Business Context and Reporting Period
Company: Workhorse Group Inc. (WKHS)
Filing Type: Form 8-K (Current Report)
Date of Report: February 28, 2022
Event: Entry into a Material Definitive Agreement (Item 1.01)
Key Financial Metrics
This filing is a Current Report regarding a contractual agreement and does not contain financial statements, revenue, profit, cash flow, margin, debt, or liquidity data for the reporting period.
Material Changes and Agreement Details
On February 28, 2022, Workhorse Group Inc. entered into a Vehicle Purchase and Supply Agreement (VPSA) with GreenPower Motor Company, Inc. Key terms include:
- Product: GreenPower will manufacture and supply the "EV Star CC," an all-electric cab and chassis vehicle certified for the U.S. and Canada.
- Modification: Workhorse will incorporate proprietary parts into the base vehicles to create a modified version for sale.
- Commitment: Workhorse has agreed to order at least 1,500 Base Vehicles.
- Pricing: Fixed price per vehicle with adjustments for delivery and tariff costs.
- Payment Terms: Requires an initial down payment (credited to future purchases) and partial payment no later than four months prior to delivery.
- Term: Initial term ends March 31, 2024, with automatic one-year renewals unless terminated.
- Intellectual Property: Each party retains ownership of its respective technology and IP.
Guidance, Outlook, and Risks
Outlook: The agreement establishes a supply chain for Workhorse's electric vehicle distribution in North America. The agreement does not restrict Workhorse from developing other vehicles or collaborating with third parties.
Risks and Contingencies:
- Forward-Looking Statements: The filing includes forward-looking statements subject to risks and uncertainties; actual results may differ materially.
- Termination: Either party may terminate the agreement upon material breach if not cured within 30 days of written notice.
- Volume Adjustments: Delivery schedules are subject to volume adjustments and regular updates via purchase orders.
Investor Verification Checklist
- Verify the specific pricing parameters and total potential financial exposure of the 1,500 vehicle commitment.
- Review the full text of Exhibit 10.1 (Vehicle Purchase and Supply Agreement) for redacted details regarding pricing and specific obligations.
- Assess GreenPower Motor Company's capacity to maintain the required assembly capacity and stock levels.
- Monitor the impact of tariff costs on the final vehicle pricing.
- Confirm the timeline for the first delivery and the associated cash outflow for down payments.