Lordstown Motors admits lack of cash to begin production
Lordstown Motors, the electric pickup truck startup company located in the former GM assembly plant in Lordstown, revealed in a government filing on Tuesday that it doesn’t yet have the money to start production as planned in September and expressed doubts about its ability to continue as a going concern.
A quarterly report filed with the Securities and Exchange Commission states that unless and until LMC secures additional funding, the company will have to change the timeline to begin full production of the all-electric Endurance pickup truck, which had been slated for this fall.
Lordstown Motors also said it will need more funds to sustain higher levels of production in 2022.
“In order to manage liquidity, expenditures will continue at a reduced pace and will relate primarily to retooling plans that will allow us to provide the limited capacity by the end of 2021 for testing and certifications and to demonstrate the capabilities of the Endurance to customers and financing sources,” according to the SEC filing. “If we are unable to raise additional capital in the near term, our operations and production plans will be scaled back or curtailed and, if any funds raised are insufficient to provide a bridge to full commercial production and generation of sufficient funds from operations, our successful operation and growth would be impeded.”
The document states that LMC had cash and equivalents of $587.0 million and an accumulated deficit of $259.7 million as of March 31, 2021, and a net loss of $125.2 million for the quarter ended on that same date.
LMC says its ability to continue as a going concern is dependent on its ability to complete the development of the Endurance, obtain regulatory approval, begin commercial-scale production and launch the sale of the trucks.
"Our research reveals a very robust demand for our vehicles," said Rich Schmidt, President of Lordstown Motors. "Capital may limit our ability to make as many vehicles as we would like. As such, we are constantly evaluating our capital needs and the various types of capital available to us."
The company said its current level of cash is insufficient to fund commercial-scale production and the launch and sale of the truck.
“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,” LMC said in the filing.
Lordstown Motors says it is looking at the sale of stock, and other funding alternatives including striking a deal with partners or 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,” according to the filing. “Our ability to obtain additional financing in the debt and equity capital markets is subject to several factors, including market and economic conditions, our performance and investor sentiment with respect to us and our industry.
LMC says it has accepted an invitation from the U.S. Department of Energy to start the process toward securing an Advanced Technology Vehicles Manufacturing loan. The company says there is no assurance that LMC will be granted the loan.
The filing comes as the public relations firm representing the company disclosed more information about plans for a "Live From Lordstown" virtual tour of their plant for investors later this month.
LMC also reported that it has received two subpoenas from the SEC for the production of documents and information, some of which relate to its merger with DiamondPeak and the pre-orders of vehicles.
The company says it is responding to the SEC’s requests and is cooperating with its inquiry.
Lordstown Motors is the subject of a class-action lawsuit from investors who claim LMC and its executives made misleading statements and failed to disclose adverse information about the Endurance and the company’s prospects.
LMC’s stock, which trades under the RIDE ticker on NASDAQ, closed at $11.22 on Tuesday, down 16% from the previous day and far below the $31.57 high on Feb. 11, 2021.
The SEC filing may be seen below: