Workhorse Group Inc
For the period ended Mar 31, 2025. Filed May 15, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
WKHS$3.09-1.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-19.
0001425287-24-000131
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001425287-25-000058
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 90 previous paragraphs and 83 current paragraphs.
30 unchanged; 27 reworded; 22 added; 32 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 2 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
As described in our Current Report on Form 8-K filed with the SEC on February 12, 2025, we issued a 2024 Note in aggregate principal amount of $35.0 million (the "Tenth Additional 2024 Note") is governed by a lockbox letter entered into between the Company and the Investor (the Lockbox Letter"). Pursuant to the Lockbox Letter, the net proceeds of $30.6 million, after a 12.5% original issue discount and related fees and expenses, were deposited into a lockbox account under the control of the collateral agent under the 2024 Securities Purchase Agreement. Funds may be released from the lockbox account from time to time (i) in an amount corresponding to the principal amount converted, if the Investor converts any portion of the Tenth Additional 2024 Note; (ii) in the amount of $2.6 million each calendar month, if we satisfy the conditions of a Market Release Event (as defined in the Lockbox Letter), including minimum Common Stock price and trading volume conditions; or (iii) otherwise, with the consent of the Investor. As of May 14, 2025, the Investor had released approximately $7.1 million from the lockbox account, and we had received net proceeds of approximately $6.0 million. Additionally, on May 14, 2025, the investor notified the Company that it consented to the release of an additional $2.5 million from the lockbox account. Subject to the satisfaction of certain conditions in the Lockbox Letter, the Company expects to receive such funds, less fees and expenses, on or about May 19, 2025. Although we expect that we will receive additional funds held in the lockbox account during the term of the Tenth Additional 2024 Note, it is possible that the foregoing events will not occur with respect to some or all of the principal amount of the Tenth Additional 2024 Note and that, accordingly, we will not be able to draw any or all of the remaining funds in the lockbox account.
Current report
Although the 2024 Securities Purchase Agreement contemplates the issuance of up to $62.0 million of additional 2024 Notes, we can issue such 2024 Notes only to the extent we can offer and sell them pursuant to a Registration Statement on Form S-3. Because the public float of our Common Stock is currently less than $75 million, SEC rules limit the amount of securities we can offer and sell on Form S-3, including the 2024 Notes, Common Stock and all other securities, to one-third of our public float in any twelve month period. Accordingly, our ability to obtain liquidity though public sales of securities, including pursuant to our ATM Agreement (as defined below) and the 2024 Securities Purchase Agreement, is substantially limited. In addition, the terms of our existing financing arrangements impose substantial restrictions on our ability to obtain additional financing.
Current report
These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of the accompanying Condensed Consolidated Financial Statements.
Current report
Another key element of management’s strategy to improve our liquidity and meet our working capital needs is the reduction of operating costs. This effort is intended, among other objectives, to ease the demands on our available liquidity. Accordingly, the below cost-saving measures implemented during 2024 have continued to deliver benefits through the quarter ended March 31, 2025.
Current report
In addition to the RIF and furlough actions, we have significantly reduced other operating costs during the first quarter of 2025 compared to the same period a year ago including, but not limited to, reductions in third-party consulting arrangements, lower research and development activities and associated internal and external costs related to new vehicle program development, consolidation of activities within back-office functions to take advantage of associated personnel attrition and other cost control actions.
Current report
We also substantially decreased the procurement of raw materials for future commercial vehicle production, which has notably affected the near-term production and availability of our W56 vehicle platform. Additionally, we are overdue on payments to certain suppliers for outstanding accounts payable. Certain purchased components for our vehicles have supplier long-lead times of up to 24 weeks. While we are focused on the sale of existing inventory on hand, in the event of an increase in market demand for our W56 vehicle, we may not have sufficient cash resources to fund working capital requirements without support from our customer and supplier base, or the availability of additional third-party financing arrangements. We are currently working with certain of our suppliers to extend or restructure the payment terms of its outstanding accounts payable as well as terms and conditions related to the purchase of materials necessary for future production.
Current report
Commodities. Commodity prices remain volatile, and we expect continued cost increases for key materials used in electric truck production, including lithium, cobalt, nickel, steel, and aluminum. Global demand shifts in supply and demand have caused uneven price trends across commodities, but overall we anticipate higher material costs. In addition, proposed tariffs measures under the new Presidential Administration could raise the cost of imported automotive parts and raw materials. Although these tariffs are evolving, we are actively monitoring developments and evaluating potential impacts on our supply chain, production costs, and pricing strategies.
Current report
The Company operates as a single reporting segment under ASC 280, Segment Reporting, (“ASC 280”) consistent with how
Current report
management evaluates and prioritizes investment and resource allocation decisions and assesses operating performance.
Current report
Our Condensed Consolidated Statements of Operations is as follows:
Current report
For the three months ending March 31, 2024, Interest income (expense), net was $5.3 million, compared to $1.2 million for the three months ended March 31, 2024. The difference was primarily driven by recognition of interest expense related to higher balances of the 2024 Notes in the current period compared to the prior year.
Current report
Change in fair value adjustment on notes
Current report
As March 31, 2025, the estimated fair value of the 2024 Notes totaled $45.2 million.
Current report
Change in fair value adjustment on warrants
Current report
During the three months ended March 31, 2025, and 2024, we recognized a net fair value gain of $0.7 million and a net fair value loss of $3.8 million, respectively, in the Condensed Consolidated Statements of Operations related to the 2024 Warrants.
