What changed in this filing

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Item 1. Financial Statements

2021-08-16 compared with 2021-05-24 · 476 added, 611 removed, 169 unchanged (87% of the section changed)

1 unchanged sentence

Consolidated Balance Sheets

and cash equivalents

receivable net

inventory (note 3)

expenses and deposits

June 30, 2021

December 31, 2020

Current Assets

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)

lease liability (note 10)

Cash and cash equivalents

Accounts receivable net

Other receivable

Inventory (note 3)

Prepaid inventory (note 3)

Prepaid expenses and deposits

Related party receivable (note 7)

Total Current Assets

Property and Equipment, net

Right-of-use asset, net (note 10)

Intangible Assets, net

Liabilities and Shareholders’ Deficit

Current Liabilities

Lease Liability (note 10)

Shareholders’

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,

Accounts payable and accrued liabilities

Payroll taxes payable

Related party loan (note 7)

Promissory notes payable (note 4)

Convertible promissory note, net (note 5)

Loan payable (note 11)

Current lease liability (note 10)

Total Current Liabilities

Long Term – Lease Liability (note 10)

Total Liabilities

Shareholders’ Equity (Deficit)

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

B issued and outstanding, respectively (note 6)

Common stock, $ 0.0001

par value, 299,000,000 shares authorized, 162,763,986

and 3,820,618 shares 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

Additional paid-in capital

Share subscriptions receivable

Share subscriptions payable

Accumulated deficit

( 14,901,211 )

( 12,866,033 )

translation adjustment

Shareholders’

Equity (Deficit)

Liabilities and Shareholders’

Equity (Deficit)

Cumulative translation adjustment

Total Shareholders’ Equity (Deficit)

Total Liabilities and Shareholders’ Equity (Deficit)

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

Consolidated Statements of Operations

the three months ended March 31, 2021 and 2020

of Goods Sold

Profit (Loss)

and administrative

and marketing

(gain) on foreign exchange

the three and six months ended June 30, 2021 and 2020

Three Months ended June 30

Six Months ended June 30,

Cost of Goods Sold

Gross Profit (Loss)

Operating Expenses

from operations

Income (Expense)

expense (note 5)

(loss) on settlement of debt

other (expense)

per Share (basic and diluted)

Average Number of Shares (basic and diluted)

General and administrative

Sales and marketing

Professional fees

(Gain) loss on foreign exchange

Total operating expenses

Loss from operations

( 1,804,382 )

Other Income (Expense)

Interest expense (note 5)

Gain (loss) on settlement of debt

Total other income (expense)

$ ( 811,659 )

$ ( 192,185 )

$ ( 2,035,178 )

$ ( 344,451 )

Loss per Share (basic and diluted)

Weighted Average Number of Shares (basic and diluted)

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

Consolidated Statements of Shareholders’

the Three Months Ended March 31, 2021 and 2020

Consolidated Statements of Cash Flows

the six Months Ended June 30, 2021 and 2020

Operating Activities

$ ( 2,035,178 )

$ ( 344,451 )

Adjustments to reconcile net loss to net cash from operating activities:

Shares and warrants issued for services

Depreciation and amortization

Interest on lease liability

Accrued interest

Amortization of debt discount

Amortization on OID interest

Gain on settlement of debt

Total items not involving cash flow from operating activities

Changes in operating assets and liabilities (note 8)

Net cash used in operating activities

Cash Flows from Investing Activities

Repayment of lease liability

Loan receivable

Purchase of investment

Purchase of intangible assets

Purchase of property and equipment

Net cash used in investing activities

Financing Activities

Proceeds from issuance of common shares, net of issuance cost

Proceeds from warrant exercise

Proceeds from loan payable

Repayment of loan payable

Proceeds from promissory notes

Shareholder assumption of debt

Net cash provided by financing activities

Change in cash

Cash and cash equivalents - beginning of year

Cash and cash equivalents end of year

Supplemental disclosure of cash flow information:

