Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 09, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Workhorse Group Inc. | |
Entity Central Index Key | 1,425,287 | |
Trading Symbol | WKHS | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 42,139,800 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 753,563 | $ 4,069,477 |
Accounts receivable | 304,374 | 1,013,423 |
Lease receivable | 41,375 | 45,300 |
Inventory | 5,027,569 | 4,621,942 |
Prepaid expenses and deposits | 215,769 | 946,134 |
Current assets, Total | 6,342,650 | 10,696,276 |
Property, plant and equipment, at cost: | ||
Land | 700,000 | 700,000 |
Buildings | 5,900,000 | 5,900,000 |
Leasehold improvements | 19,236 | 19,225 |
Software | 86,050 | 86,050 |
Equipment | 829,742 | 829,742 |
Vehicles and prototypes | 156,567 | 156,567 |
Less: accumulated depreciation | (2,143,942) | (2,095,571) |
Net property, plant and equipment | 5,547,653 | 5,596,013 |
Lease receivable | 231,700 | 212,004 |
Assets, Total | 12,122,003 | 16,504,293 |
Current liabilities: | ||
Accounts payable | 4,202,116 | 4,311,135 |
Accrued liabilities | 1,757,392 | 1,718,397 |
Accounts payable, related parties | 116,226 | 54,914 |
Customer deposits | 267,000 | 54,405 |
Current portion of long-term debt | 381,746 | 381,497 |
Current liabilities, Total | 6,724,480 | 6,520,348 |
Principal amount of notes payable | 5,750,000 | 5,750,000 |
Less: unamortized discount and debt issuance costs | 493,750 | 987,500 |
Notes payable | 5,256,250 | 4,762,500 |
Total current liabilities | 11,980,730 | 11,282,848 |
Long-term debt | 1,700,608 | 1,709,881 |
Stockholders' equity (deficit): | ||
Series A preferred stock, par value of $.001 per share 75,000,000 shares authorized, 0 shares issued and outstanding at March 31, 2018 and December 31, 2017 | ||
Common stock, par value of $.001 per share 100,000,000 shares authorized, 41,966,550 shares issued and outstanding at March 31, 2018 and 41,529,181 shares issued and outstanding at December 31, 2017 | 41,966 | 41,529 |
Additional paid-in capital | 109,106,507 | 107,760,036 |
Accumulated deficit | (110,707,808) | (104,290,001) |
Stockholders' equity (deficit), Total | (1,559,335) | 3,511,564 |
Liabilities and Stockholders' Equity (Deficit), Total | $ 12,122,003 | $ 16,504,293 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Series A preferred stock, par value | $ 0.001 | $ 0.001 |
Series A preferred stock, shares authorized | 75,000,000 | 75,000,000 |
Series A preferred stock, shares issued | 0 | 0 |
Series A preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 41,966,550 | 41,529,181 |
Common stock, shares outstanding | 41,966,550 | 41,529,181 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Net sales | $ 560,229 | $ 1,570,037 |
Cost of sales | 1,714,370 | 4,312,088 |
Gross loss | (1,154,141) | (2,742,051) |
Operating expenses | ||
Selling, general and administrative | 2,400,147 | 1,899,582 |
Research and development | 2,337,631 | 3,243,322 |
Total operating expenses | 4,737,778 | 5,142,904 |
Interest expense, net | 525,887 | 35,651 |
Net loss | $ (6,417,806) | $ (7,920,606) |
Basic and diluted loss per share | $ (0.16) | $ (0.24) |
Weighted average number of common shares outstanding | 40,258,234 | 32,965,419 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (6,417,806) | $ (7,920,606) |
Adjustments to reconcile net loss from operations to cash used by operations: | ||
Depreciation | 48,359 | 143,142 |
Amortized discount and debt issuance costs on Senior Secured Notes | 493,750 | |
Stock based compensation | 72,178 | 327,262 |
Effects of changes in operating assets and liabilities: | ||
Accounts receivable and lease receivable | 693,278 | (349,300) |
Inventory | (405,627) | (2,602,652) |
Prepaid expenses and deposits | 730,365 | (1,278,374) |
Accounts payable and accrued liabilities | (70,024) | (1,278,532) |
Accounts payable, related parties | 61,312 | (77,242) |
Customer deposits | 212,595 | |
Net cash used by operations | (4,581,620) | (13,036,302) |
Cash flows from investing activities: | ||
Capital expenditures | (35,883) | |
Proceeds from lease receivable | 110,718 | |
Net cash provided by investing activities | 74,835 | |
Cash flows from financing activities: | ||
Payments on long-term debt | (9,024) | (4,788) |
Issuance of common stock | 1,187,415 | 22,485,999 |
Exercise of warrants and options | 87,315 | 251,581 |
Net cash provided by financing activities | 1,265,706 | 22,732,792 |
Change in cash and cash equivalents | (3,315,914) | 9,771,325 |
Cash at the beginning of the period | 4,069,477 | 469,570 |
Cash at the end of the period | $ 753,563 | $ 10,240,895 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Supplemental disclosure of non-cash activities: | |
Conversion of shareholders advances into common stock | $ 229,772 |
Conversion of accrued interests into common stock | 26,727 |
Common stock | 172 |
Additional paid-in capital | $ 256,327 |
Summary of Significant Accounti
