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Item 8. Financial Statements and Supplementary Data

2023-03-31 compared with 2022-03-31 · 941 added, 1043 removed, 326 unchanged (86% of the section changed)

1 unchanged sentence

TO FINANCIAL STATEMENTS

of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets at December 31, 2021 and 2020

Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2021 and 2020

Consolidated Statements of Shareholders’ Equity (deficit) for the year ended December 31, 2021 and 2020

Consolidated Statements of Cash Flow for the years ended December 31, 2021 and 2020

to Audited Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firms

Audited Consolidated Balance Sheets at December 31, 2022 and 2021

Audited Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021

Audited Consolidated Statements of Shareholders’ Equity for the year ended December 31, 2022 and 2021

Audited Consolidated Statements of Cash Flow for the years ended December 31, 2022 and 2021

Notes to Audited Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

on the Financial Statements

have audited the accompanying consolidated balance sheet of Worksport Ltd.

and Subsidiaries (the Company) as of December 31, 2022, and

the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the year then

ended, and the related notes to the consolidated financial statements (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial condition of the Company

as of December 31, 2022, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles

generally accepted in the United States of America.

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations and has an accumulated

deficit, which raises substantial doubt about its ability to continue as a going concern.

Management’s plans regarding these matters

are also described in Note 3.

The consolidated financial statements do not include any adjustments that might result from the outcome

of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance

with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due

to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

that our audit provides a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are

material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,

and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

Plant and Equipment

of the Matter

reported in Note 6 to the consolidated financial statements, the Company acquired a significant amount of property, plant and equipment

during the year ended December 31, 2022.

As of December 31, 2022, the Company’s property, plant and equipment balance, net of accumulated

depreciation was approximately $11.9 million, which represents a significant portion of the Company’s total assets of approximately

$32.8 million.

In May 2022, the Company acquired land and building for its new warehouse facility in West Seneca, NY, with a total cost

value of approximately $8.3 million.

the inherent uncertainty and significant judgments necessary to estimate useful lives of additions, auditing these estimates involved

a focused audit effort and a high degree of auditor judgment.

We Addressed the Matter in Our Audit

auditing procedures related to property, plant and equipment included the following, among others:

evaluated the appropriateness and consistency of management’s methods used to develop

its estimates.

evaluated the reasonableness of judgments made and significant assumptions used by management

relating to key estimates.

inquired of management relative to the estimated useful lives and respective in-service dates

of acquired assets.

tested the accuracy of management’s schedule of property, plant and equipment.

selected a sample of material purchases made during the year to ensure they were properly

included in property, plant and equipment at the proper value.

of the Matter

discussed in Notes 11, 23, and 24 to the consolidated financial statements, the Company has issued a significant amount of equity securities.

The tracking of these transactions can be complicated and require management to estimate the value of equity securities using a Black

Scholes option pricing model.

We identified the fair market value of equity transactions to be a critical audit matter, as the calculations

can be complex and subject to error.

We Addressed the Matter in Our Audit

auditing procedures related to equity transactions included the following, among others:

evaluated the appropriateness and consistency of management’s methods used to develop

its estimates.

gained an understanding of Management’s process to record the equity transactions.

obtained Management’s calculations and tested the clerical accuracy and inputs used.

agreed the basic terms to source agreements and considered key assumptions.

recalculated the recorded values and conversion amounts.

of the Matter

discussed in Note 3 to the consolidated financial statements, the Company has experienced recurring net losses that raise substantial

doubt about the Company’s ability to continue as a going concern.

Upon analysis of the Company’s current financial situation

and projected outlooks, we believe there is substantial doubt about the Company’s ability to continue as a going concern.

We Addressed the Matter in Our Audit

auditing procedures related to going concern included the following, among others:

obtained the Company’s evaluation of its ability to continue as a going concern and

evaluated the Company’s plans to address these concerns.

analyzed the Company’s current state of operations.

evaluated the Company’s current and projected cash flow.

have served as the Company’s auditor since 2022.

Lumsden & McCormick, LLP

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and

Stockholders of Worksport, LTD (formerly Franchise Holdings International, Inc.)

of Worksport, LTD

on the Financial Statements

have audited the accompanying consolidated balance sheets of Worksport, LTD (the Company) as of December 31, 2021, and 2020, and the

related statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the years in

the two-year period ended December 31, 2021, and the related notes (collectively referred to as the financial statements).

In our opinion,

the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and

2020, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2021, in conformity

with accounting principles generally accepted in the United States of America.

have audited the accompanying consolidated balance sheet of Worksport, LTD (the Company) as of December 31, 2021, and the related consolidated

statements of operations and comprehensive loss, stockholders’ equity, and cash flows for the year ended December 31, 2021, and

the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in

all material respects, the financial position of the Company as of December 31, 2021 and the results of its operations and its cash flows

for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

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laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

1 unchanged sentence

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits,

As part of our audit,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

1 unchanged sentence

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

1 unchanged sentence

provide a reasonable basis for our opinion.

Audit Matters

critical audit matters (CAM) communicated below are matters arising from the current period audit of the consolidated financial statements

that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are

material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,

and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the

accounts or disclosures to which they relate.

Transactions and Conversion of Debt Securities

discussed in Note 8, 9, 10, and 22 to the financial statements, the Company has issued a significant amount of equity securities, many

of which were issued to settle its promissory notes and convertible notes payable.

Many of the notes are issued with original issuance

discounts and with warrants which are valued and recorded as a discount to the notes.

The tracking of these transactions can be complicated

and require management to estimate the value of equity securities using a Black Sholes option pricing model.

We identified the fair market value of debt and equity transactions and

related conversions to be a critical audit matter.

The calculations can be complex and subject to error.

address this critical audit matter, we gained an understanding of Management’s process to record the equity and debt transactions.

We obtained their calculations and tested its clerical accuracy and the inputs.

We agreed the basic terms to source agreements and considered

key assumptions.

Finally, we recalculated the recorded values and conversion amounts.

Haynie & Company

Lake City, Utah

have served as the Company’s auditor since 2016.

have served as the Company’s auditor from 2016 through November 2022.

Balance Sheets

31, 2022 and 2021

and cash equivalents

receivable net

expenses and deposits (note 8)

Current Assets

Cash and cash equivalents

Accounts receivable net

Other receivable

Inventory (note 4)

Prepaid expenses and deposits

Total Current Assets

Investment (note 17)

Property and Equipment, net (note 5)

Right-of-use asset, net (note 18)

Intangible Assets, net (note 6)

Liabilities and Shareholders’ Deficit

Current Liabilities

Accounts payable and accrued liabilities

Payroll taxes payable

Related party loan (note 11)

Promissory notes payable (note 8)

Convertible promissory note, net (note 9)

Loan payable (note 19)

Current lease liability (note 18)

Total Current Liabilities

Long Term – Lease Liability (note 18)

Total Liabilities

Shareholders’ Equity (Deficit)

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

A and 0 Series B issued and outstanding, respectively (note 10)

Common stock, $ 0.0001 par value, 299,000,000 shares authorized, 16,951,034 and 3,820,619 shares issued and outstanding, respectively (note 10)

and Equipment, net (note 6)

asset, net (note 19)

Assets, net (note 7)

and Shareholders’ Deficit

payable and accrued liabilities

taxes payable

party loan (note 12)

notes payable (note 9)

lease liability (note 19)

Total Current

– Lease Liability (note 19)

payable (note 19)

Shareholders’

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 11)

Common stock, $ 0.0001 par

value, 299,000,000 shares authorized, 17,159,376 and 16,951,034 shares issued and outstanding, respectively (note 11)

Additional paid-in capital

4 unchanged sentences

( 20,849,805 )

Cumulative translation adjustment

Total Shareholders’ Equity (Deficit)

Total Liabilities and Shareholders’ Equity (Deficit)

translation adjustment

Shareholders’ Equity

Liabilities and Shareholders’ Equity

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

1 unchanged sentence

31, 2022 and 2021

Cost of Goods Sold

Gross Profit (Loss)

Operating Expenses

General and administrative

Sales and marketing (including non-cash expense of 2021 - $ 884,446 (2020 - $ 90,164 ))

Professional fees (including non-cash expense of 2021 - $ 3,035,596 (2020 - $ 325,502 ))

of Goods Sold

Profit (Loss)

and administrative

and marketing

Loss on foreign exchange

Total operating expenses

Loss from operations

operating expenses

from operations

( 12,773,715 )

( 7,561,731 )

income (note 25)

on settlement of debt

other income (expense)

Interest expense (note 9)

Interest income

Bad debt expense

Gain on settlement of debt

Total other (expense)

( 12,534,414 )

( 7,897,085 )

Loss per Share (basic and diluted)

Weighted Average Number of Shares (basic and diluted)

per Share (basic and diluted)

Average Number of Shares (basic and diluted)

accompanying notes form an integral part of these consolidated financial statements

Statements of Shareholders’ Deficit

Statements of Shareholders’ Equity

31, 2022 and 2021

Preferred Stock

Additional Paid-in

Share Subscriptions

Share Subscription

Cumulative Translation

Total Stockholders’ Equity

Balance at January 1, 2020

$ ( 11,678,413 )

$ ( 882,561 )

Issuance for services

Issuance for prepaid services and subscriptions payable

Issuance from subscriptions payable

Subscriptions

Stockholders’

at January 1, 2021

$ ( 12,866,033 )

Issuance of shares from Reg-A

Stock split provision

Stock split provision, shares

Conversion of preferred stock to common stock

Conversion of preferred stock to common stock, shares

Issuance for services and subscriptions payable

Issuance for services and subscriptions payable, shares

Conversion of preferred stock

to common stock

Issuance for services and

subscriptions payable

Public offering

Public offering, shares

Share issuance cost

Cancellation of reserved shares

Issuance of shares from private placement

Issuance of shares from private placement, shares

Warrants issuance for services

Conversion of convertible promissory note to shares (note 9 and 22)

Warrant exercise

Warrant exercise, shares

Loan repayment

Loan repayment, shares

Warrants issuance in connection to convertible promissory note (note 9 and 22)

Share issuance in connection to convertible promissory note (note 9)

Issuance of Preferred Stock

( 4,459,892 )

Balance at December 31, 2020

Issuance of shares from private

Warrants issuance for services

Conversion of convertible

promissory note to shares (note 10)

Warrant exercise (note 23)

Loan repayment (note 9 and

( 7,897,085 )

Stock split provision

Conversion of preferred stock to common stock

Issuance for services and subscriptions payable

Public offering

Share issuance cost

( 7,897,085 )

at December 31, 2021

$ ( 20,849,805 )

Issuance of shares from private placement

Warrants issuance for services

Conversion of convertible promissory note to shares (note 9)

Share issuance

Warrant exercise (note 23)

Loan repayment (note 8 and 19)

Issuance for services and

subscriptions payable

(12,534,414 )

Balance at December 31, 2021

at December 31, 2022

$ ( 33,384,219 )

2 unchanged sentences

31, 2022 and 2021

Operating Activities

$ ( 12,534,414 )

$ ( 7,897,085 )

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

Bad debt expense

Shares, options and warrants issued for services

Depreciation and amortization

Interest on lease liability

Wages and salaries

Accrued interest

Amortization on OID interest

Gain/(loss) on settlement of debt

Adjustments to reconcile net income loss to cash provided by (used in) operating activities

to reconcile net loss to net cash from operating activities:

options and warrants issued for services

and amortization

in operating lease

on OID interest

on settlement of debt

to reconcile net income loss to cash provided by (used in) operating activities

( 7,412,583 )

Changes in operating assets and liabilities (note 14)

Net cash used in operating activities

( 3,597,848 )

Cash Flows from Investing Activities

Purchase of investment (note 18)

in operating assets and liabilities (note 15)

cash used in operating activities

( 7,977,960 )

( 4,210,623 )

from Investing Activities

Purchase of intangible assets

Purchase of property and equipment

of property and equipment

( 11,047,447 )

Net cash used in investing activities

( 1,101,784 )

Financing Activities

Repayment of lease liability

Proceeds from issuance of common shares, net of issuance cost

cash used in investing activities

( 11,150,776 )

( 1,131,735 )

Proceeds from issuance of

common shares, net of issuance cost

Proceeds from warrant exercise

Proceeds from share subscriptions

Proceeds from loan payable

Proceeds from promissory notes

Shareholder Assumption of Debt

Repayments on loan payable

Repayments on promissory notes (note 9)

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 activities

Shares issued for purchase of software

Shares and warrants issued to service providers and prepaid services expense

Shareholder Assumption of

on loan and promissory notes payable

cash provided by financing activities

( 13,946,576 )

and cash equivalents - beginning of year

and cash equivalents end of year

Disclosure of non-cash activities

issued for purchase of intangible assets

Share base compensation

Cashless warrant exercise

Conversion of preferred Stock to common stock

Shares issued for share subscriptions payable

Shares issued for loan repayment

Conversion of convertible promissory note to common stock

Convertible promissory note – equity discount

Convertible promissory note – original issue discount

Stock split provision

Reverse stock split

of preferred Stock to common stock

issued for loan repayment

of convertible promissory note to common stock

split provision

Disclosure of cash flow information

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

1 unchanged sentence

31, 2022 and 2021

Nature of Operations and Reverse Acquisition Transaction

(the “Company”) was incorporated in the State of Nevada on April 2, 2003.

