Company Announcements

_________________________________

¹

Adjusted EBITDA is a non-IFRS financial measure. See "Non-IFRS Measures and Other Performance Metrics" section of this press release.

_________________________________

²

See "Non-IFRS Measures and Other Performance Metrics" section of this press release. The Company's vehicles and charging stations order book is determined by management based on purchase orders that have been signed, orders that have been formally confirmed by clients or products in respect of which formal joint applications for governmental programs, subsidies or incentives have been made by the applicable clients and the Company. The order book is expressed as a number of units or a total dollar value, which dollar value is determined based on the pricing of each unit included in the order book. The vehicles included in the vehicle order book as of November 6, 2024 provided for a delivery period ranging from a few months to the end of the year ending December 31, 2028, with substantially all of such vehicles currently providing for deliveries before the end of the year ending December 31, 2025, which corresponds to the latest date by which claims are required to be made according to the current eligibility criteria of the Federal Infrastructure Canada's Zero Emission Transit Fund "ZETF" program, unless otherwise agreed by Infrastructure Canada. In addition, all of the deliveries are subject to the granting of subsidies and incentives with processing times that are subject to important variations. There has been in the past and the Company expects there will continue to be variances between the expected delivery periods of orders and the actual delivery times, and certain delays could be significant. Also, there has been in the past and the Company expects there will continue to be variances in the eligibility criteria of the various programs, subsidies and incentives introduced by governmental authorities, including in their interpretation and application. Such variances or delays could result in the loss of a subsidy or incentive and/or in the cancellation of certain orders, in whole or in part. In addition, the Company's current financial position as well as the uncertainty as to its ability to continue as a going concern is likely to increase some or all of the risks relating to the Company's order book. The Company's presentation of the order book should not be construed as a representation by the Company that the vehicles and charging stations included in its order book will translate into actual sales.

(Unaudited)

Sep 30, 2024

Dec 31, 2023

$

$

ASSETS

Current

Cash

26,287,968

29,892,966

Accounts receivable

48,724,699

75,641,780

Inventories

215,103,160

249,606,756

Prepaid expenses and other current assets

2,181,322

1,553,276

Current assets

292,297,149

356,694,778

Non-current

Other non-current assets

7,879,733

6,994,815

Property, plant and equipment

186,611,153

198,536,683

Right-of-use assets

90,986,710

89,663,139

Intangible assets

189,170,558

175,703,257

Contract asset

13,255,046

13,528,646

Non-current assets

487,903,200

484,426,540

Total assets

780,200,349

841,121,318

LIABILITIES

Current

Trade and other payables

57,905,846

92,424,961

Deferred revenue and other deferred liabilities

44,253,046

18,267,139

Current portion of long-term debt and other debts

149,540,872

27,056,476

Current portion of lease liabilities

8,190,021

7,984,563

Current liabilities

259,889,785

145,733,139

Non-current

Long-term debt and other debts

143,095,183

197,885,889

Lease liabilities

87,217,483

83,972,023

Share warrant obligations

5,521,709

29,582,203

Conversion options on convertible debt instruments

4,041,036

25,034,073

Non-current liabilities

239,875,411

336,474,188

Total liabilities

499,765,196

482,207,327

SHAREHOLDERS' EQUITY

Share capital

489,454,628

489,362,920

Contributed surplus

141,195,903

139,569,185

Deficit

(330,654,757)

(255,746,097)

Cumulative translation adjustment

(19,560,621)

(14,272,017)

Total shareholders' equity

280,435,153

358,913,991

Total shareholders' equity and liabilities

780,200,349

841,121,318

(Unaudited)

(Unaudited)

Three months ended

Nine months ended

Sep 30,
2024

Sep 30,
2023

Sep 30,
2024

Sep 30,
2023

$

$

$

$

Revenue

30,626,604

80,347,614

116,383,520

193,066,862

Cost of sales

46,580,060

74,982,572

158,694,253

189,540,202

Gross profit (loss)

(15,953,456)

5,365,042

(42,310,733)

