Workhorse (WKHS) 10-Q 6 Aug 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 06, 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	Jun. 30, 2018
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		45,982,134

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 586,441	$ 4,069,477
Accounts receivable, less allowance for doubtful accounts of $0 at June 30, 2018 and December 31, 2017, respectively	165,197	1,013,423
Lease receivable	41,375	45,300
Inventory	4,964,669	4,621,942
Prepaid expenses and deposits	181,091	946,134
Current assets, Total	5,938,773	10,696,276
Property, plant and equipment, net of accumulated depreciation of $2,248,107 and $2,095,571 at June 30, 2018 and December 31, 2017, respectively	5,443,488	5,596,013
Lease receivable	221,357	212,004
Assets, Total	11,603,618	16,504,293
Current liabilities:
Accounts payable	5,844,614	4,311,135
Accrued liabilities	2,061,308	1,718,397
Notes payable, related parties	550,000
Accounts payable, related parties	158,957	54,914
Customer deposits	320,000	54,405
Current portion of long-term debt	382,264	381,497
Current liabilities, other than notes payable	9,317,143	6,520,348
Principal amount of notes payable	5,750,000	5,750,000
Less: unamortized discount and debt issuance costs		987,500
Notes payable	5,750,000	4,762,500
Total current liabilities	15,067,143	11,282,848
Long-term debt	1,692,344	1,709,881
Stockholders' equity (deficit):
Series A preferred stock, par value of $.001 per share 75,000,000 shares authorized, no shares issued and outstanding at June 30, 2018 and December 31, 2017
Common stock, par value of $.001 per share 100,000,000 shares authorized, 45,003,219 shares issued and outstanding at June 30, 2018 and 41,529,181 shares issued and outstanding at December 31, 2017	45,003	41,529
Additional paid-in capital	113,181,411	107,760,036
Accumulated deficit	(118,382,283)	(104,290,001)
Stockholders' equity (deficit), Total	(5,155,869)	3,511,564
Liabilities and Stockholders' Equity (Deficit), Total	$ 11,603,618	$ 16,504,293

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Jun. 30, 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
Series A preferred stock, shares outstanding
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	45,003,219	41,529,181
Common stock, shares outstanding	45,003,219	41,529,181
Allowance for doubtful accounts	$ 0	$ 0
Accumulated depreciation, property, plant and equipment	$ 2,248,107	$ 2,095,571

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Net sales	$ 170,684	$ 252,000	$ 730,913	$ 1,822,037
Cost of sales	1,655,905	995,925	3,370,275	5,308,013
Gross loss	(1,485,221)	(743,925)	(2,639,362)	(3,485,976)
Operating Expenses
Selling, general and administrative	3,003,202	2,601,590	5,403,349	4,501,172
Research and development	1,894,712	5,811,333	4,232,343	9,054,655
Total operating expenses	4,897,914	8,412,923	9,635,692	13,555,827
Interest expense, net	526,162	21,852	1,052,049	57,503
Net loss	(6,909,297)	(9,178,700)	(13,327,103)	(17,099,306)
Deemed dividend - September 2017 Warrants	765,179		765,179
Net loss attributable to common stockholders	$ (7,674,476)	$ (9,178,700)	$ (14,092,282)	$ (17,099,306)
Net loss attributable to common stockholders per share - basic and diluted	$ (0.18)	$ (0.26)	$ (0.33)	$ (0.48)
Weighted average number of common shares outstanding	42,406,471	35,273,462	42,406,471	35,273,462

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from operating activities:
Net loss	$ (13,327,103)	$ (17,099,306)
Adjustments to reconcile net loss from operations to cash used by operations:
Depreciation	152,525	269,028
Amortized discount and debt issuance costs on Senior Secured Notes	987,500
Stock-based compensation	548,263	654,525
Effects of changes in operating assets and liabilities:
Accounts receivable and lease receivable	842,798	358,700
Inventory	(342,727)	(7,001,453)
Prepaid expenses and deposits	765,043	(511,902)
Accounts payable and accrued liabilities	1,876,390	3,591,211
Notes payable, related parties	550,000
Accounts payable, related parties	104,043
Customer deposits	265,595
Net cash used by operations	(7,577,673)	(19,739,197)
Cash flows from investing activities:
Capital expenditures		(70,576)
Proceeds from lease receivable		124,983
Net cash provided by investing activities		54,407
Cash flows from financing activities:
Payments on long-term debt	(16,770)	(62,042)
Shareholder advances, net of repayments		1,004,201
Issuance of common stock	4,021,341	23,060,074
Exercise of warrants and options	90,066	633,863
Net cash provided by financing activities	4,094,637	24,636,096
Change in cash and cash equivalents	(3,483,036)	4,951,306
Cash at the beginning of the period	4,069,477	469,570
Cash at the end of the period	$ 586,441	$ 5,420,876

