6-K
Vision Marine Technologies Inc. (VMAR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TORULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of July 2021
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 our unaudited condensed interim financial statements for the nine month periods ended May 31, 2021 and May 31, 2020, and attached as Exhibit 99.2 is our Management’s Discussion and Analysis for the nine months ended May 31, 2021.
Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| VISION MARINE TECHNOLOGIES INC. | ||
|---|---|---|
| Date: July 14, 2021 | By: | /s/ Kulwant Sandher |
| --- | --- | --- |
| Name: | Kulwant Sandher | |
| Title: | Chief Financial Officer |
Exhibit 99.1
Vision Marine Technologies Inc.
CondensedInterim Financial Statements
Forthe Nine Month Periods Ended May 31, 2021 and May 31, 2020 (Unaudited)
**VisionMarine Technologies Inc.**Condensed Interim Financial StatementsFor the Nine Month Periods Ended May 31, 2021 and May 31, 2020
| Table<br> of Contents | |
|---|---|
| Condensed<br> Interim Statements of Financial Position | 3 |
| Condensed<br> Interim Statements of Changes in Equity (Deficiency) | 4 |
| Condensed<br> Interim Statements of Comprehensive Loss | 5 |
| Condensed<br> Interim Statements of Cash Flows | 6 |
| Notes<br> to Condensed Interim Financial Statements | 7<br> - 23 |
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| As at May 31, 2021 | As at August 31, 2020 | |||||
|---|---|---|---|---|---|---|
| Note | ||||||
| Assets | ||||||
| Current assets | ||||||
| Cash | ||||||
| Cash held in trust | ||||||
| Trade and other receivables | 4 | |||||
| Inventories | 5 | |||||
| Prepaid expenses | ||||||
| Grants and investment tax credits receivable | ||||||
| Share subscription receivable | 14, 15 | |||||
| Total current assets | ||||||
| Debentures | 6 | |||||
| Right-of-use assets | 7 | |||||
| Property and equipment | 8 | |||||
| Intangible assets | 9 | |||||
| Total non-current assets | ||||||
| Total assets | ||||||
| Liabilities | ||||||
| Current liabilities | ||||||
| Bank indebtedness | 10 | |||||
| Trade and other payables | 11, 14 | |||||
| Contract liabilities | 12 | |||||
| Advances from related parties | 14 | |||||
| Current portion of lease liabilities | 13 | |||||
| Current portion of long-term debt | ||||||
| Total current liabilities | ||||||
| Lease liabilities | 13 | |||||
| Long-term debt | ||||||
| Deferred income taxes | ||||||
| Total non-current liabilities | ||||||
| Total liabilities | ||||||
| Shareholders’ equity | ||||||
| Capital stock | 15 | |||||
| Contributed surplus | 16 | |||||
| Deficit | ) | ) | ||||
| Total shareholders’ equity | ||||||
| Total liabilities and shareholders’ equity |
All values are in US Dollars.
See accompanying notes
- 3 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| Capital stock | Capital stock to be issued | Contributed surplus | Deficit | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Units | ||||||||||
| Shareholders’ deficiency as at August 31, 2019 | 3,275,555 | ) | ) | |||||||
| Net and comprehensive loss | - | ) | ) | |||||||
| Share issuance, net of transaction costs of 91,800 | 15 | 699,731 | ||||||||
| Share-based payments | 16 | |||||||||
| Shareholders’ equity as at May 31, 2020 | 3,975,286 | ) | ||||||||
| Shareholders’ equity as at August 31, 2020 | 4,585,001 | ) | ||||||||
| Net and comprehensive loss | - | ) | ) | |||||||
| Share issuances | 15 | 595,687 | ||||||||
| Initial Public Offering, net of transaction costs of 3,328,687 | 15 | 2,760,000 | ||||||||
| Conversion of related party loans | 14, 15 | 69,650 | ||||||||
| Shares issued as consideration for the acquisition of intangible assets | 9, 15 | 30,000 | ||||||||
| Share-based payments | 16 | - | ||||||||
| Shareholders’ equity as at May 31, 2021 | 8,040,338 | ) |
All values are in US Dollars.
See accompanying notes
- 4 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| Three months ended May 31, 2021 | Three months ended May 31, 2020 | Nine months ended May 31, 2021 | Nine months ended May 31, 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Note | (except share<br> information) | (except share<br> information) | (except share<br> information) | (except share<br> information) | ||||||
| Revenues | 14, 17 | |||||||||
| Cost of sales | 5, 14 | |||||||||
| Gross profit | ||||||||||
| Expenses | ||||||||||
| Research and development | ||||||||||
| Office salaries and benefits | ||||||||||
| Rent | ||||||||||
| Share-based payments | 16 | |||||||||
| Professional fees | ||||||||||
| Travel and entertainment | ||||||||||
| Advertising and promotion | ||||||||||
| Office and general | ||||||||||
| Interest and bank charges | ||||||||||
| Interest on long-term debt and finance lease | ||||||||||
| Foreign exchange loss (gain) | ) | |||||||||
| Other income | ) | ) | ||||||||
| Other expense | ||||||||||
| Depreciation | 7, 8, 9 | |||||||||
| Loss before income taxes | ) | ) | ) | ) | ||||||
| Income taxes | ||||||||||
| Current | ||||||||||
| Deferred | ) | |||||||||
| ) | ||||||||||
| Net and comprehensive loss | ) | ) | ) | ) | ||||||
| Weighted average number of shares outstanding | ||||||||||
| Basic and diluted loss per share | ) | ) | ) | ) |
All values are in US Dollars.
See accompanying notes
- 5 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| Nine months ended May 31, 2021 | Nine months ended May 31, 2020 | |||||
|---|---|---|---|---|---|---|
| Note | ||||||
| Operating activities | ||||||
| Net and comprehensive loss | ) | ) | ||||
| Depreciation | 7, 8, 9 | |||||
| Share-based payments | 16 | |||||
| Shares issued for services | 15 | |||||
| Accretion on long-term debt and on lease liabilities | ||||||
| Deferred income taxes | ||||||
| ) | ) | |||||
| Net change in non-cash working capital items | ||||||
| Trade and other receivables | ) | ) | ||||
| Inventories | ) | ) | ||||
| Grants and investment tax credits receivable | ||||||
| Prepaid expenses | ) | ) | ||||
| Trade and other payables | ) | |||||
| Contract liabilities | ||||||
| ) | ) | |||||
| Cash used by operating activities | ) | ) | ||||
| Investing activities | ||||||
| Advances to related parties | ||||||
| Debentures subscribed | 6 | ) | ||||
| Additions to property and equipment | 8 | ) | ) | |||
| Additions to intangible assets | 9 | ) | ||||
| Cash used in investing activities | ) | ) | ||||
| Financing activities | ||||||
| Change in bank indebtedness | ) | ) | ||||
| Increase in long-term debt | ||||||
| Repayment of long-term debt | ) | ) | ||||
| Repayment of lease liability | ) | ) | ||||
| Issuance of shares | 15 | |||||
| Initial public offering | ||||||
| Advances from related parties | ) | |||||
| Cash provided by investing activities | ||||||
| Increase in cash | ||||||
| Cash – beginning of period | ||||||
| Cash – end of period | ||||||
| Cash | ||||||
| Cash | ||||||
| Cash held in trust | ||||||
| Additional cash flows information | 21 |
All values are in US Dollars.
See accompanying notes
- 6 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 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 electric boats. On November 27, 2020, the Company completed its initial public offering of an aggregate of 2,760,000 Voting Common Shares of the Company at a price of U.S.$10.00 ($13.22) per share for gross proceeds of U.S.$27,600,000 ($36,487,200) (note 15). The Voting Common Shares of the Corporation are listed under the trading symbol “VMAR” on the Nasdaq.
The head office and registered office of the Company is located at 730 Curé-Boivin boulevard, Boisbriand, Quebec, J7G 2A7.
| 2. | Basis of preparation |
|---|
Compliance with IFRS
These condensed interim financial statements are for the nine months period ended May 31, 2021 and have been prepared in accordance with IAS 34: Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with IFRS and should be read in conjunction with the financial statements for the year ended August 31, 2020.
The condensed interim financial statements were authorized for issued by the Board of Directors on July 14, 2021.
Basis of measurement
These condensed interim financial statements are stated in Canadian dollars, which is also the Company’s functional currency, and were prepared on the historical cost basis.
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. Except for the new estimate related to the useful life of intangible assets, areas where judgments, estimates and assumptions are considered significant to the condensed interim financial statements remain unchanged to the 2020 annual financial statements.
| 3. | Significant accounting policies |
|---|
The Company has applied the same accounting policies and methods of computation in its condensed interim financial statements as in its 2020 annual financial statements except for new accounting policies being applied for intangible assets.
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; |
| --- | --- |
- 7 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 3. | Significant accounting policies(cont’d) |
|---|
Revenue recognition (cont’d)
| - | 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 standalone selling price of each distinct<br>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<br>goods or services promised. |
| --- | --- |
The Company enters into contracts with customers, as well as distributor agreements with specific distributors for the sale of boats.
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 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.
Sales 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.
Intangible assets
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. When awarded with government grants and income tax credits, the Company recognizes the income either in net earnings, netted with the related expenses, or as a reduction of the cost, when related with capitalized development expenditure. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortization and any accumulated impairment losses.
Other intangible assets, including intellectual property and software, that have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses.
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:
- 8 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 3. | Significant accounting policies (cont’d) |
|---|
Intangible assets (cont’d)
– Intellectual property: 10 years
– Software: 7 years
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
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. 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.
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.
- 9 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 3. | Significant accounting policies (cont’d) |
|---|
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”).
Amortized cost
The Company classifies trade and other receivables, trade and other payables, 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.
- 10 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 3. | Significant accounting policies (cont’d) |
|---|
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. Share-based payments 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 have been issued to non-employees and some or all of the services received by the Company cannot be specifically identified, the options are measured at the fair value of the options issued.
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 payments 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.
| 4. | Trade and other receivables | |
|---|---|---|
| As at May 31, 2021 | As at August 31, 2020 | |
| --- | --- | --- |
| Trade receivable | ||
| Sales taxes receivable | ||
| Other receivable | ||
All values are in US Dollars.
The Company applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are grouped based on similar credit risk and aging. The expected loss rates are based on the Company’s historical credit losses experienced over the three-year period prior to the period end. The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors affecting the Company’s customers.
The lifetime expected loss provision for trade receivables are $Nil (2020 - $Nil).
As at May 31, 2021, trade receivables of $Nil (2020 – $Nil) were past due but not impaired. The aging analysis of these receivables is as follows:
| As at May 31, 2021 | As at August 31, 2020 | |
|---|---|---|
| 0 - 30 | ||
| 31 - 60 | ||
| 61 - 90 | ||
All values are in US Dollars.
- 11 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 5. | Inventories | |
|---|---|---|
| As at May 31, 2021 | As at August 31, 2020 | |
| --- | --- | --- |
| Raw materials | ||
| Work-in-process | ||
| Finished goods | ||
All values are in US Dollars.
For the three months ended and the nine months ended May 31, 2021, inventories recognized as an expense amounted to $604,797 and $984,233, respectively (May 31, 2020 - $374,606 and $560,854, respectively).
For the three months ended and the nine months ended May 31, 2021, cost of sales includes depreciation of $41,399 and $160,925, respectively (May 31, 2020 - $43,252 and $125,267, respectively).
| 6. | 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 three months ended and the nine months ended May 31, 2021, the Company recorded $Nil and $Nil respectively in profit and loss for change in the fair value of the Debentures.
