UNITED STATES SECURITIES AND EXCHANGE COMMISSION 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 001-38971 XL Fleet Corp. (Exact name of Registrant as specified in its Charter) | Delaware | 83-4109918 | | --- | --- | | (State or other jurisdiction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION 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 June 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 001-38971 XL Fleet Corp. (Exact name of Registrant as specified in its Charter) (State or other jurisdiction of incorporation or orga ...

XL Fleet Corp. (XL) Q2 2021 Results Conference Call August 12, 2021 5:00 PM ET Company Participants Jim Berklas - General Counsel and VP, Corporate Development Tod Hynes - Founder and President Dimitri Kazarinoff - Chief Executive Officer Cielo Hernandez - Chief Financial Officer Operator Good afternoon, and welcome to the XL Fleet Corp. Second Quarter 2021 Conference Call. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. A brief question-and-answer se ...

Financial Data and Key Metrics Changes - Revenues for Q1 2021 totaled approximately $700,000, down from $1.2 million in the prior year period, indicating a decline [23] - Gross loss for the quarter was approximately $700,000 compared to a gross loss of approximately $60,000 in the prior period [23] - Cash and cash equivalents at the end of Q1 2021 were approximately $404 million, up from $330 million in the previous quarter [25] - The company restated its financial statements to account for warrants as liabilities, which had no impact on historical or forward-looking cash flow and operations [26][27][28] Business Line Data and Key Metrics Changes - The acquisition of World Energy Efficiency Services is expected to enhance XL Fleet's charging infrastructure division, XL Grid, and is immediately accretive to the company [13][8] - The partnership with Dickinson Fleet Services expands the service network significantly, providing access to 700 mobile repair units and 800 technicians [16] Market Data and Key Metrics Changes - The company noted that commercial fleet orders follow a seasonal pattern, with significant revenue expected in the second half of the year [30] - Supply chain issues, including the ongoing COVID-19 pandemic and shortages in key production markets, continue to create uncertainty in the industry [29] Company Strategy and Development Direction - The acquisition of World Energy aligns with the company's strategy to provide comprehensive electrification solutions and remove barriers to adoption [9][11] - The company is focused on expanding its product offerings, including all-electric solutions and partnerships with companies like Curbtender for electrified refuse trucks [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improved visibility for the second half of the year as customers refresh their budgets in July [29] - There is a recognition of ongoing industry challenges, but the company remains committed to building the business and innovating new technologies [33] Other Important Information - The company is planning for growth by adding talent across various departments, including engineering, sales, and marketing [20] - Cielo Hernandez joined as Chief Financial Officer, bringing over 25 years of experience [21] Q&A Session Summary Question: Were there any new systems sold as part of the revenue? - Management indicated that they shipped a little over 30 systems in Q1, resulting in a modest increase in cumulative systems [36] Question: Will the combined entity pursue energy efficiency drivers? - Management clarified that World Energy focuses on smaller to medium-sized projects, which aligns with their electrification goals [38] Question: How should expectations for 2021 be framed relative to 2020? - Management expects a majority of revenue to be back-loaded in 2021, with significant pressures alleviating in the second half of the year [42] Question: How is the acquisition of World Energy expected to trend in 2021? - Management expressed confidence in World Energy's strong business and relationships, anticipating continued momentum [49] Question: What are the lead times for EV solutions? - Existing hybrid and plug-in hybrid systems have a lead time of 10 to 14 weeks, while EV solutions are still in product development with longer lead times [58]

PART I – FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Q1 2021, including balance sheets, operations, equity, and cash flows [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Q1 2021 saw cash increase to **$404.1 million**, net income of **$61.9 million** (due to warrant gain), and revenue decrease to **$0.675 million** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $404,132 | $329,641 | | Total current assets | $420,425 | $345,320 | | Total assets | $427,510 | $347,013 | | **Liabilities & Equity** | | | | Warrant liabilities | $23,537 | $143,295 | | Total liabilities | $42,859 | $158,117 | | Total stockholders' equity | $384,651 | $188,896 | Condensed Consolidated Statement of Operations (in thousands) | Account | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Revenues | $675 | $1,232 | | Gross profit (loss) | $(716) | $(52) | | Loss from operations | $(10,086) | $(3,557) | | Change in fair value of warrant liability | $(72,005) | - | | Net income (loss) | $61,914 | $(6,454) | | Net income (loss) per share, diluted | $0.42 | $(0.08) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,962) | $(4,511) | | Net cash used in investing activities | $(1,104) | $(94) | | Net cash provided by financing activities | $85,557 | $8,134 | | Net increase in cash | $74,491 | $3,529 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details accounting policies, COVID-19 impact, customer concentration, warrant accounting, legal proceedings, and a recent acquisition - The company is a provider of fleet electrification solutions for commercial vehicles in North America, with over **4,300 systems sold** as of March 31, 2021[20](index=20&type=chunk) - The COVID-19 pandemic has adversely impacted operations, causing reduced production at vehicle OEMs and limitations on travel, with the full future impact remaining uncertain[23](index=23&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) - Significant customer concentration exists, with one customer accounting for approximately **80% of accounts receivable** as of March 31, 2021, and three customers accounting for **79% of revenues** for the quarter[30](index=30&type=chunk) - On May 17, 2021, the company acquired World Energy Efficiency Services, LLC for **$8.0 million** in cash and **$7.0 million** in company stock to expand its XL Grid business[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2021 financial results, highlighting revenue decrease, increased expenses, warrant gain, and strong liquidity - The company's vision is to become the world leader in fleet electrification solutions, expanding from its current hybrid and plug-in hybrid systems to full battery electric (XL ELECTRIC™), hydrogen fuel cell systems, and charging solutions (XL GRID™)[112](index=112&type=chunk)[115](index=115&type=chunk) - The company expects to incur additional annual expenses as a public company for directors' and officers' liability insurance, director fees, and increased audit and legal fees[124](index=124&type=chunk) - Key challenges include interruptions in OEM vehicle supply due to a worldwide microchip shortage, which has caused OEMs to stop taking fleet orders and could adversely impact 2021 operating results[127](index=127&type=chunk)[133](index=133&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q1 2021 revenue decreased **45.2%** to **$0.7 million** due to microchip shortage, leading to a **$61.9 million** net income from warrant gain Comparison of Results of Operations (in thousands) | Account | Q1 2021 | Q1 2020 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $675 | $1,232 | $(557) | (45.2)% | | Gross profit (loss) | $(716) | $(52) | $(664) | 1,276.9% | | Research and development | $1,412 | $1,014 | $398 | 39.3% | | Selling, general and administrative | $7,958 | $2,491 | $5,467 | 219.5% | | Loss from operations | $(10,086) | $(3,557) | $(6,529) | 183.6% | | Net income (loss) | $61,914 | $(6,454) | $68,368 | (1,059.3)% | - The decrease in revenue was primarily due to interruptions in OEM vehicle supply amid a worldwide microchip shortage[133](index=133&type=chunk) - The increase in SG&A expenses was driven by approximately **$2.9 million** in professional fees, **$1.6 million** in employee compensation (including **$0.4 million** in stock-based compensation), and **$0.8 million** in infrastructure costs related to being a public company[138](index=138&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Company maintains strong liquidity with **$404.1 million** cash, bolstered by **$85.6 million** from warrant exercises, sufficient for 12 months - The company's cash and cash equivalents stood at **$404.1 million** as of March 31, 2021[140](index=140&type=chunk) - The company generated cash proceeds of approximately **$85.6 million** from the exercise of 7,441,020 public warrants during the first quarter of 2021[141](index=141&type=chunk) Summary of Cash Flows (in thousands) | Activity | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Operating activities | $(9,962) | $(4,511) | | Investing activities | $(1,104) | $(94) | | Financing activities | $85,557 | $8,134 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not required as the company qualifies as a smaller reporting company - Disclosure is not required for smaller reporting companies[165](index=165&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of March 31, 2021, due to a material weakness in warrant accounting - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were not effective as of March 31, 2021[167](index=167&type=chunk) - A material weakness was identified in internal controls related to the accounting for warrants, which did not result in the proper classification of certain warrants issued in July 2019[168](index=168&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) Company faces two class-action lawsuits alleging Securities Exchange Act violations, which it intends to vigorously defend - Two putative class action complaints were filed against the company and certain officers and directors in March 2021, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934[101](index=101&type=chunk) - The company believes the allegations are without merit and intends to vigorously defend both lawsuits[101](index=101&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) Updates risks including warrant accounting re-evaluation, material weakness in internal controls, and acquisition strategy challenges - Following an SEC statement on April 12, 2021, the company re-evaluated its warrants and determined they should be classified as derivative liabilities measured at fair value, which could cause significant fluctuations in quarterly financial results[175](index=175&type=chunk)[176](index=176&type=chunk) - A material weakness was identified in internal control over financial reporting as of December 31, 2020. If not remediated, this could prevent accurate and timely financial reporting and adversely affect investor confidence[178](index=178&type=chunk)[179](index=179&type=chunk) - The company's growth strategy includes acquisitions, such as the recent purchase of World Energy. This strategy involves risks related to integration, realizing expected benefits, and potential customer concentration, as World Energy relied on one customer for **73% of its 2020 revenue**[185](index=185&type=chunk)[189](index=189&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the quarter ended March 31, 2021 - No unregistered sales of equity securities occurred during the quarter[190](index=190&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - None[191](index=191&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[192](index=192&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) Not applicable - Not applicable[193](index=193&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including officer certifications and XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[194](index=194&type=chunk)

XL Fleet Corp. (XL) Q4 2020 Results Conference Call March 31, 2021 5:00 PM ET Company Participants Jim Berklas - General Counsel and VP, Corporate Development Tod Hynes - Founder and President Dimitri Kazarinoff - Chief Executive Officer Conference Call Participants Greg Lewis - BTIG Jed Dorsheimer - Canaccord Genuity Operator Greetings. Welcome to the XL Fleet Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal pr ...

