturer such as Magna Steyr, we can accelerate our time to
market, reduce vehicle development costs, and gain access to an
established global supply chain. Our proprietary FF-PAD process is
hardware agnostic which will enable us to collaborate with multiple
EV platform developers for the production of future vehicles and
develop rapid derivatives and improvements to our current FM29
Platform. Since the inception of our Cooperation Agreement, we have
added significant certified content and tailored the FM29 platform
into a proprietary Fisker platform where we can leverage our
intellectual property and technology for certain systems and
subsystems in future vehicles and will increase efficiency in
vehicle development and speed to bring vehicles to
market.
Hon Hai Technology Group (Fisker Pear)
On May 13, 2021, the Company announced it signed framework
agreements with Hon Hai Technology Group (Foxconn) supporting the
joint development and manufacturing of project ‘PEAR’ (Personal
Electric Automotive Revolution), a project to develop a new
breakthrough electric vehicle. Under the agreements, the Company
and Foxconn will jointly invest into Project PEAR, with each
company taking proceeds from the successful delivery of the
program. Following an extensive review of manufacturing sites, the
two companies will make significant efforts to develop and execute
a manufacturing plan capable of supporting the planned start of
production. On May 12, 2022, Fisker and Foxconn confirmed that the
Fisker PEAR will be built at Foxconn's manufacturing facility in
Ohio, with production expected to start in 2024.

These co-operations allow Fisker to focus on vehicle design, supply
chain / procurement, vehicle integration, strong brand affiliation
and a differentiated customer experience. Fisker intends to
leverage multiple EV platforms and Fisker intellectual property to
accelerate its time to market, rapidly expand its product
portfolio, reduce vehicle development costs and gain access to an
established global supply chain of batteries and other
components.
Fisker believes that its business model will reduce the
considerable execution risk typically associated with new car
companies. Through Fisker's proprietary platform, component
sourcing and manufacturing partnerships, Fisker believes it will be
able to accelerate its time to market and reduce vehicle
development costs. Fisker remains on-track for Fisker Ocean
start-of-production on November 17, 2022 and intends to meet
timing, cost and quality expectations while optimally matching its
cost structure with its projected production ramp by leveraging
such partnerships and trained workforces. Remaining hardware
agnostic allows for selection of partners, components, and
manufacturing decisions to be based on both timeline and cost
advantages and enables Fisker to focus on delivering truly
innovative design features, a superior customer experience, and a
leading user interface that leverages sophisticated software and
other technology advancements.
Fisker has entered into agreements covering the FM29 platform,
development and engineering services, and manufacturing, among
others. Extended negotiation of the specific project-related
agreements, the sourcing of components or labor at higher than
anticipated cost, or any delays in sourcing suppliers of
sustainable parts may delay Fisker’s commercialization plans or
require it to change the anticipated pricing of its vehicles. Such
delays could be caused by a variety of factors, some of which may
be out of Fisker’s control. See “Risk Factors—Risks Related to
Fisker—Fisker faces risks related to health epidemics, including
the recent COVID-19 pandemic, which could have a material adverse
effect on its business and results of operations.”
Market Trends and Competition
Fisker anticipates robust demand for the Fisker Ocean, based on its
award-winning design, its unique sustainability features, the
management team’s experience and know-how and, in particular, the
growing acceptance of and demand for EVs as a substitute for
gasoline-fueled vehicles. Many independent forecasts are assuming
that EV’s as percentage of global auto sales will grow from less
than 3% in 2020 to more than 20% in 2030. One such report from RBC,
published in October 2020, assumes sales of EV’s to grow from less
than 2.0 million units globally (less than 3% of total volume) to
25 million units in 2030 (approximately 25% of total volume), a 29%
CAGR. The EV market is highly competitive, but Fisker believes it
will remain less competitive than the ICE market for some time. For
example, there are 79 nameplates sold in the US market within the
compact and midsize SUV category currently, while most observers
expect no more than 10-20 EV’s in those segments at the time Fisker
launches, most of which are expected to be priced well above Fisker
Ocean. Fisker believes the market will be broken down into three
primary consumer segments: the white space segment, the value
segment, and the conservative premium segment. See
“Information
About Fisker—Sales – Go to Market Strategy.”
in our Annual Report on Form 10-K for the year ended December 31,
2021 filed with the SEC on February 28, 2022 Fisker expects to sell
approximately 50% of its vehicles within the white space segment,
appealing to customers who want to be part of the new EV movement
and value sustainability and environmental, social, and governance
(“ESG”) initiatives. This is supported by a survey of Fisker’s
current reservation-holders which found that over 50% currently own
non-premium branded vehicles and over 50% currently own non-SUV’s
(i.e. cars, hatchbacks, minivans, etc.). Fisker believes that it
will be well positioned to be the primary alternative to Tesla in
this segment with the Ocean priced around the base price of the
Model 3 and below the base price of the Model Y. While Fisker will
compete with other EV startups, many of them are moving into the
higher luxury priced segments due to the lack of volume pricing of
components that Fisker expects to obtain through platform sharing
partnerships with industry-leading OEMs and/or tier-one automotive
suppliers. To expand market share and attract customers from
competitors, Fisker must continue to innovate and convert
successful research and development efforts into differentiated
products, including new EV models.
Fisker is also working to quantify the sustainability advancements
and claims that the Fisker brand would produce the most sustainable
vehicles in the world, which it believes will be an increasingly
important differentiator among a growing subset of consumers. To
this end, an internal analysis resulted in an announcement in June
2021 that Fisker aims to produce a 100% climate-neutral vehicle,
without the use of purchased carbon offsets, in 2027. In Fisker’s
pursuit of these objectives, it will be in competition with
substantially larger and better capitalized vehicle manufacturers.
While Fisker believes that the low-capital-intensity platform
sharing partnership strategy, together with direct-to-customer
commercialization, provides the Company with an advantage relative
to traditional and other established auto manufacturers, Fisker’s
better capitalized competitors may seek to undercut the pricing or
compete directly with Fisker’s designs by replicating their
features. In addition, while Fisker believes that its strong
management team forms the necessary backbone to execute on its
strategy, the Company expects to compete for talent, as Fisker’s
future growth will depend on hiring qualified and experienced
personnel to operate all aspects of the business as it prepares to
launch commercial operations.
Commercialization
Fisker currently anticipates commencing production of the Fisker
Ocean on November 17, 2022, with initial customer deliveries in
late 2022 at the. In July 2022, Fisker began accepting deposits for
up to 5,000 pre-orders of the launch edition Fisker Ocean One,
which required $5,000, or approximate local currency equivalent,
down payments. All 5,000 Ocean One preorders are sold out with a
deposit of $5,000 each. As of August 1, 2022, we have over 56,000
reservations and pre-orders that include 5,000 Fisker Ocean One
pre-orders
including 1,600 fleet
reservations, after accounting for about 6,819 customers who have
canceled over time. Fisker PEAR reservations are over
4,000.
Fisker plans to initially market its vehicles through its
direct-to-consumer sales model, leveraging its proprietary Flexee
app, which will serve as a one-stop-shop for all components of its
EMaaS business model. Over time, Fisker plans to develop Fisker
Lounges in select cities in North America and Europe, which will
enable prospective customers to experience Fisker vehicles through
test drives and virtual and augmented reality. Fisker also intends
to enter, in each launch market, into third-party service
partnerships with credible vehicle service organizations with
established service facilities, operations and technicians. These
companies’ services will be integrated into and booked via the
Flexee app in order to create a hassle-free, app-based service
experience for Fisker’s customers delivered at home, at work, or
with a pick-up and delivery service booked online. As an example in
Europe, Fisker has entered into non-exclusive Memorandum of
Understandings with Bridgestone and the Mekonomen Group related to
fleet management services. Fisker will continue to seek
opportunities to build the service partnership model.
Over time, Fisker aims to transform the EV sales model through the
flexible lease model, under which customers will be able to utilize
a vehicle on a month-to-month basis at an anticipated initial cost
of $379 per month for the base
model, with the ability to terminate the lease or upgrade their
vehicle at any time. Development of a fleet of high value,
sustainable EVs will allow Fisker to offer these flexible lease
options to capture more customers. Fisker intends to require a
non-refundable up-front payment of $3,000 under the flexible lease
model, which the Company believes will reduce its cash flow risk
and incentivize customers to keep their vehicles for a period of
time. Fisker anticipates that, over time, it will acquire a
substantial fleet of used EVs available for sale or further
flexible lease by Fisker, which it believes will enhance its
ability to maintain its premium brand and pricing.
Fisker believes its digital, direct-to-consumer sales model
reflects today’s changing consumer preferences and is less capital
intensive and expensive than the traditional automotive sales
models. Fisker’s commercialization strategy is, however, relatively
novel for the car industry, which has historically relied on
extensive advertising and marketing, as well as relationships with
physical car dealership networks. Should Fisker’s assumptions about
the commercialization of its vehicles prove overly optimistic or if
the Company is unable to develop, obtain or maintain the
direct-to-consumer marketing or service technology upon which its
prospective customer base would rely, Fisker may incur delays to
its ability to commercialize the Fisker Ocean. This may also lead
Fisker to make changes in its commercialization plans, which could
result in unanticipated marketing delays or cost overruns, which
could in turn adversely impact margins and cash flows or require
Fisker to change its pricing. Further, to the extent that Fisker
doesn’t generate the margins it expects upon commercialization of
the Fisker Ocean, Fisker may be required to raise additional debt
or equity capital, which may not be available or may only be
available on terms that are onerous to Fisker and its
stockholders.
Regulatory Landscape
Fisker operates in an industry that is subject to and benefits from
environmental regulations, which have generally become more
stringent over time, particularly across developed markets.
Regulations in Fisker’s target markets include economic incentives
to purchasers of EVs, tax credits for EV manufacturers, and
economic penalties that may apply to a car manufacturer based on
its fleet-wide emissions ratings. See “Information
about Fisker—Government Regulation and Credits.”
For example, a federal tax credit of $7,500 may be available to
U.S. purchasers of Fisker vehicles, which would bring the effective
estimated purchase price of the base Fisker Ocean model to
approximately $30,000. Further, the registration and sale of Zero
Emission Vehicles (“ZEVs”) in California will earn Fisker ZEV
credits, which it may be able to sell to other OEMs or tier-one
automotive suppliers seeking to access the state’s market. Several
other U.S. states have adopted similar standards. From time to
time, governments may change the economic incentives to purchasers
of EVs which could impact Fisker customers. For example, recent
German and US legislative efforts could reduce or eliminate federal
tax incentives available for purchasers of Fisker vehicles in those
markets. In the European Union, where European car manufacturers
are penalized for excessive fleet-wide emissions on the one hand
and incentivized to produce low emission vehicles on the other,
Fisker believes it may have the opportunity to monetize the ZEV
technology through fleet emissions pooling arrangements with car
manufacturers that may not otherwise meet their CO2 emissions
targets. While Fisker expects environmental regulations to provide
a tailwind to its growth, it is possible for certain regulations to
result in margin pressures. For example, regulations that
effectively impose EV production quotas on auto manufacturers may
lead to an oversupply of EVs, which in turn could promote price
decreases. As a pure play EV company, Fisker’s margins could be
particularly and adversely impacted by such regulatory
developments. Trade restrictions and tariffs, while historically
minimal between the European Union and the United States where most
of Fisker’s production and sales are expected, are subject to
unknown and unpredictable change that could impact Fisker’s ability
to meet projected sales or margins.
Key trends and economic factors affecting the automotive
industry
Recent outbreaks in certain regions, including China where
lock-downs due to COVID-19 have been imposed in more than 40
cities, may cause intermittent COVID-19-related disruptions in our
supply chain. Though we have no operations or suppliers, who will
produce Fisker Ocean components, located in Russia or Ukraine, our
FM29 platform used to manufacture the Fisker Ocean is located in
Graz, Austria and some of our key supplier operations are located
in European countries. Actions taken by Russia in Ukraine could
impact our suppliers, particularly our lower tier
suppliers.
Globally, prices for commodities remain volatile for base metals
(e.g., steel and aluminum), precious metals (e.g., palladium), and
raw materials that are used in batteries for electric vehicles
(e.g., lithium, cobalt, and nickel for batteries). Our Fisker Ocean
is comprised mainly of steel which has experienced less volatility
compared to aluminum. Further, we have agreed to our pricing in
2021 and early 2022 for our components under our long-term supply
contracts, which reduces our exposure to commodity volatility and
inflation in 2022, however some suppliers have the ability to
adjust prices based on a three-month rolling average for certain
commodities. In recent months, commodity pricing has moderated and
foreign exchange has become more favorable. Our battery chemistries
consist of a high-capacity pack that uses a lithium nickel
manganese cobalt (NMC) cell chemistry with the second high-value
pack based on lithium-ion phosphate (LFP) chemistry. We expect most
of our vehicles sold in 2022 and 2023 will have premium trim
levels, where margins are less sensitive, and NMC battery packs
compared to our base model Sport which uses the LFP battery packs
that do not contain nickel or cobalt.
