What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-13 compared with 2025-08-13 · 241 added, 207 removed, 243 unchanged (65% of the section changed)

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retroactively adjusted for all period presented.

following discussion should be read in conjunction with the Company’s Annual Report Form 10-K for the fiscal year ended December

31, 2024 filed with the U.S.

Securities and Exchange Commission (the “SEC”) on March 27,2025 and the condensed consolidated

financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.

following discussion should be read in conjunction with the Company’s Annual Report Form 10-K for the fiscal year ended

December 31, 2024 filed with the SEC on March 27, 2025 and the unaudited

condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.

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

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Additionally, Worksport’s hard-folding cover,

designed and manufactured in the United States, is compatible with all major truck models and is gaining traction with newer truck makers

designed and manufactured in the U.S., is compatible with all major truck models and is gaining traction with newer truck makers

including the EV sector.

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power grid independence with its proprietary solar solutions, mobile energy storage systems (ESS), and Cold-Climate Heat Pump (CCHP)

Key Performance Outcomes

The following highlights a summary of our achievements during the period:

We recognized the highest net sales in our Company’s history.

For the three

months ended September 30, 2025, net sales increased by 61% to $5.0 million when compared

with $3.1 million during the same period in 2024.

For the nine months ended September 30,

2025, net sales increased by 104% to $11.4 million when compared with $5.6 million during

the same period in 2024.

We continued our focus to increase efficiency in our production process.

three months ended September 30, 2025, gross margin expanded to 31.3%, an increase from 7.9%

during the same period in 2024.

For the nine months ended September 30, 2025, gross margin

expanded to 26.8%, an increase from 10.5% during the same period in 2024.

● Distribution

We expanded our distribution network and now partner with six (6) national distributors,

including two (2) new relationships during the three months ended September 30, 2025.

production facilities achieved its highest monthly production volume

in our Company’s history.

● Research milestones:

Our Terravis Energy subsidiary continues its prototype

development efforts, including facility setup.

Popularity of Electric Vehicles

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with its international battery supplier and U.S.-based partners to mitigate tariff exposure and evaluate onshore manufacturing opportunities.

We continue to monitor international trade developments

closely, including potential changes in tariff rates and the possibility of new exemptions or other regulatory actions, to analyze impacts

to our operations.

The extent and duration of tariffs remain uncertain and will depend on a variety of factors outside of our control.

We remain committed to optimizing our operations, including managing our supply chain to minimize the impact of tariffs on our results

of operations.

following highlights recent material developments in our business in the three months ended June 30, 2025:

On April 29, 2025, the Company announced a strategic partnership with Patriot

Automotive Technologies to accelerate nationwide expansion through Patriot’s network of over 200 dealer locations.

On May 28, 2025, the Company announced that it secured ISO 9001 Certification

Factory, expected to pave new inroads towards substantial new OEM and global supply chain opportunities.

This certification

cycle officially commenced in April 2025 and remains valid through April 2028, contingent upon continued compliance.

On June 2, 2025 the Company announced that 80% of the AL4 product line—20

out of 25 planned models—had been successfully rolled out to market.

On June 5, 2025, the Company confirmed a Fall 2025 commercial launch for

its much-anticipated modular nano-grid system, known as SOLIS & COR.

This announcement follows the successful completion of key engineering

milestones and validation benchmarks across both systems.

On June 10, 2025, the Company announced the addition of a second national

automotive distributor, expanding the Company’s partnered dealer network to over 550 locations across the United States—representing

a nearly six fold increase since the beginning of 2025.

On June 13, 2025, Worksport completed the initial closing of its Regulation

A offering of up to 3,100,000 units, each consisting of one share of the Company’s 8% Series C Convertible Preferred Stock, and

one warrant to purchase one share of the Company’s common stock.

The Offering is being conducted pursuant to the Company’s

Offering Statement on Form 1-A, as amended, which was qualified by the U.S.

Securities and Exchange Commission on May 27, 2025.

In connection

with the initial closing, the Company issued an aggregate of 49,335 Units to investors that were placed by Digital Offering LLC, the Company’s

placement agent, for aggregate gross proceeds of $160,339.

After deducting Placement Agent commissions and offering-related expenses

of $11,224, the Company received net proceeds of $149,115.

Through June 30, 2025, the Company has sold and issued 22,725 shares of

common stock in consideration for net proceeds of $185,874 under the ATM Agreement.

We continue to monitor international trade developments closely, including potential changes in tariff rates and the possibility of new

exemptions or other regulatory actions, to analyze impacts to our operations.

The extent and duration of tariffs remain uncertain and

will depend on a variety of factors outside of our control.

We remain committed to optimizing our operations, including managing our

supply chain to minimize the impact of tariffs on our results of operations.

following highlights recent material developments in our business in the three months ended September 30, 2025:

July 16, 2025, Worksport announced that the AetherLux Pro heat pump with high-performance Zerofrost technology – a product

of its subsidiary, Terravis Energy - had received the attention of multi-billion dollar corporations and U.S.

government entities,

with site visits and due diligence underway.

July 16, 2025, Worksport announced it doubled its R&D footprint by beginning a new lease at a larger R&D facility in Ozark,

Missouri for the development of upcoming product lines.

August 5, 2025, Worksport announced its strongest 4-week production run since beginning domestic production.

August 7, 2025, Worksport announced that it had doubled its Bitcoin holdings and invested in additional manufacturing machinery

to double its production output.

September 30, 2025, Worksport announced a 42% increase in national dealer partnerships over the preceding quarter.

ACCOUNTING POLICIES

The SEC defines critical accounting policies as those

that are, in management’s view, most important to the portrayal of our financial condition and results of operations and those that

require significant judgments and estimates.

The accounting principles we utilized in preparing our unaudited condensed consolidated financial

statements conform in all material respects to Generally Accepted Accounting Principles in the U.S., or U.S.

a regular basis, we evaluate the critical accounting policies used to prepare our consolidated financial statements, including revenue

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Note 1, Description of Business and Significant Accounting Policies included in Item 1, Financial Statements of this report for further

information regarding Financial Accounting Standards Board issued Accounting Standards Updates (“ASU”).

information regarding Financial Accounting Standards Board issued Accounting Standards Updates.

RESULTS OF OPERATIONS

Months Ended June 30, 2025 compared to the Three Months Ended June 30, 2024

the three months ended June 30, 2025, net sales were $4,104,958, as compared to $1,921,539 for the three months ended June 30, 2024.

Year-over-year

net sales increased by approximately 114%.

For the three months ended June 30, 2025, net sales generated in U.S.

was $4,070,406,

as compared to $1,910,838 for the same period in 2024, an increase of 113%.

For the three months ended June 30, 2025, revenue generated

in Canada was $34,552, compared to $28,677 for the same period in 2024, an increase of 20%.

sales increased during the three months ended June 30, 2025 compared to the same period the prior year due to the successful launch

of the AL4 product line alongside further branding and marketing efforts for all product lines, resulting in higher direct to

Months Ended September 30, 2025 compared to the Three Months Ended September 30, 2024

the three months ended September 30, 2025, net sales were $5,013,872, as compared to $3,122,359 for the three months ended September

Year-over-year net sales increased by 61%.

For the three months ended September 30, 2025, net sales generated in the U.S.

was $4,985,887, as compared to $3,093,608 for the same period in 2024, an increase of 61%.

For the three months ended September 30,

2025, net sales generated from other countries was $27,985, compared to $28,751 for the same period in 2024.

sales increased during the three months ended September 30, 2025 compared to the same period the prior year due to the successful

launch of the AL4 product line alongside further branding and marketing efforts for all product lines, resulting in higher direct to

consumer sales.

Implementation of our distributor, wholesaler, and jobber sales strategy via the addition of multiple distributor partners with a network of over 550 locations across the United States has

driven higher net sales from our

business to business sales channels.

Implementation of our distributor, wholesaler, and jobber sales strategy via the addition of multiple distributor

partners with a network of over 550 locations across the U.S.

has driven higher net sales from our business-to-business

sales channels.

distribute our hard tonneau covers and soft tonneau covers in the U.S.

and Canada through an expanding network of wholesalers, private

labels, distributors, and other online retailers, including eBay, Amazon, Walmart, and our own e-commerce platform hosted on Shopify.

labels, distributors, and other online retailers, including eBay, Amazon, and our own e-commerce platform hosted on Shopify.

Distribution via each aforementioned channel is expected to increase during 2026.

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with Original Equipment Manufacturers with the intention of distributing through them as well.

We currently work closely with a large Canadian and four large U.S.

as well as online retailers to grow our customer base.

We are progressing well in conversations with two other major distributors with

strong market presences, which will allow us to promote to dealers and sell to jobbers in strategic regions.

Lastly, we partnered with

a network of nationwide U.S.

dealers capable of bringing our product to all U.S.

currently work closely with six large U.S.

distributors, one retail auto chain, and online retailers to

grow our customer base.

We added two of these U.S.

distributors within the period, which will allow us to promote to dealers and sell

to jobbers in strategic regions.

Lastly, we partnered with a network of nationwide U.S.

dealers capable of bringing our product to all

continental states.

Cost of sales increased by 86%, from $1,624,910 for the three months ended

June 30, 2024, to $3,022,846 for the three months ended June 30, 2025.

Our cost of sales, as a percentage of sales, was approximately

73.6% and 84.6% for the three months ended June 30, 2025 and 2024, respectively.

The decrease in the cost of sales as a percentage of

sales was primarily driven by improved production efficiencies resulting from the continued maturation of our manufacturing processes.

As production volumes increased, we achieved greater economies of scale and more efficient overhead absorption, resulting in lower per-unit

manufacturing costs.

This improvement in operational throughput allowed fixed and semi-variable overhead costs to be allocated across

a higher number of units, thereby reducing the cost of sales on a per-unit basis.

of sales increased by 20%, from $2,875,186 for the three months ended September 30, 2024, to $3,445,088 for the three months ended

September 30, 2025.

Our cost of sales, as a percentage of sales, was 69% and 92% for the three months ended September

30, 2025 and 2024, respectively.

The decrease in the cost of sales as a percentage of sales was primarily driven by improved

production efficiencies resulting from the continued maturation of our manufacturing processes.

As production volumes increased, we achieved

greater economies of scale and more efficient overhead absorption, resulting in lower per-unit manufacturing costs.

This improvement

in operational throughput allowed fixed and semi-variable overhead costs to be allocated across a higher number of units, thereby reducing

the cost of sales on a per-unit basis.

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

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Certain exceptions

apply on rare occasions where product is shipped outside the contiguous United Sates or from the United States to Canada.

apply on rare occasions where product is shipped outside the contiguous U.S.

or from the U.S.

Volume discounts

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

expenses increased for the three months ended June 30, 2025 by $492,366, from $4,207,377 for the three months ended June 30, 2024 to

$4,699,743, mainly due to the following factors:

Research and development expense decreased by $741,031, from $1,045,864

in 2024 to $304,833 in 2025.

The decrease was related to developmental progress of our AL3 product line and release of our AL4 product

line, both of which required less development efforts as resources were shifted to normal-course production.

General and administrative expense increased by $553,533, from $1,900,522 in 2024 to $2,454,055 in 2025.

The increase was primarily attributable to new software subscriptions used to support administrative and production efforts and higher labor costs, alongside an increase in e-Commerce fees due to higher current period sales volume.

Sales and marketing expense increased by $826,563, from $478,792 in 2024

to $1,305,355 in 2025.

The increase in sales and marketing was primarily attributable to marketing campaigns to drive traffic and engagement

to our online marketplace for direct to consumer sales, including awareness campaigns for the newly released AL4 product line.

Professional fees expense, which includes accounting, legal, and consulting

fees, decreased from $766,563 in 2024 to $637,493 in 2025.

The decrease in professional fees was primarily driven by reduced reliance

on external consultants as the Company progressed from the planning and setup phase of its manufacturing operations to active production

and scaling efforts, inclusive of marketing.

expenses increased for the three months ended September 30, 2025 by $2,209,166, from $4,152,389 for the three months ended September

30, 2024 to $6,361,555, mainly due to the following factors:

and development expense decreased by $95,351, from $396,446 in 2024 to $301,095 in 2025.

The decrease was related to developmental

progress of our AL3 product line and release of our AL4 product line, both of which required less development efforts as resources

were shifted to normal-course production.

and administrative expense increased by $471,291, from $2,478,809 in 2024 to $2,950,100 in 2025.

The increase was primarily attributable

to increased insurance and facility support costs to sustain production efforts, alongside an increase in e-Commerce fees due to increased

sales volume.

and marketing expense increased by $1,700,957, from $661,238 in 2024 to $2,362,195 in 2025.

The increase in sales and marketing was

primarily attributable to marketing campaigns to support investor relations initiatives and drive traffic and engagement to our online

marketplace for direct-to-consumer sales, including awareness campaigns for the newly released AL4 product line.

fees expense, which includes accounting, legal, and consulting fees, increased by $126,928 from $621,728 in 2024 to $748,656 in

The increase in professional fees was primarily driven by stock awards granted to external consultants to support strategic

Income and Expenses

reported net other expenses for the three months ended June 30, 2025 of $116,853, compared to $102,651 for three months ended June 30, 2024.

The increase in net other expenses was attributed to a reduction in

rental income as a result of the completion of the term of our sublease agreement.

loss for the three months ended June 30, 2025 was $3,734,484, compared to a net loss of $4,013,399 for the three months ended June

30, 2024 – a decrease of 6.9%.

The decrease in the net loss can be attributed to higher net sales and gross profit and certain

reduced operating expenses.

Months Ended June 30, 2025 compared to the Six Months Ended June 30, 2024

the six months ended June 30, 2025, net sales were $6,344,963, as compared to $2,434,176 for the six months ended June 30, 2024.

Year-over-year net sales increased by approximately 161%.

For the six months ended June 30, 2025, net sales generated in U.S.

reported net other expenses for the three months ended September 30, 2025 of $135,908, compared to $229,701 for three months ended September

The decrease in net other expenses was attributed to a reduction in interest expense as a result of reduced reliance on our

line of credit.

loss for the three months ended September 30, 2025 was $4,928,679, compared to a net loss of $4,134,917 for the three months ended

September 30, 2024 – an increase of 19%.

The increase in the net loss can be attributed to higher marketing expenses to

support investor relationship initiatives and campaigns to expand sales volumes, including the development of future campaigns for

which we expect to show return on investment via increased net sales in future periods.

Months Ended September 30, 2025 compared to the Nine Months Ended September 30, 2024

the nine months ended September 30, 2025, net sales were $11,358,835, as compared to $5,556,535 for the nine months ended September 30,

Year-over-year net sales increased by 104%.

For the nine months ended September 30, 2025, net sales generated in U.S.

was $11,284,538,

as compared to $5,475,975 for the same period in 2024, an increase of 106%.

For the six months ended June 30, 2025,

revenue generated in Canada was $47,008, compared to $48,684 for the same period in 2024, a decrease of 3%.

sales increased during the six months ended June 30, 2025 compared to the same period the prior year due to further branding and

marketing efforts resulting in higher direct to consumer sales as well as implementation of our distributor, wholesaler, and jobber

sales strategy leading to increases in our business to business sales channels.

Also driving greater net sales was the release of

the flagship AL4 product line.

For the nine months ended September 30, 2025, revenue generated

in other countries was $74,297, compared to $80,560 for the same period in 2024, a decrease of 8%.

sales increased during the nine months ended September 30, 2025 compared to the same period the prior year due to further branding

and marketing efforts resulting in higher direct-to-consumer sales as well as implementation of our distributor, wholesaler, and

jobber sales strategy leading to increases in our business-to-business sales channels.

Also driving greater net sales was the

release of the flagship AL4 product line.

distribute our hard tonneau covers and soft tonneau covers in the U.S.

and Canada through an expanding network of wholesalers, private

labels, distributors, and other online retailers, including eBay, Amazon, Walmart, and our own e-Commerce platform hosted on Shopify.

labels, distributors, and other online retailers, including eBay, Amazon, and our own e-Commerce platform hosted on Shopify.

Distribution via each aforementioned channel is expected to increase during 2026.

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with Original Equipment Manufacturers with the intention of distributing through them as well.

We currently work closely with a large Canadian and four large U.S.

as well as online retailers to grow our customer base.

We are progressing well in conversations with two other major distributors with

strong market presences, which will allow us to promote to dealers and sell to jobbers in strategic regions.

Lastly, we partnered with

a network of nationwide U.S.

We currently work closely with six large U.S.

distributors, one retail auto chain, and online retailers to

grow our customer base.

We added two of these U.S.

distributors within the period, which will allow us to promote to dealers and sell to

jobbers in strategic regions.

Lastly, we partnered with a network of nationwide U.S.

dealers capable of bringing our product to all U.S.

continental states.

of sales increased by approximately 132%, from $2,100,091 for the six months ended June 30, 2024, to $4,866,630 for the six months ended June 30, 2025.

Our cost of sales, as a percentage of sales, was approximately 77% and 86% for the six months ended June 30, 2025 and 2024, respectively.

The decrease in the cost of sales as a percentage of sales was primarily driven by improved production efficiencies resulting

from the continued maturation of our manufacturing processes.

As production volumes increased, we achieved greater economies of scale

and more efficient overhead absorption, resulting in lower per-unit manufacturing costs.

This improvement in operational throughput allowed

fixed and semi-variable overhead costs to be allocated across a higher number of units, thereby reducing the cost of sales on a per-unit

of sales increased by 67%, from $4,975,277 for the nine months ended September 30, 2024, to $8,311,718 for the nine

months ended September 30, 2025.

Our cost of sales, as a percentage of sales, was 73% and 90% for the nine months

ended September 30, 2025 and 2024, respectively.

The decrease in the cost of sales as a percentage of sales was primarily

driven by improved production efficiencies resulting from the continued maturation of our manufacturing processes.

As production

volumes increased, we achieved greater economies of scale and more efficient overhead absorption, resulting in lower per-unit

manufacturing costs.

This improvement in operational throughput allowed fixed and semi-variable overhead costs to be allocated

across a higher number of units, thereby reducing the cost of sales on a per-unit basis.

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

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Certain exceptions

apply on rare occasions where product is shipped outside the contiguous United Sates or from the United States to Canada.

apply on rare occasions where product is shipped outside the contiguous U.S.

or from the U.S.

Volume discounts

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

expenses increased for the six months ended June 30, 2025 by $1,467,970, from $7,884,299 for the six months ended June 30, 2024 to $9,352,269,

mainly due to the following factors:

Research and development expense decreased by $741,031, from $1,415,465

in 2024 to $674,434 in 2025.

The decrease was related to developmental progress of our AL3 product line and release of our AL4 product

line, both of which required less development efforts as resources were shifted to normal-course production.

General and administrative expense increased by $1,237,596, from $4,205,239

in 2024 to $5,442,835 in 2025.

The increase was primarily attributable to an increase in e-commerce fees due to higher current period

sales volume and an increase in software subscriptions and depreciable equipment used to support administrative and production efforts.

expenses increased for the nine months ended September 30, 2025 by $3,693,990, from $12,036,688 for the nine months ended September

30, 2024 to $15,730,678, mainly due to the following factors:

and development expense decreased by $836,382, from $1,811,911 in 2024 to $975,529 in 2025.

The decrease was related to developmental

progress of our AL3 product line and release of our AL4 product line, both of which required less development efforts as resources

were shifted to normal-course production.

and administrative expense increased by $1,725,741, from $6,684,048 in 2024 to $8,409,789 in 2025.

The increase was primarily

attributable to increased insurance and facility support costs to sustain production efforts, increased e-Commerce fees due to higher current period

sales volume,

and increased depreciable equipment used to support administrative and production efforts .

and marketing expense increased by $3,330,492, from $1,206,807 in 2024 to $4,537,299 in 2025.

The increase in sales and marketing was

primarily attributable to marketing campaigns to drive traffic and engagement to our online marketplace for direct to consumer

fees expense, which includes accounting, legal, and consulting fees, decreased from $1,710,341 in 2024 to $1,063,534 in 2025.

decrease in professional fees was primarily driven by reduced reliance on external consultants as the Company progressed from the

planning and setup phase of its manufacturing operations to active production and scaling efforts, inclusive of marketing, as well

as a reduction in non-cash expenditures relating to stock-based compensation for consultants.

The increase in sales and marketing was primarily attributable to marketing campaigns to support investor relations initiatives and drive

traffic and engagement to our online marketplace for direct-to-consumer sales, including awareness campaigns for the newly released AL4

product line.

fees expense, which includes accounting, legal, and consulting fees, decreased by $519,879 from $2,332,069 in 2024 to $1,812,190 in

The decrease in professional fees was primarily driven by reduced reliance on external consultants as the Company progressed

from the planning and setup phase of its manufacturing operations to active production and scaling efforts, inclusive of marketing,

as well as a net reduction in non-cash expenditures relating to stock-based compensation for consultants.

Income and Expenses

reported net other expenses for the six months ended June 30, 2025 of $321,012, compared to $177,842 for the six months ended June 30, 2024.

The increase in net other expenses was attributed to increased interest expense on our line of credit and a reduction in

rental income as a result of the completion of the term of our sublease agreement.

loss for the six months ended June 30, 2025 was $8,194,948, compared to a net loss of $7,728,056 for the six months ended June 30,

2024 – an increase of 6.0%.

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

focus on expanding our operations, manufacturing, and supply chain.

reported net other expenses for the nine months ended September 30, 2025 of $440,066, compared to $407,543 for the nine months ended

September 30, 2024.

The increase in net other expenses was attributed to a reduction in rental income as a result of the completion of the term of our sublease agreement.

loss for the nine months ended September 30, 2025 was $13,123,627, compared to a net loss of $11,862,973 for the nine months ended

September 30, 2024 – an increase of 11%.

The increase in the net loss can be attributed to the increase in

various operating expenses as we focus on expanding our operations alongside higher marketing expenses to support both ongoing sales volumes and develop future campaigns for which we expect to show return

on investment via increased sales in future periods.

and Capital Resources

of June 30, 2025 and December 31, 2024, we had $1,393,140 and $4,883,099, respectively in cash and cash equivalents.

As of June 30, 2025, we

had $4,763,700 of remaining available capacity on our revolving line of credit compared with $811,400 of remaining available capacity as of

December 31, 2024.

The decrease in cash and cash equivalents and increase in the remaining available capacity on

our revolving line of credit was primarily a result of the use of cash flows from operations to reduce our indebtedness.

We have historically

generated only limited gross profit and have relied primarily upon capital generated from public and private offerings of our securities

to fund continuing operations.

Since the Company’s acquisition of Worksport in 2014, it has never generated a profit.

three and six months ended June 30, 2025, we had net losses of $3,734,484 and $8,194,948, respectively (three months ended June 30, 2024 - $4,013,399;

months ended June 30, 2024 - $7,728,056).

As of June 30, 2025, the Company had working capital of $4,758,042 (As of December 31, 2024 - $7,304,110)

and had an accumulated deficit of $72,671,914 (as of December 31, 2024 - $64,476,966).

of September 30, 2025 and December 31, 2024, we had $3,761,690 and $4,883,099, respectively in cash and cash equivalents.

September 30, 2025, we had $3,291,250 of remaining available capacity on our revolving line of credit compared with $811,400 of

remaining available capacity as of December 31, 2024.

The decrease in cash and cash equivalents and increase in the remaining

available capacity on our revolving line of credit was primarily a result of the use of cash flows from operations to reduce our

indebtedness.

We have historically generated only limited gross profit and have relied primarily upon capital generated from public

and private offerings of our securities to fund continuing operations.

Since the Company’s acquisition of Worksport in 2014,

it has never generated a profit.

During the three and nine months ended September 30, 2025, we had net losses of $4,928,679 and

$13,123,627, respectively (three months ended September 30, 2024 - $4,134,917;

nine months ended September 30, 2024 - $11,862,973).

As of September 30, 2025, the Company had working capital of $6,311,857 (As of December 31, 2024 - $7,304,110) and had an

accumulated deficit of $77,617,726 (as of December 31, 2024 - $64,476,966).

their fiscal 2024 audit report, our independent auditors expressed that there is substantial doubt as to our ability to continue as a

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our management is taking will be successful.

date, our principal sources of liquidity consist of net proceeds from public and private securities offerings and cash exercises of outstanding

During the six months ended June 30, 2025, the Company received net proceeds of $6,384,840 from offerings.

Management is focused on transitioning towards gross profit as our principal source of liquidity by growing our existing product offerings

and customer base and realizing manufacturing efficiency improvements.

date, our principal sources of liquidity consist of net proceeds from public and private securities offerings and cash exercises of

outstanding warrants.

During the nine months ended September 30, 2025, the Company received net proceeds of $13,358,414 from

Through November 13, 2025, the Company received additional net proceeds of $2,623,212 from offerings.

Management is

focused on transitioning towards gross profit as our principal source of liquidity by growing our existing product offerings and

customer base and realizing manufacturing efficiency improvements.

We cannot give assurance that we can increase our cash balances

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Future business development and demands may lead to cash utilization at levels greater than recently experienced.

We may need to raise

additional capital in the future.

However, we cannot ensure that we will be able to raise additional capital on acceptable terms, or

Subject to the foregoing, we believe our current cash balances coupled with anticipated cash flow from operating activities will

be sufficient to meet our working capital requirements for at least one year from the date of issuance of the accompanying consolidated

financial statements.

have raised significant funds during the six months ended June 30, 2025 per the following public and private offerings:

We may need to

raise additional capital in the future.

However, we cannot ensure that we will be able to raise additional capital on acceptable

terms, or at all.

Subject to the foregoing, we believe our current cash balances coupled with anticipated cash flow from operating

activities will be sufficient to meet our working capital requirements for at least one year from the date of issuance of the

accompanying consolidated financial statements.

have raised significant funds during the nine months ended September 30, 2025 per the following public and private offerings:

February 27, 2025, we entered into a common stock warrant exercise inducement offer letter (the “Inducement Letter”) with

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We received aggregate gross

proceeds of approximately $6,731,400 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 us.

proceeds of $6,731,410 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 of $346,570.

We engaged Maxim Group LLC (“Maxim”) to

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affecting our common stock and the exercise price.

to the At The Market Offering Agreement dated as of September 30, 2022 (“ATM Agreement”), with H.C.

Co., LLC, as the sales agent, during the six month period ended June 30, 2025, we sold and issued a total of 22,725 shares of

common stock in consideration for net proceeds of $185,874 under the ATM Agreement.

Regulation A Offering

On June 13, 2025, Worksport completed the initial closing of its Regulation

A offering whereby up to 3,100,000 units may be sold at an offering price of $3.25 per unit.

Each unit consists of one share of 8% Series

C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred Stock”) and one warrant for the right to

purchase one (1) share of common stock, $0.001 par value at an exercise price of $4.50 per share.

The qualified Regulation A offering

is expected to generate gross proceeds of $10,000,000, and the warrants have the potential to provide an additional $13,950,000 of additional

proceeds if all are converted.

Through June 30, 2025, the Company completed one tranche and received gross proceeds of $160,339.

to June 30, the Company completed 12 additional tranches and received gross proceeds of $4,404,146.

to the ATM Agreement, with H.C.

Wainwright & Co.,

LLC, as the sales agent, during the nine month period ended September 30, 2025, we sold and issued a total of 110,619 shares of common stock

in consideration for net proceeds of $504,372 under the ATM Agreement.

June 13, 2025, Worksport completed the initial closing of its Regulation A offering whereby up to 3,100,000 units may be sold at an

offering price of $3.25 per unit.

Each unit consists of one share of 8% Series C Convertible Preferred Stock, par value $0.001 per

share (the “Series C Preferred Stock”) and one warrant for the right to purchase one (1) share of common stock, $0.001

par value with an exercise price of $4.50 per share.

The qualified Regulation A offering is expected to generate gross proceeds of

$10,000,000, and the warrants have the potential to provide an additional $13,950,000 of additional proceeds if all are converted.

Through September 30, 2025, the Company completed twenty-four tranches and received net proceeds of $6,927,922, including $458,720

of share subscriptions receivable.

On October 1, 2025, the Company received the share subscriptions receivable of $458,720.

Subsequent to September 30, the Company completed eight additional tranches and received net proceeds of $2,164,492.

Statement of Cash Flows

Cash decreased from $4,883,099 at December 31, 2024, to $1,393,140 at June

30, 2025 – a decrease of $3,489,959 or 72%.

decreased from $4,883,099 at December 31, 2024, to $3,761,690 at September 30, 2025 – a decrease of $1,121,409 or 23%.

The decrease was primarily due to repayments on debt obligations.

cash used in operating activities for the six months ended June 30, 2025 was $6,935,033, compared to $6,421,292 in 2024, primarily

cash used in operating activities for the nine months ended September 30, 2025 was $11,190,182, compared to $7,959,212 in 2024, primarily

driven by the shift to production and distribution of hard tonneau covers.

receivable increased at June 30, 2025 by $253,372 and increased by $160,264 in the prior period.

The increase in accounts receivable was due to further development of our Distributor and Jobber customer network and relationships.

Inventory increased at June 30, 2025 by $691,459, and decreased at June

30, 2024 by $2,755,252, as a result of the maturation of the production process and shift in 2024 to hard tonneau cover production.

expenses and deposits increased by $470,641 at June 30, 2025, and decreased by $1,345,434 at June 30, 2024 due to timing of deposits from

B2C customers prior to fulfillment of their orders at the end of the accounting period.

payable and accrued liabilities increased at June 30, 2025 by $469,362 compared to an increase of $115,586 at June 30, 2024.

increase is primarily due to an increase in accrued labor costs in 2025 compared with the prior period.

Net cash used in investing activities for the six months ended June 30,

2025 was $582,797 compared to $335,787 for the six months ended June 30, 2024.

receivable increased at September 30, 2025 by $472,485 and increased at September 30, 2024 by $3,320.

increase in accounts receivable was due to further development of our business-to-business sales channel, specifically our

Distributor and Jobber customer network and relationships.

increased at September 30, 2025 by $1,645,437, and increased at September 30, 2024 by $2,506,568, as a result of the maturation of the

production process and shift in 2024 to hard tonneau cover production.

expenses and deposits increased by $865,634 at September 30, 2025, and decreased by $1,240,649 at September 30, 2024, primarily

attributable to payments for future strategic marketing, including planned public relations campaigns, and deposits for raw

materials required to support planned production requirements.

payable and accrued liabilities increased at September 30, 2025 by $1,477,537 compared to an increase of $1,031,400 at September 30,

The increase is primarily due to an increase in raw materials order volume.

cash used in investing activities for the nine months ended September 30, 2025 was $1,067,257 compared to net cash used in investing

activities of $500,760 for the nine months ended September 30, 2024.

The increase in investing activities was primarily attributable

to our purchase of cryptocurrency and website enhancements, both of which are classified as intangible assets.

We also acquired additional

tooling components for our COR production process.

Net cash provided by financing activities for the six months ended June

30, 2025 was $4,027,871 compared to net cash provided by financing activities of $6,817,390 for the six months ended June 30, 2024.

to a deposit for a new piece of manufacturing equipment.

The new manufacturing equipment will increase our production capacity and

support our sales forecast.

We expect the production equipment to be delivered and installed in the first half of 2026.

of the commitment include consideration of $3 million payable 10% upon order placement, 20% due at time of shipment, 60% upon

completion of installation, net 180 days, and 10% upon completion of installation, net 365 days.

We also purchased cryptocurrency

and completed website enhancements, both of which are classified as intangible assets on the unaudited condensed consolidated

balance sheet.

cash provided by financing activities for the nine months ended September 30, 2025 was $11,136,030 compared to net cash provided by

financing activities of $6,951,879 for the nine months ended September 30, 2024.

The increase in financing activities was primarily attributable to net proceeds from offerings offset by net

payments on our line of credit.

Sheet Arrangements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis