[10-Q] Worksport, Ltd. Warrant Quarterly Earnings Report
Worksport Ltd. reported accelerated sales growth while remaining unprofitable. For the three months ended June 30, 2025, net sales were $4.10 million, up about 114% year-over-year, and six-month sales were $6.34 million, up about 161%. Gross profit improved to $1.08 million for the quarter from $0.30 million a year earlier, reflecting better production efficiencies. Despite higher revenue, the company recorded a net loss of $3.73 million for the quarter and $8.19 million for six months, and an accumulated deficit of $72.7 million.
The balance sheet shows $1.39 million in cash at period end, working capital of $4.76 million, and available revolving credit of $4.76 million. Management completed a warrant inducement and exercises that generated approximately $6.7 million in gross proceeds and initiated a Regulation A offering (initial closing gross proceeds $160k to date). Operationally, the company expanded its dealer network to over 550 locations, secured ISO 9001 certification, rolled out 80% of its AL4 models, and plans a commercial launch of SOLIS & COR. The filing discloses a material uncertainty about the company’s ability to continue as a going concern.
Worksport Ltd. ha riportato una crescita delle vendite accelerata pur restando in perdita. Nei tre mesi chiusi il 30 giugno 2025 le vendite nette sono state $4.10 million, in aumento di circa 114% su base annua, e nei sei mesi $6.34 million, in aumento di circa 161%. Il margine lordo è migliorato a $1.08 million per il trimestre da $0.30 million un anno prima, riflettendo migliori efficienze produttive. Nonostante i ricavi più alti, la società ha registrato una perdita netta di $3.73 million nel trimestre e di $8.19 million nei sei mesi, con un deficit accumulato di $72.7 million.
Lo stato patrimoniale mostra $1.39 million di cassa a fine periodo, un capitale circolante di $4.76 million e una linea di credito revolving disponibile di $4.76 million. La direzione ha completato un'operazione di incentivo sui warrant e relativi esercizi che ha generato circa $6.7 million di proventi lordi e ha avviato un'offerta ai sensi del Regulation A (proventi lordi del primo closing $160k finora). A livello operativo, la società ha ampliato la rete concessionari a oltre 550 sedi, ottenuto la certificazione ISO 9001, lanciato l'80% dei modelli AL4 e prevede il lancio commerciale di SOLIS & COR. Il documento segnala una significativa incertezza sulla capacità della società di continuare come azienda in funzionamento.
Worksport Ltd. informó un crecimiento acelerado de las ventas, aunque siguió siendo no rentable. Para los tres meses terminados el 30 de junio de 2025, las ventas netas fueron $4.10 million, un aumento de aproximadamente 114% interanual, y en seis meses las ventas alcanzaron $6.34 million, un incremento de alrededor de 161%. El beneficio bruto mejoró a $1.08 million en el trimestre desde $0.30 million un año antes, reflejando mayores eficiencias de producción. A pesar de los mayores ingresos, la compañía registró una pérdida neta de $3.73 million en el trimestre y de $8.19 million en seis meses, y un déficit acumulado de $72.7 million.
El balance muestra $1.39 million en efectivo al cierre del periodo, un capital de trabajo de $4.76 million y una línea de crédito revolvente disponible de $4.76 million. La dirección completó una operación de incentivo sobre warrants y ejercicios que generó aproximadamente $6.7 million en ingresos brutos e inició una oferta bajo el Regulation A (ingresos brutos del cierre inicial $160k hasta la fecha). Operativamente, la compañía amplió su red de distribuidores a más de 550 ubicaciones, obtuvo la certificación ISO 9001, lanzó el 80% de sus modelos AL4 y planea un lanzamiento comercial de SOLIS & COR. La presentación revela una incertidumbre material sobre la capacidad de la compañía para continuar como negocio en marcha.
Worksport Ltd.는 손실 상태를 유지하면서도 매출이 가속 성장했다고 보고했습니다. 2025년 6월 30일로 종료된 3개월 동안의 순매출은 $4.10 million으로 전년 동기 대비 약 114% 증가했으며, 6개월 누적 매출은 $6.34 million으로 약 161% 증가했습니다. 분기 총이익은 생산 효율성 개선을 반영해 $1.08 million으로 전년 동기 $0.30 million에서 증가했습니다. 매출이 늘었음에도 불구하고 회사는 분기 순손실 $3.73 million, 6개월 누적 순손실 $8.19 million을 기록했으며 누적 적자는 $72.7 million입니다.
대차대조표상 기말 현금은 $1.39 million, 운전자본은 $4.76 million, 이용 가능한 회전 신용한도는 $4.76 million입니다. 경영진은 워런트 인센티브 및 행사로 약 $6.7 million의 총수익을 확보했고, Regulation A 공모를 개시해 현재까지 초기 클로징 총수익 $160k를 확보했습니다. 운영 측면에서는 딜러 네트워크를 550개 이상으로 확장했고, ISO 9001 인증을 획득했으며 AL4 모델의 80%를 출시했고 SOLIS & COR의 상용 출시를 계획하고 있습니다. 제출 서류는 회사의 계속기업으로서의 존속 능력에 중대한 불확실성이 있음을 밝히고 있습니다.
Worksport Ltd. a déclaré une accélération de la croissance des ventes tout en restant déficitaire. Pour les trois mois clos le 30 juin 2025, le chiffre d'affaires net s'est élevé à $4.10 million, en hausse d'environ 114% sur un an, et sur six mois à $6.34 million, en hausse d'environ 161%. Le bénéfice brut s'est amélioré à $1.08 million pour le trimestre contre $0.30 million un an plus tôt, reflétant de meilleures efficacités de production. Malgré des revenus plus élevés, la société a enregistré une perte nette de $3.73 million pour le trimestre et de $8.19 million sur six mois, et un déficit cumulé de $72.7 million.
Le bilan fait état de $1.39 million de trésorerie à la clôture, d'un fonds de roulement de $4.76 million et d'une ligne de crédit renouvelable disponible de $4.76 million. La direction a réalisé une opération d'incitation sur warrants et des exercices qui ont généré environ $6.7 million de produits bruts et a lancé une offre au titre du Regulation A (produits bruts du premier closing $160k à ce jour). Sur le plan opérationnel, la société a étendu son réseau de distributeurs à plus de 550 sites, obtenu la certification ISO 9001, déployé 80% de ses modèles AL4 et prévoit un lancement commercial de SOLIS & COR. Le dépôt signale une importante incertitude quant à la capacité de la société à poursuivre son exploitation.
Worksport Ltd. meldete ein beschleunigtes Umsatzwachstum, blieb jedoch unrentabel. Für die drei Monate zum 30. Juni 2025 beliefen sich die Nettoumsätze auf $4.10 million, ein Anstieg von etwa 114% gegenüber dem Vorjahr, und für sechs Monate auf $6.34 million, ein Plus von rund 161%. Der Bruttogewinn verbesserte sich im Quartal auf $1.08 million von $0.30 million ein Jahr zuvor, was auf bessere Produktionseffizienzen hindeutet. Trotz höherer Erlöse verzeichnete das Unternehmen einen Nettoverlust von $3.73 million im Quartal und $8.19 million in sechs Monaten sowie einen kumulierten Fehlbetrag von $72.7 million.
Die Bilanz weist zum Periodenende $1.39 million an liquiden Mitteln, ein Working Capital von $4.76 million und eine verfügbare revolvierende Kreditlinie von $4.76 million aus. Das Management führte eine Warrant‑Incentive‑ und Ausübungsmaßnahme durch, die rund $6.7 million an Bruttoerlösen einbrachte, und startete ein Regulation‑A‑Angebot (erste Closing‑Bruttoerlöse $160k bisher). Operativ erweiterte das Unternehmen sein Händlernetz auf über 550 Standorte, erhielt die Zertifizierung ISO 9001, brachte 80% seiner AL4‑Modelle auf den Markt und plant die kommerzielle Einführung von SOLIS & COR. Die Einreichung weist auf eine wesentliche Unsicherheit hinsichtlich der Fortführung des Unternehmens hin.
- None.
- None.
Insights
TL;DR: Revenue growth and margin improvement are notable, but persistent losses and low cash raise funding risk.
Worksport delivered strong top-line momentum with sequential product rollouts and distributor expansion driving a >100% year-over-year sales increase. Gross margin improvement reflects manufacturing scale and lower per-unit costs. However, operating losses remain sizable and cash declined materially to $1.39 million at period end. The company’s access to capital via warrant exercises and a revolver temporarily supports liquidity, but continuing reliance on equity and warrant financings increases dilution risk. Investors should weigh revenue traction and operational milestones against recurring net losses and going concern disclosure.
TL;DR: Material uncertainty on going concern and continued cash burn are key downside risks.
The filing explicitly states substantial doubt about the company’s ability to continue as a going concern. Cash fell from $4.88 million to $1.39 million while six-month operating cash used was ~$6.94 million, underscoring persistent cash burn. Although near-term financing events generated meaningful proceeds, the recordation of a large non-cash deemed dividend related to warrant inducements (reported incremental fair value of $7.60 million) and continued equity/warrant issuances indicate recurring reliance on shareholder financing. From a governance and liquidity risk perspective, these are negative, material signals for stakeholders.
Worksport Ltd. ha riportato una crescita delle vendite accelerata pur restando in perdita. Nei tre mesi chiusi il 30 giugno 2025 le vendite nette sono state $4.10 million, in aumento di circa 114% su base annua, e nei sei mesi $6.34 million, in aumento di circa 161%. Il margine lordo è migliorato a $1.08 million per il trimestre da $0.30 million un anno prima, riflettendo migliori efficienze produttive. Nonostante i ricavi più alti, la società ha registrato una perdita netta di $3.73 million nel trimestre e di $8.19 million nei sei mesi, con un deficit accumulato di $72.7 million.
Lo stato patrimoniale mostra $1.39 million di cassa a fine periodo, un capitale circolante di $4.76 million e una linea di credito revolving disponibile di $4.76 million. La direzione ha completato un'operazione di incentivo sui warrant e relativi esercizi che ha generato circa $6.7 million di proventi lordi e ha avviato un'offerta ai sensi del Regulation A (proventi lordi del primo closing $160k finora). A livello operativo, la società ha ampliato la rete concessionari a oltre 550 sedi, ottenuto la certificazione ISO 9001, lanciato l'80% dei modelli AL4 e prevede il lancio commerciale di SOLIS & COR. Il documento segnala una significativa incertezza sulla capacità della società di continuare come azienda in funzionamento.
Worksport Ltd. informó un crecimiento acelerado de las ventas, aunque siguió siendo no rentable. Para los tres meses terminados el 30 de junio de 2025, las ventas netas fueron $4.10 million, un aumento de aproximadamente 114% interanual, y en seis meses las ventas alcanzaron $6.34 million, un incremento de alrededor de 161%. El beneficio bruto mejoró a $1.08 million en el trimestre desde $0.30 million un año antes, reflejando mayores eficiencias de producción. A pesar de los mayores ingresos, la compañía registró una pérdida neta de $3.73 million en el trimestre y de $8.19 million en seis meses, y un déficit acumulado de $72.7 million.
El balance muestra $1.39 million en efectivo al cierre del periodo, un capital de trabajo de $4.76 million y una línea de crédito revolvente disponible de $4.76 million. La dirección completó una operación de incentivo sobre warrants y ejercicios que generó aproximadamente $6.7 million en ingresos brutos e inició una oferta bajo el Regulation A (ingresos brutos del cierre inicial $160k hasta la fecha). Operativamente, la compañía amplió su red de distribuidores a más de 550 ubicaciones, obtuvo la certificación ISO 9001, lanzó el 80% de sus modelos AL4 y planea un lanzamiento comercial de SOLIS & COR. La presentación revela una incertidumbre material sobre la capacidad de la compañía para continuar como negocio en marcha.
Worksport Ltd.는 손실 상태를 유지하면서도 매출이 가속 성장했다고 보고했습니다. 2025년 6월 30일로 종료된 3개월 동안의 순매출은 $4.10 million으로 전년 동기 대비 약 114% 증가했으며, 6개월 누적 매출은 $6.34 million으로 약 161% 증가했습니다. 분기 총이익은 생산 효율성 개선을 반영해 $1.08 million으로 전년 동기 $0.30 million에서 증가했습니다. 매출이 늘었음에도 불구하고 회사는 분기 순손실 $3.73 million, 6개월 누적 순손실 $8.19 million을 기록했으며 누적 적자는 $72.7 million입니다.
대차대조표상 기말 현금은 $1.39 million, 운전자본은 $4.76 million, 이용 가능한 회전 신용한도는 $4.76 million입니다. 경영진은 워런트 인센티브 및 행사로 약 $6.7 million의 총수익을 확보했고, Regulation A 공모를 개시해 현재까지 초기 클로징 총수익 $160k를 확보했습니다. 운영 측면에서는 딜러 네트워크를 550개 이상으로 확장했고, ISO 9001 인증을 획득했으며 AL4 모델의 80%를 출시했고 SOLIS & COR의 상용 출시를 계획하고 있습니다. 제출 서류는 회사의 계속기업으로서의 존속 능력에 중대한 불확실성이 있음을 밝히고 있습니다.
Worksport Ltd. a déclaré une accélération de la croissance des ventes tout en restant déficitaire. Pour les trois mois clos le 30 juin 2025, le chiffre d'affaires net s'est élevé à $4.10 million, en hausse d'environ 114% sur un an, et sur six mois à $6.34 million, en hausse d'environ 161%. Le bénéfice brut s'est amélioré à $1.08 million pour le trimestre contre $0.30 million un an plus tôt, reflétant de meilleures efficacités de production. Malgré des revenus plus élevés, la société a enregistré une perte nette de $3.73 million pour le trimestre et de $8.19 million sur six mois, et un déficit cumulé de $72.7 million.
Le bilan fait état de $1.39 million de trésorerie à la clôture, d'un fonds de roulement de $4.76 million et d'une ligne de crédit renouvelable disponible de $4.76 million. La direction a réalisé une opération d'incitation sur warrants et des exercices qui ont généré environ $6.7 million de produits bruts et a lancé une offre au titre du Regulation A (produits bruts du premier closing $160k à ce jour). Sur le plan opérationnel, la société a étendu son réseau de distributeurs à plus de 550 sites, obtenu la certification ISO 9001, déployé 80% de ses modèles AL4 et prévoit un lancement commercial de SOLIS & COR. Le dépôt signale une importante incertitude quant à la capacité de la société à poursuivre son exploitation.
Worksport Ltd. meldete ein beschleunigtes Umsatzwachstum, blieb jedoch unrentabel. Für die drei Monate zum 30. Juni 2025 beliefen sich die Nettoumsätze auf $4.10 million, ein Anstieg von etwa 114% gegenüber dem Vorjahr, und für sechs Monate auf $6.34 million, ein Plus von rund 161%. Der Bruttogewinn verbesserte sich im Quartal auf $1.08 million von $0.30 million ein Jahr zuvor, was auf bessere Produktionseffizienzen hindeutet. Trotz höherer Erlöse verzeichnete das Unternehmen einen Nettoverlust von $3.73 million im Quartal und $8.19 million in sechs Monaten sowie einen kumulierten Fehlbetrag von $72.7 million.
Die Bilanz weist zum Periodenende $1.39 million an liquiden Mitteln, ein Working Capital von $4.76 million und eine verfügbare revolvierende Kreditlinie von $4.76 million aus. Das Management führte eine Warrant‑Incentive‑ und Ausübungsmaßnahme durch, die rund $6.7 million an Bruttoerlösen einbrachte, und startete ein Regulation‑A‑Angebot (erste Closing‑Bruttoerlöse $160k bisher). Operativ erweiterte das Unternehmen sein Händlernetz auf über 550 Standorte, erhielt die Zertifizierung ISO 9001, brachte 80% seiner AL4‑Modelle auf den Markt und plant die kommerzielle Einführung von SOLIS & COR. Die Einreichung weist auf eine wesentliche Unsicherheit hinsichtlich der Fortführung des Unternehmens hin.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
Quarterly Period Ended:
Commission
File No.
(Exact Name of Small Business Issuer as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
Telephone Number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | ||
| The
|
Securities registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant
was required to submit post such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 13, 2025, the Registrant had shares of common stock, par value $ per share, issued and outstanding.
| WORKSPORT LTD. | |
| TABLE OF CONTENTS | |
| Page | |
| PART I. FINANCIAL INFORMATION | 3 |
| Item 1. Financial Statements. | 3 |
| Condensed Consolidated Balance Sheets as at June 30, 2025 (Unaudited) and December 31, 2024 | 3 |
| Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2025 and 2024 (Unaudited) | 4 |
| Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2025 and 2024 (Unaudited) | 5 |
| Condensed Consolidated Statements of Cash Flow for the six months ended June 30, 2025 and 2024 (Unaudited) | 7 |
| Notes to the Condensed Consolidated Financial Statements (Unaudited) | 8 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 30 |
| Item 4. Controls and Procedures | 30 |
| PART II OTHER INFORMATION | 31 |
| Item 1. Legal Proceedings | 31 |
| Item 1A. Risk Factors | 31 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 31 |
| Item 3. Defaults Upon Senior Securities | 31 |
| Item 4. Mine Safety Disclosures | 31 |
| Item 5. Other Information | 31 |
| Item 6. Exhibits | 32 |
| SIGNATURES | 33 |
| 2 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Worksport Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
| June 30, 2025 (Unaudited) | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Other receivable | ||||||||
| Inventory (Note 3) | ||||||||
| Prepaid expenses and deposits (Note 6) | ||||||||
| Total current assets | ||||||||
| Investments (Note 11) | ||||||||
| Property and equipment, net (Note 4) | ||||||||
| Operating lease right-of-use assets (Note 12) | ||||||||
| Intangible assets, net (Note 5) | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities and other | ||||||||
| Accrued compensation | ||||||||
| Long-term debt, current portion (Note 13) | ||||||||
| Lease liability, current portion (Note 12) | ||||||||
| Total current liabilities | ||||||||
| Lease liability, excluding current portion (Note 12) | ||||||||
| Long-term debt, excluding current portion (Note 13) | ||||||||
| Total liabilities | ||||||||
| Shareholders’ Equity | ||||||||
| Series A, B & C Preferred stock, $ par value, shares authorized, Series A, Series B, and Series C issued and outstanding, respectively (Note 7) | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding, respectively (Note 7) | ||||||||
| Additional paid-in capital | ||||||||
| Share subscriptions receivable | ( | ) | ( | ) | ||||
| Share subscriptions payable | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Cumulative translation adjustment | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements.
| 3 |
Worksport Ltd.
Condensed Consolidated Statements of Operations and Comprehensive Loss
For the Three and Six Months Ended June 30, 2025 and 2024
(Unaudited)
| Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Professional fees | ||||||||||||||||
| (Gain) loss on foreign exchange | ( | ) | ( | ) | ||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Rental income | ||||||||||||||||
| Other | ( | ) | ||||||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share (basic and diluted) | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of shares (basic and diluted) | ||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements.
| 4 |
Worksport Ltd.
Condensed Consolidated Statements of Shareholders’ Equity
For the Three Months Ended June 30, 2025 and 2024
(Unaudited)
| Preferred
Stock | Common
Stock | Additional Paid-in | Share Subscriptions | Share Subscription | Accumulated | Cumulative Translation | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Receivable | Payable | Deficit | Adjustment | (Deficit) | |||||||||||||||||||||||||||||||
| Balance at April 1, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | | |||||||||||||||||||||||||
| Issuance for services and subscriptions payable | - | |||||||||||||||||||||||||||||||||||||||
| Warrant inducement (Note 15) | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Warrant exercise (Note 15) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Balance at April 1, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Issuance for services and subscriptions payable | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Warrant exercise (Note 15) | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Issuance of preferred shares pursuant to Reg-A | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of warrants pursuant to Reg-A | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements.
| 5 |
Worksport Ltd.
Condensed Consolidated Statements of Shareholders’ Equity
For the Six Months Ended June 30, 2025 and 2024
(Unaudited)
| Preferred Stock |
Common
Stock |
Additional |
Share |
Share |
Accumulated |
Cumulative |
Total Stockholders’ |
|||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Receivable | Payable | Deficit | Adjustment | (Deficit) | |||||||||||||||||||||||||||||||
| Balance at January 1, 2024 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | |
|||||||||||||||||||||||||
| Issuance for services and subscriptions payable | - | |||||||||||||||||||||||||||||||||||||||
| -Share issuance (Note 7) | - | |||||||||||||||||||||||||||||||||||||||
| Warrant inducement (Note 15) | - | ( |
) | |||||||||||||||||||||||||||||||||||||
| Warrant exercise (Note 15) | - | ( |
) | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||||
| Issuance for services and subscriptions payable | - | ( |
) | |||||||||||||||||||||||||||||||||||||
| Shares issued (Note 7) | - | |||||||||||||||||||||||||||||||||||||||
| Warrant exercise (Note 15) | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of preferred shares pursuant to Reg-A | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of warrants pursuant to Reg-A | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | $ | ( |
) | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements.
| 6 |
Worksport Ltd.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2025 and 2024
(Unaudited)
| 2025 | 2024 | |||||||
| Operating Activities | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
| Shares, options and warrants issued for services | ||||||||
| Depreciation and amortization | ||||||||
| Change in operating lease | ||||||||
| ( | ) | ( | ) | |||||
| Changes in operating assets and liabilities (Note 10) | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of intangible assets | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Purchase of investments | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing Activities | ||||||||
| Shareholder assumption of debt | ( | ) | ||||||
| Proceeds from warrant exercise | ||||||||
| Proceeds from issuance of preferred stock, net of issuance cost | ||||||||
| Proceeds from issuance of warrants, net of issuance cost | ||||||||
| Proceeds from line of credit | ||||||||
| Repayments on line of credit | ( | ) | ||||||
| Repayments on long-term debt | ( | ) | ||||||
| Proceeds from issuance of common share, net of issuance cost | ||||||||
| Net cash received from (used in) financing activities | ||||||||
| Change in cash | ( | ) | ||||||
| Cash, restricted cash and cash equivalents - beginning of period | ||||||||
| Cash, restricted cash and cash equivalents end of period | $ | $ | ||||||
| Supplemental Disclosure of non-cash operating and investing activities | ||||||||
| Fixed asset additions included in accounts payable | $ | $ | ||||||
| Supplemental Disclosure of non-cash operating and financing activities | ||||||||
| Warrant inducement issuance costs included in accounts payable | $ | $ | ||||||
| Supplemental Disclosure of cash flow information | ||||||||
| Income tax paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
| 7 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. Description of Business and Significant Accounting Policies
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting of normal recurring adjustments considered necessary for the fair presentation of results for the interim period have been included. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results expected for the full year. The accompanying unaudited consolidated condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our Form 10-K for the fiscal year ended December 31, 2024. All references to years in these financial statements are fiscal years.
Reclassifications
– Certain prior year amounts have been reclassified to conform to current year’s presentation. The Company reclassified research
and development of $
Recent accounting pronouncements
Recent accounting pronouncements adopted
In November 2023, the Financial Standards Accounting Board (FASB) issued Accounting Standards Update (ASU) 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. We adopted this standard for the year ended December 31, 2024, and applied the amendments retrospectively to all prior periods presented. Refer to Note 17, Segment Reporting. The adoption of this standard did not have a material effect on the financial statements and related disclosures.
Recent accounting pronouncements not yet adopted
In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topics 740): Improvements to Income Tax Disclosures” to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on the financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures” to enhance disclosure of specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on the financial statements and related disclosures.
The company considers the applicability and impact of all ASUs. ASUs not listed were assessed and determined to be either not applicable or had or are expected to have an immaterial impact on the financial statements and related disclosures.
| 8 |
2. Going Concern
As
of June 30, 2025, the Company had $
The
accompanying 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 months ended June 30,
2025, the Company had net losses of $
The
Company has historically operated at a loss, although that may change as sales volumes increase and margins improve. As of June 30, 2025,
the Company had cash and cash equivalents of $
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 $
On
November 2, 2023, the Company consummated a registered direct offering pursuant to which the Company issued shares of common
stock and pre-funded warrants to an institutional investor for a total net proceeds of $
On
March 20, 2024, the Company consummated a registered direct offering pursuant to which the Company issued shares of common stock
and pre-funded warrants to the same institutional investor as in the Company’s registered direct offering on November 2,
2023, for a total net proceeds of $
On
May 29, 2024, Worksport sent an inducement letter to a shareholder offering an option to exercise their warrants at a reduced exercise
price of $
| 9 |
On
December 13, 2024, the Company filed a Prospectus Supplement to amend Amendment No. 1 to the prospectus supplement dated as of November
5, 2024, prospectus supplement dated as of October 13, 2022, and the prospectus dated as of October 13, 2022 to increase the maximum
amount of shares that we are eligible to sell pursuant to the Sales Agreement under General Instruction I.B.6. to $
On
February 27, 2025, Worksport entered into a warrant inducement agreement with a shareholder to exercise of their
On June 13, 2025, Worksport completed the initial closing of its Regulation A offering whereby up to units may be sold at an offering price of $ per unit. Each unit consists of one share of
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.
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.
3. Inventory
As of June 30, 2025 and December 31, 2024, inventory consists of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Work in progress | ||||||||
| $ | $ | |||||||
| 10 |
4. Property and Equipment
Property and equipment consist of:
| June 30, 2025 | December 31, 2024 | |||||||
| Building | $ | $ | ||||||
| Manufacturing equipment | ||||||||
| Land | ||||||||
| Leasehold improvements | ||||||||
| Product molds | ||||||||
| Warehouse equipment | ||||||||
| Electrical equipment | ||||||||
| Automobile | ||||||||
| Furniture | ||||||||
| Computers | ||||||||
| Property and equipment, at cost | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation
expense for the three months ended June 30, 2025 and 2024 was $
5. Intangible Assets
Intangible assets consist of costs incurred to establish the patent rights related to the quick latch and soft vinyl quad-fold tonneau cover technologies, Worksport trademarks, licenses, and software costs. The Company’s utility patents and design registrations were issued between 2014 and 2025. The patents and software are amortized on a straight-line basis over their useful life. The Company’s trademark, licenses, and other indefinite life intangible assets are reassessed every year for impairment. The Company determined that impairment is not necessary for the prior year ended December 31, 2024 and for the three and six months ended June 30, 2025.
The components of intangible assets are as follows:
| June 30, 2025 | December 31, 2024 | |||||||
| Software | $ | $ | ||||||
| License | ||||||||
| Patent | ||||||||
| Trademark | ||||||||
| Other | ||||||||
| Intangible assets, gross carrying amount | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
Amortization
expense for the three months ended June 30, 2025 and 2024 was $
| 11 |
Estimated amortization of the patent and software over the next five calendar years and beyond June 30, 2025 is as follows:
| 2025 | $ | |||
| 2026 | $ | |||
| 2027 | $ | |||
| 2028 | $ | |||
| 2029 | $ | |||
| Thereafter | $ |
6. Prepaid expenses and deposits
As of June 30, 2025 and December 31, 2024, prepaid expenses and deposits consist of the following:
| June 30, 2025 | December 31, 2024 | |||||||
| Consulting, services, and advertising | $ | $ | ||||||
| Insurance | ||||||||
| Deposits | ||||||||
| $ | $ | |||||||
7. Shareholders’ Equity (Deficit)
During the six months ended June 30, 2025, the following transactions occurred:
During
the six months ended June 30, 2025, the Company sold shares of common stock for total gross proceeds of $
The
Company recognized consulting expense of $
During
the six months ended June 30, 2025, in connection with the inducement of warrants at $
Refer to Note 15, Warrants and Note 16, Equity Compensation for additional disclosures related to shareholders’ equity.
During six months ended June 30, 2024, the following transactions occurred:
During
the six months ended June 30, 2024, the Company sold shares of common stock for a total net proceeds of $
The
Company recognized consulting expense of $
During
the six months ended June 30, 2024, the Company closed a sale of shares of common stock for net proceeds of $
| 12 |
8. Income Taxes
The
effective tax rate for the six months ended June 30, 2025 and 2024 was
9. Financial Instruments and Fair Value
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. The definition of the fair value hierarchy is as follows:
Level 1 – Quoted prices in active markets for identical assets and liabilities.
Level 2 – Observable inputs other than quoted prices in active markets for similar assets and liabilities.
Level 3 – Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available data, some of which is internally developed and considers risk premiums that a market participant would require.
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, revolving line of credit, and long-term debt. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying value because of the short-term nature of these instruments. The Company’s revolving line of credit is based on a variable interest rate and is reflected in the financial statements at carrying value which approximates fair value at June 30, 2025. The Company’s long-term debt is based on a fixed interest rate, and its carrying amount approximates fair value at June 30, 2025. The fair value of the revolving line of credit and long-term debt is classified as Level 2 within the fair value hierarchy and is estimated based on quoted market prices.
10. Changes in Cash Flows from Operating Assets and Liabilities
The changes to the Company’s operating assets and liabilities for the six months ended June 30, 2025 and 2024 are as follows:
| 2025 | 2024 | |||||||
| Decrease (increase) in accounts receivable | $ | ( | ) | $ | ( | ) | ||
| Decrease (increase) in other receivable | ( | ) | ||||||
| Decrease (increase) in inventory | ( | ) | ( | |||||
| Decrease (increase) in prepaid expenses and deposits | ( | ) | ||||||
| Increase (decrease) in accounts payable and accrued liabilities | ||||||||
| $ | ( | ) | $ | ( | ) | |||
11. Investments
During
the six months ended June 30, 2025, $
| 13 |
12. Leases
During
the year ended December 31, 2022, the Company signed a lease agreement for approximately
During
the year ended December 31, 2023, the Company signed a lease agreement for office space to be used as an R&D facility pursuant
to a
On April 1, 2025, the Company signed a lease agreement for
The Company’s right-of-use asset and lease liability as of June 30, 2025, and December 31, 2024, are as follows:
| June 30, 2025 | December 31, 2024 | |||||||
| Right-of-use asset | $ | $ | ||||||
| Current lease liability | $ | $ | ||||||
| Long-term lease liability | $ | $ | ||||||
The following is a summary of the Company’s total lease costs during the six months ended June 30, 2025 and 2024:
| June 30, 2025 | June 30, 2024 | |||||||
| Operating lease cost | $ | | $ | |||||
The following is a summary of cash paid during the six months ended June 30, 2025 and 2024 for amounts included in the measurement of lease liabilities:
| June 30, 2025 | June 30, 2024 | |||||||
| Operating cashflow | $ | $ | ||||||
| 14 |
The following are future minimum annual lease payments as of June 30, 2025:
| 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Total future minimum lease payments | ||||
| Less: amount representing interest | ( | ) | ||
| Present value of future payments | ||||
| Current portion | ||||
| Long term portion | $ |
13. Indebtedness
Long-term debt consists of:
| June 30, 2025 | December 31, 2024 | |||||||
| Revolving Credit Facility (a) | $ | $ | ||||||
| Other (b) | ||||||||
| Long-term debt | ||||||||
| Less deferred debt issuance cost | ( | ) | ( | ) | ||||
| Less current installments | ( | ) | ( | ) | ||||
| Long-term debt | $ | $ | ||||||
| a) |
For collateral, the lender holds a first position on the Company’s major asset classes (accounts receivable, the factory in New York, and inventory) other than the Company’s equipment. A non-usage fee of
| b) | |
The Company is in compliance with all covenants. |
For the three and six months ended June 30, 2025, loss per share is $ and $ (basic and diluted) compared to the three and six months ended June 30, 2024, of $ and $ (basic and diluted) using the weighted average number of shares of and (basic and diluted) as of June 30, 2025 and and (basic and diluted) as of June 30, 2024, respectively.
| 15 |
There are shares authorized with and shares issued and outstanding, as at June 30, 2025 and 2024, respectively. The computation of loss per share is based on the weighted average number of shares outstanding during the period in accordance with ASC Topic No. 260, “Earnings Per Share.” Shares underlying the Company’s outstanding warrants and convertible promissory notes were excluded due to the anti-dilutive effect they would have on the computation.
15. Warrants
On
February 27, 2025, the Company entered into a warrant inducement agreement (the “Inducement”) with the holder of existing
warrants to purchase an aggregate
During
the year ended December 31, 2024, in connection with the sale of shares of common stock, the Company also sold pre-funded
warrants and issued warrants exercisable for a total of
During
the year ended December 31, 2024, the Company closed a sale of shares of common stock. In connection with the sale of common stock
the Company issued
During
the year ended December 31, 2024,
On
May 9, 2024, the Company entered into a warrant inducement agreement (the “Inducement”) with the holder of existing warrants
to purchase an aggregate
During
the year ended December 31, 2023, in connection with the sale of shares of common stock the Company also sold pre-funded
warrants and warrants convertible for
During
the year ended December 31, 2023, the Company and a stock options holder agreed to cancel all stock options in exchange for extending
the exercisable period of
| 16 |
During
the year ended December 31, 2022, the Company and a warrant holder reached an agreement to extend the exercisable period of
During
the year ended December 31, 2021, the Company issued
As of June 30, 2025, the Company has the following warrants outstanding:
| Exercise price | Number outstanding | Remaining Contractual Life (Years) | Expiry date | |||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
The average remaining contractual life of outstanding warrants that expire is
| June 30, 2025 | December 31, 2024 | |||||||||||||||
| Number
of warrants | Weighted average price | Number
of warrants | Weighted average price | |||||||||||||
| Balance, beginning of year | $ | $ | ||||||||||||||
| Issuance | $ | $ | ||||||||||||||
| Expired | ( | ) | $ | ( | ) | $ | ||||||||||
| Exercise | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
| Balance, end of period | $ | $ | ||||||||||||||
| 17 |
Under the Company’s 2015, 2021 and 2022 Equity Incentive Plans,
All equity-settled, share-based payments are ultimately recognized as an expense in the statement of operations with a corresponding credit to “Additional Paid in Capital.” If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior periods if share options ultimately exercised are different than that estimated on vesting.
Performance Share Units
On May 1, 2023, the Company and Steven Rossi reached an agreement to modify restricted stock units and performance stock units (“PSUs”) issued on November 11, 2022, and December 29, 2021, respectively, and replace them with stock options, as described below.
On November 11, 2022, and PSUs granted on December 29, 2021, as described below, were modified to include new terms pertaining to the PSU vesting schedule. as measured using the volume weighted average of the Company’s common stock for ten (10) consecutive trading days, with over $ of trading volume on each of those days. The fair value of the PSUs was estimated to be $. As of June 30, 2025, PSUs of the remaining PSUs had vested.
On December 29, 2021, the Company granted and PSUs to the Company’s Chief Executive Officer and a director, respectively. The fair value of the PSUs was estimated to be $.
Stock Options
The Company uses the Black-Scholes option pricing model to determine fair value of stock options on the grant date.
During the six months ended June 30, 2025, the Company issued stock options to a director with an exercise price of $ and an expiration date of .
During the six months ended June 30, 2025, the Company issued stock options to various employees and directors with an exercise price of $ and an expiration date of .
During the six months ended June 30, 2025, the Company issued stock options to Steven Rossi with an exercise price of $ and an expiration date of .
On
July 23, 2024, the Company engaged in stock option repricing for certain employees, executive officers, and members of the board of directors
of the Company.
During the year ended December 31, 2024, the Company issued stock options to employees and directors with exercise prices ranging from $ to $ and expiration dates ranging from February 1, 2029 to November 19, 2034. Of these stock options, were subsequently cancelled.
| 18 |
| June 30, 2025 | December 31, 2024 | |||||||||||||||
Number of stock options | Weighted average price | Number of stock options | Weighted average price | |||||||||||||
| Balance, beginning of period | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Forfeited | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
| Balance, end of period | $ | $ | ||||||||||||||
Range of Exercise prices | Outstanding | Weighted average | Weighted average exercise price | Exercisable on | ||||||||||||||||
| Stock options | $ | - | $ |
| June 30, 2025 | December 31, 2024 | |||||||||||||||
| Number
of stock options | Weighted average price | Number
of stock options | Weighted average price | |||||||||||||
| Balance, beginning of period | $ | $ | ||||||||||||||
| Granted | $ | $ | ||||||||||||||
| Balance, end of period | $ | $ | ||||||||||||||
| Range
of Exercise prices | Outstanding | Weighted
average life (years) | Weighted
average exercise price | Exercisable
on June 30, 2024 | ||||||||||||||||
| Stock options | $ | $ | ||||||||||||||||||
| 19 |
17. Segment Reporting
The Company manages its business on a product basis and operates in the following two reporting segments for financial reporting purposes: (1) Hard Tonneau Covers and (2) Soft Tonneau Covers. The accounting policies of both reporting segments are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies.
