According to San Francisco-based Schubert Jonckheer & Kolbe (SJK) LLP a class action lawsuit filed in the Delaware Court of Chancery alleges that the proxy statement issued by Decarbonisation Plus Acquisition Corporation (DPAC) to obtain shareholder approval of the de-SPAC transaction contained false and misleading information about Hyzon’s project vehicle sales and revenues.
In a statement, SJK said the hydrogen-powered truck manufacturer was formed “in or about” July 2021, in a de-SPAC (merger to go public) transaction, between Hyzon Motors, Inc. and DPAC.
Read more: Hyzon Motors to go public through $2.7bn SPAC deal
Additionally, the law firm’s statement notes that Hyzon is currently named in a securities class action lawsuit alleging that its largest customer is an “apparent fake shell company from China.”
On January 12, 2022, Hyzon published a US Securities and Exchange Commission (SEC) filing, which under item 8.01, read, “On January 12, 2022, the company announced that it had received a subpoena from the Securities and Exchange Commission (SEC) for production of documents and information, including related to the allegations made in the report issued by Blue Orca Capital. The company is cooperating with the SEC.”
The claims were made by Blue Orca in a September 2021 report which accused Hyzon’s largest customer as “fake” and Hiringa Energy, one of the company’s largest customers, of not actually being a customer, among other statements.
In October 2021, the then Hyzon Motors CEO, Craig Knight denied such allegations, saying, “The self-serving short seller report published by Blue Orca last week is inaccurate and misleading, and we believe it was intended solely to generate profits on Blue Orca’s short position at the expense of Hyzon’s long-term shareholders.
“Hyzon is enjoying market momentum across its business globally, and is focused on executing on the business plan it presented to investors. Hyzon has no record of this short seller ever meeting with Hyzon management, requesting any information or clarification from Hyzon, or otherwise seeking to verify any of its claims, which would have been expected given the inflammatory and grossly inaccurate statements made in the report.”
Read more: Hyzon responds to ‘misleading’ claims
Furthermore, SJK noted Hyzon’s disclosure that it was investigating “issues regarding revenue recognition timing and internal controls procedures, primarily pertaining to its China operations,” as well as the company’s announcement that it would not be able to file its Form 10-Q for Q2 of 2022 by the due date.
The firm has said it is investigating potential breaches of fiduciary duty by DPAC’s or Hyzon’s officers and directors in connection with the above allegations.
H2 View has reached out to both Hyzon Motors and Schubert Jonckheer & Kolbe for comment on the matter and will provide any further updates.
Nasdaq notices
On August 4 (2022), Hyzon released a statement confirming it will not issue its Second Financial Filings by the August 15, 2022 deadline, stating its management had been made aware of ‘revenue recognition timing issues in China’ and that it had launched an independent investigation by a board-appointed special committee, working in conjunction with external advisors, to address these and other ‘governance and compliance issues’.
Read more: Is Hyzon in hot water?
In the statement, Hyzon said, “We acknowledge the serious nature of this development and are working diligently with the assistance of outside legal and financial advisors to resolve this matter as quickly as possible. Due to these findings, financial statements and guidance previously issued by the company can no longer be relied upon.
“Hyzon remains dedicated to our mission of delivering zero-emission hydrogen-powered commercial vehicles and accelerating clean transport across the globe. We affirm our unwavering commitment to our customers, employees, partners, shareholders and suppliers – and are determined to resolve these issues as soon as possible.”
Subsequently, Hyzon on August 17, 2022, revealed it had received notice from The Nasdaq Stock Market that its failure to file its second quarter report (Form 10-Q) meant the company was no longer complying with its listing rule, requiring companies to timely file all required period reports with the Securities and Exchange Commission (SEC).
Despite the notice offering no immediate effect on the listing or trading of Hyzon’s common stock on the Nasdaq Global Select Market, Nasdaq confirmed that the company must submit a plan within 60 calendar days from August 16, 2022, no later than October 14, 2022, addressing how it intends to regain compliance.
The same day as the Nasdaq notice, Hyzon announced a ‘leadership transition’ which would see its one of its founders, Craig Knight depart from his role as a director of the company. Parker Meeks now takes up the reins as Interim President and CEO of Hyzon, effective immediately.
Read more: Parker Meeks appointed interim President and Chief Executive of Hyzon Motors
On November 18, 2022, Hyzon announced it received notice from The Nasdaq Stock Market stating that it remains in non-compliance with Nasdaq listing rules. H2 View understands the notice alerted the company that it had not yet filed its quarterly report on Form 10-Q for the period ending September 30 (2022) (Q3 Form 10-Q).
Read more: Nasdaq notices pile up at Hyzon – company remains in ‘non-compliance with rules’
In a statement, Hyzon said the latest notice will have “no immediate effect on the listing or trading of the company’s common stock on the Nasdaq Global Select Market,” however noted that there can be “no assurances” that further delays in the filing of the Forms 10-Q will “not have an impact on the listing or trading of the company’s common stock.”
After the initial notice regarding the late Q2 Form 10-Q, Nasdaq confirmed Hyzon must submit a plan within 60 calendar days from August 16, no later than October 14, 2022, addressing how it intends to regain compliance.
According to Hyzon, Nasdaq has now indicated that the company must:
Submit an update to its original plan to regain compliance with respect to the filing requirement, no later than December 1, 2022.
Submit a summary of the company’s previously announced internal investigation on or before January 16, 2023.
And file the delinquent Forms 10-Q on or before February 13, 2023.
Hyzon has said it intends to file the delinquent Forms 10-Q “as soon as practicable.”