Q3 2022 Sono Group NV Earnings Call
Speaker 2: You.
Speaker 3: Oh.
Speaker 4: The conference will begin shortly. To raise your hand during Q&A, you can dial star 11.
Speaker 5: are in a listen only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 and one on your telephone. You will then hear an automated message advising your hand is raised.
Speaker 6: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Karil Baguchenko, please go ahead.
Speaker 7: Thank you, Heidi. Dear ladies and gentlemen, welcome to our conference call. A press release including financial information for the third quarter of 2022 was released this morning. It is available on our website and on the AdGer platform. A full interim report will be published later this week.
Speaker 8: On today's call we have our CEO Lauren Hahn, our Chief Operating Officer Thomas Hausch and our Chief Financial Officer Torsten Kiedel. Lauren and Thomas will first provide an update on our operations.
Speaker 9: Thorsten will then review our Q3 financials. And Lauren will conclude our today's presentation with some important news. After that we will be happy to take your questions.
Speaker 10: Before we continue, please be reminded that today's presentation will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the views expressed today.
Speaker 11: So, Laurie, please go ahead.
Speaker 12: Hi there and thanks, Gural. A warm welcome to everyone on this call.
Speaker 13: As you know, we are working very hard every single day to deliver on our mission.
Speaker 14: solar on every vehicle.
Speaker 15: And I want to start today with this beautiful picture here.
Speaker 16: The sean in front of the Golden Gate Bridge.
Speaker 17: well being successfully shown in our US tour recently.
Speaker 18: As you all know, there are so many challenging things out there happening right now in the world. Inflation, recession, energy crisis, Russian-Ukraine war, the COVID-19 pandemic, and a very challenging capital market.
Speaker 19: And in these difficult times, people become more cost-sensitive and look for affordable, yet still innovative solutions for their everyday life.
Speaker 20: And the Xeon is exactly one of these technical solutions.
Speaker 21: Approximately 20,000 euros, 25,000 euros, very affordable.
Speaker 22: Solar charging, very convenient and reduces utility bills.
Speaker 23: Bi-directional charging, a home storage on wheels.
Speaker 24: Our SEV is the perfect answer for so many people and so many problems we have in the world right now.
Speaker 25: And I was thrilled to see how the Sion resonated in the US with the people we met, including press and media, potential strategic partners, and other interested individuals who attended our event.
Speaker 26: Same as in Europe , people are looking for an affordable, sustainable and yet innovative car.
Speaker 27: And that's not for just another luxury EV, which the majority just can't afford.
Speaker 28: That said, let's talk about the recent milestones we have achieved.
Speaker 29: One year has passed since we went public in November 2021.
Speaker 30: And we keep on delivering on our ambitious plans.
Speaker 31: Within the last 12 months,
Speaker 32: We achieved 30% growth.
and are now looking at 21,000 B2C-Ceon reservation holders.
We achieved 44% growth on the B2B side of the Xeon pre-orders. This sums up to an incredible amount of approximately 43,000 Xeon pre-orders and reservations, which would equal a potential backlog of over $1 billion.
For total of 34 patents granted or filed.
And we almost doubled our steps to over 418 engineers and industry experts.
And lastly.
We delivered on our IPO promise.
and built 17 vehicles and body invites of our serious validation fleet.
Let us walk you through the achievements in more detail. Let's start with our first business unit, Sonosola, where we license and sell our solar technology to trucks, buses, vans and more. Let's walk through the achievements in more detail.
We entered several new markets with
Strong Customers
130% growth since our IPO, now at 23 customers.
These are industry leaders like Mitsubishi, Scania, and
or M A M. The letter bow
being Volkswagen subsidiaries.
These are very renowned corporations.
are now starting to integrate solar into their first product, still on a prototype basis.
but with a massive potential once we achieve spherical integration.
We now have solar customers in over 10 countries globally running from Japan.
to the U.S.
So let me give you some examples of the recent customers we signed.
We recently announced Gania and LLT as the new customers.
Six Scania diesel buses have been equipped with our innovative solar technology and are already up and running in Sweden.
It's a customized version of our solar bus kit.
And Scania is a subsidiary of Volkswagen with over 54,000 employees.
Scania operates in more than 100 countries and delivered roughly 90,000 vehicles in 2021 at number falsely hit 100,000 sell
Another customer was Pepper. Pepper has integrated our solar tech in one of their electric buses.
Pepper is the world's first digital OEM in the automotive industry for repowering a new vehicle.
First, solar integration by sonomotors.
on e-buses, so our solar bus kit is now applicable for diesel and electric.
about this.
We are expecting the E-Bus market to gain significant market share over the next 5 plus years.
We have 1.3 kilowatt peak installed on an electrified Mercedes-Benz C-Tower.
And more and more customers are beginning to understand the value of solar integration to reduce TCO and CO2 emissions.
This is especially the case for commercial vehicles.
But there's more to that.
We have made great progress with our seamless solar integration.
Going from vehicle applied photovoltaics, short V.A.T.V.
To now vehicle integrated photovoltaics short VIPV
We have now developed our six...
generation of solar technology.
And this trail placing solar technology is so unique and proprietary.
that other OEMs start to approach us to find out more.
And here I am not speaking about commercial vehicles.
passenger car OEM.
So let me share some exciting news with you today.
We received the first purchase order
from one of the world's largest car manufacturers.
The scope of the order is the delivery of solar body panels for our first prototype.
Together with Stutter Motors, this OEM wants to explore solar integration into their high-volume vehicle production.
We have worked with that OEM customer now for several months and believe this partnership shows the potential that our technology and business have to move to the next level.
On that note, let me answer the question, why other car manufacturers should license our solar technology?
And yes, it's because of free, simple...
answers.
They want to avoid a huge re-engineering effort.
Second, they don't want to lose time to come to the market.
Or to say it another famous word if a trend becomes obvious you are too late
And third, they don't want to infringe our patent.
So our technology is...
and already devolved technology which saves time.
Ready for large scale production, it's industrialised.
and it's protected with a very strong IP.
With that great news, I hand over to Thomas.
Thank you, Logan.
And thank you for showing us the scion in front of the Golden Gate Bridge in San Francisco. Here you can actually see the scion in Brooklyn, where we calculated an average yearly free range from solar for our vehicle of nearly 5,000 miles or 8,000 kilometers.
Overall, we're making good progress on our scion. We are on track with testing and series validation.
We have now produced and fully assembled 17 vehicles and bodies in white and plan to complete 32 of them within the next weeks.
We're testing in several locations around the world, including aerodynamics and wind tunnel tests in Sweden, steering and other driving dynamics tests in the northern US, and consumption and efficiency testing in Spain.
On the development side overall, we're progressing as planned. We've entered a release process for series, which marks the completion of a core stage of development work.
we continue to order series development tools.
Key functionalities such as discharging, charging, solar yield, drivability, infotainment were successfully tested and of course the final validation is ongoing.
Good news also on the series production.
We have received more series tools. We've nominated more series suppliers. We continue to have detailed alignments with Valmet Automotive regarding our manufacturability and next line builder commitments for our body shop and general assembly. However...
A reduced funding speed drives the delay of the SOP from the second half of 2023 into Q1 2024. Our definition of SOP continues to be handing over sellable products to customers, not just producing vehicles alone.
You can see that we're preparing for series production and servicing, and that's why we are tied up now with a Europe-wide partnership with Bosch Automotive for the long term.
We're working with them for servicing and repairing the scion in Europe .
This completes our three-pronged approach to allow self-repair to the customer.
empower independent workshops, but also create a Europe-wide dedicated partner network.
In our case, for the Scion launch, we're starting with 50 Bosch car service locations in Germany to be trained and qualified. More locations and European countries are following in the course of the subsequent rollout.
Bosch Automotive aftermarket gives us access to over 10,000 workshops in Europe as one of the world's largest grouping of repair locations.
Another one of our important partner is Continental.
We appreciate partnering with such a well-established TO1 supplier, and I'm showing here an advertisement created by Conti.
Conti and formerly also Vitesco or Conti in their former function also as head of Vitesco already supplied us with our electric drive unit for our SVC2 years ago. Here in our SVC3 our series validation vehicle
You can see many applications from Continental including ADAS functions, vehicle control unit software and many others just to name a few.
So much about the Scion. Let's give a corporate update and start that one with the Scion.
here in Los Angeles where we calculated an average yearly free range from solar of nearly 6,000 miles or 9,000 kilometers.
We created these real pictures just recently on our first US tour for Sono Motors.
