Lordstown Motors, the electric vehicle start-up, said on Tuesday it doesn’t have enough money to start commercial production and risks failing as a company, sending its stock tumbling.
The company on Tuesday amended its annual report with the Securities and Exchange Commission to say it may no longer operate as a “going concern” in a year.
The company said that with its current cash and cash equivalents of $587 million at the end of the first quarter, it did not have enough funding to launch the Endurance, an electric pickup truck aimed at commercial operators.
“These circumstances cast significant doubt on our ability to continue as a going concern,” the company said in its filing.
Lordstown said it was trying to find more funding but couldn’t guarantee it would be successful. The stock plunged 16 percent to close at $11.22 and continued to fall in after-hours trading.
The company has been confused since it was accused by a shortseller of inflating orders earlier this year, which it denies.
Lordstown Motors first attracted attention in 2019 when it took over a former General Motors factory and pledged to hire 400 workers to build electric vehicles there. President Donald Trump had criticized GM after it closed its plant in Ohio, a politically important Midwestern state.
GM loaned Lordstown Motors $40 million for the purchase and also invested $75 million in the company.
The bid to secure the factory originally came from Workhorse Group, which was led by Steve Burns, who is now chief executive at Lordstown. The auditor for Workhorse asked questions in 2018 on whether it can continue to function as a going concern. Workhorse Group, another electric vehicle start-up, licenses technology and owns 10 percent of Lordstown.
Shortseller Hindenburg Research published a report in March accusing Lordstown of blowing up his order book, which led to an SEC investigation. Lordstown has denied that it overestimated its pre-orders.
But in May, the Ohio company’s executives said they would cut production of the Endurance and look for additional capital, which would push stocks down.
The company revealed more details about the regulatory investigation on Tuesday and said it had received two subpoenas from the SEC. One is related to pre-orders and one to the August 2020 merger with DiamondPeak Holdings, a special-purpose acquisition company.
Lordstown also said in Tuesday’s filing it had found “material weaknesses” in its processes for disclosing information to investors. It said it did not have enough people with “appropriate technical accounting skills” to oversee financial reporting or an effective process to assess the risk of material misstatement.
The company is hiring additional employees to address the issue, but “there is no guarantee that we will be able to fix the material weaknesses,” the filing said.
At the end of the first quarter, the company reported an accumulated deficit of $260 million and a net loss of $125 million per quarter.