Bedrock FOI: LCID omits internal control attestation!

Updated: Aug 10

CELH, MARA, PLBY and others miss the 10-K deadline


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Filings from the week of February 23 - March 1.

 

LCID omits the management attestation over internal controls from their 10-K! TRUE faces significant turnover at the top. COIN takes on debt and becomes embroiled in multiple investigations.

 

Late Filers (NT 10-Ks)


Large accelerated filer 10-Ks are in except...

  • CELH is unable to file because they “identified material errors in previous filings”.

  • MARA is unable to file due to a delay on the part of their auditor related in part to the “complexity of revenues” and their transition to becoming a large accelerated filer.

  • PLBY is unable to file “due to the integration of multiple acquisitions”.

  • RIOT is unable to file due to acquisitions and because this is their first year as a large accelerated filer.

  • SRNE is unable to file because the CFO passed away.

  • PAYA needs more time to complete their management assessment of internal controls.

 

LUCID GROUP INC (LCID)


10-K | Market Cap: $41B


Lucid DID NOT provide a management attestation on internal controls in their 10-K, despite it being required. [1] Lucid no longer qualifies for exemptions as an emerging growth company. Lucid is relying on an exemption for companies recently went public via reverse merger. However, Lucid’s merger took place in early 2021 which may not be considered recent.

As of Q3 2021, Lucid had material internal control weaknesses, including issues with verifying “changes to vendor records for payment remittances”. This quarter, Lucid reported having remediated the previously reported weaknesses. [2]

Lucid is under investigation by the SEC. [3]

Last week, on February 22nd, Lucid recalled 203 vehicles. [4] Read more.

On February 27th, Lucid announced plans to build its first international manufacturing facility in Saudi Arabia. [5]

In January, 2022, Lucid was hit with another class action lawsuit alleging unjust enrichment, mismanagement and more. [6] A revised class action suit alleging misstatement was also filed in December 2021. [7]

  1. As a result, our management was unable, without incurring unreasonable effort or expense to conduct an assessment of our internal control over financial reporting as of December 31, 2021 and has excluded management's report on internal control over financial reporting pursuant to Section 215.02 of the SEC Division of Corporation Finance's Regulation S-K Compliance & Disclosure Interpretations.

  2. During the quarter ended December 31, 2021, management completed several changes to its internal control over financial reporting and remediated the previously reported material weaknesses.

  3. On December 3, 2021, the Company received a subpoena from the Securities and Exchange Commission (the “SEC”) requesting the production of certain documents related to an investigation by the SEC. Although there is no assurance as to the scope or outcome of this matter, the investigation appears to concern the business combination between the Company (f/k/a Churchill Capital Corp. IV) and Atieva, Inc. and certain projections and statements.

  4. For example, in February 2022, we voluntarily recalled certain vehicles due to a potential issue regarding the manufacture of the front strut damper by our supplier….

  5. On February 27, 2022, the Company announced that it has selected King Abdullah Economic City (“KAEC”) in the Kingdom of Saudi Arabia as the location of its first international manufacturing plant and signed related agreements with the Ministry of Investment of Saudi Arabia, the Saudi Industrial Development Fund, and the Economic City at KAEC.

  6. On January 26, 2022, a purported shareholder of the Company filed a shareholder derivative action, purportedly on behalf of the Company, against certain of the Company’s officers and directors in California federal court, captioned Sahr Lebbie v. Churchill Capital Corporation IV, et al., 4:22-cv-00531-SK (N.D. Cal.). The complaint also names the Company as a nominal defendant. Based on allegations that are similar to those in the Consolidated Class Action, the complaint asserts claims for unjust enrichment, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, abuse of control, gross mismanagement and waste of corporate assets and a claim for contribution under Sections 10(b) and 21D of the Exchange Act in connection with the Consolidated Class Action.

  7. On December 30, 2021, lead plaintiffs in the Consolidated Class Action filed a revised amended consolidated complaint (the “Complaint”), which asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of shareholders who purchased stock in CCIV between February 5, 2021 and February 22, 2021. The Complaint names as defendants Lucid Motors and the Company’s chief executive officer, and generally alleges that, prior to the public announcement of the Merger, defendants purportedly made false or misleading statements regarding the expected start of production for the Lucid Air and related matters.

 

TRUECAR INC (TRUE)


10-K | Market Cap: $320M


This year, TrueCar suffered from impressive turnover at the top as well as decreasing revenues and net income.


“In 2021, we hired a new chief financial officer and a new senior vice president, head of product, our executive vice president of dealer solutions departed and we terminated the employment of our chief operating officer, and in early 2022 our chief people officer departed.”


A director also resigned effective January 1, 2022.


Previously, TrueCar’s largest source of unit sales came from a related party. The partnership with this related party was terminated in 2020. [1] As a result, revenues decreased by more than 15% and the company booked a loss of $38M in 2021.

  1. The Company’s largest source of unit sales and one of the largest sources of visitors from affinity group marketing partners in 2020 and 2019 came from its relationship with United Services Automobile Association (“USAA”), a related party until its partnership with the Company terminated on September 30, 2020.

 

COINBASE GLOBAL INC (COIN)


10-K | Market Cap: $43B


The New York State Department of Financial Services is currently investigating Coinbase Inc’s compliance program, “including compliance with the Bank Secrecy Act and sanctions laws, cybersecurity, and customer support". [1]


Coinbase is subject to an open SEC investigation. [2]


Coinbase is highly leveraged, with $3.4B outstanding, excluding crypto assets borrowing.


Coinbase has disclosed risks associated with making scheduled principal and interest payments. [3]


Coinbase is excluding crypto asset borrowing costs from Adjusted EBITDA. [4]

In December 2021, a lawsuit was filed alleging unjust enrichment and more. [5]

  1. NYDFS Investigation Our subsidiary, Coinbase, Inc., which holds a Bitlicense from the NYDFS and is therefore subject to examinations and investigations by the NYDFS, is currently subject to an investigation by the NYDFS relating to its compliance program including compliance with the Bank Secrecy Act and sanctions laws, cybersecurity, and customer support.

  2. In addition, we have received investigative subpoenas from the SEC and similar subpoenas and demand letters from various state regulators for documents and information about certain of our customer programs, operations, and intended future products, including our stablecoin and yield-generating products.

  3. “As of December 31, 2021, we had approximately $3.44 billion in aggregate principal amount of outstanding indebtedness (excluding crypto asset borrowings), which includes $2.0 billion of our Senior Notes and $1.44 billion of our 2026 Convertible Notes….” “Our substantial indebtedness and other obligations may: •make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on our 2026 Convertible Notes, Senior Notes, and our other obligations;...require us to use a substantial portion of our cash flow from operations to make debt service payments and pay our other obligations when due….”

  4. We calculate Adjusted EBITDA as net income, adjusted to exclude provision for or benefit from income taxes, depreciation and amortization, interest expense, crypto asset borrowing costs, stock-based compensation expense, impairment, net, non-recurring Direct Listing expenses, restructuring expenses, non-recurring acquisition-related compensation expenses, unrealized gain or loss on foreign exchange, fair value gain or loss on derivatives, non-recurring legal reserves and related costs, and other loss, net.

  5. In December 2021, a shareholder derivative suit captioned Shin v. Coinbase Global, Inc., was filed in New York state court against us and our directors, alleging breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, and seeking unspecified damages and injunctive relief.

 

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