Following the recent Q1 2022 report from the Canoo EV, we found the featured image to be somewhat fitting. After admitting a net loss of more than $125 million for the first three months of this year, Kano is stuck in the woods. With cash currently in short supply to realistically reach the second quarter, Canoo admitted “there is a great deal of doubt” about the company’s ability to get out of those financial risks as well.
Canoo is sure to announce its presence on our homepage today. Earlier, we reported on a lawsuit filed on Monday in which the EV startup was working to recover $61 million in “short-term” profits allegedly made by DD Global Holdings – Canoo’s second-largest shareholder after CEO Tony Aquila.
Just hours ago, we were concerned about the fact that Canoo was in a national security agreement with DD properties due to its ties to China, and how the latter’s alleged violation of said agreement could affect Canoo’s latest contract with NASA.
However, after hearing Canoo executives speak during the company’s call with investors in the first quarter of the year, it’s clear that the startup needs $61 million and then some just to get to the third quarter.
Canoo Q1 Report: $104 million in cash in hand, more on the way?
Canoo shared the damned but honest report with the public along with its quarterly call with investors on Tuesday afternoon. While acknowledging the large net losses mentioned above, Major Shareholder, Chairman and CEO Tony Aquila tried to tell a different story:
We have been clear about our philosophy of raising capital wisely and will continue with this disciplined approach. We have over $600 million in accessible capital to support start-up production (SOP). As operators and investors, we have extensive experience raising capital in challenging markets – and the best way to raise capital is to achieve your goals. We will continue to increase as needed, bridge to key milestones and be in a position to benefit from improved market conditions. We focus on creating long-term value for our customers and shareholders.
The $600 million that Aquila is talking about can be reached, but not without some serious work. Canoo’s new “bread sale” capital includes a potential $50 million in funding from a private equity investment (PIPE) commitment. interested in trade He notes that the move consists of CEO Tony Aquila’s Aquila Family Ventures buying shares of Canoo for less than its current market value. Shares were down 11% after the market bell today.
Canoo is also working on a $250 million share purchase agreement with financing partner Yorkville Advisors. If that name sounds familiar, they funded a similar agreement with a small startup called Lordstown Motors. Last but not least, Canoo offers a $300 million global shelf listing, allowing it to issue securities like common stock in the future. This kind of feeling is like Kano digging through all his couches for millions of litter.
From a production standpoint, Canoo was already struggling to reach its goal of manufacturing 3,000 to 6,000 electric vehicles this year. According to its latest report, it has built 39 gamma vehicles, 17 of which are road-going.
Based on its current forecast for the second quarter, Canoo expects operating expenses to be between $95 and 115 million and capital expenditures somewhere between $85 and 105 million. At least $180 million is needed for the second quarter of 2022, and $104.9 million from Kano in cash on hand just won’t cut it. Hence the following statement:
Given the timing of our announced funding, and the 2014 FASB accounting rule, as of the date of this announcement, we report significant doubt about the Company’s ability to continue as a going concern.
Could this really mark the end of Canoo before we can even drive the MPDV or Pickup? …or anything really? Or can Tony Aquila add “The Savior” to his six other titles in the company? All eyes will be on the second quarter report.
NASA must be Attention now. Personally, I’m a fan of Canoo vehicles so this is sad news for me, but it’s not the most amazing thing I’ve heard lately. In the wake of maximum employee exodus and broad but optimistic company statements, it wasn’t hard to smell that something was wrong behind closed doors… I didn’t think it was that bad.
It’s not like they’re throwing in the towel and closing tomorrow. I mean, her new headquarters isn’t complete yet, so how can you close it, right? Canoo still has a lot of potential to bounce back with the necessary capital. It may come at a cost that could stifle its profits for years to come. This is Kano’s future problem, isn’t it? Just spend more money on it.
In all seriousness, I’d like to see MPDV and Pickup on the roads someday, so I’m rooting for Canoo. However, if the company’s outlook for the second quarter is bleak, there is no reason why we should not be.
Finally, I wanted to point out that I didn’t make a single joke about any canos (or canoes) sinking.
This is a low hanging fruit.
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