Long-Term Debt

9 Months Ended

Sep. 30, 2014

Long-Term Debt/Convertible Debentures [Abstract]

3. LONG-TERM DEBT

Long-term debt consists of the following:

	September 30, 2014		December 31, 2013
Secured debenture payable to Workhorse Custom Chassis, LLC, due March 2016 plus interest at 10%. The debenture is secured by the real estate and related assets of the plant located in Union City, Indiana with a net book value of $4,070,006 at September 30, 2014		2,475,000		2,250,000

Note payable, Bank due in monthly installments of $635 including interest at 5.04% with the final payment due August 2015. The note is secured by equipment with a net book value of $6,134 at September 30, 2014		6,573		11,928

Note payable, vendor due in monthly installments of $439 including interest at 8.00% with the final payment due December 2014. The note is secured by equipment with a net book value of $6,534 at September 30, 2014		1,219		5,051

Note payable to the City of Loveland, due in annual installments of $10,241 including interest with the final payment due October 2016. Interest rate amended to 8.00%. The note is unsecured and contains restrictions on the use of proceeds.		50,000		50,000

Note payable, vendor due in monthly installments of $5,000 for the first half of 2013. Note paid on March 2014.		-		123,736

Note payable, vendor due in monthly installments of $2,000 plus interest at 4% for the first half of 2013, escalating to final payment of $18,461 plus interest at 4% in December 2014. Note paid on May 2014.		-		190,400

		2,532,792		2,631,115
Less current portion		37,548		356,868

Long term debt		2,495,244		2,274,247

Aggregate maturities of long-term debt are as follows:

	2014				37,548
	2015				2,495,244
	2016				-
					2,532,792

The note payable to the City of Loveland contains job creation incentives whereby each annual payment may be forgiven by the City upon the Company meeting minimum job creation benchmarks. This loan agreement amended the incentives to 30 full time employees within the City of Loveland with payroll totaling $135,000 by October 31, 2013 and 40 employees with payroll totaling $175,000 by July 31, 2014, continuing with an average of 40 employees with payroll totaling $175,000 thereafter. The proceeds from this loan were to be used for qualified disbursements only, and the Company has been notified it did not meet the requirements for qualified disbursements and for forgiveness of the 2012 principal and interest payment, which is past due. In 2013 the Company made payments to an escrow account totaling $22,900.