What changed in this filing

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Item 1. Financial Statements

2021-05-24 compared with 2020-11-16 · 692 added, 695 removed, 88 unchanged (94% of the section changed)

FINANCIAL STATEMENTS

(formerly Franchise Holdings International, Inc)

Consolidated Balance Sheets

Current Assets

and cash equivalents

Accounts receivable

Other receivable

receivable net

inventory (note 3)

expenses and deposits

Current Assets

Investment (note

Property and Equipment,

Right-of-use Asset,

Liabilities and Shareholders’

Equity (Deficit)

Current Liabilities

Accounts payable

and accrued liabilities

Payroll taxes payable

Related party loan

Promissory notes

and Equipment, net

asset, net (note 10)

and Shareholders’

payable and accrued liabilities

taxes payable

party loan (note 7)

notes payable (note 4)

promissory note, net (note 5)

payable (note 11)

Loan payable (note

lease liability (note 10)

2 unchanged sentences

Shareholders’

Series A & B Preferred Stock, $0.0001

par value, 1,100,000 shares authorized, 1,000 Series A and 0 Series B shares issued and outstanding, respectively,

Common stock, $0.0001 par value, 299,000,000

shares authorized, 61,259,391 and 41,906,790 shares issued and outstanding, respectively

Additional paid-in capital

Share subscriptions receivable

Share subscriptions payable

Accumulated deficit

Equity (Deficit)

A & B Preferred Stock, $0.0001 par value, 1,100,000 shares authorized, 1,000 Series A and 0 Series B issued and outstanding,

respectively (note 6)

stock, $0.0001 par value, 299,000,000 shares authorized, 162,763,986 and 76,412,359 shares issued and outstanding, respectively (note

paid-in capital

Share subscriptions

(14,089,552 )

(12,866,033 )

Cumulative translation

translation adjustment

Shareholders’

Equity (Deficit)

Liabilities and Shareholders’

Equity (Deficit)

accompanying notes form an integral part of these condensed consolidated financial statements.

(formerly Franchise Holdings International, Inc)

Consolidated Statements of Operations and Comprehensive Loss

the Three and Nine Months Ended September 30, 2020 and 2019

Months ended September 30

Months ended September 30,

Consolidated Statements of Operations

the three months ended March 31, 2021 and 2020

of Goods Sold

Operating Expenses

General and administrative

Sales and marketing

Professional fees

loss on foreign exchange

Profit (Loss)

and administrative

and marketing

(gain) on foreign exchange

operating expenses

from operations

Other Income (Expense)

Interest expense

Income (Expense)

expense (note 5)

(loss) on settlement of debt

other income (expense)

Income (Loss)

Other Comprehensive

Income (Loss)

currency translation adjustment

Comprehensive

Income (Loss)

Earnings (Loss) per Share

Weighted Average Number of Shares

accompanying notes form an integral part of these condensed consolidated financial statements.

(formerly Franchise Holdings International, Inc)

Consolidated Statements of Cash Flows

the Nine Months Ended September 30, 2020 and 2019

Operating Activities

Adjustments to reconcile net loss to

net cash from operating activities:

Depreciation and

Loss (Gain) on Settlement

Accrued interest

Interest on lease

Amortization of

debt discount

Amortization on

and warrants issued for services

Changes in operating

assets and liabilities (note 5)

Net cash provided

by (used in) operating activities

Cash Flows from Investing

Purchase of property and equipment

Purchase of investment

Net cash used in

investing activities

Financing Activities

Issuance of common stock for cash

Proceeds from loan payable

Proceeds from notes payable (note 4(b))

Repayment of notes payable

shareholder loans

cash provided by financing activities

of exchange rate changes on cash

Changes in cash

and cash equivalents –

beginning of year

and cash equivalents –

end of period

Supplemental disclosure

of cash flow information:

Interest paid

Supplemental disclosure

of non-cash flow investing and financing activities:

Shares issued for share subscription

Reverse stock split

Convertible promissory note –

Equity discount

Convertible promissory note –

original issue discount

Conversion of Preferred Stock to Common

Decrease in share subscription payable

Return and share cancellation

Conversion of convertible promissory

note to Common Stock

other (expense)

per Share (basic and diluted)

Average Number of Shares (basic and diluted)

accompanying notes form an integral part of these condensed consolidated financial statements

(formerly Franchise Holdings International , Inc)

Statement of Shareholders’

the Nine Months Ended September 30, 2020 and 2019

Paid-in Capital

Subscriptions Receivable

Subscription Payable

Translation Adjustment

Consolidated Statements of Shareholders’

the Three Months Ended March 31, 2021 and 2020

Subscriptions

Stockholders’

Equity (Deficit)

at January 1, 2020

$ (11,678,413 )

Issuance of share subscriptions payable

Deemed dividend related

to down-round features

Return and Cancellation of shares

Issuance for settlement

Conversion of Preferred

currency translation adjustment

at September 30, 2019

from subscriptions payable

for prepaid services and subscriptions payable

issuance in connection to convertible promissory note (note 5 and 14)

issuance in connection to convertible promissory note (note 5)

at March 31, 2020

$ (11,830,679 )

1 unchanged sentence

$ (12,866,033 )

Service for share subscriptions

for services and subscriptions payable

of shares from Reg-A

issuance cost

of shares from private placement

issuance for services

Issuance for prepaid

services and subscriptions payable

Issuance of subscriptions

Issuance from subscriptions

Warrants issuance for

Conversion of convertible

promissory note to shares (note 4(b) and 10)

Warrants issuance in

connection to convertible promissory note (note 4(b) and 10)

Share issuance in connection

to convertible promissory note (note 4(b))

Issuance for settlement

Issuance of Preferred

at September 30, 2020

of convertible promissory note to shares (note 5)

warrant exercise (note 14)

exercise (note 14)

repayment (note 11)

at March 31, 2021

$ (14,089,552 )

accompanying notes form an integral part of these condensed consolidated financial statements

(formerly Franchise Holdings International , Inc)

Statement of Shareholders’

the Three Months Ended September 30, 2020 and 2019

Paid-in Capital

Subscriptions Receivable

Subscription Payable

Translation Adjustment

Stockholders’

Equity (Deficit)

at June 30, 2019

$ (11,447,598 )

Return and Cancellation of shares

currency translation adjustment

at September 30, 2019

$ (11,177,229 )

at June 30, 2020

$ (12,022,864 )

Issuance for services

Issuance from subscriptions

Issuance of subscriptions

Warrants issuance in

connection to convertible promissory note (note 4(b) and 10)

Conversion of convertible

promissory note to shares (note 4(b) and 10)

Warrant issuance for

at September 30, 2020

Consolidated Statements of Cash Flows

the Three Months Ended March 31, 2021 and 2020

$ (1,223,519 )

to reconcile net loss to net cash from operating activities:

and warrants issued for services

and amortization

on lease liability

on OID interest

on settlement of debt

in operating assets and liabilities (note 8)

cash used in operating activities

Flows from Investing Activities

of lease liability

of investment

of property and equipment

cash used in investing activities

from issuance of common shares, net of issuance cost

from warrant exercise

of loan payable

from promissory notes

assumption of debt

cash provided by financing activities

and cash equivalents - beginning of year

and cash equivalents end of year

disclosure of cash flow information:

Disclosure of non-cash investing and financing Activities

issued to service providers

warrant exercise

issued for share subscriptions payable

of convertible promissory note to common stock

promissory note –

equity discount

promissory note –

original issue discount

accompanying notes form an integral part of these condensed consolidated financial statements.

(formerly Franchise Holdings International, Inc)

to the Condensed Consolidated Financial Statements

Basis of Presentation and Going Concern

Basis of Presentation and Business Condition

Interim Financial Information

accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting

principles in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of

principles in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (SEC).

Accordingly, they do not include all of the information and notes required

by GAAP for complete financial statements.

In the opinion of management, all adjustments and reclassifications considered necessary

in order to make the financial statements not misleading and for a fair and comparable presentation have been included and are

of a normal recurring nature.

Operating results for the nine-month period ended September 30, 2020 are not necessarily indicative

of the results that may be expected for the year ending December 31, 2020.

The accompanying unaudited condensed consolidated financial

statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019

filed with the SEC on May 14, 2020.

Accordingly, they do not include all of the information and notes required by GAAP for complete

financial statements.

In the opinion of management, all adjustments and reclassifications considered necessary in order to make the financial

statements not misleading and for a fair and comparable presentation have been included and are of a normal recurring nature.

results for the three-month period ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year

ending December 31, 2021.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the

Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on April 13, 2021.

Functional and Reporting Currency

1 unchanged sentence

dollar-denominated activities of the subsidiary over time.

The change in functional currency from Canadian dollars to

United States dollars is accounted for prospectively from January 1, 2020.

The subsidiary’s balance sheet was converted

from Canadian dollars to United States dollars using the year ended December 31, 2019 United States dollar balance as the opening

for January 1, 2020 in accordance to ASC 830 .

These condensed interim financial statements are presented in United States

The functional and presentation currency of the Company and its subsidiary is the United States Dollar.

As a result of

the change in functional currency the Company recognized a loss on foreign exchange of $29,940.

The change in functional currency from Canadian dollars to United

States dollars is accounted for prospectively from January 1, 2020.

The subsidiary’s balance sheet was converted from Canadian

dollars to United States dollars using the year ended December 31, 2019 United States dollar balance as the opening for January 1, 2020

in accordance to ASC 830 .

These condensed interim financial statements are presented in United States Dollars.

