Operating Lease Obligations

12 Months Ended

Dec. 31, 2023

Operating Lease Obligations

Operating Lease Obligations

15. Operating Lease Obligations

During the year ended December 31, 2019, the Company signed a lease agreement for warehouse space to commence on August 1, 2019 and end on July 31, 2022 with monthly lease payments of $2,221. During the year ended December 31, 2021, the Company entered into a second lease agreement for warehouse space to commence on June 1, 2021 and end on May 31, 2024 with monthly lease payments of $19,910.

Worksport Ltd.

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022

15. Operating Lease Obligations (continued)

During the year ended December 31, 2022, the Company signed a lease agreement for approximately 20,296 square feet to be used as its then primary, now secondary corporate office and R&D facility pursuant to a five-year lease, dated June 1, 2022, for a variable rate averaging $22,101 per month over the lifetime of the lease. The Company also pays approximately $4,418 in additional fees per month, which varies year to year.

During the year ended December 31, 2023, the Company signed a lease agreement for office space to be used as an R&D facility pursuant to a one-year lease with an option to extend the lease for an additional year, dated June 1, 2023, for a monthly rent of $3,350.

The Company has accounted for its leases upon adoption of ASC 842 whereby it recognizes a lease liability and a right-of-use asset at the date of initial application beginning January 1, 2019. The lease liability is measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate of 10%. The Company has measured the right-of-use asset at an amount equal to the lease liability.

The Company’s right-of-use asset and lease liability as of December 31, 2023 and 2022 is as follows:

	December 31, 2023		December 31, 2022
Right-of-use asset	$	917,354	$	1,238,055
Current lease liability	$	328,229	$	387,329
Long-term lease liability	$	608,761	$	884,146

The following is a summary of the Company’s total lease costs:

	December 31, 2023		December 31, 2022
Operating lease cost	$	488,463	$	409,179

The following is a summary of cash paid in 2023 and 2022 for amounts included in the measurement of lease liabilities:

	December 31, 2023		December 31, 2022
Operating cashflow	$	515,776	$	400,130

Maturities of lease liability are as follows:

Future minimum lease payments as of December 31, 2023:

2024	$	400,999
2025		286,395
2026		277,767
2027		117,158
Total future minimum lease payments		1,082,319
Less: amount representing interest		(145,329	)
Present value of future payments		936,990
Current portion		328,229
Long term portion	$	608,761

Worksport Ltd.

Notes to the Consolidated Financial Statements

December 31, 2023 and 2022