Summary of Significant Accounting Principles | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES The following accounting principles and practices are set forth to facilitate the understanding of data presented in the condensed consolidated financial statements: Nature of operations and principles of consolidation Workhorse Group Inc. and its predecessor companies (“Workhorse”, the “Company”, “we”, “us” or “our”) is a technology company focused on providing sustainable and cost-effective solutions to the commercial transportation sector. As an American manufacturer, we design and build high performance battery-electric electric vehicles and aircraft that make movement of people and goods more efficient and less harmful to the environment. As part of the Company’s solution, it also develops cloud-based, real-time telematics performance monitoring systems that enable fleet operators to optimize energy and route efficiency. Although the Company operates as a single unit through its subsidiaries, it approaches its development through two divisions, Automotive and Aviation. The Company’s core products, under development and/or in manufacture, are the medium duty step van, the light duty pickup, the delivery drone and the manned multicopter. Workhorse, formerly known as Title Starts Online, Inc. and AMP Holding Inc., was incorporated in the State of Nevada in 2007 with $3,100 of capital from the issuance of common shares to the founding shareholder. On August 11, 2008, the Company received a Notice of Effectiveness from the U.S. Securities and Exchange Commission, and on September 18, 2008, the Company closed a public offering in which it accepted subscriptions for an aggregate of 200,000 shares of its common stock, raising $50,000 less offering costs of $46,234. With this limited capital, the Company did not commence operations and remained a “shell company” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended). On December 28, 2009, the Company entered into and closed a Share Exchange Agreement with the Shareholders of Advanced Mechanical Products, Inc. (n/k/a Workhorse Technologies, Inc.) (“AMP” or “Workhorse Technologies”) pursuant to which the Company acquired 100% of the outstanding securities of AMP in exchange for 14,890,904 shares of the Company’s common stock. Considering that, following the merger, the AMP Shareholders control the majority of the outstanding voting common stock of the Company, and effectively succeeded the Company’s otherwise minimal operations to those that are AMP. AMP is considered the accounting acquirer in this reverse-merger transaction (the “Transaction”). A reverse-merger transaction is considered and accounted for as a capital transaction in substance; it is equivalent to the issuance of AMP securities for net monetary assets of the Company, which are de minimis, accompanied by a recapitalization. Accordingly, goodwill or other intangible assets have not been recognized in connection with the Transaction. AMP is the surviving entity and the historical financials following the Transaction were those of AMP. The Company was a shell company immediately prior to the Transactions pursuant to the terms of the Share Exchange Agreement. As a result of the Transaction, the Company operations focused on the design, marketing and sale of vehicles with an all-electric power train and battery systems. Consequently, we believe that the Transaction caused the Company to cease to be a shell company as it had operations following the Transaction. The Company formally changed its name to AMP Holding Inc. on May 24, 2010. Since the Transaction, the Company has devoted the majority of its resources to the development of an all-electric drive system capable of moving heavy large vehicles ranging from full size SUV’s up to and including medium duty commercial trucks. Additionally, in February 2013, the Company formed a new wholly owned subsidiary, Workhorse Motor Works Inc. (f/k/a AMP Trucks Inc.), an Indiana corporation. On March 13, 2013, Workhorse Motor Works Inc. closed on the acquisition of an asset purchase of assets from Workhorse Custom Chassis, LLC. The assets included in this transaction included: The Workhorse brand, access to the dealer network of 440 dealers nationwide, intellectual property, and all physical assets which included the approximately 250,000 sq. ft. of facilities on 48 acres of land in Union City, Indiana. This acquisition allows the Company to position itself as a medium duty OEM capable of producing new chassis with electric, propane, compressed natural gas, and hybrid configurations, as well as gasoline drive systems. On April 16, 2015, the Company filed Articles of Merger with the Secretary of State of the State of Nevada to change the name from “AMP Holding Inc.” to “Workhorse Group Inc.”. The Company believes that this change allowed investors, customers and suppliers to better associate the Company with the Workhorse brand, which is well known in the market. The condensed consolidated financial statements include Workhorse Group Inc. and its wholly owned subsidiaries, together referred as “The Company”. Intercompany transactions and balances are eliminated in consolidation. The Company’s wholly owned subsidiaries include Workhorse Technologies Inc., Workhorse Motor Works Inc. and Workhorse Properties Inc. 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. 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. 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 from the sale of common stock, preferred stock, and/or convertible debentures. Obtaining such working capital is not assured. In the opinion of Management, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Workhorse’s respective financial conditions, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal, recurring nature. Intercompany balances and transactions are eliminated in consolidation. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. It is suggested that these financial statements 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, 2017. Certain reclassifications were made to the prior year financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operation or stockholders’ equity. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | 2. INVENTORY As of March 31, 2018, and December 31, 2017, our inventory consisted of the following: 2018 2017 Raw Materials $ 4,105,661 $ 3,205,618 Work in Process 921,908 1,416,324 Finished Goods - - $ 5,027,569 $ 4,621,942 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | 3. LONG-TERM DEBT Long-term debt consists of the following: March 31, December 31, Senior Secured Notes, due June 30, 2018 (discount is based on imputed interest rate of 26%) $ 5,750,000 $ 5,750,000 Less: unamortized discount and debt issuance costs on Senior Secured Notes (493,750 ) (987,500 ) Net Senior Secured Notes 5,256,250 4,762,500 Secured mortgage payable to Bank for the purchase of the 100 Commerce Drive Building due in monthly installments of $11,951. 1,732,354 1,741,378 Note payable, former building owner interest payment only due in monthly installments of $1,604 interest at 5.5%. A balloon payment of $350,000 plus unpaid interest due August 2018. 350,000 350,000 7,338,604 6,853,878 Less current portion 5,637,996 5,143,997 Long term debt $ 1,700,608 $ 1,709,881 On December 26, 2017, as part of its initial efforts to spin-off SureFly, the Company entered into a Securities Purchase Agreement with several existing institutional investors pursuant to which the company issued original issue discount Senior Secured Notes in the aggregate principal amount of $5,750,000 in consideration of gross proceeds of $5,000,000 paid by the Spin-Off Investors. The loan is convertible into SureFly equity upon achieving the spin-out. Amortization expense related to the debt issuance costs and unamortized discounts for the Senior Secured Notes was $493,750 for the quarter ended March 31, 2018. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
REVENUE | 4. REVENUE Change in Accounting Principle In May 2014, the FASB issued ASU Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)". The guidance in this ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). This guidance requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. Beginning in January 2018, the Company adopted the provisions of ASU 2014-09 Topic 606 under the modified retrospective method, which requires a cumulative effect adjustment to the opening balance of retained earnings on the date of adoption. This approach was applied to contracts not completed as of December 31, 2017. No significant change to revenue recognition, as previously recognized, was identified. At date of adoption, there was no adjustment to retained earnings related to the adoption of ASU 2014-09. At date of adoption, there was no significant change to our past revenue recognition practices and therefore no adjustment to the opening balance of retained earnings was required. Revenue Recognition Net sales include products and shipping and handling charges, net of estimates for customer allowances. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. We recognize revenue by transferring the promised products to the customer, with the majority of revenue recognized at the point in time the customer obtains control of the products. We recognize revenue for shipping and handling charges at the time the products are delivered to or picked up by the customer. The majority of our contracts have a single performance obligation and are short term in nature. Accounts Receivable Credit is extended based upon an evaluation of the customer's financial condition. Accounts receivable are stated at their estimated net realizable value. The allowance for doubtful accounts is based on an analysis of customer accounts and our historical experience with accounts receivable write-offs. The Company has elected the following practical expedients allowed under ASU 2014-09: · Performance obligations are satisfied within one year from a given reporting date, consequently we omit disclosure of the transaction price apportioned to remaining performance obligations on open orders Disaggregation of Revenue Our revenues related to the following types of business were as follows for the periods ended March 31: Three Months Ended 2018 2017 Automotive $ 404,854 $ 1,568,500 Aviation - - Other 155,375 1,537 Total revenues $ 560,229 $ 1,570,037 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 5 INCOME TAXES As the Company has not generated taxable income since inception, the cumulative deferred tax assets remain fully reserved, and no provision or liability for federal or state income taxes has been included in the financial statements. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | 6. EARNINGS PER SHARE Basic loss per share is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. For all periods presented, all of the Company’s common stock equivalents were excluded from the calculation of diluted loss per common share because they were anti-dilutive, due to the Company’s net losses. |