Interest paid

Supplemental Disclosure of non-cash investing and financing Activities

Purchase of software

Shares issued to service providers

Cashless warrant exercise

Shares issued for share subscriptions payable

Conversion of convertible promissory note to common stock

Convertible promissory note – equity discount

Convertible promissory note – original issue discount

Conversion of preferred stock to common stock

Reverse stock split

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

Consolidated Statements of Shareholders’ Deficit

the Three Months Ended June 30, 2020 and 2021

Preferred Stock

Subscriptions

Stockholders’

at January 1, 2020

Cumulative Translation

Total Stockholders’ Equity

Balance at April 1, 2020

$ ( 11,830,679 )

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

$ ( 727,327 )

at January 1, 2021

Issuance for prepaid services

Issuance for prepaid services and subscriptions payable

Issuance of Series A Preferred Stock

Conversion of preferred stock to common stock

Consulting Service for share subscriptions

Issuance of shares from Reg-A

Conversion of convertible promissory note to shares

Cashless warrant exercise

Share issuance cost

Issuance for services and subscriptions payable

Issuance of shares from private placement

Warrant exercise

Loan repayment

Issuance of share subscriptions payable

Warrants issuance in connection to convertible promissory note

Share issuance in connection to convertible promissory note

Issuance for settlement of payables

Issuance of Preferred Stock

Warrants issuance for services

Balance at June 30, 2020

$ ( 12,022,864 )

Service for share subscriptions

for services and subscriptions payable

of shares from Reg-A

issuance cost

of shares from private placement

issuance for services

of convertible promissory note to shares (note 5)

$ ( 782,622 )

Balance at April 1, 2021

$ ( 14,089,552 )

Conversion of preferred stock to common stock

Consulting Service for share subscriptions

Issuance for services and subscriptions payable

Share issuance cost

Issuance of shares from private placement

Warrant exercise (note 14)

exercise (note 14)

repayment (note 11)

at March 31, 2021

Loan repayment (note 11)

Balance at June 30, 2021

$ ( 14,901,211 )

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

Consolidated Statements of Cash Flows

the Three Months Ended March 31, 2021 and 2020

Consolidated Statements of Shareholders’ Deficit

the Six Months Ended June 30, 2020 and 2021

Subscriptions

Total Stockholders’ Equity

Balance at January 1, 2020

$ ( 11,678,413 )

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

$ ( 882,561 )

Issuance for prepaid services

Issuance for prepaid services and subscriptions payable

Issuance of share subscriptions payable

Warrants issuance in connection to convertible promissory note (note 5 and 10)

Share issuance in connection to convertible promissory note (note 5)

Issuance for settlement of payables

Issuance of Preferred Stock

Balance at June 30, 2020

$ ( 12,022,864 )

$ ( 782,622 )

Balance at January 1, 2021

$ ( 12,866,033 )

Conversion of preferred stock to common stock

Consulting Service for share subscriptions

Issuance for services and subscriptions payable

Issuance of shares from Reg-A

Share issuance cost

Issuance of shares from private placement

Warrants issuance for services

Conversion of convertible promissory note to shares (note 5)

Cashless warrant exercise (note 14)

Warrant exercise (note 14)

Loan repayment (note 11)

( 2,035,178 )

Balance at June 30, 2021

$ ( 14,901,211 )

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

3 unchanged sentences

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 the U.S.

Securities and Exchange Commission (SEC).

3 unchanged sentences

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

results for the six-month period ended June 30, 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.

May 21, 2021, the Board of Directors authorized the submission of a Certificate of Change/Amendment to the Nevada Secretary of State

in which the Company sought to affect a reverse split of its common stock at the rate of 1 for 20 for the purpose of increasing the per

share price for the Company’s stock in an effort to meet the minimum listing requirements of the NADAQ.

The Certificate of Change

was submitted to the Nevada Secretary of State on May 21, 2021 and the FINRA corporate action was filed on August 3, 2021.

FINRA declared

the 1 for 20 reverse stock split effective on August 4, 2021.

These condensed interim financial statements including, prior period comparative

share amounts, have been retrospectively restated to reflect this reverse split.

Functional and Reporting Currency

3 unchanged sentences

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

12 unchanged sentences

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

of June 30, 2021, the Company had working capital of $ 11,657,250 and an accumulated deficit of $ 14,901,211 .

As of June 30, 2021, the

Company had cash and cash equivalents of $ 12,266,597 .

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

the six month ended June 30, 2021 the Company through its Reg-A public offering, private placement offering, and exercises of warrants

had raised in aggregate of approximately $ 12,700,000 .

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

In addition, as of August 2021 the Company has approximately 2,500,000 ( 50,000,000

pre-stock split) warrants exercisable at $ 4 ($ 0.20 pre-stock split) per warrant compare to an average share price of approximately $ 4.30

($ 0.22 pre-stock split) per share, anticipating additional warrant exercises.

on the Company’s future operating plans, existing cash of $ 12,266,597 combined with possible warrants exercises of approximately

$ 10,000,000 ;

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 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 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

1 unchanged sentence

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.

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

2 unchanged sentences

the following estimated useful lives:

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

Inventory consists of the following at June 30, 2021 and December 31, 2020:

Finished goods

Promotional items

Raw materials

Prepaid inventory

Promissory Notes

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

as at December 31, 2019

following tables shows the balance of the notes payable as of June 30, 2021 and December 31, 2020:

Schedule of Notes Payable

Balance as at December 31, 2019

Reclassification

as at December 31, 2020

as at March 31, 2021

Balance as at December 31, 2020

Balance as at June 30, 2021

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

7 unchanged sentences

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.

1 unchanged sentence

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

at June 30, 2021, principal balance owing was $ 96,091 ($ 123,231 Canadian Dollars) (December 31, 2020 - $ 96,091 ($ 123,231 Canadian Dollars)).

As of June 30, 2021, the accrued interest on this note payable was $ 57,582 ($ 75,102 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

As of June 30, 2021, the Company and the secured promissory

note holder are in dispute.

6 unchanged sentences

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.

As at June 30, 2021 principal balance owing was $ 79,000 (December 31, 2020 - $ 79,000 ).

As of June 30,

2021, the accrued interest on this note payable was $ 38,032 (December 31, 2020 – $ 31,000 ) included in accounts payable and accrued

As of June 30, 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).

4 unchanged sentences

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.

During the six months ended June 30, 2021, the Company and promissory

note holders reached an agreement to repay $ 62,905 ($ 80,108 Canadian Dollars) for outstanding principal of $ 53,848 and interest of $ 14,740 .

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

As of June 30, 2021 the secured promissory notes has been

repaid in full.

to the Condensed Consolidated Financial Statements

8 unchanged sentences

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

the quarter ended June 30, 2021 the Company and secured promissory note holder agreed to repay all outstanding principal and interest

through the issuance of 36,048 ( 720,966 pre-stock split) common shares valued at $ 0.09 per share.

As at June 30, 2021, the Company had

recorded principal and interest of $ 73,886 as a result of the share repayment the Company recognized a gain on settlement of $ 8,997 .

As of June 30, 2021 the secured promissory notes has been repaid in full.

amounts repayable under promissory notes and secured promissory notes at June 30, 2021 and December 31, 2020:

Schedule of Secured Notes Payable

June 30, 2021

December 31, 2020

Balance owing

Less amounts due within one year

Long-term portion

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.

As additional consideration for the purchase of the note, (I) the Company issued to Leonite 22,500 ( 450,000 pre-stock

split) common shares, and (ii) the Company issued to Leonite a five -year warrant to purchase 45,000 ( 900,000 pre-stock split) common

shares at an exercise price of $ 2.00 ($ 0.10 pre-stock split) per share (subject to adjustment), which may be exercised on a cashless

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

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.

3 unchanged sentences

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

As of March 31, 2021, the Company has recorded

As of June 30, 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.

Furthermore, the Company issued 22,500 ( 450,000 pre-stock split) 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 126,022 ( 2,520,434 pre-stock split) common shares at $ 1.80 ($ 0.09

pre-stock split) 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 six months ended June 30, 2021 Leonite converted its remaining outstanding principal and

interest into common share.

Leonite received 204,622 ( 4,092,431 pre-stock split) common shares at $ 1.80 ($ 0.09 pre-stock split) 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.

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

Convertible Promissory Notes (continued)

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.

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

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 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.

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

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.

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 June 30, 2021 the convertible promissory note has been repaid in full.

Company amortized $ 58,146 (2020 - $ 11,677 ) of financing costs related to the shares and warrants for the six months ended June 30, 2021.

The remaining net balance of the note at June 30, 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 ).

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.

Shareholders’ Equity (Deficit)

the six months ended June 30, 2021 the Company issued a total of 1,502,409 ( 30,048,199 pre-stock split) common shares relating

to the Reg-A public offering.

Of the shares issued 15,500 ( 312,000 pre-stock split) common shares valued at $ 31,200 were from share subscription

payable and 750 ( 15,000 pre-stock split) common shares were cancelled and refunded valued at $ 1,500 .

The Company incurred share issuance

cost of $ 123,984 .

the same period 1,409,123 ( 28,182,451 pre-stock split) Reg-A public offering warrants were exercised for 1,409,122 ( 28,182,451

pre-stock split) common shares.

As of June 30, 2021 1,311,394 ( 26,227,876 pre-stock split) common shares were issued valued at $ 5,245,592 .

Subsequent to June 30, 2021 the remaining 97,729 ( 1,954,575 pre-stock split) common shares valued at $ 390,915 were issued.

the six months ended June 30, 2021 the Company raised $ 4,081,980 through private placement offerings for 2,040,990 ( 40,819,800 pre-stock

split) common shares and warrants.

the six months ended June 30, 2021 the Company entered into consulting agreements with third party consultants for 370,000 ( 7,400,000

pre-stock split) shares of common stock valued at $ 1,588,000 for consulting services.

The services will be expensed throughout

the term of the agreement as the Company accrues the stock payable.

As of June 30, 2021 the Company recorded $ 337,145 in share subscriptions

the six months ended June 30, 2021 the Company issued 259,808 ( 5,196,154 pre-stock split) common shares valued at $ 741,159 for consulting

services, $ 241,559 were issued from share subscriptions payable.

During the same period the Company issued 150,000 ( 3,000,000 pre-stock

split) common shares valued at $ 390,000 for consulting services.

During the same period the Company issued 3,350 ( 67,000 pre-stock split)

common shares for employee compensation valued at $ 24,121 .

the six months ended June 30, 2021 the Company entered into a loan settlement agreement with a loan holder to issue 62,006 ( 1,240,111

pre-stock split) common shares at $ 1.80 ($ 0.09 pre-stock split) per share for all outstanding loan principal and interest valued

at $ 111,611 .

As of the date of the settlement the Company had $ 157,787 loan payable, resulting in the Company recognized a

gain on settlement of $ 46,176 .

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

As of June 30, 2021 the Company issued 62,006 ( 1,240,111 pre-stock split) common

the six months ended June 30, 2021 the Company entered into a promissory notes payable settlement agreement with a note holder to issue

36,048 (720,996 pre-stock split) common shares valued at $ 1.80 ($ 0.09 pre-stock split) per share for a total value of

As of the date of the settlement the Company had $ 73,886 promissory notes payable, resulting in the Company recognized

a gain on settlement of $ 8,997 .

Refer to note 4.

As of June 30, 2021 the Company issued 36,048 ( 720,966 pre-stock split) common shares.

the six months ended June 30, 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.

The Company issued 204,622 ( 4,092,431 pre-stock split) common shares at $ 1.80 ($ 0.09 pre-stock

split) per share valued at $ 368,318 .

As of the date of the settlement the Company had $ 325,667 convertible promissory note,

resulting in the Company recognized a loss of $ 42,651 on settlement of debt.

During the same period the convertible promissory note

holder exercised 39,512 ( 790,243 pre-stock split) warrants on a cashless basis for 39,512 ( 790,243 pre-stock split) common shares.

to note 5 and 14.

the six months ended June 30, 2021 the Company issued 1,717,535 ( 34,350,697 pre-stock split) common shares 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 and returning 900 Series A Preferred

Stock to the Company.

the six-months ended June 30, 2020 the Company issued 66,667 ( 1,333,333 pre-stock split) and 12,000 ( 240,000 pre-stock split) common

shares at $ 1.80 ($ 0.09 pre-stock split) and $ 1.40 ($ 0.07 pre-stock split) per share for $120,000 and $ 16,800 respectively for prepaid

advertising services.

As of June 30, 2020 the Company has expensed $ 6,620 from prepaid expenses.

the six-months ended June 30, 2020 the Company entered into a share subscription agreement with a consultant of the Company for 200,000

( 4,000,000 pre-stock split) common shares valued at $125,000 for prepaid consulting services.

As of June 30, 2020 the Company issued

107,500 ( 2,150,000 pre-stock split) shares with a value of $ 67,188 .

As of June 30, 2020 the Company has expensed $ 62,500 from prepaid

the six-months ended June 30, 2020 the Company issued a consultant 200,000 ( 4,000,000 pre-stock split) common shares of subscription

payable with a value of $ 456,000 relating to the anti-dilution feature triggered on March 5, 2019.

the six-months ended June 30, 2020 the Company issued 22,942 ( 458,834 pre-stock split) common shares pursuant to a subscription payable

with a value of $ 55,000 .

the six-months ended June 30, 2020 the Company issued 22,500 ( 450,000 pre-stock split) shares in connection with the issuance of convertible

promissory note (note 5) at $ 5.40 ($ 0.27 pre-stock split) per share.

the six-months ended June 30, 2020 the Company entered into a settlement to fulfill a debt purchase agreement entered in 2017 for 134,049

( 2,680,981 pre-stock split) shares valued at $ 138,818 .

As of June 30, 2020 the Company has issued 109,548 ( 2,190,959 pre-stock split)

to the Condensed Consolidated Financial Statements

Shareholders’ Equity (Deficit) (continued)

the six-months ended June 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.

of June 30, 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 100 shares

of its Series A and 100,000 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.

Series A preferred Stock have voting rights equal to

0 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

the six months ended June 30, 2021, the Company recorded salaries expense of $ 77,026 (2020 - $ 31,837 ) related to services rendered to

the Company by its CEO.

the six months ended June 30, 2021 the Company repaid $ 36,494 to the Company’s CEO and director.

During the same period the Company’s

CEO and director paid on behalf of the Company’s operating expense of $ 10,563 for a total net transaction $ 25,931 .

30, 2021 the Company has a receivable from related party of $ 2,538 .

the six months ended June 30, 2021 the Company paid a director of the Company $ 50,000 for services rendered from 2015 to 2020.

the six months ended June 30, 2021, the Company paid $ 59,203 to a U.S.-based corporation which the Company’s CEO and director is

also a stockholder.

Changes in Cash Flows from Operating Assets and Liabilities

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

changes to the Company’s operating assets and liabilities for the six months ended June 30, 2021 and 2020 are as follows:

Schedule of Changes in Operating Assets and Liabilities

Decrease (increase) in accounts receivable

Decrease (increase) in other receivable

Decrease (increase) in inventory and prepaid inventory

Decrease (increase) in prepaid expenses and deposits

Increase (decrease) in lease liability

Increase (decrease) in payroll taxes payable

Increase (decrease) in accounts payable and accrued liabilities

in operating assets and liabilities

$ ( 329,319 )

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.

the six months ended June 30, 2021 the Company entered into an amended agreement to reserve an additional 150,000 ( 7,500 post split)

common shares 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.

advisor to reserve for issuance 100,000 ( 5,000 post split) common shares for consulting services.

As of June 30, 2021, 12,500

( 250,000 pre-stock split) common shares were issued to the third party.

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.

As June 30, 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

1 unchanged sentence

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

to the Condensed Consolidated Financial Statements

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 $2,221.

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

the six months ended June 30, 2021 the Company entered into a second lease agreement for warehouse space to commence on June 1, 2021

and end on May 31, 2024 with monthly lease payments of $ 19,910 .

During 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 .

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 % .

The Company has measured the right-of-use asset at an amount

equal to the lease liability.

The Company’s right-of-use asset for the six months ended June 30, 2021 as follows:

Schedule Right-of-use Asset

Right-of-use asset

Current lease liability

Long-term lease liability

components of lease expense are as follows:

of right-of-use

on lease liability

to the Condensed Consolidated Financial Statements

Lease Liabilities (continue)

Schedule of Components of Lease Expense

Amortization of right-of-use

Interest on lease liability

Total lease cost

of lease liability are as follows:

minimum lease payments as of March 31, 2021,

future minimum lease payments

minimum lease payments as of June 30, 2021,

Schedule of Future Minimum Lease Payments

2021 (remainder of year)

Total 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.

Present value of future payments

Current portion

Long term portion

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 six months ended June

30, 2021 the Company agreed to repay the outstanding principal and interest through the issuance of 62,006 ( 1,240,111 pre-stock split)

common shares at $ 1.80 ($ 0.09 pre-stock split) per share.

During the six month ended June 30, 2021, the Company accrued interest

expense of $ 1,319 (2020 - $ 0 ).

As of the date of the settlement agreement the Company had $ 150,439 principal and $ 7,348 interest

outstanding, resulting in the Company recognizing a gain on settlement of $ 8,997 for the six month period ended June 30, 2021.

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

3 unchanged sentences

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

to the Condensed Consolidated Financial Statements

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.

Government of Canada is currently providing funding through the Canada Emergency Wage Subsidy (“CEWS”) and Canada Emergency

Rent Subsidy (“CERS”) programs in order to provide financial relief to Canadian businesses affected by COVID-19.

program provides a reimbursement of salaries for eligible employers based on a decrease in revenues.

The CERS program provides a reimbursement

of rent expenses paid by eligible parties based on a decrease in revenues.

During the three and six months ended June 30, 2021, the Company

recognized CEWS of $ 51,606 ($ 63,905 CDN) and CERS of $ 4,971 ($ 6,000 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 three and six months ended June 30, 2021, loss per Share is $( 0.08 ) and $( 0.27 ) (basic and diluted), compared to the three and six

months ended June 30, 2020, of $( 0.08 ) and $( 0.15 ) (basic and diluted).

Using the weighted average number of shares of 9,827,576 and

7,505,625 (basic and diluted) for the three and six months ended June 30, 2021 and 2,466,875 and 2,360,511 (basic and diluted) for the

three and six months ended June 30, 2020.

are 299,000,000 shares authorized, 11,148,292 and 2,636,496 shares issued and outstanding, as at June 30, 2021 and 2020 respectively.

As of June 30, 2021, the Company has 619,395 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

As at June 30, 2021 the Company has 2,961,580 warrants convertible to 5,002,570 common shares for a total underlying

common shares of 5,002,570 .

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.

At June 30, 2020 the Company has 45,000 warrants convertible to 45,000 common shares and convertible promissory

note convertible to 110,397 common shares for a total underlying common shares of 155,397 .

the six months ended June 30, 2021, a total of 1,448,635

pre-stock split) warrants were exercised for

pre-stock split) common shares.

( 28,182,451 pre-stock split) warrants were

exercised at $ 4.00 ($ 0.20 pre-stock split) per share, the remaining 39,512 ( 790,243 pre-stock split) warrants were exercised on a cashless

basis, refer to note 5.

As of June 30, 2021 1,350,906 ( 27,018,120 pre-stock split) common shares were issued with the remaining

97,729 ( 1,954,575 pre-stock split) common shares issued subsequent to the period ended.

the six months ended June 30, 2021, the Company issued 1,502,410 ( 30,048,199 pre-stock split) and 2,040,990 ( 40,819,800 pre-stock split)

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 $ 4.00

($ 0.20 pre-stock split) per share.

the six months ended June 30, 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.

2 unchanged sentences

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

to the Condensed Consolidated Financial Statements

Warrants (continued)

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

Contractual Life (Years)

average price

beginning of year

(15,450,693 )

end of period

Revision of Prior Period Financial Statements

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.

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 March 31, 2020 reflected below:

Paid-in Capital

Subscriptions Receivable

Subscription Payable

translation adjustment

Stockholders’

Equity (Deficit)

at March 31, 2020

$ (10,961,172 )

at March 31, 2020, as revised

of June 30, 2021, the Company has the following warrants outstanding:

Schedule of Warrants Exercise Price

Exercise price

Number outstanding

Remaining Contractual Life (Years)

December 1, 2021

February 24, 2022

January 14, 2026

February 25, 2025

March 20, 2025

October 1, 2022

Schedule of Warrants Activity

June 30, 2021

December 31, 2020

Number of warrants

Weighted average price

Number of warrants

Weighted average price

Balance, beginning of year

( 1,448,635 )

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

previously reported

Operating Expenses

from Operations

Comprehensive

per Share –

Basic and Diluted

Balance, end of period

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.

19 unchanged sentences

Subsequent Events

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

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 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

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

Accounting Policies

discussion and analysis of results of operations and financial condition are based upon our condensed consolidated financial statements,

which have been prepared in accordance with accounting principles generally accepted in the United States of America.

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 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

Company has evaluated subsequent events through August 16, 2021 which is the date the financial statements were available to be

issued and the following events after year end occurred:

May 21, 2021, the Board of Directors authorized the submission of a Certificate of Change/Amendment to the Nevada Secretary

of State in which the Company sought to affect a reverse split of its common stock at the rate of 1 for 20 for the purpose of increasing

the per share price for the Company’s stock in an effort to meet the minimum listing requirements of the NADAQ.

The Certificate

of Change was submitted to the Nevada Secretary of State on May 21, 2021 and the FINRA corporate action was filed on August

FINRA declared the 1 for 20 reverse stock split effective on August 4, 2021.

These condensed interim financial statements

including, prior period comparative share amounts, have been retrospectively restated to reflect this reverse split.

August 3, 2021 immediately following the share consolidation the anti-dilution feature dated January 1, 2021 came into effect.

part of the anti-dilution feature the Company is obligated to issue an additional 237,500 shares at $ 0.37 per share for a total of

The Company recognized a non-cash deemed dividend of $ 86,688 to retain earnings and share subscriptions payable.

to quarter ended June 30, 2021, 207,425 ( 4,148,500 pre-stock split) warrants were exercised for 207,425 ( 4,148,500 pre-stock split)

common shares valued at $ 829,700 .

August 6, 2021 the Company closed on a public offering whereby 3,272,727 Units were sold to Maxim Group LLC at a price of $ 5.12 per Unit.

Each Unit consisted of one (1) share of common stock and one (1) warrant to purchase common stock at an exercise price of $ 6.05 per share.

In addition, 490,909 warrants to purchase common stock were issued to the underwriter pursuant to the over-allotment option.

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