8-K: Workhorse Group Announces 1-for-12.5 Reverse Stock Split to Regain Nasdaq Compliance

Workhorse Group Inc. announces a 1-for-12.5 reverse stock split to regain compliance with Nasdaq's minimum bid price requirement.

Summary

• Workhorse Group Inc. has announced a 1-for-12.5 reverse stock split of its common stock.
• The reverse stock split is intended to increase the market price of Workhorse's common stock to regain compliance with the Nasdaq's minimum bid price requirement of $1.00 per share.
• The reverse stock split will be effective as of March 17, 2025, and the stock will begin trading on a split-adjusted basis on the Nasdaq Capital Market on the same day.
• As a result of the reverse stock split, every 12.5 shares of pre-split common stock will be combined into one share of post-split common stock.
• The company's authorized shares of common stock will be reduced from 450,000,000 to 36,000,000 as a result of the reverse split.
• The par value of the common stock will remain unchanged at $0.001 per share.
• No fractional shares will be issued; instead, fractional shares will be rounded up to the nearest whole share.
• The trading symbol for the common stock will remain WKHS, and the new CUSIP number will be 98138J404.

Sentiment

Score: 4

Explanation: The announcement of a reverse stock split is generally viewed negatively by investors as it indicates the company's share price is struggling. While the company hopes to regain compliance with Nasdaq, the uncertainty surrounding its future and potential delisting weighs on the sentiment.

Positives

• The reverse stock split is intended to help Workhorse regain compliance with Nasdaq's minimum bid price requirement, potentially avoiding delisting.
• The reverse stock split will affect all stockholders uniformly and will not alter any stockholder's percentage ownership interest in the company's equity, except for immaterial adjustments that may result from the treatment of fractional shares.
• The company is taking action to address its non-compliance with the Bid Price Requirement.

Negatives

• There is no assurance that the reverse stock split will be successful in increasing the stock price sufficiently to regain compliance with Nasdaq's minimum bid price requirement.
• Continued non-compliance or a delisting from Nasdaq would materially and adversely affect the company's ability to raise capital and its financial condition and business.
• The company has until March 31, 2025 to comply with this requirement and must see a closing bid price of its common stock of at least $1.00 per share for a minimum of ten consecutive trading days by this date.

Risks

• The company may not be able to cure deficiencies in compliance with the Bid Price Requirement or maintain compliance with other Nasdaq Listing Rules.
• The reverse split may not allow the company to regain compliance with the Bid Price Requirement.
• The company may not be able to obtain any additional relief necessary to regain compliance from Nasdaq or to meet applicable Nasdaq requirements for any such relief.
• The company faces risks related to the substantial costs and diversion of personnel's attention and resources due to these matters.
• Continued non-compliance or a delisting from Nasdaq would materially and adversely affect the company's ability to raise capital and its financial condition and business.

Future Outlook

The company hopes the reverse stock split will allow it to regain compliance with Nasdaq's minimum bid price requirement, but there is no guarantee of success. Continued non-compliance could lead to delisting, which would negatively impact the company's ability to raise capital and its financial condition.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting from exchanges due to low share prices. Other companies in similar situations may consider this approach to maintain their listing and access to capital markets.

Comparison to Industry Standards

• Reverse stock splits are a relatively common practice among companies facing delisting from major exchanges like Nasdaq or NYSE.
• Companies like Faraday Future and Mullen Automotive have also recently implemented reverse stock splits to regain compliance with minimum bid price requirements.
• The success of a reverse stock split in maintaining listing status depends on various factors, including overall market conditions, company performance, and investor sentiment.

Stakeholder Impact

• Shareholders will see their number of shares reduced by a factor of 12.5, but their percentage ownership will remain the same (excluding fractional share adjustments).
• Employees may be concerned about the company's financial health and potential delisting.
• Customers and suppliers may be concerned about the company's long-term viability.

Next Steps

• The reverse stock split will be implemented on March 17, 2025.
• The company must achieve a closing bid price of at least $1.00 per share for a minimum of ten consecutive trading days by March 31, 2025, to regain compliance with Nasdaq requirements.

Key Dates