PART I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) XL Fleet offers commercial vehicle electrification solutions, expanding into battery electric and hydrogen, facing competition, regulations, and lawsuits Corporate History and Background - **XL Fleet Corp.** was formed on **December 21, 2020**, through a business combination (Merger) between Pivotal Investment Corporation II (a SPAC) and XL Hybrids, Inc. (Legacy XL)[14](index=14&type=chunk) Company Overview - **XL Fleet** is a leading provider of fleet electrification solutions for commercial vehicles (Class **2-6**) in North America[15](index=15&type=chunk) - As of **December 31, 2020**, the company had sold over **4,300** electrified powertrain systems, driven over **140 million** miles by over **200** fleets[15](index=15&type=chunk) - Future plans include expanding into full **battery electric** (XL ELECTRIC™), **hydrogen fuel cell systems**, Class **7-8** vehicles, and comprehensive charging solutions (XL GRID™) and Electrification-as-a-Service (EaaS)[19](index=19&type=chunk) Market Opportunity - The **total addressable market** for **XL Fleet's** products and services is estimated at over **$1 trillion**[23](index=23&type=chunk) - Plans to expand product offerings to cover the full range of Class **2-8** commercial vehicles and enter the Electrification-as-a-Service (EaaS) market[23](index=23&type=chunk) - Exploring international sales opportunities in Asia, Europe, and South America, with sales intended to commence in one or more regions by the end of **2022**[27](index=27&type=chunk) Our Technology and Products - Hybrid (XLH™) systems **improve MPG** by up to **25%** and **reduce CO2 emissions** by up to **20%**[31](index=31&type=chunk) - Plug-in hybrid (XLP™) systems offer up to **50% MPG improvement** and up to **33% reduction in emissions**[31](index=31&type=chunk) - Key components include an electric motor, inverter motor controller, control module with telematics (XL Link™), and a lithium-ion battery pack[33](index=33&type=chunk)[36](index=36&type=chunk) - Launched XL GRID™ in **December 2020** for charging and power management solutions, and anticipates offering Electrification-as-a-Service (EaaS) to select customers beginning in **2021**[35](index=35&type=chunk)[37](index=37&type=chunk) Industry and Competition - **XL Fleet** historically focuses exclusively on the commercial market (Class **2-6** hybrid and plug-in hybrid electric vehicles)[39](index=39&type=chunk) - Direct competitors include Workhorse (Class **2-6**), Lordstown Motors (Class **2** EVs), and Hyliion (Class **8**/heavy truck)[40](index=40&type=chunk) - Anticipates **increased competition** from OEMs as they release all-electric versions of vehicles and as **XL Fleet** expands into Class **7-8** and full EV applications[41](index=41&type=chunk)[42](index=42&type=chunk) Customers - As of **December 31, 2020**, served over **200** end-use customers, deploying over **4,300** systems that have accumulated over **140 million** miles[43](index=43&type=chunk) Customer Revenue Concentration (Fiscal Year 2020) | Customer | % of Total Revenue | | :--------- | :------------------- | | Farmbro Inc. | 68% | - Expects **2021 revenue** to follow typical seasonal purchasing patterns, with a majority coming in the third and fourth quarters[45](index=45&type=chunk) Partnerships and Suppliers - Relies on an established upfitter partner network for product installation and resale throughout the U.S. and Canada[48](index=48&type=chunk) - Markets systems in conjunction with major fleet management companies (FMCs) in North America[49](index=49&type=chunk) - Parker Hannifin Corporation is a single-source supplier for motor components[51](index=51&type=chunk) - Experienced supply and service disruptions in **2020** due to the COVID-19 pandemic and expects **adverse impact** from the global microchip shortage in fiscal year **2021**[52](index=52&type=chunk)[22](index=22&type=chunk) Strategy - Strategy includes expanding xEV platform to **battery electric options**, extending offerings to Class **7-8** vehicles and new applications, providing comprehensive charging solutions (XL GRID™), growing globally, and establishing an Electrification-as-a-Service (EaaS) offering[56](index=56&type=chunk) - Aims to leverage its established customer base, data, and relationships for scalable production, supply chain, and service[55](index=55&type=chunk) Value Proposition - Hybrid and plug-in hybrid systems offer immediate **fuel savings** (up to **25-50% MPG improvement**) and **CO2 reductions** (up to **20-33%**)[61](index=61&type=chunk) - No charging infrastructure is required for hybrid systems, and plug-in hybrids can use standard Level **1/2** chargers[61](index=61&type=chunk) - Solutions are less expensive to purchase and operate than full battery-powered all-electric commercial fleet vehicles and are readily available for existing OEM chassis[61](index=61&type=chunk) Manufacturing and Production - Produces hybrid and plug-in hybrid electrification systems from components manufactured by third-party suppliers[62](index=62&type=chunk) - Production team resides at a leased facility in Quincy, IL, with capabilities including receiving, warehousing, production/kitting, and delivery[62](index=62&type=chunk) Sales and Marketing - Sales team covers direct sales to customers and indirect sales through upfitter partners and fleet management companies in the U.S. and Canada[63](index=63&type=chunk) - Marketing team manages digital and offline market presence, brand identity, advertising, and public relations[63](index=63&type=chunk) Research and Development - R&D is conducted at headquarters in Boston, MA, Southern California Technical Center in Foothill Ranch, CA, and a new fleet electrification technology center in Wixom, MI (opened **February 2021**)[65](index=65&type=chunk)[77](index=77&type=chunk) - The XL developed hybrid controller provides remote monitoring, software updates, and system disabling capabilities[67](index=67&type=chunk) - The R&D team has established concept and prototype designs for all-electric and hydrogen fuel cell electric drive systems, including heavy-duty Class **7-8** applications[68](index=68&type=chunk) Intellectual Property - As of **December 31, 2020**, held **25** issued patents (including one international), **15** published patent applications, **4** provisional patent applications, and **11** trademarks[70](index=70&type=chunk) - Intellectual property portfolio largely relates to mechanical systems, software, vehicle data analysis, vehicle control strategies, and data processing/management[71](index=71&type=chunk) Facilities - Operates four separate leased facilities across the U.S.: Brighton, MA (headquarters), Quincy, IL (production), Foothill Ranch, CA (engineering), and Wixom, MI (fleet electrification technology center)[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[77](index=77&type=chunk) Employees - As of **December 31, 2020**, had **59** full-time employees[79](index=79&type=chunk) - Has not experienced any work stoppages, does not include any labor unions, and considers its relationship with employees to be very good[79](index=79&type=chunk) Government Regulations - Operates in an industry subject to extensive environmental regulation (water use, air emissions, hazardous materials) and vehicle safety standards (NHTSA, FMVSS)[80](index=80&type=chunk)[81](index=81&type=chunk)[84](index=84&type=chunk) - CARB classifies XL systems as aftermarket fit devices, requiring an Executive Order (EO) for sales in California; the company is pursuing new model certification[87](index=87&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Battery safety and testing comply with International Organization for Standardization (ISO) standards, SAE International J2929, and UN Recommendations on the Transport of Dangerous Goods[94](index=94&type=chunk)[95](index=95&type=chunk)[98](index=98&type=chunk) Legal Proceedings - As of **March 2021**, **XL Fleet** and certain officers/directors are defendants in **two** putative class action lawsuits (Suh v. XL Fleet Corp., et al., and Kumar v. XL Fleet Corp., et al.) alleging violations of Sections **10(b)** and **20(a)** of the Exchange Act and Rule **10b-5**[100](index=100&type=chunk) - The company believes the allegations are without merit and intends to vigorously defend both lawsuits, but is unable to estimate potential losses at this time[100](index=100&type=chunk) Corporate Information - Principal executive offices are located at **145** Newton Street, Boston, Massachusetts **02135**[101](index=101&type=chunk) Information Available on the Internet - Annual reports on Form **10-K**, quarterly reports on Form **10-Q**, and current reports on Form **8-K** are available free of charge through the Investor Relations section of www.xlfleet.com and on the SEC's website (www.sec.gov)[102](index=102&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) XL Fleet faces risks including losses, customer/supplier concentration, operational scalability, market adoption, and legal challenges as an early-stage public company Summary Risk Factors - The company is an early-stage company with a **history of losses** and expects to incur **significant expenses** and continuing **losses**[107](index=107&type=chunk)[114](index=114&type=chunk) - Relies on a limited number of customers for a large portion of its revenues (one customer accounted for **68% of 2020 revenue**)[107](index=107&type=chunk)[120](index=120&type=chunk) - Dependent on vehicle OEMs, upfitters, and single-source suppliers, making it vulnerable to supply shortages and production disruptions[107](index=107&type=chunk)[134](index=134&type=chunk)[137](index=137&type=chunk)[139](index=139&type=chunk) - Future **growth** is highly dependent on the fleet industry's willingness to adopt hybrid, plug-in hybrid, all-electric, and fuel cell electric vehicles (xEVs)[107](index=107&type=chunk)[142](index=142&type=chunk) Risks Related to our Business and Industry Net Loss (2019-2020) | Year | Net Loss (in millions) | | :--- | :--------------------- | | 2020 | $(25.6) | | 2019 | $(14.9) | - One customer accounted for **68% of total revenue** in fiscal year **2020**, posing a **significant risk** if lost[120](index=120&type=chunk) - Relies on a single-source supplier, Parker Hannifin Corporation, for all of its motors, creating vulnerability to supply shortages[137](index=137&type=chunk) - Identified **material weaknesses** in internal control over financial reporting related to insufficient technical accounting resources and lack of segregation of duties[191](index=191&type=chunk) - The global COVID-19 pandemic and microchip shortage have **adversely affected** and are expected to continue to impact the business, supply chain, and operating results in fiscal year **2021**[165](index=165&type=chunk)[172](index=172&type=chunk)[255](index=255&type=chunk) Risks Related to Ownership of Our Securities - The company does not anticipate declaring any cash dividends in the foreseeable future, requiring investors to rely on stock price appreciation[234](index=234&type=chunk) - The price of common stock may be volatile due to various factors, including market conditions, competition, and short-selling activity[235](index=235&type=chunk) - Issuance of additional common or preferred stock, including under equity incentive plans, could significantly dilute the equity interests of existing stockholders[238](index=238&type=chunk)[241](index=241&type=chunk) - The company has been named a defendant in stockholder derivative lawsuits (Suh and Kumar complaints) alleging securities law violations, which could result in substantial damages and divert management's time[217](index=217&type=chunk)[218](index=218&type=chunk) General Risk Factors - The company's charter contains anti-takeover provisions, such as authorization to issue preferred stock and a staggered board, which could limit stockholders' ability to influence corporate decisions or sell shares at a premium[242](index=242&type=chunk) - The Certificate of Incorporation includes an exclusive forum provision designating the Court of Chancery of the State of Delaware for certain stockholder litigation, potentially limiting forum choices[243](index=243&type=chunk) - A **significant portion** of **total outstanding common stock** is restricted from immediate resale but may be sold into the market in the near future, potentially causing the market price to drop[248](index=248&type=chunk) - Industry disruptions, including the global microchip shortage and Ford's cancellation of the eQVM program, are expected to **adversely impact operating results** in fiscal year **2021**[255](index=255&type=chunk) [Item 1B. Unresolved Staff Comments](index=69&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments - The company has no unresolved staff comments[259](index=259&type=chunk) [Item 2. Properties](index=69&type=section&id=Item%202.%20Properties) XL Fleet leases four U.S. facilities for headquarters, production, engineering, and technology, believing them sufficient for current needs - As of **December 31, 2020**, the company leases **four** facilities: headquarters in Brighton, MA; production in Quincy, IL; engineering in Foothill Ranch, CA; and a new technology center in Wixom, MI (opened **Feb 2021**)[260](index=260&type=chunk)[261](index=261&type=chunk)[77](index=77&type=chunk) - Lease for Brighton, MA headquarters extended to **February 29, 2022**, with monthly rent of **$19,473**[260](index=260&type=chunk) - Lease for Quincy, IL production facility expires **December 31, 2021**, with monthly rent of **$4,500**[260](index=260&type=chunk) [Item 3. Legal Proceedings](index=69&type=section&id=Item%203.%20Legal%20Proceedings) Material pending legal proceedings are detailed in Note 17, Commitments and Contingencies, within the financial statements - Material pending legal proceedings are described in Note **17**, Commitments and Contingencies, to the consolidated financial statements[263](index=263&type=chunk) [Item 4. Mine Safety Disclosures](index=69&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company has no mine safety disclosures - The company has no mine safety disclosures[264](index=264&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=70&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) XL Fleet's common stock is NYSE-listed, with no anticipated cash dividends as earnings are retained for operations and expansion - Common Stock is listed on the NYSE under the symbol "**XL**"[267](index=267&type=chunk) - As of **March 31, 2021**, there were approximately **175** holders of record of the company's Common Stock[267](index=267&type=chunk) - The company has not paid any cash dividends on its Common Stock to date and has no current plans to pay cash dividends for the foreseeable future, intending to retain future earnings for operations, expansion, and debt repayment[267](index=267&type=chunk) [Item 6. Selected Financial Data](index=70&type=section&id=Item%206.%20Selected%20Financial%20Data) The company has not provided selected financial data in this report - The company has not provided selected financial data in this report[268](index=268&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=71&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses XL Fleet's financial condition and operations, highlighting the 2020 recapitalization, continued net losses despite revenue growth, and impacts from the pandemic and microchip shortage Overview - **XL Fleet** is a leading provider of fleet electrification solutions for commercial vehicles (Class **2-6**) in North America[273](index=273&type=chunk) - As of **December 31, 2020**, over **4,300** electrified powertrain systems were sold, having driven over **140 million** miles by over **200** fleets[273](index=273&type=chunk) - The company plans to expand offerings to full **battery electric** (XL ELECTRIC™), **hydrogen fuel cell systems**, Class **8** vehicles, and comprehensive charging solutions (XL GRID™) and Electrification-as-a-Service (EaaS)[276](index=276&type=chunk) - Completed a business combination with Pivotal Investment Corporation II on **December 21, 2020**, resulting in approximately **$340 million** in cash after transaction costs[277](index=277&type=chunk)[278](index=278&type=chunk) Reorganization and Public Company Costs - The Merger on **December 21, 2020**, was accounted for as a **reverse recapitalization**, with Legacy XL deemed the accounting predecessor[279](index=279&type=chunk)[281](index=281&type=chunk) - The Business Combination and PIPE financing resulted in an **increase** of approximately **$340 million** in **cash and cash equivalents**[281](index=281&type=chunk) - As an NYSE-listed company, **XL Fleet** expects to incur additional annual expenses for public company regulatory requirements, including directors' and officers' liability insurance, director fees, and **increased accounting/legal fees**[282](index=282&type=chunk) Recent Developments - The COVID-19 pandemic caused **significant disruptions** in **2020**, impacting supply chains, OEM production, and customer demand, with these effects expected to continue into fiscal year **2021**[283](index=283&type=chunk)[284](index=284&type=chunk) - The global microchip shortage is expected to **adversely impact operating results** in fiscal year **2021**[284](index=284&type=chunk) - Over **80% of 2020 revenues** were recognized in the second half of the year, a seasonal trend expected to continue in **2021**[287](index=287&type=chunk) - **Repaid a $1.1 million Payroll Protection Program (PPP) loan** in full in **December 2020**[288](index=288&type=chunk) Comparability of Financial Information - Historical operations and statements of assets and liabilities may not be comparable to current operations and statements due to the Business Combination[289](index=289&type=chunk) Key Factors Affecting Operating Results - Future success depends on **increasing sales** of current product offerings and expanding product offerings to meet customer demand[290](index=290&type=chunk) - Challenges include ensuring system architecture provides adequate functionality, achieving **cost reduction targets** in component sourcing, timely new product development, and effective sales and marketing efforts[290](index=290&type=chunk) Key Components of Statements of Operations Research and Development Expense - **Research and development expenses** consist primarily of personnel-related expenses, fees paid to third parties for engineering services, expenses related to prototype materials, and depreciation for R&D equipment[291](index=291&type=chunk) - Expected to **increase substantially** in the foreseeable future to accelerate development of product enhancements and additional new products[292](index=292&type=chunk) Selling, General and Administrative Expense - **Selling, general and administrative expenses** include personnel-related costs, outside professional services (legal, audit, accounting), facilities, depreciation, travel, and sales/marketing costs[293](index=293&type=chunk) - Expected to **increase** as the company scales headcount with business **growth** and incurs costs associated with operating as a public company[293](index=293&type=chunk) Other Income (Expense), Net - Comprises **interest expense** net of interest income, **loss on extinguishment of debt**, and **change in fair value of convertible notes payable derivative liabilities**[294](index=294&type=chunk) Results of Operations Revenues Revenues (2019 vs. 2020) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change ($) | Change (%) | | :------- | :------------------ | :------------------ | :--------- | :--------- | | Revenues | $20,338 | $7,215 | $13,123 | 181.9% | - The **increase** was primarily due to the resolution of battery supply issues, **increased end customer demand**, and **increased order sizes**[296](index=296&type=chunk) - Approximately **$17.2 million** (over **80%**) of **2020 revenue** was recognized during the second half of the year due to seasonality and supply chain improvements[296](index=296&type=chunk) Cost of Revenues Cost of Revenues (2019 vs. 2020) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change ($) | Change (%) | | :------------- | :------------------ | :------------------ | :--------- | :--------- | | Cost of revenues | $17,594 | $8,075 | $9,519 | 117.9% | - The **increase** was due to higher unit volume as a result of **increased customer orders** and resolution of supply chain disruptions, increasing proportionally with revenue[297](index=297&type=chunk) Gross Profit (Loss) Gross Profit (Loss) (2019 vs. 2020) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change ($) | Change (%) | | :----------- | :------------------ | :------------------ | :--------- | :--------- | | Gross profit | $2,744 | $(860) | $3,604 | 419.1% | - The **increase in gross profit** was primarily due to higher unit volume, **improved price realization per unit**, and **cost reductions** in sourcing batteries and other components[298](index=298&type=chunk) Research and Development Research and Development Expenses (2019 vs. 2020) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change ($) | Change (%) | | :---------------------- | :------------------ | :------------------ | :--------- | :--------- | | Research and Development | $4,445 | $2,874 | $1,571 | 54.7% | - The **increase** was primarily due to the hiring of additional engineering staff to support unit sales **growth** and to further develop the product line[299](index=299&type=chunk) Selling, General and Administrative Selling, General and Administrative Expenses (2019 vs. 2020) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change ($) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Selling, general and admin expenses | $13,593 | $9,835 | $3,758 | 38.2% | - The **increase** was primarily due to costs incurred for readiness to become a public company (approx. **$2 million**), an **increase in employee compensation** (approx. **$1.8 million**, including **$0.8 million** in stock-based compensation), and new hires[300](index=300&type=chunk) Other Income (Expense), Net Other Income (Expense), Net (2019 vs. 2020) | Metric | 2020 (in thousands) | 2019 (in thousands) | Change ($) | Change (%) | | :---------------------------------------------------- | :------------------ | :------------------ | :--------- | :--------- | | Interest expense | $6,370 | $2,151 | $4,219 | 196.1% | | Loss on extinguishment of debt | $1,038 | $0 | $1,038 | — | | Change in fair value of convertible notes payable derivative liabilities | $2,889 | $(819) | $3,708 | 452.7% | - **Interest expense increased** due to higher convertible debt, an **increase** in the term loan, a draw-down on the revolving line of credit, and accelerated amortization of debt discount[301](index=301&type=chunk) - A **$1.0 million loss on extinguishment of debt** was incurred in connection with the amendment of certain convertible notes[301](index=301&type=chunk) - The **change in fair value of convertible notes payable derivative liabilities** was principally on account of an **increase** in the fair value of the company's Common Stock[301](index=301&type=chunk) Liquidity and Capital Resources Key Financial Position Data (as of December 31, 2020) | Metric | Amount (in thousands) | | :----------------- | :-------------------- | | Working Capital | $336,200 |\n| Cash & Equivalents | $329,800 |\n| Accumulated Deficit| $(89,600) | - After **December 31, 2020**, warrant exercises **generated** approximately **$85.5 million** in additional **cash proceeds**[302](index=302&type=chunk) - Planned use of funds: approximately **$25 million** for core profitability, **$50 million** for new products, **$25 million** for international expansion, **$80 million** for EaaS (including customer financing), and **$150 million** for **working capital**, other potential acquisitions, and general corporate purposes[303](index=303&type=chunk) Silicon Valley Bank Loan and Security Agreement - The revolving line of credit and term loans with Silicon Valley Bank were **fully repaid** in **December 2020** following the consummation of the Business Combination[305](index=305&type=chunk)[307](index=307&type=chunk) Convertible Promissory Notes - In **February 2020**, the company issued **$8.1 million** in subordinated convertible promissory notes and amended existing notes[309](index=309&type=chunk) - The convertible notes and accrued interest were **fully settled** in **December 2020** with a cash payment of **$11.3 million** and the issuance of **1,715,918 shares of Common Stock**[309](index=309&type=chunk) Cash Flows Summary Cash Flows Summary (2019 vs. 2020) | Cash Flow Activity | 2020 (in thousands) | 2019 (in thousands) | | :----------------- | :------------------ | :------------------ | | Operating activities | $(19,881) | $(11,551) |\n| Investing activities | $(145) | $(28) |\n| Financing activities | $346,281 | $9,208 |\n| Net change in cash | $326,255 | $(2,371) | Cash Flows Used in Operating Activities - **Net cash used in operating activities increased** by **$8.3 million** to **$19.9 million** in **2020** from **$11.6 million** in **2019**[311](index=311&type=chunk)[312](index=312&type=chunk) - The **increase** was principally due to a higher **net loss** and **increases** in accounts receivable and inventory, partially offset by non-cash items and **increases** in accounts payable and accrued expenses[311](index=311&type=chunk) Cash Flows Used in Investing Activities - **Net cash used in investing activities** was **$0.15 million** in **2020**, primarily for R&D equipment and a truck[313](index=313&type=chunk) Cash Flows Provided by Financing Activities - **Net cash provided by financing activities** was **$346.3 million** in **2020**, primarily from the **reverse merger recapitalization** (**$207.2 million**) and PIPE transaction (**$144.9 million**)[314](index=314&type=chunk) - In **2019**, **net cash provided** was **$9.21 million**, primarily from the issuance of subordinated convertible promissory notes[314](index=314&type=chunk) Related Parties - The company has a noncancelable lease agreement for office, research and development, and vehicle development and installation facilities with a holder of more than **5%** of its Common Stock[315](index=315&type=chunk) - The lease term extends through **February 29, 2022**, with monthly rent installments of **$19,473**[315](index=315&type=chunk) Off-Balance Sheet Arrangements - During the periods presented, the company did not have any **significant relationships** with unconsolidated organizations or financial partnerships for off-balance sheet arrangements, other than the New Markets Tax Credit variable interest entity[316](index=316&type=chunk) Critical Accounting Policies and Estimates - The most critical accounting policies and estimates include revenue recognition, business combinations, and convertible notes derivative accounting, which require **significant judgment** and assumptions[318](index=318&type=chunk)[327](index=327&type=chunk) Business combinations - Acquisitions are accounted for in accordance with ASC **805**, Business Combinations, allocating purchase price to the fair