Worksport Ltd 10-Q

Item 1. Financial Statements Condensed Consolidated Balance Sheets (Unaudited) ​ ​ June 30, ​ ​ December 31, ​ ​ ​ 2026 ​ ​ 2025 ​ ​ ​ (Unaudited) ​ ​ ​ ​ ​ ASSETS ​ ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 1,160,158 ​ ​ $ 5,945,894 ​ Accounts receivable, net ​ ​ 1,007,329 ​ ​ ​ 503,971 ​ Other receivable ​ ​ 312,419 ​ ​ ​ 278,027 ​ Inventories, net (Note 3) ​ ​ 12,066,416 ​ ​ ​ 9,530,671 ​ Prepaid expenses and other (Note 6) ​ ​ 344,025 ​ ​ ​ 530,861 ​ Total current assets ​ ​ 14,890,347 ​ ​ ​ 16,789,424 ​ Property and equipment, net (Note 4) ​ ​ 11,946,423 ​ ​ ​ 12,688,488 ​ Operating lease right-of-use assets (Note 11) ​ ​ 217,677 ​ ​ ​ 272,598 ​ Other noncurrent assets ​ ​ 367,079 ​ ​ ​ 67,033 ​ Intangible assets, net (Note 5) ​ ​ 665,340 ​ ​ ​ 896,531 ​ Total assets ​ $ 28,086,866 ​ ​ $ 30,714,074 ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 2,427,642 ​ ​ $ 3,107,085 ​ Accrued liabilities and other ​ ​ 808,893 ​ ​ ​ 1,400,730 ​ Accrued compensation ​ ​ 299,149 ​ ​ ​ 420,210 ​ Long-term debt, current portion (Note 12) ​ ​ 281,094 ​ ​ ​ 1,686,809 ​ Lease liability, current portion (Note 11) ​ ​ 112,482 ​ ​ ​ 113,012 ​ Total current liabilities ​ ​ 3,929,260 ​ ​ ​ 6,727,846 ​ Lease liability, excluding current portion (Note 11) ​ ​ 105,195 ​ ​ ​ 159,526 ​ Long-term debt, excluding current portion (Note 12) ​ ​ 4,976,157 ​ ​ ​ 950,481 ​ Total liabilities ​ ​ 9,010,612 ​ ​ ​ 7,837,853 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity ​ ​ ​ ​ ​ ​ ​ ​ Series A, B and Series C preferred stock, $ 0.001 par value, 10,000,000 shares authorized, 100 Series A, 0 Series B, and 427,612 and 427,812 Series C issued and outstanding, respectively (Note 7) ​ ​ 428 ​ ​ ​ 428 ​ Common stock, $ 0.001 par value, 45,000,000 shares authorized, 15,282,595 and 9,814,665 shares issued and outstanding, respectively (Note 7) ​ ​ 15,282 ​ ​ ​ 9,814 ​ Additional paid-in capital ​ ​ 110,652,344 ​ ​ ​ 101,357,686 ​ Share subscriptions receivable ​ ​ ( 1,577 ) ​ ​ ( 55,684 ) Share subscriptions payable ​ ​ 2,140,104 ​ ​ ​ 5,446,347 ​ Accumulated deficit ​ ​ ( 93,721,747 ) ​ ​ ( 83,873,790 ) Cumulative translation adjustment ​ ​ ( 8,580 ) ​ ​ ( 8,580 ) Total shareholders’ equity ​ ​ 19,076,254 ​ ​ ​ 22,876,221 ​ Total liabilities and shareholders’ equity ​ $ 28,086,866 ​ ​ $ 30,714,074 ​ See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements. 4 Table of Contents Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) ​ ​ Three Months ended ​ ​ Six Months ended ​ ​ ​ June 30, ​ ​ June 30, ​ ​ ​ 2026 ​ ​ 2025 ​ ​ 2026 ​ ​ 2025 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 5,229,660 ​ ​ $ 4,104,958 ​ ​ $ 8,542,460 ​ ​ $ 6,344,963 ​ Cost of sales ​ ​ 3,579,724 ​ ​ ​ 3,022,846 ​ ​ ​ 6,038,577 ​ ​ ​ 4,866,630 ​ Gross profit ​ ​ 1,649,936 ​ ​ ​ 1,082,112 ​ ​ ​ 2,503,883 ​ ​ ​ 1,478,333 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ ​ 214,183 ​ ​ ​ 304,833 ​ ​ ​ 419,516 ​ ​ ​ 674,434 ​ General and administrative ​ ​ 3,548,867 ​ ​ ​ 3,091,548 ​ ​ ​ 7,788,021 ​ ​ ​ 6,506,369 ​ Sales and marketing ​ ​ 1,707,194 ​ ​ ​ 1,305,355 ​ ​ ​ 3,863,061 ​ ​ ​ 2,175,104 ​ (Gain) loss on foreign exchange ​ ​ ( 1,755 ) ​ ​ ( 1,993 ) ​ ​ ( 3,986 ) ​ ​ ( 3,638 ) Total operating expenses ​ ​ 5,468,489 ​ ​ ​ 4,699,743 ​ ​ ​ 12,066,612 ​ ​ ​ 9,352,269 ​ Loss from operations ​ ​ ( 3,818,553 ) ​ ​ ( 3,617,631 ) ​ ​ ( 9,562,729 ) ​ ​ ( 7,873,936 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ ​ ( 146,837 ) ​ ​ ( 128,156 ) ​ ​ ( 239,220 ) ​ ​ ( 323,594 ) Other ​ ​ 87 ​ ​ ​ 11,303 ​ ​ ​ 8,125 ​ ​ ​ 2,582 ​ Total other income (expense) ​ ​ ( 146,750 ) ​ ​ ( 116,853 ) ​ ​ ( 231,095 ) ​ ​ ( 321,012 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 3,965,303 ) ​ $ ( 3,734,484 ) ​ $ ( 9,793,824 ) ​ $ ( 8,194,948 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loss per share (basic and diluted) (Note 13) ​ $ ( 0.33 ) ​ $ ( 0.71 ) ​ $ ( 0.87 ) ​ $ ( 1.71 ) Weighted average number of shares (basic and diluted) ​ ​ 11,858,684 ​ ​ ​ 5,285,705 ​ ​ ​ 11,318,444 ​ ​ ​ 4,778,426 ​ See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements. 5 Table of Contents Condensed Consolidated Statements of Shareholders ’ Equity (Unaudited) ​ ​ ​ ​ Additional Share Share ​ Cumulative Total Preferred Stock Common Stock Paid-in Subscriptions Subscription Accumulated Translation Shareholders’ Shares Amount Shares Amount Capital Receivable Payable Deficit Adjustment Equity Balance at April 1, 2025 100 $ - 4,795,521 $ 4,795 $ 84,126,734 $ ( 1,577 ) $ 4,941,555 $ ( 68,937,430 ) $ ( 8,580 ) $ 20,125,497 Issuance for services and subscriptions payable - - 184,076 184 908,039 - ( 114,604 ) - - 793,619 Warrant exercise (Note 14) - - 539,533 539 2,803,782 - ( 2,804,321 ) - - - Issuance of preferred shares pursuant to Reg-A 49,335 49 - - 15,096 - - - - 15,145 Issuance of warrants pursuant to Reg-A - - - - 116,781 - - - - 116,781 Net loss - - - - - - - ( 3,734,484 ) - ( 3,734,484 ) Balance at June 30, 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at April 1, 2026 427,712 $ 428 11,925,471 $ 11,925 $ 107,537,779 $ ( 1,577 ) $ 2,166,063 $ ( 89,729,030 ) $ ( 8,580 ) $ 19,977,008 Issuance for services and subscriptions payable - - - 188 808,856 - ( 25,959 ) - - 783,085 Shares issued (Note 7) - - 3,357,124 3,169 2,305,709 - - - - 2,308,878 Warrant issuance (Note 14) - - - - ( 105,183 ) - - - - ( 105,183 ) Warrant exercise (Note 14) - - - - 105,183 - - - - 105,183 Dividends paid and payable to Series C preferred shareholders (Note 7) - - - - - - - ( 27,414 ) - ( 27,414 ) Net loss - - - - - - - ( 3,965,303 ) - ( 3,965,303 ) Balance at June 30, 2026 427,712 $ 428 15,282,595 $ 15,282 $ 110,652,344 $ ( 1,577 ) $ 2,140,104 $ ( 93,721,747 ) $ ( 8,580 ) $ 19,076,254 ​ ​ ​ ​ Additional Share Share ​ Cumulative Total Preferred Stock Common Stock Paid-in Subscriptions Subscription Accumulated Translation Shareholders’ Shares Amount Shares Amount Capital Receivable Payable Deficit Adjustment Equity 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 - - 185,109 185 1,487,484 - ( 92,434 ) - - 1,395,235 Shares issued (Note 7) - - 22,725 22 185,852 - - - - 185,874 Warrant exercise (Note 14) - - 1,295,091 1,295 6,383,545 - - - - 6,384,840 Issuance of preferred shares pursuant to Reg-A 49,335 49 - - 15,096 - - - - 15,145 Issuance of warrants pursuant to Reg-A - - - - 116,781 - - - - 116,781 Net loss - - - - - - - ( 8,194,948 ) - ( 8,194,948 ) Balance at June 30, 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at January 1, 2026 427,912 $ 428 9,814,665 $ 9,814 $ 101,357,686 $ ( 55,684 ) $ 5,446,347 $ ( 83,873,790 ) $ ( 8,580 ) $ 22,876,221 Issuance for services and subscriptions payable - - - 188 1,521,678 - 8,909 - - 1,530,775 Shares issued (Note 7) - - 4,825,730 4,638 4,458,470 - - - - 4,463,108 Shares issued (Note 14) - - 642,000 642 3,314,510 - ( 3,315,152 ) - - - Warrant issuance (Note 14) - - - - ( 105,183 ) - - - - ( 105,183 ) Warrant exercise (Note 14) - - - - 105,183 - - - - 105,183 Dividends paid and payable to Series C preferred shareholders (Note 7) - - - - - - - ( 54,133 ) - ( 54,133 ) Proceeds from escrow pursuant to Reg-A - - - - - 54,107 - - - 54,107 Conversions of Series C preferred shares ( 200 ) - 200 - - - - - - - Net loss - - - - - - - ( 9,793,824 ) - ( 9,793,824 ) Balance at June 30, 2026 427,712 $ 428 15,282,595 $ 15,282 $ 110,652,344 $ ( 1,577 ) $ 2,140,104 $ ( 93,721,747 ) $ ( 8,580 ) $ 19,076,254 See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements. 6 Table of Contents Condensed Consolidated Statements of Cash Flows (Unaudited) ​ ​ Six Months ended ​ ​ ​ June 30, ​ ​ ​ 2026 ​ ​ 2025 ​ CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 9,793,824 ) ​ $ ( 8,194,948 ) Adjustments to reconcile net loss to net cash from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Shares, options and warrants issued for services ​ ​ 1,405,779 ​ ​ ​ 1,365,776 ​ Depreciation and amortization ​ ​ 845,750 ​ ​ ​ 888,868 ​ Change in operating lease ​ ​ 60 ​ ​ ​ 9,739 ​ ​ ​ ​ ( 7,542,235 ) ​ ​ ( 5,930,565 ) Changes in operating assets and liabilities (Note 10) ​ ​ ( 4,134,910 ) ​ ​ ( 1,004,468 ) Net cash provided by (used in) operating activities ​ ​ ( 11,677,145 ) ​ ​ ( 6,935,033 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ Purchase of property and equipment ​ ​ ( 172,154 ) ​ ​ ( 269,845 ) Purchase of intangible assets ​ ​ ( 25,500 ) ​ ​ ( 256,579 ) Purchase of investments ​ ​ - ​ ​ ​ ( 56,373 ) Net cash provided by (used in) investing activities ​ ​ ( 197,654 ) ​ ​ ( 582,797 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from issuance of common stock, net of issuance cost ​ ​ 4,363,925 ​ ​ ​ 185,874 ​ Proceeds from issuance of preferred stock, net of issuance cost ​ ​ - ​ ​ ​ 15,145 ​ Proceeds from issuance of warrants, net of issuance cost ​ ​ 105,183 ​ ​ ​ 116,781 ​ Proceeds from issuance of Reg-A units, net of issuance cost ​ ​ 54,107 ​ ​ ​ - ​ Proceeds from warrant exercise ​ ​ - ​ ​ ​ 6,384,840 ​ Proceeds from line of credit ​ ​ 10,950,139 ​ ​ ​ 3,449,736 ​ Repayments on line of credit ​ ​ ( 8,220,400 ) ​ ​ ( 6,027,679 ) Repayments on long-term debt ​ ​ ( 109,778 ) ​ ​ ( 96,826 ) Dividends paid to Series C Preferred shareholders ​ ​ ( 54,113 ) ​ ​ - ​ Net cash provided by (used in) financing activities ​ ​ 7,089,063 ​ ​ ​ 4,027,871 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (decrease) in cash and cash equivalents ​ ​ ( 4,785,736 ) ​ ​ ( 3,489,959 ) Cash and cash equivalents - beginning of period ​ ​ 5,945,894 ​ ​ ​ 4,883,099 ​ Cash and cash equivalents - end of period ​ $ 1,160,158 ​ ​ $ 1,393,140 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL CASH FLOW INFORMATION ​ ​ ​ ​ ​ ​ ​ ​ Income tax paid ​ $ - ​ ​ $ - ​ Interest paid ​ $ 220,000 ​ ​ $ 218,000 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial Statements. 