The feedback we received on this tour from our CO and series validation vehicles, but also for our overall company and the solar business was quite rewarding. In October we showcased this for three weeks. We had interviews with CNBC, Barron's, CNET, Axios, Boston Globe, among others.
receiving the broad interest for our solar EVs in the US showed the generally huge and positive interest in solar technologies as well.
As an impression for you, we selected seven pictures representing our seven locations we served. Feedback from the people we met, including press, potential investors and other interested attendees was very positive.
For example, many followers and interested parties perceive the scion as being much bigger, more spacious in real life than in pictures.
there was excitement about the smooth integration of the solar wafers.
Uppi Goldberg was especially convinced by the affordability of the product.
The wish and need to see our vehicle on the road and to see the application of our technology was evident to everyone on our small team on the tour.
Further progress was made in our team composition and protecting our IP.
We are now well over 400 employees by the end of Q3 2022 in December 418 with more than 300 engineers.
About 50% of our employees have an international background, with currently 45 nationalities represented at Sonar Motors.
Based on the aforementioned funding speed, we have implemented a hiring fee since November to control our operational expenses.
On the patent side, we continue with high speed for filing patents.
We have now five patents and utility model applications filed in Q3, three additional filings since the end of Q3.
In total, we have now four patents granted, 30 patents or patent utility model applications filed as of December 8th.
To continue, Thorsten will take you through our financial key facts.
Thank you so much.
was a warm welcome from my side.
Let me start with our year-to-date financial results.
In the first 9 months of this year, we significantly increased our revenues and achieved 180,000 euro from Sonosolar and Sonodetitut.
compared to no revenues at all in the same timeframe in 2021.
In parallel, we made substantial R&D investments with almost 90 million euros spent in the last 9 months.
in comparison to 27 million euro year-to-date September 2021.
We also started purchasing necessary machinery and toolings in preparation of the start of production and capitalized approximately 42 million.
Euro as of September 30th, 2022 versus 1.5 million Euro one year ago.
I'm also glad to highlight that despite the strong growth in our operations and headcounts, we were able to keep SG&A costs well under control.
with approximately 16 million euro for the first nine months in comparison to 13 million euro in the same time frame last year. That's merely an increase of 3 million euro.
Let's look at the third quarter in more detail.
The revenue growth accelerated particularly in Q3 with six times higher sales.
compared to the previous quarter.
resulting in 138,000 euro in revenue.
Our cash equivalent started at roughly 33 million Euro on September 30th of this year.
Since liquidity is essential in such a challenging market environment, let me also update you on our current and expected liquidity.
It's approximately 55 million euro as November 30th, which consists of 25 million euro of cash and cash equivalents and a signed agreement for the sale and issuance of up to 30 million dollars of convertible debenture, on which I'll provide more details on in a minute.
The substantial investment combined with the SG&A resulted in approximately 56 million euro net cash outglow in Q3 of this year.
Looking ahead, I'd like to share with you a helicopter view of where we stand on the development side and how that connects with our funding needs.
Overall, we have raised around 330 over the last couple of years.
This allowed us to achieve the serious validation vehicle fleet in our car business.
And on the solar side, we were able to develop the aforementioned six-generation of solar panel integration and to deliver the first prototypes to many renowned vehicle manufacturers.
You've come this far and now only have a fairly short distance towards launching fuel production.
We currently estimate that we need approximately 130 million until the next crucial milestone, the pre-series vehicle release next summer.
Thereafter, we estimate that we will require only an additional 80 million Euro to start delivering the first Sion to our customers in Q1 of 2024.
We are currently in the process of securing this funding.
Just this morning, we announced an agreement for the sale of convertible dev insurers with Yorkville Advisors.
We will get net proceeds of 30 million dollars in three tranches. The first one upon signing, the second one upon signing a registration statement and the third one after signing a registration statement.
upon effectiveness.
We are quite happy with the favorable terms we received.
4% interest, no warrants.
A fixed conversion price of $1.75. Unless the stock price is below that level, then a variable conversion of 96.5%, the lowest daily devop during the seven prior days.
Conversion below the fixed conversion price are limited to the greater of either 20% of the monthly trading volume or $5 million per month.
and the limitations can be waived at company discretion.
What I'd like to highlight here is that via the Dev Inters providers with meaningful upfront capital.
The conversions related to them would effectively replace our use of the existing committed equity facility or our new ATM going forward.
Since both are now limited to 2% of daily trading volume subject to exceptions for days of high trading volume.
Worth mentioning is that we also filed a registration statement on Form F3.
We made this move because we recently became shelf eligible and wanted to add this vehicle to our finance toolbox.
On December 7th, Sono Group also entered into an at-the-market sales agreement with B. Riley, Birnberg and Cantor Fitzgerald, acting as sales agents.
The size is up to $135 million and the sales agent commission is 3%.
As mentioned before, once the debentures have been repaid, the ATM program will replace the existing committed equity facility that we have been using the last four and a half months and is meant to enhance our access to capital.
Given the signed convertible debager agreement, we don't plan to use the ATM extensively until the convertible are redeemed.
I've now shared the pillars about funding strategy for Q4 that are already secured.
We started with 33 million euro in cash at the end of Q3.
Secure an agreement for the convertible debitors with 30 million us
already had inflows via the committed equity facility of approximately 7 million euros this quarter.
Summed up, we have secured €70 million in total.
Let me now share with you how we plan to close the remaining gap of approximately 130 million euro to finance the next big milestone, the pre-series vehicles.
that will already come from our production partner, Valmet Automotive in Finland.
The most significant source of funding will be a community marketing campaign we are launching right after this call.
With the support of our strong community, we are planning to raise 84 million euro net.
which translates to 3,500 full CO and down payments.
In a moment, Lauren will provide more details on why we strongly believe this is the right next step.
Let me just comment on the additional two instruments we are planning following the successful rate of the envisioned 84 million euro.
We plan to tap capital markets again and raise a total of approximately 50 million euro via additional sale of new equities. We still have ongoing dialogues re-IP lending and asset-based financing secured with our patent and the production machinery.
to further leverage the funding as much as possible and to keep the illusion as low as feasible.
also in our own interest.
We will keep you updated once there is news.
Before I hand over to Lauren, I'd like to share some more thoughts about the funding in general.
We've achieved very important operational and commercial milestones since we went public one year ago.
These include signing promising partnerships in our solar business and presenting our first Xeon Sears validation vehicles.
At the same time, high inflation and rising interest rates of central banks seeking to curb inflation have resulted in negative sentiment in the financial market since the second quarter of this year, with many tech companies losing between 50% to over 90% of their respective market capital.
Shares in mobility tech companies have been particularly hard hit.
As a result, financing our CAPEX program through equity has become challenging and dilutive for existing shareholders. One view of the investment community is that we should focus on capital light, revenue generating solar business and abandon the Xeon project.
We hear you.
and we would be willing to streamline our business.
As a public company with shareholders, we have to be open to any and all alternatives that are best for the long-term prosperity of our company. However, we believe one aspect that makes D-UN unique is our very strong and loyal community.
They want us to bring the sea onto the road as much as we do.
We believe that with our community we can bridge that difficult market environment.
reduce the overall funding need and prove to the capital market the strong demand for our solar technology and our affordable SEV design.
Handing over to Lauren once again to talk about the next step.
Thanks, Orson.
I want to start with we have an incredible 1 billion euros of potential backlog revenue, with over 40% with down payment.
So...
Before we dare to decide to stop the Sion project, we want to give the approximately 21,000 reservation holders, our community, one last chance to prepay the car in full.
And by doing so, partially solve our funding hurdle. These 21,000 reservations are an equivalent of approximately 460 million Euro when converted into potential revenue.
With almost 600 million worth of B2B pre-orders, on top of that, we have a potential order backlog of more than 1 billion euros. So why not asking the community to help to purchase the funding?
Well, this is exactly what we plan to do by launching a special marketing campaign. We are calling this special marketing campaign, SaveSion.
With it, we will give our customers community the chance to prepay the equivalent of 3500 million within 50 days.
we will give our customers community the chance to prepay the equivalent of 3500 ZION within 50 days. To make this clear, we will give our customers the chance to prepay the equivalent of 3500 ZION within 50 days.
Our community is an invaluable asset. We believe no other company has such a strong community. So the community engagement is planned like this. We launch a special marketing campaign today. We ask customers for an upfront payment of their car reservations equivalent to a $100,000 fee.
And here is the simple message we give to our community. 21,000 people have reserved a car. The vast majority of people plan to pay us the full down payment as soon as they expect to get the vehicle.
So now we ask them to give us some of the money 12 to 18 months earlier in order to start the production of their car. And they will only have to pay if the campaign is successful.
In order to support our message, we have planned a very intensive
marketing campaign around it. Our planned activities are to start under the hashtag Cécion an exceptional social media campaign with transparency as a key factor of success.
Additionally, we start a tour, a Siontour, through Germany, Austria, Switzerland, and Netherlands. We are going to be doing a tour of the Siontour.
we start a tour a searing tour through Germany Austria Switzerland Netherlands 12 cities
inviting 10,000 people. We give incentives for an advanced payment up to 10% discount for full price down payment and the campaign will last for 50 days from December 8th to October 8th.
until January 26. This is a complete new way of marketing, and we have great experience in it. We have been successfully funded by the community in the past.
In 2019, we raised 53 million euros in payment commitments in 50 days. For prepayment, loans, donations and
In 2019, we raised 53 million euros in payment commitments in 50 days. Through prepayment, loans, donations, but no dilution for equity.
At that time, it was the largest of its kind for a hardware product in Europe . The public feedback was overwhelmingly positive. We received positive press coverage around the world.
So we also believe this time in our strong community. We have done it once in 2019. Now with the Xeon in its final production design, we have a incomparably higher brand of awareness and a shorter distance towards the start of production.
So we also believe, this time, in our strong community. We have done it once in 2019. Now with the Xeon in its final production design, in comparably higher brand awareness, and a shorter distance towards the start of production, we are confident that we can work in the next. Interboom!
this out and that we can be successful with this campaign. The numbers speak for themselves. We have since then doubled the amount of the community members.
And we plan to raise double the amount of the money now.
We plan to raise double the amount of the money now. It's doable.
We can achieve it. If it doesn't go as expected,
We will focus on the B2B solar-only business case as a very attractive alternative which is significantly less capital intensive.
We believe we already have all the resources on hand to roll it out.
Moreover, we have had a number of promising negotiations with potential strategic partners interested in our solar technology.
So we would not rule out some strategic alliances here.
So, let us prove to you and all investors out there that it's about a car that has massive potential.
A community that has one belief, a belief that even a small group of people can make a difference.
So let's do it. Let's bring the Xeon to Sears production.
for a world without fossil fuels.
Thank you.
With this, we will be happy to take any questions. Please remind our participants all the instructions.
Thank you. As a reminder to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.
Please stand by while we compile the Q&A roster. We will take our first question.
The first question comes from the line of Christopher Sosa from B-Ride. Please go ahead, your line is open.
Hey guys, thanks for taking my questions and congrats on the progress here.
Thank you, Kustav.
Sure, yeah, so maybe just you called out initial shipments to automotive customer looking to add integrated solar for potentially high volume vehicles.
Can you talk through the steps and timelines you think that you have ahead of you in order to get design wins from that customer? I just wanted to frame where we think we are in that process. It's great to see that process starting to kick off.
Sure. So usually… It is the very slow, very slow pattern in the
So this goes in three main steps. The first step is a prototype in order to convince internally the management and the engineers to take a look and test this solution. That's the first step.
The second step is then serious development, where you have two to three years of serious development until it goes into production. And that's the third step, serious production. Got it.
As we're looking at the $130 million that we need to get to pre-series production, can you give us a sense of the timing of the cash out? It sounds like there's a go or no-go decision based on the community.
Can you just kind of walk through timelines that we should expect around the scion, cash needs and decisions there?
So maybe, first of all, it's good to see that we have access to the 70 million I mentioned at the starting point.
So this is already a big step towards the funding need. And the additional capital, I mean this is why we're kicking it off today. The sooner we have transparency, the sooner we can kick off purchase orders for some of the bigger machineries and toolings that we need to kick off as soon as possible.
So the timing, Lauren talked about it, is a 50-day campaign. We hope to see along over the next couple of weeks how we are progressing there and then as soon as we have more transparency on the potential success of the campaign to kick off the required or necessary purchase order for the machineries.
Okay, got it and just last 1, are there any strategic opportunities as we're kind of entering kind of the new year as far as other OEMs out there that are looking for credits? Is it would it still be too early for you guys to start pre selling?
you know better than us we're a publicly traded company so we only give here the information that we can give out. Fact is however we continue to our discussions on the items you just mentioned with not only one passenger car OEM alone.
