EV startup Canoo (GOEV) released its fourth-quarter earnings Thursday as it enters a critical phase of development. After resolving the SEC investigation and agreeing to pay $1.5 million, Canoo says it has new opportunities to access funding.
Canoo resolves SEC dispute with $1.5M settlement
Since its foundation in Canoo 2017, the EV maker has had its fair share of highs and lows.
After going public in 2020, along with a slew of other electric vehicle startups (and SPACs in general), Canoo became one of the talked about stocks with significant growth potential in the EV segment.
However, the hype soon dissipated. In April 2021, the SEC opened an investigation into the company’s merger with special acquisition purpose company (SPAC), Hennessy Capital Acquisition Corp (HCAC), to go public.
The scrutiny was part of a broader investigation that included several popular EV stocks such us Nikola (NKLA), Lordstown Motors (RIDE), and Faraday Future (FFIE).
The SEC informed the company that it believed, under its investigation, that certain former senior executives misled investors in late 2020 and early 2021 regarding revenue projections.
In March 2021, new leadership revised the projections to zero after eliminating engineering services as a potential revenue stream.
After a long-awaited battle, Canoo revealed during Thursday’s Q4 earnings release it had reached the conclusion of the SEC investigation, agreeing to pay a $1.5 million settlement.
With the investigation and other “legacy matters” behind it, Canoo says it’s ready to enter the next phase of its EV rollout.
Canoo Q4 highlights and business updates
Besides the SEC investigation, Canoo had several exciting developments in the quarter, including delivering its Light Tactical Vehicle (LTV) electric vehicle to the US Army.
In addition to existing clients, including Walmart, Zeeba, Kingbee, and recently Shindler Elevator, Canoo expanded its network to Saudi Arabia in a new distributor partnership with GCC Olayan.
Canoo still didn’t generate revenue in the quarter, ending Q4 with a net loss of $80.2 million for a loss of $487.7 million on the year.
The EV maker ended the quarter with cash and equivalents of $36.6 million. According to Canoo’s CFO Ken Magnet, the company is “exploring a number of diversified funding sources.” Magnet added now that the SEC investigation is concluded, the company can file for things like the Department of Energy’s loan program and “things of that nature.”
Canoo struggled to stay afloat last year, expressing significant doubt it would be able to continue operations after posting a net loss of over $125 million in the first quarter and another $164 million loss in Q2.
Looking ahead, Canoo expects operating expenses to be between $55 million to $70 million with CAPEX between $30 million to $45 million in the first quarter of 2023 as it enters the next stage of development.
As CEO Tony Aquila describes the next phase will be “more focused on milestones versus event-based or just-in-time” that will “lower the cost, make more efficicent use of capital and allow us to focus on long term success.”
Canoo says it will benefit from the IRA bill with domestic production. The company began phase 1 SOPin Mivchigan and kicked off phase 2 SOP at OKC, which includes an EV battery module manufacturing plant in Oklahoma.
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