Electric truck manufacturer Workhorse Group announced on Sept. 18 that it had engaged investment bank B. Riley FBR to sell its SureFly operating unit, which is developing its hybrid-electric SureFly eVTOL. “Now that SureFly is doing hover test flights and has entered into the Type Certification Process with the FAA, we believe it is the ideal time to find a suitable partner or buyer that wishes to lead the eVTOL race,” stated Stephen Burns, CEO of Workhorse. “Finding a suitable partner for SureFly will enable Workhorse to continue focusing on its N-GEN electric delivery truck platform as well as our W-15 Electric Pickup Truck.”



  1. Workhorse is selling Surefly because they are REQUIRED to sell it under the terms of a Loan Agreement with Arosa Capital. The Covenents of the Loan (which securitizes every single crumb of Workhorse property, including IP) includes a requirement to sell the Surefly business for at least $20M by January 6 2019 or face Default.

    What you guys should be asking is: why the original Surefly Note holders demanded repayment in cash for the $5.75M note rather than convert to shares. Really: they could have owned a majority of the Surefly venture for a mere $5M (the $750k was interest for six months) but insisted on repayment the day it was due.

    So what is Surefly really worth?
    After you rip out all the reusable hardware and put it on E-bay, you probably wouldn’t have to spend too much to have somebody pick up and dispose of the carcass. Net, I’m thinkin’ $20k. What’s three orders of magnitude between pals?

    1. This is a pretty harsh viewpoint. Can you provide evidence of these statements?

      1. Mike:

        Didn’t see your question; sorry — you probably think I just made all this up.


        Here are the SEC filings you should review to understand the situation:
        (1) The first is the original “spinoff” announcement on 27 December 2017. Here is the 8k filing with the SEC:


        There’s a bit to wade through, but if you start with the first link (Seq 1 “CURRENT REPORT”), under Item 2.03 it states:
        “…the Company entered into a Securities Purchase Agreement with several existing institutional investors (the “Spin-Off Investors”) pursuant to which the company issued original issue discount Senior Secured Notes (the “Notes”) in the aggregate principal amount of $5,750,000 in consideration of gross proceeds of $5,000,000 paid by the Spin-Off Investors.

        The Notes do not bear interest and mature on June 30, 2018…

        The Spin-Off Investors have the right but not the obligation to convert the Notes into Series A Preferred Stock of SureFly at a pre-money valuation of $33,000,000…”

        [Note I have abridged the entry for brevity but clearly they sold a Note for $5M, which could either be redeemed in shares in the new company or paid off for $5.75M]

        The 8k has a bunch of stuff to read, including a bill of sale that shows what a shoestring operation this is. You’ll see that there isn’t even $1M in value for the whole Surefly package. They might sell it to a fool with $$$; that sort of thinh happens all the time. But it’s VERY unlikely.

        (2) The second is the Loan Agreement with Arosa Capital Management made in July when the Note Holders chose NOT to take shares but to be paid back. Workhorse could not afford to pay them back and so took a $6.2M Loan in order to pay off the Note and keep the lights on.
        This Loan securitizes _ALL_ of Workhorse’s property.
        Everything. Factory, inventory, IP… everything.
        See the entire agreement here:


        In the Covenants of the Loan (Attachment 10.1 to the 8k here…


        … you’ll find the following at the top of page 9 under Sales Process and Financing Milestones:

        “No later than July 16, 2018, Borrower will retain on terms acceptable to Lender an investment banking firm approved by Lender (or included on a list of pre-approved firms submitted by Borrower and approved by Lender in writing) to conduct a sale of Surefly, Inc.;
        “No later than January 6, 2019, Borrower shall, and shall cause the direct parent of Surefly, Inc. to consummate a sale of Surefly, Inc. resulting in cash proceeds of no less than $20,000,000;”

        Workhorse’s failure to affirmatively accomplish the Loan Covenants makes the Loan subject to Default.

        Let’s be clear: the sale of Surefly was not a nice idea that Workhorse imagined they ought to do. They MUST do so or are subject to losing the company to Arosa. Period.

        Not to sound snotty here: this is not a “viewpoint”. It is Workhorse’s financial and contractual reality, and it’s bleak. (FWIW, since your post on 12 Nov, the closing price of WKHS shares has fallen by about 38%.)

        {I sent you this by e-mail in case you’re not still tracking. Again, apologies for missing your reply. I know you were just trying to be fair to the company.

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