Nikola (NKLA) is certainly aiming high.
The electric and hydrogen-powered truck company has said that it is "driven to revolutionize the economic and environmental impact of commerce as we know it today."
The Meeting is Adjourned
A very lofty goal, but Nikola's journey is apparently being hampered somewhat by the company's founder.
Trevor Milton, who is also the former CEO, voted against the Nikola's proposal to issue new shares at the company's annual general meeting, according to Bloomberg.
Milton owns about 11% of the company's shares and his vote threw the outcome into doubt, leading to the decision to immediately adjourn the meeting, in order to allow the company time to solicit more proxies in favor of the proposal.
The company issued a statement saying that the annual shareholders meeting had been adjourned to June 30.
So how did we get here?
Milton founded Nikola Motor Company in 2014 with an initial investment of $2 million from Worthington Industries (WOR).
On Sept. 8, 2020, Nikola announced a strategic manufacturing partnership with General Motors (GM), sending shares of both companies sharply higher.
But then in December of that year, Worthington posted a quarterly loss of $74 million due to a decline in sales during the pandemic and the company's investment in Nikola.
'An Intricate Fraud'
A month later, the company sold its remaining 7 million shares of Nikola for net pretax cash proceeds of $146.6 million.
Then came noted short seller Hindenburg Research, which issued a scathing report on Nikola saying it believed the company was "an intricate fraud built on dozens of lies over the course of its Founder and Executive Chairman Trevor Milton’s career."
"We have never seen this level of deception at a public company, especially of this size," Hindenburg said. "We think Trevor Milton, through dozens of outright lies, was able to form partnerships with some of the largest legacy auto companies in the world in their desperation to catch up to Tesla’s EV leadership status."
Milton stepped down following the allegations and last July he was indicted by federal prosecutors on three counts of fraud.
Manhattan U.S. Attorney Audrey Strauss said in a statement that Milton "brazenly and repeatedly used social media, and appearances and interviews on television, podcasts, and in print, to make false and misleading claims about the status of Nikola’s trucks and technology."
"But today’s criminal charges against Milton are where the rubber meets the road, and he now will be held accountable for his allegedly false and misleading statements to investors," Strauss said.
'An Investigation in Search of a Crime'
Milton, officials said, "made false claims regarding nearly all aspects of Nikola’s business."
Nikola went public through by merging with a Special Purpose Acquisition Company or “SPAC,” rather than through a traditional IPO,.
The government said Milton took advantage of this situation to make "many of his false and misleading claims during a period where he would have not been allowed to make public statements under rules that govern IPOs."
Milton pleaded not guilty to the charges and was freed on a $100 million bond secured against two of his properties in Utah. He is scheduled to go on trial next month.
His legal team issued a statement that claimed the indictment was "a new low in the government’s efforts to criminalize lawful business conduct."
"Trevor Milton is an entrepreneur who had a long-term vision of helping the environment by cutting carbon emissions in the trucking industry," the legal team's statement said. "From the beginning, this has been an investigation in search of a crime. Justice was not served by the government’s action today, but it will be when Mr. Milton is exonerated."
'Difficult to Predict'
Nikola agreed to pay $125 million to settle civil charges that it misled investors about its technological advancements.
In April, Nikola delivered the first units of its long-awaited Tre battery electric trucks and last month, the company posted better-than-expected first-quarter results.
During the analysts' call, Chief Financial Officer Kim Brady said that SG&A, or selling, general and administrative expenses, for the second quarter were estimated to range between $72.5 million to $77.5 million, including roughly $48 million of stock-based compensation.
Actual SG&A expenses, Brady said, according to a transcript of the call, "will likely be higher due to legal fees associated with Trevor Milton’s defense."
"These fees are difficult to predict," Brady said, "so we do not forecast them."
