This report contains forward-looking statements within the meaning of the Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this report, the words "could," "should", "will," "may," "anticipate," "believe," "expect," "estimate," "intend," "plan," "project," the negative of such terms and other similar expressions are intended to identify forward looking statements, although not all forward-looking statements contain such identifying words. Such forward-looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except with respect to statements in this Form 10-Q/A revised or provided to reflect the effects of the Restatement, forward-looking statements herein are as of the Original Filing, filed with theSEC onNovember 15, 2021 , unless specifically stated to be made as of a different date, and the Company has not updated forward-looking statements or information to reflect events occurring after the Original Filing. Forward-looking statements are subject to a number of risks and uncertainties including, but not limited to, those described below and under the sections entitled "Risk Factors "and "Cautionary Note Regarding Forward-Looking Statements" included in the Definitive Proxy Statement (the "Proxy") of DCRB filed with theSEC onJune 21, 2021 and in subsequent reports that we file with theSEC , including this Form 10-Q/A for the quarter endedSeptember 30, 2021 .
•our ability to commercialize our strategic plans, including our ability to establish facilities to produce our vehicles or secure hydrogen supply in appropriate volumes, at competitive costs or with competitive emissions profiles;
•our ability to effectively compete in the heavy-duty transportation sector, and intense competition and competitive pressures from other companies worldwide in the industries in which we operate;
•our ability to maintain the listing of our common stock on Nasdaq; •our ability to raise financing in the future;
•our ability to retain or recruit, or changes required in, our officers, key employees or directors; and
•our ability to protect, defend or enforce intellectual property on which we depend
Should one or more of the risks or uncertainties described above, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements.
The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us and speak only as of the date of this report. Except as otherwise required by applicable law, we disclaim any duty to update any forward looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this report. You should, however, review additional disclosures we make in subsequent filings with theSEC . The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto included as a part of the Form 10-Q/A to which this Management's Discussion and Analysis of Financial Condition and Results of Operation is attached. Unless the context otherwise requires, all references in this section to "Hyzon," "we," "us," and "our" are intended to mean the business and operations ofHyzon Motors Inc. and its consolidated subsidiaries following the consummation of the Business Combination and to Legacy Hyzon and its consolidated subsidiaries prior to the Business Combination. 33 -------------------------------------------------------------------------------- Table of Contents Restatement
The accompanying Management's Discussion and Analysis ("MD&A") of Financial
Condition and Results of Operations has been adjusted to give effect to the
Restatement of the unaudited condensed consolidated financial statements for the
periods ended
Overview
Headquartered inRochester, New York , with operations inNorth America ,Europe , andAustralasia , Hyzon is an energy transition accelerator and technology innovator, providing end-to-end solutions primarily for the commercial mobility sector. We operate two lines of businesses: commercial vehicles and hydrogen supply infrastructure. Our commercial vehicle business is focused primarily on assembling and supplying battery-electric vehicles and FCEVs, such as heavy-duty (Class 8) trucks, medium-duty (Class 6) trucks, light-duty (Class 3) trucks, and 40- and 60-foot (12 and 18-meter) city and coach buses to commercial vehicle operators. We also provide services that retrofit ICE vehicles to FCEVs. On-road, our potential customers include shipping and logistics companies and retail customers with large distribution networks, such as grocery retailers, food and beverage companies, waste management companies, and municipality and government agencies around the world. Off-road, our potential customers include mining and port equipment manufacturers and operators. These strategic customer groups generally employ a 'back-to-base' model where their vehicles return to a central base or depot between operations, thereby allowing operators to have fueling independence as the necessary hydrogen can be produced locally at or proximate to the central base and dispensed at optimally-configured hydrogen refueling stations. Our fuel cell technologies are also compatible with light commercial vehicles among other applications. Hyzon plans to expand its range of products and hydrogen solutions if the transportation sector increasingly adopts hydrogen power and investments are made in hydrogen production and related infrastructure in accordance with our expectations. In addition, we perform integration for rail and aviation customers and plan to expand our integration activities across maritime and other applications in the future. We expect the opportunities in these sectors to continue to expand with the rapid technological advances in hydrogen-powered fuel cells and the increasing investments in hydrogen production, storage and refueling infrastructure around the world. Our hydrogen supply infrastructure business is focused on building and fostering a clean hydrogen supply ecosystem with leading partners from feedstock through hydrogen production, dispensing and financing. We collaborate with strategic partners on development, construction, operation, and ownership of hydrogen production facilities and refueling stations in each major region of our operations, which intends to complement our back-to-base model and near-term fleet deployment. OnJuly 29, 2021 , the Company entered into aMaster Hub Agreement withRaven SR, LLC ("Raven SR") whereby Raven SR granted to the Company a right of first refusal to co-invest in up to 100 of Raven SR's first 200 solid waste-to-hydrogen production hubs, and up to 150 of Raven SR's gas-to-hydrogen production hubs acrossthe United States on a hub-by-hub basis. In connection with this agreement, Hyzon invested$2.5 million onJuly 30, 2021 , to acquire a minority interest in Raven SR. We expect near-term realization of the first waste-to-hydrogen production hub constructed by Raven SR coming online inRichmond, CA , with 5 tons per day of zero Carbon Intensity green hydrogen available for our near-term back-to-base fleets at diesel parity, in 2022.