Current report
As a result of our recurring losses from operations, accumulated deficit, projected capital needs, and delays in bringing our trucks to market and lower than expected market demand, management determined that substantial doubt exists regarding our ability to continue as a going concern within one year after the issuance date of the accompanying Condensed Consolidated Financial Statements. Our ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve the Company’s liquidity and working capital, which includes, but is not limited to:
Current report
It is essential that we have access to capital as we bring our existing line of trucks to market, scale up production and sales of such trucks and continue to develop additional variations of our existing trucks and our next generation of trucks. There is no assurance that we will be successful in implementing management’s plans to generate liquidity to fund these activities or other aspects of our short and long-term strategy, that our projections of our future capital needs will prove accurate or that any additional funding would be available or sufficient to continue operations in future periods.
Current report
Our revenues from operations are unlikely to be sufficient to meet our liquidity requirements for the twelve months following the date of the issuance of our Condensed Consolidated Financial Statements, and, accordingly, our ability to continue as a going concern depends on our ability to obtain and receive proceeds from third-party financing. We currently expect that our primary source of third-party financing will be the proceeds of the Tenth Additional 2024 Note, which we issued under our 2024 Securities Purchase Agreement. As discussed more fully above, as of March 21, 2025, approximately $27.4 million of such proceeds remain in a lockbox account and will be available to us only upon satisfaction or waiver of the conditions described above. Accordingly, there can be no assurance that any or all of such proceeds will be available to us on a timely basis or ever.
Current report
On February 12, 2025, we issued the Tenth Additional 2024 Note in the aggregate principal amount of $35.0 million. The Tenth Additional 2024 Note is governed by the terms of the Lockbox Letter. Pursuant to the Lockbox Letter, net proceeds of $ 30.6 million after a 12.5% original issue discount and related fees and expenses, were deposited into a lockbox account under the control of the collateral agent under the 2024 Securities Purchase Agreement. Funds may be released from the lockbox from time to time (i) in an amount corresponding to the principal amount converted, if the Investor converts any portion of the Tenth Additional 2024 Note; (ii) in the amount of $2.6 million each calendar month, if we satisfy the conditions of a Market Release Event (as defined in the Lockbox Letter), including minimum Common Stock price and trading volume conditions; or (iii) otherwise, with the consent of the Investor. As of May 14, 2025, the Investor had released approximately $7.1 million from the lockbox account, and we had received net proceeds of approximately $6.0 million. Although we expect that we will receive additional funds held in the lockbox account during the term of the Tenth Additional 2024 Note, it is possible that the foregoing events will not occur with respect to some or all of the principal amount of the Tenth Additional 2024 Note and that, accordingly, we will not be able to draw any or all of the remaining funds in the lockbox account. Furthermore, there is no guarantee that we will receive additional proceeds in excess of the Tenth Additional 2024 Note under the 2024 Securities Purchase Agreement.
Current report
Although the 2024 Securities Purchase Agreement contemplates the issuance of up to $62.0 million of additional 2024 Notes, we can issue such 2024 Notes only to the extent we can offer and sell them pursuant to a Registration Statement on Form S-3. Because the public float of our Common Stock is currently less than $75 million, SEC rules limit the amount of securities we can offer and sell on Form S-3, including the 2024 Notes, Common Stock and all other securities, to one-third of our public float in any twelve month period. Accordingly, our ability to obtain liquidity though public sales of securities, including pursuant to our ATM Agreement and the 2024 Securities Purchase Agreement, is substantially limited.
Current report
In addition, the terms of our existing financing arrangements impose substantial restrictions on our ability to obtain additional financing.
Current report
These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of these accompanying Condensed Consolidated Financial Statements.
Removed paragraphs (32)
Previous report
Recent Developments
Previous report
During the three months ended September 30, 2024, FedEx Corporation issued a purchase order for 15 W56 step vans to be delivered in 2024 (the “Ordered Step Vans”). On September 27, 2024, we completed our work on the Ordered Step Vans and made the Ordered Step Vans available for the purchaser’s upfitter to complete certain final customizations of the trucks for the purchaser. In connection with the completion of our work on the Ordered Step Vans in September 2024, we received payment in full for the Ordered Step Vans. We expect the Ordered Step Vans will be upfitted and delivered to the purchaser during the fourth quarter of 2024.
Previous report
On October 15, 2024 our 208-inch extended wheelbase version of the W56 step van was certified to meet full FMVSS (Federal Motor Vehicle Safety Standards) and received HVIP (Hybrid and Zero-Emission Vehicle and Bus Voucher Incentive Project) certification. We believe these certifications not only validate the truck's safety and environmental compliance but also underscore our capability of providing reliable solutions for the electric commercial truck market.
