Electric vehicle manufacturer Canoo agreed to pay $1.5 million as part of a settlement with the Securities and Exchange Commission (SEC) for alleged material misrepresentations regarding revenue over a two-year period and failing to properly disclose executive compensation.
Canoo agreed to the penalty and to cease and desist from further violations, according to an administrative proceeding filed Friday.
Canoo disclosed an SEC investigation in May 2021 into its initial public offering, operations, revenue strategy, earnings, and more.
The details: Canoo became publicly traded through a special purpose acquisition company (SPAC) transaction in late 2020.
From August 2020 through March 2021, Canoo made material misrepresentations regarding its projected fiscal year 2021-22 revenues, the SEC said.
Canoo produced revenue of $2.6 million in 2020 but stated it would earn $120 million in 2021 and $250 million in 2022. The company said this “without having a reasonable basis for those projected amounts,” the SEC alleged.
The 2021 projections were based on two potential projects, which were also attributed to 70 percent of projections for 2022, the agency said. Despite both projects being paused or falling through, the company continued to include the projections in filings with the SEC until March 2021.
Separately, in November 2019, two of Canoo’s initial owners provided a former executive with a signed agreement to pay the latter up to $1 million for staying with company, the SEC said. The former executive signed a questionnaire filed with the SEC upon the SPAC transaction representing he did not have any other agreements with the company and would be paid a fixed amount, per the agency.
Canoo did not respond to a request for comment. The company agreed to settle without admitting or denying the SEC’s findings.