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: March 31, 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 | | incorp ...

Core Insights - Worksport Ltd. has reported a significant increase in revenue and is targeting cash flow positive operations by year-end 2025 [1][3][6] Financial Performance - For Q1 2025, Worksport reported net sales of $2.24 million, a 337% increase from $512,000 in Q1 2024 [6] - Gross margin improved to approximately 18%, up from 7% in Q1 2024 and 11% in Q4 2024, with a target of 25-30% gross margins by year-end 2025 [6][9] - The company recorded a net loss of $4.46 million for Q1 2025, compared to a net loss of $3.71 million in Q1 2024 [9] Revenue Guidance - Worksport is projecting full-year revenue guidance of $20 million to $25 million for 2025, indicating a 2.5x to 3x increase over 2024 results [3][6] - The company anticipates strong sequential growth in Q2 2025, driven by the launch of its high-margin AL4 cover [6] Working Capital and Assets - As of the end of Q1 2025, Worksport reported a working capital balance of $7.94 million, with $5.1 million in cash availability [6][8] - Total assets increased to $26.66 million as of March 31, 2025, compared to $25.74 million at the end of 2024 [8] Future Outlook - The company aims to achieve cash flow breakeven by year-end 2025, supported by a stronger margin profile and operational leverage [6] - Preliminary outlook for 2026 includes sustained double-digit revenue growth and first full-year profitability, driven by expanded product availability and market share [6]

Core Viewpoint - Worksport Ltd. is set to release its financial results for Q1 fiscal year 2025 on May 15, 2025, after market closes, indicating a focus on transparency and investor engagement [1] Financial Performance and Outlook - The company will provide insights into its recent financial performance and outlook for 2025 during a live webcast, emphasizing that its current market valuation may not reflect its underlying strengths [2] - Management is focused on achieving cash-flow positivity and driving significant growth in the coming year [2] Strategic Initiatives and Product Development - Participants in the webcast will gain insights into Worksport's strategic initiatives, product development roadmap, and overall financial trajectory [3] - Worksport designs and manufactures a variety of products including tonneau covers, solar integrations, and portable power systems, with a partnership with Hyundai for the SOLIS Solar cover [4] Market Position and Consumer Trends - The company aims to capitalize on the growing consumer shift towards clean energy integrations with proprietary solar solutions and mobile energy storage systems [4] - Worksport's hard-folding cover is compatible with all major truck models and is gaining traction with newer truck makers, including those in the electric vehicle sector [4]

Core Viewpoint - Worksport Ltd. is participating in the D. Boral Capital Inaugural Global Conference on May 14, 2025, in New York City, which is expected to attract investors and feature keynote speaker Kevin O'Leary [1][2]. Company Overview - Worksport Ltd. (NASDAQ: WKSP) designs, develops, manufactures, and owns intellectual property for various products, including tonneau covers, solar integrations, portable power systems, and clean heating & cooling solutions [3]. - The company has a partnership with Hyundai for the SOLIS Solar cover and offers a hard-folding cover compatible with all major truck models, gaining traction in the electric vehicle sector [3]. - Worksport aims to leverage the growing consumer shift towards clean energy with its proprietary solar solutions, mobile energy storage systems, and Cold-Climate Heat Pump technology [3]. D. Boral Capital Overview - D. Boral Capital LLC is an investment bank based in New York, providing advisory and financing solutions to middle market and emerging growth companies [4]. - The firm has a strong track record, having aggregated over $25 billion in capital across approximately 350 transactions [5].