Basis of Presentation
Fisker currently conducts its business through one operating
segment. As a company with no commercial operations and limited
revenues derived from merchandise sales, which is not core to our
ongoing business, Fisker’s activities to date have been limited and
were conducted primarily in the United States and its historical
results are reported under U.S. GAAP and in U.S. dollars. Upon
commencement of commercial operations, Fisker expects to expand its
global operations substantially, including in the USA and the
European Union, and as a result Fisker expects its future results
to be sensitive to foreign currency transaction and translation
risks and other financial risks that are not reflected in its
historical financial statements. As a result, Fisker expects that
the financial results it reports for periods after it begins
commercial operations will not be comparable to the financial
results included in this report or Fisker’s Annual Report on Form
10-K for the year ended December 31, 2021 filed with the SEC on
February 28, 2022.
Components of Results of Operations
Fisker is an early stage company and its historical results may not
be indicative of its future results for reasons that may be
difficult to anticipate. Accordingly, the drivers of Fisker’s
future financial results, as well as the components of such
results, may not be comparable to Fisker’s historical or projected
results of operations.
Revenues
Fisker has not begun commercial operations and currently does not
generate any revenue from vehicle sales. Once Fisker commences
production and commercialization of its vehicles, it expects that
the significant majority of its revenue will be initially derived
from direct sales of Fisker Ocean SUVs and, subsequently, from
flexible leases of its vehicles. In 2021, Fisker launched its
merchandise “Fisker Edition” where it sells direct to consumers
Fisker branded apparel and goods. While merchandise sales are not
intended to be significant portion of Fisker’s results once
production of vehicles begins, it will generate revenue
pre-production.
Cost of Goods Sold
To date, Fisker has not recorded cost of goods sold from vehicle
sales. Once Fisker commences the commercial production and sale of
its vehicles, it expects cost of goods sold to include mainly
vehicle components and parts, including batteries, direct labor
costs, amortized tooling costs and capitalized costs associated
with the Magna warrants, and reserves for estimated warranty
expenses. Related to the 2021 launch of “Fisker Edition” apparel
and goods, Fisker will realize cost of goods sold.
General and Administrative Expense
General and administrative expenses consist mainly of
personnel-related expenses for Fisker’s executive and other
administrative functions and expenses for outside professional
services, including legal, accounting and other advisory
services.
Fisker is rapidly expanding its personnel headcount, in
anticipation of the start of production of its vehicles.
Accordingly, Fisker expects its general and administrative expenses
to increase significantly in the near term and for the foreseeable
future. For example, the company expects general and administrative
expenses, excluding stock-based compensation expenses (refer to
non-GAAP financial measure discussed below), in the year ended
December 31, 2022 to be in the range
of $105.0-$120.0 million
as compared to $42.4 million in the year ended
December 31, 2021. Upon commencement of commercial operations,
Fisker also expects general and administrative expenses to include
facilities, marketing and advertising costs.
Research and Development Expense
To date, Fisker’s research and development expenses have consisted
primarily of external engineering services in connection with the
design of the Fisker Ocean model and development of the first
prototype. As Fisker ramps up for commercial operations, it
anticipates that research and development expenses will increase
for the foreseeable future as the Company expands its hiring of
engineers and designers and continues to invest in new vehicle
model design and development of technology. For example, the
company expects research and development expenses, excluding
stock-based
compensation expenses (refer to non-GAAP financial measure
discussed below), in the year ended December 31, 2022 to be in
the range
of $330.0-$380.0 million as compared
to $286.9 million in the year ended December 31,
2021.
Interest Expense
Interest expense consists primarily of interest expense associated
with the convertible senior notes.
Income Tax Expense / Benefit
Fisker’s income tax provision consists of an estimate for U.S.
federal and state income taxes based on enacted rates, as adjusted
for allowable credits, deductions, uncertain tax positions, changes
in deferred tax assets and liabilities, and changes in the tax law.
Fisker maintains a valuation allowance against the full value of
its U.S. and state net deferred tax assets because Fisker believes
the recoverability of the tax assets is not more likely than
not.
Results of Operations
Comparison of the Three-Months Ended June 30, 2022 to the
Three-Months Ended June 30, 2021
The following table sets forth Fisker’s historical operating
results for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months
Ended June 30,
|
|
|
|
|
|
2022 |
|
2021 |
|
$ Change
|
|
% Change |
|
(dollar amounts in thousands) |
|
|
Revenue |
$ |
10 |
|
|
27 |
|
|
$ |
(17) |
|
|
(63) |
% |
Cost of goods sold |
8 |
|
|
14 |
|
|
(6) |
|
|
(43) |
% |
Gross Margin |
2 |
|
|
13 |
|
|
(11) |
|
|
(85) |
% |
Operating costs and expenses: |
|
|
|
|
|
|
|
General and administrative |
17,521 |
|
|
$ |
7,908 |
|
|
9,613 |
|
|
122 |
% |
Research and development |
71,160 |
|
|
45,245 |
|
|
25,915 |
|
|
57 |
% |
Total operating costs and expenses |
88,681 |
|
|
53,153 |
|
|
35,528 |
|
|
67 |
% |
Loss from operations |
(88,679) |
|
|
(53,140) |
|
|
(35,539) |
|
|
67 |
% |
Other income (expense): |
|
|
|
|
|
|
|
Other income (expense) |
(452) |
|
|
(89) |
|
|
(363) |
|
|
408 |
% |
Interest income |
1,353 |
|
|
105 |
|
|
1,248 |
|
|
n.m. |
Interest expense |
(4,751) |
|
|
— |
|
|
(4,751) |
|
|
n.m. |
Change in fair value of derivatives |
— |
|
|
6,814 |
|
|
(6,814) |
|
|
(100) |
% |
Foreign currency gain/(loss) |
(3,417) |
|
|
88 |
|
|
(3,505) |
|
|
n.m. |
Unrealized loss recognized on equity securities |
(10,030) |
|
|
— |
|
|
(10,030) |
|
|
n.m. |
Total other income (expense) |
(17,297) |
|
|
6,918 |
|
|
(24,215) |
|
|
(350) |
% |
Net Loss |
$ |
(105,976) |
|
|
$ |
(46,222) |
|
|
$ |
(59,754) |
|
|
129 |
% |
n.m. = not meaningful.
