0001731289-22-000085.txt : 20220506 0001731289-22-000085.hdr.sgml : 20220506 20220505091237 ACCESSION NUMBER: 0001731289-22-000085 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 67 CONFORMED PERIOD OF REPORT: 20220331 FILED AS OF DATE: 20220505 DATE AS OF CHANGE: 20220505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Nikola Corp CENTRAL INDEX KEY: 0001731289 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 824151153 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38495 FILM NUMBER: 22894463 BUSINESS ADDRESS: STREET 1: 4141 E BROADWAY ROAD CITY: PHOENIX STATE: AZ ZIP: 85040 BUSINESS PHONE: (480) 666-1038 MAIL ADDRESS: STREET 1: 4141 E BROADWAY ROAD CITY: PHOENIX STATE: AZ ZIP: 85040 FORMER COMPANY: FORMER CONFORMED NAME: VectoIQ Acquisition Corp. DATE OF NAME CHANGE: 20180213 10-Q 1 nkla-20220331.htm 10-Q nkla-20220331
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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 March 31, 2022

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)

Delaware82-4151153
(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 ClassTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per shareNKLAThe 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 filerAccelerated filer
Non-accelerated filerSmaller 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 May 2, 2022, there were 421,138,281 shares of the registrant’s common stock outstanding.




NIKOLA CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS

Summary Risk Factors
Our business is subject to numerous risks and uncertainties that could affect our ability to successfully implement our business strategy and affect our financial results. You should carefully consider all of the information in this report and, in particular, the following principal risks and all of the other specific factors described in Item 1A. of this report, “Risk Factors,” before deciding whether to invest in our company.
We are an early stage company with a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future.
We may be unable to adequately control the costs associated with our operations.
Our business model has yet to be tested and any failure to commercialize our strategic plans would have an adverse effect on our operating results and business, harm our reputation and could result in substantial liabilities that exceed our resources.
Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of your investment.
We will need to raise additional funds and these funds may not be available to us when we need them. If we cannot raise additional funds when we need them, our operations and prospects could be negatively affected.
If we fail to manage our future growth effectively, we may not be able to market and sell our vehicles successfully.
Our bundled lease model may present unique problems that may have an adverse effect on our operating results and business and harm our reputation.
1


We may face legal challenges in one or more states attempting to sell directly to customers which could materially adversely affect our costs.
We face risks and uncertainties related to litigation, regulatory actions and government investigations and inquiries.
Our success will depend on our ability to economically manufacture our trucks at scale and build our hydrogen fueling stations to meet our customers’ business needs, and our ability to develop and manufacture trucks of sufficient quality and appeal to customers on schedule and at scale is unproven.
We may experience significant delays in the design, manufacture, launch and financing of our trucks, including in the expansion of our manufacturing plant, which could harm our business and prospects.
Increases in costs, disruption of supply or shortage of raw materials, including lithium-ion battery cells, chipsets, and displays, could harm our business.
2


PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NIKOLA CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
March 31,December 31,
20222021
(Unaudited)
Assets
Current assets
Cash and cash equivalents$360,118 $497,241 
Accounts receivable, net1,339  
Inventory25,847 11,597 
Prepaid expenses and other current assets31,730 15,891 
Total current assets419,034 524,729 
Restricted cash and cash equivalents25,000 25,000 
Long-term deposits33,800 27,620 
Property, plant and equipment, net264,121 244,377 
Intangible assets, net97,181 97,181 
Investment in affiliates62,634 61,778 
Goodwill5,238 5,238 
Other assets3,353 3,896 
Total assets$910,361 $989,819 
Liabilities and stockholders' equity
Current liabilities
Accounts payable$77,478 $86,982 
Accrued expenses and other current liabilities105,657 93,487 
Debt and finance lease liabilities, current507 140 
Total current liabilities183,642 180,609 
Long-term debt and finance lease liabilities, net of current portion25,045 25,047 
Operating lease liabilities2,542 2,263 
Warrant liability4,718 4,284 
Other long-term liabilities72,231 84,033 
Deferred tax liabilities, net11 11 
Total liabilities288,189 296,247 
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock, $0.0001 par value, 150,000,000 shares authorized, no shares issued and outstanding as of March 31, 2022 and December 31, 2021
  
Common stock, $0.0001 par value, 600,000,000 shares authorized, 418,344,072 and 413,340,550 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively
42 41 
Additional paid-in capital2,025,552 1,944,341 
Accumulated deficit(1,403,553)(1,250,612)
Accumulated other comprehensive income (loss)131 (198)
Total stockholders' equity 622,172 693,572 
Total liabilities and stockholders' equity$910,361 $989,819 
See accompanying notes to the consolidated financial statements.
3


NIKOLA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
March 31,
20222021
Revenues:
Truck sales$ $ 
Service and other 1,887  
Total revenues1,887  
Cost of revenues:
Truck sales  
Service and other 1,456  
Total cost of revenues1,456  
Gross profit431  
Operating expenses:
Research and development74,557 55,163 
Selling, general, and administrative77,183 65,427 
Total operating expenses151,740 120,590 
Loss from operations(151,309)(120,590)
Other income (expense):
Interest expense, net(211)(9)
Revaluation of warrant liability(434)951 
Other income, net1,833 219 
Loss before income taxes and equity in net loss of affiliates(150,121)(119,429)
Income tax expense 1 
Loss before equity in net loss of affiliates(150,121)(119,430)
Equity in net loss of affiliates(2,820)(794)
Net loss$(152,941)$(120,224)
Net loss per share:
Basic$(0.37)$(0.31)
Diluted$(0.37)$(0.31)
Weighted-average shares outstanding:
Basic415,152,656 392,189,851 
Diluted415,152,656 392,489,761 
See accompanying notes to the consolidated financial statements.
4


NIKOLA CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
20222021
Net loss$(152,941)$(120,224)
Other comprehensive income (loss):
Foreign currency translation adjustment, net of tax329 (313)
Comprehensive loss$(152,612)$(120,537)
See accompanying notes to the consolidated financial statements.
5


NIKOLA CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
Three Months Ended March 31, 2022
Common StockAdditional Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
SharesAmount
Balance as of December 31, 2021413,340,550 $41 $1,944,341 $(1,250,612)$(198)$693,572 
Exercise of stock options179,831 — 308 — — 308 
Issuance of shares for RSU awards1,180,047 — — — — — 
Common stock issued under Tumim Purchase Agreements3,643,644 1 27,375 — — 27,376 
Stock-based compensation— — 53,528 — — 53,528 
Net loss— — — (152,941)— (152,941)
Other comprehensive income    329 329 
Balance as of March 31, 2022418,344,072 $42 $2,025,552 $(1,403,553)$131 $622,172 

Three Months Ended March 31, 2021
Common StockAdditional Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive Income (Loss)Total Stockholders'
Equity
SharesAmount
Balance as of December 31, 2020391,041,347 $39 $1,540,037 $(560,174)$239 $980,141 
Exercise of stock options1,896,667 — 2,413 — — 2,413 
Issuance of shares for RSU awards807,143 — — — — — 
Stock-based compensation— — 50,266 — — 50,266 
Net loss— — — (120,224)— (120,224)
Other comprehensive loss    (313)(313)
Balance as of March 31, 2021393,745,157 $39 $1,592,716 $(680,398)$(74)$912,283 