3,526,660

Administrative expenses

9,695,244

12,986,754

31,756,737

38,468,226

Selling expenses

3,777,272

5,176,768

11,812,942

16,503,134

Restructuring costs

780,260

—

2,163,269

—

Operating loss

(30,206,232)

(12,798,480)

(88,043,681)

(51,444,700)

Finance costs

13,024,254

7,728,320

35,934,083

11,149,758

Foreign exchange loss (gain)

(1,616,813)

2,861,193

1,907,293

(104,113)

Change in fair value of conversion options on convertible debt instruments

(4,538,039)

(3,355,932)

(27,755,832)

(3,355,932)

Change in fair value of share warrant obligations

(3,129,649)

(179,488)

(23,220,565)

(11,910,809)

Net loss

(33,945,985)

(19,852,573)

(74,908,660)

(47,223,604)

Other comprehensive loss

Item that will be subsequently
reclassified to net loss

Foreign currency translation
adjustment

2,844,623

(6,201,228)

(5,288,604)

1,161,192

Comprehensive loss for the period

(31,101,362)

(26,053,801)

(80,197,264)

(46,062,412)

Loss per share

Basic loss per share

(0.15)

(0.09)

(0.33)

(0.21)

Diluted loss per share

(0.15)

(0.09)

(0.33)

(0.21)

(Unaudited)

(Unaudited)

Three months ended

Nine months ended

Sep 30, 2024

Sep 30, 2023

Sep 30, 2024

Sep 30, 2023

$

$

$

$

OPERATING ACTIVITIES

Net loss

(33,945,985)

(19,852,573)

(74,908,660)

(47,223,604)

Non-cash items:

Depreciation and amortization

9,044,054

7,240,088

26,239,530

17,715,104

Share-based compensation

438,191

1,324,325

1,305,275

4,794,878

Accretion expense

3,064,258

2,275,078

9,138,265

2,275,078

Interest paid in kind on convertible debt instruments

2,504,005

—

7,454,040

—

Interest capitalized to long-term debt and other debts

559,764

—

559,764

—

Non-cash issuance of closing fee shares through 2023
Debentures Financing

—

623,336

—

623,336

Change in fair value of share warrant obligations

(3,129,649)

(179,488)

(23,220,565)

(11,910,809)

Change in fair value of conversion options on convertible debt
instruments

(4,538,039)

(3,355,932)

(27,755,832)

(3,355,932)

Unrealized foreign exchange gain (loss)

(2,784,007)

(91,679)

1,133,498

(1,323,027)

Net change in non-cash working capital items

49,925,334

(31,679,272)

48,486,016

(47,840,935)

Cash flows used in operating activities

21,137,926

(43,696,117)

(31,568,669)

(86,245,911)

INVESTING ACTIVITIES

Acquisition of property, plant and equipment

(1,436,487)

(22,394,406)

(6,824,835)

(67,790,857)

Addition to intangible assets

(4,604,831)

(16,057,154)

(27,040,490)

(56,513,413)

Proceeds from Mirabel battery building sale-leaseback

—

—

—

20,506,589

Government assistance related to property, plant and equipment and
intangible assets

2,765,526

1,690,284

7,164,621

7,441,552

Cash flows used in investing activities

(3,275,792)

(36,761,276)

(26,700,704)

(96,356,129)

FINANCING ACTIVITIES

Increase in long-term debt and other debts

17,067,371

36,875,044

73,669,446

106,099,764

Repayment of long-term debt and other debts

(9,475,665)

(103,985,678)

(13,846,612)

(126,481,649)

Payment of lease liabilities

(1,980,505)

(1,711,692)

(5,994,176)

(4,427,228)

Proceeds from issuance of shares through "at-the-market" equity
program, net of issuance costs

—

2,341,367

—

8,580,405

Proceeds from the issuance of units through the December 2022
Offering - Warrants

—

—

—

2,907,226

Proceeds from the issuance of units through the December 2022
Offering - Common Shares, net of issuance costs

