10-Q 1 d214183d10q.htm 10-Q 10-Q
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
FORM
10-Q
 
 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
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:
001-39160
 
 
FISKER INC.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
82-3100340
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
1888 Rosecrans Avenue, Manhattan Beach, CA 90266
(Address of principal executive offices)
(833)
434-7537
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading
symbol(s)
 
Name of each exchange
on which registered
Class A Common Stock, par value of $0.00001 per share
 
FSR
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  
 
 Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer      Accelerated filer  
       
Non-accelerated
filer
     Smaller reporting company  
       
         Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in
Rule
12b-2
of the Exchange Act
).    Yes  ☐    No  ☒
As of November 11, 2021, the registrant had 163,840,984 shares of Class A Common Stock and 132,354,128 shares of Class B Common Stock, par value $0.00001 per share,
outstanding.
 
 
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on
Form 10-Q
(this “report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are forward-looking and as such are not historical facts. These forward-looking statements include, without limitation, statements regarding future financial performance, business strategies, expansion plans, future results of operations, estimated revenues, losses, projected costs, prospects, plans and objectives of management. These forward-looking statements are based on our management’s current expectations, estimates, projections and beliefs, as well as a number of assumptions concerning future events, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this report, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would” and variations thereof and similar words and expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about:
 
 
 
our ability to grow and manage growth profitably;
 
 
 
our ability to enter into binding contracts with OEMs
or tier-one
suppliers in order to execute on our business plan;
 
 
 
our ability to execute our business model, including market acceptance of our planned products and services;
 
 
 
our expansion plans and opportunities;
 
 
 
our expectations regarding future expenditures;
 
 
 
our ability to raise capital in the future;
 
 
 
our ability to attract and retain qualified employees and key personnel;
 
 
 
the possibility that we may be adversely affected by other economic, business or competitive factors;
 
 
 
our ability to maintain the listing of our Class A common stock, par value $0.00001 per share (“Class A Common Stock”) on the NYSE;
 
 
 
changes in applicable laws or regulations;
 
 
 
the outcome of any known and unknown litigation and regulatory proceedings;
 
 
 
the possibility
that COVID-19
may adversely affect the results of our operations, financial position and cash flows; and
 
 
 
other factors described in this report, including those described in the section entitled “
Risk Factors
” under Part I, Item 1A of our most recent Annual Report on Form
10-K/A
for the year ended December 31, 2020 filed with the U.S. Securities and Exchange Commission (“SEC”) on May 17, 2021, as supplemented by Quarterly Reports on Form
10-Q
and filed with the SEC.
The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled “
Risk Factors
” under Part I, Item 1A of our Annual Report on Form
10-K/A
for the year ended December 31, 2020 filed with the SEC on May 17, 2021. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the effect of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.
The forward-looking statements made by us in this report speak only as of the date of this report. Except to the extent required under the federal securities laws and rules and regulations of the SEC, we disclaim any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.
WEBSITE AND SOCIAL MEDIA DISCLOSURE
We use our website (www.fiskerinc.com) and various social media channels as a means of disclosing information about the company and its products to its customers, investors and the public (e.g., @fiskerinc, @fiskerofficial, #fiskerinc, #henrikfisker and #fisker on Twitter, Facebook, Instagram, YouTube, TikTok and LinkedIn). The information posted on social media channels is not incorporated by reference in this report or in any other report or document we file with the SEC. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press
 
3
releases, SEC filings and public conference calls and webcasts. In addition, you may automatically
receive e-mail
alerts and other information about the Company when you enroll
your e-mail address
by visiting the “Investor Email Alerts” section of our website at www.investors.fiskerinc.com. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically
receive e-mail
alerts and other information about the Company when you enroll
your e-mail
address by visiting the “Investor Email Alerts” section of our website at
www.investors.fiskerinc.com
.
ADDITIONAL INFORMATION
Unless the context indicates otherwise, references in this report to the “Company,” “Fisker,” “we,” “us,” “our” and similar terms refer to Fisker Inc. (f/k/a Spartan Energy Acquisition Corp.) and its consolidated subsidiaries (including Fisker Group Inc. or Legacy Fisker). References to “Spartan” refer to our predecessor company prior to the consummation of the Business Combination (as defined below).
 
4
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets
Fisker Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
 
    
As of

September 30,

2021
   
As of

December 31,

2020
 
              
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 1,400,411     $ 991,158  
Prepaid expenses and other current assets
     22,856       9,872  
    
 
 
   
 
 
 
Total current assets
     1,423,267       1,001,030  
    
 
 
   
 
 
 
Non-current
assets:
                
Property and equipment, net
     18,558       945  
Intangible assets
     200,089       58,041  
Right-of-use
assets, net
     19,178       2,548  
Other
non-current
assets
     1,352       1,329  
    
 
 
   
 
 
 
Total
non-current
assets
     239,177       62,863  
    
 
 
   
 
 
 
TOTAL ASSETS
  
$
1,662,444
 
 
$
1,063,893
 
    
 
 
   
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
   $ 13,142     $ 5,159  
Accrued expenses
     60,198       7,408  
Lease liabilities
     4,023       655  
    
 
 
   
 
 
 
Total current liabilities
     77,363       13,222  
    
 
 
   
 
 
 
Non-current
liabilities:
                
Customer deposits
     5,085       3,527  
Warrants liability
              138,102  
Lease liabilities
     15,831       1,912  
Convertible senior notes
     659,129           
    
 
 
   
 
 
 
Total
non-current
liabilities
     680,045       143,541  
    
 
 
   
 
 
 
Total liabilities
     757,408       156,763  
    
 
 
   
 
 
 
COMMITMENTS AND CONTINGENCIES (Note 13)
            
Stockholders’ equity:
                
Preferred stock, $0.00001 par value; 15,000,000 shares authorized; no shares issued and outstanding as of September 30, 2021 and December 31, 2020
                  
