Written by Cláudio Afonso | LinkedIn | X
Canoo’s independent director, James C. Chen, resigned earlier this week, with his resignation set to take effect by the end of the month, the company disclosed in a new SEC filing on Friday. The company also warned that, if it doesn’t secure funding over the next few days, it won’t be able to continue its operations throughout the end of the month.
“On December 9, 2024, James C. Chen advised Canoo Inc. (the “Company”) that he would be resigning from the Company’s board of directors (the “Board”), effective December 31, 2024, or such earlier date as the Company elects a replacement director,” Canoo said in the filing.
The EV maker added that the decision “was not due to any disagreement with the company’s operations, policies or procedures.”
“Mr. Chen stated that his decision to resign from the Board was not due to any disagreement with the Company’s operations, policies or procedures, but in order to pursue other endeavors. The Company wishes Mr. Chen well in his future endeavors,” the company stated.
The Board member had joined the board earlier this year, on February 7, 2024. In its website, Canoo notes that Mr. Chen is “former Vice President of Regulatory Affairs & Deputy General Counsel at Tesla and former Vice President of Public Policy & Chief Regulatory Counsel at Rivian Automotive.”
Further Furloughs Confirmed
Separately, the company confirmed that it has extended its furlough to include “10 additional employees,” bringing the total number of furloughed “non-essential employees” to 50.
Earlier on Friday, EV reported that several employees had been furloughed. Internal sources confirmed to EV that this second round of furloughs, like the first announced in early November, will also last for 12 weeks (approximately three months).
Canoo shares closed 24.5% lower on Friday at $0.13 resulting in a market cap value of $12.78 million.
“On December 13, 2024, the Company announced that it was temporarily reducing its workforce by furloughing an additional 10 additional employees today resulting in a total of 50 non-essential employees over the last 90 days at its Justin, TX facility,” Canoo said.
Funding Needed
The company, led by Tony Aquila, stressed that the measure comes amid its continued efforts to cut costs, preserve cash reserves, and prioritize its core operations.
“These furloughs, in addition to our previously disclosed furloughs at our Oklahoma City location and Employee Reorganization Plan, are part of the Company’s ongoing efforts to reduce costs and conserve cash resources while focusing on core operations,” the company said in the SEC filing.
The Texas-headquartered startup added that it will need to raise “substantial additional capital” to fund operations through the month.
“As described in our Quarterly Report on Form 10-Q filed on November 14, 2024, we operate in a capital-intensive industry which requires significant cash to fund our operations and we will need to raise substantial additional capital to fund operations through the end of 2024 to continue operations,” Canoo said.
Possible Insolvency
The company also warned that “may become subject to further litigation or insolvency proceedings” if it cannot secure funding over the next days or weeks.
“While we are in active discussions regarding additional financing, these or other furloughs could have unintended consequences, and if we are unsuccessful in obtaining additional funds on commercially reasonable terms or at all, or are unsuccessful in reaching agreements with existing vendors on disputed amounts, we likely be unable to satisfy our obligations and may become subject to further litigation or insolvency proceedings.
Any of the foregoing would likely have a material adverse effect on the Company’s liquidity, financial condition and results of operations, and may render the Company insolvent and unable to sustain its operations and continue as a going concern, which could result in the loss of all of your investment in our stock.
Nathan Smith, the company’s Head of Design, confirmed earlier this Friday that he and his teams across different departments were affected by a new round of furloughs. Currently, and after giving up yesterday’s gains, the electric vehicle maker has a market cap value of just $17 million.
“But it’s not just me, the entire design team of vehicle designers, UX/UI, Web, Branding, and Motion Graphics has been affected,” the executive noted. “I’m more than happy to give references for anyone looking for killer candidates for similar roles.”
Canoo shares soared by over 110% on early Thursday to nearly $0.29 per share before giving up much of those gains and closing up 34% higher at $0.17. As of the time of writing, the stock is trading 14% lower at $0.15.
With the stock price tanking, Canoo had its highest trading volume in a single day since it went public four years ago with 970.8 million shares traded.
Written by Cláudio Afonso | LinkedIn | X
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