So we continue on the business that we have started two years ago at CES at the beginning of 2021 to continue to talk about other opportunities including the credits you just mentioned. Of course, as you know, they're effective in Europe .
only when you register the first cars. So, the priority for us is now to make sure that we are successful in the campaign we just presented to you.
Okay, makes sense. Appreciate the time here. Thanks guys, I'll hop in the queue.
Thank you. Thank you. We will take our next question. And the question comes from the line of Eric Stein from Craig Helen. Please go ahead. Your line is open.
Thank you. We will take our next question. And the question comes from the line of Eric Stein from Craig Allen. Please go ahead. Your line is open. Hi everyone. Thanks for taking the questions.
Hi, Eric. So just to kind of stick on the point from the previous question. So on the 50 day campaign, you know, it sounds like optimism on that front. I mean, can you just talk about. I mean, in the scenario where you have to pause that if that's the decision that you make.
I mean, does that impact anything with Velma? Does that, I mean, is it something that if you are able to, I don't wanna say easy, but you're able to stop and then start again if you're in a position to do so, or how does that just kind of...
impact the relationships and the work you've done to date.
Yeah, hey, thank you. That's an awesome question. So as we inform the public, of course, we also inform our suppliers. And of course, as I mentioned earlier, with the funding that became more complicated, as Torsten described it over the last couple of months, we have made the decision that we presented today.
to move our SOP from the second half of 23 into the first quarter of 2024. So we did of course this in concert with suppliers and we do not expect any dramatic impact from delaying our SOP with any supplier.
can never rule it out but specifically with Vymet Automotive it's a very good partner. So no we do not expect from that campaign and the announcement today anything but the delay we just mentioned.
Right, but if the, you know, let's say at the end of the 50 day campaign, you realize that maybe you need to push that a little further. Is that something that I mean, I would assume you'll be in kind of having conversations ongoing with your suppliers so that they're aware of the situation. Um, but it's fair to say that.
that that wouldn't cause a great, you know, disruption, and that is something that you could start up again or get back on the timeline pretty easily if you're able to do so.
Well, we want to act now and not to drag it out endlessly.
So we have been successful in the past with the 50 days Raising those fifty three million euros in payment commitment now. We have double the amount of community members We have so much more visibility in the market. We recruit to such a venture-based operation and cooperation by now
so that we are very confident that we can make it. Okay, got it. And then just on the good news on the PO sign with the large OEM, just curious with financing, top of mind, I mean, any thought or any...
any interest from some of those large partners potentially in some sort of strategic investment to kind of help alleviate that? I mean is that you know I know you're probably limited as to what you can say but anything along those lines might be helpful. Yeah sure of course.
We have some confidentiality limitations here. But of course we would be foolish not to speak to potential OEMs or to OEMs out there about a potential strategic investment. And of course those who receive or are currently looking into also technology.
would be the ones most likely to invest. But you also know how it works. With big OEMs or big corporates, it does take time. So for us it's great to see there's interest in the technology. We take this as a first step and we believe once we have proven the
the technology works, then consequently conversations will continue.
Okay, thank you. Once again, if you do wish to ask a question, please press star 1 and 1 on your telephone.
Okay, thank you. Once again, if you do wish to ask a question, please press star one and one on your telephone. We will take our next question.
Our next question comes from the line of Andra Shepherd from Canton Fitzgerald. Please go ahead, your line is open.
Hi, good afternoon, everyone. Congrats on all the milestones and thanks for taking our questions.
Thank you, Andre. Awesome. Yes, my pleasure. And so I wanted to maybe clarify a little bit on the funding strategy. So I see you've raised, you've mentioned you've raised that $70 million. You expect to raise an additional $134 million. And so I just want to try to understand this correctly. $40 million of that is to...
Would that change the amount that you would expect to pay?
I'm sorry?
I'm sorry?
I want to get more color on the capital funding strategies, particularly in regards to ATM and to the community down payments. Anything you can say there, particularly given what the stock is trading, is the ATM, do you still expect it to use that? Thank you. Yes.
So first of all, let's stop at the ATM or in the past the committed equity facility. As you probably saw, our daily average trading stock volume increased significantly ever since we went to the US in order to present our solar technology and the Xeon.
Prior to the US tour, the weeks prior to that we averaged around 300,000 on a single day. And now we're looking at more than a million, I believe the latest number was 1.7 million for the last month of average daily trading volume. So significant improvement there.
As I mentioned before, since we now signed the convertible debenture with Yorkville, we will limit the usage of the formerly committed equity facility in the future, the ATM, in order not to put too much pressure on the stock.
So it's limited to 2% and there's an exception for very high trading volume days where we can use it to a bigger extent, but of course interest here is to keep dilution as low as possible.
We spoke extensively about the community down payments, about the marketing campaign, and why we believe this is the right next step. It's non-dilutive, it's an incredible community we have out there, and this would reduce the overall funding amount significantly. And of course, as you can imagine, one of the feedbacks in the past was, hmm, you still have to pay for the money.
campaign or marketing campaign will reduce that amount significantly and then will make it easier for equity investors to realize the potential there is in our technology and in the stock as well.
Thank you, Torin. That's very helpful and very detailed. I appreciate it. Maybe as a follow-up, can you just remind us what the cash burn or the cash outflow expectations are, maybe on a quarterly or annual basis? I think in the past you had mentioned…
the operating and investment cash flow outflow of about $165 million for the second half of this year and a little bit north of $150 million in 2023. So have those numbers changed or are they kind of expected to be the same? Thanks. Yes.
So, what has changed is, of course, we try to adapt to market environment as much as possible. So, we try to postpone some expenses and we did the hiring freeze that Thomas talked about, started in November , to be as efficient as possible with the money we have received.
I think this is key. We decided against layoffs. Of course, there are many tech companies right now laying off people. It comes at a price and this is why we decided to take the step of hiring freeze.
Looking forward, the internal burn rate is less than 5 million a month, mainly for salaries. With the 400 plus employees, we currently employ here in Munich and then some other OPEX. Of course, what we need to do is continue to invest in CAPEX. The majority of the user funds are in the US.
as indicated in the past, is for production machinery and toolings. And this is, yeah, we trigger the purchase orders, so we drive the, when we need to pay for those orders, and this then is connected to when do we get access to the money in order to then purchase the production machinery and toolings.
Thanks Thomas and congrats again on the quarter. I'll pass it on. Thank you. Thank you. We will take our next question.
And the question comes from the line of Austin Zocco from Freedom Capital Markets. Please go ahead, your line is open.
Hey, guys, congrats on a successful 3rd quarter. I just had a couple questions here. So. Like, as you've probably seen last month, your competitor, like, you announced that they've begun production and are. Planning to scale early next year. So what is Sonos plans and around us?
we don't see any competitor in the next 10 years in a market that's increasing massively.
Particularly, shout out to Lightyear. If I'm not mistaken, the car is about 10 times our price. It's a wonderful product. It's a low volume, high priced product. With that kind of production, you actually do a lot of work by hand, so you have a lot of high variable cost.
while we have the first affordable solar electric vehicle, and that's why we're upfront investing into tools and machinery that makes this car sell at 25,000 euros or roughly 25,000 dollars net. So that is the main difference and we hope to see many more solar electric vehicles coming out in the future.
Great, great. I think thanks for the answer that and I just had one more around on the marketing campaign that you guys are running. So are you all concerned about like upsetting your customer base if you don't hit the delivery milestones of like you publicly announced that they're starting at Q1 of 2024?
Are you concerned that maybe some of the people that pay down early are going to be upset if you guys have to push back production, I mean delivery? So we're trying to be very transparent with our community, publishing bi-weekly, oh sorry, second week a sprint report on our website.
We're publishing even on our website the exact time plan to production. And yes, another delay. It's of course not a great news to our customers, but we are trying to be that very transparent OEM who delivers also the reason for it, the rationale behind it, and we think our community can deal with it.
All right, great. That's all my questions. Thank you. There seems to be no further questions at this time. Please continue.
Thank you, Heidi. Thank you all for joining our conference call. If you need more information, please take a look at our website or reach out directly to our IR team. Have a great day and I hope to be talking to you soon. Bye bye. Thank you all. Thank you. Thank you everyone.
This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by. The conference will begin shortly.
To raise your hand during Q&A, you can dial star 1-1.
I I I.
The.
The St P.
you