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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 March 31, 2023
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 |
☒ |
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
☐
No
☒
As of May 4, 2023, the
registrant
had 197,898,275 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 $0.00001 per share ("Class A Common Stock") on the New York
Stock Exchange ("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, 2022 filed with the U.S. Securities
and Exchange Commission (“SEC”) on March 1, 2023, as supplemented
by reports 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, 2022 filed with the SEC on March 1, 2023.
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 Spartan Energy
Acquisition Corp., our predecessor company prior to the
consummation of the Business Combination (as defined
below).
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Fisker Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
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As of
March 31, 2023
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As of
December 31, 2022
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
652,534 |
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$ |
736,549 |
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Restricted cash |
4,624 |
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— |
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Prepaid expenses and other current assets |
126,305 |
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91,765 |
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Equity investment |
2,410 |
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3,140 |
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Total current assets |
785,873 |
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831,454 |
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Non-current assets: |
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Property and equipment, net |
420,607 |
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387,137 |
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Intangible assets |
241,322 |
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246,922 |
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Right-of-use assets, net |
38,680 |
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33,424 |
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Other non-current assets |
18,064 |
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16,489 |
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Total non-current assets |
718,673 |
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683,972 |
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TOTAL ASSETS |
$ |
1,504,546 |
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$ |
1,515,426 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ |
68,317 |
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$ |
58,871 |
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Accrued expenses |
310,710 |
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264,925 |
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Lease liabilities |
7,323 |
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7,085 |
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Total current liabilities |
386,350 |
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330,881 |
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Non-current liabilities: |
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Customer deposits |
15,669 |
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15,334 |
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Lease liabilities |
33,587 |
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27,884 |
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Convertible senior notes |
661,250 |
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660,822 |
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Total non-current liabilities |
710,506 |
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704,040 |
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Total liabilities |
1,096,856 |
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1,034,921 |
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COMMITMENTS AND CONTINGENCIES (Note 14) |
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Stockholders’ equity: |
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Preferred stock, $0.00001 par value; 15,000,000 shares authorized;
no shares issued and outstanding as of March 31, 2023 and
December 31, 2022
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— |
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— |
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Class A Common stock, $0.00001 par value; 750,000,000 shares
authorized; 197,843,646 and 187,599,812 shares issued and
outstanding as of March 31, 2023 and December 31, 2022,
respectively
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2 |
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2 |
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Class B Common stock, $0.00001 par value; 150,000,000 shares
authorized; 132,354,128 shares issued and outstanding as of
March 31, 2023 and December 31, 2022
|
1 |
|
|
1 |
|
Additional paid-in capital |
1,704,622 |
|
|
1,650,196 |
|
Accumulated deficit |
(1,287,296) |
|
|
(1,166,741) |
|
Receivable for stock issuance |
(9,639) |
|
|
(2,953) |
|
Total stockholders’ equity |
407,690 |
|
|
480,505 |
|
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
1,504,546 |
|
|
$ |
1,515,426 |
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Months ended March 31, 2023 and
2022
(In thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Revenue |
$ |
198 |
|
|
$ |
12 |
|
Cost of goods sold |
164 |
|
|
11 |
|
Gross margin |
34 |
|
|
1 |
|
Operating costs and expenses: |
|
|
|
Selling, general and administrative |
44,648 |
|
|
21,992 |
|
Research and development |
76,999 |
|
|
101,460 |
|
Total operating costs and expenses |
121,647 |
|
|
123,452 |
|
Loss from operations |
(121,613) |
|
|
(123,451) |
|
Other income (expense): |
|
|
|
Other income (expense), net |
(45) |
|
|
(371) |
|
Interest income |
6,894 |
|
|
265 |
|
Interest expense |
(4,601) |
|
|
(4,383) |
|
Foreign currency gain (loss) |
(401) |
|
|
746 |
|
Unrealized gain (loss) recognized on equity securities |
(730) |
|
|
5,120 |
|
Total other income (expense) |
1,117 |
|
|
1,377 |
|
Loss before income taxes |
(120,496) |
|
|
(122,074) |
|
Provision for income taxes |
(59) |
|
|
— |
|
Net loss |
$ |
(120,555) |
|
|
$ |
(122,074) |