Business Combination
OnFebruary 8, 2021 , Legacy Hyzon, nowHyzon Motors USA Inc. ("Legacy Hyzon") entered into the Business Combination Agreement and Plan of Reorganization (the "Business Combination") with DCRB and Merger Sub pursuant to which Merger Sub merged with and into Legacy Hyzon, with Legacy Hyzon surviving the merger as a wholly owned subsidiary of DCRB. The transaction closed onJuly 16, 2021 . Following the close of the business combination, DCRB has been namedHyzon Motors Inc. , began trading on Nasdaq, and its common stock and warrants trade under the symbols "HYZN" and "HYZNW", respectively. The Business Combination generated proceeds of approximately$509.0 million cash, net of transaction costs allocated to equity and redemptions by DCRB's public stockholders. This includes an aggregate of$355 million of gross proceeds from the PIPE Financing at$10.00 per PIPE Share. Hyzon's cash on hand after giving effect to this transaction, including transaction costs and expenses, is expected to be used for general corporate 34 -------------------------------------------------------------------------------- Table of Contents purposes, including developing infrastructure and supply chain, acquiring and leasing equipment for manufacturing, and investing in research and development. COVID-19 Pandemic The COVID-19 pandemic is currently impacting countries, communities, supply chains, and the global financial markets. Governments have imposed laws requiring social distancing, travel restrictions, shutdowns of businesses and quarantines, among others, and these laws may limit our ability to meet with potential customers or partners, or affect the ability of our personnel, suppliers, partners and customers to operate in the ordinary course of business. Although the economy has begun to recover, the severity and duration of the related global economic crisis is not fully known. The COVID-19 pandemic is expected to continue to have residual negative impacts, in particular the supply chain continues to face disruptions. Rebounding demand in key components challenge the supply base and supply chain with short notice and increasing volume levels. The supply constraints include overseas freight congestion causing extended lead times, semiconductor allocation, other raw/component material shortages and supplier staffing challenges.
The COVID-19 pandemic and measures to prevent its spread have had the following impact on our business:
•Our workforce. Employee health and safety is our priority. In response to COVID-19, we established new protocols to help protect the health and safety of our workforce. We will continue to stay up-to-date and follow local, CDC, or WHO guidelines regarding safe work environment requirements. •Operations and Supply Chain. We continue to experience some delays in our supply chains which may temporarily limit our ability to outfit vehicles and fuel cell systems with key components. However, our global footprint has allowed us to leverage our strategic partnerships and to meet customer demands for zero emission heavy commercial vehicles despite these challenges. In the future, we may experience supply chain disruptions from related or third-party suppliers and any such supply chain disruptions could cause delays in our development and delivery timelines. We continue to monitor the situation for any potential adverse impacts and execute appropriate countermeasures, where possible. While we have experienced some operational challenges, the long-term implications of the COVID-19 pandemic on our workforce, operations and supply chain, as well as demand remain uncertain. These factors may in turn have a material adverse effect on our results of operations, financial position, and cash flows. Key Trends and Uncertainties We believe that our performance and future success depends on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section entitled "Risk Factors - Risks Related to Hyzon" included in the Proxy of DCRB filed withSEC onJune 21, 2021 .
Commercial Launch of Hyzon-branded commercial vehicles and other hydrogen solutions
Our business model has yet to be tested. Prior to full commercialization of our commercial vehicle business at scale, we must complete the construction of required manufacturing facilities and achieve research and development milestones. We must establish and operate facilities capable of producing our hydrogen fuel cell systems or assembling our hydrogen-powered commercial vehicles in appropriate volumes and at competitive costs. Until we can generate sufficient additional revenue from our commercial vehicle business, we expect to finance our operations through equity and/or debt financings. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts. We expect that any delays in the successful completion of our manufacturing facilities, availability of critical parts, and/or validation and testing will impact our ability to generate revenue.
Hydrogen Production & Supply Infrastructure
We continue to develop an end-to-end hydrogen ecosystem delivery model, with a
partner-driven approach to design, build, own & operate hydrogen production hubs
and downstream dispensing infrastructure expected to provide zero-to-
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negative carbon intensity hydrogen at below diesel-parity cost structures
supporting Hyzon vehicle fleet deployments. We intend to continue forming
additional partnerships across the full hydrogen feedstock, production &
dispensing lifecycle in each major region in which we operate, designed to
ensure that the hydrogen fuel required is available at the cost and carbon
intensity requirements to drive fleet conversions to Hyzon hydrogen fuel cell
commercial vehicles. Given we have a partner-driven approach, we are naturally
reliant upon our partners' performance in fulfilling the obligations that we
depend on for delivery of each segment of that value chain. Additionally,
consistent with other construction projects there are risks related to realized
construction cost and schedule that can impact final cost to produce and deliver
hydrogen and timing of that delivery, along with the availability of feedstock
near our vehicle fleet deployments. We intend to manage these risks by
partnering with high quality and high performing partners with a track record of
timely delivery and instituting commercial agreements to drive down construction
cost and on-time schedule performance.
We believe that we are the industry-leading hydrogen technology company with the most efficient and reliable fuel cell powertrain technologies and an unmatched product and service offering. Our financial performance will be significantly dependent on our ability to maintain this leading position. We expect to incur substantial and increasing research and development expenses and stock-based compensation expenses as a result. We dedicate significant resources towards research and development and invest heavily in recruiting talent, especially for vehicle design, vehicle software, fuel cell system, and electric powertrain engineers. We will continue to recruit and retain talented engineers to grow our strength in our core technologies. We expect to incur additional stock-based compensation expenses as we support our growth and status as a publicly traded company. We expect our strategic focus on innovation will further solidify our leadership position. Customer Demand We have received significant interest in our commercial vehicles and are able to convert non-binding letters of intent or memoranda of understanding into binding orders or sales. However, while we are continually seeking to expand our customer base, we depend on a few major customers and we expect this will continue for the next several years. As ofSeptember 30, 2021 , Hyzon has received orders from customers in an aggregate value of approximately$14.6 million from companies around the world, and Hyzon's customers have paid$7.8 million in deposits with respect to such orders.
Supplier Relationships
We also depend on third parties, including our majority beneficial shareholder
and parent company Horizon, for supply of key inputs and components for our
products, such as fuel cells and automotive parts. We intend to negotiate
potential relationships with industry-leading original equipment manufacturers
("OEMs") to supply chassis for our Hyzon-branded vehicles but do not yet have
any binding agreements and there is no guarantee that definitive agreements will
be reached. Such suppliers, including Horizon, may be unable to deliver the
inputs and components necessary for us to produce our hydrogen-powered
commercial vehicles or hydrogen fuel cell systems at prices, volumes, and
specifications acceptable to us. If we are unable to source required inputs and
other components from third parties on acceptable terms, it could have a
material adverse effect on our business and results of operations.
The automotive industry continues to face supply chain disruption. We are
experiencing increases in both the cost and time to receive of raw materials,
such as semiconductors or chassis. Any such increase or supply interruption
could materially negatively impact our business, prospects, financial condition
and operating results. Many of the parts for our products are sourced from
suppliers in China and the manufacturing situation in China remains uncertain.
Market Trends and Competition
The last ten years have seen the rapid development of alternative energy
solutions in the transportation space. We believe this growth will continue to
accelerate as increased product offerings, technological developments, reduced
costs, additional supporting infrastructure, and increased global focus on
climate goals drive broader adoption.
We believe that commercial vehicle operators, its initial target market, will be
driven towards hydrogen-powered commercial vehicles predominantly by the need to
decarbonize activities, but also by the potential for lower total cost of
ownership in comparison to the cost of ownership associated with traditional
gasoline and diesel ICE vehicles. Our fuel cell
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technology can be deployed across a broad range of mobility applications, including on-road, off-road, rail, maritime and aviation.
The competitive landscape for our commercial vehicles ranges from vehicles relying on legacy ICEs, to extended range electric and battery electric engines, to other hydrogen fuel cell and alternative low-to-no carbon emission propulsion vehicles. Competitors include well established vehicle companies already deploying vehicles with internal fuel cell technology and other heavy vehicle companies that have announced their plans to offer fuel cell trucks in the future. We also face competition from other fuel cell manufacturers. We believe that our company is well positioned to capitalize on growth in demand for alternative low-to-no carbon emission propulsion vehicles due to the numerous benefits of hydrogen power, including hydrogen's abundance and ability to be produced locally and the generally faster refueling times for hydrogen-powered commercial vehicles, as compared to electricity-powered vehicles. However, in order to successfully execute on our business plan, we must continue to innovate and convert successful research and development efforts into differentiated products, including new commercial vehicle models.
Our current and potential competitors have greater financial, technical, manufacturing, marketing and other resources. Our competitors may be able to deploy greater resources to the design, development, manufacturing, distribution, promotion, sales, marketing and support of their internal combustion, alternative fuel and electric truck programs.
Regulatory Landscape
We operate in a highly regulated industry. The failure to comply with laws or regulations, including but limited to rules and regulations covering vehicle safety, emissions, dealerships, and distributors, could subject us to significant regulatory risk and changing laws and regulations and changing enforcement policies and priorities could adversely affect our business, prospects, financial condition and operating results. We may be also required to obtain and comply with the terms and conditions of multiple environmental permits, many of which are difficult and costly to obtain and could be subject to legal challenges. We depend on global customers and suppliers, and adverse changes in governmental policy or trade regimes could significantly impact the competitiveness of our products. Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could affect our business and future profitability. See the section entitled "Information about Hyzon - Government Regulations" in the Proxy.
Results of Operations
Three Months Ended
Hyzon was formed and commenced operations onJanuary 21, 2020 . As a result, we have a very limited operating history from inception and limited prior period comparable information available to be presented in this "Management's Discussion and Analysis of Financial Condition and Results of Operations of Hyzon." Revenue. Revenue for the three months endedSeptember 30, 2021 represents$0.1 million of revenue from retrofit services performed by Hyzon Europe. Operating Expenses. Operating expenses for the three months endedSeptember 30, 2021 were$46.8 million compared to$0.5 million for the three months endedSeptember 30, 2020 . Operating expenses consist of cost of revenue, research and development expenses and selling, general and administrative expenses.
Cost of Revenue. Cost of revenue includes direct materials, labor costs,
allocated overhead costs related to retrofitting of hydrogen FCEVs, and
estimated warranty costs. Cost of revenue for the three months ended
Research and Development Expenses. Research and development expenses represent costs incurred to support activities that advance the development of current and next generation hydrogen powered fuel cell systems, the design and development of ePowertrain, and the integration of those systems into various mobility applications. Our research and development expenses consist primarily of employee-related personnel expenses, prototype materials and tooling, design expenses, consulting and contractor costs and an allocated portion of overhead costs.
Research and development expenses were
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our research and development expertise for our global customer base. We expect
research and development expenses to increase significantly and become a larger
percentage of our operating expenses going forward as we build out our research
facilities and expand headcount to advance our development of current and next
generation hydrogen powered fuel cell systems, the design and development of
ePowertrain, and the integration of those systems into various mobility
applications.
Selling, General and Administrative Expenses. Selling expenses consist primarily
of employee-related costs for individuals working in our sales and marketing
departments, third party commissions, and related outreach activities. General
and administrative expenses consist primarily of personnel-related expenses
associated with our executive, finance, legal, information technology and human
resources functions, as well as professional fees for legal, audit, accounting
and other consulting services, and an allocated portion of overhead costs.
Selling, general and administrative expenses were $42.7 million and $0.4 million
in the three months ended September 30, 2021 and September 30, 2020 ,
respectively. The increase is comprised of $27.7 million related to stock
compensation expense, $13.4 million of which is triggered by a key executive
retirement arrangement (see Note 13. Stock-based Compensation Plans) and $14.0
million relates to earnout equity awards pursuant to the Business Combination
(see Note 4. Business Combination). Salary and related expenses were
$3.3 million in the three months ended September 30, 2021 compared to
$0.3 million in the three months ended September 30, 2020 . The additional
increase of approximately $11.6 million in selling, general and administrative
expense was due to building out the Company's corporate infrastructure and legal
and accounting costs associated with the Business Combination for the three
months ended September 30, 2021 compared to $0.4 million in the three months
ended September 30, 2020 . We also continue to incur increased expenses,
including accounting, audit, legal, regulatory and tax-related services
associated with maintaining compliance with exchange listing and SEC
requirements; director and officer insurance costs; and investor and public
relations costs.
Change in Fair Value. Change in fair value represents non-cash gains or losses
in estimated fair values of the private placement warrant and earnout
liabilities required to be remeasured at each balance sheet date. Change in
estimated fair value of private placement warrant and earnout liabilities for
the three months ended September 30, 2021 , were $7.6 million and $73.4 million
gains, respectively. There were no equivalent instruments requiring fair value
remeasurement during the three months ended September 30, 2020 .
Foreign Currency Exchange Gain (Loss). Foreign currency exchange gain (loss)
represents exchange rate gains and losses related to all transactions
denominated in a currency other than our or our subsidiary's functional
currencies. Foreign currency exchange loss was $0.1 million in the three months
ended September 30, 2021 compared to negligible expense in the three months
ended September 30, 2020 , as there were few transactions in foreign currencies
in the prior period. We expect the volume of foreign currency transactions to
grow significantly in the future as we continue to expand our geographic
footprint.
Interest Expense, net. Interest expense, net was $0.3 million in the three
months ended September 30, 2021 , compared to negligible expense in the three
months ended September 30, 2020 . Interest expense relates primarily to the
convertible debt issued in February 2021 and is comprised primarily of changes
in the fair value of the embedded derivative associated with the automatic
conversion provision of the convertible note. Upon close of the Business
Combination in July 2021 , the convertible debt and accrued interest converted
into shares of common stock of the Company (see Note 4. Business Combination).
There was no debt outstanding during the three months ended September 30, 2020 .
Net Income (Loss) Attributable to Noncontrolling Interests. Net income (loss)
attributable to noncontrolling interests represents results attributable to
third parties in our operating subsidiaries. Net income (loss) is generally
allocated based on such ownership interests held by third parties with respect
to each of these entities.
Net loss attributable to noncontrolling interests was $0.8 million for the three
months ended September 30, 2021 , compared to zero in the three months ended
September 30, 2020 . The change in the comparative periods is the result of our
entering into a joint venture agreement with Holthausen to establish a venture
in the Netherlands in October of 2020.
Nine Months Ended
Revenue. Revenue for the nine months ended
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Operating Expense. Operating expenses for the nine months endedSeptember 30, 2021 were$59.9 million compared to$0.8 million for the period fromJanuary 21, 2020 (Inception) toSeptember 30, 2020 . Operating expenses consist of cost of revenue, research and development expenses and selling, general and administrative expenses. Cost of Revenue. Cost of revenue for the nine months endedSeptember 30, 2021 was$0.2 million . We did not record revenue or cost of revenue for the period fromJanuary 21, 2020 (Inception) toSeptember 30, 2020 . Research and Development Expenses. Research and development expenses were$8.1 million and$0.2 million in the nine months endedSeptember 30, 2021 and the period fromJanuary 21, 2020 (Inception) toSeptember 30, 2020 , respectively. The increase was primarily due to$5.4 million in higher personnel costs in developing our research and development expertise for our global customer base. We expect research and development expenses to increase significantly and become a larger percentage of our operating expenses going forward as we build out our research facilities and expand headcount to advance our development of current and next generation hydrogen powered fuel cell systems and the design and development of ePowertrain, and the integration of those systems into various mobility applications. Selling, General and Administrative Expenses. Selling, general and administrative expenses were$51.6 million and$0.7 million in the nine months endedSeptember 30, 2021 and the period fromJanuary 21, 2020 (Inception) toSeptember 30, 2020 , respectively. The increase is comprised of$28.1 million related to stock compensation expense,$13.4 million of which is triggered by a key executive retirement arrangement (see Note 13. Stock-based Compensation Plans) and$14.0 million relates to earnout equity awards pursuant to the Business Combination (see Note 4. Business Combination). Salary and related expenses were$5.7 million in the nine months endedSeptember 30, 2021 compared to$0.5 million in the period endedSeptember 30, 2020 . The additional increase of approximately$17.6 million in Selling, general and administrative expense was due to building out the Company's corporate infrastructure and legal and accounting costs associated with the Business Combination for the nine months endedSeptember 30, 2021 compared to$0.2 million for the period fromJanuary 21, 2020 (Inception) toSeptember 30, 2020 . We also expect to continue to incur increased expenses, including accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing andSEC requirements; director and officer insurance costs; and investor and public relations costs.
Change in Fair Value. Change in estimated fair value of private placement
warrant and earnout liabilities for the nine months ended
Foreign Currency Exchange Gain (Loss). Foreign currency exchange loss was$0.2 million in the nine months endedSeptember 30, 2021 compared to negligible expense in the periodJanuary 21, 2020 (Inception) toSeptember 30, 2020 , as there were few transactions in foreign currencies in the prior period. We expect the volume of foreign currency transactions to grow significantly in the future as we continue to expand our geographic footprint. Interest Expense, net. Interest expense, net was$5.2 million in the nine months endedSeptember 30, 2021 compared to negligible expense in the periodJanuary 21, 2020 (Inception) toSeptember 30, 2020 . Interest expense in 2021 relates primarily to the convertible debt issued inFebruary 2021 and is comprised primarily of changes in the fair value of the embedded derivative associated with the automatic conversion provision of the convertible note. Upon close of the Business Combination inJuly 2021 , the convertible debt and accrued interest converted into shares of common stock of the Company (see Note 4. Business Combination). Interest expense in 2020 relates primarily to the convertible debt issued onAugust 24, 2020 and converted to 250,000 common shares onOctober 19, 2020 upon the Company's closing of Qualified Financing. Net Income (Loss) Attributable to Noncontrolling Interests. Net loss attributable to noncontrolling interests was$1.3 million for the nine months endedSeptember 30, 2021 compared to zero in the period fromJanuary 21, 2020 (Inception) toSeptember 30, 2020 . The change in the comparative periods is the result of our entering into a joint venture agreement with Holthausen to establish a venture inthe Netherlands in October of 2020.
