fsr-20230331

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, 2023


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

For the transition period from _________ to _________

Commission file number: 001-39160

______________________

FISKER INC.

(Exact name of registrant as specified in its charter)

______________________


Delaware			82-3100340
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1888 Rosecrans Avenue, Manhattan Beach, CA 90266

(Address of principal executive offices)

(833) 434-7537

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

______________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

symbol(s)

Name of each exchange

on which registered

Class A Common Stock, par value of $0.00001 per share

FSR

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

______________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 4, 2023, the registrant had 197,898,275 shares of Class A Common Stock and 132,354,128 shares of Class B Common Stock, par value $0.00001 per share, outstanding.

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TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION			5
Item 1. Financial Statements.			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk.			29
Item 4. Controls and Procedures			29
PART II – OTHER INFORMATION			31
Item 1. Legal Proceedings.			31
Item 1A. Risk Factors.			31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.			31
Item 3. Defaults Upon Senior Securities.			31
Item 4. Mine Safety Disclosures			31
Item 5. Other Information.			31
Item 6. Exhibits.			32
SIGNATURE			33

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are forward-looking and as such are not historical facts. These forward-looking statements include, without limitation, statements regarding future financial performance, business strategies, expansion plans, future results of operations, estimated revenues, losses, projected costs, prospects, plans and objectives of management. These forward-looking statements are based on our management’s current expectations, estimates, projections and beliefs, as well as a number of assumptions concerning future events, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this report, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “would” and variations thereof and similar words and expressions are intended to identify such forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about:

•our ability to grow and manage growth profitably;

•our ability to continue to enter into binding contracts with OEMs or tier-one suppliers in order to execute on our business plan;

•our ability to execute our business model, including market acceptance of our planned products and services;

•our expansion plans and opportunities;

•our expectations regarding future expenditures;

•our ability to raise capital in the future;

•our ability to attract and retain qualified employees and key personnel;

•the possibility that we may be adversely affected by other economic, business or competitive factors;

•changes in applicable laws or regulations;

•the outcome of any known and unknown litigation and regulatory proceedings;

•our ability to maintain the listing of our Class A common stock, par value $0.00001 per share ("Class A Common Stock") on the New York Stock Exchange ("NYSE");

•the possibility that COVID-19, the Russian-Ukraine war or rising inflation may adversely affect the results of our operations, financial position and cash flows; and

•other factors described in this report, including those described in the section entitled “Risk Factors” under Part I, Item 1A of our most recent Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (“SEC”) on March 1, 2023, as supplemented by reports subsequently filed with the SEC.

The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on our business. There can be no assurance that future developments affecting our business will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the section entitled “Risk Factors” under Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 1, 2023. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the effect of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

The forward-looking statements made by us in this report speak only as of the date of this report. Except to the extent required under the federal securities laws and rules and regulations of the SEC, we disclaim any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or

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results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.

WEBSITE AND SOCIAL MEDIA DISCLOSURE

We use our website (www.fiskerinc.com) and various social media channels as a means of disclosing information about the company and its products to its customers, investors and the public (e.g., @fiskerinc, @fiskerofficial, #fiskerinc, #henrikfisker and #fisker on Twitter, Facebook, Instagram, YouTube, TikTok and LinkedIn). The information posted on social media channels is not incorporated by reference in this report or in any other report or document we file with the SEC. The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about the Company when you enroll your e-mail address by visiting the “Investor Email Alerts” section of our website at www.investors.fiskerinc.com. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about the Company when you enroll your e-mail address by visiting the “Investor Email Alerts” section of our website at www.investors.fiskerinc.com.

ADDITIONAL INFORMATION

Unless the context indicates otherwise, references in this report to the “Company,” “Fisker,” “we,” “us,” “our” and similar terms refer to Fisker Inc. (f/k/a Spartan Energy Acquisition Corp.) and its consolidated subsidiaries (including Fisker Group Inc. or Legacy Fisker). References to “Spartan” refer to Spartan Energy Acquisition Corp., our predecessor company prior to the consummation of the Business Combination (as defined below).

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Fisker Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)


	As of March 31, 2023		As of December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	652,534	$	736,549
Restricted cash	4,624		—
Prepaid expenses and other current assets	126,305		91,765
Equity investment	2,410		3,140
Total current assets	785,873		831,454
Non-current assets:
Property and equipment, net	420,607		387,137
Intangible assets	241,322		246,922
Right-of-use assets, net	38,680		33,424
Other non-current assets	18,064		16,489
Total non-current assets	718,673		683,972
TOTAL ASSETS	$	1,504,546	$	1,515,426
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	68,317	$	58,871
Accrued expenses	310,710		264,925
Lease liabilities	7,323		7,085
Total current liabilities	386,350		330,881
Non-current liabilities:
Customer deposits	15,669		15,334
Lease liabilities	33,587		27,884
Convertible senior notes	661,250		660,822
Total non-current liabilities	710,506		704,040
Total liabilities	1,096,856		1,034,921
COMMITMENTS AND CONTINGENCIES (Note 14)
Stockholders’ equity:
Preferred stock, $0.00001 par value; 15,000,000 shares authorized; no shares issued and outstanding as of March 31, 2023 and December 31, 2022	—		—
Class A Common stock, $0.00001 par value; 750,000,000 shares authorized; 197,843,646 and 187,599,812 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	2		2
Class B Common stock, $0.00001 par value; 150,000,000 shares authorized; 132,354,128 shares issued and outstanding as of March 31, 2023 and December 31, 2022	1		1
Additional paid-in capital	1,704,622		1,650,196
Accumulated deficit	(1,287,296)		(1,166,741)
Receivable for stock issuance	(9,639)		(2,953)
Total stockholders’ equity	407,690		480,505
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,504,546	$	1,515,426

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

Fisker Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

For the Three Months ended March 31, 2023 and 2022

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended March 31,
	2023		2022
Revenue	$	198	$	12
Cost of goods sold	164		11
Gross margin	34		1
Operating costs and expenses:
Selling, general and administrative	44,648		21,992
Research and development	76,999		101,460
Total operating costs and expenses	121,647		123,452
Loss from operations	(121,613)		(123,451)
Other income (expense):
Other income (expense), net	(45)		(371)
Interest income	6,894		265
Interest expense	(4,601)		(4,383)
Foreign currency gain (loss)	(401)		746
Unrealized gain (loss) recognized on equity securities	(730)		5,120
Total other income (expense)	1,117		1,377
Loss before income taxes	(120,496)		(122,074)
Provision for income taxes	(59)		—
Net loss	$	(120,555)	$	(122,074)
Net loss per common share
Net loss per share attributable to Class A and Class B Common shareholders- Basic and Diluted	$	(0.38)	$	(0.41)
Weighted average shares outstanding
Weighted average Class A and Class B Common shares outstanding- Basic and Diluted	320,983,589		296,508,619

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

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Fisker Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

(Unaudited)


	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Receivable for stock issuance		Accumulated Deficit		Stockholders’ Deficit
Three Months Ended March 31, 2023	Shares	Amount		Shares	Amount
Balance at December 31, 2022	187,599,812	$	2	132,354,128	$	1	$	1,650,196	$	(2,953)	$	(1,166,741)	$	480,505
Stock-based compensation	—	—		—	—		(1,642)		—		$	—	$	(1,642)
Exercise of stock options and issuance of restricted stock unit awards, net of statutory tax withholdings	1,359,754	—		—	—		20		—		$	—	$	20
Recognition of Magna warrants	—	—		—	—		2,230		—		$	—	$	2,230
Shares issued under "At-the-market" offering, net of stock issuance costs	8,884,080	—		—	—		53,818		(6,686)		$	—	$	47,132
Net Loss	—	—		—	—		—		—		$	(120,555)	$	(120,555)
Balance at March 31, 2023	197,843,646	$	2	132,354,128	$	1	$	1,704,622	$	(9,639)	$	(1,287,296)	$	407,690


