The Lion Electric Company
Condensed Interim Consolidated Financial Statements
As at September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023
Condensed Interim Consolidated Statements of Financial Position
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
Condensed Interim Consolidated Statements of Changes in Equity
Condensed Interim Consolidated Statements of Cash Flows
Notes to Condensed Interim Consolidated Financial Statements
6 - 38

2
The Lion Electric Company
Condensed Interim Consolidated Statements of Financial Position
As at September 30, 2024 and December 31, 2023
(In US dollars)
(Unaudited)
NotesSeptember 30,
2024		December 31,
2023
$$
ASSETS
Current
Cash26,287,96829,892,966
Accounts receivable48,724,69975,641,780
Inventories215,103,160249,606,756
Prepaid expenses and other current assets2,181,3221,553,276
Current assets292,297,149356,694,778
Non-current
Other non-current assets7,879,7336,994,815
Property, plant and equipment186,611,153198,536,683
Right-of-use assets590,986,71089,663,139
Intangible assets189,170,558175,703,257
Contract asset1013,255,04613,528,646
Non-current assets487,903,200484,426,540
Total assets780,200,349841,121,318
LIABILITIES
Current
Trade and other payables57,905,84692,424,961
Deferred revenue and other deferred liabilities744,253,04618,267,139
Current portion of long-term debt and other debts8149,540,87227,056,476
Current portion of lease liabilities58,190,0217,984,563
Current liabilities259,889,785145,733,139
Non-current
Long-term debt and other debts8143,095,183197,885,889
Lease liabilities587,217,48383,972,023
Share warrant obligations105,521,70929,582,203
Conversion options on convertible debt instruments94,041,03625,034,073
Non-current liabilities239,875,411336,474,188
Total liabilities499,765,196482,207,327
SHAREHOLDERS’ EQUITY
Share capital15489,454,628489,362,920
Contributed surplus141,195,903139,569,185
Deficit(330,654,757)(255,746,097)
Cumulative translation adjustment(19,560,621)(14,272,017)
Total shareholders’ equity280,435,153358,913,991 
Total shareholders’ equity and liabilities780,200,349841,121,318
The accompanying notes are an integral part of the condensed interim consolidated financial statements.




3

The Lion Electric Company
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars)
NotesThree months endedNine months ended
September 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
$$
Revenue1730,626,60480,347,614116,383,520193,066,862
Cost of sales46,580,06074,982,572158,694,253189,540,202
Gross profit (loss)(15,953,456)5,365,042(42,310,733)3,526,660
Administrative expenses9,695,24412,986,75431,756,73738,468,226
Selling expenses3,777,2725,176,76811,812,94216,503,134
Restructuring costs12780,260—2,163,269—
Operating loss(30,206,232)(12,798,480)(88,043,681)(51,444,700)
Finance costs1313,024,2547,728,32035,934,08311,149,758
Foreign exchange loss (gain)(1,616,813)2,861,1931,907,293(104,113)
Change in fair value of conversion options on convertible debt instruments9(4,538,039)(3,355,932)(27,755,832)(3,355,932)
Change in fair value of share warrant obligations10(3,129,649)(179,488)(23,220,565)(11,910,809)
Net loss(33,945,985)(19,852,573)(74,908,660)(47,223,604)
Other comprehensive loss
Item that will be subsequently reclassified to net loss
Foreign currency translation adjustment2,844,623 (6,201,228)(5,288,604)1,161,192 
Comprehensive loss for the period(31,101,362)(26,053,801)(80,197,264)(46,062,412)
Loss per share
Basic loss per share14(0.15)(0.09)(0.33)(0.21)
Diluted loss per share14(0.15)(0.09)(0.33)(0.21)
The accompanying notes are an integral part of the condensed interim consolidated financial statements.

4
The Lion Electric Company
Condensed Interim Consolidated Statements of Changes in Equity
For the nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except for number of shares)
NotesNumber of shares Share
capital		Contributed surplusDeficitCumulative
translation
adjustment		Total equity
$$$$$
Balance at January 1, 2024226,184,932489,362,920139,569,185(255,746,097)(14,272,017)358,913,991 
Share-based compensation11——1,305,275——1,305,275
Shares issued pursuant to the settlement of restricted share units and deferred share units1132,60991,708(91,708)———
Restricted shares issued pursuant to the settlement of variable compensation11——413,151— —413,151 
Net loss
———(74,908,660)—(74,908,660)
Other comprehensive loss
Foreign currency translation adjustment————(5,288,604)(5,288,604)
Balance at September 30, 2024226,217,541489,454,628141,195,903(330,654,757)(19,560,621)280,435,153
Balance at January 1, 2023218,079,962475,950,194134,365,664(151,979,960)(21,219,125)437,116,773
Share-based compensation——4,794,878— —4,794,878
Shares issued pursuant to exercise of stock options and warrants—33,149— — —33,149
Issuance of shares through "at-the-market" equity program154,894,0608,580,405— — —8,580,405
Issuance of shares through the December 2022 Offering2,952,7554,175,836—— —4,175,836
Issuance of shares related to closing fee of convertible debenture financing7258,155623,336—— —623,336
Net loss———(47,223,604)—(47,223,604)
Other comprehensive loss
Foreign currency translation adjustment———— 1,161,1921,161,192
Balance at September 30, 2023226,184,932489,362,920139,160,542(199,203,564)(20,057,933)409,261,965

The accompanying notes are an integral part of the condensed interim consolidated financial statements.


5
The Lion Electric Company
Condensed Interim Consolidated Statements of Cash Flows
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US Dollars)
Three months endedNine months ended
NotesSeptember 30,
2024		September 30,
2023		September 30,
2024		September 30,
2023
OPERATING ACTIVITIES
Net loss(33,945,985)(19,852,573)(74,908,660)(47,223,604)
Non-cash items:
Depreciation and amortization169,044,0547,240,08826,239,53017,715,104
Share-based compensation11438,1911,324,3251,305,2754,794,878
Accretion expense133,064,2582,275,0789,138,2652,275,078
Interest paid in kind on convertible debt instruments132,504,005—7,454,040—
Interest capitalized to long-term debt and other debts13559,764—559,764—
Non-cash issuance of closing fee shares through 2023 Debentures Financing13—623,336—623,336
Change in fair value of share warrant obligations10(3,129,649)(179,488)(23,220,565)(11,910,809)
Change in fair value of conversion options on convertible debt instruments9(4,538,039)(3,355,932)(27,755,832)(3,355,932)
Unrealized foreign exchange gain (loss)(2,784,007)(91,679)1,133,498(1,323,027)
Net change in non-cash working capital items 16 49,925,334(31,679,272)48,486,016(47,840,935)
Cash flows used in operating activities21,137,926 (43,696,117)(31,568,669)(86,245,911)
INVESTING ACTIVITIES
Acquisition of property, plant and equipment(1,436,487)(22,394,406)(6,824,835)(67,790,857)
Addition to intangible assets(4,604,831)(16,057,154)(27,040,490)(56,513,413)
Net proceeds from Mirabel battery building sale-leaseback5 ———20,506,589
Government assistance related to property, plant and equipment and intangible assets2,765,5261,690,2847,164,6217,441,552
Cash flows used in investing activities(3,275,792)(36,761,276)(26,700,704)(96,356,129)
FINANCING ACTIVITIES
Increase in long-term debt and other debts17,067,37136,875,04473,669,446106,099,764
Repayment of long-term debt and other debts(9,475,665)(103,985,678)(13,846,612)(126,481,649)
Payment of lease liabilities5 (1,980,505)(1,711,692)(5,994,176)(4,427,228)
Proceeds from issuance of shares through "at-the-market" equity program, net of issuance costs15—2,341,367—8,580,405
Proceeds from the issuance of warrants through the December 2022 Offering10———2,907,226
Proceeds from the issuance of units through the December 2022 Offering - Common Shares, net of issuance costs15———4,175,836
Proceeds from the 2023 Debentures Financing, net of issuance costs8—139,090,995—139,090,995
Cash flows from financing activities5,611,201 72,610,036 53,828,658 129,945,349 
Effect of exchange rate changes on cash held in foreign currency811,892(636,555)835,71758,773
Net increase (decrease) in cash24,285,227(8,483,912)(3,604,998)(52,597,918)
Cash, beginning of period2,002,741 44,152,979 29,892,966 88,266,985 
Cash, end of period26,287,96835,669,06726,287,96835,669,067
Other information on cash flows related to operating activities:
Income taxes paid————
Interest paid355,2153,360,7449,975,5947,218,418
Interest paid on obligations under lease liabilities1,313,5551,227,5603,824,0203,354,611
The accompanying notes are an integral part of the condensed interim consolidated financial statements.

