10-Q 1 qs-20210930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39345

 

 

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 325,706,537, and the number of shares of the registrant’s Class B Common Stock, par value $0.0001 per share outstanding was 96,740,426, as of October 21, 2021.

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

2

 

Condensed Consolidated Balance Sheets

2

 

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

3

 

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

4

 

Condensed Consolidated Statements of Cash Flows

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

53

Item 3.

Defaults Upon Senior Securities

53

Item 4.

Mine Safety Disclosures

53

Item 5.

Other Information

53

Item 6.

Exhibits

54

Signatures

55

 

 

 

 

i


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Company makes forward-looking statements in this Quarterly Report on Form 10-Q (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,” “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 all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of the Company and incident to its business.

These forward-looking statements are based on information available as of the date of this Report, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, 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 securities 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:

delays in or the inability to achieve our technology development objectives, including high volume production of battery cells at commercial size with acceptable quality, consistency, throughput and cost for successful commercialization of our technologies;
delays in implementing or the inability to successfully implement the manufacturing processes related automation and technologies necessary for development efforts, volume production and successful commercialization of our technologies;
the inability to establish supply relationships for necessary components or being required to pay higher than anticipated supply costs;
our relationship with Volkswagen, including the ability to commercialize solid-state batteries from our joint development relationship with Volkswagen and as a potential customer;
the failure of our batteries to perform as expected;
delays in starting up the expected operations of our current and planned facilities, including the addition of an approximately 197,000 square foot pre-pilot line facility in California (“QS-0”), a 1GWh pilot-production line (“QS-1”), and subsequently the expansion to the full 21GWh target (“QS-1 Expansion”);
the inability to attract customers during the development stage or for high volume commercial production;
the Company’s future financial and business performance, including financial projections and business metrics;
changes in the Company’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans;
the Company’s ability to scale in a cost-effective manner;
the Company’s ability to raise capital;
developments relating to the Company’s competitors and industry;
the outcome of any known and unknown litigation and regulatory proceedings and any changes to regulations;
the impact of worldwide economic, political, industry, and market conditions, including the continued effects of the global COVID-19 pandemic;
any further changes to our financial statements or this Report that may be required due to SEC comments or further guidance regarding the accounting treatment of the Assumed Common Stock Warrants (as defined in Note 2 to the condensed consolidated financial statements in this Report);
the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting; and
the quantitative effects of the restatement of our previously issued consolidated financial statements as of and for the period ended December 31, 2020.
 

Other risks and uncertainties set forth in this Report, including risk factors discussed in Item 1A under the heading, “Risk Factors.

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

QuantumScape Corporation

Condensed Consolidated Balance Sheets (Unaudited)

(In Thousands, Except per Share Amounts)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents ($3,382 and $3,406 as of September 30, 2021 and
   December 31, 2020, respectively, for joint venture)

 

$

346,156

 

 

$

113,216

 

Marketable securities

 

 

1,197,572

 

 

 

884,336

 

Prepaid expenses and other current assets

 

 

8,611

 

 

 

11,616

 

Total current assets

 

 

1,552,339

 

 

 

1,009,168

 

Property and equipment, net

 

 

135,677

 

 

 

43,696

 

Right-of-use assets - finance lease

 

 

37,290

 

 

 

 

Right-of-use assets - operating lease

 

 

22,911

 

 

 

11,712

 

Other assets

 

 

11,069

 

 

 

2,193

 

Total assets

 

$

1,759,286

 

 

$

1,066,769

 

Liabilities, redeemable non-controlling interest and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

22,403

 

 

$

5,383

 

Accrued liabilities

 

 

6,370

 

 

 

2,701

 

Accrued compensation

 

 

5,604

 

 

 

2,391

 

Operating lease liability, short-term

 

 

1,552

 

 

 

1,220

 

Finance lease liability, short-term

 

 

152

 

 

 

 

Strategic premium, short-term

 

 

201

 

 

 

655

 

Total current liabilities

 

 

36,282

 

 

 

12,350

 

Operating lease liability, long-term

 

 

22,102

 

 

 

11,244

 

Finance lease liability, long-term

 

 

44,120

 

 

 

