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It seems to me that's an institutional fund or two or three bidding up the price to draw in suckers so that the funds can realize a higher sell price. The co. is bankrupt and liquidating all assets. Nothing is being returned to shareholders. Jmo....
WorthyLion, i agree completely. That's the only reason i stayed in the stock last Fall-- the idea that certification was imminent any week....
And yet many of us invested in ELMS because of James Taylor, who had attained such high positions at GM with their Cadillac and Hummer lines.
And Jason Luo had major credibility in automotive safety...
Go figure....
Well, looks like "game over" for ELMS, as it declares Chapter 7 bankruptcy. (I can actually use the losses on my 2K remnant shares as tax deductions after some big cap gains accrued since Fall 2016 on some market tracking funds --VTI and VOO-- that i sold 50% of a few months ago to buy a house).
https://ih.advfn.com/stock-market/NASDAQ/electric-last-mile-solut-ELMS/stock-news/88343358/electric-last-mile-solutions-inc-announces-chapt?xref=newsalert
Condolences to anyone still holding lots of shares and hoping for some kind of rebound down the road.
This went from being one of the most promising EV plays to the worst possible outcome... Even beyond investors losing skin on this one, it's a darn shame these EV vans and trucks won't be available to fleet owners.....
Who else is going to step up and fill the need for class 1 EV vans and class 2-3 trucks?
New filing today:
Item 1.01.
Entry into a Material Definitive Agreement.
Commercial Agreement with McKinsey
On March 15, 2022 UpHealth, Inc. and its affiliates (“UpHealth”) entered into a Commercial Agreement (the “Commercial Agreement”) with McKinsey & Company, Inc. United States and its affiliates (“McKinsey” and together with UpHealth, the “Parties”), effective as of March 4, 2022. The Commercial Agreement provides that McKinsey will assist in implementing a transformation of UpHealth (the “Project”) and will bring to bear a broad array of personnel, which may include third parties, in support of the Project. McKinsey’s use of third parties for the Project is subject to UpHealth’s approval, and unless the Parties agree otherwise, McKinsey will manage such third parties and bear any third-party fees or expenses. To ensure a successful collaboration, UpHealth, with McKinsey’s support and assistance, will dedicate sufficient UpHealth staff and resources to lead and perform the Project in accordance with agreed timelines.
As consideration for the services performed under the Commercial Agreement, UpHealth will pay McKinsey (i) a fixed fee of $3,000,000, (ii) a fee of $1,200,000, reflecting an amount deferred from a previously completed project, (iii) up to $3,000,000 of fees based on the achievement of certain milestones and (iv) incentive fees with a target value of $3,000,000 based on the achievement of certain targets. UpHealth will be responsible for all Taxes (as defined in the Commercial Agreement) on any amounts payable by UpHealth pursuant to the Commercial Agreement. All amounts invoiced pursuant to the Commercial Agreement are exclusive of applicable taxes, and all payments made by UpHealth to McKinsey thereunder will be made without setoff or counterclaim, free and clear, and without deduction or withholding of any Taxes. The Commercial Agreement will remain in effect until March 31, 2024, unless earlier terminated by either party in accordance with the terms set forth therein. In the event that the Project is terminated by UpHealth, or by McKinsey for cause, UpHealth shall pay to McKinsey a termination fee in an amount that is to be determined based in part on when the termination occurs and the amount previously paid.
The foregoing description is only a summary of the Commercial Agreement and is qualified in its entirety by reference to the full text of the Commercial Agreement, which is filed as Exhibit 10.1 hereto, and is incorporated herein by reference. The Commercial Agreement is included as an exhibit to this Current Report in order to provide investors and security holders with material information regarding its terms. The Commercial Agreement is not intended to provide any other factual information about UpHealth or McKinsey.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits:
Exhibit
No. Item
10.1 † McKinsey Project Commercial Agreement, dated March 15, 2022, by and between UpHealth, Inc. and its affiliates and McKinsey & Company, Inc. United States and its affiliates.
Good luck to you, Ernie, i hope you and others who've come "late to the party" enjoy big gains. For those of us who found out about FIII / ELMS after the initial SPAC days, it's been an unmitigated disaster.
Down the road, with certification and solving the supply issues from China and shipping container costs, this could turn out to be a successful business. But first mover advantage now looks to be lost, and major share dilution is coming (according to explicit mention in the recent 8-K filing).
I've only 2k shares left, but might consider rebuying after the dilution event if it looks like the vehicles (van and truck) will in fact get NHTSA certified and shipping container costs return to earth.
Analysts and us shareholders have been completely burned on this name, so it's going to take a lot to restore confidence.
It remains to be seen whether Shauna McIntyre will become the official CEO or if some other name, perhaps an impressive name, comes in. And what kind of institutional and hedgefund money comes back into supporting the stock.
Barron's is piling on with the bad news. None of these media outlets pumped ELMS up to let it enjoy higher shareprices in 2021 but they're quick to jump on the negative revelations:
https://www.marketwatch.com/articles/ev-stock-electric-last-mile-51647279190
EV Start-Up Electric Last Mile Stock Is Down 47%. Here’s Why.
Mon. March 14, 2022 at 1:34 p.m. ET
By Al Root
Referenced Symbols: ELMS -51.77%
Shares of commercial electric-vehicle start-up Electric Last Mile Solutions are plummeting in Monday trading. The company disclosed a new Securities and Exchange Commission probe and a few other things that have unnerved investors.
Electric Last Mile (ticker: ELMS) stock is off about 47% in midday trading Monday.
Late Friday, Electric Last Mile said the SEC’s Division of Enforcement is conducting an investigation related to company reporting of vehicle orders among other issues. Electric Last Mile says it intends to cooperate fully with the investigation. The company didn’t immediately respond to a request for comment about the investigation. The company also disclosed information about shareholder lawsuits in the same release.
This isn’t the first big drop investors have had to endure recently. Shares fell almost 52% on Feb. 2, following the disclosure that Jason Luo resigned from his positions as executive chairman and chairman of the board, and that James Taylor resigned as CEO.
Recent trading leaves Electric Last Mile stock down about 86% year to date and down about 92% from a June 2021 52-week high of $12 a share [the day I almost sold all shares!!!].
Seven analysts cover Electric Last Mile stock, all with Hold ratings. Coming into 2021, all seven had rated shares at Buy. The average analyst price target has gone to about $2.75 from more than $15.
Troy Michigan-based Electric Last Mile is focused on producing commercial EVs, such as delivery vans, that can help cut greenhouse-gas emissions.
Write to Al Root at allen.root@dowjones.com
There's speculation over at Stocktwits by a few folks about the possibility of ELMS being bought out by a bigger company that would be able to buy at firesale prices a co. fairly close to production with two viable EV vehicles. That may happen but i'm not betting on it, i.e., i'm not buying shares down here....
Now, what would inspire confidence in the stock and lead me to pick up some shares would be if an investor(s) came in with the big funds to guarantee ELMS could survive and maybe flourish over the coming years.
But such funds will mean serious dilution, so the old EPS figures projected by the analysts for 2023-2025 would need to be probably cut in half.
Here are the saddening contents of the 8K:
FORM 8-K
CURRENT REPORT
ELECTRIC LAST MILE SOLUTIONS, INC.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
As previously disclosed in a Current Report on Form 8-K filed by the Company on February 1, 2022, in connection with James Taylor’s resignation from his positions as President and Chief Executive Officer and as a member of the Board, Mr. Taylor and the Company agreed to settlement terms, including that Mr. Taylor would provide consulting services to the Company for a period of two years. On March 1, 2022, Mr. Taylor and the Company entered into a consulting agreement (the “Consulting Agreement”), a copy of which was attached as an exhibit to the Current Report on Form 8-K filed by the Company on March 4, 2022.
The Company has since notified Mr. Taylor of its decision to terminate the Consulting Agreement, and Mr. Taylor’s services thereunder, in accordance with Section 1 of the Consulting Agreement, effective as of May 10, 2022.
Item 7.01. Regulation FD Disclosure.
Vehicle Status
On February 14, 2022, Electric Last Mile Solutions, Inc. (the “Company”) announced in a Current Report on Form 8-K that it was conducting a comprehensive review of the status of its products and commercialization plan under the guidance of the Company’s new leadership. With the assistance of outside consultants, management is continuing to assess the Company’s planned product offerings, production plans, and certification processes, including the feasibility of meeting previously announced targets.
The Company currently expects to commence production of certified Urban Delivery vehicles no earlier than the end of 2022 and into first quarter of 2023, followed by the Urban Utility vehicle no earlier than the first half of 2023. The Company had previously disclosed in September 2021 that it had successfully launched the ELMS Urban Delivery vehicle, and in November 2021, the Company announced that it expected to have certified Urban Delivery vehicles available for sale by year-end and that production of its Urban Utility vehicle was expected to commence in the second half of 2022. The operational processes planned by the Company’s new leadership around certification and safety testing, vehicle durability testing and other pre-preproduction steps are causing delays in the commercialization timeframe for Urban Delivery, Urban Utility and other vehicles. Management is committed to working closely with its commercial partners to produce quality vehicles that meet appropriate safety standards and will only sell vehicles if and when such standards are met.
Liquidity
The Company continues to work with outside advisors to determine its current liquidity position and ongoing funding needs. The Company previously announced on February 1, 2022 that it expected to report that it had $132.0 to $142.0 million in cash and cash equivalents, which includes $25.0 to $30.0 million of restricted cash, as of December 31, 2021. The Company has since confirmed that it had approximately $137 million in cash and cash equivalents, which included approximately $27 million of restricted cash, as of December 31, 2021. As of March 10, 2022, the Company currently estimates it has approximately $95 million in cash and cash equivalents, including approximately $24 million in restricted cash. The Company currently believes it has sufficient cash to continue operations through sometime between July and September 2022. We are continuing to evaluate our rate of cash expenditures, which will be affected by expenses related to professional fees associated with ongoing compliance, regulatory and litigation matters; financial statement preparation and audit costs; and the pace and cost of our ongoing vehicle development work. Additionally, as disclosed in Item 5.02 of this Current Report on Form 8-K, the Company has provided notice to Mr. Taylor of the termination of the Consulting Agreement and his services thereunder. The Company is actively pursuing potential sources of liquidity and is working to extend its cash runway during this process to the extent possible, if at all. The Company will not be able to launch the Urban Delivery, Urban Utility or any other vehicle without obtaining such additional liquidity.
