Worksport Ltd Q2 FY2024 Earnings Call

Everyone, welcome to Worksport's first ever live earnings call as a Nasdaq listed corporation. I'm Stephen Rossi, the founder and CEO of Worksport, and I'm joined today by our CFO Michael Johnston. We'd like to thank everyone for joining us today, as well as all of our special guests listening in today, those working within the capital markets, and various research analysts. On today's call, we have exciting updates and commentary to complement our Q2 earnings report that was just posted at 04:00 p.m. today, August 13, just about 30 minutes ago. We will be reviewing the financial results for the quarterly period ending June 30, 2024. These results were issued at 04:00 p.m. today, and can be downloaded from the link provided in the chat. At the end of today's call, our prepared remarks and presentation deck will be available for download at invest.Worksport.com. During this call, we will make forward-looking statements, including statements regarding our financial outlook for the third quarter and full year 2024, our expectations regarding financial and business trends, impacts from the micro and macroeconomic environment, our market position opportunities, go-to-market initiatives, growth strategy and business aspirations, and product initiatives, as well as the expected benefit of such initiatives. These statements are only predictions based on our current beliefs, expectations, and assumptions. Actual results may differ materially. These forward-looking statements are subject to risks 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 Form 10-K and Quarterly Report Form 10-Q. Worksport assumes no obligation to update any forward-looking statements we may make on today's webinar. And with that, let's begin. Worksport is a company with strong roots. These roots are what will allow us to continue to propel into the future. Three years ago, we uplisted on Nasdaq, and since then we've been diligently laying the foundation for Worksport. Today, we're thrilled to share our most recent developments. As of January 2024, our $10 million state-of-the-art factory has begun early-stage production ramp-up for our AL3 hard folding Tonneau cover, proudly manufactured in America. In March 2024, we launched our online marketing campaigns targeting direct-to-consumer sales, and by May 2024, the company reported its best sales month yet. Today, we're excited to announce that this past quarter has been the best sales quarter in the company's history. Our American-made Tonneau cover business is leading these sales and is positioned within a substantial $3.5 billion truck bed market, which we are aggressively targeting. The early traction we've received has been remarkable, and we're eager to continue rapidly expanding this business segment. This is just the beginning. To protect our innovations and secure our future growth, Worksport has approximately 160 registered and pending patents and trademarks within its IP portfolio on a global scale. Worksport intends on releasing three new products in the second half of 2024. The highly anticipated first-to-market Worksport SOLIS Solar Tonneau cover represents a unique opportunity for Worksport to enter the Clean-tech market, starting with our rapidly expanding truck customer base. The patent and SOLIS covers are designed to offer utility across a wide range of diverse applications. Worksport's COR modular portable energy system, when paired with the solar Tonneau cover, creates a green power nano grid. The COR system can store over 1700 watt-hours of energy and is fully modular, allowing for the addition of extra batteries. With the portable energy market valued at an astonishing $3.9 billion globally and growing rapidly, Worksport's COR battery features a unique, never-ending power hot-swap capability. We believe this feature will enable the COR system to penetrate markets far beyond just the pickup truck segment. The release of the COR and SOLIS will be available in mid-September for select customers. We are currently hard at work producing 100 of each of these units to test and share with key customers and influencers as we prepare for a full market launch. We are also planning to conduct a roadshow in Q3, exhibiting this unique system installed in a Ford F150 pickup truck to key news outlets and stakeholders. We will also be launching an all-new hard folding Tonneau cover model that will address a larger and growing market segment with much higher anticipated demand. More information on this new product will be available as early as later this quarter. The product is expected to launch in Q4 of this year. We are very excited about the next six months and will share more details later in the presentation. For now, I will hand it over to Mike to discuss our Q2 results.

Thanks, Steve, and hello everyone. Let's start with some exciting milestones achieved in Q2. So Worksport achieved remarkable growth in revenue with net sales of $1.92 million for Q2 2024, up 275% from Q1 of 2024. Notably, Worksport sales in Q2 surpassed the entire year-end revenue of $1.5 million for fiscal 2023. The significant increase is directly related to the company's new factory in Buffalo and recent successful marketing efforts within the e-commerce space and through dealers. The company has experienced excellent sales traction from its quickly expanding sales channels and expects this rapid growth to continue. By the end of Q2, Worksport was on track to achieve a monthly recurring revenue of approximately $1 million. The company believes this number will continue to grow in 2024 with the ongoing ramp-up of the AL3 line and the introduction of the premium AL4 product line in Q4 of 2024. Gross profit margins year-to-date for Q2 2024 are at 15.4%. While margins are still low, they have improved by 111% compared with Q1 of 2024. Currently, historical production in 2024 has been less efficient than the baseline efficiency of the plant. This was in relation to production and product improvements in the early part of the year. We're excited to say that baseline efficiency is expected to be better reflected in the latter half of this year, enhancing future margins. In addition to this expected improvement, the company anticipates a notable rise in margins from significant cost savings achieved through ongoing scaling efforts and the upcoming launch of premium product lines. These improvements will be more clearly reflected in the second half of the year and into the 2025 fiscal year. Worksport notes that the product margin for the upcoming AL4 premium-priced Tonneau cover is expected to be higher both in percentage and dollar value. The company also forecasts the AL4 to become the more popular Tonneau cover among consumers. Worksport heavily invested in infrastructure and product development initiatives to build a strong foundation for sustained operational growth. Worksport now has the infrastructure in place and an innovative product line to move towards operational cash flow positivity. Worksport is well positioned to use its equipment, facilities, and inventory investments to meet current and anticipated sales growth for the remainder of 2024. No significant equipment investment is expected within the next twelve months. As revenues accelerate, we expect the net loss from operations to decrease, having a clear vision to move towards positive operational cash flow within 2025. Since the beginning of the year, the company has strategically invested $3.63 million in inventory, bringing the total balance to $6.39 million. As we continue to expand our monthly recurring revenue, we anticipate an accelerated turnover of this inventory. With the upcoming launch of the SOLIS, COR, and AL4 products, the company plans to make further inventory investments, particularly in SOLIS & COR, in the fourth quarter of 2024. To end, a special note on the financial impact of Worksport's upcoming clean-tech products: Worksport notes that the SOLIS & COR products are expected to successfully achieve a market price between $1,200 and $1,700 each, depending on the unit and package selected. The modularity of Worksport's COR system also presents opportunities for customers to become repeat buyers of additional 1500 watt-hour batteries, which are expected to command market prices between $700 and $950. This higher-priced segment presents a significant opportunity to accelerate revenue growth and expand into new customer markets. With the Alpha Launch expected to occur in September, Worksport will provide an update on the sales outlook for SOLIS & COR during the Q3 2024 earnings call. We'll give everyone a moment to read the infographic on your screen. And I'm going to turn it back to Steve for the business performance and operational highlights.

Excellent. Thanks.

We have actually a question before I continue on from Tate Sullivan, research analyst covering Worksport. Go ahead, Tate.

Oh, thanks, Steve. Happy to save it to the end if you want to, but can you cover your manufacturing capability in New York? What are you manufacturing currently versus what are you importing from other countries?

