Company: WKSP
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000850
Chunk: 223

Company: Worksport Ltd
Filing Date: 2025-03-27
Form: 10-K
Item: Item 4
Chunk 223
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pricing actions and cost reduction initiatives.

Additionally,
as central banks and the U.S. Federal Reserve increase interest rates to combat global inflation, the cost of debt financing increases.
The U.S. Federal Reserve has begun to decrease interest rates in 2024, but they may persist at an elevated level for the foreseeable
future. Our $6,000,000 mortgage   on our West Seneca property and our $1,487,000 in equipment financing both have floating
interest rates, meaning we are susceptible to variable monthly mortgage and debt interest costs as a result of changes in interest rates.

High
interest rates have also resulted in a shift in institutional holdings away from micro-cap equities, which has negatively influenced
our stock’s trading volume. We continue to forge relationships with institutional investors and analysts in order to maintain a
healthy trading volume.

Gasoline
Prices and Supply Chain Issues

We
faced significantly higher ocean freight, trucking, and container handling costs as well as last mile delivery costs in 2021 and 2022
than we did in previous years – all of which have increased our products’ landed costs. Higher oil and gasoline prices further
increased these costs, and while such prices have come down from their 2022 highs, we continue to closely monitor gasoline and shipping
costs. While the Freight Rate Index has significantly increased from late 2023 through mid-2024 as a result of Houthi attacks against
cargo ships in the Red Sea and the concurrent decline in activity across the Panama Canal, the shipping routes used by Worksport have
not faced dramatic price hikes. Regardless, Worksport is closely monitoring international shipping costs.

Our
transition towards domestic manufacturing and assembly is anticipated to largely offset these higher costs, as we believe we will be
less exposed to higher international shipping costs. We are also identifying North American suppliers of our products’ components
and will prioritize transport by rail when possible to avoid high trucking costs.

34

Foreign
Currencies

We
are subject to foreign exchange risk as we manufacture certain products and components in China, market extensively in both Canadian
and U.S. markets, employ people residing in both the U.S. and Canada and, to date, have raised funds in Canadian Dollars. Meanwhile,
we report results of operations in USD. Since our Canadian customers pay in Canadian Dollars, we are subject to gains and losses due
to fluctuations in the USD relative to the Canadian Dollar. Our manufacturers in China are paid in USD to better avoid the relatively