This report contains forward-looking statements and can be identified by the
words "anticipate," "believe," "expect," "estimate," "intend," "plan," "will",
and similar expressions. These are statements that relate to future periods and
include our financial and business performance; expected timing with respect to
the expansion of our manufacturing facilities, joint venture with Iveco and
production and attributes of our BEV and FCEV trucks; expectations regarding our
hydrogen fuel station rollout plan and hydrogen strategy; timing of completion
of validation testing, volume production and other milestones; securing
components for our trucks on acceptable terms and in a timely manner, or at all;
changes in our strategy, future operations, financial position, estimated
revenues and losses, projected costs, prospects and plans; planned collaboration
with our business partners; our future capital requirements and sources and uses
of cash; the potential outcome of investigations, litigation, complaints,
product liability claims and/or adverse publicity; the implementation, market
acceptance and success of our business model; developments relating to our
competitors and industry; the impact of health epidemics, including the COVID-19
pandemic, on our business and the actions we may take in response thereto; our
expectations regarding our ability to obtain and maintain intellectual property
protection and not infringe on the rights of others; our ability to obtain
funding for our operations; the outcome of any known and unknown regulatory
proceedings; our business, expansion plans and opportunities; changes in
applicable laws or regulations; and anticipated trends and challenges in our
business and the markets in which we operate.
Forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those expected. These risks and
uncertainties include, but are not limited to, those risks discussed in Item 1A
of this report, as well as our ability to execute our business model, including
market acceptance of our planned products and services; changes in applicable
laws or regulations; risks associated with the outcome of any legal, regulatory,
or judicial proceeding; the effect of the COVID-19 pandemic on our business;
supply chain constraints; the impact of inflation; our ability to raise capital;
our ability to compete; the success of our business collaborations; regulatory
developments in the United States and foreign countries; the possibility that we
may be adversely affected by other economic, business, and/or competitive
factors; and our history of operating losses. These forward-looking statements
speak only as of the date hereof. We expressly disclaim any obligation or
undertaking to update any forward-looking statements contained herein to reflect
any change in our expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
In this report, all references to "Nikola," "we," "us," or "our" mean Nikola
Corporation.
Nikola™ is a trademark of Nikola Corporation. We also refer to trademarks of
other corporations and organizations in this report.
The below discussion should be read in conjunction with Management's Discussion
and Analysis of Financial Condition and Results of Operations and the audited
consolidated financial statements and notes thereto included in our Annual
Report on Form 10-K for the year ended December 31, 2021.
Overview
We are a technology innovator and integrator, working to develop innovative
energy and transportation solutions. We are pioneering a business model that
will enable corporate customers to integrate next-generation truck technology,
hydrogen fueling infrastructure, and related maintenance. By creating this
ecosystem, we and our strategic business partners and suppliers hope to build a
long-term competitive advantage for clean technology vehicles and next
generation fueling solutions.
Our expertise lies in design, innovation, and software and engineering. We
assemble, integrate, and commission our vehicles in collaboration with our
business partners and suppliers. Our approach includes leveraging strategic
partnerships to help lower cost, increase capital efficiency and increase speed
to market.
We operate in two business units: Truck and Energy. The Truck business unit is
developing and commercializing BEV and FCEV Class 8 trucks that provide
environmentally friendly, cost-effective solutions to the short, medium and long
haul trucking sector. The Energy business unit is primarily developing a
hydrogen fueling ecosystem and charging stations to support our BEV and FCEV
customers.
Our planned hydrogen fueling ecosystem is expected to include hydrogen
production and/or hydrogen procurement, hydrogen distribution, and hydrogen
storage and dispensing. As part of our hydrogen strategy, on June 22, 2021, we
entered into
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a purchase agreement ("Offtake Agreement") with Wabash Valley Resources LLC
("WVR"), pursuant to which WVR agreed to sell to us, and we agreed to purchase
from WVR, hydrogen to be produced from the hydrogen production facility being
developed by WVR in West Terre Haute, Indiana (the "Plant"), once completed.
During 2020, we established a joint venture with Iveco, a subsidiary of CNHI,
Nikola Iveco Europe GmbH. Our joint venture with Iveco provides us with the
manufacturing infrastructure to build BEV trucks for the North American market
in addition to that of our greenfield manufacturing facility in Coolidge,
Arizona. The operations of the joint venture commenced during the fourth quarter
of 2020. During the second quarter of 2021, the joint venture completed the
construction of the manufacturing facility and started trial production for the
Nikola Tre BEV on the assembly line in Ulm, Germany.
