Worksport, Ltd.

financial performance, operating progress, liquidity position, and how these results align with our strategy to build a high-margin, scalable platform in truck accessories and clean tech-enabled power solutions. We will be reviewing the financial results for the quarter ended September 30, 2025, which we filed earlier today in our Form 10-Q and can be accessed on our investor relations website at investors.worksport.com forward slash hashtag reports. Once again, investors.worksport.com forward slash hashtag reports. At the end of today's call, both our prepared remarks and the accompanying presentation deck will be available for download as well. After these remarks, we will open the line for questions from attending analysts. So on that, let's begin. First, safe harbor statements. During this call, we will make forward-looking statements, including statements regarding our financial outlook for the full year 25 and 26, our expectations regarding financial and business trends, impacts from the macroeconomic environment, our market position, opportunities, go-to-market initiatives, growth strategy, and business aspirations, our product initiatives, and the expected benefits of such initiatives. These statements are only predictions that are based on our current belief, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that may be difficult to predict, and many of which are outside of 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 discuss in detail in our filings with the SEC, included in our annual report on our Form 10-K and quarterly reports 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 webinars. So here's today's agendas. On today's call, we will cover Q3 2025 key performance outcomes, production scaling and operational execution, tariff environment and cost management, Solus and Core commercial launch roadmap, R&D next steps including Aetherlux, cash and capital strategy, 2025 to 2026 outlook and path to cash flow positivity, and key takeaways as well as some Q&A. With that, let's move into our numbers. Michael will walk us through the Q3 2025 financial highlights.

Thanks, Steve. Q3 was another solid step forward in WorkSport's growth journey, the third consecutive quarter of growth. Net sales reached $5 million, representing a 61% growth year-over-year and 22% sequential growth from Q2's net sales of $4.1 million. Gross margin continued to expand, 31.3% this quarter compared to 7.9% in Q3 of last year and 26.4% in Q2 of 2025, demonstrating the impact of operational efficiencies and a stronger product mix. Our net loss of $4.9 million reflects an ongoing expansion of product offerings and commitment to investing in scaling our manufacturing ahead of commercialization milestones. While our revenues and margins are getting stronger, we continue to invest in growth in brand and corporate awareness. We believe it will position us to reflect operational cash flow positivity and profitability in 2026. We ended the quarter with $3.8 million in cash and an additional $3.3 million available on our line of credit. Total working capital was $6.3 million. Importantly, total indebtedness reduced to $2.9 million, down from $5.3 million by year-end 2024. a meaningful strengthening of our financial stability. Overall, Q3 demonstrates that our revenue growth and margin expansion are structural with some future-facing expenditures. In Q4, our expenditure profile is projected to begin transitioning from investment mode toward long-term profitability. Worksports growth is being led by a rapid scale-up of our U.S.-made total cover production. Q3 net sales reached $5 million, up from $3.1 million a year ago. Year-to-date sales are $11.4 million, more than double the $5.6 million for the nine months ended September 30, 2024. Our strength this quarter came from strong continued growth in the AL4 hardcover, launched in late Q1 of 2025, expanded relationships with several national distributors and major national retail auto chain, continued growth in our dealer, jobber, and e-commerce channels. Our performance this fiscal year represents a recurring and diversified revenue base, not a single-channel surge. With new product launches and revenue streams entering the mix in the months ahead, we believe WorkSport is on a path toward profitability in 2026. More on the upcoming product lines later. Gross margin is one of the clearest proof points of our strategy. Q3 gross profit was $1.6 million, a 31.3% margin, up sharply from 7.9%. Q3 of 2024 and 26.4% in Q2 this year. Year-to-date gross margins 26.7% compared to 10.5% in 2024. Key drivers of this include higher production throughput and fixed cost absorption in our U.S. production facility, a higher volume or higher value product mix with maturing and emerging sales channels, and greater operational efficiency as processes mature. We are now operating solidly in the 30% plus margin range, setting the stage for future operating leverage. We expect margins to approach 35% by year-end, with continued improvement targeted for 2026. We remain committed to achieving near-term operational cash flow positivity. In Q3, operating expenses totaled $6.4 million, compared with $4.2 million in Q3 of 2024 and $4.7 million in Q2 of 2025. The increase mainly reflects growth investments and marketing costs tied to the AL4 product launch and our Regulation A offering. We completed our offering in October of 2025. Operationally, we supported 60% revenue growth from Q3 of of 2025 while increasing G&A expenses only 20%. This shows improved scalability and cost discipline, and this path includes the following factors. Breakdown of the operating expenses for Q3 of 2025. R&D spend was $300,000. Lower year-over-year as we move past core tonneau cover development. G&A is $3 million, which supported higher volumes, compliance, and facilities. Sales and marketing was $2.4 million, the main driver of our growth spending, and this was focused on channel activation, brand marketing, and investor awareness. Professional fees were $700,000, and included advisory, compliance, and stock-based compensation items. Our operating loss was $4.8 million, compared with $3.9 million in Q3 2024 and $3.6 million in Q2 2025. This investment in Q3 will partly carry into Q4 before reaching the tail end of our investment phase as we position the company for stronger leverage going forward. For the first nine months of 2025, our cash position reflects disciplined investment and growth financing activities. Our net cash used in operations was $11.2 million compared to $8 million in the same period last year. Our Q3 operating cash burn was approximately $4.3 million slightly higher than Q2 as we completed major production and marketing initiatives. We also incurred one-time expenses related to the Reg A marketing efforts. Our investing cash outflow is $485,000 and was represented mainly spending on machinery, tooling, and tangible assets. Our financing inflows were $7.1 million. This is from warrant exercises, issuance of Series C preferred stock and warrants in connection with the Reg A units offering, net repayments on revolving credit facility, and the issuance of common stock. With respect to long-term debt, we continue to improve our leverage profile while managing our obligations. As of September 30, 2025, our total indebtedness, current and long-term, equaled $2.9 million, which is down from $4.8 million on December 31, 2024. Our revolving credit facility had a balance of $1.6 million, and our other term debt had a balance of $1.3 million. Availability on a revolving credit facility. We've got $3.3 million unused, which provides additional liquidity and flexibility to support our strategic priorities. Our path to profitability is becoming clearer each quarter, supported by stronger unit economics and upcoming revenue catalysts. Our gross margin is now consistently above 30%, up from under 10% last year, showing true structural improvement in profitability generated from production activities. Our operating leverage, while year-to-date revenue is at more than 60%, G&A expenses have risen only about 20%, signaling scalability across our product offerings. On a revenue scale, applying our current margins to an annualized sales run rate approaching $20 million positions us meaningfully closer to break-even. Importantly, much of R&D investment over the last few years is now at the finish line. Tonneau Cover Line launching in Q4, and the Solis and Core systems set for commercial orders in late 2025. These are not cost centers anymore, they are our next revenue engines. As these products enter production and sales channels, we expect sustained gross margins in the 35% plus range, continued expense efficiency, and a clear trajectory towards cash flow positivity in 2026. We are building this profitability bridge, step-by-step, product-by-product. We anticipate WorkSport's need for cash provided by financing activities to decrease in 2026, given our projected path to cash flow positivity. Now back to Stephen for key insights into business operations.

Thanks, Mike. In Q3, we built a scalable ISO 9001 certified manufacturing base. Q3's 31.3% gross margin is the financial proof of that operational capability. It is expected to only improve from here. We produced 2,499 tunnel covers by hand in a four-week stretch from early to late July 2025, more than double our March 25 total monthly output. In Q4, we expect to increase production by another 50% compared to Q3. An increase in production will benefit our margins and selling the demand we have meticulously invested in creating a market over the last year. We achieved without proportional headcount increase, validating process efficiency. And Q3 margins confirm better utilization of our U.S. production facility, improved fixed cost absorption, continued focus on quality and throughput sufficient to support national distribution and dealers. Let's talk a bit about our tonneau cover business, our profit engine. After years of strategic investment, our hard folding tonneau cover division is now WorkSport's near-term economic engine. They're made in the USA with rising brand recognition and multi-channel distribution. We have proven ability to increase margins with scale, 35% plus gross margins at current volumes with margins projected to grow even further. And as production scales, our tonneau cover division can absorb a significant share of fixed cost overhead. reduce reliance on external capital, and generate cash to fund clean tech initiatives. The tunnel cover product offering provides the financial backbone on which Core and Solus and Aetherlux are being built, giving Worksport a strong and self-funded foundation for growth. Now let's talk a little bit about tariffs and how we're managing them. We continue to operate in a dynamic tariff trade environment. We all know this. While tariffs remain a headwind, They are manageable and, in the tunnel cover market, increasingly serve as a competitive tailwind for Worksport. First, U.S. manufacturing advantage. The majority of tunnel cover production value is U.S.-based, reducing exposure compared to our import-heavy competitors. Cost containment. Historical 5% to 10% material cost pressure has been offset through efficiency gains and scale-driven overhead absorption, and pricing discipline. This is through domestic pricing inflation. Our competitive position. Tariffs often impact imported competing products more severely, while our domestic footprint, brand marketing, and product quality is a clear differentiator, especially if trade frictions continue. Core and Solus considerations. While some components are globally sourced for Core and Solus, tariff exposure is modeled into our pricing and margin forecasts with flexibility to adjust and mix pricing as needed further. Further to this, the November 10th, 2025 tariff suspension provides additional near-term relief and validates our proactive planning. The thing everyone's been waiting for. Let's talk a little bit about Solus and Core. From investment to revenue pipeline. As of October 21, 2025, the Worksport HD3 tonneau cover is now in production, with initial sales expected to begin to B2B customers in November 2025, followed by sales to online customers later this year. Sorry, I wanted to talk. We're going to talk about solos and core. Let's talk about HD3 first, which we just did for a second. The HD3 is a heavy-duty tunnel cover designed for commercial and fleet applications. Building on the AL3, it features upgraded materials, seals, and latching for maximum durability. While available through all channels, its primary focus is driving growth in our wholesale and B2B channels, adding a new revenue stream, and completing our U.S. May tunnel cover lineup. So we're very, very excited about the HD3 and what it's going to do for our B2B business channels. Innovation pipeline, our SOLUS and CORE. After years of engineering, tooling, certifications, and partnership investments, SOLUS and CORE are now set to be released for orders later this month. What has been pure operating and capital expense is expected to become a visible high margin revenue stream beginning in late Q4 2025 and scaling through 2026 and beyond. Let's highlight some of our most recent announcements. First the official launch date for the SOLUS solar tunnel covered core portable power energy system is now November 28, 2025. Customers will be able to place initial orders with expected delivery in late December or early January 2026. The core starter kit is priced at $949 which includes the core inverter hub as well as one core battery. The SOLUS system This starting price is at $1,999 and will go up as high as $2,499, depending on the model size or bed size of your truck. And our initial rollout plan for the core is 1,000 core units plus 900 additional battery packs with a limited SOLUS release representing a roughly $2.5 million in near-term revenue opportunity with scaling, significant scaling plan through 2026. In terms of strategic positioning, SOLUS is a margin accretive product leveraging our tunnel cover expertise to enter into the premium solar tunnel cover market. Core is a modular portable energy system designed as a recurring revenue platform, driving stable cash flow positive sales across work, overlanding, emergency, and industrial markets. Together, these two platforms transform WorkSport from a single product channel manufacturer in a somewhat niche market into a multi-market clean tech company with recurring scalable revenue potential. Let's talk a little bit about R&D and our next steps. In 2026, we aim to transition R&D from heavy foundational build to commercial optimization and platform leverage. What this means is we're going to switch from all the operational expenses relating to heavy R&D and developing new products to perfecting those new products and being able to increase margin and efficiencies. For Solus and Core, we're planning to finalize launch execution to finalize launch execution and early customer feedback loop, optimize bill of material and logistics for margin enhancement post-launch, explore rapid-scale cost savings, and expand integrations and form factors based on usage data, expanding the core platform for multiple product lines. For tonneau covers, we're going to grow the HD3 product and launch an HD4 equivalent cover labeled internally as the WorkSport B2. We expect this B2 cover to be extremely well received in all markets. More details will come later in 2026. Incremental product improvements to maintain quality, compatibility, and margin strength. Aetherlux. We're going to advance pilots and partnerships, including evaluations with leading institutions to validate performance and use cases. Finalize and select manufacturing partners and focus spend on projects with clear commercialization paths and potential for 2026 impacts and beyond. A little bit about operating leverage in the roadmap there. Bringing it together, our operational model priorities for 2025 and 2026 are as follows. First, we're going to obtain and sustain 35% gross margins. We're going to get this by maintaining manufacturing efficiency and pricing discipline. We're going to slow our operational expense OpEx growth as a percentage of net sales, especially in sales and marketing. And we're going to treat Q3's elevated spending as a peak investment, not the new baseline. We're going to improve working capital turns by monetizing existing inventory and further align production scale with growing demand. And we're going to layer new products into our existing cost-stabilized offerings, Tonno's, Solus, Core, and we're going to share the infrastructure that we built and we're spending on and amplify our leverage. Our priorities support our transition from capital-funded mindset to operations-funded growth. A little bit about risk management and mitigation. We are clear-eyed about key risks. Ongoing net loss and going concern language in our 10Q reflect reliance on external capital and execution risks. Tariff and supply chain volatility, particularly for globally sourced components. And launch risks that we see for core and solace, timing, adoption, and margin realizations. Equity and warrant overhang impacting shareholder perception. This is how we're going to mitigate them. We're going to tighten our spend to initiatives with measurable ROI. We're going to maintain and selectively use diversified capital sources. And we're going to stage clean tech production and inventory effectively. to complement demand signals, communicate transparently about milestones, and capital deployment. Given the continued growth and healthy margins in our tunnel cover business, we are very confident in our ability to manage tariff-related cost inflations while advancing towards near-term cash flow positivity and maintaining our 2026 profitability target. I'm going to pass it back to Mike with our updated fiscal year 2025 outlook and guidance.