—

—

—

4,175,836

Proceeds from the 2023 Debentures Financing, net of issuance costs

—

139,090,995

—

139,090,995

Cash flows from financing activities

5,611,201

72,610,036

53,828,658

129,945,349

Effect of exchange rate changes on cash held in foreign currency

811,892

(636,555)

835,717

58,773

Net increase (decrease) in cash

24,285,227

(8,483,912)

(3,604,998)

(52,597,918)

Cash, beginning of year

2,002,741

44,152,979

29,892,966

88,266,985

Cash, end of period

26,287,968

35,669,067

26,287,968

35,669,067

Other information on cash flows related to operating activities:

Interest paid

355,215

3,360,744

9,975,594

7,218,418

Interest paid under lease liabilities

1,313,555

1,227,560

3,824,020

3,354,611

Delivery Periods:

The Company's order book refers to products that have not yet been delivered but which are reasonably expected by management to be delivered within a time period that can be reasonably estimated and includes, in the case of charging stations, services that have not been completed but which are reasonably expected by management to be completed in connection with the delivery of the product.

Purchase orders and applications relating to vehicles of Lion generally provide for a time period during which the client expects delivery of the vehicles. Such period can vary from a specific date, a number or range of months after the issuance of the order or application, or a calendar year. The vehicles included in the vehicle order book as of November 6, 2024 provided for a delivery period, subject to the satisfaction of the conditions set forth in each order (which, in substantially all cases as further discussed herein, relate to the approval of governmental subsidies and grants), ranging from a few months to the end of the year ending December 31, 2028, with substantially all of such vehicles currently providing for deliveries before the end of the year ending December 31, 2025, which corresponds to the latest date by which claims are required to be made according to the current eligibility criteria of the ZETF, unless otherwise agreed by Infrastructure Canada. Delivery periods are disclosed from time to time by the Company when available in respect of material orders. Delivery periods should not be construed as a representation or a guarantee by the Company that the actual delivery time will take place as scheduled. Given the nature of the business and the products of the Company, the implied lead time for the production and delivery of a vehicle (which may be impacted, among other things, by supply chain challenges or changes in specifications as well as the Company's production cadence), the nature of certain customers of the Company (in many cases, fleet owners operating capital intensive operations which require financing and ongoing scheduling flexibility), and the fact that, as further described herein, substantially all of the vehicle orders included in the order book are subject to the granting of governmental subsidies and incentives, actual delivery times may be subject to important variations or delays. In addition, the workforce reduction and other cost-cutting measures implemented by the Company aimed at managing liquidity have negatively impacted production cadence and vehicle deliveries, and the Company expects that its current financial position and results of operations will continue to impact production cadence and vehicle deliveries as it continues to focus on managing its liquidity in order to meet its capital requirements and satisfy its obligations as they become due. Please refer to the section entitled "Ongoing Evaluation; Risk Factors" of the MD&A for the three and nine months ended September 30, 2024 regarding the potential impact of variations or delays in deliveries.

Pricing:

When the Company's order book is expressed as an amount of sales, such amount has been determined by management based on the current specifications or requirements of the applicable order, assumes no changes to such specifications or requirements and, in cases where the pricing of a product or service may vary in the future, represents management's reasonable estimate of the prospective pricing as of the time such estimate is reported. A small number of vehicles included in the order book have a pricing that remains subject to confirmation based on specifications and other options to be agreed upon in the future between the applicable client and the Company. For purposes of the determination of the order book and the value allocated to such orders, management has estimated the pricing based on its current price lists and certain other assumptions relating to specifications and requirements deemed reasonable in the circumstances.

Performance Metric:

The order book is intended as a supplemental measure of performance that is neither required by, nor presented in accordance with, IFRS, and is neither disclosed in nor derived from the financial statements of the Company. The Company believes that the disclosure of its order book provides an additional tool for investors to use in evaluating the Company's performance, market penetration for its products, and the cadence of capital expenditures and tooling.

The Company's computation of its order book is subject to the specific methodology described herein and may not be comparable to other similarly entitled measures computed by other companies, because all companies may not calculate their order book in the same fashion. Other companies also sometimes refer to or use "order backlog" or "order intake" as performance metrics, which are most likely not calculated on the same basis as the Company's order book. In addition, as explained above, the Company's presentation of the order book is calculated based on the orders and the applications made as of the time that the information is presented, and it is not based on the Company's assessment of future events and should not be construed as a representation by the Company that the vehicles and charging stations included in its order book will translate into actual sales.

Ongoing Evaluation; Risk Factors:

A portion of the vehicles or charging stations included in the Company's order book may be cancellable in certain circumstances (whether by reason of a delivery delay, unavailability of a program, subsidy or incentive or otherwise) within a certain period. Management reviews the composition of the order book every time it is reported in order to determine whether any orders should be removed from the order book. For purposes of such exercise, management identifies orders that have been or are reasonably likely to be cancelled and examines, among other things, whether conditions attaching to the order are reasonably likely to result in a cancellation of the order in future periods as well as any other available information deemed relevant, including ongoing dialogue with clients and governments. Such exercise may result from time to time in orders that have previously been included in the order book being removed even if they have not been formally canceled by the client. See the first paragraph of section 9.0 of the MD&A for the three and nine months ended September 30, 2024 entitled "Order Book" for a presentation of the variance in the total number of units and the total dollar value of the vehicles and charging stations included in the Company's order book since July 30, 2024, being the last date on which such information was presented.

The Company cannot guarantee that its order book will be realized in full, in a timely manner, or at all, or that, even if realized, revenues generated will result in profits or cash generation as expected, and any shortfall may be significant. The Company's conversion of its order book into actual sales is dependent on various factors, including those described below and under section 23.0 entitled "Risk Factors" of the Company's MD&A for the years ended December 31, 2023 and 2022. For instance, a customer may voluntarily or involuntarily default on an order, may become subject to bankruptcy or insolvency or cease its business operations. In addition, substantially all of the vehicle orders included in the order book are subject to conditions relating to the granting of governmental subsidies or incentives to Lion's customers or a specified timing for the delivery of the vehicle and, in a limited number of cases, the availability of certain specifications and options or the renewal of certain routes by governmental or school authorities. As a result, the Company's ability to convert its order book into actual sales is highly dependent on the granting and timing of governmental subsidies and incentives, most notably subsidies and incentives under the Quebec government's 2030 Plan for a Green Economy (the "Quebec Green Economy Plan"), Federal Infrastructure Canada's ZETF, the Government of Canada Incentives for Medium- and Heavy-Duty Zero-Emission Vehicles (iMHZEV) Program, the U.S. Environmental Protection Agency Clean School Bus Program and California's Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP). Approximately half of the vehicles included in the order book are contingent upon grants under the ZETF, in respect of which applications relating to vehicles of Lion have not yet been fully processed to date and December 31, 2025 is the latest date by which claims are required to be made according to the current eligibility criteria of the ZETF program, unless otherwise agreed by Infrastructure Canada. During the nine months ended September 30, 2024, only one application for 200 school buses under the program submitted by one of Lion's customers was approved by the ZETF which resulted in the delivery of 70 school buses by Lion. Lion continues to be actively engaged in discussions with the Canadian Federal government regarding the application of the program. If the above-mentioned delays persist, the orders relating to such vehicles may be cancelled, in whole or in part, or be subject to renegotiation.

Any termination, modification, delay or suspension of any governmental programs, subsidies and incentives, including, most importantly as of the date hereof, the ZETF, the Quebec Green Economy Plan or the EPA Program could result in delayed deliveries or the cancellation of all or any portion of orders, which, in turn, could have a material and adverse effect on the Company's business, results of operations or financial condition.

