What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-03-28 compared with 2023-03-31 · 673 added, 773 removed, 494 unchanged (75% of the section changed)

1 unchanged sentence

TO FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firms

Report of Independent Registered Public Accounting Firm

Audited Consolidated Balance Sheets at December 31, 2023 and 2022

Audited Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2022

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

Consolidated Statements of Shareholders’ Equity for the year ended December 31, 2023 and 2022

Audited Consolidated Statements of Cash Flow for the years ended December 31, 2023 and 2022

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on the Financial Statements

have audited the accompanying consolidated balance sheet of Worksport Ltd.

have audited the accompanying consolidated balance sheets of Worksport Ltd.

and Subsidiaries (the Company) as of December 31, 2023 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.

2022, and the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for the

years then ended, and the related notes to the consolidated financial statements (collectively referred to as the consolidated financial

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

of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years 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

deficit, that raise substantial doubt about its ability to continue as a going concern.

Management’s plans in regard to these matters

are also described in Note 3.

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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.

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

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

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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

of our audits 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.

5 unchanged sentences

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.

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

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

6 unchanged sentences

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.

of December 31, 2023, the Company’s inventory balance was $3.6 million.

As reported in Note 5, inventory has increased significantly

over the past year as the Company began to stockpile inventory due to its start of domestic production during 2023.

The Company evaluates

its inventory for obsolescence on an ongoing basis by considering historical usage as well as requirements for future orders.

the inherent uncertainty and significant judgments necessary to value inventory and its related obsolescence, auditing management’s

estimates involved 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.

auditing procedures related to inventory valuation included the following, among others:

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

inventory and 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.

inquired of management relative to write-offs of inventory during the year.

tested the completeness and accuracy of management’s inventory detail.

developed an independent expectation of the obsolescence reserve based on our knowledge of

the Company’s inventory, including analysis of slow-moving items and historical usage

and compared it to actual.

performed a lower of cost or net realizable value analysis by selecting a sample of items

included in inventory at year-end.

selected a sample of purchases made throughout the year to ensure they were included in inventory

at the proper weighted-average value.

selected a sample of purchases made before and after the year end to ensure proper cut-off

was achieved.

our physical inventory observation, we toured the Company’s facility and examined inventory

on hand to determine the completeness and existence of ending inventory.

examined management’s overhead analysis and performed procedures to test its completeness

and accuracy.

Shareholders’

Equity and Related Transactions

of the Matter

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Lumsden & McCormick, LLP

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and

of Worksport, LTD

on the Financial Statements

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 audit.

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 financial statements are free of material misstatement, whether due to error or fraud.

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

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

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 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 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.

We believe that our audits

provide a reasonable basis for our opinion.

Haynie & Company

Lake City, Utah

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

Balance Sheets

31, 2023 and 2022

and cash equivalents

receivable net

expenses and deposits (note 8)

Current Assets

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)

Cash and cash equivalents

Accounts receivable, net

Other receivable

Inventory (note 5)

Prepaid expenses and deposits (note 8)

Total Current Assets

Investment (note 14)

Property and Equipment, net (note 6)

Right-of-use asset, net (note 15)

Intangible Assets, net (note 7)

Liabilities and Shareholders’ Deficit

Current Liabilities

Accounts payable and accrued liabilities

Payroll taxes payable

Related party loan (note 10)

Loan payable (note 16)

Current lease liability (note 15)

Total Current Liabilities

Long Term – Lease Liability (note 15)

Loan payable (note 16)

Total Liabilities

Shareholders’ Equity

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 9)

Common stock, $ 0.0001 par value, 299,000,000 shares authorized, 20,320,503 and 17,159,376 shares issued and outstanding, respectively (note 9)

Additional paid-in capital

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( 33,384,219 )

translation adjustment

Shareholders’ Equity

Liabilities and Shareholders’ Equity

Cumulative translation adjustment

Total Shareholders’ Equity

Total Liabilities and Shareholders’ Equity

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

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31, 2023 and 2022

of Goods Sold

Profit (Loss)

and administrative

and marketing

Loss on foreign exchange

Cost of Goods Sold

Operating Expenses

from operations

General and administrative

Sales and marketing

Professional fees

Gain on foreign exchange

Total operating expenses

Loss from operations

( 14,736,661 )

( 12,773,715 )

income (note 25)

on settlement of debt

Other Income (Expense)

Interest expense

Interest income

Rental income (note 20)

Gain on settlement of debt

Total other income (expense)

( 14,928,958 )

( 12,534,414 )

per Share (basic and diluted)

Average Number of Shares (basic and diluted)

Loss per Share (basic and diluted)

Weighted Average Number of Shares (basic and diluted)

accompanying notes form an integral part of these consolidated financial statements

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31, 2023 and 2022

Subscriptions

Stockholders’

at January 1, 2021

$ ( 12,866,033 )

Stock split provision

Conversion of preferred stock

to common stock

Issuance for services and

subscriptions payable

Public offering

Share issuance cost

( 4,459,892 )

