VOLTA INC. Unless the context otherwise requires, all references in this section to the "Company," "Volta," "we," "us," or "our" refer to the business ofVolta Inc. and its consolidated subsidiaries. You should read the following discussion and analysis of our financial condition and results of operations together with the unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 . This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Actual results and events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth in the sections entitled "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2021 and our Quarterly Report on Form 10-Q for the three months endedMarch 31, 2022 and in the sections entitled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q.
Overview
Volta's mission is to build the fueling infrastructure of the future. Volta's vision is to create an EV charging network that capitalizes on and catalyzes the shift from gasoline to electric vehicles. Volta places its charging stations in high traffic public locations that driver and consumer behavior data suggest are stopping points in EV drivers' daily routines. Located near the entrances of retail and other commercial facilities, the digital display screens on Volta's media enabled stations offer its media partners the opportunity to advertise to potential consumers just before they enter that facility. By both attracting EV drivers to a particular location to run an errand that was on their to-do list and providing a high impact advertising opportunity just before a purchasing decision, Volta's charging stations allow it to enhance its site and media partners' core commercial interests. Volta's business entails partnering with real estate and retail partners with national and regional multi-site portfolios of commercial and retail properties, as well as municipalities and local business owners, to locate, install, and deploy its EV charging stations in premier locations. The site hosts Volta partners which span a wide array of industries and locations, including retail centers, grocery stores, pharmacies, movie theaters, parking lots, healthcare/medical facilities, municipalities, sport and entertainment venues, parks and recreation areas, restaurants, schools and universities, certain transit and fueling locations, office buildings and other locations. Volta generally signs long-term contracts to locate its charging stations at site host properties and grows its footprint over time as its station utilization justifies additional investment in EV charging infrastructure. Volta also sells charging stations to certain business partners, while continuing to perform related installation, operation and maintenance services. For both Volta-owned and partner-owned charging stations, Volta sells media display time on the charging stations' digital displays to its media and advertising partners. In addition, while Volta currently provides sponsored charging services to drivers that use its charging stations, Volta intends to introduce a pay-for-use charging model in the future. As ofJune 30, 2022 , Volta had installed over 2,800 chargers across 28 territories and states that have generated over 294,000 charging sessions per month, forming one of the most utilized charging networks inthe United States . Substantially all of Volta's assets are maintained in, and its operating losses are attributable to,the United States . Volta's differentiated business model aims to maximize deployment of capital to deliver compelling value per unit and dollars per mile of capital invested. Volta's current business model is capable of generating revenue from multiple sources: media revenue, network development, charging network operations and network intelligence. •Media revenue is derived from the sale of advertising to Volta partners that purchase media display time on its advertising-driven charging stations to conduct their media and advertising campaigns to generate commerce or influence targeted driver behavior. 27 -------------------------------------------------------------------------------- •Network development revenue is generated by providing installation, infrastructure development, operating and maintenance services, and the sale of Volta's charging products to select site hosts. Network development revenue is also generated from contracts with utility companies for the sale of installed electrical infrastructure. Volta's network development customers consist of select site hosts that purchase Volta charging stations and receive associated installation and maintenance services, utility companies with whom Volta contracts to perform electrical infrastructure development activities, and select site partners for whom Volta performs the development work required to prepare a site for EV charging infrastructure. Currently, there is immaterial overlap between Volta's media revenue and network development customers. •Charging network operations revenue is generated by tracking the delivery of electricity through the use of Volta's charging stations, generatingCalifornia's Low-Carbon Fuel Standard ("LCFS") credits which Volta sells to third parties under the regulatory framework currently in effect. Volta intends to implement pay-for-use charging features in the future and anticipates that its charging network operations revenue will also include fees received for its paid charging services and that its charging network operations customers will include drivers that utilize Volta's paid charging services. •Network intelligence revenue consists of license or service fees from the sale of Volta's proprietary software tools related to its EV charging network analysis. Volta offers access to its PredictEVTM tool, a machine-learning built software tool that Volta uses for network planning, to utility companies, channel partners and other third parties as a SaaS offering to help them assess the impact that EV adoption and the shift to electric mobility will have on electricity demand in their service areas.
Key Performance Measures
Volta reviews certain key performance measures to evaluate its business and
results of operations, performance, identify trends, formulate plans, and make
strategic decisions. Volta believes the measures below are useful to investors
and counterparties because they are used to measure and benchmark the
performance of companies, such as Volta and its peers. Volta's key performance
measures are summarized in the table below.
As of June 30,
2022 2021
Total stations (a) 2,850 1,919
Total stalls (b) 2,920 1,969
(a) Includes the total installed charging network, at period-end, for both
Volta-owned and partner-owned charging stations, and is used by management to
evaluate the potential Media revenue generating capacity of the charging
network.
(b) Stalls are attributed to a station based on the number of vehicles that can
charge concurrently in the charging network. As such, some stations have
multiple stalls which results in the ability to charge more than one vehicle at
a time.
Key Factors Affecting Operational Results
Volta's future financial condition, results of operations, and cash flows are dependent upon a number of opportunities, challenges and factors such as, but not limited to, macroeconomic conditions, human resources options that attract, retain, and engage the workforce, customer retention and competition, adoption of EVs and related technology, the regulatory environment, and charger installation and construction costs.
Macroeconomic Conditions
Volta derives a significant portion of its revenues from providing paid
advertising on its EV charging stations. Current or prospective buyers' spending
priorities could be altered by a decline in the economy in general, the economic
prospects of such buyers', and/or the economy of any individual geographic
market or industry. Any such
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changes, particularly a market in which Volta conducts a substantial portion of
its business or an industry from which it derives a significant portion of its
advertising, could adversely affect Volta's revenues. Additionally, disruptions
to buyers' product plans or launches could affect revenue.
Volta is dependent upon the availability of electricity at its current and
future charging sites. Increases in electricity costs, the need to upgrade or
bring in additional power infrastructure at locations, construction delays, new
or increased taxation or regulations, power shortages and/or other restrictions
on the availability or cost of electricity could adversely affect Volta's
business, financial condition and results of operations.
Human Resources
Volta's ability to achieve revenue growth and profitability and to expand its charging network and strategic advertising partnerships to achieve broader market acceptance will depend on its ability to effectively expand its sales, advertising, marketing, technology and operational teams and capabilities. Volta's success depends, in part, on its continuing ability to identify, hire, attract, train, develop, retain and manage the succession of highly qualified personnel. To achieve its growth objectives, Volta may need to continue to expand its team and geographic footprint aggressively.
Customer Retention
Volta intends to introduce, and has begun testing, a pay-for-use by the driver model for charging, as well as idle fees for EVs that remain connected to a charging station for more than a specified period of time after charging is complete. As Volta migrates from EV charging that has been free to the driver, to include a pay-for-use model, it could risk losing drivers who have become accustomed to its free charging and do not wish to use paid charging services and reduced demand for its stations from media and site partners.
Adoption of EVs and Related Technology
Volta's future growth and success is aligned with the continuing rapid adoption of EVs for passenger and fleet applications and the desire of site partners to provide this amenity on their properties that allows Volta to access the vehicle and foot traffic at these sites. The success of alternative fuels, competing technologies or alternative transportation options could considerably undermine Volta's prospects to offer this amenity. The EV charging market is characterized by rapid technological change, which requires Volta to continue to develop new products, innovate, and maintain and expand its intellectual property portfolio. Any delays in such developments could adversely affect market adoption of its products and its financial results. Volta's ability to grow its business and consumer base depends, in part, upon the effective operation of the mobile applications that Volta deploys on various mobile operating systems, cellular and payment networks and external charging standards that it does not control. Volta is developing and operating in an emerging technology sector. Computer malware, viruses, ransomware, hacking, phishing attacks and other network disruptions could result in security and privacy breaches, loss of proprietary information and interruption in service, which could harm Volta's business. Unauthorized disclosure of personal or sensitive data or confidential information, whether through electronic security breaches or otherwise, could severely hurt Volta's business.
Regulatory Environment
Volta's business and its ability to execute operational plans could be highly
impacted by the regulatory environment in which it operates on all levels.
Regulatory factors affecting Volta's business include infrastructure financing
or support, carbon offset programs, EV-related tax incentives and tax policy,
utility and power regulation, payment regulations, data privacy and security,
software reporting tools, transportation policy and construction, electrical and
sign code permitting.
