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Worksport .(WKSP) - 2024 Q4 - Annual Report
WKSPWorksport .(WKSP)2025-03-27 11:44
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Intellectual Property and Technology - Worksport Ltd. has a growing intellectual property portfolio, including patents for solar integrated tonneau covers and hydrogen-based green energy systems[22]. - The company has a patent portfolio that includes 11 issued utility patents in the U.S. and 37 pending utility patent applications worldwide as of December 31, 2024[61]. - The company has 18 utility patents, 23 design registrations, and 79 pending patent applications worldwide as of December 31, 2024, but faces challenges in protecting its intellectual property[113]. - The company’s intellectual property rights may not adequately protect against competitors developing similar technologies[126]. - The company may face claims challenging the ownership of its patents, which could result in costly litigation and loss of intellectual property rights[123]. Financial Performance and Capital Raising - The company raised approximately 6.73millionfromtheexerciseofexistingwarrantsatanexercisepriceof6.73 million from the exercise of existing warrants at an exercise price of 5.198 per share, with potential gross proceeds of 9.3millionfromnewwarrants[24].−Thecompanyincreaseditsat−the−marketofferingprogrambyanadditional9.3 million from new warrants[24]. - The company increased its at-the-market offering program by an additional 4.134 million[25]. - A private offering resulted in the sale of 95,000 shares at 4.00pershare,alongwithwarrantsfor190,000shares[27].−Thecompanyreceivednetproceedsofapproximately4.00 per share, along with warrants for 190,000 shares[27]. - The company received net proceeds of approximately 2.59 million from a registered direct offering of 237,224 shares at 7.40each[33].−Thecompanyhasincurredanetlossof7.40 each[33]. - The company has incurred a net loss of 16,163,789 for the year ended December 31, 2024, with an accumulated deficit of 64,476,966[94].−ForthetwelvemonthsendedDecember31,2024and2023,thecompanyincurredoperatinglossesof64,476,966[94]. - For the twelve months ended December 31, 2024 and 2023, the company incurred operating losses of 16,163,789 and 14,928,958,respectively,withanaccumulateddeficitof14,928,958, respectively, with an accumulated deficit of 64,476,966 as of December 31, 2024[99]. - Cash and cash equivalents increased by 1,517,321or451,517,321 or 45%, from 3,365,778 at December 31, 2023 to 4,883,099atDecember31,2024[219].−Netcashusedbyoperatingactivitiesdecreasedfrom4,883,099 at December 31, 2024[219]. - Net cash used by operating activities decreased from 11,930,580 in 2023 to 10,138,798in2024[220].SalesandMarketGrowth−FortheyearendedDecember31,2024,netsaleswere10,138,798 in 2024[220]. Sales and Market Growth - For the year ended December 31, 2024, net sales were 8,484,379, a 455% increase compared to 1,529,632fortheyearendedDecember31,2023[201].−NetsalesintheU.S.for2024were1,529,632 for the year ended December 31, 2023[201]. - Net sales in the U.S. for 2024 were 8,397,570, up 451% from 1,522,821in2023[201].−NetsalesinCanadaincreasedby8911,522,821 in 2023[201]. - Net sales in Canada increased by 891%, reaching 67,519 in 2024 compared to 6,811in2023[201].−Theincreaseinnetsaleswasattributedtohighersalesoftonneaucoverstoprivatelabelpartners,dealers,distributors,andendusersviatheonlinemarketplace[202].−Netsalesfromonlineretailersincreasedfrom6,811 in 2023[201]. - The increase in net sales was attributed to higher sales of tonneau covers to private label partners, dealers, distributors, and end users via the online marketplace[202]. - Net sales from online retailers increased from 104,352 in 2023 to 4,930,822in2024,agrowthof4,6254,930,822 in 2024, a growth of 4,625%[203]. - Distributor sales surged 6,120% from 6,811 in 2023 to 423,627in2024[203].−Privatelabelsalesaccountedfor37423,627 in 2024[203]. - Private label sales accounted for 37% of net sales, totaling 3,129,930 in 2024[203]. Production and Manufacturing - On November 22, 2024, the company announced a significant expansion in production capacity to meet increasing demand for the SOLIS Solar Tonneau Cover and AL4 Premium Tonneau Cover[40]. - The company has expanded its manufacturing capabilities in North America, utilizing a 152,847 square foot facility in West Seneca, New York, to enhance quality control and production efficiency[57]. - The company is strategically beginning domestic manufacturing operations in Western New York to mitigate risks associated with climate change and supply chain issues[186]. - The company is closely monitoring international shipping costs and is transitioning towards domestic manufacturing to offset higher costs[192]. Research and Development - The company is committed to ongoing research and development, focusing on innovative tonneau cover designs and portable energy storage solutions[80]. - Research and development expenses rose by 620,622,from620,622, from 1,669,318 in 2023 to 2,289,940in2024[211].−Thecompanyisactivelyresearchingwaystolowerenvironmentalimpactsassociatedwithbatteryrecyclingandpreciousmetaldemand[187].StrategicPartnershipsandCollaborations−AstrategicpartnershipwithKULRTechnologyGroupwasannouncedtoadvancebatterytechnologyanddomesticmanufacturing[38].−Thecompanyhasformedstrategicpartnerships,includingacollaborationwithInfineonTechnologiesAGtouseGaNpowersemiconductorsinitsportablepowerstations[40].OperationalRisksandChallenges−Thecompanyreliesontwosuppliersfortheproductionofitssofttonneaucovers,whichmayhinderitsabilitytogrowiftherearedelaysorlossesofthesesuppliers[110].−Thecompanyhaslimitedexperienceindomesticmanufacturing,whichcouldleadtohigherproductioncostsandcompliancechallenges[129].−ThecompanysourcessofttonneaucoversandsomerawmaterialsfromChina,makingitvulnerabletochangesinU.S.traderegulationsandtariffs[136].−Thecompanymaynotbeabletoaccuratelyestimatethedemandforitstonneaucovers,leadingtoinefficienciesinproductionandhinderingprofitgeneration[108].−Continueduncertaineconomicconditions,includinginflationandtheriskofaglobalrecession,couldimpairthecompany′sabilitytoforecastandharmitsbusiness[103].−Thecompanyanticipatesthathighinterestratesmayaffectitsabilitytofinanceadditionalmachineryandequipmentpurchases,impactingitsoperationalcapacity[102].CybersecurityandInsurance−Thecompanyhascybersecurityinsurancecoverageof2,289,940 in 2024[211]. - The company is actively researching ways to lower environmental impacts associated with battery recycling and precious metal demand[187]. Strategic Partnerships and Collaborations - A strategic partnership with KULR Technology Group was announced to advance battery technology and domestic manufacturing[38]. - The company has formed strategic partnerships, including a collaboration with Infineon Technologies AG to use GaN power semiconductors in its portable power stations[40]. Operational Risks and Challenges - The company relies on two suppliers for the production of its soft tonneau covers, which may hinder its ability to grow if there are delays or losses of these suppliers[110]. - The company has limited experience in domestic manufacturing, which could lead to higher production costs and compliance challenges[129]. - The company sources soft tonneau covers and some raw materials from China, making it vulnerable to changes in U.S. trade regulations and tariffs[136]. - The company may not be able to accurately estimate the demand for its tonneau covers, leading to inefficiencies in production and hindering profit generation[108]. - Continued uncertain economic conditions, including inflation and the risk of a global recession, could impair the company's ability to forecast and harm its business[103]. - The company anticipates that high interest rates may affect its ability to finance additional machinery and equipment purchases, impacting its operational capacity[102]. Cybersecurity and Insurance - The company has cybersecurity insurance coverage of 1,000,000 per annual policy period to mitigate risks associated with potential cyberattacks[107]. - The company acknowledges the increasing importance of cybersecurity and recognizes potential vulnerabilities due to the absence of a formalized cybersecurity framework[161]. - The company is evaluating its cybersecurity needs and intends to invest more resources into improving its cybersecurity posture[162]. Market Trends and Projections - The U.S. pickup truck market is projected to grow at a compound annual growth rate (CAGR) of 4.6% from 2023 to 2028, with approximately 61 million pickup trucks in operation as of Q3 2024[65]. - The tonneau cover market in the U.S. is estimated to be $2.56 billion in 2024, with an expected CAGR of 7.1% from 2025 to 2030[67]. - The electric pickup truck market in North America is anticipated to grow at a CAGR of 31.15% from 2024 to 2029, despite challenges related to charging infrastructure[66]. - The global Portable Power Station Market is expected to grow at a CAGR of 5.39% from 2024 to 2032[71]. Company Strategy and Future Outlook - The company aims to maximize market share by focusing on competitive pricing and exploring integration opportunities[69]. - The company is expanding its distribution network through wholesalers, private labels, and online retail channels, with plans for increased distribution in 2025[72]. - The company is focusing on establishing new business-to-consumer and business-to-business channels while enhancing customer support to improve satisfaction and product turnover[202]. - The company plans to lower customer acquisition costs throughout 2025 and is assembling a strong sales team to present products to various dealers, wholesalers, and retailers[202]. - The company may pursue acquisitions and strategic alliances to expand its product offerings and geographic presence, but integration risks exist[130].