# EDGAR Filing Document

**Accession Number:** 0001834975
**File Stem:** 0001731122-23-000519
**Filing Date:** 2023-3
**Character Count:** 425307
**Document Hash:** 8dd89c2fc967eaac1b0a6cb1c456eb67
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001731122-23-000519.hdr.sgml**: 20230331

**ACCESSION NUMBER**: 0001731122-23-000519

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 103

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230331

**DATE AS OF CHANGE**: 20230330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** VICINITY MOTOR CORP
- **CENTRAL INDEX KEY:** 0001834975
- **STANDARD INDUSTRIAL CLASSIFICATION:** MOTOR VEHICLES & PASSENGER CAR BODIES [3711]
- **IRS NUMBER:** 000000000
- **STATE OF INCORPORATION:** A1
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-40412
- **FILM NUMBER:** 23782271

**BUSINESS ADDRESS:**
- **STREET 1:** 3168 262ND STREET
- **CITY:** ALDERGROVE
- **STATE:** A1
- **ZIP:** V4W 2Z6
- **BUSINESS PHONE:** (604) 607-4000

**MAIL ADDRESS:**
- **STREET 1:** 3168 262ND STREET
- **CITY:** ALDERGROVE
- **STATE:** A1
- **ZIP:** V4W 2Z6

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Grande West Transportation Group Inc.
- **DATE OF NAME CHANGE:** 20201203

?xml version="1.0" encoding="utf-8"?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

___________________________

**FORM 6-K**

___________________________

**REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934**

**For the month of: March 2023**

**Commission File Number: 001-40412**

___________________________

**VICINITY MOTOR CORP.**

(Translation of registrant's name into English)

___________________________

**3168, 262nd Street**

**Aldergrove, British Columbia, Canada V4W 2Z6**

**Telephone: (604) 607-4000** 

(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 ☒ Form 40-F ☐ <br>

The information contained in Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3 of this Form 6-K is incorporated by reference into, or as additional exhibits to, as applicable, the registrant's Registration Statement on Form F-10 (File No. 333-258876).

**DOCUMENTS INCLUDED AS PART OF THIS REPORT**

---

| | |
|:---|:---|
| **<u>Exhibit No.</u>** | **<u>Description</u>** |
| 99.1 | [Annual Information Form of the Registrant for the fiscal year ended December 31, 2022.](e4522_ex99-1.htm) |
| 99.2 | [Audited Consolidated Financial Statements of the Registrant for the year ended December 31, 2022 together with the Reports of Independent Registered Public Accounting Firm.](e4522_ex99-2.htm) |
| 99.3 | [Management's Discussion and Analysis of Financial Condition and Results of Operations of the Registrant for the year ended December 31, 2022.](e4522_ex99-3.htm) |
| 99.4 | [Consent of PricewaterhouseCoopers LLP, dated March 30, 2023.](e4522_ex99-4.htm) |
| 99.5 | [Press release dated March 30, 2023 – Vicinity Motor Corp. Reports Fourth Quarter and Full Year 2022 Financial Results.](e4522_ex99-5.htm) |
| 99.6 | [Form 52-109F1 Certification of Annual Filings by CEO (pursuant to Canadian regulations).](e4522_ex99-6.htm) |
| 99.7 | [Form 52-109F1 Certification of Annual Filings by CFO (pursuant to Canadian regulations).](e4522_ex99-7.htm) |
| 101.INS | Inline XBRL Instance Document. |
| 101.SCH | Inline XBRL Taxonomy Schema Linkbase Document. |
| 101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

**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.

---

| | | | |
|:---|:---|:---|:---|
|  | **Vicinity Motor Corp.** (Registrant) | **Vicinity Motor Corp.** (Registrant) | **Vicinity Motor Corp.** (Registrant) |
| Date: March 30, 2023 | By: | /s/ Danial Buckle | /s/ Danial Buckle |
|  |  | Name: | Danial Buckle |
|  |  | Title: | Chief Financial Officer |

---

## Exhibit 99.1

**EXHIBIT 99.1**

**VICINITY MOTOR CORP.<br>ANNUAL INFORMATION FORM<br>FOR THE FINANCIAL YEAR ENDED<br> DECEMBER 31, 2022<br>March 30, 2023**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| **EXPLANATORY NOTES** | **2** |
| &nbsp;&nbsp;&nbsp;Date of Information | 2 |
| &nbsp;&nbsp;&nbsp;Presentation of Financial Information | 2 |
| &nbsp;&nbsp;&nbsp;Defined Terms | 2 |
| &nbsp;&nbsp;&nbsp;Forward-Looking Statements | 2 |
| **BACKGROUND AND CORPORATE STRUCTURE** | **3** |
| &nbsp;&nbsp;&nbsp;Name, Address and Incorporation | 3 |
| &nbsp;&nbsp;&nbsp;Inter-Corporate Relationships | 3 |
| **DEVELOPMENT OF THE BUSINESS** | **4** |
| &nbsp;&nbsp;&nbsp;Three Year History | 4 |
| **BUSINESS OF THE CORPORATION** | **11** |
| &nbsp;&nbsp;&nbsp;Summary | 11 |
| **RISK FACTORS** | **17** |
| **DIVIDENDS AND DISTRIBUTIONS** | **49** |
| **DESCRIPTION OF CAPITAL STRUCTURE** | **49** |
| **MARKET FOR SECURITIES** | **50** |
| &nbsp;&nbsp;&nbsp;Trading Price and Volume | 50 |
| &nbsp;&nbsp;&nbsp;Prior Sales | 52 |
| **ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER** | **53** |
| **DIRECTORS AND OFFICERS** | **53** |
| &nbsp;&nbsp;&nbsp;Name, Occupation and Security Holding | 53 |
| &nbsp;&nbsp;&nbsp;Cease Trade Orders and Bankruptcies | 54 |
| &nbsp;&nbsp;&nbsp;Penalties or Sanctions | 55 |
| &nbsp;&nbsp;&nbsp;Conflicts of Interest | 55 |
| **PROMOTERS** | **55** |
| **LEGAL PROCEEDINGS AND REGULATORY ACTIONS** | **55** |
| **INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS** | **56** |
| &nbsp;&nbsp;&nbsp;Related Party Transactions | 56 |
| **AUDITOR AND REGISTRAR AND TRANSFER AGENT** | **56** |
| **MATERIAL CONTRACTS** | **56** |
| **INTERESTS OF EXPERTS** | **56** |
| **ADDITIONAL INFORMATION** | **56** |
| **APPENDIX "A" GLOSSARY OF TERMS** | **57** |
| **APPENDIX "B" AUDIT COMMITTEE DISCLOSURE FORM 52-110F1**  | **62** |

---

**EXPLANATORY NOTES**

**Date of Information**

Unless otherwise stated, the information in this AIF is stated as at December 31, 2022.

**Presentation of Financial Information**

Vicinity Motor Corp. (the "**Corporation**") presented its consolidated financial statements in Canadian dollars for financial years ending up to December 31, 2020. For the financial year ended December 31, 2021, the Corporation switched to United States dollar reporting and continues to report in US dollars. All dollar figures in this AIF are in United States dollars, unless otherwise indicated. Canadian dollar amounts are indicated as "C$". The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").

**Defined Terms**

For an explanation of the capitalized terms and expressions and certain defined terms, please refer to the "Glossary of Terms" at Appendix "A" of this AIF.

**Forward-Looking Statements**

Certain statements (collectively, "**forward-looking statements**") in this AIF about the Corporation's current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking information and/or forward-looking statements within the meaning of applicable securities legislation, securities regulation and securities rules, as amended, and the policies, notices, instruments and blanket orders in force from time to time that are applicable to an issuer (collectively, "**Securities Laws**"). The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely" or "potential" or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements, although not all forward-looking statements contain these words.

Discussions containing forward-looking statements include, among other places, those under "*Business of the Corporation*" and "*Risk Factors*". Forward-looking statements are based on certain assumptions and estimates made by us in light of the experience and perception of historical trends, current conditions, expected future developments including projected growth in the security and related industries, and other factors we believe are appropriate and reasonable in the circumstances, but there can be no assurance that such assumptions and estimates will prove to be correct.

Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the factors, which are discussed in greater detail in the "*Risk Factors*" section of this AIF.

The purpose of the forward-looking statements is to provide the reader with a description of management's expectations regarding the Corporation's financial performance and may not be appropriate for other purposes. Readers should not place undue reliance on forward-looking statements made herein. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those anticipated in such forward-looking statements. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by forward-looking statements contained in this AIF. Furthermore, unless otherwise stated, the forward-looking statements contained in this AIF are made as of the date of this AIF, and we have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained in this AIF are expressly qualified by this cautionary statement.

**BACKGROUND AND CORPORATE STRUCTURE**

**Name, Address and Incorporation**

The Corporation was incorporated under the *Business Corporations Act* (British Columbia) (the "**BCBCA**") on December 4, 2012 under the name "Grande West Transport Group Inc.". On August 7, 2013, the Corporation changed its name to "Grande West Transportation Group Inc.". On March 29, 2021, the Corporation changed its name to "Vicinity Motor Corp." to reflect the Corporation's increasing focus on the commercialization of its next-generation electric buses and consolidated its share capital on the basis of three pre-consolidation common shares to one post-consolidation common share (the "**Consolidation**").

The Corporation's common shares (the "**Common Shares**") are publicly traded on the TSX Venture Exchange ("**TSXV**") under the symbol "VMC", on the NASDAQ under the symbol VEV and on the Frankfurt Stock Exchange (the "**FSE**") under the symbol "6LGA".

The Corporation conducts its active operations in Canada through its wholly owned operating subsidiary, Vicinity Motor (Bus) Corp. ("**VMCBC**"), which was incorporated on September 2, 2008 under the BCBCA under the name "Grande West Transportation International Ltd." and changed its name to "Vicinity Motor (Bus) Corp." on September 15, 2021. The Corporation conducts its active operations in the United States through its wholly owned operating subsidiary, Vicinity Motor (Bus) USA Corp. ("**VMUSA**"), which was incorporated on April 8, 2014 under the laws of the State of Delaware under the name "Grande West Transportation USA Inc." and changed its name to "Vicinity Motor (Bus) USA Corp." on June 10, 2021. VMUSA has one wholly-owned subsidiary "Vicinity Motor Property LLC" ("**Vicinity Property**"), which was formed on September 16, 2022 under the laws of the State of Delaware, and is also registered in the State of Washington.

**Inter-Corporate Relationships**

As of the date hereof, the Corporation has three active 100% wholly-owned subsidiaries, VMCBC, VMUSA and Vicinity Property.

The current organization structure of the Corporation is as follows:

![](image_002.jpg)

**DEVELOPMENT OF THE BUSINESS**

**Three Year History**

***Financial Year Ended December 31, 2020***

 ****

Beginning in March 2020, the Corporation's business and operations began to adapt to changes brought about by the COVID-19 global pandemic. As an essential business manufacturing on behalf of the transit industry, the Corporation was able to maintain production, although levels were at times reduced compared to prior to the COVID-19 pandemic. Some of the Corporation's suppliers and contract manufacturers temporarily suspended or reduced their production levels, and the Corporation's internal staffing levels in production were temporarily reduced in order to comply with government regulations and maintain physical distancing in order to protect the health of its staff, customers and other stakeholders. While the Corporation maintained sales and production since the start of the COVID-19 pandemic, the Corporation did so at a reduced rate in order to comply with physical distancing requirements and government health regulations. The Corporation was able to secure government business grants in Canada to support its business through this period, including aid from the Canadian government in the amount of C$543,654 during the nine months ended September 30, 2020.

On March 20, 2020, the Corporation announced the closing of a non-brokered financing of unsecured convertible debenture units by issuing 1,750 debenture units ("Debenture Units") for gross proceeds of approximately C$1,750,000, each Debenture Unit sold at a price of C$980.00 per Debenture Unit and consisting of one 10.0% unsecured convertible debenture of the Corporation in the principal amount of C$1,000 (each, a "Debenture") with interest payable upon maturity being 12 months from the date the Debentures are issued, and 600 Warrants expiring 12 months after the date of issuance of such Warrants, the Debentures to be repaid in cash at maturity and each Warrant entitling the holder thereof to purchase one Warrant Share at an exercise price of C$0.38 per Warrant Share at any time up to 12 months following the closing date of the debenture financing.

On October 26, 2020, the Corporation announced that it had renewed its C$20,000,000 credit facility with the Royal Bank of Canada, to be used for ongoing working capital requirements.

On November 18, 2020, the Corporation announced that it had closed the first tranche of its private placement of Units announced on November 4, 2020 which consisted of 7,816,118 Units for gross proceeds of C$7,816,118. Each Unit consisted of one Common Share and one-half of one Warrant. Each whole Warrant entitles the holder to acquire one Warrant Share at a price of C$1.50 per Warrant Share for a period of two years from the date of closing of the first tranche of the private placement. In circumstances where, any time after the expiry of the four-month restricted period, the Corporation's stock trades at $1.75 or greater for 20 consecutive trading days, the Corporation may give notice accelerating the expiry date of the exercise period of the Warrants to that date which is 30 days from the date of such notice. 389,100 Finder's Warrants (non-transferable) having the same terms as the Warrants were issued in compensation.

On November 20, 2020, the Corporation closed the second tranche of its private placement originally announced on November 4, 2020, which consisted of 843,000 Units for gross proceeds of C$843,000. 33,780 Finder's warrants (non-transferable) having the same terms as the Warrants were issued in compensation.

***Fiscal Year Ended December 31, 2021***

 ****

On March 29, 2021, the Consolidation and change of corporate name to "Vicinity Motor Corp." was made effective at market open.

On April 19, 2021, the Corporation filed a Canadian short form base shelf prospectus (the "Base Shelf Prospectus") covering an offering amount not to exceed C$150,000,000 during the 25 month period that the Base Shelf Prospectus remains effective.

On July 7, 2021, the Common Shares began trading on the NASDAQ under the symbol "VEV."

On August 27, 2021, the Corporation entered into an equity distribution agreement with B. Riley Securities, Inc. on behalf of itself and co-sales agent Spartan Capital Securities, LLC (the "Equity Distribution Agreement"), whereby the Corporation may, at its discretion and from-time-to-time, sell up to US$50 million of Common Shares using "at-the-market" distributions in connection with the said sales agents (the "ATM Program"). The Corporation filed a prospectus supplement dated August 27, 2021 in respect of the ATM Program.

On October 5, 2021, the Corporation entered into a Sales and Marketing Agreement (the "Sales and Marketing Agreement") with Optimal Electric Vehicles, LLC ("Optimal-EV") to distribute and sell the Optimal S1 and E1 product lines for a period of 10 years in exchange for a license fee of US$20,000,000 (the "License Fee"). Pursuant to the terms and conditions of the Sales and Marketing Agreement, Optimal-EV appointed the Corporation as its exclusive sales and marketing agent for such product lines directly in Canada and through a dealer network in the U.S. and Mexico. The License Fee is payable in accordance with the following schedule: (i) US$3,000,000, which was paid within two days from the date of the Sales and Marketing Agreement; (ii) US$12,000,000 payable which was paid on October 31, 2021; and (iii) the remaining US$5,000,000 when the combined deliveries of the vehicles exceed 250 units. Optimal-EV has the right to terminate the Sales and Marketing Agreement if the License Fee is not paid when due. The Corporation will share in the profits of every sale of licensed Optimal-EV products based on agreed upon calculations with amounts varying depending on the type of transaction. During the year ended December 31, 2022, the Corporation terminated the Sales and Marketing Agreement.

On October 5, 2021, the Corporation also closed its non-brokered financing of unsecured Debenture Units in the principal amount of C$10,300,000 (the "2021 Debentures"). Each Debenture Unit was sold at an offering price of C$985.00 per Debenture Unit and consisted of one 8% unsecured 2021 Debenture of the Corporation in the principal amount of C$1,000 with interest payable upon maturity being 12 months from the date the 2021 Debentures were issued and 40 Warrants expiring 12 months after the date of issuance of such Warrants. The 2021 Debentures will be repaid in cash at maturity. Each Warrant entitles the holder thereof to purchase one Warrant Share at an exercise price of C$7.50 per Warrant Share at any time up to 12 months following the issuance date, subject to adjustment in certain events. The 2021 Debentures, in whole or in part, will be convertible into Common Shares at the option of the holder at any time following the occurrence of an event of default that is uncured for a period of 10 business days, at a conversion price equal to the market price on the date the event of default. Holders converting their 2021 Debentures will receive accrued and unpaid interest thereon to the date of actual conversion. The Corporation has the right at any time, on 10 days' notice, to prepay the 2021 Debentures in whole or in part, pro rata among the holders. The repayment shall be in cash, against the principal amount of the 2021 Debenture plus accrued and unpaid interest. The Corporation paid an administrative fee of 0.5% of the funds raised to Leede Jones Gable Inc. The maturity date of the 2021 Debentures was subsequently extended to October 4, 2023, and 1,000,000 Warrants exercisable into Warrant Shares at C$2.25 per Warrant Share were issued in consideration of the extension, also expiring on October 4, 2023. 412,000 Warrants dated October 4, 2021 that were issued in connection with the original 2021 Debentures, were cancelled as part of the debt extension.

On October 25, 2021 the Corporation closed an underwritten public offering of 3,990,610 Units at a price of US$4.26 per Unit for gross proceeds to the Corporation of US$16,999,998.60. Spartan Capital Securities, LLC ("Spartan"), acted as sole book-running manager for the offering. Revere Securities, LLC, was the exclusive selling group member for the offering.

Each Unit consisted of one Common Share and one-half of one Warrant. Each whole Warrant entitled the holder to purchase one Warrant Share at an exercise price of US$5.10 per Warrant Share, subject to adjustment in certain circumstances. The Warrants will be exercisable immediately upon issuance and expire three years from the issuance date. The Units were issued under an underwriting agreement dated October 21, 2021 between the Corporation and Spartan (the "Underwriting Agreement"). Spartan received underwriting commissions equal to 7% of the gross proceeds raised in the offering, equal to approximately US$1.19-million. The Corporation filed a prospectus supplement dated October 21, 2021 to qualify the distribution of the Units.

***Fiscal Year Ended December 31, 2022***

 ****

On January 5, 2022, the Corporation announced the receipt of a new C$3.5 million purchase order from North American private transit operator First Transit for eight (8) Vicinity™ Classic buses. Per the terms of the supply agreement, First Transit has ordered eight (8) of the Corporation's 35-foot Vicinity™ Classic buses with expected delivery in 2023. The buses will service the city of Yellowknife, Canada.

On January 19, 2022, the Corporation announced it had secured a C$14 million purchase order from Pioneer Auto Group, a leading retail automotive dealer primarily based in British Columbia, for 100 VMC 1200 Class 3 electric trucks, and Pioneer has been appointed to act as the Corporation's exclusive dealer in the province of British Columbia.

On January 26, 2022, the Corporation announced it had entered into an investor relations agreement with MarketSmart Communications Inc., under which MarketSmart would provide Canadian investor relations services. The investor relations agreement was for an initial term of twelve months commencing on January 25, 2022, with an option for renewal. Either party may terminate the agreement for any reason, with or without cause, on 30-days written notice to the other. Pursuant to the investor relations agreement, MarketSmart was paid a fee of $7,000 per month, plus applicable taxes. As of the date of this AIF, the agreement is expired.

On February 1, 2022, the Corporation announced that it had signed a sales and marketing agreement with Skydome Auto and Truck Centre Inc., an automotive dealer and service centre in the Greater Toronto Area of Ontario, Canada, including an initial order for 50 VMC 1200 Class 3 electric trucks. Skydome has also been appointed to act as the Corporation's exclusive dealer in the city of Brampton, a part of the Greater Toronto region in Ontario, Canada.

On February 21, 2022, the Corporation announced that it has signed a sales and marketing agreement with Paradigm Automotive Corporation ("Paradigm"), an automotive sales, leasing and upfitting company in Ontario, Canada, including an initial C$12.0 million order for 100 VMC 1200 Class 3 electric trucks. Paradigm has also been appointed to act as Vicinity's exclusive dealer in the Hamilton and Niagara regions of Ontario. The VMC 1200 deliveries are expected to begin in the second quarter of 2022.

On various dates in Q1, Q2 and Q3 2022, the Corporation announced purchase orders for VMC Optimal E1 and S1 electric chassis vehicles. Given the Corporation's subsequent termination of the Sales and Marketing Agreement before the end of the financial year ended December 31, 2022, the Corporation is no longer producing VMC Optimal vehicles. See "Legal Proceedings and Regulatory Actions" for additional information about the dispute with Optimal-EV.

On March 15, 2022, the Corporation announced it has expanded its strategic U.S. distribution agreement with ABC Companies, a leading provider of motorcoach and transit equipment in North America. The ABC distributorship supports the Corporation's focus on U.S. expansion. Under the expanded agreement, ABC will distribute the Corporation's product portfolio to 18 states covering key population centers across the country important to the Corporation's growth markets. The Vicinity line fills in key transit and private shuttle markets within the ABC portfolio of new vehicles for these locations, enhancing the offering to current customers while expanding to other sectors.

On March 17, 2022, the Corporation announced that it had entered into a strategic U.S. distribution agreement with DATTCO, Inc. a U.S. full-service passenger transportation company, to distribute Vicinity vehicles within the Northeastern United States. Headquartered in New Britain, Connecticut, DATTCO operates facilities throughout New England and employs over 2,000 people in Massachusetts, New Hampshire, Maine, Rhode Island and Vermont. The distributorship supports Vicinity's focus on U.S. distribution expansion for its growing portfolio of electric vehicles and conventionally powered buses. In addition to operating a fleet of over 1,200 buses, DATTCO provides sales, parts, warranty and service support for transportation providers in the region. Under the new agreement, DATTCO will distribute Vicinity vehicles throughout New England. The Vicinity line fills in key transit, EV and shuttle opportunities within the DATTCO portfolio of vehicles, further enhancing its offering to current customers while expanding to new sectors. In conjunction with the agreement, DATTCO has placed an initial order valued at over $2 million for various Vicinity vehicles.

On March 28, 2022, the Corporation issued 4,444,445 Units comprised of 4,444,445 Common Shares and 4,444,445 Warrants at a combined purchase price of US$2.70 per Unit in a registered direct offering for gross proceeds of US$12,000,001.50, before deducting placement agent fees and expenses. The Warrants will be exercisable 6 months from the closing of the offering (the "Initial Exercise Date") at an exercise price of US$3.36 per Warrant Share and will expire three years from the Initial Exercise Date. A.G.P. / Alliance Global Partners was the sole placement agent for the offering and received cash commission of 7% of the gross proceeds of the offering and 133,333 placement agent warrants at an exercise price of US$2.97 per Warrant Share and will expire two years from the Initial Exercise Date. The Corporation filed a prospectus supplement dated March 23, 2022, including in the Registration Statement to qualify the distribution of the Units, the placement agent warrants and the underlying securities.

On April 4, 2022, the Corporation announced that it has signed a distribution agreement with Central States Bus Sales, Inc. ("Central States"), one of the largest school and commercial bus dealers in the U.S., to offer the Company's full product portfolio, including an initial commitment for 18 demo and stock buses. Headquarter in Fenton, MO, Central States has been a regional leader in bus sales and service since 1975. Central States supplies thousands of school and commercial buses annually to customers throughout the region, providing a host of transportation solutions. As one of the largest bus dealers in the country, Central States offers full-service facilities in Missouri, Illinois, Tennessee, Kentucky and Arkansas. The VMC distribution agreement covers 7 states extending from Kentucky to Nebraska providing VMC a significant advantage in this important market. Under the new agreement, Central States will distribute Vicinity vehicles throughout the entire central region. The Vicinity line fills in key transit, EV and shuttle opportunities within Central States' portfolio of vehicles, further enhancing its product offering to current customers while expanding into new market sectors. The agreement includes a commitment to 18 stock and demonstration vehicles.

On April 13, 2022, the Corporation announced that it has signed a new distribution agreement with Hoekstra Transportation, Inc. ("Hoekstra"), Michigan's largest school bus, commercial bus, cargo and custom van dealer, to offer the Corporation's vehicles, including an initial order for eight (8) vehicles. Under the terms of the agreement, Hoekstra will distribute Vicinity vehicles throughout Michigan, Indiana and Ohio. The Vicinity line adds to Hoekstra's portfolio of traditional and electric vehicles.

On April 26, 2022, the Corporation announced that it signed a non-exclusive distribution agreement with Soderholm Sales & Leasing, Inc. ("SSL"), a full service bus dealer in Hawaii and the Pacific islands region, to offer the Corporation's vehicles, including an initial commitment for four (4) demo and stock buses. Under the new agreement, SSL will distribute Vicinity vehicles throughout Hawaii. The Vicinity line adds to the SSL's growing portfolio of traditional and electric vehicles.

On May 17, 2022, the Corporation announced it has entered into a Master Goods and Service Agreement with Sustainability Partners LLC ("SP"), an ESG focused company committed to eliminating deferred maintenance infrastructure by enabling sustainability, to utilize its Electric Vehicles as a Service™ (EVaaS) program to finance the conversion of traditional government fleets to Vicinity's electric vehicles. Under the terms of the agreement, SP will engage Vicinity as an independent contractor to purchase its portfolio of electric vehicles for government and corporate fleets utilizing its EVaaS program.

On June 15, 2022, the Corporation announced that it has completed the extension of the maturity date of its 8% unsecured debenture in the principal amount of CAD$10,300,000 by a further year to October 4, 2023. In consideration for the extension, the Company has issued to the debt holders (on a pro rata basis), 1,000,000 share purchase warrants (the "New Warrants") exercisable until October 4, 2023 at an exercise price of $2.25 per common share. The New Warrants will bear a four month and one day restricted period from the date of issuance. 412,000 share purchase warrants dated October 4, 2021 that were issued in connection with the original debt issuance, have been cancelled as part of the debt extension.

On June 23, 2022, the Corporation announced that it has received an order from the TOK Group, a transportation solutions provider, for six (6) Vicinity Lightning™ electric buses valued at over CAD$3.0 million. These shuttle buses will be used to support a cleaner, greener, quieter shuttle bus service, provided by Nieuport Aviation between Billy Bishop Toronto City Airport and Union Station in Toronto, Canada. The order of six new electric buses are scheduled for delivery in the first quarter of 2023.

On July 19, 2022, the Corporation announced that it has signed a distribution agreement with Schetky Bus and Van Sales ("Schetky"), a dealership and transportation solutions provider, to offer the Vicinity vehicles, including an initial commitment for 18 vehicles. Under the terms of the agreement, Schetky will distribute Vicinity vehicles throughout Washington, Oregon, Idaho and Alaska. The Vicinity line adds to Schetky's portfolio of existing internal combustion and electric vehicles.

On July 21, 2022, the Corporation announced that its VMC 1200 Class 3 electric trucks have been approved for the Incentives for Medium and Heavy-duty Zero-Emission Vehicles (iMHZEV) Program administered by Transport Canada, which helps to make buying or leasing zero-emission vehicles more affordable. The iMHZEV Program offers point-of-sale incentives for Canadian organizations and businesses who buy or lease an approved MHZEV. Before including a vehicle on the list of eligible vehicles, Transport Canada reviews an application from the automaker to certify that the vehicle meets the iMHZEV Program requirements. Incentives range from CAD$10,000 to $200,000 depending on vehicle type. Businesses will have the option to purchase or lease new vehicles under the iMHZEV program, with a maximum of 10 incentives or CAD$1,000,000 available per calendar year per organization.

On August 16, 2022, the Corporation announced that it has signed a distribution agreement with the TOK Group ("TOK"), a Canadian transportation solutions provider, to offer the Corporation's VMC 1200 Class 3 electric trucks, including an initial commitment for 10 vehicles. Under the new agreement, TOK will distribute Vicinity's VMC 1200 Class 3 Electric Truck's throughout the York Region of the Greater Toronto Area. The VMC 1200 adds to TOK's portfolio expertise in electric vehicle sales. The agreement includes an initial commitment for 10 VMC 1200 vehicles.

On October 4, 2022, the Corporation announced that it has officially launched and begun deliveries of the first Class 3 electric truck to roll off the assembly line in Canada.

On October 6, 2022. The Corporation announced that it has received an order from strategic partner Sustainability Partners LLC ("SP"), an ESG focused Public Benefit Company committed to eliminating deferred maintenance infrastructure by enabling sustainability, for four (4) Vicinity Lightning™ electric buses via Soderholm Sales & Leasing, Inc. ("Soderholm"), Vicinity's Pacific Islands distributor. The Vicinity Lightning™ shuttle buses will be used at the Daniel K. Inouye International Airport in Honolulu, the largest airport in the State of Hawaii serving 12 million passengers per year. The State of Hawaii Department of Transportation will utilize SP's Electric Vehicles as a Service™ (EVaaS) program to finance the conversion of traditional government fleets to Vicinity's electric vehicles. Soderholm will facilitate the sale and provide long-term technical and maintenance support for the project. The order of four new electric buses is scheduled for delivery in 2023.

On October 17, 2022, the Corporation announced the receipt of a purchase order for 1,000 VMC 1200 Class 3 Electric Trucks (the "PO") from Pioneer Auto Group – Vicinity's exclusive dealer in the province of British Columbia, Canada. Per the terms of the PO, which exceeds US$100 million in revenue, Vicinity is to deliver 1,000 VMC Class 3 Electric Trucks throughout 2023 as they are available.

On November 9, 2022, the Corporation provided a corporate update on the construction of the Corporation's new manufacturing facility in Ferndale, Washington (the "Washington Facility") and expected procurement and installation of a power solution by the end of 2022. As previously announced, the Washington Facility is located near the Corporation's Aldergrove, British Columbia Canadian Headquarters with easy access to port, rail and truck shipping and receiving facilities. Operations at the Washington Facility will include vehicle assembly and upfitting, "Buy America" compliant assembly, pre-delivery inspections, research and development, as well as general technical work and servicing.

On December 6, 2022, the Corporation announced it has partnered with Québec-based Omega Liquid Waste Solutions ("Omega") to upfit and resell the Corporation's VMC 1200 Class 3 Electric Truck with vacuum system used for sewer, septic tank and grease trap cleaning. Omega has purchased and is upfitting a VMC 1200 with its vacuum solution that will be showcased at the Water & Wastewater Equipment, Treatment & Transport (WWETT) Show. WWETT is the world's largest annual trade show for wastewater and environmental service professionals and took place in Indianapolis, Indiana in February, 2023. Omega intends to purchase additional vehicles for upfit and resale to its North American client base.

***Subsequent Events***

 ****

On January 4, 2023, the Corporation announced that it has secured US$30M in credit commitments ("credit commitments") from Royal Bank of Canada ("RBC") and Export Development Canada ("EDC") to fund production of the Corporation's VMC 1200 class 3 electric truck.

On February 21, 2023, the Corporation announced that it had successfully closed on a previously announced US$30M credit facility from RBC and EDC to fund production of the Corporation's VMC 1200 class 3 electric truck. The US$30 million credit facility is designed for use with Vicinity's VMC 1200 all-electric class 3 truck and can be used for up to 100% of eligible production costs on the vehicle, excluding labor and overhead from Vicinity's assembly plants. The interest rate on this new facility is prime plus 2% and is secured by the existing assets of the Corporation. In addition to the US$30 million credit facility for the VMC 1200 trucks, RBC will continue to provide Vicinity with C$10 million in an asset-backed facility (ABL) for use with its existing bus orders and a US$3 million letter of credit facility. The additional facility is an amendment to the current asset-backed facility ("ABL") currently in place with RBC, and was reflected in an amended and restated loan agreement between RBC and VMCBC dated February 17, 2023 (the "Amended Loan Agreement"), with the Corporation, VMUSA and Vicinity Property as guarantors.

On February 23, 2023, the Corporation announced it signed a dealer network development services agreement with Dealer Solutions Mergers and Acquisitions ("DSMA") to enhance North American market penetration for its industry-leading, Class 3 VMC 1200 all-electric trucks. Per the terms of the services agreement, DSMA will assist Vicinity in identifying and establishing dealer performance criteria, metrics, and guidelines for selecting and prioritizing dealership opportunities, setting the strategy for "early adopters", prioritizing geographic focus and helping define opportunities to enter different markets or introduce new vehicle offerings.

On March 1, 2023, the Corporation announced that it has received a notification letter from the Nasdaq Stock Market LLC dated February 28, 2023, notifying the Corporation that due to its closing bid price being below $1.00 per share for 30 consecutive days, it is not in compliance with the minimum bid price requirement as set forth under NASDAQ Listing Rule 5550(a)(2) for continued listing on the NASDAQ. In accordance with the NASDAQ Listing Rule 5810(c)(3)(A), the Corporation has been provided 180 calendar days, or until August 28, 2023, to regain compliance with NASDAQ Listing Rule 5550(a)(2). To regain compliance, the Corporation's shares must have a closing bid price of at least US$1.00 for a minimum of 10 consecutive business days, at which point the matter will be closed. In the event that the Corporation does not regain compliance by August 28, 2023 the Corporation may be eligible for an additional 180-day period to regain compliance. The receipt of the Notification Letter has no immediate effect on the listing of the Corporation's shares, which will continue to trade uninterrupted on NASDAQ under the ticker "VEV".

On March 27, 2023, the Corporation announced that it had completed a private placement of unsecured convertible debentures for gross proceeds of C$4,000,000. The convertible debentures are issued in denominations of C$1,000, bear interest at 15% per annum, and mature 18 months from the closing date. Interest payments on the convertible debentures have been deferred to the twelve-month anniversary and/or maturity.

Each convertible debenture is convertible at the holder's option into Units at any time prior to maturity at a conversion price of C$1.45 per Unit. Upon conversion, each Unit will consist of one Common Share and 0.2 of a Warrant. Each Warrant is exercisable into a Warrant Share at an exercise price of C$1.45 for a period of thirty-six months following the initial debenture closing date.

 

**BUSINESS OF THE CORPORATION**

**Summary**

The Corporation designs, builds and distributes a full suite of mid-size transit buses for public and commercial use, including electric, CNG and clean diesel buses and also commercial electric trucks (collectively, the "**Vicinity Vehicles**"). The Corporation has been successful in supplying Canadian and U.S.-based municipal transportation agencies and private operators with Vicinity Buses. The Corporation, with its strong distribution chain in the U.S., is actively pursuing opportunities in public and private transit fleet operations that would benefit from the Corporation's vehicles.

The Corporation has worldwide strategic partnerships and supply agreements to manufacture Vicinity products in Europe, Asia, Canada, and the United States. The Corporation is currently completing the construction of an assembly plant in Ferndale, Washington State, a cost-effective location in proximity to the border between Canada and the USA. The Washington State facility will produce buses to be compliant with the "Buy America" Act and is expected to be capable of producing electric, CNG, clean diesel and EV truck units across all sizes and powertrains.

In a large and unsaturated market segment, the Corporation is poised to capture sales growth from both the replacement of cut-away buses and the need for transit fleets to find the appropriate balance of vehicle sizes across Canada and the United States. The Corporation is at the forefront of the changeover of industrial combustion engines to electric vehicles for the bus and truck markets.

The Corporation has established a Disadvantaged Business Enterprise program in accordance with regulations of the U.S. Department of Transportation (DOT), 49 CFR Part 26.

The Corporation's revenue is summarized as follows (in thousands of dollars):

---

| | | |
|:---|:---|:---|
|  | Year ended <br> December 31, 2022 | Year ended<br> December 31, 2021 |
|  | $ | $ |
| **Vehicle Sales:** |  |  |
| Bus Sales | 11699 | 38197 |
| Truck Sales | 982 |  |
| Shuttle Sales | 484 |  |
| **Other revenue:** |  |  |
| Spare part sales | 5183 | 2701 |
| Operating lease revenue | 127 | 810 |
| Total Revenue | 18475 | 41708 |

---

**Products**

<u>Vicinity Vehicles</u>

*General*

 

Vicinity buses were born from a need expressed by transit systems looking for a durable, reliable, customer oriented mid-size vehicle at a reasonable price point. The Corporation designs the Vicinity buses with affordability, accessibility and global responsibility in mind. The Vicinity Buses cost significantly less than a 40' bus and are considerably more durable than cut-away buses which are based on a truck chassis.

The VMC Truck line builds on the in-house expertise of electric commercial vehicle development the Corporation has invested in the transit bus business expanding product reach into the broad commercial truck market, specifically Class 3 low cab forward chassis solutions.

*Vicinity Classic*

 

Vicinity's flagship bus offers significant fuel savings, lower upfront costs, low operating costs, and provides a smoother ride than competitors providing greatly improved overall value. The Vicinity buses are designed to meet North America's rigorous operating conditions and are durability tested by the Federal Government at Altoona, Pennsylvania. Vicinity buses are ranked "Best in Class" in the FTA's Bus Test Program.

Vicinity Buses' features include:

● Big bus technology in a compact, affordable platform;

● Worry-free two-year bumper-to-bumper warranty;

● Galvanized steel monocoque structure;

● Air Ride with Independent Front Suspension;

● Bonded windows;

● Fiberglass body panels;

● Cummins engine;

● ZF, Allison or Voith transmission;

● Low Floor Step-free Entry with ADA Compliant Front entry ramp; and

● Customizable electronic 'smart bus' technical features.

*Vicinity Lightning<sup>TM</sup>*

** 

The Vicinity Lightning is the Corporation's first fully electric bus and the newest bus model in the Corporation's product portfolio. The Vicinity Lightning is an environmentally friendly alternative to diesel buses currently used in a broad product segment. Uniquely positioned to offer the size and maneuverability of small buses with the durability and capacity of larger buses, the Vicinity Lightning places the Corporation in an excellent position to capture market share as customers and policy drive demand for zero emission transportation solutions.

The Vicinity Lightning is a low-floor transit bus, scaled down for a diverse range of uses including transit, airports, community shuttles, para-transit, university shuttles, corporate and other unique applications. The Vicinity Lightning is designed from the ground up and purpose-built to use commercially available high-volume, reliable components from the automotive industry. It features 19.5" tires and hydraulic disc brakes, high-power AC direct on-board charging and DC fast charging options. Its design allows it to fit into any standard commercial garage with no major infrastructural electrical upgrades.

The Vicinity Lightning uses proven zero emission technology supporting a cleaner and more sustainable planet and drives community prosperity through increased access to mobility. The size and design of the bus provides maximum versatility supporting multiple transportation applications. The Vicinity Lightning incorporates high quality, proven, and commercially validated technology along with standardized electric-vehicle charging solutions. The Vicinity Lightning delivers ease of use without high-cost proprietary technology and charging systems. The smart intentional design allows a diverse range of users to adapt the Vicinity Lightning platform conveniently into operations with very low transition burden.

*VMC 1200 Electric Truck*

 

*Parts Sales*

 

The Corporation earns additional recurring revenues by selling aftermarket parts. Aftermarket parts sales are expected to continue to increase as the existing Vicinity bus fleet ages and new vehicles are placed into service. Aging of the installed fleet base in addition to ongoing expansion into the passenger transportation and freight market naturally increases the reach of aftermarket parts and continued improvements in volume pricing expand the Corporation's competitiveness in this high-margin business segment.

**Washington Facility**

The Corporation expects to bring production online at the Washington Facility in Q2 2023. Operations at the Washington Facility will include vehicle assembly and upfitting, "Buy America" compliant assembly, pre-delivery inspections, research and development, as well as general technical work and servicing.

**Marketing**

The Corporation's sales team is focused on the goal of securing purchase orders from commercial transportation companies, transit operators, government agencies and universities.