Revenue and cost of goods sold
In 2021, Fisker launched its merchandise “Fisker Edition” where it
sells direct to consumers Fisker branded apparel and goods. Sales
of branded apparel and goods
totaled $10 thousand with related costs of goods sold of $8
thousand resulting in a gross profit of $2.0 thousand during the
three month period.
Merchandise sales are ancillary revenues that will continue in the
future but are not expected to constitute a significant portion of
operations once Fisker commences production and commercialization
of its vehicles.
General and Administrative
General and administrative expenses increased by $9.6 million or
122% from $7.9 million during the three months ended June 30,
2021 to $17.5 million during the three month ended June 30,
2022, primarily due to increased salaried employee headcount,
improved benefits in line with our human capital and ESG goals
designed to offer potential employees competitive compensation
packages,
professional fees and marketing and advertising. Professional fees
expense was approximately $3.8 million for the second quarter of
2022 compared to approximately $1.5 million for the same period in
2021. Marketing and advertising efforts resulted in expense of $1.0
million for the second quarter of 2022 compared to minimal efforts
in the corresponding second quarter of 2021 as the Company
implemented its marketing strategies in the fourth quarter of
2021.
General and administrative expenses includes stock-based
compensation expense of $0.4 million for each of the three-months
ended June 30, 2022 and 2021, respectively. General and
administrative expenses will increase during the remainder of the
2022 fiscal year as the Company continues to increase its
workforce, engage with advisors to establish global strategies for
direct and indirect taxes, and planning for entity-wide changes in
its IT systems. Overall,
total headcount for the Company increased
to 530 employees as
of August 1, 2022, compared
to 327 employees
as of December 31, 2021.
Research and Development
Research and development expenses increased by
approximately $25.9 million
or 57% from
$45.2
million during the three months ended June 30,
2021,
to $71.2 million
during the three months ended June 30, 2022. The increase
primarily relates to higher headcount and achievement of key
milestones in engineering and development of the design of
components as the Company moves towards the start of production. In
the second quarter of 2022, we continued the development phase of
our prototype Fisker Oceans, which includes the purchase and
expense of $18.7 million of prototype parts, and testing and
validation. The second quarter of 2022 reflects higher research and
development expenses as our last major design milestones were met
and the Company prepares for start of production. Reductions in
research and development efforts for the Fisker Ocean over the
remainder of 2022 are expected to be offset by increases in the
development efforts associated with the Fisker PEAR. Research and
development expenses includes stock-based compensation expense of
$0.8 million and $1.8 million for the three-months ended
June 30, 2022 and 2021, respectively.
Interest Expense
Interest expense amounted to $4.8 million during the three
months
ended June 30, 2022 due to the sale, in August 2021, of $667.5
million principal amount of 2.50% convertible senior notes. No
interest expense was recognized during the three-months ended
June 30, 2021.
Interest expense in the subsequent three-month periods throughout
calendar year 2022 will approximate $4.5 million, including
accretion of debt issuance costs.
Change in Fair Value of Derivative
During three-months ended June 30, 2021, the Company’s public
and private warrants were outstanding resulting in a non-cash fair
value adjustment
of $6.8 million.
No gain or
loss was recognized during the three-months ended June 30,
2022. The public and private warrants were exercised or redeemed
and no longer outstanding by the end of the second quarter of
2021.
Foreign Currency Gain (Loss)
The Company recorded foreign currency loss
of $3.4 million
during the three-months ended June 30, 2022, compared to
gains
of $0.1 million during
the three-months ended June 30, 2021, due to remeasurement
losses on Euro-denominated monetary assets caused by weakening Euro
currency rates.
For the remainder of 2022, we expect EUR denominated transactions
associated with our foreign operations and services provided by
suppliers will increase and will subject Fisker to greater
fluctuation in realized gain and losses from foreign
currencies.
Unrealized Gains
Recognized on Equity Securities
Unrealized losses recognized on equity securities still held as of
June 30, 2022
totaled $10.0 million
for the three-months ended June 30, 2022.
Net Loss
Net loss
was $106.0 million during
the three-months ended June 30, 2022, an increase
of approximately $59.8 million from
a net loss
of $46.2 million
during the three-months ended June 30, 2021, for the reasons
discussed above.
Comparison of the Six-Months Ended June 30, 2022 to the
Six-Months Ended June 30, 2021
The following table sets forth Fisker’s historical operating
results for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-Months Ended June 30, |
|
|
|
|
|
2022 |
|
2021 |
|
$ Change
|
|
% Change |
|
(dollar amounts in thousands) |
|
|
Revenue |
$ |
22 |
|
|
$ |
49 |
|
|
(27) |
|
|
(55) |
% |
Cost of goods sold |
19 |
|
|
31 |
|
|
(12) |
|
|
(39) |
% |
Gross Margin |
3 |
|
|
18 |
|
|
(15) |
|
|
(83) |
% |
Operating costs and expenses: |
|
|
|
|
|
|
|
General and administrative |
39,513 |
|
|
13,740 |
|
|
25,773 |
|
|
188 |
% |
Research and development |
172,620 |
|
|
72,516 |
|
|
100,104 |
|
|
138 |
% |
Total operating costs and expenses |
212,133 |
|
|
86,256 |
|
|
125,877 |
|
|
146 |
% |
Loss from operations |
(212,130) |
|
|
(86,238) |
|
|
(125,892) |
|
|
146 |
% |
Other income (expense): |
|
|
|
|
|
|
|
Other income (expense) |
(823) |
|
|
(13) |
|
|
(810) |
|
|
n.m. |
Interest income |
1,618 |
|
|
261 |
|
|
1,357 |
|
|
520 |
% |
Interest expense |
(9,134) |
|
|
— |
|
|
(9,134) |
|
|
n.m. |
Change in fair value of derivatives |
— |
|
|
(138,436) |
|
|
138,436 |
|
|
(100) |
% |
Foreign currency gain/(loss) |
(2,671) |
|
|
1,361 |
|
|
(4,032) |
|
|
(296) |
% |
Unrealized loss recognized on equity securities |
(4,910) |
|
|
— |
|
|
(4,910) |
|
|
n.m. |
Total other income (expense) |
(15,920) |
|
|
(136,827) |
|
|
120,907 |
|
|
(88) |
% |
Net Loss |
$ |
(228,050) |
|
|
$ |
(223,065) |
|
|
(4,985) |
|
|
2 |
% |
n.m.= not meaningful.