	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Stockholders’ Deficit
Three Months Ended March 31, 2022	Shares	Amount		Shares	Amount
Balance at December 31, 2021	164,377,306	$	2	132,354,128	$	1	$	1,419,284	$	(619,245)	$	800,042
Stock-based compensation	—	—		—	—		5,065		—		5,065
Exercise of stock options and issuance of restricted stock unit awards, net of statutory tax withholdings	459,630	—		—	—		298		—		298
Recognition of Magna warrants	—	—		—	—		6,695		—		6,695
Net Loss	—	—		—	—		—		(122,074)		(122,074)
Balance at March 31, 2022	164,836,936	$	2	132,354,128	$	1	$	1,431,342	$	(741,319)	$	690,026

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

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Fisker Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands, except share data)

(Unaudited)


	Three Months Ended March 31,
	2023		2022
Cash Flows from Operating Activities:
Net loss	$	(120,555)	$	(122,074)
Reconciliation of net loss to net cash used in operating activities:
Stock-based compensation (benefit)/expense	(1,642)		5,065
Depreciation and amortization	9,150		379
Amortization of right-of-use asset	1,504		900
Accretion of debt issuance costs	428		204
Unrealized (gain)/loss recognized on equity securities	730		(5,120)
Unrealized foreign currency (gain)/loss	1,435		(744)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(36,115)		(1,524)
Accounts payable and accrued expenses	61,807		13,024
Customer deposits	335		4,755
Change in operating lease liability	(819)		(853)
Net cash used in operating activities	(83,742)		(105,988)
Cash Flows from Investing Activities:
Acquisition of equity investment	—		(10,000)
Purchases of property and equipment and intangible asset	(45,748)		(45,750)
Net cash used in investing activities	(45,748)		(55,750)
Cash Flows from Financing Activities:
Proceeds from the exercise of stock options	2,788		1,861
Proceeds from stock issuance under "At-the-market" offering	47,986		—
Payments for "At-the-market" issuance costs	(675)		—
Net cash provided by financing activities	50,099		1,861
Net increase (decrease) in cash and cash equivalents	(79,391)		(159,877)
Cash and cash equivalents, beginning of the period	736,549		1,202,439
Cash, cash equivalents and restricted cash, end of the period	$	657,158	$	1,042,562
Supplemental disclosure of cash flow information
Cash paid for interest	8,344		$	9,642

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

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Fisker Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(In thousands, except share data)

(Unaudited)

1. Overview of the Company

Fisker was originally incorporated in the State of Delaware on October 13, 2017 as a special purpose acquisition company under the name Spartan Energy Acquisition Corp. for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses. Spartan completed its initial public offering in August 2018. On October 29, 2020, Spartan’s wholly-owned subsidiary merged with and into Fisker Holdings Inc. (f/k/a Fisker Inc.), a Delaware corporation (“Legacy Fisker”), with Fisker Holdings Inc. surviving the merger as a wholly-owned subsidiary of Spartan (the “Business Combination”). In connection with the Business Combination, Spartan changed its name to Fisker Inc.

Legacy Fisker was incorporated in the State of Delaware on September 21, 2016. In connection with its formation, the Company entered into stock purchase agreements with the Company’s founders, whereby the founders contributed certain intellectual property (primarily trademarks) and interests in Platinum IPR LLC. Platinum IPR LLC was an entity solely owned by the Company’s founders, which held Fisker trademarks registered in a variety of jurisdictions around the world. The founders’ transfer of its interest in Platinum IPR LLC and the transfer of trademarks was accounted for as a transfer of assets between entities under common control. The carrying amount of the transferred assets is recorded based on the prior carrying value, which was de minimis.

The Company’s common stock is listed on the NYSE under the symbol “FSR”. The Company’s warrants previously traded on the NYSE under the symbol “FSR WS” and on April 19, 2021, the NYSE filed a Form 25-NSE with respect to the warrants; the formal delisting of the warrants became effective ten days thereafter.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the SEC.

Unaudited Interim Financial Statements

The condensed consolidated balance sheet as of March 31, 2023, the condensed consolidated statements of operations and the condensed consolidated statements of changes in stockholders’ equity for the three-months ended March 31, 2023 and 2022, and the condensed consolidated statements of cash flows for the three-months ended March 31, 2023 and 2022, as well as other information disclosed in the accompanying notes, are unaudited. The consolidated balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements as of that date. The interim condensed consolidated financial statements and the accompanying notes should be read in conjunction with the annual consolidated financial statements and the accompanying notes contained in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 1, 2023.

Comprehensive loss is not separately presented as the amounts are equal to net loss for the three-months ended March 31, 2023 and 2022.

The interim condensed consolidated financial statements and the accompanying notes have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The condensed consolidated financial statements for any interim period are not necessarily indicative of the results to be expected for the full year or for any other future years or interim periods.

Going Concern, Liquidity and Capital Resources

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The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern over the next twelve months from the date of filing this report. As of March 31, 2023, the Company had approximately $653 million in unrestricted cash and cash equivalents. The Company believes that substantial doubt about its ability to continue as a going concern does not exist as its cash on hand will be sufficient to meet its working capital and capital expenditure requirements for a period of at least twelve months from the date of the filing of this Form 10-Q.

Since inception, the Company has yet to generate any significant revenue from its core business operations and has incurred significant accumulated losses of approximately $1.3 billion. The Company expects to continue to incur significant operating losses for the foreseeable future. The Company expects its capital expenditures and working capital requirements to increase substantially in 2023 and beyond, as it progresses toward serial production of the Fisker Ocean EV model, develop its customer support and marketing infrastructure and expand its research and development efforts. The Company may, however, need additional cash resources, including proceeds of up to $101.7 million from the sale of Class A common stock under its at-the-market equity program, to fund its operations until it commences serial production levels of the Fisker Ocean and achieves a level of production and sales that provide for operating profitability. To the extent that Fisker’s current resources are insufficient to satisfy its cash requirements, the Company may need to seek additional equity or debt financing and there can be no assurance that the Company will be successful in its efforts. If the financing is not available, or if the terms of financing are less desirable than the Company expects, the Company may be forced to decrease its planned level of investment in product development or scale back its operations,including production of the Fisker Ocean, which could have an adverse impact on its business and financial prospects.

Supplier Risk

Suppliers will begin production of components for serial production of vehicles, which are scheduled to be assembled in Austria, during the second quarter of 2023. As of March 31, 2023, these supplier contracts do not represent unconditional purchase obligations with take-or-pay or specified minimum quantities provisions. The Company has secured battery capacity with a supplier located in China for the Fisker Ocean SUV. Under the terms of the agreement, from 2023 through 2025, the battery supplier will deliver two different battery solutions for the Fisker Ocean SUV, with an initial battery capacity of over 5 gigawatt-hours annually.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP required management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the condensed consolidated financial statements and accompanying notes. The Company bases these estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.

Restricted Cash

Cash and cash equivalents that is restricted is primarily related to letters of credit issued to suppliers. The Company's restricted cash balance was $4.6 million as of March 31, 2023. Cash and cash equivalents are unrestricted as of December 31, 2022. Subsequent to March 31, 2023, the Company's restricted cash balance related to letters of credit issued to suppliers increased to $29.7 million.

Fair Value Measurements

The Company follows the accounting guidance in ASC 820 Fair Value Measurement ("ASC 820"), for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The accounting guidance requires fair value measurements be classified and disclosed in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets or liabilities.

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Level 2: Observable inputs other than Level 1 prices, for similar assets or liabilities that are directly or indirectly observable in the marketplace.

Level 3: Unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Long-Lived Assets

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets as follows:


			Useful Life (in years)
Tooling			3-8
Machinery and equipment			5-15
Furniture and fixtures			5-10
IT hardware and software			3-10
Leasehold improvements			Shorter of their estimated life or remaining lease term

Construction in progress is comprised primarily of costs incurred to construct serial production tooling located at affiliates of Magna and our suppliers.

Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the related lease. Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repair expenditures are expensed as incurred, while major improvements that increase functionality of the asset are capitalized and depreciated ratably to expense over the identified useful life.

Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset to be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset group to its carrying amount. The Company assesses impairment for asset groups, which represent a combination of assets that produce distinguishable cash flows. If the carrying amount of the asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. The Company has not recorded any impairment charges during the periods presented.

Income Taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

There are transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. As of March 31, 2023, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2022.

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The Company’s income tax provision consists of an estimate for U.S. federal, foreign and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. The Company maintains a valuation allowance against the full value of its U.S. and state net deferred tax assets because the Company believes the recoverability of the tax assets is not more likely than not as of March 31, 2023.

Equity Awards

The grant date for an option or stock award is established when the grantee has a mutual understanding of the key terms and conditions of the option or award, the award is authorized, including all the necessary approvals unless approval is essentially a formality or perfunctory, and the grantee begins to benefit from, or be adversely affected by, underlying changes in the price of the Company’s Class A common shares. An award or option is authorized on the date that all approval requirements are completed (e.g., action by the compensation committee approving the award and the number of options, restricted shares or other equity instruments to be issued to individual employees).

Net Loss per Share of Common Stock

Basic net loss per share of common stock is calculated using the two-class method under which earnings are allocated to both common shares and participating securities. Undistributed net losses are allocated entirely to common shareholders since the participating security has no contractual obligation to share in the losses. Basic net loss per share is calculated by dividing the net loss attributable to common shares by the weighted-average number of shares of common stock outstanding for the period. The diluted net loss per share of common stock is computed by dividing the net loss using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of stock-based compensation awards and warrants to purchase common stock (using the treasury stock method).

Foreign Currency Remeasurement and Transactions

The functional currency of the Company’s foreign subsidiaries is the U.S. Dollar. For these subsidiaries, monetary assets and liabilities denominated in non-U.S. currencies are re-measured to U.S. Dollars using current exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities denominated in non-U.S. currencies are maintained at historical U.S. Dollar exchange rates. Expenses are re-measured at average U.S. Dollar monthly rates.

Foreign currency transaction gains and losses are a result of the effect of exchange rate changes on transactions denominated in currencies other than the functional currency. Transaction gains and losses are immaterial for all periods presented.

In April and July 2022, the Company purchased 130.1 million Euros for 140.0 million U.S. dollars, a currency exchange rate of 1 U.S. dollar for 1.076 Euro and 50.0 million Euros for 50.9 million U.S. dollars, a currency exchange rate of 1 U.S. dollar for 1.018 Euro, which are designed to provide an economic hedge against future foreign currency exposures. The Company has used purchased Euros totaling 65.0 million for Euro-denominated capital expenditures and expenses during the three-months ended March 31, 2023 and has 24.6 million Euros available as of March 31, 2023 for future foreign currency exposures.

3. Fair Value Measurements

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


	Fair Value Measured as of March 31, 2023:
	Level 1		Level 2		Level 3		Total
Assets included in:
Money market funds included in cash and cash equivalents	$	577,752	$	—	$	—	$	577,752
Equity investment	2,410		—		—		2,410
Total fair value	$	580,162	$	—	$	—	$	580,162

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	Fair Value Measured as of December 31, 2022:
	Level 1		Level 2		Level 3		Total
Assets included in:
Money market funds included in cash and cash equivalents	$	601,045	$	—	$	—	$	601,045
Equity investment	3,140		—		—		3,140
Total fair value	$	604,185	$	—	$	—	$	604,185

The fair value of the Company’s money market funds is determined using quoted market prices in active markets for identical assets. The carrying amounts included in the Condensed Consolidated Balance Sheets under Current assets approximate fair value because of the short maturity of these instruments.

On July 28, 2021, the Company made a commitment for a private investment in public equity (PIPE) supporting the planned merger of European EV charging network, Allego B.V. (“Allego”) with Spartan Acquisition Corp. III (NYSE: SPAQ), a publicly-listed special purpose acquisition company. Fisker Inc. is the exclusive electric vehicle automaker in the PIPE and, in parallel, agreed to terms to deliver a range of charging options for its customers in Europe. On March 16, 2022, the merger closed and the Company delivered cash of $10.0 million in exchange for 1,000,000.00 shares of Allego's Class A common stock (NYSE:ALLG). The Company's ownership percentage is less than 5% and does not result in significant influence and has classified its equity investment in Allego as a current asset. Unrealized loss recognized during the three-months ended March 31, 2023 on equity securities held as of March 31, 2023 totaled $0.7 million as shown separately in the Condensed Consolidated Statement of Operations.

We carry the convertible senior notes at face value less the unamortized debt issuance costs on our consolidated balance sheets and present that fair value for disclosure purposes only. As of March 31, 2023, the fair value of the 2026 Notes was $205.4 million. The estimated fair value of the convertible notes, which are classified as Level 2 financial instruments, was determined based on the estimated or actual bid prices of the convertible notes in an over-the-counter market on the last business day of the period.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following as of March 31, 2023 and December 31, 2022 (in thousands):


	As of March 31, 2023		As of December 31, 2022
Prepaid insurance	2,588		2,951
Value-added tax receivable	22,044		27,928
Inventory	29,016		4,276
Prepaid and other current assets	72,657		56,610
	$	126,305	$	91,765

The Company paid value-added taxes on certain capital expenditures and submitted requests for refunds from tax authorities in foreign countries with a concentration in Europe that are pending repayment as of March 31, 2023 and December 31, 2022. Prepaid and other current assets include payments to certain suppliers in advance of production. Inventory consists of raw materials to be used in production.

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5. Intangible Assets

The Company has the following intangible assets (in thousands):


	As of March 31, 2023
	Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net
Capitalized cost - manufacturing	8 years	$	254,534	$	(13,212)	$	241,322
		$	254,534	$	(13,212)	$	241,322


	As of December 31, 2022
	Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net
Capitalized cost - manufacturing	8 years	$	252,304	$	(5,382)	$	246,922
		$	252,304	$	(5,382)	$	246,922

Amortization expense of capitalized costs associated with the manufacturing of the Fisker Ocean and production parts, and for warrants granted to Magna International, Inc. (“Magna”) for the three-months ended March 31, 2023 was $8.0 million and is expected to be approximately $31.8 million for the year ending December 31, 2023 and in each of the succeeding five years. The Company expects to amortize the intangible asset over eight years but will continually assess the reasonableness of the estimated life. Refer to Note 9 for additional information regarding the capitalization of costs upon issuance of warrants to Magna.

6. Property and Equipment, Net

Property and equipment, net, consists of the following (in thousands):


	As of March 31, 2023		As of December 31, 2022
Tooling	$	46,960	$	—
Machinery and equipment	27,513		9,298
Furniture and fixtures	563		470
IT hardware and software	9,256		6,427
Leasehold improvements	634		634
Construction in progress	339,706		372,789
Total property and equipment	424,632		389,618
Less: Accumulated depreciation and amortization	(4,025)		(2,481)
Property and equipment, net	$	420,607	$	387,137

Construction in progress is comprised primarily of costs incurred to construct serial production tooling located at affiliates of Magna and our suppliers. Assets of $47.0 million that are ready for their intended use have changed categories from Construction in progress to Tooling during the three-months ended March 31, 2023. As of March 31, 2023, accounts payable and accrued expenses includes acquired property and equipment of $133.9 million compared to $144.8 million as of December 31, 2022, which is excluded from net cash used in investing activities as reported in the condensed consolidated statement of cash flows for the three-months ended March 31, 2023.

The amounts in the table above as of December 31, 2022 have been updated to correct a disclosure classification error between fixed asset categories such that Machinery and equipment was overstated and Construction in progress was understated by $33.0 million. The Company determined the error was not material to its previously issued financial statements as it did not affect the Company's financial position as of December 31, 2022 or its results from operations and cash flows for the year ended December 31, 2022.

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7. Accrued Expenses

A summary of the components of accrued expenses is as follows (in thousands):

SEC Form 10-Q filed by Fisker Inc.