Worksport Ltd
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 13, 2024
WKSP$0.27+2.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001493152-24-031589
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001493152-24-045105
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 89 previous paragraphs and 91 current paragraphs.
58 unchanged; 24 reworded; 9 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Inflation has fallen since it’s 2022 highs, although inflation rates are still above the Federal Reserve’s target rate of 2%. Additionally, for the first time since the Federal Reserves’ sharp post-Covid interest rate hike, during it’s September meeting, the Federal Reserve announced it is lowering the overnight borrowing rate by 50 basis points, and it gave guidance of an additional 50 basis point cut by end of FY24. It is possible these interest rate cuts result in an increase in inflation.
Current report
Net Sales
Current report
Cost of sales increased by 680%, from $368,796 for the three months ended September 30, 2023, to $2,875,186 for the three months ended September 30, 2024. Our cost of sales, as a percentage of net sales, was approximately 92% and 80% for the three months ended September 30, 2024 and 2023, respectively. Our cost of sales as a percentage of net sales increased primarily driven by two factors: (1) strategic discounting aimed at boosting traffic to our direct-to-consumer online marketplace, and (2) overhead allocation associated with sold inventory produced in previous periods, which had limited production volumes. Our discounting strategy is part of a broader initiative to enhance market presence and build brand awareness. We anticipate that this will position us for sustained customer engagement in future periods, during which discounting may not be necessary to the same extent. Additionally, overhead absorption was higher due to the allocation of fixed costs over a smaller production volume in prior periods. As production volume grows and our manufacturing process becomes more efficient, we expect to allocate these costs across a larger base. This scaling will be facilitated by reallocating more of our existing human capital and machinery resources from design engineering and testing functions toward production. This shift is intended to support ongoing production increases and drive long-term efficiencies in our cost structure.
Current report
Nine Months Ended September 30, 2024 compared to the Nine Months Ended September 30, 2023
Current report
Net Sales
Current report
Cost of sales increased by 818%, from $541,841 for the nine months ended September 30, 2023, to $4,975,277 for the nine months ended September 30, 2024. Our cost of sales, as a percentage of net sales, was approximately 89% and 78% for the nine months ended September 30, 2024 and 2023, respectively. Our cost of sales as a percentage of net sales increased primarily driven by two factors: (1) strategic discounting aimed at boosting traffic to our direct-to-consumer online marketplace, and (2) overhead allocation associated with sold inventory produced in previous periods, which had limited production volumes. Our discounting strategy is part of a broader initiative to enhance market presence and build brand awareness. We anticipate that this will position us for sustained customer engagement in future periods, during which discounting may not be necessary to the same extent. Additionally, overhead absorption was higher due to the allocation of fixed costs over a smaller production volume in prior periods. As production volume grows and our manufacturing process becomes more efficient, we expect to allocate these costs across a larger base. This scaling will be facilitated by reallocating more of our existing human capital and machinery resources from design engineering and testing functions toward production. This shift is intended to support ongoing production increases and drive long-term efficiencies in our cost structure.
Current report
On September 4, 2024, the Company, through its wholly owned subsidiary, Worksport USA Operations Corporation, entered into a $1,487,200 credit and security agreement with an external lending entity with a maturity of 36 months from initial funding (September 2027). Upon transaction close, the Company received net proceeds of $1,437,998. The Company and its wholly owned subsidiary, Worksport New York Operations Corporation, serve as guarantors on the loan.
Current report
Cash decreased from $3,365,778 at December 31, 2023, to $1,857,685 at September 30, 2024 – a decrease of $1,508,093 or 45%.
Current report
Net cash used by operating activities for the nine months ended September 30, 2024 was $7,959,212, compared to $8,194,347 in the prior period. While net loss increased by $592,950 and non-cash payments decreased by $1,585,718, they were more than offset by a $2,413,803 decrease in cash used in operating assets and liabilities relative to the prior period, which reflects the Company’s improved inventory storage and consumption efficiency.
