Hudson Labs Red Flags - Dirty Laundry
Welcome to our weekly reports featuring impactful and usual disclosures as extracted by Hudson Labs' algorithms.
Filings from the week of June 21 - June 25,2021.
PLUG POWER INC (PLUG)
10-Q | Market cap: $18B
Plug power filed their Q1 statements late due to capacity issues while preparing their 10-K restatement. [1]
There are multiple class action lawsuits alleging:
Failure to disclose the company would be unable to file their 2020 10-K on time;
That the company “knew, consciously disregarded, or were reckless in not knowing” issues with material controls and misstatements [2]
Plug’s warrant accounting is unusual in that it impacts revenues. With Walmart and Amazon warrants reducing revenues by $1.6M and $104k respective for the current quarter. [3]
“As previously disclosed in the Company’s Form 12b-25 filed with the SEC on May 10, 2021, given the time and focus dedicated to completing the restatement and filing of the Form 10-K, the Company is delayed in its reporting and review process for the quarter ended March 31, 2021.”... “As previously disclosed in the Explanatory Note to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “2020 10-K”), the Company restated its previously issued audited consolidated financial statements as of and for the years ended December 31, 2019 and 2018 and its unaudited quarterly consolidated financial statements as of and for each of the quarterly periods ended March 31, 2020 and 2019, June 30, 2020 and 2019, September 30, 2020 and 2019 and December 31, 2019.”
“The St. Clair Derivative Complaint alleges that, for approximately two years beginning on March 13, 2019, the Company “failed to disclose and misrepresented the following material, adverse facts, which the [Derivative] Defendants knew, consciously disregarded, or were reckless in not knowing,” including: “(a) that the Company was experiencing known but undisclosed material weaknesses in its internal controls over financial reporting; (b) the Company was overstating the carrying amount of certain right of use assets and finance obligations associated with leases; (c) the Company was understating its loss accrual on certain service contracts; (d) the Company would need to take impairment charges relating to certain long-lived assets; (e) the Company was improperly classifying research [and] development costs versus costs of goods sold; and (f) the Company would be unable to file its Annual Report for the 2020 fiscal year due to these errors.” The St. Clair Derivative Complaint asserts claims for (1) breach of fiduciary and (2) unjust enrichment.”
“The total amount of provision for common stock warrants recorded as a reduction of revenue for the Walmart Warrant during the three months ended March 31, 2021 and 2020 was $1.6 million and $0.9 million, respectively.”... “The total amount of provision for common stock warrants recorded as a reduction of revenue for the Amazon Warrant during the three months ended March 31, 2021 and 2020 was $104 thousand and $1.3 million, respectively.”
Changes to material agreements
UNITED THERAPEUTICS CORP (UTHR)
2021-06-23 | 8-K | Market cap: $7.8B
The company agreed to discontinue efforts to develop and commercialize their Implantable System for Remodulin, which has been in development in collaboration with Medtronic over the past 12 years. UTHR will cover expenses relating to the wind-down of current clinical trials and patient support.
OPKO HEALTH INC (OPK)
2021-06-25 | 8-K | Market cap: $2.5B
Opko terminated a $100M line of credit agreement with their Chairman and CEO, subject to payment of commitment fees.
AECOM (ACM)
2021-06-25 | 8-K | Market cap: $9B
The company redeemed all remaining 2024 Notes at 115.108% of the outstanding aggregate principal amount, plus accrued and unpaid interest. The company added an additional $215M to their credit facility at Bank of America to finance the transaction.
WENDY'S CO (WEN)
2021-06-23 | 8-K | Market cap: $5B
Wendy’s subsidiary Wendy’s Funding, LLC issued $1.1B of Fixed Rate Senior Secured notes, including $450M in Series 2021-1 at 2.370% and $650M in Series 2021-2 at 2.775%.
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