Faced with a reporting deadline to avoid delisting from Nasdaq, Hyzon Motors Inc. on May 31 filed its belated 2022 annual financial statement—a document that shows mounting operating expenses and net losses.
The Honeoye Falls-based maker of hydrogen fuel cell heavy-duty vehicles plans to file its financial report for the first quarter of 2023 by June 7, as required by Nasdaq.
For the year ended Dec. 31, Hyzon posted a net loss of $54.5 million on $3.7 million in revenue, compared with a loss of $16.9 million on negligible revenue in 2021. From its startup on Jan. 21, 2020, through the end of that year, it lost $14.4 million.
Operating expenses in 2022 totaled $176.5 million, up from $98.9 million the year before. Net cash used in operating activities rose to $149 million from $94.3 million.
As the company notes in its 2022 financial statement filed with the Securities and Exchange Commission, Hyzon is “an early-stage growth company (that) expects to continue to incur net losses in the near-term.”
In order to maintain what it describes as its industry-leading position, the company expects “to incur substantial and increasing research and development expenses.” R&D expenses were $39.1 million in 2022, compared with $15.5 million the previous year.
Despite tens of millions of dollars in losses, Hyzon is not cash-strapped. The firm finished 2022 with $60.6 million in unrestricted cash and cash equivalents, $194.8 million in short-term investments, and positive working capital of $267.0 million, its filing states.
Investors remain skeptical, however. On Friday, Hyzon’s stock closed at 59 cents a share, near the bottom of its 52-week range of 45 cents to $5.14—and down 97 percent from its all-time high of $17.80 on Feb. 8, 2021.
Launched in 2020, Hyzon opened its headquarters in Honeoye Falls at the former General Motors facility that had closed eight years earlier. In February 2021, it announced plans for a nearly $8 million expansion there, assisted by Empire State Development, Monroe County and Greater Rochester Enterprise.
Seven months later, the company was targeted in a short-seller report that questioned Hyzon’s financial statements and claimed vehicle sales in China. In the wake of that report, its troubles mounted, with class-action shareholder litigation and an SEC inquiry into the allegations against the company. The U.S. attorney’s office for the Southern District of New York also launched an investigation.
In its latest SEC filing, Hyzon lists nearly a dozen shareholder suits brought against the company and current and former officers and directors with allegations including false and misleading financial statements and violations of federal securities laws. Some of the cases have been consolidated and non-binding mediation involving a court-appointed lead plaintiff took place on May 9, with no settlement reached.
Hyzon says it “cannot predict the ultimate outcome or timing of the SEC and the SDNY investigations or inquiries.”
While Hyzon has said, in response to the lawsuits, that it would “vigorously defend the company and its shareholders,” last August it disclosed possible accounting irregularities. Two weeks later, CEO and cofounder Craig Knight was ousted and company’s board of directors appointed Parker Meeks, who joined Hyzon as chief strategy officer in June 2021, as president and interim CEO. This February, the company disclosed Knight had been fired for cause, and Nasdaq informed Hyzon of its plans to delist the company’s stock—a move forestalled by extensions.
A month later, Meeks—who has spearheaded restructuring initiatives since last August—was named CEO.
In April and May, Meeks’ management team began to take shape as Hyzon announced several key hires and promotions. Bappa Banerjee, who most recently served as vice president of mining equipment at GE Transportation, was hired as Hyzon’s first chief operating officer. Sue Sun-LaSovage also joined Hyzon as chief human resources officer.
In addition, Jiajia Wu—who joined Hyzon in 2021 as chief accounting officer—was named interim chief financial officer and Pat Griffin, former president of vehicle operations, was promoted to president of North America.
Looking ahead, Hyzon is focusing on “a few major customers.” It believes growth of alternative energy solutions will continue to accelerate, with broader adoption driven by technological advances, reduced costs, additional supporting infrastructure, and other factors. But until the firm can generate sufficient new revenue from its commercial vehicle business, additional financing through debt and/or equity will be required.
Its business model, Hyzon acknowledges, “has yet to be proven.”
Paul Ericson is Rochester Beacon executive editor. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected].