The WHAT:
Canoo is holding a special virtual meeting of stockholders to vote on the following proposals:
The Share Authorization Proposal
This first proposal aims to amend the company's Second Amended and Restated Certificate of Incorporation to increase the number of authorized shares of Common Stock. This amendment would provide more flexibility for the company in issuing shares, which leads into the second proposal...
Yorkville Share Issuance Proposal:
The second proposal involves seeking approval, pursuant to Nasdaq Rule 5635, for the issuance of shares of the company's common stock. These additional shares would be given to Yorkville when they convert some loans into shares. It's like paying back a debt with shares of the company.
Additionally, this proposal covers the issuance of shares upon the exercise of warrants issued pursuant to agreements with Yorkville. It also addresses the potential issuance of shares if Yorkville decides to exercise options to purchase additional convertible debentures and warrants. Currently Canoo is only allowed to issue a limited number of extra shares (no more than 20% of what they had in April 2023). This proposal asks if they can go over that limit if Yorkville uses those special rights.
In simpler terms, this proposal is about letting Yorkville have more shares when they turn their loans into shares or when they buy more shares with special rights. They might go over the usual limit of how many shares can be given them, but Canoo needs your approval for that.
Yorkville Floor Price Proposal:
The third proposal suggests an amendment to the Pre-Paid Advance Agreement with Yorkville. This change would lower the minimum floor price at which Canoo can sell shares of Common Stock to $0.10 per share. The current floor price is .50, which above yesterdays closing price and thusly limiting Canoo's ability to use Yorkville to finance operations.
Adjournment Proposal:
The fourth and final proposal seeks approval for the adjournment of the Special Meeting to a later date if necessary. This is to ensure sufficient time for further solicitation and vote of proxies in case any of the previous proposals do not receive enough votes.
The WHEN and WHERE:
Since this meeting is virtual it's pretty easy for stockholders to participate in the Special Meeting. It will be conducted via a live audio webcast on Thursday, October 5, 2023, at 8:30 a.m. Central Time. Shareholders can attend, submit questions, and cast their votes online by visiting www.virtualshareholdermeeting.com/GOEV2023SM2
The WHY:
Canoo is in a tough spot, they are light on cash and heavy on expenses. If the proposals fail and the ability to raise funds via Yorkville is completely removed it would put a lot of pressure on the company in the short-term which already operates out of a pressure-cooker.
Authors disclosures: I am long Canoo - I own common shares, warrants and call options.