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Operating Lease Obligations

12 Months Ended

Dec. 31, 2022

19. 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.

During the year ended December 31, 2022, the Company signed a lease agreement for approximately 20,296 square feet to be used as its primary 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.

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, 2022 and 2021 is as follows:

Schedule Right-of-use Asset

	December 31, 2022		December 31, 2021
Right-of-use asset	$	1,238,055	$	515,819
Current lease liability	$	387,329	$	212,929
Long-term lease liability	$	884,146	$	316,988

Worksport Ltd.

Notes to the Consolidated Financial Statements

December 31, 2022 and 2021

19. Operating Lease Obligations (continued)

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

Schedule of Lease Costs

		December 31, 2022				December 31, 2021
Operating lease cost		$	409,179			$	166,027

The following is a summary of cash paid in 2022 and 2021 for amounts included in the measurement of lease liabilities:

		December 31, 2022				December 31, 2021
Operating cash flow		$	400,130			$	166,027

Maturities of lease liability are as follows:

Future minimum lease payments as of December 31, 2022:


2023	$	493,026
2024		361,298
2025		269,645
2026 and thereafter		394,926
Total future minimum lease payments		1,518,895
Less: amount representing interest		(247,420	)
Present value of future payments		1,271,475
Current portion		387,329
Long term portion	$	884,146