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SEC Fines Canoo $1.5M, Bans Former Execs From Board Roles

2 min read

Electric vehicle startup Canoo Inc. (Nasdaq: GOEV), which has plans to move its headquarters to Bentonville, has agreed to pay a $1.5 million civil penalty over misleading revenue projections for the past two years.

The U.S. Securities & Exchange Commission also temporarily banned former CEO Ulrich Kranz and former CFO Paul Balciunas from holding board positions at a publicly traded companies.

Regulators said the company’s revenue projections of $120 million in 2021 and $250 million in 2022 were “materially inaccurate.” Kranz and Balciunas allegedly based those numbers on projects that were no longer active or feasible, such as the company’s provision of engineering services to other companies.

The company also reported inaccurate executive compensation numbers from September 2020 to April 2021, the SEC said. Kranz received more than $900,000 in undisclosed compensation from two investors.

Kranz shifted from CEO to a role as special adviser to the executive chairman, Tony Aquila, in October 2020. Two months later, the company went public with a valuation of $2.4 billion through a special purpose acquisition deal with Hennessy Capital Acquisition Corp.

Aquila took over as CEO in March 2021. Kranz and Balciunas left the company around the same time.

The SEC has fined Kranz $125,000 and banned him from holding a board position at a publicly traded company for three years. Balciunas agreed to a two-year ban and a $50,000 fine.

Under the terms of the settlement, the two former executives and Canoo did not admit or deny the SEC’s findings.

The company, which has been burning through its cash reserves, is scheduled to report second-quarter financial results on Monday.

Canoo finished the first quarter with just $6.7 million of cash on hand. It reported $90.7 million in losses, but said its order pipeline had grown to $2.8 billion.

The company’s stock has been trading below the Nasdaq’s required $1 minimum since February. The exchange warned the company that it could be delisted this year if it doesn’t regain compliance. Share prices, which opened at $22.82 when the company went public, closed at 57 cents Monday. Year to date, shares are down 54%.

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