Electric vehicle startup Canoo, which has big plans for supply zero carbon delivery vans and NASA ground crew transportation, apparently does not have enough cash balance to get it through this quarter.
The company’s CEO, however, says they are secured by enough financing to weather the storm.And yet Canoo’s 10Q first quarter report does not share that optimism.
“Our management has performed an analysis of our ability to continue as a going concern and has identified substantial doubt” about that ability, according to the Canoo 10Q filed with the U.S. Securities and Exchange Commission this week. “Our business plans require a significant amount of capital,” the SEC filing reads.
“If we are unable to obtain sufficient funding or do not have access to capital, we will be unable to execute our business plans and could be required to terminate or significantly curtail our operations and our prospects...”
Such an event comes as Canoo appeared to be gaining momentum toward EV deployment of its models. The Arkansas-based company --formerly based in California--merged with a special purpose acquisition company to go public, announced a deal to supply NASA with ground transportation and planned a new manufacturing plant in Pryor, Oklahoma.
It has only $104 million cash balance after burning through a $125 million loss from operations for the three months ending March 31. The company expected rising capital expenditures also has it hopes to ramp up production of models such as the electric delivery van MPDV and the Canoo pickup truck.
CEO, Chairman and investor Tony Aquila noted that Canoo still has $600 million in accessible capital to support its start of production. Other funding and private investors are engaged and company leaders are optimistic, he added.
“We have been clear about our philosophy of raising capital,” Aquila said in a press release accompanying the SEC filing. “As operators and investors, we have significant experience raising capital in challenging markets – and the best way to raise capital is to achieve your goals. We will continue to raise when needed, bridge to milestones and be in a position to take advantage of improving market conditions.”
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Since the new quarter started, Aquila pointed out, Canoo has doubled its Gamma builds to 39 vehicles. The company counts more than 17,500 preorders with a projected value of $750 million.
And the pipeline is growing, the CEO contended.
The specter of financial insolvency is not the only threat to Canoo’s future. The SEC is investigating its merger with SPAC entity Hennessy Capital Acquisition Co. The probe focuses around changes in business models, executive departures and shareholder concerns.
Trading for Canoo shares, under the ticker GOEV, have dropped more than 13 percent Wednesday morning to $3.13 per share on the Nasdaq exchange.
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(Rod Walton, senior editor for EnergyTech, is a 14-year veteran of covering the energy industry both as a newspaper and trade journalist. He can be reached at [email protected]).
