What changed in this filing

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Item 1. Financial Statements

2026-05-13 compared with 2025-11-13 · 602 added, 634 removed, 264 unchanged (82% of the section changed)

1 unchanged sentence

Consolidated Balance Sheets

September 30, 2025

December 31, 2024

Current assets

Cash and cash equivalents

Cash and cash

Accounts receivable, net

1 unchanged sentence

Inventory (Note 3)

Prepaid expenses and deposits (Note 6)

Total current assets

Investments (Note 11)

Property and equipment, net (Note 4)

Operating lease right-of-use assets (Note 12)

Intangible assets, net (Note 5)

LIABILITIES AND SHAREHOLDERS’ EQUITY

expenses and other (Note 6)

current assets

Property and equipment,

Operating lease right-of-use

assets (Note 11)

assets, net (Note 5)

LIABILITIES AND SHAREHOLDERS’

Current liabilities

Accounts payable

Accrued liabilities and other

Accrued liabilities and

Accrued compensation

Long-term debt, current portion (Note 13)

Lease liability, current portion (Note 12)

Total current liabilities

Lease liability, excluding current portion (Note 12)

Long-term debt, excluding current portion (Note 13)

Total liabilities

Long-term debt, current

portion (Note 12)

liability, current portion (Note 11)

current liabilities

Lease liability, excluding

current portion (Note 11)

debt, excluding current portion (Note 12)

Shareholders’ equity

Series A, B Preferred & Series C Convertible Preferred stock, $ 0.001

Series A, B and Series

C preferred stock, $ 0.001

par value, 10,000,000

2 unchanged sentences

Series C issued and outstanding, respectively (Note 7)

Series A, B Preferred & Series C Convertible Preferred stock, $0.001 par value, 10,000,000 shares authorized, 100 Series

A, 0 Series B, and 371,784 Series C issued and outstanding, respectively (Note 7)

Common stock, $ 0.001 par value, 45,000,000 shares authorized, 7,589,036 and 4,016,205 shares issued and outstanding, respectively (Note 7)

Series A, B and Series C Preferred Stock, $0.001

par value, 10,000,000 shares authorized, 100 Series A, 0 Series B, and 427,614 and 427,812 Series C issued and outstanding, respectively

Common stock, $ 0.001 par value, 45,000,000

shares authorized, 11,925,471 and 9,814,665 shares issued and outstanding, respectively (Note 7)

Additional paid-in capital

4 unchanged sentences

( 83,873,790 )

Cumulative translation adjustment

Total shareholders’ equity

Total liabilities and shareholders’ equity

Cumulative translation

shareholders’ equity

liabilities and shareholders’ equity

accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial

Consolidated Statements of Operations and Comprehensive Loss

the Three and Nine Months Ended September 30, 2025 and 2024

Months ended September 30,

and development

and administrative

and marketing

Operating expenses

Research and development

General and administrative

Sales and marketing

loss on foreign exchange

3 unchanged sentences

( 4,256,306 )

( 12,683,561 )

( 11,455,430 )

income (expense)

Other income (expense)

$ ( 4,928,679 )

$ ( 4,134,917 )

$ ( 13,123,627 )

$ ( 11,862,973 )

per share (basic and diluted)

average number of shares (basic and diluted)

accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial

Consolidated Statements of Shareholders’ Equity

the Three Months Ended September 30, 2025 and 2024

Subscriptions

Stockholders’

Balance at July 1, 2024

$ ( 56,041,233 )

Issuance for services and subscriptions payable

Share issuance

( 2,210,269 )

( 4,134,917 )

Balance at September 30, 2024

$ ( 60,176,150 )

Balance at July 1, 2025

$ ( 72,671,914 )

Issuance for services and subscriptions payable

Share issuance

Issuance of preferred shares pursuant to Reg-A

Conversion of Series C preferred shares

( 1,977,418 )

Issuance of warrants pursuant to Reg-A

Dividend payable on Series C preferred shares

( 4,928,679 )

Balance at September 30, 2025

Interest expense

other income (expense)

$ ( 5,828,522 )

$ ( 4,460,464 )

Loss per share (basic and

diluted) (Note 13)

Weighted average number of shares (basic

accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial

Consolidated Statements of Shareholders’ Equity

the Nine Months Ended September 30, 2025 and 2024

Subscriptions

Stockholders’

Balance at January 1, 2024

$ ( 48,313,177 )

Issuance for services and subscriptions payable

Share issuance (Note 7)

( 2,210,269 )

Warrant inducement (Note 15)

Warrant exercise (Note 15)

( 11,862,973 )

Balance at September 30, 2024

$ ( 60,176,150 )

at January 1, 2025

2 unchanged sentences

exercise (Note 14)

of preferred shares pursuant to Reg-A

of Series C preferred shares

of warrants pursuant to Reg-A

payable on Series C preferred shares

at September 30, 2025

at March 31, 2025

at January 1, 2026

for services and subscriptions payable

issued (Note 7)

issued (Note 14)

from escrow pursuant to Reg-A

C preferred stock conversions

payable to Series C Preferred shareholders (Note 7)

at March 31, 2026

accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial

Consolidated Statements of Cash Flows

the Nine Months Ended September 30, 2025 and 2024

Operating Activities

Three Months ended

CASH FLOWS FROM OPERATING ACTIVITIES

$ ( 5,828,522 )

$ ( 4,460,464 )

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

Shares, options and warrants issued for services

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

Adjustments to reconcile net income loss to cash provided

by (used in) operating activities

in operating lease

Adjustments to reconcile net

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

( 4,654,543 )

( 3,403,045 )

Changes in operating assets and liabilities (Note 10)

Changes in operating assets

and liabilities (Note 10)

( 3,580,211 )

Net cash used in operating activities

cash provided by (used in) operating activities

( 8,234,754 )

1 unchanged sentence

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of intangible assets

Purchase of property and equipment

Purchase of investments

Net cash used in investing activities

( 1,067,257 )

Financing Activities

Net change in related party loan

Purchase of intangible

cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of common stock, net of issuance cost

Proceeds from issuance of Reg-A units, net of issuance cost

Proceeds from warrant exercise

Proceeds from issuance of preferred stock, net of issuance cost

Proceeds from issuance of warrants, net of issuance cost

Proceeds from line of credit

Proceeds from long-term debt

Repayments on line of credit

2 unchanged sentences

Repayments on long-term debt

( 5,300,000 )

Proceeds from issuance of common shares, net of issuance cost

Net cash provided by (used in) financing activities

Change in cash

( 1,121,409 )

Dividends paid to Series C Preferred shareholders

cash provided by (used in) financing activities

Increase (decrease) in cash

and cash equivalents

( 5,379,311 )

Cash and cash equivalents - beginning of period

Cash and cash equivalents - end of

Supplemental Disclosure of cash flow information

and cash equivalents - beginning of period

and cash equivalents - end of period

SUPPLEMENTAL CASH FLOW INFORMATION

Income tax paid

Interest paid

See accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed

Consolidated Financial Statements.

Non-cash investing activities

and financing activities

Capital expenditures included in accounts payable

accompanying Notes to Condensed Consolidated Financial Statements which form an integral part of the Condensed Consolidated Financial

to the Condensed Consolidated Financial Statements

5 unchanged sentences

of results for the interim period have been included.

The results of operations for the three and nine months ended September 30,

2025 are not necessarily indicative of the results expected for the full year.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Form

10-K for the fiscal year ended December 31, 2024.

The results of operations for the three months ended March 31, 2026 are not

necessarily indicative of the results expected for the full year.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Form 10-K for the

fiscal year ended December 31, 2025.

All references to years in these financial statements are fiscal years.

Reclassifications

– Certain prior year amounts have been reclassified to conform to current year’s presentation.

The Company reclassified research

and development of $ 301,095 and $ 396,446 for the three months ended September 30, 2025 and 2024, respectively, which were reclassified from

general and administrative expense to research and development expense.

The Company reclassified research and development of $ 975,529 and

$ 1,811,911 for the nine months ended September 30, 2025 and 2024, respectively, which were reclassified from general and administrative expense

to research and development expense.

