EXHIBIT 99.1
Unaudited Interim Condensed Consolidated Financial Statements
For
the three and nine months ended
|
Vicinity Motor Corp.
Interim Condensed Consolidated Statements of Financial Position
(Unaudited, In thousands of US Dollars)
| Note | September 30, 2023 | December 31, 2022 | ||||||||||
| $ | $ | |||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Trade and other receivables | ||||||||||||
| Inventory | 3 | |||||||||||
| Prepaids and deposits | ||||||||||||
| Long-term Assets | ||||||||||||
| Intangible assets | ||||||||||||
| Property, plant, and equipment | 4 | |||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable and accrued liabilities | ||||||||||||
| Credit facility | 5 | |||||||||||
| Current portion of deferred revenue | 6 | |||||||||||
| Current portion of provision for warranty cost | 7 | |||||||||||
| Current debt facilities | 8 | |||||||||||
| Convertible debt | 9 | |||||||||||
| Current portion of other long-term liabilities | ||||||||||||
| Long-term Liabilities | ||||||||||||
| Other long-term liabilities | 10 | |||||||||||
| Provision for warranty cost | 7 | |||||||||||
| Shareholders’ Equity | ||||||||||||
| Share capital | 11 | |||||||||||
| Contributed surplus | 11 | |||||||||||
| Accumulated other comprehensive (loss) income | ||||||||||||
| Deficit | ( |
) | ( |
) | ||||||||
NATURE OF OPERATIONS AND LIQUIDITY RISK (Note 1)
COMMITMENTS AND CONTINGENCIES (Note 15)
Approved on behalf of the Board:
| /s/”William R. Trainer “ | /s/”Christopher Strong” | |
| Director | Director |
See accompanying notes to the consolidated financial statements
Vicinity Motor Corp.
Interim Condensed Consolidated Statements of Loss
(Unaudited, In thousands of US dollars, except for per share amounts)
| Note | For
the three months ended September 30, 2023 |
For
the three months ended September 30, 2022 |
For
the nine months ended September 30, 2023 |
For
the nine months ended September 30, 2022 | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||
| Revenue | ||||||||||||||||||||
| Vehicle sales | 14 | |||||||||||||||||||
| Other | 14 | |||||||||||||||||||
| Cost of sales | 4 | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
| Gross profit (loss) | ( |
) | ||||||||||||||||||
| Expenses | ||||||||||||||||||||
| Sales and administration | ||||||||||||||||||||
| Stock-based compensation | 11 | |||||||||||||||||||
| Amortization | ||||||||||||||||||||
| Interest and finance costs | 8,9,10 | |||||||||||||||||||
| Change in fair value of embedded derivatives | 9 | ( |
) | |||||||||||||||||
| Gain on modification of debt | 8 | ( |
) | ( |
) | ( |
) | |||||||||||||
| Foreign exchange (gain) loss | ( |
) | ||||||||||||||||||
| Loss before taxes | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Current income tax expense | ||||||||||||||||||||
| Net loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Loss per share | ||||||||||||||||||||
| Basic & diluted | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||||
| Basic and diluted(1) | ||||||||||||||||||||
See accompanying notes to the consolidated financial statements
Vicinity Motor Corp.
Interim Condensed Consolidated Statements of Comprehensive Loss
(Unaudited, In thousands of US dollars)
| For
the three months ended September 30, 2023 |
For
the three months ended September 30, 2022 |
For
the nine months ended September 30, 2023 |
For the nine months ended September 30, 2022 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Net loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other comprehensive loss items that may be reclassified subsequently to net (loss) income | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Exchange differences on translation of foreign operations | ( |
) | ||||||||||||||
| Total other comprehensive (loss) income | ( |
) | ||||||||||||||
| Total comprehensive loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
See accompanying notes to the consolidated financial statements
Vicinity Motor Corp.
