Stockholders' Equity, Convertible Preferred Stock and Redeemable Non-controlling Interest

9 Months Ended

Sep. 30, 2021

Stockholders' Equity Note [Abstract]

Stockholders' Equity, Convertible Preferred Stock and Redeemable Non-controlling Interest

Stockholders’ Equity, Convertible Preferred Stock and Redeemable Non-controlling Interest

Convertible Preferred Stock

The Board of Directors has authorized 50.0 million shares of convertible preferred stock, $0.001 par value, issuable in series. As of September 30, 2021 and December 31, 2020, 7.0 million shares of Series A preferred stock were issued and outstanding. The Series A preferred stock shall be entitled to one vote per common stock on an as-converted basis and is only entitled to receive dividends when and if declared by the Board.

Redeemable Non-controlling Interest

The Company and Qingdao Chengyang Xinyang Development and Investment Company Limited (“Qingdao”) formed an entity named Qingdao Chengyang Mobo New Energy Automobile Sales Service Company Limited (“New Energy.”). With several name changes, the entity current name is Qingdao Chengyang Medici Zhixing New Energy Automobile Company Limited. Qingdao entered into a capital subscription agreement for a total of RMB 200.0 million ($28.0 million), and made the first capital contribution of RMB 50.0 million in the three months ended March 31, 2020. The remaining RMB 150.0 million ($21.0 million) are payable in three installments of RMB 50.0 million ($7.0 million) upon New Energy attaining certain revenue or market value benchmarks.

The investment agreement stipulates that New Energy must pay Qingdao dividends at the rate of 6.0%. After one year, Qingdao may sell its investment to an institutional investor, or redeem its investment if Qingdao does not meet certain revenue and market value benchmarks and after three years may redeem its investment. the redeemable amount equals the face amount plus 6.0% interest less dividends paid. At Qingdao's request, the Company had entered discussions concerning the redemption of the investment, and in the three months ended September 30, 2021 Qingdao officially requested redemption of the invested funds. Due to the redemption feature, the Company had classified the investment outside of permanent equity, and subsequent to the requested redemption classified the investment in current liabilities.

The following table summarizes activity for the redeemable non-controlling interest (in thousands):

	Nine months ended
	September 30, 2021		September 30, 2020
Beginning balance	$	7,485	$	—
Initial investment	—		7,047
Accretion of dividend	347		323
Loss attributable to non-controlling interest	(195)		(79)
Adjustment to redemption value	195		79
Ending balance	$	7,832	$	7,370

Common Stock

The Board of Directors has authorized 1,500 million shares of common stock, $0.001 par value.

2021 Equity Transactions

On February 26, 2021, the Company entered into a sales agreement with Roth Capital Partners, LLC (“Roth Capital.”) in accordance with the terms of the sales agreement, the Company may offer and sell from time to time through Roth Capital the Company’s common stock having an aggregate offering price of up to $150.0 million (the “Placement Shares.”). The Company shall pay to Roth Capital in cash, upon each sale of Placement Shares pursuant to the Agreement, an amount equal to 3.0% of the gross proceeds from each sale of Placement Shares. During the three months ended September 30, 2021, the Company issued 7.5 million shares of common stock and received net proceeds of $17.7 million after deducting $0.5 million commission and transaction fees. During the nine months ended September 30, 2021, the Company issued 50.4 million shares of common stock and received net proceeds of $145.5 million after deducting $4.5 million commission and transaction fees.

On June 30, 2021, the Company entered into a Standby Equity Distribution Agreement (the “SEDA”) with YA II PN, Ltd., (“YA”). The Company will be able to sell up to 80.4 million shares of its common stock at the Company’s request any time during the 36 months following the date of the SEDA’s entrance into force. The shares would be purchased at (i) 95% of the Market Price if the applicable pricing period is two consecutive trading days or (ii) 96% of the Market Price if the applicable pricing period is five consecutive trading days, and, in each case, would be subject to certain limitations, including that YA could not purchase any shares that would result in it owning more than 4.99% of the Company’s common stock. “Market Price” shall mean the lowest daily volume weighted average price of the Company’s common stock during the two or five consecutive trading days, as applicable, commencing on the trading day following the date the Company submits an advance notice to YA. Pursuant to the SEDA, the Company is required to register all shares which YA may acquire. The SEDA contains customary representations, warranties and agreements of the Company and YA II PN, indemnification rights and other obligations of the parties. YA II PN has covenanted not to cause or engage in any direct or indirect short selling or hedging of the Company’s shares of common stock. During the nine months ended September 30, 2021, the Company issued 10.0 million shares of common stock for a total of $27.3 million.

On August 12, 2021, the Company entered into a Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co ("Cantor"). In accordance with the terms of the Agreement, the Company may offer and sell from time to time through or to Cantor, as sales agent or principal, the Company’s common stock having an aggregate offering price of up to $350,000,000 (the “Placement Shares”). The Placement Shares will be offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (Registration No. 333- 252230). The Company shall pay to Cantor in cash, upon each sale of Placement Shares pursuant to this Agreement, an amount equal to up to 3.0% of the aggregate gross proceeds from each sale of Placement Shares. During the three months ended September 30, 2021, the Company issued 2.0 million shares of common stock and received net proceeds of $4.2 million after deducting $0.1 million commission and transaction fees.

Refer to Note 6 for information related to the issuance to common stock for acquisitions, Note 12 for information related to issuance of common stock with convertible notes, Note 15 for information related to the issuance to common stock for option exercise.

2020 Equity Transactions

During the three months ended September 30, 2020, the Company issued 1.6 million shares of common stock related to the DBOT acquisition, issued 0.3 million shares of common stock related to the professional service provide by a third party.

During the nine months ended September 30, 2020, the Company issued 13.0 million shares of common stock related to the DBOT acquisition, issued 27.9 million shares of common stock related to the issuance, conversion and warrant exercise of convertible notes to third party, 10.3 million shares of common stock related to the related party debt conversion, 34.5 million shares related to SEDA, 2.0 million shares related to the settlement of a third party debt and 1.2 million shares of common stock related to the professional service provided by the third parties.