Q2 2024 Worksport Ltd Earnings Call
Sure.
for the product line in Q4 of 2024.
Gross profit margins year-to-date for Q2 2024, 15.4%. While margins are still low, they have improved by 111% compared to Q1 2024.
Speaker Change: Coming notes here that historical production in 2024 has been less efficient than the baseline efficiency of the plant.
Speaker Change: This was in relation to production and product improvements in the early part of 2024. We're excited to say that baseline efficiency is expected to be better reflected in the latter half of this year and is expected to enhance future margins.
Speaker Change: In addition to this expected improvement, the company anticipates a notable rise in margins from substantial cost savings achieved through ongoing scaling efforts and the upcoming launch of premium product lines.
Speaker Change: These improvements will more clearly be reflected in the second half of the year and into the 2025 fiscal year.
WorkSport: WorkSport notes that the product margin for the upcoming AL4 premium price 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: 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, an innovative product line to move forward, move towards operational cash flow positivity.
WorkSport: Works part of the well position uses 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 12 months.
WorkSport: As revenues accelerate, we expect the net loss from operations to decrease, with a clear vision to move towards positive operational cash flow within 2025.
WorkSport: Since the beginning of the year, the company has strategically invested $3.63 million in inventory.
Speaker Change: bringing the total balance of $6.39 million. As we continue to expand our monthly recurring revenue, we anticipate an accelerated turnover of this inventory.
Speaker Change: With the upcoming launch of the SOLIS Core and AL4 products, the company plans to make further inventory investments, particularly in SOLIS and Core in fourth quarter of 2024.
Speaker Change: [inaudible]
Speaker Change: To end, a special note on the financial impact of WorkSport's upcoming clean tech products. WorkSport notes that the Solis and Core products are expected to successfully achieve a market price between $1,200 and $1,700 each, depending on the unit and package selected.
Speaker Change: The modularity of WorkSport's core system also presents opportunities for customers to become repeat buyers of additional 1,500-watt-hour batteries, which are expected to command market prices between $700 and $950.
Speaker Change: This higher price segment presents a significant opportunity to accelerate revenue growth and expand its new customer markets. With the alpha launch expected to occur in September, WorkSport will provide an update on the sales envelope for SOLAS and CORE during its Q3 2024 earnings call.
Speaker Change: 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.
Speaker Change: Excellent, thanks. We have actually a question before I continue on from Tate Sullivan, Research Analyst Covering Works for. Go ahead, Tate.
Tate Sullivan: 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?
Speaker Change: Sure, yeah. So the manufacturing line is set up to produce a thousand tunnel covers per day without additional expansion to which we can expand the footprint of the building by approximately almost 40%.
Speaker Change: The AL-3 tunnel cover is produced in North America with the majority of the components sourced from North America, meaning paint and resins from soil within the lower 48 states, so it's a gold standard of made by definition in America.
Speaker Change: The products that are presently being imported from overseas remain our soft folding tunnel covers that are imported from our contract factory in China.
Speaker Change: However, we do have all or most necessary, let me say better, most necessary equipment to produce soft folding tunnel covers within North America at that facility, which we intend to explore or at least finalize within 2025.
Speaker Change: i
Speaker Change: Thank you.
Speaker Change: I'll carry on. This quarter was highly dynamic, marked by numerous milestones, technical achievements, and our significant process laying the groundwork for future initiatives, most of all, the beginning of our strong growth and revenues with a keen focus on growing our bottom line through continual improvement and economies of scale.
Speaker Change: After scale of production started in January, we amassed inventory and initiated marketing efforts in March of 2024. In the last three months, WorkSport has been aggressively establishing its brand name in the market presence.
Speaker Change: 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 onwards.
Speaker Change: 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.
Speaker Change: 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 SOLUS solar tunnel cover.
Speaker Change: and we'll soon provide an update on the course test result ahead of their joint alpha release expected in September.
