Workhorse Group Inc. (WKHS) - Q3 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended September 30, 2025. Workhorse Group Inc. is an American technology company focused on designing, developing, and manufacturing zero-emission commercial trucks. The company operates as a single reporting segment. As of November 7, 2025, there were 23,962,845 shares of Common Stock outstanding.
Key Financial Metrics
| Metric | Q3 2025 | Q3 2024 | YTD 9M 2025 | YTD 9M 2024 |
|---|---|---|---|---|
| Net Sales | $2.38 million | $2.51 million | $8.70 million | $4.69 million |
| Gross Loss | ($7.71 million) | ($4.13 million) | ($19.61 million) | ($16.70 million) |
| Net Loss | ($7.83 million) | ($25.14 million) | ($43.25 million) | ($80.61 million) |
| Net Loss Per Share (Basic/Diluted) | ($0.50) | ($19.00) | ($4.49) | ($62.70) |
| Cash & Cash Equivalents | $12.73 million | $4.12 million | $12.73 million | $4.12 million |
| Restricted Cash | $25.48 million | $0.53 million | $25.48 million | $0.53 million |
| Total Debt (Convertible Notes at Fair Value) | $32.27 million | $10.49 million | $32.27 million | $10.49 million |
| Working Capital | $12.53 million | $8.20 million | $12.53 million | $8.20 million |
Note: Per share data and share counts have been adjusted for the 2024 (1-for-20) and 2025 (1-for-12.5) reverse stock splits.
Material Changes vs. Prior Period
- Revenue: Q3 2025 revenue decreased slightly by $0.12 million compared to Q3 2024, driven by fewer truck sales offset by deferred revenue recognition. YTD revenue increased $4.0 million due to higher W56 truck deliveries.
- Profitability: Net loss improved significantly in Q3 2025 ($7.8M) compared to Q3 2024 ($25.1M). This improvement was primarily driven by a $13.8 million gain on sale of assets (Sale Leaseback of Union City facility) and a $4.8 million gain from the termination of the Tropos Assembly Services Agreement.
- Cost of Sales: Increased $3.5 million in Q3 2025, largely due to a $3.3 million increase in inventory excess and obsolescence reserves.
- Operating Expenses: SG&A expenses remained relatively flat quarter-over-quarter ($7.8M vs $7.7M) but decreased significantly YTD ($20.4M vs $33.9M) due to reduced headcount and consulting costs. R&D expenses decreased $1.2M QoQ and $3.9M YTD due to cost-saving measures.
- Liquidity: Cash and restricted cash increased substantially to $38.2 million (combined) from $4.6 million at year-end 2024, driven by financing activities and the asset sale leaseback.
Guidance, Outlook, and Risks
Going Concern: Management has expressed substantial doubt regarding the Company's ability to continue as a going concern for one year following the issuance date. This is due to recurring losses, an accumulated deficit of $896.6 million, and projected capital needs. Continuity depends on the successful execution of the "Recent Transactions" and raising additional capital.
Recent Transactions (August 15, 2025):
- Merger Agreement: Entered into a merger with Motiv Power Systems, Inc. Upon closing, pre-Merger Motiv investors will own ~62.5% of the combined entity, while existing Workhorse shareholders will own ~26.5%.
- Sale Leaseback: Sold the Union City, IN manufacturing facility for $20.0 million, recognizing a $13.8 million gain, and leased it back for 20 years.
- Debt Repayment & Exchange: Agreed to repay outstanding 2024 Notes (approx. $24.1M principal) upon Merger closing. 2024 Warrants will be exchanged for rights to acquire shares representing 30% of fully diluted shares prior to closing.
- Convertible Financing: Issued a $5.0 million Motive Convertible Note to an affiliate of the Motiv Investor.
Risks & Contingencies:
- Financing Restrictions: Approximately $17.0 million of proceeds from the Tenth Additional 2024 Note remains in a lockbox account, available only upon satisfaction of specific conditions (e.g., stock price/volume).
- Legal Proceedings: Ongoing litigation with battery supplier Coulomb Solutions Inc. (CSI). The court granted summary judgment for CSI on $2.95 million of claims; a settlement conference is scheduled for December 8, 2025. Workhorse has accrued $1.0 million for this dispute.
- Internal Controls: Disclosure controls and procedures were deemed not effective due to material weaknesses in reviewing third-party valuations and insufficient accounting personnel.
- Market Conditions: Slower-than-anticipated EV adoption, potential reduction in government subsidies, and supply chain constraints remain significant headwinds.
Investor Verification Checklist
- Merger Closing Conditions: Verify the status of regulatory approvals and the likelihood of the Motiv merger closing, which is critical for debt repayment and future capital structure.
- Lockbox Release: Monitor the release of the ~$17.0 million held in the lockbox account from the Tenth Additional 2024 Note, as this is a primary liquidity source contingent on market conditions.
- Legal Exposure: Track the outcome of the Coulomb Solutions Inc. litigation, specifically the remaining claims beyond the $2.95 million summary judgment.
- Inventory Valuation: Review the $16.1 million inventory reserve and the company's ability to sell existing inventory without further write-downs.
- Internal Control Remediation: Assess progress in remediating material weaknesses in financial reporting to ensure future filing reliability.