Revenue and cost of goods sold
In 2021, Fisker launched its merchandise “Fisker Edition” where it
sells direct to consumers Fisker branded apparel and goods. Sales
of branded apparel and goods
totaled $22 thousand with related costs of goods sold of $19
thousand resulting in a gross profit of $3.0 thousand during the
six-month period.
Merchandise sales are ancillary revenues that will continue in the
future but are not expected to constitute a significant portion of
operations once Fisker commences production and commercialization
of its vehicles.
General and Administrative
General and administrative expenses increased
by $25.8 million
or 188% from
$13.7 million
during the six-months ended June 30, 2021 to $39.5 million
during the six-months ended June 30, 2022, primarily due to
increased salaried employee headcount, improved benefits in line
with our human capital and ESG goals designed to offer potential
employees competitive compensation packages, and stock based
compensation. Professional fees expense was approximately $9.5
million for the first half of 2022 compared to approximately $3.2
million for the same period in 2021. Marketing and advertising
efforts resulted in expense of approximately $5.7 million for the
first half of 2022 compared to minimal efforts in the corresponding
first half of 2021 as the Company
implemented its marketing strategies in the fourth quarter of 2021.
General and administrative expenses includes stock-based
compensation expense of $6.3 million and $3.0 million for the
six-months ended June 30, 2022 and 2021,
respectively.
Research and Development
Research and development expenses increased
by $100.1 million
or 138% from
$72.5
million
during the six-months ended June 30, 2021,
to $172.6 million during
the six-months ended June 30, 2022. The increase primarily
relates to higher headcount and achievement of key milestones in
engineering and development of the design of components as the
Company moves towards the start of production. In the first half of
2022, we continued the development phase of our prototype Fisker
Oceans, which includes the purchase and expense of
$58.1 million of prototype parts, and testing and validation.
The first half of 2022 reflects higher research and development
expenses as our last major design milestones were met and the
Company prepares for start of production. Research and development
expenses includes stock-based compensation
expense
of $4.1 million
and
$2.4 million
for the six-months ended June 30, 2022 and 2021,
respectively.
Interest Expense
Interest expense amounted to $9.1 million during the
six-months ended June 30, 2022 due to the sale, in August
2021, of $667.5 million principal amount of 2.50% convertible
senior notes. No interest expense was recognized during the
six-months ended June 30, 2021. Interest expense in the
subsequent six-month periods throughout calendar year 2022 will
approximate $4.5 million, including accretion of debt issuance
costs.
Change in Fair Value of Derivative
During six-months ended June 30, 2021, the Company’s public
and private warrants were outstanding resulting in a non-cash fair
value adjustment
of $138.4 million. No
gain or loss was recognized during the six-months ended
June 30, 2022. The public and private warrants were exercised
or redeemed and no longer outstanding by the end of the second
quarter of 2021.
Foreign Currency Gain (Loss)
The Company recorded foreign currency losses
of $2.7 million
during the six-months ended June 30, 2022, compared to gains
of $1.4
million during
the six-months ended June 30, 2021, due
to
remeasurement losses on Euro-denominated monetary assets, including
Euros purchases, caused by weakening
Euro currency
rates. For the remainder of 2022, we expect
EUR denominated transactions associated with our foreign operations
and services provided by suppliers will increase and will subject
Fisker to greater fluctuation in realized gain and losses from
foreign currencies.
Unrealized Gains Recognized on Equity Securities
Unrealized losses recognized on equity securities still held as of
June 30, 2022 totaled $4.9 million for the six-months ended
June 30, 2022.
Net Loss
Net loss
was $228.1 million during
the six-months ended June 30, 2022, a increase
of approximately $5.0 million from
a net loss of $223.1 million during the six-months ended
June 30, 2021, for the reasons discussed above.
Liquidity and Capital Resources
As of the date of this Form 10-Q, Fisker has yet to generate any
revenue from its core business operations. To date, Fisker has
funded its capital expenditures and working capital requirements
through equity and convertible notes, as further discussed below.
Fisker’s ability to successfully commence it primary commercial
operations and expand its business will depend on many factors,
including its working capital needs, the availability of equity or
debt financing and, over time, its ability to generate cash flows
from operations.
As of June 30, 2022, Fisker’s cash and cash equivalents
amounted
to $851.9 million.
In May, 2022, we entered into an at-the-market distribution
agreement, dated May 24, 2022 with J.P. Morgan Securities LLC and
Cowen and Company, LLC as the sales agents (the "Distribution
Agreement"), pursuant to which Fisker established an at-the-market
equity program (the “ATM Program”). Pursuant to the ATM Program,
Fisker may, at its discretion and from time to time during the term
of the Distribution Agreement, sell, through the Agents, shares of
its Class A Common Stock, par value $0.00001 (the “Class A Common
Stock”) as would result in aggregate gross proceeds to Fisker of up
to $350 million by any method permitted by law deemed to be an
“at-the-market offering” as defined in Rule
415 of the Securities Act of 1933, as amended, including without
limitation sales made directly on the New York Stock Exchange, on
any other existing trading market for the Class A Common Stock or
to or through a market maker. In addition, the sales agents may
also sell the shares of Class A Common Stock by any other method
permitted by law, including, but not limited to, negotiated
transactions.
In August 2021, we entered into a purchase agreement for the sale
of an aggregate of $667.5 million principal amount of convertible
senior notes due in 2026. The net proceeds from the issuance of the
2026 Notes were $562.2 million, net of debt issuance costs and the
2027 Capped Call Transactions discussed further in Note 8. The 2026
Notes mature on September 15, 2026, unless repurchased, redeemed,
or converted in accordance with their terms prior to such date. The
2026 Notes were not convertible as of June 30,
2022.
Fisker expects its capital expenditures and working capital
requirements to increase substantially in the second half of 2022
and beyond, as it progresses toward production of the Fisker Ocean
EV model, develop its customer support and marketing infrastructure
and expand its research and development efforts. Fisker believes
that its cash on hand will be sufficient to meet its working
capital and capital expenditure requirements for a period of at
least twelve months from the date of this Form 10-Q. Fisker may,
however, need additional cash resources, including proceeds from
the sale of up to $335 million of Class A common stock under the
ATM Program, to funds its operations until it commences serial
production levels of the Fisker Ocean due to changed business
conditions or other developments, including unanticipated delays in
negotiations with OEMs and tier-one automotive suppliers or other
suppliers, supply chain challenges, disruptions due to COVID-19,
competitive pressures, and regulatory developments, among other
developments such as the collaboration on “Project PEAR” with
Foxconn announced in February 2021. To the extent that Fisker’s
current resources are insufficient to satisfy its cash
requirements, Fisker may need to seek additional equity or debt
financing. If the financing is not available, or if the terms of
financing are less desirable than Fisker expects, Fisker may be
forced to decrease its level of investment in product development
or scale back its operations, which could have an adverse impact on
its business and financial prospects.
