Overview




Fisker is building a technology-enabled, asset-light automotive business that it
believes will be among the first of its kind and aligned with the future state
of the automotive industry. This involves a focus on vehicle development,
customer experience, sales and service intended to change the personal mobility
experience through technological innovation, ease of use and flexibility. The
Company combines the legendary design and engineering expertise of Henrik Fisker
to develop high quality electric vehicles with strong emotional appeal. Central
to Fisker's business model is the Fisker Flexible Platform Agnostic Design
("FF-PAD"), a proprietary process that allows the development and design of a
vehicle to be adapted to any given electric vehicle ("EV") platform in the
specific segment size. The process focuses on selecting industry leading vehicle
specifications and adapting the design to crucial hard points on a third-party
supplied EV platform and outsourced manufacturing to reduce development cost and
time to market. The first example of this is Fisker's work to adapt the Fisker
Ocean design to a base vehicle platform developed by Magna Steyr Fahrzeugtechnik
AG & Co KG ("Magna Steyr").

Recent Developments

We achieved several key milestones in Europe in April and May 2023, including
(i) the all-electric Fisker Ocean Extreme equipped with standard 20" and
optional 22" wheels and tires achieved combined WLTP ranges of up to 707 km/440
miles and 701 km/436 miles, respectively; (ii) we opened our inaugural Center +
facilities in Copenhagen, Denmark and Vienna, Austria; (iii) the Fisker Ocean
received small series type approval from the regulatory authority to be sold and
delivered in Europe; and (iv) we completed an initial delivery of the limited
edition Fisker Ocean One to an early customer in Denmark and we registered a
Fisker Ocean One in Germany for Henrik Fisker, our CEO.

[[Image Removed: Q1.23.image (1).jpg]]



As outlined earlier this year, our production forecasts are linked to supply
chain readiness and receipt of multiple regulatory homologation approvals across
our launch markets. The timing of these approvals has shifted, which impacts our
initial volume forecasts for 2023. Based on our current expectations for
approvals, which includes obtaining US homologation approvals in May 2023, as
well as our capacity expectations related to our supply base, we currently
forecast we will produce 1,400 to 1,700 vehicles during the second quarter of
2023.
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Our focus during this initial industrialization phase is to ensure process
readiness, tooling maturity, and part validation. Our suppliers are subject to
external factors that could impact their ability to ramp output of components
for our vehicles. For example, one of our Tier 2 suppliers entered receivership,
which required a timely solution with our Tier 1 supplier to secure the
underlying tooling. Our key supply chain partners are concentrated within an
umbrella group of companies, and we are dependent upon their operational
performance. A successful launch of the Fisker Ocean is reliant upon our key
suppliers' ability to mature software and components to market release levels.
Our ability to reach expected run rates is also contingent upon the ability of
our manufacturing partner to successfully ramp production at required quality
levels. We continue to work with our suppliers, including our manufacturing
partner, to add shifts to increase production capacity and meet our production
goals for the second quarter.

Basis of Presentation



Fisker currently conducts its business through one operating segment. As a
company with no commercial operations and limited revenues derived from
merchandise sales and home charging solutions, which are not core to our ongoing
business, Fisker's activities to date have been limited and its historical
results are reported under U.S. GAAP and in U.S. dollars. Upon commencement of
retail production of its Ocean SUV, Fisker expects its global operations to
focus primarily on the USA and the European Union markets. As a result, Fisker
expects that the financial results it reports for periods after it begins retail
production will not be comparable to the financial results included in this
report or Fisker's Annual Report on Form 10-K for the year ended December 31,
2022 filed with the SEC on March 1, 2023.

