What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-03-31 · 486 added, 245 removed, 18 unchanged (98% of the section changed)

Ltd., through its subsidiaries, designs, develops, manufactures, and owns the IP on a variety of tonneau covers, solar integrations,

and NP (Non-Parasitic), Hydrogen-based true green energy solutions for the sustainable, clean energy, and automotive industries.

seeks to capitalize on the growing shift of consumer mindsets towards clean energy integrations with its proprietary solar solutions,

mobile energy storage systems (ESS), and NP (Non-Parasitic), Hydrogen-based technology.

Ltd., through its subsidiaries, designs, develops, manufactures, and owns the intellectual property (“IP”) on a portfolio

of tonneau cover, solar integration, portable power station, and NP (non-parasitic), hydrogen-based green energy products and solutions

for the automotive aftermarket accessories, power storage, residential heating, and electric vehicle-charging industries.

provide consumers with next-generation automotive aftermarket accessories while capitalizing on growing consumer interest in clean energy

solutions and power grid independence.

Company was incorporated in the State of Nevada on April 2, 2003 under the name Franchise Holdings International, Inc.

December 2014, FNHI acquired 100% of the outstanding equity of Worksport Ltd., an Ontario, Canada corporation formed in 2011 (“Worksport

Ontario”), pursuant to which Worksport Ontario became a wholly-owned subsidiary of FNHI.

Upon acquiring Worksport Ontario, FNHI

abandoned all previous business plans and has been focusing on developing the tonneau business.

May 2020, FNHI changed its name to Worksport Ltd.

On December 16, 2014, FNHI acquired 100% of the outstanding equity of Worksport Ltd., a corporation formed in the Province of Ontario

on December 13, 2011, formerly known as Truxmart Ltd.

(“Worksport Ontario”), pursuant to which Worksport Ontario became a

wholly-owned subsidiary of FNHI.

In May 2020, FNHI changed its name from “Franchise Holding International Inc.” to “Worksport

May 21, 2021, the Board of Directors (“Board”) 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 Nasdaq.

The Certificate of Change was submitted to the Nevada Secretary of State on May 21, 2021, and the Financial Industry Regulatory Authority

(“FINRA”) corporate action was announced on August 3, 2021.

FINRA declared the 1-for-20 reverse stock split effective on

August 4, 2021.

(“Terravis”) was incorporated in the State of Colorado on May 24, 2021.

On August 20, 2021, the Company was

issued 100 shares of common stock at par value of $0.0001 per share, representing 100% of the outstanding equity of Terravis.

January 20, 2022, Terravis issued an additional 9,999,900 shares of Common Stock to Worksport Ltd.

at a par value of $0.0001, representing

100% of the outstanding equity of Terravis.

August 6, 2021, the Company consummated an underwritten public offering (the “Public Offering”) of an aggregate of 3,272,727

units, pursuant to a registration statement on Form S-1, as amended (File No.

333-256142) and a registration statement on Form S-1 (File

The public offering price was $5.50 per unit and each unit consisted of one share of common stock and one warrant (“Public

Warrant”) to purchase one share of common stock for $6.05 per share (110% of the unit offering price) from the date of issuance

until the third anniversary of the issuance date.

The Company received gross proceeds of approximately $18.0 million from the Public

Offering, and after deducting the underwriting commissions, discounts, and offering expenses payable by the Company, the Company received

net proceeds of approximately $16.1 million.

The Company used the net proceeds for Working Capital, R&D, Marketing, and Equipment.

connection with the Public Offering, the Company’s common stock and Public Warrants commenced trading on the Nasdaq Capital Market

under the symbols “WKSP” and “WKSPW” since August 4, 2021.

Prior to the uplisting, the Company’s common

stock was quoted on the OTCQB Marketplace under the symbol, “WKSP.”

have developed soft vinyl tonneau covers and hard aluminum tonneau covers.

Covers are offered in three or four-panel options.

Once installed,

our tonneau covers latch against the bed of the truck and fold up against the back window of the truck cab.

current products include the SC (Soft Cover) line:

SC3, SC3pro, and SC4.

SC3 was Worksport’s first product introduced in 2011 and is fitted with a powder coated lightweight aluminum frame and rear cam

The tri-fold cover is ultra-violet (UV) protected vinyl tri-layer material that seals around the truck bed with a rubber gasket

designed to protect cargo from moisture and debris.

SC3pro was introduced in 2012 and has been upgraded from the SC3 to include our patented “Smart Latch” system.

offers the same features as the SC3;

however, the Smart Latch system allows the operator to open the cover by simply pulling a release

SC4 began production in 2021 and is expected to launch in Q2 of 2022.

We believe that this will be the first vinyl wrapped tonneau cover to fold in four sections.

This cover will also allow its users full

bed access by being foldable upwards toward the rear window of the truck.

This cover will be more compact when folded parallel to the

back window of the truck which will reduce wind resistance and rear window obstruction.

in Pre-Production

is currently developing the following products:

TC3 is currently in the pre-production stage, estimated to launch in the second quarter of 2022.

The TC3 design will fold with three

sections, allowing 2/3 bed access.

The cover will have one latching point that is manually operated by the user.

The cover panels will

be made from formed aluminum, ultra-strong 5052 alloy panels with a matte black powder coated surface, for a durable finish.

the SC3pro, TC3 will also offer a cable-operated latching system that allows for one-sided operation by the user.

Options on the TC3

will include expandable cargo division and storage solutions.

Terravis System

are currently developing a three-component system called the Terravis System.

The Terravis System is a first-of-its-kind mobile power

generator & energy storage system that consists of a solar tonneau cover called the Worksport SOLIS, a portable core battery called

the Worksport COR, and an XCX Accessory Rail – securely fixed to the truck’s bed with use of specially-designed and patented

The XCX system is used to secure the SOLIS tonneau cover using our patented Pro Series latches and can be used to secure

additional accessories along with COR energy storage system, COR batteries, and a solar controller.

Terravis System is capable of charging and storing up to 6kWh of energy on the go.

This energy can be used for emergencies, outdoor activities,

or work ranging from a contractor to drone operator.

The Terravis System’s integrated track systems can

be used for a variety of add-on options such as chrome trim, tie downs, cargo cleats, textile storage bags, seating, cargo racks, sliding system and others.

Our sales efforts for our Terravis System will be focused on the North American markets, for companies such as Workhorse, Atlis, Bollinger,

Hercules, as well as Toyota, Stellantis, GM and Ford trucks.

SOLIS Hybrid Solar Tonneau Cover is fitted with cutting edge Monocrystalline solar panels, capable of generating up to 600 watts

The SOLIS is based on our Tough Cover framework and can provide up to 10 additional miles for EV pick-up trucks.

This is based

on a 98kWh battery under optimal conditions at 85% efficiency.

Worksport SOLIS uses our TC (tough cover) design and builds on it by integrating

highly advanced solar panels.

The solar panels are secured to our 16 Gauge 5052 alloy panels both mechanically and using specialized

adhesives, and those panels ensure our covers are extremely strong and durable.

SOLIS allows current pick-up truck owners to utilize

sustainable energy through advanced solar power technology to charge their COR energy storage systems (ESS) and upcoming EVs.

over the bed of the truck, the SOLIS is designed to charge power banks and portable batteries, turning any truck into a mobile micro-grid

power station.

COR ESS (energy storage system) is a standalone product that can use energy created from SOLIS, our solar cover, and utilize the stored

energy on the go, anywhere.

Worksport COR is the most unique portable battery system on the market today.

Not only does COR allow users

to swap a depleted battery for a fully charged one, but it does so without a drop in power output for up to 15s with a load of 1800W.

These innovations allow COR to go beyond a simple lifestyle product for work and leisure, as it’s a tool that could potentially

save a life in the event of an emergency.

COR’s main battery, a Lithium Nickel Manganese Oxide (Li-MNC) battery, boasts a capacity of 1534Wh while its Hot Swap Lithium Iron

Phosphate (Li-MNC) battery has a capacity of 78.6Wh.

The COR’s built-in inverter allows 2000W of power with an output voltage of

120V AC (frequency of 60Hz) and input voltage of 48V.

The system allows Bluetooth connection for monitoring and controlling the COR and

its external batteries.

issued 100 shares of common stock at par value of $0.0001 per share.

On January 20, 2022, Terravis issued an additional 9,999,900 shares

of Common Stock to Worksport Ltd.

at a par value of $0.0001.

On November 4, 2022, Steven Rossi was issued 1,000 shares of Series A Preferred

Stock of Terravis at par value of $0.0001, representing 100% of the authorized Series A Preferred Stock, in consideration for services

The shares of Series A Preferred Stock vote together with the common stock of Terravis, unless prohibited by law, and have

51% voting power, regardless of how many shares of Series A Preferred Stock are outstanding.

Acquisition Corporation was incorporated in the State of Delaware on December 28, 2021.

On January 1, 2022, the Company was issued 1,000

shares of common stock at par value of $0.0001 per share, representing 100% of the outstanding equity of Worksport Acquisition Corporation.

USA Holding Corporation was incorporated in the State of Colorado on March 11, 2022.

On March 11, 2022, the Company was issued 1,000

shares of common stock at par value of $0.0001 per share, representing 100% of the outstanding equity of Worksport USA Holding Corporation.

USA Operations Corporation was incorporated in the State of Colorado on March 23, 2022.

On March 23, 2022, the Company was issued 1,000

shares of common stock at par value of $0.0001 per share, representing 100% of the outstanding equity of Worksport USA Operations Corporation.

New York Operations Corporation was incorporated in the State of New York on March 31, 2022.

On April 1, 2022, the Company was issued

10,000 shares of common stock at par value of $0.0001 per share, representing 100% of the outstanding equity of Worksport New York Operations

August 6, 2021, we consummated an underwritten public offering (the “Public Offering”) of an aggregate of 3,272,727 units,

pursuant to a registration statement on Form S-1, as amended (File No.

333-256142) and a registration statement on Form S-1 (File No:

The Public Offering price was $5.50 per unit, and each u nit consisted of one

share of common stock and one warrant (“Public Warrant”) to purchase one share of common stock for $6.05 per share (110%

of the unit offering price) from the date of issuance until the third anniversary of the issuance date.

We received gross proceeds of

approximately $18.0 million from the Public Offering, and after deducting the underwriting commissions, discounts, and offering expenses

payable by us, we received net proceeds of approximately $16.1 million.

We used the net proceeds for working capital, research &

development, marketing, and equipment.

connection with the Public Offering, our common stock and Public Warrant commenced trading on The Nasdaq Capital Market under the symbols

“WKSP” and “WKSPW,” respectively, since August 4, 2021.

Prior to the uplisting, our common stock was quoted on

the OTCQB Marketplace under the symbol “WKSP.”

following highlights recent material developments in our business:

May 2022, we closed on the purchase of a commercial property (the “Property”) for $8,125,000 in the town of West

Seneca, Erie County, New York (the “Acquisition”) pursuant to a Purchase and Sale Agreement that we entered into

with J&M Distributing, Inc.

We financed $5,300,000 in connection with the closing of the Acquisition pursuant to a Loan Agreement

that we entered into with Northeast Bank (“Lender”), of which we issued a Promissory Note to the Lender guaranteed

by Worksport Ltd.

and secured by the Property per a Mortgage and Security Agreement entered into with the Lender.

consists of two parcels of land:

(i) one parcel consisting of approximately 14 acres improved by a building containing approximately

152,847 square feet;

and (ii) a second parcel consisting of approximately four acres of vacant land.

Currently, our manufacturing

operations are in China.

With the acquisition of the Property, we plan to move our manufacturing operations to the United States.

We believe that by moving our manufacturing operations to the United States, we can (i) have better control over design and manufacturing

quality of our products, (ii) lessen supply chain risk, (iii) decrease shipping costs, and (iv) cut overall manufacturing costs.

September 30, 2022, we filed a shelf registration statement on Form S-3 (File No.

