Electric vehicle startup Canoo has agreed to a $1.5 million settlement with the U.S. Securities and Exchange Commission, according to regulatory filings.
The SEC will begin investigating Canoo in May 2021. This comes just months after the company merged with special purpose acquisition firm Hennessy Capital Acquisition Corp. The research covered Hennessy’s IPO and merger with Canoo, Canoo’s operations, business model, earnings, revenue strategy and customers. contracts, earnings, etc. We also delved into the departures of certain company executives, including co-founder and CEO Ulrich Kranz.
Canoo shared the news on Thursday as part of its fourth quarter and full year 2022 earnings reports. The company’s shares, which closed at $0.62 on Thursday, fell nearly 10% in the hours after the news.
Canoe is one of several EV SPACs investigated by the SEC, including Rosetown Motors, Arrival, Nikola and Faraday Future.
Canoo didn’t share many details about the SEC’s investigation, but $1.5 million appeared on the company’s balance sheet in the fourth quarter.
EV SPAC is a pre-earnings company that is short on cash and has repeatedly warned it needs to raise more capital to stay in the game. Canoo delivered its first light tactical vehicle to the U.S. Army for demonstration purposes in the fourth quarter, but that contract was worth him only $67,600, not exactly a significant amount given the company’s losses. . In February, Canoo agreed to sell his 50 million shares at his 16% discount, or $1.05 per share. Total revenue from this offering was approximately $52.5 million.
This injection of funds appears to be insufficient for Canoo to turn a profit. The company ended 2022 with just $36.6 million in cash and cash equivalents. With a net loss of $80.2 million in the fourth quarter ($487.7 million for the full year), the company will need to raise more funding to cover the expenses incurred in the first quarter alone. Incidentally, on a quarterly basis, that loss is down from his $138 million in the fourth quarter of 2021. However, Canoo is up more than 40% year-over-year as he posted a net loss of $346.8 million at the end of 2021.
Canoo said on Thursday’s earnings call that it is exploring various sources of funding to announce over the next few quarters. Canoo’s CEO, Tony Aquila, has said he will not apply for funding from the Department of Energy’s loan program due to “legacy issues” including a messy management turnover and his now-completed SEC investigation. has become difficult.
“Once we start building this executive team track record, the opportunity to access capital increases exponentially,” said Aquila.
Aquila is clearly trying to send a message to investors that Canoo’s problems are due to past management issues. Aquila says he will be CEO in 2021, and since then Canoo has shifted from a single product offering to one with a “new business strategy” that includes onshore manufacturing. Canoo also recently hired Ken Magnet as its new Chief Financial Officer and Tony Elias as its new EVP of Operations.
Hopefully that’s enough to turn this electric ship around. Canoo reported his fourth-quarter 2022 adjusted EBITDA of negative $60 million and a negative $408.6 million for the full year. Last year, those numbers were negative $120 million and negative $332.6 million for the fourth quarter and full year of 2021, respectively.
Canoo Q1 2023 Outlook
Canoo expects first quarter operating expenses (excluding stock-based compensation and depreciation) to be between $55 million and $70 million and capital expenditures of between $30 million and $45 million.
“Towards 2023, we are focused on bringing our facilities online, expanding production and working with strategic distribution partners for global expansion,” Aquila said in a statement. .
Canoo said it is nearing the start of production in Pryor and Oklahoma City to bring the Lifestyle Delivery Vehicle and Lifestyle Vehicle SUV to market in 2023. Oklahoma offered his $400 to Canoo. He agreed in March to buy 1,000 Canoo EVs, but states can cancel the deal at any time.
In January, Canoo signed an agreement with GCC Olayan to exclusively distribute vehicles in Saudi Arabia. This is the first phase of the company’s international expansion.
Aquila said on Thursday’s earnings call that he believes Canoo can reach a 20,000 run rate exit per year. Orders this year have increased by 300%, with total order value at about $2.8 billion, according to the company.
