エドガーで原本を確認する
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended: September 30, 2025
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 001-40681
Worksport Ltd.
(Exact Name of Small Business Issuer as specified in its charter)
| Nevada | 35-2696895 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| 2500 N America Dr, West Seneca, NY | 14224 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s Telephone Number, including area code: (888) 554-8789
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | ||
| Common Stock | WKSP | The Nasdaq Stock Market LLC |
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. Yes ☒ No ☐
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). Yes ☒ No ☐
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 | ☐ |
| Non-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 November 13, 2025, the Registrant had 8,254,389 shares of common stock, par value $0.001 per share, issued and outstanding.
WORKSPORT LTD.
TABLE OF CONTENTS
|
|
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Worksport Ltd.
Condensed Consolidated Balance Sheets
| September 30, 2025 | December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 3,761,690 | $ | 4,883,099 | ||||
| Accounts receivable, net | 515,074 | 42,589 | ||||||
| Other receivable | 209,702 | 169,728 | ||||||
| Inventory (Note 3) | 6,835,491 | 5,190,054 | ||||||
| Prepaid expenses and deposits (Note 6) | 1,055,971 | 192,192 | ||||||
| Total current assets | 12,377,928 | 10,477,662 | ||||||
| Investments (Note 11) | 122,681 | 66,308 | ||||||
| Property and equipment, net (Note 4) | 13,208,163 | 13,644,226 | ||||||
| Operating lease right-of-use assets (Note 12) | 299,376 | 595,415 | ||||||
| Intangible assets, net (Note 5) | 1,040,474 | 953,049 | ||||||
| Total assets | $ | 27,048,622 | $ | 25,736,660 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 2,814,718 | $ | 1,526,630 | ||||
| Accrued liabilities and other | 1,078,355 | 800,283 | ||||||
| Accrued compensation | 288,489 | 377,112 | ||||||
| Long-term debt, current portion (Note 13) | 1,774,307 | 222,992 | ||||||
| Lease liability, current portion (Note 12) | 110,202 | 246,535 | ||||||
| Total current liabilities | 6,066,071 | 3,173,552 | ||||||
| Lease liability, excluding current portion (Note 12) | 189,116 | 368,472 | ||||||
| Long-term debt, excluding current portion (Note 13) | 1,014,043 | 4,781,005 | ||||||
| Total liabilities | 7,269,230 | 8,323,029 | ||||||
| Shareholders’ equity | ||||||||
| Series A, B Preferred & Series C Convertible Preferred stock, $0.001 par value, 10,000,000 shares authorized, 100 Series A, 0 Series B, and 371,784 Series C issued and outstanding, respectively (Note 7) | 372 | - | ||||||
| Common stock, $0.001 par value, 45,000,000 shares authorized, 7,589,036 and 4,016,205 shares issued and outstanding, respectively (Note 7) | 7,588 | 4,016 | ||||||
| Additional paid-in capital | 95,783,778 | 79,781,674 | ||||||
| Share subscriptions receivable | (512,392 | ) | (1,577 | ) | ||||
| Share subscriptions payable | 2,126,352 | 2,115,064 | ||||||
| Accumulated deficit | (77,617,726 | ) | (64,476,966 | ) | ||||
| Cumulative translation adjustment | (8,580 | ) | (8,580 | ) | ||||
| Total shareholders’ equity | 19,779,392 | 17,413,631 | ||||||
| Total liabilities and shareholders’ equity | $ | 27,048,622 | $ | 25,736,660 | ||||
See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements.
|
|
Worksport Ltd.
Condensed Consolidated Statements of Operations and Comprehensive Loss
For the Three and Nine Months Ended September 30, 2025 and 2024
(Unaudited)
| Three Months ended September 30, | Nine Months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net sales | $ | 5,013,872 | $ | 3,122,359 | $ | 11,358,835 | $ | 5,556,535 | ||||||||
| Cost of sales | 3,445,088 | 2,875,186 | 8,311,718 | 4,975,277 | ||||||||||||
| Gross profit | 1,568,784 | 247,173 | 3,047,117 | 581,258 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | 301,095 | 396,446 | 975,529 | 1,811,911 | ||||||||||||
| General and administrative | 2,950,100 | 2,478,809 | 8,409,789 | 6,684,048 | ||||||||||||
| Sales and marketing | 2,362,195 | 661,238 | 4,537,299 | 1,206,807 | ||||||||||||
| Professional fees | 748,656 | 621,728 | 1,812,190 | 2,332,069 | ||||||||||||
| (Gain) loss on foreign exchange | (491 | ) | (5,832 | ) | (4,129 | ) | 1,853 | |||||||||
| Total operating expenses | 6,361,555 | 4,152,389 | 15,730,678 | 12,036,688 | ||||||||||||
| Loss from operations | (4,792,771 | ) | (3,905,216 | ) | (12,683,561 | ) | (11,455,430 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (138,887 | ) | (229,701 | ) | (462,481 | ) | (487,463 | ) | ||||||||
| Interest income | 2,979 | - | 22,415 | 3,054 | ||||||||||||
| Rental income | - | - | - | 76,866 | ||||||||||||
| Total other income (expense) | (135,908 | ) | (229,701 | ) | (440,066 | ) | (407,543 | ) | ||||||||
| Net loss | $ | (4,928,679 | ) | $ | (4,134,917 | ) | $ | (13,123,627 | ) | $ | (11,862,973 | ) | ||||
| Loss per share (basic and diluted) | $ | (0.75 | ) | $ | (1.40 | ) | $ | (2.44 | ) | $ | (4.64 | ) | ||||
| Weighted average number of shares (basic and diluted) | 6,563,228 | 2,943,279 | 5,377,750 | 2,554,075 | ||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements.
|
|
Worksport Ltd.
Condensed Consolidated Statements of Shareholders’ Equity
For the Three Months Ended September 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 July 1, 2024 | 100 | $ | - | 2,852,070 | $ | 2,852 | $ | 69,230,341 | $ | (1,577 | ) | $ | 5,964,290 | $ | (56,041,233 | ) | $ | (8,580 | ) | $ | 19,146,093 | |||||||||||||||||||
| Issuance for services and subscriptions payable | - | - | 1,669 | 2 | 1,071,713 | - | 280,184 | - | - | 1,351,899 | ||||||||||||||||||||||||||||||
| Share issuance | - | - | 238,300 | 238 | 2,210,031 | - | (2,210,269 | ) | - | - | - | |||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (4,134,917 | ) | - | (4,134,917 | ) | ||||||||||||||||||||||||||||
| Balance at September 30, 2024 | 100 | $ | - | 3,092,039 | $ | 3,092 | $ | 72,512,085 | $ | (1,577 | ) | $ | 4,034,205 | $ | (60,176,150 | ) | $ | (8,580 | ) | $ | 16,363,075 | |||||||||||||||||||
| Balance at July 1, 2025 | 49,435 | $ | 49 | 5,519,130 | $ | 5,518 | $ | 87,970,432 | $ | (1,577 | ) | $ | 2,022,630 | $ | (72,671,914 | ) | $ | (8,580 | ) | $ | 17,316,558 | |||||||||||||||||||
| Issuance for services and subscriptions payable | - | - | 4,594 | 5 | 696,168 | - | 103,722 | - | - | 799,895 | ||||||||||||||||||||||||||||||
| Share issuance | - | - | 87,894 | 88 | 318,410 | - | - | - | - | 318,498 | ||||||||||||||||||||||||||||||
| Issuance of preferred shares pursuant to Reg-A | 2,299,867 | 2,300 | - | - | 2,232,233 | (188,427 | ) | - | - | - | 2,046,106 | |||||||||||||||||||||||||||||
| Conversion of Series C preferred shares | (1,977,418 | ) | (1,977 | ) | 1,977,418 | 1,977 | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Issuance of warrants pursuant to Reg-A | - | - | - | - | 4,566,535 | (322,388 | ) | - | - | - | 4,244,147 | |||||||||||||||||||||||||||||
| Dividend payable on Series C preferred shares | - |
- |
- |
- |
- |
- |
- |
(17,133 | ) | - |
(17,133 | ) | ||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (4,928,679 | ) | - | (4,928,679 | ) | ||||||||||||||||||||||||||||
| Balance at September 30, 2025 | 371,884 | $ | 372 | 7,589,036 | $ | 7,588 | $ | 95,783,778 | $ | (512,392 | ) | $ | 2,126,352 |
$ | (77,617,726 | ) | $ | (8,580 | ) | $ | 19,779,392 | |||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements.
|
|
Worksport Ltd.
Condensed Consolidated Statements of Shareholders’ Equity
For the Nine Months Ended September 30, 2025 and 2024
(Unaudited)
| Preferred Stock |
Common Stock |
Additional Paid-in |
Share Subscriptions |
Share Subscription |
Accumulated | Cumulative Translation |
Total Stockholders’ |
|||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Receivable | Payable | Deficit | Adjustment | (Deficit) | |||||||||||||||||||||||||||||||
| Balance at January 1, 2024 | 100 | $ | - | 2,032,050 | $ | 2,032 | $ | 64,685,693 | $ | (1,577 | ) | $ | 1,814,152 | $ | (48,313,177 | ) | $ | (8,580 | ) | $ | 18,178,543 | |||||||||||||||||||
| Issuance for services and subscriptions payable | - | - | 33,384 | 33 | 2,896,431 | - | 571,858 | - | - | 3,468,322 | ||||||||||||||||||||||||||||||
| Share issuance (Note 7) | - | - | 526,016 | 526 | 5,404,944 | - | (2,210,269 | ) | - | - | 3,195,201 | |||||||||||||||||||||||||||||
| Warrant inducement (Note 15) | - | - | 284,000 | 284 | (474,850 | ) | - | 3,858,464 | - | - | 3,383,898 | |||||||||||||||||||||||||||||
| Warrant exercise (Note 15) | - | - | 216,589 | 217 | (133 | ) | - | - | - | - | 84 | |||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (11,862,973 | ) | - | (11,862,973 | ) | ||||||||||||||||||||||||||||
| Balance at September 30, 2024 | 100 | $ | - | 3,092,039 | $ | 3,092 | $ | 72,512,085 | $ | (1,577 | ) | $ | 4,034,205 | $ | (60,176,150 | ) | $ | (8,580 | ) | $ | 16,363,075 | |||||||||||||||||||
| Balance at January 1, 2025 | 100 | $ | - | 4,016,205 | $ | 4,016 | $ | 79,781,674 | $ | (1,577 | ) | $ | 2,115,064 | $ | (64,476,966 | ) | $ | (8,580 | ) | $ | 17,413,631 | |||||||||||||||||||
| Issuance for services and subscriptions payable | - | - | 189,703 | 190 | 2,183,652 | - | 11,288 | - | - | 2,195,130 | ||||||||||||||||||||||||||||||
| Shares issued (Note 7) | - | - | 110,619 | 110 | 504,262 | - | - | - | - | 504,372 | ||||||||||||||||||||||||||||||
| Warrant exercise (Note 15) | - | - | 1,295,091 | 1,295 | 6,383,545 | - | - | - | - | 6,384,840 | ||||||||||||||||||||||||||||||
| Issuance of preferred shares pursuant to Reg-A | 2,349,202 | 2,349 | - | - | 2,247,329 | (188,427 | ) | - | - | - | 2,061,251 | |||||||||||||||||||||||||||||
| Conversion of Series C preferred shares | (1,977,418 | ) | (1,977 | ) | 1,977,418 | 1,977 | - | - | - | - | - | - | ||||||||||||||||||||||||||||
| Issuance of warrants pursuant to Reg-A | - | - | - | - | 4,683,316 | (322,388 | ) | - | - | - | 4,360,928 | |||||||||||||||||||||||||||||
| Dividends payable on Series C preferred shares | - | - | - | - | - | - | - | (17,133 | ) | - |
(17,133 | ) | ||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (13,123,627 | ) | - | (13,123,627 | ) | ||||||||||||||||||||||||||||
| Balance at September 30, 2025 | 371,884 | $ | 372 | 7,589,036 | $ | 7,588 | $ | 95,783,778 | $ | (512,392 | ) | $ | 2,126,352 |
$ | (77,617,726 | ) | $ | (8,580 | ) | $ | 19,779,392 | |||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements.
|
|
Worksport Ltd.
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2025 and 2024
(Unaudited)
| 2025 | 2024 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | (13,123,627 | ) | $ | (11,862,973 | ) | ||
| Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
| Shares, options and warrants issued for services | 2,139,566 | 3,105,869 | ||||||
| Depreciation and amortization | 1,359,522 | 1,019,867 | ||||||
| Change in operating lease | (19,650 | ) | 3,966 | |||||
| Adjustments to reconcile net income loss to cash provided by (used in) operating activities | (9,644,189 | ) | (7,733,271 | ) | ||||
| Changes in operating assets and liabilities (Note 10) | (1,545,993 | ) | (225,941 | ) | ||||
| Net cash used in operating activities | (11,190,182 | ) | (7,959,212 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of intangible assets | (376,802 | ) | - | |||||
| Purchase of property and equipment | (634,082 | ) | (500,760 | ) | ||||
| Purchase of investments | (56,373 | ) | - | |||||
| Net cash used in investing activities | (1,067,257 | ) | (500,760 | ) | ||||
| Financing Activities | ||||||||
| Net change in related party loan | - | (16,495 | ) | |||||
| Proceeds from warrant exercise | 6,384,840 | 3,746,435 | ||||||
| Proceeds from issuance of preferred stock, net of issuance cost | 2,082,013 | - | ||||||
| Proceeds from issuance of warrants, net of issuance cost | 4,387,189 | - | ||||||
| Proceeds from line of credit | 8,843,139 | 7,339,525 | ||||||
| Proceeds from long-term debt | - | 1,437,998 | ||||||
| Repayments on line of credit | (10,910,449 | ) | (3,450,785 | ) | ||||
| Repayments on long-term debt | (148,337 | ) | (5,300,000 | ) | ||||
| Proceeds from issuance of common shares, net of issuance cost | 497,635 | 3,195,201 | ||||||
| Net cash provided by (used in) financing activities | 11,136,030 | 6,951,879 | ||||||
| Change in cash | (1,121,409 | ) | (1,508,093 | ) | ||||
| Cash and cash equivalents - beginning of period | 4,883,099 | 3,365,778 | ||||||
| Cash and cash equivalents - end of period | $ | 3,761,690 | $ | 1,857,685 | ||||
| Supplemental Disclosure of cash flow information | ||||||||
| Income tax paid | $ | - | $ | - | ||||
| Interest paid | $ | 301,000 | $ | 487,000 | ||||
See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements.
|
|
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. Description of Business and Significant Accounting Policies
The accompanying unaudited condensed consolidated 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 nine months ended September 30, 2025 are not necessarily indicative of the results expected for the full year. The accompanying unaudited condensed consolidated 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 $301,095 and $396,446 for the three months ended September 30, 2025 and 2024, respectively, which were reclassified from general and administrative expense to research and development expense. The Company reclassified research and development of $975,529 and $1,811,911 for the nine months ended September 30, 2025 and 2024, respectively, which were reclassified from general and administrative expense to research and development expense. This change improves the disclosure of costs to develop new products and technologies and reflects the Company’s ongoing investment in innovation. The change also provides a more accurate depiction of the Company’s operating performance.
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.
|
|
2. Going Concern
As of September 30, 2025, the Company had $3,761,690 in cash and cash equivalents. The Company also has availability on its revolving line of credit of $3,291,250. The Company has generated only limited revenues and has relied primarily upon capital generated from public and private offerings of its securities. Since the Company’s acquisition of Worksport in 2014, it has never generated a profit. As of September 30, 2025, the Company had an accumulated deficit of $77,617,726.
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the three months ended September 30, 2025, the Company had net losses of $4,928,679 (2024 - $4,134,917). During the nine months ended September 30, 2025, the Company had net losses of $13,123,627 (2024 - $11,862,973). As of September 30, 2025, the Company had working capital of $6,311,857 (December 31, 2024 – $7,304,110) and had an accumulated deficit of $77,617,726 (December 31, 2024 - $64,476,966). The Company has not generated profit from operations since inception and to date has relied on debt and equity financing for continued operations. The Company’s ability to continue as a going concern is dependent upon the ability to generate cash flows from operations and obtain equity and/or debt financing. The Company intends to continue funding operations through equity and debt financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements in the long term. There can be no assurance that the steps management is taking to make the Company profitable will be successful.