During the year ended December 31, 2014, the

Company completed a reverse acquisition transaction (the “Reverse Acquisition”) with TruXmart Ltd.

Nature of Operations

(together with its subsidiaries, the “Company”) was incorporated in the State of Nevada on April 2, 2003 under the name

Franchise Holdings International, Inc.

In May 2020, FNHI changed its name to Worksport Ltd.

During the year ended

December 31, 2014, the Company completed a reverse acquisition transaction (the “Reverse Acquisition”) with TruXmart Ltd.

(“TruXmart”).

1 unchanged sentence

(“Worksport”).

Worksport designs and distributes truck

tonneau covers in Canada and the United States.

on May 5, 2021 Terravis Energy Inc.

was incorporated in the State of Colorado.

On August 20, 2021, the Company was issued 100

common shares at par value of $ 0.0001

per share for a controlling interest in Terravis

Worksport designs

and distributes truck tonneau covers in Canada and the United States.

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.

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

The Certificate of Change

3 unchanged sentences

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

(“Terravis”) was incorporated in the State of Colorado on May 5, 2021.

On August 20, 2021, the Company was issued

100 common shares at par value of $ 0.0001 per share for a controlling interest in Terravis.

During the year ended December 31, 2022,

the Company was issued an additional 9,990,900 common shares of Terravis at par value of $ 0.0001 per share.

January 20, 2022, the board of directors of Terravis and the board of directors of the Company, as the sole stockholder of Terravis,

adopted the Terravis Energy, Inc.

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

Under the Terravis 2022 Plan, Terravis’

board of directors or a committee designated by the board of directors may grant incentive stock options, nonqualified stock options,

shares of restricted stock, restricted stock units, performance shares, performance units and stock appreciation rights to eligible participants

consisting of employees of Terravis, member of Terravis’ board of directors and advisors and consultants to Terravis.

board of directors authorized and reserved 1,500,000 shares of Terravis common stock under the Terravis 2022 Plan, subject to adjustment

for any stock splits of Terravis’ common stock or reorganization, recapitalization, or acquisition of Terravis.

April 6, 2022, Lorenzo Rossi and Steven Rossi, both of whom are members of Terravis’ board of directors, were granted non-qualified

stock options under the Terravis 2022 Plan exercisable for 750,000 and 250,000 shares of Terravis’ common stock, respectively,

with exercise prices of $ 0.01 per share exercisable from the date of grant until the tenth anniversary of the date of grant.

April 12, 2022, Steven Rossi, William Caragol, and Ned L.

Siegel, all of whom are members of Terravis’ board of directors, were

granted non-qualified stock options under the Terravis 2022 Plan exercisable for 250,000 , 50,000 , and 50,000 shares of Terravis’

common stock, respectively, with exercise prices of $ 0.01 per share exercisable from the date of grant until the tenth anniversary of

the date of grant.

November 4, 2022, Terravis filed an amendment to its articles of incorporation with the Colorado Secretary of State, pursuant to which

the Terravis board of directors attached a certificate of designation designating 1,000 shares of its authorized preferred stock as Series

A Preferred Stock with a par value $ 0.0001 per share.

According to the certificate of designation, holders of the Series A Preferred

Stock do not have any dividend, conversion or liquidation rights.

Unless otherwise prohibited by law or the Series A Preferred Stock

certificate of designation, the Series A Preferred Stock shall vote together with the outstanding shares of common stock of Terravis

as one class on any matter put forth before the common stockholders.

For so long the Series A Preferred Stock is outstanding, the holders

of the Series A Preferred Stock shall be entitled to 51 % of the total votes on all matters regardless of the actual number of shares

of Series A Preferred Stock then outstanding, and the holders of the common stock and any other shares of capital stock of Terravis entitled

shall be entitled to their proportional share of the remaining 49 % of the total votes based on their respective voting power.

4, 2022, the Company issued 1,000 shares of Series A Preferred Stock to Steven Rossi, the Chief Executive Officer and President of the

to the Consolidated Financial Statements

31, 2022 and 2021

Nature of Operations (continued)

the year ended December 31, 2022, Worksport New York Operations Corporation and Worksport USA Operations Corporation were incorporated

in the state of New York and Colorado, respectively.

During the year ended, the Company was issued 1,000 common shares at par value of

$ 0.0001 of Worksport USA Operations Corporation.

On April 1, 2022, the Company was issued 10,000 common shares of Worksport New York

Operations Corporation.

Basis of Presentation and Business Condition

5 unchanged sentences

Consolidation

Company’s consolidated financial statements consolidate the accounts of the Company and its wholly owned subsidiaries.

intercompany transactions, balances and unrealized gains or losses from intercompany transactions have been eliminated upon consolidation.

Company’s consolidated financial statements consolidate the accounts of the Company.

All intercompany transactions, balances and

unrealized gains or losses from intercompany transactions have been eliminated upon consolidation.

Functional and Presentation Currency

consolidated financial statements are presented in United States Dollars.

The functional currency of the Company and its subsidiaries

are United States Dollar.

For purposes of preparing these consolidated financial statements, transactions denominated in Canadian Dollar

were converted to United States Dollar at the spot rate.

Transaction gains and losses resulting from fluctuations in currency exchange

rates on transactions denominated in currencies other than the functional currency are recognized as incurred in the accompanying consolidated

statement of operations and comprehensive loss.

The functional currency of the Company and all its subsidiaries

is the United States Dollar.

For purposes of preparing these consolidated financial statements, transactions denominated in Canadian

Dollar were converted to United States Dollar at the spot rate.

Transaction gains and losses resulting from fluctuations in currency

exchange rates on transactions denominated in currencies other than the functional currency are recognized as incurred in the accompanying

consolidated statement of operations and comprehensive loss.

Use of Estimates

3 unchanged sentences

results could differ from these estimates.

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 December 31, 2021, the Company had working capital of $ 32,235,216 (2020 – working capital deficiency of $ 33,289 ) and an accumulated

deficit of $ 20,849,805 (2020 - $ 12,866,033 ).

As of December 31, 2021, the Company had cash and cash equivalents of $ 28,567,333 (2020

- $ 1,107,812 ).

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 year ended December 31, 2021 the Company through its Reg-A public offering, private placement offering, unwritten public offering

and exercises of warrants had raised in aggregate of approximately $ 32,500,000 .

on the Company’s future operating plans, existing cash of $ 28,567,333 , combined with possible warrants exercises of approximately

$ 38,500,000 ;

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.

to the Consolidated Financial Statements

31, 2021 and 2020

Basis of Presentation and Business Condition (continued)

Reclassification

1 unchanged sentence

with current period presentation.

The Company reclassified $ 31,193 of changes from accounts payable and accrued liabilities under operating

assets and liabilities to repayment of lease liability under financing activities.

This reclassification resulted in a decrease in net

cash used by operating activities from $ 726,304 to $ 695,112 and decrease in net cash provided by financing activities from $ 1,838,850

to $ 1,807,657 .

This reclassification did not have any effect on the reported results of operations.

The Company reclassified $ 169,918 from cash used in financing activities to cash used in operating

This reclassification resulted in an increase from $ 4,046,705 to $ 4,210,623 in net cash used in operating activities and

an increase from $ 32,637,961 to $ 32,801,879 in net cash provided by financing activities.

to the Consolidated Financial Statements

31, 2022 and 2021

Going Concern

accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates

the realization of assets and the liquidation of liabilities in the normal course of business.

During the year ended December 31, 2022,

the Company had net loss of $ 12,534,414 .

As at December 31, 2022, the Company has working capital of $ 15,870,377 and had an accumulated

deficit of $ 33,384,219 .

The Company has never generated profit from operations and relies on debt and equity financing for continued

The Company’s ability to continue as a going concern is dependent upon the ability to generate cash flows from operations

and obtain financing.

The Company intends to continue funding operations through equity and debt financing arrangements, which may be

insufficient to fund its capital expenditures, working capital and other cash requirements in the long term.

There can be no assurance

that the steps management is taking will be successful.

Company has historically operated at a loss, although that may change as sales volumes increase.

As of December 31, 2022, the Company

had working capital of $ 15,870,377 (2021 – $ 32,235,216 ) and an accumulated deficit of $ 33,384,219 (2021 - $ 20,849,805 ).

As of December

31, 2022, the Company had cash and cash equivalents of $ 14,620,757 (2021 - $ 28,567,333 ).

Despite the company almost having completed

its purchasing of large manufacturing machinery, operational costs are expected to remain elevated and, thus, decrease cash and cash

Concurrently, the Company intends to begin manufacturing and increasing sales volumes within 2023, which should mitigate

the effects of operational costs on cash and cash equivalents;

this view is supported by the fact that the manufacturing facility of

the Company is near completion and is expected to start generating more substantial revenue in the second quarter of 2023, barring unforeseeable

Company has successfully raised cash, and it is positioned to do so again if deemed necessary or strategically advantageous.

year ended December 31, 2021, the Company, through its Reg-A public offering, private placement offering, underwritten public offering,

and exercises of warrants, raised an aggregate of approximately $ 32,500,000 .

On September 30, 2022, the Company filed a shelf registration

statement on Form S-3, which was declared effective by the SEC on October 13, 2022 allowing the Company to issue up to $ 30,000,000 of

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

September 30, 2022.

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.

Based on its current operating

plans, the Company believes it has a 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.

Still, these factors, among others, indicate the existence

of a material uncertainty that cast substantial doubt about the Company’s ability to continue as a going concern.

The accompanying

financial statements do not include any adjustments that might result from the outcome of this uncertainty.

These adjustments could be

Significant Accounting Policies

and Cash Equivalents - Cash and cash equivalents includes cash on account and demand deposits with maturities of three months or

Cash and cash equivalents in financial institutions may exceed insured limits at various times during the year and subject the

Company to concentrations of credit risk.

Cash and cash equivalents include restricted cash at December 31, 2022 and 2021 totaling $ 411,016

and $ 0 , respectively.

- Trade accounts receivable are stated at the amount the Company expects to collect.

2 unchanged sentences

allowances may be required.

to the Consolidated Financial Statements

31, 2022 and 2021

Significant Accounting Policies (continued)

Company offers credit terms on the sale of the Company’s products to a significant majority of the Company’s customers and

1 unchanged sentence

The Company performs ongoing credit evaluations of customers’ financial condition

and maintains an allowance for doubtful accounts receivable based upon the Company’s historical experience and a specific review

or accounts receivable at the end of each period.

As at December 31, 2021 and 2020, the Company had no allowance for doubtful accounts.

- Inventory is stated at the lower of cost or net realizable value, with cost being determined by a weighted average basis.

includes the cost of materials plus direct labor applied to the product.

- The Company offers limited warranties against defective products.

Customers who are not satisfied with their purchase may attempt

to have their purchases reimbursed outside past the warranty period.

Recognition – In

accordance with ASC 606 Revenue from Contracts with Customers, sales are recognized when products are shipped, with no right

of return but reimbursement maybe offered for defective products and the title and risk of loss has passed to unaffiliated customers

or when they are delivered based on the terms of the sale, there is an identifiable contract with a customer with defined performance

obligations, the transaction price is determinable, and the entity has fulfilled its performance obligation.

Revenue related to shipping

and handling costs billed to customers is included in net sales and the related shipping and handling costs are included in cost of products

and Equipment - Capital

assets are recorded at cost and are depreciated using the straight-line method over the following estimated useful lives:

Schedule of Estimated Useful Lives of Property and Equipment

and, if needed, maintains an allowance for doubtful accounts receivable based upon the Company’s historical experience and a specific

review of accounts receivable at the end of each period.

At December 31, 2022 and 2021, the Company had no allowance for doubtful accounts.

- Inventory is stated at the lower of cost or net realizable value, with cost being determined on a weighted average basis.

includes purchase price of materials, freight, and related costs required to bring the goods to Company warehouses.

- The Company currently offers a limited lifetime warranty against defective products out-of-the-box.

Customers who are not satisfied

with their purchase may attempt to have their purchases reimbursed outside of the warranty period.

Recognition – In accordance with ASC 606 Revenue from Contracts with Customers, sales are recognized when (1) products are

shipped, with no right of return except for defective products, and the title and risk of loss has passed to customers;

they are delivered based on the terms of the sale, and there is an identifiable contract with a customer with defined performance obligations,

the transaction price is determinable, and the entity has fulfilled its performance obligation.

Revenue related to shipping and handling

costs billed to customers is included in net sales, and the related shipping and handling costs are included in cost of goods sold.

and Equipment - Capital assets are recorded at cost and are depreciated using the straight-line method over the following estimated

useful lives:

of Estimated Useful Lives of Property and Equipment

and equipment

4 unchanged sentences

Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other

equity instruments such as employee stock ownership plans and stock appreciation rights.

Share-based payments to employees, including

grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values.

expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the

requisite service period (usually the vesting period).

equity instruments such as stock appreciation rights.

Share-based payments to employees, including grants of employee stock options,

are recognized as compensation expense in the financial statements based on their fair values at the time of grant.

That expense is recognized

over the estimated period during which an employee is required to provide services in exchange for the award, known as the requisite

service period (usually the vesting period).

of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable:

4 unchanged sentences

earlier of the performance commitment date or performance completion date.

Taxes - Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary

differences between the amount of taxable income and pretax financial income, and between the tax bases of assets and liabilities and

their reported amounts in the financial statements.

Deferred tax assets and liabilities are included in the consolidated financial statements

at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized

or settled as prescribed in FASB ASC 740.

As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted

through the provision for income taxes.

positions initially need to be recognized in the financial statements when it is more-likely-than-not the positions will be sustained

upon examination by the tax authorities.

to the Consolidated Financial Statements

1 unchanged sentence

Significant Accounting Policies (continued)

Currency Translation - Transactions denominated in foreign currencies are initially recorded in the functional currency using exchange

Taxes - Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary

differences between taxable income and pretax financial income, and between the tax bases of assets and liabilities and their reported

amounts in the financial statements.

Deferred tax assets and liabilities are included in the consolidated financial statements at currently

enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.

As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

positions initially need to be recognized in the financial statements when it is more-likely-than-not the positions will be sustained

upon examination by the tax authorities.

Currency Items - Transactions denominated in foreign currencies are initially recorded in the functional currency using exchange

rates in effect at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into

the functional currency using at the historical exchange rates in effect at the dates of the transactions.

All exchange gains and losses

are included in the statement of operations and comprehensive loss.

Instruments - Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 825, Disclosures about Fair

Value of Financial Instruments, requires disclosures of the fair value of financial instruments.

the functional currency using exchange rates in effect at the dates of the transactions.

All exchange gains and losses are included in

the statement of operations and comprehensive loss.

Instruments - Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 825, Disclosures about

Fair Value of Financial Instruments, requires disclosures of the fair value of financial instruments.

The carrying value of the Company’s

current financial instruments, which include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities,

and shareholder loan, approximates their fair values because of the short-term maturities of these instruments.

- The Company initially measures its financial instrument at fair value, except for certain non-arm’s length transactions.

The Company subsequently measures all its financial assets and financial liabilities at amortized cost, except for investments in equity

instruments that are quoted in an active market, which are measured at fair value.

Changes in fair value are recognized in earnings for

the period in which they occur.

assets measured at amortized cost include cash and cash equivalents, accounts receivable, related party receivable, other receivables

and share subscriptions receivable.

Financial liabilities measured at amortized cost include accounts payable and accrued liabilities,

and promissory note payable.

Party Transactions - All transactions with related parties are in the normal course of operations and are measured at the exchange amount.

and promissory note payable, approximates their fair values because of the short-term maturities of these instruments.

The carrying value

of the loan payable approximates fair value as its interest rate fluctuates with market interest rates.

Party Transactions - All transactions with related parties are in the normal course of operations and are measured at the exchange

Assets and Impairment – Patents and other intangibles are amortized using the straight-line method over their estimated useful

Intangible assets, such as trademarks with indefinite live are not amortized.

Intangible assets are evaluated for impairment at

least annually or when events or circumstances arise that indicate the existence of impairment.

Intangible assets, such as trademarks with indefinite lives, are not amortized.

Intangible assets are evaluated for impairment

at least annually or when events or circumstances arise that indicate the existence of impairment.

The Company evaluates the recoverability

9 unchanged sentences

future cash flows over the life of the asset being evaluated.

These assumptions require significant judgment and actual results may differ

from assumed and estimated amounts.

During the years ended December 31, 2021 and 2020, the Company had no impairment losses related to

intangible assets.

Accounting - On January 1, 2019, the Company adopted the new accounting standards ASC 842 that requires lessees to recognize operating

leases on the balance sheet as right-of-use assets and lease liabilities based on the value of the discounted future lease payments.

Expanded disclosures about the nature and terms of lease agreements are required prospectively and are included in Note 18.

These assumptions require significant judgment, and actual results may

differ from assumed and estimated amounts.

During the years ended December 31, 2022 and 2021, the Company had no impairment losses related

to intangible assets.

Taxes – Certain jurisdictions impose a sales tax on Company sales to nonexempt customers.

The Company collects these taxes

from customers and remits the entire amount as required by the applicable law.

The Company excluded from revenues and expenses the tax

collected and remitted.

Accounting - On January 1, 2019, the Company adopted ASC 842, which requires lessees to recognize operating leases on the balance

sheet as right-of-use assets and lease liabilities based on the value of the discounted future lease payments.

Expanded disclosures about

the nature and terms of lease agreements are required and are included in note 19.

Accounting Pronouncements

October 2021, the FASB issued ASU No.

2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

This ASU requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities

(deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606.

At the acquisition date, the acquirer

applies the revenue model as if it had originated the acquired contracts.

The ASU is effective for annual periods beginning after December

15, 2022, including interim periods within those fiscal years.

Adoption of the ASU should be applied prospectively.

Early adoption is

also permitted, including adoption in an interim period.

If early adopted, the amendments are applied retrospectively to all business

combinations for which the acquisition date occurred during the fiscal year of adoption.

Management is currently evaluating the impact

the adoption of this new guidance will have on its consolidated financial statements and does not anticipate a material impact.

November 2021, the FASB issued ASU No.

2021-10, Government Assistance (Topic 832).

This ASU requires business entities to disclose information

about government assistance they receive if the transactions were accounted for by analogy to either a grant or a contribution accounting

The disclosure requirements include the nature of the transaction and the related accounting policy used, the line items on the

balance sheets and statements of operations that are affected and the amounts applicable to each financial statement line item and the

significant terms and conditions of the transactions.

The ASU is effective for annual periods beginning after December 15, 2021.

disclosure requirements can be applied either retrospectively or prospectively to all transactions in the scope of the amendments that

are reflected in the financial statements at the date of initial application and new transactions that are entered into after the date

of initial application.

Management is currently evaluating the impact the adoption of this new guidance will have on its consolidated

financial statements and does not anticipate a material impact.

recently issued Accounting Standards Codification guidance has either been implemented or is not significant to the Company.

to the Consolidated Financial Statements

1 unchanged sentence

consists of the following at December 31, 2022 and 2021:

Schedule of Inventory

Finished goods

Promotional items

Raw materials

Property and Equipment

3 unchanged sentences

Leasehold improvements

Product molds

Leasehold Improvements

Balance – January 1, 2021

Balance – December 31, 2021

Accumulated Depreciation

Balance – January 1, 2021

Balance – December 31, 2021

Net amount as at December 31, 2021

Product molds

Leasehold Improvements

Balance – January 1, 2020

Balance – December 31, 2020

Property and Equipment, gross

accumulated depreciation

Balance – January 1, 2020

Balance – December 31, 2020

Net amount as at December 31, 2020

and Equipment, net

the years ended December 31, 2022 and 2021, the Company recognized depreciation expense of $ 484,073 and $ 64,497 , respectively.

property and equipment, as well as any future purchases of property and equipment have been pledged as security for the notes payable

disclosed in note 8.

31, 2022, the Company is committed to purchase an additional $ 2,545,000 of equipment.

the year ended December 31, 2022, the Company completed the purchase of a manufacturing facility and land for $ 6,079,410 and $ 2,239,405 ,

respectively.

Currently, the Company’s products are manufactured in Meihzou, China.

With the acquisition of the property, the Company

plans to build manufacturing and assembly operations in the United States.

The Company believes that by doing so it can (i) have better

control over design and manufacturing quality of its products, (ii) mitigate supply chain risk, (iii) decrease shipping costs, (iv) cut

overall manufacturing costs, and (v), by on-shoring production, participate in creating positive social externalities including employment

in its largest market:

the United States.

Intangible Assets

assets consist of costs incurred to establish the patent rights related to the Company’s quick latch and portable power station

as well as soft, tough, and solar cover technologies.

Worksport trademarks, licenses, and software costs.

The Company’s patents

were issued in 2014, 2019, 2020, and 2022.

The patents and software will be amortized on a straight-line basis.

At December 31, 2022,

the software has not been placed into service.

The Company’s trademark, licenses, and other indefinite life intangible assets are

reassessed every year for impairment;

the Company has determined that impairment is not necessary for the current year ended December

The change in intangible assets for the years ended December 31, 2022 and 2021 are as follows:

to the Consolidated Financial Statements

31, 2022 and 2021

Intangible Assets

assets consist of costs incurred to establish the Worksport Tri-Fold and Smart Fold patent technology, Worksport trademarks, as well

as the Company’s website and sales CRM system.

The patent was issued in 2014 and 2019.

The patent will be amortized on a straight-line

basis over its useful life of 25 years.

The Company’s sales CRM system is currently in testing and development which is expected

to be completed in 2022, as such no amortization has been recorded.

The Company’s trademark and website are reassessed every year

for amortization/impairment;

the Company has determined that amortization/impairment is not necessary for the current year ended December

The change in intangible assets for the years ending December 31, 2021 and 2020 are as follows:

Intangible Assets (continued)

Schedule of Change in Intangible Assets

Balance – January 1, 2021

Balance – December 31, 2021

Intangible Assets, gross

accumulated depreciation

Balance – January 1, 2021

Balance – December 31, 2021

Net amount as at December 31, 2021

Balance – January 1, 2020

Balance – December 31, 2020

Accumulated Amortization

Balance – January 1, 2020

Balance – December 31, 2020

Net amount as at December 31, 2020

of the patent over the next five years and beyond December 31, 2021 is as follows:

to December 31, 2022, the Company capitalized an additional $ 72,466 of software costs.