The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who regularly reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance of the Company’s reporting segments. The CODM primarily focuses on net income to evaluate its reporting segments. The CODM also uses net income for evaluating pricing strategy and to assess the performance for determining the compensation of certain employees. Significant segment expenses reviewed, which represent the differences between segment revenue and segment net loss, consist of the following:
Schedule of Revenue and Segment Net Loss
| For the three months ended June 30, 2025 | For the three months ended June 30, 2024 | |||||||||||||||||||||||||||||||
| Hard Tonneau Covers | Soft Tonneau Covers | Corporate / Other / Eliminations | Consolidated | Hard Tonneau Covers | Soft Tonneau Covers | Corporate / Other / Eliminations | Consolidated | |||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Less: Cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Selling, general and administrative | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
| For the six months ended June 30, 2025 | For the six months ended June 30, 2024 | |||||||||||||||||||||||||||||||
| Hard Tonneau Covers | Soft Tonneau Covers | Corporate / Other / Eliminations | Consolidated | Hard Tonneau Covers | Soft Tonneau Covers | Corporate / Other / Eliminations | Consolidated | |||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Less: Cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Selling, general and administrative | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Loss from continuing operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||
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The following table presents the Company’s net sales disaggregated by geographic area:
Schedule of Net Sales Disaggregated by Geographic Area
| 2025 | 2024 | |||||||||||||||||||||||
| Hard Tonneau Covers | Soft Tonneau Covers | Consolidated | Hard Tonneau Covers | Soft Tonneau Covers | Consolidated | |||||||||||||||||||
| United States | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Canada | ||||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
No
asset information has been provided for the reported segments as the CODM does not regularly review asset information by reportable segment.
As of June 30, 2025 and December 31, 2024, assets held in the U.S. accounted for
18. Commitments and Contingencies
There are no legal proceedings except for routine litigation incidental to the business.
19. Subsequent Events
The Company has evaluated subsequent events through August 13, 2025. The following events occurred after the period ended June 30, 2025:
On July 12, 2025, the Company granted employees an aggregate of stock options priced at the closing stock price on July 11, 2025, vesting % at the end of the following two annual anniversaries from the grant date, and expiring years from grant date. Under these same terms, the Company granted directors an aggregate of stock options.
On July 12, 2025, the Company granted Steven Rossi stock options priced at the closing stock price on July 11, 2025, vesting % at the end of the following two annual anniversaries from the grant date, and expiring years from grant date.
On July 12, 2025, the Company granted a director stock options priced at the closing stock price on July 11, 2025, vesting pursuant to a performance milestone, and expiring years from the grant date.
On July 12, 2025, the Company granted a consultant stock options priced at the closing stock price on July 11, 2025, vesting pursuant to performance milestones, and expiring years from the grant date.
On July 14, 2025, the Company signed a lease agreement for
On August 1, 2025, the Company submitted a $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This section and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and actual results may differ significantly from the results discussed in the forward-looking statements. All forward-looking statements in this Form 10-Q are made based on current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, various factors, uncertainties, and risks should be specifically considered that could affect future results or operations. These factors, uncertainties and risks may cause actual results to differ materially from any forward-looking statement set forth in this Form 10-Q. These risks and uncertainties described and other information contained in the reports filed with or furnished to the SEC should be carefully considered before making any investment decision with respect to the Company’s securities. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
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.
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.
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.
OVERVIEW
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.
Rising Popularity of Electric Vehicles
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.
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Regulatory Environment Favoring Electric Vehicles
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.
Limited Competitive Landscape
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.
Economic Conditions and Market Trends
As a result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below is a brief discussion of the key factors impacting our results of operations.
Climate Change
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.
We believe our Worksport SOLIS and Worksport COR products will be received positively by the public for their resilience to, and even increased utility as a result of, Climate Change. However, we acknowledge the potentially negative environmental impacts of poor battery recycling and increasing demand for precious metals. We are actively researching ways to lower such environmental impacts.
Inflation
Prices of certain commodity products, including raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations, trade restrictions and tariffs. Increasing prices of the component materials for parts of our goods may impact the availability, quality and price of our products as suppliers search for alternatives to existing materials and increase the prices they charge. Our suppliers may also fail to provide consistent quality of product as they may substitute lower cost materials to maintain pricing levels. Rapid and significant changes in commodity prices may negatively affect our profit margins, and it may be difficult to mitigate worsened margins through customer pricing actions and cost reduction initiatives.
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.
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.
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Gasoline Prices and Supply Chain Issues
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.
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.
Geopolitical Conditions
In February 2022, Russia initiated significant military action against Ukraine. In response, the U.S. and certain other countries imposed significant sanctions and export controls against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations, and the U.S. and certain other countries could impose further sanctions, trade restrictions, and other retaliatory actions should the conflict continue or worsen. It is not possible to predict the broader consequences of these conflicts, including related geopolitical tensions, and the measures and retaliatory actions taken by the U.S. and other countries in respect thereof as well as whether any counter measures or retaliatory actions in response, including, for example, potential cyberattacks or the disruption of energy exports, are likely to cause regional instability and geopolitical shifts, which could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. These situations remain uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflicts and actions taken in response to these conflicts could increase our costs, 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.
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.
Foreign Currencies
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.
Tariffs
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. We continue to monitor international trade developments closely, including potential changes in tariff rates and the possibility of new exemptions or other regulatory actions, to analyze impacts to our operations. The extent and duration of tariffs remain uncertain and will depend on a variety of factors outside of our control. We remain committed to optimizing our operations, including managing our supply chain to minimize the impact of tariffs on our results of operations.
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Business Developments
The following highlights recent material developments in our business in the three months ended June 30, 2025:
| ● | On April 29, 2025, the Company announced a strategic partnership with Patriot Automotive Technologies to accelerate nationwide expansion through Patriot’s network of over 200 dealer locations. | |
| ● | On May 28, 2025, the Company announced that it secured ISO 9001 Certification at its U.S. Factory, expected to pave new inroads towards substantial new OEM and global supply chain opportunities. This certification cycle officially commenced in April 2025 and remains valid through April 2028, contingent upon continued compliance. | |
| ● | On June 2, 2025 the Company announced that 80% of the AL4 product line—20 out of 25 planned models—had been successfully rolled out to market. | |
| ● | On June 5, 2025, the Company confirmed a Fall 2025 commercial launch for its much-anticipated modular nano-grid system, known as SOLIS & COR. This announcement follows the successful completion of key engineering milestones and validation benchmarks across both systems. | |
| ● | On June 10, 2025, the Company announced the addition of a second national automotive distributor, expanding the Company’s partnered dealer network to over 550 locations across the United States—representing a nearly six fold increase since the beginning of 2025. | |
| ● | On June 13, 2025, Worksport completed the initial closing of its Regulation A offering of up to 3,100,000 units, each consisting of one share of the Company’s 8% Series C Convertible Preferred Stock, and one warrant to purchase one share of the Company’s common stock. The Offering is being conducted pursuant to the Company’s Offering Statement on Form 1-A, as amended, which was qualified by the U.S. Securities and Exchange Commission on May 27, 2025. In connection with the initial closing, the Company issued an aggregate of 49,335 Units to investors that were placed by Digital Offering LLC, the Company’s placement agent, for aggregate gross proceeds of $160,339. After deducting Placement Agent commissions and offering-related expenses of $11,224, the Company received net proceeds of $149,115. | |
| ● | Through June 30, 2025, the Company has sold and issued 22,725 shares of common stock in consideration for net proceeds of $185,874 under the ATM Agreement. |
CRITICAL ACCOUNTING POLICIES
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.