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Restrictions on certain digital outdoor media advertising products, services or
other advertising are or may be imposed by laws and regulations, as well as
contracts with Volta's host sites. Digital displays were introduced to the
market relatively recently, and existing media signage regulations could be
revised or new regulations could be enacted to impose greater restrictions on
digital advertising or displays. In addition, Volta may also be impacted if
various levels of government enact rules or legislation to tax revenues derived
from the sale of digital media. Any such regulatory changes could adversely
affect Volta's financial condition and results of operations.
Competition
Volta currently faces competition from a number of companies in theU.S. andEurope , in both the EV charging industry and in the media industry. Volta expects to face significant competition in the future as the markets for EV charging and advertising evolve. Increased competition in these industries could create a talent war, making it more challenging to attract and retain talent. The EV charging business may become more competitive and Volta may face increased pressure on network utilization. Competition is expected to continue to increase as the number of EVs sold increases and as new competitors or alliances emerge that have greater market share or access to capital than Volta. If Volta's advertising competitors offer media advertising display rates below the rates it charges, Volta could lose potential partners and be pressured to reduce its rates. This could have an adverse effect on Volta's financial position. Volta's future growth and success is dependent upon the desirability of its charging stations as advertising space. The success of alternative media advertising options employed by agencies, brands or other purchasers of advertising could undermine Volta's prospects.
Relationships with Real Estate and Retail Partners
In order to build its charging network, Volta will need to continue to establish and maintain relationships with real estate, retail and site partners with national, multi-state and local portfolios of commercial and retail properties. Site hosts can span a diverse array of industries and locations, and if such hosts believe the benefits offered by Volta's competitors exceed the benefits of partnering with Volta, Volta may lose access to high quality property owners that it needs to achieve profitability.
Seasonality
Volta's advertising business has experienced and is expected to continue to experience fluctuations as it continues to scale its EV charging footprint in various markets. This is primarily due to, among other things, seasonal buying patterns and seasonal influences on media markets. Typically, media spend is highest in the fourth quarter, during the holiday shopping season, and lowest in the first quarter, as buyers adjust their spending following the holiday shopping season and prepare annual budgets.
Installation and Construction Cost Drivers
Volta's business is subject to risks associated with construction, cost overruns
and delays and other contingencies that may arise in the course of completing
installations. The timing of obtaining permits from state and local governments
to install charging stations is often out of Volta's control, and could result
in delays of operations. In addition, Volta relies on a limited number of
suppliers and manufacturers for the manufacture and supply of its charging
stations, some of which are also early-stage companies.
Volta's EV chargers are typically located in publicly accessible outdoor or
garage areas and may be subject to damage from a number of sources, including
exposure to the elements and weather-related impacts, and wear and tear and
inadvertent or accidental damage by drivers, including due to vehicle collisions
or charger misuse. Volta's charging stations may also be subject to intentional
damage and abuse, including vandalism or other intentional property damage, any
of which would increase wear and tear of the charging equipment and could result
in such equipment being irreparably damaged or destroyed.
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--------------------------------------------------------------------------------COVID-19 Impact
As there continues to be widespread impact from the COVID-19 pandemic, Volta management is closely monitoring the impact of the COVID-19 pandemic on all aspects of Volta's business. The spread of COVID-19 has disrupted the Company's supply chain and heightened its freight and logistics costs, and has similarly disrupted manufacturing, delivery and overall supply chain of vehicle manufacturers and suppliers, which has led to fluctuations in EV sales in markets around the world. The Company expects to be adversely impacted by these increased costs for the remainder of the fiscal year. Volta may take further actions that alter its business operations, as may be required by government authorities or that it determines are in the best interests of its employees, contractors and stockholders. Volta faces risks related to health pandemics, which could have a material adverse effect on its business and results of operations. Volta believes that its advertising network remains attractive to buyers, given that many of its charging stations are installed in close proximity to essential businesses such as grocery stores, pharmacies, and shopping centers. In addition, despite the adverse impacts, there are no indications that the COVID-19 pandemic has resulted in a material decline in the carrying value of any of Volta's assets, or a material change in the estimate of any contingent amounts recorded in the unaudited condensed consolidated balance sheet as ofJune 30, 2022 . However, the estimates of the impact of the COVID-19 pandemic on Volta's business may change based on new information that may emerge concerning COVID-19 and the actions to contain it or treat its impact, including any variants that may arise, and the economic impact on local, regional, national and international markets. Volta's management continues to monitor the impact of the global situation on its financial condition, liquidity, operations, suppliers, industry and workforce.
Results of Operations
Operating Revenue
The following table summarizes the components of operating revenue:
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2022 2021 2022 2021
Service $ 14,791 $ 6,826 $ 22,765 $ 11,057
Product - - 275 299
Other $ 553 $ 117 $ 690 $ 327
Service Revenue
During the three months ended June 30, 2022 , service revenue increased $8.0
million , or 117%, compared to the three months ended June 30, 2021 . During the
six months ended June 30, 2022 , service revenue increased $11.7 million , or
106%, compared to the six months ended June 30, 2021 . The increase for both
comparative periods was largely driven by increases in our media revenue and
network development revenue, which are discussed in greater detail below.
Product Revenue
During the three months endedJune 30, 2022 and 2021, product revenue was nil. During the six months endedJune 30, 2022 , product revenue remained relatively consistent compared to the six months endedJune 30, 2021 . 31 --------------------------------------------------------------------------------
Other Revenue
During the three months endedJune 30, 2022 , other revenue increased$0.4 million , or 373%, compared to the three months endedJune 30, 2021 . During the six months endedJune 30, 2022 , other revenue increased$0.4 million , or 111%, compared to the six months endedJune 30, 2021 . The increase for both comparative periods was primarily driven by an increase in our charging network operations revenue, which is discussed in greater detail below.
Revenue by Type
The following table summarizes the major categories of operating revenue:
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2022 2021 2022 2021
Media $ 11,221 $ 6,485 $ 17,339 $ 10,014
Network development 3,577 340 5,791 1,341
Charging network operations 370 1 371 1
Network intelligence 176 117 229 327
Total operating revenue $ 15,344 $ 6,943 $ 23,730 $ 11,683
Media Revenue
During the three months ended June 30, 2022 , media revenue increased $4.7
million , or 73%, compared to the three months ended June 30, 2021 . During the
six months ended June 30, 2022 , media revenue increased $7.3 million , or 73%,
compared to the six months ended June 30, 2021 . The increase for both
comparative periods was primarily due to the expansion of our media-enabled
station network and new media campaigns with national brands, including new and
existing advertisers.
Network Development Revenue
During the three months ended June 30, 2022 , network development revenue
increased $3.2 million , compared to the three months ended June 30, 2021 . During
the six months ended June 30, 2022 , network development revenue increased $4.5
million , compared to the six months ended June 30, 2021 . The increase for both
comparative periods was primarily due to the construction performed on active
projects in connection with our new infrastructure development service
contracts.
Charging Network Operations Revenue
During the three months endedJune 30, 2022 , charging network operations revenue increased$0.4 million , compared to the three months endedJune 30, 2021 . During the six months endedJune 30, 2022 , charging network operations revenue increased$0.4 million , compared to the six months endedJune 30, 2021 . The increase for both comparative periods was primarily due to the sale of LCFS credits during the second quarter of 2022.
Network Intelligence Revenue
During the three and six months ended
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The following table summarizes cost of revenues by services and products:
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2022 2021 2022 2021
Service costs (exclusive of
depreciation and amortization shown
$ 19,206 $ 9,740 Product costs (exclusive of depreciation and amortization shown below) $ - $ - $ 297$ 352
Service costs (exclusive of depreciation and amortization shown below)
During the three months endedJune 30, 2022 , service costs increased$4.7 million , or 91%, compared to the three months endedJune 30, 2021 . This was primarily due to an increase of$2.2 million in installation and services costs due to an increase in active construction projects, an increase of$1.8 million in station rent as a result of increases in both the number of leases and average monthly lease cost, and an increase of$0.6 million in freight costs due to the continued growth in active construction projects. During the six months endedJune 30, 2022 , service costs increased$9.5 million , or 97%, compared to the six months endedJune 30, 2021 . This was primarily due to an increase of$4.6 million in installation and services costs due to an increase in active construction projects, an increase of$3.3 million in station rent largely driven by an increase in number of leases and average monthly lease cost, an increase of$1.2 million in freight costs due to the continued growth in active construction projects, and an increase of$0.3 million in advertising and media costs attributable to commission fees and other costs incurred in connection with new media partnerships.