- 12 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 7. | Right-of-use assets | ||||||
|---|---|---|---|---|---|---|---|
| Premises | Computer software | Rolling stock | Total | ||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Cost | |||||||
| Balance at August 31, 2019 | |||||||
| Impact of adoption of IFRS 16 | |||||||
| Additions | |||||||
| Balance at August 31, 2020 | |||||||
| Additions | |||||||
| Disposals | ) | ) | |||||
| Transfer to intangible assets | ) | ) | |||||
| Balance at May 31, 2021 | |||||||
| Accumulated depreciation | |||||||
| Balance at August 31, 2019 | |||||||
| Impact of adoption of IFRS 16 | |||||||
| Depreciation | |||||||
| Balance at August 31, 2020 | |||||||
| Depreciation | |||||||
| Disposal | ) | ) | |||||
| Transfer to intangible assets | ) | ) | |||||
| Balance at May 31, 2021 | |||||||
| Net carrying amount | |||||||
| As at August 31, 2020 | |||||||
| As at May 31, 2021 |
All values are in US Dollars.
During the nine months period ended May 31, 2021, the Company paid in full the lease liability related with the 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.
- 13 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 8. | Property and equipment | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Machinery<br> and<br> equipment | Rolling stock | Computer<br> equipment | Moulds | Leasehold<br> improvements | Total | ||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Cost | |||||||||
| Balance at August 31, 2019 | |||||||||
| Impact of adoption of IFRS 16 | ) | ) | |||||||
| Additions | |||||||||
| Balance at August 31, 2020 | |||||||||
| Additions | |||||||||
| Disposals | ) | ) | |||||||
| Balance at May 31, 2021 | |||||||||
| Accumulated depreciation | |||||||||
| Balance at August 31, 2019 | |||||||||
| Impact of adoption of IFRS 16 | ) | ) | |||||||
| Depreciation | |||||||||
| Balance at August 31, 2020 | |||||||||
| Depreciation | |||||||||
| Disposals | ) | ) | |||||||
| Balance at May 31, 2021 | |||||||||
| Net carrying amount | |||||||||
| As at August 31, 2020 | |||||||||
| As at May 31, 2021 |
All values are in US Dollars.
- 14 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 9. | Intangible assets | ||
|---|---|---|---|
| Intellectual<br> property | Software | Total | |
| --- | --- | --- | --- |
| Cost | |||
| Balance at August 31, 2020 | |||
| Transfer from right-of-use assets | |||
| Additions | |||
| Balance at May 31, 2021 | |||
| Accumulated depreciation | |||
| Balance at August 31, 2020 | |||
| Depreciation | |||
| Balance at May 31, 2021 | |||
| Net carrying amount | |||
| As at August 31, 2020 | |||
| As at May 31, 2021 |
All values are in US Dollars.
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 15) at a price of U.S. $15.07 (approximately $19.13) for total consideration of $1,035,070.
During the nine months period ended May 31, 2021, the Company paid in full the lease liability related with the 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.
| 10. | Credit facility |
|---|
The Company has an authorized line of credit of $250,000 and a non-revolving lease facility of $100,000, 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.
| 11. | Trade payable | |
|---|---|---|
| As at May 31, 2021 | As at August 31, 2020 | |
| --- | --- | --- |
| Trade payable | ||
| Government remittances | ||
| Salaries and vacation payable | ||
All values are in US Dollars.
- 15 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 12. | Contract liabilities | |||
|---|---|---|---|---|
| As at May 31, 2021 | As at August 31, 2020 | |||
| --- | --- | --- | --- | --- |
| Opening balance | ||||
| Payments received in advance | ||||
| Payments reimbursed | ) | |||
| Transferred to revenues | ) | ) | ||
| Closing balance |
All values are in US Dollars.
| 13. | Lease liabilities | |
|---|---|---|
| --- | --- | --- |
| Balance at August 31, 2019 | ||
| Impact of adoption of IFRS 16 | ||
| Additions | ||
| Repayment | ) | |
| Negative variable lease payments | ) | |
| Interest on lease liabilities | ||
| Balance at August 31, 2020 | ||
| Additions | ||
| Repayment | ) | |
| Interest on lease liabilities | ||
| Lease termination | ) | |
| Balance at May 31, 2021 | ||
| Current | ||
| Non-current |
All values are in US Dollars.
The lease liabilities have a weighted average interest rate of 4.4% (2020 – 5.4%).
The undiscounted minimum annual payments of the Company’s leases are approximately as follows:
| Less than one year | |
| One year to five years | |
All values are in US Dollars.
- 16 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 14. | Related party transactions |
|---|
Company controlled by the majority shareholder
California Electric Boat Company Inc.
Companies related through common ownership
Electric Boat Rental Ltd. (note 22)
7858078 Canada Inc
Hurricane Corporate Services Ltd.
Company jointly controlled by the majority shareholder
9335-1427 Quebec Inc.
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)
The following table summarizes the Company’s related party transactions for the year:
| Three months ended | Nine months ended | |||
|---|---|---|---|---|
| May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
| Revenues | ||||
| Sale of boats | ||||
| Electric Boat Rental Ltd. | ||||
| Sales of parts and boat maintenance | ||||
| Electric Boat Rental Ltd. | ||||
| Expenses | ||||
| Cost of sales | ||||
| Electric Boat Rental Ltd. | ||||
| 9335-1427 Quebec Inc. | ||||
| Travel and entertainment | ||||
| Electric Boat Rental Ltd. | ||||
| Advertising and promotion | ||||
| Electric Boat Rental Ltd. |
All values are in US Dollars.
The Company leases its Boisbriand premises from California Electric Boat Company Inc. (note 7).
- 17 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 14. | Related party transactions (cont’d) |
|---|
At the end of the period, the amounts due to and from related parties are as follows:
| As at May 31, 2021 | As at August 31, 2020 | |
|---|---|---|
| Share subscription receivable from shareholders or indirect shareholders | ||
| 9335-1427 Quebec Inc. | ||
| Alexandre Mongeon | ||
| Due to shareholders and included in salaries and vacation payable | ||
| Alexandre Mongeon | ||
| Patrick Bobby | ||
| Robert Ghetti | ||
| Hurricane Corporate Services Ltd. | ||
| Current advances from shareholders or indirect shareholders | ||
| 9335-1427 Quebec Inc. | ||
| Alexandre Mongeon | ||
| Patrick Bobby | ||
| Robert Ghetti | ||
| Immobilier R. Ghetti Inc. | ||
| Société de Placement Robert Ghetti Inc. | ||
| Gestion Toyma Inc. | ||
All values are in US Dollars.