We expect both our capital and operating expenditures will increase
significantly in connection with our ongoing activities, as we:
• expand manufacturing facilities and purchase related equipment;
• commercialize our heavy-duty trucks and other products;
• develop hydrogen fueling stations;
• continue to invest in our technology;
• increase our investment in marketing and advertising, sales, and distribution
infrastructure for our products and services;
• maintain and improve our operational, financial and management information
systems;
• hire additional personnel;
• obtain, maintain, expand, and protect our intellectual property portfolio;
and
• operate as a public company.
Recent Developments
•On March 21, 2022, we started serial production of the Nikola Tre BEV at our
Coolidge, Arizona manufacturing facility with deliveries to our dealers
beginning in the second quarter of 2022.
•As of April 30, 2022, our dealers have received purchase orders for 134 Nikola
Tre BEVs.
•Completed the Phase 1 expansion of our Coolidge, Arizona manufacturing
facility, providing us with a production capacity of 2,500 trucks for 2022.
•Tre FCEV Alpha pilot testing with Anheuser-Busch in Southern California has
successfully concluded. The FCEV Alphas are scheduled to begin a pilot test with
TTSI in drayage operations.
•On March 23, 2022, we announced our expanded partnership with Alta Equipment
Group covering the Arizona sales and service territory.
•On March 29, 2022, we signed an agreement with ENGS Commercial Finance Co.
("ENGS") to facilitate the sale of Class 8 Nikola Tre BEVs and FCEVs. Working
directly through our dealer network, ENGS will offer customer finance solutions
for the purchase of our vehicles, charging assets and infrastructure
requirements to offer a broad range of financial solutions to the customers.
Key Factors Affecting Operating Results
We believe that our performance and future success depend on several factors
that present significant opportunities for us but also pose risks and
challenges, including those discussed below and in the section titled "Risk
Factors."
We completed pre-series Tre BEV trucks and have started serial production at our
Coolidge manufacturing facility. We expect to derive revenue from our Tre BEV
trucks in the second quarter of 2022 and from our Tre FCEV trucks in the second
half of 2023. From the start of serial production through April 30, 2022, we
have produced 11 Tre BEV trucks and shipped 11
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Tre BEV trucks to our dealer network. Presently, we are experiencing supply
chain shortages, including but not limited to battery cells, integrated
circuits, vehicle control chips, and displays. This has resulted in delays and
may continue to cause delays in the availability of saleable Nikola Tre BEV
trucks and impact our ability to generate revenue.
We also require substantial additional capital to develop our products and
services and fund operations for the foreseeable future. Until we can generate
sufficient revenue, we expect to finance our operations through a combination of
existing cash on hand, follow-on public offerings, private placements, debt
financings, strategic partnerships, and licensing arrangements. The amount and
timing of our future funding requirements will depend on many factors, including
the pace and results of our development efforts.
Basis of Presentation
Currently, we conduct business through one operating segment. See Note 2 in our
Annual Report on Form 10-K for the year ended December 31, 2021 for more
information.
Components of Results of Operations
Revenues
Truck sales: We expect the majority of our revenue to be derived from our BEV
trucks starting in the second quarter of 2022 and from bundled leases, or other
alternative structures, for our FCEV trucks beginning in the second half of
2023. We intend for our bundled lease offering to be inclusive of the cost of
the truck, hydrogen fuel and regularly scheduled maintenance.
Service and other: We began generating sales from deliveries of Mobile Charging
Trailers ("MCTs") to dealers and customers in the first quarter of 2022.
Cost of Revenues
Truck sales: Once we begin deliveries of our trucks, cost of revenue will
include direct parts, material and labor costs, manufacturing overhead,
including amortized tooling costs and depreciation of our Coolidge manufacturing
facilities, depreciation of our hydrogen fueling stations, cost of hydrogen
production, shipping and logistics costs and reserves for estimated warranty
expenses.
Service and other: Cost of revenues related to MCT sales primarily include
direct parts, materials, outsourced manufacturing services, and fulfillment
costs.
Research and Development Expense
Research and development expenses consist primarily of costs incurred for the
discovery and development of our vehicles, which include:
• Fees paid to third parties such as consultants and contractors for outside
development;
• Expenses related to materials, supplies and third-party services, including
prototype tooling and non-recurring engineering;
• Personnel related expenses, including salaries, benefits, and stock-based
compensation expense, for personnel in our engineering and research functions;
• Depreciation for prototyping equipment and R&D facilities; and
•Expenses related to operating the Coolidge manufacturing facility until the
start of commercial production.