See accompanying notes to the consolidated financial statements.
6


NIKOLA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
20222021
Cash flows from operating activities
Net loss$(152,941)$(120,224)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization3,111 1,805 
Stock-based compensation53,528 50,266 
Non-cash in-kind services 12,896 
Equity in net loss of affiliates2,820 794 
Revaluation of warrant liability434 (951)
Inventory write-downs3,473  
Other non-cash activity(326)1 
Changes in operating assets and liabilities:
Accounts receivable, net(1,339) 
Inventory(22,404) 
Prepaid expenses and other current assets(14,710)(1,758)
Accounts payable, accrued expenses and other current liabilities(2,131)2,083 
Long-term deposits (4,161)
Other assets(304) 
Operating lease liabilities(77) 
Other long-term liabilities(457) 
Net cash used in operating activities(131,323)(59,249)
Cash flows from investing activities
Purchases and deposits of property, plant and equipment(30,106)(24,521)
Investments in affiliates(3,348) 
Net cash used in investing activities(33,454)(24,521)
Cash flows from financing activities
Proceeds from the exercise of stock options308 2,626 
Proceeds from issuance of shares under the Tumim Purchase Agreements27,376  
Payments on finance lease liabilities(30)(258)
Payment of note payable (4,100)
Payments for issuance costs (26)
Net cash provided by (used in) financing activities27,654 (1,758)
Net decrease in cash and cash equivalents, including restricted cash(137,123)(85,528)
Cash and cash equivalents, including restricted cash, beginning of period522,241 849,278 
Cash and cash equivalents, including restricted cash, end of period$385,118 $763,750 
Supplementary cash flow disclosures:
Cash paid for interest$273 $187 
Cash interest received$85 $259 
Supplementary disclosures for noncash investing and financing activities:
Purchases of property, plant and equipment included in liabilities$21,294 $27,108 
Accrued deferred issuance costs$ $330 
Leased assets obtained in exchange for new finance lease liabilities$378 $ 
See accompanying notes to the consolidated financial statements.
7

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1.BASIS OF PRESENTATION
(a)Overview
Nikola Corporation (‘‘Nikola’’ or the ‘‘Company’’) is a designer and manufacturer of heavy-duty commercial battery-electric and hydrogen-electric vehicles and energy infrastructure solutions.
(b)Unaudited Consolidated Financial Statements
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 Annual Report on Form 10-K for the year ended December 31, 2021.
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated.
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.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
(c)Funding Risks and Going Concern
As an early stage growth company, the Company's ability to access capital is critical. Until the Company can generate sufficient revenue to cover its operating expenses, working capital and capital expenditures, the Company will need to raise additional capital.
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 Quarterly Report on Form 10-Q, 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)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
8

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
be cash equivalents. As of March 31, 2022 and December 31, 2021, the Company had $360.1 million and $497.2 million of cash and cash equivalents, which included cash equivalents of zero and $463.9 million of highly liquid investments as of March 31, 2022 and December 31, 2021, respectively.
As of March 31, 2022 and December 31, 2021, the Company had $25.0 million in non-current restricted cash. Restricted cash represents cash that is restricted as to withdrawal or usage and consists of securitization of the Company's letter of credit.
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
March 31, 2022December 31, 2021March 31, 2021
Cash and cash equivalents$360,118 $497,241 $763,750 
Restricted cash and cash equivalents – non-current25,000 25,000  
Cash, cash equivalents and restricted cash and cash equivalents$385,118 $522,241 $763,750 
(b)Fair Value of Financial Instruments
The carrying value and fair value of the Company’s financial instruments are as follows:
As of March 31, 2022
Level 1Level 2Level 3Total
Liabilities
Warrant liability$ $ $4,718 $4,718 
Derivative liability  3,752 3,752 
As of December 31, 2021
Level 1Level 2Level 3Total
Assets
Cash equivalents – money market$463,867 $ $ $463,867 
Liabilities
Warrant liability
$ $ $4,284 $4,284 
Derivative liability
  4,189 4,189 
As a result of the Company's business combination with VectoIQ Acquisition Corp. ("VectoIQ") in June 2020 (the "Business Combination"), the Company assumed a warrant liability (the "Warrant Liability") related to previously issued private warrants in connection with VectoIQ's initial public offering. The Warrant Liability is remeasured to its fair value at each reporting period and upon settlement. The change in fair value was recognized in "Revaluation of warrant liability" on the consolidated statements of operations. The change in fair value of the Warrant Liability was as follows:
Warrant Liability
Estimated fair value at December 31, 2021
$4,284 
Change in fair value434 
Estimated fair value at March 31, 2022
$4,718 
9

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The fair value of the warrants outstanding was estimated using the Black-Scholes model. The application of the Black-Scholes model requires the use of a number of inputs and significant assumptions including volatility. The following reflects the inputs and assumptions used:
As of
March 31, 2022December 31, 2021
Stock price$10.71 $9.87 
Exercise price$11.50 $11.50 
Remaining term (in years)3.183.42
Volatility90 %90 %
Risk-free rate2.43 %1.03 %
Expected dividend yield % %
On September 13, 2021, the Company entered into an Amended Membership Interest Purchase Agreement (the "Amended MIPA") with Wabash Valley Resources ("WVR") and the sellers party thereto (each, a "Seller"), pursuant to which the Company is subject to the first price differential and second price differential (together the "Price Differential"). Pursuant to the terms of the Amended MIPA, the first price differential was settled in the fourth quarter of 2021 for $3.4 million.
The second price differential is equal to $14.86 ("Issue Price") less the average closing price for shares of the Company's common stock for the five consecutive days immediately following June 20, 2022. If the second price differential is positive, the Company is obligated to pay to each Seller an amount equal to the product of 50% of such Seller's portion of the closing stock consideration and the second price differential on June 28, 2022. Under the Amended MIPA, the Company's maximum obligation for the Price Differential is $10.0 million in aggregate.
The Price Differential is a freestanding financial instrument and accounted for as a derivative liability. The derivative liability will be remeasured at each reporting period with changes in its fair value recorded in "Other income, net" on the consolidated statements of operations. The change in fair value of the derivative liability was as follows:
Derivative Liability
Estimated fair value at December 31, 2021$4,189 
Change in fair value(437)
Estimated fair value at March 31, 2022$3,752 
The fair value of the derivative liability, a level 3 measurement, was estimated using a Monte Carlo simulation model. The application of the Monte Carlo simulation model requires the use of a number of inputs and significant assumptions including volatility. The following reflects the inputs and assumptions used:
As of
March 31, 2022December 31, 2021
Stock price$10.71 $9.87 
Strike price$14.86 $14.86 
Volatility100 %100 %
Risk-free rate0.50 %0.18 %
(c)Revenue Recognition
Truck sales
Truck sales will consist of revenue recognized on the sales of the Company's battery-electric ("BEV") and fuel-cell electric ("FCEV") trucks. The sale of trucks is recognized as a single performance obligation at the point in time when control is transferred to the customer. Control is deemed transferred when the product is shipped to the customer and the customer can
10

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
direct the product's use and obtain substantially all of the remaining benefits from the asset. BEV sales are expected to begin in the second quarter of 2022 and FCEV in the second half of 2023.
Services and other
Services and other revenues for the three months end March 31, 2022 consist of sales of mobile charging trailers ("MCTs"). The sale of MCTs is recognized as a single performance obligation at the point in time when control is transferred to the customer. Control is deemed transferred when the product is delivered to the customer and the customer can direct the product's use and obtain substantially all of the remaining benefits from the asset. The Company does not offer sales returns on MCTs. Payment for products sold are made upon invoice or in accordance with the Company's customary payment terms and the Company's MCT contracts do not have significant financing components. The Company has elected to exclude sales taxes from the measurement of the transaction price.
(d)Recent Accounting Pronouncements
Recently issued accounting pronouncements not yet adopted
In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2021-10, Government Assistance, to increase transparency of government assistance which requires annual disclosures about transactions with a government entity that are accounted for by applying a grant or contribution accounting model by analogy. ASU 2021-10 is effective for annual periods beginning after December 15, 2021 and early adoption is permitted. The Company will adopt ASU 2021-10 for the year ended December 31, 2022, which will have an immaterial impact to the Company's consolidated financial statements.
3.BALANCE SHEET COMPONENTS
Inventory
Inventory consisted of the following at March 31, 2022 and December 31, 2021, respectively:
As of
March 31, 2022December 31, 2021
Raw materials$12,766 $7,344 
Work in process8,556 4,253 
Finished goods4,525  
Total inventory$25,847 $11,597 
Inventory cost is computed using standard cost, which approximates actual cost on a first-in, first-out basis. Inventories are stated at the lower of cost or net realizable value. Inventories are written down for any excess or obsolescence and when net realizable value is in excess of carrying value.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following at March 31, 2022 and December 31, 2021, respectively:
As of
March 31, 2022December 31, 2021
Deposits$17,014 $5,615 
Prepaid expenses6,846 5,116 
Non-trade receivables5,713 2,717 
Deferred implementation costs2,157 2,443 
Total prepaid expenses and other current assets$31,730 $15,891 
11

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Non-trade receivables
For the three months ended March 31, 2022 and 2021, the Company recognized government grant income totaling $0.3 million and zero, respectively, in connection with the Arizona Qualified Facility Tax Credit (“QFTC”). As U.S. GAAP does not contain authoritative accounting standards on this topic, the Company accounted for the QFTC by analogy to International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance. Under IAS 20, the grant is recognized on a systematic basis over the periods in which the qualifying expenses are incurred when it is determined that receipt of the grant is no longer contingent. As of March 31, 2022, the Company recognized $2.4 million in "Prepaid expenses and other current assets" and $0.3 million in "Other assets" on the consolidated balance sheets. As of December 31, 2021, the Company recognized $1.2 million in "Prepaid expenses and other current assets" and $1.2 million in "Other assets" on the consolidated balance sheets.
Deferred implementation costs
The capitalized costs are amortized on a straight-line basis over the estimated useful life of five years. The Company recorded an immaterial amount to amortization expense on the consolidated statements of operations for the three months ending March 31, 2022 and 2021.
Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following at March 31, 2022 and December 31, 2021:
As of
March 31, 2022 December 31, 2021
Buildings$131,118 $104,333 
Construction-in-progress85,038 103,515 
Machinery and equipment45,282 36,551 
Other8,751 3,914 
Software8,068 7,562 
Leasehold improvements2,891 2,883 
Furniture and fixtures1,480 1,480 
Finance lease assets1,025 646 
Property, plant and equipment, gross283,653 260,884 
Less: accumulated depreciation and amortization(19,532)(16,507)
Total property, plant and equipment, net$264,121 $244,377 
Construction-in-progress on the Company's consolidated balance sheets as of March 31, 2022 relates primarily to the expansion of the Company's manufacturing plant in Coolidge, Arizona, and build-out of the Company's headquarters and R&D facility in Phoenix, Arizona. During the first quarter of 2022, $26.8 million of construction-in-progress was placed in service related to phase 1.0 of the Coolidge facility.
Depreciation expense for the three months ended March 31, 2022 and 2021 was $3.0 million and $1.8 million, respectively.
12

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following at March 31, 2022 and December 31, 2021:
As of
March 31, 2022December 31, 2021
Settlement liability$50,000 $50,000 
Accrued purchase of intangible asset22,231 11,344 
Goods received not yet invoiced11,526 8,253 
Accrued legal expenses6,059 5,664 
Accrued payroll and payroll related expenses4,848 2,521 
Derivative liability3,752 4,189 
Accrued purchases of property, plant and equipment2,897 2,817 
Accrued outsourced engineering services2,546 1,134 
Other accrued expenses1,798 7,565 
Total accrued expenses and other current liabilities$105,657 $93,487 
4. INVESTMENTS IN AFFILIATES
Investments in unconsolidated affiliates accounted for under the equity method consist of the following:
As of
OwnershipMarch 31, 2022December 31, 2021
Nikola Iveco Europe GmbH50 %$4,921 $4,083 
Wabash Valley Resources LLC20 %57,713 57,695 
$62,634 $61,778 
Equity in net loss of affiliates on the consolidated statements of operations for the three months ended March 31, 2022 and 2021, was as follows:
Three Months Ended March 31,
20222021
Equity in earnings (loss) of affiliates:
Nikola Iveco Europe GmbH$(2,838)$(794)
Wabash Valley Resources LLC18  
Total equity in net loss of affiliates$(2,820)$(794)
Nikola Iveco Europe GmbH
In April 2020, the Company and Iveco established a joint venture in Europe, Nikola Iveco Europe GmbH. The operations of the joint venture are located in Ulm, Germany, and consist of manufacturing the BEV and FCEV Class 8 trucks for the European and North American markets.
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 the Company and Iveco. Nikola Iveco Europe GmbH is considered a variable interest entity ("VIE") due to insufficient equity to finance its activities without additional subordinated financial support. The Company is not considered the primary beneficiary as it does not have the power to direct the activities that most significantly impact the economic performance based on the terms of the agreements. Accordingly, the VIE is accounted for under the equity method.
13

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
During the three months ended March 31, 2022 the Company made a contribution to Nikola Iveco Europe GmbH of 3.0 million Euros (approximately $3.3 million). As of March 31, 2022, the Company's maximum exposure to loss was $16.6 million, which represents the book value of the Company's equity interest and guaranteed debt obligations of $11.7 million.
Wabash Valley Resources LLC
On June 22, 2021, the Company entered into the Membership Interest Purchase Agreement ("MIPA") with WVR and the Sellers, pursuant to which, the Company purchased a 20% equity interest in WVR in exchange for $25.0 million in cash and 1,682,367 shares of the Company’s common stock. WVR is developing a clean hydrogen project in West Terre Haute, Indiana, including a hydrogen production facility. The common stock consideration was calculated based on the 30-day average closing stock price of the Company, or $14.86 per share, and the Company issued 1,682,367 shares of its common stock.
The Company's interest in WVR is accounted for under the equity method and is included in "Investment in affiliates" on the Company's consolidated balance sheets. Included in the initial carrying value was a basis difference of $55.5 million due to the difference between the cost of the investment and the Company's proportionate share of WVR's net assets. The basis difference is primarily comprised of property, plant and equipment and intangible assets.
The Company does not guarantee debt for, or have other financial support obligations to the entity and its maximum exposure to loss in connection with its continuing involvement with the entity is limited to the carrying amount of the investment.
5. DEBT AND FINANCE LEASE LIABILITIES
Debt and finance lease liabilities as of March 31, 2022 and December 31, 2021, were as follows:
As of
March 31, 2022December 31, 2021
Current:
Promissory note$146 $ 
Finance lease liabilities361 140 
Debt and finance lease liabilities, current$507 $140 
Non-current:
Promissory note$24,510 $24,639 
Finance lease liabilities535 408 
Long-term debt and finance lease liabilities, net of current portion$25,045 $25,047 
Promissory Note
During the fourth quarter of 2021, the Company closed on the purchase of its headquarters facility in Phoenix, Arizona. Concurrently with the closing of the purchase, the Company, as borrower, executed a promissory note for $25.0 million at a stated interest rate of 4.00% (the "Promissory Note"). The Promissory Note carries a 60-month term, interest only payments for the first 12 months and a 25-year amortization thereafter, with the remaining principal balance due upon maturity. The loan is fully collateralized by the Company's headquarters.
The Company capitalized debt issuance costs of $0.4 million related to the Promissory Note. Debt issuance costs are being amortized to interest expense over the term of the Promissory Note using the effective interest method. The effective interest rate on the Promissory Note is 4.34%.
For the three months ended March 31, 2022, the Company recognized $0.3 million of interest expense related to interest on the Promissory Note and amortization of debt issuance costs.
14

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Letter of Credit
During the fourth quarter of 2021, the Company executed an irrevocable standby letter of credit for $25.0 million through December 31, 2024 in connection with the execution of a product supply agreement with a vendor. As of March 31, 2022, no amounts have been drawn on the letter of credit.
6. CAPITAL STRUCTURE
Shares Authorized
As of March 31, 2022, the Company had a total of 750,000,000 shares authorized for issuance consisting of 600,000,000 shares designated as common stock and 150,000,000 shares designated as preferred stock.
Warrants
As of March 31, 2022, the Company had 760,915 private warrants outstanding. Each 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. For the three months ended March 31, 2022 and 2021, the Company recorded a $0.4 million loss and $1.0 million gain, respectively, for "Revaluation of warrant liability" on the consolidated statements of operations. As of March 31, 2022 and December 31, 2021, the Company had $4.7 million and $4.3 million, respectively, for warrant liability related to the private warrants outstanding on the consolidated balance sheets.
The exercise price and number of shares of common stock issuable upon exercise of the private warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the private warrants will not be adjusted for issuance of common stock at a price below their exercise price.
Stock Purchase Agreements
First Purchase Agreement with Tumim Stone Capital LLC
On June 11, 2021, the Company entered into a common stock purchase agreement (the "First Tumim Purchase Agreement") and a registration rights agreement (the "Registration Rights Agreement") with Tumim Stone Capital LLC ("Tumim"), pursuant to which Tumim committed to purchase up to $300.0 million in shares of the Company's common stock, subject to certain limitations and conditions set forth in the First Tumim Purchase Agreement. The Company shall not issue or sell any shares of common stock under the First Tumim Purchase Agreement which, when aggregated with all other shares of common stock beneficially owned by Tumim, would result in beneficial ownership of more than 4.99% of the Company's outstanding shares of common stock.
Under the terms of the First Tumim Purchase Agreement, the Company has the right, but not the obligation, to sell to Tumim, shares of common stock over the period commencing on the date of the First Tumim Purchase Agreement (the “Tumim Closing Date”) and ending on the first day of the month following the 36-month anniversary of the Tumim Closing Date, provided that a registration statement covering the resale of shares of common stock that have been and may be issued under the First Tumim Purchase Agreement is declared effective by the SEC. Registration statements covering the offer and sale of up to 18,012,845 and 17,025,590 shares of common stock to Tumim were declared effective on June 30, 2021 and March 22, 2022, respectively. The purchase price will be calculated as 97% of the volume weighted average prices of the Company's common stock during normal trading hours for three consecutive trading days commencing on the purchase notice date.
During the second quarter of 2021 and concurrently with the signing of the First Tumim Purchase Agreement, the Company issued 155,703 shares of its common stock to Tumim as a commitment fee ("Commitment Shares"). The total fair value of the shares issued for the commitment fee of $2.6 million was recorded in "Selling, general, and administrative" expense on the Company's consolidated statements of operations.
During the three months ended March 31, 2022, the Company sold 3,643,644 shares of common stock for proceeds of $27.4 million under the terms of the First Tumim Purchase Agreement. As of March 31, 2022, the remaining commitment available under the First Tumim Purchase Agreement was $108.8 million.
15

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Second Purchase Agreement with Tumim Stone Capital LLC
On September 24, 2021, the Company entered into a second common stock purchase agreement (the "Second Tumim Purchase Agreement") and a registration rights agreement with Tumim, pursuant to which Tumim committed to purchase up to $300.0 million in shares of the Company's common stock, subject to certain limitations and conditions set forth in the Second Tumim Purchase Agreement. The Company will not issue or sell any shares of common stock under the Second Tumim Purchase Agreement which, when aggregated with all other shares of common stock beneficially owned by Tumim, would result in beneficial ownership of more than 4.99% of the Company's outstanding shares of common stock.
Under the terms of the Second Tumim Purchase Agreement, the Company has the right, but not the obligation, to sell to Tumim, shares of common stock over the period commencing on the date of the Second Tumim Purchase Agreement (the “Second Tumim Closing Date”) and ending on the first day of the month following the 36-month anniversary of the Second Tumim Closing Date, provided that certain conditions have been met. These conditions include effectiveness of a registration statement covering the resale of shares of common stock that have been and may be issued under the Second Tumim Purchase Agreement and termination of the First Tumim Purchase Agreement. The registration statement covering the offer and sale of up to 29,042,827 shares of common stock, including the commitment shares, to Tumim was declared effective on November 29, 2021. The purchase price will be calculated as 97% of the volume weighted average prices of the Company's common stock during normal trading hours for three consecutive trading days commencing on the purchase notice date.
During the third quarter of 2021 and concurrently with the signing of the Second Tumim Purchase Agreement, the Company issued 252,040 shares of its common stock to Tumim as a commitment fee. The total fair value of the shares issued for the commitment fee of $2.9 million was recorded in "Selling, general, and administrative" expense on the Company's consolidated statement of operations.
As of March 31, 2022, the Company has not sold any shares of common stock to Tumim under the Second Tumim Purchase Agreement and has a remaining commitment of $300.0 million available.
7. STOCK BASED COMPENSATION EXPENSE
2017 and 2020 Stock Plans
The 2017 Stock Option Plan (the “2017 Plan”) provides for the grant of incentive and nonqualified options to purchase common stock to officers, employees, directors, and consultants. Options were granted at a price not less than the fair market value on the date of grant and generally became 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.
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 provides for the grant of incentive and nonqualified stock options, 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.
16

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Stock Options
The Company utilizes the Black-Scholes option pricing model for estimating the fair value of options granted. Options vest in accordance with the terms set forth in the grant letter. Time-based options generally vest ratably over a period of approximately 36 months. Changes in stock options are as follows:
OptionsWeighted
Average
Exercise Price
Per share
Weighted Average
Remaining
Contractual Term
(Years)
Outstanding at December 31, 202128,996,160 $1.28 6.87
Granted  
Exercised179,831 1.71 
Cancelled15,225 3.16 
Outstanding at March 31, 202228,801,104 $1.27 6.62
Vested and exercisable as of March 31, 202228,470,051 $1.25 6.61
Restricted Stock Units
The fair value of RSUs is based on the closing price of the Company’s common stock on the grant date. The time-based RSUs generally vest semi-annually over a three-year period or, in the case of executive officers, cliff-vest following the third anniversary from the date of grant. Certain RSUs awarded to key employees contain performance conditions related to achievement of strategic and operational milestones ("Performance RSUs"). As of March 31, 2022, not all of the performance conditions are probable to be achieved. Compensation expense has only been recognized for those conditions that are assumed to be probable. The Company updates its estimates related to the probability and timing of achievement of the operational milestones each period until the award either vests or is forfeited. In addition, for certain technical engineering employees the awards cliff vest after a three-year period or vest on the achievement of certain operational milestones. The RSUs to directors have a vesting cliff of one year after the grant date. Changes in RSUs are as follows:
Number of RSUs
Balance at December 31, 2021
12,178,672 
Granted3,460,470 
Released1,180,047 
Cancelled502,978 
Balance at March 31, 2022
13,956,117 
Market Based RSUs
The fair value of 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 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 Company's stock price target ranges from $25 per share to $55 per share. The shares vested are transferred to the award holders upon the completion of the requisite service period ending June 3, 2023, 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 requisite service period, the market based RSUs are forfeited.
During the three months ended March 31, 2022, the Company granted 949,026 shares of market based RSUs to an executive in connection with his hiring during the period. The total grant date fair value of the market based RSUs was determined to be $2.2 million and is recognized over the requisite service period.
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
17

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
award to calculate the fair value of the award. The following inputs and assumptions were used to determine the grant date fair value for the market based RSUs:
Three Months Ended
March 31, 2022
Stock price$9.66 
Term (years)1.19
Risk-free interest rate
1.7%
Expected volatility
100%

Changes in market based RSUs are as follows:
Number of Market Based RSUs
Balance at December 31, 2021
13,317,712 
Granted949,026 
Released 
Cancelled 
Balance at March 31, 2022
14,266,738 
Stock Compensation Expense
The following table presents the impact of stock-based compensation expense on the consolidated statements of operations for the three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
20222021
Research and development$8,707 $10,322 
Selling, general, and administrative44,821 39,944 
Total stock-based compensation expense$53,528 $50,266 
As of March 31, 2022, total unrecognized compensation expense was as follows:
Unrecognized Compensation Expense
Options$608 
Market based RSUs139,524 
RSUs154,107 
Total unrecognized compensation expense at March 31, 2022
$294,239 
8. 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 months ended March 31, 2022 and 2021.
18

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
9. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is subject to legal and regulatory actions that arise from time to time. 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, and the outcome of litigation is inherently uncertain. The Company expenses professional legal fees as incurred, which are included in selling, general, and administrative expense on the consolidated financial statements. Other than as described below, there is no material pending or threatened litigation against the Company that remains outstanding as of March 31, 2022.
Regulatory and Governmental Investigations and Related Internal Review
In September 2020, a short seller reported on certain aspects of the Company’s business and operations. The Company and its board of directors retained Kirkland & Ellis LLP to conduct an internal review in connection with the short-seller article (the “Internal Review”), and Kirkland & Ellis LLP promptly contacted the Division of Enforcement of the SEC to make it aware of the commencement of the Internal Review. The Company subsequently learned that the Staff of the Division of Enforcement had previously opened an investigation. During that same month, the Company and five of its officers and employees received subpoenas from the Staff of the Division of Enforcement as a part of a fact-finding inquiry related to aspects of the Company’s business as well as certain matters described in the short seller's article. Later that same month, the Staff of the Division of Enforcement issued additional subpoenas to another three of the Company’s officers and employees and to the Company’s current and former directors.
The Company and our former executive chairman, Trevor Milton, also received grand jury subpoenas from the U.S. Attorney’s Office for the Southern District of New York (the “SDNY”) in September 2020. Later that same month, Mr. Milton offered to voluntarily step down from his position as Executive Chairman, as a member of the Company’s board of directors, including all committees thereof, and from all positions as an employee and officer of the Company. The board accepted his resignation and appointed Stephen Girsky as Chairman of the board of directors.
On March 24, 2021, the Staff of the Division of Enforcement issued an additional subpoena to the Company related to its projected 2021 cash flow and anticipated use of funds from 2021 capital raises.
The Company is committed to cooperating fully with the Staff of the Division of Enforcement and the SDNY. As such, the Company's counsel frequently engages with the Staff of the Division of Enforcement and the SDNY. Further, the Company has made voluminous productions of information and made witnesses available for interviews. The last such production of information was made in August 2021. The Company will continue to comply with future requests of the Staff of the Division of Enforcement and the SDNY.
The legal and other professional costs the Company incurred during the three months ended March 31, 2022 and 2021, in connection with the Internal Review and disclosed elsewhere in this Report include approximately $10.6 million and $3.0 million, respectively, expensed for Mr. Milton’s attorneys’ fees under his indemnification agreement with the Company. As of March 31, 2022 and December 31, 2021, the Company accrued approximately $23.7 million and $22.7 million, respectively, in legal and other professional costs for Mr. Milton's attorneys' fees under his indemnification agreement. The Company expects to incur additional costs associated with its continued cooperation with the Staff of the Division of Enforcement and the SDNY in fiscal year 2022, which will be expensed as incurred and which could be significant in the periods in which they are recorded.
On July 29, 2021, the U.S. Attorney for the SDNY announced the unsealing of a criminal indictment charging Mr. Milton with two counts of securities fraud and one count of wire fraud. That same day, the SEC announced charges against Mr. Milton for alleged violations of federal securities laws.
By order dated December 21, 2021, the Company and the SEC reached a settlement arising out of the SEC’s investigation of the Company. Under the terms of the settlement, without admitting or denying the SEC’s findings, the Company agreed to cease and desist from future violations of the Securities Exchange Act of 1934 (the "Exchange Act") and Rules 10b-5 and 13a-15(a) thereunder and Section 17(a) of the Securities Act of 1933 (the "Securities Act"); to certain voluntary undertakings; and to pay a $125 million civil penalty, to be paid in five installments over two years. The first installment was paid at the end of 2021 and the remaining installments are to be paid semiannually through 2023. The Company
19

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
previously reserved the full amount of the settlement in the quarter ended September 30, 2021, as disclosed in the Company’s quarterly report on Form 10-Q for such quarter, filed with the SEC on November 4, 2021. The SEC’s cease and desist order is available on the SEC’s website.
The Company has been informed that the SDNY investigation remains ongoing but has not received any interview or document requests since the indictment of Mr. Milton was unsealed.
The Company cannot predict the ultimate outcome of the SDNY investigation or the litigation against Mr. Milton, nor can it predict whether any other governmental authorities will initiate separate investigations or litigation. The outcome of the SDNY investigation and any related legal and administrative proceedings could include a wide variety of outcomes, including the institution of administrative, civil injunctive or criminal proceedings involving the Company and/or current or former employees, officers and/or directors in addition to Mr. Milton, the imposition of fines and other penalties, remedies and/or sanctions, modifications to business practices and compliance programs and/or referral to other governmental agencies for other appropriate actions. It is not possible to accurately predict at this time when matters relating to the SDNY investigation will be completed, the final outcome of the SDNY investigation, what additional actions, if any, may be taken by the SDNY or by other governmental agencies, or the effect that such actions may have on the Company's business, prospects, operating results and financial condition, which could be material.
The SDNY investigation, including any matters identified in the Internal Review, could also result in (1) third-party claims against the Company, which may include the assertion of claims for monetary damages, including but not limited to interest, fees, and expenses, (2) damage to the Company's business or reputation, (3) loss of, or adverse effect on, cash flow, assets, goodwill, results of operations, business, prospects, profits or business value, including the possibility of certain of the Company's existing contracts being cancelled, (4) adverse consequences on the Company's ability to obtain or continue financing for current or future projects and/or (5) claims by directors, officers, employees, affiliates, advisors, attorneys, agents, debt holders or other interest holders or constituents of the Company or its subsidiaries, any of which could have a material adverse effect on the Company's business, prospects, operating results and financial condition.
Further, to the extent that these investigations and any resulting third-party claims yield adverse results over time, such results could jeopardize the Company's operations and exhaust its cash reserves, and could cause stockholders to lose their entire investment.
The Company intends to seek reimbursement from Mr. Milton for costs and damages arising from the actions that are the subject of the government and regulatory investigations.
Shareholder Securities Litigation
Beginning on September 15, 2020, six putative class action lawsuits were filed against the Company and certain of its current and former officers and directors, asserting violations of federal securities laws under Section 10(b) and Section 20(a) of the Exchange Act, and, in one case, violations of the Unfair Competition Law under California law (the “Shareholder Securities Litigation”). The complaints generally allege that the Company and certain of its officers and directors made false and/or misleading statements in press releases and public filings regarding the Company's business plan and prospects. The actions are: Borteanu v. Nikola Corporation, et al. (Case No. 2:20-cv-01797-JZB), filed by Daniel Borteanu in the United States District Court of the District of Arizona on September 15, 2020; Salem v. Nikola Corporation, et al. (Case No. 1:20-cv-04354), filed by Arab Salem in the United States District Court for the Eastern District of New York on September 16, 2020; Wojichowski v. Nikola Corporation, et al. (Case No. 2:20-cv-01819-DLR), filed by John Wojichowski in the United States District Court for the District of Arizona on September 17, 2020; Malo v. Nikola Corporation, et al. (Case No. 5:20-cv-02168), filed by Douglas Malo in the United States District Court for the Central District of California on October 16, 2020; and Holzmacher, et al. v. Nikola Corporation, et al. (Case No. 2:20-cv-2123-JJT), filed by Albert Holzmacher, Michael Wood and Tate Wood in the United States District Court for the District of Arizona on November 3, 2020, and Eves v. Nikola Corporation, et al. (Case No. 2:20-cv-02168-DLR), filed by William Eves in the United States District Court for the District of Arizona on November 10, 2020. In October 2020, stipulations by and among the parties to extend the time for the defendants to respond to the complaints until a lead plaintiff, lead counsel, and an operative complaint are identified were entered as orders in certain of the filed actions. On November 16, 2020 and December 8, 2020 respectively, orders in the Malo and Salem actions were entered to transfer the actions to the United States District Court for the District of Arizona.
20

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On November 16, 2020, ten motions both to consolidate the pending securities actions and to be appointed as lead plaintiff were filed by putative class members. On December 15, 2020, the United States District Court for the District of Arizona consolidated the actions under lead case Borteanu v. Nikola Corporation, et al., No. CV-20-01797-PXL-SPL, and appointed Angelo Baio as the “Lead Plaintiff”. On December 23, 2020, a motion for reconsideration of the Court’s order appointing the Lead Plaintiff was filed. On December 30, 2020, a petition for writ of mandamus seeking to vacate the District Court’s Lead Plaintiff order and directing the court to appoint another Lead Plaintiff was filed before the United States Court of Appeals for the Ninth Circuit, Case No. 20-73819. The motion for reconsideration was denied on February 18, 2021. On July 23, 2021, the Ninth Circuit granted in part the mandamus petition, vacated the district court’s December 15, 2020 order, and remanded the case to the District Court to reevaluate the appointment of a Lead Plaintiff. On November 18, 2021, the Court appointed Nikola Investor Group II as Lead Plaintiff and appointed Pomerantz LLP and Block & Leviton LLP as co-lead counsel. On December 10, 2021, the Court issued a scheduling order pursuant to which Lead Plaintiff’s Amended Complaint was due January 24, 2022, Defendants’ deadline to answer or otherwise respond was set for March 10, 2022 and Plaintiffs’ deadline to file any responsive memorandum was set for April 11, 2022 with any reply from Defendants due by May 11, 2022. On January 24, 2022, Lead Plaintiffs filed the Consolidated Amended Class Action Complaint. On February 5, 2022, the Court granted the parties’ joint application for an extension of the deadline for Defendants to file an answer or move to dismiss until April 8, 2022, with Plaintiffs’ opposition due 30 days following the filing of a motion to dismiss, and any reply from Defendants due 30 days following Plaintiffs’ opposition. In accordance with the Court’s scheduling order, Defendants filed their motions to dismiss on April 8, 2022.
Plaintiffs seek an unspecified amount in damages, attorneys’ fees, and other relief. The Company intends to vigorously defend itself. The Company is unable to estimate the potential loss or range of loss, if any, associated with these lawsuits, which could be material. On December 17, 2021, Lead Plaintiff filed a motion to lift the PSLRA stay of discovery. On January 18, 2022, Nikola filed its opposition to Lead Plaintiff’s motion to lift the PSLRA stay of discovery and on January 25, 2022, Lead Plaintiff filed its reply. The Court has not yet ruled on the motion.
Derivative Litigation
Beginning on September 23, 2020, two purported shareholder derivative actions were filed in the United States District Court for the District of Delaware (Byun v. Milton, et al., Case No. 1:20-cv-01277-UNA; Salguocar v. Girsky et. al., Case No. 1:20-cv-01404-UNA), purportedly on behalf of the Company, against certain of the Company's current and former directors alleging breaches of fiduciary duties, violations of Section 14(a) of the Exchange Act, and gross mismanagement. The Byun action also brings claims for unjust enrichment and abuse of control, while the Salguocar action brings a claim for waste of corporate assets. On October 19, 2020, the Byun action was stayed until 30 days after the earlier of (a) the Shareholder Securities Litigation being dismissed in their entirety with prejudice; (b) defendants filing an answer to any complaint in the Shareholder Securities Litigation; or (c) a joint request by plaintiff and defendants to lift the stay. On November 17, 2020, the Byun and Salguocar actions were consolidated as In re Nikola Corporation Derivative Litigation, Lead Case No. 20-cv-01277-CFC. The consolidated action remains stayed.
On December 18, 2020, a purported shareholder derivative action was filed in the United States District Court for the District of Arizona, Huhn v. Milton et al., Case No. 2:20-cv-02437-DWL, purportedly on behalf of the Company, against certain of the Company’s current and former directors alleging breaches of fiduciary duties, violations of Section 14(a) of the Exchange Act, unjust enrichment, and against defendant Jeff Ubben, a member of the Company’s board of directors, insider selling and misappropriation of information. On January 26, 2021, the Huhn action was stayed until 30 days after the earlier of (a) the Shareholder Securities Litigation being dismissed in its entirety with prejudice; (b) defendants filing an answer to any complaint in the Shareholder Securities Litigation; or (c) a joint request by plaintiff and defendants to lift the stay.
On January 7, 2022, Barbara Rhodes, a purported stockholder of the Company, filed her Verified Stockholder Derivative Complaint in Delaware Chancery Court captioned Rhodes v. Milton, et al. and Nikola Corp., C.A. No. 2022-0023-KSJM (the “Rhodes Action”). On January 10, 2022, Zachary BeHage and Benjamin Rowe (together, the “BeHage Rowe Plaintiffs”), purported stockholders of the Company, filed their Verified Shareholder Derivative Complaint in Delaware Chancery Court captioned BeHage v. Milton, et al. and Nikola Corp., C.A. No. 2022-0045-KSJM (the “BeHage Rowe Action” together with the Rhodes Action, the “Related Actions”). The Related Actions are against certain of the Company’s current and former directors and allege breach of fiduciary duties, insider selling under Brophy, aiding and abetting insider selling, aiding and abetting breach of fiduciary duties, unjust enrichment, and waste of corporate assets. On January 28, 2022, Rhodes and the BeHage Rowe Plaintiffs filed a stipulation and proposed order for consolidation of the Related Actions. The proposed order
21

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
states that Defendants need not answer, move, or otherwise respond to the complaints filed in the Related Actions and contemplates that counsel for Plaintiffs shall file a consolidated complaint or designate an operative complaint within fourteen days of entry of an order consolidating these actions and shall meet and confer with counsel for Defendants or any other party regarding a schedule for Defendants to respond to the operative complaint. The proposed order was granted by the Court on February 1, 2022. On February 15, 2022, Rhodes and the BeHage Rowe Plaintiffs filed a Verified Consolidated Amended Stockholder Derivative Complaint in the Related Actions (the “Amended Complaint”). On April 4, 2022, the parties filed a stipulation and proposed order, pursuant to which the parties to the Related Actions agreed that Defendants need not answer, move, or otherwise respond to certain counts of the Amended Complaint. The parties otherwise agreed to a briefing schedule for Defendants’ anticipated motions to stay the remaining counts of the Amended Complaint, pursuant to which Defendants’ motions would be due April 13, 2022, Plaintiffs’ oppositions would be due May 4, 2022, and Defendants’ replies would be due May 25, 2022. A telephonic oral argument is scheduled for June 1, 2022 at 11:00 am ET. The Court granted the parties’ stipulation that same day, and Defendants filed their motions to stay on April 13, 2022. On March 10, 2022, Michelle Brown and Crisanto Gomes (together, the “Brown & Gomes Plaintiffs”), purported stockholders of the Company, filed a Verified Shareholder Derivative Complaint in Delaware Chancery Court captioned Brown v. Milton, et al. and Nikola Corp., C.A. No. 2022-0223-KSJM (the “Brown & Gomes Action”). The Brown & Gomes Action is against certain of the Company’s current and former directors and alleges claims against those defendants for purported breaches of fiduciary duty and unjust enrichment. On March 14, 2022, the Brown & Gomes Plaintiffs notified the court in the Related Actions of their belief that the Brown & Gomes Action properly belongs as part of the consolidated Related Actions.
The complaints seek unspecified monetary damages, costs and fees associated with bringing the actions, and reform of the Company's corporate governance, risk management and operating practices. The Company intends to vigorously defend against the foregoing complaints. The Company is unable to estimate the potential loss or range of loss, if any, associated with these lawsuits, which could be material.
In addition, on March 8, 2021, the Company received a demand letter from a law firm representing a purported stockholder of the Company alleging facts and claims substantially the same as many of the facts and claims in the filed derivative shareholder lawsuit. The demand letter requests that the board of directors (i) undertake an independent internal investigation into certain board members and management’s purported violations of Delaware and/or federal law; and (ii) commence a civil action against those members of the board and management for alleged fiduciary breaches. In April 2021, the board of directors formed a demand review committee, consisting of independent directors Bruce L. Smith, and Mary L. Petrovich, to review such demands and provide input to the Company and retained independent counsel. There can be no assurance as to whether any litigation will be commenced by or against the Company by the purported shareholder with respect to the claims set forth in the demand letter, or whether any such litigation could be material.
Books and Record Demands Pursuant to Delaware General Corporation Law Section 220
The Company has received a number of demand letters pursuant to Section 220 of the Delaware General Corporation Law (“DGCL”), seeking disclosure of certain of the Company’s records. The Company has responded to those demands, stating its belief that the demand letters fail to fully comply with the requirements of Section 220 of the DGCL. However, in the interest of resolution and while preserving all rights of the defendants, the Company has engaged in negotiations with the shareholders, and has provided certain information that the Company had reasonably available to it.
On January 15, 2021, Plaintiff Frances Gatto filed a complaint in Delaware Chancery Court seeking to compel inspection of books and records pursuant to Section 220 of the DGCL. On January 26, 2021, Plaintiff’s counsel and the Company filed a joint letter, notifying the Court that the parties are engaged in dialogue regarding Plaintiff’s demand, and the Company need not answer or otherwise respond to the complaint at this time. On October 20, 2021, Plaintiff dismissed the action without prejudice.
On October 8, 2021, Plaintiffs Zachary BeHage and Benjamin Rowe filed a complaint in Delaware Chancery Court seeking to compel inspection of books and records pursuant to Section 220 of the DGCL. On October 19, 2021, Plaintiffs’ counsel and the Company filed a joint letter, notifying the Court that the parties are engaged in dialogue regarding Plaintiffs’ demand, and the Company need not answer or otherwise respond to the complaint at this time. On January 14, 2022, Plaintiffs dismissed the action without prejudice.
22

