UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
Quarterly Period Ended:
For the transition period from __________ to __________
Commission
File No.
(Exact Name of Small Business Issuer as specified in its charter)
| (State or Other Jurisdiction of | (I.R.S. Employer | |
| Incorporation or Organization) | Identification Number) |
(Address of Principal Executive Offices, Including Zip Code)
Registrant’s
Telephone Number, including area code:
With copies to:
Ross Carmel, Esq.
Philip Magri, Esq.
Carmel, Milazzo & Feil LLP
55 W 39th Street, 18th Floor
New York, NY 10018
Tel: 212-658-0458
Fax: 646-838-1314
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class: | Trading Symbol(s) | Name of each exchange on which registered: | ||
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 preceding 12 months (or for such shorter year that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding
12 months (or such shorter year that the registrant was required to submit and post such files.
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | 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 year for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐
As of November 15, 2021 shares of Common Stock outstanding.
WORKSPORT LTD.
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Worksport Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, 2021 | December 31, 2020 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash, restricted cash and cash equivalents | $ | $ | ||||||
| Restricted cash | - | |||||||
| Accounts receivable net | ||||||||
| Other receivable | ||||||||
| Inventory (note 3) | ||||||||
| Prepaid inventory (note 3) | - | |||||||
| Prepaid expenses and deposits | ||||||||
| Related party receivable (note 7) | - | |||||||
| Total Current Assets | ||||||||
| Investment | ||||||||
| Property and Equipment, net | ||||||||
| Right-of-use asset, net (note 10) | ||||||||
| Intangible Assets, net | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Payroll taxes payable | ||||||||
| Related party loan (note 7) | - | |||||||
| Promissory notes payable (note 4) | ||||||||
| Convertible promissory note, net (note 5) | - | |||||||
| Loan payable (note 11) | ||||||||
| Current lease liability (note 10) | ||||||||
| Total Current Liabilities | ||||||||
| Long Term – Lease Liability (note 10) | ||||||||
| Total Liabilities | ||||||||
| Shareholders’ Equity (Deficit) | ||||||||
| Series A & B Preferred Stock, $ par value, shares authorized, Series A and Series B issued and outstanding, respectively (note 6) | - | |||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding, respectively (note 6) | ||||||||
| Additional paid-in capital | ||||||||
| Share subscriptions receivable | ( | ) | ( | ) | ||||
| Share subscriptions payable | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Cumulative translation adjustment | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity (Deficit) | ||||||||
| Total Liabilities and Shareholders’ Equity (Deficit) | $ | $ | ||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
| 3 |
Worksport Ltd.
Condensed Consolidated Statements of Operations
For the three and nine months ended September 30, 2021 and 2020
(Unaudited)
| Three Months ended September 30 | Nine Months ended September 30 | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Net Sales | $ | $ | $ | $ | ||||||||||||
| Cost of Goods Sold | ||||||||||||||||
| Gross Profit (Loss) | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| Professional fees | ||||||||||||||||
| (Gain) loss on foreign exchange | ( | ) | ( | ) | ( | ) | ||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest expense (note 5) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | - | - | ||||||||||||||
| Gain (loss) on settlement of debt | - | ( | ) | ( | ) | |||||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per Share (basic and diluted) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Number of Shares (basic and diluted) | ||||||||||||||||
The accompanying notes form an integral part of these condensed consolidated financial statements
| 4 |
Worksport Ltd.
Condensed Consolidated Statements of Cash Flows
For the nine Months Ended September 30, 2021 and 2020
(Unaudited)
| 2021 | 2020 | |||||||
| Operating Activities | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash from operating activities: | ||||||||
| Shares, options and warrants issued for services | ||||||||
| Depreciation and amortization | ||||||||
| Interest on lease liability | ||||||||
| Accrued interest | ||||||||
| Amortization of debt discount | - | |||||||
| Amortization on OID interest | ||||||||
| Loss (Gain) on settlement of debt | ( | ) | ||||||
| ( | ) | ( | ) | |||||
| Changes in operating assets and liabilities (note 8) | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Loan receivable | ( | ) | - | |||||
| Purchase of investment | - | ( | ) | |||||
| Purchase of intangible assets | ( | ) | - | |||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing Activities | ||||||||
| Repayment of lease liability | ( | ) | ( | ) | ||||
| Proceeds from issuance of common shares, net of issuance cost | ||||||||
| Proceeds from warrant exercise | - | |||||||
| Proceeds from loan payable | - | |||||||
| Repayment of loan payable | ( | ) | ( | ) | ||||
| Proceeds from promissory notes | - | |||||||
| Shareholder assumption of debt | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Change in cash | ||||||||
| Cash, restricted cash and cash equivalents - beginning of year | ||||||||
| Cash, restricted cash and cash equivalents end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Supplemental Disclosure of non-cash investing and financing Activities | ||||||||
| Shares issued for purchase of software | $ | $ | ||||||
| Shares issued to service providers | $ | $ | ||||||
| Cashless warrant exercise | $ | $ | ||||||
| Non-cash for prepaids | $ | $ | ||||||
| Shares issued from share subscriptions payable | $ | $ | ||||||
| Shares issued for loan repayment | $ | $ | ||||||
| Conversion of convertible promissory note to common stock | $ | $ | ||||||
| Convertible promissory note – equity discount | $ | $ | ||||||
| Convertible promissory note – original issue discount | $ | $ | ||||||
| Conversion of preferred stock to common stock | $ | $ | ||||||
| Reverse stock split | $ | $ | ||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
| 5 |
Worksport Ltd.