The Company's conversion of its order book into actual sales is also dependent on its ability to economically and timely manufacture its vehicles, at scale. The Company delivered 519 vehicles during the year ended December 31, 2022, 852 vehicles during the year ended December 31, 2023 and 386 vehicles during the nine months ended September 30, 2024. As of November 6, 2024, the Company's vehicle order book stood at 1,590 vehicles. The execution of the Company's growth strategy and the conversion of its order book, which currently provides for deliveries ranging from a few months to the end of the year ending December 31, 2028, will require that the Company increases its production cadence. While the Saint-Jerome facility and Joliet Facility currently have the infrastructure in place, including in terms of production lines and equipment, to achieve a production capacity of up to 2,500 vehicles and 2,500 buses, respectively, on an annual basis (see section 5.0 of the MD&A for the three and nine months ended September 30, 2024 entitled "Company Overview" and "Product Development and Manufacturing" under section 10.0 of the MD&A for the three and nine months ended September 30, 2024 entitled "Key Factors Affecting Lion's Performance" for further details), the Company's operations are currently being conducted on a lower scale and it has limited experience to date in high volume manufacturing. In addition, as of November 6, 2024, 96 units included in the order book, consisting of trucks and representing a combined total order value of approximately $35 million, related to products which had been developed and were being sold, but that were not currently in commercial production. See "Products and Solutions" in section 6.2 of the Company's Annual Information Form for the year ended December 31, 2023 entitled "Business of the Company". Any failure by the Company to successfully develop its vehicles, source its key components, and scale its manufacturing processes within projected costs and timelines could have a material adverse effect on its business, results of operations or financial condition. As a result, the Company's realization of its order book is subject to a number of risks and uncertainties, including the risks described in section 3.0 of the MD&A for the three and nine months ended September 30, 2024 entitled "Caution Regarding Forward-Looking Statements" and section 23.0 entitled "Risk Factors" of the Company's MD&A for the years ended December 31, 2023 and 2022, and there can be no assurance that the Company will be successful in converting all or a significant portion of its order book into actual sales.

Unaudited - Three months ended
September 30,

Unaudited - Nine months ended
September 30,

2024

2023

2024

2023

(in thousands)

(in thousands)

Revenue

$30,627

$80,348

$116,384

$193,067

Net loss

($33,946)

($19,853)

($74,909)

($47,224)

Restructuring costs⁽¹⁾

$780

$—

$2,163

$—

Finance costs

$13,024

$7,728

$35,934

$11,150

Depreciation and amortization

$9,044

$7,240

$26,240

$17,715

Share-based compensation⁽²⁾

$438

$1,324

$1,305

$4,795

Change in fair value of conversion options on
convertible debt instruments⁽³⁾

($4,538)

($3,356)

($27,756)

($3,356)

Change in fair value of share warrant
obligations⁽⁴⁾

($3,130)

($179)

($23,221)

($11,911)

Foreign exchange loss (gain)⁽⁵⁾

($1,617)

$2,861

$1,907

($104)

Transaction and other non-recurring expenses⁽⁶⁾

$416

$374

$917

$951

Adjusted EBITDA

($19,527)

($3,860)

($57,419)

($27,984)

(1)

Represents the restructuring costs (mainly severance costs) recognized in connection with workforce reduction and measures implemented by the Company (including the July 2024 Action Plan), as described in Note 12 to the condensed interim consolidated financial statements as at September 30, 2024 and for the three and nine months ended September 30, 2024, and 2023. See also "Workforce Reduction" in section 8.0 of the MD&A for the three and nine months ended entitled September 30, 2024 "Operational Highlights."

(2)

Represents non-cash expenses recognized in connection with the issuance of stock options, restricted share units, and deferred share units issued under Lion's omnibus incentive plan as described in Note 11 to the condensed interim consolidated financial statements as at September 30, 2024 and for the three and nine months ended September 30, 2024, and 2023.

(3)

Represents non-cash change in the fair value of the conversion options on convertible debt instruments as described in Note 9 to the condensed interim consolidated financial statements as at September 30, 2024 and for the three and nine months ended September 30, 2024, and 2023.

(4)

Represents non-cash change in the fair value of the share warrant obligations as described in Note 10 to the condensed interim consolidated financial statements as at September 30, 2024 and for the three and nine months ended September 30, 2024, and 2023.

(5)

Represents losses (gains) relating to foreign exchange translation.

(6)

For the three and nine months ended September 30, 2024, and 2023, represents non-recurring professional, legal and consulting fees.