Hyzon Motors Inc. shares plunged Friday after the company disclosed possible accounting irregularities and said it would not meet the Aug. 15 deadline for its second-quarter financial filings. The Honeoye Falls-based firm also told investors that “financial statements and guidance previously issued by the company can no longer be relied upon.”
At the 4 p.m. close of trading, Hyzon shares were at $2.79, down 38 percent. From its peak in early 2021, the company’s stock has fallen more than 70 percent.
Hyzon, a global supplier of zero-emissions commercial vehicles fueled by hydrogen fuel cells, said in a statement issued after the market close Thursday that its management “has become aware of revenue recognition timing issues in China.” The issues being investigated include the recognition of revenue for the year ended Dec. 31.
Hyzon also disclosed that it has identified “operational inefficiencies” at Hyzon Motors Europe B.V., the company’s European joint venture with Holthausen Clean Technology Investments. Further, Hyzon and Holthausen have been unable to finalize the terms of a transaction announced in May, a deal that now is “not expected to close on the terms originally agreed.”
The agreement called for Hyzon to acquire 735,000 shares Holthausen holds in Hyzon Motors Europe for 27 million euros. These shares represented roughly one-quarter of the issued and outstanding stock of Hyzon Motors Europe. After the transaction, Hyzon would own 75 percent of joint venture, and Holthausen would own 25 percent.
Hyzon and Holthausen are currently working to renegotiate the transaction, according to Thursday’s statement.
A board-appointed special committee, working with external advisers, has been set up to conduct an independent investigation into Hyzon’s governance and compliance issues. The board also has retained a third-party consulting firm to “assist the board and management with reassessing Hyzon’s global strategy and operations.”
“We acknowledge the serious nature of this development and are working diligently with the assistance of outside legal and financial advisers to resolve this matter as quickly as possible,” Hyzon said in its statement. “Due to these findings, financial statements and guidance previously issued by the company can no longer be relied upon.”
On May 6, Hyzon reported a first-quarter operating loss of nearly $27 million on $356,000 in revenues. In its quarterly release, company offered an upbeat assessment of its progress, citing a number of milestones reached in the first three months of this year.
In its statement Thursday, however, Hyzon said that due to the accounting issues under investigation, the first-quarter financial report—as well as the company’s annual report for 2021—“should no longer be relied upon.”
Hyzon was launched in 2020, opening its headquarters in Honeoye Falls at the former General Motors facility that closed in 2012. In February 2021, it unveiled plans for a nearly $8 million expansion there—a project assisted by Empire State Development, Monroe County and Greater Rochester Enterprise.
Hyzon also has U.S. operations near Chicago and Detroit, and international operations in the Netherlands, China, Singapore, Australia, and Germany.
An amended class-action complaint filed in March alleges that Hyzon is a “repackaging of a flailing Chinese hydrogen-fuel-cell business covered in a glittering new wrapper of misleading deal announcements, illusory customer contracts, and fantastical financial projections.”
Legal papers filed against company also have accused Hyzon and current and former top executives of “misrepresenting the nature of (Hyzon’s) ‘customer’ contracts and severely embellish(ing) its ‘deals’ and ‘partnerships’ with customers.”
Hyzon has vowed to “vigorously defend the company and its shareholders” as well as cooperate with SEC investigators.
In its statement Thursday, Hyzon said it remains “dedicated to our mission of delivering zero emission hydrogen-powered commercial vehicles and accelerating clean transport across the globe.”
Hyzon also said it is “determined to resolve these issues as soon as possible.”