Core Insights - Vicinity Group LLC has achieved the Microsoft Solutions Partner for Modern Work designation, highlighting its status as a managed IT services provider in Alaska, Hawaii, and the Pacific Northwest [1] - This designation places Vicinity among an exclusive group of technology partners, with only four partners in Alaska and three in Hawaii holding this credential [1] Company Summary - Vicinity Group LLC is a managed IT services provider that serves businesses across Alaska, Hawaii, and the Pacific Northwest [1] - The company has now become one of the few partners recognized by Microsoft for its capabilities in modern work solutions [1]

Core Viewpoint - Vicinity Motor (NASDAQ:VEV) stock is experiencing significant trading activity, with over 73 million shares moving, far exceeding its average daily volume of approximately 2.5 million shares and its float of 41.34 million units [1][2]. Group 1: Stock Performance - VEV stock has surged by 141.1% as of Tuesday morning, indicating a strong upward movement in its price [3]. - The stock is categorized as a penny stock, with a prior closing price of 10 cents and a market capitalization of only $5.017 million [2][3]. Group 2: Market Activity - The unusual trading activity is occurring without any clear news or press releases from Vicinity Motor, nor is there any analyst coverage that could explain the rally [2]. - The high trading volume may suggest speculative interest from traders, potentially involving retail and day traders engaging in pump and dump strategies [3].

Financial Data and Key Metrics Changes - Revenue increased by 400% to $13.2 million in Q1 2024, compared to $2.7 million in Q1 2023, driven by higher deliveries of 44 trucks and 22 buses [18] - Gross profit for Q1 2024 was $1.9 million, or 14% of revenue, compared to $0.5 million, or 18% of revenue in Q1 2023, with margins positively affected by higher deliveries and a shift towards higher-margin electric trucks [19] - Cash provided from operating activities was $0.5 million in Q1 2024, compared to cash used of $3.6 million in Q1 2023 [20] - Net loss for Q1 2024 was $3.7 million, or negative $0.08 per share, compared to a loss of $2.4 million, or negative $0.05 per share in Q1 2023 [20] - Cash and cash equivalents as of March 31, 2024, totaled $4.3 million, up from $2 million as of December 31, 2023 [21] Business Line Data and Key Metrics Changes - The VMC 1200 electric truck saw successful deliveries, contributing to a significant revenue increase and positive cash flow from operations [5] - The Vicinity Classic transit bus line also experienced strong demand, with follow-on orders validating the company's reputation and competitive advantage [12] Market Data and Key Metrics Changes - The backlog as of March 31 exceeded $125 million, indicating strong market demand and operational momentum [13] - The company is expanding its dealer network across Canada to meet growing demand for the VMC 1200 [8] Company Strategy and Development Direction - The company is focused on building out its distribution network and ramping up production to fulfill its growing backlog [4][16] - Strategic initiatives include onshoring production for the Vicinity Lightning bus and launching the VMC 1200 in the U.S. market [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in operational execution for 2024, supported by strong revenue and cash flow [21] - The transition to commercial EV adoption is bolstered by government incentives and corporate sustainability goals, which align with the company's strategy [22] Other Important Information - The company has made significant progress in diversifying its distribution network with new dealership partners [8] - The VMC 1200 qualifies for substantial federal and provincial rebates in Canada, enhancing its market appeal [11] Q&A Session Summary Question: Could you detail a little bit on the $28 million of inventory that you look to deliver in Q2? - The inventory consists mainly of truck inventory, with over 280 trucks and just under 30 buses on hand as of the end of Q1 [24][28] Question: What does your margin outlook look like? - Margins for the quarter were about 14%, with expectations to reach over 20% in the future as the shift to electric vehicles continues [29] Question: Are there any delays in parts or grant approvals? - Parts availability is largely normalized, but some supply chain challenges remain. There are delays in government grant processing, but a clear path to operate through these delays has been established [30][32] Question: Can you highlight the formal launch of the VMC 1200 in the U.S.? - The formal launch is expected in the second half of the year, with progress on dealer partnerships and regulatory certifications [34] Question: What is the current order backlog split between buses and trucks? - The backlog includes approximately 100 buses and around 1,100 trucks, with ongoing deliveries and new orders being placed [41]

Financial Data and Key Metrics Changes - Revenue in Q4 2023 increased to $5.1 million, compared to $2 million in Q4 2022, with total revenue for the year at $19.1 million, up from $18.5 million in 2022 [22] - Gross loss in Q4 2023 improved to $0.4 million (negative 9% of revenue), compared to a gross loss of $0.6 million (negative 28% of revenue) in Q4 2022 [23] - Net loss in Q4 2023 totaled $9.1 million (negative $0.20 per share), compared to $3.8 million (negative $0.08 per share) in Q4 2022 [26] - Cash used in operating activities for Q4 2023 was $5.7 million, up from $3.9 million in Q4 2022 [25] Business Line Data and Key Metrics Changes - The company sold 11 transit buses and invoiced for 71 VMC 1200 electric trucks in December 2023, expected to be recognized in H1 2024 [5][22] - The product mix has shifted towards electric trucks, which generally have a higher margin profile compared to transit buses [24] - The backlog as of December 31, 2023, exceeded $125 million, with the majority being for electric vehicles [18][28] Market Data and Key Metrics Changes - The VMC 1200 qualifies for a federal rebate of CAD 40,000 and an additional CAD 85,000 incentive in Quebec, enhancing its attractiveness to customers [9][10] - The company is expanding its dealership network across Canada, with several new partners announced to enhance sales and service coverage [6] Company Strategy and Development Direction - The company is focused on building out its VMC 1200 dealership network and ramping up production at its Ferndale manufacturing campus [4][19] - The partnership with ADASTEC aims to develop an SAE Level-4 automated variant of the Vicinity Lightning EV transit bus, targeting innovation in public transportation [11][12] - The company aims to capitalize on the growing adoption of commercial EVs driven by government incentives and corporate sustainability goals [31] Management's Comments on Operating Environment and Future Outlook - Management noted that the increase in adoption of commercial EVs is being driven by government incentives and declining costs of ownership [31] - The company believes it has built a foundation for sustainable growth and value delivery to stakeholders [31] Other Important Information - Cash and cash equivalents as of December 31, 2023, totaled $2 million, up from $1.6 million in 2022 [28] - Inventory as of December 31, 2023, was $23.3 million, expected to convert into cash as deliveries are made [29] Q&A Session Summary Question: Any issues with government funding affecting client purchases? - Management acknowledged delays in government incentives, particularly in Quebec, but noted that systems are now in place and functioning [33] Question: Is there still a backlog in supply for buses? - Management confirmed that supply chain issues have improved, and they are finishing up orders for Calgary transit [34][35] Question: Status of the Ferndale facility staffing? - The Ferndale facility is still in the process of ramping up staffing [36] Question: Deliveries expected for 2024? - Management indicated there are 100 buses queued for delivery in 2024, with potential sales of about 325 trucks based on current inventory levels [37][38] Question: Clarification on invoiced trucks and inventory? - The 71 trucks invoiced are awaiting final touches from dealers before delivery [43] Question: Why did the backlog decrease from the previous quarter? - The decrease was attributed to currency fluctuations and deliveries made during the quarter, with the backlog still close to $150 million [47][48]