Cash Flows
The following table provides a summary of Fisker’s cash flow data
for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
|
( in thousands)
|
Net cash used in operating activities |
$ |
(255,468) |
|
|
$ |
(56,927) |
|
Net cash used in investing activities |
(109,911) |
|
|
(65,990) |
|
Net cash provided by financing activities |
$ |
14,879 |
|
|
$ |
94,125 |
|
Cash Flows used in Operating Activities
Fisker’s net cash flows used in operating activities to date have
been primarily comprised of costs related to research and
development, payroll and other general and administrative
activities. As Fisker continues to accelerate hiring in line with
development and production of the Ocean, Fisker expects its cash
used in operating activities to increase significantly before it
starts to generate any material cash flows from its business. Lease
commitments as of June 30, 2022, will result in cash
payments
of $5.1 million for the remainder of 2022, and $10.6 million for
2023, and $48.0 million
for 2024 and thereafter. Structural improvements are required
before Fisker can use its Fisker Lounges in the U.S. and Europe for
its intended purposes. The timing for completion of the structural
improvements is expected in the second half of 2022. During the
second quarter of 2022, Fisker entered into a lease for commercial
space dedicated to powertrain and battery research and development,
which will be customized for Fisker's use. In total, Fisker is
projecting to use cash in excess
of $435 million for
combined SG&A and R&D activities during 2022.
Net cash used in operating activities increased by approximately
$198.6 million from $56.9 million during the six-months ended
June 30, 2021 to $255.5 million during the six-months ended
June 30, 2022.
Cash Flows used in Investing Activities
Fisker’s cash flows used in investing activities, historically,
have been comprised mainly of purchases of property and equipment.
During the six-months ended June 30, 2022, the Company
acquired assets related to development of the Fisker Ocean and
production of its parts that benefit our vehicle program
development in future periods that totaled
$99.9
million compared to $66.0 million during the six-months ended
June 30, 2021. Fisker continues to expect 2022 capital
expenditures for manufacturing and development, testing and
validation, tooling, manufacturing equipment, software licenses,
and IT infrastructure to range
between $280 million and $290 million of which
we expect at least 50% is denominated in foreign currencies, as
serial production tooling and equipment begins to be installed at
both vehicle assembly and supplier facilities over the remainder of
2022.
Fisker used cash of $109.9 million for
investing activities during the six-months ended June 30,
2022, compared to $66.0 million during the corresponding six-months
ended June 30, 2021.
On July 28, 2021, the Company made a $10 million commitment for a
private investment in public equity (PIPE) supporting the planned
merger of leading European EV charging network, Allego B.V.
(“Allego”) with Spartan Acquisition Corp. III (NYSE: SPAQ), a
publicly-listed special purpose acquisition company. The merger
closed in the first quarter of 2022 which triggered our investment
commitment resulting in a $10 million cash payment to acquire
1,000,000 class A common shares of Allego (NYSE: ALLG). Fisker was
the exclusive electric vehicle automaker in the PIPE and, in
parallel, has agreed to terms on a strategic partnership to deliver
a range of charging options for its customers in
Europe.
Cash Flows from Financing Activities
Through
June 30, 2022,
Fisker has financed its operations primarily through the sale of
equity securities and convertible senior notes.
Net cash from
financing activities was $14.9 million during the six-months ended
June 30, 2022, which was primarily due to the proceeds from
the issuance of the ATM equity program of $14.6 million as well as
aggregate proceeds from the exercise of stock options and
collection of related statutory withholding taxes of $2.1 million.
Net
cash from financing activities was $94.1 million during the
six-months ended June 30, 2021 reflecting the proceeds of
$89.0 million from public warrant holders who exercised 7,733,400
warrants to acquire a corresponding equal number of Class A common
stock.
Off-Balance Sheet Arrangements
Fisker is not a party to any off-balance sheet arrangements, as
defined under SEC rules.
Non-GAAP Financial Measure
The accompanying table references non-GAAP adjusted loss from
operations. This non-GAAP financial measure differs from the
directly comparable GAAP financial measure due to adjustments made
to exclude stock-based compensation expense. This non-GAAP
financial measure is not a substitute for or superior to measures
of financial performance prepared in accordance with generally
accepted accounting principles in the United States (GAAP) and
should not be considered as an alternative to any other performance
measures derived in accordance with GAAP. The Company believes that
presenting this non-GAAP financial measure provides useful
supplemental information to investors about the Company in
understanding and evaluating its operating results, enhancing the
overall understanding of its past performance and future prospects,
and allowing for greater transparency with respect to key financial
metrics used by its management in financial and
operational-decision making. However, there are a number of
limitations related to the use of a non-GAAP measure and its
nearest GAAP equivalents. For example, other companies may
calculate non-GAAP measures differently, or may use other measures
to calculate their financial performance, and therefore any
non-GAAP measures the Company uses may not be directly comparable
to similarly titled measures of other companies. Therefore, both
GAAP financial measures of Fisker’s financial performance and the
respective non-GAAP measures should be considered together. Please
see the reconciliation of non-GAAP financial measures to the most
directly comparable GAAP measure in the tables below.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months Ended June 30,
|
|
2022 |
|
2021 |
GAAP Loss from operations |
(88,679) |
|
|
(53,140) |
|
Add: stock based compensation |
$ |
1,195 |
|
|
$ |
2,218 |
|
Non-GAAP Adjusted loss from operations |
$ |
(87,484) |
|
|
$ |
(50,922) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
2022 |
|
2021 |
GAAP Loss from operations |
(212,130) |
|
|
(86,238) |
|
Add: stock based compensation |
6,260 |
|
|
3,035 |
|
Non-GAAP Adjusted loss from operations |
$ |
(205,870) |
|
|
$ |
(83,203) |
|
Critical Accounting Policies and Estimates
Fisker’s financial statements have been prepared in accordance with
GAAP. In the preparation of these financial statements, Fisker is
required to use judgment in making estimates and assumptions that
affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities as of the date of
the financial statements, as well as the reported expenses incurred
during the reporting periods. Fisker considers an accounting
judgment, estimate or assumption to be critical when (1) the
estimate or assumption is complex in nature or requires a high
degree of judgment and (2) the use of different judgments,
estimates and assumptions could have a material impact on the
condensed consolidated financial statements.
