Workhorse Group Inc.

Previous wording

The following section provides a narrative discussion about our financial condition and results of operations. The narrative should be read in conjunction with our Condensed Consolidated Financial Statements and related Notes thereto included in Item 1 of this Report and in conjunction with our 2025 Form 10-K.

Current wording

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included under Item 1 in this Quarterly Report on Form 10-Q (this “Report”) and our Consolidated Financial Statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Previous wording

Workhorse Group Inc. (“Workhorse,” or the “Company”) is a North American manufacturer of medium-duty electric trucks and buses. Our primary focus is to provide sustainable and cost-effective solutions to the commercial transportation sector. We design and manufacture all-electric vehicles, including the technology that optimizes the way that these vehicles operate. The Company’s best-in-class vehicles are designed for last-mile delivery, medium-duty operations, and a growing range of specialized applications.

Current wording

Workhorse Group Inc. (“Workhorse,” or the “Company”) is a North American manufacturer of medium-duty electric trucks and buses. Our current commercial operations are primarily focused on providing sustainable and cost-effective solutions to the commercial transportation sector. We design and manufacture all-electric vehicles, including the technology that optimizes the way that these vehicles operate. The Company’s best-in-class vehicles are designed for last-mile delivery, medium-duty operations, and a growing range of specialized applications.

Previous wording

customers and dealers. We believe we are well positioned to take advantage of long-term opportunities and continue our efforts to bring product innovations to market.

Current wording

customers and dealers. We believe we are well positioned to take advantage of long-term opportunities and continue our efforts to bring product innovations to market. In July 2026, we announced that we are developing a containerized mobile AI data center product line intended to leverage our existing engineering and manufacturing capabilities.

Previous wording

The Merger was accounted for as a reverse merger, with Motiv being treated as the acquirer for accounting purposes. References to “Workhorse,” the “Company,” “we,” “us,” or “our,” when used in this Quarterly Report on Form 10-Q (this "Report") incorporate the operations of Motiv unless otherwise indicated or the context requires otherwise. See Note 2, Merger and Related Transactions, in the notes to the accompanying Condensed Consolidated Financial Statements.

Current wording

The Merger was accounted for as a reverse merger, with Motiv being treated as the acquirer for accounting purposes. References to “Workhorse,” the “Company,” “we,” “us,” or “our,” when used in this Report incorporate the operations of Motiv unless otherwise indicated or the context requires otherwise.

Previous wording

On December 15, 2025, in accordance with the terms of the Repayment Agreement and upon consummation of the Merger, Workhorse issued to the 2024 Note Holder rights (the “Rights”) to acquire 1,193,364 shares of Common Stock in exchange for the cancellation of the 2024 Warrants (the “Exchange”). Upon completing the redemption of the 2024 Notes (the "Repayment") and the Exchange, Workhorse had no outstanding obligations under the 2024 Notes, all of the 2024 Notes and 2024 Warrants were cancelled, and all collateral, including cash collateral, securing the 2024 Notes was released. Following the Repayment and the Exchange effective December 15, 2025, Workhorse and the 2024 Note Holder terminated the Securities Purchase Agreement to which they were parties, pursuant to which the 2024 Notes were issued and which allowed for further issuances of notes and previously served as a source of third-party financing to Workhorse (the “Securities Purchase Agreement”).

Current wording

and the Exchange, Workhorse had no outstanding obligations under the 2024 Notes, all of the 2024 Notes and 2024 Warrants were cancelled, and all collateral, including cash collateral, securing the 2024 Notes was released. Following the Repayment and the Exchange effective December 15, 2025, Workhorse and the 2024 Note Holder terminated the Securities Purchase Agreement to which they were parties, pursuant to which the 2024 Notes were issued and which allowed for further issuances of notes and previously served as a source of third-party financing to Workhorse (the “Securities Purchase Agreement”).

Previous wording

On April 25, 2026, the Company and an affiliate of MGMH entered into an agreement whereby Lessor agreed to a deferral of the Company’s monthly rental payments pursuant to the lease for the Company’s manufacturing facility in Union City, Indiana for five months beginning May 2026, with the entire deferred amount due and payable in a single lump-sum payment on or before September 30, 2026.