Financial Condition - As of December 31, 2023, the Corporation had negative working capital of $2.862 million, raising substantial doubt about its ability to continue as a going concern[34]. - The Corporation has expressed substantial doubt regarding its ability to continue as a going concern, relying on the renewal of a $30 million credit facility and a C$10 million asset-based lending facility[34]. - The Corporation's financial results may vary significantly due to fluctuations in operating costs and other factors, impacting revenue generation[28]. - The Corporation expects its operating and financial results to vary significantly due to fluctuations in operating costs and other external factors[46]. - The Corporation has identified material weaknesses in its internal control over financial reporting, which could lead to material misstatements in financial statements[142]. - Material adjustments were required to the Corporation's financial statements for the year ended December 31, 2023, indicating weaknesses in the financial statement close process[144]. - The Corporation has not remediated identified material weaknesses in internal controls over financial reporting as of the filing date, which could lead to material misstatements in financial statements[146]. - The Corporation maintains a significant portion of its cash with RBC, and any failure of this institution could adversely affect its financial position[127]. Revenue and Sales Performance - The Corporation's total revenue for 2023 was $19,050,000, a slight increase of 3.1% compared to $18,475,000 in 2022, but a decrease of 2.6% from $19,554,000 in 2021[171]. - Bus sales decreased to $6,678,000 in 2023 from $11,699,000 in 2022, reflecting a decline of 43.3%[171]. - Truck sales significantly increased to $6,973,000 in 2023 from $982,000 in 2022, marking a growth of 610.5%[171]. - Revenue for the three months ended December 31, 2023 was $5,093 compared to $2,035 for the same period in 2022, representing a 150% increase[219]. - Revenue for the year ended December 31, 2023 was $19,050 compared to $18,475 for the year ended December 31, 2022, indicating a growth of 3.1%[219]. - Net loss for the year ended December 31, 2023 was $16,633 compared to a net loss of $17,948 for the year ended December 31, 2022, showing an improvement[219]. Operational Risks - The Corporation's operations are at risk due to potential disruptions in the supply of lithium-ion battery cells, which could increase operating costs and reduce margins[38]. - The Corporation relies on third-party suppliers, some of which are single-source, and any disruption in supply could materially affect its business and financial condition[42]. - The Corporation's ability to forecast supply and demand accurately is limited, which may lead to inefficiencies and hinder revenue generation[45]. - Increased freight and shipping costs could adversely affect the Corporation's ability to make sales and earn profits[53]. - The Corporation faces significant risks associated with product liability claims, which could materially adversely affect its business and financial condition[81]. - The Corporation maintains insurance for product liability claims, but there is no assurance that future claims will not exceed coverage, potentially impacting earnings[82]. - Significant product warranty claims or recalls could adversely impact the Corporation's financial condition, despite current quality control measures[84]. - The Corporation's operational systems are vulnerable to cybersecurity risks, which could disrupt business operations and harm its reputation[86]. - A significant cyber incident could impact the Corporation's manufacturing capacity and result in regulatory actions or litigation, materially affecting its financial condition[90]. Market and Competitive Environment - The Corporation's growth may be adversely affected if it cannot establish a sufficient dealer network in Canada and the United States[28]. - The Corporation's ability to maintain and strengthen its brand is critical for customer acceptance of its vehicles, which is challenged by competition from larger manufacturers[37]. - The Corporation faces competitive pressures in the battery electric vehicles industry, including pricing strategies from competitors and the introduction of alternative fuel vehicles[63]. - Increased competition in the electric vehicle market may lead to lower sales and price pressures, adversely affecting the Corporation's financial results[73]. - Demand for the Corporation's vehicles is influenced by government incentives and regulations promoting battery electric vehicles, which could change or expire[76]. - The Corporation's ability to obtain government grants and incentives is competitive and may materially affect its financial condition if unsuccessful[77]. Strategic Initiatives - The Corporation is developing a dealer network in North America to enhance market penetration, which is critical for its growth strategy[51]. - The Corporation is expanding its VMC 1200 truck dealer distribution network in Canada to enhance sales and service capabilities[188]. - The Corporation's strategic partnerships and supply agreements span Europe, Asia, Canada, and the United States, supporting global manufacturing capabilities[169]. - The Corporation partnered with ADASTEC Corp. to develop a "SAE Level-4" automated Vicinity Lighting EV transit bus for deployment in mid-2024[219]. - The Corporation secured four new VMC 1200 distribution agreements to establish new dealerships in strategic markets across Canada[219]. Future Outlook - The Corporation's future growth is contingent upon the adoption of battery electric vehicles by the busing industry and other customers[29]. - The Corporation's future growth is highly dependent on the adoption of battery electric vehicles by the commercial busing industry and other target consumers[66]. - The Corporation's focus on electric vehicles aligns with increasing demand driven by environmental regulations and funding programs in the U.S. and Canada[198][202]. - Order backlog as of December 31, 2023 exceeded $125 million, with over 75% attributed to electric vehicles[219]. - The Corporation is still in the development phase for certain vehicles, with commercial deliveries not expected until Q2 2024, which could impact its reputation and financial results[52]. Compliance and Governance - Compliance with government contract laws and regulations is essential, as violations could lead to fines, penalties, or termination of contracts, adversely affecting the Corporation's business[109]. - The Corporation faces significant risks related to compliance with anti-corruption laws, including the FCPA, which could lead to penalties and adverse consequences[121]. - The Corporation's governance is subject to Canadian corporate laws, which may differ from U.S. laws and affect shareholder rights[156]. - The Corporation's management is exploring options to regain compliance with Nasdaq listing standards to avoid potential delisting[147]. - The Corporation received a Nasdaq compliance letter on October 25, 2023, indicating it failed to maintain a minimum bid price of $1.00 per share for 30 consecutive business days, with a compliance period until April 22, 2024[147].

