Company: WKSP
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000850
Chunk: 128

Company: Worksport Ltd
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1
Chunk 128
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and increasing demand for precious metals. We are actively researching ways to lower such environmental impacts.

Inflation

Prices
of certain commodity products, including raw materials, are historically volatile and are subject to fluctuations arising from changes
in domestic and international supply and demand, labor costs, competition, market speculation, government regulations, trade restrictions
and tariffs. Increasing prices of the component materials for parts of our goods may impact the availability, quality and price of our
products as suppliers search for alternatives to existing materials and increase the prices they charge. Our suppliers may also fail
to provide consistent quality of product as they may substitute lower cost materials to maintain pricing levels. Rapid and significant
changes in commodity prices may negatively affect our profit margins, and it may be difficult to mitigate worsened margins through customer
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