Elmo Rent has failed to publish its biannual financial report by the required deadline. As a result, Nasdaq Tallinn has applied "observation status" to the company's shares. Elmo was also named "debtor of the week" by debt collection agency Juliianus Inkasso. According to Elmo Rent's CEO, the delay in submitting its report is due to the additional time taken to capitalize its investments.
Over the past two years, Elmo Rent has raised more than €6 million in funds. This summer the company began looking for new investors once again, promising annual returns of 17 percent.
This week, however, Nasdaq Tallinn applied observation status to Elmo Rent's shares, the purpose of which is to raise the attention of market participants to a potentially significant issues.
Elmo Rent was also named "debtor of the week" by debt collection agency Juliianus Inkasso.
More specifically, the issue related to Elmo Rent's failure to submit its biannual financial report on time. An interim report has to be submitted within three months of the end of the reporting period.
However, on September 29, Elmo Rent announced that it would not be able to complete it by the deadline. The company justified the delay to the stock exchange as being a result of changes to its accounting policy.
Elmo Rent CEO Enn Laansoo Jr. told ERR that the reason for the delay in submitting the report was because the consolidated report for the first six months of this year has to include the financials of all the company's subsidiaries. In Elmo Rent's case, this includes its French subsidiary (ELMO Technologies France SARL). According to Laansoo Jr., the report has been therefore been delayed because the capitalization of investments in remote control technology has taken longer than planned.
"This also applies to earlier years, which resulted in a higher workload," said Laansoo Jr. "We are now doing the capitalization precisely for the ongoing €3 million investment round, which is expected to close in October or November. Perhaps this is because of the desire of the investors, who have confirmed their investments, to have a more detailed overview of the investment and intellectual property, so far."
According to Laansoo Jr., the report is now complete and awaiting final approval. It will then be translated into English and submitted on schedule, 20 days after the deadline.
This is the second time this year that Elmo Rent has postponed the publication of its financial report. At the end of May, the company announced to the stock exchange that it would publish its consolidated annual financial report for 2022 no later than the end of June, instead of by the May 31 deadline. The reason given by Elmo Rent was the decision to replace the group's accountant with a new accounting service provider due to an increase in its accounting volumes. However, that transition process took longer than had been expected.
While a number of companies have announced layoffs, Elmo Rent's CEO believes that not too much attention should be paid to this. In his view, if revenues do not cover costs or if there is a need to adapt to the macro-economic environment, then a review of outgoings, including the potential need for layoffs, is inevitable.
"These decisions are in no way specific to the startup sector, but concern most sectors and a lot of companies," he said, adding that what is happening in the startup sector should not be exaggerates and that instead, the macroeconomic situation needs to be analyzed as a whole.
Asked whether Elmo has also made layoffs, Laansoo Jr. said the situation is certainly not easy. However, as of today they have not had to make any significant changes and expect the investment round over the coming months to provide the necessary boost.
Laansoo Jr. stressed that Elmo is now the world's first legal developer of remote piloting technology, with its technology already being used on public roads. This, he said, has given Elmo a very strong competitive advantage, and negotiations are currently underway with around fifty companies to license the company's technology. Just this week, Elmo announced to the stock exchange that their remote piloting technology will be used to operate road safety services in Canada.
"If we can disclose other licensing agreements, then we will do that too," said Laansoo Jr.
Elmo Rent shares can be traded on Nasdaq Baltic's First North alternative exchange.
The company raised €1.9 million from its first public share offering in June 2021. It also received €374,094 in funding in funding from Enterprise Estonia in December the same year.
In January 2022, Elmo Rent brought in a further €1.4 million from a second public share offering.
Between May 2022 and April 2023, it also raised €2.6 million from growth capital funds.
According to Elmo Rent, the new round of fundraising, which began this summer, was aimed at helping to meet peak season demand for the service. In an email, Elmo Rent told potential investors, that they should see their money returned on the basis of the sale of older vehicles or working assets from foreign investors, which the company was also seeking.
In 2022, Elmo Rent made a loss of over €1.5 million, more than double the amount forecast. The main reason cited by the company at the time was its decision not to launch a taxi service, as originally planned, and instead develop remote piloting technology along with a new app for its rental service.
"In different countries, in different parts of the world, the sale of technology along with the development of that same technology requires considerable investment," Laansoo Jr. said. "Consequently, it is foreseen that Elmo will continue to make calculated investments in the coming years, which may also translate into losses, unless we can capitalize the costs, in which case we will return to the main issue of 'why Elmo delayed the report for 20 days'."
Editor: Michael Cole