Advances to and from related parties are non-interest bearing and have no specified terms of repayment. On December 22, 2020, the holders of the advances from shareholders and indirect shareholders and the Company agreed that the advances shall be converted to Voting Common Shares of the Company at a conversion price equal to the Voting Common Share offering price in the Initial Public Offering (note 15).
| 15. | Capital stock |
|---|
Authorized –
Voting Common Shares, voting and participating
| As at May 31, 2021 | As at August 31, 2020 | |
|---|---|---|
| Issued - | ||
| 8,040,338 (August 31, 2020 – 4,585,001) Voting Common Shares |
All values are in US Dollars.
- 18 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 15. | Capital stock (cont’d) |
|---|
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 loss per share for all periods presented.
Subscription and issuance of Voting Common Shares
On January 20, 2020, the Board of Directors authorized the issuance of 76,577 Voting Common Shares for total consideration of $212,500.
On March 4, 2020, the Board of Directors authorized the issuance of 36,036 Voting Common Shares for total consideration of $100,000.
On March 5, 2020, the Board of Directors authorized the issuance of 86,486 Voting Common Shares, for total consideration of $320,000.
On April 10, 2020, the Board of Directors authorized the issuance of 540,540 Voting Common Shares to a third party in exchange for marketing services to be provided at a later date. Subsequently, on July 6, 2020, the contract and the related shares were cancelled, and no services were provided to the Company.
On April 10, 2020, the Board of Directors authorized the issuance of 31,982 Voting Common Shares, for services provided to the Company. The services were valued at $118,333 of which $91,800 is in connection with transaction costs directly attributable to the issuance of Voting Common Shares and $26,533 is included in professional fees.
In July 2020, the Board of Directors authorized the issuance of 357,973 Voting Common Shares, for total consideration of $1,324,500.
In addition, the Board of Directors authorized the issuance of 39,189 Voting Common Shares in connection with transaction costs amounting to $145,000 directly attributable to the issuance of Voting Common Shares.
The Company signed an agreement with the Chief Financial Officer (“CFO”) of the Company to grant a company controlled by the CFO Voting Common Shares in exchange for services rendered by the CFO. The CFO will receive 41,178 Voting Common Shares of the Company for every $500,000 tranche of qualified equity financing in which he directly assisted to raise up to a maximum of 205,795 Voting Common Shares if $2,500,000 is raised.
In July 2020, the Board of Directors authorized the issuance of 205,795 Voting Common Shares to a company controlled by the CFO of the Company in connection with the share-based compensation agreement. The Company has recorded a share-based payments expense in the amount of $572,110 as a result of the issuance of the Voting Common Shares.
In August 2020, the Board of Directors authorized the issuance of 6,757 Voting Common Shares for total consideration of $25,000.
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.
- 19 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 15. | Capital stock (cont’d) Subscription and issuance of Voting Common Shares (cont’d) |
|---|
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). Also netted against the proceeds from the Offering are professional fees amounting to $271,726 that were previously recorded in prepaid expenses.
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 (note 14).
On December 22, 2020 the Board of Directors authorized the issuance of 3,039 Voting Common Shares for a total consideration of $39,200 which remains receivable on May 31, 2021 and is presented in the advances to related parties (note 14).
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 intangible assets (note 9).
| 16. | 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 1,657,026 stock options at exercise prices varying between $2.78 and $16.53 per share to directors, officers, employees and consultants of the Company. The stock options will expire 5 to 10 years from their respective grant dates.
For each grant, the Company recognizes share-based payments expense over the vesting period of the options based on the fair value at the date of grant using the Black-Scholes valuation model. The share-based payments expense recognized for the three months period and the nine months period ended May 31, 2021 amount to $1,778,171 and $5,179,701, respectively (May 31, 2020 – $105,142 and $105,142 respectively). 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.
- 20 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 16. | Share-based payments (cont’d) |
|---|
Stock options (cont’d)
| Grant date | Exercise price | Market price | Expected<br><br> volatility % | Risk-free<br><br> interest rate % | Expected life<br><br> (years) | |||
|---|---|---|---|---|---|---|---|---|
| May 27, 2020 | 84 | 0.4 | 5 | |||||
| May 27, 2020 | 84 | 0.4 | 5 | |||||
| October 23, 2020 | 97 | 0.4 | 5 | |||||
| November 24, 2020 | 101 | 0.5 | 5 | |||||
| February 23, 2021 | 103 | 0.7 | 5 | |||||
| May 14, 2021 | 105 | 0.9 | 5 |
All values are in US Dollars.
The following tables summarize information regarding the option grants outstanding as at May 31, 2021:
| Number of<br><br> options | Weighted average<br> exercise price | |||
|---|---|---|---|---|
| Balance as at August 31, 2019 | - | |||
| Granted | 516,216 | |||
| Balance as at August 31, 2020 | 516,216 | |||
| Granted | 1,140,810 | |||
| Forfeited | (5,405 | ) | ||
| Balance as at May 31, 2021 | 1,651,621 |
All values are in US Dollars.
| Exercise price | Number of options<br><br> outstanding | Weighted average<br> grant date fair value | Weighted average<br><br> remaining contractual<br><br> life (years) | Exercisable<br><br> options | |||
|---|---|---|---|---|---|---|---|
| 162,162 | 4.00 | 162,162 | |||||
| 348,649 | 4.00 | 309,121 | |||||
| 10,810 | 4.25 | 5,405 | |||||
| 440,000 | 9.25 | 220,000 | |||||
| 190,000 | 4.75 | - | |||||
| 500,000 | 5.00 | 41,667 |
All values are in US Dollars.
| 17. | Revenues | |||
|---|---|---|---|---|
| Three months ended | Nine months ended | |||
| --- | --- | --- | --- | --- |
| May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
| Sale of boats | ||||
| Sales of parts and boat maintenance | ||||
| Other | ||||
All values are in US Dollars.