During the three months ended March 31, 2022, our research and development
expenses have primarily been incurred in the development of our BEV and FCEV
trucks.
We expect our research and development costs to increase for the foreseeable
future as we continue to invest to achieve our technology and product roadmap
goals.
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Selling, General, and Administrative Expense
Selling, general, and administrative expenses consist of personnel related
expenses for our corporate, executive, finance, and other administrative
functions, expenses for outside professional services, including legal, audit
and accounting services, as well as expenses for facilities, depreciation,
amortization, travel, and marketing costs. Personnel related expenses consist of
salaries, benefits, and stock-based compensation.
We expect our selling, general, and administrative expenses to increase for the
foreseeable future as we scale headcount with the growth of our business, and as
a result of operating as a public company.
Interest Expense, net
Interest expense consists of interest on our promissory note and finance lease
liabilities. Interest income consists primarily of interest received or earned
on our cash and cash equivalents balances.
Revaluation of Warrant Liability
The revaluation of warrant liability includes net gains and losses from the
remeasurement of the warrant liability. Warrants recorded as liabilities are
recorded at their fair value and remeasured at each reporting period.
Other Income, net
Other income, net consists primarily of other miscellaneous non-operating items,
such as government grants, subsidies, merchandising, revaluation gains and
losses on the derivative liability, foreign currency gains and losses, and
unrealized gains and losses on investments.
Income Tax Expense
Our 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. Due to cumulative losses, we maintain a
valuation allowance against our U.S. and state deferred tax assets.
Equity in Net Loss of Affiliates
Equity in net loss of affiliates consists of our portion of net gains and losses
from equity method investments.
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Results of Operations
Comparison of Three Months Ended March 31, 2022 to Three Months Ended March 31,
2021
The following table sets forth our historical operating results for the periods
indicated:
Three Months Ended March 31, $ %
2022 2021 Change Change
(in thousands, except share and per share data)
Revenues:
Truck sales $ - $ - $ - NM
Services and other 1,887 - 1,887 NM
Total revenues 1,887 - 1,887 NM
Total cost of revenues:
Truck sales - - - NM
Services and other 1,456 - 1,456 NM
Total cost of revenues 1,456 - 1,456 NM
Gross profit 431 - 431 NM
Operating expenses:
Research and development 74,557 55,163 19,394 35.2%
Selling, general, and administrative 77,183 65,427 11,756 18.0%
Total operating expenses 151,740 120,590 31,150 25.8%
Loss from operations (151,309) (120,590) (30,719) 25.5%
Other income (expense):
Interest expense, net (211) (9) (202) NM
Revaluation of warrant liability (434) 951 (1,385) (145.6)%
Other income, net 1,833 219 1,614 NM
Loss before income taxes and equity in net (30,692)
loss of affiliates (150,121) (119,429) 25.7%
Income tax expense - 1 (1) NM
Loss before equity in net loss of affiliates (150,121) (119,430) (30,691) 25.7%
Equity in net loss of affiliates (2,820) (794) (2,026) NM
Net loss $ (152,941) $ (120,224) $ (32,717) 27.2%
Net loss per share:
Basic $ (0.37) $ (0.31) $ (0.06) NM
Diluted $ (0.37) $ (0.31) $ (0.06) NM
Weighted-average shares outstanding:
Basic 415,152,656 392,189,851 22,962,805 NM
Diluted 415,152,656 392,489,761 22,662,895 NM
Revenues
Revenues were $1.9 million during the three months ended March 31, 2022, driven
by sales of MCT units during the quarter.
Costs of revenue increased by $1.5 million during the three months ended
March 31, 2022. The increase was driven by direct parts, materials, outsourced
services, and fulfillment costs related to the MCTs delivered in the first
quarter of 2022.
Research and Development
Research and development expenses increased by $19.4 million, or 35.2%, from
$55.2 million during the three months ended March 31, 2021 to $74.6 million
during the three months ended March 31, 2022. This increase was primarily due to
an increase of $10.9 million for personnel costs driven by growth in our
in-house engineering headcount. In addition, we incurred an increase of
$6.1 million in freight costs related to the transportation of parts and
prototype components and $3.9 million
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increase in costs for parts and prototype components. Further, there was an
increase of $2.5 million driven by depreciation and occupancy costs related to
equipment, software, and facilities dedicated to research and development
activities and an increase of $1.6 million in professional services, travel, and
tooling. These increases were partially offset by a decrease of $3.7 million in
outside development and a decrease in stock based compensation of $1.6 million.