Previous report
The 2024 Securities Purchase Agreement contemplates additional closings as of November 18, 2024 of up to $105.5 million in aggregate principal amount of additional 2024 Notes and, if our share price makes such exercise feasible, the possible receipt of proceeds from the exercise of the corresponding 2024 Warrants pursuant to the 2024 Securities Purchase Agreement. However, we may not realize the full amount available under the 2024 Securities Purchase Agreement. Under the terms of the 2024 Securities Purchase Agreement, our ability to issue and sell additional 2024 Notes to the Investor is restricted if the Investor has not converted previous tranches of 2024 Notes into our Common Stock and sold the shares issued on conversion. Accordingly, the Investor’s ability to make such conversions and sales, and therefore our access to additional liquidity under the 2024 Securities Purchase Agreement, depends on there being a robust public trading market for our Common Stock. Since consummating the Reverse Split of our Common Stock in June 2024, the Nasdaq trading volume of our Common Stock has generally been lower (on a Reverse Split-adjusted basis) than it was before we consummated the Reverse Split. In addition, on October 2, 2024, the Company received a written notice (the “Notice”) from the Listing Qualifications Department of Nasdaq Stock Market (“Nasdaq”) indicating that, because the closing bid price of the Company’s Common Stock had fallen below $1.00 per share for 30 consecutive trading days, the Company was no longer in compliance with the $1.00 Minimum Bid Price Requirement set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market (the “Bid Price Requirement”). If these conditions continue, the $105.5 million aggregate amount of 2024 Notes (as of November 18, 2024) we can issue and sell under the 2024 Securities Purchase Agreement may be reduced, and the issuances and sales that we are able to make may be delayed.
Previous report
If we are not able to complete the additional closings, receive proceeds from the exercise of 2024 Warrants or find another source of liquidity in the immediate future, we may be unable to continue our operations or may need to substantially reduce them. Additional information concerning the 2024 Securities Purchase Agreement, the 2024 Notes, and the 2024 Warrants is set forth in Note 1 and Note 7 to the Condensed Consolidated Financial Statements.
Previous report
Another vital component of management’s plan to improve our liquidity and working capital requirements is reducing our operating costs to, among other things, reduce demands on the liquidity that is available to us. Accordingly, in the first and second quarter of 2024 we took the measures described below and started to realize the full benefit of such measures during the third quarter ended September 30, 2024.
Previous report
Aero Drone Design and Manufacturing Operations
Previous report
As previously disclosed and discussed above as part of our cost-saving measures, on June 6, 2024, we completed the previously disclosed divestiture of our Aero business (the “Aero Divestiture”) to a third party. We expect the Aero Divestiture to provide monthly cost savings of approximately $0.4 million and enhance our ability to concentrate on our commercial electric truck business. Under the agreement’s earn-out provisions, the Company will receive a portion of the proceeds if the Aero business realizes positive net cash flow but these contingencies are indeterminable at this time. The loss on the sale for this business was $0.7 million of which $0.4 million was included in the Selling, general and administrative expenses and $0.3 million in Cost of sales in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2024.
Previous report
Nasdaq Listing Requirements
Previous report
As previously disclosed, on October 2, 2024, we received notice from Nasdaq indicating that, the closing bid price for our Stock had fallen below Nasdaq’s $1.00 minimum bid price requirement (the “Minimum Bid Requirement”) for 30 consecutive trading days, and therefore we were no longer in compliance with the $1.00 Minimum Bid Requirement. In order for us to regain compliance, the closing bid price of our Common Stock must be equal to or above $1.00 for a period of 10 consecutive trading days prior to March 31, 2025.
Previous report
Commodities. Prices for commodities remain volatile, and we expect to experience price increases for base metals and raw materials that are used in batteries for electric trucks (e.g., lithium, cobalt, and nickel) as well as steel, aluminum and other material inputs. Global demand and differences in output across sectors have generated divergence in price movements across different commodities. We expect the net impact on us overall will be higher material costs.
Previous report
The following table sets forth, for the periods indicated, the components of the Company’s Condensed Consolidated Statements of Operations:
Previous report
Sales, net of returns and allowances for the nine months ended September 30, 2024 and 2023 were $4.7 million and $8.7 million, respectively. The decrease in sales was primarily due to lower W4 CC truck sales compared with the same period a year ago, which was offset by an increase in W56 truck sales, other service revenue generated from operating our Stables by Workhorse route, Drones as a Service before the Aero Divestiture and other service revenue.
Previous report
Cost of sales for the nine months ended September 30, 2024 and 2023 were $21.4 million and $20.3 million, respectively. The increase in cost of sales was primarily due to a $3.5 million increase in inventory reserves and a $2.8 million increase in depreciation expense which was partially offset by a $2.3 million decrease in costs related to direct materials, $1.4 million reversal of warranty expenses previously accrued, and a decrease in consulting expenses of $1.4 million.
Previous report
SG&A expenses during the nine months ended September 30, 2024 and 2023 were $33.9 million and $40.5 million, respectively. The decrease in SG&A expenses was primarily driven by a $5.5 million decrease in employee compensation and related expenses due to lower headcount, a decrease in consulting expenses of $0.7 million and lower marketing expenses of $0.6 million.
Previous report
R&D expenses during the nine months ended September 30, 2024 and 2023 were $7.8 million and $18.1 million, respectively. The decrease in R&D expenses was primarily driven by a $5.2 million decrease in employee compensation and related expenses due to lower headcount, a $1.8 million decrease in prototype expenses related to development expenses for new products which launched in 2023, a $2.3 million decrease in consulting expenses related to the W56 program, and a reduction in other expenses of $0.9 million.
Previous report
Net interest expense for the three months ended September 30, 2024 was $8.3 million compared to net interest income of $0.4 million for the three months ended September 30, 2023. The increase is primarily due to $2.9 million in financing fees related to funds received, a $5.3 million fair value net loss, partially offset by interest income of $0.4 million due to higher cash balances in the previous period.
Previous report
Net interest expense for the nine months ended September 30, 2024 was $15.1 million compared to net interest income $1.5 million for the nine months ended September 30, 2023. The increase is primarily due to $6.0 million in financing fees related to funds received, partially offset by interest income of $1.5 million due to higher cash balances in the previous periods.
