Shareholders’ Equity (Deficit)

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

Shareholders’ Equity (Deficit)

10. Shareholders’ Equity (Deficit)

During year ended December 31, 2021, the following transactions occurred:

During the year ended December 31, 2021, the Company issued a total of 1,502,410 (pre-stock split 30,048,199) common shares relating to the Reg-A public offering. Of the shares issued 15,500 (pre-stock split of 310,000) common shares valued at $31,200 were from share subscription payable and 750 (pre-stock split of 15,000) common shares were cancelled and refunded valued at $1,500. The Company raised $3,003,321 and incurred share issuance cost of $123,984.

During the year ended December 31, 2021, the Company had a underwriters’ public offering for 3,272,727 units consisting of 1 common share and 1 warrant at $5.50 per unit. In addition, the Company has granted the underwriter of the offering the option to purchase 490,909 warrants and/or an additional 490,909 common shares for 45 days after the closing of the option. During the year ended December 31, 2021, the underwriter purchased 210,909 common shares at $5.49 per share and additional 490,909 warrants (refer to note 22). A cumulative 3,483,636 post-stock split common shares were issued in connection with offering for $21,805,361 incurring share issuance costs of $4,335,908. As of December 31, 2021 the Company issued on aggregate of 4,986,046 post-stock split common shares for public offerings incurring total issuance cost of $4,459,892.

During the year ended December 31, 2021 the Company raised $4,081,980 through private placement offerings of 2,040,990 units for 1 common share and 2 warrants at $2 per unit. As such the Company issued 2,040,990 (pre-stock split of 40,819,800) common shares in connection with the private offering.

During the ended year ended December 31, 2021 2,488,721 warrants were exercised for 2,287,511 (pre-stock split of 32,468,420 and post-stock split of 664,090) common shares. As of December 31, 2021, 2,287,511 common shares were issued valued at $8,454,564. Refer to note 22.

During the year ended December 31, 2021, the Company entered into a loan settlement agreement with a loan holder to issue 62,006 (pre-stock split of 1,240,111) common shares at $1.80 per share for all outstanding loan principal and interest valued at $111,610. As of the date of the settlement the Company had $157,787 loan payable, resulting in the Company recognized a gain on settlement of $46,176. Refer to note 19. As of December 31, 2021 the Company issued 62,006 common shares.

During the year ended December 31, 2021 the Company entered into a promissory notes payable settlement agreement with a note holder to issue 36,048 (pre-stock split of 720,960) common shares valued at $1.80 per share for a total value of $64,890. As of the date of the settlement the Company had $73,886 promissory notes payable, resulting in the Company recognized a gain on settlement of $8,997. Refer to note 8. As of December 31, 2021 the Company issued 36,048 common shares.

During the year ended December 31, 2021 the Company entered into a settlement agreement with the convertible promissory note holder to settle all outstanding principal and interest. The Company issued 204,622 (pre-stock split of 4,092,440) common shares at $1.80 per share valued at $368,318. As of the date of the settlement the Company had $325,667 convertible promissory note, resulting in the Company recognizing a loss of $42,651 on settlement of debt. Refer to note 9.

During the year ended December 31, 2021 the Company issued 1,717,535 (pre-stock split of 34,350,700) common shares to Steve Rossi, the Company’s Chief Executive Officer and Director, in connection with his Employment Agreement in consideration for Mr. Rossi agreeing to amend the Series A Certificate of Designation to eliminate the Series A Preferred Stock conversion rights and returning 900 Series A Preferred Stock to the Company.

Worksport Ltd.

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

10. Shareholders’ Equity (Deficit) (continued)

During the year ended December 31, 2021, the Company entered into consulting agreements with third party consultants for 380,000 post-stock split shares of common stock valued at $1,648,700 for consulting services. As of December 31, 2021, the Company issued 370,000 post-stock split common shares valued at $1,562,700 to the third-party consultants for services received. The remaining 10,000 post-stock split common share will be expensed throughout the term of the agreement as the Company accrues the stock payable. As of December 31, 2021, the Company recorded $66,329 to share subscriptions payable for the outstanding 10,000 post-stock split common shares. As of December 31, 2021 the Company expensed $337,091 to advertising and consulting and capitalized $502,534 to intangible assets.

During the year ended December 31, 2021, the Company issued 259,808 (pre-stock split of 5,196,160) common shares valued at $741,159 for consulting and prepaid services, $241,559 were issued from share subscriptions payable. As of December 31, 2021 the Company consulting expense of $497,752. During the same period the Company issued 150,000 (pre-stock split of 3,000,000) common shares valued at $390,000 for consulting services. During the same period the Company issued 3,350 (pre-stock split of 67,000) common shares for employee compensation valued at $24,121.

During the year ended December 31, 2021, the Company granted and issued 775,000 post-stock split restricted shares valued at $4,121,000 of the Company to consultants for services to be rendered over a period of 12 and 24 months. Upon issuance 775,000 of the restricted shares vested immediately and issued. As of December 31, 2021, the Company recognized consulting and advertising expense of $796,000 and $3,325,000 to prepaid expense.

During the year ended December 31, 2021, the Company granted 45,000 post-stock split restricted shares of the Company to directors of the Company. Upon being granted 15,000 of the restricted shares vested immediately, 30,000 shall vest on January 1, 2022. As of December 31, 2021 the Company recognized consulting expense of $258,618 to share subscriptions payable. As of December 31, 2021, the restricted shares have not been issued.

Refer to note 22 and 23 for additional shareholders’ equity (deficit) for consulting expense of $37,000 related to warrant issuance and $1,551,111 to share subscriptions payable for consulting and advertising expense related to stock options.

During the year ended December 31, 2021, the Company completed a share consolidation of the Company’s issued and outstanding common shares based on twenty (20) pre-consolidation shares to one (1) post-consolidation share. As a result of the share consolidation a anti-dilution clause was triggered resulting in the Company issuing 237,500 common shares valued at $86,687.

During year ended December 31, 2020, the following transactions occurred:

During the year ended December 31, 2020, the Company issued 120,651 (pre-stock split of 2,413,022) common shares at $0.07 per share for $168,910 for consulting services.

During the year ended December 31, 2020, the Company entered into a share subscription agreement with a consultant of the Company for 200,000 (pre-stock split of 4,000,000) common shares valued at $125,000 for prepaid consulting services. The Company also entered into two prepaid advertising services agreement for 66,667 (pre-stock split of 1,333,333) and 12,000 (pre-stock split of 240,000) common shares at $0.09 and $0.07 per share for $120,000 and $16,800 respectively. As of December 31, 2020, the Company has expensed $215,164 from prepaid expenses. As of December 31, 2020, the Company issued 186,167 (pre-stock split of 3,723,333) common shares from share subscriptions payable for services render. Subsequent to year ended December 31, 2020, the Company issued the remaining 92,500 (pre-stock split of 1,850,000) common shares valued at $67,188.

During the year ended December 31, 2020, the Company entered into a share subscription agreement with a consultant of the Company for 62,308 (pre-stock split of 1,246,154) common shares valued at $162,000 for prepaid consulting services. As of December 31, 2020, no shares have been issued. As of December 31, 2020, the Company has expensed $18,900 from prepaid expenses. Subsequent to year ended December 31, 2020 the Company issued 62,308 (pre-stock split of 1,246,154) common shares.

During the year ended December 31, 2020, the Company entered into an advertising service agreement to issue 11,250 (pre-stock split of 225,000) common shares and warrants. The warrants are convertible at a ratio of 1:1 and are exercisable until December 31, 2021, at $0.20 per warrant. The shares valued at $21,747 have been included in share subscriptions payable. The warrants valued at $16,503 have been included in additional paid in capital. Subsequent to year ended December 31, 2020, the Company issued 11,250 (pre-stock split of 225,000) common shares.

During the year ended December 31, 2020, the Company entered into a share subscription agreement with a consultant of the Company for 200,000 (pre-stock split of 4,000,000) common shares valued at $250,000. During the year ended December 31, 2020, the Company issued 566,874 (pre-stock split of 11,337,479) common shares from shares of subscription payable with a combined value of $1,123,147. 284,349 (pre-stock split of 5,686,978) of the common shares issued from subscription payable valued at $648,147 relates to the anti-dilution feature triggered on March 5, 2019, as noted below.

During the year ended December 31, 2020, the Company entered into a settlement to fulfill a debt purchase agreement entered in 2017 for 205,000 (pre-stock split of 4,100,000) shares valued at $856,080. As of December 31, 2020, the Company has issued 205,000 (pre-stock split of 4,100,000) shares from share subscriptions payable.

During the year ended December 31, 2020, the Company initiated a Reg-A public offering at $0.10 per share and warrant. As of December 31, 2020, the Company raised $1,017,617 incurring share issuance cost of $55,004. As of December 31, 2020, the Company issued 498,065 (pre-stock split of 9,961,301) common shares valued at $996,301. As of December 31, 2020, the Company has 16,350 (pre-stock split of 327,000) common shares valued at $32,701 to be issued.

During the year ended December 31, 2020, the issued 100,000 warrants for services valued at $12,600. Refer to note 22.

During the year ended December 31, 2020, the Company reached a legal settlement agreement with an investor. In accordance with the settlement agreement, 4,166,667 (pre-stock split of 25,000,000), reserved shares were released and returned to the Company valued at $325,000. This transaction resulted in a gain on debt settlement of $229,142.

Worksport Ltd.

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

10. Shareholders’ Equity (Deficit) (continued)

During the year ended December 31, 2020, the Company issued 126,022 (pre-stock split of 2,520,434) common shares at $0.09 per common share pursuant to the conversion of the convertible promissory note (note 9) with a value of $226,839. The original value of the convertible promissory note converted was $182,565 as a result of the conversion the Company recognized a loss of $44,274 on settlement of debt.

During the year ended December 31, 2020, the Company issued 22,500 (pre-stock split of 450,000) shares in connection with the issuance of convertible promissory note (note 8) at $0.27 per share.

During the year ended December 31, 2020, Steven Rossi (the Company’s CEO) was issued 1,000 Series A Preferred Shares at $0.09 per share equal to 299,000 common shares voting rights for services rendered.

For the year ended December 31, 2021 and 2020, the Company was authorized to issue 299,000,000 shares of its common stock with a par value of $0.0001. All shares were ranked equally with regards to the Company’s residual assets. During 2021 and 2020, the Company was authorized to issue 100 shares of its Series A and 100,000 Series B Preferred Stock with a par value of $0.0001. Series A preferred Stock have voting rights equal to 299 shares of common stock, per share of preferred stock. Series B preferred Stock have voting rights equal to 10,000 shares of common stock, per share of preferred stock.