10-Q 1 qs-20240331.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 March 31, 2024

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: 001-39345

 

 

QUANTUMSCAPE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

Delaware

85-0796578

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

1730 Technology Drive

San Jose, CA

95110

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (408) 452-2000

 

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 $0.0001 per share

 

QS

 

The New York Stock Exchange

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, 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

The number of shares of the registrant’s Class A Common Stock, par value $0.0001 per share outstanding was 444,866,620, and the number of shares of the registrant’s Class B Common Stock, par value $0.0001 per share outstanding was 54,665,633, as of April 19, 2024.

 

 

 


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

2

Condensed Consolidated Balance Sheets (Unaudited)

2

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

3

Condensed Consolidated Statements of Redeemable Non-Controlling Interest and Stockholders’ Equity (Unaudited)

4

Condensed Consolidated Statements of Cash Flows (Unaudited)

5

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

34

Item 1A.

Risk Factors

34

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

59

Item 3.

Defaults Upon Senior Securities

59

Item 4.

Mine Safety Disclosures

59

Item 5.

Other Information

59

Item 6.

Exhibits

60

Signatures

61

 

 

 

 

i


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Unless the context otherwise requires, all references to “QuantumScape,” “we,” “us,” “our,” or the “Company” in this Quarterly Report on Form 10-Q (this “Report”) refer to the current QuantumScape Corporation and its subsidiaries.

The Company makes forward-looking statements in this Report and in documents incorporated herein by reference. All statements, other than statements of present or historical fact included in or incorporated by reference in this Report, regarding the Company’s future financial performance, as well as the Company’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Report, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “prospective,” “should,” “will,” “would,” the negative of such terms, and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations, assumptions, hopes, beliefs, intentions and strategies regarding future events and are based on currently available information as to the outcome and timing of future events. The Company cautions you that these forward-looking statements are subject to risks and uncertainties, including those described in Part II, Item 1A, “Risk Factors” in this Report, most of which are difficult to predict and many of which are beyond the control of the Company and incident to its business. It is not possible for our management to predict all risks, nor can we assess the impact of all 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 we may make.

In addition, forward-looking statements in this Report and in any document incorporated herein by reference should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable laws.

As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include those discussed in Part II, Item 1A, “Risk Factors” in this Report and in our other filings with the Securities and Exchange Commission (“SEC”).
 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

QuantumScape Corporation

Condensed Consolidated Balance Sheets (Unaudited)

(In Thousands, Except per Share Amounts)

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents ($3,564 and $3,522 as of March 31, 2024 and December 31, 2023, respectively, for joint venture)

 

$

192,321

 

 

$

142,524

 

Marketable securities

 

 

817,314

 

 

 

928,284

 

Prepaid expenses and other current assets

 

 

35,400

 

 

 

12,709

 

Total current assets

 

 

1,045,035

 

 

 

1,083,517

 

Property and equipment, net

 

 

315,644

 

 

 

313,164

 

Right-of-use assets - finance lease

 

 

24,422

 

 

 

25,140

 

Right-of-use assets - operating lease

 

 

54,596

 

 

 

55,863

 

Other assets

 

 

24,281

 

 

 

24,294

 

Total assets

 

$

1,463,978

 

 

$

1,501,978

 

Liabilities, redeemable non-controlling interest and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

11,508

 

 

$

12,959

 

Accrued liabilities

 

 

72,331

 

 

 

10,180

 

Accrued compensation and benefits

 

 

8,738

 

 

 

26,043

 

Operating lease liability, short-term

 

 

5,110

 

 

 

5,006

 

Finance lease liability, short-term

 

 

2,986

 

 

 

2,907

 

Total current liabilities

 

 

100,673

 

 

 

57,095

 

Operating lease liability, long-term

 

 

56,256

 

 

 

57,622

 

Finance lease liability, long-term

 

 

34,314

 

 

 

35,098

 

Other liabilities

 

 

13,073

 

 

 

11,986

 

Total liabilities

 

 

204,316

 

 

 

161,801

 

Commitments and contingencies (see Note 7)

 

 

 

 

 

 

Redeemable non-controlling interest

 

 

1,790

 

 

 

1,770

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock- $0.0001 par value; 100,000 shares authorized; none issued and outstanding as of March 31, 2024 and December 31, 2023

 

 

 

 

 

 

Common stock - $0.0001 par value; 1,250,000 shares authorized (1,000,000 Class A and 250,000 Class B); 444,821 Class A and 54,666 Class B shares issued and outstanding as of March 31, 2024; 433,157 Class A and 59,874 Class B shares issued and outstanding as of December 31, 2023

 

 

50

 

 

 

49

 

Additional paid-in-capital

 

 

4,260,514

 

 

 

4,221,892

 

Accumulated other comprehensive loss

 

