CINCINNATI, Aug. 10, 2020 /PRNewswire/
-- Workhorse Group Inc. (Nasdaq:
WKHS) ("Workhorse" or "the Company"), an American technology
company focused on providing sustainable and cost-effective
drone-integrated electric vehicles to the last-mile delivery
sector, today reported financial results for the second quarter
ended June 30, 2020.
Release Updates and Highlights
- Officially began production and delivered three C-series
electric step vans to Ryder System, Inc. and Electric Vehicle Fleet
Solutions.
- Became the first and only medium duty battery electric vehicle
(BEV) OEM to receive approvals from
both the Environmental Protection Agency (EPA) as well as the
California Air Resources Board (CARB), permitting the Company to
sell vehicles in all 50 states.
- Reaffirmed previous production and delivery target of 300-400
vehicles in 2020.
Management Commentary
"In the first half of
this year we accomplished a series of major operational and EV
industry milestones, culminating in the first official deliveries
of our C-Series trucks to Ryder just a few weeks ago," said
Workhorse CEO Duane Hughes.
"Additionally, after acquiring the requisite various state and
federal approvals in recent months, we are now the only medium duty
BEV OEM permitted and able to sell
and deliver our vehicles in all 50 states, which should allow us to
further distance ourselves as the first movers in the last-mile EV
space. Widening our sales funnel through tax incentives, government
programs and strategic partnerships, all of which we now have, will
allow us greater opportunities to build on our growing backlog. We
are now focusing on maximizing our efficiency and output as we look
to ramp production throughout the remainder of this year to meet
our ambitious delivery campaign goals."
Second Quarter and Recent Operational Highlights
- August
2020: Workhorse strategic partner Lordstown Motors
Corp. ("LMC") entered into a business combination agreement with
DiamondPeak Holdings Corp., a special purpose acquisition company,
that will result in LMC becoming a publicly listed company on the
NASDAQ under the ticker symbol "RIDE."
-
- Post-transaction, which is expected to close in the
fourth quarter of this year, Workhorse will retain its 10%
ownership stake in the merged company, which is estimated at
approximately $160 million based on a
$1.6 billion valuation, as well as
other royalty considerations previously outlined in its
intellectual property licensing agreement from November 2019.
- July 2020: Obtained
HVIP Eligibility from CARB, qualifying certain Workhorse C-Series
models for monetary vouchers of up to $50,000 per vehicle.
- July 2020: Received
initial purchase order for 20 C-1000 trucks from eTrucks LLC, a
Cincinnati-based, newly-launched
truck buyer, reseller and financier.
- July 2020: Closed a
$70 million financing through a
Senior Secured Convertible Note with a single institutional
investor.
- July 2020: Delivered
two C-1000 electric step vans for initial use through Ryder System,
Inc.'s ChoiceLease and SelectCare product lines, as well as for
short-term rentals on COOP by Ryder® program, a peer-to-peer
truck sharing platform.
- July 2020: Awarded
Executive Order: A-445-0003 from CARB for the C-Series trucks,
designating the C-Series vehicles as zero-emission in the state of
California and permitting vehicle
sales to all 50 states. Combined with its passing of Federal Motor
Vehicle Safety Standards (FMVSS) tests for the C-650 and
C-1000 all-electric delivery vans in June, Workhorse is the only
American all-electric OEM designing and manufacturing last mile
delivery vehicles to successfully complete this level of testing
with both entities.
- June 2020: Added to the
broad-market Russell 3000® Index
at the conclusion of Russell's
annual reconstitution.
- May 2020: Joined the Small
UAV Coalition as an associate member alongside leading
consumer and technology companies such as Amazon Air, Wing, Intel,
PrecisionHawk, and Verizon to advocate for U.S. leadership in the
research, development, production, and application of unmanned
aerial systems (UAS).
Second Quarter 2020 Financial Results
Sales for the
second quarter of 2020 were recorded at $92,000 compared to $5,500 in the second quarter of 2019.
Cost of goods sold increased to $1.5
million from $930,000 in the
second quarter of 2019. The increase was primarily driven by
increases in labor and materials relating to costs for the C-Series
production.
Selling, general and administrative expenses increased to
$3.9 million from $2.0 million in the same period last year. The
increase was due primarily to increases in consulting expenses,
higher employee related costs and incentive stock expenses.
Research and development expenses increased to $1.6 million from $1.2
million in the second quarter of 2019. The increase was
mostly due to increases engineering, staffing and consulting
expenses was related to the design of the C-Series.
Interest expense, net increased to $124.3
million compared to an interest expense, net of $15.9 million in the same period last year.
"It should be noted that this significant increase of
$108.4 million in interest expense
was almost exclusively due to the change in fair value of our
convertible note and the mark-to-market adjustment for some
non-dilutive warrants issued to a lender," said Workhorse CFO
Steve Schrader. "Both of these GAAP
adjustments are non-cash and primarily dependent on the underlying
stock components of financial instruments. These large adjustments
were the result of a stock price of $17.39 on June
30th compared to $1.81 on March
31st. Due primarily to these non-cash
adjustments, our net loss was $131.3
million compared to a net loss of $20.1 million in the second quarter of 2019. A
better indication of operating performance would be loss from
operations which was $7.0 million
this quarter compared to $4.1 million
in the second quarter of 2019."
Currently, as a result of the Company's $70 million financing and the exercising of
previous issued stock warrants and options, the Company has
approximately $105 million of cash
availability.
Conference Call
Workhorse management will hold a
conference call today (August 10,
2020) at 10:00 a.m. Eastern
time (7:00 a.m. Pacific time)
to discuss these results.
Workhorse management will host the presentation, followed by a
question and answer period.
U.S. dial-in: 877-407-8289
International dial-in: 201-689-8341
Please call the conference telephone number 10 minutes prior to
the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at
949-574-3860.
The conference call will be broadcast live and available for
replay here and via the Investor Relations section of
Workhorse's website.
A telephonic replay of the conference call will be available
after 4:00 p.m. Eastern time today
through August 17, 2020.
Toll-free replay number: 877-660-6853
International replay number: 201-612-7415
Replay ID: 13707466
About Workhorse Group Inc.
Workhorse is a
technology company focused on providing drone-integrated electric
vehicles to the last-mile delivery sector. As an American original
equipment manufacturer, we design and build high performance,
battery-electric vehicles including trucks and aircraft. Workhorse
also develops cloud-based, real-time telematics performance
monitoring systems that are fully integrated with our vehicles and
enable fleet operators to optimize energy and route efficiency. All
Workhorse vehicles are designed to make the movement of people and
goods more efficient and less harmful to the environment. For
additional information visit workhorse.com.
Forward-Looking Statements
This press
release includes forward-looking statements. These statements are
made under the "safe harbor" provisions of the U.S. Private
Securities Litigation Reform Act of 1995. These statements may be
identified by words such as "believes," "expects," "anticipates,"
"estimates," "projects," "intends," "should," "seeks," "future,"
"continue," or the negative of such terms, or other comparable
terminology. Forward-looking statements are statements that are not
historical facts. Such forward-looking statements are subject to
risks and uncertainties, which could cause actual results to differ
materially from the forward-looking statements contained herein.
Factors that could cause actual results to differ materially
include, but are not limited to: our limited operations and need to
expand in the near future to fulfill product orders; risks
associated with obtaining orders and executing upon such orders;
the ability to protect our intellectual property; negative impacts
stemming from the continuing COVID-19 pandemic; the potential lack
of market acceptance of our products; potential competition; our
inability to retain key members of our management team; our
inability to raise additional capital to fund our operations and
business plan; our inability to satisfy covenants in our financing
agreements; our inability to maintain our listing of our securities
on the Nasdaq Capital Market; our inability to satisfy our customer
warranty claims; our ability to continue as a going concern; our
liquidity and other risks and uncertainties and other factors
discussed from time to time in our filings with the Securities and
Exchange Commission ("SEC"), including our annual report on Form
10-K filed with the SEC. Workhorse expressly disclaims any
obligation to publicly update any forward-looking statements
contained herein, whether as a result of new information, future
events or otherwise, except as required by law.
Media Contact:
Mike Dektas Creative Storm PR
513-266-3590
mike@creativestorm.com
Investor Relations Contact:
Matt Glover and Tom Colton
Gateway Investor Relations
949-574-3860
WKHS@gatewayir.com
Workhorse Group
Inc. Condensed Consolidated Statements of
Operations (Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
2020
|
|
2019
|
|
|
|
|
Net sales
|
$
91,942
|
|
$
5,508
|
|
|
|
|
Cost of
sales
|
1,511,360
|
|
930,164
|
Gross loss
|
(1,419,418)
|
|
(924,656)
|
|
|
|
|
Operating
expenses
|
|
|
|
Selling, general and
administrative
|
3,949,081
|
|
1,996,054
|
Research and
development
|
1,616,604
|
|
1,216,727
|
Total operating
expenses
|
5,565,685
|
|
3,212,781
|
|
|
|
|
Other
income
|
-
|
|
-
|
|
|
|
|
Loss from
operations
|
(6,985,103)
|
|
(4,137,437)
|
|
|
|
|
Interest expense,
net
|
124,346,806
|
|
15,922,763
|
|
|
|
|
Loss before provision
for income taxes
|
(131,331,909)
|
|
(20,060,200)
|
Provision for income
taxes
|
-
|
|
-
|
|
|
|
|
Net loss
|
$
(131,331,909)
|
|
$
(20,060,200)
|
Workhorse Group
Inc. Condensed Consolidated Balance
Sheets (Unaudited)
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
|
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
26,197,831
|
|
$
23,868,416
|
Restricted cash held
in escrow
|
-
|
|
1,000,000
|
Accounts and lease
receivable, current
|
75,677
|
|
41,021
|
Inventory,
net
|
4,176,289
|
|
1,798,146
|
Prepaid expenses and
deposits
|
4,752,206
|
|
4,812,088
|
Total current
assets
|
35,202,003
|
|
31,519,671
|
|
|
|
|
Property, plant and
equipment, net
|
7,082,138
|
|
6,830,181
|
Investment in
LMC
|
13,059,700
|
|
12,194,800
|
Lease receivable,
long-term
|
109,869
|
|
129,177
|
|
|
|
|
Total
Assets
|
$
55,453,710
|
|
$
50,673,829
|
|
|
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
5,080,214
|
|
$
4,784,167
|
Warranty
liability
|
4,079,769
|
|
6,001,864
|
Warrant
liability
|
-
|
|
16,335,000
|
Customer
deposits
|
124,000
|
|
303,000
|
Current portion of
PPP Term Note
|
627,111
|
|
-
|
Current portion of
Convertible Note, at fair value
|
95,330,000
|
|
19,620,000
|
Total current
liabilities
|
105,241,094
|
|
47,044,031
|
|
|
|
|
PPP Term
Note
|
783,889
|
|
-
|
Convertible Note, at
fair value
|
-
|
|
19,400,000
|
Mandatory redeemable
Series B preferred stock
|
19,905,522
|
|
19,142,908
|
|
|
|
|
Total stockholders'
deficit
|
(70,476,795)
|
|
(34,913,110)
|
|
|
|
|
Total Liabilities and
Stockholders' Deficit
|
$
55,453,710
|
|
$
50,673,829
|
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SOURCE Workhorse Group Inc.