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Item 1A. Risk Factors
Our risk factors are described in the Risk Factors section of our 2023 Form 10-K. Except as stated below, there have been no material changes to our risk factors since the filing of the 2023 Form 10-K.
There is substantial doubt about our ability to continue as a going concern through the next 12 months from the date of the condensed consolidated financial statements in this Report.
As an early-stage growth company, our ability to access capital is critical. Unless and until we can generate sufficient revenue to cover our operating expenses, working capital and capital expenditures, we will need to raise additional capital in order to fund and scale our operations. Our ability to access capital when needed is not assured and, if capital is not available to us when, and in the amounts, needed, we could be required to delay, scale back or abandon some or all of our development programs and other operations.
Additional equity financing may not be available on favorable terms or at all and, if available, could be dilutive to current stockholders. Our ability to access the SEPA is dependent on trading volumes and market price of our Common Stock. Furthermore, our ability to access the SEPA is not available until a post-effective amendmenlimited to the extent of the 3,333,333 shares registered for resale pursuant to theour Registration Statement on Form S-1 filed on July 27, 2023 is filed with , as amended by Post-Effective Amendment Number 1 the SEC andreto which was declared effective on September 10, 2024, and othe satisfaction of other applicable conditions are met. Debt financing, if available, may involve restrictive covenants and dilutive financing instruments. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our Common Stock to decline. Moreover, $20.0 million aggregate principal amount of Convertible Notes will need to be repaid out of our available cash on August 11, 2025, unless converted, extended or refinanced.
Global general economic and political conditions, such as a potential recession, inflation, uncertain credit and global financial markets, including potential future bank failures, health crises, supply chain disruption, fuel prices, international currency fluctuations, and changes to trade policies and tariffs, and geopolitical events such as local and national elections, corruption, political instability and tensions and acts of war or military conflict including repercussions of the wars between Russia and Ukraine and in Israel, or terrorismterrorism, or tensions with China and related sanctions and export control restrictions, have and could continue to adversely impact our ability to raise additional funds, among other things.
Since inception, we financed our operations primarily from the sales of Common Stock, the Business Combination, the ESEPA, the ElectraMeccanica acquisition and the issuance of debt. As of JuneSeptember 30, 2024, our principal sources of liquidity were cash and cash equivalents aggregating to $19.78.4 million (including cash acquired pursuant to the Arrangement with ElectraMeccanica, which closed on March 26, 2024).
If we seek additional financing to fund our business activities in the future, any doubt about our ability to continue as a going concern may make prospective investors or other financing sources more resistant or unwilling to provide funding to us on commercially reasonable terms, or at all. In addition, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited financial statements and/or seek protection under Chapters 7 or 11 of the United States Bankruptcy Code. This could potentially cause us to cease operations and result in a complete or partial loss of your investment in our Common Stock.
If capital is not available to us when, and in the amounts, needed, we could be required to delay, scale back, or abandon some or all of our operations and development programs, which would materially harm our business, financial condition and results of operations. The result of our ASC 205-40 analysis, due to uncertainties discussed above, is that there is substantial doubt about our ability to continue as a going concern through the next 12 months from the date of the condensed consolidated financial statements in this Report. Our consolidated financial information does not include any adjustments that might result from the outcome of this uncertainty.
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Our recent cost-cutting measures may not adequately reduce our operating costs or improve our operating margins, may lead to additional workforce attrition and may cause operational disruptions.
In October 2024, we initiated a plan to reduce future operating expenses and improve cash flows through a reduction in force and a temporary reduction in cash salaries for certain senior executives. As part of this plan we made a reduction in our workforce of approximately 26% of our total employee base at the time of the announcement.
The charges and expenditures that we expect to incur in connection with these cost-cutting measures, and timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and we may incur costs that are greater than we currently expect in connection with these activities. The cost-cutting measures may yield unintended consequences and costs, such as the loss of institutional knowledge and expertise, employee attrition beyond our intended reductions in force, and a reduction in morale among our remaining employees, all of which may have a material adverse effect on our business, results of operations or financial condition. Furthermore, these cost-cutting measures could place substantial demands on our management and remaining employees, which could lead to the diversion of attention from other business priorities. In addition, while we eliminated certain positions in connection with the reduction in force, certain functions necessary to our operations remain, and we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees or to external service providers, which could result in disruptions to our operations. We may also discover that the workforce reductions will make it difficult for us to pursue new opportunities and initiatives and require us to hire qualified replacement personnel, which may require us to incur additional and unanticipated costs and expenses. To compensate for reductions in salary for affected employees, we may incur additional unanticipated stock-based compensation expense and related dilution.