Condensed Consolidated Statements of Shareholders’ Deficit
For the Three Months Ended September 30, 2021 and 2020
(Unaudited)
| 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 July 1, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Issuance for prepaid services | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance for prepaid services and subscriptions payable | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Conversion of convertible promissory note to shares | - | |||||||||||||||||||||||||||||||||||||||
| Warrants issuance in connection to convertible promissory note | - | - | ||||||||||||||||||||||||||||||||||||||
| Warrant issuance for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Issuance of subscriptions payable | - | - | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Balance at July 1, 2021 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Stock split provision | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Issuance for services and subscriptions payable | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Public offering | - | |||||||||||||||||||||||||||||||||||||||
| Share issuance cost | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Warrant exercise (note 14) | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||
The accompanying notes form an integral part of these condensed consolidated financial statements
| 6 |
Worksport Ltd.
Condensed Consolidated Statements of Shareholders’ Deficit
For the Nine Months Ended September 30, 2021 and 2020
(Unaudited)
| 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 January 1, 2020 | - | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Issuance for services | - | |||||||||||||||||||||||||||||||||||||||
| Issuance for prepaid services and subscriptions payable | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Issuance of subscriptions payable | - | - | ||||||||||||||||||||||||||||||||||||||
| Warrant issuance for service | - | - | ||||||||||||||||||||||||||||||||||||||
| Warrants issuance in connection to convertible promissory note (note 5) | - | - | ||||||||||||||||||||||||||||||||||||||
| Share issuance in connection to convertible promissory note (note 5) | - | |||||||||||||||||||||||||||||||||||||||
| Conversion of convertible promissory note to shares (note 5) | - | |||||||||||||||||||||||||||||||||||||||
| Issuance for settlement of payables | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Issuance of Preferred Stock | - | |||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Balance at January 1, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Stock split provision | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Conversion of preferred stock to common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Issuance for services and subscriptions payable | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Public offering | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Share issuance cost | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Issuance of shares from private placement | - | |||||||||||||||||||||||||||||||||||||||
| Warrants issuance for services | - | - | ||||||||||||||||||||||||||||||||||||||
| Conversion of convertible promissory note to shares (note 5) | - | |||||||||||||||||||||||||||||||||||||||
| Warrant exercise (note 14) | - | |||||||||||||||||||||||||||||||||||||||
| Loan repayment (note 4 and 11) | - | |||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at September 30, 2021 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| 7 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation and Business Condition
a) Interim Financial Information
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary in order to make the financial statements not misleading and for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the nine month period ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on April 13, 2021.
On
May 21, 2021, the Board of Directors authorized the submission of a Certificate of Change/Amendment to the Nevada Secretary of State
in which the Company sought to affect a reverse split of its common stock at the rate of 1 for 20 for the purpose of increasing the per
share price for the Company’s stock in an effort to meet the minimum listing requirements of the NADAQ. The Certificate of Change
was submitted to the Nevada Secretary of State on May 21, 2021 and the FINRA corporate action was announced on August 3, 2021. FINRA
declared the
During the nine months period September 30, 2021 Terravis Energy Inc. was incorporated in the State of Nevada on May 5, 2021. On August 20, 2021 the Company was issued 100 common shares at par value of $0.0001 per share for a controlling interest in Terravis Energy Inc.
b) Functional and Reporting Currency
Effective
January 1, 2020, the Company changed the functional currency of its subsidiary to United States dollars given the increasing prevalence
of U.S. dollar-denominated activities of the subsidiary over time. The change in functional currency from Canadian dollars to United
States dollars is accounted for prospectively from January 1, 2020. The subsidiary’s balance sheet was converted from Canadian
dollars to United States dollars using the year ended December 31, 2019 United States dollar balance as the opening for January 1, 2020
in accordance to ASC 830. These condensed interim financial statements are presented in United States Dollars. The functional
and presentation currency of the Company and its subsidiary is the United States Dollar. As a result of the change in functional currency
the Company recognized a loss on foreign exchange of $
c) Use of Estimates
The preparation of condensed unaudited financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed interim financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
d) Business condition
The Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.
