Filed pursuant to Rule 424(b)(3)

Registration No. 333-239185

PROSPECTUS SUPPLEMENT NO. 3

(to Prospectus dated July 17, 2020)

Nikola Corporation

Up to 53,390,000 Shares of Common Stock

Up to 23,890,000 Shares of Common Stock Issuable Upon Exercise of Warrants

This prospectus supplement supplements the prospectus dated July 17, 2020 (the “Prospectus”), which forms a part of our registration statement on Form S-1 (No. 333-239185). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on August 4, 2020 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement.

The Prospectus and this prospectus supplement relates to the issuance by us of up to an aggregate of up to 23,890,000 shares of our common stock, $0.0001 par value per share (“Common Stock”), which consists of (i) up to 890,000 shares of Common Stock that are issuable upon the exercise of 890,000 warrants (the “Private Warrants”) originally issued in a private placement in connection with the initial public offering of VectoIQ and (ii) up to 23,000,000 shares of Common Stock that are issuable upon the exercise of 23,000,000 warrants (the “Public Warrants” and, together with the Private Warrants, the “Warrants”) originally issued in the initial public offering of VectoIQ.

The Prospectus and this prospectus supplement also relates to the offer and sale from time to time by the selling securityholders named in the Prospectus (the “Selling Securityholders”) of (i) up to 53,390,000 shares of Common Stock (including up to 890,000 shares of Common Stock that may be issued upon exercise of the Private Warrants) and (ii) up to 890,000 Private Warrants.

Our Common Stock and Public Warrants are listed on the Nasdaq Global Select Market under the symbols “NKLA” and “NKLAW,” respectively. On August 3, 2020, the closing price of our Common Stock was $36.49 and the closing price for our Public Warrants was $25.00.

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

See the section entitled “Risk Factors” beginning on page 7 of the Prospectus to read about factors you should consider before buying our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus supplement is August 4, 2020.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38495

Nikola Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware	82-4151153
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4141 E Broadway Road
Phoenix, AZ	85040
(Address of principal executive offices)	(Zip Code)
(480) 666-1038
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	NKLA	The Nasdaq Stock Market LLC
Warrants to purchase common stock	NKLAW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 30, 2020, there were 378,980,941 shares of the registrant’s common stock outstanding.

NIKOLA CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019	2
	Consolidated Statements of Operations	3
	Consolidated Statements of Stockholders’ Equity	4
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Control and Procedures	37
PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	56
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	57
Item 6.	Exhibits	57
Signatures

1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

NIKOLA CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	June 30,		December 31,
	2020		2019
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	698,386	$	85,688
Restricted cash and cash equivalents	8,896		—
Accounts receivable, net	424		770
Prepaid in-kind services	60,000		—
Prepaid expenses and other current assets	4,672		4,423
Total current assets	772,378		90,881
Restricted cash and cash equivalents	—		4,144
Long-term deposits	10,328		13,223
Property and equipment, net	59,856		53,378
Intangible assets, net	62,481		62,513
Goodwill	5,238		5,238
Prepaid in-kind services and other assets	14,759		53
Total assets	$	925,040	$	229,430
Liabilities and stockholders' equity
Current liabilities
Accounts payable	7,575		5,113
Accrued expenses and other current liabilities	13,952		11,425
Customer deposits	4,982		—
Term note, current	4,100		—
Total current liabilities	30,609		16,538
Term note	—		4,100
Other long-term liabilities	11,762		12,212
Deferred tax liabilities, net	1,074		1,072
Total liabilities	43,445		33,922
Commitments and contingencies (Note 11)
Stockholders' equity
Preferred stock, $0.0001 par value, 150,000,000 shares authorized, no shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	—		—
Common stock, $0.0001 par value, 600,000,000 shares authorized, 360,910,639 and 270,826,092 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	36		27
Additional paid-in capital	1,189,845		383,961
Accumulated deficit	(308,286)		(188,480)
Total stockholders' equity	881,595		195,508
Total liabilities and stockholders' equity	$	925,040	$	229,430

See accompanying notes to the consolidated financial statements.

2

NIKOLA CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Solar revenues	$	36	$	13	$	95	$	137
Cost of solar revenues	30		24		72		86
Gross profit (loss)	6		(11)		23		51
Operating expenses:
Research and development	42,501		11,854		66,619		35,251
Selling, general, and administrative	44,147		5,344		52,061		11,845
Total operating expenses	86,648		17,198		118,680		47,096
Loss from operations	(86,642)		(17,209)		(118,657)		(47,045)
Other income (expense):
Interest income, net	23		338		87		671
Revaluation of Series A redeemable convertible preferred stock warrant liability	—		98		—		(495)
Loss on forward contract liability	—		—		(1,324)		—
Other income (expense), net	(23)		9		90		10
Loss before income taxes	(86,642)		(16,764)		(119,804)		(46,859)
Income tax expense	1		2		2		4
Net loss	$	(86,643)	$	(16,766)	$	(119,806)	$	(46,863)
Premium paid on repurchase of redeemable convertible preferred stock	$	(13,407)	$	—	$	(13,407)	$	—
Net loss attributable to common stockholders, basic and diluted	$	(100,050)	$	(16,766)	$	(133,213)	$	(46,863)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.33)	$	(0.06)	$	(0.46)	$	(0.18)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted	303,785,616		260,406,343		287,822,558		260,406,343

See accompanying notes to the consolidated financial statements.

3

NIKOLA CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)

	Three Months Ended June 30, 2020
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' (Deficit) Equity
	Shares	Amount		Shares	Amount
Balance as of March 31, 2020	84,095,913	$	414,664	60,167,980	$	1	$	1,315	$	(221,643)	$	(220,327)
Retroactive application of recapitalization	(84,095,913)	(414,664)		214,077,660	26		414,638		—		414,664
Adjusted balance, beginning of period	—	—		274,245,640	27		415,953		(221,643)		194,337
Issuance of Series D redeemable convertible preferred stock, net of $5,751 issuance costs (1)	—	—		5,215,933	1		45,572		—		45,573
Issuance of Series D redeemable convertible preferred stock for in-kind contribution (1)	—	—		7,390,436	1		71,998		—		71,999
Business Combination and PIPE financing	—	—		72,272,942	7		616,213		—		616,220
Exercise of stock options	—	—		1,785,688	—		1,882		—		1,882
Stock-based compensation	—	—		—	—		38,227		—		38,227
Net loss	—	—		—	—		—		(86,643)		(86,643)
Balance as of June 30, 2020	—	$	—	360,910,639	$	36	$	1,189,845	$	(308,286)	$	881,595

⁽¹⁾ Issuance of Series D redeemable convertible preferred stock has been retroactively restated to give effect to the recapitalization transaction.

See accompanying notes to the consolidated financial statements.

4

	Six Months Ended June 30, 2020
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' (Deficit) Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2019	82,297,742	$	383,987	60,167,334	$	1	$	—	$	(188,480)	$	(188,479)
Retroactive application of recapitalization	(82,297,742)	(383,987)		210,658,758	26		383,961		—		383,987
Adjusted balance, beginning of period	—	—		270,826,092	27		383,961		(188,480)		195,508
Issuance of Series D redeemable convertible preferred stock, net of $8,403 issuance costs (1)	—	—		6,581,340	1		56,249		—		56,250
Issuance of Series D redeemable convertible preferred stock for in-kind contribution (1)	—	—		9,443,353	1		91,998		—		91,999
Business Combination and PIPE financing	—	—		72,272,942	7		616,213		—		616,220
Exercise of stock options	—	—		1,786,912	—		1,884				1,884
Stock-based compensation	—	—		—	—		39,540		—		39,540
Net loss	—	—		—	—		—		(119,806)		(119,806)
Balance as of June 30, 2020	—	$	—	360,910,639	$	36	$	1,189,845	$	(308,286)	$	881,595

⁽¹⁾ Issuance of Series D redeemable convertible preferred stock has been retroactively restated to give effect to the recapitalization transaction.

