Worksport, Ltd. Common Stock Status update

Today, I want to put those pieces together. We will talk about the business, the latest operating results, capital, and the shareholder meeting. We will also spend time on Terravis Energy and take your questions.

Steve, I think there is a fairly straightforward question behind a lot of what investors are asking. We see that sales are growing, but how does that get to a point where, as a business, we can support ourselves without having to rely on dilution or further capital raises? We will spend some time there today, but before we start, we want to make sure that we stay with information that is already disclosed publicly. That means that we can explain it, we can provide context, but we cannot give unpublished sales figures, discuss undisclosed transactions, or get ahead of company announcements. We ask that you stay focused and stay tuned, and we will be sharing that information as it happens.

Yeah. Of course, must say our discussions today may include forward-looking statements about our operating objectives, product distribution, financing, and certification plans. These statements involve risks and assumptions and actual sales may differ materially. Please review them and all of our disclosures alongside our SEC filings, including our risk factors. We do undertake no obligations to update forward-looking statements, except as required by law. With that, let us kick things off. In June, we talked quite a bit about the new products, the distribution relationships, and what those really could do for Worksport. We have another quarter of reported results under our belt, and let us assess what those could look like or what those do look like. Q2 revenue increased nearly 58% from Q1. Gross profit also increased approximately 93%, while OpEx came in lower at about 17%.

That combination, really encouraging to us, and it shows that we are improving beyond the sales line.

Let's stop there for a moment. People hear percentages all the time. But Steve, when you look at it, what changed for you?

This really gives us something concrete to work from. As we build a business, we need to understand what parts improve with volume and which expenses require more attention. We're really always fine-tuning towards that kind of improvement. A strong sales month is really useful, and it helps us understand how to repeat it and how much of it contributes after the cost of getting the sale. It really helps us make better decisions to just become better, quicker, and generally healthier.

I think that one thing a lot of people have been talking about is the concept of net loss. We know that net loss has improved from Q1, but it was still slightly larger, compared to the second quarter of last year. Where do you see net loss happening, and what's your commentary on that as we proceed forward?

Correct. So net losses, we have really two net losses to think about, or operational expenses, or sorry, expenses to think about. We have as a public company, and then we have Worksport as an operation within that public company. So we did report a quarterly net loss of approximately $3.9 million. We have work to do, lots of work to do, and I want shareholders to understand the progress without losing sight of really how far we've come and how much we've been able to improve sales, reduce that burn, and fundamentally grow the business. So we're really doing quite well in such a short period of time.

I think that's what July starts to tell us, right? We reported a strong news update, which July being the seventh consecutive month of revenue growth. What's your commentary on that, right? July update, we had a record attention for orders. There were two figures that people are talking about, orders and sales. Can you explain the difference between what we saw in July for the $2.2 million in orders, $2.5 million in orders, but $2.2 million in sales, and how does that work towards the net loss that we're going to be working through?

Yeah, good question. July orders were approximately $2.52 million, which is very healthy, and the net sales were $2.2 million. We had $300,000 in backlog. When we first started building tonneau covers at our factory, we were really estimating, educated guesses. We were putting a new product on the shelves, kind of if you build it, they will come. Well, now that metaphor plays true where we are building it, and they are coming, and in fact, we're having more demand than we can fulfill immediately, which is great. To be in a position where we're building to orders is much more risk-averse than building to forecasted orders. What we notice is, for example, Ram runs a sale on Ram trucks. More Ram trucks sell, therefore the demand for tonneau covers helps increase. But we don't have insight on those sales.

It's better to build with a backlog and build towards pending orders and a huge demand that exceeds our capacity, than to make the inventory. That finished good becomes a liability. It's something that sits on the shelf, and we may not sell it, and we haven't had that problem, but it is definitely a risk. An order has to meet the revenue recognition requirement before it becomes a reported sale. That distinction matters, when we assess that month in general. We're able to build product, we're able to invoice a product, and we're able to see good profit from those products, all on a backlog basis, which is a really healthy position for us.

It sounds like we're growing so fast that there's orders coming in, and then beyond that, there's orders that haven't been fulfilled yet, but could be revenue attribution coming up. Essentially, what you're saying is the follow-through matters as well for the orders that are coming in.

Absolutely, 100%. In business, you want to fulfill it properly, collect the cash, and leave the customer with a reason to buy from you again. Obviously, on the B2B side, that's more prevalent. This applies to an individual truck owner as well as to, of course, distributors. That first sale opens up the relationship. The experience after the sale determines whether it's growth. What we do is we focus so keenly on putting the best product in a box, getting it out the door as fast as possible, and then looking for that five-star review from the consumer, from the reseller, and building Worksport's culture, and DNA is so important to being able to see that demand. We're such a great company. We've built such a fantastic machine that we're seeing a demand that's increasing faster than we could facilitate it, which is a fantastic position.

Yeah, that's fantastic. I guess another clarification, in July, we said that the annualized run rate is approaching $30 million. I think the next segment, Steve, I want to talk about what $30 million and what $35 million really means for the company in terms of cash flow positivity. There's been this conversation that at this current market cap, we are not believing that the intrinsic value of the company is captured. We think that as the company heads towards $35 million, as it heads towards $40 million, you have a company that's making $40 million a year, might be cash flow positive at that $40 million, and market cap's at $10 million. There seems to be this inherent gap between that point and now, but reality is we're closing in on that $40 million target quickly.