Electric vehicle startup Lordstown Motors stated Tuesday it doesn’t manage to pay for to start out industrial manufacturing and runs the chance of failing as a business, sending its inventory tumbling.
The firm on Tuesday amended its annual report with the Securities and Exchange Commission to say in a single yr it may not operate as “a going concern.”
The firm stated that with its present money and money equivalents of $587 million as of the tip of the primary quarter, it didn’t have sufficient funding to launch the Endurance, an electric pickup truck geared towards industrial operators.
“These situations elevate substantial doubt concerning our skill to proceed as a going concern,” the corporate stated within the submitting.
Lordstown stated it was searching for extra funding however couldn’t assure it might achieve success. Its shares plunged 16 % to shut at $11.22 and continued falling in after-hours buying and selling.
The firm has reeled because it was accused earlier this yr by a brief vendor of inflating orders, which it denies.
Lordstown Motors first attracted consideration in 2019 when it took over a former General Motors plant and promised to rent 400 employees to construct electric autos there. President Donald Trump had lambasted GM after it closed the plant in Ohio, a politically vital state within the Midwest.
GM loaned Lordstown Motors $40 million for the acquisition and likewise invested $75 million within the firm.
The bid to safe the manufacturing facility initially got here from Workhorse Group, which was run by Steve Burns, who’s now chief government at Lordstown. The auditor for Workhorse raised questions in 2018 about whether or not it might proceed to operate as a going concern. Workhorse Group, one other electric vehicle start-up, licenses expertise to, and owns 10 % of, Lordstown.
Short vendor Hindenburg Research printed a report in March accusing Lordstown of inflating its order e-book, which triggered an SEC inquiry. Lordstown has denied that it overstated its preorders.
But in May the Ohio firm’s executives stated they might slash manufacturing of the Endurance and seek for further capital, prompting its shares to fall.
The firm revealed extra element on Tuesday in regards to the regulatory investigation, saying it had obtained two subpoenas from the SEC. One is expounded to preorders and one to its August 2020 merger with DiamondPeak Holdings, a special-purpose acquisition firm.
Lordstown additionally stated in Tuesday’s submitting that it discovered “materials weaknesses” in its processes to reveal data to buyers. It stated it didn’t have sufficient folks with “applicable technical accounting abilities” overseeing monetary reporting or an efficient course of to evaluate the chance of fabric misstatements.
The firm is hiring further staff to handle the issue, however “there isn’t a assurance we will probably be profitable in remediating the fabric weaknesses,” the submitting stated.
At the tip of the primary quarter, the corporate reported an accrued deficit of $260 million and a quarterly web lack of $125 million.
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