Nxu(NXU) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company presents unaudited financial statements for Q3 2023, highlighting its first revenue and a going concern warning Condensed Consolidated Balance Sheets As of September 30, 2023, total assets were $8.19 million and the stockholders' deficit improved to $4.26 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash | $2,028 | $2,701 | | Total current assets | $2,653 | $3,667 | | Property and equipment, net | $3,141 | $2,441 | | Total assets | $8,192 | $7,038 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $5,330 | $4,243 | | Convertible debt and warrant liability, at fair value | $5,901 | $11,285 | | Total liabilities | $12,452 | $16,086 | | Total stockholders' deficit | ($4,260) | ($9,048) | Condensed Consolidated Statements of Operations For the nine months ended September 30, 2023, the company reported its first revenue but a net loss of $38.0 million Statement of Operations Summary (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Revenue | $117 | $0 | | Gross loss | ($897) | $0 | | Stock-based compensation | $16,306 | $34,370 | | Research and development | $10,690 | $6,794 | | General and administrative | $12,808 | $7,236 | | Operating loss | ($40,985) | ($53,531) | | Gain on convertible debt and warrant liability | $4,007 | $0 | | Net loss | ($37,972) | ($53,126) | | Loss per share, basic and diluted | ($1.09) | ($7.22) | Condensed Consolidated Statements of Stockholders' Equity (Deficit) The stockholders' deficit improved to $4.26 million due to capital raising activities offsetting the period's net loss - For the nine months ended September 30, 2023, the company issued 23.6 million shares of common stock for $6.2 million in cash and converted $16.3 million of debt into 14.7 million shares of equity[16] - The accumulated deficit increased from $218.6 million at the end of 2022 to $256.6 million as of September 30, 2023, due to the net loss of $38.0 million incurred during the period[16] Condensed Consolidated Statements of Cash Flows Net cash used in operations was $23.7 million, while financing activities provided $24.1 million for the nine-month period Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($23,703) | ($15,841) | | Net cash used in investing activities | ($1,089) | ($1,164) | | Net cash provided by financing activities | $24,119 | $15,273 | | Net decrease in cash | ($673) | ($1,732) | | Cash, end of period | $2,028 | $1,414 | - Financing activities in 2023 included $18.6 million net proceeds from a public offering and $7.3 million from the issuance of convertible debt[21] Notes to Condensed Consolidated Financial Statements (Unaudited) Notes detail the corporate reorganization, a going concern warning, first revenue, and subsequent events like a Nasdaq delisting notice - On May 12, 2023, Atlis Motor Vehicles Inc. completed a reorganization merger to become Nxu, Inc., with Nxu as the successor issuer[24][26] - The company's financial condition raises substantial doubt about its ability to continue as a going concern, having incurred a net loss of $38.0 million and used $23.7 million in cash from operations in the first nine months of 2023, with only $2.0 million cash on hand at period end[34][36] - In Q3 2023, the company recognized its first revenue of $117,000 from battery systems and components sales[51] - The company wrote off approximately $0.90 million of inventory to cost of goods sold in Q3 2023 after determining it could not complete a customer contract[54] - Subsequent to the quarter end, on October 10, 2023, Nxu received a notice from Nasdaq regarding potential delisting for failing to meet the minimum bid price requirement[116] - On October 23, 2023, the company completed a public offering of 86.0 million shares at $0.035 per share, raising approximately $3.0 million before costs[117] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a strategic shift to megawatt charging, its first revenue, and critical liquidity challenges Company Overview and Strategy The company is prioritizing its megawatt charging systems, launching the Nxu One while pausing battery cell development - In Q3 2023, the company made a strategic shift to prioritize the development and deployment of its megawatt charging system[128] - The Nxu One Megawatt+ Charging System was launched in September 2023 and is capable of delivering over 700kW of universal charging[128][129] - In connection with the strategic shift, Nxu has paused the development and production of its proprietary battery cells and packs, with plans to resume in the near term[130] Results of Operations The company recorded its first revenue of $0.12 million and a gross loss, with operating expenses decreasing due to lower stock-based compensation - The company recognized its first revenue of $0.12 million in Q3 2023, primarily from a battery system contract[138] - Cost of revenue in Q3 2023 was $1.0 million, which included a write-off of approximately $0.90 million in work-in-process inventory[139] Operating Expense Changes (Nine Months Ended Sep 30, 2023 vs 2022, in millions) | Expense Category | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Stock-based compensation | $16.3 | $34.4 | ($18.1) | | Research and development | $10.7 | $6.8 | $3.9 | | General and administrative | $12.8 | $7.2 | $5.6 | | Advertising | $0.28 | $5.1 | ($4.8) | Liquidity and Capital Resources Substantial doubt exists about the company's ability to continue as a going concern, requiring immediate additional financing - There is substantial doubt about the Company's ability to continue as a going concern due to significant losses and negative cash flow[152][156] Financial Position and Cash Flow (Nine Months Ended Sep 30, 2023, in millions) | Metric | Amount | | :--- | :--- | | Net Loss | ($38.0) | | Net cash used in operating activities | ($23.7) | | Cash balance at period end | $2.0 | | Net proceeds from financing activities | $26.0 | - The company requires immediate additional financing to fund future operations and plans to access public markets and other avenues for capital[155][156] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company qualifies as a smaller reporting company - The company has not provided quantitative and qualitative disclosures about market risk, stating it is not applicable[163] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the end of the quarter - Management concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective[164] - No material changes were made to the company's internal control over financial reporting during the quarter ended September 30, 2023[165] PART II. OTHER INFORMATION Legal Proceedings The company refers to financial statement notes regarding a settlement with a software vendor - For details on legal proceedings, the report refers to Note 11, which discusses a settlement agreement with QAD, Inc. requiring Nxu to pay a $0.70 million termination fee over 21 months[69][167] Risk Factors A new material risk factor is disclosed concerning the potential delisting of the company's stock from Nasdaq - A new material risk is the potential delisting of the company's Class A common stock from Nasdaq for failing to meet the $1.00 minimum bid price and the minimum stockholders' equity requirements[169] - On October 10, 2023, Nasdaq issued a delisting determination; the company has appealed, and a hearing is scheduled for December 14, 2023[170] - Potential consequences of delisting include reduced liquidity and market price of the stock, and a negative impact on the company's ability to raise equity financing[171] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the reporting period - The company reported no unregistered sales of equity securities for the period[172] Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - The company reported no defaults upon senior securities; however, the Nasdaq non-compliance notice constituted an event of default under its Convertible Notes agreements[97][173] Other Information The company states there is no other information to report for the period - The company reported no other information for the period[175] Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements and certifications