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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 September 30, 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 October 31, 2022, there were 478,851,041 shares of the registrant’s common stock outstanding.




NIKOLA CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS

Summary of 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 and packs, 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)
September 30,December 31,
20222021
(Unaudited)
Assets
Current assets
Cash and cash equivalents$315,731 $497,241 
Restricted cash and cash equivalents600  
Accounts receivable, net37,662  
Inventory81,069 11,597 
Prepaid expenses and other current assets51,858 15,891 
Total current assets486,920 524,729 
Restricted cash and cash equivalents87,459 25,000 
Long-term deposits37,161 27,620 
Property, plant and equipment, net365,049 244,377 
Intangible assets, net93,609 97,181 
Investment in affiliates76,505 61,778 
Goodwill5,238 5,238 
Other assets7,484 3,896 
Total assets$1,159,425 $989,819 
Liabilities and stockholders' equity
Current liabilities
Accounts payable$92,511 $86,982 
Accrued expenses and other current liabilities170,707 93,487 
Debt and finance lease liabilities, current14,357 140 
Total current liabilities277,575 180,609 
Long-term debt and finance lease liabilities, net of current portion283,258 25,047 
Operating lease liabilities5,410 2,263 
Warrant liability791 4,284 
Other long-term liabilities28,349 84,033 
Deferred tax liabilities, net13 11 
Total liabilities595,396 296,247 
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 September 30, 2022 and December 31, 2021
  
Common stock, $0.0001 par value, 800,000,000 and 600,000,000 shares authorized as of September 30, 2022 and December 31, 2021, respectively, 455,205,699 and 413,340,550 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
46 41 
Additional paid-in capital2,379,191 1,944,341 
Accumulated deficit(1,812,784)(1,250,612)
Accumulated other comprehensive loss(2,424)(198)
Total stockholders' equity 564,029 693,572 
Total liabilities and stockholders' equity$1,159,425 $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
September 30,
Nine Months Ended
September 30,
2022202120222021
Revenues:
Truck sales$23,853 $ $41,236 $ 
Service and other 388  3,026  
Total revenues24,241  44,262  
Cost of revenues:
Truck sales54,080  100,861  
Service and other 330  2,396  
Total cost of revenues54,410  103,257  
Gross loss(30,169) (58,995) 
Operating expenses:
Research and development66,683 78,896 204,346 201,785 
Selling, general, and administrative132,865 192,929 289,916 329,028 
Total operating expenses199,548 271,825 494,262 530,813 
Loss from operations(229,717)(271,825)(553,257)(530,813)
Other income (expense):
Interest expense, net(7,735)(118)(10,754)(219)
Revaluation of warrant liability586 4,467 3,493 2,907 
Other income, net2,617 1,057 4,423 174 
Loss before income taxes and equity in net loss of affiliates(234,249)(266,419)(556,095)(527,951)
Income tax expense1 1 3 4 
Loss before equity in net loss of affiliates(234,250)(266,420)(556,098)(527,955)
Equity in net loss of affiliates(1,984)(1,147)(6,074)(3,067)
Net loss$(236,234)$(267,567)$(562,172)$(531,022)
Net loss per share:
Basic$(0.54)$(0.67)$(1.32)$(1.34)
Diluted$(0.54)$(0.68)$(1.32)$(1.35)
Weighted-average shares outstanding:
Basic438,416,393 400,219,585 426,382,736 395,691,795 
Diluted438,416,393 400,230,669 426,382,736 395,860,876 
See accompanying notes to the consolidated financial statements.
4


NIKOLA CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Net loss$(236,234)$(267,567)$(562,172)$(531,022)
Other comprehensive loss:
Foreign currency translation adjustment, net of tax(1,237)(123)(2,226)(358)
Comprehensive loss$(237,471)$(267,690)$(564,398)$(531,380)
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 September 30, 2022
Common StockAdditional Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
SharesAmount
Balance as of June 30, 2022433,475,084 $43 $2,176,945 $(1,576,550)$(1,187)$599,251 
Exercise of stock options1,296,206 1 1,404 — — 1,405 
Issuance of shares for RSU awards1,425,182 — — — — — 
Common stock issued under Equity Distribution Agreement, net19,009,227 2 97,997 — — 97,999 
Stock-based compensation— — 102,845 — — 102,845 
Net loss— — — (236,234)— (236,234)
Other comprehensive loss    (1,237)(1,237)
Balance as of September 30, 2022455,205,699 $46 $2,379,191 $(1,812,784)$(2,424)$564,029 
Nine Months Ended September 30, 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 options1,581,791 1 1,969 — — 1,970 
Issuance of shares for RSU awards4,025,887 — — — — — 
Common stock issued under Tumim Purchase Agreements17,248,244 2 123,670 — — 123,672 
Common stock issued under Equity Distribution Agreement, net19,009,227 2 97,997 — — 97,999 
Stock-based compensation— — 211,214 — — 211,214 
Net loss— — — (562,172)— (562,172)
Other comprehensive loss    (2,226)(2,226)
Balance as of September 30, 2022455,205,699 $46 $2,379,191 $(1,812,784)$(2,424)$564,029 

See accompanying notes to the consolidated financial statements.
6


Three Months Ended September 30, 2021
Common StockAdditional Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive Income (Loss)Total Stockholders'
Equity
SharesAmount
Balance as of June 30, 2021397,077,561 $40 $1,668,362 $(823,629)$4 $844,777 
Exercise of stock options252,442  355 — — 355 
Issuance of shares for RSU awards453,459 — — — — — 
Common stock issued for commitment shares252,040 — 2,939 — — 2,939 
Reclassification from mezzanine equity to equity after elimination of put right — — 5,532 — — 5,532 
Common stock issued under Tumim Purchase Agreements6,270,740 — 72,866 — — 72,866 
Stock-based compensation— — 49,047 — — 49,047 
Net loss— — — (267,567)— (267,567)
Other comprehensive loss— — — — (123)(123)
Balance as of September 30, 2021404,306,242 $40 $1,799,101 $(1,091,196)$(119)$707,826 

Nine Months Ended September 30, 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 options3,182,359 1 3,980 — — 3,981 
Issuance of shares for RSU awards1,721,686 — — — — — 
Common stock issued for commitment shares407,743 — 5,564 — — 5,564 
Common stock issued for investment in affiliates, net of common stock with embedded put right1,682,367 — 19,139 — — 19,139 
Reclassification from mezzanine equity to equity after elimination of put right— — 5,532 — — 5,532 
Common stock issued under Tumim Purchase Agreements6,270,740 — 72,866 — — 72,866 
Stock-based compensation— — 151,983 — — 151,983 
Net loss— — — (531,022)— (531,022)
Other comprehensive loss— — — — (358)(358)
Balance as of September 30, 2021404,306,242 $40 $1,799,101 $(1,091,196)$(119)$707,826 
See accompanying notes to the consolidated financial statements.
7


NIKOLA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20222021
Cash flows from operating activities
Net loss$(562,172)$(531,022)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization16,472 5,959 
Stock-based compensation211,214 151,983 
Non-cash in-kind services 40,230 
Equity in net loss of affiliates6,074 3,067 
Revaluation of financial instruments(94)(3,226)
Issuance of common stock for commitment shares 5,564 
Inventory write-downs16,617  
Non-cash interest expense8,890  
Other non-cash activity476 1,010 
Changes in operating assets and liabilities:
Accounts receivable, net(37,662) 
Inventory(97,952)(3,644)
Prepaid expenses and other current assets(10,371)(7,090)
Accounts payable, accrued expenses and other current liabilities25,128 147,160 
Long-term deposits(8,356)(4,705)
Other assets(912) 
Operating lease liabilities(416) 
Other long-term liabilities1,605 (655)
Net cash used in operating activities(431,459)(195,369)
Cash flows from investing activities
Purchases and deposits of property, plant and equipment(118,436)(113,680)
Investments in affiliates(23,027)(25,000)
Issuance of senior secured note receivable and prepaid acquisition-related consideration(21,910) 
Settlement of Second Price Differential(6,588) 
Proceeds from sale of equipment18 200 
Net cash used in investing activities(169,943)(138,480)
Cash flows from financing activities
Proceeds from the exercise of stock options1,645 4,194 
Proceeds from issuance of shares under the Tumim Purchase Agreements123,672 72,866 
Proceeds from issuance of Convertible Notes, net of discount and issuance costs183,504  
Proceeds from issuance of common stock under Equity Distribution Agreement, net of commissions paid100,512  
Proceeds from issuance of Collateralized Promissory Notes54,000  
Proceeds from issuance of financing obligation, net of issuance costs44,007  
Proceeds from insurance premium financing6,637  
Repayment of debt and notes(28,125)(4,100)
Payments on insurance premium financing(2,635) 
Payments on finance lease liabilities and financing obligation(266)(759)
Payments for issuance costs (644)
Net cash provided by financing activities482,951 71,557 
Net decrease in cash and cash equivalents, including restricted cash(118,451)(262,292)
Cash and cash equivalents, including restricted cash, beginning of period522,241 849,278 
Cash and cash equivalents, including restricted cash, end of period$403,790 $586,986 
See accompanying notes to the consolidated financial statements.
8


