Hyliion Holdings (HYLN) risk factors, FY2024 10-K

Other

1. 01Contractual Obligations and Capital Resources
2. 02We manage our use of cash in the operation of our business to support the execution of our primary strategic goals including the design, development and sale of the KARNO generator. We primarily use cash for R&D activities, capital investments and general and administrative costs
3. 03Critical Accounting Policies and Estimates
4. 04We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates
5. 05New and Recently Adopted Accounting Pronouncements
6. 06ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
7. 07Opinion on the financial statements
8. 08Change in accounting principle
9. 09Net loss $ (52,048) $ (123,510)
10. 10Carrying value adjustment to assets held for sale 6,464 —
11. 11Basis of Presentation and Principles of Consolidation
12. 12$ 0.5 $ 9.5 $ (2.0) $ 8.0
13. 13Concentration of Supplier Risk
14. 14Cash and Cash Equivalents
15. 15The Company has provided its corporate headquarters lessor with a letter of credit for $0.7 million to secure the performance of the Company’s lease obligations, backed by a restricted cash deposit to pay any draws on the letter of credit by the lessor
16. 16The Company believes its valuation methods are appropriate and consistent with other market participants, however the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date
17. 17Property and Equipment, Net
18. 18Impairment of Long-Lived Assets
19. 19U.S. Government Contracts
20. 20Marketing, Promotional and Advertising Costs
21. 21Research and Development Expense
22. 22Recent Accounting Pronouncements
23. 23In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), to enhance transparency and decision usefulness of income tax disclosures. The pronouncement is effective for fiscal years beginning after December 15, 2024 and we expect a material impact to our disclosures as a result of adoption
24. 24Note 5. Fair Value Measurements
25. 25Restricted cash 665 — — 665
26. 26Restricted cash 8,583 — — 8,583
27. 272024 Equity Incentive Plan
28. 28Employee and director restricted stock units (“RSUs”) for which a grant date has been established generally vest over one to three years from the date of grant. These awards generally become available to the recipient upon the satisfaction of a vesting condition based on a period of service
29. 29Unvested at December 31, 2024 232,176 $ 1.81
30. 302020 Equity Incentive Plan
31. 31Employee and director RSUs generally vest over one to three years from the date of grant. These awards become available to the recipient upon the satisfaction of a vesting condition based on a period of service, and performance and market conditions (for certain awards to employees)
32. 324 Excludes 633,750 shares underlying RSU awards with performance conditions, which have not been accounted for because no accounting grant date has been established. These excluded shares were not granted during the year ended December 31, 2024
33. 332016 Equity Incentive Plan
34. 34Employee and nonemployee stock options generally vest over four years, with a maximum term of ten years from the date of grant. These awards become available to the recipient upon the satisfaction of a vesting condition based on a period of service
35. 35Exercisable at December 31, 2024 188,229 $ 0.20 4.7 years
36. 36Employee Stock Purchase Plan
37. 37The Company enters into operating leases for its corporate office, temporary offices, vehicles and equipment. In addition, the Company may enter into arrangements whereby portions of the leased premises are subleased to third parties and are classified as operating leases
38. 38The Company’s corporate office lease has a term through 2027 and includes the option to extend the term for up to two consecutive terms of five years, which was not reasonably certain to be exercised at the commencement date
39. 39Total operating lease costs $ 3,176 $ 3,429
40. 40Operating leases 8.6 % 8.7 %
41. 41Note 9. Property and Equipment, Net
42. 42Total property and equipment, net $ 25,920 $ 9,987
43. 43Note 10. Accrued Expenses and Other Current Liabilities
44. 44Total current tax expense $ — $ —
45. 45Total deferred tax expense $ — $ —
46. 46Deferred tax assets, net of valuation allowance 1,312 1,768
47. 47Net deferred tax assets $ — $ —
48. 48Economic Incentive Agreement
49. 49Note 13. Net Loss Per Share
50. 50Net loss attributable to common stockholders $ (52,048) $ (123,510)
51. 51Net loss per share, basic and diluted $ (0.30) $ (0.68)
52. 52Note 14. Supplemental Cash Flow Information
53. 53Cash paid for taxes $ — $ —
54. 54Evaluation of Disclosure Controls and Procedures
55. 55Management’s Report on Internal Control over Financial Reporting
56. 56Changes in Internal Control over Financial Reporting
57. 57ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
58. 58ITEM 11. EXECUTIVE COMPENSATION
59. 59ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
60. 60ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
61. 61ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
62. 62ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
63. 63Exhibit Number Description
64. 64Second Amended and Restated Certificate of Incorporation of the Company, dated October 1, 2020 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-38823) filed with the SEC on October 7, 2020)
65. 65Description of Securities (incorporated by reference to Exhibit 4.4 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2020 (File No. 001-38823) filed with the SEC on May 17, 2021)
66. 66Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
67. 67____________________________________________