Company: WKSP
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023334
Chunk: 102

Company: Worksport Ltd
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 2
Chunk 102
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,910,838 for the same period in 2024, an increase of 113%. For the three months ended June 30, 2025, revenue generated
in Canada was $34,552, compared to $28,677 for the same period in 2024, an increase of 20%.

Net
sales increased during the three months ended June 30, 2025 compared to the same period the prior year due to the successful launch
of the AL4 product line alongside further branding and marketing efforts for all product lines, resulting in higher direct to
consumer sales. Implementation of our distributor, wholesaler, and jobber sales strategy via the addition of multiple distributor partners with a network of over 550 locations across the United States has
driven higher net sales from our
business to business sales channels.

25

We
distribute our hard tonneau covers and soft tonneau covers in the U.S. and Canada through an expanding network of wholesalers, private
labels, distributors, and other online retailers, including eBay, Amazon, Walmart, and our own e-commerce platform hosted on Shopify.
Distribution via each aforementioned channel is expected to increase during 2025. We have pursued and will continue to pursue relationships
with Original Equipment Manufacturers with the intention of distributing through them as well.

We currently work closely with a large Canadian and four large U.S. distributors
as well as online retailers to grow our customer base. We are progressing well in conversations with two other major distributors with
strong market presences, which will allow us to promote to dealers and sell to jobbers in strategic regions. Lastly, we partnered with
a network of nationwide U.S. dealers capable of bringing our product to all U.S. continental states.

Cost
of Sales

Cost of sales increased by 86%, from $1,624,910 for the three months ended
June 30, 2024, to $3,022,846 for the three months ended June 30, 2025. Our cost of sales, as a percentage of sales, was approximately
73.6% and 84.6% for the three months ended June 30, 2025 and 2024, respectively. The decrease in the cost of sales as a percentage of
sales was primarily driven by improved production efficiencies resulting from the continued maturation of our manufacturing processes.
As production volumes increased, we achieved greater economies of scale and more efficient overhead absorption, resulting in lower per-unit
manufacturing costs. This improvement in operational