|
Net loss per common share |
|
|
|
Net loss per share attributable to Class A and Class B Common
shareholders- Basic and Diluted |
$ |
(0.38) |
|
|
$ |
(0.41) |
|
Weighted average shares outstanding |
|
|
|
Weighted average Class A and Class B Common shares outstanding-
Basic and Diluted |
320,983,589 |
|
|
296,508,619 |
|
The accompanying notes are an integral part of these condensed
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 stock issuance |
|
Accumulated
Deficit |
|
Stockholders’
Deficit |
Three Months Ended March 31, 2023 |
Shares |
|
Amount |
|
Shares |
|
Amount |
|
|
|
|
Balance at December 31, 2022 |
187,599,812 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,650,196 |
|
|
$ |
(2,953) |
|
|
$ |
(1,166,741) |
|
|
$ |
480,505 |
|
Stock-based compensation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,642) |
|
|
— |
|
|
$ |
— |
|
|
$ |
(1,642) |
|
Exercise of stock options and issuance of restricted stock unit
awards, net of statutory tax withholdings |
1,359,754 |
|
|
— |
|
|
— |
|
|
— |
|
|
20 |
|
|
— |
|
|
$ |
— |
|
|
$ |
20 |
|
Recognition of Magna warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,230 |
|
|
— |
|
|
$ |
— |
|
|
$ |
2,230 |
|
Shares issued under "At-the-market" offering, net of stock issuance
costs |
8,884,080 |
|
|
— |
|
|
— |
|
|
— |
|
|
53,818 |
|
|
(6,686) |
|
|
$ |
— |
|
|
$ |
47,132 |
|
Net Loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
$ |
(120,555) |
|
|
$ |
(120,555) |
|
Balance at March 31, 2023 |
197,843,646 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,704,622 |
|
|
$ |
(9,639) |
|
|
$ |
(1,287,296) |
|
|
$ |
407,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
Common Stock |
|
Class B
Common Stock |
|
Additional
Paid-in
Capital |
|
Accumulated
Deficit |
|
Stockholders’
Deficit |
Three Months Ended March 31, 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 |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,065 |
|
|
— |
|
|
5,065 |
|
Exercise of stock options and issuance of restricted stock unit
awards, net of statutory tax withholdings |
459,630 |
|
|
— |
|
|
— |
|
|
— |
|
|
298 |
|
|
— |
|
|
298 |
|
Recognition of Magna warrants |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6,695 |
|
|
— |
|
|
6,695 |
|
Net Loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(122,074) |
|
|
(122,074) |
|
Balance at March 31, 2022 |
164,836,936 |
|
|
$ |
2 |
|
|
132,354,128 |
|
|
$ |
1 |
|
|
$ |
1,431,342 |
|
|
$ |
(741,319) |
|
|
$ |
690,026 |
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Cash Flows from Operating Activities: |
|
|
|
Net loss |
$ |
(120,555) |
|
|
$ |
(122,074) |
|
Reconciliation of net loss to net cash used in operating
activities: |
|
|
|
Stock-based compensation (benefit)/expense |
(1,642) |
|
|
5,065 |
|
Depreciation and amortization |
9,150 |
|
|
379 |
|
Amortization of right-of-use asset |
1,504 |
|
|
900 |
|
Accretion of debt issuance costs |
428 |
|
|
204 |
|
Unrealized (gain)/loss recognized on equity securities |
730 |
|
|
(5,120) |
|
Unrealized foreign currency (gain)/loss |
1,435 |
|
|
(744) |
|
Changes in operating assets and liabilities: |
|
|
|
Prepaid expenses and other assets |
(36,115) |
|
|
(1,524) |
|
Accounts payable and accrued expenses |
61,807 |
|
|
13,024 |
|
Customer deposits |
335 |
|
|
4,755 |
|
Change in operating lease liability |
(819) |
|
|
(853) |
|
Net cash used in operating activities |
(83,742) |
|
|
(105,988) |
|
Cash Flows from Investing Activities: |
|
|
|
Acquisition of equity investment |
— |
|
|
(10,000) |
|
Purchases of property and equipment and intangible
asset |
(45,748) |
|
|
(45,750) |
|
Net cash used in investing activities |
(45,748) |
|
|
(55,750) |
|
Cash Flows from Financing Activities: |
|
|
|
Proceeds from the exercise of stock options |
2,788 |
|
|
1,861 |
|
Proceeds from stock issuance under "At-the-market"
offering |
47,986 |
|
|
— |
|
Payments for "At-the-market" issuance costs |
(675) |
|
|
— |
|
Net cash provided by financing activities |
50,099 |
|
|
1,861 |
|
Net increase (decrease) in cash and cash equivalents |
(79,391) |
|
|
(159,877) |
|
Cash and cash equivalents, beginning of the period |
736,549 |
|
|
1,202,439 |
|
Cash, cash equivalents and restricted cash, end of the
period |
$ |
657,158 |
|
|
$ |
1,042,562 |
|
Supplemental disclosure of cash flow information |
|
|
|
Cash paid for interest |
8,344 |
|
|
$ |
9,642 |
|
The accompanying notes are an integral part of these condensed
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 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. 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 NYSE under the symbol
“FSR”. The Company’s warrants previously traded on the NYSE 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 SEC.
Unaudited Interim Financial Statements
The condensed consolidated balance sheet as of March 31, 2023,
the condensed consolidated statements of operations and the
condensed consolidated statements of changes in stockholders’
equity for the three-months ended March 31, 2023 and 2022, and
the condensed consolidated statements of cash flows for the
three-months ended March 31, 2023 and 2022, as well as other
information disclosed in the accompanying notes, are unaudited. The
consolidated balance sheet as of December 31, 2022 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, 2022 filed with the SEC on March 1,
2023.
Comprehensive loss is not separately presented as the amounts are
equal to net loss for the three-months ended March 31, 2023
and 2022.
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 March 31, 2023, the Company had approximately
$653 million in unrestricted cash and cash equivalents. The
Company believes that
substantial doubt about its ability to continue as a going concern
does not exist as
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 significant
revenue from its core business operations and has incurred
significant accumulated losses of approximately $1.3 billion.
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 2023 and beyond, as it progresses toward serial
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 of up
to $101.7 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,including production of the Fisker Ocean,
which could have an adverse impact on its business and financial
prospects.
Supplier Risk
Suppliers will begin production of components for serial production
of vehicles, which are scheduled to be assembled in Austria, during
the second quarter of 2023. As of March 31, 2023, these
supplier contracts do not represent unconditional purchase
obligations with take-or-pay or specified minimum quantities
provisions.
