Los Angeles-based electric vehicle startup Canu, which debuted at the Nasdaq Public Exchange earlier this year, is being investigated by the US Securities and Exchange Commission, a few months after its merger with special-purpose acquisition company Hennessy Capital Acquisition Corp. after.
The investigation is extensive, covering Hennessy’s initial public offering and merger with the company’s recent departures from some executives, as well as the company’s operations, business model, revenue, revenue strategy, customer agreements, earnings and other related topics . For the quarterly earnings report posted on Monday. Canu came to know about the investigation on 29 April. Canu’s stock price fell more than 3% in the hours after its first quarter earnings were released.
“The SEC has also informed the company that the investigation does not mean that it has concluded that someone has violated the law, and does not mean that it is negative about any person, institution or security Is of opinion. We intend to provide the requested information and fully cooperate in the SEC investigation, “Canu noted in the regulatory filing. Kanu said he does not consider investigations or other lawsuits to be important to his business.
The SEC investigation follows a string of executive departures, changes to some key pieces of its business model, the loss of a major automotive partnership and at least one lawsuit brought by shareholders. And this is the only activity from the year before.
Canoo debuted as Evelozcity in 2017, founded by former Faraday Future executives Stephen Kruse and Ulrich Kranz. The company rebranded as Canu in spring 2019 and debuted its first vehicle several months later. It was the first vehicle, as well as Canu’s plan to offer it as a subscription only, which attracted the attention of investors, companies and media. Last year, Hyundai announced a partnership with Canu for co-development of EVs, but according to comments made by the company’s president, the company was said to be changing its business model and not offering engineering services to other automakers The deal broke down in early 2021 after the decision was made. Now CEO Tony Aquila on the call of investors in March.
Canu retains a number of executive departures, including co-founder and CEO Kranz, general counsel Andrew Wolston, CFO Paul Balsiunas, and head of powertrain development. Kruse, who was the company’s first CEO, stepped down in August 2019. Last month, Kanu was also named as a defendant in two class-action complaints filed by shareholders.
Between the executive exit and the business axis, the company has managed to reduce its quarterly losses despite increasing R&D expenditure and no revenue. The company reported a net loss of $ 15.2 million, or 7 cents per share, in the first quarter on Monday, compared with a loss of $ 30.9 million, or 37 cents per share, in the year-ago period. The company said it ended the quarter with $ 641.9 million in cash and equivalents.