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Startup Electric Last Mile Solutions Inc.’s troubles are continuing after its independent registered public accounting firm resigned amid a controversy that sent the company’s stock value plummeting this month.
Chicago-based BDO LLP resigned from the audit of the Troy-based electric vehicle maker’s finances, which drew public scrutiny this month when a probe found senior executives improperly purchased discounted equity in the company right before it went public.
“BDO has concluded that the company has not taken timely and appropriate remedial action with respect to the potential illegal act(s),” the accounting firm said in a letter last week to ELMS.
BDO’s withdrawl as lead auditor was disclosed in an 8-K form filed with the Securities and Exchange Commission, dated Feb. 8 and posted on the ELMS website earlier this week.
Electric Last Mile denied the claim that it failed to take timely and appropriate remedial action, and it also questioned BDO’s independence throughout the audit, as required by regulators.
“The Special Committee identified that BDO’s Tax Advisory Group had helped to create and structure the transactions that ultimately resulted in the resignations of ELMI’s co-founder, Jason Luo … and Jim Taylor, our former Chief Executive Officer,” ELMS said in the filing, referring to the committee it set up to investigate the equity purchases in question.
As a result of the investigation, the company said it was restating consolidated financial statements covering the period from its August 2020 inception through Dec. 31, 2020, the six months ended June 30, and the nine months ended Sept. 30. For the third quarter of 2021, the company reported revenue of $136,000 and a net loss of $17.8 million.
The company, which produces electric light-duty vehicles for delivery, contractors and other commercial fleets, has not reported restated financial figures.
The company’s shares continue to struggle. They peaked at $11.56 per share right after it went public on June 28. Since then, the stock has slid 83 percent, closing at $2.00 on Friday in Nasdaq trading, giving it a market cap of $248 million.
Electric Last Mile spokespeople did not return requests for comment and an update on production and operations.
BDO did not immediately respond to a request for comment.
Following the resignations of Luo and Taylor, the company appointed Shauna McIntyre as interim president and CEO. In a video posted to the company’s website earlier this month, McIntyre said ELMS has a “bright future.”
“I understand that leadership transitions come with some uncertainty, and I want to assure you in no uncertain terms of our continued focus and dedication to the company’s ongoing business,” she said.