Product costs (exclusive of depreciation and amortization shown below)
During the three months endedJune 30, 2022 and 2021, product costs were zero as no product revenue was earned in the quarter. During the six months endedJune 30, 2022 , product costs remained relatively consistent compared to the six months endedJune 30, 2021 .
Other operating expenses
The following table summarizes other operating expenses, outside of cost of revenues:
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2022 2021 2022 2021
Selling, general and administrative
$ 100,157 $ 78,209 Depreciation and amortization 4,617 2,523 8,312 4,696 Other operating expense$ 1,352 $ 777 $ 1,678 $ 924 33
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Selling, General and Administrative
During the three months endedJune 30, 2022 , selling, general and administrative expense increased$26.6 million , or 153%, compared to the three months endedJune 30, 2021 . This was primarily due to a$10.3 million increase in payroll-related costs largely driven by an increase in our employee headcount to 421 from 215. Additionally, there was an increase of$5.6 million in outside services, an increase of$5.1 million in stock-based compensation expense, an increase of$2.8 million in other selling, general and administrative expense primarily due to insurance costs, and an increase of$1.5 million in software, hardware and hosting costs due to prepaid software amortization and prototyping expenses. Further, travel, meals and related expenses increased$0.8 million as COVID-19 restrictions continue to ease and rent and facilities expense increased$0.4 million . During the six months endedJune 30, 2022 , selling, general and administrative expense increased$21.9 million , or 28%, compared to the six months endedJune 30, 2021 . This was primarily due to a$20.1 million increase in payroll-related costs and a$4.0 million increase in bonus and commissions largely driven by an increase in our employee headcount as discussed above. Additionally, there was an increase of$11.3 million in outside services, an increase of$6.1 million in other selling, general and administrative expense mostly due to insurance costs, and an increase of$1.5 million in software, hardware and hosting costs mostly for prepaid software amortization. Further, travel, meals and related expenses increased$1.4 million as COVID-19 restrictions continue to ease, rent and facilities expense increased$0.9 million , and advertising, promotion and events expense increased$0.3 million . These amounts were partially offset by a$24.0 million decrease in stock-based compensation expense due to the reversal of the expenses previously recorded for forfeited executive RSUs in the six months endedJune 30, 2022 and large executive RSAs vested in the six months endedJune 30, 2021 .
Depreciation and Amortization
During the three months endedJune 30, 2022 , depreciation and amortization expense increased$2.1 million , or 83%, compared to the three months endedJune 30, 2021 . During the six months endedJune 30, 2022 , depreciation and amortization expense increased$3.6 million , or 77%, compared to the six months endedJune 30, 2021 . The increase for both comparative periods was primarily due to an increase in the aggregate number of Volta-owned stations in service as ofJune 30, 2022 compared toJune 30, 2021 by 895 stations.
Other Operating Expense
During the three months endedJune 30, 2022 , other operating expense increased$0.6 million , or 74%, compared to the three months endedJune 30, 2021 . During the six months endedJune 30, 2022 , other operating expense increased$0.8 million , or 82%, compared to the six months endedJune 30, 2021 . The increase for both comparative periods was largely driven by costs associated with disqualified projects prior to construction.
Other (Income) Expense
The following table summarizes items of other (income) expense:
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2022 2021 2022 2021
Interest expense, net $ 1,199 $ 1,673 $ 2,512 $ 3,333
Change in fair value of warrant
liabilities $ (8,151) $ (30) $ (22,851) $ (118)
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Interest Expense, net
During the three months endedJune 30, 2022 , interest expense, net decreased$0.5 million , or 28%, compared to the three months endedJune 30, 2021 . During the six months endedJune 30, 2022 , interest expense, net decreased$0.8 million , or 25%, compared to the six months endedJune 30, 2021 . The decrease for both comparative periods was primarily due to the reduction in the Term Loan Facility (as defined below) principal outstanding from$49.0 million as ofJune 30, 2021 to$32.7 million as ofJune 30, 2022 .
