View(VIEW) - 2023 Q3 - Quarterly Report

Note Regarding Forward Looking Statements This section provides a standard disclaimer regarding forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially from projections PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents View, Inc.'s unaudited condensed consolidated financial statements for the period ended September 30, 2023, including balance sheets, comprehensive loss, equity, and cash flows Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | September 30, 2023 | December 31, 2022 | Change (%) | | :-------------------------- | :------------------- | :------------------ | :--------- | | Total Assets | $291,438 | $619,026 | (52.9%) | | Total Liabilities | $359,376 | $398,534 | (9.8%) | | Total Stockholders' Equity | $(67,938) | $220,492 | (130.8%) | | Cash and cash equivalents | $50,618 | $95,858 | (47.2%) | Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Comprehensive Loss Highlights (in thousands, except per share data) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total revenue | $38,220 | $23,762 | $84,602 | $57,090 | | Gross loss | $(4,353) | $(25,364) | $(39,994) | $(72,129) | | Impairment of long-lived assets | $170,300 | $0 | $174,300 | $0 | | Net and comprehensive loss | $(213,046) | $(82,065) | $(336,695) | $(247,323) | | Net loss per share, basic and diluted | $(53.06) | $(22.93) | $(84.54) | $(69.21) | Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity decreased from $220,492 thousand as of December 31, 2022, to a deficit of $(67,938) thousand as of September 30, 2023, primarily due to a net loss of $(336,695) thousand for the nine months ended September 30, 2023[18] - Additional paid-in capital increased from $2,814,912 thousand to $2,863,177 thousand, driven by stock-based compensation and shares issued upon Convertible Notes conversion[18] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(139,603) | $(204,201) | | Net cash provided by (used in) investing activities | $93,590 | $(19,556) | | Net cash used in financing activities | $(2,808) | $(4,211) | | Cash, cash equivalents, and restricted cash, end of period | $65,344 | $69,575 | Notes to Condensed Consolidated Financial Statements Note 1. Organization and Summary of Significant Accounting Policies View, Inc. manufactures smart building products, primarily electrochromic glass, and faces substantial doubt about its ability to continue as a going concern beyond Q1 2024, necessitating additional financing - View, Inc. manufactures smart building products, primarily electrochromic or 'smart' glass panels combined with proprietary network infrastructure and software to intelligently adjust to the sun, reducing heat, glare, and energy consumption[21] Liquidity and Financial Position (as of September 30, 2023) | Metric | Amount (in thousands) | | :--------------------------------- | :-------------------- | | Accumulated Deficit | $(2,931,115) | | Net Loss (9 months ended Sep 30, 2023) | $(336,695) | | Net Cash Used in Operations (9 months ended Sep 30, 2023) | $(139,603) | | Cash and Cash Equivalents | $50,618 | - The company has concluded there is substantial doubt about its ability to continue as a going concern, as existing financial resources are only adequate to fund operations into, but not beyond, the first quarter of 2024. This necessitates securing additional financing or executing strategic alternatives like expense reductions, asset sales, or corporate restructuring[28][29][31] Note 2. Revenue Total revenue increased by 60.8% for Q3 and 48.2% for YTD 2023, driven by the Smart Building Platform, with the United States contributing 98.1% of Q3 revenue Revenue by Products and Services (in thousands) | Category | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Products | $37,131 | $21,548 | $82,640 | $52,461 | | Services | $1,089 | $2,214 | $1,962 | $4,629 | | Total | $38,220 | $23,762 | $84,602 | $57,090 | Revenue by Major Product Offering (in thousands) | Product Offering | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Smart Building Platform | $25,031 | $11,317 | $53,688 | $29,578 | | Smart Glass | $11,156 | $10,320 | $23,529 | $19,809 | | Smart Building Technologies | $2,033 | $2,125 | $7,385 | $7,703 | | Total | $38,220 | $23,762 | $84,602 | $57,090 | Revenue by Geographic Area (in thousands) | Geographic Area | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | United States | $37,500 | $21,743 | $80,470 | $52,852 | | Canada | $720 | $2,009 | $4,132 | $4,170 | | Other | $0 | $10 | $0 | $68 | | Total | $38,220 | $23,762 | $84,602 | $57,090 | - Contract loss accruals decreased from $15.0 million as of December 31, 2022, to $7.1 million as of September 30, 2023, for work that had not yet been completed[43] Note 3. Fair Value The company measures certain financial assets and liabilities at fair value, including money market funds, certificates of deposit, Sponsor Earn-Out Liability, and Private Warrants, with changes recognized in gain on fair value change, net Financial Assets Measured at Fair Value (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :-------------------- | :------------------- | :------------------ | | Money market funds | $32,315 | $66,614 | | Certificates of deposit | $14,726 | $18,308 | | Short-term investments | $0 | $102,284 | | Total | $47,041 | $187,206 | Level 3 Financial Liabilities Measured at Fair Value (in thousands) | Category | December 31, 2022 | September 30, 2023 | Change in Fair Value | | :-------------------- | :------------------ | :------------------- | :------------------- | | Sponsor Earn-Out Liability | $506 | $0 | $(506) | | Private Warrants | $7 | $0 | $(7) | | Total | $513 | $0 | $(513) | Gain on Fair Value Change, Net (in thousands) | Category | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Sponsor Earn-out Liability | $0 | $(225) | $(506) | $(6,364) | | Private Warrants | $0 | $(1) | $(7) | $(147) | | Total | $0 | $(226) | $(513) | $(6,511) | Note 4. Other Balance Sheet Information Cash and cash equivalents decreased by 47.2%, with a $4.0 million impairment on a note receivable and a $170.3 million impairment on property and equipment in Q3 2023 due to declining market conditions Cash, Cash Equivalents, and Restricted Cash (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :---------------------------------------------------- | :------------------- | :------------------ | | Cash and cash equivalents | $50,618 | $95,858 | | Short-term restricted cash | $14,000 | $1,859 | | Restricted cash | $726 | $16,448 | | Total cash, cash equivalents, and restricted cash | $65,344 | $114,165 | - The company had no short-term investments as of September 30, 2023, compared to $102.3 million as of December 31, 2022[58] - Allowance for credit losses increased to $1.8 million as of September 30, 2023, from $1.1 million as of December 31, 2022[59] - Inventory impairments were $8.4 million for the nine months ended September 30, 2023, down from $14.2 million in the prior year[61] - A $4.0 million impairment loss was recorded on a note receivable during the three months ended June 30, 2023, due to a change in the assessment of the credit risk for the customer[62] - An impairment charge of approximately $170 million was recorded during the three months ended September 30, 2023, to write down the value of property and equipment, driven by declining economic and market conditions, rising interest rates, and revised operating projections[64][68] Note 5. Product Warranties Total warranty liability increased to $40.9 million as of September 30, 2023, including $31.1 million for a specific quality issue identified in 2019, managed by a statistical model Changes in Warranty Liabilities (in thousands) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------------- | :------------------- | :------------------ | | Beginning balance | $39,573 | $42,256 | | Accruals for warranties issued | $1,682 | $1,626 | | Changes to estimates of volume and costs | $3,991 | $2,004 | | Settlements made | $(4,312) | $(6,313) | | Ending balance | $40,934 | $39,573 | - The total warranty liability includes $31.1 million (Sep 30, 2023) and $30.8 million (Dec 31, 2022) related to certain IGUs with a quality issue identified during fiscal year 2019, which the company expects to continue to replace[72][73] Note 6. Commitments and Contingencies The company has ongoing litigation and environmental settlement liabilities, including a $6.3 million litigation settlement and a $3.0 million environmental fine, with an SEC investigation settled without penalty Litigation Settlement Liability (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :-------------------------- | :------------------- | :------------------ | | Litigation settlement liability - current | $3,000 | $3,000 | | Litigation settlement liability - non-current | $3,332 | $5,794 | | Total | $6,332 | $8,794 | - An environmental settlement finalized in August 2023 requires a $3.0 million fine, a $1.5 million civil penalty, and a $0.5 million community service payment, along with approximately $4.8 million in capital expenditures for a wastewater treatment and recycling system[78] - Securities litigation