Class A Common stock, $0.00001 par value; 750,000,000 shares authorized; 163,816,328 and 144,912,362 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
     2       1  
Class B Common stock, $0.00001 par value; 150,000,000 shares authorized; 132,354,128 shares issued and outstanding as of September 30, 2021 and December 31, 2020
     1       1  
Additional
paid-in
capital
     1,385,846       1,055,128  
Accumulated deficit
     (480,813     (147,904
Receivable for warrant exercises
              (96
    
 
 
   
 
 
 
Total stockholders’ equity
     905,036       907,130  
    
 
 
   
 
 
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
1,662,444
 
 
$
1,063,893
 
    
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
5

Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Months and Nine Months ended September 30, 2021 and 2020
(In thousands, except share and per share data)
(Unaudited)
 
    
Three-Months Ended September 30,
   
Nine-Months Ended September 30,
 
    
2021
   
2020
   
2021
   
2020
 
                          
Revenue
   $ 15              $ 65           
Cost of goods sold
     16                47           
    
 
 
   
 
 
   
 
 
   
 
 
 
Gross margin
     (1              18           
Operating costs and expenses:
                                
General and administrative
     10,273     $ 6,521       24,012       8,056  
Research and development
     99,291       3,402       171,807       3,963  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total operating costs and expenses
     109,564       9,923       195,819       12,019  
    
 
 
   
 
 
   
 
 
   
 
 
 
Loss from operations
     (109,565     (9,923     (195,801     (12,019
Other income (expense):
                                
Other income (expense)
     (84     6       (98     15  
Interest income
     155       8       415       13  
Interest expense
     (2,147     (765     (2,147     (1,326
Change in fair value of derivatives
              (29,149     (138,436     (29,409
Foreign currency gain (loss)
     1,797       159       3,158       122  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total other income (expense)
     (279     (29,741     (137,108     (30,585
    
 
 
   
 
 
   
 
 
   
 
 
 
Net loss
   $ (109,844   $ (39,664     (332,909     (42,604
    
 
 
   
 
 
   
 
 
   
 
 
 
Net loss per common share
                                
Net loss per share attributable to Class A and Class B Common shareholders- Basic and Diluted
   $ (0.37   $ (0.38   $ (1.15   $ (0.40
    
 
 
   
 
 
   
 
 
   
 
 
 
Weighted average shares outstanding
                                
Weighted average Class A and Class B Common shares outstanding- Basic and Diluted
     296,133,530       105,549,787       290,445,265       105,476,293  
    
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
6

Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Temporary Equity and Stockholders’ Equity (Deficit)
(In thousands, except share data)
(Unaudited)
 
 
  
Series A

Convertible Preferred
 
  
Series B

Convertible Preferred
 
  
Founders

Convertible Preferred
 
  
Class A

Common Stock
 
  
Class B

Common Stock
 
  
Additional

Paid-in

Capital
 
 
Receivable

For

Warrant

Exercises
 
  
Accumulated

Deficit
 
 
Stockholders’

Deficit
 
 
  
    Shares    
 
  
Amount
 
  
Shares
 
  
Amount
 
  
Shares
 
  
Amount
 
  
Shares
 
 
Amount
 
  
Shares
 
  
Amount
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
 
 
  
 
 
  
 
 
  
 
 
 
 
 
  
 
 
 
 
 
                                                                                                 
Balance at June 30, 2021
  
 
—  
 
  
$
—  
 
  
 
—  
 
  
$
—  
 
  
 
—  
 
  
$
—  
 
  
 
163,711,901
 
  
$
2
 
  
 
132,354,128
 
  
$
1
 
  
$
1,481,556
 
 
$
—  
 
  
$
(370,969
 
$
1,110,590
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
Stock-based compensation
     —          —          —          —          —          —          —          —          —          —          1,043       —          —         1,043  
Exercise of stock options and
issuance of restricted stock
unit awards, net of
statutory tax withholdings
     —          —          —          —          —          —          104,427        —          —          —          35       —          —         35  
Purchase of capped call options
     —          —          —          —          —          —                  —          —          —         
(96,788
)
 
    —                 
(96,788
)
 
Net Loss 
     —          —          —          —          —          —          —          —          —          —                —         
(109,844
)
    (109,844
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
Balance at September 30, 2021
  
 
—  
 
  
$
—  
 
  
 
—  
 
  
$
—  
 
  
 
—  
 
  
$
—  
 
  
 
163,816,328
 
  
$
2
 
  
 
132,354,128
 
  
$
1
 
  
$
1,385,846
 
 
$
—  
 
  
$
(480,813
 
$
905,036
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
   
 
 
 
 
7

    
Series A

Convertible Preferred
    
Series B

Convertible Preferred
    
Founders

Convertible Preferred
    
Class A

Common Stock
    
Class B

Common Stock
    
Additional

Paid-in

Capital
   
Receivable

For

Warrant

Exercises
   
Accumulated

Deficit
   
Stockholders’

Deficit
 
    
    Shares    
    
Amount
    
Shares
    
Amount
    
Shares
    
Amount
    
Shares
   
Amount
    
Shares
    
Amount
 
                                                                                               
Balance at
December 31,
2020
  
 
—  
 
  
$
—  
 
  
 
—  
 
  
$
—  
 
  
 
—  
 
  
$
—  
 
  
 
144,912,362
 
 
$
1
 
  
 
132,354,128
 
  
$
1
 
  
$
1,055,128
 
 
$
(96
 
$
(147,904
 
$
907,130
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
Stock-based
compensation
     —          —          —          —          —          —          —         —          —          —          4,078       —         —         4,078  
Exercise of stock
options and
issuance of
restricted stock unit
awards, net of
statutory tax
withholdings
     —          —          —          —          —          —          1,095,446       —          —          —          (53     —         —         (53
Exercise of warrants
                                                           27,751,587       1        —          —          365,463       458       —         365,922  
Shares surrendered
upon exercise of
warrants
     —          —          —          —          —          —          (9,943,067 )
 
 
    —          —          —          —         (384     —         (384
Purchase of capped
call option
     —          —          —          —          —          —          —         —          —          —         
(96,788
)
 