[Report Overview](index=1&type=section&id=Report%20Overview) This section provides a high-level summary of the company's financial and operational performance [Q4 & FY 2023 Financial Results Announcement](index=1&type=section&id=Q4%20%26%20FY%202023%20Financial%20Results%20Announcement) Vicinity Motor Corp. announced Q4 and FY 2023 results, detailing **$5.1 million** Q4 revenue and **71 VMC 1200 electric truck** invoicing - Q4 2023 deliveries included **11 Vicinity™ Classic Transit Buses**[2](index=2&type=chunk) - Q4 2023 revenue reached **$5.1 million**[2](index=2&type=chunk) - **71 VMC 1200 electric trucks** were invoiced for 2024 delivery[4](index=4&type=chunk) [Fourth Quarter 2023 and Subsequent Operational Highlights](index=1&type=section&id=Fourth%20Quarter%202023%20and%20Subsequent%20Operational%20Highlights) This section details key operational achievements and management commentary from Q4 2023 [Management Commentary](index=1&type=section&id=Management%20Commentary) Management emphasized increasing operational execution and sales momentum in Q4 2023 across all product lines - The VMC 1200 provides an ideal entry into the underserved commercial EV market, with an attractive price point enhanced by Canadian federal and provincial rebates[5](index=5&type=chunk) - VMC 1200 was approved for Quebec's Écocamionnage Program, providing a **CAD$85,000 incentive** for commercial freight electrification[5](index=5&type=chunk) - Partnership with ADASTEC to develop an **SAE Level-4 automated Vicinity Lighting EV transit bus** (Vicinity Autonomous Lightning EV) for North America, with initial deployments in **Q2 2024**[6](index=6&type=chunk) - The transit bus business maintained a solid recurring customer base and strong order momentum, retaining market leadership in the Canadian mid-sized heavy-duty segment[8](index=8&type=chunk) - Order backlog **exceeded $125 million** as of December 31, 2023, with **over 75% from electric vehicles**[9](index=9&type=chunk) [Key Operational Achievements](index=1&type=section&id=Key%20Operational%20Achievements) Vicinity Motor Corp. achieved key operational milestones in Q4 2023, including substantial order backlog, increased revenue, and EV truck invoicing - Order backlog as of December 31, 2023, **exceeded $125 million**, with electric vehicles accounting for **over 75%**[7](index=7&type=chunk) - Revenue **increased to $5.1 million** in Q4 2023, primarily driven by the sale of **11 Vicinity™ Classic transit buses**[7](index=7&type=chunk) - Invoiced **71 EV trucks** to dealers in December 2023, with revenue recognition and delivery scheduled for 2024[7](index=7&type=chunk) - Secured four new VMC 1200 distribution agreements, establishing new dealerships in strategic Canadian markets (Ontario, Quebec, Alberta)[7](index=7&type=chunk) - Secured new orders for **twenty Vicinity™ Classic Clean Diesel Buses** from Autobus La Québécoise for 2024 delivery[7](index=7&type=chunk) - Partnered with ADASTEC to create an **SAE Level-4 automated Vicinity Lighting EV transit bus**, with deployment agreements for Michigan State University and Buffalo Niagara Medical Campus in **mid-2024**[7](index=7&type=chunk) [Fourth Quarter 2023 Financial Results](index=2&type=section&id=Fourth%20Quarter%202023%20Financial%20Results) Vicinity Motor Corp. reported significant financial improvements in 2023, with full-year revenue increasing to **$19.1 million** and gross profit improving to **$2.1 million** [Key Financial Metrics](index=2&type=section&id=Key%20Financial%20Metrics) Vicinity Motor Corp. reported significant financial improvements in 2023, with full-year revenue increasing to **$19.1 million** and gross profit improving to **$2.1 million** Revenue Performance | Metric | Q4 2023 (USD in millions) | Q4 2022 (USD in millions) | YoY Change (Q4) | FY 2023 (USD in millions) | FY 2022 (USD in millions) | YoY Change (FY) | | :----------------- | :------------ | :------------ | :-------------- | :------------ | :------------ | :-------------- | | Revenue | $5.1 million | $2.0 million | +155% | $19.1 million | $18.5 million | +3.2% | | Primary Driver (Q4) | 11 bus deliveries | 11 trucks | | | | | Gross Profit/Loss Analysis | Metric | Q4 2023 (USD in millions) | Q4 2022 (USD in millions) | YoY Change (Q4) | FY 2023 (USD in millions) | FY 2022 (USD in millions) | YoY Change (FY) | | :----------------- | :------------ | :------------ | :-------------- | :------------ | :------------ | :-------------- | | Gross Loss | $(0.4) million | $(0.6) million | Improved | | | | | Gross Loss % of Revenue | (9%) | (28%) | Improved | | | | | Gross Profit | | | | $2.1 million | $0.4 million | +425% | | Gross Profit % of Revenue | | | | 11% | 2% | Improved | Cash Flow from Operating Activities | Metric | Q4 2023 (USD in millions) | Q4 2022 (USD in millions) | YoY Change (Q4) | FY 2023 (USD in millions) | FY 2022 (USD in millions) | YoY Change (FY) | | :-------------------------------- | :------------ | :------------ | :-------------- | :------------ | :------------ | :-------------- | | Cash Used in Operating Activities | $5.7 million | $3.9 million | +46.2% | $24.7 million | $9.1 million | +171.4% | Net Loss and EPS | Metric | Q4 2023 (USD in millions) | Q4 2022 (USD in millions) | YoY Change (Q4) | FY 2023 (USD in millions) | FY 2022 (USD in millions) | YoY Change (FY) | | :----------------- | :------------ | :------------ | :-------------- | :------------ | :------------ | :-------------- | | Net Loss | $9.1 million | $3.8 million | +139.5% | $16.6 million | $18.0 million | -7.7% | | EPS (Basic & Diluted) | $(0.20) | $(0.08) | | $(0.36) | $(0.45) | | Adjusted EBITDA Performance | Metric | Q4 2023 (USD in millions) | Q4 2022 (USD in millions) | YoY Change (Q4) | FY 2023 (USD in millions) | FY 2022 (USD in millions) | YoY Change (FY) | | :----------------- | :------------ | :------------ | :-------------- | :------------ | :------------ | :-------------- | | Adjusted EBITDA Loss | $3.2 million | $1.4 million | +128.6% | $6.9 million | $7.4 million | -6.8% | Cash and Cash Equivalents Summary | Metric | Dec 31, 2023 (USD in millions) | Dec 31, 2022 (USD in millions) | YoY Change | | :-------------------------- | :----------------- | :----------------- | :---------- | | Cash and Cash Equivalents | $2.0 million | $1.6 million | +25% | [Fourth Quarter and Full Year 2023 Results Conference Call](index=2&type=section&id=Fourth%20Quarter%20and%20Full%20Year%202023%20Results%20Conference%20Call) This section provides details for the Q4 and FY 2023 results conference call, including access and replay information [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) This section provides details for the Q4 and FY 2023 results conference call, including access and replay information - Date & Time: **Tuesday, April 2, 2024, 4:30 p.m. Eastern time**[17](index=17&type=chunk) - U.S./Canada Dial-in: **1-877-407-3982**; International Dial-in: **1-201-493-6780**; Conference ID: **13745184**[17](index=17&type=chunk) - Webcast available at: Vicinity Motor Q4 & FY2023 Webcast[17](index=17&type=chunk) - Playback available through **Wednesday, May 1, 2024**, via phone replay (U.S./Canada: **1-844-512-2921**, International: **1-412-317-6671**, replay pin **13745184**) and webcast[18](index=18&type=chunk) [About Vicinity Motor Corp.](index=3&type=section&id=About%20Vicinity%20Motor%20Corp.) This section provides an overview of Vicinity Motor Corp., a North American supplier of electric vehicles for public and commercial sectors [Company Profile](index=3&type=section&id=Company%20Profile) Vicinity Motor Corp. is a North American supplier of electric vehicles for public and commercial sectors, leveraging a dealer network and manufacturing partners - Vicinity Motor Corp. is a North American supplier of electric vehicles for both public and commercial enterprise use[19](index=19&type=chunk) - The company supplies flagship electric, CNG, and clean-diesel Vicinity buses, as well as the VMC 1200 electric truck[19](index=19&type=chunk) - Leverages a dealer network and relationships with manufacturing partners to serve transit and industrial markets[19](index=19&type=chunk) [Contact Information](index=3&type=section&id=Contact%20Information) This section provides contact details for the Company's VP Corporate Development and Investor Relations - Company Contact: John LaGourgue, VP Corporate Development, **604-288-8043**, **IR@vicinitymotor.com**[20](index=20&type=chunk) - Investor Relations Contact: Lucas Zimmerman, MZ Group - MZ North America, **949-259-4987**, **VMC@mzgroup.us**[20](index=20&type=chunk) [Legal and Financial Disclosures](index=3&type=section&id=Legal%20and%20Financial%20Disclosures) This section outlines legal and financial disclosures, including cautionary notes on forward-looking statements and non-GAAP financial measures [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises on forward-looking statements, highlighting inherent risks and uncertainties that may cause actual results to differ materially - The press release includes **'forward-looking information'** and **'forward-looking statements'** identified by words like 'expects', 'anticipates', 'believes', etc[21](index=21&type=chunk) - Forward-looking statements involve various risks and uncertainties, and actual results could differ materially from those anticipated[21](index=21&type=chunk) - Important factors include economic conditions, vehicle sales volume, market prices for parts, operational strategies, facility operations, COVID-19 impact, supply chain recovery, strategic partnerships, and debt terms[22](index=22&type=chunk) - Vicinity assumes no obligation to update forward-looking statements or beliefs, opinions, projections, or other factors, should they change, except as required by law[22](index=22&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section defines non-GAAP financial measures, specifically **Adjusted EBITDA**, noting they lack standardized IFRS meanings but are useful for assessing performance - Non-GAAP and other financial measures do not have standardized meaning prescribed by IFRS and may not be directly comparable to similar measures presented by other issuers[23](index=23&type=chunk) - Data presented is intended to provide additional information and should not be considered in isolation or as a substitute for IFRS measures[23](index=23&type=chunk) - **Adjusted EBITDA** is defined as earnings before interest, income taxes, depreciation and amortization, foreign exchange gains or losses, certain non-recurring/non-operating income and expenses, and share-based compensation[24](index=24&type=chunk) - **Adjusted EBITDA** is considered a meaningful metric in assessing the Company's financial performance and operational efficiency[24](index=24&type=chunk) [Adjusted EBITDA Reconciliation](index=4&type=section&id=Adjusted%20EBITDA%20Reconciliation) This section provides a reconciliation of **Adjusted EBITDA**, a non-GAAP financial measure, to Net Comprehensive Loss Adjusted EBITDA Reconciliation Table | | 3 months ended | 3 months ended | Year ended | Year ended | | --- | --- | --- | --- | --- | | | December 31, | December 31, | December 31, | December 31, | | (US dollars in thousands - unaudited) | 2023 | 2022 | 2023 | 2022 | | Net Comprehensive loss | (9,108) | (3,828) | (16,633) | (17,948) | | Add back | | | | | | Stock based compensation | 470 | 668 | 929 | 1,380 | | Interest | 1,876 | 482 | 5,036 | 2,258 | | Gain on modification of debt | — | — | (492) | (803) | | Change in fair value of embedded derivatives | (580) | — | (605) | — | | Write down of intangible asset | 5,037 | — | 5,037 | — | | Foreign exchange (gain) loss | (1,546) | (629) | (1,728) | 3,253 | | (Gain) loss on disposal of property and equipment | (6) | — | (6) | 27 | | Inventory write down | 178 | 1,227 | 178 | 1,227 | | Income tax expense | (9) | (98) | — | 202 | | Amortization | 510 | 754 | 1,419 | 2,966 | | **Adjusted EBITDA** | **(3,178)** | **(1,424)** | **(6,865)** | **(7,438)** | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) The Consolidated Financial Statements provide a comprehensive overview of the company's financial position, performance, and cash flows [Consolidated Statements of Financial Position](index=5&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) The Consolidated Statements of Financial Position detail the company's assets, liabilities, and equity as of December 31, 2023 and 2022 Financial Position Data | | Dec 31, 2023 (USD in thousands) | Dec 31, 2022 (USD in thousands) | Change (USD in thousands) | Change (%) | | :------------------------------------ | :--------------- | :--------------- | :--------- | :--------- | | **Current Assets** | | | | | | Cash and cash equivalents | 2,026 | 1,622 | 404 | 24.9% | | Trade and other receivables | 5,599 | 2,655 | 2,944 | 110.9% | | Inventory | 23,273 | 10,068 | 13,205 | 131.1% | | Prepaids and deposits | 9,748 | 3,801 | 5,947 | 156.5% | | **Total Current Assets** | **40,646** | **18,146** | **22,500** | **124.0%** | | **Long-term Assets** | | | | | | Intangible assets | 9,815 | 14,273 | (4,458) | -31.2% | | Property, plant, and equipment | 23,734 | 22,613 | 1,121 | 5.0% | | **Total Assets** | **74,195** | **55,032** | **19,163** | **34.8%** | | **Current Liabilities** | | | | | | Accounts payable and accrued liabilities | 10,162 | 4,942 | 5,220 | 105.6% | | Credit facility | 15,926 | 628 | 15,298 | 2436.0% | | Current portion of deferred revenue | 4,429 | 2,382 | 2,047 | 86.0% | | Current debt facilities | 8,499 | 6,587 | 1,912 | 29.0% | | Convertible debt | 2,658 | — | 2,658 | N/A | | **Total Current Liabilities** | **43,508** | **16,573** | **26,935** | **162.5%** | | **Long-term Liabilities** | | | | | | Other long-term liabilities | 9,355 | 1,503 | 7,852 | 522.4% | | **Total Liabilities** | **52,998** | **18,200** | **34,798** | **191.2%** | | **Shareholders' Equity** | **21,197** | **36,832** | **(15,635)** | **-42.4%** | [Consolidated Statements of (Loss) Income](index=6&type=section&id=Consolidated%20Statements%20of%20%28Loss%29%20Income) The Consolidated Statements of (Loss) Income for 2023 and 2022 show increased revenue and gross profit, but also higher expenses leading to a net loss Statements of (Loss) Income Data | (In thousands of US dollars, except for per share amounts) | Year ended Dec 31, 2023 (USD in thousands) | Year ended Dec 31, 2022 (USD in thousands) | Change (USD in thousands) | Change (%) | | :------------------------------------------------------ | :-------------------------- | :-------------------------- | :--------- | :--------- | | **Revenue** | | | | | | Vehicle sales | 13,651 | 13,165 | 486 | 3.7% | | Other | 5,399 | 5,310 | 89 | 1.7% | | **Total Revenue** | **19,050** | **18,475** | **575** | **3.1%** | | Cost of sales | (16,914) | (18,035) | 1,121 | -6.2% | | **Gross profit** | **2,136** | **440** | **1,696** | **385.5%** | | **Expenses** | | | | | | Sales and administration | 9,730 | 9,526 | 204 | 2.1% | | Stock-based compensation | 929 | 1,380 | (451) | -32.7% | | Amortization | 862 | 2,572 | (1,710) | -66.5% | | Interest and finance costs | 5,036 | 2,258 | 2,778 | 123.0% | | Change in fair value of embedded derivatives | (605) | — | (605) | N/A | | Write-down of intangible asset | 5,037 | — | 5,037 | N/A | | Gain on modification of debt | (492) | (803) | 311 | -38.7% | | Foreign exchange (gain) loss | (1,728) | 3,253 | (4,981) | -153.1% | | **Total Expenses** | **18,769** | **18,186** | **583** | **3.2%** | | Loss before taxes | (16,633) | (17,746) | 1,113 | -6.3% | | Current income tax expense | — | 202 | (202) | -100.0% | | **Net loss** | **(16,633)** | **(17,948)** | **1,315** | **-7.3%** | | **Loss per share (Basic & diluted)** | **(0.36)** | **(0.45)** | **0.09** | **-20.0%** | | Weighted average number of common shares outstanding | 45,605,239 | 39,650,426 | 5,954,813 | 15.0% | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows for 2023 and 2022 indicate increased cash used in operating activities, offset by substantial cash from financing activities Cash Flow Data | (In thousands of US dollars) | Year ended Dec 31, 2023 (USD in thousands) | Year ended Dec 31, 2022 (USD in thousands) | Change (USD in thousands) | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------- | :--------- | | **Cash used in operating activities** | **(24,697)** | **(9,082)** | **(15,615)** | **171.9%** | | **Cash used in investing activities** | **(1,945)** | **(10,698)** | **8,753** | **-81.8%** | | **Cash provided by financing activities** | **27,014** | **17,368** | **9,646** | **55.5%** | | Effect of foreign exchange rate on cash | 32 | (368) | 400 | -108.7% | | **Increase (decrease) in cash and cash equivalents** | **404** | **(2,780)** | **3,184** | **-114.5%** | | Cash and cash equivalents, beginning | 1,622 | 4,402 | (2,780) | -63.1% | | **Cash and cash equivalents, ending** | **2,026** | **1,622** | **404** | **24.9%** |

Financial Data and Key Metrics Changes - Revenue increased to $6.5 million in Q3 2023 from $1.5 million in Q3 2022, driven by a change in product mix with 26 truck and eight bus deliveries compared to two buses in the prior year [19] - Gross profit for Q3 2023 was $0.5 million (8% of revenue) compared to a gross loss of $0.2 million (negative 15% of revenue) in Q3 2022, attributed to a shift towards higher-margin electric trucks [20] - Net loss for Q3 2023 improved to $4.4 million ($0.10 per share) from $7.4 million ($0.19 per share) in Q3 2022 [23] - Cash and cash equivalents as of September 30, 2023, totaled $2 million, up from $1.6 million at the end of 2022 [25] Business Line Data and Key Metrics Changes - The VMC 1200 electric trucks and transit buses saw 26 and eight deliveries respectively during the quarter, indicating strong demand [5] - The Vicinity Classic transit bus line continues to grow the backlog and serves as a foundational revenue source [12] - The new manufacturing campus in Ferndale, Washington, initiated production and is ramping up to fulfill a backlog exceeding $150 million, primarily for electric vehicles [15] Market Data and Key Metrics Changes - The company is expanding its VMC 1200 dealership network across Canada, with new partnerships to enhance sales and service coverage [5] - The VMC 1200 qualifies for a federal rebate of CAD 40,000, making it attractive to customers [6] - Market fundamentals support the business strategy with government incentives and sustainability goals driving EV adoption [27] Company Strategy and Development Direction - The company is focused on building out its dealership network and ramping up production to meet growing demand for electric vehicles [17] - A partnership with ADASTEC aims to develop an SAE Level-4 automated variant of the Vicinity Lightning EV transit bus, enhancing innovation and sustainability in public transportation [8][10] - The company plans to deploy autonomous buses in mid-2024, marking a significant advancement in public transportation [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering against a robust backlog and achieving operational execution in the upcoming quarters [25] - The company anticipates strong visibility on revenue and profitability for 2024, with expected gross margins in the 20% range as production ramps up [37] - Management highlighted the importance of government incentives and corporate sustainability goals in driving future growth [27] Other Important Information - The company has secured a new $9 million credit facility to enhance financial flexibility for growth initiatives [16] - The backlog as of September 30, 2023, exceeded $150 million, primarily for electric vehicles [15] Q&A Session Summary Question: What is the inventory status at Aldergrove? - The company has around 10 complete buses ready for delivery and approximately 40 buses in various stages of production [30] Question: Have there been any changes in contracts for those buses? - There have been no changes in contracts, and the backlog includes over 100 buses in various stages of production [31] Question: What is the expected delivery timeline for the buses? - The company expects to deliver the buses in 2024, with improved production timelines [33] Question: What are the profit margins on the vehicles? - Older buses have lighter profit margins, but newer buses are expected to have margins similar to past performance, with a blended gross margin target of around 20% [36][38] Question: What is the staffing level at Ferndale and delivery ramp-up? - Staffing is in place and continuously being added as production volume increases [39] Question: What is the status of refinancing and future financings? - The company has pushed out debt due this October into next year and does not foresee the need for additional financing in the near future [49] Question: What is the status of litigation with Optimal? - The company is in the discovery stage and expects to go to arbitration in Q2 of next year [50]

Financial Data and Key Metrics Changes - Revenue for Q2 2023 totaled $4.8 million, down from $11.7 million in Q2 2022, primarily due to a change in product mix with 34 truck deliveries compared to 34 bus deliveries in the prior year [14] - Gross profit in Q2 2023 was $1.6 million, representing 33% of revenue, compared to $1 million or 8.7% of revenue in Q2 2022, positively affected by a $0.4 million adjustment for expired warranty claims [15] - Net loss for Q2 2023 was $0.7 million or $0.02 per share, an improvement from a net loss of $3.8 million or $0.10 per share in Q2 2022 [17] - Cash and cash equivalents as of June 30, 2023, totaled $7.3 million, up from $1.6 million at the end of 2022 [18] Business Line Data and Key Metrics Changes - The VMC 1200 all-electric trucks have gained significant traction, with 34 deliveries made in Q2 2023, attracting customers due to competitive pricing and federal rebates [5][6] - The transit bus business continues to see strong demand, with Transdev ordering 42 Vicinity Classic buses, and deliveries have resumed from the backlog as supply chains improve [9] Market Data and Key Metrics Changes - The backlog as of June 30, 2023, exceeded $150 million, primarily consisting of electric vehicle orders [12] - Government incentives for EV adoption are driving interest from enterprise customers and government agencies, supporting the company's growth strategy [6][22] Company Strategy and Development Direction - The company is focused on ramping up production at the new U.S. manufacturing facility in Ferndale, which is expected to enhance profitability and operational efficiency [10][21] - The strategy includes expanding the dealer network and addressing a wide variety of customer needs with both legacy and next-generation electric vehicles [9][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving positive adjusted EBITDA in the second half of 2023, supported by improved margins and a growing sales funnel [19][21] - The company is optimistic about the future, citing strong market fundamentals, including government incentives and corporate sustainability goals driving EV adoption [22] Other Important Information - The company has secured a $9 million credit facility to support the Ferndale facility, complementing a previous $30 million facility for VMC 1200 production, enhancing financial flexibility for growth [11][19] - The Ferndale facility is designed to meet current and future production needs, with plans for a grand opening ceremony in mid-September [10] Q&A Session Summary Question: Expected truck and bus deliveries from the Ferndale plant - Management indicated that the facility can handle thousands of vehicles, but specific delivery numbers for Q3 and Q4 are not yet available as production ramps up [24][25] Question: Impact of the new bus order on backlog - The backlog is confirmed to be over $150 million, with no cancellations reported [27] Question: Refinancing of upcoming debt - Discussions are ongoing regarding the debt due in October, with options for refinancing or paying it down being considered [28] Question: Changes in backlog composition - No cancellations have occurred, and customers are awaiting delivery of their vehicles [31] Question: Staffing at the Ferndale plant - The plant is not fully staffed yet, but hiring is ongoing to meet production schedules [32] Question: Production plans for buses at Ferndale - The Ferndale facility is designed to run both bus and truck lines, with bus deliveries expected to ramp up in Q1 of next year [33][35] Question: Size of Lafarge's fleet and future orders - Lafarge plans to test two vehicles initially, with expectations for larger orders in 2024 and a goal to convert a majority of their fleet to EVs by 2025 [37] Question: Effectiveness of government support navigation team - The team has been effective in helping clients navigate various government incentive programs, significantly reducing vehicle costs [39] Question: Battery supply issues - No issues with battery supply were reported, as the company has multiple suppliers [40]

Financial Data and Key Metrics Changes - Revenue in Q1 2023 totaled $2.7 million, a decrease from $3.2 million in Q1 2022, impacted by a product mix weighted towards trucks [14] - Gross profit in Q1 2023 was $0.5 million (18% of revenue), compared to $0.2 million (7% of revenue) in Q1 2022, with gross margins positively impacted by an adjustment for expired warranty [14] - Cash used in operating activities in Q1 2023 was $3.6 million, down from $5.1 million in Q1 2022 [15] - Net loss in Q1 2023 was $2.4 million (negative $0.05 per share), an improvement from a loss of $2.9 million (negative $0.08 per share) in Q1 2022 [15] - Adjusted EBITDA loss in Q1 2023 was $1.4 million, compared to a loss of $2.1 million in Q1 2022 [16] - Cash and cash equivalents as of March 31, 2023, were $1.8 million, down from $11 million as of March 31, 2022 [16] Business Line Data and Key Metrics Changes - The company is nearing completion of a batch of 50 VMC 1200 vehicles and several transit buses for delivery in Q2 2023 [5] - The transit bus business has seen supply chains improve, allowing for the restart of bus deliveries as of spring 2023 [12] - The backlog stands at $150 million, indicating strong demand across both trucks and buses, with a significant portion attributed to electric vehicles [12][36] Market Data and Key Metrics Changes - New government incentives for EV adoption, including a CAD40,000 federal rebate for the VMC 1200 in Canada, are driving interest from enterprise customers and government agencies [7] - The company has secured Foreign-Trade Zone status for its Ferndale facility, providing a competitive advantage by reducing import costs [9][10] Company Strategy and Development Direction - The company aims to ramp up production at its new manufacturing campus in Ferndale, Washington, with plans to achieve profitability in the second half of 2023 [8][19] - The focus is on expanding the North American dealer network for the VMC 1200 and enhancing the supply chain for bus production [5][41] - The company is exploring vertical integration to address supply chain challenges, particularly in the truck business [45][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability in the second half of 2023, driven by operational execution and strong demand [19][20] - There is optimism regarding the recovery of ridership for transit buses, which is expected to boost orders and activity in the bus segment [41][44] Other Important Information - The company has supplemented its credit facilities with an additional $9 million working capital credit facility to support near-term operations [11] - The company is actively addressing supply chain issues, particularly for buses, while also preparing to increase inventory of parts to mitigate future disruptions [39][40] Q&A Session Summary Question: Will the sales of the batch of 50 VMC 1200s be recognized in Q2? - The goal is to deliver all 50 trucks in Q2, but bus delivery estimates are not available at this time [22] Question: Can you provide a range for truck versus bus deliveries for the full year? - It is difficult to provide a range until the first 50 trucks are delivered and production ramps up [24][25] Question: What is the status of financing and addressing upcoming maturity? - The company is fully funded and will address the maturity coming up in the fourth quarter [29][30] Question: Any updates on the optimal JV cancellation? - The company is in litigation regarding the JV cancellation and cannot provide updates at this time [31] Question: What is the staffing situation at the Ferndale facility? - Senior management has been hired, and the company is confident in staffing production line positions [34][35] Question: What is the composition of the backlog? - The backlog of over $150 million consists mainly of truck orders, with a significant portion being electric vehicles [36] Question: Are there still supply chain issues for buses? - While many supply chain issues have been resolved, some challenges remain, particularly with mechanical parts [39] Question: Is government funding impacting bus orders? - Yes, government funding is starting to flow through and is positively impacting bus orders [44]

