goev-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________________________

FORM 10-Q

___________________________________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number: 001-38824

___________________________________________________

CANOO INC.

(Exact name of registrant as specified in its charter)

___________________________________________________


Delaware			83-1476189
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

19951 Mariner Avenue, Torrance, California			90503
(Address of Principal Executive Offices)			(Zip code)

(424) 271-2144

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, $0.0001 par value per share

GOEV

The Nasdaq Global Select Market

Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 per share

GOEVW

The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 8, 2023, there were 503,661,544 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.

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TABLE OF CONTENTS


		Page

Part I	Financial Information

Item 1.	Financial Statements (Unaudited)	6

	Condensed Consolidated Balance Sheets	6

	Condensed Consolidated Statements of Operations	7

	Condensed Consolidated Statements of Stockholders’ Equity	8

	Condensed Consolidated Statements of Cash Flows	10

	Notes to Condensed Consolidated Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35

Item 4.	Controls and Procedures	35

Part II	Other Information

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Mine Safety Disclosures	37

Item 5.	Other Information	37

Item 6.	Exhibits	38

Signatures		39

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of present or historical fact included in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of such terms or other similar expressions. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

These statements are subject to known and unknown risks, uncertainties and assumptions, many of which are difficult to predict and are beyond our control and could cause actual results to differ materially from those projected or otherwise implied by the forward-looking statements. Below is a summary of certain material factors that may make an investment in our common stock speculative or risky.

•We are an early stage company with a history of losses and expect to incur significant expenses and continuing losses for the foreseeable future.

•We may be unable to adequately control the costs associated with our operations.

•Our current business plans require a significant amount of capital. If we are unable to obtain sufficient funding or do not have access to capital, we will be unable to execute our business plans and our prospects, financial condition and results of operations could be materially adversely affected.

•Our management has performed an analysis of our ability to continue as a going concern and has identified substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient additional funding or do not have access to additional capital, we will be unable to execute our business plans and could be required to terminate or significantly curtail our operations.

•We have been notified by The Nasdaq Stock Market LLC of our failure to comply with certain continued listing requirements and, if we are unable to regain compliance with all applicable continued listing requirements and standards of Nasdaq, our Common Stock could be delisted from Nasdaq, which would have an adverse impact on the trading, liquidity, and market price of our Common Stock.

•Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions could adversely affect our current financial condition and projected business operations.

•We have not achieved positive operating cash flow and, given our projected funding needs, our ability to generate positive cash flow is uncertain.

•Our financial results may vary significantly from period to period due to fluctuations in our operating costs, product demand and other factors.

•Our limited operating history makes evaluating our business and future prospects difficult and increases the risk of your investment.

•We previously identified material weaknesses in our internal control over financial reporting. Although the weaknesses previously identified have been remediated, if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately

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or timely report our financial condition or results of operations, which may adversely affect our business and stock price.

•If we fail to manage our growth effectively, we may not be able to design, develop, manufacture, market and launch our EVs successfully.

•We are highly dependent on the services of our key employees and senior management and, if we are unable to attract and retain key employees and hire qualified management, technical and EV engineering personnel, our ability to compete could be harmed.

•We face significant barriers to manufacture and bring our EVs to market, and if we cannot successfully overcome those barriers our business will be negatively impacted.

•Customers who have committed to purchase significant amounts of our vehicles may purchase significantly fewer vehicles than we currently anticipate or none at all. In that case, we will not realize the revenue we expect from these customers.

•Our ability to develop and manufacture EVs of sufficient quality and appeal to customers on schedule and on a large scale is unproven and still evolving.

•We will depend initially on revenue generated from a single EV model and in the foreseeable future will be significantly dependent on a limited number of models.

•There is no guarantee that we will be able to develop our software platform, Canoo Digital Ecosystem, or that if we are able to develop it, that we will obtain the revenue and other benefits we expect from it.

•We may fail to attract new customers in sufficient numbers or at sufficient rates or at all or to retain existing customers.

•If our EVs fail to perform as expected, our ability to develop, market and deploy our EVs could be harmed.

