Worksport Ltd
For the period ended Mar 31, 2025. Filed May 15, 2025.
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.
Mar 31, 2025 · Filed May 15, 2025
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 2024-09-30; filed 2024-11-13.
0001493152-24-045105
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001641172-25-010837
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 91 previous paragraphs and 76 current paragraphs.
28 unchanged; 22 reworded; 26 added; 38 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 6 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 (26)
Current report
On March 18, 2025, the Company effected a 1-for-10 reverse stock split of its common stock. All share and per share information has been retroactively adjusted for all period presented.
Current report
Worksport Ltd., through its subsidiaries, designs, develops, manufactures, and owns the intellectual property on a variety of tonneau covers, solar integrations, portable power systems, and clean heating & cooling solutions. Additionally, Worksport’s hard-folding cover, designed and manufactured in the United States, is compatible with all major truck models and is gaining traction with newer truck makers including the EV sector. Worksport seeks to capitalize on the growing shift of consumer mindsets towards clean energy integrations and power grid independence with its proprietary solar solutions, mobile energy storage systems (ESS), and Cold-Climate Heat Pump (CCHP) technology.
Current report
Economic Conditions and Market Trends
Current report
Additionally, as central banks and the U.S. Federal Reserve increase interest rates to combat global inflation, the cost of debt financing increases. The U.S. Federal Reserve has begun to decrease interest rates in 2024, but they may persist at an elevated level for the foreseeable future. Our $6,000,000 line of credit and our $1,487,000 in equipment financing both have floating interest rates, meaning we are susceptible to variable debt interest costs as a result of changes in interest rates.
Current report
Tariffs
Current report
Worksport’s hard tonneau covers—led by the AL3 and AL4 models—are manufactured in the U.S. using predominantly American aluminum, providing strong resilience against tariffs. Soft covers, currently sourced from China, account for a minor portion of revenue, with domestic sourcing options actively under review. The upcoming SOLIS solar cover will be built in the U.S., with solar panels expected to be sourced from India, a country maintaining relatively stable trade relations with the U.S. For the COR portable power system, Worksport is working with its international battery supplier and U.S.-based partners to mitigate tariff exposure and evaluate onshore manufacturing opportunities.
Current report
On a regular basis, we evaluate the critical accounting policies used to prepare our consolidated financial statements, including revenue recognition, inventory valuation, reviews for impairment of long-lived assets, and income taxes.
Current report
RECENT ACCOUNTING PRONOUNCEMENTS
Current report
See Note 1, Description of Business and Significant Accounting Policies included in Item 1, Financial Statements of this report for further information regarding Financial Accounting Standards Board issued Accounting Standards Updates (“ASU”).
Current report
CONSOLIDATED RESULTS OF OPERATIONS
Current report
Net sales increased during the three months ended March 31, 2025 compared to the same period the prior year due to further branding and marketing efforts resulting in higher direct to consumer sales as well as implementation of our distributor, wholesaler, and jobber sales strategy leading to increases in our business to business sales channels.
Current report
We currently work closely with a large Canadian and a large U.S. distributor as well as online retailers to grow our customer base. We are progressing well in conversations with three other major distributors with strong market presences, which will allow us to promote to dealers and sell to jobbers in strategic regions. Lastly, we are in closing discussions with a network of nationwide U.S. dealers capable of bringing our product to all U.S. continental states.
Current report
Cost of sales increased by 288%, from $475,181 for the three months ended March 31, 2024, to $1,843,784 for the three months ended March 31, 2025. Our cost of sales, as a percentage of sales, was approximately 82% and 93% for the three months ended March 31, 2025 and 2024, respectively. The decrease in the cost of sales as a percentage of sales was primarily driven by improved production efficiencies resulting from the continued maturation of our manufacturing processes. As production volumes increased, we achieved greater economies of scale and more efficient overhead absorption, resulting in lower per-unit manufacturing costs. This improvement in operational throughput allowed fixed and semi-variable overhead costs to be allocated across a higher number of units, thereby reducing the cost of sales on a per-unit basis.
Current report
As of March 31, 2025 and December 31, 2024, we had $5,080,372 and $4,883,099, respectively in cash and cash equivalents. As of March 31, 2025, we had $2,858,700 of remaining available capacity on our revolving line of credit compared with $811,400 of remaining available capacity as of December 31, 2024. The increase in cash and cash equivalents and increase in the remaining available capacity on our revolving line of credit was primarily a result of our warrant inducement transaction on February 27, 2025. 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, 2025, we had net losses of $4,460,464 (three months ended March 31, 2024 - $3,714,657). As of March 31, 2025, the Company had working capital of $7,936,250 (As of December 31, 2024 - $7,304,110) and had an accumulated deficit of $68,937,430 (As of December 31, 2024 - $64,476,966).
Current report
We have raised significant funds during the three months ended March 31, 2025 per the following public and private offerings:
Current report
Warrant Inducement
Current report
ATM Shares
Current report
Consolidated Statement of Cash Flows
Current report
Cash increased from $4,883,099 at December 31, 2024, to $5,080,372 at March 31, 2025 – an increase of $197,273 or 4%. The increase was primarily due to capital raising through financing activities.
Current report
Net cash used in operating activities for the three months ended March 31, 2025 was $3,839,918, compared to $2,794,604 in 2024, primarily driven by the shift to production and distribution of hard tonneau covers.
Current report
Accounts receivable increased at March 31, 2025 by $25,362 and decreased by $306,778 in the prior period. The increase in accounts receivable was due to further development of our Distributor and Jobber customer network and relationships.
Current report
Inventory increased at March 31, 2025 by $583,116, and increased at March 31, 2024 by $2,908,354, as a result of stockpiling of finished goods and raw materials in preparation for the launch of our AL4 product line. Prepaid expenses and deposits increased by $192,071 at March 31, 2025, and decreased by $1,155,090 at March 31, 2024 due to timing of deposits from B2C customers prior to fulfillment of their orders at the end of the accounting period.
Current report
Net cash used in investing activities for the three months ended March 31, 2025 was $458,342 compared to $212,969 for the three months ended March 31, 2024. The increase in investing activities was primarily attributable to our purchase of cryptocurrency and website enhancements, both of which are classified as intangible assets. We also acquired additional tooling components for our COR production process.
Current report
Net cash provided by financing activities for the three months ended March 31, 2025 was $4,495,533 compared to net cash used in financing activities of $3,178,775 for the three months ended March 31, 2024.
Current report
Off-Balance Sheet Arrangements
Current report
We did not have any material off-balance sheet arrangements that have or are reasonably likely to have a material future effect on our financial condition, results of operations or cash flows.
Removed paragraphs (38)
Previous report
Worksport Ltd., through its subsidiaries, designs, develops, manufactures, and owns the Intellectual Property on a portfolio of tonneau cover, solar integration, portable power station, and NP (Non-Parasitic), Hydrogen-based green energy products and solutions for the automotive aftermarket accessories, power storage, residential heating, and electric vehicle-charging industries. We seek to provide consumers with next-generation automotive aftermarket accessories while capitalizing on growing consumer interest in clean energy solutions and power grid independence.
Previous report
Key Factors Affecting our Performance
Previous report
Such an inflationary environment also increases our direct cost of raw goods or processed goods for our original equipment manufacturing as well as indirect costs such as overhead and rent. Due to these present and forecasted price increases and the temporary increases in ocean freight and container handling costs faced in recent periods, Worksport factors in all costs when assessing proper pricing of its goods for sale.
Previous report
Additionally, as central banks and the U.S. Federal Reserve increase interest rates to combat global inflation, the cost of debt financing increases. While we currently do not have material debt other than our $6.0 million Revolving Credit Facility, our facility’s variable rate fluctuates along with the Prime Rate, meaning our monthly interest costs vary not only by our usage of the facility but by interest rates as well. We continue to explore debt financing options at reasonable interest rates in order to strengthen our cash position.
Previous 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.
Previous report
RESULTS OF OPERATIONS
Previous report
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 report
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 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.
Previous report
Nine Months Ended September 30, 2024 compared to the Nine Months Ended September 30, 2023
Previous report
Net Sales
Previous report
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 report
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 report
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 report
Cost of Sales
Previous 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.
Previous report
Operating Expenses
Previous report
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 report
Other Income and Expenses
Previous report
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 report
Net Loss
Previous report
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 report
On November 2, 2023, the Company consummated a registered direct offering pursuant to which it sold 1,925,000 shares of common stock and 1,575,000 pre-funded warrants to an institutional investor for a total net proceeds of $4,261,542. Concurrently with the registered direct offering, the Company issued the same institutional investor 7,000,000 warrants in a private sale. The warrants are exercisable for 7,000,000 shares of common stock for $1.34 per share six months after issuance until five and a half years from the issuance date, subject to beneficial ownership limitations as described in the warrants. The Company registered the 7,000,000 shares of common stock underlying the warrants on a Form S-1 (333-276241) which was declared effective by the SEC on December 29, 2023.
Previous report
On March 20, 2024, the Company consummated a registered direct offering pursuant to which it sold 2,372,240 shares of common stock and 1,477,892 pre-funded warrants to the same institutional investor as in the Company’s registered direct offering on November 2, 2023, for total net proceeds of $2,629,083. Concurrently with the registered direct offering, the Company issued the institutional investor 7,700,264 warrants in a private sale. The warrants are exercisable for 7,700,264 shares of common stock for $0.74 per share six months after issuance until five and a half years from the issuance date, subject to beneficial ownership limitations contained in the warrants. The Company registered the 7,700,264 shares of common stock underlying the warrants on a Form S-1 (333-278461) which was declared effective by the SEC on April 8, 2024.
Previous report
As disclosed in the footnotes to our financial statements, on May 14, 2024, the Company and Worksport New York Operations Corporation entered into an Omnibus Amendment of Loan Documents with Northeast Bank. This amendment pertains to the secured loan agreement dated May 4, 2022, which was originally used to finance the purchase of our facility and land in West Seneca, New York. Effective as of May 10, 2024, the Lender extended the maturity date of the loan from May 10, 2024, to August 10, 2024. This extension alleviated immediate cash flow pressures by postponing the loan repayment, allowing us to manage our resources more effectively and focus on other operational needs. As part of the Loan Amendment, we agreed to pay the Lender an extension fee of $106,000. This fee was deemed fully earned but was waived, as the loan was repaid in full on or before the new maturity date. If the loan was not repaid by the extended maturity date or was accelerated due to default, the fee would have become payable. Additionally, we agreed to an exit fee of $106,000 under similar conditions. This fee was waived, as the loan was repaid on or before the new maturity date without acceleration. This loan extension demonstrates our ability to negotiate favorable terms with our creditors and underscores our commitment to maintaining strong liquidity. This strategic decision supported our long-term growth and helped us navigate the current economic and interest rate environment more effectively. The details of the Loan Amendment have been filed as an exhibit to this report and are incorporated by reference herein.
Previous report
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 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.
Previous report
The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Still, certain factors indicate the existence of a material uncertainty that cast substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. These adjustments could be material.
Previous report
Cash Flow Activities
Previous 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%.
Previous report
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 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.
Previous report
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 report
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 report
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 report
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.
Previous report
Our discussion and analysis of results of operations and financial condition are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Previous report
The accounting policies that we follow are set forth in Note 2 to our financial statements as included in our 2023 Annual Report on Form 10-K filed on March 27, 2024. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.
Reworded paragraphs (22)
Previous wording
Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to particular years, quarters, months or periods refer to the Company’s fiscal years ended December 31 st and the associated quarters, months and periods of those fiscal years. Each of the terms “Company” and “Worksport” as used herein refers collectively to Worksport Ltd. and its subsidiaries, unless otherwise stated.
Current wording
Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to particular years, quarters, months or periods refer to the Company’s fiscal years ended December 31st and the associated quarters, months and periods of those fiscal years. Each of the terms “Company” and “Worksport” as used herein refers collectively to Worksport Ltd. and its subsidiaries, unless otherwise stated.
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, 2023 filed with the U.S. Securities and Exchange Commission (the “SEC”) 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, 2024 filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 27,2025 and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.
Previous wording
Electric Vehicles (EVs) have been exponentially increasing in consumer interest, whether that interest takes the form of vehicle pre-orders, sales, or investments. As we begin marketing our Worksport SOLIS and COR, we plan to market the SOLIS as a must-have accessory for electric light duty vehicle owners while simultaneously riding the coattails of EV popularity to promote our other products (COR and conventional tonneau covers) to the very large population of Americans that have an interest in EVs without the funds to purchase them. Further, participating in the EV space allows us to target consumers with an interest in cutting-edge technologies – a great market in which to promote our COR.
Current wording
Electric Vehicles (EVs) have been increasing in consumer interest, whether that interest takes the form of vehicle pre-orders, sales, or investments. As we begin marketing our Worksport SOLIS and COR, we plan to market the SOLIS as a must-have accessory for electric light duty vehicle owners while simultaneously riding the coattails of EV popularity to promote our other products (COR and conventional tonneau covers) to the very large population of Americans that have an interest in EVs without the funds to purchase them. Further, participating in the EV space allows us to target consumers with an interest in cutting-edge technologies – a great market in which to promote our COR portable power system. Notably, the COR & SOLIS are compatible with existing internal combustion engine vehicles and will not rely on the rapid adoption of EVs.
Previous wording
The Build Back Better Bill was a strong indication of upcoming and favorable USA regulations. Many regulations that improve North America’s EV charging infrastructure or provide grants to businesses operating in the EV space will benefit us. While we are primarily focused on the light duty vehicle market, our energy products are particularly useful for electric light duty pickup trucks and, therefore, are positioned to benefit greatly from any bill that increases the prevalence of such vehicles.
Current wording
The Build Back Better Bill was a strong indication of upcoming and favorable U.S. regulations. Many regulations that improve North America’s EV charging infrastructure or provide grants to businesses operating in the EV space would benefit us. While we are primarily focused on the light duty vehicle market, our energy products are particularly useful for electric light duty pickup trucks and, therefore, are positioned to benefit greatly from any bill that increases the prevalence of such vehicles. However, President Donald Trump has signed an executive order titled Unleashing American Energy in which he has indicated his administration will be reversing the electric vehicle mandates of Joe Biden’s former administration, and he has further paused billions of dollars in funding allocated towards electric vehicle charging stations. The future of the U.S.’s regulatory environment surrounding electric vehicles is uncertain.
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. Even less 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, 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
Climate change threatens to cause many foreseeable as well as unforeseeable ramifications. In cautious preparation for those that are foreseeable, we have strategically begun domestic manufacturing operations in Western New York – an economically growing region not immediately threatened by climate change to the same extent as other regions and possibly one that may benefit from future population migrations within the United States of America. Further, we intend to lower our own carbon footprint by investing in energy-saving measures in our factory in West Seneca, NY. Considering climate change may also exacerbate geopolitical tensions, we are working to diversify our supply chain and lower our reliance on any particular region or country for raw materials in order to lower our exposure to climate change-induced economic or political instability.
Current wording
Climate change threatens to cause many foreseeable as well as unforeseeable ramifications. In cautious preparation for those that are foreseeable, we have strategically begun domestic manufacturing operations in Western New York – an economically growing region not immediately threatened by climate change to the same extent as other regions and possibly one that may benefit from future population migrations within the U.S. Further, we intend to lower our own carbon footprint by investing in energy-saving measures in our factory in West Seneca, NY. Considering climate change may also exacerbate geopolitical tensions, we are working to diversify our supply chain and lower our reliance on any particular region or country for raw materials in order to lower our exposure to climate change-induced economic or political instability.
Previous wording
Elevated interest rates have also resulted in a shift in institutional holdings away from micro-cap equities, which has negatively influenced our stock’s trading volume. We continue to forge relationships with institutional investors and analysts in order to maintain a healthy trading volume.
Current wording
High interest rates have also resulted in a shift in institutional holdings away from micro-cap equities, which has negatively influenced our stock’s trading volume. We continue to forge relationships with institutional investors and analysts in order to maintain a healthy trading volume.
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. 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.
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 from late 2023 through mid-2024 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 Worksport have not faced dramatic price hikes. Regardless, Worksport is closely monitoring international shipping costs.
Previous 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.
Current 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.
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, 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.
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, 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.
Previous wording
We are subject to foreign exchange risk as we manufacture certain products and components in China, market extensively in both Canadian and U.S. markets, employ people residing in both the U.S. and Canada and, to date, have raised funds in U.S. Dollars. Meanwhile, we report results of operations in U.S. Dollars. Since some of our Canadian customers pay in Canadian Dollars, we are subject to gains and losses due to fluctuations in the USD relative to the Canadian Dollar. Our manufacturers in China are paid in USD to better avoid the relatively greater fluctuation of the Chinese Yuan. To the extent the U.S. dollar strengthens against any of these foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our operations.
Current wording
We are subject to foreign exchange risk as we manufacture certain products and components in China, market extensively in both Canadian and U.S. markets, employ people residing in both the U.S. and Canada and, to date, have raised funds in Canadian Dollars. Meanwhile, we report results of operations in U.S. Dollars. Since our Canadian customers pay in Canadian Dollars, we are subject to gains and losses due to fluctuations in the USD relative to the Canadian Dollar. Our manufacturers in China are paid in USD to better avoid the relatively greater fluctuation of the Chinese Yuan. To the extent the U.S. dollar strengthens against any of these foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our operations.
Previous 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% .
Current wording
For the three months ended March 31, 2025, net sales were $2,240,005, as compared to $512,637 for the three months ended March 31, 2024. Year-over-year net sales increased by approximately 337%. For the three months ended March 31, 2025, net sales generated in U.S. was $2,227,549, as compared to $474,654 for the same period in 2024, an increase of 369%. For the three months ended March 31, 2025, revenue generated in Canada was $12,456, compared to $20,007 for the same period in 2024, a decrease of 38%.
Previous wording
We distribute our tonneau covers in Canada and the United States through an expanding network of wholesalers, private labels, distributors, and online retail channels, including eBay, Amazon, Walmart, and our own e-commerce platform hosted on Shopify. Distribution via each aforementioned channel is expected to increase during 2024. We have pursued and will continue to pursue relationships with Original Equipment Manufacturers with the intention of distributing through them as well.
Current wording
We distribute our hard tonneau covers and soft tonneau covers in the U.S. and Canada through an expanding network of wholesalers, private labels, distributors, and other online retailers, including eBay, Amazon, Walmart, and our own e-Commerce platform hosted on Shopify. Distribution via each aforementioned channel is expected to increase during 2025. We have pursued and will continue to pursue relationships with Original Equipment Manufacturers with the intention of distributing through them as well.
Previous 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:
Current wording
Operating expenses increased for the three months ended March 31, 2025 by $975,605, from $3,676,922 for the three months ended March 31, 2024 to $4,652,527, mainly due to the following factors:
Previous 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.
Current wording
We reported net other expenses for the three months ended March 31, 2025 of $204,158, compared to $75,191 for three months ended March 31, 2024. The increase in net other expenses was attributed to increased interest expense on our line of credit and a reduction in rental income as a result of the completion of the term of our sublease agreement.
Previous 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.
Current wording
Net loss for the three months ended March 31, 2025 was $4,460,464, compared to a net loss of $3,714,657 for the three months ended March 31, 2024 – an increase of 20%. 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
Liquidity and Capital Resources; Going Concern
Current wording
Liquidity and Capital Resources
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 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.
Current wording
In their fiscal 2024 audit report, our independent auditors expressed that there is substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate cash flows from operations and obtain equity and/or debt financing. We intend to continue funding operations through equity and debt financing arrangements, which may be insufficient to fund our capital expenditures, working capital and other cash requirements in the long term. There can be no assurance that the steps our management is taking will be successful.
Previous wording
To date, the Company’s principal sources of liquidity consist of net proceeds from public and private securities offerings and cash exercises of outstanding warrants. Management is focused on transitioning towards revenue as its principal source of liquidity by growing existing product offerings as well as the Company’s customer base. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for planned operations or future business developments. Future business development and demands may lead to cash utilization at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot provide assurances it will be able to raise additional capital on acceptable terms, or at all.