7 Table of Contents Notes to the Condensed Consolidated Financial Statements (Unaudited) Note 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 six months ended June 30, 2026 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, 2025 . All references to years in these financial statements are fiscal years. Reclassifications Certain prior year amounts have been reclassified to conform to the current year’s presentation. The Company reclassified professional fees of $ 637,493 and $ 1,063,534 for the three and six months ended June 30, 2025 from professional fees to general and administrative expense in the condensed consolidated statements of operations and comprehensive loss. This change better aligns the nature of the expenses that support the Company’s administrative efforts. The Company reclassified interest income of $ 11,303 and $ 19,437 for the three and six months ended June 30, 2025 from interest income to other in the condensed consolidated statements of operations and comprehensive loss to conform with current year presentation. The Company reclassified investments of $ 67,033 at December 31, 2025 from investment to other noncurrent asset on the condensed consolidated balance sheet to conform with current period presentation. Recent accounting pronouncements Recent accounting pronouncements not yet adopted In November 2024, the FASB issued ASU 2024 - 03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures. This ASU enhances 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 fiscal years 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 consolidated financial statements and related disclosures. In September 2025, the FASB issued ASU 2025 - 06, Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350 - 40 ): Targeted Improvements to the Accounting for Internal-Use Software . This ASU removes all references to prescriptive and sequential software development stages and will now require public business entities to start capitalizing software costs when management has authorized and committed to funding the software project and is probable that project will be completed and the software will be used to perform the function intended. The ASU also specifies that the disclosures in Subtopic 360 - 10, Property, Plant and Equipment – Overall, are required for all capitalized internal-use software costs. ASU 2025 - 06 is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the disclosure requirements of this standard and the impact on its consolidated financial statements. In December 2025, the FASB issued ASU 2025 - 11, Interim Reporting (Topic 270 ): Narrow Scope Improvements . This ASU amends Topic 270 by improving the navigability of the required interim disclosures and clarifying when the guidance is applicable. The amendment provides additional guidance on when disclosures should be provided in interim reporting periods and requires entities to disclose events since the end of the last annual reporting period that have a material impact on the Company. ASU 2025 - 11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026, with early adoption permitted. The Company is currently evaluating the disclosure requirements of this standard and the impact on its consolidated financial statements. 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 consolidated financial statements and related disclosures. 8 Table of Contents Note 2 - Going Concern As of June 30, 2026 , the Company had $ 1,160,158 in cash and cash equivalents. The Company also has availability on its revolving line of credit of $ 818,339 . 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 June 30, 2026 , the Company had an accumulated deficit of $ 93,721,747 . The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the three months ended June 30, 2026 , the Company had net losses of $ 3,965,303 ( 2025 - $ 3,734,484 ). During the six months ended June 30, 2026 , the Company had net losses of $ 9,793,824 ( 2025 - $ 8,194,948 ). As of June 30, 2026 , the Company had working capital of $ 10,961,087 ( December 31, 2025 - $ 10,061,578 ) and had an accumulated deficit of $ 93,721,747 ( December 31, 2025 - $ 83,873,790 ). 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 will be successful. The Company has historically operated at a loss, although that may change as sales volumes increase and margins improve. As of June 30, 2026 , the Company had cash and cash equivalents of $ 1,160,158 ( December 31, 2025 - $ 5,945,894 ). 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 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 beginning in 2024 and continuing into 2026. The Company has successfully raised capital in recent periods and believes it is positioned to do so again if deemed necessary or strategically advantageous. On September 30, 2022, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which the Company could offer and sell shares of its common stock having an aggregate offering price of up to $ 13.0 million through Wainwright as sales agent under the Company’s shelf registration statement on Form S- 3 (File No. 333 - 267696 ), including the related base prospectus and prospectus supplement dated October 13, 2022. Sales of shares of common stock through Wainwright, if any, were made pursuant to an “at the market offering” as defined in Rule 415 (a)( 4 ) under the Securities Act of 1933, as amended. Under the ATM Agreement, Wainwright is entitled to a commission equal to 3.0 % of the gross proceeds from shares sold under the ATM Agreement, and the Company also agreed to reimburse Wainwright for certain specified expenses. Because the Company’s public float was below $75.0 million, sales under the ATM Agreement were subject to the limitations of General Instruction I.B.6 of Form S- 3. Accordingly, on November 5, 2024 and December 13, 2024, the Company filed prospectus supplements to update the amount of securities then eligible for sale under the ATM Agreement based on the Company’s public float and prior sales during the applicable rolling 12 -month period. The Company’s registration statement on Form S- 3 (File No. 333 - 267696 ) expired on October 13, 2025. Through the expiration date, the Company had sold 872,027 shares of common stock under the ATM Agreement for aggregate gross proceeds of approximately $ 6,751,381 . On November 14, 2025, the Company and Wainwright entered into an amendment to the ATM Agreement in connection with the Company’s new shelf registration statement on Form S- 3 (File No. 333 - 291582 ). Pursuant to the amended ATM Agreement and the related base prospectus and prospectus supplement dated December 12, 2025, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 4.0 million through Wainwright as sales agent. Because the Company’s public float remains below $75.0 million, sales under the ATM Agreement remain subject to the limitations of General Instruction I.B.6 of Form S- 3, which limits the amount of securities the Company may sell in primary offerings during any rolling 12 -month period. During the six months ended June 30, 2026 , the Company sold 3,157,774 shares of common stock pursuant to the ATM Agreement for aggregate gross proceeds of approximately $ 4,003,273 , resulting in net proceeds to the Company of approximately $ 3,869,882 after deducting commissions and offering expenses. 9 Table of Contents 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 one -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 registration statement on Form S- 1 (File No. 333 - 276241 ) declared effective by the SEC on December 29, 2023. On March 20, 2024, the Company consummated a registered direct offering pursuant to the prospectus supplement dated March 18, 2024 to the Company’s effective shelf registration statement on Form S- 3 (File No. 333 - 267696 ), pursuant to which the Company issued 237,224 shares of common stock and 147,789 pre-funded warrants to purchase shares of common stock 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 became exercisable six months following issuance at an exercise price of $ 7.40 per share and expire five and one -half years from the issuance date, subject to beneficial ownership limitations contained. The Company registered the resale of the 770,026 shares of common stock underlying the warrants pursuant to a registration statement on Form S- 1 (File No. 333 - 278461 ) which was declared effective by the SEC on April 8, 2024. On May 29, 2024, the Company 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, the Company offered the shareholder new warrants to purchase up to 1,295,000 warrant shares with an exercise price of $ 5.198 . The shares had a term of 5.5 years, with a 6 -month required holding period. On February 27, 2025, the Company entered into a warrant inducement agreement with a shareholder to exercise 755,558 of their 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, the Company 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 Company completed the Regulation A offering in October 2025. The Company completed 32 tranches and received proceeds of $ 9,092,414 (net of issuance cost of $ 899,997 ). On December 11, 2025, the Company entered into a warrant inducement agreement (the “Inducement”) with the holder of existing warrants to purchase an aggregate of 2,194,526 shares at a reduced exercise price of $ 2.90 . Pursuant to the Inducement, the exercising holder of the existing warrants received 3,840,421 inducement warrants, and the Company received $ 6,364,000 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 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 $ 4,485,000 is recorded as a non-cash deemed dividend. The proceeds of the warrant inducement and issuance of 916,000 shares of common stock are recorded as additional paid in capital. The obligation to issue the remaining 1,278,526 shares was satisfied during the three months ended March 31, 2026. On June 17, 2026, the Company entered into a securities purchase agreement (the “First Agreement”) with an institutional accredited investor pursuant to which the Company issued and sold, in a registered direct offering, 208,333 shares of common stock and common stock purchase warrants to purchase up to 208,333 shares of