Stock Options

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock Options

23. Stock Options

Under the Company’s Equity Incentive Plan the number of common shares reserved for issuance under the option plan shall not exceed 10% of the issued and outstanding common shares of the Company, have a maximum term of 10 years and vest at the discretion of the Board of Directors.

All equity-settled share-based payments are ultimately recognized as an expense in the statement of operations and comprehensive loss with a corresponding credit to “Additional Paid in Capital.” If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognized in the current period. No adjustment is made to any expense recognized in prior periods if share options ultimately exercised are different to that estimated on vesting.

On December 29, 2021 the Company granted 400,000 and 300,000 performance stock units (“PSU”) to the Company’s Chief Executive Officer and a director, respectively. The PSU will vest in 5% increments according to a schedule that correlates with the Company’s stock price. The first 5% of the PSUs vest upon the Company’s stock price closing at $3.00. 50% will have vested at a closing price of $16.50 and 100% will have vested at a closing price of $31.50. As of December 31, 2021, no PSUs have been vested and the Company recognized $0 to stock based compensation expense.

On August 6, 2021, the Company granted 140,000 options to directors, advisors and officers with an exercise price of $5.50 and an expiry date of August 6, 2026. The stock options will vest on January 1, 2022. The fair value of the options on grant date was estimated to be $754,189. The Company recognized $749,084 to consulting expense during the year ended December 31, 2021. The fair value of the options were calculated using the Black-Scholes option pricing model and using the following assumptions:

	Year ended
	December 31, 2021
Discount rate		0.6	%
Expected volatility		263	%
Expected life (years)		4.13
Expected dividend yield		0	%
Exercise price	$	5.32
Stock price	$	5.32

On July 23, 2021, the Company granted 15,000 options to a director with an exercise price of $5.50 and an expiry date of July 23, 2026. The stock options will vest on January 1, 2022. The fair value of the options on grant date was estimated to be $129,480. The Company recognized $128,681 to consulting expense during year ended December 31, 2021. The fair value of the options were calculated using the Black-Scholes option pricing model and using the following assumptions:

	Year ended
	December 31, 2021
Discount rate		0.201	%
Expected volatility		302	%
Expected life (years)		2.72
Expected dividend yield		0	%
Exercise price	$	5.50
Stock price	$	8.72

On September 1, 2021, the Company granted 400,000 options to a consultant with an exercise price of $5.32 and an expiry date of September 1, 2026. The options have a vesting period of 6 months from the initial grant date; 100,000 shall vest on March 1, 2022, 100,000 shall vest on September 1, 2022, 100,000 shall vest on March 1, 2023 and 100,000 shall vest on September 1, 2023. The fair value of the options on grant date was estimated to be $2,112,000. The Company recognized $352,972 to consulting expense during the year ended December 31, 2021. The fair value of the options were calculated using the Black-Scholes option pricing model and using the following assumptions:

	Year ended
	December 31, 2021
Discount rate		0.60	%
Expected volatility		263	%
Expected life (years)		4.13
Expected dividend yield		0	%
Exercise price	$	5.32
Stock price	$	5.32

Worksport Ltd.

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020

On October 7 and November 2, 2021, the Company granted 5,000 and 62,500 options respectively, to advisors with an exercise price of $5.50 and $5.24. The options will expiry on October 7, 2026 and November 2, 2026 respectively. The stock options will vest on January 1, 2022. The fair value of the options on grant date was estimated to be $326,498. The Company recognized $320,374 to consulting expense during the year ended December 31, 2021. The fair value of the options were calculated using the Black-Scholes option pricing model and using the following assumptions for the 5,000 and 62,500 options respectively:

	Year ended
	December 31, 2021
Discount rate		1.02	%
Expected volatility		262	%
Expected life (years)		2.62
Expected dividend yield		0	%
Exercise price	$	5.50
Stock price	$	5.48

	Year ended
	December 31, 2021
Discount rate		0.60	%
Expected volatility		213	%
Expected life (years)		2.58
Expected dividend yield		0	%
Exercise price	$	5.24
Stock price	$	5.24

On December 29, 2021, the Company granted 30,000 stock options to members of the board for a total of 90,000 options with an exercise price of $2.51. The options will expiry on December 29, 2026. The options have a vesting period of 1 year from the initial grant date; 10,000 shall vest on December 29, 2022, 10,000 shall vest on December 29, 2023 and 10,000 shall vest on December 29, 2024. The fair value of the options on grant date was estimated to be $224,280. The Company recognized $0 to consulting expense during the year ended December 31, 2021. The fair value of the options were calculated using the Black-Scholes option pricing model and using the following assumptions:

	Year ended
	December 31, 2021
Discount rate		1.29	%
Expected volatility		253	%
Expected life (years)		4.5
Expected dividend yield		0	%
Exercise price	$	2.51
Stock price	$	2.51

	Year ended December 31, 2021
	Number of options		Weighted Average Price
Balance, beginning of period		-	$	-
Granted		712,500	$	5.00
Balance, end of period		712,500	$	5.00

	Range of Exercise prices		Number outstanding		Weighted average life (years)		Weighted average exercise price		Number exercisable on December 31, 2021
Stock options	$	2.51 - 5.50		712,500		4.74	$	5.00		-

As of December 31, 2021, no stock options has been vested.

Worksport Ltd.

Notes to the Consolidated Financial Statements

December 31, 2021 and 2020