Results of Operations

Comparison of the Three-Months Ended March 31, 2023 to the Three-Months Ended March 31, 2022



The following table sets forth Fisker's historical operating results for the
periods indicated:

                                                            Three-Months
                                                          Ended March 31,
                                                      2023                2022              $ Change             % Change
                                                             (dollar amounts in thousands)
Revenue                                          $       198          $       12          $      186                    n.m.
Cost of goods sold                                       164                  11                 153                    n.m.
Gross Margin                                              34                   1                  33                    n.m.
Operating costs and expenses:
Selling, general and administrative                   44,648              21,992              22,656                 103   %
Research and development                              76,999             101,460             (24,461)                (24)  %
Total operating costs and expenses                   121,647             123,452              (1,805)                 (1)  %
Loss from operations                                (121,613)           (123,451)              1,838                  (1)  %
Other income (expense):
Other income (expense)                                   (45)               (371)                326                 (88)  %
Interest income                                        6,894                 265               6,629                    n.m.
Interest expense                                      (4,601)             (4,383)               (218)                  5   %
Foreign currency gain/(loss)                            (401)                746              (1,147)                   n.m.
Unrealized gain/(loss) recognized on equity
securities                                              (730)              5,120              (5,850)                   n.m.
Total other income (expense)                           1,117               1,377                (260)                (19)  %
Loss before income taxes                            (120,496)           (122,074)              1,578                  (1)  %
Provision for income taxes                               (59)                  -                 (59)                   n.m.
Net Loss                                         $  (120,555)         $ (122,074)         $    1,519          $        -


n.m. = not meaningful.
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Revenue and Cost of Goods Sold



In May 2023, we began producing vehicles for deliveries to our customers and,
accordingly, we are recognizing vehicle revenues from the sale of initial Fisker
Ocean SUVs. Merchandise sales and home charging solutions are not intended to
comprise a significant portion of the Company's revenues. Over the course of the
second half of 2023, we will ramp production volumes at a measured pace to
ensure the supplier base can delivery high-quality components in line with our
serial production run-rate.

Sales of branded apparel and goods and home charging solutions totaled
$198 thousand with related costs of goods sold of $164 thousand resulting in a
gross profit of $34 thousand during the three-month period ended March 31, 2023
compared to branded apparel sales of $12 thousand with related cost of goods
sold of $11 thousand resulting in gross profit of $1 thousand during the
corresponding three-month period ended March 31, 2022.

Once we commence production and sale of our vehicles, we expect cost of goods
sold to include mainly vehicle components and parts, including batteries, direct
labor costs, amortized tooling costs and capitalized costs associated with the
Magna warrants, and reserves for estimated warranty expenses.

Selling, General and Administrative



Selling, general and administrative expenses consist mainly of personnel-related
expenses for Fisker's executive and other administrative functions, advertising
and marketing expenses, and expenses for outside professional services,
including legal, accounting and other advisory services.

Selling, general and administrative expenses increased by $22.7 million or 103%
from $22.0 million during the three months ended March 31, 2022 to $44.6 million
during the three month period ended March 31, 2023, primarily due to increased
salaried, targeted marketing and advertising for events, employee headcount,
improved benefits in line with our human capital and ESG goals designed to offer
potential employees competitive compensation packages and stock-based
compensation. With vehicle deliveries beginning in the second quarter of 2023,
we will increase our marketing and advertising efforts in alignment with
expected customer interest in the Fisker Ocean. Also, Center+, showroom, vehicle
processing, and service and pickup locations will open throughout the remainder
of 2023 resulting in higher expenses. The timing of openings will correspond
with customer order demand and completion of homologation in Europe and the
United States. Selling, general and administrative expenses include stock-based
compensation benefit of $0.7 million and stock based compensation expense of
$1.8 million for three-months ended March 31, 2023 and 2022, respectively.
Overall, total headcount for the Company increased to over 900 employees as of
March 31, 2023, compared to 760 employees as of December 31, 2022.

The company expects selling, general and administrative expenses, excluding
stock-based compensation expenses, in the year ended December 31, 2023 to range
between $130.0 million and $160.0 million as compared to $106.4 million in the
year ended December 31, 2022.

Research and Development



To date, Fisker's research and development expenses have consisted primarily of
external engineering services in connection with the design of the Fisker Ocean
model and development of the pre-production and start of production vehicles.

Research and development expenses decreased by approximately $24.5 million or
24% from $101.5 million during the three months ended March 31, 2022, to $77.0
million during the three months ended March 31, 2023. The decrease primarily
relates to higher costs associated with the purchase and expense of $39.2
million for prototype parts and engineering and design services incurred as
Fisker met key development gateways during the first quarter of 2022 that did
not recur in the first quarter of 2023 as the Fisker Ocean is in the final
stages of homologation. Higher costs in the first quarter of 2022 are only
partially offset by higher headcount in the first quarter of 2023. Over the
remainder of 2023, we expect research and development expenses will continue to
trend lower than the corresponding three-month periods in 2022 as conceptual
design and development of PEAR and costs associated with the completion of
homologation in 2023 are not expected to exceed 2022's costs incurred to
complete the engineering and design of the Ocean and transition to production,
including accrual of probable achievement of engineering and design milestones
at the end of 2022. Research and development expense includes stock-based
compensation benefit of $1.0 million and stock-based compensation expense of
$3.3 million for the three-months ended March 31, 2023 and 2022, respectively.
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The company expects research and development expenses, excluding stock-based compensation expenses, in the year ended December 31, 2023 to range between $160.0 million and $190.0 million as compared to $423.9 million in the year ended December 31, 2022.

Interest Expense

Interest expense consists of interest expense associated with the convertible senior notes.



Interest expense amounted to $4.6 million and $4.4 million during the three
months ended March 31, 2023 and 2022, respectively due to the sale, in August
2021, of $667.5 million principal amount of 2.50% convertible senior notes.
Interest expense in the subsequent three-month period throughout calendar year
2023 will approximate $4.5 million, including accretion of debt issuance costs.

Foreign Currency Gain/Loss



The Company recorded foreign currency losses of $0.4 million during the three
months ended March 31, 2023, compared to gains of $0.7 million during the
three-months ended March 31, 2022, primarily due to remeasurement losses on
Euro-denominated monetary assets caused by weakening Euro currency rates. For
the remainder of 2023, we expect EUR denominated transactions associated with
our foreign operations and services provided by suppliers will increase and will
subject Fisker to greater fluctuation in realized gain and losses from foreign
currencies.

Unrealized Gain/Loss Recognized on Equity Securities

Unrealized losses recognized on equity securities held as of March 31, 2023 totaled $0.7 million for the three-months ended March 31, 2023 compared to a gain of $5.1 million during the three-months ended March 31, 2022.

Provision for Income Tax



Fisker's income tax provision consists of an estimate for U.S. federal and state
income taxes based on enacted rates, as adjusted for allowable credits,
deductions, uncertain tax positions, changes in deferred tax assets and
liabilities, and changes in the tax law. Fisker maintains a valuation allowance
against the full value of its U.S. and state net deferred tax assets because
Fisker believes the recoverability of the tax assets is not more likely than
not.

Provision for income tax amounted to $59 thousand for the three-months ended March 31, 2023.



Net Loss

Net loss was $120.6 million during the three-months ended March 31, 2023, a decrease of approximately $1.5 million from a net loss of $122.1 million during the three-months ended March 31, 2022, for the reasons discussed above.

Liquidity and Capital Resources



As of the date of this Form 10-Q, Fisker has yet to generate any meaningful
revenue from its core business operations. To date, Fisker has funded its
capital expenditures and working capital requirements through equity and
convertible notes, as further discussed below. Fisker's ability to successfully
commence its primary commercial operations and expand its business may depend on
many factors, including its working capital needs, the availability of equity or
debt financing and, over time, its ability to generate cash flows from
operations.

As of March 31, 2023, Fisker's cash and cash equivalents totaled $652.5 million.



In May 2022, we entered into the Distribution Agreement, pursuant to which
Fisker established an ATM Program. Pursuant to the ATM Program, Fisker may, at
its discretion and from time to time during the term of the Distribution
Agreement, sell, through the Agents, shares of its Class A Common Stock as would
result in aggregate gross proceeds to Fisker of up to $350 million by any method
permitted by law deemed to be an "at-the-market offering" as defined in Rule 415
of the Securities Act of 1933, as amended, including without limitation sales
made directly on the New York Stock Exchange, on any other existing trading
market for the Class A Common Stock or to or through a market maker. In
addition, the sales agents may also sell the shares of Class A Common Stock by
any other method permitted by law, including, but not limited to, negotiated
transactions. We issued 8,884,080 shares of Class A Common Stock under the
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ATM Program during the three-months ended March 31, 2023 for gross proceeds of
$54.8 million, before $0.8 million of commissions and other direct incremental
issuance costs. As of March 31, 2023, $101.7 million of Class A Common Stock is
available for sale under the ATM Program.

In August 2021, we entered into a purchase agreement for the sale of an
aggregate of $667.5 million principal amount of convertible senior notes due in
2026. The net proceeds from the issuance of the 2026 Notes were $562.2 million,
net of debt issuance costs and the 2027 Capped Call Transactions discussed
further in Note 9. The 2026 Notes mature on September 15, 2026, unless
repurchased, redeemed, or converted in accordance with their terms prior to such
date. The 2026 Notes were not convertible as of March 31, 2023.

Fisker expects its capital expenditures and working capital requirements to
stabilize in 2023 and beyond, as it progresses toward production and deliveries
of the Fisker Ocean, develops its customer support and marketing infrastructure
and expands its research and development efforts on PEAR, Ronin and other future
vehicle programs. Fisker believes that its cash on hand will be sufficient to
meet its working capital and capital expenditure requirements for a period of at
least twelve months from the date of this Form 10-Q. Fisker may, however, need
additional cash resources, including proceeds from the sale of up to $101.7
million of Class A common stock under the ATM Program, to fund its operations
until it commences serial production levels of the Fisker Ocean due to changed
business conditions or other developments, including unanticipated delays in
negotiations with OEMs and tier-one automotive suppliers or other suppliers,
supply chain challenges, disruptions due to COVID-19, competitive pressures, and
regulatory developments, among other developments such as the collaboration on
"Project PEAR" with Foxconn announced in February 2021.

To the extent our current resources are insufficient to satisfy our cash
requirements, we may need to seek additional equity or debt financing. In
particular, in addition to issuing equity under our ATM Program, we may seek
other forms of financing under our effective shelf registration statement or
through private placements. Our existing effective shelf registration statement
permits us to issue various securities for proceeds of up to $2.0 billion, which
amount is reduced by amounts sold under our ATM Program. If such financing is
not available, or if the terms of the financing are less desirable than we
expect, we may be forced to decrease our level of investment in product
development or scale back our operations, which could have an adverse impact on
our business and financial prospects.

Cash Flows



The following table provides a summary of Fisker's cash flow data for the
periods indicated:

                                                     Three Months Ended March 31,
                                                         2023                   2022
                                                            ( in thousands)
   Net cash used in operating activities       $      (83,742)

$ (105,988)


   Net cash used in investing activities              (45,748)

(55,750)


   Net cash provided by financing activities   $       50,099

$ 1,861

Cash Flows used in Operating Activities



Fisker's net cash flows used in operating activities to date have been primarily
comprised of costs related to research and development, payroll and other
selling, general and administrative activities. Lease commitments as of
March 31, 2023, will result in cash payments of $6.4 million for the remainder
of 2023, and $8.8 million for 2024, and $35.8 million for 2025 and thereafter.
Structural improvements are required before Fisker can use its Fisker Lounges in
the U.S. and Europe for its intended purposes. The timing for completion of the
structural improvements is expected during 2023. Compared to 2022, Fisker
expects its cash used in operating activities will decrease as development costs
of the Fisker Ocean subside and cash collections from vehicle sales in excess of
costs to manufacture accumulate throughout the remainder of 2023. In total,
excluding stock-based compensation costs, Fisker is projecting to use between
$290.0 million and $350.0 million for combined SG&A and R&D activities during
2023.

Net cash used in operating activities decreased by approximately $22.2 million from $106.0 million during the three-months ended March 31, 2022 to $83.7 million during the three-months ended March 31, 2023.


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Cash Flows used in Investing Activities



Fisker's cash flows used in investing activities, historically, have been
comprised mainly of purchases of property and equipment. During the three-months
ended March 31, 2023, the Company acquired assets related to production of the
Fisker Ocean and its components that totaled $45.7 million compared to
$45.8 million during the three-months ended March 31, 2022. Fisker continues to
expect 2023 capital expenditures for tooling and manufacturing equipment to
range between $245 million and $260 million of which we expect at least 50% is
denominated in foreign currencies, as serial production tooling and equipment
installations continue at both vehicle assembly and supplier facilities during
2023.

Fisker used cash of $45.7 million for investing activities during the three-months ended March 31, 2023, compared to $55.8 million during the corresponding three-months ended March 31, 2022.



On July 28, 2021, the Company made a $10.0 million commitment for a private
investment in public equity (PIPE) supporting the planned merger of leading
European EV charging network, Allego with Spartan Acquisition Corp. III (NYSE:
SPAQ), a publicly-listed special purpose acquisition company. The merger closed
in the first quarter of 2022 which triggered our investment commitment resulting
in a $10.0 million cash payment to acquire 1,000,000 class A common shares of
Allego (NYSE: ALLG). Fisker was the exclusive electric vehicle automaker in the
PIPE and, in parallel, has agreed to terms on a strategic partnership to deliver
a range of charging options for its customers in Europe.

Cash Flows from Financing Activities

Through March 31, 2023, Fisker has financed its operations primarily through the sale of equity securities and convertible senior notes.



Net cash from financing activities was $50.1 million during the three-months
ended March 31, 2023, which was primarily due to the proceeds from the issuance
of the ATM equity program of $48.0 million, net of stock issuance costs of $0.7
million, as well as aggregate proceeds from the exercise of stock options and
collection of related statutory withholding taxes of $2.8 million. Net cash from
financing activities was $1.9 million during the three-months ended March 31,
2022 which was entirely due to the proceeds from the exercise of stock options
and collection of related statutory withholding taxes due to payment and accrued
as of March 31, 2022.

Off-Balance Sheet Arrangements

Fisker is not a party to any off-balance sheet arrangements, as defined under SEC rules.

Non-GAAP Financial Measure Reconciliations

The following tables show our Non-GAAP financial measure reconciliations:



                                                                                Three-Months Ended March 31,
Selling, General and Administrative Reconciliation                                2023                  2022
GAAP Selling, general and administrative                                            44,648              21,992
Stock-based compensation benefit/(expense)                                             657              (1,773)
Non-GAAP Selling, general and administrative                               $        45,305          $   20,219


                                                    Three-Months Ended March 31,
Research and Development Reconciliation                  2023

2022

GAAP Research and development                         76,999

101,460


Stock-based compensation benefit/(expense)               985

(3,292)


Non-GAAP Research and development            $        77,984                  $ 98,168




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Critical Accounting Policies and Estimates



Fisker's financial statements have been prepared in accordance with GAAP. In the
preparation of these financial statements, Fisker is required to use judgment in
making estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities as of the
date of the financial statements, as well as the reported expenses incurred
during the reporting periods. Fisker considers an accounting judgment, estimate
or assumption to be critical when (1) the estimate or assumption is complex in
nature or requires a high degree of judgment and (2) the use of different
judgments, estimates and assumptions could have a material impact on the
condensed consolidated financial statements.

For a description of our critical accounting policies and estimates, refer to
Part II, Item 7, Critical Accounting Policies and Estimates in our Annual Report
on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 1,
2023. There have been no material changes to our critical accounting policies
and estimates since our Annual Report on Form 10-K for the year ended
December 31, 2022 filed with the SEC on March 1, 2023.

Recent Accounting Pronouncements



See Note 2 to the condensed consolidated financial statements included elsewhere
in this Form 10-Q for more information about recent accounting pronouncements,
the timing of their adoption, and Fisker's assessment, to the extent it has made
one, of their potential impact on Fisker's financial condition and its results
of operations and cash flows.

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