6
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)

1 - REPORTING ENTITY AND NATURE OF OPERATIONS
The principal activities of The Lion Electric Company ("Lion" or the "Company") and its subsidiaries (together referred to as the "Group") include the design, development, manufacturing and distribution of purpose-built all-electric medium and heavy-duty urban vehicles including battery systems, chassis, bus bodies and truck cabins. The Group also distributes truck and bus parts and accessories.
The Company is incorporated under the Business Corporations Act (Quebec) and is the Group’s ultimate parent company. Its registered office and principal place of business is 921, chemin de la Riviere-du-Nord, Saint-Jerome, Quebec, Canada. These unaudited condensed interim consolidated financial statements ("consolidated financial statements") are as at September 30, 2024 and December 31, 2023 and for the three and nine months ended September 30, 2024 and 2023 and include the accounts of the Company and its subsidiaries. The Company is a publicly listed entity, and its shares are traded on the Toronto Stock Exchange and New York Stock Exchange under the symbol LEV.
2 - BASIS OF PRESENTATION, STATEMENT OF COMPLIANCE WITH IFRS AND GOING CONCERN
These consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 - Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB") and are expressed in United States ("US") dollars for reporting purposes. Certain information and footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by IASB, have been omitted or condensed and, therefore, these consolidated financial statements should be read in conjunction with the most recent annual consolidated financial statements for the year ended December 31, 2023. The results from operations for the interim period do not necessarily reflect the result expected for the full fiscal year. The Company’s sales have historically experienced substantial fluctuations from quarter to quarter, particularly considering that they have been mainly comprised of sales of school buses which are mainly driven by the school calendar. While the Company expects to continue to experience seasonal variations in its sales in the foreseeable future, management believes that the mix of product sales may vary considerably in the future, especially in connection with the Company’s execution of its growth strategy. As a result, it is difficult to predict if any historical trends will be reproduced in the future.
These consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to present a fair statement of the results for these interim periods. These adjustments are of a normal recurring nature.





7
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
2 - BASIS OF PRESENTATION, STATEMENT OF COMPLIANCE WITH IFRS AND GOING CONCERN (CONTINUED)
The consolidated financial statements have been prepared on a going concern basis, which assumes the Company will continue its operations in the foreseeable future and that it will be able to realize its assets and discharge its liabilities in the normal course of operations. In making the assessment that the Company continues to be a going concern, management have taken into account all available information about the future. During the three and nine months ended September 30, 2024, the Company generated a net loss of $33,945,985 and $74,908,660, respectively (September 30, 2023 - $19,852,573 and $47,223,604, respectively). For the nine months ended September 30, 2024, the Company also had negative cash flows from operating activities of $31,568,669 (nine months ended September 30, 2023 – $86,245,911) and a working capital (current assets less current liabilities) of $32,407,364 (December 31, 2023 - $210,961,639). As at September 30, 2024, the Company has an accumulated deficit of $330,654,757 (December 31, 20233 - $255,746,097).
Also, based on current assessment of management, it is not certain that cash and forecasted cash flows from operations will be sufficient to meet the Company’s obligations coming due over the next twelve months, and, as a result, the Company’s ability to continue as a going concern is dependent on, among other things, its ability to raise additional funds in order to meet its capital requirements and satisfy its obligations as they become due (such as upcoming interest payment obligations under, and repayment at maturity of, certain of its debt instruments), including in connection with the expiration of the covenant relief period on November 15, 2024 and/or the maturity of the Finalta-CDPQ Loan Agreement on November 30, 2024 (refer to Note 8).
During the nine months ended September 30, 2024, the Company has reviewed and considered different opportunities that may enable the Company to improve its near-term liquidity, strengthen its financial position and continue to pursue its business strategy, and management is currently seeking potential sources of financing and/or other opportunities that may enable it to improve its liquidity and strengthen its financial position. Such opportunities include certain refinancing initiatives related to its debt instruments, the sale of certain of its assets and/or any other opportunities or alternatives. That being said, given the Company’s recurring operating losses and negative cash flows and current financial position as well as certain factors outside of its control such as dynamics impacting the industries in which the Company operates and the fact that the Company has raised substantial amounts of capital in the past, there is no certainty that the Company will be able to raise additional funds and there can be no assurance that the Company will be successful in pursuing and implementing any such other opportunities, nor any assurance as to the outcome or timing of any such other opportunities. As a result, the Company will need to negotiate further amendments, concessions or waivers to agreements with the holders of its debt instruments in connection with the expiry of the covenant relief period and upcoming maturity of the Finalta-CDPQ Loan Agreement.
In the event the Company cannot raise such additional funds or negotiate such amendments, concessions or waivers, current forecasts of management (before taking into account any potential additional funds or further amendments, concessions or waivers to the Company’s debt instruments) indicate that the Company may in the future breach certain covenants under its debt instruments, including at the expiry of the covenant relief period. Any breach under the Company’s debt instruments could result, either directly or as a result of the application of cross default or cross acceleration provisions, in the Company’s lenders exercising their rights thereunder, including to request immediate repayment of amounts borrowed by the Company.

8
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
2 - BASIS OF PRESENTATION, STATEMENT OF COMPLIANCE WITH IFRS AND GOING CONCERN (CONTINUED)
Management is currently in discussion with the holders of certain of its debt instruments to negotiate potential amendments, concessions or waivers thereto. While the Company has been able to secure certain covenant relief and other concessions from its lenders in the past, there can be no assurances that it will be able to negotiate such amendments, concessions or waivers if and when needed in the future, including in connection with the end of the covenant relief period and/or the maturity of the Finalta-CDPQ Loan Agreement.
These conditions indicate the existence of a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern.
The condensed consolidated financial statements do not reflect any adjustments to the amounts and classification of assets and liabilities that would be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
These consolidated financial statements have been approved for issue by the Board of Directors on November 6, 2024.
3 - SUMMARY OF ACCOUNTING POLICIES
3.1 Overall considerations
The Group applied the same accounting policies in the preparation of these condensed interim consolidated financial statements as those disclosed in Note 3 of its most recent annual consolidated financial statements for the year ended December 31, 2023, except for the accounting policy described below in Note 3.2 and Note 3.3
When preparing the consolidated financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results. The Group applied the same judgements, estimates and assumptions in the consolidated financial statements, including the key sources of estimation uncertainty, as those disclosed in Note 3 of its most recent annual consolidated financial statements for the year ended December 31, 2023.
3.2 Change in accounting estimates
Property, plant and equipment
Effective January 1, 2024, the Group revised the estimated useful lives of machinery and equipment based on a re-assessment of the expected use to the Group, recent experience of their economic lives, and technological advancement of the recently acquired machinery and equipment. These assets, which were previously depreciated on 7,000 units produced or straight-line over 5 years, are now depreciated on a straight-line basis over 10 years. For the three and nine months ended September 30, 2024, the change in estimate made on a prospective basis did not result in a material reduction of depreciation.

9
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
3 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
3.3 Initial application of new accounting standards and interpretations in the reporting standards
Amendments to IAS 1, Presentation of Financial Statements
On January 23, 2020, the IASB issued narrow-scope amendments “Classification of Liability as Current or Non-Current” to IAS 1, Presentation of Financial Statements, to clarify its requirements for the presentation of liabilities in the statement of financial position. The amendments clarify that the classification of liabilities as current or non-current should be based on rights to defer that have substance and exist at the end of the reporting period. The adoption of the amendments as of January 1, 2024 did not have an impact on the Company’s condensed interim consolidated financial statements.
3.4 Standards, amendments and Interpretations to existing Standards that are not yet effective and have not been adopted early by the Group
At the date of authorization of these consolidated financial statements, several other new, but not yet effective, standards and amendments to existing standards, and interpretations have been published by the IASB. None of these standards or amendments to existing standards have been adopted early by the Company.
Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement. New standards, amendments and interpretations not adopted in the current year have not been disclosed as they are not expected to have a material impact on the Company’s consolidated financial statements.
4 - IMPAIRMENT TESTING OF INTANGIBLE ASSETS, PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE-ASSETS
As at September 30, 2024, the Company performed an impairment test that was triggered due to certain impairment indicators that were present, primarily the decline in share price and the continuing delays and challenges associated with the Company's clients obtaining subsidies approval of the requested governmental incentives which resulted in operating losses due to lower than projected revenues and negative cash flows. The recoverable amount of a cash-generating-unit is the higher of the cash-generating unit’s fair value less cost of disposal (‘FVLCD’) and its value-in-use.
The result of the Company’s impairment test as at September 30, 2024 determined that the value-in-use exceeded the carrying value of the cash-generating unit. The determination of value-in-use contains numerous variables and assumptions that are subject to change as business conditions change and therefore could impact fair value in the future. 








10
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
5 - RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS
The Group has entered into lease agreements for the rental of premises, rolling stock and equipment. The leases have an initial term of 1 to 40 years and some have a renewal option after their initial term. The lease terms are negotiated individually and encompass a wide range of different terms and conditions.
Right-of-use assets
PremisesRolling stockEquipmentTotal
$$$$
Balance at January 1, 202479,567,0421,610,1498,485,94889,663,139
Additions6,256,8721,011,491—7,268,363
Modifications2,810,533 (855)(4,105)2,805,573 
Depreciation expense(6,028,852)(429,516)(1,614,760)(8,073,128)
Foreign currency translation adjustment(664,066)(13,171)— (677,237)
Balance at September 30, 202481,941,5292,178,0986,867,08390,986,710
Balance at January 1, 202359,375,1311,133,223—60,508,354
Additions29,560,843956,3649,363,28139,880,488
Modifications(2,401,574)(31,868)5,353 (2,428,089)
Depreciation expense(7,766,903)(468,994)(882,686)(9,118,583)
Foreign currency translation adjustment799,54521,424—820,969
Balance at December 31, 202379,567,0421,610,1498,485,94889,663,139

On February 2, 2023, the Group completed a sale-leaseback transaction with BTB Real Estate Investment Trust for its battery manufacturing building located in Mirabel, Quebec for a total sale price of $20,909,566 (C$28,000,000), and net proceeds of $20,506,589 after the deduction of selling and legal fees of $484,994. The sale of the building resulted in a difference between the carrying value and net proceeds of $3,306,755 which was recognized as an increase to the right-of-use asset related to the lease agreement entered into with BTB Real Estate Investment Trust for the Mirabel battery manufacturing building concurrent with the sale, which has an initial 20-year term and subsequent renewal options.





