Struggling Lordstown Motors says it needs more financing

Struggling startup says it needs more financing

LORDSTOWN -- Lordstown Motors Corp. in a regulatory filing Friday repeated that without additional financing it cannot fund commercial-scale production and launch of its electric truck, raising doubt whether the startup will last through the year.

The going concern notice in the company's second quarter financial report with the U.S. Securities and Exchange Commission comes just two days after the company said it expects to start limited production of the battery-powered Endurance truck next month.

Going concern is a term companies typically use when noting that their outside auditors are questioning their ability to remain in business.

The company has been efforting to secure new financing. It announced in July an equity purchase agreement with a hedge fund that has the potential to invest $400 million into the company over three years.

In Friday's filing, the company reported it had cash or cash equivalents of about $365.9 million and an accumulated deficit of $367.9 million as of June 30, the close of the second quarter and first half. The company also reported a net loss of $233.4 million for the six-month period.

"We believe that our current level of cash and cash equivalents are not sufficient to fund commercial-scale production and the launch of sale of such vehicles," the report states.

The conditions "raise substantial doubt" regarding the company's ability to continue as a going concern for the next year.

CEO Angela Strand on Wednesday said production is expected to start at the end of September and vehicle validation and regulatory approval should be complete in December and January. The truck will be deployed to select early customers in the first quarter of 2022 ahead of commercial deliveries in the second quarter of the year.

Production will be limited and additional funding is needed in the near-term to ramp for 2022 production and establish higher volume, sustain capacity and reach full scale manufacturing, the filing states.

Without the additional near-term capital, "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 company said in the quarterly report.

Also Wednesday, Strand said the company is in talks with several potential partners to generate new revenue using the 6.2 million-square-foot former General Motors plant and 650 acres it sits on.

Lordstown Motors is utilizing only 30 percent of the facility.

Strand also said the company is evaluating other financing options, including non-dilutive private investments and debt, and government loan.

Lordstown Motors has come under scrutiny over the past several months, starting with a short-sellers report in March that claimed the company misled investors regarding preorders. The report spawned several federal lawsuits.

In June, the company found itself walking back statements it had firm orders after saying days before there was enough demand to last through 2022. Also in June, the company's co-founder and CEO and its chief financial officer resigned. It also remains the subject of federal regulatory and law enforcement probes.

Lordstown Motors stock closed trading Friday at $5.37 per share, down 6.4 percent. Over the past year, the stock is down more than 58 percent.

rselak@tribtoday.com