UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

SCHEDULE 14A

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant  ☐

Canoo Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

CANOO INC.

NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS

 

To Be Held On November 22, 2024

Dear Stockholder:

You are cordially invited to attend the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of CANOO INC., a Delaware corporation (the “Company,” “Canoo,” “we,” “us” or “our”). The meeting will be held on November 22, 2024 at 8:30 a.m. Central Time via a live audio webcast. You will be able to attend the Annual Meeting and vote online during the meeting by visiting www.virtualshareholdermeeting.com/GOEV2024 and logging in using the 16-digit control number included on your proxy card or on the voting instruction form accompanying these proxy materials. The Annual Meeting will be held for the following purposes:

These items of business are more fully described in the proxy statement accompanying this notice.

Notice of Annual Meeting (this “Notice”), the accompanying proxy statement and form of proxy are first being mailed on or about October 8, 2024 to stockholders of record as of September 30, 2024 (the “Record Date”). Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.

By Order of the Board of Directors

/s/ Hector Ruiz

Hector Ruiz

General Counsel and Secretary

 

October 8, 2024

CANOO INC.

 

TABLE OF CONTENTS

CANOO INC.

 

PROXY STATEMENT

FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON NOVEMBER 22, 2024

 

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

INTRODUCTION

This proxy statement (this “Proxy Statement”) and the accompanying proxy card are being furnished to stockholders of Canoo Inc., a Delaware corporation (“Canoo,” the “Company,” “our,” “us,” or “we”), in connection with the solicitation of proxies by our board of directors (the “Board”) for use at our Annual Meeting of Stockholders to be held November 22, 2024, including any adjournment, postponement or rescheduling thereof (the “Annual Meeting”).

Stockholders of record as of the close of business on September 30, 2024, the record date for determination of the stockholders entitled to vote at the Annual Meeting (the “Record Date”), will be entitled to vote at the Annual Meeting.

Why am I receiving these materials?

We have sent you these proxy materials because the Board is soliciting your proxy to vote at the Annual Meeting, including at any adjournments or postponements of the Annual Meeting. You are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions below to submit your proxy by telephone or through the Internet.

Why did I receive a notice regarding the availability of proxy materials on the Internet?

Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), we have elected to provide access to our proxy materials over the Internet. Most of our stockholders holding their shares in “street name” will not receive paper copies of our proxy materials (unless requested) and will instead be sent a Notice of Internet Availability of Proxy Materials (a “Notice of Internet Availability”) from the brokerage firms, banks or other agents holding their accounts. All “street name” stockholders receiving a Notice of Internet Availability will have the ability to access the proxy materials on the website referred to in the Notice of Internet Availability or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice of Internet Availability.

Why did I receive a full set of proxy materials in the mail instead of a notice regarding the Internet availability of proxy materials?

We are providing stockholders who have previously requested a printed set of our proxy materials with paper copies of our proxy materials instead of a Notice of Internet Availability.

How do I attend and participate in the Annual Meeting?

The Annual Meeting will be held on November 22, 2024 at 8:30 a.m. Central Time and will be a virtual meeting, which will be conducted entirely online via audio webcast to allow greater attendance. You may attend and vote at the Annual Meeting by following the instructions provided on the Notice of Internet Availability, proxy card or voting instruction form to log in to www.virtualshareholdermeeting.com/GOEV2024. If you are a stockholder of record, you will be asked to provide the 16-digit control number from your Notice of Internet Availability or proxy card. If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, follow the instructions from your broker or bank. The audio webcast of the Annual Meeting will begin promptly at 8:30 a.m. Central Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 8:15 a.m. Central Time, and you should allow reasonable time for the check-in procedures.

Will a list of record stockholders as of the Record Date be available?

For the ten days prior to the Annual Meeting, a list of our record stockholders as of the close of business on September 30, 2024, the Record Date, will be available for examination by any stockholder of record for a legally valid purpose

at our corporate office located at 15520 Highway 114, Justin, Texas 76247, during regular business hours. To access the list of record stockholders beginning ten days prior to the Annual Meeting and until the Annual Meeting, stockholders should email ir@canoo.com.

Where can I get technical assistance if I am having trouble accessing the Annual Meeting or during the Annual Meeting?

If you have difficulty accessing the Annual Meeting or during the Annual Meeting, please refer to the technical support telephone number posted on the virtual meeting website login page, where technicians will be available to help you.

Who can vote at the Annual Meeting?

Stockholders of record at the close of business on the Record Date, will be entitled to vote at the Annual Meeting. On the Record Date, there were 85,626,374 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), outstanding and entitled to vote.

Furthermore, pursuant to the terms of the certificate of designation governing the Series C Preferred Shares (as defined below), the holders of the Series C Preferred Shares shall be entitled to vote as a single class with the holders of the Common Stock on all matters submitted to a vote of the holders of Common Stock. Each share of the Series C Preferred Shares shall be entitled to a number of votes equal to the number of shares of Common Stock into which such share of the Series C Preferred Shares was convertible on the Record Date in an amount equal to: (x) the total number of shares of Common Stock into which all outstanding shares of the Series C Preferred Shares could be converted as of the Record Date without violating the AFVP Exchange Cap (as defined below) or Beneficial Ownership Limitation (as defined in the Series C Certificate of Designation), divided by (y) the total number of shares of the Series C Preferred Stock outstanding as of the Record Date and (z) for purposes of determining the number of votes each share of Series C Preferred Stock is entitled to vote, the Series C Conversion Price (as defined below) shall not be less than $2.33 (the “Series C Voting Calculation”). At the close of business on the Record Date, pursuant to the Series C Voting Calculation, holders of the Series C Preferred Shares shall be entitled to a number of votes equal to zero shares of Common Stock in the aggregate due to the Beneficial Ownership Limitation.

Stockholder of Record: Shares Registered in Your Name

If, on September 30, 2024, your shares were registered directly in your name with the Company’s transfer agent, Continental Stock Transfer & Trust Company, then you are a stockholder of record. As a stockholder of record, you may vote electronically during the meeting or vote by proxy. Whether or not you plan to attend the Annual Meeting, we urge you to fill out and return the enclosed proxy card or vote by proxy through the Internet or by telephone to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If, on September 30, 2024, your shares were held, not in your name, but rather in an account at a brokerage firm, bank or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice of Internet Availability is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker, bank or other agent regarding how to vote the shares in your account. You are also invited to attend the Annual Meeting.

What am I voting on?

There are 10 matters scheduled for a vote:

What if another matter is properly brought before the Annual Meeting?

The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.

How do I vote?

You may either vote “For” all the nominees to the Board of Directors or you may “Withhold” your vote for any nominee you specify. The Board of Directors recommends you vote “For” each of the nominees to the Board of Directors. For each proposal other than the election of directors set forth in Proposal 1, you may either vote “For” or “Against” or abstain from voting. The Board recommends you vote “For” each of these proposals presented in this Proxy Statement.

The procedures for voting are as follows:

Stockholders of Record: Shares Registered in Your Name

If on September 30, 2024, your shares were registered directly in your name with the Company’s transfer agent, Continental Stock Transfer & Trust Company, then you are a stockholder of record. As a stockholder of record, you may vote in person at the Annual Meeting or vote by proxy before the Annual Meeting in the following ways:

Proxies submitted via the Internet or by telephone must be received by 10:59 p.m., Central Time, on November 21, 2024.

Whether or not you plan to attend the Annual Meeting, we urge you to fill out and return the enclosed proxy card or vote by proxy over the telephone or on the Internet as instructed above to ensure your vote is counted.

Beneficial Owners: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a Notice of Internet Availability containing voting instructions from that organization rather than from the Company. To vote prior to the Annual Meeting, simply follow the voting instructions in the Notice of Internet

Availability to ensure that your vote is counted. Alternatively, you may vote by telephone or over the Internet as instructed by your broker or bank. To vote at the Annual Meeting, you must obtain a control number from your broker, bank or other agent. Follow the instructions from your broker, bank or other agent included with these proxy materials, or contact that organization to request a control number.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of Common Stock you own as of September 30, 2024.

If I am a stockholder of record and I do not vote, or if I return a proxy card or otherwise vote without giving specific voting instructions, what happens?

If you are a stockholder of record and do not vote by completing your proxy card, through the Internet, by telephone or in person at the Annual Meeting, your shares will not be voted.

If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted “For” each proposal presented in this Proxy Statement. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

If I am a beneficial owner of shares held in street name and I do not provide my broker or bank with voting instructions, what happens?

If you are a beneficial owner of shares held in street name and you do not instruct your broker, bank or other agent how to vote your shares, your broker, bank or other agent may still be able to vote your shares in its discretion. In this regard, under the rules of the New York Stock Exchange (NYSE), brokers, banks and other securities intermediaries that are subject to NYSE rules may use their discretion to vote your “uninstructed” shares with respect to matters considered to be “routine” under the NYSE rules, but not with respect to “non-routine” matters. In this regard, Proposals 1, 2, 3, 4, 5, 7, 8 and 9 are considered to be “non-routine” under NYSE rules meaning that your broker may not vote your shares on those proposals in the absence of your voting instructions. However, Proposals 6 and 10 are considered to be “routine” matters under NYSE rules meaning that if you do not return voting instructions to your broker by its deadline, your shares may be voted by your broker in its discretion on Proposals 6 and 10.

If you are a beneficial owner of shares held in street name, and you do not plan to attend the meeting, in order to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the materials you receive from your broker, bank or other agent.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one set of proxy materials?

If you receive more than one set of proxy materials, or more than one Notice of Internet Availability, or combination thereof, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on each set of proxy materials or Notice of Internet Availability to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?

Stockholder of Record: Shares Registered in Your Name

Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

Your most current proxy card or Internet or telephone proxy is the one that is counted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If your shares are held by your broker, bank or other agent, you should follow the instructions provided by your broker, bank or other agent.

When are stockholder proposals and director nominations due for next year’s annual meeting?

Stockholders who intend to have a proposal considered for inclusion in our proxy materials for presentation at our annual meeting of stockholders to be held in 2025 (the “2025 Annual Meeting”) pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must submit the proposal in writing to the Company’s Corporate Secretary at 15520 Highway 114, Justin, Texas 76247 by June 10, 2025 and must otherwise comply with Rule 14a-8.

If you wish to submit a proposal (including a director nomination) at the 2025 Annual Meeting, other than pursuant to Rule 14a-8, you must comply with the advance notice provisions of the Company’s Bylaws, which require, among other things, that you provide timely written notice of such proposal or nomination to the Corporate Secretary not earlier than the close of business on the 120^th day and not later than the close of business on the 90^th day prior to the anniversary of the preceding year’s annual meeting of stockholders. Therefore, our Corporate Secretary must receive notice of such a proposal or nomination for the 2025 Annual Meeting no earlier than the close of business on July 25, 2025 and no later than the close of business on August 24, 2025. The notice must contain the information required by our Bylaws. In the event that the date of the 2025 Annual Meeting is not within 30 days before or after November 22, 2025, then our Corporate Secretary must receive such written notice not earlier than the close of business on the 120^th day prior to the 2025 Annual Meeting and not later than the close of business on the later of the 90^th day prior to 2025 Annual Meeting or the closing of business on the tenth (10^th) day following the day on which public announcement of the date of such meeting is first made.

In addition to satisfying the foregoing requirements under our Bylaws, including the notice deadline set forth above and therein, to comply with the requirements set forth in Rule 14a-19 of the Exchange Act (the universal proxy rules), stockholders who intend to solicit proxies in support of director nominees, other than the Board’s nominees, must provide written notice to our Corporate Secretary that sets forth all the information required by Rule 14a-19. Such notice must be postmarked or transmitted electronically to the Company at the mailing address provided above no later than September 23, 2025.

What are “broker non-votes”?

As discussed above, when a beneficial owner of shares held in street name does not give voting instructions to his or her broker, bank or other securities intermediary holding his or her shares as to how to vote on matters deemed to be “non-routine” under NYSE rules, the broker, bank or other such agent cannot vote the shares. These un-voted shares are counted as “broker non-votes.” Proposals 1, 2, 3, 4, 5, 7, 8 and 9 are considered to be “non-routine” under NYSE rules and we therefore expect broker non-votes to exist in connection with those proposals. Proposals 6 and 10 are each a routine vote and therefore we do not expect any broker non-votes for Proposals 6 and 10.

As a reminder, if you are a beneficial owner of shares held in street name, in order to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the materials you receive from your broker, bank or other agent.

How many votes are needed to approve each proposal?

The following table summarizes the minimum vote needed to approve each proposal and the effect of abstentions and broker non-votes.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the voting power of the outstanding shares entitled to vote are present at the meeting in person or represented by proxy. On the Record Date, there were 85,626,374 shares outstanding and entitled to vote. Thus, the holders of 42,813,188 shares must be present in person or represented by proxy at the meeting to have a quorum.

Your shares will be counted toward the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you attend the virtual meeting. Abstentions and broker non-votes will be counted toward the quorum requirement. If there is no quorum, either the chairperson of the meeting or the holders of a majority of shares present at the meeting or represented by proxy may adjourn the meeting to another date.

How can I find out the results of the voting at the Annual Meeting?

Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.

What proxy materials are available on the Internet?

The proxy statement and Canoo’s 2023 annual report are available, or will be made available when published, at www.proxyvote.com.

PROPOSAL 1

 

ELECTION OF DIRECTORS

Canoo Inc.’s Board of Directors is divided into three classes, and each class has a three-year term. Vacancies on the Board may be filled only with persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified.

The Board presently has eight members. There are three directors in the class whose term of office expires at the Annual Meeting. Each of the nominees listed below is currently a director of the Company. If elected at the Annual Meeting, each of these nominees would serve until the 2027 annual meeting and until his or her successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation or removal.

Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on election of directors. Accordingly, the three nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the three nominees named below. If any nominee becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted for the election of a substitute nominee proposed by Canoo Inc. Each person nominated for election has agreed to serve if elected. The Company’s management has no reason to believe that any nominee will be unable to serve.

It is the Company’s policy to encourage directors and nominees for director to attend the annual meeting. Last year, 100% of our directors and nominees for director attended the annual meeting.

Information About Board Nominees

The Nominating and Corporate Governance Committee seeks to assemble a board that, as a whole, possesses the appropriate balance of professional and industry knowledge, financial expertise and high-level management experience necessary to oversee and direct the Company’s business. To that end, the Nominating and Corporate Governance Committee identifies and evaluates nominees in the broader context of the Board’s overall composition, with the goal of recruiting members who complement and strengthen the skills of other members and who also exhibit integrity, collegiality, sound business judgment and other qualities that the Nominating and Corporate Governance Committee views as critical to effective functioning of the Board. Among the factors that are considered, the Nominating and Corporate Governance Committee weighs whether nominees to the Board provide the integrity, experience, knowledge, skills, judgment, and level of commitment appropriate for the Company. To provide a mix of experience and perspective on the Board, the Nominating and Corporate Governance Committee also takes into account geographic, gender, age, racial and ethnic diversity to promote a Board that offers a wide breadth of perspectives and that can be both reflective of and responsive to the diverse makeup of the Company’s employees, customers and partners.

The following is a brief biography of each nominee for director and each director whose term will continue after the Annual Meeting. The biographies include information, as of the date of this Proxy Statement, regarding the specific and particular experience, qualifications, attributes or skills of each director or nominee that led the Nominating and Corporate Governance Committee to recommend that person as a nominee for continued service on the Board.

Nominees for Election for a Three-Year Term Expiring at the 2027 Annual Meeting

Debra von Storch. Ms. von Storch, age 64, has served as a member of the Board since January 2021. From 2020 through 2022, Ms. von Storch served as a director of CSW Industrials (NASDAQ: CSWI), an industrial products and specialty chemicals company. Since June 2021, Ms. von Storch has served as a board member of the NACD North Texas chapter. From 1982 to July 2020, Ms. von Storch served in various roles including Partner and Southwest Region Growth Markets Leader at Ernst & Young LLP, a multinational professional services firm. Ms. von Storch holds a Bachelor of Business Administration in Finance and Accounting from the University of North Texas.

Ms. von Storch is qualified to serve on the Board based on her extensive leadership experience, information security and risk management expertise, and strong strategic and financial acumen, having served as a partner at a leading global accounting and advisory firm. Ms. von Storch also brings to her role experience successfully advising a broad range of high-growth enterprises across all stages of a company’s lifecycle, positioning her well to advise and support the execution of the Company’s growth strategy and capital allocation plans.

James Chen. Mr. Chen, age 58, is currently a shareholder at the law firm of Babst, Calland, Clements and Zomnir, P.C. where he leads the firm’s Transportation Technology & Energy practice. From 2018 to 2023, Mr. Chen served as Vice President of Public Policy & Chief Regulatory Counsel for Rivian Automotive, Inc. From 2010 to 2016, Mr. Chen served as Director of Public Policy & Associate General Counsel and subsequently as Vice President of Regulatory Affairs & Deputy General Counsel for Tesla, Inc. Mr. Chen transitioned to the alternative energy and transportation space from nearly two decades as a prominent Washington, D.C. attorney – first as a partner in the environmental practice at Hogan Lovells LLP and later as a partner at Crowell & Moring LLP where he was the co-chair of the firm’s Product Risk Management Group. From 1991 to 1996, Mr. Chen served as an attorney for the U.S. Environmental Protection Agency’s Office of Enforcement. Mr. Chen is a graduate of Case Western Reserve University School of Law and has a bachelor’s degree in psychology from the State University of New York at Buffalo.

Mr. Chen is qualified to serve on the Board based on his business, legal and regulatory experience as an executive of publicly listed companies and partner at prominent law firms.

Foster Chiang. Mr. Chiang, age 41, has served as a member of the Board since December 2020, and prior to this, served as a director of Legacy Canoo from December 2017 to December 2020. From May 2016 to August 2020, Mr. Chiang served as the Vice Chairman of TPK Holding Co. Ltd., a leading touch solution provider listed on the Taiwan Stock Exchange (TWSE 3673), and as its Director of Business Strategy and Development from March 2013 to April 2016. Mr. Chiang has served as a director of TES Touch Embedded Solutions (Xiamen) Co., Ltd. (SHE 003019), a leading company in interactive monitor and computer industry, since March 2013, and as a member of the Board of Trustees of the Taft School, a private college-preparatory school, since September 2017. Mr. Chiang holds a Bachelor of Science in Economics — Finance and Accounting, a Bachelor of Science in International Studies, a Master of Arts in International Studies and a Master of Business Administration, all from The Wharton School of the University of Pennsylvania.

Mr. Chiang is qualified to serve on the Board based on his business experience as a vice chairman of a publicly-listed company, his investing experience and his long-standing relationship with us.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE IN FAVOR OF EACH NAMED NOMINEE.

Directors Continuing in Office Until the 2025 Annual Meeting

Thomas Dattilo. Mr. Dattilo, age 73, has served as a member of the Board since December 2020. Mr. Dattilo is an advisor to various private investment firms. He served as Chairman and Senior Advisor to Portfolio Group, a privately held provider of outsourced financial services to automobile dealerships specializing in aftermarket extended warranty and vehicle service contract programs, from 2013 to 2016, and as senior advisor to Cerberus Operations and Advisory Company, LLC, from 2007 to 2009. Previously, Mr. Dattilo held executive roles at a number of automotive industry companies, including Chief Executive Officer of Viper Motor Car Company, a Chrysler company, Chairman, President and Chief Executive Officer of Cooper Tire & Rubber Company, and various senior positions with Dana Corporation. Since 2001, Mr. Dattilo has served as a director of L3 Harris Technologies, Inc. (NYSE: LHX) or a predecessor company of L3 Harris Technologies, Inc., a technology company, defense contractor and information technology services provider and served as the Chairman of Harris Corporation, a predecessor company of L3 Harris Technologies, Inc. from 2012 to 2014. Since 2010, Mr. Dattilo has also served as a director of Haworth Inc., a privately held, family-owned office furniture manufacturer, and previously served as a director of Solera Holdings, Inc. from 2013 to 2016, Alberto Culver Company from 2006 to 2011, and Cooper Tire & Rubber Company from 1999 to 2006.

Mr. Dattilo is qualified to serve on the Board based on his experience as a director to private and public companies and his experience in the automotive industry.

Arthur Kingsbury. Mr. Kingsbury, age 76, has served as a member of the Board since March 2021. Mr. Kingsbury has been a private investor since 1996. Mr. Kingsbury has nearly five decades of business, finance and corporate governance experience including financial, senior executive and director positions at companies engaged in newspaper publishing, radio broadcasting, database publishing, cable television, cellular telephone communications, and software and services. Specific positions include President and Chief Operating Officer of VNU-USA, Vice Chairman and Chief Operating Officer of BPI Communications, and Executive Vice President and Chief Financial Officer of Affiliated Publications, Inc. Mr. Kingsbury has served on the Boards of six public companies, including Solera Holdings, Dolan Media Co., Remark Holdings, Inc. (NASDAQ: MARK), NetRatings, Inc., Affiliated Publications, Inc. and McCaw Cellular Communications, Inc. Mr. Kingsbury holds a Bachelor of Science in Business Administration in Accounting from Babson College.

Mr. Kingsbury is qualified to serve on the Board based on his experience as a director to numerous private and public companies, including committee service on audit, compensation, governance and special committees of independent directors, his extensive experience in finance and accounting matters, and his management experience and educational background.