Removed paragraphs (7)
Previous report
Revenue
Previous report
Cost of sales increased by 960%, from $153,288 for the three months ended June 30, 2023, to $1,624,910 for the three months ended June 30, 2024. Our cost of sales, as a percentage of sales, was approximately 85% and 77% for the three months ended June 30, 2024 and 2023, respectively. The increase in the cost of sales as a percentage of sales was primarily due to increased sales of domestically-produced hard covers. We consistently secure a 20% gross margin on soft covers sold to private labels, as these soft covers are drop shipped from our Chinese suppliers at a fixed cost. However, our margins on domestically manufactured hard covers is dependent on the cost of raw materials, which fluctuates, as well as overhead, which has been high due to manufacturing inefficiencies and low production volumes – both of which are actively being mitigated as we streamline manufacturing processes and allocate more existing human capital and machinery resources away from design engineering and testing towards production.
Previous report
Six Months Ended June 30, 2024 compared to the Six Months Ended June 30, 2023
Previous report
Revenue
Previous report
Cost of sales increased by 1,114%, from $173,045 for the six months ended June 30, 2023, to $2,100,091 for the six months ended June 30, 2024. Our cost of sales, as a percentage of sales, was approximately 86% and 75% for the six months ended June 30, 2024 and 2023, respectively. The increase in the cost of sales as a percentage of sales was primarily due to increased sales of domestically-produced hard covers. We consistently secure a 20% gross margin on soft covers sold to private labels, as these soft covers are drop shipped from our Chinese suppliers at a fixed cost. However, our margins on domestically manufactured hard covers is dependent on the cost of raw materials, which fluctuates, as well as overhead, which has been high due to manufacturing inefficiencies and low production volumes – both of which are actively being mitigated as we streamline manufacturing processes and allocate more existing human capital and machinery resources away from design engineering and testing towards production.
Previous report
Cash increased from $3,365,778 at December 31, 2023, to $3,426,089 at June 30, 2024 – an increase of $60,311 or 2%. The increase was primarily due to the closing of a sale of shares as well as a warrant inducement during the six months ended June 30, 2024, raising approximately $6,800,000.
Previous report
Net cash used by operating activities for the six months ended June 30, 2024 was $6,421,292, compared to $6,018,704 in the prior period, primarily driven by a larger net loss during the six months ended June 30, 2024, and partially offset by the issuance of shares, stock options, and warrants for services.
Reworded paragraphs (24)
Previous wording
We faced significantly higher ocean freight, trucking, and container handling costs as well as last mile delivery costs in 2021 and 2022 than we did in previous years – all of which have increased our products’ landed costs. Higher oil and gasoline prices further increased these costs, and while such prices have come down from their 2022 highs, we continue to closely monitor gasoline and shipping costs. While the Freight Rate Index has significantly increased since late 2023 as a result of Houthi attacks against cargo ships in the Red Sea and the concurrent decline in activity across the Panama Canal, the shipping routes used by the Company have not faced dramatic price hikes. Regardless, the Company is closely monitoring international shipping costs.
Current wording
We faced significantly higher ocean freight, trucking, and container handling costs as well as last mile delivery costs in 2021 and 2022 than we did in previous years – all of which have increased our products’ landed costs. Higher oil and gasoline prices further increased these costs, and while such prices have come down from their 2022 highs, we continue to closely monitor gasoline and shipping costs. While the Freight Rate Index has significantly increased since late 2023 as a result of Houthi attacks against cargo ships in the Red Sea and the concurrent decline in activity across the Panama Canal, the shipping routes used by the Company have not faced dramatic price hikes. Regardless, the Company is closely monitoring international shipping costs. Further, there is a risk of worker strikes within our supply chain, such as the October US port workers strike that was postponed to January, 2025, causing higher import prices for our raw materials and finished goods.
Previous wording
Our transition towards domestic manufacturing and assembly is anticipated to largely offset these higher costs, as we believe we will be less exposed to higher international shipping costs. We are also identifying North American suppliers of our products’ components and will prioritize transport by rail when possible to avoid high trucking costs.
Current wording
We are also identifying North American suppliers of our products’ components and will prioritize transport by rail when possible to avoid high trucking costs. Our transition towards domestic manufacturing and assembly is anticipated to largely offset these higher costs, as we believe we will be less exposed to higher international shipping costs.
Previous wording
While we do not have any direct operations or significant sales in the Middle East, geopolitical tensions and ongoing conflicts in the region, particularly between Israel and Hamas, may lead to global economic instability and fluctuating energy prices that could materially affect our business. It is not possible to predict the broader consequences of the Israel-Hamas war, including related geopolitical tensions, and the measures and actions taken by other countries in respect thereof, which could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. While it is difficult to predict the impact of any of the foregoing, the Israel-Hamas war may increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.
Current wording
While we do not have any direct operations or significant sales in the Middle East, geopolitical tensions and ongoing conflicts in the region, particularly between Israel and Hamas, and more recently Israel and Hezbollah, may lead to global economic instability and fluctuating energy prices that could materially affect our business. It is not possible to predict the broader consequences of the Israeli wars, including related geopolitical tensions, and the measures and actions taken by other countries in respect thereof, which could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. While it is difficult to predict the impact of any of the foregoing, the Israeli wars may increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.
Previous wording
For the three months ended June 30, 2024, revenues from our entire line of products was $1,921,539, as compared to $199,851 for the three months ended June 30, 2023. Year-over-year sales increased by approximately 862%. For the three months ended June 30, 2024, revenue generated in Canada was $31,853 as compared to $0 for the same period in 2023. For the three months ended June 30, 2024, revenue generated in the United States was $1,889,686, compared to $199,851 for the same period in 2023, an increase of 846%.
Current wording
For the three months ended September 30, 2024, net sales from our entire line of products was $3,122,359, as compared to $458,483 for the three months ended September 30, 2023. Year-over-year net sales increased by approximately 581%. For the three months ended September 30, 2024, net sales generated in Canada was $28,751 as compared to $4,225 for the same period in 2023. For the three months ended September 30, 2024, net sales generated in the United States was $3,093,608 compared to $454,258 for the same period in 2023, an increase of 581% .
Previous wording
Revenue increased during the three months ended June 30, 2024 compared to the same period the prior year due to increased sales of tonneau covers to a private label partner, various dealers and distributors, and end users via the Company’s online marketplaces. The Company continues to focus on establishing new and strengthening existing business-to-consumer and business-to-business sales channels while also strengthening customer support to increase customer satisfaction and enable high product turnover. For business-to-consumer channels, we have configured our product offerings in a manner conducive with cost-effective marketing, allowing us to securely invest in marketing and sales campaigns. For business-to-business channels, we have created all necessary marketing/sales materials and policies as well as an online dealer marketplace, and we are now actively contacting thousands of leads and presenting our product offerings to various dealers, jobbers, and retailers across the United States and Canada. We intend to gradually increase output capacity through refined production processes and increased personnel.
Current wording
Net sales increased during the three months ended September 30, 2024 compared to the same period the prior year due to increased sales of tonneau covers to a private label partner, various dealers and distributors, and end users via the Company’s online marketplaces. The Company continues to focus on establishing new and strengthening existing business-to-consumer and business-to-business sales channels while also strengthening customer support to increase customer satisfaction and enable high product turnover. For business-to-consumer channels, we have configured our product offerings in a manner conducive with cost-effective marketing, allowing us to securely invest in marketing and sales campaigns. For business-to-business channels, we have created all necessary marketing/sales materials, policies, and teams as well as an online dealer marketplace, and we are now actively contacting thousands of leads and presenting our product offerings to various dealers, jobbers, and retailers across the United States and Canada. We intend to gradually increase output capacity through refined production processes and increased personnel.