Financial Performance - Revenue for the year ended December 31, 2022 was $18,475, a decrease of 56% compared to $41,708 for 2021[201]. - Net loss for the year ended December 31, 2022 was $17,948, compared to a net loss of $7,323 for 2021[201]. - Gross margin for the year ended December 31, 2022 was 2% of revenue, down from 10% in 2021[202]. - Adjusted EBITDA loss for the year ended December 31, 2022 was ($7,438), compared to ($2,666) for 2021[205]. - Revenue for Q4 2022 was $2,035, a 13% decrease from $2,330 in Q4 2021, primarily due to product mix with 11 truck deliveries versus four bus deliveries[241]. - Gross loss for Q4 2022 was $560, representing a gross margin of (28%) of revenue, compared to a gross loss of $316 or (14%) of revenue in Q4 2021[242]. - For the year ended December 31, 2022, revenue was $18,475, down from $41,708 in 2021, with vehicle sales revenue at $13,165 compared to $38,197 in 2021[243][244]. - Total revenue for the year ended December 31, 2022 was $18,475, a significant decrease from $41,708 in 2021, with bus sales in Canada dropping from $10,925 to $7,429[281]. Operational Developments - The newly constructed manufacturing facility in Ferndale, Washington is set to commence operations in the first half of 2023[218]. - The Corporation's first Vicinity Lightning™ EV buses are in production, and the Vicinity 1200 EV trucks were delivered in November 2022[226]. - The demand for the VMC 1200 has exceeded expectations with 1,000 trucks ordered in October 2022[217]. - The Corporation secured a $100 million+ purchase order for 1,000 VMC 1200 electric trucks from Pioneer Auto Group[203]. Cash Flow and Liquidity - Cash used in operating activities for the year ended December 31, 2022 was $9,082, a decrease of $12,676 compared to cash provided of $3,594 in 2021, mainly due to increased operational losses[251]. - Investing activities used cash of $10,698 in 2022, a decrease from $23,120 in 2021, attributed to the purchase of a sales and marketing license in 2021[252]. - Financing activities provided cash of $17,368 in 2022, down from $22,945 in 2021, due to lower proceeds from option exercises and private placements[253]. - The company estimates sufficient liquidity to meet working capital requirements for at least the next twelve months based on forecasted cash flows and current cash on hand[263]. - The company had cash and cash equivalents of $1,622 as of December 31, 2022, down from $4,402 in 2021, reflecting a decrease in liquidity[250]. - The company had $19.4 million undrawn on its C$20 million credit facility as of December 31, 2022, and subsequently secured an additional $30 million in debt financing for production[262]. Expenses and Costs - Selling, general, and administrative costs rose by $1.7 million from 2021 to 2022, driven by increased travel, legal, and compliance expenses[247]. - Depreciation increased by $1.7 million in 2022 due to the Optimal license purchased in Q4 2021[248]. - Interest costs rose by $739 in 2022 compared to 2021, reflecting a full year of interest on debt received in Q4 2021[248]. - Foreign exchange losses increased by $2.9 million in 2022, primarily due to intercompany balance translations[249]. Management and Compensation - The total compensation for CEO William Trainer in fiscal 2022 was C$480,428, including a base salary of C$467,588 and other compensation[299]. - The Corporation's Vice President Corporate Development, John LaGourgue, received total compensation of C$342,941, with a base salary of C$310,380[299]. - Chief Financial Officer Dan Buckle earned total compensation of C$379,633, including a base salary of C$311,072[299]. - The Corporation's independent directors received total compensation ranging from C$120,000 to C$180,000 for their services in fiscal 2022[297]. - The Corporation's compensation program aims to attract and retain qualified executives, motivate performance, and align interests with shareholders[300]. - The Corporation's Board reviews compensation policies annually to mitigate risks associated with executive compensation practices[309]. - The Corporation's executives receive a significant portion of their compensation in the form of long-term equity-based awards[315]. Shareholder Information - The total direct and indirect shareholdings of the Corporation's directors and executive officers amounted to 4,600,428 common shares, representing 10.07% of total outstanding common shares[328]. - William Trainer holds 1,613,541 common shares, accounting for 3.53% of total outstanding shares[326]. - Joseph Miller owns 1,908,809 common shares, representing 4.18% of total outstanding shares[326]. Corporate Governance - The Audit Committee oversees the financial reporting processes and the integrity of the Corporation's financial statements[320]. - The Compensation Committee is responsible for recommending compensation levels for NEOs and key employees[325]. - The Corporation's Omnibus Equity Incentive Plan was adopted on December 22, 2022, allowing for equity-based incentive awards including Options, RSUs, DSUs, and PSUs[314]. - As of the date of the Annual Report, the Corporation has 1,580,826 Options and 623,802 DSUs outstanding[318]. - The maximum number of common shares available for issuance under the Omnibus Plan is capped at 10% of the issued and outstanding common shares[317]. - The Corporation had 57 employees as of December 31, 2022, an increase from 52 in 2021 and 48 in 2020[326].