Non-GAAP Financial Measures
In addition to our results determined in accordance with accounting principles
generally accepted in
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We use the following non-GAAP financial information 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 income or expense, income tax expense or benefit, and depreciation and amortization. "Adjusted EBITDA" is defined as EBITDA adjusted for stock-based compensation expense, change in fair value of private placement warrant liability, change in fair value of earnout liability and other special items determined by management, if applicable. EBITDA and Adjusted EBITDA are intended as supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP. 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 Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate 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 compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net income (loss) to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.
The following tables reconcile net income (loss) to EBITDA and Adjusted EBITDA (in thousands):
Three Months Ended
2021 2020
Net income (loss) $ 33,845 $ (556)
Interest expense, net 254 15
Income tax expense (benefit) - -
Depreciation and amortization 302 75
EBITDA $ 34,401 $ (466)
Change in fair value of private placement warrant liability (7,614) -
Change in fair value of earnout liability (73,359) -
Stock-based compensation 14,766 -
Executive transition charges(1) 13,860 -
Business combination transaction expenses(2) 3,404 -
Regulatory and legal matters(3) 111 -
Adjusted EBITDA $ (14,431) $ (466)
(1)Executive transition charges include stock-based compensation costs of $13.4
million and salary expense of $0.5 million related to former CTO's retirement.
(2)Transaction costs of $3.3 million attributable to the liability classified
earnout shares and $0.1 million of write-off of debt issuance costs.
(3)Regulatory and legal matters include legal, advisory, and other professional
service fees incurred in connection with the short-seller analyst article from
September 2021 , and investigations and litigation related thereto.
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For the period
January 21, 2020
Nine Months Ended (Inception) -
September 30, 2021 September 30, 2020
Net income (loss) $ 15,746 $ (854)
Interest expense, net 5,249 20
Income tax expense (benefit) - -
Depreciation and amortization 671 99
EBITDA $ 21,666 $ (735)
Change in fair value of private placement warrant liability (7,614) -
Change in fair value of earnout liability (73,359) -
Stock-based compensation 15,644 -
Executive transition charges(1) 13,860 -
Business combination transaction expenses(2) 3,404 -
Regulatory and legal matters(3) 111 -
Adjusted EBITDA $ (26,288) $ (735)
(1)Executive transition charges include stock-based compensation costs of $13.4
million and salary expense of $0.5 million related to former CTO's retirement.
(2)Transaction costs of $3.3 million attributable to the liability classified
earnout shares and $0.1 million of write-off of debt issuance costs.
(3)Regulatory and legal matters include legal, advisory, and other professional
service fees incurred in connection with the short-seller analyst article from
September 2021 , and investigations and litigation related thereto.
Liquidity and Capital Resources
As ofSeptember 30, 2021 , we had$498.0 million in unrestricted cash, positive working capital of$510.8 million , and retained earnings of$2.8 million . The Business Combination closed onJuly 16, 2021 , generated proceeds of approximately$509.0 million of cash, net of transaction costs and redemptions. We believe that our current cash balance will provide adequate liquidity during the 12-month period followingSeptember 30, 2021 . Our future capital requirements will depend on many factors, including, but not limited to, the rate of our growth, our ability to generate sufficient revenue from commercial vehicle sales and leases to cover operating expenses, working capital expenditures, and additional cash resources due to changed business conditions or other developments, including supply chain challenges, disruptions due to COVID-19, competitive pressures, and regulatory developments, among other developments. Further, we may enter into future arrangements to acquire or invest in businesses, products, services, strategic partnerships, and technologies. As such, we may be required to seek additional equity and/or debt financing. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations may be materially and adversely affected. Debt
As of
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Cash Flows
Cash Flows for the nine Months Ended
Cash Flows from Operating Activities
Net cash used in operating activities was$52.2 million for the nine months endedSeptember 30, 2021 , as compared to negligible cash provided for the period fromJanuary 21, 2020 (Inception) throughSeptember 30, 2020 . The cash flows used in operating activities for the nine months endedSeptember 30, 2021 was driven by net income of$15.7 million and adjusted for certain non-cash items and changes in operating assets and liabilities. Non-cash gain adjustments primarily consisted of changes in fair value of the private placement warrant of$7.6 million and earnout liabilities of$73.4 million . These non-cash gain adjustments were partially offset by$29.0 million stock-based compensation expense and$0.7 million in depreciation and amortization. Changes in operating assets and liabilities were primarily driven by$25.3 million in prepayments for vehicle inventory, production equipment, other supplier deposits and D&O insurance, and$12.0 million in inventory purchases. The cash flows provided by operating activities for the period fromJanuary 21, 2020 (Inception) throughSeptember 30, 2020 was driven by recording a net loss of$0.9 million , slightly outweighed by changes in operating assets and liabilities. Cash Flows from Investing Activities Net cash used in investing activities was$17.6 million for the nine months endedSeptember 30, 2021 , as compared to$0.1 million for the period fromJanuary 21, 2020 (Inception) throughSeptember 30, 2020 . The cash flows used in investing activities for the nine months endedSeptember 30, 2021 were primarily due to$7.2 million in capital expenditures, as well as,$4.0 million in machinery and equipment deposits to begin production of hydrogen fuel cell systems and assembly of hydrogen storage systems, and$4.9 million investments in equity securities of NRG and Raven SR. The$7.2 million in capital expenditures were comprised of approximately$2.3 million related to acquiring a facility nearRochester, NY ,$3.0 million in machinery equipment and$1.9 million in R&D assets. There were no similar purchases or investments in the periodJanuary 21, 2020 (Inception) throughSeptember 30, 2020 .
