Elio Motors Seeking $100 Million in Funding, Files IPO

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【Summary】Elio Motors, who has been struggling with financial problems and repeated delays to deliver its nimble, fuel efficient three-wheeled vehicle is looking to raise up to $100 million, according to a proposed public offering filed on Thursday.

Original   Eric Walz  ·  Aug 03, 2017 4:15 PM PT
author: Eric Walz   

Elio Motors, who has been struggling with financial problems and repeated delays to deliver its nimble, fuel efficient three-wheeled vehicle is looking to raise up to $100 million, according to a proposed public offering filed on Thursday. The filing revealed the company has again pushed back the year when it expects to produce and deliver the car to 2019.

Elio's ambitious plan involves producing a three-wheeled vehicle that the company claims can get up to 84 mpg at a former General Motors factory in Shreveport, Louisiana. The price of the car, a major selling point from the company's perspective, is set at $7,450, up from the original target of $6,800.

Elio has repeatedly delayed production plans for the vehicle, called The Elio, after the company founder Paul Elio, because of significant financial problems. In May, the company revealed it needed $376 million to launch production of the vehicle, and said that it furloughed a "significant portion of the engineering, manufacturing, and sales and marketing workforce."

Elio plans to list on the NASDAQ Global Market. A successful IPO, while still a longshot, could allow the company to restart production of prototypes and generate more interest in the car.

The number of shares and the price range for the offering have not been determined, according to a registration statement filed with the U.S. Securities and Exchange Commission for the initial public offering.

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However, the size of the IPO was estimated "solely for the purpose of computing the amount of the registration fee," the company said in the filing Thursday. A spokesperson for the company didn't immediately respond to a request for comment.

The company was fined $545,000 last month by the state of Louisiana, which said Elio is operating as a "manufacturer" under state law and therefore should have a license to accept non-refundable deposits. Elio has vowed to appeal the decision.

Elio Still in Debt

Elio also owes RACER Trust $1.75 million as part of a loan that facilitated the company's move into the Louisiana factory. RACER, which took over the facility as part of GM's bankruptcy, loaned Elio $23 million in the deal.

"We intend to use the net proceeds of this offering for working capital and general corporate purposes, including sales and marketing activities, product development, and capital expenditures," Elio said in the filing.

The company currently has $208,748 on hand, according to the filing, up from about $120,000 earlier this year.

Elio Remains Optimistic

Elio has remained optimistic that it could launch production and deliver vehicles by next year to the roughly 65,000 reservation holders who paid deposits for the three-wheeled vehicle. But the timeline for The Elio has been again delayed, according to the filing.

"The Elio is still in development, and we do not expect to start delivering to customers until 2019," the filing said. "The Elio vehicle requires significant investment prior to commercial introduction, and may never be successfully developed or commercially successful."

The company estimates that it requires $376.6 million from new investment to launch production, the filing said, of which $110.5 million would be obtained through additional reservation deposits. That means the company is still expecting to receive a significant uptick of interest in the car in the coming months.

While Elio has long said it hopes to tap additional funding through the U.S. government's Advanced Technology Vehicle Manufacturing program, it has yet to receive confirmation on a loan application for $185 million. The ATVM program hasn't doled out loans in years, and Elio describes the potential funding source as crucial to the vehicle's proposed production timeline.

"If we fail to obtain these loan proceeds within the timeframe needed to support our proposed production timetable or not be funded at all, it is likely we will experience significant delays in our production timetable," the filing says.

Elio Acknowledges it's a Risky Investment

The filing also includes a lengthy warning section to prospective investors to the challenges the company faces.

"Our limited operating history makes evaluating our business and future prospects difficult, and may increase the risk of an investment in our company," the company said in the filing. "You must consider the risks and difficulties we face as a development stage company with limited operating history."

"We have not yet produced or delivered our first vehicle and we have not generated any revenues," the filing continues. "If we do not successfully address these risks, our business, prospects, operating results and financial condition will be materially and adversely harmed."

Elio Fined $545,000 in July

The state of Louisiana has fined the company $545,000 last month for not having a license to accept non-refundable deposits.

During a meet last week with the Louisiana Motor Vehicle Commission, it emerged that Elio has accepted approximately 65,000 non-refundable deposits of $1,000 for its three-wheeled vehicle.

In the meeting, lawyers for Elio Motors asserted the practice did not violate state law as the reservations were for a spot in the line and didn't guarantee actual sales. However, the commission's attorney said Elio's use of the words "buy", "sell" and "own" on its website and marketing material suggested it had intent to sell.

Meanwhile, Elio Motors and plan to appeal the decision.

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