- 21 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 18. | Remuneration of directors and key management of the Company | |||
|---|---|---|---|---|
| Three months ended | Nine months ended | |||
| --- | --- | --- | --- | --- |
| May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
| Wages | ||||
| Share-based payments – Stock options | ||||
All values are in US Dollars.
| 19. | 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 <br> warrants <br> outstanding | Weighted average <br> remaining contractual <br> life (years) | ||
|---|---|---|---|---|---|
| November 23, 2020 | 151,800 | 4.50 |
All values are in US Dollars.
| 20. | 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 to related parties, trade and other payables and advances from related parties 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.
- 22 -
**VisionMarine Technologies Inc.**Condensed Interim Statements of Financial Position(Unaudited)
| 21. | Additional cash flows information | |
|---|---|---|
| Financing and investing activities not involving cash: | Nine months ended May 31, 2021 | Nine months ended May 31, 2020 |
| --- | --- | --- |
| Advances from related parties converted to shares | ||
| Unpaid share subscription | ||
| Right-of-use assets transferred to intangibles, net of accumulated depreciation | ||
| Additions to right-of-use assets | ||
| Lease termination | ||
| Shares issued as consideration for the acquisition of intangible assets (note 9) | ||
| Transaction costs for share issuance transferred from prepaids |
All values are in US Dollars.
| 22. | The<br> novel coronavirus (“COVID-19”) global pandemic continues throughout the world.<br> This pandemic has caused supply-chain issues for the Company and as a result the Company<br> has not been able to realize on orders received in a timely manner. The full extent of the<br> impact of COVID-19 on the Company’s business, operations and financial results will<br> depend on evolving factors that the Company cannot accurately predict. |
|---|---|
| 23. | Subsequent events |
| --- | --- |
On June 3, 2021, the Company acquired all of the outstanding shares of Electric Boat Rental Ltd. (“EBR”), 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. Before the acquisition, the Company and EBR were related through common ownership.
EBR was acquired for cash consideration of U.S.$4,000,000 ($4,846,163) and equity consideration of U.S.$2,000,000 ($2,423,081) representing 284,495 shares at U.S.$7.03 (approximately $8.52) per share.
- 23 -
Exhibit 99.2
VISION MARINE TECHNOLOGIES INC.
Form 51-102F1 Management's Discussion &Analysis
For the Nine months ended May 31, 2021
| 1.1.1 | Date July 14, 2021 |
|---|
Introduction
The following management's discussion and analysis, prepared as of July 14, 2021, is a review of operations, current financial position and outlook for Vision Marine Technologies Inc., (the "Company" or “Vision”) and should be read in conjunction with the Company's financial statements for the nine months ended May 31, 2021 and audited financial statements for the year ended August 31, 2020 and the notes thereto. Amounts are reported in Canadian dollars based upon financial statements prepared in accordance with IAS 34: Interim Financial Reporting.
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.
1.1.5 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.
Performance Summary
The following is a summary of significant events and transactions that occurred during the nine months ended May 31, 2021:
On November 23, 2020, the Company announced the pricing of its initial public offering of 2,400,000 common shares at a price of US$10.00 per share for gross proceeds of US$24,000,000, before deducting underwriting discounts, commissions and offering expenses. Vision has granted the underwriter a 45-day option to purchase up to an additional 360,000 common shares at the initial public offering price, less discounts and commissions, to cover over-allotments. The common shares are listed on the Nasdaq Capital Market under the ticker symbol “VMAR” and began trading on November 24, 2020. The Offering closed on November 27, 2020, subject to closing conditions. ThinkEquity, a division of Fordham Financial Management, Inc., acted as sole book running manager for the offering.
On November 27, 2020, the Company announced the closing of its initial public offering of 2,760,000 common shares at a price of US$10.00 per share, which includes 360,000 shares sold upon full exercise of the underwriter’s option to purchase additional common shares. The gross proceeds from the offering, including the exercise of the over-allotment option, were US$27,600,000, before deducting underwriting discounts, commissions and offering expenses.
On December 2, 2020, the Company announced that the Co-Founder and Chief Executive Officer, Alex Mongeon, rang the virtual Nasdaq Closing Bell to celebrate the Company’s listing to the Nasdaq Capital Markets.
On January 28, 2021, the Company announced that it signed a purchase order with Boat Fix, Inc. (“Boat Fix”), a leading boat maintenance and tracking services provider, to outfit its electric powerboat fleet with Boat Fix’s customized telematics devices as well as a monitoring software application and customer support and services.
On February 23, 2021, the Company announced that it acquired MAC Engineering's intellectual property relating to marine outboard electronic systems. MAC Engineering, the European distributor of the UQM brand, and one of the global leaders in medium and high-power electric motors in the USA, is the highly regarded designer of propulsion and battery management systems and components for electric vehicles. Under the terms of the transaction, Vision Marine has acquired all of MAC’s electric technological components, know-how and software relating to the manufacture, production, use, sale, rental and distribution of marine outboard electronic systems. Vision Marine is also pleased to announce that Xavier Montagne, Chief Executive Officer of MAC Engineering, will be joining Vision Marine as its Chief Technology Officer.
On May 19, 2021, The Limestone^®^ Boat Company ("Limestone"), announced a landmark partnership with Vision Marine Technologies to produce its proprietary E-Motion electric propulsion powertrain option for select Limestone^®^ and Aquasport brand models. The Company subscribed for and purchased 3,400 senior unsecured subordinated convertible debentures of 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.
On May 25, 2021, the Company is pleased to announce that Alan D. Gaines has been appointed to the Board of Directors and will serve as Chairman of the Board, replacing Mr. Robert Ghetti, who has resigned from Vision’s board to devote more time to other business interests.
On June 08, 2021, the Company, announced the acquisition of EB Rental Ltd. (“EBR”) consisting of cash and stock. EBR is an electric boat rental company operating at Lido Marina Village in Newport Beach, California. EBR’s business is a high margin, profitable and rapidly growing electric rental boat operation which will provide Vision Marine the unique opportunity to showcase its disruptive electric technology and grow its brand recognition.
