Vision Marine Technologies(VMAR) - 2025 Q1 - Quarterly Report

Condensed Interim Consolidated Financial Statements Consolidated Statements of Financial Position As of November 30, 2024, Vision Marine's total assets increased to $13.26 million from $11.42 million at August 31, 2024, primarily due to a significant rise in cash from $63k to $964k Consolidated Statements of Financial Position Summary | | As at November 30, 2024 ($) | As at August 31, 2024 ($) | | :--- | :--- | :--- | | Total current assets | 10,555,566 | 8,613,567 | | Total assets | 13,257,121 | 11,420,241 | | Total current liabilities | 3,664,490 | 7,689,681 | | Total liabilities | 4,125,611 | 8,400,254 | | Total shareholders' equity | 9,131,510 | 3,019,987 | | Deficit | (67,203,876) | (65,609,357) | - Cash increased significantly to $963,580 from $63,126[3] - Trade and other payables were more than halved, decreasing from $4.50 million to $2.06 million[3] - Derivative liabilities (current and long-term) saw a major reduction from a combined $2.18 million to $370k[3] Consolidated Statements of Changes in Equity (Deficit) For the three months ended November 30, 2024, shareholders' equity increased from $3.02 million to $9.13 million, primarily driven by $7.58 million raised from securities issuance Consolidated Statements of Changes in Equity (Deficit) Summary | Description | For the three-month period ended Nov 30, 2024 ($) | | :--- | :--- | | Shareholders' equity, beginning of period | 3,019,987 | | Total comprehensive loss | (1,602,337) | | Securities issuance, net of transaction costs | 7,438,849 | | Preferred shares converted | 136,689 | | Share-based compensation | 138,322 | | Shareholders' equity, end of period | 9,131,510 | Consolidated Statements of Comprehensive Income (Loss) The company experienced a significant downturn in performance for the three months ended November 30, 2024, with revenues plummeting to $142,411 from $986,392 in the prior-year period Consolidated Statements of Comprehensive Income (Loss) Summary | Metric | Q1 2025 (ended Nov 30, 2024) ($) | Q1 2024 (ended Nov 30, 2023) ($) | Change | | :--- | :--- | :--- | :--- | | Revenues | 142,411 | 986,392 | -85.6% | | Gross Profit (Loss) | (50,440) | 435,528 | N/A | | Net Finance Income | (1,403,947) | (5,224,179) | N/A | | Net Income (Loss) | (1,594,519) | 1,025,129 | N/A | | Basic and Diluted EPS | (1.97) | 11.97 | N/A | - The significant positive Net Finance Income in both periods is primarily due to large non-cash gains on the revaluation of derivative liabilities[7] Consolidated Statements of Cash Flows For the three months ended November 30, 2024, the company used $5.71 million in cash from operating activities, while financing activities provided $6.62 million, resulting in a net cash increase of $900,454 Consolidated Statements of Cash Flows Summary | Cash Flow Activity | Three months ended Nov 30, 2024 ($) | Three months ended Nov 30, 2023 ($) | | :--- | :--- | :--- | | Cash used in operating activities | (5,711,105) | (4,104,665) | | Cash provided by (used in) investing activities | (8,606) | 11,326 | | Cash provided by financing activities | 6,620,165 | 1,576,070 | | Net increase (decrease) in cash | 900,454 | (2,517,269) | | Cash, beginning of period | 63,126 | 3,359,257 | | Cash, end of period | 963,580 | 841,988 | - The primary source of cash was $6.79 million from the issuance of Voting Common Shares and warrants[9] Notes to the Condensed Interim Consolidated Financial Statements Note 1: Incorporation and Nature of Business Vision Marine Technologies Inc. primarily manufactures, sells, and rents electric boats, with highly seasonal operations where quarterly results are not indicative of future performance - The company's principal business is the manufacture, sale, and rental of electric boats[10] - Business operations are highly seasonal. Boat sales are highest in the fourth quarter (June-August), while rentals are highest from May to August[13][14] Note 2: Basis of Preparation and Going Concern Uncertainty The financial statements are prepared under IAS 34, highlighting a material uncertainty regarding the company's ability to continue as a going concern due to recurring losses and negative operating cash flows - Going Concern Uncertainty: The company has incurred recurring losses, has a deficit of $67.2 million, and negative operating cash flows, which indicates a material uncertainty and raises substantial doubt about its ability to continue as a going concern[17] - Management's plan to address this includes seeking additional financing from public and private markets. During the quarter, the company raised net proceeds of $6,786,619 from issuing common shares[19] - The company implemented two reverse stock splits: a 1-for-15 split on August 22, 2024, and a 1-for-9 split on October 8, 2024[28] - Adoption of amendments to IAS 1 resulted in the reclassification of certain derivative liabilities from long-term to current liabilities, affecting the presentation for both November 30, 2024, and the comparative period of August 31, 2024[29][31] Note 12: Long-term Debt As of November 30, 2024, the company's long-term debt totaled $444,159, consisting of term loans with interest rates between 9.44% and 13.87%, and a temporary bridge loan was fully repaid during the quarter Long-term Debt Summary | Debt Component | As at Nov 30, 2024 ($) | As at Aug 31, 2024 ($) | | :--- | :--- | :--- | | Term loans | 444,159 | 458,640 | | Current portion | (106,355) | (101,397) | | Long-term portion | 337,804 | 357,243 | - On September 2, 2024, the company obtained a temporary bridge loan of $270,500 at 30% annual interest, which was repaid in full on September 17, 2024. The loan incurred a processing fee of $74,762[47] Note 13: Derivative Liabilities The company's derivative liabilities significantly decreased during the quarter, resulting in a total gain of $1.67 million that impacted net finance income, driven by revaluation and conversions of warrants and preferred shares Warrants Issued to Common Shareholders The derivative liability for warrants issued to common shareholders was reduced to zero as of November 30, 2024, resulting in a non-cash gain of $30,564 recorded in net finance income Warrants Issued to Common Shareholders Derivative Liability | Description | As at Nov 30, 2024 ($) | As at Aug 31, 2024 ($) | | :--- | :--- | :--- | | Opening balance | 30,564 | 5,558,822 | | Change in estimate of fair value | (30,564) | (7,190,449) | | Closing balance | — | 30,564 | Series A Convertible Preferred Shares The derivative liability for Series A Convertible Preferred Shares decreased from $694,232 to $144,247 due to conversions into common stock and a net revaluation gain of $413,296 - During the quarter, 400 Series A Convertible Preferred Shares were converted into 9,877 Voting Common Shares at a value of $136,689[61] - The company recorded a net gain of $413,296 related to the valuation of these instruments in net finance income for the quarter[63] Series B Convertible Preferred Shares The derivative liability for Series B Convertible Preferred Shares significantly reduced from $1.46 million to $226,034, driven by a large revaluation gain of $1.23 million recorded in net finance income - The company recorded a net gain of $1,229,560 related to the valuation of these instruments in net finance income for the quarter[67] Series B Convertible Preferred Shares Derivative Liability | Description | As at Nov 30, 2024 ($) | As at Aug 31, 2024 ($) | | :--- | :--- | :--- | | Opening balance | 1,455,594 | — | | Revaluation at the end of the period | (2,019,193) | (4,642,780) | | Accelerated amortization of the deferred loss | 789,633 | 376,598 | | Closing balance | 226,034 | 1,455,594 | Note 14: Related Party Transactions The company engaged in significant transactions with related parties, including $2.76 million in R&D expenses and inventory deposits with MAC Engineering, SASU, and paid $454,390 in remuneration to directors and key management - Transactions for R&D expenses & Inventory Deposits with MAC Engineering, SASU, a company controlled by key management, totaled $2,759,362 for the quarter, a substantial increase from $791,906 in the prior-year period[70] Remuneration of Directors and Key Management | Remuneration of Directors and Key Management | Three months ended Nov 30, 2024 ($) | Three months ended Nov 30, 2023 ($) | | :--- | :--- | :--- | | Wages | 356,486 | 502,015 | | Share-based payments | 97,904 | 88,142 | | Total | 454,390 | 590,157 | Note 15: Capital Stock During the three months ended November 30, 2024, the company significantly increased its issued capital by issuing 1,198,003 shares through private and at-the-market offerings, raising $6.85 million in net cash proceeds - Issued 377,778 Voting Common Shares in a private placement for $3.57 million in net cash proceeds[76] - Issued 695,583 Voting Common Shares through an "at the market" offering for $3.28 million in net cash proceeds[77] - Issued 124,642 Voting Common Shares in exchange for services (marketing, consulting, board fees) valued at $591,571[74] - A 1-for-9 reverse stock split was implemented on October 8, 2024[78] Note 16: Share-Based Payments The company recorded a total share-based payment expense of $138,322 for the quarter, comprising $18,337 for stock options and $119,985 for warrants granted to an underwriter Share-Based Payment Expense Summary | Share-Based Payment Expense | Three months ended Nov 30, 2024 ($) | Three months ended Nov 30, 2023 ($) | | :--- | :--- | :--- | | Stock options | 18,337 | 74,333 | | Warrants | 119,985 | — | | Total Expense | 138,322 | 74,333 | - On September 16, 2024, the company granted an underwriter the option to purchase 18,896 Voting Common Shares at an exercise price of U.S. $11.25 ($15.29)[86] Note 17: Revenues Total revenues for the quarter ended November 30, 2024, were $142,411, a steep 85.6% decline from $986,392 in the same period last year, primarily due to a collapse in boat rental and club membership revenue Revenue Breakdown | Revenue Source | Three months ended Nov 30, 2024 ($) | Three months ended Nov 30, 2023 ($) | | :--- | :--- | :--- | | Sales of boats | 89,031 | 88,093 | | Sales of parts and boat maintenance | 31,361 | 30,497 | | Boat rental and boat club membership revenue | 22,019 | 867,802 | | Total Revenues | 142,411 | 986,392 | Note 20: Segment Information The company operates in two segments, 'Sale of electric boats' and 'Rental of electric boats', with the Sales segment generating $120,392 in external revenue and reporting a pre-tax loss of $1.61 million, largely due to non-cash derivative gains Segment Performance (Q1 2025) | Segment (Q1 2025) | Revenue from external customers ($) | Segment profit (loss) before tax ($) | Segment assets ($) | | :--- | :--- | :--- | :--- | | Sale of electric boats | 120,392 | (1,610,743) | 21,595,409 | | Rental of electric boats | 22,019 | 48,539 | 1,753,763 | - The pre-tax loss in the 'Sale of electric boats' segment for Q1 2025 includes a gain on derivative liabilities of $1,673,420[98] - For comparison, in Q1 2024, the 'Sale of electric boats' segment reported a profit of $1,126,640, which included a derivative gain of $5,411,168[98][99] Note 22: Commitments The company has significant future financial commitments, including minimum purchase obligations totaling $3.14 million for fiscal year 2025 and $1.27 million for 2026, along with undiscounted lease commitments for a new premises Unconditional Purchase Obligations | Unconditional Purchase Obligations | Amount ($) | | :--- | :--- | | 2025 | 3,143,058 | | 2026 | 1,272,764 | Note 23: Subsequent Events After the quarter ended, the company continued its financing activities, issuing 1.92 million shares through its "at-the-market" facility for $5.81 million in gross proceeds and converting all remaining Series A Convertible Preferred Shares - Between Dec 1, 2024, and Jan 9, 2025, the company raised $5.81 million in gross proceeds by issuing 1,917,537 shares via its "at-the-market" facility[104] - On December 21, 2024, all remaining Series A Convertible Preferred Shares were converted into 48,177 Voting Common Shares. No Series A shares remain outstanding[105]