Selling, General, and Administrative
Selling, general, and administrative expenses increased by $11.8 million, or
18.0%, from $65.4 million during the three months ended March 31, 2021 to $77.2
million during the three months ended March 31, 2022. The increase was driven by
an increase in personnel expense of $5.1 million and an increase in stock based
compensation of $4.9 million due to an increase in headcount. Additionally,
there was an increase in general corporate expenses of $3.2 million, including
IT, marketing, business insurance, travel and professional services. These
increases were partially offset by a decrease in legal expenses of $1.4 million.
Legal expenses in the first quarter of 2022 primarily consist of expenses for
our founder and former executive chairman's attorneys' fees under his
indemnification agreement with the Company.
Interest Expense, net
Interest expense, net was immaterial for the three months ended March 31, 2022
and 2021.
Revaluation of Warrant Liability
The revaluation of warrant liability decreased $1.4 million, from a $1.0 million
gain during the three months ended March 31, 2021 to a $0.4 million loss during
the three months ended March 31, 2022, resulting from changes in fair value of
our warrant liability.
Other Income, net
Other income, net increased by $1.6 million from $0.2 million during the three
months ended March 31, 2021 to $1.8 million during the three months ended
March 31, 2022. The increase is primarily related to government grant income,
gains from foreign currency translation and a gain from the revaluation of the
derivative liability.
Income Tax Expense
Income tax expense was immaterial for the three months ended March 31, 2022 and
2021. We have accumulated net operating losses at the federal and state level
and maintain a full valuation allowance against our net deferred taxes.
Equity in Net Loss of Affiliates
Equity in net loss of affiliates increased by $2.0 million, from $0.8 million
for the three months ended March 31, 2021 to $2.8 million for the three months
ended March 31, 2022. The increase was driven by additional losses of
$2.0 million in the current period related to Nikola Iveco Europe GmbH.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, we believe the
following non-GAAP measures are useful in evaluating operational performance. We
use the following non-GAAP financial information to evaluate 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 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 and other items
determined by management. Adjusted EBITDA is intended as a supplemental measure
of our performance that is 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
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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 loss to EBITDA
and Adjusted EBITDA below and not rely on any single financial measure to
evaluate our business.
The following table reconciles net loss to EBITDA and Adjusted EBITDA for the
three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
2022 2021
(in thousands)
Net loss $ (152,941) $ (120,224)
Interest expense, net 211 9
Income tax expense - 1
Depreciation and amortization 3,111 1,805
EBITDA (149,619) (118,409)
Stock-based compensation 53,528 50,266
Revaluation of warrant liability 434 (951)
Revaluation of derivative liability (437) -
Equity in net loss of affiliates 2,820 794
Regulatory and legal matters (1) 14,122 14,866
Adjusted EBITDA $ (79,152) $ (53,434)
(1) Regulatory and legal matters include legal, advisory, and other professional
service fees incurred in connection with the short-seller article from September
2020, and investigations and litigation related thereto.
Non-GAAP Net Loss and Non-GAAP Net Loss Per Share, Basic and Diluted
Non-GAAP net loss and non-GAAP net loss per share, basic and diluted are
presented as supplemental measures of our performance. Non-GAAP net loss is
defined as net loss attributable to common stockholders, basic and diluted
adjusted for stock compensation expense and other items determined by
management. Non-GAAP net loss per share, basic and diluted, is defined as
non-GAAP net loss divided by weighted average shares outstanding, basic and
diluted.
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Three Months Ended
March 31,
2022 2021
(in thousands, except share and per
share data)
Net loss $ (152,941) $ (120,224)
Stock-based compensation 53,528 50,266
Revaluation of warrant liability 434 (951)
Revaluation of derivative liability (437) -
Regulatory and legal matters(1) 14,122 14,866
Non-GAAP net loss $ (85,294) $ (56,043)
Non-GAAP net loss per share:
Basic $ (0.21) $ (0.14)
Diluted $ (0.21) $ (0.14)
Weighted average shares outstanding:
Basic 415,152,656 392,189,851
Diluted 415,152,656 392,489,761
(1) Regulatory and legal matters include legal, advisory, and other professional
service fees incurred in connection with the short-seller article from September
2020, and investigations and litigation related thereto.