    —               (96,788 )
Stock issuance costs
and redemption payments
     —          —          —          —          —          —          —         —          —          —          (22     22       —         —    
Vesting of Magna
warrants
     —          —          —          —          —          —          —         —          —          —          58,040       —         —         58,040  
Receivable for
warrant exercises collected
     —          —          —          —          —          —          —         —          —          —          —         —         —         —    
Net Loss
     —          —          —          —          —          —          —         —          —          —                —        
(332,909
)
 
    (332,909 )
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
Balance at
September 30,
2021
  
 
—  
 
  
$
—  
 
  
 
—  
 
  
$
—  
 
  
 
—  
 
  
$
—  
 
  
 
163,816,328
 
 
$
2
 
  
 
132,354,128
 
  
$
1
 
  
$
1,385,846
 
 
$
—  
 
 
$
(480,813
 
$
905,036
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
 
    
Series A

Convertible Preferred
    
Series B

Convertible Preferred
    
Founders

Convertible Preferred
    
Class A

Common Stock
    
Class B

Common Stock
    
Additional

Paid-in

Capital
    
Receivable

For

Warrant

Exercises
    
Accumulated

Deficit
   
Stockholders’

Deficit
 
    
Shares
    
  Amount  
    
Shares
    
  Amount  
    
Shares
    
  Amount  
    
Shares
    
Amount
    
Shares
    
Amount
 
                                                                                                  
Balance at June 30, 2020
  
 
16,983,241
 
  
$
4,634
    
 
3,765,685
 
  
$
6,386
    
 
27,162,191
 
  
$
—  
 
  
 
       266,015
 
  
$
—  
 
  
 
105,191,937
 
  
$
1
 
  
$
849
 
  
$
—  
 
  
$
(20,840
 
$
(19,990
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Stock-based compensation
     —          —          —          —          —          —          —          —          —          —          264        —          —         264  
Exercise of stock option
     —          —          —          —          —          —          91,832        —          —          —          60        —          —         60  
Net Loss
     —          —          —          —          —          —          —          —          —          —          —          —          (39,664     (39,664
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Balance at September 30, 2020
  
 
16,983,241
 
  
$
4,634
    
 
3,765,685
    
$
6,386
    
 
27,162,191
 
  
$
—  
 
  
 
357,847
 
  
$
—  
 
  
 
105,191,937
 
  
$
1
 
  
$
1,173
 
  
$
—  
 
  
$
(60,504
 
$
(59,330
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
 
8

    
Series A

Convertible Preferred
    
Series B

Convertible Preferred
    
Founders

Convertible Preferred
    
Class A

Common Stock
    
Class B

Common Stock
    
Additional

Paid-in

Capital
    
Receivable

For

Warrant

Exercises
    
Accumulated

Deficit
   
Stockholders’

Deficit
 
    
Shares
    
  Amount  
    
Shares
    
  Amount  
    
Shares
    
  Amount  
    
Shares
    
Amount
    
Shares
    
Amount
 
                                                                                                  
Balance at December 31, 2019
  
 
16,983,241
 
  
$
4,634
    
 
3,765,685
 
  
$
6,386
    
 
27,162,191
 
  
$
—  
 
  
 
210,863
 
  
$
—  
 
  
 
105,191,937
 
  
$
1
 
  
$
756
 
  
$
—  
 
  
$
(17,900
 
$
(17,143
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Stock-based compensation
     —          —          —          —          —          —          —          —          —          —          334        —          —         334  
Exercise of stock option
     —          —          —          —          —          —          146,984        —          —          —          83        —          —         83  
Net Loss
     —          —          —          —          —          —          —          —          —          —          —          —          (42,604     (42,604
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Balance at September 30, 2020
  
 
16,983,241
 
  
$
4,634
    
 
3,765,685
    
$
6,386
    
 
27,162,191
 
  
$
—  
 
  
 
       357,847
 
  
$
—  
 
  
 
105,191,937
 
  
$
1
 
  
$
1,173
 
  
$
—  
 
  
$
(60,504
 
$
(59,330
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
9

Fisker Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands, except share data)
(Unaudited)
 
    
Nine-
Months Ended September 30,
 
    
2021
   
2020
 
              
Cash Flows from Operating Activities:
                
Net loss
   $ (332,909   $ (42,604
Reconciliation of net loss to net cash used in operating activities:
                
Stock-based compensation
     4,078       334  
Depreciation
     397       26  
Amortization of
right-of-use
asset
     1,683       101  
Accretion of debt issuance costs
     153       1,091  
Change in fair value of derivative liabilities
     138,436       29,409  
Reclassification of expensed payments to arrangers of convertible security
              3,500  
Unrealized loss on foreign currency transactions
     (1,693     12  
Changes in operating assets and liabilities:
                
Prepaid expenses and other assets
     (12,945     (745
Accounts payable and accrued expenses
     41,891       (952
Customer deposits
     1,558       1,994  
Change in operating lease liability
     (1,026     (107
    
 
 
   
 
 
 
Net cash (used in) provided by operating activities
     (160,377     (7,941
    
 
 
   
 
 
 
Cash Flows from Investing Activities:
                
Purchases of property and equipment and intangible asset
     (81,828     (224
    
 
 
   
 
 
 
Net cash used in investing activities
     (81,828     (224
    
 
 
   
 
 
 
Cash Flows from Financing Activities:
                
Proceeds from the issuance of bridge notes
              5,371  
Proceeds from issuance of convertible notes
     667,500       46,500  
Payments for debt issuance costs
     (8,523         
Payments for capped call option
     (96,788         
Payments of deferred offering costs
              (671
Proceeds from the exercise of warrants
     89,023           
Payments for redemption of unexercised warrants
     (22         
Payments to tax authorities for statutory tax withholdings
     (4,891         
Proceeds from the exercise of stock options
     5,159       83  
    
 
 
   
 
 
 
Net cash provided by financing activities
     651,458       51,283  
    
 
 
   
 
 
 
Net increase (decrease) in cash and cash equivalents
     409,253       43,118  
Cash and cash equivalents, beginning of the period
     991,158       1,858  
    
 
 
   
 
 
 
Cash and cash equivalents, end of the period
   $ 1,400,411     $ 44,976  
    
 
 
   
 
 
 
Supplemental disclosure of cash flow information
                
Cash paid for interest
   $        $     
    
 
 
   
 
 
 
Cash paid for income taxes
   $        $     
    
 
 
   
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
10

Fisker Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(In thousands, except share data)
(Unaudited)
1. Overview of the Company
Fisker Inc. (“Fisker” or the “Company”) was originally incorporated in the State of Delaware
on
October 13, 2017 as a special purpose acquisition company under the name Spartan Energy Acquisition Corp. (“Spartan”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses. Spartan completed its Initial Public Offering in August 2018. On October 29, 2020, Spartan’s wholly-owned subsidiary merged with and into Fisker Holdings Inc. (f/k/a Fisker Inc.), a Delaware corporation (“Legacy Fisker”), with Fisker Holdings Inc. surviving the merger as a wholly-owned subsidiary of Spartan (the “Business Combination”). In connection with the Business Combination, Spartan changed its name to Fisker Inc.
Legacy Fisker was incorporated in the State of Delaware on September 21, 2016. In connection with its formation, the Company entered into stock purchase agreements with the Company’s founders, whereby the founders contributed certain intellectual property (primarily trademarks) and interests in Platinum IPR LLC. Platinum IPR LLC was an entity solely owned by the Company’s founders, which held Fisker trademarks registered in a variety of jurisdictions around the world. The founders’ transfer of its interest in Platinum IPR LLC and the transfer of trademarks was accounted for as a transfer of assets between entities under common control. The carrying amount of the transferred assets is recorded based on the prior carrying value, which was de minimis.
The Company’s common stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “FSR”. The Company’s warrants previously traded on the New York Stock Exchange under the symbol “FSR WS” and on April 19, 2021, the NYSE filed
a Form 25-NSE with
respect to the warrants; the formal delisting of the warrants became effective ten days thereafter (refer to Note 8 for further information).
2. Summary of Significant Accounting Policies
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”).
Unaudited Interim Financial Statements
The condensed consolidated balance sheet as of September 30, 2021, the condensed consolidated statements of operations and the condensed consolidated statements of changes in temporary equity and stockholders’ equity (deficit) for the three-months and nine-months ended September 30, 2021 and 2020, and the condensed consolidated statements of cash flows for the nine-months ended September 30, 2021 and 2020, as well as other information disclosed in the accompanying notes, are unaudited. The consolidated balance sheet as of December 31, 2020 was derived from the audited consolidated financial statements as of that date. The interim condensed consolidated financial statements and the accompanying notes should be read in conjunction with the annual consolidated financial statements and the accompanying notes contained in our Annual Report on
Form 10-K/A
for the year ended December 31, 2020 filed with the SEC on May 17, 2021.
Comprehensive loss is not separately presented as the amounts are equal to net loss for the three-months and nine-months ended September 30, 2021 and 2020.
The interim condensed consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The condensed consolidated financial statements for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future years or interim periods.
 
11

Reverse Recapitalization
The Business Combination was accounted for as a reverse recapitalization and Spartan was treated as the “acquired” company for accounting purposes. The Business Combination was accounted as the equivalent of Legacy Fisker issuing stock for the net assets of Spartan, accompanied by a recapitalization. Accordingly, all historical financial information presented in these consolidated financial statements represents the accounts of Legacy Fisker and its wholly owned subsidiaries “as if” Legacy Fisker is the predecessor to the Company. The shares and net loss per common share, prior to the Business Combination, have been adjusted as shares reflecting the exchange ratio established in the Business Combination.
Going Concern, Liquidity and Capital Resources
The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern over the next twelve months from the date of filing this report. Since inception, the Company has incurred significant accumulated losses of approximately $481 million. As of September 30, 2021, the Company had approximately $1,400 million in cash and cash equivalents. The Company expects to continue to incur significant operating losses for the foreseeable future. Proceeds from the Business Combination, issuance of convertible senior notes, and exercised public warrants and options provide the Company the liquidity and capital resources to fund its operating expenses and capital expenditure requirements for at least the next 12 months from issuance.
Supplier Risk
The Company continued nomination of suppliers with an accelerated phase during the quarter for engineering, development, testing, tooling and production of components for serial production of its vehicles. As of September 30, 2021, these supplier contracts do not represent unconditional purchase obligations with
take-or-pay
or specified minimum quantities provisions.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP required management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the condensed consolidated financial statements and accompanying notes. The Company bases these estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.
Fair Value Measurements
The Company follows the accounting guidance in ASC 820,
Fair Value Measurement
, for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than Level 1 prices, for similar assets or liabilities that are directly or indirectly observable in the marketplace.
Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
 
12

Income Taxes
Income taxes are recorded in accordance with ASC 740,
Income Taxes
(“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
There are transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. As of September 30, 2021, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2020.
The Company’s 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. The Company maintains a valuation allowance against the full value of its U.S. and state net deferred tax assets because the Company believes the recoverability of the tax assets is not more likely than not as of September 30, 2021.
Debt issuance costs
Direct and incremental costs, including amounts paid to initial purchasers of the Company’s convertible notes, are directly attributed to efforts to obtain debt financing are debt issuance costs. Upon issuance of debt, the carrying value is the principal amount of debt reduced by any debt issuance costs. Debt issuance costs are attributed to interest expense and accreted over the expected term of the debt using the effective interest rate method.
Derivative Liability
The Company accounts for its public and private warrants as a derivative liability initially measured at its fair values and remeasured in the condensed consolidated statements of operations at the end of each reporting period. When the warrants are exercised, the corresponding derivative liability is
de-recognized
at the underlying fair value of the Class A common stock that is issued to the warrant holder less any cash paid in accordance with the warrant agreement. Upon either cash or cashless exercise, the derecognized derivative liability results in an increase in additional paid in capital equal to the difference between the fair value of the underlying Class A common stock and its par value. A cashless exercise results in the warrant holder surrendering Class A common stock equal to the stated warrant exercise price based on the contractual terms in the warrant agreement that govern the cashless conversion.
Equity Awards
The grant date for an option or stock award is established when the grantee has a mutual understanding of the key terms and conditions of the option or award, the award is authorized, including all the necessary approvals unless approval is essentially a formality or perfunctory, and the grantee begins to benefit from, or be adversely affected by, underlying changes in the price of the Company’s Class A common shares. An award or option is authorized on the date that all approval requirements are completed (e.g., action by the compensation committee approving the award and the number of options, restricted shares or other equity instruments to be issued to individual employees).
Leases
Current portion of the Company’s lease liability is based on lease payments due within twelve months of the balance sheet date. Variable lease payments are included in lease payments when the contingency upon which the payment is dependent is resolved.
Net Loss per Share of Common Stock
Basic net loss per share of common stock is calculated using the
two-class
method under which earnings are allocated to both common shares and participating securities. Undistributed net losses are allocated entirely to common shareholders since the participating security has no contractual obligation to share in the losses. Basic net loss per share is calculated by dividing the net loss attributable to common shares by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share of common stock is computed by dividing the net loss using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of stock-based compensation awards and warrants to purchase common stock (using the treasury stock method).
 
