The following discussion and analysis provides information that our management
believes is relevant to an assessment and understanding of our results of
operations and financial condition. This discussion and analysis should be read
in conjunction with our consolidated financial statements and the related notes
contained elsewhere in this Annual Report on Form 10-K. The statements in this
discussion regarding expected and other production timelines, development of our
own manufacturing facilities, industry trends, our expectations regarding our
future performance, liquidity and capital resources and other non-historical
statements are forward-looking statements. These forward-looking statements are
subject to numerous risks and uncertainties, including, but not limited to, the
risks and uncertainties described in Part I, Item 1A. "Risk Factors" and
"Cautionary Note Regarding Forward-Looking Statements." Our actual results may
differ materially from those contained in or implied by any forward-looking
statements.

Certain figures included in this section have been rounded for ease of
presentation. Percentage figures included in this section have not in all cases
been calculated on the basis of such rounded figures but on the basis of such
amounts prior to rounding. For this reason, percentage amounts in this section
may vary slightly from those obtained by performing the same calculations using
the figures in our financial statements or in the associated text. Certain other
amounts that appear in this section may similarly not sum due to rounding.

Overview

Canoo is a high tech advanced mobility technology company with a mission to
bring electric vehicles ("EVs") to everyone and provide connected services that
improve the fleet or individual vehicle ownership experience. We are developing
a technology platform that we believe will enable us to rapidly innovate,
iterate and bring new products, addressing multiple use cases, to market faster
than our competition and at lower cost. Our vehicle architecture and design
philosophy are aimed at driving productivity and returning capital to our
customers, and we believe the software and technology capabilities we are
developing, packaged around a modular, customizable product, have the potential
to empower the customer experience across a vehicle's lifecycle. We remain
committed to the environment and to delivering sustainable mobility that is
accessible to everyone. We proudly intend to manufacture our fully electric
vehicles in Oklahoma, bringing advanced manufacturing and technology jobs to
communities in America's heartland. We are committed to building a diverse
workforce that will draw heavily upon the local communities of Native Americans
and veterans.
We believe we are one of the first automotive manufacturers focused on
monetizing value across the entirety of the vehicle lifecycle, across multiple
owners. Our platform and data architecture is purpose-built to be durable and
serve as the foundation for the vehicles we intend to offer, unlocking a highly
differentiated, multi-layer business model. The foundational layer is our
Multi-Purpose Platform ("MPP" or "platform") architecture, which serves as the
base of our vehicles, including the Lifestyle Vehicle and its Delivery, Base,
Premium, and Adventure trims; the Multi-Purpose Delivery Vehicle ("MPDV") and
the Pickup. The next layer is cybersecurity which is embedded in our vehicle to
ensure the privacy and protection of vehicle data. Our top hats, or cabins, are
modular and purpose-built to provide tailored solutions for our customers. This
intentional design enables us to efficiently use resources to produce only what
is necessary, underscoring our focus on sustainability and returning capital to
customers. The remaining layers, connected accessories and digital customer
ecosystem, present high-margin opportunities that extend beyond the initial
vehicle sale,
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across multiple owners. Owners will further be able to customize their vehicles
by adding connected accessories such as Bluetooth devices or infotainment
systems. In addition, there are opportunities for software sales throughout the
vehicle life, including predictive maintenance and service software or advanced
driver assistance systems ("ADAS") upgrades.

Our platform architecture is a self-contained, fully functional rolling chassis
that directly houses the most critical components for operation of an EV,
including our in-house designed proprietary electric drivetrain, battery
systems, advanced vehicle control electronics and software and other critical
components, which all have been optimized for functional integration. Both our
true steer-by-wire system, believed to be the first such system applied to a
production-intent vehicle, and our transverse composite leaf-spring suspension
system are core components of our platform's differentiated functionality,
enabling the development of a broad range of vehicle types and use cases due to
the chassis' flat profile and fully variable steering positions. All of our
announced vehicles, including the Lifestyle Vehicle and the Lifestyle Delivery
Vehicle, the MPDV and the Pickup, will share a common platform architecture
paired with different top hats to create a range of uniquely customized and use
case optimized purpose-built mobility solutions targeting multiple segments of
the rapidly expanding EV marketplace.