Claudia Romo Edelman (Gonzales Romo). Ms. Romo Edelman, age 53, has served as a member of the Board since March 2021. Ms. Romo Edelman is a social entrepreneur, a catalyst for change and a global mobilization expert with more than 25 years of experience leading marketing and advocacy for global organizations including the United Nations, UNICEF, the Global Fund to Fight AIDS, TB and Malaria, the United Nations High Commissioner for Refugees (UNHCR), and the World Economic Forum. Since 2017, Ms. Romo Edelman has served as the Founder and CEO of the We Are All Human Foundation, a New York-based global non-profit organization devoted to advancing the agenda of diversity, inclusion, and equity, focused on unifying the U.S. Hispanic community and promoting sustainability and purpose-driven activities. From 2014 to 2017, Ms. Romo Edelman served as the Chief of Public Advocacy for the United Nations Children’s Fund (UNICEF). Due to her expertise, Ms. Romo Edelman was seconded several times to various organizations to launch global mobilization campaigns. From May 2016 to January 2017, she was seconded to the Executive Office of the Secretary General of the United Nations to lead communications for the Special Adviser on the 2030 Agenda for Sustainable Development and Climate Change. Ms. Romo Edelman served as a Special Advisor to the United Nations on International Migration from January 2018 to June 2018 and from April 2017 to March 2018, Ms. Romo Edelman served as a Special Advisor to the United Nations Children’s Fund (UNICEF). Ms. Romo Edelman has also held positions as Head of Marketing at The Global Fund to fight AIDS, TB and Malaria, and as the head of Public Relations at the World Economic Forum. Ms. Romo Edelman holds a Degree in Communication from the Universidad Intercontinental and a Masters of Political Communications from the London School of Economics.

Ms. Romo Edelman is part of the Board of the American Latino Museum; the Hispanic Society of America; and KIND (Kids in Need of Defense). Ms. Romo is the Editor-at-large Thrive Latina, part of Arianna Huffington’s Thrive Global platform. She is a frequent columnist and publishes articles for various media organizations including The Guardian, Ad Age, Ad Week, Al Dia and Forbes.

Ms. Romo Edelman is the recipient of numerous awards, including in 2019-2020: People Magazine’s 25 Most Influential Latinas, ALPFA’s 50 Most Powerful Latinas 2019 and 2020, Ellis Island Medal of Honor 2019, Citizen’s Union Gotham Greats 2020, Hispanic PR Association Bravo Awards- 2019 President’s Award, Multicultural Leadership Award Jesse Jackson’s Rainbow PUSH Coalition, Humanitarian Award (Joseph L.Unanue Latino Institute), Latina Women of the Year 2020 of Solo Mujeres Magazine.

Ms. Romo Edelman is qualified to serve on the Board based on her deep expertise in marketing, her management experience, and her track record in creating growth and leading successful movements for societal change and in high-profile global roles.

Directors Continuing in Office Until the 2026 Annual Meeting

Tony Aquila. Mr. Aquila, age 59, has served as the Chief Executive Officer of the Company since April 2021, and as the Executive Chair of the Board since December 2020. Prior to this, Mr. Aquila served as Executive Chairman of the board of directors of Legacy Canoo from October 2020 to December 2020. Mr. Aquila also serves as a member of the Arkansas Council on Future Mobility since February 2022. In June 2019, Mr. Aquila founded AFV Partners, an affirmative low-leverage capital vehicle that invests in long-term mission critical software, data and technology businesses and serves as its Chairman and CEO since its founding. In 2005, Mr. Aquila founded Solera Holdings Inc., and led it as Chairman and CEO to a $1 billion initial public offering in 2007, and in the following years sourced and executed over 50 acquisitions significantly expanding Solera’s total addressable market. Mr. Aquila oversaw Solera’s $6.5 billion transaction from a public-to-private business in 2016. During his tenure, Mr. Aquila established Solera as a global technology company that provides software and data to global insurance companies, global OEMs and maintenance, repair and overhaul networks. Mr. Aquila currently serves as a member of the board of directors and chair of the compensation committee of WM Technology, Inc. (NASDAQ: MAPS), a leading technology and software infrastructure provider to the cannabis industry, since June 2021. Furthermore, Mr. Aquila currently serves as the Chairman for Aircraft Performance Group, LLC, a global provider of mission critical flight operations software, since January 2020, and director of RocketRoute Limited, global aviation services company, since March 2020 and APG Avionics LLC, an aviation data and software company for the general aviation market since September 2020. Mr. Aquila served as a member of the board of directors of The Lost Explorer Mezcal Company (“Lost Explorer”), a sustainable producer and distributor of handcrafted Mezcal, from May 2021 to April 2023, and continues to be a lead investor of Lost Explorer. From November 2018 to July 2020, Mr. Aquila served as the Global Chairman of Sportradar Group AG (NASDAQ: SRAD), a sports data and content company.

Mr. Aquila is qualified to serve on the Board based on his significant business experience as a founder, inventor, chief executive officer and director of a publicly-listed company and his investing experience. As Chief Executive Officer, Mr. Aquila has direct responsibility for our strategy and operations.

Deborah Diaz. Ms. Diaz, age 66, has served as Chief Executive Officer of Catalyst ADV, a technology and strategic growth advisory firm since 2016. Previously, Ms. Diaz served as Chief Technology Officer and Deputy Chief Information Officer at the National Aeronautics and Space Administration (NASA) responsible for global system infrastructure, investment oversight, risk management, data management, innovation and technology infusion from 2009 to 2016. Since 2020, Ms. Diaz has served as an independent board director, member of the Audit, Nominating and Governance and Enterprise Risk Management committees of Primis Financial Corp. Ms. Diaz has also served as an independent board director, member of the Audit committee, and Chair of the Nominating and Governance committee of Archer Aviation Inc. since 2021. Since 2023, Ms. Diaz has served as an independent board director of ZeroAvia. Ms. Diaz is a graduate of the Sloan School of Management at Massachusetts Institute of Technology and she received an MBA in international business at Colorado State University.

Ms. Diaz is qualified to serve on the Board based on her experience as a director to private and public companies, including committee service on audit and governance committees, her extensive leadership experience in the public sector, and her management experience and educational background.

INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

INDEPENDENCE OF THE BOARD OF DIRECTORS

As required under the Nasdaq Capital Market (“Nasdaq”) listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board. Our Board consults with our counsel to ensure that its determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.

Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and us, our senior management and our independent auditors, our Board has affirmatively determined that each of the directors on the Board other than Tony Aquila are independent directors within the meaning of the applicable Nasdaq listing standards. In making this determination, our Board found that none of these directors had a material or other disqualifying relationship with our company.

In making those independence determinations, our Board took into account certain relationships and transactions that occurred in the ordinary course of business between us and entities with which some of our directors are or have been affiliated, including the relationships and transactions described in “Transactions with Related Persons and Indemnification,” and all other facts and circumstances that the Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each director.

BOARD LEADERSHIP STRUCTURE

The Company’s Board of Directors is currently chaired by Tony Aquila, who also serves as the Company’s Chief Executive Officer. The Board has also appointed Thomas Dattilo as lead independent director.

The Company believes that combining the positions of Chief Executive Officer and Executive Chairman of the Board helps to ensure that the Board and management act with a common purpose. The Company believes that combining the positions of Chief Executive Officer and Board chairman provides a single, clear chain of command to execute the Company’s strategic initiatives and business plans. In addition, the Company believes that a combined Chief Executive Officer/Board Chairman is better positioned to act as a bridge between management and the Board, facilitating the regular flow of information, particularly in this vital growth stage for the Company.

The Board appointed Thomas Dattilo as the lead independent director to help reinforce the independence of the Board as a whole. The position of lead independent director has been structured to serve as an effective balance to a combined Chief Executive Officer/Board chairman: the lead independent director is empowered to, among other duties and responsibilities, preside over Board meetings in the absence of the Board chairman, act as liaison between the chairman and the independent directors, preside over and establish the agendas for meetings of the independent directors, and consult with the chairman in planning and setting agendas for regular Board meetings. As a result, the Company believes that the lead independent director can help ensure the effective independent functioning of the Board in its oversight responsibilities. In addition, the Company believes that the lead independent director is better positioned to build a consensus among directors and to serve as a conduit between the other independent directors and the Chief Executive Officer, for example, by facilitating the inclusion on meeting agendas of matters of concern to the independent directors.

ROLE OF THE BOARD IN RISK OVERSIGHT

One of the key functions of the Board is informed oversight of our risk management process. The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole, as well as through various standing committees of the Board that address risks inherent in their respective areas of oversight. In particular, the Board is responsible for monitoring and assessing strategic risk exposure and the Audit Committee has the responsibility to consider and discuss major financial risk exposures and the steps our management will take to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements. The Compensation Committee also assesses and monitors whether compensation plans, policies and programs comply with applicable legal and regulatory requirements.

MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors met five times during the last fiscal year. Each member of the Board of Directors attended 75% or more of the aggregate number of meetings of the Board and of the committees on which he or she served, held during the portion of the last fiscal year for which he or she was a director or committee member.

INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORS

The Board has three committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table provides current membership and meeting information for fiscal 2023 for each of the Board committees:

Board Composition For Fiscal Year Ended December 31, 2023

Board Composition (As of October 3, 2024)

Below is a description of each committee of the Board of Directors.

Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. The Board of Directors has determined that each member of each committee meets the applicable Nasdaq rules and regulations regarding “independence” and each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to the Company.

Audit Committee

Our Audit Committee currently consists of Arthur Kingsbury, Thomas Dattilo and Debra von Storch. The Board has determined that each of the members of the Audit Committee satisfies the independence requirements of Nasdaq and

Rule 10A-3 under the Exchange Act. Each member of the Audit Committee can read and understand fundamental financial statements in accordance with Nasdaq Audit Committee requirements. In arriving at this determination, the Board examined each Audit Committee member’s scope of experience and the nature of their prior and/or current employment.

Arthur Kingsbury serves as the chair of the Audit Committee. The Board determined that Arthur Kingsbury qualifies as an audit committee financial expert within the meaning of SEC regulations and meets the financial sophistication requirements of the Nasdaq Listing Rules. In making this determination, the Board considered Arthur Kingsbury’s formal education and previous experience in financial roles. Our independent registered public accounting firm and management each periodically meet privately with our Audit Committee.

Our Audit Committee is actively involved in the review and oversight of the Company’s financials, the oversight of the Company’s internal controls and accounting functions, among the committee’s other responsibilities.

The functions of this committee include, among other things:

The composition and function of the Audit Committee comply with all applicable requirements of the Sarbanes-Oxley Act, SEC rules and regulations and Nasdaq Listing Rules. The Board has adopted a written Audit Committee charter that is available to stockholders on the Corporate Governance section of the Company’s website at investors.canoo.com.

Report of the Audit Committee of the Board of Directors

The Audit Committee reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2023 with management of the Company. The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Mr. Arthur Kingsbury, Chair

Mr. Thomas Dattilo

Ms. Debra von Storch

Compensation Committee

Our Compensation Committee currently consists of Debra von Storch and Thomas Dattilo. Debra von Storch serves as the chair of the Compensation Committee. The Board has determined that each of the members of the Compensation Committee is a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act, and that each satisfies the independence requirements of Rule 10C-1 of the Exchange Act and of Nasdaq. Our Compensation Committee is actively involved in the Company’s reviewing and defining the Company’s approach to compensation, including overall and executive compensation.

The functions of the committee include, among other things:

The composition and function of the Compensation Committee comply with all applicable SEC rules and regulations and Nasdaq Listing Rules. The Board has adopted a written Compensation Committee charter that is available to stockholders on the Corporate Governance section of the Company’s website at investors.canoo.com.

Compensation Consultants

The Compensation Committee has the authority under its charter to retain outside consultants or advisors, as it deems necessary or advisable. In accordance with this authority, the Compensation Committee has engaged the services of Mercer (US) Inc. (“Mercer”) as its independent outside compensation consultant through the Fall of 2023 and Compensia, Inc. (“Compensia”) as its independent outside compensation consultant through the remainder of 2023. Neither Mercer, Compensia nor any of their respective affiliates maintain any other direct or indirect business relationships with the Company or any of our subsidiaries. The Compensation Committee evaluated whether any work provided by Mercer and Compensia raised any conflict of interest for services performed during 2023 and determined that it did not.

During 2023, Mercer’s and Compensia’s services were each limited to advising on executive and director compensation, peer group review and revisions, employee equity plans, and other broad-based employee compensation strategies that do not discriminate in scope, terms, or operation, in favor of our executive officers or directors, and that are available generally to all salaried employees.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee currently consists of Thomas Dattilo. Thomas Dattilo serves as the chair of the Nominating and Corporate Governance Committee. The Board has determined that Mr. Dattilo satisfies the independence requirements of Nasdaq.

Our Nominating and Corporate Governance Committee is actively involved in the Company’s governance and operations.

The functions of this committee include, among other things:

The composition and function of the Nominating and Corporate Governance Committee comply with all applicable SEC rules and regulations and Nasdaq Listing Rules. The Board has adopted a written Nominating and Corporate Governance Committee charter that is available to stockholders on the Corporate Governance section of the Company’s website at www.investors.canoo.com.

The Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, being over 21 years of age, having a strong understanding of the industry of the Company and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, having the ability to exercise sound business judgment, having experience as a board member or executive officer of another publicly held company, and having a diverse personal background, perspective and experience. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee considers diversity (including diversity of gender, ethnic background and country of origin), age, skills and such other factors as it deems appropriate, given the current needs of the Board and the Company, to maintain a balance of knowledge, experience and capability. The Nominating and Corporate Governance Committee appreciates the value of thoughtful Board refreshment, and regularly identifies and considers qualities, skills and other director attributes that would enhance the composition of the Board. In the case of incumbent directors whose terms of office are set to expire, the Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. The Committee also takes into account the results of the Board’s self-evaluation and assessments, conducted periodically on a group, committee and individual basis. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary.

In addition, the Nominating and Corporate Governance Committee also evaluates the other company boards and board committees on which a new or incumbent director may sit. The Nominating and Corporate Governance Committee recognizes that a director’s ability to fulfill his or her responsibilities as a director can be impaired if he or she serves on a high number of other boards or board committees. Service on boards and board committees of other companies must be consistent with the Company’s conflict-of-interest policies. Non-employee directors are generally expected to serve on no more than four (4) other public company boards and on no more than three (3) other public company audit committees, without the approval of the Board. In addition, non-employee directors who are executive officers of other public companies should generally serve on no more than one other public company board, without the approval of the Board.

The Nominating and Corporate Governance Committee uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote.

The Nominating and Corporate Governance Committee will consider director candidates recommended by the Company’s stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates a candidate for nomination to the Board based on whether or not the candidate was recommended by a Company stockholder. Any recommendation submitted to the Company should be in writing and should include any supporting material the stockholder considers appropriate in support of that recommendation, but must include information that would be required under the rules of the SEC to be included in a proxy statement soliciting proxies for the election of such candidate and a written consent of the candidate to serve as one of our directors if elected and must otherwise comply with the requirements under our Bylaws for stockholders to recommend director nominees. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board may do so by delivering written notice to the attention of the Corporate Secretary at the following address: 15520 Highway 114,

Justin, Texas 76247, not later than the close of business on the 90th day, nor less than the close of business on the 120th day, prior to the anniversary date of the preceding year’s annual meeting of stockholders. In the event that the date of the annual meeting is not within 30 days before or after the anniversary date of the prior year’s annual meeting, then our Corporate Secretary must receive such written notice not earlier than the close of business on the 120^th day prior to such annual meeting and not later than the close of business on the later of the 90^th day prior to such annual meeting or the closing of business on the tenth (10^th) day following the day on which public announcement of the date of such meeting is first made. In addition to satisfying the foregoing requirements under our Bylaws, including the notice deadline set forth above and therein, to comply with the requirements set forth in Rule 14a-19 of the Exchange Act (the universal proxy rules), stockholders who intend to solicit proxies in support of director nominees, other than the Board’s nominees, must provide written notice to our Corporate Secretary that sets forth all the information required by Rule 14a-19. Such notice must be postmarked or transmitted electronically to the Company at the mailing address provided above no later than 60 calendar days prior to the anniversary of the preceding year’s annual meeting of stockholders.

All recommendations for director nominations received by the Corporate Secretary that satisfy our Bylaws’ requirements relating to such director nominations will be presented to the Nominating and Corporate Governance Committee for its consideration. Further, each potential candidate must provide a list of references and agree (i) to be interviewed by members of the Nominating and Corporate Governance Committee or other directors in the discretion of the Nominating and Corporate Governance Committee, and (ii) to a background check or other review of the qualifications of a proposed nominee by the Company. Prior to nomination of any potential candidate by the Board, each member of the Board will have an opportunity to meet with the candidate. Upon request, any candidate nominated will agree in writing to comply with the Company’s Corporate Governance Guidelines and all other policies and procedures of the Company applicable to the Board.

BOARD DIVERSITY

Members of our Board self-identify as set forth in the table below:

STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS

Any stockholder or any other interested party who desires to communicate with our Board, or any specified individual director, may do so by directing such correspondence to the attention of the Corporate Secretary at our offices at 15520 Highway 114, Justin, Texas 76247. All communications will be compiled by the Secretary of the Company and submitted to the Board or the individual directors on a periodic basis, as appropriate.

CODE OF CONDUCT

The Board has adopted a Code of Conduct (the “Code of Conduct”), applicable to all of the Company’s employees, executive officers and directors. The Code of Conduct is available on the Corporate Governance section of the Company’s website at investors.canoo.com. The Nominating and Corporate Governance Committee of the Board is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for

employees, executive officers and directors. If the Company makes any amendments to the Code of Conduct, or grants any waivers of its requirements to directors and executive officers, the Company will promptly disclose the amendment or waiver on its website.

CORPORATE GOVERNANCE GUIDELINES

In December 2020, the Board documented the governance practices followed by the Company by adopting Corporate Governance Guidelines to assure that the Board will have the necessary authority and practices in place to review and evaluate the Company’s business operations as needed and to make decisions that are independent of the Company’s management. The guidelines are also intended to align the interests of directors and management with those of the Company’s stockholders. The Corporate Governance Guidelines set forth the practices the Board intends to follow with respect to board composition and selection including diversity, board meetings and involvement of senior management, Chief Executive Officer performance evaluation and succession planning, and board committees and compensation. The Corporate Governance Guidelines, as well as the charters for each committee of the Board, may be viewed on investor relations portion of our website at www.canoo.com.

EXECUTIVE OFFICERS

The following table sets forth information concerning our current directors and executive officers, including their ages as of October 3, 2024.

Greg Ethridge. Mr. Ethridge has served as the Company’s Chief Financial Officer since August 28, 2023. Mr. Ethridge served as a member of the Board beginning in December 2020 and as part of Mr. Ethridge’s appointment as Chief Financial Officer of the Company, Mr. Ethridge served as a member of the Board until December 31, 2023. Prior to this, Mr. Ethridge served as President, Chief Operating Officer, and a director of Hennessy Capital Investment Corp. V from January 2021 to December 2022 and President, Chief Operating Officer, and a director of Hennessy Capital Acquisition Corp. IV from February 2019 to December 2020. Mr. Ethridge also served as President, Chief Operating Officer, and director of Hennessy Capital Investment Corp. VI (NASDAQ: HCVI) (“HCVI”) from October 2021 to August 2023, resigning as President and Chief Operating Officer in connection with his appointment as the Company’s Chief Financial Officer and continues to serve as a member of HCVI’s board of directors. He has also served as Chairman of Motorsports Aftermarket Group, a designer, manufacturer, marketer and distributor of aftermarket parts, apparel and accessories for the motorcycle and power sports industry since June 2019. He previously served as President of Matlin & Partners Acquisition Corporation from January 2017 to November 2018, at which time it merged with U.S. Well Services, LLC to become U.S. Well Services, Inc., a growth and technology-oriented oilfield service company focused exclusively on hydraulic fracturing which was subsequently sold to ProFrac Holding Corp. (NASDAQ: ACDC) in November 2022. He also served as Senior Partner of MatlinPatterson Global Advisers LLC, or MatlinPatterson, from January 2009 to December 2019. Mr. Ethridge holds a BBA and a Masters in Accounting from The University of Texas at Austin.

Ramesh Murthy. Mr. Murthy has served as SVP Finance and Chief Accounting Officer since March 2021 and Interim Chief Financial Officer from December 2021 through January 25, 2023. Mr. Murthy first joined Canoo in March 2021 serving as the Company’s Chief Accounting Officer and then, from July 2021, as SVP, Finance and Chief Accounting Officer. Mr. Murthy brings to his position more than 20 years of experience in finance and public accounting serving the automotive technology, software, telecom and advanced manufacturing industries. Prior to joining the Company, Mr. Murthy was a member of the Financial Accounting Advisory Services group of Ernst & Young LLP, serving as Managing Director from July 2019 until March 2021, and as Senior Manager from November 2015 to July 2019. Mr. Murthy also enjoyed a long career in the Audit Practice of Deloitte & Touche LLP from 2004 to 2015. Mr. Murthy holds a Master of Business Administration, Finance from Texas A&M International University and a Bachelor of Commerce, Accounting from University of Madras, India.

Hector Ruiz. Mr. Ruiz has served as the General Counsel and Corporate Secretary of the Company since April 2021, and prior to this, served as our Vice President - Global Strategy, Tax Counsel & Treasury from January 2021 to April 2021. Mr. Ruiz has an extensive background in legal and tax matters. From January 2012 to January 2021, Mr. Ruiz served in a variety of senior tax and tax planning roles at Solera Holdings, Inc., including as Vice President of Global Tax from November 2015 to January 2021, responsible for all areas of taxation, including mergers and acquisitions transactions, tax planning, controversy, risk management, financial reporting and compliance. Prior to Solera, Mr. Ruiz worked in tax and accounting related roles at Caris Life Sciences and PricewaterhouseCoopers LLP. Mr. Ruiz has a Bachelor of Business Administration from Southern Methodist University and a Juris Doctor degree from Baylor University School of Law.

Family Relationships

There are no family relationships among our directors or executive officers.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information known to us regarding the beneficial ownership of the Common Stock as of October 3, 2024:

Beneficial ownership is determined according to the rules of the SEC, which generally provides that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.

The beneficial ownership percentages set forth in the table below are based on 86,776,374 shares of Common Stock issued and outstanding as of October 3, 2024 and do not take into account the issuance of any shares of Common Stock upon the exercise of warrants to purchase up to 40,460,264 shares of Common Stock that remain outstanding.

Common stock subject to options or restricted stock units (“RSUs”) that are currently exercisable or exercisable or will vest within 60 days of October 3, 2024 are deemed to be outstanding and beneficially owned by the person holding the options or RSUs. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.

Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the persons and entities named in the table have sole voting and investment power with respect to their beneficially owned Common Stock.

Partners LLC, an Oklahoma limited liability company (“I-40 OKC”). AFV Management Advisors LLC, a Delaware limited liability company (“AFV”) is the sole manager and controlling member of AFV-4, AFV-7, AFV-7/A, AFV-10, AFV-10/A, AFV-10/B, AFV-10/C and I-40 OKC. Mr. Aquila is the managing member of AFV, which exercises ultimate voting and investment power with respect to the shares held by AFV-4, AFV-7, AFV-7/A, AFV-10, AFV-10/A, AFV-10/B, AFV-10/C and I-40 OKC. Mr. Aquila may be deemed to hold voting and dispositive power with respect to the securities held indirectly by AFV, and held of record by AFV-4, AFV-7, AFV-7/A, AFV-10, AFV-10/A, AFV-10/B, AFV-10/C and I-40 OKC. Excludes shares of Common Stock that could be obtained by (x) AFV Partners SPV-11 LLC, a Delaware limited liability company (“AFV-11”), upon conversion of its 5,000 Series C Preferred Stock (as defined below), (y) AFV Partners SPV-11/A LLC, a Delaware limited liability company (“AFV-11/A”), upon conversion of its 10,000 Series C Preferred Stock and (z) AFV Partners SPV-11/B LLC, a Delaware limited liability company (“AFV-11/B”), upon conversion of its 1,500 Series C Preferred Stock.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the year ended December 31, 2023, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with.

EXECUTION COMPENSATION

The following section provides compensation information pursuant to the scaled disclosure rules applicable to “smaller reporting companies” under the rules of the SEC and may contain statements regarding future individual and company performance targets and goals. These targets and goals should not be understood to be statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts. We are required to provide a Summary Compensation Table and an Outstanding Equity Awards at Fiscal Year-End Table, as well as limited narrative disclosures regarding executive compensation for our last completed fiscal year.

Please note that any numbers set forth in this “Executive Compensation” section referencing or related to shares of Common Stock, RSUs and PSUs (including, but not limited to, share price hurdles for PSUs) are not adjusted to account for the March 2024 Reverse Stock Split (as defined below).

Our named executive officers for the year ended December 31, 2023, consisting of our principal executive officer, our two other most highly compensated executive officers as of December 31, 2023 who were serving as executive officers as of such date, and former executive officer were:

Mr. Aquila has been a substantial investor in Canoo since August 2020 through his sustainable investment fund, AFV Partners. Based on his extensive experience in growing companies and achieving significantly positive shareholder value outcomes, Mr. Aquila was appointed Executive Chair of the Board in November 2020. In April 2021, the Board determined that Canoo's business and shareholder success would be best served by placing Tony Aquila in the full-time CEO role for the company.

Ms. Sheeran joined Canoo originally as a Board member in December 2020. Her extensive experience in achieving meaningful business results with key government and business partners was evident from her earliest days. Given her key strategic importance and extensive efforts in enabling Canoo in establishing key foundations for manufacturing and R&D excellence, Ms. Sheeran transitioned from being a non-employee member of the Board to President of the Company and Board member on July 26, 2021.

Mr. Ethridge joined Canoo originally as a Board member in December 2020 and was appointed Chief Financial Officer on August 28, 2023. Mr. Ethridge has over 20 years of experience in capital markets and corporate finance.

Mr. Manget served as the Company's Chief Financial Officer from January 26, 2023 to August 26, 2023.

Executive Compensation Philosophy

Our Compensation Committee is responsible for reviewing, overseeing, and approving Canoo’s overall compensation strategy. Canoo continues to invest heavily in attracting, retaining and motivating an experienced and highly driven leadership team. Our current executive compensation philosophy is focused on a two-pronged approach:

In keeping with our compensation philosophy, Canoo makes targeted investments in key talent and aligns senior executives with shareholder growth objectives through equity awards tied to Canoo’s transformational mission. When Canoo achieves its mission, it will create a win-win opportunity for both shareholders and the Canoo leadership team.

Compensation Elements

Outlined below are descriptions of the compensation elements provided to our named executive officers.

Base Salary

Base salary is set at a level that is intended to reflect the executive’s duties, authorities, contributions, prior experience, and performance. In keeping with our objective to limit cash outlays, no increases were made to the base salaries of our named executive officers in 2023.

Bonus

Mr. Aquila is not eligible to receive an annual bonus award. Pursuant to the offers of employment for Ms. Sheeran, Mr. Manget and Mr. Ethridge, each is eligible to receive an annual target bonus opportunity of 100% of base salary, subject to a maximum bonus opportunity of 200% of base salary. No bonuses were paid to our name executive officers in 2023, which reflects our objectives of responsibly managing cash outlays and aligning pay with shareholder outcomes.

Stock Awards

The Compensation Committee is focused on aligning the majority of our named executive officers’ compensation directly with shareholder value through equity awards. These awards include performance-based restricted stock units (“PSUs”) that vest based on the achievement of operational performance milestones for Mr. Aquila, PSUs that vest based on stock price hurdles for Mr. Aquila, and restricted stock units that vest over time (“RSUs”) for all of our named executive officers. We believe these awards advance our business strategy as follows:

The equity awards granted to named executive officers in 2023 and in prior years reflect our objectives of supporting long-term business success and aligning pay with shareholder outcomes.

Benefits and Perquisites

We provide benefits to our named executive officers on the same basis as provided to all of our employees, including health, dental and vision insurance; life insurance; accidental death and dismemberment insurance; disability insurance; and a tax-qualified Section 401(k) plan for which no match by us is provided. We do not maintain any executive-specific benefit or executive perquisite programs.

Retirement Benefits

We provide a tax-qualified Section 401(k) plan for all employees, including our named executive officers. We do not provide a match for participants’ elective contributions to the 401(k) plan, nor do we provide to employees, including our named executive officers, any other retirement benefits, including but not limited to tax-qualified defined benefit plans, supplemental executive retirement plans and nonqualified defined contribution plans.

Policies against Hedging/Pledging Shares

As part of our insider trading policy, all Company directors, officers, employees and certain designated independent contractors and consultants are prohibited from engaging in short sales of our securities, establishing margin

accounts, pledging our securities as collateral for a loan, trading in derivative securities, including buying or selling puts or calls on our securities, or otherwise engaging in any form of hedging or monetization transactions (such as prepaid variable forwards, equity swaps, collars and exchange funds) involving our securities.

Ownership Guidelines

We intend to adopt stock ownership guidelines that require all of our named executive officers and other members of our executive team to hold a minimum number of shares of our common stock while serving in their leadership positions.

2023 Summary Compensation Table

The following table sets forth information concerning the compensation of our named executive officers for the years ended December 31, 2023 and December 31, 2022.

Disclosure to Summary Compensation Table

For 2023, the compensation programs for our named executive officers consisted of base salary and incentive compensation delivered in the form of equity awards, which consisted of RSUs.

Base Salary

Mr. Aquila receives a limited base salary of $500,000, defined as part of his Executive Chair compensation package approved by the board of Legacy Canoo in November 2020 prior to the IPO (with no adjustment made upon his transition to the CEO role). During 2023, Ms. Sheeran received a base salary of $490,000. Upon his appointment to CFO on August 28, 2023, Mr. Ethridge received a base salary of $490,000. During his tenure as CFO from January 26, 2023 to August 25, 2023, Mr. Manget received a base salary of $490,000. We did not make any increases to the named executive officer base salaries in 2023.

Cash Bonus

We did not pay any cash bonuses to our named executive officers in 2023.

Stock Awards

Tony Aquila

On May 5, 2023, the Board granted Mr. Aquila an award of 6,884,682 RSUs. These awards vest on May 5, 2024, subject to continuous service.

Ken Manget

On July 6, 2023, the Board granted Mr. Manget 1,500,000 RSUs in connection with his appointment to CFO of the Company. Twenty-five percent of the RSUs will vest on March 15, 2024, and the remainder of the award will vest in equal increments each quarter thereafter on the fifteenth day of the month, with each vesting event subject to Mr. Manget's continuous service through each such date.

Greg Ethridge

On December 20, 2023, the Board granted Mr. Ethridge 1,500,000 RSUs in connection with his appointment to CFO of the Company. Twenty-five percent of the RSUs will vest on September 15, 2024, and the remainder of the award will vest in equal increments each quarter thereafter on the fifteenth day of the month, with each vesting event subject to Mr. Ethridge's continuous service through each such date.

Agreements with our Named Executive Officers and Potential Payments upon Termination of Employment or Change in Control

During 2023, we maintained agreements with Mr. Aquila, Ms. Sheeran, Mr. Manget, and Mr. Ethridge, each as summarized below.

Tony Aquila

In November 2020, Legacy Canoo entered into an agreement with Mr. Aquila (the “Aquila Agreement”), as may be amended from time to time, pursuant to which he serves as the Executive Chair of the Board. The term of the Aquila Agreement commenced on December 21, 2020 and will end on December 31, 2023, or, earlier, upon his voluntary resignation from our Board upon at least thirty days’ notice, his failure to be re-elected to the Board by our stockholders at the third annual stockholder meeting following the consummation of the Business Combination, or a vote of no-confidence by a majority of the Board. Mr. Aquila is paid a $500,000 annual fee in equal quarterly installments and is entitled to any benefits and perquisites generally available to members of our Board. He is reimbursed for business expenses, including air travel expenses for either, at our option, first class airfare or the business use of his private jet (at a fixed rate per hour, as set forth in the Aquila Agreement), executive housing on a tax grossed-up basis and business expenses associated with the office of the Executive Chair.

Since his appointment to CEO, Mr. Aquila has not receive additional cash compensation in connection with his role as CEO.

Josette Sheeran

In July 2021, Canoo Technologies entered into an agreement with Ms. Sheeran pursuant to which Ms. Sheeran serves as President of the Company (the “Sheeran Agreement”). The Sheeran Agreement has no specific term and provides that Ms. Sheeran’s employment is at-will. The Sheeran Agreement provides a base salary of $490,000, and she is eligible to participate in the benefits plans offered to similarly situated employees of the Company. Ms. Sheeran is also eligible to receive an annual bonus award of up to 100% of her annual salary, with the possibility of up to a two times multiplier, in either case upon successfully achieving performance goals outlined by the Company and remaining an employee in good standing through applicable milestone dates. In addition, pursuant to the Sheeran Agreement, the Company will covered 100% of Ms. Sheeran’s moving expenses and provided a relocation allowance of up to $150,000 in temporary housing and living expenses for six months. In the event Ms. Sheeran had terminated employment within twelve months of her moving date, she would have been required to reimburse the Company for the moving expenses and relocation allowance.

In the event that Ms. Sheeran is terminated by us without cause, the Sheeran Agreement provides that she will be eligible for twelve months of severance, continued healthcare benefits and continued vesting of any RSUs through the severance period.

The Sheeran Agreement provides Ms. Sheeran with a long term incentive award under the Company’s incentive plan, consisting of a grant of 1,468,429 RSUs. Twenty-five percent of the RSUs vested on August 15, 2022, and the remainder of the award will vest in equal increments each quarter thereafter on the fifteenth day of the month, subject to Ms. Sheeran’s continuous service through each such date. Any RSUs that remain unvested upon a termination of service will be forfeited.

Ms. Sheeran is subject to our standard confidential information and inventions assignment agreement, which includes a perpetual confidentiality covenant and a non-competition covenant that applies during the period of employment.

During 2023, Ms. Sheeran continued to serve as a member of the Company’s Board but did not receive any additional board compensation.

Ken Manget

In connection with his appointment as Chief Financial Officer of the Company, Mr. Manget entered into an offer of employment letter, dated as of January 26, 2023 (the “Manget Offer Letter”), with the Company. Pursuant to the Manget Offer Letter, Mr. Manget will be entitled to receive (a) an annual base salary of $490,000, (b) an annual target bonus opportunity of 100% of base salary, subject to a maximum bonus opportunity of 200% of base salary, (c) a relocation allowance of $150,000, which amount must be repaid by Mr. Manget in the event his employment with the Company or its subsidiaries terminates prior to the first anniversary of the date he relocates to the Dallas-Fort Worth metropolitan area in Texas, and (d) a time-based restricted stock unit award (the “Manget RSU Award”) equal to 1,500,000 shares of the Company’s common stock on the applicable grant date, which award will vest based on the Company’s standard time-vesting schedule. In the event of Mr. Manget’s termination by the Company or its subsidiaries without “cause”, he will be entitled to receive 12 months of (i) base salary, (ii) continued vesting of the RSU Award, and (iii) continued healthcare benefits.

Greg Ethridge

In connection with his appointment as Chief Financial Officer of the Company, Mr. Ethridge entered into an offer of employment letter, dated as of August 27, 2023 (the “Ethridge Offer Letter”), with the Company. Pursuant to the Ethridge Offer Letter, Mr. Ethridge will be entitled to receive (a) an annual base salary of $490,000, (b) an annual target bonus opportunity of 100% of base salary, subject to a maximum bonus opportunity of 200% of base salary, and (c) a time-based restricted stock unit award (the “RSU Award”) equal to 1,500,000 shares of the Company’s common stock on the applicable grant date, which award will vest based on the Company’s standard four-year time-vesting schedule. In the event of Mr. Ethridge’s termination by the Company or its subsidiaries without “cause” or if Mr. Ethridge leaves for “good reason” (each as defined under the Ethridge Offer Letter), he will be entitled to receive 12 months of (i) base salary, (ii) continued vesting of the RSU Award, and (iii) continued healthcare benefits.

Outstanding Equity Awards at 2023 Year End

The following table presents information regarding outstanding equity awards held by our named executive officers as of December 31, 2023.

Pay Versus Performance

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K (the “PvP Rules”), we are providing the following information about the relationship between the compensation actually paid to our principal executive officer (“PEO”) and our other named executive officers (“NEOs”) and certain aspects of our financial performance

Equity Award values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. For information on the calculation of “compensation actually paid” for 2021 and 2022, please see the “pay versus performance” disclosure in our 2023 definitive proxy statement.

Pay Versus Performance Relationship

“Compensation actually paid,” as calculated per SEC Item 402(v) of Regulation S-K, reflects cash compensation actually paid as well as changes to the fair values of equity awards during the years shown in the table based on year-end or vesting date stock prices, and various accounting valuation assumptions. Due to how CAP is calculated, the CAP as reported for each year does not reflect the actual amounts earned by our NEOs from their equity awards. CAP generally fluctuates annually due to the change in our stock price from year to year as well as varying levels of actual achievement of performance goals. See the ‘Item 11: Executive Compensation’ section for a description of how our compensation committee assesses the relationship between executive compensation and performance.

Below are graphs showing the relationship of “Compensation Actually Paid” to our PEO and non-PEO NEOs for our fiscal years 2021, 2022, and 2023 to (1) TSR of our common stock and (2) our net income.

 

 

2023 Director Compensation

The following table contains information concerning the compensation of our non-employee directors in fiscal year 2023.

Non-Employee Director Compensation Policy

Our policy is to reimburse directors for reasonable and necessary out-of-pocket expenses incurred in connection with attending Board and committee meetings or performing other services in their capacities as directors.

In March 2021, amended in November 2021 to, among other things, add an annual cash retainer for services in the role of lead independent direct, and subsequently amended in November 2023 to, among other things, provide that the annual equity award be payable on July 15th of every year with the number of RSUs to be determined by dividing the annual equity award dollar value by the 30-day VWAP through July 15th, rounded down to the nearest whole share, our Board approved the following cash and equity compensation for each of our current non-employee directors:

Upon joining the Board, each of our non-employee directors are also paid a cash payment of $20,000 to cover expenses for tax and legal services incurred in connection therewith.

The Board reviews director compensation periodically to ensure that director compensation remains competitive, such that we are able to recruit and retain qualified directors. We believe our compensation program is designed to align compensation with our business objectives and the creation of stockholder value, while enabling us to attract, retain, incentivize and reward directors who contribute to our long-term success.

TRANSACTIONS WITH RELATED PERSONS AND INDEMNIFICATION

Certain Transactions with Related Parties

The following is a summary of transactions for fiscal year 2023 and 2022 which we have been a party, in which the amount involved exceeded or will exceed the lesser of (x) $120,000 or (y) 1% of the average of our total assets at December 31, 2023 and 2022 and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest other than compensation and other arrangements that are described in “Executive Compensation and Director Compensation.” We also describe below certain other transactions with our directors, former directors, executive officers and stockholders.

Please note that any numbers set forth in this “Transactions With Related Persons And Indemnification” section referencing or related to shares of Common Stock (including price per share) are not adjusted to account for the March 2024 Reverse Stock Split.

Subscription Agreements

On May 10, 2022, the Company entered into Common Stock Subscription Agreement providing for the purchase of an aggregate of 13.7 million shares of Common Stock at a price of $3.65 per share for an aggregate purchase price of $50.0 million. The purchasers of the shares are special purpose vehicles managed by entities affiliated with Mr. Aquila. The closing of the May 2022 PIPE occurred on May 20, 2022.

On November 9, 2022, the Company entered into Common Stock Subscription Agreement providing for the purchase of an aggregate of 9.0 million shares of Common Stock at a price of $1.11 per share for an aggregate purchase price of $10.0 million (the “November 2022 PIPE”). The purchasers of the shares are Mr. Aquila and a special purpose vehicle managed by entities affiliated with Mr. Aquila. The closing of the November 2022 PIPE occurred on November 18, 2022.

On June 22, 2023, the Company entered into a Common Stock and Common Warrant Subscription Agreement with certain special purpose vehicles managed by entities affiliated with Mr. Aquila. The Subscription Agreement provides for the sale and issuance by the Company of 16.3 million shares of the Company’s Common Stock, together with warrants to purchase up to 16.3 million shares of Common Stock at a combined purchase price of $0.54 per share and accompanying warrants. The total net proceeds from the transaction was $8.8 million.

On August 4, 2023, the Company entered into a Common Stock and Common Warrant Subscription Agreement with certain special purpose vehicles managed by entities affiliated with Mr. Aquila. The Subscription Agreement provides for the sale and issuance by the Company of 5.6 million shares of the Company’s Common Stock, together with warrants to purchase up to 5.6 million shares of Common Stock at a combined purchase price of $0.54 per share and accompanying warrants. The total net proceeds from the transaction was $3.0 million.

Related Party Leases

On January 31, 2023, the Company entered into a real estate lease for an approximately 8,000 square foot facility in Justin, Texas with an entity owned by Tony Aquila, Executive Chair and Chief Executive Officer of the Company. The initial lease term is three years, five months, commencing on November 1, 2022 and terminating on March 31, 2026, with one option to extend the term of the lease for an additional five years. Prior to execution, the contract was a month-to-month arrangement.

On November 9, 2022, the Company entered into a PSA with Terex for the purchase of approximately 630,000 square foot vehicle manufacturing facility on approximately 121 acres in Oklahoma City, Oklahoma. On April 7, 2023, pursuant to the assignment of real estate purchase agreement, the Company assigned the right to purchase the Property to I-40 Partners, a special purpose vehicle managed by entities affiliated with the CEO. The Company then entered into a lease agreement with I-40 Partners commencing April 7, 2023. The lease term is approximately ten years with a five year renewal option and the minimum aggregate lease payment over the initial term is expected to be approximately $44.3 million, which includes equity portion of rent composed of $1.5 million fully vested non-refundable shares. Refer to Note 16 on warrants issued in conjunction with this lease.

Employment and Other Compensation Arrangements, Equity Plan Awards

We have entered into employment agreements and consulting agreements with certain of our executive officers in connection with their employment or provision of services to us. We also have established certain equity plans,

pursuant to which we grant equity awards to our employees and directors. For more information regarding the executives’ arrangements and our equity plans, see the section titled “Executive Compensation - Agreements with our Named Executive Officers and Potential Payments Upon Termination of Employment or Change in Control.”

Other Transactions

Mr. Aquila, through an entity owned and controlled by him (Aquila Family Ventures, LLC (“AFV”)), owns a personal aircraft that was acquired without our resources, which aircraft he uses for business travel. We reimburse Mr. Aquila for certain costs and third-party payments associated with the use of his personal aircraft for Company-related business travel, excluding certain incidental fees and expenses. We incurred approximately $1.7 million and $1.3 million for such reimbursements for the years ended December 31, 2023 and 2022, respectively. In addition, certain AFV staff provided the Company with shared services support in its Justin, Texas corporate office facility. For the years ended December 31, 2023 and 2022, the Company incurred approximately $1.7 million and $1.1 million, respectively, for these services.

During the year ended December 31, 2022, the Company incurred approximately $0.8 million for the usage and purchase of certain transport trucks and trailers with an entity controlled by the Executive Chair and Chief Executive Officer of the Company. No such expenses were incurred during the year ended December 31, 2023.

Related-Person Transactions Policy

The Board has adopted a written Related-Person Transactions Policy that sets forth our policies and procedures regarding the identification, review, consideration and oversight of related-person transactions. For purposes of our policy, a related-person transaction is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any related person are, were or will be participants, in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee, consultant or director will not be considered related-person transactions under this policy.

Under the policy, a related person is any executive officer, director, nominee to become a director or a security holder known by us to beneficially own more than 5% of any class of our voting securities (a “significant stockholder”), including any of their immediate family members and affiliates, including entities controlled by such persons or such person has a 5% or greater beneficial ownership interest.

Each director and executive officer shall identify, and we shall request each significant stockholder to identify, any related-person transaction involving such director, executive officer or significant stockholder or his, her or its immediate family members and inform our audit committee pursuant to this policy before such related person may engage in the transaction.

In considering related-person transactions, our audit committee takes into account the relevant available facts and circumstances, which may include, but are not limited to:

Our Audit Committee shall approve only those related-party transactions that, in light of known circumstances, are in, or are not inconsistent with, the best interests of the Company and our stockholders, as our Audit Committee determines in the good faith exercise of its discretion.

Indemnification

Our Certificate of Incorporation eliminates our directors’ liability for monetary damages to the fullest extent permitted by applicable law. The DGCL provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability:

If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

The Certificate of Incorporation requires us to indemnify and advance expenses to, to the fullest extent permitted by applicable law, our directors, officers and agents. We maintain a directors’ and officers’ insurance policy, pursuant to which our directors and officers are insured against liability for actions taken in their capacities as directors and officers. Finally, the Certificate of Incorporation prohibits any retroactive changes to the rights or protections or increase the liability of any director in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification.

In addition, we have entered into separate indemnification agreements with each of our directors and officers. These agreements, among other things, require us to indemnify our directors and officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or officer in any action or proceeding arising out of their services as one of our directors or officers or any other company or enterprise to which the person provides services at our request.

Independence of the Board of Directors

As required under the Nasdaq listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board. Our Board consults with our counsel to ensure that its determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.

Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and us, our senior management and our independent auditors, our Board has affirmatively determined that each of the directors on the Board other than Tony Aquila are independent directors within the meaning of the applicable Nasdaq listing standards. In making this determination, our Board found that none of these directors had a material or other disqualifying relationship with our company.

In making those independence determinations, our Board took into account certain relationships and transactions that occurred in the ordinary course of business between us and entities with which some of our directors are or have been affiliated, including the relationships and transactions described in “Transactions with Related,” and all other facts and circumstances that the Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each director.

PROPOSAL 2

 

ADVISORY VOTE REGARDING NAMED EXECUTIVE OFFICER COMPENSATION (“SAY-ON-PAY”)

Pursuant to Section 14A of the Exchange Act, we are asking our stockholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement.

The compensation of our named executive officers is disclosed in “Executive Compensation,” the compensation tables and the related narrative disclosure contained on pages 24 to 29 of this Proxy Statement. As discussed in those disclosures, the Compensation Committee and the Board believe that our compensation policies and decisions are appropriately designed to align the interests of our named executive officers with those of our stockholders, to emphasize strong pay-for-performance principles and to enable us to attract and retain talented and experienced executives to lead the Company in a competitive environment.

The Board is asking stockholders to support the compensation of the Company’s named executive officers as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in this Proxy Statement for the 2024 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the section entitled “Executive Compensation”, the 2023 Summary Compensation Table and the other related tables and disclosure.”

While the advisory vote we are asking you to cast is non-binding, the Compensation Committee and the Board value the views of our stockholders and will take into account the outcome of the vote when considering future compensation decisions for our executive officers.

THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 2

PROPOSAL 3

 

YORKVILLE SHARE ISSUANCE PROPOSAL

Overview

We are seeking approval, pursuant to Nasdaq Rule 5635, of the issuance of shares of our Common Stock to Yorkville pursuant to our Prepaid Advance Agreement entered into with Yorkville on July 19, 2024 (as amended and supplemented from time to time, the “July PPA”) at prices less than the applicable minimum price discussed below in excess of 20% of the number of shares of our Common Stock outstanding on June 13, 2024 (the “Yorkville Share Issuance Proposal”).

The Company is restricted from issuing to Yorkville any Common Stock under the July PPA if the issuance of such shares of Common Stock would exceed 13,719,862 at prices less than the Yorkville Minimum Price (as defined below), which number of shares represents approximately 19.99% of the aggregate number of shares of Common Stock issued and outstanding as of June 13, 2024 (such amount, the “Yorkville Exchange Cap”).

Although the Yorkville Share Issuance Proposal is not conditioned on the approval of any of the other proposals set forth in this Proxy Statement, the outcome of certain of the other proposals may have an impact on our ability to utilize the July PPA in the future. None of the other proposals are conditioned upon the approval of the Yorkville Share Issuance Proposal.

Background

June PPA

On June 13, 2024 (the “June PPA Date”), we entered into a Prepaid Advance Agreement with Yorkville (as amended and supplemented from time to time, the “June PPA”). In accordance with the terms of the June PPA, on the June PPA Date, Yorkville agreed to advance $15,000,000 to the Company (the “June Prepaid Advance”). After giving effect to the commitment fee and the purchase price discount provided for in the June PPA, net proceeds of the June Prepaid Advance to the Company were approximately $14,100,000.

As described below in further detail in the July PPA summary, on the August Supplemental Date (as defined below), $15,000,000 in principal amount and $158,219.18 of accrued and unpaid interest remained outstanding under the June PPA (such amounts, collectively, the “Outstanding June PPA Amount”). Pursuant to the First Supplemental Agreement (as defined below), the Company used a portion of the proceeds from the First Supplemental Advance (as defined below) to repay all of the Outstanding June PPA Amount. Yorkville waived the Redemption Premium (as defined in the June PPA) on the Outstanding June PPA Amount and any prior notice period required pursuant to the June PPA. As such, as of the date hereof, none of the June Prepaid Advance remains outstanding and the Company did not issue any shares of Common Stock to Yorkville pursuant to the June PPA.

July PPA

On July 19, 2024 (the “July Effective Date”), the Company entered into the July PPA with Yorkville. In accordance with the terms of the July PPA, the Company may request advances of up to $15,000,000 in cash from Yorkville (or such greater amount that the parties may mutually agree) (each, a “Prepaid Advance”), including an initial Prepaid Advance of $15,000,000 (the “Initial July Prepaid Advance”) requested by the Company in connection with entering the July PPA and from time to time thereafter, with an aggregate limitation on the Prepaid Advances of $100,000,000. A Prepaid Advance will be offset upon the issuance of shares of our Common Stock to Yorkville.

The Initial July Prepaid Advance was offset upon the issuances of shares of Common Stock at an initial Purchase Price (as defined in the July PPA) equal to $2.70 per share. On any date after September 17, 2024, the Purchase Price on any remaining amount of the Initial July Prepaid Advance then outstanding at such time will be the lower of (i) $2.70 per share and (ii) 95% of the lowest daily volume weighted average price (“VWAP”) of the Common Stock on Nasdaq during five trading days immediately preceding the date on which Yorkville provides the purchase notice to the Company (the “YA Variable Price”); provided that the Purchase Price under the July PPA cannot currently be lower than $1.00 per share (the “July PPA Floor Price”).

With respect to a Prepaid Advance other than the Initial July Prepaid Advance, such Prepaid Advance will be offset upon the issuances of shares of Common Stock at a Purchase Price equal to the lower of (i) 120% of the daily VWAP

of the Common Stock on Nasdaq as of the trading day immediately prior to the date of the disbursement of such Prepaid Advance (the “YA Fixed Price”) and (ii) the YA Variable Price; provided that the Purchase Price cannot currently be lower than the then current July PPA Floor Price.

After giving effect to the commitment fee, structuring fee and the purchase price discount provided for in the July PPA, net proceeds of the Initial July Prepaid Advance to the Company were $14,090,000.

In connection with the Initial July Prepaid Advance, on the July Effective Date, the Company issued to Yorkville a warrant to purchase 2,777,778 shares of Common Stock each at an exercise price of $2.70 per share, exercisable beginning on January 19, 2025 and with an expiration date of July 19, 2029 (the “July YA Warrant”). The July YA Warrant includes customary adjustment provisions for stock splits, combinations and similar events. As currently drafted pursuant to its terms, any exercise of the July YA Warrant by Yorkville will not count toward the Yorkville Exchange Cap.

Furthermore, at each closing of any additional Prepaid Advance, the Company (upon agreement between the Company and Yorkville at such time) may issue to Yorkville a warrant for the purchase of up to such number of Common Stock determined by dividing one hundred percent of the principal amount of such Prepaid Advance by the YA Fixed Price in respect of such Prepaid Advance, with an exercise price equal to the YA Fixed Price in respect of such Prepaid Advance and with a five year expiration date from the date of issuance (any such issuances, “Additional YA Warrants”). Additional YA Warrants will include customary adjustment provisions for stock splits, combinations and similar events.

On August 28, 2024 (the “August Supplemental Date”), the Company entered into a Supplemental Agreement (the “First Supplemental Agreement”) with Yorkville to the July PPA. Pursuant to the First Supplemental Agreement, Yorkville agreed to advance $25,158,219.18 to the Company (the “First Supplemental Advance,” and together with the Initial July Prepaid Advance, collectively, the “Current July PPA Prepaid Advances”). Pursuant to the terms of the First Supplemental Agreement, the Company used a portion of the proceeds from the First Supplemental Advance to repay all of the Outstanding June PPA Amount. After giving effect to the commitment fee and the purchase price discount provided for in the July PPA, as well as the repayment of the Outstanding June PPA Amount, net proceeds of the First Supplemental Advance to the Company were $9,400,000. The First Supplemental Advance will be offset upon the issuances of shares of Common Stock at a Purchase Price equal to the lower of (i) $1.7554 per share and (ii) the YA Variable Price; provided that in no event shall the Purchase Price be less than the then current July PPA Floor Price.

In connection with the First Supplemental Advance, on the August Supplemental Date, the Company issued to Yorkville a warrant to purchase 2,848,354 shares of Common Stock each at an exercise price of $1.7554 per share, exercisable beginning on February 28, 2025 and with an expiration date of August 28, 2029 (the “August YA Warrant”). The August YA Warrant includes customary adjustment provisions for stock splits, combinations and similar events. As currently drafted pursuant to its terms, any exercise of the August YA Warrant by Yorkville will not count toward the Yorkville Exchange Cap.

The issuance of Common Stock under the July PPA is subject to certain limitations, including, among others, that the aggregate number of shares of Common Stock cannot exceed the Yorkville Exchange Cap unless the Company’s stockholders have approved issuances in excess of the Yorkville Exchange Cap. Pursuant to the terms of the July PPA, interest accrues on the outstanding balance of a Prepaid Advance at an annual rate equal to 5%, subject to an increase to 15% upon events of default described in the July PPA. Pursuant to the July PPA, the Company shall, among other things, (i) maintain its shelf registration statement on Form S-3, (ii) register the shares of Common Stock that are to be offered and sold to Yorkville pursuant to the July PPA and (iii) except as permitted under the July PPA, not enter into any Variable Rate Transaction (as defined in the July PPA).

Yorkville Consent Agreement

Pursuant to the terms of each of the July PPA and the 2022 PPA (as defined below) (the July PPA and the 2022 PPA, together, the “Current PPA Agreements”), the Company may enter into an “at the market offering” or other continuous offering or similar offering of Common Stock with a registered broker-dealer, whereby the Company may sell Common Stock at a future determined price; provided, however, that the Company shall not be permitted to execute transactions under such agreement unless (i) an Amortization Event (as defined in the Current PPA Agreements) has occurred and is continuing, or (ii) there is no balance outstanding under all prior Prepaid Advances (as defined in the Current PPA Agreements).

On September 13, 2024, the Company and Yorkville entered into an Omnibus Consent to Pre-Paid Advance Agreements (the “Yorkville Consent Agreement”) pursuant to which Yorkville consented to the Company undertaking an at-the-market offering with Northland Securities, Inc. acting as sales agent (such offering, the “ATM Offering”) subject to certain conditions including the following. Pursuant to the Yorkville Consent Agreement, solely with respect to the first $5 million of gross proceeds received or receivable by the Company (such proceeds, the “Initial ATM Proceeds”) pursuant to sales of Common Stock sold under the ATM Offering (such sales up to the Initial ATM Proceeds, the “Initial ATM Sales”), the Company will retain 100% of the Initial ATM Proceeds; provided that any further sales under the ATM Offering subsequent to the Initial ATM Sales will require Yorkville’s prior written consent, which consent by Yorkville to any further sales under the ATM Offering subsequent to the Initial ATM Sales may be granted at any time by Yorkville to the Company via e-mail correspondence.

As of October 3, 2024, we have issued approximately 3.8 million shares of Common Stock to Yorkville to offset outstanding Prepaid Advances under the July PPA and the aggregate principal amount outstanding under the Current July PPA Prepaid Advances was $35 million. Since we have issued approximately 3.8 million shares to Yorkville under the Yorkville Minimum Price (as defined below) to offset outstanding Prepaid Advances under the July PPA as of October 3, 2024, we may only issue approximately 9.8 million additional shares of Common Stock at prices less than the Yorkville Minimum Price prior to reaching the Yorkville Exchange Cap. Pursuant to the terms of the First Supplemental Agreement, in the event, among others, that the Company has issued in excess of 99% of the Common Stock available under the Yorkville Exchange Cap (to the extent the Yorkville Exchange Cap remains applicable at any time of determination), the Company is required to immediately begin drawing on an at-the-market facility and make minimum payments equal to $3 million per week and $15 million per month until all amounts owed under the July PPA and the 2022 PPA have been repaid in full (any such payments, “Required ATM Payments”).

The foregoing descriptions do not purport to be complete and is qualified in its entirety by reference to the full text of (i) the June PPA, filed as Exhibit 10.1 to our current report on Form 8-K on June 13, 2024, (ii) the July PPA, filed as Exhibit 10.1 to our current report on Form 8-K on July 22, 2024, (iii) the July YA Warrant, a form of which was filed as Exhibit B to Exhibit 10.1 to our current report on Form 8-K on July 22, 2024, (iv) the First Supplemental Agreement, filed as Exhibit 10.1 to our current report on Form 8-K on August 29, 2024, (v) the August YA Warrant, filed as Exhibit 4.1 to our current report on Form 8-K on August 29, 2024 and (vi) the Yorkville Consent Agreement, filed as Exhibit 10.2 to our current report on Form 8-K on September 13, 2024, each of which is incorporated by reference herein.

Reasons for Seeking Stockholder Approval

Our Common Stock is currently listed on The Nasdaq Capital Market and, as such, we are subject to the Nasdaq Listing Rules. Nasdaq Listing Rule 5635 requires us to obtain stockholder approval prior to the sale, issuance or potential issuance of Common Stock (or securities convertible into or exercisable for Common Stock) in connection with a transaction other than a public offering at a price less than the “Minimum Price” which either alone or together with sales by officers, directors or substantial stockholders of the company equals 20% or more of the Common Stock or 20% or more of the voting power outstanding before the issuance. For Nasdaq purposes, “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement.

The applicable “Minimum Price” is $2.03 per share of Common Stock based on the signing of the June PPA on June 13, 2024 (the “Yorkville Minimum Price”). As of October 3, 2024, our stock price at the close of the trading day was $0.9568, or approximately $1.07 lower than the Yorkville Minimum Price.

The Yorkville Exchange Cap applies to shares of Common Stock issued or that may be issued under the July PPA, and accordingly, we are seeking a single stockholder approval with respect to all shares previously issued under the July PPA and future shares to be issued under the July PPA. Stockholder approval of this Proposal 3 will constitute stockholder approval for purposes of Nasdaq Listing Rule 5635.

Our Board has determined that the July PPA and our ability to issue the shares of Common Stock thereunder in excess of the Yorkville Exchange Cap is in the best interests of the Company and its stockholders because the ability to sell shares of Common Stock to Yorkville provides us with a reliable source of capital for general corporate purposes, which may include, but are not limited to, funding working capital, capital expenditures, operating expenses and the selective pursuit of business development opportunities, including continued product or technology investment.

We cannot predict the price of our Common Stock at any future date, and therefore cannot predict the number of shares of Common Stock to be issued under the July PPA or whether the applicable price for the Current July PPA Prepaid Advances or any future Prepaid Advance will be greater than the Yorkville Minimum Price under the Nasdaq Rules.

Therefore, we are seeking stockholder approval under this Proposal 3 to issue shares of Common Stock in excess of the Yorkville Exchange Cap, if necessary, to Yorkville under the terms of the July PPA. The failure of the Company’s stockholders to approve this Proposal 3 will prevent the Company from selling or issuing, at less than the Yorkville Minimum Price, shares of Common Stock to Yorkville in excess of the Yorkville Exchange Cap. However, it would be possible to sell or issue shares to Yorkville in excess of the Yorkville Exchange Cap if the sale or issuance is equal to or greater than the Yorkville Minimum Price.

Consequences of Non-Approval

As previously disclosed in the Company’s previous eight Form 10-Qs (beginning with the quarter ended March 31, 2022) and each of our previous two Form 10-Ks, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of its consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to access additional sources of capital, including, but not limited to equity and/or debt financings and government loans or grants. If the Company is unable to raise additional capital, the Company may have to significantly delay, scale back or discontinue the development or commercialization of its product and/or consider a sale or other strategic transaction.

If we do not receive the Yorkville Share Issuance Approval, this will restrict our ability to sell shares of Common Stock to Yorkville, which Yorkville provides us with a reliable source of capital for general corporate purposes, unless we are able to sell shares to Yorkville at a price per share greater than the applicable Yorkville Minimum Price under the July PPA. Furthermore, pursuant to the terms of the First Supplemental Agreement, in the event, among others, that the Company has issued in excess of 99% of the Common Stock available under the Yorkville Exchange Cap (to the extent the Yorkville Exchange Cap remains applicable at any time of determination), the Company is required to immediately begin making Required ATM Payments until all amounts owed under the July PPA and the 2022 PPA have been repaid in full. As of October 3, 2024, we may only sell approximately 9.8 million shares to Yorkville at a price per share lower than the Yorkville Minimum Price under the July PPA prior to the Yorkville Exchange Cap. At such time, if applicable, Yorkville may require us to make Required ATM Payments until all amounts owed under the July PPA and the 2022 PPA have been repaid in full.

Accordingly, our Board believes that providing the Company the flexibility to issue shares of Common Stock in excess of the Yorkville Exchange Cap and below the applicable Yorkville Minimum Price under the July PPA is advisable and in the best interests of the Company and our stockholders because of the capital the Company can receive with greater flexibility to issue shares under the July PPA.

Effect on Current Stockholders

The issuance of shares of Common Stock under the July PPA (including any such shares issued below the applicable Yorkville Minimum Price for each agreement that are the subject of this Proposal 3) would result in an increase in the number of shares of Common Stock outstanding, and our stockholders will incur dilution of their percentage ownership.

For the reasons mentioned above, we cannot predict the price of our Common Stock at any future date, and therefore cannot predict the number of shares of Common Stock to be issued pursuant to the July PPA. As such, the exact magnitude of the dilutive effect cannot be conclusively determined. However, the dilutive effect may be material to our current stockholders.

Required Vote and Recommendation of Board of Directors

Approval of Proposal 3 requires the affirmative vote of a majority of the votes cast on the Proposal. Abstentions and “broker non-votes,” if any, will have no effect on the outcome of this vote.

THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 3

PROPOSAL 4

 

YORKVILLE JULY PPA FLOOR PRICE PROPOSAL

We are asking stockholders to vote on amendments to the July PPA to lower the July PPA Floor Price from $1.00 to $0.20. Changing the July PPA Floor Price would permit us to sell shares under the July PPA at prices below $1.00 if circumstances permit but in no event less than $0.20.

The Yorkville July PPA Floor Price Proposal is not conditioned on the approval of any other proposal. However, because we have previously issued shares to Yorkville under the July PPA that have counted toward the Yorkville Exchange Cap, we will be limited in our ability issue additional shares to Yorkville under the July PPA at any price below the Yorkville Minimum Price unless the Yorkville Share Issuance Proposal is approved.

