Company: WKSP
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001493152-25-022113
Chunk: 40

Company: Worksport Ltd
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 40
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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.

Geopolitical
Conditions

In
February 2022, Russia initiated significant military action against Ukraine. In response, the U.S. and certain other countries imposed
significant sanctions and export controls against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian
political, business, and financial organizations, and the U.S. and certain other countries could impose further sanctions, trade restrictions,
and other retaliatory actions should the conflict continue or worsen. It is not possible to predict the broader consequences of these
conflicts, including related geopolitical tensions, and the measures and retaliatory actions taken by the U.S. and other countries in
respect thereof as well as whether any counter measures or retaliatory actions in response, including, for example, potential cyberattacks
or the disruption of energy exports, are likely to cause regional instability and geopolitical shifts, which could materially adversely
affect global trade, currency exchange rates, regional economies and the global economy. These situations remain uncertain, and while
it is difficult to predict the impact of any of the foregoing, the conflicts and actions taken in response to these conflicts could increase
our costs, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all,
or otherwise adversely affect our business, financial condition, and results of operations.

While
we do not have any direct operations or significant sales in the Middle East, geopolitical tensions and ongoing conflicts in the region,
particularly between Israel and Hamas, may lead to global economic instability and fluctuating energy prices that could materially affect
our business. It is not possible to predict the broader consequences of the Israel-Hamas war, including related geopolitical tensions,
and the measures and actions taken by other countries in respect thereof, which could materially adversely affect global trade, currency
exchange