333-267696), which was declared effective by

the SEC on October 13, 2022 (the “Form S-3”), containing a base prospectus covering the offering, issuance and sale

by us of up to $30,000,000 of our common stock and prospectus supplement covering the offering, issuance and sale by us of up

to $13,000,000 of our common stock that may be issued and sold under an At The Market Offering Agreement dated as of September

30, 2022 (the “ATM Agreement”).

Pursuant to the ATM Agreement, H.C.

Wainwright & Co., LLC (“Wainwright”)

is entitled to a commission equal to 3.0% of the gross sales price of the shares of common stock sold.

As of the filing date

of this Annual Report on Form 10-K, no securities have been sold pursuant to the Form S-3.

On November 14, 2022, our

shareholders approved the Worksport Ltd.

2022 Equity Incentive Plan (the “2022 Plan”).

A total of 750,000 shares of common

stock were initially reserved for the issuance of awards under the 2022 Plan.

The 2022 Plan contains an “evergreen formula”

pursuant to which the number of shares of common stock available for issuance under the 2022 Plan will automatically increase on

January 1 of each calendar year during the ten-year term of the 2022 plan, beginning with the calendar year 2023, by an amount of

shares of common stock so that the total amount of common stock available under the 2022 Plan is equal to 15% of the total number

of shares of common stock outstanding on December 31 st of the prior calendar year minus the total number of shares reserved

and available for issuance under the Worksport Ltd.

2015 Equity Incentive Plan and Worksport Ltd.

2021 Equity Incentive Plan.

January 1, 2023, the authorized number of shares of common stock of the 2022 Plan was 2,518,502.

November 18, 2022, we engaged Lumsden & McCormick, LLP to replace Haynie & Company as our independent registered public accounting

On February 23, 2023, our

subsidiary, Terravis, announced the installation of its proprietary electric vehicle fast charging stations with two direct current

(DC) fast chargers at our factory in West Seneca, New York.

Each station’s initial two charge points are rated at 120 kilowatt-hours

(kWh) and equipped with two CCS1 connectors (Combined Charging Standard:

A standard for charging electric vehicles that uses Combo

1 or Combo 2 connectors to provide power at up to 350 kilowatts), also known as pistols.

We are planning installations of additional

DC fast chargers in the near future as well, rated at a minimum of 240 kWh.

have developed a series of soft and hard folding tonneau covers as well as energy products.

Tonneau Covers

soft tonneau cover offering consists of vinyl wrapped tri- and quad-fold tonneau covers manufactured overseas in Meizhou, China.

versions of our vinyl tri-fold soft tonneau covers are now available for purchase and marketed under a “PRO” designation;

our quad-fold soft tonneau covers will soon have an upgraded “PRO” version available as well.

These upgraded versions include

our patented quick latch system, which allows the operator to open the cover by simply pulling a release cable – enabling single-sided

Each soft cover is fitted with a powder-coated, lightweight aluminum frame and rear cam latches as well as ultra-violet (UV)

protected, vinyl tri-layer material that seals around the truck bed with a rubber gasket designed to protect cargo from moisture and

soft covers are a lower cost option when compared to quad-fold tonneau covers.

Compared with Worksport tri-fold soft tonneau covers,

Worksport quad-fold covers have the additional benefit of enabling full truck bed access by being foldable upwards toward the rear window

of the truck.

As the market’s first quad-folding vinyl-wrapped cover that will provide full truck bed access utilizing Worksport’s

Intellectual Property, Worksport’s soft quad-fold covers are compact when folded parallel to the back window of the truck while

avoiding obstruction of the rear brake light on most truck models.

soft tonneau cover line includes:

Worksport SC3 – soft tri-fold introduced in 2011, first Worksport Ltd.

Worksport SC3 PRO –soft tri-fold with Smart Latch system introduced in 2012;

Worksport SC4 – soft quad-fold introduced in 2022;

Worksport SC4 PRO –soft quad-fold with Smart Latch system to be introduced in 2023.

In Development

Worksport SCX – soft tri-fold with extendable frame.

Tonneau Covers

hard line of tonneau covers includes tri- and quad-fold, aluminum flush-mounted and top-mounted folding tonneau covers.

Our entire line

of hard folding tonneau covers will be manufactured in the USA.

Our hard cover panels are designed with formed aluminum, ultra-strong

high temper formed alloy panels with a durable black surface.

These panels will have significant dent resistance over many other tonneau

covers as they use thicker aluminum on the exterior surface as opposed to the sandwich style of most covers today.

Designed to auto index

(center) in the truck bed and be only 7.5mm above the truck bed, it is a low profile, sleek look that is easy to install.

Our hard covers

will be offered with the XCX rail upgrade, allowing future accessories such as expandable cargo division and storage solutions.

to the soft cover line, our hard cover line products will each be available in upgraded versions utilizing our quick latch system, enabling

single-sided operation.

hard tonneau cover line, all of which is in development, includes:

Worksport TC3 – top-mounted hard tri-fold;

Worksport TC3 PRO – top-mounted hard tri-fold with Smart Latch system;

Worksport FC3 – flush-mounted hard tri-fold;

Worksport FC4 – flush-mounted hard quad-fold;

Worksport FC4 PRO – flush-mounted hard quad-fold with Smart Latch system.

are researching and developing various energy-based products, two of which can be sold together as a kit:

the Worksport SOLIS tonneau

cover (“SOLIS”) and the Worksport COR energy storage system (“COR”).

This kit will be available for both end-consumers

and Original Vehicle Manufactures alike.

This kit integrates tonneau cover, solar energy capture, and portable energy storage technologies

to convert pickup trucks to mobile microgrid power stations – allowing Worksport to compete within niche markets in each the automotive

aftermarket accessory, solar energy, and portable power station markets.

SOLIS, a tonneau cover with integrated solar panels, is a unique, folding tonneau cover design founded on our top-mounted tough cover

design but with the addition of cutting edge, monocrystalline, semi-flexible solar panels and wiring system.

