WKSP.NASDAQWorksport LTD
S-1: Worksport Ltd. Files for Resale of Up to 12.95 Million Shares Underlying Warrants
Sentiment:
Registration Statement (Form S-1)
Worksport Ltd. has filed a registration statement for the resale of up to 12,950,000 shares of common stock underlying warrants issued in a private placement.
Capital raiseThe document details the potential for Worksport to receive approximately $6.73 million if all of the warrants are exercised for cash at the price of $0.5198.The company intends to use the aggregate net proceeds from the exercise of the Warrants for general corporate purposes, including working capital.
Summary
- Worksport Ltd. has filed a Form S-1 registration statement with the SEC to allow a selling stockholder to resell up to 12,950,000 shares of common stock.
- These shares are issuable upon the exercise of outstanding warrants.
- The warrants were issued in connection with a warrant inducement letter dated May 29, 2024, where Worksport offered to reduce the exercise price of existing warrants to $0.5198 per share.
- The selling stockholder agreed to exercise existing warrants in exchange for new warrants to purchase 12,950,000 shares.
- Each warrant is exercisable for one share of common stock at $0.5198 per share and becomes exercisable on November 29, 2024, expiring five and a half years from issuance.
- Worksport will not receive any proceeds from the resale of these shares by the selling stockholder, but will receive proceeds from any cash exercise of the warrants.
- As of July 2, 2024, the last reported sale price of Worksport's common stock was $0.8360 per share.
- Steven Rossi, the founder and CEO, owns 100% of the Series A Preferred Stock, giving him 51% of the voting power, making Worksport a controlled company under Nasdaq rules.
Sentiment
Score: 5
Explanation: The document presents a mixed sentiment. While it highlights potential financial gains from warrant exercises and strategic partnerships, it also acknowledges significant past losses, going concern risks, and Nasdaq compliance issues. The company's future success is uncertain, balancing potential growth with existing financial challenges.
Positives
- The potential exercise of warrants could provide Worksport with approximately $6.73 million in proceeds for working capital and general corporate purposes.
- The company has been awarded a grant worth up to $2.8 million from the State of New York through its Excelsior Jobs Program for job creation and wage support.
- The company has a growing intellectual property portfolio with patents and trademarks relating to tonneau covers, solar integrated tonneau covers, portable power stations, hydrogen-based green energy systems, residential heating and cooling systems and electric vehicle charging stations.
Negatives
- Worksport has incurred significant losses since its inception, with a net loss of $14,928,958 for the year ended December 31, 2023, and $3,714,657 for the period ended March 31, 2024.
- The company's independent auditors have included an explanatory paragraph in their audit report regarding the company's ability to continue as a going concern.
- Worksport received a notice from Nasdaq on April 19, 2024, for failing to maintain a minimum bid price of $1.00 per share, requiring compliance by October 16, 2024, to avoid delisting.
- The company relies on two outsourced manufacturers for the production of its soft tonneau covers, which may hinder its ability to grow.
- The company relies on a small number of customers for the majority of its sales.
Risks
- The company may be unable to achieve or sustain profitability in the future.
- The company may need, but be unable, to obtain additional funding on satisfactory terms, which could dilute stockholders or impose burdensome financial restrictions.
- The company may not succeed in establishing, maintaining, and strengthening its brand.
- Continued uncertain economic conditions, including inflation and the risk of a global recession, could impair the company's ability to forecast and may harm its business.
- The company's Chief Executive Officer and Chairman, Steven Rossi, has significant control over stockholder matters.
- The company's failure to meet the continued listing requirements of Nasdaq could result in a de-listing of its Common Stock.
- The company may not be able to protect its intellectual property rights throughout the world.
- Geopolitical conditions may negatively impact the company's business operations and financial performance.
Future Outlook
The company intends to use the net proceeds from any cash exercise of the Warrants for working capital and general corporate purposes and is actively pursuing strategies to mitigate risks, focusing on transitioning towards revenue generation from its existing product offerings and expanding its customer base.