Previous wording
Sales from online retailers of our products increased from $18,163 during the three months ended June 30, 2023, to $897,213 during the three months ended June 30, 2024. Online retailers accounted for 47% of total revenue for the three months ended June 30, 2024, compared to 9% for the three months ended June 30, 2023. Distributor sales increased for the three months ended June 30, 2024, compared with the three months ended June 30, 2023, with sales of $63,926 and $0, respectively. Distributors accounted for 3% of total revenue for the three months ended June 30, 2024. Private label sales increased from $181,688 for the three months ended June 30, 2023, to $960,400 for the three months ended June 30, 2024. Private label sales accounted for 50% of total revenue for the three months ended June 30, 2024. We expect to continue to grow our fields of business as we develop unique products with enhanced utility to offer to other prospective clients in the U.S. and Canadian markets.
Current wording
Net sales from online retailers of our products increased from $21,599 during the three months ended September 30, 2023, to $1,594,368 during the three months ended September 30, 2024. Online retailers accounted for 51% of total net sales for the three months ended September 30, 2024, compared to 5% for the three months ended September 30, 2023. Distributor net sales increased for the three months ended September 30, 2024, compared with the three months ended September 30, 2023, with net sales of $114,681 and $4,225, respectively. Distributors accounted for 4% of total net sales for the three months ended September 30, 2024. Private label net sales increased from $432,659 for the three months ended September 30, 2023, to $1,413,310 for the three months ended September 30, 2024. Private label net sales accounted for 45% of total net sales for the three months ended September 30, 2024. We expect to continue to grow our fields of business as we develop unique products with enhanced utility to offer to other prospective clients in the U.S. and Canadian markets.
Previous wording
Operating expenses increased for the three months ended June 30, 2024 by $422,095, from $3,785,282 for the three months ended June 30, 2023 to $4,207,377, due to the following factors:
Current wording
Operating expenses increased for the three months ended September 30, 2024 by $143,193, from $4,009,196 for the three months ended September 30, 2023 to $4,152,389, due to the following factors:
Previous wording
We reported net other expenses for the three months ended June 30, 2024 of $102,651, compared to a loss of $58,736 for three months ended June 30, 2023. Net other expenses can be attributed to decreased interest and rental income.
Current wording
We reported net other expenses for the three months ended September 30, 2024 of $229,701, compared to a $29,789 for three months ended September 30, 2023. Net other expenses can be attributed to increased interest expense and decreased rental income.
Previous wording
Net loss for the three months ended June 30, 2024 was $4,013,399, compared to a net loss of $3,797,455 for the three months ended June 30, 2023 – an increase of 6%. The increase in the net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations, research and development, manufacturing, and supply chain.
Current wording
Net loss for the three months ended September 30, 2024 was $4,134,917, compared to a net loss of $3,949,298 for the three months ended September 30, 2023 – an increase of 4.7%. The increase in the net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations, research and development, manufacturing, and supply chain.
Previous wording
For the six months ended June 30, 2024, revenues from our entire line of products was $2,434,176, as compared to $231,776 for the six months ended June 30, 2023. Year-over-year sales increased by approximately 950%. For the six months ended June 30, 2024, revenue generated in Canada was $51,890, as compared to $2,655 for the same period in 2023. For the six months ended June 30, 2024, revenue generated in the United States was $2,382,286 compared to $229,121 for the same period in 2023, an increase of 940%.
Current wording
For the nine months ended September 30, 2024, net sales from our entire line of products was $5,556,535, as compared to $690,259 for the nine months ended September 30, 2023. Year-over-year net sales increased by approximately 705%. For the nine months ended September 30, 2024, net sales generated in Canada was $80,530 as compared to $6,961 for the same period in 2023. For the nine months ended September 30, 2024, net sales generated in the United States was $5,476,005 compared to $683,298 for the same period in 2023, an increase of 701% .