Current wording

On April 25, 2026, the Company and an affiliate of MGMH entered into an agreement whereby the lessor agreed to a deferral of the Company’s monthly rental payments pursuant to the lease for the Company’s manufacturing facility in Union City, Indiana for five months beginning May 2026, with the entire deferred amount due and payable in a single lump-sum payment on or before September 30, 2026. In August 2026, the parties to the lease entered into an agreement whereby the lessor agreed to a further deferral of the Company’s monthly rental payments, as further described in Note 16, Subsequent Events, to the Condensed Consolidated Financial Statements.

Previous wording

The Customer Order Credit Agreement provided Workhorse with up to $40.0 million to fund vehicle manufacturing in connection with Qualified Purchase Orders (as defined in the Customer Order Credit Agreement). Under the Customer Order Credit Agreement, a Qualified Purchase Order includes purchase orders entered into between Workhorse and/or one or more of its subsidiaries and a customer made on terms approved by MGMH or substantially similar to terms previously approved by MGMH pursuant to a master purchase agreement or other standard terms and conditions approved by MGMH. The amount of funds advanced by MGMH upon the receipt of an acceptable purchase order will be determined by MGMH but will not exceed 70% of the purchase price for the ordered vehicles without MGMH’s consent. The Cash Flow Credit Agreement provided

Current wording

The Customer Order Credit Agreement provided Workhorse with up to $40.0 million to fund vehicle manufacturing in connection with Qualified Purchase Orders (as defined in the Customer Order Credit Agreement). Under the Customer Order Credit Agreement, a Qualified Purchase Order includes purchase orders entered into between Workhorse and/or one or more of its subsidiaries and a customer made on terms approved by MGMH or substantially similar to terms previously approved by MGMH pursuant to a master purchase agreement or other standard terms and conditions approved by MGMH. The amount of funds advanced by MGMH upon the receipt of an acceptable purchase order will be determined by MGMH but will not exceed 70% of the purchase price for the ordered vehicles without MGMH’s consent. The Cash Flow Credit Agreement provided Workhorse with a line of credit with borrowing capacity of up to $10.0 million to fund its working capital requirements, including costs related to the Merger, and general corporate purposes.

Previous wording

In April 2026, we amended the Credit Agreements to increase the borrowing capacity under the Cash Flow Credit Agreement from $10.0 million to $20.0 million, and reduce the borrowing capacity under the Customer Order Credit Agreement from $40.0 million to $30.0 million.

Current wording

In April 2026, Workhorse made the following amendments to the Credit Agreements: (i) amends the Cash Flow Credit Agreement to increase the borrowing capacity from $10.0 million to $20.0 million, (ii) amends the Cash Flow Credit Agreement to defer interest payments on the additional $10.0 million Commitment until the Interest Payment Date (as defined in the Cash Flow Credit Agreement) occurring after September 30, 2026 and (iii) amends the Customer Order Credit Agreement to reduce the borrowing capacity from $40.0 million to $30.0 million.

Previous wording

In order to manage liquidity and operating capital, the Company entered into certain of the transactions described above, including the Convertible Financing and the Sale-Leaseback transaction, pursuant to which the Company received gross proceeds of $25.0 million. As of March 31, 2026, there was $5.0 million in principal outstanding under the A&R Note. Additionally, the Company has access to the Customer Order Credit Agreement and the Cash Flow Credit Agreement. See discussion above in Post-Merger Financing for further information on the borrowing capacity of the Credit Agreements. As of March 31, 2026, the Company had $5.0 million in outstanding borrowings and remaining availability of $35.0 million under the Customer Order Credit Agreement. As of March 31, 2026, the Company had $10.0 million in outstanding borrowings and no remaining availability under the Cash Flow Credit Agreement.

Current wording

In order to manage liquidity and operating capital, the Company entered into certain of the transactions described above, including the Convertible Financing and the Sale-Leaseback transaction, pursuant to which the Company received gross proceeds of $25.0 million. As of June 30, 2026, there was $5.0 million in principal outstanding under the A&R Note. Additionally, the Company has access to the Customer Order Credit Agreement and the Cash Flow Credit Agreement. See discussion above in Post-Merger Financing for further information on the borrowing capacity of the Credit Agreements. As of June 30, 2026, the Company had $18.3 million in outstanding borrowings and remaining availability of $1.7 million under the Customer Order Credit Agreement. As of June 30, 2026, the Company had $30.0 million in outstanding borrowings and no remaining availability under the Cash Flow Credit Agreement.

Previous wording

On April 1, 2026, we borrowed $7.25 million under the Customer Order Credit Agreement, and following the effectiveness of the amendment to increase the borrowing capacity, we borrowed an additional $10.0 million under the Cash Flow Credit Agreement. As of the filing date, we had $12.25 million in outstanding borrowings and remaining availability of $17.75 million under the Customer Order Credit Agreement, and we had $20.0 million in outstanding borrowings and no remaining availability under the Cash Flow Credit Agreement.

Current wording

As of the filing date, we had $18.3 million in outstanding borrowings and $1.7 million remaining availability under the Customer Order Credit Agreement, and we had $40.0 million in outstanding borrowings and no remaining availability under the Cash Flow Credit Agreement.

Previous wording

Subject to certain conditions, the Credit Agreements permit the Company to raise funds through an equity or equity-linked financing; however, the consummation of such a transaction is not probable as of the issuance date of the accompanying Condensed Consolidated Financial Statements.

Current wording

Subject to certain conditions, the Credit Agreements permit the Company to raise funds through an equity or equity-linked financing. The Company is actively working to evaluate financing alternatives; however, the consummation of such a transaction is not probable as of the issuance date of the accompanying Condensed Consolidated Financial Statements.

Previous 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.

Current wording

Accordingly, 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.

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. We have plans to continue to reduce the total cost of and enhance the design and performance of our current product lineup, as well as design new vehicles as the market evolves. We intend to develop a proprietary Class 5/6 cab chassis and expect that this product will be able to be used for dry box, refrigeration, stake bed, utility and shuttle purposes. 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 2026, 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. We have plans to continue to reduce the total cost of and enhance the design and performance of our current product lineup, as well as design new vehicles as the market evolves. We are planning a new, proprietary “modular” chassis design that will be based on the foundational learnings gathered from proven W56 components but with a scalable architecture that supports flexible wheelbase configurations, advanced battery and axle technologies, and next-generation software and power electronics. In addition, we are planning for our first Class 5/6 cab chassis, which will pair the new modular chassis with a lightweight, low-cost cab designed for efficient upfitting, spanning applications across all classes of medium duty trucks. 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 2026, 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 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 were in litigation with one of our battery suppliers, Coulomb Solutions Inc., but entered into a settlement agreement in April 2026. For more information concerning this matter, see Note 15, Commitments and Contingencies, and Note 16, Subsequent Events, in the notes to the accompanying Condensed Consolidated Financial Statements.

Current wording

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.

Previous wording

Our Condensed Consolidated Statements of Operations is as follows:

Current wording

Our Condensed Consolidated Statements of Operations are as follows:

Previous wording

Cost of sales for the three months ended March 31, 2026 and 2025 were $11.8 million and $2.2 million, respectively. The increase in cost of sales of $9.6 million was primarily a result of higher sales volume as well as the higher fixed cost base of the combined manufacturing footprint, including the costs for the Workhorse manufacturing facility as well as contract manufacturing under the legacy Motiv operational structure during the quarter. Additionally, we incurred $1.5 million in higher warranty costs in the first quarter of 2026, which was primarily attributable to costs related to a retrofit campaign that is underway for certain Motiv trucks sold in Canada. Costs incurred during the quarter were higher than our original estimates, and we increased our reserves required to complete the retrofit campaign.

