As
filed with the Securities and Exchange Commission on December 30,
2021
Registration
No. 333-249649
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 2
TO
FORM
S-1
ON
FORM
S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Hyliion
Holdings Corp.
(Exact
Name of Registrant as Specified in its Charter)
Delaware |
|
3713 |
|
83-2538002 |
(State
or Other Jurisdiction of
Incorporation or Organization) |
|
(Primary
Standard Industrial
Classification Code No.) |
|
(I.R.S.
Employer
Identification No.) |
1202
BMC Drive, Suite 100
Cedar
Park, Texas 78613
Tel:
(833) 495-4466
(Address,
Including Zip Code, and Telephone Number, Including Area Code, of
Registrant’s Principal Executive Offices)
Thomas
Healy
Chief
Executive Officer
Hyliion
Holdings Corp.
1202
BMC Drive, Suite 100
Cedar
Park, Texas 78613
Tel:
(833) 495-4466
(Name,
Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent for Service)
Copies
to:
Brenda
K. Lenahan
Vinson
& Elkins L.L.P.
1114
6th Avenue, 32nd Floor
New
York, New York 10036
Tel:
(212) 237-0000
Approximate
date of commencement of proposed sale to the public: From time to
time after the effective date of this registration
statement.
If
the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check
the following box: ☐
If
any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box: ☒
If
this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
☐
If
this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that shall
become effective upon filing with the Commission pursuant to Rule
462(e) under the Securities Act, check the following box:
☐
If
this Form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.D. filed to register
additional securities or additional classes of securities pursuant
to Rule 413(b) under the Securities Act, check the following box:
☐
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.
Large
accelerated filer ☐ |
Accelerated
filer ☐ |
Non-accelerated
filer ☒ |
Smaller
reporting company ☒ |
|
|
|
Emerging
growth company ☒ |
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 7(a)(2)(B) of the Securities Act. ☐
The
registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment that specifically states
that this registration statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act or until the
registration statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section
8(a), may determine.
EXPLANATORY
NOTE
On
October 23, 2020, Hyliion Holdings Corp (the “Company”) filed a
registration statement with the Securities and Exchange Commission
(the “SEC”) on
Form S-1 (File No. 333-249649) (the “Registration Statement”).
The Registration Statement, as amended, was initially declared
effective by the SEC on November 27, 2020 and initially registered
the issuance by the Company of up to an aggregate of up to
19,185,637 shares of common stock, $0.0001 par value per share
(“Common Stock”), which consisted of (i) up to 6,660,183 shares of
Common Stock issuable upon the exercise of 6,660,183 warrants (the
“Private Placement Warrants”) originally issued in a private
placement in connection with the initial public offering (“IPO”) of
Tortoise Acquisition Corp. (“TortoiseCorp”) by the holders thereof,
(ii) up to 875,000 shares of Common Stock that are issuable upon
the exercise of 875,000 warrants (the “Forward Purchase Warrants”
and together with the Private Placement Warrants, the “Private
Warrants”) originally issued in a private placement at the closing
of the Business Combination (as defined below) by the holders
thereof other than the initial holder and (iii) up to 11,650,454
shares of Common Stock issuable upon the exercise of 11,650,454
warrants (the “Public Warrants” and, together with the Private
Warrants, the “Warrants”) originally issued in the IPO of
TortoiseCorp by the holders thereof.
The
Registration Statement also initially registered the offer and sale
from time to time by the selling stockholders identified in the
prospectus of (i) up to 132,637,517 shares of Common Stock
(including up to 7,535,183 shares of Common Stock that may be
issued upon exercise of the Private Warrants and 20,000 shares of
Common Stock that may be issued upon exercise of 20,000 Public
Warrants) and (ii) up to 7,555,183 Warrants, which consists of up
to 7,535,183 Private Warrants and up to 20,000 Public
Warrants.
The
Registration Statement was amended by that certain Post-Effective
Amendment No. 1 to Form S-1, which was filed with the SEC on July
8, 2021, and declared effective on July 14, 2021 (“Post-Effective
Amendment No. 1”). Post-Effective Amendment No. 1 updated the
Registration Statement to (i) remove references to the registration
of the Warrants and the shares of Common Stock to be issued upon
exercise thereof to reflect the redemption or exercise of all
Warrants prior to the date thereof; (ii) include updated
information regarding the selling stockholders named in the
prospectus, including a reduction in the number of shares of Common
Stock being offered by the selling stockholders and (iii) include
the information from the Company’s filings with the SEC.
This
Post-Effective Amendment No. 2 to Form S-1 on Form S-3
(“Post-Effective Amendment No. 2”) is being filed by the Company
with the SEC (i) to convert the registration statement on Form S-1
into a registration statement on Form S-3 and (ii) to include
updated information regarding certain selling stockholders,
directors and officers named in the prospectus, including a
reduction in the number of shares of Common Stock being offered by
the selling stockholders to 88,642,440 shares of Common Stock. No
additional securities are being registered under this
Post-Effective Amendment No. 2. All applicable registration fees
were paid at the time of the original filing of the Registration
Statement.
The information in this preliminary prospectus is not complete and
may be changed. Neither we nor the selling securityholders may sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
SUBJECT TO COMPLETION — DATED DECEMBER 30, 2021
PRELIMINARY PROSPECTUS

Up
to 88,642,440 Shares of Common Stock
This
prospectus relates to the offer and sale from time to time by the
selling securityholders named in this prospectus (the “Selling
Securityholders”) of up to 88,642,440 shares of Common Stock. We
will not receive any proceeds from the sale of shares of Common
Stock by the Selling Securityholders pursuant to this prospectus.
Our registration of the securities covered by this prospectus does
not mean that the Selling Securityholders will offer or sell any of
the shares of Common Stock. The Selling Securityholders may offer,
sell or distribute all or a portion of their shares of Common Stock
publicly or through private transactions at prevailing market
prices or at negotiated prices. We provide more information about
how the Selling Securityholders may sell the shares in the section
entitled “Plan of Distribution.”
We
are an “emerging growth company” as defined in Section 2(a) of the
Securities Act of 1933, as amended (the “Securities Act”), and are
subject to reduced public company reporting requirements. This
prospectus complies with the requirements that apply to an issuer
that is an emerging growth company.
Our
Common Stock is listed on the New York Stock Exchange (the “NYSE”)
under the symbol “HYLN”. On December 28, 2021, the closing price of
our Common Stock was $6.26.
See
the section entitled “Risk Factors” beginning on page 3 of this
prospectus to read about factors you should consider before buying
our securities.
Neither
the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal
offense.
The date
of this prospectus is
,
2021.
TABLE OF
CONTENTS
You
should rely only on the information provided in this prospectus, as
well as the information incorporated by reference into this
prospectus and any applicable prospectus supplement. Neither we nor
the Selling Securityholders have authorized anyone to provide you
with different information. Neither we nor the Selling
Securityholders are making an offer of these securities in any
jurisdiction where the offer is not permitted. You should not
assume that the information in this prospectus or any applicable
prospectus supplement is accurate as of any date other than the
date of the applicable document. Since the date of this prospectus
and the documents incorporated by reference into this prospectus,
our business, financial condition, results of operations and
prospects may have changed.
ABOUT THIS
PROSPECTUS
This
prospectus is part of a registration statement that we filed with
the SEC using a “shelf” registration process. Under this shelf
registration process, the Selling Securityholders may, from time to
time, sell the securities offered by them described in this
prospectus. We will not receive any proceeds from the sale by such
Selling Securityholders of the securities offered by them described
in this prospectus. To the extent permitted by law, we may also
authorize one or more prospectus supplements or free writing
prospectuses that may contain material information relating to
these offerings. Such prospectus supplement or free writing
prospectus may also add, update or change information contained in
this prospectus with respect to that offering. If there is any
inconsistency between the information in this prospectus and the
applicable prospectus supplement or free writing prospectus, you
should rely on the prospectus supplement or free writing
prospectus, as applicable. Before purchasing any securities, you
should carefully read both this prospectus and the applicable
prospectus supplement (and any applicable free writing
prospectuses), together with the additional information described
under the headings “Where You Can Find More Information” and
“Incorporation by Reference.”
Neither
we nor the Selling Securityholders have authorized anyone to
provide you with any information or to make any representations
other than those contained in this prospectus or any applicable
prospectus supplement or any free writing prospectuses prepared by
or on behalf of us or to which we have referred you. Neither we nor
the Selling Securityholders take responsibility for, and can
provide no assurance as to the reliability of, any other
information that others may give you. Neither we nor the Selling
Securityholders will make an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted.
You
should assume that the information appearing in this prospectus and
the applicable prospectus supplement to this prospectus is accurate
only as of the date on its respective cover, that the information
appearing in any applicable free writing prospectus is accurate
only as of the date of that free writing prospectus, and that any
information incorporated by reference is accurate only as of the
date of the document incorporated by reference, unless we indicate
otherwise. Our business, financial condition, results of operations
and prospects may have changed since those dates.
Unless
the context indicates otherwise, references in this prospectus to
the “Company,” “Hyliion,” “we,” “us,” “our” and similar terms refer
to Hyliion Holdings Corp. (f/k/a Tortoise Acquisition Corp.) and
its consolidated subsidiaries (including Hyliion Inc.). References
to “TortoiseCorp” refer to our predecessor company prior to the
consummation of the Business Combination (as defined
herein).
CAUTIONARY NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus, any prospectus supplement delivered with this
prospectus and the documents we incorporate by reference may
contain forward-looking statements within the meaning of Section
27A of the Securities Act, and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). All
statements, other than statements of present or historical fact,
included or incorporated by reference in this prospectus or any
prospectus supplement hereto are forward-looking statements,
including, but not limited to, our strategy, prospects, plans,
objectives, future operations, future revenue and earnings,
projected margins and expenses, markets for our services, potential
acquisitions or strategic alliances, financial position, and
liquidity and anticipated cash needs and availability. The words
“anticipates,” “believes,” “estimates,” “expects,” “intends,”
“may,” “plans,” “projects,” “will,” “would,” variations of such
words and similar expressions or the negatives thereof are intended
to identify forward-looking statements. However, not all
forward-looking statements contain these identifying words. These
forward-looking statements represent our management’s expectations
as of the date of the respective filing and involve known and
unknown risks, uncertainties and other factors that may cause our
actual results, performance and achievements or industry results to
be materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements.
We cannot guarantee the accuracy of the forward-looking statements,
and you should be aware that results and events could differ
materially and adversely from those contained in the
forward-looking statements due to a number of risks and
uncertainties including, but not limited to, the
following:
|
● |
our ability to disrupt the powertrain market, our focus in 2021 and
beyond; |
|
● |
the effects of our dynamic and proprietary solutions on commercial
truck customers; |
|
● |
the ability to accelerate the commercialization of the Hypertruck
ERX (as defined below); |
|
● |
our ability to meet 2021 and future product milestones; |
|
● |
the impact of COVID-19 on long-term objectives; |
|
● |
the ability of our solutions to reduce carbon intensity and
greenhouse gas emissions; |
|
● |
and the other risks and uncertainties described under the heading
“Risk Factors” in our other SEC filings including any prospectus
supplement delivered with this prospectus and in our Annual Reports
on Form 10-K (See Item 1A. Risk Factors). |
Should
one or more of these risks or uncertainties materialize, or should
any of our assumptions prove incorrect, actual results and outcomes
may differ materially from the results and outcomes discussed in or
anticipated by the forward-looking statements. Readers are urged
not to place undue reliance on forward-looking statements, which
speak only as of the date of this prospectus or as of the date of
any prospectus supplement or the documents we incorporate by
reference. We undertake no
obligation to update or revise any forward-looking statement,
whether as a result of new information, future events, or
otherwise, except as may be required under applicable securities
laws. Readers are urged to carefully review and consider the
various disclosures made throughout the entirety of this
prospectus, any prospectus supplement delivered with this
prospectus and the documents
we incorporate by reference.
SUMMARY
The
following is only a summary. Because it is a summary, it may not
contain all of the information that may be important to you.
Investing in our securities involves risks. We urge you to read the
entire prospectus, including information set forth under the
heading “Risk Factors” and our financial statements and other
information included herein or incorporated by reference from our
other filings with the SEC.
The
Company
We
design, develop and sell electrified powertrain solutions that can
be installed on Class 8 trucks from most major commercial vehicle
original equipment manufacturers. Our mission is to be the leading
provider of electrified powertrain solutions for the commercial
vehicle industry. Our goal is to reduce the carbon intensity and
the greenhouse gas (“GHG”) emissions of the transportation sector
by providing electrified powertrain solutions for Class 8
commercial vehicles at the lowest total cost of ownership (“TCO”).
Our solutions utilize our proprietary battery systems, control
software and data analytics, combined with fully integrated
electric motors and power electronics, to produce electrified
powertrain systems that either augment, in the case of our hybrid
electric powertrain system, or fully replace, in the case of the
Hypertruck Electric Range Extender (“Hypertruck ERX”) system, a
natural gas fueled engine powering the battery that improves their
performance. By reducing both GHG emissions and TCO, our
environmentally conscious solutions support our customers’ pursuit
of their sustainability and financial objectives.
Corporate
Information
We
were originally known as Tortoise Acquisition Corp.
(“TortoiseCorp”). TortoiseCorp was incorporated in the State of
Delaware in November 2018 for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination involving
TortoiseCorp and one or more businesses. TortoiseCorp completed its
IPO in March 2019. On October 1, 2020, TortoiseCorp consummated a
business combination pursuant to that certain Business Combination
Agreement, dated June 18, 2020 (the “Business Combination
Agreement”), by and among the TortoiseCorp, SHLL Merger Sub Inc., a
Delaware corporation and wholly owned subsidiary of TortoiseCorp
(“Merger Sub”), and Hyliion Inc., a Delaware corporation (“Legacy
Hyliion”). Pursuant to the terms of the Business Combination
Agreement, Merger Sub was merged with and into Legacy Hyliion, with
Legacy Hyliion surviving as the surviving company and as a wholly
owned subsidiary of TortoiseCorp (the “Merger” and, collectively
with the other transactions described in the Business Combination
Agreement, the “Business Combination”). On October 1, 2020, and in
connection with the closing of the Business Combination (the
“Closing”), TortoiseCorp changed its name to Hyliion Holdings Corp.
In connection with the Business Combination, a number of investors
purchased from the Company an aggregate of 30,750,000 shares of
Common Stock, for a purchase price of $10.00 per share and an
aggregate purchase price of $307.5 million pursuant to separate
subscription agreements entered into effective June 18, 2020 (the
“PIPE”). The PIPE investment closed simultaneously with the
consummation of the Business Combination.
Our
principal executive offices are located at 1202 BMC Drive, Suite
100, Cedar Park, Texas 78613. Our telephone number is (833)
495-4466. Our website address is www.hyliion.com.
Information contained on our website or connected thereto does not
constitute part of, and is not incorporated by reference into, this
prospectus or the registration statement of which it forms a
part.
THE
OFFERING
Issuer |
|
Hyliion
Holdings Corp. (f/k/a Tortoise Acquisition Corp.). |
|
|
|
Shares
of Common Stock Offered by the Selling Securityholders |
|
88,642,440
shares of Common Stock. |
|
|
|
Use
of Proceeds |
|
We
will not receive any proceeds from the sale of shares of Common
Stock by the Selling Securityholders. |
|
|
|
Market
for Common Stock |
|
Our
Common Stock is currently traded on the NYSE under the symbol
“HLYN”. |
|
|
|
Risk
Factors |
|
Investing
in our Common Stock involves a high degree of risk. See “Risk
Factors” and other information included in this prospectus and in
the documents incorporated by reference for a discussion of factors
you should consider before investing in our securities. |
RISK
FACTORS
Investment
in any securities offered pursuant to this prospectus and any
applicable prospectus supplement involves risks. You should
carefully consider the risk factors incorporated by reference to
our most recent Annual Report on Form 10-K and any subsequent
Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, and
all other information contained in or incorporated by reference
into this prospectus, as updated by our subsequent filings under
the Exchange Act, and the risk factors and other information
contained in any applicable prospectus supplement and any
applicable free writing prospectus before acquiring any of such
securities. Additional risks and uncertainties not presently known
to us or that we currently believe to be immaterial may become
material and adversely affect our business. The occurrence of any
of these risks might cause you to lose all or part of your
investment in the offered securities.
USE OF
PROCEEDS
All
of the Common Stock offered by the Selling Securityholders pursuant
to this prospectus will be sold by the Selling Securityholders for
their respective accounts. We will not receive any of the proceeds
from these sales.
UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION
The
following unaudited pro forma condensed combined financial
information has been prepared in accordance with Article 11 of
Regulation S-X.
The
unaudited pro forma condensed combined financial information does
not include an unaudited pro forma condensed combined balance sheet
as of December 31, 2020 as the Business Combination was consummated
on October 1, 2020 and is reflected in our historical audited
consolidated balance sheet as of December 31, 2020, included
elsewhere in this prospectus.
The
unaudited pro forma condensed combined statement of operations for
the year ended December 31, 2020, derived from the historical
statement of operations of the Company for the year ended December
31, 2020 and the historical statement of operations of TortoiseCorp
for the nine months ended September 30, 2020, gives effect to the
Business Combination as if it had occurred on January 1,
2020.
The
unaudited pro forma condensed combined financial information was
prepared in accordance with Article 11 of Regulation S-X as amended
by the final rule, Release No. 33-10786 “Amendments to Financial
Disclosures about Acquired and Disposed Businesses,” using the
assumptions set forth in the notes to the unaudited pro forma
condensed combined financial information. The unaudited pro forma
condensed combined financial information has been adjusted to
depict the accounting for the transaction (“Transaction Accounting
Adjustments”), which reflect the application of the accounting
required by generally accepted accounting principles in the United
States (“GAAP”), linking the effects of the Business Combination to
the Company’s historical consolidated financial statements. The
Company has elected not to present the reasonably estimable
synergies and other transaction effects that have occurred or are
reasonably expected to occur and will only be presenting
Transaction Accounting Adjustments in the following unaudited pro
forma condensed combined financial information.
The
unaudited pro forma condensed combined financial information is for
illustrative and informational purposes only and is not necessarily
indicative of the operating results that would have occurred if the
Business Combination had been completed as of the dates set forth
above, nor is it indicative of the future consolidated results of
operations of the Company. Further, pro forma adjustments represent
management’s best estimates based on information available as of
the date of this prospectus and are subject to change as additional
information becomes available.
The
unaudited pro forma condensed combined financial information should
be read together with “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” included in our
Annual Report on Form 10-K/A and “Certain Relationships and Related
Party Transactions” included in our Definitive Proxy Statement on
Schedule 14A incorporated by reference herein, and the historical
audited consolidated financial statements and related notes thereto
included elsewhere in this prospectus.
UNAUDITED
PRO FORMA CONDENSED COMBINED STATEMENT
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2020
(in thousands, except share and per share data)
|
|
Year Ended
December 31,
2020
Hyliion |
|
|
Nine Months
Ended
September 30,
2020
TortoiseCorp |
|
|
Transaction
Accounting
Adjustment |
|
|
Notes |
|
Pro Forma
Hyliion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
$ |
(12,598 |
) |
|
$ |
– |
|
|
$ |
– |
|
|
|
|
$ |
(12,598 |
) |
Selling, general and administrative expenses |
|
|
(9,585 |
) |
|
|
(5,473 |
) |
|
|
– |
|
|
|
|
|
(15,058 |
) |
Operating profit |
|
|
(22,183 |
) |
|
|
(5,473 |
) |
|
|
– |
|
|
|
|
|
(27,656 |
) |
Interest and financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(5,459 |
) |
|
|
– |
|
|
|
5,449 |
|
|
a) |
|
|
(10 |
) |
Change in fair value of convertible notes payable derivative
liabilities |
|
|
(1,358 |
) |
|
|
– |
|
|
|
1,358 |
|
|
a) |
|
|
– |
|
Change in fair value of warrant liabilities |
|
|
363,299 |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
363,299 |
|
Loss
on extinguishment of debt |
|
|
(10,170 |
) |
|
|
– |
|
|
|
– |
|
|
|
|
|
(10,170 |
) |
Other income |
|
|
(12 |
) |
|
|
– |
|
|
|
– |
|
|
|
|
|
(12 |
) |
Investment income from investments held in Trust Account |
|
|
– |
|
|
|
886 |
|
|
|
(886 |
) |
|
b) |
|
|
– |
|
Total interest and financing |
|
|
346,300 |
|
|
|
886 |
|
|
|
5,921 |
|
|
|
|
|
353,107 |
|
Income (loss) before income taxes |
|
|
324,117 |
|
|
|
(4,587 |
) |
|
|
5,921 |
|
|
|
|
|
325,451 |
|
Income tax expense |
|
|
– |
|
|
|
(162 |
) |
|
|
162 |
|
|
c) |
|
|
– |
|
Net income (loss) |
|
$ |
324,117 |
|
|
$ |
(4,749 |
) |
|
$ |
6,083 |
|
|
|
|
$ |
325,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share, basic |
|
$ |
3.11 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2.01 |
|
Loss per share, diluted |
|
$ |
(0.35 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average share outstanding, basic |
|
|
104,324,059 |
|
|
|
|
|
|
|
57,298,780 |
|
|
d) |
|
|
161,622,839 |
|
Weighted
average share outstanding, diluted |
|
|
112,570,960 |
|
|
|
|
|
|
|
57,298,784 |
|
|
d) |
|
|
169,869,744 |
|
Notes
to Unaudited Pro Forma Condensed Combined Financial
Statements
1. Description
of the Transaction & Basis of Presentation
The
unaudited pro forma condensed combined financial information was
prepared in accordance with Article 11 of Regulation S-X, as
amended by the final rule, Release No. 33-10786 “Amendments to
Financial Disclosures about Acquired and Disposed Businesses,” and
present the pro forma results of operations of the Company based
upon the historical financial information after giving effect to
the Business Combination set forth in the notes to the unaudited
pro forma condensed combined financial information.