Previous report
Fair value adjustment (loss) on warrants
Previous report
Other income (loss)
Previous report
Other (loss) for the three and nine months ended September 30, 2023 was $10.0 million and represents the impairment of our investment in Tropos.
Previous report
Our ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve our liquidity and working capital requirements. We have made progress executing on our revised strategic product roadmap for our electric truck offerings, and we expect to generate additional sales within the next twelve months which will help support our operations. Additionally, as previously disclosed, management reduced its discretionary spend related to non-contracted capital expenditures and, implemented cost-savings measures, including a 20% reduction in force, our executive officers deferring approximately 20% of their cash compensation into the third quarter of 2024, furloughing 73 employees at our Union City manufacturing facility without pay, of which 16 have already been reinstated as of September 30, 2024, and divesting our Aero business. We also experienced voluntary attrition during the nine months ended September 30, 2024, which has further reduced employee compensation and related costs. As previously disclosed, we are currently working with certain of our vendors to extend or restructure the payment terms of certain past due accounts payable balances. However, if the expected sales are not generated and management is not able to control capital expenditures and other expenses, we will continue to incur substantial operating losses and negative cash flows from operations. There can be no assurance that we will be successful in implementing our plans or acquiring additional funding, that our projections of our future capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.
Previous report
Our future funding requirements will depend upon many factors, including, but not limited to:
Previous report
•our ability to produce our current generation of trucks at required scale and to sell such trucks to customers;
Previous report
•our ability to acquire or license other technologies we may seek to pursue;
Previous report
•our ability to manage our growth and operational expenses; and
Previous report
•competing technological and market developments.
Previous report
To the extent revenues from operations are insufficient to meet our liquidity requirements, our ability to continue as a going concern will be dependent on effectively raising capital through private or public placement of our equity securities, including the continued access to the additional closings of, as of November 18, 2024 up to $105.5 million in aggregate principal amount of additional 2024 Notes. However, we may not realize the full amount available under the 2024 Securities Purchase Agreement. Under the terms of the 2024 Securities Purchase Agreement, our ability to issue and sell additional 2024 Notes to the Investor is restricted if the Investor has not converted previous tranches of 2024 Notes into our Common Stock and sold the shares issued on conversion. Accordingly, the Investor’s ability to make such conversions and sales, and therefore our access to additional liquidity under the 2024 Securities Purchase Agreement, depends on there being a robust public trading market for our Common Stock. Since consummating the Reverse Split of our Common Stock in June 2024, the Nasdaq trading volume of our Common Stock has generally been lower (on a Reverse Split-adjusted basis) than it was before we consummated the Reverse Split. If these conditions continue, the aggregate amount of 2024 Notes we can issue and sell under the 2024 Securities Purchase Agreement may be reduced, and the issuances and sales that we are able to make may be delayed.
Previous report
In addition, if our share price makes such exercise feasible, we may receive proceeds from the exercise of the corresponding 2024 Warrants pursuant to the 2024 Securities Purchase Agreement and use of the ATM Agreement (as further described below), for which there can be no assurance we will be successful in such efforts. We will also rely on debt financing or other sources of capital funding such as through the sale of assets to obtain sufficient financial resources to fund our operating activities. If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations, as well as our ability to continue to develop, produce and market our new truck programs and satisfy our obligations as they become due, will be materially and adversely affected. This could affect future truck program production and sales. Failure to obtain additional financing will have a material, adverse impact on our business operations. There can be no assurance that we will be able to obtain the financing needed to achieve our goals on acceptable terms or at all. Additionally, any equity or equity-linked financings would likely have a dilutive effect on the holdings of our existing stockholders. Our current level of cash and cash equivalents are not sufficient to execute our business plan. For the foreseeable future, we will incur significant operating expenses, capital expenditures and working capital funding that will deplete our cash on hand.
Previous report
As a result of all of the matters discussed above, including our losses, current liquidity level and our projected capital needs, substantial doubt exists about our ability to continue as a going concern over the next twelve months from the date of issuance of the accompanying Condensed Consolidated Financial Statements. The Condensed Consolidated Financial Statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if we were unable to continue as a going concern.
Previous report
Under the ATM Agreement, we may offer and sell shares of our Common Stock having an aggregate sales price of up to $175.0 million, in amounts and at times determined by management. During the nine months ended September 30, 2024, we issued 0.5 million shares under the ATM Agreement for net proceeds of $2.7 million. As of September 30, 2024 we had approximately $95.6 million available through the issuance of shares of Common Stock under the ATM Agreement. Certain of our other existing financing arrangements, including our 2024 Securities Purchase Agreement, place certain conditions and restrictions on the use of our ATM Program.
Previous report
Net cash provided by financing activities during the nine months ended September 30, 2023 was $51.7 million, which was primarily attributable to issuances of Common Stock under our ATM Program offset by the payment of our 2023 Notes.
Reworded paragraphs (27)
Previous wording
We are an American technology company with a vision to pioneer the transition to zero-emission commercial trucks. Our primary focus is to provide sustainable and cost-effective solutions to the commercial transportation sector. We design and manufacture all-electric trucks, including the technology that optimizes the way these trucks operate. We are focused on our core competency of bringing our electric delivery truck platforms to serve the last mile delivery market.
Current wording
We are an American technology company with a vision to pioneer the transition to zero-emission commercial trucks. Our primary focus is to provide robust, sustainable and cost-effective solutions to the commercial transportation sector. We design and manufacture all-electric trucks, including the technology that optimizes the way these trucks operate. We are focused on our core competency of bringing our electric delivery truck platforms to serve the last mile delivery market.