This change improves the disclosure of costs to develop new products and technologies and reflects

the Company’s ongoing investment in innovation.

The change also provides a more accurate depiction of the Company’s operating

prior year amounts have been reclassified to conform to the current year’s presentation.

The Company reclassified professional

fees of $ 426,041 for

the three months ended March 31, 2025 from professional fees to general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

This change better aligns the

nature of the expenses that support the Company’s administrative efforts.

The Company reclassified interest income of $ 8,134 for the three months ended March 31, 2025 from interest income

to other in the condensed consolidated statements of operations and comprehensive loss to conform with current year presentation.

accounting pronouncements

accounting pronouncements adopted

November 2023, the Financial Standards Accounting Board (FASB) issued Accounting Standards Update (ASU) 2023-07 “ Segment Reporting

(Topic 280) :

Improvements to Reportable Segment Disclosures ” which expands annual and interim disclosure requirements

for reportable segments, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for our

annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted.

this standard for the year ended December 31, 2024, and applied the amendments retrospectively to all prior periods presented.

to Note 17, Segment Reporting.

The adoption of this standard did not have a material effect on the financial statements and related disclosures.

accounting pronouncements not yet adopted

December 2023, the FASB issued ASU 2023-09 “ Income Taxes (Topics 740) :

Improvements to Income Tax Disclosures ”

to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

is effective for our annual periods beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the

potential effect that the updated standard will have on the financial statements and related disclosures.

November 2024, the FASB issued ASU 2024-03, “ Income Statement – Reporting Comprehensive Income – Expense Disaggregation

Disclosures” to enhance disclosure of specified categories of expenses (purchases of inventory, employee compensation, depreciation

and amortization) included in certain expense captions presented on the face of the income statement.

ASU 2024-03 is effective for annual

periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early

adoption permitted.

The Company is currently evaluating the potential effect that the updated standard will have on the financial statements

and related disclosures.

November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense

Disaggregation Disclosures.

This ASU enhances disclosure of specified categories of expenses (purchases of inventory, employee

compensation, depreciation and amortization) included in certain expense captions presented on the face of the income statement.

2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after

December 15, 2027, with early adoption permitted.

The Company is currently evaluating the potential effect that the updated standard

will have on the financial statements and related disclosures.

September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Improvements to the Accounting for Internal-Use Software .

This ASU removes all references to prescriptive and sequential software

development stages and will now require public business entities to start capitalizing software costs when management has authorized

and committed to funding the software project and is probable that project will be completed and the software will be used to perform

the function intended.

The ASU also specifies that the disclosures in Subtopic 360-10, Property, Plant and Equipment – Overall,

are required for all capitalized internal-use software costs.

ASU 2025-06 is effective for fiscal years beginning after December 15, 2027,

with early adoption permitted.

The Company is currently evaluating the disclosure requirements of this standard and the impact on its

consolidated financial statements.

December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow Scope Improvements .

This ASU amends Topic 270

by improving the navigability of the required interim disclosures and clarifying when the guidance is applicable.

The amendment provides

additional guidance on when disclosures should be provided in interim reporting periods and requires entities to disclose events since

the end of the last annual reporting period that have a material impact on the Company.

ASU 2025-11 is effective for interim reporting

periods within annual reporting periods beginning after December 15, 2026, with early adoption permitted.

The Company is currently evaluating

the disclosure requirements of this standard and the impact on its consolidated financial statements.

Company considers the applicability and impact of all ASUs.

2 unchanged sentences

2 - Going Concern

of September 30, 2025, the Company had $ 3,761,690

in cash and cash equivalents.

The Company also has availability

on its revolving line of credit of $ 3,291,250 .

The Company has generated only limited revenues and has relied primarily upon capital generated from public and private offerings of

its securities.

of March 31, 2026, the Company had $ 566,583 in cash and cash equivalents.

The Company also has availability on its revolving line of

credit of $ 2,479,490 .

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 2014, it has never generated a profit.

As of September 30, 2025,

the Company had an accumulated deficit of $ 77,617,726 .

The accompanying unaudited condensed

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

of March 31, 2026, the Company had an accumulated deficit of $ 89,729,030 .

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

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

During the three months ended

September 30, 2025, the Company had net losses of $ 4,928,679

(2024 - $ 4,134,917 ).

During the nine months ended September 30, 2025, the Company had net losses of $ 13,123,627

(2024 - $ 11,862,973 ).

of September 30, 2025, the Company had working capital of $ 6,311,857

(December 31, 2024 – $ 7,304,110 )

and had an accumulated deficit of $ 77,617,726

(December 31, 2024 - $ 64,476,966 ).

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 to make the Company profitable will be

During the three months ended March 31,

2026, the Company had net losses of $ 5,828,522 (2025 - $ 4,460,464 ).

As of March 31, 2026, the Company had working capital of $ 6,579,541

(December 31, 2025 – $ 10,061,578 ) and had an accumulated deficit of $ 89,729,030 (December 31, 2025 - $ 83,873,790 ).

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.

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

As of September

30, 2025, the Company had cash and cash equivalents of $ 3,761,690

(December 31, 2024 - $ 4,883,099 ).

Despite the Company having completed its purchasing of large manufacturing machinery for phase one output levels, 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 2025 and 2026, which should mitigate the effects of operational costs

on cash and cash equivalents as it releases new product lines;

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

the Company was completed for initial production output in 2023 and quickly began improving output and sales during 2024 and into

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

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

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

On September 30, 2022, the Company filed a shelf registration statement on Form S-3, which was declared effective by the U.S.

Securities and Exchange Commission (the “SEC”) on October 13, 2022 (the “Shelf Registration Statement”), 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 September 30, 2022 (“ATM

Agreement”), with H.C.

Wainwright & 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.

Through September 30, 2025, the Company cumulatively sold and issued 872,027

shares of common stock in consideration for net proceeds of $ 6,751,381

under the ATM Agreement.

The Shelf Registration Statement expired in October 2025 and the Company will file a new shelf registration statement

in November 2025.

November 2, 2023, the Company consummated a registered direct offering pursuant to which the Company issued 192,500 shares of common

stock and 157,500 pre-funded warrants to an institutional investor for a total net proceeds of $ 4,261,542 .

Concurrently with the registered

direct offering, the Company issued the same institutional investor 700,000 warrants in a private sale.

The warrants are exercisable

for 700,000 shares of common stock for $ 13.40 per share six months after issuance and until five and a half ( 5.5 ) years from the issuance

date, subject to beneficial ownership limitations as described in the warrants.

The Company registered the 700,000 shares of common stock

underlying the warrants on a Form S-1 (333-276241) which was declared effective by the SEC on December 29, 2023.

March 20, 2024, the Company consummated a registered direct offering pursuant to which the Company issued 237,224 shares of common stock

and 147,789 pre-funded warrants to the same institutional investor as in the Company’s registered direct offering on November 2,

2023, for a total net proceeds of $ 2,629,083 .

Concurrently with the registered direct offering, the Company issued the institutional

investor 770,026 warrants in a private sale.

The warrants are exercisable for 770,026 shares of common stock for $ 7.40 per share six

months after issuance until five and a half years from the issuance date, subject to beneficial ownership limitations as described in

the warrants.

The Company registered the 770,026 shares of common stock underlying the warrants on a Form S-1 (333-278461) which was

As of March 31,

2026, the Company had cash and cash equivalents of $ 566,583 (December 31, 2025 - $ 5,945,894 ).

Despite the Company having completed its

purchasing of large manufacturing machinery for phase one output levels, 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 2026, which should mitigate the effects of operational costs on cash and cash equivalents as it releases new product

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

in 2023 and quickly began improving output and sales beginning in 2024 and continuing into 2026.

Company has successfully raised capital in recent periods and believes it is positioned to do so again if deemed necessary or strategically advantageous.

On September 30, 2022, the Company

entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC

(“Wainwright”), pursuant to which the Company could offer and sell shares of its common stock having an aggregate

offering price of up to $ 13.0 million through Wainwright as sales agent under the Company’s shelf registration statement on

Form S-3 (File No.

