Company: WKSP
Filing Date: 2025-03-27
Form Type: 10-K
Source: 0001641172-25-000850
Chunk: 140

Company: Worksport Ltd
Filing Date: 2025-03-27
Form: 10-K
Item: Item 1
Chunk 140
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 communicated below are matters arising from the current period audit of the consolidated financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.

Inventory

Description
of the Matter

As
of December 31, 2024, the Company’s inventory balance was approximately $5.190 million. As reported in Note 3, inventory has increased over
the past year as the Company has shifted to full scale production in its West Seneca  manufacturing facility. The Company evaluates
its inventory for obsolescence on an ongoing basis by considering historical usage as well as requirements for future orders.

43

Given
the inherent uncertainty and significant 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