Company: WKSP
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001493152-25-022113
Chunk: 93

Company: Worksport Ltd
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 8
Chunk 93
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 ended September 30, 2025, revenue generated
in other countries was $74,297, compared to $80,560 for the same period in 2024, a decrease of 8%.

Net
sales increased during the nine months ended September 30, 2025 compared to the same period the prior year due to further branding
and marketing efforts resulting in higher direct-to-consumer sales as well as implementation of our distributor, wholesaler, and
jobber sales strategy leading to increases in our business-to-business sales channels. Also driving greater net sales was the
release of the flagship AL4 product line.

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, and our own e-Commerce platform hosted on Shopify.
Distribution via each aforementioned channel is expected to increase during 2026. 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 six large U.S. distributors, one retail auto chain, and online retailers to
grow our customer base. We added two of these U.S. distributors within the period, 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 67%, from $4,975,277 for the nine months ended September 30, 2024, to $8,311,718 for the nine
months ended September 30, 2025. Our cost of sales, as a percentage of sales, was 73% and 90% for the nine months
ended September 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 throughput allowed fixed and semi-variable overhead costs to be allocated
across a higher number of units, thereby reducing the cost of sales on a per-unit basis.

We
provide our distributors and online retailers an “all-in” wholesale price. This