RECENT ACCOUNTING PRONOUNCEMENTS
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”).
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024
Net sales
For the three months ended June 30, 2025, net sales were $4,104,958, as compared to $1,921,539 for the three months ended June 30, 2024. Year-over-year net sales increased by approximately 114%. For the three months ended June 30, 2025, net sales generated in U.S. was $4,070,406, as compared to $1,910,838 for the same period in 2024, an increase of 113%. For the three months ended June 30, 2025, revenue generated in Canada was $34,552, compared to $28,677 for the same period in 2024, an increase of 20%.
Net sales increased during the three months ended June 30, 2025 compared to the same period the prior year due to the successful launch of the AL4 product line alongside further branding and marketing efforts for all product lines, resulting in higher direct to consumer sales. Implementation of our distributor, wholesaler, and jobber sales strategy via the addition of multiple distributor partners with a network of over 550 locations across the United States has driven higher net sales from our business to business sales channels.
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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.
We currently work closely with a large Canadian and four large U.S. distributors as well as online retailers to grow our customer base. We are progressing well in conversations with two other major distributors with strong market presences, which will allow us to promote to dealers and sell to jobbers in strategic regions. Lastly, we partnered with a network of nationwide U.S. dealers capable of bringing our product to all U.S. continental states.
Cost of Sales
Cost of sales increased by 86%, from $1,624,910 for the three months ended June 30, 2024, to $3,022,846 for the three months ended June 30, 2025. Our cost of sales, as a percentage of sales, was approximately 73.6% and 84.6% for the three months ended June 30, 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.
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.
Operating Expenses
Operating expenses increased for the three months ended June 30, 2025 by $492,366, from $4,207,377 for the three months ended June 30, 2024 to $4,699,743, mainly due to the following factors:
| ● | Research and development expense decreased by $741,031, from $1,045,864 in 2024 to $304,833 in 2025. The decrease was related to developmental progress of our AL3 product line and release of our AL4 product line, both of which required less development efforts as resources were shifted to normal-course production. | |
| ● | General and administrative expense increased by $553,533, from $1,900,522 in 2024 to $2,454,055 in 2025. The increase was primarily attributable to new software subscriptions used to support administrative and production efforts and higher labor costs, alongside an increase in e-Commerce fees due to higher current period sales volume. | |
| ● | Sales and marketing expense increased by $826,563, from $478,792 in 2024 to $1,305,355 in 2025. The increase in sales and marketing was primarily attributable to marketing campaigns to drive traffic and engagement to our online marketplace for direct to consumer sales, including awareness campaigns for the newly released AL4 product line. | |
| ● | Professional fees expense, which includes accounting, legal, and consulting fees, decreased from $766,563 in 2024 to $637,493 in 2025. The decrease in professional fees was primarily driven by reduced reliance on external consultants as the Company progressed from the planning and setup phase of its manufacturing operations to active production and scaling efforts, inclusive of marketing. |
Other Income and Expenses
We reported net other expenses for the three months ended June 30, 2025 of $116,853, compared to $102,651 for three months ended June 30, 2024. The increase in net other expenses was attributed to a reduction in rental income as a result of the completion of the term of our sublease agreement.
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Net Loss
Net loss for the three months ended June 30, 2025 was $3,734,484, compared to a net loss of $4,013,399 for the three months ended June 30, 2024 – a decrease of 6.9%. The decrease in the net loss can be attributed to higher net sales and gross profit and certain reduced operating expenses.
Six Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024
Net sales
For the six months ended June 30, 2025, net sales were $6,344,963, as compared to $2,434,176 for the six months ended June 30, 2024. Year-over-year net sales increased by approximately 161%. For the six months ended June 30, 2025, net sales generated in U.S. was $6,297,955, as compared to $2,385,492 for the same period in 2024, an increase of 164%. For the six months ended June 30, 2025, revenue generated in Canada was $47,008, compared to $48,684 for the same period in 2024, a decrease of 3%.
Net sales increased during the six months ended June 30, 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. Also driving greater net sales was the release of the flagship AL4 product line.
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.
We currently work closely with a large Canadian and four large U.S. distributors as well as online retailers to grow our customer base. We are progressing well in conversations with two other major distributors with strong market presences, which will allow us to promote to dealers and sell to jobbers in strategic regions. Lastly, we partnered with a network of nationwide U.S. dealers capable of bringing our product to all U.S. continental states.
Cost of Sales
Cost of sales increased by approximately 132%, from $2,100,091 for the six months ended June 30, 2024, to $4,866,630 for the six months ended June 30, 2025. Our cost of sales, as a percentage of sales, was approximately 77% and 86% for the six months ended June 30, 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.
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.
Operating Expenses
Operating expenses increased for the six months ended June 30, 2025 by $1,467,970, from $7,884,299 for the six months ended June 30, 2024 to $9,352,269, mainly due to the following factors:
| ● | Research and development expense decreased by $741,031, from $1,415,465 in 2024 to $674,434 in 2025. The decrease was related to developmental progress of our AL3 product line and release of our AL4 product line, both of which required less development efforts as resources were shifted to normal-course production. | |
| ● | General and administrative expense increased by $1,237,596, from $4,205,239 in 2024 to $5,442,835 in 2025. The increase was primarily attributable to an increase in e-commerce fees due to higher current period sales volume and an increase in software subscriptions and depreciable equipment used to support administrative and production efforts. | |
| ● | Sales and marketing expense increased by $1,629,535, from $545,569 in 2024 to $2,175,104 in 2025. The increase in sales and marketing was primarily attributable to marketing campaigns to drive traffic and engagement to our online marketplace for direct to consumer sales. | |
| ● | Professional fees expense, which includes accounting, legal, and consulting fees, decreased from $1,710,341 in 2024 to $1,063,534 in 2025. The decrease in professional fees was primarily driven by reduced reliance on external consultants as the Company progressed from the planning and setup phase of its manufacturing operations to active production and scaling efforts, inclusive of marketing, as well as a reduction in non-cash expenditures relating to stock-based compensation for consultants. |
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Other Income and Expenses
We reported net other expenses for the six months ended June 30, 2025 of $321,012, compared to $177,842 for the six months ended June 30, 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.
Net Loss
Net loss for the six months ended June 30, 2025 was $8,194,948, compared to a net loss of $7,728,056 for the six months ended June 30, 2024 – an increase of 6.0%. The increase in the net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations, manufacturing, and supply chain.
Liquidity and Capital Resources
As of June 30, 2025 and December 31, 2024, we had $1,393,140 and $4,883,099, respectively in cash and cash equivalents. As of June 30, 2025, we had $4,763,700 of remaining available capacity on our revolving line of credit compared with $811,400 of remaining available capacity as of December 31, 2024. The decrease in cash and cash equivalents and increase in the remaining available capacity on our revolving line of credit was primarily a result of the use of cash flows from operations to reduce our indebtedness. 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 and six months ended June 30, 2025, we had net losses of $3,734,484 and $8,194,948, respectively (three months ended June 30, 2024 - $4,013,399; six months ended June 30, 2024 - $7,728,056). As of June 30, 2025, the Company had working capital of $4,758,042 (As of December 31, 2024 - $7,304,110) and had an accumulated deficit of $72,671,914 (as of December 31, 2024 - $64,476,966).
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.
To date, our principal sources of liquidity consist of net proceeds from public and private securities offerings and cash exercises of outstanding warrants. During the six months ended June 30, 2025, the Company received net proceeds of $6,384,840 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.
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We have raised significant funds during the six months ended June 30, 2025 per the following public and private offerings:
Warrant Inducement
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.