333-267696), including the related base prospectus and prospectus supplement dated October 13, 2022.

shares of common stock through Wainwright, if any, were made pursuant to an “at the market offering” as defined in Rule

415(a)(4) under the Securities Act of 1933, as amended.

Under the ATM Agreement, Wainwright is entitled to a commission equal to 3.0 %

of the gross proceeds from shares sold under the ATM Agreement, and the Company also agreed to reimburse Wainwright for certain specified expenses.

Company’s public float was below $75.0 million, sales under the ATM Agreement were subject to the limitations of General Instruction

I.B.6 of Form S-3.

Accordingly, on November 5, 2024 and December 13, 2024, the Company filed prospectus supplements to update the amount

of securities then eligible for sale under the ATM Agreement based on the Company’s public

float and prior sales during the applicable rolling 12-month period.

The Company’s registration statement on Form S-3 (File No.

333-267696) expired on October 13, 2025.

Through the expiration date, the Company had sold 872,027 shares of common stock under the ATM

Agreement for aggregate gross proceeds of approximately $ 6,751,381 .

November 14, 2025, the Company and Wainwright entered into an amendment to the ATM Agreement in connection with the Company’s new

shelf registration statement on Form S-3 (File No.

Pursuant to the amended ATM Agreement and the related base prospectus

and prospectus supplement dated December 12, 2025, the Company may offer and sell shares of its common sto ck having an aggregate

offering price of up to $ 4.0 million through Wainwright as sales agent.

Because the Company’s public float remains below $75.0

million, sales under the ATM Agreement remain subject to the limitations of General Instruction I.B.6 of Form S-3, which limits the amount

of securities the Company may sell in primary offerings during any rolling 12-month period.

During the three months ended March 31, 2026,

the Company sold 1,468,606 shares of common stock pursuant to the ATM Agreement for aggregate gross proceeds of approximately $ 2,232,530 ,

resulting in net proceeds to the Company of approximately $ 2,154,230 after deducting commissions and offering expenses .

November 2, 2023, the Company consummated a registered direct offering pursuant to which the Company issued 192,500

shares of common stock and 157,500

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

Concurrently with the registered direct offering, the Company issued the same institutional investor 700,000

warrants in a private sale.

The warrants are exercisable for 700,000

shares of common stock for $ 13.40

per share six months after issuance and until five and a half 5.5

years from the issuance date, subject to beneficial ownership limitations as described in the warrants.

The Company registered the 700,000

shares of common stock underlying the warrants on a registration statement on Form S-1 (File No.

333-276241) declared

effective by the SEC on December 29, 2023.

March 20, 2024, the Company consummated a registered direct offering pursuant to the prospectus supplement dated March 18, 2024 to

the Company’s effective shelf registration statement on Form S-3 (File No.

333-267696), pursuant

to which the Company issued 237,224

shares of common stock and 147,789

pre-funded warrants to purchase shares of common stock to the same institutional investor as in the Company’s registered

direct offering on November 2, 2023, for a total net proceeds of $ 2,629,083 .

Concurrently with the registered direct offering, the Company issued the institutional investor 770,026

warrants in a private sale.

The warrants became exercisable six months following issuance at an exercise price of $ 7.40 per share

and expire five and one-half years from the issuance date, subject to beneficial ownership limitations contained.

registered the resale of the 770,026

shares of common stock underlying the warrants pursuant to a registration statement on Form S-1 (File No.

333-278461) which was

declared effective by the SEC on April 8, 2024.

May 29, 2024, Worksport sent an inducement letter to a shareholder offering an option to exercise their warrants at a reduced

exercise price of $ 5.198

In turn for doing so, Worksport offered the shareholder new warrants to purchase up to 1,295,000

shares of common stock with an exercise price of $ 5.198 .

The warrants had a term of 5.5

years, with a 6-month required holding period prior to exercise.

December 13, 2024, the Company filed a prospectus supplement to amend and supplement a prospectus supplement dated as of November 5,

2024, as well as the prospectus supplement dated as of October 13, 2022, and the prospectus dated as of October 13, 2022 to increase

the maximum amount of shares that we are eligible to sell pursuant to the ATM Agreement under General Instruction I.B.6.

to $ 4,962,092

of shares of our common stock not including whatever had been sold prior to this filing date.

February 27, 2025, Worksport entered into a warrant inducement agreement with a shareholder to exercise 755,558

May 2024 Warrants at a price of $ 5.198

The remaining unexercised 539,442

warrants are included in share subscription payable.

In return, the Company issued 1,424,500

new 2025 Inducement Warrants.

Each Inducement Warrant has an exercise price of $ 6.502 ,

will become exercisable six months after issuance, and have a 5.5 -year

Worksport raised approximately $ 6,731,000

in gross proceeds before fees and expenses, with the funds earmarked for general corporate and working capital purposes.

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

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,

par value with an exercise price of $ 4.50

May 29, 2024, Worksport sent an inducement letter to a shareholder offering an option to exercise their warrants at a reduced exercise

price of $ 5.198 per warrant.

In turn, Worksport offered the shareholder new warrants to purchase up to 1,295,000 warrant

shares with an exercise price of $ 5.198 .

The shares had a term of 5.5 years, with a 6-month required holding period.

February 27, 2025, Worksport entered into a warrant inducement agreement with a shareholder to exercise 755,558 of their 1,295,000 May

2024 Warrants at price of $ 5.198 per share.

The remaining unexercised 539,442 warrants are included in share subscription payable.

return, the Company issued 1,424,500 new 2025 Inducement Warrants.

Each Inducement Warrant has an exercise price of $ 6.502 , will become

exercisable six months after issuance, and have a 5.5 -year life.

Worksport raised approximately $ 6,731,000 in gross proceeds before fees

and expenses, with the funds earmarked for general corporate and working capital purposes.

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 .

Through September 30, 2025, the Company completed twenty-four tranches and received proceeds of $ 6,469,202

(net of issuance costs of $ 665,905 ) and recognized share subscriptions

receivable of $ 458,720 (net of issuance costs of $ 41,130 ).

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

Company completed the Regulation A offering in October 2025.

The Company completed 32 tranches and received proceeds of $ 9,092,414 (net

of issuance cost of $ 899,997 ).

December 11, 2025, the Company entered into a warrant inducement agreement (the “Inducement”) with the holder of existing

warrants to purchase an aggregate of 2,194,526 shares at a reduced exercise price of $ 2.90 .

Pursuant to the Inducement, the exercising

holder of the existing warrants received 3,840,421 inducement warrants, and the Company received $ 6,364,000 from the exercise of the existing

As a result of the inducement and subsequent exercise, the Company determined the incremental fair value provided to the holder

from both the adjustment in exercise price of the existing warrants and the fair value of the inducement warrants issued using the Black

Scholes model.

The total incremental fair value of $ 4,485,000 is recorded as a non-cash deemed dividend.

The proceeds of the warrant

inducement and issuance of 916,000 shares of common stock are recorded as additional paid in capital.

The obligation to issue the remaining

1,278,526 shares was satisfied during the three months ended March 31, 2026.

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

exercises of outstanding warrants.

Management is focused on transitioning towards revenue as its principal source of liquidity by growing

Management is focused on transitioning towards revenue as its primary source of liquidity by growing

existing product offerings as well as the Company’s customer base.

6 unchanged sentences

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.

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 unaudited condensed consolidated financial statements do not include any adjustments

that might result from the outcome of this uncertainty.

These adjustments could be material.

of September 30, 2025 and December 31, 2024, inventory consists of the following:

Schedule of Inventory

September 30, 2025

December 31, 2024

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.

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.

3 - Inventories

net of reserves, consists of:

Schedule of Inventories

Raw materials

5 unchanged sentences

Schedule of Property and Equipment

September 30, 2025

December 31, 2024

Manufacturing equipment

3 unchanged sentences

Electrical equipment

Construction in progress

Property and equipment, at cost

Accumulated depreciation

Less accumulated depreciation

( 4,674,723 )

( 4,344,953 )

Property and equipment, net

expense for the three months ended September 30, 2025 and 2024 was $ 374,195 and $ 403,267 , respectively.

Depreciation expense for the nine months

ended September 30, 2025 and 2024 was $ 1,070,145 and $ 1,017,988 , respectively.

Property and equipment,

Construction in progress includes the acquisition and installation of manufacturing equipment to support ongoing

As of March 31, 2026, the Company had an outstanding contractual obligation of approximately $ 2.1 million related to the acquisition

of manufacturing equipment, representing approximately 70% of the total equipment cost of approximately $ 3.0 million.

Equipment deposits

totaling $ 879,537 are reflected in construction in progress on the condensed consolidated balance sheet.

Further, $ 879,537 of capital

expenditures related to the equipment were included in accounts payable as of March 31, 2026.

The remaining amounts are expected to become

due when the equipment is delivered, and installation milestones are achieved.

expense for the three months ended March 31, 2026 and 2025 was $ 329,770 and $ 348,507 , respectively.

5 - Intangible Assets

Intangible assets consist of patents, trademarks, copyrights, licenses, and software owned by Worksport and its subsidiaries.

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

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The Company determined that impairment

is not necessary for the prior year ended December 31, 2024 and for the three and nine months ended September 30, 2025.

is not necessary for the prior year ended December 31, 2025 and for the three months ended March 31, 2026.

components of intangible assets are as follows:

Schedule of Components of Intangible Assets

September 30, 2025

December 31, 2024

Intangible assets, gross carrying amount

Accumulated amortization

Less accumulated amortization

Intangible assets, net

expense for the three months ended September 30, 2025 and 2024 was $ 96,459 and $ 627 , respectively.

Amortization expense for the nine months

ended September 30, 2025 and 2024 was $ 289,377 and $ 1,879 , respectively.

amortization of the patent and software over the next five calendar years and beyond September 30, 2025 is as follows:

of Estimated Amortization of the patent and Software

Prepaid Expenses and Deposits

of September 30, 2025 and December 31, 2024, prepaid expenses and deposits consist of the following:

expense for the three months ended March 31, 2026 and 2025 was $ 96,459 for both periods, respectively.

amortization of the patent and software over the next five calendar years and beyond March 31, 2026 is as follows:

Schedule of Estimated Amortization of the patent and Software

6 - Prepaid Expenses and Other

expenses and other consist of:

Schedule of Prepaid Expenses and Deposits

September 30, 2025

December 31, 2024

Consulting, services and advertising

expenses and deposits

Shareholders’ Equity (Deficit)

The Company is authorized to issue up to 55,000,000

shares of capital stock, par value $ 0.001 per share.

Capital stock is divided into two classes designated as common stock and preferred

Common stock –

The Company is authorized to issue up to 45,000,000

shares of common stock.

Preferred stock – The Company is authorized

to issue up to 10,000,000 shares of preferred stock.

The board of directors may authorize, without further shareholder action, the issuance

of preferred stock in one or more classes or series.

Preferred stock ranks senior to common stock with respect to payment of dividends

and the distribution of assets on liquidation.

Each class or series of preferred stock, when issued, must include its designation and

a description of certain rights, including voting privileges, dividend preferences, conversion features, restrictions and redemption rights.

Prepaid expenses and

7- Shareholders’ Equity

Company is authorized to issue up to 55,000,000 shares of capital stock, par value $ 0.001 per share.

Capital stock is divided into two

classes designated as common stock and preferred stock.

stock – The Company is authorized to issue up to 45,000,000 shares of common stock.

stock – The Company is authorized to issue up to 10,000,000 shares of preferred stock.

The board of directors may authorize,

without further shareholder action, the issuance of preferred stock in one or more classes or series.

Preferred stock ranks senior to

common stock with respect to payment of dividends and the distribution of assets on liquidation.

Each class or series of preferred stock,

when issued, must include its designation and a description of certain rights, including voting privileges, dividend preferences, conversion

features, restrictions and redemption rights.

2019, the Company created and issued 100 shares of its Series A preferred stock.

preferred shareholders vote together as a single class and are entitled to 51% of the voting

rights on all matters regardless of the number of Series A preferred shares outstanding.

Series A preferred shareholders vote together as

a single class and are entitled to 51% of the voting rights on all matters regardless of the number of Series A preferred shares

Series A preferred stock does not have conversion rights, is not entitled to receive dividends nor receive any liquidation

2020, the Company created the Series B preferred stock.

Series B preferred shareholders have

the right to vote for each share of common stock outstanding after the issuance date.

B preferred stock does not have conversion rights, is not entitled to receive dividend preferences

nor receive any liquidation preferences.

As of September 30, 2025, the Company has not issued

share of Series B preferred stock.

- During 2025, the

Company created its Series C preferred stock for its Regulation A offering.

Refer to Note 15, Warrants for a description of units

available in the Regulation A offering.

Series C preferred stock ranks senior to common stock and future classes or series of

preferred stock as to dividend and liquidation rights.

Series C preferred shareholders may convert holdings on a 1:1 basis to common

stock at any time.

Series B preferred shareholders have the right to vote for each share of

common stock outstanding after the issuance date.

Series B preferred stock does not have conversion rights, is not entitled to receive

dividend preferences nor receive any liquidation preferences.

As of March 31, 2026, the Company has not issued shares of Series

B preferred stock.

2025, the Company created its Series C preferred stock for its Regulation A offering.

Refer to Note 14, Warrants for a description

of units available in the Regulation A offering.

Series C preferred stock ranks senior to common stock and future classes or series

of preferred stock as to dividend and liquidation rights.

Series C preferred shareholders may convert holdings on a 1:1 basis to

common stock at any time.

Series C preferred shareholders are entitled to cumulative dividends at a rate of 8.00% of the $3.25 liquidation

preference per share per year for a period of two (2) years from the date of issuance.

As of September 30, 2025, the Company

issued 2,349,202

shares of Series C preferred stock and converted 1,977,418

Series C preferred shares to common stock at the shareholder’s request.

The Company recognized dividends payable to Series C

preferred shareholders for the three months ended September 30, 2025 of $ 17,132 .

the nine months ended September 30, 2025, the following transactions occurred:

the nine months ended September 30, 2025, the Company sold 110,619

shares of common stock for total net proceeds of $ 504,372 .

The sale of shares was in connection with the Shelf Registration Statement and the ATM Agreement described in Note 2, Going Concern.

Company recognized consulting expense of $ 13,000

and marketing expense of $ 97,250 to share subscriptions payable from restricted shares and stock options to be issued.

September 30, 2025, the $ 110,250

of the restricted shares have not been issued.

During the nine months ended September 30, 2025, the Company issued 94,670

restricted shares with a value of $ 465,100 .

the nine months ended September 30, 2025, in connection with the inducement of 1,295,091 warrants at $ 5.198 per share, the Company also sold

1,424,500 warrants exercisable at $ 6.502 per share.

The Company received proceeds of $ 6,731,410 before deducting placement agent fees of $ 346,570 and other

offering expenses payable by the Company upon the exercise of the May 2024 Existing Warrants.

During the nine months ended September 30, 2025,

in connection with the Regulation A offering of up to 3,100,000 Units at an offering price of $ 3.25 per Unit, the Company issued 2,349,202

Units, received proceeds of $ 6,469,202 (net of issuance costs of $ 665,905 ), and recognized share subscriptions receivable of $ 458,720 (net

of issuance costs of $ 41,130 ).

During the nine months ended September 30, 2025, certain Series C preferred

shareholders converted 1,977,418 shares into the Company’s common stock.

to Note 15, Warrants and Note 16, Equity Compensation for additional disclosures.

nine months ended September 30, 2024, the following transactions occurred:

the nine months ended September 30, 2024, the Company sold 504,921

shares of common stock for a total net proceeds of $ 566,118 .

The sale of shares was in connection with the Shelf Registration Statement and the ATM Agreement dated as of September 30, 2022.

As of March 31, 2026, the Company issued

3,074,586 shares of Series C preferred stock and converted 2,646,974 Series C preferred shares to common stock at the shareholder’s

The Company recognized dividends payable to Series C preferred shareholders for the three months ended March 31, 2026

of $ 26,718 .

three months ended March 31, 2026, the following transactions occurred:

the three months ended March 31, 2026, the Company sold an aggregate of 1,468,606

shares of its common stock pursuant to the ATM Agreement for aggregate gross proceeds of $ 2,232,530 ,

net of issuance costs of $ 78,300 .