Industry Context
Worksport competes in the automotive aftermarket accessories and new energy industries, focusing on tonneau covers and portable power stations. The tonneau cover market is expected to grow, with electric pickup trucks gaining market share. The portable power station market is also growing, with the North American market being the largest regional market.
Comparison to Industry Standards
- The tonneau cover market is relatively consolidated, with Real Truck (formerly Truck Hero) being the industry leader.
- Worksport competes directly with Real Truck, as well as other competitors like Truck Accessories Group (Leer), Agricover (Access), Truck Covers USA, and Paragon.
- The portable power station market is global and highly fragmented, with competitors including EcoFlow, Anker Technology, and Jackery Inc.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Controlled Company Status | Steven Rossi's ownership of Series A Preferred Stock gives him voting control over 51% of the company's outstanding voting stock, making Worksport a controlled company under Nasdaq rules. | N/A | As a controlled company, Worksport may choose to exempt itself from certain corporate governance requirements, which could reduce the level of protection afforded to public stockholders. |
Stakeholder Impact
- Shareholders may experience dilution if the warrants are exercised.
- The company's ability to continue as a going concern is dependent on generating positive cash flows and securing additional financing.
- Employees are impacted by the Excelsior Jobs Program grant for job creation and wage support.
- Customers may benefit from the company's ongoing research and development efforts to improve product quality and innovation.
Next Steps
- The selling stockholder may offer and sell the registered shares from time to time.
- Worksport must regain compliance with Nasdaq's minimum bid price rule by October 16, 2024.
- The company will seek stockholder approval for the issuance of shares upon the exercise of the Warrants.
Key Dates
| Date | Description |
|---|---|
| April 2, 2003 | Company incorporated in Nevada as Franchise Holdings International, Inc. (FNHI). |
| December 2014 | FNHI acquired 100% of Worksport Ltd. (Ontario). |
| May 2020 | FNHI changed its name to Worksport Ltd. |
| May 21, 2021 | Board authorized a 1-for-20 reverse stock split. |
| August 3, 2021 | FINRA announced the 1-for-20 reverse stock split. |
| August 4, 2021 | FINRA declared the 1-for-20 reverse stock split effective. |
| August 6, 2021 | Company consummated a firm commitment underwritten public offering. |
| September 30, 2022 | Company filed a shelf registration statement on Form S-3. |
| October 13, 2022 | SEC declared the Form S-3 Registration Statement effective. |
| November 2, 2023 | Company raised roughly $4.7 million from a registered direct offering and concurrent private placement. |
| December 22, 2023 | 7,000,000 shares of Common Stock underlying the warrants were registered for resale by the institutional investor on a registration statement on Form S-1 (File No. 333-276241) filed with the SEC. |
| December 29, 2023 | Registration statement on Form S-1 (File No. 333-276241) declared effective by the SEC. |
| March 18, 2024 | Company entered into a securities purchase agreement with an institutional investor for a registered direct offering. |
| March 20, 2024 | Registered direct offering closed; warrants issued to purchase 7,700,264 shares of Common Stock. |
| April 19, 2024 | Company received notice from Nasdaq for failing to maintain a minimum bid price of $1.00 per share. |
| May 29, 2024 | Company offered to reduce the exercise price of existing warrants in exchange for the issuance of inducement warrants. |
| May 31, 2024 | Investor exercised the Existing Warrants and in consideration for such exercise the company issued the Inducement Warrant to the Investor. |
| October 16, 2024 | Deadline for Worksport to regain compliance with Nasdaq's minimum bid price requirement. |
| November 29, 2024 | Inducement Warrants become exercisable. |
| November 29, 2029 | Inducement Warrants expire. |
Keywords
Worksport, Common Stock, Warrants, Resale, Registration Statement, Tonneau Covers, Solar, COR, SOLIS, Nasdaq, Offering
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