Worksport Ltd

Previous wording

This section and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and actual results may differ significantly from the results discussed in the forward-looking statements. All forward-looking statements in this Form 10-Q are made based on current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, various factors, uncertainties, and risks should be specifically considered that could affect future results or operations. These factors, uncertainties and risks may cause actual results to differ materially from any forward-looking statement set forth in this Form 10-Q. These risks and uncertainties described and other information contained in the reports filed with or furnished to the SEC should be carefully considered before making any investment decision with respect to the Company’s securities. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Current wording

This section and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as“future,”* “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and actual results may differ significantly from the results discussed in the forward-looking statements. All forward-looking statements in this Form 10-Q are made based on current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, various factors, uncertainties, and risks should be specifically considered that could affect future results or operations. These factors, uncertainties and risks may cause actual results to differ materially from any forward-looking statement set forth in this Form 10-Q. These risks and uncertainties described and other information contained in the reports filed with or furnished to the SEC should be carefully considered before making any investment decision with respect to the Company*’s securities. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Previous wording

The following discussion should be read in conjunction with the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 26,2026 and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.

Current wording

The following discussion should be read in conjunction with the Company’s Annual Report Form 10-K for the fiscal year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission (the“SEC”) on March 26, 2026 and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.

Previous wording

Our conventional tonneau covers are engineered for enhanced user experience and resistance to wear-and-tear, making them strong and competitive products in an otherwise consolidated and saturated market. The Worksport COR, however, operates in a much wider yet unsaturated market. The global Portable Power Station market is quickly growing, and the competitive landscape is far from consolidated. The solar tonneau cover market is in its infancy, and it’s a market in which we have first-mover advantage. To ensure we do not fall behind future competitors, we are highly focused on protecting our intellectual property both domestically and abroad.

Current wording

Our conventional tonneau covers are engineered for enhanced user experience and resistance to wear-and-tear, making them strong and competitive products in an otherwise consolidated and saturated market. The Worksport COR portable power station, however, operates in a much wider yet unsaturated market. The global Portable Power Station market is quickly growing, and the competitive landscape is far from consolidated. The solar tonneau cover market is in its infancy, and it’s a market in which we have first-mover advantage. To ensure we do not fall behind future competitors, we are highly focused on protecting our intellectual property both domestically and abroad.

Previous wording

For the three months ended March 31, 2026, net sales generated in the U.S. was $3,306,645, compared to $2,227,549 for the same period in 2025, an increase of approximately 48%.

Current wording

For the three months ended June 30, 2026, net sales generated in the U.S. was $5,197,760, compared to $4,070,406 for the same period in 2025, anincrease of approximately $1,127,354.

Previous wording

Net sales increased during the three months ended March 31, 2026 compared to the same period the prior year due to increased sales of tonneau covers to end users via the Company’s online marketplace and various dealers and distributors. The Company increased its product offerings in 2025 to also include AL4 and HD3 covers to end customers. The Company continues to focus on establishing as well as strengthening its presence in both the direct-to-consumer and business-to-business sales channels while also strengthening customer support to increase customer satisfaction and increase product turnover.

Current wording

Net sales increased during the three months ended June 30, 2026 compared to the same period the prior year due to increased sales of tonneau covers to end users via various dealers and distributors. The Company increased its product offerings in 2026 to also include NEXUS covers to end customers. The Company continues to focus on establishing as well as strengthening its presence in both the direct-to-consumer and business-to-business sales channels while also strengthening customer support to increase customer satisfaction and increase product turnover.

Previous wording

The decrease in the cost of sales as a percentage of sales was primarily driven by two factors: (1) increase production volume to support sales growth, including introduction of new product lines during 2025, and (2) overhead allocation efficiencies associated with higher production volume. These improvements offset increases in certain material, components, and landed costs, including the impact of tariffs on imported products and components sourced from overseas. While tariffs contributed to higher input costs during the three months ended March 31, 2026, the overall effect of increased scale and production efficiencies resulted in an improvement in our gross margin.

Current wording

The decrease in the cost of sales as a percentage of sales was primarily driven by two factors: (1) increased production volume to support sales growth, including introduction of new product lines during 2025, and (2) overhead allocation efficiencies associated with higher production volume. These improvements offset increases in certain material, components, and landed costs, including the impact of tariffs on imported products and components sourced from overseas. While tariffs contributed to higher input costs during the three months ended June 30, 2026, the overall effect of increased scale and production efficiencies resulted in an improvement in our gross margin.