The
unaudited pro forma condensed combined financial information does
not reflect any cost savings, operating synergies or revenue
enhancements that the consolidated company may achieve as a result
of the Business Combination.
The
unaudited pro forma condensed combined statement of operations for
the year ended December 31, 2020, derived from the historical
statement of operations of the Company for the year ended December
31, 2020 and historical statement of operations of TortoiseCorp for
the nine months ended September 31, 2020, gives effect to the
Business Combination as if it had occurred on January 1,
2020.
Business
Combination
On
the October 1, 2020, TortoiseCorp entered into the Business
Combination with each of the shareholders of Legacy Hyliion.
Pursuant to the Business Combination, TortoiseCorp acquired all of
the issued and outstanding shares of common stock from the Legacy
Hyliion shareholders. In connection with the Closing, Tortoise
Corp. changed its name to Hyliion Holdings Corp.
The
Business Combination was accounted for as a reverse
recapitalization, with no goodwill or other intangible assets
recorded, in accordance with GAAP. Under this method of accounting,
TortoiseCorp was treated as the acquired company for financial
reporting purposes. Accordingly, for accounting purposes, the
Business Combination was treated as the equivalent of Legacy
Hyliion issuing stock for the net assets of TortoiseCorp,
accompanied by a recapitalization. The net assets of TortoiseCorp
were stated at historical cost, with no goodwill or other
intangible assets recorded.
2. Notes
to Unaudited Pro Forma Condensed Combined Statement of
Operations
Transaction
Accounting Adjustments include the following adjustments related to
the unaudited pro forma condensed combined statement of operations
for the year ended December 31, 2020, as follows:
|
a) |
Represents
pro forma adjustment to eliminate interest expense and change in
fair value of convertible notes payable derivative liabilities
related to the debt converted into common stock in the Business
Combination. |
|
b) |
Represents
pro forma adjustment to eliminate investment income related to the
investment held in the Trust Account. |
|
c) |
We
have incurred income tax expense primarily related to investment
income held in the Trust Account. We are eliminating this income
tax expense because this income tax expense will not be incurred if
the Merger was consummated on January 1, 2020. |
|
d) |
Represents
the increase in the weighted average shares outstanding due to the
issuance of common stock (and redemptions) in connection with the
Business Combination. |
3. Income
(Loss) per Share
Represents
the net income (loss) per share calculated using the historical
weighted average shares outstanding, the dilutive effect of stock
options, warrants and the issuance of additional shares in
connection with the Business Combination, assuming the shares were
outstanding since January 1, 2020. As the Business Combination is
being reflected as if it had occurred at the beginning of the
period presented, the calculation of weighted average shares
outstanding for basic and diluted net loss per share assumes that
the shares issuable relating to the Business Combination have been
outstanding for the entire period presented. 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.
Weighted average shares calculation, basic and diluted |
|
Year Ended
December 31,
2020 |
|
TortoiseCorp shares |
|
|
29,126,147 |
|
Shares issued in Business
Combination |
|
|
100,000,000 |
|
Private placements and Forward
Purchase Agreement shares |
|
|
32,500,000 |
|
Redemptions |
|
|
(3,308 |
) |
Weighted
average shares outstanding, basic |
|
|
161,622,839 |
|
Add: stock options |
|
|
6,326,479 |
|
Add:
warrants |
|
|
1,920,426 |
|
Weighted
average shares outstanding, diluted |
|
|
169,869,744 |
|
Net
Loss per Share, Diluted – Calculation |
|
Year Ended
December 31,
2020 |
|
(in thousands, except for share and per share amounts) |
|
|
|
Pro forma net income |
|
$ |
325,451 |
|
Less: Change in fair value of warrant liabilities |
|
|
(363,299 |
) |
Net
loss for loss per share purposes |
|
$ |
(37,848 |
) |
|
|
|
|
|
Weighted
average shares outstanding, diluted |
|
|
169,869,744 |
|
Net loss per
share, diluted |
|
$ |
(0.22 |
) |
The
Company’s stock options and warrants were not included in the
computation of net loss per share, because the effect would have
been anti-dilutive.
PRINCIPAL
SECURITYHOLDERS
The
following table sets forth information known to us regarding the
beneficial ownership of the Common Stock as of December 28, 2021
by:
|
● |
each
person who is known by us to be the beneficial owner of more than
5% of the outstanding shares of the Common Stock; |
|
● |
each
current named executive officer and director of the Company;
and |
|
● |
all
current executive officers and directors of the Company, as a
group. |
Beneficial
ownership is determined according to the rules of the SEC, which
generally provide that a person has beneficial ownership of a
security if he, she or it possesses sole or shared voting or
investment power over that security, including options that are
currently exercisable or exercisable within 60 days.
The
beneficial ownership percentages set forth in the table below are
based on approximately 173,313,427 shares of Common Stock issued
and outstanding as of November 4, 2021.
Unless
otherwise noted in the footnotes to the following table, and
subject to applicable community property laws, the persons and
entities named in the table have sole voting and investment power
with respect to their beneficially owned Common Stock.
Name and Address of Beneficial Owner |
|
Number of
Shares of
Common Stock
Beneficially
Owned |
|
|
Percentage of
Outstanding
Common Stock
% |
|
Directors and
Named Executive Officers: |
|
|
|
|
|
|
Thomas Healy(1) |
|
|
33,372,856 |
|
|
|
19.3 |
% |
Greg
Van de Vere(2) |
|
|
1,038,629 |
|
|
|
* |
|
Patrick
Sexton(3)(4) |
|
|
286,888 |
|
|
|
* |
|
Andrew H. Card, Jr.(3) |
|
|
5,000 |
|
|
|
* |
|
Elaine L. Chao(5) |
|
|
— |
|
|
|
— |
|
Vincent T. Cubbage(3) |
|
|
930,018 |
|
|
|
* |
|
Mary
E. Gustanski(5) |
|
|
— |
|
|
|
— |
|
Howard
Jenkins(3) |
|
|
5,147,000 |
|
|
|
3.0 |
% |
Edward
Olkkola(3)(6) |
|
|
2,342,913 |
|
|
|
1.4 |
% |
Stephen
Pang(3) |
|
|
63,574 |
|
|
|
* |
|
Robert M. Knight, Jr.(3) |
|
|
10,000 |
|
|
|
* |
|
Directors and Executive Officers as a Group (13
Individuals)(7) |
|
|
42,212,683 |
|
|
|
24.4 |
% |
|
|
|
|
|
|
|
|
|
Five Percent Holders: |
|
|
|
|
|
|
|
|
Colle Capital Partners I, L.P.(8) |
|
|
9,548,288 |
|
|
|
5.5 |
% |
|
(1) |
On
October 1, 2020, in connection with the Closing, subject to certain
exceptions, Mr. Healy agreed not to transfer more than 10% of the
number of shares of Common Stock held by him immediately after the
effective time of the Merger, or issuable upon the exercise of
options to purchase shares of Common Stock held by him immediately
after the effective time of the Merger until October 1, 2022. For
additional discussion of Mr. Healy’s lock-up restrictions, see our
Definitive Proxy Statement on Schedule 14A incorporated by
reference herein. |
|
(2) |
Mr.
Van de Vere resigned and retired as our Chief Financial Officer
effective as of January 15, 2021. Based on information provided to
us by the holder as of June 30, 2021. |
|
(3) |
Excludes
a grant of restricted stock units (“RSU Award”) pursuant to the
Company's 2020 Equity Incentive Plan, which will not begin vesting
until March 2022 and thereafter. |
|
(4) |
Includes
68,309 shares of Common Stock issuable upon the exercise of
options. |
|
(5) |
Excludes
a grant of RSU Awards pursuant to the Company's 2020 Equity
Incentive Plan, which will not begin vesting until October 2022 and
thereafter. |
|
(6) |
Consists
of (a) 821,610 shares of Common Stock and 1,348,643 shares of
Common Stock issuable upon the exercise of options, each owned by
Mr. Olkkola and (b) 172,660 shares of Common Stock held by Mr.
Olkkola’s wife, over which she has sole voting and investment
power. Mr. Olkkola disclaims beneficial interest in the shares of
Common Stock of Hyliion Holdings Corp. held by his
wife. |
|
(7) |
The
amounts disclosed represent shares of Common Stock beneficially
owned by current directors and executive officers of the Company.
In addition to the amounts disclosed with respect to the other
current directors and executive officers of the Company, includes
8,521 total shares of Common Stock held by three executive officers
and 45,913 fully vested RSU Awards held by two executive officers.
Excludes a grant of RSU Award pursuant to the Company's 2020 Equity
Incentive Plan, which will not begin vesting until March 2022 and
thereafter. |
|
(8) |
Based
on a Schedule 13G/A filed with the SEC on March 2, 2021 and
information received from Victoria Grace as of June 24, 2021,
consists of 9,548,288 shares of Common Stock of Hyliion Holdings
Corp. owned by Colle Capital Partners I, L.P., Colle HLN Associates
LLC and Colle Logistics Associates LLC, which may be deemed to be
beneficially owned by Victoria Grace. Ms. Grace serves as the sole
manager of both Colle HLN Associates LLC and Colle Logistics
Associates LLC. Ms. Grace serves as the sole manager of Colle
Partners GP LLC, which serves as the sole general partner of Colle
Capital Partners I, L.P. Ms. Grace disclaims beneficial interest in
the shares of Common Stock of Hyliion Holdings Corp. held by Colle
Capital Partners I, L.P., Colle HLN Associates LLC and Colle
Logistics Associates LLC, except to the extent of her pecuniary
interest therein. The business address of each of the persons named
in this paragraph is 55 Hudson Yards, Floor 44, New York, NY
10001. |
SELLING
SECURITYHOLDERS
The
Selling Securityholders acquired shares of our Common Stock from us
in private offerings pursuant to exemptions from registration under
Section 4(a)(2) of the Securities Act in connection with a private
placement concurrent with the IPO and in connection with the
Business Combination. Pursuant to (i) the Amended and Restated
Registration Rights Agreement entered into on October 1, 2020, with
Tortoise Sponsor LLC, TortoiseEcofin Borrower LLC and certain
stockholders (the “A&R Registration Rights Agreement”), (ii)
the separate subscription agreements (each, a “Subscription
Agreement”) entered into effective as of June 18, 2020, pursuant to
which a number of purchasers purchased from the Company an
aggregate of 30,750,000 shares of Common Stock for a purchase price
of $10.00 per share and an aggregate purchase price of $307,500,000
and (iii) the Amended and Restated Forward Purchase Agreement,
dated February 6, 2019, as amended by the First Amendment to
Amended and Restated Forward Purchase Agreement, dated June 18,
2020 (as amended, the “Forward Purchase Agreement”), we agreed to
file a registration statement with the SEC for the purposes of
registering for resale, among other things (a) the Private Warrants
(and the shares of Common Stock that may be issued upon exercise of
the Private Warrants), (b) the shares of our Common Stock issued to
the Selling Securityholders pursuant to the Subscription
Agreements, Business Combination Agreement and the Forward Purchase
Agreement and (c) Public Warrants held by certain affiliates of
TortoiseCorp. As of December 31, 2020, all outstanding Warrants
were either exercised by the holder or redeemed by the
Company.
The
table below has been prepared based upon information furnished to
us by the Selling Stockholders. Information concerning the Selling
Stockholders may change from time to time and, if necessary, we
will amend or supplement this prospectus accordingly and as
required. The applicable percentage ownership of Common Stock is
based on approximately 173,313,427 shares of Common Stock
outstanding as of November 4, 2021. Information with respect to
shares of Common Stock owned beneficially after the offering
assumes the sale of all of the shares of Common Stock offered and
no other purchases or sales of our Common Stock. The Selling
Securityholders may offer and sell some, all or none of their
shares of Common Stock.
We
have determined beneficial ownership in accordance with the rules
of the SEC. Except as indicated by the footnotes below, we believe,
based on the information furnished to us, that the Selling
Securityholders have sole voting and investment power with respect
to all shares of Common Stock that they beneficially own, subject
to applicable community property laws. Except as otherwise
described below, based on the information provided to us by the
Selling Securityholders, no Selling Securityholder is a
broker-dealer or an affiliate of a broker-dealer.
|
|
Shares of Common Stock Beneficially Owned Prior to |
|
|
Number of Shares of Common Stock Being |
|
|
Shares of
Common Stock
Beneficially Owned After the Offered Shares of Common Stock
are Sold |
|
Name
of Selling Securityholder |
|
Offering |
|
|
Offered(1) |
|
|
Number |
|
|
Percent |
|
1248
Holdings, LLC(2) |
|
|
1,112,500 |
|
|
|
1,112,500 |
|
|
|
— |
|
|
|
— |
|
Alexander
H. Jenkins(3)(4) |
|
|
6,982,697 |
|
|
|
450,000 |
|
|
|
— |
|
|
|
— |
|
Andrew
J. Orekar(5) |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
— |
|
|
|
— |
|
Atlas
Point Energy Infrastructure Fund, LLC(6) |
|
|
371,250 |
|
|
|
371,250 |
|
|
|
— |
|
|
|
— |
|
Axioma
Ventures, LLC(4) |
|
|
6,532,697 |
|
|
|
6,532,697 |
|
|
|
— |
|
|
|
— |
|
Bradley
J. Hilsabeck(7) |
|
|
50,000 |
|
|
|
50,000 |
|
|
|
— |
|
|
|
— |
|
Colle
Capital Partners I, L.P.(8) |
|
|
1,249,300 |
|
|
|
1,249,300 |
|
|
|
— |
|
|
|
— |
|
Colle
HLN Associates LLC(8) |
|
|
4,279,467 |
|
|
|
4,279,467 |
|
|
|
— |
|
|
|
— |
|
Colle
Logistics Associates LLC(8) |
|
|
4,019,521 |
|
|
|
4,019,521 |
|
|
|
— |
|
|
|
— |
|
CRA
Fund II LLC(9) |
|
|
5,181,161 |
|
|
|
5,181,161 |
|
|
|
— |
|
|
|
— |
|
Dana
Limited(10) |
|
|
2,988,229 |
|
|
|
2,988,229 |
|
|
|
— |
|
|
|
— |
|
Darrell
D. Brock, Jr.(11)(12) |
|
|
547,871 |
|
|
|
547,871 |
|
|
|
— |
|
|
|
— |
|
David
Douglas(13) |
|
|
433,763 |
|
|
|
433,763 |
|
|
|
— |
|
|
|
— |
|
DougCap,
LLC(14) |
|
|
1,000,793 |
|
|
|
1,000,793 |
|
|
|
— |
|
|
|
— |
|
Edward
Olkkola(15) |
|
|
2,342,913 |
|
|
|
421,610 |
|
|
|
1,921,303 |
|
|
|
1.1 |
% |
Edward
Russell(12) |
|
|
289,180 |
|
|
|
173,145 |
|
|
|
116,035 |
|
|
|
* |
|
Evan
Zimmer(12) |
|
|
133,836 |
|
|
|
132,336 |
|
|
|
1,500 |
|
|
|
* |
|
Falcon
Partners LTD(16) |
|
|
17,722 |
|
|
|
17,722 |
|
|
|
— |
|
|
|
— |
|
FJ
Management Inc.(17) |
|
|
7,278,499 |
|
|
|
7,278,499 |
|
|
|
— |
|
|
|
— |
|
Frank
M. Semple(18) |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
— |
|
|
|
— |
|
Gary
P. Henson(7) |
|
|
30,150 |
|
|
|
10,000 |
|
|
|
20,150 |
|
|
|
* |
|
Greg
Van de Vere |
|
|
1,038,629 |
|
|
|
22,149 |
|
|
|
1,016,480 |
|
|
|
* |
|
H.
Kevin Birzer(7) |
|
|
25,000 |
|
|
|
10,000 |
|
|
|
15,000 |
|
|
|
* |
|
Handelsbanken
Fonder AB, 556418-8851, on behalf of the fund Handelsbanken Hallbar
Energi(19) |
|
|
3,527,783 |
|
|
|
900,000 |
|
|
|
2,627,783 |
|
|
|
1.5 |
% |
Howard
M. Jenkins(20) |
|
|
5,147,000 |
|
|
|
5,147,000 |
|
|
|
— |
|
|
|
— |
|
Jeanne
Olkkola(21) |
|
|
994,270 |
|
|
|
166,560 |
|
|
|
406,100 |
|
|
|
* |
|
MCHC,
LLC(2) |
|
|
150,000 |
|
|
|
150,000 |
|
|
|
— |
|
|
|
— |
|
New
Era Capital Partners, L.P.(22) |
|
|
6,262,857 |
|
|
|
6,262,857 |
|
|
|
— |
|
|
|
— |
|
Sensata Technologies, Inc. |
|
|
218,758 |
|
|
|
218,758 |
|
|
|
— |
|
|
|
— |
|
Sidney
L. Tassin(23) |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
— |
|
|
|
— |
|
Stephen
Pang(12)(24) |
|
|
63,574 |
|
|
|
63,574 |
|
|
|
— |
|
|
|
— |
|
Steven
C. Schnitzer(12)(25) |
|
|
545,371 |
|
|
|
545,371 |
|
|
|
— |
|
|
|
— |
|
Texas
Mutual Insurance Company(26) |
|
|
32,992 |
|
|
|
32,992 |
|
|
|
— |
|
|
|
— |
|
Thomas
Healy(27) |
|
|
33,372,856 |
|
|
|
33,372,856 |
|
|
|
— |
|
|
|
— |
|
Tortoise
Direct Opportunities Fund II, LP(28) |
|
|
119,000 |
|
|
|
119,000 |
|
|
|
— |
|
|
|
— |
|
TortoiseEcofin
Borrower LLC(29) |
|
|
3,795,085 |
|
|
|
2,666,665 |
|
|
|
1,128,420 |
|
|
|
* |
|
Vincent
T. Cubbage(12)(30) |
|
|
930,018 |
|
|
|
930,018 |
|
|
|
— |
|
|
|
— |
|
Other
Stockholders(31) |
|
|
1,666,387 |
|
|
|
1,664,776 |
|
|
|
1,611 |
|
|
|
* |
|
|
(1) |
The
amounts set forth in this column are the number of shares of Common
Stock that may be offered by each Selling Securityholder using this
prospectus. These amounts do not represent any other shares of our
Common Stock that the Selling Securityholder may own beneficially
or otherwise. |
|
(2) |
Martin
C. Bicknell is deemed to have power to vote or dispose of the
Registrable Securities (as defined in the A&R Registration
Rights Agreement). Based on information provided to us by the
Selling Securityholder, the Selling Securityholder may be deemed to
be an affiliate of a broker-dealer. Based on such information, the
Selling Securityholder acquired the shares being registered
hereunder in the ordinary course of business, and at the time of
the acquisition of the shares, the Selling Securityholder did not
have any agreements or understandings with any person to distribute
such shares. |
|
(3) |
Based
on a Schedule 13D/A filed with the SEC on December 6, 2021,
consists of (a) 450,000 shares of Common Stock owned by Mr. Jenkins
and (b) 6,532,697 shares of Common Stock held by Axioma Ventures,
of which Mr. Jenkins is a manager. See footnote 4 for more
information about the shares of Common Stock held by Axioma
Ventures, LLC (“Axioma Ventures”). |
|
(4) |
Based
on a Schedule 13D/A filed with the SEC on December 6, 2021. The
sole member of Axioma Ventures is Axioma Holdings, LLC (“Axioma
Holdings”) and the managers of Axioma Ventures are Alexander H.
Jenkins and Kiran Lingam. The sole manager of Axioma Holdings is
Axioma Management, LLC (“Axioma Management”). Alexander H. Jenkins
and Kiran Lingam are managers of Axioma Management. Each of Axioma
Holdings, Axioma Management, Alexander H. Jenkins and Kiran Lingam
therefore may be deemed to share voting and dispositive power with
respect to the shares of Common Stock held of record by Axioma
Ventures. |
|
(5) |
Andrew
J. Orekar served as a director of TortoiseCorp prior to the Closing
of the Business Combination. |
|
(6) |
Paul
McPheeters is deemed to have power to vote or dispose of the
Registrable Securities. |
|
(7) |
TortoiseEcofin
Parent Holdco LLC (f/k/a Tortoise Parent Holdco LLC) is the sole
member of TortoiseEcofin Borrower LLC (“Tortoise Borrower”), and
TortoiseEcofin Investments, LLC is the sole member of
TortoiseEcofin Parent Holdco LLC. TortoiseEcofin Investments, LLC
(f/k/a/ Tortoise Investments LLC) is controlled by a board of
directors, which consists of Jeffrey Lovell, Robert M. Belke, Brad
Armstrong, H. Kevin Birzer, Gary P. Henson and Brad Hilsabeck.
Accordingly, each member of the board of directors of
TortoiseEcofin Investments, LLC, may be deemed to have or share
beneficial ownership of the Common Stock held directly by Tortoise
Borrower. In addition, Tortoise Sponsor, the sponsor of
TortoiseCorp and the owner, since the date of IPO of TortoiseCorp
and through the Closing of the Business Combination, of certain
securities of the Company, was an affiliate of TortoiseEcofin
Investments LLC and Tortoise Borrower. Tortoise Sponsor was
dissolved on October 2, 2020, and the shares of Common Stock of the
Company held by Tortoise Sponsor were, upon such dissolution,
distributed to the members thereof. |
|
(8) |
Victoria
Grace serves as the sole manager of both Colle HLN Associates LLC
and Colle Logistics Associates LLC. Ms. Grace serves as the sole
manager of Colle Partners GP LLC, which serves as the sole general
partner of Colle Capital Partners I, L.P. Victoria Grace
beneficially owns the shares of Common Stock held by Colle HLN
Associates LLC, Colle Logistics Associates LLC and Colle Capital
Partners I, L.P. Ms. Grace disclaims beneficial interest in the
shares of Common Stock of Hyliion Holdings Corp. held by Colle
Capital Partners I, L.P., Colle HLN Associates LLC and Colle
Logistics Associates LLC, except to the extent of her pecuniary
interest therein. Victoria Grace was also a director of Legacy
Hyliion prior to the Closing of the Business
Combination. |
|
(9) |
Gideon
Argov beneficially owns greater than 5% of the Selling
Securityholder’s interest in the Company and served as a director
of Legacy Hyliion prior to the Closing of the Business
Combination. |
|
(10) |
Jonathan
Mark Collins, Timothy Robert Kraus and John Frederick Geddes are
deemed to have power to vote or dispose of the Registrable
Securities. |
|
(11) |
Darrell
D. Brock, Jr. was the Vice President, Business Development of
TortoiseCorp from the completion of its IPO to the date of the
Closing of the Business Combination. |
|
(12) |
Each
of Darrell D. Brock, Jr., Edward Russell, Evan Zimmer, Vincent T.
Cubbage, Steven Schnitzer and Stephen Pang was also a member (i.e.,
equity owner) of Tortoise Sponsor LLC (“Tortoise Sponsor”), the
sponsor of Tortoise Acquisition Corp. (“TortoiseCorp”), which owned
shares of Common Stock and dissolved on October 2, 2020, and is
employed by an affiliate of Tortoise Borrower, which owns shares of
Common Stock of the Company. Tortoise Borrower was the managing
member of Tortoise Sponsor, the sponsor of TortoiseCorp. Each of
Darrell D. Brock, Jr., Edward Russell, Evan Zimmer, Vincent T.
Cubbage, Steven Schnitzer and Stephen Pang has or had no voting or
dispositive power over the securities of the Company owned of
record or beneficially by Tortoise Sponsor or Tortoise
Borrower. |
|
(13) |
David
Douglas was a director of Legacy Hyliion prior to the Closing of
the Business Combination. |
|
(14) |
Steven
D. Douglas, who was a director of Legacy Hyliion prior to the
Closing of the Business Combination, is deemed to have power to
vote or dispose of the Registrable Securities. |
|
(15) |
Consists
of (a) 821,610 shares of Common Stock and 1,348,643 shares of
Common Stock issuable upon the exercise of options within 60 days,
each owned by Mr. Olkkola and (b) 172,660 shares of Common Stock
held by Mr. Olkkola’s wife, over which she has sole voting and
investment power. Mr. Olkkola disclaims beneficial interest in the
shares of Common Stock of Hyliion Holdings Corp. held by his wife.
Mr. Olkkola is a current member of the board of directors of the
Company. |
|
(16) |
Lamar
Mathews, President of the General Partnership, and David Douglas
are deemed to have power to vote or dispose of the Registrable
Securities. David Douglas was also a director of Legacy Hyliion
prior to the Closing of the Business Combination. |
|
(17) |
Crystal
Maggelet and Richard L. Bozzelli are deemed to have power to vote
or dispose of the Registrable Securities. Richard L. Bozzelli was a
director of Legacy Hyliion prior to the Closing of the Business
Combination. |
|
(18) |
Frank
M. Semple served as a director of TortoiseCorp prior to the Closing
of the Business Combination. |
|
(19) |
Being
the portfolio manager of the Selling Securityholder, Patric
Lindqvist may be deemed to have the power to vote for and dispose
of the Registrable Securities on behalf of the Selling
Securityholder. Based on information provided to us by the Selling
Securityholder, the Selling Securityholder may be deemed to be an
affiliate of a broker-dealer. Based on such information, the
Selling Securityholder acquired the shares being registered
hereunder in the ordinary course of business, and at the time of
the acquisition of the shares, the Selling Securityholder did not
have any agreements or understandings with any person to distribute
such shares. |
|
(20) |
Based
on a Schedule 13D/A filed with the SEC on December 6, 2021. Howard
M. Jenkins is a current member of the board of directors of the
Company. |
|
(21) |
Consists
of (a) 172,660 shares of Common Stock owned by Mrs. Olkkola and (b)
821,610 shares of Common Stock held by Mrs. Olkkola’s husband, over
which he has sole voting and investment power. Mrs. Olkkola
disclaims beneficial interest in the shares of Common Stock of
Hyliion Holdings Corp. held by her husband. |
|
(22) |
Ran
Simha is deemed to have power to vote or dispose of the Registrable
Securities. Gideon Argov, a manager of New Era Capital Partners,
L.P., was a director of Legacy Hyliion prior to the Closing of the
Business Combination. |
|
(23) |
Sidney
L. Tassin served as a director of TortoiseCorp prior to the Closing
of the Business Combination. |
|
(24) |
Stephen
Pang was a director of TortoiseCorp from the completion of its IPO
to the date of the Closing of the Business Combination. He also
served as the Chief Financial Officer of TortoiseCorp from January
2020 to the date of the Closing of the Business Combination. Mr.
Pang is a current member of the board of directors of the
Company. |
|
(25) |
Steven
C. Schnitzer was the Vice President, General Counsel and Secretary
of TortoiseCorp from the completion of its IPO to the date of the
Closing of the Business Combination. |
|
(26) |
Tortoise
Capital Advisors, L.L.C. is an investment adviser to the Selling
Securityholder. Primary responsibility for the day-to-day
management of the portfolio containing the Registrable Securities
is the joint responsibility of a team of portfolio managers
consisting of Brian A. Kessens, James R. Mick, Matthew G.P. Sallee,
Robert J. Thummel, and Nicholas S. Holmes. |
|
(27) |
Thomas
Healy is the Chief Executive Officer and member of the board of
directors of the Company. On October 1, 2020, in connection with
the Closing, subject to certain exceptions, Mr. Healy agreed not to
transfer more than 10% of the number of shares of Common Stock held
by him immediately after the effective time of the Merger, or
issuable upon the exercise of options to purchase shares of Common
Stock held by him immediately after the effective time of the
Merger until October 1, 2022. For additional discussion of Mr.
Healy’s lock-up restrictions, see our Definitive Proxy Statement on
Schedule 14A incorporated by reference herein. |
|
(28) |
Tortoise
Capital Advisors, L.L.C. is investment advisor to the Selling
Securityholder. Brian A. Kessens, James R. Mick, Matthew G.P.
Sallee, and Robert J. Thummel, in their position as portfolio
managers, may be deemed to have voting and investment power with
respect to the Registrable Securities owned by the Selling
Securityholder. Tortoise Capital Advisors, L.L.C. has sole voting
and dispositive power over the Registrable Securities held by the
Selling Securityholder. The address for the foregoing persons is
5100 W. 115th Place, Leawood, KS 66211. Based on information
provided to us by the Selling Securityholder, the Selling
Securityholder may be deemed to be an affiliate of a broker-dealer.
Based on such information, the Selling Securityholder acquired the
shares being registered hereunder in the ordinary course of
business, and at the time of the acquisition of the shares, the
Selling Securityholder did not have any agreements or
understandings with any person to distribute such
shares. |
|
(29) |
The
Selling Securityholder was a part of the sponsor network of
TortoiseCorp. The Selling Securityholder was the managing member of
Tortoise Sponsor, which held Class B shares of common stock of the
Company in connection its IPO. Immediately prior to giving effect
to the Business Combination, Tortoise Sponsor held all of the
issued and outstanding shares of Class B common stock of the
Company (or 5,825,230 shares) other than (i) 1,265,625 shares of
Class B common stock that were previously transferred to Atlas
Point Energy Infrastructure Fund, LLC in connection with the IPO of
TortoiseCorp and (ii) 120,000 shares of Class B common stock that
were previously transferred, in the aggregate, to three independent
directors of TortoiseCorp in connection with such IPO. After giving
effect to the Business Combination and the transfer on October 1,
2020 of 894,375 shares of Class B common stock by Atlas Point Fund
to the Selling Securityholder and the distribution by Tortoise
Sponsor of Class B common stock held by it to the members of
Tortoise Sponsor upon the dissolution thereof on October 2, 2020,
the Selling Securityholder was the record and beneficial owner of
2,666,665 shares of Common Stock. |
TortoiseEcofin
Parent Holdco LLC (f/k/a Tortoise Parent Holdco LLC) is the sole
member of the Selling Securityholder, and TortoiseEcofin
Investments, LLC is the sole member of TortoiseEcofin Parent Holdco
LLC. TortoiseEcofin Investments, LLC is controlled by a board of
directors, which consists of Jeffrey Lovell, Robert M. Belke, Brad
Armstrong, H. Kevin Birzer, Gary P. Henson and Brad Hilsabeck.
Accordingly, the members of the board of directors of
TortoiseEcofin Investments, LLC may be deemed to have or share
beneficial ownership of the Common Stock held directly by the
Selling Securityholder. In addition, Vincent T. Cubbage, Stephen
Pang, Steven C. Schnitzer and Darrell D. Brock, Jr., former
officers and, in the case of Messrs. Cubbage and Pang, former and
current directors of the Company, were members of Tortoise Sponsor
and are employed by an affiliate of the Selling Securityholder that
is controlled by TortoiseEcofin Investments, LLC. None of Mr.
Cubbage, Mr. Pang, Mr. Schnitzer and Mr. Brock has voting or
dispositive power over the shares of Common Stock held beneficially
and of record by the Selling Securityholder.
Based
on information provided to us by the Selling Securityholder, the
Selling Securityholder may be deemed to be an affiliate of a
broker-dealer. Based on such information, the Selling
Securityholder acquired the shares being registered hereunder in
the ordinary course of business, and at the time of the acquisition
of the shares, the Selling Securityholder did not have any
agreements or understandings with any person to distribute such
shares.
|
(30) |
Vincent
T. Cubbage was the President, Chief Executive Officer and a
director of TortoiseCorp from the completion of its IPO to the date
of the Closing of the Business Combination. Mr. Cubbage is a
current member of the board of directors of the
Company. |
|
(31) |
Includes
approximately 45 other stockholders not otherwise listed above,
none of which currently owns more than 0.13% of the Company’s
Common Stock. Collectively, these stockholders own approximately
0.96% of the Company’s Common Stock. |
PLAN OF
DISTRIBUTION
We
are registering the resale by the Selling Securityholders or their
permitted transferees from time to time of up to 88,642,440 shares
of Common Stock.
We
are required to pay all fees and expenses incident to the
registration of the shares of our Common Stock to be offered and
sold pursuant to this prospectus. The Selling Securityholders will
bear all commissions and discounts, if any, attributable to their
sale of shares of our Common Stock.
We
will not receive any of the proceeds from the sale of the
securities by the Selling Securityholders. The aggregate proceeds
to the Selling Securityholders will be the purchase price of the
securities less any discounts and commissions borne by the Selling
Securityholders. The shares of Common Stock beneficially owned by
the Selling Securityholders covered by this prospectus may be
offered and sold from time to time by the Selling Securityholders.
The term “Selling Securityholders” includes donees, pledgees,
transferees or other successors in interest selling securities
received after the date of this prospectus from a Selling
Securityholder as a gift, pledge, partnership distribution or other
transfer. The Selling Securityholders will act independently of us
in making decisions with respect to the timing, manner and size of
each sale. Such sales may be made on one or more exchanges or in
the over-the-counter market or otherwise, at prices and under terms
then prevailing or at prices related to the then current market
price or in negotiated transactions. The Selling Securityholders
may sell their shares of Common Stock by one or more of, or a
combination of, the following methods:
|
● |
purchases
by a broker-dealer as principal and resale by such broker-dealer
for its own account pursuant to this prospectus; |
|
● |
ordinary
brokerage transactions and transactions in which the broker
solicits purchasers; |
|
● |
block
trades in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; |
|
● |
an
over-the-counter distribution in accordance with the rules of
NYSE; |
|
● |
through
trading plans entered into by a Selling Securityholder pursuant to
Rule 10b5-1 under the Exchange Act, that are in place at the time
of an offering pursuant to this prospectus and any applicable
prospectus supplement hereto that provide for periodic sales of
their securities on the basis of parameters described in such
trading plans; |
|
● |
to or
through underwriters or broker-dealers; |
|
● |
in
“at the market” offerings, as defined in Rule 415 under the
Securities Act, at negotiated prices, at prices prevailing at the
time of sale or at prices related to such prevailing market prices,
including sales made directly on a national securities exchange or
sales made through a market maker other than on an exchange or
other similar offerings through sales agents; |
|
● |
in
privately negotiated transactions; |
|
● |
in
options transactions; |
|
● |
through
a combination of any of the above methods of sale; or |
|
● |
any
other method permitted pursuant to applicable law. |
In
addition, any shares that qualify for sale pursuant to Rule 144 may
be sold under Rule 144 rather than pursuant to this
prospectus.
To
the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. In
connection with distributions of the shares or otherwise, the
Selling Securityholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with
such transactions, broker-dealers or other financial institutions
may engage in short sales of shares of Common Stock in the course
of hedging the positions they assume with Selling Securityholders.
The Selling Securityholders may also sell shares of Common Stock
short and redeliver the shares to close out such short positions.
The Selling Securityholders may also enter into option or other
transactions with broker-dealers or other financial institutions
which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to
this prospectus (as supplemented or amended to reflect such
transaction). The Selling Securityholders may also pledge shares to
a broker-dealer or other financial institution, and, upon a
default, such broker-dealer or other financial institution, may
effect sales of the pledged shares pursuant to this prospectus (as
supplemented or amended to reflect such transaction).
A
Selling Securityholder may enter into derivative transactions with
third parties, or sell securities not covered by this prospectus to
third parties in privately negotiated transactions. If an
applicable prospectus supplement indicates, in connection with
those derivatives, the third parties may sell securities covered by
this prospectus and the applicable prospectus supplement, including
in short sale transactions. If so, the third party may use
securities pledged by any Selling Securityholder or borrowed from
any Selling Securityholder or others to settle those sales or to
close out any related open borrowings of stock, and may use
securities received from any Selling Securityholder in settlement
of those derivatives to close out any related open borrowings of
stock. If applicable through securities laws, the third party in
such sale transactions will be an underwriter and will be
identified in the applicable prospectus supplement (or a
post-effective amendment). In addition, any Selling Securityholder
may otherwise loan or pledge securities to a financial institution
or other third party that in turn may sell the securities short
using this prospectus. Such financial institution or other third
party may transfer its economic short position to investors in our
securities or in connection with a concurrent offering of other
securities.
In
effecting sales, broker-dealers or agents engaged by the Selling
Securityholders may arrange for other broker-dealers to
participate. Broker-dealers or agents may receive commissions,
discounts or concessions from the Selling Securityholders in
amounts to be negotiated immediately prior to the sale.
In
offering the securities covered by this prospectus, the Selling
Securityholders and any broker-dealers who execute sales for the
Selling Securityholders may be deemed to be “underwriters” within
the meaning of the Securities Act in connection with such sales.
Any profits realized by the Selling Securityholders and the
compensation of any broker-dealer may be deemed to be underwriting
discounts and commissions.
In
order to comply with the securities laws of certain states, if
applicable, the securities must be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in
certain states the securities may not be sold unless they have been
registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is
available and is complied with.
We
have advised the Selling Securityholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of
securities in the market and to the activities of the Selling
Securityholders and their affiliates. In addition, we will make
copies of this prospectus available to the Selling Securityholders
for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The Selling Securityholders may indemnify
any broker-dealer that participates in transactions involving the
sale of the shares against certain liabilities, including
liabilities arising under the Securities Act.
At
the time a particular offer of securities is made, if required, a
prospectus supplement will be distributed that will set forth the
number of securities being offered and the terms of the offering,
including the name of any underwriter, dealer or agent, the
purchase price paid by any underwriter, any discount, commission
and other item constituting compensation, any discount, commission
or concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
LEGAL
MATTERS
The
validity of any securities offered by this prospectus has been
passed upon for us by Vinson & Elkins L.L.P., New York, New
York.
EXPERTS
The
financial statements as of and for the years ended December 31,
2020 and December 31, 2019 of Hyliion appearing in this prospectus
and registration statement have been audited by Grant Thornton LLP,
an independent registered public accounting firm (“Grant
Thornton”), as set forth in their report appearing elsewhere
herein, and are included in reliance upon such report given on the
authority of such firm as experts in accounting and
auditing.
WHERE YOU CAN FIND
MORE INFORMATION
We
are required to file annual, quarterly and current reports, proxy
statements and other information with the SEC as required by the
Exchange Act. You can read our SEC filings, including this
prospectus, over the Internet at the SEC’s website at
http://www.sec.gov.
Our website address is www.hyliion.com. Through our website,
we make available, free of charge, the following documents as soon
as reasonably practicable after they are electronically filed with,
or furnished to, the SEC, including our Annual Reports on Form
10-K; our proxy statements for our annual and special stockholder
meetings; our Quarterly Reports on Form 10-Q; our Current Reports
on Form 8-K; Forms 3, 4, and 5 and Schedules 13D with respect to
our securities filed on behalf of our directors and our executive
officers; and amendments to those documents. The information
contained on, or that may be accessed through, our website is not a
part of, and is not incorporated into, this prospectus.
INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” the information we file
with it, which means that we can disclose important information to
you by referring you to those documents. The information
incorporated by reference is considered to be part of this
prospectus and information we file later with the SEC will
automatically update and supersede this information. Any statement
contained in this prospectus or a previously filed document
incorporated by reference will be deemed to be modified or
superseded for purposes of this prospectus to the extent that a
statement contained in this prospectus or a subsequently filed
document incorporated by reference modifies or replaces that
statement. The documents we are incorporating by reference as of
their respective dates of filing are:
|
● |
our
Annual Report on
Form 10-K/A for the year ended December 31, 2020 filed with the
SEC on May 17, 2021, except for the information included in Part
II, Item 8 – Financial Statements and Supplementary
Data; |
|
● |
the
information specifically incorporated by reference into our Annual
Report on Form 10-K/A from our Definitive Proxy Statement on
Schedule 14A, filed with the SEC on April 29, 2021; |
|
● |
our
Quarterly Reports on
Form 10-Q for the quarter ended March 31, 2021 filed with the
SEC on May 17, 2021,
Form 10-Q/A for the quarter ended June 30, 2021 filed with the
SEC on August 12, 2021, and
Form 10-Q for the quarter ended September 30, 2021 filed with
the SEC on November 10, 2021; |
|
● |
our
Current Reports on Form 8-K filed with the SEC on
January 12, 2021,
January 22, 2021,April
1, 2021,
May 11, 2021,
June 14, 2021,
August 16, 2021,
August 24, 2021,
August 26, 2021, and
October 14, 2021 (except for the information furnished under
Items 2.02 or 7.01 and the exhibits thereto); and |
|
● |
the
description of our common stock contained in Exhibit 4.4 of our
Annual Report on
Form 10-K/A for the year ended December 31, 2020 filed with the
SEC on May 17, 2021, and any amendment or report filed with the SEC
for the purpose of updating such description. |
All
documents we subsequently file pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the
termination of this offering, including all such documents we may
file after the date of the initial registration statement and prior
to the effectiveness of the registration statement, but excluding
any information furnished to, rather than filed with, the SEC, will
also be incorporated by reference into this prospectus and deemed
to be part of this prospectus from the date of the filing of such
reports and documents.
You
may obtain any of the documents incorporated by reference in this
prospectus from the SEC through the SEC’s website at the address
provided above. You also may request a copy of any document
incorporated by reference in this prospectus (excluding any
exhibits to those documents, unless the exhibit is specifically
incorporated by reference in this document), at no cost, by writing
or telephoning us at the following address and phone
number:
Hyliion
Holdings Corp. c/o Investor Contact
1202
BMC Drive, Suite 100
Cedar
Park, Texas 78613
Tel:
(833) 495-4466
INDEX TO FINANCIAL
STATEMENTS
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
of Directors and Stockholders
Hyliion
Holdings Corp.
Opinion
on the financial statements
We
have audited the accompanying consolidated balance sheets of
Hyliion Holdings Corp. and subsidiaries (the “Company”) as of
December 31, 2020 and 2019, the related consolidated statements of
operations, changes in stockholders’ equity (deficit), and cash
flows for each of the two years in the period ended December 31,
2020, and the related notes (collectively referred to as the
“financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of
the Company as of December 31, 2020 and 2019, and the results of
its operations and its cash flows for each of the two years in the
period ended December 31, 2020, in conformity with accounting
principles generally accepted in the United States of
America.
Restatement
of the financial statements
As
discussed in Note 2, the 2020 consolidated financial statements
have been restated to correct a misstatement.
Basis
for opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose
of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express
no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
We
have served as the Company’s auditor since 2020.
/s/
GRANT THORNTON LLP
Dallas,
Texas
February
25, 2021 (except for the restatement described in Note 2 and the
effects thereof, as to which the date is July 8, 2021)
Hyliion Holdings
Corp.
Consolidated
Balance Sheets – As Restated
(Dollar
amounts in thousands, except share and per share data)
|
|
December 31, |
|
|
|
2020
as restated |
|
|
2019 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
389,705 |
|
|
$ |
6,285 |
|
Accounts
receivable |
|
|
92 |
|
|
|
145 |
|
Prepaid
expenses and other current assets |
|
|
20,690 |
|
|
|
414 |
|
Short-term investments |
|
|
201,881 |
|
|
|
- |
|
Total
current assets |
|
|
612,368 |
|
|
|
6,844 |
|
Property
and equipment, net |
|
|
1,171 |
|
|
|
1,635 |
|
Operating lease right-of-use assets |
|
|
5,055 |
|
|
|
4,976 |
|
Intangible assets, net |
|
|
332 |
|
|
|
429 |
|
Other
assets |
|
|
193 |
|
|
|
212 |
|
Long-term investments |
|
|
35,970 |
|
|
|
- |
|
Total assets |
|
$ |
655,089 |
|
|
$ |
14,096 |
|
Liabilities and stockholders’ equity (deficit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
1,890 |
|
|
$ |
1,156 |
|
Convertible notes payable derivative liabilities |
|
|
- |
|
|
|
3,029 |
|
Current
portion of operating lease liabilities |
|
|
734 |
|
|
|
953 |
|
Current
portion of debt |
|
|
49 |
|
|
|
6,720 |
|
Accrued expenses and other current liabilities |
|
|
6,264 |
|
|
|
500 |
|
Total
current liabilities |
|
|
8,937 |
|
|
|
12,358 |
|
Operating lease liabilities, net of current portion |
|
|
5,076 |
|
|
|
4,803 |
|
Convertible notes payable derivative liabilities, net of current
portion |
|
|
- |
|
|
|
5,322 |
|
Debt, net of current portion |
|
|
908 |
|
|
|
9,682 |
|
Total liabilities |
|
|
14,921 |
|
|
|
32,165 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit) |
|
|
|
|
|
|
|
|
Common
stock, $0.0001 par value; 250,000,000 shares authorized;
169,316,421 and 86,762,463 shares issued and outstanding at
December 31, 2020 and 2019, respectively |
|
|
19 |
|
|
|
9 |
|
Additional paid-in capital |
|
|
364,998 |
|
|
|
30,888 |
|
Accumulated earnings (deficit) |
|
|
275,151 |
|
|
|
(48,966 |
) |
Total stockholders’ equity (deficit) |
|
|
640,168 |
|
|
|
(18,069 |
) |
Total liabilities and stockholders’ equity (deficit) |
|
$ |
655,089 |
|
|
$ |
14,096 |
|
The
accompanying notes are an integral part of these consolidated
financial statements.