The functional

and presentation currency of the Company and its subsidiary is the United States Dollar.

As a result of the change in functional currency

the Company recognized a loss on foreign exchange of $29,940.

Use of Estimates

preparation of condensed unaudited financial statements in conformity with accounting principles generally accepted in the United

States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure

of contingent assets and liabilities at the date of the condensed interim financial statements and the reported amounts of revenues

and expenses during the reporting period.

preparation of condensed unaudited financial statements in conformity with accounting principles generally accepted in the United States

requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the condensed interim financial statements and the reported amounts of revenues and expenses during

the reporting period.

Actual results could differ from these estimates.

Going Concern

unaudited condensed consolidated financial statements have been prepared on a going concern basis which assumes that the Company

will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

During the nine-month period ended September 30, 2020, the Company incurred a net loss of $936,841 and as of that date, the Company’s

accumulated deficit was $12,615,254.

While the Company has demonstrated the ability to generate revenue, there are no assurances

that it will be able to achieve level of revenues adequate to generate sufficient cash flow from operations or obtain additional

financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements.

To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient, we will

have to raise additional working capital.

No assurance can be given that additional financing will be available, or if available,

will be on acceptable terms.

These conditions raise substantial doubt about our ability to continue as a going concern.

working capital is not available, we may be forced to discontinue operations, which would cause investors to lose their entire

The accompanying condensed consolidated financial statements do not include any adjustments that might result relating

to the recoverability and classification of the asset carrying amounts or the amount and classification of liabilities that might

result from the outcome of this risk and uncertainty.

Business condition

Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s

ability to continue as a going concern within one year after the date the financial statements are issued.

of March 31, 2021, the Company had working capital of $8,438,184 and an accumulated deficit of $14,089,552.

As of March 31, 2021,

the Company had cash and cash equivalents of $9,311,878.

Based on its current operating plans, the Company believes it has sufficient

level of funding for anticipated operations, capital expenditures and debt repayments for a period of at least 12 months from the issuance

date of this Annual Report.

the three month ended March 31, 2021 the Company through its Reg-A public offering, private placement offering, and exercises of warrants

had raised in aggregate of approximately $9,000,000.

In addition, as of May 2021 the Company has approximately 57,000,000 warrants exercisable

at $0.20 per warrant compare to an average share price of approximately $0.30 per share, anticipating additional warrant exercises.

Company intents to introduce in late 2021 several new tonneau covers most significant of which is the TerraVis.

TerraVis is a solar cover

tonneau cover will give pick-up truck owners rechargeable portable power and added range to upcoming EV pick-up trucks.

The Company anticipates

that the introduction of these new products will sufficiently improve the Company’s financial position.

on the Company’s future operating plans, existing cash of $9,311,878 combined with possible warrants exercises of approximately

management believes the Company have sufficient funds to meet its contractual obligations and working capital requirements

for the next 12 months and the foreseeable future.

Revision of Prior Period Financial Statements

connection with the preparation of our consolidated financial statements, we identified an immaterial error related to the recognition

of a deemed dividend related to down-round features along with the associated shares issuance and professional fees in the annual

periods in fiscal 2019 and first quarter of 2020.

of a deemed dividend related to down-round features along with the associated shares issuance and professional fees in the three month

ended March 31, 2020.

In accordance with SAB (Staff Accounting Bulletins) Topic 1.M, “Materiality,”

and SAB (Staff Accounting Bulletins) Topic 1.N, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements

in Current Year Financial Statements,”

we evaluated the error and determined that the related impact was not material to

our financial statements for any prior annual or interim period, but that correcting the cumulative impact of the error would

be significant to our results of operations and equity fiscal and interim periods of 2019 and 2020.

Accordingly, we have revised

previously reported financial information for such immaterial error, as previously disclosed in our Quarterly Report on Form 10-Q

for the first quarter of fiscal 2020 and for the fiscal year 2019.

A summary of revisions to certain previously reported financial

information presented herein for comparative purposes is included in Note 15.

Significant Accounting Policies

accounting polices used in the preparation of these condensed interim financial statements are consistent with those of the Company’s

audited financial statements for the year ended December 31, 2019.

(formerly Franchise Holdings International, Inc)

and SAB (Staff Accounting

Bulletins) Topic 1.N, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial

Statements,”

we evaluated the error and determined that the related impact was not material to our financial statements for any

prior annual or interim period, but that correcting the cumulative impact of the error would be significant to our results of operations

and equity for the fiscal and interim periods of 2020.

Accordingly, we have revised previously reported financial information for such

immaterial error, as previously disclosed in our Quarterly Report on Form 10-Q for the three month ended March 31, 2020.

revisions to certain previously reported financial information presented herein for comparative purposes is included in note 15.

to the Condensed Consolidated Financial Statements

consists of the following at September 30, 2020 and December 31, 2019:

Finished goods

Promotional items

Raw materials

Promissory Notes

Significant Accounting Policies

accounting polices used in the preparation of these condensed consolidated interim financial statements are consistent with those of

the Company’s audited financial statements for the year ended December 31, 2020 in addition to:

and Equipment –

During the three month ended March 31, 2021 the Company purchased an automobile.

As such the Company has updated

its accounting policy of its capital assets.

Capital assets are recorded at cost and are amortized using the straight-line method over

the following estimated useful lives:

consists of the following at March 31, 2021 and December 31, 2020:

Promissory Notes

following tables shows the balance of the notes payable as of September 30, 2020 and December 31, 2019:

Balance as at December

Balance as at December 31, 2019

following tables shows the balance of the notes payable as of March 31, 2021 and December 31, 2020:

as at December 31, 2019

Reclassification

at September 30, 2020

Notes Payable

the nine-months ended September 30, 2020 the Company reclassified $88,120 from accounts payable to notes payable.

the note is under negotiation.

the nine-months ended September 30, 2020 the Company reclassified a debit balance of $11,058 from notes payable to other receivable.

as at December 31, 2020

as at March 31, 2021

the year ended December 30, 2020, the Company reclassified $88,120 from accounts payable to promissory notes.

The terms of the note is

under negotiation and is currently due on demand.

the year ended December 30, 2020, the Company reclassified a debit balance of $11,058 from notes payable to other receivable.

the year ended December 31, 2016, the Company issued a secured promissory note in the amount of $73,452 ($123,231 Canadian Dollars).

During the year ended December 31, 2018, the Company issued two additions to the original unsecured promissory note of July 2016, totaling

$22,639 ($30,884 Canadian dollars).

The secured promissory note bears interest at a rate of 18% per annum.

The payment terms of the original

note including these additions are due “upon completion of going public on the Canadian Securities Exchange, with no change in

interest rate.

The secured promissory note is secured by all present and after-acquired property and assets of the Company.

year ended December 31, 2019, the Company extended the maturity dates of the secured promissory notes to be due on April 1, 2021.

at March 31, 2021, principal balance owing was $96,091 ($123,231 Canadian Dollars) (December 31, 2020 - $96,091 ($123,231 Canadian Dollars)).

As of March 31, 2021, the accrued interest on this note payable was $53,120 ($69,571 Canadian Dollars) (December 31, 2020 - $48,770 ($64,102

Canadian Dollars)) included in accounts payable and accrued liabilities.

As of March 31, 2021, the Company and the secured promissory

note holder are in dispute.

the year ended December 31, 2016, the Company issued secured promissory notes in the amount of $79,000.

The secured promissory notes

bears interest at a rate of 18% per annum, payable monthly.

The secured promissory notes are secured by all present and after-acquired

property and assets of the Company.

During the year ended December 31, 2019, the Company extended the maturity dates of all secured promissory

notes to be due on April 1, 2021.

As at March 31, 2021 principal balance owing was $79,000 (December 31, 2020 - $79,000).

31, 2021, the accrued interest on this note payable was $34,497 (December 31, 2020 –

$31,000) included in accounts payable and

accrued liabilities.

As of March 31, 2021, the Company and the secured promissory note holder are in dispute.

the years ended December 31, 2017, the Company issued secured promissory notes in the amount of $53,848 ($67,700 Canadian Dollars).

secured promissory notes were due in October and November 2018 and bears interest at a rate of 12% per annum.

The secured promissory

notes are secured by Company inventory and personal assets held by the CEO.

During the year ended December 31, 2019, the Company extended

the maturity date of the secured promissory notes to November 3, 2020.

During the three months ended March 31, 2021, the Company and

promissory note holders reached an agreement to repay $62,905 ($80,108 Canadian Dollars) for outstanding principal and interest.

result of the Company recognized a gain on settlement of debt of $5,682.

As of March 31, 2021 the Company has made the payment of $62,905.

to the Condensed Consolidated Financial Statements

Promissory Notes (continue)

the years ended December 31, 2017, the Company issued secured promissory notes in the amount of $60,000.

The secured promissory notes

are due in August and November 2018 and bear interest at a rate of 12% per annum.

The secured promissory notes are secured by Company

inventory and personal assets held by the CEO.

During the year ended December 31, 2019 the Company extended the maturity dates of this

secured promissory note to November 3, 2020.

During the year ended December 31, 2019, the Company a principal repayment of $10,000.

at March 31, 2021, principal balance owing was $50,000 (December 31, 2020 - $50,000).

As of March 31, 2021, the accrued interest on this

note payable was $24,203 (December 31, 2020 - $22,703) included in accounts payable and accrued liabilities.

As the note is outstanding

beyond its maturity date interest rate increased from 12% to 22%.

amounts repayable under promissory notes and secured promissory notes at March 31, 2021 and December 31, 2020:

amounts due within one year

Convertible Promissory Notes

February 25, 2020, the Company entered into an agreement with Leonite Capital LLC, a Delaware limited liability company (“Leonite”),

pursuant to which the Company issued to Leonite a secured convertible promissory note in the aggregate principal amount of $544,425

to be paid in tranches.

As additional consideration for the purchase of the note, (i) the Company issued to Leonite 450,000 common

shares, and (ii) the Company issued to Leonite a five-year warrant to purchase 900,000 common shares at an exercise price of $0.10

per share (subject to adjustment), which may be exercised on a cashless basis.

note carries an original issue discount of $44,425 to cover Leonite’s legal fees, accounting fees, due diligence fees and/or

other transactional costs incurred in connection with the purchase of the note.

pursuant to which the Company issued to Leonite a secured convertible promissory note in the aggregate principal amount of $544,425 to

be paid in tranches.

As additional consideration for the purchase of the note, (I) the Company issued to Leonite 450,000 common shares,

and (ii) the Company issued to Leonite a five-year warrant to purchase 900,000 common shares at an exercise price of $0.10 per share

(subject to adjustment), which may be exercised on a cashless basis.

Refer to note 14 for warrant valuation.

note carries an original issue discount of $44,425 to cover Leonite’s legal fees, accounting fees, due diligence fees and/or other

transactional costs incurred in connection with the purchase of the note.

Therefore, the purchase price of the note was $500,000.

On February 28, 2020, the Company recorded $198,715, $182,500 principal and $16,215 original issue discount.

1, 2020 the Company recorded an additional $310,322, $285,000 principal and $25,322 original issue discount.

As of September 30,

2020, the Company has recorded $509,037, $467,500 principal and $41,537 original issue discount.

Furthermore, the Company issued

450,000 shares of common stock valued at $123,390 and a debt-discount related to the warrants valued at $344,110.

During the period

ended September 30, 2020 Leonite converted $226,839 of convertible promissory note into 2,520,434 common shares at $0.09 per share.

The original value of the convertible note converted was $182,565 as a result the Company recognized a loss of $44,274 on settlement

The Company amortized $198,060 of financing costs related to the shares and warrants for the nine months ended September

The remaining net balance of the note at September 30, 2020 is $16,942 comprised of principal of $286,382 and net of

unamortized debt discount of $269,440.

February 28, 2020, the Company recorded $198,715, $182,500 principal and $16,215 original issue discount.

On September 1, 2020 the Company

recorded an additional $310,322, $285,000 principal and $25,322 original issue discount.

As of March 31, 2021, the Company has recorded

$509,037, $467,500 principal and $41,537 original issue discount.

Furthermore, the Company issued 450,000 shares of common stock valued

at $123,390 and a debt-discount related to the warrants valued at $344,110.

During the year ended December 31, 2020 Leonite converted

$226,839 of convertible promissory note into 2,520,434 common shares at $0.09 per share.

The original value of the convertible note converted

was $182,565 as a result the Company recognized a loss of $44,274 on settlement of debt.

During the three months ended March 31, 2021

Leonite converted its remaining outstanding principal and interest into common shares.

Leonite received 4,092,431

common shares at $0.09 per share valued at $368,319.

The original value of the convertible note converted including interest was $325,667.

As a result the Company recognized a loss of $42,651 on settlement of debt.

In connection with the settlement the Company expensed the

remaining $148,027 of the original debt discount to interest expense.

As of March 31, 2021 the convertible promissory note has been repaid

Company amortized $58,146 (2020 - $11,677) of financing costs related to the shares and warrants for the three months ended March 31,

The remaining net balance of the note at March 31, 2021 is $0 (2020 - $12,715) comprised of principal of $0 (2020 - $183,538) and

net of unamortized debt discount of $0 (2020 - $170,823).

note bears interest at the rate of the greater of 10.2% per annum.

Any amount of principal or interest on the note which is not

paid by the maturity date shall bear interest at the rate at the lesser of 24% per annum or the maximum legal amount permitted

by law (the “Default Interest”).

on March 18, 2020 and on the same day of each and every calendar month thereafter throughout the term of the note, the Company

shall make monthly payments of interest only due under the note to Leonite at the Stated Rate as set forth above.

shall pay to Leonite on an accelerated basis any outstanding principal amount of the note, along with accrued, but unpaid interest,

(i) net proceeds of any future financings by the Company, but not its subsidiaries, whether debt or equity, or any other

financing proceeds, except any transaction having a specific use of proceeds requirement that such proceeds are to be used exclusively

to purchase the assets or equity of an unaffiliated business and the proceeds are used accordingly;

(ii) net proceeds from any

sale of assets of the Company or any of its subsidiaries other than sales of assets in the ordinary course of business or receipt

by the Company or any of its subsidiaries of any tax credits existing prior to the date of the note;

and (iii) net proceeds from

the sale of any assets outside of the ordinary course of business or securities in any subsidiary.

As of September 30, 2020 the

Company has paid $11,100 in interest.

(formerly Franchise Holdings International, Inc)

Any amount of principal or interest on the note which is not paid

by the maturity date shall bear interest at the rate at the lesser of 24% per annum or the maximum legal amount permitted by law (the

“Default Interest”).

on March 18, 2020 and on the same day of each and every calendar month thereafter throughout the term of the note, the Company shall

make monthly payments of interest only due under the note to Leonite at the Stated Rate as set forth above.

The Company shall pay to

Leonite on an accelerated basis any outstanding principal amount of the note, along with accrued, but unpaid interest, from:

proceeds of any future financings by the Company, but not its subsidiaries, whether debt or equity, or any other financing proceeds,

except any transaction having a specific use of proceeds requirement that such proceeds are to be used exclusively to purchase the assets

or equity of an unaffiliated business and the proceeds are used accordingly;

(ii) net proceeds from any sale of assets of the Company

or any of its subsidiaries other than sales of assets in the ordinary course of business or receipt by the Company or any of its subsidiaries

of any tax credits existing prior to the date of the note;

and (iii) net proceeds from the sale of any assets outside of the ordinary

course of business or securities in any subsidiary.

During the three month ended March 31, 2021, the Company accrued interest of $5,654.

During the year ended December 31, 2020 the Company accrued interest of $9,960 and made interest payment of $11,100.

As of March 31,

2021 the Company has repaid all outstanding interest.

note will mature 18 months from the issue date, or August 25, 2021, at which time the principal amount and all accrued and unpaid interest,

if any, and other fees relating to the note, will be due and payable.

Unless an event of default as set forth in the note has occurred,

the Company has the right to prepay principal amount of, and any accrued and unpaid interest on, the note at any time prior to the maturity

date at 100% of the principal amount plus any accrued and unpaid interest plus the lesser of (i) nine months of unaccrued interest or

(ii) all unaccrued interest through the remainder of the term.

to the Condensed Consolidated Financial Statements

Promissory Notes (continued)

Convertible Promissory Notes (continued)

note will mature 18 months from the issue date, or August 25, 2021, at which time the principal amount and all accrued and unpaid

interest, if any, and other fees relating to the note, will be due and payable.

Unless an event of default as set forth in the

note has occurred, the Company has the right to prepay principal amount of, and any accrued and unpaid interest on, the note at

any time prior to the maturity date at 100% of the principal amount plus any accrued and unpaid interest plus the lesser of (i)

nine months of unaccrued interest or (ii) all unaccrued interest through the remainder of the term.

note contains customary events of default, including in the event of (i) non-payment, (ii) a breach by the Company of its covenants

under the securities purchase agreement or any other agreement entered into in connection with the securities purchase agreement,

or a breach of any of representations or warranties under the note, or (iii) the bankruptcy of the Company.

The note also contains

a cross default provision, whereby a default by the Company of any covenant or other term or condition contained in any of the

other financial instrument issued by the Company to Leonite or any other third party after the passage all applicable notice and

cure or grace periods that results in a material adverse effect shall, at Leonite’s option, be considered a default under

the note, in which event Leonite shall be entitled to apply all rights and remedies under the terms of the note.

the note, Leonite has the right at any time at its option to convert all or any part of the outstanding and unpaid principal amount

and accrued and unpaid interest of the note into fully paid and non-assessable common shares of the Company.

The number of common

shares to be issued upon each conversion of the note shall be determined by dividing the conversion amount by the applicable conversion

price then in effect.

note contains customary events of default, including in the event of (it) non-payment, (ii) a breach by the Company of its covenants

under the securities purchase agreement or any other agreement entered into in connection with the securities purchase agreement, or

a breach of any of representations or warranties under the note, or (iii) the bankruptcy of the Company.

The note also contains a cross

default provision, whereby a default by the Company of any covenant or other term or condition contained in any of the other financial

instrument issued by the Company to Leonite or any other third party after the passage all applicable notice and cure or grace periods

that results in a material adverse effect shall, at Leonite’s option, be considered a default under the note, in which event Leonite

shall be entitled to apply all rights and remedies under the terms of the note.

the note, Leonite has the right at any time at its option to convert all or any part of the outstanding and unpaid principal amount and

accrued and unpaid interest of the note into fully paid and non-assessable common shares of the Company.

The number of common shares

to be issued upon each conversion of the note shall be determined by dividing the conversion amount by the applicable conversion price

then in effect.

The conversion amount is the sum of:

(i) the principal amount of the note to be converted plus (ii) at Leonite’s

option, accrued and unpaid interest, plus (iii) at Leonite’s option, Default Interest, if any, plus (iv) Leonite’s

expenses relating to a conversion, plus (v) at Leonite’s option, any amounts owed to Leonite.