Reasons for Seeking Stockholder Approval

The July PPA Floor Price is intended to protect stockholders from the potential dilutive effects of sales under the July PPA by limiting the price at which shares may be sold thereunder and thereby limiting the downward price pressure that the July PPA could exert on the price of our Common Stock in unfavorable trading conditions. We believe the July PPA Floor Price is most effective at limiting downward movements in the stock when it cannot be waived or modified without stockholder approval. Accordingly, we are asking our stockholders to approve an amendment to the July PPA to lower the July PPA Floor Price from $1.00 to $0.20.

Furthermore, pursuant to the First Supplemental Agreement, the Company agreed to call and hold an annual meeting of its stockholders for the purposes of, among other things, obtaining the consent of the stockholders of the Company to amend the July PPA Floor Price to a revised share price not to exceed 20% of the lower of (i) $1.7554 and (ii) the Nasdaq Official Closing Price on the trading day immediately preceding the date of the proxy statement. Prior to filing this Proxy Statement, the Company and Yorkville agreed to request consent of the stockholders of the Company to amend the July PPA Floor Price to $0.20.

Our Board has determined that it is in the best interests of the Company to be able to sell shares under the July PPA below the current July PPA Floor Price. As of October 3, 2024, our stock price at the close of the trading day was $0.9568, or approximately 5% lower than the current July PPA Floor Price. However, our stock price has in the past been, and may in the future be, volatile, and there can be no assurance that it will remain below or above the current July PPA Floor Price. Our Board believes that the Company would benefit from having the flexibility to continue using the July PPA as a source of capital even in circumstances where the share price may be below the current floor price.

If the Yorkville July PPA Floor Price Proposal is approved, there is no assurance that we will sell shares under the July PPA at prices less than $1.00, and thus may negatively affect our ability to access capital pursuant to the July PPA.

Consequences of Non-Approval

As previously disclosed in the Company’s previous eight Form 10-Qs (beginning with the quarter ended March 31, 2022) and each of our previous two Form 10-Ks, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of its consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to access additional sources of capital, including, but not limited to equity and/or debt financings and government loans or grants.

If the price of our Common Stock falls below the current July PPA Floor Price, the Company may be unable to raise additional capital on terms similar to the July PPA, or at all, which could have an adverse impact on our operations and business plans. If the Yorkville July PPA Floor Price Proposal is not approved, we may continue to sell shares under the July PPA at prices equal to or greater than the current July PPA Floor Price of $1.00, provided that all other applicable July PPA conditions are satisfied. However, in the event that the daily VWAP of our Common Stock is less than the July PPA Floor Price then in effect for five trading days during a period of seven consecutive trading days (a “Floor Price Event”), the Company will then be required to make monthly repayments of amounts outstanding under any such Prepaid Advance beginning on the 10th calendar day after the Floor Price Event and continuing on the same day of each successive calendar month until the entire amount of such Prepaid Advances balance shall have been repaid. Each monthly payment shall be in an amount equal to the sum of (i) the outstanding principal amount of such Prepaid Advances divided by the lower of (y) the number of months remaining until the Maturity Date (as defined in the July PPA) of such Prepaid Advance, or

(z) five (the “Amortization Principal Amount”) plus (ii) a 3% payment premium in respect of such Amortization Principal Amount, and (iii) accrued and unpaid interest in respect of such amount as of each payment date. Furthermore, pursuant to the terms of the First Supplemental Agreement, in the event of a Floor Price Event, the Company is required to immediately begin making Required ATM Payments until all amounts owed under the July PPA and the 2022 PPA have been repaid in full. As of the close of the trading day on October 3, 2024, the daily VWAP of our Common Stock has been less than the July PPA Floor Price for four consecutive trading days. In the event of a Floor Price Event, at such time, Yorkville may require us to make Required ATM Payments until all amounts owed under the July PPA and the 2022 PPA have been repaid in full.

If stockholders do not approve the Yorkville July PPA Floor Price Proposal, we do not currently intend to amend or waive the July PPA Floor Price requirement in the July PPA. We may, however, enter into new financing arrangements with Yorkville or other parties, if our Board determines that these arrangements are in the best interest of the Company and our stockholders.

Effect on Current Stockholders

The issuance of shares of Common Stock under the July PPA would result in an increase in the number of shares of Common Stock outstanding, and our stockholders will incur dilution of their percentage ownership. The proposed new July PPA Floor Price will increase the range of prices at which shares can be sold pursuant to the July PPA, which could result in additional dilution to our existing stockholders. Because the number of shares of Common Stock that may be issued to Yorkville pursuant to the July PPA is determined based on the price at the time of issuance, the exact magnitude of the dilutive effect cannot be conclusively determined. However, the dilutive effect may be material to our current stockholders.

As of October 3, 2024, the aggregate principal amount outstanding under the Current July PPA Prepaid Advances was $35 million and, as further described in Proposal 5, the principal amount outstanding under the Eighth Supplemental Advance (as defined below) was $17.5 million. The below table illustrates the number of shares of Common Stock that could be potentially issued at the hypothetical trading prices in connection with the current outstanding principal amounts under the Current PPA Agreements.

Required Vote and Recommendation of Board of Directors

Approval of Proposal 4 requires the affirmative vote of stockholders representing a majority of voting power of the shares present in person or represented by proxy and entitled to vote generally on the subject matter. Abstentions and “broker non-votes,” if any, will have no effect on the outcome of this vote.

THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 4

PROPOSAL 5

 

YORKVILLE 2022 PPA FLOOR PRICE PROPOSAL

Overview

We are asking stockholders to vote on amendments to our Pre-Paid Advance Agreement entered into with Yorkville on July 20, 2022 (as amended and supplemented from time to time, the “2022 PPA”) to lower the 2022 PPA Floor Price from $2.30 to $0.20. Changing the 2022 PPA Floor Price would permit us to sell shares under the 2022 PPA at prices below $2.30 if circumstances permit but in no event less than $0.20.

The Yorkville 2022 PPA Floor Price Proposal is not conditioned on the approval of any other proposal.

Background

On July 20, 2022, we entered into the 2022 PPA with Yorkville. Pursuant to the 2022 PPA and subject to certain conditions precedent set forth therein, the Company may request advances of up to $50 million in cash from Yorkville (or such greater amount that the parties may mutually agree) (each, a “Pre-Paid Advance”), with an aggregate limitation on the Pre-Paid Advances of $300 million.

Pursuant to the initial terms of the 2022 PPA, the Company was not allowed to issue shares of Common Stock to Yorkville under the 2022 PPA for a purchase price per share of less than $1.00 per share (as amended from time to time, the “2022 PPA Floor Price”). However, on January 24, 2023, the Company held a special meeting of stockholders where the stockholders, among other items, (i) approved an amendment to the 2022 PPA to lower the 2022 PPA Floor Price at which shares may be sold by us from $1.00 per share to $0.50 per share and (ii) approved, pursuant to Nasdaq Rule 5635(d), the issuance under the 2022 PPA of shares of our Common Stock in excess of 20% of the number of shares outstanding on May 10, 2022. Furthermore, on October 5, 2023, the Company held a special meeting of stockholders where the stockholders, among other items, approved an amendment to the 2022 PPA to lower the 2022 PPA Floor Price at which shares may be sold by us from $0.50 per share to $0.10 per share. On March 7, 2024, upon receiving prior stockholder approval at a special meeting of stockholders held on February 29, 2024, the Company filed a Certificate of Amendment to the Company’s Second Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware to effect a 1-for-23 reverse stock split (the “March 2024 Reverse Stock Split”) of our Common Stock. Pursuant to the terms of the 2022 PPA, the 2022 PPA Floor Price was proportionally adjusted from $0.10 to $2.30 to account for the March 2024 Reverse Stock Split.

On March 12, 2024, pursuant to the Supplemental Agreement to the 2022 PPA entered into with Yorkville (the “Eighth Supplemental Agreement”), we requested a Pre-Paid Advance of $62,032,000 (the “Eighth Supplemental Advance”). Immediately prior to our entry into the Eighth Supplement Agreement, $32,000,000 in principal amount and $47,123 of accrued and unpaid interest remained outstanding in the aggregate under the certain prior supplemental agreements with Yorkville related to the 2022 PPA (such amounts, collectively, the “Outstanding Pre-Paid Advances Amount”). Pursuant to the Eighth Supplemental Agreement, the Company used $33,007,123 of the proceeds from the Eighth Supplemental Advance to repay all of the Outstanding Pre-Paid Advances Amount plus the Redemption Premium (as such term is used in the 2022 PPA) applicable to such repayment. Interest shall accrue on the outstanding balance of the Eighth Supplemental Advance at a rate equal to 5% per annum, subject to an increase to 15% upon events of default described in the 2022 PPA, as supplemented by the Eighth Supplemental Agreement.

Pursuant to the First Supplemental Agreement, the Company agreed to call and hold an annual meeting of its stockholders for the purposes of, among other things, obtaining the consent of the stockholders of the Company to amend the 2022 PPA Floor Price to a revised share price not to exceed 20% of the lower of (i) $1.7554 and (ii) the Nasdaq Official Closing Price on the trading day immediately preceding the date of the proxy statement. Prior to filing this Proxy Statement, the Company and Yorkville agreed to request consent of the stockholders of the Company to amend the 2022 PPA Floor Price to $0.20.

The Eighth Supplemental Advance has a stated maturity date of six months from the anniversary of the Eighth Supplemental Advance (i.e., September 12, 2024). Pursuant to the terms of the 2022 PPA, upon such maturity date, the Company is required to pay Yorkville an amount in cash equal to the Outstanding Pre-Paid Advances Amount, plus accrued and unpaid interest thereon (such amount, the “Maturity Payment”). As of the date of filing this Proxy Statement, the Company has not made the Maturity Payment and Yorkville has not required the Company to make the Maturity Payment.

Pursuant to the terms of the Eighth Supplemental Agreement, in the event that at any time after April 12, 2024, the daily VWAP of our Common Stock is less than $1.85 per share for five trading days during a period of seven consecutive trading days (a “Trigger Price Event”), then the Company is required to make monthly payments beginning 10 days after a Trigger Price Event equal to the sum of (i) $12.5 million in principal amount (or the remaining outstanding principal balance, if less), (ii) the Redemption Premium (as defined in the 2022 PPA) in respect of such principal amount and (iii) accrued and unpaid interest in respect of such amount as of each monthly payment date (“Required Trigger Payments”). Since August 2, 2024 through the date of filing this Proxy Statement, the closing bid price of our Common Stock has been below $1.85 per share, and, as such, there is an ongoing Trigger Price Event. As of the date of filing this Proxy Statement, the Company has not made Required Trigger Payments and Yorkville has not required the Company to make Required Trigger Payments. Furthermore, pursuant to the terms of the First Supplemental Agreement, in the event that the daily VWAP of our Common Stock is less than the 2022 PPA Floor Price then in effect for five trading days during a period of seven consecutive trading days (a “2022 PPA Floor Price Event”), the Company is required to immediately begin making Required ATM Payments until all amounts owed under the July PPA and the 2022 PPA have been repaid in full. Since July 22, 2024 through the date of filing this Proxy Statement, the closing bid price of our Common Stock has been below the current 2022 PPA Floor Price, and, as such, there is an ongoing 2022 PPA Floor Price Event. As of the date of filing this Proxy Statement, the Company has not made Required ATM Payments and Yorkville has not required the Company to make Required ATM Payments. As of October 3, 2024, we have currently issued approximately 19.7 million shares of Common Stock to Yorkville to offset the Eighth Supplemental Advance under the 2022 PPA and the aggregate principal amount outstanding under the Eighth Supplemental Advance was $17.5 million.

This description of the 2022 PPA does not purport to be complete and is qualified in its entirety by reference to the full text of (i) the 2022 PPA, filed as Exhibit 10.1 to our current report on Form 8-K filed on July 21, 2022, (ii) the first Supplemental Agreement to the 2022 PPA, dated November 9, 2022, by and between us and Yorkville, filed as Exhibit 10.1 to our current report on Form 8-K on November 9, 2022, (iii) the second Supplemental Agreement to the 2022 PPA, dated December 31, 2022, by and between us and Yorkville, filed as Exhibit 10.1 to our current report on Form 8-K on January 6, 2023, (iv) the third Supplemental Agreement to the 2022 PPA, dated September 11, 2023, by and between us and Yorkville, filed as Exhibit 10.1 to our current report on Form 8-K on September 13, 2023, (v) the fourth Supplemental Agreement to the 2022 PPA, dated November 21, 2023, by and between us and Yorkville, filed as Exhibit 10.1 to our current report on Form 8-K on November 22, 2023, (vi) the fifth Supplemental Agreement to the 2022 PPA, dated December 20, 2023, by and between us and Yorkville, filed as Exhibit 10.1 to our current report on Form 8-K on December 20, 2023, (vii) the sixth Supplemental Agreement to the 2022 PPA, dated January 11, 2024, by and between us and Yorkville, filed as Exhibit 10.1 to our current report on Form 8-K on January 12, 2024, (viii) the seventh Supplemental Agreement to the 2022 PPA, dated January 31, 2024, by and between us and Yorkville, filed as Exhibit 10.1 to our current report on Form 8-K on January 31, 2024 and (ix) the Eighth Supplemental Agreement, filed as Exhibit 10.1 to our current report on Form 8-K on March 14, 2024, each of which is incorporated by reference herein.

Reasons for Seeking Stockholder Approval

The 2022 PPA Floor Price is intended to protect stockholders from the potential dilutive effects of sales under the 2022 PPA by limiting the price at which shares may be sold thereunder and thereby limiting the downward price pressure that the 2022 PPA could exert on the price of our Common Stock in unfavorable trading conditions. We believe the 2022 PPA Floor Price is most effective at limiting downward movements in the stock when it cannot be waived or modified without stockholder approval. Accordingly, we are asking our stockholders to approve an amendment to the 2022 PPA to lower the 2022 PPA Floor Price from $2.30 to $0.20.

Our Board has determined that it is in the best interests of the Company to be able to sell shares under the 2022 PPA below the current 2022 PPA Floor Price. As of October 3, 2024, our stock price at the close of the trading day was $0.9568, or approximately $1.34 lower than the current 2022 PPA Floor Price.

If the Yorkville 2022 PPA Floor Price Proposal is approved, there is no assurance that we will sell shares under the 2022 PPA at prices less than $2.30, and thus may negatively affect our ability to access capital on terms similar to the 2022 PPA.

Consequences of Non-Approval

As previously disclosed in the Company’s previous eight Form 10-Qs (beginning with the quarter ended March 31, 2022) and each of our previous two Form 10-Ks, the Company concluded that there was substantial doubt about its

ability to continue to operate as a going concern for the 12 months following the issuance of its consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to access additional sources of capital, including, but not limited to equity and/or debt financings and government loans or grants.

As noted above, if the price of our Common Stock remains below the current 2022 PPA Floor Price, the Company may be unable to raise additional capital on terms similar to the 2022 PPA, or at all, which could have an adverse impact on our operations and business plans. If the Yorkville 2022 PPA Floor Price Proposal is not approved, we may continue to sell shares under the 2022 PPA at prices equal to or greater than the current 2022 PPA Floor Price of $2.30, provided that all other applicable 2022 PPA conditions are satisfied.

As noted above, the maturity date of the Eighth Supplemental Advance was September 12, 2024. As of the date of filing this Proxy Statement, although Yorkville has not required the Company to make Required ATM Payments, Yorkville may require such payments if stockholders do not approve the Yorkville 2022 PPA Floor Price Proposal. Furthermore, as noted above, although Yorkville has not required the Company to make Required ATM Payments due to an ongoing 2022 Floor Price Event and Trigger Price Event, Yorkville may require such payments if stockholders do not approve the Yorkville 2022 PPA Floor Price Proposal.

If stockholders do not approve the Yorkville 2022 PPA Floor Price Proposal, we do not currently intend to amend or waive the 2022 PPA Floor Price requirement in the 2022 PPA. We may, however, enter into new financing arrangements with Yorkville or other parties, if our Board determines that these arrangements are in the best interest of the Company and our stockholders.

Effect on Current Stockholders

The issuance of shares of Common Stock under the 2022 PPA has and will continue to result in an increase in the number of shares of Common Stock outstanding, and our stockholders will incur dilution of their percentage ownership. The proposed new 2022 PPA Floor Price will increase the range of prices at which shares can be sold pursuant to the 2022 PPA, which could result in additional dilution to our existing stockholders. Because the number of shares of Common Stock that may be issued to Yorkville pursuant to the 2022 PPA is determined based on the price at the time of issuance, the exact magnitude of the dilutive effect cannot be conclusively determined. However, the dilutive effect may be material to our current stockholders.

As of October 3, 2024, the principal amount outstanding under the Eighth Supplemental Advance (as defined below) was $17.5 million, and as described in Proposals 3 and 4 above, the aggregate principal amount outstanding under the Current July PPA Prepaid Advances was $35 million. The below table illustrates the number of shares of Common Stock that could be potentially issued at the hypothetical trading prices in connection with the current outstanding principal amounts under the Current PPA Agreements.

Required Vote and Recommendation of Board of Directors

Approval of Proposal 5 requires the affirmative vote of stockholders representing a majority of voting power of the shares present in person or represented by proxy and entitled to vote generally on the subject matter. Abstentions and “broker non-votes,” if any, will have no effect on the outcome of this vote.

THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 5

PROPOSAL 6

 

APPROVAL OF THE REVERSE STOCK SPLIT PROPOSAL

General

Our Board has adopted resolutions recommending that the stockholders grant the Board the discretionary authority to amend our Second Amended and Restated Certificate of Incorporation, as amended (the “Charter”), to effect one or more Reverse Stock Splits of the Company’s issued and outstanding Common Stock as described below.

The form of Reverse Stock Split amendment to be filed with the Delaware Secretary of State is set forth in Annex A (subject to any changes required by applicable law) (the “Reverse Stock Split Amendment”).

Approval of the Reverse Stock Split Proposal would permit (but not require) our Board to effect one or more Reverse Stock Splits of our issued and outstanding Common Stock with each Reverse Stock Split having a ratio of not less than 1:2 and not more than 1:30, with the exact ratio to be set at a number within this range as determined by our Board in its sole discretion, provided that the Board determines to effect a Reverse Stock Split and such Reverse Stock Split Amendment is filed with the appropriate authorities in the State of Delaware no later than the one-year anniversary of the date on which the Reverse Stock Split Proposal is approved by the Company’s stockholders and that the Board shall not effect one or more Reverse Stock Splits that, in the aggregate, exceed 1:60 (the “Aggregate Reverse Stock Split Ratio Cap”). If our stockholders approve the Reverse Stock Split Proposal, and the Board decides to implement a Reverse Stock Split, such Reverse Stock Split will become effective upon the filing of the Reverse Stock Split Amendment with the Secretary of State of the State of Delaware (as applicable, the “RSS Effective Date”).

A Reverse Stock Split will simultaneously impact all outstanding shares of Common Stock. A Reverse Stock Split will affect all holders of Common Stock uniformly, and no stockholder’s interest in the Company will be diluted as each such stockholder will hold the same percentage of the shares of Common Stock outstanding immediately following a Reverse Stock Split as that stockholder held immediately prior to a Reverse Stock Split, except for immaterial adjustments that may result from the treatment of fractional shares as described below. The Reverse Stock Split Amendment will not reduce the number of authorized shares of Common Stock (which will remain at 2,000,000,000) or Preferred Stock (which will remain at 10,000,000) and will not change the par value of the Common Stock or Preferred Stock (which in each case will remain at $0.0001 per share).

If the Reverse Stock Split Proposal is approved by our stockholders, the Board will make a determination, in its sole discretion, as to whether effecting one or more Reverse Stock Splits is in the best interest of the Company and our stockholders in light of, among other things, the Company’s ability to increase the bid price of our Common Stock to meet the minimum bid price requirements of Nasdaq without effecting a Reverse Stock Split, the per share price of the Common Stock immediately prior to any Reverse Stock Split, and the expected stability of the per share price of the Common Stock following any Reverse Stock Split. If the Board determines that it is in the best interests of the Company and its stockholders to effect one or more Reverse Stock Splits, it will determine the ratio of that such Reverse Stock Split, based on factors discussed below.

Reasons for a Reverse Stock Split

To continue to satisfy Nasdaq listing standards. Nasdaq Listing Rule 5450(a)(1) for continued listing on Nasdaq requires that companies must maintain a minimum bid price of $1.00 (the “Bid Price Requirement”). If a company’s bid price is below $1.00 for a period of 30 consecutive trading days, it is deemed non-compliant with the Bid Price Requirement until it maintains a bid price of $1.00 or more for ten consecutive trading days (or longer, at Nasdaq’s discretion). Although our Common Stock is currently below the $1.00 per share Bid Price Requirement as of the date prior to filing this Proxy Statement, our stock price has in the past been, and may in the future be, volatile, and there can be no assurance that it will remain below or above the $1.00 per share Bid Price Requirement. Our expectation is that we would implement a Reverse Stock Split if needed in order to cause an increase in our stock price to regain compliance with the Bid Price Requirement. Reducing the number of outstanding shares of our Common Stock should, absent other factors, result in an increase in the per share market price of our Common Stock in satisfaction of Nasdaq’s continued listing standards. However, there is no guarantee that implementing a Reverse Stock Split will increase the price of our Common Stock sufficiently to be able to re-gain such compliance. If we are otherwise unable to comply with the listing standards, or if we are not able to complete a Reverse Stock Split prior to the end of the compliance period, such non-compliance or a delisting from Nasdaq would materially and adversely affect our ability to raise capital, including under our current agreements, and our financial condition and business.

