Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act ) are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act , is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements, and projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
EVgo, with the participation of its chief executive officer and chief financial officer, evaluated, as of the end of the period covered by this Annual Report , the effectiveness of the Company’s disclosure controls and procedures, which were not effective at a reasonable assurance level as of December 31 , 2021 due to material weaknesses in its internal control over financial reporting described below.
Notwithstanding these material weaknesses, EVgo has concluded that the consolidated financial statements included in this Annual Report are fairly stated in all material respects in accordance with GAAP .
Management’s Annual Report on Internal Control over Financial Reporting
This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), as allowed by the SEC for reverse acquisitions between an issuer and a private operating company when it is not possible to conduct an assessment of the private operating company’s internal control over financial reporting in the period between the consummation date of the reverse acquisition and the date of management’s assessment of internal control over financial reporting (pursuant to Section 215.02 of the SEC Division of Corporation Finance’s Regulation S-K Compliance & Disclosure Interpretations).
As discussed elsewhere in this Annual Report, on July 1, 2021, the CRIS Business Combination was completed. Prior to the CRIS Business Combination, EVgo was a special purpose acquisition company formed for the purpose of effecting a merger or similar business combination with one or more businesses. As a result, previously existing internal controls are no longer applicable or comprehensive enough as of the assessment date as its operations prior to the CRIS Business Combination were insignificant compared to those of the consolidated entity post-CRIS Business Combination. The design of the Company’s internal control over financial reporting has required significant time and resources from management and other personnel. As a result, EVgo was unable, without incurring unreasonable effort or expense, to conduct an assessment regarding its internal control over financial reporting as of December 31, 2021.
Material Weakness Remediation Plan
As previously described in this Annual Report under the heading “Risk Factors,” EVgo has determined that the Company has material weaknesses in its internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of its financial statements would not be prevented or detected on a timely basis.
Specifically, material weaknesses were identified with respect to segregation of duties and review; account reconciliations, preparation of supporting documentation and analysis; effective review of technical accounting matters; separate review and approval of journal entries; and review of key inputs for estimates of asset retirement obligations. In
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order to address these identified material weaknesses, the Company has established a remediation plan which includes the following measures:
● Increasing resources within the Company’s organization, including the expansion of the Company’s accounting, control and compliance functions to develop and implement continued improvements and enhancements to address the overall deficiencies that led to the material weaknesses;
● Documenting existing, and implementing additional, internal controls over financial reporting;
● Engaging external consultants to assist with documentation of the Company’s existing internal controls over financial reporting and identification of control gaps, including the existing material weaknesses, to be remediated;
● Implementing additional training programs for the finance and accounting staff related to the requirements of being a public company and internal controls over financial reporting; and
● Designing and implementing controls over the preparation and review of journal entries and account reconciliations, including controls over the segregation of duties.
As of December 31, 2021, EVgo has remediated the material weakness related to the review and approval of journal entries. EVgo is continuing to remediate the remaining material weaknesses as efficiently and effectively as possible, and remediation efforts could continue beyond the fiscal year ending December 31, 2022. At this time, EVgo cannot provide an estimate of costs expected to be incurred in connection with implementing this remediation plan; however, these remediation measures will be time consuming, result in increased costs and place significant demands on the Company’s financial and operational resources.
Changes in Internal Control over Financial Reporting
Other than as discussed above, there were no changes in the Company’s internal control over financial reporting during the three months ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information.
A&R Nomination Agreement
On March 24, 2022, EVgo entered into the A&R Nomination Agreement with EVgo Holdings, amending and restating the Nomination Agreement. Under the A&R Nomination Agreement, the number of LS Directors that EVgo will take all necessary action to cause the Board to nominate for election at each annual or special meeting of stockholders will be determined according to that certain percentage of the outstanding shares of common stock at any time the Principal Stockholder Group Beneficially Owns (as defined in the A&R Nomination Agreement).
The foregoing is a summary of the material terms of the A&R Nomination Agreement and is qualified in its entirety by reference to the full text of the A&R Nomination Agreement, which is filed herewith as Exhibit 10.8 to this Annual Report.
The information contained in this Item 9B is included for the purpose of providing the disclosures required under “Item 1.01 – Entry into a Material Definitive Agreement” of Current Report on Form 8-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
Item 10. Directors, Executive Officers, and Corporate Governance.
The information required by this item can be found under the captions “Directors and Executive Officers” and “Corporate Governance and Board Matters” in the Company’s Proxy Statement (the “2022 Proxy Statement”) to be filed with the SEC not later than 120 days after the end of the Company’s fiscal year and is incorporated herein by reference.
In addition, EVgo’s Board of Directors has adopted a code of conduct (“Code of Conduct”) that applies to all of the Company’s directors, employees and officers, including the Company’s Chief Executive Officer and Chief Financial Officer. The current version of the Code of Conduct is available on the Company’s investor website, which can be found at http://investors.evgo.com/governance. To the extent required by rules adopted by the SEC and the Nasdaq, EVgo intends to promptly disclose future amendments to certain provisions of the Code of Conduct, or waivers of such provisions granted to executive officers and directors, on the Company’s investor website.
Item 11. Executive Compensation.
The information required by this item will be included in the Company’s 2022 Proxy Statement, which is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item will be included in the Company’s 2022 Proxy Statement, which is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be included in the Company’s 2022 Proxy Statement, which is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services.
The information required by this item will be included in the Company’s 2022 Proxy Statement, which is incorporated herein by reference.
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PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) Documents filed as part of the Annual Report on Form 10-K.
(1) List of Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts
(3) List of Exhibits
Exhibit
Number
Description
2.1*
Business Combination Agreement, dated as of January 21, 2021, by and among the Company, CRIS Thunder Merger LLC, EVgo Holdings, LLC, EVgo Holdco, LLC and EVgo OpCo, LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 22, 2021).
2.2*
Stock Purchase Agreement, dated July 9, 2021, by and among innogy e-Mobility US LLC, innogy SE solely in its capacity as guarantor, and EVgo Recargo HoldCo LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 14, 2021).
3.1
Second Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
3.2
Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
4.1
Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (Registration No. 333-248718), filed with the Securities and Exchange Commission on September 10, 2020).
4.2
Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1 (Registration No. 333-248718), filed with the Securities and Exchange Commission on September 10, 2020).
4.3
Warrant Agreement, dated September 29, 2020, between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 5, 2020).
4.4**
Description of Securities.
10.1
Sponsor Agreement, dated as of January 21, 2021, by and among the Company, EVgo Holdco, LLC, Climate Change Crisis Real Impact I Acquisition Holdings, LLC and certain investors (incorporated by reference to Exhibit E to the Business Combination Agreement, filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 22, 2021).
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10.2
Amendment to Sponsor Agreement, dated as of July 1, 2021, by and among the Company, EVgo Holdco, LLC, Climate Change Crisis Real Impact I Acquisition Holdings, LLC and certain investors (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.3
Registration Rights Agreement, dated as of July 1, 2021 by and among the Company, Climate Change Crisis Real Impact I Acquisition Holdings, LLC and certain other parties (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.4
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.5
Form of Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 22, 2021).
10.6
Amended and Restated Limited Liability Company Agreement of EVgo OpCo, LLC, dated as of July 1, 2021, by and among the Company, EVgo OpCo, LLC, CRIS Thunder Merger, LLC and EVgo Holdings, LLC (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.7
Nomination Agreement, dated as of July 1, 2021, by and between the Company and EVgo Holdings, LLC (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.8**
Amended and Restated Nomination Agreement, dated as of March 24, 2022, by and between the Company and EVgo Holdings, LLC.
10.9
Tax Receivable Agreement, dated as of July 1, 2021, by and among the Company, CRIS Thunder Merger LLC and EVgo Holdings, LLC (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.10†
EVgo Inc. 2021 Long Term Incentive Plan (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.11†
Form of Restricted Stock Unit Agreement adopted pursuant to the EVgo Inc. 2021 Long Term Incentive Plan (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.12†
Employment Agreement between EVgo Services LLC and Catherine Zoi, dated as of January 15, 2020 (incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.13†
Employment Agreement between EVgo Services LLC and Olga Shevorenkova, dated as of January 15, 2020 (incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
10.14†
Employment Agreement between EVgo Services LLC and Ivo Steklac, dated as of January 15, 2020 (incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 8, 2021).
21.1**
List of Subsidiaries.
31.1**
Certification of Chief Executive Officer Pursuant to Rule 13a-15(e) or Rule 15d-15(e) *
31.2**
Certification of Chief Financial Officer Pursuant to Rule 13a-15(e) or Rule 15d-15(e) *
32.1**
Certification of Chief Executive Officer and Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350 *
101.INS
XBRL Instance Document.
101.SCH
XBRL Taxonomy Extension Schema Document.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL document and included in Exhibit 101).
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*
The schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon its request.
** Filed or furnished herewith.
† Indicates a management contract or compensatory plan, contract or arrangement.
Item 16. Form 10-K Summary.
None.
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SCHEDULE II
EVgo Inc. (Successor) and EVgo Services LLC (Predecessor)
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2021 and 2020
(in thousands)
Balance at
Costs
Deductions
Balance at
Beginning
Charged to
and
End of
(in thousands)
of Period
Expenses
Write-offs
Other 1
Period
As of December 31, 2021
Allowance for doubtful accounts
$
309
$
414
$
( 5 )
$
—
$
718
Allowance for deferred tax asset
—
7,176
—
115,052
122,228
$
309
$
7,590
$
( 5 )
$
115,052
$
122,946
As of December 31, 2020
Allowance for doubtful accounts
$
95
$
229
$
( 15 )
$
—
$
309
1
Represents an allowance on the deferred tax asset related to the Company’s investment in EVgo OpCo and therefore is an adjustment to equity.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 24, 2022.
EVgo Inc.
By:
/s/ Cathy Zoi
Cathy Zoi
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 24, 2022 by the following persons on behalf of the registrant and in the capacities indicated:
Name
Title
/s/ Cathy Zoi
Chief Executive Officer and Director
Cathy Zoi
(Principal Executive Officer)
/s/ Olga Shevorenkova
Chief Financial Officer
Olga Shevorenkova
(Principal Financial and Principal Accounting Officer)
/s/ David Nanus
Director
David Nanus
/s/ Elizabeth Comstock
Director
Elizabeth Comstock
/s/ Joseph Esteves
Director
Joseph Esteves
/s/ Darpan Karpadia
Director
Darpan Karpadia
/s/ John King
Director
John King
/s/ Kate Brandt
Director
Kate Brandt
/s/ Rodney Slater
Director
Rodney Slater
/s/ Patricia K. Collawn
Lead Independent Director
Patricia K. Collawn
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.