Written by Cláudio Afonso | LinkedIn | X
Electric vehicle startup Canoo reported a $0.8 million decline in its cash and cash equivalents during the first five weeks of the quarter, leaving it with less than that amount on hand and raising serious financial concerns for the Texas-based company.
Canoo is currently seeking shareholder approval for another reverse stock split—the second this year—as it aims to regain compliance with Nasdaq’s listing requirements. On Thursday, its stock fell 14%, closing at $0.53.
Earlier this week, the company reported its third quarter financial results where it disclosed that cash and cash equivalents stood at $1.5 million as of September 30.
However, in a new quarterly filing on Thursday, the EV startup reported that its cash position had declined by more than 50% during the first five weeks of the quarter, falling to just $0.7 million as of November 6.
“We operate in a capital-intensive industry which requires significant cash to fund our operations. Our business plan anticipates capital expenditures to continue to be significant for the foreseeable future as we continue to develop and grow our business. As of September 30, 2024, we had approximately $1.5 million in cash and cash equivalents. As of November 6, 2024 our cash position was $0.7 million” the company stated in the filing.
Last week, the startup announced it entered into a $12 million secured revolving credit facility with AFV Management Advisors, LLC, an entity founded by the company’s CEO Tony Aquila.
To address the cash crunch, Canoo said it is negotiating with vendors and suppliers to accept shares of its common stock as payment for services.
“Depending on market conditions, we may attempt to reach these agreements with as many vendors as is commercially feasible and on reasonable terms. The resulting issuances, if any, over the near term may reflect a significant percentage of our current outstanding stock, up to 19.9%, and investors are likely to experience dilution as a result,” the filing added.
Earlier this week, Canoo announced it would refund all retail customer deposits accumulated since unveiling its first models in May 2021.
Additionally, Canoo noted that it received demand letters and similar communications from suppliers alleging nonpayment and warning that it can become “involved in additional lawsuits or disputes or be subject to judgments if adjudicated adversely to us.”
“While we receive these communications in the ordinary course of business and all such amounts are reflected within our Accounts Payable and Accrued Expenses in our balance sheet, if one or more suppliers were to seek legal action to recover on amounts they believe are past due, we could become involved in additional lawsuits or disputes or be subject to judgments if adjudicated adversely to us, which may be material,” the filing warned.
Here’s the 10Q filing from Canoo.
The company led by Tony Aquila withdrew its 2024 revenue guidance in September, along with projections for its manufacturing run rate, vehicle production, and deliveries for 2024 and beyond. Previously, Canoo had forecasted an annual revenue between $50 million and $100 million.
Earlier this month, the company reported that its Chief Financial Officer, Greg Ethridge, and General Counsel, Hector Ruiz, both resigned effective October 31.
As reported by EV earlier today, Fidelity’s subsidiary Geode Capital Management has increased its stake in Canoo by 25.6% between July and September.
As exclusively reported by EV on Tuesday, the UK’s largest electric fleet operator, Royal Mail, has started piloting Canoo’s electric delivery vehicles. The pilots with the British postal company began earlier this month as Royal Mail aims to further electrify its fleet of over 43,000 delivery vehicles.
Written by Cláudio Afonso | LinkedIn | X
The post Canoo Cash Drops to $0.7 Million, Plans Stock-for-Services Strategy first appeared on EV.