S-1: Worksport Ltd. Files for Resale of 7.7 Million Shares Underlying Warrants

Sentiment:

Registration Statement 2 April 2024 2:45 PM

Worksport Ltd. has filed a registration statement for the resale of up to 7,700,264 shares of common stock issuable upon the exercise of outstanding warrants.

Capital raiseThe company has registered shares for resale upon exercise of warrants.The company may receive up to $5.62 million if all warrants are exercised for cash.The company intends to use the net proceeds from any cash exercise of the Warrants for working capital and general corporate purposes.

Summary

Worksport Ltd. has filed a Form S-1 registration statement with the SEC to allow a selling stockholder to resell up to 7,700,264 shares of common stock.
These shares are issuable upon the exercise of warrants that were issued in a private placement concurrent with a registered direct offering on March 20, 2024.
Each warrant is exercisable for one share of common stock at a price of $0.74, beginning on September 20, 2024, and expires five years from the initial exercise date.
Worksport will not receive any proceeds from the resale of these shares by the selling stockholder, but will receive proceeds from any cash exercise of the warrants.
The company intends to use the net proceeds from any cash exercise of the Warrants for working capital and general corporate purposes.
As of April 1, 2024, the last reported sale price of Worksport's common stock was $0.63 per share.
Steven Rossi, the company's CEO, owns 100% of the Series A Preferred Stock, giving him 51% of the voting power.

Sentiment

Score: 5

Explanation: The document is neutral. It primarily describes the registration of shares for resale and outlines the terms of the warrants. While there's potential for capital influx if warrants are exercised, there are also risks and uncertainties associated with the company's financial condition and market environment.

Positives

Potential influx of $5.62 million in proceeds if all warrants are exercised for cash, which would be used for working capital and general corporate purposes.
Registration of these shares may provide liquidity for the selling stockholder.
The company has been granted tax, mortgage, wage, and energy cost relief in New York in addition to wage cost and R&D cost relief in Ontario.

Negatives

The company will not receive any proceeds from the resale of shares by the selling stockholder unless the warrants are exercised for cash.
The exercise of warrants will dilute existing shareholders' equity.
The company has incurred significant losses since its inception, including a net loss of $14,928,958 for the year ended December 31, 2023, and has an accumulated deficit of $48,313,177 as of December 31, 2023.
The company's mortgage loan with Northeast Bank matures on May 10, 2024, and failure to refinance may result in legal proceedings.

Risks

The company may not be able to protect its intellectual property rights throughout the world, which could negatively impact its business.
The U.S. Central Bank has provided forward-looking guidance of high interest rates for the near future.
Continued uncertain economic conditions, including inflation and the risk of a global recession could impair the company's ability to forecast and may harm its business.
The company relies on two suppliers for the production of its outsourced finished goods, which may hinder its ability to grow.
The company relies on a small number of customers for the majority of its sales.
The company's Chief Executive Officer and Chairman, Steven Rossi, has significant control over stockholder matters, and the minority stockholders will have little or no control over the company's affairs.
The company's mortgage loan with Northeast Bank matures on May 10, 2024. Failure to refinance the mortgage may result in legal proceedings being brought by the lender, up to and including foreclosure.
Geopolitical tensions and conflicts in the Middle East, specifically the Israel-Hamas war, may lead to global economic instability and adversely affect supply chains, which may adversely impact the company's operations, financial conditions and business prospects.

Future Outlook

The company intends to use the net proceeds from any cash exercise of the Warrants for working capital and general corporate purposes and believes net operating losses will decrease or become net income in the near future as they ramp up sales.

Industry Context

The document references the automotive aftermarket accessories and new energy industries, specifically focusing on tonneau covers and portable power stations. The tonneau cover market is expected to grow, with electric pickup trucks gaining market share. The portable power station market is also growing, with the North American market being the largest regional market.

Comparison to Industry Standards

The tonneau cover market is relatively consolidated with Real Truck (formerly Truck Hero) having the largest market share.
Worksport competes directly with Real Truck and other competitors such as Truck Accessories Group (Primarily Leer), Agricover (primarily Access), Truck Covers USA, and Paragon.
The Portable Power Station market is global and highly fragmented and includes many competitors from across the world including but not limited to Alpha ESS Co., Ltd., Anker Technology, Bluetti, Chilwee Group Co., Ltd, Duracell, GES Group Limited Company, Jackery Inc., Lion Energy, Milwaukee Tool, and Mitsubishi Corporation.

Stakeholder Impact

Existing shareholders may experience dilution if the warrants are exercised.
The registration of shares for resale may provide liquidity for the selling stockholder.
The company's ability to execute its business plan depends on its financial condition and market environment.

Next Steps

The selling stockholder may offer the shares for resale from time to time.
The company will use commercially reasonable efforts to cause the registration statement to become effective within 60 days following the closing date of the securities purchase agreements and to keep such registration statement effective at all times until no Selling Stockholder owns any Warrants or shares of Common Stock issuable upon exercise thereof.
The company will seek to refinance its mortgage loan with Northeast Bank which matures on May 10, 2024.

Key Dates

Date	Description
April 2, 2003	Company incorporated in the State of Nevada.
December 2014	FNHI acquired 100% of Worksport Ltd. (Ontario).
May 2020	FNHI changed its name to Worksport Ltd.
May 21, 2021	Board authorized submission of Certificate of Amendment for 1-for-20 reverse split.
August 3, 2021	FINRA announced the 1-for-20 reverse stock split.
August 4, 2021	FINRA declared the 1-for-20 reverse stock split effective.
August 6, 2021	Company consummated a firm commitment underwritten public offering.
May 24, 2021	TerraVis Energy Inc. (TerraVis) was incorporated in the State of Colorado.
August 20, 2021	The Company was issued 100 shares of Common Stock at par value of $0.0001 per share.
January 20, 2022	TerraVis issued an additional 9,999,900 shares of Common Stock to Worksport Ltd.. at a par value of $0.0001.
March 23, 2022	Worksport USA Operations Corporation was incorporated in the State of Colorado.
March 31, 2022	Worksport New York Operations Corporation was incorporated in the State of New York.
April 1, 2022	The Company was issued 10,000 shares of common stock at par value of $0.0001 per share, representing 100% of the outstanding equity of Worksport New York Operations Corporation.
May 2022	Company purchased a 152,847 square foot production facility in West Seneca, New York.
December 28, 2021	Worksport Acquisition Corporation was incorporated in the State of Delaware.
January 1, 2022	The Company was issued 1,000 shares of Common Stock at par value of $0.0001 per share, representing 100% of the outstanding equity of Worksport Acquisition Corporation.
March 11, 2022	Worksport USA Holding Corporation was incorporated in the State of Colorado.
November 4, 2022	Steven Rossi was issued 1,000 shares of Series A Preferred Stock of TerraVis at par value of $0.0001, representing 100% of the authorized Series A Preferred Stock, in consideration for services rendered.
September 30, 2022	Company filed a shelf registration statement on Form S-3.
October 13, 2022	Form S-3 Registration Statement was declared effective by the SEC.
May 25, 2023	Worksport USA Holding Corporation was dissolved due to lack of operations and activity.
August 8, 2023	Worksport Acquisition Corporation was dissolved due to lack of operations and activity.
August 2023	Company announced the successful dispatch of its first shipment of hard folding tonneau covers.
September 2023	Company announced that it had found a top-tier solar panel provider for its highly anticipated SOLIS Solar Tonneau Cover.
September 2023	Company announced significant strides in the development of its groundbreaking COR battery system.
September 19, 2023	Company announced that it had secured a long-term supply agreement with an established, leading automotive aftermarket reseller in the United States.
November 2, 2023	Company raised roughly $4.7 million from a registered direct offering and concurrent private placement.
December 22, 2023	The 7,000,000 shares of Common Stock underlying the warrants were registered for resale by the institutional investor on a registration statement on Form S-1 (File No. 333-276241) filed with the SEC.
December 29, 2023	Registration statement on Form S-1 (File No. 333-276241) was declared effective by the SEC.
January 3, 2024	Company announced its strategic arrangement with NeuronicWorks Inc. to manufacture and assemble its COR battery system.
February 7, 2024	Company announced a collaboration with Infineon Technologies AG to use Infineons GaN power semiconductors in the converters for its portable power stations.
February 23, 2024	Company announced a new arrangement with Dix Performance North for Dix to include its tonneau covers in their catalog.
March 18, 2024	Company entered into a securities purchase agreement with an institutional investor.
March 19, 2024	Prospectus supplement and accompanying base prospectus dated March 18, 2024, filed with the SEC.
March 20, 2024	Registered direct offering closed; Company issued warrants to purchase 7,700,264 shares of Common Stock.
April 1, 2024	Last reported sale price of common stock was $0.63 per share.
April 2, 2024	Registration statement filed.
May 10, 2024	Mortgage loan with Northeast Bank matures.
September 20, 2024	Warrants become exercisable.
September 20, 2029	Warrants expire.

Keywords

Warrants, Common Stock, Resale, Worksport, Registration Statement, Private Placement, Tonneau Covers, SOLIS, COR, WKSP

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