Agreement Finalized in Connection with Proposed General Motors Lordstown Manufacturing Facility Acquisition
CINCINNATI, Nov. 7, 2019 /PRNewswire/ -- Workhorse Group Inc. (NASDAQ: WKHS) ("Workhorse" or "the Company"), an American technology company focused on providing sustainable and cost-effective electric-mobility solutions to the transportation sector, has entered into an intellectual property licensing agreement ("IPLA") with Lordstown Motors Corp. ("LMC"), a private corporate entity founded by former Workhorse CEO Steve Burns.
The LMC entity was created in connection with, and for the purpose of, acquiring the General Motors ("GM") manufacturing facility located in Lordstown, Ohio. LMC intends to manufacture electric trucks in Lordstown.
Under the terms of the IPLA, Workhorse is granting LMC a three-year exclusive license of certain intellectual property relating to the Company's W-15 electric pickup truck in exchange for an initial equity stake of 10% in LMC, which will be anti-dilutive for two years. Going forward, Workhorse is entitled to a license fee equal to 1% of the gross sales price of each LMC truck sold, up to the first 200,000 units. LMC has agreed to pre-pay a portion of the license fee in an amount equal to 1% of the aggregate debt and equity commitments LMC intends to raise. Once the pre-payment has been amortized over actual production, LMC will pay on a per unit shipped basis up to the 200,000 unit cap. Workhorse will receive an additional 4% commission on the gross sales price of trucks sold which fulfill the 6,000 pre-orders for the W-15 transferred from the Company to LMC.
"This long-term partnership allows Workhorse to benefit by both monetizing our existing technology and participating in the upside potential of this new venture without prohibitively diluting our existing shareholders," said Company CEO Duane Hughes. "Having an affiliated company with significant automotive production capacity also provides us with beneficial manufacturing footprint options in the future, should Workhorse win substantially larger contracts as we scale our operations. We also appreciate GM's acceptance of our combined proposal and believe it represents the best opportunity to keep production in Lordstown. We look forward to working together in the future as we finalize this transaction and explore additional production possibilities at the plant."
Lordstown Motors Corp. CEO Steve Burns added, "Workhorse is the right technology partner for LMC, and this agreement ensures that both parties are positioned, and incentivized, to succeed. Under this structure, both Workhorse and LMC stand to benefit by blending Workhorse's technology with the production capacity of Lordstown Assembly. We, along with Workhorse, remain dedicated to keeping vehicle production in Lordstown. Now, with LMC's acquiring of the Lordstown, Ohio factory, it is time to begin executing on our plan."
For additional details regarding the agreement, please reference the Form 8-K to be filed with the U.S. Securities and Exchange Commission on November 7, 2019.
About Workhorse Group Inc.
Workhorse is a technology company focused on providing electric mobility solutions to the transportation sector. As an American original equipment manufacturer, we design and build high performance battery-electric vehicles including trucks and aircraft. Workhorse also develops cloud-based, real-time telematics performance monitoring systems that are fully integrated with our vehicles and enable fleet operators to optimize energy and route efficiency. All Workhorse vehicles are designed to make the movement of people and goods more efficient and less harmful to the environment. For additional information visit workhorse.com.
About Lordstown Motors Corp.
Lordstown Motors Corp. (LMC), is an Ohio-based original equipment manufacturer (OEM) of light duty fleet vehicles. The company plans to begin building the Endurance™ electric pickup truck in 2020 in the former GM Lordstown, Ohio factory, where Lordstown Motors Corp. will also locate its headquarters. For additional information visit www.lordstownmotors.com
This press release includes forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as "believes," "expects," "anticipates," "estimates," "projects," "intends," "should," "seeks," "future," "continue," or the negative of such terms, or other comparable terminology. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements contained herein. Factors that could cause actual results to differ materially include, but are not limited to: our limited operations and need to expand in the near future to fulfill product orders; risks associated with obtaining orders and executing upon such orders; the ability to protect our intellectual property; the potential lack of market acceptance of our products; potential competition; our inability to retain key members of our management team; our inability to raise additional capital to fund our operations and business plan; our inability to satisfy covenants in our financing agreements; our inability to maintain our listing of our securities on the Nasdaq Capital Market; our inability to satisfy our customer warranty claims; our ability to continue as a going concern; our liquidity and other risks and uncertainties and other factors discussed from time to time in our filings with the Securities and Exchange Commission ("SEC"), including our annual report on Form 10-K filed with the SEC. Workhorse expressly disclaims any obligation to publicly update any forward-looking statements contained herein, whether as a result of new information, future events or otherwise, except as required by law.
Workhorse Investor Relations Contact:
Matt Glover and Tom Colton
Gateway Investor Relations
Lordstown Motors Corp. Investor Relations Contact:
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