Calgary-based electric vehicle (EV) tech firm Exro Technologies is the target of a potential class-action lawsuit from a group of shareholders alleging the company misrepresented revenue projections related to its acquisition of SEA Electric earlier this year.
On Nov. 27, 2024, Ontario resident Allan Crosier filed a statement of claim in the Court of the King’s Bench of Alberta on behalf of investors who purchased Exro securities between Jan. 30 and Nov. 30, 2024.
After projecting $200 million in 2024 revenue in January, Exro posted a $225-million CAD net loss in Q3 2024.
The lawsuit lists Exro, along with its CEO Sue Ozdemir and chairman Rodney Copes, as defendants. The defendants also includes the underwriters of the $55 million in financings Exro raised this year: Canaccord Genuity Corp., Eight Capital, National Bank Financial Inc., ATB Securities Inc., Stifel Nicolaus Canada Inc., Roth Canada Inc., and AGP Canada Investments ULC.
When Exro announced the $332-million CAD merger with SEA Electric in January, it claimed the combined company would have a “strong order book” and generate over $200 million CAD in revenue for the year. The plaintiff said there was “no justification for the representations” provided at the time.
The plaintiff alleged that the defendants “knew or ought to have known that the merger agreement would not enhance the results of Exro Technologies’ operations to achieve over $200 million of revenue in 2024.”
According to the statement of claim, earlier this month, Exro revised its 2024 revenue projection to $28 million—just 14 percent of its original forecast in January. BetaKit has not corroborated this claim and asked Exro for clarification.
“The defendants’ representation that Exro Technologies would achieve a revenue of over $200 million in 2024 was delusional,” the statement of claim reads.
The plaintiff also alleged that these forecasts were made to justify two public offerings of its securities this year, which allowed Exro to raise $55 million.
The plaintiffs’ allegations have not been proven in court.
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On Nov. 27, Exro released a statement noting it disputes the allegations and “intends to defend the claim vigorously.” The company did not respond to BetaKit’s request for comment before press time.
Founded in 2014, Exro has developed an adaptive EV traction inverter that prioritizes power and torque at different speeds. The company, which trades on the Toronto Stock Exchange (TSX) under the ticker EXRO.
When announcing its merger with SEA Electric, Exro claimed that the combined company would provide it with “a defined path to profitability” within 12 months of closing the transaction.
However, filings obtained by BetaKit indicate the company experienced a $225.95-million CAD net loss for the three months ending on Sept. 30, 2024, which included $211-million CAD “impairment expense.” It attributed the loss to slower-than-expected EV market adoption, a reassessment of SEA Electric’s assets, and high operating costs. The firm recorded roughly $16 million CAD in revenue in the first nine months of the year.
At press time, Exro’s stock traded at 16 cents per share on the TSX, down almost 90 percent from its 2024 peak of $1.33 CAD in January.
Feature image courtesy Exro via LinkedIn.