DEFA14A: Workhorse Group Receives Nasdaq Extension, Plans Reverse Stock Split to Regain Compliance

Workhorse Group Inc. has been granted an extension by Nasdaq to regain compliance with the minimum bid price requirement and is seeking stockholder approval for a reverse stock split.

Summary

• Workhorse Group Inc. received an extension from Nasdaq until September 16, 2024, to regain compliance with the $1.00 minimum bid price requirement.
• The company plans to seek stockholder approval for a reverse stock split at a ratio between 1-for-10 and 1-for-20 at the Annual Meeting on May 14, 2024.
• There is no assurance that the reverse stock split will be approved or that it will enable the company to regain compliance.
• The company is considering other alternatives to regain compliance with the Nasdaq listing requirements.
• Failure to regain compliance could result in delisting from Nasdaq, which would materially and adversely affect the company's ability to raise capital and its financial condition and business.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the company's non-compliance with Nasdaq listing requirements and the uncertainty surrounding its ability to regain compliance. The need for a reverse stock split is generally viewed negatively by investors.

Positives

• Nasdaq granted Workhorse an extension to regain compliance with the minimum bid price requirement, providing additional time to address the issue.

Negatives

• Workhorse's stock price has fallen below $1.00 per share, leading to 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 successful in raising the stock price above $1.00.
• Failure to regain compliance with Nasdaq listing requirements could result in delisting, which would negatively impact the company's ability to raise capital.

Risks

• The company may not be able to regain compliance with the Nasdaq minimum bid price requirement by September 16, 2024.
• Stockholder approval of the proposed reverse stock split is not guaranteed.
• Even if approved, the reverse stock split may not be sufficient to raise the stock price above $1.00.
• Delisting from Nasdaq would materially and adversely affect the company's ability to raise capital and 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 focused on regaining compliance with Nasdaq listing requirements, but there is no guarantee of success. Failure to comply could lead to delisting, impacting the company's financial condition and ability to raise capital.

Industry Context

Many companies, especially in the EV sector, are facing challenges in maintaining stock prices amidst market volatility and evolving investor sentiment. Workhorse's situation reflects broader pressures within the industry.

Comparison to Industry Standards

• Other companies facing similar listing compliance issues, such as Lordstown Motors prior to its delisting, have explored reverse stock splits and other measures to regain compliance.
• The success of a reverse stock split in achieving sustained compliance varies widely and depends on the company's underlying financial performance and market conditions.
• Companies like Nikola have also faced stock price volatility and compliance challenges, highlighting the competitive and capital-intensive nature of the EV market.

Stakeholder Impact

• Shareholders face the risk of further stock dilution if the reverse stock split is implemented and the company's financial performance does not improve.
• Employees may experience uncertainty due to the company's financial challenges and potential delisting.
• The company's ability to secure future contracts and partnerships could be affected by its Nasdaq listing status.

Next Steps

• Seek stockholder approval for the proposed reverse stock split at the Annual Meeting on May 14, 2024.
• Continue to evaluate alternatives for regaining compliance with the Nasdaq Bid Price Requirement.
• Monitor the company's stock price to ensure compliance with the $1.00 minimum bid price requirement.

Key Dates

Keywords

Workhorse Group, Nasdaq, Delisting, Reverse Stock Split, Compliance, Minimum Bid Price, WKHS