wkhs-20250331

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 March 31, 2025


☐			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: 001-37673

WORKHORSE GROUP INC.

(Exact name of registrant as specified in its charter)


Nevada						26-1394771
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3600 Park 42 Drive, Suite 160E, Sharonville, Ohio 45241

(Address of principal executive offices, including zip code)

1 (888) 646-5205

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

WKHS

The NASDAQ Capital Market

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 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 filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, 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 ☒

The number of shares of the Registrant’s Common Stock, $0.001 par value per share, outstanding as of May 14, 2025, was 9,473,055.

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2

	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33

PART II	OTHER INFORMATION	35

Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
	SIGNATURES	37

Forward-Looking Statements

The discussions in this Quarterly Report on Form 10-Q (“Report”) contain forward-looking statements reflecting our current expectations that involve risks and uncertainties. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. 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 our liquidity and capital resources, including our ability to receive sufficient funding from our existing financing arrangements or from future financings and the expected terms of such financing, and expected growth in business. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements contained in this Report.

Factors that could cause actual results to differ materially include, but are not limited to: our ability to develop and manufacture our product portfolio, including the W4 CC, W750, and W56 and other programs; our ability to attract and retain customers for our existing and new products; ongoing and anticipated changes in the U.S. political environment, including those resulting from the new Presidential Administration, control of Congress, and changes to regulatory agencies; the implementation of changes to the existing tariff regime by the new Presidential Administration and measures taken in response to such tariffs by foreign governments; risks associated with obtaining orders and executing upon such orders; the unavailability, reduction, elimination or adverse application of government subsidies and incentives or any challenge to or failure by the federal government, states or other governmental entities to adopt or enforce regulations such as the California Air Resource Board’s Advanced Clean Fleet regulation; changes in attitude toward environmental, social, and governance matters among regulators, investors, and parties with which we do business; supply chain disruptions, including constraints on steel, semiconductors and other material inputs and resulting cost increases impacting our Company, our customers, our suppliers or the industry; our ability to capitalize on opportunities to deliver products to meet customer requirements; our limited operations and need to expand and enhance elements of our production process to fulfill product orders; our general inability to raise additional capital to fund our operations and business plan; our ability to receive sufficient proceeds from our current and any future financing arrangements to meet our immediate liquidity needs and the potential costs, dilution and restrictions resulting from any such financing; our ability to maintain compliance with the listing requirements of the Nasdaq and the impact of any steps we have taken, including reverse splits of our Common Stock, on our operations, stock price and future access to funds; our ability to protect our intellectual property; market acceptance of our products; our ability to obtain sufficient liquidity from operations and financing activities to continue as a going concern and, our ability to control our expenses; the effectiveness of our cost control measures and impact such measures could have on our operations, including the effects of furloughing employees; potential competition, including without limitation shifts in technology; volatility in and deterioration of national and international capital markets and economic conditions; global and local business conditions; acts of war (including without limitation the conflicts in Ukraine and the Middle East) and/or terrorism; the prices being charged by our competitors; our inability to retain key members of our management team; our inability to satisfy our customer warranty claims; the outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc.; our ability to consummate and realize the benefits of a potential sale and leaseback transaction of our Union City Facility; and other risks and uncertainties and other factors discussed from time to time in our filings with the Securities and Exchange Commission (“SEC”), including under the “Risk Factors” section of our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).

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, except as required by law.

All references in this Report that refer to the “Company”, “Workhorse Group”, “Workhorse”, “we,” “us” or “our” are to Workhorse Group Inc.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Workhorse Group Inc.

Condensed Consolidated Balance Sheets


	(Unaudited) March 31, 2025		December 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	2,644,825	$	4,119,938
Restricted cash	27,946,513		525,000
Accounts receivable, less allowance for credit losses of $0.3 million and $0.3 million as of March 31, 2025 and December 31, 2024, respectively	27,297		537,536
Other receivables, net	139,487		544,436
Inventory, net	41,308,930		41,839,020
Prepaid expenses and other current assets	5,476,539		5,865,890
Total current assets	77,543,591		53,431,820
Property, plant and equipment, net	31,011,965		32,976,581

Operating lease right-of-use assets, net	6,512,085		3,247,548
Finance lease right-of-use assets, net	—		4,008,510
Other assets	416,310		176,311
Total Assets	$	115,483,951	$	93,840,770
Liabilities
Current liabilities:
Accounts payable	$	11,091,912	$	11,509,150
Accrued liabilities and other current liabilities	10,009,790		8,731,915
Deferred revenue	6,350,581		6,350,581
Warranty liability	881,556		861,409
Operating lease liability - current portion	1,748,349		984,407
Finance lease liability - current portion	—		528,023
Warrant liability at fair value	5,061,700		5,778,660
Convertible notes at fair value	45,244,210		10,491,792
Total current liabilities	80,388,098		45,235,937
Operating lease liability-long-term	3,703,756		4,295,743
Financing lease liability-long-term	—		21,165
Total Liabilities	84,091,854		49,552,845
Commitments and contingencies
Stockholders’ Equity:

Common stock, par value $0.001 per share, 36,000,000 shares authorized, 5,757,591 shares issued and outstanding as of March 31, 2025 and 3,843,341 shares issued and outstanding as of December 31, 2024 (presented on a reverse stock split-adjusted basis)*	5,757		3,843
Additional paid-in capital *	905,389,017		897,642,626
Accumulated deficit	(874,002,678)		(853,358,544)

Total stockholders’ equity	31,392,097		44,287,925
Total Liabilities and Stockholders’ Equity	$	115,483,951	$	93,840,770

* Periods presented have been adjusted to reflect the 2024 reverse stock split (1-for-20), which was effective June 17, 2024 and the 2025 reverse stock split (1-for-12.5) which was effective March 17, 2025. Additional information regarding the reverse stock splits may be found in Note 1 – Summary of Business and Significant Accounting Principles to this Condensed Consolidated Financial Statement in this Quarterly Report on Form 10-Q

See accompanying notes to the Condensed Consolidated Financial Statements.

Workhorse Group Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended March 31,
	2025		2024
Sales, net of returns and allowances	$	640,922	$	1,339,295
Cost of sales	5,164,763		7,442,778
Gross loss	(4,523,841)		(6,103,483)
Operating expenses
Selling, general and administrative	6,783,911		14,095,278
Research and development	1,529,019		3,527,911
Total operating expenses	8,312,930		17,623,189
Loss from operations	(12,836,771)		(23,726,672)
Interest income (expense), net	(5,252,228)		(1,164,593)
Change in fair value adjustment on convertible notes	(3,272,095)		(467,874)
Change in fair value adjustment on warrants	716,960		(3,796,648)

Loss before provision for income taxes	(20,644,134)		(29,155,787)
Provision for income taxes	—		—
Net loss	$	(20,644,134)	$	(29,155,787)

Net loss per share of common stock
Basic and Diluted*	$	(4.68)	$	(24.09)


Weighted average shares used in computing net loss per share of common stock
Basic and Diluted*	4,409,194		1,210,429

See accompanying notes to the Condensed Consolidated Financial Statements.

Workhorse Group Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Common Stock			Additional Paid-in Capital*	Accumulated Deficit				Total Stockholders’ Equity
	Number of Shares*	Amount*
Balance as of December 31, 2024	3,843,341	$	3,843		$	897,642,626	$	(853,358,544)		$	44,287,925
Common stock issued under ATM	45,755	46			—		—			46
Common stock issued under Convertible Note	1,862,003	1,862			6,971,603		—			6,973,465



Stock options and vesting of restricted shares**	6,492	6			23,387					23,393
Stock based compensation**	—	—			751,401		—			751,401
Net loss for the year ended Net loss	—	—			—		(20,644,134)			(20,644,134)
Balance as of March 31, 2025	5,757,591	$	5,757		$	905,389,017	$	(874,002,678)		$	31,392,097


	Common Stock			Additional Paid-in Capital*	Accumulated Deficit				Total Stockholders’ Equity
	Number of Shares*	Amount*
Balance as of December 31, 2023	1,143,923	$	1,144		$	834,679,278	$	(751,568,251)		$	83,112,171
Common stock issued under ATM	39,236	39			1,242,609		—			1,242,648
Common stock issued under 2023 Warrant Exchange	34,000	34			2,847,466		—			2,847,500
Issuance of common stock under ELOC Purchase Agreement	48,000	48			3,123,952					3,124,000
Common stock issued under 2024 Securities Purchase Agreement	53,118	53			3,268,394		—			3,268,447
Stock options and vesting of restricted shares**	4,891	5			(163,521)		—			(163,516)
Stock-based compensation	—	—			3,148,308		—			3,148,308
Net loss	—	—			—		(29,155,787)			(29,155,787)

Balance as of March 31, 2024	1,323,168	$	1,323		$	848,146,486	$	(780,724,038)		$	67,423,772

**Net of tax payments related to shares withheld for option exercises and vested stock.

See accompanying notes to the Condensed Consolidated Financial Statements

Workhorse Group Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
	2025		2024
Cash flows from operating activities:
Net loss	$	(20,644,134)	$	(29,155,787)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,982,482		1,960,844
Stock-based compensation	751,401		3,370,204
Change in inventory and prepaid purchases reserve	253,432		2,074,785
Non-cash lease expense	366,740		111,363

Non-cash change in fair value loss of convertible notes	2,152,418		(3,427,534)
Non-cash change in fair value of warrants	(716,960)		3,769,648
Non-cash payment of convertible notes	1,073,465		2,800,000
Original issuance discount - non-cash fees on convertible notes	4,812,500		1,125,000


Effects of changes in operating assets and liabilities:
Accounts receivable	508,272		2,702,322
Inventory, net	276,658		(6,470,772)
Prepaid expenses and other current assets	149,351		(36,216)
Accounts payable and accrued liabilities	860,638		4,540,735
Deferred revenue	—		(24,750)
Warranty liability	20,147		(1,303,420)

Net cash used in operating activities	(8,153,590)		(17,963,578)

Cash flows from investing activities:
Capital expenditures	(17,866)		(3,025,775)
Net cash used in investing activities	(17,866)		(3,025,775)

Cash flows from financing activities:
Proceeds from convertible notes	33,687,500		—
Payments on convertible notes	—		(12,125,000)
Proceeds from issuance of common stock	406,963		4,366,649
Payments on finance lease	—		(206,265)
Exercise of options and restricted share award activity	23,393		(163,516)
Net cash provided by (used in) financing activities	34,117,856		(8,128,132)

Change in cash and cash equivalents and restricted cash	25,946,400		(29,117,485)
Cash and cash equivalents and restricted cash, beginning of the period	4,644,938		35,845,915
Cash and cash equivalents and restricted cash, end of the period	$	30,591,338	$	6,728,430

See accompanying notes to the Condensed Consolidated Financial Statements.

Workhorse Group Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING PRINCIPLES

Overview

Workhorse Group Inc. (“Workhorse”, the “Company”, “we”, “us”, or “our”) is an American technology company with a vision to pioneer the transition to zero-emission commercial trucks. Our primary focus is to provide robust, sustainable and cost-effective solutions to the commercial transportation sector. We design, develop, manufacture and sell fully electric trucks.

Liquidity, Capital Resources, and Going Concern

The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applicable to a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these Condensed Consolidated Financial Statements are issued and will be able to realize assets and discharge its liabilities and commitments in the normal course of business. The Condensed Consolidated Financial Statements do not include any adjustments to the carrying amounts and classification of assets, liabilities, and reported expenses that may be necessary if the Company were unable to continue as a going concern.

Pursuant to the requirements of the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, Presentation of Financial Statements - Going Concern (“ASC 205-40”), management must evaluate whether there are conditions and events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date that these Condensed Consolidated Financial Statements are issued. In accordance with ASC 205-40, management’s analysis can only include the potential mitigating impact of management’s plans that have not been fully implemented as of the issuance date if (a) it is probable that management’s plans will be effectively implemented on a timely basis, and (b) it is probable that the plans, when implemented, will alleviate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.

We had sales of $0.6 million, incurred a net loss of $20.6 million and used $8.2 million of cash in operating activities during the three months ended March 31, 2025. As of March 31, 2025, we had $2.6 million of cash and cash equivalents and $27.9 million in restricted cash, net accounts receivable of $27,297, other receivables of $0.1 million, inventory, net of $41.3 million and accounts payable of $11.1 million. As of March 31, 2025, the Company had negative working capital of $2.8 million and an accumulated deficit of $874.0 million.

As a result of our recurring losses from operations, accumulated deficit, projected capital needs, and delays in bringing our trucks to market and lower than expected market demand, substantial doubt exists regarding our ability to continue as a going concern within one year after the issuance date of the accompanying Condensed Consolidated Financial Statements. Our ability to continue as a going concern is contingent upon successful execution of management’s intended plan over the next twelve months to improve the Company’s liquidity and working capital, which includes, but is not limited to:

•Generating revenue by increasing sales of our trucks and other services.

•Reducing expenses and limiting non-contracted capital expenditures.

•Receiving proceeds from our current financing arrangements, including through our 2024 Securities Purchase Agreement (as defined below).

•A possible sale-leaseback transaction of our Union City, IN production facility.

It is essential that we have access to capital as we bring our existing line of trucks to market, scale up production and sales of such trucks and continue to develop additional variations of our existing trucks and our next generation of trucks. There is no assurance that we will be successful in implementing management’s plans to generate liquidity to fund these activities or other aspects of our short and long-term strategy, that our projections of our future capital needs will prove accurate or that any additional funding would be available or sufficient to continue operations in future periods.

Our revenues from operations are unlikely to be sufficient to meet our liquidity requirements for the twelve months following the date of the issuance of our Condensed Consolidated Financial Statements, and, accordingly, our ability to continue as a going concern depends on our ability to obtain and receive proceeds from third-party financing. We currently expect that our primary source of third-party financing will be the proceeds of the Tenth Additional 2024 Note (as defined below), which we issued under our 2024 Securities Purchase Agreement. As of May 14, 2025, approximately $7.1 million of the proceeds of the Tenth Additional 2024 Note had been released from the lockbox account and approximately $24.4 million of such proceeds

remain in the lockbox account and will be available to us only upon satisfaction or waiver of the conditions described below. Accordingly, there can be no assurance that any or all of such proceeds will be available to us on a timely basis or ever.

Under the ATM Agreement, we may offer and sell shares of our Common Stock having an aggregate sales price of up to $175.0 million, at amounts and times determined by management. During the year ended December 31, 2024, we issued 0.2 million shares under the ATM Agreement for net proceeds of $4.2 million, as adjusted for our 2025 Reverse Stock Split (as defined below). During the three months ended March 31, 2025, no shares were issued under the ATM Agreement, In comparison, during the same period in 2024, we issued 39,200 shares under the ATM Agreement, for net proceeds of $2.7 million. As of March 31, 2025, approximately $95.0 million remains available under the ATM Agreement. Certain of our other existing financing arrangements place certain conditions and restrictions on the use of our ATM Agreement. Rules under Form S-3 affecting issuers with a public float of less than $75 million may significantly limit our ability to make issuances and sales under our ATM Agreement going forward, as well.

In addition, the terms of our existing financing arrangements impose substantial restrictions on our ability to obtain additional financing.

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.

These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of these accompanying Condensed Consolidated Financial Statements.

In order to manage liquidity and operating capital, the Company has taken or plans to take the actions described below.

Financings under the 2024 Securities Purchase Agreement

As part of management's plan to raise capital to fund operations, we have entered into a financing arrangement that makes liquidity available in both the short term and over time. On March 15, 2024, we entered into a securities purchase agreement (the “2024 Securities Purchase Agreement”) with an institutional investor (the "Investor") under which we agreed to issue and sell, in one or more registered public offerings by the Company directly to the Investor in multiple tranches over a period beginning on March 15, 2024, (i) senior secured convertible notes for up to an aggregate principal amount of $139.0 million (the “2024 Notes”) that are convertible into shares of the Company’s common stock, par value of $0.001 per share (the “Common Stock”) and (ii) warrants (the “ 2024 Warrants”) to purchase shares of Common Stock.

During the three months ended March 31, 2025, the Company issued and sold to the Investor (i) 2024 Notes in the original principal amount of $38.5 million and (ii) 2024 Warrants to purchase up to 4.4 million shares of Common Stock (following adjustment for our 2025 Reverse Stock Split). As of March 31, 2025, we had issued and sold to the Investor (i) 2024 Notes in the aggregate original principal amount of $77.0 million and (ii) 2024 Warrants to purchase up to 5.7 million shares of Common Stock pursuant to the 2024 Securities Purchase Agreement (following adjustment in connection with our 2024 Reverse Stock Split and our 2025 Reverse Stock Split).

