In an amended regulatory filing late Tuesday, electric vehicle maker Lordstown Motors stated that it “believes that its current level of cash and cash equivalents are not sufficient to fund commercial-scale production and the launch of sale” of its vehicles.
The “going concern” warning means the company has doubts it can last through the end of the year.
In its restated financials for the March 2021 quarter, released Tuesday, Lordstown said it had $587 million of cash and cash equivalents, down from $630 million at the end of 2020. It had a net loss of $125.2 million for the quarter, as its operating expenses rose substantially.
The company’s R&D and capital expenditures have “increased significantly over 2020 levels,” Lordstown said in the first-quarter 10-Q, and were “higher than anticipated” due to additional spending for “completing its beta program, conducting vehicle tests, securing parts and equipment for production, and using third-engineering resources.”
The filing also said that Lordstown is still constructing and retooling production lines to manufacture its Endurance pickup truck. That includes “reengineering” the production process and “bringing acquired assets up to the level of production.” Lordstown acquired the Lordstown, Ohio, plant from General Motors in November 2019 for $20 million in the form of a note payable.
Lordstown Motors is one of several EV manufacturers that have gone public through a special purpose acquisition company deal in the past year.
The company’s August 2020 SPAC transaction valued it at $1.6 billion. At that time, Lordstown received $500 million in a private investment in public equity from Fidelity, Wellington Management, the Federated Hermes Kaufmann Small Cap Fund, and funds managed by BlackRock.
At the time of the SPAC, Lordstown said it planned to begin production of the flagship Endurance EV truck in the second half of 2021.
A report from short-seller Hindenburg Research in March 2021 said, among other things, that the company had “undisclosed production hurdles.”
“Lordstown is an EV SPAC [special-purpose acquisition company] with no revenue and no sellable product, which we believe has grossly misled investors on both its demand and production capabilities,” Hindenburg wrote at the time.
Lordstown’s securities filing said it needs additional capital to fund its business plan: “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.”
Lordstown’s management is 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.”
Lordstown’s shares fell to $10.37 in after-hours trading on Tuesday evening. The stock’s 52-week high is $31.80.