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 three months ended March 31, 2025, the Company received net proceeds of $6,570,415 from offerings. 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
On May 29, 2024, the Company entered into Inducement Offer Letter with a certain holder of existing warrants to purchase shares of the Company’s common stock at an exercise price of $1.34 per share issued on November 2, 2024, pursuant to which the Holder agreed to exercise for cash its Existing Warrants to purchase an aggregate of 7,000,000 shares of the Company’s common stock, at a reduced exercised price of $0.5198 per share, in consideration for the Company’s agreement to issue new warrants to purchase up to 12,950,000 shares of the Company’s common stock at $0.5198 per share. The Company received aggregate gross proceeds of approximately $3,638,600 from the exercise of the Existing Warrants by the Holder and the sale of the Inducement Warrants, before deducting placement agent fees and other offering expenses payable by the Company.
Current wording
On February 27, 2025, we entered into a common stock warrant exercise inducement offer letter (the “Inducement Letter”) with a certain holder (the “Holder”) of existing warrants to purchase shares of our common stock at an exercise price of $5.198 per share, issued on May 29, 2024 (the “Existing Warrants”), pursuant to which the Holder agreed to exercise for cash its Existing Warrants to purchase an aggregate of 1,295,000 shares of the Company’s common stock at $5.198 per share, in consideration for the Company’s agreement to issue new warrants (the “Inducement Warrants”) having terms as described below, to purchase up to 1,424,500 shares of the Company’s common stock (the “Inducement Warrant Shares”). We received aggregate gross proceeds of approximately $6,731,400 from the exercise of the Existing Warrants by the Holder and the sale of the Inducement Warrants, before deducting placement agent fees and other offering expenses payable by us. We engaged Maxim Group LLC (“Maxim”) to act as our exclusive financial advisor in connection with the transactions summarized above and will pay Maxim a cash fee from the gross proceeds received from the exercise of the Existing Warrants. Each Inducement Warrant has an exercise price equal to $6.502 per share. The Inducement Warrants are exercisable at any time on or after the date that is six (6) months from the issuance date and will have a term of exercise of five and one half (5½) years following the date of issuance. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, subsequent rights offerings, pro rate distributions, reorganizations, a Fundamental Transaction (as defined in the Inducement Warrants) or similar events affecting our common stock and the exercise price.
Previous wording
The Company has successfully raised cash, and it is positioned to do so again if deemed necessary or strategically advantageous. During the year ended December 31, 2021, the Company, through its Reg-A public offering, private placement offering, underwritten public offering, and exercises of warrants, raised an aggregate of approximately $32,500,000. On September 30, 2022, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 13, 2022, allowing the Company to issue up to $30,000,000 of common stock and prospectus supplement covering the offering, issuance and sale of up to $13,000,000 of common stock that may be issued and sold under an At The Market Offering Agreement dated September 30, 2022 (“ATM Agreement”), with H.C. Wainwright & Co., LLC, as the sales agent (“HCW”). Pursuant to the ATM Agreement, HCW is entitled to a commission equal to 3.0% of the gross sales price of the shares of common stock sold. As of September 30, 2024, the Company has sold and issued 604,048 shares of common stock in consideration for net proceeds of $780,356 under the ATM Agreement.
Current wording
Pursuant to the At The Market Offering Agreement dated as of September 30, 2022 (“ATM Agreement”), with H.C. Wainwright & Co., LLC, as the sales agent, during the three month period ended March 31, 2025, we sold and issued a total of 22,725 shares of common stock in consideration for net proceeds of $185,874 under the ATM Agreement.
Previous 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.
Current wording
Accounts payable and accrued liabilities increased at March 31, 2025 by $390,691 compared to an increase of $729,303 at March 31, 2024.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
We distribute our tonneau covers in Canada and the United States through an expanding network of wholesalers, private labels, distributors, and online retail channels, including eBay, Amazon, Walmart, and our own e-commerce platform hosted on Shopify. Distribution via each aforementioned channel is expected to increase during 2024. We have pursued and will continue to pursue relationships with Original Equipment Manufacturers with the intention of distributing through them as well.
Previous report — wording carried elsewhere
We provide our distributors and online retailers an “all-in” wholesale price. This includes any import duty charges, taxes, and shipping charges. Discounts are applied if the distributor or retailer chooses to use their own shipping process. Certain exceptions apply on rare occasions where product is shipped outside the contiguous United Sates or from the United States to Canada. Volume discounts are offered to certain high-volume customers, and we also offer a “dock price” or “pickup program” whereby clients are able to pick up product directly from our stocking warehouse.
Previous report — wording carried elsewhere
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.