Preferred Stock

Additional Paid-in

Share Subscriptions

Share Subscription

Cumulative Translation

Stockholders’ Equity

Balance at December 31, 2021

$ ( 20,849,805 )

Issuance of shares from private

Warrants issuance for services

Conversion of convertible

promissory note to shares (note 10)

Share issuance

Warrant exercise (note 18)

Loan repayment (note 9 and

Issuance for services and subscriptions payable

( 12,534,414 )

at December 31, 2021

Balance at December 31, 2022

$ ( 33,384,219 )

Share issuance

$ ( 33,384,219 )

Issuance for services and subscriptions payable

Shares issued (note 9)

Warrant exercise (note 18)

Issuance for services and

subscriptions payable

Stock option forfeiture (note 19)

( 14,928,958 )

at December 31, 2022

Balance at December 31, 2023

$ ( 48,313,177 )

accompanying notes form an integral part of these consolidated financial statements

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31, 2023 and 2022

Operating Activities

$ ( 14,928,958 )

$ ( 12,534,414 )

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

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

Shares, options and warrants issued for services

Depreciation and amortization

Change in operating lease

Accrued interest

Gain on settlement of debt

Adjustments to reconcile net income loss to cash provided

by (used in) operating activities

( 8,078,283 )

( 7,412,583 )

in operating assets and liabilities (note 15)

cash used in operating activities

Changes in operating assets and liabilities (note 13)

( 3,852,297 )

Net cash used in operating activities

( 11,930,580 )

from Investing Activities

( 7,977,960 )

Cash Flows from Investing Activities

Purchase of intangible assets

of property and equipment

Purchase of property and equipment

( 3,690,056 )

( 11,047,447 )

cash used in investing activities

Net cash used in investing activities

( 3,756,364 )

( 11,150,776 )

Proceeds from issuance of

common shares, net of issuance cost

Proceeds from warrant exercise

Financing Activities

Proceeds from issuance of common shares, net of issuance cost

Proceeds from loan payable

Shareholder Assumption of

on loan and promissory notes payable

cash provided by financing activities

Related party loan

Repayments on loan and promissory notes payable

Net cash provided by financing activities

Change in cash

( 11,254,979 )

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

( 13,946,576 )

Cash and cash equivalents - beginning of year

Cash and cash equivalents end of year

Supplemental Disclosure of non-cash activities

Shares issued for purchase of intangible assets

Cashless warrant exercise

of preferred Stock to common stock

issued for loan repayment

of convertible promissory note to common stock

split provision

Disclosure of cash flow information

Supplemental Disclosure of cash flow information

Income tax paid

Interest paid

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

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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 NASDAQ.

The Certificate of Change

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

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

These consolidated financial statements, including prior period

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

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

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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.

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

April 6, 2022, Terravis issued Lorenzo Rossi and Steven Rossi, both of whom are members of Terravis’s board of directors, were

granted non-qualified stock options under the Terravis 2022 Plan exercisable for 750,000 and 250,000 shares of Terravis’s common

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

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’

Siegel, all of whom are members of Terravis’s 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’s

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

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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)

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

Officer and President of the Company.

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

4 unchanged sentences

Operations Corporation.

to the Consolidated Financial Statements

31, 2023 and 2022

Basis of Presentation and Business Condition

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Basis of Measurement

Company’s financial statements have been prepared on the accrual basis.

Company’s financial statements have been prepared on an accrual basis.

Consolidation

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results could differ from these estimates.

Reclassification

amounts in the prior period Consolidated Statements of Cash Flows for the year ended December 31, 2021 have been reclassified to conform

with current period presentation.

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

of December 31, 2023, the Company had $ 3,365,778 in cash and cash equivalents.

The Company has generated only limited revenues and has

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

Since the Company’s acquisition of

Worksport in fiscal year 2014, it has never generated a profit.

As of December 31, 2023, the Company had an accumulated deficit of $ 48,313,177 .

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

1 unchanged sentence

During the year ended December 31, 2023,

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

the Company had net losses of $ 14,928,958 (2022 - $ 12,534,414 ).

As of December 31, 2023, the Company had working capital of $ 1 , 956,894

(2022 – $ 15,870,377 ) and had an accumulated deficit of $ 48,313,177 (2022 - $ 33,384,219 ).

The Company has not generated profit from

operations since inception and to date has relied on debt and equity financing for continued operations.

The Company’s ability

to continue as a going concern is dependent upon the ability to generate cash flows from operations and obtain equity and/or debt financing.

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

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

There can be no assurance that the steps management

is taking will be successful.

to the Consolidated Financial Statements

31, 2023 and 2022

Going Concern (continued)

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

As of December 31, 2023, the

Company had working capital of $ 1 , 956,894

(2022 – $ 15,870,377 ) and

an accumulated deficit of $ 48,313,177 (2022

- $ 33,384,219 ).

As of December 31, 2023, the Company had cash and cash equivalents of $ 3,365,778

(2022 - $ 14,620,757 ).

Despite the Company having mostly completed its purchasing of large manufacturing machinery, operational costs are expected to

remain elevated and, thus, further decrease cash and cash equivalents.

Concurrently, the Company intends to continue its ramp-up of

manufacturing and increasing sales volumes in 2024, which should mitigate the effects of operational costs on cash and cash

this view is supported by the fact that the manufacturing facility of the Company was completed for initial production

output in 2023 and has started to generate revenue in the third quarter of 2023.

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

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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.

common stock and prospectus supplement covering the offering, issuance and sale of up to $ 13,000,000 of common stock that may be issued

and sold under an At The Market Offering Agreement dated September 30, 2022 (“ATM Agreement”), with H.C.

Co., LLC, as the sales agent (“HCW”).

Pursuant to the ATM Agreement, HCW is entitled to a commission equal to 3.0 % of the

gross sales price of the shares of common stock sold.

As of December 31, 2023, the Company has sold and issued 99,127 shares of common

stock in consideration for net proceeds of $ 214,238 under the ATM Agreement.

November 2, 2023, the Company closed a sale of 1,925,000

shares of common stock and 1,575,000

pre-funded warrants for a total net proceeds of $ 4,261,542 .

In association with the sale, the Company also issued 7,000,000

warrants convertible for 7,000,000

shares of common stock at an exercise price of $ 1.34 .

The warrants are exercisable six months after issuance and will expire five

and a half years from the issuance date.

date, the Company’s principal sources of liquidity consist of net proceeds from public and private securities offerings and cash

exercises of outstanding warrants.

During the year ended December 31, 2023, the Company received nominal proceeds from public offerings,

private placement offerings, and from the exercise of any outstanding warrants or options.

Management is focused on transitioning towards

revenue as its principal source of liquidity by growing existing product offerings as well as the Company’s customer base.

Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash

balances for planned operations or future business developments.

Future business development and demands may lead to cash utilization

at levels greater than recently experienced.

The Company may need to raise additional capital in the future.

However, the Company cannot

provide assurances it will be able to raise additional capital on acceptable terms, or at all.

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

Still, certain factors indicate

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

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

These adjustments

could be material.

to the Consolidated Financial Statements

31, 2023 and 2022

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.

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

months or less.

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, 2023 and

2022 totaling $ 730,802

and $ 411,016 (see note 16).

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

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

review of accounts receivable at the end of each period.

2 unchanged sentences

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

Research and Development – Research and

development costs are expensed as incurred and are included in general and administrative expense in the accompanying financial statements.

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

1 unchanged sentence

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

Recognition – In accordance with Accounting Standards Codification (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;

7 unchanged sentences

and equipment

payments - The Company offers a share option plan for its directors, officers, employees, and consultants.

ASC 718 “Compensation

– Stock Compensation” prescribes accounting and reporting standards for all share-based payment transactions in which

employee services are acquired.

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

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).

Manufacturing

to the Consolidated Financial Statements

31, 2023 and 2022

Significant Accounting Policies (continued)

payments - The Company offers a share option plan

for its directors, officers, employees, and consultants.

ASC 718 “Compensation – Stock Compensation” prescribes accounting

and reporting standards for all share-based payment transactions in which employee services are acquired.

Transactions include incurring

liabilities, or issuing or offering to issue shares, options, and other equity instruments such as stock appreciation rights.

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:

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earlier of the performance commitment date or performance completion date.

to the Consolidated Financial Statements

31, 2022 and 2021

Significant Accounting Policies (continued)

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

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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 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.

Instruments - FASB 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, and accounts payable and accrued liabilities, 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

to the Consolidated Financial Statements

31, 2023 and 2022

Significant Accounting Policies (continued)

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

28 unchanged sentences

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

consists of the following at December 31, 2023 and 2022:

Schedule of Inventory

Finished goods

Promotional items

Raw materials

to the Consolidated Financial Statements

31, 2023 and 2022

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

Property and Equipment

1 unchanged sentence

Schedule of Property and Equipment

Manufacturing equipment

Product molds

1 unchanged sentence

Property and Equipment, gross

accumulated depreciation

and Equipment, net

Less accumulated depreciation

( 1,664,580 )

Property and Equipment,

the years ended December 31, 2023 and 2022, the Company recognized depreciation expense of $ 1,107,292 and $ 484,073 , respectively.

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.

The Company has and continues to produce soft tonneau covers in Meizhou, China and Foshan, China, and it began producing hard tonneau covers

in its West Seneca manufacturing facility in 2023.

The Company believes that by doing so it (i) has better control over design and manufacturing

quality of its products, (ii) mitigates supply chain risk, (iii) decreases shipping costs, (iv) cuts overall manufacturing costs, and

(v), by on-shoring production, participates in creating positive social externalities including employment in its largest market:

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.

assets consist of costs incurred to establish the patent rights related to the quick latch and soft vinyl quad-fold tonneau cover

technologies, Worksport trademarks, licenses, and software costs.

The Company’s utility patents and design registrations were

issued between 2014 and 2023.

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:

At December 31, 2023, 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 31, 2023.

The change in intangible assets for the years ended December 31, 2023 and 2022 are as

Schedule of Change in Intangible Assets

Intangible Assets, gross

Less accumulated amortization

Intangible Assets, net

Amortization expense for the years ended December 31, 2023 and 2022 was

$ 2,450 and $ 2,509 , respectively.

to the Consolidated Financial Statements

1 unchanged sentence

Intangible Assets (continued)

Schedule of Change in Intangible Assets

Intangible Assets, gross

accumulated depreciation

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

amortization of the patent and software over the next five years and beyond December 31, 2023 is as follows:

of Amortization of patent

2028 and later

2 unchanged sentences

Schedule of Prepaid Expenses and Deposits

services and advertising

Consulting, services and advertising

expenses and deposits, net

2 unchanged sentences

Deposits primarily include prepayments for raw materials

used in the manufacturing of inventory.

Promissory Notes

following tables shows the balance of the notes payable as of December 31, 2022 and 2021:

Schedule of Notes Payable

at December 31, 2020

Balance as at December

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.

used in the manufacturing of finished goods.

Shareholders’ Equity

year ended December 31, 2023, the following transactions occurred:

the year ended December 31, 2023, the Company sold 99,127 shares of common stock for a total net proceeds of $ 214,238 .

The sale of shares

was in connection with the shelf registration statement on Form S-3 effective on October 13, 2022, allowing the Company to issue up to

$ 30,000,000 of common stock and prospectus supplement covering the offering, issuance and sale of 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 recognized consulting expense of $ 1,222,863 to share subscriptions payable from restricted shares and stock options to be issued.

As of December 31, 2023, the restricted shares have not been issued.

During the same period, the Company issued 250,000 shares of common

stock for consulting services valued at $ 635,000 .

the year ended December 31, 2023, the Company closed a sale of 1,925,000

shares of common stock for $ 2,579,500 .

The Company incurred share issuance expense of $ 428,300 .

In association with the sale of common shares, the Company also issued 1,575,000

pre-funded warrants and 7,000,000

Refer to note 18.

to notes 18 and 19 for additional shareholders’ equity (deficit).

to the Consolidated Financial Statements

31, 2023 and 2022

Promissory Notes (continued)

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

Schedule of Secured Notes Payable

Balance owing

Less amounts due within one year

Long-term portion

Convertible Promissory Notes

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

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

be paid in tranches.

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

Shareholders’ Equity (continued)

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

4 unchanged sentences

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.

As of December 31, 2022, the restricted shares have not been issued.

to note 18 and 19 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

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 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 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 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

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.

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 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 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 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

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, an anti-dilution

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

the years ended December 31, 2023 and 2022, the Company was authorized to issue 299,000,000 shares of its common stock with a par value

5 unchanged sentences

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

Series B preferred Stock have voting rights

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

Series B Preferred Stock have voting

rights equal to 10,000 shares of common stock, per share of Preferred Stock.

Related Party Transactions

4 unchanged sentences

As of December 31, 2023 and 2022, the Company has a payable of $ 2,192 and $ 46,096 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 of which the Company’s CEO and director

is also a stockholder.

to note 9 and 19 for additional related party transactions.

to the Consolidated Financial Statements

31, 2022 and 2021

The income tax expense for the years ended December 31, 2023 and 2022 is reconciled per the schedule below:

Schedule of Reconciliation of Income Tax

before income taxes

Loss before income taxes

$ ( 14,929,000 )

$ ( 12,534,000 )

income taxes, net of federal benefits

Non-deductible

portion of meals and entertainment

base compensation

net loss for tax purposes

State income taxes, net of federal benefits

Non-deductible portion of meals and entertainment

Share base compensation

Interest and penalty

Adjusted net loss for tax purposes

( 13,760,000 )

( 13,020,000 )

Statutory rate

Income tax benefit

( 2,889,000 )

( 2,734,000 )

in valuation allowance

for income taxes

Increase in valuation allowance

Provision for income taxes

to the Consolidated Financial Statements

31, 2023 and 2022

Income Taxes (continued)

Deferred Income Tax Assets

2 unchanged sentences

Net operating loss carry forwards

Amortization and depreciation

Change in operating lease

8 unchanged sentences

Within Each Jurisdiction

United States

Deferred income taxes

Valuation allowance

( 7,537,000 )

( 4,648,000 )

deferred tax asset

to the Consolidated Financial Statements

31, 2022 and 2021

Income Taxes (continued)

Net deferred tax asset

Cumulative Net Operating Losses

3 unchanged sentences

United States

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

Non-capital losses carried forward Total

operating loss carryforwards of approximately $ 28,594,000 may be offset against future taxable income.

No tax benefit from these losses

have been reported in the December 31, 2023 consolidated financial statements since the potential tax benefit is offset by a valuation

allowance of the same amount.

to the Consolidated Financial Statements

31, 2023 and 2022

Income Taxes (continued)

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

5 unchanged sentences

Under ASC 740,

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.

The Company has determined that

the Company has no significant uncertain tax positions requiring recognition under ASC 740.

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.

The Company has determined

that the Company has no significant uncertain tax positions requiring recognition under ASC 740.

Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

2 unchanged sentences

Company is required to file income tax returns in the U.S.

and Canadian Federal jurisdictions, as well as the states of New York, New

Jersey, and Utah and in the province of Ontario.

