Company: WKSP
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000850
Chunk: 490

Company: Worksport Ltd
Filing Date: 2025-03-27
Form: 10-K
Item: Item 8
Chunk 490
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 judgments necessary to value inventory and its related obsolescence, auditing management’s
estimates involved a high degree of auditor judgment.

How
We Addressed the Matter in Our Audit

Our
auditing procedures related to inventory valuation included the following, among others:

    ●
    We
    evaluated the appropriateness and consistency of management’s methods used to value inventory and develop its estimates.

    ●
    We
    evaluated the reasonableness of judgments made and significant assumptions used by management relating to key estimates.

    ●
    We
    inquired of management relative to write-offs of inventory during the year.

    ●
    We
    tested the completeness and accuracy of management’s inventory detail.

    ●
    We
    developed an independent expectation of the obsolescence reserve based on our knowledge of the Company’s inventory, including
    analysis of slow-moving items and historical usage and compared it to actual.

    ●
    We
    performed a lower of cost or net realizable value analysis by selecting a sample of items included in inventory at year-end.

    ●
    We
    selected a sample of purchases made throughout the year to ensure they were included in inventory at the proper weighted-average
    value.

    ●
    We
    selected a sample of purchases made before and after the year end to ensure proper cut-off was achieved.

    ●
    During
    our physical inventory observation, we toured the Company’s facility and examined inventory on hand to determine the completeness
    and existence of ending inventory.

    ●
    We
    examined management’s overhead analysis and performed procedures to test its completeness and accuracy.

Shareholders’
Equity and Related Transactions

Description
of the Matter

As
discussed in Notes 7, 15, and 16 to the consolidated financial statements, the Company has issued a significant amount of equity securities.
The tracking of these transactions can be complicated and require management to estimate the value of equity securities using a Black
Scholes option pricing model. We identified the fair market value of equity transactions to be a critical audit matter, as the calculations
can be complex and subject to error.

How
We Addressed the Matter in Our Audit

Our
auditing procedures related to equity transactions included the following, among others:

    ●
    We
    evaluated the appropriateness and consistency of management’s methods used to develop its estimates.

    ●
    We
    gained an understanding of management’s process to record the equity transactions.