Lordstown Motors, which is attempting to launch an electric pickup truck, is on the brink of running out of money, the company warned in a filing with the Securities Exchange Commission.
The company spelled out its plight in its delayed 10Q filing this week, for which it was sanctioned by the SEC. Company officials will get a chance to further explain it all at the company’s Investor Day June 25.
“We had cash and cash equivalents of approximately $587.0 million and an accumulated deficit of $259.7 million at March 31, 2021 and a net loss of $125.2 million for the quarter ended March 31, 2021,” the company said in its filing.
“Our ability to continue as a going concern is dependent on our ability to complete the development of our electric vehicles, obtain regulatory approval, begin commercial scale production and launch the sale of such vehicles.
Cash crunch ripples across company
“We believe that our current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles. These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of the unaudited condensed consolidated financial statements included in this report,” the filing said.
The filing said the company’s management is currently evaluating various funding alternatives and may seek to raise additional funds through the issuance of equity, mezzanine or debt securities, through arrangements with strategic partners or through obtaining credit from government or financial institutions.
“As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all.”
In the filing, Lordstown Motors also acknowledged it is facing serious challenges, including rising costs and the slower-than-anticipated development of its battery-electric truck, the Endurance. The pickup is still undergoing testing and may not be ready for production in September as the company promised earlier.
Darker message than Q1 earnings call
CEO Steve Burns already doled out much of the bad news, putting a better spin on it during the company’s earnings call last month. He warned the company would likely produce fewer trucks.
“Capital may limit our ability to make as many vehicles as we would like,” said Steve Burns, Lordstown’s chief executive, on a call with analysts. “We wanted to make sure everybody knew the worst, worst case.”
He noted that if additional funding doesn’t come, it will leave the EV startup dangerously low on cash — between $50 million and $75 million instead of the $200 million expected — by the end of the year.
The company is reportedly in talks to secure additional funding through a federal loan program specifically for nascent electric vehicle companies. Additionally, Burns said they are looking to secure some asset-based financing, but declined to say how much funding they would be seeking. He felt optimistic that the company would be able to get the financing.
“We have zero debt, and we have a lot of assets,” Burns said, according to the Wall Street Journal. “There’s folks that want to finance that.”
Financial issues angering shareholders
Since the beginning of the year, Lordstown has dealt adverse reports from analysts and lawsuits from disgruntled shareholders, who have accused the company’s management of withholding critical information about development vehicles that had burned during testing this past winter.
The multiple lawsuits were filed by shareholders who, in the wake of a devastating research report by noted short-seller research firm Hindenburg Research, want to be compensated out of the funds the company now says it will be short on by the end of the year.
Hindenburg Research claimed the EV truckmaker either faked or overstated claims that it has advance orders for 100,000 of the electric pickups it plans to launch later this year.
“Lordstown is an electric vehicle SPAC with no revenue and no sellable product, which we believe has misled investors on both its demand and production capabilities,” Hindenburg said in the report.
Lordstown has promised to pump new life into the old General Motors Co. assembly plant next to the Ohio Turnpike in Lordstown, Ohio. GM closed the iconic plant in 2019 and then sold it to Lordstown Motors with the hope that it could bring new jobs to economically depressed northeast Ohio.