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On January 19, 2022, Plaintiff Melissa Patel filed a complaint in Delaware Chancery Court seeking to compel inspection of books and records pursuant to Section 220 of the DGCL. On February 20, 2022, the parties filed a stipulation and proposed order of dismissal without prejudice, which the court granted on February 21, 2022.
AAA Arbitration Demand
On July 23, 2021, our former executive chairman Trevor Milton filed an arbitration demand with the American Arbitration Association against the Company seeking indemnification and advancement of defense costs as well as cooperation in Mr. Milton’s defense in certain legal proceedings. The Company disputes Mr. Milton’s claims. On February 22, 2022, the arbitration panel issued a ruling addressing many of the parties’ historical disputes over the advancement of defense costs. Ongoing and future disputes concerning the advancement of defense costs that the parties are unable to resolve consensually have been or will be submitted to the arbitration panel.
Commitments and Contingencies
Coolidge Land Conveyance
In February 2019, the Company was conveyed 430 acres of land in Coolidge, Arizona, by Pinal Land Holdings ("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 fulfilled its requirement to commence construction within the period defined by the agreement and is required to complete construction of the manufacturing facility within five years of February 2019 (the “Manufacturing Facility 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.
FCPM License
In the third quarter of 2021, the Company entered into a fuel cell power module ("FCPM") license to intellectual property that will be used to adapt, further develop and assemble FCPMs. Payments for the license will be due in installments ranging from 2022 to 2023. As of March 31, 2022, the Company accrued $22.2 million in "Accrued expenses and other current liabilities" and $22.2 million in "Other long-term liabilities" on the consolidated balance sheets.
Commitment to Fund Joint Venture
In March 2022, the Company and Travel Centers of America, Inc. ("TA") entered into a series of agreements which established a joint venture, Nikola - TA HRS 1, LLC. The operations expected to be performed by the joint venture consist of the development, operation and maintenance of a hydrogen fueling station.
The agreements provide for a 50/50 ownership of the joint venture. Both parties are entitled to appoint an equal number of board members to the management committee of the joint venture. Pursuant to the terms of the agreements, the Company is committed to fund an initial capital contribution of $1.0 million. As of March 31, 2022, 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 March 31, 2022. The Company expects to recognize the joint venture under the equity method of accounting.
23

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
10. NET LOSS PER SHARE
The following table sets forth the computation of the basic and diluted net loss per share for the three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
20222021
Numerator:
Net loss$(152,941)$(120,224)
Less: revaluation of warrant liability (951)
Adjusted net loss$(152,941)$(121,175)
Denominator:
Weighted average shares outstanding, basic415,152,656 392,189,851 
Dilutive effect of common stock issuable from assumed exercise of warrants 299,910 
Weighted average shares outstanding, diluted415,152,656 392,489,761 
Net loss per share:
Basic$(0.37)$(0.31)
Diluted$(0.37)$(0.31)
Basic net loss per share is computed by dividing net loss for the period by the weighted-average number of common shares outstanding during the period.
Diluted net loss per share is computed by dividing the net loss, adjusted for the revaluation of warrant liability for the private warrants, by the weighted average number of common shares outstanding for the period, adjusted for the dilutive effect of shares of common stock equivalents resulting from the assumed exercise of the warrants. The treasury stock method was used to calculate the potential dilutive effect of these common stock equivalents.
Potentially dilutive shares were excluded from the computation of diluted net loss when their effect was antidilutive. The following outstanding common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive.
Three Months Ended March 31,
20222021
Outstanding warrants760,915  
Stock options, including performance stock options28,801,104 30,599,958 
Restricted stock units, including market based RSUs28,222,855 20,359,012 
Total57,784,874 50,958,970 
11. SUBSEQUENT EVENTS
On April 1, 2022, the Company issued 2,559,727 shares of common stock under the terms of the First Tumim Purchase Agreement to Tumim for proceeds of $27.4 million.
On April 30, 2022, the Company entered into an investment agreement (the "Investment Agreement") with an investor (the "Investor") relating to the sale to the Investor of $200.0 million aggregate principal amount of the Company's 8.00% / 11.00% Convertible Senior PIK Toggle Notes due 2026 (the "Notes"). The transactions contemplated by the Investment Agreement are expected to close in June 2022, subject to the satisfaction of the customary closing conditions set forth in the Investment Agreement. The Company is in the process of evaluating the accounting treatment of the Notes.
24


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements and can be identified by the words “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” "will", and similar expressions. These are statements that relate to future periods and include our financial and business performance; expected timing with respect to the expansion of our manufacturing facilities, joint venture with Iveco and production and attributes of our BEV and FCEV trucks; expectations regarding our hydrogen fuel station rollout plan and hydrogen strategy; timing of completion of validation testing, volume production and other milestones; securing components for our trucks on acceptable terms and in a timely manner, or at all; changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; planned collaboration with our business partners; our future capital requirements and sources and uses of cash; the potential outcome of investigations, litigation, complaints, product liability claims and/or adverse publicity; the implementation, market acceptance and success of our business model; developments relating to our competitors and industry; the impact of health epidemics, including the COVID-19 pandemic, on our business and the actions we may take in response thereto; our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others; our ability to obtain funding for our operations; the outcome of any known and unknown regulatory proceedings; our business, expansion plans and opportunities; changes in applicable laws or regulations; and anticipated trends and challenges in our business and the markets in which we operate.
Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expected. These risks and uncertainties include, but are not limited to, those risks discussed in Item 1A of this report, as well as our ability to execute our business model, including market acceptance of our planned products and services; changes in applicable laws or regulations; risks associated with the outcome of any legal, regulatory, or judicial proceeding; the effect of the COVID-19 pandemic on our business; supply chain constraints; the impact of inflation; our ability to raise capital; our ability to compete; the success of our business collaborations; regulatory developments in the United States and foreign countries; the possibility that we may be adversely affected by other economic, business, and/or competitive factors; and our history of operating losses. These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to update any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
In this report, all references to “Nikola,” “we,” “us,” or “our” mean Nikola Corporation.
Nikola™ is a trademark of Nikola Corporation. We also refer to trademarks of other corporations and organizations in this report.
The below discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Overview
We are a technology innovator and integrator, working to develop innovative energy and transportation solutions. We are pioneering a business model that will enable corporate customers to integrate next-generation truck technology, hydrogen fueling infrastructure, and related maintenance. By creating this ecosystem, we and our strategic business partners and suppliers hope to build a long-term competitive advantage for clean technology vehicles and next generation fueling solutions.
Our expertise lies in design, innovation, and software and engineering. We assemble, integrate, and commission our vehicles in collaboration with our business partners and suppliers. Our approach includes leveraging strategic partnerships to help lower cost, increase capital efficiency and increase speed to market.
We operate in two business units: Truck and Energy. The Truck business unit is developing and commercializing BEV and FCEV Class 8 trucks that provide environmentally friendly, cost-effective solutions to the short, medium and long haul trucking sector. The Energy business unit is primarily developing a hydrogen fueling ecosystem and charging stations to support our BEV and FCEV customers.
Our planned hydrogen fueling ecosystem is expected to include hydrogen production and/or hydrogen procurement, hydrogen distribution, and hydrogen storage and dispensing. As part of our hydrogen strategy, on June 22, 2021, we entered into
25


