Business Context and Reporting Period
This Form 8-K filing by Workhorse Group Inc. (WKHS) reports a material event occurring on January 27, 2023, with the report filed on February 2, 2023. The filing addresses the termination of a material definitive agreement with Lordstown Motors Corp. (LMC).
Key Financial Metrics
The filing does not provide specific financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity figures. The document focuses exclusively on the legal status of an intellectual property agreement.
Material Changes
- Agreement Termination: On January 27, 2023, Workhorse received notice from LMC purporting to terminate the Intellectual Property License Agreement dated November 7, 2019, effective March 27, 2023.
- Scope of Agreement: The terminated agreement granted LMC rights to licensed intellectual property for electric pickup trucks in exchange for royalty and commission payments on vehicle sales.
- Post-Termination Obligations: Workhorse asserts that LMC's obligation to pay royalties survives the termination of the agreement if LMC sells any vehicles.
- Sales History: LMC has not informed Workhorse of any vehicle sales since the original agreement date.
Outlook, Risks, and Contingencies
- Uncertainty of Future Revenue: The Company states it cannot predict if LMC will sell any vehicles, whether applicable royalties will be paid, or if any such royalties would be material to Workhorse's financial results.
- Legal Contingency: The filing notes that the discussion is qualified by the full text of the original agreement, implying potential legal interpretation regarding the survival of royalty obligations.
Investor Verification Checklist
- Verify the full text of the November 7, 2019 Intellectual Property License Agreement (exhibit to the 2021 Form 10-K) to confirm the survival clause regarding royalty payments.
- Monitor LMC's production and sales announcements to assess the potential for royalty revenue.
- Review any subsequent legal correspondence or filings between Workhorse and LMC regarding the termination notice.