In addition to our vehicle technology, we are developing an in-house designed
and proprietary software platform that aggregates car data from both Canoo and
non-Canoo vehicles and delivers valuable insights to our customers. Collected
over-the-air for connected vehicles or via an on-board diagnostics ("OBD")
device for non-connected vehicles, we believe car data is critical to powering
the customer journey and maximizing utility and value from the vehicle ownership
experience. Leveraging our data aggregation platform, we aim to create the Canoo
Digital Ecosystem, an application store that centralizes all vehicle information
for customers and provides key tools across Security & Safety, Household Vehicle
Management, Fleet Management, Lifecycle Management and Vehicle Asset Management.
Through our software offering, we believe we can provide differentiated and
substantial value to both commercial customers and consumers and stay connected
throughout the vehicle lifecycle, across multiple owners.

Core to our values is delivering high quality products while empowering local
communities, which drove our decision to build in America and source a majority
of our parts from America and allied nations. We believe vertical integration
across our manufacturing and assembly process will enable us to achieve in-house
scale production with less supply chain risk and provide us better oversight of
our vehicle manufacturing. We are building production facilities in states and
communities that are investing in high-tech manufacturing alongside us, creating
American jobs and driving innovation.

We have made strategic investments in our technology and products that position us to capture three large and growing markets - commercial and passenger vehicles, upfitting and accessories, and telematics data.

Since our founding in 2017, we continue to innovate on our technology and strategy. In 2022, we have achieved critical milestones in the development, testing, and manufacturing of our platform and product, as well as important developments for our business:

•Selected by NASA to provide crew transport for Artemis lunar exploration launch

•Received Walmart order to purchase up to 10,000 units

•Announced binding orders from Zeeba and KingBee totaling 12,300 vehicles

•Successfully built and tested 118 Gamma properties during the program

•Announced battery module manufacturing facility in Pryor, OK

•Delivered Light Tactical Vehicle (LTV) to US Army for analysis and demonstration

•Announced in-house vehicle manufacturing facility in Oklahoma City

•Declared start of production



  We continue to innovate and develop every aspect of our business, from our
non-traditional business model to our built in America, highly utilitarian
vehicles optimized to return capital to our customers. We believe being
forward-thinking across these areas has set the foundation for us to develop
into a scalable business that is differentiated from our peers across the
automotive original equipment manufacturer ("OEM") landscape.

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Key Factors Affecting Operating Results

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Item 1A, "Risk Factors."

Availability of Financing Sources and Commercialization of Our EVs



We expect to derive future revenue from our first vehicle offerings. In order to
reach commercialization, we must purchase and integrate related property and
equipment, as well as achieve several research and development milestones.

Our capital and operating expenditures have increased significantly in connection with our ongoing activities and we expect they will continue to increase, as we:

•continue to invest in our technology, research and development efforts;

•compensate existing personnel;

•invest in manufacturing capacity, via our owned facilities;

•increase our investment in marketing, advertising, sales and distribution infrastructure for our EVs and services;

•obtain, maintain and improve our operational, financial and management information systems;



•hire additional personnel;

•commercialize our EVs;

•obtain, maintain, expand and protect our intellectual property portfolio; and

•continue to operate as a public company.



We require substantial additional capital to develop our EVs and services and
fund our operations for the foreseeable future. We will also require capital to
identify and commit resources to investigate new areas of demand. Until we can
generate sufficient revenue from vehicle sales, we are financing our operations
through access to private and public equity offerings and debt financings.
Management believes substantial doubt exists about the Company's ability to
continue as a going concern for twelve months from the date of issuance of the
financial statements included in this Annual Report on Form 10-K.

Macroeconomic Conditions

Current adverse macroeconomic conditions, including but not limited to heightened inflation, slower growth or recession, changes to fiscal and monetary policy, higher interest rates, currency fluctuations, and challenges in the supply chain could negatively affect our business.