Speaker Change: The SOLUS cover is capable of generating up to 650 watts of power, allowing it to fully charge a 1,700 watt-hour core system in just a few hours with good weather conditions.
Speaker Change: This could provide enough power for a campsite, job site, or various recreational activities. The use cases are endless. With over 2,000 watts of maximum power output, the core system can run a fridge, microwave, various power tools, and charge lots of personal electronic devices, to just name a few.
Speaker Change: The core and solace are anticipated to be transformative products that will shape the future of Oaksport.
Speaker Change: We will initially market them to our existing base of pickup truck users, but with their compelling competitive advantage and diverse use cases, the Solus and Core system have been targeted to various markets, starting in North America and eventually expanding globally.
Speaker Change: Given the success of lab testing of our core, our vision for our core 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.
Speaker Change: 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 SOLAS and Core system to act as a portable nanogrid.
Speaker Change: off the truck bed.
Speaker Change: Opening WorkSport to a plethora of new markets and target customers, the possibility and markets are endless and global, which is why we're very excited to announce WorkSport's Clean Tech business division.
Speaker Change: With this in mind, WorkSport will now begin conceptually referring to its operations in two business divisions. First, WorkSport's Automotive, and second, WorkSport Clean Tech.
Speaker Change: Our tunnel cover business is expected to propel WorkSport into a nine-figure middle market company in the mid to short term, short to midterm rather, while the clean tech division opens us up to a 10-figure plus opportunity that we believe is achievable. Altogether, our aspirations in terms of revenue stretch beyond that of upper middle market.
Speaker Change: In April 2024, the company issued a press release stating that we believe WorkSport's stock was undervalued. Today, given this quarter's results, we believe that WorkSport's stock is undervalued. In April 2014, the company issued a press release stating that we believe WorkSport's
Speaker Change: 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.
Speaker Change: WorkSport will continue to ramp up AL3 sales, expanding its presence across the United States and Canada. With a domestic market size of over 7 million tonneau covers sold annually, we're only just scratching the surface.
Speaker Change: Our covers have received excellent reception so far and the highly anticipated AL4 cover forthcoming in Q4 is eagerly awaited.
Speaker Change: particularly by our business-to-business customers. The AL4 shares key features with the AL3, allowing the company to strategically optimize production as needed.
Speaker Change: 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.
Speaker Change: Additionally, recognizing the significant market potential within federal and state fleets, we began actively pursuing this sector. Importantly, all Works4Business and government customers are potential future SOLAS and CORE customers.
Speaker Change: The brand presence we're building daily will be crucial for the successful market launch of the Solus and Core system.
Speaker Change: WorkSupport recently filed the 1A offering earlier this month. If utilized, this filing...
Speaker Change: 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.
Speaker Change: With the Solis and Core products representing significant revenue potential and a vast market opportunity for the company, the REGE 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.
Speaker Change: Additionally, this offering will enable us to attract new investors and expand our retail shareholder base.
Speaker Change: As the company continues to grow its automotive accessory segment and with the market launch of the core and the solace products and as they draw near
Speaker Change: 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.
Speaker Change: Furthermore, WorkSport is committed to pursuing ISO certification at Western New York factory and 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.
Speaker Change: We are committed to pursuing OEM relationships with EV truck manufacturers in the mid to long term and our relationship with Hyundai remains active.
Speaker Change: The SOLAS can potentially be utilized as a portable range extender for EV pickup trucks.
Speaker Change: 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 uptake. More on this on the next slide.
Speaker Change: From a macro perspective, pickup trucks continue to be the top selling vehicle on the U.S.
Speaker Change: in the U.S. and on U.S. roads. The EV pickup truck market has experienced delays and waning sales interests. We believe that the improved infrastructure and technology
Speaker Change: EV adoption will extend to pickup trucks as well. WorkSport's solar tunnel cover is designed for use with both current internal combustion engine vehicles and with future EVs, allowing us to navigate without adverse effects by these market shifts.
Speaker Change: Additionally, we've observed the U.S. government's push for increased tariffs on imports from China, particularly batteries, by 2026.