Previous wording
As discussed more fully under Note 1, Summary of Business and Significant Accounting Principles; Liquidity, Capital Resources, and Going Concern, above, and Liquidity and Capital Resources; Going Concern, below, our ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve the Company’s liquidity and working capital requirements. A vital component of such plan is the consummation of a financing to address these requirements in the short term.
Current wording
As discussed more fully under Note 1, Summary of Business and Significant Accounting Principles; Liquidity, Capital Resources, and Going Concern, above, and Liquidity and Capital Resources; Going Concern, in the notes to our Unaudited Condensed Consolidated Financial Statements included with this Quarterly Report on Form 10-Q, our ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve the Company’s liquidity and working capital requirements.
Previous wording
On March 15, 2024, we entered into a securities purchase agreement (the “2024 Securities Purchase Agreement”) with an institutional investor (the “Investor”), under which we agreed to issue and sell, in one or more registered public offerings by the Company directly to the Investor, in multiple tranches over a period beginning on March 15, 2024, senior secured convertible notes (the "2024 Notes") for up to an aggregate principal amount of $139.0 million that are convertible into shares of the Company's Common Stock, par value of $0.001 per share (“Common Stock”) and warrants to purchase shares of Common Stock (the “2024 Warrants”).
Current wording
On March 15, 2024, we entered into a securities purchase agreement (the “2024 Securities Purchase Agreement”) with an institutional investor (the "Investor") under which we agreed to issue and sell, in one or more registered public offerings by the Company directly to the Investor in multiple tranches over a period beginning on March 15, 2024, (i) senior secured convertible notes for up to an aggregate principal amount of $139.0 million (the “2024 Notes”) that are convertible into shares of the Company’s common stock, par value of $0.001 per share (the “Common Stock”) and (ii) warrants (the “ 2024 Warrants”) to purchase shares of Common Stock.
Previous wording
During the three months ended September 30, 2024, we issued and sold to the Investor (i) 2024 Notes in the original principal amount of $10.0 million and (ii) 2024 Warrants to purchase up to 10.1 million shares of Common Stock. As of September 30, 2024 we had issued and sold to the Investor (i) 2024 Notes in aggregate original principal amount of $32.3 million and (ii) 2024 Warrants to purchase up to 15.6 million shares of Common Stock pursuant to the 2024 Securities Purchase Agreement (following adjustment in connection with the Company's 1-for-20 Reverse Split). In addition, on October 16, 2024, we issued and sold to the Investor an additional 2024 Notes in the original principal amount of $1.2 million. The Investor waived its right to receive warrants in connection with this issuance and sale.
Current wording
Pursuant to the 2024 Securities Purchase Agreement, during the three months ended March 31, 2025, the Company issued and sold to the Investor (i) 2024 Notes in the original principal amount of $38.5 million and (ii) 2024 Warrants to purchase up to
Previous wording
Our ability to obtain additional financing is extremely limited under current market conditions including the significant amount of capital required, the market price of our stock and potential dilution from the issuance of any additional securities and our ability to regain compliance with the listing requirements of the Nasdaq Capital Market. If we are unable to identify other sources of funding, we may need to further adjust our operations, including and up to filing a voluntary petition for relief under the Bankruptcy Code. If this were to occur, the value available to our various stakeholders, including our creditors and stockholders, is uncertain and trading prices for our securities may bear little or no relationship to the actual recovery, if any, by holders of our securities in bankruptcy proceedings, if any.
Current wording
Because of the foregoing, our ability to obtain additional proceeds from financing is extremely limited under current conditions, and if we are unable to obtain such proceeds, we may need to further adjust our operations and seek protection by filing a voluntary petition for relief under the Bankruptcy Code. If this were to occur, the value available to our various stakeholders, including our creditors and stockholders, is uncertain and trading prices for our securities may bear little or no relationship to the actual recovery, if any, by holders of our securities in bankruptcy proceedings, if any.
Previous wording
•We completed a reduction in force (the “RIF”) pursuant to which we terminated approximately 20% of our total workforce, excluding direct labor. We have not incurred and do not expect to incur additional material costs in connection with the RIF.
Current wording
•Completed a reduction in force (the “RIF”) pursuant to which we terminated approximately 20% of our total workforce, excluding direct labor. We have not incurred and do not expect to incur additional material costs in connection with the RIF.
Previous wording
In addition, on April 22, 2024, we furloughed 73 employees at our Union City manufacturing facility without pay, and we have experienced voluntary attrition of personnel, including senior managers of the Company, during the third quarter of 2024. We expect the furloughs and voluntary attrition to continue to provide operational savings. We have not incurred, and do not expect to incur, material costs in connection with the furloughs. We are also currently working with certain of our vendors to extend or restructure the payment terms of past due accounts payable balances. The furloughs, salary deferrals and vendor discussions are part of our previously disclosed strategy to reduce costs.
Current wording
•Furloughed employees at our Union City, IN manufacturing facility without pay.
Previous wording
•Reducing expenses and limiting non-contracted capital expenditures.
Current wording
•Reduced expenses and limited non-contracted capital expenditures.
Previous wording
During the third quarter of 2024, we continued to reinstate certain furloughed employees to fulfill truck production requirements for the W56. However, there is still no assurance that all furloughed employees, including key personnel will be available and willing to return to work or that we will be able to replace the employees who departed voluntarily.