Liquidity and Capital Resources
Since inception, we financed our operations primarily from the sales of
redeemable convertible preferred stock and common stock, the Business
Combination, a private placement with investors (the "PIPE"), proceeds from the
Tumim Purchase Agreements, and redemption of warrants. As of March 31, 2022, our
principal sources of liquidity were our cash and cash equivalents in the amount
of $360.1 million. During 2021, we entered into a common stock purchase
agreement with Tumim (the "First Tumim Purchase Agreement") allowing us to issue
shares of our common stock to Tumim for proceeds of up to $300.0 million. During
the three months ended March 31, 2022, we sold 3,643,644 shares of common stock
for proceeds of $27.4 million under the terms of the First Tumim Purchase
Agreement. As of March 31, 2022 we have issued in aggregate 17,857,142 shares of
common stock to Tumim under the terms of the First Tumim Purchase Agreement for
gross proceeds of $191.2 million, excluding the 155,703 commitment shares issued
to Tumim as consideration for its irrevocable commitment to purchase shares of
our common stock under the First Tumim Purchase Agreement. As of March 31, 2022,
there were 17,025,590 registered shares remaining and a remaining commitment
available under the First Tumim Purchase Agreement of $108.8 million.
During 2021, we entered into a second common stock purchase agreement with Tumim
(the "Second Tumim Purchase Agreement" and, together with the First Tumim
Purchase Agreement, the "Tumim Purchase Agreements") allowing us to issue shares
of our common stock to Tumim for proceeds of up to an additional $300.0 million,
provided that certain conditions have been met. These conditions include
effectiveness of a registration statement covering the resale of shares of
common stock that have been and may be issued under the Second Tumim Purchase
Agreement and termination of the First Tumim Purchase Agreement. As of March 31,
2022, we have not sold any shares of common stock to Tumim under the terms of
the Second Tumim Purchase Agreement with 28,790,787 registered shares remaining
and a remaining commitment of $300.0 million available.
Short-Term Liquidity Requirements
As of March 31, 2022, our current assets were $419.0 million consisting
primarily of cash and cash equivalents of $360.1 million, and our current
liabilities were $183.6 million primarily comprised of accrued expenses and
accounts payables.
We believe our cash and cash equivalents will be sufficient to continue to
execute our business strategy over the next twelve-month period by completing
the development and industrialization of the BEV truck, completing phase one
construction of our greenfield manufacturing facility, completing the
construction of a pilot commercial hydrogen station and hiring of personnel.
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However, actual results could vary materially and negatively as a result of a
number of factors, including:
•the costs of expanding our greenfield manufacturing facility and investing in
equipment;
•the timing and the costs involved in bringing our vehicles to market;
•our ability to manage the costs of manufacturing and servicing the BEV trucks;
•our warranty claims experience should actual warranty claims differ
significantly from estimates;
•the scope, progress, results, costs, timing and outcomes of our research and
development for our FCEV trucks;
•the development and deployment of our hydrogen fueling network;
•the costs of maintaining, expanding and protecting our intellectual property
portfolio, including potential litigation costs and liabilities;
•revenue received from sales of our BEV trucks;
•the costs of additional general and administrative personnel, including
accounting and finance, legal and human resources, as well as costs related to
litigation, investigations, or settlements;
•our ability to collect revenue; and
•other risks discussed in the section entitled "Risk Factors."
Long-Term Liquidity Requirements
Until we can generate sufficient revenue from truck sales and leases to cover
operating expenses, working capital and capital expenditures, we expect to fund
cash needs through a combination of equity and debt financing, including lease
securitization, strategic collaborations, and licensing arrangements. If we
raise funds by issuing equity securities, dilution to stockholders may result.
Any equity securities issued may also provide for rights, preferences or
privileges senior to those of holders of our common stock. If we raise funds by
issuing debt securities, these debt securities may have rights, preferences and
privileges senior to those of holders of our common stock. The terms of debt
securities or borrowings could impose significant restrictions on our
operations. If we raise funds through collaborations and licensing arrangements,
we might be required to relinquish significant rights to our technologies or
products, or grant licenses on terms that are not favorable to us. The credit
market and financial services industry have in the past, and may in the future,
experience periods of upheaval that could impact the availability and cost of
equity and debt financing.
While we intend to raise additional capital in the future, if adequate funds are
not available, we will need to curb our expansion plans or limit our research
and development activities, which would have a material adverse impact on our
business prospects and results of operations.
Since the date of our incorporation, we have not engaged in any off balance
sheet arrangements, as defined in the rules and regulations of the SEC. For the
three months ended March 31, 2022, there have been no other material changes to
our significant contractual obligations as previously disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2021.