Recent Accounting Developments
Recent Accounting Developments | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENT ACCOUNTING DEVELOPMENTS | 7. RECENT ACCOUNTING DEVELOPMENTS Accounting Guidance Adopted in 2018 Effective January 1, 2018, we adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and affects the guidance in ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU No. 2016-10 clarifies the following two aspects of Topic 606: evaluating whether promised goods and services are separately identifiable and determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property, which is satisfied at a point in time, or a right to access the entity’s intellectual property, which is satisfied over time. The Company adopted ASU No. 2016-10, using the modified retrospective approach, which did not have a material impact on the Company’s condensed consolidated financial statements. Additional information is available in Note 4, “Revenue.” Effective January 1, 2018, we adopted FASB ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), and affects the guidance in ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” . When another party is involved in providing goods or services to a customer, ASU No. 2014-09 requires an entity to determine whether the nature of its promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). The amendments in ASU No. 2016-08 are intended to improve the operability and understandability of the implementation guidance in ASU No. 2014-09 on principal versus agent considerations by offering additional guidance to be considered in making the determination. The Company adopted ASU No. 2016-08, using the modified retrospective approach, which did not have a material impact on the Company’s condensed consolidated financial statements. Additional information is available in Note 4, “ Revenue. Accounting Guidance Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires a lessee to recognize in the statement of financial position a liability to make lease payments (“the lease liability”) and a right-of-use asset representing its right to use the underlying asset for the lease term, initially measured at the present value of the lease payments. When measuring assets and liabilities arising from a lease, the lessee should include payments to be made in optional periods only if the lessee is reasonably certain, as defined, to exercise an option to the lease or not to exercise an option to terminate the lease. Optional payments to purchase the underlying asset should be included if the lessee is reasonably certain it will exercise the purchase option. Most variable lease payments should be excluded except for those that depend on an index or a rate or are in substance fixed payments. A lessee shall classify a lease as a finance lease if it meets any of five listed criteria: 1) The lease transfers ownership of the underlying asset to the lessee by the end of the lease term. 2) The lease grants the lessee and option to purchase the underlying asset that the lessee is reasonably certain to exercise. 3) The lease term is for the major part of the remaining economic life of the underlying asset. 4) The present value of the sum of the lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset. 5) The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. For finance leases, a lessee shall recognize in the statement of comprehensive income interest on the lease liability separately from amortization of the right-of-use asset. Amortization of the right-of-use asset shall be on a straight-line basis, unless another basis is more representative of the pattern in which the lessee expects to consume the right-of-use asset’s future economic benefits. If the lease does not meet any of the five criteria, the lessee shall classify it as an operating lease and shall recognize a single lease cost on a straight-line basis over the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The amendments in this update are to be applied using a modified retrospective approach, as defined, and are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. Early application is permitted. The Company is currently evaluating the financial statement impact of adopting the new guidance. |
Private Placement Memorandum an
Private Placement Memorandum and Stock Offering | 3 Months Ended |
Mar. 31, 2018 | |
Private Placement Memorandum And Stock Offering | |
PRIVATE PLACEMENT MEMORANDUM AND STOCK OFFERING | 8. PRIVATE PLACEMENT MEMORANDUM AND STOCK OFFERING On February 1, 2017, the Company announced the completion of its underwritten public offering of 6,500,000 shares of its common stock at a public offering price of $3.00 per share. In addition, the underwriters exercised an option to purchase an additional 975,000 shares of common stock at the public offering price, less the underwriting discounts and commissions. All of the shares in the offering were sold by Workhorse Group, with gross proceeds to Workhorse Group of approximately $22.4 million and net proceeds of approximately $20.5 million, after deducting underwriting discounts and commissions and estimated offering expenses. On June 22, 2017, Workhorse entered into an at the market issuance sales agreement (the “Cowen Agreement”) with Cowen and Company, LLC (“Cowen”) under which the Company may offer and sell, from time to time at its sole discretion, shares of its Common Stock having an aggregate offering price of up to $25,000,000 through Cowen as its sales agent. As of March 31, 2018, the Company issued 1,060,783 shares from this facility. On September 14, 2017, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Cowen relating to the public offering and sale (the “Offering”) of 3,749,996 shares of the Company’s common stock, and five-year warrants (exercisable beginning on the date of issuance) to purchase up to an aggregate of 2,812,497 shares of the Company’s common stock. Each investor received a warrant to purchase 0.75 shares of the Company’s common stock at an exercise price of $3.80 per share, for each share of common stock purchased. Pursuant to the Underwriting Agreement, Cowen purchased 3,749,996 shares of the Company’s common stock and accompanying warrants at a price per share of $3.20. The net proceeds to the Company were approximately $10.9 million after deducting underwriting discounts and commissions and offering expenses. The sale of such shares and accompanying warrants closed on September 18, 2017. The warrants contain full ratchet anti-dilution protection upon the issuance of any common stock, securities convertible into common stock or certain other issuances at a price below the then existing exercise price of the warrants, with certain exceptions. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 9. SUBSEQUENT EVENTS The Company evaluates events and transactions occurring subsequent to the date of the condensed consolidated financial statements for matters requiring recognition or disclosure in the condensed consolidated financial statements. The accompanying condensed consolidated financial statements consider events through May 9, 2018, the date on which the condensed consolidated financial statements were available to be issued. On April 26, 2018, the Company entered into and closed Subscription Agreements with accredited investors (the “April 2018 Accredited Investors”) pursuant to which the April 2018 Accredited Investors purchased 531,066 shares of the Company’s common stock (“April 2018 Shares”) for a purchase price of $1,444,500 or $2.72 per share. |
Summary of Significant Accoun16
Summary of Significant Accounting Principles (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of operations and principles of consolidation | Nature of operations and principles of consolidation Workhorse Group Inc. and its predecessor companies (“Workhorse”, the “Company”, “we”, “us” or “our”) is a technology company focused on providing sustainable and cost-effective solutions to the commercial transportation sector. As an American manufacturer, we design and build high performance battery-electric electric vehicles and aircraft that make movement of people and goods more efficient and less harmful to the environment. As part of the Company’s solution, it also develops cloud-based, real-time telematics performance monitoring systems that enable fleet operators to optimize energy and route efficiency. Although the Company operates as a single unit through its subsidiaries, it approaches its development through two divisions, Automotive and Aviation. The Company’s core products, under development and/or in manufacture, are the medium duty step van, the light duty pickup, the delivery drone and the manned multicopter. Workhorse, formerly known as Title Starts Online, Inc. and AMP Holding Inc., was incorporated in the State of Nevada in 2007 with $3,100 of capital from the issuance of common shares to the founding shareholder. On August 11, 2008, the Company received a Notice of Effectiveness from the U.S. Securities and Exchange Commission, and on September 18, 2008, the Company closed a public offering in which it accepted subscriptions for an aggregate of 200,000 shares of its common stock, raising $50,000 less offering costs of $46,234. With this limited capital, the Company did not commence operations and remained a “shell company” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended). On December 28, 2009, the Company entered into and closed a Share Exchange Agreement with the Shareholders of Advanced Mechanical Products, Inc. (n/k/a Workhorse Technologies, Inc.) (“AMP” or “Workhorse Technologies”) pursuant