 

Assumed common stock warrant liabilities

 

 

 

 

 

689,699

 

Total liabilities

 

 

102,504

 

 

 

713,293

 

Commitments and contingencies (see Note 8)

 

 

 

 

 

 

Redeemable non-controlling interest

 

 

1,694

 

 

 

1,704

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock- $0.0001 par value; 100,000 shares authorized, none
   issued and outstanding as of September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock - $0.0001 par value; 1,250,000 shares authorized
   (
1,000,000 Class A and 250,000 Class B); 325,702 Class A
   and
96,740 Class B shares issued and outstanding as of September 30, 2021,
   
207,769 Class A and 156,225 Class B shares issued and
   outstanding as of December 31, 2020

 

 

42

 

 

 

36

 

Additional paid-in-capital

 

 

3,612,054

 

 

 

2,329,406

 

Accumulated other comprehensive loss

 

 

(629

)

 

 

(31

)

Accumulated deficit

 

 

(1,956,379

)

 

 

(1,977,639

)

Total stockholders’ equity

 

 

1,655,088

 

 

 

351,772

 

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

 

$

1,759,286

 

 

$

1,066,769

 

 

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 September 30,

 

 

Nine Months Ended September 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

$

39,467

 

 

$

16,977

 

 

$

104,708

 

 

$

42,373

 

General and administrative

 

14,365

 

 

 

3,713

 

 

 

43,421

 

 

 

8,460

 

Total operating expenses

 

53,832

 

 

 

20,690

 

 

 

148,129

 

 

 

50,833

 

Loss from operations

 

(53,832

)

 

 

(20,690

)

 

 

(148,129

)

 

 

(50,833

)

Other (loss) income:

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(359

)

 

 

(8,947

)

 

 

(597

)

 

 

(8,947

)

Interest income

 

605

 

 

 

143

 

 

 

1,201

 

 

 

962

 

Change in fair value of assumed common stock warrant liabilities

 

68,934

 

 

 

 

 

 

168,674

 

 

 

 

Change in fair value of Series F convertible preferred stock tranche liabilities

 

 

 

 

(347,120

)

 

 

 

 

 

(347,120

)

Other income

 

3

 

 

 

760

 

 

 

101

 

 

 

760

 

Total other income (loss)

 

69,183

 

 

 

(355,164

)

 

 

169,379

 

 

 

(354,345

)

Net income (loss)

 

15,351

 

 

 

(375,854

)

 

 

21,250

 

 

 

(405,178

)

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

 

 

 

 

(1

)

 

 

(10

)

 

 

(6

)

Net income (loss) attributable to common stockholders

$

15,351

 

 

$

(375,853

)

 

$

21,260

 

 

$

(405,172

)

Net income (loss)

$

15,351

 

 

$

(375,854

)

 

$

21,250

 

 

$

(405,178

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

65

 

 

 

(107

)

 

 

(598

)

 

 

(50

)

Total comprehensive income (loss)

 

15,416

 

 

 

(375,961

)

 

 

20,652

 

 

 

(405,228

)

Less: Comprehensive loss attributable to non-controlling
   interest

 

 

 

 

(1

)

 

 

(10

)

 

 

(6

)

Comprehensive income (loss) attributable to common stockholders

$

15,416

 

 

$

(375,960

)

 

$

20,662

 

 

$

(405,222

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share of common stock attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.04

 

 

$

(1.57

)

 

$

0.05

 

 

$

(1.69

)

Diluted

$

(0.13

)

 

$

(1.57

)

 

$

(0.36

)

 

$

(1.69

)

Weighted-average shares used in computing net income (loss) per share of common stock

 

 

 

 

 

 

 

 

 

 

 

Basic

 

417,829

 

 

 

239,922

 

 

 

397,370

 

 

 

239,838

 

Diluted

 

420,649

 

 

 

239,922

 

 

 

404,369

 

 

 

239,838

 

 

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, Except Share and per Share Amounts)

 

 

Redeemable
 Non-
Controlling

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

Three Months Ended September 30, 2021

Interest

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

 Income (Loss)

 

 

Equity

 

Balance as of June 30, 2021

$

1,694

 

 