As described in our Current Report on Form 8-K filed with the SEC on February 12, 2025. we issued a 2024 Note in aggregate principal amount of $35.0 million (the "Tenth Additional 2024 Note") which is governed by a lockbox letter entered into between the Company and the Investor (the "Lockbox Letter"). Pursuant to the Lockbox Letter, the net proceeds of $30.6 million, after a 12.5% original issue discount and related fees and expenses, were deposited into a lockbox account under the control of the collateral agent under the 2024 Securities Purchase Agreement. Funds may be released from the lockbox account from time to time (i) in an amount corresponding to the principal amount converted, if the investor converts any portion of the Tenth Additional 2024 Note; (ii) in the amount of $2.6 million each calendar month, if we satisfy the conditions of a Market Release Event (as defined in the Lockbox Letter), including minimum Common Stock price and trading volume conditions; or (iii) otherwise, with the consent of the Investor. As of May 14, 2025, approximately $7.1 million of the net proceeds of the Tenth Additional 2024 Note had been released from the lockbox account. Additionally, on May 14, 2025, the investor notified the Company that it consented to the release of an additional $2.5 million from the lockbox account. Subject to the satisfaction of certain conditions in the Lockbox Letter, the Company expects to receive such funds, less fees and expenses, on or about May 19, 2025. Although we expect that we will receive additional funds held in the lockbox account during the term of the Tenth Additional 2024 Note, it is possible that the foregoing events will not occur with respect to some or all of the principal amount of the Tenth Additional 2024 Note and that, accordingly, we will not be able to draw any or all of the remaining funds in the lockbox account. Furthermore, there is no assurance that we will receive any additional proceeds beyond those from the Tenth Additional 2024 Note under the 2024 Securities Purchase Agreement.

As of March 31, 2025, $40.0 million aggregate principal amount remained outstanding under the 2024 Notes, and no shares had been issued pursuant to the 2024 Warrants. Upon our filing of one or more additional prospectus supplements, and our satisfaction of certain other conditions, as of March 31, 2025, the 2024 Securities Purchase Agreement contemplates additional closings of 2024 Notes of up to $62.0 million in aggregate principal amount of additional 2024 Notes and corresponding 2024 Warrants. Rules under Form S-3 affecting issuers with a public float of less than $75 million may significantly limit our ability

to make issuances and sales under our ATM Agreement going forward, as well.

Possible Sale Leaseback of Union City, Indiana Manufacturing Facility

Another strategic opportunity identified by management to raise capital to fund operations was to enter into a sale leaseback arrangement for our Union City, IN manufacturing facility. As previously reported, on January 31, 2024, a subsidiary of the Company entered into a purchase and sale agreement (the “Purchase and Sale Agreement”) with William Repny LLC (the “Union City Co-Party”) for the sale of our Union City, IN manufacturing facility for a negotiated purchase price in connection with which we would lease the property back from the Union City Co-Party. Although the Purchase and Sale Agreement has not been terminated, we do not believe the transaction will be consummated at the current purchase price. Accordingly, we are currently discussing alternative sale and leaseback transactions with other potential purchasers, as well as possible changes to the terms of the Purchase and Sale Agreement with the Union City Co-Party or other strategic alternatives. We expect that if a sale and leaseback transaction for the Union City facility is consummated, whether with the Union City Co-Party or another party, the purchase price in such transaction will be materially lower than the price provided in the Purchase and Sale Agreement. Moreover, because the Union City facility is currently operating at a very limited portion of its capacity, resulting from significantly lower than expected market demand, we believe that without a significant vehicle purchase agreement from a customer, it may not be possible to consummate a sale leaseback of the facility on terms acceptable to the Company.

Cost-saving Measures

As previously disclosed, a key part of management’s plan to improve liquidity and meet working capital needs involves reducing operating costs to lower cash usage and ease pressure on available liquidity. Many of the cost-saving measures implemented in 2024 have continued to yield benefits through the quarter ended March 31, 2025, including the items discussed below.

•Completed a reduction in force (the “RIF”) pursuant to which we terminated approximately 20% of our total workforce, excluding direct labor. We have not incurred and do not expect to incur additional material costs in connection with the RIF.

•Furloughed employees at our Union City, IN manufacturing facility without pay

•Reducing expenses and limiting non-contracted capital expenditures.

•Raising capital to fund operations through our 2024 Securities Purchase Agreement.

We have reinstated certain furloughed employees to fulfill truck production requirements for the W56. However, there is still no assurance that all furloughed employees, including key personnel, will be available and willing to return to work or that we will be able to replace the employees who departed voluntarily.

In addition to the RIF and furlough actions, we have significantly reduced other operating costs during the first quarter of 2025 compared to the prior year period including, but not limited to, reductions in third-party consulting arrangements, lower research and development activities and associated internal and external costs related to new vehicle program development, consolidation of activities within back-office functions to take advantage of associated personnel attrition and other cost control actions.

We also substantially decreased the procurement of raw materials for future commercial vehicle production, which has notably affected the near-term production and availability of our W56 vehicle platform. Additionally, we are overdue on payments to certain suppliers for outstanding accounts payable. Certain purchased components for our trucks have supplier long-lead times of up to 24 weeks. While we are focused on the sale of existing inventory on hand, in the event of an increase in market demand for our W56 vehicle, we may not have sufficient cash resources to fund working capital requirements without support from our customer and supplier base, or the availability of additional third-party financing arrangements. We are currently working with certain of our suppliers to extend or restructure the payment terms of its outstanding accounts payable as well as terms and conditions related to the purchase of materials necessary for future production.

Management plans to continue to seek additional opportunities to reduce costs and, in particular, cash expenditures, in a manner intended to minimize their adverse impact on our core operations. Management intends to continue to maintain a significantly

reduced capital expenditures and only allocate capital for manufacturing equipment and tooling, as needed for future production to support firm orders. There can be no assurance that the measures described above, or any other cost-saving measures we may implement in the future will be sufficient to address our immediate or longer-term liquidity and working capital needs. Moreover, it is possible that such measures will have an adverse effect on our operations.

Aero Drone Design and Manufacturing Operations

Management’s plan also included a decision to cease the production operations of our drone design and manufacturing business and transition exclusively to operating as a Drones as a Service business, as previously disclosed in the 2024 Form 10-K. On June 6, 2024, the Company completed the previously disclosed divestiture of its Aero business (the “Aero Divestiture”) to a third party, to concentrate on its commercial electric vehicle business. The Aero Divestiture has provided an estimated monthly cost savings of approximately $0.4 million. Under the agreement’s earn-out provisions, the Company will receive a portion of the proceeds if the Aero business realizes positive net cash flow but we cannot predict whether or when we would receive such payments. The loss on the Aero Divestiture was $0.7 million of which $0.4 million was included in Selling, general and administrative expenses and $0.3 million in Cost of sales in the 2024 Consolidated Statement of Operations for the year ended December 31, 2024.

NASDAQ Listing Requirements and Reverse Stock Split

As previously disclosed, on October 2, 2024, we received notice from Nasdaq indicating that the closing bid price for our Common Stock had fallen below $1.00 for 30 consecutive trading days and therefore we were no longer in compliance with the $1.00 minimum bid requirement (the “Minimum Bid Requirement”). On March 17, 2025, we effectuated a 1-for-12.5 reverse stock split of our authorized shares and outstanding shares of Common Stock (the "2025 Reverse Stock Split"). We adjusted the exercise price, number of shares issuable on exercise or vesting and/or other terms of our outstanding stock options, warrants, restricted stock, and restricted stock units to reflect the effects of the 2025 Reverse Stock Split. The 2025 Reverse Stock Split was intended to allow us to regain compliance with the Minimum Bid Requirement, and we received notification from Nasdaq Capital Markets on April 1, 2025, that we had regained compliance with the Minimum Bid Requirement.

In addition, Nasdaq has recently adopted new rules that could hinder our ability to cure any future deficiency and maintain the continued listing of our Common Stock. These new rules, which became effective in January 2025: (i) provide for the immediate delisting with no grace period of any listed company that falls out of compliance with the Minimum Bid Requirement for the second time in a twelve-month period, (ii) provide for immediate delisting if a listed company effects a reverse stock split that causes it to fall out of compliance with certain other listing requirements, and (iii) limit the ratio of reverse stock splits to a cumulative ratio of 1-to-250 in any two-year period. These Nasdaq rules limit our ability to affect a subsequent reverse stock split, including in the event our Common Stock fails to comply with the $1.00 Minimum Bid Requirement in the future.

Basis of Presentation and Consolidation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Workhorse Group Inc. and its subsidiaries, with all intercompany transactions and balances having been eliminated. The Company prepared the Condensed Consolidated Financial Statements in accordance with United States generally accepted accounting principles (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) and, in the Company's opinion, reflect all necessary adjustments, including normal recurring items that are necessary.

The Company operates as a single reporting segment under ASC 280, Segment Reporting, ("ASC 280"), consistent with how management evaluates and prioritizes investment and resource allocation decisions and assesses operating performance.

These Condensed Consolidated Financial Statements and the notes thereto for the periods presented have been adjusted to reflect the Company’s June 17, 2024 1-for-20 reverse stock split (the “2024 Reverse Stock Split”) and the 2025 Reverse Stock Split, a 1-for-12.5 reverse stock split effective March 17, 2025, in each case of its issued and outstanding shares of Common Stock.

The Company has elected the fair value option for its convertible debt and associated warrants. This election was made to align the measurement of these financial instruments with their market values and simplify the accounting for the components. Changes in fair value are recognized in Interest income (loss) and Fair value adjustment (loss) on warrants, respectively in the Condensed Consolidated Statement of Operations.

In the opinion of our management, the unaudited Condensed Consolidated Financial Statements have been prepared on a basis consistent with the audited Consolidated Financial Statements and include all adjustments necessary for the fair presentation of

Workhorse’s financial condition, 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. Reference should be made to the Consolidated Financial Statements contained in our 2024 Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures in the accompanying notes.

Reclassifications

The Company reclassified certain prior-period amounts on the Condensed Consolidated Balance Sheets to conform to the current-period presentation. These reclassifications had no impact on net income (loss), total assets, or total liabilities.

2. INVENTORY, NET

Inventory, net consisted of the following:


	March 31, 2025		December 31, 2024
Raw materials	$	30,231,876	$	30,495,263
Work in process	1,845,316		2,333,989
Finished goods	21,062,826		20,587,424
	53,140,018		53,416,676
Less: inventory reserves	(11,831,088)		(11,577,656)
Inventory, net	$	41,308,930	$	41,839,020

We reserve inventory for any excess or obsolete inventories or when we believe the net realizable value of inventories is less than the carrying value. As of March 31, 2025, and December 31, 2024, we carried inventory reserves of $11.8 million and $11.6 million, respectively. The increase in inventory reserves was primarily attributable to excess inventory due to slower than anticipated truck sales offset by our efforts to convert our on-hand inventory into finished goods, as well as sell and dispose of inventory that has been fully reserved.

During the three months ended March 31, 2025, and March 31, 2024, we recorded net write-downs of $0.3 million and $1.6 million, respectively, in Cost of sales in the Condensed Consolidated Statements of Operations.

3. CONTRACT MANUFACTURING SERVICES AND INVESTMENT IN TROPOS

We have a minority ownership investment in Tropos Technologies, Inc. (“Tropos”). The investment was acquired during the third quarter of 2022 in exchange for a cash payment of $5.0 million and a $5.0 million contribution of non-cash consideration representing a deposit from Tropos for future assembly services under an Assembly Services Agreement. The $5.0 million non-cash consideration was recorded as deferred revenue and is recognized as revenue over time as assembly service performance obligations are satisfied.

We recorded our investment at cost less impairment, if applicable. In accordance with FASB ASC Topic 321, Investments - Equity Securities, we assessed our investment for impairment at each reporting period to determine if the fair value declined below its cost basis and if the impairment is other than temporary.

During the third quarter of 2023, we determined that our investment in Tropos was impaired based on the economic conditions and uncertainties that have significantly affected Tropos' performance and financial position. The impairment is considered other-than-temporary as the decline in fair value of the investment is not expected to recover in the foreseeable future. The impairment charge recognized for our investment was $10.0 million, which represented the difference between the original cost of the investment and its fair value as of the impairment assessment date. The impairment loss was recognized in Other (loss) income in the Consolidated Statements of Operations for the year ended December 31, 2023.

