Annual report pursuant to Section 13 and 15(d)

Duke Financing Obligation

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Duke Financing Obligation
12 Months Ended
Dec. 31, 2018
Duke Financing Obligation [Abstract]  
DUKE FINANCING OBLIGATION
6. DUKE FINANCING OBLIGATION

 

On November 28, 2018, the Company entered into a Sales Agreement with Duke Energy One, Inc., a wholly-owned subsidiary of Duke Energy Corporation (NYSE: DUK) ("Duke"), pursuant to which the Company sold Duke 615,000 battery cells (the "615,000 Cells") in consideration of $1,340,700.  Workhorse will continue to use the cells in the near term for the delivery of trucks to UPS and DHL.  Until May 1, 2019, the Company has the right and option to require Duke to sell the 615,000 Cells back to the Company and Duke has the right and option to require the Company to purchase the 615,000 Cells at price equal to the price the 615,000 Cells were sold.

 

On November 28, 2018, in consideration for consenting to the Company selling the Cells to Duke, which served as collateral for Arosa the Loan Agreement, the Company entered into a Limited Consent, Waiver and Release with Arosa pursuant to which the Company issued Arosa 2,000,000 shares of common stock and restruck the exercise price of warrants previously issued to Arosa to $1.25 per share.  In addition, while the Arosa Loan remains outstanding, the exercise price of the Arosa Warrants will be restruck to equal the price of any equity issued by the Company, including the issuance of any common stock purchase warrants or other derivative convertible securities, if the issuing price of such securities is less than $1.25.

 

The Duke transactions was accounted for as a financing obligation and as such, the company has recorded a $1,340,700 liability related to the transaction.