Cash Flows from Financing Activities
Net cash provided by financing activities was$554.2 million for the nine months endedSeptember 30, 2021 , as compared to$0.6 million for the period fromJanuary 21, 2020 (Inception) throughSeptember 30, 2020 . The cash flows provided by financing activities for the nine months endedSeptember 30, 2021 was due primarily to$509.0 million in proceeds from the Business Combination, net of transaction costs allocated to equity and redemption and$45.0 million in proceeds from issuance of convertible debt. The cash flows provided by financing activities for the period fromJanuary 21, 2020 (Inception) throughSeptember 30, 2020 was due primarily to$0.5 million in proceeds from issuance of convertible debt.
Contractual Obligations and Commitments
Hyzon's contractual obligations and other commitments as ofSeptember 30, 2021 , include payments totaling$10.0 million in the aggregate due in 2021 to JS Horizon and JS Powertrain, pursuant to the terms of the Horizon IP Agreement. Please see the section below entitled "Intellectual Property" for additional information concerning the Horizon IP Agreement. This liability is reported under Horizon license agreement payable on the Condensed Consolidated Balance Sheets as ofSeptember 30, 2021 . Subsequent toSeptember 30, 2021 ,$6.9 million was paid and the remainder is expected to be paid inDecember 2021 .
Off-Balance Sheet Arrangements
We do not maintain any off-balance sheet arrangements, transactions, obligations
or other relationships with unconsolidated entities that would be expected to
have a material current or future effect upon our financial condition or results
of operations.
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Critical Accounting Policies and Estimates
Our condensed consolidated financial statements and accompanying notes are
prepared in accordance with accounting principles generally accepted in the
United States of America . Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's applications of accounting policies. Certain policies are
particularly important to the portrayal of our financial position and results of
operations and require the application of significant judgment by management to
determine appropriate assumptions to be used in certain estimates; as a result,
they are subject to an inherent degree of uncertainty and are considered
critical. Accordingly, we believe the following policies are the most critical
to aid in fully understanding and evaluating our financial condition and results
of operations.
Revenue
The Company accounts for revenue in accordance with ASC 606. Revenue is based on
the amount of transaction price to which the Company is entitled, subject to the
allocation of the transaction price to distinct performance obligations. The
Company recognizes revenue when its customer obtains control of promised goods
or services in an amount that reflects the consideration for which the Company
expects to receive in exchange for those goods or services. To determine revenue
recognition, the Company performs the following five steps: (1) identify the
contract(s) with a customer, (2) identify the performance obligations in the
contract, (3) determine the transaction price, (4) allocate the transaction
price to the performance obligations in the contract and (5) recognize revenue
when (or as) the entity satisfies a performance obligation.
When it determines it is not probable that it will collect all of the
consideration to which it will be entitled under a customer contract, the
Company concludes the contract existence criteria under ASC 606 are not met. In
these cases, the Company recognizes revenue to the extent of consideration
received provided the amounts are non-refundable, the Company has transferred
control of the goods or services to which the consideration relates, the Company
has stopped transferring goods or services, and there is no obligation to
transfer additional services.
The Company recognizes the incremental costs of obtaining contracts, including
commissions, as an expense when incurred as the contractual period of the
Company's arrangements are expected to be one year or less. Amounts billed to
customers related to shipping and handling are classified as revenue, and the
Company has elected to recognize the cost for freight and shipping when control
over vehicles, parts, or accessories has transferred to the customer as an
expense in cost of revenue.
Product Sales
The Company enters into sales contracts with customers for the purchase of the Company's products and services including fuel cell systems, FCEVs, parts, product support, and other related services. The Company considers order confirmations or purchase orders, which in some cases are governed by master vehicle supply agreements, to be contracts with a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of product(s) or service to a customer. On standard vehicle sales contracts, revenues are recognized at a point in time when customers obtain control of the vehicle, which among other indicators, is generally when transfer of title and risks and rewards of ownership of goods have passed and when the Company has a present right to payment. Provisions for warranties are made at the time of sale. Sales, value-added, and other taxes collected concurrent with revenue producing activities are excluded from revenue. Payment terms for sales of FCEVs to certain customers have included installment billing terms to fund the Company's working capital requirements. The Company does not adjust the transaction price for a significant financing component when the performance obligation is expected to be fulfilled within a year as the amount is not material. InChina , the Company has granted extended payment terms to customers, which resulted in the Company concluding collection of all of the consideration under the contract is not probable. As a result, the contract existence criteria is not met and revenue is recognized under the Alternative Method of Revenue Recognition, which may not be in the same period that control of the related goods is transferred to the customers. The Company does not include a right of return on its products other than rights related to standard warranty provisions that permit repair or replacement of defective goods. 43 -------------------------------------------------------------------------------- Table of Contents Retrofit Services The Company also enters into contracts with customers to retrofit ICE vehicles to FCEVs. In general, the customer controls any work in process arising from the Company's performance; and the Company has in effect agreed to sell its rights to the work as it performs on a continuous basis. Revenue from these contracts is generally recognized over time utilizing an input method. Under the input method, the extent of progress towards completion is measured based on the ratio of normal costs incurred to date to the total estimated costs at completion of the performance obligation. Unexpected amounts of wasted materials, labor or other resources are excluded from the cost-to-cost measure of progress. The Company believes that this method is the most accurate representation of the Company's performance, because it directly measures the value of the services transferred to the customer over time as the Company incurs costs on its contracts. Contract costs include all direct materials, labor, and indirect costs related to contract performance, which may include indirect labor, supplies, tools, repairs and depreciation costs. The amount of revenue recognized for these contracts in a period is dependent on our ability to estimate total contract costs. The Company continually evaluates its estimates of total contract costs based on available information and experience.
Share-based Compensation
We measure and recognize compensation expense for all stock options and restricted stock awards based on the estimated fair value of the award on the grant date. The fair value is recognized as expense over the requisite service period, which is generally the vesting period of the respective award, on a straight-line basis when the only condition to vesting is continued service. If vesting is subject to a market or performance condition, recognition is based on the derived service period of the award. Expense for awards with performance conditions is estimated and adjusted based upon the assessment of the probability that the performance condition will be met. We use the Black-Scholes option pricing model to estimate the fair value of stock option awards with service and/or performance conditions. The Black-Scholes option pricing model requires management to make a number of assumptions, including the expected life of the option, the volatility of the underlying stock, the risk-free interest rate and expected dividends. The assumptions used in our Black-Scholes option-pricing model represent our best estimates at the time of grant. These estimates involve a number of variables, uncertainties and assumptions and the application of our judgment, as they are inherently subjective. If any assumptions change, our stock-based compensation expense could be materially different in the future.
These assumptions are estimated as follows:
•Fair Value of Common Stock. The grant date fair value of our common stock utilized in the calculation of share-based compensation was determined using valuation methodologies which utilize certain assumptions, including observations of comparable equity values and transactions, probability weighting of events, time to liquidation, a risk-adjusted interest rate, and assumptions regarding our projected future cash flows and growth potential.
•Expected Term. The expected term represents the period that our stock options are expected to be outstanding.
•Expected Volatility. We determine the price volatility factor based on the historical volatilities of our publicly traded peer group as Hyzon does not have a long trading history for our common stock. Industry peers consist of several public companies in the automotive and energy storage industry that are similar to Hyzon in size, stage of life cycle, and financial leverage. •Risk-Free Interest Rate. The risk-free interest rate was based onU.S. Treasury zero-coupon securities with maturities consistent with the estimated expected term.
•Expected Dividend Yield. We have not paid dividends on our common stock nor do we expect to pay dividends in the foreseeable future.
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Warrant Liabilities
We account for warrants as either equity-classified or liability-classified
instruments based on an assessment of the warrant's specific terms and
applicable authoritative guidance in ASC 480 and ASC 815. The assessment
considers whether the warrants are freestanding financial instruments pursuant
to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether
the warrants meet all of the requirements for equity classification under ASC
815, including whether the warrants are indexed to the Company's own common
stock and whether the warrant holders could potentially require "net cash
settlement" in a circumstance outside of the Company's control, among other
conditions for equity classification. 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 warrants are outstanding.
We account for the Public Warrants as equity and account for the Private
Placement Warrants, in connection with the Business Combination, as liabilities.
In accordance with ASC 815, the Private Placement Warrants do not meet the
criteria for equity classification and must be recorded as liabilities. As the
Private Placement Warrants meet the definition of a derivative as contemplated
in ASC 815, the warrants are measured at fair value at inception and remeasured
at each reporting date.
We, with the assistance of third-party valuations, utilize the binominal lattice
valuation model ("BLM") to estimate the fair value of Private Placement Warrants
at each reporting date. The application of the BLM utilizes significant
unobservable assumptions, including volatility. Significant judgment is required
in determining the expected volatility of our common stock.
Earnout Liability
The earnout shares with Legacy Hyzon's common stockholders are accounted for as a liability. In accordance with ASC 815, the earnout shares with Legacy Hyzon common stockholders do not meet the criteria for equity classification and must be recorded as liabilities. Pursuant to ASC 805 initial measurement of these earnout shares are measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. As these earnout shares meet the definition of a derivative as contemplated in ASC 815, they are remeasured at each reporting date. Changes in fair value are recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). The earnout shares to other holders of outstanding equity awards are accounted for in accordance with ASC 718, Stock Compensation, as they relate to stock-based compensation awards issued in exchange for service provided or to be provided to the Company. We recognized the earnout shares to other equity holders as separate and incremental awards from other equity holders' underlying stock-based compensation awards. Upon the close of the Business Combination, we became contingently obligated to issue earnout shares if the vesting conditions were met. However, for unvested equity awards and where grant date was not established, we did not recognize any expense. We, with the assistance of third-party valuations, utilize theMonte-Carlo valuation model to estimate the fair value of earnout shares at each reporting date. The application of theMonte-Carlo pricing model utilizes significant unobservable assumptions, including volatility. Significant judgment is required in determining the expected volatility of our common stock.Monte Carlo analysis simulates the future path of the Company's stock price over the earnout period. The carrying amount of the liability may fluctuate significantly and actual amounts paid may be materially different from the liability's estimated value.
Equity Valuations
For all periods prior to the consummation of the Business Combination, there was
not a market for our equity. Accordingly, valuations of our equity instruments
require the application of significant estimates, assumptions, and judgments.
These valuations impact share-based compensation reported in our condensed
consolidated financial statements. The following discussion provides additional
details regarding the significant estimates, assumptions, and judgments that
impact the determination of the fair values of share-based compensation awards
and the common stock that comprises our capital structure. The following
discussion also explains why these estimates, assumptions, and judgments could
be subject to uncertainties and future variability.
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Common Stock Valuations
We use valuations of our common stock for various purposes, including, but not
limited to, the determination of the exercise price of stock options and
inclusion in the Black-Scholes option pricing model. As a privately held
company, the lack of an active public market for our common stock requires our
management and board of directors to exercise reasonable judgment and consider a
number of factors in order to make the best estimate of fair value of our
equity. As our capital structure consists of a single class of equity, Hyzon,
with the assistance of a third-party valuation specialist, estimates the fair
value of our total equity value using a combination of the comparable sales
method (a market approach) and the excess earnings method (an income approach).
Estimating our total equity value requires the application of significant
judgment and assumptions. Factors considered in connection with estimating these
values include:
•Recent arms-length transactions involving the sale or transfer of our common stock;
•Our historical financial results and future financial projections;
•The market value of equity interests in substantially similar businesses, which equity interests can be valued through nondiscretionary, objective means;
•The lack of marketability of our common stock;
•The likelihood of achieving a liquidity event, such as the business combination, given prevailing market conditions;
•Industry outlook; and
•General economic outlook, including economic growth, inflation and unemployment, interest rate environment and global economic trends.