The shares in a shelf takedown from the Company were sold pursuant to the base prospectus and prospectus supplement filed with the

Securities and Exchange Commission as part of the Company’s registration statement on Form S-3 (File No.

333-291582), which

was declared effective on December 12, 2025.

Company recognized consulting expense of $ 34,868 for share subscriptions payable from restricted shares to be issued.

As of March 31,

2026, the restricted shares have not been issued.

The Company also recognized consulting expense of $ 107,833 related to warrants.

As of March 31, 2026, the warrants vested and were issued.

Transactions reflected in consulting expense are included as a component of general and administrative expense in the Condensed

Consolidated Statements of Operations and Comprehensive Loss.

to Note 14, Warrants and Note 15, Equity Compensation for additional disclosures related to shareholders’ equity.

three months ended March 31, 2025, the following transactions occurred:

the three months ended March 31, 2025, the Company sold an aggregate of 22,725

shares of its common stock pursuant to an At the Market Offering

Agreement, dated September 30, 2022, for aggregate gross proceeds of $ 185,874 .

The shares were sold pursuant to the Company’s base prospectus and the related prospectus supplements filed with the Securities

and Exchange Commission as part of the Company’s registration statement on Form S-3 (File No.

333-267696), which was declared effective

on October 13, 2022.

Company recognized consulting expense of $ 22,017 to share subscriptions payable from restricted shares and stock options to be issued.

As of September 30, 2024, the Company issued 333,841 restricted shares with a value of $ 382,700 .

the nine months ended September 30, 2024, the Company closed a sale of 2,372,240

shares of common stock for net proceeds of $ 1,535,591 .

In association with the sale of common stock, the Company issued 1,477,892

pre-funded warrants and 7,700,264

warrants totaling proceeds of $ 1,093,492 .

the nine months ended September 30, 2024, the Company closed a sale of 950,000 shares of common stock for proceeds of $ 380,000 .

In connection

with the sale of common stock, the Company issued 1,900,000 warrants.

Refer to Note 15.

As of September 30, 2024, the shares have no t

effective tax rate for the nine months ended September 30, 2025 and 2024 was 22.9 % before 100 % allowance adjustments on net deferred income

The effective tax rate for the nine months ended September 30, 2025 and 2024 was higher than expected from applying the U.S.

As of March 31, 2025, the restricted shares have not been issued.

Transactions reflected in consulting expense are included as a component

of general and administrative expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

During the three

months ended March 31, 2025, the Company issued 1,000 restricted shares with a value of $ 82,100 .

the three months ended March 31, 2025, in connection with the inducement of 1,295,000 warrants at $ 5.198 per share, the Company also

sold 1,424,500 warrants exercisable at $ 6.502 per share.

The Company received proceeds of $ 6,731,410 before deducting placement agent

fees of $ 346,570 and other offering expenses payable by the Company upon the exercise of the May 2024 Existing Warrants.

8 - Income Taxes

effective tax rate for the three months ended March 31, 2026 and 2025 was 22.9 % before 100 % allowance adjustments on net deferred income

The effective tax rate for the three months ended March 31, 2026 and 2025 was higher than expected from applying the U.S.

federal statutory rate of 21 % to loss before income taxes due to tax benefits on losses generated outside the U.S.

14 unchanged sentences

value because of the short-term nature of these instruments.

The Company’s revolving line of credit is based on a variable interest

rate and is reflected in the financial statements at carrying value which approximates fair value at September 30, 2025.

The Company’s

long-term debt is based on a fixed interest rate, and its carrying amount approximates fair value at September 30, 2025.

The fair value

of the revolving line of credit and long-term debt is classified as Level 2 within the fair value hierarchy and is estimated based on

quoted market prices.

The Company’s revolving line of credit and long-term debt are based

on a variable interest rate, and are reflected in the financial statements at carrying value which approximates fair value at March

The fair value of the revolving line of credit and long-term debt is classified as Level 2 within the fair value hierarchy.

Company is exposed to market risks such as fluctuation in foreign currency exchange rates and interest rates.

Derivative instruments

may be used to offset some of the effects of these market risks on the expected future cash flows and on certain existing assets and

The Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, accounting

considerations and the prohibitive economic cost of hedging particular exposures.

Currency Risk

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

The Company actively manages these risks

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

borrowing under the Company’s Line of Credit Facility and Equipment Financing is at variable interest rates and exposes the Company

to interest rate risk.

If interest rates increase, debt service obligations on variable rate indebtedness will increase even though the

amount borrowed may not change.

10 - Changes in Cash Flows from Operating Assets and Liabilities

changes to the Company’s operating assets and liabilities for the nine months ended September 30, 2025 and 2024 are as follows:

changes to the Company’s operating assets and liabilities for the three months ended March 31, 2026 and 2025 are as follows:

Schedule of Changes in Operating Assets and Liabilities

Decrease (increase) in accounts receivable

$ ( 472,485 )

Decrease (increase) in accounts

Decrease (increase) in other receivable

1 unchanged sentence

( 2,092,218 )

Decrease (increase) in prepaid expenses and

Increase (decrease) in

accounts payable and accrued liabilities

( 1,562,383 )

Decrease (increase) in prepaid expenses and deposits

Increase (decrease) in accounts payable and accrued liabilities

in operating assets and liabilities

1 unchanged sentence

$ ( 436,873 )

the nine months ended September 30, 2025, $ 66,308 of

the Company’s Guaranteed Investment Certificate (“GIC”) matured and the Company received $ 2,500 in

interest income.

During the same period, the Company reinvested the principal amount of $ 66,308 in

The GIC bears a variable interest rate and will mature on February 27, 2026.

The anticipated earned interest on the GIC at

maturity is $ 2,500 .

During the nine months ended September 30, 2025, the Company invested $ 56,373 in

a second Guaranteed Investment Certificate (“GIC”) bearing a variable interest rate and will mature on June 5, 2026.

anticipated earned interest on the GIC at maturity is $ 1,270 .

Company accounts for leases under Accounting Standards Codification (“ASC”) 842, Leases, whereby it recognizes a lease liability and a right-of-use asset.

lease liability is measured at the present value of the remaining lease payments, discounted by the Company’s incremental

borrowing rate.

The Company measured the right of use asset at an initial amount equal to the lease liability.

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 .

was renewed effective June 1, 2024 at a rate of $ 3,600 per month with a termination date of May 31, 2025.

The lease was not renewed.

The Company’s incremental borrowing rate used to initially measure the present value of the remaining lease payments

Company accounts for leases under ASC 842, whereby it recognizes a lease liability and a right-of-use asset.

The lease liability is measured

at the present value of the remaining lease payments, discounted by the Company’s incremental borrowing rate.

The Company measured

the right of use asset at an initial amount equal to the lease liability.

April 1, 2025, the Company signed a lease agreement for 12,500 square feet of office space to be used as a R&D facility pursuant

to a three -year lease with an option to extend the lease for an additional two years.

The lease was effective on May 1, 2025 at a

rate of $ 9,659 per month with a termination date of April 30, 2028.

The Company’s incremental borrowing rate used to initially

measure the present value of the remaining lease payments was 15 %.

July 14, 2025, the Company signed a lease agreement for 1,992

square feet of office space to be used as an R&D facility for its Terravis Energy subsidiary pursuant to a two-year

lease effective July 18, 2025 for an average monthly rent of $ 3,154 .

The Company’s incremental borrowing rate used to initially measure the present value of the remaining lease payments was 15 %.

Company’s right-of-use asset and lease liability as of September 30, 2025, and December 31, 2024, are as follows:

The lease was effective on May 1, 2025 at a rate

of $ 9,659 per month with a termination date of April 30, 2028 .

The Company’s incremental borrowing rate used to initially measure

the present value of the remaining lease payments was 15 %.

July 14, 2025, the Company signed a lease agreement for 1,992 square feet of office space to be used as an R&D facility for its Terravis

Energy subsidiary pursuant to a two -year lease effective July 18, 2025 for an average monthly rent of $ 3,154 .

The Company’s incremental

borrowing rate used to initially measure the present value of the remaining lease payments was 15 %.

Company’s right-of-use asset and lease liability as of March 31, 2026, and December 31, 2025, are as follows:

Schedule Right-of-use Asset

September 30, 2025

Right-of-use asset

Current lease liability

Long-term lease liability

following is a summary of the Company’s total lease costs during the nine months ended September 30, 2025 and 2024:

of Lease Cost

September 30, 2025

September 30, 2024

Operating lease cost

following is a summary of cash paid during the nine months ended September 30, 2025 and 2024 for amounts included in the measurement

of lease liabilities:

of Measurement of Lease Liabilities

September 30, 2025

September 30, 2024

Operating cashflow

following are future minimum annual lease payments as of September 30, 2025:

of Future Minimum Annual Lease Payments

Total future minimum lease payments

lease liability

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

Schedule of Lease Cost

following is a summary of cash paid during the three months ended March 31, 2026 and 2025 for amounts included in the measurement of

lease liabilities:

Schedule of Measurement of Lease Liabilities

following are future calendar year minimum lease payments as of March 31, 2026:

Schedule of Future Minimum Annual Lease Payments

future minimum lease payments

amount representing interest

Present value of future payments

Current portion

Long term portion

value of future payments

12 - Indebtedness

debt consists of:

Schedule of Long Term Debt

September 30, 2025

December 31, 2024

Revolving Credit Facility (a)

Long-term debt

Less deferred debt issuance cost

Less current installments

( 1,774,307 )

Credit Facility (a)

Long-term debt

deferred debt issuance cost

current installments

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

6 unchanged sentences

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

Interest on the outstanding Revolving

Credit Facility is based on the greater of the prime rate or 6.0 % plus an additional 300 basis points.

At September 30, 2025, the

outstanding balance of this loan was $ 1,523,937 (net of issuance costs of $ 62,095 ).

collateral, the lender holds a first position on the Company’s major asset classes (accounts receivable, the factory in New York,

and inventory) other than the Company’s equipment.

A non-usage fee of 0.25 % is assessed quarterly and applied to the difference

between the quarter’s average daily outstanding loan balance and the total credit facility amount.

As of September 30, 2025, the

Company had an available balance of $ 3,291,250 to borrow on the Revolving Credit Facility.

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 date of September 1, 2027 , which is 36 months from

initial funding.

Upon transaction close, the Company received net proceeds of $ 1,412,750 (net of issuance costs of $ 43,735 ).

Company and its wholly owned subsidiary, Worksport New York Operations Corporation, serve as guarantors on the loan.

For collateral,

the lender holds a first position on the Company’s equipment, which is primarily manufacturing and warehousing equipment.

on the loan is based on the prime rate plus 700 basis points per annum.

At September 30, 2025, the outstanding balance of this loan was $ 1,264,412

(net of issuance costs of $ 31,435 ).

At March 31, 2026, the outstanding

balance of this loan was $ 2,260,723 .

collateral, the lender holds a first position on the Company’s major asset classes (accounts receivable, the factory in New

York, and inventory) other than the Company’s equipment.

A non-usage fee of 0.25 % is assessed quarterly and applied to the

difference between the quarter’s average daily outstanding loan balance and the total credit facility amount.

As of March 31,

2026, the Company had an available balance of $ 2,479,490 to borrow on the Revolving Credit Facility.

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 date of September 1, 2027 , which is 36 months from initial funding.

Upon transaction close, the Company received net proceeds of $ 1,412,750 (net of issuance

costs of $ 43,735 ).

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

Corporation, serve as guarantors on the loan.

For collateral, the lender holds a first position

on the Company’s equipment, which is primarily manufacturing and warehousing equipment.

Interest on the loan is based on the prime rate plus 700 basis points per annum.

31, 2026, the outstanding balance of this loan was $ 1,154,711 (net of issuance costs of $ 23,234 ).

Company is in compliance with all covenants.

13 - Loss per Share

the three and nine months ended September 30, 2025, loss per share is $ 0.75

and $ 2.44 (basic and diluted) compared to the three and nine months ended September 30, 2024, of $ 1.40

(basic and diluted) using the weighted average number of shares of 6,563,228

and 5,377,750

(basic and diluted) as of September 30, 2025 and 2,943,279

the three months ended March 31, 2026, loss per share is ($ 0.54 ) (basic and diluted) compared to that of the three months ended March 31,

2025, of ($ 1.05 ) (basic and diluted) using the weighted average number of shares of 10,778,204 (basic and diluted) and 4,262,474 (basic

and diluted), respectively.

are 45,000,000

common shares authorized with 11,925,471

and 4,795,521

(basic and diluted) as of September 30, 2024, respectively.

are 45,000,000 shares authorized with 7,589,036 and 3,092,040 shares issued and outstanding, at September 30, 2025 and 2024, respectively.

The computation

of loss per share is based on the weighted average number of shares outstanding during the period in accordance with ASC Topic No.

“Earnings Per Share.” Shares underlying the Company’s outstanding warrants and convertible promissory notes were excluded

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

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, with an exercise price of $4.50 per share.

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

$ 10,000,000 .

The proceeds from the Regulation A offering and issuance of units are recorded as additional paid-in capital.

Through September

30, 2025, the Company issued 2,349,202 warrants to investors.

February 27, 2025, the Company entered into a warrant inducement agreement with the holder of existing

warrants to purchase an aggregate 1,295,000 shares.

Pursuant to the inducement, the exercising holder of the existing warrants received

1,425,000 inducement warrants and the Company received $ 6,731,000 from the exercise of the existing warrants.

As a result of the inducement

and subsequent exercise, the Company determined the incremental fair value provided to the holder from the inducement warrants issued

using the Black Scholes model.

The total incremental fair value of $ 7,602,000 , is recorded as a non-cash deemed dividend.

of the warrant inducement and issuance of 1,295,000 shares of common stock are recorded as additional paid-in capital.

shares issued and outstanding, at March 31, 2026 and 2025,

respectively.

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

with ASC Topic No.

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

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

14 - Warrants

December 11, 2025, the Company entered into a warrant inducement agreement with the holder of existing warrants to purchase an

aggregate of 2,194,526

shares at a reduced exercise price of $ 2.90 .

Pursuant to the inducement, the existing holder of the existing warrants received 3,840,421

inducement warrants, and the Company received $ 6,364,000

from the exercise of the existing warrants.

As a result of the inducement and subsequent exercise, the Company determined the

incremental fair value provided to the holder from both the adjustment in exercise price of the existing warrants and the fair value

of the inducement warrants issued using the Black Scholes model.

The total incremental value of $ 4,485,000

is recorded as a non-cash deemed dividend as a reduction of additional paid in capital based on the Company’s history of net

operating losses.

The proceeds of the warrant inducement and issuance of 916,000

shares of common stock are recorded as additional paid-in capital.

During December 2025, the Company partially satisfied its

obligation to issue 636,526

shares of common stock.

During January 2026, the Company satisfied its remaining obligation to issue 642,000

shares of common stock.

Shares subsequently issued after the inducement agreement are recorded as additional paid-in

September 2, 2025, the Company entered into a consulting agreement with a third party to perform certain services for a six-month

period in exchange for both cash consideration and the issuance of warrants.

The warrant agreement was issued on March 2, 2026 and

is exercisable to purchase up to 100,000

shares for $ 4.00

per share and 100,000

shares of common stock at $ 5.00 per share.

The warrants expire two years from the date of issuance.

The Company determined the fair value provided to the holder at the date of

the consulting agreement using the Black Scholes model, as the warrants were earned by the holder over the term of the consulting

For the fiscal year ended December 31, 2025, the Company recognized $ 216,000

as a component of general and administrative expense.

For the three months ended March 31, 2026, the Company recognized $ 108,000

as a component of general and administrative expense.

Company commenced its Regulation A offering pursuant to which it offered up to 3,100,000

units at a price of $ 3.25 per

unit consisted of one share of 8% Series C Convertible Preferred Stock, par value $0.001 per share (the “Series C Preferred

Stock”), and one warrant to purchase one share of common stock, par value $0.001 per share, at an exercise price of

$4.50 per share.

June 13, 2025, the Company completed the initial closing of the Regulation A offering.

On October 15, 2025, the Company completed

the Regulation A offering, pursuant to which it sold an aggregate of 3,074,586 units for gross proceeds of approximately $ 9.99 million, before deducting fees and expenses.

The proceeds from the Regulation A offering are recorded as additional paid-in capital.

Through March 31, 2026, the Company issued 3,074,586

warrants to investors.

During the three months ended March 31, 2026, the Company received $ 54,107 of previously escrowed

proceeds related to the Regulation A offering .

February 27, 2025, the Company entered into a warrant inducement agreement (the “Inducement Agreement”) with the holder

of existing warrants to purchase an aggregate of 1,295,000 shares

for a reduced exercise price of $ 0.5198 per share.

Pursuant to the Inducement Agreement, the exercising holder of the existing

warrants received 1,425,000 inducement

warrants, and the Company received $ 6,731,000 from

the exercise of the existing warrants, before deducting placement agent fees and other offering expenses payable by the Company.

a result of the inducement and subsequent exercise, the Company determined the incremental fair value provided to the holder from

the inducement warrants issued using the Black Scholes model.

The total incremental fair value of $ 7,602,000 ,

is recorded as a non-cash deemed dividend.

The proceeds of the warrant inducement and issuance of 1,295,000 shares

of common stock are recorded as additional paid-in capital.

The Company registered the shares of common stock issuable upon the

exercise of the inducement warrants on a registration statement on Form S-1 (File No.

inducement 333-286255 )

declared effective by the Securities and Exchange Commission on April 3, 2025.

the year ended December 31, 2024, in connection with the sale of 237,224 shares of common stock, the Company also sold 147,789 pre-funded

11 unchanged sentences

having an exercise price of $ 60.50 , expired.

May 9, 2024, the Company entered into a warrant inducement agreement with the holder of existing warrants to purchase an aggregate 700,000

shares at a reduced exercise price of $ 5.198

in consideration for the Company to issue new warrants to purchase up to 1,295,000

additional shares of common stock with an exercise price of $ 5.198 – resulting in gross proceeds of approximately $ 3,638,000

received by the Company.

As a result of the inducement and subsequent exercise, the Company determined the incremental fair value

provided to the holder from both the adjustment in exercise price of the existing warrants and the fair value of the inducement

warrants issued using the Black Scholes model.

The total incremental fair value of $ 4,996,000

is recorded as a non-cash deemed dividend.

The proceeds of the warrant inducement and issuance of 284,000

shares of common stock are recorded as capital in excess of par.

The obligation to issue the remaining 416,000

shares was originally recorded as a share subscription payable.

During the twelve months ended December 31, 2024, the Company issued 416,000

out of the 416,000

shares to be issued.

the year ended December 31, 2023, in connection with the sale of 192,500 shares of common stock the Company also sold 157,500 pre-funded

warrants and 700,000 warrants convertible for 857,500 shares of common stock with an exercise price of $ 0.001 and $ 13.40 , respectively.

warrants and 700,000 warrants convertible for 857,500 shares of common stock at an exercise price of $ 0.001 and $ 13.40 , respectively.

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

3 unchanged sentences

warrants were exercised for 68,800 shares of common stock for $ 69 .

May 9, 2024, the Company entered into a warrant inducement agreement (the “Inducement”) with the holder of existing warrants

to purchase an aggregate 700,000 shares at a reduced exercise price of $ 5.198 in consideration for the Company to issue new warrants

to purchase up to 1,295,000 additional shares of common stock – resulting in gross proceeds of approximately $ 3,638,000 received

by the Company.

As a result of the Inducement and subsequent exercise, the Company determined the incremental fair value provided to

the holder from both the adjustment in exercise price of the existing warrants and the fair value of the inducement warrants issued using

the Black Scholes model.

The total incremental fair value of $ 4,996,000 is recorded as a non-cash deemed dividend.

The proceeds of the

warrant inducement and issuance of 284,000 shares of common stock are recorded as capital in excess of par.

The obligation to issue the

remaining 416,000 shares was originally recorded as a share subscription payable.

During the twelve months ended December 31, 2024, the

Company issued 416,000 out of the 416,000 shares to be issued.

the year ended December 31, 2023, the Company and a stock options holder agreed to cancel all 40,000 stock options in exchange for extending

12 unchanged sentences

During the year ended December 31, 2024, these representative warrants expired.

of September 30, 2025, the Company has the following warrants outstanding:

of March 31, 2026, the Company has the following warrants outstanding:

Schedule of Warrants Exercise Price

Exercise price

06/13/2028 - 09/30/2028

average remaining contractual life of outstanding warrants that expire is

of Warrants Activity

September 30, 2025

December 31, 2026

September 21, 2029

June 12, 2031

March 2, 2028

June 13, 2028 –

October 24, 2028

average remaining contractual life of outstanding warrants that expire is 3.88 years.

Schedule of Warrants Activity

average price

Balance, beginning of year

beginning of year

( 3,489,526 )

Balance, end of period

end of period

15 - Equity Compensation

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.

Company has adopted three equity incentive plans:

the 2015 Equity Incentive Plan, the 2021 Equity Incentive Plan, and the 2022

Equity Incentive Plan.

The 2015 Equity Incentive Plan expired in 2025 upon reaching the end of its ten-year term.

The 2015 and 2021

plans each authorized a fixed number of shares for issuance.

Under the 2022 Equity Incentive Plan, the

number of shares of common stock reserved for issuance shall not exceed 18% of the issued and outstanding shares of common stock of

Awards under each plan have a maximum term of 10 years and vest at the discretion of the Board of

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

18 unchanged sentences

PSUs was estimated to be $ 1,254,460 .

As of September 30, 2025, 7,500 PSUs of the remaining 30,000 PSUs had vested.

As of March 31, 2026, 7,500 PSUs of the remaining 30,000 PSUs had vested, and the Company recognized $ 26,881 (March 31, 2025 - $ 26,881 ) in general and administrative expense.

December 29, 2021, the Company granted 40,000 and 30,000 PSUs to the Company’s Chief Executive Officer and a director, respectively.

1 unchanged sentence

The first 5% of

the PSUs was to have vested upon the Company’s stock price closing at $30.00, 50% was to have vested at a closing price of $165.00,

the PSUs was to have vested upon the Company’s stock price closing at $30.00;

50% was to have vested at a closing price of $165.00,

and 100% was to have vested at a closing price of $315.00.

1 unchanged sentence

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

the nine months ended September 30, 2025, the Company issued the following stock options to various directors:

stock options vesting ratably over two years, with an exercise price of $ 5.95

and an expiration date of March

14,000 stock options vesting ratably over two years, with an exercise price of $ 3.09 and an expiration date of April

30,000 stock options vesting ratably over two years, with an exercise price of $ 3.80 and an expiration date of July

50,000 stock options vesting pursuant to a performance milestone and an expiration date of July 12, 2035

the nine months ended September 30, 2025, the Company issued the following stock options to various employees and consultants:

stock options vesting based on various service periods, with an exercise

price of $ 3.09

and an expiration date of April

81,940 stock options vesting based on various service periods, with an exercise price of $ 3.80 and an expiration

date of July 12, 2035

76,500 stock options vesting pursuant to performance milestones and an expiration date of July 12, 2035

the nine months ended September 30, 2025, the Company issued the following stock options to Steven Rossi:

stock options vesting 50% at the end of the first two anniversaries of the grant date, with an exercise price of $ 3.09

and an expiration date of April

215,000 stock options vesting 50% at the end of the first two anniversaries of the grant date, with an exercise price

of $ 3.80 , and an expiration date of July 12, 2035 .

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.

538,896 stock options’ exercise prices were repriced to $ 7.042 , and all other criteria were unchanged.

of the modification in exercise prices, the Company recognized additional expense of $ 93,140 on the date of modification.

the year ended December 31, 2024, the Company issued 84,860 stock options to employees and directors with exercise prices ranging from

$ 5.20 to $ 14.10 and expiration dates ranging from February 1, 2029 to November 19, 2034.

Of these stock options, 2,040 were subsequently

of Stock Options Activity

September 30, 2025

December 31, 2024

stock options

average price

stock options

average price

Balance, beginning of period

Balance, end of period

of Share Based Payment Arrangement, Option, Exercise Price Range

Exercise prices

Weighted average

exercise price

the three months ended March 31, 2026, the Company issued the following stock options to various directors:

stock options vesting ratably over three years, with an exercise price of $ 1.66 and an expiration date of February 9, 2036

the three months ended March 31, 2026, the Company issued the following stock options to various employees and consultants:

stock options vesting over one year, with an exercise price of $ 2.21 and an expiration date of January 5, 2036

stock options vesting ratably over three years, with an exercise price of $ 2.21 and an expiration date of January 5, 2036

stock options vesting pursuant to performance milestones, with an exercise price of $ 2.21 and an expiration date of January 5, 2036

15,000 stock options vesting ratably over two years, with an exercise price of $ 1.66 and an expiration date of February 9, 2036

the three months ended March 31, 2026, the Company issued the following stock options to Steven Rossi:

stock options vesting ratably over three years, with an exercise price of $ 1.66 , and an expiration

date of February 9, 2036

Schedule of Stock Options Activity

Balance, beginning

end of period

Schedule of Share Based Payment Arrangement, Option, Exercise Price Range

Exercisable on

September 30, 2025

Stock options

$ 3.09 - 55.00

of September 30, 2025 and December 31, 2024, Terravis Energy Inc., a wholly owned subsidiary of the Company, has the following options

of March 31, 2026 and December 31, 2025, Terravis Energy Inc., a wholly owned subsidiary of the Company, has the following options outstanding:

Schedule of Stock Options Activity

September 30, 2025

December 31, 2024

stock options

average price

stock options

average price

Balance, beginning of period

Balance, beginning

Balance, end of period

of Share Based Payment Arrangement, Option, Exercise Price Range

Exercise prices

Weighted average

exercise price

Schedule of Share Based Payment Arrangement, Option, Exercise Price Range

Exercisable on

September 30, 2025

Stock options

16 - Segment Reporting

3 unchanged sentences

in Note 1, Description of Business and Summary of Significant Accounting Policies.

Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who regularly reviews financial information

presented on a consolidated basis for purposes of allocating resources and evaluating financial performance of the Company’s reporting

The CODM primarily focuses on net income to evaluate its reporting segments.

The CODM also uses net income for evaluating pricing

strategy and to assess the performance for determining the compensation of certain employees.

Significant segment expenses reviewed,

which represent the differences between segment revenue and segment net loss, consist of the following:

of Revenue and Segment Net Loss

Corporate / Other / Eliminations

For the three months ended September 30, 2025

For the three months ended September 30, 2024

Corporate / Other / Eliminations

Cost of sales

( 3,445,088 )

( 1,661,270 )

( 1,211,933 )

( 2,875,186 )

Selling, general and administrative

( 2,561,515 )

( 3,298,686 )

( 5,890,901 )

( 1,737,843 )

( 1,126,969 )

( 3,748,495 )

Depreciation and amortization

Loss from continuing operations

$ ( 1,442,336 )

$ ( 3,339,742 )

$ ( 4,792,771 )

$ ( 1,973,719 )

$ ( 776,288 )

$ ( 1,155,209 )

$ ( 3,905,216 )

Corporate / Other / Eliminations

For the nine months ended September 30, 2025

For the nine months ended September 30, 2024

Corporate / Other / Eliminations

Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who regularly reviews financial

information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance of the

Company’s reporting segments.

The CODM primarily focuses on net income (loss) from continuing operations to evaluate its

reporting segments.

The CODM also uses net income (loss) from continuing operations for evaluating pricing strategy and assessing

the performance for determining the compensation of certain employees.

Significant segment expenses reviewed, which represent the

differences between segment net sales and segment net loss from continuing operations, consist of the following:

Schedule of Revenue and Segment Net Loss

Tonneau Covers

/ Eliminations

Tonneau Covers

/ Eliminations

the three months ended March 31, 2026

the three months ended March 31, 2025

Tonneau Covers

/ Eliminations

Tonneau Covers

/ Eliminations

Cost of sales

3 unchanged sentences

( 1,843,784 )

( 4,975,277 )

Selling, general and administrative

5 unchanged sentences

( 4,207,561 )

( 11,016,821 )

Depreciation and amortization

( 1,268,853 )

( 1,359,522 )

( 1,019,867 )

Loss from continuing operations

5 unchanged sentences

$ ( 4,256,306 )

$ ( 11,455,430 )

following table presents the Company’s net sales disaggregated by geographic area:

of Net Sales Disaggregated by Geographic Area for the nine months ended September 30,:

of Net Sales Disaggregated by Geographic Area

Tonneau Covers

United States

asset information has been provided for the reported segments as the CODM does not regularly review asset information by reportable

As of September 30, 2025 and December 31, 2024, assets held in the U.S.

accounted for 90 % and 88 % of total assets,

respectively.

Total Net sales

asset information has been provided for the reported segments as the CODM does not regularly review asset information by reportable segment.

As of March 31, 2026 and December 31, 2025, assets held in the U.S.

accounted for 93 % of total assets for each period, respectively.

17 - Commitments and Contingencies

1 unchanged sentence

- Subsequent Events

Company has evaluated subsequent events through November 13, 2025.

The following events occurred after the period ended September 30,

October 6, 2025 the Company announced its subsidiary Terravis Energy was selected for the

NREL Technical Assistance Program award to analyze its ZeroFrost cold-weather heat pump technology

October 15, 2025 the Company announced the successful completion of its Regulation A offering

October 23, 2025 the Company announced its new HD3 Heavy-Duty tonneau cover officially

entered production.

The HD3 is a new hard-folding truck bed cover engineered

for commercial and fleet applications, building on the success of the Company’s

AL3 and AL4 series.

October 30, 2025 the Company announced the official launch date for its flagship SOLIS Solar

Tonneau Cover and COR Portable Energy Storage System, both available

for order starting November 28, 2025.

● From October 1, 2025 through November 13, 2025, certain

Series C preferred shareholders converted 661,606

shares into the Company’s common stock.

Company has evaluated subsequent events through May 13, 2026.

The following events occurred after the three months ended March 31, 2026:

April 13, 2026, the Company issued to its Chief Executive Officer, Steven Rossi, 88,214

shares of the Company’s common stock, par value $ 0.001

per share at a deemed price of $ 0.8502

per share, representing the closing price of the Company’s Common Stock on the Nasdaq Capital Market on April 10, 2026, for an

aggregate value of $ 75,000 .

The shares were issued in satisfaction of previously accrued and unpaid

bonus compensation owed to Mr.

Steven Rossi and were approved by the Company’s Board of Directors.

April 20, 2026, the Company announced the official commercial launch and commencement of

sales for the NEXUS Tonneau Cover.

Production began on April 13, 2026.

● On April 29, 2026, the Company announced that it secured Tri-State Enterprises,

(“Tri-State”) as a new cross-regional distribution partner for the Company’s growing tonneau cover lineup, including

the Company’s recently launched NEXUS cover.

April 30, 2026, Michael Johnston resigned as the Company’s Chief Financial Officer,

Principal Financial Officer and Principal Accounting Officer, effective April 30, 2026.

Johnston’s resignation was not the result of any disagreement with the Company regarding

its operations, policies or practices, including any matters relating to the Company’s

accounting practices or financial reporting.

April 30, 2026, the Company’s Board of Directors appointed Jennifer Kartychak as the

Company’s Chief Financial Officer, Principal Financial Officer and Principal Accounting

Officer, effective May 1, 2026.

Kartychak has served as the Company’s Vice President

of Finance since January 1, 2026.

Prior thereto, beginning in August 2023, Ms.

provided consulting services to the Company through Arend Advisory Group LLC, an entity wholly

● Through May 13, 2026, the Company sold and issued 606,069 of common stock in consideration for net proceeds of $ 623,124 under

the ATM Agreement.

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 1. Financial Statements