Tesla 2011 Annual Report Download - page 112

Table of Contents
Tesla Motors, Inc.
Notes to Consolidated Financial Statements
1. Overview of the Company
Tesla Motors, Inc. (Tesla, we, us or our) was incorporated in the state of Delaware on July 1, 2003. We design, develop, manufacture and
sell high-performance fully electric vehicles and advanced electric vehicle powertrain components.
Since inception, we have incurred significant losses and have used approximately $330.6 million of cash in operations through
December 31, 2010. As of December 31, 2010, we had approximately $99.6 million in cash and cash equivalents. We are currently selling the
Tesla Roadster automobile and are developing the Model S sedan. To the extent we do not meet our planned sales volumes or future product
releases or our existing cash and cash equivalents balances are insufficient to fund our future activities, we will need to raise additional funds.
We cannot be certain that additional financing, if and when needed, will be available at terms satisfactory to us, or at all. These consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the outcome of this uncertainty.
In January 2010, we entered into a loan agreement with the United States Federal Financing Bank and United States Department of Energy
(DOE), pursuant to the Advanced Technology Vehicles Manufacturing Loan Program (ATVM), authorizing the commitment from the DOE to
arrange loans for up to $465.0 million. See Note 8 for additional details.
In May 2010, we effected a 1-for-3 reverse stock split of our outstanding common stock, and a proportional adjustment to the existing
conversion ratios for each series of preferred stock was made at the time of the effectiveness of the reverse stock split. Accordingly, all share and
per share amounts for all periods presented in these consolidated financial statements and notes thereto, have been adjusted retroactively, where
applicable, to reflect this reverse stock split and adjustment of the preferred stock conversion ratio.
Initial Public Offering and Toyota Concurrent Private Placement
On June 28, 2010, our registration statement on Form S-1 relating to our initial public offering (IPO) was declared effective by the
Securities and Exchange Commission (SEC) and our IPO closed on July 2, 2010, at which time we received cash proceeds of $188.8 million
from this transaction, net of underwriting discounts and commissions. Additionally, we incurred offering costs of $4.4 million related to the IPO
(see Note 9).
Concurrent with the closing of our IPO in July 2010, we closed a private placement transaction for the sale of our common stock to Toyota
Motor Corporation (Toyota) pursuant to which we received proceeds of $50.0 million from Toyota (see Note 9).
As a result of the IPO, our convertible preferred stock was automatically converted into common stock and our outstanding warrants,
excluding the DOE warrant, were net exercised.
Unadjusted Error in 2009
In June 2010, we identified an error related to the understatement in stock-based compensation expense subsequent to the issuance of the
consolidated financial statements for the year ended December 31, 2009.
In the fourth quarter of 2009, we granted certain stock options for which a portion of the grant was immediately vested. We erroneously
accounted for the expense on a straight-line basis over the term of the award, while expense recognition should always be at least commensurate
with the number of awards vesting
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