Withdrawal of Prior Guidance and Estimates
In connection with management’s review, and in light of the disclosures in this Item 7.01, the Company has decided to withdraw all previously issued business outlook and related forward-looking statements, as well as other commercialization targets issued by the Company, until such time as it has improved forecasting confidence. The statements in this Current Report on Form 8-K hereby supersede any previously issued disclosure and guidance from the Company with respect to such matters. The Company intends to keep the public informed of its progress.
These statements and estimates with respect to our product launch and otherwise in this Item 7.01 are unaudited and preliminary and do not present all information necessary for an understanding of the Company’s financial condition and results of operations. The completion of the Company’s year-end accounting procedures, including execution of the Company’s internal control over financial reporting, and audit of the Company’s financial statements for the year ended December 31, 2021 is ongoing and could result in changes to the information set forth above.
The information in Item 7.01 of this Current Report on Form 8-K is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 8.01. Other Events.
On February 3, 2022, a stockholder of the Company, Scott Hacker, filed a putative class action against the Company and certain of its current and former officers alleging violations of Section 10(b) and Rule 10b-5 thereunder, and 20(a) of the Securities Exchange Act of 1934. Hacker v. Electric Last Mile Solutions, Inc., 22-CV-00545 (D.N.J., filed Feb. 3, 2022). The plaintiff alleges that the defendants failed to disclose that certain Company officers purchased equity in the Company at substantial discounts to market without obtaining an independent valuation, and that as a result the Company’s financial statements were not accurate. The case is in its early stages and a lead plaintiff has not yet been appointed.
On February 4, 2022 , the Company received a letter from The Nasdaq Stock Market (“Nasdaq”), requesting additional information related to the disclosures in the Company’s Current Report on Form 8-K filed on February 1, 2022. The Company responded to Nasdaq’s request as directed.
On February 24, 2022, the Company received a request from a putative stockholder of the Company to inspect certain of the Company’s books and records, including with respect to the matters alleged in the securities class action. The Company is in the process of responding to this request.
On March 7, 2022, the Company learned that the Division of Enforcement of the Securities and Exchange Commission (the “SEC”) is conducting an investigation involving the matters discussed in Current Reports on Form 8-K filed by the Company on September 27, 2021, February 1, 2022 and February 14, 2022 and Exhibits 99.1 and 99.2 to Forum Merger III Corporation’s Current Report on Form 8-K filed on March 16, 2021. The Company intends to cooperate fully with the SEC investigation. At this point, the Company cannot predict the eventual scope, duration or outcome of this matter.
Forward-Looking Statements
I wasn't aware until i checked Stocktwits this a.m. that ELMS filed an 8-K Friday afternoon-- FULL OF BAD NEWS. (Have no idea why it didn't show up in the news feed here at IHUB ELMS board.)
Apparently the cash burn was paying off more of the Mishawaka factory previously owned by SERES.
James Taylor's consultancy has been terminated.
Production of the road-worthy Urban Delivery van has been delayed many months, and same with the Urban Utility truck....
(SEE MY NEXT POST of the 8-K contents....)
Here's a news report, which doesn't contain any news about the big delay in production. https://finance.yahoo.com/news/electric-last-mile-discloses-sec-225415878.html
--------------
From the 8-K:
3/11/22, 03:52 PM
$ELMS
As of March 10, 2022, [the Company has] approximately $95 million in cash The Company currently believes it has sufficient cash to continue operations through sometime between July and September 2022. We are continuing to evaluate our rate of cash expenditures, which will be affected by expenses related to professional fees associated with ongoing compliance, regulatory and litigation matters; financial statement preparation and audit costs; and the pace and cost of our ongoing vehicle development work. Additionally, as disclosed in Item 5.02 of this Current Report on Form 8-K, the Company has provided notice to Mr. Taylor of the termination of the Consulting Agreement and his services thereunder. The Company is actively pursuing potential sources of liquidity and is working to extend its cash runway during this process to the extent possible, if at all. The Company will not be able to launch the Urban Delivery, Urban Utility or any other vehicle without obtaining such additional liquidity.
I've been focused on other stuff... The daily/hourly trading behavior on ELMS will be very much subject, imo, to the risk off / risk on sector & market sentiment.
I was glad to see the PR the other day providing a bit of clarity on how ELMS is laying off staff to focus on their core business plan.
I presume those are the jobs created for the business entities ELMS established in China and S.F., and maybe extra divisions at Troy, not at the Mishawaka, IN, factory, where the core assembly / production business is to occur and ramp up this year.
So much is up in the air about whether ELMS will be able to get logistic costs down, and sufficient parts delivered to ramp up.
The debacle with co-founders' resignation could not have come at a worse time, imo.
~~~~~~~~~~~~~~~~~~~~~
March 07 2022 - 01:15AM
Electric Last Mile Solutions (ELMS) plans to lay off 24% of its staff as it seeks to streamline its business. Reuters reports that the layoffs will allow the commercial electric vehicle (EV) maker to become leaner as it focuses on its core business. [...] The company has yet to ascertain the total cost savings it will achieve with the layoffs.
Today's after-hours filing 1) announces a cutback of 25% of their extended workforce so that ELMS can concentrate on the essential business plan; and 2) it confirms all the massive legal details about Jason Luo and James Taylor's resignations, formalizes their 2 year consultancy contract, clarifies the status of what stock-shares they still have or don't have, etc.
I simply don't have time to read all of it, but perusing it lightly makes me think there's nothing really different here than what was originally revealed in early Feb. (I could be wrong.)
The stock is down along with the entire sector, which continues to sell off hard. I'm seeing many names (PTRA, QS, RIVN, et al.) struggling as they fall down, down, down.....
I'll let MrGreenie speak for himself, but Stoxjock you have to read some of the earlier posts here from the past week about how investors need clarity on homologation (full NHTSA certification), shipping container costs, and production ramp-up schedule, based in turn on the supply logistics-- namely, is ELMS getting sufficient number of basic vans from China to ramp up production here?
We're all hoping for the best, but shareholders need clarity ASAP....
MrGreenieSr, i can't help but think that IR and mgmt have had to "go silent" for awhile because of all those sharks in the water-- the ambulance-chasing law firms trying to start up a class-action lawsuit.
Obviously most of these never amount to anything, though some do (e.g., i was a beneficiary of the lawsuit against China Media Express CCME after massive losses in 2011).
Anyway, ELMS is surely realizing they have to be very careful about anything that they or IR say until they're able to bring public clarity to operations and forward looking statements.
Just my thoughts, fwiw....
That's why it's so maddening now for shareholders or prospective shareholders-- we're all in the dark about whether ELMS can solve the problems i've discussed -- supply & cost of parts and NHTSA homologation-- the MAJOR FACTORS in whether ELMS will be able to ramp up this year and maximize that claimed "first mover" advantage.
The formerly mega-bullish analysts sure haven't helped with their downgrades to "hold" and utterly cratered PTs.... e.g., $2.50 from Volkmann at Jefferies-- REALLY????? How does one go from being the most bullish ($18 PT) to the most bearish (in terms of P.T.) of the six analysts? Not to mention that Fuzzy Panda short report....
Right. That's why i wasn't re-buying shares yesterday sub-$2 in an IRA (i believe there's no wash sale involved there).
This rebound to $2.40s may just be one of those so-called "dead-cat" bounces (i hate that term), fueled in large part by short-covering.
Over at Stocktwits and FinanceYahoo there seem to be some bullish new posters/traders/investors pushing this for a shortsqueeze.
An update article from Detroit Free Press-- here's the final section:
"[ELMS spokesperson Austin] Stowe said the company is continuing to run "business as usual." Its small Urban Delivery electric van started production in September at the former Hummer plant in Mishawaka, Indiana.
Stowe said ELMS has completed testing of the van and is finalizing calibration and quality checks before those hit public roads shortly."
https://www.freep.com/story/money/cars/2022/02/09/former-gm-executive-resigns-ev-startup-amid-investigation/6706728001/
Former GM executive resigns from EV startup amid investigation
Jamie L. LaReau
Detroit Free Press
A former General Motors executive is out and a onetime Ford Motor Co. leader is in — after a management shakeup at a Troy-based electric vehicle startup.
The ELMS cargo van is the first Class 1 commercial EV in the United States and is being built at the old Hummer H2 plant in Mishawaka, Indiana.
Electric Last Mile Solution (ELMS), which makes battery-powered delivery vehicles, said its top two executives resigned Feb. 1 after an investigation into their share purchases.
Jim Taylor, 65, resigned as CEO of ELMS, and Jason Luo resigned as chairman.
Jim Taylor, the CEO and President of Electric Last Mile Solutions (ELMS) in Troy rolling off the production line of an electric vehicle cargo van being built at the old Hummer H2 plant in Mishawaka, Indiana. Taylor is the former head of Cadillac and former CEO of Hummer who left General Motors in the mid-2000s to launch various start-ups. The ELMS cargo van is the first Class 1 commercial EV in the United States.
Taylor, an entrepreneur who has a colorful history with EV startups, was the subject of a Free Press profile in November about how he started ELMS.
Taylor spent the bulk of his career at GM. He started there in 1980 in Canada, and eventually made it to vehicle line executive for Cadillac in 1995. In 2005, he was promoted to president of Cadillac, then named CEO of Hummer in 2008. He stayed until Hummer was shuttered in 2010 amid GM's bankruptcy restructuring.
Luo was the former CEO of Ford Great China in 2017-18 before going into private equity. Luo declined to comment.
In a Securities and Exchange filing, ELMS said a special committee of the board conducted an investigation that found, shortly before it announced an agreement to go public in December 2020, that some executives, including Taylor and Luo, bought equity at "substantial discounts to market value" without obtaining an independent valuation, meaning there was no third-party appraisal of the equity's market value.
Taylor declined a request for an interview saying he could not speak to the news media.
Both Taylor and Luo remain as consultants to ELMS. The filing listed Taylor will receive $300,000 in the role as consultant; it did not list Luo's salary.
ELMS said former Ford alum Shauna McIntyre, 50, has been named interim CEO of ELMS. McIntyre, who was on ELMS board, is a former chief of staff at Google's consumer electronics division.
She worked at Ford for five years, starting in 1995. There, she "instituted lean manufacturing principles in factories overseas, and later led final assembly production of the Ford Ranger" stateside, said ELMS spokesman Austin Stowe.
Former Intel chief Brian Krzanich was named ELMS non-executive chairman.
"Brian, the full Board and I want to assure all of our stakeholders, including customers, suppliers, investors and employees, of our continued focus and dedication to the company’s ongoing business and mission," McIntyre said in a statement.
In the filing, ELMS also said it will have to restate its financial statements as of Dec. 31, 2020, and the nine months ended Sept. 30, 2021, as part of the investigation.
Shauna McIntyre has been named interim CEO of Electric Last Mile Solution
But Stowe said the company is continuing to run "business as usual." Its small Urban Delivery electric van started production in September at the former Hummer plant in Mishawaka, Indiana.
Stowe said ELMS has completed testing of the van and is finalizing calibration and quality checks before those hit public roads shortly.
ELMS has plans for a larger Urban Utility electric delivery truck, which is on track to launch later this year, Stowe said.
That's an interesting thought. If all we're talking about here with the "scandal" is that Taylor & Luo pre-merger greatly sweetened the deal for themselves in being able to get a lot more shares for a certain value, and there's nothing wrong with the business model, then the analysts' severe PT reductions-- especially Volkmann & Ives' PTs of $2.50 and $4-- are just a way of sh!tting on the co. and remaining shareholders. It's really cruel.
Now, we know that 3 problems HAVE emerged for the biz model: 1) those darned high shipping container costs, which wipe out ELMS' profitability on the vans; 2) the big delays in getting parts shipped at all; 3) the much-delayed homologation, preventing any ramp-up of vans for commercial fleets using the the public roads.
The co. hasn't addressed any of these 3 concerns in months, leaving us in the dark.
I don't have access to those analyst downgrade reports in full, so i don't know if they've provided color or encouragement/discouragement about these issues.
So ELMS shares are still a big mysterious "X factor" as to how this co. should be properly valued.
As i stated the other day, What a clusterf*ck.
There have been at least 7 or 8 firms that have stepped up with their solicitations for plaintiffs-- such c'mons are all over the Stocktwits thread for ELMS.
I still don't understand what is holding back the full NHTSA certification / homologation. Poking around in my files, i found this Sept. 2021 comment from Croatoan Capital in the lengthy comment thread to his Dec. 2020 SeekingAlpha.com article about ELMS (the first article i ever read about ELMS before starting to invest):
Croatoan Capital
22 Sep. 2021, 8:41 PM
[...] The U.S.-engineered refinements to structural integrity and safety have brought the van to U.S. safety standards. The ELMS van has passed NHTSA safety testing.
Excerpt from https://ir.electriclastmile.com/news/news-details/2021/ELMS-Announces-Successful-Completion-of-Next-Critical-Milestone-for-Start-of-Production/default.aspx: “Incorporating our all new, ELMS-engineered, patented, front bumper energy absorption system along with a series of structural reinforcements allowed the Urban Delivery to meet federal safety testing standards,” added Praveen Cherian, ELMS Vice President of Engineering. “I am extremely pleased with the results of the confirmation test and proud of our global engineering development team at ELMS for their innovative thinking and methods that helped us deliver robust results in a very compressed timeline. This was certainly no ordinary achievement especially being the first Commercial Class 1 EV engineered for the US market.”
------------
So what more does ELMS have to do to achieve homologation? Or is this just waiting endlessly for a final bureaucratic step to occur at the NHTSA?
By the way, Croatoan Capital sadly notes in a much more recent reply to someone on Feb. 3, 2022 that he no longer holds his sizeable amount of shares after the stock crashed this past week.
And on the evening of Feb. 1 after the news first broke, he posted in that same comment thread:
"It is a surprise to put it mildly. I read through the filing. From what I can gather, the timing of the purchases in pre-SPAC stock and the extremely low valuation of that stock was the issue compared to the eventual $10 SPAC price. Had we heard of this investigation prior to today [e.g., in the fine print of an SEC filing]? How did it come about and why did it have to result in the departure of the founders of the company? Were it to rise to a level of behavior deemed criminal, I don't think they would still be employed as consultants and keep their shares. So my immediate impression is that this is messy, unfortunate and unclear why this had to happen. I don't think, given various legal minefields around the actions of these individuals, that we are going to get much more clarity. Maybe the investigation began with the independent accountant who reported it to the board. My guess is the board was not about to ignore it and then become complicit, no matter how inconsequential the infraction ended up being."
--------------
My comment:
If the infractions by co-founders Taylor and Luo are indeed "inconsequential," then the severe negative downgrade reactions by the analysts (especially Volkmann at Jefferies and Ives at Wedbush) and massacre-selloff by the market is unwarranted.
But maybe those two analysts actually know more than they're telling?
That's what keeps me from re-buying shares right now.....
I totally agree! It's a nice video from interim CEO Shauna McIntyre. I only wish it had come out on Tues afternoon with the resignation news.
Going forward, there needs to be:
--homologation / full certification of ELMS vans from NHTSA ASAP or at least news from mgmt on why it's taking so long (if it's merely understaffing due to COVID at NHTSA that will lessen doubt that certification is going to happen),
--then rapid ramp-up of vehicle production to make up for lost time,
--significant cost containment on shipping parts from China,
--renewed commitment from Randy Marion group on purchase orders (last year, Marion himself stated there was "overwhelming demand," which is why i bought FIII/ELMS shares so heavily, but the Fuzzy Panda shortseller report this past week has created FUD on that point),
--if possible, a shortened timeline to getting the Class 3 Urban Utility truck homologated and into production,
--restated financials ASAP so the market has some transparency as McIntyre promised.
Here's a very warm 3-minute video presentation by the new interim CEO Shauna McIntyre. No news about homologation and ramp-up of production, but she does convey a strong sense of a positive future for ELMS.
https://player.vimeo.com/video/673746556
I've been wanting to see what exactly Jefferies analyst Stephen Volkmann said about ELMS to justify slashing his PT from $18 all the way down to a measly $2.50 in his note released yesterday early a.m. It's very hard to find anything on the internet. So i got the free 1-week trial with StreetInsider.com and this is what is shown under their headline item:
UPDATE: Jefferies Downgrades Electric Last Mile Solutions Inc. (ELMS) to Hold
February 3, 2022 Updated-7:55 AM EST
Jefferies analyst Stephen Volkmann downgraded Electric Last Mile Solutions Inc. (NASDAQ: ELMS) from Buy to Hold with a price target of $2.50 (from $18.00).
The analyst commented, "ELMS recently announced the resignation of its Chairman and CEO following an internal investigation. ELMS is also restating its financials for FY 20/21. The resulting impact on the stock raises the potential for significantly increased costs and cash burn, and the lack of meaningful business updates from the company provides little to reassure markets. We downgrade ELMS to a HOLD and reduce our price target to $2.50."
----------
Presumably his remark about "increased costs" refers to the prospect of having to raise funds down the road at lower stock prices, and/or bankers not willing to give them lower borrowing terms if they try to finance any debt if/when cash runs low....
For what it's worth, i emailed Erik at IR early yesterday a.m. (I've not heard back from him, though i imagine he's extremely busy responding to whatever major institutional investors are still invested in ELMS):
Hi Erik
With that short report / attack from “Fuzzy Panda Research” yesterday,
and all the severe downgrades / PT reductions from the formerly positive analysts, the new management team really has to step up and defend the ELMS investment thesis, ASAP!
Faithful ELMS investors have been deeply traumatized by the EV sector selloff and now this additional ELMS shareprice plunge on the terrible news and attacks from both shortsellers & analysts, too.
Here's something that spooked me about ELMS-- i never mentioned it on this board before. But it's something that needs to be watched..... Back on Nov. 15, 2021 i emailed IR guy Erik Grossman:
Dear Erik,
[...] the most recent 10-Q document from ELMS contains this passage:
Pursuant to the Agreement, Randy Marion will purchase and ELM will sell to Randy Marion a total of not less than 6,000 of the initial 8,000 Vehicles manufactured and produced by the Company (the “First Order Requirement”).
In connection with the execution of the Agreement, Randy Marion issued a purchase order for 1,000 Vehicles.
Pursuant to the Agreement, Randy Marion is required to issue another purchase order for at least 1,000 Vehicles on or before [Monday] November 15, 2021 and all additional purchase orders required to fulfill the First Order Requirement must be issued by February 28, 2022.
I hope that we hear a news release about such a P.O. very soon, since today (Nov. 15) has come and gone….
------------
Well, Erik never replied to my email (he was the one who had initially reached out to me after i posted an informed comment to a SeekingAlpha article about ELMS last year).
One could argue (as i did in my own mind) that Randy Marion held off on further committed orders due to the delay of NHTSA homologation, but the continued silence from both the NHTSA and Randy Marion is ominous to me.
Rocketeer, the problem is that any other EV co. that emerged via SPAC process is now a "suspect" of having similar insider-trading as happened here with Taylor & Luo, or other "funny money" shenanigans.
That's why so many other EV stocks were "jolted" yesterday by ELMS' "implosion", as stated by the S.Alpha news blurb on the sector's renewed losses.
I wish i still held my 12K NIO shares bought several years ago around $3 (sold at $7), my only previous EV investment other than a brief swing trade on QS.
The Nasdaq down 3% today sure doesn't help with any possible ELMS rebound here today.
Having been so negative with my 2 posts here this a.m., i want to also say that if certification/homologation happens sooner than later, container-shipping costs come down, and actual orders and revenues start pouring in, there's a good chance this goes back to at least the $6s or more...
I also think that the Urban Utility Class 3 truck could be a beautiful and lucrative development for the co. Revenues from that alone would be worth a shareprice in the upper single digits.
But commercial buyers need to have faith that ELMS is going to be a solid player here, around for many years/decades. Without that faith, sales will not be nearly robust enough.....
The irony/tragedy is that i almost sold all shares that late day in June 2021 when ELMS briefly touched $12 in intraday trading and then began to fade. I could have sold everything in upper $11s. It was the ONLY GREEN DAY i had experienced since starting to heavily buy shares in Jan.-Feb. 2021.
Little did i know that Big Money was going to bearishly sell off the EV sector so very hard almost ALL YEAR LONG and then again into this year.
The ELMS investment still "made sense" b/c of it having that former GM factory, relatively low debt, and very little startup costs compared to almost all other EV startups. I figured the shipping container costs would be brought down and ELMS could become profitable sometime in 2023.
Wedbush analyst Dan Ives in his downgrade note yesterday remarked “James Taylor and Jason Luo were the linchpins to the ELMS strategic and holistic vision. Their experience in the automotive industry was unmatched along with their unique relationships with the China OEM market. With both gone [sic] under dark cloud circumstances, the ELMS bull story is tossed out the window. The only reason we are not downgrading to sell is because of the inherent value of the company’s core franchise and potential M&A value.”
I disagreed with Ives here yesterday, noting on this board that the "expertise" of CEO Taylor isn't gone, since he is staying on as a well-paid consultant for the next 2 years.
So Ives' remark doesn't logically make sense.
But the pessimism being shown by Ives and now Volkmann is contagious and influential and will keep too many people away from investing in ELMS for at least the short to medium term.
What a clusterf*ck-- who needs the rather inane shortseller report from "Fuzzy Panda Research" yesterday when there's Jefferies analyst Stephen Volkmann. Singing the praises of ELMS last year and positing the highest one-year price target ($18) among the six analysts, early this a.m. he came in with a downgrade to Hold and slashed his PT all the way down to $2.50/share (far below the reduced PTs of analysts yesterday: $7, $6, $4). I was expecting him to defend the investment thesis, not tank it.
I sold 12k of my 14k shares pre-market on the ask (to not crash the price) at 2.49 avg.
At least i'll have a huge tax-loss deduction to offset far more massive gains in mkt-tracking ETFs (VTI, VOO, ITOT, the bulk of my portfolio the past six years) in case i need to take some cap gains this year or next.
But the 6% of my portfolio i've devoted to individual stock trading, which had become very overweight on ELMS (because of the uniformly positive prospects put out by Volkmann, Ives at Wedbush, and the others) has just been torched.
The new ELMS interim CEO Shauna McIntyre needs to step up here ASAP and defend the investment thesis and business model....
And jeez, when is that safety certification (homologation) from the NHTSA going to ever happen? Taylor promised it in Sept. for the Fall, then Dec., then January.
I was expecting a pop from that news, but now am wondering if it's coming at all....
Sorry to be so negative but i feel quite betrayed by mgmt, IR, and analysts.
I'm keeping 2K shares just in case this thing ever turns around and gets rolling.....
I don't understand the logic of the two analysts i saw cited today in stock-news stories, when they argue that Taylor and Luo were the key personnel for the future of ELMS, and now that they're gone, the co.'s future is uncertain...
--The 8-K made it quite clear that Taylor is staying on as a well-paid consultant for the next 2 years!! And Luo will also be available as a consultant. So that "mgmt expertise" is still there.\
And since they both still own so many shares, they are surely motivated to see ELMS and its stock do as well as possible. Btw, a "non-disparagement" clause is written into their agreement.
Reading the fine print of the 8-K, it appears that the share-count will be reduced by at least 7.8M shares by the "surrender" of 6M shares from Luo, 1.8M from Taylor; "and, no later than April 11, an additional number of shares of Company common stock with a value of approximately [$3.3 million for Taylor, $10 million for Luo] based on a VWAP calculation." So the latter could mean a further reduction in share-count as well as funds incoming to ELMS cash coffers.
And by "positive," i mean a reduced share-count, which will increase EPS down the road, assuming they get logistics smoothed out, ramp up sales, and begin generating the big revenues.
Good summation, MrGreenie. I, too, am in deep on this one and the news is rather shocking. But, like you, i'm thinking something very positive could come out of this...
The selloff in this sector continues to be unbelievably brutal.
Never thought sentiment would so turn against it.
But at some point, presumably after logistic supply-lines "heal," the sentiment will turn and we likely get a massive run-up.
In the meantime, there's so much pain for anyone heavily invested in the sector.
There are a number of new graphic ads for ELMS over past several days that you can see at their Linkedin site:
https://www.linkedin.com/company/electric-last-mile-solutions/posts/?feedView=all
It's the entire darned EV sector and almost all the rest of the market, too. Even bonds are down. Massive "risk off" sentiment. I saw a news blurb from S.Alpha today and they named over a dozen EV names that were down 10% or more.
ELMS is being swept up (or is that "swept down") with the rest of the market's heavy selloff. Nasdaq is already in correction territory. EV sector selling has been nasty. Oh well, hoping it's a case of "this, too, shall pass."
Greenie, that's some useful DD you've dug up by contacting the RM group. Thanks for this! I love the part about production really ramping up in March. They must know something from ELMS about the logistics situation opening up to flow more freely.... That would be not just "huge" but YUUUUUUGE!
Good article about ELMS after the CES....
https://www-cnet-com.cdn.ampproject.org/c/s/www.cnet.com/google-amp/news/elms-commercial-vans-ces-2022/
Electric-vehicle maker ELMS moves out of the shadows at CES 2022
Focused on building affordable, battery-powered commercial vehicles, Electric Last Mile Solutions could quickly become a household name.
Craig Cole Fri Jan. 7, 2022
Tesla, Rivian, Lucid and Fisker are the EV makers that grab headlines: They're sexy, tech-y and oh-so glamorous. But countless other electric vehicle manufacturers are working just as hard to build battery-powered vehicles. Arguably, one of the most important ones you've probably never heard of is Electric Last Mile Solutions, or ELMS. (Pronounce it "elms," like the tree.) And at CES 2022, the company moved out of the shadows -- in short order, ELMS could become a household name.
"I'd still call us relatively stealth," Jim Taylor, the automaker's co-founder and chief executive officer, told Roadshow. Despite flying way below the radars of most people, he explained, "We're real, we're not a PowerPoint [presentation], or a car that will come out in two years."
ELMS is building and delivering all-electric vans right now. Headquartered in Troy, Michigan, ELMS has a manufacturing plant in Mishawaka, Indiana, at an old Hummer factory that was converted to build EVs. Bringing things full circle, Taylor used to be an executive at GM: He was in charge of Cadillac and, as fate would have it, the Hummer brand.
PHOTO: The Urban Delivery is a heavily reworked Wuling van imported from China.
About the polar opposite of those two marques, ELMS focuses on offering solid, affordable commercial vehicles. "Extreme technology is not our play," said Taylor, rather, "It's extreme affordability." The company's Urban Delivery van is tailor made for painters, couriers and other businesses in need of long-lasting, workhorse vehicles, so don't expect this hauler to feature Nappa leather, an adaptive suspension system or ventilated seats.
At 186 inches long, the Urban Delivery is about the size of a Ford Transit Connect. It rolls on a 120-inch wheelbase and weighs a claimed 3,133 pounds. Cargo space clocks in at a generous 157 cubic feet, and its maximum payload is 2,100 pounds. (Yep, more than a ton.) As for performance, this vehicle is no rocket: It features a 41-kilowatt-hour battery pack provided by CATL, which ELMS estimates will deliver 110 miles of range in Environmental Protection Agency testing. A single electric motor cranks out a modest 60kW of oomph, about 80 horsepower. The top speed is a claimed 55 mph -- pretty slow, but more than enough for downtown delivery duty.
Based on its outward appearance, this van looks pretty utilitarian and oddly unfamiliar. This is because at its core the Urban Delivery is a Wuling design from China. Taylor explained a lot of people accuse them of just importing Chinese vans but he said emphatically "that's what we aren't doing." ELMS does start with a body-in-white rolling chassis that's supplied by Wuling, because "it's out on the road with proven reliability," but ELMS reworks them significantly, adding seats, sensors and safety gear, new bumpers and headlights (everything it takes to make the vehicle street legal in the US). ELMS also installs its own electric powertrain. [And also installs smart digital electronics and uniquely outfits each van to meet needs of different kinds of customers/businesses.]
PHOTO: Don't expect cutting-edge tech inside this van.
But why start with Wuling? Taylor explained the company imported a bunch of the most-popular commercial vans sold in China and compared them. Wuling's established offering came out on top, which is why ELMS chose it as the basis for its first model. And of course, by starting with an existing product, you don't have to develop a vehicle from scratch, which saves years of work and untold billions of dollars.
The first Urban Delivery vans were handed over to customers in September, but they are not street legal. The Urban Delivery Campus Vehicle as this variant is called, is intended to be used in closed settings, such as on university grounds. Taylor explained, ELMS decided to launch a non-homologated product first in order to iron out any production or supply issues. But simultaneously, engineers were developing a roadworthy version of the van, one that meets all federal standards. Work on this model is complete, and vehicles should begin shipping to customers by the end of this month, meaning you might start seeing the Urban Delivery quietly rolling through your neighborhood sooner rather than later.
Aside from this light-duty offering, ELMS is developing an all-electric chassis-cab model, which will also be a reworked version of a Chinese vehicle. Called the Urban Utility, it's expected to go on sale in short order, likely early in the second half of 2022. Large, Class 3 trucks like this one have nowhere near as many safety requirements as passenger vehicles, so the company is able to get this product out the door a whole lot sooner than its smaller sibling.
PHOTO: The Urban Utility chassis-cab truck is the next project ELMS is working on.
The ELMS Urban Delivery starts at around $34,500 before any EV incentives. Making things interesting, the available $7,500 federal tax credit should drop the price to one that's right in line with combustion-powered rivals. When you factor in the generally low cost of electricity and EVs' dramatically reduced maintenance, they become an even better deal. As for availability, "We're only focused on this commercial side," said Taylor, though for fans of boxy and basic vehicles, there's nothing stopping the average driver from grabbing one. ELMS products will be sold through three handpicked distributors located in key US markets.
Taylor can't comment on how many units have been ordered or what companies are interested, but he seems highly optimistic about what his team is doing. He said the Urban Delivery "is going to put us on the map." And who knows, maybe someday ELMS will be mentioned in the same breath as Tesla, Rivian and other high-profile EV makers.