a purchase agreement ("Offtake Agreement") with Wabash Valley Resources LLC (“WVR”), pursuant to which WVR agreed to sell to us, and we agreed to purchase from WVR, hydrogen to be produced from the hydrogen production facility being developed by WVR in West Terre Haute, Indiana (the "Plant"), once completed.
During 2020, we established a joint venture with Iveco, a subsidiary of CNHI, Nikola Iveco Europe GmbH. Our joint venture with Iveco provides us with the manufacturing infrastructure to build BEV trucks for the North American market in addition to that of our greenfield manufacturing facility in Coolidge, Arizona. The operations of the joint venture commenced during the fourth quarter of 2020. During the second quarter of 2021, the joint venture completed the construction of the manufacturing facility and started trial production for the Nikola Tre BEV on the assembly line in Ulm, Germany.
We expect both our capital and operating expenditures will increase significantly in connection with our ongoing activities, as we:
•    expand manufacturing facilities and purchase related equipment;
•    commercialize our heavy-duty trucks and other products;
•    develop hydrogen fueling stations;
•    continue to invest in our technology;
•    increase our investment in marketing and advertising, sales, and distribution infrastructure for our products and services;
•    maintain and improve our operational, financial and management information systems;
•    hire additional personnel;
•    obtain, maintain, expand, and protect our intellectual property portfolio; and
•    operate as a public company.
Recent Developments
On March 21, 2022, we started serial production of the Nikola Tre BEV at our Coolidge, Arizona manufacturing facility with deliveries to our dealers beginning in the second quarter of 2022.
As of April 30, 2022, our dealers have received purchase orders for 134 Nikola Tre BEVs.
Completed the Phase 1 expansion of our Coolidge, Arizona manufacturing facility, providing us with a production capacity of 2,500 trucks for 2022.
Tre FCEV Alpha pilot testing with Anheuser-Busch in Southern California has successfully concluded. The FCEV Alphas are scheduled to begin a pilot test with TTSI in drayage operations.
On March 23, 2022, we announced our expanded partnership with Alta Equipment Group covering the Arizona sales and service territory.
On March 29, 2022, we signed an agreement with ENGS Commercial Finance Co. ("ENGS") to facilitate the sale of Class 8 Nikola Tre BEVs and FCEVs. Working directly through our dealer network, ENGS will offer customer finance solutions for the purchase of our vehicles, charging assets and infrastructure requirements to offer a broad range of financial solutions to the customers.
Key Factors Affecting Operating Results
We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section titled “Risk Factors.”
We completed pre-series Tre BEV trucks and have started serial production at our Coolidge manufacturing facility. We expect to derive revenue from our Tre BEV trucks in the second quarter of 2022 and from our Tre FCEV trucks in the second half of 2023. From the start of serial production through April 30, 2022, we have produced 11 Tre BEV trucks and shipped 11
26


Tre BEV trucks to our dealer network. Presently, we are experiencing supply chain shortages, including but not limited to battery cells, integrated circuits, vehicle control chips, and displays. This has resulted in delays and may continue to cause delays in the availability of saleable Nikola Tre BEV trucks and impact our ability to generate revenue.
We also require substantial additional capital to develop our products and services and fund operations for the foreseeable future. Until we can generate sufficient revenue, we expect to finance our operations through a combination of existing cash on hand, follow-on public offerings, private placements, debt financings, strategic partnerships, and licensing arrangements. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts.
Basis of Presentation
Currently, we conduct business through one operating segment. See Note 2 in our Annual Report on Form 10-K for the year ended December 31, 2021 for more information.
Components of Results of Operations
Revenues
Truck sales: We expect the majority of our revenue to be derived from our BEV trucks starting in the second quarter of 2022 and from bundled leases, or other alternative structures, for our FCEV trucks beginning in the second half of 2023. We intend for our bundled lease offering to be inclusive of the cost of the truck, hydrogen fuel and regularly scheduled maintenance.
Service and other: We began generating sales from deliveries of Mobile Charging Trailers ("MCTs") to dealers and customers in the first quarter of 2022.
Cost of Revenues

Truck sales: Once we begin deliveries of our trucks, cost of revenue will include direct parts, material and labor costs, manufacturing overhead, including amortized tooling costs and depreciation of our Coolidge manufacturing facilities, depreciation of our hydrogen fueling stations, cost of hydrogen production, shipping and logistics costs and reserves for estimated warranty expenses.
Service and other: Cost of revenues related to MCT sales primarily include direct parts, materials, outsourced manufacturing services, and fulfillment costs.
Research and Development Expense
Research and development expenses consist primarily of costs incurred for the discovery and development of our vehicles, which include:
•    Fees paid to third parties such as consultants and contractors for outside development;
•    Expenses related to materials, supplies and third-party services, including prototype tooling and non-recurring engineering;
•    Personnel related expenses, including salaries, benefits, and stock-based compensation expense, for personnel in our engineering and research functions;
•    Depreciation for prototyping equipment and R&D facilities; and
Expenses related to operating the Coolidge manufacturing facility until the start of commercial production.
During the three months ended March 31, 2022, our research and development expenses have primarily been incurred in the development of our BEV and FCEV trucks.
We expect our research and development costs to increase for the foreseeable future as we continue to invest to achieve our technology and product roadmap goals.
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Selling, General, and Administrative Expense
Selling, general, and administrative expenses consist of personnel related expenses for our corporate, executive, finance, and other administrative functions, expenses for outside professional services, including legal, audit and accounting services, as well as expenses for facilities, depreciation, amortization, travel, and marketing costs. Personnel related expenses consist of salaries, benefits, and stock-based compensation.
We expect our selling, general, and administrative expenses to increase for the foreseeable future as we scale headcount with the growth of our business, and as a result of operating as a public company.
Interest Expense, net
Interest expense consists of interest on our promissory note and finance lease liabilities. Interest income consists primarily of interest received or earned on our cash and cash equivalents balances.
Revaluation of Warrant Liability
The revaluation of warrant liability includes net gains and losses from the remeasurement of the warrant liability. Warrants recorded as liabilities are recorded at their fair value and remeasured at each reporting period.
Other Income, net
Other income, net consists primarily of other miscellaneous non-operating items, such as government grants, subsidies, merchandising, revaluation gains and losses on the derivative liability, foreign currency gains and losses, and unrealized gains and losses on investments.
Income Tax Expense
Our income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. Due to cumulative losses, we maintain a valuation allowance against our U.S. and state deferred tax assets.
Equity in Net Loss of Affiliates
Equity in net loss of affiliates consists of our portion of net gains and losses from equity method investments.
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Results of Operations
Comparison of Three Months Ended March 31, 2022 to Three Months Ended March 31, 2021
The following table sets forth our historical operating results for the periods indicated:
Three Months Ended March 31,$%
20222021 ChangeChange
(in thousands, except share and per share data)
Revenues:
Truck sales$— $— $— NM
Services and other1,887 — 1,887 NM
Total revenues1,887 — 1,887 NM
Total cost of revenues:
Truck sales— — — NM
Services and other1,456 — 1,456 NM
Total cost of revenues1,456 — 1,456 NM
Gross profit431 — 431 NM
Operating expenses:
Research and development74,557 55,163 19,394 35.2%
Selling, general, and administrative77,183 65,427 11,756 18.0%
Total operating expenses151,740 120,590 31,150 25.8%
Loss from operations(151,309)(120,590)(30,719)25.5%
Other income (expense):
Interest expense, net(211)(9)(202)NM
Revaluation of warrant liability(434)951 (1,385)(145.6)%
Other income, net1,833 219 1,614 NM
Loss before income taxes and equity in net loss of affiliates(150,121)(119,429)(30,692)25.7%
Income tax expense— (1)NM
Loss before equity in net loss of affiliates(150,121)(119,430)(30,691)25.7%
Equity in net loss of affiliates(2,820)(794)(2,026)NM
Net loss$(152,941)$