10-Q 1 qs-20220930.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, 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: 001-39345

 

 

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 356,503,201, and the number of shares of the registrant’s Class B Common Stock, par value $0.0001 per share outstanding was 79,454,147, as of October 21, 2022.

 

 

 


 

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

24

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

54

Item 3.

Defaults Upon Senior Securities

54

Item 4.

Mine Safety Disclosures

54

Item 5.

Other Information

54

Item 6.

Exhibits

55

Signatures

56

 

 

 

 

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,” “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 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 the below and those which we discuss in greater detail in the section titled “Risk Factors” in this Report:

delays in or the inability to achieve our technology development objectives, delays in delivering battery cell samples to our customers, delays in achieving 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 our ability to meet Volkswagen’s time, cost, performance and volume requirements, and our ability to commercialize solid-state batteries (i.e. batteries containing solid state films that separate their anode and cathode) 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 a pre-pilot line (“QS-0”) facility in California, a 1GWh pilot-production line (“QS-1”), and subsequently the expansion to the full 21GWh target (“QS-1 Expansion”);
the inability to attract and retain 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; and
the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting and the operation of our new enterprise resource planning system.

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,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents ($3,372 and $3,382 as of September 30, 2022 and December 31, 2021, respectively, for joint venture)

 

$

297,960

 

 

$

320,700

 

Marketable securities

 

 

857,339

 

 

 

1,126,975

 

Prepaid expenses and other current assets

 

 

10,349

 

 

 

15,757

 

Total current assets

 

 

1,165,648

 

 

 

1,463,432

 

Property and equipment, net

 

 

268,225

 

 

 

166,183

 

Right-of-use assets - finance lease

 

 

28,731

 

 

 

30,886

 

Right-of-use assets - operating lease

 

 

62,254

 

 

 

36,913

 

Other assets

 

 

18,253

 

 

 

18,234

 

Total assets

 

$

1,543,111

 

 

$

1,715,648

 

Liabilities, redeemable non-controlling interest and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

17,213

 

 

$

14,182

 

Accrued liabilities

 

 

15,224

 

 

 

6,078

 

Accrued compensation and benefits

 

 

9,062

 

 

 

9,119

 

Operating lease liability, short-term

 

 

3,394

 

 

 

1,209

 

Finance lease liability, short-term

 

 

501

 

 

 

19

 

Total current liabilities

 

 

45,394

 

 

 

30,607

 

Operating lease liability, long-term

 

 

63,643

 

 

 

36,760

 

Finance lease liability, long-term

 

 

38,688

 

 

 

39,378

 

Other liabilities

 

 

7,592

 

 

 

315

 

Total liabilities

 

 

155,317

 

 

 

107,060

 

Commitments and contingencies (see Note 7)

 

 

 

 

 

 

Redeemable non-controlling interest

 

 

1,691

 

 

 

1,693

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock- $0.0001 par value; 100,000 shares authorized; none issued and outstanding as of September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock - $0.0001 par value; 1,250,000 shares authorized (1,000,000 Class A and 250,000 Class B); 356,140 Class A and 79,454 Class B shares issued and outstanding as of September 30, 2022, 332,869 Class A and 95,450 Class B shares issued and outstanding as of December 31, 2021

 

 

43

 

 

 

43

 

Additional paid-in-capital

 

 

3,734,584

 

 

 

3,634,665

 

Accumulated other comprehensive loss

 

 

(22,078

)

 

 

(4,208

)

Accumulated deficit

 

 

(2,326,446

)

 

 

(2,023,605

)

Total stockholders’ equity

 

 

1,386,103

 

 

 

1,606,895

 

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

 

$

1,543,111

 

 

$

1,715,648

 

 

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

$

87,582

 

 

$

39,467

 

 

$

214,060

 

 

$

104,708

 

General and administrative

 

33,072

 

 

 

14,365

 

 

 

93,124

 

 

 

43,421

 

Total operating expenses

 

120,654

 

 

 

53,832

 

 

 

307,184

 

 

 

148,129

 

Loss from operations

 

(120,654

)

 

 

(53,832

)

 

 

(307,184

)

 

 

(148,129

)

Other income (loss):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(600

)

 

 

(359

)

 

 

(1,807

)

 

 

(597

)

Interest income

 

3,487

 

 

 

605

 

 

 

5,813

 

 

 

1,201

 

Change in fair value of assumed common stock warrant liabilities

 

 

 

 

68,934

 

 

 

 

 

 

168,674

 

Other income

 

114

 

 

 

3

 

 

 

335

 

 

 

101

 

Total other income

 

3,001

 

 

 

69,183

 

 

 

4,341

 

 

 

169,379

 

Net income (loss)

 

(117,653

)

 

 

15,351

 

 

 

(302,843

)

 

 

21,250

 

Less: Net income (loss) attributable to non-controlling interest, net of tax of $0 for the three and nine months ended September 2022 and 2021

 

7

 

 

 

 

 

 

(2

)

 

 

(10

)

Net income (loss) attributable to common stockholders

$

(117,660

)

 

$

15,351

 

