Workhorse Group Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Workhorse Group Inc. on June 12, 2018, reporting events occurring on June 7, 2018. The filing discloses the entry into a material definitive agreement involving a short-term loan from related parties.
Key Financial Metrics
- Loan Amount: $550,000 aggregate principal.
- Lenders: Stephen S. Burns, H. Benjamin Samuels, Gerald Budde, and Ray Chess (executive officers and/or directors).
- Interest Rate: 12.0% per annum.
- Maturity Date: December 6, 2018.
- Use of Proceeds: General business and working capital purposes.
- Security Status: Unsecured obligations; not convertible into equity.
Material Changes and Terms
The Company created a direct financial obligation through the issuance of promissory notes to related parties. A specific prepayment restriction applies: the notes cannot be paid off on or prior to the 91st day following the maturity date of the Senior Secured Notes issued on December 27, 2017 (principal amount $5,750,000). However, if the Company raises in excess of $10,000,000 in equity financing, it will use part of those proceeds to pay off these notes.
Guidance, Risks, and Contingencies
The filing does not provide updated financial guidance or outlook. The primary contingency noted is the potential acceleration of repayment upon the successful completion of equity financing exceeding $10,000,000. The notes contain customary events of default.
Key Facts for Investor Verification
- Verify the Company's current liquidity position and ability to service the new $550,000 debt alongside existing obligations.
- Confirm the status of the Senior Secured Notes issued on December 27, 2017, to understand the prepayment restriction timeline.
- Monitor progress on equity financing efforts, as raising over $10,000,000 would trigger a mandatory partial or full repayment of this loan.
- Review the full text of the Promissory Note (Exhibit 4.1) for specific default provisions not detailed in the summary.