The Company has secured battery capacity with a supplier located in
China for the Fisker Ocean SUV. Under the terms of the agreement,
from 2023 through 2025, 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.
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.
Restricted Cash
Cash and cash equivalents that is restricted is primarily related
to letters of credit issued to suppliers. The Company's restricted
cash balance was
$4.6 million
as of March 31, 2023. Cash and cash equivalents are unrestricted as
of December 31, 2022. Subsequent to March 31, 2023, the
Company's restricted cash balance related to letters of credit
issued to suppliers increased to
$29.7 million.
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.
Long-Lived Assets
Property and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization is
computed using the straight-line method over the estimated useful
lives of the related assets as follows:
|
|
|
|
|
|
|
Useful Life (in years) |
Tooling |
3-8
|
Machinery and equipment |
5-15
|
Furniture and fixtures |
5-10
|
IT hardware and software |
3-10
|
Leasehold improvements |
Shorter of their estimated life or remaining lease term |
Construction in progress is comprised primarily of costs incurred
to construct serial production tooling located at affiliates of
Magna and our suppliers.
Leasehold improvements are amortized on a straight-line basis over
the shorter of their estimated useful lives or the term of the
related lease. Upon retirement or sale, the cost and related
accumulated depreciation are removed from the balance sheet and the
resulting gain or loss is reflected in operations. Maintenance and
repair expenditures are expensed as incurred, while major
improvements that increase functionality of the asset are
capitalized and depreciated ratably to expense over the identified
useful life.
Long-lived assets, including intangible assets subject to
amortization, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. If circumstances require a long-lived
asset to be tested for possible impairment, the Company first
compares undiscounted cash flows expected to be generated by that
asset group to its carrying amount. The Company assesses impairment
for asset groups, which represent a combination of assets that
produce distinguishable cash flows. If the carrying amount of the
asset group is not recoverable on an undiscounted cash flow basis,
an impairment is recognized to the extent that the carrying amount
exceeds its fair value. Fair value is determined through various
valuation techniques, including discounted cash flow models, quoted
market values, and third-party independent appraisals, as
considered necessary. The Company has not recorded any impairment
charges during the periods presented.
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 March 31, 2023, 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, 2022.
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 March 31,
2023.
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 foreign subsidiaries is
the U.S. Dollar. For these subsidiaries, 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 for 1.018 Euro,
which are designed to provide an economic hedge against future
foreign currency exposures. The Company has used purchased Euros
totaling 65.0 million for Euro-denominated capital expenditures and
expenses during the three-months ended March 31, 2023 and has 24.6
million Euros available as of March 31, 2023 for future foreign
currency exposures.
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 March 31, 2023:
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets included in: |
|
|
|
|
|
|
|
Money market funds included in cash and cash
equivalents |
$ |
577,752 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
577,752 |
|
Equity investment |
2,410 |
|
|
— |
|
|
— |
|
|
2,410 |
|
Total fair value |
$ |
580,162 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
580,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measured as of December 31, 2022:
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
Assets included in: |
|
|
|
|
|
|
|
Money market funds included in cash and cash
equivalents |
$ |
601,045 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
601,045 |
|
Equity investment |
3,140 |
|
|
— |
|
|
— |
|
|
3,140 |
|
Total fair value |
$ |
604,185 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
604,185 |
|
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
$10.0 million
in exchange for 1,000,000.00 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 and has classified
its equity investment in Allego as a current asset. Unrealized loss
recognized during the three-months ended March 31, 2023 on
equity securities held as of March 31, 2023 totaled
$0.7 million
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
March 31, 2023, the fair value of the 2026 Notes
was $205.4 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.
4. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following
as of March 31, 2023 and December 31, 2022 (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2023 |
|
As of December 31, 2022 |
Prepaid insurance |
2,588 |
|
|
2,951 |
|
Value-added tax receivable |
22,044 |
|
|
27,928 |
|
Inventory |
29,016 |
|
|
4,276 |
|
Prepaid and other current assets |
72,657 |
|
|
56,610 |
|
|
$ |
126,305 |
|
|
$ |
91,765 |
|
The Company paid value-added taxes on certain capital expenditures
and submitted requests for refunds from tax authorities in foreign
countries with a concentration in Europe that are pending repayment
as of March 31, 2023 and December 31, 2022. Prepaid and
other current assets include payments to certain suppliers in
advance of production. Inventory consists of raw materials to be
used in production.
5. Intangible Assets
The Company has the following intangible assets (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2023
|
|
Amortization Period |
|
Gross
Carrying
Amount |
|
Accumulated
Amortization |
|
Net |
Capitalized cost - manufacturing |
8 years |
|
$ |
254,534 |
|
|
$ |
(13,212) |
|
|
$ |
241,322 |
|
|
|
|
$ |
254,534 |
|
|
$ |
(13,212) |
|
|
$ |
241,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2022
|
|
Amortization
Period |
|
Gross
Carrying
Amount |
|
Accumulated
Amortization |
|
Net |
Capitalized cost - manufacturing |
8 years |
|
$ |
252,304 |
|
|
$ |
(5,382) |
|
|
$ |
246,922 |
|
|
|
|
$ |
252,304 |
|
|
$ |
(5,382) |
|
|
$ |
246,922 |
|
Amortization expense of capitalized costs associated with the
manufacturing of the Fisker Ocean and production parts, and for
warrants granted to Magna International, Inc. (“Magna”) for the
three-months ended March 31, 2023 was
$8.0
million and is expected to be approximately
$31.8 million for the year ending December 31, 2023 and in
each
of the succeeding five years. 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.
6. Property and Equipment, Net
Property and equipment, net, consists of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2023 |
|
As of December 31, 2022 |
Tooling |
$ |
46,960 |
|
|
$ |
— |
|
Machinery and equipment |
27,513 |
|
|
9,298 |
|
Furniture and fixtures |
563 |
|
|
470 |
|
IT hardware and software |
9,256 |
|
|
6,427 |
|
Leasehold improvements |
634 |
|
|
634 |
|
Construction in progress |
339,706 |
|
|
372,789 |
|
Total property and equipment |
424,632 |
|
|
389,618 |
|
Less: Accumulated depreciation and amortization |
(4,025) |
|
|
(2,481) |
|
Property and equipment, net |
$ |
420,607 |
|
|
$ |
387,137 |
|
Construction in progress is comprised primarily of costs incurred
to construct serial production tooling located at affiliates of
Magna and our suppliers. Assets of $47.0 million that are ready for
their intended use have changed categories from Construction in
progress to Tooling during the three-months ended March 31, 2023.
As of March 31, 2023, accounts payable and accrued expenses
includes acquired property and equipment
of $133.9 million
compared to $144.8 million as of December 31, 2022, which
is excluded from net cash used in investing activities as reported
in the condensed consolidated statement of cash flows for the
three-months ended March 31, 2023.
The amounts in the table above as of December 31, 2022 have been
updated to correct a disclosure classification error between fixed
asset categories such that Machinery and equipment was overstated
and Construction in progress was understated by $33.0 million. The
Company determined the error was not material to its previously
issued financial statements as it did not affect the Company's
financial position as of December 31, 2022 or its results from
operations and cash flows for the year ended December 31,
2022.
7. Accrued Expenses
A summary of the components of accrued expenses is as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
December 31, 2022 |
Accrued vendor liabilities |
$ |
291,067 |
|
|
$ |
251,291 |
|
Order deposits |
4,917 |
|
|
4,860 |
|
Accrued professional fees |
2,030 |
|
|
1,145 |
|
Accrued payroll |
4,415 |
|
|
1,627 |
|
Accrued interest |
695 |
|
|
4,867 |
|
Accrued other |
7,586 |
|
|
1,135 |
|
Total accrued expenses |
$ |
310,710 |
|
|
$ |
264,925 |
|
Accrued expenses include amounts owed to vendors but not yet
invoiced in exchange for vendor purchases, research and development
services, and order deposits. Certain estimates of accrued vendor
expenses are based on costs incurred to date.
Order Deposits
In the third quarter of 2022, the Company began accepting order
deposits of $5,000 USD or equivalent currency (Order Deposits) for
Fisker Ocean Ones, a limited-edition trim level of the Fisker
Ocean. The Company also converted customer deposits for reservation
holders who previously made a deposit for an Extreme, Ultra or
Sport Ocean prior to August 16, 2022, the enactment date of the
Inflation Reduction Act of 2022 (the "Inflation Reduction Act").
Order deposits will be applied to the sales price of the vehicle
and recognized as revenue when the vehicle is sold and delivered to
the customer. Order Deposits are not included in customer
deposits.
On
July 1, 2022,
the Company entered into a contract for global payment processing
agreement with
JPMorgan Chase Bank, N.A. (“Chase”).
Order Deposits paid directly to the Company via ACH or other direct
payment mechanisms are received in the Company’s bank account and
available for its use in the subsequent month after the month in
which the Order Deposits were placed. For Order Deposits made
through credit card transactions, Chase holds cash received from
customers 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. Cash received from Order Deposits and the
conversion of any customer deposit results in the recognition of a
contract liability. As of March 31, 2023 contract liabilities
totaled
$4.9
million and were classified as current liabilities, included in
“Accrued Expenses” on the consolidated balance sheet.
8. Customer Deposits
Customer deposits consists of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
|
December 31, 2022 |
Customer reservation |
$ |
14,915 |
|
|
$ |
14,580 |
|
Customer SUV option |
754 |
|
|
754 |
|
Total customer deposits |
$ |
15,669 |
|
|
$ |
15,334 |
|
Customer deposits consist of reservations, which represent cash
received for the future right (e.g., a reservation) to order a
Fisker Ocean or PEAR, and customer SUV option. Each reservation
requires a deposit of $250 USD or equivalent currency.
9. 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 $625.0 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 are 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 March 31, 2023, the 2026 Notes consisted of the
following (in thousands):
|
|
|
|
|
|
Principal |
$ |
667,500 |
|
Unamortized debt issuance costs |
(6,250) |
|
Net carrying amount |
$ |
661,250 |
|
Interest
expense related to the amortization of debt issuance costs for the
three-months ended March 31, 2023 was $0.4 million.
Contractual interest expense for the three-months ended
March 31, 2023
was $4.2 million.
As of March 31, 2023,
the if-converted value of the 2026 Notes did not exceed the
principal amount. The
2026 Notes were not eligible for conversion as of March 31,
2023.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.
10. Common Stock and Warrants
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 March 31, 2023, 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 March 31,
2023, 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 second quarter
of 2023, a change in the estimated service period of the third
tranche from 29 months to 31 months resulting in a decrease of the
carrying value and related accretion of $3.8 million in the
three-month period ended March 31, 2023. For the three-months ended
March 31, 2023, the recognized cost
of $2.2 million (a non-cash transaction) associated
with services rendered, resulted in increased capitalized cost -
manufacturing
to $254.5 million as of March 31, 2023.
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 March 31, 2023, 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 March 31, 2023, none of which are
exercised.
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value |
|
Capitalized at March 31, 2023 |
Milestone (a) |
$ |
58,041 |
|
|
$ |
58,041 |
|
Milestone (b) |
58,041 |
|
|
58,041 |
|
Milestone (c) |
58,215 |
|
|
54,445 |
|
|
$ |
174,297 |
|
|
$ |
170,527 |
|
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 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 8,884,080 shares of Class A common
stock during the three-months ended March 31, 2023 for gross
proceeds of $54.8 million, before $0.8 million of commissions
and other direct incremental issuance costs and stock issuance
receivable of $9.6 million (non-cash), and, as of
March 31, 2023, $101.7 million of Class A Common Stock is
available for sale under the ATM Program. As of March 31,
2023, 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.
11. 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 March 31, |
|
2023 |
|
2022 |
Numerator: |
|
|
|
Net loss |
$ |
(120,555) |
|
|
$ |
(122,074) |
|
Denominator: |
|
|
|
Weighted average Class A common shares outstanding |
188,629,461 |
|
|
164,154,491 |
|
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 |
320,983,589 |
|
|
296,508,619 |
|
Net loss per share attributable to Class A and Class B Common
shareholders- Basic and Diluted |
$ |
(0.38) |
|
|
$ |
(0.41) |
|
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 March 31, |
|
2023 |
|
2022 |
Convertible senior notes |
33,891,845 |
|
|
33,891,845 |
|
Stock options and warrants |
37,054,239 |
|
|
30,560,564 |
|
Total |
70,946,084 |
|
|
64,452,409 |
|
12. 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 March 31,
2023, no shares have been issued under the ESPP.
Stock-based compensation expense is as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
|
2023 |
|
2022 |
Selling, general and administrative expense/(benefit) |
$ |
(657) |
|
|
$ |
1,773 |
|
Research and development expense/(benefit) |
(985) |
|
|
3,292 |
|
Total |
(1,642) |
|
|
5,065 |
|
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, 2022 |
17,679,596 |
|
|
1.51 |
|
|
4.7 |
Granted |
7,000 |
|
|
7.05 |
|
|
|
Exercised |
(34,124) |
|
|
0.60 |
|
|
|
Forfeited |
(72,687) |
|
|
14.42 |
|
|
|
Balance as of March 31, 2023 |
17,579,785 |
|
|
1.46 |
|
|
4.5 |
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:
|
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
Expected term (in years) |
6.3 |
Volatility |
74.5% to 75.2%
|
Dividend yield |
0.0% |
Risk-free interest rate |
3.40% to 4.00%
|
Common stock price |
$6.98 to $7.10
|
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 three months ended March 31, 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 the release of 339,340 shares of Class
A common stock equal to stock-based compensation expense of $1.5
million recognized in the three-months ended March 31, 2022.
The Company’s founders declined to receive an award related to
performance in 2021 and 2022. 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 RSU awards granted to Outside Directors vested on the grant
date which resulted in stock-based compensation
expense
of $0.4 million recognized
in each of the three-months ended March 31, 2023 and
March 31, 2022, respectively.
The number of Class A Common Stock granted to Outside Directors
annually is 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 shares of Class A Common Stock 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, 2022 |
11,752 |
|
|
$ |
12.45 |
|
|
Awarded |
625,844 |
|
|
6.62 |
|
Vested |
(47,165) |
|
|
12.88 |
|
Forfeited |
(8,992) |
|
|
12.47 |
|
Unvested as of March 31, 2023 |
581,439 |
|
|
$ |
10.78 |
|
|
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. 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 condition is achieved,
and the compensation committee has determined whether it will
exercise its discretion to adjust the PRSU award.
Recognition of stock-based compensation occurs
when performance conditions are probable of achievement.
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).
As of March 31, 2023, the Company
has approved and authorized PRSUs equal to 2,191,975 shares of
Class A Common Stock with an aggregate PRSU value of $13.5 million
of which 1,278,465 awards vested on March 24, 2023, the grant
and vesting date for the first tranche of the PRSU award. As of
December 31, 2022, achievement of the first tranche of the PRSU
award was deemed probable resulting in the recognition of
cumulative expense of $10.1 million. During the three-month period
ended March 31, 2023, the Company measured the cumulative expense
to be recognized upon vesting based on the closing stock price on
the grant and vesting date, which resulted in cumulative expense of
$7.3 million, a reduction of $2.8 million from the Company's
measurement of compensation expense as of the end of 2022. The
cumulative catch-up adjustment of $2.8 million recorded in the
three-month period ended March 31, 2023 to remeasure the PRSU award
exceeded compensation expense of $1.1 million for stock options and
restricted stock awards.
The grant date of the second tranche of the PRSUs has not been
determined as department goals have not been set and the
compensation committee has not determined whether it will use its
negative discretion. Thus, achievement of the second tranche of the
PRSUs is not probable as of March 31, 2023 and remains subject to
variable accounting treatment.
13. 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 March 31, 2023 and 2022, the Company incurred expenses
for legal services rendered by Orrick totaling approximately $0.5
million and $1.7 million, respectively.
14. 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.
Item 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
Overview
Fisker is building a technology-enabled, asset-light automotive
business 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 (“Magna Steyr”).
Recent Developments
We achieved several key milestones in Europe in April and May 2023,
including (i) the all-electric Fisker Ocean Extreme equipped with
standard 20” and optional 22” wheels and tires achieved combined
WLTP ranges of up to 707 km/440 miles and 701 km/436 miles,
respectively; (ii) we opened our inaugural Center + facilities in
Copenhagen, Denmark and Vienna, Austria; (iii) the Fisker Ocean
received small series type approval from the regulatory authority
to be sold and delivered in Europe; and (iv) we completed an
initial delivery of the limited edition Fisker Ocean One to an
early customer in Denmark and we registered a Fisker Ocean One in
Germany for Henrik Fisker, our CEO.

As outlined earlier this year, our production forecasts are linked
to supply chain readiness and receipt of multiple regulatory
homologation approvals across our launch markets.
The timing of these approvals has shifted, which impacts our
initial volume forecasts for 2023. Based on our current
expectations for approvals, which includes obtaining US
homologation approvals in May 2023, as well as our capacity
expectations related to our supply base, we currently forecast we
will produce 1,400 to 1,700 vehicles during the second quarter of
2023.
Our focus during this initial industrialization phase is to ensure
process readiness, tooling maturity, and part validation.
Our suppliers are subject to external factors that could impact
their ability to ramp output of components for our vehicles. For
example, one of our Tier 2 suppliers entered receivership, which
required a timely solution with our Tier 1 supplier to secure the
underlying tooling. Our key supply chain partners are concentrated
within an umbrella group of companies, and we are dependent upon
their operational performance. A successful launch of the Fisker
Ocean is reliant upon our key suppliers’ ability to mature software
and components to market release levels. Our ability to reach
expected run rates is also contingent upon the ability of our
manufacturing partner to successfully ramp production at required
quality levels. We continue to work with our suppliers, including
our manufacturing partner, to add shifts to increase production
capacity and meet our production goals for the second
quarter.
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 and home charging
solutions, which are not core to our ongoing business, Fisker’s
activities to date have been limited and its historical results are
reported under U.S. GAAP and in U.S. dollars. Upon commencement of
retail production of its Ocean SUV, Fisker expects its global
operations to focus primarily on the USA and the European Union
markets. As a result, Fisker expects that the financial results it
reports for periods after it begins retail production 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,
2022 filed with the SEC on March 1, 2023.
Results of Operations
Comparison of the Three-Months Ended March 31, 2023 to the
Three-Months Ended March 31, 2022
The following table sets forth Fisker’s historical operating
results for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three-Months
Ended March 31,
|
|
|
|
|
|
2023 |
|
2022 |
|
$ Change
|
|
% Change |
|
(dollar amounts in thousands) |
|
|
Revenue |
$ |
198 |
|
|
$ |
12 |
|
|
$ |
186 |
|
|
n.m. |
Cost of goods sold |
164 |
|
|
11 |
|
|
153 |
|
|
n.m. |
Gross Margin |
34 |
|
|
1 |
|
|
33 |
|
|
n.m. |
Operating costs and expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
44,648 |
|
|
21,992 |
|
|
22,656 |
|
|
103 |
% |
Research and development |
76,999 |
|
|
101,460 |
|
|
(24,461) |
|
|
(24) |
% |
Total operating costs and expenses |
121,647 |
|
|
123,452 |
|
|
(1,805) |
|
|
(1) |
% |
Loss from operations |
(121,613) |
|
|
(123,451) |
|
|
1,838 |
|
|
(1) |
% |
Other income (expense): |
|
|
|
|
|
|
|
Other income (expense) |
(45) |
|
|
(371) |
|
|
326 |
|
|
(88) |
% |
Interest income |
6,894 |
|
|
265 |
|
|
6,629 |
|
|
n.m. |
Interest expense |
(4,601) |
|
|
(4,383) |
|
|
(218) |
|
|
5 |
% |
Foreign currency gain/(loss) |
(401) |
|
|
746 |
|
|
(1,147) |
|
|
n.m. |
Unrealized gain/(loss) recognized on equity securities |
(730) |
|
|
5,120 |
|
|
(5,850) |
|
|
n.m. |
Total other income (expense) |
1,117 |
|
|
1,377 |
|
|
(260) |
|
|
(19) |
% |
Loss before income taxes |
(120,496) |
|
|
(122,074) |
|
|
1,578 |
|
|
(1) |
% |
Provision for income taxes |
(59) |
|
|
— |
|
|
(59) |
|
|
n.m. |
Net Loss |
$ |
(120,555) |
|
|
$ |
(122,074) |
|
|
$ |
1,519 |
|
|
$ |
— |
|
n.m. = not meaningful.
Revenue and Cost of Goods Sold
In May 2023, we began producing vehicles for deliveries to our
customers and, accordingly, we are recognizing vehicle revenues
from the sale of
initial Fisker Ocean SUVs. Merchandise sales and home charging
solutions are not intended to comprise a significant portion of the
Company's revenues. Over the course of the second half of 2023, we
will ramp production volumes at a measured pace to ensure the
supplier base can delivery high-quality components in line with our
serial production run-rate.
Sales of branded apparel and goods and home charging
solutions
totaled $198 thousand with related costs of goods sold of
$164 thousand resulting in a gross profit of $34 thousand
during the three-month period ended March 31, 2023 compared to
branded apparel sales of $12 thousand with related cost of
goods sold of $11 thousand resulting in gross profit of
$1 thousand during the corresponding three-month period ended
March 31, 2022.
Once we commence production and sale of our vehicles, we expect
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.
Selling, General and Administrative
Selling, general and administrative expenses consist mainly of
personnel-related expenses for Fisker’s executive and other
administrative functions, advertising and marketing expenses, and
expenses for outside professional services, including legal,
accounting and other advisory services.
Selling, general and administrative expenses increased by $22.7
million or 103% from $22.0 million during the three months ended
March 31, 2022 to $44.6 million during the three month period
ended March 31, 2023, primarily due to increased salaried,
targeted marketing and advertising for events, 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. With vehicle deliveries
beginning in the second quarter of 2023, we will increase our
marketing and advertising efforts in alignment with expected
customer interest in the Fisker Ocean. Also, Center+, showroom,
vehicle processing, and service and pickup locations will open
throughout the remainder of 2023 resulting in higher expenses. The
timing of openings will correspond with customer order demand and
completion of homologation in Europe and the United States.
Selling, general and administrative expenses include stock-based
compensation benefit of $0.7 million and stock based compensation
expense of $1.8 million for three-months ended March 31, 2023
and 2022, respectively. Overall, total headcount for the Company
increased to over 900 employees as of March 31, 2023, compared to
760 employees as of December 31, 2022.
The company expects selling, general and administrative expenses,
excluding stock-based compensation expenses, in the year ended
December 31, 2023 to range between $130.0 million and $160.0
million as compared to $106.4 million in the year ended
December 31, 2022.
Research and Development
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
pre-production and start of production vehicles.
Research and development expenses decreased by
approximately $24.5 million or 24% from
$101.5
million during the three months ended March 31,
2022,
to $77.0 million
during the three months ended March 31, 2023. The decrease
primarily relates to higher costs associated with the purchase and
expense of $39.2 million
for
prototype parts and engineering and design services incurred as
Fisker met key development gateways during the first quarter of
2022 that did not recur in the first quarter of 2023 as the Fisker
Ocean is in the final stages of homologation. Higher costs in the
first quarter of 2022 are only partially offset by higher headcount
in the first quarter of 2023.
Over the remainder of 2023, we expect research and development
expenses will continue to trend lower than the corresponding
three-month periods in 2022 as conceptual design and development of
PEAR and costs associated with the completion of homologation in
2023 are not expected to exceed 2022's costs incurred to complete
the engineering and design of the Ocean and transition to
production, including accrual of probable achievement of
engineering and design milestones at the end of 2022. Research and
development expense includes stock-based compensation benefit of
$1.0 million and stock-based compensation expense of $3.3 million
for the three-months ended March 31, 2023 and 2022,
respectively.
The company expects research and development expenses, excluding
stock-based compensation expenses, in the year ended
December 31, 2023 to range between $160.0 million and $190.0
million as compared to $423.9 million in the year ended
December 31, 2022.
Interest Expense
Interest expense consists of interest expense associated with the
convertible senior notes.
Interest expense amounted to $4.6 million and $4.4 million during
the three months
ended March 31, 2023 and 2022, respectively due to the sale,
in August 2021, of $667.5 million principal amount of 2.50%
convertible senior notes.
Interest expense in the subsequent three-month period throughout
calendar year 2023 will approximate $4.5 million, including
accretion of debt issuance costs.
Foreign Currency Gain/Loss
The Company recorded foreign currency
losses of $0.4 million
during the three months ended March 31, 2023, compared to
gains
of $0.7 million during
the three-months ended March 31, 2022, primarily due to
remeasurement losses on Euro-denominated monetary assets caused by
weakening Euro currency rates.
For the remainder of 2023, 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 Gain/Loss
Recognized on Equity Securities
Unrealized
losses recognized
on equity securities held as of March 31, 2023
totaled $0.7 million
for the three-months ended March 31, 2023 compared to a gain
of $5.1 million during the three-months ended March 31,
2022.
Provision for Income Tax
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.
Provision for income tax amounted to
$59
thousand for the three-months ended March 31,
2023.
Net Loss
Net loss
was $120.6 million during
the three-months ended March 31, 2023, a decrease
of approximately $1.5 million from
a net loss
of $122.1 million
during the three-months ended March 31, 2022, for the reasons
discussed above.
Liquidity and Capital Resources
As of the date of this Form 10-Q, Fisker has yet to generate any
meaningful 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 its
primary commercial operations and expand its business may 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 March 31, 2023, Fisker’s cash and cash equivalents
totaled
$652.5 million.
In May 2022, we entered into the Distribution Agreement, pursuant
to which Fisker established an 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 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. We issued 8,884,080 shares of Class A
Common Stock under the
ATM Program during the three-months ended March 31, 2023 for
gross proceeds of $54.8 million, before $0.8 million of commissions
and other direct incremental issuance costs. As of March 31,
2023, $101.7 million of Class A Common Stock is available for sale
under the ATM Program.
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 9. 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 March 31,
2023.
Fisker expects its capital expenditures and working capital
requirements to stabilize in 2023 and beyond, as it progresses
toward production and deliveries of the Fisker Ocean, develops its
customer support and marketing infrastructure and expands its
research and development efforts on PEAR, Ronin and other future
vehicle programs. 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 $101.7 million
of Class A common stock under the ATM Program, to fund 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 our current resources are insufficient to satisfy our
cash requirements, we may need to seek additional equity or debt
financing. In particular, in addition to issuing equity under our
ATM Program, we may seek other forms of financing
under
our effective shelf registration statement or through private
placements. Our existing effective shelf registration statement
permits us to issue various securities for proceeds of up to $2.0
billion, which amount is reduced by amounts sold under our ATM
Program.
If such financing is not available, or if the terms of the
financing are less desirable than we expect, we may be forced to
decrease our level of investment in product development or scale
back our operations, which could have an adverse impact on our
business and financial prospects.
Cash Flows
The following table provides a summary of Fisker’s cash flow data
for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
|
( in thousands)
|
Net cash used in operating activities |
$ |
(83,742) |
|
|
$ |
(105,988) |
|
Net cash used in investing activities |
(45,748) |
|
|
(55,750) |
|
Net cash provided by financing activities |
$ |
50,099 |
|
|
$ |
1,861 |
|
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 selling, general and administrative
activities. Lease commitments as of March 31, 2023, will
result in cash payments of $6.4 million for the remainder of 2023,
and $8.8 million for 2024, and $35.8 million for 2025 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 during 2023. Compared to 2022, Fisker expects its cash
used in operating activities will decrease as development costs of
the Fisker Ocean subside and cash collections from vehicle sales in
excess of costs to manufacture accumulate throughout the remainder
of 2023.
In total, excluding stock-based compensation costs, Fisker is
projecting to use between $290.0 million and $350.0 million
for combined SG&A and R&D activities during
2023.
Net cash used in operating activities decreased by approximately
$22.2 million from $106.0 million during the three-months ended
March 31, 2022 to $83.7 million during the three-months ended
March 31, 2023.
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 three-months ended March 31, 2023, the Company
acquired assets related to production of the Fisker Ocean and its
components that totaled $45.7 million compared to
$45.8 million during the three-months ended March 31,
2022.
Fisker continues to expect 2023 capital expenditures for tooling
and manufacturing equipment to range between $245 million and $260
million of which we expect at least 50% is denominated in foreign
currencies, as serial production tooling and equipment
installations continue at both vehicle assembly and supplier
facilities during 2023.
Fisker used cash of $45.7 million for investing activities during
the three-months ended March 31, 2023, compared to $55.8
million during the corresponding three-months ended March 31,
2022.
On July 28, 2021, the Company made a $10.0 million commitment for a
private investment in public equity (PIPE) supporting the planned
merger of leading European EV charging network, 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
$10.0 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 March 31, 2023, Fisker has financed its operations
primarily through the sale of equity securities and convertible
senior notes.
Net cash from financing activities was $50.1 million during the
three-months ended March 31, 2023, which was primarily due to
the proceeds from the issuance of the ATM equity program of $48.0
million, net of stock issuance costs of $0.7 million, as well as
aggregate proceeds from the exercise of stock options and
collection of related statutory withholding taxes
of
$2.8 million.
Net cash from financing activities was $1.9 million during the
three-months ended March 31, 2022 which was entirely due to
the proceeds from the exercise of stock options and collection of
related statutory withholding taxes due to payment and accrued as
of March 31, 2022.
Off-Balance Sheet Arrangements
Fisker is not a party to any off-balance sheet arrangements, as
defined under SEC rules.
Non-GAAP Financial Measure Reconciliations
The following tables show our Non-GAAP financial measure
reconciliations:
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Three-Months Ended March 31,
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Selling, General and Administrative Reconciliation |
2023 |
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2022 |
GAAP Selling, general and administrative |
44,648 |
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21,992 |
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Stock-based compensation benefit/(expense) |
657 |
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(1,773) |
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Non-GAAP Selling, general and administrative |
$ |
45,305 |
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$ |
20,219 |
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Three-Months Ended March 31,
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Research and Development Reconciliation |
2023 |
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2022 |
GAAP Research and development |
76,999 |
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101,460 |
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Stock-based compensation benefit/(expense) |
985 |
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(3,292) |
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Non-GAAP Research and development |
$ |
77,984 |
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$ |
98,168 |
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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, 2022 filed with the SEC on March 1, 2023. 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, 2022 filed with the SEC on March 1,
2023.
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. In the future, 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. The Company has used
purchased Euros totaling 65.0 million for Euro-denominated capital
expenditures and expenses during the three-months ended March 31,
2023 and has 24.6 million Euros available as of March 31, 2023 for
future foreign currency exposures.
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 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 March 31, 2023, the Company’s disclosure controls and
procedures were effective at the reasonable level.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial
reporting during the quarter ended March 31, 2023, that have
materially affected, or are reasonably likely to materially affect,
the Company's 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 14, 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
Please see Part I, Item 1A.
Risk Factors
in our Annual Report filed on Form 10-K for the year ended
December 31, 2022 filed with the SEC on March 1, 2023, for a
discussion of risks, uncertainties and other factors that could
materially affect our business, financial condition or future
results.
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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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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101.LAB |
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XBRL Taxonomy Extension Label Linkbase Document. |
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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 May 9,
2023.
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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 |
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