Steve Girsky: And to maybe give just a little bit of confidence in this and one of the reasons I’m, here, I mean, to think about what must be true for this not to happen, you’d have to believe that zero emissions isn’t going to happen and you’d have to believe that as a country we’re not going to clean up, long haul trucking and after all of the talk and all of the legislation and everything where we’re moving toward that just doesn’t seem, that just doesn’t seem practical. And it’s going to happen. We just need to, again, to repeat, get the flywheel going and get some of these big accounts there.
Scott Group: Thanks for the time, guys. Appreciate it.
Steve Girsky: Thank you.
Operator: I would now like to turn the call back over to Zoe for the investor questions.
Unidentified Company Representative: Thank you, operator. We received questions from retail investors through the SAE [ph] platform, most of which can be summed up into three topics. The reverse split proposal, subsequent potential for dilution, and finally our path to growth and profitability. First question, what is the rationale for the proposed reverse split? Why is it necessary and why now?
Thomas Okray: I’ll take that one. The Nikola team has worked hard to reset the operational focus of the company since 2023. We are proud to have the first two quarters of fuel cell serial production under our belt. And as Steve mentioned, this is just the beginning. Now it’s time to reset our financial foundation so that Nikola has the characteristics of a company that is ready to climb. Therefore, three reasons for the reverse split. First, there’s a need to address the potential of delisting. If Nikola stock trades below a dollar for a certain period, we can be delisted from NASDAQ, which has severe consequences for a company like ours, such as limiting our ability to access markets that raise capital. The reverse split should allow the stock to trade above $1, thereby reducing the risk of delisting.
Second, it broadens the pool of investors that may be interested in investing in Nicola by attracting new investors who are prohibited from, or prefer not to invest in shares that trade at lower share prices. Third, the reverse split makes available additional shares needed for future capital raises and potential partnerships so that we can be a company poised to climb. Of course, we are mindful of dilution and will only use the additional shares as necessary. In short, we need flexibility in choices, and the reverse split is the best, most efficient option to get us there.
Unidentified Company Representative: Second question why is the strategy being referred to as a reduction in authorized shares when it effectively increases the potential dilution for current shareholders?
Thomas Okray: It’s important for a growing company like Nikola to have access to capital. Therefore, having the flexibility to best position Nicola to raise capital efficiently and effectively is of critical importance. If not for reverse split, we would have had to request shareholder approval for authorization of additional shares to support the business. We analyzed both options, the reverse split or authorizing more shares, and the impact on shareholders in depth. We concluded that the reverse split provided the most financial flexibility we needed, discussed in the prior question, to achieve our objectives.
Unidentified Company Representative: The final question, what is Nicola’s roadmap to profitability? Can you talk about the potential for partnerships and large accounts?
Thomas Okray: Sure, I’ll take that one, Steve. It gets at the heart of our message today. We need to build scale. Without scale, profitability will be below our expectations. Simply put, it’s not practical to optimize our cost structure without a meaningful level of volume. We are putting a greater focus on national accounts. In order to do this, we will be deal-driven and less sensitive to ASP in the short term to build confidence with our end fleet users. Finally, while our main focus remains California and Canada, we are expanding our geographical footprint beyond California and Canada, thereby increasing the addressable market. Working towards zero emissions and building out the hydrogen ecosystem should benefit all. We look to develop and leverage partnerships wherever we can build volume and hydrogen infrastructure across North America.
Unidentified Company Representative: Thank you, Steve and Tom. We appreciate you all taking the time to join us today. On behalf of all Nicola employees, we thank you.
Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.