The following table provides a summary of cash flow data:
Three Months Ended March 31,
2022 2021
(in thousands)
Net cash used in operating activities $ (131,323) $ (59,249)
Net cash used in investing activities (33,454) (24,521)
Net cash provided by (used in) financing activities 27,654 (1,758)
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Cash Flows from Operating Activities
Our cash flows from operating activities are significantly affected by the
growth of our business primarily related to research and development activities.
Our operating cash flows are also affected by our working capital needs to
support growth in personnel related expenditures and fluctuations in accounts
payable and other current assets and liabilities.
Net cash used in operating activities was $131.3 million for the three months
ended March 31, 2022. The most significant component of our cash used during
this period was net loss of $152.9 million, which included non-cash expenses of
$53.5 million related to stock-based compensation, $3.1 million in depreciation
and amortization, other non-cash charges of $6.4 million and net cash outflows
of $41.4 million from changes in operating assets and liabilities primarily
driven by an increase in inventory and prepaid expenses and other current
assets.
Net cash used in operating activities was $59.2 million for the three months
ended March 31, 2021. The most significant component of our cash used during
this period was a net loss of $120.2 million, which included non-cash charges of
$50.3 million related to stock-based compensation, $12.9 million expense for
in-kind services, $1.8 million related to depreciation and amortization,
$1.0 million gain for the revaluation of warrant liability, $0.8 million equity
in net loss of affiliate, and net cash outflows of $3.8 million from changes in
operating assets and liabilities primarily driven by increases in long-term
deposits and prepaid expenses and other current assets, partially offset by an
increase in accounts payable and accrued expenses.
Cash Flows from Investing Activities
We continue to experience negative cash flows from investing activities as we
expand our business and infrastructure. Cash flows from investing activities
primarily relate to capital expenditures to support our growth. Net cash used in
investing activities is expected to continue to increase substantially as we
expand and tool our manufacturing facility in Coolidge, Arizona, finance
operations of our joint venture in Ulm, Germany, and develop the network of
hydrogen fueling stations. As of March 31, 2022, we anticipate our capital
expenditures for the remainder of fiscal year 2022 to be between $265 million to
$275 million, of which a significant portion is related to the expansion of our
truck manufacturing facility and purchases of related equipment in Coolidge,
Arizona.
Net cash used in investing activities was $33.5 million for the three months
ended March 31, 2022, which was primarily due to $30.1 million in purchases of
and deposits for capital equipment, costs of expansion for our Coolidge
manufacturing facility and supplier tooling and a $3.3 million cash contribution
to Nikola Iveco Europe GmbH.
Net cash used in investing activities was $24.5 million for the three months
ended March 31, 2021, which was primarily due to costs of expansion for our
Coolidge manufacturing facility, purchases and deposits for capital equipment
and supplier tooling.
Cash Flows from Financing Activities
Net cash provided by financing activities was $27.7 million for the three months
ended March 31, 2022, which was primarily due to proceeds from the Tumim
Purchase Agreements of approximately $27.4 million and proceeds from the
exercises of stock options of $0.3 million.
Net cash used by financing activities was $1.8 million for the three months
ended March 31, 2021, which was primarily due to $4.1 million term note
repayment and payments on our financing lease of $0.3 million, partially offset
by the exercise of stock options of $2.6 million.
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with GAAP. These principles require us to make certain estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities, as
of the balance sheet date, as well as reported amounts of revenue and expenses
during the reporting period. Our most significant estimates and judgments
involve valuation of our stock-based compensation, including the fair value of
common stock and market-based restricted stock units, the valuation of warrant
liabilities, derivative liabilities, estimates related to our lease assumptions,
contingent liabilities, including litigation reserves, and inventory valuation.
Management bases its estimates on historical experience and on various other
assumptions believed to be reasonable, the results
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of which form the basis for making judgments about the carrying values of assets
and liabilities. Actual results could differ from those estimates.
There have been no substantial changes to these estimates, or the policies
related to them during the three months ended March 31, 2022. For a full
discussion of these estimates and policies, see "Critical Accounting Estimates"
in Item 7 of our Annual Report on Form 10-K for the year ended December 31,
2021.
Recent Accounting Pronouncements
See Note 2 to our Unaudited Consolidated Financial Statements included elsewhere
in this Quarterly Report on Form 10-Q for more information about recent
accounting pronouncements, the timing of their adoption, and our assessment, to
the extent we have made one, of their potential impact on our financial
condition and our results of operations.
35
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