Speaker Change: And we're positioning ourselves to leverage this change as a strategic advantage. We've already begun developing next-generation core batteries using U.S.-based technology in production. The company will provide an update on its production partner for the core and solace in the near future.
Speaker Change: The portable energy market is growing rapidly, with further development expected.
Speaker Change: As mentioned earlier, Chinese competitors, despite offering perceived inferior products, are achieving over $1 billion in annual sales from the U.S. market, with a year-over-year growth rate of over 300%.
Speaker Change: 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.
Speaker Change: regarding future guidance.
Speaker Change: 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 the year, 2024.
Speaker Change: Importantly, please be aware this guidance does not account for potential revenues from AL4, SOLAS, and CORE, so it's highly conservative and the launch of those products within this year and is based solely on our AL3 and soft cover product segments.
Speaker Change: Worksport believes that a funnel cover business alone will represent $15-20 million in revenues for next year 2025.
Speaker Change: We are excited to initiate the alpha release of our core and solace this September. The Conceptual Business Division
Speaker Change: of the company is the foundation for a future push to become a middle-large market company. For future guidance on WorkSport Cleantech, stay tuned for an inside sales look during the Q3 2024 earnings call.
Speaker Change: 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.
Speaker Change: Thank you for the call, Stephen. Now directing to CK Pofrat, an analyst from AGP.
Speaker Change: Yeah, thanks, Stephen. Can you just talk about the second quarter? It sounded like your production efficiency wasn't as high as you expected, but yet
CK Pofrat: You got margins into the 15% range. How much did production inefficiency cost you in the quarter?
Speaker Change: It's continual improvement. Mike may be able to answer on a numbers side.
Speaker Change: However, speaking to product efficiencies, because it's a new product relative to it only having launched at the beginning of this year, and therefore a child that's six to eight months old.
Speaker Change: most, figuratively speaking, the products need a continual improvement. The first iteration of our AL3 product was nowhere near as good as it is today. So, we've had to re-handle product consistently. So, we've made a product and then we've realized that there was...
Speaker Change: It's something that needed improvement, so we had to reopen that product and make an improvement and improve on tooling and components to make our product more durable, more manufacturable, more weather-resistant to rain and car washes, which customers and users want.
Speaker Change: So the efficiency of our production line is a fraction of what it can be. Dollars adding to cents, the products make a multiple of their cost.
Speaker Change: There's only so much I can divulge, but our cost is a fraction of our retail price.
Speaker Change: but having to touch that product numerous times is difficult. We anticipate margin to continue to climb into very healthy margins.
Speaker Change: 30% potentially even higher than that as time goes. If you wanted a more imperial answer like dollars, Mike may be able to put something together with something in the quarter, but I'm not quite sure we have that data.
Mike: Yeah, I don't have the data to hand, but essentially there's a.
Mike: almost a fixed pool of manufacturing overhead that's just being divided across a smaller number of units at this point. So, as we increase efficiency,
Speaker Change: the same pool of cost isn't going to increase by the same amount, so you would expect those costs to be spread out over more units.
Mike: which would increase the gross profit of each unit.
Mike: We have three production lines, PO, at our facility. Each line is capable of producing somewhere in the neighborhood of 50 to 100 covers per day.
Mike: So, with not that 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. We're just starting.
Speaker Change: Great. Yeah, you sort of answered the question of target market or target, you know, margins in the 30% range, plus or minus probably 5%.
Speaker Change: When you look at, you know, your guidance on just the cover business for 2025, you know, 15 to 20 million, that doesn't seem to incorporate much.
Speaker Change: ramping up production if I'm looking at it correctly, if June was over a million bucks as far as revenue.
Speaker Change: Is there something beyond that $15 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 cleantech business potential is for 2025?
Speaker Change: Difficult to say, you know, it's based on literal, you know, estimations because it's a new product that we haven't sold. All I can say is that we know import products.
Speaker Change: So on the clean tech, the core competitor for that is a Chinese-owned, Chinese-operated business. So we have, for lack of a better phrase, home turf advantage. They were about a billion dollars in sales in the U.S. economy last year.
Speaker Change: So, you know, I know that the market is a 10-figure market with just one of our competitors.
Speaker Change: just within the 48, you know, so to speak. So we, we, we, we could, you know, we can only estimate, can we take 1%? Can we take 5% of that market share? Can we take 10%?
Speaker Change: We hope to sell about a thousand core units per month as we get our stride.
Speaker Change: at a retail price of somewhere between $1,200 to $1,700, depending, but that number begins to add up to the point where we get so far ahead of ourselves that we just don't want to seem, we want to be very, very cautious.
Speaker Change: because things obviously take longer than we would hope at times. There's always delays with producing such complex items.
Speaker Change: So, the forecast of $15 to $20 million is just AL3, so our more basic hard-folding tunnel cover. We feel that we can get that from about $1 million a month.
Speaker Change: to roughly a million and a half plus per month, which is a very modest or conservative estimation.
Speaker Change: AL4, we believe, can sell multiples of that, so we think that the demand is heavily leaning towards a product of that style.
Speaker Change: And we think that it wouldn't be.
Speaker Change: twice the sales. We don't think we'd sell a million and a half a month. We'd probably sell three to five million dollars a month. But once again, you start adding all those numbers up and WorkSport would be figuratively releasing guidance of $50 million next year, which just sounds
Speaker Change: It's too far to reach.
Speaker Change: Great. Thank you, Stephen. Thank you, Michael.
Speaker Change: Stephen, our next question is from Tim Moore, analyst at ClearStreet. His first question is, for your core portable energy storage, can you elaborate more offering it both as a direct purchase or a subscription service?
Speaker Change: Good question. Yeah, so we feel that a $1,200, it's a unit that is affordable with a lowercase a. And what that means is people will be able to afford a $1,200 unit. But one of our sayings here internal to the company is appeal to the mass dining class.
Speaker Change: A lot of individuals are budget conscious on a monthly basis and can afford monthly fees. That's why Netflix and these monthly subscriptions are so popular.
Speaker Change: So we intend to first launch the core as a cash purchase unit with financing options, like a firm and those that are low cost to the consumers. However, in the future, and we're hoping within
Speaker Change: Within next year, 2025, we will offer a core club or subscription service where you will pay a deposit or upfront fee.
Speaker Change: Let's say $500 or $600, which most or many more can afford, and then a monthly fee.
Speaker Change: As you pay the bill, the Bluetooth app.
Speaker Change: similar to Tesla, would unlock the device, failure to pay the bill, would break the device.
Speaker Change: and have us know its coordinates for collection.
Speaker Change: So there's security as well that we don't lose valuable assets.
Speaker Change: We also are contemplating rental services and we're also contemplating at least refurbished units.
Speaker Change: or second-hand or used units to be collected and stored in high likelihood, high areas of natural disaster for disaster relief efforts. So if there's, God forbid, an earthquake or some natural disaster, we would have a marked amount of units available for rent.
Speaker Change: or deployment to government agencies as they need on a pay service.
Speaker Change: So we have a few different options. Buy it upfront, which is our first go-to-market option, which is still a very large market. Second will be a smaller upfront deposit with a monthly subscription, which gives you benefits and perks like discounts on products, etc. Then third would be rental services for short-term.
Speaker Change: Thanks, Steve. His next question was, can you give color on how quiet the core system is and how Hotspot Module Feature works?
Speaker Change: All the units that come in from China right now, Anchor, Jackery, Echoflow, some have no fans, some have one, maybe two fans. Ours have nine. These units have been tested. We can't tell you the test results, but our units perform superior in miles to those coming in from imported products.
Speaker Change: As a result of our unit having nine fans, it performs in hotter climates, which is a more addressable concern, and it also performs much better in colder climates.
Speaker Change: So, where other units simply shut off, die, and also may have risk of thermal runaway or explosion, which is a big problem for battery technology.
Speaker Change: our unit will survive. It'll work in the heat of Arizona or desert as well as the cold of various mountains in northern states and places.
Speaker Change: However, with nine fans blaring to keep it cold, it could be noisy. We haven't had a decibel measurement yet formally, but it would be, you'd be able to speak and understand, you know, no more than whisper, but still it would make more noise then.
Speaker Change: the competitor's unit, which frankly would make no noise because it would be a brick.
Speaker Change: And the last question, Steve, is will it be available for retail purchase online a few weeks before Christmas regarding the core again? Yep, absolutely. Targeting hard the Christmas sales. At the very least, we think that we're going to launch pre-sales before then and hope to fill those orders to get them under Christmas trees, a big market for us.
Speaker Change: Also, to talk about hot swap, we're going to offer a pro version and a base version. Base version will have modular batteries.
Speaker Change: The pro version for a few hundred dollars more will have hot swap which means that as you have
Speaker Change: delicate medical devices like let's say a respirator or blood transfusion machine or just music playing at a beach party while you change batteries, the unit has an inbuilt uninterrupted power supply. So that's a pro version product that will be available which will probably be a very popular option for us.
Speaker Change: Thank you, Steve. And Tate, I see you still have your hand up. Do you have any further questions live on the call?
Tate Sullivan: Yeah, thank you. It seems like you have good cash conversion cycle in the quarter. And then can you talk about your sales channel for the to-note covers? Is it selling to distributors and they pay you right immediately for a batch of to-note covers or multiple sales channels, please?
Speaker Change: Direct-to-consumer, we're running anywhere between $20,000 to $30,000 daily, which obviously we aim to multiply in sales, which is paid up front.
Speaker Change: And then dealer, all the dealer sales, there's 17,000 dealers just in the U.S. alone. And we're literally calling each one of them. Like, I mean, we have a sales team engaging each single one of them, not one left behind.
Speaker Change: So, those are all COD sales, which is wonderful. The value proposition is so strong that we offer great, we prefer and support dealer network.
Speaker Change: We covet our dealer base, but the only stipulation is we don't finance dealer sales, banks do. So give us a credit card and we'll charge a sale, and if you need one or three or five or ten, we'll ship them to you and just prepay.
Speaker Change: Distributor sales that are that are coming on board are going to be net 30. However, there are financing solutions for those as well in AR financing that are relatively low cost should we need. So we're covered but the majority of our sales are paid in enviable terms.
Speaker Change: And then last for me is, are you, for the SLIS and the core, have separate assembly lines after you get in the components in Seneca, New York, or will those products be assembled elsewhere?
Speaker Change: Yeah.
Speaker Change: The SOLUS, sorry, to address the core, the initial launch of the core will be assembled here in Toronto's facility where I speak from here today. Future assembly of beta and subsequent launches we're not sure of yet, not to say we're not sure of, we're hesitant, we actually have too many options.
Speaker Change: If sales and demand are as strong as we think that we may need some heavy lifting, either domestic or abroad, we may look at assembly within USA or maybe even in parts of Asia peripheral to China for assembly services.
Speaker Change: later down the road. The SOLUS will share about 50% of the production lines at our factory in Buffalo and then have a final hand assembly station for engineers that are skilled to be able to connect the electrical devices and what not and route the wiring through our patented wireway management system.
Speaker Change: 50% of it goes right down the line as normal, and then it branches off to its own hand-built line for now. Once volumes ramp up, then we're going to have its own separate line within the facility in West Seneca on the SOLAS.
Speaker Change: Thank you, Stephen. You're welcome.
Steve: Steve, the question from Kamran said, could you please talk about ISO certification and the deal with Hyundai, as well as the potential revenue on it? When will that happen?
Speaker Change: Yeah, lots of questions. ISO is earmarked for this year. We actually just had some milestones on that earlier today that we'll announce to the market later. Not today, but at some point subsequent. ISO, you have to organize your business internally for it and then apply for it. And then it's either a yes or a no. And if it's a no, it's gone.
Speaker Change: You have to improve to get there, so we hope to be ISO this year, which will be a milestone for us as a factory.
Speaker Change: So, the only update I can say is that every day we're working towards it. We have a team at our West Seneca facility that are very, very skilled in this, experts in the field.
Speaker Change: Hyundai is an active relationship. We do speak with them often. Our product went from Detroit R&D to their U.S. corporate offices in California.
Speaker Change: past that, and now it went to ownership and leadership in Korea directly, and they're working on their EV truck, so the product is ahead of its time for Hyundai, they don't have an EV truck that we're aware of yet, or that anyone's aware of yet, so we continue to work with them on their schedule of releasing a vehicle that's an electric truck that could use our cover, but it's an active relationship with OEMs.
Speaker Change: Hyundai and any OEM you could think of typically work very slow and a vehicle takes five to six years to hit market after it's conceptualized.
Speaker Change: Thank you. Steve, a question from Ehab Zed. What would your annual revenues be if you're working today at full production capacity?
Speaker Change: In this case, what would your market share at full capacity? Let's answer the first question, which is what would your annual revenues be if you're working today at your full production capacity? I can handle that one.
Speaker Change: Estimated full production is about 1,000 covers a day. If we assume 252 production days,
Speaker Change: We're producing AL3s, which sell for $709, about $179 million of revenue per year, which equates to about 5% of the tonneau cover market, which sits at $3.5 billion.
Speaker Change: So, that revenue figure could fluctuate, depending on what's produced, whether that's
Speaker Change: you know, some of the lower sale point items if it's more of the premium offerings like Solace Nail 4. So it...
Speaker Change: That's kind of a ballpark figure based on AL3s.
John C.: Thank you, Mike. A question from John C. Are there any plans to expand tonneau cover lineups to cover older models of pickups?
Speaker Change: I talk in bronze, silver, gold. Gold medals are the big three, four-dodge GM five-and-a-half-foot-long bed, six-and-a-half-foot-long bed.
Speaker Change: Actually, 6.5s are more silver, and then bronze would be older or more obscure models, which we still love. I mean, I'm a huge fan of 88 to 98 GM pickup trucks are personally my favorite truck.
Speaker Change: but the demand's not quite as high, although there still is a market for them. So the answer is we plan on developing our product line.
Speaker Change: out then down if that makes sense, so out means AL3, AL4 solace with the gold.
Speaker Change: you know, the more popular models.
Speaker Change: And then down as in reaching deeper within generations of vehicles and starting to get into classic vehicles and, yeah, maybe even vehicles like the 49 Chevy pickup truck, for example.
Speaker Change: We could do them. Our machinery is all robotic, so it's not hard, it's just we need time. So the answer is yes, but not right now.
Randolph B.: We have a question from Randolph B. Based on fixed costs and variable cost structure, what revenue number is needed to break even? Is management willing to publicly say when that will happen? Lastly, when will it happen?
Speaker Change: That's a very difficult question. It's a moving figure. We've earmarked revenues.
Speaker Change: is somewhere between 15 to $20 million as.
Speaker Change: It's a sliding scale though, because as you ramp up sales and production, you reach continual improvement and operational efficiencies, so you become more profitable. So then the real number becomes 14 million as opposed to 15 because of continual improvements.
Speaker Change: So, it's a very difficult answer.
Speaker Change: question to answer, but I very simply put is we anticipate cash flow positivity.
Speaker Change: And then we anticipate EBITDA earnings, you know, within, I think, next year.
Speaker Change: However, the figure moves, although we're still a very lean operation for the size of our operation, a quarter million square foot factory, plus two R&D facilities in the U.S. and in Canada, we're still lean, but it's a difficult question to answer. We've looked at it, but very basically, 15, 20, 25 million, somewhere around there.
Speaker Change: I know it's a big range is where we start making a lot of money, but an exact figure is a moving target.
Steve: Thank you, Steve.
Speaker Change: Is the durability of the Solos cover the same as the L3, which you demonstrated on the live call last week?
Speaker Change: Yeah, so same framework of a tunnel cover same thick aluminum panels
Speaker Change: Same aluminum extrusions, it's just as durable.
Speaker Change: The solar panels themselves have been hammered, have been stepped on, have been folded and still maintain most of their efficiency.
Speaker Change: So, in general, the product is meant to be, it shouldn't be hatcheted, of course.
Speaker Change: But, it could withstand golf ball size hail, difficult inclement weather situations, and then contractors resting metal toolboxes and tools on top of the cover should not reduce its operational efficiency.
Speaker Change: A question from Shankta Kumar M. When are your WKSBW warrants expiring?
Speaker Change: Yeah, good question. Obviously something that's been talked about for a while. So the WorkSport warrants were registered warrants.
Speaker Change: and then a tradable warrant in our 2021 S-1, which were always to expire in three years. We understand various brokerage made mistakes on when they expired. The brokerages have nothing to do with us.
Speaker Change: where they picked up the the expiration the incorrect expiration date we don't know but the WKSPW warrants
Speaker Change: Anyone that can read an S-1 would easily see from the S-1 filed in 2021 that there were three-year warrants. They expired, I believe they expired August 9th, and they're gone. So, you know, that was three years in the making, so by no means was there any error or disclosure issues.
Speaker Change: from the company. It's been in all of our Qs and Ks since...
Speaker Change: since 2021.
Speaker Change: [inaudible]
Bob T.: Thank you Steve. Another question from Bob T. Hello Mr. Rossi and team I'd love to know if WorkSport is set to benefit from the IRA in any way and if not are there plans to bring a new product to market to enter a sector that would result in IRA benefits?
Speaker Change: So there are benefits available to the to the core. Corporate speaking there's our carbon credits, tracking.
Speaker Change: the energy compiled and then the deployment of that energy. Getting clean energy and then using that clean energy is what qualifies someone for carbon credit. Through our MPPT charge controller, we're going to be able to track not only our consumption or.
Speaker Change: Bye.
Speaker Change: Are you sitting in collection of solar energy but also all of our customers so as our fleet expands from one to a thousand two hundred thousand solace on the road.
Speaker Change: in use, we'll be able to track and qualify ourselves for those carbon credits. And then also anyone that buys over three kilowatt hours of energy from us qualifies for credits when used with their home. So obviously the core is meant to be used within home as a plug away from the wall.
Speaker Change: So customers get, Fran, you may know, I'm not sure exactly, I think it's like a six or $700 credit.
Speaker Change: you know, on purchase of our core unit, it's when they buy two batteries as opposed to one. So that's a very meaningful credit. So we do have support, there are programs in place. And I think that as we dig deeper, we'll probably find more supports and available to our clean tech products.
Speaker Change: Even a question from Eric W., as the customer base for Solace and Core may see a heavy leaning towards blue collar workers, he says, I think the big question on their mind will be, will I be able to put my power tools for long enough to complete the work I have?
Eric W.: Is investment worth it? Will there be an estimated runtime for items such as compressors, portable table saws, circular saws, and other appliances that are hooked up to the core battery?
Speaker Change: Sure, yeah. So, as we say, the core is as much or more power than any wall outlet. So, the average wall outlet's connected to a 15-amp circuit or less in smaller or older homes. Our product produces 2,000 watts or powers 2,000 watts nominal and then peak probably 3,000 watts.
Speaker Change: So anything you would plug into a wall could be powered by our core, so that would be table saws, drop site, campsite, medical, military, first responders, most things except for home air conditioning units, but even
Speaker Change: Smaller room air conditioning units can be run. Hot plates can be run. All of these things that you would plug into a wall, anything you would plug into a normal wall socket will be powered by our core. How long that will run will depend on the amount of power.
Speaker Change: So, we have some ideas that a fridge could be run for, you know, a weekend. Our data is difficult because refrigerators, as you know, don't run all the time. They run for a minute of every 15 to keep it cold, and then they shut off. So, if it ran steady, it would only run power for about, you know, a couple hours.
Speaker Change: but for a weekend if it's an efficient fridge or a new one. So we have an idea of what will run for how long, but the answer to the question is anything you could plug into a wall will be
Speaker Change: Well, you could plug into a core and if you want to power it for a long time, buy more batteries from us.
John C.: Thank you, Steve. Another question from John asks, how soon will the company need to raise additional capital regarding the company's minimum bid price notification and the minimum listing requirements? Is the company contemplating a reverse stock split at all?
Speaker Change: Good questions. Raising capital, we have a 1A offering that we may use.
Speaker Change: are utilized, but it's a retail at-the-market offering, which means that we have to raise capital at or above market for retail shareholders, non-institutional typically, although institutions may participate. So it's a very retail-facing, long-term shareholder type of product, and if those
Speaker Change: That no the company during the last reggae offering that is one.
Speaker Change: The company performed the best in terms of its market capitalization and appreciation of that as well as its ability to raise capital. So it was a very good experience and typically reg A's do very well for companies, especially ones that are as exciting as ours.
Speaker Change: So, I think the reggae is going to be a high tide that sails all ships, including shareholders of WorkSport.
Speaker Change: So, will we need to raise capital? We have the reg A, but as revenues increase, we also have access to traditional bank financing, like loans and lines of credit and revolvers, so that if the markets don't cooperate, we don't need to use the capital markets. We could use debt markets.
Speaker Change: And then when there's a very good or enviable position for capital markets, we could raise it in an enviable position or position for strength.
Speaker Change: So the answer is, do we need to raise capital? Of course, it takes money to make money, so we're gonna have to raise, we're gonna have to fund operations and growth to continue to ramp up and grow, but we have many more options available to us that are much more friendly.
Speaker Change: then other options and other issuers in our cohort have struggled a lot. I think there's a record number of Nasdaq shell companies right now that have all failed. So in our cohort 2021, I think we're doing very well compared to most.
Speaker Change: Um, in terms of what was the second question for on the second part of that?
Speaker Change: Does the company anticipate contemplating a reverse stock split regarding the minimum listing requirement? Oh, okay. So minimum listing requirement is 180 days from when you fall below a dollar. And then after 180 days, you get another 180-day extension. So it's about a year. We think that within a year, with all the things that are going on, we still maintain that we're dramatically undervalued. But for when the market finally catches up to that...
Speaker Change: which should be sooner than later, we think that we'll cure this without having to consolidate. So we have no plans for consolidation, but obviously we'll see what happens in the future. But we're very bullish of the future of WorkSport and we don't think that we'll need to consolidate.
Speaker Change: Speaking of the future of WorkSport, the next question is regarding dividends from Core EP. Will you do dividends before 2030?
Speaker Change: If we could do dividends next year, we will. So, I mean, it's not a commitment. I'm speaking figuratively, but what I will say is.
Speaker Change: Our goal is set on the business by basic definition.
Speaker Change: is an entity that exchanges a product or service for money.
Speaker Change: A lot of issuers don't meet that basic requirement, we do.
Speaker Change: And now it's rinse and repeat. We are going to scale up revenues. We are heading for cashflow positivity. We're heading for earnings.
Speaker Change: And then as a result for earnings, as far as we can grow that, as we said earlier, you know, we're eyeballing beyond upper middle market and revenues. Obviously, shareholder rewards such as dividends and these types of instruments are very much so viable opportunity for all of us.
Speaker Change: Thank you, Steve. With that, we'd like to end the call for this evening. All questions that have remained unanswered will be answered via a press release later this month.
Speaker Change: The prepared remarks from this call as well as the slide deck will be available on our website and we will share a press release giving the highlights of the quarter and this earning call tomorrow morning. Thank you so much for everyone joining and we wish you have a great evening.
Speaker Change: Thank you, everyone.