iLearningEngines Announces Leadership Appointments

Rhea-AI Summary

iLearningEngines (NASDAQ: AILE) announced key leadership changes with Bonnie-Jeanne Gerety appointed as Interim CFO and Thomas Olivier as Interim COO. The company has postponed its Q3 2024 financial results due to an ongoing investigation into a short seller report. Based on preliminary findings, the company advised that financial statements from 2021-2024, including quarterly and annual reports, should no longer be relied upon. The company may need to restate these financials and is working to improve internal controls. Farhan Naqvi will continue as SVP of Corporate Development.

Positive

• None.

Negative

• Postponement of Q3 2024 financial results
• Financial statements from 2021-2024 deemed unreliable and may require restatement
• Ongoing investigation into short seller allegations
• Potential internal control deficiencies requiring improvements
• Multiple interim executive appointments indicating leadership instability

Insights

Financial Analyst

This leadership change and financial restatement announcement represents a significant red flag for investors. The company has indicated that multiple years of financial statements (2021-2024) can no longer be relied upon, following a short seller report investigation. This situation is particularly concerning for a recently public company.

The delay in Q3 2024 results and potential restatement of historical financials suggests serious issues with internal controls and financial reporting accuracy. The appointment of an interim CFO and COO, while potentially stabilizing, comes at a critical time when the company's financial credibility is being questioned. The lack of clarity on the magnitude of potential corrections and timeline for resolution creates significant uncertainty for investors.

These developments could lead to potential legal challenges, regulatory scrutiny and difficulties in accessing capital markets. The stock will likely face significant pressure until there is clarity on the actual financial position of the company.

Legal Expert

The company's disclosure of potentially unreliable financial statements spanning multiple years triggers significant regulatory and legal exposure. This situation falls under SEC reporting requirements and could result in enforcement actions. The formation of a Special Committee and ongoing investigation indicates potential material misstatements in previous filings.

Shareholders now have grounds for potential securities litigation, particularly given this occurred shortly after the company's public listing. The company faces risks of class action lawsuits from investors who relied on these financial statements for investment decisions. The acknowledgment of internal control improvements needed suggests systemic issues in financial reporting processes.

Bonnie-Jeanne Gerety Appointed Interim CFO

Thomas Olivier Appointed Interim COO

Postpones Announcement of 3^rd Quarter 2024 Financial Results

BETHESDA, Md., Nov. 18, 2024 (GLOBE NEWSWIRE) -- iLearningEngines, Inc. (NASDAQ: AILE) (“iLearningEngines,” “ILE” or the “Company”) a leader in AI-powered learning and work automation, today announced the appointment of Bonnie-Jeanne Gerety as Interim Chief Financial Officer (“CFO”) and the appointment of Thomas Olivier as Interim Chief Operating Officer (“COO”). Farhan Naqvi will continue to serve ILE as Senior Vice President of Corporate Development.

“The Board is pleased to formally welcome Bonnie-Jeanne as Interim CFO after serving as a consultant to the company for more than a year. The appointment of Bonnie-Jeanne is aimed at enhancing the overall quality and professionalism of our finance function as we continue our global growth. Bonnie-Jeanne's extensive experience in leading finance teams and implementing best practices will be instrumental in refining our processes, ensuring compliance, and fostering a culture of accountability and transparency,” said ILE Chairman & Chief Executive Officer Harish Chidambaran.

Commenting on the appointment of Mr. Olivier as Interim COO, Mr. Chidambaran stated, “We are excited to welcome Tom to our executive leadership team as our interim Chief Operating Officer. Tom has been an invaluable member of our board since going public, and his insights have been instrumental in guiding our company through the public listing process. His deep understanding of our business, gained through years of close collaboration with our management team, makes him uniquely qualified for this role. As a senior member of the leadership team, Tom will ensure continuity in our strategic vision while bringing a fresh perspective to our day-to-day operations. His expertise and leadership will be crucial as we navigate the challenges and opportunities that lie ahead in our journey as a public company. ”

Bonnie-Jeanne Gerety began working with iLearningEngines as a contractor to run the accounting function for the Company in late 2023. She has run her own financial and accounting advisory firm, GeretyAdvisors LLC since 2019. Ms. Gerety previously served as Chief Financial Officer of Brain Scientific and Piezo Motion and has over 20 years of corporate accounting experience. She began her career in public accounting, spending 16 years at Arthur Andersen, rising to the level of Partner. Ms. Gerety holds a B.S.F.S. from Georgetown University and an M.B.A from the University of South Florida.

Thomas Olivier is a Managing Director with Arrowroot Capital and has held this position since March 2021. In addition, from November 2020 to April 2024, Mr. Olivier served as the President and Chief Financial Officer, and the Vice Chairman of the board of directors of Arrowroot Acquisition Corp. Previously, Mr. Olivier was a Managing Director in Houlihan Lokey’s Technology, Media & Telecom (TMT) Group from May 2017 until April 2021. Prior to his time at Houlihan Lokey, Mr. Olivier served as a Managing Director at Pacific Crest Securities, Inc., an investment bank focused on the technology sector which was acquired by Key Bank in 2016, from April 2012 to May 2017. Mr. Olivier holds an undergraduate degree from Boston College and a J.D. from George Washington University.

iLearningEngines also announced a delay in the release of its third-quarter 2024 financial results. As previously announced, a Special Committee of the Board of the Directors has been formed to conduct an independent investigation into assertions contained in a recent short seller report (the “Investigation”).

While the Investigation is ongoing, based on preliminary information identified by the Audit Committee of the Board of Directors during the course of the Investigation, that is subject to change with the completion of the Investigation, (i) the audited consolidated financial statements of iLearningEngines Holdings, Inc. (formerly known as iLearningEngines Inc.), a wholly owned subsidiary of the Company (“Holdings”), as of December 31, 2023 and 2022 and for each of the three years in the period ended December 31, 2023, which were reported in the Current Report on Form 8-K filed by the Company on April 22, 2024 (the “Super 8-K”), (ii) the audited consolidated financial statements of Holdings, as of December 31, 2022 and 2021 and for each of the three years in the period ended December 31, 2022, which were reported in the registration statement on Form S-4 initially filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on September 5, 2023 and declared effective on February 2, 2024 (the “S-4”), in connection with the Company’s business combination, (iii) the Company’s unaudited financial statements for the quarter ended June 30, 2024, (iv) Holdings’ unaudited financial statements for the quarter ended March 31, 2024, which were reported in the Super 8-K, and (v) Holdings’ unaudited financial statements for the quarters ended June 30, 2022, September 30, 2022, June 30, 2023 and September 30, 2023, which were reported in the S-4 ((i)-(v) collectively, the “Non-Reliance Period”), as previously filed with the SEC, should no longer be relied upon. At this time, the Company is unable to determine whether it must correct financial statements for the Non-Reliance Period, or if such corrections are necessary, the quantification of such corrections. If the Investigation concludes that financial statements in the Non-Reliance Period must be restated, the Company intends to diligently pursue completion and filing of such restated financial statements as soon as reasonably practicable. In addition, the Company is working diligently towards the goal of being in a position to file third-quarter 2024 financial results with the SEC as soon as practicable after the conclusion of the Investigation, but at this time cannot predict with certainty when the preparation and filing of information will be completed.

The Company will release additional information concerning the Investigation in due course and is committed to taking appropriate measures to improve its internal controls.

About iLearningEngines

iLearningEngines (Nasdaq: AILE) is a leading Applied AI platform for learning and work automation. iLearningEngines enables Enterprises to rapidly productize and deploy a wide range of AI applications and use cases (AI Engines) at scale.

iLearningEngines is powered by proprietary vertical specific AI models and data with a flexible No Code AI canvas to drive rapid out-of-the-box deployment while offering low latency and high levels of data security and compliance.

Serving over 1,000 enterprise end customers, iLearningEngines is deployed globally into some of the most demanding vertical markets including Healthcare, Education, Insurance, Retail, Energy, Manufacturing and Public Sector to achieve mission critical outcomes.

For more information about iLearningEngines, please visit: www.ilearningengines.com.

Cautionary Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve substantial risks and uncertainties. All statements, other than statements of historical fact included in this press release, are forward-looking statements. Forward looking statements generally are accompanied by words such as “believe,” “may,” “will, “estimate,” “continue,” “anticipate,” “intend,” expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” the negative forms of these words and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding: Ms. Gerety’s and Mr. Olivier’s expected contributions to iLearningEngines and iLearningEngines’ ability to execute on its strategic vision; iLearningEngines’ ability to ensure compliance and foster a culture of accountability and transparency; the timing of the completion of the Investigation and the outcome of the Investigation, including the extent of any impact on iLearningEngines’ reported historical financial statements; and the expected timing of determinations relating to the sufficiency of iLearningEngines’ financial statements and to the sufficiency of iLearningEngines’ internal control over financial reporting and any impact resulting from such determinations. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of the iLearningEngines’ management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as and must not be relied on by an investor as a guarantee, an assurance, a prediction, or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions this press release relies on. Many actual events and circumstances are beyond the control of iLearningEngines. These forward-looking statements are subject to a number of risks and uncertainties, including changes in domestic and foreign business, market, financial, political, and legal conditions; iLearningEngines’ failure to realize the anticipated benefits of the Business Combination; risks related to the rollout of iLearningEngines’ business and the timing of expected business milestones; iLearningEngines’ dependence on a limited number of customers and partners; iLearningEngines’ ability to obtain sufficient financing to pay its expenses incurred in connection with the closing of the Business Combination; the ability of iLearningEngines to issue equity or equity-linked securities or obtain debt financing in the future; risks related to iLearningEngines’ need for substantial additional financing to implement its operating plans, which financing it may be unable to obtain, or unable to obtain on acceptable terms; iLearningEngines’ ability to maintain the listing of its securities on Nasdaq or another national securities exchange; the risk that the Business Combination disrupts current plans and operations of iLearningEngines; the effects of competition on iLearningEngines future business and the ability of iLearningEngines to grow and manage growth profitably, maintain relationships with customers and suppliers and retain its management and key employees; risks related to political and macroeconomic uncertainty; the outcome of any legal proceedings that may be instituted against iLearningEngines or any of their respective directors or officers, including litigation related to the Business Combination; the impact of the global COVID-19 pandemic on any of the foregoing risks; and those factors discussed in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, filed with the SEC on August 13, 2024, and its subsequent filings with the SEC. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that iLearningEngines does not presently know, or that iLearningEngines does not currently believe are immaterial, that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect iLearningEngines’ expectations, plans, or forecasts of future events and views as of the date of this communication. iLearningEngines anticipate that subsequent events and developments will cause iLearningEngines’ assessments to change. However, while iLearningEngines may elect to update these forward-looking statements at some point in the future, iLearningEngines specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing iLearningEngines’ assessments as of any date subsequent to the date of this communication. Accordingly, undue reliance should not be placed upon the forward-looking statements.

IR & Press Contacts:
Investor Contact:
Kevin Hunt, ICR Inc.
iLearningEnginesIR@icrinc.com

Press Contact:
Dan Brennan, ICR Inc.
iLearningPR@icrinc.com

FAQ

Why did iLearningEngines (AILE) postpone its Q3 2024 financial results?

AILE postponed its Q3 2024 results due to an ongoing investigation into a short seller report and potential need to restate financial statements from 2021-2024.

What financial periods are affected by AILE's financial statement reliability issues?

The affected periods include financial statements from 2021 through 2024, covering both quarterly and annual reports filed with the SEC.

Who are the new interim executives appointed at iLearningEngines (AILE)?

Bonnie-Jeanne Gerety was appointed as Interim CFO and Thomas Olivier as Interim COO in November 2024.

What actions is iLearningEngines (AILE) taking to address its financial reporting issues?

AILE is conducting an independent investigation, working to potentially restate financial statements, and implementing measures to improve internal controls.