Previous wording
Revenue increased during the six months ended June 30, 2024 compared to the same period the prior year due to increased sales of tonneau covers to a private label partner, various dealers and distributors, as well as end users via the Company’s online marketplaces. The Company continues to focus on establishing new and strengthening existing business-to-consumer and business-to-business sales channels while also strengthening customer support to increase customer satisfaction and enable high product turnover. For business-to-consumer channels, we have configured our product offerings in a manner conducive to cost-effective marketing, allowing us to securely invest in marketing and sales campaigns. For business-to-business channels, we have created all necessary marketing/sales materials and policies as well as an online dealer marketplace, and we are now actively contacting thousands of leads and presenting our product offerings to various dealers, jobbers, and retailers across the United States and Canada. We intend to gradually increase output capacity through refined production processes and increased personnel.
Current wording
Net sales increased during the nine months ended September 30, 2024 compared to the same period the prior year due to increased net sales of tonneau covers to a private label partner, various dealers and distributors, as well as end users via the Company’s online marketplaces. The Company continues to focus on establishing new and strengthening existing business-to-consumer and business-to-business net sales channels while also strengthening customer support to increase customer satisfaction and enable high product turnover. For business-to-consumer channels, we have configured our product offerings in a manner conducive to cost-effective marketing, allowing us to securely invest in marketing and sales campaigns. For business-to-business channels, we have created all necessary marketing/sales materials and policies as well as an online dealer marketplace, and we are now actively contacting thousands of leads and presenting our product offerings to various dealers, jobbers, and retailers across the United States and Canada. We intend to gradually increase output capacity through refined production processes and increased personnel.
Previous wording
Sales from online retailers of our products increased from $42,437 during the six months ended June 30, 2023, to $921,623 during the six months ended June 30, 2024. Online retailers accounted for 38% of total revenue for the six months ended June 30, 2024, compared to 18% for the six months ended June 30, 2023. Distributor sales increased for the six months ended June 30, 2024, compared with the six months ended June 30, 2023, with sales of $86,773 and $2,655, respectively. Distributor sales accounted for 3% of total revenue for the six months ended June 30, 2024. Private label sales increased from $188,684 for the six months ended June 30, 2023, to $1,425,780 for the six months ended June 30, 2024. Private label sales accounted for 59% of total revenue for the six months ended June 30, 2024. We expect to continue to grow our fields of business as we develop unique products with enhanced utility to offer to other prospective clients in the U.S. and Canadian markets.
Current wording
Net sales from online retailers of our products increased from $62,827 during the nine months ended September 30, 2023, to $2,446,053 during the nine months ended September 30, 2024. Online retailers accounted for 44% of total net sales for the nine months ended September 30, 2024, compared to 9% for the nine months ended September 30, 2023. Distributor net sales increased for the nine months ended September 30, 2024, compared with the nine months ended September 30, 2023, with net sales of $204,158 and $6,961, respectively. Distributor net sales accounted for 4% of total net sales for the nine months ended September 30, 2024. Private label net sales increased from $620,471 for the nine months ended September 30, 2023, to $2,906,324 for the nine months ended September 30, 2024. Private label net sales accounted for 52% of total net sales for the nine months ended September 30, 2024. We expect to continue to grow our fields of business as we develop unique products with enhanced utility to offer to other prospective clients in the U.S. and Canadian markets.
Previous wording
Operating expenses increased for the six months ended June 30, 2024 by $556,901, from $7,327,398 for the six months ended June 30, 2023 to $7,884,299, due to the following factors:
Current wording
Operating expenses increased for the nine months ended September 30, 2024 by $700,094, from $11,336,594 for the nine months ended September 30, 2023 to $12,036,668, due to the following factors:
Previous wording
We reported net other expenses for the six months ended June 30, 2024 of $177,842, compared to net expenses of $52,058 for the six months ended June 30, 2023. Other expenses can be attributed to decreased interest and rental income.
Current wording
We reported net other expenses for the nine months ended September 30, 2024 of $407,543, compared to net expenses of $81,847 for the nine months ended September 30, 2023. Other expenses can be attributed to decreased interest and rental income.
Previous wording
Net loss for the six months ended June 30, 2024 was $7,728,056, compared to a net loss of $7,320,725 for the six months ended June 30, 2023 – an increase of 6%. The increase in the net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations, research and development, manufacturing, and supply chain.
Current wording
Net loss for the nine months ended September 30, 2024 was $11,862,973, compared to a net loss of $11,270,023 for the nine months ended September 30, 2023 – an increase of 5.3%. The increase in the net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations, research and development, manufacturing, and supply chain.
Previous wording
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the three and six months ended June 30, 2024, the Company had a net loss of $4,013,399 (2023 – $3,797,455) and $7,728,056 (2023 – $7,320,725), respectively. As of June 30, 2024, the Company has working capital of $8,489,246 (December 31, 2023 – $1,956,894) and had an accumulated deficit of $56,041,233 (December 31, 2023 – $48,313,177). The Company has not generated profit from operations since inception and to date has relied on debt and equity financings for continued operations. The Company’s ability to continue as a going concern is dependent upon the ability to generate cash flows from operations and obtain equity and/or debt financing. The Company intends to continue funding operations through equity and debt financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements in the long term. There can be no assurance that the steps management is taking will be successful.
Current wording
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the three and nine months ended September 30, 2024, the Company had a net loss of $4,134,917(2023–$3,949,298) and $11,862,973(2023–$11,270,023), respectively. As of September 30, 2024, the Company has working capital of $5,880,926(December 31, 2023–$1,956,894) and had an accumulated deficit of$60,176,150(December 31, 2023–$48,313,177). The Company has not generated profit from operations since inception and to date has relied on debt and equity financings for continued operations. The Company’s ability to continue as a going concern is dependent upon the ability to generate cash flows from operations and obtain equity and/or debt financing. The Company intends to continue funding operations through equity and debt financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements in the long term. There can be no assurance that the steps management is taking will be successful.
Previous wording
Despite the Company having mostly completed its purchasing of large manufacturing machinery, operational costs are expected to remain elevated and, thus, further decrease cash and cash equivalents. Concurrently, the Company intends to continue its ramp-up of manufacturing and increasing sales volumes in the second half of 2024, which should mitigate the effects of operational costs on cash and cash equivalents; this view is supported by the fact that the manufacturing facility of the Company was completed for initial production output in 2023 and started to generate revenue in the third quarter of 2023, registering its highest quarterly sales total in the Company’s history in the second quarter of 2024.
Current wording
Despite the Company having completed its purchasing of large manufacturing machinery for current output needs, operational costs are expected to remain elevated and, thus, further decrease cash and cash equivalents. Concurrently, the Company intends to continue its ramp-up of manufacturing and increasing sales volumes in the second half of 2024, which should mitigate the effects of operational costs on cash and cash equivalents; this view is supported by the fact that the manufacturing facility of the Company was completed for initial production output in 2023 and started to generate revenue in the third quarter of 2023, registering its highest quarterly sales total in the Company’s history in the third quarter of 2024.
Previous wording
On July 19, 2024, the Company, as the guarantor, and Worksport New York Operations Corporation as well as Worksport USA Operations Corporation, entered into a $6 million Revolving Financing and Assignment Agreement with an external lending entity, Amerisource Business Capital. Upon transaction close, the Company drew down approximately $5.06 million of the Revolving Credit Facility, net of $790,000 of interest reserve required to be withheld to ensure interest payments by the Company. The Company used $4.73 million of the drawn down amount to refinance the Company’s mortgage on the Company’s real property located at 2500 North America Dr. in West Seneca, New York, and additionally drew approximately $330,000 in accounts receivables, leaving approximately $940,000 available for Accounts Receivable financing under the Agreement as of the deal close date.
