Worksport Ltd Leases Disclosure
11. Leases
The Company accounts for leases under ASC 842, whereby it recognizes a lease liability and a right-of-use asset. The lease liability is measured at the present value of the remaining lease payments, discounted by the Company’s incremental borrowing rate. The Company measured the right of use asset at an initial amount equal to the lease liability.
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 lease was renewed effective June 1, 2024 at a rate of $3,600 per month with a termination date of May 31, 2025. The lease was not renewed after the initial extension period ended May 31, 2025. The Company’s incremental borrowing rate used to initially measure the present value of the remaining lease payments was 10%.
On April 1, 2025, the Company signed a lease agreement for 12,500 square feet of office space to be used as a R&D facility pursuant to a three-year lease with an option to extend the lease for an additional two years. The lease was effective on May 1, 2025 at a rate of $9,659 per month with a termination date of April 30, 2028. The Company’s incremental borrowing rate used to initially measure the present value of the remaining lease payments was 15%.
On July 14, 2025, the Company signed a lease agreement for 1,992 square feet of office space to be used as an R&D facility for its Terravis Energy subsidiary pursuant to a two-year lease effective July 18, 2025 for an average monthly rent of $3,154. The Company’s incremental borrowing rate used to initially measure the present value of the remaining lease payments was 15%.
The Company’s right-of-use asset and lease liability as of December 31, 2025 and 2024 is as follows:
| December 31, 2025 | December 31, 2024 | |||||||
| Right-of-use asset | $ | 272,598 | $ | 595,415 | ||||
| Current lease liability | $ | 113,012 | $ | 246,535 | ||||
| Long-term lease liability | $ | 159,526 | $ | 368,472 | ||||
The following is a summary of the Company’s total lease costs:
| December 31, 2025 | December 31, 2024 | |||||||
| Operating lease cost | $ | 267,608 | $ | 409,464 | ||||
The following is a summary of cash paid in 2025 and 2024 for amounts included in the measurement of lease liabilities:
| December 31, 2025 | December 31, 2024 | |||||||
| Operating cashflow | $ | 266,420 | $ | 412,933 | ||||
Maturities of lease liability are as follows:
Future minimum lease payments as of December 31, 2025:
| 2026 | $ | 144,453 | ||
| 2027 | 134,284 | |||
| 2028 | 39,783 | |||
| Total future minimum lease payments | 318,520 | |||
| Less: amount representing interest | (45,982 | ) | ||
| Present value of future payments | 272,538 | |||
| Current portion | 113,012 | |||
| Long term portion | $ | 159,526 |
Worksport Ltd.
Notes to the Consolidated Financial Statements
December 31, 2025 and 2024
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 26, 2026 | Showing above |
| 2024 | Mar 27, 2025 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Mar 31, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.