What changed in this filing

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Item 9A. Controls and Procedures

2023-03-30 compared with 2022-03-24 · 107 added, 61 removed, 82 unchanged (67% of the section changed)

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.

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;

● 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.

Management’s Evaluation of Disclosure Controls and Procedures

Per Rules 13a-15(e) and 15d-15(e) under the Exchange Act, the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision of the Company’s Board of Directors and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer (the “certifying officers”), the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in and pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022.

The certifying officers concluded that, as a result of the material weaknesses in internal control over financial reporting described below in “Management’s Report on Internal Control Over Financial Reporting”, the Company’s disclosure controls and procedures were not effective as of December 31, 2022;

accordingly, the Company is implementing additional policies and procedures to remediate these shortcomings as outlined below.

Notwithstanding the identified material weaknesses, the Company’s management believes the consolidated financial statements included in this Annual Report present fairly, in all material respects, the Company’s financial position, results of operations and cash flows as of and for the periods presented, in accordance with U.S.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act).

The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S.

A company’s internal control over financial reporting includes those policies and procedures that:

● Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company;

● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and the directors of the Company;

● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.

Also, 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.

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 the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The Company’s management, with participation of the certifying officers, under the oversight of the Company’s Board of Directors, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 using the framework in Internal Control – Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission (commonly referred to as the “COSO” framework).

In connection with enhancing the Company’s accounting, control and compliance functions during 2022, the Company undertook a comprehensive approach to this evaluation, which included a review of any material weaknesses previously identified as of December 31, 2021.

Based on that evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2022 due to the material weaknesses identified in the paragraph below, which include all material weaknesses as of December 31, 2021 that were identified in the Company’s annual report for the period then ended and that continue to persist.

The following material weaknesses in internal control over financial reporting were identified:

as a result of the Company lacking a sufficient number of trained resources to fulfill internal control responsibilities, the Company did not have an effective risk assessment process that evaluated risks at a sufficient level of detail to identify all relevant risks of material misstatement across the entity and the Company did not have an effective information and communication process that identified and assessed the controls necessary to ensure the reliability of information used in financial reporting.

As a consequence, the Company did not effectively design, implement and operate process-level controls and effective general information technology (“IT”) controls relevant to all of its financial reporting processes.

Notwithstanding the material weaknesses in internal control over financial reporting identified above, they did not result in any material misstatements to the Company’s consolidated financial statements as of and for the year ended December 31, 2022.

This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm due to the established rules of the SEC.

Remediation Plan for Existing Material Weaknesses in Internal Control over Financial Reporting

In order to address the identified material weaknesses, the Company has established a remediation plan which includes the following measures:

● Evaluating skill set gaps and hiring additional accounting, financial reporting, and compliance personnel (including both internal and external resources), as needed, with public company experience to develop and implement additional policies, procedures and controls;

● Providing ongoing training for key personnel responsible for accounting, financial reporting and internal control over financial reporting;

● Designing and implementing a comprehensive and continuous risk assessment process that identifies and assesses risks of material misstatement across the entity and helps ensure that related internal controls are properly designed and in place to respond to those risks in the Company’s financial reporting;

● Designing and implementing controls over the completeness and accuracy of information used in financial reporting;

● Designing and implementing process-level controls and effective general IT controls relevant to all of the Company’s financial reporting processes.

The Company is committed to remediating the material weaknesses and is making progress in that effort.

The actions the Company is taking are subject to ongoing senior management review, as well as oversight from the Company’s Board of Directors.

When fully implemented and operational, the Company believes the measures described above will remediate the underlying causes of the control deficiencies that gave rise to the material weaknesses and strengthen the Company’s internal control over financial reporting.

However, remediation efforts may continue beyond the fiscal year ending December 31, 2023.

The Company will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time.

The Company may also identify additional measures that may be required to remediate the material weaknesses in the Company’s internal control over financial reporting, necessitating further action.

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.

Other than the material weaknesses discussed above, there has been no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

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.

Change in Control Plan

On March 27, 2023, the Compensation Committee of the Board, with input from Pay Governance — the compensation advisor it retained in connection with these matters, including regarding market practices therefor — recommended and the Board approved the EVgo Inc.

Executive Change in Control and Severance Plan (the “Change in Control Severance Plan”), for the benefit of employees in certain senior positions from time to time.

Under the Change in Control Severance Plan, in the event that, within the period beginning on the date that is three months prior to a “change in control” (which is generally consistent with the change in control definition in the 2021 Incentive Plan) and ending on the date that is 12 months following such change in control, a plan participant’s employment is terminated either by the participant for “good reason,” or by the Company, its subsidiaries or any successor entity other than for “cause,” death or “disability” (as such terms are defined in the Change in Control Severance Plan), such participant will receive the following benefits, provided the participant timely signs and does not revoke a separation agreement and release of claims in the Company’s favor and otherwise complies with the terms of the Change in Control Severance Plan:

(a) cash severance payments equal to two times base salary and target bonus for EVgo’s Chief Executive Officer and one times base salary and target bonus for “C-level” direct reports of EVgo’s Chief Executive Officer;

(b) full acceleration of time-based Company equity awards, and pro rata acceleration of performance-based Company equity awards based on target performance;

and (c) payment of the employer-portion of COBRA premiums for continued medical coverage for up to 18 months for EVgo’s Chief Executive Officer and up to 12 months for “C-level” direct reports of EVgo’s Chief Executive Officer, and each of their respective eligible dependents, if any.

The change in control benefits provided for in the Change in Control Severance Plan supersede any conflicting change in control provisions in the employment agreements and offer letters entered into between the Company and each participant;

however, the change in control features of any Management Holdings Incentive Units held by a participant are not impacted by the Change in Control Severance Plan.

The foregoing is a summary of the Change in Control Severance Plan and should be read in conjunction with the full text of the Change in Control Severance Plan, which is attached as Exhibit 10.12 to this Annual Report.

Capitalized terms used in the foregoing summary of the Change in Control Severance Plan but not defined herein have the meanings ascribed to them in the Change in Control Severance Plan.

Resignation of John King and Appointment of Peter Anderson to the Board

On March 27, 2023, John King resigned as a member of the Board.

King’s resignation as a director was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

On March 27, 2023, the Board, in order to fill the newly created directorship that resulted from Mr.

King’s resignation and upon the recommendation of its Nominating and Governance Committee, elected Peter Anderson as a member of the Board, effective immediately.

Anderson is a Senior Vice President and member of the investment team at LS Power.

Anderson’s role at LS Power, his responsibilities include origination, mergers and acquisitions, financing, due diligence, and asset management for LS Power’s energy transition and conventional generation investments.

During his time at LS Power, Mr.

Anderson has engaged in a variety of transactions across the energy sector, including transportation electrification, renewable natural gas, distributed generation, and conventional and renewable generation.

Prior to joining LS Power in 2014, Mr.

Anderson was an associate in Barclays’s Power and Gas Commodities Group from 2011 to 2014.

In that role, he focused on structured power and gas commodity transactions.

Anderson holds a B.S.

in Commerce with a concentration in Finance and a B.S.

in Mathematics from the University of Virginia.

EVgo believes Mr.

extensive experience in the transportation electrification, power generation and renewable energy sectors makes him well suited to serve on the Board.

Anderson was elected to the Board pursuant to the A&R Nomination Agreement, which grants EVgo Holdings the right to designate up to five directors to the Board.

There are no family relationships between Mr.

Anderson and any director or executive officer of the Company, and Mr.

Anderson does not have any direct or indirect material interest in any transaction or proposed transaction required to be reported under Item 404(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

1 unchanged sentence

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.

The information required by this item can be found under the captions “Board of Directors and Committees;

Corporate Governance,” and “Executive Officers” in the Company’s definitive proxy statement (the “2023 Proxy Statement”), which will be filed with the SEC not later than 120 days after the end of the Company’s fiscal year and which is incorporated herein by reference.

Executive Compensation.

9 unchanged sentences

(1) List of Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Equity

Consolidated Statements of Operations and Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ and Member’s Equity (Deficit)

Consolidated Statements of Cash Flows

19 unchanged sentences

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).

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).

Amended and Restated Nomination Agreement, dated as of March 24, 2022, by and between the Company and EVgo Holdings, LLC.

Amended and Restated Nomination Agreement, dated as of March 24, 2022, by and between the Company and EVgo Holdings, LLC (incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 24, 2022).

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) .

2 unchanged sentences

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).

Form of Stock Option Agreement adopted pursuant to the EVgo Inc.

2021 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on May 13, 2022).

Executive Change in Control and Severance Plan.

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).

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).

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).

Employment Agreement, dated as of January 15, 2020, between EVgo Services LLC and Olga Shevorenkova (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).

Employment Agreement, dated as of January 1, 2022, between EVgo Services LLC and Dennis Kish.

Distribution Agreement, dated as of November 10, 2022, by and among the Company and J.P.

Morgan Securities LLC, Evercore Group L.L.C.

and Goldman Sachs & Co.

LLC (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 10, 2022).

List of Subsidiaries.

Consent of Independent Registered Public Accounting Firm.

Certification of Chief Executive Officer Pursuant to Rule 13a-15(e) or Rule 15d-15(e).

11 unchanged sentences

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.

Filed herewith.

** Furnished herewith.

Indicates a management contract or compensatory plan, contract or arrangement.

Form 10-K Summary.

(Successor) and EVgo Services LLC (Predecessor)

Not applicable.

VALUATION AND QUALIFYING ACCOUNTS

1 unchanged sentence

(in thousands)

As of December 31, 2022

3 unchanged sentences

Allowance for doubtful accounts

Allowance for deferred tax asset

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.

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 30, 2023.

/s/ Cathy Zoi

/s/ Catherine Zoi

Catherine 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 30, 2023 by the following persons on behalf of the registrant and in the capacities indicated:

/s/ Cathy Zoi

/s/ Catherine Zoi

Chief Executive Officer and Director

Catherine Zoi

(Principal Executive Officer)

2 unchanged sentences

Olga Shevorenkova

(Principal Financial and Principal Accounting Officer)

(Principal Financial Officer and

Principal Accounting Officer)

/s/ David Nanus

/s/ Elizabeth Comstock

Elizabeth Comstock

Chairman of the Board and Director

/s/ Kate Brandt

/s/ Joseph Esteves

Joseph Esteves

/s/ Darpan Karpadia

Darpan Karpadia

/s/ John King

/s/ Kate Brandt

/s/ Darpan Kapadia

Darpan Kapadia

/s/ Badar Khan

/s/ Peter Anderson

Peter Anderson

/s/ Katherine Motlagh

Katherine Motlagh

/s/ Rodney Slater

Rodney Slater

/s/ Patricia K.

Lead Independent Director

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures