SEC Investigating Electric Vehicle Startup Canoo

Kimberly Redmond  |

Image source: Canoo

The US Securities and Exchange Commission (SEC) is investigating California-based electric vehicle startup Canoo Inc (Nasdaq: GOEV), which went public in December 2020 following a merger with special purpose acquisition company (SPAC) Hennessy Capital Acquisition Corp.

According to Canoo's Form 10-Q for the first quarter filed on Monday, the “fact-finding inquiry” will cover Hennessy’s initial public offering and merger with Canoo, along with Canoo’s “operations, business model, revenues, revenue strategy, customer agreements, earnings and other related topics.”

“The SEC has also informed the company that the investigation does not mean that it has concluded that anyone has violated the law and does not mean that it has a negative opinion of any person, entity or security,” Canoo noted in the filing. “We intend to provide the requested information and cooperate fully with the SEC investigation.”

The Verge reported that a number of other newly-public EV startups, including Lordstown Motors and Nikola, are also facing stepped up scrutiny from the SEC and other regulators. 

In April, the SEC said it would start reviewing filings and seeking clearer disclosures for SPACs to ensure investors were not being misled. The agency’s announcement followed a dramatic increase in the use and popularity of SPACs over the past six months. 

Established in 2017, Canoo has sustained numerous executive departures, including co-founder and chief executive officer Ulrich Kranz, general counsel Andrew Wolfstan and chief financial officer Paul Balciunas, according to TechCrunch

Last year, Hyundai Motor Company announced it would partner with Canoo to co-develop EVs, but the agreement fell apart in early 2021 after the startup changed its business model and decided not to offer engineering services to other automakers. 

Further, the company was named as a defendant last month in two class-action complaints filed by shareholders. 

Amid the tumult, Canoo said it has somehow managed to narrow its quarterly losses, despite an increase in research and development expenditures and no revenue.

On Monday, the company reported its first quarter results, which showed a net loss of $15.2 million, or 7 cents a share, for the first three months of 2021, compared to a loss of $30.9 million, or 37 cents a share, in the same period last year. 

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Source: Equities News

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