Increased demand for semiconductor chips in 2020, due in part to the increased
demand for consumer electronics that use these chips, resulted in a global
shortage of chips in 2021 that has continued into 2023. As a result, our ability
to source semiconductor chips used in our vehicles may be adversely affected.
This shortage may result in increased chip delivery lead times, delays in the
production of our vehicles, and increased costs to source available
semiconductor chips.

Although we have made our best estimates based upon current information, actual
results could materially differ from the estimates and assumptions developed by
management. Accordingly, it is reasonably possible that the estimates made in
the financial statements have been, or will be, materially and adversely
impacted in the near term as a result of these conditions, and if so, we may be
subject to future impairment losses related to long-lived assets as well as
changes to valuations.
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Key Components of Statements of Operations

Basis of Presentation



Currently, we conduct business through one operating segment. We are an early
stage-growth company with limited commercial activities to date, which are
primarily conducted in the United States. For more information about our basis
of presentation, refer to Note 2, Basis of Presentation and Summary of
Significant Accounting Policies, of the notes to the consolidated financial
statements included elsewhere in this Annual Report on Form 10-K.

Research and Development Expenses, excluding Depreciation



Research and development expenses, excluding depreciation consist of salaries,
employee benefits and expenses for design and engineering, stock-based
compensation, as well as materials and supplies used in research and development
activities. In addition, research and development expenses include fees for
consulting and engineering services from third party vendors.

Selling, General and Administrative Expenses, excluding Depreciation

The principal components of our selling, general and administrative expenses are salaries, wages, benefits and bonuses paid to our employees; stock-based compensation; travel and other business expenses; and professional services fees, including legal, audit and tax services.

Depreciation Expense



Depreciation is provided on property and equipment over the estimated useful
lives on a straight-line basis. Upon retirement or disposal, the cost of the
asset disposed of and the related accumulated depreciation are removed from the
accounts and any gain or loss is reflected in the loss from operations. No
depreciation expense is allocated to research and development, cost of revenue
and selling, general and administrative expenses.

Interest (Expense) Income

Interest expense consists primarily of interest expense and amortization of debt discount and issuance costs.

Gain on Fair Value Change in Contingent Earnout Shares Liability

The gain on fair value change in the contingent earnout shares liability is due to the change in fair value of the corresponding contingent earnout shares liability.

Loss on Extinguishment of Debt

The loss on extinguishment of debt arose from the redemption of our convertible debt with Yorkville into Common Stock, as discussed in Note 9, Convertible Debt.


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Results of Operations

Comparison of the Years Ended December 31, 2022 and 2021



Commentary for the year ended December 31, 2021 compared to 2020 may be found in
Item 7 of the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission ("SEC") on March 1, 2022, ("2021 Form 10-K").

The following table sets forth our historical operating results for the periods
indicated (in thousands):

                                                                 Year Ended
                                                                December 31,                        $                   %
                                                          2022                2021               Change               Change
Revenue                                               $        -          $        -          $        -                      NM
Costs and Operating Expenses
Cost of revenue, excluding depreciation                        -                   -                   -                      NM
Research and development expenses, excluding
depreciation                                             299,218             246,245              52,973                   22  %
Selling, general and administrative expenses,
excluding depreciation                                   196,029             194,736               1,293                    1  %
Depreciation                                              11,554               8,921               2,633                   30  %
Total costs and operating expenses                       506,801             449,902              56,899                   13  %
Loss from operations                                    (506,801)           (449,902)            (56,899)                  13  %
Interest (expense) income                                 (2,249)                103              (2,352)                     NM
Gain on fair value change in contingent earnout
shares liability                                          26,044             104,446             (78,402)                 (75) %
Loss on fair value change in private placement
warrants liability                                             -              (1,639)              1,639                 (100) %
Loss on extinguishment of debt                            (4,626)                  -              (4,626)                     NM
Other (expense) income, net                                  (62)                224                (286)                (128) %
Loss before income taxes                                (487,694)           (346,768)           (140,926)                  41  %
Provision for income taxes                                     -                   -                   -                      NM
Net loss and comprehensive loss                       $ (487,694)         $ (346,768)         $ (140,926)                  41  %

"NM" means not meaningful

Research and Development Expenses, excluding Depreciation



Research and development expenses were $299.2 million for the year ended
December 31, 2022, compared to $246.2 million for the year ended December 31,
2021. The increase of $53.0 million, or 22%, was primarily due to an increase in
salary and related benefits expense of $39.8 million, stock-based compensation
expense of $5.3 million, travel and other business expenses of $4.4 million, and
shipping costs of $4.1 million. Other factors affecting research and development
expenses were individually immaterial.

Salary and related benefits expense was $126.8 million for the for the year
ended December 31, 2022, compared to $87.0 million for the year ended
December 31, 2021. The increase of $39.8 million, or 46%, in salary and related
benefits expenses are primarily due to continued investment in personnel and
contract employees to drive and reach our research and development goals.

Stock-based compensation expense was $31.1 million for the for the year ended
December 31, 2022, compared to $25.8 million for the year ended December 31,
2021. The increase of $5.3 million, or 21%, in stock-based compensation expense
was primarily driven by the continued recognition of stock compensation expense
related to issuance of awards to employees and the commencement of the ESPP
program during the year ended December 31, 2022. See further discussion in Note
15, Stock-based Compensation, of the notes to our accompanying financial
statements.

Travel and other business expenses were $7.4 million for the for the year ended
December 31, 2022, compared to $3.0 million for the year ended December 31,
2021. The increase of $4.4 million, or 147%, in travel and expense costs are
primarily due to travel related to gamma stage engineering design and
development costs.
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Shipping costs were $7.7 million for the for the year ended December 31, 2022,
compared to $3.6 million for the year ended December 31, 2021. The increase of
$4.1 million, or 114%, in shipping costs are primarily due to investments in
research and development and manufacturing activities to achieve start of
production in late 2022.

Selling, General, and Administrative Expenses, excluding Depreciation



Selling, general, and administrative expenses were $196.0 million for the year
ended December 31, 2022, compared to $194.7 million for the year ended
December 31, 2021. The increase of $1.3 million, was primarily due to a decrease
of $34.1 million in stock-based compensation expenses and $0.4 million in
professional fees, more than offset by an increase in salary and related
benefits of $18.2 million, information technology expenses of $12.0 million, and
occupancy costs of $4.6 million. Other factors affecting selling, general and
administrative expenses were individually immaterial.

Stock-based compensation expense was $48.5 million for the for the year ended
December 31, 2022, compared to $82.6 million for the year ended December 31,
2021. The decrease of $34.1 million, or 41%, in stock-based compensation expense
was primarily driven by the granting of certain non-routine awards, some of
which vested immediately during the year ended December 31, 2021, partially
offset by the continued recognition of stock compensation expense related to
issuance of awards to employees during the year ended December 31, 2022. See
further discussion on stock-based compensation in Note 15, Stock-based
Compensation, of the notes to our accompanying financial statements.

Professional fees expense was $47.7 million for the for the year ended December 31, 2022, compared to $48.1 million for the year ended December 31, 2021. The decrease of $0.4 million, or 1%, in Professional fees expense are primarily driven by reducing certain costs to third party service providers during the year ended December 31, 2022.



Salary and related benefits expense was $47.7 million for the for the year ended
December 31, 2022, compared to $29.5 million for the year ended December 31,
2021. The increase of $18.2 million, or 62%, in Salary and related benefits
expense are primarily driven by investment in personnel to support our growth
and achieve start of production during the year ended December 31, 2022.

Information technology expenses was $19.8 million for the for the year ended
December 31, 2022, compared to $7.8 million for the year ended December 31,
2021. The increase of $12.0 million, or 154%, in information technology expense
are primarily driven by increased computer software-related costs including
subscriptions and maintenance during the year ended December 31, 2022.

Occupancy costs expense was $17.5 million for the for the year ended
December 31, 2022, compared to $12.9 million for the year ended December 31,
2021. The increase of $4.6 million, or 36%, in occupancy costs expense are
primarily driven by increased rent from additional spaced leases that commenced
during the year ended December 31, 2022. Refer to Note 10, Operating leases, for
information regarding the Company's lease portfolio.

Depreciation Expense



Depreciation expense was $11.6 million for the year ended December 31, 2022,
compared to depreciation expense of $8.9 million for the year ended December 31,
2021. The increase of $2.7 million, was primarily due to assets acquired during
the year ended December 31, 2022.

Interest (Expense) Income



Interest expense was $2.3 million for the year ended December 31, 2022, compared
to interest income of $0.1 million for the year ended December 31, 2021. This
change of $2.4 million was primarily due to the effective interest incurred
under the PPA of $0.4 million, as well as the amortization of debt issuance
costs of $1.0 million, and debt discount of $0.9 million.

Gain on Fair Value Change in Contingent Earnout Shares Liability



Gain on fair value change in contingent earnout shares liability was $26.0
million for the year ended December 31, 2022, compared to $104.4 million for the
year ended December 31, 2021. The change of $78.4 million, or 75.1%, was a
result of the periodic remeasurement of the fair value of our contingent earnout
shares liability.
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Loss on Fair Value Change of Private Placement Warrants Liability



We recognized a non-cash loss on fair value change of private placement warrants
liability of $1.6 million for the year ended December 31, 2021 which was a
result of the periodic remeasurement of the fair value of our private placement
warrants liability. All of the private placement warrants were converted to
public warrants on March 2, 2021.

Loss on Extinguishment of Debt

We recognized $4.6 million of extinguishment of debt loss as a result of repayments made to Yorkville of convertible debt through the issuance of shares during the year ended December 31, 2022.

Non-GAAP Financial Measures



In addition to our results determined in accordance with accounting principles
generally accepted in the United States ("GAAP"), we believe the following
non-GAAP measures are useful in evaluating our operational performance. We use
the following non-GAAP measures to evaluate our ongoing operations and for
internal planning and forecasting purposes. We believe that non-GAAP financial
information, when taken collectively, may be helpful to investors in assessing
our operating performance.

EBITDA and Adjusted EBITDA

"EBITDA" is defined as net loss before interest expense, income tax expense or
benefit, and depreciation and amortization. "Adjusted EBITDA" is defined as
EBITDA adjusted for stock-based compensation, restructuring charges, asset
impairments, and other costs associated with exit and disposal activities,
acquisition and related costs, changes to the fair value of contingent earnout
shares liability, changes to the fair value of warrants liability, and any other
one-time non-recurring transaction amounts impacting the statement of operations
during the year. Adjusted EBITDA is intended as a supplemental measure of our
performance that is neither required by, nor presented in accordance with, GAAP.
We believe EBITDA and Adjusted EBITDA, when combined with net loss are
beneficial to an investor's complete understanding of our operating performance.
We believe that the use of EBITDA and Adjusted EBITDA provides an additional
tool for investors to use in evaluating ongoing operating results and trends and
in comparing our financial measures with those of comparable companies, which
may present similar non-GAAP financial measures to investors. However, you
should be aware that when evaluating EBITDA and Adjusted EBITDA we may incur
future expenses similar to those excluded when calculating these measures. In
addition, our presentation of these measures should not be construed as an
inference that our future results will be unaffected by unusual or non-recurring
items. Our computation of EBITDA and Adjusted EBITDA may not be comparable to
other similarly titled measures computed by other companies, because all
companies may not calculate EBITDA and Adjusted EBITDA in the same fashion.

Because of these limitations, EBITDA and Adjusted EBITDA should not be
considered in isolation or as a substitute for performance measures calculated
in accordance with GAAP. We manage our business utilizing EBITDA and Adjusted
EBITDA as supplemental performance measures.
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The following table reconciles net loss to EBITDA and Adjusted EBITDA for the years ended December 31, 2022 and 2021 (in thousands):



                                                                               Year Ended
                                                                              December 31,
                                                                        2022                2021
Net loss                                                            $ (487,694)         $ (346,768)

Interest expense (income)                                                2,249                (103)

Depreciation                                                            11,554               8,921
EBITDA                                                                (473,891)           (337,950)

Adjustments:

Gain on fair value change in contingent earnout shares liability

                                                              (26,044)           (104,446)

Loss on fair value change in private placement warrants liability

                                                                    -               1,639
Loss on extinguishment of debt                                           4,626                   -
Other (expense) income, net                                                 62                (224)
Stock-based compensation                                                79,573             108,360
SEC settlement (Note 12)                                                 1,500                   -
Non-cash legal settlement (Note 12)                                      5,532                   -
Adjusted EBITDA                                                       (408,642)           (332,621)

Liquidity and Capital Resources



As of December 31, 2022, we had unrestricted cash and cash equivalents in the
amount of $36.6 million, which was primarily invested in money market funds that
consist of liquid debt securities issued by the U.S. government. In assessing
our liquidity requirements and cash needs, we also consider contractual
obligations to which we are a party. Additionally, see discussion related to the
operating lease maturity schedule and any new leases entered into in Note 10 of
the notes to our accompanying financial statements.

We have incurred and expect to incur, net losses which have resulted in an
accumulated deficit of $1.2 billion as of December 31, 2022. Management
continues to explore raising additional capital through a combination of debt
financing, other non-dilutive financing and/or equity financing to supplement
the Company's capitalization and liquidity. If and as we raise additional funds
by incurring loans or by issuing debt securities or preferred stock, these forms
of financing have rights, preferences, and privileges senior to those of holders
of our Common Stock. The availability and the terms under which we are able to
raise additional capital could be disadvantageous, and the terms of debt
financing or other non-dilutive financing involve restrictive covenants and
dilutive financing instruments, which could place significant restrictions on
our operations. Macroeconomic conditions and credit markets are also impacting
the availability and cost of potential future debt financing. As we raise
capital through the issuance of additional equity, such sales and issuance has
and will continue to dilute the ownership interests of the existing holders of
Common Stock. There can be no assurances that any additional debt, other
non-dilutive and/or equity financing would be available to us on favorable terms
or at all. We expect to continue to incur net losses, comprehensive losses, and
negative cash flows from operating activities in accordance with our operating
plan as we continue to expand our research and development activities to
complete the development of our MPP and EVs, establish our go-to-market model
and scale our operations to meet anticipated demand. We expect that both our
capital and operating expenditures will increase significantly in connection
with our ongoing activities, as we:

•continue to invest in our technology, research and development efforts;

•compensate existing personnel;

•invest in manufacturing capacity, via our owned facilities;

•increase our investment in marketing, advertising, sales and distribution infrastructure for our EVs and services;

•obtain, maintain and improve our operational, financial and management information systems;

•hire additional personnel;


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•commercialize our EVs;

•obtain, maintain, expand and protect our intellectual property portfolio; and

•operate as a public company.



As of the date of this report, we believe that our existing cash resources and
additional sources of liquidity are not sufficient to support planned operations
for the next 12 months. Our financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The accompanying consolidated
financial statements do not include any adjustments related to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might result from the outcome of this
uncertainty related to the Company's ability to continue as a going concern.

Cash Flows Summary



Presented below is a summary of our operating, investing and financing cash
flows (in thousands):

                                                              For the Year Ended
                                                                 December 31,
                                                             2022            2021
Net cash used in operating activities                    $ (400,475)     $ 

(300,816)


Net cash used in investing activities                       (66,830)       

(162,728)

Net cash provided by (used in) financing activities 290,428 (11,386)

Cash Flows from Operating Activities



Our cash flows from operating activities are significantly affected by the
growth of our business primarily related to research and development as well as
selling, general, and administrative activities. Our operating cash flow is also
affected by our working capital needs to support growth in personnel-related
expenditures and fluctuations in accounts payable and other current assets and
liabilities.

Net cash used in operating activities was $400.5 million for the year ended
December 31, 2022. Our cash outflow from operating activities primarily consist
of payments related to our research & development and selling, general and
administration expenses. Total expenditure as it relates to research &
development excluding depreciation was $299.2 million during year ended
December 31, 2022, of which $31.1 million related to stock-based compensation
expenses during the year. The Company also incurred selling, general and
administration expenses of $196.0 million for year ended December 31, 2022, of
which $48.5 million related to stock-based compensation expenses during the
year. The expenses include salaries and benefits paid to employees as primarily
all salaries and benefits are paid in cash during the year.

Net cash used in operating activities was $300.8 million for the year ended
December 31, 2021. Our cash outflow from operating activities primarily consist
of payments related to our research & development and selling, general and
administration expenses. Total expenditure as it relates to research &
development excluding depreciation was $246.2 million during year ended
December 31, 2021, of which $25.8 million related to stock-based compensation
expenses during the year. The Company also incurred selling, general and
administration expenses of $194.7 million for year ended December 31, 2021, of
which $82.6 million related to stock-based compensation expenses during the
year. The expenses include salaries and benefits paid to employees as primarily
all salaries and benefits are paid in cash during the year.

Cash Flows from Investing Activities



We generally expect to experience negative cash flows from investing activities
as we expand our business and continue to build our infrastructure. Cash flows
from investing activities primarily relate to capital expenditures to support
our growth.

Net cash used in investing activities for the year ended December 31, 2022 was
$66.8 million, which consisted of purchases of production tooling, machinery,
and equipment to support manufacturing activities of $97.3 million, offset by a
repayment received in February 2022 totaling $30.4 million from VDL Nedcar.
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Net cash used in investing activities was approximately $162.7 million for the
year ended December 31, 2021, which primarily consisted of purchases of fixed
assets that are recorded in construction in progress specifically related to the
development of manufacturing lines as well as equipment and tooling necessary in
the production of the Company's vehicles. Net cash used in investing activities
was also comprised of the prepayment made to VDL Nedcar.

Cash Flows from Financing Activities



Net cash provided by financing activities for the year ended December 31, 2022
was $290.4 million, which consisted primarily of proceeds from PPA of $141.1
million, proceeds from issuance of shares under PIPE of $60.0 million, proceeds
from issuance of shares under ATM of $49.3 million, proceeds from issuance of
shares under SEPA agreement of $32.5 million, and proceeds from the purchase of
shares by VDL Nedcar of $8.4 million, partially offset by cash repayments under
the PPA of $2.5 million.

Net cash used in financing activities was $11.4 million for the year ended
December 31, 2021, which was primarily due to the $11.3 million in payments for
offering costs. The $6.9 million repayment of the PPP loan during the year was
offset by $6.9 million in cash received from exercise of public warrants.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements.

Critical Accounting Policies and Estimates



Our consolidated financial statements are prepared in accordance with GAAP. The
preparation of these financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities as of the date of the financial
statements, as well as the reported expenses incurred during the reporting
periods. Our estimates are based on our historical experience and on various
other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or
conditions. We believe that the accounting policies discussed below are critical
to understanding our historical and future performance, as these policies relate
to the more significant areas involving management's judgments and estimates.

While our significant accounting policies are described in Note 2, Basis of
Presentation and Summary of Significant Accounting Policies, of the notes to the
consolidated financial statements included elsewhere in this Annual Report on
Form 10-K, we believe that the following accounting policies require a greater
degree of judgment and complexity and are the most critical to understanding our
financial condition and historical and future results of operations:

Contingent Earnout Shares Liability
The Company has a contingent obligation to issue shares of Common Stock to
certain stockholders and employees upon the achievement of certain market share
price milestones within specified periods (the "Earnout Shares"). The initial
fair value of our contingent Earnout Shares liability was recognized at $248.9
million with a corresponding reduction from the additional paid in capital in
our stockholders' equity. The terms and conditions of the right to receive
Earnout Shares are described in Note 4 to the accompanying consolidated
financial statements. In accordance with the guidance under Accounting Standards
Codification ("ASC") 815, Derivatives and Hedging, the Earnout Shares right are
classified as a Level 3 fair value measurement liability, and the increase or
decrease in the fair value during the reporting period is recognized as other
expense or other income in our consolidated statement of operations accordingly.
The fair value of the contingent Earnout Shares liability was estimated using a
Monte Carlo simulation of stock prices using an expected volatility assumption
based on the historical volatility of the price of the Company's Common Stock
and implied volatility derived from the price of exchange traded options on the
Company's Common Stock. Changes in these inputs or other underlying assumptions
could have a significant impact on the fair value of the contingent Earnout
Shares liability. Changes to contingent earnout shares liability can result from
changes to discount rates or accretion of the liability due to the passage of
time. The determination of the contingent Earnout Shares liability requires
significant judgments including the appropriateness of the valuation model,
reasonableness of estimates and assumptions, and the discount rates applied to
such forecasts.

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As of December 31, 2021, the fair value of our contingent Earnout Shares
liability was estimated to be $29.1 million. We recognized a gain on fair value
change in contingent Earnout Shares liability of $104.4 million as other income
in our consolidated statement of operations for the year ended December 31,
2021. As of December 31, 2022, the fair value of our contingent Earnout Shares
liability was estimated to be $3.0 million. We recognized a gain on fair value
change in contingent Earnout Shares liability of $26.0 million as other income
in our consolidated statement of operations for the year ended December 31,
2022.

Warrants



We account for warrants as either equity-classified or liability-classified
instruments based on an assessment of the instruments' specific terms and
applicable authoritative guidance in ASC 480 and ASC 815, as further described
in Note 2. This assessment, which requires the use of professional judgment, is
conducted at the time of warrant issuance and as of each subsequent quarterly
period end date while the instruments are outstanding. The Company concluded
that the warrants issued to Walmart and vested as of December 31, 2022 qualify
for equity accounting treatment. The equity classified warrants are measured at
fair value on its grant date using a Black-Scholes-Merton model, with no fair
value re-measurement at each reporting period given equity classification. The
Company concluded that the warrants issued to Yorkville as of December 31, 2022
qualify for liability accounting treatment. The liability classified warrants
are measured at fair value on its grant date using a Black-Scholes-Merton model,
with fair value re-measurement at each reporting period given its
classification. Refer to Note 16 for information regarding the warrants issued
to Walmart and Yorkville.

Stock-Based Compensation

We account for stock-based compensation awards granted to employees and members
of our Board based on the awards' estimated grant date fair value using a fair
value method. For awards that vest solely based on continued service ("requisite
service"), the resulting fair value is recognized as an expense on an
accelerated basis over the requisite service period, which is generally four
years. For awards which contain performance conditions, the resulting fair value
is recognized over the requisite service period using the graded vesting method,
when it is probable the performance conditions will be met. We account for
forfeitures as they occur.

We estimate the fair value of RSUs based on the market price of our Common Stock
underlying the awards on the grant date. Fair value for awards with our stock
price performance metrics is calculated using the Monte Carlo simulation model,
which incorporates stock price correlation and other variables over the time
horizons matching the performance periods.

The assumptions underlying these valuations represent management's best estimates, which involve inherent uncertainties and the application of management judgment. As a result, if factors or expected outcomes change and our management uses significantly different assumptions or estimates, our stock-based compensation expense for future periods could be materially different, including as a result of adjustments to stock-based compensation expense recorded for prior periods.

For the years ended December 31, 2022 and 2021 total stock-based compensation expense was $79.6 million and $108.4 million, respectively.

Smaller Reporting Company Status



Based on the aggregate worldwide market value of voting and non-voting Common
Stock held by non-affiliates as of June 30, 2022, we re-qualified as a
"non-accelerated filer" beginning with this Annual Report on Form 10-K for the
year ended December 31, 2022. Therefore, our independent registered public
accounting firm is not required to provide the attestation report on our system
of internal control over financial reporting pursuant to Section 404(b) of the
Sarbanes-Oxley Act in this Annual Report.

In addition, we re-qualified as a "smaller reporting company", given that the
market value of our Common Stock held by non-affiliates was less than the
subsequent qualification threshold of $560.0 million and our annual revenue was
less than $80.0 million during the most recently completed fiscal year. We may
take advantage of certain of the scaled disclosures available to smaller
reporting companies and will be able to take advantage of these scaled
disclosures for so long as the market value of our voting and non-voting Common
Stock held by non-affiliates is less than $250.0 million measured on the last
business day of our second fiscal quarter, or our annual revenue is less than
$100.0 million during the
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most recently completed fiscal year and the market value of our voting and non-voting Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Recent Accounting Pronouncements

See Item 8. Note 3 - Recent Accounting Pronouncements of the notes to our accompanying financial statements for the years ended December 31, 2022 and 2021 for a summary of recently issued and adopted accounting pronouncements.

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