to which the Company acquired 100% of the outstanding securities of AMP in exchange for 14,890,904 shares of the Company’s common stock. Considering that, following the merger, the AMP Shareholders control the majority of the outstanding voting common stock of the Company, and effectively succeeded the Company’s otherwise minimal operations to those that are AMP. AMP is considered the accounting acquirer in this reverse-merger transaction (the “Transaction”). A reverse-merger transaction is considered and accounted for as a capital transaction in substance; it is equivalent to the issuance of AMP securities for net monetary assets of the Company, which are de minimis, accompanied by a recapitalization. Accordingly, goodwill or other intangible assets have not been recognized in connection with the Transaction. AMP is the surviving entity and the historical financials following the Transaction were those of AMP. The Company was a shell company immediately prior to the Transactions pursuant to the terms of the Share Exchange Agreement. As a result of the Transaction, the Company operations focused on the design, marketing and sale of vehicles with an all-electric power train and battery systems. Consequently, we believe that the Transaction caused the Company to cease to be a shell company as it had operations following the Transaction. The Company formally changed its name to AMP Holding Inc. on May 24, 2010. Since the Transaction, the Company has devoted the majority of its resources to the development of an all-electric drive system capable of moving heavy large vehicles ranging from full size SUV’s up to and including medium duty commercial trucks. Additionally, in February 2013, the Company formed a new wholly owned subsidiary, Workhorse Motor Works Inc. (f/k/a AMP Trucks Inc.), an Indiana corporation. On March 13, 2013, Workhorse Motor Works Inc. closed on the acquisition of an asset purchase of assets from Workhorse Custom Chassis, LLC. The assets included in this transaction included: The Workhorse brand, access to the dealer network of 440 dealers nationwide, intellectual property, and all physical assets which included the approximately 250,000 sq. ft. of facilities on 48 acres of land in Union City, Indiana. This acquisition allows the Company to position itself as a medium duty OEM capable of producing new chassis with electric, propane, compressed natural gas, and hybrid configurations, as well as gasoline drive systems. On April 16, 2015, the Company filed Articles of Merger with the Secretary of State of the State of Nevada to change the name from “AMP Holding Inc.” to “Workhorse Group Inc.”. The Company believes that this change allowed investors, customers and suppliers to better associate the Company with the Workhorse brand, which is well known in the market. The condensed consolidated financial statements include Workhorse Group Inc. and its wholly owned subsidiaries, together referred as “The Company”. Intercompany transactions and balances are eliminated in consolidation. The Company’s wholly owned subsidiaries include Workhorse Technologies Inc., Workhorse Motor Works Inc. and Workhorse Properties Inc. |
Basis of presentation | 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. 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. 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 from the sale of common stock, preferred stock, and/or convertible debentures. Obtaining such working capital is not assured. In the opinion of Management, the Unaudited Condensed Consolidated Financial Statements include all adjustments that are necessary for the fair presentation of Workhorse’s respective financial conditions, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal, recurring nature. Intercompany balances and transactions are eliminated in consolidation. The results of operations and cash flows for the interim periods presented may not necessarily be indicative of full-year results. It is suggested that these financial statements 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, 2017. Certain reclassifications were made to the prior year financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operation or stockholders’ equity. |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of components of inventory | 2018 2017 Raw Materials $ 4,105,661 $ 3,205,618 Work in Process 921,908 1,416,324 Finished Goods - - $ 5,027,569 $ 4,621,942 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | March 31, December 31, Senior Secured Notes, due June 30, 2018 (discount is based on imputed interest rate of 26%) $ 5,750,000 $ 5,750,000 Less: unamortized discount and debt issuance costs on Senior Secured Notes (493,750 ) (987,500 ) Net Senior Secured Notes 5,256,250 4,762,500 Secured mortgage payable to Bank for the purchase of the 100 Commerce Drive Building due in monthly installments of $11,951. 1,732,354 1,741,378 Note payable, former building owner interest payment only due in monthly installments of $1,604 interest at 5.5%. A balloon payment of $350,000 plus unpaid interest due August 2018. 350,000 350,000 7,338,604 6,853,878 Less current portion 5,637,996 5,143,997 Long term debt $ 1,700,608 $ 1,709,881 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Schedule of disaggregation revenue | Three Months Ended 2018 2017 Automotive $ 404,854 $ 1,568,500 Aviation - - Other 155,375 1,537 Total revenues $ 560,229 $ 1,570,037 |