To potentially attract investment capital. With a high number of issued and outstanding shares of Common Stock, the price per share of our Common Stock may be too low for the Company to attract investment capital on reasonable terms for the Company. We believe that a Reverse Stock Split will make our Common Stock more attractive to a broader range of institutional investors, professional investors and other members of the investing public.

To potentially improve the marketability and liquidity of our Common Stock. The Board believes that an increased stock price may also improve the marketability and liquidity of our Common Stock. For example, many brokerages, institutional investors and funds have internal policies that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers by restricting or limiting the ability to purchase such stocks on margin. Additionally, investors may be dissuaded from purchasing stocks below certain prices because brokers’ commissions, as a percentage of the total transaction value, can be higher for low-priced stocks. We believe that a Reverse Stock Split may make our Common Stock a more attractive and cost-effective investment for many investors, which may enhance the liquidity of the holders of our Common Stock.

To decrease the risk of market manipulation of our Common Stock. The Board believes that the potential increase in stock price may reduce the risk of market manipulation of our Common Stock, which we believe is enhanced when our stock trades below $1.00 per share. By reducing market manipulation risk, we may also thereby potentially decrease the volatility of our stock price.

To provide us with flexibility with respect to our authorized Common Stock. A Reverse Stock Split will also effectively increase the number of authorized and unreserved shares of our Common Stock for future issuances by the amount of the reduction in outstanding shares of Common Stock effected by a Reverse Stock Split. These additional shares would be available in the event that the Board determines that it is necessary or appropriate (i) to provide financial flexibility to raise additional capital through the sale of equity securities, convertible securities, or other equity-linked securities; (ii) to enter into strategic business transactions; (iii) to provide equity incentives to directors, officers and employees pursuant to equity compensation plans; and (iv) for other corporate purposes. The availability of additional shares of Common Stock is particularly important in the event that the Board needs to undertake any of the foregoing actions on an expedited basis, as market conditions permit and favorable financing and business opportunities become available, and thus without the potential delay associated with convening a special stockholders’ meeting at that time.

We need additional funding to execute our business plan to develop and grow our business, including acquiring, developing and tooling our production facilities, developing and producing our electric vehicles, establishing or expanding design, research and development, production, sales, customer experience and service facilities and building our brand. The opinion of our independent registered public accountants on our audited financial statements as of and for the year ended December 31, 2023 contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. We continue to explore all financing alternatives, including through issuances of our securities, as our operations are anticipated to require significant capital for the foreseeable future. We are also seeking strategic partners to provide additional capital and other support to enable us to scale our business. As we seek additional sources of financing, there can be no assurance that such financing would be available to us on favorable terms or at all. If we are unable to raise substantial additional capital in the near term, through sales of our equity securities or otherwise, our operations and production plans will be scaled back or curtailed.

Criteria to be Used for Determining Whether to Implement a Reverse Stock Split

This proposal gives the Board sole discretion to determine whether to implement one or more Reverse Stock Splits and, if so implemented, select a Reverse Stock Split ratio for any Reverse Stock Split from within a range between and including 1:2 to 1:30 (provided that the Board shall not effect one or more Reverse Stock Splits that, in the aggregate, exceed the Aggregate Reverse Stock Split Ratio Cap), any time prior to the one-year anniversary of the date on which the Reverse Stock Split Proposal is approved by the Company’s stockholders, based on the Board’s then-current assessment of the factors below, and in order to maximize Company and stockholder interests. In determining whether to implement a Reverse Stock Split, and which ratio to implement, if any, the Board may consider, among other factors:

Subject to the Aggregate Reverse Stock Split Ratio Cap, we believe that granting our Board the authority to set the ratio for any Reverse Stock Split is essential because it allows us to take these factors into consideration and to react to changing market conditions. If the Board chooses to implement a Reverse Stock Split, the Company will make a public announcement regarding the determination of the Reverse Stock Split ratio.

Certain Risks and Potential Disadvantages Associated with a Reverse Stock Split

One or more Reverse Stock Splits, if completed, may not result in the intended benefits described above, the market price of our Common Stock may not increase (proportionately to the reduction in the number of shares of our Common Stock outstanding after a Reverse Stock Split or otherwise) following a Reverse Stock Split and the market price of our Common Stock may decrease in the future.

Although reducing the number of outstanding shares of our Common Stock through a Reverse Stock Split is intended, absent other factors, to increase the per share market price of our Common Stock, the effect of a Reverse Stock Split on our stock price cannot be predicted with any certainty. In addition, the history of reverse stock splits for other companies is varied, particularly since some investors may view a reverse stock split negatively. It is possible that our stock price after a Reverse Stock Split will not increase in the same proportion as the reduction in the number of shares outstanding, causing a reduction in the Company’s overall market capitalization. Further, even if we implement a Reverse Stock Split, our stock price may decline due to various factors, including our future performance, financial results, dilutive issuances of additional securities, market perception of our business, and general industry, market and economic conditions, among the other matters identified under the heading “Risk Factors” in our Form 10-K and other filings with the SEC. This percentage decline, as an absolute number and as a percentage of our overall market capitalization, may be greater than would occur in the absence of a Reverse Stock Split. In the future, if we fail to satisfy Nasdaq’s listing requirements and are subsequently unable to regain compliance in a timely manner, Nasdaq may suspend trading and commence delisting proceedings.

Nasdaq Listing Rule 5810 provides that if a listed company’s security fails to meet the continued $1.00 minimum price rule and has effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, then such company is not be eligible for any 180 day compliance period specified in Nasdaq Listing Rule 5810(c)(3)(A) and Nasdaq’s Listing Qualifications Department shall issue a Staff Delisting Determination under Nasdaq Listing Rule 5810 with respect to that security. Since the March 2024 Reverse Stock Split effected a 1-for-23 reverse stock split, the highest ratio that the Company could effect any subsequent Reverse Stock Split is approximately 1:10 in order to avoid exceeding the cumulative reverse split ratio of 250:1 set forth in Nasdaq Listing Rule 5810. As such, the implementation of the next Reverse Stock Split effected by the Company at a ratio above 1:10 could make it more difficult for us to maintain our listing with Nasdaq.

On August 19, 2024, Nasdaq proposed amendments to Nasdaq Listing Rule 5810 which, if adopted, would modify certain of its procedures related to delisting notifications concerning compliance with the bid price rule (the “Proposed Rule”). In particular, the Proposed Rule would provide that the 180 day compliance grace period generally available to listed companies who fail to satisfy the $1.00 minimum bid price rule would not be available to any issuer that had effected a reverse stock split over the prior one-year period. If adopted, the Proposed Rule could make it more difficult for us to maintain our listing with Nasdaq, or could have the effect of causing the Board to choose a higher split ratio than it otherwise deems appropriate. The Proposed Rule is currently subject to public comment and was scheduled to become effective October 3, 2024 unless the SEC extends the comment period or if Nasdaq takes other action to amend, modify or withdraw the Proposed Rule. On October 3, 2024, the SEC extended the comment period on the Proposed Rule to November 21, 2024. It is not presently known if the comment period will be extended, or if the Proposed Rule will ultimately become effective in its current form, or at all.

Any Reverse Stock Split may decrease the liquidity of our Common Stock and result in higher transaction costs. The liquidity of our Common Stock may be negatively impacted by the reduced number of shares outstanding after a Reverse Stock Split, which would be exacerbated if the stock price does not increase following the split. In addition, any Reverse Stock Split may increase the number of stockholders owning “odd lots” of fewer than 100 shares, trading which generally results in higher transaction costs. Accordingly, a Reverse Stock Split may not achieve the desired results of increasing marketability and liquidity as described above.

The implementation of a Reverse Stock Split would result in an effective increase in the authorized number of shares of Common Stock available for issuance, which could, under certain circumstances, have anti-takeover implications. The additional shares of Common Stock available for issuance could be used by the Company to oppose a hostile takeover attempt or to delay or prevent changes in control or in our management. Although a Reverse Stock Split has been prompted by business and financial considerations, and not by the threat of any hostile takeover attempt (nor is the Board currently aware of any such attempts directed at the Company), stockholders should be aware that approval of the Reverse Stock Split Proposal could facilitate future efforts by us to deter or prevent changes in control, including transactions in which stockholders might otherwise receive a premium for their shares over then-current market prices.

Stockholders should also keep in mind that the implementation of a Reverse Stock Split does not have an effect on the actual or intrinsic value of our business or a stockholder’s proportional ownership interest (subject to the treatment of fractional shares). However, should the overall value of our Common Stock decline after a Reverse Stock Split, then the actual or intrinsic value of shares held by stockholders will also proportionately decrease as a result of the overall decline in value.

Effects of a Reverse Stock Split

A reverse stock split refers to a reduction in the number of outstanding shares of a class of a corporation’s capital stock, which may be accomplished, as in this case, by reclassifying and combining all of our outstanding shares of Common Stock into a proportionately smaller number of shares. For example, a stockholder holding 100,000 shares of Common Stock before a Reverse Stock Split would instead hold 10,000 shares of Common Stock immediately after that Reverse Stock Split if the Board determined the ratio to be 1-for-10. Each stockholder’s proportionate ownership of outstanding shares of Common Stock would remain the same, except for immaterial adjustments that may result from the treatment of fractional shares as described herein. All shares of Common Stock will remain validly issued, fully paid and non-assessable.

Upon the effectiveness of a Reverse Stock Split:

This will result in approximately the same aggregate price being required to be paid (if any as applicable pursuant to their respective transaction documents) under such securities upon conversion, and approximately the same value of shares of Common Stock being delivered upon such conversion, immediately following a Reverse Stock Split as was the case immediately preceding a Reverse Stock Split.

The following table summarizes, for illustrative purposes only, the approximate number of shares of our Common Stock that would be outstanding as a result of the potential reverse stock split ratios within the range of this Proposal 6 based on information as of the Record Date (unless otherwise noted below) and without giving effect to the treatment of fractional shares.

Assuming Proposal 6 Is Approved by Stockholders and Implemented by the Board

A Reverse Stock Split would affect all stockholders uniformly. As of the RSS Effective Date, each stockholder would own a reduced number of shares of Common Stock. Percentage ownership interests, voting rights and other rights and preferences would not be affected, except to the extent that a Reverse Stock Split would result in fractional shares (as described below).

A Reverse Stock Split would not affect the registration of our Common Stock under Section 12(b) of the Exchange Act, and we would continue to be subject to the periodic reporting and other requirements of the Exchange Act. Our Common Stock would continue to be listed on Nasdaq under the symbol “GOEV” (subject to compliance with continued listing requirements) but would have a new Committee on Uniform Securities Identification Procedures (“CUSIP”) number after the RSS Effective Date.

Fractional Shares

No fractional shares will be issued in connection with a Reverse Stock Split, if implemented. Our transfer agent, Continental Stock Transfer & Trust Company, will aggregate all fractional shares of our Common Stock and sell them as soon as practicable after the RSS Effective Date at the then-prevailing prices on the open market, on behalf of those stockholders who would otherwise be entitled to receive a fractional share of our Common Stock as a result of a Reverse Stock Split. We expect that our transfer agent will conduct the sale in an orderly fashion at a reasonable pace and that it may take several days to sell all of the aggregated fractional shares of our Common Stock (the “Aggregated Fractional Shares”). After the completion of such sale, stockholders of record who otherwise would be entitled to receive fractional shares (i.e., stockholders that hold a number of pre-Reverse Stock Split Shares of Common Stock not evenly divisible by the final ratio determined by the Board) will instead receive their respective pro rata share of the total proceeds of that sale (the “Total Sale Proceeds”). These stockholders will be entitled to a cash payment (without interest), in lieu of any fractional shares, in an amount equal to: (a) their respective fractional share interest, multiplied by (b) a share price equal to (i) the Total Sale Proceeds, divided by (ii) the Aggregated Fractional Shares.

Other than the right to receive the cash payment described above, a fractional stockholder, solely with respect to its fractional shares of our Common Stock, will not retain any voting or other rights that accompany such fractional shares of our Common Stock. Because cash payments will be made in lieu of fractional shares, a Reverse Stock Split could have the effect of reducing the number of our stockholders, to the extent there are stockholders who hold fewer than the number of shares of our Common Stock that will be combined into one (1) share (based on the final ratio). Reducing the number of post-Reverse Stock Split stockholders is not, however, one of the purposes or an objective of this proposal. If you believe that you may not hold a sufficient number of shares of our Common Stock at the RSS Effective Date to retain at least one (1) share of our Common Stock in the Reverse Stock Split, and you want to continue to hold our Common Stock after a

Reverse Stock Split, you will need to purchase a sufficient number of shares of our Common Stock prior to the RSS Effective Date so that you hold a number of shares of our Common Stock that would entitle you to receive at least one share of our Common Stock if a Reverse Stock Split is implemented.

Stockholders should be aware that, under the escheat or unclaimed property laws of the various jurisdictions where stockholders reside or are domiciled, where the Company is domiciled, and where the funds will be deposited, sums due for fractional share interests that are not timely claimed after the RSS Effective Date of a Reverse Stock Split may be required to be paid to the designated agent for each such jurisdiction, unless correspondence has been received by us or our transfer agent concerning ownership of such funds within the time permitted in such jurisdiction. Thereafter, stockholders otherwise entitled to receive such funds will have to seek to obtain them directly from the state to which they were paid. After the RSS Effective Date, stockholders owning less than a whole share will no longer be stockholders. We do not intend for this transaction to be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.

Procedure for Effecting A Reverse Stock Split

The effectiveness of the proposed Reverse Stock Split Amendment or the abandonment thereof, notwithstanding stockholder approval, will be determined by the Board, at its sole discretion, prior to the one-year anniversary of the date on which a Reverse Stock Split is approved by the Company’s stockholders at the Special Meeting. The text of the proposed form of a Reverse Stock Split Amendment is attached hereto as Annex A. If approved by stockholders and implemented by the Board, a Reverse Stock Split will become effective upon the filing of the Reverse Stock Split Amendment with the Secretary of State of the State of Delaware. We will publicly announce the Reverse Stock Split ratio chosen by the Board prior to the RSS Effective Date.

Effect on Beneficial Holders

Stockholders who hold their shares through a bank, broker or other nominee will be treated in the same manner as registered stockholders who hold their shares in their names. Banks, brokers and other nominees will be instructed to effect a Reverse Stock Split for beneficial owners of such shares. However, banks, brokers or other nominees may implement different procedures than those to be followed by registered stockholders for processing a Reverse Stock Split, particularly with respect to the treatment of fractional shares. Stockholders whose shares of Common Stock are held in the name of a bank, broker or other nominee are encouraged to contact their bank, broker or other nominee with any questions regarding the procedures for implementing a Reverse Stock Split with respect to their shares.

Effect on Registered “Book-Entry” Holders

Registered stockholders hold shares electronically in book-entry form under the direct registration system (i.e., do not have stock certificates evidencing their share ownership but instead have a statement reflecting the number of shares registered in their accounts) and, as a result, do not need to take any action to receive post-split shares. If they are entitled to receive post-split shares, they automatically will receive, at their address of record, a transaction statement indicating the number of post-split shares held following the RSS Effective Date.

Effect on Preferred Stock

Upon a Reverse Stock Split, there will be no adjustment to the authorized amount of shares of Preferred Stock. The number of issued and outstanding shares of Preferred Stock will not change; however, to the extent such securities are convertible into Common Stock, proportionate adjustments will be made to the applicable conversion rates and conversion or exercise prices of such securities.

No Appraisal Rights

Our stockholders are not entitled to appraisal rights with respect to a Reverse Stock Split, and we will not independently provide stockholders with any such right.

Certain U.S. Federal Income Tax Consequences

The following discussion is a general summary of certain U.S. federal income tax consequences relating to the proposed Reverse Stock Split to us and stockholders. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as in effect on the date of this filing, and all of which are subject to change or differing interpretations, possibly with retroactive effect. Any such change or differing interpretation could affect the tax consequences described below.

We have not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service (the “IRS”) regarding the U.S. federal income tax consequences of the Reverse Stock Split to us or U.S. holders (as defined below), and there can be no assurance that the IRS will not challenge the statements and conclusions set forth below or that a court would not sustain any such challenge. EACH HOLDER OF COMMON STOCK SHOULD CONSULT WITH SUCH STOCKHOLDER’S TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO SUCH HOLDER.

This summary generally only applies to U.S. holders (as defined below) that hold our Common Stock as a “capital asset” within the meaning of Section 1221 of the Code (generally, property held for investment).

This summary is for general information only and does not address all tax considerations that may be applicable to a stockholder’s particular circumstances or to stockholders that may be subject to special tax rules, such as, for example and without limitation, brokers and dealers in securities or commodities, banks and financial institutions, regulated investment companies, real estate investment trusts, personal holding companies, U.S. holders (as defined below) whose functional currency is not the U.S. dollar, U.S. expatriates, non-resident alien individuals, tax-exempt entities, governmental organizations, foreign entities, traders in securities that elect to use a mark-to-market method of accounting for their securities, certain former citizens or long-term residents of the United States, insurance companies, persons holding shares of our Common Stock as part of a hedging, integrated or conversion transaction or a straddle or persons deemed to sell shares of our Common Stock under the constructive sale provisions of the Code, persons that hold more than 5% of our Common Stock, persons that hold our Common Stock in an individual retirement account, 401(k) plan or similar tax-favored account, grantor trusts, persons who acquired their Common Stock in connection with employment or other performance of services, or partnerships or other flow-through entities for U.S. federal income tax purposes and partners, members or investors in such entities. In addition, this summary does not address any aspect of U.S. state or local tax, non-U.S. tax, the Medicare tax on net investment income, U.S. federal estate and gift tax, the base erosion and anti-abuse tax, alternative minimum tax or other U.S. federal tax consequences other than U.S. federal income taxation. This summary also does not address any U.S. federal income tax considerations relating to any other transaction other than the Reverse Stock Split.

For purposes of this summary, a “U.S. holder” means a beneficial owner of our Common Stock who is any of the following for U.S. federal income tax purposes:

If an entity (or arrangement) classified as a partnership for U.S. federal income tax purposes holds shares of our Common Stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A U.S. holder treated as a partner in a partnership that holds shares of our Common Stock should consult its tax advisor regarding the U.S. federal income tax consequences of the proposed Reverse Stock Split to it.

THIS SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISOR WITH RESPECT TO THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATION AS WELL AS ANY TAX CONSIDERATIONS ARISING UNDER OTHER U.S. FEDERAL TAX LAWS (SUCH AS THE ESTATE OR GIFT TAX LAWS) OR UNDER THE LAWS OF ANY STATE, LOCAL, NON-U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

Tax Consequences to the Company

The proposed Reverse Stock Split is intended to be treated as a tax deferred “recapitalization” for U.S. federal income tax purposes under Section 368(a)(1)(E) of the Code, and we do not expect to recognize taxable income, gain or loss as a result of the proposed Reverse Stock Split.

Tax Consequences to U.S. Holders

Assuming the Reverse Stock Split qualifies as a recapitalization, except as described below with respect to cash received in lieu of a fractional share, a U.S. holder generally should not recognize any gain or loss for U.S. federal income tax purposes upon the Reverse Stock Split. In the aggregate, a U.S. holder’s tax basis in the Common Stock received pursuant to the Reverse Stock Split (excluding the portion of the tax basis that is allocable to any fractional share) should equal the U.S. holder’s tax basis in its Common Stock surrendered in the Reverse Stock Split in exchange therefor, and the holding period of the U.S. holder’s Common Stock received pursuant to the Reverse Stock Split should include the holding period of the Common Stock surrendered in the Reverse Stock Split in exchange therefor. U.S. Treasury regulations promulgated under the Code provide rules for allocating the tax basis and holding period of the shares of the Common Stock received pursuant to the Reverse Stock Split. U.S. holders of our Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.

In general, a U.S. holder who receives a cash payment in lieu of a fractional share should recognize capital gain or loss equal to the difference between the amount of cash received in lieu of the fractional share and the portion of the U.S. holder’s tax basis of the Common Stock surrendered in the Reverse Stock Split that is allocable to the fractional share. Such gain or loss generally should be long-term capital gain or loss if the U.S. holder’s holding period in its Common Stock surrendered in the Reverse Stock Split is more than one year as of the RSS Effective Date. The deductibility of net capital losses by individuals and corporations is subject to limitations. Depending upon a stockholder’s individual facts and circumstances, it is possible that cash received in lieu of a fractional share could be treated as a distribution under Section 301 of the Code, so stockholders should consult their own tax advisors as to that possibility and the resulting tax consequences to them in that event.

Information Reporting and Backup Withholding

Information returns generally will be required to be filed with the IRS with respect to the payment of cash in lieu of a fractional share made pursuant to the Reverse Stock Split unless such U.S. holder is an exempt recipient and timely and properly establishes with the applicable withholding agent the exemption. In addition, payments of cash in lieu of a fractional share made pursuant to the Reverse Stock Split may, under certain circumstances, be subject to backup withholding (at the current applicable rate of 24%), unless a U.S. holder provides, in a timely manner, the appropriate documentation (generally, IRS Form W-9) to the applicable withholding agent certifying that, among other things, its taxpayer identification number is correct, or otherwise establishes an exemption. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the U.S. holder’s U.S. federal income tax liability, if any, provided that the U.S. holder furnishes the required information in a timely manner to the IRS. U.S. holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.

