Worksport Ltd. Q4 FY2025 earnings call

• 2025 was a year of top-line growth and margin improvement, with net sales nearly doubling and gross margins improving. The strategy was to expand sales channels, introduce new products, but led to net operating loss and use of external capital. - Successfully transformed product capitalization to market delivery, increased brand and sales channel presence. - Operational execution included manufacturing scale-up, distribution expansion, and key product milestones like HD3 cover in production, SOLIS and CORE launched commercially in Dec 2025. - TerraVis Energy's AetherLux has unique ZeroFrost technology, undergoing evaluation by government entities. - Intellectual property portfolio includes 24 issued utility patents and 50 issued design patents, with 95 utility and design applications pending.

In fiscal 2025, net sales nearly doubled to $16,100,000. The hard tonneau covers segment generated $15,700,000 in net sales, while the soft cover segment contributed $500,000. Online retailer net sales increased 142% to $11,900,000 in 2025, representing 74% of total net sales. Distributor and jobber net sales increased to $4,200,000. U.S. net sales were $16,000,000, up 91% from fiscal 2024. Gross margins improved from 11% in 2024 to 28% in 2025, with Q4 2025 gross margin about 30%.

For 2026, expects revenue of $35,000,000 to $42,000,000 with gross margins of approximately 35%. Key milestones include initial SOLIS and CORE ramp-up, full rollout of HD3, AL4, AL3 lines, launch of game-changer hard folding tonneau cover, aggressive dealer network expansion to 1,500 locations, operational cash flow positivity, and B2B and OEM partnership expansions. Assumes continued growth in B2B sales channel which was 26% of sales mix in 2025. Excludes contributions from AetherLux and potential impacts from geopolitical environment.

• As a growth-stage entity with history of operating loss, there are uncertainties regarding ability to continue as a going concern. - Impact of raw material costs, such as 50% increase in domestic aluminum prices since start of 2024 due to tariffs, which can affect margins and pricing. - Supply chain risks for portable energy products using foreign lithium-ion supply chains and potential tariff impacts. - Economic constraints and consumer spending patterns can impact sales of premium products.

Q: How should we think about the difference between the high end and the low end of the 2026 revenue guide and what needs to go right to end up closer to that high end?

A: Top-down depends on market demand, economy strength, consumer spending. Bottom-up depends on cost side and supply chain stability. Hoping for stable costs and strong consumer/economy.

Q: How do you envision the monetization of the heat pump business?

A: Considered options like divestiture, licensing, or manufacturing/marketing/selling, exploring all possibilities.

Q: On sales and marketing expense, should we continue to see that move higher in 2026 or have we reached steady state?

A: Steady state, will tighten up marketing expenses.

Q: Any new relationships with truck lines (OEM)?

A: OEM discussions are active, mature now with ISO certification, expect to announce material relationships this year.

Q: Comment on current sales and sales forecast for SOLIS and CORE?

A: Sales initially okay, but marketing assets just released, expect more news in second half of 2026.

Q: Strength of intellectual property regarding AetherLux and competitors?

A: Fairly thorough in freedom-to-operate reviews, patent checks, etc., think AetherLux patent is very defensible with no close competitors found.