common stock at an offering price of $ 1.20 per unit, with each unit consisting of one share of common stock and one warrant. The shares of common stock and the shares of common stock issuable upon exercise of the warrants were offered pursuant to the Company’s shelf registration statement on Form S- 3 (File No. 333 - 291582 ), filed with the SEC on November 14, 2025 and declared effective on December 12, 2025, and a prospectus supplement dated June 18, 2026 and filed with the SEC on June 18, 2026. The registered direct offering closed on June 18, 2026 and resulted in gross proceeds of $ 250,000 (net of issuance costs of $ 65,000 ). The warrants issued in the registered direct offering have an exercise price of $ 1.50 per share, are immediately exercisable and expire five years from the date of issuance. The warrants include a cashless exercise feature pursuant to which the holder is entitled to receive 1.4 shares of common stock for each share underlying the warrant being exercised, without payment of the exercise price, resulting in the potential issuance of up to 291,667 shares of common stock upon cashless exercise. On June 18, 2026, the Company entered into a second securities purchase agreement (the “Second Agreement”) with the same institutional accredited investor pursuant to which the Company issued and sold, in a separate registered direct offering, 675,529 shares of common stock at an offering price of $ 0.70 per share. The shares were offered pursuant to the Company’s shelf registration statement on Form S- 3 (File No. 333 - 291582 ), filed with the SEC on November 14, 2025 and declared effective on December 12, 2025, and a prospectus supplement dated June 18, 2026 and filed with the SEC on June 18, 2026. The registered direct offering closed on June 18, 2026 and resulted in gross proceeds of $ 472,870 (net of issuance costs of $ 58,643 ). No warrants or other derivative securities were issued in connection with the offering. To date, the Company’s primary 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 primary 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. 10 Table of Contents 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 consolidated 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 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. These adjustments could be material. Note 3 - Inventories Inventories, net of reserves, consists of: ​ ​ June 30, ​ ​ December 31, ​ ​ ​ 2026 ​ ​ 2025 ​ Raw materials ​ $ 6,589,918 ​ ​ $ 5,405,618 ​ Finished goods ​ ​ 4,631,573 ​ ​ ​ 3,368,509 ​ Work in progress ​ ​ 844,925 ​ ​ ​ 756,544 ​ Inventories, net ​ $ 12,066,416 ​ ​ $ 9,530,671 ​ Note 4 - Property and Equipment Property and equipment consists of: ​ ​ June 30, ​ ​ December 31, ​ ​ ​ 2026 ​ ​ 2025 ​ Building ​ $ 6,079,410 ​ ​ $ 6,079,410 ​ Manufacturing equipment ​ ​ 6,321,569 ​ ​ ​ 6,519,571 ​ Land ​ ​ 2,239,405 ​ ​ ​ 2,239,405 ​ Leasehold improvements ​ ​ 503,972 ​ ​ ​ 489,722 ​ Product molds ​ ​ 524,476 ​ ​ ​ 524,476 ​ Warehouse equipment ​ ​ 598,060 ​ ​ ​ 503,297 ​ Electrical equipment ​ ​ 183,977 ​ ​ ​ 183,977 ​ Automobile ​ ​ 242,642 ​ ​ ​ 242,642 ​ Furniture ​ ​ 149,883 ​ ​ ​ 149,883 ​ Computers ​ ​ 101,058 ​ ​ ​ 101,058 ​ Property and equipment, at cost ​ ​ 16,944,452 ​ ​ ​ 17,033,441 ​ Less accumulated depreciation ​ ​ ( 4,998,029 ) ​ ​ ( 4,344,953 ) Property and equipment, net ​ $ 11,946,423 ​ ​ $ 12,688,488 ​ On June 30, 2026 , the Company amended an agreement whereby it was released from an outstanding contractual obligation of approximately $ 2.7 million and oustanding duties payable of $ 0.3 million related to the acquisition of manufacturing equipment valued with a cost of approximately $ 3.0 million. Equipment deposits paid totaling $ 300,000 are included as a component of other noncurrent assets, pursuant to the terms of the amendment. Further, $ 38,857 of capital expenditures related were included in accounts payable as of June 30, 2026 . Depreciation expense for the three months ended June 30, 2026 and 2025 was $ 323,306 and $ 347,443 , respectively. Depreciation expense for the six months ended June 30, 2026 and 2025 was $ 653,076 and $ 695,950 , respectively. 11 Table of Contents Note 5 - Intangible Assets Intangible assets consist of costs incurred to establish the patent rights related to the quick latch and soft vinyl quad-fold tonneau cover technologies, Worksport trademarks, licenses, and software costs. The Company’s utility patents and design registrations were issued between 2014 and 2025. The patents and software are amortized on a straight-line basis over their useful life. The Company’s trademark, licenses, and other indefinite life intangible assets are reassessed every year for impairment. The Company determined that impairment is not necessary for the prior year ended December 31, 2025 and for the three and six months ended June 30, 2026 . The components of intangible assets are as follows: ​ ​ June 30, ​ ​ December 31, ​ ​ ​ 2026 ​ ​ 2025 ​ Software ​ $ 1,150,000 ​ ​ $ 1,150,000 ​ License ​ ​ 243,829 ​ ​ ​ 218,329 ​ Patent ​ ​ 62,706 ​ ​ ​ 62,706 ​ Trademark ​ ​ 5,150 ​ ​ ​ 5,150 ​ Other ​ ​ 179,752 ​ ​ ​ 243,769 ​ Intangible assets, gross carrying amount ​ ​ 1,641,437 ​ ​ ​ 1,679,954 ​ Less accumulated amortization ​ ​ ( 976,097 ) ​ ​ ( 783,423 ) Intangible assets, net ​ $ 665,340 ​ ​ $ 896,531 ​ Amortization expense for the three months ended June 30, 2026 and 2025 was $ 96,215 and $ 96,459 , respectively. Amortization expense for the six months ended June 30, 2026 and 2025 was $ 192,674 and $ 192,918 , respectively. Estimated amortization of the patent and software over the next five calendar years and beyond June 30, 2026 is as follows: 2026 ​ $ 193,000 ​ 2027 ​ $ 3,000 ​ 2028 ​ $ 3,000 ​ 2029 ​ $ 3,000 ​ 2030 ​ $ 3,000 ​ Thereafter ​ $ 31,000 ​ Note 6 - Prepaid Expenses and Other Prepaid expenses and other consists of: ​ ​ June 30, ​ ​ December 31, ​ ​ ​ 2026 ​ ​ 2025 ​ Consulting, services and advertising ​ $ 196,448 ​ ​ $ 222,922 ​ Insurance ​ ​ 23,760 ​ ​ ​ 104,421 ​ Deposits ​ ​ 123,817 ​ ​ ​ 203,518 ​ Prepaid expenses and other ​ $ 344,025 ​ ​ $ 530,861 ​ 12 Table of Contents Note 7 - Shareholders ’ Equity 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 June 30, 2026 , the Company has not issued shares of Series B preferred stock. - During 2025, the Company created its Series C preferred stock for its Regulation A offering. Refer to Note 14, 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 June 30, 2026 , the Company issued 3,074,586 shares of Series C preferred stock and converted 2,646,974 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 June 30, 2026 of $ 27,414 . During six months ended June 30, 2026 , the following transactions occurred: During the six months ended June 30, 2026 , the Company sold an aggregate of 3,157,774 shares of its common stock pursuant to the ATM Agreement for aggregate gross proceeds of $ 4,003,273 , net of issuance costs of $ 133,391 . The shares in a shelf takedown from the Company were sold pursuant to the base prospectus and prospectus supplement filed with the Securities and Exchange Commission as part of the Company’s registration statement on Form S- 3 (File No. 333 - 291582 ), which was declared effective on December 12, 2025. The Company recognized consulting expense of $ 54,901 for share subscriptions payable from restricted shares to be issued. As of June 30, 2026 , $ 23,325 of restricted shares have not been issued. The Company also recognized consulting expense of $ 107,833 related to warrants. As of June 30, 2026 , the warrants vested and were issued. Transactions reflected in consulting expense are included as a component of general and administrative expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Refer to Note 14, Warrants, and Note 15, Equity Compensation, for additional disclosures related to shareholders’ equity. During six months ended June 30, 2025 , the following transactions occurred: During the six months ended June 30, 2025 , the Company sold an aggregate of 22,725 shares of its common stock pursuant to an At the Market Offering Agreement, dated September 30, 2022, for aggregate gross proceeds of $ 192,612 , net of issuance costs of $ 6,738 . The shares were sold pursuant to the Company’s base prospectus and the related prospectus supplements filed with the Securities and Exchange Commission as part of the Company’s registration statement on Form S- 3 (File No. 333 - 267696 ), which was declared effective on October 13, 2022. 13 Table of Contents The Company recognized consulting expense of $ 26,000 to share subscriptions payable from restricted shares and stock options to be issued. As of June 30, 2025 , $ 13,000 of restricted shares have not been issued. Transactions reflected in consulting expense are included as a component of general and administrative expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss. During the six months ended June 30, 2025 , the Company issued 90,076 restricted shares with a value of $ 452,100 . During the six months ended June 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. Note 8 - Income Taxes The effective tax rate for the three and six months ended June 30, 2026 and 2025 was 22.9 % before 100 % allowance adjustments on net deferred income tax assets. The effective tax rate for the three and six months ended June 30, 2026 and 2025 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. Note 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 and long-term debt are based on a variable interest rate, and are reflected in the financial statements at carrying value which approximates fair value at June 30, 2026 . The fair value of the revolving line of credit and long-term debt is classified as Level 2 within the fair value hierarchy. The Company is exposed to market risks such as fluctuation in foreign currency exchange rates and interest rates. Derivative instruments may be used to offset some of the effects of these market risks on the expected future cash flows and on certain existing assets and liabilities. The Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting considerations and the prohibitive economic cost of hedging particular exposures. 