$VRRM, $TWTR, $SQ, $AL, $VLDR, $NRGV, $PATH
Filings from the week of April 20 - April 26.
Verra Mobility Corp ($VRRM) restated its financials by $30.9 million due to accounting revisions related to private placement stock warrants. Velodyne Lidar Inc ($VLDR) announced its sixth (6th) board of directors resignation since July 2021. Elon Musk purchased TWTR at $54.20 per share.
Top Red Flags
VELODYNE LIDAR INC ($VLDR) | 8-K | $378M - VLDR announced the resignation of Marta Hall from its Board of Directors. According to the 8-K, Ms. Hall “repeatedly criticized the Board and management.” This is the sixth resignation from VLDR’s board of directors since July 2021. The company’s former CEO also resigned back in July 2021. ENERGY VAULT HOLDINGS INC ($NRGV) | 8-K | $1.93B - NRGV parted ways with its Chief Financial Officer, Andrea Wuttke, on April 20, 2022. The company also dismissed its auditors, Marcum LLP, in February 2022. In NRGV’s most recent annual report, the company reported ineffective controls and substantial doubt on continuing as a going concern. UIPATH INC ($PATH) | 8-K | $9.86B - PATH dismissed Grant Thornton LLP as its auditors. Grant Thornton had previously identified ineffective controls in PATH’s revenue recognition process during fiscal year 2018. The company hired KPMG LLP as its new auditors.
SEC Filings In The News
BLOCK INC ($SQ) | 8-K | $58.3B - Jack Dorsey changed his title from “Chief Executive Office, President and Chairperson” to “Block Head and Chairperson.” AIR LEASE CORP ($AL) | 8-K | $4.75B - AL wrote off over $800 million worth of jets that are stuck in Russia. The company had left 27 planes stranded with no anticipation of regaining possession. TWITTER INC (TWTR) | 8-K | $37.9B - TWTR announced an agreement to be acquired by Elon Musk for $54.20 per share, valued at approximately $44 billion. TWTR will become a privately held company.
VERRA MOBILITY CORP (VRRM)
10-K | Market Cap: $2.2B
VRRM, a mobile technology solutions company, restated its financials for the fiscal years ending December 31, 2020, 2019, and 2018, reducing total earnings for the three years by $30.9 million. VRRM first received a high Risk Score from Bedrock AI in FY2018. The company also reduced its additional paid in capital and accumulated deficit by $30.9 million.   The significant restatement related to a revision to VRRM’s accounting for private placement stock warrants. VRRM failed to classify these stock warrants as liabilities in its balance sheets. Furthermore, the company was also required to record changes of the fair value of these stock warrants in its income statements.  The company disclosed that it had made this restatement after reviewing the SEC’s Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) from April 12, 2021.   Due to the restatement, VRRM concluded that its controls were ineffective during 2020. In last year’s Form 10-K, the company originally concluded that its controls were effective during 2020.  VRRM also concluded that its controls were ineffective during 2021 due to insufficient monitoring over a recent acquisition and ineffective design over its revenue and reporting controls.  These issues mentioned above in VRRM’s 2021 Form 10-K should be no surprise considering the company had filed its annual report more than 6 weeks later compared to last year’s annual report. VRRM filed a notification of late filing (NT 10-K) on February 28, 2021 as noted in our previous FO reports.
Total dollar value of restatements were determined by comparison of the balance sheets and income statements from VRRM’s 2021 Form 10-K versus the balance sheets and income statements from the company’s 2020 Form 10-K.
“During fiscal year 2021, we also identified a material weakness in our internal control over the operation of certain controls over the review of the accounting for our Private Placement Warrants related to the April 12, 2021 SEC Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies. This material weakness resulted in a material misstatement of our private placement warrant liability, change in fair value of private placement warrant liability, additional paid-in capital and accumulated deficit as of December 31, 2020 and 2019 and for years ended December 31, 2020, 2019 and 2018. We restated our consolidated financial statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 upon completing our management’s evaluation of the SEC Staff statement as a part of our remediation measures. As a result of these material weaknesses, management concluded that our internal control over financial reporting was not effective as of December 31, 2020.”
“During fiscal year 2021, we identified material weaknesses in our internal controls over financial reporting related to: (i) the monitoring and control activities over the acquisition of Redflex Holdings Limited due to the lack of sufficient qualified accounting resources to timely identify and assess accounting implications of revenue arrangements assumed as part of the acquisition and to provide adequate controls over the completeness and accuracy of inputs used in accounting for the business combination; and (ii) the design and maintenance of certain revenue and reporting controls related to a third-party application utilized in performing certain control activities and used in the preparation of our consolidated financial statements. As a result of these material weaknesses, management concluded that our internal control over financial reporting was not effective as of December 31, 2021.”
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