Ohio-based electric vehicle manufacturer Workhorse Group Inc. (NASDAQ:WKHS), currently valued at $45 million in market capitalization, announced on Monday that its independent accounting firm, Grant Thornton LLP, has declined to stand for reappointment for the fiscal year ending December 31, 2024. The notification, received by the company on December 3, ends Grant Thornton's tenure as the company's auditor since 2018.
The company's financial statements for the fiscal years ended December 31, 2023, and 2022, audited by Grant Thornton, did not contain any adverse opinions or disclaimers. However, the auditor included an explanatory paragraph in the 2023 report, expressing substantial doubt about Workhorse's ability to continue as a going concern.
According to InvestingPro data, the company reported a concerning negative EBITDA of -$85.13 million in the last twelve months, with revenue declining by 25% during this period.
Workhorse reported no disagreements with the former auditor on any accounting principles or practices, financial statement disclosure, or auditing scope or procedure during the fiscal years 2023 and 2022 and the subsequent interim period through December 3, 2024.
Nonetheless, the company did acknowledge material weaknesses in its internal control over financial reporting. InvestingPro analysis reveals the company is quickly burning through cash, with negative free cash flow of -$73.78 million and a weak overall financial health score.
These weaknesses included issues related to the design and operation of internal controls, particularly in the fair value calculation of convertible notes and warrant liability, as well as challenges stemming from turnover in key accounting positions and insufficient internal resources in technical accounting and financial reporting.
Grant Thornton provided a letter to the U.S. Securities and Exchange Commission (SEC), as requested by Workhorse, stating their agreement with the company's disclosures in the 8-K filing.
As of the filing date of the 8-K, Workhorse has not yet appointed a new independent accounting firm for the 2024 fiscal year. The company will disclose the engagement of a new auditor in a subsequent SEC filing once an appointment is made.
This development comes at a time when Workhorse, like many companies in the burgeoning electric vehicle industry, is facing financial pressures and market challenges. The company's stock has declined 86.65% over the past year, with the share price currently at $1.11. The company's efforts to address these issues will be closely watched by investors and industry observers in the coming months. For deeper insights into Workhorse's financial health and future prospects, investors can access comprehensive analysis and 17 additional ProTips through InvestingPro.
Information for this article is based on a press release statement.
In other recent news, Workhorse Group secured additional financing through several agreements, totaling $8.6 million. The manufacturer of electric vehicles issued senior secured convertible notes to institutional investors as part of a broader securities purchase agreement. TD Cowen, in its recent analysis, maintained a Hold rating on the company’s stock while increasing the price target to $1.25 from $0.25.
Workhorse Group's financial performance has been in focus, reporting sales of $2.5 million and a cash reserve of $3.2 million. Despite these financial challenges, the company achieved important certifications for its 208-inch W56 step-van, marking progress in product certification.
The company also reported the completion and sale of 15 W56 step vans, a significant operational milestone. However, Workhorse Group has been warned by the Nasdaq Stock Market about potential delisting due to its stock trading below the $1.00 threshold for 30 consecutive days. The company has until March 31, 2025, to regain compliance.
These are the recent developments in Workhorse Group's journey, including securing additional financing, certification achievements, operational milestones, and facing potential Nasdaq delisting.
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