8-K: Workhorse Group Announces 1-for-20 Reverse Stock Split to Regain Nasdaq Compliance

Workhorse Group will implement a 1-for-20 reverse stock split effective June 17, 2024, to increase its stock price and regain compliance with Nasdaq's minimum bid price requirement.

Summary

• Workhorse Group Inc. has announced a 1-for-20 reverse stock split of its common stock.
• The reverse stock split will be effective on June 17, 2024, and the stock will begin trading on a split-adjusted basis on the same day.
• This action is intended to increase the market price of Workhorse's common stock to meet Nasdaq's minimum bid price requirement of $1.00 per share for at least ten consecutive trading days by September 16, 2024.
• The reverse stock split will combine every 20 existing shares into one new share.
• Fractional shares resulting from the split will be rounded up to the nearest whole share.
• The reverse stock split will not change any stockholder's percentage ownership, except for minor adjustments due to fractional shares.
• The company's transfer agent, Empire Stock Transfer Inc., will manage the exchange and send transaction statements to stockholders.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the need for a reverse stock split to avoid delisting, indicating underlying issues with the company's stock performance and financial health. While the company is taking action, the situation is not positive.

Positives

• The reverse stock split is a proactive measure to address Nasdaq's minimum bid price requirement.
• The company is taking steps to avoid potential delisting from Nasdaq.
• The reverse stock split will not change the percentage ownership of stockholders, except for minor adjustments due to fractional shares.

Negatives

• The reverse stock split is a result of the company's stock price falling below Nasdaq's minimum bid price requirement.
• There is no guarantee that the reverse stock split will successfully increase the stock price to meet Nasdaq's requirements.
• Continued non-compliance with Nasdaq listing rules could lead to delisting, which would negatively impact the company's ability to raise capital and its financial condition.

Risks

• There is no assurance that the reverse stock split will increase the stock price sufficiently to meet Nasdaq's minimum bid price requirement.
• The company may face delisting from Nasdaq if it fails to meet the minimum bid price requirement by September 16, 2024.
• Delisting from Nasdaq could significantly impair the company's ability to raise capital and negatively affect its financial condition and business.
• The company faces risks related to the substantial costs and diversion of personnel's attention and resources due to these matters.

Future Outlook

The company is taking steps 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.

Management Comments

• The reverse stock split is intended to increase the market price of Workhorse's common stock to regain compliance with the minimum bid price requirement for continued listing on Nasdaq.
• There can be no assurance that the reverse split will have such effect.

Industry Context

Reverse stock splits are a common strategy for companies facing delisting due to low stock prices. This action is not unique to Workhorse and is often seen in companies struggling to maintain compliance with exchange listing requirements. The electric vehicle sector is highly competitive and companies are under pressure to perform.

Comparison to Industry Standards

• Other companies in the electric vehicle sector, such as Lordstown Motors and Nikola, have also faced challenges with stock prices and have taken similar actions to maintain listing compliance.
• The 1-for-20 ratio is a relatively high ratio for a reverse stock split, indicating the severity of the stock price decline.
• Companies like Faraday Future have also faced delisting warnings and have had to take measures to regain compliance, highlighting the challenges in the EV sector.

Stakeholder Impact

• Shareholders will see a reduction in the number of shares they own, but their percentage ownership will remain the same, except for minor adjustments due to fractional shares.
• The reverse stock split aims to prevent delisting, which would negatively impact shareholder value.
• The company's ability to raise capital could be affected if it fails to regain compliance with Nasdaq listing requirements.

Next Steps

• The reverse stock split will be implemented on June 17, 2024.
• The company will monitor its stock price to ensure compliance with Nasdaq's minimum bid price requirement.
• The company will continue to work towards improving its financial performance and business operations.

Key Dates

Keywords

reverse stock split, Nasdaq compliance, minimum bid price, stock price, delisting, WKHS, Workhorse Group, equity, shareholders