Company: WKSP
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023334
Chunk: 59

Company: Worksport Ltd
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 8
Chunk 59
---
, 2022.

The
Company recognized consulting expense of $595,863 to share subscriptions payable from restricted shares and stock options to be issued.
As of June 30, 2024, the Company issued 31,715 restricted shares with a value of $369,700.

During
the six months ended June 30, 2024, the Company closed a sale of 237,224 shares of common stock for net proceeds of $1,535,591. In
association with the sale of common stock, the Company issued 147,789 pre-funded warrants and 770,026 warrants totaling proceeds
of $1,093,492.

    12

8.
Income Taxes

The
effective tax rate for the six months ended June 30, 2025 and 2024 was 22.9% before 100% allowance adjustments on net deferred income
tax assets. The effective tax rate for the six months ended June 30, 2025 and 2024 was higher than expected from applying the U.S. federal
statutory rate of 21% to loss before income taxes due to tax benefits on losses generated outside the U.S. with higher statutory rates.

9.
Financial Instruments and Fair Value

Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between
market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can
be used to estimate fair value. The definition of the fair value hierarchy is as follows:

Level
1 – Quoted prices in active markets for identical assets and liabilities.

Level
2 – Observable inputs other than quoted prices in active markets for similar assets and liabilities.

Level
3 – Inputs for which significant valuation assumptions are unobservable in a market and therefore value is based on the best available
data, some of which is internally developed and considers risk premiums that a market participant would require.

The
Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, revolving line of credit,
and long-term debt. The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying
value because of the short-term nature of these instruments. The Company’s revolving line of credit is based on a variable interest
rate and is reflected in the financial statements at carrying value which approximates fair value at June 30, 2025. The Company’s
long-term debt is based on a fixed