Workhorse(US:WKHS)2024-05-20 21:08PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents Workhorse Group Inc.'s unaudited condensed consolidated financial statements and notes for Q1 2024 and FY2023 Condensed Consolidated Balance Sheets | Metric | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $6,728,430 | $25,845,915 | | Total current assets | $65,642,482 | $93,825,478 | | Total Assets | $113,869,956 | $141,674,724 | | Total current liabilities | $41,398,619 | $53,282,027 | | Total Liabilities | $46,446,184 | $58,562,553 | | Total stockholders' equity | $67,423,772 | $83,112,171 | - Cash and cash equivalents decreased significantly from $25.8 million at December 31, 2023, to $6.7 million at March 31, 202411 - Total assets declined from $141.7 million to $113.9 million, while total liabilities also decreased from $58.6 million to $46.4 million11 Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Sales, net | $1,339,295 | $1,693,415 | | Cost of sales | $7,442,778 | $5,328,119 | | Gross loss | $(6,103,483) | $(3,634,704) | | Total operating expenses | $17,623,189 | $21,914,692 | | Loss from operations | $(23,726,672) | $(25,549,396) | | Net loss | $(29,155,787) | $(24,999,037) | | Net loss per share (Basic & Diluted) | $(0.10) | $(0.15) | - Net sales decreased by 20.9% from $1.69 million in Q1 2023 to $1.34 million in Q1 2024, primarily due to lower W4 CC vehicle sales13145 - Gross loss widened to $(6.1) million in Q1 2024 from $(3.6) million in Q1 2023, driven by a $2.2 million increase in inventory reserves and higher depreciation13146 - Net loss increased to $(29.2) million in Q1 2024 from $(25.0) million in Q1 2023, largely due to a $5.4 million net interest expense compared to $0.6 million net interest income in the prior year13149 Condensed Consolidated Statements of Stockholders' Equity | Metric | December 31, 2023 | March 31, 2024 | | :-------------------------------- | :---------------- | :------------- | | Common Stock (Number of Shares) | 285,980,843 | 330,791,980 | | Common Stock (Amount) | $285,981 | $330,792 | | Additional Paid-in Capital | $834,394,441 | $847,817,018 | | Accumulated Deficit | $(751,568,251) | $(780,724,038) | | Total Stockholders' Equity | $83,112,171 | $67,423,772 | - Total stockholders' equity decreased from $83.1 million at December 31, 2023, to $67.4 million at March 31, 2024, primarily due to a net loss of $29.2 million16 - Common stock shares outstanding increased significantly due to issuances under the ATM program, 2023 Warrant Exchange, ELOC Purchase Agreement, and 2024 Securities Purchase Agreement16 Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(17,963,578) | $(32,749,402) | | Net cash used in investing activities | $(3,025,775) | $(5,404,727) | | Net cash (used in) provided by financing activities | $(8,128,132) | $17,988,404 | | Change in cash and cash equivalents | $(29,117,485) | $(20,165,725) | | Cash and cash equivalents, end of period | $6,728,430 | $79,110,576 | - Net cash used in operating activities decreased to $18.0 million in Q1 2024 from $32.7 million in Q1 2023, primarily due to reduced inventory spend and lower employee compensation20162 - Net cash used in investing activities decreased to $3.0 million in Q1 2024 from $5.4 million in Q1 2023, driven by reduced capital expenditures for tooling and equipment20163 - Net cash used in financing activities was $8.1 million in Q1 2024, a significant shift from $18.0 million provided in Q1 2023, mainly due to the repayment of 2026 Notes, partially offset by proceeds from ATM and 2024 Notes20164165 Notes to Condensed Consolidated Financial Statements 1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES - Workhorse Group Inc. designs, develops, manufactures, and sells fully electric ground and air-based electric vehicles, aiming to pioneer the transition to zero-emission commercial vehicles23 - The Company's ability to continue as a going concern is in substantial doubt due to recurring losses, accumulated deficit ($780.7 million), projected capital needs, and lower-than-expected market demand2627 - Management's plan to address liquidity includes increasing vehicle sales, reducing expenses, limiting capital expenditures, and raising capital through debt/equity issuances (e.g., 2024 Securities Purchase Agreement, ATM Agreement) or asset sales2728 - The Company entered into a 2024 Securities Purchase Agreement for up to $139.0 million in senior secured convertible notes and warrants, with an initial $9.0 million note fully converted and a second $6.3 million note issued in May 20243233 - A planned sale-leaseback of the Union City manufacturing facility for $34.5 million is unlikely to close at the original price, and the Company is exploring alternative transactions at a materially lower price36 - Cost-saving measures include a 20% workforce reduction (excluding direct labor), executive salary deferrals, and furloughing 73 employees at the Union City facility in April 202437120 - The Aero drone design and manufacturing business is transitioning to a 'Drones as a Service' model, with a divestiture of the remaining Aero business expected in Q2 2024 to reduce operating costs38 [2. INVENTORY, NET](index=10&type=section&id=2.%20INVENTORY