Core Viewpoint - Worksport Ltd. has formed a strategic partnership with Patriot Automotive Technologies to enhance its business-to-business (B2B) distribution network, aiming for significant growth in annual recurring revenue through the sale of its tonneau covers across Patriot's extensive dealer network of over 200 locations in the U.S. [1][2][11] Strategic Partnership Highlights - The partnership will enable Patriot to distribute Worksport's innovative tonneau covers, including the popular AL4 premium cover, marking a significant step in Worksport's B2B growth strategy [2][11] - This collaboration is projected to evolve into a multi-million dollar annually recurring revenue source within 2025, providing Worksport with stable cash flows and enhancing Patriot's portfolio of aftermarket products [11] Continued Growth and Future Partnerships - The partnership with Patriot Automotive Technologies is part of Worksport's strategy to aggressively grow its U.S.-based distribution channels, reinforcing its position as a premier supplier of U.S.-made automotive accessories [6][11] - Worksport is actively seeking additional strategic partnerships and distribution channels to leverage its commitment to quality and innovation [6] Looking Ahead - Worksport anticipates providing updates on further partnerships and key business developments, including the launch of its clean-tech products, such as the SOLIS Solar Tonneau Cover and the COR Portable Energy System [8]

Core Insights - Worksport Ltd. has reported significant growth in its dealer network and B2B sales, indicating strong market adoption of its U.S.-made AL4 tonneau cover [2][4][7] - The company emphasizes the advantages of manufacturing in the U.S., including mitigating tariff risks and supporting American jobs, which resonates well with dealers [7][8] Dealer Network and Sales Growth - The dealer network has expanded by 64%, increasing from 92 dealers at the end of 2024 to 151 active dealers [7] - March 2025 B2B sales grew nearly 70% compared to February, highlighting robust demand for the AL4 cover [7] - Worksport added 35 new dealer accounts in March, following 24 additions in January and February, showcasing a strong growth trajectory [7] Strategic Initiatives - The company plans to further expand its dealer network by partnering with distributors and purchasing groups that prioritize American-made quality [5] - Worksport aims to launch new products, including the SOLIS solar-integrated tonneau cover and COR modular portable energy system, to capture additional revenue streams in sustainable power solutions [12] - Management is focused on achieving cash-flow positivity through B2B growth, direct-to-consumer sales, and disciplined cost control [12]

Steven Rossi Thank you for joining Worksport's Fiscal Year 2024 and Q4 2024 Earnings Call. I'm Steven Rossi, Chief Executive Officer of Worksport. With me is our Chief Financial Officer, Mike Johnston. Today, we will review our 2024 performance, discuss key operational milestones and share an updated outlook for 2025. Fiscal year 2024 was a transformative year for Worksport. We achieved significant revenue growth, expanded our product lineup and strengthened our financial foundation. We will be reviewing th ...

Financial Performance - For fiscal year 2024, the company reported net sales of $8,480,000, a 455% increase from $1,530,000 in 2023, driven by increased sales to private label partners and a surge in online consumer sales [6][11][12] - The fourth quarter of 2024 saw net sales of approximately $2,930,000, a nearly 250% year-over-year growth from $839,000 in Q4 2023, exceeding the full year revenue guidance [8][11] - Gross profit for the full year reached approximately $910,000, reflecting a gross margin of about 11%, with December 2024 gross margin exceeding 20% [13][9] - The operating loss for fiscal year 2024 was $16,160,000, compared to $14,930,000 in 2023, but the loss per share improved from $8.44 in 2023 to $5.84 in 2024, a 31% improvement [14][13] Business Lines and Market Performance - The company effectively bolstered its direct-to-consumer presence, with online sales accounting for 58% of total revenue in 2024, up from just 7% in 2023 [6][36] - The strategic shift towards higher margin Worksport branded products contributed to gross margin improvements, with a focus on phasing out lower margin offerings [7][9] - The company expanded its sales to U.S. Federal government agencies, marking its entry into the government sector, which is expected to grow in 2025 [21][20] Strategic Direction and Industry Competition - The company plans to launch new products, including the AL4 premium tunnel cover and the HD3 heavy-duty cover, targeting both consumer and commercial markets [25][26] - The company is also focusing on clean energy solutions, with the Solus solar tunnel cover and the Core mobile power system expected to launch in mid-2025 [28][29] - The company aims to strengthen its market position by expanding its sales and distribution networks, with a 30% increase in its dealer network in early 2025 [36][38] Management Commentary on Future Outlook - Management expressed optimism for 2025, forecasting revenues between $20,000,000 and $34,500,000, with expectations of significant revenue expansion driven by new product introductions [39][40] - The company anticipates gross margins to reach 25% to 30% by late 2025, supported by a shift towards higher margin products and economies of scale [41][42] - The overarching financial objective for 2025 is to achieve cash flow positivity by late 2025 or early 2026, with a focus on maintaining sufficient cash reserves [43][44] Other Important Information - The company completed a warrant inducement transaction in March 2025, resulting in net proceeds of $6,300,000, which bolstered its working capital to $7,300,000 [16] - The company enacted a one-for-ten reverse stock split in March 2025 to maintain compliance with NASDAQ listing requirements [19] - The patent portfolio expanded by 25% year-over-year, with over 170 approved, registered, and pending patents and trademarks [34] Q&A Session Summary Question: Can you provide an overview of online sales and future expectations? - Management aims for a 50/50 split between sales through its online platform and dealer networks, focusing on driving traffic to its website and offering exclusive products [54][55] Question: What is the expected revenue range for 2025? - The low end of the forecast is based on tunnel covers alone, while the upper end includes contributions from the Solus and Core products, with no expected revenues from tariff fees [78][82] Question: How will the company balance profitability and reinvestment? - The company plans to improve margins through engineering and operational efficiencies rather than reducing product quality, while also managing operating expenses carefully [69][70] Question: What is the current manufacturing capacity and future CapEx needs? - The company has two production lines capable of producing 100 covers per shift, with no immediate need for significant CapEx investments due to improved efficiencies [70][72]

Company Outlines Strong Momentum in Margins, Revenue, and Business Growth Entering 2025 West Seneca, New York, March 27, 2025 (GLOBE NEWSWIRE) -- Worksport Ltd. (NASDAQ: WKSP) (“Worksport” or the “Company”), a U.S.-based manufacturer and innovator of hybrid and clean energy solutions for the light truck, overlanding, and global consumer goods sectors, today announced financial results and significant operational achievements for fiscal year 2024. Marking a transformational year with record revenue growth, e ...

Intellectual Property and Technology - Worksport Ltd. has a growing intellectual property portfolio, including patents for solar integrated tonneau covers and hydrogen-based green energy systems[22]. - The company has a patent portfolio that includes 11 issued utility patents in the U.S. and 37 pending utility patent applications worldwide as of December 31, 2024[61]. - The company has 18 utility patents, 23 design registrations, and 79 pending patent applications worldwide as of December 31, 2024, but faces challenges in protecting its intellectual property[113]. - The company’s intellectual property rights may not adequately protect against competitors developing similar technologies[126]. - The company may face claims challenging the ownership of its patents, which could result in costly litigation and loss of intellectual property rights[123]. Financial Performance and Capital Raising - The company raised approximately $6.73 million from the exercise of existing warrants at an exercise price of $5.198 per share, with potential gross proceeds of $9.3 million from new warrants[24]. - The company increased its at-the-market offering program by an additional $4.134 million[25]. - A private offering resulted in the sale of 95,000 shares at $4.00 per share, along with warrants for 190,000 shares[27]. - The company received net proceeds of approximately $2.59 million from a registered direct offering of 237,224 shares at $7.40 each[33]. - The company has incurred a net loss of $16,163,789 for the year ended December 31, 2024, with an accumulated deficit of $64,476,966[94]. - For the twelve months ended December 31, 2024 and 2023, the company incurred operating losses of $16,163,789 and $14,928,958, respectively, with an accumulated deficit of $64,476,966 as of December 31, 2024[99]. - Cash and cash equivalents increased by $1,517,321 or 45%, from $3,365,778 at December 31, 2023 to $4,883,099 at December 31, 2024[219]. - Net cash used by operating activities decreased from $11,930,580 in 2023 to $10,138,798 in 2024[220]. Sales and Market Growth - For the year ended December 31, 2024, net sales were $8,484,379, a 455% increase compared to $1,529,632 for the year ended December 31, 2023[201]. - Net sales in the U.S. for 2024 were $8,397,570, up 451% from $1,522,821 in 2023[201]. - Net sales in Canada increased by 891%, reaching $67,519 in 2024 compared to $6,811 in 2023[201]. - The increase in net sales was attributed to higher sales of tonneau covers to private label partners, dealers, distributors, and end users via the online marketplace[202]. - Net sales from online retailers increased from $104,352 in 2023 to $4,930,822 in 2024, a growth of 4,625%[203]. - Distributor sales surged 6,120% from $6,811 in 2023 to $423,627 in 2024[203]. - Private label sales accounted for 37% of net sales, totaling $3,129,930 in 2024[203]. Production and Manufacturing - On November 22, 2024, the company announced a significant expansion in production capacity to meet increasing demand for the SOLIS Solar Tonneau Cover and AL4 Premium Tonneau Cover[40]. - The company has expanded its manufacturing capabilities in North America, utilizing a 152,847 square foot facility in West Seneca, New York, to enhance quality control and production efficiency[57]. - The company is strategically beginning domestic manufacturing operations in Western New York to mitigate risks associated with climate change and supply chain issues[186]. - The company is closely monitoring international shipping costs and is transitioning towards domestic manufacturing to offset higher costs[192]. Research and Development - The company is committed to ongoing research and development, focusing on innovative tonneau cover designs and portable energy storage solutions[80]. - Research and development expenses rose by $620,622, from $1,669,318 in 2023 to $2,289,940 in 2024[211]. - The company is actively researching ways to lower environmental impacts associated with battery recycling and precious metal demand[187]. Strategic Partnerships and Collaborations - A strategic partnership with KULR Technology Group was announced to advance battery technology and domestic manufacturing[38]. - The company has formed strategic partnerships, including a collaboration with Infineon Technologies AG to use GaN power semiconductors in its portable power stations[40]. Operational Risks and Challenges - The company relies on two suppliers for the production of its soft tonneau covers, which may hinder its ability to grow if there are delays or losses of these suppliers[110]. - The company has limited experience in domestic manufacturing, which could lead to higher production costs and compliance challenges[129]. - The company sources soft tonneau covers and some raw materials from China, making it vulnerable to changes in U.S. trade regulations and tariffs[136]. - The company may not be able to accurately estimate the demand for its tonneau covers, leading to inefficiencies in production and hindering profit generation[108]. - Continued uncertain economic conditions, including inflation and the risk of a global recession, could impair the company's ability to forecast and harm its business[103]. - The company anticipates that high interest rates may affect its ability to finance additional machinery and equipment purchases, impacting its operational capacity[102]. Cybersecurity and Insurance - The company has cybersecurity insurance coverage of $1,000,000 per annual policy period to mitigate risks associated with potential cyberattacks[107]. - The company acknowledges the increasing importance of cybersecurity and recognizes potential vulnerabilities due to the absence of a formalized cybersecurity framework[161]. - The company is evaluating its cybersecurity needs and intends to invest more resources into improving its cybersecurity posture[162]. Market Trends and Projections - The U.S. pickup truck market is projected to grow at a compound annual growth rate (CAGR) of 4.6% from 2023 to 2028, with approximately 61 million pickup trucks in operation as of Q3 2024[65]. - The tonneau cover market in the U.S. is estimated to be $2.56 billion in 2024, with an expected CAGR of 7.1% from 2025 to 2030[67]. - The electric pickup truck market in North America is anticipated to grow at a CAGR of 31.15% from 2024 to 2029, despite challenges related to charging infrastructure[66]. - The global Portable Power Station Market is expected to grow at a CAGR of 5.39% from 2024 to 2032[71]. Company Strategy and Future Outlook - The company aims to maximize market share by focusing on competitive pricing and exploring integration opportunities[69]. - The company is expanding its distribution network through wholesalers, private labels, and online retail channels, with plans for increased distribution in 2025[72]. - The company is focusing on establishing new business-to-consumer and business-to-business channels while enhancing customer support to improve satisfaction and product turnover[202]. - The company plans to lower customer acquisition costs throughout 2025 and is assembling a strong sales team to present products to various dealers, wholesalers, and retailers[202]. - The company may pursue acquisitions and strategic alliances to expand its product offerings and geographic presence, but integration risks exist[130].