What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-15 · 246 added, 150 removed, 204 unchanged (66% of the section changed)

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and its subsidiaries, unless otherwise stated.

On March 18, 2025, the Company effected

a 1-for-10 reverse stock split of its common stock.

All share and per share information has been retroactively adjusted for all period

March 18, 2025, the Company effected a 1-for-10 reverse stock split of its common stock.

All share and per share information has been

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

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

Worksport Ltd., through its subsidiaries, designs, develops, manufactures,

and owns the intellectual property on a variety of tonneau covers, solar integrations, portable power systems, and clean heating

& cooling solutions.

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 including the EV sector.

Worksport seeks to capitalize

on the growing shift of consumer mindsets towards clean energy integrations and power grid independence with its proprietary solar solutions,

mobile energy storage systems (ESS), and Cold-Climate Heat Pump (CCHP) technology.

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

integrations, portable power systems, and clean heating & cooling solutions.

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

including the EV sector.

Worksport seeks to capitalize on the growing shift of consumer mindsets towards clean energy integrations and

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

Popularity of Electric Vehicles

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COR portable power system.

Notably, the COR & SOLIS are compatible with existing internal combustion engine vehicles and will not rely

on the rapid adoption of EVs.

Notably, the COR & SOLIS are compatible with existing internal combustion engine vehicles and will not

rely on the rapid adoption of EVs.

Environment Favoring Electric Vehicles

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Federal Reserve has begun to decrease interest rates in 2024, but they may persist at an elevated level for the foreseeable

Our $6,000,000 line of credit and our $1,487,000 in equipment financing both have floating interest rates,

meaning we are susceptible to variable debt interest costs as a result of changes in interest rates.

Our $6,000,000 line of credit and our $1,487,000 in equipment financing both have floating interest rates, meaning we are susceptible

to variable debt interest costs as a result of changes in interest rates.

interest rates have also resulted in a shift in institutional holdings away from micro-cap equities, which has negatively influenced

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

following highlights recent material developments in our business in the three months ended March 31, 2025:

February 4, 2025, the Company announced it had begun production of its new flagship product

the AL4 Hardcover.

February 11, 2025, the Company announced that its subsidiary, Terravis Energy, had achieved

a major industry milestone by unveiling its AetherLux™ heat pump system, which eliminates

the need for Defrost Cycles, and operates at temperatures as low as -57°F and as high

as +131°F – both of which are large shortcomings of other heat pumps on the market.

February 25, 2026 the Company announced that its dealer network has expanded by 30% in the

first two months of 2025, and, following an ongoing production ramp-up driven by strong early

feedback, initial models of its AL4 Premium Tonneau Cover were now officially available for

purchase at www.worksport.com

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

with the holder of existing warrants to purchase an aggregate 1,295,000 shares at a revised

price of $5.20 in consideration for the Company to issue new warrants to purchase up to 1,424,500

additional shares of common stock at an exercise price of $6.502 each – resulting in

gross proceeds of approximately $6,734,000 received by the Company.

March 18, 2025, Worksport effectuated a 1-for-10 reverse stock split of its common stock.

The Company’s common stock continues to trade on the Nasdaq under the Company’s

existing trading symbol, “WKSP”, and a new CUSIP number, 98139Q308, was assigned

as a result of the reverse stock split.

March 31, 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 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.

ACCOUNTING POLICIES

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RESULTS OF OPERATIONS

Months Ended March 31, 2025 compared to the Three Months Ended March 31, 2024

the three months ended March 31, 2025, net sales were $2,240,005, as compared to $512,637 for the three months ended March 31, 2024.

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

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.

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.

Distribution via each aforementioned channel is expected to increase during 2025.

We have pursued and will continue to pursue relationships

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.

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.

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

This includes any import duty charges, taxes,

and shipping charges.

Discounts are applied if the distributor or retailer chooses to use their own shipping process.

Certain exceptions

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

Volume discounts

are offered to certain high-volume customers, and we also offer a “dock price” or “pickup program” whereby clients

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.

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 three months ended March 31, 2025, net sales generated in U.S.

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

$6,297,955, as compared to $2,385,492 for the same period in 2024, an increase of 164%.

For the three months ended March 31, 2025,

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 three months ended March 31, 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.

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.

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

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

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

distributor as well as online retailers to grow our customer base.

progressing well in conversations with three other major distributors with strong market presences, which will allow us to promote to

dealers and sell to jobbers in strategic regions.

Lastly, we are in closing discussions with a network of nationwide U.S.

dealers capable

of bringing our product to all U.S.

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.

continental states.

of sales increased by 288%, from $475,181 for the three months ended March 31, 2024, to $1,843,784 for the three months ended March 31,

Our cost of sales, as a percentage of sales, was approximately 82% and 93% for the three months ended March 31, 2025 and 2024,

respectively.

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

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

expenses increased for the three months ended March 31, 2025 by $975,605, from $3,676,922 for the three months ended March 31, 2024 to

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:

and development expense decreased by $11,399, from $381,000 in 2024 to $369,601 in 2025.

decrease was related to developmental progress of our AL3 product line which required less

R&D efforts as resources were shifted to normal-course production.

and administrative expense increased by $695,463, from $2,293,318 in 2024 to $2,988,781 in 2025.

The increase was related to a shift

in overhead absorption driven by production volume requirements as well as an increase in labor costs to support production efforts.

and marketing expense increased by $802,972, from $66,777 in 2024 to $869,749 in 2025.

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.

● Professional

fees expense, which includes accounting, legal, and consulting fees, decreased from $943,778

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

in 2024 to $674,434 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, as well as a reduction in non-cash expenditures relating to stock-based compensation for

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.

and marketing expense increased by $1,629,535, from $545,569 in 2024 to $2,175,104 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.

Income and Expenses

reported net other expenses for the three months ended March 31, 2025 of $204,158, compared to $75,191 for three months ended March

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 three months ended March 31, 2025 was $4,460,464, compared to a net loss of $3,714,657 for the three months ended March

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, research and development, manufacturing, and supply chain.

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

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

and Capital Resources

of March 31, 2025 and December 31, 2024, we had $5,080,372 and $4,883,099, respectively in cash and cash equivalents.

31, 2025, we had $2,858,700 of remaining available capacity on our revolving line of credit compared with $811,400 of remaining

available capacity as of December 31, 2024.

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

capacity on our revolving line of credit was primarily a result of our warrant inducement transaction on February 27, 2025.

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 months ended March 31, 2025, we had net losses of $4,460,464 (three months ended March 31, 2024

- $3,714,657).

As of March 31, 2025, the Company had working capital of $7,936,250 (As of December 31, 2024 - $7,304,110) and had an

accumulated deficit of $68,937,430 (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 going concern.

Our ability to continue as a going concern is dependent upon our ability to generate cash flows from operations and

obtain equity and/or debt financing.

We intend to continue funding operations through equity and debt financing arrangements, which

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

There can be no

assurance that the steps our management is taking will be successful.

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).

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

going concern.

Our ability to continue as a going concern is dependent upon our ability to generate cash flows from operations and obtain

equity and/or debt financing.

We intend to continue funding operations through equity and debt financing arrangements, which may be insufficient

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

There can be no assurance that the steps

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 three months ended March 31, 2025, the Company received net proceeds of $6,570,415 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 or limit our cash

consumption and thus maintain sufficient cash balances for our planned operations or future business developments.

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

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 three months ended March 31, 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 a certain holder (the “Holder”) of existing warrants to purchase shares of our common stock at an exercise price of

$5.198 per share, issued on May 29, 2024 (the “Existing Warrants”), pursuant to which the Holder agreed to exercise for

cash its Existing Warrants to purchase an aggregate of 1,295,000 shares of the Company’s common stock at $5.198 per share, in

consideration for the Company’s agreement to issue new warrants (the “Inducement Warrants”) having terms as

described below, to purchase up to 1,424,500 shares of the Company’s common stock (the “Inducement Warrant

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.

engaged Maxim Group LLC (“Maxim”) to act as our exclusive financial advisor in connection with the transactions

summarized above and will pay Maxim a cash fee from the gross proceeds received from the exercise of the Existing Warrants.

Inducement Warrant has an exercise price equal to $6.502 per share.

The Inducement Warrants are exercisable at any time on or after

the date that is six (6) months from the issuance date and will have a term of exercise of five and one half (5½) years

following the date of issuance.

The exercise price and number of shares of common stock issuable upon exercise is subject to

appropriate adjustment in the event of stock dividends, stock splits, subsequent rights offerings, pro rate distributions,

reorganizations, a Fundamental Transaction (as defined in the Inducement Warrants) or similar events affecting our common stock and

the exercise price.

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.

We cannot give assurance that we can increase our cash balances

or limit our cash consumption and thus maintain sufficient cash balances for our planned operations or future business developments.

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:

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

a certain holder (the “Holder”) of existing warrants to purchase shares of our common stock at an exercise price of $5.198

per share, issued on May 29, 2024 (the “Existing Warrants”), pursuant to which the Holder agreed to exercise for cash its

Existing Warrants to purchase an aggregate of 1,295,000 shares of the Company’s common stock at $5.198 per share, in consideration

for the Company’s agreement to issue new warrants (the “Inducement Warrants”) having terms as described below, to purchase

up to 1,424,500 shares of the Company’s common stock (the “Inducement Warrant Shares”).

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.

We engaged Maxim Group LLC (“Maxim”) to

act as our exclusive financial advisor in connection with the transactions summarized above and will pay Maxim a cash fee from the gross

proceeds received from the exercise of the Existing Warrants.

Each Inducement Warrant has an exercise price equal to $6.502 per share.

The Inducement Warrants are exercisable at any time on or after the date that is six (6) months from the issuance date and will have

a term of exercise of five and one half (5½) years following the date of issuance.

The exercise price and number of shares of

common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends, stock splits, subsequent rights

offerings, pro rate distributions, reorganizations, a Fundamental Transaction (as defined in the Inducement Warrants) or similar events

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.

Wainwright & Co.,

LLC, as the sales agent, during the three month period ended March 31, 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.

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.

Statement of Cash Flows

Cash increased from $4,883,099 at December 31, 2024, to $5,080,372 at March

31, 2025 – an increase of $197,273 or 4%.

The increase was primarily due to capital raising through financing activities.

cash used in operating activities for the three months ended March 31, 2025 was $3,839,918, compared to $2,794,604 in 2024, primarily

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%.

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

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

receivable increased at March 31, 2025 by $25,362 and decreased by $306,778 in the prior period.

The increase in accounts receivable

was due to further development of our Distributor and Jobber customer network and relationships.

increased at March 31, 2025 by $583,116, and increased at March 31, 2024 by $2,908,354, as a result of stockpiling of finished goods

and raw materials in preparation for the launch of our AL4 product line.

Prepaid expenses and deposits increased by $192,071 at March

31, 2025, and decreased by $1,155,090 at March 31, 2024 due to timing of deposits from B2C customers prior to fulfillment of their orders

at the end of the accounting period.

Accounts payable and accrued liabilities increased at March 31, 2025 by

$390,691 compared to an increase of $729,303 at March 31, 2024.

cash used in investing activities for the three months ended March 31, 2025 was $458,342 compared to $212,969 for the three months

ended March 31, 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 three months ended March

31, 2025 was $4,495,533 compared to net cash used in financing activities of $3,178,775 for the three months ended March 31, 2024.

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.

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.

Sheet Arrangements

5 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis