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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Date
of Report (date of earliest event reported):
May 6, 2022
Worksport Ltd
(Exact
Name of Registrant as Specified in its Charter)
Nevada |
|
001-40681 |
|
35-2696895 |
(State of |
|
(Commission |
|
(IRS
Employer |
incorporation) |
|
File
Number) |
|
Identification
No.) |
3120 Rutherford Road
Suite 414
Vaughan,
Ontario,
Canada
L4K 0B1
(Address
of principal executive offices)
888-554-8789
(Registrant’s
telephone number, including area code)
N/A
(Former
Name or former address if changed from last report.)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
Common Stock, par value $0.0001 |
|
WKSP |
|
The Nasdaq Stock Market LLC |
Warrants to purchase common stock |
|
WKSPW |
|
The Nasdaq Stock Market LLC |
Item
2.01. Completion of Acquisition or Disposition of
Assets.
Acquisition of Seneca Property
On
May 6, 2022, Worksport Ltd. (“Worksport,” the “Company” or
“Guarantor”), through its wholly owned subsidiary, Worksport New
York Operations Corporation (“WKSP NY” or “Borrower”), closed (the
“Closing”) on the purchase of a property (the “Property”) in the
town of West Seneca, Erie County, New York (the
“Acquisition”).
The
Acquisition was completed with a Purchase and Sale Agreement
between the Company and J&M Distributing, Inc. (the “Seller),
Loan Agreement (the “Agreement”) between WKSP NY and Northeast Bank
(“Lender”), Promissory Note (the “Note”), Guarantee by Worksport
(the “Guarantee”) and Mortgage and Security Agreement between WKSP
NY and Lender (the “Mortgage”).
The
full text of the Purchase and Sale Agreement, Loan Agreement,
Promissory Note, Guarantee and Mortgage and Security Agreement will
be filed as Exhibits to the Company’s 10-Q report for the quarter
ended June 30, 2022.
The
Property consists of two (2) parcels of land. One parcel consists
of approximately 14 acres improved by a building containing
approximately 152,847 square feet (the “Building”). The second
parcel consists of approximately four (4) acres of vacant
land.
Currently
the Company’s manufacturing operations are in China. With the
acquisition of the Property the Company plans to move its
manufacturing operations to the United States.
The
Company believes that by moving its manufacturing operations to the
United States it can (i) have better control over design and
manufacturing quality of its products, (ii) lessen supply chain
risk, (iii) decrease shipping costs, and (iv) cut overall
manufacturing costs.
Purchase Price and Loan
The
purchase price of the property was eight million one hundred and
twenty-five US Dollars ($8,125,000) (the “Purchase Price”). WKSP NY
financed $5,300,000 of the Purchase Price with a loan (the “Loan”)
from Northeast Bank of which the obligation is evidenced by the
Note. Worksport has guaranteed the Loan. WKSP NY will be the owner
legal owner of the Property. The Loan is secured by the Property
with the Mortgage.
The
Loan has a term of 24 months with an option to extend the term for
an additional 12 months provided no default has occurred. The
interest rate of the Loan is priced at the Wall Street Prime Rate
(the “Prime Rate”) plus 2.25% (the “Interest Rate”) and is payable
monthly. Principal and interest payments are due on the
10th of each month (the” Due Date”). The Interest Rate
will adjust monthly on each Due Date in accordance with any change
in the Prime Rate.
Worksport
paid an interest rate reserve of $617,965.28 (the “Reserve”) at
closing which can be used by the Company for monthly draws as long
as the Reserve balance does not fall below six (6) months of
required payments at then prevailing interest rates. The Loan also
has a “Minimum Interest” term whereby, Lender is guaranteed at
least 12 months of non-default interest during the term of the
Loan, regardless of if the Company decides to prepay the
Loan.
The
Loan carries a 5% late charge for payments not received with five
(5) days when due. In the event of default, the Interest Rate will
increase to 24% or the maximum rate permitted under New York
law.
The
Loan and Mortgage contain customary provisions for default and
breach.
The Lease
The
Company, through WKSP NY, will lease (the “Lease”) the Property to
Worksport USA Operations Corporation, a Colorado corporation, a
wholly owned subsidiary of the Company (“WKSP CO”).
The
Company plans to conduct all of its U.S. operations through WKSP CO
while continuing to conduct its Canadian operations through its
subsidiary, Worksport Ltd. (Ontario).
Currently
30,000 square feet of the Building is leased by Seller (the “Sonwil
Lease”) to Sonwil Distribution (“Sonwil”). Effective April 16, 2022
the Sonwil lease was modified such that Sonwil will continue to
lease 30,000 square feet of the building until December 31, 2022.
Upon Closing the Sonwil Lease was assigned to WKSP NY.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
|
WORKSPORT
LTD |
|
|
Date:
May 11, 2022 |
By: |
/s/
Steven Rossi |
|
Name: |
Steven
Rossi |
|
Title: |
Chief
Executive Officer |