10-K: Worksport Navigates Growth Amid Losses, Boosts Sales & Capital

Worksport Ltd. reports significant revenue growth and successful capital raises in 2025, despite continued net losses and a going concern warning from auditors.

Summary

• Net sales increased by 89.8% to $16.1 million in 2025 from $8.48 million in 2024.
• Gross profit surged by 394.1% to $4.47 million in 2025 from $0.91 million in 2024.
• Net loss increased to $19.35 million in 2025 from $16.16 million in 2024, contributing to an accumulated deficit of $83.87 million.
• The company successfully raised approximately $21.8 million in net proceeds from various securities offerings during 2025.
• Worksport commercially launched its SOLIS solar-integrated tonneau cover and COR portable battery system, and expanded its dealer network by 42% to over 550 locations.
• Terravis Energy, a subsidiary, announced breakthroughs in cold climate heat pump technology (AetherLux ZeroFrost) and attracted interest from major corporations and U.S. government entities.
• A 1-for-10 reverse stock split was effectuated on March 18, 2025, to regain compliance with Nasdaq listing rules.
• Auditors expressed "substantial doubt" about the company's ability to continue as a going concern due to recurring losses and reliance on external financing.
• Material weaknesses in internal control over financial reporting were identified, primarily due to inadequate staff size and lack of segregation of duties.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed filing. While significant revenue growth and strategic product launches are positive, the increasing net losses, growing accumulated deficit, and the auditor's going concern warning indicate substantial financial challenges and operational risks that temper optimism.

Positives

• Net sales increased significantly by 89.8% to $16,101,738 in 2025 compared to $8,484,379 in 2024.
• Gross profit increased by 394.1% to $4,474,907 in 2025 from $905,650 in 2024, with gross margin improving from 11% to 28%.
• Successful commercial launch of SOLIS solar-integrated tonneau cover and COR portable battery system on December 1, 2025.
• Expansion of the national dealer network by 42% and addition of a second national automotive distributor, increasing partnered locations to over 550.
• Secured ISO 9001 Certification at the U.S. Factory, expected to pave new inroads towards substantial new OEM and global supply chain opportunities.
• Terravis Energy's AetherLux Pro heat pump with Zerofrost technology received attention from multi-billion dollar corporations and U.S. government entities.
• Doubled Bitcoin holdings and invested in additional manufacturing machinery to double production output on August 7, 2025.
• Achieved its strongest 4-week production run since beginning domestic production on August 5, 2025.
• Doubled R&D footprint by beginning a new lease at a larger R&D facility in Ozark, Missouri on July 16, 2025.
• Successful rollout of 80% of the AL4 product line (20 out of 25 planned models) by June 2, 2025.
• Strategic partnership with Patriot Automotive Technologies announced on April 29, 2025, to accelerate nationwide expansion.
• Strategic partnership with KULR Technology Group, Inc. announced on February 13, 2025, focused on advancing battery technology and strengthening domestic manufacturing.
• Announced two major breakthroughs in cold climate heat pump technology by Terravis Energy on February 11, 2025, allowing operation in temperatures as low as -57F.
• Agreement to appoint Coinbase as the official custodian for cryptocurrency holdings executed on January 28, 2025.
• Successful capital raises generated approximately $21.8 million in net proceeds during 2025.
• Working capital increased to $10,061,578 in 2025 from $7,304,110 in 2024.

