What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-13 compared with 2024-08-13 · 251 added, 237 removed, 288 unchanged (63% of the section changed)

62 unchanged sentences

fall behind future competitors, we are highly focused on protecting our intellectual property both domestically and abroad.

following highlights recent material developments in our business in the three months ended June 30, 2024:

April 2024, 12,100 stock options issued during 2023 and 8,300 stock options issued during the six months ended June 30, 2024 were forfeited in connection with the termination

of employees with the Company.

restricted stock units (“RSUs”) were granted to a contractor on May 1, 2024 in consideration for services rendered in

the first quarter of 2024.

May 6, 2024, 1,477,892 pre-funded warrants issued during the three months ended March 31, 2024 were exercised for 1,477,892 shares

of common stock for a total of $15.

May 8, 2024, the Company announced its receipt of a major grant from New York State Excelsior Jobs Program worth up to $2.8 million.

The grant, following a strategic low-cost power award from New York Power Authority (NYPA) in April 2024, signifies additional state-level

investment in the Company’s expanding operations.

With growth exceeding NY State’s forecasts, the Company expects to

create up to or over 280 new jobs from 2025 to 2030 and if achieved will receive cash benefits for the creation of these jobs, amounting

to $2.8 million received over the next 10 years.

May 14, 2024, the Company and Worksport New York Operations Corporation (“Worksport New York”) entered into an Omnibus

Amendment of Loan Documents (the “Loan Amendment”) with Northeast Bank (the “Lender”) in connection with

that certain secured loan agreement, dated May 4, 2022 (the “Loan Agreement”), by and among the Company, as the guarantor,

Worksport New York, as the borrower (the “Borrower”), and the Lender in connection with the Company’s purchase

of its 152,847 square foot facility and 18 acres of land in West Seneca, New York on May 6, 2022 for a total purchase price of $8,150,000.

Pursuant to the Loan Amendment, effective as of May 10, 2024, the Lender extended the initial maturity date of the Loan from May

10, 2024 to August 10, 2024 (the “Extended Maturity Date”).

The Company also agreed to pay the Lender an extension fee

of $106,000 (the “Extension Fee”) which was deemed fully earned as of the date of the Loan Amendment.

However, the Lender

agreed to postpone payment of the Extension Fee until the occurrence of (i) the Loan not being repaid in full by or on the Extended

Maturity Date;

or (ii) the Loan being accelerated following an Event of Default or Termination Date (as defined in the Forbearance

Agreement dated as of February 4, 2024, by and between the Company, Worksport New York and the Lender).

If the Loan is repaid in

full on or prior to the Extended Maturity Date, the Lender has agreed to waive the Extension Fee.

In addition to the Extension Fee,

the Company agreed to pay the Lender an exit fee of $106,000 (the “Exit Fee”) in the event the Loan is not repaid in

full on or prior to the Extended Maturity Date or if the Loan has been accelerated following an Event of Default or in connection

with a Termination Event (as defined in the Forbearance Agreement).

If the Loan is repaid in full on or prior to the Extended Maturity

Date (and not as a result of an acceleration following a Termination Event), the Company will not be required to pay the Exit Fee.

May 29, 2024, the Company entered into a common stock warrant exercise inducement offer letter (the “Inducement Offer Letter”)

with a certain holder (the “Holder”) of existing warrants to purchase shares of the Company’s common stock at an

exercise price of $1.34 per share issued on November 2, 2023 (the “Existing Warrants”), pursuant to which the Holder

agreed to exercise for cash its Existing Warrants to purchase an aggregate of 7,000,000 shares of the Company’s common stock,

at a reduced exercised price of $0.5198 per share, in consideration for the Company’s agreement to issue new warrants (the

“Inducement Warrants”) to purchase up to 12,950,000 shares of the Company’s common stock at $0.5198 per share.

The Company received aggregate gross proceeds of $3,638,600 from the exercise of the Existing Warrants by the Holder

and the sale of the Inducement Warrants, before deducting placement agent fees and other offering expenses payable by the Company.

May 29, 2024, the Company announced it had been issued a new utility patent from the United States Patent & Trademark Office

related to its highly anticipated SOLIS Solar Tonneau Cover.

RSUs were granted to two contractors on May 30, 2024 in consideration for services rendered over the prior year.

June 5, 2024, the Company announced the formation of a new sales partnership with a prominent Midwest distributor operating within

the automotive industry.

June 13, 2024, the Company was awarded “Innovator of the Year” by Buffalo Business First – recognizing the Company’s

commitment to pioneering advancements in the automotive sector.

June 26, 2024, the Company announced it had strategically decided to design its Maximum Power Point Tracking algorithm such that

its SOLIS Solar Power System will be able to charge not only the Company’s COR Portable Battery Generator system but also most

other portable power stations and power banks on the market.

following highlights recent material developments in our business in the three months ended September 30, 2024:

July 11, 2024, the Company launched a new dealer webpage to facilitate sales to tonneau cover dealers by offering a simplified ordering

July 19, 2024, the Company, as the guarantor, and Worksport New York Operations Corporation as well as Worksport USA Operations Corporation,

entered into a $6,000,000 Revolving Financing and Assignment Agreement with an external lending entity with a maturity of 24 months

from initial funding (July 2026).

Upon transaction close, the Company drew down approximately $5.06 million of the Revolving Credit

Facility, net of $790,000 of interest reserve required to be withheld to ensure interest payments by the Company.

The Company used

$4.73 million of the drawn down amount to refinance the Company’s mortgage on the Company’s real property located at

2500 North America Dr.

in West Seneca, New York, and additionally drew approximately $330,000 to fund operations.

July 23, 2024, the Company engaged in stock option repricing for certain employees, executive officers, and members of the board

of directors of the Company.

All included options’ exercise prices were repriced to $0.7042 – the closing price per share

of the Company’s Common Stock as reported on The Nasdaq Stock Market on July 23, 2024.

The Repriced Options consisted of certain

outstanding stock options that had been granted under the Company’s 2015 Equity Incentive Plan, the 2021 Equity Incentive Plan

and 2022 Stock Incentive Plan as of the Effective Date.

August 6, 2024, through a partnership with Firework, the Company launched a new live sales feature to drive direct to consumer sales.

August 13, 2024, the Company hosted its first live earnings call.

September 3, 2024, the Company launched its new Dealer Sales Initiative, which represents a sharp expansion of its sales team to

driver sales amount dealers.

September 4, 2024, the Company announced an expansion of it’s product lines to service a wider range of truck models.

September 4, 2024, the Company, through its wholly owned subsidiary, Worksport USA Operations Corporation, entered into a $1,487,200

credit and security agreement with an external lending entity with a maturity of 36 months from initial funding (September 2027).

Upon transaction close, the Company received net proceeds of $1,437,998.

The Company and its wholly owned subsidiary, Worksport New

York Operations Corporation, serve as guarantors on the loan.

September 11, 2024, the Company published results from a lab test in which it found that the COR Hub + Battery, which carries over

1.7 kWh of power, added approximately seven miles of range to a Tesla Model 3 when used as a Level 1 power source.

Factors Affecting our Performance

42 unchanged sentences

healthy trading volume.

has fallen since it’s 2022 highs, although inflation rates are still above the Federal Reserve’s target rate of 2%.

Additionally,

for the first time since the Federal Reserves’ sharp post-Covid interest rate hike, during it’s September meeting, the Federal

Reserve announced it is lowering the overnight borrowing rate by 50 basis points, and it gave guidance of an additional 50 basis point

cut by end of FY24.

It is possible these interest rate cuts result in an increase in inflation.

Prices and Supply Chain Issues

6 unchanged sentences

Regardless, the Company is closely monitoring international shipping costs.

transition towards domestic manufacturing and assembly is anticipated to largely offset these higher costs, as we believe we will be

less exposed to higher international shipping costs.

We are also identifying North American suppliers of our products’ components

and will prioritize transport by rail when possible to avoid high trucking costs.

Further, there is a risk of worker strikes within

our supply chain, such as the October US port workers strike that was postponed to January, 2025, causing higher import prices for our

raw materials and finished goods.

are also identifying North American suppliers of our products’ components and will prioritize transport by rail when possible to

avoid high trucking costs.

Our transition towards domestic manufacturing and assembly is anticipated to largely offset these higher costs,

as we believe we will be less exposed to higher international shipping costs.

February 2022, Russia initiated significant military action against Ukraine.

16 unchanged sentences

we do not have any direct operations or significant sales in the Middle East, geopolitical tensions and ongoing conflicts in the region,

particularly between Israel and Hamas, may lead to global economic instability and fluctuating energy prices that could materially affect

our business.

It is not possible to predict the broader consequences of the Israel-Hamas war, including related geopolitical tensions,

and the measures and actions taken by other countries in respect thereof, which could materially adversely affect global trade, currency

exchange rates, regional economies and the global economy.

While it is difficult to predict the impact of any of the foregoing, the Israel-Hamas

war may increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when

needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition and results of operations.

particularly between Israel and Hamas, and more recently Israel and Hezbollah, may lead to global economic instability and fluctuating

energy prices that could materially affect our business.

It is not possible to predict the broader consequences of the Israeli wars,

including related geopolitical tensions, and the measures and actions taken by other countries in respect thereof, which could materially

adversely affect global trade, currency exchange rates, regional economies and the global economy.

While it is difficult to predict the

impact of any of the foregoing, the Israeli wars may increase our costs, disrupt our supply chain, reduce our sales and earnings, impair

our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial

condition and results of operations.

are subject to foreign exchange risk as we manufacture certain products and components in China, market extensively in both Canadian

11 unchanged sentences

OF OPERATIONS

Months Ended June 30, 2024 compared to the Three Months Ended June 30, 2023

the three months ended June 30, 2024, revenues from our entire line of products was $1,921,539, as compared to $199,851 for the three

months ended June 30, 2023.

Year-over-year sales increased by approximately 862%.

For the three months ended June 30, 2024, revenue generated

in Canada was $31,853 as compared to $0 for the same period in 2023.

For the three months ended June 30, 2024, revenue generated in the

United States was $1,889,686, compared to $199,851 for the same period in 2023, an increase of 846%.

increased during the three months ended June 30, 2024 compared to the same period the prior year due to increased sales of tonneau covers

to a private label partner, various dealers and distributors, and end users via the Company’s online marketplaces.

Months Ended September 30, 2024 compared to the Three Months Ended September 30, 2023

the three months ended September 30, 2024, net sales from our entire line of products was $3,122,359, as compared to $458,483 for

the three months ended September 30, 2023.

Year-over-year net sales increased by approximately 581%.

For the three months ended

September 30, 2024, net sales generated in Canada was $28,751 as compared to $4,225 for the same period in 2023.

For the three months

ended September 30, 2024, net sales generated in the United States was $3,093,608 compared to $454,258 for the same period in 2023, an

increase of 581% .

increased during the three months ended September 30, 2024 compared to the same period the prior year due to increased sales of tonneau

covers to a private label partner, various dealers and distributors, and end users via the Company’s online marketplaces.

continues to focus on establishing new and strengthening existing business-to-consumer and business-to-business sales channels while

3 unchanged sentences

and sales campaigns.

For business-to-business channels, we have created all necessary marketing/sales materials and policies as well

as an online dealer marketplace, and we are now actively contacting thousands of leads and presenting our product offerings to various

dealers, jobbers, and retailers across the United States and Canada.

We intend to gradually increase output capacity through refined

production processes and increased personnel.

from online retailers of our products increased from $18,163 during the three months ended June 30, 2023, to $897,213 during the three

months ended June 30, 2024.

Online retailers accounted for 47% of total revenue for the three months ended June 30, 2024, compared to

9% for the three months ended June 30, 2023.

Distributor sales increased for the three months ended June 30, 2024, compared with the

three months ended June 30, 2023, with sales of $63,926 and $0, respectively.

Distributors accounted for 3% of total revenue for the

three months ended June 30, 2024.

Private label sales increased from $181,688 for the three months ended June 30, 2023, to $960,400 for

the three months ended June 30, 2024.

Private label sales accounted for 50% of total revenue for the three months ended June 30, 2024.

We expect to continue to grow our fields of business as we develop unique products with enhanced utility to offer to other prospective

clients in the U.S.

For business-to-business channels, we have created all necessary marketing/sales materials, policies, and teams

as well as an online dealer marketplace, and we are now actively contacting thousands of leads and presenting our product offerings to

various dealers, jobbers, and retailers across the United States and Canada.

We intend to gradually increase output capacity through

refined production processes and increased personnel.

sales from online retailers of our products increased from $21,599 during the three months ended September 30, 2023, to $1,594,368

during the three months ended September 30, 2024.

Online retailers accounted for 51% of total net sales for the three months ended

September 30, 2024, compared to 5% for the three months ended September 30, 2023.

Distributor net sales increased for the three

months ended September 30, 2024, compared with the three months ended September 30, 2023, with net sales of $114,681 and $4,225,

respectively.

Distributors accounted for 4% of total net sales for the three months ended September 30, 2024.

Private label net

sales increased from $432,659 for the three months ended September 30, 2023, to $1,413,310 for the three months ended September 30,

Private label net sales accounted for 45% of total net sales for the three months ended September 30, 2024.

We expect to continue to

grow our fields of business as we develop unique products with enhanced utility to offer to other prospective clients in the U.S.

and Canadian markets.

5 unchanged sentences

Manufacturers with the intention of distributing through them as well.

of sales increased by 960%, from $153,288 for the three months ended June 30, 2023, to $1,624,910 for the three months ended June 30,

Our cost of sales, as a percentage of sales, was approximately 85% and 77% for the three months ended June 30, 2024 and 2023, respectively.

The increase in the cost of sales as a percentage of sales was primarily due to increased sales of domestically-produced hard covers.

We consistently secure a 20% gross margin on soft covers sold to private labels, as these soft covers are drop shipped from our Chinese

suppliers at a fixed cost.

However, our margins on domestically manufactured hard covers is dependent on the cost of raw materials, which

fluctuates, as well as overhead, which has been high due to manufacturing inefficiencies and low production volumes – both of which

are actively being mitigated as we streamline manufacturing processes and allocate more existing human capital and machinery resources

away from design engineering and testing towards production.

of sales increased by 680%, from $368,796 for the three months ended September 30, 2023, to $2,875,186 for the three months ended

September 30, 2024.

Our cost of sales, as a percentage of net sales, was approximately 92% and 80% for the three months ended

September 30, 2024 and 2023, respectively.

Our cost of sales as a percentage of net sales increased primarily driven

by two factors:

(1) strategic discounting aimed at boosting traffic to our direct-to-consumer online marketplace, and (2) overhead allocation

associated with sold inventory produced in previous periods, which had limited production volumes.

Our discounting strategy is part of

a broader initiative to enhance market presence and build brand awareness.

We anticipate that this will position us for sustained customer

engagement in future periods, during which discounting may not be necessary to the same extent.

Additionally, overhead absorption was

higher due to the allocation of fixed costs over a smaller production volume in prior periods.

As production volume grows and our manufacturing

process becomes more efficient, we expect to allocate these costs across a larger base.

This scaling will be facilitated by reallocating

more of our existing human capital and machinery resources from design engineering and testing functions toward production.

is intended to support ongoing production increases and drive long-term efficiencies in our cost structure.

provide our distributors and online retailers an “all-in” wholesale price.

7 unchanged sentences

are able to pick up product directly from our stocking warehouse.

expenses increased for the three months ended June 30, 2024 by $422,095, from $3,785,282 for the three months ended June 30, 2023 to

$4,207,377, due to the following factors:

and administrative expenses increased by $1,201,585, from $1,744,801 in 2023 to $2,946,386

The increase was related to increased research and development activities, increased

employment of support personnel including engineers,

and increases in wages and salaries as we seek to expand our operations and further develop

our products.

and marketing expenses decreased by $69,920, from $548,712 for 2023 to $478,792 for 2024.

The decrease in sales and marketing is primarily attributable to the completion of several

marketing agreements and lower cost of in-house marketing campaigns to create brand and product

fees, which include accounting, legal, and consulting fees, decreased from $1,491,453 in

2023 to $766,563 in 2024.

The decrease in professional fees was due primarily to insourcing

of certain business processes and fewer equity grants to third parties for services rendered.

realized a loss on foreign exchange of $15,636 during 2024, compared to a loss on foreign exchange of $316 for the prior

period due to conversions between CAD and USD.

expenses increased for the three months ended September 30, 2024 by $143,193, from $4,009,196 for the three months ended September 30,

2023 to $4,152,389, due to the following factors:

and administrative expenses decreased by $216,233, from $3,091,488 in 2023 to $2,875,255 in 2024.

General and administrative is constant

with a slight decrease compared to prior year as the Company begins to shift its focus to production and research and development

and marketing expenses increased by $280,391, from $380,847 for 2023 to $661,238 for 2024.

The increase in sales and marketing is

primarily attributable to the Company’s marketing campaign to create brand and product awareness.

fees, which include accounting, legal, and consulting fees, increased from $539,126 in 2023 to $621,728 in 2024.

The increase in

professional fees was due primarily to payment of commissions to third parties, stock options modification, and

its associated fees.

realized a gain on foreign exchange of $5,832 during 2024, compared to a gain on foreign exchange of $2,265 for the prior period

due to conversions between CAD and USD.

Income and Expenses

reported net other expenses for the three months ended June 30, 2024 of $102,651, compared to a loss of $58,736 for three months

ended June 30, 2023.

