Company Quick10K Filing
Workhorse
Price3.54 EPS-1
Shares66 P/E-4
MCap234 P/FCF-10
Net Debt4 EBIT-14
TEV239 TEV/EBIT-17
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-08-10
10-Q 2020-03-31 Filed 2020-05-06
10-K 2019-12-31 Filed 2020-03-13
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-09
10-Q 2019-03-31 Filed 2019-05-07
10-K 2018-12-31 Filed 2019-03-18
10-Q 2018-09-30 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-06
10-K 2017-12-31 Filed 2018-03-14
10-Q 2017-12-31 Filed 2018-05-09
10-Q 2017-09-30 Filed 2017-11-07
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-10
10-K 2016-12-31 Filed 2017-03-14
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
10-Q 2016-03-31 Filed 2016-05-16
10-K 2015-12-31 Filed 2016-03-25
10-Q 2015-09-30 Filed 2015-11-16
10-Q 2015-06-30 Filed 2015-08-14
10-Q 2015-03-31 Filed 2015-05-15
10-K 2014-12-31 Filed 2015-03-30
10-Q 2014-09-30 Filed 2014-11-13
10-Q 2014-06-30 Filed 2014-08-14
10-Q 2014-03-31 Filed 2014-05-20
10-K 2013-12-31 Filed 2014-04-15
10-Q 2013-09-30 Filed 2013-11-19
10-Q 2013-06-30 Filed 2013-08-19
10-Q 2013-03-31 Filed 2013-05-15
10-K 2012-12-31 Filed 2013-04-12
10-Q 2012-09-30 Filed 2012-11-15
10-Q 2012-06-30 Filed 2012-08-14
10-Q 2012-03-31 Filed 2012-05-15
10-K 2011-12-31 Filed 2012-04-04
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-15
10-Q 2011-03-31 Filed 2011-05-13
10-K 2010-12-31 Filed 2011-03-31
10-Q 2010-09-30 Filed 2010-11-15
10-Q 2010-06-30 Filed 2010-08-16
10-Q 2010-03-31 Filed 2010-05-20
10-K 2009-12-31 Filed 2010-03-31
8-K 2020-09-03 Other Events, Exhibits
8-K 2020-08-10 Earnings, Exhibits
8-K 2020-08-01 Enter Agreement, Exhibits
8-K 2020-07-16 Enter Agreement, Off-BS Arrangement, Sale of Shares, Exhibits
8-K 2020-06-30 Enter Agreement, Regulation FD, Exhibits
8-K 2020-05-06
8-K 2020-05-01
8-K 2020-04-14
8-K 2020-03-13
8-K 2020-03-10
8-K 2020-01-29
8-K 2020-01-13
8-K 2019-12-19
8-K 2019-12-09
8-K 2019-11-27
8-K 2019-11-25
8-K 2019-11-21
8-K 2019-11-08
8-K 2019-11-07
8-K 2019-11-06
8-K 2019-10-31
8-K 2019-10-31
8-K 2019-10-28
8-K 2019-10-01
8-K 2019-08-12
8-K 2019-08-06
8-K 2019-05-31
8-K 2019-05-31
8-K 2019-05-07
8-K 2019-04-30
8-K 2019-04-16
8-K 2019-04-01
8-K 2019-03-18
8-K 2019-02-18
8-K 2019-02-11
8-K 2019-01-30
8-K 2018-12-31
8-K 2018-12-04
8-K 2018-11-28
8-K 2018-11-08
8-K 2018-11-07
8-K 2018-09-28
8-K 2018-08-13
8-K 2018-08-09
8-K 2018-08-06
8-K 2018-07-05
8-K 2018-06-29
8-K 2018-06-07
8-K 2018-06-04
8-K 2018-05-30
8-K 2018-05-03
8-K 2018-04-26
8-K 2018-04-05
8-K 2018-01-23

WKHS 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 wkhs-20200630xexx311.htm
EX-31.2 wkhs-20200630xexx312.htm
EX-32.1 wkhs-20200630xexx321.htm
EX-32.2 wkhs-20200630xexx322.htm

Workhorse Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
40224-14-32-502012201420172020
Assets, Equity
10.00.0-10.0-20.0-30.0-40.02012201420172020
Rev, G Profit, Net Income
3021123-6-152012201420172020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 000-53704
WORKHORSE GROUP INC.
(Exact name of registrant as specified in its charter)
Nevada26-1394771
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
100 Commerce Drive, Loveland, Ohio 45140
(Address of principal executive offices, including zip code)
(513) 360-4704
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth comp any, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 

Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par value per shareWKHSThe NASDAQ Capital Market

The number of shares of the Registrant's Common Stock, $0.001 par value per share, outstanding as of August 4, 2020, was 105,134,924.


1


TABLE OF CONTENTS


Condensed Consolidated Statements of Comprehensive Loss

i


Forward-Looking Statements
The discussions in this Quarterly Report contain forward-looking statements reflecting our current expectations that involve risks and uncertainties. When used in this Report, the words “anticipate”, expect”, “plan”, “believe”, “seek”, “estimate” and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to, statements about the features, benefits and performance of our products, our ability to introduce new product offerings and increase revenue from existing products, expected expenses including those related to selling and marketing, product development and general and administrative, our beliefs regarding the health and growth of the market for our products, anticipated increase in our customer base, expansion of our products functionalities, expected revenue levels and sources of revenue, expected impact, if any, of legal proceedings, the adequacy of liquidity and capital resource, and expected growth in business. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, market acceptance for our products, our ability to attract and retain customers for existing and new products, our ability to control our expenses, our ability to recruit and retain employees, legislation and government regulation, shifts in technology, global and local business conditions, our ability to effectively maintain and update our product and service portfolio, the strength of competitive offerings, the prices being charged by those competitors and the risks discussed elsewhere herein. These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
All references in this Form 10-Q that refer to the “Company”, “Workhorse Group”, “Workhorse”, “we,” “us” or “our” are to Workhorse Group Inc.
ii


PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Workhorse Group Inc.
Condensed Consolidated Balance Sheets
June 30,
2020
December 31,
2019
(Unaudited)
Assets
Current assets:
Cash and cash equivalents$26,197,831  $23,868,416  
Restricted cash held in escrow  1,000,000  
Accounts receivable, less allowance for doubtful accounts of $0 at June 30, 2020
    and December 31, 2019
42,577  7,921  
Lease receivable, current33,100  33,100  
Inventory, net4,176,289  1,798,146  
Prepaid expenses4,752,206  4,812,088  
      Total current assets35,202,003  31,519,671  
Property, plant and equipment, net
7,082,138  6,830,181  
Investment in LMC13,059,700  12,194,800  
Lease receivable, long-term109,869  129,177  
Total Assets$55,453,710  $50,673,829  
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable$2,061,799  $1,678,983  
Accrued liabilities3,018,415  3,105,184  
Warranty liability4,079,769  6,001,864  
Warrant liability  16,335,000  
Customer deposits124,000  303,000  
Current portion of long-term debt627,111    
Current portion of Convertible Note, at fair value95,330,000  19,620,000  
      Total current liabilities105,241,094  47,044,031  
Long-term debt783,889    
Convertible Note, at fair value  19,400,000  
Mandatorily redeemable Series B preferred stock19,905,522  19,142,908  
Commitments and contingencies
Stockholders’ deficit:
Series A preferred stock, par value $0.001 per share, 75,000,000 shares authorized,
0 shares issued and outstanding at June 30, 2020 and December 31, 2019
    
Common stock, par value $0.001 per share, 250,000,000 shares authorized, 89,330,123
shares issued and outstanding at June 30, 2020 and 67,105,000 shares issued and
outstanding at December 31, 2019
89,330  67,105  
Additional paid-in capital233,715,623  143,826,315  
Accumulated deficit(305,381,748) (178,806,530) 
Accumulated other comprehensive income1,100,000    
      Total stockholders' deficit(70,476,795) (34,913,110) 
Total Liabilities and Stockholders' Deficit$55,453,710  $50,673,829  
See accompanying notes to the condensed consolidated financial statements.
1


Workhorse Group Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Net sales$91,942  $5,508  $176,242  $369,690  
Cost of sales1,511,360  930,164  3,259,335  2,327,770  
Gross loss(1,419,418) (924,656) (3,083,093) (1,958,080) 
Operating expenses
Selling, general and administrative3,949,081  1,996,054  9,514,868  4,086,944  
Research and development1,616,604  1,216,727  3,518,840  2,579,002  
Total operating expenses5,565,685  3,212,781  13,033,708  6,665,946  
Other income    864,900    
Loss from operations(6,985,103) (4,137,437) (15,251,901) (8,624,026) 
Interest expense, net124,346,806  15,922,763  111,323,317  17,700,346  
Loss before provision for income taxes(131,331,909) (20,060,200) (126,575,218) (26,324,372) 
Provision for income taxes        
Net loss(131,331,909) (20,060,200) (126,575,218) (26,324,372) 
Net loss attributable to common stockholders per share -
basic and diluted
$(1.76) $(0.33) $(1.77) $(0.44) 
Weighted average number of common shares outstanding -
basic and diluted
74,701,343  60,530,168  71,583,551  60,530,168  
See accompanying notes to the condensed consolidated financial statements.

2


Workhorse Group Inc.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited)


Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Net loss$(131,331,909) $(20,060,200) $(126,575,218) $(26,324,372) 
Other comprehensive income
Credit risk adjustment in fair value of Convertible Note    1,100,000    
Comprehensive loss$(131,331,909) $(20,060,200) $(125,475,218) $(26,324,372) 
See accompanying notes to the condensed consolidated financial statements.
3


Workhorse Group Inc.
Condensed Consolidated Statements of Stockholders’ Deficit
(Unaudited)

Common StockSeries A
Preferred Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive IncomeTotal
Stockholders’
Deficit
Number
of Shares
AmountNumber
of Shares
Amount
Balance as of March 31, 201961,496,990  $61,497    $  $129,764,361  $(147,821,668) $  $(17,995,810) 
Issuance of common stock3,957,432  3,958  —  —  2,924,542  —  —  2,928,500  
Stock options and warrants exercised510,894  511  —  —  (511) —  —    
Deemed dividend116,496  116  —  —  86,091  (86,207) —    
Stock-based compensation—  —  —  —  185,848  —  —  185,848  
Effect of reclassification of warrants—  —  —  —  857,072  857,072  
Value of warrants issued with preferred stock—  —  —  —  6,709,961  —  —  6,709,961  
Net loss for the three months ended June 30, 2019—  —  —  —  —  (20,060,200) —  (20,060,200) 
Balance as of June 30, 201966,081,812  $66,082    $  $140,527,364  $(167,968,075) $  $(27,374,629) 

Common StockSeries A
Preferred Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive IncomeTotal
Stockholders’
Deficit
Number
of Shares
AmountNumber
of Shares
Amount
Balance as of December 31, 201858,270,934  $58,271    $  $126,076,782  $(141,557,496) $  $(15,422,443) 
Issuance of common stock7,183,488  7,184  —  —  5,921,051  —  —  5,928,235  
Stock options and warrants exercised510,894  511  —  —  (511) —  —    
Deemed dividend116,496  116  —  —  86,091  (86,207) —    
Stock-based compensation—  —  —  —  876,918  —  —  876,918  
Effect of reclassification of warrants—  —  —  —  857,072  857,072  
Value of warrants issued with preferred stock—  —  —  —  6,709,961  —  —  6,709,961  
Net loss for the six months ended June 30, 2019—  —  —  —  —  (26,324,372) —  (26,324,372) 
Balance as of June 30, 201966,081,812  $66,082    $  $140,527,364  $(167,968,075) $  $(27,374,629) 















4


Workhorse Group Inc.
Condensed Consolidated Statements of Stockholders’ Deficit
(Unaudited)

Common StockSeries A
Preferred Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive IncomeTotal
Stockholders’
Deficit
Number
of Shares
AmountNumber
of Shares
Amount
Balance as of March 31, 202069,493,836  $69,494    $  $150,883,717  $(174,049,839) $1,100,000  $(21,996,628) 
Stock options and warrants exercised, and vesting of restricted shares12,479,122  12,479  —  —  46,902,920  —  —  46,915,399  
Common stock issued for preferred stock dividends308,642  309  —  —  499,691  —  —  500,000  
Conversion of Convertible Note6,837,381  6,837  —  —  33,534,630  —  —  33,541,467  
Common stock issued for interest on Convertible Note211,142  211  —  —  724,474  —  —  724,685  
Stock-based compensation—  —  —  —  1,170,191  —  —  1,170,191  
Net loss for the three months ended June 30, 2020—  —  —  —  —  (131,331,909) —  (131,331,909) 
Other comprehensive income—  —  —  —  —  —  —    
Balance as of June 30, 202089,330,123  $89,330    $  $233,715,623  $(305,381,748) $1,100,000  $(70,476,795) 


Common StockSeries A
Preferred Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive IncomeTotal
Stockholders’
Deficit
Number
of Shares
AmountNumber
of Shares
Amount
Balance as of December 31, 201967,105,000  $67,105    $  $143,826,315  $(178,806,530)   $(34,913,110) 
Stock options and warrants exercised, and vesting of restricted shares12,911,234  12,911  —  —  47,145,488  —  —  47,158,399  
Common stock issued for preferred stock dividends617,284  618  —  —  999,382  —  —  1,000,000  
Conversion of Convertible Note8,384,270  8,384  —  —  38,726,635  —  —  38,735,019  
Common stock issued for interest on Convertible Note312,335  312  —  —  988,585  —  —  988,897  
Stock-based compensation—  —  —  —  2,029,218  —  —  2,029,218  
Net loss for the six months ended June 30, 2020—  —  —  —  —  (126,575,218) —  (126,575,218) 
Other comprehensive income—  —  —  —  —  —  1,100,000  1,100,000  
Balance as of June 30, 202089,330,123  $89,330    $  $233,715,623  $(305,381,748) $1,100,000  $(70,476,795) 

See accompanying notes to the condensed consolidated financial statements.



5


Workhorse Group Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30,
20202019
Cash flows from operating activities:
Net loss$(126,575,218) $(26,324,372) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation368,372  193,786  
Tooling expense353,786    
Amortization of discount and debt issuance costs on long-term debt  260,103  
Amortization of discount on mandatorily redeemable Series B preferred stock762,614  119,471  
Change in fair value of Convertible Note and loss on conversion to common stock96,145,019    
Change in fair value of warrant liability12,176,690  14,910,668  
Change in fair value of investment in LMC(864,900)   
Dividends for mandatorily redeemable Series B preferred stock paid in common stock1,000,000    
Interest on Convertible Note paid in common stock988,897    
Stock-based compensation2,029,218  876,918  
Write down of inventory  22,221  
Effects of changes in operating assets and liabilities:
Accounts and lease receivable(15,348) 24,135  
Inventory(2,378,143) 313,712  
Prepaid expenses59,882  554,276  
Accounts payable and accrued liabilities296,047  (2,228,966) 
Warranty liability(1,922,095) (485,209) 
Customer deposits(179,000) (47,000) 
Net cash used in operating activities(17,754,179) (11,810,257) 
Cash flows from investing activities:
Capital expenditures(974,115) (2,965,372) 
Net cash used in investing activities(974,115) (2,965,372) 
Cash flows from financing activities:
Proceeds from long-term debt1,411,000  5,854,140  
Proceeds from issuance of Series B preferred stock  25,000,000  
Issuance of common stock  5,928,235  
Exercise of warrants and options18,646,709    
Net cash provided by financing activities20,057,709  36,782,375  
Change in cash and cash equivalents1,329,415  22,006,746  
Cash, cash equivalents and restricted cash, beginning of the period24,868,416  1,512,750  
Cash and cash equivalents, end of the period$26,197,831  $23,519,496  

Supplemental disclosure of non-cash activities:

During the six months ended June 30, 2020, the Company issued 8,384,270 shares of common stock in connection with the conversion of the Convertible Note, which were valued at $38,735,019. The Company recorded additional paid-in capital with the offset as a reduction to the fair value of the Convertible Note.

6


During the six months ended June 30, 2020, the change in fair value of the Convertible Note included a $1,100,000 adjustment attributed to changes in credit risk. The Company recorded other comprehensive income with the offset as a reduction to the fair value of the Convertible Note.

See accompanying notes to the condensed consolidated financial statements.
7



Workhorse Group Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

1.SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES
Nature of operations
Workhorse Group Inc. (“Workhorse”, the “Company”, “we”, “us” or “our”) is a technology company focused on providing sustainable and cost-effective solutions to the commercial transportation sector. We are an American manufacturer who designs and builds high performance electric vehicles. As part of our solutions, we also develop cloud-based, real-time telematics performance monitoring systems that enable fleet operators to optimize energy and route efficiency. We are currently focused on bringing the C-Series electric delivery truck to market and fulfilling our existing backlog of orders. We are also exploring other opportunities in monetizing our intellectual property which could include a sale, license or other arrangement of assets that are outside of our core focus.
Principles of consolidation
The condensed consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
Basis of presentation
The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has limited revenues and a history of negative working capital and stockholders’ deficits. Our existing capital resources are expected to be sufficient to fund our operations into 2022. Unless and until we are able to generate a sufficient amount of revenue, reduce our costs and/or enter into a strategic relationship, we expect to finance future cash needs through public and/or private offerings of equity securities and/or debt financings. If we are not able to obtain additional financing and/or substantially increase revenue from sales, we will be unable to continue as a going concern. These conditions raise substantial doubt about the ability of the Company to continue as a going concern.
In view of these matters, continuation as a going concern is dependent upon the continued operations of the Company, which, in turn, is dependent upon the Company’s ability to meet its financial requirements, raise additional capital, and successfully carry out its future operations. The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary, should the Company not continue as a going concern.
The Company has continued to raise capital and debt. Management believes the proceeds from these offerings, future offerings, and the Company’s anticipated revenue, provides an opportunity to continue as a going concern. If additional funding is required, the Company plans to obtain working capital from either debt or equity financing. Obtaining such working capital is not assured. The Company is currently in a production ramp up mode and placing greater emphasis on manufacturing capability.
In the opinion of Management, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Workhorse’s financial conditions, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal, recurring nature. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto of Workhorse contained in its Annual Report on Form 10-K for the year ended December 31, 2019.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
Impact of COVID-19 Pandemic
In December 2019, a novel coronavirus disease (“COVID-19”) was reported and on January 30, 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO
8


raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic.
As of the date of this filing, our locations and primary suppliers continue to operate. However, the broader implications of COVID-19 on our results of operations and overall financial performance remain uncertain. We may experience constrained supply or other business disruptions that could materially impact our business, results of operations and overall financial performance in future periods. See Risk Factors for further discussion of the possible impact of the COVID-19 pandemic on our business.

2. INVENTORY, NET

Inventory, net consists of the following:
June 30, 2020December 31, 2019
Raw materials$5,412,613  $3,741,097  
Work in process927,351  422,176  
Finished goods