Negatives

• The company has a history of operating losses and has never generated a profit.
• Net loss increased to $19,352,297 in 2025 from $16,163,789 in 2024, a 19.7% increase.
• Accumulated deficit grew to $83,873,790 as of December 31, 2025, from $64,476,966 in 2024.
• Independent auditors expressed "substantial doubt" about the company's ability to continue as a going concern.
• Operating expenses increased by $6,916,849 (42%) in 2025, primarily driven by a 191% increase in sales and marketing and a 26% increase in general and administrative expenses.
• Net cash used in operating activities increased to $17,314,390 in 2025 from $10,138,798 in 2024.
• Material weaknesses in internal control over financial reporting were identified due to inadequate staff size and lack of segregation of duties.
• The company relies on one supplier in Foshan, China, for the production of its outsourced soft tonneau covers, posing concentration risk.
• Inventory increased significantly to $9,530,671 in 2025 from $5,190,054 in 2024.
• The company does not intend to pay dividends in the foreseeable future.
• Voting control is concentrated with the Chief Executive Officer and Chairman, Steven Rossi, who owns 100% of Series A Preferred Stock, entitling him to 51% of the voting power.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to recurring operating losses and reliance on equity and debt financings.
• Additional capital will be required to fund operations, and such capital may not be available on acceptable terms, or at all, potentially leading to dilution of existing stockholders or restrictive debt covenants.
• Business, results of operations, and financial condition could be adversely affected by widespread public health events or outbreaks beyond the company's control.
• The company has only sold tonneau covers, and its long-term results depend on successfully introducing and marketing new products, which may expose it to new and increased challenges and risks.
• Failure to establish, maintain, and strengthen the Worksport brand would materially and adversely affect customer acceptance and financial performance.
• High interest rates could make financing additional machinery, equipment, and land less attractive and increase the cost of indebtedness.
• Continued uncertain economic conditions, including inflation and the risk of a global recession, could impair the ability to forecast and harm business, operating results, financial condition, and cash flows.
• The business and operations would suffer in the event of computer system failures, cyberattacks, deficiencies in cybersecurity, or an inability to effectively adopt and govern emerging technologies, including artificial intelligence.
• Inability to accurately estimate the demand for tonneau covers could result in production inefficiencies or inability to secure sufficient capacity.
• Future growth may be limited by the ability to internally develop products, attract and retain skilled employees, protect intellectual property, and acquire sufficient funding.
• Reliance on one supplier for outsourced soft tonneau covers may hinder growth and lead to supply delays or loss.
• The company relies on key personnel, especially Steven Rossi, its Chief Executive Officer, President, and Chairman of the Board.
• Intellectual property rights may be infringed upon, or the company may infringe upon the intellectual property rights of others, leading to costly litigation and potential loss of competitive advantage.
• Inability to protect intellectual property rights throughout the world, particularly in jurisdictions with weaker enforcement.
• Patents might not protect the company's technology from competitors, eroding any exclusionary advantage.
• Trademarks may be infringed or successfully challenged, harming the business.
• Much of the intellectual property is protected as trade secrets or confidential know-how, which may be unintentionally or willfully disclosed.
• The company may be subject to claims challenging the inventorship or ownership of its patents and other intellectual property.
• Intellectual property rights do not necessarily address all potential threats to the business.
• Risks associated with outsourced production may result in delivery delays, product defects, or inadequate production capacity.
• Intense competition in the automotive aftermarket equipment and portable power station markets could harm sales.
• The company may not have sufficient product liability insurance to cover potential damages from product defects.
• Production of inferior quality or perceived inferior quality products could lead to customer loss.
• Geopolitical conditions, including direct or indirect acts of war or terrorism, could have an adverse effect on operations and financial results by increasing costs and reducing demand.
• Assets held at financial institutions may exceed FDIC insurance coverage, posing a risk of loss in the event of bank failure.
• Evolving U.S. trade regulations and policies with China, including tariffs and other trade measures, could adversely affect costs and supply chains.
• Risks associated with outsourced production in China, including changes in laws, regulations, and enforceability of commercial claims.
• Cross-border sales transactions present tax risks, changing regulations, wait times, customs inspection, and lost or damaged product.
• The company is subject to foreign currency risk due to manufacturing in China, marketing in Canada and the U.S., and reporting in USD.
• Changes in U.S. government policies or regulations, including potential rollbacks of electric vehicle initiatives, could adversely affect the business, strategy, and growth prospects.
• A large number of authorized but unissued shares of common stock will dilute existing ownership positions when issued.
• Common stock or warrants may be affected by limited trading volume and price fluctuations.
• Inability to obtain additional funding on satisfactory terms could dilute stockholders or impose burdensome financial restrictions.
• The stock ownership structure concentrates voting control with the Chief Executive Officer and Chairman, Steven Rossi, limiting the ability of other shareholders to influence decisions.
• If research analysts do not publish research or issue unfavorable commentary, the stock price and trading volume could decline.
• Anti-takeover provisions in charter documents and Nevada law could discourage, delay, or prevent a change of control.
• The Bitcoin acquisition strategy exposes the company to various risks associated with Bitcoin, including high volatility and regulatory uncertainty.
• Acceptance of blockchain and digital assets as payment introduces significant risks, including regulatory uncertainty, market volatility, and operational challenges.

Future Outlook

The company expects to continue incurring operating losses as it scales operations and invests in product development, manufacturing, and commercialization. Management is focused on transitioning towards gross profit as the principal source of liquidity by growing existing product offerings and customer base, and realizing manufacturing efficiency improvements. The company intends to gradually increase output capacity, lower customer acquisition costs through brand awareness, and expand business-to-business sales channels. Worksport anticipates positive reception for its SOLIS and COR products due to their resilience to climate change and expects to remediate internal control weaknesses later in 2026.

Management Comments

• "We expect to continue to incur operating losses as we scale our operations and invest in product development, manufacturing, and commercialization."
• "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 intend to continue gradually increasing output capacity through refined production processes and increased personnel."
• "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."

Industry Context

StockSavvy.ai notes Worksport operates in highly competitive automotive accessories, portable power, and clean energy markets. The company's strategy to focus on innovative, integrated solutions like the SOLIS solar tonneau cover and COR portable power system positions it to capitalize on growing consumer interest in clean energy and power grid independence, particularly in the nascent electric pickup truck market. The AetherLux heat pump's cold-climate breakthroughs could be a significant differentiator in the HVAC market, attracting interest from major players. However, the company faces strong competition from established players like RealTruck in tonneau covers and fragmented competition in portable power stations. The reliance on innovation and intellectual property is crucial for market share gains against larger, better-funded competitors.