The Company is no longer subject to income tax examinations by tax authorities for tax

years ending before December 31, 2019.

and Canadian Federal jurisdictions, as well as various states and in the

province of Ontario.

The Company is no longer subject to income tax examinations by tax authorities for tax years ending before

December 31, 2020 in the United States and for tax years ending before December 31, 2014 in Canada.

Financial Instruments

Company is exposed to credit risk on the accounts receivable from its customers.

In order to reduce its credit risk, the Company has

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 $ 0 and $ 62,329 during the year ended December 31, 2022 and 2021.

to the Consolidated Financial Statements

31, 2022 and 2021

Financial Instruments (continued)

To reduce its credit risk, the Company has 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 $ 0

during each of the years ended December 31, 2023 and 2022.

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

7 unchanged sentences

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

to the Consolidated Financial Statements

31, 2023 and 2022

Financial Instruments (continued)

Concentration

of Supplier Risk

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.

Company has historically purchased all of its soft tonneau cover finished goods from Meizhou, China, and it began purchasing soft tonneau

cover finished goods from a second supplier in Foshan, China in late 2023.

The Company carries significant strategic inventories of these

materials and is increasing its purchasing from the supplier in Foshan to lower supplier concentration risk.

Further, the Company has

established domestic assembly of its hard tonneau cover product line to further reduce the risk associated with this concentration of

finished good suppliers.

Strategic 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 these key suppliers or

a delay in shipments could have an adverse effect on its business.

Concentration

3 unchanged sentences

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.

the year ended December 31, 2023, 93 % of the Company’s revenue is comprised of one customer.

For the year ended December 31, 2022,

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

two customers made up 50 % ( 38 % and 12 % individually) of revenue.

Changes in Cash Flows from Operating Assets and Liabilities

1 unchanged sentence

Schedule of 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

Decrease (increase) in accounts receivable

$ ( 400,521 )

Decrease (increase) in other receivable

Decrease (increase) in inventory

( 2,285,120 )

Decrease (increase) in prepaid expenses and deposits

Increase (decrease) in lease liability

Increase (decrease) in payroll taxes payable

Increase (decrease) in accounts payable and accrued liabilities

in operating assets and liabilities

1 unchanged sentence

$ ( 565,377 )

to the Consolidated Financial Statements

31, 2022 and 2021

Commitments and Contingencies

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

common shares for consulting services at $ 0.001 per share.

Reverse Stock Split

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

The Certificate of Change

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

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

These consolidated financial statements, including prior period

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 of a privately owned US-based mobile

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

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.

As of December 31, 2023 and 2022, the Company had advanced a total of $ 24,423 and is advancing tranches of capital as required by

the year ended December 31, 2023, the Company purchased $ 66,308 ($ 90,000 CAD) of Guaranteed Investment Certificate (“GIC”).

The GIC bears a variable interest rate and matured on February 27, 2024.

The anticipated earned interest on the GIC at maturity

is $ 2,818 ($ 3,825 CAD).

Operating Lease Obligations

3 unchanged sentences

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.

to the Consolidated Financial Statements

31, 2023 and 2022

Operating Lease Obligations (continued)

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

now secondary 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.

the year ended December 31, 2023, the Company signed a lease agreement for office space to be used as an R&D facility pursuant to

a one-year lease with an option to extend the lease for an additional year, dated June 1, 2023, for a monthly rent of $ 3,350 .

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

6 unchanged sentences

Schedule Right-of-use Asset

lease liability

to the Consolidated Financial Statements

31, 2022 and 2021

Operating Lease Obligations (continued)

December 31, 2023

December 31, 2022

Right-of-use asset

Current lease liability

Long-term lease liability

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

2 unchanged sentences

of Measurement of Lease Liabilities

December 31, 2023

December 31, 2022

Operating cashflow

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

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

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

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, 2023 and 2022

Government Assistance

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.

Loans payable

May 4, 2022, the Company entered into a secured loan agreement (the “Loan Agreement”) with an external banking entity

relating to the Company’s purchase of a 152,847 square-foot building situated on two parcels of land aggregating 18 acres of

land located in West Seneca, New York (collectively, the “Property”) for a total purchase price of $ 8,150,000 on May 6,

Under the terms of the Loan Agreement, the Company procured a total principal sum of $ 5,300,000 ,

bearing an interest rate of the prime rate

annually, for the Company’s purchase of the Property and covering associated costs.

To ensure the loan’s servicing over its

duration, the Company allocated $ 667,409 into

a specially designated account.

By the close of December 31, 2023, this account’s balance had risen to $ 730,802 ,

which is recorded under cash and cash

equivalents in the concurrent financial statements.

As of December 31, 2023, the outstanding principal and the accrued interest

was an aggregate of $ 5,331,889 .

This outstanding balance and accrued interest are due on May 20, 2024.

The Company disclosed the material terms of the Loan Agreement in a

Current Report on Form 8-K filed with the Securities and Exchange Commission on May 11, 2022.

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.

