DEF 14C: Worksport Ltd. Secures Stockholder Approval for Warrant Issuance via Written Consent

Worksport Ltd. announces that it has received written consent from a majority stockholder to approve the issuance of warrant shares, satisfying Nasdaq listing requirements.

Summary

• Worksport Ltd. has notified its stockholders that on March 27, 2024, it received written consent from its majority stockholder, Steven Rossi, to approve the issuance of shares underlying warrants.
• This action was taken in lieu of a stockholders meeting to comply with Nasdaq listing rules.
• The consent relates to warrants issued in connection with a registered direct public offering that closed on March 20, 2024.
• The offering included 2,372,240 shares of common stock and pre-funded warrants to purchase 1,477,892 shares of common stock.
• The warrants are exercisable for 7,700,264 shares of common stock at $0.74 per share, commencing on September 20, 2024, and expiring on September 20, 2029.
• Steven Rossi, as the holder of Series A Preferred Stock, which carries 51% of the voting power, provided the necessary consent.
• The actions will become effective no earlier than twenty calendar days after the information statement is mailed to stockholders on or about April 8, 2024.

Sentiment

Score: 6

Explanation: The sentiment is neutral. The announcement is procedural, detailing the approval of a warrant issuance. While the capital raise is positive, the potential dilution is a concern.

Positives

• The company has secured the necessary stockholder approval to comply with Nasdaq listing requirements related to the warrant issuance.
• The registered direct offering provides additional capital to the company.
• The warrant exercise price of $0.74 per share could bring additional capital to the company if the warrants are exercised.

Negatives

• The issuance of a large number of warrant shares (7,700,264) could potentially dilute existing shareholders if the warrants are exercised.
• The exercise price of $0.74 per share is subject to adjustment, which could further impact the potential dilution.

Risks

• The company's stock price could be negatively impacted by the potential dilution from the warrant shares.
• The company's ability to maintain its Nasdaq listing depends on continued compliance with listing standards.
• The company's future performance is subject to various risks and uncertainties, as noted in the cautionary statement regarding forward-looking statements.

Future Outlook

The company intends to utilize the capital raised from the registered direct offering and potential warrant exercises to fund its operations and growth initiatives.

Management Comments

• Steven Rossi, our Chief Executive Officer, President, and Chairman, holds 100 shares of Series A Preferred Stock, representing 100% of the Series A Preferred Stock outstanding.
• Mr. Rossi, as the Majority Stockholder, approved the issuance of the Warrant Shares underlying the Warrants on March 27, 2024, by written consent in lieu of a stockholders meeting.

Industry Context

This announcement reflects a common practice for companies listed on the Nasdaq Capital Market to raise capital through registered direct offerings and warrants, while ensuring compliance with listing requirements.

Comparison to Industry Standards

• Many small-cap companies listed on Nasdaq use similar financing structures, including registered direct offerings and warrants, to raise capital.
• The warrant coverage and exercise price are within typical ranges for such offerings.
• The requirement for stockholder approval for warrant issuances is a standard Nasdaq listing rule.

Stakeholder Impact

• Shareholders may experience dilution if the warrants are exercised.
• The company's employees and customers may benefit from the additional capital raised through the offering.

Next Steps

• The actions approved by the majority stockholder will become effective no earlier than twenty calendar days after the information statement is mailed to stockholders.
• The company will monitor the exercise of the warrants and the potential impact on its capital structure.

Key Dates

Keywords

Warrants, Stockholder Approval, Registered Direct Offering, Nasdaq, Common Stock, Worksport Ltd.