UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended: June 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-40681

A close up of a logo

Description automatically generated

Worksport Ltd.

(Exact Name of Small Business Issuer as specified in its charter)

Nevada		35-2696895
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2500 N America Dr, West Seneca, NY		14224
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone Number, including area code: (888) 554-8789

55G East Beaver Creek Rd.,

Richmond Hill, Ontario, Canada L4B 1E5
(Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol(s)	Name of each exchange on which registered:
Common Stock	WKSP	The Nasdaq Stock Market LLC
Warrants	WKSPW	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit post such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 14, 2023 , the Registrant had 17,436,805 shares of common stock, par value $0.0001 per share, issued and outstanding.

WORKSPORT LTD.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets as at June 30, 2023 (Unaudited) and December 31, 2022	4
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2023 and 2022 (Unaudited)	5
Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2023 and 2022 (Unaudited)	6-7
Condensed Consolidated Statements of Cash Flow for the six months ended June 30, 2023 and 2022 (Unaudited)	8
Notes to the Condensed Consolidated Financial Statements (Unaudited)	9-20

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21-28

Item 3. Quantitative and Qualitative Disclosures About Market Risk	29

Item 4. Controls and Procedures	30

PART II OTHER INFORMATION

Item 1. Legal Proceedings	30

Item 1A. Risk Factors	30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3. Defaults Upon Senior Securities	30

Item 4. Mine Safety Disclosures	30

Item 5. Other Information	31

Item 6. Exhibits	32

SIGNATURES	33

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Worksport Ltd.

Condensed Consolidated Balance Sheets

(Unaudited)

	June 30, 2023 (Unaudited)			December 31, 2022
Assets
Current Assets
Cash and cash equivalents	$	5,902,235		$	14,620,757
Accounts receivable net		326,475			62,601
Other receivable		301,244			268,032
Inventory (note 4)		2,879,864			1,346,372
Prepaid expenses and deposits (note 5)		1,045,158			2,034,345
Total Current Assets		10,454,976			18,332,107
Investments (note 12)		90,731			24,423
Property and Equipment, net (note 6)		14,037,399			11,900,672
Right-of-use asset, net (note 13)		1,067,977			1,238,055
Intangible Assets, net		1,340,147			1,268,873
Total Assets	$	26,991,230		$	32,764,130
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities	$	1,199,548		$	2,028,305
Payroll taxes payable		7,900			-
Related party loan (note 10)		2,192			46,096
Loan payable (note 14)		5,300,000			-
Current lease liability (note 13)		390,926			387,329
Total Current Liabilities		6,900,566			2,461,730
Long Term – Lease Liability (note 13)		693,289			884,146
Loan payable (note 14)		-			5,300,000
Total Liabilities		7,593,855			8,645,876

Shareholders’ Equity
Series A & B Preferred Stock, $0.0001 par value, 100,100 shares authorized, 100 Series A and 0 Series B issued and outstanding, respectively (note 9)		-			-
Common stock, $0.0001 par value, 299,000,000 shares authorized, 17,413,810 and 17,159,376 shares issued and outstanding, respectively (note 9)		1,742			1,716
Additional paid-in capital		58,615,849			56,919,625
Share subscriptions receivable		(1,577	)		(1,577	)
Share subscriptions payable		1,494,885			591,289
Accumulated deficit		(40,704,944	)		(33,384,219	)
Cumulative translation adjustment		(8,580	)		(8,580	)
Total Shareholders’ Equity		19,397,375			24,118,254
Total Liabilities and Shareholders’ Equity	$	26,991,230		$	32,764,130

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

Worksport Ltd.

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited)

	2023			2022			2023			2022
	Three Months ended June 30						Six Months ended June 30,
	2023			2022			2023			2022

Net Sales	$	199,851		$	11,305		$	231,776		$	59,089
Cost of Goods Sold		153,288			7,987			173,045			45,964
Gross Profit		46,563			3,318			58,731			13,125

Operating Expenses
General and administrative		1,744,801			850,915			3,874,413			1,451,773
Sales and marketing		548,712			646,367			1,093,063			1,366,855
Professional fees		1,491,453			1,813,875			2,360,064			3,301,454
(Gain) loss on foreign exchange		316			352			(142	)		(986	)
Total operating expenses		3,785,282			3,311,509			7,327,398			6,119,096
Loss from operations		(3,738,719	)		(3,308,191	)		(7,268,667	)		(6,105,971	)

Other Income (Expense)
Interest expense		(187,893	)		(180,015	)		(352,992	)		(205,110	)
Interest income		78,778			19,669			198,606			24,935
Rental income (note 19)		50,379			96,218			94,835			96,218
Gain on settlement of debt		-			-			7,493			-
Total other income (expense)		(58,736	)		(64,128	)		(52,058	)		(83,957	)

Net Loss	$	(3,797,455	)	$	(3,372,319	)	$	(7,320,725	)	$	(6,189,928	)

Loss per Share (basic and diluted)	$	(0.22	)	$	(0.20	)	$	(0.43	)	$	(0.36	)
Loss per Share basic	$	(0.22	)	$	(0.20	)	$	(0.43	)	$	(0.36	)
Weighted Average Number of Shares (basic and diluted)		17,165,533			17,022,587			17,162,471			17,005,405
Weighted Average Number of Shares basic		17,165,533			17,022,587			17,162,471			17,005,405

The accompanying notes form an integral part of these condensed consolidated financial statements

Worksport Ltd.

Condensed Consolidated Statements of Shareholders’ Equity

For the Three Months Ended June 30, 2023 and 2022

(Unaudited)

	Shares		Amount		Shares		Amount		Capital		Receivable			Payable		Deficit			Adjustment			(Deficit)
	Preferred Stock				Common Stock				Additional Paid-in		Share Subscriptions			Share Subscription		Accumulated			Cumulative Translation			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Capital		Receivable			Payable		Deficit			Adjustment			(Deficit)
Balance at April 1, 2022		100	$	0		17,001,034	$	1,701	$	55,212,869	$	(1,577	)	$	365,269	$	(23,667,414	)	$	(8,580	)	$	31,902,268
Issuance for services and subscriptions payable		-		-		40,000		4		743,529		-			134,273		-			-			877,806
Warrant exercise (note 17)		-		-		21		-		-		-			-		-			-			-
Net loss		-		-		-		-		-		-			-		(3,372,319	)		-			(3,372,319	)
Balance at June 30, 2022		100	$	0		17,041,055	$	1,705	$	55,956,398	$	(1,577	)	$	499,542	$	(27,039,733	)	$	(8,580	)	$	29,407,755
Balance		100	$	0		17,041,055	$	1,705	$	55,956,398	$	(1,577	)	$	499,542	$	(27,039,733	)	$	(8,580	)	$	29,407,755

Balance at April 1, 2023		100	$	0		17,159,376	$	1,716	$	57,275,920	$	(1,577	)	$	1,223,111	$	(36,907,489	)	$	(8,580	)	$	21,583,101
Balance		100	$	0		17,159,376	$	1,716	$	57,275,920	$	(1,577	)	$	1,223,111	$	(36,907,489	)	$	(8,580	)	$	21,583,101
Issuance for services and subscriptions payable		-		-		250,000		25		1,332,798		-			271,774		-			-			1,604,597
Shares issued (note 9)		-		-		4,434		1		7,131		-			-		-			-			7,132
Net loss		-		-		-		-		-		-			-		(3,797,455	)		-			(3,797,455	)
Balance at June 30, 2023