2
Financings
During the nine months ended May 31, 2021, the Company issued the following shares and debt financing.
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 US$10.00 ($13.22) per share for proceeds of US$25,287,624 ($33,430,239) net of a US$1,932,000 ($2,554,104) cash commission paid to the underwriter and professional fees in connection with the Offering amounting to US$380,376 ($502,857). Also netted against the proceeds from the Offering are professional fees amounting to $271,726 that were previously recorded in prepaid expenses.
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 3,039 Voting Common Shares for a total consideration of $39,200 which remains receivable on May 31, 2021 and is presented in the advances to related parites.
On February 16, 2021, the Company issued 30,000 Voting Common Shares at a price of US $15.07 (approximately $19.13) as part of the consideration paid for the for the acquisition of intangible assets.
Incentive Stock Options
During the nine months ended May 31, 2021, the Company granted the following stock options; On October 23, 2020, the Company granted 10,810 options at an exercise price of $3.70 per share; on November 24, 2020, the Company granted 440,000 stock options at an exercise price of $16.53 per share; on February 23, 2021, 190,000 stock options at an exercise price of $15.76 per share to directors, officers, employees and consultants of the Company and on May 14, 2021, the Company granted 500,000 stock options at an exercise price of $8.99 per shares to a director of the Company. The stock options will expire between 5 and 10 years from the grant date.
3
| 1.2 | Selected Annual Financial Information |
|---|
| Year Ended August 31, 2020 | Year Ended August 31, 2019 | |
|---|---|---|
| Revenue | 2,417,173 | 2,869,377 |
| Gross Profit | 604,390 | 1,285,364 |
| Expenses | (2,858,613 | (987,911 |
| Earnings/(Loss) before Income Tax | (2,254,223 | 297,453 |
| Income Taxes | (21,309 | (64,387 |
| Net and comprehensive income/(loss) | (2,275,532 | 233,066 |
| Basic & Diluted Income/(Loss) per Share | (0.56 | 0.06 |
| Balance Sheet | ||
| Working Capital | 533,760 | (92,765 |
| Total Assets | 3,631,625 | 1,914,562 |
| Total Long Term Liabilities | 932,877 | 587,330 |
All values are in US Dollars.
| 1.3 | Results of Operations |
|---|
Three months ended May 31, 2021
Revenue for the three months ended May 31, 2021 was $770,770 (2020: $853,602), realising a 10% reduction from the three months ended May 31, 2020. The decrease was due to the impact of COVID-19 and challenges in the Company’s supply chain. Gross margin for the three months ended May 31, 2021, was $165,973 (2020: $478,996), realising a 65% decrease from the three months ended May 31, 2020. The decrease in gross margin was caused by an increase in amortisation of right of use assets, increase in labour costs due to the addition of production staff and an increase in labour costs, and increases in raw material and component costs caused by the global shortage and demand of these items.
During the three months ended May 31, 2021, the Company incurred a net comprehensive loss of $4,808,061 compared to $56,909 net comprehensive loss for the corresponding period in 2020. The largest expense items that resulted in an increase in net comprehensive loss for the three months ended May 31, 2021 were;
| • | Research and development costs for the three months ended May 31, 2021 increased to $311,626 (2020:<br> $13,314) caused by the Company’s installation and testing of its E-Motion powertrains on its own boats and boats supplied by<br> other manufacturers. |
|---|---|
| • | Office salaries and benefits for the three months ended May 31, 2021 increased to $544,107 (2020:<br> $74,879), caused by an increase in salaries to senior management, employees and the addition of new employees. |
| --- | --- |
4
| • | Professional fees for the three months ended May 31, 2021 increased to $672,114 (2020: $181,117),<br> caused by an increase in legal and accounting fees related corporate matters and increases in fees paid for consultants involved in<br> investor and public relations |
|---|---|
| • | Office and general expenses for the three months ended May 31, 2021, increased to $242,468 (2020:<br> $22,812), caused by the cost of directors and officers liability insurance and the fees to the Nasdaq. |
| --- | --- |
| • | Foreign exchange losses for the three months ended May 31, 2021, increased to $844,800 (2020:<br> $18,019) as the Canadian dollar strengthened against the US Dollar during the period due to the addition of US dollars from the<br> initial public offering. |
| --- | --- |
| • | Share-based payments for the three months ended May 31, 2021 increased to $1,817,414 (2020:<br> $105,142), as the Company granted 500,000 options priced at $8.99 to a director during the three months ended May 31, 2021. In<br> addition, the Company’s previous stock option grants would increase the share-based payment expense. The Company uses the<br> Black-Scholes method of valuing stock options. |
| --- | --- |
| • | Advertising and promotion expenses for the three months to May 31, 2021 increased to $414,568 (2020:<br> $42,732), as the Company launched its global marketing campaign for its E-Motion Powertrains. |
| --- | --- |
The operating expenses for the three months ended May 31, 2021 increased to $5,000,409 (2020: $535,905); the increase in operating loss was caused by the aforementioned expenses for the year.
Nine months ended May 31, 2021
Revenue for the nine months ended May 31, 2021 was $1,234,492 (2020: $1,289,795), realising a 4% decrease from the nine months ended May 31, 2020. The decrease was due to a decrease in parts and maintenance revenue. Gross margin for the nine months ended May 31, 2021, was $250,259 (2020: $728,941), realising a 66% decrease from the nine months ended May 31, 2020. The decrease in gross margin was caused by an increase in amortisation of right of use assets, increase in labour costs due to the addition of production staff and increases in labour rates; increases in raw material and component costs caused by the global shortage and demand for these items.