and derivative litigation are ongoing, and the company cannot reasonably estimate the possible loss (or range of loss), if any, at this time[88][93] - The SEC announced a settlement with the company on July 3, 2023, resolving the previously disclosed investigation into warranty-related accruals, with no civil penalty imposed due to self-reporting, prompt remediation, and cooperation[95] Note 7. Debt Total debt outstanding was $209.8 million as of September 30, 2023, primarily Convertible Notes ($196.6 million) and a Term Loan ($13.2 million), with Convertible Notes maturing in October 2027 Debt Outstanding (in thousands) | Category | September 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------------- | :------------------ | | Convertible Notes, net of debt issuance costs | $196,576 | $206,347 | | Term loan | $13,225 | $13,960 | | Total debt | $209,801 | $220,307 | Principal Payments on Debt Outstanding (in thousands) | Year Ending December 31, | Total | | :----------------------- | :---- | | 2023 (remaining three months) | $735 | | 2024 | $1,470 | | 2025 | $1,470 | | 2026 | $1,470 | | 2027 | $198,046 | | Thereafter | $6,610 | | Total | $209,801 | - The Convertible Notes bear interest at 6.00% per annum (cash) or 9.00% per annum (PIK) and will mature on October 1, 2027. The effective interest rate on the Convertible Notes was 9.82% as of September 30, 2023[100][106] - Holders of $18.0 million in aggregate principal amount of Convertible Notes exercised their right to convert into 280,373 shares of Class A common stock in January 2023[107] Note 8. Stockholders' Equity As of September 30, 2023, the company had 4,053,580 shares outstanding, with stockholders' equity decreasing to a deficit of $(67.9) million, and a $100.0 million common stock purchase agreement unused - As of September 30, 2023, the company had 4,053,580 shares of common stock issued and outstanding[111] - Total stockholders' equity decreased from $220,492 thousand as of December 31, 2022, to a deficit of $(67,938) thousand as of September 30, 2023[18] - The company has a Common Stock Purchase Agreement allowing it to sell up to $100.0 million of common stock to investors, but no shares have been purchased under this agreement as of September 30, 2023[116] Note 9. Stock Warrants The company has various warrants outstanding, including Public, Private, RXR, and Legacy Warrants, with RXR Warrants having a grant date fair value of $9.2 million and accounted for as consideration payable to a customer Outstanding Common Stock Warrants | Warrant Type | Number of Warrants (Sep 30, 2023) | Exercise Price Per Warrant | Expiry Date | | :-------------------------------- | :-------------------------------- | :------------------------- | :---------- | | Public Warrants | 277,777 | $690.00 | Through March 2026 | | Private Warrants | 6,111 | $690.00 | Through March 2026 | | RXR Warrants | 158,518 | $0.60 | October 2032 | | Legacy Warrants (various) | 49,754 | Various | Various | | WorxWell Warrants | 16,666 | $600.00 | December 2031 | | Total Stock Warrants | 509,233 | | | - The RXR Warrants, issued on October 25, 2022, had a total grant date fair value of $9.2 million, accounted for as consideration payable to a customer and non-employee stock compensation[126] Note 10. Stock-Based Compensation Total stock-based compensation expense was $10.6 million for Q3 and $32.6 million for YTD 2023, with unrecognized costs for stock options at $5.3 million and RSUs at $25.1 million Stock-Based Compensation Expense (in thousands) | Category | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Cost of revenue | $297 | $418 | $1,020 | $1,126 | | Research and development | $1,022 | $2,032 | $3,216 | $3,587 | | Selling, general, and administrative | $9,291 | $20,776 | $28,326 | $54,122 | | Total | $10,610 | $23,226 | $32,562 | $58,835 | - Total unrecognized compensation cost related to unvested stock options was $5.3 million as of September 30, 2023, expected to be recognized over a weighted-average remaining service period of 1.4 years[133] - Total unrecognized compensation cost related to RSUs was $25.1 million as of September 30, 2023, expected to be recognized over a weighted-average remaining service period of 2.0 years[138] - Total unrecognized compensation cost related to options under the CEO Incentive Plan was $40.4 million as of September 30, 2023, expected to be recognized over a weighted-average remaining service period of 3.1 years[142] Note 11. Restructuring In March 2023, the company initiated a restructuring plan, incurring $4.8 million in costs for YTD 