Company: WKSP
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001493152-25-022113
Chunk: 112

Company: Worksport Ltd
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 2
Chunk 112
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 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 of sales on a per-unit basis.

We
provide our distributors and online retailers an “all-in” wholesale price. This includes any import duty charges, taxes,
and shipping charges. Discounts are applied if the distributor or retailer chooses to use their own shipping process. Certain exceptions
apply on rare occasions where product is shipped outside the contiguous U.S. or from the U.S. to Canada. Volume discounts
are offered to certain high-volume customers, and we also offer a “dock price” or “pickup program” whereby clients
are able to pick up product directly from our stocking warehouse.

Operating
Expenses

Operating
expenses increased for the three months ended September 30, 2025 by $2,209,166, from $4,152,389 for the three months ended September
30, 2024 to $6,361,555, mainly due to the following factors:

    ●
    Research
    and development expense decreased by $95,351, from $396,446 in 2024 to $301,095 in 2025. The decrease was related to developmental
    progress of our AL3 product line and release of our AL4 product line, both of which required less development efforts as resources
    were shifted to normal-course production.

    ●
    General
and administrative expense increased by $471,291, from $2,478,809 in 2024 to $2,950,100 in 2025. The increase was primarily attributable
to increased insurance and facility support costs to sustain production efforts, alongside an increase in e-Commerce fees due to increased
sales volume.

    ●
    Sales
    and marketing expense increased by $1,700,957, from $661,238 in 2024 to $2,362,195 in 2025. The increase in sales and marketing was
    primarily attributable to marketing campaigns to support investor relations initiatives and drive traffic and engagement to our online