During the nine months ended May 31, 2021, the Company incurred a net comprehensive loss of $11,564,616 compared to $534,706 net comprehensive loss for the corresponding period in 2020. The largest expense items that resulted in an increase in net comprehensive loss for the nine months ended May 31, 2021 were;
| • | Research and development costs for the nine months ended May 31, 2021 increased to $378,626 (2020:<br> $29,699), caused by the Company’s installation and testing of its E-Motion powertrains on its own boats and boats supplied by<br> other manufacturers. |
|---|
5
| • | Office salaries and benefits for the nine months ended May 31, 2021 increased to $928,980 (2020:<br> $242,482), caused by an increase in salaries to senior management, employees and the addition of new employees. |
|---|---|
| • | Professional fees for the nine months ended May 31, 2021 increased to $1,417,372 (2020: $362,012),<br> caused by an increase in legal and accounting fees related to the completion of the Company’s registration statement with<br> regards to its initial public offering and corporate matters with additional fees paid for consultants involved in investor and<br> public relations. |
| --- | --- |
| • | Office and general expenses for the nine months ended May 31, 2021, increased to $770,446 (2020:<br> $82,414), caused by the cost of directors and officers liability insurance and the fees to the Nasdaq. |
| --- | --- |
| • | Foreign exchange losses for the nine months ended May 31, 2021, increased to $1,897,435 (2020:<br> $(17,241)) as the Canadian dollar strengthened against the US Dollar during the period due to the addition of US dollars from the<br> initial public offering. |
| --- | --- |
| • | Share-based payments for the nine months ended May 31, 2021 increased to $5,218,944 (2020:<br> $105,142), as the Company granted 1,140,810 options priced between $3.70 and $16.53 to directors, officers and consultants. The<br> Company uses the Black-Scholes method of valuing stock options. |
| --- | --- |
| • | Advertising and promotion expenses for the nine months to May 31, 2021 increased to $544,481 (2020:<br> $198,331), as the Company launched its global marketing campaign for its E-Motion Powertrains. |
| --- | --- |
The operating expenses for the nine months ended May 31, 2021 increased to $11,437,417 (2020: $1,236,647); the increase in operating loss was caused by the aforementioned expenses for the year.
The Company incurred an increase in income taxes for the nine months ended May 31, 2021, of $377,459 (2019: $nil), caused by an increase in deferred taxes.
1.4 Liquidity and Capital Resources
The Company’s operations consist of the designing, developing and manufacturing of electric outboard powertrain systems and electric boats. 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. There is no assurance that equity funding will be possible at the times required by the Company. If no funds are can be raised and sales of its outboard powertrain systems and electric boats do not produce sufficient net cash flow, then the Company may require a significant curtailing of operations to ensure its survival.
6
The financial statements have been prepared on a going concern basis which assumes that the Company will be able to realise its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company incurred a net and comprehensive loss of $11,564,616 during the nine months ended May 31, 2021 and has a cash balance and a working capital surplus of $23,886,416 and $26,412,164, respectively, as at May 31, 2021. 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.
As of July 14, 2021, the Company had 8,040,338 issued and outstanding shares and on a fully diluted basis.
The Company had $26,412,164, of working capital surplus as at May 31, 2021 compared to $533,760 working capital surplus as at August 31, 2020. The increase in working capital surplus resulted from the cash used in operations of $7,880,817, (2020: $308,692); cash used in investing activities of $4,113,490 (2020: $903) resulting from the additions to property and equipment and an investment in debentures from Limestone; which was offset by financing activities generating cash of $34,733,902, (2020: $567,339), due to a decrease in long term debt of $nil (2019: $280,000), and the issuance of capital stock realising net proceeds of $35,455,239 (2020:$ 674,575).
1.7 Capital Resources
As at May 31, 2021, the Company had cash and cash equivalents of $23,886,416 (August 31, 2020: $1,296,756). The Company successfully listed its common shares on the Nasdaq through an initial public offering.
As of the date of this MD&A, the Company has no outstanding commitments, other than rent and lease commitments. The Company has not pledged its assets as security for loans, and is not subject to any debt covenants.
1.8 Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
1.9 Transactions with Related Parties
Remuneration of directors and key management of the Company
| Three months ended | |||||
|---|---|---|---|---|---|
| May 31,<br> 2021 | |||||
| $ | |||||
| Wages | 357,000 | 50,000 | 809,000 | 159,000 | |
| Share-based payments – Stock options | 1,404,000 | - | 4,537,000 | - | |
| 1,761,000 | 50,000 | 5,346,000 | 159,000 |
All values are in US Dollars.
7
Related party transactions
Company controlled by the majority shareholderCalifornia Electric Boat Company Inc.
Companies related through common ownershipElectric Boat Rental Ltd.
7858078 Canada Inc
Hurricane Corporate Services Ltd.
Company jointly controlled by the majority shareholder9335-1427 Quebec Inc.
Ultimate founder shareholders and their individually controlledentitiesAlexandre Mongeon
Patrick Bobby
Robert Ghetti
Immobilier R. Ghetti Inc.
Société de Placement Robert Ghetti Inc.
Founder shareholdersGestion Toyma Inc.
Entreprises Claude Beaulac Inc. (former shareholder)
Gestion Moka Inc. (former shareholder)
The following table summarizes the Company’s related partytransactions during the year:
8
| Three months ended | Nine months ended | |||
|---|---|---|---|---|
| May 31, 2021 | May 31, 2020 | May 31, 2021 | May 31, 2020 | |
| Revenues | ||||
| Sale of boats | ||||
| Electric Boat Rental Ltd. | ||||
| Sales of parts and boat maintenance | ||||
| Electric Boat Rental Ltd. | ||||
| Expenses | ||||
| Cost of sales | ||||
| Electric Boat Rental Ltd. | ||||
| 9335-1427 Quebec Inc. | ||||
| Travel and entertainment | ||||
| Electric Boat Rental Ltd. | ||||
| Advertising and promotion | ||||
| Electric Boat Rental Ltd. |
All values are in US Dollars.
The Company leases its Boisbriand premises from California Electric Boat Company Inc.