values of assets acquired and liabilities assumed[319](index=319&type=chunk) - The fair value of developed technology acquired in a business combination is determined using the income approach, estimating discounted after-tax cash flows over its useful life[321](index=321&type=chunk) Revenue Recognition - Revenue is recognized upon transfer of control to the customer, generally at the time of equipment shipment (FOB shipping point)[323](index=323&type=chunk) - Installation services, when provided, are not distinct and are combined with the hybrid electric powertrain equipment as a single performance obligation[323](index=323&type=chunk) - Extended warranties are considered separate performance obligations and recognized ratably over the extended warranty period[324](index=324&type=chunk) Convertible Note and Derivative Accounting - Embedded features within convertible notes are assessed to determine if they require accounting as a derivative liability, bifurcated from the notes if they meet the definition of a derivative[326](index=326&type=chunk) - Combined derivative liabilities are remeasured to their fair value at each subsequent **balance** sheet date, with adjustments to current earnings[326](index=326&type=chunk) Emerging Growth Company Status - The company qualifies as an "**emerging growth company**" under the JOBS Act[328](index=328&type=chunk) - It has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards and intends to rely on other JOBS Act exemptions (e.g., no auditor attestation report on internal control over financial reporting)[328](index=328&type=chunk)[330](index=330&type=chunk) - This status will continue until the earliest of **December 31, 2024**, achieving **$1.1 billion** in annual gross revenue, becoming a "**large accelerated filer**," or issuing more than **$1.0 billion** in non-convertible debt securities[331](index=331&type=chunk) New and Recently Adopted Accounting Pronouncements - Adopted ASU **2017-04** (Goodwill Impairment) on **January 1, 2020**, with no material effect on financial position, results of operations, or cash flows[456](index=456&type=chunk) - Expects a **material impact** from the adoption of ASC Topic **842**, Leases, on **January 1, 2021**, by recognizing right-of-use assets and lease liabilities[457](index=457&type=chunk) - Currently evaluating ASU **2016-13** (Credit Losses) for **January 1, 2023**, and ASU **2019-12** (Income Taxes) for **January 1, 2021**, with no material impact expected from these two[459](index=459&type=chunk)[460](index=460&type=chunk) Quantitative and Qualitative Disclosure About Market Risk - This disclosure is not required for the company[334](index=334&type=chunk) Off-Balance Sheet Arrangements - The company has no **significant known off-balance sheet arrangements**[335](index=335&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=84&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This disclosure is not required for the company - This disclosure is not required for the company[336](index=336&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=84&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) Financial statements are presented in pages F-1 through F-39 of this Annual Report on Form 10-K - Financial statements are contained in pages F-1 through F-39 of this Annual Report on Form **10-K**[337](index=337&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=84&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes or disagreements with accountants on accounting and financial disclosure have occurred - There have been no changes in or disagreements with accountants on accounting and financial disclosure[338](index=338&type=chunk) [Item 9A. Controls and Procedures](index=84&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of December 31, 2020, due to material weaknesses in technical accounting and segregation of duties, with remediation efforts underway Evaluation of Disclosure Controls and Procedures - As of **December 31, 2020**, the Chief Executive Officer concluded that the company's disclosure controls and procedures were not effective at the reasonable assurance level due to the presence of **material weaknesses**[340](index=340&type=chunk) Management's Report on Internal Controls over Financial Reporting - Management identified **material weaknesses** in internal control over financial reporting related to insufficient technical accounting resources and lack of segregation of duties[345](index=345&type=chunk) - These **material weaknesses** are attributed to the company's prior status as a private company with limited resources and expertise in public company financial reporting[347](index=347&type=chunk) - A remediation plan instituted in **2021** involves hiring additional qualified personnel, further documentation and implementation of control procedures, and control monitoring[347](index=347&type=chunk) - Notwithstanding the identified **material weaknesses**, management believes that the consolidated financial statements present fairly, in all material respects, the company's financial position, results of operations, and cash flows[349](index=349&type=chunk) Changes in Internal Control over Financial Reporting - The company is implementing measures to remediate the identified **material weaknesses** in internal control over financial reporting[351](index=351&type=chunk) - Other than these remediation measures, there have been no changes in internal control over financial reporting during the quarter ended **December 31, 2020**, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[351](index=351&type=chunk) [Item 9B. Other Information](index=87&type=section&id=Item%209B.%20Other%20Information) No other information is reported under this item - No other information is reported under this item[352](index=352&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=88&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Director, executive officer, and corporate governance information, including the Code of Conduct, will be in the 2021 Proxy Statement - Information required by this item will be set forth in the company's definitive Proxy Statement for its **2021** Annual Meeting of Stockholders[355](index=355&type=chunk) - The company has adopted a Corporate Code of Conduct and Ethics and Whistleblower Policy, available on its website[356](index=356&type=chunk) [Item 11. Executive Compensation](index=88&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation details will be provided in the definitive Proxy Statement for the 2021 Annual Meeting of Stockholders - Information required by this item will be set forth in the company's definitive Proxy Statement for its **2021** Annual Meeting of Stockholders[357](index=357&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=88&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership and equity compensation plan information will be disclosed in the 2021 Annual Meeting of Stockholders Proxy Statement - Information required by this item will be set forth in the company's definitive Proxy Statement for its **2021** Annual Meeting of Stockholders[358](index=358&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=88&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Related party transactions and director independence information will be presented in the 2021 Annual Meeting of Stockholders Proxy Statement - Information required by this item will be set forth in the company's definitive Proxy Statement for its **2021** Annual Meeting of Stockholders[359](index=359&type=chunk) [Item 14. Principal Accounting Fees and Services](index=88&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Principal accounting fees and services information will be detailed in the 2021 Annual Meeting of Stockholders Proxy Statement - Information required by this item will be set forth in the company's definitive Proxy Statement for its **2021** Annual Meeting of Stockholders[360](index=360&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=89&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists consolidated financial statements and various exhibits, including the reorganization plan and corporate governance documents - Includes the consolidated financial statements of **XL Fleet Corp.** and Report of Marcum LLP, Independent Registered Public Accounting Firm[363](index=363&type=chunk) - Lists various exhibits, including the Agreement and Plan of Reorganization, Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Warrant Agreements, and the **2020** Equity Incentive Plan[366](index=366&type=chunk)[367](index=367&type=chunk) [Item 16. Form 10-K Summary](index=90&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a Form 10-K Summary - The company has not provided a Form **10-K** Summary[370](index=370&type=chunk) SIGNATURES This section contains required signatures for the Annual Report on Form 10-K, affirming the filing by the CEO and directors - The Annual Report on Form **10-K** was signed on **March 31, 2021**, by Dimitri N. Kazarinoff, Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, and Principal Accounting Officer), and other directors[374](index=374&type=chunk)[377](index=377&type=chunk) Index to Consolidated Financial Statements This index lists the consolidated financial statements and accompanying notes included in the report - The index lists the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Changes in Stockholders' Equity (**Deficit**), Consolidated Statements of Cash Flows, and Notes to Consolidated Financial Statements[379](index=379&type=chunk) REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Marcum LLP issued an unqualified opinion on XL Fleet Corp.'s consolidated financial statements for 2020 and 2019, affirming fair presentation under U.S. GAAP - Marcum LLP issued an **unqualified opinion** on the consolidated financial statements of **XL Fleet Corp.** and Subsidiaries for the years ended **December 31, 2020** and **2019**[381](index=381&type=chunk) - The financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows in conformity with U.S. GAAP[381](index=381&type=chunk) - The audit did not include an opinion on the effectiveness of the company's internal control over financial reporting[383](index=383&type=chunk) Consolidated Financial Statements [Consolidated Balance Sheets](index=94&type=section&id=Consolidated%20Balance%20Sheets) The balance sheets show a significant increase in cash, assets, and positive stockholders' equity in 2020 due to the Business Combination and PIPE financing Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2020 | Dec 31, 2019 | | :---------------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $329,641 | $3,386 |\n| Total current assets | $345,320 | $7,081 |\n| Total assets | $347,013 | $9,249 |\n| Total current liabilities | $9,083 | $15,489 |\n| Total liabilities | $14,822 | $22,949 |\n| Total stockholders' equity (deficit) | $332,191 | $(13,700) | [Consolidated Statements of Operations](index=95&type=section&id=Consolidated%20Statements%20of%20Operations) Operations show increased revenues and gross profit in 2020, but a higher net loss due to increased operating expenses, interest, and derivative liabilities Consolidated Statements of Operations Highlights (in thousands) | Metric | 2020 | 2019 | | :---------------------------------------------------- | :----------- | :----------- | | Revenues | $20,338 | $7,215 |\n| Cost of revenues | $17,594 | $8,075 |\n| Gross profit | $2,744 | $(860) |\n| Research and development | $4,445 | $2,874 |\n| Selling, general, and administrative expenses | $13,593 | $9,835 |\n| Loss from operations | $(15,294) | $(13,569) |\n| Interest expense, net | $6,370 | $2,151 |\n| Loss on extinguishment of debt | $1,038 | $0 |\n| Change in fair value of convertible notes payable derivative liabilities | $2,889 | $(819) |\n| Net loss | $(25,591) | $(14,901) |\n| Net loss per share, basic and diluted | $(0.30) | $(0.19) | [Consolidated Statements of Changes in Stockholders' Equity (Deficit)](index=96&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Deficit)) Stockholders' equity transformed from a $13.7 million deficit to $332.2 million positive equity in 2020, driven by recapitalization and PIPE financing Changes in Stockholders' Equity (Deficit) (in thousands) | Metric | Dec 31, 2020 | Dec 31, 2019 | | :---------------------------------------- | :----------- | :----------- | | Balance at January 1 | $(13,700) | $846 |\n| PIC shares recapitalized, net of issuance costs | $207,169 | - |\n| Shares issued in offering, net of issuance costs | $144,891 | - |\n| Net loss | $(25,591) | $(14,901) |\n| Balance at December 31 | $332,191 | $(13,700) | [Consolidated Statements of Cash Flows](index=97&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash flows show a substantial increase from 2020 financing activities, offsetting increased cash used in operating activities due to higher net losses Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 2020 | 2019 | | :---------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(19,881) | $(11,551) |\n| Net cash used in investing activities | $(145) | $(28) |\n| Net cash provided by financing activities | $346,281 | $9,208 |\n| Net increase/(decrease) in cash and cash equivalents and restricted cash | $326,255 | $(2,371) |\n| Cash, cash equivalents, and restricted cash at end of year | $329,791 | $3,536 | - **Net cash provided by financing activities** in **2020** was primarily from proceeds from the **reverse merger recapitalization** (**$207.2 million**) and the PIPE transaction (**$144.9 million**)[314](index=314&type=chunk)[392](index=392&type=chunk) - **Cash used in operating activities increased** in **2020** versus **2019** by **$8.3 million**, principally due to higher operating expenses and **net loss**[311](index=311&type=chunk)[312](index=312&type=chunk) [Notes to Consolidated Financial Statements](index=99&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes provide detailed financial information, covering organization, accounting policies, merger impact, revenue, debt, equity, and critical accounting judgments Note 1. Organization, Description of Business and Liquidity - **XL Fleet Corp.** was formed on **December 21, 2020**, through a business combination between Legacy XL and Pivotal Investment Corporation II[395](index=395&type=chunk) - The COVID-19 pandemic has **adversely impacted** and is expected to continue to impact operations, contractors, and automotive OEMs, causing delays in operational activities[397](index=397&type=chunk)[398](index=398&type=chunk)[400](index=400&type=chunk) - The company believes its **cash and cash equivalents** at **December 31, 2020**, and management's operating plan will provide sufficient liquidity for at least the next **twelve months**[401](index=401&type=chunk) Note 2. Summary of Significant Accounting Policies - The financial statements are prepared in accordance with U.S. GAAP and include consolidated accounts of wholly-owned subsidiaries and variable interest entities[402](index=402&type=chunk) - The company has elected not to opt out of the extended transition period for new accounting standards as an "**emerging growth company**" under the JOBS Act[403](index=403&type=chunk) - Key estimates and judgments involve deferred income taxes, valuation of share-based compensation, convertible notes payable derivative liability, and business combinations[405](index=405&type=chunk) - As of **December 31, 2020**, one customer accounted for approximately **82%** of accounts receivable and **68% of revenues**[408](index=408&type=chunk) - Adopted ASU **2017-04** (Goodwill Impairment) on **January 1, 2020**, with no material effect, and expects a **material impact** from ASU **842** (Leases) adoption on **January 1, 2021**[456](index=456&type=chunk)[457](index=457&type=chunk) Note 3. Merger with Pivotal Investment Corporation II - On **December 21, 2020**, Legacy XL consummated a merger with Pivotal Investment Corporation II, with Legacy XL surviving as a wholly-owned subsidiary of **XL Fleet Corp.** (formerly Pivotal)[461](index=461&type=chunk) - The transaction was treated as a **reverse merger** and **recapitalization** of Legacy XL for accounting purposes, with Pivotal treated as the acquired company[467](index=467&type=chunk) - The Business Combination and PIPE financing resulted in **net proceeds** of **$352.06 million**[468](index=468&type=chunk) - **Outstanding convertible promissory notes** were **settled** with a cash payment of **$11.25 million** and the issuance of **1,715,918 shares of Common Stock**[466](index=466&type=chunk) Note 4. Acquisition of Quantum - On **October 4, 2019**, the company acquired certain assets of Quantum Fuel Systems, LLC, to accelerate product development and expand engineering capabilities[469](index=469&type=chunk) - The aggregate **purchase consideration** was **$1,759 thousand**, including a deferred cash payment, issuance of **458,902 shares of common stock**, and contingent **purchase consideration** for **three** milestone events[470](index=470&type=chunk)[477](index=477&type=chunk) - The acquisition resulted in recorded **goodwill** of **$489 thousand**, attributable to the acquired assembled workforce and synergies[476](index=476&type=chunk)[477](index=477&type=chunk) Note 5. Revenue Revenue Disaggregation by Sales Channel (in thousands) | Sales Channel | 2020 | 2019 | | :---------------------- | :------ | :----- | | Revenue direct to customers | $4,013 | $3,263 |\n| Revenue through channel partners | $16,325 | $3,952 |\n| **Total revenue** | **$20,338** | **$7,215** | - Revenue is recognized upon transfer of control to the customer, typically at shipment, with installation services integrated as a single performance obligation[434](index=434&type=chunk) - **Accrued warranty costs increased** from **$1,009 thousand** in **2019** to **$1,735 thousand** in **2020**[485](index=485&type=chunk) Note 6. Property and Equipment Property and Equipment, Net (in thousands) | Category | Dec 31, 2020 | Dec 31, 2019 | | :------------------------ | :----------- | :----------- | | Equipment | $647 | $630 |\n| Furniture and fixtures | $91 | $45 |\n| Computers | $30 | $30 |\n| Software | $359 | $346 |\n| Vehicles | $622 | $559 |\n| Leasehold improvements | $170 | $164 |\n| **Total gross** | **$1,919** | **$1,774** |\n| Less accumulated depreciation | $(1,340) | $(934) |\n| **Property and equipment, net** | **$579** | **$840** | - Depreciation expense on property and equipment was **$406 thousand** in **2020**, up from **$265 thousand** in **2019**[486](index=486&type=chunk) Note 7. Intangibles - Intangible assets consist of developed technology acquired during **2019**, with a **gross value of $863 thousand**, amortized over a useful life of **4** years[488](index=488&type=chunk) Approximate Annual Aggregate Amortization Expense of Intangibles (in thousands) | Year ending December 31 | Amount | | :---------------------- | :----- | | 2021 | $216 |\n| 2022 | $216 |\n| 2023 | $161 |\n| **Total amortization** | **$593** | - **Amortization expense** recognized on intangible assets was **$216 thousand** in **2020**, up from **$72 thousand** in **2019**[489](index=489&type=chunk) Note 8. Accrued Expenses and Other Current Liabilities Accrued Expenses and Other Current Liabilities (in thousands) | Category | Dec 31, 2020 | Dec 31, 2019 | | :------------------------------------------------ | :----------- | :----------- | | Accrued warranty costs | $1,735 | $1,009 |\n| Accrued compensation and related benefits | $1,001 | $398 |\n| Contingent and deferred purchase consideration connection with Quantum acquisition | $926 | $638 |\n| Accrued financing fees | $723 | $360 |\n| Accrued expenses, other | $216 | $553 |\n| Sales tax | $0 | $96 |\n| **Total** | **$4,601** | **$3,054** | Note 9. New Markets Tax Credit Financing - On **March 4, 2015**, the company entered into a New Markets Tax Credit (NMTC) financing transaction with U.S. Bancorp Community Development Corporation related to its Quincy, Illinois facility[491](index=491&type=chunk) - The company made **two** loans totaling **$10,454 thousand** to federal and state NMTC investment funds, while U.S. Bank made an equity investment of **$4,995 thousand**[492](index=492&type=chunk) - The company is the **primary beneficiary** of the variable interest entity (VIE) formed through this financing arrangement and consolidates the Investment Fund[495](index=495&type=chunk)[496](index=496&type=chunk) - The **$4,995 thousand** in **net proceeds** received for tax credits have been deferred and will be recognized as income upon completion of the **seven-year** NMTC compliance period (**March 2022**)[496](index=496&type=chunk) Note 10. Debt Debt Carrying Value (in thousands) | Category | Dec 31, 2020 | Dec 31, 2019 | | :---------------------------------------- | :----------- | :----------- | | Subordinated convertible promissory notes | $0 | $10,000 |\n| Unamortized debt discount | $0 | $(898) |\n| Subordinated convertible promissory notes, net | $0 | $9,102 |\n| Term Loan | $0 | $3,100 |\n| Unamortized debt discount | $0 | $(87) |\n| Vehicle financing agreements | $208 | $271 |\n| **Total debt obligations, net** | **$208** | **$3,284** |\n| Less: current portion of debt | $(110) | $(1,435) |\n| **Debt – net of current portion** | **$98** | **$1,849** | - The revolving line of credit and term loans with Silicon Valley Bank were **fully repaid** on **December 23, 2020**[498](index=498&type=chunk)[502](index=502&type=chunk) - In **2020**, the company issued **$8.1 million** in subordinated convertible promissory notes and incurred a **$1.038 million loss on extinguishment of debt** due to amendments[503](index=503&type=chunk)[504](index=504&type=chunk) - On **December 21, 2020**, convertible notes and accrued interest were **settled** with a **$11.25 million cash payment** and the issuance of **1,715,918 shares of Common Stock**[509](index=509&type=chunk) Note 11. Fair Value Measurements - Contingent consideration liability and convertible notes payable derivative liabilities are considered Level **3** measurements due to **significant unobservable inputs** in their valuation[511](index=511&type=chunk)[514](index=514&type=chunk) - The fair value of the contingent consideration liability is based on a Monte Carlo Simulation, evaluating the probability and timing of milestone events[511](index=511&type=chunk) - The fair value of convertible notes payable derivative liabilities was estimated using probability-weighted expected return models and 'with and without' valuation models[515](index=515&type=chunk)[516](index=516&type=chunk) Level 3 Fair Value Liabilities (in thousands) | Liability | Dec 31, 2020 | Dec 31, 2019 | | :------------------------ | :----------- | :----------- | | Contingent consideration | $1,849 | $1,503 |\n| Derivatives | $0 | $1,349 |\n| **Total Level 3 liabilities** | **$1,849** | **$2,852** | Note 12. Stockholders' Equity - At **December 31, 2020**, the company authorized **350,000,000 shares of Common Stock**, with holders entitled to vote and receive dividends if declared[519](index=519&type=chunk) Shares of Common Stock Reserved for Future Issuance | Category | Shares | | :---------------------------------------- | :----------- | | Warrants for the issuance of Common Stock | 12,149,117 |\n| Stock options issued and outstanding | 10,975,279 |\n| Authorized for future grant under 2020 Equity Incentive Plan | 12,800,000 |\n| **Total** | **35,924,396** | Note 13. Warrants - In **2020**, the company assumed private placement warrants (**4,233,333 shares** at **$1.50/share**) and public warrants (**7,666,667 shares** at **$11.50/share**) in connection with the merger[521](index=521&type=chunk) - During **2020**, **4,995,584 shares of Common Stock** were issued from warrant exercises, **generating $884 thousand** in **cash proceeds**[522](index=522&type=chunk) - As of **December 31, 2020**, **12,149,117 warrants** to purchase Common Stock were outstanding[522](index=522&type=chunk)[524](index=524&type=chunk) - Subsequent to **December 31, 2020**, **7,441,020 public warrants** were exercised, **generating** approximately **$85.5 million** in **cash proceeds**[523](index=523&type=chunk) Note 14. Share-Based Compensation Expense - **Share-based compensation expense** was **$978 thousand** in **2020**, up from **$208 thousand** in **2019**[526](index=526&type=chunk) - As of **December 31, 2020**, there was **$4,857 thousand** of **unrecognized compensation cost** related to share-based payments, expected to be recognized over a weighted-average period of **3.9 years**[526](index=526&type=chunk) Stock Option Activity (2020) | Options | Shares | Weighted Average Exercise Price | | :------------------------ | :----------- | :------------------------------ | | Outstanding at Dec 31, 2019 | 10,087,294 | $0.25 |\n| Granted | 2,738,912 | $1.76 |\n| Exercised | (488,860) | $0.24 |\n| Cancelled or forfeited | (1,362,124) | $0.74 |\n| Outstanding at Dec 31, 2020 | 10,975,222 | $0.57 |\n| Exercisable at Dec 31, 2020 | 5,518,767 | $0.25 | - The **aggregate intrinsic value** of stock options exercised was **$3,336 thousand** in **2020** and **$1,676 thousand** in **2019**[527](index=527&type=chunk) Note 15. Income Taxes Net Deferred Income Tax Assets (in thousands) | Category | Dec 31, 2020 | Dec 31, 2019 | | :---------------------------- | :----------- | :----------- | | Net operating loss carryforwards | $20,898 | $15,239 |\n| Tax credit carryforwards | $1,341 | $1,341 |\n| Reserves | $456 | $308 |\n| Share-based compensation | $172 | $308 |\n| Depreciation and amortization | $(54) | $(16) |\n| Other | $89 | $91 |\n| **Total deferred tax assets** | **$22,902** | **$17,271** |\n| Less valuation allowance | $(22,902) | $(17,271) |\n| **Net deferred tax assets** | **$0** | **$0** | - The company has provided a **full valuation allowance** against its **net deferred tax assets** due to the uncertainty of realizing future benefits, given its **history of losses**[534](index=534&type=chunk) - As of **December 31, 2020**, the company had federal and state **net operating loss carryforwards** of approximately **$80.6 million** and **$27.5 million**, respectively[536](index=536&type=chunk) - Utilization of NOLs and **tax credit carryforwards** may be subject to annual limitation under Section **382** of the Internal Revenue Code due to ownership changes[536](index=536&type=chunk) Note 16. Related Party Transactions - The company has a noncancelable operating lease agreement for office, research and development, and vehicle development and installation facilities with an investor (related party)[537](index=537&type=chunk) - **Rent expense** under this operating lease was **$235 thousand** for both **2020** and **2019**[537](index=537&type=chunk) Future Minimum Lease Payments for Related Party Lease (in thousands) | Year ending December 31 | Amount | | :---------------------- | :----- | | 2021 | $235 |\n| 2022 | $39 |\n| **Total** | **$274** | Note 17. Commitments and Contingencies - The company has noncancelable operating lease agreements for facilities in Quincy, Illinois (through **Dec 2021**), California (through **Feb 2025**), and Michigan (through **Feb 2024**)[539](index=539&type=chunk)[540](index=540&type=chunk) Future Minimum Lease Payments for Operating Leases (in thousands) | Year ending December 31 | Amount | | :---------------------- | :----- | | 2021 | $791 |\n| 2022 | $606 |\n| 2023 | $582 |\n| 2024 | $462 |\n| 2025 | $74 |\n| **Total** | **$2,515** | - As of **March 2021**, the company is a defendant in **two** putative class action lawsuits (Suh v. XL Fleet Corp., et al., and Kumar v. XL Fleet Corp., et al.) alleging securities law violations, which it intends to vigorously defend[544](index=544&type=chunk) Note 18. Net Loss Per Share Net Loss Per Share (2019 vs. 2020) | Metric | 2020 | 2019 | | :-------------------------------------- | :------------- | :------------- | | Net loss | $(25,591) | $(14,901) |\n| Weighted average shares outstanding, basic and diluted | 84,565,448 | 79,823,065 |\n| Net loss per share, basic and diluted | $(0.30) | $(0.19) | - Potential dilutive securities (stock options, warrants) were excluded from diluted **net loss per share** calculation as their effect would be anti-dilutive[547](index=547&type=chunk) Number of Shares Underlying Outstanding Stock Options and Warrants | Category | 2020 | 2019 | | :------------ | :----------- | :----------- | | Stock options | 10,975,222 | 10,087,294 |\n| Warrants | 12,149,117 | 5,849,164 |\n| **Total** | **23,124,339** | **15,936,458** | Note 19. Retirement Plan - The company has adopted a **401(k)** plan for eligible employees, allowing before-tax and Roth contributions[548](index=548&type=chunk) - The plan provides for safe harbor matching contributions: **100%** on the first **3%** of eligible earnings deferred and an additional **50%** on the next **2%**[548](index=548&type=chunk) - Employee elective deferrals and safe harbor matching contributions are **100% vested** at all times[548](index=548&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-38971 PIVOTAL INVESTMENT CORPORATION II (Exact name of registrant as specified in its charter) Delaware 83-41099 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 June 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-38971 PIVOTAL INVESTMENT CORPORATION II (Exact name of registrant as specified in its charter) Delaware 83-4109918 (S ...

PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed financial statements for Pivotal Investment Corporation II as of March 31, 2020, including the balance sheet, statements of operations, changes in stockholders' equity, and cash flows, reflecting its status as a blank check company with assets in a trust account [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2020, total assets were **$233.2 million**, primarily marketable securities in the Trust Account, with **$219.9 million** Class A common stock subject to redemption Condensed Balance Sheet Data (as of March 31, 2020) | Metric | March 31, 2020 (unaudited) | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash | $965,957 | $624,943 | | Marketable securities held in Trust Account | $232,178,457 | $231,919,897 | | **Total Assets** | **$233,194,207** | **$232,661,414** | | **Liabilities & Equity** | | | | Total Liabilities | $8,287,504 | $8,266,100 | | Class A common stock subject to possible redemption | $219,906,695 | $219,395,310 | | Total Stockholders' Equity | $5,000,008 | $5,000,004 | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) For the three months ended March 31, 2020, net income was **$511,389**, driven by **$778,592** interest income from the Trust Account, offset by operating costs Statement of Operations (Three Months Ended March 31, 2020) | Metric | Amount | | :--- | :--- | | Interest income on marketable securities held in Trust Account | $778,592 | | Operating and formation costs | $131,264 | | Provision for income taxes | ($135,939) | | **Net income** | **$511,389** | [Condensed Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity remained stable at approximately **$5.0 million** as of March 31, 2020, with net income offset by changes in redeemable Class A common stock - Total stockholders' equity increased slightly from **$5,000,004** at the beginning of the period to **$5,000,008** at March 31, 2020[18](index=18&type=chunk) [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For Q1 2020, net cash used in operating activities was **$179,018**, while investing activities provided **$520,032**, increasing the cash balance to **$965,957** Cash Flow Summary (Three Months Ended March 31, 2020) | Metric | Amount | | :--- | :--- | | Net cash used in operating activities | ($179,018) | | Net cash provided by investing activities | $520,032 | | Net Change in Cash | $341,014 | | **Cash – Ending** | **$965,957** | [Notes to Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) Notes detail operations, accounting policies, and financial items, including SPAC formation, **$230 million** IPO, **$6.35 million** private placement, related-party transactions, and commitments - The company is a blank check company formed to effect a business combination, focusing on North American companies in industries disrupted by digital technology[26](index=26&type=chunk)[27](index=27&type=chunk) - On July 16, 2019, the company completed its Initial Public Offering of **23,000,000 units**, generating gross proceeds of **$230,000,000**, which were placed in a Trust Account[29](index=29&type=chunk)[31](index=31&type=chunk) - The company has until January 16, 2021 (the "Combination Period") to consummate a Business Combination, or it will be required to liquidate and redeem its public shares[39](index=39&type=chunk) - A managing member of the Sponsor has entered into a forward purchase agreement to purchase up to **$150,000,000** of the company's securities concurrently with the initial Business Combination[77](index=77&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's blank check status, Q1 2020 financial results, and liquidity, noting net income from Trust Account interest and key contractual obligations - For the three months ended March 31, 2020, the company had a net income of **$511,389**, which consisted of **$778,592** in interest income from the Trust Account, offset by **$131,264** in operating costs and a **$135,939** provision for income taxes[98](index=98&type=chunk) - As of March 31, 2020, the company had **$965,957** in cash held outside the Trust Account for working capital purposes and **$232,178,457** in marketable securities held within the Trust Account[104](index=104&type=chunk)[106](index=106&type=chunk) - The company's primary contractual obligations include a deferred underwriting fee of **$8,050,000** payable upon completion of a Business Combination and a forward purchase agreement for up to **$150,000,000**[110](index=110&type=chunk)[112](index=112&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=20&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is not subject to material market or interest rate risk, as Trust Account funds are invested in short-term U.S. government treasury securities - The company believes there is no material exposure to interest rate risk due to the short-term nature of its investments in U.S. government securities with maturities of 180 days or less[117](index=117&type=chunk) [Controls and Procedures](index=20&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) As of March 31, 2020, CEO and CFO concluded disclosure controls were effective, with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2020[119](index=119&type=chunk) - No changes in internal control over financial reporting occurred during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[120](index=120&type=chunk) PART II. OTHER INFORMATION [Unregistered Sales of Equity Securities and Use of Proceeds](index=21&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section discloses unregistered sales to the Sponsor, including **5,750,000** Class B common stock for **$25,000** and **4,233,333** private placement warrants for **$6.35 million** - In March 2019, the company issued **5,750,000** shares of Class B common stock to its Sponsor for a capital contribution of **$25,000**[121](index=121&type=chunk) - Simultaneously with the IPO, the company sold **4,233,333** Private Placement Warrants to the Sponsor at **$1.50** per warrant, generating total proceeds of **$6,350,000**[123](index=123&type=chunk) - Total transaction costs related to the IPO amounted to **$13,185,704**, including **$4,600,000** in underwriting fees and **$8,050,000** in deferred underwriting fees[124](index=124&type=chunk) [Exhibits](index=21&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, primarily certifications by the Principal Executive Officer and Principal Financial Officer per Sarbanes-Oxley Act - The report includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906[126](index=126&type=chunk) Signatures [Signatures](index=22&type=section&id=Signatures) The Form 10-Q report was signed on May 14, 2020, by CEO Jonathan J. Ledecky and CFO James Brady - The report was signed on May 14, 2020, by Jonathan J. Ledecky (Chief Executive Officer) and James Brady (Chief Financial Officer)[130](index=130&type=chunk)[131](index=131&type=chunk)