Summary of Significant Accoun20
Summary of Significant Accounting Principles (Details Textual) - USD ($) | Feb. 01, 2017 | Sep. 18, 2008 | Dec. 31, 2007 |
Summary of Significant Accounting Principles (Textual) | |||
Amount raise by subscriptions of common stock | $ 50,000 | ||
Subscriptions for aggregate shares of common stock | 6,500,000 | 200,000 | |
Offering costs of common stock | $ 46,234 | ||
Shareholder [Member] | |||
Summary of Significant Accounting Principles (Textual) | |||
Amount raise by subscriptions of common stock | $ 3,100 |
Summary of Significant Accoun21
Summary of Significant Accounting Principles (Details Textual 1) - AMP Holding Inc. [Member] - Share Exchange Agreement [Member] | 1 Months Ended |
Dec. 28, 2009shares | |
Summary of Significant Accounting Principles (Textual) | |
Number of outstanding securities in exchange of common stock | 14,890,904 |
Acquired outstanding securities , description | Company acquired 100% of the outstanding securities. |
Summary of Significant Accoun22
Summary of Significant Accounting Principles (Details Textual 2) | Mar. 13, 2013ft²aDealer |
Summary of Significant Accounting Principles (Textual) | |
Number of dealers | Dealer | 440 |
Area of facilities covered (in sq ft) | ft² | 250,000 |
Area of land (in acres) | a | 48 |
Inventory (Details)
Inventory (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Components of inventories | ||
Raw Materials | $ 4,105,661 | $ 3,205,618 |
Work in Process | 921,908 | 1,416,324 |
Finished Goods | ||
Inventory | $ 5,027,569 | $ 4,621,942 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Senior Secured Notes, due June 30, 2018 (discount is based on imputed interest rate of 26%) | $ 5,750,000 | $ 5,750,000 |
Less: unamortized discount and debt issuance costs on Senior Secured Notes | (493,750) | (987,500) |
Net Senior Secured Notes | 5,256,250 | 4,762,500 |
Long term debt | 7,338,604 | 6,853,878 |
Less current portion | 381,746 | 381,497 |
Long-term debt | 1,700,608 | 1,709,881 |
Secured mortgage payable to Bank [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | 1,732,354 | 1,741,378 |
Note payable to former building owner [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 350,000 | $ 350,000 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) | 3 Months Ended |
Mar. 31, 2018USD ($)Employee | |
Debt Instrument [Line Items] | |
Unamortized discount | $ 493,750 |
Secured mortgage payable to Bank [Member] | |
Debt Instrument [Line Items] | |
Number of Commerce Drive Building | Employee | 100 |
Monthly installments | $ 11,951 |
Senior Secured Notes (Member) | |
Debt Instrument [Line Items] | |
Percentage of interest payable | 26.00% |
Debt due date | June 30, 2018 |
Note payable to former building owner [Member] | |
Debt Instrument [Line Items] | |
Monthly installments | $ 1,604 |
Percentage of interest payable | 5.50% |
Balloon payment | $ 350,000 |
Debt due date | August 2,018 |
Revenue (Details)
Revenue (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Total revenues | $ 560,229 | $ 1,570,037 |
Automotive [Member] | ||
Total revenues | 404,854 | 1,568,500 |
Other [Member] | ||
Total revenues | 155,375 | 1,537 |
Aviation [Member] | ||
Total revenues |
Private Placement Memorandum 27
Private Placement Memorandum and Stock Offering (Details) - USD ($) | Sep. 14, 2017 | Jun. 22, 2017 | Feb. 01, 2017 | Sep. 18, 2008 | Mar. 31, 2018 |
Private Placement Memorandum and Stock Offering (Textual) | |||||
Shares of common stock public offering | 6,500,000 | 200,000 | |||
Value of common stock offering | $ 50,000 | ||||
Public offering price per share | $ 3 | ||||
Purchase of common stock, shares | 3,749,996 | 975,000 | |||
Gross of proceeds from issuance of initial public offering | $ 22,400,000 | ||||
Net of proceeds from issuance of initial public offering | $ 10,900,000 | $ 20,500,000 | |||
Warrants exercise price per share | $ 3.20 | ||||
Underwriting Agreement [Member] | |||||
Private Placement Memorandum and Stock Offering (Textual) | |||||
Shares of common stock public offering | 3,749,996 | ||||
Purchase of common stock, shares | 2,812,497 | ||||
Underwriting commitments, description | Each investor received a warrant to purchase 0.75 shares of the Company’s common stock at an exercise price of $3.80 per share, for each share of common stock purchased. | ||||
Warrants expiration term | 5 years | ||||
Cowen Agreement [Member] | |||||
Private Placement Memorandum and Stock Offering (Textual) | |||||
Value of common stock offering | $ 25,000,000 | ||||
Shares issued | 1,060,783 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events [Member] | 1 Months Ended |
Apr. 26, 2018USD ($)$ / sharesshares | |
Subsequent Events (Textual) | |
Purchase of common stock | shares | 531,066 |
Purchase price | $ | $ 1,444,500 |
Price per share | $ / shares | $ 2.72 |