Related party balances
The following amounts are due to/from related parties;
9
| As at May 31, 2021 | As at<br> August 31, 2020 | |
|---|---|---|
| Current advances to shareholders or indirect shareholders | ||
| 9335-1427 Quebec Inc. | ||
| Alexandre Mongeon | ||
| Due to shareholders and included in trade and other payables | ||
| Alexandre Mongeon | ||
| Patrick Bobby | ||
| Robert Ghetti | ||
| Hurricane Corporate Services Ltd. | ||
| Current advances from shareholders or indirect shareholders | ||
| 9335-1427 Quebec Inc. | ||
| Alexandre Mongeon | ||
| Patrick Bobby | ||
| Robert Ghetti | ||
| Immobilier R. Ghetti Inc. | ||
| Société de Placement Robert Ghetti Inc. | ||
| Gestion Toyma Inc. | ||
All values are in US Dollars.
Advances to and from related parties are non-interest bearing and have no specified terms of repayment. On December 22, 2020, the holders of the advances from shareholders and indirect shareholders and the Company agreed that the advances shall be converted to Voting Common Shares of the Company at a conversion price equal to the Voting Common Share offering price in the Initial Public Offering (note 15).
1.10 Critical Accounting Estimates
The preparation of the Company’s financial statements requires management to use estimates and assumptions that affect the reported amounts of assets and liabilities as well as revenue and expenses.
Research costs are expensed in the period in which they are incurred. Development costs are capitalized when it probable that the project will be a success considering its commercial and technical feasibility; the Company is able to use or sell the asset; the Company has sufficient resources and intent to complete its development; and its costs can be measured reliably. The Company has not capitalized any development costs.
10
The Company accounts for all share-based payments and awards using the fair value-based method. For grants to employees, the Black Scholes model is used and requires several assumptions, the most significant of which are the volatility of the underlying share and the expected life of the option. Share-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity estimates issued, or liabilities incurred, whichever is more reliably measurable.
From time to time, the company must make accounting estimates. These are based on the best information available at the time, utilizing generally accepted industry standards.
.
1.11 Changes in Accounting Policies including Initial Adoption
See Note 3 of the Company's financial statements for the nine months ending May 31, 2021.
Internal control over financial reporting and disclosure controlsand procedures
Management is responsible for the design and maintenance of both internal control systems over financial reporting and disclosure controls and procedures. Disclosure controls and procedures are designed to provide reasonable assurance that relevant information is gathered and reported to senior management on a timely basis so that appropriate decisions can be made regarding public disclosure.
Management and the Board of Directors continue to work to mitigate the risk of material misstatement.
1.14 Financial Instruments and risk management
See Note 20 to the Company's financial statements for nine months ended May 31, 2021.
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1.15 Additional Information
| HEAD OFFICE | CAPITALIZATION<br><br> <br><br><br> <br>(as at July 14, 2021)<br><br> <br><br><br> <br>Shares Authorized: Unlimited<br><br> <br><br><br> <br>Shares Issued: 8,040,338 |
|---|---|
| 730 Boulevard du Cure-Boivin | |
| Boisbriand, QC | |
| J7G 2A7 | |
| Tel: (450) 951 - 7009 | |
| Email: [email protected] | |
| OFFICERS & DIRECTORS | |
| Alex Mongeon,<br><br> CEO and Director<br><br> <br><br><br> <br>Patrick Bobby<br><br> <br><br><br> <br>COO and Director | |
| Kulwant Sandher, CPA, CA, BSc (Eng.)<br><br> <br><br><br> <br>Chief Financial Officer | AUDITORS<br><br> <br><br><br> <br>BDO Canada LLP<br><br> <br><br><br> <br>1000 de la Gauchetière West, suite 200, Montreal, QC H3B 4W5<br><br> <br><br><br> <br>LEGAL COUNSEL<br><br> <br><br><br> <br>Renno & Co LLP<br><br> <br><br><br> <br>400 - 3 Place Ville-Marie,<br><br> <br><br><br> <br>Montreal, QC H3B 2E3 |
| Alan Gaines<br><br> <br><br><br> <br>Chairman & Director<br><br> <br><br><br> <br>Luisa Ingargiola<br><br> <br><br><br> <br>Director<br><br> <br><br><br> <br>Steven Barrenechea<br><br> <br><br><br> <br>Director<br><br> <br><br><br> <br>Renaud Cloutier<br><br> <br><br><br> <br>Director |
12
Exhibit 99.3
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Alex Mongeon, Chief Executive Officer of VisionMarine Technologies Inc., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the<br> “interim filings”) of Vision Marine Technologies Inc. (the “issuer”) for the interim period ended May31, 2021. |
|---|---|
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the<br>interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that<br>is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered<br>by the interim filings. |
| --- | --- |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim<br>financial report together with the other financial information included in the interim filings fairly present in all material respects<br>the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim<br>filings. |
|---|---|
| Date: July 14, 2021 | |
| --- | |
| “Alex Mongeon” | |
| Alex Mongeon | |
| Chief Executive Officer |
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
| i) | controls and other procedures designed to provide reasonable assurance that information required to be<br>disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,<br>processed, summarized and reported within the time periods specified in securities legislation; and |
|---|---|
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation<br>of financial statements for external purposes in accordance with the issuer’s GAAP. |
| --- | --- |
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
Exhibit 99.4
Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate
I, Kulwant Sandher, Chief Financial Officer of VisionMarine Technologies Inc., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the<br> “interim filings”) of Vision Marine Technologies Inc. (the “issuer”) for the interim period ended May31, 2021. |
|---|---|
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the<br>interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that<br>is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered<br>by the interim filings. |
| --- | --- |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim<br>financial report together with the other financial information included in the interim filings fairly present in all material respects<br>the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim<br>filings. |
|---|---|
| Date: July 14, 2021 | |
| --- | |
| “Kulwant Sandher” | |
| Kulwant Sandher | |
| Chief Financial Officer |
NOTE TO READER
In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of
| i) | controls and other procedures designed to provide reasonable assurance that information required to be<br>disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded,<br>processed, summarized and reported within the time periods specified in securities legislation; and |
|---|---|
| ii) | a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation<br>of financial statements for external purposes in accordance with the issuer’s GAAP. |
| --- | --- |
The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.