Current wording

Cost of sales were $11.0 million and $2.1 million for the three months ended June 30, 2026 and 2025, respectively, and $22.8 million and $4.3 million for the six months ended June 30, 2026 and 2025, respectively. The increases in cost of sales of $8.9 million and $18.5 million for the three and six months ended June 30, 2026, respectively, were primarily a result of higher sales volume and the higher fixed cost base of Workhorse's Union City, IN manufacturing facility. Additionally, costs in the first quarter of 2026 included the contract manufacturing costs of the legacy Motiv operational structure. We also incurred $0.9 million and $2.4 million in higher warranty costs in the three and six months ended June 30, 2026, respectively, which was primarily attributable to costs related to an ongoing retrofit campaign for certain Motiv trucks sold in Canada. Costs incurred for the retrofit campaign during the current year exceeded our original estimates, and we increased our reserves required to complete the retrofit campaign. These items were partly offset by margin realized on the sale of 12 older model Workhorse vehicles during the second quarter of 2026 that had been previously written down.

Previous wording

Selling, general and administrative expenses (“SG&A”) expenses for the three months ended March 31, 2026 and 2025 were $9.5 million and $4.3 million, respectively. The increase in SG&A of $5.2 million was primarily driven by the Merger, with costs in the first quarter of 2026 reflecting the costs of the combined company, while the costs in the prior year period only reflected the costs of Motiv’s historical operations. The main drivers of the higher costs include legal, consulting, accounting and investor relations fees, as well as higher IT costs and increased cost for D&O insurance, primarily related to being a publicly traded company in the current year, while the prior year reflected the operations of a privately held company. We also incurred higher rent costs for redundant facilities as we work to complete the Merger integration and close redundant facilities. These costs were partly offset by synergies resulting from the Merger, including the elimination of redundant headcount and other operating costs.

Current wording

Selling, general and administrative (“SG&A”) expenses were $7.8 million and $4.5 million for the three months ended June 30, 2026 and 2025, respectively, and $17.4 million and $8.8 million for the six months ended June 30, 2026 and 2025, respectively. The increases in SG&A of $3.4 million and $8.6 million for three and six months ended June 30, 2026, respectively, were primarily driven by the Merger, as the current year periods reflected the costs of the combined company, whereas the corresponding prior-year periods reflected only the costs of Motiv’s historical operations. The higher costs were primarily attributable to legal, consulting, accounting and investor relations fees, higher IT costs, increased D&O insurance costs associated with the combined company’s public-company status, and rent expense for duplicative facilities pending closure as part of the Merger integration. These increases were partly offset by Merger-related synergies, including reductions in redundant headcount and other operating costs.

Previous wording

Research and development (“R&D”) expenses during the three months ended March 31, 2026 and 2025 were $4.1 million and $3.7 million, respectively. The increase in R&D expenses of $0.4 million was primarily driven by higher employee compensation and related expenses as we invest in R&D on key projects, including our initiative to lower the total bill of material cost of our vehicles to be in line with internal combustion engine (“ICE”) vehicles.

Current wording

Research and development (“R&D”) expenses were $4.1 million and $3.2 million for the three months ended June 30, 2026 and 2025, respectively, and $8.2 million and $6.9 million for the six months ended June 30, 2026 and 2025, respectively. The increases in R&D expenses of $0.9 million and $1.3 million for the three and six months ended June 30, 2026, respectively, were primarily driven by higher employee compensation and related expenses associated with our investment in key R&D projects, including our initiative to reduce the total bill of material cost of our vehicles to levels comparable with internal combustion engine ("ICE") vehicles.

Previous wording

For the three months ending March 31, 2026 and 2025, Interest expense, net was $0.4 million and $3.6 million, respectively. The difference was primarily driven by lower outstanding debt at lower interest rates in the first quarter of 2026 as compared to the prior year. All debt outstanding as of March 31, 2025 was restructured as part of the Merger, resulting in lower debt levels at lower interest rates.

Current wording

For the three months ended June 30, 2026 and 2025, Interest expense, net was $0.8 million and $3.8 million, respectively. For the six months ended June 30, 2026 and 2025, Interest expense, net was $1.2 million and $7.4 million, respectively. The difference was primarily driven by lower outstanding debt at lower interest rates in the first six months of 2026 as compared to the prior year. All debt that was outstanding as of June 30, 2025 was restructured in connection with the Merger, resulting in lower debt levels at lower interest rates.

Previous wording

In connection with the Merger, we assumed the A&R Note that is remeasured to fair value at each reporting period. As of March 31, 2026, the estimated fair value of the A&R Note was $5.4 million. We recorded a fair value loss of $0.1 million for the three months ended March 31, 2026.

Current wording

In connection with the Merger, we assumed the A&R Note that is remeasured to fair value at each reporting period. As of June 30, 2026, the estimated fair value of the A&R Note was $5.6 million. We recorded a fair value loss of $0.1 million and $0.3 million for the three and six months ended June 30, 2026, respectively.

Previous wording

In connection with the Merger, we assumed an outstanding liability for Rights to acquire 1,193,364 shares of Workhorse Common Stock (the “Rights”). The Rights were issued pre-Merger in exchange for the cancellation of the 2024 Warrants. The Rights are periodically marked-to-market using the closing price of Workhorse Common Stock. During the three months ended March 31, 2026, we recorded $1.7 million of income related to changes in the fair value of the Rights.

Current wording

In connection with the Merger, we assumed an outstanding liability for Rights to acquire 1,193,364 shares of Workhorse Common Stock (the “Rights”). The Rights were issued pre-Merger in exchange for the cancellation of the 2024 Warrants. The Rights are periodically marked-to-market using the closing price of Workhorse Common Stock. During the three and six months ended June 30, 2026, we recorded $0.2 million and $1.9 million, respectively, of income related to changes in the fair value of the Rights. As of June 30, 2026, all Rights have been exercised, and no shares remain issuable under the stock Rights liability.

Previous wording

We had sales of $4.3 million, incurred a net loss of $19.9 million and used $16.5 million of cash in operating activities during the three months ended March 31, 2026. As of March 31, 2026, we had $0.6 million of cash and cash equivalents and $0.7 million in restricted cash.

Current wording

We had sales of $7.9 million, incurred a net loss of $40.1 million and used $40.6 million of cash in operating activities during the six months ended June 30, 2026. As of June 30, 2026, we had $9.6 million of cash and cash equivalents and $0.7 million in restricted cash.

Previous wording

During the three months ended March 31, 2026 and 2025, net cash used in operating activities was $16.5 million and $12.5 million, respectively. The increase in net cash used in operations was primarily attributable to higher net losses in the first quarter of 2026 as compared to the prior year.

Current wording

During the six months ended June 30, 2026 and 2025, net cash used in operating activities was $40.6 million and $21.7 million, respectively. The increase in net cash used in operations was primarily attributable to higher net losses of $14.6 million in the first six months of 2026 as compared to the prior year.

Previous wording

Cash used in investing activities related primarily to capital expenditures, totaling $0.1 million for the three months ended March 31, 2026, and $0.2 million for the three months ended March 31, 2025. Capital expenditures in 2026 were due to investments in tooling and equipment required as we transition the manufacturing of legacy Motiv vehicles in the Workhorse manufacturing facility in Union City, IN as a result of the Merger.

Current wording

Cash used in investing activities related primarily to capital expenditures, totaling $0.3 million for the six months ended June 30, 2026, and $0.3 million for the six months ended June 30, 2025. Capital expenditures in 2026 were due to investments in tooling and equipment required as we transition the manufacturing of legacy Motiv vehicles in the Workhorse manufacturing facility in Union City, IN as a result of the Merger.

Previous wording

Net cash provided by financing activities during the three months ended March 31, 2026, was $5.0 million, which was attributable to proceeds received during the period from the Customer Order Credit Agreement. Net cash provided by financing activities during the three months ended March 31, 2025, was $10.0 million, which was attributable to proceeds received during the period from the A&R Senior Note.

Current wording

Net cash provided by financing activities during the six months ended June 30, 2026, was $38.3 million, which was attributable to proceeds received during the period from the Cash Flow Credit Agreement and Customer Order Credit Agreement. Net cash provided by financing activities during the six months ended June 30, 2025, was $18.0 million, which was attributable to proceeds received during the period from the A&R Senior Note.