13

Recently adopted accounting pronouncements
In December 2019, the FASB issued ASU
No. 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
, which is intended to simplify various aspects related to accounting for income taxes. ASU
No. 2019-12
removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. This guidance had no effect on the Company’s condensed consolidated financial statements upon adoption in 2021.
In September 2020, the FASB issued ASU
2020-06,
Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic
815-40)
. This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The ASU eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The ASU also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. The ASU amends the diluted earnings per share guidance, including the requirement to use
if-converted
method for all convertible instruments and an update for instruments that can be settled in either cash or shares. We early adopted ASU
2020-06
effective on January 1, 2021 applying the modified retrospective method. Since the Company does not have any financial instruments as of January 1, 2021 within the scope of ASU
2020-06,
early adoption had no effect on the Company’s condensed consolidated financial statements.
Recently issued accounting pronouncements
In June 2016, the FASB issued ASU
No. 2016-13,
Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments
. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. This ASU also provides updated guidance regarding the impairment of
available-for-sale
debt securities and includes additional disclosure requirements. The guidance is effective for
non-public
companies, and public business entities that meet the definition of a Smaller Reporting Company as defined by the Securities and Exchange Commission, for interim and annual periods beginning after December 15, 2022. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.
 
14

3. Business Combination and Recapitalization
On October 29, 2020, the Company consummated (the “Closing”) the Business Combination with Legacy Fisker pursuant to the business combination agreement between Legacy Fisker and Spartan (the “Merger Agreement”). Pursuant to ASC 805, for financial accounting and reporting purposes, Legacy Fisker was deemed the accounting acquirer and the Company was treated as the accounting acquiree, and the Business Combination was accounted for as a reverse recapitalization. Accordingly, the Business Combination was treated as the equivalent of the Legacy Fisker issuing stock for the net assets of Spartan, accompanied by a recapitalization. The net assets of Spartan were stated at historical costs, with no goodwill or other intangible assets recorded, and are consolidated with Legacy Fisker’s financial statements on the date of the Closing. The shares and net income (loss) per share available to holders of the Company’s common stock, prior to the Business Combination, have been adjusted as shares reflecting the exchange ratio established in the Merger Agreement.
In connection with the Business Combination, Spartan entered into subscription agreements with certain investors (the “PIPE Investors”), whereby pursuant to which it issued 50,000,000 shares of Class A common stock at $10.00 per share (the “PIPE Shares”) for an aggregate purchase price of $500.0 million (the “PIPE Financing”), which closed simultaneously with the consummation of the Business Combination.
The aggregate consideration for the Business Combination and proceeds from the PIPE Financing was approximately $1.8 billion, consisting of 179,192,713 shares of common stock valued at $10.00 per share. The common stock consideration consists of (1) 46,838,585 shares of Legacy Fisker Class A common stock, including shares issuable in respect of vested equity awards of the Legacy Fisker and shares issued in respect of the Bridge notes and Convertible Equity Security, plus (2) 132,354,128 shares of Legacy Fisker Class B common stock.
Conversion of Notes and Preferred Stock upon Recapitalization
Upon the formation of Legacy Fisker in September 2016, HF Holdco LLC, an entity controlled by the Company’s Chief Executive Officer, and founder, and the Company’s Chief Financial Officer and Chief Operating Officer, and founder, advanced the Company $250,000 in the form of a demand note. In May 2020, in satisfaction of the advances made by HF Holdco LLC, the Company issued a bridge note payable to HF Holdco LLC with the principal sum of $250,000 and convertible into Class A Common Stock upon completion of the Business Combination and is no longer outstanding as of December 31, 2020.
From July 2019 to September 2020, the Company entered into bridge note agreements with investors. Certain holders of the bridge notes were issued option agreements providing the holder with a
non-binding
right to receive a base model Fisker Ocean SUV within the first 12 months of production, subject to certain terms and conditions. The proceeds received from these holders were allocated to the bridge notes and option agreements on a relative fair value basis, resulting in an initial discount to the bridge notes.
The automatic exchange feature is the predominant settlement feature and the change of control feature within the bridge notes are embedded contingent put options that, collectively, are required to be bifurcated from the debt host and measured at fair value with changes in fair value recognized in earnings (see Note 4). After bifurcation of the embedded derivative, the initial carrying value of the bridge notes are accreted to their stated principal value over the contractual term of the bridge notes, using the effective interest method. The Company recognized approximately $0.2 million of accretion of debt discount from the issuance dates of the bridge notes through March 31, 2020, classified as Interest expense in the Condensed Consolidated Statement of Operations. The embedded derivative was eliminated upon the conversion of the bridge notes payable at the close of the Business Combination.
In June 2020, the Company entered into an amendment to the note agreements with holders of the Company’s outstanding bridge notes to provide for amendments to the definition of the Next Equity Financing such that in the event of a Special Purpose Acquisition Company (“SPAC”) Transaction, as defined, prior to repayment or conversion in full of the note, immediately prior to such SPAC Transaction, the outstanding principal and any accrued
 
15

but unpaid interest under the bridge notes would automatically convert into shares of Class A Common Stock of the Company (or, at the election of the Company, directly into proceeds paid to the holders of Class A Common Stock in connection with such SPAC Transaction) at a price per share that is 75% of the price per share of Class A Common Stock paid in such SPAC Transaction. Upon the Closing, the conversion feature upon a business combination was triggered for the bridge notes causing a conversion of the $10.0 million outstanding principal amount of these bridge notes at a specified price. The noteholders received 1,361,268 shares of Class A Common Stock of the Company as result of the conversion in connection with the Business Combination.
Prior to the Closing, Fisker had shares of $0.00001 par value Series A, Series B, and Founders Convertible preferred stock outstanding. The shares of Series A and B preferred stock were convertible into shares of Class A Common Stock of Legacy Fisker based on a specified conversion price calculated by dividing the then-original issue price, as adjusted, for such share of preferred stock by the conversion price, as adjusted, in effect on the date the certificate is surrendered for conversion. Shares of Founders preferred stock, classified in equity, were convertible into Class B Common Stock determined by dividing $0.10, as adjusted, for such share of preferred stock by the conversion price, as adjusted, in effect on the date the certificate is surrendered for conversion. Upon the Closing, the outstanding shares of preferred stock were converted into common stock of the Company at 2.7162, the exchange ratio established in the Business Combination Agreement. Immediately after the Business Combination, Founders Convertible, Series A
(pre-combination),
and Series B
(pre-combination)
converted into 27,162,191 Class A Common Stock, 16,983,241 Class A Common Stock, and 3,765,685 Class A Common Stock, respectively.
4. Fair value measurements
The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):
 
    
Fair Value Measured as of September 30, 2021:
 
    
Level 1
    
Level 2
    
Level 3
    
Total
 
                             
Assets included in:
                                   
Money market funds included in cash and cash equivalents
   $ 1,394,181      $ —        $      —        $ 1,394,181  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total fair value
   $ 1,394,181      $ —        $ —        $ 1,394,181  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
    
Fair Value Measured as of December 31, 2020:
 
    
Level 1
    
Level 2
    
Level 3
    
Total
 
                             
Assets included in:
                                   
Money market funds included in cash and cash equivalents
   $    987,728      $ —        $ —        $ 987,728  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total fair value
   $ 987,728      $ —        $ —        $ 987,728  
    
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities included in:
                                   
Warrants liability
   $ 90,487      $ —        $ 47,615      $ 138,102  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total fair value
   $ 90,487      $ —        $ 47,615      $    138,102  
    
 
 
    
 
 
    
 
 
    
 
 
 
The fair value of the Company’s money market funds is determined using quoted market prices in active markets for identical assets.
 
16

The carrying amounts included in the Condensed Consolidated Balance Sheets under Current assets approximate fair value because of the short maturity of these instruments.
We carry the convertible senior notes at face value less the unamortized debt issuance costs on our consolidated balance sheets and present that fair value for disclosure purposes only. As of September 30, 2021, the fair value of the 2026 Notes was $649.1 million. The estimated fair value of the convertible notes, which are classified as Level 2 financial instruments, was determined based on the estimated or actual bid prices of the convertible notes in an
over-the-counter
market on the last business day of the period.
The Company’s derivative liability for its private and public warrants are measured at fair value on a recurring basis. The private warrants fair value is determined based on significant inputs not observable in the market, which causes it to be classified as a Level 3 measurement within the fair value hierarchy. The valuation of the private warrants uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assess these assumptions and estimates on an
on-going
basis as additional data impacting the assumptions and estimates are obtained. The Company uses an option pricing simulation to estimate the fair value of its private warrants, all of which were exercised in March 2021. The public warrants fair value is determined using its publicly traded prices (Level 1). During the three months ended June 30, 2021, the Company completed its redemption of all outstanding public warrants (refer to Note 8). Changes in the fair value of the derivative liability related to updated assumptions and estimates are recognized within the Condensed Consolidated Statements of Operations as a
non-operating
expense. For the nine-months ended September 30, 2021, the changes in the fair value of the derivative liability resulted from changes in the fair values of the underlying Class A common shares and its associated volatilities upon exercise in March 2021.
The reconciliation of changes in Level 3 during the nine-months ended September 30, 2021 is as follows:
 
Balance as of December 31, 2020
   $ 47,615  
Change in fair value
     63,526  
Cashless exercise of warrants
     (111,141
    
 
 
 
Balance as of September 30, 2021
   $     
    
 
 
 
 
17

5. Intangible assets
The Company has the following intangible assets (in thousands):
 
    
As of September 30, 2021
 
    
Amortization

Period
    
Gross

Carrying

Amount
    
Accumulated

Amortization
    
Net
 
                             
Capitalized cost - manufacturing
     8 years      $ 200,089      $         $ 200,089  
    
 
 
    
 
 
    
 
 
    
 
 
 
              $ 200,089      $         $ 200,089  
             
 
 
    
 
 
    
 
 
 
 
    
As of December 31, 2020
 
    
Amortization

Period
    
Gross

Carrying

Amount
    
Accumulated

Amortization
    
Net
 
                             
Capitalized cost - manufacturing
     8 years      $ 58,041      $         $ 58,041  
    
 
 
    
 
 
    
 
 
    
 
 
 
              $   58,041      $         $   58,041  
             
 
 
    
 
 
    
 
 
 
The Company did
no
t
amortize the capitalized cost associated with the warrants vested and exercisable by Magna International, Inc. (“Magna”) for the year ended December 31, 2020 as amortization will commence on a straight-line basis with the start of production for the Fisker Ocean which is expected to occur in 2022. The Company expects to amortize the intangible asset over eight years
but will continually assess the reasonableness of the estimated life. Refer to Note 8 for additional information regarding the capitalization of costs upon issuance of warrants to Magna. Also, the Company capitalized certain costs associated with manufacturing of the Fisker Ocean and production of parts in 2021, including
 
$19.7 
million capitalized and accrued for during the third quarter, which will be amortized on a straight-line basis beginning with the start of production for the Fisker Ocean over eight years.
6. Property and Equipment, net
Property and equipment, net, consists of the following (in thousands):
 
    
September 30,

2021
    
December 31,

2020
 
               
Machinery and equipment
   $ 1,094      $ 130  
Furniture and fixtures
     189        67  
IT hardware and software
     2,516        820  
Leasehold improvements
     20        26  
Construction in progress
     15,233            
    
 
 
    
 
 
 
Total property and equipment
     19,052        1,043  
Less: Accumulated depreciation and amortization
     (494      (98
    
 
 
    
 
 
 
Property and equipment, net
     18,558      $ 945  
    
 
 
    
 
 
 
As of September 30, 2021, accounts payable includes acquired property and equipment of $0.9 million, which is excluded from net cash used in investing activities as reported in the condensed consolidated statement of cash flows for the nine-months ended September 30, 2021.
 
18

7. Customer Deposits
Customer deposits consists of the following (in thousands):
 
    
September 30,

2021
    
December 31,

2020
 
               
Customer reservation deposits
   $ 4,331      $ 2,773  
Customer SUV option
     754        754  
    
 
 
    
 
 
 
Total customer deposits
   $ 5,085      $ 3,527  
    
 
 
    
 
 
 
8. Warrants
Public and Private Warrants
Upon the Closing, there were 18,400,000 public and 9,360,000 private warrants outstanding to purchase shares of the Company’s common stock that were issued by Spartan prior to the Business Combination. Each whole warrant entitles the registered holder to purchase one whole share of the Company’s Class A Common Stock at a price of $11.50 per share, subject to adjustment as discussed below, 30 days after the Closing, provided that the Company has an effective registration statement under the Securities Act covering the shares of Class A Common Stock issuable upon exercise of the warrants and a current prospectus relating to them is available and such shares are registered, qualified or exempt from registration under the securities, or blue sky, laws of the state of residence of the holder. Pursuant to the warrant agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A Common Stock. The warrants will expire five years after the completion of the Business Combination, or earlier upon redemption or liquidation. The Private Placement Warrants are identical to the Warrants, except that the Private Placement Warrants and the Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of an Initial Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be
non-redeemable
so long as they are held by the Sponsor or any of its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants.
On March 19, 2021, the Company announced that it would redeem all of its outstanding warrants (the “Public Warrants”) to purchase shares of the Company’s Class A common stock, par value $0.00001 per share (the “Common Stock”), that were issued under the Warrant Agreement, dated August 9, 2018 (the “Warrant Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agent”), as part of the units sold in the Company’s initial public offering (the “IPO”), for a redemption price of $0.01 per Public Warrant (the “Redemption Price”), that remained outstanding at 5:00 p.m. New York City time on April 22, 2021 (the “Redemption Date”). The Private Placement Warrants were not subject to this redemption. In addition, in accordance with the Warrant Agreement, the Company’s board of directors elected to require that, upon delivery of the notice of redemption, all Public Warrants were to be exercised only on a “cashless basis.” Accordingly, holders could not exercise Public Warrants and receive Common Stock in exchange for payment in cash of the $11.50 per warrant exercise price. Instead, a holder exercising a Public Warrant was deemed to pay the $11.50 per warrant exercise price by the surrender of 0.5046 of a share of Common Stock that such holder would have been entitled to receive upon a cash exercise of a Public Warrant. Accordingly, by virtue of the cashless exercise of the Public Warrants, exercising warrant holders received 0.4954 of a share of Common Stock for each Public Warrant surrendered for exercise. For the unexercised 225,906 Public Warrants outstanding at the Redemption Date, the Company paid $2,259 to redeem the unexercised warrants in the second quarter of 2021. There are no Public Warrants outstanding as of September 30, 2021.
 
19

During March 2021, the 9,360,000 warrants to purchase Common Stock that were originally issued under the Warrant Agreement in a private placement simultaneously with the IPO were exercised by the Company’s former sponsor on a cashless basis for 4,907,329 shares of Common Stock (4,452,671 shares of Common Stock surrendered) and are no longer outstanding.
Since January 1, 2021, the Company has received cash proceeds of $89 million upon the exercise of 7,733,400 Public Warrants immediately prior to the announcement to redeem the Public Warrants.
Public and private warrant exercise activity and underlying Common Stock issued or surrendered for the nine-months ended September 30, 2021, is:
 
    
Public

warrants
    
Private

warrants
    
Total
 
                      
December 31, 2020
     18,391,587        9,360,000        27,751,587  
Shares issued for cash exercises
     (7,733,400               (7,733,400
Shares issued for cashless exercises
     (5,167,791      (4,907,329      (10,075,120
Shares surrendered upon cashless exercise
     (5,264,490      (4,452,671      (9,717,161
Shares redeemed by Company for cash
     (225,906               (225,906
    
 
 
    
 
 
    
 
 
 
September 30, 2021
                             
    
 
 
    
 
 
    
 
 
 
Cashless exercises of public and private warrants increased additional
paid-in
capital by $277 million for the nine-months ended September 30, 2021, respectively.
Magna Warrants
On October 29, 2020, the Company granted Magna up to 19,474,454 warrants, each with an exercise price of $0.01, to acquire underlying shares of Class A common stock of Fisker, which represented approximately 6% ownership in Fisker on a fully diluted basis as of the grant date. The right to exercise vested warrants expires on October 29, 2030. The warrants are accounted for as an award issued to
non-employees
measured on October 29, 2020 with three interrelated performance conditions that are separately evaluated for achievement.
The cost upon achievement of each milestone is capitalized when it is probable that a milestone is met. The cost for awards to nonemployees is recognized in the same period and in the same manner as if the Company had paid cash for the goods or services. On June 12, 2021, Fisker Group Inc., a Delaware corporation, a wholly-owned subsidiary of Fisker Inc., entered into a detailed manufacturing agreement with Magna Steyr Fahrzeugtechnik AG & Co KG, a limited liability partnership established and existing under the laws of Austria, an affiliate of Magna, and achieved the second milestone resulting in $58 million
non-cash
increases of intangible assets and additional
paid-in-capital
in the condensed consolidated balance sheet. As of September 30, 2021, Magna satisfied the first and second milestones and the Company capitalized costs of $116 million as an intangible asset representing the future economic benefit to Fisker, Inc. Magna has 12,969,986 vested and exercisable warrants to acquire underlying Class A common stock of Fisker as of September 30, 2021. The third milestone is start of
pre-serial
production, which is not probable of being met as of September 30, 2021.
 
20

9. Accrued Expenses
A summary of the components of accrued expenses is as follows (in thousands):
 
    
September 30,

2021
    
December 31,

2020
 
               
Accrued payroll
   $ 1,086      $ 686  
Accrued professional fees
     134        468  
Accrued other
     2,195        254  
Accrued vendor expenses
     56,783            
Accrued legal cost
               6,000  
    
 
 
    
 
 
 
Total accrued expenses
   $ 60,198      $ 7,408  
    
 
 
    
 
 
 
As of September 30, 2021, accrued expenses include amounts owed to vendors but not yet invoiced in exchange for vendor purchases and research and development services. Vendor expenses and research and development services are invoiced and included in accounts payable as of December 31, 2020. Certain estimates of accrued vendor expenses are based on costs incurred to date.
10. Convertible Senior Notes
2026 Notes
In August 2021, we
issued
an aggregate of $667.5 million principal amount of 2.50% convertible senior notes due in September 2026 (the “2026 Notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The 2026 Notes have been designated as green bonds, whose proceeds will be allocated in accordance with the Company’s green bond framework. The 2026 Notes consisted of a $625 million initial placement and an over-allotment option that provided the initial purchasers of the 2026 Notes with the option to purchase an additional $100.0 million aggregate principal amount of the 2026 Notes, of which $42.5 million was exercised. The 2026 Notes were issued pursuant to an indenture dated August 17, 2021. The net proceeds from the issuance of the 2026 Notes were $562.2 million, net of debt issuance costs and cash used to purchase the capped call transactions (“2026 Capped Call Transactions”) discussed below. The debt issuance costs are amortized to interest expense.
The 2026 Notes are unsecured obligations which bear regular interest at
2.50
% annually and will be payable semiannually in arrears on March 15 and September 15 of each year, beginning on March 15, 2022. The 2026 Notes will mature on September 15, 2026, unless repurchased, redeemed, or converted in accordance with their terms prior to such date. The 2026 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 50.7743 shares of Class A common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $19.70 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2026 Notes. We may redeem for cash all or any portion of the 2026 Notes, at our option, on or after September 20, 2024 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Holders of the 2026 Notes may convert all or a portion of their 2026 Notes at their option prior to June 15, 2026, in multiples of $1,000 principal amounts, only under the following circumstances:
 
   
during any calendar quarter commencing after the calendar quarter ending on September 30, 2021 (and only during such calendar quarter), if the last reported sale price of the Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
 
   
during the five-business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the 2026 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the 2026 Notes on such trading day;
 
   
if we call such 2026 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the notes called (or deemed called) for redemption; or
 
   
on the occurrence of specified corporate events.
 
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On or after June 15, 2026, the 2026 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Holders of the 2026 Notes who convert the 2026 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2026 Notes, or in connection with a redemption may be entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change, holders of the 2026 Notes may require us to repurchase all or a portion of the 2026 Notes at a price equal to 100% of the principal amount of 2026 Notes, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
We accounted for the issuance of the 2026 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.
As of September 30, 2021, the 2026 Notes consisted of the following:
 
Principal
   $ 667,500  
Unamortized debt issuance costs
     (8,371
    
 
 
 
Net carrying amount
   $ 659,129  
    
 
 
 
Interest expense related to the amortization of debt issuance costs was $0.2 million for the three and nine months ended September 30, 2021. Contractual interest expense was $2 million for the three and nine months ended September 30, 2021.
As of September 30, 2021, the
if-converted
value of the 2026 Notes did not exceed the principal amount. The 2026 Notes were not eligible for conversion as of September 30, 2021. No sinking fund is provided for the 2026 Notes, which means that we are not required to redeem or retire them periodically.
Capped Call Transactions
In connection with the offering of the 2026 Notes, we entered into the 2026 Capped Call Transactions with certain counterparties at a net cost of $96.8 million. The 2026 Capped Call Transactions are purchased capped call options on 33.9 million shares Class A common stock, that, if exercised, can be net share settled, net cash settled, or settled in a combination of cash or shares consistent with the settlement elections made with respect to the 2026 Notes if converted. The cap price is initially $32.57 per share of our Class A common stock and subject to certain adjustments under the terms of the 2026 Capped Call Transactions. The strike price is initially $19.70 per share of Class A common stock, subject to customary anti-dilution adjustments that mirror corresponding adjustments for the 2026 Notes.
The 2026 Capped Call Transactions are intended to reduce potential dilution to holders of our Class A common stock upon conversion of the 2026 Notes and/or offset any cash payments we are required to make in excess of the principal amount, as the case may be, with such reduction or offset subject to a cap. The cost of the Capped Call Transactions was recorded as a reduction of our additional
paid-in
capital in our consolidated balance sheets. The Capped Call Transactions will not be remeasured as long as they continue to meet the conditions for equity classification.
 
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11. Loss Per Share
The Company computes earnings (loss) per share of Class A Common Stock and Class B Common Stock using the
two-class
method required for participating securities. Basic and diluted earnings per share was the same for each period presented as the inclusion of all potential Class A Common Stock and Class B Common Stock outstanding would have been anti-dilutive. Basic and diluted earnings per share are the same for each class of common stock because they are entitled to the same liquidation and dividend rights. The following table sets forth the computation of basic and diluted loss per Class A Common Stock and Class B Common Stock:
 
    
Three-months Ended September 30,
 
    
2021
    
2020
 
               
Numerator:
                 
Net loss
   $ (109,844    $ (39,664
Denominator:
                 
Weighted average Class A common shares outstanding