Workhorse Group Inc (OTCMKTS:WKHS) is Quietly Climbing the Charts
Remember when Amazon.com, Inc. (NASDAQ:AMZN) started playing with the idea of unmanned drones delivering your packages? It happened almost two years ago and it immediately became apparent that at least for now, there are some legal (as well as technical) obstacles in the way. That hasn’t stopped AMZN from dreaming about an unmanned drone delivery future, however, and it hasn’t stopped smaller companies like Workhorse Group Inc (OTCMKTS:WKHS) from trying to beat the world’s biggest internet retailer to it.
Apparently, some people believe that it is WKHS who will get there first. Yesterday, the small OTC stock surged in the right direction and it gained an impressive 28%. It closed the session with a price of $0.41 and it logged a dollar volume of nearly $190 thousand – two things that hadn’t happened in a very long while.
Straight away, we can see a couple of problems. First of all, the sudden surge wasn’t caused by anything immediately obvious. In fact, with the latest press release now almost two months old and with no new SEC filings, it seems to have come out of nowhere.
Then there’s the fact that, as we mentioned already, we are still a very long way away from drones buzzing around our heads and delivering packages. Of course, Amazon are faced with the same problem, but they have some other business initiatives that are going well.
WKHS also have some other business operations. They specialize in commercial electric trucks, but unfortunately, they are not progressing along quite as nicely. Here, for example, is what the financial statement looked like at the end of the second quarter:
- cash: $160,931
- current assets: $542,985
- current liabilities: $6,142,034
- quarterly revenue: $67,980
- quarterly net loss: $1,881,292
You have to agree that things are not looking good. Still, WKHS said in the report that they have received some orders which they should be in the process of completing at the moment. Unfortunately, they apparently needed some cash. And they didn’t choose the most shareholder-friendly way of funding their operations.
Between June 17 and July 13, they issued convertible notes with an aggregate principal amount of $600 thousand and at the end of June, they also signed a securities purchase agreement according to which they will sell up to $500 thousand worth of convertible debentures over the next three years.
All of the freshly acquired debt is convertible into common stock either at fixed prices ranging from $0.20 to $0.30, or at discounts that span from 35% to 40%, whichever is lower. If the notes and debentures get converted and if the discounted stock finds its way to the open market, WKHS will need a very powerful drone to lift the ticker off the ground.