Supplementary cash flow disclosures:
Cash paid for interest$2,643 $573 
Cash interest received$257 $456 
Supplementary disclosures for noncash investing and financing activities:
Purchases of property, plant and equipment included in liabilities$28,912 $21,001 
Accrued paid in kind interest$7,284 $ 
Accrued commissions under Equity Distribution Agreement$2,513 $ 
Embedded derivative asset bifurcated from Convertible Notes$1,500 $ 
Stock option proceeds receivable$325 $ 
Accrued debt issuance costs$311 $ 
Accrued deferred issuance costs$ $439 
Leased assets obtained in exchange for new finance lease liabilities$698 $11,125 
Common stock issued for commitment shares$ $5,564 
Common stock issued for investments in affiliates, including common stock with embedded put right$ $32,376 
Acquired intangible assets included in liabilities$ $47,181 
See accompanying notes to the consolidated financial statements.
9

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.
Prior to the start of production for the Tre battery-electric vehicle ("BEV") trucks late in the first quarter of 2022, pre-production activities, including manufacturing readiness, process validation, prototype builds, freight, inventory write-downs, and operations of the Company's manufacturing facility in Coolidge, Arizona were recorded as research and development activities on the Company's consolidated statements of operations. Commensurate with the start of production, manufacturing costs, including labor and overhead, as well as inventory-related expenses related to the Tre BEV trucks, and related facility costs, are recorded in cost of revenues beginning in the second quarter of 2022.
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.
10

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
The Company considers investments in money market funds with a floating net asset value to be cash equivalents. As of September 30, 2022 and December 31, 2021, the Company had $315.7 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 September 30, 2022 and December 31, 2021, respectively.
As of September 30, 2022 and December 31, 2021, the Company had $88.1 million and $25.0 million, respectively, in current and non-current restricted cash. Restricted cash represents cash that is restricted as to withdrawal or usage and consists of securitization of the Company's letters of credit, leases, and debt. See Note 5, Debt and Finance Lease Liabilities, for additional details.
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
September 30, 2022December 31, 2021September 30, 2021
Cash and cash equivalents$315,731 $497,241 $586,986 
Restricted cash and cash equivalents – current600   
Restricted cash and cash equivalents – non-current87,459 25,000  
Cash, cash equivalents and restricted cash and cash equivalents$403,790 $522,241 $586,986 
(b)Accounts Receivable, net
Accounts receivable, net, are reported at the invoiced amount, less an allowance for potential uncollectible amounts. The Company had no allowance for uncollectible amounts as of September 30, 2022 and December 31, 2021.
(c)Fair Value of Financial Instruments
The carrying value and fair value of the Company’s financial instruments are as follows:
As of September 30, 2022
Level 1Level 2Level 3Total
Assets
Derivative asset
$ $ $500 $500 
Senior secured note receivable
  10,081 10,081 
Liabilities
Warrant liability$ $ $791 $791 
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 
11

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Warrant liability
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 estimated fair value(3,493)
Estimated fair value at September 30, 2022
$791 
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
September 30, 2022December 31, 2021
Stock price$3.52 $9.87 
Exercise price$11.50 $11.50 
Remaining term (in years)2.683.42
Volatility90 %90 %
Risk-free rate4.24 %1.03 %
Expected dividend yield % %
Put Right and Price Differential derivative liabilities
On June 22, 2021 (the "WVR Closing Date"), the Company entered into a Membership Interests Purchase Agreement (the “Original MIPA”) with Wabash Valley Resources LLC (“WVR”) and the sellers party thereto (collectively, the “Sellers”), pursuant to which, the Company purchased a 20% equity interest in WVR in exchange for cash and shares of the Company’s common stock (see Note 4, Investments). Under the Original MIPA, each Seller had a right but not the obligation, in its sole discretion, to cause the Company to purchase a portion of such Seller’s Shares outside the specified blackout windows, at $14.86 per share of common stock (the "Put Right") with a maximum share repurchase of $10.0 million in aggregate. On the WVR Closing Date, the maximum potential cash settlement from the shares of common stock subject to the Put Right and the fair value of the embedded Put Right was recorded in temporary equity. The fair value of the Put Right was $3.2 million as of the WVR Closing Date.
On September 13, 2021, the Company entered into an Amended Membership Interest Purchase Agreement (the "Amended MIPA") with WVR and the Sellers, pursuant to which the Put Right was removed in its entirety and replaced with the first price differential and second price differential (together the "Price Differential"). As a result of the Amended MIPA, the shares of common stock with the embedded Put Right were deemed modified and $13.2 million was reclassified from temporary equity to equity on the consolidated balance sheets. The Price Differential was a freestanding financial instrument and accounted for as a derivative liability. The fair value of the Price Differential upon modification was $7.7 million and recognized as a derivative liability, resulting in a net impact of $5.5 million to equity during the third quarter of 2021.
Pursuant to the terms of the Amended MIPA, the first price differential was settled in the fourth quarter of 2021 for $3.4 million and the second price differential was settled in the third quarter of 2022 for $6.6 million, eliminating the Company's derivative liability balance as of September 30, 2022.
The derivative liability was 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:
12

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Derivative Liability
Estimated fair value at December 31, 2021$4,189 
Change in estimated fair value2,399 
Settlement of second price differential(6,588)
Fair value at September 30, 2022$ 
The fair value of the derivative liability, a level 3 measurement, was estimated using a Monte Carlo simulation model as of December 31, 2021. 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
December 31, 2021
Stock price$9.87 
Strike price$14.86 
Volatility100 %
Risk-free rate0.18 %
Put Premium derivative asset
In June 2022, the Company completed a private placement of $200 million aggregate principal amount of unsecured 8.00% / 11.00% convertible senior paid in kind ("PIK") toggle notes (the “Convertible Notes”). In conjunction with the issuance of the Convertible Notes, the Company entered into a premium letter agreement (the "Put Premium") with the purchasers (the "Note Purchasers") of the Convertible Notes which requires the Note Purchasers to pay $9.0 million to the Company if during the period through the date that is thirty months after the closing date of the private placement of Convertible Notes, the last reported sale price of the Company's common stock has been at least $20.00 for at least 20 trading days during any consecutive 40 trading day periods.
The Put Premium is an embedded derivative asset and meets the criteria to be separated from the host contract and carried at fair value. The derivative is measured both initially and in subsequent periods at fair value, with changes in fair value recognized in other income, net on the consolidated statements of operations. The fair value of the derivative asset is included in other assets on the consolidated balance sheets. The change in fair value of the derivative asset was as follows:
Derivative asset
Estimated fair value as of June 1, 2022$1,500 
Change in estimated fair value(1,000)
Estimated fair value as of September 30, 2022$500 
The fair value of the derivative asset, 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
September 30, 2022June 1, 2022
Stock price$3.52 $6.77 
Threshold price$20.00 $20.00 
Remaining term (in years)2.172.50
Volatility100 %90 %
Risk-free rate4.18 %2.73 %
Payer cost of debt6.25 %4.30 %
13

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Senior secured note receivable
The Company entered into an Agreement and Plan of Merger and Reorganization dated July 30, 2022 (the "Merger Agreement") with Romeo Power, Inc. ("Romeo") and J Purchaser Corp (“Purchaser”), a wholly-owned subsidiary of the Company. Concurrently with the execution of the Merger Agreement, Romeo and Romeo Systems, Inc., a Delaware corporation and a wholly-owned subsidiary of Romeo (“Romeo Systems”), entered into a Loan and Security Agreement (the “Loan Agreement”) with the Company as the lender. The Loan Agreement provides for a liquidity support senior secured debt facility (the “Facility”) in an aggregate principal amount of up to $30.0 million (subject to certain incremental increases of up to $20.0 million), which shall be available for drawing subject to certain terms and conditions set forth in the Loan Agreement. As of September 30, 2022, the Company issued $10.0 million to Romeo under the terms of the Loan Agreement. The Company elected to account for the senior secured note receivable pursuant to the fair value option under ASC 825. As of September 30, 2022, the fair value of the senior secured note receivable was $10.1 million, based on the recent transaction price.
(d)Revenue Recognition
Truck sales
Truck sales consist of revenue recognized on the sales of the Company's BEV trucks. The sale of a truck is recognized as a single performance obligation at the point in time when control is transferred to the customer (dealers). Control is deemed transferred when the product is picked up by the carrier and the customer (dealer) can direct the product's use and obtain substantially all of the remaining benefits from the product. The Company does not offer returns on truck sales.
Payment for trucks sold are made in accordance with the Company's customary payment terms. The Company has elected an accounting policy whereby the Company does not adjust the promised amount of consideration for the effects of a significant financing component because, at contract inception, the Company expects the period between the time when the Company transfers a promised good or service to the customer and the time when the customer pays for that good or service will be one year or less. Sales tax collected from customers is not considered revenue and is accrued until remitted to the taxing authorities. Shipping and handling activities occur after the customer has obtained control of the product, thus the Company has elected to account for those expenses as fulfillment costs in cost of revenues, rather than an additional promised service.
Services and other
Services and other revenues 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 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.
(e)Warranties
Warranty costs are recognized upon transfer of control of trucks to dealers, and are estimated based on factors including the length of the warranty, product costs, supplier warranties, and product failure rates. Warranty reserves are reviewed and adjusted quarterly to ensure that accruals are adequate to meet expected future warranty obligations. Initial
14

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
warranty data is limited early in the launch of a new product and accordingly, future adjustments to the warranty accrual may be material.
The change in warranty liability for the three and nine months ended September 30, 2022 is summarized as follows:
Three Months EndedNine Months Ended
September 30, 2022September 30, 2022
Accrued warranty - beginning of period$2,203 $ 
Warranty costs incurred(200)(200)
Net changes in liability for pre-existing warranties(213) 
Provision for new warranties2,611 4,601 
Accrued warranty - end of period$4,401 $4,401 
As of September 30, 2022, warranty accrual for $1.1 million is recorded in accrued expenses and other current liabilities and $3.3 million in other long-term liabilities on the consolidated balance sheets.
(f)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 September 30, 2022 and December 31, 2021, respectively:
As of
September 30, 2022December 31, 2021
Raw materials$63,398 $7,344 
Work in process5,547 4,253 
Finished goods10,935  
Service parts1,189  
Total inventory$81,069 $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, which is based upon estimated selling prices, is in excess of carrying value. Once inventory is written-down, a new, lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration of or increase in that newly established cost basis.
15

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following at September 30, 2022 and December 31, 2021, respectively:
As of
September 30, 2022December 31, 2021
Prepaid acquisition-related consideration$11,910 $ 
Prepaid expenses11,750 5,116 
Senior secured note receivable10,081  
Non-trade receivables7,206 2,717 
HQ Sale Agreement receivable4,528  
Deposits4,204 5,615 
Deferred implementation costs2,179 2,443 
Total prepaid expenses and other current assets$51,858 $15,891 
Prepaid acquisition-related consideration
As part of the Loan Agreement entered into with Romeo, the Company agreed to a short-term battery price increase which will be considered part of the merger consideration upon closing of the transaction.
Deferred implementation costs
Deferred implementation costs are amortized on a straight-line basis over the estimated useful life of the related software. During the second quarter of 2022, the Company re-assessed the estimated useful life of its existing enterprise resource planning system as a result of ongoing re-implementation, resulting in a shorter useful life and prospective change in amortization.
The Company recorded $1.2 million and $2.4 million of amortization expense on the consolidated statements of operations for the three and nine months ended September 30, 2022, respectively, related to deferred implementation costs. Amortization during the three and nine months ended September 30, 2021 was immaterial.

16

NIKOLA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Property, Plant and Equipment, Net
Property, plant and equipment, net consisted of the following at September 30, 2022 and December 31, 2021:
As of
September 30, 2022 December 31, 2021
Construction-in-progress$161,798 $103,515 
Buildings127,797 104,333 
Machinery and equipment51,178 36,551 
Land20,762 15 
Demo vehicles12,751 888 
Software8,449 7,562 
Other3,473 3,011 
Leasehold improvements2,953 2,883 
Furniture and fixtures1,492 1,480 
Finance lease assets1,338