Current wording
We have reinstated certain furloughed employees to fulfill truck production requirements for the W56. However, there is still no assurance that all furloughed employees, including key personnel, will be available and willing to return to work or that we will be able to replace the employees who departed voluntarily.
Previous wording
We continue to focus on product quality, manufacturing capacity and operational planning, and engineering and design to enable increased deliveries and deployments of our products and future revenue growth. During the first nine months of 2024, we continued executing our strategic product roadmap for our electric truck offerings, including the production of the W4 CC, W56 and the development of the W56 208-inch wheelbase truck program in both strip chassis and step van variants. We continued to electrify the fleet of trucks being used in our Stables by Workhorse initiative, which operates FedEx Ground delivery routes in the greater Cincinnati area. The electrification of the fleet provides us with firsthand data on the benefits and challenges of independent fleet operators experience while executing last-mile delivery operations. The initiative also provides valuable insights into how our customers can plan for and manage the transition to EV operations, including how to develop adequate charging infrastructure, training and maintenance services. In addition to our ongoing production ramp in 2024-2025, we intend to continue to generate demand and brand awareness by improving our trucks’ performance and functionality, and by developing new truck programs, including new W56 variants. We expect to continue to benefit from ongoing electrification of the commercial truck market and in particular "last mile delivery" sector.
Current wording
We continue to focus on product quality, manufacturing capacity and operational planning, and engineering and design to enable increased deliveries and deployments of our products and future revenue growth. During the first three months of 2025, we continued executing our strategic product roadmap for our electric truck offerings, including the production of the W56 and the development of the W56 208-inch wheelbase truck program in both strip chassis and step van variants. We continued to electrify the fleet of trucks being used in our Stables by Workhorse initiative, which operates FedEx Ground delivery routes in the greater Cincinnati, OH area. The electrification of the fleet provides us with firsthand data on the benefits and challenges of independent fleet operators experience while executing last-mile delivery operations. The initiative also provides valuable insights into how our customers can plan for and manage the transition to EV operations, including how to develop adequate charging infrastructure, training and maintenance services. In addition to our ongoing production ramp in 2025, we intend to continue to generate demand and brand awareness by improving our trucks’ performance and functionality, and by developing new truck programs, including new W56 variants. We expect to continue to benefit from ongoing electrification of the commercial truck market and in particular "last mile delivery" sector.
Previous wording
We continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, in this tumultuous environment and we will endeavor to project demand and infrastructure requirements globally and deploy our production, workforce and other resources accordingly.
Current wording
We continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, in this uncertain environment and we will endeavor to project demand and infrastructure requirements globally and deploy our production, workforce and other resources accordingly.
Previous wording
Market Demand. Our sales during the first nine months of 2024 were lower than the prior year period due to slower-than-anticipated industry wide electric truck adoption rates and lack of government subsidies and incentives available to our dealers as well as slower than expected roll-out of additional power to electric grids and the resulting effect on roll-outs of electric truck charging infrastructure, nationwide. Delayed governmental approvals in certain states and slower than expected proliferation of charging stations across the country have also adversely impacted demand. However, we expect adoption rates to accelerate in 2025, driven by more stringent state and federal emissions requirements and continued government subsidies and incentives that will continue to reduce cost barriers for EV ownership, including the approval for our W56 platform for the California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project ("HVIP") program through California Air Resource Board ("CARB"), providing buyers with an $85,000 base voucher per W56 truck purchased. The accelerated adoption rates are related to the enforcement of California’s Advanced Clean Fleets Regulation (“ACF Regulation”), which is contingent upon the Environmental Protection Agency (“EPA”) granting a waiver or determining that a waiver is not necessary. Under the Clean Air Act, California holds the unique authority to request a waiver of preemption, which typically restricts states from setting their own emissions standards for new motor trucks. The EPA’s role involves a thorough review of comments and an assessment to determine if the criteria for granting a waiver are satisfied. This regulatory landscape is a significant consideration for our operations and strategic planning.
Current wording
Market Demand. Our sales during the first three months of 2025 were lower than the prior year period due to slower-than-anticipated industry wide electric truck adoption rates and lack of government subsidies and incentives available to our dealers as well as slower than expected roll-out of additional power to electric grids and the resulting effect on roll-outs of electric truck charging infrastructure, nationwide. Delayed governmental approvals in certain states and slower than expected proliferation of charging stations across the country have also adversely impacted demand. However, we expect adoption rates to accelerate in 2025, driven by more stringent state and federal emissions requirements and continued government subsidies and incentives that will continue to reduce cost barriers for EV ownership, including the approval for our W56 platform for the California’s Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project ("HVIP") program through California Air Resource Board ("CARB"), providing buyers with an $85,000 base voucher per W56 truck purchased. The accelerated adoption rates are related to the enforcement of California’s Advanced Clean Fleets Regulation (“ACF Regulation”), which is contingent upon the Environmental Protection Agency (“EPA”) granting a waiver or determining that a waiver is not necessary. Under the Clean Air Act, California holds the unique authority to request a waiver of preemption, which typically restricts states from setting their own emissions standards for new motor trucks. The EPA’s role involves a thorough review of comments and an assessment to determine if the criteria for granting a waiver are satisfied. This regulatory landscape is a significant consideration for our operations and strategic planning.
Previous wording
Supply Chain. We continue to develop relationships with suppliers of key parts, components and raw materials to be used in the manufacture of our products such as batteries, electronics, and truck chassis that are sourced from suppliers across the world. As we continue to execute on our new truck programs, we will continue to identify supplier relationship and truck program synergies which may allow us to take advantage of pricing efficiencies from economies of scale. Where available, we will utilize multiple supply sources for key parts, and we will work to qualify multiple supply sources to achieve pricing efficiencies and minimize potential production risks related to supply chain. As previously disclosed, we are currently working with certain of our vendors to extend or restructure the payment terms of past due accounts payable balances. We are also currently in litigation with one of our battery suppliers, Coulomb Solutions Inc. For more information concerning this matter, see Note 15, Commitments and Contingenciesto the Condensed Consolidated Financial Statements included in this Form 10-Q.
Current wording
Supply Chain. We continue to develop relationships with suppliers of key parts, components and raw materials to be used in the manufacture of our products such as batteries, electronics, and truck chassis that are sourced from suppliers across the world. As we continue to execute on our new truck programs, we will continue to identify supplier relationships and truck program synergies which may allow us to take advantage of pricing efficiencies from economies of scale. Where available, we will utilize multiple supply sources for key parts, and we will work to qualify multiple supply sources to achieve pricing efficiencies and minimize potential production risks related to supply chain. As previously disclosed, we are currently working with certain of our vendors to extend or restructure the payment terms of past due accounts payable balances. We are also currently in litigation with one of our battery suppliers, Coulomb Solutions Inc. For more information concerning this matter, see Note 15, Commitments and Contingenciesto the Condensed Consolidated Financial Statements included in this Form 10-Q.
Previous wording
Sales, net of returns and allowances for the three months ended September 30, 2024 and 2023 were $2.5 million and $3.0 million, respectively. The decrease in sales was primarily due to the non-recurrence of a $2.3 million sales allowance reversal related to W4 CC vehicle sales recognized in the prior period and an increase in W4 CC and W56 truck sales in the current period of $1.7 million.
Current wording
Sales, net of returns and allowances for the three months ended March 31, 2025, and 2024 were $0.6 million and $1.3 million, respectively. The decrease in sales of $0.7 million was primarily due to the Aero divestiture and lower W4 CC and W56 truck sales in the current period.
Previous wording
Cost of sales for the three months ended September 30, 2024 and 2023 were $6.6 million and $6.6 million, respectively. Cost of sales was primarily flat due to increase in costs related to direct materials due to higher sales volume, which was partially offset by lower inventory reserves of $1.1 million and lower direct and indirect labor costs of $1.0 million primarily due to lower headcount as a result of employee furloughs during the period.
Current wording
Cost of sales for the three months ended March 31, 2025, and 2024 were $5.2 million and $7.4 million, respectively. The decrease in Cost of sales of $2.3 million was primarily a result of lower sales volume, which was partially offset by lower inventory reserves of $0.5 million and lower direct and indirect labor costs of $1.6 million primarily due to lower headcount as a result of employee furloughs.
Previous wording
Selling, general and administrative (“SG&A”) expenses during the three months ended September 30, 2024 and 2023 were $7.7 million and $11.8 million, respectively. The decrease in SG&A expenses was driven by a $1.8 million decrease in employee compensation and related expenses primarily due to lower headcount, a decrease of $1.1 million in consulting expenses, a decrease in legal and professional expenses of $0.3 million and lower corporate insurances of $0.3 million.
Current wording
Selling, general and administrative expenses ("SG&A") expenses for the three months ended March 31, 2025, and 2024 were decreased $6.8 and $14.1 million, respectively. The decrease in SG&A of $7.3 million was primarily driven by a $4.4 million decrease in employee compensation and related expenses primarily due to lower headcount, a decrease of $1.0 million in consulting related expenses, a decrease in legal and professional expenses of $0.7 million, a decrease of $0.4 million in marketing expenses, a decrease in IT-related expenses of $0.5 and lower corporate insurance of $0.5 million, partially offset by an increases in rent expenses and depreciation and amortization expense.
Previous wording
Research and development (“R&D”) expenses during the three months ended September 30, 2024 and 2023 were $2.3 million and $5.8 million, respectively. The decrease in R&D expenses was primarily driven by a $2.1 million decrease in employee compensation and related expenses due to lower headcount and a $0.8 million decrease in consulting expenses.
Current wording
Research and development (“R&D”) expenses during the three months ended March 31, 2025, and 2024 were $1.5 million and $3.5 million, respectively. The decrease in R&D expenses of $2.0 million was primarily driven by a $1.3 million decrease in employee compensation and related expenses due to lower headcount and a $0.4 million decrease in consulting expenses.
Previous wording
During the nine months ended, September 30, 2024 the Investor converted 2024 Notes in the principal amount of $22.9 million into Common Stock and we recorded a $8.9 million fair value net loss in Interest income (expense), net in the Condensed Consolidated Statements of Operations.
Current wording
During the three months ended March 31, 2025, the Investor converted $5.9 million of principal into Common Stock and we recorded a net $1.6 million fair value net gain in the Condensed Consolidated Statements of Operations. We recorded a net $3.3 million gain and a net $0.5 million fair value net loss, respectively, in the Condensed Consolidated Statements of Operations related to the 2024 Notes.
Previous wording
The September 30, 2024 estimated fair value of the 2024 Warrants totaled $7.2 million. During the three and nine months ended September 30, 2024, we recorded a $2.6 million and $7.0 million fair value net loss, respectively, in the Condensed Consolidated Statements of Operations related to the 2024 Warrants.
Current wording
As March 31, 2025, the estimated fair value of the 2024 Warrants totaled $5.1 million.
Previous wording
Benefit for income taxes during the three and nine months ended September 30, 2024 and 2023 was zero as all income tax benefits are reserved.
Current wording
Benefit for income taxes during the three months ended March 31, 2025, and 2024 was zero as all income tax benefits are reserved.
Previous wording
We had sales of $4.7 million, incurred a net loss of $80.6 million and used $40.1 million of cash in operating activities during the nine months ended September 30, 2024. As of September 30, 2024, the Company had $3.2 million of cash and cash equivalents, net accounts receivable of $0.7 million, other receivables of $3.0 million, inventory, net of $43.2 million and accounts payable of $10.6 million. As of September 30, 2024, the Company had working capital of $7.9 million and an accumulated deficit of $832.2 million.
Current wording
We had sales of $0.6 million, incurred a net loss of $20.6 million and used $8.2 million of cash in operating activities during the three months ended March 31, 2025. As of March 31, 2025, we had $2.6 million of cash and cash equivalents and $27.9 million in restricted cash.
Previous wording
•Raising capital to fund operations through the issuance of debt or equity securities, including through our 2024 Securities Purchase Agreement (as defined above) and our At-the-Market Sales Agreement (“ATM Agreement”), the sale of assets, or other strategic transactions.
Current wording
•Raising capital to fund operations through the issuance of debt or equity securities, including through our 2024 Securities Purchase Agreement.
Previous wording
Our cash flows from operating activities are affected by our cash investments to support the business in R&D, manufacturing, SG&A. Our operating cash flows are also affected by our working capital needs to support fluctuations in accounts receivable, inventory, accounts payable and other current assets and liabilities.
Current wording
Our cash flows from operating activities are affected by our cash investments to support the business in R&D, manufacturing, and SG&A. Our operating cash flows are also affected by our working capital needs to support fluctuations in accounts receivable, inventory, accounts payable and other current assets and liabilities.
Previous wording
During the nine months ended September 30, 2024 and 2023, net cash used in operating activities was $40.1 million and $95.5 million, respectively. The decrease in net cash used in operations was primarily attributable to a decrease in spend related to inventory and the above mentioned cost saving measures as we slowed our inventory build due to slower than anticipated sales throughout 2023 and the first half of 2024. The decrease is also attributable to a $5.0 million decline in employee compensation and related expenses, excluding non-cash stock-based compensation, resulting from our reduction in force actions.
Current wording
During the three months ended March 31, 2025 and 2024, net cash used in operating activities was $8.2 million and $18.0 million, respectively. The decrease in net cash used in operations was primarily attributable to a decrease in spend related to inventory and cost saving measures as we slowed our production due to slower than anticipated sales. The decrease is also attributable to a $7.3 million decline in employee compensation and related expenses, excluding non-cash stock-based compensation, resulting from our reduction in force actions.
Previous wording
Cash used in investing activities related primarily to capital expenditures to upgrade our production and research and development facilities, were $4.0 million for the nine months ended September 30, 2024 and $16.5 million for the nine months ended September 30, 2023. The decrease is primarily driven by a decline in spending in tooling and equipment related to our truck programs at our Union City, Indiana manufacturing facility.
Current wording
Cash used in investing activities related primarily to capital expenditures to upgrade our production and research and development facilities, were $17,866 for the three months ended March 31, 2025, and $3.0 million for the three months ended March 31, 2024. The decrease is primarily driven by a decline in spending in tooling and equipment related to our truck programs at our Union City, IN manufacturing facility.
Previous wording
Net cash provided by financing activities during the nine months ended September 30, 2024 was $11.5 million, which was primarily attributable to the issuances of 2024 Notes and 2024 Warrants under our 2024 Securities Purchase Agreement and of Common Stock under our ATM Program offset by the payment of our 2026 Notes.
Current wording
Net cash provided by financing activities during the three months ended March 31, 2025, was $34.1 million, which was primarily attributable to the issuances of Notes and Warrants under our 2024 Securities Purchase Agreement and of Common Stock under our ATM Agreement.
Previous wording
A discussion of our critical accounting estimates is contained in the Form 10-K, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Current wording
A discussion of our critical accounting estimates is contained in the 2024 Form 10-K, under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
4.4 million shares of Common Stock pursuant to the 2024 Securities Purchase Agreement (following adjustment in connection with the Company’s 1-for-20 and 1-for-12.5 Reverse Splits).
Current report — wording carried from elsewhere
•Raised capital to fund operations through our 2024 Securities Purchase Agreement.
Current report — wording carried from elsewhere
Management plans to continue to seek additional opportunities to reduce costs and, in particular, cash expenditures, in a manner intended to minimize their adverse impact on our core operations. Management also plans to significantly reduce capital expenditures and only allocate capital for manufacturing equipment and tooling, as needed for future production to support firm orders. There can be no assurance that the measures described above, or any other cost-saving measures we may implement in the future will be sufficient to address our immediate or longer-term liquidity and working capital needs. Moreover, it is possible that such measures will have an adverse effect on our operations.
Current report — wording carried from elsewhere
Because of the foregoing, our ability to obtain additional proceeds from financing is extremely limited under current conditions, and if we are unable to obtain such proceeds, we may need to further adjust our operations and seek protection by filing a voluntary petition for relief under the Bankruptcy Code. If this were to occur, the value available to our various stakeholders, including our creditors and stockholders, is uncertain and trading prices for our securities may bear little or no relationship to the actual recovery, if any, by holders of our securities in bankruptcy proceedings, if any.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
During the three months ended September 30, 2024, the Investor converted $8.5 million of principal into Common Stock..