ATM Shares
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 six month period ended June 30, 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.
Regulation A Offering
On June 13, 2025, Worksport completed the initial closing of its Regulation A offering whereby up to 3,100,000 units may be sold at an offering price of $3.25 per unit. Each unit consists of one share of 8% Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”) and one warrant for the right to purchase one (1) share of common stock, $0.001 par value at an exercise price of $4.50 per share. The qualified Regulation A offering is expected to generate gross proceeds of $10,000,000, and the warrants have the potential to provide an additional $13,950,000 of additional proceeds if all are converted. Through June 30, 2025, the Company completed one tranche and received gross proceeds of $160,339. Subsequent to June 30, the Company completed 12 additional tranches and received gross proceeds of $4,404,146.
Consolidated Statement of Cash Flows
Cash decreased from $4,883,099 at December 31, 2024, to $1,393,140 at June 30, 2025 – a decrease of $3,489,959 or 72%. The decrease was primarily due to repayments on debt obligations.
Operating Activities
Net cash used in operating activities for the six months ended June 30, 2025 was $6,935,033, compared to $6,421,292 in 2024, primarily driven by the shift to production and distribution of hard tonneau covers.
Accounts receivable increased at June 30, 2025 by $253,372 and increased by $160,264 in the prior period. The increase in accounts receivable was due to further development of our Distributor and Jobber customer network and relationships.
Inventory increased at June 30, 2025 by $691,459, and decreased at June 30, 2024 by $2,755,252, as a result of the maturation of the production process and shift in 2024 to hard tonneau cover production. Prepaid expenses and deposits increased by $470,641 at June 30, 2025, and decreased by $1,345,434 at June 30, 2024 due to timing of deposits from B2C customers prior to fulfillment of their orders at the end of the accounting period.
Accounts payable and accrued liabilities increased at June 30, 2025 by $469,362 compared to an increase of $115,586 at June 30, 2024. The increase is primarily due to an increase in accrued labor costs in 2025 compared with the prior period.
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Investing Activities
Net cash used in investing activities for the six months ended June 30, 2025 was $582,797 compared to $335,787 for the six months ended June 30, 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.
Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2025 was $4,027,871 compared to net cash provided by financing activities of $6,817,390 for the six months ended June 30, 2024.
Off-Balance Sheet Arrangements
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.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the quarter covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure due to a material weakness in internal control over financial reporting.
Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board Auditing Standard AS 2201, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We had the following material weakness in internal control over financial reporting, characterized by the following:
| ● | We have not designed written policies and procedures at a sufficient level of precision to support the operating effectiveness of the controls to prevent and timely detect potential errors. | |
| ● | We did not maintain adequate documentation to evidence the operating effectiveness of certain control activities. | |
| ● | We did not maintain appropriate access to certain systems and did not maintain appropriate segregation of duties related to processes associated with those systems. |
To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in our periodic reports filed with the SEC are prepared in accordance with generally accepted accounting principles. Management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are involved in lawsuits, claims, investigations, and proceedings, including pending opposition proceedings involving patents that arise in the ordinary course of business. We are not presently a party to any material pending or threatened legal proceedings, nor do we have any knowledge of any such pending claims.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition, liquidity, or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, liquidity or future results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Recent Sales of Unregistered Securities
| ● | On June 13, 2025, Worksport completed the initial closing of its Regulation A offering of up to 3,100,000 units, each consisting of one share of the Company’s 8% Series C Convertible Preferred Stock, and one warrant to purchase one share of the Company’s common stock. The Offering is being conducted pursuant to the Company’s Offering Statement on Form 1-A, as amended, which was qualified by the U.S. Securities and Exchange Commission on May 27, 2025. In connection with the initial closing, the Company issued an aggregate of 49,335 Units to investors that were placed by Digital Offering LLC, the Company’s placement agent, for aggregate gross proceeds of $160,338.75. After deducting Placement Agent commissions and offering-related expenses of $11,223.71, the Company received net proceeds of $149,115.04. The issuance of the securities was made pursuant to the exemption from registration provided under Section 3(b)(2) of the Securities Act and Regulation A. |
(b) Use of Proceeds
Not applicable.
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Securities Trading Plans
During
the six months ended June 30, 2025, none of our Section 16 officers or directors (as defined in Rule 16a-1(f) of the Exchange Act)
Subsequent Events
On July 12, 2025, the Company granted employees an aggregate of 91,940 stock options priced at the closing stock price on July 11, 2025, vesting 50% at the end of the following two annual anniversaries from grant date, and expiring 10 years from grant date. Under these same terms, the Company granted directors an aggregate of 10,000 stock options.
On July 12, 2025, the Company granted Steven Rossi 215,000 stock options priced at the closing stock price on July 11, 2025, vesting 50% at the end of the following two annual anniversaries from grant date, and expiring 10 years from grant date.
On July 12, 2025, the Company granted a director 50,000 stock options priced at the closing stock price on July 11, 2025, vesting pursuant to a performance milestone, and expiring 10 years from grant date.
On July 12, 2025, the Company granted a consultant 76,500 stock options priced at the closing stock price on July 11, 2025, vesting pursuant to performance milestones, and expiring 10 years from grant date.
On July 14, 2025 the Company signed a lease agreement for 1,992 square feet of office space to be used as an R&D facility for its Terravis Energy subsidiary pursuant to a two year lease effective July 18,2025 for an average monthly rent of $3,154. | |
| On August 1, 2025, the Company submitted a $3 million purchase order and placed a deposit with an established manufacturing equipment supplier for additional machinery, with delivery currently expected in the second quarter of 2026. This additional equipment is expected to meaningfully increase production capacity at the Company’s West Seneca, NY manufacturing facility, enabling the Company to meet anticipated customer demand more efficiently, improve operational throughput, and support future revenue growth. |
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Item 6. Exhibits
EXHIBIT No. |
DESCRIPTION | |
| 3.1 | Certificate of Designations, Rights, and Preferences of 8% Series C Cumulative Preferred Stock, filed on June 13, 2025 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 18, 2025 | |
| 10.1 | Regulation A Securities Offering, filed April 18, 2025 | |
| 10.2 | Notice of Stockholder Action by Written Consent, filed on April 28, 2025 | |
| 10.3 | Amendment to Form 1-A, filed May 20, 2025 | |
| 31.1* | Section 302 Certification of Chief Executive Officer and President. | |
| 31.2* | Section 302 Certification of Chief Financial Officer. | |
| 32.1** | Section 906 Certifications of Chief Executive Officer and President. | |
| 32.2** | Section 906 Certifications of Chief Financial Officer. | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 104* | Cover Page Interactive Data File (embedded within the Inline XBRL document filed as Exhibit 101). |
| * | Filed herewith. |
| ** | Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| WORKSPORT LTD. | ||
| Dated: August 13, 2025 | By: | /s/ Steven Rossi |
| Steven Rossi | ||
Chief Executive Officer and President (Principal Executive Officer) | ||
| Dated: August 13, 2025 | By: | /s/ Michael Johnston |
| Michael Johnston | ||
Chief Financial Officer (Principal Financial and Accounting Officer) |
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FAQ
What were Worksport (WKSPW) net sales for Q2 2025 and how much did they grow year-over-year?
How much cash did Worksport have at June 30, 2025 and what credit is available?
Is Worksport profitable and what was the net loss for the period?
Did Worksport raise capital during the period and how much was raised from warrant transactions?
What operational progress did Worksport report that could support future sales?
Does the filing disclose any liquidity or going concern risks for WKSPW?