Net other expenses can be attributed to decreased interest and rental

loss for the three months ended June 30, 2024 was $4,013,399, compared to a net loss of $3,797,455 for the three months ended June 30,

reported net other expenses for the three months ended September 30, 2024 of $229,701, compared to a $29,789 for three months ended September

Net other expenses can be attributed to increased interest expense and decreased rental income.

loss for the three months ended September 30, 2024 was $4,134,917, compared to a net loss of $3,949,298 for the three months ended September

30, 2023 – an increase of 4.7%.

The increase in the net loss can be attributed to the increase in various operating expenses as we focus

on expanding our operations, research and development, manufacturing, and supply chain.

Months Ended June 30, 2024 compared to the Six Months Ended June 30, 2023

the six months ended June 30, 2024, revenues from our entire line of products was $2,434,176, as compared to $231,776 for the six months

ended June 30, 2023.

Year-over-year sales increased by approximately 950%.

For the six months ended June 30, 2024, revenue generated

in Canada was $51,890, as compared to $2,655 for the same period in 2023.

For the six months ended June 30, 2024, revenue generated in

the United States was $2,382,286 compared to $229,121 for the same period in 2023, an increase of 940%.

increased during the six months ended June 30, 2024 compared to the same period the prior year due to increased sales of tonneau covers

to a private label partner, various dealers and distributors, as well as end users via the Company’s online marketplaces.

continues to focus on establishing new and strengthening existing business-to-consumer and business-to-business sales channels while

also strengthening customer support to increase customer satisfaction and enable high product turnover.

For business-to-consumer channels,

we have configured our product offerings in a manner conducive to cost-effective marketing, allowing us to securely invest in marketing

and sales campaigns.

For business-to-business channels, we have created all necessary marketing/sales materials and policies as well

as an online dealer marketplace, and we are now actively contacting thousands of leads and presenting our product offerings to various

dealers, jobbers, and retailers across the United States and Canada.

We intend to gradually increase output capacity through refined

production processes and increased personnel.

from online retailers of our products increased from $42,437 during the six months ended June 30, 2023, to $921,623 during the six months

ended June 30, 2024.

Online retailers accounted for 38% of total revenue for the six months ended June 30, 2024, compared to 18% for

the six months ended June 30, 2023.

Distributor sales increased for the six months ended June 30, 2024, compared with the six months

ended June 30, 2023, with sales of $86,773 and $2,655, respectively.

Distributor sales accounted for 3% of total revenue for the six

months ended June 30, 2024.

Private label sales increased from $188,684 for the six months ended June 30, 2023, to $1,425,780 for the

six months ended June 30, 2024.

Private label sales accounted for 59% of total revenue for the six months ended June 30, 2024.

to continue to grow our fields of business as we develop unique products with enhanced utility to offer to other prospective clients

The increase in the net loss can be attributed to the increase in various operating expenses as

we focus on expanding our operations, research and development, manufacturing, and supply chain.

Months Ended September 30, 2024 compared to the Nine Months Ended September 30, 2023

the nine months ended September 30, 2024, net sales from our entire line of products was $5,556,535, as compared to $690,259 for the

nine months ended September 30, 2023.

Year-over-year net sales increased by approximately 705%.

For the nine months ended September

30, 2024, net sales generated in Canada was $80,530 as compared to $6,961 for the same period in 2023.

For the nine months ended

September 30, 2024, net sales generated in the United States was $5,476,005 compared to $683,298 for the same period in 2023, an

increase of 701% .

sales increased during the nine months ended September 30, 2024 compared to the same period the prior year due to increased net

sales of tonneau covers to a private label partner, various dealers and distributors, as well as end users via the Company’s

online marketplaces.

The Company continues to focus on establishing new and strengthening existing business-to-consumer and

business-to-business net sales channels while also strengthening customer support to increase customer satisfaction and enable high

product turnover.

For business-to-consumer channels, we have configured our product offerings in a manner conducive to

cost-effective marketing, allowing us to securely invest in marketing and sales campaigns.

For business-to-business channels, we

have created all necessary marketing/sales materials and policies as well as an online dealer marketplace, and we are now actively

contacting thousands of leads and presenting our product offerings to various dealers, jobbers, and retailers across the United

States and Canada.

We intend to gradually increase output capacity through refined production processes and increased

sales from online retailers of our products increased from $62,827 during the nine months ended September 30, 2023, to $2,446,053

during the nine months ended September 30, 2024.

Online retailers accounted for 44% of total net sales for the nine months ended

September 30, 2024, compared to 9% for the nine months ended September 30, 2023.

Distributor net sales increased for the nine months

ended September 30, 2024, compared with the nine months ended September 30, 2023, with net sales of $204,158 and $6,961,

respectively.

Distributor net sales accounted for 4% of total net sales for the nine months ended September 30, 2024.

Private label

net sales increased from $620,471 for the nine months ended September 30, 2023, to $2,906,324 for the nine months ended September

Private label net sales accounted for 52% of total net sales for the nine months ended September 30, 2024.

continue to grow our fields of business as we develop unique products with enhanced utility to offer to other prospective clients in

and Canadian markets.

5 unchanged sentences

Manufacturers with the intention of distributing through them as well.

of sales increased by 1,114%, from $173,045 for the six months ended June 30, 2023, to $2,100,091 for the six months ended June 30, 2024.

Our cost of sales, as a percentage of sales, was approximately 86% and 75% for the six months ended June 30, 2024 and 2023, respectively.

The increase in the cost of sales as a percentage of sales was primarily due to increased sales of domestically-produced hard covers.

We consistently secure a 20% gross margin on soft covers sold to private labels, as these soft covers are drop shipped from our Chinese

suppliers at a fixed cost.

However, our margins on domestically manufactured hard covers is dependent on the cost of raw materials, which

fluctuates, as well as overhead, which has been high due to manufacturing inefficiencies and low production volumes – both of which

are actively being mitigated as we streamline manufacturing processes and allocate more existing human capital and machinery resources

away from design engineering and testing towards production.

of sales increased by 818%, from $541,841 for the nine months ended September 30, 2023, to $4,975,277 for the nine months ended

September 30, 2024.

Our cost of sales, as a percentage of net sales, was approximately 89% and 78% for the nine months ended

September 30, 2024 and 2023, respectively.

Our cost of sales as a percentage of net sales increased primarily driven

by two factors:

(1) strategic discounting aimed at boosting traffic to our direct-to-consumer online marketplace, and (2) overhead allocation

associated with sold inventory produced in previous periods, which had limited production volumes.

Our discounting strategy is part of

a broader initiative to enhance market presence and build brand awareness.

We anticipate that this will position us for sustained customer

engagement in future periods, during which discounting may not be necessary to the same extent.

Additionally, overhead absorption was

higher due to the allocation of fixed costs over a smaller production volume in prior periods.

As production volume grows and our manufacturing

process becomes more efficient, we expect to allocate these costs across a larger base.

This scaling will be facilitated by reallocating

more of our existing human capital and machinery resources from design engineering and testing functions toward production.

is intended to support ongoing production increases and drive long-term efficiencies in our cost structure.

provide our distributors and online retailers an “all-in” wholesale price.

7 unchanged sentences

are able to pick up product directly from our stocking warehouse.

expenses increased for the six months ended June 30, 2024 by $556,901, from $7,327,398 for the six months ended June 30, 2023 to $7,884,299,

due to the following factors:

and administrative expenses increased by $1,746,291, from $3,874,413 in 2023 to $5,620,704

The increase was related to increased research and development activities, increased

employment of support personnel including engineers, and increases in wages and salaries as we seek to expand our operations and further develop

our products.

expenses increased for the nine months ended September 30, 2024 by $700,094, from $11,336,594 for the nine months ended September 30,

2023 to $12,036,668, due to the following factors:

and administrative expenses increased by $1,530,058, from $6,965,901 in 2023 to $8,495,959 in 2024.

The increase was related to increased

research and development activities, increased employment of support personnel including engineers, and increases in wages and salaries

as we seek to expand our operations and further develop our products.

and marketing expenses decreased by $267,103, from $1,473,910 for 2023 to $1,206,807 for 2024.

The decrease in sales and marketing is primarily attributable to the completion of several

marketing agreements and lower cost of in-house marketing campaigns to create brand and product

fees, which include accounting, legal, and consulting fees, decreased from $2,360,064 in

2023 to $1,710,341 in 2024.

The decrease in professional fees was due primarily to insourcing

of certain business processes and fewer equity grants to third parties for services rendered.

realized a loss on foreign exchange of $7,685 during 2024, compared to a gain on foreign exchange of $142 for the prior period due

to conversions between CAD and USD.

The decrease in sales and marketing

is primarily attributable to the completion of several marketing agreements and lower cost of in-house marketing campaigns to create

brand and product awareness.

fees, which include accounting, legal, and consulting fees, decreased from $2,899,190 in 2023 to $2,332,069 in 2024.

in professional fees was due primarily to insourcing of certain business processes and fewer equity grants to third parties for services

realized a loss on foreign exchange of $1,853 during 2024, compared to a gain on foreign exchange of $2,407 for the prior period

due to conversions between CAD and USD.

Income and Expenses

reported net other expenses for the six months ended June 30, 2024 of $177,842, compared to net expenses of $52,058 for the six

months ended June 30, 2023.

Other expenses can be attributed to decreased interest and rental

loss for the six months ended June 30, 2024 was $7,728,056, compared to a net loss of $7,320,725 for the six months ended June 30, 2023

reported net other expenses for the nine months ended September 30, 2024 of $407,543, compared to net expenses of $81,847 for the nine

months ended September 30, 2023.

Other expenses can be attributed to decreased interest and rental income.

loss for the nine months ended September 30, 2024 was $11,862,973, compared to a net loss of $11,270,023 for the nine months ended September

30, 2023 – an increase of 5.3%.

The increase in the net loss can be attributed to the increase in various operating expenses as we focus on

expanding our operations, research and development, manufacturing, and supply chain.

The increase in the net loss can be attributed to the increase in various operating expenses as

we focus on expanding our operations, research and development, manufacturing, and supply chain.

and Capital Resources;

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During the three and

six months ended June 30, 2024, the Company had a net loss of $4,013,399 (2023 – $3,797,455) and $7,728,056 (2023 – $7,320,725),

nine months ended September 30, 2024 ,

the Company had a net loss of $ 4,134,917 (2023 – $3,949,298)

and $ 11,862,973 (2023 – $11,270,023),

respectively.

As of June 30, 2024, the Company has working capital of $8,489,246 (December 31, 2023 – $1,956,894) and had an accumulated

deficit of $56,041,233 (December 31, 2023 – $48,313,177).

The Company has not generated profit from operations since inception

and to date has relied on debt and equity financings 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.

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 the second half of 2024, 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 was completed for initial production output in 2023

and started to generate revenue in the third quarter of 2023, registering its highest quarterly sales total in the Company’s history

in the second quarter of 2024.

As of September 30, 2024 , the Company has working capital of $5,880,926

(December 31, 2023 – $1,956,894) and had an

accumulated deficit of $60,176,150 (December 31, 2023 – $48,313,177).

The Company has not generated profit from operations since inception and to date has relied on debt and equity financings 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 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.

no assurance that the steps management is taking will be successful.

the Company having completed its purchasing of large manufacturing machinery for current output needs, 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 the second half of 2024, 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 was completed for initial production

output in 2023 and started to generate revenue in the third quarter of 2023, registering its highest quarterly sales total in the Company’s

history in the third quarter of 2024.

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

8 unchanged sentences

gross sales price of the shares of common stock sold.

As of June 30, 2024, the Company has sold and issued 604,048 shares of common stock

in consideration for net proceeds of $780,356 under the ATM Agreement.

As of September 30, 2024, the Company has sold and issued 604,048 shares of common

stock in consideration for net proceeds of $780,356 under the ATM Agreement.

November 2, 2023, the Company consummated a registered direct offering pursuant to which it sold 1,925,000 shares of common stock and

44 unchanged sentences

other offering expenses payable by the Company.

July 19, 2024, the Company, as the guarantor, and Worksport New York Operations Corporation as well as Worksport USA Operations

Corporation, entered into a $6 million Revolving Financing and Assignment Agreement with an external lending entity, Amerisource

Business Capital.

Upon transaction close, the Company drew down approximately $5.06 million of the Revolving Credit Facility, net of

$790,000 of interest reserve required to be withheld to ensure interest payments by the Company.

The Company used $4.73 million of

the drawn down amount to refinance the Company’s mortgage on the Company’s real property located at 2500 North America

in West Seneca, New York, and additionally drew approximately $330,000 in accounts receivables, leaving approximately $940,000

available for Accounts Receivable financing under the Agreement as of the deal close date.

July 19, 2024, t he Company, as the guarantor, and Worksport

New York Operations Corporation as well as Worksport USA Operations Corporation, entered into a $6 million Revolving Financing and Assignment

Agreement with an external lending entity, Amerisource Business Capital.

Upon transaction close, the Company drew down approximately

$5.06 million of the Revolving Credit Facility, net of $790,000 of interest reserve required to be withheld to ensure interest payments

by the Company.

The Company used $4.73 million of the drawn down amount to refinance the Company’s mortgage on the Company’s

real property located at 2500 North America Dr.

in West Seneca, New York, and additionally drew approximately $330,000 to fund operations.

September 4, 2024, the Company, through its wholly owned subsidiary, Worksport USA Operations Corporation, entered into a $1,487,200

credit and security agreement with an external lending entity with a maturity of 36 months from initial funding (September 2027).

transaction close, the Company received net proceeds of $1,437,998.

The Company and its wholly owned subsidiary, Worksport New York Operations

Corporation, serve as guarantors on the loan.

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

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Flow Activities

increased from $3,365,778 at December 31, 2023, to $3,426,089 at June 30, 2024 – an increase of $60,311 or 2%.

The increase was

primarily due to the closing of a sale of shares as well as a warrant inducement during the six months ended June 30, 2024, raising approximately

of June 30, 2024, we had current assets of $10,743,200 (December 31, 2023 – $9,123,506) and current liabilities of $2,253,954 (December

31, 2023 – $7,166,612).

As of June 30, 2024, we had working capital of $8,489,246 (December 31, 2023 – $1,956,894) and an

accumulated deficit of $56,041,233 (December 31, 2023 – $48,313,177).

cash used by operating activities for the six months ended June 30, 2024 was $6,421,292, compared to $6,018,704 in the prior period,

primarily driven by a larger net loss during the six months ended June 30, 2024, and partially offset by the issuance of shares, stock

options, and warrants for services.

receivable increased at June 30, 2024 by $160,264 and increased by $263,874 in the prior period.

The increase in accounts receivable

was due to larger sales volume with business-to-business customers.

increased at June 30, 2024 by $2,755,252, and at June 30, 2023 by $1,533,492, as a result of our stockpiling components for

production as well as finished goods to fulfill rising demand for our domestically-produced tonneau covers.

Prepaid expenses and

deposits decreased by $1,345,434 at June 30, 2024, and increased by $14,280 at June 30, 2023 due to deposits used and made by us

for the purchase of manufacturing equipment and inventory, respectively.

payable and accrued liabilities decreased at June 30, 2024 by $59,989 compared to a decrease of $828,757 in the prior period.

cash used in investing activities for the six months ended June 30, 2024 was $335,787 compared to $2,663,046 in the prior period.

decrease in investing activities was primarily attributable to higher capital expenditure on various manufacturing equipment in 2023.

cash generated by financing activities for the six months ended June 30, 2024 was $6,817,390 compared to net cash used from financing

activities of $36,772 in the prior period.

decreased from $3,365,778 at December 31, 2023, to $1,857,685 at September 30, 2024 – a decrease of $1,508,093 or 45%.

of September 30, 2024, we had current assets of $8,887,057 (December 31, 2023 – $9,123,506) and current liabilities of $3,006,131

(December 31, 2023 – $7,166,612).

As of September 30, 2024, we had working capital of $5,880,926 (December 31, 2023 – $1,956,894)

and an accumulated deficit of $60,176,150 (December 31, 2023 – $48,313,177).

cash used by operating activities for the nine months ended September 30, 2024 was $7,959,212, compared to $8,194,347 in the prior period.

While net loss increased by $592,950 and non-cash payments decreased by $1,585,718, they were more than offset by a $2,413,803 decrease

in cash used in operating assets and liabilities relative to the prior period, which reflects the Company’s improved inventory

storage and consumption efficiency.

receivable increased at September 30, 2024 by $3,320 and increased by $455,509 in the prior period.

This small increase relative to the

prior period was due to there being a small increase in business-to-business sales relative to the prior period.

increased at September 30, 2024 by $2,506,568, and at September 30, 2023 by $2,205,697, as a result of our purchasing more raw materials

for increased output to fulfill rising demand for our domestically-produced tonneau covers.

Prepaid expenses and deposits decreased by

$1,240,649 at September 30, 2024, and decreased by $26,200 at September 30, 2023 due to deposits

used and made by us for the purchase of inventory.

payable and accrued liabilities increased at September 30, 2024 by $1,004,819 compared to a decrease of $152,474 in the prior period.

cash used in investing activities for the nine months ended September 30, 2024 was $500,760 compared to $3,512,469 in the prior period.

The decrease in investing activities was primarily attributable to higher capital expenditure on various manufacturing equipment in 2023.

cash generated by financing activities for the nine months ended September 30, 2024 was $6,951,879 compared to net cash generated by

financing activities of $51,637 in the prior period.

Cash generated from financing activities increased as the Company issued additional

shares, warrants and access to credit lines compared to 2023.

Accounting Policies

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis