8-K: Workhorse Group Granted Nasdaq Extension to Regain Compliance, Plans Reverse Stock Split Vote

Workhorse Group has received a 180-day extension from Nasdaq to regain compliance with the minimum bid price requirement and plans a shareholder vote on a reverse stock split.

Summary

• Workhorse Group received a notice from Nasdaq on September 22, 2023, stating that its stock price had fallen below $1.00 for 30 consecutive trading days, putting it out of compliance with Nasdaq's minimum bid price requirement.
• The company has been granted a 180-day extension, until September 16, 2024, to regain compliance.
• To regain compliance, Workhorse plans to seek shareholder approval for a reverse stock split at its annual meeting on May 14, 2024, with a ratio between 1-for-10 and 1-for-20.
• If the stock price closes at or above $1.00 for at least 10 consecutive trading days before September 16, 2024, the company will regain compliance.
• If compliance is not achieved, Nasdaq may delist the company's stock, which could be appealed, but there is no guarantee of success.
• The company is also considering other options to regain compliance.
• The company acknowledges that non-compliance or delisting would negatively impact its ability to raise capital and its financial condition.

Sentiment

Score: 3

Explanation: The document highlights significant challenges for the company, including the risk of delisting. While an extension has been granted, the overall tone is negative due to the underlying issues with the stock price and the uncertainty of the reverse stock split.

Positives

• Workhorse has been granted a 180-day extension to regain compliance with Nasdaq's minimum bid price requirement, providing additional time to address the issue.
• The company is actively seeking shareholder approval for a reverse stock split, which could help to increase the stock price and regain compliance.

Negatives

• Workhorse's stock price has fallen below $1.00 for 30 consecutive trading days, resulting in non-compliance with Nasdaq's minimum bid price requirement.
• There is no guarantee that the proposed reverse stock split will be approved or that it will be sufficient to regain compliance.
• Failure to regain compliance could result in delisting from Nasdaq, which would negatively impact the company's ability to raise capital and its financial condition.

Risks

• There is a risk that the proposed reverse stock split will not be approved by shareholders.
• Even if approved, the reverse stock split may not be sufficient to raise the stock price above $1.00 for the required 10 consecutive trading days.
• The company faces the risk of delisting from Nasdaq if it fails to regain compliance by September 16, 2024.
• Delisting would materially and adversely affect the company's ability to raise capital and its financial condition.

Future Outlook

The company is focused on regaining compliance with Nasdaq's minimum bid price requirement and is considering various options, including a reverse stock split. There is no guarantee of success, and failure to regain compliance could result in delisting.

Management Comments

• The company has evaluated various options for regaining compliance with the Bid Price Requirement and determined to seek the approval of its stockholders of a reverse split of the outstanding shares of its common stock.
• The company continues to consider alternatives for regaining compliance with the Bid Price Requirement.

Industry Context

This announcement highlights the challenges faced by companies with low stock prices in maintaining their listing on major exchanges. It is not uncommon for companies to seek reverse stock splits to boost their share price and avoid delisting.

Comparison to Industry Standards

• Many companies facing similar stock price issues have used reverse stock splits to regain compliance with exchange listing requirements.
• Other companies in the electric vehicle sector have also faced challenges with maintaining stock prices, highlighting the volatility and risk in this industry.
• The 180-day extension is a standard procedure offered by Nasdaq to companies facing non-compliance issues.

Stakeholder Impact

• Shareholders face the risk of further stock price decline and potential delisting if the company fails to regain compliance.
• Employees may be concerned about the company's financial stability and future prospects.
• Customers and suppliers may be impacted by the uncertainty surrounding the company's listing status.

Next Steps

• Workhorse will seek shareholder approval for a reverse stock split at its annual meeting on May 14, 2024.
• The company must achieve a stock price of $1.00 or more for at least 10 consecutive trading days before September 16, 2024, to regain compliance with Nasdaq listing rules.
• The company will continue to evaluate other options for regaining compliance.

Key Dates

Keywords

Nasdaq, delisting, minimum bid price, reverse stock split, compliance, stock price, extension, shareholder approval