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Supplemental disclosure of non-cash activities:
Conversion of common stock	$ 298,350	$ 229,772
Conversion common stock, value		26,727
Common stock	114	172
Additional paid-in capital	$ 298,236	$ 256,327

Summary of Business and Signifi

Summary of Business and Significant Accounting Policies	6 Months Ended
	Jun. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES	1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES 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 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 (“SureFly” ™). 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 or from the sale of a product line/business. 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-Kfor the year ended December 31, 2017, as amended. 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	6 Months Ended
	Jun. 30, 2018
Inventory Disclosure [Abstract]
INVENTORY	2. INVENTORY As of June 30, 2018, and December 31, 2017, our inventory consisted of the following: 2018 2017 Raw Materials $ 4,134,952 $ 3,205,618 Work in Process 829,717 1,416,324 Finished Goods - - $ 4,964,669 $ 4,621,942

Long-Term Debt

Long-Term Debt	6 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
LONG-TERM DEBT	3. LONG-TERM DEBT Long-term debt consists of the following: June 30, 2018 December 31, 2017 Senior Secured Notes, due July 6, 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 - (987,500 ) Net Senior Secured Notes 5,750,000 4,762,500 Secured mortgage payable, due November 2026, to Bank for 100 Commerce Drive Building due in monthly installments of $11,951, inclusive of principal and interest 1,724,608 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 Related Parties Notes, due December 6, 2018, interest rate 12.0% 550,000 - 8,374,608 6,853,878 Less current portion 6,682,264 5,143,997 Long-term debt $ 1,692,344 $ 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-off. On June 28, 2018, the Company entered into an amendment agreement with the Spin-Off Investors. The amendment agreement provided that the Senior Secured Notes were amended to provide a maturity date of July 6, 2018. Amortization expense recorded as interest related to the debt issuance costs and unamortized discounts for the Senior Secured Notes was $987,500 for the six months ended June 30, 2018. On June 7, 2018, the Company received a short-term loan in the aggregate principal amount of $550,000 from Stephen S. Burns, H. Benjamin Samuels, Gerald Budde and Ray Chess, each an executive officer and/or director of the Company (collectively, the “Related Parties”). To evidence the loans, the Company issued the Related Parties promissory notes (the “Related Parties Notes”) in the aggregate principal amount of $550,000. The Related Parties Notes are unsecured obligations of the Company and are not convertible into equity securities of the Company. Principal and interest under the Related Parties Notes are due and payable December 6, 2018, however, in the event that the Company raises in excess of $10,000,000 in equity financing, then the Company will use part of its proceeds to pay off the Related Parties Notes. Under no circumstance may the Related Parties Notes be paid off on or prior to the 91st day following the maturity date of the Senior Secured Notes issued by the Company on December 27, 2017 in the principal aggregate amount of $5,750,000. Interest accrues on the Related Parties Notes at the rate of 12.0% per annum. The Related Parties Notes contain terms and events of default customary for similar transactions. The Company used the net proceeds from the transaction for general business and working capital purposes.

Revenue

Revenue	6 Months Ended
	Jun. 30, 2018
Revenue Recognition and Deferred Revenue [Abstract]
REVENUE	4. REVENUE Change in Accounting Principle In May 2014, the Financial Accounting Standards Board (“FASB”) 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 June 30: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Automotive $ 118,398 $ 252,000 $ 523,252 $ 1,820,500 Aviation - - - - Other 52,286 - 207,661 1,537 Total revenues $ 170,684 $ 252,000 $ 730,913 $ 1,822,037

