UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

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☐		Preliminary Proxy Statement
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☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to §240.14a-12

Northern Genesis Acquisition Corp.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

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Prospectus of:		Proxy Statement of:
The Lion Electric Company		Northern Genesis Acquisition Corp.

March 24, 2021

PROPOSED BUSINESS COMBINATION—YOUR VOTE IS VERY IMPORTANT

To the stockholders of Northern Genesis Acquisition Corp.:

On November 30, 2020, The Lion Electric Company (“Lion”), a corporation existing under the Business Corporations Act (Québec), Lion Electric Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Lion (“Merger Sub”), and Northern Genesis Acquisition Corp., a Delaware corporation (“NGA”), entered into a Business Combination Agreement and Plan of Reorganization (the “Business Combination Agreement”) pursuant to which Merger Sub, a wholly-owned subsidiary of Lion, will merge through a statutory merger with and into NGA (the “Business Combination”). As a result of the Business Combination, the separate corporate existence of Merger Sub will cease, and NGA will continue as the surviving corporation and a wholly-owned subsidiary of Lion.

Immediately prior to the effective time of the Business Combination (the “Effective Time”), Lion will implement a reorganization (the “Lion Pre-Closing Reorganization”), which will include (i) a split of the common shares of Lion (the “Lion Common Shares”), whereby each Lion Common Share outstanding immediately prior to such share split will be converted into 4.1289 Lion Common Shares immediately following such share split, (ii) the amendment and restatement, effective as of the Effective Time, of Lion’s articles, and (iii) the adoption by Lion, effective as of the Effective Time, of new bylaws.

At the closing of the Business Combination (the “Closing”), each outstanding share of NGA’s common stock, par value $0.0001 per share (the “NGA Common Stock”) will be converted into the right to receive one Lion Common Share and each outstanding warrant to purchase shares of NGA Common Stock, with each whole warrant exercisable for one share of NGA Common Stock at an exercise price of $11.50 (each, an “NGA Warrant”), will be converted into a warrant to acquire a number of Lion Common Shares equal to the number of shares of NGA Common Stock underlying such NGA Warrant, subject to the same terms and conditions as were applicable to the NGA Warrant. Effective immediately prior to the conversions contemplated above, but immediately after the completion of the Lion Pre-Closing Reorganization, any and all units of NGA (“NGA Units”) shall be immediately and automatically detached and broken out into their constituent parts, such that a holder of a NGA Unit shall be deemed to hold one share of NGA Common Stock and one-half of one NGA Warrant and such underlying constituent securities shall be converted in accordance with the above.

Prior to the Business Combination, there has been no public market for the Lion Common Shares. Lion currently anticipates that, following the Business Combination, the Lion Common Shares will trade on the New York Stock Exchange (the “NYSE”) and the Toronto Stock Exchange (the “TSX”) under the new symbol “LEV”, and Lion Warrants will trade on the NYSE under the new symbol “LEV WS” and on the TSX under the new symbol “LEV.WT.” NGA’s Common Stock, NGA Units and NGA Warrants are currently listed for trading on the NYSE under the symbols “NGA,” “NGA.U,” and “NGA WS,” respectively. Lion has applied for listing of the Lion Common Shares and Lion Warrants on the NYSE and the TSX. Neither the NYSE nor the TSX has conditionally approved Lion’s listing application and there is no assurance that such exchanges will approve the listing applications. Upon the closing of the Business Combination, the NGA securities will be delisted from the NYSE.

Lion will be an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, and is therefore eligible to take advantage of certain reduced reporting requirements otherwise applicable to other public companies.

NGA will hold a special meeting of its stockholders (together with any adjournment thereof, the “Special Meeting”) on April 23, 2021 at 10:00 a.m. Eastern Time, via live webcast (i) to consider and vote upon a proposal to approve and adopt the Business Combination Agreement and the transactions contemplated thereby, (ii) to consider and vote upon a proposal to approve and adopt an amendment (the “Corrective Amendment”) to Article Sixth of the Amended and Restated Certificate of Incorporation of NGA, dated August 17, 2020 (the “NGA Certificate”), subject to approval of the Business Combination by NGA stockholders and solely in connection with the Business Combination, in order to provide for the issuance of NGA Warrants to purchase up to 3,000,000 shares of NGA Common Stock (the “NGA Working Capital Warrants”) to be issued by NGA to Northern Genesis Sponsor, LLC (the “Sponsor”) immediately prior to the Effective Time, the proceeds of which shall be used by NGA for the payment of the transaction expenses in connection with the Business Combination and other working capital purposes, and (iii) to consider and vote upon a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal or the Corrective Amendment Proposal.

The Board of Directors of NGA recommends that NGA stockholders vote (i) “FOR” the approval and adoption of the Business Combination Agreement and the transactions contemplated thereby, (ii) “FOR” the approval and adoption of the Corrective Amendment to provide for the issuance of the NGA Working Capital Warrants in connection with but prior to the Closing, and (iii) “FOR” the approval to adjourn the Special Meeting, if necessary or appropriate, to, among other reasons, solicit additional proxies.

YOUR VOTE IS VERY IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. Whether or not you plan to attend the Special Meeting, please take the time to vote by using the internet or by telephone as described in this proxy statement/prospectus or by completing the enclosed proxy card and mailing it in the enclosed envelope. Information about the meeting, the Business Combination and the other business to be considered at the meeting is contained in this proxy statement/prospectus. You are urged to read this proxy statement/prospectus carefully.

In particular, you should read the section entitled “Risk Factors” beginning on page 21 for a discussion of some of the risks you should consider in evaluating the Business Combination Agreement and the Business Combination and how they will affect you.

Neither the Securities and Exchange Commission nor any state or Canadian securities regulator has approved or disapproved the Business Combination Agreement and the Business Combination described in this proxy statement/prospectus or the securities to be issued in the Business Combination contemplated by the Business Combination Agreement, passed upon the merits or fairness of the Business Combination or related transactions, or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated March 24, 2021 and is first being mailed to NGA stockholders on or about March 24, 2021.

REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates by reference important business and financial information about Lion and NGA from documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your oral or written request. You can obtain the documents incorporated by reference into this proxy statement/prospectus by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

The Lion Electric Company		Northern Genesis Acquisition Corp.
921 chemin de la Rivière-du-Nord Saint-Jérôme (Québec) J7Y 5G2		4801 Main Street, Suite 1000 Kansas City, MO 64112
Attention: Nicolas Brunet, Executive Vice-President and Chief Financial Officer		Attention: Ken Manget, Chief Financial Officer
Telephone: (450) 432-5466		Telephone: (816) 514-0324

If you would like to request documents, please do so by April 16, 2021 in order to receive them before the Special Meeting.

See the section entitled “Where You Can Find Additional Information” on page 254.

NOTICE OF SPECIAL MEETING OF NGA STOCKHOLDERS

TO BE HELD APRIL 23, 2021

To stockholders of Northern Genesis Acquisition Corp.:

NOTICE IS HEREBY GIVEN that the special meeting (together with any adjournment thereof, the “Special Meeting”) of stockholders of Northern Genesis Acquisition Corp. (“NGA”) will be held at 10:00 a.m., Eastern time, on April 23, 2021, via live webcast. To participate in the meeting, visit www.virtualshareholdermeeting.com/NGA2021SM and enter the 12 digit control number included on your proxy card. If you hold your shares through a bank, broker or other nominee, you will need to take additional steps to participate in the meeting, as described in the accompanying proxy statement/prospectus. At the Special Meeting, NGA’s stockholders will be asked to consider and vote upon the following proposals:

 

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The Business Combination Proposal—To consider and vote upon a proposal to (a) approve and adopt the Business Combination Agreement and Plan of Reorganization, dated as of November 30, 2020 (the “Business Combination Agreement”), among NGA, The Lion Electric Company, a corporation existing under the Business Corporations Act (Québec) (“Lion”), and Lion Electric Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Lion (“Merger Sub”), pursuant to which Merger Sub will merge through a statutory merger with and into NGA, with NGA surviving the Business Combination as a wholly-owned subsidiary of Lion and (b) approve such Business Combination and the other transactions contemplated by the Business Combination Agreement (the “Business Combination” and such proposal, the “Business Combination Proposal”) (Proposal No. 1). A copy of the Business Combination Agreement is attached to the accompanying proxy statement/prospectus as Annex A.

 

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The Corrective Amendment Proposal—To consider and vote upon a proposal to approve and adopt an amendment (the “Corrective Amendment”) to Article Sixth of the Amended and Restated Certificate of Incorporation of NGA, dated August 17, 2020 (the “NGA Certificate”), subject to approval of the Business Combination by NGA’s stockholders and solely in connection with the Business Combination, in order to provide for the issuance of NGA Warrants to purchase up to 3,000,000 shares of NGA Common Stock (the “NGA Working Capital Warrants”) to be issued by NGA to Northern Genesis Sponsor, LLC (the “Sponsor”) immediately prior to the Effective Time, the proceeds of which shall be used by NGA for the payment of transaction expenses in connection with the Business Combination and other working capital purposes (such proposal, the “Corrective Amendment Proposal”) (Proposal No. 2). A copy of the Corrective Amendment is attached to the accompanying proxy statement/prospectus as Annex B.

 

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The Adjournment Proposal—To consider and vote upon a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal or the Corrective Amendment Proposal (the “Adjournment Proposal” and, together with the Business Combination Proposal and the Corrective Amendment Proposal, the “Proposals”) (Proposal No. 3).

The Special Meeting will be completely virtual. There will be no physical meeting location and the Special Meeting will only be conducted via live webcast at the following address: www.virtualshareholdermeeting.com/NGA2021SM.

Only holders of record of NGA Common Stock at the close of business on March 18, 2021 are entitled to notice of the virtual Special Meeting and to vote at the virtual Special Meeting and any adjournments thereof. A complete list of NGA’s stockholders of record entitled to vote at the virtual Special Meeting will be available at the virtual Special Meeting and for ten days before the virtual Special Meeting at NGA’s principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the virtual Special Meeting.

Pursuant to the NGA Certificate, NGA is providing the holders of shares of NGA Common Stock originally sold as part of the NGA Units issued in NGA’s initial public offering (the “NGA IPO” and such shares, the

“NGA Public Shares” and such holders, the “Public Stockholders”) with the opportunity to redeem, upon the Closing, NGA Public Shares then held by them for cash at the applicable redemption price per share equal to the quotient obtained by dividing (a) the aggregate amount on deposit in the trust account (“Trust Account”) that holds the proceeds (including interest not previously released to NGA to pay its franchise and income taxes) from the NGA IPO and concurrent private placements of warrants to the Sponsor, by (b) the total number of NGA Public Shares; provided that NGA will not redeem any NGA Public Shares to the extent that such redemption would result in NGA having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) of less than $5,000,001. For illustrative purposes, based on the fair value of cash and marketable securities held in the Trust Account as of March 17, 2021 of $319,605,157, the estimated per share redemption price would have been approximately $10.00. If a holder exercises its redemption rights, then such holder will be exchanging its NGA Public Shares for cash and will no longer own NGA Public Shares and will not participate in future growth of Lion, if any. Such a holder will be entitled to receive cash for its NGA Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to NGA’s transfer agent in accordance with the procedures described herein.

NGA cannot consummate the Business Combination unless the Business Combination Proposal is approved at the Special Meeting. The approval of the Business Combination Proposal requires the affirmative vote (online or by proxy) of the holders of a majority of the outstanding shares of NGA Common Stock entitled to vote thereon at the Special Meeting. The Corrective Amendment Proposal is conditioned on the approval of the Business Combination Proposal, but the Business Combination Proposal is not conditioned on the approval of the Corrective Amendment Proposal. The approval of the Corrective Amendment Proposal requires the affirmative vote (online or by proxy) of the holders of a majority of the outstanding shares of NGA Common Stock entitled to vote thereon at the Special Meeting. Approval of the Adjournment Proposal requires the affirmative vote (online or by proxy) of the holders of a majority of the outstanding shares of NGA Common Stock present and entitled to vote thereon at the Special Meeting. The Business Combination Proposal is not conditioned on the approval of the Adjournment Proposal.

As of March 17, 2021, there was $319,605,157 in the Trust Account. Each redemption of shares by Public Stockholders will decrease the amount in the Trust Account. NGA will not consummate the Business Combination if the redemption of shares would result in NGA’s failure to have at least $5,000,001 of net tangible assets. In addition, the Business Combination Agreement includes a condition to closing that NGA’s available cash (including the funds in the Trust Account) immediately prior to the effective time of the Business Combination, after taking into account payments required to satisfy redemptions of shares by Public Stockholders and the payment of NGA’s transaction costs, plus the aggregate amount of cash proceeds received by Lion in connection with its private placement of Lion Common Shares, equal or exceed $200 million.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. Whether or not you plan to attend the Special Meeting, please take the time to vote by using the internet or by telephone as described in this proxy statement/prospectus or by completing the enclosed proxy card and mailing it in the enclosed envelope. You may also submit a proxy by telephone or via the internet by following the instructions printed on your proxy card. If you hold your shares through a brokerage firm, bank or other nominee, you should direct the vote of your shares in accordance with the voting instruction form provided by the broker, bank or nominee.

The Board of Directors of NGA recommends that NGA stockholders vote (i) “FOR” the approval and adoption of the Business Combination Agreement and the transactions contemplated thereby, (ii) “FOR” the approval and adoption of the Corrective Amendment to provide for the issuance of the NGA Working Capital Warrants in connection with but prior to the Closing, and (iii) “FOR” the approval to adjourn the Special Meeting, if necessary or appropriate, to, among other reasons, solicit additional proxies.

Your attention is directed to the proxy statement/prospectus accompanying this notice (including the annexes thereto) for a more complete description of the proposed Business Combination and related transactions and each of the Proposals. NGA encourages you to read the accompanying proxy statement/prospectus carefully. If you have any questions or need assistance voting your shares, please contact NGA’s proxy solicitor, D.F.

King & Co., Inc., toll-free at (888) 605-1958 or collect at (212) 269-5550 or by email at nga@dfking.com. For assistance in French, please call 1-866-822-1243 or email nga-fr@astfinancial.com.

 

March 24, 2021				By Order of the Board of Directors,
				/s/ Ian Robertson
				Director and Vice Chair

STOCKHOLDERS WHO CANNOT ATTEND THE VIRTUAL SPECIAL MEETING ONLINE ARE REQUESTED TO VOTE AS PROMPTLY AS POSSIBLE. YOU MAY VOTE OVER THE INTERNET, BY TELEPHONE, OR BY MAIL.

TABLE OF CONTENTS

 

		Page
SUMMARY TERM SHEET			i
QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND NGA’S SPECIAL MEETING OF STOCKHOLDERS			v
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS			1
SELECTED HISTORICAL FINANCIAL INFORMATION OF LION			14
SUMMARY HISTORICAL FINANCIAL INFORMATION OF NGA			15
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			16
INDUSTRY AND MARKET DATA			17
SUMMARY OF RISK FACTORS			18
RISK FACTORS			21
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION			64
COMPARATIVE SHARE INFORMATION			73
CAPITALIZATION OF NGA, LION AND THE COMBINED ENTITY			74
THE NGA SPECIAL MEETING			75
PROPOSAL NO. 1—THE BUSINESS COMBINATION PROPOSAL			81
PROPOSAL NO. 2—THE CORRECTIVE AMENDMENT PROPOSAL			129
PROPOSAL NO. 3—THE ADJOURNMENT PROPOSAL			132
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF LION			133
BUSINESS OF LION			154
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF NGA			175
INFORMATION ABOUT NGA			180
EXECUTIVE COMPENSATION			190
MANAGEMENT AFTER THE BUSINESS COMBINATION			201
DESCRIPTION OF CERTAIN INDEBTEDNESS			212
DESCRIPTION OF SHARE CAPITAL OF LION			214
COMPARISON OF THE RIGHTS OF HOLDERS OF NGA COMMON STOCK AND LION COMMON SHARES			221
BENEFICIAL OWNERSHIP OF SECURITIES			241
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			247
LEGAL MATTERS			252
EXPERTS			252
HOUSEHOLDING INFORMATION			252
TRANSFER AGENT AND REGISTRAR OF LION			253

		Page
SUBMISSION OF STOCKHOLDER PROPOSALS			253
FUTURE STOCKHOLDER PROPOSALS			253
SERVICE OF PROCESS AND  ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. SECURITIES LAWS			253
WHERE YOU CAN FIND ADDITIONAL INFORMATION			254
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS			F-1

 

ANNEX A		Business Combination Agreement and Plan of Reorganization
ANNEX B		NGA Corrective Amendment
ANNEX C		Lion Amended and Restated Articles
ANNEX D		Lion Bylaws

TRADEMARKS

This proxy statement/prospectus includes certain trademarks, such as “Lion,” “LionBeat” and “LionEnergy,” which are registered under applicable intellectual property laws and are Lion’s property or for which Lion has pending applications or common law rights. Solely for convenience, the trademarks, and trade names referred to in this prospectus are listed without the ^®, and (TM) symbols, but Lion intends to assert, to the fullest extent under applicable law, its rights or the rights of the applicable licensors to these trademarks, and trade names.

CURRENCY

In this proxy statement/prospectus, unless otherwise specified, all monetary amounts are in U.S. dollars, all references to “US$,” “$,” “USD” and “dollars” mean U.S. dollars and all references to “C$” mean Canadian dollars.

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form F-4 filed with the U.S. Securities and Exchange Commission (“SEC”) by Lion (File No. 333-251847) (the “Registration Statement”), constitutes a prospectus of Lion under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the Lion Common Shares to be issued if the Business Combination described below is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the special meeting of NGA stockholders at which NGA’s stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Business Combination Agreement, among other matters.

As used in this prospectus/proxy statement, unless the context indicates or requires otherwise, all references to “Lion” refer to The Lion Electric Company together with its subsidiaries, on a consolidated basis.

This proxy statement/prospectus incorporates important business and financial information about Lion that is not included in or delivered with the document.

This information is available without charge to you upon written or oral request. To make this request, you should contact NGA’s proxy solicitor at:

D.F. King & Co., Inc.

48 Wall Street, 22^nd Floor

New York, NY 10005

Call Toll-Free: (888) 605-1958

Banks and Brokers Call: (212) 269-5550

nga@dfking.com

To obtain timely delivery of requested materials, you must request the information no later than five business days prior to the date of the Special Meeting. For assistance in French, please call 1-866-822-1243 or email nga-fr@astfinancial.com.

You may also obtain additional information about NGA from documents filed with the SEC by following the instruction in the section entitled “Where You Can Find Additional Information.”

SUMMARY TERM SHEET

This Summary Term Sheet, together with the sections entitled “Questions and Answers About the Business Combination and NGA’s Special Meeting of stockholders” and “Summary of the Proxy Statement/Prospectus,” summarizes certain information contained in this proxy statement/prospectus, but does not contain all of the information that is important to you. You should read carefully this entire proxy statement/prospectus, including the attached annexes, for a more complete understanding of the matters to be considered at the Special Meeting.

 

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NGA is a blank check company incorporated on May 27, 2020 as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. For more information about NGA, see the section entitled “Information About NGA.”

 

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There are currently 39,931,680 shares of NGA Common Stock issued and outstanding including 31,945,344 NGA Public Shares and 7,986,336 non-public shares of NGA Common Stock issued by NGA to the Sponsor prior to the NGA IPO (the “Founder Shares”). In addition, there are currently 24,111,741 NGA Warrants outstanding, consisting of 15,972,672 NGA Warrants (the “Public Warrants”) included in the NGA Units sold in the NGA IPO and 8,139,069 NGA Warrants issued to the Sponsor pursuant to a private placement in connection with the NGA IPO (the “Private Placement Warrants”). In addition, NGA may issue 3,000,000 NGA Working Capital Warrants to the Sponsor pursuant to a private placement in connection with the Business Combination, assuming approval of the Corrective Amendment Proposal (Proposal No. 2) by the NGA stockholders. Each whole NGA Warrant entitles the holder to purchase one whole share of NGA Common Stock for $11.50 per share. The NGA Warrants (or warrants issued in exchange therefor) will become exercisable upon the later of (i) 30 days after the completion of NGA’s initial business combination and (ii) 12 months following the NGA IPO, and will expire five years after the completion of such initial business combination or earlier upon redemption or liquidation. Once the NGA Warrants (or warrants issued in exchange therefor) become exercisable, NGA (or the issuer of any warrants issued in exchange therefor) may redeem the outstanding Public Warrants, in whole and not in part, for cash in accordance with, and subject to the terms of, that certain Warrant Agreement dated August 7, 2020 (the “Warrant Agreement”), by and between NGA and Continental Stock Transfer & Trust Company. The Private Placement Warrants and the NGA Working Capital Warrants (or warrants issued in exchange therefor) are non-redeemable so long as they are held by the Sponsor or its permitted transferees. As a result of the Business Combination, NGA Warrants will automatically be converted into Lion Warrants (as defined herein) exercisable for Lion Common Shares. Further, in connection with the listing of the Lion Warrants on the TSX, in accordance with the TSX’s listing requirements in respect of warrants, Lion will provide certain undertakings to the TSX to the effect that Lion will not exercise certain of its rights under the Warrant Agreement, including, notably, (i) lowering of the exercise price of the Lion Warrants and (ii) extending the duration of the Lion Warrants by delaying the expiration date thereof.

 

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Lion, a corporation existing under the Business Corporations Act (Québec), is an innovative manufacturer of zero-emission vehicles. Lion creates, designs, and manufactures all-electric commercial urban trucks and all-electric buses and minibuses for the school, paratransit, and mass transit markets. Lion believes it is a North American leader in electric transportation and each Lion vehicle is purpose-built for electric and entirely designed and assembled in-house, with its own chassis, truck cabin or bus body, proprietary battery technology with modular energy capacity and 100% Lion software integration. For more information about Lion, see the sections entitled “Business of Lion” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Lion.”

 

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On November 30, 2020, NGA entered into the Business Combination Agreement with Lion and its wholly-owned subsidiary, Merger Sub. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A.

 

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Pursuant to the Business Combination Agreement, and subject to the terms and conditions contained therein, Merger Sub will merge through a statutory merger with and into NGA, with NGA surviving

 

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the Business Combination as a wholly-owned subsidiary of Lion. For more information about the Business Combination Agreement and the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal.”

 

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Immediately prior to or concurrently with the Effective Time, the Lion Pre-Closing Reorganization will be implemented, which reorganization will include a split of the Lion Common Shares, whereby each Lion Common Share outstanding immediately prior to such share split will be converted into 4.1289 Lion Common Shares (subject to adjustments as contemplated in the Business Combination Agreement) immediately following such share split, the amendment and restatement, effective as of the Effective Time, of Lion’s articles and the adoption by Lion, effective as of the Effective Time, of new bylaws. For more information about the Business Combination Agreement and the Lion Pre-Closing Reorganization, see the section entitled “Proposal No. 1—The Business Combination Proposal—Lion Pre-Closing Reorganization and Amended and Restated Organizational Documents.”

 

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At the Closing, each outstanding share of NGA Common Stock will be converted into the right to receive from Lion one Lion Common Share and each outstanding NGA Warrant will be converted into a warrant to acquire a number of Lion Common Shares equal to the number of shares of NGA Common Stock underlying such NGA Warrant, subject to the same terms and conditions as were applicable to the NGA Warrant. For more information about the Business Combination Agreement and the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal.”

 

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The Closing is subject to the satisfaction (or waiver) of a number of conditions set forth in the Business Combination Agreement. For more information about the closing conditions to the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal—The Business Combination Agreement—Conditions to Closing of the Business Combination Agreement.”

 

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The Business Combination Agreement may be terminated at any time prior to the consummation of the Business Combination upon mutual written consent of NGA and Lion, or for other reasons in the circumstances specified in the Business Combination Agreement. For more information about the termination rights under the Business Combination Agreement, see the section entitled “Proposal No. 1—The Business Combination Proposal—The Business Combination Agreement—Conditions to Closing of the Business Combination Agreement—Termination.”

 

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The proposed Business Combination and the business of Lion involve numerous risks. For more information, see the section entitled “Risk Factors.”

 

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Under the NGA Certificate, in connection with the Business Combination, Public Stockholders may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the NGA Certificate. As of March 17, 2021, this would have amounted to approximately $10.00 per share. If a holder exercises its redemption rights, then such holder will be exchanging its NGA Public Shares for cash and will not receive Lion Common Shares following the completion of the Business Combination and will not participate in the future growth of Lion, if any. Such a holder will be entitled to receive cash for its NGA Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to NGA’s transfer agent at least two business days prior to the Special Meeting. For more information, see the section entitled “The NGA Special Meeting—Redemption Rights.”

 

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In connection with the execution of the Business Combination Agreement, on November 30, 2020, NGA and Lion entered into separate subscription agreements (collectively, the “Subscription Agreements”) with a number of investors (the “Subscribers”) pursuant to which the Subscribers agreed to purchase, and Lion agreed to sell to the Subscribers, an aggregate of 20,040,200 Lion Common Shares, for a purchase price of $10.00 per share and an aggregate purchase price of $200,402,000, in a private placement (the “PIPE Financing”). The closing of the sale of the Lion Common Shares pursuant to the Subscription Agreements is contingent upon, among other customary

 

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closing conditions, the consummation of the Business Combination immediately after the closing of the PIPE Financing. The purpose of the PIPE Financing is to raise additional capital which, together with the remaining balance in the Trust Account, is expected to be used to repay indebtedness and fund the growth strategy of Lion, which includes the establishment of a production facility in the United States, the development of proprietary battery modules and packs, the establishment of a new battery pack assembly factory, other research and development activities and an increase in working capital expected to be required to accommodate growth in revenues. For more information, see the section entitled “Proposal No. 1—The Business Combination Proposal—The Business Combination Agreement—Related Agreements.”

 

•

The Board of Directors of NGA (the “NGA Board”) considered various factors in determining whether to approve the Business Combination Agreement and the Business Combination. For more information about the NGA Board’s decision-making process, see the section entitled “Proposal No. 1—The Business Combination Proposal—NGA Board’s Reasons for the Approval of the Business Combination.”

 

•

In addition to voting on the approval of the Business Combination Proposal at the Special Meeting, NGA’s stockholders will also be asked to vote on the approval of the Corrective Amendment Proposal and the Adjournment Proposal. For more information about the Proposals, see the sections entitled “Proposal No. 2—The Corrective Amendment Proposal” and “Proposal No. 3—The Adjournment Proposal.”

 

•

Lion anticipates that, upon the Closing, the ownership of Lion will be as follows:

 

•

NGA’s Public Stockholders will own 33,195,344 Lion Common Shares (inclusive of 1,250,000 shares purchased in the PIPE Financing), which will constitute approximately 17.6% of the total issued and outstanding Lion Common Shares as of Closing;

 

•

the Sponsor will own 8,186,336 Lion Common Shares (inclusive of 200,000 shares purchased in the PIPE Financing by the managing members or other executive officers of the Sponsor), which will constitute approximately 4.3% of the total issued and outstanding Lion Common Shares as of Closing, subject to the distribution of such securities by Sponsor to its members upon or promptly following the Closing pursuant to Sponsor’s governing documents;

 

•

the existing shareholders of Lion will own 130,308,671 Lion Common Shares (inclusive of 1,762,500 shares purchased in the PIPE Financing), which will constitute approximately 69.1% of the total issued and outstanding Lion Common Shares as of Closing; and

 

•

the Subscribers will own (excluding any shares currently held or to be purchased in the PIPE Financing by any existing shareholders of Lion or NGA stockholders participating in the PIPE Financing) 16,827,700 Lion Common Shares, which will constitute approximately 8.9% of the total issued and outstanding Lion Common Shares as of Closing.

The number of shares and the interests set forth above are on a non-diluted basis and assume that (a) no Public Stockholders elect to have their NGA Public Shares redeemed, (b) the Lion Pre-Closing Reorganization is implemented immediately prior to or concurrently with Closing, (c) 20,040,200 Lion Common Shares are issued in the PIPE Financing, (d) 31,945,344 Lion Common Shares are issued to the NGA Public Stockholders in the Business Combination, (e) 7,986,336 Lion Common Shares are issued to the Sponsor in the Business Combination in respect of the Founder Shares, (f) the only NGA Public Stockholders who will purchase Lion Common Shares in the PIPE Financing are those who have filed a Schedule 13G or Schedule 13D with the SEC in respect of their beneficial ownership of shares of NGA Common Stock and (g) there are no other issuances of equity interests of Lion. The foregoing also does not account for the possibility that Sponsor, existing Lion shareholders, or any Subscriber (other than Subscribers which have filed a Schedule 13G or Schedule 13D in respect of their beneficial ownership of shares of NGA Common Stock) may be or become NGA Public Stockholders as a result of any purchase of NGA Public Shares in the NGA IPO or open market.

 

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Further, the foregoing ownership percentages do not account for the future exercise of any Lion warrants, options or other convertible securities that will be outstanding upon the Closing of the Business Combination, including those received by the holders of the NGA Warrants, the Specified Customer Warrant (as defined below), and stock options, the exercise of which may have a material impact on the foregoing ownership percentages.

The NGA Warrants will automatically be converted into warrants to purchase Lion Common Shares (“Lion Warrants”) upon the consummation of the Business Combination and will become exercisable upon the later of (i) 30 days after the completion of the Business Combination and (ii) 12 months following the NGA IPO, and will expire five years after the completion of the Business Combination or earlier upon their redemption or liquidation. Once the Lion Warrants held by holders of Public Warrants become exercisable, Lion may redeem such Lion Warrants, in whole and not in part, for cash in accordance with, and subject to the terms of, the Warrant Agreement. The Private Placement Warrants and NGA Working Capital Warrants, however, will be non-redeemable so long as they are held by the Sponsor or its permitted transferees.

