6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2022

Commission File No. 001-39730

VISION MARINE TECHNOLOGIES INC.

(Translation of registrant’s name into English)

730 Boulevard du Curé-Boivin

Boisbriand, Québec, J7G 2A7, Canada

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

Form 20-F x Form 40-F ¨ 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) ¨

Attached as Exhibit 99.1 is the registrant’s audited consolidated financial statements for the fiscal years ended August 31, 2022 and August 31, 2021, and attached as Exhibit 99.2 is the registrant’s Management’s Discussion and Analysis for the fiscal year ended August 31, 2022. The information contained in Exhibits 99.1 and 99.2 to this Report on Form 6-K is hereby incorporated by reference into the registrant’s Registration Statement on Form S-8 (File No. 333-264089).

Exhibits

Exhibit No.	Exhibit
99.1	Audited consolidated financial statements for the fiscal year ended August 31, 2022 and August 31, 2021
99.2	Management’s Discussion and Analysis for the fiscal year ended August 31, 2022
99.3	Form 52-109F1 Certification of Annual Filings – CEO
99.4	Form 52-109F1 Certification of Annual Filings – CFO

SIGNATURE

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.

VISION MARINE TECHNOLOGIES INC.

Date: November 23, 2022	By:	/s/ Kulwant Sandher
	Name:	Kulwant Sandher
	Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

 

Vision Marine Technologies Inc.

Consolidated financial statements

August 31, 2022 and 2021

Report of independent registered public accounting firm

To the Shareholders and the Board of Directors of

Vision Marine Technologies Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of financial position of Vision Marine Technologies Inc. [the “Company”] as of August 31, 2022 and 2021, the related consolidated statements of changes in shareholders’ equity (deficit), comprehensive loss and cash flows for each of the two years in the period ended August 31, 2022, and the related notes [collectively referred to as the “consolidated financial statements”]. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at August 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended August 31, 2022, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) [“PCAOB”] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2021.

Montréal, Canada

November 23, 2022

Vision Marine Technologies Inc.

Consolidated statements of financial position

As at August 31,

	2022			2021
	$			$
Assets
Current
Cash		5,824,716			18,147,821
Trade and other receivables [note 6]		472,548			319,740
Inventories [note 7]		2,093,776			1,976,084
Prepaid expenses		2,472,301			544,843
Grants and investment tax credits receivable [note 21]		681,663			108,302
Share subscription receivable [note 17]		39,200			39,200
Advances to related parties [note 17]		16,736			185,407
Total current assets		11,600,940			21,321,397
Debentures [note 8]		2,435,000			2,850,000
Right-of-use assets [note 9]		2,261,100			2,905,199
Property and equipment [note 10]		2,218,982			1,414,509
Intangibles [note 11]		1,112,670			1,225,722
Deferred income taxes [note 23]		-			17,547
Goodwill [note 5]		9,352,640			9,033,638
Other financial assets		118,877			33,280
Total assets		29,100,209			38,801,292
Liabilities and shareholders’ equity
Current
Trade and other payables [notes 13 & 17]		1,030,331			848,054
Income tax payable		3,188			138,308
Contract liabilities [note 14]		1,029,318			898,713
Current portion of lease liabilities [note 15]		561,168			562,136
Current portion of long-term debt [note 16]		72,090			10,179
Other financial liabilities		177,834			237,444
Total current liabilities		2,873,929			2,694,834
Lease liabilities [note 15]		1,854,381			2,404,680
Long-term debt [note 16]		155,259			53,936
Deferred income taxes [note 23]		188,044			122,655
Total liabilities		5,071,613			5,276,105
Shareholders’ equity
Capital stock [note 18]		43,441,591			42,834,982
Contributed surplus [note 19]		10,560,886			7,861,405
Accumulated other comprehensive income		697,671			388,566
Deficit		(30,671,552	)		(17,559,766	)
Total shareholders’ equity		24,028,596			33,525,187
		29,100,209			38,801,292

See accompanying notes

Vision Marine Technologies Inc.

Consolidated statements of changes in shareholders’ equity (deficit)

Year ended August 31,

													Accumulated
													other
					Capital Stock			Contributed					comprehensive
	Capital stock				to be issued			surplus		Deficit			income		Total
	Units		$		$			$		$			$		$
Shareholders’ equity as at August 31, 2019		3,275,555		525		37,500			-		(170,327	)		-		(132,302	)
Net and comprehensive loss		-		-		-			-		(2,275,532	)		-		(2,275,532	)
Share issuance, net of transactions costs of $320,230		1,309,446		2,497,288		(37,500	)		-		-			-		2,459,788
Share-based compensation [note 19]		-		-		-			739,961		-			-		739,961
Shareholders’ equity as at August 31, 2020		4,585,001		2,497,813		-			739,961		(2,445,859	)		-		791,915
Net and comprehensive loss		-		-					-		(15,113,907	)		388,566		(14,725,341	)
Share issuance, net of transactions costs of nil [note 18]		595,715		2,231,999		-			-		-			-		2,231,999
Initial Public Offering, net of transactions costs of $3,328,687		2,760,000		33,158,513		-			-		-			-		33,158,513
Conversion of related party loans into shares [note 17 &18]		69,650		898,489		-			-		-			-		898,489
Shares issued as consideration for the acquisition of intangible assets [note 11 & 18]		30,000		573,936		-			-		-			-		573,936
Shares issued as consideration in a business combination [note 5 & 18]		284,495		3,474,232		-			-		-			-		3,474,232
Share-based compensation [note 19]		-		-		-			7,121,444		-			-		7,121,444
Shareholders’ equity as at August 31, 2021		8,324,861		42,834,982		-			7,861,405		(17,559,766	)		388,566		33,525,187
Net and comprehensive loss		-		-		-			-		(13,111,785	)		309,105		(12,802,680	)
Share issuance, net of transactions costs of nil [note 18]		93,062		606,609		-			-		-			-		606,609
Share-based compensation [note 19]		-		-		-			2,699,481		-			-		2,699,481
Shareholders’ equity as at August 31, 2022		8,417,923		43,441,591		-			10,560,886		(30,671,551	)		697,671		24,028,597

See accompanying notes

Vision Marine Technologies Inc.

Consolidated statements of comprehensive loss

Year ended August 31,

	2022			2021			2020
	$			$			$
Revenues [note 20]		7,350,946			3,513,788			2,417,173
Cost of sales [note 7]		4,065,381			1,909,606			1,812,783
Gross profit		3,285,565			1,604,182			604,390
Expenses
Research and development [note 17]		2,242,794			1,489,953			-
Office salaries and benefits		3,335,799			1,754,613			315,138
Selling and marketing expenses		1,972,306			1,086,057			238,389
Professional fees		3,590,816			1,633,477			671,788
Office and general		1,949,583			1,239,457			194,932
Share-based compensation [note 19]		2,699,481			7,121,444			1,312,071
Depreciation		268,490			184,855			27,895
Net finance expense [note 22]		223,660			2,256,392			108,400
Other income		(143,922	)		(153,749	)		(10,000	)
		16,139,007			16,612,499			2,858,613
Loss before tax		(12,853,442	)		(15,008,317	)		(2,254,223	)
Income taxes [note 23]
Current tax expense		182,854			131,403			-
Deferred tax expense (recovery)		75,489			(25,813	)		21,309
		258,343			105,590			21,309
Net loss for the period		(13,111,785	)		(15,113,907	)		(2,275,532	)
Items of comprehensive income that will be subsequently reclassified to earnings:
Foreign currency translation differences for foreign operations, net of tax		309,105			388,566			-
Other comprehensive income, net of tax		309,105			388,566			-
Total comprehensive loss for the year, net of tax		(12,802,680	)		(14,725,341	)		(2,275,532	)
Weighted average shares outstanding		8,318,121			7,412,899			4,179,017
Basic and diluted loss per share		(1.58	)		(2.04	)		(0.56	)

See accompanying notes      

Vision Marine Technologies Inc.

Consolidated statements of cash flows

Year ended August 31,  

	2022			2021			2020
	$			$			$
Operating activities
Net loss		(13,111,785	)		(15,113,907	)		(2,275,532	)
Depreciation		955,513			417,050			170,182
Accretion on long-term debt and lease liability		157,270			70,379			5,905
Share-based compensation – capital stock		-			-			572,110
Share-based compensation – options		2,699,481			7,121,444			739,961
Shares issued for services		596,608			109,069			26,533
Net loss on debentures		330,000			550,000			-
Government grant		-			-			(3,666	)
Interest income received		85,000			-			-
Income tax expense		258,343			105,590			21,310
Income tax received		-			13,415			-
Income tax paid		(373,196	)		-			-
Non-cash lease		-			-			19,137
Gain on lease termination		(5,652	)		(7,230	)		-
Effect of exchange rate fluctuation		17,398			(6,542	)		-
		(8,391,020	)		(6,740,732	)		(724,060	)
Net change in non-cash working capital items
Trade and other receivables		(152,808	)		(232,715	)		22,757
Inventories		(117,692	)		(1,471,693	)		327,284
Grants and investment tax credits receivable		(573,361	)		293,937			(2,160	)
Other financial assets		(85,597	)		(25,595	)		-
Prepaid expenses		(1,927,459	)		(552,196	)		(162,384	)
Trade and other payables		182,277			96,615			263,534
Contract liabilities		130,605			396,097			(159,629	)
Other financial liabilities		(61,764	)		(15,156	)		-
Cash used in operating activities		(10,996,819	)		(8,251,438	)		(434,658	)
Investing activities
Subscription to debentures [note 8]		-			(3,400,000	)		-
Business acquisition, net of cash acquired [note 5]		-			(5,029,416	)		-
Additions to property and equipment		(1,175,931	)		(544,354	)		(77,966	)
Advances to related parties		-			-			40,310
Proceeds from the disposal of property and equipment		243,630			34,101			-
Additions to intangible assets		(32,202	)		(528,726	)		-
Cash used in investing activities		(964,503	)		(9,468,395	)		(37,656	)
Financing activities
Change in bank indebtedness		-			(170,000	)		(113,813	)
Addition in Long-term debts		282,424			-			280,000
Repayment of long-term debt		(135,230	)		(419,090	)		(13,992	)
Advances to related parties		176,771			-			(151,575	)
Initial public offering, net of transaction costs paid		-			33,430,239
Issuance of shares, net of transaction costs paid		-			2,025,000			1,898,645
Shares issued upon options conversion		10,001			-
Subscriptions to capital stock received in advance of issuance		-			-			(37,500	)
Repayment of lease liabilities		(695,749	)		(295,316	)		(130,130	)
Cash (used in) provided by financing activities		(361,783	)		34,570,833			1,731,635
Net (decrease) increase in cash during the year		(12,323,105	)		16,851,000			1,259,321
Cash, beginning of year		18,147,821			1,296,821			37,500
Cash, end of year		5,824,716			18,147,821			1,296,821

See accompanying notes      

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

1. Incorporation and nature of business

Vision Marine Technologies Inc. [the “Company”] was incorporated on August 29, 2012 and its principal business is to manufacture and sell or rent electric boats. The Voting Common Shares of the Company are listed under the trading symbol “VMAR” on Nasdaq.

The Company is incorporated in Canada and its head office and registered office is located at 730 Curé-Boivin boulevard, Boisbriand, Quebec, J7G 2A7.

Business seasonality

The Company’s operating results generally vary from quarter to quarter as a result of changes in general economic conditions and seasonal fluctuations, among other things, in each of its reportable segments. This means the Company’s results in one quarter are not necessarily indicative of how the Company will perform in a future quarter.

Sale of electric boats

The sale of electric boats segment has a seasonal aspect to its operations. Most customers purchase their electric boats from the Company with the intention of utilizing them during the summer period which typically runs from early June to late August and corresponds to the Company’s fourth quarter of a financial year. As such, the revenues in this operating segment fluctuate based on the level of boat deliveries, with a high and a low in the fourth quarter and the first quarter, respectively.

Rental of electric boats

Revenue generated by the rental of electric boats segment also has a seasonal aspect to its operations. Boat rental as an activity is highly sought by customers when the weather is milder, which is typically the case during the period from May to August. A colder-than-expected or rainier summer in any given year could have an impact on the segment’s revenues and hence on its profitability. Revenue from the boat club memberships is not impacted by seasonality as the memberships are typically on an annual basis.

2. Basis of preparation

Compliance with IFRS

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards [“IFRS”], as issued by the International Accounting Standards Board [“IASB”] and interpretations issued by the International Financial Reporting Interpretations Committee [“IFRIC”] in effect on August 31, 2022.

The consolidated financial statements were authorized for issue by the Board of Directors on November 22, 2022.

Basis of measurement

These consolidated financial statements are presented in Canadian dollars and were prepared on a historical cost basis.

1

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Basis of consolidation

The consolidated financial statements include the accounts of the Company, and the subsidiaries that it controls. Control exists when the Company has the power over the subsidiary, when it is exposed or has rights to variable returns from its involvement with the subsidiary and when it has the ability to use its power to affect its returns. Subsidiaries that the Company controls are consolidated from the effective date of acquisition up to the effective date of disposal or loss of control.

Details of the Company’s significant subsidiaries at the end of the reporting period are set out below.

Name of subsidiary	Principal activity	Country of incorporation and operation	Proportion of ownership held by the Company
7858078 Canada Inc.	Owns an electric boat rental center	Canada	100%
EB Rental Ltd.	Operates an electric boat rental center	United States	100%

Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Areas where estimates are significant to the consolidated financial statements are disclosed in note 4.

3. Significant accounting policies

Business combination

Business combinations are accounted for using the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Company. In determining whether a particular set of activities and assets is a business, the Company assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The Company has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The consideration transferred in the acquisition is measured at fair value at the acquisition date, as are the identifiable net assets acquired. The Company assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. Subsequent adjustments to the fair values of identifiable net assets acquired are adjusted against the consideration transferred when they qualify as measurement period adjustments. Transaction costs are expensed as incurred.

2

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Cash and cash equivalents

Cash and cash equivalents include cash in hand, cash held in trust, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and – for the purpose of the statement of cash flows – bank overdrafts. Bank overdrafts are shown within bank indebtedness in current liabilities on the consolidated statement of financial position.

Trade and other receivables

Trade receivables are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.

The Company has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit loss, trade receivables have been grouped based on days overdue.

Other receivables are recognized at amortized cost, less any allowance for expected credit loss.

Inventories

Inventories are stated at the lower of cost and net realizable value. Raw materials are valued on a first-in first-out basis. Cost of work in progress and finished goods comprises direct materials and delivery costs, direct labour, import duties and other taxes, and appropriate proportion of variable and fixed overhead expenditure based on normal operating capacity. Cost of purchased inventory are determined after deducted rebates and discounts received or receivable.

Net realizable value is the estimated selling price in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale.

Grants and investment tax credits

Government grants are recognized where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. When the grant relates to an expense item, it is recognized as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. Where retention of a government grant is dependent on the Company satisfying certain criteria, it is initially recognized as deferred income. When the criteria for retention have been satisfied, the deferred income balance is released to the statement of consolidated comprehensive loss or netted against the asset purchased.

3

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Leases

Right-of-use assets

The Company recognizes right-of-use assets at the commencement date of the lease [i.e., the date the underlying asset is available for use]. Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Company is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term ranging from two to six years. Right-of-use assets are subject to impairment.

Lease liabilities

At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments [including in-substance fixed payments] less any lease incentives receivable and variable lease payments that depend on an index or a rate. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. Interest accretion is recorded as interest expense in finance costs. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

Short-term leases and leases of low-value assets

The Company applies the short-term lease recognition exemption to its short-term leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option. It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered of low value [i.e., below $5,000]. Lease payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis over the lease term. For the year-ended August 31, 2022, the expense for leases of low-value assets is insignificant.

4

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Property and equipment

Property and equipment is stated at cost less accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the asset.

Depreciation is recorded to recognize the cost of assets over their useful lives. The estimated useful lives and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Asset type	Methods	Rates
Computer equipment	Declining balance method	55%
Machinery and equipment	Declining balance method	20%
Rolling stock	Declining balance method	30%
Leasehold improvements	Straight-line method	Over the term of the lease
Boat rental fleet	Straight-line method	15 years
Moulds	Straight-line method	25 years

Any item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales and proceeds and the carrying amount of the asset and is recognized in profit or loss.

Repairs and maintenance costs that do not improve or extend productive life are recognized in profit or loss in the period in which the costs are incurred.

Intangible assets and goodwill

Expenditure on research activities is recognized in net earnings as incurred.

Development expenditure is capitalized only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in net earnings as incurred. The Company has not capitalized any development costs. When awarded with government grants and income tax credits, the Company recognizes the income either in net income (loss), netted with the related expenses, or as a reduction of the cost, when related with capitalized development expenditure.

Goodwill arising from business combinations is initially recognized when the fair value of the separately identifiable assets the Company acquired and liabilities the Company assumed is lower than the consideration paid [including the recognized amount of the non-controlling interest, if any]. If the fair value of the consideration transferred is lower than that of the separately identified assets and liabilities, the Company immediately recognizes the difference as a gain in the consolidated statement of comprehensive loss.

Other intangible assets, including intellectual property, software, trade name, backlog and website that have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses.

5

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Amortization is calculated over the cost of the asset less its residual value. Amortization is recognized in net earnings on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The estimated useful lives are as follows:

Asset type	Methods	Rates
Intellectual property	Straight-line method	10 years
Software	Straight-line method	7 years
Trade name	Straight-line method	5 years
Backlog	Straight-line method	3 years
Website	Straight-line method	5 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Impairment of non-financial assets

Non-financial assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets, other than goodwill, to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. Where it is not possible to estimate the recoverable amount of an individual asset, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets [the “cash-generating unit”, or “CGU”].

Recoverable amount is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. If the recoverable amount of an asset or CGU is lower than its carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognized immediately in the consolidated statement of comprehensive loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the revised recoverable amount, to the extent that the carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized. A reversal of an impairment loss is recognized immediately in the consolidated statement of comprehensive loss.

Goodwill

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For purposes of impairment testing, goodwill is allocated to each of the Company’s CGU [or groups of CGUs] that is expected to benefit from the synergies of the combination. A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the CGU may be impaired. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the goodwill allocated to the CGU and then, to reduce the carrying amounts of the other assets in the CGU on a pro-rata basis. Any impairment loss is recognized in the consolidated statement of comprehensive loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

6

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Trade and other payables

These amounts represent liabilities for goods and services provided to the entity prior to the end of the financial year and which are unpaid. Due to their short-term nature, they are measured at amortized cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Provisions

Provisions are recognized when the Company has a present obligation as a result of a past event, it is probable the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognized as a finance cost.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

Financial instruments

Classification and measurement of financial instruments

The Company measures its financial assets and financial liabilities at fair value on initial recognition, which is typically the transaction price unless a financial instrument contains a significant financing component. Subsequent measurement is dependent on the financial instrument’s classification which in the case of financial assets, is determined by the context of the Company’s business model and the contractual cash flow characteristics of the financial asset. Financial assets are classified into two categories: [1] measured at amortized cost and [2] fair value through profit and loss [“FVTPL”]. Financial liabilities are subsequently measured at amortized cost at the effective interest rate, other than financial liabilities that are measured at FVTPL or designated as FVTPL where any change in fair value resulting from an entity’s own credit risk is recorded as other comprehensive income [“OCI”].

7

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Amortized cost

The Company classifies trade and other receivables, other financial assets, trade and other payables, other financial liabilities, long-term debt and advances to/from related parties as financial instruments measured at amortized cost. The contractual cash flows received from the financial assets are solely payments of principal and interest and are held within a business model whose objective is to collect the contractual cash flows.

Fair value through profit and loss

The Company classifies debentures as financial instruments measured at fair value through profit and loss since the contractual cash flows received from the financial asset are not solely payments of principal and interest.

Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets measured at amortized cost. The measurement of the loss allowance depends upon the Company’s assessment at the end of each reporting period as to whether the financial instrument’s credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk, a 12-month expected credit loss allowance is estimated. The amount of expected credit loss recognized is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. Impairment provisions for current and non-current trade receivables are recognized based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses.

Equity instruments

Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issuance costs.

The Company’s shares are classified as equity instruments.

Revenue recognition

Revenue is recognized at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the Company:

• identifies the contract with the customer;

• identifies the performance obligations in the contract;

• determines the transaction price which takes into account estimates of variable consideration and the time value of money;

• allocates the transaction price to separate performance obligations on the basis of relative stand-alone selling price of each distinct good or service to be delivered; and,

• recognizes revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

The Company enters into contracts with customers, as well as distributor agreements with specific distributors for the sale of boats.

8

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Sale of boats

Revenue from the sale of boats, including incidental shipping fees, is recognized at the point in time when the customer obtains control of the goods, which is generally at the shipping point. In the context of its distributor agreements, control is passed at the shipping point to the distributor as the Company has no further performance obligations at that point. The Company concluded that it is the principal in its revenue arrangements, because it typically controls the boats before transferring them to the customer. The amount of consideration the Company receives, and the revenue recognized varies with volume rebate programs offered to distributors. When the Company offers retrospective volume rebates, it estimates the expected volume rebates based on an analysis of historical experience, to the extent that it is highly probable that a significant reversal will not occur. The Company adjusts its estimate of revenue related to volume rebates at the earlier of when the most likely amount of consideration expected to be received changes or when the consideration becomes fixed.

The Company recognizes customer deposits on the sale of boats as contract liabilities.

Boat rental and boat club membership revenue

Revenue from boat rentals is recognized at a point in time when the services are completed. Boat club membership revenue is recognized over time as the service is provided. These services are typically provided, and thus revenue is typically recognized, on a monthly basis.

The Company recognizes customer prepayments on boat rentals and boat club memberships as contract liabilities.

Sale of parts and boat maintenance

Revenue from the sale of parts and related maintenance services are recognized at the point in time when the customer obtains control of the parts and when services are completed.

Other

Other revenue is recognized when it is received or when the right to receive payment is established.

Contract liabilities

A contract liability is recognized if a payment is received, or a payment is due [whichever is earlier] from a customer before the Company transfers the related goods or services. Contract liabilities are recognized as revenue when the Company performs under the contract [i.e., transfers control of the related goods or services to the customer].

Share-based payments

The Company has a share option plan for key employees, consultants, advisors, officers and directors from which options to purchase common stock of the Company are issued. The Company also issues warrants to non-employees granting the right to purchase common stock of the Company at a determined exercise price. Share-based compensation costs are accounted for on a fair value basis, as measured at the grant date, using the Black-Scholes option pricing model taking into account the terms and conditions upon which the options were granted. An individual is classified as an employee when the individual is an employee for legal or tax purposes or provides services similar to those performed by an employee. In situations where options or warrants have been issued to non-employees and some or all of the services received by the Company can be specifically identified, the options or warrants are measured at the fair value of the services received. If the services cannot be specifically identified, the options or warrants are measured at the fair value of the options issued.

9

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

All share-based remuneration is ultimately recognized as an expense in profit or loss with a corresponding credit to contributed surplus. If vesting periods or other 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. Any adjustment to cumulative share-based compensation resulting from a revision is recognized in the current period. The number of vested options ultimately exercised by holders does not impact the expense recorded in any period.

Foreign currency translation

The Company’s consolidated financial statements are presented in Canadian dollars, which is also the parent company’s functional currency. The functional currencies of 7858078 Canada Inc. and EB Rental Ltd. are the Canadian dollar and the US dollar, respectively. The Company and its subsidiaries each determine their functional currency based on the currency of the primary economic environment in which they operate. Transactions denominated in a currency other than the functional currency of an entity are translated at the exchange rate in effect on the transaction date. The resulting exchange gains and losses are included in each entity’s net income (loss) in the period in which they arise.

The Company’s foreign operations are translated to the Company’s presentation currency, for inclusion in the consolidated financial statements. Foreign-denominated monetary and non-monetary assets and liabilities of foreign operations are translated at exchange rates in effect at the end of the reporting period and revenue and expenses are translated at exchange rates in effect at the transaction date. The resulting translation gains and losses are included in other comprehensive loss with the cumulative gain or loss reported in accumulated other comprehensive income. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is reclassified to profit or loss.

The exchange rates for the currencies used in the preparation of the consolidated financial statements were as follows:

	Exchange rate as at				Average exchange rate for year ended
	August 31, 2022		August 31, 2021		August 31, 2022		August 31, 2021
US dollar		1.3076		1.2630		1.2717		1.2688

Taxes

Tax expense comprises current and deferred tax. Tax is recognized in net income (loss) except to the extent it relates to items recognized in other comprehensive income or directly in equity.

Current tax

Current tax expense is based on the results for the period as adjusted for items that are not taxable or not deductible. Current tax is calculated using tax rates and laws that were enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities.

10

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Deferred tax

Deferred taxes are the taxes expected to be payable or recoverable on differences between the carrying amounts of assets in the statement of financial position and their corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences between the carrying amounts of assets and their corresponding tax bases. Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill or from the initial recognition [other than in a business combination] of other assets in a transaction that affects neither the taxable profit nor the accounting profit.

The Company offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Earnings per share

Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company by the weighted average number of common stock outstanding during the year.

Diluted income per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of common stock outstanding, adjusted for the effects of all dilutive potential common stock. The weighted average number of common stock outstanding is increased by the number of additional common stock that would have been issued by the Company assuming exercise of all options with exercise prices below the average market price for the year.

Standards issued but yet not effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37

In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a “directly related cost approach”. The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual reporting periods beginning on or after January 1, 2022. The amendments are not expected to have a material impact on the Company’s consolidated financial statements.

11

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16 Property, plant and equipment

The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss.

The amendment is effective for annual reporting periods beginning on or after January 1, 2022 and must be applied retrospectively to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment. The amendments are not expected to have a material impact on the Company’s consolidated financial statements.

4. Significant accounting estimates and assumptions

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and judgments are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates.

Business acquisition fair value

The Company makes a number of estimates when determining the acquisition date fair values of consideration transferred, assets acquired, and liabilities assumed in a business acquisition. Fair values are estimated using valuation techniques based on discounted future cash flows. Future cash flows may be influenced by a number of assumptions such as forecasted revenues, royalty rate, selling prices, costs to operate, capital expenditures, growth rate and the discount rate.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The Company concluded the fair value less costs of disposal will yield a higher recoverable amount, which is based on a discounted cash flow (“DCF”) model. The fair value measurement is categorized within Level 3 of the fair value hierarchy. The cash flows are derived from cash flow projections over a 5-year period, including future investments and expansion activities that will enhance the performance of the assets of the CGU.

As at August 31, 2021, all of the Company’s goodwill is allocated to the boat rental operation CGU, which represents the lowest level within the Company at which the goodwill is monitored for internal management purposes. For the year ended August 31, 2022, there was no impairment of goodwill.

The recoverable amount is sensitive to the discount rate used for the DCF model, as well as the expected future cash-inflows, gross profit and the growth rate used for extrapolation purposes. The post-tax discount rate of 27% used in the DCF is based on a weighted average cost of capital calculated using observable market-based inputs or a benchmark of a sample of representative publicly traded companies. The long-term growth rate of 2% used for extrapolation purposes is based on published research growth rates. Any reasonable negative change in the key assumptions used could cause the carrying value of this CGU to exceed its recoverable amount.

12

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Financial instruments measured at fair value

In measuring financial instruments at fair value, the Company makes estimates and assumptions, including estimates and assumptions about interest rates, credit spreads and other market conditions.

Provision for impairment of inventories

The provision for impairment of inventories assessment requires a degree of estimation and judgment. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence.

Income tax

Provisions for taxes are made using the best estimate of the amount expected to be paid based on a qualitative assessment of all relevant factors. The Company reviews the adequacy of these provisions at the end of the reporting period. However, it is possible that at some future date an additional liability could result from audits by taxing authorities. Where the final outcome of these tax-related matters is different from the amounts that were initially recorded, such differences will affect the tax provisions in the period in which such determination is made.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

In assessing the recoverability of deferred tax assets, the Company relies on the same forecast assumptions used elsewhere in the financial statements and in other management reports, which, among other things, reflect the potential impact of climate-related development on the business.

Share-based payments

The Company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instrument at the date at which they are granted. The fair value is determined by using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. Judgment is exercised in determining the expected life and historical volatility. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities but may impact profit or loss and equity.

Lease term

The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgment is exercised in determining whether there is reasonable certainty that an option to extend the lease will be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option are considered at the lease commencement date. The Company reassesses whether it is reasonably certain to exercise an extension option if there is a significant event or significant change in circumstances.

13

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Incremental borrowing rate

Where the interest rate implicit in the lease cannot be readily determined, an incremental borrowing rate is estimated to discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a rate is based on what the Company estimates it would have to pay a third party to borrow the funds necessary to obtain an asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.

5. Business combination

On June 3, 2021, the Company completed the acquisition of EB Rental Ltd. [“EBR”] by acquiring all the issued and outstanding shares of 7858078 Canada Inc. EBR operates an electric boat rental operation located in Newport beach, California, with a fleet of over 20 ships. All boats operated by EBR are supplied by the Company, which offers the Company the ability to showcase its products and provide brand awareness. Before the acquisition, the Company and EBR were related through common ownership.

EBR was acquired for cash consideration of U.S.$4,582,367 ($5,546,039), financed entirely by the Company’s available cash on hand, and equity consideration of $3,474,232 representing 284,495 shares at U.S.$10.09 [approximately $12.21] per share [note 18].

The acquisition gave rise to transaction costs of $13,170 which were expensed as incurred in the consolidated statements of comprehensive loss.

The investment was accounted for as a business combination and the results have been included in the consolidated statements of comprehensive loss since the date of the acquisition. The revenues and net earnings included in the consolidated statements of comprehensive loss are approximately $1,360,000 and $530,000 respectively for the 90-day period ended August 31, 2021.

14

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

The following table reflects the recognized amounts of assets acquired and liabilities assumed, on a fair value basis, at the acquisition date:

	June 3, 2021
	$
Fair value at acquisition
Cash		516,623
Trade and other receivables		7,998
Income tax receivable		9,963
Inventories		12,864
Prepaids		34,687
Advances to related parties		177,671
Other financial assets		7,685
Right-of-use asset		1,651,746
Property and equipment		417,554
Intangible assets		184,000
Deferred tax asset		18,467
Goodwill		8,656,700
Trade and other payables		(111,602	)
Income tax payable		(1,952	)
Contract liabilities		(482,173	)
Other financial liabilities		(242,060	)
Long-term debt, including current portion		(66,204	)
Lease liability, including current portion		(1,651,746	)
Deferred tax liability		(119,950	)
Net assets acquired		9,020,271

The Company measured the acquired lease liabilities using the present value of the remaining lease payments at the date of acquisition. The right-of-use assets were measured at an amount equal to the lease liabilities and adjusted to reflect the favorable terms of the lease relative to market terms, if any.

The fair value of the intangible assets, which consist in trade name, backlog and website, was calculated using a discounted cash flow approach. The fair value of property and equipment was established using a market value approach.

The goodwill related to the acquisition of EBR arises from the benefits of increasing our strategic position by expanding our market presence, expected synergies and integrating an assembled workforce that does not qualify for separate recognition. The goodwill is not deductible for tax purposes. The balance of goodwill is at $9,352,640 at August 31, 2022 [2021 – $9,033,638], with the change since acquisition date due to foreign exchange translation.

15

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

6. Trade and other receivables

	2022		2021
	$		$
Trade receivables		108,716		27,388
Sales taxes receivable		194,523		166,749
Other receivables		169,309		125,603
		472,548		319,740

Trade receivable disclosed above include amounts that are past due at the end of the reporting period for which the Company has not recognized an allowance for expected credit losses because there has not been a significant change in credit quality and the amounts are still considered recoverable.

As at August 31, 2022, trade receivables of $31,091 [2021 – $27,388] were past due but not impaired. They relate to customers with no default history. The aging analysis of these receivables is as follows:

	2022		2021
	$		$
0 – 30		77,625		-
31 – 60		-		2,008
61 – 90		14,212		25,380
91 and over		16,879		-
		108,716		27,388

There were no movements in the allowance for expected credit losses for years ended August 31, 2022 and August 31, 2021.

7. Inventories

	2022		2021
	$		$
Raw materials		1,709,368		1,549,125
Work-in-process		75,170		327,757
Finished goods		309,238		99,202
		2,093,776		1,976,084

For the year ended August 31, 2022, inventories recognized as an expense amounted to $4,065,381 [2021 – $1,909,606; 2020 – 1,812,783].

For the year ended August 31, 2022, cost of sales includes depreciation of $687,023 [2021 – $232,195; 2020 - $142,336].

16

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

8. Debentures

On May 14, 2021, the Company subscribed for and purchased 3,400 senior unsecured subordinated convertible debentures of The Limestone Boat Company Limited [“Limestone”], a publicly traded company listed under the trading symbol "BOAT" on the TSX Venture Exchange [the "Debentures"], for an aggregate amount of $3,400,000.

The Debentures bear interest at a rate of 10% per annum, payable annually in arrears, and have a 36-month term [the “Term”]. The Debentures are convertible at any time at the option of the Company into common shares of Limestone [“Common Shares”] at a conversion price of $0.36 per Common Share [the “Conversion Price”]. If at any time following 120 days from the date of issuance of the Debentures [the “Closing Date“] and prior to the date that is 30 days prior to the end of the Term, the volume weighted average closing price of the Common Shares on the TSX Venture Exchange, or such other exchange on which the Common Shares may be listed, is equal to or higher than $0.50 per Common Share for 20 consecutive trading days, Limestone may notify the Company that the Debentures will be automatically converted into Common Shares at the Conversion Price 30 days following the date of such notice.

The Debentures are carried at fair value through profit and loss and are considered as Level 2 financial instruments in the fair value hierarchy. For the year ended August 31, 2022, the Company recorded a loss of $670,000 [2021 - $550,000; 2020 - Nil] for the change in fair value of the Debentures and interest income of $340,000 [2021 - $85,000; 2020 - Nil] in net income (loss) as a net financial expense.

Subsequent to year end, Limestone announced that it has implemented significant cost savings measures, as well as the withdrawal of its previously proposed debt financings. As Limestone continues to pursue alternative liquidity and financing proposals, these factors may have a negative impact on the key assumptions described in Note 25 used by the Company to determine the fair value of the Debentures subsequent to the reporting date. Although the estimates of the fair value of the Debentures as at August 31, 2022 are based on management’s best knowledge and estimates of the amount, events or actions at that time, the valuation in future periods ultimately may differ from those estimates.

17

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

9. Right-of-use assets

	Premises		Computer equipment			Rolling stock			Boat rental fleet			Total
	$		$			$			$			$
Cost
Balance at August 31, 2020		737,066		11,333			38,699			-			787,098
Business acquisition		1,281,308		3,646			39,924			326,868			1,651,746
Additions		672,731		-			179,736			-			852,467
Disposals		-		-			(57,475	)		-			(57,475	)
Transfer to intangible assets		-		(11,333	)		-			-			(11,333	)
Currency translation		55,013		-			1,652			-			56,665
Balance at August 31, 2021		2,746,118		3,646			202,536			326,868			3,279,168
Additions		93,565		-			141,043			-			234,608
Disposals		-		-			(255,953	)		(115,409	)		(371,362	)
Currency translation		40,356		-			394			-			40,750
Balance at August 31, 2022		2,880,039		3,646			88,020			211,459			3,183,164
Accumulated depreciation
Balance at August 31, 2020		117,806		4,231			12,094			-			134,131
Depreciation		216,551		1,697			30,527			24,087			272,862
Disposal		-		-			(27,672	)		-			(27,672	)
Transfer to intangible assets		-		(5,352	)		-			-			(5,352	)
Balance at August 31, 2021		334,357		576			14,949			24,087			373,969
Depreciation		488,050		2,302			71,488			89,617			651,457
Disposal		-		-			(66,122	)		(37,240	)		(103,362	)
Balance at August 31, 2022		822,407		2,878			20,315			76,464			922,064
Net carrying amount
As at August 31, 2021		2,411,761		3,070			187,587			302,781			2,905,199
As at August 31, 2022		2,057,632		768			67,705			134,995			2,261,100

During the year ended August 31, 2021, the Company paid in full a lease liability related with a computer software that was previously included in the right-of-use assets. As a result, the Company transferred the asset to intangible assets at its net book value of $5,981 [note 11].

18

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

10. Property and equipment

	Machinery and equipment		Rolling stock			Computer equipment			Moulds			Leasehold improvements		Boat rental fleet			Total
	$		$			$			$			$		$			$
Cost
Balance at August 31, 2020		187,850		32,175			8,436			506,172			34,818		-			769,451
Business acquisition		-		-			-			-			-		417,554			417,554
Additions		115,088		-			6,211			214,833			96,415		111,807			544,354
Disposals		-		-			-			(30,000	)		-		(34,101	)		(64,101	)
Currency translation		-		-			-			-			-		18,057			18,057
Balance at August 31, 2021		302,938		32,175			14,647			691,005			131,233		513,317			1,685,315
Additions		30,146		197,739			11,284			220,919			133,123		582,720			1,175,931
Disposals		-		(111,215	)		(4,899	)		-			-		(154,714	)		(270,828	)
Currency translation		-		(35	)		-			-			-		30,154			30,119
Balance at August 31, 2022		333,084		118,664			21,032			911,924			264,356		971,477			2,620,537
Accumulated depreciation
Balance at August 31, 2020		148,156		21,014			4,556			57,660			-		-			231,386
Depreciation		19,448		3,348			3,842			22,760			11,579		8,443			69,420
Disposal		-		-			-			(30,000	)		-		-			(30,000	)
Balance at August 31, 2021		167,604		24,362			8,398			50,420			11,579		8,443			270,806
Depreciation		30,200		23,938			5,079			22,608			32,926		43,196			157,947
Disposal		-		(18,301	)		(674	)		-			-		(8,223	)		(27,198	)
Balance at August 31, 2022		197,804		29,999			12,803			73,028			44,505		43,416			401,555
Net carrying amount
As at August 31, 2021		135,334		7,813			6,249			640,585			119,654		504,874			1,414,509
As at August 31, 2022		135,280		88,665			8,229			838,896			219,851		928,061			2,218,982

As at August 31, 2022, moulds of $346,752 [August 31, 2021 – $125,833] are not depreciated because they are not ready for use.

19

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

11. Intangible assets

	Intellectual property		Software		Trade name		Backlog		Website		Total
	$		$		$		$		$		$
Cost
Balance at August 31, 2020		-		-		-		-		-		-
Business acquisition		-		-		90,000		76,000		18,000		184,000
Transfer from Right-of-use assets		-		5,981		-		-		-		5,981
Additions		1,035,070		67,592		-		-		-		1,102,662
Currency translation		-		-		3,856		3,220		771		7,847
Balance at August 31, 2021		1,035,070		73,573		93,856		79,220		18,771		1,300,490
Additions		-		28,202		4,000		-		-		32,202
Currency translation		-		-		438		330		87		855
Balance at August 31, 2022		1,035,070		101,775		98,294		79,550		18,858		1,333,547
Accumulated depreciation
Balance at August 31, 2020		-		-		-		-		-		-
Depreciation		55,581		7,107		4,633		6,520		927		74,768
Balance at August 31, 2021		55,581		7,107		4,633		6,520		927		74,768
Depreciation		103,508		17,593		9,806		13,310		1,892		146,109
Balance at August 31, 2022		159,089		24,700		14,439		19,830		2,819		220,877
Net carrying amount
As at August 31, 2021		979,489		66,466		89,223		72,700		17,844		1,225,722
As at August 31, 2022		875,981		77,075		83,855		59,720		16,039		1,112,670

On February 16, 2021, the Company acquired intellectual property in exchange for cash consideration of EUR 300,000 ($461,134) and the issuance of 30,000 shares of the Company [note 18] at a price of U.S.$15.07 [approximately $19.13] for total consideration of $1,035,070.

As at August 31, 2022, software of $Nil [August 31, 2021 – $42,677] are not depreciated because they are not ready for use.

12. Credit facility

The Company has an authorized line of credit of $250,000, renewable annually, bearing interest at prime rate plus 1%, secured by a first ranking movable hypothec of $750,000 on all present and future accounts receivable and inventory. As at August 31, 2022, the Company has drawn an amount of Nil [2021 – Nil] on the line of credit.

20

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

13. Trade and other payables

	2022		2021
	$		$
Trade payable		737,946		560,870
Sales taxes payable		21,547		34,076
Government remittances		9,450		46,030
Salaries and vacation payable		261,388		207,078
		1,030,331		848,054

14. Contract liabilities

	2022			2021
	$			$
Opening balance		898,713			20,443
Business acquisition		-			482,173
Payments received in advance		2,502,080			1,199,958
Boat sale deposits		87,609			-
Payments reimbursed		(2,615	)		(37,842	)
Transferred to revenues		(2,475,307	)		(766,019	)
Currency translation		18,838			-
Closing balance		1,029,318			898,713

15. Lease liabilities

	2022			2021
	$			$
Opening balance		2,966,816			672,988
Business acquisition [note 5]		-			1,651,746
Additions		234,608			852,467
Repayment		(695,749	)		(295,316	)
Interest on lease liability		141,994			65,115
Lease termination		(273,652	)		(37,033	)
Currency translation		41,532			56,849
Closing balance		2,415,549			2,966,816
Current		561,168			562,136
Non-current		1,854,381			2,404,680
		2,415,549			2,966,816

21

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Future undiscounted lease payments as at August 31, 2022 are as follows:

	$
Less than one year		670,125
One to five years		2,006,295
		2,676,420

Included in rent expense is $58,663 of short-term lease expense [2021 – $50,186, 2020 - $65,934]. The lease liabilities have a weighted average interest rate of 5.4% [2021 – 5.2%, 2020 – 5.4%].

16. Long-term debt

	2022		2021
	$		$
The government assistance loan is non-interest bearing until December 31, 2022 at which time the loan bears interest at 5% per annum. The loan must be repaid by December 31, 2025.		39,342		36,972
Term loan bearing interest at a rate of 5.80% per annum payable in monthly installments of $848 until April 2024.		-		27,143
Term loans, bearing interest at rates varying between 9.44% and 10.71%, repayable in monthly instalments of $7,372, ending January 2025.		188,007		-
		227,349		64,115
Current portion of long-term debt		72,090		10,179
		155,259		53,936

22

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

17. Related party transactions

Companies related through common ownership

EB Rental Ltd. [prior to June 3, 2021] [note 5] 

7858078 Canada Inc. [prior to June 3, 2021] [note 5] 

Montana Strategies Inc.

Key management personnel of the Company have control over the following entities

California Electric Boat Company Inc. 

9335-1427 Quebec Inc. 

Hurricane Corporate Services Ltd. 

Mac Engineering, SASU – Since February 16, 2021

Ultimate founder shareholders and their individually controlled entities

Alexandre Mongeon 

Patrick Bobby 

Robert Ghetti 

Immobilier R. Ghetti Inc. 

Société de Placement Robert Ghetti Inc.

Founder shareholders

Gestion Toyma Inc. 

Entreprises Claude Beaulac Inc. [former shareholder] 

Gestion Moka Inc. [former shareholder]

23

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

The following table summarizes the Company’s related party transactions for the year:

	2022		2021		2020
	$		$		$
Revenues
Sales of boats
EB Rental Ltd. [prior to June 3, 2021]		-		84,149		101,684
Patrick Bobby				-		11,000
Sale of parts and boat maintenance
EB Rental Ltd. [prior to June 3, 2021]		-		40,310		79,696
Other
EB Rental Ltd. [prior to June 3, 2021]		-		-		2,500
7858078 Canada Inc. [prior to June 3, 2021]		-		-		6,074
Expenses
Cost of sales
EB Rental Ltd. [prior to June 3, 2021]		-		11,444		16,865
Research and Development
9335-1427 Quebec Inc.		-		75,020		-
Mac Engineering, SASU		666,178		176,500		-
Travel and entertainment
EB Rental Ltd. [prior to June 3, 2021]		-		8,926		-
Advertising and promotion
EB Rental Ltd. [prior to June 3, 2021]		-		11,245		-
Rent expense
EB Rental Ltd. [prior to June 3, 2021]		-		-		65,934
Office salaries and benefits
Montana Strategies Inc.		62,462		-		-

The Company leases its Boisbriand premises from California Electric Boat Company Inc. with a right-of-use assets as at August 31, 2022 of $889,866 [August 31, 2021 – $1,132,556] and lease liability of $971,399 [August 31, 2021 – $1,177,867] [notes 9 and 15].

24

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Remuneration of directors and key management of the Company

	2022		2021		2020
	$		$		$
Wages		2,324,770		1,299,402		308,868
Share-based payments – capital stock		-		-		572,110
Share-based payments – stock options		2,560,031		6,081,900		259,410
		4,884,801		7,381,302		1,140,388

At the end of the year, the amounts due to and from related parties are as follows:

	2022		2021
	$		$
Share subscription receivable
9335-1427 Quebec Inc.		25,000		25,000
Alexandre Mongeon		14,200		14,200
		39,200		39,200
Current advances to related party
Alexandre Mongeon		16,736		185,407
Amounts due to related parties included in trade and other payable
Alexandre Mongeon		16,000		74,157
Patrick Bobby		12,308		11,092
Kulwant Sandher		8,062		7,054
Xavier Montagne		8,292		-
Mac Engineering, SASU		-		29,957
		44,662		122,260

In December 2020, the holders of the advances from related parties and the Company have agreed that the advances shall automatically convert into Voting Common Shares of the Company at a conversion price equal to the per Voting Common Share offering price in the Initial Public Offering [note 18].

25

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

18. Capital stock

Authorized

Voting Common Shares, voting and participating

Preferred shares, without par value, non-cumulative annual dividend, redeemable at their issue price, non-participating, non-voting.

Issued

	2022		2021
	$		$
8,417,923 voting common shares [2021 – 8,324,861]		43,441,591		42,834,982

Subscription and issuance of Class A common shares, share exchange and share consolidation

On September 3, 2020, the Board of Directors authorized the consolidation of all the issued and outstanding Voting Common Shares on the basis on 1 post-consolidation Voting Common Shares for every 3.7 pre-consolidation Voting Common Shares. The impact of this adjustment has been reflected in the Company’s share capital and earnings (loss) per share.

Subscription and issuance of Voting Common Shares

On September 2, 2020, the Board of Directors authorized the issuance of 547,297 Voting Common shares, for a total consideration of $2,025,000.

On September 18, 2020, the Board of Directors authorized the issuance of 45,351 Voting Common Shares, for services provided to the Company. The services were valued at $167,799 of which $58,730 is in connection with transaction costs directly attributable to the issuance of Voting Common Shares and $109,069 is included in professional fees.

On November 27, 2020, the Company completed its initial public offering [the “Offering”] of an aggregate of 2,760,000 common shares of the Company at a price of U.S.$10.00 ($13.22) per share for proceeds of U.S.$25,287,624 ($33,430,239) net of a U.S.$1,932,000 ($2,554,104) cash commission paid to the underwriter and professional fees in connection with the Offering amounting to U.S.$380,376 ($502,857). Netted against the proceeds from the Offering are also included professional fees amounting to $271,726 that were previously recorded in prepaids.

On December 22, 2020, the Board of Directors authorized the issuance of 69,650 Voting Common Shares, being the conversion of the advances from related parties of $898,489.

On the same day, the Board of Directors authorized the issuance of 3,067 Voting Common Shares for a total consideration of $39,200 which remains receivable on August 31, 2022 and is presented in the advances to related parties [note 17].

On February 16, 2021, the Company issued 30,000 Voting Common Shares at a price of U.S. $15.07 [approximately $19.13] as part of the consideration paid for the acquisition of intellectual property [note 11].

26

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

On June 3, 2021, the Company issued 284,495 Voting Common Shares at a price of U.S. $10.09 [approximately $12.21] as part of the consideration paid in a business acquisition [note 5].

On January 12, 2022 and February 1, 2022, the Board of Directors authorized the issuance of 25,000 Voting Common Shares and 5,435 Voting Common Shares respectively to a third party in exchange for marketing services provided to the Company.

On January 31, 2022, the Board of Directors authorized the issuance of 6,479 Voting Common Shares to a third party in exchange for sub-contracting services provided to the Company related to research and development.

During the six-month period ended August 31, 2022, the Company issued 53,445 Voting Common Shares to third parties in exchange for marketing services provided to the Company.

On August 25, 2022, the Company issued 2,703 Voting Common Shares upon the exercise of a former employee’s stock options.

19. Share-based payments

Description of the plan

The Company has a fixed option plan. The Company’s stock option plan is administered by the Board of Directors. Under the plan, the Company’s Board of Directors may grant stock options to employees, advisors and consultants, and designates the number of options and the share price pursuant to the new options, subject to applicable regulations. The options, when granted, will have an exercise price of no less than the estimated fair value of shares at the date of grant.

Stock options

On multiple grant dates, the Company granted a total of 1,664,526 stock options at exercise prices varying between $2.78 and $16.29 per share to directors, officers, employees and consultants of the Company. The stock options will expire 5 to 10 years from the grant dates.

The Company recognizes share-based payments expense for option grants based on the fair value at the date of grant using the Black-Scholes valuation model. The share-based payments expense recognized for the year ended August 31, 2022 amounts to $2,699,481 [2021 – $7,121,444; 2020 - $1,312,071]. The table below lists the assumptions used to determine the fair value of these option grants. Volatility is based on public companies with characteristics similar to the Company.

