Hyzon Motors (HYZN) - 2022 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION This part details the unaudited consolidated financial statements, management's discussion, and disclosures on market risk and internal controls Item 1. Financial Statements This section presents Hyzon Motors Inc.'s unaudited consolidated financial statements, including balance sheets, income statements, equity changes, cash flows, and detailed accounting notes for specified periods Consolidated Balance Sheets This table provides a snapshot of the company's assets, liabilities, and stockholders' equity at specific dates | ASSETS (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :---------------------- | :----------- | :----------- | | Cash and cash equivalents | $70,602 | $445,146 | | Short-term investments | $239,648 | — | | Total current assets | $374,257 | $496,145 | | Total Assets | $431,096 | $530,279 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------------------ | :----------- | :----------- | | Total current liabilities | $30,014 | $31,256 | | Total liabilities | $62,132 | $160,214 | | Total Stockholders' Equity | $368,964 | $370,065 | Consolidated Statements of Operations and Comprehensive Income (Loss) This table details the company's revenues, expenses, and net income or loss over specific reporting periods | (in thousands, except per share) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Revenue | $5 | $89 | $2,939 | $89 | | Total operating expenses | $53,547 | $46,847 | $112,806 | $59,892 | | Loss from operations | $(53,542) | $(46,758) | $(109,867) | $(59,803) | | Total other income (expense) | $17,889 | $80,603 | $104,713 | $75,549 | | Net income (loss) | $(35,653) | $33,845 | $(5,680) | $15,746 | | Net income (loss) attributable to Hyzon | $(24,795) | $34,621 | $10,681 | $17,053 | | Basic EPS | $(0.10) | $0.15 | $0.04 | $0.09 | | Diluted EPS | $(0.10) | $0.14 | $0.04 | $0.08 | Consolidated Statements of Changes in Stockholders' Equity This table outlines changes in the company's equity components, including common stock and accumulated deficit, over time | (in thousands, except share data) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Common Stock (shares) | 248,153,362 | 247,758,412 | | Additional Paid-in Capital | $404,436 | $400,826 | | Accumulated Deficit | $(15,731) | $(26,412) | | Total Stockholders' Equity | $368,964 | $370,065 | Consolidated Statements of Cash Flows This table summarizes the cash inflows and outflows from operating, investing, and financing activities for the specified periods | Cash Flows (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(116,218) | $(52,242) | | Net cash used in investing activities | $(250,652) | $(17,635) | | Net cash (used in) provided by financing activities | $(3,944) | $554,165 | | Net change in cash, cash equivalents, and restricted cash | $(371,781) | $483,435 | | Cash, cash equivalents, and restricted cash — Ending | $77,584 | $500,574 | Note 1. Nature of Business and Basis of Presentation This note describes Hyzon Motors Inc.'s business, its hydrogen fuel cell technology, and the basis for its financial statement presentation - Hyzon Motors Inc. commercializes proprietary heavy-duty fuel cell technology by manufacturing and retrofitting hydrogen fuel cell electric vehicles (FCEVs) in the US, Europe, and Australia, and fosters a clean hydrogen supply ecosystem[31] - The company incurred net losses of $35.7 million and $5.7 million for the three and nine months ended September 30, 2022, respectively, compared to net income in the prior year periods. Net cash used in operating activities increased to $116.2 million for the nine months ended September 30, 2022[36] - As of September 30, 2022, the company had $70.6 million in unrestricted cash and cash equivalents and $239.6 million in short-term investments. Management believes existing financial resources are sufficient for the next 12 months[37][39] - In September 2022, the company terminated an agreement to acquire Orten Betriebs GmbH and subsidiaries, transferring €8.5 million (approximately $8.4 million USD) in cash and vehicle inventory, recorded as Selling, general and administrative expense[42] Note 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the company's financial statements - Cash equivalents consist of short-term, highly liquid financial instruments with original maturities of three months or less, totaling $40.6 million as of September 30, 2022[45] - Short-term investments are marketable debt securities with original maturities greater than three months but less than one year, classified as available-for-sale (AFS) and recorded at fair value[46] Note 3. Revenue This note details the company's revenue recognition policies and sources, including FCEV sales and contract liabilities - The Company recognized negligible revenue for the three months ended September 30, 2022, and $2.9 million for the nine months ended September 30, 2022, from sales of hydrogen fuel cell systems in the US, FCEVs in China, and retrofit services in Europe[48] - Revenue recognition for FCEV sales in China is based on an alternative method due to collectability concerns with special purpose entities, recognizing $2.5 million from 62 FCEVs delivered in the nine months ended September 30, 2022[49][50] - Contract liabilities, representing advance consideration from customers, decreased from $10.9 million as of December 31, 2021, to $0.8 million as of September 30, 2022 (current portion)[52] - Remaining performance obligations for commercial vehicles and other contracts totaled $15.4 million as of September 30, 2022, with approximately 5% expected to be recognized as revenue over the next twelve months[53] Note 4. Inventory This note provides a breakdown of inventory components and discusses inventory write-downs recognized during the period | Inventory (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :----------------------- | :----------- | :----------- | | Raw materials | $26,434 | $16,099 | | Work in process | $13,391 | $4,828 | | Total inventory | $39,825 | $20,927 | - Inventory write-downs recognized in Cost of revenue were $2.3 million for the three months and $3.0 million for the nine months ended September 30, 2022. No write-downs occurred in the prior year periods[54] Note 5. Prepaid Expenses and Other Current Assets This note itemizes the company's prepaid expenses and other current assets, including various deposits and receivables | Prepaid Expenses and Other Current Assets (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------------------------- | :----------- | :----------- | | Deposit for fuel cell components | $6,017 | $5,008 | | Vehicle inventory deposits | $6,638 | $10,171 | | Production equipment deposits | $242 | $1,169 | | Other prepaid expenses | $4,673 | $3,266 | | Prepaid insurance | $4,345 | $5,079 | | VAT receivable from government | $2,155 | $2,159 | | Total prepaid expenses and other current assets | $24,070 | $26,852 | Note 6. Property, Plant, and Equipment, net This note presents the company's property, plant, and equipment, net of accumulated depreciation, and related expenses | Property, Plant, and Equipment, net (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------------------- | :----------- | :----------- | | Land and building | $2,818 | $2,818 | | Machinery and equipment | $16,197 | $8,827 | | Software | $2,071 | $507 | | Leasehold improvements | $1,356 | $746 | | Construction in progress | $5,081 | $2,139 | | Total Property, plant, and equipment | $27,523 | $15,037 | | Less: Accumulated depreciation and amortization | $(2,654) | $(691) | | Property, plant and equipment, net | $24,869 | $14,346 | - Depreciation and amortization expense increased to $0.8 million for the three months and $2.1 million for the nine months ended September 30, 2022, from $0.2 million and $0.5 million in the prior year periods, respectively[56] Note 7. Accrued liabilities This note details the company's accrued liabilities, including payroll, professional fees, and contract-related costs | Accrued liabilities (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :--------------------------------- | :----------- | :----------- | | Payroll and payroll related expenses | $3,904 | $2,250 | | Accrued professional fees | $5,325 | $2,450 | | Accrued product warranty costs | $903 | $816 | | Accrued contract manufacturer costs | $1,346 | — | | Accrued contract termination costs | $2,430 | — | | Accrued Orten cancellation costs | $1,617 | — | | Accrued severance | $475 | — | | Other accrued expenses | $2,586 | $1,254 | | Accrued liabilities | $18,586 | $6,770 | Note 8. Investments in Equity Securities This note describes the company's equity investments, including gains and impairment losses recognized during the period - The Company recorded a $12.5 million gain on its equity investment in Raven SR, Inc. for the nine months ended September 30, 2022, due to an observable price change[59] - An impairment loss of $2.4 million was recognized for the investment in Global NRG H2 Limited due to lack of progress and operating performance[60] | Carrying Value of Held Securities (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :----------------------------------------------- | :----------- | :----------- | | Total initial cost basis | $4,948 | $4,948 | | Cumulative unrealized gain | $12,530 | — | | Cumulative impairment | $(2,448) | — | | Carrying amount, end of period | $15,030 | $4,948 | Note 9. Short-term Investments This note provides a breakdown of the company's short-term investments by type, fair value, and unrealized gains/losses | Short-term Investments (in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | | :------------------------------------ | :------------- | :--------------- | :---------------- | :--------- | | Certificates of deposit | $105,097 | $175 | $(87) | $105,186 | | Commercial paper | $47,197 | $105 | — | $47,302 | | Corporate debt securities | $39,780 | — | $(181) | $39,598 | | Foreign government bonds | $3,187 | — | — | $3,187 | | U.S. Treasury bills | $44,287 | $95 | $(7) | $44,375 | | Total short-term investments | $239,548 | $375 | $(275) | $239,648 | - The Company did not have any short-term investments as of December 31, 2021[62] Note 10. Income Taxes This note outlines the company's income tax position, including discrete tax expense and valuation allowances against deferred tax assets - For the nine months ended September 30, 2022, the Company recorded a net discrete tax expense of $0.5 million, primarily due to establishing a deferred tax liability[63] - The Company maintains full valuation allowances against its net deferred tax assets, which were approximately $43.2 million as of September 30, 2022, and $23.0 million as of December 31, 2021[64] Note 11. Fair Value Measurements This note explains the company's fair value measurement hierarchy and details changes in warrant and earnout liabilities - The Company uses a three-level hierarchy for fair value measurements, categorizing inputs as Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1), and Level 3 (unobservable inputs)[67][71] | Liabilities (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------- | :----------- | :----------- | | Private Placement Warrant Liability | $1,843 | $15,228 | | Earnout liability | $16,390 | $103,761 | - Changes in the estimated fair value of private placement warrant liability and earnout liability for the nine months ended September 30, 2022, were $(13.4) million and $(87.4) million, respectively[72] Note 12. Commitments and Contingencies This note details the company's legal proceedings, government investigations, and customer disputes - The Company is involved in several legal proceedings, including consolidated shareholder securities class action lawsuits and derivative lawsuits, generally alleging false and misleading statements and breaches of fiduciary duties[76][77] - The SEC issued subpoenas in January and August 2022, and the U.S. Attorney's Office for the Southern District of New York (SDNY) notified the Company of its investigation in October 2022, related to allegations in a short-seller report[83] - A customer dispute with Duurzaam Transport B.V. and H2 Transport B.V. was settled in April 2023 for €2.1 million (approximately $2.0 million USD), recorded in Accrued liabilities as of September 30, 2022[84] Note 13. Stock-based Compensation Plans This note summarizes the activity and unrecognized expense related to the company's stock option and RSU plans | Stock Option and RSU Activity | Outstanding at Dec 31, 2021 | Granted | Exercised or released | Forfeited/Cancelled | Outstanding at Sep 30, 2022 | | :---------------------------- | :-------------------------- | :------ | :-------------------- | :------------------ | :-------------------------- | | Stock Options (Number) | 19,311,140 | 539,292 | (38,868) | (83,284) | 19,728,280 | | RSUs (Number) | 1,852,685 | 1,260,408 | (468,778) | (106,128) | 2,538,187 | - As of September 30, 2022, unrecognized stock-based compensation expense was $2.7 million for stock options (expected over 3.5 years) and $11.1 million for RSUs (expected over 3.09 years)[88][89] Note 14. Stockholders' Equity This note provides details on the company's common stock, outstanding warrants, and share repurchase activities - As of September 30, 2022, there were 248,153,362 shares of Class A common stock issued and outstanding[92] - Total warrants outstanding were 19,028,165 as of September 30, 2022, including 11,013,665 Public Warrants and 8,014,500 Private Placement Warrants[93] - The Company repurchased a total of 272,577 public warrants for $0.5 million and $31 thousand, respectively, and suspended its share repurchase program as of January 5, 2022[94] Note 15. Related Party Transactions This note describes significant transactions and balances with related parties, including Horizon and Holthausen - The Company paid the remaining $3.1 million of a $10.0 million fixed payment under the Horizon IP Agreement in February 2022[95] - The Company acquired the remaining 49.5% equity interest in Hyzon Europe from Holthausen in December 2022 for €3.5 million (approximately $3.7 million USD), gaining 100% ownership[101] | Related Party Balances (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------ | :----------- | :----------- | | Related party payable to Horizon | $100 | $3,700 | | Related party payable to Holthausen | $300 | $(300) | Note 16. Income (Loss) per share This note presents the basic and diluted net income or loss per share and lists potentially dilutive securities | Net income (loss) per share attributable to Hyzon | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Basic | $(0.10) | $0.15 | $0.04 | $0.09 | | Diluted | $(0.10) | $0.14 | $0.04 | $0.08 | | Potentially Dilutive Securities (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Restricted stock units | 2,538 | 426 | 937 | 426 | | Stock options with service conditions | 12,419 | — | 539 | — | | Private placement warrants | 8,015 | 8,015 | 8,015 | 8,015 | | Public warrants | 11,014 | 11,286 | 11,014 | 11,286 | | Earnout shares | 23,250 | 23,250 | 23,250 | 23,250 | Note 17. Subsequent Events This note discloses significant events occurring after the reporting period, including investments, divestitures, and regulatory updates - In December 2022, the Company invested $8.5 million in Raven SR S1 LLC, with an additional $1.5 million to be paid in 2023, for an approximate 20% ownership in a solid waste-to-hydrogen production facility[107] - The Company sold its equity interest in Hyzon Guangdong to Hymas for approximately $3.1 million in cash in December 2022 and repurchased approximately 3.8 million shares of common stock from Hymas for $6.4 million[108][109] - Nasdaq issued Staff Determinations in February and April 2023 regarding non-compliance with listing rules due to delayed filings, with the Hearings Panel granting continued listing until May 15, 2023[110][111] - The Delaware Court of Chancery granted the Company's petition under Section 205 of the DGCL in March 2023, validating the approval of increased authorized share capital at the July 2021 shareholder meeting[112] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section offers management's analysis of financial condition and operations, covering business strategies, market trends, performance, liquidity, non-GAAP measures, and critical accounting policies Overview This section introduces Hyzon Motors Inc.'s business model, focusing on hydrogen fuel cell electric vehicles and a clean hydrogen supply ecosystem - Hyzon Motors Inc. focuses on assembling and supplying hydrogen-powered fuel cell electric vehicles (FCEVs) and building a clean hydrogen supply ecosystem in the US, Netherlands, and Australia[115][118] - The company's strategy involves designing and developing one vehicle platform per region, manufacturing fuel cells in-house, and leveraging third-party vehicle assemblers to maintain an asset-light business model and lower production costs[116] Key Trends and Uncertainties This section discusses significant trends and uncertainties impacting the company, including revenue generation, R&D expenses, supply chain risks, and regulatory compliance - The company reported negligible revenue for Q3 2022 and $2.9 million for the nine months ended September 30, 2022, indicating that its business model is yet to be proven at scale, requiring completion of manufacturing facilities and R&D milestones[120] - Hyzon is developing an end-to-end hydrogen ecosystem with partners for production and dispensing infrastructure, aiming for zero-to-negative carbon intensity hydrogen at below diesel-parity costs[122] - The company expects substantial and increasing R&D expenses to maintain its leadership in hydrogen technology, focusing on vehicle design, software, fuel cell systems, and electric powertrains[123] - Hyzon relies on third parties, including its parent company Horizon, for key inputs and components, and faces supply chain disruptions, cost increases, and potential inability of suppliers to deliver on acceptable terms[125][126] - The company operates in a highly regulated industry, and non-compliance or changes in laws/regulations could significantly impact its business, financial condition, and operating results[131] Results of Operations This section provides a detailed analysis of the company's financial performance, including revenue, cost of revenue, operating expenses, and net income or loss | (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | $ Change | % Change | | :--------------- | :------------------------------ | :------------------------------ | :------- | :------- | | Revenue | $5 | $89 | $(84) | (94)% | | Cost of revenue | $8,203 | $204 | $7,999 | 3921% | | R&D | $9,241 | $3,982 | $5,259 | 132% | | SG&A | $36,103 | $42,661 | $(6,558) | (15)% | | Loss from operations | $(53,542) | $(46,758) | $(6,784) | 15% | | Net income (loss) | $(35,653) | $33,845 | $(69,498) | (205)% | | (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | $ Change | % Change | | :--------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Revenue | $2,939 | $89 | $2,850 | 3202% | | Cost of revenue | $10,226 | $204 | $10,022 | 4913% | | R&D | $26,660 | $8,081 | $18,579 | 230% | | SG&A | $75,920 | $51,607 | $24,313 | 47% | | Loss from operations | $(109,867) | $(59,803) | $(50,064) | 84% | | Net income (loss) | $(5,680) | $15,746 | $(21,426) | (136)% | - Cost of revenue for the three months ended September 30, 2022, was primarily due to customer contract provisions, inventory write-downs, and costs of 20 FCEVs delivered to Jiushuang[135] - Selling, general, and administrative expenses decreased by $6.6 million for the three months ended September 30, 2022, primarily due to $26.8 million lower stock compensation expense, offset by increases in legal, accounting, consulting fees, and Orten acquisition cancellation costs[139] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures like EBITDA and Adjusted EBITDA to GAAP net income or loss - EBITDA is defined as net income (loss) before interest, income tax, and depreciation/amortization. Adjusted EBITDA further adjusts for stock-based compensation, fair value changes of warrant and earnout liabilities, gain/loss on equity securities, and other special items[160] | (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income (loss) | $(35,653) | $33,845 | $(5,680) | $15,746 | | EBITDA | $(35,093) | $34,401 | $(3,059) | $21,666 | | Adjusted EBITDA | $(38,695) | $(14,431) | $(87,463) | $(26,288) | Liquidity This section assesses the company's ability to meet its short-term and long-term financial obligations, including cash position and future capital needs - The Company incurred net losses and used $116.2 million in operating activities for the nine months ended September 30, 2022. As of September 30, 2022, it had $70.6 million in cash and cash equivalents and $239.6 million in short-term investments[164] - As an early-stage growth company, Hyzon expects to incur net losses and will need to raise additional capital through equity, debt financing, strategic collaborations, and licensing arrangements to fund operations[165] - Management believes current financial resources are sufficient for the next 12 months, supported by strategic actions including global organizational integration, elimination of non-vital R&D programs, reduction of vehicle variants, halting China deliveries, and divestitures[166][167][168] Contractual Obligations and Commitments This section discusses any material changes to the company's contractual obligations and commitments - There were no material changes to contractual obligations outside the ordinary course of business for the nine months ended September 30, 2022[177] Off-Balance Sheet Arrangements This section confirms the absence of material off-balance sheet arrangements that could impact the company's financial position - The Company does not maintain any off-balance sheet arrangements, transactions, obligations, or relationships with unconsolidated entities that would materially affect its financial condition or results of operations[178] Critical Accounting Policies and Estimates This section highlights the company's critical accounting policies and estimates, noting any substantial changes - There have been no substantial changes to the Company's critical accounting policies and estimates for the nine months ended September 30, 2022[179] Emerging Growth Company Status This section explains the company's status as an emerging growth company and its election regarding accounting standards and disclosures - Hyzon has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards as an emerging growth company under the JOBS Act[180] - The Company intends to rely on JOBS Act exemptions, including not providing an auditor's attestation report on internal control over financial reporting and reduced compensation disclosures[181] Material Transactions with Related Parties This section reiterates details on significant transactions with related parties, consistent with Note 15 - The Company made deposit payments to Horizon and its subsidiaries for fuel cell components, with a remaining balance of $6.0 million as of September 30, 2022[183] - The Company acquired the remaining 49.5% equity interests of Hyzon Europe from Holthausen in December 2022, gaining 100% ownership[188] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Hyzon Motors Inc. is exempt from providing quantitative and qualitative disclosures about market risk - Hyzon Motors Inc. is a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk[191] Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures, identifies material weaknesses in internal control over financial reporting, outlines the remediation plan, and confirms no material changes in internal control during the quarter Evaluation of Disclosure Controls and Procedures This section assesses the effectiveness of the company's disclosure controls and procedures, noting identified material weaknesses - As of September 30, 2022, the Chief Executive Officer and Interim Chief Financial Officer concluded that the Company's disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[194] - Despite the ineffectiveness, management concluded that the unaudited interim consolidated financial statements for the periods presented fairly represent the Company's financial position, results of operations, and cash flows in conformity with U.S. GAAP[195] Material Weaknesses in Internal Control over Financial Reporting This section identifies specific material weaknesses in the company's internal control over financial reporting and their implications - Material weaknesses identified include insufficient qualified resources, ineffective risk assessment, inadequate internal information and communication processes, and insufficient establishment of structures, reporting lines, and responsibilities[196][197] - These deficiencies led to the conclusion that the Company did not effectively design, implement, and operate process-level control activities related to revenue recognition, complex accounting transactions, and the financial close process[196] Remediation Plan and Status This section outlines the actions taken and planned by management to address and remediate the identified material weaknesses - Remedial actions taken include appointing new executive officers, hiring additional finance and accounting personnel, engaging external consultants, establishing a Disclosure Committee, and implementing a formal regional general manager financial statement review process[199] - Planned actions include designing a comprehensive risk assessment process, further developing formal policies for financial reporting and complex accounting, formalizing controls for sales and vendor contracting, and completing ethics and public company training[200] Changes in Internal Control over Financial Reporting This section reports on any changes in the company's internal control over financial reporting during the quarter - There have been no changes in the Company's internal control over financial reporting during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to affect, its internal control over financial reporting[201] PART II – OTHER INFORMATION This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings This section incorporates by reference the information on legal proceedings from Note 12, detailing ongoing litigation and government investigations - Information regarding legal proceedings is incorporated by reference from Note 12. Commitments and Contingencies of the unaudited interim consolidated financial statements[203] Item 1A. Risk Factors This section refers to the risk factors previously disclosed in the 2021 Form 10-K/A and highlights additional risks related to adverse developments in the financial services industry - No material changes to risk factors described in the 2021 Form 10-K/A, except for additional risks concerning adverse developments affecting the financial services industry[204] - New risks include potential negative impacts on liquidity and access to funding due to events involving limited liquidity, defaults, or non-performance by financial institutions, as seen with Silicon Valley Bank and Signature Bank[205][206][207][208] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms that there were no unregistered sales of equity securities during the nine months ended September 30, 2022 - There were no sales of equity securities for the nine months ended September 30, 2022, that were not registered under the Securities Act[209] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities - There were no defaults upon senior securities[210] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable[211] Item 5. Other Information This section states that there is no other information to report - No other information to report[212] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including organizational documents, agreements, and certifications - Key exhibits include the Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Cancellation Agreement with Orten Holding GmbH, and certifications of the CEO and Interim CFO[216] SIGNATURES This section contains the official signatures of the company's executive officers, certifying the accuracy of the report - The report is signed by Parker Meeks, Chief Executive Officer, and Jiajia Wu, Interim Chief Financial Officer and Chief Accounting Officer, on May 1, 2023[218][220]