LMC, Workhorse Group power off partnership
$11.1M paid to end technology-licensing deal
LORDSTOWN — Workhorse Group Inc., an early stakeholder in Lordstown Motors Corp., and the electric-vehicle startup no longer are partners.
Regulatory filings show Lordstown Motors paid $11.1 million to Workhorse Group in the third quarter last year, a move that ends a technology-licensing agreement from 2019.
The agreement gave Lordstown Motors access to certain intellectual property that belongs to Workhorse Group in exchange for a 10 percent stake in Lordstown Motors and royalties of 1 percent of the gross sales price for the first 200,000 vehicles sold.
The filing states given the lack of Workhorse technology in Lordstown Motors’ first vehicle, the Endurance pickup truck, and management taking the company in a different direction, the company “deemed it appropriate to change the useful life of the technology we acquired from Workhorse to zero months.”
“As such, we recorded accelerated amortization of $11.1 million during the third quarter of 2021,” the filing states.
The shift in the strategic direction of the company includes the sale of the company’s assembly plant in Lordstown to technology and electronics assembly company Foxconn of Taiwan. The companies also are trying to work out agreements for Foxconn to be the contract manufacturer of the Endurance and a joint product development agreement for future vehicles and technology.
Lordstown Motors and Foxconn have until May 18 to finalize the sale, or Lordstown Motors will be forced to repay $200 million Foxconn has made toward the $230 million plant sale. Under those circumstances, Lordstown Motors likely would go out of business.
Lordstown Motors in November 2020 prepaid a royalty payment of $4.75 million to Workhorse Group.
The 10 percent of Lordstown Motors owned by Workhorse was about 16.5 million shares of Class A common stock, which Workhorse Group sold in the third quarter last year at an average price of $6.42 per share, according to Workhorse Group’s 2021 financial report.
Workhorse Group made $105.1 million from the sale but recognized a loss of about $76.5 million.
Both companies were founded by Steve Burns.
He and Lordstown Motors’ chief financial officer left the company in June without a reason given by Lordstown Motors. Their departure, however, was in sync with an admission by the company that statements regarding preorders for the Endurance were inaccurate.
Since November, Burns has sold more than 8.4 million of the shares he owns in Lordstown Motors, earning him more than $30 million.