 

(1,387

)

 

 

(2,877

)

Accumulated deficit

 

 

(3,001,305

)

 

 

(2,880,657

)

Total stockholders’ equity

 

 

1,257,872

 

 

 

1,338,407

 

Total liabilities, redeemable non-controlling interest and stockholders’ equity

 

$

1,463,978

 

 

$

1,501,978

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2


 

QuantumScape Corporation

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(In Thousands, Except per Share Amounts)

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

83,847

 

 

$

76,941

 

General and administrative

 

 

48,054

 

 

 

33,037

 

Total operating expenses

 

 

131,901

 

 

 

109,978

 

Loss from operations

 

 

(131,901

)

 

 

(109,978

)

Other income (loss):

 

 

 

 

 

 

Interest expense

 

 

(572

)

 

 

(600

)

Interest income

 

 

12,065

 

 

 

6,277

 

Other expense

 

 

(220

)

 

 

(330

)

Total other income

 

 

11,273

 

 

 

5,347

 

Net loss

 

 

(120,628

)

 

 

(104,631

)

Less: Net income attributable to non-controlling interest, net of tax of $0

 

 

20

 

 

 

16

 

Net loss attributable to common stockholders

 

$

(120,648

)

 

$

(104,647

)

Net loss

 

$

(120,628

)

 

$

(104,631

)

Other comprehensive income (loss):

 

 

 

 

 

 

Unrealized gain on marketable securities

 

 

1,490

 

 

 

5,518

 

Total comprehensive loss

 

 

(119,138

)

 

 

(99,113

)

Less: Comprehensive income attributable to non-controlling interest

 

 

20

 

 

 

16

 

Comprehensive loss attributable to common stockholders

 

$

(119,158

)

 

$

(99,129

)

 

 

 

 

 

 

 

Basic and Diluted net loss per share

 

$

(0.24

)

 

$

(0.24

)

Basic and Diluted weighted-average common shares outstanding

 

 

496,145

 

 

 

440,085

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


 

QuantumScape Corporation

Condensed Consolidated Statements of Redeemable Non-Controlling Interest and Stockholders’ Equity (Unaudited)

(In Thousands)

 

Redeemable
 Non-
Controlling

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

Three Months Ended March 31, 2024

Interest

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance as of December 31, 2023

$

1,770

 

 

 

 

493,031

 

 

$

49

 

 

$

4,221,892

 

 

$

(2,880,657

)

 

$

(2,877

)

 

$

1,338,407

 

Exercise of stock options

 

 

 

 

 

1,201

 

 

 

 

 

 

1,948

 

 

 

 

 

 

 

 

 

1,948

 

Shares issued upon vesting of restricted stock units

 

 

 

 

 

5,255

 

 

 

1

 

 

 

20,216

 

 

 

 

 

 

 

 

 

20,217

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

16,458

 

 

 

 

 

 

 

 

 

16,458

 

Net income (loss)

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

(120,648

)

 

 

 

 

 

(120,648

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,490

 

 

 

1,490

 

Balance as of March 31, 2024

$

1,790

 

 

 

 

499,487

 

 

$

50

 

 

$

4,260,514

 

 

$

(3,001,305

)

 

$

(1,387

)

 

$

1,257,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable
 Non-
Controlling

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

Three Months Ended March 31, 2023

Interest

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance as of December 31, 2022

$

1,704

 

 

 

 

437,959

 

 

$

44

 

 

$

3,771,181

 

 

$

(2,435,512

)

 

$

(17,873

)

 

$

1,317,840

 

Exercise of stock options

 

 

 

 

 

4,081

 

 

 

 

 

 

4,050

 

 

 

 

 

 

 

 

 

4,050

 

Shares issued upon vesting of restricted stock units

 

 

 

 

 

1,590

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

34,228

 

 

 

 

 

 

 

 

 

34,228

 

Net income (loss)

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

(104,647

)

 

 

 

 

 

(104,647

)

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,518

 

 

 

5,518

 

Balance as of March 31, 2023

$

1,720

 

 

 

 

443,630

 

 

$

44

 

 

$

3,809,459

 

 

$

(2,540,159

)

 

$

(12,355

)

 

$

1,256,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


 

QuantumScape Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In Thousands)

 

 

 

Three Months Ended March 31,

 

 

 

 

2024

 

 

2023

 

Operating activities

 

 

 

 

 

 

 

Net loss

 

 

$

(120,628

)

 

$

(104,631

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

11,983

 

 

 

9,505

 

Amortization of right-of-use assets and non-cash lease expense

 

 

 

1,985

 

 

 

1,933

 

Amortization of premiums and accretion of discounts on marketable securities

 

 

 

(8,159

)

 

 

(2,176

)

Stock-based compensation expense

 

 

 

19,287

 

 

 

37,990

 

Other

 

 

 

107

 

 

 

599

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Prepaid expenses and other current assets and other assets

 

 

 

(22,679

)

 

 

(862

)

Accounts payable, accrued liabilities and accrued compensation and benefits

 

 

 

61,564

 

 

 

(4,108

)

Operating lease liability

 

 

 

(1,261

)

 

 

(569

)

Other liabilities

 

 

 

(144

)

 

 

 

Net cash used in operating activities

 

 

 

(57,945

)

 

 

(62,319

)

Investing activities

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

 

(14,120

)

 

 

(28,012

)

Proceeds from maturities of marketable securities

 

 

 

384,639

 

 

 

191,043

 

Proceeds from sales of marketable securities

 

 

 

1,245

 

 

 

1,477

 

Purchases of marketable securities

 

 

 

(265,265

)

 

 

(100,422

)

Net cash provided by investing activities

 

 

 

106,499

 

 

 

64,086

 

Financing activities

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

 

1,948

 

 

 

4,050

 

Principal payment for finance lease

 

 

 

(705

)

 

 

 

Net cash provided by financing activities

 

 

 

1,243

 

 

 

4,050

 

Net increase in cash, cash equivalents and restricted cash

 

 

 

49,797

 

 

 

5,817

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

 

160,572

 

 

 

252,916

 

Cash, cash equivalents and restricted cash at end of period

 

 

$

210,369

 

 

$

258,733

 

Supplemental disclosure:

 

 

 

 

 

 

 

Cash paid for interest

 

 

$

572

 

 

$

 

Purchases of property and equipment, not yet paid

 

 

$

9,772

 

 

$

13,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table presents the Company’s cash, cash equivalents and restricted cash by category in the Company’s Condensed Consolidated Balance Sheets (Unaudited) (amounts in thousands):

 

 

As of March 31,

 

 

 

2024

 

 

2023

 

Cash and cash equivalents

 

$

192,321

 

 

$

241,210

 

Other assets

 

 

18,048

 

 

 

17,523

 

Total cash, cash equivalents and restricted cash

 

$

210,369

 

 

$

258,733

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


 

 

QuantumScape Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

March 31, 2024

Note 1. Nature of Business

Organization

The original QuantumScape Corporation, now named QuantumScape Battery, Inc. (“Legacy QuantumScape”), a wholly owned subsidiary of the Company (as defined below), was founded in 2010 with the mission to revolutionize energy storage to enable a sustainable future. In 2020, QuantumScape became a publicly traded company (NYSE: QS) through a business combination with a special purpose acquisition company named Kensington Capital Acquisition Corp. (“Kensington”) which changed its name to QuantumScape Corporation upon closing in November 2020 (the “Business Combination”). As a result of the Business Combination, QuantumScape Battery Inc. survived and became a wholly owned subsidiary of QuantumScape Corporation (the “Company”).

The Company is focused on the development and commercialization of its solid-state lithium-metal batteries. Planned principal operations have not yet commenced. As of March 31, 2024, the Company had not derived revenue from its principal business activities.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as determined by the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain prior period balances have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes.

The Company’s policy is to consolidate all entities that it controls by ownership of a majority of the outstanding voting stock. In addition, the Company consolidates entities that meet the definition of a variable interest entity (“VIE”) for which the Company is the related party most closely associated with and is the primary beneficiary. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and who has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity. For consolidated entities that are less than wholly owned, the third party’s holding of an equity interest is presented as redeemable non-controlling interests in the Company’s Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Redeemable Non-Controlling Interest and Stockholders’ Equity. The portion of net earnings (loss) attributable to the redeemable non-controlling interests is presented as net income (loss) attributable to non-controlling interests in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Legacy QuantumScape was a single-legal entity prior to becoming a partner with Volkswagen in QSV Operations LLC (“QSV”). As noted in the section titled “Joint Venture and Redeemable Non-Controlling Interest” below, Legacy QuantumScape determined QSV was a VIE for which it was required to consolidate the operations upon its formation in 2018. Following the closing of the Business Combination, the Company made the same determination and the Company continued to consolidate the operations of QSV in the three months ended March 31, 2024 as the determination of the VIE has not changed.

All intercompany accounts and transactions are eliminated in consolidation.

6


 

 

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements as well as reported amounts of expenses during the reporting periods. Estimates made by the Company include, but are not limited to, those related to the valuation of common stock prior to the Business Combination and valuation of awards under the Extraordinary Performance Award Program (the “EPA Program”), among others. 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 could differ materially from those estimates.

Unaudited Interim Condensed Consolidated Financial Statements

The accompanying interim Condensed Consolidated Balance Sheets as of March 31, 2024, the interim Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), the interim Condensed Consolidated Statements of Redeemable Non-Controlling Interest and Stockholders’ Equity for the three months ended March 31, 2024 and 2023, and the interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023, are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in management’s opinion, include adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, 2024 and its results of operations for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023. The financial data and the other financial information disclosed in the notes to these condensed consolidated financial statements related to the three-month period are also unaudited. The results of operations for the three months ended March 31, 2024 and 2023 are not necessarily indicative of the results to be expected for the full fiscal year or any other period.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s audited annual consolidated financial statements for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 27, 2024 (the “Annual Report”).

7


 

 

Joint Venture and Redeemable Non-Controlling Interest

QSV was incorporated as a limited liability company in 2018. Volkswagen Group of America, Inc. (“VWGoA”), Volkswagen Group of America Investments, LLC (“VGA”) and Legacy QuantumScape executed a Joint Venture Agreement (“JVA”), effective September 2018, with the goal of jointly establishing a manufacturing facility to produce the pilot line of the Company’s product through QSV. In connection with this agreement, the parties also have entered into two operating agreements: (i) the Limited Liability Company Agreement of QSV to govern the respective rights and obligations as members of QSV and (ii) the Common IP License Agreement for the Company to license certain intellectual property pertaining to automotive battery cells as defined in the JVA to VWGoA, VGA and QSV.

Volkswagen is a related party stockholder (approximately 25.0% and 24.0% voting interest holder of the Company as of March 31, 2024 and December 31, 2023, respectively). Upon the effectiveness of the JVA, each party contributed $1.7 million in cash to capitalize QSV in exchange for 50% equity interests.

The joint venture is considered a VIE with a related party and therefore the related party whose business is more closely related to the planned operations of the joint venture is required to consolidate the operations.

The Company determined its operations were most closely aligned with the operations of the joint venture and therefore has consolidated the results of QSV’s operations in its Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), and Condensed Consolidated Statements of Redeemable Non-Controlling Interest and Stockholders’ Equity. QSV had minimal operations through March 31, 2024.

The Company classifies non-controlling interests with redemption features that are not solely within the control of the Company within temporary equity on the Company’s Condensed Consolidated Balance Sheets in accordance with ASC 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities (“ASC 480-10-S99-3A”). The non-controlling interest was recorded outside of stockholders’ equity because the non-controlling interest provides the holder with put rights in the event of, amongst others, (i) the failure by the Company to meet specified development milestones within certain timeframes, (ii) the parties to the JVA cannot agree to certain commercial terms within certain timeframes, or (iii) a change of control of the Company, which such events are considered not solely within the Company’s control. The Company adjusts redeemable non-controlling interests for the portion of net loss attributable to the redeemable non-controlling interests. As of March 31, 2024, the redeemable non-controlling interest is equivalent to the value of Volkswagen’s interest in the joint venture. The commercialization timeline originally contemplated in 2018 by the joint venture agreements, and by subsequent amendments, has changed, and at the time of filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, certain milestones contemplated by the joint venture agreements had not been met. As a result, Volkswagen’s right to exercise its put rights has been triggered. If Volkswagen exercises such rights, the joint venture with Volkswagen and Volkswagen’s commitments to purchase output capacity from the joint venture would terminate, and we would be obligated to purchase Volkswagen’s interest in the joint venture for its book value. As of March 31, 2024, the book value of this interest was approximately $1.8 million and is recorded as a redeemable non-controlling interest in our Condensed Consolidated Balance Sheets. To date, Volkswagen has not informed us of any intention to exercise its put rights.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and marketable securities. As of March 31, 2024 and December 31, 2023, approximately $114.6 million and $115.8 million of our total cash and cash equivalents and marketable securities, are held in U.S. money market funds, and $711.6 million and $723.9 million are invested in U.S. government and agency securities, respectively. The Company seeks to mitigate its credit risk with respect to cash and cash equivalents and marketable securities by making deposits with what we believe to be large, reputable financial institutions and investing in high credit rated shorter-term instruments.

Cash and Cash Equivalents and Restricted Cash

Management considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

Restricted cash is maintained under an agreement that legally restricts the use of such funds and is reported within other assets as the date of availability or disbursement for all restricted cash is more than one year from March 31, 2024.

Restricted cash is comprised of $18.0 million as of both March 31, 2024 and December 31, 2023, all of which is pledged as a form of security for the Company’s lease agreements for its headquarters and pre-pilot manufacturing facilities. The restricted cash is maintained in certificate of deposits as of March 31, 2024.

Marketable Securities

8


 

 

The Company’s investment policy is consistent with the definition of available-for-sale securities. The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Company’s policy is focused on the preservation of capital, liquidity, and return. From time to time, the Company may sell certain securities, but the objectives are generally not to generate profits on short-term differences in price.

These securities are carried at estimated fair value with unrealized gains and losses included in other comprehensive gain/loss in stockholders’ equity until realized. Gains and losses on marketable security transactions are reported on the specific-identification method. Dividend and interest income are recognized when earned.

Fair Value Measurement

The Company applies fair value accounting for all financial assets and liabilities measured on a recurring and nonrecurring 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 established a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, used to determine the fair value of its financial instruments. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Level 1 – Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.

Property and Equipment

Property and equipment are recorded at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the related asset. Improvements that increase functionality of the fixed asset are capitalized and depreciated over the asset’s remaining useful life. Deposits for purchases of property and equipment are included in construction-in-progress. Construction-in-progress is not depreciated until the asset is placed in service. Fully depreciated assets are retained in property and equipment, net, until removed from service.

The estimated useful lives of assets are generally as follows:

 

Computer equipment, hardware, and software

 

3 - 5 years

Furniture and fixtures

 

7 - 10 years

Machinery and equipment

 

3 - 10 years

Leasehold improvements

 

Shorter of the lease term (including estimated renewals) or the estimated useful lives of the improvements

Impairment of Long-Lived Assets

The Company evaluates the carrying value of long-lived assets when indicators of impairment exist. The carrying value of a long-lived asset is considered impaired when the estimated separately identifiable, undiscounted cash flows from such an asset are less than the carrying value of the asset. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. There was no material impairment charge in the three months ended March 31, 2024 and 2023.

9


 

 

Leases

The Company classifies arrangements meeting the definition of a lease as operating or financing leases, and leases are recorded on the Condensed Consolidated Balance Sheets as both a right-of-use (“ROU”) asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate which is the rate incurred to borrow on a collateralized basis over a similar term. Lease liabilities are increased by interest and reduced by payments each period, and the ROU asset is reduced over the lease term. For operating leases, interest on the lease liability and the non-cash lease expense result in straight-line rent expense over the lease term. For finance leases, interest on the lease liability and the amortization of the ROU asset results in front-loaded expense over the lease term. Variable lease expenses, including common maintenance fees, insurance and property tax, are recorded when incurred.

In calculating the right-of-use asset and lease liability, the Company elects to combine lease and non-lease components for all classes of assets, and elects to exclude short-term leases having terms of 12 months or less.

Segments

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

Research and Development Cost

Costs related to research and development are expensed as incurred.

General and Administrative Expenses

General and administrative expenses represent costs incurred by the Company in managing the business, including salary, benefits, incentive compensation, marketing, insurance, professional fees and other operating costs associated with the Company’s non-research and development activities.

Stock-Based Compensation

The Company measures and recognizes compensation expense for all stock-based awards made to employees, directors, and non-employees, including stock options, restricted stock units and restricted shares, based on estimated fair values recognized over the requisite service period. The Company accounts for forfeitures when they occur.

The fair values of options granted with only service conditions are estimated on the grant date using the Black-Scholes option pricing model. This valuation model for stock-based compensation expense requires the Company to make assumptions and judgments about the variables used in the calculation, including the expected term (weighted-average period of time that the options granted are expected to be outstanding), the volatility of the Company’s common stock, and an assumed risk-free interest rate. The Company recognizes compensation expense for all options with only service conditions on a straight-line basis over the requisite service period of the awards, which is generally the option vesting term of four years.

The fair values of options granted with performance (e.g., business milestone) and market conditions (e.g., stock price target) are estimated at the grant date using a Monte Carlo simulation model. The model determined the grant date fair value of each vesting tranche and the future date when the market condition for such tranche is expected to be achieved. The Monte Carlo valuation requires the Company to make assumptions and judgements about the variables used in the calculation including the expected term, volatility of the Company’s common stock, an assumed risk-free interest rate, and cost of equity.

For performance-based options with a vesting schedule based on the attainment of both performance and market conditions, along with service conditions, each quarter the Company assesses whether it is probable that it will achieve each performance condition that has not previously been achieved or deemed probable of achievement and if so, the future time when the Company expects to achieve that business milestone, or its “expected business milestone achievement time.” When the Company first determines that a business milestone has become probable of being achieved, the Company allocates the entire expense for the related tranche over the number of quarters between the grant date and the then-applicable “expected vesting date,” which represents the requisite service period. The requisite service period at any given time is generally the period between the grant date and the later of (i) the expected time when the performance condition will be achieved (if the related performance condition has not yet been achieved) and (ii) the expected time when the market condition will be achieved (if the related market condition has not yet been achieved). The Company immediately recognizes a cumulative catch-up expense for all accumulated expense for the quarters from the grant date through the quarter in which the performance condition was first deemed probable of being achieved. Each quarter thereafter, the Company recognizes the then-remaining expense for the tranche through the end of the requisite service period except that upon vesting of a tranche, all remaining expense for that tranche is immediately recognized.

10


 

 

The fair values of restricted stock units granted with service conditions only are based on the closing price of the Company’s Class A Common Stock on the date of grant. The Company recognizes compensation expense for restricted stock units with only service conditions on a straight-line basis over the requisite service period of the awards, which is generally the award vesting term of four years.

The fair values of restricted stock units granted with service and performance conditions are based on the closing price of the Company’s Class A Common Stock on the grant date. The vesting schedule of such awards is based entirely on the attainment of both service and performance conditions. Each quarter the Company assesses whether it is probable that it will achieve each performance condition and if so, the future time when the Company expects to achieve that performance condition, the “expected vesting date”. When the Company first determines that a performance condition has become probable of being achieved, the Company allocates the entire expense for the related tranche over the number of quarters between the grant date and expected vesting date, which represents the requisite service period. The requisite service period at any given time is generally the period between the grant date and the expected time when the performance condition will be achieved with the service condition also being met.

The Company’s 2020 Employee Stock Purchase Plan (the “ESPP”) is compensatory in accordance with ASC 718-50-25. The Company measures and recognizes compensation expense for shares to be issued under the ESPP based on estimated grant date fair value recognized on a straight-line basis over the offering period.

The ESPP provides eligible employees with the opportunity to purchase shares of the Company’s Class A Common Stock at a discount through payroll deductions. There were no shares purchased under the ESPP during the three months ended March 31, 2024. As of March 31, 2024, 10.5 million shares of Class A Common Stock were reserved for future issuance under the ESPP.

The Company established the 2024 corporate bonus plan (the “2024 Bonus Plan”) to be settled in the form of restricted stock units to eligible employees upon the achievement of certain service and performance conditions. The awards under the 2024 Bonus Plan are classified as a liability prior to the settlement of vested RSUs, upon which the liability is reclassified into equity. The 2024 Bonus Plan awards are measured as the grant date fair value, i.e., the closing price of the Company’s Class A Common Stock on the grant date. The Company recognizes compensation expense for the 2024 Bonus Plan to be settled in restricted stock units on a straight-line basis over the requisite service period of approximately a year.

Income Taxes

The Company accounts for income taxes under an asset and liability approach. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and operating loss carryforwards, measured by applying currently enacted tax laws. Valuation allowances are provided when necessary to reduce net deferred tax assets to an amount that is more likely than not to be realized.

The Company recognizes tax liabilities based upon its estimate of whether, and the extent to which, additional taxes will be due when such estimates are more likely than not to be sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained.

The Company has no provision for income taxes for the three months ended March 31, 2024 and 2023. The Company has no current tax expense from losses and no deferred expense from the valuation allowance. The Company’s effective tax rate differs from the U.S. statutory rate primarily due to a valuation allowance against its net deferred tax assets as it is more likely than not that some or all of the deferred tax assets will not be realized.


 

11


 

Note 3. Recent Accounting Pronouncements

In March 2023, the FASB issued ASU 2023-01, Leases (Topic 842): Common Control Agreements, which clarifies the accounting for leasehold improvements associated with common control leases. The ASU is effective for all entities in fiscal years beginning after December 15, 2023. The Company adopted the guidance in the three months ended March 31, 2024. The adoption of such guidance had no impact on the Company’s condensed consolidated financial statements as of March 31, 2024.

In August 2023, the FASB issued ASU 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, which addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements. The ASU is effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. Additionally, a joint venture that was formed before January 1, 2025 may elect to apply the amendments retrospectively. Early adoption is permitted, either prospectively or retrospectively. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The ASU is effective for all entities in fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted and public entities should apply the amendments retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the transparency and decision usefulness of income tax disclosures. The ASU is effective for all public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of FASB Accounting Standards Codification (FASB ASC) 718, Compensation-Stock Compensation. The ASU is effective for all public business entities for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

12


 

Note 4. Fair Value Measurement

The Company’s financial assets subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows (amounts in thousands):

 

 

Fair Value Measured as of March 31, 2024

 

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Total

 

Assets included in:

 

 

 

 

 

 

 

 

 

Money market funds(1)

 

$

114,592

 

 

$

 

 

$

114,592

 

Commercial paper(2)

 

 

 

 

 

74,065

 

 

 

74,065

 

U.S. government and agency securities(2)

 

 

 

 

 

711,593

 

 

 

711,593

 

Corporate notes and bonds(2)

 

 

 

 

 

108,078

 

 

 

108,078

 

Total fair value

 

$

114,592

 

 

$

893,736

 

 

$

1,008,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measured as of December 31, 2023

 

 

 

 

 

 

Level 1

 

 

Level 2

 

 

Total

 

Assets included in:

 

 

 

 

 

 

 

 

 

Money market funds(1)

 

$

115,848

 

 

$

 

 

$

115,848

 

Commercial paper(2)

 

 

 

 

 

80,913

 

 

 

80,913

 

U.S. government and agency securities(2)

 

 

 

 

 

723,888

 

 

 

723,888

 

Corporate notes and bonds(2)

 

 

 

 

 

147,923

 

 

 

147,923

 

Total fair value

 

$

115,848

 

 

$

952,724

 

 

$

1,068,572

 

 

 

 

 

 

 

 

 

 

 

(1)
Money market funds are included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.
(2)
Marketable securities consist of commercial paper, U.S. government and agency securities, corporate notes and bonds. As of March 31, 2024 and December 31, 2023, marketable securities with original maturities of three months or less of $76.4 million and $24.4 million, respectively, are included in cash and cash equivalents on the Condensed Consolidated Balance Sheets.

 

 

Level 1 assets: Money market funds are classified as Level 1 within the fair value hierarchy, as fair value is based on unadjusted quoted prices in active markets for identical assets.

Level 2 assets: Investments in commercial paper, U.S. government and agency securities, and corporate notes and bonds are classified as Level 2 as they were valued based upon quoted market prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.

The Company had no financial liabilities subject to fair value measurements on a recurring basis as of March 31, 2024 and December 31, 2023.

There have been no changes to the valuation methods utilized during the three months ended March 31, 2024. As of March 31, 2024 and December 31, 2023, the carrying values of cash and cash equivalents, accounts payable and accrued liabilities approximate their respective fair values due to their short-term nature.

13


 

Marketable Securities

The following table summarizes, by major security type, the Company’s assets that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. Amortized cost net of unrealized gain (loss) is equal to fair value as of March 31, 2024 and December 31, 2023. The fair value as of March 31, 2024 and December 31, 2023 are as follows (amounts in thousands):

 

 

March 31, 2024

 

 

 

Amortized
 Cost

 

 

Gross Unrealized
 Gain

 

 

Gross Unrealized
 Loss

 

 

Fair Value

 

Level 1 securities

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

114,592

 

 

$

 

 

$

 

 

$

114,592

 

Level 2 securities

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

74,065

 

 

 

 

 

 

 

 

 

74,065

 

U.S. government and agency securities

 

 

712,564

 

 

 

23

 

 

 

(994

)

 

 

711,593

 

Corporate notes and bonds

 

 

108,494

 

 

 

20

 

 

 

(436

)

 

 

108,078

 

Total

 

$

1,009,715

 

 

$

43

 

 

$

(1,430

)

 

$

1,008,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

Amortized
 Cost

 

 

Gross Unrealized
 Gain

 

 

Gross Unrealized
 Loss

 

 

Fair Value

 

Level 1 securities

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

115,848

 

 

$

 

 

$

 

 

$

115,848

 

Level 2 securities

 

 

 

 

 

 

 

 

 

 

 

 

Commercial paper

 

 

80,913

 

 

 

 

 

 

 

 

 

80,913

 

U.S. government and agency securities

 

 

725,301

 

 

 

334

 

 

 

(1,747

)

 

 

723,888

 

Corporate notes and bonds

 

 

149,387

 

 

 

40

 

 

 

(1,504

)

 

 

147,923

 

Total

 

$

1,071,449

 

 

$

374

 

 

$

(3,251

)

 

$

1,068,572

 

 

Realized gains and losses and interest income from the investment are included in interest income.

The Company regularly reviews its available-for-sale marketable securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. The following tables display additional information regarding gross unrealized losses and fair value by major security type for the 61 and 51 marketable securities in unrealized loss positions as of March 31, 2024 and December 31, 2023, respectively (amounts in thousands):

 

 

March 31, 2024

 

 

 

Less than 12 Consecutive Months

 

 

12 Consecutive Months or Longer

 

 

Total

 

 

 

Gross Unrealized Loss

 

 

Fair Value

 

 

Gross Unrealized Loss

 

 

Fair Value

 

 

Gross Unrealized Loss

 

 

Fair Value

 

U.S. government and agency securities

 

$

(159

)

 

$

509,139

 

 

$

(835

)

 

$

71,088

 

 

$

(994

)

 

$

580,227

 

Corporate notes and bonds

 

 

(32

)

 

 

23,223

 

 

 

(404

)

 

 

75,975

 

 

 

(436

)

 

 

99,198

 

Total

 

$

(191

)

 

$

532,362

 

 

$

(1,239

)

 

$

147,063

 

 

$

(1,430

)

 

$

679,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2023

 

 

 

Less than 12 Consecutive Months

 

 

12 Consecutive Months or Longer

 

 

Total

 

 

 

Gross Unrealized Loss

 

 

Fair Value

 

 

Gross Unrealized Loss

 

 

Fair Value

 

 

Gross Unrealized Loss

 

 

Fair Value

 

U.S. government and agency securities

 

$

(10

)

 

$

31,741

 

 

$

(1,737

)

 

$

87,257

 

 

$

(1,747

)

 

$

118,998

 

Corporate notes and bonds

 

 

(5

)

 

 

13,338

 

 

 

(1,499

)

 

 

125,524

 

 

 

(1,504

)

 

 

138,862

 

Total

 

$

(15

)

 

$

45,079

 

 

$

(3,236

)

 

$

212,781

 

 

$

(3,251

)

 

$

257,860

 

The unrealized losses were attributable to changes in interest rates that impacted the value of the investments, and not increased credit risk. During the three months ended March 31, 2024 and 2023, the Company received proceeds of $1.2 million and $1.5 million, including interest, from the sale of available-for-sale marketable securities, respectively. The Company realized immaterial gains as a result of such sales for the three months ended March 31, 2024 and 2023. The Company does not intend to sell the investments that are in an unrealized loss position, nor is it more likely than not that the Company will be required to sell the investments before the recovery of the amortized cost basis, which may be its maturity. Accordingly, the Company did not record an allowance for credit losses associated with these investments.

14


 

The estimated amortized cost and fair value of available-for-sale securities by contractual maturity as of March 31, 2024 are as follows (amounts in thousands):

 

 

March 31, 2024

 

 

 

Amortized Cost

 

 

Fair Value

 

Due within one year

 

$

1,007,725

 

 

$

1,006,329

 

Due after one year and through five years

 

 

1,990

 

 

 

1,999

 

Total

 

$

1,009,715

 

 

$

1,008,328

 

 

Note 5. Balance Sheet Components

 

Prepaid expenses and other current assets

Prepaid expenses and other current assets as of March 31, 2024 and December 31, 2023, consisted of the following (amounts in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Insurance receivable

 

$

23,433

 

 

$

 

Prepaid expenses and other

 

 

11,967

 

 

 

12,709

 

Prepaid expenses and other current assets

 

$

35,400

 

 

$

12,709

 

 

Property and Equipment

Property and equipment as of March 31, 2024 and December 31, 2023 consisted of the following (amounts in thousands):

 

 

 

March 31,

 

 

December 31

 

 

 

2024

 

 

2023

 

Computer equipment, hardware, and software

 

$

7,110

 

 

$

7,191

 

Furniture and fixtures

 

 

103,924

 

 

 

77,813

 

Leasehold improvements

 

 

101,102

 

 

 

99,524

 

Machinery and equipment

 

 

148,517

 

 

 

146,730

 

Construction-in-progress

 

 

74,407

 

 

 

89,664

 

 Property and equipment, gross

 

 

435,060

 

 

 

420,922

 

Accumulated depreciation and amortization

 

 

(119,416

)

 

 

(107,758

)

Property and equipment, net

 

$

315,644

 

 

$

313,164

 

 

Depreciation and amortization expense related to property and equipment was $11.8 million and $9.2 million for the three months ended March 31, 2024 and 2023, respectively.

 

 

Accrued Liabilities

Accrued liabilities as of March 31, 2024 and December 31, 2023, consisted of the following (amounts in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Litigation-related accrual

 

$

59,200

 

 

$

4,000

 

Accrued property and equipment

 

 

5,270

 

 

 

3,203

 

Other

 

 

7,861

 

 

 

2,977

 

Accrued liabilities

 

$

72,331

 

 

$

10,180

 

 

15


 

 

Other Liabilities

Other liabilities as of March 31, 2024 and December 31, 2023 consisted of the following (amounts in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Long-term advance payments

 

$

2,515

 

 

$

2,515

 

Asset retirement obligation

 

 

10,558

 

 

 

9,471

 

Other liabilities

 

$

13,073

 

 

$

11,986

 

 

Note 6. Leases

The Company leases its headquarters, pre-pilot manufacturing facilities and certain equipment, with current lease terms running through 2032. The Company did not include in the calculation of the lease liability and right-of use asset at the lease inception as the exercise of the options was not reasonably certain for these leases. Fixed rent generally escalates each year, and the Company is responsible for a portion of the landlords’ operating expenses such as property tax, insurance and common area maintenance.

The Company’s leases include various operating leases expiring at various dates through September 2032 and a finance lease expiring September 2032 for the consolidated pre-pilot line. Many leases include one or more options to renew. The Company does not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably certain.

The Company’s leases do not have any contingent rent payments and do not contain residual value guarantees.

The components of lease related expense are as follows (amounts in thousands):

 

 

 

Three Months Ended March 31,

 

Lease costs

 

2024

 

 

2023

 

Finance lease costs:

 

 

 

 

 

 

Amortization of right-of-use assets

 

$

718

 

 

$

718

 

Interest on lease liabilities