As Worksport’s CEO, let me begin by wishing everyone a Happy and
Healthy 2023. There is much to accomplish in the year ahead.
Looking back at 2022, we made significant
overall progress but faced challenges that caused setbacks in
getting our recently acquired U.S. factory in upstate New York
ready for production. Finding the best suitable solar supply
partners took more time than initially expected due mainly to
Worksport's high standard of quality and rigorous testing. In
addition, we experienced delays in procuring the factory's required
machinery, which unfortunately caused the current holdup in our
production readiness. I am proud to announce that those challenges
have been successfully resolved, and we are moving toward our goal
of producing our Hard Folding Tonneau Covers and SOLIS (Solar)
Tonneau Covers in our very own U.S. factory.
Q1 2022 Highlights
Despite a declining market, lasting much of the
year and tightening financial conditions, Worksport started the
year with nearly US$30 million in capital and big plans and goals
that are now possible. The Worksport team began to fulfill its
promise to investors: moving hard folding tonneau cover
manufacturing to the U.S. and starting to produce the SOLIS solar
light truck bed cover (previously known as Terravis).
Q2 2022 Highlights
The second quarter began with us agreeing to
provide Hyundai America with working models of Worksport’s SOLIS
(solar) tonneau covers and custom support stands in addition to
attempting to produce the COR ESS system (portable battery with
advanced hot swap technology) for Hyundai’s potential forthcoming
electric pickup truck at no charge. It’s an exciting project that
moved forward greatly during the rest of the year. It takes time to
build the factory to produce electric pickups, regular truck beds
and solar covers. We believe that the two companies working
together and strengthening their mutual knowledge is a great way of
growing closer and creating the conditions for potential future
collaboration. We publicly announced this project in a press
release on April 21, 2022.
In another development, Terravis Energy, a
Worksport subsidiary that researches and develops hydrogen energy
solutions, unveiled its Non-Parasitic Electric Vehicle (NPEV)
System to fast charge EVs with hydrogen-based Green Energy. This
product received funding from the Canadian government for R&D,
allowing Terravis to continue an exciting path for a greener
future. Some investors have expressed concerns about the potential
for this product line to distract us from our primary mission.
Still, as Worksport’s CEO, I can say this R&D endeavor enhances
our focus, adding to our learning and helping to realize more
efficient SOLIS solar truck bed cover production. In addition to
outstanding teams like Hyundai, there are other incredible
companies we are teaming up with that we cannot disclose yet. All
these relationships are expected to lead to revenue growth.
In May, after many inspections, negotiations,
extensive due diligence, and research, Worksport achieved something
extraordinary: finalizing the purchase of its 222,000 sq. ft.
factory in West Seneca, a Buffalo, NY suburb, where we plan on
manufacturing our “Made in America” hard folding cover and its
exciting enhancement, the SOLIS solar cover. The purchase cost was
US$8.25 million, with a favorable $5.3 million loan agreement with
Northeast Bank. An incredible feature that gets the Worksport team
excited is the 17,229-square foot Automated Storage & Retrieval
System, or AS/RS, that stands 90 feet tall and significantly
reduces staffing needed to maintain inventories and pick
orders.
This purchase was a key step in beginning
American production, so the real work to build the factory and its
automated systems could begin. Even New York Governor Kathy Hochul
was excited about our move, and her office put out the following
statement:
“Governor Hochul’s dedication to attracting
small businesses, by supporting forward-thinking companies like
Worksport Ltd. will continue to strengthen the economy and create
high-quality jobs in Erie County and across the state,” said Empire
State Development Acting Commissioner and President &
CEO-designate Hope Knight. “As Worksport’s first U.S. production
facility, this project will solidify the company’s investment
within New York State, help foster innovation and green technology,
and provide the potential for even more jobs in the future.”
At Q2’s end, we launched our first storefronts
on Amazon, eBay, and Walmart Marketplace, opening
direct-to-consumer sales. These outlets came online even before the
NY factory was ready. We believe it takes time to improve the
process, allowing us to gain more experience with the online
storefronts and put the right people in place to manage the new
sales volume.
Q3 2022 Highlights
In Q3, Worksport was granted C$1.15 million from
MITACS (see press release), the Mathematics of Information
Technology and Complex Systems, a non-profit Canadian national
research organization, in partnership with the Canadian government,
our alternate hydrogen energy project development.
In addition, there were some great moments to
share when on July 29, we rang the symbolic Nasdaq closing bell in
New York City to commemorate our uplisting in August 2021.
SOLIS and COR were presented to one additional
international auto manufacturer in Q3, and as we move forward,
Worksport will provide updates on our relationships where
possible.
Q4 2022 Highlights
Q4 was devoted to taking delivery of, installing
and testing equipment in the West Seneca, NY, manufacturing plant.
In a series of video reports, I updated investors and gave them an
inside look at our progress there. Linkedin & Worksport
Youtube.
On December 16, I did an Interview on Bloomberg Radio’s highly
rated “The Tape” with hosts Paul Sweeney and Kriti
Gupta.
Here is a penetrating question that Sweeney asked:
Sweeney: “Who is your
end-market customer, is it the individual, the auto OEM, the parts
stores? Who is your customer?”
Rossi: “A
great question. Our solar truck accessory is perfect for the OEM.
At this point, we have a named partnership with Hyundai, and we
have various other discussions happening with other OEMs on the
North American side. The accessory can be installed on an electric
pickup truck – and charge the truck – or on a gas or diesel truck
and turn that truck into a microgrid at the job or campsite. With
our battery system, our market broadens from being a humble
supplier to the automotive markets, which is somewhat niche, to the
global consumer market. Anybody, whether they drive or not, could
use our power generator for a stormy day, or as I said, for the job
site or campsite. That fits perfectly with the direct-to-consumer
market, or with mass merchandisers like Home Depot, for
example.”
Looking Ahead to 2023
Our main goal is straightforward and clear:
complete our NY factory to start manufacturing as soon as possible
to meet current demand. Finishing our factory will open the doors
for meaningful revenue growth. For me personally, as Worksport’s
CEO, it has been frustrating talking to clients who want to order
significant quantities of our products -- and even signing letters
of intent -- while we are preparing the factory. Yet they can tell
we have invested in R&D of 'made in the U.S.' compared with our
'made in China' product offering. That’s a good sign, but we need
to get these products off the line and into the hands of our
partners and consumers.
We plan to continue investing in and developing
our Intellectual Property. At the end of January, our team has an
inspection planned for a key piece of manufacturing equipment, and
if everything is approved, it can be shipped to our plant with an
arrival expected in March. After its installation, training can
start. It will take a few weeks, but then we should be able to
begin our automated production processes finally. This will be a
great celebration for the team and investors because Worksport will
be capable of switching from building out our New York factory to
producing U.S.-made hard covers and SOLIS solar covers. This will
shift the focus to our next target, sales and revenue growth, and
then -- profitability and sustainable growth. And that is what
matters to investors, for the company and future product
innovations for our clients.
Building a business always comes with
obstacles, but I am happy to confirm that we are still on track to
deliver on our promise: to bring truck bed manufacturing to the
U.S. in our very own New York State factory. We have encountered
many challenges and delays but are proud to say that we have
overcome each and are on track to open our US factory this
year."
Our two main goals for 2023 are:
1. Finish building our West Seneca, NY factory as soon as
possible; and
2. Aim for profits and sustainable growth.
That’s Worksport’s year in review. We thank you
for your support and patience. We believe there is a great year
ahead. All the best to you and your family in the New Year.
Sincerely,
Steven RossiChief Executive Officer
For additional information, please
contact:
Steven ObadiahInvestor RelationsWorksport
Ltd.
T: 1-(888) 506-2013E: investors@worksport.comW:
www.worksport.com
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