The Corporation's priority is to generate customers across all sectors targeted by the Corporation including, but not limited to, transit, shuttle, universities, government and commercial sectors. Many of the customers that the Corporation has deployed or is targeting have other buses in their fleet that the Corporation may potentially replace with the Classic and the Vicinity Lightning. Ultimately, the Corporation intends to be the best choice for buses in this segment regardless of the fuel type that the customer chooses.

The Corporation's bus sales plan in Canada is to meet with the top potential customers and obtain purchase orders for new buses for their production vehicle requirements.

United States bus distribution strategy involves localized bus dealers that actively engage and promote the sales of the Corporation's buses, leveraging current client relationship and market presence. The Corporation works with dealers and their customers to address customer needs by responding with technical information and competitive proposals to generate sales.

In Canada, the Corporation is expanding its VMC 1200 truck dealer distribution network to promote the sales and service of VMC trucks throughout the country. VMC truck dealers will inventory and sell the VMC 1200 trucks to end-users. As announced in February 2023, the Corporation has engaged Dealer Solutions Mergers and Acquisitions to support the Corporation in developing its Canadian dealer distribution network.

**Specialized Skill and Knowledge**

There is a specialized skill required for the development, operations, maintenance, sales and marketing of the Corporation's technology and buses. The Corporation's current staff possesses the necessary skills, knowledge, and expertise required for the Corporation's business. As additional employees are added to the Corporation, they will be trained by existing Corporation staff as needed.

As the Corporation expands operations and continues to grow, ensuring that all employees possess the necessary skills, education, and appropriate licenses as required by regulatory agencies will be important in sustaining the Corporation's growth.

**Competitive Conditions**

**Components**

The Corporation utilizes a global supply chain for component parts for buses ensuring high quality and cost-effective products with the highest safety standards. Wherever possible there are multiple suppliers for components to ensure there is no economic dependence on any individual supplier.

However, as a result of the COVID-19 global pandemic, some of the Corporation's suppliers suspended or scaled back their operations and continued supply chain disruptions all over the world continue to impact the Corporation and deliveries of component parts for production of its vehicles. These impacts resulted in order backlogs for the Corporation's vehicles. The Corporation actively pursues opportunities to offset and balance supply chain risks through design and evaluation of alternative vendors and resources where possible.

**Intangible Properties**

The Corporation has invested significant resources in developing its suite of Vicinity Buses. The Corporation created and owns the rights to the design of its buses and ongoing product development. The Corporation has intellectual property agreements in place where necessary with partners and developers ensuring oversight over maintaining internally created or developed intellectual property. The Vicinity Buses use key components from established third-party suppliers. The Corporation does not currently have patents, and licenses, but may choose to obtain patents and licenses on our designs, processes or inventions in the future. The Corporation's grant from SDTC is recorded in the Financial Statements as a reduction in intangible assets.

**Cycles**

The Corporation does not expect the market for transit buses to experience normal cyclical or seasonal changes. The Corporation has entered the EV truck market which has more steady demand than the transit bus industry.

Significant United States and Canadian state and federal funding programs are in place which incentivize the addition of battery electric commercial vehicles which helps contribute to demand.

**Economic Dependence**

The Corporation's sales within a calendar year have been concentrated on a small number of customers and therefore the Corporation's revenues are reliant on a small number of customers. However, on a year-to-year basis the customers have changed and are not the same small number of customers on a repeated basis and the Corporation endeavors to expand its base of customers.

**Changes to Contracts**

The Corporation does not reasonably expect any material changes to contracts or business relationships in the current financial year, other than the Amended Loan Agreement with RBC, as described elsewhere in this AIF.

**Environmental Protection**

Environmental laws and regulations may affect the operations of the Corporation. The Corporation is subject to numerous environmental and health and safety laws, including statutes, regulations, bylaws and other legal requirements. These laws relate to the generation, use, handling, storage, transportation and disposal of regulated substances, including hazardous substances, dangerous goods and waste, emissions or discharges into soil, water and air, including noise and odors (which could result in remediation obligations), and occupational health and safety matters, including indoor air quality. Failure to dispose of these in a manner compliant with local environmental regulation could expose the Corporation to penalties and clean-up costs. These legal requirements vary by location and can arise under federal, provincial, state or municipal laws. Any breach of such laws, regulations or requirements may negatively affect on our Corporation and its operating results.

Growing concerns about climate change may result in the imposition of additional regulation particularly with respect to greenhouse gas emissions. Several jurisdictions around the world, including Canada, and various provinces within Canada, have implemented or intend to implement regulations to put a price on carbon emissions to address climate change concerns. These regulations may impact the Corporation's business in terms of increased cost and compliance efforts. However, given the evolving nature of policies related to climate change and the regulation of carbon emissions, it is not currently possible to predict either the nature of anticipated requirements or the impact on the Corporation's business. Further, such policies may increase interest in and demand for the Corporation's electric vehicles.

**Employees**

As at the date of this AIF, the Corporation has approximately 60 employees, who are responsible for assisting the management of the Corporation and its day-to-day operations. The Corporation relies heavily on its senior management team. Operations could be impacted if one or more members of the senior management team were to depart unless the Corporation has in place sufficient safeguards. The Corporation has developed a succession plan to ensure continuity and mitigate any potential disruptions from any departures in the senior management team.

**Foreign Operations**

The Corporation has worldwide strategic partnerships to manufacture its products in Europe, Asia, Canada, and the United States. See "*Three Year History*" and "*Business of the Corporation*" for details of our foreign operations. As the Corporation continues to grow, the Corporation expects to expand our United States operations. The Corporation's Washington Facility is expected to be operational in Q2 2023.

There are risks associated with foreign operations, including currency risk and regulatory risk. In the event there is a dispute, the Corporation may be unable to obtain legal remedy or legal proceedings may be prohibitively expensive.

**Lending**

The Corporation's operations generally do not include any lending operations. Invoices paid by customers must be paid in a reasonable time period.

**RISK FACTORS**

You should carefully consider the risks described below, which are qualified in their entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere in this AIF, and all other information contained in this AIF. The risks and uncertainties described below are those we currently believe to be material, but they are not the only ones we face. If any of the following risks, or any other risks and uncertainties that we have not yet identified or that we currently consider not to be material, actually occur or become material risks, our business, prospects, financial condition, results of operations and cash flows and consequently the price of the Corporation's common shares could be materially and adversely affected.

**Failure to drastically increase manufacturing capacity and efficiency could have a material adverse effect on the Corporation's business, results of operations or financial condition.**

Although the Corporation's existing manufacturing facilities, including contract manufacturers, which were used in 2022 to manufacture over 44 Vicinity Buses and 20 VMC Trucks, are able to satisfy the Corporation's current manufacturing requirements, the future success of the Corporation's business depends in part on its ability to drastically increase manufacturing capacity and efficiency, particularly in the United States in order to comply with the "Buy American" Act. The Corporation is currently completing the construction of the Washington Facility, an assembly facility in Washington State that is expected to be able to deliver up to 1,000 vehicles annually over all sizes and powertrains. The Corporation may be unable to expand its business, satisfy demand from its current and new customers, maintain its competitive position and improve profitability if it is unable to operate the Washington Facility and otherwise allow for increases in manufacturing output and speed. The construction of such a facility will require significant cash investments and management resources and may not meet the Corporation's expectations with respect to increasing capacity, efficiency and satisfying additional demand. For example, if there are further delays in the Washington Facility becoming fully operational or achieving target yields and output, the Corporation may not meet its target for adding capacity, which would limit its ability to increase sales and result in lower than expected sales and higher than expected costs and expenses. Failure to drastically increase manufacturing capacity or otherwise satisfy customers' demands may result in a loss of market share to competitors, damage the Corporation's relationships with its key customers, a loss of business opportunities or otherwise materially adversely affect its business, results of operations or financial condition.

**The Corporation is and will be dependent on its manufacturing facilities. If one or more of its current or future manufacturing facilities becomes inoperable, capacity constrained or if operations are disrupted, the Corporation's business, results of operations or financial condition could be materially adversely affected.**

The Corporation's revenue is and will be dependent on the continued operations of its existing manufacturing facilities as well as its other planned facilities, the Washington Facility. To the extent that the Corporation experiences any operational risk including, among other things, fire and explosions, severe weather and natural disasters (such as floods and hurricanes), failures in water supply, major power failures, equipment failures (including any failure of its information technology, air conditioning, and cooling and compressor systems), failures to comply with applicable regulations and standards, labor force and work stoppages, or if its current or future manufacturing facilities become capacity constrained, the Corporation will be required to make capital expenditures even though it may not have available resources at such time. Additionally, there is no guarantee that the proceeds available from the Corporation's insurance policies will be sufficient to cover such capital expenditures. As a result, the Corporation's insurance coverage and available resources may prove to be inadequate for events that may cause significant disruption to its operations. Any disruption in the Corporation's manufacturing processes could result in delivery delays, scheduling problems, increased costs, or production interruption, which, in turn, may result in its customers deciding to purchase products from its competitors. The Corporation is and will be dependent on its current and future manufacturing facilities which will in the future require a high degree of capital expenditures. If one or more of the Corporation's current or future manufacturing facilities becomes inoperative, capacity constrained or if operations are disrupted, its business, results of operations or financial condition could be materially adversely affected.

**The Corporation may not succeed in establishing, maintaining and strengthening its brand, which would materially and adversely affect customer acceptance of its vehicles, which in turn could materially adversely affect its business, results of operations or financial condition.**

The Corporation's business and prospects heavily depend on its ability to develop, maintain and strengthen the Vicinity brand. If it is unable to establish, maintain and strengthen its brand, the Corporation may lose the opportunity to build and maintain a critical mass of customers. The Corporation's ability to develop, maintain and strengthen the Vicinity brand will depend heavily on the success of its marketing efforts. The bus industry, the battery electric vehicle industry, and the alternative fuel vehicle industry in general, are highly competitive, and the Corporation may not be successful in building, maintaining and strengthening its brand. Many of the Corporation's current and potential competitors, particularly bus manufacturers headquartered in the United States and Canada, have greater name recognition, broader customer relationships and substantially greater marketing resources than the Corporation. Failure to develop and maintain a strong brand would materially and adversely affect customer acceptance of the Corporation's vehicles, could result in suppliers and other third parties being less likely to invest time and resources in developing business relationships with the Corporation, and could materially adversely affect the Corporation's business, results of operations or financial condition.

**Increases in costs, disruption of supply or shortage of lithium-ion battery cells could materially adversely affect the Corporation's business, results of operations or financial condition.**

Any disruption in the supply of battery cells could temporarily disrupt production of the Corporation's vehicles until a different supplier is fully qualified. Moreover, battery cell manufacturers may refuse to supply electric vehicle manufacturers if they determine that the vehicles are not sufficiently safe. Furthermore, various fluctuations in market and economic conditions may cause the Corporation to experience significant increases in freight charges and battery cell costs. Substantial increases in the prices for battery cells would increase the Corporation's operating costs and could reduce the Corporation's margins if the increased costs cannot be recouped through increased vehicle prices. There can be no assurance that the Corporation will be able to recoup increasing costs of battery cells by increasing vehicle prices.

**The Corporation's projected operating and financial results relies in large part upon assumptions and analyses developed by it. If these assumptions or analyses prove to be incorrect, the Corporation's actual operating and financial results may be materially different from its forecasted results.**

The financial and operating information of the Corporation appearing elsewhere in this AIF reflects current estimates of future performance made by it. Whether actual operating and financial results and business developments will be consistent with those expectations and assumptions as reflected in projected financial and operating information depends on a number of factors, some of which are outside the Corporation's control, including, but not limited to:

● its ability to economically manufacture and distribute its vehicles at scale and meet customers' business needs;

● its ability to obtain sufficient capital and successfully execute its growth strategy, including planned additions to its current manufacturing plant, property and equipment as well as the operation of the Washington Facility;

● its ability to manage its growth;

● its ability to accurately forecast supply and demand;

● its ability to secure and maintain required strategic supply arrangements;

● projected improvements in technology;

● rates of adoption of battery electric vehicles by customers in the markets in which it operates;

● continued availability of favorable regulations and government incentives affecting the industry and markets in which it operates;

● competition, including from established and future competitors;

● its ability to attract and retain management or other employees who possess specialized market knowledge and technical skills; and

● the overall strength and stability of the U.S. and Canadian economies.

Unfavorable changes in any of these or other factors, some of which are beyond the Corporation's control, could cause actual results to differ materially from the Corporation's projections and other forward-looking information included in this AIF, and could materially and adversely affect the Corporation's business, results of operations or financial condition.

**Some of the Corporation's vehicles use lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.**

The battery packs within some of the Corporation's vehicles use lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While the battery pack is designed to contain any single cell's release of energy without spreading to neighboring cells, a field or testing failure of the Corporation's vehicles could occur, which could result in bodily injury or death and could subject the Corporation to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications, the social and environmental impacts of cobalt mining or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve the Corporation's vehicles, could materially adversely affect the Corporation's business, results of operations or financial condition.

In addition, manufacturing of some of the Corporation's vehicles requires it to store a significant number of lithium-ion cells at its facility. Any mishandling of battery cells may cause disruption to the operation of the Corporation's current or future facilities. While the Corporation has implemented safety procedures related to the handling of the cells, a safety issue or fire related to the cells could disrupt the Corporation's operations. Such damage or injury could lead to adverse publicity and potentially a safety recall. Moreover, any failure of a competitor's electric vehicle or energy storage product may cause indirect adverse publicity for the Corporation and its products. Such adverse publicity could negatively affect the Corporation's brand or could materially adversely affect the Corporation's business, results of operations or financial condition.

**The Corporation is dependent on third-party suppliers, some of which are single-source suppliers, and expects to continue to rely on third-party suppliers. The inability of any supplier to deliver necessary parts or components according to schedule and at prices, volumes or quality levels acceptable to it, or the termination or interruption of any supply arrangement could materially adversely affect the Corporation's business, results of operations or financial condition.** 

The Corporation is dependent on its third-party suppliers, some of which are single or limited source suppliers, and such suppliers' ability to supply and manufacture parts and components included in the Corporation's vehicles. The Corporation expects to continue to rely on third parties to supply and manufacture such parts and components in the future, as well as to maintain and grow its supply chain for its manufacturing operations in both Canada and the United States. While the Corporation obtains components from multiple sources whenever possible, some of the components used in its vehicles, including certain key battery system components, are purchased from a single source. While the Corporation believes that it may be able to establish alternate supply relationships and can obtain or potentially engineer replacement components for some of its single source components, it may be unable to do so in the short term or at all, or at prices, volumes or quality levels that are acceptable to it. In addition, the inability of any of the Corporation's suppliers to deliver necessary parts or components according to the Corporation's schedule and at prices, volumes or quality levels acceptable to the Corporation, or the termination or interruption of any material supply arrangement could materially adversely affect the business, results of operations or financial condition. Also, if any suppliers become economically distressed or go bankrupt, or is acquired by a competitor, the Corporation may be required to, as applicable, provide substantial financial support or take other measures to ensure supplies of components or materials, which could increase its costs, affect its liquidity or cause production disruptions, all of which could materially adversely affect the business, results of operations or financial condition.

In addition, the Corporation operates in multiple jurisdictions is party to certain agreements with suppliers, vendors, and other third parties located in jurisdictions that could impact enforcement of judgments against such third parties. These agreements may contain provisions that limit such third parties' liability, require arbitration or litigation in a specific jurisdiction, or provide for indemnification against certain claims. Any limitation in the Corporation enforcing its rights of judgments against suppliers or other third parties could materially adversely affect The Corporation's business, results of operations or financial condition.

**The Corporation may not be able to adequately forecast the supply and demand for its vehicles, its manufacturing capacity or its profitability under supply arrangements, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue.**

It is difficult to predict the Corporation's future sales and appropriately budget for the Corporation's expenses, and the Corporation may have limited insight into trends that may emerge and affect its business. The Corporation will be required to provide forecasts of its demand to its suppliers several months prior to the scheduled delivery of products to customers. If the Corporation fails to accurately predict its manufacturing requirements, it could incur additional costs or experience delays. If the Corporation overestimates manufacturing requirements, its suppliers may have excess inventory, which indirectly would increase the Corporation's costs. If the Corporation underestimates manufacturing requirements, its suppliers may have inadequate inventory, which could interrupt manufacturing of the Corporation's vehicles and result in delays in shipments and revenues. In addition, lead times for materials and components that the Corporation's suppliers order may vary significantly and depend on factors such as the specific supplier, contract terms and demand for each component at a given time. If the Corporation fails to order sufficient quantities of product components in a timely manner, the delivery of vehicles to its customers could be delayed, which could materially adversely affect its business, results of operations or financial condition.

**The Corporation's operating and financial results may vary significantly from period to period due to fluctuations in its operating costs and other factors**.

The Corporation expects its period-to-period operating and financial results to vary based on a multitude of factors, some of which are outside of the Corporation's control. The Corporation expects its period-to-period financial results to vary based on operating costs, which it anticipates will fluctuate with the pace at which it increases its manufacturing capacity and continues to design, develop and produce new products. In addition, the Corporation's revenues from period to period may fluctuate as it develops and introduces new vehicles. As a result of these factors, the Corporation believes that quarter-to-quarter comparisons of its operating or financial results, especially in the short term, are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of future performance. Moreover, the Corporation's financial results may not meet expectations of equity research analysts, ratings agencies or investors, who may be focused only on quarterly financial results. If any of this occurs, the trading price of the Common Shares could fall substantially, either suddenly or over time, which could have a material adverse effect on the Corporation's business, results of operations or financial condition.

While the Corporation expects to generate positive cash flows and profitability over time, the aforementioned anticipated expenditures will make it very challenging for the Corporation to achieve profitability and positive cash flow and the Corporation cannot guarantee it will achieve either in the near or medium term, or at all. If the Corporation is unable to generate adequate revenue growth and manage its expenses, it may continue to incur losses and have negative cash flows from operating activities.

The Corporation may make decisions that could reduce its short-term operating results if it believes those decisions will improve the quality of its products or services or improve its operating results, business or prospects over the long-term. These decisions may not be consistent with the expectations of investors and may not produce the long-term benefits that the Corporation expects, in which case the business, results of operations or financial condition may be materially and adversely affected.

The Corporation's business may not continue to generate cash flow from operations in the future sufficient to satisfy its obligations under its existing indebtedness and any future indebtedness it may incur. If the Corporation is unable to generate such cash flow, it may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be highly onerous or dilutive. The Corporation's ability to refinance existing or future indebtedness, including its facility with RBC, will depend on the capital markets and its financial condition at such time. The Corporation's ability to make payments may be limited by law, by regulatory authority or by agreements governing the Corporation's current or future indebtedness. The Corporation may not be able to engage in these activities on desirable terms or at all. In addition, the Corporation's ability to finance its operations, capital expenditures and working capital needs could be impacted by a rise in interest rates, as any such increase in interest rates would lead to higher costs of borrowing for the Corporation. The Corporation may not be able to effectively manage its borrowing costs and may lack alternative sources of funding to mitigate risks associated with a rise in interest rates. Any of the foregoing could materially adversely affect the business, results of operations or financial condition.

**The Corporation may experience significant delays in the design, production and launch of its new products.**

The Corporation is still in the development and testing phase with respect to certain of its vehicles, including, among others, the Vicinity Lightning. The commercial deliveries of such vehicles are not expected to begin until the second quarter of 2023 (depending on the product) and may occur later or not at all. Any delay in the financing, design, production and launch of any such new vehicles, including future production of the aforementioned all-electric buses and trucks could harm the Corporation's reputation or materially adversely affect its business, results of operations or financial condition.

**Increased freight and shipping costs or disruptions in transportation and shipping infrastructure could materially adversely impact the Corporation's business, results of operations or financial condition.**

The Corporation uses external freight shipping and transportation services to transport and deliver its vehicles as well as subcomponents and raw materials incorporated therein. Adverse fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure at important shipping and delivery points for the Corporation's products, as well as for subcomponents incorporated in the Corporation's vehicles could materially adversely affect the Corporation's business, financial condition and results of operations. For example, delivery delays or increases in transportation costs (including through increased fuel costs, increased carrier rates or driver wages as a result of driver shortages, a decrease in transportation capacity, or work stoppages or slowdowns) could significantly decrease the Corporation's ability to make sales and earn profits. Labor shortages or work stoppages in the transportation industry or long-term disruptions to the national and international transportation infrastructure that lead to delays or interruptions of deliveries or which would necessitate the Corporation securing alternative shipping suppliers could also increase the Corporation's costs or otherwise materially adversely affect its business, results of operations or financial condition. Disruptions in the movement of freight may also impact our freight costs and ultimately our results of operations.

**The Corporation's employees and independent contractors may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could have a material adverse effect on its business, results of operations or financial condition.**

The Corporation is exposed to the risk that its employees, independent contractors or other parties it collaborates with may engage in misconduct or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or other activities that violate laws and regulations, including production standards, federal, state and provincial fraud, abuse, data privacy and security laws, other similar laws or laws that require the true, complete and accurate reporting of financial information or data. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions the Corporation takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting it from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. In addition, the Corporation is subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against the Corporation and it is not successful in defending itself or asserting its rights, those actions could have a material adverse effect on its business, results of operations or financial condition, including, without limitation, by way of imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgement, integrity oversight and reporting obligations to resolve allegations of non-compliance, imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of its operations.

**The Corporation has and may in the future make strategic alliances, partnerships or investments or acquisitions, all of which could divert management's attention, result in the Corporation incurring significant costs or operating difficulties and dilution to its shareholders and otherwise disrupt its operations and materially adversely affect its business, results of operations or financial condition.**

Pursuing potential strategic alliances, partnerships or investments or acquisitions and/or inorganic growth opportunities is part of the Corporation's growth strategy. There are risks associated with any strategic partnership or arrangement, the termination or operation of joint ventures or other strategic alliances and pursuing strategic acquisitions or investment opportunities, including:

● the sharing of confidential information;

● the diversion of management's time and focus from operating its business;

● the use of resources that are needed in other areas of its business;

● unforeseen costs or liabilities;

● adverse effects to the Corporation's existing business relationships with partners and suppliers;

● litigation or other claims arising in connection with the acquired corporation, investment, partnership or joint venture;

● the possibility of adverse tax consequences;

● in the case of an acquisition, implementation or remediation of controls, procedures and policies of the acquired corporation;

● in the case of an acquisition, difficulty integrating the accounting systems and operations of the acquired corporation; and

● in the case of an acquisition, retention and integration of employees from the acquired corporation, and preservation of its corporate culture.

The Corporation may have limited ability to monitor or control the actions of any third party involved in any such transaction and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, the Corporation may also suffer negative publicity or harm to its reputation by virtue of its association with any such third party. Participation in strategic alliances, partnerships or investments or acquisitions may also result in dilutive issuances of equity securities, which could adversely affect the price of the Common Shares, or result in issuances of securities with superior rights and preferences to the Common Shares or the incurrence of debt with restrictive covenants that limit the Corporation's future uses of capital in pursuit of business opportunities. The Corporation may also not be able to identify opportunities for strategic partnerships or arrangements, acquisition or investments that meet its strategic objectives, or to the extent such opportunities are identified, may not be able to negotiate terms with respect to any such opportunity that are acceptable to it. At this time the Corporation has made no commitments or agreements with respect to any such material transactions.

**Fluctuations in foreign currency exchange rates could result in declines in reported sales and net earnings.**

The Corporation reports its financial results in United States dollars; however; some of its sales and operating costs are realized in Canadian dollars. The Corporation is also exposed to other currencies such as the Euro, and may in the future be exposed to other currencies. Although these risks may sometimes be naturally hedged by a match in sales and operating costs denominated in the same currency, fluctuations in foreign currency exchange rates, particularly the U.S.-Canadian dollar exchange rate, could create discrepancies between the Corporation's sales and operating costs in a given currency that could have a material adverse effect on its business, results of operations or financial condition. Fluctuations in foreign currency exchange rates could also have a material adverse effect on the relative competitive position of the Corporation's products in markets where it faces competition from manufacturers who are less affected by such fluctuations in exchange rates, especially in the U.S. market.

While the Corporation manages its exposure to foreign-exchange rate fluctuations and may enter into hedging contracts from time to time, such contracts hedge foreign-currency denominated transactions and any change in the fair value of the contracts could be offset by changes in the underlying value of the transactions being hedged. Furthermore, the Corporation does not have foreign-exchange hedging contracts in place with respect to currencies in which it does business. As a result, there can be no assurance that the Corporation's approach to managing its exposure to foreign-exchange rate fluctuations will be effective in the future or that the Corporation will be able to enter into foreign-exchange hedging contracts as deemed necessary on satisfactory terms.

**The Corporation's growth will depend on its ability to successfully attract new customers and secure firm purchase orders from them and to retain existing customers and engage them into additional deployments in the future. Failure to increase sales to both new and existing customers could have a material adverse effect on the Corporation's business, results of operations or financial condition.**

The Corporation's success, and its ability to increase revenue and operate profitably, depends in part on its ability to identify new customers and secure firm orders from them, its ability to retain existing customers and engage them into additional deployments in the future, and its ability to meet current and new customers' business needs. Failure to achieve any of the foregoing could materially and adversely affect the Corporation's business, results of operations or financial condition. The Corporation may fail to attract new customers or retain existing customers, retain revenue from existing customers or increase sales to both new and existing customers as a result of a number of other factors, including:

● reductions in the Corporation's existing or potential customers' spending levels;

● competitive factors affecting the battery electric vehicles industry, including the introduction of other alternative fuel vehicles or other technologies;

● discount, pricing and other strategies that may be implemented by its competitors;

● its ability to execute on its growth strategy;

● a decline in its customers' level of satisfaction with its vehicles and services;

● changes in its relationships with third parties, including its suppliers and other partners;

● the timeliness and success of new products it may offer in the future; and

● its focus on long-term value over short-term results, meaning that the Corporation may make strategic decisions that may not maximize its short-term revenue or profitability if it believes that the decisions are consistent with its vision and will improve its financial performance over the long-term.

**The Corporation has limited experience servicing its electric bus, the Vicinity Lightning. Failure to address the servicing requirements of its customers could harm the Corporation's reputation or materially adversely affect its business, results of operations or financial condition.**

The Corporation has limited experience in servicing its electric bus, the Vicinity Lightning, and it expects to be required to increase its servicing capabilities as it scales its operations and continues to grow. Servicing electric vehicles is different than servicing vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques. Although the Corporation believes the experience it has gained servicing its traditional buses positions it well to service its electric buses and future products, the Corporation has no after-sale experience of maintaining and servicing electric buses for its customers, and there is no guarantee the Corporation will be able to do so. Failure to address the servicing requirements of its customers could harm the Corporation's reputation or materially adversely affect its business, results of operations or financial condition.

The Corporation's customers will also depend on the Corporation's customer support team to resolve technical and operational issues relating to the software integrated in its vehicles. The Corporation's ability to provide effective customer support is largely dependent on its ability to attract, train and retain qualified personnel with experience in supporting customers on platforms such as the Corporation's platform. As it continues to grow, additional pressure may be placed on the Corporation's customer support team, and the Corporation may be unable to respond quickly enough to accommodate short-term increases in customer demand for technical support. The Corporation may also be unable to modify the future scope and delivery of its technical support to compete with changes in the technical support provided by its competitors. Increased customer demand for support, without corresponding revenue, could increase costs and negatively affect the Corporation's results of operation. If the Corporation is unable to successfully address the servicing requirements of its customers or establish a market perception that it maintains high-quality support, it may be subject to claims from its customers, including for loss of revenue or damages, and its business, results of operations or financial condition may be materially and adversely affected.

**The Corporation's future growth is dependent upon the busing industries' and the Corporation's other customers' willingness to adopt battery electric vehicles and specifically the Corporation's vehicles.**

The Corporation's future growth is highly dependent upon the adoption by the commercial busing industries and the Corporation's other target consumers of, and the Corporation is subject to an elevated risk of any reduced demand for, alternative fuel vehicles in general and electric vehicles in particular. If the market for electric vehicles does not develop at the rate or in the manner or to the extent that the Corporation expects, or if critical assumptions the Corporation has made regarding the efficiency of its vehicles are incorrect or incomplete, the Corporation's business, results of operations or financial condition may be adversely materially affected. The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors. Factors that may influence the adoption of alternative fuel vehicles, and specifically electric vehicles, include:

● perceptions about electric vehicle quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost;

● perceptions about vehicle safety in general, including the use of advanced technology, such as vehicle electronics, alternative fuel and regenerative braking systems;

● the limited range over which electric vehicles may be driven on a single battery charge;

● the decline of an electric vehicle's range resulting from deterioration over time in the battery's ability to hold a charge or short term declines resulting from adverse weather conditions;

● the availability of service and charging stations for electric vehicles;

● concerns about electric grid capacity and reliability, which could derail past, present and future efforts to promote electric vehicles as a practical solution to vehicles which require gasoline;

● the availability of alternative fuel vehicles;

● improvements in the fuel economy of the internal combustion engine;

● the environmental consciousness of the busing industries and the Corporation's other target customers;

● volatility in the cost of oil and gasoline;

● government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

● the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation;

● perceptions about and the actual cost of alternative fuel, as well as hybrid and electric vehicles; and

● macroeconomic factors.

For example, it is unknown to what extent any decreases in the cost of diesel fuel may impact the market for electric vehicles. Even if the busing industries and the Corporation's other target customers adopt battery electric vehicles, the Corporation may be unable to establish and maintain confidence in its long-term business prospects among consumers, analysts and within the industry, and may be subject to negative publicity. The influence of any of the factors described above may cause current or potential customers not to purchase the Corporation's vehicles and may otherwise materially adversely affect the Corporation's business, results of operations or financial condition.

**Inadequate access to charging stations could impact the demand for all-electric vehicles, and failure by the Corporation to meet user expectations related to, or other difficulties in providing, charging solutions could harm the Corporation's reputation or materially adversely affect its business, results of operations or financial condition.** 

Demand for the Corporation's vehicles will depend in part upon the availability of a charging infrastructure. While the prevalence of charging stations generally has been increasing, charging station locations are significantly less widespread than gas stations. Some potential customers may choose not to purchase the Corporation's vehicles because of the lack of a more widespread charging infrastructure. Further, to provide its customers with access to sufficient charging infrastructure, the Corporation will rely on the availability of, and successful integration of its vehicles with, third-party charging networks. Any failure of third-party charging networks to meet customer expectations or needs, including quality of experience, could impact the demand for all-electric vehicles, including the Corporation's. To the extent the Corporation is unable to meet user expectations or experience difficulties in its users accessing charging solutions, its reputation could be harmed, and its business, results of operations or financial condition could be materially adversely affected.

**The Corporation's inability to leverage vehicle and customer data could impact the servicing of its products, its software algorithms and impact research and development operations.**

The Corporation relies on data collected from the use of its fleet of vehicles, including vehicle data and data related to battery usage statistics. The Corporation uses this data in connection with the servicing and normal course software updates of its products, its software algorithms and the research, development and analysis of its vehicles. The Corporation's inability to obtain this data or the necessary rights to use this data or the Corporation's inability to properly analyze or use this data could result in the Corporation's inability to adequately service its vehicles or delay or otherwise negatively impact its research and development efforts. Any of the foregoing could materially adversely affect the Corporation's business, results of operations or financial condition.

**The bus industry and the electric vehicle industry are highly competitive and the Corporation is likely to face competition from a number of sources. The Corporation may not be successful in competing in these industries, which may materially adversely affect its business, results of operations or financial condition.**

Some of the Corporation's current and potential competitors may also have greater financial resources, more extensive development, manufacturing, technical, marketing and service capabilities, greater brand, customer and industry recognition, a larger number of managerial and technical personnel or a lower cost of funds than the Corporation does or other competitive advantages relative to the Corporation. Many of the Corporation's current and potential competitors may also be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products.

The Corporation expects competition in its industry to intensify in the future in light of increased demand for electric and other alternative fuel vehicles and continuing globalization. Factors affecting competition include total cost of ownership, product quality and features, innovation and development time, pricing, availability, reliability, safety, fuel economy, customer service (including breadth of service network) and financing terms. Increased competition may lead to lower vehicle unit sales and increased inventory, which may result in further downward price pressure and adversely affect the Corporation's business, financial condition and results of operation. There can be no assurances that the Corporation will be able to compete successfully in the markets in which it operates. If the Corporation's competitors introduce new vehicles or services that compete with or surpass the quality, price, performance or availability of the Corporation's vehicles or services, the Corporation may be unable to satisfy existing customers or attract new customers at the prices and levels that would allow it to generate attractive rates of return on its investment. Increased competition could result in price reductions and revenue shortfalls, loss of customers and loss of market share, which could materially adversely affect the Corporation's business, results of operations or financial condition.

**The unavailability, reduction or elimination of government and economic incentives due to policy changes, government regulation or otherwise, could have a material adverse effect on the Corporation's business, results of operations or financial condition.**

Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of the electric vehicle industry or other reasons may result in the diminished competitiveness of the alternative fuel and electric vehicle industry generally or the Corporation's vehicles. While certain tax credits and other incentives for alternative energy production, alternative fuel and electric vehicles have been available in the past, there is no guarantee these programs will be available in the future. If current tax incentives are not available in the future, the Corporation's business, results of operations or financial condition could be materially adversely affected.

In particular, demand for the Corporation's vehicles is influenced by federal, state, provincial and local tax credits, rebates, grants and other government programs and incentives that promote the use of battery electric vehicles. These include various government programs that make grant funds available for the purchase of battery electric vehicles. Additionally, demand for the Corporation's vehicles may be influenced by laws, rules, regulations and programs that require reductions in carbon emissions, such as the various measures implemented by lawmakers and regulators in California and British Columbia, among others, designed to increase the use of electric and other zero-emission vehicles, including the establishment of firm goals in certain instances for the number of these vehicles operating on state and provincial roads by specified dates and the enactment of various laws and other programs in support of these goals. These programs and regulations, which have the effect of encouraging the use of battery electric vehicles, could expire or be repealed or amended for a variety of reasons. For example, parties with an interest in gasoline and diesel, hydrogen or other alternative vehicles or vehicle fuels, including lawmakers, regulators, policymakers, environmental or advocacy organizations, original equipment manufacturers ("**OEMs**"), trade groups, suppliers or other groups, may invest significant time and money in efforts to delay, repeal or otherwise negatively influence regulations and programs that promote the use of battery electric vehicles. Many of these parties have substantially greater resources and influence than the Corporation has. Further, changes in federal, state, provincial or local political, social or economic conditions, including a lack of legislative focus on these programs and regulations, could result in their modification, delayed adoption or repeal. Any failure to adopt, delay in implementation, expiration, repeal or modification of these programs and regulations, or the adoption of any programs or regulations that encourage the use of other alternative fuels or alternative vehicles over battery electric vehicles, would reduce the market for battery electric vehicles and could materially adversely affect the Corporation's business, results of operations or financial condition.

**The Corporation's inability to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which it may apply could have a material adverse effect on its business, results of operations or financial condition.**

The Corporation has applied, and expects in the future to apply, for federal, state and provincial grants, loans and tax incentives under government programs designed to stimulate the economy and support the production of battery electric vehicles and related technologies. The Corporation anticipates that in the future there will be new opportunities to apply for grants, loans and other incentives from federal, state, provincial and foreign governments. The Corporation's ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of the Corporation's applications to participate in such programs. The application process for these funds and other incentives will likely be highly competitive and will cause management to divert time and resources from other aspects of its business. The Corporation cannot assure that it will be successful in obtaining any of these additional grants, loans and other incentives, and the Corporation's inability to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which it may apply could have a material adverse effect on its business, results of operations or financial condition.

**Unfavorable changes in U.S. or Canadian laws or regulations and trade policy, including the imposition of tariffs or quotas, or changes in any free-trade arrangements such as the CUSMA could adversely affect the Corporation's business, results of operations or financial condition.**

The Corporation expects to increasingly manufacture some of its vehicles in the United States at the Washington Facility. The U.S. market has been and is expected to continue generating sales growth. Several factors, including weakened international economic conditions, the introduction of new trade restrictions, increased protectionism or changes in free-trade arrangements such as the Canada-United States-Mexico Agreement (the "**CUSMA**"), tariffs, negative geo-political events or an outbreak of infectious disease, a pandemic or a similar public health threat, such as the COVID-19 pandemic, could adversely affect such growth. In particular, the U.S. government has adopted a new approach to trade policy and in some cases has attempted to renegotiate or terminate certain existing bilateral or multi-lateral trade agreements. It has also imposed tariffs on certain foreign goods, including steel and certain commercial vehicle parts, which have resulted in increased costs for goods imported into the United States. There is no guarantee that further tariffs or additional trade restrictions will not be implemented on a broader range of products or raw materials. The resulting environment could have a material adverse effect on the Corporation's business, results of operations or financial condition.

**An adverse determination in any significant product liability claim against the Corporation could materially adversely affect its business, results of operations or financial condition.** 

The development, manufacturing, sale and usage of vehicles expose the Corporation to significant risks associated with product liability claims. The automotive industry in particular experiences significant product liability claims, and the Corporation may face inherent risk of exposure to claims in the event its vehicles do not perform or are claimed to not have performed as expected. If the Corporation's products are defective, malfunction or are used incorrectly by its customers, it may result in bodily injury, property damage or other injury, including death, which could give rise to product liability claims against the Corporation. Changes to manufacturing processes, including as a result of the establishment of manufacturing operations, and the production of new products and applications could result in product quality issues, thereby increasing the risk of litigation and potential liability. Any losses that the Corporation may suffer from any liability claims and the effect that any product liability litigation may have upon the brand image, reputation and marketability of the Corporation's products could have a material adverse impact on business, results of operations or financial condition.

Although the Corporation maintains insurance with respect to future claims in amounts it believes to be appropriate, no assurance can be given that material product liability claims will not be made in the future against the Corporation, or that claims will not arise in the future in excess or outside the coverage of the Corporation's indemnities and insurance. When required, the Corporation's records provisions for known potential liabilities, but there is the possibility that actual losses may exceed these provisions and therefore negatively impact earnings. Also, the Corporation may not be able in the future to obtain adequate product liability insurance or the cost of doing so may be prohibitive. Adverse determinations of material product liability claims made against the Corporation could also harm its reputation and cause it to lose customers and could have a material adverse effect on its business, results of operations or financial condition.

**Significant product repair and/or replacement due to product warranty claims or product recalls could have a material adverse impact on the Corporation's business, results of operations or financial condition.**

The Corporation generally provides a limited warranty against defects for all of its products. In addition, the Corporation may in the future be required to make product recalls or could be held liable in the event that some of its products do not meet safety standards or statutory requirements on product safety, even if the defects related to any such recall or liability are not covered by the Corporation's limited warranty. Although the Corporation employs quality control procedures, products manufactured by it will need repair or replacement or may be recalled. The Corporation's standard warranties generally require it to repair or replace defective products during such warranty periods at no cost to the consumer. The Corporation records provisions based on an estimate of product warranty claims, but there is the possibility that actual claims may exceed these provisions and therefore negatively impact the Corporation's results of operations of financial condition. Although the Corporation has not to this date made any major product recall, it could in the future be required to make major product recalls or could be held liable in the event that some of its products do not meet safety standards or statutory requirements on product safety. In addition, the risks associated with product recalls may be aggravated if production volumes increase significantly, supplied goods do not meet the Corporation's standards, the Corporation fails to perform its risk analysis systematically or product-related decisions are not fully documented. The repair and replacement costs that the Corporation could incur in connection with a recall could have a material adverse effect on its business, results of operations or financial condition. Product recalls could also harm the Corporation's reputation and cause it to lose customers, particularly if recalls cause consumers to question the safety or reliability of its products, which could have a material adverse effect on its business, results of operations or financial condition.