Estimated amortization of the patent and software

over the next five years and beyond December 31, 2022 is as follows:

Schedule of Amortization of Patent

2028 and later

to the Consolidated Financial Statements

31, 2021 and 2020

Prepaid expenses and deposits

1 unchanged sentence

Schedule of Prepaid Expenses and Deposits

Consulting, services and advertising

services and advertising

expenses and deposits, net

of December 31, 2021 prepaid expense and deposit consists of $ 4,328,389 in prepaid consulting, services and advertising for third party

consultants through the issuance of shares and stock options.

of December 31, 2022, prepaid expense and deposit consists of $ 1,313,799 (2021 - $ 4,328,389 ) in prepaid consulting, services and advertising

for third party consultants through the issuance of shares and stock options.

Deposits primarily include prepayments for raw materials

used in the manufacturing of inventory.

Promissory Notes

1 unchanged sentence

Schedule of Notes Payable

Balance as at December 31, 2019

Reclassification

Balance as at December 31, 2020

at December 31, 2020

Balance as at December

the year ended December 31, 2020, the Company reclassified $ 99,177 from

accounts payable to promissory notes and from promissory notes to other receivable.

The terms of the note is under

negotiation and is currently due on demand.

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

respectively.

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

July 2016, totaling $ 22,639 ($ 30,884 Canadian dollars).

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

terms of the original note including these additions are due “upon completion of going public on the Canadian Securities Exchange,

with no change in interest rate.

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

During the year ended December 31, 2019, the Company extended the maturity dates of the secured promissory notes to be due on

April 1, 2021.

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

As of December 31, 2021, the accrued interest on this note payable was $ 66,380 ($ 86,284 Canadian Dollars) (2020 - 48,770 ($ 64,102

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

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

note holder are in dispute.

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

The secured promissory notes

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

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

property and assets of the Company.

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

notes to be due on April 1, 2021.

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

As of December 31, 2021,

the accrued interest on this note payable was $ 45,181 (2020 – $ 31,000 ) included in accounts payable and accrued liabilities.

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

the years ended December 31, 2017, the Company issued secured promissory notes in the amount of $ 53,848

Canadian Dollars).

secured promissory notes were due in October and November 2018 and

bears interest at a rate of 12 %

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

During the year ended December

31, 2019, the Company extended the maturity date of the secured promissory notes to November 3, 2020.

During the year ended December

31, 2021, the Company and promissory note holders reached an agreement to repay $ 62,905

Canadian Dollars) in cash 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 December 31, 2021 the secured promissory notes has been settled.

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

secured promissory notes are due in August and November 2018 and

bear interest at a rate of 12 %

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

During the year ended December

31, 2019 the Company extended the maturity dates of this secured promissory note to November

During the year ended December 31, 2019,

the Company made a principal repayment of $ 10,000 .

During the year ended December 31, 2021 the Company and secured promissory note holder agreed to repay all outstanding principal and

interest through the issuance of 36,048

post-stock split

common shares valued at $ 0.09

As at December 31, 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 December 31, 2021 the secured promissory notes has been repaid in full.

as at December 31, 2022

the year ended December 31, 2022, the Company and promissory note holder reached an agreement to settle all outstanding promissory notes

and interest for $ 100,000 .

As a result of the settlement, the Company recognized a gain on settlement of debt of $ 163,211 .

Additionally,

as a part of this settlement, there was accrued interest on these promissory notes included in accounts payable on the accompanying consolidated

balance sheets totaling $ 139,121 that was also settled;

accordingly, the Company recognized a gain on settlement of debt for this amount.

to the Consolidated Financial Statements

31, 2022 and 2021

Promissory Notes (continued)

the year ended December 31, 2019, the promissory note holder advanced $ 88,120 to the Company.

As of the date the amount was advanced,

the terms of the note were under negotiation and, as a result, the note was due on demand.

During the year ended December 31, 2022, the

Company and promissory note holder reached an agreement to settle all outstanding promissory notes and interest, noted above.

the year ended December 31, 2016, the Company issued a secured promissory note in the principal amount of $ 73,452

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

2016, totaling $ 22,639

The secured promissory note bore interest at a rate of 18 %

The payment terms of the original note including these additions were due “upon completion of going public on the

Canadian Securities Exchange, with no change in interest rate.” The secured promissory note was secured by all present and

after-acquired property and assets of the Company.

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

of the secured promissory notes to be due on April 1, 2021.

During the year ended December 31, 2022, the Company and promissory note

holder reached an agreement to settle all outstanding promissory notes and interest, noted above.

As of December 31, 2022, principal

balance owing was $ nil

(2021 - $ 96,091

As of December 31, 2022, the accrued interest on this note payable, $ nil

(2021 - $ 66,380

($ 86,284 CAD)), was included in accounts payable and accrued liabilities.

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

promissory notes bore interest at a rate of 18 % per annum, payable monthly.

The secured promissory notes were secured by all present

and after-acquired property and assets of the Company.

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

of all secured promissory notes to be due on April 1, 2021.

During the year ended December 31, 2022, the Company and promissory note

holder reached an agreement to settle all outstanding promissory notes and interest, noted above.

As of December 31, 2022, the principal

balance owing was $ nil (2021 - $ 79,000 ).

As of December 31, 2022, the accrued interest on this note payable, $ nil (2021 – $ 45,181 ),

was included in accounts payable and accrued liabilities.

the year ended December 31, 2017, the Company issued secured promissory notes in the aggregate principal amount of $ 53,848 ($ 67,700 CAD).

The secured promissory notes were due in October and November 2018 and bore an interest rate of 12 % per annum.

The secured promissory

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

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

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

During the year ended December 31, 2021, the Company and promissory

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

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

As of December 31, 2022 and 2021, the secured promissory

notes have been repaid in full.

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

promissory notes were due in August and November 2018 and bore interest at a rate of 12 % per annum.

The secured promissory notes were

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

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

dates of this secured promissory note to November 3, 2020 .

During the year ended December 31, 2019, the Company made a principal repayment

of $ 10,000 .

During the year ended December 31, 2021, the Company and secured promissory note holder agreed to repay all outstanding principal

and interest through the issuance of 36,048 common shares valued at $ 1.80 per share.

As of December 31, 2021, the Company had recorded

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

of December 31, 2022 and 2021 the secured promissory notes have been repaid in full.

to the Consolidated Financial Statements

31, 2022 and 2021

Promissory Notes (continued)

amounts repayable under promissory notes and secured promissory notes at December 31, 2022 and 2021 are as follows:

3 unchanged sentences

Long-term portion

to the Consolidated Financial Statements

31, 2021 and 2020

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 22,500

post-stock split

common shares, and (ii) the Company issued to Leonite a five -year

warrant to purchase 45,000

post-stock split common shares at an exercise

price of $ 2.00

per share (subject to adjustment), which may

be exercised on a cashless basis.

note carries an original issue discount of $ 44,425

to cover Leonite’s legal fees, accounting

fees, due diligence fees and/or other transactional costs incurred in connection with the purchase of the note.

Therefore, the purchase

price of the note was $ 500,000 .

On February 28, 2020, the Company recorded $ 198,715 ,

principal and $ 16,215

original issue discount.

On September 1, 2020

the Company recorded an additional $ 310,322 ,

principal and $ 25,322

original issue discount.

As of December 31, 2020,

the Company has recorded $ 509,037 ,

principal and $ 41,537

original issue discount.

Furthermore, the Company

issued 22,500

post-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

post-stock split

common shares at $ 1.80

The original value of the convertible

note converted was $ 182,565

as a result the Company recognized a loss of

on settlement of debt.

During the year ended

December 31, 2021 Leonite converted its remaining outstanding principal and interest into common shares.

Leonite received 204,622

common shares at $ 1.80

per share valued at $ 368,318 .

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 December 31, 2021 the convertible promissory note has been settled.

Company amortized $ 58,146 (2020 - $ 11,677 ) of financing costs related to the shares and warrants for the year ended December 31, 2021.

The remaining net balance of the note as at December 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).

Shareholders’ Equity (Deficit)

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 22,500 common shares,

and (ii) the Company issued to Leonite a five -year warrant to purchase 45,000 common shares at an exercise price of $ 2.00 per share (subject

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

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

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

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

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

September 1, 2020, the Company recorded an additional $ 310,322 , consisting of $ 285,000 for principal and $ 25,322 as an original issue

As of December 31, 2021, the Company has recorded $ 509,037 , consisting of $ 467,500 for principal and $ 41,537 as an original

issue discount.

Furthermore, the Company issued 22,500 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 the convertible promissory note into 126,022

common shares at $ 1.80 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 year ended December 31, 2021, Leonite converted its remaining outstanding principal

and interest into common shares.

Leonite received 204,622 common shares at $ 1.80 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

In connection with the settlement, the Company expensed the remaining $ 148,027 of the original debt discount to interest expense.

As of December 31, 2022 and 2021, the convertible promissory note has been repaid in full.

Shareholders’ Equity

year ended December 31, 2022, the following transactions occurred:

the year ended December 31, 2021, the Company issued a total of 1,502,410

(pre-stock split 30,048,199 )

common shares relating to the Reg-A public offering.

Of the shares issued 15,500

(pre-stock split of 310,000 )

common shares valued at $ 31,200

were from share subscription payable and 750

(pre-stock split of 15,000 ) common shares

were cancelled and refunded valued at $ 1,500 .

The Company raised $ 3,003,321

and incurred share issuance cost of $ 123,984 .

the year ended December 31, 2021, the Company had a underwriters’ public offering for 3,272,727

units consisting of 1 common share and 1 warrant

In addition, the Company has granted

the underwriter of the offering the option to purchase 490,909

warrants and/or an additional 490,909

common shares for 45 days after the closing of

During the year ended December 31, 2021, the underwriter purchased 210,909

common shares at $ 5.49

per share and additional 490,909

warrants (refer to note 22).

Company issued 10,000 common shares to a consultant for services received valued at $ 86,000 , of which $ 66,329 was issued from share subscriptions

During the same period, the Company issued 80,000 common shares for consulting, advisory services, and employee compensation

valued at $ 240,000 .

Company issued 45,000 shares of restricted stock to members of the board valued at $ 260,100 from share subscriptions payable.

Company recognized consulting expense of $ 487,602 to share subscriptions payable from restricted shares and stock options to be issued.

As of December 31, 2022, the restricted shares have no t been issued.

to note 23 and 24 for additional disclosures of shareholders’ equity.

to the Consolidated Financial Statements

31, 2022 and 2021

Shareholders’ Equity (continued)

year ended December 31, 2021, the following transactions occurred:

the year ended December 31, 2021, the Company issued a total of 1,502,410 common shares relating to the Reg-A public offering.

shares issued, 15,500 common shares valued at $ 31,200 were from share subscription payable and 750 common shares valued at $ 1,500 were

cancelled and refunded.

The Company raised $ 3,003,321 and incurred share issuance cost of $ 123,984 .

the year ended December 31, 2021, the Company had an underwriters’ public offering for 3,272,727 units consisting of 1 common share

and 1 warrant at $ 5.50 per unit.

In addition, the Company has granted the underwriter of the offering the option to purchase 490,909

warrants and/or an additional 490,909 common shares for 45 days after the closing of the option.

During the year ended December 31, 2021,

the underwriter purchased 210,909 common shares at $ 5.49 per share and additional 490,909 warrants (refer to note 23).

A cumulative 3,483,636

post-stock split

common shares were issued in connection with offering for $ 21,805,361

incurring share issuance costs of $ 4,335,908 .

As of December 31, 2021 the Company issued on aggregate of 4,986,046

post-stock split common shares for public offerings incurring total issuance cost of $ 4,459,892 .

the year ended December 31, 2021 the Company raised $ 4,081,980

through private placement offerings of 2,040,990

units for 1 common share and 2 warrants at $ 2

As such the Company issued 2,040,990

(pre-stock split of 40,819,800 )

common shares in connection with the private offering.

the ended year ended December 31, 2021 2,488,721

warrants were exercised for 2,287,511

(pre-stock split of 32,468,420 and post-stock

split of 664,090 ) common shares.

common shares were issued in connection with offering for $ 21,805,361 , incurring share issuance costs of $ 4,335,908 .

As of December 31,

31, 2021, 2,287,511

2021, the Company issued an aggregate of 4,986,046 common shares for public offerings, incurring total issuance cost of $ 4,459,892 .

the year ended December 31, 2021, the Company raised $ 4,081,980 through private placement offerings of 2,040,990 units for 1 common share

and 1 warrant for two additional common shares at $ 2 per unit.

As such, the Company issued 2,040,990 common shares in connection with

the private offering.

the ended year ended December 31, 2021, 2,488,721 warrants were exercised for 2,287,511 common shares.

As of December 31, 2021, 2,287,511

common shares were issued valued at $ 8,454,564 .

Refer to note 23.

the year ended December 31, 2021, the Company entered into a loan settlement agreement with a loan holder to issue 62,006

(pre-stock split of 1,240,111 )

common shares at $ 1.80

per share for all outstanding loan principal

and interest valued at $ 111,610 .

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 .

the year ended December 31, 2021, the Company entered into a loan settlement agreement with a loan holder to issue 62,006 common shares

at $ 1.80 per share for all outstanding loan principal and interest valued at $ 111,610 .

As of the date of the settlement, the Company

had $ 157,787 in loans payable, resulting in the Company recognizing a gain on settlement of $ 46,176 .

Refer to note 20.

As of December 31, 2021 the Company issued 62,006

common shares.

the year ended December 31, 2021 the Company entered into a promissory notes payable settlement agreement with a note holder to issue

(pre-stock split of 720,960 )

common shares valued at $ 1.80

per share for a total value of $ 64,890 .

As of December

31, 2021, the Company issued 62,006 common shares.

the year ended December 31, 2021, the Company entered into a promissory note payable settlement agreement with a note holder to issue

36,048 common shares valued at $ 1.80 per share for a total value of $ 64,890 .

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 .

in promissory notes payable, resulting in the Company recognizing a gain on settlement of $ 8,997 .

Refer to note 9.

As of December 31, 2021 the Company issued 36,048

common shares.

As of December 31,

2021, the Company issued 36,048 common shares.

the year ended December 31, 2021, the Company entered into a settlement agreement with the convertible promissory note holder to settle

all outstanding principal and interest.

The Company issued 204,622

(pre-stock split of 4,092,440 )

common shares at $ 1.80

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 recognizing a loss of $ 42,651

The Company issued 204,622 common shares at $ 1.80 per share valued at $ 368,319 .

As of the date

of the settlement, the Company had $ 325,667 in convertible promissory notes payable, resulting in the Company recognizing a loss of $ 42,651

on settlement of debt.

Refer to note 10.

the year ended December 31, 2021 the Company issued 1,717,535

(pre-stock split of 34,350,700 )

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.

to the Consolidated Financial Statements

31, 2021 and 2020

Shareholders’ Equity (Deficit) (continued)

the year ended December 31, 2021, the Company entered into consulting agreements with third party consultants for 380,000

post-stock split

shares of common stock valued at $ 1,648,700

for consulting services.

As of December 31, 2021,

the Company issued 370,000

post-stock split common shares

valued at $ 1,562,700

the year ended December 31, 2021, the Company issued 1,717,535 common shares to Steven 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 agreeing to return 900 Series A Preferred Stock to the Company.

the year ended December 31, 2021, the Company entered into consulting agreements with third party consultants for 380,000 shares of common

stock valued at $ 1,648,700 for consulting services.

As of December 31, 2021, the Company issued 370,000 common shares valued at $ 1,562,700

to the third-party consultants for services received.

The remaining 10,000

post-stock split common share will be expensed

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

As of December 31, 2021, the Company recorded $ 66,329

share subscriptions payable for the outstanding 10,000 post-stock split common shares.

As of December 31, 2021 the Company expensed

$ 337,091 to advertising and consulting and capitalized $ 502,534 to intangible assets.

the year ended December 31, 2021, the Company issued 259,808

(pre-stock split of 5,196,160 )

common shares valued at $ 741,159

for consulting and prepaid services, $ 241,559

were issued from share subscriptions payable.

As of December 31, 2021 the Company consulting expense of $ 497,752 .

During the same period the Company issued 150,000

(pre-stock split of 3,000,000 ) common shares

valued at $ 390,000

for consulting services.

During the same period

the Company issued 3,350

(pre-stock split of 67,000 )

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

the year ended December 31, 2021, the Company granted and issued 775,000

post-stock split

restricted shares valued at $ 4,121,000

of the Company to consultants for services to

be rendered over a period of 12 and 24 months.

Upon issuance 775,000

of the restricted shares vested immediately and

As of December 31, 2021, the Company recognized consulting and advertising expense of $ 796,000

The remaining 10,000 common shares will be expensed throughout the term of the

agreement as the Company accrues the stock payable.

As of December 31, 2021, the Company recorded $ 66,329 to share subscriptions payable

for the outstanding 10,000 post-stock split common shares.

As of December 31, 2021, the Company expensed $ 337,091 to advertising and

consulting and capitalized $ 502,534 to intangible assets.

to the Consolidated Financial Statements

31, 2022 and 2021

to prepaid expense.

the year ended December 31, 2021, the Company granted 45,000

post-stock split

restricted shares of the Company to directors of the Company.

Upon being granted 15,000

of the restricted shares vested immediately,

shall vest on January 1, 2022.

As of December

31, 2021 the Company recognized consulting expense of $ 258,618

to share subscriptions payable.

As of December

31, 2021, the restricted shares have not been issued.

Refer to note 22 and 23 for additional shareholders’

equity (deficit) for consulting expense of $ 37,000 related to warrant issuance and $ 1,551,111 to share subscriptions payable for consulting

and advertising expense related to stock options.

Shareholders’ Equity (continued)

the year ended December 31, 2021, the Company issued 259,808 common shares valued at $ 741,159 for consulting and prepaid services, $ 241,559

of which was issued from share subscriptions payable.

As of December 31, 2021, the Company recognized consulting expenses of $ 497,752 .

During the same period, the Company issued 150,000 common shares valued at $ 390,000 for consulting services as well as 3,350 common shares

valued at $ 24,121 for employee compensation.

the year ended December 31, 2021, the Company granted and issued 775,000 restricted shares of the Company valued at $ 4,121,000 to consultants

for services to be rendered over a period of 12 and 24 months.

Upon issuance, 775,000 of the restricted shares vested immediately.

of December 31, 2021, the Company recognized consulting and advertising expense of $ 796,000 and $ 3,325,000 , respectively, to prepaid

the year ended December 31, 2021, the Company granted 45,000 restricted shares of the Company to directors of the Company.

granted, 15,000 of the restricted shares vested immediately, and 30,000 vested on January 1, 2022.

As of December 31, 2021, the Company

recognized consulting expense of $ 258,618 to share subscriptions payable.

As of December 31, 2022, the restricted shares have been issued.

to note 23 and 24 for additional disclosures related to shareholders’ equity for consulting expense of $ 37,000 related to warrant

issuance and $ 1,551,111 to share subscriptions payable for consulting and advertising expense related to stock options.

the year ended December 31, 2021, the Company completed a share consolidation of the Company’s issued and outstanding common shares

based on twenty (20) pre-consolidation shares to one (1) post-consolidation share.

As a result of the share consolidation a anti-dilution

As a result of the share consolidation, an anti-dilution

clause was triggered, resulting in the Company issuing 237,500 common shares valued at $ 86,687 .

year ended December 31, 2020, the following transactions occurred:

the year ended December 31, 2020, the Company issued 120,651 (pre-stock split of 2,413,022 )

common shares at $ 0.07

per share for $ 168,910

for consulting services.

the year ended December 31, 2020, the Company entered into a share subscription agreement with a consultant of the Company for 200,000

(pre-stock split of 4,000,000 )

common shares valued at $ 125,000

for prepaid consulting services.

also entered into two prepaid advertising services agreement for 66,667 (pre-stock split of 1,333,333 )

and 12,000 (pre-stock split of

240,000 ) common

shares at $ 0.09

per share for $ 120,000

respectively.

As of December 31, 2020, the Company

has expensed $ 215,164

from prepaid expenses.

As of December 31, 2020,

the Company issued 186,167 (pre-stock split of 3,723,333 )

common shares from share subscriptions payable

for services render.

Subsequent to year ended December 31, 2020, the Company issued the remaining 92,500 (pre-stock split of 1,850,000 )

common shares valued at $ 67,188 .

the year ended December 31, 2020, the Company entered into a share subscription agreement with a consultant of the Company for 62,308

(pre-stock split of 1,246,154 )

common shares valued at $ 162,000

for prepaid consulting services.

As of December

31, 2020, no shares have been issued.

As of December 31, 2020, the Company has expensed $ 18,900

from prepaid expenses.

Subsequent to year ended

December 31, 2020 the Company issued 62,308 (pre-stock split of 1,246,154 )

common shares.

the year ended December 31, 2020, the Company entered into an advertising service agreement to issue 11,250 (pre-stock split of 225,000 )

common shares and warrants.

warrants are convertible at a ratio of 1:1 and are exercisable until December 31, 2021, at $ 0.20 per

The shares valued at $ 21,747

have been included in share subscriptions payable.

The warrants valued at $ 16,503

have been included in additional paid in capital.

Subsequent to year ended December 31, 2020, the Company issued 11,250 (pre-stock split of 225,000 )

common shares.

the year ended December 31, 2020, the Company entered into a share subscription agreement with a consultant of the Company for 200,000

(pre-stock split of 4,000,000 )

common shares valued at $ 250,000 .

During the year ended December 31, 2020, the Company issued 566,874 (pre-stock split of 11,337,479 )

common shares from shares of subscription

payable with a combined value of $ 1,123,147 .

284,349 (pre-stock split of 5,686,978 )

of the common shares issued from subscription

payable valued at $ 648,147

relates to the anti-dilution feature triggered

on March 5, 2019, as noted below.

the year ended December 31, 2020, the Company entered into a settlement to fulfill a debt purchase agreement entered in 2017 for 205,000

(pre-stock split of 4,100,000 )

shares valued at $ 856,080 .

As of December 31, 2020, the Company has issued 205,000 (pre-stock split of 4,100,000 )

shares from share subscriptions payable.

the year ended December 31, 2020, the Company initiated a Reg-A public offering at $ 0.10

per share and warrant.

As of December 31, 2020,

the Company raised $ 1,017,617

incurring share issuance cost of $ 55,004 .

As of December 31, 2020, the Company issued 498,065 (pre-stock split of 9,961,301 )

common shares valued at $ 996,301 .

As of December 31, 2020, the Company has 16,350 (pre-stock split of 327,000 )

common shares valued at $ 32,701

to be issued.

the year ended December 31, 2020, the issued 100,000 warrants for services valued at $ 12,600 .

Refer to note 22.

the year ended December 31, 2020, the Company reached a legal settlement agreement with an investor.

In accordance with the settlement

agreement, 4,166,667

(pre-stock split of 25,000,000 ),

reserved shares were released and returned to the Company valued at $ 325,000 .

This transaction resulted in a gain on debt settlement of $ 229,142 .

to the Consolidated Financial Statements

31, 2021 and 2020

Shareholders’ Equity (Deficit) (continued)

the year ended December 31, 2020, the Company issued 126,022 (pre-stock split of 2,520,434 )

common shares at $ 0.09

per common share pursuant to the conversion of

the convertible promissory note (note 9) with a value of $ 226,839 .

The original value of the convertible promissory note converted was $ 182,565

as a result of the conversion the Company recognized

a loss of $ 44,274

on settlement of debt.

the year ended December 31, 2020, the Company issued 22,500 (pre-stock split of 450,000 )

shares in connection with the issuance of convertible

promissory note (note 8) at $ 0.27

the year ended December 31, 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 for services rendered .

the year ended December 31, 2021 and 2020, the Company was authorized to issue 299,000,000

shares of its common stock with a par value of

the years ended December 31, 2022 and 2021, the Company was authorized to issue 299,000,000 shares of its common stock with a par value

of $ 0.0001 .

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

During 2021 and 2020, the Company was authorized

shares of its Series A and 100,000

Series B Preferred Stock with a par value of

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 .

During 2022 and 2021, the Company was

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

Series A preferred

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

Series B preferred Stock have voting rights

equal to 10,000 shares of common stock, per share of preferred stock.

Related Party Transactions

the year ended December 31, 2021, the Company recorded salaries expense of $ 410,573

(2020 - $ 64,903 )

related to services rendered to the Company by its CEO.

During the same period the Company recorded salaries expense of $ 125,707

to an officer of the Company and director.

the years ended December 31, 2021 and 2020, the Company’s CEO paid on behalf of the Company $ 12,154 ( 2020- repayment of

As of December 31, 2021, the Company has a payable of $ 35,547 (2020 - $ 23,393 ).

the year ended December 31, 2022, the Company recorded salaries expense of $ 387,308 (2021 - $ 410,573 ) related to services rendered to

the Company by its CEO.

During the same period the Company recorded salaries expense of $ 265,858 (2021 - $ 125,707 ) to an officer and

director of the Company.

As of December 31, 2022 and 2021, the Company has a payable of $ 46,096 and $ 35,547 to the CEO.

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

the year ended December 31, 2021, the Company paid $ 59,203 to a U.S.-based corporation which the Company’s CEO and director is

also a stockholder.

the year ended December 31, 2021, the Company paid $ 59,203 to a U.S.-based corporation of which the Company’s CEO and director

is also a stockholder.

to note 11 and 24 for additional related party transactions.

The income tax expense for the year ended December 31, 2021 and 2020 is reconciled per the schedule below:

to the Consolidated Financial Statements

31, 2022 and 2021

The income tax expense for the years ended December 31, 2022 and 2021 is reconciled per the schedule below:

Schedule of Reconciliation of Income Tax

Net loss before income taxes

before income taxes

$ ( 12,534,414 )

$ ( 7,897,086 )

Non-deductible portion of meals and entertainment

Expenses paid in shares

Interest on lease liability

Lease payments

Gain/(loss) on Settlement of Debt

Adjusted net loss for tax purposes

income taxes, net of federal benefits

Non-deductible

portion of meals and entertainment

base compensation

net loss for tax purposes

( 12,457,196 )

Statutory rate

Income tax benefit

( 7,264,822 )

Increase in valuation allowance

Provision for income taxes

to the Consolidated Financial Statements

31, 2021 and 2020

Income Taxes (continued)

( 2,616,011 )

( 1,525,613 )

in valuation allowance

for income taxes

Deferred Income Tax Assets

2 unchanged sentences

Net operating loss carry forwards

Change in operating lease

Share base compensation

Deferred tax assets, gross

Deferred tax assets not recognized

2 unchanged sentences

Net deferred tax asset

income taxes within each jurisdiction on the balance sheets at December 31, 2022 and 2021 are as follows:

Schedule of Deferred Income Taxes

Within Each Jurisdiction

Deferred income taxes

( 8,999,407 )

( 6,383,396 )

deferred tax asset

to the Consolidated Financial Statements

31, 2022 and 2021

Income Taxes (continued)

Cumulative Net Operating Losses

Company has non-capital losses carried forward of approximately $ 10,197,000

available to reduce future years’ taxable

These losses will expire as follows:

Company has non-capital losses carried forward of approximately $ 17,997,000 available to reduce future years’ taxable income.

losses will expire as follows:

Schedule of Cumulative Non-capital Losses

United States

Non-capital losses carried forward Total

net operating loss carryforwards of approximately $ 10,197,000 may be offset against future taxable income for the years 2022 through

No tax benefit from continuing or discontinued operations have been reported in the December 31, 2021 consolidated financial statements

since the potential tax benefit is offset by a valuation allowance of the same amount.

to change in ownership provisions of the Tax Reform Act of 1986, net operation loss carryforwards for Federal income tax reporting purposes

Non-capital losses carried

forward Total

net operating loss carryforwards of approximately $ 17,997,000 may be offset against future taxable income.

No tax benefit from these

losses have been reported in the December 31, 2022 consolidated financial statements since the potential tax benefit is offset by a valuation

allowance of the same amount.

to change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes

are subject to annual limitations.

4 unchanged sentences

Under ASC 740,

the Company may recognize the tax benefit from an uncertain tax position only if it is more likely that not that the tax position will

the Company may recognize the tax benefit from an uncertain tax position only if it is more-likely-than-not that the tax position will

be sustained on examination by the taxing authorities, based on the technical merits of the position.

13 unchanged sentences

adopted credit policies which include the analysis of the financial position of its customers and the regular review of their credit

The Company incurred bad debt expense of $ 62,329

during the year ended December 31, 2021 and

the year ended December 31, 2020.

Company is exposed to currency risk on its sales and purchases denominated in Canadian Dollars.

The Company actively manages these risks

by adjusting its pricing to reflect currency fluctuations and purchasing foreign currency at advantageous rates.

The Company incurred bad debt expense of $ 0 and $ 62,329 during the year ended December 31, 2022 and 2021.

to the Consolidated Financial Statements

1 unchanged sentence

Financial Instruments (continued)

Company is exposed to currency risk on its sales and purchases denominated in Canadian Dollars.

The Company actively manages these risks

by adjusting its pricing to reflect currency fluctuations and purchasing foreign currency at advantageous rates.

risk is the risk that the Company will not be able to meet its obligations associated with financial liabilities.

The Company relies

on cash flows generated from operations, as well as injections of capital through the issuance of the Company’s capital stock to

settle its liabilities when they become due.

Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary current assets and current liabilities.

on its cash reserves, cash flows generated from operations, and injections of capital through the issuance of the Company’s capital

stock to settle its liabilities when they become due.

Company is exposed to interest rate risk due to the variable interest rate of its mortgage, which is equal to the Prime Rate plus two

hundred twenty-five basis points ( 2.25 % ) per annum.

Concentration

of Supplier Risk

Company purchases all of its inventory from one supplier source in Asia.

The Company carries significant strategic inventories of these

materials to reduce the risk associated with this concentration of suppliers.

Strategic inventories are managed based on demand.

the Company has been able to obtain adequate supplies of the materials used in the production of its products in a timely manner from

existing sources.

The loss of this key supplier or a delay in shipments could have an adverse effect on its business.

Company purchases all of its finished goods from Meizhou, China.

The Company carries significant strategic inventories of these materials

and is currently establishing domestic assembly to reduce the risk associated with this concentration of finished good suppliers.

inventories are managed based on demand.

To date, the Company has been able to obtain adequate supplies of the materials used in the

production of its products in a timely manner from existing sources.

The loss of this key supplier or a delay in shipments could have

an adverse effect on its business.

Concentration

of Customer Risk

following table includes the percentage of the Company’s sales to significant customers for the fiscal years ended December 31,

2021 and 2020.

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

Schedule of Significant Customer Risk Percentage

Concentration of revenues

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

At December 31, 2021 customer A represented

33.4 % at $ 106,988 of the Company’s revenue compare to 26.1 % at $ 190,313 of Company revenue in 2020.

Customer B represented 29.3 %

of the Company’s revenue at $ 93,622 compared to 2020 of 51 % or $ 190,313 .

Customer C represented 14.90 % or $ 47,604 of the Company’s

revenue compared to 2020 of 0 % or $ 0 .

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

The loss of any key

customer could have an adverse effect on the Company’s business.

the year ended December 31, 2022, two customers made up 50 % ( 38 % and 12 % individually) of revenue.

For the year ended December 31, 2021,

three customers made up 77 % ( 33 % , 29 % , and 15 % individually) of revenue.

Changes in Cash Flows from Operating Assets and Liabilities

The changes to the Company’s operating assets and liabilities for

the years ended December 31, 2021 and 2020 are as follows:

changes to the Company’s operating assets and liabilities for the years ended December 31, 2022 and 2021 are as follows:

Schedule of Changes in Operating Assets and Liabilities

Decrease (increase) in accounts receivable

$ ( 119,813 )

Decrease (increase) in other receivable

Decrease (increase) in inventory

Decrease (increase) in prepaid expenses and deposits

Increase (decrease) in lease liability

Increase (decrease) in taxes payable

Increase (decrease) in accounts payable and accrued liabilities

Changes in operating assets and liabilities

(increase) in accounts receivable

(increase) in other receivable

(increase) in inventory

(increase) in prepaid expenses and deposits

(decrease) in lease liability

(decrease) in payroll taxes payable

(decrease) in accounts payable and accrued liabilities

in operating assets and liabilities

$ ( 565,377 )

3 unchanged sentences

Commitments and Contingencies

the year ended December 31, 2021 the Company entered into an amended agreement to reserve an additional 7,500

common shares for consulting services.

the year ended December 31, 2020 the Company entered into an agreement with a third-party advisor to reserve for issuance 5,000

post-stock split

common shares for consulting services.

As of December 31, 2021, 12,500

post-stock split

common shares were issued to the third party.

the year ended December 31, 2021, the Company entered into an agreement with a third-party advisor to reserve for sale and issuance 15,000

post-stock split

common shares for consulting services at a $ 0.001

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 December 31, 2021, the outcome of the legal proceeding is uncertain.

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

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

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

common shares for consulting services at $ 0.001 per share.

Reverse Stock Split

1 unchanged sentence

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.

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

The Certificate of Change

3 unchanged sentences

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

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

The shares have been

issued to the Company.

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

As of December 31, 2021, the Company had advanced a total of $ 24,423 and is advancing tranches of capital as required

by the Company.

Lease Liabilities

the year ended December 31, 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 .

the year ended December 31, 2019, the Company entered into an agreement to purchase 10,000,000 shares of a privately owned US-based mobile

phone development company for $ 50,000 – representing a 10 % equity stake.

The shares have been issued to the Company.

As of December

31, 2022 and 2021, the Company had advanced a total of $ 24,423 and is advancing tranches of capital as required by the Company.

Operating Lease Obligations

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 .

During the year ended December 31, 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 .

the year ended December 31, 2022, the Company signed a lease agreement for approximately 20,296 square feet to be used as its primary

corporate office and R&D facility pursuant to a five-year lease, dated June 1, 2022 , for a variable rate averaging $ 22,101 per month

over the lifetime of the lease.

The Company also pays approximately $ 4,418 in additional fees per month, which varies year to year.

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

4 unchanged sentences

equal to the lease liability.

Company’s right-of-use asset for the years ended December 31, 2021 and 2020 as follows:

Company’s right-of-use asset and lease liability as of December 31, 2022 and 2021 is as follows:

Schedule Right-of-use Asset

December 31, 2021

December 31, 2020

Right-of-use asset

Current lease liability

Long-term lease liability

components of lease expense are as follows:

Schedule of Components of Lease Expense

December 31, 2021

December 31, 2020

Amortization of right-of-use

Interest on lease liability

Total lease cost

lease liability

to the Consolidated Financial Statements

31, 2022 and 2021

Lease Liabilities (continued)

Operating Lease Obligations (continued)

following is a summary of the Company’s total lease costs:

of Lease Costs

following is a summary of cash paid in 2022 and 2021 for amounts included in the measurement of lease liabilities:

of Measurement of Lease Liabilities

of lease liability are as follows:

1 unchanged sentence

Schedule of Future Minimum Lease Payments

2026 and thereafter

Total future minimum lease payments

3 unchanged sentences

Long term portion

the year ended December 31, 2020 the Company received loans of $ 32,439 ,

and $ 108,000

from a unrelated third party with an interest

per annum with a maturity date of December

22 and August

31, 2021 respectively.

During the year ended December

31, 2021 the Company agreed to repay the outstanding principal and interest through the issuance of 62,006

post-stock split

common shares valued at $ 1.80

Loans payable

the year ended December 31, 2022, the Company entered into a loan agreement with a third

party for the purchase of property located in West Seneca, New York, the details of which

are disclosed in the Company’s Form 8-K filed with the United States Securities and

Exchange Commission on May 11, 2022.

The Company received $ 5,300,000 with an interest rate

of prime plus 2.25 % with an initial maturity date of May 10, 2024 and the option to extend

the loan for an additional year.

In order to service the loan throughout the term, the Company

deposited $ 667,409 in a restricted account.

As of December 31, 2022, the balance in the restricted

account was $ 411,016 and is included in cash and cash equivalents on the accompanying balance

the year ended December 31, 2020, the Company received loans of $ 32,439 , $ 10,000 , and $ 108,000

from an unrelated third party with an interest rate of 10 % per annum and a maturity date

of December 31, July 22 and August 31, 2021 , respectively.

During the year ended December

2021, the Company accrued interest expense of $ 1,319

(2020 - $ 6,028 ).

31, 2021, the Company agreed to repay the outstanding principal and interest through the

issuance of 62,006 common shares at $ 0.09 per share.

As of December 31, 2021, the Company

accrued interest of $ 1,319 .

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 $ 46,176

for the year ended December 31, 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

COVID-19 small business relief program.

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

of 25 percent.

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

of principal and $ 7,348 of interest outstanding, resulting in the Company recognizing a gain

on settlement of $ 46,176 for the year ended December 31, 2021.

There are no amounts owing,

and the loan has been fully settled.

the year ended December 31, 2020, the Company received $ 28,387 ($ 40,000 CAD) interest-free

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

the balance of the loan on or before December 31, 2023 resulted in loan forgiveness of 25

percent ( 25 %).

As of September 30, 2022, the Company made a repayment of $ 28,387 ($ 40,000

CAD) and, as of February 14, 2023, received the forgiven debt of $ 7,383 ($ 10,000 CAD), see

At December 31, 2022, there are no amounts owing, and the loan has been fully settled.

to the Consolidated Financial Statements

31, 2022 and 2021

Government Assistance

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 year ended December 31, 2021, the Company recognized

CEWS of $ 125,812

CDN) and CERS of $ 13,628

CDN) as a reduction in general and administrative

the COVID-19 pandemic, the Government of Canada was 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

The CEWS program provided a reimbursement of salaries for eligible employers based on a decrease in revenues.

The CERS program

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

During the year ended December 31,

2021, the Company recognized CEWS of $ 125,812 ($ 157,866 CAD) and CERS of $ 13,628 ($ 16,974 CAD) as a reduction in general and administrative

expense on the consolidated statements of operations.

Loss per Share

the year ended December 31 2021, loss per share is $( 0.69 ) (basic and diluted) compared to the year ended December 31, 2020 of $( 0.43 )

(basic and diluted) using the weighted average number of shares of 11,504,147 (basic and diluted) and 2,734,531 (basic and diluted) respectively.

are 299,000,000 shares authorized, 16,951,034 and 3,820,619 shares issued and outstanding, as at December 31, 2021 and

the year ended December 31, 2022, loss per share is $ 0.72 (basic and diluted) compared to that of the year ended December 31, 2021 of

$ 0.69 (basic and diluted) using the weighted average number of shares of 17,078,480 (basic and diluted) and 11,504,147 (basic and diluted),

respectively.

As of December 31, 2021, the Company has 221,667 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 December 31, 2021 the Company has 5,658,315 warrants convertible to 6,649,305 common shares,

45,000 restricted stock to be issued and 712,500 stock options exercisable for 712,500 common shares for a total underlying common shares

of 7,406,805 .

As at December 31, 2020 the Company has 12,436,301 warrants convertible to 12,436,301 common shares and convertible promissory

note convertible to 3,448,025 common shares for a total underlying common shares of 15,884,326 .

to the Consolidated Financial Statements

31, 2021 and 2020

the year ended December 31, 2021, a total of 2,488,721

warrants were exercised for 2,287,511

common shares.

warrants were exercised at $ 4.00

per share, 317,000

warrants were exercised at $ 6.05

per share and 494,500

warrants were exercised on a cashless basis for

are 299,000,000 shares authorized and 17,159,376 and 16,951,034 shares issued and outstanding, as at December 31, 2022 and 2021, respectively.

The computation of loss per share is based on the weighted average number of shares outstanding during the period in accordance with

ASC Topic No.

260, “Earnings Per Share.” Shares underlying the Company’s outstanding warrants and convertible promissory

notes were excluded due to the anti-dilutive effect they would have on the computation.

As at December 31, 2022, the Company has 3,939,924

warrants convertible to 4,239,924 common shares, 2,645,000 restricted stock to be issued, and 785,000 stock options exercisable for 785,000

common shares for a total underlying common shares of 7,669,924 .

As at December 31, 2021, the Company had 5,658,315 warrants convertible

to 6,649,305 common shares, 45,000 restricted stock to be issued, and 712,500 stock options exercisable for 712,500 common shares for

a total underlying common shares of 7,406,805 .

the year ended December 31, 2022, an aggregate of 250,121 warrants were exercised primarily on a cashless basis for 73,321 common shares,

and 1,599,179 Reg-A public offering and private placement warrants expired.

the year ended December 31, 2021, a total of 2,488,721 warrants were exercised for 2,287,511 common shares.

1,637,709 warrants were exercised

at $ 4.00 per share, 317,000 warrants were exercised at $ 6.05 per share, and 494,500 warrants were exercised on a cashless basis for 293,290

common shares.

During the same period the

warrants were exercised on a cashless basis related

to a convertible promissory note, please refer to note 9.

As of December 31, 2021 2,287,511

common shares were issued from warrant exercises.

During the same period, the 39,512 warrants were exercised on a cashless basis related to a convertible promissory note

(please refer to note 10).

For the year ended December 31, 2021, 2,287,511 common shares were issued from warrant exercises.

the year ended December 31, 2021, the Company issued 1,502,409 and 2,040,990 warrants convertible to 1 and 2 common shares each exercisable

3 unchanged sentences

The exercise price of the warrants is $ 4.00 per share.

During the same period the Company issued 3,763,636 warrants

convertible to 1 common share at an exercise price of $ 6.05 per share exercisable for a period of 36 months.

3,272,727 warrants were

purchased through the underwritten public offering and 490,909 over-allotment warrants purchased by the underwriter.

The warrants were

issued in connection with the underwritten public offering.

During the year ended December 31, 2022, the Company and

a warrant holder reached an agreement to extend the exercisable period of 300,000 warrants, convertible to 2 common shares each, for

an additional 12 months.

During 2021, the Company issued 3,763,636 warrants convertible to 1 common share at an exercise price of $ 6.05

per share exercisable for a period of 36 months.

3,272,727 warrants were purchased through the underwritten public offering and 490,909

over-allotment warrants were purchased by the underwriter.

The warrants were issued in connection with the underwritten public offering.

the year ended December 31, 2021, the Company and warrant holder reached an agreement to amend a previous warrant agreement.

will issue an additional 150,000 warrants for a total of 250,000 warrants valued at $ 37,000 .

The exercisable period of the warrants was

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

The warrants are convertible to 1 common share each exercisable

at $ 2 per share.

the year ended December 31, 2021 the Company issued 130,909

representative warrants to the Company’s

underwriters.

The representative warrants are not exercisable until January 30, 2022.

The representative warrants are exercisable

common shares at $ 6.05

per share until August 3, 2024.

As of December

31, 2021 the Company has not valued the representative warrants.

issued an additional 150,000 warrants for a total of 250,000 warrants valued at $ 37,000 .

The exercisable period of the warrants was also

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

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

During the year ended December 31, 2022, the warrants were exercised on a cashless basis for 73,321 common shares.

to the Consolidated Financial Statements

31, 2022 and 2021

Warrants (continued)

the year ended December 31, 2021, the Company issued 130,909 representative warrants to the Company’s underwriters.

The representative

warrants are not exercisable until January 30, 2022.

The representative warrants are exercisable for 130,909 common shares at $ 6.05 per

share until August 3, 2024.

As of December 31, 2022, the Company recognized a value of $ 273,993 for the representative warrants to share

issuance cost.

the year ended December 31, 2021, 26,815 warrants expired.

of December 31, 2022, the Company has the following warrants outstanding:

of Warrants Exercise Price

Exercise price

Number outstanding

Remaining Contractual Life (Years)

February 24, 2022

October 1, 2022

Schedule of Warrants Exercise Price

Contractual Life (Years)

August 3, 2024

February 25, 2025

March 20, 2025

January 14, 2026

of Warrants Activity

December 31, 2021

December 31, 2020

Number of warrants

Weighted average price

Number of warrants

Weighted average price

Balance, beginning of year

August 6, 2024

Schedule of Warrants Activity

average price

beginning of year

( 1,593,691 )

Balance, end of period

to the Consolidated Financial Statements

31, 2021 and 2020

Stock Options

( 2,494,209 )

end of period

Stock Options and Performance Share Units

the Company’s 2015 Equity Incentive Plan, the number of common shares reserved for issuance under the option plan shall not exceed

1 unchanged sentence

of Directors.

equity-settled share-based payments are ultimately recognized as an expense in the statement of operations and comprehensive loss with

a corresponding credit to “Additional Paid in Capital.” If vesting periods or other non-market vesting conditions apply,

the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest.

Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous

Any cumulative adjustment prior to vesting is recognized in the current period.

No adjustment is made to any expense recognized

in prior periods if share options ultimately exercised are different to that estimated on vesting.

On December 29, 2021 the Company granted 400,000

and 300,000 performance stock units (“PSU”) to the Company’s Chief Executive Officer and a director, respectively.

The PSU will vest in 5% increments according to a schedule that correlates with the Company’s stock price.

The first 5% of the

PSUs vest upon the Company’s stock price closing at $3.00.

50% will have vested at a closing price of $16.50 and 100% will have

vested at a closing price of $31.50 .

As of December 31, 2021, no PSUs have been vested and the Company recognized $ 0 to stock based compensation

equity-settled, share-based payments are ultimately recognized as an expense in the statement of operations with a corresponding credit

to “Additional Paid in Capital.” If vesting periods or other non-market vesting conditions apply, the expense is allocated

over the vesting period, based on the best available estimate of the number of share options expected to vest.

Estimates are subsequently

revised if there is any indication that the number of share options expected to vest differs from previous estimates.

Any cumulative

adjustment prior to vesting is recognized in the current period.

No adjustment is made to any expense recognized in prior periods if

share options ultimately exercised are different than that estimated on vesting.

to the Consolidated Financial Statements

31, 2022 and 2021

Stock Options and Performance Share Units (continued)

November 11, 2022, 700,000 performance stock units (“PSUs”) granted December 29, 2021, as described below, were modified

to include new terms pertaining to the PSU vesting schedule.

The PSUs vest in 5% increments according to the modified schedule that correlates

with the Company’s stock price.

The first 5% of the PSUs vest upon the Company’s stock price closing at $2.25.

50% will have

vested at a closing price of $5.31, and 100% will have vested at a closing price of $13.76.

The fair value of the PSUs was estimated

to be $ 1,254,460 .

As of December 31, 2022, no PSUs have vested, and the Company recognized $ 35,100 in consulting expense.

December 29, 2021, the Company granted 400,000 and 300,000 performance stock units (“PSUs”) to the Company’s Chief

Executive Officer and a director, respectively.

The PSUs were to vest in 5% increments according to a schedule that correlates with the

Company’s stock price.

The first 5% of the PSUs was to have vested upon the Company’s stock price closing at $3.00.

to have vested at a closing price of $16.50, and 100% was to have vested at a closing price of $31.50.

The fair value of the PSUs was

estimated to be $ 1,344,570 .

As of December 31, 2022, no PSUs have vested, and the Company recognized $ 232,312 (2021 - $ 0 ) in consulting

Company uses the Black-Scholes option pricing model to determine fair value of stock options on the grant date.

During the year ended

December 31, 2022, the Company granted 10,000 and 50,000 options to advisors with an exercise price of $ 2.19 and $ 2.37 , respectively,

expiring on February 7, 2027 and May 5, 2032 , respectively.

The options vested immediately upon issuance.

The fair values of the options

on the grant date was estimated to be $ 21,780 and $ 261,400 , respectively.

The Company recognized $ 283,180 in consulting expense during

the year ended December 31, 2022.

the year ended December 31, 2022, the Company granted 12,500 options to a consultant with an exercise price of $ 1.60 expiring on November

The options are earned in four equal installments on February 27, 2023, May 29, 2023, August 29, 2023 and November 27, 2023.

The options shall vest one year after being earned on February 27, 2024, May 29, 2024, August 29, 2024 and November 27, 2024 .

values of the options on the grant date was estimated to be $ 18,725 .

The Company recognized $ 1,642 in consulting expense during the year

ended December 31, 2022.

the year ended December 31, 2022, Terravis Energy, Inc., a subsidiary of the Company, granted an aggregate of 1,350,000 of Terravis Energy,

stock options to its officers and directors.

The stock options have an exercise price of $ 0.01 and will expire on April 12, 2032 .

The options vested immediately upon issuance.

The fair value of the options on the grant date was estimated to be immaterial.

July 23, 2021, the Company granted 15,000 options to a director with an exercise price of $ 5.50 and an expiry date of July 23, 2026 .

The stock options vested on January 1, 2022.

The fair value of the options on grant date was estimated to be $ 129,480 .

The Company recognized

$ 799 (2021 - $ 128,681 ) to consulting expense during the year ended December 31, 2022.

August 6, 2021, the Company granted 140,000 options to directors, advisors, and officers with an exercise price of $ 5.50 and an expiry

date of August 6, 2026 .

The stock options will vest on January 1, 2022.

The fair value of the options on grant date was estimated to

be $ 754,189 .

The Company recognized $ 749,084 to consulting expense during the year ended December 31, 2021.

The fair value

of the options were calculated using the Black-Scholes option pricing model and using the following assumptions:

Schedule of Fair Value of the Black - Scholes

Option Pricing Model

December 31, 2021

Discount rate

Expected volatility

Expected life (years)

Expected dividend yield

Exercise price

July 23, 2021, the Company granted 15,000 options to a director with an exercise price of $ 5.50 and an expiry date of July 23, 2026 .

The stock options will vest on January 1, 2022.

The stock options vested on January 1, 2022.

The fair value of the options on grant date was estimated to be

recognized $ 128,681 to consulting expense during year ended December 31, 2021.

The fair value of the options were calculated

using the Black-Scholes option pricing model and using the following assumptions:

Schedule of Fair Value of the Black - Scholes

Option Pricing Model

December 31, 2021

Discount rate

Expected volatility

Expected life (years)

Expected dividend yield

Exercise price

The Company recognized $ 5,105 (2021 - $ 749,084 ) to consulting expense during the year ended December 31, 2022.

to the Consolidated Financial Statements

31, 2022 and 2021

Stock Options and Performance Share Units (continued)

September 1, 2021, the Company granted 400,000 options to a consultant with an exercise price of $ 5.32 and an expiry date of September

4 unchanged sentences

on grant date was estimated to be $ 2,112,000 .

The Company recognized $ 352,972 to consulting expense during the year ended December

The fair value of the options were calculated using the Black-Scholes option pricing model and using the following

Schedule of Fair Value of the Black - Scholes

Option Pricing Model

December 31, 2021

Discount rate

Expected volatility

Expected life (years)

Expected dividend yield

Exercise price

to the Consolidated Financial Statements

31, 2021 and 2020

October 7 and November 2, 2021, the Company granted 5,000 and 62,500 options respectively, to advisors with an exercise price of $ 5.50

The options will expiry on October 7, 2026 and November 2, 2026 respectively.

The stock options will vest on January 1, 2022.

The fair value of the options on grant date was estimated to be $ 326,498 .

The Company recognized $ 320,374 to consulting

expense during the year ended December 31, 2021.

The fair value of the options were calculated using the Black-Scholes option pricing

model and using the following assumptions for the 5,000 and 62,500 options respectively:

Schedule of Fair Value of the Black - Scholes

Option Pricing Model

December 31, 2021

Discount rate

Expected volatility

Expected life (years)

Expected dividend yield

Exercise price

of Fair Value of the Black - Scholes Option Pricing Model

December 31, 2021

Discount rate

Expected volatility

Expected life (years)

Expected dividend yield

Exercise price

December 29, 2021, the Company granted 30,000 stock options to members of the board for a total of 90,000 options with an exercise price

The options will expiry on December 29, 2026 .

The Company recognized $ 1,058,917 (2021 - $ 352,972 ) to consulting expense during the year

ended December 31, 2022.

The Consultant has since agreed to forfeit these options;

October 7 and November 2, 2021, the Company granted to advisors 5,000 and 62,500 options with exercise prices of $ 5.50 and $ 5.24 , respectively.

The options will expire on October 7, 2026 and November 2, 2026 , respectively.

The stock options vested on January 1, 2022.

value of the options on grant date was estimated to be $ 353,230 .

The Company recognized $ 32,856 (2021 - $ 320,374 ) to consulting expense

during the year ended December 31, 2021.

December 29, 2021, the Company granted an aggregate of 90,000 options to members of the board with an exercise price of $ 2.51 .

will expire on December 29, 2026 .

The options have a vesting period of 1 year from the initial grant date ;

shall vest on December 29, 2022, 10,000 shall vest on December 29, 2023 and 10,000 shall vest on December 29, 2024 .

The fair value of

the options on grant date was estimated to be $ 224,280 .

The Company recognized $ 0 to consulting expense during the year ended

December 31, 2021.

The fair value of the options were calculated using the Black-Scholes option pricing model and using the

following assumptions:

Schedule of Fair Value of the Black - Scholes

Option Pricing Model

December 31, 2021

Discount rate

Expected volatility

Expected life (years)

Expected dividend yield

Exercise price

10,000 vested on December

29, 2022, 10,000 shall vest on December 29, 2023, and 10,000 shall vest on December 29, 2024.

The fair value of the options on grant

date was estimated to be $ 224,280 .

The Company recognized $ 73,941 (2021 - $ 0 ) in consulting expense during the year ended December 31,

Schedule of Stock Options Activity

of stock options

average price

of stock options

average price

beginning of year

end of period

Schedule of Share-based Payment Arrangement, Option, Exercise Price Range

of Exercise prices

average life (years)

average exercise price

on December 31, 2022

of December 31, 2022, Terravis Energy Inc.

had the following options outstanding:

of Stock Options Activity

Year ended December 31, 2021

Number of options

Weighted Average Price

Balance, beginning of period

Balance, end of period

of stock options

average price

beginning of year

end of period

of Share-based Payment Arrangement, Option, Exercise Price Range

Range of Exercise prices

Number outstanding

Weighted average life (years)

Weighted average exercise price

Number exercisable on December 31, 2021

Exercisable on December 31, 2022

Stock options

$ 2.51 - 5.50

of December 31, 2021, no stock options has been vested.

to the Consolidated Financial Statements

31, 2022 and 2021

Rental Income

the year ended December 31, 2022, the Company entered into a sublease agreement for its warehouse in Mississauga, Ontario, Canada.

sublease commenced on September 15, 2022 and will end on May 31, 2024 at $ 15,515 ($ 19,992 CAD) per month.

the year ended December 31, 2022, the Company entered into a lease agreement in relation to its West Seneca property.

Initially, the

Company entered into a lease agreement with a third-party from July 1 to December 31, 2022 at $ 33,750 per month.

Subsequently, on September

23, 2022, a mutual agreement was reached to terminate the lease agreement.

the year ended December 31, 2022, the Company recognized rental income of $ 213,383 .

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

6 unchanged sentences

fiscal interventions designed to stabilize economic conditions.

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

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

duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions.

Additionally,

4 unchanged sentences

yet know the full extent of potential delays or impacts on our business, financing or the global economy as a whole.

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

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

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

to minimize potential losses.

However, these effects

could have a material impact on our liquidity, capital resources, operations and business and those of the third parties on which we

The management and board of the Company is constantly monitoring this situation to minimize potential losses.

Subsequent Events

Company has evaluated subsequent events through March 31, 2023, which is the date the financial statements were available to be issued.

and the following events after year end occurred:

February 17, 2022, Worksport appointed Tom DiNanno to its Board of Advisors for a monthly fee of $ 5,000 USD in addition to a 10,000

common share option grant.

agreed to issue 20,000 shares of common stock to employees/consultants.

Additionally, Worksport has agreed to issue Stock Options

of Terravis Energy, Inc., a Worksport subsidiary, to Lorenzo Rossi and Steven Rossi in the amount of 750,000 and 250,000 options,

respectively.

agreed to issue 10,000 Common Shares to Zenfar Investments Ltd on January 13, 2022 for manufacturing consulting services rendered

per agreement signed on March 3, 2021.

agreed to issue 40,000 Common Shares to Exchange Listing LLC on March 18, 2022 for capital markets and strategic advisory services

rendered per agreement signed on January 26, 2022.

has initiated final steps towards closing on the West Seneca production facility it began looking into in 2021, applying for a mortgage

and initiating a Phase 2 Environmental Assessment.

We are seeking to purchase the property for $ 8.125 M, financing $ 5.3 M via mortgage

with an interest rate of prime rate + 5.5 % while putting down $ 2.825 M on the property.

The following events occurred after year-end:

January 30, 2023, the Company and a stock options holder reached an agreement to cancel all

400,000 stock options in exchange for extending the exercisable period of 300,000 warrants

to December 31, 2024.

January 30, 2023, the Company issued 360,000 stock options to members of the board.

options have an exercise price of $ 1.66 and an expiration date of January 30, 2033 .

options will vest in six equal installments of 60,000 commencing on the effective date of

the grant and on each annual anniversary.

January 30, 2023, the Company issued 300,000 stock options to a consultant.

The stock options

have an exercise price of $ 1.66 and an expiration date of January 30, 2028 .

The options have

a vesting period with:

150,000 shall vest on grant date, 75,000 shall vest on March 1, 2023,

and 75,000 shall vest on September 1, 2023.

February 14, 2023, the Company received $ 7,383 ($ 10,000 CAD) of forgiven debt from the Government

of Canada for an interest-free loan issued by the Government of Canada as part of the COVID-19

small business relief program.

to the Consolidated Financial Statements

31, 2022 and 2021

Subsequent Events (continued)

March 14, 2023, the Company issued 45,000 stock options to various employees.

The stock options

have an exercise price of $ 1.53 and an expiration date of March 14, 2033 .

The options will

vest in two equal installments of 22,500 on each of the following two annual anniversaries

of the effective date of the grant.

March 14, 2023, the Company issued 20,000 stock options to a consultant.

The stock options

have an exercise price of $ 1.53 and an expiration date of March 14, 2033 .

The options will

vest in two equal installments of 10,000 on each of the following two annual anniversaries

of the effective date of the grant.

March 14, 2023, the Company issued 85,106 stock options to a manager.

The stock options have

an exercise price of $ 1.53 and an expiration date of March 14, 2033 .

The options will vest

in two equal installments of 42,553 upon the completion of two milestones as approved by

the Company’s Compensation Committee.

March 14, 2023, the Company issued 170,212 restricted stock units to a manager.

The restricted

stock units have a vesting period with:

21,280 shall vest on grant date, and 10,638 shall

vest at the end of each subsequent three month period through August 31, 2026.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data