11
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
5 - RIGHT-OF-USE ASSETS AND LEASE OBLIGATIONS (CONTINUED)
Right-of-use assets (continued)
Depreciation was recognized as follows :
Three months endedNine months ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
$$$$
Administrative expenses156,432135,268441,853349,167
Selling expenses318,350312,936963,872976,415
Cost of sales2,241,522 1,944,4196,348,804 4,352,895
Capitalized to property, plant and equipment—137,459318,599898,854
Total depreciation2,716,3042,530,0828,073,1286,577,331
Lease liabilities
$
Balance at January 1, 202491,956,586
Additions7,268,363
Lease payments(5,994,176)
Modifications2,805,573 
Foreign currency translation adjustment(628,842)
Balance at September 30, 202495,407,504
Current portion8,190,021
Non-current portion87,217,483
Balance at January 1, 202363,520,215
Additions36,573,733
Lease payments(6,512,231)
Modifications(2,456,531)
Foreign currency translation adjustment831,400
Balance at December 31, 202391,956,586
Current portion7,984,563
Non-current portion83,972,023



12
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
6 - FINANCIAL ASSETS AND LIABILITIES
6.1 Categories of financial assets and financial liabilities
The classification of financial instruments is summarized as follows:
ClassificationsSeptember 30, 2024December 31, 2023
$$
FINANCIAL ASSETS
Cash
Amortized cost26,287,96829,892,966 
Trade receivablesAmortized cost22,429,86040,621,997 
Incentives and other government assistance receivableAmortized cost22,854,38426,625,156 
FINANCIAL LIABILITIES
Trade and other payablesAmortized cost41,109,13371,856,894
Long-term debt and other debtsAmortized cost292,636,055224,942,365
Share warrant obligationsFVTPL5,521,70929,582,203
Conversion options on convertible debt instrumentsFVTPL4,041,03625,034,073
The Company is a party to claims and litigation arising in the normal course of operations. The Company does not expect the resolution of these matters to have a material adverse effect on the financial position or results of operations of the Company.
6.2 Fair value of financial instruments
Current financial instruments that are not measured at fair value in the consolidated statements of financial position are represented by cash, trade receivables, incentives and other government assistance receivable, trade and other payables and long-term debt and other debts. Their carrying values are considered to be a reasonable approximation of their fair value because of their short-term maturity and / or the contractual terms of these instruments.
As of September 30, 2024 and December 31, 2023, the fair values of long-term debt and other debts based on discounted cash flows were not materially different from their carrying values because there were no material changes in the assumptions used for fair value determination at inception, with the exception of the loan from Strategic Innovation Fund of the Government of Canada (Note 8.3) and from Investissement Quebec (Note 8.2).
The combined carrying value of Strategic Innovation Fund of the Government of Canada and Investissement Quebec loans amounted to $42,763,037 (December 31, 2023: $38,697,354) while their combined fair value amounted to $35,584,549 (December 31, 2023: $27,744,314). As of September 30, 2024 and December 31, 2023, the fair values of the warrants issued to a customer, the private Business Combination warrants, the warrants issued as part of 2023 Debenture Financing (as defined in Note 8.7) and the conversion options on convertible debt instruments were determined using the Black-Scholes or the binomial option pricing model and the fair value of the public Business Combination warrants and December 2022 warrants (see Note 10) was determined using their market value.

13
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
6 - FINANCIAL ASSETS AND LIABILITIES (CONTINUED)
6.2 Fair value of financial instruments (continued)
As at September 30, 2024, the impact of a 5.0% increase in the value of the Company’s share price would have an impact of increasing the fair values of the private share warrants, the warrants issued to a customer and the warrants issued as part of 2023 Debenture Financing (as defined in Note 8.7) with a corresponding increase in consolidated net loss of $342,159 (September 30, 2023: increase in consolidated net loss by $1,962,781) and a 5.0% decrease in the value would have an impact of decreasing the consolidated net loss by $327,980 (September 30, 2023: decrease in consolidated net loss by $1,920,539).
As at September 30, 2024, the impact of a 5.0% increase or decrease in the value of the Company’s share price would have an impact of $91,131 on the fair value of the public warrants, with a corresponding impact on the consolidated net loss (September 30, 2023: $712,629). As at September 30, 2024, the impact of a 5.0% increase in the value of the Company’s share price would have an impact of increasing the fair value of the conversion options on convertible debt instruments with a corresponding increase in consolidated net loss of $412,020 (September 30, 2023: not applicable) and a 5.0% decrease in the value would have an impact of decreasing the consolidated net loss by $394,838 (September 30, 2023: not applicable).
6.3 Fair Value Hierarchy
Fair value measurements are categorized in accordance with the following levels:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability; and
Level 3: Inputs are unobservable inputs for the asset or liability.
The Group’s financial instruments are categorized as follows on the fair value hierarchy:
Fair Value Hierarchy
FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
Share warrant obligations- publicLevel 1
Share warrant obligations- privateLevel 2
Share warrant obligations- warrants issued to a customerLevel 3
Share warrant obligations- July 2023 warrantsLevel 2
Conversion options on convertible debt instrumentsLevel 3
FINANCIAL INSTRUMENTS MEASURED AT AMORTIZED COST
Long-term debt and other debtsLevel 2
See Note 10 for share warrants obligation, Note 9 for the conversion options on convertible debt instrument and Note 8 for long-term debt and other debts for additional information related to the inputs used in the fair value calculation and the reconciliation between opening and closing balances.



14
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
7 - DEFERRED REVENUE AND OTHER DEFERRED LIABILITIES
Deferred revenue and other deferred liabilities consist of the following:
September 30, 2024December 31, 2023
$$
Deferred revenue related to the U.S. Environmental Protection Agency ("EPA") Clean School Bus Program (Note 7.1)
39,033,52516,293,067
Deferred liabilities related to the non-repayable financial contribution under Project Innovation Program for the Development of a Mobilizing Project (Note 7.2)
3,636,0491,622,433
Other deferred liabilities1,583,472351,639
Deferred revenue and other deferred liabilities 44,253,04618,267,139
7.1 U.S. Environmental Protection Agency (EPA) Clean School Bus Program (the "EPA Program")
Lion all-electric school buses are eligible under the EPA Program. Under the grant and rebate funding rounds of the EPA Program in which Lion participated directly and indirectly through school districts, once the EPA reviewed the payment request and confirmed that all required information was included, the EPA issued either a rebate payment under the rebate funding round or a reimbursement of expenditures under the grant funding round to the selectee such that payments made under the EPA Program were generally made before delivery of the applicable school bus.
Reimbursement of expenditures of $37.2 million were received during the third quarter of fiscal 2024 under the grant funding round. From the expense reimbursements received, the Company reimbursed $7.1 million (which is included as part of Trade and other payables as at September 30, 2024) to the EPA in October 2024, in accordance with the EPA's direction as to timing of disbursements. Such amounts are available to be drawn by Lion in the future based on the program parameters.
7.2 Non-repayable financial contribution under Project Innovation Program for the Development of a Mobilizing Project
On March 20, 2023, the Company entered into a non-repayable financial contribution agreement under the Project Innovation Program for the Development of a Mobilizing Project. The agreement provides for financing of up to C$26,991,772 until December 31, 2026. As at September 30, 2024, the Company received advances of government assistance of $12,475,417 (C$17,079,144) from Investissement Quebec relating to vehicle development project costs, of which $8,925,787 has been incurred and recorded as a reduction of intangible assets.


15
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8- LONG-TERM DEBT AND OTHER DEBTS
September 30, 2024December 31, 2023
$$
Credit Agreement with Banking Syndicate, secured, maturing August 11, 2025 (Note 8.1)
117,100,000 70,000,000 
Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (Note 8.2)
27,307,848 23,573,074 
Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Manufacturing Plant and Innovation Center (Note 8.3)
15,455,189 15,124,280 
Loans on research and development tax credits and subsidies receivable, maturing November 30, 2024 (Note 8.4)
22,659,723 22,682,595 
Secured loans for the acquisition of rolling stock, maturing between December 2023 and August 2024 (Note 8.5)
— 10,361 
Credit facility for the supplier payment program (Note 8.6)
9,254,2434,363,520
Non-Convertible Debentures issued as part of 2023 Debenture Financing (Note 8.7, Note 8.7.1)
47,539,002 44,532,212 
Convertible Debentures issued as part of 2023 Debenture Financing (Note 8.7, Note 8.7.2)
49,494,383 44,656,323 
Investissement Quebec secured loan under the Project ESSOR related to the financing of equipment at the Saint-Jerome Manufacturing Plant (Note 8.8)
3,825,667 — 
292,636,055 224,942,365 
Current portion of long-term debt and other debts149,540,872 27,056,476 
Long-term portion of long-term debt and other debts143,095,183 197,885,889 
8.1 Credit Agreement with Banking Syndicate
On August 11, 2021, Lion entered into a credit agreement with a syndicate of lenders represented by National Bank of Canada, as administrative agent and collateral agent, and including Bank of Montreal and Federation des Caisses Desjardins du Quebec (the “Revolving Credit Agreement”).
The Revolving Credit Agreement was amended on January 25, 2022 to increase the maximum principal amount that may become available from time to time under the revolving credit facility, subject to the borrowing base and compliance with the covenants contained under the Revolving Credit Agreement from $100,000,000 to $200,000,000. The Revolving Credit Agreement was further amended on July 19, 2023 (the "July 2023 Amendment") to permit the incurrence of the 2023 Debenture Financing (as defined in Note 8.7), extend the maturity of the Revolving Credit Agreement by one year to August 11, 2025, and provide for an availability block and the establishment of an interest reserve account.


16
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8- LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.1 Credit Agreement with Banking Syndicate (continued)
The Revolving Credit Agreement was further amended on July 1, 2024 (the "July 2024 Amendment") to provide for, amongst other things, the suspension during the covenant relief period (i.e., from June 30, 2024 until September 30, 2024), of the financial covenants applicable under the Revolving Credit Agreement namely the tangible net worth test and the springing fixed charge coverage ratio, as further described below, and to remove the requirements relating to an availability block and the funding of an interest reserve account which were introduced in the context of the July 2023 Amendment. On July 30, 2024, the lenders under the Revolving Credit Agreement also agreed to certain accommodations relating to the temporary inclusion of additional assets in the borrowing base until August 16, 2024. On September 30, 2024, the Company entered into additional amendments to the Revolving Credit Agreement (the “September 2024 Amendment”) to provide for, amongst other things, the extension of the period applicable to the covenant relief period from September 30, 2024 to November 15, 2024.
The revolving credit facility under the Revolving Credit Agreement is available for use to finance working capital and for other general corporate purposes, and available to be drawn subject to a borrowing base comprised of eligible accounts (including insured or investment grade accounts) and eligible inventory, in each case, subject to customary eligibility and exclusionary criteria, advance rates and reserves.
The revolving credit facility under the Revolving Credit Agreement currently bears interest at a floating rate by reference to the Canadian prime rate or the Canadian Overnight Repo Rate Average ("CORRA") rate, if in Canadian dollars, or the US base rate or Term Secured Overnight Financing Rate ("SOFR"), if in US dollars, as applicable, plus the relevant applicable margin. The July 2024 Amendment also provides for certain increases in the applicable pricing grid, the effective deferral of the interest payable under the revolving credit facility during the covenant relief period, and an applicable 3-month SOFR rate for existing draws maturing at the end of the covenant relief period, as well as certain increased reporting requirements, including obligations relating to the delivery by the Company of an updated inventory appraisal report as well as the delivery during each week of the covenant relief period of updated 13-week cash flow projections. Pursuant to July 2024 Amendment, the Company will also be subject to limitations on the use of any advances made under the revolving credit facility until such time that the amount available to be drawn under the revolving credit facility equals or exceeds 50% of the total borrowing capacity under the revolving credit facility for 30 consecutive days. In addition, the September 2024 Amendment provides that the Company may not, subject to limited exceptions, accumulate or maintain cash or cash equivalent investments in an amount greater than $5,000,000, failing which the Company shall use any excess thereof to promptly repay the loan outstanding on the Revolving Credit Agreement.







17
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8- LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.1 Credit Agreement with Banking Syndicate (continued)
As at September 30, 2024, the weighted average all-in interest rate was 8.6%, including stamping fees and spread, divided as follows:
Repricing dateInterest Rate
SOFR loans in the amount of US$17,100,000
October 2024
6.94%- 9.42%, including spread of 1.50%- 4.00%
US base loans in the amount of US$100,000,000
October 2024
 9.25%- 11.75%, including spread of 0.25%- 2.75%
As at December 31, 2023, the weighted average all-in interest rate was 6.96%, including stamping fees and spread, divided as follows:
Repricing dateInterest Rate
Loans in the amount of US$70,000,000
January 2024
6.94% - 6.98%, including spread of 1.50%
The Revolving Credit Agreement matures on August 11, 2025. The obligations under the Revolving Credit Agreement are secured by a first priority security interest, hypothec and lien on substantially all of Lion’s and certain of its subsidiaries’ movable property and assets (subject to certain exceptions and limitations). The Revolving Credit Agreement includes certain customary affirmative covenants, restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets and thresholds. The Revolving Credit Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds.
Finally, except during the covenant relief period, the Revolving Credit Agreement requires Lion to maintain certain financial ratios and namely, an all times tangible net worth test and a springing fixed charge coverage ratio based on a minimum availability test which may, from time to time, impact the maximum amount available under the revolving credit facility. In accordance with the July 2024 Amendment and the September 2024 Amendment, the Company will be required during the covenant relief period to maintain a minimum amount of available liquidity (calculated based on the maximum amount that can be drawn under the revolving credit facility and cash on hand) of up to C$15,000,000, subject to limited exceptions. The requirement under the July 2023 Amendment related to the availability block and the establishment of an interest reserve account was removed as part of the July 2024 Amendment. On November 15, 2024, at the end of the covenant relief period, the Company will be required to maintain certain financial ratios, namely an all times tangible net worth test of $40,000,000, a springing fixed charge coverage ratio based on a minimum availability test which may, from time to time, impact the maximum amount available under the revolving credit facility and a reduced minimum amount of available liquidity.
8.2 Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center
On July 1, 2021, the Company entered into an interest-bearing secured loan agreement with Investissement Quebec (the “IQ Loan”) relating to the construction of the battery manufacturing plant (the "Battery Plant") and innovation center (the "Innovation Center" and collectively with the Battery Plant, the "Lion Campus").

18
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.2 Investissement Quebec secured loan related to Battery Manufacturing Plant and Innovation Center (continued)
The IQ Loan provides for financing of up to C$50,000,000. On July 19, 2023, in connection with the 2023 Debenture Financing (as defined in Note 8.7), the IQ Loan was amended (the "IQ Loan 2023 Amendment") to allow holders of the Non-Convertible Debentures to benefit from a second-priority hypothec on substantially all movable/personal property of the Company, subject to certain exceptions in regards to excluded assets, and a first-rank hypothec on each of the immovable/real rights related to the Company’s Innovation Center facility located in Mirabel, Quebec and Battery Plant equipment financed by Investissement Quebec.
As part of the IQ Loan 2023 Amendment, the potential forgiveness of up to 30% of the IQ Loan subject to certain criteria tied to the Company and to the operations of the Lion Campus, including the creation and maintenance of workforce and certain minimum spending related to R&D activities was replaced with certain financial penalties of up to C$3,000,000 and/or C$15,000,000 for the Company, pro-rated based on the proportion of criteria achieved and the borrowing amount relative to the C$50,000,000 maximum. Funds will be provided to the Company by way of reimbursement of a predetermined percentage of qualified expenditures incurred by the Company, such that the ultimate amount to be received by the Company from Investissement Quebec is dependent upon qualified expenditures being made by the Company in connection with the Lion Campus. The Company will conduct work, incur expenses and fund all costs from its own capital resources, and then submit claims to Investissement Quebec for reimbursement of a predetermined percentage of eligible qualified expenditures up to C$50,000,000. Disbursement by Investissement Quebec is conditional upon, among other things, the Company’s compliance with certain affirmative and negative covenants as set out in the IQ Loan, including covenants relating to Company’s creation and maintenance of workforce, operations and R&D activities.
The IQ Loan bears interest at a fixed rate of 4.41%, and will be repayable over a ten-year term, beginning in June 2027. The IQ Loan contains certain affirmative and negative covenants, including covenants relating to the Company’s workforce, operations and research and development activities and to the location of its head office in the Province of Quebec, as well as certain financial covenants. Following the IQ Loan 2023 Amendment, and the purchase of the equipment used in the battery factory of the Company, the obligations under the IQ Loan will be secured by a second-priority hypothec on the Company’s immovable (real) property rights related to the Innovation Center facility located on the Lion Campus and the equipment used in connection with the battery factory of the Company, and a hypothec on substantially all of the Company’s other movable property and assets (subject to certain exceptions and limitations in regards to excluded assets) ranking after those securing the Revolving Credit Agreement, the Non-Convertible Debentures and the Finalta-CDPQ Loan Agreement.
8.3 Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Plant and Innovation Center
On August 19, 2021, the Company entered into an unsecured non-interest bearing loan agreement with the Strategic Innovation Fund of the Government of Canada relating to the construction of the Lion Campus (the “SIF Loan”).