27

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Grant date	Exercise price		Market price		Expected volatility		Risk-free interest rate		Expected life
	$		$		%		%		[years]
May 27, 2020		3.70		3.70		84		0.4		5
May 27, 2020		2.78		3.70		84		0.4		5
October 23, 2020		3.70		3.70		97		0.4		5
November 24, 2020		16.29		13.03		101		0.4		5
February 23, 2021		15.75		15.05		103		0.6		5
May 14, 2021		8.98		9.06		105		0.8		5
July 14, 2021		9.25		9.01		105		0.7		5
September 21, 2021		8.85		8.58		106		0.9		5
January 22, 2022		5.65		5.52		107		1.5		5

The following tables summarize information regarding the option grants outstanding as at August 31, 2022:

	Number of options			Weighted average exercise price
	#			$
Balance at August 31, 2020		516,216			3.41
Granted		1,148,310			12.86
Forfeited		(5,405	)		3.70
Balance at August 31, 2021		1,659,121			9.95
Granted		152,500			6.70
Forfeited		(102,500	)		13.59
Exercised		(2,703	)		3.70
Balance at August 31, 2022		1,706,418			9.45

Exercise price	Number of options outstanding		Weighted average grant date fair value		Weighted average remaining contractual life		Exercisable options
$	#		$		[years]
3.70		345,946		2.42		2.75		325,253
2.78		162,162		2.59		2.75		162,162
3.70		10,810		2.69		3.00		7,883
16.29		440,000		9.33		8.25		440,000
15.75		120,000		11.28		3.50		45,000
8.98		500,000		6.91		3.75		500,000
8.85		25,000		6.55		9.25		25,000
5.65		102,500		4.28		4.50		102,500

28

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Warrants

On November 23, 2020, the Company granted the underwriter the option to purchase 151,800 Voting Common Shares of the Company for a period of five years from the date of the initial public offering at an exercise price of U.S. $12.50 ($16.53).

Grant date	Exercise price		Number of warrants outstanding		Weighted average remaining contractual life
	$		#		[years]
November 23, 2020		16.53		151,800		3.25

20. Revenues

	2022		2021		2020
	$		$		$
Sales of boats		2,459,365		2,080,110		2,249,107
Sales of parts and boat maintenance		97,721		75,205		167,263
Boat rental and boat club membership revenue		4,793,860		1,355,548		-
Other		-		2,925		803
		7,350,946		3,513,788		2,417,173

The geographical distribution of revenues from external customers is as follows:

					2022
	Sale of electric boats		Rental of electric boats		Total
	$		$		$
Canada		557,639		-		557,639
USA		1,292,666		4,793,861		6,086,527
Other		706,780		-		706,780
		2,557,085		4,793,861		7,350,946

					2021		2020
	Sale of electric boats		Rental of electric boats		Total		Total
	$		$		$		$
Canada		571,216		-		571,216		827,057
USA		1,329,575		1,363,024		2,692,599		1,407,063
Other		249,973		-		249,973		183,053
		2,150,764		1,363,024		3,513,788		2,417,173

29

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

21. Grants and investment tax credits

During the year ended August 31, 2022, the Company recognized grants and investment tax credits amounting to $1,458,632 [August 31, 2021 –$921,658], of which $1,408,840 are presented against research and development expenses [August 31, 2021 –$859,516], $8,535 against cost of sales [August 31 2021 –$Nil] and $40,584 as a reduction of property and equipment and intangible assets [August 31, 2021 – $44,939]. Office salaries and benefits are presented net $Nil [August 31, 2021 –$17,203] of grants.

22. Net finance expense

	2022			2021		2020
	$			$		$
Interest and bank charges		184,895			123,100		107,105
Interest income		(379,288	)		-		-
Foreign currency exchange (gain) loss		(251,947	)		1,583,292		1,295
Loss on Debentures [note 8]		670,000			550,000		-
		223,660			2,256,392		108,400

23. Income taxes

The income tax expense on the Company’s loss before tax differs from the theoretical amount that would arise using the federal, provincial and foreign statutory tax rates applicable. The difference is as follows:

	2022			2021			2020
	$			$			$
Income taxes at the applicable tax rate of 26.5% [2021 – 26.5%; 2020 – 15%]		(3,406,162	)		(3,977,204	)		(338,133	)
Change in tax status following the initial public offering		-			(127,979	)		-
Adjustment in respect of current and deferred income tax of previous year		(4,396	)		(207,601	)
Permanent differences		823,119			2,100,615			198,475
Temporary difference		-			-			160,967
Change in recognition of deferred income tax assets		2,816,417			2,317,759			-
Other		29,365			-			-
Total income tax expense		258,343			105,590			21,309

On November 27, 2020, the Company conducted an initial public offering [note 18] after which its tax status changed and is no longer a Canadian-controlled private corporation. As a result of this change of status, the combined statutory rate in Canada increased from 15% to 26.5%.

Deferred income taxes reflect the net tax impact of temporary differences between the value of assets and liabilities for accounting and tax purposes. The main components of the deferred tax expense and deferred tax assets and liabilities were as follows:

30

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

	Balance as at August 31, 2021			Recognized in net income (loss)			Recognized in equity		Business combination			Balance as at August 31, 2022
	$			$			$		$			$
Temporary differences
Property and equipment		(262,778	)		115,282			-		(7,802	)		(155,298	)
Intangibles		(42,887	)		(251,498	)		-		-			(294,385	)
Net operating losses		2,054,789			2,735,223			-		-			4,790,012
Financing fees		940,948			(235,354	)		-		-			705,594
Research and development		174,884			255,951			-		-			430,835
Difference in timing of recognition		148,850			110,463			-		(195	)		259,118
Right-of-use asset		(789,968	)		184,851			-		(11,790	)		(616,907	)
Lease liability		813,691			(167,184	)		-		12,340			658,847
Net capital losses		57,224			(6,806	)		-		-			50,418
Valuation allowance		(3,199,861	)		(2,816,417	)		-		-			(6,016,278	)
Deferred tax liability		(105,108	)		(75,489	)		-		(7,447	)		(188,044	)

As of August 31, 2022, the Company had net operating losses carried forward for income tax purposes of $18,194,000 [2021 - $8,143,000] available to reduce future taxable income, that will expire between 2040 and 2042.

As of August 31, 2022, the Company had research and development expenditures of $1,439,000 [2021 - $471,000] for Canadian federal income tax purposes. These expenditures are available to reduce future taxable income and have unlimited carryforward period.

24. Capital disclosures

The Company’s objectives in managing capital are:

· to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and

· to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

Capital is regarded as total equity, as recognized in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

The Company manages and adjusts its capital structure considering changes in economic conditions. To maintain or adjust its capital structure, the Company may issue debt or new shares. Financing decisions are generally made on a specific transaction basis and depend on such things as the Company’s needs, capital markets and economic conditions at the time of the transaction. Management reviews its capital management approach on an ongoing basis and believes that this approach is reasonable, given the size of the Company.

The Company does not have any externally imposed capital compliance requirements at August 31, 2022.

31

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

25. Financial risk management and fair value measurement

Fair value measurement and hierarchy

The fair value measurement of the Company’s financial and non-financial assets and liabilities utilizes market observable inputs and data as far as possible. Inputs used in determining fair value measurements are categorized into different levels based on how observable the inputs used in the valuation technique utilized are (the “fair value hierarchy”):

· Level 1: Quoted prices in active markets for identical items [unadjusted];

· Level 2: Observable direct or indirect inputs other than Level 1 inputs; and

· Level 3: Unobservable inputs [i.e., not derived from market data].

The classification of an item into the above levels is based on the lowest level of the inputs used that has a significant effect on the fair value measurement of the item. Transfers of items between levels are recognized in the period they occur.

The carrying amount of trade and other receivables, advances from related parties and trade and other payables are assumed to approximate their fair value due to their short-term nature.

The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities.

Classified as Level 2, the fair value of Debentures is estimated using the partial differential equation model to value convertible debentures that include a call feature. Key assumptions used in the model include volatility, which is based on actual trading data, difference in volatility since initial issuance of the instrument and similar instruments on the market, and credit spread, which is based on corporate bond yield spreads in the market and credit spread data for similar public companies. The model includes a fair value adjustment based on an initial calibration exercise.

Below is a sensitivity analysis based on variations in the key assumptions used in the model. The table presents the fair value of the Debentures would have been had the key assumptions varied as indicated:

	Volatility				Credit spread
	+5%		-5%		+2%		-2%
	$		$		$		$
Fair value of debentures		2,441,000		2,431,500		2,382,000		2,490,500

Financial risk management

The Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies and processes for managing those risks and the methods used to measure them.

[a] Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has a strict code of credit, including obtaining instalment payments, obtaining agency credit information and setting appropriate credit limits. The maximum exposure to credit risk at the reporting date, is the carrying amount of financial assets. The Company does not hold any collateral.

32

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

Credit risk related with the Debentures is reflected in the fair value of the instrument [note 8].

Trade and other receivables are generally written off when there is no reasonable expectation of recovery. Indicators of this include the failure for a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments.

[b] Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due. The Company is exposed to liquidity risk primarily from its trade and other payables, other financial liabilities and long-term debt. The Company believes that its recurring financial resources are adequate to cover all its expenditures.

	Contractual cash flows		Less than one year		1-5 years
	$		$		$
August 31, 2022
Trade and other payables		1,030,331		1,030,331		-
Other financial liabilities		177,834		177,834		-
Long-term debt		227,349		72,090		155,259
		1,435,514		1,280,255		155,259
August 31, 2021
Trade and other payables		848,054		848,054		-
Other financial liabilities		237,444		237,444		-
Long-term debt		64,115		10,179		53,936
		1,149,613		1,095,677		53,936

[c] Interest rate risk

The Company is exposed to interest rate risk on its variable rate bank indebtedness and variable and fixed rate long-term debt. Fixed-rate borrowings expose the Company to fair value risk while variable rate borrowings expose the Company to cash flow risk.

[d] Foreign exchange risk

Foreign exchange risk is the risk that future cash flows or fair value of a financial instrument will fluctuate due to changes in foreign exchange rates.

The Company is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currencies of the Company and its subsidiaries.

33

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

The Company has certain financial assets and liabilities denominated in United States dollars. The Canadian dollar equivalent carrying amounts of these assets and liabilities are as follows:

	2022		2021
	$		$
Cash		5,142,703		11,219,143
Trade and other receivables		103,116		-
Trade and other payables		172,871		294,637

Sensitivity

A reasonably possible 5% strengthening (weakening) of the U.S. dollar against the Canadian Dollar at the reporting date would have increased (decreased) net income (loss) and other comprehensive income by the amounts shown below. This analysis assumes that all other variables remain constant.

	Net income (loss)					Other comprehensive income
	+5%		-5%			+5%		-5%
	$		$			$		$
August 31, 2022		253,000		(253,000	)		358,000		(358,000	)

26. Segment information

The Company operates in two reportable business segments.

The two reportable business segments offer different products and services, require different processes and are based on how the financial information is produced internally for the purposes of monitoring operating results and making decisions about resource allocation and performance assessment by the Company’s Chief Operating Decision Maker.

The following summary describes the operations of each of the Company’s reportable business segments:

· Sale of electric boats – manufacture of customized electric boats for consumer market and sale of boat parts maintenance, and

· Rental of electric boats – short-term rental operation and boat club membership.

Sales between segments are accounted for at prices that approximate fair value. No business segments have been aggregated to form the above reportable business segments.

34

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

	Year ended August 31, 2022
	Sale of electric boats			Rental of electric boats		Inter-segment eliminations			Total
		$			$		$			$
Revenue from external customers		2,557,086			4,793,860		-			7,350,946
Revenue from other segments		820,383			80,842		(901,225	)		-
Segment revenues		3,377,469			4,874,702		(901,225	)		7,350,946
Segment gross profit		596,570			2,839,970		(150,975	)		3,285,565
Segment (loss) profit before tax		(13,632,377	)		872,787		(93,852	)		(12,853,442	)
Research and development		2,242,794			-		-			2,242,794
Office salaries and benefits		2,384,746			951,053		-			3,335,799

	Year ended August 31, 2021
	Sale of electric boats			Rental of electric boats		Inter-segment eliminations			Total
		$			$		$			$
Revenue from external customers		2,158,240			1,355,548		-			3,513,788
Revenue from other segments		142,007			7,476		(149,483	)		-
Segment revenues		2,300,247			1,363,024		(149,483	)		3,513,788
Segment gross profit		640,228			1,003,596		(39,642	)		1,604,182
Segment (loss) profit before tax		(15,517,319	)		541,257		(32,255	)		(15,008,317	)
Research and development		1,489,953			-		-			1,489,953
Office salaries and benefits		1,555,014			199,599		-			1,754,613

	August 31, 2022
	Sale of electric boats	Rental of electric boats	Sale of electric boats		Total
	$	$	$		$
Segment assets	24,499,107	14,039,428	(9,438,326	)	29,100,209
Cash	4,146,260	1,678,456	-		5,824,716
Additions to property and equipment	412,158	859,176	(162,446	)	1,108,888
Additions to intangible assets	32,202	-	-		32,202
Segment liabilities	2,023,368	3,311,128	(262,883	)	5,071,613

	August 31, 2021
	Sale of electric boats		Rental of electric boats		Sale of electric boats			Total
		$		$		$			$
Segment assets		35,175,599		12,734,296		(9,108,603	)		38,801,292
Cash		17,210,266		937,555		-			18,147,821
Additions to property and equipment		432,547		145,275		(33,468	)		544,354
Additions to intangible assets		1,102,662		-		-			1,102,662
Segment liabilities		2,400,829		2,938,746		(63,470	)		5,276,105

The Company has disclosed the above amounts for each reportable segment because they are regularly reviewed by the Chief Operating Decision Maker.

35

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

27. Additional cash flows information

Financing and investing activities not involving cash:

	2022		2021		2020
	$		$		$
Advances to related parties converted to shares		-		898,489		-
Unpaid share subscription		-		39,200		-
Right-of-use assets transferred to intangibles, net of accumulated depreciation		-		5,981		-
Additions to right-of-use assets		234,608		852,467		-
Lease termination		273,652		37,033		-
Shares issued as consideration for the acquisition of intangible assets		-		573,936		-
Shares issued as consideration for business acquisition		-		3,474,232		-
Transaction costs for share issuance transferred from prepaid		-		213,019		-

28. Commitments

In addition to the obligations under leases [note 15], the Company is subject to supply agreements with minimum spend commitments. The amount of the minimum fixed and determinable portion of the unconditional purchase obligations over the next years, is as follows:

	$
2023		4,350,104
2024		2,253,394

In October 2021, EB Rental Ltd. has entered into a lease arrangement for premises, which has not commenced yet and therefore related right-of-use asset and lease liability are not recorded as at August 31, 2022. The lease offers EB Rental Ltd. a termination clause in case certain contractual requirements are not met by the lessor at the lease commencement date. The Company’s undiscounted lease commitments related to this lease are as follows as at August 31, 2022:

	$
2023		105,000
2024		159,000
2025		162,000
2026		165,000
2027 and thereafter		225,000

36

Vision Marine Technologies Inc.

Notes to the consolidated financial statements

August 31, 2022

29. Subsequent events

During the months of September, October and November 2022, the Company issued a total of 19,457 Voting Common Shares to third parties in exchange of sub-contracting services provided to the Company related to investor relations.

30. Comparative figures

Certain comparative figures have been reclassified to conform to current period’s presentation.

37

EX-99.2

Exhibit 99.2

VISION MARINE TECHNOLOGIES INC.

Form 51-102F1 Management's Discussion & Analysis

For the Year ended August 31, 2022

1.1 Date November 23, 2022

Introduction

The following management's discussion and analysis, prepared as of August 31, 2022, is a review of operations, current financial position and outlook for Vision Marine Technologies Inc. (the "Company"), and should be read in conjunction with the Company's audited consolidated financial statements for the years ended August 31, 2022 and 2021 and the notes thereto. Amounts are reported in Canadian dollars based upon consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) on SEDAR at www.sedar.com.

Forward-Looking Statements

Certain statements contained in the following Management’s Discussion and Analysis (“MD&A”) constitute forward-looking statements. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

Risks and Uncertainties

There is limited public information on our operating history.

Our limited public operating history makes evaluating our business and prospects difficult. Although we were formed in 2012, we did not provide public reports on the results of operations until our 2020 fiscal year. We only have five years of audited financial statements.

We currently have no net income, and if we are unable to achieve and grow our net income in the future our ability to grow our business as planned will be adversely affected.

We have made significant up-front investments in research and development, sales and marketing, and general and administrative expenses to rapidly develop and expand our business. We had a loss before tax of $12,853,442 and total comprehensive loss of $12,802,680 for the year ended August 31, 2022 as compared to a total comprehensive loss of $14,725,341 in the year ended August 31, 2021. We may never achieve net income or if we do it may fail to grow or even decline in certain circumstances, many of which are beyond our control. Our revenues might not ever significantly exceed our expenses, and may even be lower than our expenses. It may take us longer to obtain net income to do so than we anticipate, if at all, or we may only do so at a much lower rate than we anticipate. Failure to obtain net income may mean that we will have to curtail our planned growth in operations or resort to financings to fund such growth in the future.

1

Our plan of operations entails promoting a product that we may never launch or which may not be commercially accepted if launched.

We have concentrated the majority of our research and development efforts on developing electric powertrain systems that we intend to rent and sell to Original Equipment Manufacturers (“OEM”s) of boats. We expect the electric powertrain systems to represent the majority of our revenue in our coming accounting periods. We have built prototypes of our electric powertrain. We do not know if OEMs will find our product candidate to be an attractive component in their boats or if they will find the price of our electric powertrains to be acceptable. We do not currently have any significant customers for our electric powertrains. Although we have received LOIs from OEMs for over 1,000 powertrains through the year ended August 31, 2024, such LOIs are non-binding and may never result in any actual sales. Even if we do develop such relationships, we might not be able to maintain them or grow them as anticipated. At the time of our initial public offering, we had expected to begin the commercialization of our electric powertrains in 2020 but were not able to meet that preferred timeline and we may not meet our new timelines. Additionally, we had anticipated developing a 300 horsepower within 18 months of our last annual report but currently we may need additional 18 months from the date hereof. If we are not successful in commercializing our product or if sales of our electric powertrain are less than we estimate, our business may not grow as expected, if at all, and we may fail.

In June 2021, we acquired EB Rental, Ltd. (“EBR”), and the acquired company may not perform as we expect.

In June 2021, we acquired all of the equity interests of 7858078 Canada Inc. which wholly-owns EBR, an electric boat rental company operating at Lido Marina Village in Newport Beach, California. Integrating businesses is a difficult, expensive, and time-consumingprocess. Our principal executive offices and manufacturing facility are located in Quebec, Canada and EBR’s operations are conducted, and its employees are mostly located, in California. Failure to integrate successfully EBR’s business and operations with ours could lead to inefficiencies, the loss of staff or revenues below what we anticipated at the time of the acquisition.

Revenues from EBR may be affected by a variety of factors that are outside of our control.

Revenues from EBR represented 65% of our total revenues in our fiscal 2022. Future revenues from EBR may be affected by factors that are outside of our control, including:

● Lido Village Marina’s appearance, safety, economic health and ability to continue to attract visitors willing to rent electric vehicles;

● the continued desirability of boat rentals as a leisure activity; and

● the local economic condition in and around Newport Beach, California.

If EBR’s revenues decrease significantly, it may cease to be profitable or our revenues may not be as large as we currently project.

A portion of our assets consist of debentures in a third-party, and the ability of that third-party to repay those debentures is outside of our control. If those debentures were not to be repaid in full, our assets could be significantly reduced.

On May 14, 2021, we purchased $3,400,000 in debentures (the “Debentures”) from The Limestone Boat Company Limited (“Limestone”). Limestone is a North American designer and manufacturer of recreational and commercial powerboats. The Debentures bear interest at the rate of 10% per annum and mature in three years from issuance. Although the Debentures are convertible into Limestone common shares at the price of $0.36 per share, on November 22, 2022 the closing share price of Limestone’s common shares on the TSX Venture Exchange was $0.02 with a relatively low trading volume. As a result, we may never be able to convert the Debentures at more than their principal and could be entirely dependent on Limestone repaying the debentures in cash. If we do not convert and Limestone is unable to repay such Debentures and the interest due thereon in full and in cash, our assets will be significantly reduced and we may be forced to alter our proposed use of assets or raise additional funds.

To carry out our proposed business plan to build up inventory for order fulfilment, increase brand awareness and develop a new powertrain for our engines, we will require a significant amount of capital.

If current cash, cash equivalents and revenue from our business are not sufficient to cover our cash requirements, we will need to raise additional funds through the sale of debt or equity securities, in either private placements or additional registered offerings. If we are unsuccessful in raising enough funds through such capital-raising efforts, we may review other financing possibilities such as bank loans. Financing might not be available to us or, if available, only on terms that are not favorable or acceptable to us.

Our ability to obtain the necessary financing to carry out our business plan is subject to a number of factors, including general market conditions and investor acceptance of our business plan. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable to raise sufficient funds, we will have to significantly reduce our spending, delay or cancel our planned activities or substantially change our current corporate structure. We might not be able to obtain any funding, and we might not have sufficient resources to conduct our business as projected, both of which could mean that we would be forced to curtail or discontinue our operations.

2

Terms of subsequent financings may adversely impact your investment.

We may have to engage in common equity, debt, or preferred share financings in the future. As a result, your rights and the value of your investment in our securities could be reduced. Interest on debt securities could increase costs and negatively impact operating results. Preferred shares could be issued in one or more series from time to time with such designation, rights, preferences, and limitations as determined by the Board. The terms of preferred shares could be more advantageous to those investors than to the holders of common shares. In addition, if we need to raise more equity capital from the sale of common shares, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms of your investment in our common shares.

Our future growth depends upon consumers’ willingness to purchase electric powerboats.

Our growth highly depends upon the adoption by consumers of, and we are subject to an elevated risk of any reduced demand for, electric powerboats. Without such growth, sales of our electric powertrain, if any, and our electric boats may not grow at the rate that we anticipate, if such sales grow at all. If the market for electric powerboats does not develop as we expect or develops more slowly than we expect, our business, prospects, financial condition and operating results will be negatively impacted. Despite the long history of electric powerboats, the market for them is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new electric powerboat announcements and changing consumer demands and behaviors. Powerboats with conventional gas-powered motors may be deemed preferable to electric powerboats as they tend to be more powerful, have a longer range and/or cost less. Other factors that may influence the adoption of electric powerboats include:

● the decline of an electric powerboats range resulting from deterioration over time in the battery’s ability to hold a charge;

● concerns about electric grid capacity and reliability, which could derail our efforts to promote electric powerboats as a practical solution to powerboats which require gasoline;

● improvements in the fuel economy of the internal combustion engine;

● the availability of service for electric powerboats;

● the environmental consciousness of consumers;

● volatility in the cost of oil and gasoline;

● consumers’ perceptions about convenience and cost to charge an electric powerboat;

● the availability of tax and other governmental incentives to manufacture electric powerboats; and

● perceptions about and the actual cost of alternative fuel.

Any of the factors described above may cause current or potential customers not to purchase our electric powerboat, which would materially adversely affect our business, operating results, financial condition and prospects.

3

Our future growth depends upon consumers’ preference for outboard motors.

We envision the majority of our growth deriving from the sale of our electric powertrain for an outboard motor. If consumer preferences lead to a decline in outboard motors, the OEMs we intend to sell our electric powertrain to may produce less electric boats, and we may not be able to sell as many electric powertrains as we anticipate, if we sell any at all. We may not be able to adapt the technology behind this powertrain for inboard motors or may only be able to do so in a way that is not cost effective.

We rely on a limited number of suppliers for key components of our finished products.

Although we manufacture all of our powerboats, we do so by assembling the component parts that we acquire from third-party suppliers rather than by producing any of those component parts ourselves. We materially depend on some of those third-party suppliers for certain components that we obtain from a limited number of suppliers, namely:

● hulls: we purchase all of our hulls from Aqualux and Abitibi & Co.;

● motors: for our electric powertrains, we intend to purchase motors from Danfoss Technologies and Dana TM4 and for our boats, we purchase approximately 30% from Min-Kota, 35% from E-Tech and 20% from E-Propulsion;

● powertrains: we purchase approximately 5% of our powertrains from Piktronik, an Austrian-Slovenian company specialized in the research, development and production of components for electric vehicles and electric powerboats (which provides the powertrain used in our Bruce 22); and

● battery packs: we purchase our lithium-ion batteries from Relion Batteries (“Relion”), who in turn rely upon Samsung cells, and we purchase our lead batteries (approximately 85% of all batteries we purchase) from Thermo Fisher Scientific Inc.  We have agreements with Octillion Power Systems (“Octillion”) to provide marine specific batteries to power the E-Motion powertrain.

As we purchase our components and parts through purchase orders and informal arrangements rather than long-term purchase agreements, we have not contractually secured a supply chain for these components and parts. As a result of the COVID-19 pandemic, some of our third-party suppliers have experienced delays in delivering parts and components for our products. If as a result of the COVID-19 pandemic we continue to experience delays in receiving our supplies from these third-parties, if they significantly increased the cost of these components or if they ceased offering us these components, we may have to find new suppliers, which might not be possible on a timely basis, or cease production of the products in which the components are included.

The range of electric powerboats on a single charge declines over time which may negatively influence potential customers’ decisions whether to purchase our boats or boats containing our electric powertrains.

The range of electric powerboats on a single charge declines principally as a function of usage, time and charging patterns. For example, a customer’s use of their powerboat as well as the frequency with which they charge the battery can result in additional deterioration of the battery’s ability to hold a charge. During the lifetime of the lead acid batteries in powerboats, 500 to 1000 recharge cycles are possible, and our lithium battery pack will retain approximately 85% of its ability to hold its initial charge after approximately 3,000 charge cycles and 8 years, which will result in a decrease to the boat’s initial range. Such battery deterioration and the related decrease in range may negatively influence potential customer decisions whether to purchase an electric boat, which may harm our ability to market and sell our boats. Likewise, if such reasoning deters potential customers from purchasing boats made by OEMs that use our electric powertrains, they may order fewer electric powertrains from us, if they ever order any at all.

Developments in alternative technologies or improvements in the internal combustion engine may materially adversely affect the demand for our electric powerboats.

Significant developments in alternative technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. For example, fuel which is abundant and relatively inexpensive in North America, such as compressed natural gas, may emerge as consumers’ preferred alternative to petroleum-based propulsion. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced electric powerboats, which could result in the loss of competitiveness of our boats, decreased revenue and a loss of market share to competitors.

4

If we are unable to keep up with advances in electric powerboat technology, we may lose our competitive position in the industry.

We may be unable to keep up with changes in electric powerboats technology, particularly developments with powertrains. As a result, we may lose our competitive position in the industry. Any failure to keep up with advances in electric powerboat technology could result in a loss of our competitive position which would materially and adversely affect our business, prospects, operating results and financial condition. Our research and development efforts may not be sufficient to adapt to changes in electric powerboat technology. As technologies change, we plan to upgrade or adapt our electric powertrain. We would additionally upgrade our boats and introduce new models to take advantage of these changes. However, our technology and boats may not compete effectively with alternative technology or powerboats if we are not able to source and integrate the latest technology. For example, we do not manufacture lead or lithium battery cells, and as a result, we are dependent on suppliers of battery cell technology for our battery packs.

Demand in the powerboat industry is highly volatile.

Fluctuations in demand for recreational powerboats and electric powerboats may materially and adversely affect our business, prospects, operating results and financial condition. The markets in which we compete have been subject to considerable volatility in demand in recent periods. Demand for recreational powerboat and electric powerboat sales depends to a large extent on general, economic and social conditions in a given market. Historically, sales of recreational powerboats decrease during economic downturns. We have fewer financial resources than more established powerboat manufacturers to withstand adverse changes in the market and disruptions in demand.

Unfavorable weather conditions may have a material adverse effect on our business, financial condition, and results of operations, especially during the peak boating season.

Adverse weather conditions in any year, in any particular geographic region, may adversely affect sales in that particular geographic region, especially during the peak boating season in such particular geographic region. Sales of our products are generally stronger just before and during spring and summer, which represent the peak boating months in most of our markets, and favorable weather during these months generally has a positive effect on consumer demand for our products. Conversely, unseasonably cool weather, excessive rainfall, reduced rainfall levels, or drought conditions during these periods may close area boating locations or render boating dangerous or inconvenient, thereby generally reducing consumer demand for our products. Unseasonably cool or wet weather may also adversely affect a consumer’s decision to rent one of our boats. Our annual results would be materially and adversely affected if our net sales were to fall below expected seasonal levels during these periods. We may also experience more pronounced seasonal fluctuation in net sales in the future as we continue to expand our businesses. Additionally, to the extent that unfavorable weather conditions are exacerbated by global climate change or otherwise, our sales may be affected to a greater degree than we have previously experienced.

5

We intend to increasingly use our network of independent dealers, and we will face increasing competition for dealers and have little control over their activities.

Currently, most of our sales are directly placed with us online, but approximately 35% of our sales in our 2022 fiscal year were derived from our network of independent dealers. We have agreements with dealers in our network that typically provide for terms of between 1 and 3 years. While we will continue to market direct sales through our website, we seek to increase revenues and diversify our sales points by expanding our network of independent dealers. We envision an increase in the number of dealers supporting our products and the quality of their marketing and servicing efforts as being essential to our ability to increase sales. We may not be successful in our effort to grow our network of independent dealers.

Competition for dealers among recreational powerboat manufacturers continues to increase based on the quality, price, value and availability of the manufacturers’ products, the manufacturers’ attention to customer service and the marketing support that manufacturers provide to dealers. We will face intense competition from other recreational powerboat manufacturers in attracting and retaining dealers, and we might not be able to attract or retain relationships with qualified and successful dealers as well as our competition, if at all. We might not be able to maintain or improve our relationship with dealers or our market share position. In addition, independent dealers in the recreational powerboat industry have experienced significant consolidation in recent years, which could inhibit our ability to retain them or result in the loss of one or more of our dealers in the future if the surviving entity in any such consolidation purchases similar products from a competitor. If we do not establish a significant network of dealers, our future sales could fail to meet our projections, and our business, financial condition and results of operations may be adversely affected.

We envision that our success will depend, in part, upon the financial health of our dealers and their continued access to financing.

We seek to increase revenues and diversify our sales points by expanding our network of independent dealers. The financial health of our current and any future dealers is critical to our success. Our business, financial condition and results of operations may be adversely affected if the financial health of dealers that sell our products suffers. Their financial health may suffer for a variety of reasons, including a downturn in general economic conditions, rising interest rates, higher rents, increased labor costs and taxes, compliance with regulations and personal financial issues.

In addition, dealers require adequate liquidity to finance operations, including purchases of our products. Dealers are subject to numerous risks and uncertainties that could unfavorably affect their liquidity positions, including, among other things, continued access to adequate financing sources on a timely basis on reasonable terms. These sources of financing are vital to our ability to sell products through our distribution network. Access to floor plan financing generally facilitates dealers’ ability to purchase powerboats from us, and their financed purchases reduce our working capital requirements. If floor plan financing were not available to our dealers, our sales and our working capital levels could be adversely affected. The availability and terms of financing offered by dealers’ floor plan financing providers will continue to be influenced by:

· their ability to access certain capital markets and to fund their operations in a cost-effective manner;

· the performance of their overall credit portfolios;

· their willingness to accept the risks associated with lending to dealers; and

· the overall creditworthiness of those dealers.

6

Changes to trade policies, tariffs, and import/export regulations may have a material adverse effect on our business, financial condition, and results of operations.

Although we manufacture our products in Canada, in our last fiscal year approximately 90% of our sales and rentals occurred in the United States, a percentage that could increase as our operations expand. Changes in laws and policies governing foreign trade could adversely affect our business. As a result of recent policy changes, there may be greater restrictions and economic disincentives on international trade. We anticipate that we will be affected by the agreement between the United States of America, the United Mexican States, and Canada (commonly known as USMCA), if ratified by all participants. Such agreement has the potential to adversely impact the global and local economies, our industry and global demand for our products and, as a result, could have a material adverse effect on our business, financial condition and results of operations.

Interest rates and energy prices affect marine products’ sales

Although our products are not frequently financed by our dealers and retail powerboat consumers, we envision this becoming more common as we expand our operations and grow our network of distributors. This may not occur if interest rates rise because higher rates increase the borrowing costs and, as a result, the cost of doing business for dealers and the cost of powerboat purchases for consumers. Energy costs can represent a large portion of the costs to manufacture our products and can increase their ultimate sales price. Therefore, higher interest rates and fuel costs can adversely affect consumers’ decisions relating to recreational powerboating purchases.

We have a large fixed cost base that will affect our profitability if our sales decrease.

The fixed cost levels of operating a recreational powerboat manufacturer can put pressure on profit margins when sales and production decline. Our profitability depends, in part, on our ability to spread fixed costs over a large number of products sold and shipped, and if we decide to reduce our rate of production, gross or net margins could be negatively affected. Consequently, decreased demand or the need to reduce production can lower our ability to absorb fixed costs and materially impact our financial condition or results of operations.

We depend on certain key personnel, and our success will depend on our continued ability to retain and attract such qualified personnel.

Our success depends on the efforts, abilities and continued service of Alexandre Mongeon, our Chief Executive Officer, Patrick Bobby, our Head of Performance & Special Projects, Xavier Montagne, our Chief Operating Officer and Chief Technology Officer, and Kulwant Sandher, our Chief Financial Officer. A number of these key employees and consultants have significant experience in the recreational boating, manufacturing and electric vehicle industries. A loss of service from any one of these individuals may adversely affect our operations, and we may have difficulty locating, or may not be able to locate and hire a suitable replacement. We have not obtained any “key person” insurance on certain key personnel.

We are subject to numerous environmental, health and safety laws and any breach of such laws may have a material adverse effect on our business and operating results.

We are subject to numerous environmental, health and safety laws, including statutes, regulations, bylaws and other legal requirements. These laws relate to the generation, use, handling, storage, transportation and disposal of regulated substances, including hazardous substances (such as batteries), dangerous goods and waste, emissions or discharges into soil, water and air, including noise and odors (which could result in remediation obligations), and occupational health and safety matters, including indoor air quality. These regulations also apply to any contamination that our powerboats cause in the lakes and rivers in which they operate. These legal requirements vary by location and can arise under federal, provincial, state or municipal laws. Any breach of such laws and/or requirements could have a material adverse effect on our company and its operating results.

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Our powerboats are subject to mandated safety standards and failure to meet those standards could have a material adverse effect on our business and operating results.

Given the inherent dangers involved with powerboats, all powerboats sold must comply with federal, state and provincial safety standards. Additionally, most powerboats sold in the United States meet the safety standards set by the American Boat and Yacht Counsel (“ABYC”), a non-profit, member organization that develops voluntary safety standards for the design, construction, maintenance, and repair of recreational powerboats and the National Marine Manufacturers Association (“NMMA”). Our powerboats have been certified by the United States Coast Guard and the Canadian Coast Guard, meet the ABYC safety standards and have received CE marking indicating their conformity with health, safety, and environmental protection standards within the European Economic Area. Loss of any of these certifications or failure to obtain them for future products could have a material adverse effect on our business and operating results.

If we are unable to meet the service requirements of our customers, our business will be materially and adversely affected.

We do not offer warranties or provide service for our boats and do not intend to offer warranties on our powertrains systems. Instead, the purchasers of our boats and of our powertrains may rely upon the warranties and services of the manufacturers of the components used in our boats and powertrains. As all such warranties are provided by third-party suppliers, the quality and timeliness of such service is outside of our control. Additionally, the terms of such warranties, including the length of time of coverage, and servicing terms, including locations and labor cost, are not uniform. If our purchasers and potential purchasers believe that warranties and servicing capabilities provided by our third-party suppliers are inadequate, the reputation of our brand will suffer and business and prospects could be materially and adversely affected.

If we are unable to meet our production and development goals, we may need to change our business plans or the timeline in which we expect to carry them out

Our ability to carry out our business plans depends upon meeting our production and development goals. Delays or failures in meeting these goals could require us to reassess our business plans and the timeline that it will take us to implement those plans. In the past we have not always met our production and development goals. For example, we expected to manufacture approximately 50 powerboats, and begin commercialization of our electric powertrains in calendar 2023, and we will not meet these goals. If any such delays or failures were to cause a material change to our proposed business plans, such change could result materially adverse changes in our projected revenues or expenses.

We may not succeed in establishing, maintaining and strengthening the Vision Marine brand, which could materially and adversely affect customer acceptance of our boats and components and our business, revenues and prospects.

Our business and prospects heavily depend on our ability to develop, maintain and strengthen the Vision Marine brand and the brands of our powerboat models. Any failure to develop, maintain and strengthen these brands may materially and adversely affect our ability to sell our products. If we are not able to establish, maintain and strengthen our brands, we may lose the opportunity to build our customer base. We expect that our ability to develop, maintain and strengthen the Vision Marine brand will also depend heavily on the success of our marketing efforts. We intend to use proceeds for marketing of our products, but we might be successful in such expanded marketing. To further promote our brand, we may be required to change our marketing practices, which could result in substantially increased advertising expenses, including the need to use traditional media such as television, radio and print. Many of our current and potential competitors have greater name recognition, broader customer relationships and substantially greater marketing resources than we do. If we do not develop and maintain strong brands, our business, prospects, financial condition and operating results will be materially and adversely impacted.

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Increases in costs, disruption of supply or shortage of raw materials, in particular lithium-ion cells, could harm our business.

Although we do not materially use raw materials in the production of our electronic powerboats, we purchase the necessary parts and components for our boats from third-party suppliers that do. Were those third-party suppliers to experience increases in the cost or a sustained interruption in the supply or shortage of raw materials, the corresponding parts and components could become more costly or less available (if still available at all). For example, our supply chain has been impacted by the COVID-19 pandemic as some of our third-party suppliers have experienced delays in delivering parts and components for our products. We are particularly exposed to a supply-chain risk as we have not contractually secured long-term supply commitments at fixed prices with our third-party suppliers. The prices for these raw materials fluctuate depending on market conditions and global demand for these materials and price fluctuations and material shortages could adversely affect our business and operating results. For instance, we are exposed to multiple risks relating to price fluctuations for lithium-ion cells. These risks include:

● the inability or unwillingness of current battery manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells required to meet demand; 

● disruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers; and

● an increase in the cost of raw materials, such as cobalt, used in lithium-ion cells.

Our business depends on the continued supply of battery cells for our boats. We do not currently have any agreements for the supply of batteries and depend upon the open market for their procurement. Any disruption in the supply of battery cells from our supplier could temporarily disrupt the planned production of our boats until such time as a different supplier is fully qualified. Moreover, battery cell manufacturers may choose to refuse to supply electric boat manufacturers to the extent they determine that the boats are not sufficiently safe. Furthermore, current fluctuations or shortages in petroleum and other economic conditions may cause us to experience significant increases in freight charges and raw material costs. Substantial increases in the prices for our raw materials would increase our operating costs and could reduce our margins if we cannot recoup the increased costs through increased electric boat prices. We might not be able to recoup increasing costs of raw materials by increasing boat prices. We publish the price for the base model of our powerboats. However, any attempts to increase the published prices in response to increased raw material costs could be viewed negatively by our potential customers, result in cancellations of orders and could materially adversely affect our brand, image, business, prospects and operating results.

If our suppliers sell us parts or components containing conflict minerals, we may be required at significant expense to find suppliers that do not use conflict minerals.

In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) requiring the Securities and Exchange Commission (“SEC”) to issue rules specifically relating to the use of “Conflict Minerals” within manufactured products. Conflict Minerals are currently defined by U.S. Law as tin, tantalum, tungsten and gold (also known as “3TG”) and related derivatives. Within a year of becoming a public company, the SEC rules require any SEC registrant whose commercial products contain any 3TG (“3TG Product”) to determine whether the 3TG in the 3TG Product originated from the Democratic Republic of the Congo (“DRC”) or adjoining countries (collectively, the “DRC Region”) and, if so, whether the 3TG is “conflict free”. “3TG Conflict Free” means that the supply chain is transparent and the 3TG in 3TG Products does not directly or indirectly benefit armed groups responsible for serious human rights abuses in the DRC Region. By enacting this provision, Congress intends to further the humanitarian goal of ending the extremely violent conflict in the DRC Region, which has been partially financed by the exploitation and trade of 3TG originating in the DRC Region.

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We will need to expend time and money on determining whether our products contain conflict minerals. If our suppliers use conflict minerals in the production of the parts and components that we purchase from them, we may need to find alternative suppliers. If possible, this may only be possible at significant expense or with material delays in production.

Our software to control our electric powertrain systems contains “open source” software, and any failure to comply with the terms of one or more of these open-source licenses could negatively affect our business.

We use software to control our electric powertrain systems that relies upon “open source” licenses and intend to use such software in the future. Although we do not believe that the open source code we have used imposes any limitations on the use of the software that we have developed, the terms of many open source licenses have not been interpreted by United States or other courts, and there is a risk that these licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our solutions including requirements that we make available source code for modifications or derivative works we create based upon the open source software or license such modifications or derivative works. In addition to risks related to license requirements, usage of open-source software can lead to greater risks than use of third-party commercial software, as open-source licensors generally do not provide warranties or controls on origin of the software. We cannot be sure that all open source is submitted for approval prior to use in our solutions. In addition, many of the risks associated with use of open source cannot be eliminated, and could, if not properly addressed, negatively affect the performance of our electric powertrains and our business.

We rely on network and information systems and other technologies for our business activities and certain events, such as computer hackings, viruses or other destructive or disruptive software or activities may disrupt our operations, which could have a material adverse effect on our business, financial condition and results of operations.

Network and information systems and other technologies are important to our business activities and operations. Network and information systems-related events, such as computer hackings, cyber threats, security breaches, viruses, or other destructive or disruptive software, process breakdowns or malicious or other activities could result in a disruption of our services and operations or improper disclosure of personal data or confidential information, which could damage our reputation and require us to expend resources to remedy any such breaches. Moreover, the amount and scope of insurance we maintain against losses resulting from any such events or security breaches may not be sufficient to cover our losses or otherwise adequately compensate us for any disruptions to our businesses that may result, and the occurrence of any such events or security breaches could have a material adverse effect on our business and results of operations. The risk of these systems-related events and security breaches occurring has intensified, in part because we maintain certain information necessary to conduct our businesses in digital form stored on cloud servers. While we develop and maintain systems seeking to prevent systems-related events and security breaches from occurring, the development and maintenance of these systems is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. Despite these efforts, there can be no assurance that disruptions and security breaches will not occur in the future. Moreover, we may provide certain confidential, proprietary and personal information to third parties in connection with our businesses, and while we obtain assurances that these third parties will protect this information, there is a risk that this information may be compromised. The occurrence of any of such network or information systems-related events or security breaches could have a material adverse effect on our business, financial condition and results of operations.

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If the governmental grants and tax credits that we receive were to be no longer available, our net income would be materially reduced.

We receive governmental benefits in connection with our operations. In connection with the production of our powerboats and our research into green technology, we have been able to receive tax credits and grants provided by the Quebec provincial government and the Canadian federal government. During the year ended August 31, 2022, the Company recognized grants and investment tax credits amounting to $1,399,092 and $59,540 respectively [August 31, 2021 – $860,018 and $61,640], of which $1,408,840 are presented against research and development expenses [August 31, 2021 –$859,516]. We intend to continue applying for such grants and receiving such tax credits. Without such grants and tax credits, our net loss in each of the past two fiscal years would have been larger. If they were no longer available, our business, prospects, financial condition and operating results could be adversely affected.

The unavailability, reduction or elimination of government incentives could have a material adverse effect on our business, financial condition, operating results and prospects.

Although we are unaware of substantial governmental economic incentives, such as tax credits and rebates, that customers may receive in connection with the purchase of our products, there are certain governmental regulations whose repeal could affect the desirability of our powerboats. In particular, local and regional restrictions of internal combustion engines on certain waterways, make electric boats an attractive alternative for use in such lakes and rivers. Any reduction, elimination or discriminatory application of such rules because of policy changes or other reasons may result in the diminished competitiveness of electric boats generally. This could materially and adversely affect the growth of our market and our business, prospects, financial condition and operating results.

If we fail to manage future growth effectively, we may not be able to market or sell our powerboats or powertrains successfully.

Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition. We plan to expand our operations in the near future. Our future operating results depend to a large extent on our ability to manage this expansion and growth successfully. Risks that we face in undertaking this expansion include:

● training new personnel;

● forecasting production and revenue;

● expanding our marketing efforts, including the marketing of a new powertrain that we use;

● controlling expenses and investments in anticipation of expanded operations;

● establishing or expanding design, manufacturing, sales and service facilities;

● implementing and enhancing administrative infrastructure, systems and processes; and

● addressing new markets.

We intend to continue to hire a number of additional personnel, including design and manufacturing personnel and service technicians for our electric boats and powertrains. Competition for individuals with experience designing, manufacturing and servicing electric boats is intense, and we may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business and prospects.

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Our business may be adversely affected by labor and union activities.

None of our employees are currently represented by a labor union, It is common in Québec for employees of manufacturers of a certain size to belong to a union. Although we do not believe that we are currently of a size where our employees will unionize, were they to do so now or in the future, we would be at risk for higher employee costs and increased risk of work stoppages. We also directly and indirectly depend upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have a material adverse impact on our business, financial condition or operating results. If a work stoppage occurs among our key suppliers or our network of distributors, it could materially reduce the manufacture and sale of our boats and have a material adverse effect on our business, prospects, operating results or financial condition.

Our ability to meet our manufacturing workforce needs is crucial to our results of operations and future sales and profitability.

We rely on the existence of an available hourly workforce to manufacture our products. We cannot assure you that we will be able to attract and retain qualified employees to meet current or future manufacturing needs at a reasonable cost, or at all. For instance, the demand for skilled employees has increased recently with the low unemployment rates in the regions where we have manufacturing facilities. Also, although none of our employees are currently covered by collective bargaining agreements, we cannot assure you that our employees will not elect to be represented by labor unions in the future. Additionally, competition for qualified employees could require us to pay higher wages to attract a sufficient number of employees. Significant increases in manufacturing workforce costs could materially adversely affect our business, financial condition or results of operations.

We compete with a variety of other activities for consumers’ leisure time.

Our powerboats are used for recreational and sport purposes, and demand for our powerboats may be adversely affected by competition from other activities that occupy consumers’ leisure time and by changes in consumer lifestyle, usage pattern or taste. Similarly, an overall decrease in consumer leisure time may reduce consumers’ willingness to purchase and enjoy our products.

Product liability, warranty, personal injury, property damage and recall claims may materially affect our financial condition and damage our reputation.

We are engaged in a business that exposes us to claims of product liability and warranty claims in the event our products actually or allegedly fail to perform as expected or the use of our products results, or is alleged to result, in property damage, personal injury or death. Our products involve kinetic energy, produce physical motion and are to be used on the water, factors which increase the likelihood of injury or death. Our products contain Lithium-ion batteries, which have been known to catch fire or vent smoke and flame, and chemicals which are known to be, or could later be proved to be, toxic carcinogenic. Any personal injury or wrongful death claim could, even if not justified, prove expensive to contest.

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We do not provide warranties for our powerboats but instead rely upon the warranties provided by the third-party manufacturers from whom we purchase the components for our powerboats. Although we maintain product and general liability insurance of the types and in the amounts that we believe are customary for the industry, we are not fully insured against all such potential claims. We may experience legal claims in excess of our insurance coverage or claims that are not covered by insurance, either of which could adversely affect our business, financial condition and results of operations. Adverse determination of material product liability and warranty claims made against us could have a material adverse effect on our financial condition and harm our reputation. In addition, if any of our products or components in our products are, or are alleged to be, defective, we may be required to participate in a recall of that product or component if the defect or alleged defect relates to safety. Any such recall and other claims could be costly to us and require substantial management attention.

Our intellectual property is not protected through patents or formal copyright registration. As a result, we do not have the full benefit of patent or copyright laws to prevent others from replicating our products, product candidates and brands.

Apart from trademark applications that we filed with the Canadian Intellectual Property Office and the U.S. Patent and Trademark Office for our logo and the brand name “E-Motion”, we have not protected our intellectual property rights through patents or formal copyright or trademark registration, and we do not currently have any patent applications pending. As we intend to transition into the production of electric powertrains to OEMs, we envision our intellectual property and its security becoming more vital to our future. Until we protect our intellectual property through patent, trademarks and registered copyrights, we may not be able to protect our intellectual property and trade secrets or prevent others from independently developing substantially equivalent proprietary information and techniques or from otherwise gaining access to our intellectual property or trade secrets. In such an instance, our competitors could produce products that are nearly identical to ours resulting in us selling less products or generating less revenue from our sales.

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

We rely on trade secrets, know-how and technology, which are not protected by patents, to protect the intellectual property behind our electric powertrain and for the construction of our boats. We do not yet use confidentiality agreements with our collaborators, employees, consultants, outside scientific collaborators and sponsored researchers and other advisors to protect our proprietary technology and processes. We intend to use such agreements in the future, but these agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such party. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

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Any patent applications that we file may not result in issued patents, which may have a material adverse effect on our ability to prevent others from interfering with our commercialization of our products.

To date, we have not filed any patent applications, and we might not ever file patent applications. The registration and enforcement of patents involves complex legal and factual questions and the breadth and effectiveness of patented claims is uncertain. If we ever file patent applications in connection with our electric outboard powertrain systems or other matters, we cannot be certain that we will be first to file patent applications on those or other inventions, nor can we be certain that such patent applications will result in issued patents or that any of our issued patents will afford sufficient protection against someone creating competing products, or as a defensive portfolio against a competitor who claims that we are infringing its patents. In addition, patent applications filed in foreign countries are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign patent applications, if any, will result in issued patents in those foreign jurisdictions or that such patents can be effectively enforced, even if they relate to patents issued in the United States.

We do not have registered trademarks for our products and trade names.

Although we have submitted applications for registered trademarks for our name and the brand name “E-Motion” for our electric powertrain and for the logos for each with the Canadian Intellectual Property Office, we do not have any registered trademarks for any of our brand names and logos in the United States or elsewhere. Any trademark applications that we file with a relevant governmental authority for brand names/logos might not be approved. Failure to obtain such approval could limit our ability to use the brand names/logos in those territories or lead our products be confused with, and/or tarnished by, competing products. Even if appropriate applications were made and approved, third parties may oppose or otherwise challenge such applications or registrations.

We may need to defend ourselves against patent or trademark infringement claims, which may be time-consuming and would cause us to incur substantial costs.

The status of the protection of our intellectual property is unsettled as we do not have any patents, trademarks or registered copyrights and have not applied for the same. Companies, organizations or individuals, including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with our ability to make, use, develop, sell or market our powerboats and electric powertrains or use third-party components, which could make it more difficult for us to operate our business. From time to time, we may receive communications from third parties that allege our products or components thereof are covered by their patents or trademarks or other intellectual property rights. Companies holding patents or other intellectual property rights may bring suits alleging infringement of such rights or otherwise assert their rights. If we are determined to have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following:

● cease making, using, selling or offering to sell processes, goods or services that incorporate or use the third-party intellectual property;

● pay substantial damages;

● seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all;

● redesign our boats or other goods or services to avoid infringing the third-party intellectual property;

● establish and maintain alternative branding for our products and services; or

● find-third providers of any part or service that is the subject of the intellectual property claim.

In the event of a successful claim of infringement against us and our failure or inability to obtain a license to the infringed technology or other intellectual property right, our business, prospects, operating results and financial condition could be materially adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.

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You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited because we are incorporated under the laws of the Province of Québec, a substantial portion of our assets are in Canada and the majority of our directors and executive officers reside outside the United States.

We are constituted under the laws of the Business Corporations Act (Québec) (the “Business Corporation Act”), and our executive offices are located outside of the United States in Boisbriand, Québec. Our officers, and the majority of our directors, as well as our auditor reside outside the United States. In addition, a substantial portion of their assets and our assets are located outside of the United States. As a result, you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing, both in and outside of the United States, judgments you may obtain in U.S. courts against us or these persons in any action, including actions based upon the civil liability provisions of U.S. Federal or state securities laws. Furthermore, there is substantial doubt as to the enforceability in Canada against us or against any of our directors and officers who are not residents of the United States, in original actions or in actions for enforcement of judgments of U.S. courts, of liabilities based solely upon the civil liability provisions of the U.S. federal securities laws. In addition, shareholders in Québec corporations may not have standing to initiate a shareholder derivative action in U.S. federal courts.

As a result, our public shareholders may have more difficulty in protecting their interests through actions against us, our management, our directors or our major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

Global economic conditions could materially adversely impact demand for our products and services.

Our operations and performance depend significantly on economic conditions. Global financial conditions continue to be subject to volatility arising from international geopolitical developments and global economic phenomenon, as well as general financial market turbulence, including a significant recent market reaction to the novel coronavirus (COVID-19) and growing inflationary concerns, resulting in a significant reduction in many major market indices. Uncertainty about global economic conditions could result in:

· customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our products and services; and

· third-party suppliers being unable to produce parts and components for our products in the same quantity or on the same timeline or being unable to deliver such parts and components as quickly as before or subject to price fluctuations, which could have a material adverse effect on our production or the cost of such production; and

accordingly, on our business, results of operations or financial condition. Access to public financing and credit can be negatively affected by the effect of these events on Canadian, U.S. and global credit markets. The health of the global financing and credit markets may affect our ability to obtain equity or debt financing in the future and the terms at which financing or credit is available to us. These instances of volatility and market turmoil could adversely affect our operations and the trading price of our common shares.

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Our business may be materially affected by the COVID-19 Outbreak

The continued novel coronavirus (COVID-19) pandemic, including variations from new strains, may disrupt our business and operational plans. These disruptions may include disruptions resulting from (i) shortages of employees, (ii) unavailability of contractors and subcontractors, (iii) interruption of, or price fluctuations in, supplies from third parties upon which we rely, (iv) restrictions that governments impose to address the COVID-19 outbreak, and (v) restrictions that we and our contractors and subcontractors impose to ensure the safety of employees and others. Although we have not noticed any decrease to orders that we would attribute to COVID-19, we believe that COVID-19 is impacting our supply chain by increasing the amount of time between ordering third-party materials needed for our boats and their delivery. Continued delays in our supply chain could adversely impact our production and, in turn, our revenues. Further, it is presently not possible to predict the extent or durations of these disruptions. These disruptions may have a material adverse effect on our business, financial condition and results of operations. Such adverse effect could be rapid and unexpected. These disruptions may severely affect our ability to carry out our business plans for 2023 and 2024.

Fluctuations in currency exchange rates may significantly impact our results of operations.

Our operations are conducted in USA and Canada, but approximately 90% of our sales and rentals have occurred in the United States. As a result, we are exposed to an exchange rate risk between the U.S. and Canadian dollars. The exchange rates between these currencies in recent years have fluctuated significantly and may continue to do so in the future. In our fiscal 2022, the monthly average exchange rate as published by the Bank of Canada ranged from a high of US$1.00:$1.2942 to a low of US$1.00:1.2437. An appreciation of the Canadian dollar against the U.S. dollar could increase the relative cost of our products outside of Canada, which could lead to decreased sales. Conversely, to the extent that we are required to pay for goods or services in U.S. dollars, the depreciation of the Canadian dollar against the U.S. dollar would increase the cost of such goods and services.

We do not hedge our currency exposure and, therefore, we incur currency transaction risk whenever we enter into either a purchase or sale transaction using a currency other than the Canadian dollar. Given the volatility of exchange rates, we might not be able to effectively manage our currency transaction risks, and volatility in currency exchange rates might have a material adverse effect on our business, financial condition or results of operations.

If we experience material weaknesses or otherwise fail to maintain an effective system of internal controls over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, the value of our common shares.

For our fiscal year ended August 31, 2022, we identified that we did not maintain effective processes and controls over the accounting for and reporting of complex and non-routine transactions. Specifically, we determined that there was a lack of sufficient accounting and finance personnel to perform in-depth analysis and review of complex accounting matters and non-routine transactions within the timeframes set by us for filing our consolidated financial statements. Because of this deficiency, we concluded there was a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis at August 31, 2022.

If we fail to identify or remediate any future material weaknesses in our internal controls over financial reporting, if we are unable to conclude that our internal controls over financial reporting are effective or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting when we are no longer an emerging growth company, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common shares could be negatively affected. As a result of such failures, we could also become subject to investigations by Nasdaq, the SEC or other regulatory authorities, and become subject to litigation from investors and shareholders, which could harm our reputation and financial condition or divert financial and management resources from our regular business activities.

Our financial statements have been prepared on a going concern basis and our financial status creates a doubt whether we will continue as a going concern.

Our financial statements have been prepared on a going concern basis under which an entity is considered to be able to realize its assets and satisfy its liabilities in the ordinary course of business. Our future operations are dependent upon the identification and successful completion of equity or debt financing and the achievement of profitable operations at an indeterminate time in the future. There can be no assurances that we will be successful in completing an equity or debt financing or in achieving or maintaining profitability. The financial statements do not give effect to any adjustments relating to the carrying values and classification of assets and liabilities that would be necessary should we be unable to continue as a going concern.

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1.2      Overall Performance

Description of Business

The Company was incorporated on August 29, 2012, under the laws of the province of Quebec, Canada, and its principal activity is the design, development and manufacturing of electric outboard powertrain systems and electric boats.

The head office and principal address of the Company are located at 730 Boulevard du Cure-Boivin, Boisbriand, Quebec, Canada, V7G 2A7.

Additional information related to the Company is available on SEDAR at www.sedar.com.

Performance Summary

The following is a summary of significant events and transactions that occurred during the year ended August 31, 2022:

On September 1, 2021, the Company announced its Bruce 22 electric boat powered by its 180 hp fully electric E-Motion™ outboard motor set a new category speed record at the Lake of the Ozarks Shootout, the largest unsanctioned boat race in the US, which took place August 28-29, 2021. The Company was able to achieve a speed of 109 mph.

On October 26, 2021 the Company announced that it has executed a Manufacture and Supply Agreement with Linamar Corporation, a global leader in manufacturing solutions and world class developer of highly engineered products. Under the terms of the agreement, McLaren Engineering, Linamar’s leading-edge technology and product development team for its advanced mobility segment, will manufacture and assemble the Company’s E-Motion™ technology through testing, parts, tooling development, and designing the union assembly for mass production of the Company’s disruptive fully electric outboard motor at Linamar’s facility in Canada.

On December 17, 2021 the Company announced that Xavier Montagne, presently the Company’s Chief Technology Officer, has been appointed to the additional role of Chief Operating Officer.

On December 20, 2021 the Company announced that its Board of Directors has authorized the repurchase of up to 10% of the Company's common shares from time to time via open market purchases or in privately negotiated transactions. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions and other factors. The repurchase program may be suspended or discontinued at any time. Any repurchased shares will be available for use in connection with its stock plans and for other corporate purposes. The repurchase program will be funded using the Company’s working capital.

On January 4, 2022 the Company announced that it has partnered with Octillion Power Systems (“Octillion”) to develop a customized high voltage 35 KW high density battery exclusively for use within the recreational boating market. Under the terms of the agreement, Octillion will manufacture a new advanced electric battery system to power its E-Motion™ outboard powertrain. The configuration of the battery pack is smaller than that of a typical fuel tank, which in turn makes it easier to custom fit in virtually any boat. Multiple battery packs will be installed depending on the application and power requirements of the recreational boat.

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On January 20, 2022 Company announced that it has partnered with Nextfour Solutions Ltd. (“Nextfour”) to further develop a customized multifunctional display to be integrated within Vision Marine’s ground breaking E-Motion™ 180 fully electric powertrain system.

On February 11, 2022 the Company announced a joint development agreement (“JDA”) with Weismann Marine, LLC to design and develop a lower unit (or gearcase) assembly for the Vision Marine’s E-Motion™ 180 HP outboard propulsion system.

On July 18, 2022 the Company announced that Groupe Beneteau, a global market leader in recreational boating, have launched a partnership to integrate the Company’s E-Motion outboard motors onboard several models across Groupe Beneteau's brand portfolio.

On August 29, 2022, the Company announced that an historic milestone in the boating industry by shattering the 100 MPH speed barrier on an electric watercraft by achieving 109 MPH, a new world record for electric boats.

Financings

During the year ended August 31, 2022, the Company issued the following shares:

On January 12, 2022 and February 1, 2022, the Board of Directors authorized the issuance of 25,000 Voting Common Shares and 5,435 Voting Common Shares respectively to a third party in exchange for marketing services provided to the Company.

On January 31, 2022, the Board of Directors authorized the issuance of 6,479 Voting Common Shares to a third party in exchange for sub-contracting services provided to the Company and related to research and development.

During the three-month period ended May 31, 2022, the Company issued 28,806 Voting Common Shares to third parties in exchange of sub-contracting services provided to the Company related to investor relations.

During the three-months ended August 31, 2022, the Company issued a total of 24,639 Voting Common Shares to third parties in exchange of sub-contracting services provided to the Company related to investor relations.

Subsequent to August 31, 2022, the Company issued a total of 19,457 Voting Common Shares to third parties in exchange of sub-contracting services provided to the Company related to investor relations.

Incentive Stock Options

During the year ended August 31, 2022, the Company granted the following stock options:

On September 21, 2021, the Company granted 50,000 options at an exercise price of $8.85 per share. The stock options will expire 5 years from the grant date. On January 22, 2022, the Company granted 102,500 options at an exercise price of $5.65 per share. The stock options will expire 5 years from the date of grant.

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1.3       Selected Annual Financial Information

	Year Ended August 31, 2022			Year Ended August 31, 2021			Year Ended August 31, 2020
	$			$			$
Revenue		7,350,946			3,513,788			2,417,173
Gross Profit		3,285,565			1,604,182			604,390
Expenses		(16,139,007	)		(16,612,499	)		(2,858,613	)
Income/(Loss) before Tax		(12,853,442	)		(15,008,317	)		(2,254,223	)
Income Taxes		(258,343	)		(105,590	)		(21,309	)
Total comprehensive income/(loss)		(12,802,680	)		(14,725,341	)		(2,275,532	)
Basic & Diluted Earnings/(Loss) per Share		(1.58	)		(2.04	)		(0.56	)
Balance Sheet
Working Capital Surplus/(Deficit) (1)		8,727,011			18,626,563			533,760
Total Assets		29,100,209			38,801,292			3,631,625
Total Long-Term Liabilities		2,197,684			2,581,271			932,877

⁽¹⁾ Working capital surplus (deficit) is calculated using current assets less current liabilities

Selected Quarterly financial information

Quarter end	Revenues		Total comprehensive loss			Loss per Share
August 31, 2022		3,375,806		(3,740,535	)		(0.48	)
May 31, 2022¹		2,014,769		(1,980,083	)		(0.24	)
February 28, 2022¹		753,520		(3,770,436	)		(0.45	)
November 30, 2021		1,206,851		(3,311,625	)		(0.41	)
August 31, 2021		2,279,296		(3,160,725	)		(0.38	)
May 31, 2021		770,770		(4,808,061	)		(0.60	)
February 28, 2021		189,886		(4,453,314	)		(0.56	)
November 30, 2020		273,836		(2,303,241	)		(0.44	)

¹ The Company restated its financial results for three months ending February 28, 2022.

1.4 Results of Operations

Three months ended August 31, 2022

Revenue for the three months ended August 31, 2022 was $3,375,806 (2021: $2,279,296); the increase of 48% resulted from an increase in revenue from the Company’s rental operations. This also resulted in an increase in gross profit to $1,390,246 (2021: $1,353,923). Excluding the revenue from the acquisition, the Company’s segment of sales of electric boats generated revenue of $1,626,959 (2021: $1,065,755); the increase in revenue was caused by an easing of the supply chain issues. The revenue generated by the Company’s segment of rental operations was $1,748,847 (2021: $1,213,541): the increase in revenue was caused by an increase in the number of boats available for rent.

19

During the three months ended August 31, 2022, the Company incurred a total comprehensive loss of $(3,740,535) compared to a comprehensive loss of $(3,160,725) for the corresponding prior year period. The increase in comprehensive loss was due to an increase in revenue and expenses for the three months ended August 31, 2022, increasing to $5,230,742 (2021: $5,175,083). The largest expense items that are included in expenses for the three months ended August 31, 2022 were:

· Research and development for the three months ended August 31, 2022 was $2,192,615 (2021: $1,111,327); the increase was due to the fitting of the Company’s E-Motion powertrains which was offset by the receipt of government grants and tax credits.

· Office salaries and benefits for three months ended August 31, 2022 increased to $475,371 compared to $825,633 for the three months ended August 31, 2021.

· Selling and marketing expenses for the three months ended August 31, 2022 increased to $763,851 (2021: $383,027) due to the attendance at boat shows, increased marketing of the Company’s E-Motion powertrains and incurred additional costs related to the acquisition of 7858078 Canada Inc.

· Professional fees for the three months ended August 31, 2022 increased to $463,760 (2021: $216,105) due share-based payments to third parties who provided investor relation services

· Office and general expenses for the three months ended August 31, 2022, increased to $1,137,916 (2021: $359,850) as the Company increased its operational staff, insurance costs and incurred additional costs related to the acquisition of 7858078 Canada Inc.

· Share-based compensation decreased to $90,273 (2021: $1,902,500), as the Company granted no stock options during the three months ended August 31, 2022. The costs are related to past grants of stock options which are recognised when the stock options are vested. The Company recognizes compensation expense for option grants based on the fair value at the date of grant using the Black-Scholes valuation model.

· Net finance (income)/expenses for the three months ended August 31, 2022 realised a loss of $10,241 (2021: $199,065). The loss was caused by a decrease in the value of shares for The Limestone Boat Company. During the three months August 31, 2022, income was generated by interest income of $121,397 (2021: $36,792) and a loss from debentures and currency of $70,715 (2021: $235,857 loss) as the Company incurred unrealized losses from its investment in debentures and the Canadian dollar decreasing its value against the US Dollar.

Year ended August 31, 2022

Revenue for the year ended August 31, 2022 was $7,350,946 (2021: $3,513,788); the increase of 109% resulted from the acquisition of 7858078 Canada Inc. This also resulted in an increase in gross profit to $3,285,565 (2021: $1,604,182). Excluding the revenue from the acquisition, the Company’s segment of sales of electric boats generated revenue of $2,557,085 (2021: $2,150,764); the Company experienced an increase in revenue from boat sales due to the easing of supply change issues.

20

					2022		2021
	Sale of electric boats		Rental of electric boats		Total		Total
	$		$		$		$
Canada		557,639		-		557,639		571,216
USA		1,292,666		4,793,861		6,086,527		2,692,599
Other		706,780		-		706,780		249,973
		2,557,085		4,793,861		7,350,946		3,513,788

During the year ended August 31, 2022, the Company incurred a total comprehensive loss of $(12,802,680) compared to a comprehensive loss of $(14,725,341) for the corresponding prior year period. The decrease in comprehensive loss was due to expenses for the year ended August 31, 2022, decreasing to $16,139,007 (2021: $16,612,499). The largest expense items that are included in expenses for the year ended August 31, 2022 were:

· Research and development for the year ended August 31, 2022 was $2,242,794 (2021: $1,489,953) the increase was due to the fitting of the Company’s E-Motion powertrains to third party boats which was offset by the receipt of grants related to MEI and Technoclimat.

· Office salaries and benefits for year ended August 31, 2022 increased to $3,335,799 compared to $1,754,613 for the year ended August 31, 2021. The increase was caused by increases in staff, additional staff related to the acquisition of 7858078 Canada Inc., and increases in executive salaries.

· Selling and marketing expenses for the year ended August 31, 2022 increased to $1,972,306 (2021: $1,086,057) due to an increase in attendance at boat shows, increased marketing of the Company’s E-Motion powertrains and incurred additional costs related to the acquisition of 7858078 Canada Inc.

· Professional fees for the year ended August 31, 2022 increased to $3,590,816 (2021: $1,633,477) due to legal, accounting, fees paid to recruitment consultants, public relation agency and consulting fees.

· Office and general expenses for the year ended August 31, 2022, increased to $1,949,583 (2021: $1,239,457) as the Company increased its operational staff, insurance costs and incurred additional costs related to the acquisition of 7858078 Canada Inc.

· Share-based compensation decreased to $2,699,481 (2021: $7,121,444), as the Company granted 152,500 stock options during the year ended August 31, 2022, at an exercise price of $5.65 and $8.85 to its directors, officers, employees and consultants. The Company recognizes compensation expense for option grants based on the fair value at the date of grant using the Black-Scholes valuation model.

· Net finance (income)/expenses for the year ended August 31, 2022 realised a loss of $223,660 (2021: $2,256,392). During the year ended August 31, 2022, income was generated by interest income of $379,288 (2021: $nil) and a loss from debentures and currency of $418,053 (2021: $2,133,292) as the Company incurred unrealized losses from its investment in debentures and the Canadian dollar increasing its value against the US Dollar.

21

Correction of an error

During 2022, the Company noted that deferred tax (recovery) expense had been erroneously calculated in its interim financial statements for the three and nine months ended May 31, 2021, with no impact on the consolidated financial statements as at August 31, 2021 and 2020 and the years then ended. As a consequence, deferred tax liability and (recovery) expense as at May 31, 2021 and for the three and nine months then ended have been overstated. The error has been corrected by restating each of the affected financial statement line items for the prior period, as follows:

	Three months ended May 31, 2021			Nine months ended May 31, 2021
	$			$
Impact on consolidated statements of comprehensive loss (decrease/(increase) in loss)
Deferred tax expense (recovery)		(26,375	)		377,459
Net impact on loss for the period		(26,375	)		377,459
Impact on basic and diluted loss per share (decrease/(increase) in loss per share)
Basic and diluted loss per share		-			0.05

The change did not have an impact on other comprehensive income or the Company’s operating, investing and financing cash flows for the three and nine months ended May 31, 2022.

22

During the three months ended May 31, 2022, the Company noted that the loss on Debentures for the three months ended February 28, 2022 was overstated in its interim financial statements for the three and six months ended February 28, 2022, with no impact on the on the consolidated financial statements as at August 31, 2021 and 2020 and the years then ended. The error has been corrected by restating each of the affected financial statement line items for the prior period, as follows:

	Previously reported			Effect of restatement			Amended
	$			$			$
Consolidated statement of financial position as at February 28, 2022
Debentures		1,990,000			538,500			2,528,500
Deficit		(25,224,153	)		538,500			(24,685,653	)
Consolidated statement of comprehensive loss for the three months ended February 28, 2022
Net financing expense		809,855			(538,500	)		271,355
Loss before tax		(4,305,386	)		538,500			(3,766,886	)
Net loss for the period		(4,236,810	)		538,500			(3,698,310	)
Total comprehensive loss for the period, net of tax		(4,308,936	)		538,500			(3,770,436	)
Basic and diluted loss per share		(0.51	)		0.06			(0.45	)
Consolidated statement of comprehensive loss for the six months ended February 28, 2022
Net financing expense		652,311			(538,500	)		113,811
Loss before tax		(7,697,491	)		538,500			(7,158,991	)
Net loss for the period		(7,664,387	)		538,500			(7,125,887	)
Total comprehensive loss for the period, net of tax		(7,620,561	)		538,500			(7,082,061	)
Basic and diluted loss per share		(0.92	)		0.06			(0.85	)

The change did not have an impact on other comprehensive income or the Company’s operating, investing and financing cash flows for the year ended August 31, 2022.

1.6 Liquidity and Capital Resources

The Company’s operations consist of the designing, developing and manufacturing of electric outboard powertrain systems, rental of electric boats and electric boats sales. The Company’s financial success is dependent upon its ability to market and sell its outboard powertrain systems and electric boats; and to raise sufficient working capital to enable the Company to execute its business plan. The Company’s historical capital needs have been met by internally generated cashflow from operations and the support of its shareholders. During the year ended August 31, 2021, the Company raised gross proceeds of US$27,600,000 from its initial public offering onto the Nasdaq. However, should the Company need further funding, there is no assurance that equity funding will be possible at the times required by the Company. If no funds can be raised and sales of its outboard powertrain systems and electric boats does not produce sufficient net cash flow, then the Company may require a significant curtailing of operations to ensure its survival.

The consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company incurred a loss before tax of $12,853,442 and net loss of $13,111,785 during the year ended August 31, 2022 and has a cash balance and a working capital surplus of $5,824,716 and $8,727,011, respectively, as at August 31, 2022. The Company’s ability to meet its obligations as they fall due and to continue to operate as a going concern is dependent on the continued financial support of the creditors and the shareholders. In the past, the Company has relied on the support of its shareholders to meet its cash requirements. There can be no assurance that funding from this or other sources will be sufficient in the future to continue its operations. Even if the Company is able to obtain new financing, it may not be on commercially reasonable terms or terms that are acceptable to it. Failure to obtain such financing on a timely basis could cause the Company to reduce or terminate its operations.

23

As of November 23, 2022, the Company had 8,437,379 issued and outstanding shares and 10.290.540 on a fully diluted basis.

The Company had $8,727,011, of working capital surplus as at August 31, 2022 compared to $18,626,563 working capital surplus as at August 31, 2021. The decrease in working capital surplus during the year ended August 31, 2022 resulted from the cash used in operations of $10,996,819 (2021: $8,251,438); cash used in investing activities of $964,503 (2021: $9,468,395) resulting from the additions to property and equipment; which was offset by proceeds from disposal of equipment of $243,630 (2021: $34,101).

1.7 Capital Resources

As at August 31, 2022, the Company had cash and cash equivalents of $5,824,716 (August 31, 2021: $18,147,821).

As of the date of this MD&A, the Company has no outstanding commitments, other than rent and lease commitments and purchase commitments as disclosed in Note 15 and 29 of the Company’s consolidated financial statements for the year ended August 31, 2022. The Company has not pledged its assets as security for loans.

1.8 Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

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1.9 Transactions with Related Parties

Related party balances and transactions

The following table summarizes the Company’s related party transactions for the year:

	2022		2021		2020
	$		$		$
Revenues
Sales of boats
EB Rental Ltd. [prior to June 3, 2021]		-		84,149		101,684
Patrick Bobby				-		11,000
Sale of parts and boat maintenance
EB Rental Ltd. [prior to June 3, 2021]		-		40,310		79,696
Other
EB Rental Ltd. [prior to June 3, 2021]		-		-		2,500
7858078 Canada Inc. [prior to June 3, 2021]		-		-		6,074
Expenses
Cost of sales
EB Rental Ltd. [prior to June 3, 2021]		-		11,444		16,865
Research and Development
9335-1427 Quebec Inc.		-		75,020		-
Mac Engineering, SASU		666,178		176,500		-
Travel and entertainment
EB Rental Ltd. [prior to June 3, 2021]		-		8,926		-
Advertising and promotion
EB Rental Ltd. [prior to June 3, 2021]		-		11,245		-
Rent expense
EB Rental Ltd. [prior to June 3, 2021]		-		-		65,934
Office salaries and benefits
Montana Strategies Inc.		62,462		-		-

The Company leases its Boisbriand premises from California Electric Boat Company Inc. with a right-of-use assets as at August 31, 2022 of $889,866 [August 31, 2021 – $1,132,556] and lease liability of $971,399 [August 31, 2021 – $1,177,867].

25

Remuneration of directors and key management of the Company are as follows:

	2022		2021		2020
	$		$		$
Wages		2,324,770		1,299,402		308,868
Share-based payments – capital stock		-		-		572,110
Share-based payments – stock options		2,560,031		6,081,900		259,410
		4,884,801		7,381,302		1,140,388

At the end of the year, the amounts due to and from related parties are as follows:

	2022		2021
	$		$
Share subscription receivable
9335-1427 Quebec Inc.		25,000		25,000
Alexandre Mongeon		14,200		14,200
		39,200		39,200
Current advances to related party
Alexandre Mongeon		16,736		185,407
Amounts due to related parties included in trade and other payable
Alexandre Mongeon		16,000		74,157
Patrick Bobby		12,308		11,092
Kulwant Sandher		8,062		7,054
Xavier Montagne		8,292		-
Mac Engineering, SASU		-		29,957
		44,662		122,260

In December 2020, the holders of the advances from related parties and the Company did agree that the advances shall automatically convert into Voting Common Shares of the Company at a conversion price equal to the per Voting Common Share offering price in the Initial Public Offering.

Advances from related parties are non-interest bearing and have no specified terms of repayment.

1.10 Critical Accounting Estimates

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and judgments are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. There were no material changes in estimates during the year ended August 31, 2022.

1.11 Changes in Accounting Policies including Initial Adoption

See Note 2 of the Company's consolidated financial statements for the year ended August 31, 2022. The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended August 31, 2021.

26

1.12 Controls and procedures

Disclosure controls and procedures

The CEO and the CFO have designed disclosure controls and procedures, or have caused them to be designed under their supervision, in order to provide reasonable assurance that:

· material information relating to the Company has been made known to them; and

· information required to be disclosed in the Company’s filings is recorded, processed, summarized and reported within the time periods specified in securities legislation.

An evaluation was carried out, under the supervision of the CEO and the CFO, of the design and effectiveness of our disclosure controls and procedures. Based on this evaluation, the CEO and the CFO concluded that the disclosure controls and procedures at August 31, 2022 were not effective to provide reasonable assurance that material information required to be disclosed by us in the reports that we file with, or submit to, the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in by the SEC’s rules and regulations, due to the inadvertent omission of historical financial statements for EBR. To remediate the foregoing deficiency in our disclosure controls and procedures that led to the inadvertent omission described above, we are implementing additional steps, which include: (i) adopting additional internal review procedures with respect to required disclosures in the reports that we file with, or submit to, the SEC under the Exchange Act; (ii) enhancing our internal communication process associated with such disclosures; and (iii) improving our training and education of certain of our personnel who are involved in aspects of our reporting process.

Internal controls over financial reporting

The CEO and the CFO have also designed internal controls over financial reporting or have caused them to be designed under their supervision, in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

An evaluation was carried out, under the supervision of the CEO and the CFO, of the design and effectiveness of our internal controls over financial reporting, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) on Internal Control – Integrated Framework (2013 Framework).

As a result of the year-end assessment process for the year ended August 31, 2022, we identified that we did not maintain effective processes and controls over the accounting for and reporting of complex and non-routine transactions. Specifically, we determined that there was a lack of sufficient accounting and finance personnel to perform in-depth analysis and review of complex accounting matters and non-routine transactions within the timeframes set by us for filing our consolidated financial statements. Because of this deficiency, we concluded there was a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis at August 31, 2022, and we issued the corrections described herein for the period ended May 31, 2022.

A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected.

To remediate the identified material weaknesses, management is in the process of designing and implementing revised controls and procedures which management believes will address the material weakness. These controls and procedures include establishing a more comprehensive schedule for management review and establishing additional review procedures over the accounting for complex and non-routine transactions. As at August 31, 2022, the Company is working on remediating the identified material weakness.

Notwithstanding the material weakness, management has concluded that the Company’s consolidated financial statements as at the year ended August 31, 2022 present fairly, in all material respects, the Company’s financial position, results of operations, changes in equity and cash flows in accordance with IFRS.

27

Changes in internal controls over financial reporting

Except for the corrections described herein for the year ended August 31, 2022, no changes were made to our internal controls over financial reporting that occurred during the year ended August 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

1.14 Financial Instruments and risk management

See Note 25 to the Company's consolidated financial statements for the year ended August 31, 2022.

28

1.15 Additional Information

HEAD OFFICE   730 Boulevard du Cure-Boivin   Boisbriand, QC   J7G 2A7   Tel: (450) 951 - 7009   Email: info@electricboats.ca   OFFICERS & DIRECTORS   Alexandre Mongeon,   CEO and Director   Patrick Bobby   Director   Kulwant Sandher, CPA, CA, BSc (Eng.)   Chief Financial Officer   Alan Gaines   Chairman & Director   Luisa Ingargiola   Director   Renaud Cloutier   Director   Steve P. Barrenechea   Director CAPITALIZATION   (as at November 23, 2022)   Shares Authorized: Unlimited   Shares Issued: 8,437,379                                 AUDITORS   Ernst & Young LLP   Montreal, Quebec   LEGAL COUNSEL   Dentons US LLP   1221 Avenue of the Americas   New York, New York 10020

29

EX-99.3

Exhibit 99.3

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

I, Alexandre Mongeon, Chief Executive Officer of Vision Marine Technologies Inc., certify the following:

1. Review: I have reviewed the AIF, if any, annual consolidated financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of Vision Marine Technologies Inc. (the "issuer") for the financial year ended August 31, 2022.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual consolidated financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the financial year end

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of Treadway Commission (COSO).

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer's financial reporting and its ICFR; and

(c) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness

5.3 N/A

6. Evaluation: The issuer's other certifying officer(s) and I have

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end and the issuer has disclosed in its annual MD&A

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) for each material weakness relating to operation existing at the financial year end

(A) a description of the material weakness;

(B) the impact of the material weakness on the issuer's financial reporting and its ICFR; and

(C) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer's ICFR that occurred during the period beginning on September 1, 2021 and ended on August 31, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

8. Reporting to the issuer's auditors and board of directors or audit committee: The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer's ICFR.

Date: November 23, 2022

/s/Alexandre Mongeon

Alexandre Mongeon

Chief Executive Officer

EX-99.4

Exhibit 99.4

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

I, Kulwant Sandher, Chief Financial Officer of Vision Marine Technologies Inc., certify the following:

1. Review: I have reviewed the AIF, if any, annual consolidated financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of Vision Marine Technologies Inc. (the "issuer") for the financial year ended August 31, 2022.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual consolidated financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the financial year end

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1 Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of Treadway Commission (COSO).

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer's financial reporting and its ICFR; and

(c) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness

5.3 N/A

6. Evaluation: The issuer's other certifying officer(s) and I have

(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end and the issuer has disclosed in its annual MD&A

(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

(ii) for each material weakness relating to operation existing at the financial year end

(A) a description of the material weakness;

(B) the impact of the material weakness on the issuer's financial reporting and its ICFR; and

(C) the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.

7. Reporting changes in ICFR: The issuer has disclosed in its annual MD&A any change in the issuer's ICFR that occurred during the period beginning on September 1, 2021 and ended on August 31, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

8. Reporting to the issuer's auditors and board of directors or audit committee: The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer's ICFR.

Date: November 23, 2022

/s/ Kulwant Sandher

Kulwant Sandher

Chief Financial Officer