For a description of our critical accounting policies and
estimates, refer to Part II, Item 7, Critical Accounting Policies
and Estimates in our Annual Report on Form 10-K for the year ended
December 31, 2021 filed with the SEC on February 28, 2022.
There have been no material changes to our critical accounting
policies and estimates since our Annual Report on Form 10-K for the
year ended December 31, 2021 filed with the SEC on February
28, 2022.
Emerging Growth Company Status
Section 102(b)(1) of the Jumpstart Our Business Startups Act of
2012 (“JOBS Act”) exempts emerging growth companies from being
required to comply with new or revised financial accounting
standards until private companies are required to comply with the
new or revised financial accounting standards. The JOBS Act
provides that a company can choose not to take advantage of the
extended transition period and comply with the requirements that
apply to non-emerging growth companies, and any such election to
not take advantage of the extended transition period is
irrevocable.
Prior to December 31, 2021, Fisker was an “emerging growth company”
as defined in Section 2(a) of the Securities Act of 1933, as
amended, and elected to take advantage of the benefits of the
extended transition period for new or revised financial accounting
standards. Fisker has taken advantage of the benefits of the
extended transition period, although it may decide to early adopt
such new or revised accounting standards to the extent permitted by
such standards. This may make it difficult or impossible to compare
Fisker’s financial results with the financial results of another
public company that is either not an emerging growth company or is
an emerging growth company that has chosen not to take advantage of
the extended transition period exemptions because of the potential
differences in accounting standards used. Effective
December 31, 2021, Fisker exited its emerging growth company
status and met the definition of a large accelerated filer, as
defined under Rule 12b-2 of the Exchange Act. The accommodations
afforded to an emerging growth company will no longer
apply.
Recent Accounting Pronouncements
See Note 2 to the condensed consolidated financial statements
included elsewhere in this Form 10-Q for more information about
recent accounting pronouncements, the timing of their adoption, and
Fisker’s assessment, to the extent it has made one, of their
potential impact on Fisker’s financial condition and its results of
operations and cash flows.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
Fisker has not, to date, been exposed to material market risks
given its early stage of operations. Upon commencing commercial
operations, Fisker expects to be exposed to foreign currency
translation and transaction risks and potentially other market
risks, including those related to interest rates or valuation of
financial instruments, among others.
Foreign Currency Risk
Fisker’s functional currency is the U.S. dollar, while certain of
Fisker’s current and future subsidiaries are expected to have
functional currencies in Euro, British Pound Sterling, Indian
Rupee, and Chinese Yuan Renminbi reflecting their principal
operating markets. Once Fisker commences commercial operations, it
expects to be exposed to both currency
transaction and translation risk. For example, Fisker expects its
contracts with OEMs and/or tier-one automotive suppliers to be
transacted in Euro or other foreign currencies. In addition, Fisker
expects that certain of its subsidiaries will have functional
currencies other than the U.S. dollar, meaning that such
subsidiaries’ results of operations will be periodically translated
into U.S. dollars in Fisker’s condensed consolidated financial
statements, which may result in revenue and earnings volatility
from period to period in response to exchange rates fluctuations.
The Company assesses whether opportunities exist to purchase
foreign currencies with U.S. dollars to take advantage of favorable
exchange rates. In April and July 2022, the Company purchased 130.1
million Euros for 140.0 million U.S. dollars, a currency exchange
rate of 1 U.S. dollar for 1.076 Euro and 50.0 million Euros for
50.9 million U.S. dollars, a currency exchange rate of 1 U.S.
dollar for 1.018 Euro.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), that are
designed to provide reasonable assurance that information required
to be disclosed by us in the reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC rules and forms, and
that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions
regarding required financial disclosures.
Management, including the participation of our Chief Executive
Officer and our Chief Financial Officer, conducted an evaluation
(pursuant to Rule 13a-15(b)under the Exchange Act) of the
effectiveness of our disclosure controls and procedures as of the
end of the period covered by this Report. In designing and
evaluating the disclosure controls and procedures, our management
recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of
achieving the desired control objectives. In addition, the design
of disclosure controls and procedures must reflect the fact that
there are resource constraints and that our management is required
to apply its judgment in evaluating the benefits of possible
controls and procedures relative to their costs. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as of June 30, 2022, the Company’s disclosure
controls and procedures were effective at the reasonable
level.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2022, we implemented a new
Enterprise Resource Planning (“ERP”) system, which replaced our
existing financial systems and is designed to improve the
efficiency and effectiveness of the Company’s financial reporting
and business processes as well as provide timely information to our
management team. In connection with this ERP implementation, we are
updating our internal controls over financial reporting, as
necessary, to accommodate modifications to our business processes
and accounting procedures. While we do not believe the ERP
implementation will have an adverse effect on our internal controls
over financial reporting, we will continue to evaluate control
changes as part of our assessment of control design and
effectiveness throughout 2022. Except as disclosed above, there was
no change in our internal control over financial reporting that
occurred during the quarter ended June 30, 2022, which has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
For a description of our material pending legal proceedings, please
see Note 13, Commitments and Contingencies, to the unaudited
condensed consolidated financial statements included elsewhere in
this report.
From time to time, we may become involved in legal proceedings
arising in the ordinary course of business. We are not currently a
party to any litigation or legal proceedings that, in the opinion
of our management, are likely to have a material adverse effect on
our business. Regardless of outcome, litigation can have an adverse
impact on us because of defense and settlement costs, diversion of
management resources, negative publicity and reputational harm and
other factors.
Item 1A. Risk Factors
In addition to the information set forth below and other
information contained elsewhere in this report, you should
carefully consider the factors discussed in Part I, Item 1A.
Risk Factors
in our most recent Annual Report filed on Form 10-K for the year
ended December 31, 2021 filed with the SEC on February 28,
2022, which could materially affect our business, financial
condition or future results.
The unavailability, reduction or elimination of government and
economic incentives could have a material adverse effect on our
business, prospects, financial condition and operating
results.
Any reduction, elimination, or discriminatory application of
government subsidies and economic incentives because of policy
changes, or the reduced need for such subsidies and incentives due
to the perceived success of the electric vehicle or other reasons,
may result in the diminished competitiveness of the alternative
fuel and electric vehicle industry generally or our electric
vehicles in particular. This could materially and adversely affect
the growth of the alternative fuel automobile markets and our
business, prospects, financial condition and operating results. For
example, recent German and U.S. legislative efforts could reduce or
eliminate federal tax incentives available for purchasers of Fisker
vehicles in those markets.