19
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.3 Strategic Innovation Fund of the Government of Canada unsecured loan related to Battery Plant and Innovation Center (continued)
The SIF Loan provides for financing of up to C$49,950,000, of which up to 30% is expected to be forgiven subject to the satisfaction of certain criteria tied to the Company and to the operations of the facilities, including the creation and maintenance of workforce and certain minimum spending related to research and development activities. On June 25, 2024, the SIF Loan, which is repayable over a 15-year term, was amended to modify the repayment date to begin in April 2030. The SIF Loan contains certain affirmative and negative covenants, including relating to the Company’s workforce, operations and research and development activities and to the location of its head office.

As at September 30, 2024, the SIF Loan has a nominal value of $21,807,465 (December 31, 2023: $21,982,156) and is discounted at the rate of 4.03%. As at September 30, 2024, the difference between the proceeds received and the fair value of the debt of $7,410,092 (December 31, 2023: $7,329,216) was accounted as a government grant and recorded as a reduction of property, plant and equipment in the amount of $7,072,058 (December 31, 2023: $7,018,905) and intangible assets in the amount of $338,034 (December 31, 2023: $310,311).
The Group has recognized the following movements related to the SIF Loan:
September 30, 2024December 31, 2023
$$
Beginning balance15,124,2806,189,814
Addition185,486 8,903,080 
Accretion expense445,209 403,408 
Foreign currency translation adjustment(299,786)(372,022)
Ending balance15,455,18915,124,280
8.4 Loans on research and development tax credits and subsidies receivable
Finalta-CDPQ Loan Agreement
On November 8, 2022, Lion entered into the Finalta-CDPQ Loan Agreement with Finalta, as lender and administrative agent, and Caisse de dépôt et placement du Québec ("CDPQ") (through one of its subsidiaries), as lender, to finance certain refundable tax credits and grants under government programs. The Finalta-CDPQ Loan Agreement provides for a loan facility of up to a principal amount of C$30,000,000. The Finalta-CDPQ Loan Agreement was amended on July 1, 2024 to provide for a minimum available liquidity requirement aligned during the covenant relief period with the one added to the Revolving Credit Agreement (see Note 8.1) pursuant to the July 2024 Amendment. Following the end of the covenant relief period, the minimum available liquidity requirement under the Finalta-CDPQ Loan Agreement will correspond to C$25,000,000 until maturity.


20
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)

8 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.4 Loans on research and development tax credits and subsidies receivable (continued)
Finalta-CDPQ Loan Agreement (continued)
Further, the Finalta-CDPQ Loan Agreement provides for an increase in the applicable interest rate from 10.95% per annum to 12.95% and capitalization of 50% of the interest payable during the covenant relief period. All other material terms and conditions of the amended loan agreement, remain substantially unchanged. The Finalta-CDPQ Loan Agreement was further amended on September 30, 2024 to extend the November 6, 2024 maturity date until November 30, 2024. The amendment also provides that the minimum available liquidity requirement under the Finalta CDPQ Loan Agreement will remain aligned during the covenant relief period with the one applicable during such period under the Revolving Credit Agreement. The non-substantial modification of the Finalta-CDPQ Loan Agreement did not have a significant impact on the carrying amount of the debt.
The obligations thereunder are secured by a first priority security interest, hypothec and lien in certain tax credits and government grants and a subordinate security interest, hypothec and lien in substantially all other movable property and assets. The Finalta-CDPQ Loan Agreement includes certain customary restrictions and negative covenants on Lion’s and its subsidiaries’ activities, subject to certain exceptions, baskets, and thresholds. The Finalta-CDPQ Loan Agreement also provides for customary events of default, in each case, subject to customary grace periods, baskets and materiality thresholds. Upon the occurrence and during the continuance of an event of default, the lenders would be entitled to demand the immediate repayment of all amounts owing to them under the Finalta-CDPQ Loan Agreement and/or the lenders may exercise their other rights, remedies and/or recourses. An aggregate amount of C$30,000,000 was advanced under the Finalta-CDPQ Loan Agreement on November 8, 2022 upon entering into the Finalta-CDPQ Loan Agreement and an aggregate amount of C$588,359 in capitalized interests under the July 2024 Amendment is outstanding as of the date hereof.
8.5 Secured loans for the acquisition of rolling stock
As at September 30, 2024, the Group had no outstanding secured loans related to the financing of the acquisition of rolling stock. As of December 31, 2023, the Group had outstanding secured loans, maturing from December 2023 to August 2024, related to the financing of the acquisition of rolling stock in the amount of $10,361.
8.6 Supplier credit facility for the supplier payment program
On February 8, 2023, the Company entered into a revolving credit facility with National Bank of Canada (the "Supplier Credit Facility") to finance the Company’s accounts payable related to good or services purchased in the normal course of its operations. On May 8, 2024, financing under the Supplier Credit Facility, which is insured by Export Development Canada ("EDC") was increased from up to $5,000,000, to up to $10,000,000. Each term loan tranche has a period of minimum 30 days and a maximum of 120 days. Each advance expires at the later of the expiry date of the invoice payable or the date indicated as the expiry date on the term note and accepted by the National Bank of Canada and cannot be prepaid in whole or in part. The Supplier Credit Facility is subject to an annual review and may be cancelled by National Bank of Canada at any time.


21
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.6 Supplier Credit facility for the supplier payment program (continued)
The Supplier Credit Facility bears interest at a floating rate by reference to the SOFR for a comparable period, plus the relevant credit adjustment spread of 2.5%, an increase of 1.0% resulting from the amendment on May 8, 2024.
As at September 30, 2024 and December 31, 2023, the carrying amounts for Supplier Credit Facility were as follows:
September 30, 2024December 31, 2023
$$
Carrying amount
Presented in long-term debt and other debts of which suppliers have received payments$9,254,243$4,363,520
Range of payment due date
Liabilities that are part of the arrangements119-120 days after invoice date119 - 120 days after invoice date
Comparable trade payables that are not part of the arrangementsNet 30 days - net 60 days Net 30 days
8.7 2023 Debenture Financing
On July 19, 2023, the Company closed concurrent financing transactions for aggregate gross proceeds for the Company of $142,920,845 (the “2023 Debenture Financing”).
The 2023 Debenture Financing consists of:
i.the issuance by way of private placement of senior unsecured convertible debentures (the “Convertible Debentures”) for gross proceeds of $74,005,000. The Group allocated proceeds in the amount of $30,342,059 to the fair value of the conversion options on the convertible debt instruments (refer to Note 9) and $43,662,941 to the Convertible Debentures (refer to Note 8.7.2).
ii.the issuance by way of private placement of senior secured non-convertible debentures (the “Non-Convertible Debentures”) and the issuance by way of private placement to the holders of Non-Convertible Debentures of a number of common share purchase warrants (the "July 2023 Warrants") for gross proceeds of $68,915,845 (C$90,900,000). The Group allocated proceeds in the amount of $24,767,843 to the fair value of the July 2023 Warrants (refer to Note 10.4) and $44,148,002 to the Non-Convertible debentures at inception (refer to Note 8.7.1).
At issuance, transactions costs of $1,919,701 were netted against the proceeds received from the Convertible Debenture and $1,910,149 were netted against the proceeds received from the Non-Convertible Debenture.

22
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.7.1 Non-Convertible Debentures issued as part of 2023 Debenture Financing
The Non-Convertible Debentures with a principal amount of $68,915,845 (C$90,900,000) bear interest at the rate of 11% per annum and are payable in cash quarterly. The Company amended the Non-Convertible Debentures to provide for the capitalization of 50% of the interest payable as at June 30, 2024 under the non-convertible debentures during the covenant relief period, which capitalized interest will be due and payable at the end of such covenant relief period at the same time as the interest payable for the interest period ending on September 30, 2024. The non-substantial modification to the Non-Convertible Debentures did not have a significant impact on the carrying amount of the debt.
The Non-Convertible Debentures will mature on July 19, 2028. The Company has the right, at any time since January 19, 2024, upon 30-day notice, to redeem all or part of the principal amount thereunder, without penalty, at a price equal to one hundred per cent (100%) of the principal amount so redeemed, plus accrued and unpaid interest on the principal amount so repaid, accruing to the date of such redemption.
The Non-Convertible Debentures contain customary covenants for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Non-Convertible Debentures, and (ii) that a default shall only occur under the Non-Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company’s consolidated financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period), in addition to certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Québec.
The Non-Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, (i) the occurrence of an event of default under the Revolving Credit Agreement if such default results in the acceleration of the payments owed thereunder and (ii) the occurrence of an event of default under any other debt instrument of the Company with a principal amount exceeding US$15,000,000 if such default permits the acceleration of the payment of such debt.
The Non-Convertible Debentures constitute senior secured obligations of the Company and will be secured by a hypothec and other liens on substantially all of the Company’s and certain of its subsidiaries’ movable/personal property as well as on the immovable/real rights related to the Company’s Innovation Center and guaranteed by such subsidiaries.
The Non-Convertible Debentures were recorded at the estimated fair value of $42,237,853 using an effective interest rate of 22.54% per annum at the time of issuance on July 19, 2023, representing proceeds received from the issuance of the Non-Convertible Debenture of $44,148,002, less an amount of $1,910,149 incurred as a direct cost in the closing of the financing.

23
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.7.1 Non-Convertible Debentures issued as part of 2023 Debenture Financing (continued)
The Group has recognized the following movements related to the Non-Convertible Debenture:
September 30, 2024December 31, 2023
$$
Beginning Balance44,532,21242,237,853
Accretion expense3,877,666 2,346,874 
Foreign currency translation adjustment(870,876)(52,515)
Ending balance47,539,00244,532,212
8.7.2 Convertible Debentures issued as part of 2023 Debenture Financing
The Convertible Debentures, with a principal amount of $74,005,000 bear interest at the rate of 13% per annum, compounded monthly on the last day of each month. Prior to any accrual date, the Company has the right, at its discretion, to make an election to pay interest accrued on the principal for the applicable month in cash (in which case any interest so paid shall not be compounded). The Convertible Debentures will mature on July 19, 2028. The Convertible Debentures contain customary covenants and events of default for an instrument of its nature, including covenants relating to compliance with the financial ratios and negative covenants included in the Revolving Credit Agreement (as defined below) (provided (i) that any amendment to the financial ratios to which the lenders under the Revolving Credit Agreement consent will automatically be incorporated in the Convertible Debentures, and (ii) that a default shall only occur under the Convertible Debentures if a financial ratio default occurs and is continuing on the date that is fifteen business days following the delivery of the Company’s consolidated financial statements evidencing such event of default, and only if the lenders under the Revolving Credit Agreement have not waived or tolerated such event of default before the expiry of this fifteen business day period).
The Convertible Debentures also include certain covenants relating to maintaining the current headquarters, employees and facilities of the Company in the province of Québec and certain covenants limiting the incurrence of capital expenditures over the term of the Convertible Debentures, including limits on capital expenditures towards increasing production capacity at the Company’s manufacturing facilities beyond certain capacity as well as limits on the incurrence of maintenance and other capital expenditures.
The Convertible Debentures contain customary events of default for an instrument of its nature, including, among other things, the occurrence of an event of default under any other debt of the Company with a principal amount exceeding US$15,000,000 if such default results in the acceleration of the amounts owed thereunder.





24
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.7.2 Convertible Debentures issued as part of 2023 Debenture Financing (continued)
Upon the occurrence of an event of default under the Convertible Debentures or, if later, at the expiry of any agreed-upon period for curing an event of default, as the case may be, holders of Convertible Debentures will have the right, upon giving written notice to the Company, to (i) require the Company to redeem all of their Convertible Debentures, or (ii) require that the principal amount of the Convertible Debentures, plus any accrued, compounded and unpaid interest, be converted into Common Shares, with the number of Common Shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment as set forth below.
In connection with the Debenture Financing, the Company issued 258,155 Common Shares in the aggregate (the “Closing Fee Shares”) to the holders of Convertible Debentures, representing 0.75% of the principal amount of Convertible Debentures, based on the 5-day volume weighted average price (“VWAP”) of the Common Shares on the NYSE on July 14, 2023.
The Convertible Debentures were recorded at the estimated fair value of $41,743,240 using an effective interest rate of 21.02% per annum at the time of issuance on July 19, 2023, representing the proceeds received from the issuance of the Convertible Debenture of $43,662,941, less an amount of $1,919,701 incurred as a direct cost in the closing of the financing.
The Group has recognized the following movements related to the Convertible Debenture:
September 30, 2024December 31, 2023
$$
Beginning balance44,656,32341,743,240
Accretion expense4,838,060 2,913,083 
Ending balance49,494,38344,656,323
8.8 Essor Loan
On June 27, 2024, the Company entered into an agreement with Investissement Quebec providing for an unsecured loan under the ESSOR program in the amount of C$5,000,000 ($3,653,102), which loan may, under certain conditions, be drawn up to C$7,500,000 ($5,479,652) (the "ESSOR loan"). The ESSOR loan has an initial term of three years, bears interest at a fixed annual rate of 13% per annum and provides, subject to the terms and conditions therein, for a moratorium of 12 months on the payment of any principal and interest thereunder. Interest incurred during the moratorium of 12 months are capitalized to the principal of the loan.






25
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
8 - LONG-TERM DEBT AND OTHER DEBTS (CONTINUED)
8.8 Essor Loan (continued)
The Group has recognized the following movements related to the ESSOR Loan:
September 30, 2024
$
Beginning balance—
Addition3,653,102 
Capitalized interests121,266 
Foreign currency translation adjustment51,299
Ending balance3,825,667
As at September 30, 2024 and December 31, 2023 and for the periods then ended, the Company was in compliance with all the covenants and financial ratios included in its long-term debt and other debts above.
9 - CONVERSION OPTIONS ON CONVERTIBLE DEBT INSTRUMENTS
The Convertible Debentures are convertible at the holders’ option into common shares at a conversion price of US$2.58 per common share (reflecting a 20% premium over the 5-day VWAP for the common shares on the New York Stock Exchange (“NYSE”) calculated on July 14, 2023, the last trading day prior to announcement of the 2023 Debenture Financing). The conversion price is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the Toronto Stock Exchange ("TSX") relating to anti-dilution mechanisms.
Upon the occurrence of a “fundamental change”, including a change of control of the Company or the Company failing to comply with the covenants to maintain the current headquarters, employees and facilities of the Company in the province of Québec, holders of Convertible Debentures will either (i) convert all of their Convertible Debentures, with the number of common shares issuable upon such conversion being subject to a grid-based “make-whole” adjustment, or (ii) require the Company to repurchase for cash all of their Convertible Debentures at a repurchase price equal to 150% of the principal amount and the accrued, compounded and unpaid interest. In the event holders of Convertible Debentures elect to convert their Convertible Debentures upon a fundamental change or an event of default, the number of common shares issuable upon such conversion will be subject to a grid-based “make-whole” adjustment pursuant to which the conversion rate determining the number of common shares issuable will be increased by a number of additional common shares (the “Additional Shares”), (i) in the case of a conversion in connection with a fundamental change, based on a reference price on the date on which the fundamental change occurs or becomes effective, or (ii) in the case of a conversion following an event of default, based on a reference price on the date on which the holder exercises its conversion right.

26
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
9 - CONVERSION OPTIONS ON CONVERTIBLE DEBT INSTRUMENTS (CONTINUED)
The fair value of the conversion options on convertible debt instruments was determined using the Black-Scholes or the binomial option pricing model taking into account the following assumptions:
September 30, 2024December 31, 2023
Exercise price ($)2.582.58
Share price ($)0.681.77
Volatility61.6%57.0%
Risk-free interest rate2.80%3.28%
Expected conversion option life (years)3.794.54
The expected volatility was determined by reference to historical data of comparable entities over the expected life of the conversion options on convertible debt instruments.
The Group has recognized the following conversion options on convertible debt instruments:
September 30, 2024December 31, 2023
$$
Beginning balance25,034,07330,342,059
Paid in kind interest7,454,040 3,551,316 
Fair value adjustment(27,755,832)(8,533,552)
Foreign currency translation adjustment(691,245)(325,750)
Ending balance4,041,03625,034,073
10 - SHARE WARRANT OBLIGATIONS
10.1 Warrants issued to a customer
On July 1, 2020, in connection with the entering into of a master purchase agreement and a work order (collectively, the “MPA”) with Amazon Logistics, Inc., the Company issued warrants to purchase common shares of the Company (the “Warrant”) to Amazon.com NV Investment Holdings LLC (the “Warrantholder”) which vests, subject to the terms and conditions contained therein, based on the aggregate amount of spending by Amazon.com, Inc. and its affiliates on the Group’s products or services. At the election of the Warrantholder, any vested portion of the Warrant can be exercised either on a cash basis by the payment of the applicable exercise price or on a net issuance basis based on the in-the-money value of the Warrant. The exercise price of the Warrant corresponds to $5.66 per share. The Warrant grants the Warrantholder the right to acquire up to 35,350,003 common shares of the Company.



27
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
10 - SHARE WARRANT OBLIGATIONS (CONTINUED)
10.1 Warrants issued to a customer (continued)
There was an initial vesting of a portion of the Warrant which are exercisable for 5,302,511 common shares as at September 30, 2024 and December 31, 2023. The remaining portion of the Warrant vests in three tranches based on the aggregate amount of spending by Amazon.com, Inc. and its affiliates on Group products or services.
The Warrant has a term of 8 years. Full vesting of the Warrant requires spending of at least $1.2 billion on Group products or services over the term of the Warrant, subject to accelerated vesting upon the occurrence of certain events, including a change of control of the Group or a termination of the MPA for cause.
The fair value of the Warrant was determined using the Black-Scholes option pricing model taking into account the following assumptions:
September 30, 2024December 31, 2023
Exercise price ($)5.665.66
Share price ($)0.681.77
Volatility61.6%57.0%
Risk-free interest rate2.80%3.30%
Expected warrant life (years)3.754.50
The Group has recognized the following contract asset and Warrant obligation:
September 30, 2024December 31, 2023
Contract asset$$
Beginning Balance 13,528,64613,211,006
Foreign currency translation adjustment(273,600)317,640
Ending Balance 13,255,04613,528,646
September 30, 2024December 31, 2023
Share warrant obligation$$
Beginning Balance1,897,7912,172,269
Fair value adjustment(1,651,394)(262,569)
Foreign currency translation adjustment(53,228)(11,909)
Ending Balance193,1691,897,791



28
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
10 - SHARE WARRANT OBLIGATIONS (CONTINUED)
10.2 Warrants issued as part of the business combination transaction
Upon completion of the business combination transaction on May 6, 2021, each outstanding warrant to purchase shares of Northern Genesis Acquisition Corp. (“NGA”)’s common stock was converted into a warrant to acquire one common share of the Company at a price of $11.50 per share until May 6, 2026, subject to adjustment in certain customary events. A total of 27,111,741 NGA warrants were converted into 27,111,741 Business Combination Warrants, 15,972,672 of which are publicly traded and 11,139,069 of which are private.
As at September 30, 2024 and December 31, 2023, there were 27,111,323 Business Combination Warrants outstanding of which 15,972,364 are publicly traded and 11,138,959 are private.
The public Business Combination Warrants may be redeemed by the Company, in whole at a price of $0.01 per public Business Combination Warrant, provided that the last reported sales price of the Company’s common shares equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period commencing once the public Business Combination Warrants become exercisable and ending on the third trading day prior to the date on which the Company gives proper notice of such redemption.
The fair value of the public Business Combination Warrants was determined using their market trading price as follows:
September 30, 2024December 31, 2023
Warrant price ($)0.01 0.05
Each private Business Combination Warrant may not be redeemed by the Company so long as they are held by NGA or any of its permitted transferees. Once transferred to any person that is not NGA or any of its permitted transferees, a private Business Combination Warrant becomes treated as a public Business Combination Warrant.
The fair value of the private Business Combination Warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:
September 30, 2024December 31, 2023
Exercise price ($)11.5011.50
Share price ($)0.681.77
Volatility66.8%53.0%
Risk-free interest rate3.08%3.81%
Expected warrant life (years)1.582.33
The expected volatility was determined by reference to historical data of comparable share prices over the expected life of the private Business Combination Warrants.

29
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
10 - SHARE WARRANT OBLIGATIONS (CONTINUED)
10.2 Warrants issued as part of the business combination transaction (continued)
The Group has recognized the following Business Combination Warrant obligations:
Public warrantsPrivate warrantsTotal
$$$
Beginning balance at January 1, 2024905,737177,1831,082,920
Fair value adjustment(703,309)(170,214)(873,523)
Foreign currency translation adjustment(24,944)(4,060)(29,004)
Balance at September 30, 2024177,4842,909180,393
Public warrantsPrivate warrantsTotal
$$$
Beginning balance at January 1, 20237,075,767914,8817,990,648
Fair value adjustment(6,173,511)(727,873)(6,901,384)
Foreign currency translation adjustment3,481 (9,825)(6,344)
Balance at December 31, 2023905,737177,1831,082,920
10.3 Warrants issued as part of the December 2022 Offering
On December 16, 2022, the Company closed the "December 2022 Offering", pursuant to which the Company issued 19,685,040 "2022 Warrants". On January 17, 2023, the Company announced the exercise and closing of the underwriters’ over-allotment option with respect to the offering of units closed in December 2022, pursuant to which the Company issued 2,952,755 2022 Warrants. Each whole 2022 Warrant entitles the holder to purchase one common share for a price of $2.80 per share for a period of five years ending on December 15, 2027, subject to adjustment in certain customary events.
The over-allotment option aggregate gross proceeds of $2,907,226 were allocated to the 2022 Warrants, representing the fair value of the 2022 Warrants on the day of issuance. Issuance fees of $247,586 were recognized in administrative expenses in the consolidated statement of loss and comprehensive loss, relating to legal and other professional costs ($58,916) and net commissions paid to the agents ($188,670). As at September 30, 2024 and December 31, 2023, all 2022 Warrants are outstanding.
The fair value of the 2022 Warrants was determined using their market trading price as follows:
September 30, 2024December 31, 2023
Warrant price ($)0.07 0.41

30
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
10 - SHARE WARRANT OBLIGATIONS (CONTINUED)
10.3 Warrants issued as part of the December 2022 Offering (continued)
The Group has recognized the following warrant obligation:
September 30, 2024December 31, 2023
$$
Beginning balance8,558,06613,080,646
Additions— 2,907,226 
Fair value adjustment(6,211,333)(7,378,042)
Foreign currency translation adjustment(250,485)(51,764)
Ending balance2,096,2488,558,066
10.4 July 2023 Warrants issued as part of 2023 Debenture Financing
In connection with the 2023 Debenture Financing, the Company issued Warrants ("July 2023 Warrants") to holders of Non-Convertible Debentures (refer to Note 8.7) entitling them to purchase, until July 19, 2028, 22,500,000 common shares in the aggregate at an exercise price of C$2.81 per common share (representing the 5-day VWAP of the common shares on the TSX as of July 14, 2023). The exercise price of the July 2023 Warrants is subject to customary adjustments, including for share splits or consolidation, share dividends, rights offerings, asset or other distributions and above market repurchases of shares (including above market exchanges or tender offers), in each case in compliance with the rules and requirements of the TSX relating to anti-dilution mechanisms. Upon a change of control of the Company, the Company will have the right to redeem and cancel all of the outstanding July 2023 Warrants for a cash purchase price based on the remaining term of the July 2023 Warrants and the value of the consideration offered or payable per common share in the transaction constituting the change of control. In addition, upon a change of control of the Company resulting in (or which is reasonably anticipated to result in) the common shares ceasing to be listed on a stock exchange, the holders of July 2023 Warrants may require the Company to redeem and cancel all July 2023 Warrants at the Redemption Price subject to and on the date such transaction resulting in a change of control is completed.
The fair value of the July 2023 Warrants was determined using the Black-Scholes option pricing model taking into account the following assumptions:
September 30, 2024December 31, 2023
Exercise price (C$)2.812.81
Share price (C$)0.922.36
Volatility61.6%57.0%
Risk-free interest rate2.80%3.28%
Expected warrant life (years)3.794.54

31
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
10 - SHARE WARRANT OBLIGATIONS (CONTINUED)
10.4 July 2023 Warrants issued as part of 2023 Debenture Financing (continued)
The expected volatility was determined by reference to historical data of comparable entities over the expected life of the July 2023 Warrants. The Group has recognized the following warrant obligation:
September 30, 2024December 31, 2023
$$
Beginning balance18,043,42624,767,843
Fair value adjustment(14,484,315)(6,421,117)
Foreign currency translation adjustment(507,212)(303,300)
Ending balance3,051,89918,043,426
11 - SHARE-BASED COMPENSATION
Compensation expense related to the share-based compensation was recognized in the consolidated statements of loss and comprehensive loss as follows:
Three months endedNine months ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
$$$$
Administrative expenses342,624984,7431,063,2563,638,877
Selling expenses95,567339,582242,0191,156,001
438,1911,324,3251,305,2754,794,878
11.1 Stock options
The following table summarizes the outstanding options as at September 30, 2024 and 2023 and changes during the nine months then ended:
September 30, 2024September 30, 2023
Number of stock optionsWeighted average exercise priceNumber of stock optionsWeighted average exercise price
C$C$
Outstanding, beginning of period10,759,5831.659,547,1852.11
Granted3,157,8261.351,921,1512.78
Forfeited(546,263)2.67(167,199)6.20
Outstanding, end of period13,371,1461.5411,301,1372.16
Exercisable, end of period9,248,6231.348,238,4311.53

32
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
11 - SHARE-BASED COMPENSATION (CONTINUED)
11.1 Stock options (continued)
The description of the Company's stock option plan is included in Note 16 of annual consolidated financial statements for the year ended December 31, 2023.
11.2 Restricted share units
The following table summarizes the outstanding restricted share units as at September 30, 2024 and 2023 and changes during the nine months then ended:
September 30, 2024September 30, 2023
Number of restricted share unitsWeighted average exercise priceNumber of restricted share unitsWeighted average exercise price
C$C$
Outstanding, beginning of period897,2403.99297,6588.35
Granted2,130,4171.35811,4582.75
Settled(1,629)23.02——
Forfeited(285,582)2.51(62,908)5.46
Outstanding, end of period2,740,4462.081,046,2084.18
Vested, end of period432,8581.87——
The description of the Company's restricted share unit plan is included in Note 16 of annual consolidated financial statements for the year ended December 31, 2023.
11.3 Deferred share units
September 30, 2024September 30, 2023
Number of deferred share unitsWeighted average exercise priceNumber of deferred share unitsWeighted average exercise price
C$C$
Outstanding, beginning of period779,9753.21301,0914.23
Granted——224,3422.85
Settled(30,981)2.79——
Outstanding, end of period748,9943.23525,4333.64
Vested, end of period748,9943.23525,4333.64
The description of the Company's deferred share unit plan is included in Note 16 of annual consolidated financial statements for the year ended December 31, 2023.

33
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
12 - RESTRUCTURING COSTS
During the last quarter of 2023 and during the nine months ended September 30, 2024, the Company implemented restructuring initiatives, which included workforce reductions aimed at rationalizing the Company’s cost structure and improving its ability to reach its profitability objectives.
The following table summarizes the workforce reduction activities related to restructuring:
September 30, 2024December 31, 2023
$$
Liability beginning of period711,622—
Expenses2,163,2691,426,487
Payments(2,581,409)(714,865)
Liability end of period293,482711,622
13 - FINANCE COSTS
Finance costs for the reporting periods consist of the following:
Three months endedNine months ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
$$$$
Interest on long-term debt and other debtsa
8,528,3902,671,77722,509,1154,925,806
Interest on lease liabilitiesa
1,246,141416,8723,598,3761,155,720
Accretion expense3,064,2582,275,0789,138,2652,275,078
Financing cost267,2302,599,7291,412,7493,362,855
Other(81,765)(235,136)(724,422)(569,701)
13,024,2547,728,32035,934,08311,149,758
a.Net of capitalized borrowing costs of $330,460 for the three months ended September 30, 2024 (three months ended September 30, 2023: $1,616,097), $263,048 included in interest on long-term debt and other debts and $67,412 in interest on lease liabilities (three months ended September 30, 2023: $805,410 included in interest on long-term debt and other debts and $810,687 in interest on lease liabilities). The weighted average interest rate used to capitalize the borrowing costs is 14.35% for the three months ended September 30, 2024 (three months ended September 30, 2023: 7.24%).

Net of capitalized borrowing costs of $1,078,379 for the nine months ended September 30, 2024 (nine months ended September 30, 2023: $4,763,783), $852,737 included in interest on long-term debt and other debts and $225,642 in interest on lease liabilities (nine months ended September 30, 2023: $2,564,892 included in interest on long-term debt and other debts and $2,198,891 in interest on lease liabilities). The weighted average interest rate used to capitalize the borrowing costs is 8.27% for the nine months ended September 30, 2024 (nine months ended September 30, 2023: 6.87%).

34
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
14 - EARNINGS PER SHARE
Three months endedNine months ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
$$$$
Net loss
(33,945,985)(19,852,573)(74,908,660)(47,223,604)
Basic weighted average number of common shares outstanding226,217,541226,134,423226,212,329223,679,796
Basic loss per share
(0.15)(0.09)(0.33)(0.21)
Basic weighted average number of common shares outstanding226,217,541226,134,423226,212,329223,679,796
Plus dilutive impact of stock options, RSUs, DSUs, and warrants————
Diluted weighted average number of common shares outstanding226,217,541226,134,423226,212,329223,679,796
Diluted loss per share
(0.15)(0.09)(0.33)(0.21)
Excluded from the above calculations for the three and nine months ended September 30, 2024 and 2023 are all outstanding stock options, share warrant obligations, convertible debentures, RSUs, and DSUs, which are deemed to be anti-dilutive.
15 - SHARE CAPITAL
15.1 ATM Program
On June 17, 2022, the Company established an "at-the-market" equity program (the "ATM Program") that allowed the Company to issue and sell, from time to time through a syndicate of agents, newly issued common shares of the Company, for an aggregate offering amount of up to $125,000,000 (or the Canadian dollar equivalent). On July 19, 2023, the Company terminated its ATM Program which expired in July 2024.
During the three months ended September 30, 2023, the Company issued 1,287,272 common shares outstanding as at June 30, 2023, for aggregate net proceeds of $2,341,367 and issued no common shares pursuant to the ATM Program. During the nine months ended September 30, 2023, the Company issued 4,894,060 common shares pursuant to the ATM Program at an average price of $1.93 per share for aggregate gross proceeds of $9,430,894, and for aggregate net proceeds of $8,580,405 after the deduction of equity issuance fees of $850,489. Equity issuance fees for the nine months ended September 30, 2023 were mainly related to net commissions paid ($141,462) to the agents under the ATM Program and legal fees ($709,027).



35
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
15 - SHARE CAPITAL (CONTINUED)
15.2 December 2022 Offering
On January 17, 2023, the Company closed the over-allotment option with respect to the December 2022 Offering in full, to purchase an additional 2,952,755 Units at a price of $2.54 per unit with respect to the December 2022 Units Offering. This resulted in aggregate gross proceeds to the Group of $7,499,998, and for aggregate net proceeds of $6,835,476 after the deduction of underwriting commission and offering costs of $664,522.
Each Unit consisted of one common share in the capital of the Company and one common share purchase warrant. The allocation of the proceeds between the warrants and the common shares at the issuance date was based on allocating the fair value of the warrants based on the Black-Scholes option pricing model (refer to Note 10.3), with the residual value allocated to the common shares.
Pursuant to the December 2022 Offering over-allotment, the Company issued 2,952,755 common shares of which gross proceeds of $4,592,772 were allocated to the common shares, and for net proceeds of $4,175,836 after the deduction of equity issuance fees of $416,936. Equity issuance fees were mainly related to legal costs ($114,294) and net commissions paid to the agents ($302,642).
16 - SUPPLEMENTAL CASH FLOW DISCLOSURE
The depreciation and amortization is detailed as follows:
Three months endedNine months ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
$$$$
Depreciation – property, plant and equipment5,033,9832,901,94513,165,5936,894,309
Depreciation – right-of-use assets2,716,3042,392,6237,754,5295,678,477
Amortization – intangible assets1,293,7671,945,5205,319,4085,142,318
Total depreciation and amortization9,044,054 7,240,088 26,239,530 17,715,104 
See Note 5 for additional information related to the depreciation of right-of-use assets.

36
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
16 - SUPPLEMENTAL CASH FLOW DISCLOSURE (CONTINUED)
The net change in non-cash working capital is detailed as follows:                        
Three months endedNine months ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
$$$$
Inventories17,217,218 (29,483,874)29,476,819 (67,694,338)
Accounts receivable9,399,934 (19,533,183)22,905,724 (37,485,745)
Prepaid expenses(383,740)3,315,968 (979,680)3,147,863 
Trade and other payables (1)
(8,063,895)6,027,042 (26,988,956)21,432,260 
Deferred revenue and other deferred liabilities
31,755,817 7,994,775 24,072,109 32,759,025 
49,925,334 (31,679,272)48,486,016 (47,840,935)
(1)For the three months ended September 30, 2024, the net change in trade and other payables excludes trade and other payables as at September 30, 2024 related to the following non-cash working capital items: $196,729 in additions of intangible assets, $6,693,187 in acquisition of property, plant and equipment and includes trade and other payables as at June 30, 2024 related to the additions of intangible assets of $862,241 and related to the acquisition of property, plant and equipment of $7,758,536.

For the nine months ended September 30, 2024, the net change in trade and other payables excludes trade and other payables as at September 30, 2024 related to the following non-cash working capital items: $196,729 in additions of intangible assets and $6,693,187 related to the acquisition of property, plant and equipment and includes trade and other payables as at December 31, 2023 related to the additions of intangible assets of $634,331 and related to the acquisition of property, plant and equipment of $11,750,398.

For the three months ended September 30, 2023, the net change in trade and other payables excludes trade and other payables as at September 30, 2023 related to the following non-cash working capital items: $474,790 related to the additions of intangible assets and $7,928,670 related to the acquisition of property, plant and equipment and includes trade and other payables as at June 30, 2023 related to the additions of intangible assets of $630,775 and related to the acquisition of property, plant and equipment of $13,541,507.

For the nine months ended September 30, 2023, the net change in trade and other payables excludes trade and other payables as at September 30, 2023 related to the following non-cash working capital items: $474,790 related to the additions of intangible assets and $7,928,670 related to the acquisition of property, plant and equipment and includes trade and other payables as at December 31, 2022 related to the additions of intangible assets of $4,757,926 and related to the acquisition of property, plant and equipment of $16,229,912.





37
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
17 - ENTITY-WIDE DISCLOSURES
The Group has one reportable operating segment, the manufacturing and sales of electric vehicles in Canada and in the United States.The Group’s revenue from external customers is divided into the following geographical areas:
Three months endedNine months ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Revenue from external customers$$$$
Canada13,694,34037,866,75680,402,985136,272,790
United States16,932,26442,480,85835,980,53556,794,072
30,626,60480,347,614116,383,520193,066,862
During the three months ended September 30, 2024, 30.8% of the Group's revenue depended on two customers, 19.8% and 11.0%, respectively (three months ended September 30, 2023: no significant customers). During the nine months ended September 30, 2024, 13.8% of the Group's revenue depended on one customer (nine months ended September 30, 2023: no significant customers).
The Group’s non-current assets are allocated to geographic areas as follows:
September 30, 2024
CanadaUnited StatesTotal
$$$
Other non-current assets7,503,122 376,611 7,879,733 
Property, plant and equipment88,698,728 97,912,425 186,611,153 
Right-of-use assets36,917,971 54,068,739 90,986,710 
Intangible assets180,325,767 8,844,791 189,170,558 
Contract asset13,255,046 — 13,255,046 
326,700,634 161,202,566 487,903,200 
December 31, 2023
CanadaUnited StatesTotal
$$$
Other non-current assets6,812,370 182,445 6,994,815 
Property, plant and equipment94,684,032 103,852,651 198,536,683 
Right-of-use assets35,469,879 54,193,260 89,663,139 
Intangible assets167,106,057 8,597,200 175,703,257 
Contract asset13,528,646 — 13,528,646 
317,600,984 166,825,556 484,426,540 

38
The Lion Electric Company
Notes to Condensed Interim Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(Unaudited, In US dollars, except number of shares or where otherwise indicated)
17 - ENTITY-WIDE DISCLOSURES (CONTINUED)
Geographical areas are determined according to where the sales take place and according to the location of the long-term assets.