Worksport, Ltd.

Good afternoon, everyone, and thank you for joining WorkSport's Quarter 2 2025 Earnings Call. I'm Stephen Rossi, Chief Executive Officer of WorkSport, and with me today is our Chief Financial Officer, Michael Johnston. This quarter represents another significant step forward in our growth story. We achieved record quarterly revenues, meaningfully expanded our gross margins, and continue to build the operational commercial foundation that will carry us through the rest of 2025 and beyond. We will be reviewing the financial results for the quarter ended June 30th, 2025, which were filed earlier today in our form 10Q and can be accessed in our investor relations website at investors.worksport.com forward slash hashtag reports. At the end of today's call, both are prepared remarks and the accompanying presentation will be available for download. After these remarks, we will open the lineup for questions from the attending analysts. So with that, let's begin. Safe harbour statements. During this call, we will make forward-looking statements, including statements regarding our financial outlook for the full year 2025 and 2026, our expectations regarding financial and business trends, impacts from the macroeconomic environment, our market positions, opportunities, go-to-market initiatives, growth strategies, and business aspirations, and product initiatives, and the expected benefits of such initiatives. These statements are only predictions that are based on our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in our circumstances that may be difficult to predict and many of which are outside our control. Actual results or events may differ materially. Therefore, you should not rely on any of these forward-looking statements. These forward-looking statements are subject to risk and other factors that could affect our performance and financial results. which we will discuss in details in our filings with SEC, including our annual report on Form 10-K and quarterly report on Form 10-Q and other SEC filings. The forward-looking statements made in this earnings call are made only as of today's date. Worksport assumes no obligation to update any forward-looking statements we may make on today's webinar. So with that, on today's call, we're going to cover one, Q2 2025 performance highlights, financial and operational. Two, growth and market expansion insights and updates, including dealer network, e-commerce, B2B, and B2B initiatives. Three, innovation pipeline, progress on our HD3, the SOLUS, the Core, and Atherlux. Four, we're going to cover current operations, production scaling, cost management, and operational readiness. And on number five, we're going to update our 2025 guidance, revenues, margins, cash flow targets, and capital priorities. With that, let's move into the numbers. Mike will walk us through the Q2 2025 financial highlights.

Thanks, Steve.

Q2 2025 is our highest revenue quarter in company history. Net sales reached 4.1 million, representing 114% year-over-year growth compared to 1.92 million in Q2 of 2024, and an 83% sequential increase from Q1 of 2025. This growth was driven by the continued ramp-up of our flagship AL4 premium tonneau cover, expanding dealer adoption order frequency, and sustained strength in e-commerce sales across our direct-to-consumer channels. Gross profit for the quarter rose 173% to $1.08 million compared to $396,000 in Q1 of 2025. Gross margin improved under 800 basis points to 26.4%, up from 17.7% in Q1 and 15.4% in Q2 of last year, marking our third consecutive quarter of margin expansion This sustained improvement reflects continued operational efficiencies and a favorable mix of new B2B and B2C sales. Operating expenses were $4.7 million, up modestly from Q2 of 2024 as $4.21 million, but essentially flat compared to Q1's $4.65 million, despite significantly higher revenues. Within the operating expenses, sales and marketing increased to $1.31 million, supporting dealer growth and digital marketing campaigns. General and admin declined to $2.45 million from $2.99 million in Q1 of 2025, showing early results from cost discipline. We know this occurred while production went up nearly 100%. Our belief is that the G&A of the company will not increase proportionally with exponential revenue growth. R&D was down $300,000, down significantly year over year due to prior year development peaks. Our operating loss improved to 3.62 million for Q1 versus 4.26 million in Q1 and 3.91 million in Q2 of last year. Net loss for Q2 narrowed to 3.73 million from 4.46 million in Q1 of 2025. We remain committed to achieving our near-term operational cash flow positivity. While the tunnel cover division is currently our sole revenue generating unit, we believe it can sustain the broader corporate structure, including R&D for Core and Solis, the EtherLux product line, and general corporate expenses. This outlook is further supported by our expectation that Core and Solis will transition from R&D expenses to revenue generating products later this year. Since we believe that general corporate expenses will not increase proportional to business growth and profitability, a true path to cash flow positivity in the near term is possible. Cash and cash equivalents ended the quarter at $1.39 million compared to $5.08 million on March 31, 2025. However, at the end of Q2, $4.6 million was the available borrowing capacity on our credit facility. Operating cash usage in Q2 was approximately $3.1 million. 19% improvement from Q1's $3.84 million cash outflow. Accounts receivable increased in line with higher dealer sales volumes, while inventory remained stable at $5.88 million, approximately 90% in raw materials and 10% in finished goods. In Q1, inventory stood at $5.7 million, with a 60-40 split between raw materials and finished goods. Reduced finished goods share reflects demand consistently outpacing production. Later in this report, we will outline the steps being taken to expand production capacity to meet this growth. We're happy to share these steps have been successful thus far. Our inventory profile positions us to fulfill ongoing dealer and e-commerce demand without requiring significant near-term investment. Our long-term debt excluding amounts repayable in the next 12 months declined to $2.09 million, compared to $4.78 million as of December 31, 2024, and $2.7 million as of March 31, 2025. Of special note, on August 1, 2025, the company submitted a $3 million purchase order and placed a deposit with an established manufacturing equipment supplier for additional machinery with delivery currently as early as Q1 of 2026. at the company's discretion. This will occur with extremely favorable financing terms with the manufacturer. It's not expected to place a cash flow concern to the business. This additional equipment is expected to meaningfully increase production capacity at the company's West Seneca, New York manufacturing facility, enabling the company to meet anticipated customer demand more efficiently, improve operational throughput, and support future revenue growth. However, management emphasizes that expects that workforce, current equipment, and supply chain can allow the company to generate positive cash flows from operations. Now back to Stephen for key insights on business operations.