2023, primarily for severance and R&D equipment relocation, with a total ending liability of $0.1 million - The company recorded $4.8 million in restructuring costs during the nine months ended September 30, 2023, primarily for employee severance and costs related to the relocation of R&D equipment[145] - A $0.7 million reduction was recorded to accrued compensation due to a change in the estimate of costs for employees impacted by the March 2023 restructuring plan, resulting in a total ending liability of $0.1 million as of September 30, 2023[146] Note 12. Income Taxes Income tax expense was immaterial, and the company maintains a full valuation allowance on U.S. deferred tax assets due to projected taxable losses, indicating benefits are not expected to be realized - The company's income tax expense was immaterial for the three and nine months ended September 30, 2023 and 2022[148] - The company maintains a full valuation allowance on U.S. deferred tax assets, as it is more likely than not that the tax benefits of the U.S. losses incurred will not be realized[149] Note 13. Net Loss Per Share The company reported a basic and diluted net loss per share of $(53.06) for Q3 and $(84.54) for YTD 2023, with common stock equivalents excluded from diluted EPS due to anti-dilutive effects Net Loss Per Share (Basic and Diluted) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss | $(213,046) | $(82,065) | $(336,695) | $(247,323) | | Weighted-average shares outstanding | 4,015,307 | 3,579,584 | 3,982,824 | 3,573,700 | | Net loss per share | $(53.06) | $(22.93) | $(84.54) | $(69.21) | Common Stock Equivalents Excluded from Diluted EPS (as of September 30) | Category | 2023 | 2022 | | :-------------------------- | :----- | :----- | | Stock options | 385,750 | 402,002 | | Unvested restricted stock units | 200,045 | 112,498 | | Warrants | 456,395 | 355,085 | | Convertible Notes | 1,537,087 | 0 | | Total | 2,579,277 | 869,585 | Note 14. Related Party Transactions Transactions with RXR FP include $113.6 million in Convertible Notes outstanding and $19.2 million in revenue for YTD 2023, with interest expense on RXR Notes at $8.3 million - Convertible Notes outstanding to RXR FP (RXR Notes) totaled $113.6 million as of September 30, 2023, compared to $109.1 million as of December 31, 2022[156] - Interest expense on the RXR Notes was $8.3 million for the nine months ended September 30, 2023[156] - Revenue recognized from RXR FP was $19.2 million for the nine months ended September 30, 2023, a significant increase from $4.9 million in the prior year[157][158] Note 15. Subsequent Events The company secured a new $50 million senior secured term loan credit agreement in October 2023 and reduced its workforce by approximately 100 employees, expecting a $2.1 million charge in Q4 2023 - On October 16, 2023, the company entered into a new senior secured term loan credit agreement, establishing a $12.5 million term loan facility and a $37.5 million delayed draw term loan facility, each maturing on September 30, 2027[160] - The ability to make additional draws from the credit agreement is subject to conditions including a $2 million weekly cap, delivery of a lender-approved budget after December 31, 2023, no default, and maintaining liquidity of at least $25 million[161] - On October 13, 2023, the company decreased overall headcount by approximately 100 employees (22% of full-time staff), expecting a one-time charge of approximately $2.1 million in Q4 2023 for severance payments and continued benefits[163][164] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial performance, condition, business overview, key operating factors, revenue and expense analysis, liquidity, and critical accounting policies Overview View, Inc. is a smart buildings platform and technology company offering electrochromic smart glass and integrated products, with revenue growth of 60.8% for Q3 and 48.2% for YTD 2023 - View, Inc. is a leading smart buildings platform and technology company that designs, manufactures, and provides electrochromic smart glass panels and a suite of fully integrated, cloud-connected smart-building products[168][169] - The company's product offerings include Smart Glass, a Smart Building Platform (launched in 2021), and Smart Building Technologies, with products installed in over 48 million square feet of buildings[170][171][178] Revenue Growth | Period | 2023 Revenue (in millions) | 2022 Revenue (in millions) | Growth (%) | | :-------------------------- | :------------------------- | :------------------------- | :--------- | | 3 Months Ended Sep 30 | $38.2 | $23.8 | 60.8% | | 9 Months Ended Sep 30 | $84.6 | $57.1 | 48.2% | Key Factors Affecting Operating Results The company faces substantial doubt about its going concern ability beyond Q1 2024, recorded a $170 million impairment charge in Q3 2023, and pursues growth strategies amidst macro-economic challenges and liquidity concerns - Substantial doubt exists about the company's ability to continue as a going concern, as existing financial resources are only adequate to fund forecasted operating costs and meet obligations into, but not beyond, the first quarter of 2024, requiring additional sources of capital[180][181] - A $170 million impairment charge on property and equipment was recorded during Q3 2023 due to a decline in economic and market conditions, including market capitalization, rising interest rates, and a prolonged slowdown in the real estate market[182] - Growth strategies include increasing product awareness, recurring sales, expanding the product portfolio, and leveraging the Investment Tax Credit (ITC) from the Inflation Reduction Act of 2022, which is expected to drive demand[184][185] - Current macro-economic factors, such as higher interest rates and uncertainty in lending markets, are negatively impacting the real estate market and the company's near-term outlook, leading to a pivot towards multi-family residential developments and a focus on profitable projects[186] - R&D investment is now focused on improvements to the unit cost of products and collaborating with industry partners, with anticipated reductions in R&D expenses during 2023 and 2024 as the company focuses on profitability[175][189] Components of Results of Operations This section details income statement components, including revenue disaggregation, cost of revenue drivers, expected decreases in operating expenses due to restructuring, and specifics on impairment charges, restructuring costs, and fair value changes - Revenue is generated from three main offerings: View Smart Building Platform (fully installed and functioning platform, revenue recognized over time), View Smart Glass (materials provider for IGUs and CSS components, revenue recognized over time for IGUs and at a point in time/customer acceptance for CSS), and View Smart Building Technologies (suite of products, some with software-as-a-service pricing, recognized over contract period)[192][198][204] - Cost of revenue is primarily impacted by significant base operating costs from manufacturing capacity and upfront recognition of contract losses for Smart Building Platform contracts, which are expected to decrease as production volumes increase[206][207] - Research and development expenses are anticipated to decrease in 2023 and 2024 as the company focuses on profitability after the launch of its fourth-generation smart glass and Smart Building Platform products[208][209] - Selling, general, and administrative expenses are expected to decrease in absolute dollars in 2023 and 2024 following restructuring plans, as the company aims to right-size the business[211] - Impairment of long-lived assets includes a $4.0 million impairment of a note receivable in Q2 2023 and a $170.3 million impairment of property and equipment in Q3 2023[212] - Restructuring costs consist of severance and related costs, as well as costs incurred to relocate certain long-lived assets, associated with the March 2023 restructuring plan[213] - Gain on fair value change, net, primarily relates to the remeasurement of the Sponsor Earn-out Shares and Private Warrants to fair value at each balance sheet date[217] Results of Operations Total revenue increased by 60.8% for Q3 and 48.2% for YTD 2023, driven by Smart Building Platform growth, but net loss increased substantially due to a $170.3 million impairment charge, while operating expenses decreased Consolidated Statements of Comprehensive Loss Summary (in thousands, except percentages) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (%) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------- | :-------------------------- | :-------------------------- | :--------- | | Revenue | $38,220 | $23,762 | 60.8% | $84,602 | $57,090 | 48.2% | | Cost of revenue | $42,573 | $49,126 | (13.3%) | $124,596 | $129,219 | (3.6%) | | Gross loss | $(4,353) | $(25,364) | (82.8%) | $(39,994) | $(72,129) | (44.6%) | | Research and development | $8,918 | $15,554 | (42.7%) | $31,573 | $56,157 | (43.8%) | | Selling, general, and administrative | $25,518 | $41,174 | (38.0%) | $74,429 | $124,888 | (40.4%) | | Impairment of long-lived assets | $170,300 | $0 | 100.0% | $174,300 | $0 | 100.0% | | Restructuring costs | $(662) | $0 | (100.0%) | $4,845 | $0 | 100.0% | | Loss from operations | $(208,427) | $(82,092) | 153.9% | $(325,141) | $(253,174) | 28.4% | | Net and comprehensive loss | $(213,046) | $(82,065) | 159.6% | $(336,695) | $(247,323) | 36.1% | - Revenue increases were primarily driven by a continued shift in new projects to the Smart Building Platform offering and strong demand in the multi-family residential market[222] - Cost of revenue decreased as a percentage of net sales due to leveraging base operating costs over higher revenues, favorable product mix, and lower levels of spending on factory and other fixed expenses from cost savings initiatives[223] - Research and development expenses decreased by $6.6 million (Q3) and $24.6 million (YTD) primarily due to reductions in costs for Smart Building Technology projects and IGU product/manufacturing processes, along with other cost savings[227][228] - Selling, general, and administrative expenses decreased by $15.7 million (Q3) and $50.5 million (YTD) primarily due to lower stock-based compensation expense, reduced legal/consulting expenses, and sales and marketing cost savings initiatives[230][231] Liquidity and Capital Resources As of September 30, 2023, the company had $50.6 million in cash and a $71.6 million working capital deficit, raising substantial doubt about its going concern ability beyond Q1 2024, relying on a new $50 million credit agreement and cost-saving initiatives - As of September 30, 2023, the company had $50.6 million in cash and cash equivalents and $71.6 million in working capital[245] - The accumulated deficit totaled $2,931.1 million as of September 30, 2023, with a net loss of $336.7 million and negative cash flows from operations of $139.6 million for the nine months ended September 30, 2023[245] - Substantial doubt exists about the company's ability to continue as a going concern, as existing financial resources are only adequate to fund operations into, but not beyond, the first quarter of 2024, necessitating additional financing or strategic alternatives[245] - A new $50 million senior secured term loan credit agreement was entered into in October 2023, with an initial $12.5 million drawn and a $37.5 million delayed draw facility, subject to various conditions[245] - The company has implemented cost savings initiatives and restructuring plans to reduce cash outflow and expects the Investment Tax Credit (ITC) to increase demand and aid progress towards profitable operations[249] Off-Balance Sheet Arrangements The company has no material off-balance sheet financing arrangements, except for $13.8 million in standby letters of credit as of September 30, 2023, with $1.0 million drawn - The company did not have any material off-balance sheet financing arrangements during the periods presented, other than standby letters of credit totaling $13.8 million as of September 30, 2023, with $1.0 million drawn[263][264] Critical Accounting Policies and Estimates Financial statement preparation requires significant judgments and estimates in revenue recognition, product warranties, asset impairment, stock compensation, and Sponsor Earn-out liability, with no changes made in the first nine months of 2023 - Critical accounting policies and estimates include revenue recognition, product warranties, impairment of long-lived assets, impairment of goodwill, stock compensation, and the Sponsor Earn-out liability[265] - No changes were made to these critical accounting policies during the first nine months of 2023[265] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, View, Inc. is not required to provide quantitative and qualitative disclosures about market risk Item 4. Controls and Procedures This section details the evaluation of disclosure controls and procedures, concluding they were not effective as of September 30, 2023, due to material weaknesses in internal control over financial reporting Evaluation of Disclosure Controls and Procedures - The company's disclosure controls and procedures were not effective as of September 30, 2023, due to material weaknesses in internal control over financial reporting[269] - Despite the material weaknesses, management believes the condensed consolidated financial statements in this Quarterly Report fairly present, in all material respects, the company's financial position, results of operations, and cash flows[269] Material Weaknesses in Internal Control over Financial Reporting - The company did not design or maintain an effective internal control environment that meets its accounting and reporting requirements, specifically lacking sufficient personnel with appropriate accounting knowledge and experience - The company did not demonstrate a commitment to integrity and ethical values - These weaknesses contributed to additional material weaknesses in controls over revenue and receivables and warranty-related obligations[271] Remediation Efforts and Status of Material Weaknesses - The company has hired full-time staff and experienced contractors to address competency gaps in the accounting/finance function, but additional time is needed to demonstrate consistent performance for remediation - New control activities have been designed and implemented in response to the commitment to integrity and ethical values, but consistent operation over a sufficient period is required for remediation - New control activities for warranty-related obligations and revenue and receivable processes were implemented and operated effectively, but additional time is needed to demonstrate consistent operation for remediation[272][275] Changes in Internal Control Over Financial Reporting - There were no changes during the quarter ended September 30, 2023, in the company's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[274] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 6 of the financial statements for detailed information on the company's legal proceedings, including claims, litigation, and investigations - Information on claims, litigation, internal or governmental investigations, including those related to labor and employment, contracts, intellectual property, environmental, regulatory compliance, and commercial matters, is detailed in Note 6 of the Condensed Consolidated Financial Statements[276] Item 1A. Risk Factors This section outlines significant risks, particularly those related to liquidity, going concern ability, non-cash impairment charges, and future performance Risks Related to Liquidity - The company has determined there is substantial doubt about its ability to continue as a going concern, as existing financial resources are only adequate to fund operations into, but not beyond, the first quarter of 2024, necessitating additional capital[278][279] - Failure to secure necessary additional financing could force the company to execute other strategic alternatives, including further expense reductions, asset sales, corporate capital restructuring, or liquidation of assets[279] - Future equity issuance would result in substantial dilution to stockholders, and additional debt could impose significant restrictions on operations[280] Risk Factors Relating to Future Performance - The company recorded a $170 million non-cash impairment charge on property and equipment during the three and nine months ended September 30, 2023, due to a continued decline in economic and market conditions[285] - Further declines in market capitalization or inability to obtain additional financing could necessitate further impairment testing and potentially result in additional impairment of assets, materially impacting business and financial results[286] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section details the issuance of unregistered equity securities, including Director RSUs, 2021 Officer RSUs, and Convertible Notes and Warrants issued in private placements - Granted 4,293 restricted stock units (Director RSUs) to independent directors in Q2 2021, with 2,449 vested as of September 30, 2023 - Granted 208,333 restricted stock units (2021 Officer RSUs) to executive officers in March 2021; market-based vesting conditions were removed in August 2022, and 112,503 have vested with 53,238 withheld for taxes as of September 30, 2023 - Sold $200.0 million (plus an additional $12.3 million) aggregate principal amount of Convertible Notes in Q4 2022 in a private placement, relying on the exemption from registration provided by Section 4(a)(2) of the Securities Act - Issued Warrants in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act[287][288][289][291] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities for the period Item 4. Mine Safety Disclosures The company reports no mine safety disclosures Item 5. Other Information The company reports no other material information not disclosed elsewhere in the report Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, agreements, and certifications Signatures This section contains the formal signatures of the Chief Executive Officer and Chief Financial Officer, certifying the accuracy and completeness of the report