Previous wording

We continue to employ a discounting strategy as part of a broader initiative to enhance market presence and build brand awareness. We anticipate this will well position us for sustained customer engagement in future periods, during which discounting may not be necessary to the same extent. As production volume grows and our manufacturing process becomes more efficient, we expect to allocate fixed costs included in overhead absorption against a larger production volume base. This scaling will be facilitated by reallocating more of our existing human capital and machinery resources toward production.

Current wording

We continue to employ a discounting strategy as part of a broader initiative to enhance market presence and build brand awareness. We anticipate this will position us well for sustained customer engagement in future periods, during which discounting may not be necessary to the same extent. As production volume grows and our manufacturing process becomes more efficient, we expect to allocate fixed costs included in overhead absorption against a larger production volume base. This scaling will be facilitated by reallocating more of our existing human capital and machinery resources toward production.

Previous wording

Operating expenses increased for the three months ended March 31, 2026 by $1,945,596, from $4,652,527 for the three months ended March 31, 2025 to $6,598,123, mainly due to the following factors:

Current wording

Operating expenses increased for the three months ended June 30, 2026 by $768,746, from $4,699,743 for the three months ended June 30, 2025 to $5,468,489, mainly due to the following factors:

Previous wording

Net loss for the three months ended March 31, 2026 was $5,828,522, compared to a net loss of $4,460,464 for the three months ended March 31, 2025 – an increase of approximately 31%. The increase in net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations and promoting our brand awareness.

Current wording

Net loss for the three months ended June 30, 2026 was $3,965,303, compared to a net loss of $3,734,484 for the three months ended June 30, 2025 – anincrease of approximately 6.2%. Theincrease in net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations and promoting our brand awareness.

Previous wording

Net sales from online retailers of our products decreased by $60,045, from $1,871,085 for the three months ended March 31, 2025 to $1,811,040 for same period ended March 31, 2026. The 3% decrease is a result of the Company’s focus to lower our customer acquisition cost with additional focus on brand awareness and less focus on conversion marketing. The reduction in conversion marketing efforts decreased order volume, but this was offset by an increase in the average order value of our product offerings.

Current wording

Net sales from online retailers of our products decreased by $301,739, from $4,992,533 for the six months ended June 30, 2025 to $4,690,794 for the same period ended June 30, 2026. The 6.0%decrease is a result of the Company’s focus to lower our customer acquisition cost with additional focus on brand awareness and less focus on conversion marketing. The reduction in conversion marketing efforts decreased order volume, but this was offset by an increase in the average order value of our product offerings.

Previous wording

We reported net other expenses for the three months ended March 31, 2026 of $84,345, compared to $204,158 for three months ended March 31, 2025. The decrease in net other expenses was attributed to decreased interest expense on our line of credit as a result of reduced usage following cash inflows as a result of the December warrant inducement transaction.

Current wording

We reported net other expenses for the six months ended June 30, 2026 of $231,095, compared to $321,012 for six months ended June 30, 2025. Thedecrease in net other expenses was attributed to decreased interest expense on our line of credit as a result of reduced usage following cash inflows as a result of the December 2025 warrant inducement transaction.

Previous wording

As of March 31, 2026 and December 31, 2025, we had $566,583 and $5,945,894, respectively in cash and cash equivalents. As of March 31, 2026, we had $2,479,490 of remaining available capacity on our revolving line of credit compared with $3,448,016 of remaining available capacity as of December 31, 2025. The decrease in cash and cash equivalents and decrease in the remaining available capacity on our revolving line of credit was primarily a result of our use of proceeds from our warrant inducement transaction in December 2025 to fund working capital requirements to support the production of our new product offerings. We have historically generated only limited gross profit and have relied primarily upon capital generated from public and private offerings of our securities to fund continuing operations. Since the Company’s acquisition of Worksport in 2014, it has never generated a profit. During the three months ended March 31, 2026, we had net losses of $5,828,522 (three months ended March 31, 2025 - $4,460,464). As of March 31, 2026, the Company had working capital of $6,579,541 (As of December 31, 2025 - $10,061,578) and had an accumulated deficit of $89,729,030 (As of December 31, 2025 - $83,873,790).

Current wording

As of June 30, 2026 and December 31, 2025, we had $1,160,158 and $5,945,894, respectively in cash and cash equivalents. As of June 30, 2026, we had $818,339 of remaining available capacity on our revolving line of credit compared with $3,448,016 of remaining available capacity as of December 31, 2025. The decrease in cash and cash equivalents and decrease in the remaining available capacity on our revolving line of credit was primarily a result of our use of proceeds from our warrant inducement transaction in December 2025 to fund working capital requirements to support the production of our new product offerings. We have historically generated limited gross profit and have relied primarily upon capital generated from public and private offerings of our securities to fund continuing operations. Since the Company’s acquisition of Worksport in 2014, it has never generated a profit. During the three and six months ended June 30, 2026, we had net losses of $3,965,303 and $9,793,824, respectively (three months ended June 30, 2025 - $3,734,484; six months ended June 30, 2025 - $8,194,948). As of June 30, 2026, the Company had working capital of $10,961,087 (As of December 31, 2025 - $10,061,578) and had an accumulated deficit of $93,721,747 (As of December 31, 2025 - $83,873,790).

