Company: WKSP
Filing Date: 2025-03-28
Form Type: S-1
Source: 0001641172-25-001309
Chunk: 36

Company: Worksport Ltd
Filing Date: 2025-03-28
Form: S-1
Chunk 36
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its parent company Digital Currency Group, Inc., and former partner Gemini Trust Company, have highlighted the counterparty risks applicable
to owning and transacting in digital assets. Any similar bankruptcies, closures, liquidations and other events may not result in any loss
or misappropriation of our intended bitcoin holdings, or adversely impact our access to our bitcoin holdings. Or, any such bankruptcies,
closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry may negatively
impact the adoption rate, price, and use of bitcoin, limit the availability to us of financing collateralized by bitcoin, or create or
expose additional counterparty risks.

| 17 |

Changes in the accounting treatment of our bitcoin holdings could have significant accounting impacts, including increasing the volatility of our results.In December 2023, the
FASB issued ASU 2023-08, which upon our adoption will require us to measure in-scope crypto assets (including our bitcoin holdings) at
fair value in our statement of financial position, and to recognize gains and losses from changes in the fair value of our bitcoin in
net income each reporting period. ASU 2023-08 will also require us to provide certain interim and annual disclosures with respect to our
bitcoin holdings. The standard is effective for our interim and annual periods beginning January 1, 2025, with a cumulative-effect adjustment
to the opening balance of retained earnings as of the beginning of the annual reporting period in which we adopt the guidance. Due in
particular to the volatility in the price of bitcoin, we expect the adoption of ASU 2023-08 to have a material impact on our financial
results in future periods, increase the volatility of our financial results, and affect the carrying value of our bitcoin on our balance
sheet, and it could also have adverse tax consequences, which in turn could have a material adverse effect on our financial results and
the market price of our common stock. Additionally, as a result of ASU 2023-08 requiring a cumulative-effect adjustment to our opening
balance of retained earnings as of the beginning of the annual period in which we adopt the guidance and not permitting retrospective
restatement of our historical financial statements, our future results will not be comparable to results from periods prior to our adoption
of the guidance.

The broader digital assets industry, including the
technology associated with digital assets, the rate of adoption and development of, and use cases for, digital assets, market perception
of