The fair value ultimately assigned to our common stock may take into account any number or combination of the various factors described above, based upon their applicability at the time of measurement. Determination of the fair value of our common stock also may involve the application of multiple valuation methodologies and approaches, with varying weighting applied to each methodology as of the grant date. Application of these approaches involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses, and future cash flows; discount rates; market multiples; the selection of comparable companies; and the probability of possible future events. Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact our valuations as of each valuation date and may have a material impact on the valuation of our common stock. As ofNovember 12, 2020 , the estimated fair value of our common stock was$2.00 per share. In making this determination, we relied upon the previous Round A equity financing, which closed onNovember 12, 2020 as being the only reliable indication of fair value of our common stock before (and including)December 1, 2020 . The price of the Round A capital raise was$2.00 per share of our common stock. The estimated fair value of our common stock was$4.45 per share as ofDecember 31, 2020 . The increase in fair value was primarily due to our making progress and taking necessary steps to prepare for the Business Combination. The necessary steps undertaken to prepare for the Business Combination included meeting with DCRB and financial advisors, discussing timing expectations, negotiating a non-binding letter of intent and signing a binding exclusivity agreement between DCRB and Hyzon. As our ongoing negotiations related to the Business Combination reflected an increased likelihood of a near-term exit transaction and/or liquidity event, the valuation of our equity as ofDecember 31, 2020 took into consideration the indicated equity value implied by the negotiations. While theDecember 31, 2020 valuation incorporated indicated equity values based upon traditional income and market approaches, consisting of the excess earnings method and comparable sales method. the valuation also incorporated the equity value implied by the business combination. Accordingly, the valuation applied the probability-weighted expected return method (PWERM) to weight the indicated equity value determined under the traditional income and market approaches and the equity value implied by our expected business combination with DCRB. Due to the proximity in time and observability, management placed the most significant weighting on the value as implied by the comparable sales method. 46 -------------------------------------------------------------------------------- Table of Contents The estimated fair value of our common stock was$9.90 per share as ofJune 30, 2021 . The increase in fair value fromDecember 31, 2020 toJune 30, 2021 was primarily due to Hyzon executing a non-binding letter of intent with DCRB inJanuary 2021 and signing a Business Combination Agreement with DCRB as well as issuing a convertible note payable in the amount of$45 million inFebruary 2021 . In addition, Hyzon made progress in procuring new orders from customers during the six months endedJune 30, 2021 . As ofJune 30, 2021 , the estimated fair value of our common stock was$9.90 per share, which equates to an implied equity value of$1.0 billion . The primary difference between the fair value derived onJune 30, 2021 and the fair value implied by the Business Combination is that the fair value implied by the Business Combination is based only upon a scenario in which the parties complete the Business Combination and is not probability weighted, in contrast to theJune 30, 2021 valuation, which considered multiple potential outcomes, some of which would have resulted in a lower value of our common stock than its implied transaction value. Following the Business Combination with DCRB, it is no longer necessary for our management and its board of directors to estimate the fair value of our common stock, as the Class A common stock is traded in the public market.
Emerging Growth Company Status
Section 102(b)(1) of the 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 Exchange Act) 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 an election to opt out is irrevocable. Hyzon 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, Hyzon, 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 Hyzon is no longer considered to be an emerging growth company. At times, Hyzon may elect to early adopt a new or revised standard. In addition, Hyzon intends to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an emerging growth company, Hyzon intends to rely on such exemptions, Hyzon is not required to, among other things: (a) provide an auditor's attestation report on Hyzon's system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; (b) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act; (c) comply with any requirement that may be adopted by thePublic Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (d) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer's compensation to median employee compensation. Hyzon will remain an emerging growth company under the JOBS Act until the earliest of (a) the last day of Hyzon's first fiscal year following the fifth anniversary of the closing of DCRB's initial public offering, (b) the last date of Hyzon's fiscal year in which Hyzon has total annual gross revenue of at least$1.07 billion , (c) the date on which Hyzon is deemed to be a "large accelerated filer" under the rules of theSEC with at least$700.0 million of outstanding securities held by non-affiliates or (d) the date on which Hyzon has issued more than$1.0 billion in non-convertible debt securities during the previous three years.
Material Transactions with Related Parties
Horizon IP Agreement
InJanuary 2021 , Hyzon entered into the Horizon IP Agreement with JS Horizon, part of the Horizon group of Companies, and inSeptember 2021 JS Powertrain was an added party to the agreement. Pursuant to the agreement the parties convey to each other certain rights in intellectual property relating to Hyzon's core fuel cell and mobility product technologies, under which Hyzon will pay JS Horizon and JS Powertrain a total fixed payment of$10.0 million in 2021. Subsequent toSeptember 30, 2021 ,$6.9 million was paid and the remainder is expected to be paid inDecember 2021 . 47 -------------------------------------------------------------------------------- Table of Contents Horizon Supply Agreement InJanuary 2021 , Hyzon entered into a supply agreement withJiangsu Horizon New Energy Technologies Co. Ltd , a wholly owned subsidiary of Horizon, to supply certain fuel cell components. During the three months endedMarch 31, 2021 , the Company made a deposit payment to Horizon in the amount of$5.0 million for long lead time components. This payment is included in prepaid expenses as none of the components have yet been received as ofSeptember 30, 2021 .
Holthausen and Affiliates
The Company entered into a joint venture agreement inOctober 2020 to create Hyzon Europe with Holthausen. As Hyzon Europe builds out its production facilities, it relies on Holthausen for certain production resources that result in related party transactions. In addition, both companies rely on certain suppliers including Horizon.
In
As of
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