View(VIEW) - 2022 Q2 - Quarterly Report

Note Regarding Forward Looking Statements This section cautions readers that the report contains forward-looking statements subject to risks and uncertainties, which the company does not commit to updating - This section highlights that the report contains forward-looking statements subject to risks and uncertainties, including those amplified by the COVID-19 pandemic. Readers are cautioned not to place undue reliance on these statements, and the company does not commit to updating them[14] PART I. FINANCIAL INFORMATION This part presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Financial Statements (Unaudited) This section presents View, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, comprehensive loss, equity, and cash flows, with detailed notes Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of specific dates Balance Sheet Summary (in thousands) | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total current assets | $183,454 | $343,532 | | Total assets | $511,555 | $679,066 | | Total current liabilities | $83,466 | $104,610 | | Total liabilities | $161,866 | $199,728 | | Total stockholders' equity | $349,689 | $479,338 | Condensed Consolidated Statements of Comprehensive Loss This section details the company's revenues, costs, expenses, and net comprehensive loss for the reported periods Comprehensive Loss Summary (in thousands) | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Revenue | $16,316 | $16,926 | | Total costs and expenses | $101,194 | $105,283 | | Loss from operations | $(84,878) | $(88,357) | | Net and comprehensive loss | $(82,886) | $(95,720) | | Net loss per share, basic and diluted | $(0.39) | $(0.45) | Comprehensive Loss Summary (in thousands) | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Revenue | $33,328 | $26,695 | | Total costs and expenses | $204,410 | $179,732 | | Loss from operations | $(171,082) | $(153,037) | | Net and comprehensive loss | $(165,258) | $(169,755) | | Net loss per share, basic and diluted | $(0.77) | $(1.26) | Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) This section outlines changes in the company's redeemable convertible preferred stock and stockholders' equity (deficit) over the reported periods Stockholders' Equity Summary (in thousands) | Metric | December 31, 2021 (in thousands) | June 30, 2022 (in thousands) | | :-------------------------------- | :------------------------------- | :--------------------------- | | Total Stockholders' Equity | $479,338 | $349,689 | | Accumulated Deficit | $(2,257,331) | $(2,422,589) | - Stock-based compensation contributed $17.468 million and $18.141 million to additional paid-in capital for the periods ending March 31, 2022, and June 30, 2022, respectively[20] Condensed Consolidated Statements of Cash Flows This section presents the company's cash flows from operating, investing, and financing activities for the reported periods Cash Flow Summary (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(153,248) | $(125,168) | | Net cash used in investing activities | $(13,736) | $(5,820) | | Net cash provided by (used in) financing activities | $(999) | $516,122 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(167,983) | $385,134 | - Cash, cash equivalents, and restricted cash decreased significantly from $297.5 million at the beginning of the period to $129.6 million by June 30, 2022[21] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of the company's significant accounting policies, financial instruments, and other relevant financial information 1. Organization and Summary of Significant Accounting Policies This note describes View, Inc.'s business, its reverse recapitalization, basis of financial statement presentation, and going concern risk - View, Inc. manufactures smart building products, primarily electrochromic "smart" glass panels, network infrastructure, and software to improve health, productivity, and energy efficiency in buildings[22] - The company completed a reverse recapitalization merger on March 8, 2021, raising $771.3 million in net proceeds, which were used to repay a $276.8 million revolving debt facility[23][24] - The company has an accumulated deficit of $2.423 billion as of June 30, 2022, and reported a net loss of $165.3 million and negative cash flows from operations of $153.2 million for the six months ended June 30, 2022[31] - Management has determined there is substantial doubt about the company's ability to continue as a going concern beyond November 2022 without additional capital[32] - Two customers accounted for 16.9% and 16.6% of total revenue for the six months ended June 30, 2022, indicating customer concentration[37] - Three suppliers accounted for 20.0%, 19.1%, and 14.2% of total purchases for the six months ended June 30, 2022, indicating supplier concentration[39] 2. Reverse Recapitalization This note details the reverse recapitalization merger, including gross proceeds, transaction costs, and the identification of the accounting acquirer - The Merger raised $815.2 million in gross proceeds, including $374.1 million from CF II's trust account and $441.1 million from PIPE financing[43] - Transaction costs of $43.9 million were incurred, with $42.4 million recorded as a reduction to additional paid-in capital[46] - Legacy View was identified as the accounting acquirer due to factors such as majority voting power, board nomination rights, continuation of operations and management, and retention of the Legacy View name[49] 3. Revenue This note disaggregates revenue by product, offering, and geographic area, detailing contract assets, liabilities, and performance obligations Revenue by Type (in thousands) | Revenue Type | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | | :---------------- | :------------------------------------ | :------------------------------------ | | Products | $15,380 | $16,814 | | Services | $936 | $112 | | Total | $16,316 | $16,926 | Revenue by Product Offering (in thousands) | Product Offering | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | | :----------------------- | :------------------------------------ | :------------------------------------ | | Smart Glass | $4,306 | $11,580 | | Smart Building Platform | $9,055 | $5,136 | | Smart Building Technologies | $2,955 | $210 | | Total | $16,316 | $16,926 | Revenue by Geographic Area (in thousands) | Geographic Area | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | | :---------------- | :------------------------------------ | :------------------------------------ | | United States | $14,825 | $12,053 | | Canada | $1,443 | $4,403 | | Other | $48 | $470 | | Total | $16,316 | $16,926 | - Estimated contract losses for uncompleted work decreased from $20.7 million as of December 31, 2021, to $14.2 million as of June 30, 2022[53] 4. Fair Value This note outlines the company's fair value measurements for financial assets and liabilities, categorizing them into a three-level hierarchy Fair Value of Financial Instruments (in thousands) | Financial Instrument | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------- | :----------------------------- | :------------------------------- | | Money market funds | $87,693 | $247,500 | | Certificates of deposit | $18,318 | $16,462 | | Sponsor earn-out liability | $1,485 | $7,624 | | Private warrants liability | $28 | $174 | Gain/Loss on Fair Value Change, Net (in thousands) | (Gain) Loss on Fair Value Change, net (in thousands) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Sponsor Earn-out Liability | $(1,846) | $2,118 | $(6,139) | $(342) | | Private Warrants | $(58) | $(53) | $(146) | $50 | | Redeemable Convertible Preferred Stock Warrants | — | — | — | $(5,056) | | Total (Gain) loss on fair value change, net | $(1,904) | $2,065 | $(6,285) | $(5,348) | - The fair value of the Sponsor Earn-Out liability decreased from $7.624 million to $1.485 million from December 31, 2021, to June 30, 2022, reflecting a gain on fair value change[62][63] 5. Other Balance Sheet Information This note provides details on cash, accounts receivable, inventories, and long-lived assets, highlighting changes and impairments Cash and Cash Equivalents (in thousands) | Cash & Equivalents | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------------------- | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $111,242 | $281,081 | | Total cash, cash equivalents, and restricted cash | $129,560 | $297,543 | - The allowance for credit losses decreased from $0.7 million at December 31, 2021, to $0.5 million at June 30, 2022, due to a $0.2 million decrease related to written-off receivables[70] - Inventory impairments for the six months ended June 30, 2022, were $12.2 million, an increase from $6.1 million in the same period of 2021[71] 6. Product Warranties This note details the company's warranty obligations, including standard assurance warranties and specific liabilities for quality issues - Standard assurance warranty for IGUs is generally 10 years, and for control systems, 5 years[76] - A specific warranty liability of $33.8 million as of June 30, 2022, (down from $36.2 million at Dec 31, 2021) is recorded for a quality issue with certain IGU materials identified in 2019[77] Warranty Liability Rollforward (in thousands) | Warranty Liability (in thousands) | December 31, 2021 | June 30, 2022 | | :-------------------------------- | :---------------- | :------------ | | Beginning balance | $47,678 | $42,256 | | Accruals for warranties issued | $1,551 | $896 | | Changes to estimates of volume and costs | $1,234 | — | | Settlements made | $(8,207) | $(3,644) | | Ending balance | $42,256 | $39,508 | - Charges to Cost of revenues related to warranty liability adjustments were $0.3 million for Q2 2022 (down from $0.4 million in Q2 2021) and $0.9 million for H1 2022 (up from $0.8 million in H1 2021)[80] 7. Commitments and Contingencies This note details various commitments and contingencies, including indemnifications, letters of credit, and significant litigation and environmental liabilities - Standby letters of credit totaled $17.1 million as of June 30, 2022, an increase from $16.5 million at December 31, 2021[84] - The company has a promissory note with a customer, allowing draws up to $10.0 million, with $1.6 million drawn as of June 30, 2022[85] Litigation Settlement Liability (in thousands) | Litigation Settlement Liability (in thousands) | June 30, 2022 | December 31, 2021 | | :------------------------------------------- | :------------ | :---------------- | | Current | $3,000 | — | | Non-current | $5,312 | $7,834 | | Total | $8,312 | $7,834 | - The company agreed in principle to a global settlement for environmental claims, including a $3.0 million fine, a $1.5 million civil penalty, and a $0.5 million community service payment, totaling $5.0 million in penalties[88][89][90] Environmental Settlement Liability (in thousands) | Environmental Settlement Liability (in thousands) | June 30, 2022 | December 31, 2021 | | :---------------------------------------------- | :------------ | :---------------- | | Current | $2,950 | $2,950 | | Non-current | $2,000 | $2,000 | | Total | $4,950 | $4,950 | - The company is a defendant in a putative securities class action and multiple stockholder derivative complaints, with potential losses currently not estimable[94][96][99] - The SEC is conducting a formal investigation into the adequacy of the company's previously reported warranty accrual, and the U.S. Attorney's Office for the Southern District of New York has also requested information[105][106] 8. Debt This note details the company's debt, primarily an interest-free term loan, and the repayment of its revolving debt facility Debt Summary (in thousands) | Debt Type | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------ | :----------------------------- | :------------------------------- | | Term loan, due June 30, 2032 | $14,695 | $15,430 | | Debt, current | $1,470 | $1,470 | | Debt, non-current | $13,225 | $13,960 | - The term loan is interest-free and requires semi-annual payments of $0.7 million through June 30, 2032, with payments resuming on June 30, 2022[108][109] - The $276.8 million revolving debt facility was fully repaid and terminated on March 8, 2021, resulting in a $10.0 million debt extinguishment loss[114] 9. Stockholders' Equity This note outlines the company's common stock and preferred stock structure, including shares outstanding and dividend policy - As of June 30, 2022, 219,227,971 shares of common stock were issued and outstanding[115] - The company is authorized to issue 1,000,000 shares of preferred stock, but none were issued or outstanding as of June 30, 2022[116] - The company has not paid any cash dividends on common stock to date and has no current plans to do so[117] 10. Stock Warrants This note details the company's outstanding public, private, and other common stock warrants, including their exercise prices and status - As of June 30, 2022, there were 366,666 Private Warrants and 16,666,637 Public Warrants outstanding, with an exercise price of $11.50 per share[118][122] - No Public or Private Warrants had been exercised as of June 30, 2022[122] - In December 2021, 1,000,000 common stock warrants were issued in connection with the WorxWell acquisition[124] Stock Warrants Outstanding (As converted) | Warrant Type | Number of Warrants June 30, 2022 (As converted) | Number of Warrants December 31, 2021 (As converted) | Exercise Price Per Warrant (As converted) | | :------------------------------------------------- | :---------------------------------------------- | :------------------------------------------------ | :---------------------------------------- | | Total stock warrants | 21,305,462 | 21,311,920 | Varies | 11. Stock-Based Compensation This note describes the company's stock-based compensation plans, detailing outstanding options, RSUs, vesting conditions, and associated expenses - The 2018 Plan was terminated upon the Merger, with 24,657,302 outstanding options assumed under the new 2021 Plan[127] - The 2021 Plan initially reserved 58,631,907 shares, with 22,217,714 shares remaining for future issuance as of June 30, 2022[129][130] - Officer RSUs (12,500,000 shares) and Officer Options (5,000,000 options) were granted under the 2021 Plan, subject to both time and market-based vesting conditions ($15.00 and $20.00 share price hurdles for RSUs)[131] - The CEO Incentive Plan granted 25,000,000 options with an exercise price of $10.00 per share, vesting upon achieving stock price hurdles ranging from $20.00 to $110.00[132][133] Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense (in thousands) | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of revenue | $345 | $1,297 | $708 | $2,175 | | Research and development | $1,486 | $2,628 | $1,555 | $3,543 | | Selling, general, and administrative | $16,310 | $18,349 | $33,346 | $27,019 | | Total | $18,141 | $22,274 | $35,609 | $32,737 | 12. Income Taxes This note states that income tax expense was immaterial and a full valuation allowance is maintained on U.S. deferred tax assets due to projected losses - Income tax expense was immaterial for the three and six months ended June 30, 2022 and 2021[143] - A full valuation allowance is maintained on U.S. deferred tax assets due to projected taxable losses, indicating that tax benefits are unlikely to be realized[144][145] 13. Net Loss Per Share This note provides the computation of basic and diluted net loss per share, highlighting the impact of net loss and weighted-average shares outstanding Net Loss Per Share Calculation | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(82,886) | $(95,720) | $(165,258) | $(169,755) | | Weighted-average shares outstanding, basic and diluted | 214,253,209 | 212,116,112 | 214,242,768 | 134,240,831 | | Net loss per share, basic and diluted | $(0.39) | $(0.45) | $(0.77) | $(1.26) | - Common stock equivalents (stock options, RSUs, warrants) were excluded from diluted EPS calculation for all periods due to the company recording a net loss, making their inclusion anti-dilutive[148][149] 14. Subsequent Events This note discloses significant events after the reporting period, including equity facilities and amendments to Officer RSUs - On August 8, 2022, the company entered into common stock purchase agreements with Cantor and Yorkville for a committed equity facility, allowing the sale of up to $100.0 million of common stock[151][152] - The purchase price for shares sold under the facility will be 97% of the volume weighted average price during the applicable purchase date[154] - On August 5, 2022, the Compensation Committee approved an amendment to Officer RSUs, removing market-based vesting conditions, making them subject only to time-based vesting[159] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, including liquidity and capital resources Overview This section provides an overview of View's business as a smart buildings platform and technology company, detailing its products and market positioning - View is a smart buildings platform and technology company that designs, manufactures, and provides electrochromic "smart" glass panels, network infrastructure, software, and algorithms to adjust tint, reduce energy consumption, and improve human health and experience[163][164] - The company introduced a Smart Building Platform in 2021, integrating smart glass IGUs, fabrication, installation, and Smart Building Technologies, positioning View as a prime contractor rather than a subcomponent supplier[166][172] - View's Smart Building Platform includes applications like View Immersive Display (transparent digital displays) and View Sense (environmental quality sensors)[174] Key Financial Metrics | Metric | 3 Months Ended June 30, 2022 | 3 Months Ended June 30, 2021 | | :------- | :--------------------------- | :--------------------------- | | Revenue | $16.3 million | $16.9 million | Key Financial Metrics | Metric | 6 Months Ended June 30, 2022 | 6 Months Ended June 30, 2021 | | :------- | :--------------------------- | :--------------------------- | | Revenue | $33.3 million | $26.7 million | Key Factors Affecting Operating Results This section discusses the primary factors influencing the company's operating results, including growth strategies, going concern risk, R&D, and production capacity - The company's growth strategies are driven by secular trends in climate change/ESG, human health in buildings, improved human experiences, and demand for smart buildings[176] - Execution of growth strategies depends on increasing product awareness, recurring sales, expanding product portfolio and sales channels, strengthening ecosystem partnerships, and international expansion[177] - The company faces substantial doubt about its ability to continue as a going concern beyond November 2022, requiring additional financing and profitable sales contracts[178] - View has over 1,400 patents and patent filings and plans continued significant investments in R&D to improve existing products and develop new ones, including "The Smart Building Cloud" suite (View Net, Immersive Display, Sense, Secure Edge, Remote Access, Building Performance, Workplace Experience)[179][180][181] - The company operates one production line with a capacity of 5 million square feet of smart glass per year and has partially completed a second line, which will increase total capacity to 12.5 million square feet per year[183] - Over $400 million has been invested in capital expenditures for the factory, with an additional $90 million expected over the next four years for automation and completion of the second production line, requiring further financing[184] Components of Results of Operations This section explains the various components contributing to the company's results of operations, including revenue recognition and expense categories - View Smart Glass revenue is generated from manufacturing and selling IGUs and CSS (controllers, sensors, software), with revenue recognized over time for IGUs and at shipment/acceptance for CSS[185][187][188] - View Smart Building Platform revenue is from a fully integrated solution including IGUs, framing, Smart Building Technologies, and installation, with View acting as the principal contractor and recognizing revenue over time using a cost-to-cost input method[190][191][193] - View Smart Building Technologies offers products like View Secure Edge, Remote Access, Building Performance, and Workplace Experience, with some contracts offering software-as-a-service pricing recognized over the contract period[195][196] - Cost of revenue includes manufacturing costs, materials, customer support, personnel, facility expenses, warranty costs, and inventory valuation provisions. Significant base operating costs and contract loss accruals for Smart Building Platform contracts are key factors[197][198][199] - Research and development expenses are primarily for salaries, materials, and consultants for product improvements and new product development, expected to increase in absolute dollars but decrease as a percentage of revenue[200] - Selling, general, and administrative expenses include personnel, sales & marketing, finance, legal, and public company operating costs, expected to increase in absolute dollars but decline as a percentage of revenue over time[201][202] - Interest expense, net, primarily relates to debt facilities and finance leases, while other expense (income), net, includes environmental settlement penalties and foreign exchange[203][204] - (Gain) loss on fair value change, net, results from remeasurement of Sponsor Earn-out Shares and Private Warrants[205] Results of Operations This section provides a detailed analysis of the company's revenues, costs, and expenses for the reported periods, highlighting key changes and drivers Key Financial Metrics (in thousands) | Metric | 3 Months Ended June 30, 2022 (in thousands) | 3 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Revenue | $16,316 | $16,926 | | Cost of revenue | $39,531 | $49,610 | | Research and development | $20,908 | $21,040 | | Selling, general, and administrative | $40,755 | $34,633 | | Loss from operations | $(84,878) | $(88,357) | | Net and comprehensive loss | $(82,886) | $(95,720) | Key Financial Metrics (in thousands) | Metric | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Revenue | $33,328 | $26,695 | | Cost of revenue | $80,093 | $85,789 | | Research and development | $40,603 | $37,610 | | Selling, general, and administrative | $83,714 | $56,333 | | Loss from operations | $(171,082) | $(153,037) | | Net and comprehensive loss | $(165,258) | $(169,755) | - Q2 2022 revenue decreased 3.6% YoY to $16.3 million, primarily due to a 62.8% decrease in Smart Glass revenue, partially offset by a 76.3% increase in Smart Building Platform revenue and a 1307.1% increase in Smart Building Technologies revenue[209][210] - H1 2022 revenue increased 24.8% YoY to $33.3 million, driven by a 255.5% increase in Smart Building Platform revenue and a 216.2% increase in Smart Building Technologies revenue, despite a 52.1% decrease in Smart Glass revenue[209][210] - Cost of revenue decreased as a percentage of net sales from 293.1% to 242.3% in Q2 YoY and from 321.4% to 240.3% in H1 YoY, reflecting leverage of minimum operating costs over higher revenues, favorable product mix, and lower contract loss accruals[211] - Selling, general, and administrative expenses increased by $6.1 million (17.7%) in Q2 2022 and $27.4 million (48.6%) in H1 2022, primarily due to higher legal, consulting, and accounting expenses related to the audit and restatement of financial statements, and increased headcount[218][219] - Interest expense, net, decreased significantly by $5.4 million (95.3%) in H1 2022 due to the full repayment of the revolving debt facility in Q1 2021[222] - Other expense (income), net, decreased by $6.3 million (97.8%) in H1 2022, primarily due to $5.0 million in environmental settlement penalties incurred in Q2 2021 not recurring at the same level[223] Liquidity and Capital Resources This section discusses the company's financial liquidity, capital resources, and ability to meet its short-term and long-term obligations, including going concern risks - As of June 30, 2022, the company had $111.2 million in cash and cash equivalents and $100.0 million in working capital, but an accumulated deficit of $2.423 billion[227] - The company reported a net loss of $165.3 million and negative cash flows from operations of $153.2 million for the six months ended June 30, 2022[227] - Management has determined there is substantial doubt about the company's ability to continue as a going concern beyond November 2022, necessitating additional capital[227] - Future capital requirements depend on revenue growth, profitability of contracts, customer payments, sales & marketing expansion, R&D, and capital expenditures for capacity expansion[230] - Current liabilities as of June 30, 2022, were $83.5 million, including $13.7 million in estimated losses on Smart Building Platform contracts[231] - Long-term liabilities due in the next 12 months include $1.0 million in lease payments and $1.1 million in estimated warranty settlements, plus potential $8.4 million additional loan disbursement to a customer[231] Cash Flows This section analyzes the company's cash flows from operating, investing, and financing activities, explaining significant changes between periods Cash Flow Summary (in thousands) | Cash Flow Activity | 6 Months Ended June 30, 2022 (in thousands) | 6 Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(153,248) | $(125,168) | | Net cash used in investing activities | $(13,736) | $(5,820) | | Net cash provided by (used in) financing activities | $(999) | $516,122 | - Net cash used in operating activities increased by $28.1 million to $153.2 million in H1 2022, primarily due to a net loss of $165.3 million and changes in operating assets and liabilities[236] - Net cash used in investing activities increased by $7.9 million to $13.7 million in H1 2022, mainly due to increased purchases of property, plant, and equipment for manufacturing facility expansion[238] - Net cash provided by financing activities shifted from $516.1 million in H1 2021 (due to reverse recapitalization and PIPE) to net cash used of $1.0 million in H1 2022 (due to debt and lease payments)[239][240] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risks, primarily related to interest rates on cash and debt, and foreign currency fluctuations - The company's market risk exposure is mainly from changes in interest rates on cash and cash equivalents[246] - Outstanding debt as of June 30, 2022, includes a $14.7 million interest-free term loan and $0.9 million in financing lease obligations[246] - Foreign currency transaction gains and losses were not material, and the company has not used derivative financial instruments to hedge foreign currency risk[247] Item 4. Controls and Procedures This section reports that the company's disclosure controls and procedures were not effective as of June 30, 2022, due to identified material weaknesses in internal control over financial reporting - Disclosure controls and procedures were not effective as of June 30, 2022, due to material weaknesses in internal control over financial reporting[250] - Material weaknesses include an ineffective internal control environment (insufficient accounting personnel, lack of formal policies), ineffective controls in response to material misstatement risks (revenue, inventory, equity, warranty), and ineffective IT general controls[251][252] - These material weaknesses led to the restatement of prior financial statements and adjustments to accounts and disclosures[252] - Remediation efforts include designing new control activities for significant business processes, comprehensive assessment of financial reporting risks, enhancing technical accounting capabilities, appointing a new Chief Financial Officer and recruiting for a VP of Internal Audit, and improving IT systems and user applications[253][254][256] PART II. OTHER INFORMATION This part provides additional information including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings This section refers to the financial statement notes for details on various legal proceedings, claims, litigation, and governmental investigations - The company is subject to various claims, litigation, and investigations, including those related to labor, contracts, intellectual property, environmental, and regulatory compliance[260] - Further details on legal proceedings are provided in Note 7 of the Condensed Consolidated Financial Statements[260] Item 1A. Risk Factors This section directs readers to the company's annual report for a comprehensive list of material risk factors affecting business operations and financial condition - Material risk factors affecting business operations and financial condition are detailed in Part I, Item 1A of the company's 2021 Annual Report on Form 10-K[261] - These risks, along with potential unknown or immaterial risks, could have a significant adverse effect on the company's results of operations or financial condition[261] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered sales of equity securities, specifically restricted stock units granted to independent directors, and their vesting status - In Q2 2021, 257,625 restricted stock units (RSUs) were granted to independent directors, subject to time-based vesting conditions[262] - As of June 30, 2022, 146,973 Director RSUs had vested, while some unvested RSUs were canceled due to resignations[262] Item 3. Defaults Upon Senior Securities This section confirms that there were no defaults upon senior securities during the reported period - No defaults upon senior securities were reported[263] Item 4. Mine Safety Disclosures This section states that there are no mine safety disclosures to report - No mine safety disclosures were reported[263] Item 5. Other Information This section indicates that there is no other information to disclose - No other information was reported[263] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including organizational documents and executive officer certifications - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Certifications of Principal Executive Officer and Principal Financial Officer (pursuant to Sarbanes-Oxley Act), and XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[265] Signatures This section contains the official signatures of the company's Chief Executive Officer and Chief Financial Officer, certifying the report - The report is signed by Rao Mulpuri, Chief Executive Officer, and Amy Reeves, Chief Financial Officer, on August 9, 2022[268]