The impairment of our investment did not release the Company from its obligation to perform assembly services under the Assembly Services Agreement and, accordingly, the Company continues to be obligated to perform assembly services and carry the balance of such obligations in Deferred revenue in the Condensed Consolidated Balance Sheets. As of March 31, 2025, and December 31, 2024, deferred revenue related to the Assembly Services Agreement was $4.7 million.

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:


	March 31, 2025		December 31, 2024
Prepaid purchases	$	6,667,634	$	6,721,097
Less: prepaid purchases reserve	(3,625,933)		(3,625,933)
Prepaid purchases, net	3,041,701		3,095,164
Prepaid insurance	1,011,281		1,452,542
Right of return asset	877,587		877,587
Other	545,970		440,597
Prepaid expenses and other current assets	$	5,476,539	$	5,865,890

Prepaid purchases consist of deposits made to our suppliers for non-recurring engineering costs and production parts. As of March 31, 2025 and December 31, 2024, net prepaid purchases primarily consisted of deposits for direct materials associated with our W4 CC and W750 trucks.

5. REVENUE

The following table provides a summary of sales activity for the periods indicated:


	Three Months Ended March 31,
	2025		2024
Vehicles	$	351,500	$	568,296
Services, parts and accessories	289,422		770,999
Total revenues	$	640,922	$	1,339,295

Vehicles

Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under the agreement, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including any constraints on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

Services, Parts and Accessories

Services, parts and accessories revenue consists of non-warranty after-sales vehicle services, body shop and parts, and assembly services. It also includes revenue generated from operating our Stables by Workhorse route, and other service revenue. We recognize revenue related to sales of service, parts and other accessories when we transfer control of the items. For the majority of vehicles, parts, and accessories, we transfer control and recognize a sale when we ship the product from our manufacturing facility to our customer (dealers and distributors). We recognize service revenue upon the transfer of control to the customer, which is generally at the time the service is completed.

For the three months ending March 31, 2025 and 2024, two entities represented 10% or more of our total revenues.

Deferred Revenue

Deferred revenue related to our Assembly Services Agreement with Tropos Technologies, Inc and sales of select vehicles consisted of the following:


	March 31,		December 31,
	2025		2024
Deferred revenue, beginning of period	$	6,350,581	$	4,714,331
Additions	—		2,265,000

Revenue recognized	—		(628,750)
Deferred revenue, end of period	$	6,350,581	$	6,350,581
Less: current portion	6,350,581		6,350,581
Long-term deferred revenue, end of period	$	—	$	—

6. ACCRUED AND OTHER CURRENT LIABILITIES

Accrued and other current liabilities consisted of the following:


	March 31, 2025		December 31, 2024
UPS allowance	$	1,412,500	$	1,412,500

Compensation and related costs	5,528,100		4,507,561
Sales returns and allowances	1,102,005		1,102,005
Accrued interest	433,508		167,388
Supplier allowance	1,024,518		1,024,518

Other	509,159		517,943
Total accrued and other current liabilities	$	10,009,790	$	8,731,915

Warranty Liability

We generally provide a manufacturer's warranty on all new vehicles we sell. We record a warranty liability for the products sold by us, which includes our best estimate of the projected costs to repair or replace items under warranties and recalls if identified. The amount of warranty liability accrued reflects management’s best estimate of the nature, frequency, and costs of future claims. Historically, the cost of fulfilling the warranty obligations has principally involved replacement parts, towing and transportation costs, labor and sometimes travel for any field retrofit campaigns. Our estimates are based on historical experience, the extent of pre-production testing, the number of units involved, and the extent of features/components included in product models.

Although we believe the estimates and judgments discussed herein are reasonable, actual results could differ, and we may be exposed to increases or decreases in our warranty liability accrual that could be material. Change in the Accrued warranty liability consisted of the following:


	Three Months Ended March 31,
	2025		2024
Warranty liability, beginning of period	$	861,409	$	1,902,647
Warranty costs incurred	(122,745)		(85,194)
Provision for warranty(1)	142,892		(1,218,226)
Warranty liability, end of period	$	881,556	$	599,227

(1) The negative provision in 2024 is a result of the expiration of the warranty liability related to non-current truck models

7. DEBT

A reconciliation of the fair value of convertible notes is as follows:


	March 31, 2025		December 31, 2024
Fair value of convertible notes, beginning of period	$	10,491,792	$	20,180,100
Fair value of convertible notes issued during period	61,262,898		57,078,214
Payments on convertible notes	—		(20,180,100)
Change in fair value of convertible notes (1)	(17,091,207)		(2,621,234)

Fair value of convertible notes exchanged for common stock	(9,419,273)		(43,965,188)
Fair value of convertible notes, end of period	$	45,244,210	$	10,491,792

(1) The Company recognizes changes in fair value of convertible notes for Common Stock, net in the Condensed Consolidated Statements of Operations.

Senior Secured Convertible Notes

2024 Securities Purchase Agreement

On March 15, 2024, we entered into the 2024 Securities Purchase Agreement with the Investor under which the Company agreed to issue and sell, in one or more registered public offerings by the Company directly to the Investor in multiple tranches over a period beginning on March 15, 2024, (i) 2024 Notes for up to an aggregate principal amount of $139.0 million that will be convertible into shares of the Company’s Common Stock and (ii) 2024 Warrants to purchase shares of Common Stock.

As of March 31, 2025, the Company issued and sold to the Investor (i) 2024 Notes in the original principal amount of $77.0 million and (ii) 2024 Warrants to purchase up to 5.7 million shares of Common Stock pursuant to the 2024 Securities Purchase Agreement (following adjustment in connection with the Company’s 2024 Reverse Stock Split and 2025 Reverse Stock Split). As of March 31, 2025, $45.2 million fair value aggregate principal amount remained outstanding under the 2024 Notes, and no shares had been issued pursuant to the 2024 Warrants.

No 2024 Notes may be converted and no 2024 Warrants may be exercised to the extent that such conversion or exercise would cause the then holder of such 2024 Notes or 2024 Warrants to become the beneficial owner of more than 9.99% of the Company’s then outstanding Common Stock, after giving effect to such conversion or exercise.

2024 Notes

The 2024 Notes were issued with original issue discount of 12.5%, resulting in $67.2 million of net proceeds to the Company before fees and expenses as of March 31, 2025. The 2024 Notes are or will be senior, secured obligations of the Company, ranking senior to all other unsecured indebtedness, subject to certain limitations and are unconditionally guaranteed by each of the Company’s subsidiaries, pursuant to the terms of a certain security agreement and subsidiary guarantee. The 2024 Notes are issued pursuant to the Company’s Indenture with U.S. Bank Trust Company, National Association, as trustee, and supplemental indentures thereto.

Each 2024 Notes bears interest at a rate of 9.0% per annum, payable in arrears on the first trading day of each calendar quarter, at the Company’s option, either in cash or in-kind by compounding and becoming additional principal. Upon the occurrence and during the continuance of an event of default, the interest rate will increase to 18.0% per annum. Unless earlier converted or redeemed, each 2024 Notes will mature on the one-year anniversary of the date of issuance, subject to extension at the option of the holders in certain circumstances as provided therein.

All amounts due under any 2024 Notes are convertible at any time, in whole or in part, at the option of the Investors into shares of Common Stock at a conversion price equal to the applicable Reference Price set forth in such 2024 Note or (b) the greater of (x) the applicable Floor Price set forth in such 2024 Notes and (y) 87.5% of the volume weighted average price of the Common Stock during the ten trading days ending and including the trading day immediately preceding the delivery or deemed delivery of the applicable conversion notice, as elected by the converting holder. The Reference Price and Floor Price are subject to customary adjustments upon any stock split, stock dividend, stock combination, recapitalization or similar event. The Reference Price is also subject to full-ratchet adjustment in connection with a subsequent offering at a per share price less than the Reference Price then in effect. Subject to the rules and regulations of Nasdaq, we have the right, at any time, with the written consent of the Investor, to lower the reference price to any amount and for any period of time deemed appropriate by our board of directors. Upon the satisfaction of certain conditions, we may prepay any 2024 Notes upon 15 business days’ written notice by paying an amount equal to the greater of (i) the face value of the 2024 Notes at premium of 25% (or 75% premium, during the occurrence and continuance of an event of default, or in the event certain redemption conditions are not satisfied) and (ii) the equity value of the shares of Common Stock underlying the 2024 Notes. The equity value of our Common Stock underlying the 2024 Notes is calculated using the two greatest volume weighted average prices of our Common Stock during the period immediately preceding the date of such redemption and ending on the date we make the required payment.

The 2024 Notes contain customary affirmative and negative covenants, including certain limitations on debt, liens, restricted payments, asset transfers, changes in the business and transactions with affiliates. The 2024 Notes require the Company to maintain minimum liquidity on the last day of each fiscal quarter in the amount of either (i) $1.5 million if the sale leaseback transaction of Company’s manufacturing facility in Union City, IN (the “Sale Leaseback”) has not been consummated and (ii) $4.0 million if the Sale Leaseback has been consummated, subject to certain conditions. The 2024 Notes also contain customary events of default.

Under certain circumstances, including a change of control, the Investor may cause us to redeem all or a portion of the then-outstanding amount of principal and interest on any 2024 Notes in cash at the greater of (i) the face value of the amount of 2024 Notes to be redeemed at a 25% premium or 10% premium with respect to amounts held in the lockbox account (or at a 75% premium, if certain redemption conditions are not satisfied or during the occurrence and continuance of an event of default), (ii)

the equity value of our Common Stock underlying such amount of 2024 Notes to be redeemed and (iii) the equity value of the change of control consideration payable to the holder of our Common Stock underlying such 2024 Notes.

In addition, during an event of default, the Investor may require us to redeem in cash all, or any portion, of any outstanding 2024 Notes at the greater of (i) the face value of our Common Stock underlying such 2024 Notes at a 75% premium and (ii) the equity value of our Common Stock underlying such 2024 Notes. In addition, during a bankruptcy event of default, we shall immediately redeem in cash all amounts due under the 2024 Notes at a 75% premium unless the Investor of such 2024 Notes waives such right to receive payment. Further, upon the sale of certain assets, the Investor may cause a redemption at a premium, including upon consummation of the Sale Leaseback if the redemption conditions are not satisfied. The 2024 Notes also provide for purchase and participation rights in the event of a dividend or other purchase right being granted to the holders of Common Stock.

As of March 31, 2025, $40.0 million in aggregate principal amount remained outstanding under the 2024 Notes. Of this amount, $27.4 million is considered restricted cash, resulting in a net outstanding aggregate principal amount of $12.6 million.

During the three months ended March 31, 2025, the Investor converted $5.9 million of principal into Common Stock, and we recorded a net $1.6 million fair value net gain in the Condensed Consolidated Statements of Operations.

As of March 31, 2025, the estimated fair value of the 2024 Notes totaled $45.2 million. The fair value was computed using a Monte Carlo Simulation Model which incorporates significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement. The unobservable inputs utilized for measuring the fair value of the 2024 Notes reflect our assumptions about the assumptions that market participants would use in valuing the 2024 Notes as of the issuance date and subsequent reporting period.

We determined the fair value by using the following key inputs to the Monte Carlo Simulation Model:


Issuance Date	December 16, 2024
Maturity Date	December 16, 2025
Principal Balance as of the Valuation Date	$	3,500,000
Risk-Free Rate (Annual)	3.8		%
Corporate Bond Yield	24.7		%
Volatility (Annual)	95.0		%
Outstanding Principal	$	3,008,413


Issuance Date	January 27, 2025
Maturity Date	January 27, 2026
Principal Balance as of the Valuation Date	$	3,500,000
Risk-Free Rate (Annual)	3.8		%
Corporate Bond Yield	24.7		%
Volatility (Annual)	95.0		%
Outstanding Principal	$	2,723,970


Issuance Date	February 12, 2025
Maturity Date	February 12, 2026
Principal Balance as of the Valuation Date	$	35,000,000
Risk-Free Rate (Annual)	3.8		%
Corporate Bond Yield	24.7		%
Volatility (Annual)	95.0		%
Outstanding Principal	$	34,267,617

As of March 31, 2025, the Company was in compliance with the debt terms and associated covenants under the 2024 Notes.

Warrants Exercisable

During the three months ended March 31, 2025, the Company issued 2024 Warrants to purchase 4.4 million shares of Common Stock at an exercise price of $8.75 per share (following adjustment in connection with the Company’s 2024 Reverse Stock Split and 2025 Reverse Stock Split). The exercise price of the outstanding 2024 Warrants is subject to adjustment to a price based on the then-current market price of the Common Stock upon the occurrence of certain Stock Combination Events, including, without limitation, a reverse split of the Common Stock. We expect that such an adjustment may be required as a result of the 2025 Reverse Stock Split and that any such adjustment would affect the fair value of the 2024 Warrants. As of March 31, 2025, no shares had been issued pursuant to the 2024 Warrants.

Under the 2024 Warrants, the Investor has a purchase right that allows the Investor to participate in transactions in which the Company issues or sells certain securities or other property to holders of Common Stock, allowing the Investor to acquire, on the terms and conditions applicable to such purchase rights, the aggregate purchase rights which the holder would have been able to acquire if the holder held the number of shares of Common Stock acquirable upon exercise of the 2024 Warrants.

In the event of a Fundamental Transaction (as defined in the 2024 Warrants) that is not a change of control or corporate event as described in the 2024 Warrants, the surviving entity would be required to assume the Company’s obligations under the 2024 Warrants. In addition, if the Company engages in certain transactions that result in the holders of the Common Stock receiving consideration, a holder of the 2024 Warrants will have the option to either (i) exercise the 2024 Warrants prior to the consummation of such transaction and receive the consideration to be issued or distributed in connection with such transaction or (ii) cause the Company to repurchase the 2024 Warrants for its then Black Scholes Value (as defined in the 2024 Warrants).

As of March 31, 2025, the estimated fair value of the 2024 Warrants as of each respective issuance date totaled $5.1 million. For the three months ending March 31, 2025, we recorded a $0.7 million net fair value gain, compared to a $3.8 million net fair value loss for the same period in 2024, in Change in fair value of warrants in the Condensed Consolidated Statement of Operations related to the 2024 Warrants. The fair value of the 2024 Warrants was measured using the Black Scholes model approach.

Significant inputs to the model at each respective issuance date and March 31, 2025, were as follows:


Valuation Assumptions	March 31, 2025		Initial Recognition on March 15, 2024
Fair Value	$	90,623	$	4,749,754
Stock Price	$	1.84	$	5.32
Strike Price	$	87.50	$	7.00
Volatility (annual)	90.0%		45.0%
Risk-Free Rate	4.1%		4.2%
Estimated time to expiration (years)	8.96		10
Dividend Yield	0.0%		0.0%


Valuation Assumptions	March 31, 2025		Initial Recognition on May 10, 2024
Fair Value	$	97,030	$	3,706,121
Stock Price	$	1.84	$	3.60
Strike Price	$	73.58	$	5.89
Volatility (annual)	85.0%		50.0%
Risk-Free Rate	4.1%		4.4%
Estimated time to expiration (years)	9.11		10.00
Dividend Yield	0.0%		0.0%


Valuation Assumptions	March 31, 2025		Initial Recognition on May 29, 2024
Fair Value	$	109,034	$	4,099,389
Stock Price	$	1.84	$	3.80
Strike Price	$	73.58	$	5.89
Volatility (annual)	85.0%		45.0%
Risk-Free Rate	4.1%		4.5%
Estimated time to expiration (years)	9.16		10
Dividend Yield	0.0%		0.0%


Valuation Assumptions	March 31, 2025		Initial Recognition on July 18, 2024
Fair Value	$	187,682	$	2,901,545
Stock Price	$	1.84	$	1.89
Strike Price	$	36.58	$	2.93
Volatility (annual)	85.0%		50.0		%
Risk-Free Rate	4.1%		4.1		%
Estimated time to expiration (years)	9.30		10
Dividend Yield	0.0%		0


Valuation Assumptions	March 31, 2025		Initial Recognition on August 23, 2024
Fair Value	$	216,526	$	1,200,626
Stock Price	$	1.84	$	0.78
Strike Price	$	13.88	$	1.11
Volatility (annual)	75.0%		45.0		%
Risk-Free Rate	4.1%		3.7		%
Estimated time to expiration (years)	9.40		10
Dividend Yield	0.0%		0


Valuation Assumptions	March 31, 2025		Initial Recognition on September 30, 2024
Fair Value	$	329,605	$	2,252,786
Stock Price	$	1.84	$	0.87
Strike Price	$	15.86	$	1.27
Volatility (annual)	75.0%		50.0		%
Risk-Free Rate	4.1%		3.7		%
Estimated time to expiration (years)	9.50		10
Dividend Yield	0.0%		0


Valuation Assumptions	March 31, 2025		Initial Recognition on February 12, 2025
Fair Value	$	4,031,200	$	16,416,923
Stock Price	$	1.84	$	6.61
Strike Price	$	8.75	$	8.75
Volatility (annual)	65.0%		45.0		%
Risk-Free Rate	4.1%		4.5		%
Estimated time to expiration (years)	9.87

SEC Form 10-Q filed by Workhorse Group Inc.