Accounting Consequences

The par value per share of our Common Stock will remain unchanged at $0.0001 per share following the Reverse Stock Split. As a result, as of the RSS Effective Date, the stated capital on the Company’s balance sheets attributable to Common Stock will be reduced proportionally based on the Reverse Stock Split ratio, and the additional paid-in capital will be credited with the amount by which the capital is reduced. The net income or loss per share of Common Stock will be increased as a result of the fewer shares of Common Stock outstanding. The Reverse Stock Split will be reflected retroactively in our consolidated financial statements.

Required Vote and Recommendation of Board of Directors

Approval of Proposal 6 requires the affirmative vote of a majority of the votes cast on the Proposal. Abstentions and broker non-votes, if any, will have no effect on the outcome of this vote. Proposal 6 is considered “routine”, and thus we do not expect any broker non-votes for this Proposal.

THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 6

PROPOSAL 7

 

AFVP SHARE ISSUANCE PROPOSAL

Overview

We are seeking approval, pursuant to Nasdaq Rule 5635, of the issuance of shares of our Common Stock upon (I) the conversion of the Company’s 7.5% Series C Cumulative Perpetual Redeemable Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”) pursuant to our (x) Securities Purchase Agreement, dated April 9, 2024 (the “April 9 SPA”), (y) Securities Purchase Agreement, dated April 26, 2024 (the “April 26 SPA”), and (z) Securities Purchase Agreement, dated May 3, 2024 (the “May 3 SPA,” and together with the April 9 SPA and April 26 SPA, collectively, the “Series C Purchase Agreements”), in each case, entered into with certain special purpose vehicles managed by entities affiliated with Tony Aquila, the Company’s Chief Executive Officer and Executive Chairman (collectively, the “Series C Purchasers”), (II) the election by the Series C Purchasers for payment of dividends on the Series C Preferred Shares (as defined below) to be paid in Common Stock in accordance with the Certificate of Designation of Series C Cumulative Perpetual Redeemable Preferred Stock, par value $0.0001 per share, of Canoo Inc. (the “Series C Preferred Certificate”), and (III) the exercise of warrants issued pursuant to the Series C Purchase Agreements per the terms set forth in the Series C Warrants (as defined below), in each case, at prices less than the applicable minimum price discussed below in excess of 20% of the number of shares of our Common Stock outstanding on April 9, 2024 (the “AFVP Share Issuance Proposal”). The Series C Purchase Agreements and the Series C Warrants collectively will be referred to herein as the “Applicable AFVP Agreements”.

Pursuant to Nasdaq Rule 5635, the Company is restricted from issuing to the AFVP Purchasers any Common Stock pursuant to any of the Applicable AFVP Agreements if the issuance of such shares of Common Stock would exceed 12,888,262 (which number of shares represents approximately 19.99% of the aggregate number of shares of Common Stock issued and outstanding as of April 9, 2024) at prices less than the AFVP Minimum Price (as defined below) without first obtaining the approval of the Company’s stockholders (the “AFVP Exchange Cap”).

The AFVP Share Issuance Proposal is not conditioned on the approval of any of the other proposals set forth in this Proxy Statement and none of the other proposals in this Proxy Statement are conditioned upon the approval of the AFVP Share Issuance Proposal.

Background

Series C Purchase Agreements and Series C Warrants

On April 9, 2024, the Company entered into the April 9 SPA with certain of the Series C Purchasers in connection with the issuance and sale by the Company of 10,000 shares of the Series C Preferred Stock (the “1st Series C Issuance”), which are convertible into shares of Common Stock, and pursuant to which the Company issued warrants to purchase 4,473,272 shares of Common Stock (the “1st Series C Warrant”), for a total purchase price of $10,000,000. Pursuant to the terms of the April 9 SPA, on or prior to the date 20 business days after April 9, 2024, the Series C Purchasers or affiliated entities had the right to purchase up to an additional $15,000,000 of additional Series C Preferred Stock and Series C Warrants (as defined below) on substantially identical terms (the “Series C Additional Investment Right”).

On April 26, 2024, a Series C Purchaser elected the Series C Additional Investment Right and the Company entered into the April 26 SPA with that Series C Purchaser in connection with the issuance and sale by the Company of 1,500 shares of the Series C Preferred Stock (the “2nd Series C Issuance”) and pursuant to which the Company issued warrants to purchase 670,991 shares of Common Stock (the “2nd Series C Warrant”), for a total purchase price of $1,500,000.

On May 3, 2024, another Series C Purchaser elected the Series C Additional Investment Right and the Company entered into the May 3 SPA with that Series C Purchaser in connection with the issuance and sale by the Company of 5,000 shares of the Series C Preferred Stock (the “3rd Series C Issuance,” and together with the 1st Series C Issuance and the 2nd Series C Issuance, collectively, the “Series C Preferred Shares”), and pursuant to which the Company issued warrants to purchase 2,236,636 shares of Common Stock (the “3rd Series C Warrant,” and together with the 1st Series C Warrant and the 2nd Series C Warrant, collectively, the “Series C Warrants”), for a total purchase price of $5,000,000.

Pursuant to the Series C Purchase Agreements, the Company issued to the Series C Purchasers the Series C Warrants to purchase in the aggregate 7,380,899 shares of Common Stock. The Series C Warrants have an exercise price of $2.2355 per share and expire on the date that is the fifth-year anniversary of issuance. The Series C Warrants include customary adjustment provisions for stock splits, combinations and similar events.

On May 3, 2024, the Company closed the sale of the Series C Preferred Shares and the Series C Warrants to the Series C Purchasers. On May 6, 2024, the Company filed the Series C Certificate of Designation with the Delaware Secretary of State.

Following the completion of the transactions contemplated by the Applicable AFVP Agreements, the Series C Purchasers hold an aggregate of 16,500 shares of Series C Preferred Stock. Although the Company, at the discretion of the Board, may issue additional preferred securities in the future, the approval of the AFVP Share Issuance Proposal would only apply to shares to be issued to the Series C Purchasers pursuant to the Applicable AFVP Agreements.

Designation of the Series C Preferred Shares

Ranking and Dividend

The Series C Preferred Shares rank senior to the Common Stock with respect to dividends and distributions on liquidation, winding-up and dissolution. The Series C Preferred Shares each has a stated value of $1,000 (the “Stated Value”). Dividends on the Series C Preferred Shares may be paid in either cash, in kind or, at the option of the Series C Purchasers, in shares of Common Stock.

The Company will pay, subject to certain adjustments, dividends at a rate per annum (the “Dividend Rate”) equal to 7.50% of the Liquidation Preference (as defined below) per Series C Preferred Share from the original issuance date of such Series C Preferred Share through the fifth anniversary of such issuance (the “First Reset Date”). On and after the First Reset Date, the Company will pay a Dividend Rate equal to the Dividend Rate applicable to the prior payment period plus 1.50%. If the Series C Purchasers elect to receive a cash dividend payment and the Company fails to make a corresponding cash dividend payment (a “Dividend Nonpayment”) for three or more payment periods, the Dividend Rate will increase by an additional 0.25% per annum commencing immediately following the third payment period for which there has been a Dividend Nonpayment and will increase an additional 0.25% per annum every third succeeding Dividend Nonpayment (whether the payment periods to which such Dividend Nonpayments relate are consecutive or non-consecutive); provided that the maximum Dividend Rate on the Series C Preferred Shares is capped at 12.0% per annum.

Liquidation Preference

Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, each of the Series C Purchasers will be entitled to payment out of the assets of the Company, prior and in preference to holders of Common Stock, in an amount per share equal to the Stated Value (the “Liquidation Preference”) plus any accumulated and unpaid dividends. As of the Record Date, the aggregate Liquidation Preference plus any accumulated and unpaid dividends of all outstanding Series C Preferred Stock was approximately $17.0 million.

Conversion

Each Series C Purchaser has the right, at its option, to convert its Series C Preferred Shares, in whole or in part, into fully paid and non-assessable shares of Common Stock at a conversion price equal to the lesser of (i) 120% of the average of the closing sale prices per share of Common Stock for the ten consecutive trading days immediately preceding the conversion (the “Series C Average Common Stock Price”) (provided that if the Series C Average Common Stock Price is equal to the Series C Floor Price (as defined below), the Series C Conversion Price shall be determined based on 100% of the Series C Average Common Stock Price instead of 120%) and (ii) $2.2355 (such price, the “Series C Conversion Price”); provided that in no event shall the Series C Conversion Price be less than $2.00 (the “Series C Floor Price”). The Series C Conversion Price is subject to customary adjustments, including in the event of any stock split, stock dividend, recapitalization or similar events. The Series C Preferred Shares cannot be converted if such conversion would result in an issuance of Common Stock above the AFVP Exchange Cap. As of October 3, 2024, the effective Series C Conversion Price was $2.00 due to the application of the Series C Floor Price.

Voting

The holders of the Series C Preferred Shares shall be entitled to vote as a single class with the holders of the Common Stock on all matters submitted to a vote of the holders of Common Stock. With respect to any matter submitted to

a vote of the holders of Common Stock, each share of the Series C Preferred Shares shall be entitled to a number of votes equal to the number of shares of Common Stock into which such share of the Series C Preferred Shares were convertible on the record date for determining holders of Common Stock entitled to vote on such matter (such date, the “Applicable Record Date”); provided that (i) the aggregate number of votes to which a holder of the Series C Preferred Shares shall be entitled shall be reduced by the aggregate number of shares of Common Stock issued to such holder pursuant shares of Common Stock issued as dividends, (ii) until the Company has obtained the Requisite Shareholder Approval (as defined in the Series C Certificate of Designation), the amount set forth in the foregoing clause shall not exceed an amount equal to: (x) the total number of shares of Common Stock into which all outstanding shares of the Series C Preferred Shares could be converted as of the Applicable Record Date without violating the AFVP Exchange Cap or Beneficial Ownership Limitation (as defined in the Series C Certificate of Designation), divided by (y) the total number of shares of the Series C Preferred Stock outstanding as of the Applicable Record Date and (iii) for purposes of determining the number of votes each share of Preferred Stock is entitled to vote, the Series C Conversion Price shall not be less than $2.33 (the “Series C Voting Calculation”). As of the Record Date, pursuant to the Series C Voting Calculation, the holders of the Series C Preferred Shares will not receive any votes on the proposals set forth in this Proxy Statement due to the Beneficial Ownership Limitation set forth in clause (ii)(x) directly above since any shares of the Series C Preferred Shares convertible on the Record Date would exceed the Beneficial Ownership Limitation.

As long as any shares of Series C Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the Series C Purchasers holding a majority of the then outstanding shares of Series C Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series C Preferred Stock or alter or amend the Series C Certificate of Designation, (ii) amend or repeal any provision of, or add any provision to, the Company’s Certificate of Incorporation or Amended and Restated Bylaws, or file any articles of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, if such action would materially and adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series C Preferred Stock, or (iii) declare or pay any junior dividends or repurchase any junior securities during any time that all accrued dividends on the Series C Preferred Stock have not been paid in full in cash or, at the option of the Series C Purchasers, in shares of Common Stock.

Optional and Special Optional Redemptions; Change of Control

On or after the fifth anniversary of the original issuance date, or in connection with certain change of control events, the Company may redeem the Series C Preferred Shares for cash at a redemption price equal to 103% of the Liquidation Preference, plus any accumulated and unpaid dividends thereon.

Upon the occurrence of certain change of control events, each Series C Purchaser will have the right (subject to the Company’s special optional redemption right discussed in the paragraph above) to convert some or all of the shares of Series C Preferred Shares held by such Series C Purchaser into a number of shares of Common Stock per share of the Series C Preferred Shares to be converted equal to (x) the Liquidation Preference plus any accumulated and unpaid dividends thereon divided by (y) the Series C Conversion Price.

Subsequent Participation Rights

If the Company sells any shares of a series of preferred stock and/or rights, options, or warrants to purchase shares of Common Stock or of a series of preferred stock, or similar securities (“Qualifying New Securities”), subject to certain exclusions, the Company shall give notice to the Series C Purchasers within 30 days after the issuance of Qualifying New Securities and provide each Series C Purchaser the option to elect to purchase up to the number of Qualifying New Securities on the same terms which equals the greater of (i) that number of Qualifying New Securities having an aggregate purchase price equal to 400% of the aggregate purchase price paid by such Series C Purchaser for its Series C Preferred Shares and Series C Warrants and (ii) the proportion that the Common Stock then held by such Series C Purchaser (including all shares of Common Stock issuable upon conversion or exercise of any Series C Preferred Shares or other derivative securities) bears to the total Common Stock outstanding (assuming the conversion and/or exercise of all Series C Preferred Shares and other derivative securities). Each Series C Purchaser’s participation right will expire and be of no further force and effect upon the redemption or conversion in full of its Series C Preferred Shares. The Series C Purchasers cannot elect to participate if such participation would result in an issuance of Common Stock above the AFVP Exchange Cap.

The foregoing descriptions of the Applicable AFVP Agreements do not purport to be complete and are qualified by reference to the full text of (i) the April 9 SPA, filed as Exhibit 10.1 to our current report on Form 8-K filed on

April 9, 2024, (ii) the Form of Warrant, filed as Exhibit A to Exhibit 10.1 to our current report on Form 8-K filed on April 9, 2024, (iii) the April 26 SPA, filed as Exhibit 10.2 to our Form 10-Q filed on August 14, 2024, (iv) the May 3 SPA, filed as Exhibit 10.3 to our Form 10-Q filed on August 14, 2024 and (v) the Series C Preferred Certificate, filed as Exhibit 3.1 to our current report on Form 8-K filed on May 6, 2024, each of which is incorporated by reference herein.

Reasons for Seeking Stockholder Approval

Our Common Stock is currently listed on The Nasdaq Capital Market and, as such, we are subject to the Nasdaq Listing Rules. Nasdaq Listing Rule 5635 requires us to obtain stockholder approval prior to the sale, issuance or potential issuance of Common Stock (or securities convertible into or exercisable for Common Stock) in connection with a transaction other than a public offering at a price less than the “Minimum Price” which either alone or together with sales by officers, directors or substantial stockholders of the company equals 20% or more of the Common Stock or 20% or more of the voting power outstanding before the issuance. For Nasdaq purposes, “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement. The applicable “Minimum Price” with respect to the Applicable AFVP Agreements is $2.33 per share of Common Stock based on the signing of the April 9 SPA (the “AFVP Minimum Price”).

The AFVP Exchange Cap applies to shares of Common Stock issued or that may be issued under each of the Applicable AFVP Agreements. As of the Record Date, we have not issued any shares of Common Stock pursuant to any of the Applicable AFVP Agreements and accordingly, we are seeking a single stockholder approval with respect to all future shares to be issued under the Applicable AFVP Agreements. Stockholder approval of this Proposal 7 will constitute stockholder approval for purposes of Nasdaq Listing Rule 5635.

Our Board has determined that the Applicable AFVP Agreements and our ability to issue the shares of Common Stock thereunder in excess of the AFVP Exchange Cap is in the best interests of the Company and its stockholders because the ability to issue shares of Common Stock to the Series C Purchasers or affiliated entities may provide us with another source of capital for general corporate purposes, which may include, but are not limited to, funding working capital, capital expenditures, operating expenses and the selective pursuit of business development opportunities, including continued product or technology investment.

We cannot predict the price of our Common Stock at any future date, when certain Series C Purchasers may elect to convert their Series C Preferred Shares or if the Series C Purchasers may elect dividend payments on their Series C Preferred Shares in the form of Common Stock, and therefore cannot predict the number of shares of Common Stock to be issued under the Applicable AFVP Agreements.

Therefore, we are seeking stockholder approval under this Proposal 7 to issue shares of Common Stock in excess of the AFVP Exchange Cap, if necessary, to the Series C Purchasers under the terms of the Applicable AFVP Agreements. The failure of the Company’s stockholders to approve this Proposal 7 will prevent the Company from issuing, at less than the AFVP Minimum Price, shares of Common Stock to the Series C Purchasers in excess of the AFVP Exchange Cap. However, it would be possible to sell or issue shares to the Series C Purchasers in excess of the AFVP Exchange Cap if the sale or issuance of such shares is equal to or greater than the AFVP Minimum Price.

Consequences of Non-Approval

As previously disclosed in the Company’s previous eight Form 10-Qs (beginning with the quarter ended March 31, 2022) and each of our previous two Form 10-Ks, the Company concluded that there was substantial doubt about its ability to continue to operate as a going concern for the 12 months following the issuance of its consolidated financial statements. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to access additional sources of capital, including, but not limited to equity and/or debt financings and government loans or grants. If the Company is unable to raise additional capital, the Company may have to significantly delay, scale back or discontinue the development or commercialization of its product and/or consider a sale or other strategic transaction. Furthermore, if we do not receive the AFVP Share Issuance Approval, this may result in the Series C Preferred Shares accruing further dividends and remaining senior in the share capital structure to holders of Common Stock.

If we do not receive the AFVP Share Issuance Approval, (i) this will restrict our ability to issue shares of Common Stock to the Series C Purchasers unless we are able to issue shares to the Series C Purchasers at a price per share

greater than the AFVP Minimum Price and (ii) the Company may be unable to raise, or adversely affected raising, additional capital in the future from the Series C Purchasers or affiliates thereof.

Accordingly, our Board believes that providing the Company the flexibility to issue shares of Common Stock in excess of the AFVP Exchange Cap and below the AFVP Minimum Price for all of the Applicable AFVP Agreements is advisable and in the best interests of the Company and our stockholders.

Effect on Current Stockholders

The issuance of shares of Common Stock under the Applicable AFVP Agreements (including any such shares issued below the AFVP Minimum Price for each agreement that is the subject of this Proposal 7) would result in an increase in the number of shares of Common Stock outstanding, and our stockholders will incur dilution of their percentage ownership.

We cannot predict the price of our Common Stock at any future date, when certain Series C Purchasers may elect to convert their Series C Preferred Shares or if the Series C Purchasers may elect dividend payments on their Series C Preferred Shares in the form of Common Stock, and therefore cannot predict the number of shares of Common Stock to be issued under the Applicable AFVP Agreements. As such, the exact magnitude of the dilutive effect cannot be conclusively determined. However, the dilutive effect may be material to our current stockholders.

Required Vote and Recommendation of Board of Directors

Approval of Proposal 7 requires the affirmative vote of stockholders representing a majority of voting power of the shares present in person or represented by proxy and entitled to vote generally on the subject matter. Abstentions and “broker non-votes,” if any, will have no effect on the outcome of this vote.

THE BOARD RECOMMENDS A VOTE “FOR” PROPOSAL 7

PROPOSAL 8

 

EIP AMENDMENT PROPOSAL

We are asking our stockholders to approve an amendment (the “EIP Amendment”) to the Canoo Inc. 2020 Equity Incentive Plan (the “2020 EIP”) which, if approved by our stockholders, will increase the number of shares of our Common Stock available and reserved for issuance under the 2020 EIP by an additional 45,000,000 shares, as well as modify the number of shares of Common Stock that may be issued pursuant to the exercise of incentive stock options granted under the 2020 EIP to reflect the new share reserve (the “EIP Amendment Proposal”). Unless otherwise noted, share amounts set forth in this Proposal 8 have been adjusted to reflect the March 2024 Reverse Stock Split.

The 2020 EIP was originally approved by our Board and stockholders on September 18, 2020 and December 18, 2020, respectively. Under the 2020 EIP as originally adopted, we reserved an aggregate number of shares of our Common Stock for issuance equal to 1,169,502. Prior to the proposed EIP Amendment, the 2020 EIP share reserve was increased pursuant to the annual evergreen provision set forth in the 2020 EIP by an aggregate amount of 3,679,609 additional shares of our Common Stock. As of October 3, 2024, the aggregate share reserve under the 2020 EIP was equal to 4,849,111 shares of Common Stock.

Since the adoption of the 2020 EIP, awards covering an aggregate number of 3,768,335 shares of our Common Stock have been granted, which aggregate number is net of any shares that have been cancelled or forfeited pursuant to certain awards previously granted under the 2020 EIP. As of October 3, 2024, there were 1,080,776 shares of Common Stock remaining available for future issuance as awards under the 2020 EIP. The EIP Amendment, if approved by our stockholders, would increase the number of shares of Common Stock available for issuance pursuant to awards under the 2020 EIP by an additional 45,000,000 shares, to a total of 46,169,502 shares of our Common Stock available for issuance as awards, which new share reserve would continue to be subject to the annual evergreen increases as further described below, as well as modify the number of shares of Common Stock that may be issued pursuant to the exercise of incentive stock options granted under the 2020 EIP to reflect the new share reserve.

Other than the increase to the share reserve as described above, the EIP Amendment makes no other material changes to the 2020 EIP. If the EIP Amendment is approved by our stockholders at the Annual Meeting, the EIP Amendment will become effective on the date of the Annual Meeting. If the EIP Amendment is not approved by our stockholders at the Annual Meeting, the 2020 EIP will continue by its terms and the EIP Amendment will not become effective.

If the EIP Amendment is approved by our stockholders at the Annual Meeting, we intend to file, pursuant to the Securities Act, a registration statement on Form S-8 to register the additional shares of Common Stock as soon as reasonably practicable thereafter.

The text of the EIP Amendment is attached hereto as Annex B.

Reasons for the EIP Amendment

We believe that operation of the 2020 EIP is a necessary and powerful tool in enabling us to attract and retain the best available personnel for positions of substantial responsibility; to provide additional incentive to key employees, key contractors and non-employee directors, and to promote the success of our business. The 2020 EIP provides flexibility to our compensation methods in order to adapt the compensation of such employees, contractors and directors to a changing business environment, after giving due consideration to competitive conditions and the impact of federal tax laws. We have strived to use our 2020 EIP resources effectively and to maintain an appropriate balance between stockholder interests and the ability to recruit and retain valuable employees. However, we believe there is an insufficient number of shares remaining under our 2020 EIP to meet our current and projected needs.

The additional 45,000,000 shares requested to be reserved for issuance under the 2020 EIP pursuant to the EIP Amendment represents approximately 53.2% of the 86,776,374 issued and outstanding shares of our Common Stock as of October 3, 2024. This amount does not include shares of Common Stock that may be issued upon conversion of outstanding transaction agreements (including, among others, the July PPA, the 2022 PPA and preferred stock transactions) and exercise of warrants. Based on the number of shares of Common Stock remaining available for future issuance as awards under the 2020 EIP as of October 3, 2024 (i.e., 1,080,776 shares), and the closing price per share of our Common Stock on Nasdaq as of October 3, 2024 (i.e., $0.9568), that would leave only approximately

$1,034,086 in current value for such remaining shares. For the reasons discussed above and further below, the Board believes that is insufficient in order to attract and retain the best available personnel for positions of substantial responsibility and to provide additional incentive to key employees, key contractors and non-employee directors; and to promote the success of our business.

Our Board believes the additional shares of our Common Stock to be made available for grants of awards pursuant to the EIP Amendment represents reasonable potential equity dilution and provides management with an appropriate equity plan with which to satisfactorily align the incentives of our employees, directors and other eligible participants to increase the value of our company for all stockholders. Further, the Board believes that the EIP Amendment, which increases the number of shares of Common Stock available for issuance pursuant to awards under the 2020 EIP, reflect best practices in our industry and are appropriate to permit the grant of equity awards at expected levels for the future. Accordingly, it is the judgment of our Board that the proposed EIP Amendment is in the best interest of the Company and its stockholders.

Historical Information

The 2020 EIP currently provides that, subject to adjustment in accordance with Section 2(c) of the 2020 EIP and any adjustments as necessary to implement any Capitalization Adjustments (as defined in the 2020 EIP), the aggregate number of shares of Common Stock that may be issued pursuant to awards under the 2020 EIP will not exceed 1,169,502 shares of our Common Stock. In addition, this share reserve is subject to an automatic increase on January 1 of each year during the term of the 2020 EIP equal to 5% of the total number of shares of Common Stock outstanding on December 31 of the preceding year (or such lesser number of shares of Common Stock as determined by the Board). The EIP Amendment, if approved by our stockholders, would increase the number of shares of Common Stock available for issuance pursuant to awards under the 2020 EIP by an additional 45,000,000 shares, to a total of 46,169,502 shares of our Common Stock available for issuance as awards.

As of October 3, 2024, there were 1,080,776 shares of Common Stock remaining available for future issuance as awards under the 2020 EIP. The market price per share of the securities underlying such shares as of October 3, 2024 was $0.9568. For additional information regarding equity-based awards previously granted under the 2020 EIP, please see Note  15 to our consolidated financial statements filed with our Form 10-K for the fiscal year ended December 31, 2023.

The following table provides certain additional information regarding awards outstanding and unvested under the 2020 EIP as October 3, 2024.

Summary of Material Terms of the 2020 EIP

A summary description of the material features of the 2020 EIP, as amended by the EIP Amendment, is set forth below. The following summary does not purport to be a complete description of all the provisions of the 2020 EIP and is qualified in its entirety by reference to the 2020 EIP, attached hereto as Annex C, and the EIP Amendment, attached hereto as Annex B, each of which are incorporated by reference into this Proposal 8.

Eligibility. Any individual who is an employee of Canoo or any of its affiliates, or any person who provides services to Canoo or its affiliates, including members of the Board, is eligible to receive awards under the 2020 EIP at the discretion of the plan administrator. The basis for participation in the 2020 EIP is the administrator’s decision to select participants from among those eligible. As of October 3, 2024, we had approximately 468 employees, 7 non-employee directors and 43 consultants who were eligible to participate in the 2020 EIP.

Awards. The 2020 EIP provides for the grant of incentive stock options (“ISOs”), within the meaning of Section 422 of the Code to employees, including employees of any parent or subsidiary, and for the grant of non-statutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to employees, directors and consultants, including employees and consultants of Canoo’s affiliates.

Authorized Shares.

Initially, the maximum number of shares of Common Stock that may be issued under the 2020 EIP could not exceed 1,169,502 shares of Common Stock. In addition, the number of shares of Common Stock reserved for issuance under the 2020 EIP automatically increases on January 1 of each year, starting on January 1, 2021 through January 1, 2030, in an amount equal to (1) 5% of the total number of shares of Common Stock outstanding on December 31 of the preceding year, or (2) a lesser number of shares of Common Stock determined by the Board prior to the date of the increase. Notwithstanding the EIP Amendment, such annual evergreen increases have added a total of 3,679,609 shares of Common Stock to the share reserve. The maximum number of shares of Common Stock that may be issued upon the exercise of ISOs under the 2020 EIP is 3,508,507 shares.

The EIP Amendment, if approved by our stockholders, would increase the number of shares of Common Stock available for issuance pursuant to awards under the 2020 EIP by an additional 45,000,000 shares, to a total of 46,169,502 shares of our Common Stock available for issuance as awards, as well as modify the number of shares of Common Stock that may be issued pursuant to the exercise of incentive stock options granted under the 2020 EIP to reflect the new share reserve. This new share reserve would continue to be subject to the annual evergreen increases described above. On October 3, 2024, the closing price per share of our Common Stock on Nasdaq was $0.9568.

Shares subject to stock awards granted under the 2020 EIP that expire or terminate without being exercised or otherwise issued in full or that are paid out in cash rather than in shares do not reduce the number of shares available for issuance under the 2020 EIP. Shares withheld under a stock award to satisfy the exercise, strike or purchase price of a stock award or to satisfy a tax withholding obligation do not reduce the number of shares available for issuance under the 2020 EIP. If any shares of Common Stock issued pursuant to a stock award are forfeited back to or repurchased or reacquired by the Company because of the failure to vest, the shares that are forfeited or repurchased or reacquired will revert to and again become available for issuance under the 2020 EIP.

Non-Employee Director Compensation Limit. The aggregate value of all compensation granted or paid to any non-employee director with respect to any calendar year, including awards granted and cash fees paid to such non-employee director, will not exceed (1) $1,000,000 in total value or (2) if such non-employee director is first appointed or elected to the Board during such calendar year, $1,250,000 in total value, in each case, calculating the value of any equity awards based on the grant date fair value of such equity awards for financial reporting purposes and excluding distributions from a deferred compensation program.

Plan Administration. The Board, or a duly authorized committee thereof, will administer the 2020 EIP and is referred to as the “plan administrator” herein. The Board may also delegate to one or more of Canoo’s officers the authority to (1) designate employees (other than officers) to receive specified stock awards and (2) determine the number of shares subject to such stock awards. Under the 2020 EIP, the Board has the authority to determine award recipients, grant dates, the numbers and types of stock awards to be granted, the applicable fair market value, and the provisions of each stock award, including the period of exercisability and the vesting schedule applicable to a stock award.

Under the 2020 EIP, the Board also generally has the authority to effect, without the approval of stockholders but with the consent of any materially adversely affected participant, (1) the reduction of the exercise, purchase, or strike price of any outstanding option or stock appreciation right; (2) the cancellation of any outstanding option or stock appreciation right and the grant in substitution therefore of other awards, cash, or other consideration; or (3) any other action that is treated as a repricing under generally accepted accounting principles.

Stock Options. ISOs and NSOs are granted under stock option agreements adopted by the plan administrator. The plan administrator determines the exercise price for stock options, within the terms and conditions of the 2020 EIP, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of a share of Common Stock on the date of grant. Options granted under the 2020 EIP vest at the rate specified in the stock option agreement as determined by the plan administrator.

The plan administrator determines the term of stock options granted under the 2020 EIP, up to a maximum of ten years. Unless the terms of an optionholder’s stock option agreement provide otherwise or as otherwise provided by the plan administrator, if an optionholder’s service relationship with Canoo or any of Canoo’s affiliates ceases for any reason other than disability, death, or cause, the optionholder may generally exercise any vested options for a period of three months following the cessation of service. This period may be extended in the event that exercise of the option is prohibited by applicable securities laws. Unless the terms of an optionholder’s stock option agreement provide otherwise or as otherwise provided by the plan administrator, if an optionholder’s service relationship with

Canoo or any of Canoo’s affiliates ceases due to death, or an optionholder dies within a certain period following cessation of service, the optionholder or a beneficiary may generally exercise any vested options for a period of 18 months following the date of death. Unless the terms of an optionholder’s stock option agreement provide otherwise or as otherwise provided by the plan administrator, if an optionholder’s service relationship with Canoo or any of Canoo’s affiliates ceases due to disability, the optionholder may generally exercise any vested options for a period of 12 months following the cessation of service. In the event of a termination for cause, options generally terminate upon the termination date. In no event may an option be exercised beyond the expiration of its term.

Acceptable consideration for the purchase of Common Stock issued upon the exercise of a stock option will be determined by the plan administrator and may include (1) cash, check, bank draft or money order, (2) a broker-assisted cashless exercise, (3) the tender of shares of Common Stock previously owned by the optionholder, (4) a net exercise of the option if it is an NSO or (5) other legal consideration approved by the plan administrator.

Unless the plan administrator provides otherwise, options and stock appreciation rights generally are not transferable except by will or the laws of descent and distribution. Subject to approval of the plan administrator or a duly authorized officer, an option may be transferred pursuant to a domestic relations order.

Tax Limitations on ISOs. The aggregate fair market value, determined at the time of grant, of Common Stock with respect to ISOs that are exercisable for the first time by an award holder during any calendar year under all of Canoo’s stock plans may not exceed $100,000. Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of Canoo’s total combined voting power or that of any of Canoo’s parent or subsidiary corporations unless (1) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and (2) the term of the ISO does not exceed five years from the date of grant.

Restricted Stock Unit Awards. Restricted stock unit awards are granted under restricted stock unit award agreements adopted by the plan administrator. Restricted stock unit awards may be granted in consideration for any form of legal consideration that may be acceptable to the plan administrator and permissible under applicable law. A restricted stock unit award may be settled by cash, delivery of shares of Common Stock, a combination of cash and shares of Common Stock as determined by the plan administrator, or in any other form of consideration set forth in the restricted stock unit award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit award. Except as otherwise provided in the applicable award agreement or by the plan administrator, restricted stock unit awards that have not vested will be forfeited once the participant’s continuous service ends for any reason.

Restricted Stock Awards. Restricted stock awards are granted under restricted stock award agreements adopted by the plan administrator. A restricted stock award may be awarded in consideration for cash, check, bank draft or money order, services to us, or any other form of legal consideration that may be acceptable to the plan administrator and permissible under applicable law. The plan administrator determines the terms and conditions of restricted stock awards, including vesting and forfeiture terms. If a participant’s service relationship with Canoo ends for any reason, Canoo may receive any or all of the shares of Common Stock held by the participant that have not vested as of the date the participant terminates service with Canoo through a forfeiture condition or a repurchase right.

Stock Appreciation Rights. Stock appreciation rights are granted under stock appreciation right agreements adopted by the plan administrator. The plan administrator determines the strike price for a stock appreciation right, which generally cannot be less than 100% of the fair market value of Common Stock on the date of grant. A stock appreciation right granted under the 2020 EIP vests at the rate specified in the stock appreciation right agreement as determined by the plan administrator. Stock appreciation rights may be settled in cash or shares of Common Stock or in any other form of payment, as determined by the plan administrator and specified in the stock appreciation right agreement.

The plan administrator determines the term of stock appreciation rights granted under the 2020 EIP, up to a maximum of 10 years. Unless the terms of a participant’s stock appreciation rights agreement provide otherwise or as otherwise provided by the plan administrator, if a participant’s service relationship with Canoo or any of its affiliates ceases for any reason other than cause, disability, or death, the participant may generally exercise any vested stock appreciation right for a period of three months following the cessation of service. This period may be further extended in the event that exercise of the stock appreciation right following such a termination of service is prohibited by applicable securities laws. Unless the terms of a participant’s stock appreciation rights agreement provide otherwise or as otherwise provided by the plan administrator, if a participant’s service relationship with Canoo or any of its affiliates,

ceases due to disability or death, or a participant dies within a certain period following cessation of service, the participant or a beneficiary may generally exercise any vested stock appreciation right for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a termination for cause, stock appreciation rights generally terminate immediately upon the occurrence of the event giving rise to the termination of the individual for cause. In no event may a stock appreciation right be exercised beyond the expiration of its term.

Performance Awards. The 2020 EIP permits the grant of performance awards that may be settled in stock, cash or other property. Performance awards may be structured so that the stock or cash will be issued or paid only following the achievement of certain pre-established performance goals during a designated performance period. Performance awards that are settled in cash or other property are not required to be valued in whole or in part by reference to, or otherwise based on, Common Stock.

The performance goals may be based on any measure of performance selected by the plan administrator. The performance goals may be based on company-wide performance or performance of one or more business units, divisions, affiliates, or business segments, and may be either absolute or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the plan administrator when the performance award is granted, the plan administrator will appropriately make adjustments in the method of calculating the attainment of performance goals as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any portion of Canoo’s business which is divested achieved performance objectives at targeted levels during the balance of a performance period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of Common Stock by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under Canoo’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; and (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles. In addition, the Board may establish or provide for other adjustment items in the award agreement at the time the award is granted or in such other document setting forth the performance goals at the time the performance goals are established.

Other Stock Awards. The plan administrator may grant other awards based in whole or in part by reference to Common Stock. The plan administrator will set the number of shares under the stock award (or cash equivalent) and all other terms and conditions of such awards.

Changes to Capital Structure. In the event there is a specified type of change in the capital structure of Canoo, such as a stock split, reverse stock split, or recapitalization, appropriate adjustments will be made to (1) the class and maximum number of shares reserved for issuance under the 2020 EIP, (2) the class of shares by which the share reserve may increase automatically each year, (3) the class and maximum number of shares that may be issued upon the exercise of ISOs and (4) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding stock awards.

Corporate Transactions. The following applies to stock awards under the 2020 EIP in the event of a corporate transaction (as defined in the 2020 EIP), unless otherwise provided in a participant’s stock award agreement or other written agreement with Canoo or one of its affiliates or unless otherwise expressly provided by the plan administrator at the time of grant.

In the event of a corporate transaction, any stock awards outstanding under the 2020 EIP may be assumed, continued or substituted for by any surviving or acquiring corporation (or its parent company), and any reacquisition or repurchase rights held by Canoo with respect to the stock award may be assigned to Canoo’s successor (or its parent company). If the surviving or acquiring corporation (or its parent company) does not assume, continue or substitute for such stock awards, then (i) with respect to any such stock awards that are held by participants whose continuous service has not terminated prior to the effective time of the corporate transaction, or current participants, the vesting (and exercisability, if applicable) of such stock awards will be accelerated in full (or, in the case of performance awards with multiple vesting levels depending on the level of performance, vesting will accelerate at 100% of the

target level) to a date prior to the effective time of the corporate transaction (contingent upon the effectiveness of the corporate transaction), and such stock awards will terminate if not exercised (if applicable) at or prior to the effective time of the corporate transaction, and any reacquisition or repurchase rights held by Canoo with respect to such stock awards will lapse (contingent upon the effectiveness of the corporate transaction), and (ii) any such stock awards that are held by persons other than current participants will terminate if not exercised (if applicable) prior to the effective time of the corporate transaction, except that any reacquisition or repurchase rights held by Canoo with respect to such stock awards will not terminate and may continue to be exercised notwithstanding the corporate transaction.

In the event a stock award will terminate if not exercised prior to the effective time of a corporate transaction, the plan administrator may provide, in its sole discretion, that the holder of such stock award may not exercise such stock award but instead will receive a payment equal in value to the excess (if any) of (i) the per share amount payable to holders of Common Stock in connection with the corporate transaction, over (ii) any per share exercise price payable by such holder, if applicable.

Plan Amendment or Termination. The Board has the authority to amend, suspend or terminate the 2020 EIP at any time, provided that such action does not materially impair the existing rights of any participant without such participant’s written consent. Certain material amendments also require approval of Canoo’s stockholders. No ISOs may be granted after the tenth anniversary of the date the Board adopts the 2020 EIP. No stock awards may be granted under the 2020 EIP while it is suspended or after it is terminated.

U.S. Federal Income Tax Consequences

The following is a brief summary of certain material U.S. federal income tax consequences of the 2020 EIP generally applicable to the Company and to participants in the 2020 EIP who are subject to U.S. federal income taxes. The summary is based on the Code, applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this proxy statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or non-U.S. tax laws.

Nonqualified Stock Options. A participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock option with an exercise price at least equal to the fair market value of Common Stock on the date of grant and no additional deferral feature. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the stock option on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise date or the exercise price of the stock option.

With respect to nonqualified stock options, special rules apply if a participant uses shares of Common Stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are subject to a substantial risk of forfeiture by the participant.

Incentive Stock Options. A participant generally will not recognize taxable income upon the grant of an ISO. If a participant exercises an ISO during employment or within three months after employment ends (12 months in the case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes at that time as if the stock option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an ISO after the later of (i) one year from the date the participant exercised the option and (ii) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the exercise price of the stock option. If a participant sells or otherwise disposes of shares acquired upon exercise of an ISO before these holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be.

As with nonqualified stock options, special rules apply if a participant uses shares of Common Stock already held by the participant to exercise the stock option or if the stock option is subject to a substantial risk of forfeiture by the participant.

Stock Appreciation Rights. A participant generally will not recognize taxable income upon the grant or vesting of an SAR with a grant price at least equal to the fair market value of Common Stock on the date of grant and no additional deferral feature. Upon the exercise of an SAR, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the grant price of the SAR.

Restricted Stock Awards, RSUs and Performance Awards. A participant generally will not have taxable income upon the grant of restricted stock, RSUs or performance awards. Instead, the participant will recognize ordinary income at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received minus any amount paid. For restricted stock only, a participant may instead elect to be taxed at the time of grant.

Other Stock-Based Awards. The U.S. federal income tax consequences of other stock or cash- based awards will depend upon the specific terms of each award.

Tax Consequences to the Company. In the foregoing cases, we generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, subject to certain limitations imposed under the Code. Section 162(m) of the Code provides that certain compensation received in any year by a “covered employee” in excess of $1 million is non-deductible by the Company for federal income tax purposes. The Company will also be required to pay the employer share of any employment taxes with respect to any compensation income earned by an employee.

Section 409A. We intend that awards granted under the EIP will comply with, or otherwise be exempt from, Section 409A of the Code, but make no representation or warranty to that effect.

Tax Withholding. We are authorized to deduct or withhold from any award granted or payment due under the 2020 EIP, or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes.

New Plan Benefits

Grants under the 2020 EIP, as amended by the EIP Amendment, will be made at the discretion of the plan administrator, and therefore, the benefits or number of shares subject to awards that may be granted in the future to 2020 EIP participants is not currently determinable. As such, a New Plan Benefits Table is not provided.

The following table reflects the equity awards that were granted to our Named Executive Officers and all other eligible employees and directors under the 2020 EIP during the last completed fiscal year:

Equity Use

Equity-based incentive awards represent a significant portion of our Named Executive Officers’ compensation, representing approximately 80.5% of their total target compensation for the year ended December 31, 2023, as disclosed in the 2023 Summary Compensation Table.

Burn Rate

Our burn rate over the last three years, ended December 31, 2023, has averaged 7.0%, which is below the ISS global industry classification standard (GICS) burn rate limit for our industry of 7.29% over the same period, ended December 31, 2023. “Burn rate” is calculated by dividing the total number of shares subject to equity awards granted in a given year by the total weighted average number of shares of Common Stock outstanding during the period, and does not reflect any forfeitures or cancellations.

Overhang Calculation

Our average total overhang over the last three years, ended December 31, 2023 is 12.9%. “Overhang” is a measure of potential dilution from equity compensation plans and is calculated by dividing the number of shares of Common Stock subject to equity awards outstanding at the end of the relevant year plus the number of shares available for future grants under our equity plans by the total number of shares of Common Stock outstanding at the end of such year.

Equity Compensation Plan Information

The following table provides certain information with respect to all of the Company’s equity compensation plans in effect as of December 31, 2023 and does not include information about additional securities that are subject to the EIP Amendment Proposal and the ESPP Amendment Proposal. Please note that the below numbers are not adjusted to account for the March 2024 Reverse Stock Split.