As
of September 30, 2021, the Company had working capital of $
During
the nine months ended September 30, 2021 the Company through its Reg-A public offering, underwritten public offering, private placement
offering, and exercises of warrants had raised in aggregate of approximately $
| 8 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
d) Business condition (continued)
Based
on the Company’s future operating plans, existing cash and restricted cash of $
e) Reclassification
Certain
amounts in the prior period Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 have been reclassified
to conform with current period presentation. The Company reclassified $
2. Significant Accounting Policies
The accounting polices used in the preparation of these condensed consolidated interim financial statements are consistent with those of the Company’s audited financial statements for the year ended December 31, 2020 in addition to:
Property and Equipment – During the nine months ended September 30, 2021 the Company purchased an automobile. As such the Company has updated its accounting policy of its capital assets. Capital assets are recorded at cost and are amortized using the straight-line method over the following estimated useful lives:
| ● | Automobile |
3. Inventory
Inventory consists of the following at September 30, 2021 and December 31, 2020:
| 2021 | 2020 | |||||||
| Finished goods | $ | $ | ||||||
| Promotional items | ||||||||
| Raw materials | ||||||||
| $ | $ | |||||||
| Prepaid inventory | $ | $ | ||||||
4. Promissory Notes
The following tables shows the balance of the notes payable as of September 30, 2021 and December 31, 2020:
| Balance as at December 31, 2019 | $ | |||
| Reclassification | ||||
| Balance as at December 31, 2020 | $ | |||
| Repayment | ( | ) | ||
| Balance as at September 30, 2021 | $ |
During
the year ended December 30, 2020, the Company reclassified $
During
the year ended December 30, 2020, the Company reclassified a debit balance of $
During
the year ended December 31, 2016, the Company issued a secured promissory note in the amount of $
| 9 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
4. Promissory Notes (continued)
December
31, 2019, the Company extended the maturity dates of the secured promissory notes to be due on April 1, 2021. As at September 30, 2021,
principal balance owing was $
During
the year ended December 31, 2016, the Company issued secured promissory notes in the amount of $
During
the years ended December 31, 2017, the Company issued secured promissory notes in the amount of $
During
the years ended December 31, 2017, the Company issued secured promissory notes in the amount of $
The amounts repayable under promissory notes and secured promissory notes at September 30, 2021 and December 31, 2020:
| September 30, 2021 | December 31, 2020 | |||||||
| Balance owing | $ | $ | ||||||
| Less amounts due within one year | ( | ) | ( | ) | ||||
| Long-term portion | $ | $ | ||||||
5. Convertible Promissory Notes
On
February 25, 2020, the Company entered into an agreement with Leonite Capital LLC, a Delaware limited liability company (“Leonite”),
pursuant to which the Company issued to Leonite a secured convertible promissory note in the aggregate principal amount of $
| 10 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
5. Convertible Promissory Notes (continued)
The
note carries an original issue discount of $
The
Company amortized $
6. Shareholders’ Equity (Deficit)
During the nine months period ended September 30, 2021, the following transactions occurred:
During
the nine months ended September 30, 2021 the Company issued a total of common shares relating to the Reg-A public offering.
Of the shares issued common shares valued at $were from share subscription payable and common shares were cancelled and refunded valued at $
During
the nine months ended September 30, 2021 the Company had a underwriters’ public offering for units consisting of 1 common
share and 1 warrant at $ per unit. In addition, the Company has granted the underwriter of the offering the option to purchase
warrants and/or an additional common shares for 45 days after the closing of the option. During the nine months ended September
30, 2021 the underwriter purchased common shares at $ per share and warrants. A cumulative common shares
were issued in connection with offering for $
During
the same period warrants were exercised for common shares. As of September 30, 2021 common shares were issued valued at $.
Subsequent to September 30, 2021 the remaining common shares valued at $
During
the nine months ended September 30, 2021 the Company raised $
During
the nine months ended September 30, 2021 the Company entered into a loan settlement agreement with a loan holder to issue common
shares at $ per share for all outstanding loan principal and interest valued at $
During
the nine months ended September 30, 2021 the Company entered into a promissory notes payable settlement agreement with a note holder
to issue common shares valued at $ per share for a total value of $64,890. As of the date of the settlement the Company had
$
During
the nine months ended September 30, 2021 the Company entered into a settlement agreement with the convertible promissory note holder
to settle all outstanding principal and interest. The Company issued common shares at $per share valued at $
| 11 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
6. Shareholders’ Equity (Deficit) (continued)
During the nine months ended September 30, 2021 the Company issued common shares to Steve Rossi, the Company’s Chief Executive Officer and Director, in connection with his Employment Agreement in consideration for Mr. Rossi agreeing to amend the Series A Certificate of Designation to eliminate the Series A Preferred Stock conversion rights and returning 900 Series A Preferred Stock to the Company.
During
the nine months ended September 30, 2021 the Company entered into consulting agreements with third party consultants for
During
the nine months ended September 30, 2021 the Company issued common shares valued at $
During
the nine months ended September 30, 2021 the Company granted restricted shares of the Company to consultants for services to
be rendered over a period of 12 and 24 months. Upon issuance of the restricted shares vested immediately and issued. As of September
30, 2021 the Company recognized consulting and advertising expense of $
During
the nine months ended September 30, 2021 the Company granted restricted shares of the Company to directors of the Company. Upon
issuance of the restricted shares vested immediately, shall vest on January 1, 2022. As of September 30, 2021 the Company
recognized consulting expense of $
During
the nine months ended September 30, 2021, the Company completed a share consolidation of the Company’s issued and outstanding common
shares based on twenty (20) pre-consolidation shares to one (1) post-consolidation share. As a result of the share consolidation a anti-dilution
clause was triggered resulting in the Company issuing common shares valued at $
During the nine months period ended September 30, 2020, the following transactions occurred:
During
the nine months ended September 30, 2020 the Company issued common shares at $ per share for $
During
the nine months ended September 30, 2020, the Company issued common shares pursuant to the conversion of the convertible promissory
note (note 5) with a value of $
During the nine months ended September 30, 2020, the Company entered into a share subscription agreement with a consultant of the Company for common shares valued at $.
During
the nine months ended September 30, 2020 the Company issued and common shares at $ and $ per share for $
During the nine months ended September 30, 2020 the Company entered into a share subscription agreement with a consultant of the Company for common shares valued at $ for prepaid consulting services. As of September 30, 2020 the Company issued shares with a value of $. As of September 30, 2020 the Company has expensed $93,750 from prepaid expenses.
During
the nine months ended September 30, 2020 the Company issued a consultant common shares of subscription payable with a value of
$
During the nine months ended September 30, 2020 the Company issued common shares pursuant to a subscription payable with a value of $.
During the nine months ended September 30, 2020 the Company issued shares in connection with the issuance of convertible promissory note (note 5) at $ per share.
| 12 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
6. Shareholders’ Equity (Deficit) (continued)
During
the nine months ended September 30, 2020 the Company entered into a settlement to fulfill a debt purchase agreement entered in 2017 for
shares valued at $
During
the nine months ended September 30, 2020,
As
of September 30, 2021, the Company was authorized to issue shares of its common stock with a par value of $. All shares
were ranked equally with regards to the Company’s residual assets. During 2021, the Company was authorized to issue shares
of its Series A and Series B Preferred Stock with a par value of $.
7. Related Party Transactions
During
the nine months ended September 30, 2021, the Company recorded salaries expense of $
During
the nine months ended September 30, 2021 the Company repaid $
During
the year ended December 31, 2020, the Company repaid $
During
the nine months ended September 30, 2021 the Company paid a director of the Company $
During
the nine months ended September 30, 2021, the Company paid $
Refer to note 6 and 15 for additional related party transactions.
8. Changes in Cash Flows from Operating Assets and Liabilities
The changes to the Company’s operating assets and liabilities for the nine months ended September 30, 2021 and 2020 are as follows:
| 2021 | 2020 | |||||||
| Decrease (increase) in accounts receivable | $ | ( | ) | $ | ( | ) | ||
| Decrease (increase) in other receivable | ||||||||
| Decrease (increase) in inventory and prepaid inventory | ( | ) | ||||||
| Decrease (increase) in prepaid expenses and deposits | ( | ) | ||||||
| Increase (decrease) in lease liability | ( | ) | ||||||
| Increase (decrease) in payroll taxes payable | ( | ) | ||||||
| Increase (decrease) in accounts payable and accrued liabilities | ( | ) | ||||||
| $ | ( | ) | $ | ( | ) | |||
9. Commitments and contingencies
During the nine months ended September 30, 2021 the Company entered into an amended agreement to reserve an additional common shares for consulting services. During the year ended December 31, 2020 the Company entered into an agreement with a third-party advisor to reserve for issuance common shares for consulting services. As of September 30, 2021, common shares were issued to the third party.
| 13 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
9. Commitments and contingencies (continued)
During the nine months period ended September 30, 2021 the Company entered into an agreement with a third-party advisor to reserve for sale and issuance common shares for consulting services at a $ per share.
During the year ended December 31, 2020 the Company (defendant) is currently in an ongoing legal proceeding with a promissory notes payable holder (plaintiff). As September 30, 2021, the outcome of the legal proceeding is uncertain.
10. Lease Liabilities
During
the nine months ended September 30, 2021 the Company entered into a second lease agreement for warehouse space to commence on June 1,
2021 and end on
The
Company has accounted for its leases upon adoption of ASC 842 whereby it recognizes a lease liability and a right-of-use asset at the
date of initial application, beginning January 1, 2019. The lease liability is measured at the present value of the remaining lease payments,
discounted using the Company’s incremental borrowing rate of
The Company’s right-of-use asset for the nine months ended September, 2021 and December 31, 2020 as follows:
| September 30, 2021 | December 31, 2020 | |||||||
| Right-of-use asset | $ | $ | ||||||
| Current lease liability | $ | $ | ||||||
| Long-term lease liability | $ | $ | ||||||
The components of lease expense are as follows:
| September 30, 2021 | September 30, 2020 | |||||||
| Amortization of right-of-use | $ | $ | ||||||
| Interest on lease liability | $ | $ | ||||||
| Total lease cost | $ | $ | ||||||
Maturities of lease liability are as follows:
Future minimum lease payments as of September 30, 2021,
| 2021 (remainder of year) | ||||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| Total future minimum lease payments | ||||
| Less: amount representing interest | ( | ) | ||
| Present value of future payments | ||||
| Current portion | ||||
| Long term portion | $ |
| 14 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
11. Loan payable
During
the year ended December 31, 2020 the Company received loans of $, $ and $ from a unrelated third party with an interest
rate of % per annum with a maturity date of , and respectively. During the nine months ended September
30, 2021 the Company agreed to repay the outstanding principal and interest through the issuance of common shares at $ per
share. During the nine months ended September 30, 2021, the Company accrued interest expense of $
During
the year ended December 31, 2020 the Company received $
12. Government Assistance
The
Government of Canada is currently providing funding through the Canada Emergency Wage Subsidy (“CEWS”) and Canada Emergency
Rent Subsidy (“CERS”) programs in order to provide financial relief to Canadian businesses affected by COVID-19. The CEWS
program provides a reimbursement of salaries for eligible employers based on a decrease in revenues. The CERS program provides a reimbursement
of rent expenses paid by eligible parties based on a decrease in revenues. During the three and nine months ended September 30, 2021,
the Company recognized CEWS of $
For the three and nine months ended September 30, 2021, loss per Share is $() and $() (basic and diluted), compared to the three and nine months ended September 30, 2020, of $() and $() (basic and diluted). Using the weighted average number of shares of and (basic and diluted) for the three nine months ended September 30, 2021 and and (basic and diluted) for the three and nine months ended September 30, 2020.
There
are shares authorized, and shares issued and outstanding, as at September 30, 2021 and 2020 respectively.
As of September 30, 2021, the Company has shares to be issued. The computation of loss per share is based on the weighted average
number of shares outstanding during the period in accordance with ASC Topic No. 260, “Earnings Per Share”. Shares underlying
the Company’s outstanding warrants and convertible promissory notes were excluded due to the anti-dilutive effect they would have
on the computation. As at September 30, 2021 the Company has warrants and stock options convertible to
14. Warrants
During
the nine months ended September 30, 2021, a total of warrants were exercised for common shares. warrants
were exercised at $
During
the nine months ended September 30, 2021, the Company issued and
During
the nine months ended September 30, 2021 the Company and warrant holder reached an agreement to amend a previous warrant agreement. The
Company will issue an additional
| 15 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
14. Warrants (continued)
During the nine months period ended the Company issued representative warrants to the Company’s underwriters. The representative warrants are not exercisable until January 30, 2022. The representative are exercisable for 130,909 common shares at $ per share until August 3, 2024. As of September 30, 2021 the Company has not valued the representative warrants.
As of September 30, 2021, the Company has the following warrants outstanding:
| Exercise price | Number outstanding | Remaining Contractual Life (Years) | Expiry date | |||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| $ | ||||||||||||
| September 30, 2021 | December 31, 2020 | |||||||||||||||
| Number of warrants | Weighted average price | Number of warrants | Weighted average price | |||||||||||||
| Balance, beginning of year | $ | $ | ||||||||||||||
| Issuance | $ | $ | ||||||||||||||
| Exercise | ( | ) | $ | ( | ) | $ | ||||||||||
| Balance, end of period | $ | $ | ||||||||||||||
Under the Company’s 2015 Equity Incentive Plan .
All equity-settled share-based payments are ultimately recognized as an expense in the statement of operations and comprehensive loss 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 to that estimated on vesting.
On
August 6, 2021, the Company granted options to directors, advisors and officers with
an exercise price of $and an expiry date of . The Company recognized $
On
July 23, 2021, the Company granted options to a director with an exercise price
of $and an expiry date of . The stock options will vest on January
1, 2022. . The Company recognized $
On
September 1, 2021, the Company granted options to a consultant with an exercise price
of $and an expiry date of . The fair value of the options on grant date was estimated to be $.
The Company recognized $
| 16 |
Worksport Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
15. Stock Options (continued)
Nine months ended | ||||||||
| Number of options | Weighted Average Price | |||||||
| Balance, beginning of period | $ | |||||||
| Granted | $ | |||||||
| Balance, end of period | $ | |||||||
| Range of Exercise prices | Number outstanding | Weighted average life (years) | Weighted average exercise price | Number exercisable on September 30, 2021 | ||||||||||||||||
| Stock options | $ | - | $ | - | ||||||||||||||||
As of September 30, 2021 stock options has been vested.
16. COVID-19
The recent outbreak of the novel coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions.
Additionally, while the potential economic impact brought by, and the duration of the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity. The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, financing or mining production activities or the ore and mining industry or the global economy as a whole. However, these effects could have a material impact on our liquidity, capital resources, operations and business and those of the third parties on which we rely. The management and board of the Company is constantly monitoring this situation to minimize potential losses.
17. Subsequent Events
| ● | On October 7, 2021, the Company entered into a board advisory agreement with a third party. As compensation the Company shall grant to the advisor stock options. The stock option has an exercise price of $ and an expiry date of . . | ||
| ● | On October
26, 2021, 11,250 warrants were exercised for | ||
| ● | On October 27, 2021, 300 warrants were exercised for | ||
| ● | On November 2, 2021, the Company and an advisor entered into a modified advisory board agreement. The advisor and Company has agreed to a milestone compensation structure base on when milestone criteria are achieved for Customer/Revenue generation, Strategic Partnership, Board/Advisor, Government Affairs and Banking and Capital Markets. The Company has agreed to potential compensation package for the advisory of stock options exercisable at $ for years and/or restricted stocks of common shares. | ||
| ○ | As of November 3, 2021 the Company has issued
restricted stock valued at $ | ||
| 17 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This section and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and actual results may differ significantly from the results discussed in the forward-looking statements. All forward-looking statements in this Form 10-Q are made based on current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, various factors, uncertainties, and risks should be specifically considered that could affect future results or operations. These factors, uncertainties and risks may cause actual results to differ materially from any forward-looking statement set forth in this Form 10-Q. These risks and uncertainties described and other information contained in the reports filed with or furnished to the SEC should be carefully considered before making any investment decision with respect to the Company’s securities. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years. Each of the terms the “Company” and “Worksport” as used herein refers collectively to Worksport Ltd. and its wholly owned subsidiaries, unless otherwise stated.
The following discussion should be read in conjunction with the 2020 Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.
COVID-19
The Company believes that the COVID- 19 pandemic has had certain impacts on its business, but management does not believe there has been a material long-term impact from the effects of the pandemic on the Company’s business and operations, results of operations, financial condition, cash flows, liquidity or capital and financial resources.
During the nine months ended September 30, 2021, aspects of the Company’s business continued to be affected by the COVID-19 pandemic with respect to its manufacturing practices and sales. Combined with decreased consumer confidence, Management expects the Company to generate less revenues than in previous periods.
The full extent of the future impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside the Company’s control, including, without limitation, the timing, extent, trajectory and duration of the pandemic; the availability, distribution and effectiveness of vaccines; the imposition of protective public safety measures; and the impact of the pandemic on the global economy and demand for consumer products.
RESULTS OF OPERATIONS
Three Months Ended September 30, 2021 compared to Three Months Ended September 30, 2020
Revenue
For the three months ended September 30, 2021, revenue generated from sales was $93,408, compared to $116,491 for the three months ended September 30, 2020. Total revenues decreased by approximately 20% compared to the same period in the prior year.
Revenue decreased for the three months ended September 30, 2021 compared to the same period the prior year due to the Company shifting its focus to building up its inventory to mitigate against potential supply chain issues in anticipation of launching its e-commerce platform, while it repositions to domestic manufacturing.
For the three months ended September 30, 2021 total revenues generated in Canada were $0 compared to a loss of $935 in the prior period. For the three-months ended September 30, 2021, total revenue generated in the United States decreased by 20% from $117,426 in the prior period to $93,408. Similar to above, the decrease in revenue was a result of the Company shifting its focus to building up its inventory to mitigate against potential supply chain issues in anticipation of launching its e-commerce platform, while it repositions to domestic manufacturing.
For the three months ended September 30, 2021, online revenues decreased by 20% from $116,482 in the prior period to $93,408. Online revenue accounted for 100% of total revenue for the three months ended September 30, 2021 compared to 99% for the same period in 2020.
| 18 |
Cost of Sales
For the three months ended September 30, 2021 cost of sales decreased by 13% from $94,134 in the prior period to $81,810. Cost of sales, as a percentage of sales, was approximately 88% for three months ended September 30, 2021 compared to 81% for the same period in 2020, respectively. The increase in cost of sales as a percentage of sales was primarily due to increased cost associated with acquiring inventory for the nine months ended September 30, 2021 compare to the same prior period
Shipping and freight costs accounted for 55% of the total cost of sales during the three months ended September 30, 2021, compared to 40% for the same period in 2020.
Gross Margin
Gross margin percentage for the three months ended September 30, 2021 was 12% compared to 19% for the same period in 2020. The decrease in gross margin reflects the increased cost of inventory due to increased costs of manufacturing.
Operating Expenses
Operating expenses increased for the three months ended September 30, 2021 by $1,658,593 from $392,970 in the prior periods to $2,051,563.
| ● | General and administrative expense increased by $466,899 from $50,836 in the prior period to $517,735. The increase related to research and development and salaries as the Company seeks to expand its operations and further develop its products. | |
| ● | Sales and marketing expenses increased by $374,783 from $59,122 in the prior period to $433,905. The increase in sales and marketing is a result of building brand and product awareness. | |
| ● | The Company realized a gain on foreign exchange of $11,175 during the three months ended September 30, 2021, an increase of $13,774 compared to a loss of $2,599 during the prior period. The gain on foreign exchange can be attributed to operating expenses denominated in the Canadian Dollar. | |
| ● | Professional fees which include accounting, legal and consulting fees, increased from $280,413 for the three months ended September 30, 2020 to $1,111,098 for the three months ended September 30, 2021. The increase was due to the employment of various third-party consultants to help expand the Company’s business operations. |
Other Income and Expenses
Other income and expenses for the three months ended September 30, 2021 was $24,316 compared to $234,377 the prior period, a decrease of $210,061. The change can be attributed to the Company’s decrease in interest expense.
Net Loss
Net loss for the three months ended September 30, 2021 was $2,064,281 compared to $604,990 for the three months ended September 30, 2020, a change of $1,459,291 or 241%. The increase in the net loss can be attributed to the increase of various operating expenses as the Company focuses on expanding its operations, research and development, manufacturing and supply chain.
Nine Months Ended September 30, 2021 compared to Nine Months Ended September 30, 2020
Revenue
For the nine months ended September 30, 2021, revenue generated from sales was $287,297, compared to $223,620 for the nine months ended September 30, 2020. Total revenues increased by approximately 28% compared to the same period in the prior year.
Revenue increased for the nine months ended September 30, 2021 compared to the same period the prior year due to the increased demand for the Company’s products during the first six months of the year as Covid-19 restrictions were eased.
For the nine months ended September 30, 2021 total revenues generated in Canada increased by 370% from $10,990 in the prior periods to $40,645. For the nine months ended September 30, 2021, total revenue generated in the United States increased by 16% from $212,620 in the prior period to $246,652. The increase in revenue generated in Canada and United States can be attributed to the easing of Covid-19 restrictions.
For the nine months ended September 30, 2021, online revenues increased by 18% from $208,554 in the prior period to $246,701. Online revenue accounted for 86% of total revenue for the nine months ended September 30, 2021 compared to 98% for the same period in 2020.
For the nine months ended September 30, 2021, revenues based on sales to distributors were $40,311 compared to $8,845 for the same period in 2020.
| 19 |
Cost of Sales
For the nine months ended September 30, 2021 cost of sales increased by 55% from $180,028 in the prior periods to $279,364. Cost of sales, as a percentage of sales, was approximately 97% for nine months ended September 30, 2021 compared to 81% for the same periods in 2020, respectively. The increase in cost of sales as a percentage of sales was primarily due to increased cost associated with acquiring inventory for the nine months ended September 30, 2021 compare to the same prior period.
Shipping and freight costs accounted for 38% of total cost of sales during the nine months ended September 30, 2021, compared to 42% for the same period in 2020.
Gross Margin
Gross margin percentage for the nine months ended September 30, 2021 was 3% compared to 19% for the same period in 2020. The decrease in gross margin reflects the Company’s increased costs of procuring inventory as the Company seeks to gain greater control over its manufacturing process.
Operating Expenses
Operating expenses increased for the nine months ended September 30, 2021 by $3,180,343 from $671,937 in the prior periods to $3,852,280.
| ● | General and administrative expense increased by $826,473 from $97,566 in the prior period to $924,041. The increase was related to research and development and salaries as the Company seeks to expand its operations and further develop its products. | |
| ● | Sales and marketing expenses increased by $691,843 from $69,869 in the prior period to $761,712. The increase in sales and marketing is a result of building brand and product awareness. | |
| ● | The Company realized a gain on foreign exchange of $2,170 during the nine months ended September 30, 2021, a decrease of $2,675 compared to $4,845 during the prior period. The decrease in gain on foreign exchange can be attributed to the weakening of the Canadian Dollar against the United States Dollar. | |
| ● | Professional fees which include accounting, legal and consulting fees, increased from $509,347 for the nine months ended September 30, 2020 to $2,168,697 for the nine months ended September 30, 2021. The increase was due to the employment of various third-party consultants to help expand the Company’s business operations. |
Other Income and Expenses
Other income and expenses for the nine months ended September 30, 2021 was $255,112 compared to $321,096 the prior period, a decrease of $65,984. The difference can be attributed to the Company’s gain on settlement of debt and interest income.
Net Loss
Net loss for the nine months ended September 30, 2021 was $4,099,459 compared to $949,441 for the nine months ended September 30, 2020, a change of $3,150,018 or 332%. The increase in the net loss can be attributed to the increase of various operating expenses as the Company focuses on expanding its operations, research and development programs and manufacturing and supply chains.
Worksport currently works with a total of ten dealers and distributors, however, given current market conditions Worksport plans to focus on online sales during 2021. Management believes that increasing sales through online retailers will continue to outpace the traditional distribution business model during 2021. Management further believes that online retailer’s customers tend to provide larger sales volumes, greater profit margins and greater protection against price erosion.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2021, the Company had $30,920,477 in cash, restricted cash and cash equivalents. The Company has generated only limited revenues and has relied primarily upon capital generated from public and private offerings of its securities.
Since the Company’s acquisition of Worksport in fiscal 2014, it has never generated a profit.
As of September 30, 2021 the Company had an accumulated deficit of $17,052,179.
Cash Flow Activities
Accounts receivable increased at September 30, 2020 by $122,606 and September 30, 2021 by $32,479. The increase was due to the Company increased sale near quarter end. Other receivable decreased at September 30, 2021 and 2020 by $69,603 and $22,970 respectively, due to funds received from a sales tax refund.
| 20 |
Inventory decreased at September 30, 2020 by $44,423 and increased at September 30, 2021 by $156,822. Prepaid expenses increased by $223,582 at September 30, 2021 and decreased at September 30, 2020 by $48,642, due to increased consulting and marketing expenditures during the quarter ended September 30, 2021.
Accounts payable and accrued liabilities increased at September 30, 2021 $221,979 and decreased at September 30, 2020 by and $73,201 respectively.
Cash increased from $467,133 at September 30, 2020 to $30,920,477 at September 30, 2021, an increase of $30,453,343 or 6,519%. The increase in cash was primarily due to warrants exercises, public offerings and private placement offerings which generated of approximately $32,000,000.
As of September 30, 2021, the Company had current assets of $36,762,621 and current liabilities of $1,728,043.
Operating Activities
Net cash used by operating activities for the nine months ended September 30, 2021 was $2,031,966, compared to $382,352 in the prior period.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2021 was $764,090 compared to $16,727 in the prior period. The increase in investing activities was primarily due to the purchase of property and equipment of $734,883 and intangible assets of $23,700.
Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2021 was $32,608,720 compared to $854,219 in the prior period.
During the nine months ended September 30, 2021 the Company received $32,805,825 of proceeds from public offerings, private placement offering and exercises of warrants net of share issuance cost. During the nine months ended September 30, 2021 the Company made repayment of $62,905 of promissory notes and repayment of $48,861 of shareholder loans.
During 2021, the Company intends to introduce several new tonneau covers as well as the Terravis system. The Company anticipates that the introduction of these new products will improve the Company’s financial position.
Based on the Company’s future operating plans, existing cash of $30,920,477; management believes that the Company has sufficient funds to meet its contractual obligations and working capital requirements for the next 12 months and the foreseeable future.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies
Our discussion and analysis of results of operations and financial condition are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The accounting policies that we follow are set forth in Note 2 to our financial statements as included in the Form 10-K filed on April 13, 2021. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
| 21 |
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the quarter covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time years and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. To address the material weaknesses, we performed additional analysis and other post-closing procedures in an effort to ensure our consolidated financial statements included in this quarterly report have been prepared in accordance with generally accepted accounting principles. Accordingly, management believes that the financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Not Applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Not Applicable.
Item 6. Exhibits
| EXHIBIT No. | DESCRIPTION | |
| 31.1 | Section 302 Certification of Chief Executive Officer | |
| 31.2 | Section 302 Certification of Chief Financial Officer | |
| 32.1 | Section 906 Certifications of Chief Executive Officer and Chief Financial Officer | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| 22 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WORKSPORT LTD. | ||
| Dated: November 15, 2021 | By: | /s/ Steven Rossi |
| Steven Rossi | ||
| Chief Executive Officer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| WORKSPORT LTD. | ||
| Dated: November 15, 2021 | By: | /s/ Michael Johnston |
| Michael Johnston | ||
| Chief Financial Officer and Accounting Officer | ||
| 23 |