While certain tax credits and other incentives for alternative
energy production, alternative fuel and electric vehicles have been
available in the past, there is no guarantee these programs will be
available in the future. If current tax incentives are not
available in the future, our financial position could be
harmed.
We continue to face risks related to health epidemics, including
the recent COVID-19 pandemic, which could have a material adverse
effect on our business and results of operations.
We continue to face various risks related to public health issues,
including epidemics, pandemics, and other outbreaks, including the
pandemic of respiratory illness caused by a novel coronavirus known
as COVID-19. The impact of COVID-19, including changes in consumer
and business behavior, pandemic fears and market downturns, and
restrictions on business and individual activities (such as the
ongoing lockdowns in Shanghai, China), has created significant
volatility in the global economy and led to reduced economic
activity. The spread of COVID-19 has also created a disruption in
the manufacturing, delivery and overall supply chain of vehicle
manufacturers and suppliers, and has led to a global decrease in
vehicle sales in markets around the world.
The pandemic has resulted in government authorities implementing
numerous measures to try to contain the virus, such as travel bans
and restrictions, quarantines, stay-at-home or shelter-in-place
orders, and business shutdowns. These measures may adversely impact
our employees and operations and the operations of its customers,
suppliers, vendors and business partners, and may negatively impact
our sales and marketing activities. In addition, various aspects of
our business cannot be conducted remotely. These measures by
government authorities may remain in place in certain areas for a
significant period of time and they may continue to adversely
affect our manufacturing plans, sales and marketing activities,
business and results of operations.
The spread of COVID-19 caused us to modify our business practices,
and we may take further actions as may be required by government
authorities or that we determine is in the best interest of our
employees, customers, suppliers, vendors and business partners.
There is no certainty that such actions will be sufficient to
mitigate the risks posed by the virus or otherwise be satisfactory
to government authorities. If significant portions of our workforce
are unable to work effectively, including due to illness,
quarantines, social distancing, government actions, or other
restrictions in connection with the COVID-19 pandemic, our
operations will be impacted.
The full extent to which the COVID-19 pandemic impacts our
business, prospects and results of operations will depend on future
developments, which are highly uncertain and cannot be predicted,
including the duration and spread of the pandemic, its severity,
the emergence of variants, the actions to contain the virus or
treat its impact, and how quickly and to what extent normal
economic and operating activities can resume. Even after the
COVID-19 pandemic has substantially subsided, we may continue to
experience an adverse impact to our business as a result of the
pandemic's global economic impact, including any recession that has
occurred or may occur in the future. As an example, the ongoing
lockdowns in China have impacted certain aspects of our business,
including our ability to obtain materials from certain of our
suppliers in the affected area on a timely basis.
Specifically, difficult macroeconomic conditions, such as decreases
in per capita income and level of disposable income, increased and
prolonged unemployment, or a decline in consumer confidence as a
result of the COVID-19 pandemic could have a material adverse
effect on the demand for our vehicles. Under difficult economic
conditions, potential customers may seek to reduce spending by
forgoing our vehicles for other traditional options or may choose
to keep their existing vehicles and cancel
reservations.
There are no comparable recent events that may provide guidance as
to the effect of the spread of COVID-19 and a pandemic, and, as a
result, the ultimate impact of the COVID-19 pandemic or a similar
health epidemic is highly uncertain.
The military conflict between Russia and Ukraine, and the global
response to this conflict, may adversely affect our business and
results of operations.
In response to the military conflict between Russia and Ukraine,
the U.S., U.K. E.U., and others have imposed significant new
sanctions and export controls against Russia and certain Russian
individuals and entities. This conflict has also resulted in
significant volatility and disruptions to the global markets. It is
not possible to predict the short- or long-term implications of
this conflict, which could include but are not limited to further
sanctions, uncertainty about economic and political stability,
increases in inflation rates and energy prices, supply chain
challenges and adverse effects on currency exchange rates and
financial markets. In addition, the U.S. government has reported
that U.S. sanctions against Russia in response to the conflict
could lead to an increased threat of cyberattacks (including
increased risk of data breach and other threats from ransomware,
destructive malware, distributed denial-of-service attacks, as well
as fraud, spam, and fake accounts, or other illegal activity
conducted generally by bad actors seeking to take advantage of us,
our partners or end-customers) against U.S. companies. These
increased threats could pose risks to the security of our
information technology systems, our network and our product
offerings and/or service offerings for our products, as well as the
confidentiality, availability and integrity of our
data.
We have operations, as well as potential new customers, in Europe.
If the conflict extends beyond Ukraine or further intensifies, it
could have an adverse impact on our operations in Europe or other
affected areas. While we do not offer any services in Ukraine, we
are continuing to monitor the situation in that country and
globally as well as assess its potential impact on our business,
including the supply of natural gas in Europe . Although neither
Russia nor Belarus constitutes a material portion of our business
(if any), a significant escalation or further expansion of the
conflict's current scope or related disruptions to the global
markets could have a material adverse effect on our results of
operations.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable
Item 4. Mine Safety Disclosures
Not applicable
Item 5. Other Information.
Not applicable
Item 6. Exhibits.
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Incorporated by Reference |
Exhibit No. |
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Exhibit Title |
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Form |
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File No. |
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Exhibit No. |
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Filing Date |
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Filed or
Furnished
Herewith
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1.1 |
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8-K
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001-38625
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1.1 |
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5/24/2022 |
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31.1 |
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X |
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31.2 |
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X |
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32.1 |
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X |
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32.2 |
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X |
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101.INS |
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XBRL Instance Document. |
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X |
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101.SCH |
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XBRL Taxonomy Extension Schema Document. |
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X |
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101.CAL |
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XBRL Taxonomy Extension Calculation Linkbase Document. |
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X |
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101.DEF |
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XBRL Taxonomy Extension Definition Linkbase Document. |
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X |
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101.LAB |
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XBRL Taxonomy Extension Label Linkbase Document. |
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X |
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101.PRE |
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XBRL Taxonomy Extension Presentation Linkbase Document. |
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X |
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104 |
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Coverpage Interactive Data File (formatted as inline XBRL and
contained in Exhibit 101) |
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X |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized on
August 8, 2022
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FISKER INC. |
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By: |
/s/ Dr. Geeta Gupta-Fisker |
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Name: |
Dr. Geeta Gupta-Fisker |
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Title: |
Chief Financial Officer and Chief Operating Officer |
Fisker (NYSE:FSR)
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