 

$

(302,841

)

 

$

21,260

 

Net income (loss)

$

(117,653

)

 

$

15,351

 

 

$

(302,843

)

 

$

21,250

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

(2,933

)

 

 

65

 

 

 

(17,870

)

 

 

(598

)

Total comprehensive income (loss)

 

(120,586

)

 

 

15,416

 

 

 

(320,713

)

 

 

20,652

 

Less: Comprehensive income (loss) attributable to non-controlling interest

 

7

 

 

 

 

 

 

(2

)

 

 

(10

)

Comprehensive income (loss) attributable to common stockholders

$

(120,593

)

 

$

15,416

 

 

$

(320,711

)

 

$

20,662

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.27

)

 

$

0.04

 

 

$

(0.70

)

 

$

0.05

 

Diluted

$

(0.27

)

 

$

(0.13

)

 

$

(0.70

)

 

$

(0.36

)

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

 

 

 

 

 

 

 

 

 

 

 

Basic

 

434,051

 

 

 

417,829

 

 

 

431,654

 

 

 

397,370

 

Diluted

 

434,051

 

 

 

420,649

 

 

 

431,654

 

 

 

404,369

 

 

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 per Share Amounts)

 

 

Redeemable Non-

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Accumulated Other

 

 

Total

 

Three Months Ended September 30, 2022

Controlling Interest

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit

 

 

Comprehensive Income (Loss)

 

 

Stockholders' Equity

 

Balance as of June 30, 2022

$

1,684

 

 

 

 

432,669

 

 

$

43

 

 

$

3,699,039

 

 

$

(2,208,786

)

 

$

(19,145

)

 

$

1,471,151

 

Exercise of stock options

 

 

 

 

 

1,437

 

 

 

 

 

 

1,967

 

 

 

 

 

 

 

 

 

1,967

 

Shares issued upon vesting of restricted stock units

 

 

 

 

 

1,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

33,578

 

 

 

 

 

 

 

 

 

33,578

 

Net income (loss)

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

(117,660

)

 

 

 

 

 

(117,660

)

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,933

)

 

 

(2,933

)

Balance as of September 30, 2022

$

1,691

 

 

 

 

435,594

 

 

$

43

 

 

$

3,734,584

 

 

$

(2,326,446

)

 

$

(22,078

)

 

$

1,386,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Non-

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Accumulated Other

 

 

Total

 

Nine Months Ended September 30, 2022

Controlling Interest

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit

 

 

Comprehensive Income (Loss)

 

 

Stockholders' Equity

 

Balance as of December 31, 2021

$

1,693

 

 

 

 

428,319

 

 

$

43

 

 

$

3,634,665

 

 

$

(2,023,605

)

 

$

(4,208

)

 

$

1,606,895

 

Exercise of stock options and employee stock purchase plan

 

 

 

 

 

3,480

 

 

 

 

 

 

6,934

 

 

 

 

 

 

 

 

 

6,934

 

Shares issued upon vesting of restricted stock units

 

 

 

 

 

3,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

92,985

 

 

 

 

 

 

 

 

 

92,985

 

Net loss

 

(2

)

 

 

 

 

 

 

 

 

 

 

 

 

(302,841

)

 

 

 

 

 

(302,841

)

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,870

)

 

 

(17,870

)

Balance as of September 30, 2022

$

1,691

 

 

 

 

435,594

 

 

$

43

 

 

$

3,734,584

 

 

$

(2,326,446

)

 

$

(22,078

)

 

$

1,386,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Non-

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Accumulated Other

 

 

Total

 

Three Months Ended September 30, 2021

Controlling Interest

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit

 

 

Comprehensive Income (Loss)

 

 

Stockholders' Equity

 

Balance as of June 30, 2021

$

1,694

 

 

 

 

414,540

 

 

$

41

 

 

$

3,478,814

 

 

$

(1,971,730

)

 

$

(694

)

 

$

1,506,431

 

Exercise of stock options

 

 

 

 

 

1,244

 

 

 

 

 

 

1,880

 

 

 

 

 

 

 

 

 

1,880

 

Shares issued upon vesting of restricted stock units

 

 

 

 

 

992

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of warrants

 

 

 

 

 

5,667

 

 

 

1

 

 

 

118,633

 

 

 

 

 

 

 

 

 

118,634

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

12,727

 

 

 

 

 

 

 

 

 

12,727

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,351

 

 

 

 

 

 

15,351

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65

 

 

 

65

 

Balance as of September 30, 2021

$

1,694

 

 

 

 

422,443

 

 

$

42

 

 

$

3,612,054

 

 

$

(1,956,379

)

 

$

(629

)

 

$

1,655,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Non-

 

 

 

Common Stock

 

 

Additional

 

 

Accumulated

 

 

Accumulated Other

 

 

Total

 

Nine Months Ended September 30, 2021

Controlling Interest

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit

 

 

Comprehensive Income (Loss)

 

 

Stockholders' Equity

 

Balance as of December 31, 2020

$

1,704

 

 

 

 

363,994

 

 

$

36

 

 

$

2,329,406