Change in Fair Value of Warrant Liabilities
During the three months endedJune 30, 2022 , the change in fair value of warrant liabilities represents a gain which increased$8.1 million , compared to the three months endedJune 30, 2021 . During the six months endedJune 30, 2022 , the change in fair value of warrant liabilities also represents a gain which increased$22.7 million , compared to the six months endedJune 30, 2021 . The increase for both comparative periods reflects a decline in the fair values of the Public Warrants and Private Warrants due to the decline in our stock price which is the primary input used in the valuations.
Financial Condition, Liquidity, and Capital Resources
Sources of Liquidity
Volta's operations are dependent on its ability to generate meaningful long-term revenue and will highly depend on expanding EV offerings from auto manufactures, increasing EV purchasing trends, driver behavior patterns, and the related need for charging services. If the market for EVs does not develop as Volta expects, develops more slowly than it expects, or if there is a decrease in driver demand for EVs and the related charging services, Volta's business, prospects, financial condition, results of operations, and cash flows will be adversely impacted. The market for EV charging is relatively new, continuously evolving with technology changing rapidly, volatile electricity pricing, increasing competition, evolving government regulation, support, and industry standards (including the ability to benefit from carbon credits and other incentives), frequent new EV announcements and changing driver behavior and patterns. Any number of the aforementioned factors as well as other unforeseen changes in the industry could have a material adverse impact on our financial position, results of operations, and cash flows. Volta has incurred net losses and negative cash flows from operations since its inception. To date, Volta has funded its operations primarily with proceeds from the issuance of Volta common and preferred stock, and borrowings under its loan facilities, including the Term Loan Facility (as defined below). Until Volta is cash flow positive or generating profits from operations, the Company will need to raise additional funds through the issuance of debt or equity securities, or from additional borrowings. For the six months endedJune 30, 2022 , the Company incurred a net loss of$85.6 million and had net cash used from operating activities of$74.0 million . As ofJune 30, 2022 , Volta had cash and cash equivalents of$105.3 million . Management has considered conditions and events which provide substantial doubt about the Company's ability to continue as a going concern for the 12 months following the issuance of these unaudited condensed consolidated financial statements and, based on reasonable information available, has concluded that there is substantial doubt about the Company's ability to continue as a going concern. As such, no assurances can be provided that additional funding will be available at terms acceptable to the Company, if at all. If the Company is unable to raise additional capital or effectively execute its mission or vision, the Company will need to significantly curtail operations, modify strategic plans, and/or dispose of certain operations or assets.
Term Loan
In
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and the lenders party thereto. The lenders under the Loan Agreement made
available to the Company a term loan facility (the "Term Loan Facility") in the
amount of $44.0 million . In November 2020 , the Company entered into an amendment
to the Loan Agreement that increased the amount of the Term Loan Facility by
$5.0 million , all of which was borrowed by the Company on the closing date of
the amendment. The proceeds of the Term Loan Facility were made available for
the Company to purchase, install, operate and maintain the Company's electric
vehicle charging stations and for other general corporate purposes.
The Loan Agreement requires the Company to repay the principal amount of the
loans made under the Term Loan Facility in monthly installments of $1.4 million ,
with all remaining principal, together with all accrued and unpaid interest, to
be paid in full on the maturity date of June 19, 2024 . Interest accrues on the
outstanding amount of the principal loans made under the Term Loan Facility at a
fixed rate of 12.0% per annum, with accrued interest payable in arrears on the
first business day of each fiscal quarter and on the maturity date. On the
maturity date and each date the Company makes a prepayment under the Term Loan
Facility, the Company will be required to pay additional deferred interest equal
to 11.0% of the principal amount of the loans amount being paid on such date
unless, in the case of any prepayment, the Company's fixed charge coverage ratio
would be greater than 1.0 to 1.0 after giving effect to such prepayment. As of
June 30, 2022 , the aggregate outstanding principal amount of all loans made
under the Term Loan Facility was $32.7 million .
The Loan Agreement requires the Company to be in compliance with certain
financial covenants, including a minimum cash balance and total and average
revenue covenants. Additional covenants and other restrictions exist that limit
the Company's ability, among other things, to undergo certain mergers or
consolidations, sell certain assets, create liens, guarantee certain obligations
of third parties, make certain investments or acquisitions, and declare
dividends or make distributions. The Loan Agreement also contains customary
financial reporting covenants. The Loan Agreement further includes a requirement
that any investments we make in our foreign subsidiaries not exceed 125% of
funds deposited into escrow. As of June 30, 2022 , we had funded $3.3 million
into an escrow account to cover projected investments in our foreign
subsidiaries through that date.
The credit facility is secured by substantially all of the domestic assets of
the Company and certain of its subsidiaries, including a pledge of the equity
interests in certain subsidiaries of the Company, with customary exceptions.
The lenders under the Loan Agreement waived certain events of default that had
occurred and were continuing as of March 30, 2022 and May 11, 2022 . After giving
effect to such waivers, the Company was in compliance with all applicable
covenants as of June 30, 2022 .
Volta's Term Loan Facility information is as follows:
Net Carrying Value
Principal Issuance Date Maturity Date Interest Rate December 31,
($ in thousands) Amount June 30, 2022 2021
Term loan payable (a) $ 49,000 6/19/2019 6/19/2024 12.0% $ 32,666 $ 40,833
Less: unamortized issuance costs (670) (838)
Total debt 31,996 39,995
Less: current maturities (15,998) (15,998)
Total term loan payable, net of unamortized issuance costs $ 15,998 (a) In March, 2022 certain additional covenants pertaining to investments by the Company in its foreign subsidiariesVolta Canada Inc. ,Volta Charging Germany GmbH and Volta France SARL were implemented through an amendment to the Loan Agreement. Accordingly, inMay 2022 , the Company funded$3.3 million in an escrow account to cover projected investments throughJune 30, 2022 in such foreign subsidiaries. As a result, theMarch 2022 amendment requires that investments in the foreign subsidiaries shall not exceed 125% of funds held in escrow. See Note 6 - Debt for additional information on the Loan Agreement. 36 --------------------------------------------------------------------------------
Financing Obligations
Volta's financing obligations related to digital media screens are as follows(a): (in thousands) June 30, 2022 December 31, 2021 Financing obligations, noncurrent portion $ 2,780 $ 3,050 Add: current portion of financing obligation 896 896 Total financing obligations $ 3,676 $ 3,946
(a) This table presents the financing obligations on a discounted basis.
Volta entered into multiple sale-leaseback arrangements of digital media screens that do not qualify as asset sales and are accounted for as financing obligations. These financing obligations have been amortized over the 5-year term at Volta's incremental borrowing rate at the time of the transaction which has ranged between 6.0%-16.7%.
Cash Flow Summary
The following table summarizes Volta's cash flows:
Six Months Ended June 30,
(in thousands) 2022 2021
Net cash used in operating activities $ (74,030) $ (46,017)
Net cash used in investing activities $ (54,849) $ (8,642)
Net cash (used in) provided by financing activities $ (24,737) $ 19,884
Operating Activities
Net cash used in operating activities increased by $28.0 million during the six
months ended June 30, 2022 , as compared to the six months ended June 30, 2021 .
This increase was primarily due to a $41.0 million increase in net loss adjusted
for non-cash items partially offset by a $8.4 million decrease in net working
capital, excluding operating lease liabilities. Net working capital was impacted
by the net effect of an increase in accrued expenses and other current
liabilities and deferred revenue for the six months ended June 30, 2022 compared
to the decrease in the same period in the prior year, contributing favorably to
the change in net working capital. Prepaid expenses and other current assets
increased for the six months ended June 30, 2022 , although to a lesser extent
than the same period in the prior year, contributing favorably to the change in
net working capital. Partially offsetting the impact of these items was the net
effect of increases in accounts receivable and prepaid partnership costs for the
six months ended June 30, 2022 compared to the same period in the prior year.
Accounts payable increased for the six months ended June 30, 2022 , however, a
significant portion is related to capital expenditures within investing
activities, offsetting the favorable impact to the change in net working
capital. Inventory declined for the six months ended June 30, 2022 , although to
a lesser extent than the same period in the prior year, contributing unfavorably
to the change in net working capital.
Investing Activities
Net cash used in investing activities increased by$46.2 million during the six months endedJune 30, 2022 , as compared to the six months endedJune 30, 2021 . The increase was primarily due to a$42.3 million increase in purchases of property and equipment for the expansion of the charging station network, a$3.2 million increase in expenditures on internal-use software development, and a cash payment of$0.9 million related to the acquisition of technology patents during the second quarter of 2022. 37 --------------------------------------------------------------------------------
Financing Activities
Net cash used in financing activities increased by$44.6 million for the six months endedJune 30, 2022 , as compared to net cash provided by financing activities for the six months endedJune 30, 2021 . The increase was primarily due to no additional proceeds raised from financing during the first six months of 2022, partially offset by principal repayments on the Term Loan Facility of$8.2 million during the first six months of 2022. During the six months endedJune 30, 2021 ,$28.7 million was raised from the issuance of Series D preferred stock, partially offset by a$8.3 million payment of taxes on promissory notes for employees. Contractual Commitments
Contractual commitments as of
(in thousands) Total Less than 1 year More than 1 year Lease liability$ 130,289 $ 16,980 $ 113,309 Purchase obligations 1,884 1,884 - Term loan 32,666 16,333 16,333 Financing obligations 4,405 1,197 3,208 Total$ 169,244 $ 36,394 $ 132,850
(a) This table presents amounts on an undiscounted basis.
Non-GAAP Financial Measures
Non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for, financial information presented in accordance withU.S. GAAP. In addition, other companies, including companies in Volta's industry, may calculate similarly-titled non-GAAP measures differently, or may use other measures to evaluate their performance, all of which could reduce their comparison usefulness. In addition to financial results determined in accordance withU.S. GAAP, Volta believes that Earnings Before Income Taxes, Interest, Depreciation and Amortization ("EBITDA") and EBITDA less stock-based compensation and changes in the fair value of warrant liabilities ("Adjusted EBITDA"), as non-GAAP measures, are useful for investors to evaluate its operating performance, as management uses these measures to assess the health of the business, evaluate operating performance, and for internal planning and forecasting purposes. Volta believes that these non-GAAP measures, when used in conjunction withU.S. GAAP, provide meaningful, supplemental information about operating performance and helps illustrate underlying trends for users more consistently with peers or competitors that may have different financing and capital structures or tax rates. Furthermore, these measures are frequently used by securities analysts, investors, and other interested parties in the evaluation of companies in the industry, and is a measure contained in our debt covenants. 38 -------------------------------------------------------------------------------- The following unaudited table presents the reconciliation of net loss, the most directly comparableU.S. GAAP measure, to EBITDA and Adjusted EBITDA for the periods indicated: Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Net loss$ (37,434) $ (20,584) $ (85,583) $ (85,755) Income tax expense 2 24 2 24 Interest expense, net 1,199 1,673 2,512 3,333 Depreciation and amortization 4,617 2,523 8,312 4,696 EBITDA$ (31,616) $ (16,364)
Stock-based compensation expense 6,346 1,282 22,831 46,800 Change in fair value of warrant liabilities (8,151) (30) (22,851) (118) Adjusted EBITDA$ (33,421) $ (15,112) $ (74,777) $ (31,020)
Critical Accounting Policies and Estimates
There were no material changes from the Critical Accounting Estimates disclosed in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 . See Note 2 - Summary of Significant Accounting Policies for additional information.
Emerging Growth Company Status
Pursuant to Section 107(b) of theInfrastructure Investment and Jobs Act (the "JOBS Act"), an emerging growth company is provided the option to adopt new or revised accounting standards that may be issued by FASB or theSEC either (a) within the same periods as those otherwise applicable to non-emerging growth companies or (b) within the same time periods as private companies. Volta intends to take advantage of the exemption for complying with certain new or revised accounting standards within the same time periods as private companies, such as current expected credit losses and income tax. Volta also intends to take advantage of some of the reduced regulatory and reporting requirements of emerging growth companies pursuant to the JOBS Act, including, but not limited to not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)), reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments. Volta will cease to be an emerging growth company on the date that is the earliest of (a) the last day of the fiscal year in which it has total annual gross revenues of$1.07 billion or more; (b)December 31, 2025 (the last day of its fiscal year following the fifth anniversary of the date of its initial public offering); (c) the date on which it has issued more than$1.0 billion in nonconvertible debt during the previous three years; and (d) the last day of the fiscal year in which it is deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of its common stock held by non-affiliates equals or exceeds$700.0 million as of the last business day of the second fiscal quarter of such fiscal year.
Off-Balance Sheet Arrangements
As of the unaudited condensed consolidated balance sheet dates of
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