Workhorse Group Inc. (WKHS) Earnings Call Transcript & Summary

Good morning and welcome to the Workhorse Group Inc. 2020 Annual Meeting of Stockholders. I would now like to turn the conference over to Duane Hughes, please go ahead.

Good morning, ladies and gentlemen. I am Duane Hughes, Chief Executive Officer and Director of your company. I will be serving as Chairman for this meeting. On behalf of the company, I want to welcome you and thank you for attending this meeting of the stockholders. I would like to introduce Steve Schrader, Chief Financial Officer of the company; and Directors of our company, including Benjamin Samuels, Gerald Budde, Harry DeMott, Jacqui Dedo, Pamela Mader, Mike Clark and Raymond Chess. I would also like to introduce Dan Borton and [ Nate Straham ], a representative of the accounting firm of Grant Thornton, the company's independent public accountants. During the question-and-answer period, following the discussion of the matters to be voted on, I will respond to appropriate questions you may have. The meeting is called to order. Stephen Fleming, Vice President and General Counsel, will act as secretary of this meeting. The polls are now open. If you have not yet voted and wish to vote or if you wish to revoke or change a previously submitted proxy, you may do so by clicking the vote here button on your screen. In order to do so, you will need the 16-digit control number you received with your proxy materials. In addition, logging in with your control number allows you to submit questions by typing your question into the ask a question field and clicking submit. Questions pertinent to meeting matters will be answered following the formal portion of this meeting, subject to time constraints.

[ Charles Zade ] has been appointed as inspector of election for this meeting. [ Mr. Zade ] has taken the customary oath of office, which will be filed with the permanent records of the meeting. By attending the meeting virtually, you are asked to record your appearance. The company has already given the inspector of election the proxies previously received from stockholders.

Will the secretary please report the number of shares outstanding and entitled to vote at this meeting?

The Board of Directors has set the close of business on July 20, 2020, as the record date for stockholders entitled to notice of and to vote at this meeting. A certified list of stockholders entitled to vote at the meeting is available and may be inspected by any stockholder. As of the record date, 109,095,528 shares of common stock were outstanding, each share being entitled to 1 vote on all matters properly before the meeting. Also available for inspection by the stockholders is the affidavit of mailing prepared by an employee of Broadridge Financial Solutions, Inc., certifying to the timely mailing of the notice of the meeting to all stockholders of record on the record date. Under the bylaws, the majority of the shares entitled to vote present or represented by proxy constitute a quorum. A quorum is necessary to conduct business at the annual meeting. You will be considered part of the quorum if you have voted by proxy. Abstentions and broker nonvotes and votes withheld from Director nominees count as shares present at the annual meeting for purposes of determining a quorum. However, abstentions and broker nonvotes do not count in the voting results. A broker nonvote occurs when a broker or other nominee who hold shares for another does not vote on a particular item because the broker or nominee does not have discretionary authority for that item and has not received instructions from the owner of the shares. The tally by the inspector of election indicates that a quorum is present at the meeting, and the meeting will proceed on that assumption. The presence of a quorum will be confirmed by the inspector of election when they complete the tally of the proxies and ballots. A final count of the exact number of shares present will be included in the minutes of this meeting. Now the formal business of the meeting. This meeting has been called to, one, consider and vote upon the election of directors to serve until the next Annual Meeting of Stockholders. Two, consider and vote upon for purposes of NASDAQ Listing Rule 5635(d), the issuance of the maximum number of shares of our common stock issuable in connection with the potential, a, conversion of the senior secured convertible note in the principal amount of $70 million issued pursuant to the Securities Purchase Agreement dated June 30, 2020, by and between the company and HT Investments MA LLC; and b, delivery of shares of common stock in lieu of cash payments of interest and principal on such note. For convenience, we will refer to the above matter as the transaction. Consider the -- three, consider the ratification of the Board's selection of Grant Thornton LLP as the independent auditor of the books and accounts of the company for the fiscal year ending December 31, 2020. Fourth, to transact such other business as may properly come before the meeting. Directors will be elected by a plurality of the shares of common stock present in voting in person or by proxy at this meeting. The majority of the votes cast is required to: one, ratify the appointment of Grant Thornton as our independent registered public accounting firm for the fiscal year ending December 31, 2020; and two, to approve the -- approve the transaction. This meeting will take up separately each of the items of business. I request that any discussion in connection with an item be limited to that item. Following a completion of discussion on all of the items, voting on each of the items will take place. While the votes are being counted, we will make a report and then entertain questions. Election of Directors. The first order of business is the election of Directors as set forth in the proxy statement. I recognize Gerald Budde, a Director of the company.

I nominate the following persons named in the proxy statement for election as Directors of the company, to hold office subject to the provisions of the bylaw until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified: one, Raymond J. Chess; two, Harry DeMott; three, H. Benjamin Samuels; four, Gerald B. Budde; five, Duane A. Hughes; six, Michael L. Clark; seven, Jacqueline A. Dedo; and eight, Pamela S. Mader.

I second the nominations. As there are no further nominations, I will entertain a motion that nominations be closed.

I move that nominations be closed.

I second the motion. The motion has been carried, and I hereby declare that the nominations for directors are closed.

Ratification of auditors. We will now proceed with the consideration of the ratification of Grant Thornton as the independent auditors of the books and accounts of the company for the fiscal year ending December 31, 2020. Representatives of Grant Thornton are present or available to answer any questions you may have during the answer -- question-and-answer period.

Mr. Chairman, I move the adoption of the following resolution, resolved, that the Board's selection of Grant Thornton LLP as the independent auditors to audit books and accounts of the company for the fiscal year ending December 31, 2020, is hereby ratified and approved.

I second the motion. Is there any discussion on the motion?

Next matter, approval of the transaction. We will now proceed with the next order of business, which is the approval of the transaction.

Mr. Chairman, I move the adoption of the following resolution, resolved, that the approval of the transaction is hereby ratified and approved.