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 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	6 Months Ended
	Jun. 30, 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	6 Months Ended
	Jun. 30, 2018
Accounting Changes and Error Corrections [Abstract]
RECENT ACCOUNTING DEVELOPMENTS	7. RECENT ACCOUNTING DEVELOPMENTS Accounting Guidance Adopted in 2017 Effective September 30, 2017, we early-adopted FASB ASU 2017-11, “Earnings per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features. Part I of ASU 2017-11 simplifies the accounting for certain financial instruments with down round features, a provision in an equity-linked financial instrument (or embedded feature) that provides a downward adjustment of the current exercise price based on the price of future equity offerings. Previous accounting guidance created cost and complexity for organizations that issue financial instruments with down round features by requiring, on an ongoing basis, fair value measurement of the entire instrument or conversion option. The new standard requires companies to disregard the down round feature when assessing whether the instrument is indexed to its own stock, for purposes of determining liability of equity classification. Companies that provide earnings per share (“EPS”) data will adjust their diluted EPS calculation for the effect of the feature when triggered (i.e., when the exercise price of the related equity-linked financial instrument is adjusted downward because of the down round feature) and will also recognize the effect of the trigger within equity. We applied this guidance on a prospective basis. The primary impact of adoption is that equity-linked financial instruments are less likely to be liability classified than prior to the adoption of this standard. The adoption of the new standard resulted in warrants issued in September 2017 not being classified as liabilities in our Consolidated Financial Statements. Accounting Guidance Adopted in 2018 Effective January 1, 2018, we adopted FASB 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 an 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	6 Months Ended
	Jun. 30, 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 the Company, with gross proceeds to the Company of approximately $22.4 million and net proceeds of approximately $20.5 million, after deducting underwriting discounts and commissions and estimated offering expenses. 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. Stephen Burns, Benjamin Samuels, Gerald Budde and Julio Rodriguez, executive officers and/or directors of the Company, participated in this offering On June 22, 2017, the Company 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 June 30, 2018, the Company issued 1,876,489 shares from this facility for proceeds of approximately $5.8 million. 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 contained 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 $3.20, with certain exceptions. On June 4, 2018, the Company and holders of all outstanding Warrants to Purchase Common Stock of the Company issued September 18, 2017 (collectively, the “Warrants”) entered into separate, privately-negotiated exchange agreements (the “Exchange Agreements”), pursuant to which the Company issued to such holders an aggregate of 1,968,736 shares of the Company’s common stock in exchange for the Warrants. The closing of the exchanges contemplated by the Exchange Agreements occurred on June 5, 2018. In addition, the “Down Round” feature of the Warrants was triggered in the second quarter of 2018, causing the strike price to decrease from $3.80 per share to $2.62 per share. As a result, the Company recorded approximately $765,179 as a deemed dividend which represents the value transferred to the Warrant holders due to the Down Round being triggered. The deemed dividend was recorded as a reduction of Retained Earnings and increase in Additional Paid-in-Capital and reduced net income available to common shareholders by the same amount.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 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 the date on which the condensed consolidated financial statements were available to be issued. On July 6, 2018, the Company, as borrower, entered into a Loan Agreement with a fund managed by Arosa Capital Management LP (“Arosa”), as lender, providing for a term loan (the “Arosa Loan”) in the principal amount of $6,100,000 (the “Loan Agreement”). The maturity date of the Arosa Loan is July 6, 2019 (the “Maturity Date”). The interest rate for the Arosa Loan is 8% per annum payable in quarterly installments commencing October 6, 2018. The Company may prepay the Arosa Loan at any time upon three days written notice. The Loan Agreement requires the Company to pay Arosa’s expenses including attorney fees. The Loan Agreement also requires the Company to make certain representations and warranties and other agreements that are customary in loan agreements of this type and also includes covenants to raise $10,000,000 in equity prior to September 30, 2018 and to consummate a sale of Surefly, Inc., the Company’s indirect wholly-owned subsidiary resulting in cash proceeds of no less than $20,000,000. The Loan Agreement also contains customary events of default, including non-payment of principal or interest, violations of covenants, bankruptcy and material judgments. The Company’s subsidiaries and Arosa also entered into a Guarantee and Collateral Agreement and Intellectual Property Security Agreement providing that the Company’s obligations to Arosa are secured by substantially all of the Company’s assets. In addition, the Company is required to appoint to the Board of Directors a person designated in writing by Arosa for a period of no less than 12 months. The Company used the proceeds from the Arosa Loan to satisfy the Senior Secured Loans initially issued December 27, 2017 in the amount of $5,750,000 and a loan in the amount of $350,000 payable to the former owner of the Company’s facility based in Loveland, Ohio. In accordance with the Loan Agreement, the Company issued Arosa a warrant to purchase 5,000,358 shares of common stock of the Company at an exercise price of $2.00 per share exercisable in cash only for a period of five years. While the Arosa Loan remains outstanding, the Company will be required to issue additional warrants to purchase common stock to Arosa equal to 10% of any additional issuance excluding issuances under an approved stock plan. The additional warrants to purchase common Stock will have an exercise price equal to the lesser of $2.00 or a 5% premium to the price utilized in such financing. Pursuant to the warrant, Arosa may not exercise such warrant if such exercise would result in Arosa beneficially owning in excess of 9.99% of the Company’s then issued and outstanding common stock. On August 2, 2018, after conducting additional due diligence on the Company’s available collateral base, Arosa agreed to enter into the First Amendment to the Loan Agreement with the Company pursuant to which an additional $1,700,000 was loaned to the Company for working capital purposes and general corporate purposes. In addition, various covenants were added or amended including, but not limited to, requiring the Company to satisfy its Mortgage on its Loveland, Ohio facility no later than October 1, 2018. Separately, on July 5, 2018, the Company received a short-term loan in the aggregate principal amount of $500,000 from accredited investors (collectively, the “Loan Parties”), including $200,000 from a related party investor. To evidence the loans, the Company issued the Loan Parties promissory notes (the “Loan Parties Notes”) in the aggregate principal amount of $500,000. The Loan Parties Notes are unsecured obligations of the Company and are not convertible into equity securities of the Company. Principal and interest under the Loan Parties Notes is due and payable January 5, 2019, however, in the event that the Company raises in excess of $10,000,000 in equity or debt financing, then the Company will use part of its proceeds to pay off the Loan Parties Notes. Interest accrues on the Loan Parties Notes at the rate of 12.0% per annum. The Loan Parties Notes contain terms and events of default customary for similar transactions. The Company is using the net proceeds from the transaction for general business and working capital purposes.

Summary of Business and Signi16

Summary of Business and Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 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 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 (“SureFly” ™). 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 or from the sale of a product line/business. 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-Kfor the year ended December 31, 2017, as amended. 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)	6 Months Ended
	Jun. 30, 2018
Inventory Disclosure [Abstract]
Schedule of inventory	2018 2017 Raw Materials $ 4,134,952 $ 3,205,618 Work in Process 829,717 1,416,324 Finished Goods - - $ 4,964,669 $ 4,621,942

Long-Term Debt (Tables)

Long-Term Debt (Tables)	6 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
Schedule of long-term debt	June 30, 2018 December 31, 2017 Senior Secured Notes, due July 6, 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 - (987,500 ) Net Senior Secured Notes 5,750,000 4,762,500 Secured mortgage payable, due November 2026, to Bank for 100 Commerce Drive Building due in monthly installments of $11,951, inclusive of principal and interest 1,724,608 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 Related Parties Notes, due December 6, 2018, interest rate 12.0% 550,000 - 8,374,608 6,853,878 Less current portion 6,682,264 5,143,997 Long-term debt $ 1,692,344 $ 1,709,881

Revenue (Tables)

Revenue (Tables)	6 Months Ended
	Jun. 30, 2018
Revenue Recognition and Deferred Revenue [Abstract]
Schedule of disaggregation revenue	Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Automotive $ 118,398 $ 252,000 $ 523,252 $ 1,820,500 Aviation - - - - Other 52,286 - 207,661 1,537 Total revenues $ 170,684 $ 252,000 $ 730,913 $ 1,822,037

Inventory (Details)

Inventory (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Components of inventories
Raw Materials	$ 4,134,952	$ 3,205,618
Work in Process	829,717	1,416,324
Finished Goods
Inventory, Total	$ 4,964,669	$ 4,621,942

Long-Term Debt (Details)

