Electric vehicle start-up Lordstown Motors said Tuesday it does not have enough money to start commercial production and runs the risk of failing as a company, sending its stock down.
The company on Tuesday amended its annual report to the Securities and Exchange Commission to say in a year that it can no longer function as “an ongoing company.”
The company said that with its current number and cash equivalent of $ 587 million at the end of the first quarter, it did not have enough funding to launch Endurance, an electric pick-up for operators. commercial.
“These conditions raise a substantial doubt as to our ability to continue as an ongoing society,” the company said in the presentation.
Lordstown said he was on track to find more funding but could not guarantee he would succeed. Its stock fell 16 percent to close at $ 11.22 and continued to fall in trading after hours.
The company has been under investigation since it was accused earlier this year by a short seller of inflating orders, which it denies.
Lordstown Motors first attracted attention in 2019 when it took over a former General Motors plant and promised to employ 400 workers to build these electric vehicles. President Donald Trump had slammed GM after closing the plant in Ohio, a politically important state in the Midwest.
GM lent Lordstown Motors $ 40m for the purchase and also invested $ 75m in the company.
The offer to secure the factory came initially from Workhorse Group, which was managed by Steve Burns, who is now chief executive of Lordstown. The reviewer for Workhorse interrogated in 2018 on whether it could continue to function as an ongoing concern. Workhorse Group, another electric vehicle start-up, licenses technology and owns 10 per cent of Lordstown.
Short-seller Hindenburg Research published a report in March accusing Lordstown of inflating his order book, which sparked an SEC investigation. Lordstown has denied that it has exceeded its pre-orders.
But in May Ohio company executives said they would reduce Endurance production and seek additional capital, causing their shares to plummet.
The company revealed more details Tuesday about the regulatory investigation, saying it had received two citations from the SEC. One is linked to pre-orders and one to its August 2020 merger with DiamondPeak Holdings, a special-purpose acquisition company.
Lordstown also said in Tuesday’s presentation that it found “material weaknesses” in its plans to disclose information to investors. He said he did not have enough people with “adequate accounting technical skills” to monitor financial reports or an effective process to assess the risk of material anomalies.
The company is hiring additional employees to address the problem, but “there is no assurance that we will succeed in remedying the material weaknesses,” the presentation said.
At the end of the first quarter, the company reported a cumulative deficit of $ 260m and a net quarterly loss of $ 125m.