Nikola (NKLA) Financial Report Summaries

Risks

• We have a history of losses, expect to incur significant expenses and continuing losses for the foreseeable future, and there is substantial doubt about our ability to continue as a going concern.
• We need to raise additional capital to continue as a going concern, which capital may not be available to us when we need it. If we cannot raise additional capital when needed, our operations and prospects will be negatively affected.
• We may be unable to adequately control the costs associated with our operations.
• Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of your investment.
• Our success is dependent upon the trucking market's willingness to adopt FCEV and BEV trucks.
• The unavailability, reduction or elimination of government and economic incentives could have a material adverse effect on our business, prospects, financial condition and operating results.
• We may face legal challenges in one or more states attempting to sell directly to fleets or end users, which could materially and adversely affect our costs.
• We depend on our network of independent dealers for the sale of vehicles, face competition for dealers, and have little control over their activities.
• We face risks and uncertainties related to litigation, regulatory actions and government investigations and inquiries.
• Product recalls have and may in the future materially and adversely affect our business, prospects, operating results and financial condition.
• Our success will depend on our ability to economically manufacture our trucks at scale and establish a hydrogen fueling ecosystem to meet our customers’ business needs, and our ability to develop and manufacture trucks of sufficient quality and appeal to end user fleets on schedule and at scale.
• We may experience significant delays in the design, validation, and manufacture of our trucks, which could harm our business and prospects.
• Increases in costs, disruption of supply or shortage of components and raw materials could harm our business.
• We rely on complex machinery for our operations and production involves a significant degree of risk and uncertainty in terms of operational performance and costs.
• If our manufacturing plant becomes inoperable, we will be unable to produce our trucks and our business will be harmed.
• Our business may be subject to risks associated with construction, cost overruns and delays, and other contingencies that may arise while constructing or servicing a network of hydrogen fueling solutions, and such risks may increase in the future as we expand the scope of such services.
• We, our partners and other suppliers rely on complex technology to dispense hydrogen, which involves a significant degree of risk and uncertainty in terms of operational performance and costs.
• We may offer leasing options or other alternative structures to customers which would expose us to credit risk.
• We face significant barriers to produce our trucks, and if we cannot successfully overcome those barriers, our business will be negatively impacted.
• If our trucks fail to perform as expected, our ability to develop, market and sell or lease our alternative fuel and electric trucks could be harmed.
• Insufficient warranty reserves to cover warranty claims could materially and adversely affect our business, prospects, financial condition and operating results.
• We face intense competition as a provider of FCEV and BEV Class 8 trucks, which competition could have an adverse effect on our business.
• Developments in alternative technology or improvements in the internal combustion engine may adversely affect the demand for our trucks.
• We have limited experience servicing or repairing our vehicles. If we are unable to address the service requirements of end users, our business will be materially and adversely affected.
• Collaboration with strategic partners is subject to risks.
• We are or may be subject to risks associated with strategic alliances or acquisitions.
• We may not be able to consume minimum commitments under our “take or pay” agreements, which may have a material adverse impact on our business and prospects.
• We are dependent on our suppliers, a significant number of which are single or limited source suppliers, and the inability of these suppliers to deliver necessary components of our vehicles at prices and volumes acceptable to us would have a material adverse effect on our business, prospects, and operating results.
• Our vehicles' estimated range may not be achievable based on various external conditions, which may negatively influence potential end users' decisions whether to purchase our trucks.
• The battery efficiency of electric trucks and fuel cell efficiency of FCEV trucks will decline over time, which may negatively influence potential end users’ decisions whether to purchase our trucks.
• Our trucks make use of lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.
• We may face challenges related to perceptions of safety for commercial electric vehicles, especially if adverse events or accidents occur that are linked to the quality or safety of commercial electric vehicles.
• Any unauthorized control or manipulation of our vehicles’ systems could result in loss of confidence in us and our vehicles and harm our business.
• Interruption or failure of our information technology and communications systems could impact our ability to effectively provide our services.
• We are subject to substantial regulation and unfavorable changes to, or failure by us to comply with, these regulations could substantially harm our business and operating results.
• We are subject to various environmental laws and regulations that could impose substantial costs upon us and cause delays in operating our manufacturing facilities.
• We are subject to evolving laws, regulations, standards, policies, and contractual obligations related to data privacy and security, and any actual or perceived failure to comply with such obligations could harm our reputation and brand, subject us to significant fines and liabilities, or otherwise affect our business.
• We face risks associated with our international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm our business.
• Our ability to use net operating losses to reduce future tax payments may be limited by provisions of the Internal Revenue Code and may be subject to further limitation as a result of future transactions.
• We face risks related to health epidemics, which could have a material adverse effect on our business and results of operations.
• We may not be able to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which we may apply.
• The evolution of the regulatory framework for autonomous vehicles is outside of our control and we cannot guarantee that our trucks will achieve the requisite level of autonomy to enable driverless systems.
• We may be subject to risks associated with autonomous driving technology.
• Unfavorable publicity, or a failure to respond effectively to adverse publicity, could harm our reputation and adversely affect our business.
• Social media platforms present risks and challenges that could cause damage to our brand and reputation, and which could subject us to liability, penalties and other restrictive sanctions.
• We may need to defend ourselves against patent or trademark infringement, or other intellectual property claims, which may be time-consuming and cause us to incur substantial costs.
• Our business may be adversely affected if we are unable to protect our intellectual property rights from unauthorized use by third parties.
• Our patent applications may not issue as patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.
• We may not have sufficient cash flow from our business to pay our substantial debt, and we may not be able to refinance or restructure our debt.
• We may incur a substantial amount of debt or take other actions which would intensify the risks discussed above, and significant indebtedness may prevent us from taking actions that we would otherwise consider to be in our best interests.
• We may not have the ability to raise the funds necessary to settle conversions of our convertible notes in cash or to repurchase the notes upon a fundamental change or change in control transaction, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the notes.
• The conditional conversion feature of our June 2022 Toggle Convertible Notes and June 2023 Toggle Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
• We incur significant expenses and administrative burdens as a public company, which could have an adverse effect on our business, financial condition and results of operations.
• We identified a material weakness in our internal control over financial reporting, and have identified other material weaknesses in the past. If we are unable to remediate these material weaknesses, or if we experience additional material weaknesses or other deficiencies in the future or otherwise fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial results.
• Interest in our common stock from our significant base of retail and other individual investors could result in increased volatility in the market price of our common stock, which could have a material adverse impact on the market price of our common stock and your investment.
• We have never paid dividends on our capital stock, and we do not anticipate paying dividends in the foreseeable future.
• Our stock price is volatile, and you may not be able to sell shares of our common stock at or above the price you paid.
• If we fail to satisfy all applicable Nasdaq continued listing requirements, including the $1.00 minimum closing bid price requirement, our common stock may be delisted from Nasdaq, which could have an adverse impact on the liquidity and market price of our common stock.
• Material impairment of indefinite or long-lived assets may adversely impact our results of operations.
• If we are unable to attract and retain key employees and hire qualified management, technical and engineering personnel, our ability to compete could be harmed.
• Our certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
• If securities or industry analysts issue an adverse recommendation regarding our stock or do not publish research or reports about our company, our stock price and trading volume could decline.
• Certain of our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.