Quarterly report pursuant to Section 13 or 15(d)

Duke Financing Obligation

v3.19.1
Duke Financing Obligation
3 Months Ended
Mar. 31, 2019
Duke Financing Obligation [Abstract]  
DUKE FINANCING OBLIGATION

5. 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 615,00 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 remained 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.

 

On April 30, 2019, Duke and the Company entered into an agreement to amend the initial Sales Agreement to extend the expiration date from May 1, 2019 to October 15, 2019.

 

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.