Filed 2026-03-26 · Period ending 2025-12-31 · 58,521 words · SEC EDGAR
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# Worksport Ltd (WKSP) — 10-K **Filed:** 2026-03-26 **Period ending:** 2025-12-31 **Accession:** 0001493152-26-012945 **Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1096275/000149315226012945/) **Origin leaf:** b6787dfe9d952c8fff17f338984694bc62f056738108e1f0efbcf2bd8ea05dea **Words:** 58,521 --- ** UNITED STATES** **SECURITIES AND EXCHANGE COMMISSION** **Washington, D.C. 20549** **FORM 10-K** ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 **For the Fiscal Year Ended: December 31, 2025** TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 **Commission File No. 001-40681** * **Worksport Ltd.** (Exact Name of Small Business Issuer as specified in its charter) | Nevada | | 35-2696895 | | | (State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) | | | 2500 N America Dr, West Seneca, NY | | 14224 | | | (Address of principal executive offices) | | (Zip Code) | | **** Registrants Telephone Number, including area code: **(888) 554-8789** 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, par value $0.001 per share | | WKSP | | The Nasdaq Stock Market LLC | | Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No 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 has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b). Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No The aggregate market value of the voting and non-voting stock held by non-affiliates of the Registrant, as of June 30, 2025, the last business day of the Registrants most recently completed second fiscal quarter, was approximately $15,619,138, based on a closing price of $2.83 per share of common stock on June 30, 2025, as reported by The Nasdaq Stock Market, LLC.. As of March 26, 2026, the Registrant had 11,885,519 shares of common stock, par value $0.001 per share, issued and outstanding. | | | **Table of Contents** | PART I | 4 | | | | ITEM 1. BUSINESS | 4 | | | | ITEM 1A. RISK FACTORS | 12 | | | | ITEM 1B. UNRESOLVED STAFF COMMENTS | 23 | | | | ITEM 1C. CYBERSECURITY | 23 | | | | ITEM 2. PROPERTIES | 24 | | | | ITEM 3. LEGAL PROCEEDINGS | 24 | | | | ITEM 4. MINE SAFETY DISCLOSURES | 24 | | | PART II | 25 | | | | ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | 25 | | | | ITEM 6. [RESERVED]. | 26 | | | | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 26 | | | | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 32 | | | | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 33 | | | | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 58 | | | | ITEM 9A. CONTROLS AND PROCEDURES | 58 | | | | ITEM 9B. OTHER INFORMATION | 59 | | | | ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS | 59 | | | PART III | 60 | | | | ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE | 60 | | | | ITEM 11. EXECUTIVE COMPENSATION | 64 | | | | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 72 | | | | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 74 | | | | ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES | 74 | | | PART IV | 75 | | | | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES | 75 | | | | ITEM 16. FORM 10-K SUMMARY. | 78 | | | | | In this Annual Report on Form 10-K (Form 10-K), unless otherwise stated or as the context otherwise requires, references in this document to Worksport Ltd., Worksport, us, we, our or the Company refer to Worksport Ltd., a Nevada corporation and its subsidiaries, Worksport Ltd., an Ontario, Canada corporation, Worksport USA Operations Corporation, a Colorado corporation, Worksport New York Operations Corporation, a New York corporation, and Terravis Energy, Inc., a Colorado corporation. Our logo and other trademarks or service marks of the Company and its subsidiaries appearing in this Annual Report on Form 10-K are the property of Worksport Ltd. This Form 10-K also contains registered marks, trademarks, and trade names of other companies. All other trademarks, registered marks, and trade names appearing in this Form 10-K are the property of their respective holders. Unless otherwise indicated, all share and per share amounts in this Form 10-K, including in the consolidated financial statements and notes, have been retroactively adjusted to reflect the 1:10 stock split of our common stock that was effected on March 18, 2025 for all periods presented. **Cautionary Note Regarding Forward-Looking Statements and Industry Data** This Form 10-K, in particular, Part II Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations*, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These forward-looking statements represent our expectations, beliefs, intentions, or strategies concerning future events, including, but not limited to, any statements regarding our assumptions about financial performance; the continuation of historical trends; the sufficiency of our cash balances for future liquidity and capital resource needs; the expected impact of changes in accounting policies on our results of operations, financial condition or cash flows; anticipated problems and our plans for future operations; and the economy in general or the future of the industry in which we operate, all of which were subject to various risks and uncertainties. When used in this Form 10-K and other reports, statements, and information we have filed with the SEC, in our press releases, presentations to securities analysts or investors, in oral statements made by or with the approval of an executive officer, the words or phrases believes, may, will, expects, should, continue, anticipates, intends, will likely result, estimates, projects or similar expressions and variations thereof are intended to identify such forward-looking statements. However, any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. These statements are only predictions. All forward-looking statements included in this Annual Report on Form 10-K are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Any or all of our forward-looking statements in this document may turn out to be wrong. Actual events or results may differ materially. Our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties, and other factors. This Form 10-K also contains estimates, projections, and other information concerning our industry, our business, and particular markets, including data regarding the estimated size of those markets. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, general publications, government data, and similar sources. | 3 | | **PART I** **ITEM 1. BUSINESS** **Overview** Worksport Ltd., through its subsidiaries, designs, develops, and manufactures innovative products for various markets including automotive accessories, consumer electronics, and both residential and commercial HVAC system markets. Worksport is able to monetize and protect its products through a large and growing intellectual property (IP) portfolio with patents, designs, and trademarks relating to, among other things, tonneau covers and components, solar integrated tonneau covers, portable power stations, NP (non-parasitic) hydrogen-based green energy systems, residential heating and cooling systems (heat pumps), and electric vehicle-charging stations. Worksport seeks to provide consumers with next-generation automotive accessories through the production of our innovative line of tonneau covers for light trucks while capitalizing on growing consumer interest in clean energy solutions and power grid independence through the launch of its forthcoming solar tonneau cover (Worksport SOLIS) and mobile battery generator system (Worksport COR). Worksports subsidiary, Terravis Energy, is poised to revolutionize the local and global markets for efficient home and commercial heat pumps through its groundbreaking Aetherlux Heat Pump. **Corporate History** The Company was incorporated in the State of Nevada on April 2, 2003 under the name Franchise Holdings International, Inc. In December 2014, the Company acquired Worksport Ltd., an Ontario corporation formed in 2011, which became a wholly owned subsidiary. In May 2020, the Company changed its name to Worksport Ltd. On March 18, 2025, the Company effected a 1-for-10 reverse stock split of its issued and outstanding common stock in order to regain compliance with the minimum bid price requirement under Nasdaq Listing Rule 5550(a)(2). In connection with the reverse stock split, the authorized number of shares of common stock was proportionally reduced from 299,000,000 shares to 29,900,000 shares. On April 17, 2025, the Company filed an amendment to its amended and restated articles of incorporation, effective May 19, 2025, increasing the total number of authorized shares of capital stock from 30,900,000 to 55,000,000, consisting of 45,000,000 shares of common stock and 10,000,000 shares of preferred stock **Recent Offerings** **** At-the-Market (ATM) Offering Program During 2025, we raised capital through our at-the-market offering program and other registered offerings of our common stock, generating aggregate gross proceeds of approximately $521,835 and net proceeds of $504,372 after commissions and offering expenses. These financings were undertaken to support our operations, fund growth initiatives and strengthen our balance sheet. In November 2025, we entered into an amendment to our at-the-market offering agreement to permit the sale of up to $4.0 million of our common stock from time to time. See Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesAt-The-Market Offering for additional information regarding these transactions. December 2025 Warrant Inducement On December 11, 2025, the Company entered into a warrant exercise inducement agreement with the holder of certain existing warrants originally issued on March 20, 2024 and March 3, 2025. Pursuant to the agreement, the holder exercised warrants to purchase 2,194,526 shares of the Companys common stock at a reduced exercise price of $2.90 per share, resulting in gross proceeds of approximately $6.4 million, before placement agent fees and other offering expenses. In consideration for the exercise, the Company issued new warrants to purchase up to 3,840,421 shares of common stock. The shares of common stock issuable upon exercise of the new warrants were registered for resale pursuant to the Companys registration statement on Form S-3 (File No. 333-292823), filed with the SEC on January 20, 2026 and declared effective on January 28, 2026. The Company intends to use the net proceeds from the transaction for general corporate and working capital purposes. The Company engaged Maxim Group LLC as its exclusive financial advisor in connection with the transaction. Regulation A Offering Between June 2025 and October 2025, the Company conducted a Regulation A offering pursuant to which it sold units consisting of shares of Series C Preferred Stock and accompanying warrants, resulting in aggregate gross proceeds of approximately $10.0 million, before fees and expenses. February 2025 Warrant Inducement On February 27, 2025, the Company entered into a warrant exercise inducement agreement with the holder of certain existing warrants originally issued on May 29, 2024. Pursuant to the agreement, the holder exercised warrants to purchase 1,295,000 shares of the Companys common stock at a reduced exercise price of $5.198 per share, resulting in gross proceeds of approximately $6.7 million, before placement agent fees and other offering expenses. In consideration for such exercise, the Company issued new warrants to purchase up to 1,424,500 shares of its common stock at an exercise price of $6.502 per share, subject to adjustment. The new warrants become exercisable six months from the date of issuance and expire on the fifth anniversary of the date of issuance. The shares of common stock issuable upon exercise of the new warrants were registered for resale pursuant to the Companys registration statement on Form S-1 (File No. 333-286255), filed with the SEC on March 28, 2025 and declared effective on April 3, 2025. The Company used the net proceeds from the transaction for working capital and general corporate purposes. The Company engaged Maxim Group LLC as its exclusive financial advisor in connection with the transaction. | 4 | | **Business Developments** The following highlights recent material developments in our business since the beginning of the fiscal year covered by this Form 10-K: | | | On December 11, 2025, we held our 2025 Annual Meeting of Shareholders. At the Annual Meeting, a total of 12,369,649 shares of common stock were represented in person or by proxy, constituting 73.8% of the total outstanding common shares and a quorum under our bylaws. | | | | | | | | | | On December 11, 2025, we entered into a common stock warrant exercise inducement offer letter with a certain holder of existing warrants to purchase shares of our common stock, par value 0.001 per share, at a weighted average exercise price of $6.82, issued on March 20, 2024 and March 3, 2025, respectively. The holder agreed to exercise for cash its existing warrants to purchase an aggregate of 2,194,526 shares of common stock at a reduced exercise price of $2.90 per share, in consideration for our agreement to issue new warrants to purchase up to 3,840,421 shares of common stock. We received aggregate gross proceeds of approximately $6.4 million before deducting placement agent fees and other offering expenses paid by us. | | | | | | | | | | On December 1, 2025, we announced the commercial launch of our SOLIS truck-mounted folding solar array and COR portable battery system, which together form a modular, vehicle-mounted clean-energy solution. The products are available for purchase through our direct-to-consumer platform. | | | | | | | | | | On November 25, 2025, we announced that our HD3 heavy-duty hard-folding tonneau cover entered commercial sales through our business-to-business dealer network following the commencement of production in mid-October 2025. | | | | | | | | | | On November 18, 2025, we announced the opening of a newly leased facility in Missouri to support the assembly, testing, and distribution of our SOLIS solar-integrated tonneau cover and COR energy products. | | | | | | | | | | On November 10, 2025, we announced final pricing and initial vehicle compatibility for our SOLIS solar-integrated tonneau cover in advance of its commercial launch, with initial availability covering a range of popular pickup truck models and bed configurations. | | | | | | | | | | On September 30, 2025, we announced a 42% increase in national dealer partnerships over the preceding quarter | | | | | | | | | | On August 7, 2025, we announced that we had doubled our Bitcoin holdings and invested in additional manufacturing machinery to double its production output | | | | | | | | | | On August 5, 2025, we announced our strongest 4-week production run since beginning domestic production. | | | | | | | | | | On July 16, 2025, we announced we doubled our R&D footprint by beginning a new lease at a larger R&D facility in Ozark, Missouri for the development of upcoming product lines. | | | | | | | | | | On July 16, 2025, we announced that the AetherLux Pro heat pump with high-performance Zerofrost technology a product of its subsidiary, Terravis Energy - had received the attention of multi-billion dollar corporations and U.S. government entities, with site visits and due diligence underway. | | | | | | | | | | On June 10, 2025, we announced the addition of a second national automotive distributor, expanding our partnered dealer network to over 550 locations across the U.S. representing a nearly sixfold increase since the beginning of 2025. | | | | | | | | | | On June 5, 2025, we confirmed a Fall 2025 commercial launch for our 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 2, 2025, we announced that 80% of the AL4 product line20 out of 25 planned modelshad been successfully rolled out to market. | | | | | | | | | | On May 28, 2025, we announced that we secured ISO 9001 Certification at our U.S. 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 April 29, 2025, we announced our strategic partnership with Patriot Automotive Technologies to accelerate nationwide expansion through Patriots network of over 200 dealer locations. | | | | | | | | | | On March 18, 2025, we effectuated a 1-for-10 reverse stock split of its common stock. Our common stock continues to trade on the Nasdaq under our existing trading symbol, WKSP, and a new CUSIP number, 98139Q308, was assigned as a result of the reverse stock split. | | | | | | | | | | On February 27, 2025, we 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 us 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. | | | | | | | | | | On February 25, 2025, we announced that our 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. | | | | | | | | | | On February 13, 2025, we announced our strategic partnership with KULR Technology Group, Inc. (NASDAQ: KULR), focused on advancing battery technology and strengthening domestic manufacturing, including, without limitation, joint battery pack development, thermal runaway protection and AI-integrated battery management system software design. | | | | | | | | | | On February 11, 2025, we announced two major breakthroughs in cold climate heat pump technology developed by its subsidiary, Terravis Energy. These breakthroughs eliminate the need of defrost cycles, a common heat pump drawback, and allow the heat pump (the AetherLux heat pump system) to operate in temperatures as low as -57F, which is lower than the operating capabilities of commercially available heat pumps. | | | | | | | | | | On January 28, 2025, we executed an agreement to appoint Coinbase as the official custodian for our cryptocurrency holdings. | | | 5 | | **Segments and Products** We conduct our business in two reportable business segments, which are the same as our operating segments: Soft Tonneau Covers and Hard Tonneau Covers. Additional information describing the comparative segment revenues, operating profits and related financial information for 2025 and 2024 are provided in Note 16 Segment Reporting, of Part III Item 8, Financial Statements and Supplementary Data, of this Report. We have developed and are commercializing a series of soft and hard folding tonneau covers and energy products designed for mobile and off-grid use cases. Soft Tonneau Covers Our soft tonneau cover offerings consist primarily of vinyl-wrapped tri-fold and quad-fold tonneau covers manufactured by third-party suppliers overseas in accordance with our specifications. Soft covers include powder-coated lightweight aluminum frames, rear cam latches, quick latch functionality, and UV-protected vinyl tri-layer materials intended to seal around the truck bed and protect cargo from moisture and debris. Tri-fold soft covers are generally positioned as lower-cost options, while quad-fold covers provide additional functionality by allowing fuller truck bed access by folding upward toward the rear window. Certain quad-fold configurations are designed to provide full bed access while limiting obstruction of the rear window in typical configurations. Hard Tonneau Covers Our hard folding tonneau cover offerings include tri-fold and quad-fold aluminum covers manufactured and assembled in the United States. Our hard covers incorporate Quick Latch functionality intended to allow single-sided operation. Hard cover panels are formed aluminum and are coated using proprietary finishing processes intended to enhance durability. These covers are designed to provide a low-profile appearance and are engineered to align within the truck bed for fit and ease of installation. Certain hard cover offerings may be purchased with optional rail system configurations intended to expand utility and improve weather resistance and sealing. We continue to expand our hard cover lineup to address consumer, commercial, and fleet requirements, and we expect to continue expanding applications and fitments across major truck makes, models, and bed configurations. Our tonneau cover portfolio includes multiple soft and hard folding platforms developed over time, including soft folding products marketed under the SC platform and hard folding products marketed under the AL and HD platforms. These product families encompass a range of tri-fold and quad-fold configurations designed to address differing customer needs related to price point, durability, access to the truck bed, and intended use, including consumer, commercial, and fleet applications. We continue to expand applications and configurations across these platforms as part of our broader product development and commercialization strategy. *Up and Coming Products: Clean-Energy Products* ** We are expanding beyond traditional automotive accessories into clean-energy products designed to integrate power generation and energy storage into pickup truck platforms and other mobile environments. SOLIS Solar-Integrated Tonneau Cover SOLIS is a folding solar-integrated tonneau cover designed to combine cargo protection with on-vehicle renewable power generation. SOLIS is designed to generate power that may be used to charge compatible energy storage systems or support mobile and off-grid power applications. SOLIS is intended for use in a variety of settings, including outdoor recreation, worksite operations, emergency preparedness, and other mobile use cases. We may offer SOLIS as a standalone product and/or in combination with other compatible energy products. COR Portable Energy System. COR is a portable energy storage system designed to store and deliver electrical power for mobile, off-grid, and backup power applications. COR is designed for use as a standalone power source and is also designed to integrate with SOLIS for certain charging and power use cases. COR represents the Companys initial entry into the portable energy storage market and is intended to support a range of applications, including vocational activities, emergency backup, disaster readiness, and recreational use. Our next-generation COR Pro unit is expected to allow for battery swapping without a drop in power output for 15 seconds at 2000W and can be used for various activities. It can be purchased separately or with the SOLIS tonneau cover and is Worksports first product in the energy storage market. We have also developed and may offer related power management components, including charging and power regulation functionality, that may be offered as part of integrated solutions or as complementary components. | 6 | | Terravis Energy Aetherlux ZeroFrost Heat Pump Systems Developed by Worksports subsidiary Terravis Energy (TVE), the AetherLux platform introduces the companys breakthrough ZeroFrost heat pump technology. The AetherLux Pro model is designed as a Combined Cooling, Heating, and Power (CCHP) system that redefines energy efficiency in cold climates. By virtually eliminating frost buildup, it maintains high performance even in extreme temperatures, while providing superior efficiency in all temperatures. AetherLux systems are intended for use in residential, commercial, and industrial environments, offering scalable power management, integrated smart controls, and compatibility with renewable energy inputs - aligning with Worksports long-term vision of a clean, decentralized energy ecosystem. **Manufacturing** Our manufacturing updates reflect our commitment to quality and expansion. We outsource the production of our soft tonneau covers to a facility in Foshan, China, which we began to utilize for increased output in late 2023. We have also diversified our list of raw material suppliers and, in May 2022, acquired and set up a state-of-the-art partially automated production facility in West Seneca, New York for domestic manufacturing. In 2023, we initiated early production of our first hard folding tonneau cover (made in the USA with domestic and foreign parts), the Worksport AL3 Pro; it is now in active production for most major makes and models of light trucks in North America. In early 2025, we introduced the American-made AL4 hard cover to the market, which was followed by the HD3 cover in late 2025. These updates demonstrate our dedication to meeting the growing demand for our products. We utilize a hybrid manufacturing and assembly model. Our soft tonneau covers and portable energy systems are manufactured by third-party suppliers overseas in accordance with our specifications, our hard folding tonneau covers are manufactured and assembled in the U.S., and our solar-integrated tonneau covers are assembled in the U.S. with components supplied from overseas. We operate a manufacturing, storage, and distribution facility in West Seneca, New York and a facility in Ozark, Missouri that supports operations related to assembly, testing, and distribution activities. We continue to invest in tooling, fixtures, and process improvements intended to improve production efficiency, quality, and scalability across our product lines. We also maintain a supplier network across multiple geographies for components used in both our tonneau covers and energy products. We believe this diversified supplier approach reduces reliance on any single supplier or region and helps mitigate geopolitical and supply chain risks. **Intellectual Property** We seek to protect our products and technologies through a combination of patents, trademarks, design registrations, and other intellectual property rights. Our intellectual property portfolio includes patents, designs, and trademarks covering aspects of tonneau cover designs, latching mechanisms, solar integration, portable energy systems, heat pump systems and components, and related technologies. We currently hold a broad collection of intellectual property rights relating to certain aspects of our parts and accessories and services. This includes patents, designs, trademarks, copyrights and trade secrets. Although we believe the ownership of such intellectual property rights is an important factor in our business and that our success does depend in part on such ownership, we rely primarily on the innovative skills, technical competence and marketing abilities of our personnel. *Patents* As of December 31, 2025, our patent portfolio includes approximately fourteen (14) issued utility patents in the U.S., approximately ten (10) issued utility patents outside of the U.S., and approximately fifty-six (56) pending utility patent applications in various jurisdictions worldwide. Our portfolio further includes approximately eleven (11) issued design patents in the U.S., approximately thirty-nine (39) design patents and registrations outside the U.S., and approximately twenty-six (26) pending design applications in various jurisdictions worldwide. We are also in the process of preparing and filing several other utility and design patent applications across various countries and jurisdictions. *Trademarks* As of December 31, 2025, the Company had approximately forty-three (43) trademark registrations and fifteen (15) pending trademark applications in various jurisdictions worldwide. | 7 | | **The Market** The markets in which we operate are competitive and include a number of established domestic and international manufacturers. In the automotive accessories market, competition includes large consolidated suppliers and smaller independent manufacturers. In portable power and clean-energy markets, competition includes a range of companies offering alternative energy generation and storage solutions. We compete primarily on product design, functionality, quality, pricing, manufacturing capabilities, intellectual property, customer support, and distribution reach. *Tonneau Cover Market* There are various forms of tonneau covers, each with their advantages and disadvantages, available for consumption through direct-to-consumer and retailer and dealer sales channels. These mainly include but are not limited to: solid one-piece caps and lids; retractable covers; soft folding & roll-up covers; and hard folding & standing covers. Solid one-piece covers and retractable covers tend to have limited functionality and tend to be priced higher when compared to other types of tonneau covers. Soft and hard folding/rolling tonneau covers, in contrast, tend to be priced more competitively and, as such, are a popular choice among tonneau cover consumers. Given these factors and our belief that we can develop less cumbersome, high functioning, and low cost soft and hard folding covers, we focus primarily on developing soft and hard folding covers. While the product lifetime of a tonneau cover is shorter than that of a pickup truck, higher pickup truck sales provide greater market opportunity for the tonneau cover industry. As of the third quarter of 2024, there were roughly 61 million pickup trucks in operation within the U.S.1 We offer tonneau covers for each of the 5 most popular pickup truck makes/models sold in 2025,2 as well as the top 10 most accessorized pickup truck makes/models projected in 2022-2029.3 Within the U.S., the pickup truck market is expected to grow at a compound annual growth rate of 5.3% between 2025 and 2030.4 Electric pickup trucks are projected to gain a larger portion of the U.S. pickup truck market share each year through 2035;1 in fact, the electric pickup truck market is expected to grow at a compound annual growth rate of 29.86% between 2025 and 2029 within North America.5 However, a large headwind acting against this trend is that pickup trucks tend to be more popular in areas with less-developed charging infrastructure3 a headwind that the SOLIS cover directly addresses and positions us favorably for possible partnerships and deals with electric pickup truck manufacturers. The Specialty Equipment Aftermarket provides more specific insight into how often and for what reasons vehicle owners or renters are purchasing accessories for their vehicles. Pickup trucks are the largest market by sales within the U.S. for specialty equipment constituting 32% of the specialty equipment market6. Within this pickup truck accessory market, 34% of accessories are truck bed & utility modifications,3 which is the submarket in which we operate. Truck bed covers were among the top product categories for aftermarket accessory purchases in 2021,3 and the size of the tonneau cover market within the U.S., which was estimated to be $2.56 billion in 2024, is expected to grow at a compound annual growth rate of 7.1% from between 2025 and 2030.7 | 1. | SEMA. Future Trends Report. 2024. Retrieved from www.sema.org | | | 2. | Statista. Best-selling pickup trucks in the United States in 2025. 2026. Retrieved from https://www.statista.com/statistics/204473/best-selling-trucks-in-the-united-states-from-january-to-october-2011/ | | | 3. | SEMA. Pickup Accessorization Report. 2022. Retrieved from www.sema.org | | | 4. | TechNavio. Pickup Truck Market in the US 2026-2030. 2026. Retrieved from https://www.researchandmarkets.com/report/united-states-pickup-truck-market?utm_source=GNE&utm_medium=PressRelease&utm_code=3xc3fr&utm_campaign=2003670+-+US+Pickup+Truck+Analysis+Report+2024%3a+Market+to+Grow+by+%2449.4+Billion+During+2023-2028%2c+Driven+by+Increasing+Product+Portfolio+and+Development+of+Electric+Pickup+Trucks&utm_exec=chdomspi | | | 5. | Mordor Intelligence. North America Electric Truck Market Size & Share Analysis Growth Trends & Forecasts up to 2029. 2026. Retrieved from https://www.mordorintelligence.com/industry-reports/north-america-electric-truck-market | | | 6. | SEMA. SEMA Market Report. 2025. Retrieved from www.sema.org | | | 7. | Grand View Research. U.S. Truck Bed Accessories Market Size, Share & Trends Analysis Report By Product Type, By Sales Channels, And Segment Forecasts, 2025 2030. 2024. Retrieved from https://www.grandviewresearch.com/industry-analysis/us-truck-bed-accessories-market-report | | | 8 | | Worksport looks to maximize market share by manufacturing industry-leading products at competitive margins as well as by exploring horizontal and vertical integration opportunities. *Portable Power Station Market* Compared to the Tonneau Cover Market, the Portable Power Station Market is much younger and globalized. Gas and diesel generators have long been used by consumers to generate electricity when they could not rely on the grid, whether it be due to grid damage or the lack of grid in remote areas. Unlike such generators, portable power stations do not generate electricity themselves, but they too can be used to provide electricity during times of grid unreliability. These portable power stations are often charged by the grid via home outlets or independent of the grid via external power sources often solar panels. The global Portable Power Station Market is large and growing with a compound annual growth rate of 5.3% between 2025 and 2035.1 The segments within the North American market that have the largest market share are power stations utilizing lithium-ion batteries and those used for off-grid power applications,1 which match the COR systems battery type as well as intended usage. When paired with the SOLIS cover, the COR energy storage system will be a market outlier in that it can be charged safely while mobile whereas competing portable power stations are intended to be stationary during charging. | 1. | Market Research Future. Portable Power Station Market Size, Share & Growth Analysis Report by Operation Type, By Technology Type, By Capacity Type, by Application And By Region - Trends & Industry Forecast to 2035. 2023. Retrieved from https://www.marketresearchfuture.com/reports/portable-power-station-market-10079 | | **Distribution** We distribute our tonneau covers in U.S. and Canada through an expanding network of wholesalers, private labels, distributors, and dealers, and through online channels, including major online marketplaces and our direct-to-consumer e-commerce platform. We intend to continue expanding both business-to-business and direct-to-consumer channels. We also pursue relationships with original equipment manufacturers and fleet customers where appropriate. The specialty equipment aftermarket consists of three major types of customers, which include master warehouse distributors and big box stores, dealers and wholesalers, and retail end consumers. Master warehouse distributors and big box stores stock and distribute products to their customers, which are usually local dealers and wholesalers. Dealers and wholesalers are local stores which sell products to some businesses and retail consumers in their area and online. Dealers purchase most of their products from their local distributor who delivers to them regularly. Retail end consumers are the end users of the products. **Competition** *Tonneau Cover Competitors* The Tonneau Cover market is dominated by RealTruck, but we compete with other brands as well, such as Truck Accessories Group, Agri-Cover, Truck Covers USA, and Paragon. We aim to gain market share by being independent, innovative, lean, and competitively priced. Our small sales and customer support teams focus on building strong relationships and enforcing MAP policies. Our SOLIS cover offers unique features and potential partnerships with electric truck manufacturers. We believe that being independent, innovative, operationally lean, and competitively priced will enable us to acquire a larger portion of the existing market share. To execute on this, we have a small and effective sales team to forge strong business-to-business relationships as well as a small and effective customer support team to service both business-to-business and direct-to-consumer sales. Selling above MAP (Minimum Advertised Price) and enforcing this policy will allow business customers to sell without competing with us and, in return, support the growth of the distribution base. We also plan to work alongside distributors as our relationships develop utilizing aggressive phone, mail and email campaigns in our distributors coverage areas to help grow our shared consumer bases and show commitment to our B2B customers. Our innovative covers are designed to serve purposes that no other tonneau cover is currently capable of, some of which are specifically geared towards improving margins for distributors. Further, the SOLIS covers inclusion of solar panels may be particularly attractive to electric pickup truck original equipment manufacturers, paving the path towards an original equipment manufacturer relationship that may be lucrative beyond standard tonneau cover partnerships. *Portable Power Station Competitors* The Portable Power Station market is global and highly fragmented, with numerous competitors such as EcoFlow, Alpha ESS Co., Ltd., Anker Technology, and Bluetti. Our strategy is to focus on the COR Portable Power Station Product Line and offer modular batteries for consumers to customize their stored energy capacity and upgrade over time. At Worksport, we differentiate ourselves from our competitors through innovation, quality, onshoring, and customer focus. We believe our unique selling propositions, such as the SOLIS solar tonneau cover and the COR portable power station, set us apart in the market by offering integrated solutions that address the growing demand for renewable energy and sustainable products. Unlike others, we have successfully leveraged cutting-edge technology to transform traditional pickup truck accessories into multifunctional tools that enhance the utility and efficiency of vehicles. Our commitment to sustainability is not just a business strategy, but a core value that resonates with environmentally conscious consumers. Moreover, our agile business model and strategic partnerships enable us to quickly adapt to industry trends and consumer needs, ensuring we stay ahead of the curve. In a market dominated by conventional products, Worksport stands out as a forward-thinking brand that delivers innovative, high-quality solutions designed to meet the evolving demands of modern consumers and the environment. | 9 | | **Supply of Components** Our soft and hard tonneau cover production requires various components such as plastics, rubber, foam, aluminum, and metal. We have a diverse supplier network in countries like the U.S., the Peoples Republic of China (China), Vietnam, and Canada. We are actively reducing our reliance on countries with potential geopolitical risks. **Research and Development** **** We continually invest in research and development, acquiring new assets and developing unique tonneau cover designs and sustainable materials. Our design and engineering teams are based in the U.S. and Canada and work on product design, materials selection, manufacturing optimization, and the development of new product platforms across our tonneau cover and clean-energy offerings. We also engage third parties from time to time to support testing, validation, and development activities. Our recently announced partnership with KULR Group aims to develop technology that may be used in future generations of the COR. Our subsidiary, TerraVis Energy, Inc., is researching and developing green energy solutions, such as heat pump technologies, for homes and communities. Through our subsidiary, TerraVis Energy (TerraVis), we are developing advanced heat pump technology intended for residential, commercial, and industrial heating and cooling applications. TerraViss AetherLux platform incorporates proprietary ZeroFrost design features intended to address performance challenges associated with conventional heat pumps in cold-climate environments. The AetherLux Pro concept is designed as a CCHP system and is intended to maintain operating efficiency across a wide range of temperatures by reducing or eliminating performance losses associated with frost buildup. AetherLux systems are being designed with scalability, integrated control functionality, and compatibility with renewable energy inputs in mind. TerraViss activities are currently focused on research, development, and evaluation, and these technologies have not yet been commercialized. **Governmental Programs, Incentives and Regulations** Globally, both the operation of our business and the ownership of our products by our customers are impacted by various government programs, incentives, and other arrangements. Our business and products are also subject to numerous governmental regulations that vary among jurisdictions. *Programs and Incentives* We have applied for and been granted tax, mortgage, wage, and energy cost relief in New York in addition to wage cost and R&D cost relief in Ontario. These programs are provided by several agencies including the Erie County Industrial Development Agency, Empire State Development, NY Power Authority, and the Canada Revenue Agency. Each of these incentive programs includes its own set of guidelines and requirements, including but not limited to timely eligibility reporting, environmental regulation compliance, and headcount projection realization each of which we have agreed to and must abide by in order to continue realizing said incentives. We additionally receive incentives related to the hiring and employment of interns in Ontario. We continue to seek additional incentives and grants in order to lower our operational costs as well as commit less capital to new product initiatives. *Regulations* Our energy storage products involve lithium-ion batteries and are subject to evolving domestic and international regulations related to the manufacture, labeling, transportation, storage, and disposal of lithium-ion battery products. We also operate in jurisdictions subject to various governmental programs, incentives, and regulatory regimes applicable to manufacturing operations and clean-energy related activities. | 10 | | **Environmental Matters** We are committed to high environmental standards and carry out our activities and operations in compliance with all relevant and applicable environmental regulations and best industry practices. Costs of environmental regulatory compliance are not expected to be significant. **Human Capital Resources** As of December 31, 2025, we employed one hundred and three (103) full-time employees and five (5) part-time employees in the U.S. and further employed thirteen (13) full-time employees and one (1) part-time employee in Canada. We intend to hire additional employees as operations grow particularly within our West Seneca, NY manufacturing facility. We utilize temporary labor and, from time to time, engage independent contractors and consultants to support our operations. *Compensation and Benefits* We believe that compensation should be competitive and equitable and should enable employees to share in our success. We recognize our employees are most likely to thrive when they have resources and support to meet their needs and succeed in their professional and personal lives. In support of this, we offer a variety of benefits for employees, such as group insurance, HRAs, supplemental insurance, paid time off, and 401k benefits, and we invest in tools and resources that are designed to support employees growth and development. *Inclusion and Diversity* We remain committed to our vision to build and sustain a more inclusive workforce that is representative of the communities we serve. We continue to work to increase diverse representation, foster an inclusive culture, and support equitable pay and access to opportunity for all employees. *Engagement* We believe that open and honest communication among team members, managers, and leaders helps create an open, collaborative work environment, where everyone can contribute, grow and succeed. Team members are encouraged to come to their managers with questions, feedback or concerns. *Health and Safety* We are committed to protecting our team members everywhere we operate and, as such, supporting employees with general safety training. We have also taken additional health and safety measures during and after the COVID-19 pandemic. **Available Information** We file our annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. We also make available, free of charge, on the Investor Relations section of its website, our Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC. Our website address is www.worksport.com. Information contained on, or accessible through, our website is not incorporated by reference into this Form 10-K. | 11 | | **ITEM 1A. RISK FACTORS** Investing in our securities involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this Form 10-K, including our consolidated financial statements and the related notes, before making an investment decision. If any of the following risks actually occur, our business, financial condition, results of operations or prospects could be materially adversely affected. In that event, the trading price of our securities could decline, and investors could lose all or part of their investment. The risks described below are not the only risks facing our Company. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also adversely affect our business, financial condition, results of operations or prospects **Risks Related to Our Business** **We have expressed substantial doubt about our ability to continue as a going concern.** **** Our independent registered public accounting firms report on our audited financial statements includes an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. We have a history of operating losses, have never generated a profit, and have relied primarily on equity and debt financings to fund our operations. For the year ended December 31, 2025, we incurred a net loss of approximately $19.4 million, and accumulated deficit of approximately $83.9 million and cash and cash equivalents of approximately $5.9 million. We also had availability on our revolving line of credit of approximately $3.4 million. Our ability to continue as a going concern depends on our ability to generate positive cash flows from operations and to obtain additional financing on acceptable terms, if at all. We expect to continue to incur operating losses as we scale our operations and invest in product development, manufacturing, and commercialization. There can be no assurance that we will achieve profitability or generate sufficient cash flows from operations in the future. If we are unable to obtain additional financing when needed, our liquidity, financial condition, and ability to continue operations could be materially and adversely affected. **Our business, results of operations and financial condition could be adversely affected by the effects of widespread public health events or outbreaks that are beyond our control.** A significant outbreak, epidemic or pandemic of contagious diseases in any geographic area in which we operate or plan to operate could result in a health crisis adversely affecting the economies and financial markets in which we operate as well as the overall demand for our products. In addition, any preventative or protective actions that governments implement or that we take in response to a health crisis, such as travel restrictions, quarantines, or site closures, may interfere with the ability of our employees, suppliers and customers to perform their responsibilities. Such events could have a materially adverse effect on our business. Any such public health events may also exacerbate other risks described in this *Risk Factors* section. | 12 | | **We will require additional capital to fund our operations, and such capital may not be available on acceptable terms, or at all.** **** We expect to require additional capital to fund working capital needs, capital expenditures, product development, manufacturing scale-up, sales and marketing activities, and ongoing operating losses. Our future capital requirements will depend on many factors, including the pace of commercialization of our products, customer demand, manufacturing costs, and operating expenses. Additional financing may not be available when needed or on terms acceptable to us. Any future equity or equity-linked financing would dilute existing stockholders, and debt financing could impose restrictive covenants, require significant cash payments, or limit our operational flexibility. If we are unable to obtain sufficient capital to support our operations and growth strategy, our business, financial condition, and results of operations could be materially and adversely affected. **We have only sold tonneau covers, the market size of which is limited. Our long-term results depend upon our ability to successfully introduce and market new products, which may expose us to new and increased challenges and risks.** **** To date, we have only sold tonneau covers, the market size of which is limited. Our growth strategy depends, in part, on our ability to successfully introduce and market new products, such as our SOLIS cover and COR system, as well as developing new products. As we introduce new products or refine, improve or upgrade versions of existing products, we cannot predict the level of market acceptance or the amount of market share these products will achieve, if any. Our ability to compete also depends on our ability to anticipate and respond to evolving customer preferences, industry standards and technological developments, including developments affecting product design, functionality, manufacturing processes, battery and energy storage technologies, software-enabled features and automation. We cannot assure you that we will not experience material delays in the introduction of new products and services in the future. Consistent with our strategy of offering new products and product refinements, we expect to continue to use a substantial amount of capital for product refinement, research and development, and sales and marketing, which may not provide a return on investment in the event we fail to bring potential products to market. In addition, if we are unable to adjust our manufacturing capabilities, supplier base, quality controls and operational processes in a timely and cost-effective manner to support evolving technologies or new product requirements, our costs could increase, our margins could decline, product launches could be delayed and our competitive position could be harmed. We will need additional capital for product development and refinement, and this capital may not be available on terms favorable to us, if at all, which could adversely affect our business, prospects, financial condition, results of operations, and cash flows. If we are unable to successfully introduce, integrate, and market new products and services, or to adapt to technological changes in our products or operations, our business, prospects, financial condition, results of operations, and cash flows may be materially and adversely affected. **We may not succeed in establishing, maintaining and strengthening our brand, which would materially and adversely affect customer acceptance of our products and our business, prospects, financial condition, results of operations and cash flows.** **** Our business and prospects heavily depend on our ability to develop, maintain and strengthen the Worksport brand. If we are not able to establish, maintain and strengthen our brand, we may lose the opportunity to build a critical mass of customers. Our ability to develop, maintain and strengthen our brand will depend heavily on our ability to provide high quality products and engage with our customers as intended, as well as depend on the success of our customer development and marketing efforts. The automobile accessory and parts industry is intensely competitive, and we may not be successful in building, maintaining and strengthening the Worksport brand. Many of our current and potential competitors have greater name recognition, broader customer relationships and substantially greater marketing resources than we do. If we do not develop and maintain a strong brand, our business, prospects, financial condition, results of operations and cash flows could be materially and adversely impacted. In addition, we could be subject to adverse publicity. In particular, given the popularity of social media, any negative publicity, whether products may be evaluated and reviewed by third parties. Any negative reviews or reviews which compare us unfavorably to competitors could adversely affect consumer perception about our products. **The U.S. Central Bank has provided forward-looking guidance of relatively high interest rates plateauing for the near future.** We may need to invest in additional machinery, equipment and land if demand for our products is higher than anticipated or if we secure a supplier deal with a major original equipment manufacturer (OEM). With high interest rates, it will be less financially attractive to finance such purchases, which may lead to an otherwise higher burn rate. High interest rates increase the amount that we must pay related to our indebtedness. At the same time, it lowers the attractiveness of refinancing, despite the fact that our anticipated positive future cash flows would allow us to seek financing from a broader selection of lenders. | 13 | | **Continued uncertain economic conditions, including inflation and the risk of a global recession could impair our ability to forecast and may harm our business, operating results, including our revenue growth and profitability, financial condition and cash flows.** While U.S. inflation rates have come down substantially from their 2022 highs, the U.S. economy is still experiencing higher than target inflation rates, and high levels of inflation persist in many countries around the world. Historically, we have not experienced significant inflation risk in our business. However, our ability to raise our product prices depends on market conditions, and there may be periods during which we are unable to fully recover increases in our costs. In addition, the global economy suffers from slowing growth and elevated interest rates, and many economists are still unsure whether a global recession may begin in the near future. If the global economy slows, our business would likely be adversely affected. Also, a recession may result in job loss and lower discretionary funds among potential customers, lowering demand for automotive aftermarket accessories. Part of our consumer base for SOLIS includes workers, particularly those in manufacturing and construction environments, who may have lower job security in the event of a recession and, thus, have lower demand for the SOLIS. Commercial real estate values may also decrease, which would lower the value of our production facility in West Seneca, NY. **Our business and operations would suffer in the event of computer system failures, cyberattacks or a deficiency in our cybersecurity, or an inability to effectively adopt and govern emerging technologies, including artificial intelligence, or a natural disaster.** There are growing risks related to the security, confidentiality and integrity of personal and corporate information stored and transmitted electronically due to increasingly diverse and sophisticated threats to networks, systems and data security. Potential attacks span a spectrum from attacks by criminal hackers, hacktivists, and nation state or state-sponsored actors, to employee malfeasance and human or technological error. The increasing availability and use of artificial intelligence technologies may further increase these risks by enabling more targeted phishing attempts, fraud, social engineering, malicious code development and other cyber intrusions, and our own or our third-party service providers use of artificial intelligence tools may create additional risks relating to data privacy, confidentiality, intellectual property, accuracy, bias, internal controls and regulatory compliance. Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely (including our vendors, contractors and other third-party partners who process information on our behalf or have access to our systems), are vulnerable to damage from computer viruses, malware, ransomware, phishing attacks and other forms of social engineering, denial-of-service attacks, third party or employee theft or misuse and other negligent actions, natural disasters, terrorism, war, telecommunication and electrical failures, cyberattacks or cyber-intrusions over the internet, security incidents, disruptions, attachments to emails, persons inside our organization, or persons with access to systems inside our organization. The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. If we or our third-party service providers fail to adopt, implement, monitor or govern artificial intelligence technologies effectively and responsibly, or if such technologies produce inaccurate, misleading or unauthorized outputs or actions, our operations, decision-making, customer relationships, reputation or compliance efforts could be adversely affected. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our product development programs. To the extent that any disruption or security breach was to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur material legal claims (including class claims) and liability, substantial remediation costs, regulatory enforcement, liability under data protection laws, additional reporting requirements and damage to our reputation, and the further development of our product lines could be delayed. To mitigate risks associated with cybersecurity attacks, we have cybersecurity insurance coverage in the aggregate amount of $1,000,000 per annual policy period, which covers damages from a range of potential cybersecurity issues including but not limited to property damage, computer crime, privacy liability, privacy regulatory defense, cyber extortion, and post breach remediation. **We may not be able to accurately estimate the demand for our tonneau covers, which could result in inefficiencies in our production and hinder our ability to generate revenue.** **** If we fail to predict our manufacturing requirements accurately, we will incur the risk of having to pay for production capacities that we reserved but will not be able to use or that we will not be able to secure sufficient additional production capacities at reasonable costs in the event product demand exceeds expectations. A single contract with an OEM or key distributor can significantly increase demand for our products, requiring investments in expanded operational capacity including personnel, equipment and potential facilities. | 14 | | **Our future growth may be limited.** Our ability to achieve our expansion objectives and to manage our growth effectively depends upon a variety of factors, including our ability to internally develop products, to attract and retain skilled employees, to successfully position and market our products, to protect our existing intellectual property, to capitalize on the potential opportunities we are pursuing with third parties, and to acquire sufficient funding whether internally or externally. To accommodate growth and compete effectively, we will need working capital to maintain adequate inventory levels, develop additional procedures and controls and increase, train, motivate and manage our work force. There is no assurance that our personnel, systems, procedures and controls will be adequate to support our potential future operations. There is no assurance that we will generate higher revenues from our prospective sales partners nor be able to capitalize on additional third-party manufacturers. **We rely on one supplier for the production of our outsourced soft tonneau covers, which may hinder our ability to grow.** We purchase all of our soft tonneau covers from a supplier located in Foshan, China. We carry significant strategic inventories of these finished goods to reduce the risk associated with this concentration of suppliers. Strategic inventories are managed based on demand. While we are now manufacturing hard tonneau covers in the U.S., the loss of this supplier or a delay in shipments could have a material adverse effect on our soft tonneau cover sales and business. **We rely on key personnel, especially Steven Rossi, our Chief Executive Officer, President and Chairman of the Board.** Our success also will depend in large part on the continued service of our key operational and management personnel, including executive, research and development, engineering, marketing and sales staff. Most specifically, this includes Steven Rossi, our President and Chief Executive Officer, who oversees the implementation of new products, key customer acquisition and retention, and our overall management and future growth. Any failure on our part to hire, train and retain a sufficient number of qualified professionals could impair our business. **We depend on intellectual property rights that may be infringed upon, and we may infringe upon the intellectual property rights of others.** Our success depends to a significant degree upon our ability to develop, maintain, and protect proprietary products and technologies. However, patents provide only limited protection of our intellectual property. The assertion of patent protection involves complex legal and factual determinations and is therefore uncertain and potentially expensive. We cannot provide assurance that patents will be granted with respect to our pending patent applications, that the scope of any patents we might obtain will be sufficiently broad to offer meaningful protection, or that we will develop additional proprietary products that are patentable. In fact, any patents which might issue from our patent applications pending with the U.S. Patent and Trademark Office could be successfully challenged, invalidated or circumvented. This could result in our pending patent rights failing to create an effective competitive barrier. Losing a significant patent or failing to get a patent issued from a pending patent application we consider significant could have a material adverse effect on our business. **We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business.** Filing, prosecuting and defending patents covering our current and future product candidates and technology platforms in all countries worldwide would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may obtain patent protection but where patent enforcement is not as strong as that in the U.S.. These products may compete with our products in jurisdictions where we do not have any issued or licensed patents, and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights, generally. Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights worldwide may be inadequate to obtain a significant commercial advantage from the intellectual property we develop or license. Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors are forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected. | 15 | | **Our patents might not protect our technology from competitors, in which case we may not have any exclusionary advantage over competitors in selling any products that we may develop.** Our commercial success will depend in part on our ability to obtain additional patents and protect our existing patent position, as well as our ability to maintain adequate intellectual property protection for our technologies, product candidates, and any future products in the U.S. and other countries. If we do not adequately protect our technology, product candidates and future products, competitors may be able to use or practice them and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability. The laws of some foreign countries do not protect our proprietary rights to the same extent or in the same manner as U.S. laws, and we may encounter significant problems in protecting and defending our proprietary rights in these countries. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies, product candidates and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets. Certain aspects of our technologies are protected by patents, patent applications, and trade secrets. In addition, we have a number of new patent applications pending. There is no assurance that the applications still pending or which may be filed in the future will result in the issuance of any patents. Furthermore, there is no assurance as to the breadth and degree of protection any issued patents might afford us. Disputes may arise between us and others as to the scope and validity of these or other patents. Any defense of the patents could prove costly and time-consuming, and there can be no assurance that we will be in a position, or deem it advisable, to carry on such a defense. A suit for patent infringement could result in increasing costs as well as delaying or halting development. Other private and public entities, including universities, may have filed applications for, may have been issued, or may obtain additional patents and other proprietary rights to technology potentially useful or necessary to us. We are not currently aware of any such patents, but the scope and validity of such patents, if any, and the cost and availability of such rights are impossible to predict. **Any trademarks we may obtain may be infringed or successfully challenged, resulting in harm to our business.** We expect to rely on trademarks as one means to distinguish our products from our competitors products. Once we select trademarks and apply to register them, our trademark applications may not be approved. Third parties may oppose our trademark applications or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in a loss of brand recognition and could require us to devote resources to advertising and marketing new brands. Our competitors may infringe on our trademarks, and we may not have adequate resources to enforce our trademarks. **Much of our intellectual property is protected as trade secrets or confidential know-how.** We consider proprietary trade secrets to be important to our business. This type of information must be protected diligently by us to protect its disclosure to competitors, since legal protections after disclosure may be minimal or non-existent. Accordingly, much of the value of this intellectual property is dependent upon our ability to keep our trade secrets. To protect this type of information against disclosure or appropriation by competitors, our policy is to require our employees, consultants, contractors and advisors to enter into confidentiality agreements with us. However, current or former employees, consultants, contractors and advisers may unintentionally or willfully disclose our confidential information to competitors, and confidentiality agreements may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Enforcing a claim that a third party illegally obtained, and is using, trade secrets is expensive, time-consuming and unpredictable. The enforceability of confidentiality agreements may vary from jurisdiction to jurisdiction. Failure to obtain or maintain trade secret protection could adversely affect our competitive position. Moreover, our competitors may independently develop substantially equivalent proprietary information and may even apply for patent protection in respect of the same. If successful in obtaining such patent protection, our competitors could limit our use of such trade secrets. **We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.** We may also be subject to claims that former employees, suppliers, collaborators or other third parties have an ownership interest in our patents or other intellectual property. We may be subject to ownership disputes in the future arising, for example, from conflicting obligations of suppliers, consultants or others who are involved in developing our products. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and employees. | 16 | | **Intellectual property rights do not necessarily address all potential threats to our business.** The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business. The following examples are illustrative: | | | others may be able to develop technologies that are similar to our technology platforms but that are not covered by the claims of any patents, should they issue, that we own or license; | | | | | | | | | | we or our licensors might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or license; | | | | | | | | | | we or our licensors might not have been the first to file patent applications covering certain aspects of our inventions; | | | | | | | | | | others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; | | | | | | | | | | it is possible that our pending patent applications will not lead to issued patents; | | | | | | | | | | issued patents that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; | | | | | | | | | | our competitors might conduct research and development activities in the U.S. and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; | | | | | | | | | | we may not develop additional proprietary technologies that are patentable; and | | | | | | | | | | the patents of others may have an adverse effect on our business. | | **We may need to defend ourselves against patent or trademark infringement claims, which may be time-consuming and cause us to incur substantial costs.** Companies, organizations or individuals, including our competitors, may own or obtain patents, trademarks or other proprietary rights that would prevent or limit our ability to make, use, develop or sell our products or components, which could make it more difficult for us to operate our business. The automotive aftermarket has been characterized by significant litigation and other proceedings regarding patents, patent applications and other intellectual property rights. The situations in which we may become parties to such litigation or proceedings may include: | | | litigation or other proceedings we may initiate against third parties to enforce our patent rights or other intellectual property rights | | | | | | | | | | litigation or other proceedings we or our licensee(s) may initiate against third parties seeking to invalidate the patents held by such third parties or to obtain a judgment that our products do not infringe such third parties patents and | | | | | | | | | | litigation or other proceedings third parties may initiate against us to seek to enforce their patents and/or invalidate our patents. | | | 17 | | **If third parties initiate litigation claiming that our products infringe their patent or other intellectual property rights, we will need to defend against such proceedings.** The costs of resolving any patent litigation or other intellectual property proceeding, even if resolved in our favor, could be substantial. Many of our potential competitors will be able to sustain the cost of such litigation and proceedings more effectively than we can because of their substantially greater resources. In some instances, competitors may proceed with litigation or other proceedings pertaining to infringement of their intellectual property as a means to hinder or devaluate the target defendant company, with no intention of the matter being resolved in their favor. Uncertainties resulting from the initiation and continuation of patent litigation or other intellectual property proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other intellectual property proceedings may also consume significant management time and costs. Substantial additional costs may be evident in the event that litigation or other proceedings were initiated against us because we would have to seek legal defense or counsel in the state (U.S.) or province (Canada) where the litigation or legal proceedings were filed. Failure to adequately protect our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive advantage, and a decrease in our revenue which would adversely affect our business, prospects, financial condition and operating results. **Confidentiality agreements with employees and others may not adequately prevent the disclosure of trade secrets and other proprietary information.** In order to protect our proprietary technology and processes, we also rely in part on confidentiality agreements with our employees, consultants, outsourced manufacturers and other advisors. These agreements may not effectively prevent the disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position. **There are risks associated with outsourced production that may result in a decrease in our profit.** The possibility of delivery delays, product defects and other production-side risks stemming from our use of outsourced manufacturers and suppliers cannot be eliminated. In particular, inadequate production capacity among outsourced manufacturers could result in us being unable to supply enough product amid periods of high product demand, the opportunity costs of which could be substantial. In addition, if our outsourced manufacturers or suppliers are unable or unwilling to adopt new production methods, automation, quality systems or other technological improvements necessary to support our current or future products on a timely and cost-effective basis, our manufacturing costs, product quality, launch timing and ability to compete could be adversely affected **We have competition for our market share which could harm our sales.** We participate in the automotive aftermarket equipment industry which is highly competitive for a relatively limited customer base. Companies that compete in this market include RealTruck, Truck Accessories Group, and Agri-Cover, Inc., among others. Many of our current competitors are significantly better funded and have longer operating histories than we do. In addition, some of our competitors sell their products at prices lower than ours, and we compete primarily on the basis of product quality, features, value, service, and customer relationships. Our competitive success also depends on our ability to maintain a strong brand and the belief that customers will need our products and services to meet their growth requirements. Alternatively, in the case of generic competition, competitors products may be of equal or better quality and sold at substantially lower prices than our products. At times, competitors may also release a generic or re-branded version of a current and successful product at a substantially reduced price in efforts to increase revenues or market share. As a result, if we fail to maintain our competitive position, this could have a material adverse effect on our business, cash flow, results of operations, financial position and prospects. | 18 | | **We may not have sufficient product liability insurance to cover potential damages.** The existence of any defects, errors or failures in our products or the misuse of our products could also lead to product liability claims or lawsuits against us. While we had $5,000,000 in umbrella coverage on top of our $1,000,000 aggregate product liability coverage as of the date of this prospectus, we have no assurance that this insurance will be adequate to protect us from all material judgments and expenses related to potential future claims or that these levels of insurance will be available at economical prices, if at all. To that extent, product liability insurance is conditional and up for further investigation. A successful product liability claim could result in substantial costs for us. Even if we are fully insured as it relates to a claim, a claim could nevertheless diminish our brand and divert managements attention and resources, which could have a negative impact on our business, financial condition and results of operations. **We may produce products of inferior quality or perceived inferior quality which would cause us to lose customers.** Although we make an effort to ensure the high quality of our light truck tonneau cover products, they could from time to time contain defects, anomalies or malfunctions that are undetectable at the time of shipment. These defects, anomalies or malfunctions could be discovered after our products are shipped to customers, resulting in the return or exchange of our products, customers claims for compensatory damages or discontinuation of the use of our products, which could negatively impact our operating results. We do not presently have product recall (or similar function) insurance that protects a company against broad-scale product manufacturing defects, engineering defects and the costs related to a broad product recall such as shipping, replacement or repairs. Even if in place, there is no guarantee that the full costs of any reimbursements or claims, lawsuits or litigation would be covered by such insurance. **Geopolitical conditions, including direct or indirect acts of war or terrorism, could have an adverse effect on our operations and financial results.** Geopolitical conditions, including but not limited to acts of war, terrorism, political and social instability, may negatively impact our business operations and financial performance. Our business activities could face interruptions due to such unpredictable geopolitical events. Notably, the recent escalation of military conflict by Russia in Ukraine in February 2022, the internal conflict within Sudan that erupted in April 2023 between the Rapid Support Forces and the Sudanese Armed Forces, and the conflict initiated by Hamas against Israel in October 2023, leading to a war in Gaza, have all contributed to a tense geopolitical climate. This tension has also encouraged Houthi attacks on commercial vessels in the Red Sea and hindered diplomatic efforts in the Middle East. Moreover, ongoing conflicts in regions such as Ethiopia and Myanmar further underscore the global nature of these geopolitical risks. In reaction to the invasion of Ukraine by Russia, the U.S. along with several other nations have enforced substantial sanctions and export controls on Russia and Belarus, as well as on certain individuals and enterprises linked to their political, commercial, and financial sectors. There is a possibility that additional sanctions, trade restrictions, and retaliatory measures may be adopted should these conflicts persist or escalate. The full ramifications of these and other global conflicts are challenging to predict but may lead to increased geopolitical tension, regional instability, shifts in geopolitical alliances, cyber threats, or interruptions in energy exports. These outcomes could have a considerable negative effect on international trade, currency exchange rates, regional economies, and the global economic landscape. In addition to the above, conflicts involving Iran and instability in the Middle East have contributed to volatility in global financial markets, increases in energy prices and inflationary pressures. While we do not have operations, suppliers or customers in the affected regions, these developments could indirectly impact our business by increasing global energy and transportation costs and contributing to higher costs of materials and logistics across our global supply chain, including materials sourced from our suppliers in Asia, and may reduce consumer demand for our products, which are generally discretionary in nature. In addition, such conditions could result in adverse capital markets conditions, including reduced liquidity and increased volatility, which could impair our ability to access capital on acceptable terms, or at all. Any of these factors could adversely affect our business, financial condition and results of operations. **We currently, and may in the future, have assets held at financial institutions that may exceed the insurance coverage offered by the Federal Deposit Insurance Corporation (FDIC), the loss of such assets would have a severe negative effect on our operations and liquidity.** **** We may maintain our cash assets at certain financial institutions in the U.S. in amounts that may be in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit of $250,000. In the event of a failure of any financial institutions where we maintain our deposits or other assets, we may incur a loss to the extent such loss exceeds the FDIC insurance limitation, which could have a material adverse effect upon our liquidity, financial condition and our results of operations. | 19 | | **Risks Associated with Outsourced Manufacturing and Foreign Sourcing** **Evolving U.S. trade regulations and policies with China have in the past and may in the future have a material and adverse effect on our business, financial condition and results of operations.** Our soft tonneau covers and some raw materials are sourced from China. The U.S. government has recently imposed a variety of tariffs, duties and other trade measures on imports from China, and there is an increasing risk of further changes to tariffs or other trade restrictions. Any tariffs, duties, quotas, export controls, sanctions or other trade restrictions imposed on products that we or our suppliers import for sale or production in the U.S. would adversely and directly impact our cost of goods sold and could force us to seek alternative suppliers, which may not be as cost effective or readily available. In addition, changes in U.S. trade regulations and policies could have an adverse impact on trade relations between the U.S. and certain foreign countries, which could materially and adversely affect our relationships with our international suppliers and reduce the supply of goods available to us. Further, we cannot predict the extent to which the U.S. or foreign governments will implement new or modified trade regulations and policies, which creates uncertainties in planning our sourcing strategies and forecasting our margins. Although we are taking steps to mitigate these risks, including evaluating alternative sourcing and manufacturing strategies, the COR energy storage system is expected to be manufactured initially in China, we and our manufacturing partner are actively evaluating potential U.S. production options for future periods. However, transitioning to domestic production may involve significant costs, regulatory approvals and operational challenges, and there is no guarantee that it will be operational in the anticipated timeframe. If additional tariffs or other trade measures are implemented on our products, or other retaliatory trade measures are taken, our costs could increase, and we may be required to raise our prices, which could materially and adversely affect our results. In addition, extended trade tensions and regulatory uncertainties may disrupt our supply chain, delay production or negatively impact our ability to compete in the market. **There are risks associated with outsourced production in China, and their laws may have a material adverse effect on our financial stability.** We have historically purchased all our soft tonneau cover finished goods from one to two suppliers in China. Changes in Chinese laws and regulations, or their interpretation, or the imposition of confiscatory taxation or restrictions are matters over which we have no control. While the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization, there is no assurance that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice. For example, the Chinese government has enacted some laws and regulations dealing with matters such as corporate organization and governance, foreign investment, commerce, taxation and trade. However, their experience in implementing, interpreting and enforcing these laws and regulations is limited and, in turn, our ability to enforce commercial claims or to resolve commercial disputes is unpredictable. If our business ventures with Chinese manufacturers and suppliers are unsuccessful, or other adverse circumstances arise from these transactions, we face the risk that the parties to these ventures may seek ways to terminate the transactions. The resolution of these matters may be subject to the exercise of considerable discretion by agencies of the Chinese government, and forces unrelated to the legal merits of a particular matter or dispute may influence their determination. Any rights we may have to specific performance or to seek an injunction under Chinese law are severely limited, and, without a means of recourse by virtue of the Chinese legal system, we may be unable to prevent these situations from occurring. The occurrence of any such events could have a material adverse effect on our business, financial condition and results of operations in such guises as currency conversion, imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises. In that context, we may have to evaluate the feasibility of acquiring alternative or fallback manufacturing capabilities to support the production of our existing and future soft tonneau cover products. Such a development could adversely affect our cost structure inasmuch as we would be required to support sales at an acceptable cost and might have relatively limited time to adapt. We have not manufactured our own soft tonneau covers in the past and are not planning to do so in the short term. That is because developing these technological capabilities and building or purchasing a facility will increase our expenses with no guarantee that we will be able to recover our investment in our manufacturing capabilities. | 20 | | **We engage in cross-border sales transactions which present tax risks among other obstacles.** Cross-border sales transactions carry a risk of changes in import tax and/or duties related to the import and export of our product, which can result in pricing changes, which will affect revenues and earnings. Cross-border sales transactions carry other risks including, but not limited to, changing regulations, wait times, customs inspection and lost or damaged product. **We are subject to foreign currency risk which may adversely affect profitability.** We are subject to foreign exchange risk as we manufacture our products in China, market extensively in both Canadian and U.S. markets, and employ people residing in both the U.S. and Canada. Meanwhile, we report results of operations in U.S. Dollars (USD). Since our Canadian customers pay in Canadian Dollars (CAD), we are subject to gains and losses due to fluctuations in the USD relative to the CAD. While having our soft tonneau covers manufactured in China, our manufacturers are paid in USD to better avoid the relatively greater fluctuation of the Chinese Yuan (RMB). Any large fluctuations in the exchange between the RMB and USD may cause product costs to increase, therefore affecting revenues and profits, potentially adversely. **Changes in U.S. government policies or regulations, including potential rollbacks of electric vehicle initiatives, could adversely affect our business, strategy, and growth prospects.** **** Our business strategy may rely, in part, on regulatory support for electric vehicle adoption, including incentives, mandates, infrastructure investment and emissions regulations. However, President Donald Trump has signed an executive order titled *Unleashing American Energy*, indicating that his administration intends to reverse electric vehicle mandates implemented by the prior administration. In addition, President Trump has paused billions of dollars in federal funding allocated toward EV charging infrastructure. The actions reflect a shift in federal energy and transportation policy, and the future of the U.S. regulatory environment surrounding electric vehicles remains uncertain. Any reduction or elimination of governmental support for EV adoption or related infrastructure development could negatively impact market demand, hinder our growth initiatives and materially affect our financial condition and results of operations. **Risks Related to the Ownership of Our Securities** **We have a large number of authorized but unissued shares of our common stock which will dilute existing ownership positions when issued.** At December 31, 2025, our authorized capital stock consisted of 45,000,000 shares of common stock and 10,000,000 shares of preferred stock. A substantial number of shares of our common stock remain available for issuance, including shares issuable upon the exercise of outstanding warrants. Our Board of Directors has the authority to issue additional shares of common stock and, with respect to preferred stock, to establish the rights, preferences and privileges of one or more series of preferred stock without further stockholder approval, except where stockholder approval may be required by applicable law or the rules of Nasdaq or any other trading market on which our common stock may be listed. The issuance of additional shares of common stock could dilute the ownership interests of existing stockholders. In addition, the issuance of preferred stock could adversely affect the voting power, dividend rights and other rights of holders of our common stock and could have the effect of discouraging, delaying or preventing a change in control of the Company. **Our common stock or warrants may be affected by limited trading volume and price fluctuations, which could adversely impact the value of our common stock.** Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market prices of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the market prices of our common stock and warrants to fluctuate substantially. These fluctuations may also cause short sellers to periodically enter the market in the belief that we will have poor results in the future. We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our common stock and warrants will be stable or appreciate over time. **We may need, but be unable, to obtain additional funding on satisfactory terms, which could dilute our stockholders or impose burdensome financial restrictions on our business.** We have relied upon cash from financing activities, and, in the future, we hope to rely on revenues generated from operations to fund the cash requirements of our activities. However, there can be no assurance that we will be able to generate any significant cash from our operating activities in the future. Future financing may not be available on a timely basis, in sufficient amounts or on terms acceptable to us, if at all. Any debt financing or other financing of securities senior to the common stock will likely include financial and other covenants that will restrict our financing and/or operational flexibility. Any failure to comply with these covenants would have a material adverse effect on our business, prospects, financial condition and results of operations because we could lose our existing sources of funding, and our ability to secure new sources of funding could be impaired. | 21 | | **Our stock ownership structure has the effect of concentrating voting control with our Chief Executive Officer and Chairman, Steven Rossi, which will limit the ability of other shareholders to influence the outcome of important decisions.** Mr. Steven Rossi currently owns 100% of our outstanding Series A Preferred Stock which entitles him to 51% of the voting power of our outstanding voting equity. Subject to any fiduciary duties owed to our other stockholders under Nevada law, Mr Steven Rossi is able to exercise significant influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, and will have some control over our management and policies. Mr. Steven Rossi may have interests that are different from yours. For example, Mr. Steven Rossi may support proposals and actions with which you may disagree. The concentration of ownership could delay or prevent a change in control of our Company or otherwise discourage a potential acquirer from attempting to obtain control of our Company, which in turn could reduce the price of our stock. In addition, Mr. Steven Rossi could use his voting influence to maintain our existing management and directors in office, delay or prevent changes in control of our Company, or support or reject other management and Board proposals that are subject to stockholder approval, such as amendments to our employee stock plans and approvals of significant financing transactions. **If research analysts do not publish research about our business, or if they issue unfavorable commentary or downgrade our common stock, our stock price and trading volume could decline.** The trading market for our securities may depend in part on the research and reports that research analysts publish about us and our business. If we do not maintain adequate research coverage, or if any of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, the price of our common stock could decline. If one or more of our research analysts ceases to cover our business or fails to publish reports on us regularly, demand for our securities could decrease, which could cause the price of our common stock or trading volume to decline. **Anti-takeover provisions in our charter documents and Nevada law could discourage, delay or prevent a change of control of our Company and may affect the trading price of our common stock.** We are a Nevada corporation, and the anti-takeover provisions of the Nevada Control Shares Acquisition Act may discourage, delay or prevent a change of control by limiting the voting rights of control shares acquired in a control share acquisition. In addition, our amended and restated articles of incorporation, as amended (Articles of Incorporation), and amended and restated bylaws (Bylaws) may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Among other things, our Articles of Incorporation and Bylaws: | | | authorize the issuance of blank check preferred stock that could be issued by our Board in response to a takeover attempt; | | | | | | | | | | provide that vacancies on our Board, including newly created directorships, may be filled only by a majority vote of directors then in office, except a vacancy occurring by reason of the removal of a director without cause shall be filled by vote of the stockholders; and | | | | | | | | | | limit who may call special meetings of stockholders. | | These provisions could have the effect of delaying or preventing a change of control, whether or not it is desired by, or beneficial to, our stockholders. **We do not intend to pay dividends in the foreseeable future.** We currently do not expect to declare any dividends on our common stock in the foreseeable future. Any decision to declare or pay dividends in the future will be at the discretion of our Board of Directors and may also be subject to the rights and preferences of any outstanding preferred stock, including our Series C Preferred Stock. Accordingly, even if our Board of Directors were to determine to declare dividends in the future, holders of preferred stock may be entitled to receive dividends before any dividends may be declared or paid on our common stock. As a result, your only opportunity to achieve a return on your investment in our common stock may be if the market price of our common stock appreciates and you sell your shares at a profit. The market price for our common stock may never exceed, and may fall below, the price that you pay for such common stock. See Part II, Item 5 *Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesDividend Policy*. **Risks Associated with Holding Cryptocurrency Reserves** **Our Bitcoin acquisition strategy may expose us to various risks associated with bitcoin.** *Bitcoin is a highly volatile asset.* ** Bitcoin is a highly volatile asset that has traded at widely fluctuating prices during recent periods. The trading price of bitcoin was significantly lower during prior periods, and such decline may occur again in the future. Significant declines in the price of bitcoin could materially and adversely affect the value of our bitcoin holdings and our financial condition. | 22 | | *Changes in our ownership of bitcoin could have accounting, regulatory and other impacts.* ** While we currently intend to own bitcoin directly, we may investigate other potential approaches to owning bitcoin, including indirect ownership (for example, through ownership interests in a fund that owns bitcoin). If we were to own all or a portion of our bitcoin in a different manner, the accounting treatment for our bitcoin, our ability to use our bitcoin as collateral for additional borrowings, and the regulatory requirements to which we are subject, could change, which may have a material impact on our financial statements, liquidity, or regulatory obligations. **We may be subject to regulatory developments related to crypto assets and crypto asset markets, which could adversely affect our business, financial condition, and results of operations.** As bitcoin, XRP and other digital assets are relatively novel and the application of state and federal securities laws and other laws and regulations to digital assets is unclear in certain respects, regulators in the U.S. and internationally may interpret or apply existing laws and regulations in a manner that adversely affects the ownership, transfer, valuation, or use of digital assets The U.S. federal government, states, regulatory agencies, and foreign countries may also enact new laws and regulations, or pursue regulatory, legislative, enforcement or judicial actions, that could materially impact the price of bitcoin or the ability of individuals or institutions such as us to own or transfer bitcoin. **The acceptance of blockchain and digital assets as payment on our platform introduces significant risks, including, without limitation, regulatory uncertainty, market volatility, and operational challenges.** We accept digital assets as a form of payment from our customers. Digital assets are subject to evolving legal and regulatory frameworks in the U.S. and internationally. Any change in laws regulating or enforcement actions pertaining to digital assets may restrict the use of these assets, including bitcoin and XRP, expose us to penalties and increase compliance costs. Our ability to convert digital asset payments into fiat currency may be impaired during periods of market instability, while funds stored in digital assets lack protections offered by institutions such as the Federal Deposit Insurance Corporation or the Securities Investor Protection Corporation. The integration of blockchain payment systems may expose us to risks of cyberattacks, fraud, or technical failures, potentially resulting in financial losses or reputational damage. **ITEM 1B. UNRESOLVED STAFF COMMENTS** None. **ITEM 1C. CYBERSECURITY** We acknowledge the increasing importance of cybersecurity in todays digital and interconnected world. Cybersecurity threats pose significant risks to the integrity of our systems and data, potentially impacting our business operations, financial condition and reputation. As a smaller reporting company, we currently do not have enhanced cybersecurity measures, a dedicated cybersecurity team or robust protocols in place to manage cybersecurity risks. We have not yet conducted comprehensive risk assessments, established an incident response plan or engaged with external cybersecurity consultants for assessments or services. We intend to invest more resources into improving our assessment and response to cybersecurity risk in the future. Given our current stage of cybersecurity development, we have not experienced any significant cybersecurity incidents to date. However, we recognize that the absence of a formalized cybersecurity framework may leave us vulnerable to cyberattacks, data breaches and other cybersecurity incidents. Such events could potentially lead to unauthorized access to, or disclosure of, sensitive information, disrupt our business operations, result in regulatory fines or litigation costs and negatively impact our reputation among customers and partners. In addition, cybersecurity incidents could have material adverse effects on our business strategy, financial condition, and results of operations (e.g., a significant breach could result in direct financial losses due to fraud, system downtime impacting revenue generation, increased compliance costs or contractual liabilities with third-party vendors and customers). We are in the process of evaluating our cybersecurity needs and developing appropriate measures to enhance our cybersecurity posture. This includes considering the engagement of external cybersecurity experts to advise on best practices, conducting vulnerability assessments and developing an incident response strategy. Our goal is to establish a cybersecurity framework that is commensurate with our size, complexity and the nature of our operations, thereby reducing our exposure to cybersecurity risks. | 23 | | In addition, the Board will oversee any cybersecurity risk management framework, and the Boards governance committee and the firms CEO, Steven Rossi, will review and approve any cybersecurity policies, strategies and risk management practices. The Board (or designated committee or officer) will receive periodic updates on cybersecurity risks, including emerging threats, mitigation efforts and incident response activities. The updates will be provided at least annually, or more frequently as needed, to ensure cybersecurity risks are appropriately managed and integrated into our broader risk oversight strategy. Despite our efforts to improve our cybersecurity measures, there can be no assurance that our initiatives will fully mitigate the risks posed by cyber threats. The landscape of cybersecurity risks is constantly evolving, and we will continue to assess and update our cybersecurity measures in response to emerging threats. We do, however, have cybersecurity insurance coverage in the aggregate amount of $1,000,000 per annual policy period, which covers damages from a range of potential cyber security issues including but not limited to property damage, computer crime, privacy liability, privacy regulatory defense, cyber extortion, and post breach remediation. For a discussion of potential cybersecurity risks affecting us, please refer to the Risk Factors section. **ITEM 2. PROPERTIES** As of December 31, 2025, we had three facilities located throughout the U.S. and Canada. One of these facilities is owned and the remainder are leased. Our principal facilities are as follows: | Address | | Type | | Ownership | | Size (sq ft) | | | 2500 N America Dr., West Seneca, NY 14224, U.S. (1) | | Corporate Headquarters, Warehouse, and Manufacturing | | Owned; Collateral for line of credit | | 152,847 | | | 391 Steelcase Road, West, Unit 17, Markham L3R3V9, Canada (2) | | Office, R&D Facility | | Rented | | 1,992 | | | 967 W. Hwy NN, Suites C, D, E &F, Ozark, MO, U.S. (3) | | Office, R&D Facility | | Rented | | 12,500 | | | | (1) | For further information on this property, see Note 12 - Indebtedness of Part II Item 8, Financial Statements and Supplementary Data, of this Report. | | | | (2) | Two-year lease, dated July 18, 2025, at a rate of $2,299 CAD per month with a termination date of July 17, 2027. | | | | (3) | Three-year lease, dated May 1, 2025 - at a variable rate beginning at $9,659 USD per month with a termination date of April 30, 2028. | | We believe our facilities are suitable and adequate for our current operations. **ITEM 3. LEGAL PROCEEDINGS** From time to time, we are involved in lawsuits, claims, investigations, and proceedings. We are not presently a party to any material pending or threatened legal proceedings, nor do we have any knowledge of any such pending claim. **ITEM 4. MINE SAFETY DISCLOSURES** Not applicable. | 24 | | **PART II** **ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES** **Market Information** Our common stock commenced trading on The Nasdaq Capital Market under the symbol WKSP on August 4, 2021. Prior to trading on Nasdaq, our common stock was quoted on the OTCQB Market under the symbol WKSP. **Holders of Common Stock** On March 26, 2026, there were 11,885,519 holders of record of our common stock. **Stock Transfer Agent** Our transfer agent is Odyssey Transfer and Trust Company., located at 2155 Woodlane Drive, Suite 100, Woodbury, MN 55125. Their telephone number is (612) 453-4531. **Dividend Policy** We have never declared or paid any cash dividends on our common stock. We intend to retain future earnings, if any, to finance the operation of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our Board after considering our financial condition, results of operations, capital requirements, business prospects and other factors our Board deems relevant, and subject to the restrictions contained in any future financing instruments, and the rights and preferences of any outstanding preferred stock, including our Series C Preferred Stock. At-The-Market Offering On September 30, 2022, we filed a shelf registration statement on Form S-3 (File No. 333-267696), which was declared effective by the SEC on October 13, 2022. The registration statement included (i) a base prospectus covering the offering, issuance and sale of up to $30,000,000 of our common stock, preferred stock, warrants, rights and units, and (ii) a prospectus supplement relating to the offer and sale of up to $13,000,000 of our common stock pursuant to an At The Market Offering Agreement, dated September 30, 2022 (the Sales Agreement), with H.C. Wainwright & Co., LLC (Wainwright), as sales agent. Under the Sales Agreement, Wainwright is entitled to a commission equal to 3.0% of the gross sales price of shares sold. From January 1, 2025 through October 13, 2025 (the expiration of the registration statement), we sold an aggregate of 110,619 shares of our common stock pursuant to the Sales Agreement (the ATM Shares), for aggregate gross proceeds of $521,835 and net proceeds of $504,372, after deducting commissions and other related transaction costs of $17,463. On November 14, 2025, we entered into an amendment to the Sales Agreement with Wainwright (the Amendment), pursuant to which we may offer and sell shares of our common stock having aggregate sales proceeds of up to $4,000,000 from time to time through Wainwright, acting as sales agent. The sales are made pursuant to a prospectus supplement and the accompanying base prospectus included in a registration statement on Form S-3 (File No. 333-291582), filed with the SEC on November 14, 2025, and declared effective on December 12, 2025. **Unregistered Sales of Equity Securities** **** *December 2025 Warrant Inducement* On December 11, 2025, the Company entered into a warrant exercise inducement agreement with the holder of certain outstanding warrants originally issued on March 20, 2024 and March 3, 2025. Pursuant to the agreement, the holder exercised warrants to purchase an aggregate of 2,194,526 shares of the Companys common stock at a reduced exercise price of $2.90 per share, resulting in gross proceeds of approximately $6.4 million to the Company before placement agent fees and other offering expenses. In consideration for the exercise of the existing warrants, the Company issued new warrants to purchase up to 3,840,421 shares of common stock (the Inducement Warrants). The Inducement Warrants were issued in a private placement to the holder of the existing warrants and were not registered under the Securities Act of 1933, as amended (the Securities Act). The Inducement Warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. The holder represented that it was an accredited investor and that the Inducement Warrants were acquired for investment purposes and not with a view to distribution in violation of the Securities Act. The shares of common stock issuable upon exercise of the Inducement Warrants were subsequently registered for resale pursuant to the Companys registration statement on Form S-3 (File No. 333-292823), filed January 20, 2025 and declared effective January 28, 2026. *February 2025 Warrant Inducement* On February 27, 2025, the Company entered into a warrant exercise inducement agreement with the holder of certain existing warrants originally issued on May 29, 2024. Pursuant to the agreement, the holder exercised warrants to purchase 1,295,000 shares of the Companys common stock at a reduced exercise price of $5.198 per share, resulting in gross proceeds of approximately $6.7 million, before placement agent fees and other offering expenses. In consideration for such exercise, the Company issued new warrants to purchase up to 1,424,500 shares of its common stock at an exercise price of $6.502 per share, subject to adjustment. The new warrants become exercisable six months from the date of issuance and expire on the fifth anniversary of the date of issuance. The shares of common stock issuable upon exercise of the new warrants were registered for resale pursuant to the Companys registration statement on Form S-1 (File No. 333-286255), filed with the SEC on March 28, 2025 and declared effective on April 3, 2025. The Company used the net proceeds from the transaction for working capital and general corporate purposes. The Company engaged Maxim Group LLC as its exclusive financial advisor in connection with the transaction. **Securities Authorized for Issuance Under Equity Compensation Plans** See *Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersEquity Incentive Plans* of this report which is incorporated herein by reference. **Equity Incentive Plans** See *Part III Item 11, Executive Compensation* of this report which is incorporated herein by reference. | 25 | | **ITEM 6. [RESERVED]** **ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** *Prospective investors should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this annual report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See Cautionary Note Regarding Forward-Looking Statements. This discussion should be read in conjunction with our audited consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K*. **Overview** Worksport Ltd., through its subsidiaries, designs, develops, manufactures, and owns the Intellectual Property on a portfolio of tonneau cover, solar integration, portable power station, and NP (Non-Parasitic), Hydrogen-based green energy products and solutions for the automotive aftermarket accessories, power storage, residential heating, and electric vehicle-charging industries. We seek to provide consumers with next-generation automotive aftermarket accessories while capitalizing on growing consumer interest in clean energy solutions and power grid independence. Rising Popularity of Electric Vehicles Electric Vehicles (EVs) have been increasing in consumer interest, whether that interest takes the form of vehicle pre-orders, sales, or investments. As we begin marketing our Worksport SOLIS and COR, we plan to market the SOLIS as a must-have accessory for electric light duty vehicle owners while simultaneously riding the coattails of EV popularity to promote our other products (COR and conventional tonneau covers) to the very large population of Americans that have an interest in EVs without the funds to purchase them. Further, participating in the EV space allows us to target consumers with an interest in cutting-edge technologies a great market in which to promote our COR portable power system. Regulatory Environment Favoring Electric Vehicles The Build Back Better Bill was a strong indication of upcoming and favorable U.S. regulations. Many regulations that improve North Americas EV charging infrastructure or provide grants to businesses operating in the EV space would benefit us. While we are primarily focused on the light duty vehicle market, our energy products are particularly useful for electric light duty pickup trucks and, therefore, are positioned to benefit greatly from any bill that increases the prevalence of such vehicles. However, President Donald Trump has signed an executive order titled Unleashing American Energy in which he has indicated his administration will be reversing the electric vehicle mandates of Joe Bidens former administration, and he has further paused billions of dollars in funding allocated towards electric vehicle charging stations. The future of the U.S.s regulatory environment surrounding electric vehicles is uncertain. Limited Competitive Landscape Our conventional tonneau covers are engineered for enhanced user experience and resistance to wear-and-tear, making them strong and competitive products in an otherwise consolidated and saturated market. The Worksport COR, however, operates in a much wider yet unsaturated market. The global Portable Power Station market is quickly growing, and the competitive landscape is far from consolidated. The solar tonneau cover market is in its infancy, and its a market in which we have first-mover advantage. To ensure we do not fall behind future competitors, we are highly focused on protecting our intellectual property both domestically and abroad. **Economic Conditions and Market Trends** As a result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below is a brief discussion of the key factors impacting our results of operations. | 26 | | **Tariffs and Supply Chain Impact** Our hybrid manufacturing model, which includes sourcing certain products and components from overseasparticularly from Chinaexposes us to risks associated with tariffs and evolving global trade policies. Tariffs on imported raw materials, components, and finished goods have increased our input costs and may continue to do so in the future. During fiscal 2025, increases in certain material and component costs attributable, in part, to tariffs contributed to higher cost of goods sold; however, these increases were offset by higher production volumes, improved overhead absorption, and operational efficiencies, resulting in an overall improvement in gross margins compared to the prior fiscal year. These impacts are both direct, through duties applied to imported products and components, and indirect, as suppliers and logistics providers may pass through increased costs associated with tariff regimes and related trade restrictions. While we have taken steps to mitigate these risks through supplier diversification, a portion of our supply chain remains dependent on foreign sources. As a result, tariffs and other trade measures may continue to increase our cost of goods sold and may impact product pricing and margins to the extent not offset by operational efficiencies or pricing actions. In addition, changes in U.S. trade policy or further escalation of tariffs could disrupt supply availability or increase lead times, which may adversely affect our operations and results of operations. **Geopolitical and Macroeconomic Conditions** **** Recent geopolitical developments, including conflicts in the Middle East involving Iran, have contributed to volatility in global financial markets, higher energy prices and inflationary pressures. While we do not have direct exposure to the affected regions through our suppliers, customers or operations, these conditions may adversely affect our business. In particular, increases in global energy and transportation costs may increase our cost of goods sold, and inflationary pressures may increase the cost of materials sourced from our suppliers, including suppliers in Asia. In addition, such conditions may adversely affect consumer discretionary spending, which could reduce demand for our products. Volatility in the capital markets may also affect our ability to raise capital on favorable terms. The extent and duration of these conditions remain uncertain and could adversely affect our business, financial condition and results of operations. Climate Change Climate change threatens to cause many foreseeable as well as unforeseeable ramifications. In cautious preparation for those that are foreseeable, we strategically began domestic manufacturing operations in Western New York an economically growing region not immediately threatened by climate change to the same extent as other regions and possibly one that may benefit from future population migrations within the U.S. Further, we intend to lower our own carbon footprint by investing in energy-saving measures in our factory in West Seneca, NY. Considering climate change may also exacerbate geopolitical tensions, we are working to diversify our supply chain and lower our reliance on any particular region or country for raw materials in order to lower our exposure to climate change-induced economic or political instability. We believe our Worksport SOLIS and Worksport COR products will be received positively by the public for their resilience to, and even increased utility as a result of, Climate Change. However, we acknowledge the potentially negative environmental impacts of poor battery recycling and increasing demand for precious metals. We are actively researching ways to lower such environmental impacts. Inflation Prices of certain commodity products, including raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations, trade restrictions and tariffs. Increasing prices of the component materials for parts of our goods may impact the availability, quality and price of our products as suppliers search for alternatives to existing materials and increase the prices they charge. Our suppliers may also fail to provide consistent quality of product as they may substitute lower cost materials to maintain pricing levels. Rapid and significant changes in commodity prices may negatively affect our profit margins, and it may be difficult to mitigate worsened margins through customer pricing actions and cost reduction initiatives. Additionally, as central banks and the U.S. Federal Reserve increase interest rates to combat global inflation, the cost of debt financing increases. The U.S. Federal Reserve has begun to decrease interest rates in 2024, but they may persist at an elevated level for the foreseeable future. Our indebtedness arrangements both have floating interest rates, meaning we are susceptible to variable monthly mortgage and debt interest costs as a result of changes in interest rates. High interest rates have also resulted in a shift in institutional holdings away from micro-cap equities, which has negatively influenced our stocks trading volume. We continue to forge relationships with institutional investors and analysts in order to maintain a healthy trading volume. Gasoline Prices and Supply Chain Issues We faced significantly higher ocean freight, trucking, and container handling costs as well as last mile delivery costs in recent years all of which have increased our products landed costs. Higher oil and gasoline prices further increased these costs, and while such prices have come down from their 2022 highs, we continue to closely monitor gasoline and shipping costs. While the Freight Rate Index has significantly increased during certain periods due to geopolitical tensions and disruptions affecting global shipping routes, the shipping routes used by Worksport have not faced dramatic price hikes. Regardless, Worksport is closely monitoring international shipping costs. Our transition towards domestic manufacturing and assembly is anticipated to largely offset these higher costs, as we believe we will be less exposed to higher international shipping costs. We are also identifying North American suppliers of our products components and will prioritize transport by rail when possible to avoid high trucking costs. | 27 | | Foreign Currencies We are subject to foreign exchange risk as we manufacture certain products and components in China, market extensively in both U.S. and Canadian markets, employ people residing in both the U.S. and Canada and, to date, have raised funds in both U.S. Dollars (USD) and Canadian Dollars (CAD). Meanwhile, we report results of operations in USD. Since our Canadian customers pay in CAD, we are subject to gains and losses due to fluctuations in the USD relative to CAD. Our manufacturers in China are paid in USD to better avoid the relatively greater fluctuation of the Chinese Yuan. To the extent the USD strengthens against any of these foreign currencies, the translation of these foreign currencies denominated transactions results in reduced revenue, operating expenses and net income for our operations. **Critical Accounting Policies** Our discussion and analysis of consolidated results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. of America. The preparation of these consolidated financial statements requires us to make estimates assumptions and judgments that affect the amounts reported. These estimates, assumptions and judgments are affected by our application of accounting principles, which are discussed in Note 1 Description of Business and Summary of Significant Accounting Policies of Part II, Item 8, Financial Statements and Supplementary Data, of this report. We believe the accounting policies discussed below are the most critical in understanding and evaluating our financial results. These critical accounting policies have been reviewed with the Audit Committee of our Board of Directors. **Revenue Recognition **In accordance with Accounting Standards Codification (ASC) 606 Revenue from Contracts with Customers, sales are recognized when (1) products are shipped, with no right of return except for defective products, and the title and risk of loss has passed to customers; and (2) when they are delivered based on the terms of the sale, and there is an identifiable contract with a customer with defined performance obligations, the transaction price is determinable, and the entity has fulfilled its performance obligation. Revenue related to shipping and handling costs billed to customers is included in net sales, and the related shipping and handling costs are included in cost of sales. **Inventory Valuation **At December 31, 2025, we had inventories of $9,530,671, or 57% of our current assets. Inventories are stated at the lower of cost or net realizable value with cost determined on a weighted average basis. We record valuation reserves to provide for slow-moving or obsolete inventory by principally using a formula-based method that increases the valuation reserve as the inventory ages. We also take specific circumstances into consideration. We consider overall inventory levels in relation to forecasted demand. Changes in these and other factors, such as low demand or technological obsolescence, could cause us to establish or increase our inventory reserves, which would negatively impact our gross margin. **Reviews of Impairment of Long-Lived Assets** Long-lived assets held for use, which primarily includes finite-lived intangible assets, property, plant and equipment, and right-of-use assets, are evaluated for impairment whenever events or circumstances indicate that the undiscounted cash flows to be generated by their use over their expected useful lives and eventual disposition are less than carrying value. The long-term nature of these assets requires the estimation of their cash inflows and outflows several years into the future and only takes into consideration technological advances known at the time of the impairment test. **Income Taxes **Our annual tax rate is based on our operating results before taxes by jurisdiction, applicable statutory tax rates, the impacts of permanent differences, tax incentives, and tax planning opportunities in the jurisdictions in which we operate. Significant judgment is required in determining our annual tax rate and evaluating our tax positions. We record reserves against tax benefits when it is more likely than not that we will not sustain a position if the appropriate taxing jurisdiction had full information and examined our position. We adjust these reserves when facts and circumstances change, and there is a considerable amount of judgment in making these assessments. For further information, refer to Note 8, Income Taxes of Part III Item 8, Financial Statements and Supplementary Data, of this report. **Reverse Common Stock Split** On March 18, 2025, we effected the Reverse Stock Split at the ratio of 1:10, which immediately proportionally reduced the authorized number of shares of common stock from 299,000,000 to 29,900,000. Pursuant to the laws of the State of Nevada, shareholder approval was not required in order to effect the split as the Board has the authority to effect a reverse stock split without shareholder approval if the number of authorized shares of common stock is proportionally reduced as a result. No fractional shares were issued as a result of the Reverse Stock Split. Each fractional share was automatically rounded up to the next whole share. The Reverse Stock Split was undertaken in order for us to regain compliance with the minimum bid requirement under Nasdaq Listing Rule 5550(a)(2). **** **Amendment to Articles of Incorporation** On April 17, 2025, our Board of Directors and majority stockholder approved an amendment to our articles of incorporation to increase the total number of authorized shares of capital stock from 30,900,000 to 55,000,000, consisting of an increase in the authorized number of shares of common stock from 29,900,000 to 45,000,000 and an increase in the authorized number of shares of preferred stock from 1,000,000 to 10,000,000. The amendment was filed with the State of Nevada and became effective on May 19, 2025. The increase in authorized capital provides the Company with additional flexibility to issue equity securities in connection with capital-raising transactions, strategic initiatives, or other corporate purposes. | 28 | | **Consolidated Results of Operations** The following is a discussion of our results of operations for the fiscal year ended December 31, 2025 compared to the fiscal year ended December 31, 2024. | | | Years ended December 31, | | | Favorable (Unfavorable) 2025 vs. 2024 | | | | | | 2025 | | | 2024 | | | Amount | | | % | | | | Net sales | | $ | 16,101,738 | | | $ | 8,484,379 | | | $ | 7,617,359 | | | | 89.8 | % | | | Cost of sales | | | 11,626,831 | | | | 7,578,729 | | | | (4,048,102 | ) | | | (53.4 | )% | | | Gross profit | | | 4,474,907 | | | | 905,650 | | | | 3,569,257 | | | | 394.1 | % | | | Research and development | | | 1,538,923 | | | | 2,289,940 | | | | 751,017 | | | | 32.8 | % | | | General and administrative | | | 14,806,326 | | | | 11,709,925 | | | | (3,096,401 | ) | | | (26.4 | )% | | | Sales and marketing | | | 6,947,671 | | | | 2,386,504 | | | | (4,561,167 | ) | | | (191.1 | )% | | | Other operating income, net | | | (4,587 | ) | | | (14,885 | ) | | | (10,298 | ) | | | (69.2 | )% | | | Loss from operations | | | (18,813,426 | ) | | | (15,465,834 | ) | | | (3,347,592 | ) | | | (21.6 | )% | | | Interest expense | | | (592,755 | ) | | | (726,095 | ) | | | 133,340 | | | | 18.4 | % | | | Other (expense) income | | | 53,884 | | | | 28,140 | | | | 25,744 | | | | 91.5 | % | | | Net loss | | $ | (19,352,297 | ) | | $ | (16,163,789 | ) | | $ | (3,188,508 | ) | | | (19.7 | )% | | | Per share data | | | | | | | | | | | | | | | | | | | Basic and diluted earnings per share | | $ | (3.16 | ) | | $ | (5.84 | ) | | $ | 2.68 | | | | 46.0 | % | | | | | Years ended December 31, | | | Favorable (Unfavorable) | | | | Percent of net sales | | 2025 | | | 2024 | | | Percentage points | | | | Cost of sales | | 72 | % | | 89 | % | | 17 | % | | | Gross profit | | | 28 | % | | | 11 | % | | | 17 | % | | | Research and development expense | | | 10 | % | | | 27 | % | | | 17 | % | | | General and administrative expense | | | 92 | % | | | 138 | % | | | 46 | % | | | Sales and marketing expense | | | 43 | % | | | 28 | % | | | (15 | )% | | *Net sales* For the year ended December 31, 2025, net sales generated in the U.S. was $16,010,083, compared to $8,397,570 for the same period in 2024, an increase of 91%. For the year ended December 31, 2025, net sales generated in Canada was $90,955, compared to $67,519 for the same period in 2024, an increase of 35%. For the year ended December 31, 2025, net sales generated outside the U.S. and Canada was $700, compared to $19,290 for the same period in 2024. Net sales increased the year ended December 31, 2025, compared to the same period the prior year due to increased sales of tonneau covers to end users via the Companys online marketplace and various dealers and distributors. The Company increased its product offerings in 2025 to also include the AL4 and HD3 covers to end customers. The Company continues to focus on establishing new and strengthening existing business-to-consumer and business-to-business channels while also strengthening customer support to increase customer satisfaction and enable high product turnover. Worksport has successfully bolstered its business-to-consumer sales channels in 2025, and it is now focusing on increasing cost efficiencies in these sales channel as well as expanding its presence in additional business-to-business sales channel territories. For the business-to-consumer channel, we are focused on lowering our customer acquisition cost with additional focus on brand awareness and shift away from reliance on conversion marketing to increase brand awareness. For the business-to-business channel, we have assembled a strong team of both internal and external sales representatives, and we are actively presenting our product offerings to various dealers, wholesalers, and retailers across the U.S. and Canada. We intend to continue gradually increasing output capacity through refined production processes and increased personnel. Net sales from online retailers of our products increased from $4,930,822 in 2024 to $11,933,269 in 2025, an increase of 142%. Online retailers accounted for 74% of total net sales for the fiscal year ended December 31, 2025 compared to 58% for the fiscal year ended December 31, 2024. Distributor sales increased 884% for the fiscal year ended December 31, 2025 compared with the fiscal year ended December 31, 2024 with net sales of $4,168,469 and $423,627, respectively. There were no private label sales in 2025. Private label sales accounted for 37% or $3,129,930 of net sales for the fiscal year ended December 31, 2024. We expect to continue to grow our fields of business as we develop unique products with enhanced utility to offer to other prospective clients in the U.S. and Canadian markets. | 29 | | We distribute our products in the U.S. and Canada through an expanding network of wholesalers, distributors, and dealers, and through online channels, including major online marketplaces and our direct-to-consumer e-commerce platform. We intend to continue expanding both business-to-business and direct-to-consumer channels with product offerings unique to each of these channels. We also continue to pursue relationships with original equipment manufacturers and fleet customers where appropriate. We currently work closely with a large U.S. and a large Canadian distributor as well as online retailers to grow our customer base. We are 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. continental states. *Cost of Sales* The decrease in the cost of sales as a percentage of sales was primarily due to two factors: (1) increase production volume to support sales growth, including introduction of new product lines during 2025, and (2) overhead allocation efficiencies associated with higher production volume. These improvements offset increases in certain material, components, and landed costs, including the impact of tariffs on imported products and components sourced from overseas. While tariffs contributed to higher input costs during the fiscal year, the overall effect of increased scale and production efficiencies resulted in an improvement in our gross margin. We continue to employ a discounting strategy as part of a broader initiative to enhance market presence and build brand awareness. We anticipate this will well position us for sustained customer engagement in future periods, during which discounting may not be necessary to the same extent. As production volume grows and our manufacturing process becomes more efficient, we expect to allocate fixed costs included in overhead absorption against a larger production volume base. This scaling will be facilitated by reallocating more of our existing human capital and machinery resources toward production. We provide our distributors and online retailers an all-in wholesale price. This includes import duty charges, including tariffs, 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 U.S. or from the U.S. to Canada. Volume discounts are offered to certain high-volume customers, and we also offer a dock price or pickup program in which clients are able to pick up inventory directly from our stocking warehouse. *Operating Expenses* Operating expenses increased for the fiscal year ended December 31, 2025 by $6,916,849, from $16,371,484 for the fiscal year ended December 31, 2024 to $23,288,333 for the fiscal year ended December 31, 2025, due to the following factors. | | | Research and development expense: The $751,017 (33%) decrease relates to our transition from development of certain hard covers in 2024 (e.g., HD3, AL4, certain energy products) to production in 2025. We continued our development initiatives with our energy products and other tonneau covers in 2025 with the anticipation of production of 2026. | | | | | | | | | | General and administrative expense: The $3,096,401 (26%) increase was related to increased employment as we expand our operations and further develop our products. We also incurred expenses related to ongoing investment relations initiatives to further our brand recognition to investors during the period. | | | | | | | | | | Sales and marketing expense: The $4,561,167 (191%) increase in sales and marketing is primarily attributable to the Companys online optimization efforts, online marking campaigns and other traditional branding initiatives to create brand and product awareness. | | *Other Income ((Expense)* The $159,084 (23%) decrease in other expenses can be attributed to decreased interest expense based on our components of indebtedness in 2025. In 2024, we converted from a traditional mortgage to a line of credit which is secured by our production facility. **Liquidity and Capital Resources** As of December 31, 2025, we had $5,945,894 in cash and cash equivalents and $3,448,016 of remaining available capacity on our revolving line of credit. 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 Companys acquisition of Worksport in 2014, it has never generated a profit. During the fiscal year ended December 31, 2025, we had net losses of $19,352,297 (2024 - $16,163,789). As of December 31, 2025, the Company had working capital of $10,061,578 (2024 $7,304,110) and had an accumulated deficit of $83,873,790 (2024 - $64,476,966). | 30 | | In their 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. To date, our principal sources of liquidity consist of net proceeds from public and private securities offerings and cash exercises of outstanding warrants. During the fiscal year ended December 31, 2025, the Company received net proceeds of approximately $21.8 million 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 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. We have raised significant funds during the 2025 fiscal year by utilizing the following public and private offerings: At-the-Market Offering Program During the fiscal year ended December 31, 2025, the Company sold 110,619 shares of its common stock under its at-the-market offering program pursuant to the At-the-Market Offering Agreement, dated September 30, 2022 (the Sales Agreement), as amended on November 14, 2025, with H.C. Wainwright & Co., LLC acting as sales agent. These sales resulted in gross proceeds of approximately $521,835 and net proceeds of approximately $504,372, after commissions and offering expenses. Under the Sales Agreement, the Company pays Wainwright a commission of 3.0% of the gross sales price of the shares sold through the at-the-market offering program. December 2025 Warrant Inducement On December 11, 2025, the Company entered into a warrant exercise inducement agreement with the holder of certain existing warrants originally issued on March 20, 2024 and March 3, 2025. Pursuant to the agreement, the holder exercised warrants to purchase 2,194,526 shares of the Companys common stock at a reduced exercise price of $2.90 per share, resulting in gross proceeds of approximately $6.4 million, before placement agent fees and other offering expenses. In consideration for the exercise, the Company issued new warrants to purchase up to 3,840,421 shares of common stock. The shares of common stock issuable upon exercise of the new warrants were registered for resale pursuant to the Companys registration statement on Form S-3 (File No. 333-292823), filed January 20, 2025 and declared effective January 28, 2025. The Company intends to use the net proceeds from the transaction for general corporate and working capital purposes. The Company engaged Maxim Group LLC as its exclusive financial advisor in connection with the transaction. Regulation A Offering Between June 2025 and October 2025, we conducted a Regulation A offering pursuant to which we sold units consisting of shares of Series C Preferred Stock and accompanying warrants, generating aggregate gross proceeds of approximately $10.0 million before fees and expenses. February 2025 Warrant Inducement On February 27, 2025, the Company entered into a warrant exercise inducement agreement with the holder of certain existing warrants originally issued on May 29, 2024. Pursuant to the agreement, the holder exercised warrants to purchase 1,295,000 shares of the Companys common stock at a reduced exercise price of $5.198 per share, resulting in gross proceeds of approximately $6.7 million, before placement agent fees and other offering expenses. In consideration for such exercise, the Company issued new warrants to purchase up to 1,424,500 shares of its common stock at an exercise price of $6.502 per share, subject to adjustment. The new warrants become exercisable six months from the date of issuance and expire on the fifth anniversary of the date of issuance. The shares of common stock issuable upon exercise of the new warrants were registered for resale pursuant to the Companys registration statement on Form S-1 (File No. 333-286255), filed with the SEC on March 28, 2025 and declared effective on April 3, 2025. The Company used the net proceeds from the transaction for working capital and general corporate purposes. The Company engaged Maxim Group LLC as its exclusive financial advisor in connection with the transaction. **Consolidated Statement of Cash Flows** Cash increased from $4,883,099 at December 31, 2024 to $5,945,894 at December 31, 2025 an increase of $1,062,795 or 22%. The increase was primarily due to financing activities conducted during the fiscal year to support growth of ongoing operations. *Operating Activities* Net cash used in operating activities for the fiscal year ended December 31, 2025 was $17,314,390, compared to $10,138,798 in the prior year, driven by a shift to production and distribution of hard tonneau covers. Accounts receivable increased at December 31, 2025 by $461,382 and decreased by $387,561 in the prior year. The increase in accounts receivable when compared with 2024 was due to volume shifts from private label sales in 2023 to direct to consumer sales in 2024. The shift from private label sales to other business to business channel customers resulted in an increase in accounts receivable in 2025 based on longer payment terms when compared with direct sales to consumers. | 31 | | Inventory increased at December 31, 2025 by $4,340,617 and increased at December 31, 2024 by $1,558,562 due to a shift in production requirements from soft tonneau covers to hard tonneau covers. Prepaid expenses and deposits increased by $338,669 at December 31, 2025 and decreased by $1,305,057 at December 31, 2024 due to deposits by us for the purchase of production equipment and inventory. Accounts payable and accrued liabilities increased at December 31, 2025 by $2,179,473 and increased at December 31, 2024 by $1,167,834, respectively. These fluctuations were driven primarily by the transition to production activities in 2024 and increased raw materials inventory purchases to support production in 2025. *Investing Activities* Net cash used in investing activities for the fiscal year ended December 31, 2025 was $1,119,503 compared to $528,235 in the prior year. The increase in investing activities was primarily due to higher capital expenditures on various production equipment in 2025. *Financing Activities* Net cash provided by financing activities for the fiscal year ended December 31, 2025 was $19,456,688 compared to $12,184,354 in the prior year. During the fiscal year ended December 31, 2025 the Company received net proceeds of $21,823,476 from the sale of shares and pre-funded warrants. During the fiscal year ended December 31, 2024, the Company received net proceeds of $12,482,549 from the sale of shares and pre-funded warrants. **Contractual Obligations and Commercial Commitments** The following table summarizes our contractual obligations as of December 31, 2025 and 2024: | Contractual Obligations | | December 31, 2025 | | | December 31, 2024 | | | | Operating lease obligations | | $ | 318,520 | | | $ | 615,007 | | | | Equipment purchases | | $ | 2,700,000 | | | $ | - | | | | Total Contractual Obligations | | $ | 3,018,520 | | | $ | 615,007 | | | We intend to fund our contractual obligations with working capital. **Off-Balance Sheet Arrangements** We do not have any material off balance sheet arrangements that have or are reasonably likely to have a material future effect on our financial condition, results of operations or cash flows. **Recent Accounting Pronouncements** See Note 1, Description of Business and Summary of Significant Accounting Policies, included in Part II Item 8, Financial Statements and Supplementary Data, of this report for further information regarding Financial Accounting Standards Board issued Accounting Standards Updates (ASU). **ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item. | 32 | | **ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA** **INDEX TO FINANCIAL STATEMENTS** | Report of Independent Registered Public Accounting Firm | 34 | | | Audited Consolidated Balance Sheets at December 31, 2025 and 2024 | 36 | | | Audited Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2025 and 2024 | 37 | | | Audited Consolidated Statements of Shareholders Equity for the years ended December 31, 2025 and 2024 | 38 | | | Audited Consolidated Statements of Cash Flow for the years ended December 31, 2025 and 2024 | 39 | | | Notes to Audited Consolidated Financial Statements | 40 | | | 33 | | **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** The Board of Directors and Shareholders Worksport Ltd. **Opinion on the Financial Statements** We have audited the accompanying consolidated balance sheets of Worksport Ltd. and Subsidiaries (the Company) as of December 31, 2025 and 2024, and the related consolidated statements of operations and comprehensive loss, shareholders equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial condition of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. **Going Concern** The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and has an accumulated deficit, that raise substantial doubt about its ability to continue as a going concern. Managements plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. **Basis for Opinion** These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. **Critical Audit Matters** The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. **Inventory** *Description of the Matter* As of December 31, 2025, the Companys inventory balance was approximately $9.5 million. As reported in Note 3, inventory has increased over the past year as the Company has shifted to full scale production in its West Seneca manufacturing facility. The Company evaluates its inventory for obsolescence on an ongoing basis by considering historical usage as well as requirements for future orders. | 34 | | Given the inherent uncertainty and significant judgments necessary to value inventory and its related obsolescence, auditing managements estimates involved a high degree of auditor judgment. *How We Addressed the Matter in Our Audit* Our auditing procedures related to inventory valuation included the following, among others: | | | We evaluated the appropriateness and consistency of managements methods used to value inventory and develop its estimates. | | | | | We evaluated the reasonableness of judgments made and significant assumptions used by management relating to key estimates. | | | | | We inquired of management relative to write-offs of inventory during the year. | | | | | We tested the completeness and accuracy of managements inventory detail. | | | | | We developed an independent expectation of the obsolescence reserve based on our knowledge of the Companys inventory, including analysis of slow-moving items and historical usage and compared it to actual. | | | | | We performed a lower of cost or net realizable value analysis by selecting a sample of items included in inventory at year-end. | | | | | We selected a sample of purchases made throughout the year to ensure they were included in inventory at the proper weighted average value. | | | | | We selected a sample of purchases made before and after the year end to ensure proper cut-off was achieved. | | | | | During our physical inventory observation, we toured the Companys facility and examined inventory on hand to determine the completeness and existence of ending inventory. | | | | | We examined managements overhead analysis and performed procedures to test its completeness and accuracy. | | **Shareholders Equity and Related Transactions** *Description of the Matter* As discussed in Notes 7, 14, and 15 to the consolidated financial statements, the Company has issued a significant amount of equity securities. The tracking of these transactions can be complicated and require management to estimate the value of equity securities using a Black Scholes option pricing model. We identified the fair market value of equity transactions to be a critical audit matter, as the calculations can be complex and subject to error. *How We Addressed the Matter in Our Audit* Our auditing procedures related to equity transactions included the following, among others: | | | We evaluated the appropriateness and consistency of managements methods used to develop its estimates. | | | | | We gained an understanding of managements process to record the equity transactions. | | | | | We obtained managements calculations and tested the clerical accuracy and inputs used. | | | | | We agreed the basic terms to source agreements and considered key assumptions. | | | | | We recalculated the recorded values and conversion amounts. | | **Going Concern** *Description of the Matter* As discussed in Note 2 to the consolidated financial statements, the Company has experienced recurring net losses that raise substantial doubt about the Companys ability to continue as a going concern. Upon analysis of the Companys current financial situation and projected outlooks, we believe there is substantial doubt about the Companys ability to continue as a going concern. *How We Addressed the Matter in Our Audit* Our auditing procedures related to going concern included the following, among others: | | | We obtained the Companys evaluation of its ability to continue as a going concern and evaluated the Companys plans to address these concerns. | | | | | We analyzed the Companys current state of operations. | | | | | We evaluated the Companys current and projected cash flow. | | We have served as the Companys auditor since 2022. /s/ Lumsden & McCormick, LLP Buffalo, New York March 26, 2026 PCAOB ID Number: 130 | 35 | | **Worksport Ltd.** **Consolidated Balance Sheets** **December 31, 2025 and 2024** | | | 2025 | | | 2024 | | | | ASSETS | | | | | | | | | | | Current assets | | | | | | | | | | | Cash and cash equivalents | | $ | 5,945,894 | | | $ | 4,883,099 | | | | Accounts receivable, net | | | 503,971 | | | | 42,589 | | | | Other receivable | | | 278,027 | | | | 169,728 | | | | Inventories, net (Note 3) | | | 9,530,671 | | | | 5,190,054 | | | | Prepaid expenses and deposits (Note 6) | | | 530,861 | | | | 192,192 | | | | Total Current assets | | | 16,789,424 | | | | 10,477,662 | | | | Investment (Note 11) | | | 67,033 | | | | 66,308 | | | | Property and equipment, net (Note 4) | | | 12,688,488 | | | | 13,644,226 | | | | Operating lease right-of-use assets (Note 11) | | | 272,598 | | | | 595,415 | | | | Intangible assets, net (Note 5) | | | 896,531 | | | | 953,049 | | | | Total assets | | $ | 30,714,074 | | | $ | 25,736,660 | | | | LIABILITIES AND SHAREHOLDERS EQUITY | | | | | | | | | | | Current liabilities | | | | | | | | | | | Accounts payable | | $ | 3,107,085 | | | $ | 1,526,630 | | | | Accrued liabilities and other | | | 1,400,730 | | | | 800,283 | | | | Accrued compensation | | | 420,210 | | | | 377,112 | | | | Long-term debt, current portion (Note 12) | | | 1,686,809 | | | | 222,992 | | | | Lease liability, current portion (Note 11) | | | 113,012 | | | | 246,535 | | | | Total current liabilities | | | 6,727,846 | | | | 3,173,552 | | | | Lease liability, excluding current portion (Note 11) | | | 159,526 | | | | 368,472 | | | | Long-term debt, excluding current portion (Note 12) | | | 950,481 | | | | 4,781,005 | | | | Total liabilities | | | 7,837,853 | | | | 8,323,029 | | | | | | | | | | | | | | | Shareholders equity | | | | | | | | | | | Series A, B and Series C Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 100 Series A, 0 Series B, and 427,812 Series C (for 2025) issued and outstanding, respectively (Note 7) | | | 428 | | | | - | | | | Series A, B and Series C Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 100 Series A, 0 Series B, and 427,812 Series C (for 2025) issued and outstanding, respectively (Note 7) | | | 428 | | | | - | | | | Common stock, $0.001 par value, 45,000,000 shares authorized, 9,814,665 and 4,016,205 shares issued and outstanding, respectively (Note 7) | | | 9,814 | | | | 4,016 | | | | Additional paid-in capital | | | 101,357,686 | | | 79,781,674 | | | | Share subscriptions receivable | | | (55,684 | ) | | | (1,577 | ) | | | Share subscriptions payable | | | 5,446,347 | | | | 2,115,064 | | | | Accumulated deficit | | | (83,873,790 | ) | | | (64,476,966 | ) | | | Cumulative translation adjustment | | | (8,580 | ) | | | (8,580 | ) | | | Total shareholders equity | | | 22,876,221 | | | | 17,413,631 | | | | Total liabilities and shareholders equity | | $ | 30,714,074 | | | $ | 25,736,660 | | | See accompanying Notes to Consolidated Financial Statements which form an integral part of the Consolidated Financial Statements. | 36 | | **Worksport Ltd.** **Consolidated Statements of Operations and Comprehensive Loss** **December 31, 2025 and 2024** | | | 2025 | | | 2024 | | | | | | | | | | | | | Net sales | | $ | 16,101,738 | | | $ | 8,484,379 | | | | Cost of sales | | | 11,626,831 | | | | 7,578,729 | | | | Gross profit | | | 4,474,907 | | | | 905,650 | | | | | | | | | | | | | | | Operating expenses | | | | | | | | | | | Research and development | | | 1,538,923 | | | | 2,289,940 | | | | General and administrative | | | 14,806,326 | | | | 11,709,925 | | | | Sales and marketing | | | 6,947,671 | | | | 2,386,504 | | | | Gain on foreign exchange | | | (4,587 | ) | | | (14,885 | ) | | | Total operating expenses | | | 23,288,333 | | | | 16,371,484 | | | | Loss from operations | | | (18,813,426 | ) | | | (15,465,834 | ) | | | | | | | | | | | | | | Other income (expense) | | | | | | | | | | | Interest expense | | | (592,755 | ) | | | (726,095 | ) | | | Other | | | 53,884 | | | | 28,140 | | | | Total other income (expense) | | | (538,871 | ) | | | (697,955 | ) | | | | | | | | | | | | | | Net loss | | | (19,352,297 | ) | | | (16,163,789 | ) | | | | | | | | | | | | | | Loss per share (basic and diluted) (Note 13) | | $ | (3.16 | ) | | $ | (5.84 | ) | | | Weighted average number of shares (basic and diluted) | | | 6,143,122 | | | | 2,768,732 | | | See accompanying Notes to Consolidated Financial Statements which form an integral part of the Consolidated Financial Statements. | 37 | | **Worksport Ltd.** **Consolidated Statements of Shareholders Equity** **December 31, 2025 and 2024** | | | 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 December 31, 2023 | | | 100 | | | $ | - | | | | 2,032,050 | | | $ | 2,032 | | | $ | 64,685,693 | | | $ | (1,577 | ) | | $ | 1,814,152 | | | $ | (48,313,177 | ) | | $ | (8,580 | ) | | $ | 18,178,543 | | | | Issuance for services and subscriptions payable | | | - | | | | - | | | | 66,710 | | | | 67 | | | | 3,009,004 | | | | - | | | | 300,912 | | | | - | | | | - | | | | 3,309,983 | | | | Shares issued (Note 7) | | | - | | | | - | | | | 1,416,856 | | | | 1,417 | | | | 12,561,959 | | | | - | | | | (3,858,464 | ) | | | - | | | | - | | | | 8,704,912 | | | | Warrant inducement (Note 14) | | | - | | | | - | | | | 284,000 | | | | 284 | | | | (474,850 | ) | | | - | | | | 3,858,464 | | | | - | | | | - | | | | 3,383,898 | | | | Warrant exercise (Note 14) | | | - | | | | - | | | | 216,589 | | | | 216 | | | | (132 | ) | | | - | | | | - | | | | - | | | | - | | | | 84 | | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (16,163,789 | ) | | | - | | | | (16,163,789 | ) | | | Balance at December 31, 2024 | | | 100 | | | $ | - | | | | 4,016,205 | | | $ | 4,016 | | | $ | 79,781,674 | | | $ | (1,577 | ) | | $ | 2,115,064 | | | $ | (64,476,966 | ) | | $ | (8,580 | ) | | $ | 17,413,631 | | | | Balance | | | 100 | | | $ | - | | | | 4,016,205 | | | $ | 4,016 | | | $ | 79,781,674 | | | $ | (1,577 | ) | | $ | 2,115,064 | | | $ | (64,476,966 | ) | | $ | (8,580 | ) | | $ | 17,413,631 | | | | Issuance for services and subscriptions payable | | | - | | | | - | | | | 193,450 | | | | 193 | | | | 3,019,614 | | | | - | | | | 16,132 | | | | - | | | | - | | | | 3,035,939 | | | | Shares issued (Note 7) | | | - | | | | - | | | | 110,619 | | | | 110 | | | | 504,262 | | | | - | | | | - | | | | - | | | | - | | | | 504,372 | | | | Warrant inducement (Note 14) | | | - | | | | - | | | | 2,847,617 | | | | 2,849 | | | | 8,994,082 | | | | - | | | | 3,315,151 | | | | - | | | | - | | | | 12,312,082 | | | | Issuance of preferred shares pursuant to Reg-A | | | 3,074,586 | | | | 3,074 | | | | - | | | | - | | | | 3,053,727 | | | | (19,959 | ) | | | - | | | | - | | | | - | | | | 3,036,842 | | | | Conversion of Series C preferred shares | | | (2,646,774 | ) | | | (2,646 | ) | | | 2,646,774 | | | | 2,646 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | Dividends on preferred shares | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (44,527 | ) | | | - | | | | (44,527 | ) | | | Issuance of warrants pursuant to Reg-A | | | - | | | | - | | | | - | | | | - | | | | 6,004,327 | | | | (34,148 | ) | | | - | | | | - | | | | - | | | | 5,970,179 | | | | Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (19,352,297 | ) | | | - | | | | (19,352,297 | ) | | | Balance at December 31, 2025 | | | 427,912 | | | $ | 428 | | | | 9,814,665 | | | $ | 9,814 | | | $ | 101,357,686 | | | $ | (55,684 | ) | | $ | 5,446,347 | | | $ | (83,873,790 | ) | | $ | (8,580 | ) | | $ | 22,876,221 | | | | Balance | | | 427,912 | | | $ | 428 | | | | 9,814,665 | | | $ | 9,814 | | | $ | 101,357,686 | | | $ | (55,684 | ) | | $ | 5,446,347 | | | $ | (83,873,790 | ) | | $ | (8,580 | ) | | $ | 22,876,221 | | | See accompanying Notes to Consolidated Financial Statements which form an integral part of the Consolidated Financial Statements. | 38 | | **Worksport Ltd.** **Consolidated Statements of Cash Flows** **December 31, 2025 and 2024** | | | 2025 | | | 2024 | | | | Operating activities | | | | | | | | | | | Net loss | | $ | (19,352,297 | ) | | $ | (16,163,789 | ) | | | Adjustments to reconcile net loss to net cash from operating activities: | | | | | | | | | | | Shares, options and warrants issued for services | | | 3,035,939 | | | | 2,916,328 | | | | Depreciation and amortization | | | 1,834,308 | | | | 1,753,285 | | | | Change in operating lease | | | (19,652 | ) | | | (44 | ) | | | Other | | | 256,806 | | | | 57,395 | | | | Adjustments to reconcile net income loss to cash provided by (used in) operating activities | | | (14,244,896 | ) | | | (11,436,825 | ) | | | Changes in operating assets and liabilities (Note 10) | | | (3,069,494 | ) | | | 1,298,027 | | | | Net cash used in operating activities | | | (17,314,390 | ) | | | (10,138,798 | ) | | | | | | | | | | | | | | Cash flows from investing activities | | | | | | | | | | | Investments and intangible assets | | | (330,043 | ) | | | - | | | | Purchase of property and equipment | | | (789,460 | ) | | | (528,235 | ) | | | Net cash used in investing activities | | | (1,119,503 | ) | | | (528,235 | ) | | | | | | | | | | | | | | Financing activities | | | | | | | | | | | Proceeds from issuance of common shares, net of issuance cost | | | 504,372 | | | | 8,736,114 | | | | Proceeds from warrant exercise (Note 14) | | | 12,312,082 | | | | 3,746,435 | | | | Proceeds from issuance of preferred stock, net of issuance cost | | | 3,076,762 | | | | - | | | | Proceeds from issuance of warrants, net of issuance cost | | | 5,970,179 | | | | - | | | | Proceeds from line of credit | | | 13,779,650 | | | | 10,349,670 | | | | Repayments on line of credit | | | (15,939,691 | ) | | | (6,758,422 | ) | | | Proceeds from long-term debt | | | - | | | | 1,437,998 | | | | Repayments on short-term and long-term debt | | | (206,666 | ) | | | (5,325,249 | ) | | | Related party loan | | | - | | | | (2,192 | ) | | | Net cash provided by financing activities | | | 19,496,688 | | | | 12,184,354 | | | | | | | | | | | | | | | Change in cash | | | 1,062,795 | | | | 1,517,321 | | | | Cash and cash equivalents - beginning of year | | | 4,883,099 | | | | 3,365,778 | | | | Cash and cash equivalents end of year | | $ | 5,945,894 | | | $ | 4,883,099 | | | | Supplemental disclosure of cash flow information | | | | | | | | | | | Income tax paid | | $ | - | | $ | - | | | Interest paid | | $ | 593,000 | | | $ | 726,000 | | | See accompanying Notes to Consolidated Financial Statements which form an integral part of the Consolidated Financial Statements. | 39 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **1. Description of Business and Significant Accounting Policies** The Companys corporate history and business overview are described in detail in our most recent registration statement on Form S-3, filed with the SEC on January 20, 2026, which is incorporated herein by reference. For a description of material developments the Company has undertaken since that time, see Corporate History of Part I Item 1, Business of this Report. **Basis of presentation **The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) as contained within the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC). **Consolidation** The Companys consolidated financial statements consolidate the accounts of the Company. All intercompany transactions, balances and unrealized gains or losses from intercompany transactions have been eliminated upon consolidation. **Foreign currency translation and presentation** The consolidated financial statements are presented in USD. The functional currency of the Company and all its subsidiaries is USD. Transactions denominated in foreign currencies are initially recorded in the functional currency using exchange rates in effect at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using exchange rates in effect at the dates of the transactions. All exchange gains and losses are included in the statement of operations and comprehensive loss. **Use of estimates** The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates and assumptions. **Revenue recognition **In accordance with ASC 606 , sales are recognized when (1) products are shipped, with no right of return except for defective products, and the title and risk of loss has passed to customers; and (2) when they are delivered based on the terms of the sale, and there is an identifiable contract with a customer with defined performance obligations, the transaction price is determinable, and the entity has fulfilled its performance obligation. Revenue related to shipping and handling costs billed to customers is included cost of sales and presented net of related shipping and handling costs. **Cost of sales **Includes costs of products sold, which include but are not limited to purchased product, raw material, direct labor, shipping and handling costs, depreciation and amortization, indirect costs and overhead charges. **Research and development** Research and development costs are expensed as incurred and include consulting and material costs. **Advertising costs** The Company expenses advertising costs as incurred and includes expenses in sales and marketing. **Share-based payments** - The Company offers a share option plan for its directors, officers, employees, and consultants. ASC 718 prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values at the time of grant. Compensation expense is included in general and administrative expenses. Compensation expense is recognized over the estimated period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The Company elected to account for forfeitures when the forfeiture of the underlying awards occur. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of the performance commitment date or performance completion date. **Income taxes -**Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between taxable income and pretax financial income, and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the consolidated financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Tax positions initially need to be recognized in the financial statements when it is more likely than not the positions will be sustained upon examination by the tax authorities. The Company recognizes interest accrued related to unrecognized tax benefits in interest expenses and penalties in operating expenses. The Company treats tax on the Global Intangible Low-Tax Income (GILTI) as a current period cost included in tax expense in the year incurred. The Company does not measure the impact of GILTI in the determination of deferred taxes. **Cash and cash equivalents** - All highly liquid investments with an original maturity of three months or less are considered cash equivalents. Cash and cash equivalents in financial institutions may exceed insured limits at various times during the year and subject the Company to concentrations of credit risk. There is no restricted cash at December 31, 2025 or 2024. | 40 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **1. Description of Business and Significant Accounting Policies**(continued) **Accounts receivable, net** Accounts receivable primarily consists of amounts that are due and payable from distributors, wholesalers, and private label partners. Receivables are stated at net realizable value, which approximates fair value. Receivables are reduced by an allowance for credit losses for amounts that may be uncollectible in the future. The allowance is determined by considering factors such as historical experience, credit quality, age of the accounts receivable, economic conditions and reasonable forecasted financial information that may affect a customers ability to pay. The allowance for credit losses at December 31, 2025 and 2024 was $15,000. **Inventories -**Inventories are stated at the lower of cost or net realizable value. The cost of inventory is measured on a weighted average cost method. Cost includes purchase price of materials, freight, and related costs required to bring the goods to Company warehouses. Inventories are reviewed to determine if quantities are in excess of forecasted usage or if they become obsolete. **Property and equipment, net **Property and equipment are measured at cost. Maintenance and repair costs are charged to expense when incurred. Depreciation is recognized on a straight-line method based on the following estimated useful lives: Schedule of Estimated Useful Lives of Property and Equipment | Furniture and equipment | | 5 years | | | Automobile | | 5 years | | | Computers | | 3 years | | | Leasehold improvements | | 15 years or lease term, if shorter | | | Manufacturing equipment | | 5-15 years | | | Building | | 15 years | | **Right-of-use assets** - The Company recognizes leases in accordance with ASC 842, which requires lessees to recognize operating leases on the balance sheet as right-of-use assets and lease liabilities based on the value of the discounted future lease payments. **Intangible assets** Patents and other intangibles are amortized using the straight-line method over their estimated useful lives. Intangible assets, such as trademarks with indefinite lives, are not amortized. **Valuation of long-lived assets** Intangible assets are evaluated for impairment at least annually or when events or circumstances arise that indicate the existence of impairment. The Company evaluates the recoverability of identifiable intangible assets whenever events or changes in circumstances indicate that an intangible assets carrying amount may not be recoverable. When indicators of impairment exist, the Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment, and actual results may differ from assumed and estimated amounts. During the years ended December 31, 2025 and 2024, the Company had no impairment losses related to intangible assets. | 41 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **1. Description of Business and Significant Accounting Policies** (continued) **Product warranties -**The Company currently offers a three-year limited warranty against defective products out-of-the-box. Customers who are not satisfied with their purchase may attempt to have their purchases reimbursed outside of the warranty period. **Financial instruments**- ASC 825, requires disclosures of the fair value of financial instruments. The carrying value of the Companys current financial instruments, which include cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities, approximates their fair values because of the short-term maturities of these instruments. The carrying value of the loans payable approximate fair value as its interest rate fluctuates with market interest rates. We do not hold or issue financial instruments for trading purposes. **Related party transactions**- All transactions with related parties are in the normal course of operations and are measured at the exchanged amount. Reclassifications Certain prior year amounts have been reclassified to conform to current years presentation. The Company reclassified professional fees of $3,136,869 and $3,030,931 for the fiscal years ended December 31, 2025 and 2024, respectively, which were classified from professional fees to general and administrative expense on the Consolidated Statements of Operations and Comprehensive Loss. This change improves the disclosure of costs as the company continues to increase its size and decrease its reliance on consulting arrangements with third parties to grow its operations. **Recent accounting pronouncements** *Recent accounting pronouncements adopted* In December 2023, the FASB issued Accounting Standards Update (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. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. We adopted this standard for the year ended December 31, 2025, and applied the amendments on a prospective basis. Refer to Note 8, Income Taxes. The adoption of this standard did not have a material effect on the financial statements and related disclosures. In November 2023, the FASB issued 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. We adopted this standard for the year ended December 31, 2024, and applied the amendments retrospectively to all prior periods presented. Refer to Note 16, Segment Reporting. The adoption of this standard did not have a material effect on the financial statements and related disclosures. *Recent accounting pronouncements not yet adopted* In 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 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. In September 2025, the FASB issued ASU 2025-06, *Intangibles- Goodwill and Other- Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software*. This ASU removes all references to prescriptive and sequential software development stages and will now require PBEs to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the 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. In 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 that guidance is applicable. The amendments also provide additional guidance on what disclosures should be provided in interim reporting periods. Additionally, the amendment requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 is effective for interim reporting periods within annual reporting periods 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. The Company considers the applicability and impact of all ASUs. ASUs not listed were assessed and determined to be either not applicable or had or are expected to have an immaterial impact on the financial statements and related disclosures. | 42 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **2. Going Concern** As of December 31, 2025, the Company had $5,945,894 in cash and cash equivalents. The Company also has availability on its revolving line of credit of $3,448,016. The Company has generated only limited revenues and has relied primarily upon capital generated from public and private offerings of its securities. Since the Companys acquisition of Worksport in 2014, it has never generated a profit. As of December 31, 2025, the Company had an accumulated deficit of $83,873,790. The 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 year ended December 31, 2025, the Company had net losses of $19,352,297 (2024 - $16,163,789). As of December 31, 2025, the Company had working capital of $10,061,578 (2024 $7,304,110) and had an accumulated deficit of $83,873,790 (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 Companys ability to continue as a going concern is dependent upon the ability to generate cash flows from operations and obtain equity and/or debt financing. The Company intends to continue funding operations through equity and debt financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements in the long term. There can be no assurance that the steps management is taking will be successful. The Company has historically operated at a loss, although that may change as sales volumes increase and margins improve. As of December 31, 2025, the Company had cash and cash equivalents of $5,945,894 (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 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 2025. The Company has successfully raised cash, and it is positioned to do so again if deemed necessary or strategically advantageous. During 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 December 31, 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. This agreement was amended in November 2025. On 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. On 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 Companys 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 declared effective by the SEC on April 8, 2024. | 43 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** On 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 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. On 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. On February 27, 2025, Worksport entered into a warrant inducement agreement with a shareholder to exercise 755,558 of 1,295,000 May 2024 Warrants at a price of $5.198 per share. 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 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. 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 Company completed the Regulation A offering in October 2025. The Company completed 32 tranches and received proceeds of $9,092,414 (net of issuance costs of $899,997). On November 14, 2025, Worksport filed a registration statement containing two prospectuses: (1) a base prospectus, which covers the potential offering, issuance, and sale by the registrant of up to a maximum aggregate offering price of $30,000000 of the registrants common stock, preferred stock, debt securities, warrants and units, and (2) an at the marketing offering offering prospectus supplement, which covers issuance and sale by the Company of up to a maximum aggregate offering price of $4,000,000 of the Companys common stock that may be issued and sold under that certain At the Market Offering agreement, dated September 22, 2022, as amended on November 14, 2025 between the Company and H.C. Wainwright & Co., LLC, as sales agent. On 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 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 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 is recorded as a component of equity. To date, the Companys principal 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 existing product offerings as well as the Companys customer base. The Company cannot give assurance that it can increase its cash balances or limit its cash consumption and thus maintain sufficient cash balances for planned operations or future business developments. Future business development and demands may lead to cash utilization at levels greater than recently experienced. The Company may need to raise additional capital in the future. However, the Company cannot provide assurances it will be able to raise additional capital on acceptable terms, or at all. The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Companys 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 Companys 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. | 44 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **3. Inventories** Inventory consists of the following at December 31, 2025 and 2024: Schedule of Inventory | | | 2025 | | | 2024 | | | | Raw materials | | $ | 5,405,618 | | | $ | 3,373,704 | | | | Finished goods | | | 3,368,509 | | | | 1,343,006 | | | | Work in progress | | | 756,544 | | | | 473,344 | | | | Inventories, net | | $ | 9,530,671 | | | $ | 5,190,054 | | | **4. Property and Equipment** Major classes of property and equipment at December 31, 2025 and 2024 are as follows: Schedule of Property and Equipment | | | 2025 | | | 2024 | | | | Building | | $ | 6,079,410 | | | $ | 6,079,410 | | | | Manufacturing equipment | | | 6,519,571 | | | | 5,830,999 | | | | Land | | | 2,239,405 | | | | 2,239,405 | | | | Leasehold improvements | | | 489,722 | | | | 862,504 | | | | Product molds | | | 524,476 | | | | 524,476 | | | | Warehouse equipment | | | 503,297 | | | | 512,700 | | | | Electrical equipment | | | 183,977 | | | | 185,261 | | | | Automobile | | | 242,642 | | | | 172,645 | | | | Furniture | | | 149,883 | | | | 154,065 | | | | Computers | | | 101,058 | | | | 114,786 | | | | Property and equipment, at cost | | | 17,033,441 | | | | 16,676,251 | | | | Less accumulated depreciation | | | (4,344,953 | ) | | | (3,032,025 | ) | | | Property and equipment, net | | $ | 12,688,488 | | | $ | 13,644,226 | | | During the fiscal years ended December 31, 2025 and 2024, the Company recognized depreciation expense of $1,448,472 and $1,367,445, respectively. During the fiscal year ended December 31, 2025, the Company recognized a non-cash loss on disposal of property and equipment of $296,726. The loss primarily relates to leasehold improvements whereby the underlying lease agreement was not renewed. This loss is included in the Consolidated Statement of Operations and Comprehensive Loss as a component of general and administrative expense. **5. Intangible Assets** Intangible assets consist primarily of costs incurred in establishing the Companys intellectual property and other non-physical rights, including patents and patent applications (including related utility patents and design registrations), trademarks and trade names, copyrights, certain licenses and other contractual rights, and capitalized software and qualifying website and application development costs. The Companys utility patents and design registrations were issued between 2014 and 2024. The patents and software are amortized on a straight-line basis over their useful life. The Companys trademark, licenses, and other indefinite life intangible assets are reassessed every year for impairment. The Company determined that impairment is not necessary for the current year ended December 31, 2025. The components of intangible assets as of December 31, 2025 and 2024 are as follows: Schedule of Components of Intangible Assets | | | 2025 | | | 2024 | | | | Software | | $ | 1,150,000 | | | $ | 1,150,000 | | | | License | | | 218,329 | | | | 103,329 | | | | Patent | | | 62,706 | | | | 62,706 | | | | Trademark | | | 5,150 | | | | 5,150 | | | | Other | | | 243,769 | | | | 29,451 | | | | Intangible assets, gross carrying amount | | | 1,679,954 | | | | 1,350,636 | | | | Less accumulated amortization | | | (783,423) | | | | (397,587 | ) | | | Intangible assets, net | | $ | 896,531 | | | $ | 953,049 | | | Amortization expense for the fiscal years ended December 31, 2025 and 2024 was $385,836 and $385,840, respectively. | 45 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **5. Intangible Assets** (continued) Estimated amortization of the patent and software over the next five years and beyond December 31, 2025 is as follows: ****Schedule of Estimated Amortization of the patent and Software | | | | | | | | 2026 | | $ | 386,000 | | | | 2027 | | $ | 3,000 | | | | 2028 | | $ | 3,000 | | | | 2029 | | $ | 2,000 | | | | 2030 | | $ | 2,000 | | | | Thereafter | | $ | 33,000 | | | **6. Prepaid Expenses and Deposits** As of December 31, 2025 and 2024, prepaid expenses and deposits consists of the following: Schedule of Prepaid Expenses and Deposits | | | 2025 | | | 2024 | | | | Consulting, services and advertising | | $ | 222,922 | | | $ | 35,740 | | | | Insurance | | | 104,421 | | | | 65,938 | | | | Deposits | | | 203,518 | | | | 90,514 | | | | Prepaid expenses and deposits | | $ | 530,861 | | | $ | 192,192 | | | Deposits include prepayments for research and development services, manufacturing equipment and raw materials used in the production of finished goods. **7. 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 stock. *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. | | - | During 2019, the Company created and issued 100 shares of its Series A preferred stock. 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 outstanding. Series A preferred stock does not have conversion rights, is not entitled to receive dividends nor receive any liquidation preferences. | | | | | | | | | - | During 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. Series B preferred stock does not have conversion rights, is not entitled to receive dividend preferences nor receive any liquidation preferences. As of December 31, 2025, the Company has not issued shares of Series B preferred stock. | | | | | | | | | - | During 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 December 31, 2025, the Company issued 3,074,586 shares of Series C preferred stock and converted 2,646,774 Series C preferred shares to common stock at the shareholders request. The Company recognized dividends paid and payable to Series C preferred shareholders as of December 31, 2025, of $17,192 and $27,335, respectively. | | *During year ended December 31, 2025, the following transactions occurred:* During the year ended December 31, 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. The Company recognized consulting expense of $13,000 and salary expense of $4,843 to share subscriptions payable from restricted shares and stock options to be issued. As of December 31, 2025, the $17,843 of the restricted shares have not been issued. The Company recognized consulting expense of $215,667 related to warrants issued pursuant to a service agreement. During the year ended December 31, 2025, in connection with the inducement of 1,295,091 warrants at $5.198 per share, the Company 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. In addition, in connection with the inducement of 2,194,526 warrants at $2.90 per share, the Company sold 770,026 warrants exercisable at $7.40 per share and 1,424,500 warrants exercisable at $6.502 per share. The Company received proceeds of $6,364,125 before deducting placement aging fees of $328,206 and other offering expenses payable by the Company upon the exercise of February 2024 and February 2025 warrants, respectively. During the year ended December 31, 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 3,074,586 Units, received proceeds of $9,092,414 (net of issuance costs of $899,997). During the year ended December 31, 2025, certain Series C preferred shareholders converted 2,646,774 shares into the Companys common stock. | 46 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **7. Shareholders Equity (Deficit)**(continued) *During year ended December 31, 2024, the following transactions occurred:* During the year ended December 31, 2024, the Company sold 758,995 shares of common stock for a total net proceeds of $6,032,789. The sale of shares was in connection with the shelf registration statement on Form S-3 effective on October 13, 2022, 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 as of September 30, 2022. The Company recognized consulting expense of $747,366 to share subscriptions payable from restricted shares and stock options to be issued. As of December 31, 2024, the restricted shares have not been issued. As of December 31, 2024, the Company issued 84,594 restricted shares with a value of $438,992. During 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 warrants and issued 770,026 warrants exercisable for a total of 770,026 shares of common stock for $0.001 and $7.40, respectively, per share. The Company received net proceeds of $1,093,492 associated with the sale of the pre-funded warrants. The pre-funded warrants are immediately exercisable until all the pre-funded warrants are exercised. During the period, 147,790 warrants were exercised for 147,790 shares of common stock for $150. Refer to Note 14, Warrants. During the year ended December 31, 2024, the Company closed a sale of 95,000 shares of common stock for proceeds of $380,000. In connection with the sale of common stock, the Company issued 190,000 warrants. Refer to Note 14, Warrants. As of December 31, 2024, the shares have not been issued. **8. Income Taxes** The Company adopted ASU 2023-09 on a prospective basis as of January 1, 2025, which resulted in additional income tax disclosures for the rate reconciliation and related to income taxes paid for 2025. Given that the Company elected to adopt ASU 2023-09 prospectively, the 2024 rate reconciliation is not disaggregated in accordance with 2023-09 and the income taxes paid is not presented by jurisdiction. The following table summarizes disaggregated loss from continuing operations before income tax expense: Schedule of Disaggregated Loss from Continuing Operations Before Income Tax Expense | | | Domestic | | | Foreign | | | Total | | | | Loss before income tax expense from continuing operations | | | | | | | | | | | | | | | Federal | | $ | (10,934,578 | ) | | $ | - | | | $ | (10,934,578 | ) | | | State | | | (1,712,911 | ) | | | - | | | | (1,712,911 | ) | | | Foreign | | | - | | | | (6,704,808 | ) | | | (6,704,808 | ) | | | Total continuing operation | | $ | (12,647,489 | ) | | $ | (6,704,808 | ) | | $ | (19,352,297 | ) | | Income tax expense (benefit) from continuing operations or the fiscal year ended December 31, 2025 consisted of the following: Schedule of Income Tax Expense (benefit) from Continuing Operations | | | Current | | | Deferred | | | Total | | | | 2025 | | | | | | | | | | | | | | | Federal | | $ | - | | | $ | (2,042,695 | ) | | $ | (2,042,695 | ) | | | State | | | - | | | | (516,688 | ) | | | (516,688 | ) | | | Foreign | | | - | | | | (1,641,617 | ) | | | (1,641,617 | ) | | | | | $ | - | | | $ | (4,201,000 | ) | | $ | (4,201,000 | ) | | | Valuation allowance | | | - | | | | 4,201,000 | | | | 4,201,000 | | | | Income tax expense | | $ | - | | | $ | - | | | $ | - | | | The provision for income taxes for the fiscal year ended December 31, 2025 differed from the amount computed by applying the federal statutory income tax rate due to: Schedule of Statutory U.S Federal Income Tax Rate | | | Amount | | | Percent | | | | U.S. Federal Statutory Income Tax and Rate | | $ | (2,656,369 | ) | | | (21.0 | )% | | | Federal statutory income tax rate | | | | | | | | | | | State and Local Income Taxes, Net of Federal Income Tax Effect (1) | | | (364,757 | ) | | | (0.5 | )% | | | | | | | | | | | | | | Foreign Tax Effects | | | (1,641,617 | ) | | | (2.1 | )% | | | | | | | | | | | | | | Changes in Unrecognized Tax Benefits | | | | | | | | | | | Share compensation | | | 345,850 | | | | 0.5 | % | | | Other | | | 19,201 | | | | 0.0 | % | | | Tax Credits | | | | | | | | | | | Income tax benefit | | | | | | | | | | | Research and Development Tax Credit | | | (40,000 | ) | | | (0.00 | )% | | | Nontaxable and nondeductible items | | | | | | | | | | | Share Based Compensation | | | 131,152 | | | | 0.2 | % | | | Other | | | 5,539 | | | | 0.0 | % | | | Changes in Valuation Allowance | | | 4,201,000 | | | | 22.9 | % | | | Effective Tax Rate | | $ | - | | | | 0.0 | % | | | | (1) | State taxes in Florida, New York, New Jersey and Massachusetts make up the majority (more than 50%) of the tax effect of this category. | | | 47 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **8. Income Taxes**(continued) A reconciliation of the statutory U.S. federal income tax rate to the effective tax rate for the period before the adoption of ASU 2023-09 was as follows: | | | 2024 | | | | Federal statutory income tax rate | | | 21.0 | % | | | State taxes, net of federal benefits | | | (0.7 | )% | | | Share based compensation | | | 1.3 | % | | | Other | | | 1.3 | % | | | Effective income tax rate | | | 22.9 | % | | | Income tax benefit | | | (3,383,000 | ) | | | Estimated research and development credit | | | (90,000 | ) | | | Increase in valuation allowance | | | 3,473,000 | | | | Provision for income taxes | | $ | - | | | Income taxes paid (net or refunds) consisted of the following: Schedule Of Income Taxes Paid (Net or Refunds) | | | 2025 | | | | Federal | | $ | - | | | State | | | 2,420 | | | Foreign | | | - | | | Total income taxes paid | | | 2,420 | | Income taxes paid (net of refunds) was $62 for the year ended December 31, 2024. Income taxes paid, net of refunds, exceeded five (5) percent of total income taxes paid (net of refunds) in the following jurisdictions: | | | 2025 | | | | State | | | | | | | New Jersey | | $ | 2,138 | | | New York | | | 150 | | | Massachusetts | | | 132 | | | State | | | 2,420 | | | Foreign | | | - | | | Total income taxes paid | | | 2,420 | | The tax effects of temporary differences that give rise to the deferred income tax assets at December 31, 2025 and 2024 are as follows: Schedule of Deferred Income Tax Assets | | | 2025 | | | 2024 | | | | Net operating loss carry forwards | | $ | 13,618,000 | | $ | 10,029,000 | | | | Differences in basis of depreciation of property and equipment | | | 417,000 | | | 465,000 | | | | Share based compensation | | | 2,012,000 | | | 1,352,000 | | | | Research and development credit | | | 180,000 | | | 180,000 | | | | Deferred tax asset, gross | | | 16,227,000 | | | 12,026,000 | | | | Deferred tax assets not recognized | | | (16,227,000 | ) | | | (12,026,000 | ) | | | Net deferred tax asset | | $ | - | | $ | - | | | Deferred income taxes within each jurisdiction on the balance sheets at December 31, 2025 and 2024 are as follows: Schedule of Deferred Income Taxes Within Each Jurisdiction | | | 2025 | | | 2024 | | | | United States | | $ | 10,118,000 | | $ | 7,488,000 | | | | Canada | | | 6,109,000 | | | 4,538,000 | | | | Deferred income taxes | | | 16,227,000 | | | 12,026,000 | | | | Valuation allowance | | | (16,227,000 | ) | | | (12,026,000 | ) | | | Net deferred tax asset | | $ | - | | $ | - | | | The Company has non-capital losses carried forward of approximately $58,867,000 available to reduce future years taxable income. These losses will expire as follows: Schedule of Cumulative Non-capital Losses | | | United States | | | Canada | | | Total | | | | 2034 | | $ | 53,000 | | | $ | 183,000 | | | $ | 236,000 | | | | 2035 | | | 161,000 | | | | 368,000 | | | | 529,000 | | | | 2036 | | | 868,000 | | | | 262,000 | | | | 1,130,000 | | | | 2037 | | | 1,472,000 | | | | 59,000 | | | | 1,531,000 | | | | 2038 | | | - | | | | 520,000 | | | | 520,000 | | | | 2039 | | | - | | | | 193,000 | | | | 193,000 | | | | 2040 | | | - | | | | 718,000 | | | | 718,000 | | | | 2041 | | | - | | | | 2,854,000 | | | | 2,854,000 | | | | 2042 | | | - | | | | 3,771,000 | | | | 3,771,000 | | | | 2043 | | | | | | | 2,686,000 | | | | 2,686,000 | | | | 2044 | | | - | | | | 5,032,000 | | | | 5,032,000 | | | | 2045 | | | - | | | | 6,197,000 | | | | 6,197,000 | | | | Non-capital losses carried forward Total | | $ | 2,554,000 | | | $ | 22,843,000 | | | $ | 25,397,000 | | | | Never expire | | $ | 33,470,000 | | | $ | - | | | $ | 33,470,000 | | | | 48 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **8. Income Taxes**(continued) Realization of deferred tax assets is dependent, in part, upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income, tax planning strategies and carryback opportunities in making its assessment of the recoverability of tax assets. Net operating loss carryforwards of approximately $58,867,000 may be offset against future taxable income. No tax benefit from these losses have been reported in the December 31, 2025 consolidated financial statements since the potential tax benefit is offset by a valuation allowance of the same amount. Due to change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years. The Company complies with the provisions of ASC 740 in accounting for its uncertain tax positions. ASC 740 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company has determined that the Company has no significant uncertain tax positions requiring recognition under ASC 740. The Company does not expect the amount of unrecognized tax benefits to materially change within the next twelve months. The Company is subject to income taxes in the U.S. and in various states and foreign jurisdictions. Tax regulations with each jurisdiction are subject to the interpretation of the related tax laws and regulations and require the application of significant judgment. The Company is no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for tax years ending before December 31, 2020 in the U.S. The Company is no longer subject to non-U.S. income tax examinations by tax authorities for tax years ending before December 31, 2014. **9. Financial Instruments and Fair Value** Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. The definition of the fair value hierarchy is as follows: Level 1 Quoted prices in active markets for identical assets and liabilities. Level 2 Observable inputs other than quoted prices in active markets for similar assets and liabilities. Level 3 Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available data, some of which is internally developed and considers risk premiums that a market participant would require. The Companys financial instruments include cash and cash equivalents, accounts receivable, accounts payable, revolving line of credit, and long-term debt. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying value because of the short-term nature of these instruments. The Companys 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 December 31, 2025. The fair value of the revolving line of credit and long-term debt is classified as Level 2 within the fair value hierarchy. The 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 liabilities. 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. **Market Risks** **Foreign Currency Risk** The 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. **Interest Rate Risk** The borrowing under the Companys 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. | 49 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **9. Financial Instruments and Fair Value**(continued) **Concentration of Risk** **Concentration of Supplier Risk** The Company has historically purchased all of its soft tonneau cover finished goods from Meizhou, China, and it began purchasing soft tonneau cover finished goods from a second supplier in Foshan, China in late 2023. The Company carries significant strategic inventories of these materials and is increasing its purchasing from the supplier in Foshan to lower supplier concentration risk. Further, the Company has established domestic assembly of its hard tonneau cover product line to further reduce the risk associated with this concentration of finished good suppliers. The Company primarily sources raw materials for domestic production and assembly from vendors in Europe, Southeast Asia, and North America. Strategic inventories are managed based on demand. To date, the Company has been able to obtain adequate supplies of the materials used in the production of its products in a timely manner from existing sources. The loss of these key suppliers or a delay in shipments could have an adverse effect on fulfillment of soft tonneau cover orders. **Concentration of Customer Risk** A customer is considered to be significant if they account for greater than 10% of the Companys annual net sales. The loss of any key customer could have an adverse effect on the Companys business. For the year ended December 31, 2025, there are no customers with net sales greater than 10%. For the year ended December 31, 2024, 37% of the Companys net sales was comprised of one customer. **10. Changes in Cash Flows from Operating Assets and Liabilities** The changes to the Companys operating assets and liabilities for the years ended December 31, 2025 and 2024 are as follows: Schedule of Changes in Operating Assets and Liabilities | | | 2025 | | | 2024 | | | | Decrease (increase) in accounts receivable | | $ | (461,382 | ) | | $ | 387,561 | | | | Decrease (increase) in other receivable | | | (108,299 | ) | | | (3,863 | ) | | | Decrease (increase) in inventories | | | (4,340,617 | ) | | | (1,558,562 | ) | | | Decrease (increase) in prepaid expenses and deposits | | | (338,669 | ) | | | 1,305,057 | | | | Increase (decrease) in accounts payable and accrued liabilities | | | 2,179,473 | | | | 1,167,834 | | | | Changes in operating assets and liabilities | | $ | (3,069,494 | ) | | $ | 1,298,027 | | | | 50 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **11. Leases** The 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 Companys incremental borrowing rate. The Company measured the right of use asset at an initial amount equal to the lease liability. During 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. The lease 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 after the initial extension period ended May 31, 2025. The Companys incremental borrowing rate used to initially measure the present value of the remaining lease payments was 10%. On 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 Companys incremental borrowing rate used to initially measure the present value of the remaining lease payments was 15%. On 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 Companys incremental borrowing rate used to initially measure the present value of the remaining lease payments was 15%. The Companys right-of-use asset and lease liability as of December 31, 2025 and 2024 is as follows: Schedule Right-of-use Asset | | | December 31, 2025 | | | December 31, 2024 | | | | Right-of-use asset | | $ | 272,598 | | | $ | 595,415 | | | | Current lease liability | | $ | 113,012 | | | $ | 246,535 | | | | Long-term lease liability | | $ | 159,526 | | | $ | 368,472 | | | The following is a summary of the Companys total lease costs: Schedule of Lease Cost | | | December 31, 2025 | | | December 31, 2024 | | | | Operating lease cost | | $ | 267,608 | | | $ | 409,464 | | | The following is a summary of cash paid in 2025 and 2024 for amounts included in the measurement of lease liabilities: Schedule of Measurement of Lease Liabilities | | | December 31, 2025 | | | December 31, 2024 | | | | Operating cashflow | | $ | 266,420 | | | $ | 412,933 | | | Maturities of lease liability are as follows: Future minimum lease payments as of December 31, 2025: Schedule of Future Minimum Annual Lease Payments | | | | | | | | 2026 | | $ | 144,453 | | | | 2027 | | | 134,284 | | | | 2028 | | | 39,783 | | | | Total future minimum lease payments | | | 318,520 | | | | Less: amount representing interest | | | (45,982 | ) | | | Present value of future payments | | | 272,538 | | | | Current portion | | | 113,012 | | | | Long term portion | | $ | 159,526 | | | | 51 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **12. Indebtedness** Long-term debt consists of: Schedule of Long Term Debt**** | | | December 31, 2025 | | | December 31, 2024 | | | | Revolving Credit Facility (a) | | $ | 1,441,665 | | | $ | 3,808,025 | | | | Other (b) | | | 1,233,493 | | | | 1,456,485 | | | | Long-term debt | | | 2,675,158 | | | | 5,264,510 | | | | Less deferred debt issuance cost | | | (37,868 | ) | | | (260,513 | ) | | | Less current installments | | | (1,686,809 | ) | | | (222,992 | ) | | | Long-term debt | | $ | 950,481 | | | $ | 4,781,005 | | | | | a) | On July 19, 2024, the Company, as the guarantor, and Worksport New York Operations Corporation as well as Worksport USA Operations Corporation, entered into a $6,000,000 Revolving Financing and Assignment Agreement with an external lending entity with a maturity date of July 18, 2026, or 24 months. Upon transaction close, the Company drew down approximately $5.06 million of the Revolving Credit Facility, net of $790,000 of interest reserve required to be withheld to ensure interest payments by the Company. The Company used $4.73 million of the drawn down amount to refinance the Companys mortgage on the Companys real property located at 2500 North America Dr. in West Seneca, New York, and additionally drew approximately $330,000 to fund operations. At December 31, 2025, the outstanding balance of this loan was $1,431,131 (net of issuance costs of $10,534). For collateral, the lender holds a first position on the Companys major asset classes (accounts receivable, the factory in New York, and inventory) other than the Companys equipment. A non-usage fee of 0.25% is assessed quarterly and applied to the difference between the quarters average daily outstanding loan balance and the total credit facility amount. As of December 31, 2025, the Company had an available balance of $3,448,016 to borrow on the Revolving Credit Facility. | | | | | | | | | b) | On 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 Companys equipment, which is primarily manufacturing and warehousing equipment. Interest on the loan is based on the prime rate plus 700 basis points per annum. At December 31, 2025, the outstanding balance of this loan was $1,206,159 (net of issuance costs of $27,334). The Company is in compliance with all covenants. | | **13. Loss per Share** For the year ended December 31, 2025, loss per share is $3.16 (basic and diluted) compared to that of the year ended December 31, 2024 of $5.84 (basic and diluted) using the weighted average number of shares of 6,143,122 (basic and diluted) and 2,768,732 (basic and diluted), respectively. There are 45,000,000 shares authorized with 9,814,665 and 4,016,205 shares issued and outstanding, at December 31, 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 260. Shares underlying the Companys outstanding warrants and convertible promissory notes were excluded due to the anti-dilutive effect they would have on the computation. As of December 31, 2025, the Company has 7,335,008 warrants convertible to 7,365,008 common shares, 472,812 Series C preferred shares convertible to 472,812 common shares, 46,504 shares of restricted stock to be issued, and 298,623 stock options exercisable for 298,623 common shares for a total underlying common shares of 8,137,497. As of December 31, 2024, the Company has 2,291,276 warrants convertible to 2,321,276 common shares, 117,018 restricted stock to be issued, and 192,784 stock options exercisable for 192,784 common shares for a total underlying common shares of 2,631,078. | 52 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **14. Warrants** On December 11, 2025, the Company entered into a warrant inducement agreement with the holder of existing warrants to purchase an aggregate 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 Companys 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. The obligation to issue the remaining 1,278,526 shares is recorded as a component of equity. On 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 gives the holder the right to purchase 100,000 shares at $4.00 and 100,000 common shares at $5.00. 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 agreement. For the fiscal year ended December 31, 2025, the Company recognized $216,000 as a component of general and administrative expense. On June 13, 2025, the Company 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. On October 15, 2025, the Company completed the Regulation A offering. Through December 31, 2025, the Company issued 3,074,586 warrants to investors. On 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 as a reduction of additional paid in capital based on the Companys history of net operating losses. The proceeds of the warrant inducement and issuance of 1,295,000 shares of common stock are recorded as additional paid-in capital. During 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 warrants and issued 770,026 warrants exercisable for a total of 770,026 shares of common stock for $0.001 and $7.40, respectively, per share. The Company received net proceeds of $1,093,492 associated with the sale of the pre-funded warrants. The pre-funded warrants are immediately exercisable until all of the pre-funded warrants are exercised. During the same period, 147,789 pre-funded warrants were exercised for 147,789 shares of common stock for $150. During the year ended December 31, 2024, the Company closed a sale of 95,000 shares of common stock. In connection with the sale of common stock the Company issued 190,000 warrants. The warrants have an exercise price of $4.00 and an expiration date of September 21, 2029. During the year ended December 31, 2024, 13,091 warrants issued on August 3, 2021, and 344,652 warrants issued on August 6, 2021, all of which having an exercise price of $60.50, expired. On 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 as a reduction of additional paid in capital based on the Companys history of net operating losses. 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. During 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 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. During the same period, 88,700 pre-funded warrants were exercised for 88,700 shares of common stock for $89. During the year ended December 31, 2024, the remaining 68,800 pre-funded warrants were exercised for 68,800 shares of common stock for $69. During 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 the exercisable period of 30,000 warrants to December 31, 2024. Later in the year ended December 31, 2023, the expiration date for these warrants was extended to December 31, 2026, and the stock option holder was issued an additional 40,000 restricted stock units. | 53 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **14. Warrants**(continued) During the year ended December 31, 2022, the Company and a warrant holder reached an agreement to extend the exercisable period of 30,000 warrants, convertible to 2 shares of common stock each, for an additional 12 months. During the year ended December 31, 2021, the Company issued 13,091 representative warrants to the Companys underwriters. The representative warrants were not exercisable until January 30, 2022. The representative warrants were exercisable for 13,091 shares of common stock at $60.50 per share until August 3, 2024. As of December 31, 2022, the Company recognized a value of $273,993 for the representative warrants to share issuance cost. During the year ended December 31, 2024, these representative warrants expired. As of December 31, 2025, the Company has the following warrants outstanding: Schedule of Warrants Exercise Price | Exercise price | | | Number outstanding | | | Remaining Contractual Life (Years) | | | Expiry date | | | $ | 40.00 | | | | 30,000 | | | | 1.00 | | | December 31, 2026 | | | $ | 4.00 | | | | 190,000 | | | | 3.73 | | | September 21, 2029 | | | $ | 3.00 | | | | 3,840,421 | | | | 5.45 | | | June 30, 2031 | | | $ | 4.00 5.00 | | | | 200,000 | | | | 2.17 | | | March 2, 2028 | | | $ | 4.50 | | | | 3,074,587 | | | | 2.45 2.82 | | | June 13, 2028 October 24, 2028 | | | | | | | | 7,335,008 | | | | 4.12 | | | | | The average remaining contractual life of outstanding warrants that expire is 4.39 years. Schedule of Warrants Activity | | | December 31, 2025 | | | December 31, 2024 | | | | | | Number of warrants | | | Weighted average price | | | Number of warrants | | | Weighted average price | | | | Balance, beginning of fiscal year | | | 2,291,276 | | | $ | 6.35 | | | | 1,162,792 | | | $ | 24.20 | | | | Issuance | | | 8,539,508 | | | $ | 4.16 | | | | 2,402,815 | | | $ | 5.49 | | | | Expired | | | (6,250 | ) | | $ | 24.00 | | | | (357,742 | ) | | $ | 60.50 | | | | Exercise | | | (3,489,526 | ) | | $ | 6.22 | | | | (916,589 | ) | | $ | (3.97 | ) | | | Balance, end of fiscal year | | | 7,335,008 | | | $ | 3.85 | | | | 2,291,276 | | | $ | 6.35 | | | **15. Equity Compensation** Under the Companys 2015, 2021 and 2022 Equity Incentive Plans, the number of shares of common stock reserved for issuance under the option plan shall not exceed 18% 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. | 54 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **15. Equity Compensation**(continued) All equity-settled, share-based payments are ultimately recognized as an expense in the statement of operations with a corresponding credit to additional paid in capital. If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior periods if share options ultimately exercised are different than that estimated on vesting. *Performance Share Units* On May 1, 2023, the Company and Steven Rossi reached an agreement to modify 160,000 restricted stock units and 40,000 performance stock units (PSUs) issued on November 11, 2022, and December 29, 2021, respectively, and replace them with 200,000 stock options, as described below. On November 11, 2022, 40,000 and 30,000 PSUs granted on December 29, 2021, as described below, were modified to include new terms pertaining to the PSU vesting schedule. The PSUs vest in 5% increments according to the modified schedule that correlates with the Companys stock price. The first 5% of the PSUs vest upon the Companys stock price closing at $22.50, 50% will have vested at a closing price of $53.10, and 100% will have vested at a closing price of $137.60 as measured using the volume weighted average of the Companys common stock for ten (10) consecutive trading days, with over $100,000 of trading volume on each of those days. The fair value of the PSUs was estimated to be $1,254,460. As of December 31, 2025, 7,500 PSUs of the remaining 30,000 PSUs had vested, and the Company recognized $107,525 (2024 - $107,525) in consulting expenses. On December 29, 2021, the Company granted 40,000 and 30,000 PSUs to the Companys Chief Executive Officer and a director, respectively. The PSUs were to vest in 5% increments according to a schedule that correlates with the Companys stock price. The first 5% of the PSUs was to have vested upon the Companys 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. The fair value of the PSUs was estimated to be $1,344,570. *Stock Options* The Company uses the Black-Scholes option pricing model to determine fair value of stock options on the grant date. During the year ended December 31, 2025, the Company issued the following stock options to various directors: | | - | 10,000 stock options vesting ratably over two years, with an exercise price of $5.95 and an expiration date of March 7, 2035 | | | | - | 14,000 stock options vesting ratably over two years, with an exercise price of $3.09 and an expiration date of April 4, 2035 | | | | - | 30,000 stock options vesting ratably over two years, with an exercise price of $3.80 and an expiration date of July 12, 2035 | | | | - | 50,000 stock options vesting pursuant to a performance milestone and an expiration date of July 12, 2035 | | During the year ended December 31, 2025, the Company issued the following stock options to various employees and consultants: | | - | 88,600 stock options vesting based on various service periods, with an exercise price of $3.09 and an expiration date of April 4, 2035 | | | | - | 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 | | During the year ended December 31, 2025, the Company issued the following stock options to Steven Rossi: | | - | 30,000 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 4, 2035 | | | | - | 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. | | On 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. As a result of the modification in exercise prices, the Company recognized additional expense of $93,140 on the date of modification. During 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 cancelled. | 55 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **15. Equity Compensation**(continued) Schedule of Stock Options Activity | | | December 31, 2025 | | | December 31, 2024 | | | | | | Number of stock options | | | Weighted average price | | | Number of stock options | | | Weighted average price | | | | Balance, beginning of fiscal year | | | 579,936 | | | $ | 7.14 | | | | 506,386 | | | $ | 19.62 | | | | Granted | | | 596,040 | | | $ | 3.68 | | | | 84,860 | | | $ | 7.70 | | | | Forfeited | | | (4,270 | ) | | $ | 9.52 | | | | (11,310 | ) | | $ | (29.30 | ) | | | Balance, end of fiscal year | | | 1,171,706 | | | $ | 5.37 | | | | 579,936 | | | $ | 7.14 | | | Schedule of Share Based Payment Arrangement, Option, Exercise Price Range | | | Range of Exercise prices | | | Outstanding | | | Weighted average life (years) | | | Weighted average exercise price | | | Exercisable on December 31, 2025 | | | | Stock options | | $ | 3.09 7.042 | | | | 1,171,706 | | | | 8.22 | | | $ | 5.37 | | | | 298,609 | | | As of December 31, 2025 and December 31, 2024, Terravis Energy Inc., a subsidiary of the Company, has the following options outstanding: Schedule of Stock Options Activity | | | December 31, 2025 | | | December 31, 2024 | | | | | | Number of stock options | | | Weighted average price | | | Number of stock options | | | Weighted average price | | | | Balance, beginning of fiscal year | | | 1,350,000 | | | $ | 0.01 | | | | 1,350,000 | | | $ | 0.01 | | | | Granted | | | - | | | $ | - | | | | - | | | $ | - | | | | Balance, end of fiscal year | | | 1,350,000 | | | $ | 0.01 | | | | 1,350,000 | | | $ | 0.01 | | | Schedule of Share Based Payment Arrangement, Option, Exercise Price Range | | | Range of Exercise prices | | | Outstanding | | | Weighted average life (years) | | | Weighted average exercise price | | | Exercisable on December 31, 2025 | | | | Stock options | | $ | 0.01 | | | | 1,350,000 | | | | 6.28 | | | $ | 0.01 | | | | 1,350,000 | | | | 56 | | **Worksport Ltd.** **Notes to the Consolidated Financial Statements** **December 31, 2025 and 2024** **16. Segment Reporting** The Company manages its business on a product basis and operates in the following two reporting segments for financial reporting purposes: (1) Hard Tonneau Covers and (2) Soft Tonneau Covers. The accounting policies of both reporting segments are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies. The Companys 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 Companys reporting segments. 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 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: Schedule of Revenue and Segment Net Loss | | | Hard Tonneau Covers | | | Soft Tonneau Covers | | | Corporate / Eliminations | | | Consolidated | | | Hard Tonneau Covers | | | Soft Tonneau Covers | | | Corporate / Eliminations | | | Consolidated | | | | | | For the year ended December 31, 2025 | | | For the year ended December 31, 2024 | | | | | | Hard Tonneau Covers | | | Soft Tonneau Covers | | | Corporate / Eliminations | | | Consolidated | | | Hard Tonneau Covers | | | Soft Tonneau Covers | | | Corporate / Eliminations | | | Consolidated | | | | Net sales | | $ | 15,647,276 | | | $ | 454,462 | | | $ | - | | | $ | 16,101,738 | | | $ | 5,171,201 | | | $ | 3,313,178 | | | $ | - | | | $ | 8,484,379 | | | | Less: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cost of sales | | | (11,272,138 | ) | | | (350,466 | ) | | | (4,227 | ) | | | (11,626,831 | ) | | | (4,663,491 | ) | | | (2,915,238 | ) | | | - | | | | (7,578,729 | ) | | | Selling, general and administrative | | | (10,140,759 | ) | | | (175,048 | ) | | | (11,138,218 | ) | | | (21,454,025 | ) | | | (5,918,555 | ) | | | (4,762,105 | ) | | | (3,937,539 | ) | | | (14,618,199 | ) | | | Depreciation and amortization | | | (1,676,800 | ) | | | (37,451 | ) | | | (120,057 | ) | | | (1,834,308 | ) | | | (1,206,499 | ) | | | (440,916 | ) | | | (105,870 | ) | | | (1,753,285 | ) | | | Net loss from operations | | | (7,442,421 | ) | | | (108,503 | ) | | | (11,262,502 | ) | | | (18,813,426 | ) | | | (6,617,344 | ) | | | (4,805,081 | ) | | | (4,043,409 | ) | | | (15,465,834 | ) | | The following table presents the Companys net sales disaggregated by geographic area: Schedule of Net Sales Disaggregated by Geographic Area | | | Hard Tonneau Covers | | | Soft Tonneau Covers | | | Consolidated | | | Hard Tonneau Covers | | | Soft Tonneau Covers | | | Consolidated | | | | | | 2025 | | | 2024 | | | | | | Hard Tonneau Covers | | | Soft Tonneau Covers | | | Consolidated | | | Hard Tonneau Covers | | | Soft Tonneau Covers | | | Consolidated | | | | United States | | $ | 15,558,123 | | | $ | 451,960 | | | $ | 16,010,083 | | | $ | 5,111,377 | | | $ | 3,286,193 | | | $ | 8,397,570 | | | | Other | | | 89,153 | | | | 2,502 | | | | 91,655 | | | | 59,824 | | | | 26,985 | | | | 86,809 | | | | Total | | | 15,647,276 | | | | 454,462 | | | | 16,101,738 | | | | 5,171,201 | | | | 3,313,178 | | | | 8,484,379 | | | No asset information has been provided for the reported segments as the CODM does not regularly review asset information by reportable segment. As of December 31, 2025 and 2024, assets held in the U.S. accounted for 93% and 88% of total assets, respectively. **17. Legal Proceedings** There are no legal proceedings except for routine litigation incidental to the business. **18. Subsequent Events** The Company has evaluated subsequent events through March 26, 2026, which is the date the financial statements were available to be issued. The following events occurred after year-end: | | Through March 26, 2026, the Company has sold and issued 2,070,654 shares of common stock in consideration for net proceeds of $2,113,000 under the ATM Agreement. | | | | | | | | | | Through March 26, 2026, 200 shares of Series C Preferred stock were converted to 200 shares of common stock at the request of the investor. | | | 57 | | **ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE** None. **ITEM 9A. CONTROLS AND PROCEDURES** **Evaluation of Disclosure Controls and Procedures.** We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on managements evaluation (with the participation of the individuals serving as our principal executive officer and principal financial officer) of our disclosure controls and procedures as required by Rules 13a-15 and 15d-15 under the Exchange Act, each of the individuals serving as our principal executive officer and principal financial officer has concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of December 31, 2025, the end of the period covered by this Annual Report on Form 10-K. **Managements Report on Internal Control over Financial Reporting.** Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including the individuals serving as our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was not effective based on those criteria due to material weaknesses in our internal control over financial reporting described below. **Material Weakness in Internal Control over Financial Reporting** Our current staff size prevents effective segregation of duties in key financial reporting processes due to inadequate oversight. Small staff sizes prevent the ability to demonstrate proper checks and balances as well as increases the risk of potential misstatements. Because of our staff size, we also have not sufficiently designed written policies and procedures at a level of prevision to support the operating effectiveness of internal controls to prevent and detect potential errors. We also at present do not maintain adequate documentation to evidence the operating effectiveness of certain control activities. These control deficiencies resulted in one misstatement to the preliminary financial statements that was corrected prior to issuance of the financial statements. While this was a vast improvement over the prior year, the identified audit adjustment and the suggested changes to public filings throughout the year may have been identified before being provided to our external auditor if our size and segregation of duties was sufficiently designed and in operation. These control deficiencies create a reasonable possibility that a material misstatement to the financial statements will not be prevented or detected on a timely basis, and therefore we concluded that the deficiencies represent material weaknesses in our internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2025. | 58 | | **Remediation Plan** During the year ended December 31, 2025, we continued to enhance our internal control over financial reporting in an effort to remediate the material weaknesses described above. Measures taken in this remediation included investing in additional senior accounting personnel, establishing a clearer organizational structure, implementing additional enterprise resource planning system modules, and formalizing internal processes and procedures. Our remediation process includes, but is not limited to: | | | Implement compensating controls to include additional controls related to external reporting function. | | | | | Perform root cause analysis over significant classes of transactions, inclusive of internal control over financial reporting, to identify which processes lack segregation. | | | | | Redesign access roles or identify compensating controls to eliminate or reduce the risks that arise in key business processes. | | | | | Implement mitigating strategies identified after root cause analysis, such as hiring and training additional personnel to support key business processes. | | | | | Formalize our policies and procedures for key business processes, inclusive of adequate documentation to evidence operational effectiveness. | | | | | Providing regular feedback to our Audit Committee about the status of our remediation efforts. | | We expect to remediate these material weaknesses later in 2026 and further enhance our internal control function beyond that time. However, we may discover additional material weaknesses that may require additional time and resources to remediate. **Attestation Report on Internal Control over Financial Reporting.** This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm due to the deferral allowed for smaller reporting companies. **Changes in Internal Control over Financial Reporting** Other than with respect to the remediation efforts discussed above, there was no change in our internal control over financial reporting that occurred during the fourth quarter of 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. **ITEM 9B. OTHER INFORMATION** During the fourth fiscal quarter ended December 31, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K. The Company has adopted an insider trading policy governing the purchase, sale, and/or other dispositions of the Companys securities by directors, officers and employees, or the registrant itself, that have been designed to promote compliance with insider trading laws, rules and regulations, and Nasdaqs listing standards. **ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS** None. | 59 | | **PART III** **ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE** Set forth below is a list of the names, ages and positions of our executive officers and directors as of March 26, 2026: | Name: | | Age | | Position(s): | | Director or Executive Officer Since: | | | Steven Rossi | | 40 | | Chief Executive Officer, President, Secretary, Chair of the Board of Directors (Principal Executive Officer) | | November 7, 2014 | | | | | | | | | | | | Michael Johnston | | 45 | | Chief Financial Officer (Principal Financial and Accounting Officer) | | December 5, 2017 | | | | | | | | | | | | Lorenzo Rossi | | 71 | | Director | | December 9, 2014 | | | | | | | | | | | | Craig Loverock | | 55 | | Independent Director* | | April 22, 2019 | | | | | | | | | | | | William Caragol | | 59 | | Independent Director# | | June 30, 2021 | | | | | | | | | | | | Ned L. Siegel | | 74 | | Independent Director | | June 30, 2021 | | * Audit Committee Chair # Compensation Committee Chair Nominating and Corporate Governance Chair A brief description of the background and business experience of our executive officers and directors for the past five years is as follows: **Steven Rossi** has served as the Chief Executive Officer, President, Secretary and Chair of the Board of Directors of the Company since November 7, 2014. Mr. Steven Rossi attended the University of Toronto from 2005 to 2007, majoring in Life Science and pausing his post-secondary education to begin his career as an entrepreneur, visionary, and founder. Mr. Steven Rossi founded two automotive-based companies in 2005 and 2006, respectively, and he managed and grew their respective operations for several years. Mr. Steven Rossi then founded Worksport Ontario, a wholly owned operating entity of the Company, in 2011, and he has since been granted numerous patents across the U.S, and Canada all of which he assigned exclusively to Worksport. In a short time since raising substantial funds in 2021 with which to grow Worksport, Mr. Steven Rossi has been instrumental in retrofitting a distribution facility in West Seneca, New York into a manufacturing facility. He was further responsible for facilitating the research and development and planning the launch of new tonneau cover product lines; as these product lines were well-received by the consumer market, and as demand for them increased, Mr. Steven Rossi then orchestrated the scaling of production through coordinating with teams across multiple states and disciplines to meet consumer demand. Through his two decades of business experience in the automotive sector, Steven Rossi possesses the knowledge and experience in establishing, managing, and growing automotive companies that aid him in efficiently and effectively identifying and executing the Companys strategic priorities. As our Chief Executive Officer, President, Chair and founder, Mr. Steven Rossi brings to the Board extensive knowledge of the Companys products, structure, history, and culture as well as years of expertise in the industry and is qualified to be a member of the Companys Board of Directors. **Michael Johnston CPA, CA**, has been serving as the Chief Financial Officer of the Company since December 5, 2017. Mr. Michael Johnston has been a partner with Forbes Andersen LLP, Chartered Professional Accountants, since January 2012 and offers over 20 years of experience advising both private and public companies. His responsibilities include assisting Steven Rossi in developing new business, maintaining operating budgets and ensuring adequate cash flow. Mr. Michael Johnston was appointed by the Board for his extensive knowledge of the Companys products and his financial and accounting expertise. Mr. Michael Johnston holds a graduate degree from the University of Western Ontario. | 60 | | **Dr. Lorenzo H. Rossi** has served as a Director of the Company since December 9, 2014. Dr. Rossi currently serves as Chief Executive Officer of TerraVis Energy, a subsidiary of Worksport Ltd., and is the inventor of the AetherLux ZeroFrost cold-climate heat pump technology. He served as Chair of Finance for one of Canadas largest Catholic school boards, where he was responsible for financial oversight and governance of a large public institution. He also served as a Board Director of a TSX-listed biometric technology company, where he gained experience in corporate governance, technology strategy, and the regulatory responsibilities of a publicly traded enterprise. Dr. Lorenzo Rossi served for 23 years as a Continuing Education High School Principal, during which he held responsibility for institutional administration, staff leadership, and academic program development. He brings to the Board expertise in clean energy technology, financial oversight, corporate governance, and organizational leadership. With academic qualifications that include a Doctorate in Theology (ThD), a Master of Education (M.Ed.) in Computer Science, a Bachelor of Education (B.Ed.), and a Bachelor of Arts (B.A.), Dr. Lorenzo Rossis diverse educational background underpins his strategic decision-making and commitment to lifelong learning. **Craig Loverock, CPA, CA**, has been a member of the Board of the Company since April 22, 2019. Mr. Craig Loverock has also served as the Chair of the Audit Committee since April 22, 2019. Mr. Craig Loverock is a licensed CPA (Chartered Professional Accountant) and received his Chartered Accountant designation from the Institute of Chartered Accountants, Ontario in 1997, and has over 30 years experience in accounting and finance roles in Canada, the United States and England. Mr. Craig Loverock has been the Chief Financial Officer and Corporate Secretary at Contagious Gaming Inc. since November 30, 2015, and currently serves as the Chief Financial Officer of Calibrex Developments. From January 2018 to April 2023, he served as the Chief Financial Officer of Sproutly Canada, Inc. From October 2014 to May 2015, he served as the Chief Financial Officer of VoiceTrust Inc. From November 2012 to October 2014, he served as the Chief Financial Officer and Chief Compliance officer of Quartz Capital Group Ltd. The Board believes that Mr. Craig Loverocks vast professional experience, education, and professional credentials qualify him to serve as a member of the Companys Board of Directors and as a member of the Boards committees. **William Caragol** was appointed Director on June 30, 2021. From 2018 to the present, Mr. William Caragol has also been Managing Director of Quidem LLC, a corporate advisory firm. Mr. William Caragol is the Chief Financial Officer of Mainz Biomed, N.V. (NASDAQ: MYNZ) since July of 2021. From November 2021 to September 2025, Mr. William Caragol also served as the Chief Operating Officer and Chief Financial Officer of Iron Horse Acquisitions Corp. (NASDAQ: IROH). Since November 2023, Mr. William Caragol has also served as a director and Chief Financial Officer of Iron Horse Acquisition II Corp. (NASDAQ: IRHO). Since November 2023, Mr. William Caragol has also Since July 2023, Mr. William Caragol has also been on the board of directors and has been Chairman of the audit committee of DeFi Development Corp (NASDAQ: DFDV) and he served on the board of directors of Greenbox POS (NASDAQ: GBOX) from 2021 to April 2023. Mr. William Caragol earned a B.S. in business administration and accounting from Washington & Lee University and is a member of the American Institute of Certified Public Accountants. The Board believes that Mr. William Caragols vast experience as a member of several publicly traded companies board of directors, his education, and professional credentials qualify him to serve as a member of the Companys Board Directors and as a member of the Boards committees. **Ambassador Ned L. Siegel**was appointed a director June 30, 2021. Ambassador Siegel is the President of The Siegel Group, a multi-disciplined international business management advisory firm he founded in 1997 in Boca Raton, Florida, specializing in real estate, energy, utilities, infrastructure, financial services, oil & gas and cyber & secure technology. Mr. Ambassador Ned Siegel has served since 2013 as Of Counsel to the law firm of Wildes & Weinberg, P.C.. From October 2007 until January 2009, he served as the United States Ambassador to the Commonwealth of The Bahamas. Prior to his Ambassadorship, in 2006, he served with Ambassador John R. Bolton at the United Nations in New York, as the Senior Advisor to the U.S. Mission and as the United States Representative to the 61st Session of the United Nations General Assembly. From 2003 to 2007, Mr. Ambassador Ned Siegel served on the Board of Directors of the Overseas Private Investment Corporation (OPIC), which was established to help U.S. businesses invest overseas, fostering economic development in new and emerging markets, complementing the private sector in managing the risk associated with foreign direct investment and supporting U.S. foreign policy. Appointed by Governor Jeb Bush, Mr. Ambassador Ned Siegel served as a Member of the Board of Directors of Enterprise Florida, Inc. (EFI) from 1999-2004. EFI is the state of Floridas primary organization promoting statewide economic development through its public-private partnership. Mr. Ambassador Ned Siegel presently serves on the Board of Directors of La Rosa Holdings Corp. . He also presently serves in an advisory capacity to the U.S. Medical Glove Company, Captis Intelligence, Inc., VisionWave Holdings, Inc., Potomac International Partners, Parallel Profile, Inc., and Maridose, LLC. Mr. Ambassador Ned Siegel received a B.A. from the University of Connecticut in 1973 and J.D. from the Dickinson School of Law in 1976. In December 2014, he received an honorary degree of Doctor of Business Administration from the University of South Carolina. The Board believes that Mr. Ambassador Ned Siegels vast professional experience, education, and professional credentials qualify him to serve as a member of the Companys Board Directors, and as a member of the Boards committees. | 61 | | **Term of Office** Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until their resignation or removal in accordance with our bylaws. Our officers are appointed by our Board of Directors and hold office until removed by the Board of Directors. Members of our advisory board do not have any voting power and serve at the pleasure of the Board. **Family Relationships** Lorenzo Rossi and Steven Rossi are father and son. Other than the foregoing, there are no other family relationships between any of our directors or executive officers. **Involvement in Legal Proceedings** To our knowledge, there have been no material legal proceedings that would require disclosure under the federal securities laws that are material to an evaluation of the ability of our directors or executive officers. **Code of Business Conduct and Ethics** Our Board has adopted a written code of business conduct and ethics (Code) that applies to our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. One of our investor webpages, *https://investors.worksport.com/#reports*, displays a current copy of the Code and all disclosures that are required by law in regard to any amendments to, or waivers from, any provision of the Code. **Insider Trading Policy** All officers, directors and employees of, and consultants and contractors to, us or any of our subsidiaries are subject to our Insider Trading Policy. The Insider Trading Policy prohibits the unauthorized disclosure of any nonpublic information acquired in the workplace and the misuse of material nonpublic information in the trading of our securities. To ensure compliance with the Insider Trading Policy and applicable federal and state securities laws, all officers, directors and employees of, and consultants and contractors to, us or any of our subsidiaries must refrain from the sale or purchase of our securities except in specific designated trading windows or pursuant to 10b5-1 trading plans that were preapproved. Even during a trading window period, certain insiders, including our named executive officers and directors, must comply with our designated pre-clearance policy prior to trading in our securities. **Director Independence and Board Committees** An independent director is defined generally as a director that is not an officer or employee of the Company or its subsidiaries or any other individual having a relationship which, in the opinion of the Companys Board, would interfere with the directors exercise of independent judgment in carrying out the responsibilities of a director. Mr. Steven Rossi, Dr. Lorenzo Rossi, Mr. Craig Loverock, Mr. William Caragol and Mr. Ambassador Ned L. Siegel serve as members of our Board of Directors. Our Board has determined that Mr. Craig Loverock, Mr. William Caragol and Mr. Ambassador Ned L. Siegel are independent directors as defined in The Nasdaq Stock Market LLC (Nasdaq) listing rules and under Rule 10-A-3(b)(1) of the Exchange Act and applicable SEC rules. *Audit Committee*. We currently have a standing Audit Committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least three members of the Audit Committee, each of whom is required to be independent and financially literate, with one qualifying as an audit committee financial expert as defined in applicable SEC rules. Messrs. Craig Loverock, William Caragol and Ned L. Siegel serve as members of our Audit Committee. Mr. Craig Loverock serves as the Audit Committee Chairman and qualifies as an audit committee financial expert under the SEC rules. | 62 | | We have adopted an Audit Committee charter, which details the purpose and principal functions of the Audit Committee, including to: | | | appoint, compensate, and oversee the work of any registered public accounting firm employed by us; | | | | | resolve any disagreements between management and the auditor regarding financial reporting; | | | | | pre-approve all auditing and non-audit services; | | | | | retain independent counsel, accountants, or others to advise the Audit Committee or assist in the conduct of an investigation; | | | | | seek any information it requires from employees all of whom are directed to cooperate with the Audit Committees requests or external parties; | | | | | meet with our officers, external auditors, or outside counsel, as necessary; and | | | | | oversee that management has established and maintained processes to assure our compliance with all applicable laws, regulations and corporate policies. | | *Compensation Committee*. We have a standing Compensation Committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the Compensation Committee, all of whom must be independent. Mr. William Caragol, Mr. Craig Loverock and Mr. Ambassador Ned L. Siegel serve as members of our Compensation Committee. Mr. William Caragol serves as the Compensation Committee Chairman. We have adopted a Compensation Committee charter, which details the purpose and responsibility of the Compensation Committee, including to: | | | discharge the responsibilities of the Board relating to compensation of our directors, executive officers and key employees; | | | | | assist the Board in establishing appropriate incentive compensation and equity-based plans and to administer such plans; | | | | | oversee the annual process of evaluation of the performance of our management; and | | | | | perform such other duties and responsibilities as enumerated in and consistent with the Compensation Committees charter. | | The Compensation Committees charter permits the committee to retain or receive advice from a compensation consultant and outlines certain requirements to ensure the consultants independence or certain circumstances under which the consultant need not be independent. However, as of the date hereof, we have not retained such a consultant. *Nominating and Corporate Governance Committee*. We have a standing Nominating and Corporate Governance Committee. Mr. Craig Loverock, Mr. William Caragol and Mr. Ambassador Ned L. Siegel serve as members of the Nominating and Corporate Governance. Mr. Ambassador Ned L. Siegel serves as the Nominating and Corporate Governance Committee Chairman. We have adopted a Nominating and Corporate Governance Committee charter, which details the purpose and responsibilities of the Nominating and Corporate Governance Committee, including to: | | | assist the Board by identifying qualified candidates for director nominees, and to recommend to the Board of Directors the director nominees for the next annual meeting of shareholders; | | | | | lead the Board in its annual review of its performance; | | | | | recommend director nominees to the Board for each committee of the Board; and | | | | | develop and recommend to the Board corporate governance guidelines applicable to us. | | | 63 | | **Meetings of the Board of Directors** During our fiscal year ended December 31, 2025, the Board met from time to time informally and acted by written consent on numerous occasions. **ITEM 11. EXECUTIVE COMPENSATION** The following summary compensation table sets forth all compensation awarded to, earned by, or paid during the years ended December 31, 2025 and 2024 in all capacities for our named executive officers which include: (i) all individuals serving as our principal executive officer or acting in a similar capacity during the last completed fiscal year (PEO), regardless of compensation level; (ii) our two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year and whose total compensation for the last fiscal year exceeded $100,000; and (iii) up to two additional individuals for whom disclosure would have been provided under (ii), except that the individual was not serving as an executive officer of the Company at the end of the last completed fiscal year. **Summary Compensation Table** | Name and Position | | Fiscal Year Ended December 31, | | | Salary ($) | | | Stock Awards ($) | | | Stock Options ($) | | | All Other Compensation | | | Total ($) | | | | Steven Rossi, Chief Executive Officer, President (PEO) | | | 2025 | | | | 302,715 | (1) | | | - | | | | 844,750 | (3) | | | 150,000 | (5) | | | 1,297,465 | | | | | | | 2024 | | | | 348,246 | (2) | | | - | | | | 10,500 | (4) | | | 150,000 | (6) | | | 508,746 | | | (1) Mr. Steven Rossis gross salary in 2025 was $300,000, which includes only consulting fees. He also received contributions towards health, dental, and vision coverage equaling $2,715 in the same year. (2) Mr. Steven Rossis gross salary in 2024 was $187,000, which includes his base compensation plus an 8% vacation payout per paycheck. He additionally received $159,527 in consulting fees. He also received contributions towards health, dental, and vision coverage equaling $1,719 in the same year. (3) On April 4, 2025, we granted Mr. Steven Rossi 30,000 nonqualified stock options with a strike price of $3.09 and a fair value of $2.86 as determined by use of the Black Scholes valuation model. On July 12, 2025, we granted Mr. Steven Rossi 215,000 NQSO stock options with a strike price of $3.80 and a grant date fair value of $3.53 as determined by use of the Black Scholes valuation model. (4) On July 26. 2024, we amended Mr. Steven Rossis 2023 5,000 nonqualified stock options with a strike price of $36.10 to a strike price of $7.04. All other elements of the award were otherwise unchanged. Management determined the incremental fair value of the modification using Black Scholes. (5) On February 12, 2026, the Board approved the issuance of a $150,000 cash bonus to Mr. Steven Rossi for his exemplary performance in 2025 pursuant to the terms of the Consulting Agreement, dated July 23, 2024. (6) On February 14, 2025, the Board approved a bonus of $150,000 payable in cash to Mr. Steven Rossi for his achievements in leading and delivering outstanding results in 2024, pursuant to the terms of the Consulting Agreement, dated July 23, 2024. **Steven Rossi Employment and Consulting Arrangements** The Company previously entered into an employment agreement with Mr. Steven Rossi, its Chief Executive Officer, effective May 10, 2021 (the Employment Agreement), which was filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on May 12, 2021. Pursuant to the Employment Agreement, Mr. Steven Rossi served as the Companys Chief Executive Officer and received an annual base salary of $300,000 and was eligible to receive an annual bonus equal to 50% of his base salary, subject to the achievement of performance goals established by the Compensation Committee of the Companys Board of Directors. The Employment Agreement had an initial term of five years commencing May 10, 2021, with automatic three-year renewal terms thereafter unless either party provided written notice of non-renewal at least 90 days prior to the applicable renewal date. The agreement also contained customary provisions relating to severance upon certain qualifying terminations, change in control benefits, indemnification, clawback and definitions of Cause and Good Reason. On July 23, 2024, the Company terminated the Employment Agreement and entered into a consulting agreement with Steven Rossi and 2230164 Ontario Inc., an Ontario corporation owned by Mr. Steven Rossi (the Consultant) (the Consulting Agreement), which replaced the Employment Agreement in its entirety. The Consulting Agreement was filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on July 26, 2024. Pursuant to the Consulting Agreement, Mr. Steven Rossi continues to serve as the Companys Chief Executive Officer and President, with services provided through the Consultant. The Consulting Agreement commenced on July 23, 2024 and continues until terminated in accordance with its terms. Because the Consultant is wholly owned by Mr. Steven Rossi, payments made to the Consultant under the Consulting Agreement are treated as compensation to Mr. Steven Rossi for purposes of the Companys executive compensation disclosure. Under the Consulting Agreement, the Consultant receives annual base fees of $300,000 and is eligible to earn an annual incentive bonus equal to 50% of the base fees based on performance goals established by the Compensation Committee of the Companys Board of Directors, when constituted. In connection with the Consulting Agreement, the Company granted the Consultant or Mr. Steven Rossi a non-qualified stock option to purchase 350,000 shares of the Companys common stock for $7.042 per share. The option vests in equal quarterly installments over a five-year period and expires on the tenth anniversary of the date of grant, subject to the Consultants continued service with the Company. In the event of a change in control of the Company, the option will vest in full. The Consulting Agreement may be terminated by the Company with or without cause or by the Consultant with or without good reason and contains customary provisions relating to change in control benefits, clawback and indemnification. Mr. Steven Rossi provided services to the Company pursuant to the Consulting Agreement throughout the fiscal year ended December 31, 2025. The foregoing description of the Consulting Agreement is a summary and is qualified in its entirety by reference to the full text of the Consulting Agreement filed as Exhibit 10.1 to the Companys Current Report on Form 8-K filed on July 26, 2024. | 64 | | The table below sets forth the outstanding equity awards held by our named executive officers as of December 31, 2025. **OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2025** | | | Option Awards | | | Stock Awards | | | | Name | | Number of securities underlying exercised options (#) | | | Number of securities underlying unexercised options (#) exercisable | | | Equity incentive plan awards: Number of securities underlying unexercised unearned options (#) | | | Option exercise price ($) | | | Option expiration date | | | Number of shares or units of stock that have not vested (#) | | | Market value of shares of units of stock that have not vested ($) | | | | Steven Rossi, CEO & Pres. (PEO) | | | - | | | | 188,750 | (1)(2)(3)(4)(5)(6) | | | 491,250 | (1)(2)(3)(4)(5)(6) | | | | (1)(2)(3)(4)(5)(6) | | | (1)(2)(3)(4)(5)(6) | | | - | | | | - | | | | | (1) | On August 6, 2021, we granted Mr. Steven Rossi an incentive stock option to purchase 10,000 shares of common stock for $55.00 per share under the Worksport Ltd. 2021 Equity Incentive Plan. The option vests 100% on the grant date. The expiration date of the option is August 6, 2026. During the year ended December 31, 2024, this stock options strike price was updated to $7.042. | | | | | | | | | (2) | On May 1, 2023, we granted Mr. Steven Rossi a non-qualified stock option to purchase 200,000 shares of common stock for $17.40 per share. Vesting is based upon the achievement of either the Companys Market Capitalization or the Companys Share Price. The grant vests in ten tranches. The first tranche vests once the Company either maintains a volume weighted average price of $20.00 or more for 10 consecutive trading days or reaches a market capitalization of $38,000,000, and an additional tranche representing 10% of the option grant vests for each dollar by which the volume weighted average price increases or for each additional $17,000,000 in which the Companys market capitalization increases. 20% of the stock option has vested. The expiration date of the option is May 1, 2033. During the year ended December 31, 2024, this stock options strike price was updated to $7.042. | | | | | | | | | (3) | On July 21, 2023, we granted Mr. Steven Rossi a non-qualified stock option to purchase 5,000 shares of common stock for $36.10 per share under the Worksport Ltd. 2022 Equity Incentive Plan. The option vests 50% on the first annual anniversary of the grant date, and the other 50% vests on the second annual anniversary of the grant date. The expiration date of the option is July 21, 2028. During the year ended December 31, 2024, this stock options strike price was updated to $7.042. | | | | | | | | | (4) | On October 31, 2023, we granted Mr. Steven Rossi an incentive stock option to purchase 150,000 shares of common stock for $14.40 per share. Vesting is based upon the achievement of revenue-based milestones. The first tranche represents 20% of the option vests upon the achieving of an annual run rate revenue of $10,000,000 as measured by $2,500,000 of quarterly revenue, and an additional 20% vests for each $10,000,000 increase in annual run rates, each represented by an additional $2,500,000 of quarterly revenue. 40% of the stock option has vested. The expiration date of the option is October 31, 2033. During the year ended December 31, 2024, this stock options strike price was updated to $7.042. | | | | | | | | | (5) | On April 4, 2025, we granted Mr. Steven Rossi a non-qualified stock option to purchase 30,000 shares of common stock for $3.09 per share under the Worksport Ltd 2022 Equity Incentive Plan. The option vests 12.5% every three months beginning October 31, 2025. 12.5% of the stock option has vested. The expiration date of the option is April 3, 2035. | | | | | | | | | (6) | On July 12, 2025, we granted Mr. Steven Rossi a non-qualified stock option to purchase 215,000 shares of common stock for $3.89 per share. The option vests 50% on the first anniversary of the grant date, and the other 50% vests on the second annual anniversary of the grant date. The expiration date of the option is July 12, 2035. | | | 65 | | **Equity Incentive Plans** 2015 Equity Incentive Plan In July 2015, our Board and shareholders adopted the Worksport Ltd. 2015 Equity Incentive Plan (the 2015 Plan), effective as of July 5, 2015. The 2015 Plan provides for the grant of the following types of stock awards: (i) incentive stock options, (ii) nonstatutory stock options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock unit awards and (vi) other stock awards. The 2015 Plan is intended to help us secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for our success and that of any affiliate and provide a means by which the eligible recipients may benefit from increases in value of our common stock. The Board reserved 50,000 shares of common stock issuable upon the grant of awards under the 2015 Plan. As of December 31, 2025, 2,000 shares of common stock remain available under the 2015 Plan. 2021 Equity Incentive Plan On March 31, 2021, our Board and shareholders adopted the Worksport Ltd. 2021 Equity Incentive Plan (the 2021 Plan). The 2021 Plan provides for the grant of the following types of stock awards: (i) incentive stock options, (ii) nonstatutory stock options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock unit awards and (vi) other stock awards. The 2021 Plan is intended to help us secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for our success and that of any affiliate and provide a means by which the eligible recipients may benefit from increases in value of our common stock. The Board reserved 125,000 shares of common stock issuable upon the grant of awards under the 2021 Plan. As of December 31, 2025, 1,000 shares of common stock were available under the 2021 Plan. 2022 Equity Incentive Plan In September 2022 and November 2022, our Board and shareholders, respectively, approved and adopted the Worksport Ltd. 2022 Equity Incentive Plan (the 2022 Plan). The 2022 Plan authorizes the grant of the following types of stock awards: (i) incentive stock options, (ii) nonstatutory stock options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock units, (vi) performance units, (vii) performance shares and (vii) other awards as the administrator may determine. The 2022 Plan is to be administered by the Board, the Compensation Committee or any other committee appointed by the Board. The 2022 Plan is intended to (i) attract and retain the best available personnel for positions of substantial responsibility, (ii) provide incentives to individuals who perform services for us and (iii) promote the success of our business. The 2022 Plan also contains an evergreen formula pursuant to which the number of shares of common stock available for issuance under the 2022 Plan will automatically increase on January 1 of each calendar year during the term of the 2022 Plan, beginning with the calendar year 2023, by an amount of shares of common stock so that the total amount of common stock available under the 2022 Plan is equal to 15% of the total number of shares of common stock outstanding on December 31st of the prior calendar year minus the total number of shares reserved and available for issuance under the 2015 Plan and 2021 Plan. In December 2025, the evergreen formula was modified to equity 18% of the total number of shares of common stock outstanding on December 31st of the prior calendar year. As of December 31, 2024, 27,909 shares of common stock were available under the 2022 Plan. The number of shares of common stock authorized under the 2022 Plan as of January 1, 2025, was 303,311. As of December 31, 2025, 27,909 shares of common stock were available under the 2022 Plan. The number of shares of common stock authorized under the 2022 Plan as of January 1, 2025, was 428,431. As of December 31, 2025, 20,158 shares of common stock were available under the 2022 Plan. The number of shares of common stock authorized under the 2022 Plan as of January 1, 2026, was 1,592,640. *Term* The 2022 Plan shall be in effect upon the adoption by the Board and remain in effect until the 10th anniversary of the date the Board approves and adopts the 2022 Plan, unless terminated earlier by the Board. *Lapsed Awards* If awards are surrendered, terminated, or expire without being exercised in whole or in part, new awards may be granted covering the shares of common stock not issued under such lapsed awards, subject to any restrictions that may be imposed by the Code. | 66 | | *Adjustment in Shares of Common Stock* In the event that any dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares or other securities of the Company, or other change in the corporate structure of the Company affecting the shares occurs, the administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the 2022 Plan, will adjust the number and class of shares that may be delivered under the 2022 Plan and/or the number, class, and price of shares covered by each outstanding award, and the numerical share limits therein. *Non-Transferability* Unless determined otherwise by the administrator, an award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the participant, only by the participant. If the administrator makes an award transferable, such award may only be transferred (i) by will, (ii) by the laws of descent and distribution, (iii) to a revocable trust or (iv) as permitted by Rule 701 of the Securities Act of 1933, as amended (the Securities Act). *Limitation on Number of Shares Subject to Awards* The maximum aggregate amount of cash that may be paid in cash during any calendar year (measured from the date of any payment) with respect to one or more awards payable in cash is $100,000. *Amendments to the 2022 Plan* The administrator may at any time amend, alter, suspend, or terminate the 2022 Plan. We will obtain shareholder approval of any 2022 Plan amendment to the extent necessary and desirable to comply with applicable laws. No amendment, alteration, suspension, or termination of the 2022 Plan will impair the rights of any participant, unless mutually agreed otherwise between the participant and the administrator, in which case such an agreement must be in writing and signed by the participant and the Company. Termination of the 2022 Plan will not affect the administrators ability to exercise the powers granted to it hereunder with respect to awards granted under the 2022 Plan prior to the date of such termination. *Options* *Exercise Price* The per share exercise price for the shares to be issued pursuant to exercise of an option will be determined by the administrator but will be no less than 100% of the fair market value per share on the date of grant. In addition, in the case of an incentive stock option granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting power of all classes of our stock or any parent or subsidiary, the per share exercise price will be no less than 110% of the fair market value per share on the date of grant. Notwithstanding the foregoing, options may be granted with a per share exercise price of less than 100% of the fair market value per share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. *Grant of Options* Each option will be designated in the award agreement as either an incentive stock option or a non-qualified stock option. However, notwithstanding such designation, to the extent that the aggregate fair market value of the shares with respect to which incentive stock options are exercisable for the first time by the participant during any calendar year (under all plans of the Company and any parent or subsidiary) exceeds $100,000, such options will be treated as non-qualified stock options. Incentive stock options will be taken into account in the order in which they were granted. The fair market value of the shares will be determined as of the time the option with respect to such shares is granted. | 67 | | *Exercise of Option* Any option granted hereunder will be exercisable according to the terms of the 2022 Plan and at such times and under such conditions as determined by the administrator and set forth in the award agreement. An option may not be exercised for a fraction of a share. An option will be deemed exercised when we receive: (i) notice of exercise (in such form as the administrator specifies from time to time) from the person entitled to exercise the option, and (ii) full payment for the shares with respect to which the option is exercised (together with any applicable withholding taxes). *Effect of Termination of Employment or Death or Disability* If a participant ceases to be a service provider, other than upon the participants termination as the result of the participants death or disability, the participant may exercise his, her, or its option within such period of time as is specified in the award agreement to the extent that the option is vested on the date of termination (but in no event later than the expiration of the term of such option as set forth in the award agreement). In the absence of a specified time in the award agreement, the option will remain exercisable for three months following the participants termination. Unless otherwise provided by the administrator, if on the date of termination the participant is not vested as to his, her, or its entire option, the shares covered by the unvested portion of the option will revert to the 2022 Plan. If after termination the participant does not exercise his, her, or its option within the time specified by the administrator, the option will terminate, and the shares covered by such option will revert to the 2022 Plan. If a participant ceases to be a service provider as a result of the participants disability, the participant may exercise his or her option within such period of time as is specified in the award agreement to the extent the option is vested on the date of termination (but in no event later than the expiration of the term of such option as set forth in the award agreement). In the absence of a specified time in the award agreement, the option will remain exercisable for six (6) months following the participants termination. Unless otherwise provided by the administrator, if on the date of termination the participant is not vested as to his or her entire option, the shares covered by the unvested portion of the option will revert to the 2022 Plan. If after termination the participant does not exercise his or her option within the time specified herein, the option will terminate, and the shares covered by such option will revert to the 2022 Plan. If a participant dies while a service provider, the option may be exercised within such period of time as is specified in the award agreement to the extent that the option is vested on the date of death (but in no event may the option be exercised later than the expiration of the term of such option as set forth in the award agreement), by the participants designated beneficiary, provided such beneficiary has been designated prior to participants death in a form acceptable to the administrator. If no such beneficiary has been designated by the participant, then such option may be exercised by the personal representative of the participants estate or by the person(s) to whom the option is transferred pursuant to the participants will or in accordance with the laws of descent and distribution. In the absence of a specified time in the award agreement, the option will remain exercisable for six (6) months following participants death. Unless otherwise provided by the administrator, if at the time of death participant is not vested as to his or her entire option, the shares covered by the unvested portion of the option will continue to vest in accordance with the award agreement. If the option is not so exercised within the time specified herein, the option will terminate, and the shares covered by such option will revert to the 2022 Plan. *Change of Control* In the event of a merger of the Company with or into another corporation or other entity or a change in control, each outstanding option will be treated as the administrator determines without a participants consent. *Stock Appreciation Rights* *Grant of Stock Appreciation Rights* Subject to the terms and conditions of the 2022 Plan, a stock appreciation right may be granted to service providers at any time and from time to time as will be determined by the administrator, in its sole discretion. *Number of Shares* The administrator will have complete discretion to determine the number of stock appreciation rights granted to any participant. | 68 | | *Exercise Price and Other Terms* The administrator, subject to the provisions of the 2022 Plan, will have complete discretion to determine the terms and conditions of stock appreciation rights granted under the 2022 Plan provided, however, that the exercise price will be not less than 100% of the fair market value of a share on the date of grant. *Agreement, Expiration, and Payment* Each stock appreciation right grant will be evidenced by an award agreement that will specify the exercise price, the term of the stock appreciation right, the conditions of exercise, and such other terms and conditions as the administrator, in its sole discretion, will determine. A stock appreciation right granted under the 2022 Plan will expire upon the date determined by the administrator, in its sole discretion, and set forth in the award agreement provided, however, that the term will be no more than 10 years from the date of grant thereof. Upon exercise of a stock appreciation right, a participant will be entitled to receive payment from the Company in an amount determined by multiplying: (i) the difference between the fair market value of a share on the date of exercise over the exercise price *times*(ii) the number of shares with respect to which the stock appreciation right is exercised. At the discretion of the administrator, the payment upon stock appreciation right exercise may be in cash, in shares of equivalent value, or in some combination thereof. *Restricted Stock* *Grant of Restricted Stock* Subject to the terms and provisions of the 2022 Plan, the administrator, at any time and from time to time, may grant shares of restricted stock to service providers in such amounts as the administrator, in its sole discretion, will determine. *Agreement* Each award of restricted stock will be evidenced by an award agreement that will specify the period of restriction, the number of shares granted, and such other terms and conditions as the administrator, in its sole discretion, will determine. Unless the administrator determines otherwise, the Company as escrow agent will hold shares of restricted stock until the restrictions on such shares have lapsed. *Transferability* Except as provided otherwise in the 2022 Plan, shares of restricted stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable period of restriction. The administrator, in its sole discretion, may impose such other restrictions on shares of restricted stock as it may deem advisable or appropriate. *Voting Rights* During the period of restriction, service providers holding shares of restricted stock granted hereunder may exercise full voting rights with respect to those shares, unless the administrator determines otherwise. *Dividends, Other Distributions, and Return* During the period of restriction, service providers holding shares of restricted stock will be entitled to receive all dividends and other distributions paid with respect to such shares unless otherwise provided in the award agreement. If any such dividends or distributions are paid in shares, the shares will be subject to the same restrictions on transferability and forfeitability as the shares of restricted stock with respect to which they were paid. On the date set forth in the award agreement, the restricted stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the 2022 Plan. | 69 | | *Restricted Stock Units* *Grant of Restricted Stock Units* Restricted stock units may be granted at any time and from time to time as determined by the administrator. Each restricted stock unit grant will be evidenced by an award agreement that will specify such other terms and conditions as the administrator, in its sole discretion, will determine, including all terms, conditions, and restrictions related to the grant, the number of restricted stock units and the form of payout, which may be left to the discretion of the administrator. *Vesting Criteria and Other Terms* The administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of restricted stock units that will be paid out to the participant. After the grant of restricted stock units, the administrator, in its sole discretion, may reduce or waive any restrictions for such restricted stock units. Each award of restricted stock units will be evidenced by an award agreement that will specify the vesting criteria, and such other terms and conditions as the administrator, in its sole discretion will determine. The administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed. Upon meeting the applicable vesting criteria, the participant will be entitled to receive a payout as specified in the award agreement. On the date set forth in the award agreement, all unearned restricted stock units will be forfeited to us. *Performance Units and Performance Shares* *Grant of Performance Units/Shares* Performance units and performance shares may be granted to service providers at any time and from time to time, as will be determined by the administrator, in its sole discretion. The administrator will have complete discretion in determining the number of performance units/shares granted to each participant. *Value of Performance Units/Shares* Each performance unit will have an initial value that is established by the administrator on or before the date of grant. Each performance share will have an initial value equal to the fair market value of a share on the date of grant. *Performance Objections and Other Terms* The administrator will set performance objectives or other vesting provisions. The administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the administrator in its discretion. Each award of performance units/shares will be evidenced by an award agreement that will specify the performance period, and such other terms and conditions as the administrator, in its sole discretion, will determine. After the applicable performance period has ended, the holder of performance units/shares will be entitled to receive a payout of the number of performance units/shares earned by the participant over the performance period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a performance unit/share, the administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance unit/share. On the date set forth in the award agreement, all unearned or unvested performance units/shares will be forfeited to the Company, and again will be available for grant under the 2022 Plan. **Compensation of Directors** Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board has the authority to fix the compensation of directors. | 70 | | During 2025, Steven Rossi, Lorenzo Rossi, Craig Loverock, Bill Caragol, and Ned L. Siegel were compensated for their services. **Director Compensation (1)** **As of December 31, 2025** | Name | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | All Other Compensation ($) | | | Total ($) | | | | Craig Loverock | | | 46,343 | (1) | | | - | | | | 20,020 | (4) | | | 35,300 | (5) | | | - | | | | 101,663 | | | | William Caragol | | | 75,000 | | | | - | | | | 20,020 | (4) | | | 176,500 | (5) | | | - | | | | 271,520 | | | | Ned L. Siegel | | | 70,000 | | | | - | | | | 20,020 | (4) | | | 35,300 | (5) | | | - | | | | 125,320 | | | | Lorenzo Rossi | | | 70,000 | (2) | | | - | | | | 59,500 | (3) | | | 35,300 | (5) | | | - | | | | 164,800 | | | (1) Payments were made in CAD and converted to USD using the 2025 average rate of 0.7154. (2) Dr. Lorenzo Rossis fees earned in 2025 was $70,000 ($97,847 CAD). The payments were made in CAD and converted to USD using the 2025 average exchange rate of 0.7154. (3) On March 7, 2025, we granted Dr. Lorenzo Rossi a non-qualified stock option to purchase 10,000 shares of common stock under the 2022 Equity Incentive Plan at a strike price of $5.95 and a fair value of $5.95 as determined by use of the Black Scholes valuation model. The option expires on March 7, 2035. (4) On April 4, 2025, we granted each independent director a non-qualified stock option to purchase 7,000 shares of common stock under the 2022 Equity Incentive Plan at a strike price of $3.09 and a fair value of $2.86 as determined by use of the Black Scholes valuation model. The options expire on April 4, 2035. Under these same terms, we granted Mr. Steven Rossi a non-qualified stock option to purchase 30,000 shares of common stock. (5) On July 12, 2025, we granted Mr. Craig Loverock, Mr. Ambassador Ned Siegel, and Dr. Lorenzo Rossi non-qualified stock options to purchase 10,000 shares of common stock at a strike price of $3.89 per share and a fair value of $3.53 as determined by use of the Black Scholes valuation model. The options expire on July 12, 2035. Under these same terms, we granted Mr. William Caragol and Mr. Steven Rossi non-qualified stock options to purchase 50,000 and 215,000 shares of common stock, respectively. **Clawback Policy** On October 2, 2023, our Board adopted an executive compensation recoupment policy consistent with the requirements of the Exchange Act Rule 10D-1 and the Nasdaq listing standards thereunder, to help ensure that incentive compensation is paid based on accurate financial and operating data, and the correct calculation of performance against incentive targets. Our policy addresses recoupment of amounts from performance-based awards paid to all corporate officers, including awards under our equity incentive plans, in the event of a financial restatement to the extent that the payout for such awards would have been less, or in the event of fraud, or intentional, willful or gross misconduct that contributed to the need for a financial restatement. **Policies and Practices for Granting Certain Equity Awards** Our policies and practices regarding the granting of equity awards are carefully designed to ensure compliance with applicable securities laws and to maintain the integrity of our executive compensation program. The Compensation Committee is responsible for the timing and terms of equity awards to executives and other eligible employees. The timing of equity award grants is determined with consideration to a variety of factors, including but not limited to, the achievement of pre-established performance targets, market conditions and internal milestones. The Company does not follow a predetermined schedule for the granting of equity awards; instead, each grant is considered on a case-by-case basis to align with the Companys strategic objectives and to ensure the competitiveness of our compensation packages. In determining the timing and terms of an equity award, the Board or the Compensation Committee may consider material nonpublic information to ensure that such grants are made in compliance with applicable laws and regulations. The Boards or the Compensation Committees procedures to prevent the improper use of material nonpublic information in connection with the granting of equity awards include oversight by legal counsel and, where appropriate, delaying the grant of equity awards until the public disclosure of such material nonpublic information. The Company is committed to maintaining transparency in its executive compensation practices and to making equity awards in a manner that is not influenced by the timing of the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. The Company regularly reviews its policies and practices related to equity awards to ensure they meet the evolving standards of corporate governance and continue to serve the best interests of the Company and its shareholders. | 71 | | **** **ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS** The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this report by (a) each shareholder who is known to us to beneficially own more than 5% of our common stock, (b) directors, (c) our executive officers, and (d) all executive officers and directors as a group. Beneficial ownership is determined according to the SEC rules, and generally means that person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power of that security and includes options, warrants and other securities convertible or exercisable into shares of common stock, provided that such securities are currently exercisable or convertible within 60 days of March 26, 2026. Each director or officer, as the case may be, has furnished us with information with respect to their beneficial ownership. Except as otherwise indicated, all persons listed below have (i) sole voting power and investment power with respect to their common stock, except to the extent that authority is shared by spouses under applicable law, and (ii) record and beneficial ownership with respect to their common stock. | Name and Address of Beneficial Owner (1) | | Number of Shares of Common Stock Beneficially Owned | | | Percentage of Common Stock Beneficially Owned (2) | | | | Directors and Executive Officers: | | | | | | | | | | | | | | | | | | Steven Rossi CEO, President, and Chairman | | | 628,838 | (3) | | | 5.30 | % | | | | | | | | | | | | | | Michael Johnston CFO | | | - | | | | 0.00 | % | | | | | | | | | | | | | | Lorenzo Rossi Director | | | 38,750 | (4) | | | 0.33 | % | | | | | | | | | | | | | | Craig Loverock Director | | | 19,563 | (5) | | | 0.16 | % | | | | | | | | | | | | | | William Caragol Director | | | 19,563 | (6) | | | 0.16 | % | | | | | | | | | | | | | | Ned L. Siegel Director | | | 19,563 | (7) | | | 0.16 | % | | | | | | | | | | | | | | All officers and directors as a group (6 persons) | | | 726,277 | | | | 6.12 | % | | | | | | | | | | | | | | 5%+ Shareholders: | | | | | | | | | | *Less than 1%. (1) Unless otherwise indicated, the address for each person is c/o Worksport Ltd., 2500 N America Drive, West Seneca, NY 14224. (2) Based on 11,885,519 shares of common stock outstanding as of March 26, 2026. (3) Includes (i) 10,000 shares of common stock issuable upon the exercise of vested options at a price of $7.042 per share until August 6, 2026, (ii) 5,000 shares of common stock issuable upon the exercise of vested options at a price of $7.042 per share until July 21, 2028, (iii) 350,000 of issuable stock upon the completion of milestones; 70,000 of these stock options have vested while the remaining 280,000 stock options are deemed unlikely to vest in the near future, and (iv) 11,250 shares of common stock issuable upon the exercise of vested options at a price of $3.09 per share until April 4, 2035. Mr. Steven Rossi also owns 100 shares of Series A Preferred Stock - entitling him to 51% of the voting power of the corporation. Mr. Steven Rossi holds 252,588 shares with our transfer agent - 3,333 of which he purchased on November 19, 2024. | 72 | | (4) Includes (i) 5,000 shares of common stock issuable upon the exercise of vested options at a price of $5.95 per share until March 7, 2035, (ii) 3,750 shares of common stock issuable upon the exercise of vested options at a price of $3.89 per share until July 12, 2035, and (iii) 30,000 of issuable stock upon the completion of milestones; 7,500 of these performance stock units have vested while the remaining 22,500 are deemed unlikely to vest in the near future. (5) Includes (i) 1,500 shares of restricted shares of common stock granted on September 6, 2021 and that vested on September 6, 2021, (ii) 1,500 shares of common stock issuable upon the exercise of vested options at a price of $55.00 per share until July 23, 2026, (iii) 1,500 shares of common stock issuable upon the exercise of vested options at a price of $36.10 per share until July 21, 2028, (iv) 3,000 shares of common stock issuable upon the exercise of vested options at a price of $25.10 per share until December 29, 2026, (v) 8,000 shares of common stock issuable upon the exercise of vested options at a price of $16.60 per share until January 30, 2033, and (vi) 2,625 shares of common stock issuable upon the exercise of vested options at a price of $7.042 per share until July 23, 2034. All of these stock options have been subsequently repriced to $7.042 per share, (6) Includes (i) 1,500 shares of restricted shares of common stock granted on September 6, 2021 and that vested on September 6, 2021, (ii) 1,500 shares of common stock issuable upon the exercise of vested options at a price of $55.00 per share until August 6, 2026, (iii) 750 shares of common stock issuable upon the exercise of vested options at a price of $36.10 per share until July 21, 2028, (iv) 3,000 shares of common stock issuable upon the exercise of vested options at a price of $25.10 per share until December 29, 2026, (v) 8,000 shares of common stock issuable upon the exercise of vested options at a price of $16.60 per share until January 30, 2033, (vi) 2,188 shares of common stock issuable upon the exercise of vested options at a price of $7.042 per share until July 23, 2034, and (vii) 2,625 shares of common stock issuable upon the exercise of vested options at a price of $3.09 per share until April 4, 2035. Stock options (ii) (v) have been subsequently repriced to $7.042 per share. (7) Includes (i) 1,500 shares of restricted shares of common stock granted on September 6, 2021 and that vested on September 6, 2021, (ii) 1,500 shares of common stock issuable upon the exercise of vested options at a price of $55.00 per share until August 6, 2026, (iii) 750 shares of common stock issuable upon the exercise of vested options at a price of $36.10 per share until July 21, 2028, (iv) 3,000 shares of common stock issuable upon the exercise of vested options at a price of $25.10 per share until December 29, 2026, (v) 8,000 shares of common stock issuable upon the exercise of vested options at a price of $16.60 per share until January 30, 2033, (vi) 2,188 shares of common stock issuable upon the exercise of vested options at a price of $7.042 per share until July 23, 2034, and (vii) 2,625 shares of common stock issuable upon the exercise of vested options at a price of $3.09 per share until April 4, 2035. Stock options (ii) (v) have been subsequently repriced to $7.042 per share. **Securities Authorized for Issuance Under Equity Compensation Plans** **Equity Compensation Plan Information** **(As of December 31, 2025)** | Plan Category: | | Number of securities to be issued upon exercise of outstanding options, warrants and rights: | | | Weighted average exercise price of outstanding options, warrants and rights: | | | Number of securities remaining available for future issuance: | | | | 2015 Equity Incentive Plan: | | | | | | | | | | | | | | | Equity compensation plans approved by security holders | | | 50,000 | | | $ | 7.042 | | | | 2,000 | | | | Equity compensation plans not approved by security holders | | | - | | | | - | | | | - | | | | Total | | | 50,000 | | | $ | 7.042 | | | | 2,000 | | | | | | | | | | | | | | | | | | | 2021 Equity Incentive Plan: | | | | | | | | | | | | | | | Equity compensation plans approved by security holders | | | 124,000 | | | $ | 7.042 | | | | 1,000 | | | | Equity compensation plans not approved by security holders | | | - | | | $ | - | | | | - | | | | Total | | | 124,000 | | | | 7.042 | | | | 1,000 | | | | | | | | | | | | | | | | | | | 2022 Equity Incentive Plan: (1) | | | | | | | | | | | | | | | Equity compensation plans approved by security holders | | | 428,431 | | | $ | 5.31 | | | | 20,158 | | | | Equity compensation plans not approved by security holders | | | - | | | | - | | | | - | | | | Total | | | 428,431 | | | $ | 5.31 | | | | 20,158 | | | | | | | | | | | | | | | | | | | Total | | | 602,431 | | | $ | 5.82 | | | | 23,158 | | | | (1) | The 2022 Plan also contains an evergreen formula pursuant to which the number of shares of common stock available for issuance under the 2022 Plan will automatically increase on January 1st of each calendar year during the term of the 2022 Plan, beginning with the calendar year 2023, by an amount of shares of common stock so that the total amount of common stock available under the 2022 Plan is equal to 15% of the total number of shares of common stock outstanding on December 31st of the prior calendar year minus the total number of shares reserved and available for issuance under the 2015 Plan and 2021 Plan. During December 2025, the board approved an increase to the allocation percentage under the 2022 Plan to 18%. The number of shares of common stock authorized under the 2022 Plan as of January 1, 2026 was 1,572,640. | | **Changes in Control** There are no arrangements, to our knowledge, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company. | 73 | | **ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE** The following is a summary of transactions entered since January 1, 2022 to which we have been a party in which the amount involved exceeded or will exceed *$*120,000 (or, if less, 1% of the average of our total assets amounts as of December 31, 2025), and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described under Executive and Director Compensation. We also describe below certain other transactions with our directors, executive officers and stockholders. Forbes Anderson Limited, an accounting firm based in Ontario, Canada and managed by Worksports Chief Financial Officer, Michael Johnston, received $34,399 ($48,000 CAD) based on the 2025 average exchange rate for services rendered within the fiscal year ended December 31, 2025. The Company has entered into a consulting agreement with Steven Rossi and 2230164 Ontario Inc., an Ontario corporation owned by Mr. Steven Rossi, pursuant to which Mr. Steven Rossi continues to serve as the Companys Chief Executive Officer and President through such entity. Payments under the consulting agreement are made to the consulting entity owned by Mr. Steven Rossi and are treated as compensation to Mr. Steven Rossi for purposes of the Companys executive compensation disclosure. For a description of the material terms of the consulting agreement, see Executive Compensation Steven Rossi Employment and Consulting Arrangements. During the fiscal year ended December 31, 2025, the Company paid aggregate consulting fees of $300,000 to 2230164 Ontario Inc. pursuant to the consulting agreement. Lorenzo Rossi, the father of Steven Rossi, the Companys Chief Executive Officer, serves as the Chief Executive Officer of the Companys subsidiary, Terravis Energy. During the fiscal year ended December 31, 2025, Lorenzo Rossi received total compensation of approximately $186,000 in connection with his services to Terravis Energy. Mr. Steven Rossi does not participate in decisions regarding the compensation of his father. The compensation of Lorenzo Rossi is determined by the Compensation Committee of the Board of Directors, and Steven Rossi does not participate in decisions regarding such compensation. **Controlling Persons** Steven Rossi, the Companys Chief Executive Officer, owns 100 shares of the Companys Series A Preferred Stock, representing all of the outstanding shares of Series A Preferred Stock. Pursuant to the Certificate of Designations governing the Series A Preferred Stock, the Series A Preferred Stock votes together with the Companys common stock on all matters submitted to a vote of stockholders, unless otherwise prohibited by law, and possesses voting power equal to 51% of the aggregate voting power of the Companys outstanding voting securities. As a result, Mr. Steven Rossi has the ability to control the outcome of matters submitted to a vote of the Companys stockholders. **Related Person Transaction Policy** Under our policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to our Audit Committee, or, if Audit Committee approval would be inappropriate, to another independent body of our Board, for review, consideration and approval or ratification. The presentation must include a description of, among other things, the material facts, the interests, direct and indirect, of the related persons, the benefits to us of the transaction and whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally. Under the policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant shareholder to enable us to identify any existing or potential related person transactions and to effectuate the terms of the policy. In addition, under our code of business conduct and ethics, our employees and directors will have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related person transactions, our Audit Committee, or other independent body of our Board, will take into account the relevant available facts and circumstances including, but not limited to: | | | the risks, costs and benefits to us; | | | | | the impact on a directors independence in the event that the related person is a director, immediate family member of a director or an entity with which a director is affiliated; | | | | | the availability of other sources for comparable services or products; and | | | | | the terms available to or from, as the case may be, unrelated third parties or to or from employees, generally. | | The policy requires that, in determining whether to approve, ratify or reject a related person transaction, our Audit Committee, or other independent body of our Board of Directors, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our shareholders, as our Audit Committee, or other independent body of our Board, determines in the good faith exercise of its discretion. **ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES** On November 18, 2022, we appointed Lumsden & McCormick, LLP to serve as our independent auditor. We incurred fees from Lumsden & McCormick, LLP for the year ended December 31, 2025 and 2024, as discussed below: | | | Fiscal Year Ended December 31, | | | | | | 2025 | | | 2024 | | | | Audit Fees | | $ | 182,000 | | | $ | 110,000 | | | | Audit-Related Fees (1) | | $ | - | | | $ | 19,300 | | | | Tax Fees | | $ | 53,000 | | | $ | 22,000 | | | | All Other Fees | | $ | - | | | $ | 36,000 | | | | Total | | $ | 235,000 | | | $ | 187,300 | | | | (1) | Fees incurred in conjunction with consents for various registration statements filed during 2024; Included in Audit Fees in 2025. | | Audit fees consist of fees related to professional services rendered in connection with the audit of our annual financial statements. All other fees relate to professional services rendered in connection with the review of the quarterly financial statements. Our policy is to pre-approve all audit and permissible non-audit services performed by the independent accountants. These services may include audit services, audit-related services, tax services and other services. Under our Audit Committees policy, pre-approval is generally provided for particular services or categories of services, including planned services, project-based services and routine consultations. In addition, the Audit Committee may also pre-approve particular services on a case-by-case basis. Our Audit Committee approved all services that our independent accountants provided to us in the past two fiscal years. | 74 | | **PART IV** **ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES** The following documents are filed as part of this Annual Report on Form 10-K: | ExhibitNo.: | | Description: | | Previously Filed and Incorporated by Reference Herein: | | ExhibitNumber: | | | 1.1 | | At the Market Offering Agreement, dated September 30, 2022, by and between the Company and H.C. Wainwright & Co., LLC. | | Form S-3 (333-267696) filed September 30, 2022 | | 1.1 | | | 1.2 | | Amendment, dated November 14, 2025, to the At the Market Offering Agreement, dated September 30, 2022, by and between the Company and H.C. Wainwright & Co., LLC | | Form S-3 (File No. 333-291582) filed November 14, 2025 | | 1.2 | | | 3.1 | | Amended and Restated Articles of Incorporation of Worksport Ltd. filed with the Nevada Secretary of State on May 7, 2021 | | Form S-1 (File No. 333-256142) filed May 14, 2021 | | 3.1 | | | 3.1.1 | | Amended and Restated Certificate of Designation of the Series A Preferred Stock filed with the Nevada Secretary of State on March 20, 2019 | | Form S-1 (File No. 333-256142) filed May 14, 2021 | | 3.1.1 | | | 3.1.2 | | Series B Preferred Stock Certificate of Designation filed with the Nevada Secretary of State on May 18, 2020 | | Form S-1 (File No. 333-256142) filed May 14, 2021 | | 3.1.2 | | | 3.1.3 | | Amendment to the Amended and Restated Certificate of Designation of the Series A Preferred Stock filed with the Nevada Secretary of State on May 7, 2020 | | Form S-1 (File No. 333-256142) filed May 14, 2021 | | 3.1.3 | | | 3.1.4 | | Amendment to the Amended and Restated Articles of Incorporation filed May 21, 2021 effecting the 1-for-20 Reverse Stock Split | | Amendment No. 1 to Form S-1 (File No. 333-256142) filed July 8, 2021 | | 3.1.4 | | | 3.1.5 | | Certificate of Change to the Articles of Incorporation of Worksport Ltd., filed on March 14, 2025 to effect a 1-for-10 Reverse Stock Split of outstanding and authorized common stock | | Form 8-K filed March 21, 2025 | | 3.1 | | | 3.1.6 * | | Amendment to the Articles of Incorporation effective March 19, 2025 | | | | | | | 3.1.7 | | Certificate of Designation of 8% Series C Convertible Preferred Stock | | Form 8-K filed June 18, 2025 | | 3.1 | | | 3.2 | | Amended and Restated Bylaws | | Form 8-K, filed October 28, 2021 | | 3.1 | | | 3.3 | | Articles of Merger of TMAN Global.com, Inc. and Franchise Holdings International, Inc. | | Form 10-K for the fiscal year ended December 31, 2018 filed May 13, 2019 | | 3.1 | | | 4.1 | | Form of Representative Warrant | | Amendment No. 2 to Form S-1 (File No. 333-256142) filed July 16, 2021 | | 4.2 | | | 4.2 | | Form of Common Stock Purchase Warrant used in 2021 Private Placement | | Amendment No. 2 to Form S-1 (File No. 333-256142) filed July 16, 2021 | | 4.3 | | | 4.3 | | Form of Pre-Funded Warrant, dated November 2, 2023 | | Form 8-K filed November 3, 2023 | | 4.1 | | | 75 | | | ExhibitNo.: | | Description: | | Previously Filed and Incorporated by Reference Herein: | | ExhibitNumber: | | | 4.4 | | Form of Warrant, dated November 2, 2023 | | Form 8-K filed November 3, 2023 | | 4.2 | | | 4.5 | | Form of Pre-Funded Warrant, dated March 20, 2024 | | Form 8-K filed March 20, 2024 | | 4.1 | | | 4.6 | | Form of Warrant, dated March 20, 2024 | | Form 8-K filed March 20, 2024 | | 4.2 | | | 4.7 | | Form of Inducement Warrant, dated March 3, 2025 | | Form 8-K filed February 28, 2025 | | 4.1 | | | 4.8 | | Form of Inducement Warrant, dated December 12, 2025 | | Form 8-K filed December 11, 2025 | | 4.1 | | | 4.9 | | Form of Common Stock Purchase Warrant | | Form 8-K filed June 18, 2025 | | 10.3 | | | 4.10 | | Description of Registrants Securities | | Form 10-K for the fiscal year ended December 31, 2022 filed March 31, 2023 | | 4.1 | | | 10.1 | | Patent License Agreement, dated November 26, 2014 | | Form 8-K filed December 17, 2014 | | 10.2 | | | 10.2 | | Employment Agreement, dated May 10, 2021, between Worksport Ltd. and Steven Rossi | | Form 8-K filed May 12, 2021 | | 10.1 | | | 10.3 | | Worksport Ltd. 2015 Equity Incentive Plan | | Amendment No. 1 to Form S-1 (File No. 333-256142) filed July 8, 2021 | | 10.15 | | | 10.4 | | Lease Agreement, dated April 16, 2021, between Worksport Ltd. and Majorcon Holdings, Inc. re 7299 East Danbro Crescent | | Amendment No. 1 to Form S-1 (File No. 333-256142) filed July 8, 2021 | | 10.16 | | | 10.5 | | Worksport Ltd. 2021 Equity Incentive Plan | | Form 10-K for the fiscal year ended December 31, 2022 filed March 31, 2023 | | 10.20 | | | 10.6 | | Worksport Ltd. 2022 Equity Incentive Plan | | Form 10-K for the fiscal year ended December 31, 2022 filed March 31, 2023 | | 10.21 | | | 10.7 | | Performance Stock Unit award, dated November 11, 2022, to Steven Rossi | | Form 10-Q for the fiscal quarter ended September 30, 2022 filed November 14, 2022 | | 10.1 | | | 10.8 | | Performance Stock Unit award, dated November 11, 2022, to Lorenzo Rossi | | Form 10-Q for the fiscal quarter ended September 30, 2022 filed November 14, 2022 | | 10.2 | | | 10.9 | | Restricted Stock Award, dated November 11, 2022, to Steven Rossi | | Form 10-Q for the fiscal quarter ended September 30, 2022 filed November 14, 2022 | | 10.3 | | | 10.10 | | Form of Securities Purchase Agreement, dated October 31, 2023 | | Form 8-K filed November 3, 2023 | | 10.1 | | | 10.11 | | Form of Securities Purchase Agreement, dated March 18, 2024 | | Form 8-K filed March 20, 2024 | | 10.1 | | | 10.12 | | Loan Agreement dated as of May 4, 2022, by and between the Company and Northeast Bank | | Form 10-K for the fiscal year ended December 31, 2023 filed March 28, 2024 | | 10.29 | | | 10.13 | | Consulting Agreement dated as of July 23, 2024, by and between the Company and Steven Rossi | | Form 8-K filed July 26, 2024 | | 10.1 | | | 10.14 | | Credit and Security Agreement dated September 4, 2024, between Worksport USA Operations Corporation and Loeb Term Solutions LLC | | Form 8-K filed September 10, 2024 | | 10.1 | | | 76 | | | ExhibitNo.: | | Description: | | Previously Filed and Incorporated by Reference Herein: | | ExhibitNumber: | | | 10.15 | | Term Promissory Note, dated September 4, 2024, by Worksport USA Operations Corporation to the benefit of Loeb Term Solutions LLC | | Form 8-K filed September 10, 2024 | | 10.2 | | | 10.16 | | Guaranty dated September 4, 2024 by Worksport Ltd. | | Form 8-K filed September 10, 2024 | | 10.3 | | | 10.17 | | Guaranty dated September 4, 2024 by Worksport New York Operations Limited | | Form 8-K filed September 10, 2024 | | 10.4 | | | 10.18 | | Security Agreement dated September 4, 2024 by Worksport USA Operations Corporation | | Form 8-K filed September 10, 2024 | | 10.5 | | | 10.19 | | Security Agreement dated September 4, 2024 by Worksport Ltd. | | Form 8-K filed September 10, 2024 | | 10.6 | | | 10.20 | | Security Agreement dated September 4, 2024 by Worksport New York Operations Limited. | | Form 8-K filed September 10, 2024 | | 10.7 | | | 10.21 | | Form of Inducement Letter, dated February 27, 2025 | | Form 8-K filed February 28, 2025 | | 10.1 | | | 10.22 | | Form of Inducement Letter, dated December 11, 2025 | | Form 8-K filed December 11, 2025 | | 10.1 | | | 10.23 | | Revolving Financing And Assignment Agreement, dated July 19, 2024, by and between Worksport New York Operations Corporation and Worksport USA Operations Corporation and Amerisource Funding, Inc. | | Form 8-K filed July 25, 2024 | | 10.1 | | | 10.24 | | Amended, Restated and Consolidated Commercial Promissory Note, dated July 19, 2024, by Worksport New York Operations Corporation, and Worksport USA Operations Corporation to the benefit of Amerisource Funding, Inc. | | Form 8-K filed July 25, 2024 | | 10.2 | | | 10.25 | | Securities Purchase Agreement, dated September 19, 2024 | | Form 8-K filed September 20, 2024 | | 10.1 | | | 10.26 | | Stock Purchase Agreement, dated as of November 19, 2024 | | Form 8-K filed November 21, 2024 | | 10.1 | | | 10.27 | | Selling Agency Agreement dated as of May 27, 2025, by and between the Company and Digital Offering LLC | | Form 8-K filed June 18, 2025 | | 10.1 | | | 10.28 | | Form of Subscription Agreement | | Form 8-K filed June 18, 2025 | | 10.2 | | | 14.1 | | Code of Ethics | | Form 8-K filed July 2, 2021 | | 14.1 | | | 19.1 | | Insider Trading Policy and Procedures | | Form 10-K for the fiscal year ended December 31, 2024 filed March 27, 2025 | | 19.1 | | | 21.1 | | List of Subsidiaries | | Form 10-K for the fiscal year ended December 31, 2024 filed March 31, 2025 | | 21.1 | | | 77 | | | ExhibitNo.: | | Description: | | Previously Filed and Incorporated by Reference Herein: | | ExhibitNumber: | | | 23.1* | | Consent of Lumsden & McCormick, LLP | | | | | | | 31.1* | | Certification of Principal Executive Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | | | | 31.2* | | Certification of Principal Financial Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | | | | | | 32.1** | | Certification of Chief Executive Officer furnished pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | | | | 32.2** | | Certification of Chief Financial Officer furnished pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | | | | 97.1 | | Clawback Policy | | Form 10-K for the fiscal year ended December 31, 2024 filed March 27, 2025 | | 97.1 | | | 101 | | Interactive Data Files | | | | | | | 101.INS | | XBRL Instance Document | | | | | | | 101.SCH | | XBRL Schema Document | | | | | | | 101.CAL | | XBRL Calculation Linkbase Document | | | | | | | 101.DEF | | XBRL Definition Linkbase Document | | | | | | | 101.LAB | | XBRL Label Linkbase Document | | | | | | | 101.PRE | | XBRL Presentation Linkbase Document | | | | | | | 104 | | Cover Page Interactive Data File. | | | | | | Management compensatory plan. *Filed herewith. **Furnished herewith and not to be incorporated by reference into any filing of Worksport Ltd. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K. **ITEM 16. FORM 10-K SUMMARY.** None. | 78 | | **SIGNATURES** Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. | | WORKSPORT LTD | | | | | | | Dated: March 26, 2026 | /s/ Steven Rossi | | | | Steven Rossi | | | | President, Chief Executive Officer, and Chairman of the Board of Directors (Principal Executive Officer) | | Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. | Signature | | Title | | Date | | | | | | | | | | /s/ Steven Rossi | | President, Chief Executive Officer and | | March 26, 2026 | | | Steven Rossi | | Chairman of the Board of Directors(Principal Executive Officer) | | | | | | | | | | | | /s/ Michael Johnston | | Chief Financial Officer | | March 26, 2026 | | | Michael Johnston | | (Principal Financial Officer and Principal Accounting Officer) | | | | | | | | | | | | /s/ Lorenzo Rossi | | Director | | March 26, 2026 | | | Lorenzo Rossi | | | | | | | | | | | | | | /s/ Craig Loverock | | Director | | March 26, 2026 | | | Craig Loverock | | | | | | | | | | | | | | /s/ William Caragol | | Director | | March 26, 2026 | | | William Caragol | | | | | | | | | | | | | | /s/ Ned L. Siegel | | Director | | March 26, 2026 | | | Ned L. Siegel | | | | | | | 79 | |