Previous wording

To date, our principal sources of liquidity consist of net proceeds from public and private securities offerings and cash exercises of outstanding warrants. During the three months ended March 31, 2026, the Company received net proceeds of $2,208,337 from the offerings described below. Management is focused on transitioning towards gross profit as our principal source of liquidity by growing our existing product offerings and customer base and realizing manufacturing efficiency improvements. We cannot give assurance that we can increase our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future business developments. Future business development and demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future. However, we cannot ensure that we will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, we believe our current cash balances coupled with anticipated cash flow from operating activities will be sufficient to meet our working capital requirements for at least one year from the date of issuance of the accompanying consolidated financial statements.

Current wording

To date, our principal sources of liquidity consist of net proceeds from public and private securities offerings and cash exercises of outstanding warrants. During the six months ended June 30, 2026, the Company received net proceeds of $4,523,215 from the offerings described below. Management is focused on transitioning towards gross profit as our principal source of liquidity by growing our existing product offerings and customer base and realizing manufacturing efficiency improvements. We cannot give assurance that we can increase our cash balances or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future business developments. Future business development and demands may lead to cash utilization at levels greater than recently experienced. We may need to raise additional capital in the future. However, we cannot ensure that we will be able to raise additional capital on acceptable terms, or at all. Subject to the foregoing, we believe our current cash balances coupled with anticipated cash flow from operating activities will be sufficient to meet our working capital requirements for at least one year from the date of issuance of the accompanying consolidated financial statements.

Previous wording

We have raised funds during the three months ended March 31, 2026 from the following public and private securities offerings:

Current wording

We have raised funds during the six months ended June 30, 2026 from the following public and private securities offerings:

Previous wording

On November 14, 2025, the Company entered into an amendment to its At The Market Offering Agreement, dated September 30, 2022, with H.C. Wainwright & Co., LLC (“Wainwright”) in connection with a new shelf registration statement on Form S-3 (File No. 333-291582), which was declared effective by the SEC on December 12, 2025. Pursuant to the amended ATM Agreement and the related prospectus supplement dated December 12, 2025, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $4.0 million through Wainwright as sales agent. During the three months ended March 31, 2026, the Company sold 1,468,606 shares of common stock under the ATM Agreement for aggregate gross proceeds of approximately $2,232,530, resulting in net proceeds of approximately $2,154,230 after deducting commissions and offering expenses.

Current wording

On November 14, 2025, the Company entered into an amendment to its At The Market Offering Agreement, dated September 30, 2022, with H.C. Wainwright & Co., LLC (“Wainwright”) in connection with a new shelf registration statement on Form S-3 (File No. 333-291582), which was declared effective by the SEC on December 12, 2025. Pursuant to the amended ATM Agreement and the related prospectus supplement dated December 12, 2025, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $4.0 million through Wainwright as sales agent. During the six months ended June 30, 2026, the Company sold 3,157,774 shares of common stock under the ATM Agreement for aggregate gross proceeds of approximately $4,003,273, resulting in net proceeds of approximately $3,869,882 after deducting commissions and offering expenses.

Previous wording

During the three months ended March 31, 2026, we received $54,107 of proceeds net of issuance cost that were previously held in escrow. The funds in escrow pertain to the Regulation A offering from 2025.

Current wording

During the six months ended June 30, 2026, we received $54,107 of proceeds net of issuance cost that were previously held in escrow. The funds in escrow pertain to the Regulation A offering from 2025.

Previous wording

Cash decreased from $5,945,894 at December 31, 2025, to $566,583 at March 31, 2026 – a decrease of $5,379,311 or 90%. The decrease was primarily due to the use of cash to acquire working capital based on supporting the production of existing product offerings as well as the expected growth of additional product offerings launched in 2026. The Company procured approximately $5.1 million of raw materials to support production of our expanded product lineup, including the SOLIS, COR and NEXUS product lines. Some of our new product offerings utilize raw materials common to existing product offerings. Approximately $1.0 million of these raw materials purchases remained in accounts payable as of March 31, 2026.

Current wording

Cash and cash equivalents decreased from $5,945,894 at December 31, 2025, to $1,160,158 at June 30, 2026 – a decrease of $4,785,736 or 80.5%. The decrease was primarily due to the use of cash to acquire working capital based on supporting the production of existing product offerings as well as the expected growth of additional product offerings launched in 2026. The Company procured approximately $8.1 million of raw materials to support production of our expanded product lineup, including the SOLIS, COR and NEXUS product lines. Some of our new product offerings utilize raw materials common to existing product offerings. Approximately $1.0 million of these raw materials purchases remained in accounts payable as of June 30, 2026.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2026 was $8,234,754, compared to $3,839,918 in 2025, primarily driven by the launch of additional product offerings during the three months ended March 31, 2026. Net cash used in operating activities exceeded the Company’s net loss by approximately $2.4 million. The principal component of the change is attributable to the $2.1 million increase in inventory, reflecting the procurement of raw materials and production of finished goods to support the launch of new product offerings during the three months ended March 31, 2026: SOLIS, COR, and NEXUS.

Current wording

Net cash used in operating activities for the six months ended June 30, 2026 was $11,677,145, compared to $6,935,033 in 2025, primarily driven by the launch of additional product offerings during the six months ended June 30, 2026. Net cash used in operating activities exceeded the Company’s net loss by approximately $1.8 million. The principal component of the change is attributable to the $2.5 million increase in inventory, reflecting the procurement of raw materials and production of finished goods to support the launch of new product offerings during the six months ended June 30, 2026 including SOLIS, COR, and NEXUS.

Previous wording

Accounts receivable decreased at March 31, 2026 by $23,759 and increased by $25,362 in the prior period. The decrease in accounts receivable is based on the timing of shipment with various business-to-business customers and well as the concentration of customers in certain sales channels.

Current wording

Accounts receivable increased at June 30, 2026 by $503,358 and increased by $253,372 in the prior period. The increase in accounts receivable is based on the volume of shipment with various business-to-business customers as well as the concentration of customers in certain sales channels.

Previous wording

Inventory increased at March 31, 2026 by $2,092,218, and increased at March 31, 2025 by $583,116, as a result of the procurement and production of raw materials and finished goods to support the successful launches of our COR, SOLIS and NEXUS product lines.

Current wording

Inventory increased at June 30, 2026 by $2,535,745, and increased at June 30, 2025 by $691,459, as a result of the procurement of raw materials and production of finished goods to support the commercial launches of our COR, SOLIS and NEXUS product lines.

Previous wording

Prepaid expenses and other decreased by $62,902 at March 31, 2026, and increased by $192,071 at March 31, 2025 due to timing of advanced payments for professional services to support operations.

Current wording

Prepaid expenses and other decreased by $186,836 at June 30, 2026, and increased by $470,641 at June 30, 2025 due to timing of advanced payments for professional services to support operations.

Previous wording

Accounts payable and accrued liabilities decreased at March 31, 2026 by $1,562,383 compared to an increase of $390,691 at March 31, 2025 due to the payment for raw materials and finished goods procured and produced in preparation to support the successful launches of our COR, SOLIS and NEXUS product lines.

Current wording

Accounts payable and accrued liabilities decreased at June 30, 2026 by $1,248,251 and increased by $469,362 at June 30, 2025 due to the payment for raw materials and finished goods procured and produced in preparation for and support of the commercial launches of our COR, SOLIS and NEXUS product lines.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2026 was $103,643 compared to $458,342 for the three months ended March 31, 2025. The decrease in investing activities was primarily attributable to our purchase of cryptocurrency and website enhancements in the prior period, both of which are classified as intangible assets.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 was $197,654 compared to $582,797 for the six months ended June 30, 2025. The decrease in investing activities was primarily attributable to our purchase of cryptocurrency and website enhancements in 2025, both of which are classified as intangible assets.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2026 was $2,959,086 compared to net cash provided by financing activities of $4,495,533 for the three months ended March 31, 2025. Net cash provided by financing activities were principally due to our use of the ATM, whereby we received net proceeds of $2,154,230. We also received proceeds from our line of credit through net borrowings of $829,591 for the three months ended March 31, 2026.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2026 was $7,089,063 compared to net cash provided by financing activities of $4,027,871 for the six months ended June 30, 2025. Net cash provided by financing activities were principally due to our use of the ATM, whereby we received net proceeds of $3,869,882. We also received proceeds from our line of credit through net borrowings of $2,729,739 for the six months ended June 30, 2026. In June 2026, we completed two registered direct offerings with one institutional accredited investor for gross proceeds of $722,870, resulting in net proceeds of approximately $599,226 after deducting issuance costs.