14 Table of Contents Market Risks Foreign Currency Risk The Company is exposed to currency risk on its sales and purchases denominated in Canadian Dollars. The Company actively manages these risks by adjusting its pricing to reflect currency fluctuations and purchasing foreign currency at advantageous rates. Interest Rate Risk The borrowing under the Company’s Line of Credit Facility and Equipment Financing is at variable interest rates and exposes the Company to interest rate risk. If interest rates increase, debt service obligations on variable rate indebtedness will increase even though the amount borrowed may not change. Note 10 - Changes in Cash Flows from Operating Assets and Liabilities The changes to the Company’s operating assets and liabilities for the six months ended June 30, 2026 and 2025 are as follows: ​ ​ 2026 ​ ​ 2025 ​ Decrease (increase) in accounts receivable ​ $ ( 503,358 ) ​ $ ( 253,372 ) Decrease (increase) in other receivable ​ ​ ( 34,392 ) ​ ​ ( 58,358 ) Decrease (increase) in inventory ​ ​ ( 2,535,745 ) ​ ​ ( 691,459 ) Decrease (increase) in prepaid expenses and other ​ ​ 186,836 ​ ​ ​ ( 470,641 ) Increase (decrease) in accounts payable and accrued liabilities ​ ​ ( 1,248,251 ) ​ ​ 469,362 ​ ​ ​ $ ( 4,134,910 ) ​ $ ( 1,004,468 ) Note 11 - Leases The Company accounts for leases under ASC 842, 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. 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 %. 15 Table of Contents The Company’s right-of-use asset and lease liability as of June 30, 2026 , and December 31, 2025 , are as follows: ​ ​ June 30, ​ ​ December 31, ​ ​ ​ 2026 ​ ​ 2025 ​ Right-of-use asset ​ $ 217,677 ​ ​ $ 272,598 ​ Current lease liability ​ $ 112,482 ​ ​ $ 113,012 ​ Long-term lease liability ​ $ 105,195 ​ ​ $ 159,526 ​ The following is a summary of the Company’s total lease costs: ​ ​ June 30, ​ ​ June 30, ​ ​ ​ 2026 ​ ​ 2025 ​ Operating lease cost ​ $ 73,000 ​ ​ $ 172,000 ​ The following is a summary of cash paid during the six months ended June 30, 2026 and 2025 for amounts included in the measurement of lease liabilities: ​ ​ June 30, ​ ​ June 30, ​ ​ ​ 2026 ​ ​ 2025 ​ Operating cashflow ​ $ 73,000 ​ ​ $ 173,000 ​ The following are future calendar year minimum lease payments as of June 30, 2026 : 2026 $ 71,731 2027 134,284 2028 39,784 Total future minimum lease payments 245,799 Less: amount representing interest ( 28,122 ) Present value of future payments 217,677 Current portion 112,482 Long term portion $ 105,195 16 Table of Contents Note 12 - Indebtedness Long-term debt consists of: ​ ​ June 30, ​ ​ December 31, ​ ​ ​ 2026 ​ ​ 2025 ​ Revolving Credit Facility (a) ​ $ 4,160,871 ​ ​ $ 1,441,665 ​ Other (b) ​ ​ 1,115,494 ​ ​ ​ 1,233,493 ​ ​ ​ ​ 5,276,365 ​ ​ ​ 2,675,158 ​ Less deferred debt issuance cost ​ ​ ( 19,114 ) ​ ​ ( 37,868 ) Less current installments ​ ​ ( 281,094 ) ​ ​ ( 1,686,809 ) Long-term debt ​ $ 4,976,157 ​ ​ $ 950,481 ​ 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 (the “Agreement”) with an external lending entity with a maturity date of July 18, 2026, or 24 months. The Agreement includes an autorenewal provision whereby the Agreement renews and extends for an additional 24 months at the time of original maturity, or until July 18, 2028 . On July 18, 2026, the Agreement was renewed. Upon original transaction close, the Company drew down approximately $ 5.06 million of the Agreement, 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. At June 30, 2026 , the outstanding balance of this loan was $ 4,160,871 . 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 June 30, 2026 , the Company had an available balance of $ 818,339 to borrow under the Agreement. 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 final 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 June 30, 2026 , the outstanding balance of this loan was $ 1,115,494 (net of issuance costs of $ 19,114 ). The Company is in compliance with all covenants. Note 13 - Loss per Share For the three and six months ended June 30, 2026 , loss per share is ($ 0.33 ) and ($ 0.87 ) (basic and diluted) using the weighted average number of shares of 11,858,684 and 11,318,444 (basic and diluted), respectively. For the three and six months ended June 30, 2025 , loss per share is ($ 0.71 ) and ($ 1.71 ) (basic and diluted) using the weighted average number of shares of 5,285,705 and 4,778,426 (basic and diluted), respectively. There are 45,000,000 common shares authorized with 15,282,595 and 5,519,130 shares issued and outstanding, at June 30, 2026 and 2025 , 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. 17 Table of Contents Note 14 - Warrants On June 17, 2026, the Company entered into a Securities Purchase Agreement with an investor. The terms of the agreement provided for the issuance of 208,333 units at a price of $ 1.20 per unit. Each unit consisted of one share of common stock with a par value of $ 0.001 per share and one warrant to purchase one share of common stock, par value $ 0.001 per share, at an exercise price of $ 1.50 per share. The warrants were immediately exercisable and expire on July 17, 2031. The warrants contained a cashless feature, in which the holder was entitled to receive 1.4 shares of common stock for each warrant exercised without transfer of cash. The Company determined the fair value provided to the investor at the date of the agreement using the Black-Scholes model. The investor immediately exercised the cashless feature of the warrants on June 17, 2026. On December 11, 2025, the Company entered into a warrant inducement agreement with the holder of existing warrants to purchase an aggregate of 2,194,526 shares at a reduced exercise price of $ 2.90 . Pursuant to the inducement, the existing holder of the existing warrants received 3,840,421 inducement warrants, and the Company received $ 6,364,000 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 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 value of $ 4,485,000 is recorded as a non-cash deemed dividend as a reduction of additional paid-in capital based on the Company’s history of net operating losses. The proceeds of the warrant inducement and issuance of 916,000 shares of common stock are recorded as additional paid-in capital. During December 2025, the Company partially satisfied its obligation to issue 636,526 shares of common stock. During January 2026, the Company satisfied its remaining obligation to issue 642,000 shares of common stock. Shares subsequently issued after the inducement agreement are recorded as additional paid-in capital. On September 2, 2025, the Company entered into a consulting agreement with a third party to perform certain services for a six -month period in exchange for both cash consideration and the issuance of warrants. The warrant agreement was issued on March 2, 2026 and is exercisable to purchase up to 100,000 shares for $ 4.00 per share and 100,000 shares of common stock at $ 5.00 per share. The warrants expire two years from the date of issuance. The Company determined the fair value provided to the holder at the date of the consulting agreement using the Black-Scholes model, as the warrants were earned by the holder over the term of the consulting agreement. For the fiscal year ended December 31, 2025 , the Company recognized $ 216,000 as a component of general and administrative expense. For the six months ended June 30, 2026 , the Company recognized $ 108,000 as a component of general and administrative expense. The Company commenced its Regulation A offering pursuant to which it offered up to 3,100,000 units at a price of $ 3.25 per unit. Each unit consisted of one share of 8 % Series C Convertible Preferred Stock, par value $ 0.001 per share (the “Series C Preferred Stock”), and one warrant to purchase one share of common stock, par value $ 0.001 per share, at an exercise price of $ 4.50 per share. On June 13, 2025, the Company completed the initial closing of the Regulation A offering. On October 15, 2025, the Company completed the Regulation A offering, pursuant to which it sold an aggregate of 3,074,586 units for gross proceeds of approximately $ 9.99 million, before deducting fees and expenses. The proceeds from the Regulation A offering are recorded as additional paid-in capital. Through June 30, 2026 , the Company issued 3,074,586 warrants to investors. During the six months ended June 30, 2026 , the Company received $ 54,107 of previously escrowed proceeds related to the Regulation A offering. On February 27, 2025, the Company entered into a warrant inducement agreement (the “Inducement Agreement”) with the holder of existing warrants to purchase an aggregate of 1,295,000 shares for a reduced exercise price of $ 0.5198 per share. Pursuant to the Inducement Agreement, 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, before deducting placement agent fees and other offering expenses payable by the Company. 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. The Company registered the shares of common stock issuable upon the exercise of the inducement warrants on a registration statement on Form S- 1 (File No. 333 - 286255 ) declared effective by the Securities and Exchange Commission on April 3, 2025. 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 . 18 Table of Contents 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, 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. 19 Table of Contents As of June 30, 2026 , the Company has the following warrants outstanding: ​ ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ Exercise ​ ​ Number ​ ​ Contractual ​ ​ price ​ ​ outstanding ​ ​ Life (Years) ​ Expiry date $ 3.00 ​ ​ ​ 3,840,421 ​ ​ ​ 4.95 ​ June 12, 2031 $ 4.00 ​ ​ ​ 100,000 ​ ​ ​ 1.67 ​ March 2, 2028 $ 5.00 ​ ​ ​ 100,000 ​ ​ ​ 1.67 ​ March 2, 2028 $ 4.50 ​ ​ ​ 3,074,587 ​ ​ ​ 1.96 - 2.32 ​ June 13, 2028 – October 24, 2028 $ 4.00 ​ ​ ​ 190,000 ​ ​ ​ 3.23 ​ September 21, 2029 $ 40.00 ​ ​ ​ 30,000 ​ ​ ​ 0.50 ​ December 31, 2026 ​ ​ ​ ​ ​ 7,335,008 ​ ​ ​ 3.63 ​ ​ The average remaining contractual life of outstanding warrants that expire is 3.63 years. June 30, 2026 December 31, 2025 Number of Weighted Number of Weighted warrants average price warrants average price Balance, beginning of year 7,335,008 $ 3.85 2,291,276 $ 6.35 Issuance 291,667 $ 1.50 8,539,508 $ 4.16 Expired - $ - ( 6,250 ) $ 24.00 Exercise ( 291,667 ) $ ( 1.50 ) ( 3,489,526 ) $ 6.22 Balance, end of period 7,335,008 $ 3.85 7,335,008 $ 3.85 Note 15 - Equity Compensation The Company has adopted three equity incentive plans: the 2015 Equity Incentive Plan, the 2021 Equity Incentive Plan, and the 2022 Equity Incentive Plan. The 2015 Equity Incentive Plan expired in 2025 upon reaching the end of its ten -year term. The 2015 and 2021 plans each authorized a fixed number of shares for issuance. Under the 2022 Equity Incentive Plan, the number of shares of common stock reserved for issuance shall not exceed 18 % of the issued and outstanding shares of common stock of the Company. Awards under each plan 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. 20 Table of Contents 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 June 30, 2026 , 7,500 PSUs of the remaining 30,000 PSUs had vested, and the Company recognized $ 26,881 and $ 53,762 for the three and six months ended June 30, 2026 ($ 26,881 and $ 53,762 for the three and six months ended June 30, 2025 ) in general and administrative expense. 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 six months ended June 30, 2026 , the Company issued the following stock options to various directors: - 90,006 stock options vesting ratably over three years, with an exercise price of $ 1.66 and an expiration date of February 9, 2036 During the six months ended June 30, 2026 , the Company issued the following stock options to various employees and consultants: - 205,000 stock options vesting over one year, with an exercise price of $ 2.21 and an expiration date of January 5, 2036 - 75,000 stock options vesting ratably over three years, with an exercise price of $ 2.21 and an expiration date of January 5, 2036 - 25,000 stock options vesting pursuant to performance milestones, with an exercise price of $ 2.21 and an expiration date of January 5, 2036 - 15,000 stock options vesting ratably over two years, with an exercise price of $ 1.66 and an expiration date of February 9, 2036 During the six months ended June 30, 2026 , the Company issued the following stock options to Steven Rossi: - 240,000 stock options vesting ratably over three years, with an exercise price of $ 1.66 , and an expiration date of February 9, 2036 ​ ​ June 30, 2026 ​ ​ December 31, 2025 ​ ​ ​ Number of ​ ​ Weighted ​ ​ Number of ​ ​ Weighted ​ ​ ​ stock ​ ​ average ​ ​ stock ​ ​ average ​ ​ ​ options ​ ​ price ​ ​ options ​ ​ price ​ Balance, beginning of year ​ ​ 1,171,706 ​ ​ $ 5.37 ​ ​ ​ 579,936 ​ ​ $ 7.14 ​ Granted ​ ​ 650,006 ​ ​ $ 1.93 ​ ​ ​ 596,040 ​ ​ $ 3.68 ​ Forfeited ​ ​ ( 1,000 ) ​ $ 3.09 ​ ​ ​ ( 4,270 ) ​ $ 9.52 ​ Balance, end of period ​ ​ 1,820,712 ​ ​ $ 4.14 ​ ​ ​ 1,171,706 ​ ​ $ 5.37 ​ 21 Table of Contents Range of ​ Weighted Weighted ​ Exercise ​ average average Exercisable on prices Outstanding life (years) exercise price June 30, 2026 Stock options $ 1.66 - 7.042 1,820,712 8.39 $ 4.14 583,023 As of June 30, 2026 and December 31, 2025 , Terravis Energy Inc., a wholly owned subsidiary of the Company, has the following options outstanding: ​ ​ June 30, 2026 ​ ​ December 31, 2025 ​ ​ ​ Number of ​ ​ Weighted ​ ​ Number of ​ ​ Weighted ​ ​ ​ stock ​ ​ average ​ ​ stock ​ ​ average ​ ​ ​ options ​ ​ price ​ ​ options ​ ​ price ​ Balance, beginning of year ​ ​ 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 ​ Weighted Weighted ​ Exercise ​ average average Exercisable on prices Outstanding life (years) exercise price June 30, 2026 Stock options $ 0.01 1,350,000 5.78 $ 0.01 1,350,000 Note 16 - 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 (loss) from continuing operations to evaluate its reporting segments. The CODM also uses net income (loss) from continuing operations for evaluating pricing strategy and assessing the performance for determining the compensation of certain employees. Significant segment expenses reviewed, which represent the differences between segment net sales and segment net loss from continuing operations, consist of the following: For the three months ended June 30, 2026 For the three months ended June 30, 2025 Hard Soft ​ ​ Hard Soft ​ ​ Tonneau Tonneau Corporate / ​ Tonneau Tonneau Corporate / ​ Covers Covers Eliminations Consolidated Covers Covers Eliminations Consolidated Net sales $ 5,161,509 $ 68,151 $ - $ 5,229,660 $ 3,981,689 $ 123,269 $ - $ 4,104,958 Cost of sales ( 3,532,252 ) ( 47,472 ) - ( 3,579,724 ) ( 2,937,204 ) ( 90,357 ) 4,715 ( 3,022,846 ) Selling, general and administrative ( 2,434,700 ) ( 25,488 ) ( 2,588,780 ) ( 5,048,968 ) ( 2,502,025 ) ( 52,063 ) ( 1,701,753 ) ( 4,255,841 ) Depreciation and amortization ( 378,914 ) ( 4,574 ) ( 36,033 ) ( 419,521 ) ( 430,224 ) ( 10,002 ) ( 3,676 ) ( 443,902 ) Loss from continuing operations $ ( 1,184,357 ) $ ( 9,383 ) $ ( 2,624,813 ) $ ( 3,818,553 ) $ ( 1,887,764 ) $ ( 29,153 ) $ ( 1,700,714 ) $ ( 3,617,631 ) 22 Table of Contents For the six months ended June 30, 2026 For the six months ended June 30, 2025 Hard Soft ​ ​ Hard Soft ​ ​ Tonneau Tonneau Corporate / ​ Tonneau Tonneau Corporate / ​ Covers Covers Eliminations Consolidated Covers Covers Eliminations Consolidated Net sales $ 8,431,214 $ 111,246 $ - $ 8,542,460 $ 6,100,254 $ 244,709 $ - $ 6,344,963 Cost of sales ( 5,961,841 ) ( 76,736 ) - ( 6,038,577 ) ( 4,673,695 ) ( 188,708 ) ( 4,227 ) ( 4,866,630 ) Selling, general and administrative ( 5,176,712 ) ( 54,703 ) ( 5,989,447 ) ( 11,220,862 ) ( 4,525,421 ) ( 118,292 ) ( 3,819,688 ) ( 8,463,401 ) Depreciation and amortization ( 757,357 ) ( 9,126 ) ( 79,267 ) ( 845,750 ) ( 847,539 ) ( 22,831 ) ( 18,498 ) ( 888,868 ) Loss from continuing operations $ ( 3,464,696 ) $ ( 29,319 ) $ ( 6,068,714 ) $ ( 9,562,729 ) $ ( 3,946,401 ) $ ( 85,122 ) $ ( 3,842,413 ) $ ( 7,873,936 ) The following table presents the Company’s net sales disaggregated by geographic area: ​ ​ 2026 ​ ​ 2025 ​ ​ ​ Hard ​ ​ Soft ​ ​ ​ ​ ​ ​ Hard ​ ​ Soft ​ ​ ​ ​ ​ ​ ​ Tonneau ​ ​ Tonneau ​ ​ ​ ​ ​ ​ Tonneau ​ ​ Tonneau ​ ​ ​ ​ ​ ​ ​ Covers ​ ​ Covers ​ ​ Consolidated ​ ​ Covers ​ ​ Covers ​ ​ Consolidated ​ United States ​ $ 8,393,231 ​ ​ $ 111,174 ​ ​ $ 8,504,405 ​ ​ $ 6,053,246 ​ ​ $ 244,709 ​ ​ $ 6,297,955 ​ Canada ​ ​ 37,983 ​ ​ ​ 72 ​ ​ ​ 38,055 ​ ​ ​ 47,008 ​ ​ ​ - ​ ​ ​ 47,008 ​ Total Net sales ​ $ 8,431,214 ​ ​ $ 111,246 ​ ​ $ 8,542,460 ​ ​ $ 6,100,254 ​ ​ $ 244,709 ​ ​ $ 6,344,963 ​ No asset information has been provided for the reported segments as the CODM does not regularly review asset information by reportable segment. As of June 30, 2026 and December 31, 2025 , assets held in the U.S. accounted for 93 % and 93 % of total assets for each period, respectively. Note 17 - Commitments and Contingencies From time to time, the Company is involved in lawsuits, claims, investigations and proceedings arising in the ordinary course of business, including opposition proceedings involving patents. As of June 30, 2026, the Company was not a party to any legal proceeding that management believed would have a material adverse effect on the Company’s business, financial condition or results of operations. Note 18 - Subsequent Events The Company has evaluated subsequent events through August 11, 2026 . The following events occurred after the six months ended June 30, 2026 : ● On July 31, 2026, the Company granted an aggregate of 274,000 restricted stock units ("RSUs") to certain employees and consultants under the Company's 2022 Equity Incentive Plan. The grant-date fair value of the RSUs was determined based on the closing price of the Company's common stock on July 31, 2026. The RSU's vest immediately on the grant date. ● On July 31, 2026, the Company granted an aggregate of 492,050 non-qualified stock options to certain employees, including an officer of the Company, under the Company's 2022 Equity Incentive Plan. The options have an exercise price equal to the closing price of the Company's common stock on the grant date, July 31, 2026. The options are subject to the terms of the applicable award agreements, with vesting schedules ranging from immediate vesting to quarterly vesting through June 30, 2029. 23 Table of Contents 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. The following discussion should be read in conjunction with the Company ’ s Annual Report Form 10-K for the fiscal year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission (the “ SEC ” ) on March 26, 2026 and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q. OVERVIEW Worksport Ltd., through its subsidiaries, designs, develops, manufactures and sells tonneau covers, portable energy storage systems, and solar-integrated automotive accessories, and is developing other energy technologies, including pre-commercial non-parasitic heat-pump technology. The Company owns intellectual property associated with these products and technologies. We seek to expand our automotive-accessory business while commercializing selected clean-energy products and technologies, subject to product-development, regulatory, manufacturing, market-acceptance and financing risks. 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. 24 Table of Contents 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 portable power station, 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. Tariffs and Supply Chain Impact Our hybrid manufacturing model, which includes sourcing certain products and components from overseas—particularly from China—exposes us to risks associated with tariffs and evolving global trade policies. Tariffs on imported raw materials, components, and finished goods have increased our input costs and may continue to do so in the future. During fiscal 2025, increases in certain material and component costs attributable, in part, to tariffs contributed to higher cost of goods sold; however, these increases were offset by higher production volumes, improved overhead absorption, and operational efficiencies, resulting in an overall improvement in gross margins compared to the prior fiscal year. These impacts are both direct, through duties applied to imported products and components, and indirect, as suppliers and logistics providers may pass through increased costs associated with tariff regimes and related trade restrictions. While we have taken steps to mitigate these risks through supplier diversification, a portion of our supply chain remains dependent on foreign sources. As a result, tariffs and other trade measures may continue to increase our cost of goods sold and may impact product pricing and margins to the extent not offset by operational efficiencies or pricing actions. In addition, changes in U.S. trade policy or further escalation of tariffs could disrupt supply availability or increase lead times, which may adversely affect our operations and results of operations. 25 Table of Contents Geopolitical and Macroeconomic Conditions Recent geopolitical developments, including conflicts in the Middle East involving Iran, have contributed to volatility in global financial markets, higher energy prices and inflationary pressures. While we do not have direct exposure to the affected regions through our suppliers, customers, or operations, these conditions may adversely affect our business. In particular, increases in global energy and transportation costs may increase our cost of goods sold, and inflationary pressures may increase the cost of materials sourced from our suppliers, including suppliers in Asia. In addition, such conditions may adversely affect consumer discretionary spending, which could reduce demand for our products. Volatility in the capital markets may also affect our ability to raise capital on favorable terms. The extent and duration of these conditions remain uncertain and could adversely affect our business, financial condition and 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 adjust interest rates in response to evolving inflationary conditions, the cost of debt financing may fluctuate. While the Federal Reserve began reducing the federal funds rate in the latter half of 2024 and has continued measured reductions into 2025 and early 2026, interest rates remain elevated relative to pre-2022 levels, and the pace and extent of future reductions remain uncertain. Our $6,000,000 revolving line of credit and our $1,487,000 in equipment financing both carry floating interest rates, meaning we remain 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. 26 Table of Contents 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 recent 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 during certain periods due to geopolitical tensions and disruptions affecting global shipping routes, 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. 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. Business Developments The following highlights recent material developments in our business in the three months ended June 30, 2026: ● On April 13, 2026, the Company issued to its Chief Executive Officer, Steven Rossi, 88,214 shares of the Company’s common stock, par value $0.001 per share at a deemed price of $0.8502 per share, representing the closing price of the Company’s Common Stock on the Nasdaq Capital Market on April 10, 2026, for an aggregate value of $75,000. The shares were issued in satisfaction of previously accrued and unpaid bonus compensation owed to Mr. Steven Rossi and were approved by the Company’s Board of Directors. ● On April 20, 2026, the Company announced the official commercial launch and commencement of sales for the NEXUS Tonneau Cover. Production began on April 13, 2026. ● On April 29, 2026, the Company announced that it secured Tri-State Enterprises, Inc. as a new cross-regional distribution partner. ● On April 30, 2026, Michael Johnston resigned as the Company’s Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer, effective April 30, 2026. Mr. Johnston’s resignation was not the result of any disagreement with the Company regarding its operations, policies or practices, including any matters relating to the Company’s accounting practices or financial reporting. ● On April 30, 2026, the Company’s Board of Directors appointed Jennifer Kartychak as the Company’s Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer, effective May 1, 2026. Ms. Kartychak has served as the Company’s Vice President of Finance since January 1, 2026. Prior thereto, beginning in August 2023, Ms. Kartychak provided consulting services to the Company through Arend Advisory Group LLC, an entity wholly owned by Ms. Kartychak. ● On May 26, 2026, the Company announced that its clean-energy subsidiary, Terravis Energy, has been issued a U.S. patent for its AetherLux™ heat-pump system incorporating ZeroFrost™ technology. ● On June 5, 2026, the Company issued to its Chief Executive Officer, Steven Rossi, 79,618 shares of the Company’s common stock, par value $0.001 per share at a deemed price of $0.6280 per share, representing the closing price of the Company’s Common Stock on the Nasdaq Capital Market on June 5, 2026, for an aggregate value of $50,000. The shares were issued in satisfaction of previously accrued and unpaid bonus compensation owed to Mr. Steven Rossi and were approved by the Company’s Board of Directors. ● On June 17, 2026, the Company entered into a securities purchase agreement with an investor pursuant to which the Company agreed to issue and sell to the investor in a registered direct offering: (i) 208,333 shares of the Company’s common stock, par value $0.001 per share, at an offering price of $1.20 per unit (each unit consisting of one share and one common warrant, as defined herein), and (ii) common stock purchase warrants to purchase up to 208,333 shares of common stock (or up to 291,667 shares of common stock upon cashless exercise), for aggregate gross proceeds of $250,000, before deducting placement agent fees and other offering expenses payable by the Company. The registered direct offering closed on June 18, 2026. ● On June 18, 2026, the Company entered into a second securities purchase agreement with an investor, pursuant to which the Company agreed to issue and sell to the investor in a separate registered direct offering 675,529 shares of common stock at an offering price of $0.70 per share, for aggregate gross proceeds of approximately $472,870, before deducting placement agent fees and other offering expenses payable by the Company. The registered direct offering closed on June 18, 2026. ● On June 22, 2026, the Company announced that it has secured Meyer Distributing as its first multinational distribution partner. 27 Table of Contents CRITICAL ACCOUNTING POLICIES On a regular basis, we evaluate the critical accounting policies used to prepare our consolidated financial statements, including revenue recognition, inventory valuation, reviews for impairment of long-lived assets, and income taxes. RECENT ACCOUNTING PRONOUNCEMENTS See Note 1, Description of Business and Significant Accounting Policies included in Item 1, Financial Statements of this report for further information regarding Financial Accounting Standards Board issued Accounting Standards Updates (“ASU”). CONSOLIDATED RESULTS OF OPERATIONS The following is a discussion of our results of operations from the three months ended June 30, 2026 compared to the three months ended June 30, 2025 ​ ​ Increase (Decrease) Three months ended June 30, 2026 vs. 2025 2026 2025 Amount % Net sales $ 5,229,660 $ 4,104,958 $ 1,124,702 27.4 % Cost of sales 3,579,724 3,022,846 556,878 18.4 % Gross profit 1,649,936 1,082,112 567,824 52.5 % Research and development 214,183 304,833 (90,650 ) (29.7 )% General and administrative 3,548,867 3,091,548 457,319 14.8 % Sales and marketing 1,707,194 1,305,355 401,839 30.8 % (Gain) loss on foreign exchange (1,755 ) (1,993 ) 238 (11.9 )% Loss from operations (3,818,553 ) (3,617,631 ) (200,922 ) 5.6 % Interest expense (146,837 ) (128,156 ) (18,681 ) 14.6 % Other 87 11,303 (11,216 ) (99.2 )% Net loss $ (3,965,303 ) $ (3,734,484 ) $ (230,819 ) 6.2 % Per share data ​ ​ ​ ​ Basic and diluted earnings per share $ (0.33 ) $ (0.71 ) $ 0.37 52.7 % Three months ended June 30, Increase (Decrease) Percent of net sales 2026 2025 Percentage points Cost of sales 68 % 74 % (5.2 )% Gross profit 32 % 26 % 5.2 % Research and development expense 4 % 7 % (3.3 )% General and administrative expense 68 % 75 % (7.5 )% Sales and marketing expense 33 % 32 % 0.8 % 28 Table of Contents Net sales For the three months ended June 30, 2026, net sales generated in the U.S. was $5,197,760, compared to $4,070,406 for the same period in 2025, an increase of approximately $1,127,354. Net sales increase d during the three months ended June 30, 2026 compared to the same period the prior year due to increased sales of tonneau covers to end users via various dealers and distributors. The Company increased its product offerings in 2026 to also include NEXUS covers to end customers. The Company continues to focus on establishing as well as strengthening its presence in both the direct-to-consumer and business-to-business sales channels while also strengthening customer support to increase customer satisfaction and increase product turnover. We distribute our products in the U.S. and Canada through an expanding network of wholesalers, distributors, and dealers, and through online channels, including major online marketplaces and our direct-to-consumer e-commerce platform. We intend to continue expanding both business-to-business and direct-to-consumer channels with product offerings unique to each of these channels. We also continue to pursue relationships with original equipment manufacturers and fleet customers where appropriate. We currently work closely with a large Canadian and two large U.S. distributors as well as online retailers to grow our customer base. We are progressing well in conversations with three other major distributors with strong market presences, which will allow us to promote to dealers and sell to jobbers in strategic regions. Lastly, we are in closing discussions with a network of nationwide U.S. dealers capable of bringing our product to all U.S. continental states. Net sales from online retailers of our products decrease d by $241,704, from $3,121,458 for the three months ended June 30, 2025 to $2,879,754 for same period ended June 30, 2026. The $241,704 decrease is a result of the Company’s focus to lower our customer acquisition cost with additional focus on brand awareness and less focus on conversion marketing. The reduction in conversion marketing efforts decreased order volume, but this was offset by an increase in the average order value of our product offerings. Cost of Sales The decrease in the cost of sales as a percentage of sales was primarily driven by two factors: (1) increased production volume to support sales growth, including introduction of new product lines during 2025, and (2) overhead allocation efficiencies associated with higher production volume. These improvements offset increases in certain material, components, and landed costs, including the impact of tariffs on imported products and components sourced from overseas. While tariffs contributed to higher input costs during the three months ended June 30, 2026, the overall effect of increased scale and production efficiencies resulted in an improvement in our gross margin. We continue to employ a discounting strategy as part of a broader initiative to enhance market presence and build brand awareness. We anticipate this will position us well for sustained customer engagement in future periods, during which discounting may not be necessary to the same extent. As production volume grows and our manufacturing process becomes more efficient, we expect to allocate fixed costs included in overhead absorption against a larger production volume base. This scaling will be facilitated by reallocating more of our existing human capital and machinery resources toward production. 29 Table of Contents We provide our distributors and online retailers with an “all-in” wholesale price. This includes any import duty charges, taxes, and shipping charges. Discounts are applied if the distributor or retailer chooses to use their own shipping process. Certain exceptions apply on rare occasions where product is shipped outside the contiguous United Sates or from the 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 June 30, 2026 by $768,746, from $4,699,743 for the three months ended June 30, 2025 to $5,468,489, mainly due to the following factors: ● Research and development expense decreased by $90,650, from $304,833 for the three months ended June 30, 2025 to $214,183 for the three months ended June 30, 2026. The decrease was related to developmental progress of our AL4 and NEXUS product lines, which required less R&D efforts as resources were shifted to normal-course production. ● General and administrative expense increase d by $457,319, from $3,091,548 in 2025 to $3,548,867 in 2026. The increase was related to a shift in overhead absorption driven by production volume requirements as well as an increase in production costs to support order volume. ● Sales and marketing expense increase d by $401,839, from $1,305,355 in 2025 to $1,707,194 in 2026. The increase in sales and marketing was primarily attributable to marketing campaigns to promote brand awareness and new product launches. Other Income and Expenses We reported net other expenses for the three months ended June 30, 2026 of $146,750, compared to $116,853 for three months ended June 30, 2025. The increase in net other expenses was attributed to an greater use of our line of credit to fund working capital requirements. Net Loss Net loss for the three months ended June 30, 2026 was $3,965,303, compared to a net loss of $3,734,484 for the three months ended June 30, 2025 – an increase of approximately 6.2%. The increase in net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations and promoting our brand awareness. 30 Table of Contents The following is a discussion of our results of operations from the six months ended June 30, 2026 compared to the six months ended June 30, 2025 ​ ​ Increase (Decrease) Six months ended June 30, 2026 vs. 2025 2026 2025 Amount % Net sales $ 8,542,460 $ 6,344,963 $ 2,197,497 34.6 % Cost of sales 6,038,577 4,866,630 1,171,947 24.1 % Gross profit 2,503,883 1,478,333 1,025,550 69.4 % Research and development 419,516 674,434 (254,918 ) (37.8 )% General and administrative 7,788,021 6,506,369 1,281,652 19.7 % Sales and marketing 3,863,061 2,175,104 1,687,957 77.6 % (Gain) loss on foreign exchange (3,986 ) (3,638 ) (348 ) 9.6 % Loss from operations (9,562,729 ) (7,873,936 ) (1,688,793 ) 21.4 % Interest expense (239,220 ) (323,594 ) 84,374 (26.1 )% Other 8,125 2,582 5,543 214.7 % Net loss $ (9,793,824 ) $ (8,194,948 ) $ (1,598,876 ) 19.5 % Per share data ​ ​ ​ ​ Basic and diluted earnings per share $ (0.87 ) $ (1.71 ) $ 0.85 49.5 % Six months ended June 30, Increase (Decrease) Percent of net sales 2026 2025 Percentage points Cost of sales 71 % 77 % (6.0 )% Gross profit 29 % 23 % 6.0 % Research and development expense 5 % 11 % (5.7 )% General and administrative expense 91 % 103 % (11.4 )% Sales and marketing expense 45 % 34 % 10.9 % 31 Table of Contents Net sales For the six months ended June 30, 2026, net sales generated in the U.S. was $8,504,405, compared to $6,297,955 for the same period in 2025, an increase of approximately 35.0%. Net sales increase d during the six months ended June 30, 2026 compared to the same period the prior year due to increased sales of tonneau covers to end users via various dealers and distributors. The Company increased its product offerings in 2025 to also include AL4 and HD3 covers to end customers. In 2026, the Company added the NEXUS product offering to its customers. The Company continues to focus on establishing as well as strengthening its presence in both the direct-to-consumer and business-to-business sales channels while also strengthening customer support to increase customer satisfaction and increase product turnover. We distribute our products in the U.S. and Canada through an expanding network of wholesalers, distributors, and dealers, and through online channels, including major online marketplaces and our direct-to-consumer e-commerce platform. We intend to continue expanding both business-to-business and direct-to-consumer channels with product offerings unique to each of these channels. We also continue to pursue relationships with original equipment manufacturers and fleet customers where appropriate. We currently work closely with a large Canadian and a large U.S. distributor as well as online retailers to grow our customer base. We are progressing well in conversations with three other major distributors with strong market presences, which will allow us to promote to dealers and sell to jobbers in strategic regions. Lastly, we are in closing discussions with a network of nationwide U.S. dealers capable of bringing our product to all U.S. continental states. Net sales from online retailers of our products decrease d by $301,739, from $4,992,533 for the six months ended June 30, 2025 to $4,690,794 for the same period ended June 30, 2026. The 6.0% decrease is a result of the Company’s focus to lower our customer acquisition cost with additional focus on brand awareness and less focus on conversion marketing. The reduction in conversion marketing efforts decreased order volume, but this was offset by an increase in the average order value of our product offerings. Cost of Sales The decrease in the cost of sales as a percentage of sales was primarily driven by two factors: (1) increased production volume to support sales growth, including introduction of new product lines during 2025, and (2) overhead allocation efficiencies associated with higher production volume. These improvements offset increases in certain material, components, and landed costs, including the impact of tariffs on imported products and components sourced from overseas. While tariffs contributed to higher input costs during the six months ended June 30, 2026, the overall effect of increased scale and production efficiencies resulted in an improvement in our gross margin. We continue to employ a discounting strategy as part of a broader initiative to enhance market presence and build brand awareness. We anticipate this will position us well for sustained customer engagement in future periods, during which discounting may not be necessary to the same extent. As production volume grows and our manufacturing process becomes more efficient, we expect to allocate fixed costs included in overhead absorption against a larger production volume base. This scaling will be facilitated by reallocating more of our existing human capital and machinery resources toward production. 32 Table of Contents We provide our distributors and online retailers with an “all-in” wholesale price. This includes any import duty charges, taxes, and shipping charges. Discounts are applied if the distributor or retailer chooses to use their own shipping process. Certain exceptions apply on rare occasions where product is shipped outside the contiguous United Sates or from the 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 increase d for the six months ended June 30, 2026 by $2,714,343, from $9,352,269 for the six months ended June 30, 2025 to $12,066,612, mainly due to the following factors: ● Research and development expense decrease d by $254,918, from $674,434 for the six months ended June 30, 2025 to $419,516 for the six months ended June 30, 2026. The decrease was related to developmental progress of our AL4 and NEXUS product lines, which required less R&D efforts as resources were shifted to normal-course production. ● General and administrative expense increase d by $1,281,652, from $6,506,369 in 2025 to $7,788,021 in 2026. The increase was related to labor and consulting costs to support production and operational efforts. ● Sales and marketing expense increase d by $1,687,957, from $2,175,104 in 2025 to $3,863,061 in 2026. The increase in sales and marketing was primarily attributable to marketing campaigns to promote brand awareness and new product launches. Other Income and Expenses We reported net other expenses for the six months ended June 30, 2026 of $231,095, compared to $321,012 for six months ended June 30, 2025. The decrease in net other expenses was attributed to decreased interest expense on our line of credit as a result of reduced usage following cash inflows as a result of the December 2025 warrant inducement transaction. Net Loss Net loss for the six months ended June 30, 2026 was $9,793,824, compared to a net loss of $8,194,948 for the six months ended June 30, 2025 – an increase of approximately 19.5%. The increase in net loss can be attributed to the increase in various operating expenses as we focus on expanding our operations and promoting our brand awareness. 33 Table of Contents Liquidity and Capital Resources As of June 30, 2026 and December 31, 2025, we had $1,160,158 and $5,945,894, respectively in cash and cash equivalents. As of June 30, 2026, we had $818,339 of remaining available capacity on our revolving line of credit compared with $3,448,016 of remaining available capacity as of December 31, 2025. The decrease in cash and cash equivalents and decrease in the remaining available capacity on our revolving line of credit was primarily a result of our use of proceeds from our warrant inducement transaction in December 2025 to fund working capital requirements to support the production of our new product offerings. We have historically generated limited gross profit and have relied primarily upon capital generated from public and private offerings of our securities to fund continuing operations. Since the Company’s acquisition of Worksport in 2014, it has never generated a profit. During the three and six months ended June 30, 2026, we had net losses of $3,965,303 and $9,793,824, respectively (three months ended June 30, 2025 - $3,734,484; six months ended June 30, 2025 - $8,194,948). As of June 30, 2026, the Company had working capital of $10,961,087 (As of December 31, 2025 - $10,061,578) and had an accumulated deficit of $93,721,747 (As of December 31, 2025 - $83,873,790). In their fiscal 2025 audit report, our independent auditors expressed that there is substantial doubt as to our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon our ability to generate cash flows from operations and obtain equity and/or debt financing. We intend to continue funding operations through equity and debt financing arrangements, which may be insufficient to fund our capital expenditures, working capital and other cash requirements in the long term. There can be no assurance that the steps our management is taking will be successful. To date, our principal sources of liquidity consist of net proceeds from public and private securities offerings and cash exercises of outstanding warrants. During the six months ended June 30, 2026, the Company received net proceeds of $4,523,215 from the offerings described below. 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 funds during the six months ended June 30, 2026 from the following public and private securities offerings: ATM Shares On November 14, 2025, the Company entered into an amendment to its At The Market Offering Agreement, dated September 30, 2022, with H.C. Wainwright & Co., LLC (“Wainwright”) in connection with a new shelf registration statement on Form S-3 (File No. 333-291582), which was declared effective by the SEC on December 12, 2025. Pursuant to the amended ATM Agreement and the related prospectus supplement dated December 12, 2025, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $4.0 million through Wainwright as sales agent. During the six months ended June 30, 2026, the Company sold 3,157,774 shares of common stock under the ATM Agreement for aggregate gross proceeds of approximately $4,003,273, resulting in net proceeds of approximately $3,869,882 after deducting commissions and offering expenses. 34 Table of Contents Because the Company’s public float is below $75.0 million, sales under the ATM Agreement are subject to the limitations of General Instruction I.B.6 of Form S-3, which limits the amount of securities the Company may sell in primary offerings during any rolling 12-month period. As a result, the amount currently available for sale under the ATM Agreement may be significantly less than the aggregate amount registered under the Company’s shelf registration statement. Regulation A Offering During the six months ended June 30, 2026, we received $54,107 of proceeds net of issuance cost that were previously held in escrow. The funds in escrow pertain to the Regulation A offering from 2025. Registered Direct Offerings During the six months ended June 30, 2026, we completed two registered direct offerings with one institutional accredited investor and received gross proceeds of $722,870, resulting in net proceeds of approximately $599,226 after deducting issuance costs. Consolidated Statement of Cash Flows Cash and cash equivalents decreased from $5,945,894 at December 31, 2025, to $1,160,158 at June 30, 2026 – a decrease of $4,785,736 or 80.5%. The decrease was primarily due to the use of cash to acquire working capital based on supporting the production of existing product offerings as well as the expected growth of additional product offerings launched in 2026. The Company procured approximately $8.1 million of raw materials to support production of our expanded product lineup, including the SOLIS, COR and NEXUS product lines. Some of our new product offerings utilize raw materials common to existing product offerings. Approximately $1.0 million of these raw materials purchases remained in accounts payable as of June 30, 2026. Operating Activities Net cash used in operating activities for the six months ended June 30, 2026 was $11,677,145, compared to $6,935,033 in 2025, primarily driven by the launch of additional product offerings during the six months ended June 30, 2026. Net cash used in operating activities exceeded the Company’s net loss by approximately $1.8 million. The principal component of the change is attributable to the $2.5 million increase in inventory, reflecting the procurement of raw materials and production of finished goods to support the launch of new product offerings during the six months ended June 30, 2026 including SOLIS, COR, and NEXUS. Accounts receivable increased at June 30, 2026 by $503,358 and increased by $253,372 in the prior period. The increase in accounts receivable is based on the volume of shipment with various business-to-business customers as well as the concentration of customers in certain sales channels. Inventory increased at June 30, 2026 by $2,535,745, and increased at June 30, 2025 by $691,459, as a result of the procurement of raw materials and production of finished goods to support the commercial launches of our COR, SOLIS and NEXUS product lines. Prepaid expenses and other decreased by $186,836 at June 30, 2026, and increased by $470,641 at June 30, 2025 due to timing of advanced payments for professional services to support operations. Accounts payable and accrued liabilities decreased at June 30, 2026 by $1,248,251 and increased by $469,362 at June 30, 2025 due to the payment for raw materials and finished goods procured and produced in preparation for and support of the commercial launches of our COR, SOLIS and NEXUS product lines. 35 Table of Contents Investing Activities Net cash used in investing activities for the six months ended June 30, 2026 was $197,654 compared to $582,797 for the six months ended June 30, 2025. The decrease in investing activities was primarily attributable to our purchase of cryptocurrency and website enhancements in 2025, both of which are classified as intangible assets. Financing Activities Net cash provided by financing activities for the six months ended June 30, 2026 was $7,089,063 compared to net cash provided by financing activities of $4,027,871 for the six months ended June 30, 2025. Net cash provided by financing activities were principally due to our use of the ATM, whereby we received net proceeds of $3,869,882. We also received proceeds from our line of credit through net borrowings of $2,729,739 for the six months ended June 30, 2026. In June 2026, we completed two registered direct offerings with one institutional accredited investor for gross proceeds of $722,870, resulting in net proceeds of approximately $599,226 after deducting issuance costs. Material Contractual Obligations As of June 30, 2026, the Company amended an agreement that included an outstanding contractual obligation of approximately $2.1 million related to the acquisition of manufacturing equipment from Prima Power, representing approximately 70% of the total equipment cost of approximately $3.0 million. The amendment provides for Prima Power to retain the initial 10% equipment deposit of $300,000 to be applied to a future equipment purchase. The equipment deposit of $300,000 is included in other noncurrent assets as of June 30, 2026. Other than the indebtedness, lesses, purchases, employment and other obligations disclosed in this Form 10-Q or incurred in the ordinary course of business, the Company had no material contractual obligations as of June 30, 2026. 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. 36 Table of Contents