These solar panels are secured

to aluminum alloy panels both mechanically and using specialized adhesives, which ensure the covers are extremely strong, durable, and

The SOLIS cover is intended to be sold as an Original Equipment Manufacturer product, as it can be integrated into the design

of leading electric pickup trucks;

consequently, we have and will continue forging relationships with electric pickup truck manufacturers,

including but not limited to Workhorse, Atlis, Bollinger, and Hercules as well as Toyota, Stellantis, General Motors, Ford, Nissan, and

solar panels that we plan to integrate into the SOLIS cover are capable of generating 170-180 watts per square meter.

For example, as

tested outdoors, the SOLIS cover is capable of generating approximately 460 watts of power on a RAM 6’5” truck bed.

integrated into the design of an electric pickup truck, this power generation can be converted to additional vehicle mileage.

added mileage is dependent on many factors including but not limited to region of the world in which the vehicle is driven, weather conditions,

season, temperature, hours of sun light per day, and average irradiance.

For example, assuming a solar power density of 170 W/m 2 ,

battery capacity of 98 kWh, mileage range of 300 miles, average hours of sun per day of 6 hours, average irradiance per day of 700 W/m 2 ,

and surface area of 2.7 m 2 , the SOLIS cover is estimated to provide 5.6 additional miles of range to an electric pickup truck

COR or COR ESS (energy storage system) is a modular, portable power station uniquely designed to mount to the inside of a pickup truck

bed and enable battery swapping without an immediate drop in power output.

The COR built-in inverter with an output voltage of 120V AC

(frequency of 60Hz) is capable of powering loads up to 3000W.

Combined with its modular 48V batteries, it can store up to 6kWh of energy

Each additional modular battery adds 1.5kWh of energy storage.

The COR main battery, a Lithium battery, boasts a capacity

of 1534Wh while its Hot Swap Lithium Iron Phosphate (Li-LFP) battery has a capacity of around 200Wh.

The system allows Bluetooth connection

for monitoring and controlling the COR system and its external batteries.

only does the COR system allow users to swap a depleted battery for a fully charged one, but it does so without a drop in power output

for up to 15 seconds with a load of 3000W.

This unique feature allows the COR system to be used in a variety of applications, including

but not limited to sporting and outdoor activities, disaster relief and general emergencies, and vocational activities ranging from contractor

to drone operator.

While the COR system is designed to nicely complement the SOLIS tonneau cover, it will be purchasable as a standalone

product – allowing consumers to utilize stored energy, whether captured via grid or grid-independent energy sources, anywhere.

As Worksport’s first step into the energy storage market, the COR system is Worksport’s pioneer product within its future

COR platform.

Manufacturing

of December 31, 2021, all Worksport products were manufactured in a facility located in Meizhou, China according to our specifications,

schematics and blueprints.

We believe that production at the factory can be increased within 30 days to facilitate volumes up to ten

times the current output without any adverse effects on quality or craftsmanship.

are currently in the process of establishing manufacturing presence within North America and are working towards closing on a property

in West Seneca, New York.

Management and seller are under contract for the property, and management plans to close on the property in

April of 2022 barring any unforeseen problems or delays.

Management believes that having manufacturing capability in North America will

increase quality control and production efficiency as well as lower landed costs.

Company currently holds a broad collection of intellectual property rights relating to certain aspects of its parts and accessories,

and services.

This includes patents, trademarks, service marks, and trade secrets.

Although the Company believes the ownership of such

intellectual property rights is an important factor in its business and that its success does depend in part on such ownership, the Company

relies primarily on the innovative skills, technical competence and marketing abilities of its personnel.

current intellectual portfolio consists of five (5) issued U.S.

utility patents, one (1) issued Canadian utility patent, and twenty (20)

pending patent applications:

four (4) U.S.

of December 31, 2022, all Worksport tonneau covers were manufactured in a facility located in Meizhou, China according to Worksport’s

specifications, schematics and blueprints.

We believe production at the factory can be increased within 30 days to facilitate volumes

up to ten times the current output without any adverse effects on quality or craftsmanship.

have purchased many production tools including injection molds, die cast molds, extrusion dies, and stamping dies – many of which

are residing among foreign suppliers who are currently utilizing said tooling to produce needed components for manufacturing or assembly

within the USA.

We are concurrently diversifying this list raw material suppliers who can use our production tools to continue producing

our tonneau cover components, should trade with any particular or preferred raw material supplier become more expensive or difficult.

May of 2022, we purchased a 152,847 square foot production facility for domestic production, storage, and distribution, located in West

Seneca, New York.

We have received the majority of all manufacturing equipment deemed necessary to begin production, and we are in the

process of installing and testing those machines, as well as training personnel to use those machines.

Management believes that having

manufacturing capability in North America will increase quality control and production efficiency, as well as lower landed costs and

geopolitical risks.

Plant-Readiness Team believes that we will begin initial, basic manufacturing and/or assembly at our USA-based production facility within

the second quarter of fiscal year 2023, improving our process on an on-going basis.

currently hold a broad collection of intellectual property rights relating to certain aspects of our parts and accessories and services.

This includes patents, trademarks, copyrights and trade secrets.

Although we believe the ownership of such intellectual property rights

is an important factor in our business and that our success does depend in part on such ownership, we rely primarily on the innovative

skills, technical competence and marketing abilities of our personnel.

of December 31, 2022, the Company’s patent portfolio consists of eight (8) issued U.S.

utility patents, one (1) issued Canadian

utility patent, and twenty-seven (27) pending patent applications:

eight (8) U.S.

utility applications, seven (7) U.S.

provisional applications, seven (7) U.S.

design applications,

and two (2) Canadian utility applications.

We also in the process of preparing several other provisional and design patent applications.

three (3) PCT applications, six (6) Canadian utility applications, one (1) Chinese invention application, and two (2) Chinese design

applications.

The Company is also in the process of preparing and filing several other utility and design patent applications across

relevant countries and jurisdictions.

patents will expire between 2032 and 2036, excluding any patent term adjustment that might be available following the grant of the

If issued, pending applications would expire in 2041, excluding any patent term adjustment that might be available following

the grant of the patent.

Patents issued on the provisional applications, if any, would expire in 2042, excluding any patent term adjustment

that might be available following the grant of the patent.

patents issued to our Chief Executive Officer, Steven Rossi, have been assigned to the Company or will be assigned to the Company upon

being issued by the USPTO.

Company has twenty-eight (28) trademarks in various states of pending, registered and allowed in the United States, Canada, China, European

Union, Australia, New Zealand, and United Kingdom.

If issued, pending applications would expire 20 years from the filing date of each application, excluding the filing date of

any provisional applications and excluding any patent term adjustment that might be available following the grant of the patent.

of December 31, 2022, the Company has 20 trademark registrations and 15 pending trademark applications in the United States, Canada,

China, and European Union.

primarily compete in the Automotive Aftermarket Accessories and New Energy industries with a focus on the Tonneau Cover and the Portable

Power Station Markets.

are various forms of tonneau covers, each with their advantages and disadvantages, available for consumption through direct-to-consumer

and retailer and dealer sales channels.

Some forms of tonneau covers include but are not limited to:

One Piece Caps and Lids;

Folding & Roll-Up Covers;

Folding & Standing Covers.

one piece covers and retractable covers tend to have limited functionality and tend to be priced higher when compared to other types

of tonneau covers.

Soft and hard folding/rolling tonneau covers, in contrast, tend to be priced more competitively and, as such, are

a popular choice among tonneau cover consumers.

Given these factors and our belief that we can develop less cumbersome, high functioning,

and low cost soft and hard folding covers, we focus primarily on developing soft and hard folding covers.

tonneau cover revenue stream is largely proportional to sales of pickup trucks.

Currently, there are 284.9 million vehicles in operation

in the USA 1 , 21%, or 59.5 million, of which are pickup trucks.

2 However, as a result of supply chain shortages,

rising interest rates, high prices, and slowing sales, it may take until 2025 for new-vehicle sales to return to pre-pandemic levels.

While new vehicle sales have decreased, we are well-positioned to capitalize on new vehicle sales;

we offer tonneau covers for

each of the 10 most popular makes/models by projected 2022-2029 sales (including, for example, the Ford F-Series, RAM Pickups, and Chevrolet

Silverado), as well as the top 10 most accessorized pickup truck makes/models projected in 2022-2029.

2 Within the USA market,

pickup truck market revenue is expected to show a compound annual growth rate of 1.70% in 2023-2027.

3 Within this market,

pickup trucks are most popular within the southern region of the United States 2 , and the two largest state markets for pickup

trucks are by far Texas and California.

2 Globally, pickup truck market revenue is expected to show a compound annual growth

rate of 1.01% in 2023-2027.

pickup trucks are projected to gain a larger portion of the pickup truck market share each year through 2035 1 , as this submarket

is estimated to have a compound annual growth rate of 29.7% between 2022 and 2023.

5 However, a large headwind acting against

this trend is that pickup trucks tend to be more popular in areas with less-developed charging infrastructure 2 – a headwind

that the SOLIS cover directly addresses and positions us favorably for possible partnerships and deals with electric pickup truck manufacturers.

Specialty Equipment Aftermarket provides more specific insight into how often and for what reasons vehicle owners or renters are purchasing

accessories for their vehicles.

Despite crossover utility vehicles being the most common vehicle type on the road in the USA 1 ,

pickup trucks are the largest market by sales within the USA for specialty equipment – constituting 31% of this market 2 ,

which translated to $16 billion in sales during 2021.

2 This market is expected to grow from $50.9 billion in 2021 to $58.66

billion by 2025.

6 Within this pickup truck accessory market, 34% of accessories are truck bed & utility modifications 2 ,

which is the submarket in which we operate.

Truck bed covers are among the top product categories for aftermarket accessory purchases

in 2021 2 , and the size of the tonneau cover market within the USA was valued at $3 billion as of 2021.

discretionary consumer goods, the specialty automotive part market is subject to consumer spending trends.

Per capita disposable income

fell 7.8% during 2022 as government stimulus ended;

however, it is expected to increase slowly during 2023.

8 Further, while

the Federal Reserve has projected unemployment rates to increase in 2023 and subsequent years 9 , recent unemployment rates

are the lowest they have been in recent decades.

10 Together, these factors suggest consumer disposable income and unemployment

will need to be carefully monitored in order to accurately forecast the automotive aftermarket accessories’ market potential year-to-year.

purchase automotive aftermarket accessories, as well as tonneau covers, specifically, for various reasons.

According to recent reports,

97%, 92%, 80%, and 62% of pickup truck owners use their trucks for utility/work, travel/vacation, outdoor recreation, and off-road uses,

respectively.

2 Of those pickup truck owners who have purchased accessories for their trucks, 93%, 86%, 68%, and 43% of them

use their pickup trucks for day trips, carrying tools/gear, light off-roading, and car camping, respectively.

2 Pickup truck

owners who use their vehicles for outdoor recreation, work, or off-roading are much more likely to purchase accessories when compared

to those who use their vehicles for other purposes.

2 Worksport’s tonneau covers largely benefit truck owners using their

vehicles for any of these aforementioned purposes, and the SOLIS cover provides additional utility for those utilizing their trucks for

utility/work, outdoor recreation, and car camping, in particular.

of truck bed covers occur across several channels, among those including but not limited to part manufacturers, specialty retailers and

online retailers.

For physical location sales, the most popular sales channels for truck bed covers include Specialty Retailers/Installers

and New Vehicle Dealerships, which constitute 17% and 11% of in-store sales, respectively.

6 For online sales, the most popular

sales channels for truck bed covers include Online Only General Retailer, Specialty Retailers/Installers, and Parts Manufacturers, which

constitute 23%, 19%, and 8% of online sales, respectively.

6 In the Fall of 2022, it was reported that roughly 59% of retailer

specialty equipment sales were sold through in-store/physical channels while the other 41% were sold through online channels.

It was further reported that roughly 50% of manufacturer specialty equipment sales were sold through in-store/physical channels

while the other 50% were sold through online channels.

11 Worksport aims to list its products on each of these highly-popular

in-person and online sales channels in order to maximize sales volumes.

