2月伊始，原创世代（CreateAI）首次曝光了《金庸群侠传》开放世界RPG的实机PV（产品视频）。智通财经注意 到，此次PV全画面为游戏实机运行效果，含战斗演示。而随着实机PV的发布，这款改编自经典IP数的作品也真正走 到了大众面前。 《金庸群侠传》游戏氛围图 智通财经记者 | 佘晓晨 智通财经编辑 | 文姝琪 《黑神话：悟空》的成功，一度点燃了国内游戏行业对3A大作的市场热情与创作信心，不少游戏公司开始押注传统文 化IP。 从自动驾驶行业到游戏行业的跨度比陈默想象中更大。尤其是《金庸群侠传》的定位为开放世界RPG游戏，对美术画 面和武术动作都有更高的要求。过去一年，研发团队实地走访名山大川，通过扫描技术复刻了100多处古迹建筑。在 这一过程中，陈默有过反思：不能图快。陈默直言，最开始公司想用钱去换时间，"拔苗助长"，最后的结果就是得不 偿失。 3A游戏之所以难做，一个最大的挑战是海量的制作投入。 据天风证券研究数据，若将PC平台的高投入大型游戏项目纳入统计，中国大型游戏内容市场规模预计将在2026年达到 169亿元人民币。但与此同时，更高的叙事要求、更复杂的角色表演以及更精细的战斗动作，使动作捕捉技术成为 ...

Core Insights - The article emphasizes the importance of probabilistic perception and control in autonomous driving, advocating for a tight coupling between perception and control systems to enhance safety and decision-making [10][11][12]. Technical Approach - The core idea is to output a probability distribution rather than a single deterministic result, allowing the system to quantify its uncertainty and make informed decisions based on that uncertainty [10][11]. - The system should output key features of obstacles, including position, speed, size, and category, along with their uncertainties, which are crucial for safety decisions [11]. Challenges - Major challenges include algorithm limitations, sensor noise, and the inherent ambiguity of the environment, which can lead to uncertainty in perception [15]. - Developing algorithms that can naturally output probability distributions and optimizing planning and control algorithms to utilize uncertainty information effectively are critical [15]. Case Study - A case study illustrates the difference between traditional deterministic approaches and probabilistic outputs in handling a stationary vehicle potentially encroaching into the lane, highlighting the advantages of probabilistic decision-making [14][16]. Sensor Fusion and Localization - The article discusses the significance of multi-sensor fusion for precise localization, combining data from LiDAR, cameras, RTK GNSS, IMU, and wheel speed sensors to achieve robust positioning [46][47]. - The proposed solution includes a self-developed RTK GNSS tightly coupled localization scheme that enhances robustness against GNSS signal loss [49][53]. Prediction and Planning - The article outlines two main prediction methodologies: rasterized representation and vectorized representation, each with its strengths and weaknesses in modeling traffic interactions [60][65]. - A hybrid approach is suggested, utilizing both methods to adapt to different driving environments, ensuring effective modeling of structured and unstructured roads [75][77]. Control Strategies - The article introduces a closed-loop control system that adapts to real-time vehicle dynamics, enhancing robustness compared to traditional open-loop control methods [91][92]. - The system incorporates adaptive feedback control and online learning to continuously optimize control strategies based on vehicle performance and environmental conditions [99][100]. Simulation and Testing - End-to-end simulation is emphasized as a crucial component for testing the entire algorithm system, allowing for comprehensive evaluation and refinement of the autonomous driving framework [106][108].

Core Viewpoint - TuSimple's co-founder and former CEO Xiaodi Hou is actively seeking to change the company's board of directors and push for liquidation to return cash to shareholders, amidst ongoing disputes regarding his voting rights and the company's strategic direction [1][2][6]. Group 1: Board Control and Shareholder Actions - Hou is advocating for a written consent process to remove current board members and replace them with directors who support liquidation, allowing shareholders to act even if the current board is re-elected [2][4]. - TuSimple is urging shareholders to re-elect its existing directors and approve a staggered board plan, which would prevent future attempts to remove all board members simultaneously [3]. Group 2: Company Operations and Financial Status - TuSimple has faced significant challenges since going public in 2021, including shutting down U.S. operations and delisting from the stock market in early 2024, while planning to relaunch AV testing in China [5]. - The company is reportedly looking to utilize its U.S. funds for a new business unit in AI animation and gaming, which has caused dissatisfaction among shareholders like Hou [5][6]. - Hou estimates that liquidation could return approximately $1.93 per share to shareholders, based on the company's reported cash reserves of around $450 million as of September [6]. Group 3: Legal Disputes and Shareholder Rights - Hou has filed a lawsuit to regain control over his voting rights, arguing that a previous agreement granting control to co-founder Mo Chen has expired [8]. - The resolution of the dispute over Hou's 27.9% stake is expected to be addressed in a hearing scheduled for the first quarter of 2025 [9].

Core Viewpoint - TuSimple is attempting to shift its focus from self-driving trucks to a new AI-generated animation and video game business, which has caused confusion and anger among shareholders, and is leading to legal disputes over approximately $450 million in funds [1][2][4] Company Background - TuSimple, founded in 2015, was once a prominent player in the autonomous vehicle sector, raising $648 million from various investors and going public in 2021 with a valuation of $8.49 billion [3] - The company faced significant challenges, including internal issues, a lost partnership, a self-driving truck crash, and federal investigations, leading to a drastic decline in stock price from $62.58 to under $1 before delisting in January 2024 [3][4] Financial Situation - TuSimple has approximately $450 million in cash, but access to these funds is restricted due to ongoing lawsuits, including a class action settlement of $189 million [4][5] - The company’s Chinese subsidiary, TuSimple China, has annual operating expenses exceeding $100 million, necessitating access to U.S. funds for operations [4] Shareholder Concerns - A group of shareholders has raised allegations of "potentially fraudulent activities" regarding the misappropriation of funds to support private ventures linked to co-founder Mo Chen [2][5] - Shareholders have expressed distrust in management's ability to generate value and have urged the board to keep funds in the U.S. for the benefit of all shareholders [5] Business Transition - TuSimple's pivot to animation and gaming, which includes developing a feature film and video game based on "The Three Body Problem," marks a significant departure from its original business model [2][6] - The company is leveraging its self-driving technology infrastructure to enter the $600 billion animation and gaming industry, which is seen as a potential source of near-term profits [8][9] Legal and Regulatory Issues - The company is currently under scrutiny due to a temporary restraining order that limits its ability to transfer assets outside the U.S., complicating its operational strategy [4][8] - TuSimple's connections to other businesses, particularly those linked to Mo Chen, have raised concerns among shareholders and regulators, leading to investigations regarding potential conflicts of interest [9][10]

Core Viewpoint - TuSimple Holdings Inc. has reached a settlement with the Committee on Foreign Investment in the United States (CFIUS) regarding past security and intellectual property concerns, allowing the company to focus on its development goals without admitting fault [1][2]. Company Overview - TuSimple is a global autonomous driving technology company based in San Diego, California, founded in 2015 [2]. - The company is developing a fully autonomous (SAE Level 4) driving solution for long-haul heavy-duty trucks, aiming to transform the $4 trillion global truck freight industry [2]. - TuSimple's technology enables trucks to see 1,000 meters away, operate nearly continuously, and reduce fuel consumption by over 10% compared to manually driven trucks [2]. - The company has achieved significant milestones, including the world's first fully autonomous, 'driver-out' semi-truck run on open public roads in both the U.S. and China, and the development of the world's first Autonomous Freight Network (AFN) [2].

Revenue Performance - Revenue for the three months ended September 30, 2023, was $0, a decrease of 100% compared to $2.653 million in the same period in 2022, reflecting the company's revised strategy to pause freight revenue operations in the U.S. segment [101]. - For the nine months ended September 30, 2023, revenue decreased by $7.2 million, or 96%, to $307,000 compared to $7.511 million in the same period in 2022, primarily due to reduced volume of orders and loads [102]. Cost and Expenses - Cost of revenue for the three months ended September 30, 2023, was $0, a decrease of 100% from $5.436 million in the same period in 2022, consistent with the pause in freight revenue operations [103]. - Total operating expenses for the three months ended September 30, 2023, were $70.657 million, down 39% from $116.050 million in the same period in 2022 [100]. - Research and Development (R&D) expenses decreased by $40.4 million, or 67%, in the three months ended September 30, 2023, compared to the same period in 2022, primarily due to restructuring efforts [108]. - U.S. SG&A expenses decreased by $7.9 million, or 30%, in Q3 2023 compared to Q3 2022, primarily due to restructuring efforts [113]. - APAC SG&A expenses increased by $3.1 million, or 58%, in Q3 2023 compared to Q3 2022, mainly due to increased legal and professional services costs [114]. Operational Efficiency - Total Adjusted EBITDA for Q3 2023 was $(57.4) million, a 38% improvement from $(92.8) million in Q3 2022 [120]. - Loss from operations decreased by $48.2 million, or 41%, in Q3 2023 compared to Q3 2022, reflecting improved operational efficiency [121]. Cash and Investments - Cash and cash equivalents as of September 30, 2023, were $249.2 million, with an additional $526.0 million in short-term investments [126]. - Net cash used in operating activities decreased from $256.0 million in the first nine months of 2022 to $217.9 million in 2023 [129]. - Net cash used in investing activities decreased from $210.1 million in the first nine months of 2022 to $147.7 million in 2023 [130]. - Company anticipates that existing cash and cash equivalents will be sufficient to meet cash needs for at least the next 12 months [126]. - As of September 30, 2023, the company had cash and cash equivalents of $249.2 million and short-term investments of $526.0 million [138]. - The investment portfolio primarily consists of cash deposits, money market funds, commercial paper, U.S. government and agency securities, and investment-grade corporate debt securities [138]. - The company's investment activities aim to preserve capital and meet liquidity requirements without significantly increasing risk [138]. - Investments are primarily in highly-liquid, investment-grade debt securities, with limited credit exposure to any one issuer [138]. - The company does not engage in trading or speculative investments and has not used derivative financial instruments for interest rate risk management [138]. - The fair value of the investment portfolio is relatively insensitive to interest rate fluctuations due to the short maturities of cash equivalents and marketable securities [138]. - A hypothetical 100 basis point increase in interest rates would not materially impact the fair value of the investment portfolio as of September 30, 2023 [138]. Strategic Initiatives - The company has implemented multiple restructuring plans, including a 25% reduction of the total workforce in December 2022 and a 30% reduction in May 2023, to align with strategic priorities [105]. - The company operated approximately 70 L4 autonomous semi-trucks, with 35 in the U.S. and 35 in APAC, in Driver-In mode with a safety driver and safety engineer [91]. - The Autonomous Freight Network (AFN) is in early development stages, aiming to provide autonomous freight capacity as a service through two service models based on user needs [87]. Interest Income - Interest income for the three months ended September 30, 2023, was $9.298 million, an increase from $5.545 million in the same period in 2022 [100]. - Interest income rose by $3.8 million, or 68%, in Q3 2023 compared to Q3 2022, attributed to an increase in interest-bearing short-term investments [116].

Revenue and Cost - Revenue for the three months ended June 30, 2023, decreased by $2.5 million, or 96%, compared to the same period in 2022, primarily due to reduced volume of orders and loads in the U.S. segment [105]. - Revenue for the six months ended June 30, 2023, decreased by $4.6 million, or 94%, compared to the same period in 2022, in line with the revised strategy to pause freight revenue operations in the U.S. segment [106]. - Cost of revenue for the three months ended June 30, 2023, decreased by $5.5 million, or 96%, compared to the same period in 2022, consistent with the strategy to pause freight revenue operations [108]. - Cost of revenue for the six months ended June 30, 2023, decreased by $9.1 million, or 92%, compared to the same period in 2022, reflecting the same operational strategy [109]. Research and Development (R&D) Expenses - Research and Development (R&D) expenses for the three months ended June 30, 2023, totaled $58.5 million, a decrease of $27.0 million, or 32%, compared to the same period in 2022 [113]. - R&D expenses in the U.S. for the three months ended June 30, 2023, decreased by $27.2 million, or 42%, primarily due to restructuring efforts [114]. - R&D expenses increased by $1.1 million, or 3%, in the six months ended June 30, 2023, primarily due to expansion in China and Japan for L4 capabilities [116]. Operating Expenses and Net Loss - Total operating expenses for the three months ended June 30, 2023, were $87.2 million, down from $107.5 million in the same period in 2022 [102]. - The net loss for the three months ended June 30, 2023, was $78.0 million, compared to a net loss of $108.6 million in the same period in 2022 [102]. - The company has implemented restructuring plans, including a 25% reduction in workforce in December 2022 and a 30% reduction in May 2023, to align costs with strategic priorities [110]. SG&A Expenses - SG&A expenses in the U.S. rose by $4.7 million, or 27%, in Q2 2023, mainly due to increased legal and professional services costs [118]. - SG&A expenses in APAC increased by $2.1 million, or 42%, in Q2 2023, attributed to higher legal and professional services costs [119]. Financial Performance - Interest income surged by $7.8 million, or 411%, in Q2 2023, driven by earnings from money market funds and short-term investments [122]. - Adjusted EBITDA improved by 22% in Q2 2023, with a loss of $64.9 million compared to a loss of $82.7 million in Q2 2022 [124]. Cash and Investments - Total cash and cash equivalents as of June 30, 2023, were $314.7 million, with $519.2 million in short-term investments [132]. - Net cash used in operating activities decreased from $176.7 million in H1 2022 to $157.8 million in H1 2023, reflecting restructuring efforts [135]. - Net cash used in investing activities increased significantly to $141.3 million in H1 2023, primarily due to investments in marketable securities [136]. - Future capital requirements may necessitate additional equity or debt financing, potentially diluting existing stockholders' interests [133]. - Future minimum lease payments for operating leases amounted to $54.9 million as of June 30, 2023 [138]. Investment Portfolio - As of June 30, 2023, the company had cash and cash equivalents of $314.7 million and short-term investments of $519.2 million [144]. - The investment portfolio primarily consists of cash deposits, money market funds, commercial paper, U.S. government and agency securities, and investment-grade corporate debt securities [144]. - The company aims to preserve capital and meet liquidity requirements without significantly increasing risk through its investment activities [144]. - Investments are primarily in highly-liquid, investment-grade debt securities, with limited credit exposure to any single issuer [144]. - The company does not engage in trading or speculative investments and has not used derivative financial instruments for interest rate risk management [144]. - The fair value of the investment portfolio is relatively insensitive to interest rate fluctuations due to the short maturities of cash equivalents and marketable securities [144]. - A hypothetical 100 basis point increase in interest rates would not materially impact the fair value of the investment portfolio as of June 30, 2023 [144]. Autonomous Freight Network - The Autonomous Freight Network (AFN) is in early development stages, aiming to provide autonomous freight capacity as a service through two service models based on user needs [89].

Revenue and Costs - Revenue for the three months ended March 31, 2023, decreased by $2.0 million, or 91%, to $215,000 compared to $2.26 million in the same period in 2022, primarily due to reduced volume of orders and loads [102]. - Cost of revenue for the same period decreased by $3.58 million, or 88%, to $508,000 from $4.09 million in 2022, aligning with the company's strategy to pause freight revenue operations in the U.S. segment [103]. Expenses - Research and Development (R&D) expenses decreased by $16.56 million, or 21%, to $61.6 million in Q1 2023 compared to $78.16 million in Q1 2022, with a notable 29% decrease in U.S. R&D expenses [105]. - Selling, General and Administrative (SG&A) expenses decreased by $3.53 million, or 11%, to $28.69 million in Q1 2023 from $32.22 million in Q1 2022, primarily due to restructuring efforts [108]. Financial Performance - The net loss for the three months ended March 31, 2023, was $81.21 million, compared to a net loss of $111.90 million in the same period in 2022, reflecting a reduction in losses [101]. - Adjusted EBITDA for Q1 2023 was $(69,525) thousand, a 13% improvement from $(80,235) thousand in Q1 2022 [115]. - U.S. segment Adjusted EBITDA improved to $(48,646) thousand in Q1 2023, a 21% decrease from $(61,752) thousand in Q1 2022 [116]. - APAC segment Adjusted EBITDA increased to $(20,879) thousand in Q1 2023, reflecting a 13% increase from $(18,483) thousand in Q1 2022 [116]. Cash and Investments - As of March 31, 2023, the company had $510.0 million in cash and cash equivalents and $397.0 million in short-term investments [118]. - Net cash used in operating activities decreased from $(100,630) thousand in Q1 2022 to $(87,680) thousand in Q1 2023 [121]. - Net cash used in investing activities increased from $(1,377) thousand in Q1 2022 to $(18,120) thousand in Q1 2023, primarily due to investments in marketable securities [122]. Restructuring and Strategy - The company initiated restructuring activities in Q4 2022, including a 25% reduction in total workforce and impairment of several capital assets [104]. - The company’s restructuring activities have contributed to a decrease in net losses, aligning costs with strategic priorities [121]. - The company plans to continue focusing on R&D to refine its L4 autonomous driving technology for scaled deployment and commercialization [92]. Autonomous Technology - The company has approximately 70 L4 autonomous semi-trucks currently operating, with 35 in the U.S. and 35 in APAC, in Driver In mode [93]. - The company is developing its Autonomous Freight Network (AFN) to provide autonomous freight capacity as a service, aiming for commercialization with retrofitted trucks [89]. Financing and Interest Rates - The company may seek additional equity or debt financing to support growth and technology development, which could dilute existing stockholder ownership [119]. - A hypothetical 100 basis point increase in interest rates would not materially impact the fair value of the company's investment portfolio as of March 31, 2023 [130]. - Interest income increased significantly by $9.4 million, or 2,047%, to $9.88 million in Q1 2023 compared to $460,000 in Q1 2022, driven by earnings from money market funds and short-term investments [111].

Part I [Business Overview](index=5&type=section&id=Item%201.%20Business) TuSimple develops L4 autonomous driving technology and an Autonomous Freight Network (AFN) for the U.S. and APAC regions, targeting the $4 trillion global truck freight market - TuSimple is a global autonomous driving technology company, founded in 2015, headquartered in San Diego, California, with operations in the U.S. and APAC, developing full-stack **L4 autonomous driving technology** and an **Autonomous Freight Network (AFN)** to revolutionize the **$4 trillion global truck freight market**[22](index=22&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) - The company operates approximately **70 L4 autonomous semi-trucks** (**35 in the U.S. and 35 in APAC**) with a safety driver and engineer, de-emphasizing revenue-generating freight services in **Q4 2022** due to operating losses, with no significant revenue planned for **2023**[32](index=32&type=chunk)[35](index=35&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - TuSimple achieved fully **'Driver Out'** (no human present in the cockpit) test runs in the U.S. (**80+ mile route in Arizona, over 550 miles driven, zero disengagements**) and APAC (**40+ mile route in Shanghai, including Yangshan Port, during heavy traffic, zero disengagements**)[41](index=41&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk) Autonomous Freight Market Size | Market | Addressable Market | | :----- | :----------------- | | Global | $4 trillion | | U.S. | $800 billion | | APAC | $1.6 trillion | - The company's **L4 autonomous technology** is specifically designed for semi-trucks, focusing on **'middle mile' routes** to address industry challenges such as driver shortages, safety (**94% of serious crashes caused by human error**), efficiency, and carbon footprint[48](index=48&type=chunk)[49](index=49&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Regulatory environments are supportive: **44 U.S. states** allow autonomous semi-truck testing (**29 for commercial deployment**), **Shanghai, China**, became the first city to allow **L4 fully driverless testing**, with TuSimple receiving a license, and **Japan targets L4 commercial operation by 2026**[59](index=59&type=chunk)[61](index=61&type=chunk)[64](index=64&type=chunk) - TuSimple's commercialization roadmap prioritizes the **'TuSimple Capacity' model** (owned/leased retrofitted trucks) for accelerated scaling, followed by purpose-built L4 trucks from OEMs, with the **AFN** aiming to provide a comprehensive autonomous freight solution with HD mapped routes and terminals[26](index=26&type=chunk)[62](index=62&type=chunk)[65](index=65&type=chunk)[71](index=71&type=chunk) - Core technologies include a **camera-centric L4 ADS** with a **1,000-meter perception range**, **multi-modal sensor fusion** (LiDAR, radar, GPS, ultrasonic), and offboard capabilities (HD maps, ML, simulation, fleet operations), with the **TuSimple Domain Controller (TDC)** being developed with **NVIDIA**[29](index=29&type=chunk)[72](index=72&type=chunk)[76](index=76&type=chunk)[78](index=78&type=chunk)[81](index=81&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) - The company passed an independent 3rd party (**TÜV SÜD**) safety audit to **SAE standard J3018** and AV testing best practices with **zero nonconformities in 2022**[88](index=88&type=chunk) Intellectual Property Portfolio (as of June 30, 2023) | Metric | Count | | :--------------------- | :---- | | Issued Patents Globally | 590 | | Pending Patent Applications | 1,170 | - TuSimple's autonomous solutions are estimated to deliver **over 10% better fuel efficiency** than traditional trucking, contributing to a reduction in fuel consumption and greenhouse gas emissions[107](index=107&type=chunk) Global Full-Time Employees | Date | FTEs (Global) | | :------------- | :------------ | | Dec 31, 2022 | ~1,450 | | June 30, 2023 | ~1,058 | | June 30, 2023 (Excl. WARN) | ~810 | [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces material risks across strategic transactions, technology development, operational execution, financial stability, and regulatory compliance - The company faces risks related to its exploration of **strategic alternatives for its U.S. business**, including potential **failure to complete transactions**, diversion of management resources, and **adverse effects on business, financial condition, and stock price**[119](index=119&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - **Failure to timely file periodic reports** with the SEC (e.g., 2022 10-K, Q1/Q2 2023 10-Q) could result in the **delisting of its Class A common stock from Nasdaq**, making it difficult for stockholders to sell shares and negatively impacting the stock price[11](index=11&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Autonomous driving is an **emerging technology** with significant risks, including reliance on internally-developed software and third-party OEM/Tier 1 partners, potential defects in components, and challenges in achieving necessary reliability for **L4 autonomy at commercial scale**, especially in extreme weather or with non-compliant driving behavior[127](index=127&type=chunk)[128](index=128&type=chunk)[140](index=140&type=chunk) - The company has a **limited operating history** in a new market, with its **AFN still in early stages** of development and commercialization, and it expects to incur **significant expenses and continuing losses for the foreseeable future**[129](index=129&type=chunk)[135](index=135&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - **Unfavorable media coverage and publicity**, including past incidents related to technology safety, senior management turnover, and regulatory actions, have **negatively affected the company's reputation and business relationships**[133](index=133&type=chunk)[143](index=143&type=chunk)[147](index=147&type=chunk)[150](index=150&type=chunk) - The company is susceptible to **product liability or warranty claims** due to the inherent risks of autonomous driving technology, which could result in **significant costs, reputational harm, increased insurance premiums**, or the need for self-insurance[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) - **Reliance on relationships with OEMs, business partners, and third-party suppliers** for development and integration of products and services poses risks, including potential **termination of partnerships (e.g., Navistar)**, supply shortages, long lead times, and increased costs[162](index=162&type=chunk)[163](index=163&type=chunk)[166](index=166&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk) - The company has identified **material weaknesses in its internal control over financial reporting**, specifically regarding the **disclosure of related party transactions** and the **impact of board changes on oversight**, with remediation efforts ongoing[196](index=196&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) - The company's **intellectual property (IP) is essential**, but it faces risks of **IP infringement claims**, challenges to its patents, and unauthorized use of its proprietary technology and trade secrets, which could lead to **loss of competitive advantage and significant costs**[202](index=202&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[218](index=218&type=chunk) - The company is subject to **various claims, lawsuits, and regulatory investigations**, including **securities class actions and shareholder derivative actions** related to alleged false statements and related-party transactions (Hydron), as well as inquiries from **CFIUS and the SEC** regarding NSA compliance and internal investigation findings[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) - **Operations in China** are subject to **significant government regulation and legal, political, and economic risks**, including restrictions on cross-border data transfer and potential adverse changes in laws or their interpretation and enforcement[244](index=244&type=chunk)[246](index=246&type=chunk)[249](index=249&type=chunk) - The **dual-class stock structure concentrates voting control with certain stockholders**, particularly the **Founders (Mo Chen and Xiaodi Hou)**, limiting other stockholders' ability to influence important transactions and potentially affecting the trading market for Class A common stock[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[274](index=274&type=chunk) [Unresolved Staff Comments](index=52&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - None[304](index=304&type=chunk) [Properties](index=52&type=section&id=Item%202.%20Properties) TuSimple's corporate headquarters is in San Diego, California, with 100,000 square feet of office space, and it leases other facilities globally - TuSimple's corporate headquarters is in **San Diego, California**, with approximately **100,000 square feet of office space**, including **20,000 square feet subleased** or offered for sublease, with leases expiring in **September 2027**[305](index=305&type=chunk) - The company also leases facilities in the **U.S. and internationally** for its U.S. and APAC segments, believing current space is **adequate** and additional space can be obtained if needed[305](index=305&type=chunk) [Legal Proceedings](index=52&type=section&id=Item%203.%20Legal%20Proceedings) TuSimple is involved in shareholder class actions, derivative suits, and regulatory investigations by CFIUS and the SEC, with potential material losses - **Two shareholder securities class actions** (August 2022 and November 2022) were consolidated in **July 2023**, alleging materially false or misleading statements regarding autonomous driving technology and undisclosed related-party transactions with **Hydron Inc.**, and the company is **unable to estimate the potential loss**[307](index=307&type=chunk)[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - **Three shareholder derivative actions** were consolidated in **May 2023**, alleging **breaches of fiduciary duties** related to the **Hydron transaction and board restructuring**, with the consolidated action **stayed until February 9, 2024**, pending an investigation by a special litigation committee, and the company is **unable to estimate the potential loss**[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk) - TuSimple is cooperating with a **CFIUS inquiry** regarding compliance with the **National Security Agreement (NSA)** related to information shared with **TuSimple China, Hydron**, and Hydron's partners, and a **civil penalty may be imposed** if violations are found[319](index=319&type=chunk)[320](index=320&type=chunk) - The company is also cooperating with an **SEC investigation**, having received subpoenas for documents related to the **Audit Committee's internal investigation** into the **Hydron related-party transaction**, and the **potential loss cannot be estimated**[321](index=321&type=chunk)[322](index=322&type=chunk) [Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to TuSimple Holdings Inc - Not applicable[323](index=323&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=55&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TuSimple's Class A Common Stock is listed on Nasdaq, has 13 Class A and 2 Class B holders, and the company retains earnings for growth, never paying dividends - TuSimple's Class A Common Stock has been listed on the **Nasdaq Global Select Market** under the symbol **\"TSP\"** since **April 15, 2021**[326](index=326&type=chunk) Common Stock Holders (as of August 31, 2023) | Class of Stock | Holders of Record | | :------------- | :---------------- | | Class A Common Stock | 13 | | Class B Common Stock | 2 | - The company has **never declared or paid cash dividends** and intends to **retain all available funds and future earnings** to fund business growth, with current debt instruments also restricting the ability to pay dividends[328](index=328&type=chunk) Equity Compensation Plans (as of December 31, 2022) | Plan Category | Securities to be Issued Upon Exercise () | Weighted Average Exercise Price ($) | Securities Remaining Available for Future Issuance () | | :------------ | :---------------------------------------- | :---------------------------------- | :----------------------------------------------------- | | Approved by Stockholders | 20,602,012 | 15.16 | 18,041,005 | | Not Approved by Stockholders | — | — | — | | Total | 20,602,012 | 15.16 | 18,041,005 | - There has been **no material change in the planned use of proceeds from the IPO** from that described in the prospectus filed on April 16, 2021[331](index=331&type=chunk) [Reserved](index=56&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - Item 6 is reserved[335](index=335&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews TuSimple's financial condition and operations, highlighting L4 autonomous driving, recent board changes, workforce reductions, increasing net losses, and negative Adjusted EBITDA - TuSimple is a global autonomous driving technology company developing **L4 autonomous driving solutions** and an **Autonomous Freight Network (AFN)** in the **U.S. and APAC regions**, with independent development strategies for each segment[339](index=339&type=chunk)[340](index=340&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) - The company underwent **significant board and management changes** in late 2022 and early 2023, including the **termination of Dr. Xiaodi Hou as CEO**, the **re-appointment of Cheng Lu as CEO**, and multiple director changes, with restructuring plans in **December 2022 and May 2023** resulting in global **workforce reductions of 25% and 30%**, respectively[347](index=347&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk)[653](index=653&type=chunk) - TuSimple is evaluating **strategic alternatives for its U.S.-based business**, engaging **Perella Weinberg Partners** as a financial advisor[351](index=351&type=chunk)[656](index=656&type=chunk) Operational Highlights (Year Ended December 31) | Metric | 2021 | 2022 | % Change | | :------------------------- | :-------- | :-------- | :------- | | R&D Full Time Employees | ~1,100 | ~1,100 | —% | | Global FTEs (pre-restructuring) | ~1,400 | ~1,450 | 4% | | Patents Issued | 387 | 519 | 34% | | Cumulative Road Miles (in thousands) | ~6,300 | ~10,000 | 59% | | Total Truck Reservations (EOY) | ~6,975 | ~5,585 | (20)% | | Total Mapped Miles (EOY) | ~11,200 | ~11,400 | 2% | | Revenue Miles (in thousands) | ~3,446 | ~4,276 | 24% | - The company **de-emphasized revenue-generating freight services in Q4 2022** due to **operating losses** and does **not plan to generate significant revenue in 2023**, shifting focus to testing and R&D[346](index=346&type=chunk)[356](index=356&type=chunk)[373](index=373&type=chunk) Key Financial Position (as of December 31, 2022) | Metric | Amount (in thousands) | | :--------------------- | :-------------------- | | Cash and cash equivalents | $615,386 | | Short-term investments | $377,312 | Consolidated Results of Operations (in thousands) | Metric | 2020 | 2021 | 2022 | | :------------------------- | :---------- | :---------- | :---------- | | Revenue | $1,843 | $6,261 | $9,369 | | Cost of revenue | $5,293 | $12,369 | $19,780 | | Gross loss | $(3,450) | $(6,108) | $(10,411) | | Research and development | $132,001 | $287,167 | $351,599 | | Selling, general and administrative | $38,613 | $118,076 | $127,053 | | Loss from operations | $(174,064) | $(411,351) | $(489,063) | | Net loss | $(177,870) | $(732,673) | $(472,045) | | Net loss attributable to common stockholders | $(198,829) | $(736,808) | $(472,045) | Revenue Growth (Year Ended December 31) | Year | Revenue ($ thousands) | % Change YoY | | :--- | :-------------------- | :----------- | | 2020 | 1,843 | - | | 2021 | 6,261 | 240% | | 2022 | 9,369 | 50% | Cost of Revenue and Gross Loss Margin (Year Ended December 31) | Year | Cost of Revenue ($ thousands) | % Change YoY | Gross Loss Margin | | :--- | :---------------------------- | :----------- | :---------------- | | 2020 | 5,293 | - | 187% | | 2021 | 12,369 | 134% | 98% | | 2022 | 19,780 | 60% | 111% | - **Restructuring charges of $26.9 million** were incurred in **2022**, recorded in SG&A and R&D, related to a **25% workforce reduction** and asset impairment[376](index=376&type=chunk) Research and Development Expenses by Segment (in thousands) | Segment | 2020 | 2021 | 2022 | 2020 to 2021 % Change | 2021 to 2022 % Change | | :------ | :------- | :-------- | :-------- | :-------------------- | :-------------------- | | U.S. | $105,118 | $214,754 | $257,011 | 104% | 20% | | APAC | $26,883 | $72,413 | $94,588 | 169% | 31% | | Total | $132,001 | $287,167 | $351,599 | 118% | 22% | Selling, General and Administrative Expenses by Segment (in thousands) | Segment | 2020 | 2021 | 2022 | 2020 to 2021 % Change | 2021 to 2022 % Change | | :------ | :------ | :------- | :------- | :-------------------- | :-------------------- | | U.S. | $31,788 | $87,898 | $102,780 | 177% | 17% |\ | APAC | $6,825 | $30,178 | $24,273 | 342% | (20)% |\ | Total | $38,613 | $118,076 | $127,053 | 206% | 8% | Adjusted EBITDA (in thousands) | Year | Adjusted EBITDA | | :--- | :-------------- | | 2020 | $(153,285) | | 2021 | $(278,887) | | 2022 | $(348,653) | Segment Adjusted EBITDA (in thousands) | Segment | 2020 | 2021 | 2022 | 2020 to 2021 % Change | 2021 to 2022 % Change | | :------ | :---------- | :---------- | :---------- | :-------------------- | :-------------------- | | U.S. | $(124,314) | $(220,370) | $(259,109) | 77% | 18% | | APAC | $(28,971) | $(58,517) | $(89,544) | 102% | 53% | | Total | $(153,285) | $(278,887) | $(348,653) | | | Cash Flows Summary (in thousands) | Activity | 2020 | 2021 | 2022 | | :----------------- | :---------- | :------------ | :---------- | | Operating activities | $(103,848) | $(259,033) | $(329,865) | | Investing activities | $(4,412) | $(13,637) | $(392,173) | | Financing activities | $356,495 | $1,299,151 | $1,394 | Material Cash Requirements (as of December 31, 2022) | Type of Lease | Future Minimum Lease Payments (in thousands) | | :------------ | :----------------------------------------- | | Finance Leases | $4,126 | | Operating Leases | $59,275 | [Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) TuSimple faces market risks from foreign currency and interest rate fluctuations, with immaterial historical impact and an insensitive short-term investment portfolio - The company's results of operations and cash flows are subject to fluctuations due to changes in **foreign currency exchange rates**, but the effect has **not been material historically**, and **no hedging strategies** are currently employed[423](index=423&type=chunk) - TuSimple is exposed to **interest rate risk** related to its investment portfolio, which includes **cash, cash equivalents ($615.4 million), and short-term investments ($377.3 million)** as of **December 31, 2022**, and due to the **short-term nature** of these investments, the portfolio is **relatively insensitive** to interest rate fluctuations, and a **hypothetical 100 basis point increase would not have a material impact**[424](index=424&type=chunk)[425](index=425&type=chunk) [Financial Statements and Supplementary Data](index=69&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents TuSimple's audited consolidated financial statements for 2020-2022, with UHY LLP issuing an unqualified opinion on financials but an adverse opinion on internal control due to material weaknesses - **UHY LLP**, the independent registered public accounting firm, issued an **unqualified opinion** on the **consolidated financial statements** for the three-year period ended **December 31, 2022**[431](index=431&type=chunk) - **UHY LLP expressed an adverse opinion** on the company's **internal control over financial reporting** as of **December 31, 2022**, due to identified **material weaknesses** related to the **disclosure of related party transactions** and the **impact of board changes on internal control oversight**[432](index=432&type=chunk)[441](index=441&type=chunk)[442](index=442&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2021 | Dec 31, 2022 | | :------------------------- | :----------- | :----------- | | Cash and cash equivalents | $1,337,586 | $615,386 | | Short-term investments | — | $377,312 | | Total current assets | $1,353,180 | $1,007,552 | | Property and equipment, net | $36,053 | $17,083 | | Operating lease right-of-use assets | — | $44,952 | | Total assets | $1,396,323 | $1,074,279 | | Total current liabilities | $55,926 | $71,520 | | Total liabilities | $69,345 | $119,798 | | Total stockholders' equity | $1,326,978 | $954,481 | Consolidated Statements of Operations Highlights (in thousands) | Metric | 2020 | 2021 | 2022 | | :------------------------- | :---------- | :---------- | :---------- | | Revenue | $1,843 | $6,261 | $9,369 | | Gross loss | $(3,450) | $(6,108) | $(10,411) | | Total operating expenses | $170,614 | $405,243 | $478,652 | | Loss from operations | $(174,064) | $(411,351) | $(489,063) | | Net loss | $(177,870) | $(732,673) | $(472,045) | | Net loss per share (basic and diluted) | $(3.37) | $(4.36) | $(2.11) | Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | 2020 | 2021 | 2022 | | :----------------- | :---------- | :------------ | :---------- | | Operating activities | $(103,848) | $(259,033) | $(329,865) | | Investing activities | $(4,412) | $(13,637) | $(392,173) | | Financing activities | $356,495 | $1,299,151 | $1,394 | - The company adopted **ASC 842 (Leases) and ASC 326 (Financial Instruments-Credit Losses)** as of **January 1, 2022**, with the lease standard impacting the balance sheet by recognizing **ROU assets of $32.9 million** and **lease liabilities of $35.1 million**[433](index=433&type=chunk)[497](index=497&type=chunk) Stock-Based Compensation Expense (in thousands) | Expense Category | 2020 | 2021 | 2022 | | :---------------------------- | :------ | :------- | :------ | | Research and development | $917 | $71,201 | $75,260 | | Selling, general and administrative | $11,846 | $51,395 | $23,407 | | Total | $12,763 | $122,596 | $98,667 | - As of **December 31, 2022**, the company had accumulated federal and state **net operating loss carryforwards of $659.3 million and $249.3 million**, respectively, and a U.S. federal and state **R&D tax credit carryforward of $44.9 million**, with a **full valuation allowance** maintained due to a lack of earnings history[630](index=630&type=chunk)[631](index=631&type=chunk)[632](index=632&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosures](index=107&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) Information regarding changes in and disagreements with accountants was previously reported in the company's Current Reports on Form 8-K filed on November 21, 2022, and May 11, 2023 - The information required by this item was previously reported in the Company's **Current Reports on Form 8-K** filed on **November 21, 2022, and May 11, 2023**[657](index=657&type=chunk) [Controls and Procedures](index=107&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded TuSimple's disclosure controls were ineffective as of December 31, 2022, due to material weaknesses, but asserts financial statements are fairly presented, with remediation efforts underway - Management, with CEO and CFO participation, concluded that **disclosure controls and procedures were not effective** as of **December 31, 2022**, due to **material weaknesses in internal control over financial reporting**[658](index=658&type=chunk) - Despite the material weaknesses, management concluded that the **consolidated financial statements** for the periods covered by this report **fairly present the financial position, results of operations, and cash flows in conformity with GAAP**[658](index=658&type=chunk) - Material weaknesses identified include: (i) **ineffective controls over related party transaction disclosure** due to a lack of understanding among personnel, and (ii) **impaired oversight and monitoring of internal controls** due to the **unexpected removal of all independent directors and dissolution of the Audit Committee in November 2022**[661](index=661&type=chunk) - Remediation plans include **appointing independent directors**, **reconstituting the Audit Committee**, resuming board and committee meetings, providing **targeted training on related party transactions**, and developing/refining identification and reporting processes[662](index=662&type=chunk) [Other Information](index=108&type=section&id=Item%209B.%20Other%20Information) This item states that there is no other information to report - None[666](index=666&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=108&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to TuSimple Holdings Inc - Not applicable[667](index=667&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=109&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details TuSimple's directors, executive officers, and corporate governance, highlighting Mo Chen's concentrated voting control, board diversity, and the functions of its key committees Current Directors and Executive Officers | Name | Age | Position(s) with TuSimple | | :--------------- | :-- | :-------------------------------------- | | Mo Chen | 39 | Executive Chairman of the Board | | Cheng Lu | 40 | Chief Executive Officer and Director | | Eric Tapia | 46 | Chief Financial Officer | | Wendy Hayes | 53 | Director | | James Lu | 41 | Director | | Michael Mosier | 50 | Director | | Tyler McGaughey | 44 | Director | | Zhen Tao | 42 | Director | - **Mo Chen, the Executive Chairman**, beneficially holds **approximately 58% of the total voting power** of the outstanding common stock due to a proxy and voting agreement, **concentrating voting control**[269](index=269&type=chunk)[672](index=672&type=chunk)[698](index=698&type=chunk)[836](index=836&type=chunk) - **All Section 16(a) filing requirements** for executive officers, directors, and greater than 10% stockholders were **in compliance during 2022**[684](index=684&type=chunk) - The company's corporate governance features include an **annually re-elected Board**, **5 out of 7 (71%) independent directors**, a clawback provision, **prohibitions on short sales and hedging of securities**, and **restrictions on pledging securities**[687](index=687&type=chunk)[697](index=697&type=chunk) Board Diversity Matrix (as of August 8, 2023) | Category | Number of Directors | | :------------------- | :------------------ | | **Gender Identity** | | | Female | 2 | | Male | 5 | | **Demographic Background** | | | Asian | 5 | | White | 2 | | Total Number of Directors | 7 | - The **Board met fourteen times in 2022**, with **all directors attending at least 75%** of the total number of Board and committee meetings[696](index=696&type=chunk) - TuSimple is a **\"controlled company\" under Nasdaq Listing Rules** due to **Mo Chen's majority voting power**, allowing it to elect **exemptions from certain corporate governance requirements**, such as having a majority independent board and fully independent compensation and nominating committees[271](index=271&type=chunk)[698](index=698&type=chunk)[699](index=699&type=chunk) Board Committee Membership (as of August 2023) | Board Member | Audit | Compensation | Nominating and Corporate Governance | Government Security | | :---------------- | :---- | :----------- | :---------------------------------- | :------------------ | | Mo Chen (Chair) | | X | | | | Cheng Lu | | | | | | James Lu | X | Chair | Chair | | | Wendy Hayes | Chair | | X | X | | Michael Mosier | | | | X | | J. Tyler McGaughey | | | | Chair and Security Director | | Zhen Tao | X | | | | - The **Audit Committee**, composed of **three independent directors (Wendy Hayes as chair)**, oversees financial statements, compliance, and the independent auditor, and met **fifteen times in 2022**[707](index=707&type=chunk)[708](index=708&type=chunk)[709](index=709&type=chunk) - The **Government Security Committee (GSC)**, chaired by **J. Tyler McGaughey (Security Director)**, oversees compliance with the **National Security Agreement (NSA)** and met **four times in 2022**[715](index=715&type=chunk) [Executive Compensation](index=115&type=section&id=Item%2011.%20Executive%20Compensation) This section details TuSimple's executive compensation philosophy and structure for NEOs, aiming to attract and retain talent through base salary, bonuses, and equity, with the Compensation Committee overseeing decisions and severance agreements - The **Named Executive Officers (NEOs) for 2022** included **Cheng Lu (CEO), Eric Tapia (CFO)**, and former executives Xiaodi Hou, Ersin Yumer, Patrick Dillon, and James Mullen, with **significant changes in roles and departures** during the year[718](index=718&type=chunk) - The compensation philosophy aims to **attract and retain talented executives**, **motivate them to achieve corporate objectives**, **align their interests with stockholders**, and **maximize long-term growth** through competitive, fair, and performance-driven pay[719](index=719&type=chunk)[722](index=722&type=chunk) - The **Compensation Committee (CC)** is responsible for establishing and overseeing executive compensation, reviewing it annually based on job responsibilities, experience, performance, competitive market data (from independent consultant **FW Cook**), and CEO recommendations (excluding his own)[720](index=720&type=chunk)[723](index=723&type=chunk)[724](index=724&type=chunk)[725](index=725&type=chunk)[727](index=727&type=chunk) NEO Base Salary (2021 vs. 2022) | Name | 2022 Base Salary ($) | 2021 Base Salary ($) | | :---------- | :------------------- | :------------------- | | Cheng Lu | 197,115 | 450,000 | | Xiaodi Hou | 439,038 | 325,000 | | Eric Tapia | 332,713 | 265,000 | | Ersin Yumer | 415,301 | 426,000 | | Patrick Dillon | 247,821 | 350,000 | | James Mullen | 347,011 | 350,000 | - **Annual incentive bonuses** are tied to corporate performance and individual assessments, with discretionary bonuses approved in **2022**, including a **guaranteed $400,000 bonus for Cheng Lu and $97,200 for Eric Tapia**[736](index=736&type=chunk)[737](index=737&type=chunk)[740](index=740&type=chunk)[743](index=743&type=chunk) - **One-time $500,000 special cash bonuses** were awarded to **Patrick Dillon and James Mullen** in **April 2022 for retention**, with repayment waived upon their resignations[741](index=741&type=chunk)[742](index=742&type=chunk) - **Equity compensation**, primarily **time-vested Restricted Stock Units (RSUs)**, is a critical long-term incentive, with **Cheng Lu receiving performance-based RSUs in 2022** with **market and service-based vesting requirements**, including **stock price hurdles**[745](index=745&type=chunk)[746](index=746&type=chunk)[747](index=747&type=chunk) - **Severance and Change in Control (CIC) agreements** provide benefits upon qualifying terminations, including **base salary continuation, COBRA coverage, and accelerated equity vesting**, designed to attract and retain executives[749](index=749&type=chunk)[782](index=782&type=chunk)[783](index=783&type=chunk)[784](index=784&type=chunk)[785](index=785&type=chunk) - **Cheng Lu's current employment agreement** includes an **annual base salary of $450,000**, a **guaranteed annual bonus of $400,000 for 2022**, a **monthly housing allowance of $9,000**, and **6,850,000 restricted stock units** (**50% service-based, 50% market/service-based**)[779](index=779&type=chunk) 2022 Summary Compensation Table (in thousands) | Name | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | :---------- | :--- | :--------- | :-------- | :--------------- | :---------------- | :------------------------- | :----------- | | Cheng Lu | 2022 | 197 | 400 | 9,076 | — | 451 | 10,125 | | | 2021 | 450 | 305 | — | 65,999 | 15 | 66,769 | | | 2020 | 388 | 60 | 8,241 | 7,786 | 1,076 | 17,551 | | Xiaodi Hou | 2022 | 439 | — | — | — | — | 439 | | | 2021 | 325 | 187 | 14,110 | 9,160 | 551 | 24,334 | | | 2020 | 280 | 1 | 45 | — | 74 | 400 | | Ersin Yumer | 2022 | 415 | — | 617 | — | 365 | 1,397 | | Eric Tapia | 2022 | 333 | 97 | 1,311 | — | 57 | 1,798 | | Patrick Dillon | 2022 | 248 | — | 3,477 | — | 512 | 4,238 | | | 2021 | 350 | 350 | 706 | 458 | 34 | 1,898 | | | 2020 | 9 | 50 | 494 | 1,529 | — | 2,083 | | James Mullen | 2022 | 347 | — | 3,477 | — | 614 | 4,438 | | | 2021 | 350 | 179 | 8,819 | — | 16 | 9,364 | | | 2020 | 75 | 55 | 330 | 1,020 | — | 1,480 | 2022 Director Compensation (in thousands) | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Total ($) | | :--------------- | :------------------------------ | :--------------- | :-------- | | Mo Chen | — | — | — | | Wendy Hayes | 4 | 250 | 254 | | Michael Mosier | 15 | — | 15 | | James Lu | 6 | 250 | 256 | | Brad Buss | 82 | 188 | 270 | | Charles Chao | — | — | — | | Karen C. Francis | 64 | 188 | 253 | | Michelle Sterling | 74 | 188 | 262 | | Reed Werner | 193 | — | 193 | | Bonnie Yi Zhang | 19 | — | 19 | - **Non-employee directors receive annual cash retainers** for Board and committee service, and **Security Directors are compensated with a $250,000 cash payment instead of equity**, as requested by CFIUS[817](index=817&type=chunk)[820](index=820&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=132&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details TuSimple's equity compensation plans and beneficial ownership, with over 20 million securities authorized and Executive Chairman Mo Chen holding approximately 58.4% of total voting power via Class B Common Stock Securities Authorized for Issuance Under Equity Compensation Plans (as of December 31, 2022) | Plan Category | Securities to be Issued Upon Exercise () | Weighted Average Exercise Price ($) | Securities Remaining Available for Future Issuance () | | :------------ | :---------------------------------------- | :---------------------------------- | :----------------------------------------------------- | | Approved by Stockholders | 20,602,012 | 15.16 | 18,041,005 | | Not Approved by Stockholders | — | — | — | | Total | 20,602,012 | 15.16 | 18,041,005 | Security Ownership of Certain Beneficial Owners and Management (as of August 8, 2023) | Name of Beneficial Owner | Number of Shares of Class A Common Stock | % of Class A Common Stock | Number of Shares of Class B Common Stock | % of Class B Common Stock | % of Total Voting Power | | :----------------------- | :--------------------------------------- | :------------------------ | :--------------------------------------- | :------------------------ | :---------------------- | | Cheng Lu, CEO | 2,619,578 | 1.3% | — | — | * | | Eric Tapia, CFO | 114,574 | * | — | — | * | | Xiaodi Hou, former CEO | 13,442,314 | 6.6% | 12,000,000 | 50% | 30.0% | | Ersin Yumer, former CEO | 39,248 | * | — | — | * | | Patrick Dillon, former CFO | 195,219 | * | — | — | * | | James Mullen, former CALO | 295,947 | * | — | — | * | | Mo Chen, Executive Chairman | 19,734,628 | 9.6% | 24,000,000 | 100% | 58.4% | | All Executive Officers and Directors as a Group (8 persons) | 22,468,780 | 11.0% | 24,000,000 | 100% | 59.0% | | Sun Dream Inc. | 24,676,708 | 12.0% | — | — | 5.5% | | TRATON SE | 15,782,220 | 7.7% | — | — | 3.6% | | The Vanguard Group | 12,816,129 | 6.3% | — | — | 2.9% | | BlackRock, Inc. | 11,646,102 | 5.7% | — | — | 2.6% | - The percentage ownership is based on **205,095,521 Class A shares and 24,000,000 Class B shares outstanding as of August 8, 2023**, with **Class A shares having one vote per share**, while **Class B shares have ten votes per share**[826](index=826&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=134&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) TuSimple requires Audit Committee approval for related-party transactions over $120,000, and an investigation found confidential information was shared with Hydron Inc. (Mo Chen's company) without proper board approval - The company has a **written related party transaction policy** requiring **prior consent from the Audit Committee**, or other independent board members, for **transactions exceeding $120,000** involving executive officers, directors, or significant stockholders[839](index=839&type=chunk) - **Indemnification agreements** are in place with **each director, executive officer, and certain other key employees**, providing for indemnification to the **fullest extent permitted by Delaware law**[841](index=841&type=chunk)[842](index=842&type=chunk) - The **Joint Development Agreement (JDA) with Navistar, Inc.** (a TRATON SE subsidiary) to develop a purpose-built L4 autonomous semi-truck **ended on December 5, 2022**[847](index=847&type=chunk) - An **ongoing Audit Committee investigation** found that **confidential information was shared with Hydron Inc.** (where **Mo Chen is a founder, director, and CEO**) **without proper approval**, though the information was **not source code** and was **consistent with normal vendor sharing**, and **no current partnership exists with Hydron**[848](index=848&type=chunk)[849](index=849&type=chunk) [Principal Accountant Fees and Services](index=135&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section details fees paid to KPMG LLP for audit and tax services in 2021-2022, with UHY LLP appointed as the new independent auditor on May 10, 2023, and the Audit Committee pre-approving all services Principal Accountant Fees (in thousands) | Fee Type | 2021 ($) | 2022 ($) | | :--------------- | :------- | :------- | | Audit Fees | 930 | 1,198 | | Audit-Related Fees | — | — | | Tax Fees | 93 | 119 | | All Other Fees | — | — | | Total Fees | 1,023 | 1,317 | - **UHY LLP was appointed** as the company's **new independent registered public accounting firm** on **May 10, 2023**, with no consultations regarding accounting matters held with UHY prior to their appointment[852](index=852&type=chunk) - The **Audit Committee is responsible for the appointment, compensation, and oversight** of the independent registered public accounting firm, and generally **pre-approves all audit and permissible non-audit services**[854](index=854&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=137&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed with the report, including financial statements, omitted schedules, and a comprehensive list of exhibits covering corporate governance and various agreements - The report includes **financial statements and a list of exhibits**, with **Financial statement schedules are omitted** because the required information is presented in the financial statements or related notes[857](index=857&type=chunk) - Exhibits include the **Amended and Restated Certificate of Incorporation and Bylaws, Indemnification Agreements, various Share Purchase Agreements, Equity Incentive Plans, Employment and Severance Agreements, and certifications**[858](index=858&type=chunk) [Form 10-K Summary](index=139&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K summary is provided in the report - None[861](index=861&type=chunk) [Signatures](index=140&type=section&id=Signatures) This section contains the required signatures of TuSimple Holdings Inc.'s authorized officers and directors, including the CEO, CFO, and Executive Chairman, confirming the Form 10-K filing - The report is signed by authorized officers and directors, including **Cheng Lu (Chief Executive Officer), Eric Tapia (Chief Financial Officer), and Mo Chen (Director, Co-Founder and Executive Chairman)**, confirming compliance with **Sections 13 or 15(d) of the Securities Exchange Act of 1934**[864](index=864&type=chunk)[865](index=865&type=chunk)[868](index=868&type=chunk)

Business Strategy - TuSimple is targeting the $4 trillion global truck freight market with its Autonomous Freight Network (AFN) designed for semi-trucks [110]. - The AFN offers autonomous freight capacity as a service, allowing users to select service models based on their needs, which is expected to drive rapid adoption [111]. - TuSimple's pricing strategy includes a per mile rate for shipping that is anticipated to be significantly lower than conventional market rates, benefiting users with reduced shipping costs [113]. - The company aims for a payback period of less than one year for users purchasing its purpose-built L4 autonomous semi-trucks through the TuSimple Path subscription [113]. Legal and Compliance Issues - TuSimple is currently facing multiple securities class action lawsuits alleging misleading statements regarding its autonomous driving technology and related party transactions [114][115]. - An internal investigation revealed that employees worked on matters for Hydron Inc. valued at less than $300,000, raising concerns about compliance with company policies [121]. - The company is cooperating with inquiries from the Committee on Foreign Investments in the United States (CFIUS) regarding compliance with a National Security Agreement [123]. - TuSimple received a notice from Nasdaq for non-compliance due to delayed filings, but has been granted an extension until September 30, 2023, to regain compliance [125][127]. Management Changes - Significant management changes occurred, including the termination of Dr. Xiaodi Hou and the appointment of Cheng Lu as the new CEO [128][131]. - The company has granted Cheng Lu 3,425,000 RSUs as part of his compensation package, contingent on continued employment and stock price performance [132]. - The company has implemented a Restructuring Plan resulting in a workforce reduction of approximately 650 employees, with an estimated one-time charge of $33.0 million to $35.0 million [134][135]. Financial Performance - As of September 30, 2022, the company reported a revenue increase of 49% year-over-year for Q3, totaling $2.7 million, and a 78% increase for the nine months ended September 30, 2022, totaling $7.5 million [153][154]. - The cost of revenue for Q3 2022 increased by 56% year-over-year to $5.4 million, and for the nine months ended September 30, 2022, it increased by 75% to $15.3 million [157][159]. - The gross loss margin for Q3 2022 was 105%, deteriorating from 95% in the same period of the prior year, primarily due to rising fuel and insurance costs [158]. - The company ended Q3 2022 with $0.9 billion in cash and cash equivalents and $0.2 billion in short-term investments [140]. Research and Development - Research and Development (R&D) expenses for Q3 2022 were approximately $84.9 million, with a total of $248.6 million for the nine months ended September 30, 2022 [152]. - Patents issued increased by 32% year-over-year, totaling 473 as of September 30, 2022, reflecting the company's commitment to innovation [139]. - R&D expenses increased by $0.4 million, or 1%, in Q3 2022 compared to Q3 2021, primarily due to higher personnel-related costs and depreciation [161]. - R&D expenses increased by $43.8 million, or 21%, for the nine months ended September 30, 2022, driven by increased personnel-related costs and stock-based compensation [162]. Operating Expenses - SG&A expenses increased by $1.4 million, or 5%, in Q3 2022 compared to Q3 2021, mainly due to higher office and facility-related costs and professional services [164]. - SG&A expenses decreased by $0.8 million, or 1%, for the nine months ended September 30, 2022, attributed to a one-time stock-based compensation expense in the prior year [165]. Interest Income and Cash Flow - Interest income surged by $5.1 million, or 1,127%, in Q3 2022 compared to Q3 2021, primarily from money market funds and short-term investments [169]. - Interest income increased by $6.8 million, or 605%, for the nine months ended September 30, 2022, also driven by money market funds and short-term investments [170]. - Loss from operations was $118.8 million in Q3 2022, a 2% increase from Q3 2021, and $341.7 million for the nine months ended September 30, 2022, a 16% increase year-over-year [171]. - Adjusted EBITDA for Q3 2022 was $(92.8) million, a 14% increase in loss compared to Q3 2021, and $(255.7) million for the nine months ended September 30, 2022, a 29% increase in loss [171]. Liquidity and Investment - As of September 30, 2022, the company had $0.9 billion in cash and cash equivalents and $0.2 billion in short-term investments, sufficient to meet cash needs for at least the next 12 months [176]. - Net cash used in operating activities increased to $256.0 million for the nine months ended September 30, 2022, primarily due to higher operational losses [179]. - The primary objective of the company's investment activities is to preserve capital and meet liquidity requirements without significantly increasing risk [191]. - The company invests primarily in highly-liquid, investment grade debt securities and limits credit exposure to any one issuer [191]. Market Risk - The fair value of the company's investment portfolio is relatively insensitive to interest rate fluctuations due to the short-term nature of its investments [191]. - A hypothetical 100 basis point increase in interest rates would not have a material impact on the fair value of the company's investment portfolio as of September 30, 2022 [191]. - The company is exposed to interest rate risk related primarily to its investment portfolio, affecting interest earned on cash and marketable securities [190]. - There have been no material changes to the company's market risk during the first nine months of 2022 [189]. Accounting Standards - The company has elected to use the extended transition period under the JOBS Act for the adoption of certain accounting standards [186]. - Financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates [186]. - For information on recently issued accounting pronouncements, refer to the condensed consolidated financial statements included in the Quarterly Report on Form 10-Q [187].