C3.ai, Inc.

After conducting a forensic financial and accounting review, Spruce Point believes C3.ai, Inc. (NYSE: AI) has a pattern of exaggerated business claims and is using multiple strategic partnerships with well known companies such as Baker Hughes, Hewlett Packard Enterprises, Microsoft, Google and Intel to project an aura as a successful enterprise artificial intelligence platform with limitless growth. In reality, we believe C3 has failed to gain broad market acceptance, is on its third rebrand, and its revenues are being propped up by an aggressively managed and struggling strategic partnership with Baker Hughes amounting to >30% of sales. While C3 boasts a star-studded roster of investors and directors, such as Thomas Siebel and Condoleezza Rice, their track records are not entirely without blemish, or without potential conflict. Mr. Siebel’s prior company Siebel Systems was charged by the SEC for Reg FD violations, while Ms. Rice obscures from her biography her role at Kior, a company charged by the SEC with fraud. C3 is on its 3rd CFO since filing to IPO in Sept 2020, and based upon our review, we find numerous instances of aggressive accounting and problematic financial reporting. C3’s current CFO was previously CAO and CFO of Telenav, which blind-sided investors with a revenue restatement and material weakness opinion. Even more worrisome, he has an arrest record for violence against his wife and allegedly making a death threat.  Now that investors are more focused on fundamentals for technology growth stocks, we expect investors to pay closer attention to C3’s revenue, net income and dilution prospects. Based on our research, we expect C3’s revenues tied to the Baker Hughes partnership to fall short, while losses could exceed over $100m per year.  We see 40% – 50% downside risk.