UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39283

Lightning eMotors, Inc.

(Exact name of registrant as specified in its charter)

Delaware

84-4605714

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

815 14th Street SW

Suite A100

Loveland, Colorado 80537

(Address of Principal Executive Offices)

(800) 233-0740

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading symbol	Name of Exchange on which registered
Common Stock, par value $0.0001 per share	ZEV	New York Stock Exchange
Redeemable Warrants, each full warrant exercisable for one share of Common stock at an exercise price of $11.50 per share	ZEV.WS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer	◻	Accelerated filer	◻

Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 29, 2021, there were 74,955,725 shares of the registrant’s common stock outstanding.

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TABLE OF CONTENTS


		Page

Part I	Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of September 30, 2021 (Unaudited) and December 31, 2020	3

	Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (Unaudited)	4

	Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended September 30, 2021 and 2020 (Unaudited)	5

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (Unaudited)	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46

Item 4.	Controls and Procedures	47

Part II	Other Information

Item 1.	Legal Proceedings	49

Item 1A.	Risk Factors	49

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	84

Item 3.	Defaults Upon Senior Securities	84

Item 4.	Mine Safety Disclosures	84

Item 5.	Other Information	84

Item 6.	Exhibits	84

Exhibit Index		84

Signatures		86

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PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

Lightning eMotors, Inc.

Consolidated Balance Sheets

(in thousands, except share data)


	September 30,		December 31,
	2021		2020
		(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	187,238	$	460
Accounts receivable, net		12,070		4,122
Inventories		10,761		5,743
Prepaid expenses and other current assets		7,237		3,999
Total current assets		217,306		14,324
Property and equipment, net		4,330		2,615
Operating lease right-of-use asset, net		8,840		7,881
Other assets		145		45
Total assets	$	230,621	$	24,865
Liabilities and stockholders’ equity (deficit)
Current liabilities
Accounts payable	$	3,736	$	2,599
Accrued expenses and other current liabilities		6,740		2,890
Warrant liability		1,481		21,155
Current portion of long-term debt		—		7,954
Current portion of long-term debt - related party		—		6,225
Current portion of operating lease obligation		1,035		1,769
Current portion of finance lease obligation		—		54
Total current liabilities		12,992		42,646
Long-term debt, convertible note net of debt discount		58,740		—
Long-term debt, net of current portion and debt discount - related party		2,956		1,649
Operating lease obligation, net of current portion		9,431		7,265
Derivative liability		21,368		—
Earnout liability		123,124		—
Total liabilities		228,611		51,560
Commitments and contingencies (Note 14)
Stockholders’ equity (deficit)
Preferred stock, par value $.0001, 1,000,000 shares authorized no shares issued and outstanding as of September 30, 2021 and December 31, 2020		—		—
Common stock, par value $.0001, 250,000,000 shares authorized as of September 30, 2021 and December 31, 2020; 74,827,128 and 32,949,507 shares issued and outstanding as of September 30, 2021 and December 31, 2020		7		3
Additional paid-in capital		205,753		54,097
Accumulated deficit		(203,750)		(80,795)
Total stockholders’ equity (deficit)		2,010		(26,695)
Total liabilities and stockholders’ equity (deficit)	$	230,621	$	24,865

See accompanying notes to unaudited financial statements

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Lightning eMotors, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	6,257	$	3,802	$	16,771	$	5,368
Cost of revenues		7,026		3,938		19,392		6,213
Gross loss		(769)		(136)		(2,621)		(845)
Operating expenses
Research and development		823		287		2,214		742
Selling, general and administrative		9,299		2,758		29,245		6,973
Total operating expenses		10,122		3,045		31,459		7,715
Loss from operations		(10,891)		(3,181)		(34,080)		(8,560)
Other expenses
Interest expense		3,983		862		9,534		1,242
(Gain) loss from change in fair value of warrant liabilities		(27)		14,533		28,108		14,363
Loss from change in fair value of derivative liability		5,023		—		9,290		—
Loss from change in fair value of earnout liability		31,788		—		44,164		—
Gain on extinguishment of debt		(2,194)		—		(2,194)		—
Other (income) expense		(3)		108		(27)		107
Total other expenses		38,570		15,503		88,875		15,712
Net loss	$	(49,461)	$	(18,684)	$	(122,955)	$	(24,272)
Net loss per share	$	(0.67)	$	(0.59)	$	(2.22)	$	(0.83)
Weighted-average shares outstanding, basic and diluted		73,740,294		31,585,159		55,298,257		29,305,734

See accompanying notes to unaudited financial statements

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Lightning eMotors, Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share data) (Unaudited)



	Redeemable						Additional		Stockholders’		Total
	Convertible Preferred						Paid-in		Accumulated		Stockholders’
	Stock			Common Stock			Capital		Deficit		Equity (Deficit)
	Shares	Amount		Shares	Par Value
Balance as of June 30, 2021	—	$	—	73,248,111	$	7	$	193,804	$	(154,289)	$	39,522
Exercise of stock options	—		—	506,461		—		511		—		511
Vesting of restricted stock units	—		—	17,168		—		—		—		—
Stock—based compensation expense	—		—	—		—		1,349		—		1,349
Conversion of convertible notes payable	—		—	1,055,388		—		10,089		—		10,089
Net loss	—		—	—		—		—		(49,461)		(49,461)
Balance as of September 30, 2021	—	$	—	74,827,128	$	7	$	205,753	$	(203,750)	$	2,010


Balance as of December 31, 2020	30,120,057	$	43,272	4,910,555	$	—	$	10,828	$	(80,795)	$	(69,967)
Retroactive application of recapitalization	(30,120,057)		(43,272)	28,038,952		3		43,269		—		43,272
Adjusted balance beginning of period	—		—	32,949,507		3		54,097		(80,795)		(26,695)
Exercise of Common Warrants¹	—		—	69,232		—		646		—		646
Issuance of Series C redeemable convertible preferred stock upon exercise of Series C warrants¹	—		—	1,756,525		—		14,068		—		14,068
Business Combination and PIPE Financing	—		—	37,843,390		4		109,801		—		109,805
Warrants issued in connection with the Convertible Note	—		—	—		—		14,522		—		14,522
Exercise of stock options¹	—		—	1,135,918		—		552		—		552
Vesting of restricted stock units	—		—	17,168		—		—		—		—
Stock—based compensation expense	—		—	—		—		1,545		—		1,545
Conversion of convertible notes payable	—		—	1,055,388		—		10,089		—		10,089
Issuance of common stock warrants	—		—	—		—		433		—		433
Net loss	—		—	—		—		—		(122,955)		(122,955)
Balance as of September 30, 2021	—	$	—	74,827,128	$	7	$	205,753	$	(203,750)	$	2,010


Balance as of June 30, 2020	29,818,650	$	42,191	3,254,478	$	—	$	7,402	$	(48,730)	$	(41,328)
Retroactive application of recapitalization	(29,818,650)		(42,191)	27,853,836		3		42,188		—		42,191
Adjusted balance beginning of period	—		—	31,108,314		3		49,590		(48,730)		863
Issuance of Series C warrants beneficial conversion feature	—		—	—		—		2,976		—		2,976
Exercise of stock options¹	—		—	895,890		—		44		—		44
Stock—based compensation expense	—		—	—		—		254		—		254
Net loss	—		—	—		—		—		(18,684)		(18,684)
Balance as of September 30, 2020	—	$	—	32,004,204	$	3	$	52,864	$	(67,414)	$	(14,547)


Balance as of December 31, 2019	25,757,260	$	37,982	3,254,478	$	—	$	5,552	$	(43,164)	$	(37,612)
Retroactive application of recapitalization	(25,757,260)		(37,982)	24,033,725		3		37,979		—		37,982
Adjusted balance beginning of period	—		—	27,288,203		3		43,531		(43,164)		370
Adoption of ASC 842	—		—	—		—		—		22		22
Issuance of Series C redeemable convertible preferred stock¹	—		—	127,302		—		225		—		225
Issuance in connection with the redemption of convertible debt and cash purchase of redeemable Series C convertible preferred stock¹	—		—	3,692,809		—		3,984		—		3,984
Issuance of Series C warrants beneficial conversion feature	—		—	—		—		2,976		—		2,976
Exercise of stock options¹	—		—	895,890		—		44		—		44
Stock—based compensation expense	—		—	—		—		260		—		260
Redemption of convertible notes payable	—		—	—		—		1,844		—		1,844
Net loss	—		—	—		—		—		(24,272)		(24,272)
Balance as of September 30, 2020	—	$	—	32,004,204	$	3	$	52,864	$	(67,414)	$	(14,547)

¹Share amounts have been retroactively restated to give effect to the recapitalization transaction

See accompanying notes to unaudited financial statements

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Lightning eMotors, Inc.

Consolidated Statements of Cash Flows

(in thousands, except share data)

(Unaudited)


	Nine Months Ended
	September 30,
	2021		2020
Cash flows from operating activities
Net loss	$	(122,955)	$	(24,272)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		605		263
Provision for doubtful accounts		142		—
Gain on disposal of fixed asset		(9)		—
Gain on extinguishment of debt		(2,194)		—
Change in fair value of warrant liability		28,108		14,363
Change in fair value of earnout liability		44,164		—
Change in fair value of derivative liability		9,290		—
Stock-based compensation		1,545		260
Amortization of debt discount		4,598		470
Non-cash impact of operating lease right of use asset		1,453		795
Issuance of common stock warrants for services performed		433		—
Other non-cash expenses		—		164
Changes in operating assets and liabilities that (used) provided cash:
Accounts receivable		(8,090)		(2,939)
Inventories		(5,018)		(953)
Prepaid expenses and other current assets and other assets		(6,511)		(195)
Accounts payable		1,293		233
Accrued expenses and other current liabilities		5,184		118
Net cash used in operating activities		(47,962)		(11,693)
Cash flows from investing activities
Purchase of property and equipment		(2,320)		(1,301)
Proceeds from disposal of property and equipment		9		—
Net cash used in investing activities		(2,311)		(1,301)
Cash flows from financing activities
Proceeds from term loan and working capital facility		—		1,000
Proceeds from convertible notes payable, net of issuance costs paid		95,000		9,379
Proceeds from Business combination and PIPE Financing, net of issuance costs paid		142,796		—
Proceeds from facility borrowings		7,000		—
Repayments of facility borrowings		(11,500)		—
Proceeds as part of a redemption of convertible notes payable and Series C redeemable convertible preferred stock and warrants		—		3,000
Proceeds from the exercise of Series C redeemable convertible preferred warrants		3,100		—
Proceeds from exercise of common warrants		157		—
Proceeds from issuance of Series C convertible preferred stock and preferred stock warrants		—		3,225
Payments on finance lease obligations		(54)		(50)
Proceeds from exercise of stock options		552		44
Net cash provided by financing activities		237,051		16,598
Net increase in cash		186,778		3,604
Cash - Beginning of year		460		1,297
Cash - End of period	$	187,238	$	4,901
Supplemental cash flow information - Cash paid for interest	$	2,559	$	641
Significant noncash transactions
Earnout liability at inception	$	78,960	$	—
Warrant liability at inception		1,253		—
Derivative liability at inception		17,063		—
Conversion of short-term convertible notes for common stock		9,679		—
Conversion of convertible notes for common stock		10,089		—
Conversion of warrant liabilities for common stock		37,580		—
Conversion of convertible notes payable into Series C redeemable convertible preferred stock		—		3,000

See accompanying notes to unaudited financial statements

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Lightning eMotors, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

(Unaudited)

Note 1 – Description of Business and Basis of Presentation

On May 6, 2021 (the "Closing Date"), GigCapital3, Inc. ("Gig"), consummated the previously announced merger pursuant to the Business Combination Agreement, dated December 10, 2020 (the "Business Combination Agreement"), by and among Project Power Merger Sub, Inc., a wholly-owned subsidiary of Gig incorporated in the State of Delaware ("Merger Sub"), and Lightning Systems, Inc., a Delaware corporation ("Lightning Systems"). Pursuant to the terms of the Business Combination Agreement, a business combination between Gig and Lightning Systems was effected through the merger of Merger Sub with and into Lightning Systems, with Lightning Systems surviving as the surviving company and as a wholly-owned subsidiary of Gig (the "Business Combination").

On the Closing Date, and in connection with the closing of the Business Combination, Gig changed its name to Lightning eMotors, Inc. (the "Company", "Lightning", “we” or “us”). Lightning Systems was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification ("ASC") 805, Business Combinations. This determination was primarily based on Lightning Systems stockholders prior to the Business Combination having a majority of the voting interests in the combined company, Lightning Systems operations comprising the ongoing operations of the combined company and Lightning Systems senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Lightning Systems issuing stock for the net assets of Gig, accompanied by a recapitalization. The net assets of Gig are stated at historical cost, with no goodwill or other intangible assets recorded.

While Gig was the legal acquirer in the Business Combination, Lightning Systems was deemed the accounting acquirer, the historical financial statements of Lightning Systems became the historical financial statements of the combined company, upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of Lightning Systems prior to the Business Combination; (ii) the combined results of the Company and Lightning Systems following the closing of the Business Combination; (iii) the assets and liabilities of Lightning Systems at their historical cost; and (iv) the Company’s equity structure for all periods presented.

In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company's common stock, $0.0001 par value per share ("Common Stock") issued to Lightning Systems stockholders in connection with the recapitalization transaction. As such, the shares and corresponding capital amounts and earnings per share related to Lightning Systems redeemable convertible preferred stock and Lightning Systems common stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio of approximately 0.9406 shares (the “Exchange Ratio”) established in the Business Combination Agreement. Activity within the statement of stockholders' equity for the issuances and repurchases of Lightning Systems convertible redeemable preferred stock, were also retroactively converted to Lightning Systems common stock. For more details on the reverse recapitalization, see Note 3 to the Company’s notes to unaudited consolidated financial statements.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). The unaudited financial information reflects, in the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company's financial position, results of operations and cash flows for the periods indicated. The results reported for the interim period presented are not necessarily indicative of results that may be expected for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the

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Company's audited financial statements as of and for the year ended December 31, 2020 included in the Prospectus which constituted a part of the Company's Registration Statement on Form S-1 (File No. 333-257237), which was declared effective by the SEC on July 6, 2021 (the "Prospectus").

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated.

Reclassifications

Certain prior period balances in the consolidated balance sheets and statements of cash flows have been combined or reclassified to conform to current period presentation. Such reclassifications had no impact on net loss or shareholders’ equity previously reported.

Out-of-Period Adjustments

During the three months ended June 30, 2021, the Company identified an error related to the failure to account for the modification of an operating lease for one of its facilities amended in November 2020. The modification extended the term of the lease from November 2024 to February 2027. As a result of the error Operating lease right-of-use assets, Total Assets, Lease Obligation (current and long-term), and Net loss were understated in the periods ended March 31, 2021 and December 31, 2020. The Company assessed the materiality of these errors considering the relevant quantitative and qualitative factors and concluded that the errors were not material to the consolidated financial statements taken as a whole. As such, during the three months ended June 30, 2021, the Company recorded the following out-of-period adjustment to correct the error: increased “right-of-use asset” $2,272, increased “cost of revenues” $14, increased “selling, general and administrative” expense $47, increased “current portion of operating lease obligation” $100, and increased “operating lease obligation, net of current portion” $2,233. The consolidated statements of operations for the three and nine months ended September 30, 2021, the consolidated balance sheet as of September 30, 2021 and the consolidated statements of stockholders’ equity and cash flows for the three and nine months ended September 30, 2021 reflect the above adjustments.

Liquidity

As of September 30, 2021, the Company had $187,238 in cash and cash equivalents. For the three and nine months ended September 30, 2021, the net loss of the Company was $49,461 and $122,955, respectively. Cash flow used in operating activities was $47,962 for the nine months ended September 30, 2021. The Company had positive working capital of $204,314 as of September 30, 2021 primarily as a result of the Business Combination. The current and historical operating cash flows, current cash and working capital balances, and forecasted obligations of the Company were considered in connection with management’s evaluation of the Company’s ongoing liquidity. As a result of the Business Combination, the Company received net proceeds of $216,812 in cash, after paying off the outstanding working capital facilities, the secured promissory note, and unsecured facility agreements. The cash proceeds received from the transaction are expected to provide sufficient capital to fund planned operations for one year from the date of financial statements issuance. We believe our cash and cash equivalents balance will be sufficient to continue to operate our business over the next twelve-month period from the date the financial statements were issued. However, we will require substantial additional capital to develop our products and services, including those for orders in our order backlog, fund the growth and scaling of our manufacturing facilities, fund the growth and scaling of our operations and possible acquisitions. Until we can generate sufficient cash flow from operations, we expect to finance our operations through a combination of the merger proceeds we received from the Business Combination, the PIPE Financing and the Convertible Note investment, as well as from additional public offerings, debt financings, collaborations or licensing arrangements. The amount and timing of our future funding requirements depend on many factors, including the pace and results of our development efforts and our ability to scale our operations.

COVID-19

On March 11, 2020, the World Health Organization declared the outbreak of a respiratory disease caused by a new coronavirus, known as COVID-19, a pandemic. The first Delta variant case was identified in December 2020, and the

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variant soon became the predominant strain of the virus and by the end of September 2021, the Delta variant was the cause of more than 99% of new U.S. COVID-19 cases. In response, most U.S. states have implemented measures to combat the outbreak that has impacted U.S. business operations. As of the date of issuance of the financial statements, the Company’s operations have not been significantly impacted, but the Company continues to monitor the situation. No impairments were recorded as of the balance sheet date, as no triggering events or changes in circumstances had occurred as of period-end; however, due to significant uncertainty surrounding the situation, management’s judgment regarding this could change in the future. In addition, while the Company’s results of operations, cash flows, and financial condition could be impacted, the extent of the impact cannot be reasonably estimated at this time.

Note 2 – Summary of Significant Accounting Policies

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our most significant estimates and judgments involve deferred income taxes, allowance for doubtful accounts, warranty liability, write downs and write offs of obsolete and damaged inventory and the valuation of share-based compensation, warrant liability, convertible note derivative liability and earnout share liability. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates, and such differences could be material to the Company’s financial statements.

Segment information

ASC 280, Segment Reporting, defines operating segments as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company operates as a single operating segment. The Company’s CODM is the Chief Executive Officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM uses Company forecasts, a financial and operations dashboard, and cash flows as the primary measures to manage the business and does not segment the business for internal reporting or decision making.

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Concentrations of credit risk

As of September 30, 2021 and December 31, 2020, two customers accounted for 55% and 37%, respectively, of the Company’s total accounts receivable. The net sales to the following customers comprised more than 10% of revenues for the periods presented.


	Three Months Ended September 30,								Nine months ended September 30,
	2021				2020				2021				2020
		Net Sales	% of Net Revenues			Net Sales	% of Net Revenues			Net Sales	% of Net Revenues			Net Sales	% of Net Revenues
Customer A	$	1,326	21	%	$	—	—	%	$	—	—	%	$	—	—	%
Customer B		1,078	17	%		—	—	%		—	—	%		—	—	%
Customer C		722	12	%		—	—	%		6,040	36	%		—	—	%
Customer D		682	11	%		—	—	%		—	—	%		—	—	%
Customer E		647	10	%		1,240	33	%		2,807	17	%		2,006	37	%
Customer F		—	—	%		921	24	%		—	—	%		1,021	19	%
Customer G		—	—	%		792	21	%		—	—	%		792	15	%
Customer H		—	—	%		527	14	%		—	—	%		—	—	%
Total of customers with sales greater than 10%	$	4,455	71	%	$	3,480	92	%	$	8,847	53	%	$	3,819	71	%
Total of customers with sales less than 10%		1,802	29	%		322	8	%		7,924	47	%		1,549	29	%
Total Revenues	$	6,257	100	%	$	3,802	100	%	$	16,771	100	%	$	5,368	100	%

Concentrations of supplier risk

As of September 30, 2021 and December 31, 2020 one supplier accounted for 16% and 12% of the Company’s accounts payable, respectively. For the three months ended September 30, 2021 and 2020, two suppliers accounted for 37% and 47% of purchases, respectively. For the nine months ended September 30, 2021 and 2020 two and one suppliers, respectively, accounted for 36% and 39% of purchases.

Cash and cash equivalents

Cash and cash equivalents include cash held in banks and in money market funds. The Company’s cash and cash equivalents are placed with high-credit-quality financial institutions and issuers, and at times exceed federally insured limits. To date, the Company has not experienced any credit loss relating to its cash and cash equivalents.

Accounts receivable

Accounts receivable are recorded at invoiced amounts, net of discounts, and allowances. The Company grants credit in the normal course of business to its customers. The Company periodically performs credit analyses and monitors the financial condition of its customers to reduce credit risk and, under certain circumstances, requires collateral to support accounts receivable. The Company reduces the carrying value for estimated uncollectible accounts based on a variety of factors including the length of time receivables are past due, economic trends and conditions affecting the Company’s customer base, and historical collection experience. Specific provisions are recorded for individual receivables when the Company becomes aware of a customer’s inability to meet its financial obligations. The Company writes off accounts receivable when they are deemed uncollectible or, in certain jurisdictions, when legally able to do so. The allowance for doubtful accounts balances at September 30, 2021 and December 31, 2020 were $142 and