	Three Months Ended June 30, 2019
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' (Deficit) Equity
	Shares	Amount		Shares	Amount
Balance as of March 31, 2019	76,817,224	$	278,062	60,166,667	$	1	$	8,057	$	(128,824)	$	(120,766)
Retroactive application of recapitalization	(76,817,224)	(278,062)		200,239,676	25		278,037		—		278,062
Adjusted balance, beginning of period	—	—		260,406,343	26		286,094		(128,824)		157,296
Stock-based compensation	—	—		—	—		1,434		—		1,434
Net loss	—	—		—	—		—		(16,766)		(16,766)
Balance as of June 30, 2019	—	$	—	260,406,343	$	26	$	287,528	$	(145,590)	$	141,964

See accompanying notes to the consolidated financial statements.

5

	Six Months Ended June 30, 2019
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' (Deficit) Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2018	76,817,224	$	278,062	60,166,667	$	1	$	6,742	$	(98,565)	$	(91,822)
Retroactive application of recapitalization	(76,817,224)	(278,062)		200,239,676	25		278,037		—		278,062
Adjusted balance, beginning of period	—	—		260,406,343	26		284,779		(98,565)		186,240
Stock-based compensation	—	—		—	—		2,587		—		2,587
Cumulative effect of ASU 2018-07 adoption	—	—		—	—		162		(162)		—
Net loss	—	—		—	—		—		(46,863)		(46,863)
Balance as of June 30, 2019	—	$	—	260,406,343	$	26	$	287,528	$	(145,590)	$	141,964

See accompanying notes to the consolidated financial statements.

6

NIKOLA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities
Net loss	$	(119,806)	$	(46,863)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,812		446
Stock-based compensation	39,540		2,587
Revaluation of Series A redeemable convertible preferred stock warrant liability	—		495
Deferred income taxes	2		4
Non-cash in-kind services	17,241		—
Loss on forward contract liability	1,324		—
Changes in operating assets and liabilities:
Accounts receivable, net	346		(206)
Prepaid expenses and other current assets	(1,204)		(816)
Accounts payable and accrued expenses and other current liabilities	9,068		(5,336)
Customer deposits	4,892		—
Other long-term liabilities	—		(107)
Net cash used in operating activities	(45,785)		(49,796)
Cash flows from investing activities
Purchases of property and equipment	(3,857)		(4,311)
Deposits for property and equipment	(2,446)		(4,288)
Cash paid towards build-to-suit lease	—		(11,826)
Net cash used in investing activities	(6,303)		(20,425)
Cash flows from financing activities
Proceeds from issuance of Series D redeemable convertible preferred stock, net of issuance costs paid	50,349		—
Business Combination and PIPE financing, net of issuance costs paid	616,736		—
Proceeds from the exercise of stock options	1,884		—
Proceeds from landlord of finance lease	889		—
Payments to landlord for finance lease	(320)		—
Proceeds from note payable	4,134		—
Payment of note payable	(4,134)		—
Net cash provided by financing activities	669,538		—
Net increase (decrease) in cash and cash equivalents, including restricted cash	617,450		(70,221)
Cash and cash equivalents, including restricted cash, beginning of period	89,832		173,956
Cash and cash equivalents, including restricted cash, end of period	$	707,282	$	103,735
Supplementary cash flow disclosures:
Cash paid for interest	$	425	$	59
Cash interest received	$	479	$	721
Supplementary disclosures for noncash investing and financing activities:
Accrued purchases and deposits of property and equipment	$	1,371	$	13,229
Non-cash prepaid in-kind services	$	74,758	$	—
Accrued Business Combination and PIPE transaction costs	$	295	$	—

See accompanying notes to the consolidated financial statements.

7

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.BASIS OF PRESENTATION

(a)Basis of Presentation

On June 3, 2020 (the "Closing Date"), VectoIQ Acquisition Corp. ("VectoIQ"), consummated the previously announced merger pursuant to the Business Combination Agreement, dated March 2, 2020 (the "Business Combination Agreement"), by and among the VectoIQ, VCTIQ Merger Sub Corp., a wholly-owned subsidiary of VectoIQ incorporated in the State of Delaware ("Merger Sub"), and Nikola Corporation, a Delaware corporation ("Legacy Nikola"). Pursuant to the terms of the Business Combination Agreement, a business combination between the Company and Legacy Nikola was effected through the merger of Merger Sub with and into Legacy Nikola, with Legacy Nikola surviving as the surviving company and as a wholly-owned subsidiary of VectoIQ (the "Business Combination").

On the Closing Date, and in connection with the closing of the Business Combination, VectoIQ changed its name to Nikola Corporation (the "Company" or "Nikola"). Legacy Nikola was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification ("ASC") 805. This determination was primarily based on Legacy Nikola's stockholders prior to the Business Combination having a majority of the voting interests in the combined company, Legacy Nikola's operations comprising the ongoing operations of the combined company, Legacy Nikola's board of directors comprising a majority of the board of directors of the combined company, and Legacy Nikola's senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Nikola issuing stock for the net assets of VectoIQ, accompanied by a recapitalization. The net assets of VectoIQ are stated at historical cost, with no goodwill or other intangible assets recorded.

While VectoIQ was the legal acquirer in the Business Combination, because Legacy Nikola was deemed the accounting acquirer, the historical financial statements of Legacy Nikola became the historical financial statements of the combined company, upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of Legacy Nikola prior to the Business Combination; (ii) the combined results of the Company and Legacy Nikola following the closing of the Business Combination; (iii) the assets and liabilities of Legacy Nikola at their historical cost; and (iv) the Company’s equity structure for all periods presented.

In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company's common stock, $0.0001 par value per share ("Common Stock") issued to Legacy Nikola's stockholders in connection with the recapitalization transaction. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Nikola redeemable convertible preferred stock and Legacy Nikola common stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination Agreement. Activity within the statement of stockholders' equity for the issuances and repurchases of Legacy Nikola's convertible redeemable preferred stock, were also retroactively converted to Legacy Nikola common stock.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). The unaudited financial information reflects, in the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company's financial position, results of operations and cash flows for the periods indicated. The results reported for the interim period presented are not necessarily indicative of results that may be expected for the full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's audited consolidated financial statements as of and for the year ended December 31, 2019 included in the Prospectus which constituted a part of the Company's Registration Statement on Form S-1 (File No. 333-239940), which was declared effective by the SEC on July 27, 2020 (the "Prospectus").

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated.

8

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Certain prior period balances have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes.

All dollar amounts are in thousands, unless otherwise noted. Share and per share amounts are presented on a post-conversion basis for all periods presented, unless otherwise specified.

(b)Funding Risks and Going Concern

As an early stage growth company, Nikola’s ability to access capital is critical. Management plans to raise additional capital through a combination of public equity, debt financings, strategic alliances, and licensing arrangements.

Additional stock financing may not be available on favorable terms and could be dilutive to current stockholders. Debt financing, if available, may involve restrictive covenants and dilutive financing instruments.

The Company’s ability to access capital when needed is not assured and, if capital is not available to the Company when, and in the amounts needed, the Company could be required to delay, scale back, or abandon some or all of its development programs and other operations, which could materially harm the Company’s business, financial condition and results of operations.

These financial statements have been prepared by management in accordance with GAAP and this basis assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. These financial statements do not include any adjustments that may result from the outcome of this uncertainty.

As of the date of this report, the Company’s existing cash resources and existing borrowing availability are sufficient to support planned operations for the next 12 months. As a result, management believes that the Company's existing financial resources are sufficient to continue operating activities for at least one year past the issuance date of the financial statements.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)Comprehensive Loss

Comprehensive loss includes all changes in equity during a period from non-owner sources. Through June 30, 2020, there are no components of comprehensive loss which are not included in net loss; therefore, a separate statement of comprehensive loss has not been presented. The Company does not have any foreign currency translation adjustments as a component of other comprehensive loss through June 30, 2020, as the functional currency of all subsidiaries is the U.S. Dollar.

(b)Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, restricted cash and cash equivalents, and accounts receivable. The Company's cash is placed with high-credit-quality financial institutions and issuers, and at times exceed federally insured limits. The Company limits its concentration of risk in cash equivalents by diversifying its investments among a variety of industries and issuers. The Company has not experienced any credit loss relating to its cash equivalents.

(c)Concentration of Supplier Risk

The Company is not currently in the production stage and generally utilizes suppliers for outside development and engineering support. The Company does not believe that there is any significant supplier concentration risk during the periods ended June 30, 2020 and 2019.

(d)Cash, Cash Equivalents and Restricted Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. Additionally, the Company considers investments in money market funds with a floating net asset value to be cash equivalents. As of June 30, 2020 and December 31, 2019, the Company had $698.4 million and $85.7 million of cash and cash equivalents, which included cash equivalents of $662.4 million and $73.0 million of highly liquid investments at June 30, 2020 and December 31, 2019, respectively.

9

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As of June 30, 2020 and December 31, 2019, the Company had $4.1 million in an escrow account related to the securitization of the term loan with JP Morgan Chase included in restricted cash and cash equivalents.

The reconciliation of cash and cash equivalents and restricted cash and cash equivalents to amounts presented in the consolidated statements of cash flows are as follows:

	As of
	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	698,386	$	85,688
Restricted cash and cash equivalents – current	8,896		—
Restricted cash and cash equivalents – non-current	—		4,144
Cash, cash equivalents and restricted cash and cash equivalents	$	707,282	$	89,832

(e)Fair Value of Financial Instruments

The carrying value and fair value of the Company’s financial instruments are as follows:

	As of June 30, 2020
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents – money market	$	662,406	$	—	$	—	$	662,406
Restricted cash equivalents – money market	$	4,100	$	—	$	—	$	4,100

	As of December 31, 2019
	Level 1		Level 2	Level 3	Total
Assets
Cash equivalents – money market	$	73,005	—	—	$	73,005
Restricted cash equivalents – money market	4,144		—	—	4,144

In September 2019, Legacy Nikola entered into an agreement that required Legacy Nikola to issue, and the investor to purchase, Series D redeemable convertible preferred stock at a fixed price in April 2020 (the “ Forward Contract Liability”), which was accounted for as a liability. The liability was remeasured to its fair value each reporting period and at settlement, which occurred in April 2020 with the issuance of Series D redeemable convertible preferred stock. The change in fair value was recognized in other income (expense) on the consolidated statements of operations. The change in fair value of the Forward Contract Liability was as follows:

Estimated fair value at December 31, 2019	$	—
Change in fair value	1,324
Estimated fair value at March 31, 2020	$	1,324
Settlement of forward contract liability	$	(1,324)
Estimated fair value at June 30, 2020	$	—

In determining the fair value of the Forward Contract Liability, estimates and assumptions impacting fair value included the estimated future value of the Company's Series D redeemable convertible preferred stock, discount rates and estimated time to liquidity. The following reflects the significant quantitative inputs used:

10

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	As of
	April 10, 2020			December 31, 2019
Estimated future value of Series D redeemable convertible preferred stock	$	19.01		$	18.52
Discount rate	—		%	1.56		%
Time to liquidity (years)	0			0.3

(f)Recent Accounting Pronouncements

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC. The adoption dates discussed below reflect this election. The Company expects to become a large accelerated filer on the last day of its fiscal year 2020 and will no longer qualify as an EGC and plans to revise the adoption dates accordingly in subsequent filings.

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In July 2018, ASU 2018-10, Codification Improvements to Topic 842, Leases, was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. Furthermore, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method in addition to the existing modified retrospective transition method by allowing a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. These new leasing standards are effective for the Company beginning January 1, 2021, with early adoption permitted. The Company is currently evaluating the effect of the adoption of this guidance on the consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments, which, together with subsequent amendments, amends the requirement on the measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company beginning January 1, 2023, with early adoption permitted. The Company is currently in the process of evaluating the effects of this pronouncement on the Company’s financial statements and does not expect it to have a material impact on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. ASU 2019-12 is effective for the Company beginning January 1, 2022, with early adoption permitted. The Company is currently in the process of evaluating the effects of this pronouncement on the Company’s financial statements and does not expect it to have a material impact on the consolidated financial statements.

In January 2020, the FASB issued ASU No. 2020-01, Investments – Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. ASU 2020-01 is effective for the Company beginning January 1, 2022, with early adoption permitted. The Company is currently in the process of evaluating the effects of this pronouncement on the Company’s financial statements and does not expect it to have a material impact on the consolidated financial statements.

3. BUSINESS COMBINATION

On June 3, 2020, the Company and VectoIQ consummated the merger contemplated by the business combination agreement, with Legacy Nikola surviving the merger as a wholly-owned subsidiary of VectoIQ. Immediately prior to the closing of the Business Combination, all shares of outstanding redeemable convertible preferred stock of Legacy Nikola were automatically converted into shares of Common Stock. Upon the consummation of the Business Combination, each share of

11

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Legacy Nikola common stock issued and outstanding was canceled and converted into the right to receive 1.901 shares (the "Exchange Ratio") of Common Stock (the "Per Share Merger Consideration").

Upon the closing of the Business Combination, VectoIQ's certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 750,000,000 shares, of which 600,000,000 shares were designated Common Stock, $0.0001 par value per share, and of which 150,000,000 shares were designated preferred stock, $0.0001 par value per share.

In connection with the execution of the Business Combination Agreement, VectoIQ entered into separate subscription agreements (each, a "Subscription Agreement") with a number of investors (each a "Subscriber"), pursuant to which the Subscribers agreed to purchase, and VectoIQ agreed to sell to the Subscribers, an aggregate of 52,500,000 shares of common stock (the "PIPE Shares"), for a purchase price of $10.00 per share and an aggregate purchase price of $525.0 million, in a private placement pursuant to the subscription agreements (the "PIPE"). The PIPE investment closed simultaneously with the consummation of the Business Combination.

Prior to the closing of the Business Combination, Legacy Nikola repurchased 2,850,930 shares of Legacy Nikola's Series B redeemable convertible preferred stock at the price of $8.77 per share for an aggregate purchase price of $25.0 million pursuant to a Series B preferred stock repurchase agreement (the "Repurchase Agreement") with Nimbus Holdings LLC ("Nimbus"). The repurchase is retrospectively adjusted in the statement of stockholders' equity to reflect the Company’s equity structure for all periods presented.

Immediately following the Business Combination, pursuant to a redemption agreement, Nikola redeemed 7,000,000 shares of Common Stock from M&M Residual, LLC at a purchase price of $10.00 per share. See Note 6 “Related Party Transactions” for further details on the transaction.

The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, VectoIQ was treated as the "acquired" company for financial reporting purposes. See Note 1 "Basis of Presentation" for further details. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Nikola issuing stock for the net assets of VectoIQ, accompanied by a recapitalization. The net assets of VectoIQ are stated at historical cost, with no goodwill or other intangible assets recorded.

Prior to the Business Combination, Legacy Nikola and VectoIQ filed separate standalone federal, state and local income tax returns. As a result of the Business Combination, structured as a reverse acquisition for tax purposes, Legacy Nikola, which was renamed Nikola Subsidiary Corporation in connection with the Business Combination (f/k/a Nikola Corporation), became the parent of the consolidated filing group, with Nikola Corporation (f/k/a VectoIQ Acquisition Corp.) as a subsidiary.

The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows and the consolidated statement of changes in equity for the six months ended June 30, 2020:

	Recapitalization
Cash - VectoIQ's trust and cash (net of redemptions)	$	238,358
Cash - PIPE	525,000
Less transaction costs and advisory fees paid	(51,200)
Less VectoIQ loan payoff in conjunction with close	(422)
Less: M&M Residual redemption	(70,000)
Less: Nimbus repurchase	(25,000)
Net Business Combination and PIPE financing	616,736
Less: non-cash net liabilities assumed from VectoIQ	(221)
Less: accrued transaction costs and advisory fees	(295)
Net contributions from Business Combination and PIPE financing	$	616,220

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NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The number of shares of Common Stock issued immediately following the consummation of the Business Combination:

	Number of Shares
Common stock, outstanding prior to Business Combination	22,986,574
Less redemption of VectoIQ shares	(2,702)
Common stock of VectoIQ	22,983,872
VectoIQ Founder Shares	6,640,000
Shares issued in PIPE	52,500,000
Less: M&M Residual redemption	(7,000,000)
Less: Nimbus repurchase	(2,850,930)
Business Combination and PIPE financing shares	72,272,942
Legacy Nikola shares (1)	288,631,536
Total shares of Common Stock immediately after Business Combination	360,904,478

⁽¹⁾ The number of Legacy Nikola shares was determined from the 151,831,441 shares of Legacy Nikola common stock outstanding immediately prior to the closing of the Business Combination converted at the Exchange Ratio of 1.901. All fractional shares were rounded down.

4.BALANCE SHEET COMPONENTS

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following at June 30, 2020 and December 31, 2019, respectively:

	As of
	June 30, 2020		December 31, 2019
Materials and supplies	$	1,859	$	1,872
Prepaid expenses and current assets	2,813		2,551
Total prepaid expenses and other current assets	$	4,672	$	4,423

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NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Property and Equipment

Property and equipment consist of the following at June 30, 2020 and December 31, 2019, respectively:

	As of
	June 30, 2020		December 31, 2019
Machinery and equipment	$	14,130	$	13,483
Furniture and fixtures	1,404		1,228
Leasehold improvements	1,376		1,437
Software	2,759		1,909
Building	33,248		33,248
Construction-in-progress	11,636		4,264
Other	1,583		1,309
Property and equipment, gross	66,136		56,878
Less: accumulated depreciation and amortization	(6,280)		(3,500)
Total property and equipment, net	$	59,856	$	53,378

Depreciation expense for the three months ended June 30, 2020 and 2019 was $1.4 million and $0.2 million, respectively. Depreciation expense for the six months ended June 30, 2020 and 2019 was $2.8 million and $0.4 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following at June 30, 2020 and December 31, 2019, respectively:

	As of
	June 30, 2020		December 31, 2019
Accrued payroll and payroll related expenses	$	1,909	$	1,385
Accrued stock issuance and transaction costs	295		4,695
Accrued outsourced engineering services	7,732		3,205
Other accrued expenses	3,311		1,480
Current portion of lease financing liability	705		660
Total accrued expenses and other current liabilities	$	13,952	$	11,425

5.INTANGIBLE ASSETS, NET

The gross carrying amount and accumulated amortization of separately identifiable intangible assets are as follows:

	As of June 30, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
In-process R&D	$	12,110	$	—	$	12,110
Trademarks	394		(88)		306
Licenses	50,150		(85)		50,065
Total intangible assets	$	62,654	$	(173)	$	62,481

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NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	As of December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
In-process R&D	$	12,110	$	—	$	12,110
Trademarks	394		(71)		323
Licenses	50,150		(70)		50,080
Total intangible assets	$	62,654	$	(141)	$	62,513

Amortization expense for the three and six months ended June 30, 2020 and 2019 was immaterial.

6.RELATED PARTY TRANSACTIONS

Related Party Aircraft Charter Agreement

In 2019, the Company entered into an aircraft charter arrangement with the Company’s Executive Chairman (the "Executive Chairman") of the board of directors of the Company and Legacy Nikola's former Chief Executive Officer to reimburse him for the flight hours incurred for Company use on his personal aircraft. These flight hours are related to business travel by the Executive Chairman and other members of the executive team to business meetings and trade conferences, as well as the Executive Chairman's commute between the Company’s headquarters in Phoenix, Arizona, and his residence in Utah. During the three months ended June 30, 2020 and 2019, the Company reimbursed $0.07 million and $0.04 million, respectively, to the Executive Chairman for the use of the aircraft. During the six months ended June 30, 2020 and 2019, the Company reimbursed $0.24 million and $0.04 million, respectively, to the Executive Chairman for use of the aircraft. As of June 30, 2020 and December 31, 2019 the Company had $0.05 million and $0.03 million, respectively, outstanding in accounts payable and accrued expenses to the Executive Chairman for the use of the aircraft.

Related Party Revenue and Accounts Receivable

During the three months ended June 30, 2020 and 2019 the Company recorded solar revenues of $0.03 million and $0.04 million, respectively, for the provision of solar installation services to the Executive Chairman, which are billed on time and materials basis. During the six months ended June 30, 2020 and 2019 the Company recorded solar revenues of $0.08 million and $0.06 million, respectively, for the provision of solar installation services to the Executive Chairman. As of June 30, 2020 and December 31, 2019, the Company had $3 thousand and $51 thousand, respectively, outstanding in accounts receivable related to solar installation services. The outstanding balance was paid subsequent to period end.

Related Party Stock Options

In December 2018, the Executive Chairman issued 6,005,139 performance-based stock options to recognize the performance and contribution of specific employees, including certain executive officers, pursuant to Legacy Nikola's Founder Stock Option Plan (the "Founder Stock Option Plan"). The underlying Common Stock of these option awards are owned by M&M Residual, a Nevada limited liability company that is wholly-owned by the Executive Chairman and are considered to be issued by the Company for accounting purposes. These performance-based stock options vest based on the Company's achievement of a liquidation event, such as a private sale or an initial public offering on a U.S. stock exchange. An additional award of 180,153 shares was made under the plan in May 2020, to replace a forfeited grant. The weighted average grant date fair value of the performance-based stock options was $1.20 per share for the period ended June 30, 2020. During the three months ended June 30, 2020, the performance conditions were met upon the closing of the Business Combination. As a result, the Company recognized stock-based compensation expense related to these option awards for $7.2 million during the three and six months ended June 30, 2020.

Related Party Redemption of Common Stock

15

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Immediately following the Business Combination, pursuant to a redemption agreement, Nikola redeemed 7,000,000 shares of common stock from M&M Residual at a purchase price of $10.00 per share, payable in immediately available funds. The number of shares to be redeemed and the redemption price were determined and agreed upon during negotiations between the various parties to the Business Combination, including the Executive Chairman and representatives of VectoIQ, Legacy Nikola and the Subscribers.

Former Related Party License and Service Agreements

In September 2019, Legacy Nikola entered into a Master Industrial Agreement (“CNHI Services Agreement”) and S-WAY Platform and Product Sharing Agreement (“CNHI License Agreement”) with CNH Industrial N.V. ("CNHI") and Iveco S.p.A ("Iveco"), a former related party, in conjunction with the Company’s Series D redeemable convertible preferred stock offering. Under these agreements, CNHI and Iveco were issued 25,661,448 shares of Legacy Nikola Series D redeemable convertible preferred stock in exchange for an IP license valued at $50.0 million, $100.0 million in-kind services and $100.0 million in cash.

During the three and six months ended June 30, 2020, the Company issued 7,390,436 and 9,443,353 shares of Series D redeemable convertible preferred stock, respectively, to Iveco, in exchange for $72.0 million and $92.0 million of prepaid in-kind services, respectively. During the three and six months ended June 30, 2020, $10.5 million and $17.2 million of in-kind services, respectively, were recognized in research and development on the consolidated statements of operations. As of June 30, 2020 and December 31, 2019, $74.8 million and zero prepaid in-kind services, respectively, were reflected on the consolidated balance sheets.

During the three and six months ended June 30, 2020, the Company issued 5,132,291 shares of Series D redeemable convertible preferred stock to Iveco in exchange for $50.0 million in cash. As of June 3, 2020, the entity was no longer considered a related party under ASC 850.

Former Related Party Research and Development and Accounts Payable

During the three months ended June 30, 2020 and 2019, the Company recorded research and development expenses of $5.6 million and $5.6 million, respectively, from a former related party. During the six months ended June 30, 2020 and 2019, the Company recorded research and development expenses of $6.5 million and $10.7 million, respectively, from a former related party. As of June 30, 2020, the Company had $0.6 million of accounts payable due to the former related party and $5.5 million of accrued expenses due to the former related party. As of December 31, 2019, the Company had $0.6 million of accounts payable due to the former related party and $0.5 million of accrued expenses due to the former related party. As of June 3, 2020, the entity is no longer considered a related party.

Former Related Party Stock Repurchase

In September 2019, in contemplation of Legacy Nikola’s proposed Series D preferred stock financing, Legacy Nikola entered into an amendment of the letter agreement by and between Legacy Nikola and Nimbus, dated August 3, 2018 (the “Nimbus Redemption Letter Agreement” and as amended, the “Nimbus Amendment”). Pursuant to the terms of the Amendment and the Nimbus Repurchase Agreement, Legacy Nikola agreed to repurchase 3,575,750 shares of Series B redeemable convertible preferred stock held by Nimbus, a former related party, at the share price of $8.77 which is equal to 90% of the share price in the Series D redeemable convertible preferred stock financing of $9.74 per share. The number of shares to be repurchased exceeded five percent (5%) of the contemplated Series D round of financing. This was negotiated by Legacy Nikola in order to reduce the total number of shares of Series B redeemable convertible preferred stock held by Nimbus, to such an extent that Nimbus would no longer be entitled to elect a member of Legacy Nikola's board of directors as a result of Nimbus' Series B preferred stock holdings. The repurchase was completed in October 2019, for an aggregate repurchase amount of $31.4 million. The Amendment also provided Nimbus with additional redemption rights based on various capital raise thresholds, none of which were met as of December 31, 2019.

In March 2020, Legacy Nikola entered into an additional letter agreement with Nimbus in which Nimbus agreed to terminate the Nimbus Redemption Letter Agreement. Concurrently, Legacy Nikola entered into an agreement with Nimbus, whereby Legacy Nikola agreed to repurchase an additional 2,850,930 shares of Series B preferred stock from Nimbus at a share

16

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

price of $8.77 for an aggregate repurchase price of $25.0 million. The parties agreed that the repurchase price constituted the price that Nimbus would otherwise be entitled to under the Nimbus Redemption Letter Agreement. The number of shares to be repurchased was negotiated by Legacy Nikola and Nimbus as a mechanism to compensate Nimbus for agreeing to relinquish its previous redemption rights granted in the Nimbus Redemption Letter Agreement.

The repurchase was contingent on completion of the Business Combination which occurred during the quarter ending June 30, 2020, and the Company repurchased the shares in conjunction with the closing of the Business Combination. The Company recorded a reduction to additional paid in capital for the repurchase price in excess of the carrying value of the redeemable convertible preferred stock of $13.4 million. The carrying value of the shares repurchased were recorded as a reduction to redeemable convertible preferred stock, which has been retrospectively adjusted in the statement of stockholders' equity to reflect the Company’s equity structure for all periods presented. For the computation of net loss per share for the three and six months ended June 30, 2020, the repurchase price in excess of the carrying value of the redeemable convertible preferred stock of $13.4 million is reflected as a decrease to net loss attributable to common stockholders (see Note 12). As of June 3, 2020, the entity is no longer considered a related party.

7.DEBT

Term Note

Debt consisted of a term note for $4.1 million as of June 30, 2020 and December 31, 2019.

In January 2018, the Company entered into a term note with JP Morgan Chase, pursuant to which, the Company borrowed $4.1 million to fund equipment purchases. The term note accrued interest at 2.43% per annum and was payable on or before January 31, 2019. The term note is secured by restricted cash.

In February 2019, the Company amended the term note to extend its term by one year and increased the interest rate to 3.00% per annum. In February 2020, the Company further amended the term note and extended its term for one year, to January 31, 2021. The term note accrues interest at a rate equal to the LIBOR rate for the applicable interest period multiplied by the statutory reserve rate as determined by the Federal Reserve Board. The term loan has a financial covenant that requires the Company to maintain a minimum amount of liquidity with the bank. As of June 30, 2020, the Company was in compliance with the financial covenant.

Payroll Protection Program Note

In April 2020, the Company entered into a Note with JP Morgan Chase under the Small Business Administration Paycheck Protection Program established under Section 1102 of the Coronavirus Aid, Relief and Economic Security (CARES) Act, pursuant to which the Company borrowed $4.1 million (the "Note"). The Note accrues interest at rate of 0.98% per annum and matures in 24 months. On April 30, 2020, the Company returned the $4.1 million in proceeds from the Note to JP Morgan Chase.

8.CAPITAL STRUCTURE

Shares Authorized

As of June 30, 2020, the Company had authorized a total of 750,000,000 shares for issuance with 600,000,000 shares designated as common stock and 150,000,000 shares designated as preferred stock.

Warrants

As of June 30, 2020, the Company had 23,000,000 public warrants and 890,000 private warrants outstanding. Each public and private warrant entitles the registered holder to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment, at any time commencing 30 days after the completion of the Business Combination. The public warrants will expire on the fifth anniversary of the Business Combination, or earlier upon redemption or liquidation.

17

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 The Company may call the public warrants for redemption:

•in whole and not in part;

•at a price of $0.01 per warrant;

•upon a minimum of 30 days' prior written notice of redemption; and

•if, and only if, the last reported closing price of the ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which Nikola sends the notice of redemption to the warrant holders.

If the Company calls the public warrants for redemption, management will have the option to require all holders that wish to exercise the public warrants to do so on a "cashless basis," as described in the warrant agreement.

The exercise price and number of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of common stock at a price below its exercise price.

On July 22, 2020 the Company issued a redemption notice to the warrant holders for a redemption of all of the outstanding public warrants, on a cash basis. The redemption is expected to be completed on August 21, 2020. See Note 13, "Subsequent Events" for additional information regarding the redemption of public warrants.

9.STOCK BASED COMPENSATION EXPENSE

2017 and 2020 Stock Plans

Legacy Nikola's 2017 Stock Option Plan (the “2017 Plan”) provides for the grant of incentive and nonqualified options to purchase Legacy Nikola common stock to officers, employees, directors, and consultants of Legacy Nikola. Options are granted at a price not less than the fair market value on the date of grant and generally become exercisable between one and four years after the date of grant. Options generally expire ten years from the date of grant. Outstanding awards under the 2017 Plan continue to be subject to the terms and conditions of the 2017 Plan.

Each Legacy Nikola option from the 2017 Plan that was outstanding immediately prior to the Business Combination, whether vested or unvested, was converted into an option to purchase a number of shares of Common Stock (each such option, an "Exchanged Option") equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Legacy Nikola common stock subject to such Legacy Nikola option immediately prior to the Business Combination and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such Legacy Nikola option immediately prior to the consummation of the Business Combination, divided by (B) the Exchange Ratio. Except as specifically provided in the Business Combination Agreement, following the Business Combination, each Exchanged Option will continue to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Legacy Nikola option immediately prior to the consummation of the Business Combination. All stock option activity was retroactively restated to reflect the Exchanged Options.

At the Company's special meeting of stockholders held on June 2, 2020, the stockholders approved the Nikola Corporation 2020 Stock Incentive Plan (the "2020 Plan") and the Nikola Corporation 2020 Employee Stock Purchase Plan (the "2020 ESPP"). The 2020 Plan and the 2020 ESPP were previously approved, subject to stockholder approval, by the Company's board of directors on May 6, 2020. The aggregate number of shares authorized for issuance under the 2020 Plan will not exceed 20,000,000, plus the number of shares subject to outstanding awards as of the closing of the Business Combination under the 2017 Plan that are subsequently forfeited or terminated, plus the number of reserved shares not issued or subject to outstanding grants under the 2017 Plan as of the closing of the Business Combination. In addition, the shares authorized for the 2020 Plan may be increased on an annual basis for a period of up to ten years, beginning with the fiscal year that begins January 1, 2021, in an amount equal up to 2.5% of the outstanding shares of Common Stock on the last day of the immediately preceding fiscal year. The aggregate number of shares available for issuance under the 2020 ESPP is 4,000,000, which may be increased on an annual basis of up to 1.0% of the outstanding shares of Common Stock as of the first day of each such fiscal year.

18

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The 2020 Plan provides for the grant of incentive and nonqualified stock option, restricted stock units ("RSUs"), restricted share awards, stock appreciation awards, and cash-based awards to employees, outside directors, and consultants of the Company. The 2020 Plan and the 2020 ESPP became effective immediately upon the closing of the Business Combination. No offerings have been authorized to date by the Company's board of directors under the ESPP.

Common Stock Valuation

Prior to the completion of Business Combination and listing of the Company's common stock on the public stock exchange, the fair value of Legacy Nikola common stock that underlies the stock options was determined by Legacy Nikola's board of directors based upon information available at the time of grant. Because such grants occurred prior to the public trading of the Company's common stock, Legacy Nikola's board of directors determined the fair value of Legacy Nikola common stock with assistance of periodic valuation studies from an independent third-party valuation firm. The valuations were consistent with the guidance and methods outlined in the AICPA Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or AICPA Practice Aid.

Stock Option Valuation

The Company utilizes the Black-Scholes option pricing model for estimating the fair value of options granted, which requires the input of highly subjective assumptions.

The Company calculates the fair value of each option grant on the grant date using the following assumptions:

Expected Term - The Company uses the simplified method when calculating expected term due to insufficient historical exercise data.

Expected Volatility - As the Company’s shares have limited history, the volatility is based on a benchmark of comparable companies within the automotive and energy storage industries.

Expected Dividend Yield - The dividend rate used is zero as the Company does not have a history of paying dividends on its common stock and does not anticipate doing so in the foreseeable future.

Risk-Free Interest Rate - The interest rates used are based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

	As of
	June 30, 2020	December 31, 2019
Exercise price	$3.58 - $9.66	$1.05 – $3.58
Risk-free interest rate	0.2% - 1.7%	1.4% – 2.7%
Expected term (in years)	0.51 – 6.3	5.0 – 6.3
Expected dividend yield	—	—
Expected volatility	83.6% - 85.8%	70.0% – 85.1%

The unrecognized compensation cost of stock options as of June 30, 2020 was $3.6 million, which is expected to be recognized over the weighted average remaining service period of 1.97 years.

Performance Based Stock Options

As of June 30, 2020 and December 31, 2019, the outstanding performance-based options (“PSUs”) issued by the Company were 5,153,485. No PSUs were granted during the six months ended June 30, 2020. The performance-based provision, related to specified amount of equity capital raised, was achieved for all of the outstanding performance-based awards in 2018 and the Company began recognizing expense related to these PSUs in 2018.

The 5,153,485 PSUs outstanding as of June 30, 2020 do not include PSUs issued by a related party. See Note 6, “Related Party Transactions” for additional information regarding the related party PSUs.

Stock Option Activity

19

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Changes in stock options are as follows:

	Options	Weighted Average Exercise Price Per share		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2019	40,012,825	$	1.08	8.78
Granted	1,582,496	$	5.30
Exercised	1,786,912	$	1.05
Cancelled	91,330	$	1.65
Outstanding at June 30, 2020	39,717,079	$	1.25	8.34
Vested and exercisable as of June 30, 2020	36,696,437	$	1.19	8.31

The weighted-average grant date fair value of stock options issued for the six months ended June 30, 2020 were $8.20. There were 1,786,912 stock options exercised during the six months ended June 30, 2020 and Company received $1.9 million in cash proceeds from the exercise of options.

As a result of the Business Combination, vesting of certain stock options and PSUs accelerated in accordance with terms of the related award agreements, resulting in additional stock-based compensation expense of $8.1 million in June 2020.

Related Party Performance-based Stock Options Activity

In December 2018, the Executive Chairman issued 6,005,139 PSUs to certain employees. An additional award of 180,153 Legacy Nikola options was made under the Founder Stock Option Plan in May 2020, to replace a forfeited grant. As of June 30, 2020 the weighted average exercise price per share was $1.39, the weighted-average grant date fair value was $1.20 per share, and the weighted average remaining contractual term of these PSUs is 8.51 years. All PSUs vested in conjunction with the Business Combination and the Company recorded stock-based compensation expense of $7.2 million in the second quarter of 2020.

Restricted Stock Units

In June 2020, in connection with the closing of the Business Combination, the Company granted 2,163,000 time-based RSUs to several executive officers and directors of the Company. The RSUs have a vesting cliff of either one or three years after the grant date. The fair value of RSUs is based on the closing price of the Company’s common stock on the grant date. The unrecognized compensation cost of the RSUs as of June 30, 2020 was $71.4 million, which is expected to be recognized over the weighted average remaining service period of 2.79 years. The RSUs are subject to legal approval by the board of directors as soon as administratively practicable following the effective registration of the securities under the 2020 Plan on a Registration Statement on Form S-8. As all the terms of the RSUs have been established and communicated, the grant date was achieved as of June 3, 2020.

Market Based RSUs

In June 2020, in connection with the closing of the Business Combination, the Company granted 16,356,000 market based RSUs ("Market Based RSUs") to several executive officers of the Company. The Market Based RSUs contain a stock price index as a benchmark for vesting. These awards have three milestones that each vest depending upon a consecutive 20-trading day stock price target of the Company’s common stock. The shares vested are transferred to the award holders upon the completion of the requisite service period of three years, and upon achievement certification by the Company's board of directors. If the target price for the tranche is not achieved by the end of third anniversary of the grant date, the Market Based RSUs are forfeited. The Market Based RSUs are subject to legal approval by the board of directors as soon as administratively practicable following the effective registration of the securities under the 2020 Plan on a Registration Statement on Form S-8. As all the terms of the Market Based RSUs have been established and communicated, the grant date was achieved as of June 3, 2020.

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NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The grant date fair value of the Market Based RSUs was determined using a Monte Carlo simulation model that utilizes significant assumptions, including volatility, that determine the probability of satisfying the market condition stipulated in the award to calculate the fair value of the award. The expected volatility in the model of 70% was estimated on the basis of historical volatility of a group of peers, given the limited trading history of the Company. The risk-free interest rate of 0.26% was based on the United States Treasury rate for a term commensurate with the expected life of the grant. The total grant date fair value of the Market Based RSUs was determined to be $466.7 million and will be recognized over the requisite service period of 3 years. The unrecognized compensation expense as of June 30, 2020 was $455.0 million and will be recognized over the remaining service period of 2.9 years.

Stock Compensation Expense

The following table presents the impact of stock-based compensation expense on the consolidated statements of operations for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Research and development	$	2,880	$	155	$	3,238	$	305
Selling, general, and administrative	35,347		1,279		36,302		2,282
Total stock-based compensation expense	$	38,227	$	1,434	$	39,540	$	2,587

10.INCOME TAXES

To calculate the interim tax provision, at the end of each interim period the Company estimates the annual effective tax rate and applies that to its ordinary quarterly earnings. The effect of changes in the enacted tax laws or rates is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and judgments including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in foreign jurisdictions, permanent differences between book and tax amounts, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained, or the tax environment changes.

Income tax expense was immaterial for the three and six ended June 30, 2020 and 2019, respectively.

11.COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is subject to legal and regulatory actions that arise from time to time in the ordinary course of business. The assessment as to whether a loss is probable or reasonably possible, and as to whether such loss or a range of such loss is estimable, often involves significant judgment about future events. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss with respect to loss contingencies for asserted legal and other claims. However, the outcome of litigation is inherently uncertain. There is no material pending or threatened litigation against the Company that remains outstanding as of June 30, 2020.

Commitments and Contingencies on Land Conveyance

In February 2019, the Company was conveyed 430 acres of land in Coolidge, Arizona, by Pinal Land Holdings, LLC (“PLH”). The purpose of the land conveyance was to incentivize the Company to locate its manufacturing facility in Coolidge, Arizona, and provide additional jobs to the region. The Company is required to commence construction of the manufacturing facility within two years of February 2019 (the “Manufacturing Facility Commencement Deadline”), and is required to complete construction of the manufacturing facility within five years of February 2019 (the “Manufacturing Facility Deadline”).

21

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Upon the earlier of the Manufacturing Facility Commencement Deadline or the commencement of construction, the Company will deposit $4.0 million in escrow to PLH. The amount in escrow will be returned to the Company upon completion of construction.

If the Company fails to meet the Manufacturing Facility Commencement Deadline, the Company has the option to extend the deadline for one year by providing written notice to PLH and paying PLH $0.5 million. In the event the Company fails to meet the extended deadline, PLH is entitled to either the $4.0 million security deposit, or may reacquire the land from the Company at a price equal to out of pocket costs and expenses incurred by the Company prior to the Manufacturing Facility Commencement Deadline.

If the Company fails to meet the Manufacturing Facility Deadline, the Company may extend the completion deadline by paying PLH $0.2 million per month, until construction is completed (the "Monthly Payment Option"). The extension of the Manufacturing Facility Deadline beyond two years will require express written consent of PLH. If the Company does not exercise the Monthly Payment Option, fails to make timely payments on the Monthly Payment Option, or fails to complete construction by the extended Manufacturing Facility Deadline, PLH is entitled to either the $4.0 million security deposit or may reacquire the land and property at the appraised value to be determined by independent appraisers selected by the Company and PLH.

Contingent Fee for Advisory Services

In January 2020, the Company entered into an agreement to obtain advisory services for the potential Business Combination. The fee for the services was contingent upon completion of the Business Combination, which occurred on June 3, 2020. The contingent fee of $3.0 million was paid during the three months ended June 30, 2020

Commitment to Fund Joint Venture

In April 2020, the Company and Iveco entered into a series of agreements which established a joint venture in Europe, Nikola Iveco Europe B.V. The operations expected to be performed by the joint venture consist of the development and manufacturing of the battery-electric vehicle ("BEV") and fuel cell electric vehicle ("FCEV") trucks for the European market, as well as for the North American market while Nikola's greenfield manufacturing facility in Coolidge, Arizona, is being completed. The operations of the joint venture are expected to commence in the third quarter of 2020.

The agreements provide for a 50/50 ownership of the joint venture and a 50/50 allocation of the joint venture's production volumes and profits between Nikola and Iveco. Both parties are entitled to appoint an equal number of board members to the board of the joint venture. Pursuant to the terms of the agreements, the Company and Iveco each contributed intellectual property licenses to their respective technology, and agreed to contribute approximately 7.4 million Euros in cash for a 50% interest in the joint venture. The cash contribution is to be funded by September 30, 2020. The intellectual property licenses contributed to the joint venture by Nikola are related to intellectual property related to Nikola-developed BEV and FCEV technology for the use in the European market. Iveco contributed to the joint venture a license for the S-WAY technology for use in the European market.

As of June 30, 2020, the joint venture has not commenced operations and the Company has not contributed cash to the entity resulting in no financial statement impact for the period ended June 30, 2020. Based on the preliminary review of the executed and draft agreements, the Company expects to account for the joint venture under the equity method of accounting.

12.NET LOSS PER SHARE

The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders for the three and six months ended June 30, 2020 and 2019.

22

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
	(in thousands, except share and per share data)
Numerator:
Net loss	$	(86,643)	$	(16,766)	$	(119,806)	$	(46,863)
Less: Premium on repurchase of redeemable convertible preferred stock	(13,407)		—		(13,407)		—
Net loss attributable to common stockholder, basic and diluted	(100,050)		(16,766)		(133,213)		(46,863)
Denominator:
Weighted average shares outstanding, basic and diluted	303,785,616		260,406,343		287,822,558		260,406,343
Net loss per share to common stockholder, basic and diluted	$	(0.33)	$	(0.06)	$	(0.46)	$	(0.18)

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common stock outstanding would have been anti-dilutive.

The following outstanding common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive.

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Outstanding warrants	23,890,000	—	23,890,000	—
Stock options, including performance stock options	39,717,079	39,214,816	39,717,079	39,214,816
Restricted stock units, including market based RSUs	18,519,000	—	18,519,000	—
Total	82,126,079	39,214,816	82,126,079	39,214,816

13.SUBSEQUENT EVENTS

On July 22, 2020, the Company issued a notice of redemption of all of its outstanding public warrants. Holders of the Company’s public warrants have until 5:00 p.m. New York City time, on August 21, 2020, to exercise their public warrants by paying the exercise price of $11.50 per share in cash. Public warrants not exercised by the redemption date will be void and no longer exercisable, and redeemed by the Company for a price of $0.01 per public warrant. The private warrants still held by the initial holders thereof or permitted transferees of the initial holders are not subject to this redemption.

As of July 30, 2020, the Company has issued 18,070,302 shares of Common Stock pursuant to the exercise of public warrants and have received approximately $207.8 million of proceeds from such exercises.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this report, the words “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” and similar expressions are intended to identify forward looking statements. These are statements that relate to future periods and include our ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the combined business to grow and manage growth profitably; our financial and business performance; changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; our future capital requirements and sources and uses of cash; 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 proceeding; the effect of the COVID-19 pandemic on our business; our ability to raise capital; our ability to compete; the success of our collaborations; 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.

Overview

We are a vertically integrated zero emissions transportation systems provider that designs and manufactures state of the art battery electric and hydrogen electric vehicles, electric vehicle drivetrains, energy storage systems, and hydrogen fueling stations. To date, we have been primarily focused on delivering zero emission Class 8 trucks to the commercial transportation sector in the U.S. and in Europe. Our core product offering includes battery electric and hydrogen fuel cell electric trucks and hydrogen fuel.

We operate in three business units: Truck, Energy and Powersports. The Truck business unit is developing and commercializing BEV and FCEV Class 8 trucks that provide environmentally friendly, cost effective solutions to the short haul and long haul trucking sector. The Energy business unit is developing and constructing a network of hydrogen fueling stations to meet hydrogen fuel demand for our FCEV customers. The Powersports business unit is developing electric vehicle solutions for military and outdoor recreational applications.

In 2019, we partnered with Iveco, a subsidiary of CNHI, a leading European industrial vehicle manufacturing company. Together, Nikola and Iveco are jointly developing cab over BEV and FCEV trucks for sale in the European market which will be manufactured through a 50/50 owned joint venture in Europe. In April 2020, the Company and Iveco entered into a series of agreements which established the joint venture, Nikola Iveco Europe B.V. Our joint venture with Iveco provides us with the manufacturing infrastructure to build BEV trucks for the North American market prior to the completion of our planned greenfield manufacturing facility in Coolidge, Arizona. The operations of the joint venture are expected to commence in the third quarter of 2020.

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We began the construction on our greenfield manufacturing facility in July 2020, and Iveco will contribute technical engineering and production support. Phase 1 of the greenfield manufacturing facility will be completed by the end of 2021, and we expect to start BEV production at the facility in 2022 and FCEV production in 2023.

We expect both our capital and operating expenditures will increase significantly in connection with our ongoing activities, as we:

• construct 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.

Comparability of Financial Information

Nikola’s results of operations and statements of assets and liabilities may not be comparable between periods as a result of the Business Combination and becoming a public company.

Business Combination and Public Company Costs

On June 3, 2020, the Company and VectoIQ consummated the merger contemplated by the Business Combination Agreement, with Legacy Nikola surviving the merger as a wholly-owned subsidiary of VectoIQ. Immediately prior to the closing of the Business Combination, all shares of outstanding redeemable convertible preferred stock of Legacy Nikola were automatically converted into shares of VectoIQ's common stock. Upon the consummation of the Business Combination, each share of Legacy Nikola common stock issued and outstanding was canceled and converted into the right to receive the Per Share Merger Consideration.

Upon the closing of the Business Combination, VectoIQ's certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 750,000,000 shares, of which 600,000,000 shares were designated common stock, $0.0001 par value per share, and of which 150,000,000 shares were designated preferred stock, $0.0001 par value per share.

In connection with the execution of the Business Combination Agreement, VectoIQ entered into separate subscription agreements with a number of investors, pursuant to which the Subscribers agreed to purchase, and VectoIQ agreed to sell to the Subscribers, an aggregate of 52,500,000 PIPE Shares, for a purchase price of $10.00 per share and an aggregate purchase price of $525.0 million, in the PIPE. The PIPE investment closed simultaneously with the consummation of the Business Combination.

Prior to the closing of the Business Combination, Legacy Nikola repurchased 2,850,930 shares of Legacy Nikola's Series B redeemable convertible preferred stock at the price of $8.77 per share for an aggregate purchase price of $25.0 million pursuant to the Nimbus Repurchase Agreement. The repurchase is retrospectively adjusted in the statement of stockholders' equity to reflect the Company’s equity structure for all periods presented.

Immediately following the Business Combination, pursuant to a redemption agreement, Nikola redeemed 7,000,000 shares of common stock from M&M Residual at a purchase price of $10.00 per share.

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The Business Combination is accounted for as a reverse merger in accordance with GAAP. While VectoIQ was the legal acquirer, because Legacy Nikola was deemed the accounting acquirer, the historical financial statements of Legacy Nikola became the historical financial statements of the combined company, upon the consummation of the Business Combination.

As a consequence of the Business Combination, we became a Nasdaq-listed company, which will require us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We expect to incur additional annual expenses as a public company for, among other things, directors' and officers' liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit, compliance, and legal fees.

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.”

Commercial launch of heavy duty trucks and other products

We expect to derive revenue from our BEV trucks in late 2021 and FCEV trucks in the second half 2023. Prior to commercialization, we must complete modification or construction of required manufacturing facilities, purchase and integrate related equipment and software, and achieve several research and development milestones. As a result, we will require substantial additional capital to develop our products and services and fund operations for the foreseeable future. Until we can generate sufficient revenue from product sales and hydrogen FCEV leases, we expect to finance our operations through a combination of existing cash on hand, public offerings, private placements, debt financings, collaborations, 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. Any delays in the successful completion of our manufacturing facility will impact our ability to generate revenue.

Customer Demand

While not yet commercially available, we have received significant interest from potential customers. Going forward, we expect the size of our committed backlog to be an important indicator of our future performance.

Basis of Presentation

Currently, we conduct business through one operating segment. All long-lived assets are maintained in, and all losses are attributable to, the United States of America.

Components of Results of Operations

Revenue

To date, we have primarily generated revenue from services related to solar installation projects that are completed in one year or less. Solar installation projects are expected to be discontinued and are not part of our primary operations.

Following the anticipated introduction of our products to the market, we expect the significant majority of our revenue to be derived from direct sales of BEV trucks starting in 2021 and from the bundled leases of FCEV trucks beginning in 2023. Our bundled lease offering is inclusive of the cost of the truck, hydrogen fuel and regularly scheduled maintenance. We expect the bundled leases to qualify for the sales type lease accounting under GAAP, with the sale of the truck recognized upon the transfer of the title, and hydrogen fuel and maintenance revenues recognized over time as they are being provided to the customer.

Cost of Revenue

To date, our cost of revenue has included materials, labor, and other direct costs related to solar installation projects.

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Once we have reached commercial production, cost of revenue will include direct parts, material and labor costs, manufacturing overhead, including amortized tooling costs and depreciation of our greenfield manufacturing facility, depreciation of our hydrogen fueling stations, cost of hydrogen production, shipping and logistics costs and reserves for estimated warranty expenses.

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;

• 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.

During the six months ended June 30, 2020, our research and development expenses have primarily been incurred in the development of the BEV and FCEV trucks.

As a part of its in-kind investment into Nikola, Iveco is providing Nikola with $100.0 million in advisory services (based on pre negotiated hourly rates), including project coordination, drawings, documentation support, engineering support, vehicle integration, and product validation support. During the six months ended June 30, 2020, we utilized $17.2 million of advisory services which were recorded as research and development expense. As of June 30, 2020, we have $74.8 million of prepaid in-kind advisory services remaining which is expected to be consumed primarily in 2020 and 2021 and will be recorded as research and development expense until we reach commercial production.

We expect our research and development costs to increase for the foreseeable future as we continue to invest in research and develop activities to achieve our technology and product roadmap.

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, including compliance with the rules and regulations of the Securities Exchange Commission, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

In addition, we expect our marketing expenses to increase in the second half of 2020, in preparation for the Nikola World 2020 event, scheduled to be held in December 2020.

Interest Income (Expense), net

Interest income (expense) consists primarily of interest received or earned on our cash and cash equivalents balances. Interest expense consists of interest paid on our term loan and financing lease.

Loss on Forward Contract Liability

The loss on forward contract liability includes losses from the remeasurement of our Series D redeemable convertible preferred stock forward contract liability. In April 2020, the Company fulfilled the forward contract liability and, therefore, subsequent to June 30, 2020, there will not be any impact from the remeasurement of the forward contract liability.

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Other Income, net

Other income consists primarily of other miscellaneous non-operating items, such as government grants, subsidies, and merchandising.

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. Cash paid for income taxes, net of refunds during the six months ended June 30, 2020 and 2019 was not material.

Results of Operations

Comparison of Three Months Ended June 30, 2020 to Three Months Ended June 30, 2019

The following table sets forth our historical operating results for the periods indicated:

	Three Months Ended June 30,				$		%
	2020		2019		Change		Change
	(dollar amounts in thousands)
Solar revenues	$	36	$	13	$	23	NM
Cost of solar revenues	30		24		6		NM
Gross profit (loss)	6		(11)		17		NM
Operating expenses:
Research and development	42,501		11,854		30,647		258.5%
Selling, general, and administrative	44,147		5,344		38,803		726.1%
Total operating expenses	86,648		17,198		69,450		403.8%
Loss from operations	(86,642)		(17,209)		(69,433)		403.5%
Other income (expense):
Interest income, net	23		338		(315)		(93.2)%
Revaluation of Series A redeemable convertible preferred stock warrant liability	—		98		(98)		NM
Other income (expense), net	(23)		9		(32)		NM
Loss before income taxes	(86,642)		(16,764)		(69,878)		NM
Income tax expense	1		2		(1)		NM
Net loss	(86,643)		(16,766)		(69,877)		NM
Premium paid on repurchase of redeemable convertible preferred stock	(13,407)		—		(13,407)		NM
Net loss attributable to common stockholders, basic and diluted	$	(100,050)	$	(16,766)	$	(83,284)	NM
Net loss per share attributable to common stockholders, basic and diluted	$	(0.33)	$	(0.06)	$	(0.26)	NM
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted	303,785,616		260,406,343		43,379,273		NM

Solar Revenues and Cost of Solar Revenues

Revenues and cost of revenues for the three months ended June 30, 2020 and 2019 were related to solar installation service projects. Solar installation projects are not related to our primary operations and are expected to be discontinued. Solar revenues and cost of solar revenues were immaterial during the three months ended June 30, 2020 and 2019.

Research and Development

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Research and development expenses increased by $30.6 million, or 258.5%, from $11.9 million during the three months ended June 30, 2019 to $42.5 million during the three months ended in June 30, 2020. This increase was due to higher spend on purchased components and outside engineering services as we focus primarily on the development, build, and testing of our BEV truck platform, as well as continuing the development of our FCEV truck platform. In addition, we incurred higher stock-based compensation expense of $2.7 million from the Business Combination and increased headcount, higher personnel costs of $4.3 million driven by growth in our in-house engineering headcount, and higher depreciation costs primarily driven by the depreciation of our new headquarters and R&D facility and related capital equipment.

Selling, General, and Administrative

Selling, general, and administrative expenses increased by $38.8 million, or 726.1%, from $5.3 million during the three months ended June 30, 2019 to $44.1 million during the three months ended June 30, 2020. The increase was primarily related to higher stock-based compensation expense of $34.1 million from one-time expenses due to the Business Combination and additional grants to our executive officers. In addition, we incurred higher personnel expenses driven by growth in headcount, and higher general corporate expenses, including professional services related to the Business Combination and public company requirements. Those increases were partially offset by lower marketing costs due to the Nikola World event held in April 2019.

Interest Income, net

Interest income, net decreased by $0.3 million, or 93.2%, primarily due to the interest expense from the financing lease on our headquarters.

Other Income (expense), net

Other income (expense) was immaterial for the three months ended June 30, 2020 and 2019.

Income Tax Expense

Income tax expense was immaterial for the three months ended June 30, 2020 and 2019. We have accumulated net operating losses at the federal and state level and maintain a full valuation allowance against our net deferred taxes.

Comparison of Six Months Ended June 30, 2020 to Six Months Ended June 30, 2019

The following table sets forth our historical operating results for the periods indicated:

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	Six Months Ended June 30,				$			%
	2020		2019		Change			Change
	(dollar amounts in thousands)
Solar revenues	$	95	$	137	$	(42)		NM
Cost of solar revenues	72		86		(14)			NM
Gross profit (loss)	23		51		(28)			NM
Operating expenses:
Research and development	66,619		35,251		31,368			89.0%
Selling, general, and administrative	52,061		11,845		40,216			339.5%
Total operating expenses	118,680		47,096		71,584			152.0%
Loss from operations	(118,657)		(47,045)		(71,612)			152.2%
Other income (expense):
Interest income, net	87		671		(584)			NM
Revaluation of Series A redeemable convertible preferred stock warrant liability	—		(495)		495			NM
Loss on forward contract liability	(1,324)		—		(1,324)			NM
Other income (expense), net	90		10		80			NM
Loss before income taxes	(119,804)		(46,859)		(72,945)			(155.7)%
Income tax expense	2		4		(2)			NM
Net loss	$	(119,806)	$	(46,863)	$	(72,943)		(155.7)%
Premium paid on repurchase of redeemable convertible preferred stock	(13,407)		—		(13,407)			NM
Net loss attributable to common stockholders, basic and diluted	$	(133,213)	$	(46,863)	$	(86,350)		NM
Net loss per share attributable to common stockholders, basic and diluted	$	(0.46)	$	(0.18)	$	(0.28)	</