Canoo reports first-quarter net loss of more than $125 million, admitting ‘substantial doubt’ it can continue

Canoo reports first-quarter net loss of more than $125 million, admitting ‘substantial doubt’ it can continue

Canoo reports first-quarter net loss of more than $125 million, admitting 'substantial doubt' it can continue

Following the recent Q1 2022 report from EV startup Canoo, we find the picture of the feature quite appropriate. After admitting a net loss of more than $125 million for the first three months of this year, Canoo is very stuck in the woods. With a lack of current cash to realistically get through the second quarter, Canoo admitted “there is substantial doubt” about the company’s ability to emerge from these financial woods either.

Canoo is certainly making its presence known on our homepage today. Earlier, we reported on a lawsuit filed Monday in which the EV startup was seeking to recoup $61 million in “short” profits allegedly made by DD Global Holdings – Canoo’s second largest shareholder behind CEO Tony Aquila.

Just a few hours ago, we were concerned that Canoo was in a national security agreement with DD holdings due to its ties to China, and how the latter’s alleged violation of said agreement could affect the recent contract. of Canoo with NASA.

However, after hearing Canoo executives speak on the company’s Q1 call with investors, it’s obvious the startup needs that $61 million and then more just to reach Q3. .

Canoo Report
Tony Aquila, President and CEO of Canoo / Source: Canoo

Canoo Q1 Report: $104M in Cash, More on the Way?

Canoo shared the damning but honest report with the public alongside its quarterly call with investors on Tuesday afternoon. While admitting the large net losses mentioned above, majority shareholder, chairman and CEO Tony Aquila attempted to tell a different story:

We have been clear on our philosophy to raise capital wisely and we will continue this disciplined approach. We have over $600 million in accessible capital to support start-up production (SOP). As operators and investors, we have significant experience in raising capital in challenging markets – and the best way to raise capital is to achieve your goals. We will continue to increase as needed, hit milestones and be able to take advantage of improving market conditions. We are focused on creating long-term value for our customers and shareholders.

This 600 million dollars that Aquila talks about can be accessible, but not without serious groundwork. Canoo’s new “bake sale” includes potential funding of $50 million from a private investment in public equity (PIPE) commitment. Business Intern points out that the move is for CEO Tony Aquila’s company, Aquila Family Ventures, to buy Canoo stock below current market value. Shares fell 11% after the market bell today.

Canoo is also working on a $250 million stock purchase deal with financial partner Yorkville Advisors. If that name sounds familiar, they funded a similar deal with a small startup called Lordstown Motors. Last but not least, Canoo files a universal registration for $300 million, allowing it to issue securities like common stock in the future. That kind of feeling is like Canoo rummaging through all his couches for loose millions.

From a production perspective, Canoo was already struggling to meet its goal of making between 3,000 and 6,000 electric vehicles this year. According to its latest report, it has built 39 gamma vehicles, 17 of which are operating on the roads.

Based on its current projections for the second quarter, Canoo expects operating expenses to be between $95 million and $115 million and capital expenses between $85 million and $105 million. At a minimum, $180 million is needed for the second quarter of 2022, and Canoo’s $104.9 million in cash will not be enough. Hence the following statement:

Due to the timing of our announced financing and the 2014 FASB accounting rule, as of the date of this announcement, we report that there is substantial doubt as to the Company’s ability to continue as a going concern.

Could this really mean the end of Canoo before we can even drive the MPDV or the Pickup?…or anything really? Or can Tony Aquila add “savior” to his other six corporate titles? All eyes will be on the Q2 report.

Electrek’s Grasp

Nasa must be pay attention now. I’m personally a fan of Canoo’s vehicles, so this is sad news for me, but it’s not the most surprising thing I’ve heard lately. Following the maximum exodus of staff and general but optimistic statements from the company, it wasn’t hard to sense that something was wrong behind closed doors… I just didn’t think it was that bad.

It’s not like Canoo is throwing in the towel and closing tomorrow. I mean, his new HQ isn’t even finished yet, so how can you shut it down, right? Canoo still has a lot of potential to bounce back with the necessary capital. This may well come at a cost that could stifle its profits for years to come. That’s the problem with the future Canoo, isn’t it? Just throw more money on it.

Seriously, I would love to see the MPDV and the Pickup on the roads one day, so I’m rooting for Canoo. However, if the company’s outlook for the second quarter is gloomy, there’s no reason why we shouldn’t be as well.

Finally, I wanted to point out that I didn’t make a single joke about the sinking of Canoos (or canoes).

It is a handy fruit.

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