Current wording
On July 19, 2024, the Company, as the guarantor, and Worksport New York Operations Corporation as well as Worksport USA Operations Corporation, entered into a $6 million Revolving Financing and Assignment Agreement with an external lending entity, Amerisource Business Capital. Upon transaction close, the Company drew down approximately $5.06 million of the Revolving Credit Facility, net of $790,000 of interest reserve required to be withheld to ensure interest payments by the Company. The Company used $4.73 million of the drawn down amount to refinance the Company’s mortgage on the Company’s real property located at 2500 North America Dr. in West Seneca, New York, and additionally drew approximately $330,000 to fund operations.
Previous wording
As of June 30, 2024, we had current assets of $10,743,200 (December 31, 2023 – $9,123,506) and current liabilities of $2,253,954 (December 31, 2023 – $7,166,612). As of June 30, 2024, we had working capital of $8,489,246 (December 31, 2023 – $1,956,894) and an accumulated deficit of $56,041,233 (December 31, 2023 – $48,313,177).
Current wording
As of September 30, 2024, we had current assets of $8,887,057 (December 31, 2023 – $9,123,506) and current liabilities of $3,006,131 (December 31, 2023 – $7,166,612). As of September 30, 2024, we had working capital of $5,880,926 (December 31, 2023 – $1,956,894) and an accumulated deficit of $60,176,150 (December 31, 2023 – $48,313,177).
Previous wording
Accounts receivable increased at June 30, 2024 by $160,264 and increased by $263,874 in the prior period. The increase in accounts receivable was due to larger sales volume with business-to-business customers.
Current wording
Accounts receivable increased at September 30, 2024 by $3,320 and increased by $455,509 in the prior period. This small increase relative to the prior period was due to there being a small increase in business-to-business sales relative to the prior period.
Previous wording
Inventory increased at June 30, 2024 by $2,755,252, and at June 30, 2023 by $1,533,492, as a result of our stockpiling components for production as well as finished goods to fulfill rising demand for our domestically-produced tonneau covers. Prepaid expenses and deposits decreased by $1,345,434 at June 30, 2024, and increased by $14,280 at June 30, 2023 due to deposits used and made by us for the purchase of manufacturing equipment and inventory, respectively.
Current wording
Inventory increased at September 30, 2024 by $2,506,568, and at September 30, 2023 by $2,205,697, as a result of our purchasing more raw materials for increased output to fulfill rising demand for our domestically-produced tonneau covers. Prepaid expenses and deposits decreased by $1,240,649 at September 30, 2024, and decreased by $26,200 at September 30, 2023 due to deposits used and made by us for the purchase of inventory.
Previous wording
Accounts payable and accrued liabilities decreased at June 30, 2024 by $59,989 compared to a decrease of $828,757 in the prior period.
Current wording
Accounts payable and accrued liabilities increased at September 30, 2024 by $1,004,819 compared to a decrease of $152,474 in the prior period.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2024 was $335,787 compared to $2,663,046 in the prior period. The decrease in investing activities was primarily attributable to higher capital expenditure on various manufacturing equipment in 2023.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2024 was $500,760 compared to $3,512,469 in the prior period. The decrease in investing activities was primarily attributable to higher capital expenditure on various manufacturing equipment in 2023.
Previous wording
Net cash generated by financing activities for the six months ended June 30, 2024 was $6,817,390 compared to net cash used from financing activities of $36,772 in the prior period.
Current wording
Net cash generated by financing activities for the nine months ended September 30, 2024 was $6,951,879 compared to net cash generated by financing activities of $51,637 in the prior period. Cash generated from financing activities increased as the Company issued additional shares, warrants and access to credit lines compared to 2023.