Worksport Ltd. (WKSP) Earnings Call Transcript & Summary

So good afternoon, everyone. A lot of the we spent some time kind of preparing remarks, but then we're going to also let the conversation flow naturally as well. We really, really, really insist that you guys engage ask questions, and we'll try our best to answer everything. And we're not going to gate -- so far and we're not getting any questions. We're just going to answer all of them to the best of our abilities. Of course, we cannot provide any we can't see into the future. We also can't provide nonpublic or material information. So we do have some bounding blocks. But with that, I'll kick things off. So good afternoon, everyone, and thanks for joining Worksport's first Town Hall to end June, a little late, better late than never, and I appreciate you all being here. I'm Steve Rossi. As you all know, CEO and Founder of Worksport. Joining with me today is Faran Ali, my right-hand man, Investor Relations and Corporate Strategies. Leading here at Worksport. Today's format is intentionally simple. We're not going to go slide by slide through a deck. I want us to do direct camera on a useful. We want to spend roughly 20 or 30 minutes probably going to go over a little bit walking through what has changed in the business, how recent announcements connect and what we as management are focused on in the second half of this year. Then we're going to spend the balance of the session engaging with you, answering shareholder questions submitted previously and some live questions to the best of our ability. So get your thinking caps on with us get ready to it. So before we get, I want to make the disclosure bounce clear today, as I already said, we may reiterate previous forward-looking statements about our business outlook, operating objectives, expected trends, margins opportunities, distribution expansion, product adoption, certification, financing possibilities and our path towards cash flow positivity and profits. Some of these statements are based on current expectations and assumptions and some are subject to risks and uncertainties that we've described in our SEC filings. Actual results, of course, may differ materially, and we're not undertaking to update forward-looking statements, except for as required by law.

One more note. As we read the questions at the end. I do have to say that we'll have to keep the conversation within the realm of public information. I know that often shareholders that call me and ask me overeat if they want real-time answers, hey, how sales going, how's sales for the [indiscernible] how is the [indiscernible] Can we do XYZ. When we enter your questions, we have to answer within the realm of public information. And so when something requires formal disclosure, we will be upfront about it, and we'll do a press release informing all investors at the same time. So with your questions, I do have to stay in the realm of what's already publicly available, but we do look forward to giving clarity and speaking to those comments.

So the reason we scheduled this town hall is that work sport story has moved quickly since our Q1 earnings call. And in Q1, we gave investors a baseline revenue is growing. Gross profit was growing faster than revenue. So on core moving into commercialization. Nexus had launched. We landed our first national distributor, Tri-State and we continue to target operational cash flow positivity within this year. But since then, the company has released several key updates that we believe need to be understood altogether. We achieved a preliminary 35% gross margin in May, we added another multinational distributor of Meyer distributing as a major partner. We outlined a $36 million plus annualized revenue opportunity supported by direct-to-consumer sales and B2B expansion. We complemented by our existing run rate of $21 million and growing. So to be clear on that press release, if it wasn't already clear, we have a run rate of -- in the 20s of millions. And then with the addition of these new businesses that we have a run rate of the $35 million, $36 million. Run rate means a year from that day, not within this year. We're going to try our absolute best to hit as many millions of sales within this year but at least we hit that run rate, which is a really, really good update for us. We completed direct investments, including one at a premium to the then trading price I have twice taken equity in lieu of cash compensation this year. Our shares closed back above one on June 24, which was a huge milestone for us. We never delinquent or in violation in the NASDAQ rules, which is great. And we believe this keeps the company in full compliance with NASDAQ's minimum bid price requirement. And of course, super exciting cars Energy continues to be progressing with its revolutionary [indiscernible] cross-platform following the recent U.S. patent that we got branded, which is fantastic.

It's a lot, Steve. I mean, individually, those are important updates. Collectively, they tell a much stronger story, a story that I love speaking with investors about. It's about us moving from a point where we invested tens of millions of dollars and years to build this foundation to now we're building out operating conversion growth, scale, margins, revenue, business partnerships. And everything is finally aligning to the point where manufacturing efficiency is turning into more revenue higher margin and ultimately, bringing us closer to that operational cash flow positivity goal that we've been repeatedly saying we anticipate the target in the new.

Yes. So let me start with what's changed since our first quarter earnings call. Q1 was a launch readiness and inventory readiness quarter. We reported net sales of $3.3 million, $3.31 million, which was up year-over-year or almost 50%, $47.9 million. and gross profits of almost $1 million $855,000, up 115% year-over-year. The quarter-over-quarter wasn't strong, but Black Friday quarter Q4 is always our strongest quarter. This is important because gross profit grew faster than revenue, which is exactly what investors should want to see as a manufacturing platform scales. But we notably didn't have -- we notably did have a net operating loss and revenue was up sharply from Q4. This had to do revenue wasn't up sharply. And this has to do with seasonality, inventory investments in some final foundational investments. So we reinvested in Q1, not a bad quarter, but definitely a quarter we're going to continue to build off of. But since then, we've had several key commercial and operating developments, very, very important things have happened in Q2. Most significantly, the Nexus is now at market. So long worksport.com and check it out. It's the only 1 of its kind, and we invented it. We're so proud of it. This is an important product because it's not just another cover that addresses practical consumer pain points, especially with ease of operations, single-sided operations, speed and safety. And for a competitive tunnel cover market, the product differentiator matters for sure.

Steve you know, I wonder if investors are truly aware of how important Nexus is to our business line considering that our last financials reported in March, and this product came out in April. Could you describe the Nexus in your own words and speak to why it's very relevant?

Yes. So there's a couple of key things to pay attention to. Number one, our competitors have a flip-up tunnel covered like ours. They came out with it first actually. Ours has done a little bit better. There's no drilling involved. So ALI flips up against the back window. But as an operator, so if you have a truck, you have to go around the truck a few different times, you have to fold it up -- you have to buckle it, then you put it up against the back window, you engage one crop road, you have to do a trip around the truck, engage another proper, lock that in, do another trip around the truck. So it's kind of unsafe if you're on the road side, parking lots, it's inconvenient if it's raining and you want to get out of the elements or snowing, in convening if you're up against the curve, now bank depending on weather. You just don't want to do laps around the truck. It's not it just not necessarily conducive to ease of operations. So you have this fully loaded truck with all of these amazing endowments and then you've got this kind of dumb technology on the back of it. That is directly referring to our AL 4. It's a more basic flip-up tunnel cover. But now we have this nexus. And the Nexus is the only cover of its kind. We own this market, we own the IP around it that offers you taillight door operation. You get out, you open up your tailgate, you fold it open. It automatically locks up nice and easy and you get back in your truck and carrying on with your day. So it really is the nexus of tunnel covers. And we think that the 17,000 stores in America are going to start really catching on to it, they already have. It's outpacing the growth that we had from the AL 4 by double. And we think it's the next generation of covers that complement the well in Dow pickup trucks. The best features come first in a pickup truck, the GMC CR Denali, the F-150 platforms, they all have the latest and greatest features. So we wanted to make a cover that and met that truck, and the Nexus really is that. And it also recently directly contributed to recent distributor movements and it's really aided in our growth. So we're able to in Tri-State. It was an important first step as a distributor that services the Midwest, South and very key truck states and that distributor is actively growing. Myer distributing is multinational services Canada and the U.S.A., a much larger validation point. And Myer is a respected automotive aftermarket distributor with a broad reach of distributors, government, installers, upfitters, fleets, these types of things. So the initial purchase order was important, but the larger potential for these distributors is the B2B channel flow. As work sport kind of works its way through all the different aftermarket networks and reseller channels.

Yes. That's really important to for investors. I think 1 of the key steps that I like quoting, we did $4 million in B2B revenue in 2025. Absolutely. In 2020, we're already of approximately $8 million. And within 12 months, we're expecting that B2B run rate to be about $25 million annually. So sometime around June 2027 and we expect a $25 million B2B run rate as opposed to $4 million in 2025 and $8 million currently today. I think that's a tremendous jump and that speaks to what the next was of [indiscernible] brand is doing in terms of growth.

Yes. We've got a fully stackecards at this point, metaphorically speaking. So we couldn't be any more excited -- much more excited. Speaking of the excitement on Terabit Energy, super excited about that. I feel like the market overlooked the issuance of the patent of the Zero Frost. Otherwise, apply to the [indiscernible] pump in general. It strengthened our IP foundation on the platform. And I want to be clear, Terrific Energy is not the core 2026 revenue driver, but it's important for long-term strategic upside assets and certification work continues to progress. So investors should know that we're just finalizing the certification, we're knee deep in certification work right now to get it all the certifications it needs to meet all the standards to be bought by government agencies and of the businesses sold in the U.S. and abroad. And it's something that's getting a strong amount of interest. It has a 50x larger total addressable market than work for its tunnel cover core business. And this is -- this product is expected to be certified in 2026. So within the rest of this year, when the answer is not soon enough. Well, obviously, we want to certify it right away, but we're pushing and it will happen when it happens. And with such a large market and the fact that it's so innovative all of these things aggregate to a significant opportunity for investors to participate in the Worksport owns most of that business. So it's very exciting. So continuing forward on the topic of capital and alignment, I've taken Worksport Equity place this year in roof cash compensation at $75,000 worth at $0.85 and in April, a $50,000 worth of stock at $0.63 in early June. My only source of income is worked for it. I wish I had other businesses -- well I don't wish I had other businesses, but if I was Worksport is the only thing that I focus on, so my only incomes there, and I exchanged a compensation for stock, doubling down on my, I believe that this is going to be worth a lot more than the cash would have been to me -- and I did this because I believe in the company's long-term value the value creation, the opportunity and because I believe we, as management, should be aligned with the shareholders. I want to put more of my skin on the game -- so we also completed our recent direct investment. So while no emerging growth company likes issuing equity, I understand that. The key point is how capital is used and whether it supports value creation. So can we multiply those investor dollars. And our goal is to reduce reliance on external capital by growing revenue, gross margin and converting inventory and improving operational efficiencies so we're almost out of that at this point, and we're able to -- and once we're cash flow positive, we have to rely on any outside source of capital, and we'll be generating profits on our side, and we're right there. So the most important recent operating key metric is the preliminary May gross margins that were 35%. That's a major change from where the company was a year ago. We've disclosed that gross margins were roughly only 11% in December of last year -- or sorry, 2024, approximately 30% of December 2025, and they dipped a little bit in Q4 of 2026 -- Q1 of 2026 to just under 29%, 28.4% and approximately 35% in May based on preliminary internal results, and this really does matter with our base materials being a little inflated at this point in aluminum being so expensive.

Yes. No, it's interesting, right, because the higher gross margin, every dollar that the company makes has potential to cover our fixed costs and that's what operating leverage really means. The factory, the people, the systems, equipment, product infrastructure have been built now, and now our job is to push them through more contributions so that they have a stronger impact. We estimate that at 35% gross margin, which would need $9 million of quarterly revenue to achieve operational cash flow positivity. Earlier cash run rate annual revenue is about $20 million-ish that's already at a $5 million quarter absent the date that we quoted about, which I believe was in May. So we're already trajectory -- the trajectory is already moving nicely towards that $9 million. That number is not a magic line. It can move depending on product mix, channel mix, marketing efficiency, working capital operating expenses. But I think it's a useful framework for investors to know that we're aiming for 35% at $9 million a quarter, and we believe in the near term, near term is defined within 12 months, can achieve that goal. And given that in May 2025, May 2026, we achieved that 35% gross margin and revenues are stronger and new deals are coming in. Cash flow positivity is looking more viable day after day, and we expect to continue targeting it strong.

And very important to mention is we're actively working to make that $9 million a quarter revenue target smaller. We're looking at leaning out the operation of the business and finding efficiencies where possible. So the practical way to do that is not complicated, improved gross margins, improved channel mix, we do some necessary cost, increase throughput optimize marketing returns, reduce fulfillment friction and keep SG&A discipline. If we can generate more contribution from every dollar of revenue and keep operating cost control, the revenue level required to get to operational cash flow positive we can come down, and that's really a gold medal for us.

And I think that's what we mean when we say hidden operating leverage or export looks very different in the 35% margin than it did at 11%. The same [indiscernible] has a different impact. And our objective is to increase sales velocity while preserving the margin improvements that we have earned.

Yes. So let's talk a little bit about our commercial engine. We have 2 major channels, B2B and B2C business-to-consumer, business-to-business resellers retail. So business to consumer is valuable because it gives us customer data, it gives us higher margin, direct brand engagement, faster feedback the reseller or B2B is valuable because it can create a broader reach, dealer penetration, repeat ordering and distribution at scale.

In our June '25 update, we described our current revenue as $21 million are growing. That's not the same as the full year revenue guidance, and it's not a guarantee but it's an important momentum marker because it shows that the company is no longer only talking about these future or the future commercialization, we're actively converting the commercial demand. B2C turning at about $1 million per month or $12 million annualized, and that continues to grow every single day. It's an important channel because it helps validate consumer demand. It can be margin accretive advantaged with disciplined marketing spend. And importantly, on the B2B side, as we were talking about earlier, it's already at $8 million plus annual run rate and with now [ Myers, TRIS, Patriot, Alpro, ] our existing wholesale relationships as well as the broader dealer network that we're actively targeting Management believes B2B annualized revenue has the potential to exceed over $24 million in the next 12 months. But simply, B2B has the potential to become a much larger contributor and it's already showing but it's working and headed that way.

Yes. And when you combine current B2C with the B2B opportunity, we've described the $36 million annualized revenue opportunity. That number should be understood as a revenue opportunity supported by channel rent, not a guarantee but it's also where we are today, and we're obviously fighting and pushing towards more. So it gives shareholders a framework for why these distribution announcements matter. Myers is not just a headline, it's a potential access to more dealers, deeper installer networks and repeatable wholesale order flow. It basically covers more ground for us than we could just on our own. So our core focus for 2026, revenue driver really remains tunnel covers [ Solis, core Nexus ] and distribution growth. The core and the Nexus are going to get a lot of focus for the rest of this year. The next is we just wrapped up all the marketing assets on. So Nexus, as we discussed, is important because it gives us the tunnel cover portfolio -- it gives our tunnel cover portfolio fresh product with clear differentiation. The tunnel cover market is competitive, and we need products that are easy to use, durable secure and positioned better for consumer and pro install channels. The sales and the core remains strategically important because they extend work sport beyond the truck bed protection into mobile power, so a much bigger market kind of for anybody and everyone. The strategic idea is simple, cover solar generation, portable energy storage and utility for truck owners, overlanders, workers, emergency uses and potentially commercial customers like tweets or maybe the government or certification was an important execution milestone because certification is often a gatekeeper for large retailers, distributors, fleets and commercial opportunities. So we're really excited that we have that certification. Now we're switching our focus to the energy side of the business for the back half of this year for the second half. So I think that things are going to be a lot better when we start mixing in more core sales and more solar sales into the mix that we don't already have. So on that, I wanted to talk a little bit more about [ Tervis in the Atelux. ] It remains a separate upside platform -- the Zero Frost patent strengthens our IP position. Certification remains a key milestone. We're working hard towards it. And we're not building the 2026 revenue plan around [ Aelux ] and I don't want shareholders to misunderstand that. The current operating focus is work for commercial product lineup and distribution scale, while Tervis remains a strategic upside, and we'll update investors when the certification commercialization. We'll update you guys on partnerships or licensing milestones as they become appropriate to disclose. I also wanted to address the shareholders directly on capital and share price. We know dilution matters. We know shareholders are sensitive to financing [ Soma. ] Management is sensitive to it. And my view is that capital must be tied to operational return inventory conservation, distribution scale, product launches, manufacturing efficiencies and really ultimately a path to cash flow positivity. So the recent financing we did was an investment price of $1.20 per unit with warrants exercise at $1.50 and the additional years and additional interest expressed up to $10 million of potential future financing subject to market conditions and their appetite and also available registration capacity and regulatory requirements, define documents, approvals, all of these things. So there's a lot to get to $10 million, but we're going to take it in striving and we're going to raise capital and avoid out. We're going to raise capital as needed, and we're going to avoid dilution as much as possible as well. But what matters is we're attracting capital interest while we're trying to execute through key operating through a transformative year for us. And we don't want to take any more capital than strategically necessary at this stage. We'd rather take enough aim to increase the enterprise value and then take more capital at a strategic level and maybe debt financing that's not dilutive in these types of things.

Thanks, Steve. I'll take that context is really important. And we're always going to be happy to chat with investors and that commentary and conversation as it needs to. A lot of the key questions that I received over the last few weeks had to do with the common stock and closing above $1. Thankfully and fortunately, I think that the market has started to see a better reception of work ports press releases on June 24. We did close above $1, and we believe that keeps were fully in compliance with the minimum bid requirement. Compliance matters, but our deep focus is on the business behind the ticker and the stock price. We do not control the daily market pricing. We do not -- we do control execution. And we believe that the company is closer to operational cash flow positivity, reduces uncertainty. The intrinsic value of the business should be better reflected on the stock price over time. Currently, we are still trading below book value, and we are painting this picture of an operational cash flow positive future coming high revenue growth rate, and we expect that to have better opportunity inside the market as it continues and as it executes.

No doubt. So to close the prepared portion kind of where Ron and I wanted to have some of this open conversation. I want shareholders to understand our priorities for the second half of this year. First, grow revenue; second, maintain and expand margin progress. So we're going to try to squeeze every percent of margin. We're going to try to get as many sales as possible. We, as shareholders, I say this all the time on ex or Twitter we all want the exact same things. So third is we're going to try to convert inventory into sales. Fourth, we're going to scale distributor and dealer relationships fit. We're going to continue with the Nexus -- we're going to start really, really diving deep into the solid core commercialization. Sixth, we're really going to advance Terabit energy certifications and really position that business unit strategically. And seven, we're going to maintain capital discipline and keep working towards operational cash flow positivity. This is the phase that we've really been working so hard towards and the company has more products, stronger margins, broader distribution, more public visibility and a cleaner operating framework. Also like a much more visible path towards cash flow improvement than it had a year ago. There's still execution risk, we're still working hard. I still -- I say also all the time, it's not a straight line. It's not always pretty, we're going to try not to overpromise, and we believe in the foundation, we believe that it's stronger, what we build today. and we're focused on turning the foundation into execution and results.

Thanks, Steve. I think that's a perfect segue into Q&A. We did get a decent amount of questions in advance via e-mail and incur investors that as we continue to e-mail us and investors at worksport.com and ask for questions. Today, we are joined by our analysts covering the stock from Maxim Group, and we'll let him go first deliquestion before we proceed with the other investor in

Thanks, Faran. It's Tate Sullivan. Thanks, Stephen, for all the comments -- can you update on potential relationships with truck manufacturers? Or is that a sales channel you still want to pursue or more on the business on the distributor end? Can you contact on the OEM?

Yes. Good question. So Tic Tac Toe, we needed to get our house in order, so we got production under really, really well established under control. then we needed to be able to memorialize that and we did that with the ISO certification, which is a very important milestone for us to reach to be able to achieve or access OEM distribution OEM type business. So now that we've checked we've gotten everything in order on our side, and now we've memorialized that with ISO, we are able to start proceeding with the OEM conversations. So obviously, we're not going to be able to talk much about it specifically, but look out for that for -- in the near term. Well, at some point, hopefully this year, we're going to start looking at OEM relationships and getting those covers sold through truck manufacturers or installed directly on brands that would include, obviously, the big 3 domestic board General Motors Stellantis Ram, but then obviously, we have Nissan, Hyundai, Honda, Toyota, and then we have EV automakers like Rivian and Slate.

And what is -- what does the ideal partnership look like with the truck manufacturers/OEMs pay you directly and then deliver the trucks with your [indiscernible] covers on there? Or would it be a customer choice? How might it work?

So like when we talk about RAM, as an example, Rent has ran direct where we ship them product and they install it on -- at the factory floor. And then there's 3 options. Option 1 is we install -- they install it directly on the factory as a base accessory. Number 2 is they sell it through their parts like instead of going like through RAN, it goes through MOPAR if that metaphor makes sense. And then number 3 is they become just -- not just, but they become a dealer or a marketplace for our product. And usually, one transitions to the next. That's fluid. So it will go from like maybe like they'll sell your product to they'll offer it in their accessory catalog to they'll install it on the vehicle itself. Usually going direct to like direct installed at the factory could be dangerous. There's a risk there while you're establishing that relationship. And the warranty and quality required by OEMs is significant. So it's better to ease in these types of relationships as opposed to going straight for the biggest side of it. like going direct to install or cover on the Tesla cyber truck at the factory. We may not want that strategically until we've dipped our foot in the water of the business relationship because otherwise, the warranty risk and the cash required is crazy. Just so you know, in the industry, for every dollar you sell on OEM on a tunnel cover, you have to a warranty cost to $8,000 so if we sell them a 1,000 tonne cover and something goes arrive, it's going to cost us $8,000 on the back end between assessments. There's a full -- you have to tear down recovery. You have to have outside companies report on what failed and why all of these things. So we want to make sure that we ease into these types of relationships.

And just one more if and I will turn it over to the audience for more question. Is now that you -- is Nexus going to be most of your revenue? Or do you still sell prior versions of hard covers? Or how might that mix change?

We have a strategy. So NEXUS is going to be, obviously, I think probably the clear revenue driver ALI's going to probably transition to like a job or installer direct type product. And then the AL3 product is probably going to be like a door crasher on a work sporting ecosystem. And we're going to try to get the AL3 platform, our first more basic cover to be as cost competitive as possible to really compete with the imported products. I've said this before many times. There's nothing worse than a foreign product sold by a foreign company, that vacuums cash out of the economy. So we want to stay competitive with those Chinese, for lack of a better phrase of saying a Chinese Amazon products because every time someone buys a Chinese-made Chinese own company, tonner on Amazon, their $500 gets back and out of the economy into China, whereas we want to be able to make the AL3 door crasher kind of products, you can keep the cash in the economy here. This is still 93% American source made by American Hans we're gold metal of Made in America.

Thanks, Dave. Thanks for joining. Steve. Thanks, Dave, for your questions. Steve, we have the question here in the chat from Jack B. From a macro perspective, what's your perspective on foreign and Chinese imports in the U.S. truck bread cover industry and market? And what are the trends you have seen in the past? And what do you expect going forward, specifically around the tariff market.

Yes. That's -- Jack, what if I met you shake your hand right now, it's a great question. I want to say that I personally dislike I dislike Amazon as a marketplace. And I'll tell you why these Amazon has quickly turned into like a low-cost alternative. It's where like more foreign products go can be very cost competitive. So you have like Dyson vacuums that are $400, $500, and then you have this like kind of almost a replica for $50 or $60. And it's helping us, but it hurts us first. The average American consumer has been bitten by that lower cost product too many times now, and they bought something that they think is going to save them a few dollars and that it just doesn't last or it doesn't work as well. So my perspective on foreign or Chinese imported products is that the quality just isn't there. You really do get what you pay for and when you -- when you could buy an American-made product with the best domestic customer service for $600 and the equivalent imported product is only like 10% or 15% less it just doesn't make sense. And we've got to try to get our cost down while still being profitable. The trends I see are very cyclical, but now they're really cycling in favor of Made in America. I think that the average consumer as I said earlier, has been bitten by the low-cost product. They can buy a copycat icon vacuum and you think that you saved $400 because it's only $15 so $50 and then it just doesn't work. And there's only a few times that the consumer is going to want to deal with that before they just say, you know what, I'm going to like to pull it. The problem is the economy right now in North America is a little stressed. The consumer is a little stress though with inflation. So we think we're going to weather a little bit of a storm while consumers are being more cautious on where they spend their dollars. But I think in the year is coming, when inflation hopefully gets reversed, finally, things will come full circle and people will be spending more and they'll, at that point, be very focused on trying to get the best value for the dollar, which is going to be made in America product.

Thanks, Steve. I think that was a pretty sufficient answer. We have a question here from Robert T. surrounding the core. The question is, where do you stand with negotiations in getting the core into big box outlets? Do you have the capital and capacity to support this type of large-scale initiative. I think that we can't talk too much about where we stand with active negotiations, but we can definitely talk about a second part on capital and capacity and how we would target it.

Yes. So we have figures fraud, right, in inventory of the core. So we have enough to jump start that cycle. Obviously, big box stores are a good marketplace but the same kind of metaphor with the OEMs like going direct to Ram trucks and like installing your cover on the factories like the biggest contract, but it has the biggest risk and then going direct to like big box stores is really, I think, going straight there is difficult. What a more prudent path might look like is like partnering with like Home Depot, for example, and becoming like a marketplace vendor and seeing how it sells through there where they just take a commission and then maybe trying some key stores like they have like 1,000 stores, I think. So trying like 50 of their best stores and then lagging into these types of relationships. And then while you leg into it, you mitigate risks of downside like warranty, maybe sell-through challenges or returns, but then you also are able to ramp up the revenue to sell finance that as opposed to that one big like the risk with Home Depot being like fine. We're going to buy $10 million right now. Well, now you have $10 million of revenue, but you have probably more than $10 million in risk whereas starting a little slow and modestly allows you to leg into things with much more reduced risk and being able to fix problems as they come up before they become too big. If that makes sense, if we've shown anything is that maybe we're not the fastest to grow and it's not because of lack of demand but because we really like to mitigate risk and otherwise, things go sideways quickly. I don't want to talk much longer about it. But I will say, a friend of mine came to me a decade ago and he said, hey, I got this Costco contract for winter wheels. And he says, they're going to buy all the winter steel rooms for me and I said, I don't know if you want to do that, Costco is pretty nefarious and he went ahead on a mortgage is house to buy -- to sell, I think, $1.5 million of cost for aluminum rooms, the didn't cost return $1 million of them at the end of the year and he went bankrupt. These big box stores are difficult. And we know what they do, and we've just got to leg into these types of relationships on the photo.

Thanks, Steve. We have...

Bob, I know you very well, and thanks for communicating with me all the time.

We hear a question from Kresimir and it actually aligns with Question 11 that we received over e-mail. The question is, where are you with the Solesencore? Are you in line with expectations that you initially had with the products? And where is the revenue target for this year or maybe next? So far publicly, we have talked about the core and [indiscernible] in Q1. We didn't give revenue targets for this year and next. So maybe going outside of revenue target specifically, I think maybe we can rehash the conversation of where we are with this product and sort of what we're seeing and how we're targeting it in the market.

Yes. So it's difficult. So the core in the solar product that never existed before. So when you make an AL3 and it's similar to a solid hold by extending or a rugged liner cover. It's easy to target existing customers. There's already a market. So that's why people copy other products because there's already an existing market, you just got to be cheaper and rollout you're into the market. Solis never existed before ever. Core versions of it existed. I did a video that we're going to launch pretty soon, showing like a drill that has a built-in battery. So the built-in battery generator system exists, nothing like our core exists where it's an unlimited amount of energy kind of system. So it takes a lot of time to be able to develop the marketing assets and then find the right marketing channels, influencers affiliates, all of these things. So we, at the beginning of the year, we did launch the core in the Solis, but we were also launching the Nexus, which was the more clear opportunity. So we put all of our marketing efforts into Nexus. Now the Nexus is done. It's basically done. And all of our marketing department, which is -- we see everything that they do online, all of the brilliant mines there are going to be focused for the second half of the year exclusively on core and solar. So cores, we're not selling a heck of a lot of them, and that's on purpose. I can't give you a number, but we're not because I'm bailing anything, but because it's like we've sold maybe between 50 to 100 crores, for example, but that's on purpose. We just haven't focused on it. We're going to sell millions of dollars. Our intention is to sell millions of dollars of core throughout the years as much as possible, but we have to focus the marketing departments to get that built out. The Solis is actually selling quite well. We're selling on a frequent basis. They sell daily which -- and there's no marketing dollars there. So that's a very positive sign. So we're excited for the second half of the year now that our focus is going to be switching to that.

And I'd like to compliment that question with 2 more insights. Number one, Worksport did 1 million open tone covers the first year we started selling U.S. [indiscernible] covers. Then the next year, it was $8.5 million. So this is our first year of selling the soles and core, and we do anticipate it to scale up with the core, one of the key aspects that we have had faced from an environmental and a broader economic perspective. is the tariffs. With the lithium ion battery, specifically, we did end up paying a high percentage on the core pricing on the tariffs. We noticed that competitors placed merge orders while in new the tariffs and we anticipate that either when the tariffs phase out or their inventory phases out, the pricing scheme between competitors and us does balance. On the solar side, we're only on stealing it. The margins are healthy and the pricing is also healthy and we do anticipate that to grow quickly as well. I will move to the next question, Steve. It's from Stephen L and it's related to patent protection for our products. He's asking what type of coverage we have across the globe.

Yes. Good question. So we have elected our on-staff General Counsel, started as our patent council coming from Philips and I value [indiscernible] immensely as a colleague of mine in the upper management of the company and it's very expensive and very strategic on the patent side of things. So we try to do PCTs, which allow us to pull down patents over a year or 2 on a global scale. But otherwise, we tend to focus on patent products our recipes, we patent our products in China so that we could obviously stop the export of [ OpCo. ] And then we try to patent within North, South and Central America. Sometimes we pick like Eurasia or Australia and New Zealand and then sometimes we pick Europe. But getting into some of these European countries, you can be expensive and very challenging with translations and weird patent laws. So you can assume that most of our products are patented in North America and in China at minimum and then we may touch Europe, we may touch Eurasia, Australia, New Zealand, and we may look selectively at some of Central and South America. What I will say is the 0 frost patent is going to be the most expensive one for us. We're going to go everywhere with that because the heat pump market is not just a North America thing. It's a global thing. It's a massive market. So that's kind of our strategy there. Thanks, Steve.

And we have an anonymous in question here that I'll take myself. The question is -- if we can give insight on the book-to-bill ratio monthly or quarterly as part of our public information and congratulating us on great growth so far. I believe the answer to that best stated is we've been doing build to order as well as using our existing inventory. Thankfully, we have not had a situation we've had a large backlog, especially as the B2B orders start building up and the volume started to come in, in much more aggressive banners. We have been having discussions about backlog and who gets on which priority goes where. So we would be happy to disclose that better into public financials as it happens. But currently, we have the black log that's a significant amount. And as we start building a backlog, you can imagine that the largest distribution would have a little bit of longer backlog than perhaps the dealer network would or the B2C individuals would and I'll top it off with we never want backlog to be into the weeks we would try our best to keep it into the days.

Faran, I do want to get through all of these questions, the live ones. So let's get through all of them as possible, please.

Yes, sir. Mike T. His question is, what is your biggest challenge overall right now? And what do you need to fix it?

I know Mike. The biggest challenge is oh boy. Biggest challenge is finding the right amount of sales growth. B2B, as you know, is very difficult and growing within those markets is challenging covering so much ground. Also making sure that we don't overspend making sure that we're fighting inflation is very difficult with the prices of aluminum having gone from $1.30 a pound to $2.60 account for American aluminum doesn't help anybody. But they got all of our competitors have to raise -- they're dealing with the sympathy raising the pricing as well, we're not really raising our pricing were just reducing the discount. So the challenges are growing as fast as possible, striking while the [indiscernible] And then also not jumping on Landmark as you can see like here, investors want that RAN partnership and they want that Cabela's partnership, and they want that Home Depot PO and Walmart but investors sometimes and I'm not knocking investors, I wanted to, but they don't understand the inherent risks. And I think you know coming from aftermarket that if you go straight to an OEM and you become a factory installed item. If something goes wrong, which can and usually does -- you're losing way more money than you ever thought about maybe. So it's being highly strategic in our growth and making sure that we're stable. But meanwhile, yes, there's been a handful of years, grown a tunnel cover business with $30 million in run rate. I don't think that's ever been heard of. I think back industries was around for 30 years, and they were at $15 million after the 30th year, we're going to be in the 30s of millions of run rate in our third year. So I think we're doing quite well. But otherwise, just keeping it all together and pushing, keeping everyone rolling together and pushing that bold.

Thanks, Steve. I did answer a few questions over chat, but I did want to ask this 1 quickly because I think it will be interesting for ever doing here is what were the initial purchase orders for Myers and Tri-State and you can speak to that, could you at least talk to the reorder cadence and seasonality, are you assuming from them within the revenue run rate. So I guess within that $25 million or projection that we have spoken about.

I see it Steve, Steve Wang. So thanks for asking the question, Steve. I want to answer the first part of it, but I can't. It's nonpublic. I just can't. I promise you I can't, but I can say that we've gotten reorders from one and the other one just went out like a week ago. So we expect more orders from the other. And I don't see a lot of seasonality. So the seasonality we have in the business is the doldrum of summer, like August is not a bad month. It's just a slower month because everyone in that last minute vacation but June and July are busy because they're getting ready for that road trip or whatever. As soon as September hits, we got the fall late summer and fall markets, which are strong. And then we've got Black Friday in November, which is a wild. It could be a $2 million a month and it could be a $10 million a month, it just depends. But then as soon as Christmas you think that people would buy tunnel covers for Christmas, they don't, they don't. So as soon as December, as soon as Black Friday is over and December hits your quiet December, January, February, like those 3 months are pretty quiet. So it's not like dead qual, which just sales are slower. We could run promos more strategically at that point, but it depends on our cost. It depends on if there's any additional inflation the higher our cost goes, the lower that we could -- the less we could discount is the way you got to look at it. So yes, what I can say is with distribution, though we reach deeper into like fleets, governments and these types of things where we're more sheltered from the seasonality of direct-to-consumer sales, if that makes sense?

I think that's a great answer. And I'll go ahead and answer a question from me. He was asking a question related to the heavy volume and billions of shares that have traded in the last 10 days compared to the historical averages. I think that remains the best answer here is the only answer, which is we have no insight to what has caused that normally high volume over the last few days. Outside of the recent news releases surrounding the recent business financings, revenue growth, margin growth as well as a business lending Myers distribution. We posted those press releases to the market. It seems like there was a positive reaction, both in price and volume. But what specifically caused it to trade hundreds of millions of shares for this $5 million or $500,000, we have no idea.

I remember 1 time Faran as an anecdote, [indiscernible] one time the stock was like going crazy, and we were trading a lot of stock. And I remember my phone started buzzing and buzzing and buzzing. And someone -- I just answered arbitrarily and there was like an investor or a bank -- and he said, "Oh, my god, what are you doing? What are you doing? Like the stock is going crazy and your price is up and your volumes up and I'm like I'm presently and my mother's living room getting yelled at by her, like lectured by her? Like so it's an anecdote and it's a stupid one, but investors think that we're in a roundtable with computers and screens, doing deals and talking to bankers and stuff -- sometimes you know better than we do. We're on and I are on calls, talking strategy and opportunities and then something just happens in the market, it will go down 20%. Investors like what do you do? And it's like we were talking about sales. But I don't know what we did. We did nothing. So the answer is sometimes it born we don't know. And I promise you if we did know, we tell you -- but a lot of our days are just spent doing this Zoom meetings and team meetings or meeting in person talking sales and strategy. And what happens in the markets up or down, usually, we have no idea. We don't we find out loaded through you guys.

Thanks, Steve. And I do want to wrap this up. I know that there's a lot of others left on e-mail as well as one question that he's here really to her Frost. But we want to give the note that we will be doing this again. We will try to continue to engage investors through this sort of medium and if you have some feedback and how we can make this better, more suitable and more informative for you to please go ahead and e-mail us, and we look forward to continue giving investors positive updates as well as speaking to about past updates and this great company together with you.

We're going to try to do these every month. So continue to engage with me. I think it's at @steverossiWKSP on X. You X me or tweet me on there, e-mail as you get prong so we're always open to conversations. And then from there, we'll have these on a monthly basis and just continue to answer questions and give updates. So I guess we'll wrap it up at that Faran.

Yes, sir. Thank you all. Thank you so much. And see you soon.