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HomeAll NewsMost read newsBusiness Leaders Biography
Birthday : 11/01/1960
Place of birth : Robertsdale, Alabama - United States
Linked companies : Apple Inc. - NIKE, Inc.
Biography : Presently, Timothy Donald Cook occupies the position of Chief Executive Officer & Director at Apple,
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WORKSPORT LTD Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

05/23/2022 | 03:03pm EDT

This section and other parts of this Quarterly Report on Form 10-Q ("Form 10-Q") contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms. Forward-looking statements are not guarantees of future performance and actual results may differ significantly from the results discussed in the forward-looking statements. All forward-looking statements in this Form 10-Q are made based on current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, various factors, uncertainties, and risks should be specifically considered that could affect future results or operations. These factors, uncertainties and risks may cause actual results to differ materially from any forward-looking statement set forth in this Form 10-Q. These risks and uncertainties described and other information contained in the reports filed with or furnished to the SEC should be carefully considered before making any investment decision with respect to the Company's securities. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Unless otherwise stated, all information presented herein is based on the Company's fiscal calendar, and references to particular years, quarters, months or periods refer to the Company's fiscal years ended in March and the associated quarters, months and periods of those fiscal years. Each of the terms the "Company" and "Worksport" as used herein refers collectively to Worksport Ltd. and its wholly owned subsidiaries, unless otherwise stated.

The following discussion should be read in conjunction with the 2021 Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") and the condensed consolidated financial statements and accompanying notes included in Part I, Item 1 of this Form 10-Q.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2022, compared to Three Months Ended March 31, 2021

Revenue

For the three months ended March 31, 2022, revenue generated from sales was $47,784, compared to $7,650 for the three months ended March 31, 2022. Total revenues increased by approximately 525% compared to the same period in the prior year.

Revenue increased for the three months ended March 31, 2022, compared to the same period the prior year due to the Company nearing completion of its focus on building up its inventory in anticipation of launching its e-commerce platform, while it repositions to domestic manufacturing. The Company is anticipating the launch of its e-commerce platform in 2022 and beginning to focus on increasing sales.

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Cost of Sales

For the three months ended March 31, 2022, cost of sales decreased by 37% from $60,221 in the prior period to $37,977. Cost of sales, as a percentage of sales, was approximately 79% for three months ended March 31, 2022 compared to 787% for the same period in 2021, respectively. The decrease in cost of sales as a percentage of sales was primarily due to increased efficiency associated with acquiring and manufacturing inventory for the three months ended March 31, 2022, compare to the same prior period

Gross Margin

Gross margin percentage for the three months ended March 31, 2022, was 21% compared to negative 687% for the same period in 2021. The increase in gross margin reflects the Company's efforts to control the cost of manufacturing and acquiring inventory.

Operating Expenses

Operating expenses increased for the three months ended March 31, 2022, by $1,742,932 from $949,255 in the prior periods to $2,682,187.

  ? General and administrative expense increased by $466,574 from $134,284 in the
    prior period to $600,858. The increase expense is related to research and
    development and salaries as the Company seeks to expand its operations and
    further develop its products.
  ? Sales and marketing expenses increased by $557,837 from $162,651 in the prior
    period to $720,488. The increase in sales and marketing is a result of the
    Company's marketing campaign to create brand and product awareness.
  ? The Company realized a gain on foreign exchange of $1,338 during the three
    months ended March 31, 2022, an increase of $6,544 compared to a loss of
    $5,206 during the prior period. The gain on foreign exchange can be attributed
    to operating expenses denominated in the Canadian Dollar.
  ? Professional fees which include accounting, legal and consulting fees,
    increased from $647,114 for the three months ended March 31, 2021 to
    $1,487,579 for the three months ended March 31, 2022. The increase was due to
    the employment of various third-party consultants help expand the Company's
    business operations.



Other Income and Expenses

Other income and expenses for the three months ended March 31, 2022, was $19,829 compared to $221,693 the prior period, a decrease of $201,864. The change can be attributed to the Company's decrease in interest expense.

Net Loss

Net loss for the three months ended March 31, 2022, was $2,817,609 compared to $1,223,519 for the three months ended March 31, 2021, a change of $1,594,090 or 130%. The increase in the net loss can be attributed to the increase of various operating expenses as the Company focuses on expanding its operations, research and development, manufacturing and supply chain.

Worksport currently works with a total of ten dealers and distributors, however, given current market conditions Worksport plans to focus on online sales during 2022. Management believes that increasing sales through online retailers will continue to outpace the traditional distribution business model during 2022. Management further believes that online retailer's customers tend to provide larger sales volumes, greater profit margins and greater protection against price erosion.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2022, the Company had $25,808,938 in cash and cash equivalents. The Company has generated only limited revenues and has relied primarily upon capital generated from public and private offerings of its securities.

Since the Company's acquisition of Worksport in fiscal 2014, it has never generated a profit.

As of March 31, 2022, the Company had an accumulated deficit of $23,667,414.

Cash Flow Activities

Accounts receivable decreased at March 31, 2022 by $6,733 and March 31, 2021 by $106,349. The decrease in accounts receivable was due to the Company's collection of payments from customers. Other receivable decreased at March 31, 2022 and 2021 by $106,413 and $135,307 respectively, due to funds received from a sales tax refund.

Inventory increased at March 31, 2022 by $290,041 and at March 31, 2021 by $252,529 as a result of the Company stockpiling inventory in anticipation of the launch of its e-commerce platform. Prepaid expenses increased by $430,917 at March 31, 2022 and at March 31, 2021 by $64,594, due to deposits made by to Company to purchase manufacturing equipment.

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Accounts payable and accrued liabilities increased at March 31, 2022 by $105,626 and decreased at March 31, 2021 by $4,862.

Cash increased from $9,311,878 at March 31, 2021 to $25,808,938 at March 31, 2022, an increase of $16,497,060 or 177%. The increase in in cash was primarily due to warrants exercises, public offerings and private placement offerings.

As of March 31, 2022, the Company had current assets of $30,846,020 and current liabilities of $1,794,887.

Operating Activities

Net cash used by operating activities for the three months ended March 31, 2022, was $2,016,480, compared to $506,867 in the prior period.

Investing Activities

Net cash used in investing activities for the three months ended March 31, 2022, was $614,046 compared to $124,740 in the prior period. The increase in investing activities was primarily due to the purchase of property and equipment.

Financing Activities

Net cash used in financing activities for the three months ended March 31, 2022, was $127,870 compared to net cash generated of $8,835,673 in the prior period.

Based on the Company's future operating plans, existing cash of $25,808,938; management believes that the Company has sufficient funds to meet its contractual obligations and working capital requirements for the next 12 months and the foreseeable future.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies

Our discussion and analysis of results of operations and financial condition are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The accounting policies that we follow are set forth in Note 2 to our financial statements as included in the Form 10-K filed on March 31, 2022. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.

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ChangeLast1st jan.
WORKSPORT LTD. 2.43% 2.11 Delayed Quote.-14.88%