Workhorse Group Inc (OTCMKTS:WKHS) Accelerates Its Climb
Workhorse Group Inc (OTCMKTS:WKHS) has been moving up the chart for a couple of sessions now but their daily gains were far from impressive. All that changed yesterday when the company shot upwards and added exactly 20% to its value closing at $0.54 per share.
The sudden jump may have come as a result of the rather positive article on WKHS that was published on Monday coupled with the new financial report that was filed by the company. If you take a look at the results contained in the report, however, you might find yesterday’s trading rather puzzling. WKHS finished the quarter ended September 30 with:
• $141 thousand cash
• $1.4 million current assets
• $6.7 million current liabilities
• $72 thousand sales
• $3.8 million net loss
Less than two months ago WKHS were in a dire financial state with limited cash reserves and massive working capital deficit. While the company did generate some sales during the period they remained negligible when compared to the net loss. There is still hope though.
Earlier this year the company received a prime order from UPS for the purchase of 125 of WKHS‘s E-GEN trucks. Under the current terms of the deal Workhorse is expected to deliver 20 trucks monthly starting from February 2016. In order to do so, however, the company needed to find a significant amount of fresh capital. At the start of this month WKHS announced exactly that – a securities purchase agreement with several accredited investors the company will allow the company to receive $8,750,001 by selling convertible promissory notes.
Acquiring funds through convertible debt is risky though. The notes WKHS can sell will be convertible into common shares at a fixed price of $0.35, which is considerably lower than the current market price. As part of the deal warrants for the purchase of 25 million shares were also issued. The exercise price of the warrants stands at $0.528, which is also lower than yesterday’s closing price of the stock.
WKHS must be approached with caution. Even if you believe in the potential of the company it is paramount to do your own due diligence before committing to any trades.