The conversion price shall

be $0.09 per share (subject to adjustment as further described in the note for common share distributions and splits, certain

fundamental transactions, and anti-dilution adjustments), provided that at any time after any event of default under the note,

the conversion price shall immediately be equal to the lesser of (i) the fixed conversion price ($0.09);

(ii) 60% of the lowest

bid price during the twenty one consecutive trading day period immediately preceding the trading that the Company receives a Notice

of Conversion or (iii) the discount to market based on subsequent financing.

option, accrued and unpaid interest, plus (iii) at Leonite’s option, Default Interest, if any, plus (iv) Leonite’s expenses

relating to a conversion, plus (v) at Leonite’s option, any amounts owed to Leonite.

The conversion price shall be $0.09 per share

(subject to adjustment as further described in the note for common share distributions and splits, certain fundamental transactions,

and anti-dilution adjustments), provided that at any time after any event of default under the note, the conversion price shall immediately

be equal to the lesser of (i) the fixed conversion price ($0.09);

(ii) 60% of the lowest bid price during the twenty one consecutive

trading day period immediately preceding the trading that the Company receives a Notice of Conversion or (iii) the discount to market

based on subsequent financing.

Notwithstanding

the foregoing, in no event shall Leonite be entitled to convert any portion of the note in excess of that portion of the note

upon conversion of which the sum of (1) the number of common shares beneficially owned by Leonite and its affiliates (other than

common shares which may be deemed beneficially owned through the ownership of the unconverted portion of the note or the unexercised

or unconverted portion of any other security of the Company subject to a limitation on conversion or exercise analogous to the

limitations contained in the note, and, if applicable, net of any shares that may be deemed to be owned by any person not affiliated

with Leonite who has purchased a portion of the note from Leonite) and (2) the number of common shares issuable upon the conversion

of the portion of the note with respect to which the determination of this proviso is being made, would result in beneficial ownership

by Leonite and its affiliates of more than 4.99% of the outstanding common shares of the Company.

Such limitations on conversion

may be waived (up to a maximum of 9.99%) by Leonite upon, at its election, not less than 61 days’

prior notice to the Company,

and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined

by Leonite, as may be specified in such notice of waiver).

note shall give Leonite a senior secured obligation of the Company, with first priority over all current and future indebtedness

of the Company and any subsidiary.

the foregoing, in no event shall Leonite be entitled to convert any portion of the note in excess of that portion of the note upon conversion

of which the sum of (1) the number of common shares beneficially owned by Leonite and its affiliates (other than common shares which

may be deemed beneficially owned through the ownership of the unconverted portion of the note or the unexercised or unconverted portion

of any other security of the Company subject to a limitation on conversion or exercise analogous to the limitations contained in the

note, and, if applicable, net of any shares that may be deemed to be owned by any person not affiliated with Leonite who has purchased

a portion of the note from Leonite) and (2) the number of common shares issuable upon the conversion of the portion of the note with

respect to which the determination of this proviso is being made, would result in beneficial ownership by Leonite and its affiliates

of more than 4.99% of the outstanding common shares of the Company.

Such limitations on conversion may be waived (up to a maximum of

9.99%) by Leonite upon, at its election, not less than 61 days’

prior notice to the Company, and the provisions of the conversion

limitation shall continue to apply until such 61st day (or such later date, as determined by Leonite, as may be specified in such notice

note shall give Leonite a senior secured obligation of the Company, with first priority over all current and future indebtedness of the

Company and any subsidiary.

of beneficial conversion feature

of September 30, 2020 The Company allocated $509,037 as the proceeds from Leonite;

$467,500 principal and $41,537 original issue

of March 31, 2021, The Company allocated $509,037 as the proceeds from Leonite;

$467,500 principal and $41,537 original issue discount.

The Company allocated $123,390 to common shares and $242,100 to warrants calculated using the black-scholes model.

effective rate resulted in a beneficial conversion feature greater than the proceeds.

Allocated proceeds of Convertible

Promissory Note

Conversion Price

Number of shares of Common Stock that

would be issued upon conversion of Convertible Promissory Note

The effective rate

resulted in a beneficial conversion feature greater than the proceeds.

proceeds of Convertible Promissory Note

of shares of Common Stock that would be issued upon conversion of Convertible Promissory Note

Conversion price

FMV of Common

Per Share Intrinsic Value of Beneficial Conversion Feature

Calculated Beneficial Conversion Feature

of Common Stock

Per Share Intrinsic

Value of Beneficial Conversion Feature

Beneficial Conversion Feature

accordance to ASC 470-20-30 , if the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated

to the convertible promissory note, the amount of the discount assigned to the beneficial conversion feature shall be limited

to the amount of the proceeds allocated to the convertible promissory note.

As such, the beneficial conversion feature of the

convertible promissory note is equal to $467,500 with an excess of $466,146.

(formerly Franchise Holdings International, Inc)

to the convertible promissory note, the amount of the discount assigned to the beneficial conversion feature shall be limited to the

amount of the proceeds allocated to the convertible promissory note.

As such, the beneficial conversion feature of the convertible promissory

note is equal to $467,500 with an excess of $466,146.

to the Condensed Consolidated Financial Statements

Shareholders’

Equity (Deficit)

the three month ended March 31, 2021 the Company issued a total of 30,048,199 common shares relating to the Reg-A public offering.

the shares issued 312,000 common shares valued at $31,200 were from share subscription payable and 15,000 common shares were cancelled

and refunded valued at $1,500.

The Company incurred share issuance cost of $59,160.

the same period 14,660,450 Reg-A public offering warrants were exercised for 14,660,450 common shares.

As of March 31, 2021 14,559,800

common shares were issued valued at $2,919,975.

Subsequent to March 31, 2021 the remaining 60,650 common shares valued at $12,130 were

the three month period ended March 31, 2021 the Company raised $3,081,981 through private placement offerings for 30,819,800 common shares

and warrants.

As of March 31, 2021, the Company issued 30,499,800 shares of common stock.

As of March 31, 2021, the Company has 320,000

common shares of to be issued.

Subsequent to the period ended the Company issued the remaining 320,000 common shares.

the three month ended March 31, 2021 the Company entered into consulting agreements with third party consultants for 7,400,000 shares

of common stock valued at $1,522,000 for prepaid consulting services.

As of March 31, 2021 the Company recorded $111,222 in share subscriptions payable.

the three month ended March 31, 2021 the Company issued 3,321,154 common shares valued at $269,910 for consulting services, $241,559

were issued from share subscriptions payable.

During the same period the Company issued 3,000,000 common shares valued at $300,000 for

consulting services.

the three month ended March 31, 2021 the Company issued entered into a settlement agreement with a loan holder to issue 1,240,111

common shares for all outstanding loan principal and interest valued at $111,610.

Refer to note 11.

Subsequent to the three month

ended March 31, 2021 the 1,240,111 common shares were issued.

the three month ended March 31, 2021 the Company entered into a settlement agreement with the convertible promissory note holder to settle

all outstanding principal and interest.

The Company issued 4,092,431 common shares valued at $368,320.

During the same period the convertible

promissory note holder exercised 790,243 warrants on a cashless basis for 790,243 common shares.

Refer to note 5 and 14.

the three month ended March 31, 2020 the Company entered into a share subscription agreement with a consultant of the Company for 4,000,000

common shares valued at $125,000 for prepaid consulting services.

As of March 31, 2020, the Company has expensed $31,250 from prepaid

the three month ended March 31, 2020, the Company issued 4,458,333 common shares from shares subscription payable with a combined value

4,000,000 of the common shares issued from subscription payable valued at $456,000 relates to the anti-dilution feature

triggered on March 5, 2019 as noted below.

the three month ended March 31, 2020 the Company entered into a settlement to fulfill a debt purchase agreement entered in 2017 for 4,100,000

shares valued at $856,080.

As of March 31, 2020, the Company has issued 2,190,959 shares from share subscriptions payable valued at $457,472.

the three month ended March 31, 2020 the Company issued 450,000 shares in connection with the issuance of convertible promissory note

(refer to note 5) at $0.27 per share.

of March 31, 2021, the Company was authorized to issue 299,000,000 shares of its common stock with a par value of $0.0001.

were ranked equally with regards to the Company’s residual assets.

During 2021, the Company was authorized to issue 1,100,000 shares

of its Series A and Series B Preferred Stock with a par value of $0.0001.

Series A preferred Stock have voting rights equal to 299 shares

of common stock, per share of preferred stock.

Series B preferred Stock have voting rights equal to 10,000 shares of common stock, per

share of preferred stock.

Related Party Transactions

the three month ended March 31, 2021, the Company recorded salaries expense of $49,783 (2020 - $16,126) related to services rendered

to the Company by its CEO.

the three month ended March 31, 2021 the Company repaid $19,453 to the Company’s CEO and director.

During the three months ended

March 31, 2020 the Company’s CEO and director paid on behalf of the Company’s lease payments of $7,317.

the three month ended March 31, 2021 the Company paid a director of the Company $50,000 for services rendered from 2015 to 2020.

the three month ended March 31, 2021, the Company paid $53,403 to a U.S.-based corporation which the Company’s CEO and director

is also a stockholder.

to the Condensed Consolidated Financial Statements

Changes in Cash Flows from Operating Assets and Liabilities

changes to the Company’s operating assets and liabilities for the nine months period ended September 30, 2020 and 2019 are

Decrease (increase) in accounts

Decrease (increase) in other receivable

Decrease (increase) in inventory

Decrease (increase) in prepaid expenses

Increase (decrease) in lease liability

Increase (decrease) in income taxes

Increase (decrease)

in accounts payable and accrued liabilities

the year ended December 31, 2019, the Company entered into an agreement to purchase 10,000,000 shares for $50,000 which has been

issued to the Company.

The Company’s investment accounts for a 10% equity stake in a US based mobile phone development company.

As of September 30, 2020 the Company had advanced a total of $24,423 (December 31, 2019 - $15,658) and is advancing tranches of

capital as required.

changes to the Company’s operating assets and liabilities for the three months ended March 31, 2021 and 2020 are as follows:

(increase) in accounts receivable

(increase) in other receivable

(increase) in inventory and prepaid inventory

(increase) in prepaid expenses and deposits

(decrease) in lease liability

(decrease) in payroll taxes payable

(decrease) in accounts payable and accrued liabilities

Commitments and contingencies

the three month ended March 31, 2021 the Company entered into an amended agreement to reserve an additional 150,000 common shares at

$0.0001 per share for consulting services.

During the year ended December 31, 2020 the Company entered into an agreement with a third-party

advisor to reserve for issuance 100,000 common shares at $0.0001 per share for consulting services.

As of March 31, 2021, the third party

has not exercised the shares.

As of March 31, 2021 the Company has reserved 250,000 commons shares.

the year ended December 31, 2020 the Company (defendant) is currently in an ongoing legal proceeding with a promissory notes payable

holder (plaintiff).

As of March 31, 2021, the outcome of the legal proceeding is uncertain.

the year ended December 31, 2020, the Company reached a legal settlement with a supplier in which the Company is obligated to pay $6,037

per month beginning on March 1, 2020 for four months until the settlement amount of $24,148 has been fully paid on June 1, 2020.

December 31, 2020, the Company has completed all payments.

Lease Liabilities

the year ended December 31, 2019, the Company signed a lease agreement for warehouse space to commence on August 1, 2019 and end

on July 31, 2022 with monthly lease payments of $2,222.

The Company has accounted for its leases upon adoption of ASC 842

whereby it recognizes a lease liability and a right-of-use asset at the date of initial application, being January 1, 2019.

lease liability is measured at the present value of the remaining lease payments, discounted using the Company’s incremental

borrowing rate of 10%.

The Company has measured the right-of-use asset at an amount equal to the lease liability.

Company’s right-of-use asset for the nine-months ended September 30, 2020 and December 31, 2019 are as follows:

Right-of-use asset

Current lease liability

Long-term lease liability

components of lease expense are as follows:

Amortization of right-of-use

the year ended December 31, 2019, the Company signed a lease agreement for warehouse space to commence on August 1, 2019 and end on July

31, 2022 with monthly lease payments of $2,221.

The Company has accounted for its leases upon adoption of ASC 842 whereby it recognizes

a lease liability and a right-of-use asset at the date of initial application, beginning January 1, 2019.

The lease liability is measured

at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate of 10%.

has measured the right-of-use asset at an amount equal to the lease liability.

Company’s right-of-use asset for the three month ended March 31, 2021 as follows:

lease liability

of lease liability are as follows:

minimum lease payments as of September 30, 2020:

Total future minimum lease payments

representing interest

Present value of future payments

Current portion

Long term portion

(formerly Franchise Holdings International, Inc)

lease liability

components of lease expense are as follows:

of right-of-use

on lease liability

to the Condensed Consolidated Financial Statements

Shareholders’

the nine-months ended September 30, 2020 the Company issued 2,413,022 common shares at $0.07 per share for $168,910 for consulting

the nine-months ended September 30, 2020, the Company issued 2,520,434 common shares pursuant to the conversion of the convertible

promissory note (note 4(b)) with a value of $226,839.

the the nine-months ended September 30, 2020, the Company entered into a share subscription agreement with a consultant of the

Company for 4,000,000 common shares valued at $250,000.

the nine-months ended September 30, 2020 the Company issued 1,333,333 and 240,000 common shares at $0.09 and 0.07 per share for

$120,000 and $16,800 respectively for prepaid advertising services.

As of September 30, 2020 the Company has expensed $53,293

from prepaid expenses.

the nine-months ended September 30, 2020 the Company entered into a share subscription agreement with a consultant of the Company

for 4,000,000 common shares valued at $125,000 for prepaid consulting services.

As of September 30, 2020 the Company issued 2,150,000

shares with a value of $67,188.

As of September 30, 2020 the Company has expensed $93,750 from prepaid expenses.

the nine-months ended September 30, 2020 the Company issued a consultant 5,686,978 common shares of subscription payable with

a value of $648,147 relating to the anti-dilution feature triggered on March 5, 2019 as noted below.

the nine-months ended September 30, 2020 the Company issued 458,834 common shares pursuant to a subscription payable with a value

the nine-months ended September 30, 2020 the Company issued 450,000 shares in connection with the issuance of convertible promissory

note (note 4(b)) at $0.27 per share.

the nine-months ended September 30, 2020 the Company entered into a settlement to fulfill a debt purchase agreement entered in

2017 for 4,100,000 shares valued at $856,080 .

As of September 30, 2020 the Company has issued 4,100,000 shares.

the nine-months ended September 30, 2020, Steven Rossi (the Company’s CEO) was issued 1,000 Series A Preferred Shares at

$0.09 per share equal to 299,000 common shares voting rights.

the nine-months ended September 30, 2019, the Company issued 2,680,084 common shares pursuant to a subscription payable to Consultant

with a value of $379,494.

During the same period, the Company entered into a share subscription agreement with a consultant of

the Company for 1,500,000 common shares valued at $30,000.

the nine-months ended September 30, 2019, Steven Rossi was issued 13,583,397 shares of Worksport, Ltd common stock as approved

by the board of directors, due to a conversion of all 1,000,000 shares of his Series A Preferred stock.

the nine-month ended September 30, 2019 on March 5, 2019, the Company completed a share consolidation of the Company’s issued

and outstanding common shares based on six (6) pre-consolidation shares to one (1) post-consolidation share.

The Consolidation

reduced the number of issued and outstanding common shares of the Company from 147,804,298 pre-Consolidation common shares to

approximately 24,634,051 post-Consolidation common shares.

While the share consolidation occurred during the year ended December

31, 2019, the Company has accounted for the effects retrospectively as such, the schedules and all references to shares, options

and warrants throughout the financial statements have been updated to reflect the number of post-consolidation securities.

(formerly Franchise Holdings International, Inc)

Lease Liabilities (continue)

of lease liability are as follows:

minimum lease payments as of March 31, 2021,

future minimum lease payments

amount representing interest

value of future payments

the year ended December 31, 2020 the Company received loans of $32,439, $10,000 and $108,000 from a unrelated third party with

an interest rate of 10% per annum with a maturity date of December 31, July 22 and August 31, 2021, respectively.

During the three

months ended March 31, 2021 the Company agreed to repay the outstanding principal and interest through the issuance of 1,240,111 common

shares at $0.09 per share.

As of March 31, 2021, the Company accrued interest of $1,319 (2020 - $0).

As of the date of the settlement

agreement the Company had $150,439 principal and $7,336 interest outstanding, resulting in the Company recognizing a gain on settlement

of $46,176 for the three month period ended March 31, 2021.

The 1,240,111 common shares were issued subsequent to period end.

the year ended December 31, 2020 the Company received $28,387 ($40,000 CDN) interest free from the Government of Canada as part of the

COVID-19 small business relief program.

Repaying the balance of the loan on or before December 31, 2022 will result in loan forgiveness

of 25 percent.

As of March 31, 2021 loan payable outstanding is $28,387 ($40,000 CDN).

Government Assistance

government of Canada is currently providing funding through the Canada Emergency Wage Subsidy (“CEWS”) program in order to

provide financial relief to Canadian businesses affected by COVID-19.

The CEWS program provides a reimbursement of salaries for eligible

employers based on the decrease in revenues.

During the three month ended March 31, 2021, the Company recognized CEWS of $21,704 ($27,534

CDN) as a reduction in general and administrative on the condensed consolidated statements of Operations.

Loss per Share

the three months ended March 31, 2021, loss per Share is $(0.01) (basic and diluted) compared to the three months ended March 31, 2020,

of $0.00 (basic and diluted) using the weighted average number of shares of 103,101,944 (basic and diluted) and 43,129,884 (basic and

diluted) respectively.

are 299,000,000 shares authorized, 162,763,986 and 49,006,583 shares issued and outstanding, as at March 31, 2021 and 2020 respectively.

As of March 31, 2021, the Company has 12,304,095 shares to be issued.

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.

As at March 31, 2021 the Company has 57,683,607 warrants convertible to 57,683,607 common shares for a total underlying

common shares of 57,683,607.

At March 31, 2020 the Company has 900,000 warrants convertible to 900,000 common shares and convertible

promissory note convertible to 2,207,946 common shares for a total underlying common shares of 3,107,946.

the three months ended March 31, 2021 a total of 15,450,693 warrants were exercised for 15,450,693 common shares.

14,660,450 warrants

were exercised at $0.20 per share, the remaining 790,243 warrants were exercised on a cashless basis, refer to note 5.

As of March 31,

2021 15,390,043 common shares were issued with the remaining 60,650 common shares issued subsequent to the period ended.

the three months ended March 31, 2021 the Company issued 30,048,199 and 30,499,800 warrants convertible to 1 and 2 common

shares each exercisable for a period of 12 and 18 months respectively.

The warrants were issued in connection with the Reg-A public

offering and private placement offering respectively.

The exercise price of the warrants is $0.20 per share.

the three month ended March 31, 2021 the Company and warrant holder reached an agreement to amend a previous warrant agreement.

will issue an additional 150,000 warrants for a total of 250,000 warrants.

The exercisable period of the warrants was also amended to

a period of five years beginning on January 14, 2021.

The warrants are convertible to 1 common share each exercisable at $2 per share.

to the Condensed Consolidated Financial Statements

Shareholders’

Deficit (continued)

March 5, 2019 immediately following the share consolidation the anti-dilution feature under the Investment and Co-operation agreement

dated November 1, 2017 came into effect.

As part of the anti-dilution feature the Company is obligated to issue an additional

8,465,608 shares at $0.11 per share for a total of $965,079.

The Company recognized a non-cash deemed dividend of $965,079 to

retain earnings and share subscriptions payable (Note 15).

the nine-months ended September 30, 2020 and 2019, the Company was authorized to issue 299,000,000 shares of its common stock

with a par value of $0.0001.

All shares were ranked equally with regards to the Company’s residual assets.

During 2020 and

2019, the Company was authorized to issue 1,100,000 shares of its Series A and Series B Preferred Stock with a par value of $0.0001.

Series A preferred Stock have voting rights equal to 299 shares of common stock, per share of preferred stock.

Series B preferred

Stock have voting rights equal to 10,000 shares of common stock, per share of preferred stock.

Earnings per Share

the nine-months ended September 30, 2020, Earnings per Share (EPS) is $(0.02) (basic and diluted) compared to the EPS for the

nine-months ended September 30, 2019 of $0.00 (basic and diluted) using the weighted average number of shares of 50,547,286 (basic

and diluted) and 35,236,355 basic and 50,259,078 diluted respectively.

per Share (EPS) is $(0.01) (basic and diluted) for the three months ended September 30, 2020 compare to the three months ended

September 30, 2019 of $0.01 basic and $0.00 diluted using the weighted average number of shares of 57,148,856 (basic and diluted)

and 40,639,077 basic and 55,710,518 diluted respectively.

are 299,000,000 shares authorized, 61,259,391 and 39,906,790 shares issued and outstanding, as at September 30, 2020 and 2019

respectively.

As of September 30, 2020 the Company has 7,336,994 shares to be issued.

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.

At September 30, 2020 the Company has 2,250,000 warrants convertible

to 2,250,000 common shares and convertible promissory note convertible to 3,448,025 common shares for a total underlying common

shares of 5,698,025.

At September 30, 2019 there were no underlying common shares.

the nine-months ended September 30, 2020 the Company issued 900,000 warrants convertible to 1 common share each with an exercise

period of 5 years.

The exercise price of the warrants is $0.10 per share (subject to adjustment) and may be exercised on a cashless

Refer to Note 4(b).

the During the nine-months ended September 30, 2020 the Company issued 1,250,000 and 100,000 warrants convertible to 1 common

share each exercisable until March 30, 2025 and April 29, 2022 respectively.

The exercise price of the warrants

are $0.12 and $2 per share.

Warrants (continued)

of March 31, 2021 the Company has the following warrants outstanding:

Contractual Life (Years)

April 29, 2022

February 25, 2025

March 20, 2025

average price

Balance, beginning

beginning of year

(15,450,693 )

end of period

(formerly Franchise Holdings International, Inc)

to the Condensed Consolidated Financial Statements

Concentration of Customer Risk

following table includes the percentage of the Company’s sales to significant customers for the nine-months ended September

30, 2020 and 2019, as well as the balance included in revenue and accounts receivable for each significant customer as at September

30, 2020 and 2019.

A customer is considered to be significant if they account for greater than 10% of the Company’s annual

loss of any of these key customers could have an adverse effect on the Company’s business.

Related Party Transactions

the nine-months ended September 30, 2020 the Company’s CEO and director paid on behalf of the Company’s lease payments

and other general expenses of $6,615.

During the same period the Company repaid $7,230 to the Company’s CEO and director

for a total net transaction of $615.

As of September 30, 2020 the Company has $28,023 in related party loan.

Contingent Liability

the nine-months ended September 30, 2020, the Company reached a legal settlement with a supplier in which the Company is obligated

to pay $6,037 per month beginning on March 1, 2020 for four months until the settlement amount of $24,148 has been fully paid

on June 1, 2020.

As of September 30, 2020 the Company has completed all payments.

the nine-months ended September 30, 2020 the Company received a loan of $32,439, $10,000 and $108,000 from a unrelated third party

with an interest rate of 10% per annum with a maturity date of December 31, July 22 and August 31, 2021 respectively.

the nine-months ended September 30, 2020 the Company received $28,397 ($40,000 CDN) interest free from the Government of Canada

as part of the COVID-19 small business relief program.

Repaying the balance of the loan on or before December 31, 2022 will result

in loan forgiveness of 25 percent.

of September 30, 2020 the Company accrued interest of $2,226.

(formerly Franchise Holdings International, Inc)

to the Condensed Consolidated Financial Statements

Revision of Prior Period Financial Statements

the review for the nine-months ended September 30, 2020 new information came to light regarding share issuances and an anti-dilution

the audit for the year ended December 31, 2020 an error was discovered relating to share issuances resulting from an anti-dilution agreement.

The share issuances for the three months ended March 31, 2020 were 2,000,000 and 458,834 common shares respectively.

The anti-dilution agreement relating to a 2017 share subscription payable agreement was triggered in March 2019 upon the Company’s

stock split was also discovered.

Please refer to Note 8.

revised certain prior period financial statements for an immaterial error related to the recognition of the deemed dividend related

to down-round features along with the associated shares issuance and professional fees (Note 1).

A summary of revisions to our

previously reported financial statements presented herein for comparative purposes.

The anti-dilution

agreement relating to a 2017 share subscription payable agreement was triggered in March 2019 upon the Company’s stock split.

revised certain prior period financial statements for an immaterial error related to the recognition of the deemed dividend related to

down-round features along with the associated shares issuance and professional fees (note 1).

A summary of revisions to our previously

reported financial statements presented herein for comparative purposes.

cumulative effect of the adjustments on all prior periods to Shareholders’

Equity as of June 30, 2019, September 30, 2019,

December 30, 2019 and March 31, 2020 reflected below:

Subscriptions

Equity as of March 31, 2020 reflected below:

Paid-in Capital

Subscriptions Receivable

Subscription Payable

translation adjustment

Stockholders’

Balance at June 30, 2019

$ (10,482,521 )

Balance at June 30, 2019, as revised

$ (11,447,600 )

Balance at September,

$ (10,212,150 )

Balance at September 30, 2019, as revised

$ (11,177,230 )

Balance at December 31, 2019

$ (10,768,906 )

Balance at December 31, 2019, as revised

$ (11,678,413 )

Balance at March 31, 2020

Equity (Deficit)

at March 31, 2020

$ (10,961,172 )

Balance at March 31, 2020, as revised

at March 31, 2020, as revised

$ (11,830,679 )

Consolidated Statements of Operations and Comprehensive Loss has been revised to reflect the correction for the three months ended

March 31, 2020 as follows

Condensed Consolidated Statements of Operations has been revised to reflect the correction for the three months ended March 31, 2020

the Three Months Ended March 31, 2020

Professional Fees

Total Operating Expenses

Loss from Operations

Comprehensive Loss

Loss per Share –

previously reported

Operating Expenses

from Operations

Comprehensive

per Share –

Basic and Diluted

the nine months period ended September 30, 2019 the Company entered into an agreement with a third party to reserve 100,000 common

shares for consulting services at $0.0001 per share.

As of September 30, 2020, the third party has not exercised the shares.

to the Condensed Consolidated Financial Statements

recent outbreak of the novel coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting

emergency measures to combat the spread of the virus.

These measures, which include the implementation of travel bans, self-imposed quarantine

periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown.

Global equity

markets have experienced significant volatility and weakness.

Governments and central banks have reacted with significant monetary and

fiscal interventions designed to stabilize economic conditions.

The duration and impact of the COVID-19 outbreak is unknown at this time,

as is the efficacy of the government and central bank interventions.

Additionally,

while the potential economic impact brought by, and the duration of the COVID-19 pandemic is difficult to assess or predict, the impact

of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our

short-term and long-term liquidity.

The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change.

yet know the full extent of potential delays or impacts on our business, financing or mining production activities or the ore and mining

industry or the global economy as a whole.

However, these effects could have a material impact on our liquidity, capital resources, operations

and business and those of the third parties on which we rely.

The management and board of the Company is constantly monitoring this situation

to minimize potential losses

Subsequent Events

Company has evaluated subsequent events through November 16, 2020 which is the date the financial statements were available

to be issued and the following events after September 30, 2020 occurred:

October 7, 2020 the Company issued 2,900,000 common shares from share subscription valued at $145,000

October 7, 2020 the Company issued 2,291,667 common shares from share subscription valued at $275,000

October 23, 2020 the Company reached a settlement agreement with a third party.

In accordance with the settlement agreement

the third party will release and cancel a reserve of 4,166,666 common shares of the Company.

Company has evaluated subsequent events through May 24, 2021 which is the date the financial statements were available to be issued and

the following events after year end occurred:

April 1, 2021 26,000 warrants were exercised at $0.20 per warrant for 26,000 common shares.

April 4, 2021 the Company issued 67,000 common shares to an employee for services rendered to the Company.

April 14, 2021 the Company entered into a consulting agreement for a duration of 18 months for 1,500,000 common shares at $0.10 per

April 29, 2021 the Company issued 1,850,000 which will be returned and cancelled.

May 3, 2021 the Company sold an aggregate of 10,000,000 units to a private investor for $0.10 per unit, for a total

purchase price of $1,000,000.

Each unit consists of one share of Common Stock and one (1) warrant to purchase two (2) shares

of Common Stock for $0.20 per Warrant Share from the date of issuance until November 3, 2022.

May 10, 2021, the Company issued an aggregate of 34,350,697 shares of Common Stock, to Steve Rossi, the Company’s Chief Executive

Officer and Director, in connection with his Employment Agreement in consideration for Mr.

Rossi agreeing to amend the Series A Certificate

of Designation to eliminate the Series A Preferred Stock conversion rights.

to note 6 for additional subsequent event.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

following management’s discussion and analysis (“MD&A”) should be read in conjunction with financial statements

of Worksport, Ltd.

(formerly Franchise Holdings International, Inc) and its wholly owned subsidiary, Worksport Ltd.

for the nine-months

ended September 30, 2020 and 2019, and the notes thereto.

Additional information relating to Worksport Ltd is available at Worksport.ca.

Harbor for Forward-Looking Statements

statements included in this MD&A constitute forward-looking statements, including those identified by the expressions anticipate,

believe, plan, estimate, expect, intend, and similar expressions to the extent they relate to Worksport or its management.

These forward-looking statements are not facts, promises, or guarantees;

rather, they reflect current expectations regarding future

results or events.

These forward-looking statements are subject to risks and uncertainties that could cause actual results, activities,

performance, or events to differ materially from current expectations.

These include risks related to revenue growth, operating

results, industry, products, and litigation, as well as the matters discussed in Worksport’s MD&A under Risk Factors .

Readers should not place undue reliance on any such forward-looking statements.

Worksport disclaims any obligation to publicly

update or to revise any such statements to reflect any change in the Company’s expectations or in events, conditions, or

circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from

those set forth in the forward-looking statements.

following discussion of our financial condition and results of operations should be read in conjunction with our financial statements

and the related notes included in this report.

December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China.

The virus has since spread

to over 150 countries and including Canada and United States.

On March 11, 2020, the World Health Organization declared the outbreak

In both Canada and United Sates most states/provinces and cities have reacted by instituting lockdown orders, restrictions

on travel, “stay at home”

orders and restrictions on the types of businesses that may continue to operate, as well

as guidance in response to the pandemic and the need to contain it.

a result of the lockdown orders enacted in the United States, Canada and China the Company expects a disruption to its manufacturing

with significant reduction to sales presented in these condensed interim financial statements.

As of the date of this financial

statement, lockdown orders have been relaxed in parts of the United States, Canada and China, but due to low consumer confidence

and disruption to manufacturing the Company expects sales to remain low.

extent to which the pandemic may impact our results will depend on future developments, which are highly uncertain and cannot

be predicted as of the date of this report, including new information that may emerge concerning the severity of the pandemic

and steps taken to contain the pandemic or treat its impact, among others.

Nevertheless, the pandemic and the current financial,

economic and capital markets environment, and future developments in the global supply chain and other areas present material

uncertainty and risk with respect to our performance, financial condition, results of operations and cash flows.

the nine months ended September 30, 2020, revenue generated from the entire line of Worksport products was $223,620, compared

to $1,959,027 for the nine months ended September 30, 2019.

The year over year decrease of approximately 89% was attributed to

the impact of COVID-19.

the nine months ended September 30, 2020, revenue generated in Canada was $10,990 compared to $74,058 for the same period in 2019,

a decrease of 85%.

For the three months ended September 30, 2020, the Company had refunds of $935 compared to revenue of $49,410

for the same period in 2019, an decrease of 102%.

The rate of exchange between the Canadian Dollar and the United States Dollar

during the first nine months of fiscal 2020 fluctuated due to COVID-19;

the Canadian Dollar decreasing in value compare to United

States Dollar on average by $0.1.

As a result, Canadian Dollars sales during the first nine-months ended September 30, 2020 will

be on average lower compared to 2019 when converted to United States Dollar for financial statement reporting purposes.

nine months ended September 30, 2020, gross revenue generated in the United States was $212,630 compared to $1,884,969 for the

same period in 2019.

This represents a year-over-year decrease in US-sourced revenue of approximately 89%.

For the three months

ended September 30, 2020, gross revenue generated in the United States was $117,426 compared to $820,643 for the same period in

2019, an decrease of 86%.

The decrease in revenue generated in Canada and United States can be attributed to the lockdown and

stay-at-home orders due to the COVID-19 pandemic resulting in lower consumer confidence and demand.

Worksport works closely with one major distributor in Canada, along with its own contracted distribution and inventory facility

in Breinigsville, PA and Depew, NY.

This does not include multiple independent online retailers.

Worksport currently supports a total of 10 dealers and distributors, Worksport believes the trend of increasing sales through

online retailers will continue to outpace the traditional distribution business model.

Moreover, reputable online retailer’s

customers tend to provide larger sales volumes, greater margin of profit as well as greater protection against price erosion.

of sales decreased for the first nine months of fiscal 2020, when compared to the first nine months of fiscal 2019, by 88% from

$1,473,150 to $180,028.

Our cost of sales, as a percentage of sales, was approximately 81% and 75% for nine months ended September

30, 2020 and 2019, respectively.

Cost of sales for the three months ended September 30, 2020 were $94,134 compared to $668,516

for the three months ended September 30, 2019.

In relation to our cost of sales, as a percentage of sales, was approximately 81%

and 77% for the three months ended September 30, 2020 and 2019.

The decrease in cost of sales for the three and nine months ended

September 30, 2020 was primarily due to significantly lower consumer demand as the COVID-19 pandemic negatively effected the economy.

cost of sales, freight costs accounted for 42% of cost of sales during the nine months ended September 30, 2020, whereas in 2019,

it accounted for 2% of cost of sales.

The increase in the percentage of cost of sales is due to increased shipping expenses due

increase demand of international delivery as a result of COVID-19.

provides its distributors and online retailers an “all-in”

wholesale price.

This includes any import duty charges,

taxes and shipping charges.

Discounts are applied if the distributor or retailer chooses to use their own shipping process.

exceptions apply on rare occasions where product is shipped outside the contiguous United States or from the United States to

Volume discounts are also offered to certain higher volume customers.

margin percentage for the nine month ended September 30, 2020 and 2019 were 19% and 25% respectively.

For the three month ended

September 30, 2020 and 2019 gross margin percentage were 19% and 23% respectively.

The decrease in gross margin reflects the affect

COVID-19 had impacted the Company’s freight costs as stated above increasing from 4% to 42%.

expenses increased for the nine months ended September 30, 2020 by $137,308 to $671,937 compared to $534,629 for the nine months

ended September 30, 2019.

For the three months ended September 30, 2020 operating expenses were $392,970 compared to $173,664

for the three months ended September 30, 2019.

and administrative expense decreased by $51,475 from $149,041 to $97,566 during the nine months ended September 30, 2020.

For the three months ended September 30, 2020 general and administrative expense decreased by $40,418 from $91,254 to $50,836

compared to the three month ended September 30, 2019.

The nine and three months decrease is attributed to reduced general

and administrative expenses as a result of COVID-19.

Company also realized a gain on foreign exchange in the amount of $4,845 during the nine months ended September 30, 2020,

a decrease of $38,582 when compared to a gain on foreign exchange of $43,427 during the nine months ended September 30, 2019.

For the three months ended September 30, 2020 the Company had a loss on foreign exchange of $2,599 compared to a gain on foreign

exchange of $22,701 for the three months ended September 30, 2019.

The decrease on foreign exchange was the result of the

Company’s reduced operations in Canadian Dollars related expenses and sales.

fees which include accounting, legal and consulting fees, increased from $366,843 for the nine months ended September 30,

2019 to $509,347 for the nine months ended September 30, 2020.

For the three months ended September 30, 2020 and 2019 the

Company recognized Professional fees of $280,413 and $92,858 respectively.

Professional fees increased for the three and nine

months ended September 30, 2020 compare to 2019 was due to the Company’

employing third party consultants to help expand

production and sales.

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

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.

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 in September and the associated quarters, months and periods

of those fiscal years.

Each of the terms the “Company”

and “Worksport”

as used herein refers collectively to

Worksport Ltd..

and its wholly owned subsidiaries, unless otherwise stated.

following discussion should be read in conjunction with the 2020 Form 10-K filed with the U.S.

Securities and Exchange Commission (the

“SEC”) and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form

Company believes that the COVID- 19 pandemic has had certain impacts on its business, but management does not believe there has been

a material long-term impact from the effects of the pandemic on the Company’s business and operations, results of operations, financial

condition, cash flows, liquidity or capital and financial resources.

the first quarter of 2021, aspects of the Company’s business continued to be affected by the COVID-19 pandemic with respect to

its manufacturing practices and sales.

Combined with decreased consumer confidence, Management expects the Company to generate less revenues

than in previous periods.

full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain

and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and

duration of the pandemic;

the availability, distribution and effectiveness of vaccines;

the imposition of protective public safety measures;

and the impact of the pandemic on the global economy and demand for consumer products.

OF OPERATIONS

the three months ended March 31, 2021, revenue generated from sales was $7,650, compared to $41,027 for the three months ended March

Total revenues decreased by approximately 81% compared to the same period in the prior year.

a result of the COVID-19 pandemic for the quarter ended March 31, 2021, factory output decreased, shipping costs increased and the ability

to distribute products to dealers, wholesalers and retailers was constrained due to labor shortages.

the quarter ended March 31, 2021 total revenues generated in Canada decreased 100% from $13,018 in the prior period to $0.

For the quarter

ended March 31, 2021, total revenue generated in the United States decreased 65% from $21,702 in the prior period to $7,650.

in revenue generated in Canada and United States can be attributed to the Company’s focus on enhancing its manufacturing and logistics

supply chain for the introduction of new products into the market.

the quarter ended March 31, 2021, online revenues decreased 60% from $19,005 in the prior period to

Online revenue accounted for 100% of total revenue for the quarter ended March 31, 2021 compared to 63% for the same period in

the quarter ended March 31, 2021, revenues based on distributors decreased from 13,018 to

$0 compared to the same period in 2020.

currently works with a total of nine dealers and distributors, however, given current market conditions Worksport plans to focus on online

sales during 2021.

Management believes that increasing sales through online retailers will continue to outpace the traditional distribution

business model during 2021.

Management further believes that online retailer’s customers tend to provide larger sales volumes,

greater profit margins and greater protection against price erosion.

the quarter ended March 31, 2021 cost of sales increased by 123% from $27,011 in the prior period to $60,221.

Cost of sales, as a percentage

of sales, was approximately 787% and 66% for three months ended March 31, 2021 and 2020, respectively.

The increase in cost of sales

was primarily due to increased shipping expenses near the end of the quarter in connection with inventory acquisitions.

and freight costs accounted for 52% of total cost of sales during the quarter ended March 31, 2020, compared to 13% for the same period

The increase in the percentage of the cost of sales was due to increased shipping expenses near the end of the quarter.

margin percentage for the quarter ended March 31, 2021 and 2020 were negative 687% and 34% respectively.

The decrease reflects

the Company’s focus on enhancing its manufacturing and logistics supply chain as it seeks to introduce new products, as

well as increased shipping expenses near the end of the quarter relating to inventory purchases.

expenses increased for the quarter ended March 31, 2021 by $782,434 from $138,471 in the prior period to $949,255.

and administrative expense increased by $100,378 from $33,906 in the prior period to $134,284.

The increase related

to research and development and salaries as the Company seeks to expand its operations and products.

Company realized a loss on foreign exchange of $5,206 during the quarter ended March 31, 2021, a decrease of $12,932 compared

to a gain on foreign exchange of $7,726 during the prior period.

The decrease on foreign exchange can be attributed to

operating with the Canadian Dollar.

fees which include accounting, legal and consulting fees, increased from $109,465 for the quarter ended March 31, 2020 to

$647,114 for the quarter ended March 31, 2021.

The increase was due to the employment of various third party

consultants to help expand the Company’s business operations.

Income and Expenses

income and expenses for the nine months ended September 30, 2020 was $321,096 compared to an income of $190,901 as at September

A difference of $511,997.

For the three months ended September 30, 2020 and 2019 other income and expenses were $234,377

and income of $242,498 respectively.

The difference for the three and nine months ended September 30, 2020 and 2019 can be attributed

to the Company recognizing a loss on settlement of debt in for $44,274 compare to a gain on settlement of debt $250,778 respectively.

loss for the nine months ended September 30, 2020 was $949,441 compared to a net income of $142,149 for the nine months ended

September 30, 2019, a change of $1,091,590 or 768%.

For the three months ended September 30, 2020 net loss was $604,990 compare

to a net income of $270,370 for the three months ended September 30, 2019.

The increase in the net loss can be attributed to the

decrease in net sales of $753,562 and $1,959,027 when comparing the three and nine months ended September 30, 2019 to 2020 as

a result of COVID-19.

income and expenses for the quarter ended March 31, 2021 was $221,693 compared to $27,811 the prior period, a change of

The difference can be attributed to the Company’s increased interest expense.

loss for the quarter ended March 31, 2021 was $1,223,519 compared to $152,266 for the quarter ended March 31, 2020, a change

of $1,071,253 or 704%.

The increase in the net loss can be attributed to the decrease in net sales and the increase of expenses

as the Company focuses on expanding its operations.

AND CAPITAL RESOURCES

of March 31, 2021, the Company had $9,311,878 in cash and cash equivalents.

The Company has generated only limited revenues and has relied

primarily upon capital generated from public and private offerings of its securities.

the Company’s acquisition of Worksport in fiscal 2014, it has never generated a profit.

of March 31, 2021 the Company had an accumulated deficit of $14,089,552.

Flow Activities

increased from September 30, 2019 to September 30, 2020 at $178,752 to $467,133, as a result of funds received from financing

Increase in accounts receivable at September 30, 2019 to 2020 were $187,706 and $122,606 respectively.

in accounts receivable as at September 30, 2020 was due to the lifting of COVID-19 quarantine measures.

Other receivable decreased

by $22,970 due to funds being received from sales tax refund.

Decrease in inventory as at September 30, 2019 and 2020 were $91,038

Decrease in inventory was a result of disruptions to supplier manufacturing from the COVID-19 pandemic.

Prepaid expenses

decreased by $48,642 as at September 30, 2020 compared to a decrease of $97,737 as at September 30, 2019.

The difference was due

the Company entering into new consulting and marketing services not yet to fully rendered.

Accounts payable and accrued liabilities

decreased by $73,201 as at September 30, 2020 compare to September 30, 2019 with an increase of $437,347.

The decrease in payables

as at September 30, 2020 is due to the Company increasing payment to vendors compare to expenses being incurred.

the nine months ended September 30, 2020, the Company advanced a further $8,765 to a US based mobile phone development company.

the nine months ended September 30, 2020, the Company purchased $7,962 in patents and leasehold improvements.

the nine months ended September 30, 2019, the Company invested $84,149 in warehouse equipment, product moulds, patents, trademarks,

and leasehold improvements.

the nine months ended September 30, 2019, the Company advanced a further $15,658 to a US based mobile phone development company.

the first nine months of fiscal 2020, the Company received $467,500 in convertible promissory note, made repayment of $615 and

$16,150 to shareholder loans and convertible promissory note respectively.

During the same period the Company received a loan

of $150,439 from an unrelated third party and $28,397 ($40,000 CDN) from the Government of Canada.

The Company also received $250,000

in share subscription for 4,000,000 common stock.

the first nine months of fiscal 2019, the Company issued $30,000 in issuance of common stock for cash and repayment of $9,395

of shareholder loans.

receivable increased at March 31, 2020 by $24,278 and decreased at March 31, 2021 by $106,349.

The decrease was due to the Company’s

collection of receivables from customers.

Other receivable decreased at March 31, 2021 and March 31, 2020 by $135,307 and $1,390

respectively, due to funds received from a sales tax refund and capital raised in the Reg-A offering.

decreased at March 31, 2020 by $17,411 and increased at March 31, 2021 by $252,529.

Prepaid expenses increased by

$64,594 at March 31, 2021 and decreased at March 31, 2020 by $8,281, due to increased consulting and marketing expenditures

during the quarter ended March 31, 2021.

payable and accrued liabilities decreased at March 31, 2021 and March 31, 2020 by $4,862 and $44,567 respectively.

increased from $10,101 at March 31, 2020 to $9,311,878 at March

31, 2021, an increase of $ 9,301,777or 921%.

The increase in cash was primarily due to its Reg A and private placement offerings

which generated $8,984.786.

of March 31, 2021, the Company had current assets of $9,811,800

and current liabilities of $1,373,617.

cash used by operating activities for the quarter ended March

31, 2021 was $506,867, compared to $181,035 in the prior period.

The primary difference was due to the issuance of shares and warrants

for services.

cash used in investing activities for the quarter ended March 31, 2021 was $132,256 compared to $8,765 in the prior period.

in investing activities was primarily due to the purchase of property and equipment of $119,233 and the advance of $5,504 of a short

term receivable.

cash provided by financing activities for the quarter ended March 31, 2021was $8,843,188 compared to $188,817 in the prior period.

the quarter ended March 31, 2021 the Company received $8,984,706 of proceeds from Reg-A public offering, private placement offering and

exercises of warrants incurring share issuance cost of $59,160.

During the quarter ended March 31, 2021 the Company made repayment of

$62,905 of promissory notes and repayment of $19,453 of shareholder loans.

2021, the Company intends to introduce several new tonneau covers as well as the TerraVis system.

The Company anticipates that the introduction

of these new products will improve the Company’s financial position.

on the Company’s future operating plans, existing cash of $9,311,878, additional funds of approximately $6,300,000 raised during

the quarter ended March 31, 2021;

management believes that the Company has sufficient funds to meet its contractual obligations and working

capital requirements for the next 12 months and the foreseeable future.

Sheet Arrangements

are no off-balance sheet arrangements with any party.

Accounting Policies

2 unchanged sentences

The preparation

of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts

of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

We evaluate our estimates

on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible

assets and contingencies and litigation.

We base our estimates on historical experience and on various other assumptions that

are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying

values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates

under different assumptions or conditions.

accounting policies that we follow are set forth in Note 2 to our financial statements as included in the Form 10K filed on May

These accounting policies conform to accounting principles generally accepted in the United States and have been consistently

applied in the preparation of the financial statements.

of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of

assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

We evaluate our estimates on

an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets

and contingencies and litigation.

We base our estimates on historical experience and on various other assumptions that are believed to

be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and

liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions

or conditions.

accounting policies that we follow are set forth in Note 2 to our financial statements as included in the Form 10K filed on April 13,

These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied

in the preparation of the financial statements.

Quantitative and Qualitative Disclosures about Market Risk

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements