Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
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, 2023. The certifying officers concluded that, as a result of the material weakness 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, 2023; accordingly, the Company is implementing additional procedures to remediate these shortcomings as outlined below.
Notwithstanding the identified material weakness, 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. GAAP.
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. GAAP. 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; and
● 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.
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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, 2023 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 2023, the Company undertook a comprehensive approach to this evaluation, which included a review of any material weaknesses previously identified as of December 31, 2022. Based on that evaluation, management concluded the Company’s internal control over financial reporting was not effective as of December 31, 2023 due to the material weakness identified in the paragraph below.
The following material weakness in internal control over financial reporting was identified as of December 31, 2023: due to an ineffective information and communication process to ensure the completeness and accuracy of underlying data and reports, the Company did not effectively design, implement and operate process-level controls and effective general information technology (“IT”) controls relevant to its financial reporting processes.
Notwithstanding the material weakness in internal control over financial reporting identified above, this did not result in any material misstatements to the Company’s consolidated financial statements as of and for the year ended December 31, 2023. 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 Weakness in Internal Control over Financial Reporting
During 2023, the Company implemented remediation plans including hiring qualified personnel with the appropriate level of knowledge related to accounting transactions, accounting matters, and relevant systems. The Company also engaged an outside internal audit service provider to assist the Company with completing a risk assessment based on criteria established by COSO to identify internal control over financial reporting risks and control objectives. The Company also evaluated its IT systems and related processes, and the Company is expanding the functionality of its internal systems to provide for higher levels of automation and assurance in its financial reporting function. These changes are expected to result in the generation of reliable information that can be used to execute process and IT controls in a repeatable manner. 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 weakness and strengthen the Company’s internal control over financial reporting. However, remediation efforts may continue beyond the fiscal year ending December 31, 2024. The Company will not be able to fully remediate this material weakness 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 weakness in the Company’s internal control over financial reporting, necessitating further action.
Changes in Internal Control over Financial Reporting
Other than the remediation progress discussed above, there has been no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.
Item 9B. Other Information.
During the three months ended December 31, 2023, the following Section 16 officer adopted , modified or terminated a “Rule 10b5-1 trading arrangement” (as defined in Item 408 of Regulation S-K of the Exchange Act): Badar Khan , the Company’s Chief Executive Officer and a member of the Company’s Board of Directors, adopted a new 10b5-1 trading plan on December 21, 2023 (with the first trade under the new plan scheduled for May 18, 2024). The trading plan will be effective until December 31, 2024 (or such earlier time as provided pursuant to the terms of the trading plan) to sell 246,596 shares of the Company’s Class A Common Stock.
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There were no “non-Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted, modified or terminated during the fiscal quarter ended December 31, 2023 by any of the Company’s Section 16 officers or directors. Each of the existing Rule 10b5-1 trading arrangements of the Company’s Section 16 officers are in compliance with the Company’s Insider Trading Policy, and any actual sale transactions made pursuant to such trading arrangements are disclosed publicly in Section 16 filings with the SEC in accordance with applicable securities laws, rules and regulations.
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 “Board of Directors and Committees; Corporate Governance,” and “Executive Officers” in the Company’s definitive proxy statement (the “2024 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.
Item 11. Executive Compensation.
The information required by this item will be included in the Company’s 2024 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 2024 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 2024 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 2024 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
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders’ Deficit
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).
3.1
Third 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 May 22, 2023).
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 4.4 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 (incorporated by reference to Exhibit 4.4 to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2023).
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).
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).
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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
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).
10.8
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) .
10.9†
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).
10.10†
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).
10.11†
Form of Restricted Stock Unit Agreement (Executive) adopted pursuant to the EVgo 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 November 8, 2023).
10.12*†
Form of Restricted Stock Unit Agreement (Performance-Based) adopted pursuant to the EVgo 2021 Long Term Incentive Plan.
10.13†
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).
10.14*†
Form of Stock Option Agreement (Executive) adopted pursuant to the EVgo Inc. 2021 Long Term Incentive Plan.
10.15†
EVgo Inc. Executive Change in Control and Severance Plan (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2023).
10.16†
Employment Agreement, dated August 1, 2023, between EVgo Services LLC and Badar Khan (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 August 2, 2023).
10.17†
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).
10.18†
Transition Agreement, dated August 1, 2023, between EVgo Inc., EVgo Services LLC, EVgo Holdings, LLC, EVgo Management Holdings, LLC and Catherine Zoi (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 August 2, 2023).
10.19†
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).
10.20†
Amended & Restated Employment Agreement, dated January 17, 2024, between EVgo Services LLC and Dennis Kish (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 17, 2024).
19*
EVgo Inc. Insider Trading Policy, amended and restated as of December 21, 2023.
21.1*
List of Subsidiaries.
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23.1*
Consent of Independent Registered Public Accounting Firm.
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.
97*†
EVgo Inc. Executive Compensation Clawback Policy, effective December 1, 2023.
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).
+
The schedules to this Exhibit have been omitted in accordance with Regulation S-K Items 601(a)(5) and 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 herewith.
** Furnished herewith.
†
Indicates a management contract or compensatory plan, contract or arrangement.
Item 16. Form 10-K Summary.
Not applicable.
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SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 2023 and 2022
Balance at
Costs
Deductions
Balance at
Beginning
Charged to
and
End of
(in thousands)
of Period
Expenses
Write-offs
Period
As of December 31, 2023
Allowance for doubtful accounts
$
687
$
470
$
( 41 )
$
1,116
Allowance for deferred tax asset
134,364
32,824
—
167,188
$
135,051
$
33,294
$
( 41 )
$
168,304
As of December 31, 2022
Allowance for doubtful accounts
$
718
$
240
$
( 271 )
$
687
Allowance for deferred tax asset
122,228
12,136
—
134,364
$
122,946
$
12,376
$
( 271 )
$
135,051
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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 6, 2024.
EVgo Inc.
By:
/s/ Badar Khan
Badar Khan
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 6, 2024 by the following persons on behalf of the registrant and in the capacities indicated:
Name
Title
/s/ Badar Khan
Chief Executive Officer and Director
Badar Khan
(Principal Executive Officer)
/s/ Olga Shevorenkova
Chief Financial Officer
Olga Shevorenkova
(Principal Financial Officer and
Principal Accounting Officer)
/s/ David Nanus
Chairman of the Board and Director
David Nanus
/s/ Peter Anderson
Director
Peter Anderson
/s/ Joseph Esteves
Director
Joseph Esteves
/s/ Darpan Kapadia
Director
Darpan Kapadia
/s/ Katherine Motlagh
Director
Katherine Motlagh
/s/ Jonathan Seelig
Director
Jonathan Seelig
/s/ Paul Segal
Director
Paul Segal
134