H2 View understands Hyzon is involved in a separate legal matter in the State of Delaware, US.

On February 3, 2023, Hyzon received a Staff Determination from the Listing Qualification Staff of Nasdaq notifying the company that unless it requested an appeal, trading of its Class A common stock and warrants would be suspended from the Nasdaq Capital Market on February 14, 2023, as well as seeing a Form 25-NSE filed with the Securities and Exchange Commission (SEC) to delist the company from Nasdaq.

According to Hyzon, The Staff Determination was issued because it informed Nasdaq that it will not file its missing quarterly reports for the periods ending June 30, 2022, and September 20, 2022, on or before February 13, 2023.

Hyzon then, on February 10, 2023, filed a request for hearing with the Nasdaq Hearing Panel in response to the Staff Determination and requested an extension pending the hearing.

The same day, the Hearing Panel granted Hyzon a 15 calendar stay of delisting, confirming it would notify the company within the 15 days whether its request for a stay pending hearing would be granted.

A date for the delisting hearing was set for March 16, 2023, where Hyzon is set to present its plan to regain compliance with Nasdaq listing rules and request the continued listing of its securities on The Nasdaq Capital Market, pending such compliance.

In a statement, Hyzon said, “Although the Company is working diligently to file the quarterly reports as soon as practicable, there can be no assurance that such reports will be filed before any hearing before the Hearings Panel, or that the Hearings Panel will grant the company’s request for a stay pending the hearing.  If the Company’s appeal to the Hearings Panel is denied, the company’s securities will be subject to delisting on The Nasdaq Capital Market.”

Hyzon’s stock on February 17, 2023, appeared to remain active with Nasdaq.

How did Hyzon get here?

The events leading up to the delisting notifications and hearings started in August 2022, when Hyzon, on August 4, released a statement confirming it would not be issuing its Second Financial Filing by the August 15, 2022, deadline.

In that statement, Hyzon said 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.”

Subsequently, on August 17, 2022, Hyzon received a notice from Nasdaq confirming it was no longer complying with its listing rules having failed to file its second quarter report (Form 10-Q).

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.

August 17 also saw Hyzon announce a “leadership transition,” seeing one of its founders, Craig Knight depart from his role as a director of the company, with Parker Meeks stepping up to Interim CEO and President of Hyzon.

Read more: Parker Meeks appointed interim President and Chief Executive of Hyzon Motors

On November 18, 2022, the company then announced it had received another notice from Nasdaq, confirming that it remained in non-compliance with its listing rules, due to Hyzon not filing its quarterly report on Form 10-Q for the period ending September 30, 2022 (Q3 Form 10-Q).

At the time of the November notice, Hyzon said to regain compliance with Nasdaq listing rules, it had to:

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.

On January 30, 2023, Hyzon then informed Nasdaq that it would not file its quarterly reports on Form 10-Q for the periods ended June 30, 2022, and September 30, 2022, on or before February 12, 2023.

In the Court of Chancery of the State of Delaware

In parallel with the ongoing issues with Nasdaq, Hyzon has been involved in a case in the Court of Chancery of the State of Delaware, calling into question whether the formation of the existing company followed Delaware state laws.

According to an SEC filing by Hyzon, on July 15, 2021, Decarbonization Plus Acquisition Corporation (DCRB), the predecessor to Hyzon, held a special meeting of stockholders to approve certain matters relating to the business combination between DCRB and the then privately held Hyzon Motors Inc. (Old Hyzon).

H2 View understands the matters of that meeting included approval of the company’s Second Amended and Restated Certificate of Incorporation, including a proposal to increase the total number of authorised shares of DCRB’s Class A common stock, from 250,000,000 shares to 400,000,000 shares, and increase the number of DCRB’s preferred stock from 1,000,000 to 10,000,000 – known as the Authorised Share Charter Proposal.

According to Hyzon, at the special meeting, all proposals including the Authorised Share Charter Proposal were approved by the affirmative vote of the holders of majority of the outstanding shares of Class A common stock and Class B common stock.

Following the DCRB meeting, on July 16, 2021, DCRB and Old Hyzon closed the business combination and DCRB changed its name to Hyzon Motors Inc.

In the same SEC filing, Hyzon said, “Due in part to a recent ruling by the Delaware Court of Chancery, there is uncertainty as to whether Section 242(b)(2) of the Delaware General Corporation Law (DGCL) would have required the Authorised Share Charter Proposal to be approved by a separate vote of the majority of DCRB’s then-outstanding shares of Class A common stock.”

Section 242(b)(2) requires series-specific approval of a charter amendment if the change would “alter or change the powers, preferences, or special rights of 1 or more series of any class so as to affect them adversely but shall not so affect the entire class.”

Following this, Hyzon on February 13, 2023, filed a petition with the Delaware Court of Chancery in pursuant to Section 205 of the DGCL seeking resolve to the uncertainty with respect to the above matters.

Section 205 of the DGCL permits the Court of Chancery, at its discretion, to ratify and validate potentially defective corporate acts after considering a variety of factors.

Under its Section 205 Action, Hyzon has requested that the Court validate and declare effective the company’s New Certificate of Incorporation and all of its outstanding shares of Class A common stock.

Hyzon said, “If the company is not successful in the Section 205 Action, the uncertainty with respect to the company’s capitalisation resulting from the Delaware Court of Chancery’s ruling referenced above could have a material adverse impact on the company, including on the company’s ability to complete equity or debt financing transactions or issue stock-based compensation to its employees, directors and officers until the underlying issues are definitively resolved.

“This uncertainty could impair the company’s ability to execute its business plan, attract and retain employees, management and directors and adversely affect its commercial relationships.”

H2 View understands a public hearing regarding the merits of the Section 205 Action will be held on March 6, 2023.

Questions that remain

It would appear that Hyzon is embroiled in two different battles, the questions of whether the two are linked or have a bearing on each other remain yet to be answered.

The verdicts from either of those cases will inevitably raise further questions for many: what could happen if the company loses either appeal, and what next for Hyzon and any of the projects it is actively involved in?

H2 View reached out to Hyzon regarding the above topics. The company said it cannot provide any further comment at this time.