Hyzon Motors, a leading supplier of hydrogen fuel cell-powered commercial vehicles, has released a statement from its special committee regarding revenue recognition issues.
The special committee, appointed by the company’s board of directors in August 2022, investigated issues brought to their attention by management in relation to revenue recognition and internal controls and procedures.
The committee’s preliminary findings, completed in January 2023, revealed that certain fuel cell-powered vehicles delivered to customers in China did not meet the criteria necessary for revenue recognition. The investigation found that 20 vehicles delivered to customer Jiushuang and approximately 30 vehicles delivered to customer Shanghai Hydrogen Hongyun Automotive were not operable on hydrogen at the time of delivery, despite documentation suggesting otherwise.
The committee also noted that the company should have had more formal processes and controls to ensure commissioning was completed prior to delivery. In addition, the investigation found that five vehicles delivered to customers in Europe needed repairs post-delivery, and that one vehicle provided to Transport Groep Noord in Europe in 2021 was not operable on hydrogen.
The committee recommended implementing a written revenue recognition policy, approved by the Audit Committee, to address the unique nature and specialized activities involved in the company’s products. The committee also recommended the implementation of a written disclosure policy regarding the preparation, approval, and release of disclosures regarding financial information and delivery of vehicles, as well as the consideration of establishing a disclosure committee.
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The investigation is a significant development for Hyzon Motors, which is committed to producing hydrogen fuel cell-powered commercial vehicles that contribute to a sustainable future. The company must address these revenue recognition issues and implement the recommended policies and processes to ensure compliance with relevant accounting standards and maintain its reputation as a leader in the industry.