INVESTMENT IN LORDSTOWN MOTORS CORP. (“LMC”) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INVESTMENT IN LORDSTOWN MOTORS CORP. (“LMC”) | INVESTMENT IN LORDSTOWN MOTORS CORP. (“LMC”) As of December 31, 2022, the Company owned zero shares of LMC Class A Common Stock. During the third quarter of 2021, the Company sold its Investment in LMC at an average price of $6.42 per share. Proceeds from the sale, net of transaction expenses and broker commissions, were approximately $105.1 million. The Company recognized a loss of approximately $76.5 million in connection with the sale, which is recorded in Other Loss on the Consolidated Statements of Operations.
The following table sets forth a reconciliation of our investment in LMC:
LMC Transaction
On November 7, 2019, the Company entered into a transaction with LMC (the “LMC Transaction”) in which the Company granted LMC a perpetual and worldwide license to certain intellectual property relating to the Company’s W-15 electric pickup truck platform and its related technology in exchange of consideration as described below:
•A ten percent ownership interest in the common stock of LMC in exchange for the Company’s obligations under the Intellectual Property License Agreement (the "Agreement")
•One percent of the aggregate debt and equity commitments funded to LMC upon completion of a capital raise (the “Royalty Advance”).
•A one percent royalty on the gross sales price of the first 200,000 vehicles sold by LMC, to the extent that the aggregate amount of such royalty fees exceeds the amount paid as the Royalty Advance.
The consideration included fixed and variable components. The fixed components consisted of the ten percent ownership interest in LMC and amounts received under the Royalty Advance. The variable component consists of the one percent royalty
on the gross sales price of the first 200,000 vehicles sold by LMC. Variable consideration will be recognized when each vehicle for which a royalty is sold.
On January 27, 2023, we received a letter (the “Notice”) from LMC purporting to terminate the Agreement, effective March 27, 2023. The Company believes that the Agreement provides that LMC’s obligation to pay the Royalties survives termination of the Agreement and that, notwithstanding LMC’s termination of the Agreement, the Royalties would still be due and payable if LMC sells vehicles. LMC has not informed the Company that it has sold any applicable vehicles since the date of the Agreement. The Company cannot currently predict to what extent, if at all, LMC will sell any such vehicles, whether LMC will pay the applicable Royalties on any such vehicles it does sell, or whether the amount of any such Royalties will be material.
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