Interim Condensed Consolidated Statements of Changes in Equity
(Unaudited, In thousands of US dollars, except for per number of shares)
| Note | Number of Shares | Share Capital | Contributed Surplus | Accumulated Other Comprehensive Income | Deficit | Total Shareholders’ Equity | ||||||||||||||||||||||
| $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Balance, January 1, 2022 | ( |
) | ( |
) | ||||||||||||||||||||||||
| Issuance of shares – private placement | 11.2 | (b) | ||||||||||||||||||||||||||
| Issuance of shares – options exercised | 11.2 | (c) | ( |
) | ||||||||||||||||||||||||
| Share issuance costs | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Share issuance costs – agent warrants | — | ( |
) | |||||||||||||||||||||||||
| Warrants | — | |||||||||||||||||||||||||||
| Stock-based compensation | 11.4-11.5 | — | ||||||||||||||||||||||||||
| Other comprehensive loss | — | |||||||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, September 30, 2022 | ( |
) | ||||||||||||||||||||||||||
| Balance, January 1, 2023 | ( |
) | ||||||||||||||||||||||||||
| Issuance of shares – private placement | 11.2 | (a) | ||||||||||||||||||||||||||
| Share issuance costs | 11.2 | (a) | — | ( |
) | ( |
) | |||||||||||||||||||||
| Warrants | 11.3 | — | ||||||||||||||||||||||||||
| Stock-based compensation | 11.4-11.5 | — | ||||||||||||||||||||||||||
| Other comprehensive loss | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Net loss | — | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, September 30, 2023 | ( |
) | ||||||||||||||||||||||||||
See accompanying notes to the consolidated financial statements
Vicinity Motor Corp.
Interim Condensed Consolidated Statements of Cash Flows
(Unaudited, In thousands of US dollars)
| Nine months ended | Nine months ended | |||||||||||
| Note | September 30, 2023 | September 30, 2022 | ||||||||||
| OPERATING ACTIVITIES | $ | $ | ||||||||||
| Net loss for the year | ( |
) | ( |
) | ||||||||
| Items not involving cash: | ||||||||||||
| Loss on disposal of property and equipment | ||||||||||||
| Gain on modification of debt | ( |
) | ( |
) | ||||||||
| Amortization | ||||||||||||
| Foreign exchange loss | ||||||||||||
| Interest and finance costs | 8,9 | |||||||||||
| Change in fair value of embedded derivatives | ( |
) | ||||||||||
| Stock-based compensation | 11 | |||||||||||
| (2,320 | ) | (6,132 | ) | |||||||||
| Changes in non-cash items: | ||||||||||||
| Trade and other receivables | ( |
) | ( |
) | ||||||||
| Inventory | 3 | ( |
) | |||||||||
| Prepaids and deposits | ( |
) | ( |
) | ||||||||
| Accounts payable and accrued liabilities | ||||||||||||
| Deferred consideration | ( |
) | ||||||||||
| Deferred revenue | 6 | ( |
) | |||||||||
| Warranty provision | 7 | ( |
) | |||||||||
| Taxes paid | ( |
) | ( |
) | ||||||||
| Interest paid | ( |
) | ( |
) | ||||||||
| Cash used in operating activities | ( |
) | ( |
) | ||||||||
| INVESTING ACTIVITIES | ||||||||||||
| Purchase of intangible assets | ( |
) | ( |
) | ||||||||
| Proceeds from government subsidy | ||||||||||||
| Purchase of property and equipment | ( |
) | ( |
) | ||||||||
| Proceeds on disposal of property and equipment | ||||||||||||
| Cash used in investing activities | ( |
) | ( |
) | ||||||||
| FINANCING ACTIVITIES | ||||||||||||
| Proceeds from issuance of common shares | 11 | |||||||||||
| Share issuance costs | 11 | ( |
) | ( |
) | |||||||
| Proceeds of credit facility | 5 | |||||||||||
| Proceeds from convertible debt | 9 | |||||||||||
| Convertible debt financing fees | 9 | ( |
) | |||||||||
| Proceeds from long-term loans | 10 | |||||||||||
| Repayment of long-term loans | ( |
) | ( |
) | ||||||||
| Cash provided in financing activities | ||||||||||||
| Effect of foreign exchange rate on cash | ( |
) | ( |
) | ||||||||
| Increase (decrease) in cash and cash equivalents | ( |
) | ||||||||||
| Cash and cash equivalents, beginning | ||||||||||||
| Cash and cash equivalents, ending | ||||||||||||
See accompanying notes to the consolidated financial statements
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
1. NATURE OF OPERATIONS AND LIQUIDITY RISK
Vicinity Motor Corp. (“Vicinity”, “VMC” or the “Company”) is a Canadian company that is a North American supplier of electric vehicles for both public and commercial enterprise use. The Company leverages a dealer network and relationships with manufacturing partners to supply its flagship electric, compressed natural gas (“CNG”) and clean-diesel Vicinity buses and the VMC 1200 class 3 electric truck. VMC (formerly Grande West Transportation Group) was incorporated on December 4, 2012 under the laws of British Columbia. The Company conducts its active operations in Canada through its wholly owned operating subsidiary, Vicinity Motor (Bus) Corp. which was incorporated on September 2, 2008 under the laws of British Columbia. The Company also conducts its active operations in the U.S. through a wholly owned subsidiary, Vicinity Motor (Bus) USA Corp., incorporated on April 8, 2014 under the laws of the State of Delaware. The Company’s head office is located at 3168 262nd Street, Aldergrove, British Columbia.
As at September 30, 2023, the Company had working capital (current assets less current liabilities) of $7,025 compared to working capital of $1,573 as at December 31, 2022. For the nine months ended September 30, 2023, the Company incurred a net loss of $7,525 (September 30, 2022: $14,120) and used cash in operations of $19,008 (September 30, 2022: $5,222) of which $8,127 was used for prepaids and deposits and $3,760 related to build up of inventory. Revenues for the nine months ended September 30, 2023, totalled $13,957 (September 30, 2022: $16,440).
In February 2023, the Company obtained $30 million in credit commitments from Royal Bank of Canada and Export Development Canada to fund production of the Company’s VMC 1200 class 3 electric trucks. The facility will expire in February 2024 and may be renewed on a yearly basis at the discretion of the lenders. As at September 30, 2023, $9,597 has been drawn on this facility (note 5). The Company also has an asset-based lending facility from Royal Bank of Canada for C$10 million that expires in February 2024 (note 5). The Company also has convertible debt of C$4 million plus interest that matures September 27, 2024 (note 9) and unsecured debentures of C$11,948 (note 8) at September 30, 2023 that is repayable with C$2,987 principal payments due in both April and July of 2024, with the remainder and interest payable due on October 4, 2024.
Based on the Company’s cash on hand and working capital; its forecasted sales and resulting cash flows for the next twelve months; the expected renewal of the $30 million credit commitments and C$10 million asset-based lending facility in February 2024, as well as the repayments of the convertible debentures and the unsecured debentures, the Company estimates that it will have sufficient liquidity to meet its working capital requirements for at least the next twelve months from September 30, 2023.
2. BASIS OF PRESENTATION
The following companies are consolidated with Vicinity Motor Corp. as at September 30, 2023:
| Company Name | Registered | Holding | Functional Currency | |||||
| % | ||||||||
| % | ||||||||
Intercompany balances and transactions, and any unrealized gains arising from intercompany transactions, were eliminated in preparing the consolidated financial statements.
| a) | Statement of compliance |
These unaudited interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board, have been omitted or condensed. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2022.
The interim condensed consolidated financial statements were authorized for issue by the Board of Directors on November 10, 2023.
7
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
| 2. | BASIS OF PRESENTATION (continued) |
| b) | Basis of measurement |
The interim condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments carried at fair value.
| c) | Use of estimates and judgments |
The preparation of the consolidated financial statements requires the use of judgments and/or estimates that affect the amounts reported and disclosed in the consolidated financial statements and related notes. These judgments and estimates are based on management’s best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the consolidated financial statements. For significant estimates and judgements refer to Note 7 and Note 9 of these interim consolidated financial statements as well as the audited consolidated financial statements for the year ended December 31, 2022.
Fair value of embedded derivatives
During the current period the Company entered into the convertible debt arrangement and accordingly the following are new estimates and judgements. The Company is required to determine the fair value of embedded derivatives. Fair value of embedded derivatives are determined using valuation techniques and require estimates of as at the reporting period date as the financial instruments are not traded in an active market as disclosed in Note 9.
Going concern
Judgement is required in determining if disclosure of a materiality uncertainty related to events or conditions which might cast significant doubt on the Company’s ability to continue as a going concern is required in the notes to the consolidated financial statements. In management’s judgement, such a disclosure is not required. The judgement is depending on management’s expectations of revenue, future net cash flows for the year ending December 31, 2024, renewing existing debt facilities and financial obligations due within the next 12 months.
3. INVENTORY
| September 30, 2023 | December 31, 2022 | |||||||
| $ | $ | |||||||
| Finished goods | ||||||||
| Work in progress - vehicles | ||||||||
| Parts for resale | ||||||||
| Total Inventory | ||||||||
As at September 30, 2023 and December 31, 2022, work in progress – vehicles consists of the cost of buses and trucks still being manufactured. Finished goods inventory consisted of the costs of assembled buses and trucks, as well as freight and other costs incurred directly by the Company in compiling inventory. All inventory is part of the general security agreement to secure the credit facility described in Note 5.
During
the nine months ended September 30, 2023, the Company recognized $
8
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
4. PROPERTY AND EQUIPMENT
During the nine months ended September 30, 2023, the Company completed construction and received its certificate of occupancy for its US manufacturing campus in Ferndale, Washington. The building started being amortised during the three months ended September 30, 2023 as the building was capable of operating in the manner intended by management and the expense is recorded in cost of goods sold.
5. CREDIT FACILITY
During
the year ended December 31, 2017, the Company entered into a revolving credit facility agreement with a financial institution for a maximum
amount of C$
During
the nine months ended September 30, 2023, the terms of the agreement were amended to reduce the ABL facility to C$
As
at September 30, 2023, the Company had drawn $nil on this facility (December 31, 2022: $
During
the nine months ended September 30, 2023, the Company obtained $
As
at September 30, 2023, the Company had drawn $
As at September 30, 2023, the Company is in compliance with all covenants.
9
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
6. DEFERRED REVENUE
| September 30, 2023 | December 31, 2022 | |||||||||||
| $ | $ | |||||||||||
| Sales deposits – future delivery of buses | ||||||||||||
| Future delivery of buses | (a) | |||||||||||
| Deferred revenue | ||||||||||||
| Less: current portion | ||||||||||||
| Long-term portion of deferred revenue | ||||||||||||
| a) | During the year ended December 31, 2022, the Company recognized deferred revenue in relation to a non-cash agreement with a customer in which the Company provided the customer with 8 leased buses to be leased until the delivery of the 8 new buses which is expected within the next 12 months. As a result, the Company has recognized $122 as lease revenue (September 30, 2022: $127) and has a deferred revenue balance of $1,812 as at September 30, 2023. |
7. PROVISION FOR WARRANTY COST
The Company provides a two year bumper to bumper warranty coverage for vehicles on specified components, with the exception of normal wear and tear.
During
the nine months ended September 30, 2023, the Company recorded warranty expense of $
| $ | ||||
| Balance at December 31, 2021 | ||||
| Additions | ||||
| Warranty claims applied | ( |
) | ||
| Change in estimate of warranty provision | ||||
| Change in foreign exchange | ( |
) | ||
| Balance at December 31, 2022 | ||||
| Additions | ||||
| Warranty claims applied | ( |
) | ||
| Change in estimate of warranty provision | ( |
) | ||
| Change in foreign exchange | ||||
| Balance at September 30, 2023 | ||||
| Less: Current portion | ||||
| Long-term portion of warranty provision | ||||
10
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
8. CURRENT DEBT FACILITIES
| September 30, 2023 | December 31, 2022 | |||||||||||
| $ | $ | |||||||||||
| Unsecured debentures - 2021 | (a) | |||||||||||
| a) | On October 5, 2021, the Company issued C$10.3 million in unsecured debentures with a maturity 12 months from the date of issue. On June 15, 2022, the maturity date of the debentures was extended to October 4, 2023, with the extension being treated as a modification of the original debt. As a result, a gain of $803 on modification of debt was recorded during the six months ended June 30, 2022. In connection with the extension, the Company cancelled 412,000 warrants from the previous agreement. On extension the Company issued 1,000,000 warrants to purchase common shares at an exercise price of C$2.25 per share. The value of these warrants was incorporated in the $803 gain on modification of debt. On September 25, 2023, the maturity date of the debentures was extended with C$1,648 of accrued interest being added to the principal with the new principal amount being C$11,948. The facility is repayable with 25% (C$2,987) principal payments due in April and July of 2024, with the remainder and interest payable due on October 4, 2024. As a result, a gain of $492 on modification of debt was recorded during the nine months ended September 30, 2023. In connection with the extension, the Company cancelled 1,000,000 warrants from the previous agreement. On extension the Company issued 1,500,000 warrants to purchase common shares at an exercise price of C$1.33 per share. The value of these warrants was incorporated in the $492 gain on modification of debt. The warrants expire on October 4, 2024. |
As
a result of the extension on September 25, 2023, the interest rate increased from
During
the nine months ended September 30, 2023, the Company incurred $
9. CONVERTIBLE DEBT
On March 27, 2023, the Corporation completed a private placement of unsecured convertible debentures for gross proceeds of C$4 million. The convertible debentures are issued in denominations of C$1 thousand, bear interest at 15% per annum, and mature 18 months from the closing date. Interest payments on the convertible debentures are due on the twelve-month anniversary and/or the maturity date of September 27, 2024.
Each convertible debenture is convertible at the holder’s option into Units at any time prior to maturity at a conversion price of C$1.45 per Unit. Upon conversion, each Unit will consist of one Common Share and 0.2 of a Warrant. Each Warrant is exercisable into a Warrant Share at an exercise price of C$1.45 for a period of thirty-six months following the initial debenture closing date. The convertible debenture is redeemable at the Company’s option at any time after 12 months, with 30 days notice, at a redemption price of 105% of the principal, payable in cash, plus any accrued interest up to the maturity date.
The unsecured convertible debentures represent financial instruments that include host debentures accounted for at amortized cost and embedded derivatives related to the conversion feature and redemption option, which are separated from the convertible debentures and accounted for at fair value with changes in fair value recorded in the statement of loss.
11
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
| 9. | CONVERTIBLE DEBT (continued) |
| Host debentures | Embedded derivatives | Total | ||||||||||
| $ | $ | $ | ||||||||||
| As at January 1, 2023 | ||||||||||||
| Convertible debt principal | ||||||||||||
| Transactions costs | ( |
) | ( |
) | ||||||||
| As at March 24, 2023 | ||||||||||||
| Change in fair value | N/A | ( |
) | ( |
) | |||||||
| Interest accretion | ||||||||||||
| Foreign exchange | ||||||||||||
| As at September 30, 2023 | ||||||||||||
The fair value of the embedded derivatives were estimated using a binomial tree method with the following assumptions as at September 30, 2023:
| Assumptions | ||||
| Risk-free interest rate | – % | |||
| Credit spread | % | |||
| Expected life of options | – years | |||
| Annual dividend rate | % | |||
| Annualized volatility | – % | |||
For
the nine months ended September 30, 2023, the change in fair value resulted in a gain of $
10. OTHER LONG-TERM LIABILITIES
| September 30, 2023 | December 31, 2022 | |||||||||||
| $ | $ | |||||||||||
| Unsecured debentures - 2021 | (a) | |||||||||||
| Term loan | (b) | |||||||||||
| Lease obligation | (c) | |||||||||||
| Vehicles | ||||||||||||
| Less: Current portion | ( |
) | ( |
) | ||||||||
| a) | Unsecured debentures |
On September 25, 2023, the maturity date of the debentures was extended to October 4, 2024, with the extension being treated as a modification of debt. (Note 8)
12
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
| 10. | OTHER LONG-TERM LIABILITIES (continued) |
| b) | Term loan |
During
the six months ended June 30, 2023, the Company secured a financing with a lender for proceeds up to $
During
the nine months ended September 30, 2023, the Company incurred $
| c) | Lease Obligation |
Minimum lease payments in respect of lease liabilities for the right-of-use assets included in property, plant and equipment (Note 4) and the effect of discounting are as follows:
| September 30, 2023 | ||||
| $ | ||||
| Undiscounted minimum lease payments: | ||||
| Less than one year | ||||
| One to two years | ||||
| Two to three years | ||||
| Three to six years | ||||
| Effect of discounting | ( |
) | ||
| Present value of minimum lease payments – total lease liability | ||||
| Less: Current portion | ( |
) | ||
| Long-term lease liabilities | ||||
The Company has lease agreements for office and warehouse facilities expiring October 31, 2023, March 31, 2027 and May 31, 2027. and October 31, 2023. The Company also has a lease agreements for vehicles expiring on November 30, 2025 and March 15, 2029.
| 11.1 | Authorized: Unlimited number of common shares without par value |
| 11.2 | Issued and Outstanding Common Shares: |
The details for the common share issuances during the nine months ended September 30, 2023 are as follows:
| a. | During the nine months ended September 30, 2023, the Company issued shares at prices ranging from $0.87 to $1.01 per share. The Company incurred share issuance costs of $ for net proceeds of $ through its At-the-Market equity program. |
13
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
11. | SHARE CAPITAL (continued) |
The details for the common share issuances during the nine months ended September 30, 2022 were as follows:
| b. | During
the nine months ended September 30, 2022, |
During the nine months ended September 30, 2022, the Company also issued shares at prices ranging from $2.96 to $3.65 for gross proceeds of $ through its At-the-Market equity program.
| c. | During
the nine months ended September 30, 2022, stock options were exercised by employees
of the Company at an average exercise price of $1.13 for gross proceeds of $ |
| 11.3 | Share Purchase Warrants |
A summary of the Company’s share purchase warrants are as follows:
| Number of Warrants | Weighted Average Exercise Price | ||||||||
| C$ | |||||||||
| Outstanding, December 31, 2021 | |||||||||
| Issued | |||||||||
| Cancelled | ( |
) | |||||||
| Outstanding, December 31, 2022 | |||||||||
| Cancelled | ( |
) | |||||||
| Issued | |||||||||
| Outstanding, September 30, 2023 | |||||||||
During
the nine months ended September 30, 2023, the Company issued
During
the nine months ended September 30, 2022, the Company issued
During
the nine months ended September 30, 2022, the Company issued
| 11.4 | Directors, Consultants, and Employee stock options |
The Company has adopted a share option plan for which options to acquire up to a total of 10% of the issued share capital, at the award date, may be granted to eligible optionees from time to time. Generally, share options granted have a maximum term of five years, and a vesting period and exercise price determined by the directors.
During
the nine months ended September 30, 2022, the Company granted
During the nine months ended September 30, 2023, the Company recognized $39 (September 30, 2022 - $56) on the grant and vesting of options to directors, consultants and employees.
14
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
| 11. | SHARE CAPITAL (Continued) |
The following tables summarize information about the Company’s stock options outstanding at September 30, 2023:
| Options Outstanding | Options Exercisable | Exercise Price |
Remaining Contractual Life (Years) | Expiry Date | |||||||||||||||
| C$ | |||||||||||||||||||
| January 17, 2019 | |||||||||||||||||||
| November 15, 2019 | |||||||||||||||||||
| November 28, 2019 | |||||||||||||||||||
| May 4, 2020 | |||||||||||||||||||
| November 23, 2020 | |||||||||||||||||||
| January 12, 2021 | |||||||||||||||||||
| February 1, 2021 | |||||||||||||||||||
| April 27, 2021 | |||||||||||||||||||
| March 31, 2022 | |||||||||||||||||||
| November 25, 2022 | |||||||||||||||||||
| Total | |||||||||||||||||||
During
the nine months ended September 30, 2023,
| 11.5 | Deferred Share Units |
Pursuant to the Company’s Deferred Share Unit (“DSU”) Incentive Plan approved by the board of directors of the Company on July 8, 2018, deferred stock units to acquire common shares of the Company may be granted to specified board members of the Company in accordance with the terms and conditions of the plan.
Each DSU entitles the participant to receive one common share upon vesting. DSUs vest into common shares on the board members’ separation date from the board of directors. DSUs track the value of the underlying common shares, but do not entitle the recipient to the underlying common shares until such DSUs vest, nor do they entitle a holder to exercise voting rights or any other rights attached to ownership or control of the common shares, until the DSU vests and the DSU participant receives common shares.
A summary of the Company’s DSUs are as follows:
| Number of DSUs | |||||
| Outstanding, December 31, 2021 | |||||
| Issued | |||||
| Outstanding, December 31, 2022 | |||||
| Issued | |||||
| Outstanding, September 30, 2023 | |||||
During the nine months ended September 30, 2023, the Company issued 492,757 DSUs (September 30, 2022 – 304,473) to board members of the Company that vest upon the board members separation date from the Board of Directors.
During the nine months ended September 30, 2023, the Company recorded $420 (September 30, 2022 - $426) as stock-based compensation for the fair value of the DSUs issued.
15
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
12. RELATED PARTY BALANCES AND TRANSACTIONS
Key management consists of personnel having the authority and responsibility for planning, directing and controlling the activities of the Company, which are the directors and executive officers of the Company.
Compensation to key management:
| Nine months ended | Nine months ended | |||||||
| September 30, 2023 | September 30, 2022 | |||||||
| $ | $ | |||||||
| Salaries and benefits | ||||||||
| Stock-based compensation | ||||||||
During
the nine months ended September 30, 2023 the Company paid $
During
the nine months ended September 30, 2022 the Company paid $
Balances with key management and other related parties are:
As
at September 30, 2023, included in accounts payable are balances owing to key management or companies controlled by officers of the Company
in the amount of $
All related party balances are non-interest bearing, unsecured and have no fixed terms of repayment and have been classified as current.
13. FINANCIAL INSTRUMENTS
Fair values
The
Company’s financial instruments include cash and cash equivalents, trade and other receivables, accounts payable, the credit facility,
short-term loans and convertible debt. The carrying amounts of cash and cash equivalents, trade and other receivables, accounts payable,
the credit facility, and short-term loans approximate fair value due to their short term nature. The embedded derivatives related to
the convertible debt are the only instruments measured at fair value through profit and loss in accordance with IFRS 9 – Financial
Instruments. The fair value of the host debenture as at September 30, 2023 is $
The following table summarizes the carrying values and fair values of the Company’s financial instruments:
| September 30, 2023 | December 31, 2022 | |||||||
| $ | $ | |||||||
| Assets: | ||||||||
| Measured at amortized cost (i) | ||||||||
| Liabilities: | ||||||||
| Amortized cost (ii) | ||||||||
| Fair value through P&L (iii) | ||||||||
(i) Cash and cash equivalents, and trade and other receivables
(ii) Accounts payable and accrued liabilities, current loans, and lease obligations.
(iii) Embedded derivatives related to convertible debt (only financial instrument carried at fair value)
16
Vicinity Motor Corp.
Notes to the Interim Condensed Consolidated Financial Statements
Three and nine months ended September 30, 2023 and September 30, 2022
(Unaudited, In thousands of US dollars, except for per share amounts)
| 13. | FINANCIAL INSTRUMENTS (continued) |
The Company classifies its fair value measurements in accordance with the three-level fair value hierarchy. The measurement is classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices), and
Level 3 – Inputs that are not based on observable market data
The Company valued the derivatives associated with the convertible debt (iii) as a level 3 instrument. The Company used the binomial tree method to determine the fair value of the embedded derivatives attributed to the convertible debt (Note 9).
14. SEGMENT INFORMATION
Allocation of revenue to geographic areas for the single segment is as follows:
Nine months ended September 30, 2023 |
Nine months ended September 30, 2022 | |||||||||||||||||||||||
| Canada | USA | Total | Canada | USA | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Bus Sales | ||||||||||||||||||||||||
| Truck Sales | ||||||||||||||||||||||||
| Vehicle Sales | ||||||||||||||||||||||||
| Spare part sales | ||||||||||||||||||||||||
| Operating lease revenue | ||||||||||||||||||||||||
| Other revenue | ||||||||||||||||||||||||
| Total Revenue | ||||||||||||||||||||||||
During
the nine months ended September 30, 2023, the Company had sales of $
15. COMMITMENTS AND CONTINGENCIES
The
Company entered into a production agreement with its manufacturers whereby the parties have agreed to a specified production volume.
Future payments as at September 30, 2023 are $
17