The Company has historically operated at a loss, although that may change as sales volumes increase and margins improve. As of September 30, 2025, the Company had cash and cash equivalents of $3,761,690 (December 31, 2024 - $4,883,099). Despite the Company having completed its purchasing of large manufacturing machinery for phase one output levels, operational costs are expected to remain elevated and, thus, further decrease cash and cash equivalents. Concurrently, the Company intends to continue its ramp-up of manufacturing and increasing sales volumes in 2025 and 2026, which should mitigate the effects of operational costs on cash and cash equivalents as it releases new product lines; this view is supported by the fact that the manufacturing facility of the Company was completed for initial production output in 2023 and quickly began improving output and sales during 2024 and into 2025.
The Company has successfully raised cash, and it is positioned to do so again if deemed necessary or strategically advantageous. During the year ended December 31, 2021, the Company, through its Reg-A public offering, private placement offering, underwritten public offering, and exercises of warrants, raised an aggregate of approximately $32,500,000. On September 30, 2022, the Company filed a shelf registration statement on Form S-3, which was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on October 13, 2022 (the “Shelf Registration Statement”), allowing the Company to issue up to $30,000,000 of common stock and prospectus supplement covering the offering, issuance and sale of up to $13,000,000 of common stock that may be issued and sold under an At The Market Offering Agreement dated September 30, 2022 (“ATM Agreement”), with H.C. Wainwright & Co., LLC, as the sales agent (“HCW”). Pursuant to the ATM Agreement, HCW is entitled to a commission equal to 3.0% of the gross sales price of the shares of common stock sold. Through September 30, 2025, the Company cumulatively sold and issued 872,027 shares of common stock in consideration for net proceeds of $6,751,381 under the ATM Agreement. The Shelf Registration Statement expired in October 2025 and the Company will file a new shelf registration statement in November 2025.
On November 2, 2023, the Company consummated a registered direct offering pursuant to which the Company issued 192,500 shares of common stock and 157,500 pre-funded warrants to an institutional investor for a total net proceeds of $4,261,542. Concurrently with the registered direct offering, the Company issued the same institutional investor 700,000 warrants in a private sale. The warrants are exercisable for 700,000 shares of common stock for $13.40 per share six months after issuance and until five and a half (5.5) years from the issuance date, subject to beneficial ownership limitations as described in the warrants. The Company registered the 700,000 shares of common stock underlying the warrants on a Form S-1 (333-276241) which was declared effective by the SEC on December 29, 2023.
On March 20, 2024, the Company consummated a registered direct offering pursuant to which the Company issued 237,224 shares of common stock and 147,789 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 $2,629,083. Concurrently with the registered direct offering, the Company issued the institutional investor 770,026 warrants in a private sale. The warrants are exercisable for 770,026 shares of common stock for $7.40 per share six months after issuance until five and a half years from the issuance date, subject to beneficial ownership limitations as described in the warrants. The Company registered the 770,026 shares of common stock underlying the warrants on a Form S-1 (333-278461) which was declared effective by the SEC on April 8, 2024.
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 $5.198 per warrant. In turn for doing so, Worksport offered the shareholder new warrants to purchase up to 1,295,000 shares of common stock with an exercise price of $5.198. The warrants had a term of 5.5 years, with a 6-month required holding period prior to exercise.
|
|
On December 13, 2024, the Company filed a prospectus supplement to amend and supplement a prospectus supplement dated as of November 5, 2024, as well as the 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 ATM Agreement under General Instruction I.B.6. to $4,962,092 of shares of our common stock not including whatever had been sold prior to this filing date.
On February 27, 2025, Worksport entered into a warrant inducement agreement with a shareholder to exercise 755,558 of 1,295,000 May 2024 Warrants at a price of $5.198 per share. The remaining unexercised 539,442 warrants are included in share subscription payable. In return, the Company issued 1,424,500 new 2025 Inducement Warrants. Each Inducement Warrant has an exercise price of $6.502, will become exercisable six months after issuance, and have a 5.5-year life. Worksport raised approximately $6,731,000 in gross proceeds before fees and expenses, with the funds earmarked for general corporate and working capital purposes.
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 with an exercise price of $4.50 per share. The qualified Regulation A offering is expected to generate gross proceeds of $10,000,000. Through September 30, 2025, the Company completed twenty-four tranches and received proceeds of $6,469,202 (net of issuance costs of $665,905) and recognized share subscriptions receivable of $458,720 (net of issuance costs of $41,130).
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 unaudited condensed consolidated 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 September 30, 2025 and December 31, 2024, inventory consists of the following:
Schedule of Inventory
| September 30, 2025 | December 31, 2024 | |||||||
| Raw materials | $ | 4,138,808 | $ | 3,373,704 | ||||
| Finished goods | 1,988,117 | 1,343,006 | ||||||
| Work in progress | 708,566 | 473,344 | ||||||
| Inventories, net | $ | 6,835,491 | $ | 5,190,054 | ||||
|
|
4. Property and Equipment
Property and equipment consist of:
Schedule of Property and Equipment
| September 30, 2025 | December 31, 2024 | |||||||
| Building | $ | 6,079,410 | $ | 6,079,410 | ||||
| Manufacturing equipment | 6,390,593 | 5,830,999 | ||||||
| Land | 2,239,405 | 2,239,405 | ||||||
| Leasehold improvements | 873,759 | 862,504 | ||||||
| Product molds | 524,476 | 524,476 | ||||||
| Warehouse equipment | 522,128 | 512,700 | ||||||
| Electrical equipment | 185,261 | 185,261 | ||||||
| Automobile | 242,642 | 172,645 | ||||||
| Furniture | 154,065 | 154,065 | ||||||
| Computers | 98,594 | 114,786 | ||||||
| Property and equipment, at cost | 17,310,333 | 16,676,251 | ||||||
| Less: Accumulated depreciation | (4,102,170 | ) | (3,032,025 | ) | ||||
| Property and equipment, net | $ | 13,208,163 | $ | 13,644,226 | ||||
Depreciation expense for the three months ended September 30, 2025 and 2024 was $374,195 and $403,267, respectively. Depreciation expense for the nine months ended September 30, 2025 and 2024 was $1,070,145 and $1,017,988, respectively.
5. Intangible Assets
Intangible assets consist of patents, trademarks, copyrights, licenses, and software owned by Worksport and its subsidiaries. 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 nine months ended September 30, 2025.
The components of intangible assets are as follows:
Schedule of Components of Intangible Assets
| September 30, 2025 | December 31, 2024 | |||||||
| Software | $ | 1,150,000 | $ | 1,150,000 | ||||
| License | 218,329 | 103,329 | ||||||
| Patent | 62,706 | 62,706 | ||||||
| Trademark | 5,150 | 5,150 | ||||||
| Other | 291,253 | 29,451 | ||||||
| Intangible assets, gross carrying amount | 1,727,438 | 1,350,636 | ||||||
| Less: Accumulated amortization | (686,964 | ) | (397,587 | ) | ||||
| Intangible assets, net | $ | 1,040,474 | $ | 953,049 | ||||
Amortization expense for the three months ended September 30, 2025 and 2024 was $96,459 and $627, respectively. Amortization expense for the nine months ended September 30, 2025 and 2024 was $289,377 and $1,879, respectively.
|
|
Estimated amortization of the patent and software over the next five calendar years and beyond September 30, 2025 is as follows:
Schedule of Estimated Amortization of the patent and Software
| 2025 | $ | 97,000 | ||
| 2026 | $ | 386,000 | ||
| 2027 | $ | 3,000 | ||
| 2028 | $ | 3,000 | ||
| 2029 | $ | 2,000 | ||
| Thereafter | $ | 35,000 |
6. Prepaid Expenses and Deposits
As of September 30, 2025 and December 31, 2024, prepaid expenses and deposits consist of the following:
Schedule of Prepaid Expenses and Deposits
| September 30, 2025 | December 31, 2024 | |||||||
| Consulting, services, and advertising | $ | 693,788 | $ | 35,740 | ||||
| Insurance | 147,673 | 65,938 | ||||||
| Deposits | 214,510 | 90,514 | ||||||
| Prepaid expenses and deposits | $ | 1,055,971 | $ | 192,192 | ||||
7. Shareholders’ Equity (Deficit)
The Company is authorized to issue up to 55,000,000 shares of capital stock, par value $0.001 per share. Capital stock is divided into two classes designated as common stock and preferred stock.
Common stock – The Company is authorized to issue up to 45,000,000 shares of common stock.
Preferred stock – The Company is authorized to issue up to 10,000,000 shares of preferred stock. The board of directors may authorize, without further shareholder action, the issuance of preferred stock in one or more classes or series. Preferred stock ranks senior to common stock with respect to payment of dividends and the distribution of assets on liquidation. Each class or series of preferred stock, when issued, must include its designation and a description of certain rights, including voting privileges, dividend preferences, conversion features, restrictions and redemption rights.
| - | During 2019, the Company created and issued 100 shares of its Series A preferred stock. Series A preferred shareholders vote together as a single class and are entitled to 51% of the voting rights on all matters regardless of the number of Series A preferred shares outstanding. Series A preferred stock does not have conversion rights, is not entitled to receive dividends nor receive any liquidation preferences. | |
| - | During 2020, the Company created the Series B preferred stock. Series B preferred shareholders have the right to vote for each share of common stock outstanding after the issuance date. Series B preferred stock does not have conversion rights, is not entitled to receive dividend preferences nor receive any liquidation preferences. As of September 30, 2025, the Company has not issued share of Series B preferred stock. | |
| - | During 2025, the Company created its Series C preferred stock for its Regulation A offering. Refer to Note 15, Warrants for a description of units available in the Regulation A offering. Series C preferred stock ranks senior to common stock and future classes or series of preferred stock as to dividend and liquidation rights. Series C preferred shareholders may convert holdings on a 1:1 basis to common stock at any time. Series C preferred shareholders are entitled to cumulative dividends at a rate of 8.00% of the $3.25 liquidation preference per share per year for a period of two (2) years from the date of issuance. As of September 30, 2025, the Company issued 2,349,202 shares of Series C preferred stock and converted 1,977,418 Series C preferred shares to common stock at the shareholder’s request. The Company recognized dividends payable to Series C preferred shareholders for the three months ended September 30, 2025 of $17,132. |
During the nine months ended September 30, 2025, the following transactions occurred:
During the nine months ended September 30, 2025, the Company sold 110,619 shares of common stock for total net proceeds of $504,372. The sale of shares was in connection with the Shelf Registration Statement and the ATM Agreement described in Note 2, Going Concern.
The Company recognized consulting expense of $13,000 and marketing expense of $97,250 to share subscriptions payable from restricted shares and stock options to be issued. As of September 30, 2025, the $110,250 of the restricted shares have not been issued. During the nine months ended September 30, 2025, the Company issued 94,670 restricted shares with a value of $465,100.
During the nine months ended September 30, 2025, in connection with the inducement of 1,295,091 warrants at $5.198 per share, the Company also sold 1,424,500 warrants exercisable at $6.502 per share. The Company received proceeds of $6,731,410 before deducting placement agent fees of $346,570 and other offering expenses payable by the Company upon the exercise of the May 2024 Existing Warrants.
During the nine months ended September 30, 2025, in connection with the Regulation A offering of up to 3,100,000 Units at an offering price of $3.25 per Unit, the Company issued 2,349,202 Units, received proceeds of $6,469,202 (net of issuance costs of $665,905), and recognized share subscriptions receivable of $458,720 (net of issuance costs of $41,130).
During the nine months ended September 30, 2025, certain Series C preferred shareholders converted 1,977,418 shares into the Company’s common stock.
Refer to Note 15, Warrants and Note 16, Equity Compensation for additional disclosures.
During nine months ended September 30, 2024, the following transactions occurred:
During the nine months ended September 30, 2024, the Company sold 504,921 shares of common stock for a total net proceeds of $566,118. The sale of shares was in connection with the Shelf Registration Statement and the ATM Agreement dated as of September 30, 2022.
The Company recognized consulting expense of $753,069 to share subscriptions payable from restricted shares and stock options to be issued. As of September 30, 2024, the Company issued 333,841 restricted shares with a value of $382,700.
During the nine months ended September 30, 2024, the Company closed a sale of 2,372,240 shares of common stock for net proceeds of $1,535,591. In association with the sale of common stock, the Company issued 1,477,892 pre-funded warrants and 7,700,264 warrants totaling proceeds of $1,093,492.
During the nine months ended September 30, 2024, the Company closed a sale of 950,000 shares of common stock for proceeds of $380,000. In connection with the sale of common stock, the Company issued 1,900,000 warrants. Refer to Note 15. As of September 30, 2024, the shares have not been issued.
|
|
8. Income Taxes
The effective tax rate for the nine months ended September 30, 2025 and 2024 was 22.9% before 100% allowance adjustments on net deferred income tax assets. The effective tax rate for the nine months ended September 30, 2025 and 2024 was higher than expected from applying the U.S. federal statutory rate of 21% to loss before income taxes due to tax benefits on losses generated outside the U.S. with higher statutory rates.
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 September 30, 2025. The Company’s long-term debt is based on a fixed interest rate, and its carrying amount approximates fair value at September 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 nine months ended September 30, 2025 and 2024 are as follows:
Schedule of Changes in Operating Assets and Liabilities
| 2025 | 2024 | |||||||
| Decrease (increase) in accounts receivable | $ | (472,485 | ) | $ | (3,320 | ) | ||
| Decrease (increase) in other receivable | (39,974 | ) | 11,898 | |||||
| Decrease (increase) in inventory | (1,645,437 | ) | (2,506,568 | ) | ||||
| Decrease (increase) in prepaid expenses and deposits | (865,634 | ) | 1,240,649 | |||||
| Increase (decrease) in accounts payable and accrued liabilities | 1,477,537 | 1,031,400 | ||||||
| Changes in operating assets and liabilities | $ | (1,545,993 | ) | $ | (225,941 | ) | ||
11. Investments
During the nine months ended September 30, 2025, $66,308 of the Company’s Guaranteed Investment Certificate (“GIC”) matured and the Company received $2,500 in interest income. During the same period, the Company reinvested the principal amount of $66,308 in a GIC. The GIC bears a variable interest rate and will mature on February 27, 2026. The anticipated earned interest on the GIC at maturity is $2,500. During the nine months ended September 30, 2025, the Company invested $56,373 in a second Guaranteed Investment Certificate (“GIC”) bearing a variable interest rate and will mature on June 5, 2026. The anticipated earned interest on the GIC at maturity is $1,270.
|
|
12. Leases
The Company accounts for leases under Accounting Standards Codification (“ASC”) 842, Leases, whereby it recognizes a lease liability and a right-of-use asset. The lease liability is measured at the present value of the remaining lease payments, discounted by the Company’s incremental borrowing rate. The Company measured the right of use asset at an initial amount equal to the lease liability.
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 one-year lease with an option to extend the lease for an additional year, dated June 1, 2023, for a monthly rent of $3,350. The lease was renewed effective June 1, 2024 at a rate of $3,600 per month with a termination date of May 31, 2025. The lease was not renewed. The Company’s incremental borrowing rate used to initially measure the present value of the remaining lease payments was 10%.
On April 1, 2025, the Company signed a lease agreement for 12,500 square feet of office space to be used as a R&D facility pursuant to a three-year lease with an option to extend the lease for an additional two years. The lease was effective on May 1, 2025 at a rate of $9,659 per month with a termination date of April 30, 2028. The Company’s incremental borrowing rate used to initially measure the present value of the remaining lease payments was 15%.
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. The Company’s incremental borrowing rate used to initially measure the present value of the remaining lease payments was 15%.