Repaying 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 the repayment of $ 28,387 ($ 40,000 CAD) and, as of February 14, 2023,

received the forgiven debt of $ 7,493 ($ 10,000 CAD).

As at December 31, 2023 and 2022, there are no amounts owing, and the loan has

been fully settled.

Loss per Share

2 unchanged sentences

respectively.

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.

are 299,000,000 shares authorized with 20,320,503 and 17,159,376 shares issued and outstanding, as at December 31, 2023 and 2022, respectively.

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

2 unchanged sentences

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 .

As of December 31, 2023, the Company has 11,627,924

warrants convertible to 11,927,924 common shares, 570,212 restricted stock to be issued, and 5,063,856 stock options

exercisable for 5,063,856 common shares for a total underlying common shares of 17,561,922 .

As of December 31, 2022, the Company has

3,939,924 warrants convertible to 4,239,924 common shares, 1,940,000 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 .

the year ended December 31, 2023, in connection to the sale of 1,925,000 shares of common stock the Company also sold 1,575,000 pre-funded

warrants and 7,000,000 warrants convertible for 8,575,000 shares of common stock at an exercise price of $ 0.0001 and $ 1.34 , respectively.

The Company received net proceeds of $ 2,110,342 associated with the sale of the pre-funded warrants.

The pre-funded warrants are exercisable

immediately with no expiration date.

The warrants are exercisable six months after issuance and will expire five and a half years from

the issuance date.

the year ended December 31, 2023, 887,000 pre-funded warrants were exercised for 887,000 shares of common stock for $ 89 .

the year ended December 31, 2023, the Company and a stock options holder agreed to

cancel all 400,000

stock options in exchange for extending the exercisable period of 300,000

warrants to December 31, 2024.

Later in the year ended December 31, 2023, the expiration date for these warrants was extended to December 31, 2026, and the stock

option holder was issued an additional 400,000 restricted stock units.

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 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

for a period of 12 and 18 months, respectively.

The warrants were issued in connection with the Reg-A public offering and private placement

offering, respectively.

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

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.

to the Consolidated Financial Statements

31, 2023 and 2022

Warrants (continued)

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 shares of common stock each, for an additional 12 months.

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

2 unchanged sentences

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 warrants are convertible to 1 share of common stock, each exercisable

at $ 2 per share.

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

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.

warrants were not exercisable until January 30, 2022.

The representative warrants are exercisable for 130,909 shares of common stock

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.

of December 31, 2023, the Company has the following warrants outstanding:

Schedule of Warrants Exercise Price

Contractual Life (Years)

Exercise price

Number outstanding

Remaining Contractual Life (Years)

August 6, 2024

August 3, 2024

Schedule of Warrants Activity

average price

beginning of year

( 1,593,691 )

December 31, 2026

March 20, 2025

Never – see note 22

of Warrants Activity

December 31, 2023

December 31, 2022

Number of warrants

Weighted average price

Number of warrants

Weighted average price

Balance, beginning of year

( 1,593,691 )

end of period

Balance, 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

10% of the issued and outstanding common shares of the Company, have a maximum term of 10 years, and vest at the discretion of the Board

of Directors.

the Company’s 2015, 2021 and 2022 Equity Incentive Plans, the number of shares of common stock reserved for issuance under the

option plan shall not exceed 10% of the issued and outstanding shares of common stock of the Company, have a maximum term of 10 years,

and vest at the discretion of the Board of Directors .

to the Consolidated Financial Statements

31, 2023 and 2022

Stock Options and Performance Share Units (continued)

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

7 unchanged sentences

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

May 1, 2023, the Company and Steven Rossi reached an agreement to modify 1,600,000

restricted stock units and 400,000

performance stock units (“PSUs”) issued on November 11, 2022, and December 29, 2021, respectively, and replace them with 2,000,000

stock options, as described below.

November 11, 2022, 400,000

PSUs granted on December 29, 2021, as described below, were modified to include new terms pertaining to the PSU vesting schedule.

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 as measured using the volume weighted average of the Company’s common stock

for ten (10) consecutive trading days, with over $ 100,000

of trading volume on each of those days.

The fair value of the PSUs was estimated to be $ 1,254,460 .

As of December 31, 2023, 75,000

PSUs of the remaining 300,000

PSUs had vested, and the Company recognized $ 155,314

(2022 - $ 35,100 )

in consulting expenses.

December 29, 2021, the Company granted 400,000

PSUs to the Company’s Chief Executive Officer and a director, respectively.

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, 50% was 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 December 31, 2023, no PSUs have vested, and the Company recognized $ 0

(2022 - $ 232,312 )

in consulting expenses.

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

the year ended December 31, 2023, the Company issued 1,500,000 stock options to Steven Rossi.

The stock options have an exercise price

of $ 1.584 and an expiration date of October 31, 2033 .

The stock options shall vest as follows:

20% shall vest upon the Company achieving

annual run rate revenue of $10,000,000, measured by $2,500,000 of quarterly revenue;

(ii) an additional 20% shall vest upon the Company

achieving annual run rate revenue of $20,000,000, measured by $5,000,000 of quarterly revenue;

(iii) an additional 20% shall vest upon

the Company achieving annual run rate revenue of $30,000,000, measured by $7,500,000 of quarterly revenue;

(iv) an additional 20% shall

vest upon the Company achieving annual run rate revenue of $40,000,000, measured by $10,000,000 of quarterly revenue;

and (v) an additional

20% shall vest upon the Company achieving annual run rate revenue of $50,000,000, measured by $12,500,000 of quarterly revenue.

the year ended December 31, 2023 the Company recognized $ 374,547 in related wages and salary.

to the Consolidated Financial Statements

1 unchanged sentence

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.

the year ended December 31, 2023, the Company issued 12,100 and 25,000 stock options to employees with an exercise price of $ 1.70 and

$ 1.44 , respectively.

The stock options will expire 10 years from the grant date.

12,100 stock options shall vest in two equal

installments on the second and third anniversary of the grant date.

25,000 stock options shall vest on October 31, 2025 .

The total fair

value of the options on the grant date was estimated to be $ 56,496 .

The Company recognized $ 4,144 in wages and salary during the year

ended December 31, 2023.

the year ended December 31, 2023, the Company issued 321,150 stock options to employees, consultants and directors with an

exercise price ranging from $ 2.55 to $ 4.20 .

108,750 of the stock options shall expire 5 years after grant date and vest in two equal

installments on the first and second anniversary of the grant date.

155,400 of the stock options shall expire 10 years after grant date

and vest in two equal installments on the first and second anniversary of the grant date.

The fair value of the options on the grant date was estimated to be $ 1,116,856 .

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.

December 31, 2023, 49,500 stock options were cancelled upon the departure of employees.

The Company recognized $ 386,606 in

wages and salary and consulting expenses during the year ended December 31, 2023.

the year ended December 31, 2023, the Company issued 2,000,000 stock options to Steven Rossi.

The stock options have an exercise price

of $ 1.74 and an expiration date of May 1, 2033 .

The options shall vest in increments of 10% for each dollar that the Company’s

stock price increases between $2.00 and $11.00, as measured using the volume weighted average of the Company’s common stock for

ten consecutive trading days .

The fair value of the options on the grant date was estimated to be $ 2,821,572 .

The Company recognized

$ 714,798 in wages and salary during the year ended December 31, 2023.

the year ended December 31, 2023, the Company issued 75,000 stock options to an employee with an exercise price of $ 2.43 and expiring

on May 18, 2033 .

The options shall vest in two installments, 25,000 on May 18, 2024, and 50,000 on August 1, 2024 .

The fair value of

the options on the grant date was estimated to be $ 182,025 .

The Company recognized $ 37,632 in wages and salary expenses during the year

ended December 31, 2023.

the year ended December 31, 2023, the Company issued 65,000 stock options to employees and a consultant with an exercise price of $ 1.53

and expiring on March 14, 2033 .

The options shall vest in two equal installments on March 14, 2024, and 2025 .

The fair value of the options

on the grant date was estimated to be $ 98,670 .

The Company recognized $ 33,683 in wages and salary and consulting expenses during the

year ended December 31, 2023.

During the year ended December 31, 2023, 15,000 stock options were cancelled upon the departure of employees;

as a result the Company recognized $ 19,406 in wages and salary expense during the period.

the year ended December 31, 2023, the Company issued 85,106 stock options to an employee with an exercise price of $ 1.53 and expiring

on March 14, 2033 .

The options shall vest in two installments;

a) one fiscal quarter in which the Company generates $3,600,000 in sales

with at least 20% unit margin and b) one fiscal quarter in which the Company generates $5,400,000 in sales with at least 30% unit margin .

The fair value of the options on the grant date was estimated to be $ 129,191 .

The Company recognized $ 45,476 in wages and salary expenses

during the year ended December 31, 2023.

the year ended December 31, 2023, the Company issued 300,000 stock options to a consultant with an exercise price of $ 1.66 and expiring

on January 30, 2028 .

150,000 of the stock options shall vest on January 30, 2023, and 75,000 of the stock options shall each vest on

March 1, 2023 and September 1, 2023 .

The fair value of the options on the grant date was estimated to be $ 486,600 .

The Company recognized

$ 486,600 in consulting expenses during the year ended December 31, 2023.

the year ended December 31, 2023, the Company issued 360,000 stock options to directors with an exercise price of $ 1.66 and expiring

on January 30, 2033 .

The options shall vest in six equal installments on January 30, 2023, July 31, 2023, January 30, 2024, July 30,

2024, January 30, 2025, and July 30, 2025.

The fair value of the options on the grant date was estimated to be $ 592,560 .

recognized $ 217,542 in consulting expenses during the year ended December 31, 2023.

to the Consolidated Financial Statements

31, 2023 and 2022

Stock Options and Performance Share Units (continued)

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 fair values

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

The Company recognized $ 0 (2022 - $ 283,180 )

in consulting expenses during the year ended December 31, 2023.

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

1 unchanged sentence

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.

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

The Company recognized $ 17,083 (2022 - $ 1,642 ) in consulting expenses

during the year ended December 31, 2023.

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

5 unchanged sentences

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.

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

recognized $ 0 (2022 - $ 799 ) to consulting expenses during the year ended December 31, 2023.

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

1 unchanged sentence

The stock options vested on January 1, 2022.

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

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)

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

be $ 754,189 .

The Company recognized $ 0 (2022 - $ 5,105 ) to consulting expenses during the year ended December 31, 2023.

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

The options have a vesting period of 6 months from the initial grant date ;

100,000 shall vest on March 1, 2022, 100,000 shall

vest on September 1, 2022, 100,000 shall vest on March 1, 2023, and 100,000 shall vest on September 1, 2023.

The fair value of the options

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

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.

100,000 shall vest on March 1, 2022, 100,000 shall vest on September 1, 2022, 100,000 shall vest on March 1, 2023, and 100,000

shall vest on September 1, 2023.

The fair value of the options on the grant date was estimated to be $ 2,112,000 .

The Company recognized

$ 87,514 (2022 - $ 1,058,917 ) to consulting expenses during the year ended December 31, 2023.

During the year ended December 31, 2023,

the Company and the 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.

October 7 and November 2, 2021, the Company granted 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

The stock options fully vested on January 1, 2022.

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

The Company recognized $ 0 (2022 - $ 32,856 ) to consulting expenses

during the year ended December 31, 2023.

1 unchanged sentence

will expire on December 29, 2026 .

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

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,

For each of these three option grants, 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 the grant date was estimated to be $ 224,280 .

Company recognized $ 75,170 (2022 - $ 73,941 ) in consulting expenses during the year ended December 31, 2023.

to the Consolidated Financial Statements

31, 2023 and 2022

Stock Options and Performance Share Units (continued)

Schedule of Stock Options Activity

of stock options

average price

of stock options

average price

beginning of year

end of period

December 31, 2023

December 31, 2022

Number of stock options

Weighted average price

Number of stock options

Weighted average price

Balance, beginning of year

Balance, 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

Range of Exercise prices

Weighted average life (years)

Weighted average exercise price

Exercisable on December 31, 2023

Stock options

$ 1.44 – 5.50

of December 31, 2023, Terravis Energy Inc.

had the following options outstanding:

of Stock Options Activity

of stock options

average price

beginning of year

end of period

Schedule of Stock Options Activity

December 31, 2023

December 31, 2022

Number of stock options

Weighted average price

Number of stock options

Weighted average price

Balance, beginning of year

Balance, end of period

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

4 unchanged sentences

Stock options

to the Consolidated Financial Statements

31, 2022 and 2021

Rental Income

7 unchanged sentences

the year ended December 31, 2023, the Company recognized rental income of $ 184,564 (2022 - $ 213,383 ).

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

measures to combat the spread of the virus.

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

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

Global equity

markets have experienced significant volatility and weakness.

Governments and central banks have reacted with significant monetary and

fiscal interventions designed to stabilize economic conditions.

duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions.

Additionally,

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

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

short-term and long-term liquidity.

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

yet know the full extent of potential delays or impacts on our business, financing or 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

The management and board of the Company is constantly monitoring this situation to minimize potential losses.

Legal Proceedings

There are no legal proceedings except for routine litigation incidental to the business.

to the Consolidated Financial Statements

31, 2023 and 2022

Subsequent Events

1 unchanged sentence

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.

January 11, 2024, the Company issued 53,194

of restricted stock to an employee.

February 5, 2024, the remaining 688,000

pre-funded warrants issued in October of 2023 were exercised for 688,000

shares of common stock for $ 0.0001 per share, for an aggregate of $ 69 .

February 7, 2024, the Company issued 1,343 shares of common stock for services received valued at $ 2,000 .

to the year ended December 31, 2023, the Company granted 68,800

stock options to employees.

of these options shall vest 50 %

on July 17, 2025 and 50 %

on July 17, 2026;

the remainder shall vest in two equal installments on the second and third anniversary of the grant date.

exercise price of the stock options ranges from $ 0.62

stock options will expire 5

years from grant date and 60,500

stock options will expire 10

years from grant date.

to the year ended December 31, 2023, the Company issued 504,921 shares of common stock for net proceeds of $ 566,118 .

On March 18, 2024, Worksport entered into a securities

purchase agreement with a single institutional investor to purchase 3,850,132

shares of common stock (or pre-funded warrants to purchase shares of common stock in lieu thereof) in a registered direct offering.

The offering was consummated on March 20, 2024.

In a concurrent private placement, the Company also agreed to issue and sell to the

investor warrants to purchase up to 7,700,264

shares of common stock.

The combined effective offering price for each share of common stock (or pre-funded warrant in lieu thereof)

and accompanying warrant is $ 0.74 .

The warrants will become exercisable six months from issuance, expire five and a half years from the issuance date and have an

exercise price of $ 0.74

The gross proceeds to the Company from the registered direct offering and concurrent private placement are estimated to

be approximately $ 2.8

million before deducting the placement agent’s fees and other estimated offering expenses payable by the Company.

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