Comparison to Industry Standards

• The global Portable Power Station Market is growing with a compound annual growth rate (CAGR) of 5.3% between 2025 and 2035, aligning with Worksport's COR system's intended usage in the largest North American market segments (lithium-ion batteries and off-grid applications).
• The U.S. pickup truck market is expected to grow at a CAGR of 5.3% between 2025 and 2030, providing a growing base for Worksport's tonneau covers.
• The electric pickup truck market in North America is projected to grow at a CAGR of 29.86% between 2025 and 2029, a trend Worksport's SOLIS cover directly addresses by mitigating the challenge of less-developed charging infrastructure, positioning it favorably for partnerships with EV manufacturers, unlike competing portable power stations that are intended to be stationary during charging.
• The U.S. tonneau cover market, estimated at $2.56 billion in 2024, is expected to grow at a CAGR of 7.1% from 2025 to 2030, indicating a healthy market for Worksport's core products.
• Terravis Energy's AetherLux heat pump system is noted for its ability to operate in temperatures as low as -57F, which is explicitly stated as "lower than the operating capabilities of commercially available heat pumps," suggesting a significant technological advantage over existing market offerings.

Corporate Governance

Legal Proceedings

• Not presently a party to any material pending or threatened legal proceedings.

Related Party Transactions

• Forbes Anderson Limited, an accounting firm managed by CFO Michael Johnston, received $34,399 ($48,000 CAD) for services rendered during the fiscal year ended December 31, 2025.
• The company entered into a consulting agreement with Steven Rossi and 2230164 Ontario Inc. (an Ontario corporation owned by Mr. Steven Rossi) for his services as Chief Executive Officer and President, with annual base fees of $300,000 and eligibility for an annual incentive bonus.
• Lorenzo Rossi, the father of Steven Rossi and CEO of the Terravis Energy subsidiary, received total compensation of approximately $186,000 in connection with his services to Terravis Energy during the fiscal year ended December 31, 2025.
• Steven Rossi, the company's Chief Executive Officer, owns 100 shares of the company's Series A Preferred Stock, which entitles him to 51% of the voting power of the outstanding voting equity.

Stakeholder Impact

• Shareholders face potential dilution from future equity issuances, stock price volatility, and the concentration of voting control with CEO Steven Rossi. No dividends are anticipated in the foreseeable future, meaning returns depend on stock price appreciation.
• Employees benefit from increased employment opportunities as operations expand, competitive compensation and benefits, and a commitment to inclusion, diversity, health, and safety.
• Customers gain access to innovative automotive accessories (tonneau covers, SOLIS, COR) and clean energy solutions (AetherLux heat pump), with potential for improved product quality due to ISO 9001 certification and increased production.
• Suppliers may experience changes in demand and sourcing strategies as the company diversifies its supply chain to mitigate geopolitical risks and reduce reliance on single suppliers.
• Creditors are exposed to risks highlighted by the auditor's 'going concern' warning. High interest rates could increase debt service obligations on variable rate indebtedness, although the company's revolving credit facility and other long-term debt are secured by company assets.

Next Steps

• Continue funding operations through equity and debt financing arrangements.
• Transition towards gross profit as the principal source of liquidity by growing existing product offerings and customer base.
• Realize manufacturing efficiency improvements.
• Increase output capacity through refined production processes and increased personnel.
• Lower customer acquisition cost with additional focus on brand awareness.
• Expand presence in additional business-to-business sales channel territories.
• Progress conversations with three other major distributors.
• Close discussions with a network of nationwide U.S. dealers.
• Continue development initiatives with energy products and other tonneau covers for anticipated production in 2026.
• Invest more resources into improving assessment and response to cybersecurity risk.
• Evaluate cybersecurity needs and develop appropriate measures, including engaging external experts, conducting vulnerability assessments, and developing an incident response strategy.
• Establish a cybersecurity framework commensurate with size, complexity, and operations.
• Remediate material weaknesses in internal control over financial reporting later in 2026, including hiring additional senior accounting personnel, establishing clearer organizational structure, implementing ERP system modules, and formalizing internal processes.
• Continue to seek additional incentives and grants to lower operational costs and commit less capital to new product initiatives.
• Actively research ways to lower environmental impacts of battery recycling and demand for precious metals.

Key Dates

Recommendation

Worksport Ltd. presents a high-risk, high-reward profile. While the company achieved impressive revenue growth and launched innovative products like SOLIS and COR, the persistent net losses, growing accumulated deficit, and the auditor's 'going concern' warning are significant concerns. The successful capital raises provide liquidity for the short term, and strategic partnerships and ISO certification are positive operational developments. However, the path to profitability remains uncertain, and the stock is subject to high volatility. A 'hold' recommendation reflects the potential for future growth driven by new products and market expansion, balanced against the substantial financial risks and the need for the company to demonstrate a clear path to sustainable profitability. Investors should monitor the remediation of internal control weaknesses and progress towards positive cash flow from operations.

Keywords

Tonneau covers, Solar-integrated, Portable power stations, Clean energy, Electric vehicles, Heat pumps, Automotive accessories, Intellectual property, Manufacturing, SEC filing, 10-K, Worksport, Terravis Energy, SOLIS, COR, AetherLux, Corporate governance, Capital raise