In a significant financial development, Workhorse Group Inc. (NASDAQ:WKHS), a manufacturer of electric vehicles, has entered into a new agreement with an institutional investor, securing an additional $1.2 million in funding through a senior secured convertible note. This transaction, which took place on Wednesday, is part of a broader securities purchase agreement that was initially disclosed on March 15, 2024.
The note, carrying a principal amount of $1.2 million, can be converted into shares of Workhorse Group's common stock. The investor has also waived their right to receive warrants that were initially part of the deal. The company has previously issued notes totaling over $32 million and warrants for purchasing additional shares, with $8.95 million of the principal amount still outstanding as of the day before the latest transaction.
This convertible note bears an interest rate of 9% per annum, with an option for the company to pay the interest in cash or by adding it to the principal amount. The note is set to mature one year from the issue date, with the possibility of extension under certain conditions. The conversion price for the note into common stock is variable and subject to specific terms outlined in the agreement.
The investor's waiver also allows Workhorse Group to sell up to $5 million in common stock through an at-the-market offering program without a price floor, and without triggering anti-dilution provisions for one year starting from the closing date of the current transaction.
The funding obtained through this note is crucial for Workhorse Group as it continues to navigate the competitive electric vehicle market. It provides the company with additional liquidity to support its operations and strategic initiatives.
This latest development is based on a press release statement and the company's SEC filing.
In other recent news, Workhorse Group Inc. faced a potential Nasdaq delisting due to its stock trading below the $1.00 threshold for 30 consecutive days. The electric vehicle manufacturer has until March 31, 2025, to regain compliance.
However, the company has secured additional funding, totaling $6 million, with $3.4 million from a new financing agreement and $2.6 million through a securities purchase agreement with an institutional investor.
Workhorse Group also announced the completion and sale of 15 W56 step vans, a significant milestone in its operations. TD Cowen maintained a Hold rating on the company, reducing the stock's price target due to liquidity concerns and disappointing revenue, citing Q2 sales of $800,000 and a cash balance of $5.3 million.
These are recent developments for Workhorse Group.
InvestingPro Insights
The recent $1.2 million funding secured by Workhorse Group Inc. (NASDAQ:WKHS) through a convertible note comes at a critical time for the company, as revealed by InvestingPro data and tips. With a market capitalization of just $20.72 million, this additional funding is significant for Workhorse's operations.
InvestingPro data shows that Workhorse's revenue for the last twelve months as of Q2 2024 stands at $9.62 million, with a concerning revenue growth of -9.75% over the same period. This context underscores the importance of the new funding for the company's financial stability.
Two key InvestingPro Tips are particularly relevant to this development. First, Workhorse is "quickly burning through cash," which explains the need for this additional funding. Second, the company "may have trouble making interest payments on debt," highlighting the challenges it faces in managing its financial obligations.
These insights from InvestingPro provide valuable context to the article, illustrating the financial pressures Workhorse is under and the strategic importance of securing additional funding. For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Workhorse Group, providing a deeper understanding of the company's financial position and market performance.
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