 

 

414,539,835

 

 

$

41

 

 

$

3,478,814

 

 

$

(1,971,730

)

 

$

(694

)

 

$

1,506,431

 

Exercise of stock option

 

 

 

 

 

1,243,545

 

 

 

 

 

 

1,880

 

 

 

 

 

 

 

 

 

1,880

 

Shares issued upon vesting of restricted stock units

 

 

 

 

 

992,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of warrants

 

 

 

 

 

5,666,799

 

 

 

1

 

 

 

118,633

 

 

 

 

 

 

 

 

 

118,634

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

12,727

 

 

 

 

 

 

 

 

 

12,727

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,351

 

 

 

 

 

 

15,351

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65

 

 

 

65

 

Balance as of September 30, 2021

$

1,694

 

 

 

 

422,442,663

 

 

$

42

 

 

$

3,612,054

 

 

$

(1,956,379

)

 

$

(629

)

 

$

1,655,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable
 Non-
Controlling

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

Nine Months Ended September 30, 2021

Interest

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

 Income (Loss)

 

 

Equity

 

Balance as of December 31, 2020

$

1,704

 

 

 

 

363,993,705

 

 

$

36

 

 

$

2,329,406

 

 

$

(1,977,639

)

 

$

(31

)

 

$

351,772

 

Exercise of stock option

 

 

 

 

 

11,772,597

 

 

 

1

 

 

 

11,331

 

 

 

 

 

 

 

 

 

11,332

 

Shares issued upon vesting of restricted stock units

 

 

 

 

 

3,997,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of warrants

 

 

 

 

 

15,497,043

 

 

 

2

 

 

 

672,454

 

 

 

 

 

 

 

 

 

672,456

 

Issuance of Class A Common Stock, net of issuance costs of $15.5 million

 

 

 

 

 

11,960,000

 

 

 

1

 

 

 

462,925

 

 

 

 

 

 

 

 

 

462,926

 

Issuance of Class A Common Stock pursuant to Legacy QuantumScape Series F Preferred Stock Purchase Agreement, net of issuance costs of $0.1 million

 

 

 

 

 

15,221,334

 

 

 

2

 

 

 

99,928

 

 

 

 

 

 

 

 

 

99,930

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

36,010

 

 

 

 

 

 

 

 

 

36,010

 

Net income (loss)

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

 

21,260

 

 

 

 

 

 

21,260

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(598

)

 

 

(598

)

Balance as of September 30, 2021

$

1,694

 

 

 

 

422,442,663

 

 

$

42

 

 

$

3,612,054

 

 

$

(1,956,379

)

 

$

(629

)

 

$

1,655,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable
 Non-
Controlling

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

Three Months Ended September 30, 2020

Interest

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

 Income (Loss)

 

 

Equity

 

Balance as of June 30, 2020

$

1,705

 

 

 

 

239,798,774

 

 

$

24

 

 

$

448,836

 

 

$

(325,181

)

 

$

147

 

 

$

123,826

 

Exercise of stock option

 

 

 

 

 

396,618

 

 

 

 

 

 

306

 

 

 

 

 

 

 

 

 

306

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

4,871

 

 

 

 

 

 

 

 

 

4,871

 

Net loss

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

(375,853

)

 

 

 

 

 

(375,853

)

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(107

)

 

 

(107

)

Balance as of September 30, 2020

$

1,704

 

 

 

 

240,195,392

 

 

$

24

 

 

$

454,013

 

 

$

(701,034

)

 

$

40

 

 

$

(246,957

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable
 Non-
Controlling

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

Nine Months Ended September 30, 2020

Interest

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

 Income (Loss)

 

 

Equity

 

Balance as of December 31, 2019

$

1,710

 

 

 

 

239,777,057

 

 

$

24

 

 

$

444,440

 

 

$

(295,862

)

 

$

90

 

 

$

148,692

 

Exercise of stock option

 

 

 

 

 

418,335

 

 

 

 

 

 

320

 

 

 

 

 

 

 

 

 

320

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

9,253

 

 

 

 

 

 

 

 

 

9,253

 

Net loss

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

(405,172

)

 

 

 

 

 

(405,172

)