Company: WKSP
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001493152-25-022113
Chunk: 43

Company: Worksport Ltd
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 1
Chunk 43
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 in 2024, an increase of 61%. For the three months ended September 30,
2025, net sales generated from other countries was $27,985, compared to $28,751 for the same period in 2024.

Net
sales increased during the three months ended September 30, 2025 compared to the same period the prior year due to the successful
launch of the AL4 product line alongside further branding and marketing efforts for all product lines, resulting in higher direct to
consumer sales. Implementation of our distributor, wholesaler, and jobber sales strategy via the addition of multiple distributor
partners with a network of over 550 locations across the U.S. has driven higher net sales from our business-to-business
sales channels.

25

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 20%, from $2,875,186 for the three months ended September 30, 2024, to $3,445,088 for the three months ended
September 30, 2025. Our cost of sales, as a percentage of sales, was 69% and 92% for the three 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