In addition, purchase agreements with the Corporation's customers may from time to time contain, in addition to the Corporation's limited warranty, undertakings related to certain specific levels of performance and availability for the vehicles sold thereunder. Failure by the Corporation to provide the required levels of performance and availability, even if such failure is the result of factors outside of the Corporation's control, could result in the Corporation being liable under such contractual arrangements or allow customers to terminate their arrangements with the Corporation.

**The Corporation is subject to information technology and cybersecurity risks to operational systems, security systems, infrastructure, integrated software in its vehicles and solutions and customer data processed by it, third-party vendors or suppliers, and any material failure, weakness, interruption, cyber event, incident or breach of security could prevent the Corporation from effectively operating its business, harm its reputation or materially adversely affect its business, results of operations or financial condition.**

The Corporation is at risk for interruptions, outages and breaches of: (i) operational systems, including business, financial, accounting, product development, data processing or production processes, owned by it or its third-party vendors or suppliers; (ii) facility security systems, owned by it or its third-party vendors or suppliers; (iii) transmission control modules or other in-product technology, owned by it or its third-party vendors or suppliers; (iv) the integrated software in the Corporation's vehicles; or (v) customer or driver data that the Corporation processes or the Corporation's third-party vendors or suppliers process on its behalf. Such cyber incidents could materially disrupt operational systems; result in loss of intellectual property, trade secrets or other proprietary or competitively sensitive information; compromise certain information of customers, employees, suppliers, drivers or others; jeopardize the security of the Corporation's facilities; or affect the performance of transmission control modules or other in-product technology and the integrated software in the Corporation's vehicles. A cyber incident could be caused by disasters, insiders (through inadvertence or with malicious intent) or malicious third parties (including nation-states or nation-state supported actors) using sophisticated, targeted methods to circumvent firewalls, encryption and other security defenses, including hacking, fraud, trickery or other forms of deception. The techniques used by cyber attackers change frequently and may be difficult to detect for long periods of time.

Although the Corporation maintains information technology measures designed to protect it against intellectual property theft, data breaches and other cyber incidents, such measures will require updates and improvements, and there is no guarantee that such measures will be adequate to detect, prevent or mitigate cyber incidents. Any implementation, maintenance, segregation and improvement of the Corporation's systems may require significant management time, support and cost. Moreover, there are inherent risks associated with developing, improving, expanding and updating current systems, including the disruption of the Corporation's data management, procurement, production execution, finance, supply chain and sales and service processes. These risks may affect the Corporation's ability to manage its data and inventory, procure parts or supplies or produce, sell, deliver and service its vehicles, adequately protect its intellectual property or achieve and maintain compliance with, or realize available benefits under, applicable laws, regulations and contracts. The Corporation cannot be sure that these systems upon which it relies, including those of its third-party vendors or suppliers, will be effectively implemented, maintained or expanded as planned. If the Corporation does not successfully implement, maintain or expand these systems as planned, its operations may be disrupted, the Corporation's ability to accurately and timely report its financial results could be impaired, and deficiencies may arise in the Corporation's internal control over financial reporting, which may impact the Corporation's ability to certify its financial results. Moreover, the Corporation's proprietary information or intellectual property could be compromised or misappropriated, and its reputation may be adversely affected. If these systems do not operate as expected, the Corporation may be required to expend significant resources to make corrections or find alternative sources for performing these functions.

A significant cyber incident could impact the Corporation's manufacturing capacity or production capability, harm its reputation, cause the Corporation to breach its contractual arrangements with other parties or subject the Corporation to regulatory actions or litigation, any of which could materially affect its business, prospects, results of operations or financial condition. In addition, the Corporation's insurance coverage for cyberattacks may not be sufficient to cover all the losses it may experience as a result of a cyber incident.

The Corporation also collects, uses, discloses, stores, transmits and otherwise processes customer, driver and employee and others' data as part of its business and operations, which may include personal data or confidential or proprietary information. The Corporation also works with partners and third-party service providers or vendors that may in the course of their business relationship with the Corporation collect, store and process such data on the Corporation's behalf and in connection with the Corporation's products and services. There can be no assurance that any security measures that the Corporation or its third-party service providers, vendors, or suppliers have implemented will be effective against current or future security threats. While the Corporation has developed systems and processes designed to protect the availability, integrity, confidentiality and security of the Corporation's, the Corporation's customers', drivers', employees' and others' data, such security measures or those of its third-party service providers, vendors or suppliers could fail and result in unauthorized access to or disclosure, acquisition, encryption, modification, misuse, loss, destruction or other compromise of such data. If a compromise of such data were to occur, the Corporation may become liable under its contracts with other parties and under applicable law for damages and incur penalties and other costs to respond to, investigate and remedy such an incident. Laws in all 50 states of the United States and Canada require the Corporation to provide notice to individuals, customers, regulators, credit reporting agencies and others when certain sensitive information has been compromised as a result of a security breach or where a security breach creates a real risk of significant harm to an individual. Such laws are inconsistent and compliance in the event of a widespread data breach could be costly. Depending on the facts and circumstances of such an incident, these damages, penalties, fines and costs could be significant. Any such event could harm the Corporation's reputation and result in litigation against it, or otherwise materially adversely affect its business, prospects, results of operations or financial condition.

**Any unauthorized control or manipulation of the information technology systems in the Corporation's vehicles could result in loss of confidence in the Corporation and its vehicles and harm its reputation, which could materially adversely affect its business, results of operations or financial condition.**

The Corporation's vehicles contain complex information technology systems and built-in data connectivity to accept and install periodic remote updates to improve or update functionality. The Corporation has designed, implemented and tested security measures intended to prevent unauthorized access to its information technology networks and its vehicles and related systems. However, hackers may attempt to gain unauthorized access to modify, alter and use such networks, vehicles and systems to gain control of or to change the Corporation's solutions' functionality, user interface and performance characteristics, or to gain access to data stored in or generated by the vehicles. Future vulnerabilities could be identified and the Corporation's efforts to remediate such vulnerabilities may not be successful. Any unauthorized access to or control of the Corporation's vehicles, or any loss of customer data, could result in legal claims or proceedings and remediation of such problems could result in significant, unplanned capital expenditures. In addition, regardless of their veracity, reports of unauthorized access to its technology systems or data, as well as other factors that may result in the perception that the Corporation's vehicles, technology systems or data are capable of being "hacked," could materially negatively affect the Corporation's brand and harm the Corporation's business, prospects, results of operations or financial condition.

**The Corporation's vehicles, as well as the maintenance and repair services it offers to its customers, rely on software and hardware that is highly technical, and if these systems contain errors, bugs or vulnerabilities, or if the Corporation is unsuccessful in addressing or mitigating technical limitations in its systems, the Corporation's business, results of operations or financial condition could be materially adversely affected.**

The Corporation's vehicles rely on software and hardware, including software and hardware developed or maintained by third parties, that is highly technical and complex and will require modification and updates over the life of the vehicle. In addition, the performance of the software solutions included in the Corporation's vehicles depends on the ability of such software and hardware to store, retrieve, process and manage immense amounts of data. The Corporation's software and hardware may contain errors, bugs or vulnerabilities, and its systems are subject to certain technical limitations that may compromise the Corporation's ability to meet its objectives. Some errors, bugs or vulnerabilities inherently may be difficult to detect and may only be discovered after the code has been released for external or internal use. Errors, bugs, vulnerabilities, design defects or technical limitations may be found within the Corporation's software and hardware. Although the Corporation attempts to remedy any issues it observes in its vehicles and software as effectively and rapidly as possible, such efforts may not be timely, may hamper production or may not be to the satisfaction of the Corporation's customers. Additionally, if the Corporation is able to deploy updates to the software addressing any issues, but such updates cannot or are not installed by its customers, such customers' software will be subject to these vulnerabilities until they install such updates. If the Corporation is unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in its software and hardware, the Corporation may suffer damage to its reputation, loss of customers, loss of revenue or liability for damages, any of which could materially adversely affect the Corporation's business, results of operations or financial condition.

**Interruption or failure of the Corporation's information technology and communications systems could impact the Corporation's ability to effectively provide the Corporation's services.**

The availability and effectiveness of the Corporation's goods and services depend on the continued operation of information technology and communications systems. The Corporation's systems will be vulnerable to damage or interruption from, among others, physical theft, fire, terrorist attacks, natural disasters, power loss, war, telecommunications failures, viruses, denial or degradation of service attacks, ransomware, social engineering schemes, insider theft or misuse or other attempts to harm the Corporation's systems. The Corporation utilizes reputable third-party service providers or vendors for the Corporation's data, and these providers could also be vulnerable to harms similar to those that could damage the Corporation systems, including sabotage and intentional acts of vandalism causing potential disruptions. Some of the Corporation's systems may not be redundant, and the Corporation's disaster recovery planning cannot account for all eventualities. Any problems with the Corporation's third-party cloud hosting providers could result in lengthy interruptions in the Corporation's business. In addition, the Corporation's products utilize technical and complex technology which may contain errors or vulnerabilities that could result in interruptions in the Corporation's business or the failure of the Corporation's systems.

**The Corporation is subject to evolving laws, regulations, standards and contractual obligations related to data privacy and security, and the Corporation's actual or perceived failure to comply with such obligations could harm its reputation, subject it to significant fines and liability or adversely affect its business.**

Collection, use, disclosure, storage, transmission or other processing of the Corporation's customers', employees' and others' information in conducting the Corporation's business may subject it to various legislative and regulatory burdens related to data privacy and security that could require notification of data breaches, restrict or impose burdensome conditions on the Corporation's use of such information and hinder the Corporation's ability to acquire new customers or market to existing customers. The regulatory framework for data privacy and security is rapidly evolving, and the Corporation may not be able to monitor and react to all developments in a timely manner. For example, California requires connected devices to maintain minimum information security requirements. As legislation continues to develop, the Corporation will likely be required to expend significant additional resources to continue to modify or enhance the Corporation's protective measures and internal processes to comply with such legislation. In addition, non-compliance with these laws or a significant breach of the Corporation's third-party service providers' or vendors' or the Corporation's own network security and systems could have serious negative consequences for its business and future prospects, including possible fines, penalties and damages, reduced customer demand for its vehicles and harm to its reputation and brand. Customers may also object to the Corporation's or its third party service providers' or vendors' collection or processing of certain information, including personal data, which could materially adversely affect the Corporation's business, results of operations or financial condition.

**The performance characteristics of the Corporation's vehicles, including battery life and range, may vary or decline over time, including due to factors outside of the Corporation's control. Any such variation or decline may negatively influence potential or existing customers' decisions whether to purchase the Corporation's vehicles or affect the Corporation's reputation, or could materially adversely affect its business, results of operations or financial condition.**

The performance characteristics of the Corporation's vehicles, including battery life and range, may vary or decline over time, including due to factors outside of the Corporation's control. Factors such as driver behavior, usage, speed, terrain, time and stress patterns may also impact the battery's ability to hold a charge, which would decrease the Corporation's vehicles' range before needing to recharge. Such battery deterioration and the related decrease in range may negatively influence potential customer decisions. In addition, the Corporation cannot guarantee that battery life and range deterioration will not be greater than what is currently anticipated. Any deterioration above the expected level could affect the Corporation's reputation or could materially adversely affect its business, results of operations or financial condition.

**The Corporation relies on unpatented proprietary know-how, trade secrets and contractual restrictions, and not patents, to protect its intellectual and other proprietary rights. Failure to adequately protect, enforce or otherwise manage the Corporation's intellectual and other proprietary rights may undermine its competitive position and could materially adversely affect its business, prospects, results of operations or financial condition.**

Protection of proprietary technology, processes, methods and other intellectual property related to the Corporation is critical to its business. The Corporation relies on unpatented proprietary know-how, trade secrets, trademarks, copyrights and contractual restrictions to protect its intellectual property and other proprietary rights and the Corporation does not hold any patents related to its business. As a matter of course, the Corporation employs numerous measures to protect its intellectual property and other confidential information, including technical data. For instance, the Corporation has implemented procedures designed to make the proprietary technology incorporated in its vehicle systems very difficult to access and/or retrieve and imposes consequences for users that seek to obtain unauthorized access to such technology. In addition, the Corporation enters into confidentiality agreements with suppliers, vendors, service providers, customers and other third parties with whom it may share information about its business and operations, and the Corporation also requires all of its employees, consultants and other persons who work for it to enter into confidentiality and assignment of intellectual property agreements. However, failure to adequately protect the Corporation's intellectual property rights could result in the Corporation's competitors offering similar products, potentially resulting in the loss of some of the Corporation's competitive advantage and a decrease in revenue which would adversely affect the Corporation's business, prospects, financial condition and operating results.

As well, there can be no assurance that competitors and other third parties will not independently develop the know-how and trade secrets related to the Corporation's proprietary technology, in which case the Corporation would not be able to prevent such third parties from using such know-how and trade secrets, or develop better products or manufacturing methods or processes than it.

Further, the Corporation may not be able to deter current and former employees, consultants, suppliers and customers as well as other parties from breaching confidentiality agreements and misappropriating proprietary information and it is possible that third parties may copy or otherwise obtain and use the Corporation's information and proprietary technology without authorization or otherwise infringe on the Corporation's intellectual property and other proprietary rights. The Corporation may in the future need to rely on litigation to enforce its intellectual property rights and contractual rights, and, if not successful, may not be able to protect the value of its intellectual property. Any litigation could be protracted and costly and have a material adverse effect on the Corporation's business, prospects, results of operations or financial condition regardless of the outcome. As well, in some cases the costs associated with such litigation could make enforcement impracticable. Further, intellectual property and contract laws vary throughout the world. Some foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States and Canada. Policing the unauthorized use of the Corporation's intellectual property in foreign jurisdictions may be difficult. Therefore, the Corporation's intellectual property rights may not be as strong or as easily enforced outside of the United States and Canada. Failure to adequately enforce the Corporation's intellectual property rights could result in its competitors offering similar products, potentially resulting in the loss of some of the Corporation's competitive advantage and a decrease in its revenue, which would adversely affect its business, prospects, financial condition and operating results.

**The Corporation has a long sales, production, and technology development cycle for new public transit customers, which may create fluctuations in whether and when revenue is recognized, and may have an adverse effect on the Corporation's business.**

The vast majority of the Corporation's current and historical sales are to transit agencies that do not procure transit buses every year. The complexity, expense and nature of government procurement processes result in a lengthy customer acquisition and sales process. It can take the Corporation years to attract, obtain an award of contract from, contract with, and recognize revenue from the sale of a vehicle to a new customer, if the Corporation is successful at all. Before awarding an order for transit buses, transit agencies generally conduct a comprehensive and competitive proposal process based on a variety of criteria, including technical requirements, reliability, reputation and price. Even if the Corporation is awarded an order, the actual realization and timing of revenue is subject to various contingencies, many of which are beyond the Corporation's control, including the customer's interpretation of technical or performance requirements for acceptance, timing and conditions of customer acceptance, and the customer's reduction, modification or termination of an order. A customer is not obligated to purchase the transit buses and may cancel or modify an award prior to entering into a contract or purchase order with the Corporation. The Corporation may experience customer cancellations or modifications of awards. Prior to entering into a contract or purchase order with the Corporation, a customer can cancel or modify an award for a variety of reasons, including as a result of improvements in the Corporation's technology or the technology of the Corporation's competitors between the dates of award and signed contract, or as the result of a successful bid protest.

The Corporation's sales and production cycle for a transit customer can be a long and time-consuming process. The initial sales process from first engagement to award typically ranges from 6 to 18 months. The award of a proposal is typically followed by a pre-production process where the design and specifications of the customized buses are mutually agreed and the Corporation negotiates a final contract and purchase order with the customer. Procurement of parts and production typically follow this final agreement between the Corporation and the customer. Once a bus is fully manufactured, the customer performs a final inspection and determines whether to accept delivery of the bus, at which time the Corporation recognizes revenue on the sale. The length of time between a customer award and vehicle acceptance typically varies between 9 and 24 months, depending on product availability, production capacity and the pre-delivery and post-delivery inspection process by the customer which often results in additional changes to the transit bus after manufacturing completion, re-works, further product validation and acceptance periods and additional costs to the Corporation that the Corporation may not be able to recover. Consequently, the Corporation may invest significant resources and incur substantial expenses before a customer accepts a bus order and these expenses may not be recovered at all if a customer does not accept the completed bus, the bus requires costly modifications or the Corporation extends additional warranties. For instance, the Corporation creates a bill of materials and obtains the appropriate parts for each customized bus for a customer, which can result in excessive inventory risk if a customer changes or cancels the order. In addition, the Corporation may devote significant management effort to develop potential relationships that do not result in bus orders, acceptance of the bus as delivered, and the corresponding recognition of revenue, and the diversion of that effort may prevent the Corporation from pursuing other opportunities. As a result, the Corporation's long sales and development cycle may subject the Corporation to significant risks that could have an adverse effect on the Corporation's business, prospects, financial condition and operating results.

**The Corporation's business could be adversely affected from an accident or safety incident involving the Corporation's transit buses.**

An accident or safety incident involving one of the Corporation's transit buses could expose the Corporation to significant liability and a public perception that the Corporation's transit buses and products are unsafe or unreliable. The Corporation's agreements with customers contain broad indemnification provisions, and in the event of a major accident, the Corporation could be subject to significant personal injury and property claims that could subject the Corporation to substantial liability. While the Corporation maintains liability insurance in amounts and of the type generally consistent with industry practice, the amount of such coverage may not be adequate to cover fully all claims, and the Corporation may be forced to bear substantial losses from an accident or safety incident. In addition, any accident or safety incident involving one of the Corporation's buses, even if fully insured,<br>

could harm the Corporation's reputation and result in a loss of future customer demand if it creates a public perception that the Corporation's transit buses are unsafe or unreliable as compared to those offered by other transit bus manufacturers or other means of transportation. While the Corporation has not experienced significant accident or safety incidents involving its transit buses, the Corporation has experienced malfunctions, such as thermal events and a bus fire related to low voltage wiring. Also, any accident or safety incident involving the buses of the Corporation's competitors could result in reduced customer demand if it creates a public perception that bus transit in general is unsafe or unreliable. There are also risks particular to the operation of electric transit buses, and the Corporation's business could be adversely affected by an accident or safety incident involving the Corporation's battery systems, electrification and charging solutions, fleet and energy management systems or electric transit buses. Such an incident could expose the Corporation to significant liability and a public perception that the Corporation's electric transit buses are unsafe or unreliable. As a result, any accident or safety incident involving the Corporation's buses, or the buses of the Corporation's competitors, could materially and adversely affect the Corporation's business, prospects, financial condition and operating results.

**The Corporation's work with government customers exposes it to unique risks inherent in government contracting.**

The Corporation must comply with and is affected by laws and regulations relating to the award, administration and performance of government contracts. Government contract laws and regulations affect how the Corporation does business with its customers and impose certain risks and costs on its business. A violation of specific laws and regulations by the Corporation, its employees, or others working on its behalf could harm its reputation and result in the imposition of fines and penalties, the termination of the Corporation's contracts, suspension or debarment from bidding on or being awarded contracts and civil or criminal investigations or proceedings.

The Corporation's performance under its contracts with government entities and its compliance with the terms of those contracts and applicable laws and regulations are subject to periodic audit, review and investigation by various agencies of the government. If such an audit, review or investigation uncovers a violation of a law or regulation or improper or illegal activities relating to the Corporation's government contracts, the Corporation may be subject to civil or criminal penalties or administrative sanctions, including the termination of contracts, forfeiture of profits, the triggering of price reduction clauses, withholding of payments, suspension of payments, fines and suspension or debarment from contracting with government agencies. There is inherent uncertainty as to the outcome of any audit, review or investigation. If the Corporation incurs a material penalty or administrative sanction or otherwise suffers harm to its reputation, its business, prospects, financial condition or operating results could be adversely affected.

Further, if a government regulatory authority were to initiate suspension or debarment proceedings against the Corporation as a result of a conviction or indictment for illegal activities, the Corporation may lose its ability to be awarded contracts in the future or receive renewals of existing contracts for a period of time. The Corporation could also suffer harm to its reputation if allegations of impropriety were made against the Corporation, which would impair the Corporation's ability to win awards of contracts in the future or receive renewals of existing contracts. Inability to be awarded contracts in the future or receive renewal of existing contacts could have an adverse effect on the Corporation's business, prospects, financial condition and operating results.

**If the Corporation is unable to obtain bid bonds, performance bonds or letters of credit required by public transit agencies or other customers, the Corporation's ability to obtain future projects could be negatively affected.**

The Corporation has in the past been, and may in the future be, required to provide bid bonds or performance bonds to secure its performance under customer contracts or, in some cases, as a prerequisite to submitting a bid on a potential project. The Corporation's continued ability to obtain these bonds will depend primarily upon its capitalization, working capital, past performance, management expertise, reputation and certain external factors, including the overall capacity of the surety market. Surety companies consider these factors in relation to the amount of the Corporation's awards and their underwriting standards, which may change from time to time. Surety companies also require that the Corporation collateralize a percentage of the bond with cash or other form of credit enhancement. With a decreasing number of insurance providers in that market, it may be difficult to find sureties who will continue to provide contract-required bonding on acceptable terms and conditions, or at all. Furthermore, events that affect surety markets generally may result in bonding becoming more difficult to obtain in the future or being available only at a significantly greater cost.

In addition, some of the Corporation's customers also require collateral guarantees in the form of letters of credit to secure performance or to fund possible damages in the event of default under the Corporation's contracts with them. If the Corporation enters into agreements that require the issuance of letters of credit, the Corporation's liquidity could be negatively impacted. The Corporation's inability to obtain adequate bonding or letters of credit and, as a result, to bid or enter into agreements, could have an adverse effect on the Corporation's business, prospects, financial condition and operating results.

**The Corporation's business relies heavily on its specialized sales personnel and technical sales support to market and sell its products, in addition to its key personnel. If the Corporation is unable to effectively hire, train, manage and retain the relevant personnel, its business may be adversely impacted.**

The success of the Corporation's businesses largely depends on the Corporation's ability to hire, train and manage its sales personnel who have experience with and connections to the public and other transit agencies and commercial vehicle OEMs that are the Corporation's current and potential customers. Because the Corporation employs a small and specialized sales force, the loss of any member of the Corporation's sales team or technical sales support professionals could weaken its sales expertise and its customer reach, and adversely affect the Corporation's business, and the Corporation may not be able to find adequate replacements on a timely basis, or at all. Moreover, there are no assurances that the Corporation will be able to maintain a sufficient level of sales personnel to effectively meet its needs as its business continues to grow.

Competition for sales personnel who are familiar with and trained to sell the Corporation's products and services continues to be strong. The Corporation trains its sales personnel to better understand its existing and new product technologies and how they can be positioned against the Corporation's competitors' products. The Corporation also trains its sales personnel to be adept at working with long sales cycles characteristic of public agency customers and commercial vehicle manufacturers, as well as the special requirements attendant to each.

These initiatives are intended to improve the productivity of the Corporation's sales personnel and the Corporation's revenue and profitability. It takes time for the sales professionals to become productive following their hiring and training and there can be no assurance that sales representatives will reach adequate levels of productivity, or that the Corporation will not experience significant levels of attrition in the future. Measures the Corporation implements to improve productivity may not be successful and may instead contribute to instability in the Corporation's operations, departures from the Corporation's sales and technical support organizations, or reduce the Corporation's revenue or profitability, and harm its business.

Further, the Corporation is highly dependent on the services of management and skilled mechanical engineering technicians. The unexpected loss of or failure to retain one or more of the Corporation's key employees could adversely affect the business, results of operations or financial condition. The Corporation does not currently maintain key man life insurance policies for any director, officer or employee.

Experienced and highly skilled employees are in high demand and competition for these employees can be intense. The Corporation's ability to hire, attract and retain them depends on its ability to provide competitive compensation. The Corporation may not be able to attract, assimilate, develop or retain qualified personnel in the future, and the Corporation's failure to do so could materially adversely affect its business, results of operations or financial condition. In addition, global labor shortages have exacerbated and may continue to exacerbate in the future the Corporation's exposure to such risk.

**Regulations related to "conflict minerals" may force the Corporation to incur additional expenses, may make the Corporation's supply chain more complex and may result in damage to the Corporation's reputation with customers.**

Pursuant to the Dodd-Frank Act, the SEC has adopted requirements for companies that use certain minerals and metals, known as conflict minerals, in their products, whether these products are manufactured by third parties. These requirements require companies to perform due diligence, disclose and report whether such minerals originate from the Democratic Republic of Congo and adjoining countries, or come from recycled or scrap sources. These requirements could adversely affect the sourcing, availability and pricing of minerals used in the manufacture of heavy-duty electric vehicles, including the Corporation's products. While these requirements continue to be subject to administrative uncertainty, the Corporation will incur additional costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals and metals used in the Corporation's products. Since the Corporation's supply chain is complex, the Corporation may not be able to sufficiently verify the origins for these minerals and metals used in the Corporation's products through the due diligence procedures that the Corporation implements, which may harm its reputation. In such event, the Corporation may also face difficulties in satisfying customers who require that all of the components of the Corporation's products are certified as conflict mineral free.

**Failure to comply with anti-corruption, anti-money laundering and sanction laws, including the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder ("FCPA") and similar laws associated with the Corporation's activities outside of the United States, could subject the Corporation to penalties and other adverse consequences.**

The Corporation is subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, the UK Bribery Act of 2010, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), U.S. and foreign laws relating to economic sanctions, including the laws and regulations administered by the U.S. Department of the Treasury's Office of Foreign Assets Control and may be subject to other anti-bribery, anti-money laundering and sanctions laws in countries in which the Corporation conducts activities. The Corporation faces significant risks if the Corporation fails to comply with the FCPA and other anti-corruption laws that prohibit companies and their employees and third-party intermediaries from promising, authorizing, offering or providing, directly or indirectly, improper payments or benefits to foreign government officials, political parties and private sector recipients for the purpose of obtaining or retaining business, directing business to any person or securing any advantage. In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses engage in practices that are prohibited by the FCPA or other applicable laws and regulations. The Corporation may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities and the Corporation can be held liable for the corrupt or other illegal activities of these third- party intermediaries, the Corporation's employees, representatives, contractors, partners and agents, even if the Corporation does not explicitly authorize such activities. The Corporation has implemented an anti-corruption compliance program but cannot assure you that all of its employees and agents, as well as those companies to which the Corporation outsources certain of its business operations, will not take actions in violation of the Corporation's policies and applicable law, for which the Corporation may be ultimately held responsible.

Any violation of the FCPA, other applicable anti-corruption, anti-money laundering and other applicable laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges or severe criminal or civil sanctions, which could have an adverse effect on the Corporation's business, prospects, financial condition and operating results. In addition, responding to any enforcement action may result in a significant diversion of management's attention and resources, significant defense costs and other professional fees.

**Cancellations, reductions or delays in customer orders or customer breaches of purchase agreements may adversely affect the Corporation's results of operations.**

The Corporation provides products to its customers for which the Corporation is customarily not paid in advance. The Corporation relies on the creditworthiness of its customers to collect on its receivables from them in a timely manner after it has billed for products previously provided. While the Corporation generally provides products pursuant to a written contract which determines the terms and conditions of payment to it by its customers, it is possible that customers may dispute an invoice and delay, contest or not pay the Corporation's receivable. The Corporation's failure to collect its receivables could adversely affect its cash flows and results of operations and, in certain cases, could cause the Corporation to fail to comply with the financial covenants under its outstanding debt.

**Fuel shortages, or high prices for fuel, could have a negative effect on sales of the Corporation's products.**

Gasoline or diesel fuel is required for the operation of most of the Corporation's vehicles and there is no assurance that the supply of these petroleum products will continue uninterrupted or that the price of or tax on these petroleum products will not significantly increase. High fuel costs generally drive greater demand for better fuel economy and substantial increases in the price of fuel have had a material adverse effect on the specialty vehicle industry as a whole in the past and could have a material adverse effect on the Corporation's business in the future. Fluctuations in fuel prices have also historically negatively impacted consumer confidence and increased customer preferences for alternative fuel vehicles, only some of which the Corporation produces. The Russia-Ukraine conflict could increase instability in fuel prices.

**Unfavorable global economic conditions and world events may have a material adverse effect on the Corporation's business, results of operations and financial condition.** 

The Corporation's business may be affected by global economic markets and levels of consumer comfort and spend, including recessions, slow economic growth, economic and pricing instability (including the current inflationary environment), increase of interest rates and credit market volatility, all of which could impact demand in the worldwide transportation industries or otherwise have a material adverse effect on the Corporation's business, operating results and financial condition. In addition, unforeseen events such as the global COVID-19 pandemic and geopolitical conflicts, including the current military conflict between Russia and Ukraine, have resulted and may in the future result in widespread disruptions to economic markets, manufacturing operations, supply chains, employment and consumer behavior or governmental spending (as a result of a reduction or different allocation in spending or otherwise). The impact of these and any future unforeseen events on the Corporation's business, results of operations and financial condition is yet unknown and varied across geographic regions. The Corporation's ability to accurately project supply and demand, infrastructure requirements and pace of delivery for the Corporation's vehicles and allocate resources accordingly is critical. If current global market conditions continue or worsen, including further pandemic-related disruptions, geopolitical conflicts, or other unforeseen events, the Corporation's business, results of operations and financial condition could be materially adversely affected.

The Corporation maintains the majority of its cash and cash equivalents in accounts with RBC, a major Canadian bank, and our deposits at these institutions, may at times, exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where the Corporation maintains itsr cash and cash equivalents, there can be no assurance that the Corporation would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position.

**The Corporation may sell additional Common Shares or other securities that are convertible or exchangeable into Common Shares in subsequent offerings or may issue additional Common Shares or other securities to finance future acquisitions.**

The Corporation cannot predict the size or nature of future sales or issuances of securities or the effect, if any, that such future sales and issuances will have on the market price of the Common Shares. Sales or issuances of substantial numbers of Common Shares or other securities that are convertible or exchangeable into Common Shares, or the perception that such sales or issuances could occur, may adversely affect prevailing market prices of the Common Shares. With any additional sale or issuance of Common Shares or other securities that are convertible or exchangeable into Common Shares, investors will suffer dilution to their voting power and economic interest in the Corporation. Furthermore, to the extent holders of the Corporation's stock options or other convertible securities convert or exercise their securities and sell the Common Shares they receive, the trading price of the Common Shares may decrease due to the additional amount of Common Shares available in the market.

**The market price for the Common Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Corporation's control.**

The factors which may contribute to market price fluctuations of the Common Shares include the following:

● actual or anticipated fluctuations in the Corporation's quarterly results of operations;

● recommendations by securities research analysts;

● changes in the economic performance or market valuations of companies in the industry in which the Corporation operates;

● addition to or departure of the Corporation's executive officers, directors and other key personnel;

● release or expiration of transfer restrictions on outstanding Common Shares (including Common Shares subject to lock-up restrictions);

● sales or perceived sales of additional Common Shares;

● operating and financial performance that vary from the expectations of management, securities analysts and investors;

● regulatory changes affecting the Corporation's industry generally and its business and operations;

● announcements of developments and other material events by the Corporation or its competitors;

● fluctuations to the costs of vital production materials and services;

● changes in global financial markets and global economies and general market conditions, such as interest rates;

● significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving the Corporation or its competitors;

● litigation or regulatory action against us;

● operating and share price performance of other companies that investors deem comparable to the Corporation or from a lack of arket comparable companies;

● news reports relating to trends, concerns, technological or competitive developments, regulatory changes and other related issues in the Corporation's industry or target markets; and

● current and future global economic, political and social conditions.

**The Corporation has not declared and paid dividends in the past and may not declare and pay dividends in the future.**

Any decision to declare and pay dividends in the future will be made at the discretion of the Board of Directors and will depend on, among other things, financial results, cash requirements, contractual restrictions and other factors that the Board of Directors may deem relevant. As a result, investors may not receive any return on an investment in the Common Shares unless they sell their Common Shares for a price greater than that which such investors paid for them.

**Future sales, or the perception of future sales, of Common Shares by existing shareholders or by us, or future dilutive issuances of Common Shares by us, could adversely affect prevailing market prices for the Common Shares.**

Subject to compliance with applicable securities laws, sales of a substantial number of Common Shares in the public market could occur at any time. These sales, or the market perception that the holders of a large number of Common Shares or securities convertible into Common Shares intend to sell Common Shares, could reduce the prevailing market price of our Common Shares. We cannot predict the effect, if any, that future public sales of these securities or the availability of these securities for sale will have on the market price of our Common Shares. If the market price of our Common Shares were to drop as a result, this might impede our ability to raise additional capital and might cause remaining shareholders to lose all or part of their investment.

In addition, certain holders of options and other share-based awards will have an immediate income inclusion for tax purposes when they exercise their options or when their other awards are share-settled (that is, tax is not deferred until they sell the underlying Common Shares). As a result, these holders may need to sell Common Shares purchased on the exercise of options or issued upon share settlement of share-based awards in the same year that they exercise their options or in which their share-based awards are share-settled. This might result in a greater number of Common Shares being sold in the public market, and reduced long-term holdings of Common Shares by our management and employees.

**If securities or industry analysts do not publish research or reports about the Corporation's business, or if they downgrade the Common Shares, the price of the Common Shares could decline.**

The trading market for our Common Shares depends, in part, on the research and reports that securities or industry analysts publish about the Corporation or its business. The Corporation does not have any control over these analysts. If one or more of the analysts who cover the Corporation downgrade the Corporation's stock or publish inaccurate or unfavorable research about the Corporation's business, the price of the Common Shares would likely decline. In addition, if the Corporation's results of operations fail to meet the forecast of analysts, the price of the Common Shares would likely decline. If one or more of these analysts cease coverage of the Corporation or fail to publish reports on the Corporation regularly, demand for the Common Shares could decrease, which might cause the price and trading volume of the Common Shares to decline.

**The Corporation incurs increased costs as a result of being a public company in the United States and Canada, and management is required to devote substantial time to public company compliance efforts.**

As a public company in the United States and Canada, the Corporation incurs additional legal, accounting, reporting and other expenses that the Corporation would not incur if it was private, and incurs increased expenses from being a public company in both jurisdictions. The additional demands associated with being a U.S. public company may disrupt regular operations of our business by diverting the attention of some of the Corporation's senior management team away from revenue-producing activities to additional management and administrative oversight, adversely affecting the Corporation's ability to attract and complete business opportunities and increasing the difficulty in both retaining professionals and managing and growing the Corporation's business. Any of these effects could harm the Corporation's business, results of operations and financial condition.

If the Corporation's efforts to comply with new United States laws, regulations and standards differ from the activities intended by regulatory or governing bodies, such regulatory bodies or third parties may initiate legal proceedings against the Corporation and its business may be adversely affected. As a public company in the United States, it is more expensive for the Corporation to obtain director and officer liability insurance, and the Corporation will be required to accept reduced coverage or incur substantially higher costs to continue its coverage. These factors could also make it more difficult for the Corporation to attract and retain qualified directors.

The U.S. Sarbanes-Oxley Act 2002, as amended (the "**U.S. Sarbanes-Oxley Act**"), requires that the Corporation maintain effective disclosure controls and procedures and internal control over financial reporting. Pursuant to Section 404 of the U.S. Sarbanes-Oxley Act ("**Section 404**"), the Corporation is required to furnish a report by our management on its internal control over financial reporting ("**ICFR"**), which, if or when the Corporation is no longer an emerging growth company, must be accompanied by an attestation report on ICFR issued by its independent registered public accounting firm.

To achieve compliance with Section 404 within the prescribed period, the Corporation will document and evaluate its ICFR, which is both costly and challenging. In this regard, the Corporation needs to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of its ICFR, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for ICFR. Despite the Corporation's efforts, there is a risk that neither the Corporation nor its independent registered public accounting firm will be able to conclude within the prescribed timeframe that the Corporation's ICFR is effective as required by Section 404. This could result in a determination that there are one or more material weaknesses in the Corporation's ICFR, which could cause an adverse reaction in the financial markets due to a loss of confidence in the reliability of the Corporation's consolidated financial statements. In addition, in the event that the Corporation is not able to demonstrate compliance with the Sarbanes-Oxley Act, that its internal control over financial reporting is perceived as inadequate, or that it is unable to produce timely or accurate financial statements, investors may lose confidence in its operating results and the price of the Common Shares may decline. In addition, if the Corporation is unable to continue to meet these requirements, it may not be able to remain listed on Nasdaq.

**Inability to meet NASDAQ listing standards**

The Corporation received a letter from the Listings Qualifications Department of NASDAQ on February 28, 2023 notifying the Corporation that it was not in compliance with Listing Rule 5550 (a)(2), which requires the listed securities of the Corporation to maintain a minimum bid price of US$1 per share. The Corporation had not met the requirement for a period of 30 consecutive business days prior to receipt of the NASDAQ letter. The Corporation has a compliance period of 180 calendar days or until August 28, 2023, to regain compliance with NASDAQ's minimum bid price requirement. If at any time during the compliance period the Corporation's closing bid price is at least US$1 for a minimum of 10 consecutive business days, NASDAQ will provide the Corporation with a written confirmation of compliance and the matter will be closed. As of the date of this AIF, the Common Share per share closing bid price remains below US$1. In the event the Corporation does not regain compliance by August 28, 2023, the Corporation may be eligible for an additional 180 calendar day compliance period. To qualify, the Corporation would need to, among other things,<br>

<br> meet the continued listing requirement for the market value of publicly held shares and all other initial listing standards for NASDAQ, with the exception of the minimum bid price requirement, and provide written notice to NASDAQ that it intends to cure the deficiency during the second compliance period. There is no guarantee that the Corporation will regain compliance with the minimum bid price requirement, that the Corporation will maintain compliance with other NASDAQ listing standards, or that the Corporation will be eligible for a second compliance period. If NASDAQ concludes that the Corporation will not be able to cure the deficiency during the second compliance period, or the Corporation does not make the required representations, then NASDAQ will give notice that the Common Shares are subject to delisting and the Corporation will be able to appeal that delisting before a Nasdaq hearings panel. The Corporation's management is reviewing various options available to the Corporation in order to regain compliance and continued listing on NASDAQ. The delisting of the Corporation's Common Shares from NASDAQ could negatively impact the Corporation because it: (i) could reduce the liquidity, and possibly the market price, of the Common Shares; (ii) could reduce the number of US investors willing to hold or acquire our Common Shares, which could negatively impact the Corporation's ability to raise equity financing; and (iii) would limit the Corporation's ability to use certain types of registration statements in the United States to offer and sell freely tradable securities, thereby preventing the Corporation from accessing the US public capital markets.

**As a foreign private issuer, the Corporation is subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to its shareholders.**

The Corporation is a "foreign private issuer" as such term is defined in Rule 405 under the U.S. Securities Act, and is permitted, under a multijurisdictional disclosure system adopted by the United States and Canada, to prepare its disclosure documents filed under the Exchange Act in accordance with Canadian disclosure requirements. Under the Exchange Act, the Corporation is subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. As a result, the Corporation will not file the same reports that a U.S. domestic issuer would file with the SEC, although it will be required to file or furnish to the SEC the continuous disclosure documents that it is required to file in Canada under Canadian securities laws. In addition, the Corporation's officers, directors and principal shareholders are exempt from the reporting and "short swing" profit recovery provisions of Section 16 of the Exchange Act. Therefore, the Corporation's shareholders may not know on as timely a basis when its officers, directors and principal shareholders purchase or sell shares, as the reporting deadlines under the corresponding Canadian insider reporting requirements are longer.