•Our distribution model may expose us to risk and if unsuccessful may impact our business prospects and results of operations.

•We face legal, regulatory and legislative uncertainty in how our go-to-market models will be interpreted under existing and future law, including the potential inability to protect our intellectual property rights, and we may be required to adjust our consumer business model in certain jurisdictions as a result.

•If we fail to successfully build and tool our manufacturing facilities and/or if we are unable to establish or continue a relationship with a contract manufacturer or if our manufacturing facilities become inoperable, we will be unable to produce our vehicles and our business will be harmed.

•We may not be able to realize the non-dilutive financial incentives offered by the States of Oklahoma and Arkansas where we will develop our own manufacturing facilities.

•Developing our own manufacturing facilities for production of our EVs could increase our capital expenditures and delay or inhibit production of our EVs.

•We have no experience to date in high volume manufacture of our EVs.

•We may experience significant delays in the design, production and launch of our EVs, which could harm our business, prospects, financial condition and operating results.

•Increases in costs, disruption of supply or shortage of raw materials and other components used in our vehicles, in particular lithium-ion battery cells, could harm our business.

•We depend upon third parties to manufacture and to supply key components and services necessary for our vehicles. We do not have long-term agreements with all of our manufacturers and suppliers, and if these

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manufacturers or suppliers become unwilling or unable to provide these key components and services we would not be able to find alternative sources in a timely manner and our business would be adversely impacted.

•We are or may be subject to risks associated with strategic alliances or acquisitions and may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future.

•The automotive market is highly competitive and technological developments by our competitors may adversely affect the demand for our EVs and our competitiveness in this industry.

•Our EVs are based on the use of complex and novel steer-by-wire technology that is unproven on a wide commercial scale and rely on software and hardware that is highly technical, and if these systems contain errors, bugs or vulnerabilities, or if we are unsuccessful in addressing or mitigating technical limitations in our systems, our business could be adversely affected.

•We are subject to cybersecurity risks to our operational systems, security systems, infrastructure, integrated software in our EVs and customer data processed by us or third-party vendors.

•Economic, regulatory, political and other events, including the rise in interest rates, heightened inflation, slower growth or recession, issues with supply chain, shortage of labor and the war in Ukraine, adversely affect our financial results.

•Our ability to meet the timelines we have established for production and manufacturing milestones of our electric vehicles ("EVs") is uncertain.

•Other factors disclosed in this Quarterly Report on Form 10-Q or our other filings with the Securities and Exchange Commission (the “SEC”).

These statements are subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected or otherwise implied by the forward-looking statements, including those described under the section "Summary of Risk Factors" and Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 30, 2023. Given such risks and uncertainties, you should not place undue reliance on forward-looking statements.

Should one or more of these risks or uncertainties described in this Quarterly Report on Form 10-Q materialize, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact the forward-looking statements discussed herein can be found in the sections entitled “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations.” We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described in this Quarterly Report on Form 10-Q may not be exhaustive and the above summary is qualified in its entirety by those more complete discussions of such risks and uncertainties.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report on Form 10-Q. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements


CANOO INC. Condensed Consolidated Balance Sheets (in thousands, except par values) (unaudited)


	March 31, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	6,715	$	36,589
Restricted cash, current	3,725		3,426

Inventory	5,105		2,954
Prepaids and other current assets	11,452		9,350
Total current assets	26,997		52,319
Property and equipment, net	328,907		311,400
Restricted cash, non-current	10,600		10,600
Operating lease right-of-use assets	38,782		39,331
Deferred warrant asset	50,175		50,175
Deferred battery supplier cost	30,000		30,000
Other non-current assets	2,655		2,647
Total assets	$	488,116	$	496,472

Liabilities and stockholders' equity
Liabilities
Current liabilities
Accounts payable	$	88,835	$	103,187
Accrued expenses and other current liabilities	85,945		63,091
Convertible debt, current	—		34,829
Warrant liability, current	—		17,171
Total current liabilities	174,780		218,278
Contingent earnout shares liability	508		3,013
Operating lease liabilities	38,076		38,608


Warrant liability, non-current	23,000		—
Total liabilities	236,364		259,899

Commitments and contingencies (Note 11)

Stockholders’ equity
Preferred stock, $0.0001 par value; 10,000 authorized, no shares issued and outstanding at March 31, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value; 1,000,000 and 500,000 authorized as of March 31, 2023 and December 31, 2022, respectively; 475,598 and 355,388 issued and outstanding at March 31, 2023 and December 31, 2022, respectively	47		35
Additional paid-in capital	1,522,260		1,416,361
Accumulated deficit	(1,270,555)		(1,179,823)
Total stockholders’ equity	251,752		236,573
Total liabilities and stockholders’ equity	$	488,116	$	496,472

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CANOO INC. Condensed Consolidated Statements of Operations (in thousands, except per share values) Three Months Ended March 31, 2023 and 2022 (unaudited)


	Three months ended March 31,
	2023		2022

Revenue	$	—	$	—

Costs and Operating Expenses
Cost of revenue, excluding depreciation	—		—
Research and development expenses, excluding depreciation	47,104		82,487
Selling, general and administrative expenses, excluding depreciation	29,849		55,621
Depreciation	4,575		2,678
Total costs and operating expenses	81,528		140,786
Loss from operations	(81,528)		(140,786)

Other (expense) income
Interest (expense)	(296)		(29)
Gain on fair value change in contingent earnout shares liability	2,505		15,465
Gain on fair value change in warrant liability	17,342		—
Loss on extinguishment of debt	(26,739)		—
Other (expense), net	(2,016)		(17)
Loss before income taxes	(90,732)		(125,367)
Provision for income taxes	—		—
Net loss and comprehensive loss	$	(90,732)	$	(125,367)

Per Share Data:
Net loss per share, basic and diluted	$	(0.22)	$	(0.54)

Weighted-average shares outstanding, basic and diluted	418,064		233,661

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CANOO INC.


Condensed Consolidated Statement of Stockholders’ Equity (in thousands) Three Months Ended March 31, 2023 (unaudited)


	Common stock			Additional paid-in capital		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balance as of December 31, 2022	355,388	$	35	$	1,416,361	$	(1,179,823)	$	236,573

Repurchase of unvested shares – forfeitures	(22)	—		—		—		—
Issuance of shares for restricted stock units vested	2,768	—		—		—		—
Issuance of shares upon exercise of vested stock options	2	—		—		—		—
Issuance of shares under employee stock purchase plan	701	—		389		—		389
Vesting of early exercised stock options and restricted stock awards	—	—		26		—		26
Issuance of shares under the PPA	66,761	7		64,382		—		64,389
Reclassification of warrant liability to additional paid-in capital	—	—		19,510		—		19,510
Issuance of shares under SPA, net of offering costs	50,000	5		10,156		—		10,161
Issuance of warrants to placement agent under SPA	—	—		1,600		—		1,600
Stock-based compensation	—	—		9,836		—		9,836
Net loss and comprehensive loss	—	—		—		(90,732)		(90,732)
Balance as of March 31, 2023	475,598	$	47	$	1,522,260	$	(1,270,555)	$	251,752

The accompanying notes are an integral part of these condensed consolidated financial statements.

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CANOO INC.


Condensed Consolidated Statement of Stockholders’ Equity (in thousands) Three Months Ended March 31, 2022 (unaudited)


	Common stock			Additional paid-in capital		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balance as of December 31, 2021	238,578	$	24	$	1,036,104	$	(692,129)	$	343,999
Repurchase of unvested shares – forfeitures	(296)	—		(3)		—		(3)
Issuance of shares for restricted stock units vested	584	—		—		—		—
Issuance of shares upon exercise of vested stock options	20	—		—		—		—
Purchase of shares and warrants by VDL Nedcar	972	—		8,400		—		8,400
Stock-based compensation	—	—		20,680		—		20,680
Net loss and comprehensive loss	—	—		—		(125,367)		(125,367)
Balance as of March 31, 2022	239,858	$	24	$	1,065,181	$	(817,496)	$	247,709

SEC Form 10-Q filed by Canoo Inc.