2023 Future Trends Report .

Retrieved from www.sema.org

Pickup Accessorization Report .

Retrieved from www.sema.org

Pickup Trucks – Worldwide .

Retrieved from

https://www.statista.com/outlook/mmo/passenger-cars/pickup-trucks/united-states

Pickup Trucks – Worldwide .

Retrieved from

https://fr.statista.com/outlook/mmo/passenger-cars/pickup-trucks/worldwide

Electric Pickup Truck Market Size, Statistics, Growth Trend Analysis, and Forecast Report, 2022 – 2032 .

from https://www.marketdecipher.com/report/electric-pickup-trucks-market

2022 Market Report .

Retrieved from www.sema.org

Tonneau Covers Market - Industry Outlook & Forecast 2022-2027 .

Retrieved from

https://www.arizton.com/market-reports/us-tonneau-covers-market

Per Capita Disposable Income .

Retrieved from

https://www.ibisworld.com/us/bed/per-capita-disposable-income/33/#:

:text=Following%20the%20ending%20of%20government,when%20it%20may%20potentially%20hit.

Federal Reserve Board.

Summary of Economic Projections .

Retrieved from

https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20221214.pdf.

Bureau of Labor Statistics.

The Employment Situation – January 2023 .

Retrieved from

https://www.bls.gov/news.release/pdf/empsit.pdf

State of the Industry Report 2022 Fall .

Retrieved from www.sema.org

Power Station Market

to the Tonneau Cover Market, the Portable Power Station Market is much younger and globalized.

Gas and diesel generators have long been

used by consumers to generate electricity when they could not rely on the grid, whether it be for grid damages or the lack of grid in

remote areas.

Unlike such generators, portable power stations do not generate electricity, themselves, but can also be used to provide

electricity during times of grid unreliability.

These portable power stations are often charged by the grid via home outlets or independent

of the grid via consumers’ vehicles or solar panels.

Portable Power Station Market is large and growing.

At a compound annual growth rate of 3.9% between 2022 and 2031 1 , the global

Portable Power Station market size was valued at $4.0 billion in 2021.

1 Within this global market, the largest regional market

is the North American market.

2 The highest compound annual growth rates in this regional market is expected to be those power

stations utilizing lithium-ion batteries for off-grid power applications 2 , which matches the COR system’s battery type

as well as intended usage.

paired with the SOLIS cover, the COR energy storage system will be a market outlier in that it can be charged safely while mobile whereas

competing portable power stations are intended to be stationary during charging.

Allied Market Research.

Portable Power Station Market .

Retrieved from

https://www.alliedmarketresearch.com/portable-power-station-market-A11700

Markets And Markets.

Portable Power Station Market .

Retrieved from

https://www.marketsandmarkets.com/Market-Reports/portable-power-station-market-23592113.html

distribute our tonneau covers in Canada and the United States through an expanding network of wholesalers, private labels, distributors,

and online retail channels, including eBay, Amazon, Walmart, and our own e-commerce platform hosted on Shopify.

Distribution via each

aforementioned channel is expected to increase during 2023.

We have pursued and will continue to pursue relationships with Original Equipment

Manufacturers with the intention of distributing through them as well.

specialty equipment aftermarket consists of three major types of customers, which include master warehouse distributors and big box stores,

dealers and wholesalers, and retail end consumers.

Master warehouse distributors and big box stores stock and distribute products to

their customers, which are usually local dealers and wholesalers.

Dealers and wholesalers are local stores which sell products to some

businesses and retail consumers in their area and online.

Dealers purchase most of their products from their local distributor who deliver

to them regularly.

Retail end consumers are the end users of the products.

Cover Competitors

Tonneau Cover market is relatively consolidated with one industry leader, Real Truck (formerly Truck Hero), having the largest market

Real Truck has acquired upwards of 16 independent tonneau cover brands in North America, allowing it to concurrently target many

different niche markets but also potentially cannibalizing its own sales.

We compete directly with Real Truck.

Other competitors in this

space include Truck Accessories Group (Primarily Leer), Agricover (primarily Access), Truck Covers USA, and Paragon.

believe that being independent, innovative, operationally lean, and competitively priced will enable us to acquire a larger portion of

the existing market share.

In order to execute on this, we intend to have a small and effective sales team to forge strong business-to-business

relationships, while turning inventory regularly through direct-to-consumer sales supported by a strong customer support team.

above MAP (Minimum Advertised Price) and enforcing this policy will allow business customers to sell without competing with us and in

return support the growth of the distribution base.

Our innovative covers are designed to serve purposes that no other tonneau cover

is currently capable of, some of which are specifically geared towards improving margins for distributors.

Further, the SOLIS cover’s

inclusion of solar panels may be particularly attractive to electric pickup truck original equipment manufacturers, paving the path towards

an original equipment manufacturer relationship that may be lucrative beyond standard tonneau cover partnerships.

Power Station Competitors

Portable Power Station market is global and highly fragmented and includes many competitors from across the world including but not limited

to Alpha ESS Co., Ltd., Anker Technology, Bluetti, Chilwee Group Co., Ltd, Duracell, GES Group Limited Company, Jackery Inc., Lion Energy,

Milwaukee Tool, and Mitsubishi Corporation.

Some of these competitors offer a line of Portable Power Stations, each with different power

capacities, sizes, and price points.

Others specialize in few or even one Portable Power Station as to target a specific or niche submarket.

intend to be competitive by focusing on our portable power station’s biggest strengths – primarily it’s modularity

and Hot Swap battery.

Modularity allows consumers not only to determine themselves the ideal stored energy capacity and price point they

are seeking but also to upgrade their COR system overtime based on their evolving needs.

of Components

of our soft and hard cover product lines requires components including but not limited to injection molded plastics, rubber hinges, rubber

seals, foam corners, aluminum blanks, aluminum extrusions, and metal brackets.

We believe that we can source materials needed for soft

and hard tonneau cover production from other suppliers without major delay should any preferred supplier no longer be suitable.

our domestically-assembled products, we have developed an extensive network of suppliers based in a diverse range of countries, including

but not limited to the USA, China, Romania, Spain, Turkey, and Canada.

We are further diversifying our supply chain of tonneau cover

components by developing relationships with suppliers based in countries, including but not limited to Malaysia, Hungary, Czech Republic,

Estonia, Latvia, Slovakia, Bulgaria, Vietnam, Thailand, Poland, Finland, Italy, and Lithuania.

For our COR and SOLIS components, we are

establishing relationships with suppliers based in countries, including but not limited to China, Germany, Romania, Turkey, Philippines,

We actively seek to lower reliance on any country deemed a potential geo-political supply chain risk.

and Development

invest in research and development activities on an ongoing basis.

We are actively acquiring new engineering and design assets, both

in-house and third-party.

Our industrial engineers are based in both Canada and the United States, and they have developed and are further

developing unique tonneau cover designs with enhanced user experience, cost-effective and sustainable materials, and automatable manufacturing

Our electrical engineers are based in Canada and work heavily on sourcing solar panels with features suitable for the Company’s

SOLIS cover, as determined through deep product research and testing.

Concurrently, the electrical engineering department is researching

and developing more size- and cost-effective methods of portable energy storage in order to offer the market a competitive portable energy

storage system with distinguishable and unique product features.

subsidiary, Terravis, researches green energy solutions for home and community power as well as Electric Vehicle DC charging and heat-pump

Programs, Incentives and Regulations

both the operation of our business by us and the ownership of our products by our customers are impacted by various government programs,

incentives and other arrangements.

both the operation of our business and the ownership of our products by our customers are impacted by various government programs, incentives,

and other arrangements.

Our business and products are also subject to numerous governmental regulations that vary among jurisdictions.

and Incentives

are in the process of applying for several sales tax, energy, and mortgage incentives, each containing their own sets of guidelines and

agreements by which we must abide in order to continue receiving said incentives.

While we are not currently bound by these agreements,

we expect these agreements to take effect in 2022.

portable power station (Worksport COR) is subject to various U.S.

and international regulations that govern transport of “dangerous

goods,” defined to include lithium-ion batteries, which may present a risk in transportation.

We plan to conduct testing to demonstrate

our compliance with such regulations.

have applied for and been granted tax, mortgage, wage, and energy cost relief in New York in addition to wage cost relief in Ontario.

These programs are provided by several agencies including the Erie County Industrial Development Agency, Empire State Development, NY

Power Authority, and The Canada Revenue Agency.

Each of these incentive programs includes its own set of guidelines and requirements,

including but not limited to timely eligibility reporting, environmental regulation compliance, and headcount projection realization

– each of which we have agreed to and must abide by in order to continue realizing said incentives.

continue to seek additional incentives and grants in order to lower our operational costs as well as commit less capital to new product

COR portable power station is subject to various U.S.

and international regulations that govern transport of “dangerous goods,”

defined to include lithium-ion batteries, which may present a risk in transportation.

We plan to conduct testing to demonstrate our compliance

with such regulations.

use lithium-ion cells in our energy storage products.

1 unchanged sentence

laws and are the subject of ongoing regulatory changes that may add additional requirements in the future.

revenue is directly proportional to sales of pickup trucks.

The following chart using SEMA 1 data from 2021 shows sales of

specialty equipment retail sales of aftermarket automotive accessories in the United States in billions from 2014, through 2020 and estimates

those sales into 2024.

Automotive Specialty-Equipment Retail Sales Reach New High .

Retrieved from www.sema.org

current growth trend is fueled by a decade average of strong overall economic performance, including an ongoing decade average decline

in unemployment and growth in consumer spending.

A strong economy paired with rising consumer confidence suggest that consumers are willing

to spend capital on discretionary items, such as specialty automotive parts.

While new vehicle sales have leveled off, they still remain

at near-record highs—close to 15 million per year.

Recently announced tariffs on imported steel, aluminum, etc.

and other policy

changes could affect the economy and the automotive industry, however, demand continues to remain strong for new pickup trucks in North

Statista Market Outlook suggests that pickup trucks will continue to be the number one selling vehicle in North America.

upgrades are the largest sector of the specialty equipment industry, accounting for 27% of total retail dollars (about $12.03 Billion).

In the United States alone, there are over 158.6 million registered light trucks.

Despite the growth of crossover vehicles (CUV) overall,

full-size pickups remain the most common vehicle subtype on the road today.

This is likely driven by the continued popularity of domestic

half-ton pickups ( e.g., Ford F-150, Chevrolet Silverado, Ram 1500) throughout the United States, especially in the U.S.

Further, in 2021, roughly 75% of vehicles sold in the USA were light trucks.

there is increasing interest in electrification by automakers, less than 1% of light vehicles are electrified thus far.

the decade where mass adoption takes place.

The electric pickup truck market is very promising.

Under the push of EV’s worldwide

and legal policies in states like California banning non-eco truck sales by 2035, we believe that a sizable amount of customers will

be looking to purchase and upgrade to newer trucks.

EV pickup truck sales are suggested to grow at a 58% change of annual growth rate

(CAGR) between 2020 and 2030.

the roughly 56 million pickups in the United States today, nearly 60% of them are either GM Full-Size or Ford F-Series, and account for

almost 12% of all vehicles on the road.

The Ram Pickup is third.

All three brands are ideal target markets for our products.

New Pickup Truck Sales in the United States by Month (All Models)

2021 year-end sales of approximately 726,000 units, the Ford F-Series was the best-selling light truck in the United States 1 .

The Ford F-Series is a series of full-size pickup trucks, the most popular variant being the F-150 1 .

The 14th generation of

this model was released in 2020.

truck sales growth in the U.S.

decreased in 2021 compared with 2020.

pickup truck sales came to around 2.84 million units in 2021 2 ,

compared to 2.96 million units in 2020 3 .

This decline is largely attributed to chip shortages causing a decrease in trucks

manufactured.

With the exception of Toyota pickups, light trucks built by U.S.-based automakers continue to be favorites among U.S.

The best-selling light trucks in the United States in 2021 .

Retrieved from www.statista.com.

GOODCARBADCAR.

2021 U.S Pickup Truck Sales Analysis .

Retrieved from goodcarbadcar.net

GOODCARBADCAR.

2020 U.S Pickup Truck Sales Analysis .

Retrieved from goodcarbadcar.net

distribute our tonneau covers through wholesalers, private labels, distributors, and online retail channels in Canada and the United

We will provide our tonneau covers through Original Equipment Manufacturers and our own eCommerce platform.

specialty equipment (aftermarket) consists of three major types of customers, which include master warehouse distributors, dealers and

wholesalers, and retail end consumers.

Master warehouse distributors stock and distribute products to their customers, which are usually

local dealers and wholesalers.

Dealers and wholesalers are local stores which sell products to some businesses and retail consumers in

their area and online.

Dealers purchase most of their products from their local distributor who deliver to them regularly.

consumers are simply the end users of the products.

our estimation, for many years, consumers looking to purchase tonneau covers have had a limited number of options available, mostly including:

Folding & Roll-up covers (Vinyl covers);

one piece caps and lids (Plastic & Fiberglass);

Covers (Plastic & Aluminum);

Folding & Standing Covers (Aluminum and FRP).

one piece covers and retractable covers are the least desirable because of their limited functionality and overall cost.

We believe that

consumers want a less cumbersome tonneau cover with high functionality and at a lower cost.

is why the most popular covers in today’s market are soft and hard folding/rolling tonneau covers, and the biggest growth opportunity

in the tonneau cover market is the aggressively priced hard folding tonneau cover market niche.

largest competitor is Truck Hero, which has acquired upwards of 16 independent tonneau cover brands in North America.

products directly compete with our products.

Our other competitors include LEER, Access, Truck Covers USA and Paragon.

believe that by being independent, aggressively priced, innovative, and operationally sound, we will be able to grow revenues with minimal

sales effort while continuing to develop our relationships with our larger clients.

we believe our Company is currently the only independent Business-to-Business (B2B) producer of tonneau covers in the United States and

Canada that does not yet sell directly to customers (B2C).

Worksport believes that we can expand our current customer base throughout

our current and future markets and intends to enter various B2C channels to boost sales of new products.

Company plans to expand to other markets outside the United States and Canada.

We intend to generate revenue in new markets including

but not limited to the automotive specialty equipment market and global Original Equipment Manufacturers.

goal is to become the leader in the tonneau cover market through innovation.

Our main objective is to design and engineer our products

to better suit today’s new, dynamic, and innovative models of light trucks and electric trucks, whether that be through Worksport’s

Terravis System or through innovations within its subsidiary, Terravis Energy, Inc.

and Development

will spend for research and development activities on an ongoing basis.

The company is actively acquiring new engineering and design

assets, both in-house and third-party.

The Company’s subsidiary, Terravis Energy, Inc., researches green energy solutions for

home and community power as well as Electric Vehicle DC charging.

Much of the Company’s research and development is focused on

hydrogen fuel cell power, which serves as a strong basis for grid-independent power solutions.

Environmental

2 unchanged sentences

Costs of environmental regulatory compliance are not expected to be significant.

currently employ eleven full-time employees, including our Chief Executive Officer.

We intend to hire additional employees as our operations

We rely on independent contractors for additional labor, as needed.

principal business address and R&D facility is located at 7299 E Danbro Crescent, Mississauga, ON L5N 6P8, Canada while our secondary

business address is 3120 Rutherford Road, Suite 414, Vaughan, ON L4K 0B2, Canada.

As of December

31, 2022, we had a total of 25 employees, of which included 16 full-time employees in Canada and five full-time and four temporary

employees in the USA.

We intend to hire additional employees as operations grow – particularly within our West Seneca, NY

manufacturing facility.

We rely on few independent contractors for additional labor and are very selective in our use of

are an equal opportunity employer committed to inclusion and diversity and to providing a workplace free of harassment or discrimination.

believe that compensation should be competitive and equitable, and should enable employees to share in our success.

We recognize our

people are most likely to thrive when they have the resources to meet their needs and the time and support to succeed in their professional

and personal lives.

In support of this, we offer a variety of benefits for employees and invest in tools and resources that are designed

to support employees’ growth and development.

and Diversity

remain committed to our vision to build and sustain a more inclusive workforce that is representative of the communities we serve.

continue to work to increase diverse representation, foster an inclusive culture, and support equitable pay and access to opportunity

for all employees.

believe that open and honest communication among team members, managers, and leaders helps create an open, collaborative work environment,

where everyone can contribute, grow and succeed.

Team members are encouraged to come to their managers with questions, feedback or concerns.

are committed to protecting our team members everywhere we operate and, as such, support employees with general safety trainings.

have also taken additional health and safety measures during the COVID-19 pandemic.

Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to

Sections 13(a) and 15(d) of the Exchange Act, are filed with the SEC.

Such reports and other information filed by us with the SEC are

available free of charge at investors.worksport.com/stock-information when such reports are available on the SEC’s website.

We periodically provide certain information for investors on our corporate website, worksport.com , and our investor relations

website, investors.worksport.com .

This includes press releases and other information about financial performance, information

on environmental, social and governance matters, and details related to our annual meeting of shareholders.

The information contained

on the websites referenced in this Annual Report on Form 10-K is not incorporated by reference into this filing.

Further, our references

to website URLs are intended to be inactive textual references only.

principal corporate office and research and development (“R&D”) facility is located at 55G East Beaver Creek Rd., Richmond

Hill, Ontario, L4B 1E5, Canada while our manufacturing and secondary business address is 2500 N.

America Dr., West Seneca, NY 14224,

main telephone number is (888) 554-8789.

Our main website is www.worksport.com and our website for Terravis is www.goterravis.com.

contents of our websites are not incorporated by reference into this annual report.

a “smaller reporting company,” are not required to provide the information required by this Item 1A.

UNRESOLVED STAFF COMMENTS

Our main website is www.worksport.com .

The contents of our website are not incorporated by reference into this Annual Report on Form 10-K.

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-K

Item 1. Business