Hyliion Holdings
Corp.
Consolidated
Statements of Operations – As Restated
(Dollar
amounts in thousands, except share and per share data)
|
|
Years Ended December 31, |
|
|
|
2020
as restated |
|
|
2019 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
Research and development |
|
$ |
(12,598 |
) |
|
$ |
(9,269 |
) |
Selling, general and administrative expenses |
|
|
(9,585 |
) |
|
|
(2,730 |
) |
|
|
|
|
|
|
|
|
|
Loss
from operations |
|
|
(22,183 |
) |
|
|
(11,999 |
) |
Other
income (expense): |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(5,459 |
) |
|
|
(3,260 |
) |
Change
in fair value of convertible notes payable derivative
liabilities |
|
|
(1,358 |
) |
|
|
1,119 |
|
Change
in fair value of warrant liabilities |
|
|
363,299 |
|
|
|
- |
|
Other
income (expense) |
|
|
(12 |
) |
|
|
27 |
|
Loss on extinguishment of debt |
|
|
(10,170 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total other income (expense) |
|
|
346,300 |
|
|
|
(2,114 |
) |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
324,117 |
|
|
$ |
(14,113 |
) |
|
|
|
|
|
|
|
|
|
Net
income (loss) per share, basic |
|
$ |
3.11 |
|
|
$ |
(0.16 |
) |
Net
loss per share, diluted |
|
$ |
(0.35 |
) |
|
$ |
(0.16 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding, basic |
|
|
104,324,059 |
|
|
|
86,643,714 |
|
Weighted-average shares outstanding, diluted |
|
|
112,570,960 |
|
|
|
86,643,714 |
|
The
accompanying notes are an integral part of these consolidated
financial statements.
Hyliion Holdings
Corp.
Consolidated
Statements of Stockholders’ Equity (Deficit) – As
Restated
(Dollar
amounts in thousands, except share data)
|
|
Series
A-1
Redeemable,
Convertible
Preferred Stock |
|
|
Series
A-2
Redeemable,
Convertible
Preferred Stock |
|
|
Series
A-3
Redeemable,
Convertible Preferred Stock |
|
|
Common
Stock |
|
|
Additional
Paid-In |
|
|
Accumulated
Earnings |
|
|
Stockholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Par Value |
|
|
Capital |
|
|
(Deficit) |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2018 |
|
|
23,460,903 |
|
|
$ |
20,750 |
|
|
|
8,793,755 |
|
|
$ |
3,893 |
|
|
|
2,545,155 |
|
|
$ |
2,026 |
|
|
|
24,453,750 |
|
|
$ |
24 |
|
|
$ |
4,072 |
|
|
$ |
(34,853 |
) |
|
$ |
(30,757 |
) |
Retroactive
application of recapitalization (See Note 4) |
|
|
(23,460,903 |
) |
|
|
(20,750 |
) |
|
|
(8,793,755 |
) |
|
|
(3,893 |
) |
|
|
(2,545,155 |
) |
|
|
(2,026 |
) |
|
|
61,890,680 |
|
|
|
(15 |
) |
|
|
26,684 |
|
|
|
- |
|
|
|
26,669 |
|
Adjusted
balance, beginning of period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
86,344,430 |
|
|
|
9 |
|
|
|
30,756 |
|
|
|
(34,853 |
) |
|
|
(4,088 |
) |
Exercise
of common stock options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
418,033 |
|
|
|
- |
|
|
|
7 |
|
|
|
- |
|
|
|
7 |
|
Share-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
125 |
|
|
|
- |
|
|
|
125 |
|
Net
income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(14,113 |
) |
|
|
(14,113 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2019 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
86,762,463 |
|
|
|
9 |
|
|
|
30,888 |
|
|
|
(48,966 |
) |
|
|
(18,069 |
) |
Exercise
of common stock options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,112,160 |
|
|
|
- |
|
|
|
121 |
|
|
|
- |
|
|
|
121 |
|
Conversion
of convertible notes payable to common stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
4,404,367 |
|
|
|
- |
|
|
|
44,039 |
|
|
|
- |
|
|
|
44,039 |
|
Business
Combination and PIPE financing |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
61,622,839 |
|
|
|
6 |
|
|
|
153,147 |
|
|
|
- |
|
|
|
153,153 |
|
Common
stock issued for warrants exercised, net of issuance
cost |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15,414,592 |
|
|
|
4 |
|
|
|
136,512 |
|
|
|
- |
|
|
|
136,516 |
|
Redemption
of unexercised warrants |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(3 |
) |
|
|
- |
|
|
|
(3 |
) |
Share-based
compensation |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
294 |
|
|
|
- |
|
|
|
294 |
|
Net
income (loss) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
324,117 |
|
|
|
324,117 |
|
Balance
at December 31, 2020 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
169,316,421 |
|
|
$ |
19 |
|
|
$ |
364,998 |
|
|
$ |
275,151 |
|
|
$ |
640,168 |
|
The
accompanying notes are an integral part of these consolidated
financial statements.
Hyliion Holdings
Corp.
Consolidated
Statements of Cash Flows – As Restated
(Dollar
amounts in thousands, except share data)
|
|
Years Ended December 31, |
|
|
|
2020
restated |
|
|
2019 |
|
Operating
activities: |
|
|
|
|
|
|
Net income (loss) |
|
$ |
324,117 |
|
|
$ |
(14,113 |
) |
Adjustments to reconcile net income (loss) to net cash used in
operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
850 |
|
|
|
1,028 |
|
Loss on
extinguishment of debt |
|
|
10,170 |
|
|
|
- |
|
Noncash
lease expense |
|
|
928 |
|
|
|
1,312 |
|
Paid-in-kind interest on convertible notes payable |
|
|
1,085 |
|
|
|
723 |
|
Amortization of debt discount |
|
|
4,237 |
|
|
|
2,485 |
|
Share-based compensation |
|
|
294 |
|
|
|
125 |
|
Change
in fair value of convertible notes payable derivative
liabilities |
|
|
1,358 |
|
|
|
(1,118 |
) |
Change
in fair value of contingent consideration liability |
|
|
- |
|
|
|
(27 |
) |
Change
in fair value of warrant liability |
|
|
(363,299 |
) |
|
|
- |
|
Change
in operating assets and liabilities, net of effects of business
acquisition: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
53 |
|
|
|
(28 |
) |
Prepaid
expenses and other current assets |
|
|
(8,301 |
) |
|
|
(62 |
) |
Other
assets |
|
|
19 |
|
|
|
106 |
|
Accounts
payable |
|
|
734 |
|
|
|
(684 |
) |
Accrued
expenses and other current liabilities |
|
|
5,764 |
|
|
|
(21 |
) |
Operating lease liabilities |
|
|
(953 |
) |
|
|
(798 |
) |
|
|
|
|
|
|
|
|
|
Net cash
used in operating activities |
|
|
(22,944 |
) |
|
|
(11,072 |
) |
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment |
|
|
(311 |
) |
|
|
(349 |
) |
Purchase of
investments |
|
|
(237,851 |
) |
|
|
- |
|
Proceeds from sale of property and equipment |
|
|
22 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net cash
used in investing activities |
|
|
(238,140 |
) |
|
|
(349 |
) |
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
Business
Combination and PIPE financing, net of issuance costs paid |
|
|
516,454 |
|
|
|
- |
|
Proceeds
from the exercise of stock warrants |
|
|
124,536 |
|
|
|
- |
|
Proceeds
from convertible notes payable issuance and derivative
liabilities |
|
|
3,200 |
|
|
|
16,803 |
|
Proceeds
from Paycheck Protection Program loan |
|
|
908 |
|
|
|
- |
|
Payments
for deferred financing costs |
|
|
(468 |
) |
|
|
- |
|
Repayments on finance lease obligations |
|
|
(247 |
) |
|
|
(201 |
) |
Proceeds from exercise of common stock options |
|
|
121 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
644,504 |
|
|
|
16,609 |
|
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents: |
|
|
383,420 |
|
|
|
5,188 |
|
Cash and cash equivalents, beginning of period |
|
|
6,285 |
|
|
|
1,097 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
389,705 |
|
|
$ |
6,285 |
|
The
accompanying notes are an integral part of these consolidated
financial statements.
Note 1. Description
of business and basis of presentation
Hyliion
Holdings Corp. and its wholly owned subsidiary, designs and
develops hybrid and electrified powertrain systems for long haul
“Class 8” semi-tractors which modify semi-tractors into Hybrid
and fully electric range extender vehicles,
respectively.
Hyliion
Holdings Corp.’s Hybrid systems utilize intelligent electric drive
axles with advanced algorithms and battery technology to optimize
fuel savings and vehicle performance with reduced emissions,
enabling fleets to access an easy, efficient way to decrease fuel
expenses, lower emissions and/or improve vehicle
performance.
Hyliion
Holdings Corp.’s fully electric range extender systems utilize an
intelligent electric powertrain with advanced algorithms to
optimize emissions performance and efficiency with no new
infrastructure required. The Hypertruck ERX system enables fleets
to reduce the cost of ownership while providing the ability to
deliver net-negative carbon emissions and operate fully electric
when needed.
Hyliion
Holdings Corp. is in a pre-commercialization stage of development
in which its electric Hybrid system is in the testing phase and the
Hypertruck ERX system is in the prototype phase.
Basis of Presentation and Principles of Consolidation: On
the Closing Date, Tortoise Acquisition Corp (“TortoiseCorp”)
entered into a business combination agreement (the “Business
Combination”) with each of the shareholders of Legacy Hyliion.
Pursuant to the Business Combination, TortoiseCorp acquired all of
the issued and outstanding shares of common stock from the Legacy
Hyliion shareholders. In connection with the closing of the
transaction, Tortoise Corp. changed its name to Hyliion Holdings
Corp. For more information on this transaction see Note
4.
On
the Closing Date, and in connection with the closing of the
Business Combination, TortoiseCorp changed its name to Hyliion
Holdings Corp. (the “Company” or “Hyliion”) and the Company’s
common stock began trading on the New York Stock Exchange under the
ticker symbol HYLN. Legacy Hyliion was deemed the accounting
acquirer in the Business Combination based on an analysis of the
criteria outlined in Accounting Standards Codification (“ASC”) 805.
The determination was primarily based on Legacy Hyliion’s
shareholders prior to the Business Combination having a majority of
the voting interests in the combined company, Legacy Hyliion’s
board of directors comprising a majority of the board of directors
of the combined company, Legacy Hyliion’s existing shareholders’
control over decisions regarding the election and removal of
directors and officers of the combined company’s board of
directors, and Legacy Hyliion’s senior management comprising the
senior management of the combined company. Accordingly, for
accounting purposes, the Business Combination was treated as the
equivalent of Legacy Hyliion issuing stock for the net assets of
TortoiseCorp, accompanied by a recapitalization. The net assets of
TortoiseCorp are stated at historical cost, with no goodwill or
other intangible assets recorded.
While
TortoiseCorp was the legal acquirer in the Business Combination,
because Legacy Hyliion was deemed the accounting acquirer, the
historical financial statements of Legacy Hyliion became the
historical financial statements of the combined company, upon the
consummation of the Business Combination. As a result, the
financial statements included in this report reflect (i) the
historical operating results of Legacy Hyliion prior to the
Business Combination; (ii) the combined results of TortoiseCorp and
Legacy Hyliion following the closing of the Business Combination;
(iii) the assets and liabilities of Legacy Hyliion at their
historical cost; and (iv) the Company’s equity structure for all
periods presented.
In
accordance with guidance applicable to these circumstances, the
equity structure has been restated in all comparative periods up to
the Closing Date, to reflect the number of shares of the Company’s
common stock, $0.0001 par value per share, issued to Legacy Hyliion
shareholders and Legacy Hyliion convertible noteholders in
connection with the recapitalization transaction. As such, the
shares and corresponding capital amounts and earnings per share
related to Legacy Hyliion redeemable convertible preferred stock
and Legacy Hyliion common stock prior to the Business Combination
have been retroactively restated as shares reflecting the exchange
ratio established in the Business Combination.
The
accompanying consolidated financial statements include the accounts
of Hyliion Holdings Corp. and its wholly-owned subsidiary.
Intercompany transactions and balances have been eliminated upon
consolidation. The consolidated financial statements and
accompanying notes have been prepared in accordance with generally
accounting principles in the United States of America (“U.S. GAAP”)
and in accordance with the rules and regulations of the Unites
States Securities and Exchange Commission (“SEC”). Any reference in
these footnotes to the applicable guidance is meant to refer to the
authoritative U.S. GAAP as found in the Accounting Standards
Codification and Accounting Standards Updates (“ASU”) of the
Financial Accounting Standards Board (“FASB”).
Liquidity: These consolidated financial statements have
been prepared on a going concern basis, which contemplates the
realization of assets and settlement of liabilities in the normal
course of business. The Company is an early stage growth company in
the pre-commercialization stage of development and has generated
negative cash flows from operating activities since
inception.
On
October 1, 2020, the Company consummated the Business Combination
and raised net proceeds of $516.5 million net of transaction costs
and expenses. As of December 31, 2020, all outstanding warrants
were either exercised or redeemed, with gross proceeds of $140.8
million raised, of which $16.3 million was collected during the
first quarter of 2021 (see Note 7). As of December 31, 2020, the
Company had a cash and cash equivalents balance of $389.7 million
and total investments of $237.9 million. Based on this, the Company
has sufficient funds to continue to execute its business strategy
for the next twelve months.
Note
2. Restatement of Previously Issued Financial
Statements
On
April 12, 2021, the Acting Director of the Division of Corporation
Finance and Acting Chief Accountant of the Securities and Exchange
Commission together issued a statement regarding the accounting and
reporting considerations for warrants issued by special purpose
acquisition companies entitled “Staff Statement on Accounting and
Reporting Considerations for Warrants Issued by Special Purpose
Acquisition Companies (“SPACs”)” (the “SEC Statement”).
Specifically, the SEC Statement focused in part on provisions in
warrant agreements that provide for potential changes to the
settlement amounts dependent upon the characteristics of the
warrant holder and because the holder of a warrant is not an input
into the pricing of a fixed-for-fixed option on equity shares, such
provision would preclude the warrant from being classified in
equity and thus the warrant should be classified as a liability. As
a result of the SEC Statement, the Company reevaluated the
accounting treatment of the Warrants issued in connection with the
IPO of TortoiseCorp and recorded in equity on the Company’s
consolidated balance sheet as a result of the merger and reverse
recapitalization occurring on October 1, 2020. The Company
concluded that the Warrants should have been recorded at fair value
as a liability in the Company’s consolidated balance
sheet.
All
public and private warrants were exercised by December 31, 2020, so
the warrant liability on the Company’s consolidated balance sheet
recorded on the date of the acquisition has been extinguished, and
the change in the fair value of the liability as of the exercise
date was recognized as a gain in the Company’s consolidated
statement of operations.
While
all warrants were exercised as of December 31, 2020, 371,535
warrants which were exercised on December 30, 2020 were broker
protected, resulting in cash collection and share issuance being
delayed until January 4, 2021. Accounts receivable for the net
amount due from investors of $4.3 million and an associated
liability for these common shares to be issued has been recognized
at the balance sheet date and included below.
Immaterial Error Correction: Subsequent to the filing of
the Form 10K/A on May 17, 2020, the Company determined that in
connection with the restatement for the changes in the fair value
warrant liability, the diluted earnings per share was improperly
disclosed. The Company has corrected the immaterial error in the
previously restated financial statements to reflect the correct
diluted net loss per share. This correction did not have any effect
on the Company’s cash position, loss from operations, net income or
cashflows. This correction resulted in a diluted net loss per share
of $(0.35) compared to $2.93 as disclosed in the previously filed
Form 10K/A.
The
restatement and immaterial error correction adjustments reflect the
entries to record the initial warrant liability from the Warrants,
to revalue the warrant liability to the then fair value as of the
exercise date, the subsequent extinguishment of the liability, and
the accounts receivable and associated liability arising from the
broker protected warrants exercised but not settled. The following
presents a reconciliation of the consolidated balance sheet as
previously reported to the restated amounts as of December 31, 2020
(in thousands):
|
|
For
the Year Ended |
|
|
|
December 31, 2020 |
|
|
|
As Reported |
|
|
Restatement
Impact |
|
|
As Restated |
|
Consolidated Statement of Operations: |
|
|
|
|
|
|
|
|
|
Change in fair value of
warrant liabilities |
|
$ |
— |
|
|
$ |
363,299 |
|
|
$ |
363,299 |
|
Net income (loss) |
|
$ |
(39,182 |
) |
|
$ |
363,299 |
|
|
$ |
324,117 |
|
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.38 |
) |
|
$ |
3.49 |
|
|
$ |
3.11 |
|
Earnings (loss) per share,
diluted |
|
$ |
2.93 |
|
|
$ |
(3.28 |
) |
|
$ |
(0.35 |
) |
Weighted-average
shares outstanding, diluted |
|
|
110,696,489 |
|
|
|
1,874,471 |
|
|
|
112,570,960 |
|
|
|
As
of |
|
|
|
December 31, 2020 |
|
|
|
As Reported |
|
|
Restatement
Impact |
|
|
As Restated |
|
Consolidated Balance Sheets: |
|
|
|
|
|
|
|
|
|
Prepaid expenses and other
current assets |
|
$ |
16,408 |
|
|
$ |
4,282 |
|
|
$ |
20,690 |
|
Total current assets |
|
$ |
608,086 |
|
|
$ |
4,282 |
|
|
$ |
612,368 |
|
Total assets |
|
$ |
650,807 |
|
|
$ |
4,282 |
|
|
$ |
655,089 |
|
Warrant liabilities |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Accrued expenses and other current
liabilities |
|
$ |
1,982 |
|
|
$ |
4,282 |
|
|
$ |
6,264 |
|
Total current liabilities |
|
$ |
4,655 |
|
|
$ |
4,282 |
|
|
$ |
8,937 |
|
Total liabilities |
|
$ |
10,639 |
|
|
$ |
4,282 |
|
|
$ |
14,921 |
|
Common Stock |
|
$ |
17 |
|
|
$ |
2 |
|
|
$ |
19 |
|
Additional paid-in-capital |
|
$ |
728,299 |
|
|
$ |
(363,301 |
) |
|
$ |
364,998 |
|
Accumulated earnings |
|
$ |
(88,148 |
) |
|
$ |
363,299 |
|
|
$ |
275,151 |
|
Total equity (deficit) |
|
$ |
640,168 |
|
|
$ |
— |
|
|
$ |
640,168 |
|
|
|
As
of |
|
|
|
December 31, 2020 |
|
|
|
As Reported |
|
|
Restatement
Impact |
|
|
As Restated |
|
Consolidated Statement of Stockholders’ Equity (Deficit): |
|
|
|
|
|
|
|
|
|
Common Stock Par Value |
|
$ |
17 |
|
|
$ |
2 |
|
|
$ |
19 |
|
Additional paid-in-capital |
|
$ |
728,299 |
|
|
$ |
(363,301 |
) |
|
$ |
364,998 |
|
Accumulated earnings |
|
$ |
(88,148 |
) |
|
$ |
363,299 |
|
|
$ |
275,151 |
|
|
|
For
the Year Ended |
|
|
|
December 31, 2020 |
|
|
|
As Reported |
|
|
Restatement
Impact |
|
|
As Restated |
|
Consolidated Statement of Cash Flow: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(39,182 |
) |
|
$ |
363,299 |
|
|
$ |
324,117 |
|
Change in fair value of warrant
liability |
|
$ |
— |
|
|
$ |
(363,299 |
) |
|
$ |
(363,299 |
) |
Note
3. Summary of significant accounting policies
Emerging Growth Company: Section 102(b)(1) of the Jumpstart
Our Business Startups Act (“JOBS Act”) exempts emerging growth
companies from being required to comply with new or revised
financial accounting standards until private companies (that is,
those that have not had a Securities Act registration statement
declared effective or do not have a class of securities registered
under the Securities Exchange Act of 1934, as amended) are required
to comply with the new or revised financial accounting standards.
The JOBS Act provides that a company can elect to opt out of the
extended transition period and comply with the requirements that
apply to non-emerging growth companies but any such election to opt
out is irrevocable. The Company has elected not to opt out of such
extended transition period which means that when a standard is
issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company,
can adopt the new or revised standard at the time private companies
adopt the new or revised standard, until such time the Company is
no longer considered to be an emerging growth company. At times,
the Company may elect to early adopt a new or revised
standard.
Use of estimates and uncertainty of the coronavirus
pandemic: The preparation of financial statements in
conformity with U.S. GAAP requires management to make certain
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities as of the balance sheet date, as well as reported
amounts of expenses during the reporting period. The Company’s most
significant estimates and judgments involve valuation of
share-based compensation, including the fair value of common stock
prior to the Business Combination, and the valuation of the
convertible notes payable derivative liability. Management bases
its estimates on historical experience and on various other
assumptions believed to be reasonable, the results of which form
the basis for making judgments about the carrying values of assets
and liabilities. Actual results could differ from those estimates,
and such differences could be material to the Company’s
consolidated financial statements.
On
January 30, 2020, the World Health Organization declared the
coronavirus outbreak a “Public Health Emergency of International
Concern” and on March 11, 2020, declared the coronavirus
outbreak a pandemic. In mid-March 2020, U.S. State Governors, local
officials and leaders outside of the U.S. began ordering various
“shelter-in-place” orders, which have had various impacts on the
U.S. and global economies. This has required greater use of
estimates and assumptions in the preparation of the unaudited
consolidated financial statements.
As
the coronavirus pandemic continues to evolve, the Company believes
the extent of the impact to its businesses, operating results, cash
flows, liquidity and financial condition will be primarily driven
by the severity and duration of the coronavirus pandemic, the
pandemic’s impact on the U.S. and global economies and the timing,
scope and effectiveness of federal, state and local governmental
responses to the pandemic. Those primary drivers are beyond the
Company’s knowledge and control, and as a result, at this time the
Company is unable to predict the cumulative impact, both in terms
of severity and duration, that the coronavirus pandemic will have
on its business, operating results, cash flows and financial
condition, but it could be material if the current circumstances
continue to exist for a prolonged period. Although the Company has
made its best estimates based upon current information, actual
results could materially differ from the estimates and assumptions
developed by management. If so, the Company may be subject to
future impairment charges as well as changes to recorded reserves
and valuations.
Segment information: ASC 280, Segment Reporting,
defines operating segments as components of an enterprise where
discrete financial information is available that is evaluated
regularly by the chief operating decision-maker (“CODM”) in
deciding how to allocate resources and in assessing performance.
The Company operates as a single operating segment. The Company’s
chief operating decision maker (“CODM”) is the chief executive
officer, who has ultimate responsibility for the operating
performance of the Company and the allocation of resources. The
CODM uses cash flows as the primary measure to manage the business
and does not segment the business for internal reporting or
decision making.
Concentration of supplier risk: The Company is dependent on
certain suppliers, the majority of which are single source
suppliers, and the inability of these suppliers to deliver
necessary components of the Company’s products in a timely manner
at prices, quality levels and volumes that are acceptable, or the
Company’s inability to efficiently manage these components from
these suppliers, could have a material adverse effect on the
Company’s business, prospects, financial condition and operating
results.
Cash and cash equivalents: The Company considers all highly
liquid investments with a maturity date of 90 days or less at the
time of purchase to be cash and cash equivalents only if in
checking, savings or money market accounts. Cash and cash
equivalents include cash held in banks and money market accounts.
Cash equivalents are carried at cost, which approximates fair
value.
The
Company maintains cash in excess of federally insured limits at
financial institutions. The Company makes such deposits with
entities it believes are of high credit quality and has not
incurred any losses related to these balances to date. Management
believes its credit risk, with respect to the financial
institutions to be minimal.
Accounts receivable: Accounts receivable are stated at a
gross invoice amount, net of an allowance for doubtful accounts.
The allowance for doubtful accounts is maintained at a level
considered adequate to provide for potential account losses on the
balance based on management’s evaluation of the anticipated impact
of current economic conditions, changes in the character and size
of the balance, past and expected future loss experience, among
other pertinent factors. As of December 31, 2020 and 2019, there
was no allowance for doubtful accounts required based on
management’s evaluation.
Investments: The Company’s investments consist of corporate
bonds, treasury securities and commercial paper, all of which are
classified as held-to-maturity, with a maturity date of 36-months
or less at the time of purchase. Management determines the
appropriate classification of investments at the time of purchase
and re-evaluates such designation as of each balance sheet date.
Investments are classified as held-to-maturity when the Company has
the positive intent and ability to hold the securities to maturity.
Held-to-maturity securities are stated at amortized cost, adjusted
for amortization of premiums and accretion of discounts to
maturity. Such amortization is included in investment income.
Interest on securities classified as held-to-maturity is included
in investment income.
The
Company uses the specific identification method to determine the
cost basis of securities sold.
Investments
are impaired when a decline in fair value is judged to be
other-than-temporary. The Company evaluates an investment for
impairment by considering the length of time and extent to which
market value has been less than cost or amortized cost, the
financial condition and near-term prospects of the issuer as well
as specific events or circumstances that may influence the
operations of the issuer and the Company’s intent to sell the
security or the likelihood that it will be required to sell the
security before recovery of the entire amortized cost. Once a
decline in fair value is determined to be other-than-temporary, an
impairment charge is recorded to other income (expense) and a new
costs basis in the investment is established.
Fair value measurements: ASC 820, Fair Value
Measurements, clarifies that fair value is 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. As such, fair value is a market-based
measurement that should be determined based upon assumptions that
market participants would use in pricing an asset or liability. As
a basis for considering such assumptions, ASC 820 establishes a
three-tier fair value hierarchy, which prioritizes the inputs used
in measuring fair value as follows:
Level
I: Quoted prices (unadjusted) for identical assets or
liabilities in active markets that the Company can access at the
measurement date.
Level
II: Significant other observable inputs other than level I
prices such as quoted prices for similar assets or liabilities,
quoted prices in markets that are not active or other inputs that
are observable or can be corroborated by observable market
data.
Level
III: Significant unobservable inputs that reflect the Company’s
own assumptions about the assumptions that market participants
would use in pricing an asset or liability.
An
asset’s or liability’s fair value measurement level within the fair
value hierarchy is based on the lowest level of any input that is
significant to the fair value measurement. Valuation techniques
used need to maximize the use of observable inputs and minimize the
use of unobservable inputs.
Assets
and liabilities measured at fair value are based on one or more of
the following three valuation techniques noted in ASC
820:
|
● |
Market
approach: Prices and other relevant information generated by market
transactions involving identical or comparable assets or
liabilities. |
|
● |
Cost
approach: Amount that would be required to replace the service
capacity of an asset (replacement cost). |
|
● |
Income
approach: Techniques to convert future amounts to a single present
value amount based upon market expectations (including present
value techniques, option pricing and excess earnings
models) |
The
Company believes its valuation methods are appropriate and
consistent with other market participants, however the use of
different methodologies or assumptions to determine the fair value
of certain financial instruments could result in a different fair
value measurement at the reporting date.
The
Company’s financial instruments consist of cash and cash
equivalents, accounts receivable, investments, accounts payable,
accrued expenses, contingent consideration liability, convertible
notes payable derivative liability, warrant liabilities, and
convertible notes payable. The carrying value of cash and cash
equivalents, accounts receivable, accounts payable, and accrued
expenses approximates fair value because of the short-term nature
of those instruments. We estimate the fair value of our convertible
notes payable using Level II and Level III inputs by discounting
the future cash flows using current interest rates at which we
could obtain similar borrowings in consideration of the estimated
enterprise value of the Company. The fair value of corporate bonds,
treasury securities and commercial paper are based on quoted prices
for identical or similar instruments in markets that are not
active. As a result, corporate bonds, treasury securities and
commercial paper are classified within Level II of the fair value
hierarchy. The fair value of the Company’s public
warrant liabilities are based on Level I inputs, while the fair
value of the private warrants is determined using the trading price
of the public warrants, a Level II input.
The
Company’s assets and liabilities that are measured at fair value on
a recurring basis include the Company’s contingent consideration
liability, warrant liabilities, and convertible notes payable
derivative liabilities (See Note 5).
Prepaid expenses and other current assets: Prepaid expenses
and other current assets include prepaid insurance, prepaid rent,
supplies, and amounts owed to the Company from the Company’s
transfer agent (see Note 8) which are expected to be recognized,
received or realized within the next 12 months.
Property and equipment, net: Property and equipment, net is
stated at cost less accumulated depreciation, or if acquired in a
business combination, at fair value as of the date of acquisition.
Depreciation is calculated using the straight-line method, based
upon the following estimated useful lives:
Production machinery and
equipment |
|
2 to 7 years |
Vehicles |
|
3 to 7 years |
Leasehold improvements |
|
shorter of lease term or 7
years |
Demo fleet systems |
|
2 to 3 years |
Furniture and fixtures |
|
3 years |
Computers and related equipment |
|
3 to 7 years |
Major
renewals and improvements are capitalized, while replacements,
maintenance and repairs, which do not improve or extend the lives
of the respective assets, are expensed as incurred. When property
and equipment is retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the accounts, and any
gain or loss on the disposition is recorded in the consolidated
statement of operations as a component of other (expense)
income.
Intangible assets, net: Intangible assets consist of
developed technology and a non-compete agreement and are amortized
over their estimated useful life which range from three to six
years.
Impairment of long-lived assets: The Company reviews
long-lived assets, including property and equipment and intangible
assets with definite lives, for impairment whenever events or
changes in circumstances indicate that an asset group’s carrying
amount may not be recoverable. The Company conducts its long-lived
asset impairment analysis in accordance with ASC 360-10,
Impairment or Disposal of Long-Lived Assets, which requires
the Company to group assets and liabilities at the lowest level for
which identifiable cash flows are largely independent of the cash
flows of other assets and liabilities and evaluate the asset group
against the sum of the undiscounted future cash flows. If the
undiscounted cash flows do not indicate the carrying amount of the
asset group is recoverable, an impairment charge is measured as the
amount by which the carrying amount of the asset group exceeds its
fair value.
Revenue: The Company follows the five steps to recognize
revenue from contracts with customers under ASC 606, Revenue
from Contracts with Customers (“ASC 606”), which
are:
|
● |
Step
1: Identify the contract(s) with a customer |
|
● |
Step
2: Identify the performance obligations in the contract |
|
● |
Step
3: Determine the transaction price |
|
● |
Step
4: Allocate the transaction price to the performance obligations in
the contract |
|
● |
Step
5: Recognize revenue when (or as) a performance obligation is
satisfied |
The
Company intends to generate revenue from the sale of its hybrid and
electrified drive systems for the long haul “Class 8”
semi-tractors. However, since the Company is still in the
pre-commercialization stage, it has not generated revenue from the
sale of the products.
The
Company did not enter into any agreement that meets the definition
of a contract with a customer that would be accounted for under ASC
606 through December 31, 2020.
Leases:
Lessee: The Company determines if an arrangement is a lease
at inception of the contract. Operating leases are included in
operating lease right-of-use (“ROU”) assets, current portion of
operating lease liabilities, and operating lease liabilities, net
of current portion in the accompanying consolidated balance sheets.
Finance leases are included in property and equipment, net, current
portion of long-term debt, and long-term debt, net of current
portion in the accompanying consolidated balance sheets.
ROU
assets represent the Company’s right to use underlying assets for
the lease term, and lease liabilities represent the Company’s
obligation to make lease payments arising from the leases. ROU
assets and lease liabilities are recognized at the commencement
date based on the present value of lease payments over the lease
term. The discount rate used to calculate the present value for
lease payments is the Company’s incremental borrowing rate, which
is determined based on information available at lease commencement
and is equal to the rate of interest that the Company would have to
pay to borrow on a collateralized basis over a similar term in an
amount equal to the lease payments in a similar economic
environment. The Company uses the implicit rate when readily
determinable.
The
Company has entered into operating leases for corporate offices
having initial lease terms of one to eight years. The Company has
entered into finance leases primarily for vehicles and equipment,
having initial terms of three years.
The
Company’s real estate leases may include one or more options to
renew, with the renewal extending the lease term for an additional
one to five years. The exercise of lease renewal option is at the
Company’s sole discretion. In general, the Company does not
consider renewal option to be reasonably likely to be exercised,
therefore renewal option are generally not recognized as part of
the ROU assets and lease liabilities. Lease costs for lease
payments are recognized on a straight-line basis over the lease
term, unless there is a transfer of title or purchase option
reasonably certain to be exercised. The Company does not record
operating leases with an initial term of twelve months or less
(“short-term leases”) in the consolidated balance
sheets.
The
Company’s vehicle and equipment leases may include transfer rights
or options to purchase at the end of the lease that the Company is
reasonably certain to exercise. Interest expense is recognized
using the effective interest rate method, and the ROU asset is
amortized over the useful life of the underlying asset.
Lessor: The Company also enters into arrangements whereby
space within the real estate is subleased. At the lease
commencement date these subleases are recognized as operating
leases. Operating leases are recognized on a straight-line basis
over the lease term.
The
Company has entered into various trial and evaluation agreements
that contain an operating lease component that is within the scope
of ASC 842, Leases (“ASC 842”). These agreements also
contain non-lease components related to certain stand-ready
services where control transfers over time over the same period and
based on the same pattern as the lease component. Because the
Company has determined the lease component is the most predominant
component of the arrangement and the timing and pattern of transfer
for the lease and non-lease components associated with the lease
component are the same, the Company has decided to elect the
practical expedient not to separate the lease and non-lease
component and accounts for the entire arrangement under ASC
842.
The trial and evaluation agreements contain only variable payments
not based on an index or rate as a result of refund provisions
within those contracts. The Company records accounts receivable
when the Company meets the criteria within the trial and evaluation
agreements to invoice the lessee. In accordance with ASC 842, the
Company recognizes variable lease payments as profit or loss in the
period in which the changes in facts and circumstances on which the
variable lease payments are based occur, which will generally be
the end of the trial period when the customer refund rights lapse.
During the years ended December 31, 2020 and 2019, the Company has
not recognized any lease income related to these trial and
evaluation agreements either because the Company has not received
any consideration from the lease contracts, or the uncertainty
related to the consideration received has not been resolved.
Certain of the Company’s lessee and lessor lease agreements contain
both lease and non-lease components, which are generally accounted
for as a single lease component. Additionally, for certain vehicle
leases, we apply a portfolio approach to effectively account for
the finance lease ROU assets and liabilities.
Income taxes: The Company accounts for income taxes
in accordance with ASC 740, Income Taxes, under which
deferred tax liabilities and assets are recognized for the expected
future tax consequences of temporary differences between financial
statement carrying amounts and the tax basis of assets and
liabilities and net operating loss and tax credit carryforwards.
Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.
Due to the Company’s history of losses since inception, the net
deferred tax assets have been fully offset by a valuation allowance
as of December 31, 2020 and 2019. Uncertain tax positions taken or
expected to be taken in a tax return are accounted for using the
more likely than not threshold for financial statement recognition
and measurement. For the years ended December 31, 2020 and 2019,
there were no uncertain tax positions taken or expected to be taken
in the Company’s tax returns.
Share-based compensation: The Company accounts for
share-based compensation in accordance with ASC 718,
Compensation – Stock Compensation, under which shared based
payments that involve the issuance of common stock to employees and
nonemployees and meet the criteria for equity-classified awards are
recognized in the financial statements as share-based compensation
expense based on the fair value on the date of grant. The Company
issues stock option awards and restricted stock awards to employees
and nonemployees.
The Company utilizes the Black-Scholes model to determine the fair
value of the stock option awards, which requires the input of
subjective assumptions. These assumptions include estimating (a)
the length of time grantees will retain their vested stock options
before exercising them for employees and the contractual term of
the option for nonemployees (“expected term”), (b) the volatility
of the Company’s common stock price over the expected term, (c)
expected dividends, and (d) the fair value of a share of common
stock prior to the Business Combination. After the closing of the
Business Combination, the Company’s board of directors determined
the fair value of each share of common stock underlying stock-based
awards based on the closing price of the Company’s common stock as
reported by the NYSE on the date of grant. The Company has elected
to recognize the adjustment to share-based compensation expense in
the period in which forfeitures occur.
The assumptions used in the Black-Scholes model are management’s
best estimates, but the estimates involve inherent uncertainties
and the application of management judgment (see Note 9). As a
result, if other assumptions had been used, the recorded
share-based compensation expense could have been materially
different from that depicted in the financial statements.
Research and development expense: Research and
development costs did not meet the requirements to be recognized as
an asset as the associated future benefits were at best uncertain
and there was no alternative future use at the time the costs were
incurred. Research and development costs include, but are not
limited to, outsourced engineering services, allocated facilities
costs, depreciation on equipment utilized in research and
development activities, internal engineering and development
expenses, materials, and employee related expenses (including
salaries, benefits, travel, and share-based compensation) related
to development of the Company’s products and services.
Net income (loss) per share: Basic earnings (loss)
per share (“EPS”) are computed by dividing net income (loss) (the
numerator) by the weighted average number of common shares
outstanding for the period (the denominator). Diluted EPS
attributable to common shareholders is computed by adjusting net
income (loss) by the weighted average number of common shares and
potential common shares outstanding (if dilutive) during each
period. Potential common shares include shares issuable upon
exercise of stock options and vesting of restricted stock awards
(see Note 9). The number of potential common shares outstanding are
calculated using the treasury stock or if-converted method.
Recent accounting pronouncements issued, not yet
adopted:
In June 2016, the FASB issued ASU 2016-13, Financial
Instruments—Credit Losses (Topic 326): Measurement of Credit Losses
of Financial Instruments, which, together with subsequent
amendments, amends the requirement on the measurement and
recognition of expected credit losses for financial assets held to
replace the incurred loss model for financial assets measured at
amortized cost and require entities to measure all expected credit
losses for financial assets held at the reporting date based on
historical experience, current conditions, and reasonable and
supportable forecasts. ASU 2016-13 is effective for the Company
beginning January 1, 2023, with early adoption permitted. The
Company is currently in the process of evaluating the effects of
this pronouncement on the Company’s financial statements and does
not expect it to have a material impact on the consolidated
financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes
(Topic 740): Simplifying the Accounting for Income Taxes, which
is intended to simplify various aspects related to accounting for
income taxes. The pronouncement is effective for fiscal years, and
for interim periods within those fiscal years, beginning after
December 15, 2020, with early adoption permitted. ASU 2019-12
is effective for the Company beginning January 1, 2021, with
early adoption permitted. The Company is currently in the process
of evaluating the effects of this pronouncement on the Company’s
financial statements and does not expect it to have a material
impact on the financial statements.
Note 4. Reverse Recapitalization
On October 1, 2020, Legacy Hyliion and TortoiseCorp consummated the
merger contemplated by the Business Combination, with Legacy
Hyliion surviving the merger as a wholly-owned subsidiary of
TortoiseCorp.
Upon the closing of the Business Combination, TortoiseCorp’s
certificate of incorporation was amended and restated to, among
other things, increase the total number of authorized shares of
capital stock to 260,000,000 shares, of which 250,000,000 shares
were designated common stock, $.0001 par value per share, and of
which 10,000,000 shares were designated preferred stock, $0.0001
par value per share.
Immediately prior to the closing of the Business Combination,
each
|
● |
issued and
outstanding share of Legacy Hyliion’s redeemable, convertible
preferred stock, was converted into shares Legacy Hyliion common
stock based on a one-to-one ratio (see Note 8). The Business
Combination is accounted for with a retrospective application of
the Business Combination that results in 34,799,813 shares of
redeemable, convertible preferred stock converting into the same
number of shares of Legacy Hyliion common stock. |
|
● |
convertible note
payable, plus accrued paid-in-kind interest, was converted into an
aggregate 2,336,235 shares of Legacy Hyliion common stock at the
predetermined discount (see Note 4). |
Upon the consummation of the Business Combination, each share of
Legacy Hyliion common stock issued and outstanding was cancelled
and converted into the right to receive 1.45720232 shares (the
“Exchange Ratio”) of the Company’s common stock (the “Per Share
Merger Consideration”).
Additionally, Legacy Hyliion issued 1,000,000 shares of Legacy
Hyliion common stock with an estimated grant date fair value of
$10.00 per share to one of the convertible noteholders in
connection with the commercial matters agreement (“Commercial
Matters Agreement”) that was entered into in June 2020, that was
not subject to the Exchange Ratio (see Note 15).
Outstanding stock options, whether vested or unvested, to purchase
shares of Legacy Hyliion common stock granted under the 2016 Plan
(“Legacy Options”) (see Note 9) converted into stock options for
shares of the Company’s common stock upon the same terms and
conditions that were in effect with respect to such stock options
immediately prior to the Business Combination, after giving effect
to the Exchange Ratio.
Outstanding warrants to purchase shares of TortoiseCorp Class A
common stock will remain outstanding at the Closing Date. The
warrants will become exercisable 30 days after the completion of
the Business Combination and will expire five years after the
completion of the Business Combination or earlier upon redemption
or liquidation. On November 30, 2020, the Company issued a notice
of redemption to the warrant holders and on December 31, 2020, it
redeemed all outstanding public warrants. See Note 8 “Capital
Structure” for more information.
In connection with the Business Combination,
|
● |
certain TortoiseCorp shareholders
exercised their right to redeem certain of their outstanding shares
for cash, resulting in the redemption of 3,308 shares of
TortoiseCorp common stock for gross redemption payments of less
than $0.1 million. |
|
● |
a number of
investors purchased from the Company an aggregate of 30,750,000
shares of common stock (the “PIPE Shares”), for a purchase price of
$10.00 per share and an aggregate purchase price of $307.5 million
pursuant to separate subscription agreements entered into effective
June 18, 2020 (the “PIPE”). The PIPE investment closed
simultaneously with the consummation of the Business
Combination. |
|
● |
an investor
purchased 1,750,000 TortoiseCorp units (consisting of one share of
common stock and one half of one warrant, the “Forward Purchase
Units”), consisting of 1,750,000 shares of common stock (“Forward
Purchase Shares”) and warrants to purchase 875,000 shares of common
stock (“Forward Purchase Warrants”) for an aggregate purchase price
of $17.5 million pursuant to a forward purchase agreement entered
into effective February 6, 2019, as amended by the First Amendment
to Amended and Restated Forward Purchase Agreement, dated June 18,
2020. |
The Business Combination is accounted for as a reverse
recapitalization in accordance with U.S. GAAP. Under this method of
accounting, TortoiseCorp was treated as the “acquired” company for
financial reporting purposes. See Note 1 “Description of business
and basis of presentation” for further details. Accordingly, for
accounting purposes, the Business Combination was treated as the
equivalent of Legacy Hyliion issuing stock for the net assets of
TortoiseCorp, accompanied by a recapitalization. The net assets of
TortoiseCorp are stated at historical cost, with no goodwill or
intangible assets recorded.
Prior to the Business Combination, Legacy Hyliion and TortoiseCorp
filed separate standalone federal, state and local income tax
returns. As a result of the Business Combination Legacy Hyliion
will file a consolidated income tax return. Although, for legal
purposes, TortoiseCorp acquired Legacy Hyliion, and the transaction
represents a reverse acquisition for federal income tax purposes.
TortoiseCorp will be the parent of the consolidated group with
Legacy Hyliion a subsidiary, but in the year of the closing of the
Business Combination, Legacy Hyliion will file a full year tax
return with TortoiseCorp joining in the return the day after the
Closing Date.
The following table reconciles the elements of the Business
Combination to the consolidated statements of cash flows and the
consolidated statement of changes in stockholders’ equity (deficit)
for the year ended December 31, 2020 (in thousands):
Cash - TortoiseCorp’s
trust and cash (net of redemption) |
|
$ |
236,484 |
|
Cash - PIPE |
|
|
307,500 |
|
Cash - forward purchase units |
|
|
17,500 |
|
Less:
transaction costs and advisory fees paid |
|
|
(45,030 |
) |
Net Business
Combination and PIPE financing |
|
$ |
516,454 |
|
The number of shares of common stock issued immediately following
the consummation of the Business Combination were:
Common stock, outstanding
prior to Business Combination |
|
|
23,300,917 |
|
Less: redemption of TortoiseCorp
shares |
|
|
(3,308 |
) |
Common stock of TortoiseCorp |
|
|
23,297,609 |
|
TortoiseCorp founder shares |
|
|
5,825,230 |
|
Shares issued in PIPE |
|
|
30,750,000 |
|
Shares issued
in connection with forward purchase agreement |
|
|
1,750,000 |
|
Business Combination, PIPE, and
forward purchase agreement financing shares |
|
|
61,622,839 |
|
Legacy Hyliion
shares(1) |
|
|
92,278,990 |
|
Total shares of common stock
immediately after Business Combination |
|
|
153,901,829 |
|
Hyliion
Holdings Corp. exercise of warrants |
|
|
15,414,592 |
|
Total shares of common stock at
December 31, 2020 |
|
|
169,316,421 |
|
(1) |
The number of Legacy Hyliion shares
was determined as follows: |
|
|
Legacy
Hyliion
shares |
|
|
Legacy
Hyliion
shares,
effected for
Exchange
Ratio |
|
Balance at December 31, 2018 |
|
|
24,453,750 |
|
|
|
35,634,061 |
|
Recapitalization applied to Series A
outstanding at December 31, 2018 |
|
|
34,799,813 |
|
|
|
50,710,369 |
|
Exercise of common stock options - 2019 |
|
|
286,874 |
|
|
|
418,033 |
|
Exercise of common stock options -
2020 (pre-Closing) |
|
|
763,216 |
|
|
|
1,112,160 |
|
Conversion of
convertible notes payable to common stock(2) |
|
|
2,336,235 |
|
|
|
4,404,367 |
|
|
|
|
|
|
|
|
92,278,990 |
|
(2) |
The number of shares issued for the
conversion of convertible notes payable to common stock is
calculated by applying the Exchange Ratio to the Legacy Hyliion
shares issued at the time of conversion and adding 1,000,000 shares
issued in connection with the Commercial Matters Agreement. All
fractions were rounded down. |
Lock-Up Arrangements
Certain former stockholders of Legacy Hyliion and TortoiseCorp have
agreed to lock-up restrictions regarding the future transfer shares
of common stock. Such shares may not be transferred or otherwise
disposed of for a period of six months through April 1, 2021,
subject to certain exceptions.
Transaction costs:
Transaction costs incurred in connection with the Business
Combination totaled approximately $45.0 million which were charged
to additional paid-in capital for the year ended December 31,
2020.
Note 5. Debt
At December 31, 2020 and 2019, the carrying value of debt was as
follows:
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
(in
thousands) |
|
Convertible notes payable, net of unamortized discount at December
31, 2020 and 2019 of $0 and $6,451, respectively |
|
$ |
- |
|
|
$ |
16,113 |
|
Paycheck Protection Program loan |
|
|
908 |
|
|
|
- |
|
Finance lease
obligations |
|
|
49 |
|
|
|
289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
957 |
|
|
|
16,402 |
|
|
|
|
|
|
|
|
|
|
Less current
portion |
|
|
49 |
|
|
|
6,720 |
|
|
|
|
|
|
|
|
|
|
Debt, net of current portion |
|
$ |
908 |
|
|
$ |
9,682 |
|
During 2018, the Company issued a convertible note payable in
exchange for cash totaling $5.0 million (the “2018 Note”). The 2018
Note bears interest at 6% per annum and matures in September 2020
(two years subsequent to its issuance date). The 2018 Note includes
the following embedded features:
(a) Automatic conversion upon the next equity financing of at least
$5.0 million in proceeds. The conversion price is dependent upon
the pre-money valuation of the Company in connection with the next
equity financing, with the conversion price set at a 35% discount
on the next equity financing price if the pre-money valuation is
$100.0 million or less, or 35% multiplied by the quotient of $100.0
million divided by the pre-money valuation if it is greater than
$100.0 million.
(b) Optional conversion upon a change in control. In the event of a
change in control, the holder can elect to convert the 2018 Note
into shares of common stock at a conversion price equal to (i) the
product of the change in control purchase price multiplied by 65%,
divided by (ii) the total number of outstanding shares of capital
stock of the Company (on a fully diluted basis).
(c) Optional redemption upon a change in control. In the event of a
change in control, the holder can elect to request payment of all
outstanding principal (with no penalty) and unpaid accrued
interest.
(d) Automatic or optional redemption upon an event of default. Upon
the occurrence of an event of default, the 2018 Note will either
automatically become due and payable or can become due and payable
at the holder’s option (based on the nature of the event of
default). Upon such acceleration, all outstanding principal (with
no penalty) and unpaid accrued interest will become payable.
(e) Additional interest of 3% (or a total of 9%) upon an event of
default.
In addition to the above embedded features, the Company agreed that
the holder of the 2018 Note would be the Company’s preferred
supplier for certain components or products that the holder sells.
See Note 15 for further details on this related party
agreement.
The Company assessed the embedded features within the 2018 Note and
determined that the automatic conversion feature upon next equity
financing and optional conversion feature upon change in control
(share-settled redemption features) and the additional interest
feature met the definition of a derivative and were not clearly and
closely related to the host contract and required separate
accounting.
At issuance, the Company estimated the fair value of the automatic
and optional conversion features to be approximately $1.8 million.
The Company’s fair value measurements are more fully described in
(Note 7).
At issuance, the Company concluded the fair value of the additional
interest feature was de minimis.
Between February and July 2019, the Company issued a series of
convertible notes payable in exchange for cash totaling $13.6
million (the “Initial 2019 Notes”). The Initial 2019 Notes bear
interest at 6% per annum and mature two to five years after their
respective issuance dates. The Initial 2019 Notes are only
prepayable with the consent of the holders. One of the Initial 2019
Notes (totaling $1.8 million) is secured by substantially all of
the assets of the Company, subordinate to the first priority,
senior secured interest held by a note holder of a convertible note
issued in January 2020. The holder of this note has first priority
secured interest in these assets.
The Initial 2019 Notes include the following embedded features:
(a) Automatic or optional (for one of the Initial 2019 Notes)
conversion upon the next equity financing of at least $15.0 million
in proceeds (the “Next Equity Financing”). The conversion price is
dependent upon the pre-money valuation of the Company in connection
with the next equity financing, with the conversion price set at a
25% discount on the next equity financing price if the pre-money
valuation is $100.0 million or less, or 25% multiplied by the
quotient of $100.0 million divided by the pre-money valuation if it
is greater than $100.0 million.
(b) Optional conversion (for one of the Initial 2019 Notes) upon a
subsequent equity financing if the holder did not elect to convert
upon the Next Equity Financing, at the price that is set by the
subsequent equity financing (no discount).
(c) Optional conversion upon a change in control. In the event of a
change in control, the holder can elect to convert the Initial 2019
Notes into shares of common stock at a conversion price equal to
(i) the product of the change in control purchase price multiplied
by 75%, divided by (ii) the total number of outstanding shares of
capital stock of the Company (on a fully diluted basis).
(d) Optional redemption upon a change in control. In the event of a
change in control, the holder can elect to request payment of all
outstanding principal (with no penalty) and unpaid accrued
interest.
(e) Automatic or optional redemption upon an event of default. Upon
the occurrence of an event of default, the Initial 2019 Notes will
either automatically become due and payable or can become due and
payable at the holder’s option (based on the nature of the event of
default). Upon such acceleration, all outstanding principal (with
no penalty) and unpaid accrued interest will become payable.
(f) Additional interest of 3% (or a total of 9%) upon an event of
default.
In addition, the Company has the right to modify one of the Initial
2019 Notes (totaling $1.8 million) in the event the holder does not
convert upon next equity financing to adjust the interest rate to
4% per annum.
The Company assessed the embedded features within the Initial 2019
Notes and determined that the automatic or optional conversion
feature upon next equity financing and the optional conversion
feature upon change in control (share-settled redemption features),
the additional interest feature, and the interest rate adjustment
feature met the definition of a derivative and were not clearly and
closely related to the host contract and required separate
accounting.
At issuance, the Company estimated the fair value of the automatic
and optional conversion features to be approximately $6.0 million.
The Company’s fair value measurements are more fully described in
(Note 7).
At issuance, the Company concluded the fair value of the additional
interest feature and the interest rate adjustment feature was de
minimis.
In December 2019, the Company issued a convertible note payable in
exchange for cash totaling $3.2 million (the “December 2019 Note”).
The December 2019 Note bears interest at 6% per annum and matures
in December 2020 (one year subsequent to its issuance date). The
December 2019 Note is only prepayable with the consent of the
holder. The December 2019 Note is secured by substantially all of
the assets of the Company, subordinate to the security interest
held by one of the Initial 2019 Note holders. The December 2019
Note includes the following embedded features:
(a) Automatic conversion upon the next equity financing of at least
$35.0 million in proceeds. The conversion price will be based on
the next equity financing per share price, with a 50% discount.
(b) Optional conversion upon the next equity financing of at least
$15.0 million in proceeds. The conversion price will be based on
the next equity financing per share price, with a 50% discount.
(c) Automatic conversion upon a subsequent equity financing of at
least $35.0 million if the holder did not elect to convert upon any
previous equity financing, at the price that is set by the
subsequent equity financing (no discount).
(d) Optional conversion upon a change in control. In the event of a
change in control, the holder can elect to convert the December
2019 Note into shares of common stock at a conversion price equal
to (i) the product of the change in control purchase price
multiplied by 50%, divided by (ii) the total number of outstanding
shares of capital stock of the Company (on a fully diluted
basis).
(e) Optional redemption upon a change in control. In the event of a
change in control, the holder can elect to request payment of all
outstanding principal (with no penalty) and unpaid accrued
interest.
(f) Automatic or optional redemption upon an event of default. Upon
the occurrence of an event of default, the December 2019 Note will
either automatically become due and payable or can become due and
payable at the holder’s option (based on the nature of the event of
default). Upon such acceleration, all outstanding principal (with
no penalty) and unpaid accrued interest will become payable.
(g) Additional interest of 3% (or a total of 9%) upon an event of
default.
In addition, in the event the holder does not convert upon an
equity financing, the maturity date of the December 2019 Note will
automatically extend by one year. In such situation, the holder
also has the right to extend the maturity date for an additional
two years beyond the modified maturity date.
The Company assessed the embedded features within the December 2019
Note and determined that the automatic and optional conversion
features upon next equity financing (share-settled redemption
features), the additional interest feature and the term extension
feature met the definition of a derivative and were not clearly and
closely related to the host contract and required separate
accounting. The Company also concluded that the conversion features
did not represent beneficial conversion features.
At issuance and at December 31, 2019, the Company estimated
the fair value of the automatic and optional conversion features to
be approximately $1.4 million. The Company’s fair value
measurements are more fully described in (Note 7).
At issuance, the Company concluded the fair value of the additional
interest and term extension features was de minimis.
During January 2020, the Company issued a convertible note payable
in exchange for cash totaling $3.2 million (the “January 2020
Note”). The January 2020 Note bears interest at 6% per annum and
matures in January 2025 (five years subsequent to its issuance
date). The January 2020 Note is only prepayable with the consent of
the holder. The January 2020 Note is secured by a first priority,
senior secured interest in substantially all of the assets of the
Company. The January 2020 Note includes the following embedded
features:
(a) Optional conversion upon the next equity financing of at least
$15.0 million in proceeds. The conversion price will be based on
the next equity financing per share price, with a 50% discount.
(b) Optional conversion upon a subsequent equity financing of at
least $15.0 million if the holder did not elect to convert upon the
next equity financing, at the price that is set by the subsequent
equity financing (no discount).
(c) Optional conversion upon a change in control. In the event of a
change in control, the holder can elect to convert the January 2020
Note into shares of common stock at a conversion price equal to (i)
the product of the change in control purchase price multiplied by
50%, divided by (ii) the total number of outstanding shares of
capital stock of the Company (on a fully diluted basis).
(d) Optional redemption upon a change in control. In the event of a
change in control, the holder can elect to request payment of all
outstanding principal (with no penalty) and unpaid accrued
interest.
(e) Optional redemption upon the Company obtaining at least $10.0
million in commercial debt which would result in the January 2020
Note having the same priority or being treated as subordinate to
the commercial debt. In such scenario, the holder can elect to
request payment of all outstanding principal (with no penalty) and
unpaid accrued interest.
(f) Automatic or optional redemption upon an event of default. Upon
the occurrence of an event of default, the January 2020 Note will
either automatically become due and payable or can become due and
payable at the holder’s option (based on the nature of the event of
default). Upon such acceleration, all outstanding principal (with
no penalty) and unpaid accrued interest will become payable.
(g) Additional interest of 3% (or a total of 9%) upon an event of
default.
In addition, in the event the holder does not convert upon an
equity financing or change in control event, the noteholder may
extend the maturity date of the January 2020 Note by five years
beyond the original maturity date.
In addition, in the event the holder does not convert upon an
equity financing, the interest rate on the January 2020 Note will
automatically be adjusted to a rate of 4% per annum.
The Company assessed the embedded features within the January 2020
Note and determined that the automatic and optional conversion
features upon next equity financing (share-settled redemption
features), the additional interest feature and the term extension
feature met the definition of a derivative and were not clearly and
closely related to the host contract and required separate
accounting. The Company also concluded that the conversion features
did not represent beneficial conversion features.
At issuance, the Company estimated the fair value of the automatic
and optional conversion features to be approximately $2.7 million.
The Company’s fair value measurements are more fully described in
(Note 7).
At issuance, the Company has concluded the fair value of the
additional interest and term extension features was de minimis.
The terms of the convertible notes payable include certain
restrictive covenants related to the Company’s ability to enter
into certain transactions or agreements, pay dividends, or take
other similar corporate actions.
During June 2020, the holders of the convertible notes executed
amendments (the “Note Amendments”) to their respective convertible
notes clarifying the planned Business Combination would qualify as
a next financing, as defined in the respective convertible notes.
The convertible notes would either automatically convert or convert
at the holder’s option (the election of which was evidenced by
entering into the Note Amendments) in connection with such next
financing (in this case the Business Combination). The convertible
notes would convert into shares of common stock at a conversion
price equal to (i) the valuation of the Company established in
connection with such next financing, divided by (ii) the total
number of shares of capital stock of the Company (on a fully
diluted and as-converted basis), as established in the original
respective convertible notes. This conversion price would then
be discounted based on the negotiated conversion discounts that
were established in the noteholders’ original convertible notes.
The amended terms of the Note Amendments were determined to be
clarifications of the existing terms and did not result in
substantially different terms. Accordingly, the Note Amendments
were accounted for as modifications.
In connection with the reverse recapitalization discussed in Note
4, immediately prior to the closing of the Business Combination,
the convertible notes, plus accrued paid-in-kind interest, totaling
$26.8 million were converted into an aggregate of 2,336,235 shares
of Legacy Hyliion common stock, which were then exchanged for an
aggregate of 3,404,367 shares of the Company’s common stock on the
Closing Date (see Note 4). In addition, the Company issued
1,000,000 shares of Legacy Hyliion common stock to a noteholder of
the 2018 Note, Initial 2019 Notes, and January 2020 Note, with a
grant date fair value of $10.00 per share in accordance with the
Commercial Matters Agreement (see Note 15).
In connection with this conversion of the convertible notes, the
Company recorded a loss on extinguishment of $10.2 million included
within other income (expense) on the accompanying consolidated
statements of operations.
Term Loan: During August 2020, the Company issued a
term loan (the “Term Loan”) with a principal balance totaling $10.1
million that matured on the earlier of (i) December 15, 2020, (ii)
the termination of the Business Combination or, (iii) the
consummation of the Business Combination as provided in the
Business Combination. In connection with the Term Loan, the Company
paid $0.5 million of financing costs. The Term Loan bore interest
at a rate equal to 6.5% plus the greater of (a) the Federal Funds
rate plus 0.5%, (b) LIBOR Rate for a one-month interest period plus
1.0%, and (c) Prime Rate in effect on such day. While outstanding
in 2020, the Term Loan bore interest at 8.5% per annum. The Term
Loan plus accrued interest was repaid in full in October 2020.
Payroll Protection Program loan: During May 2020, the
Company received loan proceeds in the amount of $0.9 million under
the Payroll Protection Program (the “PPP”). The PPP was established
as part of Coronavirus Aid, Relief, and Economic Security Act and
provides for loans to qualifying businesses for amounts up to 2.5
times the average monthly payroll expenses of the business, subject
to certain limitations. The loans and accrued interest are
forgivable after eight weeks so long as the borrower uses the loan
proceeds for eligible purposes, including payroll, benefits, rent
and utilities, and so long as the borrower maintains its
pre-funding employment and wage levels. Although the Company used
the PPP loan proceeds for purposes consistent with the provisions
of the PPP and that such usage met the criteria established for
forgiveness of the loan, the Company intends to repay the PPP loan
plus accrued interest. The PPP loan matures in May 2022.
Finance Lease Obligations: The Company’s debt arising
from finance lease obligations primarily relates to vehicles and
equipment. See Note 10 for future maturities of finance lease
obligations.
Note 6. Investments
The amortized cost, unrealized gains and losses, and fair value of
our investments at December 31, 2020 are summarized as follows:
|
|
|
|
|
Fair Value Measurements
as of
December 31, 2020
|
|
|
|
Amortized Cost |
|
|
Gross
Unrealized
Gains |
|
|
Gross Unrealized Losses |
|
|
Fair Value |
|
|
|
(in
thousands) |
|
Held-to-maturity investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury securities |
|
$ |
149,996 |
|
|
$ |
- |
|
|
$ |
(1 |
) |
|
$ |
149,995 |
|
Commercial
paper |
|
|
37,963 |
|
|
|
- |
|
|
|
(15 |
) |
|
|
37,948 |
|
Corporate bonds and notes |
|
|
49,892 |
|
|
|
- |
|
|
|
(63 |
) |
|
|
49,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
held-to-maturity investments |
|
$ |
237,851 |
|
|
$ |
- |
|
|
$ |
(79 |
) |
|
$ |
237,772 |
|
|
|
December 31, 2020 |
|
|
|
Amortized
Cost |
|
|
Fair Value |
|
|
|
(in
thousands) |
|
Due in one year or
less |
|
$ |
201,881 |
|
|
$ |
201,864 |
|
Due after one
year through five years |
|
|
35,970 |
|
|
|
35,908 |
|
|
|
|
|
|
|
|
|
|
Total
held-to-maturity securities |
|
$ |
237,851 |
|
|
$ |
237,772 |
|
The Company did not have any investments at December 31, 2019.
Note 7. Fair Value Measurements – As Restated
The convertible notes payable derivative liabilities are considered
a Level III measurement due to the utilization of significant
unobservable inputs in the valuation. The Company utilized a
scenario-based with and without valuation model to estimate the
fair value of the embedded derivative features requiring
bifurcation associated with the convertible notes payable at
issuance, as of the December 31, 2019 reporting date, and upon the
settlement of the convertible notes payable derivative liabilities
in connection with the extinguishment accounting applied to the
convertible notes payable (see Note 5). This valuation model is
designed to utilize the Company’s best estimates of the timing and
likelihood of the settlement events that are related to the
embedded derivative features in order to estimate the fair value of
the respective convertible notes with these embedded derivative
features.
The fair value of the convertible notes with the derivative
features is compared to the fair value of a plain vanilla note
(excluding the derivative features), which is calculated based on
the present value of the future cash flows. The difference between
the two values represents the fair value of the bifurcated
derivative features as of each respective valuation date.
The key inputs to the valuation models that were utilized to
estimate the fair value of the convertible debt derivative
liabilities include:
Input |
|
October 1,
2020 |
|
Issuance of
January
2020 Note
(January 2020) |
|
Issuance of
December
2019 Note
and
December 31,
2019 |
|
Issuances of
Initial 2019
Notes
(July 2019) |
|
Issuances of
Initial 2019
Notes
(June 2019) |
|
Issuances of
Initial 2019
Notes
(February 2019) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Probability-weighted conversion discount |
|
2.5 - 50.0% |
|
50.0% |
|
23.9 - 50.0% |
|
24.1% |
|
24.4% |
|
24.4% |
Remaining term (years) |
|
0.0 - 4.3 |
|
5.0 |
|
0.7 - 4.5 |
|
5.0 |
|
2.0 |
|
2.0 |
Equity volatility |
|
NA |
|
NA |
|
63.0 - 71.0% |
|
74.0% |
|
78.0% |
|
75.0% |
Risk rate1 |
|
19.6 - 57.7% |
|
50.0% |
|
27.2 - 50.0% |
|
29.0% |
|
26.6% |
|
34.2% |
Probability of next financing event1 |
|
100.0% |
|
70.0% |
|
70.0% |
|
50.0% |
|
50.0% |
|
50.0% |
Timing of next financing event1 |
|
10/1/2020 |
|
9/30/2020 |
|
9/30/2020 |
|
3/31/2020 |
|
3/31/2020 |
|
9/30/2019 |
Probability of default event1 |
|
0.0% |
|
30.0% |
|
25.0 - 30.0% |
|
50.0% |
|
50.0% |
|
50.0% |
Timing of default event1 |
|
NA |
|
9/30/2020 |
|
9/30/2020 |
|
3/31/2020 |
|
3/31/2020 |
|
9/30/2019 |
Probability of sale event1 |
|
0.0% |
|
0.0% |
|
0.0 - 5.0% |
|
0.0% |
|
0.0% |
|
0.0% |
Timing of sale event1 |
|
NA |
|
NA |
|
9/30/2020 |
|
NA |
|
NA |
|
NA |
Negotiation discount1 2 |
|
0.0 - 0.1% |
|
24.2% |
|
21.7% |
|
0.0% |
|
0.0% |
|
0.0% |
1 |
Represents a Level III unobservable
input |
2 |
Based on the terms and provisions
of the December 2019 and January 2020 Notes, the valuation model
incorporated this additional assumption |
The key inputs to the valuation models are defined as follows:
|
● |
The probability-weighted conversion
discount is based on the contractual terms of the convertible note
agreement and the expectation of the pre-money valuation of the
Company as of the estimated date that the next equity financing
event occurs. |
|
● |
The remaining term was determined
based on the remaining time period to maturity of the related
convertible note with embedded features subject to valuation (as of
the respective valuation date). |
|
● |
The Company’s equity volatility
estimate was based on the re-levered historical equity volatility
of a selection of the Company’s comparable guideline public
companies, based on the remaining term of the respective
convertible notes. |
|
● |
The risk rate was the discount rate
utilized in the valuation and was determined based on reference to
market yields for debt instruments with similar credit ratings and
terms. |
|
● |
The probabilities and timing of the
next financing event and default event are based on management’s
best estimate of the future settlement of the respective
convertible notes. |
|
● |
The negotiation discount utilized
was calculated in order to further discount the specified
instruments in order to agree to the principal value of the
convertible notes at issuance. The utilization of the negotiation
discount reflects the fact that there was a significant need for
new investment and limited availability of market participants who
have interest in making investments in such companies. The presence
of the additional discount reflects the higher rate of return that
these investors would seek in making such investments. |
The convertible notes payable derivative liabilities were settled
upon the conversion of the related convertible notes during the
year ended December 31, 2020 (see Note 5). The following table
shows the fair value measurements of the Company’s assets and
liabilities that are measured at fair value on a recurring basis at
December 31, 2020 and 2019:
|
|
Fair Value Measurements as of December 31,
2020 |
|
|
|
Level I |
|
|
Level II |
|
|
Level III |
|
|
Total |
|
Assets |
|
(in
thousands) |
|
Cash and cash equivalents |
|
$ |
389,705 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
389,705 |
|
Held-to-maturity investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury
securities |
|
|
- |
|
|
|
149,995 |
|
|
|
- |
|
|
|
149,995 |
|
Commercial
paper |
|
|
- |
|
|
|
37,948 |
|
|
|
- |
|
|
|
37,948 |
|
Corporate bonds and notes |
|
|
- |
|
|
|
49,829 |
|
|
|
- |
|
|
|
49,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
389,705 |
|
|
$ |
237,772 |
|
|
$ |
- |
|
|
$ |
627,477 |
|
|
|
Fair Value Measurements as of December 31,
2019 |
|
|
|
Level I |
|
|
Level II |
|
|
Level III |
|
|
Total |
|
Liabilities |
|
(in
thousands) |
|
Convertible notes payable derivative liabilities |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
8,351 |
|
|
$ |
8,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
8,351 |
|
|
$ |
8,351 |
|
The following is a rollforward of the Company’s Level III
instruments (in thousands):
Balance, December 31, 2018 |
|
$ |
2,068 |
|
Issuance of
convertible notes payable derivative liabilities |
|
|
7,428 |
|
Fair value
adjustments |
|
|
(1,145 |
) |
|
|
|
|
|
Balance, December 31, 2019 |
|
|
8,351 |
|
Issuance of
convertible note payable derivative liability |
|
|
2,656 |
|
Fair value adjustments |
|
|
1,358 |
|
Settlement of convertible notes payable derivative liabilities |
|
|
(12,365 |
) |
|
|
|
|
|
Balance, December 31, 2020 |
|
$ |
- |
|
Note 8. Capital Structure
As discussed in Note 1 and Note 4, on October 1, 2020, the Company
consummated the Business Combination, which has been accounted for
as a reverse recapitalization. Pursuant to the Certificate of
Incorporation as amended on October 1, 2020 and as a result of the
reverse recapitalization, the Company has retrospectively adjusted
the Legacy Hyliion preferred shares and Legacy Hyliion common
shares issued and outstanding prior to October 1, 2020 to give
effect to the Exchange Ratio used to determine the number of shares
of common stock of the combined entity into which they were
converted.
Preferred Stock: The Company is authorized to issue
10,000,000 shares of preferred stock with a par value of $0.0001
per share. The Company’s board of directors is authorized to fix
the voting rights, if any, designations, powers, preferences, the
relative, participating, option or other special rights and any
qualifications, limitations and restrictions thereof, applicable to
the shares of each series. As of December 31, 2020 and 2019, there
were no shares of preferred stock issued and outstanding.
Common Stock: The Company is authorized to issue
250,000,000 shares of common stock with a par value of $0.0001 per
share, of which 169,316,421 and 86,762,463 shares were issued
and outstanding at December 31, 2020 and 2019, respectively.
The following shares of common stock are reserved for future
issuance:
Stock options issued and
outstanding |
|
|
6,982,497 |
|
Authorized for
future grant under 2020 Equity Incentive Plan |
|
|
12,937,713 |
|
|
|
|
19,920,210 |
|
Warrants:
Public Warrants: On March 4, 2019, TortoiseCorp
completed an initial public offering that included warrants for
shares of common stock (the “Public Warrants”). Each Public Warrant
entitles the holder to the right to purchase one share of common
stock at an exercise price of $11.50 per share. No fractional
shares will be issued upon exercise of the Public Warrants. The
Company may elect to redeem the Public Warrants, in whole and not
in part, at a price of $0.01 per Public Warrant if (i) 30 days’
prior written notice of redemption is provided to the holders, and
(ii) the last reported sale price of the Company’s common stock
equals or exceeds $18.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within a 30-trading day period ending on
the third business day prior to the date on which the Company sends
the notice of redemption to the warrant holders. Upon issuance of a
redemption notice by the Company, the warrant holders have a period
of 30 days to exercise for cash, or on a cashless basis. On the
Closing Date, there were 11,650,458 Public Warrants issued and
outstanding.
Private Placement Warrants: Simultaneous with
TortoiseCorp’s initial public offering in March 2019, Tortoise
Borrower purchased warrants at a purchase price of $1.00 per
warrant in a private placement (the “Private Placement Warrants”).
The Private Placement Warrants may not be redeemed by the Company
so long as the Private Placement Warrants are held by the initial
purchasers, or such purchasers’ permitted transferees. The Private
Placement Warrants have terms and provisions identical to those of
the Public Warrants, including as to exercise price, exercisability
and exercise period, except if the Private Placement Warrants are
held by someone other than the initial purchasers’ permitted
transferees, then the Private Placement Warrants are redeemable by
the Company and exercisable by such holders on the same basis as
the Public Warrants. On the Closing Date, there were 6,660,183
Private Warrants issued and outstanding.
Forward Purchase Warrants: Simultaneous with the
consummation of the Business Combination in October 2020, 875,000
Forward Purchase Warrants to purchase shares of common stock were
issued in connection with the forward purchase agreement (See Note
4). The Forward Purchase Warrants have terms and provisions
identical to those of the Public Warrants, including as to exercise
price, exercisability and exercise period, except that the Forward
Purchase Warrants are subject to transfer restrictions and certain
registration rights.
Because the Company’s Warrants contain provisions whereby the
settlement amount varies depending upon the characteristics of the
warrant holder, all warrants were determined to have liability
classification at issuance, and as such, were recorded at fair
value as a warrant liability in the Company’s consolidated balance
sheet at the date of the merger.
On November 30, 2020, the Company issued a notice of redemption of
all its outstanding Public Warrants and Forward Purchase Warrants
which was completed in December 2020. However, the Private Warrants
held by the initial holders thereof or permitted transferees of the
initial holders were not subject to this redemption. As of December
31, 2020, all outstanding Public Warrants and Forward Purchase
Warrants were either exercised or redeemed by the holder. As of
December 31, 2020, the Company’s transfer agent received gross
proceeds of $140.8 million corresponding to the exercise of
15,786,127 warrants. However, due to the timing of the receipt of
the warrant exercise and the cash, the Company’s transfer agent
issued 15,414,592 shares of common stock as of December 31, 2020.
The remaining 371,535 shares of common stock were issued in January
2021. Additionally, as of December 31, 2020, the Company’s transfer
agent had not yet remitted $12.0 million of the gross proceeds
associated with the shares of issued common stock to the Company
and is included within prepaid expenses and other current assets on
the accompanying consolidated balance sheets as of December 31,
2020. There were 281,065 warrants not exercised by the end of the
redemption period that were redeemed for a price of $0.01 per
warrant, and subsequently cancelled by the Company. The Company
made the redemption payment on these cancelled warrants in January
2021. Certain holders of the warrants elected a cashless exercise,
resulting in the forfeiture of 3,118,445 shares.
Note 9. Share-based Compensation
2016 Equity Incentive Plan
For periods prior to the reverse recapitalization (See Note 4), the
Hyliion Inc. 2016 Equity Incentive Plan (the “2016 Plan”), as
amended in August 2017 and approved by the board of directors (the
“Board”), permitted the granting of various awards including stock
options (including both nonqualified options and incentive
options), stock appreciation rights (“SARs”), stock awards, phantom
stock units, performance awards, and other share-based awards to
employees, outside directors and consultants and advisors of the
Company. Only stock options have been awarded to employees,
consultants and advisors under the 2016 Plan.
Legacy Options converted into an option to purchase a number of
shares of common stock equal to the product of the number of shares
of Legacy Hyliion common stock and the Exchange Ratio at an
exercise price per share equal to the exercise price of the Legacy
Option divided by the Exchange Ratio. Each exchanged option is
governed by the same terms and conditions applicable to the Legacy
Option prior to the Business Combination. No further grants can be
made under the 2016 Plan.
The option exercise price for all grantees equals the stock’s
estimated fair value on the date of the grant, after giving effect
to the Exchange Ratio. The Board determined the fair value of
common stock at the time of grant by considering a number of
objective and subjective factors, including independent third-party
valuations of the Company’s common stock, operating and financial
performance, the lack of liquidity of capital stock, and general
and industry-specific economic outlook, amongst other factors. The
Company believes the fair value of the stock options granted to
nonemployees is more readily determinable than the fair value of
the services received.
The fair value of each option is estimated on the date of the grant
using the Black-Scholes option-pricing model in order to measure
the compensation cost associated with the award. This model
incorporates certain assumptions for inputs including an expected
volatility in the market value of the underlying common stock,
expected term, a risk-free interest rate, and the expected dividend
yield of the underlying common stock.
The following assumptions were used for options issued in the
following periods:
|
|
Years Ended December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Expected volatility |
|
|
70.0% |
|
|
|
70.0% |
|
Expected term (in years) |
|
|
6.1 |
|
|
|
6.1 - 10 |
|
Risk-free interest rate |
|
|
1.7% |
|
|
|
1.4 - 3.0% |
|
Expected dividend yield |
|
|
0.0% |
|
|
|
0.0% |
|
|
● |
Expected volatility:
The expected volatility was determined by examining the historical
volatilities of a group of industry peers, as the Company did not
have any trading history for the Company’s common stock. |
|
● |
Expected term: For
employees, the expected term is determined using the “simplified”
method, as prescribed by the SEC’s Staff Accounting Bulletin No.
107, Share-Based Payment, to estimate on a formula basis the
expected term of the Company’s employee stock options which are
considered to have “plain vanilla” characteristics. For
nonemployees, the expected term represents the contractual term of
the option. |
|
● |
Risk-free interest
rate: The risk-free interest rate was based upon quoted
market yields for the United States Treasury instruments with terms
that were consistent with the expected term of the Company’s stock
options. |
|
● |
Expected dividend
yield: The expected dividend yield was based on the
Company’s history and management’s current expectation regarding
future dividends. |
Employee and nonemployee stock options generally vest over four
years, with a maximum term of ten years from the date of grant.
These awards become available to the recipient upon the
satisfaction of a vesting condition based on a period of service,
which may be accelerated at the discretion of the Board.
Share-based compensation expense is recognized on a straight-line
basis over the applicable vesting period.
A summary of the status of the 2016 Plan at December 31, 2020 and
2019, and changes during the same periods is presented below:
Options |
|
Shares |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Term |
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2018 |
|
|
5,508,031 |
|
|
$ |
0.11 |
|
|
|
8.7 |
|
Granted |
|
|
3,213,131 |
|
|
|
0.16 |
|
|
|
|
|
Exercised |
|
|
(418,033 |
) |
|
|
0.14 |
|
|
|
|
|
Cancelled or
forfeited |
|
|
(1,715,847 |
) |
|
|
0.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2019 |
|
|
6,587,282 |
|
|
|
0.13 |
|
|
|
8.2 |
|
Granted |
|
|
2,797,828 |
|
|
|
0.23 |
|
|
|
|
|
Exercised |
|
|
(1,112,960 |
) |
|
|
0.11 |
|
|
|
|
|
Cancelled or
forfeited |
|
|
(1,289,653 |
) |
|
|
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31,
2020 |
|
|
6,982,497 |
|
|
$ |
0.16 |
|
|
|
7.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31,
2019 |
|
|
2,482,987 |
|
|
$ |
0.10 |
|
|
|
7.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31,
2020 |
|
|
3,851,486 |
|
|
$ |
0.13 |
|
|
|
7.1 |
|
As of December 31, 2020, the options outstanding and exercisable
have an intrinsic value of $113.8 million and $62.8 million,
respectively. There were no options with an exercise price greater
than the market price on December 31, 2020 to exclude from the
intrinsic value computation. The intrinsic value of options
exercised during the years ended December 31, 2020 and 2019 was
$18.4 million and less than $0.1 million, respectively.
Share-based compensation expense for the years ended December 31,
2020 and 2019 was $0.3 million and $0.1 million, respectively. As
of December 31, 2020, there was $0.4 million of unrecognized
compensation cost related to share-based payments, which is
expected to be recognized over the remaining vesting periods, with
a weighted-average period of 2.6 years.
2020 Equity Incentive Plan
On October 1, 2020, the Company’s shareholders approved a new
long-term incentive award plan (the “2020 Plan”) in connection with
the Business Combination. The 2020 Plan is administered by the
Board and the compensation committee. The selection of
participants, allotment of shares, determination of price and other
conditions are approved by the Board and the compensation committee
at its sole discretion in order to attract and retain personnel
instrumental to the success of the Company. Under the 2020 Plan,
the Company may grant an aggregate of 12,937,713 shares of common
stock in the form of nonstatutory stock options, incentive stock
options, SARs, restricted stock awards, performance awards, and
other awards. No grants have been authorized to date by the
Company’s Board and the compensation committee under the 2020
Plan.
Note 10. Leases
The Company has operating and finance leases for its corporate
office, temporary office, vehicles and equipment. In addition, the
Company enters into arrangements whereby portions of the leased
premises are subleased to third parties and are classified as
operating leases. The following table provides a summary of the
components of lease income, costs and rent, which are included
within research and development and selling, general and
administrative on the accompanying consolidated statements of
operations:
|
|
Years Ended December
31,
|
|
|
|
2020 |
|
|
2019 |
|
|
|
(in
thousands) |
|
Operating lease costs: |
|
|
|
|
|
|
Operating lease cost |
|
$ |
1,389 |
|
|
$ |
1,908 |
|
Short-term lease
cost |
|
|
42 |
|
|
|
4 |
|
Variable lease
cost |
|
|
(14 |
) |
|
|
(140 |
) |
Sublessor income |
|
|
(326 |
) |
|
|
(421 |
) |
|
|
|
|
|
|
|
|
|
Total
operating lease costs |
|
$ |
1,091 |
|
|
$ |
1,351 |
|
|
|
|
|
|
|
|
|
|
Finance lease
costs: |
|
|
|
|
|
|
|
|
Amortization of
right-of-use assets |
|
$ |
112 |
|
|
$ |
112 |
|
Interest on lease liabilities |
|
|
21 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
Total
finance lease costs |
|
$ |
133 |
|
|
$ |
162 |
|
Finance lease ROU assets were $0.3 million and $0.7 million as of
December 31, 2020 and 2019 and accumulated amortization was $0.1
million and $0.2 million as of December 31, 2020 and 2019,
respectively.
The following table provides the weighted-average lease terms and
discount rates used for the Company’s operating and finance
leases:
|
|
December 31,
2020 |
|
Weighted-average remaining lease term (in years): |
|
|
|
Operating leases |
|
|
5.0 |
|
Finance leases |
|
|
0.3 |
|
|
|
|
|
|
Weighted-average discount rate: |
|
|
|
|
Operating
leases |
|
|
9.9 |
% |
Finance leases |
|
|
14.2 |
% |
The following table provides a summary of lease liability
maturities for the next five years and thereafter:
|
|
Operating |
|
|
Finance |
|
|
|
Leases |
|
|
Leases |
|
|
|
(in
thousands) |
|
2021 |
|
$ |
1,269 |
|
|
$ |
49 |
|
2022 |
|
|
1,441 |
|
|
|
- |
|
2023 |
|
|
1,484 |
|
|
|
- |
|
2024 |
|
|
1,529 |
|
|
|
- |
|
2025 |
|
|
1,575 |
|
|
|
- |
|
Thereafter |
|
|
133 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total lease payments |
|
|
7,431 |
|
|
|
49 |
|
Less: Imputed interest |
|
|
(1,621 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total lease
obligations |
|
$ |
5,810 |
|
|
$ |
49 |
|
Note 11. Property and Equipment, net
Property and equipment, net consisted of the following at December
31, 2020 and 2019:
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
(in
thousands) |
|
Production machinery and
equipment |
|
$ |
1,751 |
|
|
$ |
1,751 |
|
Vehicles |
|
|
712 |
|
|
|
727 |
|
Leasehold improvements |
|
|
749 |
|
|
|
670 |
|
Demo fleet systems |
|
|
263 |
|
|
|
263 |
|
Office furniture and fixtures |
|
|
64 |
|
|
|
28 |
|
Computers and
related equipment |
|
|
195 |
|
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,734 |
|
|
|
3,463 |
|
|
|
|
|
|
|
|
|
|
Less
accumulated depreciation |
|
|
(2,563 |
) |
|
|
(1,828 |
) |
|
|
|
|
|
|
|
|
|
Property and
equipment, net |
|
$ |
1,171 |
|
|
$ |
1,635 |
|
Depreciation expense for the years ended December 31, 2020 and 2019
totaled approximately $0.8 million and $0.9 million, respectively.
For the year ended December 31, 2020, less than $0.1 million and
$0.7 million is included within selling, general and administrative
expenses and research and development expenses on the accompanying
consolidated statements of operations, respectively. For the year
ended December 31, 2019, $0.1 million and $0.8 million is included
within selling, general and administrative expenses and research
and development expenses on the accompanying consolidated
statements of operations, respectively.
Note 12. Intangible assets, net
The gross carrying amount and accumulated amortization of
separately identifiable intangible assets at December 31, 2020 and
2019 are as follows:
|
|
|
|
December 31, 2020 |
Intangible Asset |
|
Useful Life |
|
Weighted Average Remaining Life |
|
Gross Carrying Value |
|
|
Accumulated Amortization |
|
|
Net |
|
|
|
|
|
|
|
(in
thousands) |
|
Developed technology |
|
6 years |
|
3.4 years |
|
$ |
578 |
|
|
$ |
(247 |
) |
|
$ |
331 |
|
Non-compete |
|
3 years |
|
0.4
years |
|
|
5 |
|
|
|
(4 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
583 |
|
|
$ |
(251 |
) |
|
$ |
332 |
|
|
|
December 31, 2019 |
|
Intangible Asset |
|
Gross
Carrying
Value |
|
|
Accumulated
Amortization |
|
|
Net |
|
|
|
(in
thousands) |
|
Developed technology |
|
$ |
578 |
|
|
$ |
(151 |
) |
|
$ |
427 |
|
Non-compete |
|
|
5 |
|
|
|
(3 |
) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
583 |
|
|
$ |
(154 |
) |
|
$ |
429 |
|
Total amortization expense was $0.1 million for each of the years
ended December 31, 2020 and 2019 and is included within selling,
general and administrative expenses on the accompanying
consolidated statements of operations.
Total future amortization expense for the finite-lived intangible
assets is estimated as follows (in thousands):
2021 |
|
$ |
97 |
|
2022 |
|
|
97 |
|
2023 |
|
|
97 |
|
2024 |
|
|
41 |
|
|
|
|
|
|
|
|
$ |
332 |
|
Note 13. Accrued Expenses and Other Current Liabilities – As
Restated
Accrued expenses and other current liabilities consisted of the
following at December 31, 2020 and 2019:
|
|
December 31, |
|
|
|
2020
as restated |
|
|
2019 |
|
|
|
(in
thousands) |
|
Accrued professional
services |
|
$ |
1,032 |
|
|
$ |
120 |
|
Accrued compensation and related
benefits |
|
|
615 |
|
|
|
- |
|
Refundable grant |
|
|
175 |
|
|
|
175 |
|
Accrued liability for warrants
exercised but not settled |
|
|
4,282 |
|
|
|
- |
|
Other accrued
liabilities |
|
|
160 |
|
|
|
205 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,264 |
|
|
$ |
500 |
|
The accrued liability totaling $4.3 million for warrants exercised
but not settled represents all warrants that were exercised as of
December 31, 2020 under broker protects resulting in cash
collection and share issuance being delayed until January 4,
2021.
Note 14. Income Taxes – As Restated
The income tax provision consists of the following:
|
|
Years Ended December
31,
|
|
|
|
2020 |
|
|
2019 |
|
|
|
(in
thousands) |
|
Current tax expense (benefit): |
|
|
|
|
|
|
Federal |
|
$ |
- |
|
|
$ |
- |
|
State |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total current tax
expense |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Deferred tax expense (benefit): |
|
|
|
|
|
|
|
|
Federal |
|
$ |
(8,952 |
) |
|
$ |
(2,788 |
) |
State |
|
|
(291 |
) |
|
|
- |
|
Valuation
allowance |
|
|
9,243 |
|
|
|
2,788 |
|
|
|
|
|
|
|
|
|
|
Total deferred
tax expense (benefit) |
|
$ |
- |
|
|
$ |
- |
|
The components of deferred taxes as of December 31, 2020 and 2019
are as follows:
|
|
Years Ended December
31,
|
|
|
|
2020 |
|
|
2019 |
|
|
|
(in
thousands) |
|
Deferred tax assets: |
|
|
|
|
|
|
Federal net operating loss
carryforwards |
|
$ |
17,265 |
|
|
$ |
9,083 |
|
State net operating loss
carryforwards |
|
|
984 |
|
|
|
825 |
|
Operating lease obligation |
|
|
1,009 |
|
|
|
1,209 |
|
R&D tax credit |
|
|
481 |
|
|
|
- |
|
Other |
|
|
224 |
|
|
|
- |
|
Property and
equipment, net |
|
|
29 |
|
|
|
- |
|
Total deferred tax assets |
|
|
19,992 |
|
|
|
11,117 |
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
|
|
Operating lease right of use asset,
net |
|
|
854 |
|
|
|
1,045 |
|
Intangible assets, net |
|
|
70 |
|
|
|
90 |
|
Property and equipment, net |
|
|
- |
|
|
|
18 |
|
Other |
|
|
- |
|
|
|
139 |
|
Total deferred tax liabilities |
|
|
924 |
|
|
|
1,292 |
|
|
|
|
|
|
|
|
|
|
Total net deferred tax assets
(liabilities) |
|
|
19,068 |
|
|
|
9,825 |
|
|
|
|
|
|
|
|
|
|
Less valuation
allowance |
|
|
(19,068 |
) |
|
|
(9,825 |
) |
|
|
|
|
|
|
|
|
|
Net deferred tax
assets (liabilities) |
|
$ |
- |
|
|
$ |
- |
|
The reconciliation of taxes at the federal statutory rate to the
Company’s provision for income taxes for the years ended December
31, 2020, and 2019 was as follows:
|
|
Years Ended December 31, |
|
|
|
2020
as restated |
|
|
2019 |
|
|
|
(in
thousands) |
|
Provision at statutory
rate of 21% |
|
$ |
68,069 |
|
|
$ |
(2,964 |
) |
Non-deductible convertible debt
interest expense |
|
|
227 |
|
|
|
152 |
|
Non-deductible gain related to warrant
conversions |
|
|
(76,293 |
) |
|
|
|
|
State tax expense |
|
|
(158 |
) |
|
|
|
|
Stock options |
|
|
54 |
|
|
|
15 |
|
Transaction costs |
|
|
(2,947 |
) |
|
|
- |
|
Shares issued in connection with
Commercial Matters Agreement (see Notes 4, 5, and 15) |
|
|
2,100 |
|
|
|
- |
|
Other |
|
|
(102 |
) |
|
|
9 |
|
R&D tax credit |
|
|
(193 |
) |
|
|
- |
|
Change in
valuation allowance |
|
|
9,243 |
|
|
|
2,788 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
|
$ |
- |
|
The net change in the total valuation allowance for the year ended
December 31, 2020, was an increase of $9.2 million, (compared to an
increase of $2.8 million in 2019). In assessing the realizability
of deferred tax assets, management considered whether it is more
likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income
during the periods in which those temporary differences become
deductible. Management considered the scheduled reversal of
deferred tax liabilities, projected future taxable income and tax
planning strategies in making this assessment. Based upon the level
of historical taxable income and projections for future taxable
income over the periods in which the deferred tax assets are
deductible, management believes it is more likely than not that the
Company will not realize the benefits of these deductible
differences at December 31, 2020.
The Company has federal net operating loss carryforwards of
approximately $82.2 million and $43.3 million at December 31, 2020
and 2019, respectively. $10.5 million of this amount will begin to
expire in 2036. The remaining $71.7 million has an indefinite
carryforward period. The Company also has state net operating loss
carryforwards of approximately $12.5 million and $10.5 million at
December 31, 2020 and 2019. They will expire beginning in 2036. The
Company also has R&D credits of $0.3 million that begin to
expire in 2037. The Company’s ability to utilize a portion of its
net operating loss carryforwards and credits to offset future
taxable income, and tax, respectively, is subject to certain
limitations under section 382 of the Internal Revenue Code upon
changes in equity ownership of the Company. Due to such limitation,
$2.0 million of the Company’s net operating loss and less than $0.1
million of the Company’s R&D credits will expire unused,
regardless of taxable income in future years.
The Company files a United States federal income tax return, as
well as income tax returns in various states. The tax returns for
years 2016 and thereafter remain open for examination.
Note 15. Commitments and Contingencies
Economic Incentive Agreement: During 2018, the
Company entered into an agreement with the Cedar Park Economic
Development Corporation (EDC), whereby the Company will receive
grants from the EDC contingent upon the Company fulfilling and
maintaining certain corporate office lease and employment
requirements. The specified requirements must be met on or before
specific measurement dates and maintained throughout the term of
the agreement, which expires effective December 31, 2024.
Should the Company fail to meet and maintain any performance
requirements, all amounts received from the EDC are subject to
refund. During 2018, the Company achieved the first performance
requirement and received a payment of $0.2 million. During 2019,
the Company continued maintaining the employment level of the first
performance requirement but failed to meet the second performance
requirement. As a result, the Company did not receive any
additional grant funding in 2019, the agreement is subject to
termination by the EDC and all amounts received are subject to
refund.
As the terms of the EDC grant agreement require the Company to meet
and maintain all of the performance requirements throughout the
term of the agreement, the Company has not substantially met all
the conditions for the grant funding received. Accordingly, the
grant funding of $0.2 million received in 2018 is recorded as part
of accrued expenses and other current liabilities as of December
31, 2020 and 2019 and will continue to be reflected as a currently
liability until all related performance requirements have been met
through the end of the agreement on December 31, 2024.
Under the agreement, the EDC has the right to file a security
interest to all assets of the Company. This security interest is
subordinate to the holders of the convertible notes payable with
security interests.
Preferred Sourcing Arrangement and Commercial Matters
Agreement: During 2018, the Company entered into a preferred
sourcing arrangement, as amended (the “PSA”), with a noteholder of
the 2018 Note, Initial 2019 Notes, and January 2020 Note (the “PSA
Partner”). Under the terms of the PSA, so long as the PSA Partner
is one of the Company’s stockholders or debtholders and for a
period of five years following a change of control affecting the
Company, the Company will treat the PSA Partner as the Company’s
preferred source for any products that the PSA Partner manufactures
or sells in preference to other competing products as long as the
PSA Partner’s products meet the technical criteria established by
the Company and on reasonably competitive terms. Under the PSA, the
Company is allowed to purchase competing products upon the request
of any customer.
In June 2020 and in conjunction with the Business Combination, the
Company entered into a Commercial Matters Agreement with the PSA
Partner pursuant to which, among other things, contingent and
effective upon the execution of the Business Combination, the
Company issued to the PSA Partner $10.0 million worth of Legacy
Hyliion’s Common Stock, immediately prior to the effective time of
the merger in consideration for the Note Amendments and for any
future services to be provided pursuant to the terms of a services
agreement to provide engineering or operational services to the
Company that was entered into in June 2020. The terms of the
services agreement are yet to, and may ultimately not, be
negotiated and the PSA Partner is under no obligation to enter into
such services agreement.
As a result, immediately prior to the consummation of the Business
Combination discussed in Note 4, the Company issued 1,000,000
shares of Legacy Hyliion common stock with a fair value of $10.00
per share in exchange for future services to the Company.
Legal Proceedings: The Company is periodically
involved in legal proceedings, legal actions and claims arising in
the normal course of business, including proceedings relating to
product liability, intellectual property, safety and health,
employment and other matters. Management believes that the outcome
of such legal proceedings, legal actions and claims will not have a
significant adverse effect on the Company’s financial position,
results of operations or cash flows.
Note 16. Net Income (Loss) Per Share – As Restated
As a result of the reverse recapitalization (see Note 4), the
Company has retroactively adjusted the weighted average shares
outstanding prior to October 1, 2020 to give effect to the Exchange
Ratio used to determine the number of shares of common stock into
which they were converted.
The following table sets forth the computation of basic and diluted
net income (loss) per share of common stock for the years ended
December 31, 2020, and 2019:
|
|
Years Ended December 31, |
|
|
|
2020 as restated |
|
|
2019 |
|
|
|
(in
thousands, except share and per share data) |
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to common stockholders - basic |
|
$ |
324,117 |
|
|
$ |
(14,113 |
) |
Less: gain from
change in fair value of warrant liabilities |
|
|
(363,299 |
) |
|
|
- |
|
Net loss
attributable to common shareholders – diluted |
|
$ |
(39,182 |
) |
|
$ |
(14,113 |
) |
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic |
|
|
104,324,059 |
|
|
|
86,643,714 |
|
Weighted average shares
outstanding, diluted |
|
|
112,570,960 |
|
|
|
86,643,714 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share,
basic |
|
$ |
3.11 |
|
|
$ |
(0.16 |
) |
Net loss per share, diluted |
|
$ |
(0.35 |
) |
|
$ |
(0.16 |
) |
The Company included the following weighted average potential
common shares in the computation of diluted net income per share
for the years ended December 31, 2020, but not for the years ended
December 31, 2019 because including them would have had an
anti-dilutive effect:
|
|
Years Ended December 31, |
|
|
|
2020 as restated |
|
|
2019 |
|
|
|
|
|
|
|
|
Stock options, including
incentive stock options and non-qualified |
|
|
6,326,479 |
|
|
|
3,772,368 |
|
Common shares issuable from the
exercise of warrants |
|
|
1,920,426 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
8,246,905 |
|
|
|
3,772,368 |
|
Note 17. Supplemental Cash Flow Information
The following table provides supplemental cash flow information for
the years ended December 31, 2020 and 2019:
|
|
Years Ended December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
(in
thousands) |
|
Cash
paid for interest |
|
$ |
(144 |
) |
|
$ |
(53 |
) |
|
|
|
|
|
|
|
|
|
Cash paid for
taxes |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Cash paid for amounts included in the
measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flows from operating leases |
|
$ |
(1,446 |
) |
|
$ |
(1,255 |
) |
|
|
|
|
|
|
|
|
|
Operating cash
flows from finance leases |
|
$ |
(29 |
) |
|
$ |
(50 |
) |
|
|
|
|
|
|
|
|
|
Right-of-use
assets obtained in exchange for lease obligations |
|
$ |
1,007 |
|
|
$ |
21 |
|
The following table provides supplemental disclosures of noncash
financing activities for the year ended December 31, 2020 and
2019:
|
|
Years Ended December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
(in
thousands) |
|
Warrants exercised where proceeds are included within prepaid
expenses and other current assets |
|
$ |
11,978 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Settlement of
convertible notes payable and convertible note payable derivative
liabilities |
|
$ |
44,039 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Redemption of unexercised warrants included within prepaid expenses
and other current assets |
|
$ |
(3 |
) |
|
$ |
- |
|
Note 18. Retirement Plan
The Company has adopted a 401(k) plan to provide all eligible
employees a means to accumulate retirement savings on a
tax-advantaged basis. The 401(k) plan requires participants to be
at least 20 years old. Plan participants may make before tax
elective contributions up to the maximum percentage of compensation
and dollar amount allowed under the Internal Revenue Code and are
always 100% vested in their elective contributions. The Company
makes discretionary employer contributions at its election. Plan
participants must be employed on the last day of the year to be
eligible for the employer match. Participants may defer specified
portions of their compensation. The Company did not provide a match
of the employee’s contribution for the years ended December 31,
2020 and 2019.

PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following is an estimate of the expenses (all of which are to
be paid by the registrant) that we may incur in connection with the
securities being registered hereby.
|
|
Amount |
|
SEC registration fee |
|
$ |
366,418.72 |
|
FINRA filing fee |
|
|
225,000 |
|
Legal fees and expenses |
|
|
250,000 |
|
Accounting fees and expenses |
|
|
52,500 |
|
Miscellaneous |
|
|
11,081.28 |
|
Total |
|
$ |
905,000 |
|
Item 15. Indemnification of Directors and Officers.
Section 145(a) of the DGCL provides, in general, that a corporation
may indemnify any person who was or is a party to or is threatened
to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation), because he or she is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys’ fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such action,
suit or proceeding, if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.
Section 145(b) of the DGCL provides, in general, that a corporation
may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in
its favor because the person is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys’ fees)
actually and reasonably incurred by the person in connection with
the defense or settlement of such action or suit if he or she acted
in good faith and in a manner he or she reasonably believed to be
in or not opposed to the best interests of the corporation, except
that no indemnification shall be made with respect to any claim,
issue or matter as to which he or she shall have been adjudged to
be liable to the corporation unless and only to the extent that the
Court of Chancery or other adjudicating court determines that,
despite the adjudication of liability but in view of all of the
circumstances of the case, he or she is fairly and reasonably
entitled to indemnity for such expenses that the Court of Chancery
or other adjudicating court shall deem proper.
Section 145(g) of the DGCL provides, in general, that a corporation
may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by such person
in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify
the person against such liability under Section 145 of the
DGCL.
Additionally, our Certificate of Incorporation eliminates our
directors’ liability to the fullest extent permitted under the
DGCL. The DGCL provides that directors of a corporation will not be
personally liable for monetary damages for breach of their
fiduciary duties as directors, except for liability:
|
● |
for any transaction from which the
director derives an improper personal benefit; |
|
● |
for any act or omission not in good faith or that involves
intentional misconduct or a knowing violation of law; |
|
● |
for any unlawful payment of dividends or redemption of shares;
or |
|
● |
for any breach of a director’s duty of loyalty to the
corporation or its stockholders. |
If the DGCL is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then
the liability of the Company’s directors will be eliminated or
limited to the fullest extent permitted by the DGCL, as so
amended.
In addition, we have entered into separate indemnification
agreements with our directors and officers. These agreements, among
other things, require us to indemnify our directors and officers
for certain expenses, including attorneys’ fees, judgments, fines,
and settlement amounts incurred by a director or officer in any
action or proceeding arising out of their services as one of our
directors or officers or any other company or enterprise to which
the person provides services at our request.
We maintain a directors’ and officers’ insurance policy pursuant to
which our directors and officers are insured against liability for
actions taken in their capacities as directors and officers.
Item 16. Exhibits.
Exhibit
Number |
|
Description |
2.1+ |
|
Business Combination Agreement and
Plan of Reorganization, dated June 18, 2020, by and among
TortoiseCorp., Merger Sub and the Company (incorporated by
reference to Exhibit 2.1 to the Current Report on Form 8-K (File
No. 001-38823) filed on June 19, 2020). |
3.1 |
|
Second Amended and Restated
Certificate of Incorporation of the Company, dated October 1, 2020
(incorporated by reference to Exhibit 3.1 to the Current Report on
Form 8-K (File No. 001-38823) filed on October 7,
2020). |
3.2 |
|
Amended and Restated Bylaws of the
Company, dated October 1, 2020 (incorporated by reference to
Exhibit 3.2 to the Current Report on Form 8-K (File No. 001-38823)
filed on October 7, 2020). |
4.1 |
|
Form of Common Stock Certificate of
the Company (incorporated by reference to Exhibit 4.1 to the
Current Report on Form 8-K (File No. 001-38823) filed on October 7,
2020). |
4.2 |
|
Amended and Restated Registration
Rights Agreement, dated October 1, 2020, by and among TortoiseCorp
and certain stockholders of TortoiseCorp (incorporated by reference
to Exhibit 4.4 to the Current Report on Form 8-K (File No.
001-38823) filed on October 7, 2020). |
4.3 |
|
Lock-Up Agreement, dated October 1,
2020, by and between the Company and Thomas Healy (incorporated by
reference to Exhibit 4.6 to the Current Report on Form 8-K (File
No. 001-38823) filed on October 7, 2020). |
5.1* |
|
Opinion of Vinson & Elkins
L.L.P. |
23.1 |
|
Consent of Grant Thornton LLP |
23.2* |
|
Consent of Vinson & Elkins L.L.P.
(included in Exhibit 5.1). |
24.1 |
|
Power of Attorney (included on the signature page
hereof). |
101.INS |
|
XBRL Instance Document |
101.SCH |
|
XBRL Taxonomy Extension Schema
Document |
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase
Document |
101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase
Document |
101.LAB |
|
XBRL Taxonomy Extension Label Linkbase
Document |
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase
Document |
|
+ |
The schedules and exhibits to this
agreement have been omitted pursuant to Item 601(b)(2) of
Regulation S-K. A copy of any omitted schedule and/or exhibit will
be furnished to the SEC upon request. |
Item 17. Undertakings.
|
(a) |
The undersigned registrant hereby
undertakes: |
|
(1) |
To file, during any period in which
offers or sales are being made, a post-effective amendment to this
registration statement: |
|
(i) |
to include any prospectus required by Section 10(a)(3) of the
Securities Act; |
|
(ii) |
to reflect in the prospectus any
facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
“Calculation of Registration Fee” table in the effective
registration statement; and |
|
(iii) |
to include any material information
with respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement; |
provided, however, that: Paragraphs (a)(1)(i), (a)(1)(ii)
and (a)(1)(iii) of this section do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the
SEC by the registrant pursuant to Section 13 or Section 15(d) of
the Exchange Act, that are incorporated by reference in the
registration statement, or is contained in a form of prospectus
filed pursuant to Rule 424(b) that is part of the registration
statement.
|
(2) |
That, for the purpose of
determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. |
|
(3) |
To remove from registration by
means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering. |
|
(4) |
That, for the purpose of determining liability under the
Securities Act to any purchaser: |
|
(i) |
Each prospectus filed by the
registrant pursuant to Rule 424(b)(3) shall be deemed to be part of
the registration statement as of the date the filed prospectus was
deemed part of and included in the registration statement; and |
|
(ii) |
Each prospectus required to be
filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a
registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the
purpose of providing the information required by Section 10(a) of
the Securities Act shall be deemed to be part of and included in
the registration statement as of the earlier of the date such form
of prospectus is first used after effectiveness or the date of the
first contract of sale of securities in the offering described in
the prospectus. As provided in Rule 430B, for liability purposes of
the issuer and any person that is at that date an underwriter, such
date shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof. Provided, however, that no statement made in a
registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective
date, supersede or modify any statement that was made in the
registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date. |
|
(b) |
That, for purposes of determining
any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona
fide offering thereof. |
|
(c) |
Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue. |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has
duly caused this Post-Effective Amendment No. 2 to the Registration
Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Cedar Park, State of Texas on
December 30, 2021.
|
HYLIION
HOLDINGS CORP. |
|
|
|
/s/
Thomas Healy |
|
Name: |
Thomas
Healy |
|
Title: |
Chief
Executive Officer |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below hereby constitutes and appoints Thomas
Healy and Sherri Baker, and each of them, his or her true and
lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and
all amendments, including post-effective amendments, to this
Registration Statement, and any registration statement relating to
the offering covered by this Registration Statement, and to file
the same, with all exhibits thereto and other documents in
connection therewith, with the SEC, granting unto said
attorneys-in-fact and agents, and each of them full power and
authority to do and perform each and every act and thing requisite
and necessary to be done, as fully for all intents and purposes as
he or she might or could do in person, hereby ratifying and
confirming all that each of said attorneys-in-fact and agents, or
his or her substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 to the Registration Statement has
been signed below by the following persons in the capacities and on
December 30, 2021.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Thomas Healy |
|
Chief
Executive Officer and Director |
|
December 30, 2021 |
Thomas Healy |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Sherri Baker |
|
Chief
Financial Officer (Principal Financial |
|
December 30, 2021 |
Sherri Baker |
|
Officer and Principal Accounting
Officer) |
|
|
|
|
|
|
|
/s/ Andrew H. Card, Jr. |
|
Director |
|
December 30, 2021 |
Andrew H. Card, Jr. |
|
|
|
|
|
|
|
|
|
/s/ Elaine L. Chao |
|
Director |
|
December 30, 2021 |
Elaine L. Chao |
|
|
|
|
|
|
|
|
|
/s/ Vincent T. Cubbage |
|
Director |
|
December 30, 2021 |
Vincent T. Cubbage |
|
|
|
|
|
|
|
|
|
/s/ Mary E. Gustanski |
|
Director |
|
December 30, 2021 |
Mary E. Gustanski |
|
|
|
|
|
|
|
|
|
/s/ Howard Jenkins |
|
Director |
|
December 30, 2021 |
Howard Jenkins |
|
|
|
|
|
|
|
|
|
/s/ Edward Olkkola |
|
Director |
|
December 30, 2021 |
Edward Olkkola |
|
|
|
|
|
|
|
|
|
/s/ Stephen Pang |
|
Director |
|
December 30, 2021 |
Stephen Pang |
|
|
|
|
|
|
|
|
|
/s/ Robert M. Knight, Jr. |
|
Director |
|
December 30, 2021 |
Robert M. Knight, Jr. |
|
|
|
|
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