Sure, yes. So the manufacturing line is set up to produce 1000 Tonneau covers per day without additional expansion, to which we can expand the footprint of the building by approximately almost 40%. The AL3 Tonneau cover is produced in North America, with the majority of the components sourced from North America, meaning paint and resins sourced from within the lower 48 states. So it's the gold standard of being made by definition in America. The products that are presently being imported from overseas remain our soft folding Tonneau covers that are imported from our contract factory in China. However, we do have almost all the necessary equipment to produce soft folding Tonneau covers within North America at that facility which we intend to explore or at least finalize within 2025. Welcome. Okay, I'll carry on. This quarter was highly dynamic, marked by numerous milestones, technical achievements, and significant progress laying the groundwork for future initiatives. Most of all, the beginning of our strong growth in revenues, with a keen focus on growing our bottom line through continual improvement and economies of scale. After scale production started in January, we amassed inventory and initiated marketing efforts in March of 2024. In the last few months, Worksport has been aggressively establishing its brand name in the market. Our E-commerce strategy continues to grow. We have initiated dealer and distributor sales outreach, which is expected to fuel revenue growth for Q3 and beyond. In May, Worksport was honored to be recognized by the state of New York with a grant valued at approximately $2.8 million over its lifetime. The grant is based on our projected employee growth and will become redeemable starting in 2025. The governor's office has taken note of our operation in western New York and is actively supporting our business. Recently, we announced excellent test results for the SOLIS solar Tonneau cover and will soon provide an update on the COR's test result ahead of their joint Alpha release expected in September. The SOLIS cover is capable of generating up to 650 watts of power, allowing it to fully charge a 1700 watt-hour COR system in just a few hours. With good weather conditions, this could provide enough power for a campsite, job site, or various recreational activities. The use cases are endless. With over 2000 watts of maximum power output, the COR system can run a fridge, microwave, various power tools, and charge lots of personal electronic devices, to just name a few. The COR and SOLIS are anticipated to be transformative products that will shape the future of Worksport. We will initially market them to our existing base of pickup truck users, but with their compelling competitive advantage and diverse use cases, the SOLIS and COR system have been targeted to various markets, starting in North America and eventually expanding globally. Given the success of lab testing of our COR, our vision for our COR batteries is for it to become the 'AA' battery of the future. The market opportunity is tremendous. With existing companies coming out of China growing at 300% per year in this space, we couldn't be more excited about our unique launch. I note two figures on the right of this slide: our engineers have begun developing a transferable solution of the Worksport SOLIS & COR system to act as a portable nano grid off the truck bed, opening Worksport to a plethora of new markets and target customers. The possible end markets are endless and global, which is why we're very excited to announce Worksport's Clean-tech business division. With this in mind, Worksport will now begin conceptually referring to its operations in two business divisions: first, Worksport Automotive, and second, Worksport Clean-tech. Our Tonneau cover business is expected to propel Worksport into a nine-figure middle market company in the short to mid-term, while the Clean-tech division opens us up to a ten-figure-plus opportunity that we believe is achievable altogether. Our aspirations in terms of revenue stretch beyond that of the upper middle market. In April 2024, the company issued a press release stating that we believe Worksport's stock was undervalued. Today, given this quarter's results, the shared remarks on our path to cash flow positivity, and the upcoming update on guidance, we reaffirm that statement, confident that the revenue growth we're seeing this quarter is just the beginning of a prosperous climb ahead. Worksport will continue to ramp up AL3 sales, expanding its presence across the United States and Canada. With a domestic market size of over seven million Tonneau covers sold annually, we're only just scratching the surface. Our covers have received excellent reception so far and the highly anticipated AL4 cover, forthcoming in Q4, is eagerly awaited, particularly by our business-to-business customers. The AL4 shares key features with the AL3, allowing the company to strategically optimize production as needed. This quarter, we launched a dedicated website for our dealers and resellers and initiated a live online sales program, both of which have established a strong foundation for expanding our brand presence and supporting our dealer network, to whom we're very fond of. Additionally, recognizing the significant market potential within federal and state fleets, we began actively pursuing the sector. Importantly, all Worksport business and government customers are potential future SOLIS and COR customers. The brand presence we're building daily will be crucial for the successful market launch of the SOLIS and COR system.

Worksport recently filed the 1A offering earlier this month. If utilized, this filing allows Worksport to raise capital at or above market prices while targeting new investors. We are very excited about this opportunity, especially given the success of our last Reg A offering, which was oversubscribed within one month. With the SOLIS and COR products representing significant revenue potential and a vast market opportunity for the company, the Reg A offering is intended to provide investors with a chance to participate in a direct ROI opportunity, with proceeds primarily funding the market release of these products. Additionally, this offering will enable us to attract new investors and expand our retail shareholder base. As the company continues to grow its automotive accessory segment and with the market launch of the COR and the SOLIS products drawing near, this filing represents an exciting opportunity to be part of the significant growth we anticipate in the near future and potentially increase the upside for our active and existing investors. Furthermore, Worksport is committed to pursuing ISO certification for our Western New York factory, and we will keep shareholders informed of our progress. Achieving ISO certification is a near-term goal for the company and will play a crucial role in strengthening our business-to-business and future OEM relationships. We are committed to pursuing OEM relationships with EV truck manufacturers in the mid to long-term, and our relationship with Hyundai remains active. The SOLIS could potentially be utilized as a portable range extender for EV pickup trucks. We estimate that the cover can provide enough power for nine or more miles per day, delivering electric cost savings to customers while OEMs are slowing down EV pickup truck production. We estimate to elaborate more on this on the next slide.

From a macro perspective, pickup trucks continue to be the top-selling vehicle in the US and on US roads. The EV pickup truck market has experienced delays in waning sales interest. We believe that the improved infrastructure and technology EV adoption will extend to pickup trucks as well. Worksport SOLIS solar Tonneau cover is designed for use with both current internal combustion engine vehicles and future EVs, allowing us to navigate without adverse effects from these market shifts. Additionally, we've observed the US government's push for increased tariffs on imports from China, particularly batteries, by 2026, and we're positioning ourselves to leverage this change as a strategic advantage. We've already begun developing next-generation COR batteries using US-based technology in production. The company will provide an update on its production partner for the COR and SOLIS in the near future. The portable energy market is growing rapidly with further development expected. As mentioned earlier, Chinese competitors, despite offering perceived inferior products, are achieving over $1 billion in annual sales from the US market, with a year-over-year growth rate of over 300%. Being first to market with our solar cover and the belief that we offer a stronger product at an attractive price, we aim to capture both new market share and a portion of their existing market share. Regarding future guidance, at the current Q2 gross revenue rates, we are on track to meet or exceed our previously issued revenue guidance of $6 to $8 million by the end of 2024. Importantly, please be aware this guidance does not account for potential revenues from AL4, SOLIS & COR, so it's highly conservative and based solely on our AL3 and soft cover product segments. Worksport believes that its Tonneau cover business alone will represent $15 to $20 million in revenues for next year, 2025. We're excited to initiate the Alpha release of our COR and SOLIS this September. The conceptual business division of the company serves as the foundation for a future push to become a middle-large market company. For future guidance on Worksport Clean-tech, stay tuned for insight during the Q3 2024 earnings call. Worksport is now opening the floor for questions and answers. We have a list of previously submitted questions that we will address either during this call or via a press release at a later time. We now welcome live questions from the analysts attending the call, followed by those from general investors and listeners.

Thank you for the call, Stephen. Now directing to CK Poe Fratt, an analyst from AGP.

Yes, thanks, Steven. Can you just talk about the second quarter? It sounded like your production efficiency wasn't as high as you expected, but yet you got margins into the 15% range. How much did production inefficiency cost you in the quarter?

So it's continual improvement. So we don't... I mean, Mike may be able to answer on the numbers side. However, speaking to product deficiencies, because it's a new product, relative to it only having launched at the beginning of this year, the products need continual improvement. The first iteration of our AL3 product was nowhere near as good as it is today. We've had to re-handle the product consistently. We made a product, and then we realized that there was something that needed improvement. We had to reopen that product and make an improvement and improve on tooling and components to make our product more durable, manufacturable, and weather-resistant to rain and car washes, which customers and users want. The efficiency of our production line is a fraction of what it can be. Revenue projections for those products make a multiple of their costs. I have to be cautious, but our cost is a fraction of our retail price. Having to touch that product numerous times is difficult, so we anticipate margins to continue to climb into very healthy margins, potentially up to 30% or higher as time goes on. If you wanted a more imperial answer, Mike may be able to put together something to quantify that number, but I'm not quite sure we have that data.

Yes, I don't have the data at hand, but essentially, there's almost a fixed pool of manufacturing overhead that's divided across a smaller number of units at this point. So as we increase efficiency, that same pool of costs isn't going to increase by the same amount. You would expect those costs to be spread out over more units, which would increase the gross profit of each unit.

We have three production lines at our facility. Each line is capable of producing somewhere in the neighborhood of 50 to 100 covers per day. So, with not much additional cost, we could be at about a third of our peak production output, which right now we're at a fraction of as we ramp up.

Great. Yes. You answered the question of target market or target margins in the 30% range, plus or minus probably 5%. When you look at your guidance on just the cover business for 2025, $15 million to $20 million, that doesn't seem to incorporate much ramping up production. If I'm looking at it correctly. If June was over a million bucks, is there something beyond that $15 million to $20 million that we could sort of look at for the cover business? And I guess it's a long-winded way of saying, what do you think the Clean-tech business potential is for 2025?

It's difficult to say. It's based on estimations because it's a new product that we haven't sold. All I can say is that we know import products—our competitor in the Clean-tech sector is a Chinese-owned, Chinese-operated business. So, we have, for lack of a better phrase, a home turf advantage. They generated about a billion dollars in sales in the US economy last year. The market is a ten-figure market with just one of our competitors in the continental US. So can we take 1%? Can we take 5% of that market share? Can we take 10%? We hope to sell about 1000 COR units per month at a retail price of somewhere between $1,200 and $1,700, depending on various factors. But that number begins to add up to the point where we get ahead of ourselves and we just don’t want to seem overly optimistic because things can take longer than we hope at times. There are always delays with producing such complex items. The forecast of $15 million to $20 million is just from AL3, our more basic hard folding Tonneau cover. We feel we can increase revenue from about $1 million a month to roughly $1.5 million plus per month, which is a very modest or conservative estimation. However, for the AL4, we believe it will sell multiples of that. We don't think we would simply double the sales amount for AL3; we anticipate figures ranging from $3 million to $5 million per month. When added up, that could lead to the company figuratively releasing guidance of $50 million next year, which just sounds crazy. We remain very bullish and optimistic, but it's quite difficult to produce estimations that don't seem excessively ambitious.

Great. Yes, you answered the question of target market or target margins in the 30% range, plus or minus probably 5%. When you look at your guidance on just the cover business for 2025, $15 million to $20 million, that doesn't seem to incorporate much ramping up production. If I'm looking at it correctly. If June was over a million bucks, is there something beyond that $15 million to $20 million that we could sort of look at for the cover business? And I guess it's a long-winded way of saying, what do you think the Clean-tech business potential is for 2025?

Good question. Yes, we feel that at $1,200, it's a unit that is affordable. Many individuals are budget-conscious on a monthly basis and can afford monthly fees. That's why Netflix and these subscription services are so popular. We intend to first launch the COR in a cash purchase unit with financing options available, which will be low-cost to consumers. However, in the future, and we're hoping within 2025, we will offer a COR club or subscription service, where you will pay a deposit or upfront fee, let's say $500 or $600, which many can afford, and then a monthly fee. The Bluetooth app, similar to Tesla, would unlock the device. Failure to pay the bill would deactivate the device and track its coordinates for collection, thus providing security for valuable assets. We also contemplate rental services and refurbished or second-hand units to be collected and stored in areas likely to experience natural disasters. If there's a significant disaster, we would have a number of units available for rent or deployment to government agencies as they need, on a pay service. So we have different options: buy upfront, which is our first go-to-market option, then a smaller upfront deposit with a monthly subscription that offers benefits like product discounts, and finally, rental services for short-term.

Thanks, Steve. His next question was, can you give color on how quiet the COR system is and how the Hot-swap module feature works?

All the units that come in from China right now—Anchor, Jack, and Echo Flow—some have no fans, some have one or maybe two fans. Ours have nine. These units have been tested. We can't disclose the test results yet, but our units outperform those coming in from imports. Our units feature nine fans to ensure they perform well in hotter climates and also in colder climates. While other units may shut off or die, our unit will continue to run. It’s designed to operate effectively in high temperatures of Arizona and the cold of northern states, although with nine fans keeping it cold, it may produce some noise, though we haven't conducted formal decibel measurements yet. Users would be able to speak without raising their voices, yet it would still generate more noise than competitors' units, due to their less effective cooling mechanisms.

And the last question, Steve, is will it be available for retail purchase online a few weeks before Christmas regarding the COR again?

Yep, absolutely. We're targeting Christmas sales hard. At the very least, we plan on launching pre-sales before then and hope to fulfill those orders to get them under Christmas trees. It's a big market for us. Also, regarding Hot-swap, we're going to offer a pro version and a base version. The base version will have modular batteries. The pro version, for a few hundred dollars more, will feature Hot-swap, which means that, as you connect delicate medical devices, like a respirator or blood transfusion machine, the unit has an inbuilt, uninterrupted power supply. This pro version product will likely be very popular for us.

Yes, thank you. It seems like you have good cash conversion cycle in the quarter. Can you talk about your sales channel for the Tonneau covers? Is it selling to distributors and do they pay you immediately for a batch of Tonneau covers or do you have multiple sales channels?

Direct-to-consumer, we're running anywhere between $20,000 to $30,000 daily, which we aim to multiply in sales, which is paid upfront. For dealer sales, there are 17,000 dealers just in the US alone. We're literally calling each one of them. We have a sales team engaging every single one of them, not leaving anyone behind. These are all COD sales, which is wonderful. The value proposition is so strong, and we prefer to support our dealer network. The only stipulation is we don't finance dealer sales; banks do. So, give us a credit card, and we'll charge the sale. Whether you need one, three, five, or ten, we'll ship them to you pre-paid. Distributor sales coming on board will operate on net 30 terms, although there are financing solutions relatively low-cost should we need. So we're covered, but the majority of our sales are on enviable terms.

Also for the SOLIS and COR, will there be separate assembly lines after you receive the components in Seneca, New York, or will those products be assembled elsewhere?

The SOLIS, sorry to address, the COR will initially be assembled here in Toronto's facility, where I speak from today. Future assembly of beta and subsequent launches is yet to be determined. We're not hesitant; we actually have too many options. If sales and demand are as strong as we think, we may need some heavy lifting, either domestically or abroad. We may look at assembly within the USA or even in parts of Asia, peripheral to China, for assembly services later down the road. The SOLIS will share about 50% of the production lines at our factory in Buffalo and then have a final hand assembly station for skilled assemblers, who will be able to connect the delicate electrical devices through our patented wire management system. So 50% of it goes down the line as normal, branching off to its own hand-built line for now. Once volumes ramp up, we'll create a separate line for the SOLIS within the facility in West Seneca. Yes, lots of questions. ISO is earmarked for this year. We actually just had some milestones on that earlier today that we will announce to the market later, not today, but at some future point. With respect to ISO, you have to internally organize your business for it and then apply for it. It’s either a yes or a no. If it’s a no, then the scope of improvement remains. We hope to achieve ISO this year, which will be a milestone for us as a factory. The only update I could say is that every day we're working towards it. We have a team at our West Seneca facility that is very skilled in this. Our relationship with Hyundai is also active; we speak with them often. Our product moved from Detroit R&D to their U.S. corporate offices in California, then directly to ownership and leadership in Korea. They're working on their EV truck. The product is ahead of its time for Hyundai. They don't have an EV truck in the works yet to the best of anyone's knowledge. We continue to work with them on the schedule for releasing a vehicle that could utilize our cover, but it's an ongoing relationship, and typically OEMs work very slowly. A vehicle takes five to six years to hit the market after it's conceptualized. Let's answer the first question, which is what would your annual revenues be if you're working today at full production capacity?

If we assume full production is about 1000 covers a day, assuming 252 production days and producing AL3s, which sell for $709, it's about $179 million of revenue per year, which equates to about 5% of the Tonneau cover market, which sits at $3.5 billion. So this revenue could fluctuate depending on what's produced, whether they are lower sales point items or more premium offerings like SOLIS and AL4. That's kind of a ballpark figure based on AL3s. So I talk in bronze, silver, gold; gold medals are the big three—Ford, Dodge, GM 5.5-foot long bed, 6.5-foot long bed. Actually, 6.5-foot are more silver, and then bronze would be older or more obscure models, which we still like. I'm a huge fan of GM pickup trucks from 88 to 98 and they're my personal favorite, but the demand isn't quite as high, although there's still a market for them. So we plan on developing our product line out and then down, if that makes sense. So extending the lineup means AL3, AL4, and SOLIS, which appeals to the more popular models, and reaching deeper into generations of vehicles, including classic vehicles, maybe even vehicles like the 49 Chevy pickup truck—all feasible. Our machinery is robotic, so it’s not hard, it just needs time. So the answer is yes, but not right now.

That's a very difficult question; it's a moving figure. We’ve earmarked revenues somewhere between $15 million to $20 million as cash flow positive. It's a sliding scale, though, because as you ramp up sales and production, you continuously improve operational efficiencies. The real number could become $14 million, as opposed to $15 million because of those continual improvements, so it's a very difficult question to pin down. Very simply put, we anticipate cash flow positivity next year, but the exact figure moves. We're still a very lean operation for the size of our operation. Our quarter-million-square-foot factory, plus two R&D facilities in the US and Canada, is still lean, but it's a tough question. We've reviewed it and basically, $15 million to $25 million is where we start to see significant earnings. But an exact figure is a moving target. Yes, the durability of the SOLIS cover is the same as the AL3, which you demonstrated on the live call last week. So it's the same structure of a Tonneau cover, utilizing thick aluminum panels and similar extrusions. It is just as durable. We have subjected the solar panels to various tests, stepping and folding them while retaining most of their efficiency. Overall, the product is meant to endure. It should not be hatcheted, of course, but it can withstand golf ball-sized hail and harsh weather situations. Contractors resting metal toolboxes and tools on top of the cover should not reduce its operational efficiency. Yes, good question. The Worksport warrants were registered as a tradable warrant in our 2021 offering, which were always to expire in three years. We understand various brokerage firms made mistakes on the expiration dates. The brokerages have nothing to do with us; where they picked up the expiration, we don't know, but the WKSPW warrants, anyone who can read an S-1 would easily see from the S-1 filed in 2021 that they were three-year warrants. I believe they expired on August 9, and they are gone. That was three years in the making. So by no means was there any error disclosure issues from the company; it's been covered in all our filings since 2021. So there are benefits available to the COR. Corporate or otherwise; there's our carbon credits for tracking the energy generated and then the usage of that energy. So getting clean energy out there and utilizing that energy qualifies someone for carbon credits. Through our MPPT charge controller, we'll track not only our consumption or our use and collection of solar energy, but also all of our customers. As we expand our fleet from one to 1000 and ultimately to 100,000 SOLIS products on the road, in use, we'll be able to track and qualify for those carbon credits. Additionally, anyone who buys over three kilowatt-hours of energy from us qualifies for credits when integrated into their home. The COR is designed to be used within homes as a wall plug, enabling customers to receive substantial credits—about $600 or $700—when purchasing our COR unit, particularly when buying two batteries instead of one. There are various advantages available to our Clean-tech products. Sure. Yes, as we convey that the COR is capable of producing as much or more power than any wall outlet, the average wall outlet is connected to a 15 amp circuit or less. In smaller, older homes, our product generates 2000 watts nominal and peaks at around 3000 watts. Therefore, any device that could be plugged into a wall can be powered by our COR. So table saws, job sites, campsites, medical equipment, and military first responders can use it—all except for home air conditioning units. However, even smaller room air conditioning units can be run, as well as hot plates. From a duration standpoint, we have estimates that a fridge can be powered for a weekend. Our data is difficult since refrigerators don't run continuously. They run for a minute of every 15 to keep cool and then shut off. But when powered continuously, it can run for a limited time. We have some ideas on how long devices will run when plugged into our units. However, the underlying detail is that anything that can be plugged into a wall can also be powered by a COR. To maintain power for a longer duration, more batteries can be purchased from us. Good questions. We have a 1A offering that we may leverage or utilize. However, it’s a retail-at-market offering, meaning we raise capital at or above market pricing for retail shareholders, typically non-institutional—though institutions can participate as well. This structure benefits long-term shareholders, which was evident during our last Reg A offering, where we oversubscribed in one month. Such Reg A offerings often perform well, especially for exciting companies like ours. I believe the Reg A will be a rising tide that lifts all boats, including Worksport. So will we need to raise capital? Absolutely. It takes money to make money. We have to fund operations and growth to continue ramping up. We are in a stronger position compared to other companies in our cohort who have struggled. Our options for capital are more favorable. So the minimum listing requirement is 180 days from when you fall below a dollar. After 180 days, you get another 180-day extension. So we're on about a year timeline. We think that within a year, with everything going on, we maintain that we're dramatically undervalued. It's difficult to provide a timeframe for the market to catch up. For this reason, we don’t believe we’ll need to consolidate. If we could do dividends next year, we will. I'm not making a commitment; I'm speaking figuratively. Our focus is growing the business—an entity that exchanges products or services for money. Many issuers don’t meet that basic requirement, but we do. Now it’s rinse and repeat. We'll scale revenues and aim for cash flow positivity. With earnings, we’ll be able to look at rewards for shareholders, including dividends. With that, we'd like to end the call for this evening. All questions that remain unanswered will be addressed via a press release later this month. The prepared remarks from this call, as well as the slide deck, will be available on our website.

Thank you, everyone.