Long-Term Debt (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Senior Secured Notes, due July 6, 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		(987,500)
Long term debt	8,374,608	6,853,878
Less current portion	382,264	381,497
Long-term debt	1,692,344	1,709,881
Related Parties Notes [Member]
Debt Instrument [Line Items]
Long term debt	550,000
Secured mortgage payable to Bank [Member]
Debt Instrument [Line Items]
Long term debt	1,724,608	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)	Jun. 07, 2018USD ($)	Dec. 26, 2017USD ($)	Jun. 30, 2018USD ($)Employee
Long-Term Debt (Textual)
Aggregate principal amount	$ 550,000
Unamortized discount			$ 987,500
Related Parties Notes [Member]
Long-Term Debt (Textual)
Aggregate principal amount	$ 550,000
Debt maturity date	Dec. 6, 2018
Excess of equity financing	$ 10,000,000
Related parties notes, description	Under no circumstance may the Related Parties Notes be paid off on or prior to the 91st day following the maturity date of the Senior Secured Notes issued by the Company on December 27, 2017 in the principal aggregate amount of $5,750,000. Interest accrues on the Related Parties Notes at the rate of 12.0% per annum. The Related Parties Notes contain terms and events of default customary for similar transactions. The Company used the net proceeds from the transaction for general business and working capital purposes.
Secured mortgage payable to Bank [Member]
Long-Term Debt (Textual)
Number of Commerce Drive Building | Employee			100
Monthly installments			$ 11,951
Senior Secured Notes (Member)
Long-Term Debt (Textual)
Percentage of interest payable			26.00%
Debt due date			July 6, 2018
Aggregate principal amount		$ 5,750,000
Consideration of gross proceeds paid by spin-off investors		$ 5,000,000
Note payable, to former building owner [Member]
Long-Term Debt (Textual)
Monthly installments			$ 1,604
Percentage of interest payable			5.50%
Balloon payment			$ 350,000
Debt due date			August 2,018
Notes payable, related parties [Member]
Long-Term Debt (Textual)
Percentage of interest payable			12.00%

Revenue (Details)

Revenue (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Total revenues	$ 170,684	$ 252,000	$ 730,913	$ 1,822,037
Automotive [Member]
Total revenues	118,398	252,000	523,252	1,820,500
Aviation [Member]
Total revenues
Other [Member]
Total revenues	$ 52,286		$ 207,661	$ 1,537

Private Placement Memorandum 24

Private Placement Memorandum and Stock Offering (Details) - USD ($)	Jun. 04, 2018	Sep. 14, 2017	Jun. 22, 2017	Feb. 01, 2017	Jun. 30, 2018	Apr. 26, 2018
Private Placement Memorandum and Stock Offering (Textual)
Shares of common stock public offering				6,500,000
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
Aggregate common stock in exchange for warrants	1,968,736
Deemed dividend					$ 765,179
Common stock price per share					$ 3.20
Maximum [Member]
Private Placement Memorandum and Stock Offering (Textual)
Strike price of warrants					3.80
Minimum [Member]
Private Placement Memorandum and Stock Offering (Textual)
Strike price of warrants					$ 2.62
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					1,876,489
Net of proceeds from issuance of initial public offering					$ 5,800,000
Subscription Agreements [Member]
Private Placement Memorandum and Stock Offering (Textual)
Purchase of common stock, shares						531,066
Common stock purchase price						$ 1,444,500
Common stock price per share						$ 2.72

Subsequent Events (Details)

Subsequent Events (Details) - USD ($)	Aug. 02, 2018	Jul. 06, 2018	Jul. 05, 2018	Jun. 07, 2018	Dec. 27, 2017
Subsequent Events (Textual)
Aggregate principal amount				$ 550,000
Proceeds from issuence of loan					$ 5,750,000
Loan payable					$ 350,000
Related Parties Notes [Member]
Subsequent Events (Textual)
Aggregate principal amount				$ 550,000
Date of maturity				Dec. 6, 2018
Excess of equity financing				$ 10,000,000
Subsequent Events [Member]
Subsequent Events (Textual)
Aggregate principal amount			$ 500,000
Excess of equity financing		$ 10,000,000
Loan additional amount	$ 1,700,000
Subsequent Events [Member] | January 5, 2019 [Member]
Subsequent Events (Textual)
Interest rate, percentage			12.00%
Excess of equity financing			$ 10,000,000
Subsequent Events [Member] | Loan Parties Notes [Member]
Subsequent Events (Textual)
Aggregate principal amount			500,000
Subsequent Events [Member] | Related Parties Notes [Member]
Subsequent Events (Textual)
Aggregate principal amount			$ 200,000
Subsequent Events [Member] | Loan Agreement [Member]
Subsequent Events (Textual)
Aggregate principal amount		$ 6,100,000
Date of maturity		Jul. 6, 2019
Interest rate, percentage		8.00%
Warrants to purchase of common stock shares		5,000,358
Warrants exercise price		$ 2
Warrants to purchase common stock, description		The Arosa Loan remains outstanding, the Company will be required to issue additional warrants to purchase common stock to Arosa equal to 10% of any additional issuance excluding issuances under an approved stock plan. The additional warrants to purchase common Stock will have an exercise price equal to the lesser of $2.00 or a 5% premium to the price utilized in such financing. Pursuant to the warrant, Arosa may not exercise such warrant if such exercise would result in Arosa beneficially owning in excess of 9.99% of the Company’s then issued and outstanding common stock.