Hopium, a French start-up that had set its sights on developing hydrogen fuel cell technology, has recently encountered severe financial turbulence, casting a shadow of uncertainty over its future endeavors.
The first half of 2023 delivered daunting financial results for Hopium. The company reported a net loss of 24.7 million euros. Notably, Hopium has not yet initiated the marketing of its hydrogen fuel cells, resulting in zero turnover during this period. This unfavorable financial situation is further compounded by negative equity totaling -31.9 million euros as of June 30, with meager cash flow barely scraping 88,000 euros.
Despite its financial woes, Hopium has not thrown in the towel. The company, which initially intended to bring a hydrogen sedan to the market by 2025, has pivoted its focus towards the development of fuel cell technology. The departure of 35 employees via collective contractual terminations has helped reduce personnel costs, but Hopium’s overall situation remains precarious. With a workforce of 85 employees, the company postponed research and development costs associated with the 2022 prototype, known as “Machina,” to the 2023 financial year, which, in turn, increased its overall losses by 14.4 million euros.
In a bid to secure its future, Hopium is actively seeking discussions with potential industrial and commercial partners to chart a sustainable path forward. The French commercial court has granted Hopium a six-month lifeline, extending until January 19, 2024, to secure the necessary funds. The company has also revealed the utilization of new tranches of the bond loan agreement made with Atlas Special Opportunities, aimed at sustaining its fuel cell development until the successful demonstration of a prototype.
However, a looming challenge presents itself – Atlas Special Opportunities, the bond loan provider, has no intention of remaining a shareholder. This indicates that Hopium shares, resulting from the conversion of the convertible bonds, may flood the market in the near term. This potential stock surge could exert significant downward pressure on share prices, causing considerable value dilution.