As a foreign private issuer, the Corporation is exempt from the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements. The Corporation is also exempt from Regulation FD, which prohibits issuers from making selective disclosures of material non-public information. While the Corporation expects to comply with the corresponding requirements relating to proxy statements and disclosure of material non-public information under Canadian securities laws, these requirements differ from those under the Exchange Act and Regulation FD and shareholders should not expect to receive in every case the same information at the same time as such information is provided by U.S. domestic companies.

In addition, as a foreign private issuer, the Corporation has the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary to U.S. securities laws, and provided that it discloses the requirements it is not following and describe the Canadian practices it follows instead. For example, the Corporation intends to utilize exemptions under Nasdaq listing standards from the requirement to have fully independent compensation and nominating and corporate governance committees, as defined under Nasdaq rules. In addition, the Corporation does not intend to follow the minimum quorum requirements for shareholder meetings as well as certain shareholder approval requirements prior to the issuance of securities under Nasdaq listing standards, as permitted for foreign private issuers. As a result, the Corporation's shareholders may not have the same protections afforded to shareholders of U.S. domestic companies that are subject to all U.S. corporate governance requirements.

If the Corporation ceases to qualify as a foreign private issuer, it will be subject to the same reporting requirements and corporate governance requirements as a U.S. domestic issuer which will likely increase its costs of being a public corporation in the United States.

**The Corporation is an emerging growth company and intends to take advantage of reduced disclosure requirements applicable to emerging growth companies, which could make the Common Shares less attractive to investors.**

The Corporation is an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012. The Corporation will remain an emerging growth company until the earliest to occur of (i) the last day of the fiscal year in which it has total annual gross revenue of US$1.07 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of Common Shares pursuant to the Registration Statement; (iii) the date on which it has issued more than US$1.0 billion in non-convertible debt securities during the prior three-year period; or (iv) the date it qualifies as a "large accelerated filer" under the rules of the SEC, which means the market value of the Common Shares held by non-affiliates exceeds US$700 million as of the last business day of its most recently completed second fiscal quarter after it has been a reporting company in the United States for at least 12 months. For so long as the Corporation remains an emerging growth company, it is permitted to and intends to rely upon exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act.

The Corporation may take advantage of some, but not all, of the available exemptions available to emerging growth companies. The Corporation cannot predict whether investors will find the Common Shares less attractive if it relies on these exemptions. If some investors find the Common Shares less attractive as a result, there may be a less active trading market for the Common Shares and the price of the Common Shares may be more volatile.

**The Corporation is governed by the corporate and securities laws of Canada which in some cases have a different effect on shareholders than the corporate laws of Delaware, U.S. and U.S. securities laws.**

The Corporation is governed by the BCBCA and other relevant laws, which may affect the rights of shareholders differently than those of a Corporation governed by the laws of a U.S. jurisdiction, and may, together with the Corporation's constating documents, have the effect of delaying, deferring or discouraging another party from acquiring control of the Corporation by means of a tender offer, a proxy contest or otherwise, or may affect the price an acquiring party would be willing to offer in such an instance. The material differences between the BCBCA and Delaware General Corporation Law ("**DGCL**") that may have the greatest such effect include, but are not limited to, the following: (i) for material corporate transactions (such as mergers and amalgamations, other extraordinary corporate transactions or amendments to the Corporation's articles) the BCBCA generally requires a two-thirds majority vote by shareholders, whereas DGCL generally requires only a majority vote; and (ii) under the BCBCA, holders of 5% or more of the Corporation's shares that carry the right to vote at a meeting of shareholders can requisition a special meeting of shareholders, whereas such right does not exist under the DGCL.

**As the Corporation is a Canadian corporation and most of its directors and officers reside or are organized in Canada, it may be difficult for United States shareholders to effect service on the Corporation, and it may be difficult for Canadian investors to enforce civil liabilities against our directors and officers residing outside of Canada.**

The Corporation is governed by the BCBCA with its principal place of business in Canada, most of its directors and officers reside or are organized in Canada or the provinces thereof and the majority of the Corporation's assets and all or a substantial portion of the assets of these persons may be located outside the United States. Consequently, it may be difficult for investors who reside in the United States to effect service of process in the United States upon the Corporation or upon such persons who are not residents of the United States, or to realize upon judgments of courts of the United States predicated upon the civil liability provisions of the U.S. federal securities laws. A judgment of a U.S. court predicated solely upon such civil liabilities may be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. Investors should not assume that Canadian courts: (i) would enforce judgments of U.S. courts obtained in actions against the Corporation or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or the securities or blue sky laws of any state within the United States, or (ii) would enforce, in original actions, liabilities against the Corporation or such persons predicated upon the U.S. federal securities laws or any such state securities or blue sky laws. Similarly, some of the Corporation's directors and officers are residents of countries other than Canada and all or a substantial portion of the assets of such persons are located outside Canada. As a result, it may be difficult for Canadian investors to initiate a lawsuit within Canada against these persons. In addition, it may not be possible for Canadian investors to collect from these persons judgments obtained in courts in Canada predicated on the civil liability provisions of securities legislation of certain of the provinces and territories of Canada. It may also be difficult for Canadian investors to succeed in a lawsuit in the United States based solely on violations of Canadian securities laws.

**If a United States person is treated as owning at least 10% of the Common Shares, such holder may be subject to adverse U.S. federal income tax consequences.**

If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of the Common Shares, such person may be treated as a "United States shareholder" with respect to each "controlled foreign corporation" in our group. Because the Corporation's group includes one or more non-U.S. subsidiaries, the Corporations expects that certain of its non-U.S. subsidiaries will be treated as controlled foreign corporations (regardless of whether or not it is treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of "Subpart F income," "global intangible low-taxed income," and investments in U.S. property by controlled foreign corporations, regardless of whether it makes any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder's U.S. federal income tax return for the year for which reporting was due from starting. The Corporation cannot provide any assurances that it will assist investors in determining whether any of its non-U.S. subsidiaries is treated as a controlled foreign corporation or whether any investor is treated as a United States shareholder with respect to any such controlled foreign corporation or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A United States investor should consult its advisors regarding the potential application of these rules to an investment in the Common Shares.

**DIVIDENDS AND DISTRIBUTIONS**

The Corporation has not declared or paid dividends since incorporation and has no present intention to declare or pay any dividends in the foreseeable future. Dividends paid by the Corporation would be subject to tax and, potentially, withholdings. Any decision to declare or pay dividends will be made by the Corporation's Board of Directors based upon the Corporation's earnings, financial requirements and other conditions existing at such future time.

**DESCRIPTION OF CAPITAL STRUCTURE**

**Common Shares**

As at the date hereof, the Corporation's authorized capital consists of an unlimited number of Common Shares of which 45,667,706 Common Shares are issued and outstanding.

The holders of common shares of the Corporation are entitled to dividends, if, as and when declared by the Board of Directors of each respective Corporation, to receive notice of and attend all meetings of shareholders of each respective Corporation, to one vote per common share at such meetings and, upon liquidation, to ratably receive such assets of each respective Corporation as are distributable to the holders of the common shares. There are no conversion or exchange rights attaching to the Common Shares, nor are there any sinking or purchase fund provisions, provisions permitting or restricting the issuance of additional securities or any other material restrictions, nor are there any provisions requiring a shareholder to contribute additional capital. All issued and outstanding common shares of the Corporation are fully paid and non-assessable.

**Omnibus Equity Incentive Plan**

On November 7, 2022, upon a recommendation of the Compensation Committee, the Board passed a resolution to adopt the Omnibus Equity Incentive Plan (the "Omnibus Plan"), subject to, and effective upon, receiving shareholder approval which was obtained on December 22, 2022. The Omnibus Plan provides flexibility to the Corporation to grant equity-based incentive awards in the form of options ("Options"), restricted share units ("RSUs"), preferred shared units ("PSUs") and deferred share units ("DSUs"), as described in further detail below.

The objectives of the Omnibus Plan are to, among other things, to promote a significant alignment between Directors, officers, employees and consultants of the Corporation (collectively "Participants") and the long term growth objectives of the Corporation; to associate a portion of participants' compensation with the performance of the Corporation over the long term; and to attract, motivate and retain the key participants to drive the business success of the Corporation and its subsidiaries.

The maximum number of common shares available for issuance pursuant to the Omnibus Plan and any other security-based compensation arrangement of the Corporation shall not exceed 10% of the issued and outstanding common shares from time to time. A copy of the Omnibus Plan is included as a schedule to the Information Circular filed on SEDAR at www.sedar.com on November 16, 2022.

As at the date of this Annual Information Form, the Corporation has 1,580,826 Options outstanding and 623,802 DSUs outstanding.

**Warrants**

The Corporation may issue Warrants from time to time entitling the holder thereof to purchase Warrant Shares. As at the date of this Annual Information Form, the Corporation has 7,573,083 Warrants outstanding.

**MARKET FOR SECURITIES**

**Trading Price and Volume**

The Common Shares are listed on the TSXV under the symbol "VMC", on the NASDAQ under the symbol "VEV" and on the FSE under the symbol "6LGA". On March 29, 2023, the last trading day before the date of this AIF, the closing price of the Common Shares on the TSX-V was C$1.13. The following tables sets forth the high and low market prices and volume of the Common Shares traded on the TSXV and NASDAQ for the fiscal year ended December 31, 2022 and as of the date of this AIF:

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| | | | |
|:---|:---|:---|:---|
| **TSXV Price Range (in C$)** | **TSXV Price Range (in C$)** | **TSXV Price Range (in C$)** | **TSXV Price Range (in C$)** |
| **Month** | **High** | **Low** | **Total Volume** |
| March 1 to 29, 2023 | 1.35 | 1.05 | 2458080 |
| February 2023 | 1.35 | 1.12 | 777263 |
| January 2023 | 1.42 | 1.17 | 865702 |
| December 2022 | 1.38 | 1.07 | 1367267 |
| November 2022 | 1.83 | 1.21 | 2161653 |
| October 2022 | 2.01 | 1.07 | 3247314 |
| September 2022 | 1.67 | 1.34 | 653044 |
| August 2022 | 1.62 | 1.54 | 540461 |
| July 2022 | 1.80 | 1.54 | 538738 |
| June 2022 | 2.06 | 1.70 | 707263 |
| May 2022 | 2.37 | 1.92 | 969291 |
| April 2022 | 3.03 | 2.33 | 1439984 |
| March 2022 | 4.60 | 2.75 | 2627138 |
| February 2022 | 5.45 | 3.95 | 1336974 |
| January 2022 | 4.97 | 3.59 | 1467958 |

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The following table sets forth information relating to the trading of the Common Shares on NASDAQ for the fiscal year ended December 31, 2022 and as of the date of this AIF:

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| | | | |
|:---|:---|:---|:---|
| | **Nasdaq Price Range (in US$)** | **Nasdaq Price Range (in US$)** | |
|<br>**Month** | **High** | **Low** |<br>**Total Volume** |
| March 1 to March 29, 2023 | 0.94 | 0.76 | 788204 |
| February 2023 | 0.98 | 0.84 | 2039994 |
| January, 2023 | 1.04 | 0.87 | 1663511 |
| December 2022 | 1.01 | 0.75 | 2440310 |
| November, 2022 | 1.35 | 0.88 | 3096885 |
| October 2022 | 1.49 | 0.75 | 53589445 |
| September 2022 | 1.38 | 0.99 | 1028002 |
| August 2022 | 1.67 | 1.07 | 819373 |
| July 2022 | 1.39 | 1.18 | 500462 |
| June 2022 | 1.65 | 1.30 | 403876 |
| May 2022 | 1.88 | 1.50 | 789739 |
| April 2022 | 2.45 | 1.81 | 1984954 |
| March 2022 | 3.78 | 2.14 | 7192448 |
| February 2022 | 4.29 | 3.12 | 1634319 |
| January 2022 | 3.92 | 2.84 | 1301466 |

---

**Prior Sales**

The following table summarizes details of the Common Shares and securities that are convertible or exchangeable into Common Shares issued by the Corporation during the financial year ended December 31, 2022, and to the date of this AIF.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Issue Date** | **Number of Securities** | **Type of<br> Security** | **Issue Price<br> per Security** | **Issue Price<br> per Security** | **Aggregate<br> Issue Price** | **Aggregate<br> Issue Price** | **Nature of consideration** |
| March 27, 2023 | 4000 | Convertible Debentures | C$ | 1000 | 4000000 | 4000000 | Private Placement |
| February 9, 2023 | 86924 | Common Shares | US$ | 0.8869 |  | 77093 | ATM Offering |
| February 8, 2023 | 34301 | Common Shares | US$ | 0.8814 |  | 30233 | ATM Offering |
| February 7, 2023 | 8738 | Common Shares | US$ | 0.8748 |  | 7644 | ATM Offering |
| February 6, 2023 | 52549 | Common Shares | US$ | 0.8756 |  | 46012 | ATM Offering |
| February 3, 2023 | 16910 | Common Shares | US$ | 0.9168 |  | 15503 | ATM Offering |
| February 2, 2023 | 115208 | Common Shares | US$ | 0.9260 |  | 106683 | ATM Offering |
| February 1, 2023 | 53893 | Common Shares | US$ | 0.8926 |  | 48105 | ATM Offering |
| January 31, 2023 | 25404 | Common Shares | US$ | 0.8891 |  | 22587 | ATM Offering |
| January 30, 2023 | 24153 | Common Shares | US$ | 0.8904 |  | 21506 | ATM Offering |
| January 27, 2023 | 34243 | Common Shares | US$ | 0.9025 |  | 30904 | ATM Offering |
| January 26, 2023 | 17006 | Common Shares | US$ | 0.9101 |  | 15477 | ATM Offering |
| January 25, 2023 | 24700 | Common Shares | US$ | 0.9062 |  | 22383 | ATM Offering |
| January 24, 2023 | 16982 | Common Shares | US$ | 0.9179 |  | 15588 | ATM Offering |
| January 23, 2023 | 50601 | Common Shares | US$ | 0.9176 |  | 46431 | ATM Offering |
| January 20, 2023 | 31109 | Common Shares | US$ | 0.9361 |  | 29121 | ATM Offering |
| January 19, 2023 | 4494 | Common Shares | US$ | 0.9389 |  | 4219 | ATM Offering |
| January 18, 2023 | 26314 | Common Shares | US$ | 0.9688 |  | 25493 | ATM Offering |
| January 17, 2023 | 9150 | Common Shares | US$ | 0.9526 |  | 8716 | ATM Offering |
| January 13, 2023 | 14959 | Common Shares | US$ | 0.9903 |  | 14814 | ATM Offering |
| January 12, 2023 | 28598 | Common Shares | US$ | 0.9984 |  | 28552 | ATM Offering |
| January 11, 2023 | 16822 | Common Shares | US$ | 1.0017 |  | 16851 | ATM Offering |
| January 10, 2023 | 11599 | Common Shares | US$ | 1.0005 |  | 11539 | ATM Offering |
| January 9, 2023 | 19642 | Common Shares | US$ | 1.00 |  | 19642 | ATM Offering |
| January 6, 2023 | 28334 | Common Shares | US$ | 0.9967 |  | 28240 | ATM Offering |
| January 5, 2023 | 51767 | Common Shares | US$ | 0.9952 |  | 51519 | ATM Offering |
| January 4, 2023 | 121267 | Common Shares | US$ | 1.0059 |  | 121982 | ATM Offering |
| December 31, 2022 | 148437 | DSUs<sup>(1)</sup> |  | n/a |  | n/a | DSU Award |
| December 22, 2022 | 36885 | Common Shares | US$ | 0.8610 |  | 31758 | ATM Offering |
| December 21, 2022 | 130349 | Common Shares | US$ | 0.8236 |  | 107355 | ATM Offering |
| December 20, 2022 | 20317 | Common Shares | US$ | 0.8182 |  | 16623 | ATM Offering |
| December 19, 2022 | 8487 | Common Shares | US$ | 0.7863 |  | 6673 | ATM Offering |
| December 16, 2022 | 13730 | Common Shares | US$ | 0.8060 |  | 11066 | ATM Offering |
| December 15, 2022 | 41750 | Common Shares | US$ | 0.8040 |  | 33567 | ATM Offering |
| December 14, 2022 | 8965 | Common Shares | US$ | 0.8225 |  | 7374 | ATM Offering |
| December 13, 2022 | 38753 | Common Shares | US$ | 0.8121 |  | 31471 | ATM Offering |
| December 12, 2022 | 12300 | Common Shares | US$ | 0.8253 |  | 10151 | ATM Offering |
| December 9, 2022 | 8040 | Common Shares | US$ | 0.8463 |  | 6804 | ATM Offering |
| December 8, 2022 | 9067 | Common Shares | US$ | 0.8348 |  | 7569 | ATM Offering |
| December 7, 2022 | 17772 | Common Shares | US$ | 0.8549 |  | 15139 | ATM Offering |
| December 6, 2022 | 54674 | Common Shares | US$ | 0.8571 |  | 46861 | ATM Offering |
| December 5, 2022 | 8200 | Common Shares | US$ | 0.8311 |  | 6815 | ATM Offering |
| December 2, 2022 | 31827 | Common Shares | US$ | 0.8572 |  | 27282 | ATM Offering |
| December 1, 2022 | 23006 | Common Shares | US$ | 0.8914 |  | 20508 | ATM Offering |
| November 30, 2022 | 18200 | Common Shares | US$ | 0.9045 |  | 16462 | ATM Offering |
| November 29, 2022 | 12046 | Common Shares | US$ | 0.9200 |  | 11082 | ATM Offering |
| November 28, 2022 | 9500 | Common Shares | US$ | 0.9521 |  | 9045 | ATM Offering |
| November 25, 2022 | 12784 | Common Shares | US$ | 0.9537 |  | 12192 | ATM Offering |
| November 25, 2022 | 97500 | Options<sup>(2)</sup> |  | n/a |  | n/a | Option Award |
| November 23, 2022 | 17137 | Common Shares | US$ | 0.9593 |  | 16440 | ATM Offering |
| November 22, 2022 | 8829 | Common Shares | US$ | 0.9680 |  | 8546 | ATM Offering |
| November 17, 2022 | 166000 | Common Shares | C$ | 1.31 |  | 217460 | Exercise of RSUs |
| October 17, 2022 | 1926776 | Common Shares | US$ | 1.1481 |  | 2212132 | ATM Offering |
| October 6, 2022 | 1700 | Common Shares | US$ | 1.1050 |  | 1879 | ATM Offering |
| October 5, 2022 | 2344905 | Common Shares | US$ | 1.1880 |  | 2785747 | ATM Offering |
| September 30, 2022 | 141086 | DSUs<sup>(1)</sup> |  | n/a |  | n/a | DSU Award |
| September 22, 2022 | 250000 | Options<sup>(3)</sup> |  | n/a |  | n/a | Option Award |
| June 30, 2022 | 104012 | DSUs<sup>(1)</sup> |  | n/a |  | n/a | DSU Award |
| March 31, 2022 | 59375 | DSUs<sup>(1)</sup> |  | n/a |  | n/a | DSU Award |
| March 31, 2022 | 40000 | Option<sup>(4)</sup> |  | n/a |  | n/a | Option Award |
| March 29, 2022 | 27775 | Common Shares | C$ | 1.68 | C$ | 46662 | Option Exercise |
| March 29, 2022 | 38886 | Common Shares | C$ | 1.20 | C$ | 46663 | Option Exercise |
| March 28, 2022 | 4444445 | Common Shares | US$ | 2.70 |  | 12000001 | Prospectus Offering |
| March 28, 2022 | 4444445 | Warrants |  | n/a |  | n/a | Prospectus Offering |
| March 28, 2022 | 133333 | Agent Warrants |  | n/a |  | n/a | Agent Compensation |
| January 21, 2022 | 34721 | Common Shares | US$ | 3.0668 |  | 106482 | ATM Offering |
| January 20, 2022 | 12050 | Common Shares | US$ | 3.1676 |  | 36170 | ATM Offering |
| January 19, 2022 | 29020 | Common Shares | US$ | 3.2252 |  | 93595 | ATM Offering |
| January 18, 2022 | 38001 | Common Shares | US$ | 3.1967 |  | 121478 | ATM Offering |
| January 14, 2022 | 29694 | Common Shares | US$ | 3.3208 |  | 98608 | ATM Offering |
| January 13, 2022 | 46323 | Common Shares | US$ | 3.4023 |  | 157605 | ATM Offering |
| January 12, 2022 | 10000 | Common Shares | US$ | 3.4767 |  | 34767 | ATM Offering |
| January 11, 2022 | 12467 | Common Shares | US$ | 3.5003 |  | 43638 | ATM Offering |
| January 10, 2022 | 3106 | Common Shares | US$ | 3.5477 |  | 11019 | ATM Offering |
| January 7, 2022 | 10316 | Common Shares | US$ | 3.6586 |  | 37742 | ATM Offering |
| January 6, 2022 | 6632 | Common Shares | US$ | 3.7502 |  | 24871 | ATM Offering |
| January 5, 2022 | 43721 | Common Shares | US$ | 3.7864 |  | 165545 | ATM Offering |
| January 4, 2022 | 20057 | Common Shares | US$ | 3.4097 |  | 68388 | ATM Offering |
| January 3, 2022 | 6447 | Common Shares | US$ | 3.4820 |  | 22448 | ATM Offering |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) Each DSU will convert into Common Shares upon the separation with the Corporation.

(2) Each five year option is exercisable at a price of C$1.30 per Common Share. 1/4 of these options will vest every six months over two years.

(3) Each three year option is exercisable at a price of C$1.50 per Common Share. These options vest on September 21, 2023 providing certain individual performance milestones have been met.

(4) Each five year option is exercisable at a price of C$2.98 per Common Share. 1/6 of these options will vest every six months over three years.

**ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER**

As at the date hereof, none of the Corporation's securities are subject to escrow or subject to contractual restrictions on transfer.

**DIRECTORS AND OFFICERS**

**Name, Occupation and Security Holding**

The following table sets out, as at the date hereof, for each of the directors and executive officers of the Corporation, the person's name, province and country of residence, their respective positions and offices held, the date on which the person became a director, his or her principal occupation and previously held positions for the last five years, and the number and percentage of Common Shares beneficially owned, controlled or directed, directly or indirectly. Our directors are expected to hold office until our next annual meeting of shareholders. Our directors are elected annually and, unless re-elected, retire from office at the end of the next annual general meeting of shareholders.

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| | | | |
|:---|:---|:---|:---|
| &nbsp;&nbsp;**Name and <br> Municipality of <br> Residence** | &nbsp;&nbsp;**Principal Occupations for <br> the Last Five Years** | &nbsp;&nbsp;**Period(s) during which each director has served as a director of the Corporation** | &nbsp;&nbsp;**Number and <br> Percent of Voting Securities<sup>(3)</sup>** |
| &nbsp;&nbsp;William Trainer<br> Langley, BC, Canada<br>Chief Executive Officer, President and Director | &nbsp;&nbsp;Chief Executive Officer of the Corporation | &nbsp;&nbsp;December 4, 2012 to present &nbsp;&nbsp;1597541<sup>(4)</sup> | &nbsp;&nbsp;3.49% |
| &nbsp;&nbsp;Joseph Miller<sup>(1)(2)</sup><br> Surrey, BC, Canada<br>Chairman and Director | &nbsp;&nbsp;Commercial Real Estate Developer | &nbsp;&nbsp;December 4, 2012 to present &nbsp;&nbsp;1908819**<sup>(</sup>**<sup>5)</sup> | &nbsp;&nbsp;4.18% |
| &nbsp;&nbsp;John LaGourgue<br> Surrey, BC, Canada<br>VP Corporate Development and Director | &nbsp;&nbsp;VP Corporate Development and Director of the Corporation | &nbsp;&nbsp;June 21, 2016 to present &nbsp;&nbsp;257374<sup>(6)</sup> | &nbsp;&nbsp;0.56% |
| &nbsp;&nbsp;Andrew Imanse<br> Orange County, CA, USA<br>Director | &nbsp;&nbsp;Independent Corporate Advisor | &nbsp;&nbsp;October 13, 2015 to present &nbsp;&nbsp;91133<sup>(7)</sup> | &nbsp;&nbsp;0.20% |
| &nbsp;&nbsp;Christopher Strong <sup>(1)(2)</sup><br> Fort Worth, TX, USA<br>Director | &nbsp;&nbsp;Independent Corporate Advisor | &nbsp;&nbsp;May 29, 2018 to present &nbsp;&nbsp;Nil<sup>(8)</sup> | &nbsp;&nbsp;N/A |
| &nbsp;&nbsp;James White<sup>(1)</sup><br> Toronto, ON, Canada<br>Director | &nbsp;&nbsp;Managing Partner, Baynes & White, Toronto, ON | &nbsp;&nbsp;September 23, 2019 to present &nbsp;&nbsp;620271<sup>(9)</sup> | &nbsp;&nbsp;1.36% |
| &nbsp;&nbsp;Danial Buckle<br> Vancouver, BC, Canada<br>Chief Financial Officer | &nbsp;&nbsp;Chief Financial Officer of the Corporation (2018- 2021)<br>Finance Director and Corporate Secretary of Fortress Paper Ltd. (2009 – 2017) | &nbsp;&nbsp;December 4, 2020 to present &nbsp;&nbsp;99300<sup>(10)</sup> | &nbsp;&nbsp;0.22% |

---

**Notes:** 

&nbsp;&nbsp;&nbsp;&nbsp;(1) Denotes a member of the Audit Committee.

(2) Denotes a member of the Compensation Committee.

(3) Based on 45,667,706 Common Shares issued and outstanding as of the date of this AIF.

(4) In addition, Mr. Trainer holds 283,333 Options and 16,666 Warrants.

(5) In addition, Mr. Miller holds 198,254 DSUs and 83,333 Options.

(6) In addition, Mr. LaGourgue holds 9,778 DSUs and 66,666 Options.

(7) In addition, Mr. Imanse holds 109,956 DSUs and 16,666 Options.

(8) In addition, Mr. Strong holds 173,108 DSUs and 99,999 Options

(9) In addition, Mr. White holds 132,606 DSUs, 33,332 Options and 35,000 Warrants.

(10) In addition, Mr. Buckle holds 149,999 Options.

**Cease Trade Orders and Bankruptcies**

None of our directors or executive officers is, as at the date of this AIF, or has been within 10 years before the date of this AIF, a director, chief executive officer or chief financial officer of any Corporation (including us) that, while that person was acting in that capacity, or after that person ceased to act in such capacity but resulting from an event that occurred while that person was acting in such capacity, was the subject of a cease trade order, an order similar to a cease trade order, or an order that denied the Corporation access to any exemption under securities legislation in each case for a period of more than 30 consecutive days.

Except as disclosed herein, none of our directors, or executive officers, or to our knowledge, our shareholders holding a sufficient number of securities to affect materially the control of our Corporation (i) is as at the date of this AIF, or has been within 10 years before the date of this AIF, a director or executive officer of any Corporation (including us) that, while that person was acting in that capacity, or within a year of that person ceasing to act in such capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (ii) has, within 10 years before the date of this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of such director, executive officer or shareholder.

Mr. Strong, a director of the Corporation, was a director of Geokinetics Inc. ("**Geokinetics**"), a publicly traded corporation on the AMEX headquartered in Houston, Texas. In March 2013, Geokinetics filed a prepackaged reorganization. Geokinetics is in the seismic business, which is heavily exposed to oil and gas prices. Due in part to a downturn in commodity prices, budget cuts for seismic data acquisition to develop new prospects and equipment which formed a substantial portion of the Geokinetics' assets becoming obsolete, causing its value to be impaired when wireless networks began being used in the field for data collection, the Corporation became insolvent and was not believed to be financeable. Mr. Strong resigned as director of Geokinetics in April 2013.

**Penalties or Sanctions**

None of our directors or executive officers, or to our knowledge, our shareholders holding a sufficient number of securities to affect materially the control of our Corporation, has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

**Conflicts of Interest**

To the best of our knowledge, there are no known existing or potential conflicts of interest between us and our directors, executive officers or other members of management as a result of their outside business interests as at the date of this AIF. However, as certain of our directors and officers also serve as directors and officers of other companies, it is possible that a conflict of interest may arise between their duties to us and their duties to such other companies. See "Directors and Officers" and "Interest of Management and Others in Material Transactions".

**PROMOTERS**

No person will be, or has been within the two most recently completed financial years or during the current financial year, a promoter of the Corporation.

**LEGAL PROCEEDINGS AND REGULATORY ACTIONS**

Other than as disclosed below, the Corporation is not party to any legal proceedings or regulatory actions and no such proceedings are known to the Corporation to be contemplated as at the date of this AIF.

During the year ended December 31, 2022, the Corporation terminated the Sales and Marketing Agreement with Optimal Electric Vehicles LLC ("Optimal EV"). Subsequent to year end, the Corporation initiated arbitration proceedings regarding a business dispute with Optimal EV. The recoverable amount upon termination pursuant to the Sales and Marketing Agreement is $12,000,000. The Corporation is seeking additional damages from Optimal EV above this amount. The status of the arbitration is currently pending.

**INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS**

Other than as disclosed herein, none of (i) the directors or executive officers of the Corporation, (ii) the shareholders who beneficially own, control or direct, directly or indirectly, more than 10% of the voting securities of the Corporation, or (iii) any associate or affiliate of the persons referred to in (i) and (ii), has or has had any material interest, direct or indirect, in any transaction within the three years before the date of this AIF or in any proposed transaction that has materially affected or is reasonably expected to materially affect the Corporation or any of its subsidiaries.

**Related Party Transactions**

The Corporation has not engaged in any related party transactions, other than those set out in the Financial Statements. The Corporation paid lease payments to a company owned by a director as set out in the Financial Statements.

**AUDITOR AND REGISTRAR AND TRANSFER AGENT**

The external auditors of the Corporation are PricewaterhouseCoopers LLP, located at 1400 - 250 Howe Street, Vancouver, B.C. V6C 3S7.

The registrar and transfer agent for the Common Shares is Computershare Trust Company of Canada at its principal offices in Vancouver, BC and Toronto, Ontario.

**MATERIAL CONTRACTS**

In addition to contracts entered into in the ordinary course of business, the following material contracts have been entered into by the Corporation within the most recently completed financial year, or before the most recently completed financial year but are still in effect:

● The Amended Loan Agreement with RBC dated February 17, 2023, as described in this AIF

● Equity Distribution Agreement, as described in this AIF

● Underwriting Agreement, as described in this AIF

**INTERESTS OF EXPERTS**

The Corporation's financial statements for the financial year ended December 31, 2022 has been audited by PricewaterhouseCoopers LLP. PricewaterhouseCoopers LLP is the independent registered public accounting firm of the Corporation and is independent within the meaning of the Chartered Professional Accountants of British Columbia Code of Professional Conduct and in compliance with Public Company Accounting Oversight Board Rule 3250, Auditor Independence.

**ADDITIONAL INFORMATION**

Additional information relating to the Corporation can be found on SEDAR at www.sedar.com

In addition, additional information, including directors' and officers' remuneration and indebtedness, principal holders of the Corporation's securities, securities authorized for issuance under equity compensation plans, audit committee charter and corporate governance disclosure can be found in the Corporation's Information Circular dated November 8, 2022, and filed on SEDAR on November 16, 2022. The Corporation's audit committee disclosure under NI 52-110F1 is included as Appendix "B" to this AIF.

Additional financial information is provided in the Financial Statements and the MD&As and can also be found on SEDAR.

**APPENDIX "A" GLOSSARY OF TERMS**

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| | |
|:---|:---|
| &nbsp;&nbsp;"**AIF**" | &nbsp;&nbsp;means this annual information form; |
| &nbsp;&nbsp;"**ATM Program**" | &nbsp;&nbsp;means the sale of Common Shares using "at-the-market" distributions; |
| &nbsp;&nbsp;**"Base Shelf Prospectus**" | &nbsp;&nbsp;means the Corporation's Canadian short form base shelf prospectus dated April 19, 2021; |
| &nbsp;&nbsp;**"BCBCA"** | &nbsp;&nbsp;means the *Business Corporations Act* (British Columbia); |
| &nbsp;&nbsp;"**Board of Directors**" | &nbsp;&nbsp;means the board of directors of the Corporation; |
| &nbsp;&nbsp;"**CNG**" | &nbsp;&nbsp;means compressed natural gas; |
| &nbsp;&nbsp;"**Common Shares**" | &nbsp;&nbsp;means the common shares in the capital of the Corporation; |
| &nbsp;&nbsp;"**Consolidation**" | &nbsp;&nbsp;means the consolidation of the share capital of the Corporation on the basis of three pre-consolidation common shares to one post-consolidation common share effective March 29, 2021; |
| &nbsp;&nbsp;"**CUSMA**" | &nbsp;&nbsp;means the Canada-United States-Mexico Agreement; |
| &nbsp;&nbsp;"**Debenture" and "2021 Debenture"** | &nbsp;&nbsp;means unsecured convertible debentures of the Corporation; |
| &nbsp;&nbsp;"**Debenture Units**" | &nbsp;&nbsp;means debenture units (comprised of Debentures or 2021 Debentures and detachable Warrants) issued on a private placement basis; |
| &nbsp;&nbsp;"**DGCL**" | &nbsp;&nbsp;means the Delaware General Corporation Law; |
| &nbsp;&nbsp;"**DSU**" | &nbsp;&nbsp;means deferred share unit; |
| &nbsp;&nbsp;"**Eligible Persons**" | &nbsp;&nbsp;means directors, senior officers, employees, consultant Corporation or management Corporation, employees of the Corporation and its subsidiaries, or an eligible charitable organization; |
| &nbsp;&nbsp;"**FCPA"** | &nbsp;&nbsp;means the Foreign Corrupt Practices Act of 1977; |
| &nbsp;&nbsp;"**Financial Statements**" | &nbsp;&nbsp;means the audited consolidated financial statements of the Corporation for the years ended December 31, 2022 and 2021; |
| &nbsp;&nbsp;"**forward-looking statements**" | &nbsp;&nbsp;means certain statements in this AIF about the Corporation's current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking information and/or forward-looking statements within the meaning of applicable Securities Laws; |
| &nbsp;&nbsp;"**FSE**" | &nbsp;&nbsp;means the Frankfurt Stock Exchange; |
| &nbsp;&nbsp;"**FTA**" | &nbsp;&nbsp;means the Federal Transit Administration; |
| &nbsp;&nbsp;"**ICFR**" | &nbsp;&nbsp;means internal control over financial reporting; |
| &nbsp;&nbsp;"**IFRS**" "**Information Circular**" | &nbsp;&nbsp;means International Financial Reporting Standards; means the Corporation's management information circular dated November 8, 2022 sent to shareholders in respect of the Corporation's most recent annual general meeting of shareholders held on December 22, 2022; |

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---

| | |
|:---|:---|
| &nbsp;&nbsp;"**MD&As**" | &nbsp;&nbsp;means the management discussion and analysis of the Corporation for the years ended December 31, 2022 and 2021; |
| &nbsp;&nbsp;"**NASDAQ**" | &nbsp;&nbsp;means Nasdaq Capital Market; |
| &nbsp;&nbsp;"**NATO**" | &nbsp;&nbsp;means the North Atlantic Treaty organization; |
| &nbsp;&nbsp;"**OEMs**" | &nbsp;&nbsp;means the original equipment manufacturers; |
| &nbsp;&nbsp;"**Omnibus Plan**" | &nbsp;&nbsp;means the Corporation's plan to grant equity-based incentive awards in the form of Options, restricted share units ("RSUs"), preferred shared units ("PSUs") and DSUs; |
| &nbsp;&nbsp;"**Options**" | &nbsp;&nbsp;means the incentive stock options of the Corporation; |
| &nbsp;&nbsp;"**Registration Statement**" | &nbsp;&nbsp;means the Corporation's U.S. registration statement on Form-10 dated August 17, 2021; |
| &nbsp;&nbsp;"**Section 404**" | &nbsp;&nbsp;means Section 404 of the U.S. Sarbanes- Oxley Act; |
| &nbsp;&nbsp;"**Securities Laws**" | &nbsp;&nbsp;means securities legislation, securities regulation and securities rules, as amended, and the policies, notices, instruments and blanket orders in force from time to time that are applicable to an issuer; |
| &nbsp;&nbsp;"**Stock Option Plan**" | &nbsp;&nbsp;means the stock option plan of the Corporation; |
| &nbsp;&nbsp;"**TSXV**" | &nbsp;&nbsp;means the TSX Venture Exchange; |
| &nbsp;&nbsp;"**U.S. Sarbanes-Oxley Act**" | &nbsp;&nbsp;means the U.S. Sarbanes- Oxley Act 2002; |
| &nbsp;&nbsp;"**Unit**" | &nbsp;&nbsp;means a security of the Corporation comprised of a Common Share and a fraction of a Warrant or whole Warrant (issued with various terms and prices, as described in this AIF); |
| &nbsp;&nbsp;"**Vicinity**" or the "**Corporation**" | &nbsp;&nbsp;means Vicinity Motor Corp.; |
| &nbsp;&nbsp;"**Vicinity Buses**" | &nbsp;&nbsp;means the full suite of transit busses for public and commercial use including electric, CNG, gas and clean diesel buses; |
| &nbsp;&nbsp;"**Vicinity Lightning**" | &nbsp;&nbsp;means Vicinity Lightning electric bus; |
| &nbsp;&nbsp;"**Vicinity Property**" | &nbsp;&nbsp;means Vicinity Motor Property LLC; |
| &nbsp;&nbsp;"**VMCBC**" | &nbsp;&nbsp;means the wholly owned operating subsidiary of the Corporation, Vicinity Motor (Bus) Corp.; |
| &nbsp;&nbsp;"**VMUSA**" | &nbsp;&nbsp;means the wholly owned operating subsidiary of the Corporation, Vicinity Motor (Bus) USA Corp.; |
| &nbsp;&nbsp;"**Washington Facility**" | &nbsp;&nbsp;means the manufacturing facility located in Ferndale, Washington; |
| &nbsp;&nbsp;"**Warrants**" | &nbsp;&nbsp;means share purchase warrants of the Corporation (issued with various exercise terms and conditions, as described in this AIF) to purchase Warrant Shares; and |
| &nbsp;&nbsp;"**Warrant Shares"** | &nbsp;&nbsp;means the Common Shares issuable on exercise of a Warrant (exercisable at various prices as described in this AIF). |

---

 **APPENDIX "B" AUDIT COMMITTEE DISCLOSURE FORM 52-110F1**

**<u>Item 1: Audit Committee Charter</u>**

&nbsp;&nbsp;&nbsp;&nbsp;**A.** **General Functions, Authority and Role** 

&nbsp;&nbsp;&nbsp;&nbsp;1. The audit committee (the "**Committee**") is a committee of the board of directors (the
" **Board"**) of Vicinity Motor Corp. ()"**Vicinity**" or the "**Corporation** "). The primary
purpose of the Committee is to oversee the accounting and financial reporting processes of the Corporation and the audits of the Corporation's
financial statements and to exercise the responsibilities and duties set forth below, including, but not limited to, assisting the Board
in fulfilling its responsibilities of monitoring (a) the integrity of the financial statements of the Corporation, (b) compliance by the
Corporation with legal and regulatory requirements related to financial reporting, (c) the performance of the Corporation's independent
auditors, (d) the integrity of the Corporation's internal controls and financial reporting process and (e) the Corporation's
strategy with regard to risk management.

&nbsp;&nbsp;&nbsp;&nbsp;2. The Committee has the power to conduct or authorize investigations into any matters within its scope of
responsibilities, with full access to all books, records, facilities and personnel of the Corporation, its auditors and its legal advisors.
In connection with such investigations or otherwise in the course of fulfilling its responsibilities under this charter, the Committee
has the authority to independently retain special legal, accounting, or other consultants to advise it, and may request any of officer
or employee of the Corporation, its independent legal counsel or independent auditor to attend a meeting of the Committee or to meet with
any members of, or consultants to, the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;3. The Corporation's independent auditor is accountable to the Board and to the Committee, who, as
representatives of the Corporation's shareholders, have the ultimate authority and responsibility to evaluate the independent auditor,
appoint and replace the independent auditor, and to determine appropriate compensation for the independent auditor. In the course of fulfilling
its specific responsibilities hereunder, the Committee must maintain free and open communication between the Corporation's independent
auditors, Board and Corporation management. The responsibilities of a member of the Committee are in addition to such member's duties
as a member of the Board.

&nbsp;&nbsp;&nbsp;&nbsp;4. The Committee is not responsible for: planning or conducting audits; certifying or determining the completeness
or accuracy of the Corporation's financial statements or that the financial statements are in accordance with generally accepted
accounting principles or international financial reporting standards, as applicable; or guaranteeing the report of the Corporation's
external auditor. The fundamental responsibility for the Corporation's financial statements and disclosure rests with management
and the external auditor.

&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Composition and Committee Organization** 

&nbsp;&nbsp;&nbsp;&nbsp;5. The Committee shall consist of not less than three members of the Board, the majority of whom shall be
free from any relationship that, in the opinion of the Board would interfere with the exercise of his or her independent judgement as
a member of the Committee. At the invitation of the Committee, members of the Board, management and others may attend Committee meetings
as the Committee considers necessary or desirable.

&nbsp;&nbsp;&nbsp;&nbsp;6. The Chair of the Committee (the "**Chair**") shall be appointed by the Board from among
the members of the Committee by a majority vote.

&nbsp;&nbsp;&nbsp;&nbsp;7. The Committee shall comply with all applicable securities laws, instruments, rules and policies and regulatory
requirements (collectively "**Applicable Securities Laws** "), including those relating to independence and financial literacy.
Accordingly, the majority of the members of the Committee shall be independent within the meaning of National Instrument 52-110 – *Audit Committees*, and financially literate within the meaning of Applicable Securities Laws.

&nbsp;&nbsp;&nbsp;&nbsp;8. The Committee shall meet all requirements of the TSX Venture Exchange and the requirements of such other
securities exchange, quotation system or regulatory agencies as may from time to time apply to the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;9. Each member of the Committee shall be appointed by the Board on an annual basis at its first meeting following
each annual shareholders meeting and shall serve at the pleasure of the Board, or until the earlier of (a) the close of the next annual
meeting of the Corporation's shareholders at which the member's term of office expires, (b) the death of the member, or (c)
the resignation, disqualification or removal of the member from the Committee or from the Board. The Board may fill a vacancy in the membership
of the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;**C.** **Meetings** 

&nbsp;&nbsp;&nbsp;&nbsp;10. The members of the Committee shall hold meetings as are required to carry out this Charter, and in any
case, the Committee shall meet at least quarterly in each financial year of the Corporation. The Committee shall meet otherwise at the
discretion of the Chair or a majority of the members of the Committee, or as may be required by Applicable Securities Laws.

&nbsp;&nbsp;&nbsp;&nbsp;11. No business may be transacted by the Committee at a meeting unless a quorum of the Committee is present.
A majority of the members of the Committee shall constitute a quorum.

&nbsp;&nbsp;&nbsp;&nbsp;12. The external auditors and non-Committee board members are entitled to receive notice of and attend and
be heard at each Committee meeting. The Chair, any member of the Committee, the external auditors, the Chairman of the Board, the Chief
Executive Officer (the "**CEO**") or the Chief Financial Officer (the "**CFO**") may call a meeting of the
Committee by notifying the Corporation's Corporate Secretary who will notify the members of the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;13. The Chair shall chair all Committee meetings that he or she attends, and in the absence of the Chair,
the members of the Committee present may appoint a chair from their number at a meeting.

&nbsp;&nbsp;&nbsp;&nbsp;14. The Committee shall maintain minutes or other records of meetings and activities of the Committee in sufficient
detail to convey the substance of the discussions held and file a copy of the minutes with the Corporate Secretary. The Chair may report
orally to the Board on any matter in his or her view requiring the immediate attention of the Board.

&nbsp;&nbsp;&nbsp;&nbsp;15. The Committee may invite to a meeting any officers or employees of the Corporation, legal counsel, advisors
and other persons whose attendance it considers necessary or desirable in order to carry out its responsibilities.

&nbsp;&nbsp;&nbsp;&nbsp;16. The Committee may appoint any individual, who need not be a member, to act as the secretary at any meeting.

&nbsp;&nbsp;&nbsp;&nbsp;17. The procedures for calling, holding, conducting and adjourning meetings of the Committee shall be the
same as those applicable to meetings of the Board.

&nbsp;&nbsp;&nbsp;&nbsp;18. Any matter to be determined by the Committee shall be decided by a majority of the votes cast at a meeting
of the Committee called for such purpose. Any action of the Committee may also be taken by an instrument or instruments in writing signed
by all of the members of the Committee (including in counterparts, by facsimile or other electronic signature) and any such action shall
be as effective as if it had been decided by a majority of the votes cast at a meeting of the Committee called for such purpose.

&nbsp;&nbsp;&nbsp;&nbsp;19. The Committee shall report its determinations and recommendations to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;**D.** **Resources and Authority** 

&nbsp;&nbsp;&nbsp;&nbsp;20. The Committee has the authority to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. engage, at the expense of the Corporation, independent counsel and other experts or advisors as is considered
advisable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. determine and authorize the payment by the Corporation of the compensation for any independent counsel
and other experts and advisors retained by the Committee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. communicate directly with the internal and external auditors of the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. conduct any investigation considered appropriate by the Committee; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. have unrestricted access to the books and records of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;**E.** **Functions and Responsibilities** 

The Committee shall have the functions and responsibilities set out below as well as any other functions that are specifically delegated to the Committee by the Board and that the Board is authorized to delegate by Applicable Securities Laws and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;21. **Financial Reports** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. **General** – The Committee is responsible for overseeing the Corporation's financial statements
and financial disclosure. Management is responsible for the preparation, presentation and integrity of the Corporation's financial
statements and financial disclosure and for the appropriateness of the accounting principles and the reporting policies used by the Corporation.
The external auditors are responsible for auditing the Corporation's annual consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. **Review of Annual Financial Reports** – The Committee shall review the annual consolidated audited
financial statements of the Corporation, the external auditors' report thereon, the related management's discussion and analysis
of the Corporation's financial condition and results of operation ()"**MD&A** "), the financial disclosure in any
earnings press release and any other public disclosure documents that are required to be reviewed by the Committee pursuant to Applicable
Securities Laws. After completing its review, if advisable, the Committee shall recommend for Board approval the annual financial statements,
the related MD&A, and the earnings release.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. **Review of Interim Financial Reports** – The Committee shall review the interim consolidated
financial statements of the Corporation, the related MD&A, the financial disclosure in any earnings press release as well as the release
of significant new financial information and any other public disclosure documents that are required to be reviewed by the Committee pursuant
to Applicable Securities Laws. After completing its review, if advisable the Committee shall recommend for Board approval the interim
financial statements, the related MD&A, and the earnings release.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. **Review Considerations** – In conducting its review of the annual financial statements or the
interim financial statements, the Committee shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. meet with management and the external auditors, as applicable, to discuss the financial statements and
MD&A;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. review the disclosures in the financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. review the audit report prepared by the external auditors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. discuss with management, the external auditors and legal counsel, if so requested, any pending or threatened
litigation claims and assessments or other contingency that could have a material effect on the financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v. review critical accounting and other significant estimates and judgments underlying the financial statements
as presented by management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi. review any material effects of regulatory accounting initiatives or off-balance sheet structures on the
financial statements as presented by management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii. review critical accounting and other significant estimates and judgments underlying the financial statements
as presented by management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;viii. review the use of any non-GAAP financial measures, including "pro forma" or "adjusted"
information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ix. review management's report on the design and effectiveness of disclosure controls and procedures
and internal controls over financial reporting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;x. review results of the Corporation's whistleblower program;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xi. meet in private with external auditors, as applicable, and one or more senior executives;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xii. review any other matters related to the financial statements that are brought forward by the external
auditors and any amendment thereof, or which are required to be communicated to the Committee under accounting policies or auditing standards;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;xiii. if the Corporation lists its securities on a stock exchange in a jurisdiction other than Canada the Committee
should review the equivalent applicable documentation and procedures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. **Approval of Other Financial Disclosures** – The Committee shall review and if advisable, approve
and recommend for Board approval any financial disclosure contained in a prospectus or other securities offering document, annual report,
annual information form, management information circular or proxy circular of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;22. **Auditors** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. **General** – The Committee shall be directly responsible for oversight of the work of the external
auditors, including the external auditors' work in preparing or issuing an audit report, performing other audit review, or attest
services of any other related work. The external auditors shall report directly to the Committee and the Committee shall have authority
to communicate directly with the Corporation's external auditors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. **Appointment** – The Committee shall review and recommend to the Board the appointment of the
external auditors. The Committee shall review and recommend for Board approval the compensation of the external auditors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. **Resolution of Disagreements** – The Committee shall seek to resolve any disagreements between
management and the external auditors as to financial reporting matters.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. **Discussions with External Auditor** – At least annually, the Committee shall discuss with the
external auditor such matters as are required by applicable auditing standards to be discussed by the external auditor with the Committee,
including any difficulties encountered in the course of the audit work or otherwise, any restrictions on the scope of activities or access
to requested information, and any significant disagreements with management; receive from and review with the independent auditor any
accounting adjustments that were noted or proposed by the auditor but that were "passed" (as immaterial or otherwise), any
"management" or "internal control" letter or schedule of unadjusted differences issued, or proposed to be issued,
by the auditor to the Corporation, or any other material written communication provided by the auditor to the Corporation's management.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. **External Audit Plan** – At least annually, the Committee shall review a summary of the external
auditors' annual audit plan. The Committee shall consider and review with the external auditors any material changes to the scope
of the plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. **Independence of External Auditors** – At least annually, and before the external auditors issue
their report on the annual financial statements, the Committee shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. obtain from the external auditors a formal written statement describing all relationships between the
external auditors and the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. discuss with the external auditors any disclosed relationships or services that may affect the objectivity
and independence of the auditors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. obtain written confirmation from the external auditors that they are objective and independent within
the meaning of the applicable Rules of Professional Conduct/Code of Ethics adopted by the provincial institute or order of chartered professional
accountants to which it belongs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. The Committee shall take appropriate action to ensure the independence of the external auditors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. **Evaluation and Rotation of Lead Partner** – At least annually, the Committee shall review the
qualifications and performance of the lead partner of the external auditors. The Committee shall obtain a report from the external auditors
annually verifying that the lead partner of the external auditors has served in that capacity for no more than five fiscal years of the
Corporation and that the engagement team collectively possesses the experience and competence to perform an appropriate audit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. **Hiring of Former Employees of External Auditor** – The Committee shall review and approve the
Corporation's hiring policies regarding partners, employees and former partners and employees of the present and former external
auditors of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. **Non-Audit Services** – The Committee shall approve in advance any retainer of the external
auditors to perform any non-audit service not prohibited by law, including Applicable Securities Laws, for the Corporation. The Committee
may delegate preapproval authority to a member of the Committee. The decisions of any member of the Committee to whom this authority has
been delegated must be presented to the full Committee at its next scheduled Committee meeting. Approval by the Committee of a non-audit
service to be performed by the external auditor of the Corporation shall be disclosed in periodic reports as necessary under reporting
requirements. The external auditors are prohibited from providing any of the following services: (a) financial information systems design,
implementation or consulting services, (b) appraisal or valuation services, (c) fairness opinions, (d) actuarial services, (e) internal
audit outsourcing, (f) investment banking or investment advisory services, (g) legal services, or (h) any management or human resources
function.

&nbsp;&nbsp;&nbsp;&nbsp;23. **Internal Accounting and Disclosure Controls** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. **General** – The Committee shall review the adequacy of the Corporation's internal accounting
and disclosure controls, its management information systems and its financial, auditing and accounting organization and systems.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. **Establishment, Review and Approval** – the Committee shall require management to implement
and maintain appropriate systems of internal control in accordance with Applicable Securities Laws, regulations and guidance, including
internal control over maintenance of records, financial reporting and disclosure and to review, evaluate and approve these procedures.
At least annually, the Committee shall consider and review with management and the external auditors:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. the effectiveness of, or weaknesses or deficiencies in: the design or operating effectiveness of the Corporation's
internal controls the overall control environment for management business risks; and accounting, financial and disclosure controls (including
without limitation, controls over financial reporting) non-financial controls, and legal and regulatory controls and the impact of any
identified weaknesses in internal controls on management's conclusions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. any significant changes in internal control over financial reporting that are disclosed, or considered
for disclosure, including those in the Corporation's periodic regulatory filings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. any material issues raised by any inquiry or investigation by the Corporation's regulators;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. the Corporation's fraud prevention and detection program, including deficiencies in internal controls
that may impact the integrity of financial information, or that may expose the Corporation to other significant internal or external fraud
losses and the extent of those losses and any disciplinary action in respect of fraud taken against management or other employees who
have a significant role in financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v. any related significant issues and recommendations of the auditors together with management's responses
thereto, including the timetable for implementation of recommendations to correct weaknesses in internal controls over financial reporting
and disclosure controls.

&nbsp;&nbsp;&nbsp;&nbsp;24. The Committee shall receive and review regular reports from the Corporation's General Counsel, if
any, and other management members on: legal or compliance matters that may have a, if any, material impact on the Corporation; the effectiveness
of the Corporation's compliance policies; and any material communications received from regulators. The Committee shall review management's
plans to remediate any deficiencies identified.

&nbsp;&nbsp;&nbsp;&nbsp;25. The Committee shall establish or oversee the establishment of procedures for (a) the receipt, retention,
and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters; and (b)
the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters,
and will, as necessary or appropriate, investigate the matter and will work with management, external auditors, and the General Counsel,
if any, or external legal counsel to reach a satisfactory conclusion.

&nbsp;&nbsp;&nbsp;&nbsp;26. The Committee shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. at least annually, review and assess the adequacy of and, if advisable, approve and recommend for Board
approval, any amendments to the Corporation's Code of Business Conduct;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. review and, if advisable, approve the Corporation's processes for administering the Code of Business
Conduct;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. review actions taken by management to ensure compliance with the Code of Business Conduct, the results
of the confirmations and the responses to any violations of the Code of Business Conduct;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. review with management the results of their assessment of the Corporation's compliance with the
Code of Business Conduct and their plans to remediate any deficiencies identified;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. review the policies and procedures instituted to ensure that any departure from the Code of Business Conduct
by a director or senior officer which constitutes a "material change" within the meaning of Applicable Securities Laws is
appropriately disclosed in accordance with Applicable Securities Laws; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. review and, if advisable, approve any waiver from a provision of the Code of Business Conduct requested
by a member of the Board or senior management.

&nbsp;&nbsp;&nbsp;&nbsp;27. The Committee shall prepare, review and approve any Committee disclosure required in the Corporation's
disclosure documents.

&nbsp;&nbsp;&nbsp;&nbsp;28. The Committee may designate a subcommittee to review any matter within this Charter as the Committee deems
appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;29. The Committee shall annually review and reassess the adequacy of this Charter, recommend any proposed
changes to the Board for approval and provide a copy of the Charter to all directors of the Board.

&nbsp;&nbsp;&nbsp;&nbsp;30. The Chair shall report to the Board at its request or as deemed necessary by the Committee on matters
arising at Committee meetings and, where applicable, shall present the Committee`s recommendation to the Board for its approval. The Committee
shall assess and report annually to the Board on the performance of the Committee by comparing the performance of the Committee against
this Charter and the Committee's goals and objectives for the year.

&nbsp;&nbsp;&nbsp;&nbsp;**F.** **Financial Instruments, Risk Assessment and Risk Management** 

&nbsp;&nbsp;&nbsp;&nbsp;31. The Committee shall review and monitor the management of the principal financial risks that could materially
impact the reporting of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;32. The Committee shall review and monitor the processes in place for identifying principal financial risks
and report them to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;33. The Committee shall review policies with respect to the management of capital and financial instrument
risk management, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. reviewing and periodically approving management's financial instrument risk philosophy and management
policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. reviewing management reports demonstrating compliance with risk management policies; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. discussing with management, at least annually, the Corporation`s major financial risk exposures and the
steps management has taken to monitor, control and report such risks.

&nbsp;&nbsp;&nbsp;&nbsp;**G.** **Other Responsibilities** 

&nbsp;&nbsp;&nbsp;&nbsp;34. The Committee should:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. request and obtain an annual report from the external auditor regarding the external auditor's internal
quality control procedures including foreign office oversight and the application of such control procedures to the Corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. review and consider any issues raised by the external auditor's report on its internal quality control
procedures and any audit quality concerns raised by any regulators in respect of any review of the external auditor in any applicable
jurisdiction; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. perform any other activities consistent with this Charter and Applicable Securities Laws as the Committee
or the Board considers advisable.

**<u>Item 2: Composition of the Audit Committee</u>**

National Instrument 52-110 Audit Committees, ("**NI 52-110**") provides that a member of an audit committee is "independent" if the member has no direct or indirect material relationship with the Corporation, which could, in the view of the Corporation's Board, reasonably interfere with the exercise of the member's independent judgment.

NI 52-110 provides that an individual is "financially literate" if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Corporation's financial statements. The following sets out the members of the audit committee and their education and experience that is relevant to the performance of his responsibilities as an audit committee member.

The current members of the Audit Committee are Christopher Strong (Chair), Joseph Miller and James White, all three of whom are independent and all of whom are financially literate as defined by NI 52-110.

**<u>Item 3: Relevant Education And Experience</u>**

The education and experience of each current Audit Committee member that is relevant to the performance of his responsibilities as an Audit Committee member is set out below.

 **

***Christopher Strong (Chair)***

 **

Mr. Strong is a senior executive with over thirty years of experience with startups, acquisitions, initial public offerings, turnarounds and sales. In addition to previous roles as Chief Executive Officer, he has also served as audit committee chair, Chief Financial Officer and held numerous other finance-related positions earlier in his career. Mr. Strong is a former U.S. Navy Officer and received his MBA in finance from the Wharton School of Business.

***Joseph Miller***

 ****

Mr. Miller has been a director of the Corporation since December 4, 2012. Mr. Miller has over 30 years' experience in the construction field and manages a diverse construction Corporation based in British Columbia that has projects across North America and the South Pacific, through which Mr. Miller has a developed a broad base of skills and experience in management.

 **

***James White***

 **

Mr. White has extensive experience as a corporate director for public companies and is currently serving as Managing Partner with Baynes & White, a Toronto, Ontario based benefits and pension actuarial consulting firm.

 ****

**<u>Item 4: Reliance on Certain Exemptions</u>**

During the most recently completed financial year, the Corporation has not relied on certain exemptions set out in NI 52-110, namely section 2.4 (*De Minimus Non-audit Services*), section 3.2 (*Initial Public Offerings*), section 3.4 (*Events Outside Control of Member*), section 3.5 (*Death, Incapacity or Resignation of Audit Committee Member*), and any exemption, in whole or in part, in Part 8 (*Exemptions*).

**<u>Item 5: Reliance on the Exemption in Subsection 3.3(2) or Section 3.6</u>**

During the most recently completed financial year, the Corporation has not relied on upon the exemption in subsection 3.3(2) (*Controlled Companies*). The Corporation did temporarily rely on section 3.6 (*Temporary Exemption for Limited and Exceptional Circumstances*) until May 2022, when James White was appointed to the Audit Committee in place of John LaGourgue who is not independent.

**<u>Item 6: Reliance on Section 3.8</u>**

During the most recently completed financial year, the Corporation has not relied upon section 3.8 (*Acquisition of Financial Literacy*).

**<u>Item 7: Audit Committee Oversight</u>**

At no time during the Corporation's most recently completed financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor (currently, PricewaterhouseCoopers LLP, Chartered Professional Accountants) not adopted by the Board.

**<u>Item 8: Pre-Approval Policies and Procedures</u>**

The Audit Committee has not adopted formal policies and procedures for the engagement of non-audit services. Subject to the requirements of the NI 52-110, the engagement of non-audit services is considered by, as applicable, the Board and the Audit Committee, on a case by case basis.

**<u>Item 9: External Auditor Service Fees (By Category)</u>**

The following table sets out the aggregate fees charged to the Corporation by the external auditor in each of the last two financial years for the category of fees described.<br>

---

| | | |
|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2022** |
| Audit Fees<sup>(1)</sup> | $198592 | $192970 |
| Audit-Related Fees<sup>(2)</sup> | Nil | Nil |
| Tax fees<sup>(3)</sup> | 22821 | 33152 |
| All Other Fees<sup>(4)</sup> | 133349 | 23701 |
| **Total Fees:** | $**354762** | $**249823** |

---

(1) "Audit fees" include aggregate fees billed by the Corporation's external auditor in each of the last two fiscal years for audit fees.

(2) "Audited related fees" include the aggregate fees billed in each of the last two fiscal years for assurance and related services by the Corporation's external auditor that are reasonably related to the performance of the audit or review of the Corporation's financial statements and are not reported under "Audit fees" above. The services provided include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.

(3) "Tax fees" include the aggregate fees billed in each of the last two fiscal years for professional services rendered by the Corporation's external auditor for tax compliance, tax advice and tax planning. The services provided include tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities.

(4) "All other fees" include the aggregate fees billed in each of the last two fiscal years for products and services provided by the Corporation's external auditor, other than "Audit fees", "Audit related fees" and "Tax fees" above and relate to work on the Corporation's prospectuses.

## Exhibit 99.2

?xml version="1.0" encoding="utf-8"?

**EXHIBIT 99.2**

&nbsp;&nbsp;**VICINITY MOTOR CORP.**<br>Consolidated Financial Statements<br>**For the Years Ended December 31, 2022 and December 31, 2021**

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Vicinity Motor Corp.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated statements of financial position of Vicinity Motor Corp. and its subsidiaries (together, the Company) as of December 31, 2022 and 2021, and the related consolidated statements of loss, comprehensive loss, changes in equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

**/s/PricewaterhouseCoopers LLP**

Chartered Professional Accountants

Vancouver, Canada

March 30, 2023

We have served as the Company's auditor since 2017.

PricewaterhouseCoopers LLP

PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7

T: +1 604 806 7000, F: +1 604 806 7806

"PwC" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.

**Vicinity Motor Corp.** 

Consolidated Statements of Financial Position

(In thousands of US Dollars)

---

| | | | |
|:---|:---|:---|:---|
|  | Note | December 31, 2022 | December 31, 2021 |
|  | | $ | $ |
| **Current Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents |  | 1622 | 4402 |
| &nbsp;&nbsp;&nbsp;Trade and other receivables | 4 | 2655 | 2810 |
| &nbsp;&nbsp;&nbsp;Inventory | 5 | 10068 | 9416 |
| &nbsp;&nbsp;&nbsp;Prepaids and deposits |  | 3801 | 4178 |
| Current Assets |  | 18146 | 20806 |
| **Long-term Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Intangible assets | 6 | 14273 | 22353 |
| &nbsp;&nbsp;&nbsp;Property, plant, and equipment | 7 | 22613 | 10834 |
| Assets |  | 55032 | 53993 |
| **Current Liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities |  | 4942 | 2915 |
| &nbsp;&nbsp;&nbsp;Deferred consideration | 6 |  | 4602 |
| &nbsp;&nbsp;&nbsp;Credit facility | 8 | 628 |  |
| &nbsp;&nbsp;&nbsp;Current portion of deferred revenue | 9 | 2382 | 3193 |
| &nbsp;&nbsp;&nbsp;Current portion of provision for warranty cost | 10 | 1585 | 1414 |
| &nbsp;&nbsp;&nbsp;Current debt facilities | 11 | 6587 | 7143 |
| &nbsp;&nbsp;&nbsp;Current portion of other long-term liabilities | 12 | 449 | 134 |
| Current Liabilities |  | 16573 | 19401 |
| **Long-term Liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Other long-term liabilities | 12 | 1503 | 92 |
| &nbsp;&nbsp;&nbsp;Provision for warranty cost | 10 | 124 | 255 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 9 |  |  |
| Liabilities |  | 18200 | 19748 |
| **Shareholders' Equity** |  |  |  |
| &nbsp;&nbsp;&nbsp;Share capital | 13 | 75983 | 58055 |
| &nbsp;&nbsp;&nbsp;Contributed surplus | 13 | 7088 | 6035 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) income |  | 1403 | (151) |
| &nbsp;&nbsp;&nbsp;Deficit |  | (47642) | (29694) |
| Shareholders' Equity |  | 36832 | 34245 |
| Liabilities and shareholders' equity |  | 55032 | 53993 |

---

NATURE OF OPERATIONS (Note 1)

COMMITMENTS (Note 20)

SUBSEQUENT EVENTS (Note 22)

Approved on behalf of the Board:

---

| | |
|:---|:---|
| &nbsp;&nbsp;*/s/"William R. Trainer"* | &nbsp;&nbsp;*/s/"Christopher Strong"* |
| &nbsp;&nbsp;Director | &nbsp;&nbsp;Director |

---

See accompanying notes to the consolidated financial statements

**Vicinity Motor Corp.** 

Consolidated Statements of Loss

(In thousands of US dollars, except for per share amounts)

---

| | | | |
|:---|:---|:---|:---|
|  | Note | Year ended December 31, 2022 | Year ended December 31, 2021 |
|  | | $ | $ |
| Revenue |  |  |  |
| &nbsp;&nbsp;&nbsp;Vehicle sales | 18 | 13165 | 38197 |
| &nbsp;&nbsp;&nbsp;Other | 18 | 5310 | 3511 |
|  |  | 18475 | 41708 |
| Cost of sales | 5, 7a | (18035) | (37473) |
| Gross profit |  | 440 | 4235 |
| Expenses |  |  |  |
| &nbsp;&nbsp;&nbsp;Sales and administration |  | 9526 | 7812 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation |  | 1380 | 1353 |
| &nbsp;&nbsp;&nbsp;Amortization |  | 2572 | 872 |
| &nbsp;&nbsp;&nbsp;Interest and finance costs | 81112 | 2258 | 716 |
| &nbsp;&nbsp;&nbsp;Gain on modification of debt | 11 | (803) |  |
| &nbsp;&nbsp;&nbsp;Foreign exchange loss |  | 3253 | 341 |
| Expenses |  | 18186 | 11094 |
| Loss before taxes |  | (17746) | (6859) |
| Current income tax expense | 15 | 202 | 464 |
| Net loss |  | (17948) | (7323) |
| Loss per share |  |  |  |
| Basic & diluted | 19 | (0.45) | (0.24) |
| Weighted average number of common shares outstanding |  |  |  |
| Basic & diluted | 19 | 39650426 | 30827688 |

---

See accompanying notes to the consolidated financial statements

**Vicinity Motor Corp.** 

**Consolidated Statements of Comprehensive Loss** 

(In thousands of US dollars)

---

| | | |
|:---|:---|:---|
|  | Year ended December 31, 2022 | Year ended December 31, 2021 |
|  | $ | $ |
| Net loss | (17948) | (7323) |
| **Other comprehensive loss** |  |  |
| **Items that may be reclassified subsequently to net loss** |  |  |
| Exchange differences on translation of foreign operations | 1554 | (296) |
| Total other comprehensive (loss) income | 1554 | (296) |
| Total comprehensive loss | (16394) | (7619) |

---

See accompanying notes to the consolidated financial statements

**Vicinity Motor Corp.** 

**Consolidated Statements of Changes in Equity**

(In thousands of US dollars, except for per share amounts)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Note | Number of Shares | Share Capital | Contributed Surplus | Accumulated Other Comprehensive Income | Deficit | Total Shareholders' Equity |
|  | | | $ | $ | $ | $ | $ |
| Balance, January 1, 2021 | 20 | 28650754 | 37175 | 2618 | 145 | (22371) | 17567 |
| Issuance of shares – private placement | 13.2 (d) | 4114242 | 17563 |  |  |  | 17563 |
| Issuance of shares – warrants exercised | 13.2 (e) | 1924721 | 6269 | (141) |  |  | 6128 |
| Issuance of shares – options exercised | 13.2 (f) | 256662 | 615 | (199) |  |  | 416 |
| Issuance of options | 13.4 |  |  | 1333 |  |  | 1333 |
| Share issuance costs | 13.2 (d) |  | (3567) |  |  |  | (3567) |
| Warrants | 13.3 |  |  | 1071 |  |  | 1071 |
| Stock-based compensation | 13.4-13.6 |  |  | 1353 |  |  | 1353 |
| Other comprehensive loss |  |  |  |  | (296) |  | (296) |
| Net loss |  |  |  |  |  | (7323) | (7323) |
| Balance, December 31, 2021 |  | 34946379 | 58055 | 6035 | (151) | (29694) | 34245 |
| Issuance of shares – private placement | 13.2 (a) | 9562999 | 18449 |  |  |  | 18449 |
| Issuance of shares – RSU vested | 13.2 (b) | 166000 | 900 | (900) |  |  |  |
| Issuance of shares – options exercised | 13.2 (c) | 66661 | 98 | (23) |  |  | 75 |
| Share issuance costs | 13.2 (a) |  | (1519) | 152 |  |  | (1367) |
| Warrants | 13.3 |  |  | 444 |  |  | 444 |
| Stock-based compensation | 13.4-13.6 |  |  | 1380 |  |  | 1380 |
| Other comprehensive loss |  |  |  |  | 1554 |  | 1554 |
| Net loss |  |  |  |  |  | (17948) | (17948) |
| Balance, December 31, 2022 |  | 44742039 | 75983 | 7088 | 1403 | (47642) | 36832 |

---

See accompanying notes to the consolidated financial statements

**Vicinity Motor Corp.** 

**Consolidated Statements of Cash Flows**

(In thousands of US dollars)

---

| | |
|:---|:---|
|  |<br>Note |
| **OPERATING ACTIVITIES** |  |
| Net loss for the year) |  |
| Items not involving cash: |  |
| &nbsp;&nbsp;&nbsp;Loss on disposal of property and equipment |  |
| &nbsp;&nbsp;&nbsp;Gain on modification of debt) |  |
| &nbsp;&nbsp;&nbsp;Amortization |  |
| &nbsp;&nbsp;&nbsp;Foreign exchange loss (gain) |  |
| &nbsp;&nbsp;&nbsp;Interest and finance costs | 81112 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 13 |
| Changes in non-cash items: |  |
| &nbsp;&nbsp;&nbsp;Trade and other receivables | 4) |
| &nbsp;&nbsp;&nbsp;Inventory | 5) |
| &nbsp;&nbsp;&nbsp;Prepaids and deposits) |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities) |  |
| &nbsp;&nbsp;&nbsp;Deferred consideration | 6) |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 9) |
| &nbsp;&nbsp;&nbsp;Warranty provision | 10 |
| Taxes paid) |  |
| Interest paid |  |
| Cash provided (used) in operating activities |  |
| **INVESTING ACTIVITIES** |  |
| &nbsp;&nbsp;&nbsp;Purchase of intangible assets | 6) |
| &nbsp;&nbsp;&nbsp;Proceeds from government subsidy | 6 |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment | 7) |
| &nbsp;&nbsp;&nbsp;Proceeds on disposal of property and equipment | 7 |
| &nbsp;&nbsp;&nbsp;Restricted cash |  |
| Cash used in investing activities |  |
| **FINANCING ACTIVITIES** |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of common shares | 13 |
| &nbsp;&nbsp;&nbsp;Share issuance costs | 13) |
| &nbsp;&nbsp;&nbsp;(Repayments) proceeds of credit facility | 8) |
| &nbsp;&nbsp;&nbsp;Proceeds from short-term loans | 11 |
| &nbsp;&nbsp;&nbsp;Repayment of short-term loans | 11) |
| &nbsp;&nbsp;&nbsp;Repayment of long-term loans | 12 |
| Cash provided by financing activities |  |
| Effect of foreign exchange rate on cash |  |
| Increase in cash and cash equivalents) |  |
| Cash and cash equivalents, beginning |  |
| Cash and cash equivalents, ending |  |

---

See accompanying notes to the consolidated financial statements

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **NATURE OF OPERATIONS** 

Vicinity Motor Corp. ("Vicinity", "VMC" or the "Company") is a Canadian company that is a North American supplier of electric vehicles for both public and commercial enterprise use. The Company leverages a dealer network and relationships with manufacturing partners to supply its flagship electric, compressed natural gas ("CNG") and clean-diesel Vicinity buses and the VMC 1200 electric truck. VMC (formerly Grande West Transportation Group) was incorporated on December 4, 2012 under the laws of British Columbia. The Company conducts its active operations in Canada through its wholly owned operating subsidiary, Vicinity Motor (Bus) Corp. which was incorporated on September 2, 2008 under the laws of British Columbia. The Company also conducts its active operations in the U.S. through a wholly owned subsidiary, Vicinity Motor (Bus) USA Corp., incorporated on April 8, 2014 under the laws of the State of Delaware. The Company's head office is located at 3168 262<sup>nd</sup> Street, Aldergrove, British Columbia.

&nbsp;&nbsp;&nbsp;&nbsp;**2.** **BASIS OF PRESENTATION** 

The following companies are consolidated with Vicinity Motor Corp. as at December 31, 2022:

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| | | | |
|:---|:---|:---|:---|
| Company Name | Registered | Holding | Functional Currency |
| Vicinity Motor Corp. | &nbsp;&nbsp;British Columbia | Parent Company | &nbsp;&nbsp;United States Dollar (Canadian Dollar up to October 5, 2021) |
| Vicinity Motor (Bus) Corp. | &nbsp;&nbsp;British Columbia | 100% | &nbsp;&nbsp;Canadian Dollar |
| Vicinity Motor (Bus) USA Corp. | &nbsp;&nbsp;United States | 100% | &nbsp;&nbsp;United States Dollar |

---

Intercompany balances and transactions, and any unrealized gains arising from intercompany transactions, were eliminated in preparing the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").

The consolidated financial statements were authorized for issue by the Board of Directors on March 30, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments carried at fair value as described in Note 3.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with IFRS requires the use of judgments and/or estimates that affect the amounts reported and disclosed in the consolidated financial statements and related notes. These judgments and estimates are based on management's best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the consolidated financial statements.

Estimates that have a risk of resulting in material adjustment to the carrying amounts of assets and liabilities within the next year are summarized below:

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**2.** **BASIS OF PRESENTATION (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Impairment
 assessment of intangible assets:

The determination of the recoverable amount of intangible assets involves significant estimates and assumptions. At year end, management concluded that there were material breaches of contract by Optimal Electric Vehicles LLC ("Optimal EV") and consequently the Company terminated the Sales and Marketing Agreement with Optimal EV. Accordingly, the Company also concluded that impairment indicators existed in relation to the Optimal EV intangible asset. The Company tested the intangible asset for impairment at December 31, 2022. The Company determined the recoverable amount of the intangible asset based on a scenario weighted discounted cash flow model. The significant assumptions applied to the determination of the recoverable amount included the probability of recovery of the $12,000 pursuant to the termination of the Sales and Marketing Agreement from Optimal EV and the estimated discount rate and future cashflows from the rights to the intellectual property in the event of bankruptcy of Optimal EV. As a result of the impairment assessment the Company concluded the recoverable amount exceeded the carrying value of the intangible asset and no impairment was required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Inventory net realizable value:

The Company estimates net realizable value of inventory for its vehicles and spare parts. Net realizable value is the estimated selling price in the ordinary course of business, less any costs to complete and sell the product. An allowance for obsolete, slow-moving or defective inventory is made when necessary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. The determination of provision for warranty cost:

The Company offers warranties on the buses and trucks it sells. The Company estimates the provision for future warranty claims based on historical warranty claim information, as well as recent trends that might suggest the past results may differ from future warranty claims. The Company does not have a long history of estimating warranty provisions. In addition, the items covered by the Company's warranty may be subject to interpretation because the warranty items are not specific in all cases, and the warranty demands made by different customers may also vary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv. Contingent liability
estimate:

In the normal course of business, the Company receives notice of potential legal proceedings or is named as defendant in legal proceedings, including those that may be related to product liability, wrongful dismissal or personal injury, many of which are covered by the Company's insurance policies. Contingent liabilities are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Company and amounts can be estimated reliably. The Company has accrued for claims where it is probable there will be an outflow of resources. The amounts accrued are based on management's assumptions with regards to the outcomes of legal proceedings and/or any settlements that may occur. Therefore, are subject to estimation uncertainty and as such, the final settlements could be materially different from those accrued.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Revenue recognition

Revenue from contracts with customers, is based upon the principle that revenue is recognized when control of a good or service is transferred to a customer. The Company considers that control has passed when there is a present obligation to pay, physical possession, and when legal title and the risks and rewards of ownership have passed to the customer.

In the case of buses and trucks, revenue is recognized when the buses and trucks have been delivered to the customer. The buses and trucks are considered delivered when it is picked up from the Company's yard by the customer or when it has been delivered to a customer specified location in accordance with the agreement. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue when the sales are recognized.

In the case of revenue from the sale of parts inventory, revenue is recognized when control of the parts inventory transfers to the customer upon delivery.

In the case where the performance obligation is to stand ready to deliver a bus and deliver a bus if requested, revenue is recognized when the bus has been delivered to the customer or when the stand ready period is complete.

In circumstances where the Company receives consideration or sales deposits from the customer in advance of meeting the revenue recognition criteria, deferred revenue is recognized.

In circumstances where the Company facilitates sales through an agent, and the agent is paid a commission for acting on behalf of the Company, revenue is recorded as the amount of consideration agreed by the ultimate customer and the commission to the agent is recorded as commissions and services expense and included in sales and administration.

In certain circumstances, the Company may agree to accept pre-owned buses or other non-cash considerations as consideration for the purchase of new buses. In these circumstances, the Company recognizes revenue based on the fair value of the non-cash consideration received.

In circumstances where the Company modifies a contract judgement is applied to determine if the modification should be accounted for as a new contract or part of the existing contract, depending upon the nature of the contract. Modifications that defer the delivery of buses or change the type of bus to be delivered in the future are generally accounted for prospectively and deferred revenue is continued to be deferred. A modification that adds additional distinct performance obligations at stand-alone selling prices are accounted for as a new contract.

Revenue from operating leases of buses is recognized in accordance with the terms of the relevant agreement with the customer evenly over the term of that agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) Cash and cash equivalents

Cash and cash equivalents consist of cash deposits with banks and highly liquid investments that are readily convertible to cash with maturities of three months or less when purchased, or which are redeemable at the option of the Company.

Any cash which is contractually restricted is classified as restricted cash, as it is not available for ongoing operational purposes until the restriction is removed.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) Trade receivables

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost, less expected credit losses. Trade receivables do not carry any interest. The expected credit losses for trade receivables are measured at initial recognition and throughout its life at an amount equal to lifetime expected credit loss and are presented within sales and administration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d) Inventory

Inventory for buses, trucks, and aftermarket parts is stated at the lower of cost and net realizable value. Cost for aftermarket parts is determined on a first-in first-out basis. The cost of finished goods comprises raw materials, direct labor, other direct costs, freight, import duties and related production overheads. Net realizable value is the estimated selling price in the ordinary course of business, less any costs to complete and sell the product. An allowance for obsolete, slow-moving or defective inventory is made when necessary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e) Intangible assets

Intangible assets consist of intellectual property rights and developed software and licences. Intellectual property rights acquired are initially recognized at cost and are subsequently carried at cost less accumulated amortization and accumulated impairment losses, if any. Software implementation costs have finite lives and are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intellectual property costs are amortized to profit or loss using the straight-line method over 8-10 years, which is their estimated useful life. Software implementation costs are to be amortized over 5 years, which is its estimated useful life. These assets with finite lives are tested at the end of every reporting period for possible impairment or when there are events or changes in circumstances that indicate that their carrying amounts may not be recoverable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f) Development costs

Expenditure incurred in the development of products or enhancements to existing product ranges is capitalized as an intangible asset only when the future economic benefits expected to arise are deemed probable and the costs can be reliably measured. Development costs not meeting these criteria are expensed in the statement of operations as incurred. Capitalized development costs are amortized on a straight-line basis over their estimated useful economic lives once the product or enhancement is available for use. Product research costs are expensed as incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g) Debt issue costs

Debt issue costs are recognized in connection with proposed financing transactions which are specifically identified in that the form of financing is known and its completion is probable. When the financing is completed, these costs are recognized and netted against the value of the debt for debt transactions. Debt issue costs include only those costs which are incremental and directly attributable to the proposed financing transaction. In the event that the transaction is abandoned, previously capitalized debt issue costs are expensed through the consolidated statements of (loss) income and comprehensive (loss) income.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h) Share issuance costs

Professional, consulting, regulatory and other costs directly attributable to equity financing transactions are recorded as deferred financing costs until the financing transactions are completed, if the completion of the transaction is considered likely; otherwise they are expensed as incurred. Share issuance costs are charged to share capital when the related shares are issued. Deferred financing costs related to financing transactions that are not completed are expensed through the consolidated statements of (loss) income and comprehensive (loss) income.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i) Property and equipment

Property and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. Cost includes the acquisition price, any direct costs to bring the asset into productive use at its intended location, the cost of replacing part of the property and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.

Depreciation of property and equipment is recorded in operating expenses with the exception of our buses under lease which is included in cost of sales. Property and equipment are depreciated annually using the following methods and rates:

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| | |
|:---|:---|
| Office equipment | Declining balance, 20% - 55% |
| Vehicles | Declining balance, 30% |
| Buses under lease | Straight-line over the expected life of the bus, up to 12 years |
| Asset under lease | Straight-line, over lease term |
| Plant and manufacturing equipment | Straight-line, 25 years |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j) Government
 assistance

Government assistance is recorded as receivable when the Company qualifies under the terms of a government program and the Company has reasonable assurance the assistance will be received. Government assistance related to the acquisition of property, plant and equipment is recorded as a reduction of the cost of the asset to which it relates, with any amortization calculated on the net amount. Government assistance related to non-capital projects is recorded as a reduction of the related expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k) Leases

At the inception of a contract, the Company as the lessee assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company assesses whether the contract involves the use of an identified asset, whether the Company has the right to obtain substantially all of the economic benefits from the use of the asset during the term of the arrangement and if the Company has the right to direct the use of the asset.

Leases are recognized as a right-of-use asset and a corresponding liability when the leased asset is available for use by the Company. Lease liabilities are initially measured at the net present value of the fixed lease payments and variable lease payments that are based on an index or a rate, discounted using the rate implicit in the lease, or if that cannot be determined, the Company's incremental borrowing rate. Right-of-use assets are initially measured at cost, comprising of the amount of the initial measurement of the lease liability, any lease payments made at or before the lease commencement date, and restoration costs.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

Right of use assets are depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Lease liabilities are subsequently measured at amortized cost using the effective interest rate method.

The Company has elected to not recognize right-of-use assets and lease liabilities for leases with a term of less than 12 months and low value leases. The lease payments for these leases are recorded as expenses as they are incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l) Provisions

Provisions are recorded when a present legal or constructive obligation exists as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

At the time of sale, a provision for warranty claims is recorded in cost of sales. This warranty provision is based upon management's best estimate of expected future warranty costs for the particular contract. Actual warranty expenditures are charged against the provision as incurred during the two-year warranty period. If actual expense is different from the provision, management re-estimates the remaining provision required and records a change in estimate in cost of sales.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m) Impairment of non-financial assets

Assets that are subject to depreciation and amortization, such as property and equipment and intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

If there are indicators of impairment, an evaluation is undertaken to determine whether the carrying amounts are in excess of their recoverable amounts. An asset's recoverable amount is determined as the higher of its fair value less costs to sell and its value-in-use. Such reviews are undertaken on an asset-by-asset basis, except where assets do not generate cash flows independent of other assets, in which case the review is undertaken at the cash-generating unit level.

If the carrying amount of an individual asset or cash-generating unit exceeds its recoverable amount, an impairment loss is recorded in the consolidated statements of (loss) income and comprehensive (loss) income to reflect the asset at the recoverable amount. In assessing the value-in-use, the relevant future cash flows expected to arise from the continuing use of such assets and from their disposal are discounted to their present value using a pre-tax discount rate which reflects the current market's assessments of the time value of money and asset-specific risks for which the cash flow estimates have not been adjusted. Fair value less costs to sell is determined as the price that would be received to sell the asset or group of assets in an orderly transaction between market participants at the measurement date less incremental costs directly attributed to the disposal of the asset or group of assets.

A reversal of a previously recognized impairment loss is recorded in the consolidated statements of (loss) income and comprehensive (loss) income when events or circumstances dictate that the estimates used to determine the recoverable amount have changed since the prior impairment loss was recognized. The carrying amount is increased to the recoverable amount but not beyond the carrying amount net of amortization which would have arisen if the prior impairment loss had not been recognized. After such a reversal, the amortization charge is adjusted in future periods to allocate the asset's revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;n) Financial instruments

Cash and cash equivalents and restricted cash are classified as loans and receivables and are recorded at amortized cost. Interest income is recognized by applying the effective interest rate.

Derivative instruments, including embedded derivatives, are recorded at fair value through profit or loss and, accordingly, are recorded on the consolidated statements of financial position at fair value. Unrealized gains and losses on derivatives held for trading are recorded in profit or loss for the year. Fair values for derivative instruments are determined using valuation techniques, with assumptions based on market conditions existing at the consolidated statements of financial position date or settlement date of the derivative.

Accounts payable, accrued liabilities and debt are classified as other financial liabilities and are recognized initially at fair value, net of any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are held at amortized cost using the effective interest method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on its financial assets. At each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If, at the reporting date, the credit risk on the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance for the financial asset at an amount equal to twelve month expected credit losses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;p) Income taxes

Income tax expense comprises current and deferred tax and is recognized in operations except to the extent that it relates to business combinations, or items recognized directly in equity or in other comprehensive loss.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is recognized at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;q) (Loss) earnings per share

Basic (loss) earnings per share is computed by dividing net (loss) income available to common shareholders by the weighted average number of common shares outstanding during the year. The Company applies the treasury stock method in calculating diluted (loss) earnings per share. Diluted (loss) earnings per share exclude all dilutive potential common shares if their effect is anti-dilutive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;r) Related party transactions

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Related parties may be individuals or corporate entities. Parties are also considered to be related if they are subject to common control or common significant influence. A transaction is considered to be a related party transaction when there is a transfer of resources, services or obligations between related parties.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;s) Stock-based payments

Equity-settled stock-based payments to employees and others providing similar services are measured at the fair value of equity instruments at the grant date. The fair value is measured at grant date, using the Black-Scholes option pricing model, and each tranche is recognized on a graded-vesting basis over the period in which options vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to contributed surplus.

Equity-settled stock-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted. These transactions are then measured at the date the entity obtains the goods or the counterparty renders the service.

Consideration received on the exercise of stock options is recorded in share capital and the related stock-based payment in contributed surplus is transferred to share capital. Charges for options that are forfeited before vesting are reversed from equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;t) Share Capital

The Company uses the residual value approach in respect of unit offerings, whereby the amount assigned to the warrant is the excess of the unit price over the trading price of the Company's shares at the date of issuance, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;u) Reportable segments

The Company operates as a single segment, which is the production and sale of buses, trucks and spare parts in North America, consistent with the internal reporting provided to the chief executive officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v) Recent accounting pronouncements

Certain new accounting standards and interpretations have been published that are not mandatory for December 31, 2022 reporting periods and have not been early adopted by the Company. These standards are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.

&nbsp;&nbsp;&nbsp;&nbsp;**4.** **TRADE AND OTHER RECEIVABLES** 

---

| | | |
|:---|:---|:---|
|  | December 31, 2022 | December 31, 2021 |
|  | $ | $ |
| Trade receivable | 1076 | 1268 |
| Income tax receivable | 160 |  |
| Sales tax receivable | 21 | 37 |
| Duties receivable | 162 | 649 |
| Receivable from manufacturer | 1236 | 856 |
| Total Trade and other receivables | 2655 | 2810 |

---

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**5.** **INVENTORY** 

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| | | |
|:---|:---|:---|
|  | December 31, 2022 | December 31, 2021 |
|  | $ | $ |
| Finished goods | 8098 | 6472 |
| Work in progress – vehicles | 42 | 41 |
| Parts for resale | 1928 | 2903 |
| Total Inventory | 10068 | 9416 |

---

As at December 31, 2022 and December 31, 2021, work in progress – vehicles consists of the cost of buses and trucks still being manufactured. Finished goods inventory consisted of the costs of assembled buses and trucks, as well as freight and other costs incurred directly by the Company in compiling inventory. All inventory is part of the general security agreement to secure the credit facility described in Note 8.

During the year ended December 31, 2022, the Company reduced inventory of parts for resale and finished goods by $1,227 to reflect the net realizable value for obsolete parts and aged used buses with a corresponding increase recorded to cost of goods sold.

During the year ended December 31, 2022, the Company recognized $14,408 as the cost of inventory included as an expense in cost of sales (December 31, 2021: $31,914).

&nbsp;&nbsp;&nbsp;&nbsp;**6.** **INTANGIBLE ASSETS** 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | Purchased Intellectual Property (a) | Developed Intellectual Property (b) | Software | Total |
|  | $ | $ | $ | $ |
| **Cost** |  |  |  |  |
| Balance at December, 2020 | 1248 | 441 | 782 | 2471 |
| Additions | 19495 | 1720 | 488 | 21703 |
| Foreign exchange | (458) | (5) | (21) | (484) |
| At December, 2021 | 20285 | 2156 | 1249 | 23690 |
| Additions |  | 203 |  | 203 |
| Reduction of deferred consideration | (4639) |  |  | (4639) |
| Write-down of intangible asset |  |  | (345) | (345) |
| Foreign exchange | (1593) | 262 | (86) | (1417) |
| At December 31, 2022 | 14053 | 2621 | 818 | 17492 |
| **Accumulated Amortization** |  |  |  |  |
| Balance at December 31, 2020 | 506 |  | 257 | 763 |
| Depreciation | 473 |  | 97 | 570 |
| Foreign exchange | 4 |  |  | 4 |
| At December 31, 2021 | 983 |  | 354 | 1337 |
| Depreciation | 1954 | 3 | 94 | 2051 |
| Foreign exchange | (142) |  | (27) | (169) |
| At December 31, 2022 | 2795 | 3 | 421 | 3219 |
| **Carrying Value** |  |  |  |  |
| At December 31, 2021 | 19302 | 2156 | 895 | 22353 |
| At December 31, 2022 | 11258 | 2618 | 397 | 14273 |

---

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**6.** **INTANGIBLE ASSETS** **(continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) On June 10, 2015, the Company entered into a compensation for services agreement with a customer to formalize
compensation for the services provided in the development of the Vicinity bus. On September 29, 2017, the Company entered into a new agreement
and terminated the prior service agreement. Under the new agreement, the previously accrued royalty payable to the customer and all future
royalty payments are removed in exchange for the delivery of up to 8 buses over the next 8 years without payment to the Company. The new
agreement is an intangible asset as it represents the acquisition of the customer's interest in the intellectual property of the
Vicinity Bus represented by the royalty. The intangible asset is being amortized over an 8-year period representing the useful life of
the intellectual property related to the Vicinity bus.

On acquisition, the Company valued the above transaction at the fair value to be delivered in the future, discounted at an interest rate of 6.2%. The Company also recognizes deferred revenue related to these buses (Note 9).

On October 5<sup>th</sup>, 2021, the Company entered into the Sales and Marketing Agreement with Optimal EV to purchase the exclusive sales and marketing rights for VMC Optimal products for 10 years. The Company paid $15,000 in cash and will pay $5,000 contingent on the sale of 250 units sold by the Company. The Company has initially accounted for the contingent deferred consideration at fair value and subsequently measured the contingent deferred consideration at fair value at each period with changes in fair value being recorded in the statement of (loss) income. As a result, the Company recorded an intangible asset for the licensing fee in the amount of $19,484 and $78 in interest and finance costs for the year ended December 31, 2021.

During the year ended December 31, 2022, the Company terminated the Sales and Marketing Agreement with Optimal EV due to material breaches. Subsequent to year end, the Company initiated arbitration proceedings regarding ongoing disputes with Optimal EV. As a result of the termination, the Company reduced the intangible asset and the deferred consideration by the remaining amount of deferred consideration, $4,640 (Note 16). As a result of the ongoing arbitration, management concluded that there was an impairment indicator with regards to the intangible asset. As a result, management performed an evaluation to determine whether the carrying amount of the intangible asset was in excess of its recoverable amount. Management determined the recoverable amount by performing a scenario weighted discounted cash flow model. The Company is pursuing amounts greater than $12,000 through arbitration proceedings. Based on the results of management's impairment assessment it determined that no impairment was required.

Developed intellectual property is development costs for Vicinity products, such as electric trucks and buses. During the year ended December 31, 2022, the Company received $817 as a grant from Sustainable Development Technology Canada for the development of the Company's electric vehicles. The amount was recorded as a reduction in intangible assets. The Company has the right to receive an additional C$1,549 dollars in further grants as milestones are achieved for this project.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**7.** **PROPERTY AND EQUIPMENT** 

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Buses Available for Lease<br> (a)** | **Office Equipment** | **Right-of-Use Asset** | **Vehicles** | **Land<br> (b)** | **Plant and Equipment** | **Total** |
|  | $ | $ | $ | $ | $ | $ | $ |
| **Cost** |  |  |  |  |  |  |  |
| At December 31, 2020 | 2924 | 794 | 591 | 350 |  | 70 | 4729 |
| Additions | 3522 | 1109 | 27 |  | 1760 | 3922 | 10340 |
| Disposals | (2350) |  |  |  |  |  | (2350) |
| Foreign exchange | 19 | 3 | 2 | 1 |  |  | 25 |
| At December 31, 2021 | 4115 | 1906 | 620 | 351 | 1760 | 3992 | 12744 |
| Additions | 399 | 2123 | 2242 |  |  | 8791 | 13555 |
| Disposals | (285) | (6) |  |  |  |  | (291) |
| Foreign exchange | (79) | (295) | (161) | (22) |  |  | (557) |
| At December 31, 2022 | 4150 | 3728 | 2701 | 329 | 1760 | 12783 | 25451 |
| **Accumulated Amortization** |  |  |  |  |  |  |  |
| At December 31, 2020 | 791 | 267 | 312 | 192 |  |  | 1562 |
| Disposals | (319) |  |  |  |  |  | (319) |
| Depreciation | 369 | 66 | 193 | 42 |  |  | 670 |
| Foreign exchange | (2) |  | (1) |  |  |  | (3) |
| At December 31, 2021 | 839 | 333 | 504 | 234 |  |  | 1910 |
| Disposals | (22) | (1) |  |  |  |  | (23) |
| Depreciation | 394 | 88 | 403 | 30 |  |  | 915 |
| Foreign exchange | 123 | (25) | (46) | (16) |  |  | 36 |
| At December 31, 2022 | 1334 | 395 | 861 | 248 |  |  | 2838 |
| **Carrying Value** |  |  |  |  |  |  |  |
| December 31, 2021 | 3276 | 1573 | 116 | 117 | 1760 | 3992 | 10834 |
| December 31, 2022 | 2816 | 3333 | 1840 | 81 | 1760 | 12783 | 22613 |

---

All property and equipment, with the exception of land and plant and equipment of $14,543 are pledged as part of a general security agreement to secure the credit facility described in Note 8. Additionally, the vehicles are pledged to secure vehicle loans described in Note 12.

&nbsp;&nbsp;&nbsp;&nbsp;a) As at December 31, 2022, $573 of buses available for lease had been returned to the Company and are no
longer under a lease contract with a customer (December 31, 2021: $920).

During the year ended December 31, 2022, one bus available for lease was sold to a customer with a loss of $27 being recognized in cost of sales (December 31, 2021: $542).

During the year ended December 31, 2022, the Company recognized $85 in net realizable value write down for buses available for lease to reflect the net realizable value with a corresponding increase in cost of goods sold.

&nbsp;&nbsp;&nbsp;&nbsp;b) During 2021, the Company purchased land and began construction of a new manufacturing facility in Ferndale,
Washington, USA.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**8.** **CREDIT FACILITY** 

During the year ended December 31, 2017, the Company entered into a revolving credit facility agreement with a financial institution for a maximum amount of C$20 million based on the value of certain Company assets. The terms of the agreement were amended on October 23, 2020, renewing the credit facility for a three-year term. The credit facility bears interest at a rate of 0.75% - 1% plus Canadian prime rate for loans denominated in Canadian dollars and 0.75% - 1% plus US prime rate for loans denominated in US dollars. The facility is secured by way of a general security agreement over all assets of the Company.

As at December 31, 2022, the Company had drawn $628 on this facility (December 31, 2021: $nil), comprised of $850 in Canadian funds.

Per the terms of the credit facility, the Company must maintain a consolidated 12-month rolling fixed charge coverage ratio if the Company borrows over 75% of the available facility. As at December 31, 2022, the Company has not borrowed over 75% of its availability.

Subsequent to December 31, 2022, the Company announced it obtained $30M in credit commitments from Royal Bank of Canada and Export Development Canada to fund production of the Company's VMC 1200 class 3 electric trucks. The credit facility can be used for 100% of eligible production costs on the trucks, excluding labor and overhead from the Company's assembly plants. The credit facility has an interest rate of prime plus 2% and will be secured by existing assets of the Company. Royal Bank of Canada will also continue to provide the Company with C$10M in an asset-based lending (ABL) agreement for use with its existing bus orders and a US$3M letter of credit facility.

&nbsp;&nbsp;&nbsp;&nbsp;**9.** **DEFERRED REVENUE** 

---

| | | |
|:---|:---|:---|
|  | <br>December 31, 2022 | <br>December 31, 2021 |
|  | $ | $ |
| Sales deposits – future delivery of buses | 453 |  |
| Future delivery of buses (a) |  | 1003 |
| Future delivery of buses (b) | 1929 | 2190 |
| Deferred revenue | 2382 | 3193 |
| Less: current portion | 2382 | 3193 |
| Long-term portion of deferred revenue |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) The Company has recognized deferred revenue and an intangible asset in relation to an agreement with a
customer to provide buses in the future (Note 6). In 2017 the contract was modified to provide for one diesel powered bus to be delivered
each year for 8 years. No buses have been delivered under this agreement. In late 2020 the Company concluded that it no longer had the
obligation or intent to deliver three out of the eight buses. During the three months ended June 30, 2021 the Company came to an agreement
with the customer to deliver three future buses. Subsequent to the agreement the Company concluded that it no longer had the obligation
or intent to deliver the remaining two buses. As a result, the Company recorded $444 as revenue during the three months ended June 30,
2021. During the year ended December 31, 2022, the Company delivered the three remaining buses completing its obligation to the customer.

During the year ended December 31, 2022, the Company recognized $nil in interest expense related to the deferred revenue (December 31, 2021: $4).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) During the year ended December 31, 2022, the Company recognized deferred revenue in relation to a non-cash
agreement with a customer in which the customer provided the Company with 8 used buses in exchange for 8 leased buses to be leased until
the delivery of the 8 new buses are provided in 2023. As a result, the Company has recognized $127 as lease revenue (December 31, 2021:
$14) and has a deferred revenue balance of $1,929 as at December 31, 2022.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**10.** **PROVISION FOR WARRANTY COST** 

The Company provides bumper to bumper warranty coverage for the first two years on specified components, with the exception of normal wear and tear.

During the year ended December 31, 2022, the Company recorded warranty expense of $499

(December 31, 2021 - $1,598) as part of its cost of sales in connection with sales completed during the year. During the year ended December 31, 2022, $841 of warranty costs (December 31, 2021 - $1,073) have been incurred against the provision. Change in estimate of the warranty provision relates to re-assessment of the warranty provision compared to the actual warranty claims applied.

---

| | |
|:---|:---|
|  | $ |
| Balance at December 31, 2020 | 800 |
| Additions | 1598 |
| Warranty claims applied | (1073) |
| Change in estimate of warranty provision | 344 |
| Change in foreign exchange |  |
| Balance at December 31, 2021 | 1669 |
| Additions | 499 |
| Warranty claims applied | (841) |
| Change in estimate of warranty provision | 421 |
| Change in foreign exchange | (39) |
| Balance at December 31, 2022 | 1709 |
| Less: Current portion | 1585 |
| Long-term portion of warranty provision | 124 |

---

&nbsp;&nbsp;&nbsp;&nbsp;**11.** **CURRENT DEBT FACILITIES** 

---

| | | |
|:---|:---|:---|
|  | December 31, 2022 | December 31, 2021 |
|  | $ | $ |
| Unsecured debentures - 2021 (a) | 6587 | 7143 |
| Unsecured debentures - 2020 (b) |  |  |
| Private loan (c) |  |  |
|  | 6587 | 7143 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) On October 5, 2021, the Company issued C$10,300 in unsecured debentures with a maturity 12 months from
the date of issue. On June 15, 2022, the maturity date of the debentures was extended to October 4, 2023, with the extension being treated
as a modification of the original debt with the classification changing from current to long-term liabilities. As a result, a gain of
$803 on modification of debt was recorded during the three months ended June 30, 2022. In connection with the extension, the Company cancelled
412,000 warrants from the previous agreement. On extension the Company issued 1,000,000 warrants to purchase common shares at an exercise
price of C$2.25 per share. The value of these warrants was incorporated in the $803 gain on modification of debt. The warrants expire
on the debt maturity date of October 4, 2023.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**11.** **CURRENT DEBT FACILITIES (Continued)** 

The unsecured debentures include 8% annual interest paid at maturity with $449 being recorded as borrowing costs on June 15, 2022, and an effective interest rate of 24%.

During the year ended December 31, 2022, the Company incurred $1,748 in interest expense (December 31, 2021 - $411) on this loan, of which $765 is included in accounts payable and accrued liabilities at December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b) On March 20, 2020, the Company issued C$1,750 in unsecured debentures with a maturity 12 months from the
date of issue. The debentures were issued at a discount of 2% and include 10% annual interest paid at maturity; the Company incurred borrowing
costs of $82 and the debt has an effective interest rate of 16%.

During the year ended December 31, 2021, the Company incurred $52 in interest expense on this loan, of which $nil is included in accounts payable and accrued liabilities at December 31, 2021. During the year ended December 31, 2021, the Company repaid the debenture.

In connection with the issuance, the Company also issued 350,000 warrants to purchase common shares at an exercise price of C$1.14 per share, the value of these warrants was incorporated in the transaction costs of $82 referenced above. The warrants expire 12 months from the date of issue. All warrants were exercised during the year ended December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c) The loan bears annual interest at a rate of 10%. During the year ended December
31, 2021, the Company incurred $14 in interest expense on this loan, of which $nil is included in accounts payable and accrued liabilities
at December 31, 2021. During the year ended December 31, 2021, the Company repaid the $636 balance of this debt.

&nbsp;&nbsp;&nbsp;&nbsp;**12.** **OTHER LONG-TERM LIABILITIES** 

---

| | | |
|:---|:---|:---|
|  | December 31, 2022 | December 31, 2021 |
|  | $ | $ |
| Lease obligation (a) | 1883 | 116 |
| Vehicles | 69 | 110 |
| Less: Current portion | (449) | (134) |
|  | 1503 | 92 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a) Lease Obligation

Minimum lease payments in respect of lease liabilities for the right-of-use assets included in property, plant and equipment (Note 7) and the effect of discounting are as follows:

---

| | |
|:---|:---|
|  | December 31, 2022 |
|  | $ |
| Undiscounted minimum lease payments: |  |
| &nbsp;&nbsp;&nbsp;Less than one year | 485 |
| &nbsp;&nbsp;&nbsp;One to two years | 467 |
| &nbsp;&nbsp;&nbsp;Two to three years | 476 |
| &nbsp;&nbsp;&nbsp;Three to six years | 622 |
|  | 2050 |
| &nbsp;&nbsp;&nbsp; Effect of discounting | (167) |
| &nbsp;&nbsp;&nbsp; Present value of minimum lease payments – total lease liability | 1883 |
| &nbsp;&nbsp;&nbsp; Less: Current portion | (418) |
| &nbsp;&nbsp;&nbsp; Long-term lease liabilities | 1465 |

---

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**12.** **OTHER LONG-TERM LIABILITIES (continued)** 

The Company has lease agreements for office and warehouse facilities expiring October 31, 2023, March 31, 2027 and May 31, 2027. and October 31, 2023. The Company also has a lease agreement for a vehicle expiring on November 30, 2025.

&nbsp;&nbsp;&nbsp;&nbsp;**13.** **SHARE CAPITAL** 

On March 24, 2021, the Company performed a 3 for 1 share consolidation of the Company's common shares, stock options, warrants and DSUs. The quantities and per unit prices presented in this note are shown on post consolidation basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Authorized**: Unlimited number of common shares without par value

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Issued and Outstanding Common Shares:**

The details for the common share issuances during the year ended December 31, 2022 are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. During the year ended December 31, 2022, 4,444,445 units, each unit consisting of one common share and one warrant, were issued for a private placement at a price of $2.70 for gross proceeds of $12,000 . The value allocated to the warrants based on the residual value method was $nil. The Company also incurred share issuance costs of $1,283 in relation to this private placement.

During the year ended December 31, 2022, the Company also issued 5,118,554 shares at prices ranging from $0.79 to $3.65, the Company incurred share issuance costs of $205 for net proceeds of $6,244 through its At-the-Market equity program.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. During the year ended December 31, 2022, 166,000 RSU's were vested for gross cash proceeds of $nil .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. During the year ended December 31, 2022, 66,661 stock options were exercised by employees of the Company at an average exercise price of $1.13 for gross proceeds of $75 .

The details for the common share issuances during the year ended December 31, 2021 were as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. During the year ended December 31, 2021, 4,114,242 shares were issued on settlement of a private placement at a price of $4.27 for gross proceeds of $17,563 . The Company also incurred share issuance costs of $3,567 in relation to this private placement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. During the year ended December 31, 2021, 1,924,721 warrants were exercised at an average price of $3.18 per share for gross proceeds of $6,128 .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. During the year ended December 31, 2021, 256,662 stock options were exercised by employees of the Company at an average exercise price of $1.62 for gross proceeds of $416 .

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**13.** **SHARE CAPITAL (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Share Purchase Warrants**

A summary of the Company's share purchase warrants are as follows:

---

| | | |
|:---|:---|:---|
| | Number of Warrants | Weighted Average Exercise Price |
|  |  | C$ |
| Outstanding, December 31, 2020 | 1934100 | 3.89 |
| Issued | 2407304 | 6.64 |
| Forfeited | (9379) | 4.50 |
| Exercised | (1924721) | 3.89 |
| Outstanding, December 31, 2021 | 2407304 | 6.64 |
| Issued | 5577778 | 3.84 |
| Forfeited | (412000) | 4.50 |
| Outstanding, December 31, 2022 | 7573082 | 4.53 |

---

During the year ended December 31, 2022, the Company issued 4,444,445 warrants and 133,333 agent warrants, as part of a private placement agreement with exercise prices of $2.97 and $3.36, respectively. The warrants expire 3 years and 2 years, respectively, from the date of closing of the placement.

During the year ended December 31, 2022, the Company issued 1,000,000 warrants as part of a debt extension agreement (Note 11) with an exercise price of C$2.25. The warrants expire on October 4, 2023.

During the year ended December 31, 2021, the Company issued 1,995,304 warrants as part of a private placement agreement with an exercise price of $5.10. The warrants expire 3 years from the date of closing of the placement.

During the year ended December 31, 2021, the Company issued 412,000 warrants as part of a debt agreement (Note 11) with an exercise price of C$7.50. The warrants expire 12 months from the date of issue.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Directors, Consultants, and Employee stock options** 

The Company has adopted a share option plan for which options to acquire up to 10% of the issued share capital, at the award date, may be granted to eligible optionees from time to time. Generally, share options granted have a maximum term of five years, and a vesting period and exercise price determined by the directors.

A summary of the Company's directors, consultants, and employee stock options are as follows:

---

| | | |
|:---|:---|:---|
| | Number of Options | Weighted Average Exercise Price |
| | | C$ |
| Outstanding, December 31, 2020 | 1173320 | 2.70 |
| Issued | 684999 | 6.71 |
| Exercised | (256662) | 2.06 |
| Outstanding, December 31, 2021 | 1601657 | 4.52 |
| Issued | 387500 | 1.60 |
| Forfeited | (341670) | 5.21 |
| Exercised | (66661) | 1.40 |
| Outstanding, December 31, 2022 | 1580826 | 3.79 |

---

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**13.** **SHARE CAPITAL (continued)** 

During the year ended December 31, 2022, the Company granted 387,500 stock options to executives and directors to purchase common shares of the Company with exercise prices ranging from C$1.30 to C$2.98 per common share and expiring in three to five years. These stock options vest over one to three years.

During the year ended December 31, 2021, the Company granted 524,999 stock options to consulting firms to purchase common shares of the Company with exercise prices ranging from C$5.86 to C$9.36 per common share expiring in one to five years.

During the year ended December 31, 2021, the Company granted 160,000 stock options to executives and directors to purchase common shares of the Company with exercise prices ranging from C$7.20 to C$7.24 per common share and expiring in five years. These stock options vest over three years.

During the year ended December 31, 2022, the Company recognized $116 (2021 - $814) on the grant and vesting of options to directors, consultants and employees. The grant date fair value per option was calculated using the Black-Scholes model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | December 31, 2022 | December 31, 2021 |
| Fair value at grant date (C$) | $0.75 | $4.20 |
| Fair value at grant date (US$) | $0.56 | $3.27 |
| Risk-free interest rate | 3.47% | 0.42% |
| Expected life of options | 5 years | 4 years |
| Expected dividend rate | 0% | 0% |
| Annualized volatility | 97% | 90% |
| Forfeiture rate | 14% | 3% |

---

The following tables summarize information about the Company's stock options outstanding at December 31, 2022:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | Options Outstanding | Options Exercisable | Exercise <br> Price | Remaining Contractual Life (Years) | Expiry Date |
|  |  |  | C$ |  |  |
| April 4, 2018 | 83333 | 83333 | 5.25 | 0.26 | &nbsp;&nbsp;April 4, 2023 |
| April 26, 2018 | 83333 | 83333 | 4.35 | 0.32 | &nbsp;&nbsp;April 26, 2023 |
| May 29, 2018 | 83333 | 83333 | 4.35 | 0.41 | &nbsp;&nbsp;May 29, 2023 |
| January 17, 2019 | 166666 | 166666 | 2.40 | 1.05 | &nbsp;&nbsp;January 17, 2024 |
| November 15, 2019 | 233333 | 233333 | 1.50 | 1.88 | &nbsp;&nbsp;November 15, 2024 |
| November 28, 2019 | 16666 | 16666 | 1.56 | 1.91 | &nbsp;&nbsp;November 28, 2024 |
| May 4, 2020 | 24999 | 24999 | 1.20 | 2.34 | &nbsp;&nbsp;May 4, 2025 |
| November 23, 2020 | 66664 | 66664 | 6.15 | 2.90 | &nbsp;&nbsp;November 23, 2025 |
| January 12, 2021 | 333333 | 333333 | 6.51 | 3.03 | &nbsp;&nbsp;January 11, 2026 |
| February 1, 2021 | 41666 | 34722 | 9.36 | 3.09 | &nbsp;&nbsp;January 31, 2026 |
| April 27, 2021 | 60000 | 30000 | 7.24 | 3.32 | &nbsp;&nbsp;April 26, 2026 |
| March 31, 2022 | 40000 | 6666 | 2.98 | 4.25 | &nbsp;&nbsp;March 30, 2027 |
| September 22, 2022 | 250000 |  | 1.50 | 2.73 | &nbsp;&nbsp;September 21, 2025 |
| November 25, 2022 | 97500 |  | 1.30 | 4.90 | &nbsp;&nbsp;November 24, 2027 |
| Total | 1580826 | 1163048 |  |  |  |

---

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**13.** **SHARE CAPITAL (continued)** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.5 Restricted Share Units**

Pursuant to the Company's Restricted Share Unit ("RSU") Incentive Plan approved by the board of directors of the Company on June 8, 2015, restricted stock units to acquire common shares of the Company may be granted to specified service providers of the Company in accordance with the terms and conditions of the plan.

Upon vesting, each RSU entitles the participant to receive one common share, provided that the participant is continuously employed with or providing services to the Company. RSUs track the value of the underlying common shares, but do not entitle the recipient to the underlying common shares until such RSUs vest, nor do they entitle a holder to exercise voting rights or any other rights attached to ownership or control of the common shares, until the RSU vests and the RSU participant receives common shares.

A summary of the Company's RSU's are as follows:

---

| | |
|:---|:---|
|  | Number of RSUs |
| Outstanding, December 31, 2020 |  |
| Issued | 166000 |
| Outstanding, December 31, 2021 | 166000 |
| Vested | (166000) |
| Outstanding, December 31, 2022 |  |

---

On April 27, 2021 the Company issued 166,000 RSU's to directors and officers of the Company that vested on November 17, 2022. At December 31, 2022, there were nil RSUs outstanding

(December 31, 2021 – 166,000). During the year ended December 31, 2022, the Company recorded $696 (December 31, 2021 - $216) as stock-based compensation for the fair value of the RSUs issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.6 Deferred Share Units**

Pursuant to the Company's Deferred Share Unit ("DSU") Incentive Plan approved by the board of directors of the Company on July 8, 2018, deferred stock units to acquire common shares of the Company may be granted to specified board members of the Company in accordance with the terms and conditions of the plan.

Each DSU entitles the participant to receive one common share upon vesting. DSUs vest into common shares on the board members' separation date from the board of directors. DSUs track the value of the underlying common shares, but do not entitle the recipient to the underlying common shares until such DSUs vest, nor do they entitle a holder to exercise voting rights or any other rights attached to ownership or control of the common shares, until the DSU vests and the DSU participant receives common shares.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**13.** **SHARE CAPITAL (continued)** 

A summary of the Company's DSUs are as follows:

---

| | | |
|:---|:---|:---|
|  | Number of DSUs | Number of DSUs |
| Outstanding, December 31, 2020 |  | 95141 |
| Issued | | 75,650 |
| Outstanding, December 31, 2021 |  | 170791 |
| Issued | | 452,910 |
| Outstanding, December 31, 2022 | | 623,701 |

---

During the year ended December 31, 2022, the Company issued 452,910 DSUs

(December 31, 2021 – 75,650) to board members of the Company that vest upon the board member's separation date from the Board of Directors.

During the year ended December 31, 2022, the Company recorded $569

(December 31, 2021 - $323) as stock-based compensation for the fair value of the DSUs issued.

&nbsp;&nbsp;&nbsp;&nbsp;**14.** **RELATED PARTY BALANCES AND TRANSACTIONS** 

Key management includes personnel having the authority and responsibility for planning, directing and controlling the activities of the Company and comprised the Company's directors and executive officers.

Expenses incurred to key management are:

---

| | | | |
|:---|:---|:---|:---|
|  | | Year ended | Year ended |
|  | Year ended<br>December 31, 2022 | December 31, 2021 | December 31, 2021 |
|  |  | $— | $|
| Salaries and Benefits |  |  | 1572 |
| Stock-based compensation |  |  | 869 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total |  |  | 2441 |

---

During the year ended December 31, 2022 the Company paid $215 in lease payments to a company owned by a director. $231 was recognized as depreciation and interest expense on the right of use asset and lease liability respectively.

During the year ended December 31, 2021 the Company paid $191 in lease payments to a company owned by a director. $179 was recognized as depreciation and interest expense on the right of use asset and lease liability respectively.

As at December 31, 2022, included in accounts payable are balances owing to key management or companies controlled by officers of the Company in the amount of $1 (December 31, 2021 - $1).

All related party balances are non-interest bearing, unsecured and have no fixed terms of repayment and have been classified as current.

&nbsp;&nbsp;&nbsp;&nbsp;**15.** **INCOME TAX** 

The following table reconciles the amount of income tax expense on the application of the combined statutory Canadian federal and provincial income tax rates:

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**15.** **INCOME TAX (Continued)** 

---

| | | |
|:---|:---|:---|
|  | December 31, 2022 | December 31, 2021 |
|  | $.. | $.. |
| Loss before tax | (17746) | (6859) |
| Combined statutory tax rates | 27% | 27% |
| Expected tax recovery | (4791) | (1852) |
| Non-deductible items | (60) | 369 |
| Share issuance costs |  | (1198) |
| Other | (41) | 94 |
| Differences in foreign tax rates | 9 | (13) |
| Change in unrecognized deferred tax assets | 5085 | 3064 |
| Current income tax expense | 202 | 464 |

---

Deferred taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The tax effects of deductible temporary differences for which no deferred tax asset has been recognized are as follows:

---

| | | |
|:---|:---|:---|
|  | December 31, 2022. | December 31, 2021. |
|  | $.. | $.. |
| Deferred tax assets (liabilities): |  |  |
| Tax loss carry-forwards | 11747 | 7480 |
| Property and equipment | (54) | (5) |
| Intangible asset | (529) | (838) |
| Warranty provision | 440 | 432 |
| Financing costs | 1213 | 1161 |
| Other provisions | (28) | 220 |
| Deferred tax assets | 12789 | 8450 |
| Unrecognized deferred tax assets | (12789) | (8450) |
| Recognized net deferred tax assets |  |  |

---

As at December 31, 2022, the Company had non-capital loss carry forwards available to reduce taxable income for future years. The non-capital losses expire as follows:

---

| | |
|:---|:---|
|  | $ |
| 2031 | 404 |
| 2032 | 835 |
| 2033 | 498 |
| 2034 | 2094 |
| 2035 | 2944 |
| 2036 | 4235 |
| 2037 | 1092 |
| 2038 | 1511 |
| 2039 | 1457 |
| 2040 | 3159 |
| 2041 | 7657 |
| 2042 | 15026 |
| Non Capital Losses | 40912 |

---

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**16.** **FINANCIAL INSTRUMENTS** 

*Fair values*

 

The Company's financial instruments include cash and cash equivalents, restricted cash, trade and other receivables, accounts payable, the credit facility, short-term loans, deferred consideration, and lease obligations. The carrying amounts of these financial instruments are a reasonable estimate of their fair values based on their current nature and current market rates for similar financial instruments. Deferred consideration is the only instrument measured at fair value through profit and loss in accordance with IFRS 9 – Financial Instruments.

The following table summarizes the carrying values and fair values of the Company's financial instruments:

---

| | | |
|:---|:---|:---|
|  | December 31, 2022 | December 31, 2021 |
|  | $ | $ |
| Assets: |  |  |
| Measured at amortized cost (i) | 4277 | 7212 |
| Liabilities: |  |  |
| Amortized cost (ii) | 14108 | 10284 |
| Fair value through P&L (iii) |  | 4602 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp; Cash, restricted cash and trade and other receivables

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable and accrued liabilities, current loans, and lease obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp; Deferred consideration (only financial instrument carried at fair value)

The Company classifies its fair value measurements in accordance with the three-level fair value hierarchy. The measurement is classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Level 1 – &nbsp;&nbsp;&nbsp;&nbsp; Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2 – &nbsp;&nbsp;&nbsp;&nbsp; Inputs other than quoted prices that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices), and

Level 3 – &nbsp;&nbsp;&nbsp;&nbsp; Inputs that are not based on observable market data

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**16.** **FINANCIAL INSTRUMENTS (Continued)** 

The carrying value amount of the Company's financial instruments that are measured at amortized cost approximates fair value due to their short-term nature. The Company valued deferred consideration (iii) as a level 3 instrument. For the year ended December 31, 2021, the Company used a probability weighted discount model to determine the fair value of the deferred consideration. Key assumptions included a discount rate of 10% and an original expected maturity date of June 30, 2023 for the deferred consideration milestone to be met. During the year ended December 31, 2022, the Company terminated the agreement which resulted in the deferred consideration being reduced to a fair value of nil (Note 6).

*Interest Rate and Credit Risk*

 

The Company is exposed to interest rate risk on its bank loans to the extent that its credit facilities are based on Canadian and US prime rates of interest.

Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash and cash equivalents, restricted cash, and trade and other receivables.

To minimize the credit risk related to cash and cash equivalents, the Company places these instruments with a top tier Canadian bank with an AA credit rating and their subsidiary bank in the United States.

*Currency Risk*

 

The Company is exposed to foreign currency risk because the Company's parent and US operations incur a portion of their operating expenses in Canadian dollars. Therefore, an increase in the value of the CAD relative to the USD increases the value of expenses in USD terms incurred by the Company's parent and US operations, which reduces operating margin and the cash flow available to fund operations. Conversely, the Company's Canadian operation has a functional currency of Canadian dollars and incurs a portion of its operating expenses in US dollars.

At December 31, 2022, the Company had cash of $322, accounts receivable of $1,446 and accounts payable of $2,449, which were denominated in US dollars for its entity with CAD functional currency.

At December 31, 2022, the Company had cash of C$41, accounts receivable of C$nil , short term loans of C$8,922 and accounts payable of C$150, which were denominated in Canadian dollars for its entities with USD functional currency.

 

*Liquidity Risk*

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's objective when managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company uses cash to settle its financial obligations as they fall due. The ability to do this relies on the Company collecting its trade receivables in a timely manner and maintaining sufficient cash on hand through credit facility financing.

As at December 31, 2022, the Company had working capital (current assets less current liabilities) of $1,573. For the year ended December 31, 2022, the Company used cash for operating activities of $9,082 and cash for investing activities of $10,698. As at December 31, 2022, the Company had $19.4 million undrawn on its C$20 million credit facility (note 8). Subsequent to year end, the Company obtained an additional $30 million in debt financing to fund production of the Company's VMC 1200 class 3 electric trucks.

Based on the Company's forecasted cash flows, the current cash on hand and the headroom available under debt facilities, the Company estimates that it will have sufficient liquidity to meet its working capital requirements for at least the next twelve months.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**16.** **FINANCIAL INSTRUMENTS (Continued)** 

The following are the contractual maturities of financial liabilities:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Carrying Amount | Contractual Cash Flows | Within 1 year | 1 to 2 years | 2 to 3 years | 3 to 6 years |
|  | $ | $ | $ | $ | $ | $ |
| *At December 31, 2022* |  |  |  |  |  |  |
| Accounts payable | 4942 | (4942) | (4942) |  |  |  |
| Current debt facilities | 6587 | (8822) | (8822) |  |  |  |
| Credit facility | 628 | (628) | (628) |  |  |  |
| Other long-term liabilities | 1952 | (2120) | (513) | (480) | (486) | (641) |
| Total | 14109 | (16512) | (14905) | (480) | (486) | (641) |

---

*Sensitivity analysis*

 

The Company's borrowing under the existing credit facility are at variable rates of interest and expose the Company to interest rate risk. The Company has completed a sensitivity analysis to estimate the impact on comprehensive income which a change in interest rates at and during the year ended December 31, 2022 would have had on the Company. The result of this sensitivity analysis indicates that a 0.5% increase (decrease) in the prime interest rates would not have a material impact.

The Company has completed a sensitivity analysis to estimate the impact on comprehensive earnings which a change in foreign exchange rates as at and during the year ended December 31, 2022 would have had on the Company.

The sensitivity analysis includes the assumption that changes in individual foreign exchange rates do not cause foreign exchange rates in other countries to alter.

The following tables summarizes quantitative data about our exposure to currency risk as a result of monetary assets (liabilities) in currencies different from each entity's functional currency:

---

| | | |
|:---|:---|:---|
|  |  | **2022** |
|  |  | $ |
| Net Canadian dollar monetary asset (liability) | &nbsp;&nbsp;CAD thousands | (9031) |
| Net US dollar monetary asset (liability) | &nbsp;&nbsp;USD thousands | (749) |

---

The result of this sensitivity analysis indicates that a 10% increase (decrease) in the average value of the Canadian dollar relative to the US dollar during the period would have resulted in an increase (decrease) in net income of approximately $735.

&nbsp;&nbsp;&nbsp;&nbsp;**17.** **CAPITAL MANAGEMENT** 

The Company's objectives when managing capital are:

● to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

● to provide an adequate return to shareholders through expansion correspondingly to the level of risk.

The Company considers its share capital, other shareholders' equity, credit facility, and short-term loans to be its capital. As a part of its loan commitments, the Company is required to obtain authorization from the credit facility lender (Note 8) prior to obtaining further loans. The Company's capital is currently not subject to any other external restrictions except those described in Note 8.

The Company sets the amount of capital in proportion to risk. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares, sell assets, reduce debt or increase its debt.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**18.** **REVENUE** 

The Company's revenue for the single segment is summarized as follows:

---

| | | |
|:---|:---|:---|
|  | Year ended<br>December 31, 2022 | Year ended<br>December 31, 2021 |
|  | $ | $ |
| **Vehicle Sales:** |  |  |
| Bus Sales | 11699 | 38197 |
| Truck Sales | 982 |  |
| Shuttle Sales | 484 |  |
| **Other revenue:** |  |  |
| Spare part sales | 5183 | 2701 |
| Operating lease revenue | 127 | 810 |
| Total Revenue | 18475 | 41708 |

---

&nbsp;&nbsp;&nbsp;&nbsp;**19.** **LOSS PER SHARE** 

Basic loss per share is calculated by dividing the net loss from continuing operations attributable to equity holders of the Company by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated by adjusting the weighted average number of common shares outstanding to assume conversion of all dilutive potential common shares. The number of average basic and diluted shares outstanding for all the periods presented in the consolidated statements of loss have been adjusted in order to reflect the effect of the share consolidation that took place on March 29, 2021. The Company has four categories of dilutive potential common shares: convertible debt, stock options, RSUs and DSUs. The convertible debt is assumed to have been converted into common shares, and the net loss is adjusted to eliminate the interest expense less the tax effect. For the stock options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding stock options. The number of shares calculated reduces the number of shares that would have been issued assuming the exercise of the share options. DSUs are assumed to be converted as of the grant date. A total of 1,143,120 (2021: 2,441,349) instruments before share consolidation, which include convertible debt, stock options, restricted share units and deferred share units have not been included in the calculation for diluted loss per share as they are antidilutive. These could potentially dilute basic income per share in the future.

&nbsp;&nbsp;&nbsp;&nbsp;**20.** **COMMITMENTS AND CONTINGENCIES** 

The Company entered into a production agreement with one of its manufacturers whereby the parties have agreed to a specified production volume. The Company also has outstanding purchase order commitments related to the construction of its new manufacturing facility. Future payments as at December 31, 2022 are $12,275. The Company has an outstanding letter of credit of $1,375 with a vendor related to the future purchase of trucks expected to be delivered in 2023.

**Vicinity Motor Corp.**

Notes to the Consolidated Financial Statements

Years ended December 31, 2022 and December 31, 2021

(In thousands of US dollars, except for per share amounts)

&nbsp;&nbsp;&nbsp;&nbsp;**21.** **SEGMENT INFORMATION** 

Allocation of revenue to geographic areas for the single segment is as follows:

---

| | | |
|:---|:---|:---|
|  | Year ended December 31, 2022 | Year ended December 31, 2021 |
|  | $ | $ |
| Canada |  |  |
| Bus sales | 7429 | 10925 |
| Spare part sales | 4516 | 2504 |
| Truck sales | 982 |  |
| Shuttle sales | 484 |  |
| United States |  |  |
| Bus sales | 4270 | 27272 |
| Spare part sales | 667 | 197 |
| Operating lease revenue | 127 | 810 |
| Total | 18475 | 41708 |

---

During the year ended December 31, 2022, the Company had sales of $6,261 and $4,792 to two end customers representing 34% and 26% of total sales, respectively. During the year ended December 31, 2021, the Company had sales of $26,795 and $4,423 to two end customers representing 64% and 11% of total sales, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;**22.** **SUBSEQUENT EVENTS** 

On February 21, 2023, the Company announced it obtained $30M in credit commitments from Royal Bank of Canada and Export Development Canada to fund production of the Company's VMC 1200 class 3 electric trucks. The credit facility can be used for 100% of eligible production costs on the trucks, excluding labor and overhead from the Company's assembly plants. The credit facility has an interest rate of prime plus 2% and will be secured by existing assets of the Company. Royal Bank of Canada will also continue to provide the Company with C$10M in an asset-based lending (ABL) agreement for use with its existing bus orders and a US$3M letter of credit facility.

On March 24, 2023, the Corporation announced that it had completed a private placement of unsecured convertible debentures for gross proceeds of C$4,000. The convertible debentures are issued in denominations of C$1,000, bear interest at 15% per annum, and mature 18 months from the closing date. Interest payments on the convertible debentures have been deferred to the twelve-month anniversary and/or maturity.

Each convertible debenture is convertible at the holder's option into Units at any time prior to maturity at a conversion price of C$1.45 per Unit. Upon conversion, each Unit will consist of one Common Share and 0.2 of a Warrant. Each Warrant is exercisable into a Warrant Share at an exercise price of C$1.45 for a period of thirty-six months following the initial debenture closing date.

## Exhibit 99.3

**EXHIBIT 99.3**

**VICINITY MOTOR CORP.**

**Management Discussion and Analysis**

**For the year ended December 31, 2022** 

**Introduction**

This Management Discussion and Analysis ("MD&A") relates to the financial condition and results of the operations of Vicinity Motor Corp. ("Vicinity", "VMC" or the "Company") together with its subsidiaries and is supplemental to, and should be read in conjunction with, Vicinity's audited consolidated financial statements for the year ended December 31, 2022, (including notes) (the "financial statements"). Readers are cautioned that this MD&A contains forward-looking statements and that actual events may vary from management's expectations. Vicinity's public disclosure statements are available on SEDAR at **www.sedar.com**. The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"). This MD&A has been prepared as of March 30, 2023. <u>All amounts are in thousands of US dollars, except share and per share information or where otherwise noted.</u>

**Cautionary Statement on Forward-Looking Information** 

This document includes certain "forward-looking information" and "forward-looking statements" (collectively "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical fact, included herein, including without limitation, statements regarding anticipated vehicle deliveries, future sales, completion of its assembly facility in the State of Washington, vehicle market acceptance and strategic partnerships, are forward-looking statements. Forward-looking statements are frequently, but not always, identified by words such as "expects", "anticipates", "believes", "intends", "estimates", "potential", "possible", and similar expressions, or statements that events, conditions, or results "will", "may", "could", or "should" occur or be achieved. Forward-looking statements involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.

These forward-looking statements may include statements regarding the perceived merit of the product offered by Vicinity; sales estimates; manufacturing capabilities; capital expenditures; timelines; strategic plans; market prices for parts and material; or other statements that are not statements of fact. Forward-looking statements involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.

Important factors that could cause actual results to differ materially from Vicinity's expectations include uncertainties relating to the economic conditions in the markets in which Vicinity operates, vehicle sales volume, anticipated future sales growth, the success of Vicinity's operational strategies, the timing of the completion of the vehicle assembly facility in the State of Washington, the effect of the COVID-19 pandemic, related government-imposed restrictions on operations, the success of Vicinity's strategic partnerships; and other risk and uncertainties disclosed in Vicinity's reports and documents filed with applicable securities regulatory authorities from time to time. Vicinity's forward-looking statements reflect the beliefs, opinions and projections on the date the statements are made. Vicinity assumes no obligation to update the forward-looking statements or beliefs, opinions, projections, or other factors, should they change, except as required by law.

**About Vicinity**

Vicinity Motor Corp. is a Canadian company that is a North American supplier of electric vehicles for both public and commercial enterprise use. The Company leverages a dealer network and close relationships with world-class manufacturing partners to supply its flagship electric, compressed natural gas ("CNG") and clean-diesel Vicinity buses and the VMC 1200 electric truck.

Vicinity shares trade on the Nasdaq exchange under the symbol VEV and the TSX Venture exchange under the symbol VMC.

**Fourth Quarter and Subsequent Highlights** 

 

● Current order backlog exceeds $150 million, the vast majority of which are for electric vehicles.

● Assembly operations are set to commence at the newly constructed, state-of-the-art, 100,000 square foot U.S. manufacturing campus in Ferndale, Washington in the first half of 2023.

● Final electrical components have been installed to supply power on-site.

● Company has received its Certificate of Occupancy for the facility.

● Free Trade Zone certification for Ferndale Campus in process.

● Signed a dealer network development services agreement with Dealer Solutions Mergers and Acquisitions ("DSMA") to enhance North American automotive dealer market penetration for its industry-leading, Class 3 VMC 1200 all-electric truck.

● Partnered with RBC and Export Development Canada to secure $30 million to finance VMC 1200 EV Truck production in 2023, while maintaining funding for existing bus orders.

● Secured a US$100M+ purchase order for 1,000 VMC 1200 electric trucks from Pioneer Auto Group - Vicinity's exclusive dealer in the province of British Columbia, Canada – with initial deliveries beginning in November 2022.

● Secured an order from strategic partner Sustainability Partners LLC, an ESG focused Public Benefit Company, for four Vicinity Lightning™ electric buses via Soderholm Sales & Leasing, Inc., Vicinity's Pacific Islands distributor.

● Revenue for the three months ended December 31, 2022 of $2,035 compared to $2,330 for the three months ended December 31, 2021

● Net loss for the three months ended December 31, 2022 of $3,828 compared to net loss of $4,782 for the three months ended December 31, 2021

● Adjusted EBITDA loss for the three months ended December 31, 2022 of $1,424 compared to an adjusted EBITDA loss of $2,192 for the three months ended December 31, 2021 (see "Non-GAAP and Other Financial Measures")

● Deliveries of 11 Vicinity trucks for the three months ended December 31, 2022 compared to deliveries of 12 Vicinity buses, eight of which were sold from the Company's lease pool and excluded from revenue for the three months ended December 31, 2021

● Revenue of $18,475 for the year ended December 31, 2022 compared to $41,708 for the year ended December 31, 2021

● Adjusted EBITDA loss of $7,438 for the year ended December 31, 2022 compared to an adjusted EBITDA loss of $2,666 for the year ended December 31, 2021 (see "Non-GAAP and Other Financial Measures")

● Net loss of $17,948 for the year ended December 31, 2022 compared to a net loss of $7,323 for the year ended December 31, 2021

● Deliveries of 38 Vicinity buses, 11 Vicinity trucks and 4 Optimal shuttles for the year ended December 31, 2022 compared to 131 buses delivered for the year ended December 31, 2021

The Company reports results for the three months ended December 31, 2022 included deliveries of 11 Vicinity trucks, revenue of $2,035, net loss of $3,828 and gross loss of $560 which was (28%) of revenue (see "Non-GAAP and Other Financial Measures"). The gross margin for the three months ended December 31, 2022 was negatively affected by the low volume of buses sold and a write-down of aged bus inventory and parts for $1,296.

Results for the three months ended December 31, 2021 included deliveries of 12 Vicinity buses, revenue of $2,330, net loss of $4,782 and gross loss of $316 which was (14%) of revenue (see "Non-GAAP and Other Financial Measures"). Eight of the 12 buses sold during the fourth quarter of 2021 were sold from the lease pool and excluded from revenue. The gross margin for the three months ended December 31, 2021 was negatively affected by the loss on disposal of $487 on eight buses sold from the Company's lease pool and the low volume of buses sold.

The Company reports results for the year ended December 31, 2022 of 38 Vicinity buses, 11 Vicinity trucks and 4 Optimal shuttles delivered, revenue of $18,475, net loss of $17,948 and gross profit of $440. Results for the year ended December 31, 2021 were 131 buses delivered, revenue of $41,708, net loss of $7,323 and gross profit of $4,235.

Gross margin for the year ended December 31, 2022 was 2% of revenue compared to 10% of revenue in 2021 (see "Non-GAAP and Other Financial Measures"). Margins for 2022 were negatively affected by product mix, the low volume of vehicles delivered and a write-down of aged bus inventory and aftermarket parts for $1,296 partially offset by cost adjustments of approximately $800 from a supplier. Consistent with the rest of the automotive industry, shipping difficulties and global supply chain disruptions in the availability of certain bus components have delayed a large portion of 2022 expected deliveries. Margins beyond 2022 are expected to be more in line with historical margins realized in 2018 and 2019, with the exception of some introductory pricing for new EV products.

Adjusted EBITDA for the year ended December 31, 2022 was ($7,438) compared to ($2,666) for the year ended December 31, 2021 (see "Non-GAAP and Other Financial Measures"). Gross profit decreased by $3,795 in the year ended December 31, 2022, when compared to the prior year due to less deliveries in 2022, aged inventory write-downs, and product mix. Higher selling, general, and administrative costs mainly related to an increase in travel, legal, insurance, and salaries as VMC ramps up for the next period of growth and forecasted increased volumes.

**Business Overview**

*Corporate Update*

 

"2022 was a transformational year, expanding our capabilities beyond our strong legacy in transit buses and into the significant class 3 vehicle market with the introduction of the highly configurable VMC 1200 electric truck – for which we began initial customer deliveries in the fourth quarter," said William Trainer, Founder and Chief Executive Officer of Vicinity Motor Corp. "The fourth quarter and subsequent period continued our rapid pace of evolution, marked by significant sales momentum for our VMC 1200 and Vicinity Lightning™ product lines, as well as continued progress towards starting assembly operations at our U.S. manufacturing campus in Ferndale, Washington.

"To support the working capital needs of our VMC 1200 production ramp, we recently secured an expanded $30M credit facility with the Royal Bank of Canada and Export Development Canada, while maintaining existing financing to support bus production. This financing, paired with the installation of our power solution and receipt of a certificate of occupancy for our Ferndale manufacturing campus, puts us in a position to significantly increase our production capabilities with the onset of U.S. assembly operations in the first half of 2023.

"We are fortunate that the VMC 1200 supply chain is fairly insulated from the global disruptions that have impacted our transit bus business – since we kicked off deliveries in November 2022, we have delivered 18 vehicles with 100 currently in production. Naturally, we expect the pace of production to increase exponentially as we scale operations and bring our facility in Ferndale online – helping us to chip away at our order backlog, which now exceeds $150 million.

"Looking ahead, we are incredibly well positioned for a breakout year, expanding into the vast class 3 commercial EV truck market. We are in the final steps prior to the onset of assembly operations at our new U.S. facility in Ferndale, which we are in the process of certifying as a Free Trade Zone to enable us to better service the entirety of the North American market. These are exciting times for Vicinity and I look forward to continuing to update our investors as we build the foundation for what I believe will be a record 2023," concluded Trainer.

*Recent Developments*

 

In July of 2022, the Company entered into a distribution agreement for the Northwest U.S. with Schetky Bus and Van Sales, a dealership and transportation solutions provider, to offer the Vicinity Lightning, Vicinity Classic and VMC-Optimal vehicles, including an initial commitment for 18 vehicles.

In July of 2022, VMC announced eligibility in Transport Canada's new Incentives for Medium and Heavy-duty Zero-Emission Vehicles (iMHZEV) program which helps to make buying or leasing zero-emission vehicles more attractive. The VMC 1200 EV truck will qualify for these significant incentives that are passed onto the consumer.

In August of 2022, VMC signed a distribution agreement with the TOK Group to offer the VMC 1200 electric truck throughout the York region of the greater Toronto area. TOK placed an order for 100 VMC 1200 electric trucks.

In October of 2022, VMC secured a purchase order for 1,000 VMC 1200 class 3 electric trucks worth over $100 million in revenue with expected delivery in 2023.

In February of 2023, VMC announced the closing of a new $30 million credit facility to be used for up to 100% of eligible production costs for the VMC 1200 Class 3 EV truck. VMC also announced the renewal of an asset based lending facility for $10 million for use with bus orders.

In February of 2023, VMC announced the signing of a dealer network development services agreement with Dealer Solutions Mergers and Acquisitions ("DSMA") to enhance North American market penetration for its Class 3 VMC 1200 electric trucks.

During the three months ended March 31, 2022, VMC issued 302,555 common shares at prices ranging from $3.07 to $3.79 per share for net proceeds of $1 million through its "at-the-market" equity distribution program approved in 2021. There were no shares issued through this program during the three months ended June 30, 2022 or September 30, 2022. During the three months ended December 31, 2022, the Company issued 4,815,999 common shares at prices ranging from $0.79 to $1.19 per share for net proceeds of $5.3 million.

During the fourth quarter of 2022, the Company terminated the Sales and Marketing Agreement with Optimal Electric Vehicles LLC ("Optimal EV"). Subsequent to year end, the Company initiated arbitration proceedings regarding a business dispute with Optimal EV. As a result of the termination, the Company reduced the intangible asset by the remaining amount of deferred consideration, $4,640. The recoverable amount upon termination pursuant to the Sales and Marketing Agreement is $12,000 which is greater than the carrying value of $10,854. VMC is seeking additional damages from Optimal EV above this amount. The status of the arbitration is currently pending.

*Supply Chain Update*

 

Consistent with other manufacturing and automotive companies, VMC continues to experience delays from some suppliers and shipping companies due to ongoing supply chain shortages related to bus production, which has affected deliveries originally scheduled for delivery in 2021 and into 2022. Sales activity, for both the pipeline and order book, has strengthened significantly during 2021 and 2022 for future deliveries. The Company's manufacturing partners are operating and currently producing to meet the Company's needs. Although deliveries may be delayed, purchase orders are firm and will be delivered when product is made available. We continue to work with our customers to communicate ongoing supply chain issues to manage expected delivery timelines.

Our supply chain is currently working to provide us with the necessary components, although delayed in certain circumstances, for production and aftermarket part sales but there is potential risk of further disruptions.

The Company remains well-positioned to serve its customers. We continue to monitor the industry and supply chain issues closely and we are responding swiftly and effectively to protect the interests of our stakeholders. We are confident that our skilled and loyal workforce, the diversification and strength of our business model, and our strong partner relationships position us well to navigate the current environment.

*Outlook*

 

Management expects to maintain its strong market segment leadership position in Canada and continue to make progress in the U.S. with private operators and public transit agencies. The external pressures to "right size" vehicles for their applications and ridership levels along with the availability of funding in Canada and the U.S. create an ideal environment for Vicinity to prosper. Even with the challenges remaining from ongoing supply chain disruptions for bus manufacturing, the outlook for Vicinity, including significant growth in the U.S., remains very positive. The supply chain for the VMC 1200 EV truck has been more insulated from global disruptions than the problems VMC has experienced with the availability of bus components.

Order activity for deliveries in 2022 and beyond remains strong across Vicinity product lines, including the Vicinity Lightning™ EV and the newly announced VMC 1200 Class 3 EV trucks. The demand for the VMC 1200 has exceeded expectations with 1,000 trucks being ordered in October 2022 with a solid pipeline of further orders expected to be finalized and announced in the near future. The addition of a partnership with Dealer Solutions Mergers and Acquisitions ("DSMA") will enhance VMC 1200 market penetration in North America with through DSMA's existing dealer relationships and automotive industry knowledge.

Our newly constructed, state-of-the-art, U.S. manufacturing facility in Ferndale, Washington, has now been completed with operations set to commence in the first half of 2023. The Company received its certificate of occupancy in March of 2023 with the installation of electrical components that were delayed through supply chain issues. VMC is currently finalizing the certification of the new facility as a Free Trade Zone to manage any potential duties during the manufacturing process. The facility will be used for the manufacturing of both buses and EV trucks for sale in North America.

Approved funding for transit in the U.S. and Canada prior to the pandemic was high. During the pandemic, government support for transit has remained strong in both the U.S. and Canada with both countries approving emergency funding for transit through billions of dollars in safe restart programs. Funding announcements have continued in both the U.S. and Canada showing a commitment to improving transit through investing heavily in transit and zero emission transit solutions.

In the U.S. the Infrastructure Investment and Jobs Act ("IIJA"), the successor to the Fixing America's Surface Transportation Act ("FAST Act"), is a $1.2 trillion infrastructure bill that includes increased funding for transit, specifically for the purchase of low or zero emission vehicles and investments to modernize existing transit systems. Deliveries for EV buses are anticipated to strengthen through to 2025 with the expected funding from this program. The IIJA provides $86.9 billion in funding for the Federal Transit Administration ("FTA") over five years. The FTA funds up to 80% of the cost of qualifying "Buy America" buses.

In October of 2020, the Canadian federal government announced $1.5 billion in financing through the Canada Infrastructure Bank to support the adoption of zero emission buses and charging infrastructure over 24 to 36 months. In February of 2021, the Canadian government announced $14.9 billion to be invested in Canadian public transit, including $5.9 billion in dedicated project funds starting in 2021, and ongoing permanent funding of $3 billion per year beginning in 2026-2027.

The Canadian Federal budget for 2021 included $17.6 billion in new spending that will go towards a "green recovery" and announced aggressive emissions reductions targets with a goal to be net-zero by 2050.

Although the proposed legislations and funding announcements from the Canadian and U.S. governments are encouraging for the transit industry, the Company does not yet know how or when the proposed funds will materialize and the expected impact on financial performance of the Company.

The medium and long-term recovery of the Company's end markets from the COVID-19 pandemic are currently unknown but are expected to be dependent on government support, manufacturing and supply chain capabilities, travel restrictions and economic reopening activity. The Company has implemented a robust risk management process to ensure the health and safety of its employees and continued access to supply chain materials, but the ongoing nature of the pandemic and economic recovery may adversely impact results in the future.

Our Company has shifted the majority of its business to zero emission vehicles through the expansion of our product lines with the addition of the 100% zero emission electric Vicinity Lightning™ bus model and the introduction of 100% electric trucks to our product lineup to reduce the Company's exposure to periods of inconsistent quarterly revenues from the bus industry. The Vicinity heavy duty "Classic" bus is planned for electrification in 2023, which will place Vicinity in an excellent position to capture market share as the demand for zero emissions buses grows. Municipalities of all sizes across Canada and the U.S. along with private operators in multiple sectors are looking for a more robust low floor accessible bus to replace their cutaways and internal combustion engine propelled heavy duty buses. Our first Vicinity Lightning™ EV buses are currently in production for initial customers. Our Vicinity 1200 EV trucks are available immediately to fill high volume demands for the electric truck markets. The first Vicinity 1200 EV trucks were delivered in November of 2022.

As with the entire global manufacturing industry, VMC is exposed to increased inflation with respect to parts and raw materials purchased by the Company. VMC has already ordered the majority of components for current builds or has fixed pricing in place to reduce the short term exposure. Future impacts for higher input costs will be mitigated through higher pricing for new bids or purchase price index ("PPI") provisions in multiyear contracts.

Aftermarket parts sales are expected to continue to increase as Vicinity bus fleets get older and new vehicles are placed into service.

*Tariffs, Invasion of Ukraine, and COVID-19 Lockdowns*

 

Management continues to closely monitor negotiations and ongoing global trade discussions which may influence the Company. We are implementing purchasing, shipping and assembly modifications to best adapt to the current trade environment and strengthen our U.S.-based operations and component sourcing.

There have been no significant direct impacts to date on supply chains related to the Russian invasion of Ukraine. VMC does not have direct suppliers based in either Russia or Ukraine, but additional supply delays may arise as the conflict progresses if subcomponent supplies of our suppliers are affected.

Disruptions from COVID-19 related lockdowns in China, and elsewhere in the world, could have ongoing effects on the supply chain for certain critical components. The medium and long-term recovery of the Company's end markets from the COVID-19 pandemic are currently unknown but are expected to be dependent on government support, COVID-19 case rates, manufacturing and supply chain capabilities, travel restrictions and economic reopening activity. The increase in transit ridership and increased bid activity in the industry are encouraging signs of recovery, but the ongoing nature of the pandemic may adversely impact results in the future.

**Non-GAAP and Other Financial Measures**

The non-GAAP and other financial measures presented do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be directly comparable to similar measures presented by other issuers. The data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-GAAP and other financial measures should be read in conjunction with our consolidated financial statements.

*Non-GAAP financial measure - Adjusted EBITDA* 

 

Adjusted EBITDA does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines adjusted EBITDA as earnings before interest, income taxes, depreciation and amortization, foreign exchange gains or losses, certain non-recurring and/or non-operating income and expenses, and share based compensation. Adjusted EBITDA should not be construed as an alternative for revenue or net loss determined in accordance with IFRS. The Company believes that adjusted EBITDA is a meaningful metric in assessing the Company's financial performance and operational efficiency.

The following table reconciles net earnings or losses to Adjusted EBITDA based on the consolidated financial statements of the Company for the periods indicated.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;3 months ended December 31, 2022 | &nbsp;&nbsp;3 months ended December 31, 2021 | &nbsp;&nbsp;Year ended December 31, 2022 | &nbsp;&nbsp;Year ended December 31, 2021 |
| &nbsp;&nbsp;(US dollars in thousands - unaudited) | &nbsp;&nbsp;$| &nbsp;&nbsp;$| &nbsp;&nbsp;$| &nbsp;&nbsp;$|
| &nbsp;&nbsp;Net Comprehensive loss | &nbsp;&nbsp;(3828) | &nbsp;&nbsp;(4782) | &nbsp;&nbsp;(17948) | &nbsp;&nbsp;(7323) |
| &nbsp;&nbsp;Add back |  |  |  |  |
| &nbsp;&nbsp;Stock based compensation | &nbsp;&nbsp;668 | &nbsp;&nbsp;311 | &nbsp;&nbsp;1380 | &nbsp;&nbsp;1353 |
| &nbsp;&nbsp;Interest | &nbsp;&nbsp;482 | &nbsp;&nbsp;509 | &nbsp;&nbsp;2258 | &nbsp;&nbsp;716 |
| &nbsp;&nbsp;Gain on modification of debt | &nbsp;&nbsp;- | &nbsp;&nbsp;- | &nbsp;&nbsp;(803) | &nbsp;&nbsp;- |
| &nbsp;&nbsp;Foreign exchange loss (gain) | &nbsp;&nbsp;(629) | &nbsp;&nbsp;270 | &nbsp;&nbsp;3253 | &nbsp;&nbsp;341 |
| &nbsp;&nbsp;Loss on disposal | &nbsp;&nbsp;- | &nbsp;&nbsp;487 | &nbsp;&nbsp;27 | &nbsp;&nbsp;542 |
| &nbsp;&nbsp;Inventory write down | &nbsp;&nbsp;1227 | &nbsp;&nbsp;- | &nbsp;&nbsp;1227 | &nbsp;&nbsp;- |
| &nbsp;&nbsp;Income tax expense | &nbsp;&nbsp;(98) | &nbsp;&nbsp;442 | &nbsp;&nbsp;202 | &nbsp;&nbsp;464 |
| &nbsp;&nbsp;Amortization | &nbsp;&nbsp;754 | &nbsp;&nbsp;571 | &nbsp;&nbsp;2966 | &nbsp;&nbsp;1241 |
| &nbsp;&nbsp;Adjusted EBITDA | &nbsp;&nbsp;(1424) | &nbsp;&nbsp;(2192) | &nbsp;&nbsp;(7438) | &nbsp;&nbsp;(2666) |

---

 

 

*Non-GAAP financial measure – working capital*

 

Working capital is a non-GAAP measure calculated as current assets less current liabilities. Working capital does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other companies.

---

| | | |
|:---|:---|:---|
|  | &nbsp;&nbsp;Year ended December 31, 2022 | &nbsp;&nbsp;Year ended December 31, 2021 |
| &nbsp;&nbsp;(US dollars in thousands - unaudited) | &nbsp;&nbsp;$| &nbsp;&nbsp;$|
| &nbsp;&nbsp;Current Assets | &nbsp;&nbsp;18146 | &nbsp;&nbsp;20806 |
| &nbsp;&nbsp;Current Liabilities | &nbsp;&nbsp;16573 | &nbsp;&nbsp;19401 |
| &nbsp;&nbsp;Working Capital | &nbsp;&nbsp;1573 | &nbsp;&nbsp;1405 |

---

*Supplementary financial measure – gross margin as a percentage of revenue*

 

Gross margin as a percentage of revenue is a supplementary financial measure calculated as gross profit divided by revenue expressed as a percentage.

**Summary of Quarterly Results**

The following selected financial information is derived from unaudited quarterly financial statements of the Company. The information is stated in US dollars. ****

 ****

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;(US dollars in thousands, except earning per share - unaudited) | &nbsp;&nbsp;Q4 2022<br> $| &nbsp;&nbsp;Q3 2022 <br> $| &nbsp;&nbsp;Q2 2022<br> $| &nbsp;&nbsp;Q1 2022 <br> $| &nbsp;&nbsp;Q4 2021 <br> $| &nbsp;&nbsp;Q3 2021 <br> $(Restated) | &nbsp;&nbsp;Q2 2021 <br> $(Restated) | &nbsp;&nbsp;Q1 2021<br> $(Restated) |
| &nbsp;&nbsp;Revenue | &nbsp;&nbsp;2035 | &nbsp;&nbsp;1515 | &nbsp;&nbsp;11742 | &nbsp;&nbsp;3183 | &nbsp;&nbsp;2330 | &nbsp;&nbsp;2324 | &nbsp;&nbsp;15518 | &nbsp;&nbsp;21536 |
| &nbsp;&nbsp;Gross (loss) profit | &nbsp;&nbsp;(560) | &nbsp;&nbsp;(234) | &nbsp;&nbsp;1024 | &nbsp;&nbsp;210 | &nbsp;&nbsp;(316) | &nbsp;&nbsp;(577) | &nbsp;&nbsp;1716 | &nbsp;&nbsp;3412 |
| &nbsp;&nbsp;Net (loss) income | &nbsp;&nbsp;(3828) | &nbsp;&nbsp;(7445) | &nbsp;&nbsp;(3789) | &nbsp;&nbsp;(2887) | &nbsp;&nbsp;(4782) | &nbsp;&nbsp;(3798) | &nbsp;&nbsp;(344) | &nbsp;&nbsp;1601 |
| &nbsp;&nbsp;Basic earnings (loss) per share<sup>(1)</sup> | &nbsp;&nbsp;(0.09) | &nbsp;&nbsp;(0.19) | &nbsp;&nbsp;(0.10) | &nbsp;&nbsp;(0.08) | &nbsp;&nbsp;(0.14) | &nbsp;&nbsp;(0.13) | &nbsp;&nbsp;(0.01) | &nbsp;&nbsp;0.06 |
| &nbsp;&nbsp;Diluted earnings (loss) per share<sup>(1)</sup> | &nbsp;&nbsp;(0.09) | &nbsp;&nbsp;(0.19) | &nbsp;&nbsp;(0.10) | &nbsp;&nbsp;(0.08) | &nbsp;&nbsp;(0.14) | &nbsp;&nbsp;(0.13) | &nbsp;&nbsp;(0.01) | &nbsp;&nbsp;0.05 |
| &nbsp;&nbsp;Cash and cash equivalents | &nbsp;&nbsp;1622 | &nbsp;&nbsp;1115 | &nbsp;&nbsp;9357 | &nbsp;&nbsp;11016 | &nbsp;&nbsp;4402 | &nbsp;&nbsp;3890 | &nbsp;&nbsp;8237 | &nbsp;&nbsp;1365 |
| &nbsp;&nbsp;Working capital | &nbsp;&nbsp;1573 | &nbsp;&nbsp;2075 | &nbsp;&nbsp;8250 | &nbsp;&nbsp;8664 | &nbsp;&nbsp;1405 | &nbsp;&nbsp;12846 | &nbsp;&nbsp;19682 | &nbsp;&nbsp;16522 |
| &nbsp;&nbsp;Total assets | &nbsp;&nbsp;55032 | &nbsp;&nbsp;58272 | &nbsp;&nbsp;65762 | &nbsp;&nbsp;73268 | &nbsp;&nbsp;53993 | &nbsp;&nbsp;30463 | &nbsp;&nbsp;34185 | &nbsp;&nbsp;37953 |
| &nbsp;&nbsp;Non-current financial liabilities | &nbsp;&nbsp;1627 | &nbsp;&nbsp;7962 | &nbsp;&nbsp;8349 | &nbsp;&nbsp;1035 | &nbsp;&nbsp;347 | &nbsp;&nbsp;586 | &nbsp;&nbsp;780 | &nbsp;&nbsp;737 |

---

<sup>(1)</sup> Basic and diluted earnings (loss) per share have been retrospectively adjusted to give effect to the 3 to 1 share consolidation effective March 29, 2021.

All figures prior to Q4 2021 have been restated to USD to reflect the change in the Company's presentation currency.

Variability of revenues, gross profit (loss), and net income (loss) over the past 8 quarters is mainly driven by the timing and delivery of buses.

**Three Months Ended December 31, 2022 Earnings Review**

---

| | | |
|:---|:---|:---|
| (US dollars in thousands, except earnings per share - unaudited) | **Three months ended** **December 31, 2022** <br> **$** | **Three months ended** **December 31, 2021** <br> **$** |
| Revenue | 2035 | 2330 |
| Gross loss | (560) | (316) |
| Net loss | (3828) | (4782) |
| Basic and diluted earnings (loss) per share<sup>(2)</sup> | (0.09) | (0.14) |

---

<sup>(3)</sup> Basic and diluted earnings (loss) per share have been retrospectively adjusted to give effect to the 3 to 1 share consolidation effective March 29, 2021.

*Revenue*

 

Revenue for the three months ended December 31, 2022 was $2,035 compared to $2,330 for the three months ended December 31, 2021, representing a 13% decrease mainly due to product mix. This represented 11 truck deliveries versus four bus deliveries in the previous period.

*Gross Margin*

 

Gross margin for vehicle sales and other revenue for the three months ended December 31, 2022 was a loss of $560 or (28%) of revenue (see "Non-GAAP and Other Financial Measures") as compared to the three months ended December 31, 2021, which had a gross loss of $316 or (14%) of revenue (see "Non-GAAP and Other Financial Measures"). The gross margin for the three months ended December 31, 2022 was negatively affected by the low volume of vehicles sold and a write-down of aged bus inventory and aftermarket parts for $1,296 partially offset by cost adjustments of approximately $800 from a supplier. Excluding these write-downs and cost adjustments, the adjusted gross margin for the three months ended December 31, 2022 would have been (3%). The margin in the fourth quarter of 2021 was negatively affected by a loss on disposal of $487 on eight buses sold from the Company's lease pool included in cost of sales and the low volume of buses sold. The buses sold at a loss had previously been leased to customers and have generated revenue in their years of service in excess of their actual cost to Vicinity.

**Year Ended December 31, 2022 Earnings Review**

---

| | | |
|:---|:---|:---|
| (Canadian dollars in thousands, except earnings per share unaudited) | **Year ended December 31, 2022<br> $** | **Year ended December 31, 2021 <br> $** |
| Revenue | 18475 | 41708 |
| Gross profit | 440 | 4235 |
| Net income (loss) | (17948) | (7323) |
| Basic and diluted earnings (loss) per share<sup>(1)</sup> | (0.45) | (0.24) |

---

<sup>(1)</sup> Basic and diluted earnings (loss) per share have been retrospectively adjusted to give effect to the 3 to 1 share consolidation effective March 29, 2021.

*Revenue*

 

During the year ended December 31, 2022, the Company sold 38 Vicinity buses, 11 Vicinity EV trucks and 4 shuttle buses compared to the year ended December 31, 2021 where the Company sold 122 Vicinity buses. Sales from the lease pool are excluded from revenue. Revenue from vehicle sales was $13,165 for the year ended December 31, 2022 compared to $38,197 for the year ended December 31, 2021. Average sales price per vehicle varies with customers and product mix. Revenue from the sales of parts and other sources was $5,310 for the year ended December 31, 2022 compared to $3,511 for the year ended December 31, 2021.

*Gross Margin*

 

Gross profit decreased by $3,795 in the year ended December 31, 2022, when compared to the prior year. Gross profit for the year ended December 31, 2022 was $440 or 2% of revenue (see "Non-GAAP and Other Financial Measures") as compared to the year ended December 31, 2021, which had a gross profit of $4,235 or 10% of revenue (see "Non-GAAP and Other Financial Measures"). The gross margin for the year ended December 31, 2022 was negatively affected by the low volume of buses sold and a write-down of aged bus inventory and aftermarket parts for $1,296 partially offset by cost adjustments of approximately $800 from a supplier. Excluding these write-downs and cost adjustments, the gross margin for the year ended December 31, 2022 would have been 5% of revenue.

*Net Income (Loss)*

 

Net loss for the year ended December 31, 2022 was $17,948 compared to the net loss for the year ended December 31, 2021 of $7,323. The increase in net loss is the result of a decrease in gross profit and an increase in selling, general and administrative expenses, depreciation, interest costs and foreign exchange from 2021 to 2022.

Selling general, and administrative costs increased by $1.7 million from 2021 to 2022 due mainly to increased travel costs, legal and public company compliance expenses, and salaries. In 2022 the headcount has been increased as the Company ramps up for the next period of growth and forecasted increased sales volume. There were also increased travel and marketing expenses in 2022 as the Company experienced a full year without COVID restrictions in 2022.

Depreciation increased by $1.7 million in 2022 compared to 2021 due to the Optimal licence purchased during the fourth quarter of 2021.

Interest costs increased by $739 in 2022 compared to 2021 due to a full year of interest on debt received in the fourth quarter of 2021 and interest accretion for intangible assets.

Foreign exchange increased by $2.9 million in 2022 compared to 2021 which was mainly the result of translating intercompany balances between VMC entities for consolidation purposes and do not reflect realized exchange losses.

**Liquidity and Selected Cash Flow Items**

---

| | | |
|:---|:---|:---|
| (US dollars in thousands - unaudited) | **December 31, 2022 <br> $** | **December 31, 2021** <br> **$** |
| Cash and cash equivalents | 1622 | 4402 |
| Working capital | 1573 | 1405 |
| Total assets | 55032 | 53993 |
| Non-current financial liabilities | 1627 | 347 |

---

Vicinity has working capital of $1,573 as of December 31, 2022 compared to working capital at December 31, 2021 of $1,405 (see "Non-GAAP and Other Financial Measures"). Working capital has increased mainly due to private placements throughout 2022 which offset spending on increased development costs for new products and property, plant, and equipment purchases as the Company builds its new manufacturing facility in Ferndale, Washington, USA. Vicinity had a cash and cash equivalents balance of $1,622 as at December 31, 2022 compared to $4,402 as at December 31, 2021.

Cash used in operating activities during the year ended December 31, 2022 was $9,082 compared to cash provided of $3,594 during the year ended December 31, 2021. The decrease of $12,676 from the previous year was mainly due to the increased loss from operations and the change in non-cash working capital items.

As at December 31, 2022, investing activities used cash of $10,698 compared to the year ended December 31, 2021, where investing activities used cash of $23,120. The decrease of $12,422 from the previous year was due to the purchase of a sales and marketing license from Optimal in 2021.

As at December 31, 2022, financing activities provided cash of $17,368 compared to the year ended December 31, 2021, where financing activities provided cash of $22,945. Proceeds from option exercises and private placements in 2022 were less than 2021 which resulted in a decrease of cash provided of $5,577 compared to 2021.

**Financial Instruments**

*Fair values*

 

The Company's financial instruments include cash and cash equivalents, restricted cash, trade and other receivables, accounts payable, the credit facility, short-term loans, deferred consideration, and lease obligations. The carrying amounts of these financial instruments are a reasonable estimate of their fair values based on their current nature and current market rates for similar financial instruments. Deferred consideration is the only instrument measured at fair value through profit and loss in accordance with IFRS 9 – Financial Instruments.

The Company classifies its fair value measurements in accordance with the three-level fair value hierarchy. The measurement is classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly (i.e. as prices) or indirectly (i.e. derived from prices), and

Level 3 – Inputs that are not based on observable market data

The carrying value amount of the Company's financial instruments that are measured at amortized cost approximates fair value due to their short-term nature. The Company valued deferred consideration (iii) as a level 3 instrument. The Company used a probability weighted discount model to determine the fair value of the deferred consideration. Key assumptions included a discount rate of 10% and an original expected maturity date of June 30, 2023 for the deferred consideration milestone to be met. During the year ended December 31, 2022, the Company terminated the agreement which resulted in the deferred consideration being reduced to nil (Note 6 of the financial statements).

*Interest Rate and Credit Risk*

 

The Company is exposed to interest rate risk on its bank loans to the extent that its credit facilities are based on Canadian and US prime rates of interest.

Financial instruments that potentially subject the Company to concentrations of credit risks consist principally of cash and cash equivalents, restricted cash, and trade and other receivables.

To minimize the credit risk related to cash and cash equivalents, the Company places these instruments with a top tier Canadian bank with an AA credit rating and their subsidiary bank in the United States.

*Currency Risk*

 

The Company is exposed to foreign currency risk because the Company's parent and US operations incur a portion of their operating expenses in Canadian dollars. Therefore, an increase in the value of the CAD relative to the USD increases the value of expenses in USD terms incurred by the Company's parent and US operations, which reduces operating margin and the cash flow available to fund operations. Conversely, the Company's Canadian operation has a functional currency of Canadian dollars and incurs a portion of its operating expenses in US dollars.

At December 31, 2022, the Company had cash of $322, accounts receivable of $1,446 and accounts payable of $2,449, which were denominated in US dollars for its entity with CAD functional currency.

At December 31, 2022, the Company had cash of C$41, accounts receivable of C$nil, short term loans of C$8,922 and accounts payable of C$150, which were denominated in Canadian dollars for its entities with USD functional currency.

 

*Liquidity Risk*

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's objective when managing liquidity risk is to ensure that it has sufficient liquidity available to meet its liabilities when due. The Company uses cash to settle its financial obligations as they fall due. The ability to do this relies on the Company collecting its trade receivables in a timely manner and maintaining sufficient cash on hand through credit facility financing.

As at December 31, 2022, the Company had working capital (current assets less current liabilities) of $1,573. For the year ended December 31, 2022, the Company used cash for operating activities of $9,082 and cash for investing activities of $10,698. As at December 31, 2022, the Company had $19.4 million undrawn on its C$20 million credit facility (note 8). Subsequent to year end, the Company obtained an additional $30 million in debt financing to fund production of the Company's VMC 1200 class 3 electric trucks.

Based on the Company's forecasted cash flows, the current cash on hand and the headroom available under debt facilities, the Company estimates that it will have sufficient liquidity to meet its working capital requirements for at least the next twelve months.

The following are the contractual maturities of financial liabilities:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | Carrying Amount | Contractual Cash Flows | Within 1 year | 1 to 2 years | 2 to 3 years | 3 to 6 years |
|  | $ | $ | $ | $ | $ | $ |
| *At December 31, 2022* |  |  |  |  |  |  |
| Accounts payable | 4942 | (4942) | (4942) |  |  |  |
| Current debt facilities | 6587 | (8822) | (8822) |  |  |  |
| Credit facility | 628 | (628) | (628) |  |  |  |
| Other long-term liabilities | 1952 | (2120) | (513) | (480) | (486) | (641) |
| Total | 14109 | (16512) | (14905) | (480) | (486) | (641) |

---

*Sensitivity analysis*

 

The Company's borrowing under the existing credit facility are at variable rates of interest and expose the Company to interest rate risk. The Company has completed a sensitivity analysis to estimate the impact on comprehensive income which a change in interest rates at and during the year ended December 31, 2022 would have had on the Company. The result of this sensitivity analysis indicates that a 0.5% increase (decrease) in the prime interest rates would not have a material impact.

The Company has completed a sensitivity analysis to estimate the impact on comprehensive earnings which a change in foreign exchange rates as at and during the year ended December 31, 2022 would have had on the Company.

The sensitivity analysis includes the assumption that changes in individual foreign exchange rates do not cause foreign exchange rates in other countries to alter.

The following tables summarizes quantitative data about our exposure to currency risk as a result of monetary assets (liabilities) in currencies different from each entity's functional currency:

---

| | |
|:---|:---|
| Net Canadian dollar monetary asset (liability) | &nbsp;&nbsp;CAD thousands) |
| Net US dollar monetary asset (liability) | &nbsp;&nbsp;USD thousands |

---

The result of this sensitivity analysis indicates that a 10% increase (decrease) in the average value of the Canadian dollar relative to the US dollar during the period would have resulted in an increase (decrease) in net income of approximately $735.

**Capital Management**

The Company's objectives when managing capital are:

● to safeguard the Company's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

● to provide an adequate return to shareholders through expansion correspondingly to the level of risk.

The Company considers its share capital, other shareholders' equity, credit facility, and short-term loans to be its capital. As a part of its loan commitments, the Company is required to obtain authorization from the credit facility lender (Note 10) prior to obtaining further loans. The Company's capital is currently not subject to any other external restrictions except those described in Note 8.

The Company sets the amount of capital in proportion to risk. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may issue new shares, sell assets, reduce debt or increase its debt.

**Commitments**

Refer to note disclosure in the financial statements (Note 20).

**Off-Balance Sheet Arrangements**

The Corporation has not entered into any off balance sheet arrangements.

**Transactions with Related Parties**

Expenses incurred to key management are:

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| | | |
|:---|:---|:---|
|  | Year ended<br>December 31, 2022 | Year ended<br>December 31, 2021 |
| Salaries and Benefits | $1187 | $1572 |
| Share based payments | 1345 | 869 |
|  | $2532 | $2441 |

---

During the year ended December 31, 2022 the Company paid $215 in lease payments to a company owned by a director. $231 was recognized as depreciation and interest expense on the lease.

During the year ended December 31, 2021 the Company paid $191 in lease payments to a company owned by a director. $179 was recognized as depreciation and interest expense on the lease.

As at December 31, 2022, included in accounts payable are balances owing to key management or companies controlled by officers of the Company in the amount of $1 (December 31, 2021 - $1).

All related party balances are non-interest bearing, unsecured and have no fixed terms of repayment and have been classified as current.

**Critical Accounting Estimates and Judgements**

The preparation of the consolidated financial statements in conformity with IFRS requires the use of judgments and/or estimates that affect the amounts reported and disclosed in the consolidated financial statements and related notes. These judgments and estimates are based on management's best knowledge of the relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts included in the consolidated financial statements.

Estimates that have a risk of resulting in material adjustment to the carrying amounts of assets and liabilities within the next year are summarized below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Impairment assessment of intangible assets:

The determination of the recoverable amount of intangible assets involves significant estimates and assumptions. At year end, management concluded that there were material breaches of contract by Optimal Electric Vehicles LLC ("Optimal EV") and consequently the Company terminated the Sales and Marketing Agreement with Optimal EV. Accordingly, the Company also concluded that impairment indicators existed in relation to the Optimal EV intangible asset. The Company tested the intangible asset for impairment at December 31, 2022. The Company determined the recoverable amount of the intangible asset based on a scenario weighted discounted cash flow model. The significant assumptions applied to the determination of the recoverable amount included the probability of recovery of the $12,000 pursuant to the termination of the Sales and Marketing Agreement from Optimal EV and the estimated discount rate and future cashflows from the rights to the intellectual property in the event of bankruptcy of Optimal EV. As a result of the impairment assessment the Company concluded the recoverable amount exceeded the carrying value of the intangible asset and no impairment was required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii. Inventory net realizable value:

The Company estimates net realizable value of inventory for its vehicles and spare parts. Net realizable value is the estimated selling price in the ordinary course of business, less any costs to complete and sell the product. An allowance for obsolete, slow-moving or defective inventory is made when necessary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii. The determination of provision for warranty cost:

The Company offers warranties on the buses and trucks it sells. The Company estimates the provision for future warranty claims based on historical warranty claim information, as well as recent trends that might suggest the past results may differ from future warranty claims. The Company does not have a long history of estimating warranty provisions. In addition, the items covered by the Company's warranty may be subject to interpretation because the warranty items are not specific in all cases, and the warranty demands made by different customers may also vary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi. Contingent liability estimate:

In the normal course of business, the Company receives notice of potential legal proceedings or is named as defendant in legal proceedings, including those that may be related to product liability, wrongful dismissal or personal injury, many of which are covered by the Company's insurance policies. Contingent liabilities are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Company and amounts can be estimated reliably. The Company has accrued for claims where it is probable there will be an outflow of resources. The amounts accrued are based on management's assumptions with regards to the outcomes of legal proceedings and/or any settlements that may occur. Therefore, are subject to estimation uncertainty and as such, the final settlements could be materially different from those accrued.

**Recent Accounting Pronouncements**

Certain new accounting standards and interpretations have been published that are not mandatory for December 31, 2022, reporting periods and have not been early adopted by the Company. These standards are not expected to have a material impact on the Company in the current or future reporting periods and on foreseeable future transactions.

**Segment Information**

Allocation of revenue to geographic areas for the single segment is as follows:

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| | | |
|:---|:---|:---|
|  | Year ended December 31, 2022 | Year ended<br> December 31, 2021 |
|  | $ | $ |
| Canada |  |  |
| &nbsp;&nbsp;&nbsp;Bus sales | 7429 | 10925 |
| &nbsp;&nbsp;&nbsp;Spare part sales | 4516 | 2504 |
| &nbsp;&nbsp;&nbsp;Truck sales | 982 |  |
| &nbsp;&nbsp;&nbsp;Shuttle sales | 484 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;United States |  |  |
| &nbsp;&nbsp;&nbsp;Bus sales | 4270 | 27272 |
| &nbsp;&nbsp;&nbsp;Spare part sales | 667 | 197 |
| &nbsp;&nbsp;&nbsp;Operating lease revenue | 127 | 810 |
| Total | 18475 | 41708 |

---

During the year ended December 31, 2022, the Company had sales of $6,261 and $4,792 to two end customers representing 34% and 26% of total sales, respectively. During the year ended December 31, 2021, the Company had sales of $26,795 and $4,423 to two end customers representing 64% and 11% of total sales, respectively.

**Subsequent Events**

On February 21, 2023, the Company announced it obtained $30M in credit commitments from Royal Bank of Canada and Export Development Canada to fund production of the Company's VMC 1200 class 3 electric trucks. The credit facility can be used for 100% of eligible production costs on the trucks, excluding labor and overhead from the Company's assembly plants. The credit facility has an interest rate of prime plus 2% and will be secured by existing assets of the Company. Royal Bank of Canada will also continue to provide the Company with C$10M in an asset-based lending (ABL) agreement for use with its existing bus orders and a US$3M letter of credit facility.

On March 24, 2023, the Corporation announced that it had completed a private placement of unsecured convertible debentures for gross proceeds of C$4,000. The convertible debentures are issued in denominations of C$1,000, bear interest at 15% per annum, and mature 18 months from the closing date. Interest payments on the convertible debentures have been deferred to the twelve-month anniversary and/or maturity.

Each convertible debenture is convertible at the holder's option into Units at any time prior to maturity at a conversion price of C$1.45 per Unit. Upon conversion, each Unit will consist of one Common Share and 0.2 of a Warrant. Each Warrant is exercisable into a Warrant Share at an exercise price of C$1.45 for a period of thirty-six months following the initial debenture closing date.

**Outstanding Share Data**

At a Special Annual General Meeting of the shareholders held on March 24, 2021, a 3 for 1 share consolidation was approved, effective March 29, 2021. All share and per share amounts are reflective of the share consolidation. Issued and outstanding as of the date of this report is as follows:

45,667,706 common shares

7,573,082 warrants

1,580,826 stock options

623,701 deferred share units

## Exhibit 99.4

**Exhibit 99.4**

**Consent of Independent Registered Public Accounting Firm**

We hereby consent to the incorporation by reference in the Registration Statement on Form F-10 (No. 333-258876) of Vicinity Motor Corp. of our report dated March 30, 2023, relating to the consolidated financial statements of Vicinity Motor Corp., which is filed in Exhibit 99.2 to this Current Report on Form 6-K.

We also consent to reference to us under the heading "Interests of Experts," which appears in the Annual Information Form filed as Exhibit 99.1 to this Current Report on Form 6-K, which is incorporated in such Registration Statement.

**/s/PricewaterhouseCoopers LLP**

**Chartered Professional Accountants**

Vancouver, Canada

March 30, 2023

## Exhibit 99.5

**EXHIBIT 99.5**

**Vicinity Motor Corp. Reports Fourth Quarter and Full Year 2022 Financial Results**

*U.S. Manufacturing Campus in Ferndale, Washington Preparing for Near-Term Start of Vehicle Assembly Operations*

 

**VANCOUVER, BC / March 30, 2023 /** Vicinity Motor Corp. (NASDAQ:VEV) (TSXV:VMC) ("Vicinity" or the "Company"), a North American supplier of commercial electric vehicles, today reported its financial and operational results for the fourth quarter and full year ended December 31, 2022.

**Fourth Quarter 2022 and Subsequent Operational Highlights**

● Current order backlog exceeds $150 million, the vast majority of which are for electric vehicles.

● Assembly operations set to commence at the newly constructed, state-of-the-art, 100,000 square foot U.S. manufacturing campus in Ferndale, Washington in first half of 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Final electrical components have been installed to supply power on-site.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Company has received its Certificate of Occupancy for the facility.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Free Trade Zone certification for Ferndale Campus in process.

● Signed a dealer network development services agreement with Dealer Solutions Mergers and Acquisitions ("DSMA") to enhance North American automotive dealer market penetration for its industry-leading, Class 3 VMC 1200 all-electric truck.

● Partnered with RBC and Export Development Canada to secure US$30 million to finance VMC 1200 EV Truck production in 2023, while maintaining funding for existing bus orders.

● Partnered with Omega Liquid Waste Solutions to upfit and resell the VMC 1200 Class 3 Electric Truck with a vacuum system used for sewer, septic tank and grease trap cleaning.

● Secured a US$100M+ purchase order for 1,000 VMC 1200 electric trucks from Pioneer Auto Group - Vicinity's exclusive dealer in the province of British Columbia, Canada – with initial deliveries beginning in November 2022.

● Secured an order from strategic partner Sustainability Partners LLC, an ESG focused Public Benefit Company, for four Vicinity Lightning™ electric buses via Soderholm Sales & Leasing, Inc., Vicinity's Pacific Islands distributor.

**Management Commentary**

"2022 was a transformational year, expanding our capabilities beyond our strong legacy in transit buses and into the significant class 3 vehicle market with the introduction of the highly configurable VMC 1200 electric truck – for which we began initial customer deliveries in the fourth quarter," said William Trainer, Founder and Chief Executive Officer of Vicinity Motor Corp. "The fourth quarter and subsequent period continued our rapid pace of evolution, marked by significant sales momentum for our VMC 1200 and Vicinity Lightning™ product lines, as well as continued progress towards starting assembly operations at our U.S. manufacturing campus in Ferndale, Washington.

"To support the working capital needs of our VMC 1200 production ramp, we recently secured an expanded $30M credit facility with the Royal Bank of Canada and Export Development Canada, while maintaining existing financing to support bus production. This financing, paired with the installation of our power solution and receipt of a certificate of occupancy for our Ferndale manufacturing campus, puts us in a position to significantly increase our production capabilities with the onset of U.S. assembly operations in the first half of 2023.

"We are fortunate that the VMC 1200 supply chain is fairly insulated from the global disruptions that have impacted our transit bus business – since we kicked off deliveries in November 2022, we have already delivered 18 vehicles with 100 currently in production. Naturally, we expect the pace of production to increase exponentially as we scale operations and bring our facility in Ferndale online – helping us to chip away at our order backlog, which now exceeds US$150 million.

"Looking ahead, we are incredibly well positioned for a breakout year, expanding into the vast class 3 commercial EV truck market. We are in the final steps prior to the onset of assembly operations at our new U.S. facility in Ferndale, which we are in the process of certifying as a Free Trade Zone to enable us to better service the entirety of the North American market. These are exciting times for Vicinity and I look forward to continuing to update our investors as we build the foundation for what I believe will be a record 2023," concluded Trainer.

**Fourth Quarter and Full Year 2022 Financial Results**

*All figures stated in this press release are in U.S. dollars unless stated otherwise.*

Revenue in 2022 totaled $18.5 million, as compared $41.7 million in 2021. Revenue in the fourth quarter of 2022 totaled $2.0 million, as compared to $2.3 million in the fourth quarter of 2021.

Gross profit in 2022 totaled $0.4 million, or 2% of revenue, as compared to $4.2 million, or 10% of revenue, in 2021. Gross profit in the fourth quarter of 2022 totaled ($0.6) million, as compared to ($0.3) million in the fourth quarter of 2021. Gross margins were negatively affected by product mix, the low volume of vehicles delivered and a write-down of aged bus inventory and aftermarket parts. Consistent with the rest of the automotive industry, shipping difficulties and global supply chain disruptions in the availability of certain bus components have delayed a large portion of 2022 expected deliveries.

Cash used in operating activities in 2022 totaled $9.1 million, as compared to $3.6 million in 2021.

Net loss in 2022 totaled $18.0 million, or $(0.45) per share, as compared to $7.3 million, or $(0.24) per share, in 2021. Net loss in the fourth quarter of 2022 totaled $3.8 million, or $(0.09) per share, compared to a loss of $4.8 million, or $(0.14) per share, in the fourth quarter of 2021.

Adjusted EBITDA loss in 2022 totaled $7.4 million, as compared to $2.7 million in 2021. Adjusted EBITDA loss in the fourth quarter of 2022 totaled $1.4 million, as compared to a loss of $2.2 million in the fourth quarter of 2021.

Cash and cash equivalents as of December 31, 2022 totaled $1.6 million, as compared to $4.4 million as of December 31, 2021. Subsequent to the closing of the fourth quarter, the Company fortified its balance sheet through the closing of a CAD$4.0 million private placement of convertible debentures with strategic investors.

**Fourth Quarter and Full Year 2022 Results Conference Call**

Management will host an investor conference call at 4:30 p.m. Eastern time on Thursday, March 30, 2023 to discuss Vicinity Motors' fourth quarter & full year 2022 financial results, provide a corporate update, and conclude with a question and answer session from telephone participants. To participate, please use the following information:

**Q4 & FY2022 Conference Call and Webcast** 

Date: Thursday, March 30, 2023<br> Time: 4:30 p.m. Eastern time<br> U.S./Canada Dial-in: 1-844-850-0545<br> International Dial-in: 1-412-542-4118<br> Conference ID: 10176143<br> Webcast: Vicinity Motors Q4 & FY2022 Webcast

Please dial in at least 10 minutes before the start of the call to ensure timely participation.

A playback of the call will be available through Sunday, April 30, 2023. To listen, call 1-844-512-2921 within the United States and Canada or 1-412-317-6671 when calling internationally, using replay pin number 10176143. A webcast will also be available by clicking here: Vicinity Motors Q4 & FY 2022 Webcast.

**About Vicinity Motor Corp.**

Vicinity Motor Corp. (NASDAQ:VEV) (TSXV:VMC) ("VMC") is a North American supplier of electric vehicles for both public and commercial enterprise use. The Company leverages a dealer network and close relationships with world-class manufacturing partners to supply its flagship electric, CNG and clean-diesel Vicinity buses, as well as the VMC 1200 electric truck to the transit and industrial markets. For more information, please visit www.vicinitymotorcorp.com.

**Company Contact:**<br> John LaGourgue<br> VP Corporate Development<br> 604-288-8043<br> IR@vicinitymotor.com

**Investor Relations Contact:**<br> Lucas Zimmerman<br> MZ Group - MZ North America<br> 949-259-4987<br> VMC@mzgroup.us<br> www.mzgroup.us

*Neither the TSX-V nor its Regulation Service Provider (as that term is defined in the policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this release.*

**Cautionary Note Regarding Forward-Looking Statements**

This press release includes certain "forward-looking information" and "forward-looking statements" (collectively "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical fact, included herein are forward-looking statements. Forward-looking statements are frequently, but not always, identified by words such as "expects", "anticipates", "believes", "intends", "estimates", "potential", "possible", and similar expressions, or statements that events, conditions, or results "will", "may", "could", or "should" occur or be achieved. Forward-looking statements involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.

Important factors that could cause actual results to differ materially from Vicinity's expectations include uncertainties relating to the economic conditions in the markets in which Vicinity operates, vehicle sales volume, anticipated future sales growth, the success of Vicinity's operational strategies, the timing of the completion of the vehicle assembly facility in the State of Washington, the effect of the COVID-19 pandemic, related government-imposed restrictions on operations, the success of Vicinity's strategic partnerships; and other risk and uncertainties disclosed in Vicinity's reports and documents filed with applicable securities regulatory authorities from time to time. Vicinity's forward-looking statements reflect the beliefs, opinions and projections on the date the statements are made. Vicinity assumes no obligation to update the forward-looking statements or beliefs, opinions, projections, or other factors, should they change, except as required by law.

**Non-GAAP Financial Measures**

The non-GAAP and other financial measures presented do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be directly comparable to similar measures presented by other issuers. The data presented is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-GAAP and other financial measures should be read in conjunction with our consolidated financial statements.

*Non-GAAP financial measure - Adjusted EBITDA*

Adjusted EBITDA does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines adjusted EBITDA as earnings before interest, income taxes, depreciation and amortization, foreign exchange gains or losses, certain non-recurring and/or non-operating income and expenses, and share based compensation. Adjusted EBITDA should not be construed as an alternative for revenue or net loss determined in accordance with IFRS. The Company believes that adjusted EBITDA is a meaningful metric in assessing the Company's financial performance and operational efficiency.

The following table reconciles net earnings or losses to Adjusted EBITDA based on the consolidated financial statements of the Company for the periods indicated.

---

| | | | | |
|:---|:---|:---|:---|:---|
| **(US dollars in thousands)** | **3 months ended December 31, 2022** | **3 months ended December 31, 2021** | **Year ended December 31, 2022** | **Year ended December 31, 2021** |
| **Net loss** | (3828) | (4782) | (17948) | (7323) |
| **Add back** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;**Stock based compensation** | 668 | 311 | 1380 | 1353 |
| &nbsp;&nbsp;&nbsp;**Interest** | 482 | 509 | 2258 | 716 |
| &nbsp;&nbsp;&nbsp;**Gain on modification of debt** |  |  | (803) |  |
| &nbsp;&nbsp;&nbsp;**Foreign exchange loss (gain)** | (629) | 270 | 3253 | 341 |
| &nbsp;&nbsp;&nbsp;**Loss on disposal** |  | 487 | 27 | 542 |
| &nbsp;&nbsp;&nbsp;**Inventory write down** | 1227 |  | 1227 |  |
| &nbsp;&nbsp;&nbsp;**Income tax expense** | (98) | 442 | 202 | 464 |
| &nbsp;&nbsp;&nbsp;**Amortization** | 754 | 571 | 2966 | 1241 |
| **Adjusted EBITDA** | (1424) | (2192) | (7438) | (2666) |

---

**Vicinity Motor Corp.** <br> Consolidated Statements of Financial Position<br> (Unaudited, In thousands of US Dollars)

---

| | | | |
|:---|:---|:---|:---|
|  | Note | December 31, 2022 | December 31, 2021 |
|  | | $ | $ |
| **Current Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents |  | 1622 | 4402 |
| &nbsp;&nbsp;&nbsp;Trade and other receivables | 4 | 2655 | 2810 |
| &nbsp;&nbsp;&nbsp;Inventory | 5 | 10068 | 9416 |
| &nbsp;&nbsp;&nbsp;Prepaids and deposits |  | 3801 | 4178 |
|  |  | 18146 | 20806 |
| **Long-term Assets** |  |  |  |
| &nbsp;&nbsp;&nbsp;Intangible assets | 6 | 14273 | 22353 |
| &nbsp;&nbsp;&nbsp;Property, plant, and equipment | 7 | 22613 | 10834 |
|  |  | 55032 | 53993 |
| **Current Liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities |  | 4942 | 2915 |
| &nbsp;&nbsp;&nbsp;Deferred consideration | 6 |  | 4602 |
| &nbsp;&nbsp;&nbsp;Credit facility | 8 | 628 |  |
| &nbsp;&nbsp;&nbsp;Current portion of deferred revenue | 9 | 2382 | 3193 |
| &nbsp;&nbsp;&nbsp;Current portion of provision for warranty cost | 10 | 1585 | 1414 |
| &nbsp;&nbsp;&nbsp;Current debt facilities | 11 | 6587 | 7143 |
| &nbsp;&nbsp;&nbsp;Current portion of other long-term liabilities | 12 | 449 | 134 |
|  |  | 16573 | 19401 |
| **Long-term Liabilities** |  |  |  |
| &nbsp;&nbsp;&nbsp;Other long-term liabilities | 12 | 1503 | 92 |
| &nbsp;&nbsp;&nbsp;Provision for warranty cost | 10 | 124 | 255 |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 9 |  |  |
|  |  | 18200 | 19748 |
| **Shareholders' Equity** |  |  |  |
| &nbsp;&nbsp;&nbsp;Share capital | 13 | 75983 | 58055 |
| &nbsp;&nbsp;&nbsp;Contributed surplus | 13 | 7088 | 6035 |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive (loss) income |  | 1403 | (151) |
| &nbsp;&nbsp;&nbsp;Deficit |  | (47642) | (29694) |
|  |  | 36832 | 34245 |
|  |  | 55032 | 53993 |

---

**Vicinity Motor Corp.** <br> Consolidated Statements of (Loss) Income<br> (In thousands of US dollars, except for per share amounts)

---

| | | | |
|:---|:---|:---|:---|
|  | Note | Year ended<br> December 31, 2022 | Year ended<br> December 31, 2021 |
|  | | $ | $ |
| Revenue |  |  |  |
| Vehicle sales | 18 | 13165 | 38197 |
| Other | 18 | 5310 | 3511 |
|  |  | 18475 | 41708 |
| Cost of sales | 5, 7a | (18035) | (37473) |
| Gross profit |  | 440 | 4235 |
| Expenses |  |  |  |
| &nbsp;&nbsp;&nbsp;Sales and administration |  | 9526 | 7812 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation |  | 1380 | 1353 |
| &nbsp;&nbsp;&nbsp;Amortization |  | 2572 | 872 |
| &nbsp;&nbsp;&nbsp;Interest and finance costs | 81112 | 2258 | 716 |
| &nbsp;&nbsp;&nbsp;Gain on modification of debt | 11 | (803) |  |
| &nbsp;&nbsp;&nbsp;Foreign exchange loss |  | 3253 | 341 |
|  |  | 18186 | 11094 |
| Loss before taxes |  | (17746) | (6859) |
| Current income tax expense | 15 | 202 | 464 |
| Net loss |  | (17948) | (7323) |
| Loss per share |  |  |  |
| Basic & diluted | 19 | (0.45) | (0.24) |
| Weighted average number of common shares outstanding |  |  |  |
| Basic & diluted | 19 | 39650426 | 30827688 |

---

**Vicinity Motor Corp.** <br> Consolidated Statements of Cash Flows<br> (In thousands of US dollars)

---

| | | | |
|:---|:---|:---|:---|
|  |<br>Note | Year ended<br>December 31, 2022 | Year ended<br>December 31, 2021 |
|  | | $ | $ |
| **OPERATING ACTIVITIES** |  |  |  |
| Net loss for the year |  | (17948) | (7323) |
| Items not involving cash: |  |  |  |
| &nbsp;&nbsp;&nbsp;Loss on disposal of property and equipment |  | 27 | 542 |
| &nbsp;&nbsp;&nbsp;Gain on modification of debt |  | (803) |  |
| &nbsp;&nbsp;&nbsp;Amortization |  | 2966 | 1241 |
| &nbsp;&nbsp;&nbsp;Foreign exchange loss (gain) |  | 3498 | (2) |
| &nbsp;&nbsp;&nbsp;Interest and finance costs | 81112 | 2258 | 716 |
| &nbsp;&nbsp;&nbsp;Stock-based compensation | 13 | 1380 | 1353 |
|  |  | (8622) | (3473) |
| Changes in non-cash items: |  |  |  |
| &nbsp;&nbsp;&nbsp;Trade and other receivables | 4 | (233) | 471 |
| &nbsp;&nbsp;&nbsp;Inventory | 5 | (1212) | 14073 |
| &nbsp;&nbsp;&nbsp;Prepaids and deposits |  | 31 | (2339) |
| &nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities |  | (1627) | (2727) |
| &nbsp;&nbsp;&nbsp;Deferred consideration | 6 | 4602 | (4602) |
| &nbsp;&nbsp;&nbsp;Deferred revenue | 9 | (622) | 1662 |
| &nbsp;&nbsp;&nbsp;Warranty provision | 10 | 69 | 869 |
| Taxes paid |  | (760) |  |
| Interest paid |  | (708) | (340) |
| Cash provided (used) in operating activities |  | (9082) | 3594 |
| **INVESTING ACTIVITIES** |  |  |  |
| &nbsp;&nbsp;&nbsp;Purchase of intangible assets | 6 | (658) | (17596) |
| &nbsp;&nbsp;&nbsp;Proceeds from government subsidy | 6 | 817 |  |
| &nbsp;&nbsp;&nbsp;Purchase of property and equipment | 7 | (11109) | (6537) |
| &nbsp;&nbsp;&nbsp;Proceeds on disposal of property and equipment | 7 | 252 | 729 |
| &nbsp;&nbsp;&nbsp;Restricted cash |  |  | 284 |
| Cash used in investing activities |  | (10698) | (23120) |
| **FINANCING ACTIVITIES** |  |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from issuance of common shares | 13 | 18523 | 24087 |
| &nbsp;&nbsp;&nbsp;Share issuance costs | 13 | (1367) | (2213) |
| &nbsp;&nbsp;&nbsp;(Repayments) proceeds of credit facility | 8 | 659 | (4628) |
| &nbsp;&nbsp;&nbsp;Proceeds from short-term loans | 11 |  | 7959 |
| &nbsp;&nbsp;&nbsp;Repayment of short-term loans | 11 |  | (2038) |
| &nbsp;&nbsp;&nbsp;Repayment of long-term loans | 12 | (447) | (222) |
| Cash provided by financing activities |  | 17368 | 22945 |
| Effect of foreign exchange rate on cash |  | (368) | (25) |
| Increase in cash and cash equivalents |  | (2780) | 3394 |
| Cash and cash equivalents, beginning |  | 4402 | 1008 |
| Cash and cash equivalents, ending |  | 1622 | 4402 |

---

## Exhibit 99.6

**EXHIBIT 99.6** 

**Form 52-109F1**

 ***Certification of Annual Filings***

 ***Full Certificate***

I*, **William Trainer, Chief Executive Officer of Vicinity Motor Corp.***, certify the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.  ***Review:*** I have reviewed the AIF, if any, annual financial statements and annual MD&A,
including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual
filings") of **Vicinity Motor Corp.** (the "issuer") for the financial year ended **December 31, 2022**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.  ***No misrepresentations:*** Based on my knowledge, having exercised reasonable diligence, the
annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is
necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual
filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.  ***Fair presentation:*** Based on my knowledge, having exercised reasonable diligence, the annual
financial statements together with the other financial information included in the annual filings fairly present in all material respects
the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the annual
filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.  ***Responsibility:*** The issuer's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those
terms are defined in National Instrument 52-109 *Certification of Disclosure in Issuers' Annual and Interim Filings*, for the
issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.  ***Design:*** Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's
other certifying officer(s) and I have, as at the financial year end

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance
that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) material information relating to the issuer is made known to us by others, particularly during the period
in which the annual filings are being prepared; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports
filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified
in securities legislation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's
GAAP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1  ***Control framework:*** The control framework the issuer's other certifying officer(s)
and I used to design the issuer's ICFR is **Internal Control – Integrated Framework (2013) published by the Committee of Sponsoring Organization of the Treadway Commission ("COSO")**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2  ***ICFR – material weakness relating to design:*** N/A

5.3 ***Limitation on scope of design:*** N/A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.  ***Evaluation:*** The issuer's other certifying officer(s) and I have

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's DC&P
at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the
financial year end based on that evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR
at the financial year end and the issuer has disclosed in its annual MD&A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) N/A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.  ***Reporting changes in ICFR:*** The issuer has disclosed in its annual MD&A any change in
the issuer's ICFR that occurred during the period beginning on **October 1, 2022** and ended on **December 31, 2022** that
has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.  ***Reporting to the issuer's auditors and board of directors or audit committee:*** The
issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors,
and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who
have a significant role in the issuer's ICFR.

---

| |
|:---|
| Date: **March 30, 2023** |
| /s/ William Trainer |
| William Trainer, |
| Chief Executive Officer |

---

## Exhibit 99.7

**EXHIBIT 99.7** 

**Form 52-109F1**

 ***Certification of Annual Filings***

 ***Full Certificate***

I*, **Danial Buckle, Chief Financial Officer of Vicinity Motor Corp.***, certify the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.  ***Review:*** I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty,
all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of **Vicinity Motor Corp.** (the "issuer") for the financial year ended **December 31, 2022**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.  ***No misrepresentations:*** Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain
any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.  ***Fair presentation:*** Based on my knowledge, having exercised reasonable diligence, the annual financial statements together
with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial
performance and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.  ***Responsibility:*** The issuer's other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National
Instrument 52-109 *Certification of Disclosure in Issuers' Annual and Interim Filings*, for the issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.  ***Design:*** Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying
officer(s) and I have, as at the financial year end

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings
are being prepared; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it
under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1  ***Control framework:*** The control framework the issuer's other certifying officer(s) and I used to design the issuer's
ICFR is **Internal Control – Integrated Framework (2013) published by the Committee of Sponsoring Organization of the Treadway Commission ("COSO")**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2  ***ICFR – material weakness relating to design:*** N/A

5.3 ***Limitation on scope of design:*** N/A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.  ***Evaluation:*** The issuer's other certifying officer(s) and I have

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's DC&P at the financial year
end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end
based on that evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer's ICFR at the financial year end
and the issuer has disclosed in its annual MD&A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) N/A

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.  ***Reporting changes in ICFR:*** The issuer has disclosed in its annual MD&A any change in the issuer's ICFR that
occurred during the period beginning on **October 1, 2022** and ended on **December 31, 2022** that has materially affected, or
is reasonably likely to materially affect, the issuer's ICFR.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.  ***Reporting to the issuer's auditors and board of directors or audit committee:*** The issuer's other certifying
officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer's auditors, and the board of directors
or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in
the issuer's ICFR.

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| |
|:---|
| Date: **March 30, 2023** |
| /s/ Danial Buckle |
| Danial Buckle, |
| Chief Financial Officer |

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