The Company’s right-of-use asset and lease liability as of September 30, 2025, and December 31, 2024, are as follows:
Schedule Right-of-use Asset
| September 30, 2025 |
December 31, 2024 |
|||||||
| Right-of-use asset | $ | 299,376 | $ | 595,415 | ||||
| Current lease liability | $ | 110,202 | $ | 246,535 | ||||
| Long-term lease liability | $ | 189,116 | $ | 368,472 | ||||
The following is a summary of the Company’s total lease costs during the nine months ended September 30, 2025 and 2024:
Schedule of Lease Cost
| September 30, 2025 | September 30, 2024 | |||||||
| Operating lease cost | $ | 230,471 | $ | 331,057 | ||||
The following is a summary of cash paid during the nine months ended September 30, 2025 and 2024 for amounts included in the measurement of lease liabilities:
Schedule of Measurement of Lease Liabilities
| September 30, 2025 | September 30, 2024 | |||||||
| Operating cashflow | $ | 229,282 | $ | 328,113 | ||||
|
|
The following are future minimum annual lease payments as of September 30, 2025:
Schedule of Future Minimum Annual Lease Payments
| 2025 | $ | 37,138 | ||
| 2026 | 144,452 | |||
| 2027 | 134,284 | |||
| 2028 | 39,784 | |||
| Total future minimum lease payments | 355,658 | |||
| Less: amount representing interest | (56,340 | ) | ||
| Present value of future payments | 299,318 | |||
| Current portion | 110,202 | |||
| Long term portion | $ | 189,116 |
13. Indebtedness
Long-term debt consists of:
Schedule of Long Term Debt
| September 30, 2025 | December 31, 2024 | |||||||
| Revolving Credit Facility (a) | $ | 1,586,032 | $ | 3,808,025 | ||||
| Other (b) | 1,295,847 | 1,456,485 | ||||||
| Long-term debt | 2,881,879 | 5,264,510 | ||||||
| Less deferred debt issuance cost | (93,529 | ) | (260,513 | ) | ||||
| Less current installments | (1,774,307 | ) | (222,992 | ) | ||||
| Long-term debt | $ | 1,014,043 | $ | 4,781,005 | ||||
| a) | On July 19, 2024, the Company, as the guarantor, and Worksport New York Operations Corporation as well as Worksport USA Operations Corporation, entered into a $6,000,000 Revolving Financing and Assignment Agreement with an external lending entity with a maturity date of July 18, 2026, or 24 months. Upon transaction close, the Company drew down approximately $5.06 million of the Revolving Credit Facility, net of $790,000 of interest reserve required to be withheld to ensure interest payments by the Company. The Company used $4.73 million of the drawn down amount to refinance the Company’s mortgage on the Company’s real property located at 2500 North America Dr. in West Seneca, New York, and additionally drew approximately $330,000 to fund operations. Interest on the outstanding Revolving Credit Facility is based on the greater of the prime rate or 6.0% plus an additional 300 basis points. At September 30, 2025, the outstanding balance of this loan was $1,523,937 (net of issuance costs of $62,095). |
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 0.25% is assessed quarterly and applied to the difference between the quarter’s average daily outstanding loan balance and the total credit facility amount. As of September 30, 2025, the Company had an available balance of $3,291,250 to borrow on the Revolving Credit Facility.
| b) | On September 4, 2024, the Company, through its wholly owned subsidiary, Worksport USA Operations Corporation, entered into a $1,487,200 credit and security agreement with an external lending entity with a maturity date of September 1, 2027, which is 36 months from initial funding. Upon transaction close, the Company received net proceeds of $1,412,750 (net of issuance costs of $43,735). The Company and its wholly owned subsidiary, Worksport New York Operations Corporation, serve as guarantors on the loan. For collateral, the lender holds a first position on the Company’s equipment, which is primarily manufacturing and warehousing equipment. Interest on the loan is based on the prime rate plus 700 basis points per annum. At September 30, 2025, the outstanding balance of this loan was $1,264,412 (net of issuance costs of $31,435). |
The Company is in compliance with all covenants.
For the three and nine months ended September 30, 2025, loss per share is $0.75 and $2.44 (basic and diluted) compared to the three and nine months ended September 30, 2024, of $1.40 and $4.64 (basic and diluted) using the weighted average number of shares of 6,563,228 and 5,377,750 (basic and diluted) as of September 30, 2025 and 2,943,279 and 2,554,075 (basic and diluted) as of September 30, 2024, respectively.
|
|
There are 45,000,000 shares authorized with 7,589,036 and 3,092,040 shares issued and outstanding, at September 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 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, with an exercise price of $4.50 per share. The qualified Regulation A offering is expected to generate gross proceeds of $10,000,000. The proceeds from the Regulation A offering and issuance of units are recorded as additional paid-in capital. Through September 30, 2025, the Company issued 2,349,202 warrants to investors.
On February 27, 2025, the Company entered into a warrant inducement agreement with the holder of existing warrants to purchase an aggregate 1,295,000 shares. Pursuant to the inducement, the exercising holder of the existing warrants received 1,425,000 inducement warrants and the Company received $6,731,000 from the exercise of the existing warrants. As a result of the inducement and subsequent exercise, the Company determined the incremental fair value provided to the holder from the inducement warrants issued using the Black Scholes model. The total incremental fair value of $7,602,000, is recorded as a non-cash deemed dividend. The proceeds of the warrant inducement and issuance of 1,295,000 shares of common stock are recorded as additional paid-in capital.
During the year ended December 31, 2024, in connection with the sale of 237,224 shares of common stock, the Company also sold 147,789 pre-funded warrants and issued 770,026 warrants exercisable for a total of 770,026 shares of common stock for $0.001 and $7.40, respectively, per share. The Company received net proceeds of $1,093,492 associated with the sale of the pre-funded warrants. The pre-funded warrants are immediately exercisable until all of the pre-funded warrants are exercised. During the same period, 147,789 pre-funded warrants were exercised for 147,789 shares of common stock for $150.
During the year ended December 31, 2024, the Company closed a sale of 95,000 shares of common stock. In connection with the sale of common stock the Company issued 190,000 warrants. The warrants have an exercise price of $4.00 and an expiration date of September 21, 2029.
During the year ended December 31, 2024, 13,091 warrants issued on August 3, 2021, and 344,652 warrants issued on August 6, 2021, all of which having an exercise price of $60.50, expired.
On May 9, 2024, the Company entered into a warrant inducement agreement with the holder of existing warrants to purchase an aggregate 700,000 shares at a reduced exercise price of $5.198 in consideration for the Company to issue new warrants to purchase up to 1,295,000 additional shares of common stock with an exercise price of $5.198 – resulting in gross proceeds of approximately $3,638,000 received by the Company. As a result of the inducement and subsequent exercise, the Company determined the incremental fair value provided to the holder from both the adjustment in exercise price of the existing warrants and the fair value of the inducement warrants issued using the Black Scholes model. The total incremental fair value of $4,996,000 is recorded as a non-cash deemed dividend. The proceeds of the warrant inducement and issuance of 284,000 shares of common stock are recorded as capital in excess of par. The obligation to issue the remaining 416,000 shares was originally recorded as a share subscription payable. During the twelve months ended December 31, 2024, the Company issued 416,000 out of the 416,000 shares to be issued.
During the year ended December 31, 2023, in connection with the sale of 192,500 shares of common stock the Company also sold 157,500 pre-funded warrants and 700,000 warrants convertible for 857,500 shares of common stock with an exercise price of $0.001 and $13.40, respectively. The Company received net proceeds of $2,110,342 associated with the sale of the pre-funded warrants. During the same period, 88,700 pre-funded warrants were exercised for 88,700 shares of common stock for $89. During the year ended December 31, 2024, the remaining 68,800 pre-funded warrants were exercised for 68,800 shares of common stock for $69.
During the year ended December 31, 2023, the Company and a stock options holder agreed to cancel all 40,000 stock options in exchange for extending the exercisable period of 30,000 warrants to December 31, 2024. Later in the year ended December 31, 2023, the expiration date for these warrants was extended to December 31, 2026, and the stock option holder was issued an additional 40,000 restricted stock units.
|
|
During the year ended December 31, 2022, the Company and a warrant holder reached an agreement to extend the exercisable period of 30,000 warrants, convertible to 2 shares of common stock each, for an additional 12 months.
During the year ended December 31, 2021, the Company issued 13,091 representative warrants to the Company’s underwriters. The representative warrants were not exercisable until January 30, 2022. The representative warrants were exercisable for 13,091 shares of common stock at $60.50 per share until August 3, 2024. As of December 31, 2022, the Company recognized a value of $273,993 for the representative warrants to share issuance cost. During the year ended December 31, 2024, these representative warrants expired.
As of September 30, 2025, the Company has the following warrants outstanding:
Schedule of Warrants Exercise Price
| Exercise price | Number outstanding |
Remaining Contractual Life (Years) |
Expiry date | ||||||||||
| $ | 40.00 | 30,000 | 1.25 | 12/31/2026 | |||||||||
| $ | 7.40 | 770,026 | 3.98 | 09/20/2029 | |||||||||
| $ | 4.00 | 190,000 | 3.98 | 09/21/2029 | |||||||||
| $ | 6.50 | 1,424,500 | 4.91 | 08/27/2030 | |||||||||
| $ | 4.50 | 2,349,202 | 2.70 - 3.00 | 06/13/2028 - 09/30/2028 | |||||||||
| 4,763,728 | 3.69 | ||||||||||||
The average remaining contractual life of outstanding warrants that expire is
Schedule of Warrants Activity
| September 30, 2025 | December 31, 2024 | |||||||||||||||
| Number of warrants |
Weighted average price |
Number of warrants |
Weighted average price |
|||||||||||||
| Balance, beginning of year | 2,291,276 | $ | 6.35 | 1,162,792 | $ | 24.20 | ||||||||||
| Issuance | 3,773,702 | $ | 5.26 | 2,402,815 | $ | 5.49 | ||||||||||
| Expired | (6,250 | ) | $ | 24.00 | (357,742 | ) | $ | 60.50 | ||||||||
| Exercise | (1,295,000 | ) | $ | 5.20 | (916,589 | ) | $ | 3.97 | ||||||||
| Balance, end of period | 4,763,728 | $ | 5.77 | 2,291,276 | $ | 6.35 | ||||||||||
|
|
Under the Company’s 2015, 2021 and 2022 Equity Incentive Plans, the number of shares of common stock reserved for issuance under the option plan shall not exceed 10% of the issued and outstanding shares of common stock of the Company, have a maximum term of 10 years, and vest at the discretion of the Board of Directors.
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 160,000 restricted stock units and 40,000 performance stock units (“PSUs”) issued on November 11, 2022, and December 29, 2021, respectively, and replace them with 200,000 stock options, as described below.
On November 11, 2022, 40,000 and 30,000 PSUs granted on December 29, 2021, as described below, were modified to include new terms pertaining to the PSU vesting schedule. The PSUs vest in 5% increments according to the modified schedule that correlates with the Company’s stock price. The first 5% of the PSUs vest upon the Company’s stock price closing at $22.50, 50% will have vested at a closing price of $53.10, and 100% will have vested at a closing price of $137.60 as measured using the volume weighted average of the Company’s common stock for ten (10) consecutive trading days, with over $100,000 of trading volume on each of those days. The fair value of the PSUs was estimated to be $1,254,460. As of September 30, 2025, 7,500 PSUs of the remaining 30,000 PSUs had vested.
On December 29, 2021, the Company granted 40,000 and 30,000 PSUs to the Company’s Chief Executive Officer and a director, respectively. The PSUs were to vest in 5% increments according to a schedule that correlates with the Company’s stock price. The first 5% of the PSUs was to have vested upon the Company’s stock price closing at $30.00, 50% was to have vested at a closing price of $165.00, and 100% was to have vested at a closing price of $315.00. The fair value of the PSUs was estimated to be $1,344,570.
Stock Options
The Company uses the Black-Scholes option pricing model to determine fair value of stock options on the grant date.
During the nine months ended September 30, 2025, the Company issued the following stock options to various directors:
| - | 10,000 stock options vesting ratably over two years, with an exercise price of $5.95 and an expiration date of March 7, 2035 | |
| - | 14,000 stock options vesting ratably over two years, with an exercise price of $3.09 and an expiration date of April 4, 2035 | |
| - | 30,000 stock options vesting ratably over two years, with an exercise price of $3.80 and an expiration date of July 12, 2035 | |
| - | 50,000 stock options vesting pursuant to a performance milestone and an expiration date of July 12, 2035 |
During the nine months ended September 30, 2025, the Company issued the following stock options to various employees and consultants:
| - | 88,600 stock options vesting based on various service periods, with an exercise price of $3.09 and an expiration date of April 4, 2035 | |
| - | 81,940 stock options vesting based on various service periods, with an exercise price of $3.80 and an expiration date of July 12, 2035 | |
| - | 76,500 stock options vesting pursuant to performance milestones and an expiration date of July 12, 2035 |
During the nine months ended September 30, 2025, the Company issued the following stock options to Steven Rossi:
| - | 30,000 stock options vesting 50% at the end of the first two anniversaries of the grant date, with an exercise price of $3.09 and an expiration date of April 4, 2035 | |
| - | 215,000 stock options vesting 50% at the end of the first two anniversaries of the grant date, with an exercise price of $3.80, and an expiration date of July 12, 2035. |
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. 538,896 stock options’ exercise prices were repriced to $7.042, and all other criteria were unchanged. As a result of the modification in exercise prices, the Company recognized additional expense of $93,140 on the date of modification.
During the year ended December 31, 2024, the Company issued 84,860 stock options to employees and directors with exercise prices ranging from $5.20 to $14.10 and expiration dates ranging from February 1, 2029 to November 19, 2034. Of these stock options, 2,040 were subsequently cancelled.
|
|
| September 30, 2025 | December 31, 2024 | |||||||||||||||
|
Number of stock options |
Weighted average price |
Number of stock options |
Weighted average price |
|||||||||||||
| Balance, beginning of period | 579,936 | $ | 7.14 | 506,386 | $ | 19.62 | ||||||||||
| Granted | 596,040 | $ | 3.68 | 84,860 | $ | 7.70 | ||||||||||
| Forfeited | (960 | ) | $ | 7.04 | (11,310 | ) | $ | 29.30 | ||||||||
| Balance, end of period | 1,175,016 | $ | 5.38 | 579,936 | $ | 7.14 | ||||||||||
|
Range of Exercise prices |
Outstanding | Weighted average life (years) |
Weighted average exercise price |
Exercisable on September 30, 2025 |
||||||||||||||||
| Stock options | $ | 3.09 - 55.00 | 1,175,016 | 8.45 | $ | 5.38 | 279,780 |
Schedule of Stock Options Activity
| September 30, 2025 | December 31, 2024 | |||||||||||||||
| Number of stock options |
Weighted average price |
Number of stock options |
Weighted average price |
|||||||||||||
| Balance, beginning of period | 1,350,000 | $ | 0.01 | 1,350,000 | $ | 0.01 | ||||||||||
| Granted | - | $ | - | - | $ | - | ||||||||||
| Balance, end of period | 1,350,000 | $ | 0.01 | 1,350,000 | $ | 0.01 | ||||||||||
| Range of Exercise prices |
Outstanding | Weighted average life (years) |
Weighted average exercise price |
Exercisable on September 30, 2025 |
||||||||||||||||
| Stock options | $ | 0.01 | 1,350,000 | 6.53 | $ | 0.01 | 1,350,000 | |||||||||||||
|
|
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 September 30, 2025 | For the three months ended September 30, 2024 | |||||||||||||||||||||||||||||||
| Hard Tonneau Covers |
Soft Tonneau Covers |
Corporate / Other / Eliminations | Consolidated | Hard Tonneau Covers |
Soft Tonneau Covers |
Corporate / Other / Eliminations | Consolidated | |||||||||||||||||||||||||
| Net sales | $ | 4,881,982 | $ | 131,890 | $ | - |
$ | 5,013,872 | $ | 1,716,686 | $ | 1,405,673 | $ | - | $ | 3,122,359 | ||||||||||||||||
| Less: Cost of sales | (3,341,071 | ) |
(104,017 | ) | - | (3,445,088 | ) | (1,661,270 | ) | (1,211,933 | ) | (1,983 | ) | (2,875,186 | ) | |||||||||||||||||
| Selling, general and administrative | (2,561,515 | ) | (30,700 | ) | (3,298,686 | ) | (5,890,901 | ) | (1,737,843 | ) | (883,683 | ) | (1,126,969 | ) | (3,748,495 | ) | ||||||||||||||||
| Depreciation and amortization | (421,732 | ) | (7,866 | ) | (41,056 | ) |
(470,654 | ) | (291,292 | ) | (86,345 | ) | (26,257 | ) | (403,894 | ) | ||||||||||||||||
| Loss from continuing operations | $ | (1,442,336 | ) | $ | (10,693 | ) | $ | (3,339,742 | ) | $ | (4,792,771 | ) | $ | (1,973,719 | ) | $ | (776,288 | ) | $ | (1,155,209 | ) | $ | (3,905,216 | ) | ||||||||
| For the nine months ended September 30, 2025 | For the nine months ended September 30, 2024 | |||||||||||||||||||||||||||||||
| Hard Tonneau Covers |
Soft Tonneau Covers |
Corporate / Other / Eliminations | Consolidated | Hard Tonneau Covers |
Soft Tonneau Covers |
Corporate / Other / Eliminations | Consolidated | |||||||||||||||||||||||||
| Net sales | $ | 10,982,236 | $ | 376,599 | $ | - | $ | 11,358,835 | $ | 2,696,595 | $ | 2,859,940 | $ | - | $ | 5,556,535 | ||||||||||||||||
| Less: Cost of sales | (8,014,766 | ) | (292,725 | ) | (4,227 | ) | (8,311,718 | ) | (2,491,413 | ) | (2,454,131 | ) | (29,733 | ) | (4,975,277 | ) | ||||||||||||||||
| Selling, general and administrative | (7,087,353 | ) | (148,686 | ) | (7,135,117 | ) | (14,371,156 | ) | (3,981,931 | ) | (1,872,270 | ) | (5,162,620 | ) | (11,016,821 | ) | ||||||||||||||||
| Depreciation and amortization | (1,268,853 | ) | (31,003 | ) | (59,666 | ) | (1,359,522 | ) | (790,797 | ) | (125,745 | ) | (103,325 | ) | (1,019,867 | ) | ||||||||||||||||
| Loss from continuing operations | $ | (5,388,736 | ) | $ | (95,815 | ) | $ | (7,199,010 | ) | $ | (12,683,561 | ) | $ | (4,567,546 | ) | $ | (1,592,206 | ) | $ | (5,295,678 | ) | $ | (11,455,430 | ) | ||||||||
|
|
The following table presents the Company’s net sales disaggregated by geographic area:
Schedule of Net Sales Disaggregated by Geographic Area for the nine months ended September 30,:
| 2025 | 2024 | |||||||||||||||||||||||
| Hard Tonneau Covers |
Soft Tonneau Covers |
Consolidated | Hard Tonneau Covers |
Soft Tonneau Covers |
Consolidated | |||||||||||||||||||
| United States | $ | 10,910,214 | $ | 374,324 | $ | 11,284,538 | $ | 2,622,350 | $ | 2,853,625 | $ | 5,475,975 | ||||||||||||
Other |
72,022 | 2,275 | 74,297 | 74,245 | 6,315 | 80,560 | ||||||||||||||||||
| Net sales | $ | 10,982,236 | $ | 376,599 | $ | 11,358,835 | $ | 2,696,595 | $ | 2,859,940 | $ | 5,556,535 | ||||||||||||
No asset information has been provided for the reported segments as the CODM does not regularly review asset information by reportable segment. As of September 30, 2025 and December 31, 2024, assets held in the U.S. accounted for 90% and 88% of total assets, respectively.
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 November 13, 2025. The following events occurred after the period ended September 30, 2025:
| ● | On October 6, 2025 the Company announced its subsidiary Terravis Energy was selected for the NREL Technical Assistance Program award to analyze its ZeroFrost cold-weather heat pump technology in Alaska | |
| ● | On October 15, 2025 the Company announced the successful completion of its Regulation A offering | |
| ● | On October 23, 2025 the Company announced its new HD3 Heavy-Duty tonneau cover officially entered production. The HD3 is a new hard-folding truck bed cover engineered for commercial and fleet applications, building on the success of the Company’s AL3 and AL4 series. | |
| ● | On October 30, 2025 the Company announced the official launch date for its flagship SOLIS Solar Tonneau Cover and COR Portable Energy Storage System, both available for order starting November 28, 2025. | |
| ● | From October 1, 2025 through November 13, 2025, certain Series C preferred shareholders converted 661,606 shares into the Company’s common stock. |
|
|
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 SEC on March 27, 2025 and the unaudited 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 U.S., 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.
Key Performance Outcomes
The following highlights a summary of our achievements during the period:
| ● | Sales growth: We recognized the highest net sales in our Company’s history. For the three months ended September 30, 2025, net sales increased by 61% to $5.0 million when compared with $3.1 million during the same period in 2024. For the nine months ended September 30, 2025, net sales increased by 104% to $11.4 million when compared with $5.6 million during the same period in 2024. | |
| ● | Margin expansion: We continued our focus to increase efficiency in our production process. For the three months ended September 30, 2025, gross margin expanded to 31.3%, an increase from 7.9% during the same period in 2024. For the nine months ended September 30, 2025, gross margin expanded to 26.8%, an increase from 10.5% during the same period in 2024. | |
| ● | Distribution growth: We expanded our distribution network and now partner with six (6) national distributors, including two (2) new relationships during the three months ended September 30, 2025. | |
| ● | Production milestones: Our U.S. production facilities achieved its highest monthly production volume in our Company’s history. | |
| ● | Research milestones: Our Terravis Energy subsidiary continues its prototype development efforts, including facility setup. |
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.
|
|
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.
|
|
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.
|
|
Business Developments
The following highlights recent material developments in our business in the three months ended September 30, 2025:
| ● | On July 16, 2025, Worksport announced that the AetherLux Pro heat pump with high-performance Zerofrost technology – a product of its subsidiary, Terravis Energy - had received the attention of multi-billion dollar corporations and U.S. government entities, with site visits and due diligence underway. | |
| ● | On July 16, 2025, Worksport announced it doubled its R&D footprint by beginning a new lease at a larger R&D facility in Ozark, Missouri for the development of upcoming product lines. | |
| ● | On August 5, 2025, Worksport announced its strongest 4-week production run since beginning domestic production. | |
| ● | On August 7, 2025, Worksport announced that it had doubled its Bitcoin holdings and invested in additional manufacturing machinery to double its production output. | |
| ● | On September 30, 2025, Worksport announced a 42% increase in national dealer partnerships over the preceding quarter. |
CRITICAL ACCOUNTING POLICIES
The SEC defines critical accounting policies as those that are, in management’s view, most important to the portrayal of our financial condition and results of operations and those that require significant judgments and estimates. The accounting principles we utilized in preparing our unaudited condensed consolidated financial statements conform in all material respects to Generally Accepted Accounting Principles in the U.S., or U.S. GAAP.
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.
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended September 30, 2025 compared to the Three Months Ended September 30, 2024
Net Sales
For the three months ended September 30, 2025, net sales were $5,013,872, as compared to $3,122,359 for the three months ended September 30, 2024. Year-over-year net sales increased by 61%. For the three months ended September 30, 2025, net sales generated in the U.S. was $4,985,887, as compared to $3,093,608 for the same period in 2024, an increase of 61%. For the three months ended September 30, 2025, net sales generated from other countries was $27,985, compared to $28,751 for the same period in 2024.
Net sales increased during the three months ended September 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 U.S. has driven higher net sales from our business-to-business sales channels.
|
|
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, and our own e-commerce platform hosted on Shopify. Distribution via each aforementioned channel is expected to increase during 2026. 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 six large U.S. distributors, one retail auto chain, and online retailers to grow our customer base. We added two of these U.S. distributors within the period, 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 20%, from $2,875,186 for the three months ended September 30, 2024, to $3,445,088 for the three months ended September 30, 2025. Our cost of sales, as a percentage of sales, was 69% and 92% for the three months ended September 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 U.S. or from the U.S. 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 September 30, 2025 by $2,209,166, from $4,152,389 for the three months ended September 30, 2024 to $6,361,555, mainly due to the following factors:
| ● | Research and development expense decreased by $95,351, from $396,446 in 2024 to $301,095 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 $471,291, from $2,478,809 in 2024 to $2,950,100 in 2025. The increase was primarily attributable to increased insurance and facility support costs to sustain production efforts, alongside an increase in e-Commerce fees due to increased sales volume. | |
| ● | Sales and marketing expense increased by $1,700,957, from $661,238 in 2024 to $2,362,195 in 2025. The increase in sales and marketing was primarily attributable to marketing campaigns to support investor relations initiatives and 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, increased by $126,928 from $621,728 in 2024 to $748,656 in 2025. The increase in professional fees was primarily driven by stock awards granted to external consultants to support strategic objectives. |
Other Income and Expenses
We reported net other expenses for the three months ended September 30, 2025 of $135,908, compared to $229,701 for three months ended September 30, 2024. The decrease in net other expenses was attributed to a reduction in interest expense as a result of reduced reliance on our line of credit.
|
|
Net Loss
Net loss for the three months ended September 30, 2025 was $4,928,679, compared to a net loss of $4,134,917 for the three months ended September 30, 2024 – an increase of 19%. The increase in the net loss can be attributed to higher marketing expenses to support investor relationship initiatives and campaigns to expand sales volumes, including the development of future campaigns for which we expect to show return on investment via increased net sales in future periods.
Nine Months Ended September 30, 2025 compared to the Nine Months Ended September 30, 2024
Net Sales
For the nine months ended September 30, 2025, net sales were $11,358,835, as compared to $5,556,535 for the nine months ended September 30, 2024. Year-over-year net sales increased by 104%. For the nine months ended September 30, 2025, net sales generated in U.S. was $11,284,538, as compared to $5,475,975 for the same period in 2024, an increase of 106%. For the nine months ended September 30, 2025, revenue generated in other countries was $74,297, compared to $80,560 for the same period in 2024, a decrease of 8%.
Net sales increased during the nine months ended September 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, and our own e-Commerce platform hosted on Shopify. Distribution via each aforementioned channel is expected to increase during 2026. 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 six large U.S. distributors, one retail auto chain, and online retailers to grow our customer base. We added two of these U.S. distributors within the period, 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 67%, from $4,975,277 for the nine months ended September 30, 2024, to $8,311,718 for the nine months ended September 30, 2025. Our cost of sales, as a percentage of sales, was 73% and 90% for the nine months ended September 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 U.S. or from the U.S. 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 nine months ended September 30, 2025 by $3,693,990, from $12,036,688 for the nine months ended September 30, 2024 to $15,730,678, mainly due to the following factors:
| ● | Research and development expense decreased by $836,382, from $1,811,911 in 2024 to $975,529 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 $1,725,741, from $6,684,048 in 2024 to $8,409,789 in 2025. The increase was primarily attributable to increased insurance and facility support costs to sustain production efforts, increased e-Commerce fees due to higher current period sales volume, and increased depreciable equipment used to support administrative and production efforts . | |
| ● | Sales and marketing expense increased by $3,330,492, from $1,206,807 in 2024 to $4,537,299 in 2025. The increase in sales and marketing was primarily attributable to marketing campaigns to support investor relations initiatives and 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 by $519,879 from $2,332,069 in 2024 to $1,812,190 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 net reduction in non-cash expenditures relating to stock-based compensation for consultants. |
|
|
Other Income and Expenses
We reported net other expenses for the nine months ended September 30, 2025 of $440,066, compared to $407,543 for the nine months ended September 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.
Net Loss
Net loss for the nine months ended September 30, 2025 was $13,123,627, compared to a net loss of $11,862,973 for the nine months ended September 30, 2024 – an increase of 11%. The increase in the net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations alongside higher marketing expenses to support both ongoing sales volumes and develop future campaigns for which we expect to show return on investment via increased sales in future periods.
Liquidity and Capital Resources
As of September 30, 2025 and December 31, 2024, we had $3,761,690 and $4,883,099, respectively in cash and cash equivalents. As of September 30, 2025, we had $3,291,250 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 nine months ended September 30, 2025, we had net losses of $4,928,679 and $13,123,627, respectively (three months ended September 30, 2024 - $4,134,917; nine months ended September 30, 2024 - $11,862,973). As of September 30, 2025, the Company had working capital of $6,311,857 (As of December 31, 2024 - $7,304,110) and had an accumulated deficit of $77,617,726 (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 nine months ended September 30, 2025, the Company received net proceeds of $13,358,414 from offerings. Through November 13, 2025, the Company received additional net proceeds of $2,623,212 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.
|
|
We have raised significant funds during the nine months ended September 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 $6,731,410 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 of $346,570. 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 ATM Agreement, with H.C. Wainwright & Co., LLC, as the sales agent, during the nine month period ended September 30, 2025, we sold and issued a total of 110,619 shares of common stock in consideration for net proceeds of $504,372 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 with 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 September 30, 2025, the Company completed twenty-four tranches and received net proceeds of $6,927,922, including $458,720 of share subscriptions receivable. On October 1, 2025, the Company received the share subscriptions receivable of $458,720. Subsequent to September 30, the Company completed eight additional tranches and received net proceeds of $2,164,492.
Consolidated Statement of Cash Flows
Cash decreased from $4,883,099 at December 31, 2024, to $3,761,690 at September 30, 2025 – a decrease of $1,121,409 or 23%. The decrease was primarily due to repayments on debt obligations.
Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2025 was $11,190,182, compared to $7,959,212 in 2024, primarily driven by the shift to production and distribution of hard tonneau covers.
Accounts receivable increased at September 30, 2025 by $472,485 and increased at September 30, 2024 by $3,320. The increase in accounts receivable was due to further development of our business-to-business sales channel, specifically our Distributor and Jobber customer network and relationships.
Inventory increased at September 30, 2025 by $1,645,437, and increased at September 30, 2024 by $2,506,568, 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 $865,634 at September 30, 2025, and decreased by $1,240,649 at September 30, 2024, primarily attributable to payments for future strategic marketing, including planned public relations campaigns, and deposits for raw materials required to support planned production requirements.
Accounts payable and accrued liabilities increased at September 30, 2025 by $1,477,537 compared to an increase of $1,031,400 at September 30, 2024. The increase is primarily due to an increase in raw materials order volume.
|
|
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2025 was $1,067,257 compared to net cash used in investing activities of $500,760 for the nine months ended September 30, 2024. The increase in investing activities was primarily attributable to a deposit for a new piece of manufacturing equipment. The new manufacturing equipment will increase our production capacity and support our sales forecast. We expect the production equipment to be delivered and installed in the first half of 2026. Terms of the commitment include consideration of $3 million payable 10% upon order placement, 20% due at time of shipment, 60% upon completion of installation, net 180 days, and 10% upon completion of installation, net 365 days. We also purchased cryptocurrency and completed website enhancements, both of which are classified as intangible assets on the unaudited condensed consolidated balance sheet.
Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2025 was $11,136,030 compared to net cash provided by financing activities of $6,951,879 for the nine months ended September 30, 2024. The increase in financing activities was primarily attributable to net proceeds from offerings offset by net payments on our line of credit.
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.
|
|
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. Through September 30, 2025, the Company issued an aggregate of 2,349,202 Units to investors that were placed by Digital Offering LLC, the Company’s placement agent, for aggregate gross proceeds of $7,634,957, including share subscriptions receivable of $499,850. After deducting Placement Agent commissions and offering-related expenses (issuance costs) of $707,035, the Company received net proceeds of $6,927,922. 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. Subsequent to September 30, 2025, the Company issued an aggregate of 725,386 Units to investors for aggregate gross proceeds of $2,357,454. After deducting issuance costs of $192,962, the Company received net proceeds of $2,164,492. |
(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 nine months ended September 30, 2025, none of our Section 16 officers or directors (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any “non-Rule 10b5-1 trading arrangement” (as defined in Section 408(c) of Regulation S-K).
Subsequent Events
| ● | On October 6, 2025 the Company announced its subsidiary Terravis Energy was selected for the NREL Technical Assistance Program award to analyze its ZeroFrost cold-weather heat pump technology in Alaska | |
| ● | On October 15, 2025 the Company announced the successful completion of its Regulation A offering | |
| ● | On October 23, 2025 the Company announced its new HD3 Heavy-Duty tonneau cover officially entered production. The HD3 is a new hard-folding truck bed cover engineered for commercial and fleet applications, building on the success of the Company’s AL3 and AL4 series. | |
| ● | On October 30, 2025 the Company announced the official launch date for its flagship SOLIS Solar Tonneau Cover and COR Portable Energy Storage System, both available for order starting November 28, 2025. | |
| ● | From October 1, 2025 through November 13, 2025, certain Series C preferred shareholders converted 661,606 shares into the Company’s common stock. |
|
|
Item 6. Exhibits
| EXHIBIT No. | DESCRIPTION | |
| 3.1 | Marketing Services Agreement between Worksport Ltd. and Octagon Media Corp., dated September 5, 2025 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 5, 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. |
|
|
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: November 13, 2025 | By: | /s/ Steven Rossi |
| Steven Rossi | ||
|
Chief Executive Officer and President (Principal Executive Officer) |
||
| Dated: November 13, 2025 | By: | /s/ Michael Johnston |
| Michael Johnston | ||
|
Chief Financial Officer (Principal Financial and Accounting Officer) |
|
|
EXHIBIT 31.1
Certification of Principal Executive Officer
I, Steven Rossi, certify that:
| 1. | I have reviewed this Form 10-Q of Worksport Ltd; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 13, 2025
| By: | /s/ Steven Rossi | |
| Steven Rossi | ||
| Chief Executive Officer and President | ||
| (Principal Executive Officer) |
EXHIBIT 31.2
Certification of Principal Financial Officer
I, Michael Johnston, certify that:
| 1. | I have reviewed this Form 10-Q of Worksport Ltd.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 13, 2025
| By: | /s/ Michael Johnston | |
| Michael Johnston | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Steve Rossi, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Worksport Ltd. on Form 10-Q for the period ended September 30, 2025 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Worksport Ltd. at the dates and for the periods indicated.
| By: | /s/ Steven Rossi | |
| Steven Rossi | ||
| Chief Executive Officer and President | ||
| (Principal Executive Officer) |
Date: November 13, 2025
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Johnston, certify, as of the date hereof, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Worksport Ltd. on Form 10-Q for the period ended September 30, 2025 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents in all material respects the financial condition and results of operations of Worksport Ltd. at the dates and for the periods indicated.
| By: | /s/ Michael Johnston | |
| Michael Johnston | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) |
Date: November 13, 2025