The Securities and Exchange Commission recently denied an appeal from electric vehicle maker T3 Motion Inc. to regain its listing on the New York Stock Exchange, citing serious financial concerns that threaten the company’s viability.
The regulatory agency in its ruling said the Costa Mesa-based company failed to meet sales and other benchmarks laid out in March, raising the risk of default on short-term loans.
“The company’s efforts to return to profitability may well succeed in the future, but its prospects for the present remain uncertain,” the SEC filing said.
T3, which is contesting the decision, was granted an extension in March to meet listing requirements.
The company didn’t respond for comment on this story.
Its shares are now trading for pennies on the over-the-counter stock market.
T3’s low-speed, three-wheel cruisers, which cost upward of $9,000, are used by security guards, police officers, dock workers and others. Customers include police departments in Los Angeles and New York, as well as other agencies in the U.S. and various cities overseas.
The U.S. military and other federal agencies use T3 Motion vehicles, and they are used at John Wayne Airport as well.
The company competes primarily against New Hampshire-based Segway Inc.
The latest SEC ruling follows management changes and some recent initiatives at T3 to shore up its financial position.
The company in March secured a $750,000 loan from two prior institutional investors—Lichtenstein-based Alpha Capital Anstalt and Brio Capital Master Fund in New York—for “general working capital purposes, including the purchase of parts inventory, sales and marketing, and research and development.”
New Chief
It was one of the first moves under new Chief Executive William Tsumpes, who’s implementing a series of changes to improve production, customer service, logistics and inventory.
Tsumpes, an inventor with executive leadership experience in the automotive and finance industries, replaced Rod Keller, who abruptly resigned in February after less than a year on the job.
Tsumpes also assumed the role of interim chief financial officer with the departure of Domonic Carney, who joined T3 around the same time as Keller.
A permanent finance chief has yet to be named.
T3 entered 2013 with a warning from auditors who voiced “substantial doubt” and “a going concern” that it could sustain operations through the year.
The company has lost $76.4 million since its inception in 2006 and is facing a severe cash shortage. It went through about $1.1 million in cash reserves in the first quarter, finishing the period with about $104,000.
The SEC indicated the company had enough cash on hand through May 28 to fund operations for about three months if it didn’t raise additional debt or equity financing.
The agency in its delisting ruling noted that T3 doesn’t have the means to pay off $5.3 million in short-term debt due in November and December.
In June, T3 reduced its debt by $275,000 through the sale of some 3 million shares of unregistered common stock as part of a convertible debt agreement forged last November with four investors.