For more information about the ownership of Lion upon the completion of the Business Combination and pro forma financial information, see the sections entitled “Summary of the Proxy Statement/Prospectus—Ownership of Lion After the Closing,” “Unaudited Pro Forma Consolidated Financial Information” and “Beneficial Ownership of Securities.”

 

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QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION AND

NGA’S SPECIAL MEETING OF STOCKHOLDERS

The following questions and answers briefly address some commonly asked questions about the Proposals to be presented at the Special Meeting of stockholders of NGA, including the proposed Business Combination. The following questions and answers do not include all the information that is important to NGA stockholders. The NGA Board urges NGA stockholders to carefully read this entire proxy statement/prospectus, including the annexes and other documents referred to herein.

 

Q:	Why am I receiving this proxy statement/prospectus?

 

A:

NGA stockholders are being asked to consider and vote upon, among other things, a proposal to approve and adopt the Business Combination Agreement, pursuant to which Merger Sub will merge through a statutory merger with and into NGA, with NGA surviving the Business Combination as a wholly-owned subsidiary of Lion.

At Closing, as a result of the Business Combination, (i) each outstanding share of NGA Common Stock will be cancelled and automatically converted into the right to receive one Lion Common Share and (ii) each NGA Warrant will automatically become exercisable for Lion Common Shares.

A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A. A copy of the Corrective Amendment is attached to this proxy statement/prospectus as Annex B. This proxy statement/prospectus and its annexes include important information about the proposed Business Combination and the other matters to be acted upon at the Special Meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its annexes.

 

Q:	What is being voted on at the Special Meeting?

 

A:	NGA stockholders will be asked to consider and vote upon the following proposals at the Special Meeting.

 

•

The Business Combination Proposal—a proposal to approve and adopt the Business Combination Agreement and the transactions contemplated thereby (Proposal No. 1).

 

•

The Corrective Amendment Proposal—a proposal to approve and adopt the Corrective Amendment to the NGA Certificate in order to provide for the issuance of the NGA Working Capital Warrants immediately prior to the Closing (Proposal No. 2).

 

•

The Adjournment Proposal—a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal (Proposal No. 3).

NGA may not consummate the Business Combination unless the Business Combination Proposal is approved by the holders of a majority of the issued and outstanding shares of NGA Common Stock entitled to vote thereon at the Special Meeting. The Business Combination Proposal is not conditioned on the approval of the Corrective Amendment Proposal or the Adjournment Proposal.

 

Q:	What will happen in the Business Combination?

 

A:	On November 30, 2020, Lion and Merger Sub entered into the Business Combination Agreement with NGA. Pursuant to the Business Combination Agreement, and subject to the terms and conditions contained therein, Merger Sub will merge through a statutory merger with and into NGA, with NGA surviving the

 

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merger (the “Surviving Corporation”). After giving effect to the Business Combination, NGA will become a wholly-owned subsidiary of Lion. At the Closing, 39,931,680 Lion Common Shares will be issued to the current holders of NGA Common Stock, including the Sponsor, in the Business Combination in exchange for all outstanding shares of NGA Common Stock, and up to 27,111,741 Lion Common Shares will be reserved for issuance in respect of NGA Warrants. For more information about the Business Combination Agreement and the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal—The Business Combination Agreement.”

 

Q:	Why is NGA proposing the Business Combination?

 

A:	NGA was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving NGA and one or more businesses.

On August 20, 2020, NGA completed the NGA IPO, consisting of 30,000,000 NGA Units, with each NGA Unit consisting of one share of NGA Common Stock and one-half of one NGA Warrant, each whole warrant to purchase one share of NGA Common Stock at a price of $11.50 per share, generating gross proceeds to NGA of $300,000,000. Simultaneously with the closing of the IPO, NGA completed the sale of 7,750,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $7,750,000. On August 27, 2020, in connection with the underwriters’ election to partially exercise their over-allotment option, NGA sold an additional 1,945,344 NGA Units at $10.00 per unit and sold an additional 389,069 Private Placement Warrants at $1.00 per Private Placement Warrant, generating total gross proceeds of $19,842,509. Since the NGA IPO, NGA’s activity has been limited to the search for a prospective initial business combination.

Lion is an innovative manufacturer of zero-emission vehicles. Lion creates, designs, and manufactures all-electric commercial urban trucks and all-electric buses and minibuses for the school, paratransit, and mass transit markets. Lion believes it is a North American leader in electric transportation and designs, builds, and assembles all of its vehicles’ components, including, chassis, battery packs, truck cabins and bus bodies each Lion vehicle is purpose-built for electric and entirely designed and assembled in-house, with its own chassis, truck cabin or bus body, proprietary battery technology with modular energy capacity and 100% Lion software integration.

The NGA Board considered a wide variety of factors in connection with its evaluation of the Business Combination, including its review of the results of the due diligence conducted by NGA’s management and NGA’s advisors. This due diligence review included meetings and calls with Lion’s management regarding Lion’s business model, operations and forecasts; legal, tax and accounting due diligence reviews conducted by NGA’s advisors; consultation with legal and financial advisors and industry experts; financial and valuation analysis of Lion and the Business Combination; and the financial statements of Lion. For more information about the Business Combination Agreement and the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal—Background of the Business Combination.”

Following the foregoing process, the NGA Board concluded that a transaction with Lion would present the most attractive opportunity to maximize value for NGA stockholders, and the NGA Board ultimately determined that the Business Combination with NGA was the most attractive potential transaction for NGA. For more information about the Business Combination Agreement and the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal—NGA Board’s Reasons for the Approval of the Business Combination.”

 

Q:	Are the Proposals conditioned on one another?

 

A:	NGA cannot consummate the Business Combination unless the Business Combination Proposal is approved at the Special Meeting. The Business Combination Proposal is not conditioned on the approval of any other Proposal set forth in this proxy statement/prospectus.

 

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The Corrective Amendment Proposal is conditioned on the approval of the Business Combination Proposal. The Adjournment Proposal is not conditioned on the approval of any other Proposal set forth in this proxy statement/prospectus.

 

Q:	What conditions must be satisfied to complete the Business Combination?

 

A:

There are a number of closing conditions in the Business Combination Agreement, including the approval by NGA stockholders of the Business Combination Proposal and that NGA has a specified minimum net tangible assets and a minimum of available cash. For more information about the conditions that must be satisfied or waived prior to the completion of the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal.”

 

Q:	How will Lion be managed and governed following the Business Combination?

 

A:

Immediately after the Closing, Lion’s Board will consist of eight directors: Sheila Colleen Bair, Marc Bedard, Christopher Jarratt, Pierre Larochelle, Pierre-Olivier Perras, Ian Robertson, Michel Ringuet and Pierre Wilkie. Mr. Larochelle serves and will continue to serve upon Closing as Chairman of Lion’s Board. Immediately after the Closing, it is anticipated that the following individuals will be the officers of Lion: Marc Bedard, as CEO – Founder, Nicolas Brunet, as Executive Vice-President and Chief Financial Officer and Yannick Poulin, as Chief Operational Officer. For more information about Lion’s Board and officers, see the sections entitled “Board of Directors of Lion Following the Business Combination” and “Management After the Business Combination.”

 

Q:	Will Lion obtain new financing in connection with the Business Combination?

 

A:

The Subscribers have committed to purchase from Lion 20,040,200 Lion Common Shares, for a purchase price of $10.00 per share and an aggregate purchase price of $200,402,000, in the PIPE Financing. As of the date hereof, the Lion Common Shares are not traded on any stock exchange. Lion anticipates that, following Closing of the Business Combination, the Lion Common Shares will trade on the NYSE. In connection with the Closing, each outstanding share of NGA Common Stock will be converted into the right to receive one Lion Common Share. Based on the closing price of NGA Common Stock of $18.80 per share on March 23, 2021, the Lion Common Shares sold in the PIPE Financing would be valued at approximately $376,755,760 million if unrestricted and freely tradable.

 

Q:	What equity stake will NGA’s current stockholders and the holders of NGA’s Founder Shares hold in Lion following the consummation of the Business Combination?

 

A:	Lion anticipates that, upon the Closing, the ownership of Lion will be as follows:

 

•

the existing shareholders of Lion will own 130,308,671 Lion Common Shares (inclusive of 1,762,500 shares purchased in the PIPE Financing), which will constitute approximately 69.1% of the total issued and outstanding Lion Common Shares as of Closing;

 

•

the NGA Public Stockholders will own 33,195,344 Lion Common Shares (inclusive of 1,250,000 shares purchased in the PIPE Financing), which will constitute approximately 17.6% of the total issued and outstanding Lion Common Shares as of Closing;

 

•

the Subscribers will own (excluding any shares currently held or to be purchased in the PIPE Financing by any existing shareholders of Lion or stockholders of NGA participating in the PIPE Financing) 16,827,700 Lion Common Shares, which will constitute approximately 8.9% of the total issued and outstanding Lion Common Shares as of Closing; and

 

•

the Sponsor will own 8,186,336 Lion Common Shares (inclusive of 200,000 shares purchased in the PIPE Financing by the managing members or other executive officers of the Sponsor), which will

 

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constitute approximately 4.3% of the total issued and outstanding Lion Common Shares as of Closing, subject to the distribution of such securities by Sponsor to its members upon or promptly following the Closing pursuant to Sponsor’s governing documents.

The number of shares and the interests set forth above (a) assume that (i) no NGA Public Stockholders elect to have their NGA Public Shares redeemed, (ii) the Lion Pre-Closing Reorganization is implemented immediately prior to or concurrently with Closing, (iii) 20,040,200 Lion Common Shares are issued in the PIPE Financing, (iv) 31,945,344 Lion Common Shares are issued to the NGA Public Stockholders in the Business Combination, (v) 7,986,336 Lion Common Shares are issued to the Sponsor in the Business Combination in respect of the Founder Shares, (vi) the only NGA Public Stockholders who will purchase Lion Common Shares in the PIPE Financing are those who have filed a Schedule 13G or Schedule 13D with the SEC in respect of their beneficial ownership of shares of NGA Common Stock and (vii) there are no other issuances of equity interests of NGA or Lion and (b) are calculated on a non-diluted basis and do not take into account (i) the possibility that Sponsor, existing Lion Shareholders, or any Subscriber (other than Subscribers which have filed a Schedule 13G or Schedule 13D in respect of their beneficial ownership of shares of NGA Common Stock) may be or become an NGA Public Stockholder as a result of any purchase of NGA Public Shares in the NGA IPO or open market, or (ii) the warrants to purchase Lion Common Shares that will remain outstanding immediately following the Business Combination, including those received by holders of NGA Warrants and the Specified Customer Warrant (as defined below) and any other convertible equity securities or instruments of Lion that will remain outstanding immediately following the Business Combination, including stock options.

If the facts are different than these assumptions or if convertible securities are exercised, the percentage ownership of NGA’s stockholders in Lion following the Business Combination will be different. For example, assuming that all 24,111,741 NGA Warrants (including the 8,139,069 Private Placement Warrants, but excluding the 3,000,000 NGA Working Capital Warrants to be issued in connection with but prior to the Closing) were exercisable and exercised following completion of the Business Combination and further assuming that no NGA Public Stockholders elect to have their NGA Public Shares redeemed, and that each other assumption set forth in the preceding paragraph remains the same, then the ownership of Lion, upon Closing, would be as follows:

 

•

the existing shareholders of Lion will own 130,308,671 Lion Common Shares (inclusive of 1,762,500 shares purchased in the PIPE Financing), which will constitute 61.3% of the total issued and outstanding Lion Common Shares as of Closing;

 

•

the NGA Public Stockholders will own 49,168,016 Lion Common Shares (inclusive of 1,250,000 shares purchased in the PIPE Financing), which will constitute 23.1% of the total issued and outstanding Lion Common Shares as of Closing;

 

•

the Subscribers will own (excluding any shares currently held or to be purchased in the PIPE Financing by any existing shareholders of Lion or stockholders of NGA participating in the PIPE Financing) 16,827,700 Lion Common Shares, which will constitute 7.9% of the total issued and outstanding Lion Common Shares as of Closing; and

 

•

the Sponsor will own 16,325,405 Lion Common Shares (inclusive of 200,000 shares purchased in the PIPE Financing by the managing members or other executive officers of the Sponsor), which will constitute 7.7% of the total issued and outstanding Lion Common Shares as of Closing, subject to the distribution of such securities by Sponsor to its members upon or promptly following the Closing pursuant to Sponsor’s governing documents.

The Lion Warrants will become exercisable upon the later of (i) 30 days after the completion of the Business Combination and (ii) 12 months following the NGA IPO and will expire five years after the completion of the Business Combination or earlier upon their redemption or liquidation. Once the Lion Warrants held by holder of Public Warrants become exercisable, Lion may redeem such Lion Warrants, in whole and not in part, for cash in accordance with, and subject to the terms of, the Warrant Agreement. The

 

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Private Placement Warrants and the NGA Working Capital Warrants, however, will be non-redeemable so long as they are held by the Sponsor or its permitted transferees.

For more information about the ownership of Lion upon completion of the Business Combination, see the sections entitled “Summary of the Proxy Statement/Prospectus—Ownership of Lion After the Closing”, “Unaudited Pro Forma Consolidated Financial Information” and “Beneficial Ownership of Securities.”

 

Q:	Why is NGA proposing the Corrective Amendment set forth in the Corrective Amendment Proposal?

 

A:

As described in NGA’s final prospectus dated August 17, 2020 filed in connection with the NGA IPO (the “NGA Prospectus”), the Sponsor may, but is not obligated to, loan funds to NGA to fund transaction costs incurred by NGA in connection with a business combination and other working capital needs of NGA, with the Sponsor having the right to elect to receive, in lieu of repayment of up to $3,000,000 of such funding, one warrant for each $1.00 of such funding. Such warrants are expressly provided for, as “Working Capital Warrants,” in the Warrant Agreement, pursuant to which all other outstanding NGA Warrants have been issued.

As described in the NGA Prospectus, each Working Capital Warrant is identical (including as to exercise price ($11.50 per NGA common share), exercisability and exercise period) to the Private Placement Warrants and are entitled to registration rights. All such Private Placement Warrants and the Working Capital Warrants are identical to NGA’s Public Warrants except that they may be exercised on a cashless (net issuance) basis and they are not redeemable by NGA so long as they are held by NGA’s Sponsor or its permitted transferees.

In connection with entry into the Business Combination Agreement, and in order to facilitate NGA’s ability to consummate the Business Combination, NGA desired a definitive commitment from the Sponsor to provide the additional $3,000,000 funding contemplated by the NGA Prospectus to pay transaction costs associated with the Business Combination and better ensure adequate funding of NGA’s permitted expenses prior to the Closing.

In lieu of such funding being at the discretion of the Sponsor, and in lieu of the Sponsor having a future right (but not obligation) to elect to receive Working Capital Warrants in exchange for such funding, the Sponsor was willing in connection with the Business Combination Agreement to agree to directly purchase 3,000,000 Working Capital Warrants from NGA for $1.00 per Working Capital Warrant. However, the NGA Certificate does not permit the issuance of Working Capital Warrants prior to NGA’s initial business combination.

Therefore, NGA and the Sponsor entered into the NGA Working Capital Warrant Purchase Agreement under which the sale of the Working Capital Warrants to the Sponsor is conditioned upon approval of the Corrective Amendment by the NGA stockholders. Pursuant to the terms of the NGA Working Capital Warrant Purchase Agreement, the NGA Working Capital Warrants will not be issued until immediately prior to the Closing, but the Sponsor will pay the $3,000,000 purchase price to NGA promptly following approval of the Corrective Amendment by the NGA stockholders.

Subsequent to entry into the NGA Working Capital Warrant Purchase Agreement, in February and March of 2021 the Sponsor loaned to NGA a total of $3,000,000 on a non-interest bearing basis to fund transaction costs and working capital needs, and NGA issued to the Sponsor a non-convertible promissory note in respect of such loans. If the Corrective Amendment Proposal is approved by the NGA Stockholders, it is expected that the Sponsor will tender such promissory note to NGA in satisfaction of the Sponsor’s payment obligation under the NGA Working Capital Warrant Purchase Agreement.

If the Corrective Amendment is not approved, the promissory note will be repayable solely upon consummation of a business combination by, or liquidation of, NGA. Closing of the Business Combination is not conditioned upon the approval of the Corrective Amendment by NGA stockholders.

 

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Q:	Did the NGA Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A:

No. The NGA Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. NGA’s officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of NGA’s advisors, enabled them to make the necessary analyses and determinations regarding the Business Combination. In addition, NGA’s officers, directors and advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the NGA Board in valuing Lion and assuming the risk that the NGA Board may not have properly valued the business.

 

Q:	What happens if I sell my shares of NGA Common Stock before the Special Meeting?

 

A:

The record date for the Special Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of NGA Common Stock after the record date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares of NGA Common Stock because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination in accordance with the provisions described in this proxy statement/prospectus. If you transfer your shares of NGA Common Stock prior to the record date, you will have no right to vote those shares at the Special Meeting or seek redemption of those shares.

 

Q:	How has the announcement of the Business Combination affected the trading price of the NGA Units, NGA Common Stock and NGA Warrants?

 

A:

On October 30, 2020, the last trading date before the publication of articles speculating about the Business Combination, the NGA Units, NGA Public Shares and Public Warrants closed at $9.96, $9.63 and $0.80, respectively. On November 27, 2020, the last trading date before the announcement of the execution of the Business Combination Agreement, the NGA Units, NGA Public Shares and Public Warrants closed at $14.30, $13.04 and $3.20, respectively. On March 23, 2021 the trading date immediately prior to the date of this proxy statement/prospectus, the NGA Units, NGA Public Shares and Public Warrants closed at $23.15, $18.80 and $7.50, respectively.

 

Q:	Following the Business Combination, will Lion’s securities trade on a stock exchange?

 

A:

Yes. Lion currently anticipates that, following the Business Combination, Lion Common Shares will trade on the NYSE and the TSX under the new symbol “LEV” and Lion Warrants will trade on the NYSE under the new symbol “LEV WS” and on the TSX under the new symbol “LEV.WT.” There is no assurance that the NYSE and the TSX will approve Lion’s listing application, and any such listing of the Lion Common Shares and Lion Warrants will be conditional upon Lion fulfilling all of the listing requirements and conditions of the NYSE and the TSX. In connection with the Business Combination, the NGA Units will automatically separate into the component securities and be converted to Lion securities. Lion will not have any units outstanding after the consummation of the Business Combination. For more information about the conversion of Lion securities, see the section entitled “The Business Combination—Conversion of Securities.”

 

Q:	What vote is required to approve the Proposals presented at the Special Meeting?

 

A:

Approval of each of the Business Combination Proposal and the Corrective Amendment Proposal at the Special Meeting requires the affirmative vote (online or by proxy) of the holders of a majority of the outstanding shares of NGA Common Stock entitled to vote thereon at the Special Meeting. The Corrective

 

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Amendment Proposal is conditioned on the approval of the Business Combination Proposal, but the Business Combination Proposal is not conditioned on the approval of the Corrective Amendment Proposal. Approval of the Adjournment Proposal at the Special Meeting requires the affirmative vote (online or by proxy) of the holders of a majority of the outstanding shares of NGA Common Stock present and entitled to vote thereon at the Special Meeting. The Business Combination Proposal is not conditioned on the approval of the Adjournment Proposal.

 

Q:	May the Sponsor, directors, officers, advisors of NGA or any of their respective affiliates purchase NGA Public Shares in connection with the Business Combination?

 

A:

In connection with the stockholder vote to approve the proposed Business Combination, the Sponsor, directors, officers, advisors of NGA and any of their respective affiliates may privately negotiate to purchase NGA Public Shares from stockholders who would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for a per share pro rata portion of the Trust Account. The Sponsor, directors, officers, advisors and any of their respective affiliates will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller of such NGA Public Shares or during a restricted period under Regulation M under the Exchange Act. Such a purchase could include a contractual acknowledgement that such stockholder, although still the record holder of such NGA Public Shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights and could include a contractual provision that directs such stockholder to vote such shares in a manner directed by the purchaser. In the event that the Sponsor, directors, officers, advisors or any of their respective affiliates purchase NGA Public Shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are in excess of the per share pro rata portion of the Trust Account.

 

Q:	How many votes do I have at the Special Meeting?

 

A:

NGA’s stockholders are entitled to one vote at the Special Meeting for each share of NGA Common Stock held of record as of March 18, 2021, the record date for the Special Meeting. As of the close of business on the record date, there were 31,945,344 outstanding shares of NGA Common Stock held by NGA’s Public Stockholders and 7,986,336 outstanding shares of NGA Common Stock held by the Sponsor.

 

Q:	What constitutes a quorum at the Special Meeting?

 

A:

Holders of a majority in voting power of NGA Common Stock issued and outstanding and entitled to vote at the Special Meeting, virtually present or represented by proxy, constitute a quorum. In the absence of a quorum, the chairman of the meeting has the power to adjourn the Special Meeting. As of the record date for the Special Meeting, 19,965,841 shares of NGA Common Stock, in the aggregate, would be required to achieve a quorum. Abstentions will count as present for the purposes of establishing a quorum with respect to each Proposal.

 

Q:	How will the Sponsor and NGA’s directors and officers vote?

 

A:	The Sponsor has agreed to vote any shares of NGA Common Stock owned by it in favor of the Business Combination. Currently, the Sponsor owns approximately 20% of the issued and outstanding shares of NGA Common Stock, in the aggregate.

 

Q:	What interests do the current officers and directors have in the Business Combination?

 

A:	In considering the recommendation of the NGA Board to vote in favor of the Business Combination, NGA stockholders should be aware that, aside from their interests as stockholders, the Sponsor and certain of

 

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NGA’s directors and officers have interests in the Business Combination that are different from, or in addition to, those of other NGA stockholders generally. NGA’s directors were aware of and considered these interests, among other matters, in evaluating the Business Combination and in recommending to NGA’s stockholders that they approve the Business Combination. NGA’s stockholders should take these interests into account in deciding whether to approve the Business Combination. These interests include, among other things:

 

•

the fact that the Sponsor (i) holds 8,139,069 Private Placement Warrants acquired at a purchase price of $8,139,069 which, if unrestricted and freely tradable, would be valued at approximately $61,043,018 based on the closing price of NGA’s Public Warrants of $7.50 per warrant on March 23, 2021 (but which are subject to a lock-up and not freely tradable for a period of 30 days following the closing of the Business Combination), all of which would expire worthless if a business combination is not consummated, and (ii) has loaned $3,000,000 to NGA in exchange for a promissory note and, assuming NGA stockholder approval of the Corrective Amendment Proposal, will purchase 3,000,000 NGA Working Capital Warrants from NGA for a purchase price of $3,000,000, which if issued and unrestricted and freely tradable would be valued at approximately $22,500,000 based on the closing price of NGA’s Public Warrants of $7.50 per warrant on March 23, 2021 (but which will be subject to a lock-up and not freely tradable for a period of 30 days following the closing of the Business Combination), all of which would expire worthless if a business combination is not consummated;

 

•

the fact that the Sponsor paid an aggregate of $25,000 for 8,625,000 shares of NGA Common Stock (the “Founder Shares”) and, due to forfeiture to NGA of 638,664 Founder Shares as a result of the less-than-full exercise of the underwriters’ over-allotment option in connection with the NGA IPO, continues to hold 7,986,336 Founder Shares, which if unrestricted and freely tradable would be valued at approximately $150,143,117, based on the closing price of NGA Common Stock of $18.80 per share on March 23, 2021 (but which are subject to a lock-up and not freely tradable for a period of up to one year following the closing of the Business Combination), which shares would be worthless if a business combination is not consummated;

 

•

the fact that NGA’s independent directors collectively invested $675,000 to acquire interests in Sponsor that entitle such directors to receive a distribution from Sponsor, following an initial business combination, of (i) 675,000 Private Placement Warrants which, if unrestricted and freely tradable, would be valued at approximately $5,062,500 based on the closing price of NGA’s Public Warrants of $7.50 per warrant on March 23, 2021 (but which are subject to a lock-up and not freely tradable for a period of 30 days following the closing of the Business Combination), which warrants will expire worthless if a business combination is not consummated and (ii) 525,000 Founder Shares (or securities issued in exchange therefor), which, if unrestricted and freely tradable, would be valued at approximately $9,870,000 based on the closing price of NGA’s Common Stock of $18.80 per share on March 23, 2021 (but which are subject to a lock-up and not freely tradable for a period of up to one year following the closing of the Business Combination), which shares would be worthless if a business combination is not consummated;

 

•

the fact that the Sponsor and NGA’s officers and directors have agreed not to redeem any of the shares of NGA Common Stock held by them in connection with a stockholder vote to approve the Business Combination;

 

•

the anticipated continuation of Messrs. Ian Robertson and Chris Jarratt as directors of Lion after the consummation of the Business Combination and the fact that, in connection with the Business Combination, Lion has agreed, in respect of any meeting of shareholders at which directors of Lion’s Board are to be elected, prior to and including any annual general meeting of Lion to be held in the calendar year 2022, to use at least the same efforts to cause the election of Ian Robertson and Chris Jarratt as it uses to cause the election of the other nominees of Lion’s Board;

 

•

the fact that the Sponsor and NGA’s officers and directors will be reimbursed for expenses incurred in connection with activities on behalf of NGA, such as identifying potential target businesses and

 

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performing due diligence on suitable business combinations, which expenses were approximately $640,000 as of February 28, 2021;

 

•

the fact that the Sponsor and NGA’s officers and directors will lose their entire investment in NGA if NGA fails to complete an initial business combination by August 20, 2022;

 

•

the fact that if the NGA Trust Account is liquidated, including in the event that NGA fails to complete an initial business combination by August 20, 2022, the Sponsor has agreed to indemnify NGA to ensure that the proceeds in the NGA Trust Account are not reduced below $10.00 per public share by the claims of any target business to which NGA has any obligations or any third party for services rendered or products sold to NGA (except as to any indemnification claims of the underwriters in the NGA IPO against certain liabilities, including liabilities under the Securities Act), unless such target business or third party has executed a waiver of all rights to seek access to the NGA Trust Account; and

 

•

the fact that NGA’s officers have agreed not to become a director or officer of any other blank check company that has publicly filed a registration statement with the SEC until NGA has entered into a definitive agreement regarding an initial business combination or fails to complete an initial business combination by August 20, 2022.

 

Q:	What happens if I vote against the Business Combination Proposal?

 

A:

Under NGA’s Certificate, if the Business Combination Proposal is not approved and NGA does not otherwise consummate an alternative business combination by August 20, 2022, NGA will be required to dissolve and liquidate the Trust Account by returning the then-remaining funds in such account to NGA’s Public Stockholders.

 

Q:	Do I have redemption rights?

 

A:

If you are a holder of NGA Public Shares, you may elect to have your shares of NGA Common Stock then held be redeemed for cash at the applicable redemption price per share equal to the quotient obtained by dividing (a) the aggregate amount on deposit in the Trust Account, by (b) the total number of shares of NGA Common Stock issued in the NGA IPO; provided that NGA will not redeem any NGA Public Shares to the extent that such redemption would result in NGA having net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) of less than $5,000,001.

For illustrative purposes, based on the fair value of cash and marketable securities held in the Trust Account as of March 17, 2021 of $319,605,157 the estimated per share redemption price would have been approximately $10.00.

Shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise holders of such shares will only be entitled to a pro rata portion of the Trust Account (including interest but net of franchise and income taxes payable) (a) in connection with a stockholder vote to approve an amendment to NGA’s Certificate that would affect the substance or timing of NGA’s obligation to redeem 100% of the NGA Public Shares if NGA has not consummated an initial business combination by August 20, 2022, (b) in connection with the liquidation of the Trust Account or (c) if NGA subsequently completes a different business combination on or before August 20, 2022.

There are no redemption rights with respect to NGA Warrants.

 

Q:	Will how I vote affect my ability to exercise redemption rights?

 

A:

No. You may exercise your redemption rights whether you vote your shares of NGA Common Stock for or against or abstain from voting on the Business Combination Proposal or any other proposal described in this proxy statement/prospectus. As a result, the Business Combination can be approved by stockholders who will redeem their shares and no longer remain stockholders.

 

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Q:	How do I exercise my redemption rights?

 

A:

In order to exercise your redemption rights, you must (a) if you hold your shares of NGA Common Stock through NGA Units, elect to separate your NGA Units into the underlying NGA Public Shares and Public Warrants prior to exercising your redemption rights with respect to the NGA Public Shares and (b) prior to 5:00 p.m., Eastern time, on April 21, 2021 (two business days before the Special Meeting), tender your shares physically or electronically and submit a request in writing that NGA redeem your NGA Public Shares for cash to Continental Stock Transfer & Trust Company, NGA’s transfer agent, at the following address:

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, New York 10004-1561

Attention: Mark Zimkind

Email: Mzimkind@continentalstock.com

NGA Public Stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the transfer agent and time to effect delivery. It is NGA’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, NGA does not have any control over this process and it may take longer than two weeks. Stockholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.

Holders of outstanding NGA Units must separate the underlying NGA Public Shares and Public Warrants prior to exercising redemption rights with respect to the NGA Public Shares. If you hold NGA Units registered in your own name, you must deliver the certificate for such NGA Units or deliver such NGA Units electronically to the transfer agent with written instructions to separate such NGA Units into NGA Public Shares and Public Warrants. This must be completed far enough in advance to permit the mailing of the public share certificates or electronic delivery of the NGA Public Shares back to you so that you may then exercise your redemption rights with respect to the NGA Public Shares following the separation of such NGA Public Shares from the NGA Units.

If a broker, dealer, commercial bank, trust company or other nominee holds your NGA Units, you must instruct such nominee to separate your NGA Units. Your nominee must send written instructions to the transfer agent. Such written instructions must include the number of NGA Units to be split and the nominee holding such NGA Units. Your nominee must also initiate electronically, using The Depository Trust Company’s (“DTC”) DWAC (deposit withdrawal at custodian) system, a withdrawal of the relevant NGA Units and a deposit of the corresponding number of NGA Public Shares and Public Warrants. This must be completed far enough in advance to permit your nominee to exercise your redemption rights with respect to the NGA Public Shares following the separation of such NGA Public Shares from the NGA Units. While this is typically done electronically on the same business day, you should allow at least one full business day to accomplish the separation. If you fail to cause your NGA Public Shares to be separated in a timely manner, you will likely not be able to exercise your redemption rights.

Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with NGA’s consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for redemption to the transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that the transfer agent return the shares (physically or electronically). You may make such request by contacting NGA’s transfer agent at the email address or address listed under the question “Who can help answer my questions?” below.

 

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Q:	What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

The U.S. federal income tax consequences of a redemption depend on a holder’s particular facts and circumstances. You are strongly urged to read the section entitled “Proposal No. 1—The Business Combination Proposal—Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations for Holders in Respect of the Redemption of NGA Common Stock,” and to consult with, and rely solely upon, your tax advisors to determine the particular U.S. federal, state, local, or foreign income or other tax consequences of exercising your redemption rights.

 

Q:	What are the U.S. federal income tax consequences of engaging in the Business Combination for holders of NGA Common Stock and NGA Warrants?

 

A:

It is intended that the Business Combination qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code (the “Code”). Although Husch Blackwell LLP, NGA’s tax counsel, is currently of the opinion that the Business Combination more likely than not qualifies as a reorganization within the meaning of Section 368(a) of the Code (including that it is not excluded from the application of such provision pursuant to Section 367 of the Code), and Lion and NGA currently expect to file tax returns consistent with this intended tax treatment, this tax treatment is not free from doubt. There is significant uncertainty as to whether the exchange of NGA Common Stock and NGA Warrants for Lion Common Shares and Lion Warrants in the Business Combination would be treated as a taxable exchange and, as a result, there is significant risk that you could be subject to tax in respect of the Business Combination. No assurance can be given that your tax advisor will agree with our intended tax treatment or that the IRS would not assert, or that a court would not sustain, a contrary position. If the Business Combination qualifies as a reorganization within the meaning of Section 368(a) of the Code, holders generally will not recognize gain or loss upon the exchange of NGA Common Stock and NGA Warrants for Lion Common Shares and Lion Warrants pursuant to the Business Combination. If the Business Combination fails to qualify as a reorganization within the meaning of Section 368(a) of the Code, holders generally would recognize gain (but may not be able to recognize loss) upon the exchange of NGA Common Stock and NGA Warrants for Lion Common Shares and Lion Warrants pursuant to the Business Combination. In light of the significant uncertainty regarding the tax treatment of the Business Combination, you are strongly urged to read the section entitled “Proposal No. 1—The Business Combination—Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations in Respect of Engaging in the Business Combination for Holders of NGA Common Stock and NGA Warrants—Tax Characterization of the Business Combination for Holders of NGA Securities,” and to consult with, and rely solely upon, your tax advisors to determine the particular U.S. federal, state, local, or foreign income or other tax consequences of the Business Combination to you.

 

Q:	What are the principal Canadian federal income tax considerations applicable to a person who acquires Lion Common Shares or Lion Warrants in exchange for NGA Common Stock or Lion Warrants as part of the Business Combination?

 

A:

The principal Canadian federal income tax considerations of acquiring Lion Common Shares or Lion Warrants depend on a holder’s particular facts and circumstances. For more information about Canadian federal tax considerations, see the section entitled “Proposal No. 1—The Business Combination Proposal—Certain Canadian Federal Income Tax Considerations.” NGA and Lion urge you to consult your tax advisors with respect to your particular circumstances.

 

Q:	Do I have appraisal rights if I object to the proposed Business Combination?

 

A:	No. There are no appraisal rights available to holders of NGA Common Stock or NGA Warrants in connection with the Business Combination.

 

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Q:	What happens to the funds deposited in the Trust Account after consummation of the Business Combination?

 

A:

If the Business Combination Proposal is approved, Lion intends to use a portion of the funds held in the Trust Account to pay (a) a portion of the NGA Transaction Costs (as defined in the Business Combination Agreement), (b) tax obligations and deferred underwriting discounts and commissions from the NGA IPO and (c) for any redemptions of NGA Public Shares. The remaining balance in the Trust Account, together with funds from the PIPE Financing, are expected to be used to repay indebtedness and fund the growth strategy of Lion, which includes the establishment of a production facility in the United States, the development of proprietary battery modules and packs, the establishment of a new battery pack assembly factory, other research and development activities and an increase in working capital expected to be required to accommodate growth in revenues. For more information about the consummation of the Business Combination, see the section entitled “The Business Combination.”

 

Q:	What happens if the Business Combination is not consummated or is terminated?

 

A:

There are certain circumstances under which the Business Combination Agreement may be terminated. For more information about the parties’ specific termination rights, see the section entitled “Proposal No. 1—The Business Combination Proposal—The Business Combination Agreement—Termination.” In accordance with NGA’s Certificate, if an initial business combination is not consummated by August 20, 2022, NGA will (a) cease all operations except for the purpose of winding up, (b) as promptly as reasonably possible but not more than ten business days thereafter subject to lawfully available funds therefor, redeem the NGA Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to NGA to pay NGA’s franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then-outstanding NGA Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (c) as promptly as reasonably possible following such redemption, subject to the approval of NGA’s remaining stockholders and the NGA Board, dissolve and liquidate, subject in each case to NGA’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

NGA expects that the amount of any distribution NGA’s Public Stockholders would be entitled to receive upon NGA’s dissolution would be approximately the same as the amount they would have received if they had redeemed their shares in connection with the Business Combination, subject in each case to NGA’s obligations under Delaware law to provide for claims of creditors and other requirements of applicable law. Holders of NGA’s Founder Shares have waived any right to any liquidating distributions with respect to those shares.

In the event of liquidation, there will be no distribution with respect to NGA’s outstanding warrants. Accordingly, the warrants will expire worthless.

 

Q:	When is the Business Combination expected to be consummated?

 

A:

It is currently anticipated that the Business Combination will be consummated promptly following the Special Meeting of NGA’s stockholders to be held on April 23, 2021, provided that all the requisite stockholder approvals are obtained and other conditions to the consummation of the Business Combination have been satisfied or waived. For more information about the conditions for the completion of the Business Combination, see the section entitled “Proposal No. 1—The Business Combination Proposal—The Business Combination Agreement—Conditions to Closing of the Business Combination Agreement.”

 

Q:	What do I need to do now?

 

A:	You are urged to read carefully and consider the information included in this proxy statement/prospectus, including the section entitled “Risk Factors” and the annexes attached to this proxy statement/prospectus,

 

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and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

 

Q:	How do I vote?

 

A:	If you were a holder of record of NGA Common Stock on March 18, 2021, the record date for the Special Meeting of the NGA stockholders, you may vote with respect to the Proposals in any of the following ways, if available:

 

•

Vote by Mail: by signing, dating and returning the enclosed proxy card in the accompanying postage-paid envelope;

 

•

Vote by Internet: visit http://www.proxyvote.com, 24 hours a day, seven days a week, until 11:59 p.m. Eastern Time on April 22, 2021 (have your proxy card in hand when you visit the website);

 

•

Vote by Phone: by calling toll-free (within the U.S. or Canada) 1-800-690-6903 (have your proxy card in hand when you call); or

 

•

Vote online at the Special Meeting: by attending the Special Meeting at www.virtualshareholdermeeting.com/NGA2021SM.

If your shares are held in “street name” through a broker, bank or other nominee, your broker, bank or other nominee will send you separate instructions describing the procedure for voting your shares. Simply complete, sign and date your voting instruction card and return it in the postage-paid envelope provided to ensure that your vote is counted. Alternatively, you may vote by telephone or over the internet as instructed by your broker, bank or other nominee. If you wish to attend the Special Meeting of stockholders and vote online, you must obtain a proxy from your broker, bank or nominee. Holders of record of NGA Common Stock are encouraged to vote in advance of the Special Meeting.

If you have any questions or need assistance voting your shares, please contact NGA’s proxy solicitor, D.F. King & Co., Inc., toll-free at (888) 605-1958 or collect at (212) 269-5550 or by email at nga@dfking.com. For assistance in French, please call 1-866-822-1243 or email nga-fr@astfinancial.com.

 

Q:	What will happen if I abstain from voting or fail to vote at the Special Meeting?

 

A:

At the Special Meeting, NGA will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. For purposes of approval, failure to vote or an abstention will have no effect on the Adjournment Proposal, but will have the same effect as a vote AGAINST the Business Combination Proposal and the Corrective Amendment Proposal.

 

Q:	What will happen if I sign and submit my proxy card without indicating how I wish to vote?

 

A:	Signed and dated proxies received by NGA without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each Proposal being submitted to a vote of the stockholders at the Special Meeting.

 

Q:	If I am not going to attend the virtual Special Meeting online, should I submit my proxy card instead?

 

A:	Yes. Whether you plan to attend the Special Meeting or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

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Q:	If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. NGA believes the Proposals presented to NGA’s stockholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

 

Q:	May I change my vote after I have submitted my executed proxy card?

 

A:

Yes. You may change your vote by sending a later-dated, signed proxy card to NGA at the address listed below so that it is received by NGA prior to the Special Meeting or by attending the virtual Special Meeting online and voting there. You also may revoke your proxy by sending a notice of revocation to NGA, which must be received prior to the Special Meeting.

 

Q:	What should I do if I receive more than one set of voting materials?

 

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

 

Q:	Who can help answer my questions?

 

A:	If you have questions about the Proposals or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact NGA’s proxy solicitor at:

D.F. King & Co., Inc.

48 Wall Street, 22^nd Floor

New York, NY 10005

Call Toll-Free: (888) 605-1958

Banks and Brokers Call: (212) 269-5550

nga@dfking.com

To obtain timely delivery, NGA’s stockholders must request the materials no later than five business days prior to the Special Meeting. For assistance in French, please call 1-866-822-1243 or email nga-fr@astfinancial.com.

You may also obtain additional information about NGA from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find Additional Information.”

If you intend to seek redemption of your NGA Public Shares, you will need to send a letter demanding redemption and deliver your shares (either physically or electronically) to the Transfer Agent at least two business days prior to the Special Meeting in accordance with the procedures detailed under the question “How do I exercise my redemption rights?” If you have questions regarding the certification of your position or delivery of your shares, please contact:

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, New York 10004-1561

 

xviii

Attention: Mark Zimkind

Email: Mzimkind@continentalstock.com

 

Q:	Who will solicit and pay the cost of soliciting proxies?

 

A:

The NGA Board is soliciting your proxy to vote your shares of NGA Common Stock on all matters scheduled to come before the Special Meeting. NGA will pay the cost of soliciting proxies for the Special Meeting. NGA has engaged D.F. King & Co., Inc. to assist in the solicitation of proxies for the Special Meeting. NGA has agreed to pay D.F. King & Co., Inc. a fee of $25,000, plus disbursements. NGA will reimburse D.F. King & Co., Inc. for reasonable out-of-pocket expenses and will indemnify D.F. King & Co., Inc. and its affiliates against certain claims, liabilities, losses, damages and expenses. NGA will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of NGA Common Stock for their expenses in forwarding soliciting materials to beneficial owners of NGA Common Stock and in obtaining voting instructions from those owners. NGA’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus, and the documents to which this proxy statement/prospectus refers, contain forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Any statements contained in this proxy statement/prospectus, or any such documents, that are not statements of historical fact, including statements about Lion’s and/or NGA’s beliefs and expectations, are forward-looking statements and should be evaluated as such. Any references to forward-looking statements in this proxy statement/prospectus include forward-looking information within the meaning of applicable Canadian securities laws.

Forward-looking statements may be identified by the use of words such as “believe,” “may,” “will,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “could,” “plan,” “project,” “potential,” “seem,” “seek,” “future,” “target” or other similar expressions and any other statements that predict or indicate future events or trends or that are not statements of historical matters, although not all forward-looking statements contain such identifying words. These forward-looking statements are subject to numerous risks and uncertainties. Such forward-looking statements reflect, among other things, Lion’s and/or NGA’s current expectations, plans, strategies and anticipated financial results and involve a number of known and unknown risks, uncertainties, and factors that may cause Lion’s and/or NGA’s actual results to differ materially and adversely from those expressed or implied by these forward-looking statements. These risks, uncertainties and factors include, but are not limited to, the following: any adverse changes in the U.S. and Canadian general economic, business, market, financial, political and legal conditions, including as consequences of the global COVID-19 pandemic; Lion’s inability to successfully and economically manufacture and distribute its vehicles at scale and meet its customers’ business needs; Lion’s inability to execute its growth strategy; Lion’s inability to maintain its competitive position; Lion’s inability to reduce its costs of supply overtime; any inability to maintain and enhance Lion’s reputation and brand; any significant product repair and/or replacement due to product warranty claims or product recalls; any failure of information technology systems or any cybersecurity and data privacy breaches or incidents; the reduction, elimination or discriminatory application of government subsidies and economic incentives or the reduced need for such subsidies; natural disasters, epidemic or pandemic outbreaks, boycotts and geo-political events; the risk that a condition to closing of the transaction (including the obtention of NGA stockholders approval) may not be satisfied; the failure to realize the anticipated benefits of the proposed transaction; the amount of redemption requests made by NGA stockholders; the risk that the proposed transaction disrupts Lion’s or NGA’s current plans and operations as a result of the announcement of the transaction; the outcome of any legal proceedings that may be instituted against Lion or NGA following announcement of the transaction; the inability of the parties to successfully or timely consummate the proposed transaction.

These and other uncertainties related to the businesses of Lion and the Business Combination are described in greater detail in the section entitled “Risk Factors.” Many of these risks are beyond each of NGA’s and Lion’s management’s ability to control or predict. All forward-looking statements attributable to NGA, Lion or persons acting on behalf of them are expressly qualified in their entirety by the cautionary statements contained, and risk factors identified, in this proxy statement/prospectus and the companies’ filings with the SEC and any Canadian securities regulatory authority. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, neither Lion nor NGA undertakes any obligation, and expressly disclaim any duty, to update, revise or review any forward-looking information, whether as a result of new information, future events or otherwise.

 

16

INDUSTRY AND MARKET DATA

Industry and market data presented throughout this proxy statement/prospectus was obtained from third-party sources and industry reports, and from publications, websites and other publicly available information, as well as industry and other data prepared by NGA, Lion or on their behalf on the basis of NGA or Lion’s knowledge of the markets in which they operate, including information provided by suppliers, partners, customers and other industry participants.

NGA and Lion believe that the market and economic data presented throughout this proxy statement/prospectus is accurate and, with respect to data prepared by NGA or Lion or on their behalf, that NGA’s or Lion’s estimates and assumptions, as applicable, are currently appropriate and reasonable, but there can be no assurance as to the accuracy or completeness thereof. The accuracy and completeness of the market and economic data presented throughout this proxy statement/prospectus are not guaranteed and none of NGA or Lion makes any representation or warranty, express or implied, as to the accuracy of such data. Actual outcomes may vary materially from those forecast in such reports or publications, and the prospect for material variation can be expected to increase as the length of the forecast period increases. Although NGA and Lion believe it to be reliable, none of them has independently verified any of the data from third-party sources referred to in this proxy statement/prospectus, analyzed or verified the underlying studies or surveys relied upon or referred to by such sources, or ascertained the underlying market, economic and other assumptions relied upon by such sources. Market and economic data, including estimates and projections relating to addressable markets, competitive position and market share, is subject to variations and cannot be verified due to limits on the availability and reliability of data inputs, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. NGA’s and Lion’s management estimates are based on internal research, their knowledge of the relevant market and industry and extrapolations from third-party sources. While NGA and Lion are not aware of any misstatements regarding the industry and market data presented in this proxy statement/prospectus, such data involve risks and uncertainties and are subject to change based on various factors, including those factors discussed under the section entitled “Cautionary Note Regarding Forward-Looking Statements.” NGA and Lion have no intention and undertake no obligation to update or revise any such information or data, whether as a result of new information, future events or otherwise, except as required by law.

 

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SUMMARY OF RISK FACTORS

An investment in the Lion Common Shares involves a high degree of risk. Below is a summary of certain key risk factors that you should consider in deciding how to vote your shares of stock with respect to the Business Combination or deciding to invest in the Lion Common Shares. However, this list is not exhaustive. For more information about the risks related to an investment in the Lion Common Shares, see the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Some of the significant risks include:

 

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Lion’s ability to economically develop, manufacture and distribute its vehicles at scale and meet its customers’ business needs.

 

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The accuracy and reliability of the assumptions and analyses underlying Lion’s financial results forecast.

 

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Lion’s ability to successfully implement its growth strategy and manage future growth effectively.

 

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Lion’s current and future dependence on its manufacturing facilities.

 

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Lion’s ability to raise additional funds to meet its capital requirements.

 

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Increases in costs, disruption of supply or shortage of raw materials, particularly lithium-ion battery cells.

 

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Unfavorable economic conditions, such as the effects of the global COVID-19 pandemic.

 

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Lion’s ability to successfully attract new customers and secure firm orders from them and to retain existing customers and engage them for additional deployments in the future.

 

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The inability of suppliers to deliver necessary parts or components according to Lion’s schedule and at prices, volumes and quality levels acceptable to it.

 

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The trucking and busing industries and Lion’s other customers’ willingness to adopt battery electric vehicles and specifically Lion’s vehicles.

 

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Developments in alternative or analogous technologies affecting the demand for Lion’s vehicles.

 

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Competition within the battery electric vehicle industry.

 

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Unfavorable changes in U.S. or Canadian laws or regulations and trade policy.

 

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Information technology and cybersecurity risks to operational systems, security systems, infrastructure, integrated software in its vehicles and solutions and customer data processed by it, third-party vendors or suppliers.

 

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Volatility in the share price of Lion Common Shares.

 

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The significant influence of certain of Lion existing shareholders will continue following completion of the Business Combination.

 

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Provisions in Lion’s constating documents may have the effect of delaying or preventing certain change in control transactions or shareholder proposals.

 

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NGA’s limited operating history.

 

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Past performance by members of NGA’s management team may not be indicative of an ability to complete a business combination or of future performance of an investment in Lion.

 

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The Sponsor and certain of NGA’s directors and officers have interests in the Business Combination that are different from, or in addition to, the interests of the NGA stockholders generally, and NGA’s officers and directors may have conflicts that could have a negative impact on NGA’s ability to complete the Business Combination.

 

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The ability of the Sponsor to influence certain actions requiring a stockholder vote, including the approval of the Business Combination.

 

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NGA’s incurrence of significant transaction costs in connection with the negotiation of the Business Combination Agreement and consummation of the Business Combination.

 

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NGA’s inability to complete the Business Combination or to arrange another initial business combination prior to August 20, 2022.

 

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NGA stockholders’ limited rights or interests in funds from NGA’s Trust Account.

 

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Lion’s right to redeem all NGA Warrants prior to their exercise, including at times that may be disadvantageous to holders of such securities.

 

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NGA’s due diligence investigation of Lion and factors affecting its business may not surface all material issues.

 

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NGA’s assessment of the capabilities of Lion’s management to continue Lion’s growth transition may prove to be incorrect.

 

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Investors’ exposure to a concentration of risk in the limited sectors in which Lion’s business is focused.

 

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Lion results of operations may differ significantly from the unaudited pro forma financial data included in this proxy statement/prospectus.

 

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During the pre-closing period, NGA and Lion are prohibited from evaluating and entering into certain transactions that might otherwise be beneficial to NGA, Lion or their respective stockholders.

 

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The consummation of the Business Combination is subject to certain material conditions, some of which are outside the control of NGA and Lion.

 

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Each of NGA and Lion may be obligated to close the Business Combination notwithstanding the occurrence of certain events or circumstances that have a material adverse effect on the other party and the combined enterprise.

 

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NGA or Lion may waive one or more of the conditions to the Business Combination set forth in the Business Combination Agreement, resulting in the consummation of the Business Combination notwithstanding divergence from assumptions on which the Business Combination was evaluated and approved.

 

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If the Business Combination does not qualify as a “reorganization” under Section 368(a) of the Code, or results in gain recognition to holders of NGA Common Stock or NGA Warrants pursuant to Section 367(a) of the Code, the NGA stockholders and NGA’s warrantholders may be required to pay substantial U.S. federal income taxes. In addition, this could result in NGA stockholders or NGA’s warrantholders selling shares or warrants, including the Sponsor of NGA (who would be excepted from the Stockholder Support and Lock-Up Agreement), in order to satisfy such taxes, which could adversely impact the price of NGA’s or Lion’s stock or warrants.

 

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The possibility that Lion could be treated as a U.S. corporation for U.S. federal income tax purposes.

 

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The possibility that Lion could be treated as an inverted domestic corporation under the Homeland Security Act or other relevant state and local rules.

 

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The fact that NGA does not have a specified maximum redemption threshold may make it difficult or impossible for NGA to consummate the Business Combination.

 

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If NGA stockholders fail to comply with the redemption requirements specified herein, they will not be entitled to redeem their NGA Common Stock for a pro rata portion of the funds held in the NGA Trust Account.

 

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If third parties bring claims against NGA, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by NGA stockholders may be less than $10.00 per share.

 

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The securities in which NGA invests the funds held in the NGA Trust Account could bear a negative rate of interest.

 

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RISK FACTORS

An investment in Lion, and the proposed Business Combination between Lion and NGA, each involves a high degree of risk and uncertainty. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this proxy statement/prospectus, including the financial statements and the related notes appearing at the end of this proxy statement/prospectus, before deciding how to vote your shares of NGA Common Stock with respect to the Business Combination, and in deciding whether to cause your shares of NGA Common Stock to be redeemed in connection with the Business Combination. Additional risks and uncertainties, that NGA and Lion do not presently consider to be material or of which NGA and Lion are not presently aware, also may become important factors that affect the business, results of operations or financial condition of NGA or Lion, or the likelihood or effects of the Business Combination, that may materially and adversely affect the investment of NGA stockholders prior to and following the Business Combination or in the event that the Business Combination does not occur. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Lion’s Business

Lion’s success will depend on its ability to economically develop, manufacture and sell its vehicles at scale and meet its customers’ business needs. Lion’s ability to develop, manufacture and distribute vehicles of sufficient quality and appeal to customers on schedule and at scale is unproven.

Lion’s future business depends in large part on its ability to economically manufacture, market and sell its vehicles at sufficient capacity to meet the transportation demands of its customers. Although it currently develops and manufactures vehicles from its manufacturing facility in Saint-Jérôme, Québec, Lion will need to scale its manufacturing capacity in order to successfully implement its growth strategy, and plans to do so in the future by, among other things, building a large-scale manufacturing facility in the United States and building a battery assembly facility. Although Lion has experience in developing and manufacturing buses and trucks from its existing facility, such operations are currently conducted on a limited scale, and Lion has no experience to date in high volume manufacturing of its vehicles. Lion does not know whether it will be able to develop efficient, automated, low-cost manufacturing capabilities and processes, or whether it will be able to secure reliable sources of component supply, in each case that will enable it to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully mass market its vehicles and meet its business objectives and customer needs. Even if Lion is successful in developing high-volume manufacturing capability and processes and can reliably source component supplies in sufficient volume, it does not know whether it will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond its control such as problems with suppliers, or in time to meet the commercialization schedules of future vehicles or to satisfy the requirements of its customers. Lion’s ability to effectively reduce its cost structure over time is limited by the fixed nature of many of its planned expenses in the near-term, and its ability to reduce long-term expenses is constrained by its need to continue investment in its growth strategy. Any failure to develop and scale such manufacturing processes and capabilities within Lion’s projected costs and timelines could have a material adverse effect on its business, results of operations or financial condition.

Lion’s operating and financial results forecast relies in large part upon assumptions and analyses developed by it and NGA. If these assumptions or analyses prove to be incorrect, Lion’s actual operating and financial results may be materially different from its forecasted results.

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

 

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

 

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its ability to obtain sufficient capital and successfully execute its growth strategy, including planned additions to its current manufacturing plant, property and equipment as well as the construction of its additional planned large-scale U.S. manufacturing facility and battery assembly facility;

 

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its ability to manage its growth;

 

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its ability to accurately forecast supply and demand;

 

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its ability to secure and maintain required strategic supply arrangements;

 

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projected improvements in technology;

 

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

 

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

 

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competition, including from established and future competitors;

 

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

 

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

Unfavorable changes in any of these or other factors, some of which are beyond Lion’s control, could cause actual results to differ materially from Lion’s forecasts and projections and other forward-looking information included in this proxy statement/prospectus, and could materially and adversely affect Lion’s business, results of operations or financial condition.

Lion may not be able to successfully implement its growth strategy, on a timely basis or at all, and it may be unable to manage future growth effectively.

Lion’s future growth, results of operations and financial condition depend upon its ability to successfully implement its growth strategy, which, in turn, is dependent upon a number of factors, some of which are beyond Lion’s control, including its ability to:

 

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economically manufacture and sell its vehicles at scale and meet customers’ business needs;

 

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effectively introduce new products and implement new technology-driven services and solutions;

 

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complete the construction of its planned battery assembly facility and planned large-scale U.S. manufacturing facility, in each case at a reasonable price and on a timely basis;

 

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secure and maintain required strategic supply arrangements;

 

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keep pace with technological change affecting the battery electric vehicle industry;

 

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effectively compete in the markets in which it operates; and

 

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attract and retain management or other employees who possess specialized market knowledge and technical skills.

There can be no assurance that Lion can successfully achieve any or all of the above initiatives in the manner or time period that it expects. Further, achieving these objectives will require investments which may result in both short-term and long-term costs without generating any current revenue and therefore may be dilutive to earnings. Lion cannot provide any assurance that it will realize, in full or in part, the anticipated benefits it expects to generate from its growth strategy. Failure to realize those benefits could have a material adverse effect on Lion’s business, results of operations or financial condition.

Even if it can achieve the above benefits and successfully implement its growth strategy, any failure to manage its growth effectively could materially and adversely affect Lion’s business, results of operations or

 

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financial condition. Lion intends to expand its operations significantly, which will require it to hire and train new employees across all divisions; accurately forecast supply and demand, production and revenue; control expenses and investments in anticipation of expanded operations; establish new or expand current design, production, and sales and service facilities; and implement and enhance administrative infrastructure, systems and processes. Failure to efficiently manage any of the above could have a material adverse effect on Lion’s business, results of operations or financial condition.

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

Although Lion’s existing Saint-Jérôme, Québec, manufacturing facility, which has a current capacity of approximately 2,500 vehicles per year and which was used in 2020 to manufacture 84 vehicles comprised primarily of LionC (Type C school bus) and a few Lion 360° (cowled-chassis bus) buses and Lion6 and Lion8 urban class truck prototypes, is able to satisfy Lion’s current manufacturing requirements, the future success of Lion’s business depends in part on its ability to drastically increase manufacturing capacity and efficiency. Lion may be unable to expand its business, satisfy demand from its current and new customers, maintain its competitive position and improve profitability if it is unable to build and operate its planned large-scale manufacturing facility in the U.S. and otherwise allow for increases in manufacturing output and speed. The construction of such a facility will require significant cash investments and management resources and may not meet Lion’s expectations with respect to increasing capacity, efficiency and satisfying additional demand. For example, if there are delays in Lion’s planned large-scale U.S. manufacturing facility becoming fully operational or achieving target yields and output, Lion may not meet its target for adding capacity, which would limit its ability to increase sales and result in lower than expected sales and higher than expected costs and expenses. Failure to drastically increase manufacturing capacity or otherwise satisfy customers’ demands may result in a loss of market share to competitors, damage Lion’s relationships with its key customers, a loss of business opportunities or otherwise materially adversely affect its business, results of operations or financial condition.

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

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

 

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Lion may in the future need to raise additional funds to meet its capital requirements and such funds may not be available to Lion on commercially reasonable terms or at all when it needs them, which could materially adversely affect Lion’s business, results of operations or financial condition.

The development, design, manufacturing, sale and servicing of Lion’s battery electric vehicles is capital-intensive. Although Lion believes that it will have sufficient funds to meet its short to medium term capital requirements, it may in the future need to raise additional funds, including through the issuance of equity, equity related or debt securities or through obtaining credit from government or financial institutions, to meet its capital requirements, and the availability of additional funds to Lion will depend on a variety of factors, some of which are outside of its control. Additional funds may not be available to Lion on commercially reasonable terms or at all when it needs them, which could materially adversely affect its business, results of operations or financial condition. If additional funds are raised by issuing equity securities, shareholders of Lion may incur dilution.

Lion has a history of losses, and negative cash flows from operating activities and expects to incur significant expenses for the foreseeable future, and there is no guarantee it will achieve or sustain profitability.

Lion incurred net losses of approximately $97.4 million for the year ended December 31, 2020, approximately $3.1 million for the year ended December 31, 2019, and approximately $5.4 million for the year ended December 31, 2018. Further, Lion had negative cash flows from operating activities of approximately $27.1 million for the year ended December 31, 2020, approximately $7.4 million for the year ended December 31, 2019, and approximately $2.2 million for the year ended December 31, 2018. These losses and negative cash flows are the result of the substantial investments Lion made to grow its business, and Lion expects to make significant expenditures to expand its business in the future. Lion expects to incur significant expenditures in connection with its growth strategy, both in the United States and Canada, including as a result of the expected increase in costs related to: the construction of its planned battery assembly facility and planned large-scale U.S. manufacturing facility; the design, development and production of its new products; the hire of additional employees across all divisions; the production of an inventory of its vehicles; the buildup of inventories of parts and components for its vehicles; the expansion of its design, development, installation and servicing capabilities, including the planned construction of additional research and development centers and Lion experience centers; and an increase in its administrative functions to support its growth. Lion also expects to continue spending on technical and other operational enhancements to its business and to increase investment in research and development as it continues to introduce new products and solutions with a view to offer full turnkey transition services towards fleet electrification to its customers. While Lion expects to generate positive cash flows over time, the aforementioned anticipated increased expenditures will make it harder for Lion to achieve profitability and positive cash flow and Lion cannot guarantee it will achieve either in the near term or at all. If Lion is unable to generate adequate revenue growth and manage its expenses, it may continue to incur losses and have negative cash flows from operating activities and there is no guarantee it will achieve or sustain profitability or positive cash flows. To the extent Lion has negative cash flows from operating activities in any future periods, all or a portion of the funds raised in connection with the Business Combination and the PIPE financing may be used to fund such negative cash flows. See the section entitled “Lion may in the future need to raise additional funds to meet its capital requirements and such funds may not be available to Lion on commercially reasonable terms or at all when it needs them, which could materially adversely affect Lion’s business, results of operations or financial condition.” Even if Lion is able to successfully and economically develop, manufacture and distribute its vehicles on schedule and at scale, there can be no assurance that it will be commercially successful.

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

 

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

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

Increases in costs, disruption of supply or shortage of raw materials, particularly lithium-ion battery cells, could materially adversely affect Lion’s business, results of operations or financial condition.

Lion may experience increases in the cost or a sustained interruption in the supply or shortage of raw materials. Any such increase in cost or supply interruption or shortage could materially adversely affect Lion’s business, results of operations or financial condition. Components in Lion’s vehicles are made of various raw materials, including aluminum, steel, carbon fiber, non-ferrous metals (such as copper), and cobalt. The prices for these raw materials fluctuate depending on market conditions and global demand and could materially affect Lion’s business, results of operations or financial condition. Although Lion has secured long-term contractual arrangements with suppliers with respect to the supply of key components of its vehicles, including lithium-ion batteries, Lion is nevertheless exposed to multiple risks relating to price fluctuations for lithium-ion cells. These risks include:

 

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the inability or unwillingness of current battery manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric vehicle industry as demand for such cells increases;

 

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disruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers;

 

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increased regulation of supply chains to account for, among other things, environmental and/or human rights risks; and

 

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an increase in the cost of raw materials used in lithium-ion cells, such as cobalt.

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

Lion’s vehicles use lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.

The battery packs within Lion’s vehicles use lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials

 

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as well as other lithium-ion cells. While the battery pack is designed to contain any single cell’s release of energy without spreading to neighboring cells, a field or testing failure of Lion’s vehicles could occur, which could result in bodily injury or death and could subject Lion to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications, the social and environmental impacts of cobalt mining or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve Lion’s vehicles, could materially adversely affect Lion’s business, results of operations or financial condition.

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

Lion may not be able to adequately forecast the supply and demand for its vehicles, its manufacturing capacity or its profitability under long term supply arrangements, including the MPA with the Specified Customer, which could result in a variety of inefficiencies in its business and hinder its ability to generate revenue.

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

In addition, the MPA (as defined below) with the Specified Customer (as defined below) requires Lion to reserve necessary manufacturing capacity to deliver up to 500 trucks per year from 2021 to 2025 and the greater of 500 trucks per year or 10% of Lion’s manufacturing capacity from 2026 to 2030, which could hinder Lion’s ability to capitalize on future business opportunities. Moreover, some of Lion’s customers, including the Specified Customer under the MPA, operate on a purchase order basis, which means such customers are not required to purchase any specified minimum quantity of vehicles beyond the quantities in an existing purchase order and may in certain circumstances cancel or reschedule purchase orders on relatively short notice. Cancellations or rescheduling of customer orders could result in the delay or loss of anticipated sales without allowing sufficient time to reduce, or delay the incurrence of, corresponding inventory and operating expenses, which could materially adversely affect Lion’s business, results of operations or financial condition.

Lion’s operating and financial results may vary significantly from period to period due to fluctuations in its operating costs and other factors.

Lion expects its period-to-period operating and financial results to vary based on a multitude of factors, some of which are outside of Lion’s control. Lion expects its period-to-period financial results to vary based on operating costs, which it anticipates will fluctuate with the pace at which it increases its manufacturing capacity

 

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

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

Lion is still in the development and testing phase with respect to certain of its vehicles, including, among others, the Lion8 Tractor, Lion8 Bucket, Lion8 Boom, Lion7, Lion6 Utility and Lion5 all-electric trucks, the LionD all-electric school bus and an all-electric ambulance. The commercial deliveries of such vehicles are not expected to begin until 2021 or 2022 (depending on the product) and may occur later or not at all. Any delay in the financing, design, production and launch of any such new vehicles, including future production of the aforementioned all-electric trucks, school buses and ambulance, could harm Lion’s reputation or materially adversely affect its business, results of operations or financial condition.

Failure to carry adequate insurance coverage may have a material adverse effect on Lion’s business, results of operations or financial condition.

Lion maintains liability insurance, property and business interruption insurance, cargo insurance, cybersecurity insurance, automotive liability insurance and directors and officers insurance, and such insurance coverage reflects deductibles, self-insured retentions, limits of liability and similar provisions. However, there is no guarantee that Lion’s insurance coverage will be sufficient, or that insurance proceeds will be paid to Lion in a timely manner. In addition, there are types of losses Lion may incur but against which it cannot be insured or which it believes are not economically reasonable to insure, such as losses due to acts of war and certain natural disasters. If Lion incurs these losses and they are material, its business, results of operations or financial condition could be materially adversely affected.

Increased freight and shipping costs or disruptions in transportation and shipping infrastructure could materially adversely impact Lion’s business, results of operations or financial condition.

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

 

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Lion is highly dependent on the services of Marc Bedard, its CEO—Founder, and the rest of its senior management team. Lion’s inability to retain Mr. Bedard or attract and retain management or other employees who possess specialized market knowledge and technical skills could affect its ability to compete, manage operations effectively or develop new products or otherwise materially adversely affect its business, results of operations or financial condition.

Lion’s success depends, in part, on its ability to retain its key personnel, in particular management and other employees who possess specialized market knowledge and technical skills. Lion is highly dependent on the services of Marc Bedard, its CEO—Founder and second largest shareholder. Mr. Bedard is the source of many of the innovative ideas driving Lion and their execution. If Mr. Bedard were to discontinue his service for Lion due to death, disability or any other reason, Lion would be significantly disadvantaged. The unexpected loss of or failure to retain one or more of Lion’s key employees could adversely affect Lion’s business, results of operations or financial condition. Lion does not currently maintain key man life insurance policies with respect to Mr. Bedard or any other officer, and Lion expects to evaluate whether to obtain such key man life insurance policies following completion of the Business Combination.

Lion’s success also depends, in part, on its continuing ability to identify, hire, attract, train, develop and retain other highly qualified personnel with specialized market knowledge and technical skills. Experienced and highly skilled employees are in high demand and competition for these employees can be intense, and Lion’s ability to hire, attract and retain them depends on Lion’s ability to provide competitive compensation. Lion may not be able to attract, assimilate, develop or retain qualified personnel in the future, and Lion’s failure to do so could materially adversely affect its business, results of operations or financial condition. Any failure by Lion’s management team and employees to perform as expected may have a material adverse effect on its business, financial condition and operating results.

Any deterioration in relationships with Lion’s employees as well as any work stoppage or similar difficulties could have a material adverse effect on Lion’s business, results of operations or financial condition.

None of Lion’s employees are currently unionized. The maintenance of a productive and efficient labor environment and, in the event of unionization of employees, the successful negotiation of a collective bargaining agreement, cannot be assured. A deterioration in relationships with employees or in the labor environment could result in work interruptions or other disruptions, or cause management to divert time and resources from other aspects of Lion’s business, any of which could have a material adverse effect on Lion’s business, results of operations or financial condition.

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

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

 

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obligations to resolve allegations of non-compliance, imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings and curtailment of its operations.

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

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

 

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the sharing of confidential information;

 

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

 

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

 

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unforeseen costs or liabilities;

 

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adverse effects to Lion’s existing business relationships with partners and suppliers;

 

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

 

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the possibility of adverse tax consequences;

 

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

 

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

 

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

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

The terms of Lion’s indebtedness contain, and the terms of its future indebtedness may contain, certain covenants that restrict its ability to engage in certain transactions and may impair its ability to execute its growth strategy and respond to changing business and economic conditions.

The instruments governing Lion’s indebtedness contain restrictive covenants that may limit its discretion with respect to certain business matters. These covenants place significant restrictions on, among other things, Lion’s ability to incur additional indebtedness or issue shares, create liens or other encumbrances, pay

 

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distributions or dividends or make certain other payments, investments, loans and guarantees, engage in transactions with affiliates, merge, amalgamate, consolidate or make other fundamental changes and to sell or otherwise dispose of assets. In addition, the instruments governing Lion’s indebtedness contain covenants that require it to meet certain financial ratios and financial condition tests. Lion has in the past obtained waivers from its lenders in connection with financial ratios provided for in certain of its debt instruments, but there are no guarantees lenders will agree to provide similar waivers in the future if requested. Lion may also incur future indebtedness that might subject it to additional covenants and restrictions that could affect its financial and operational flexibility. The restrictions in the instruments governing Lion’s indebtedness may prevent it from taking actions that it believes would be in the best interest of its business and may make it difficult for it to execute its business strategy successfully or effectively compete with companies that are not similarly restricted.

Lion’s ability to comply with the covenants and restrictions contained in the instruments governing its indebtedness may be affected by economic, financial and industry conditions beyond its control. A breach of any of these covenants or restrictions could result in a default under the applicable debt instrument that would permit applicable lender(s) to declare all amounts outstanding thereunder to be due and payable, together with accrued and unpaid interest, or cause cross-defaults under Lion’s other debt. If Lion is unable to repay its indebtedness, lenders could proceed against the collateral securing the debt. In any such case, Lion may be unable to borrow under the agreements under which such other indebtedness is issued, which could have a material adverse effect on its business, results of operations or financial condition.

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

Lion reports its financial results in U.S. dollars and a material portion of its sales and operating costs are realized in currencies other than the U.S. dollar. For the year ended December 31, 2020, approximately 49.5% of Lion’s revenues were realized in Canada. Lion is also exposed to other currencies such as the Euro, and may in the future be exposed to other currencies. If the value of any currencies in which sales are realized, particularly the Canadian dollar, depreciates relative to the U.S. dollar, Lion’s foreign currency revenue will decrease when translated to U.S. dollars for reporting purposes. In addition, any depreciation in foreign currencies could result in higher local prices, which may negatively impact local demand and have a material adverse effect on Lion’s business, results of operations or financial condition. Alternatively, if the value of any of the currencies in which operating costs are realized appreciates relative to the U.S. dollar, Lion’s operating costs will increase when translated to U.S. dollars for reporting purposes. Although these risks may sometimes be naturally hedged by a match in sales and operating costs denominated in the same currency, fluctuations in foreign currency exchange rates, particularly the U.S.-Canadian dollar exchange rate, could create discrepancies between Lion’s sales and operating costs in a given currency that could have a material adverse effect on its business, results of operations or financial condition. Fluctuations in foreign currency exchange rates could also have a material adverse effect on the relative competitive position of Lion’s products in markets where it faces competition from manufacturers who are less affected by such fluctuations in exchange rates, especially in the U.S. market.

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

Unfavorable economic conditions, such as consequences of the global COVID-19 pandemic, may have a material adverse effect on Lion’s business, results of operations and financial condition.

Lion has been impacted by the COVID-19 pandemic, and Lion cannot predict the future impacts the COVID-19 pandemic may have on its business, results of operations and financial condition. Beginning in March

 

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2020, numerous government regulations and public advisories, as well as shifting social behaviors, temporarily and from time to time limited or closed non-essential transportation, government functions, business activities and person-to-person interactions, and the duration of such trends is difficult to predict. Mandated governmental measures have forced Lion to reduce operations at its Saint-Jérôme, Québec, facility and establish work-from-home policies for certain of its employees, and some of its suppliers have been subject to similar limitations and may also have been required to shut down production. Limitations on travel by Lion’s personnel and personnel of its customers and increased demand for commercial trucks within its customers’ fleets caused some customers to delay electrification of their fleet, and future delays or shutdowns of Lion’s facilities or those of its suppliers’ could impact Lion’s ability to meet customer orders. Lion cannot predict if current restrictions and limitations to its or its customers’ and suppliers’ operations will be maintained, or if new measures will be implemented.

Lion’s operations and timelines may also be affected by global economic markets and levels of consumer comfort and spend, including recessions, slow economic growth, economic and pricing instability, increase of interest rates and credit market volatility, all of which could impact demand in the worldwide transportation industries or otherwise have a material adverse effect on Lion’s business, operating results and financial condition. Because the impact of current conditions on an ongoing basis is yet largely unknown, is rapidly evolving and has been varied across geographic regions, this ongoing assessment will be particularly critical to allow Lion to accurately project supply and demand and infrastructure requirements globally and allocate resources accordingly. If current global market conditions continue or worsen, Lion’s business, results of operations and financial condition could be materially adversely affected.

Natural disasters, unusually adverse weather, epidemic or pandemic outbreaks, boycotts and geo-political events could materially adversely affect Lion’s business, results of operations or financial condition.

The occurrence of one or more natural disasters, such as hurricanes and earthquakes, unusually adverse weather, epidemic or pandemic outbreaks, such as the ongoing COVID-19 pandemic, boycotts and geo-political events, such as civil unrest and acts of terrorism, or similar disruptions could materially adversely affect Lion’s business, results of operations or financial condition. These events could result in physical damage to property, an increase in energy prices, temporary or permanent closure of one or more of Lion’s current or planned facilities, temporary lack of an adequate workforce in a market, temporary or long-term disruption in the supply of raw materials, product parts and components, temporary disruption in transport from overseas, or disruption to Lion’s information systems. Lion may incur expenses or delays relating to such events outside of its control, which could have a material adverse impact on its business, operating results and financial condition.

Risks Related to Customers and Suppliers

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

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

 

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reductions in Lion’s existing or potential customers’ spending levels;

 

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

 

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

 

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its ability to execute on its growth strategy;

 

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

 

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

 

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

 

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its focus on long-term value over short-term results,

meaning that Lion may make strategic decisions that may not maximize its short-term revenue or profitability if it believes that the decisions are consistent with its vision and will improve its financial performance over the long-term.

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

Lion is dependent on third-party suppliers to supply and manufacture parts and components included in its vehicles, and it expects to continue to rely on third parties to supply and manufacture such parts and components in the future. While Lion obtains components from multiple sources whenever possible, some of the components used in its vehicles, including certain key battery system components, are purchased from a single source. While Lion believes that it may be able to establish alternate supply relationships and can obtain or potentially engineer replacement components for some of its single source components, it may be unable to do so in the short term or at all, or at prices, volumes or quality levels that are acceptable to it. In addition, the inability of any of Lion’s suppliers to deliver necessary parts or components according to Lion’s schedule and at prices, volumes or quality levels acceptable to Lion, Lion’s inability to efficiently manage these parts or components, or the termination or interruption of any material supply arrangement could materially adversely affect Lion’s business, results of operations or financial condition. Any disruption in the supply of parts or components, whether or not from a single source supplier, could temporarily disrupt manufacturing of Lion’s vehicles until an alternative supplier is able to supply the required material. Changes in business conditions, unforeseen circumstances, governmental changes, and other factors beyond Lion’s control or which it does not presently anticipate, could also affect Lion’s suppliers’ ability to deliver components to Lion on a timely basis and ultimately, Lion’s ability to economically manufacture and distribute its vehicles. Any of the foregoing could materially adversely affect Lion’s business, results of operations or financial condition.

Also, if any of Lion’s suppliers become economically distressed or go bankrupt, Lion may be required to provide substantial financial support or take other measures to ensure supplies of components or materials, which could increase its costs, affect its liquidity or cause production disruptions, all of which could materially adversely affect Lion’s business, results of operations or financial condition.

Lion has limited experience servicing the urban trucks it distributes. Failure to address the servicing requirements of its customers could harm Lion’s reputation or materially adversely affect its business, results of operations or financial condition.

Lion has limited experience in servicing the urban trucks it distributes, including its class 6 and 8 trucks available for purchase today, and it expects to be required to increase its servicing capabilities as it scales its operations and continues to grow, including by building new Lion experience centers in the U.S. and Canada. Servicing electric vehicles is different than servicing vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques. Although Lion believes the

 

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experience it has gained servicing its electric buses and developing and operating prototypes of its urban trucks positions it well to service its urban trucks and future products, Lion has no after-sale experience of maintaining and servicing urban trucks for its customers, and there is no guarantee Lion will be able to do so. Failure to address the servicing requirements of its customers could harm Lion’s reputation or materially adversely affect its business, results of operations or financial condition.

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

Lion’s future growth is dependent upon the trucking and busing industries’ and Lion’s other customers’ willingness to adopt battery electric vehicles and specifically Lion’s vehicles.

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

 

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

 

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

 

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

 

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

 

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the availability of service and charging stations for electric vehicles;

 

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

 

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the availability of alternative fuel vehicles;

 

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improvements in the fuel economy of the internal combustion engine;

 

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the environmental consciousness of the trucking and busing industries and Lion’s other target customers;

 

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volatility in the cost of oil and gasoline;

 

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•

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

 

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

 

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

 

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macroeconomic factors.

For example, the market price of oil has dropped since March 2020, and it is unknown to what extent any corresponding decreases in the cost of diesel fuel may impact the market for electric vehicles. Moreover, travel restrictions and social distancing efforts in response to the COVID-19 pandemic may negatively impact the commercial trucking industry, leading to reduced consumer demand for products carried by the commercial trucking industry, for an unknown, but potentially lengthy, period of time. In addition, temporary school closures in the United States and Canada resulted in reduced school bus usage and reduced demand for ancillary products and services. Even if the trucking and busing industries and Lion’s other target customers adopt battery electric vehicles, Lion may be unable to establish and maintain confidence in its long-term business prospects among consumers, analysts and within the industry, and may be subject to negative publicity. The influence of any of the factors described above may cause current or potential customers not to purchase Lion’s vehicles and may otherwise materially adversely affect Lion’s business, results of operations or financial condition.

Lion’s inability to leverage vehicle and customer data could impact the servicing of its products, its software algorithms and impact research and development operations.

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

Risks Related to Electric Vehicle Industry and Related Regulatory, Legal and Tax Matters

The battery electric vehicle industry and its associated technologies are rapidly evolving and may be subject to unforeseen changes. Developments in alternative or analogous technologies may adversely affect the demand for Lion’s vehicles or otherwise materially adversely affect Lion’s business, results of operations or financial condition.

The battery electric vehicle industry and its technology are rapidly evolving and may be subject to unforeseen changes. Lion may be unable to keep up with changes in electric vehicle technology or alternatives to electricity as a fuel source and, as a result, its competitiveness may suffer. Developments in alternative or analogous technologies, such as advanced diesel, ethanol, fuel cells, or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may harm Lion’s competitive position and growth prospects or materially and adversely affect Lion’s business, results of operations or financial condition, including in ways which it currently does not anticipate.

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

The North American medium and heavy-duty urban truck market is highly competitive today and Lion expects it will become even more so in the future. Lion’s principal competition for their trucks comes from

 

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manufacturers of trucks with internal combustion engines powered by diesel fuel. This includes Navistar (Volkswagen), Daimler, Volvo, PACCAR, Hino (Toyota), and other automotive manufacturers. Lion cannot assure that customers will choose its vehicles over those of its competitors’ diesel-powered trucks. As of the date hereof, few class 5 to 8 electric trucks or battery electric buses are being sold in the United States or Canada. However, Lion expects that an increasing number of competitors will enter the electric truck market within the next several years and as they do so Lion expects that it will experience significant competition. A number of private and public companies have announced plans to offer battery electric trucks, including companies such as Navistar, Daimler, Volvo, PACCAR, Tesla, Nikola, and others. Based on publicly available information, a number of these competitors have displayed prototype trucks and have announced target availability and production timelines, while others have launched pilot programs in some markets. In addition, Lion is aware that potential competitors, including BYD and Workhorse, are currently manufacturing and selling battery electric trucks.

The North American school bus market is mainly concentrated in the hands of three incumbent automotive original equipment manufacturers (“OEMs”) selling primarily diesel school buses: Blue Bird Corporation, Thomas Built Buses (Daimler), and IC Bus (Navistar/Volkswagen). These manufacturers mainly compete with Lion’s school buses through their traditional diesel offering but are beginning to rollout electric models. In addition to the incumbent diesel school bus OEMs, a few early-stage EV OEMs have entered in competition with Lion such as Green Power Motor, which offers purpose-built electric Type D school buses, and Trans Tech, which offers retrofit electric Type A school buses.

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

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

Lion’s vehicles are subject to numerous mandated safety standards. Lion may be unable to comply with such safety standards, or could incur significant costs in order to do so, which could in each case materially adversely affect its business, results of operations or financial condition.

Lion’s vehicles, and the sale of motor vehicles in general, are subject to numerous international, federal, state and provincial motor vehicle safety and other standards, including the National Traffic and Motor Vehicle Safety Act, the Federal Motor Vehicle Safety Standards, the Motor Vehicle Safety Act (Canada) and similar laws and regulations. Although Lion continuously evaluates requirements for licenses, approvals, certificates and governmental authorizations necessary to manufacture, sell or service its vehicles in the United States and Canada, it may experience difficulties in obtaining or complying with various licenses, approvals, certifications

 

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and other governmental authorizations necessary to manufacture, sell or service its vehicles, especially for future vehicles. For example, in the United States, vehicles that meet or exceed all federally mandated safety standards are certified under the federal regulations. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving federal certification. Similar regulations exist in other jurisdictions. Failure by Lion to maintain or obtain any necessary approval for, or otherwise satisfy motor vehicle standards with respect to, its existing or future electric vehicles, or the incurrence of material unexpected costs in connection therewith, could have a material adverse effect on Lion’s business, financial condition and operating results.

Lion is subject to substantial laws, regulations and standards, including related to product safety, health and safety and environmental matters, each of which could impose substantial costs, legal prohibitions or unfavorable changes upon its operations or products, and any failure to comply with these laws, regulations or standards, including as they evolve, could harm Lion’s reputation, subject it to significant fines and liability, negatively impact its ability to sell its vehicles or operate its manufacturing facilities and materially adversely affect its business, results of operations and financial condition.

As a manufacturing company, including with respect to its current Saint-Jérôme, Québec, facility and its planned battery assembly facility and planned large-scale U.S. manufacturing facility, Lion is or will be subject to complex environmental, manufacturing, health and safety laws and regulations at numerous jurisdictional levels in the U.S. and Canada, including laws relating to the use, handling, storage, recycling, disposal and human exposure to hazardous materials and with respect to constructing, operating and maintaining its facilities. The costs of compliance, including remediating contamination if any is found on Lion’s current or future properties, or at sites where Lion has sent wastes for disposal, and any changes to Lion’s operations mandated by new or amended laws, may be significant. Lion may also face unexpected delays in obtaining permits and approvals required by such laws in connection with its future facilities, which would hinder operation of these facilities and Lion’s growth. Such costs and delays may materially adversely impact Lion’s business, results of operations or financial condition. Furthermore, any violations of these laws may result in substantial fines and penalties, remediation costs, third party damages, or a suspension or cessation of Lion’s operations. In addition, battery electric vehicles are subject to substantial regulation under international, federal, state, provincial and local laws and implementing regulations. These requirements are subject to change, including as a result of shifting sociopolitical trends. For example, several jurisdictions have adopted, or are considering adopting, laws related to supply chain sustainability, particularly with regards to environmental and/or human rights characteristics. Lion incurs significant costs in complying with applicable laws and regulations and may be required to incur additional costs to comply with any changes to such laws or regulations, and any failures to comply could result in significant expenses, delays or fines, or otherwise materially adversely affect Lion’s business, results of operations or financial condition.

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

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

In particular, demand for Lion’s vehicles is influenced by federal, state, provincial and local tax credits, rebates, grants and other government programs and incentives that promote the use of battery electric vehicles. These include various government programs that make grant funds available for the purchase of battery electric vehicles. Additionally, demand for Lion’s vehicles may be influenced by laws, rules, regulations and programs

 

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

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

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

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

While Lion plans on manufacturing some of its vehicles in the United States in the future, all of its vehicles are currently manufactured in, and distributed from, its Saint-Jérôme, Québec, facility. For the year ended December 31, 2020 and the year ended December 31, 2019, Lion’s total sales outside Canada represented approximately 50.5% and 62.0%, respectively, of its total sales, and Lion intends to continue to expand its operations in the United States by investing in the construction of a large-scale U.S. manufacturing facility and promoting its brand and vehicles in the United States. The U.S. market has been and is expected to continue generating sales growth. Several factors, including weakened international economic conditions, the introduction of new trade restrictions, increased protectionism or changes in free-trade arrangements such as the Canada-United States-Mexico Agreement (CUSMA), tariffs, negative geo-political events or an outbreak of infectious disease, a pandemic or a similar public health threat, such as the COVID-19 pandemic, could adversely affect such growth. In particular, the U.S. government has adopted a new approach to trade policy and in some cases has attempted to renegotiate or terminate certain existing bilateral or multi-lateral trade agreements. It has also imposed tariffs on certain foreign goods, including steel and certain commercial vehicle parts, which have

 

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resulted in increased costs for goods imported into the United States. There is no guarantee that further tariffs or additional trade restrictions will not be implemented on a broader range of products or raw materials. The resulting environment could have a material adverse effect on Lion’s business, results of operations or financial condition.

Tax matters and changes in tax laws could materially adversely affect Lion’s business, results of operations or financial condition.

Lion conducts operations, directly and through its U.S. subsidiary, in Canada and the United States and is therefore subject to income taxes in Canada and the United States. Lion may also in the future become subject to income taxes in other foreign jurisdictions. Lion’s effective income tax rate could be adversely affected by a number of factors, including changes in the valuation of deferred tax assets and liabilities, changes in tax laws, changes in accounting and tax standards or practices, changes in the composition of operating income by tax jurisdiction, changes in Lion’s operating results before taxes, and the outcome of income tax audits in Canada, the United States, or other jurisdictions. Lion regularly assesses all of these matters to determine the adequacy of its tax liabilities. If any of Lion’s assessments turn out to be incorrect, Lion’s business, results of operations, or financial condition could be materially adversely affected.

Lion conducts business in the United States through its existing U.S. subsidiary and may in the future conduct business via new subsidiaries in the United States or other jurisdictions. Due to the complexity of multinational tax obligations and filings, Lion may have a heightened risk related to audits or examinations by federal, state, provincial, and local taxing authorities in the jurisdictions in which it operates. Outcomes from these audits or examinations could have a material adverse effect on Lion’s business, results of operations, or financial condition.

The tax laws of Canada and the U.S. as well as potentially any other jurisdiction in which Lion may operate in the future, have detailed transfer pricing rules that require that all transactions with non-resident related parties satisfy arm’s length pricing principles. Although Lion believes that its transfer pricing policies have been reasonably determined in accordance with arm’s length principles, the taxation authorities in the jurisdictions where Lion carries on business could challenge its transfer pricing policies. International transfer pricing is a subjective area of taxation and generally involves a significant degree of judgment. If any of these taxation authorities were to successfully challenge Lion’s transfer pricing policies, Lion could be subject to additional income tax expenses, including interest and penalties. Any such increase in Lion’s income tax expense and related interest and penalties could have a material adverse effect on its business, results of operations, or financial condition.

In addition, Lion is also entitled to claim certain expenses and tax credits, including research and development expenses and Scientific Research and Experimental Development tax credits. Although Lion believes that the claims or deductions have been reasonably determined, there can be no assurance that Canadian or other relevant foreign taxation authorities will agree. If a taxation authority were to successfully challenge the correctness of such expenses or tax credits claimed, or if a taxation authority were to reduce any tax credit either by reducing the rate of the grant or the eligibility of some research and development expenses in the future, Lion’s business, results of operations, or financial condition could be materially adversely affected.

Lion may also be adversely affected by changes in the relevant tax laws and tax rates, treaties, regulations, administrative practices and principles, judicial decisions, and interpretations thereof, in each case, possibly with retroactive effect. For example, the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS recently entered into force among the jurisdictions that have ratified it. While Canada has ratified this convention, the United States has not yet done so. These recent changes could adversely affect Lion’s taxation, especially as Lion expands its relationships and operations internationally and could have a material adverse effect on Lion’s business, results of operations, or financial condition.

 

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

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

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

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

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

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

 

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respect to availability of vehicles in the ordinary course, and failure by Lion to satisfy those obligations, including if vehicle downtime and unavailability result from defects in the vehicles or preventative maintenance or maintenance issues, could result in Lion being liable for significant amounts, and any material breach by Lion under the MPA could entitle the Specified Customer to terminate the MPA and fully accelerate the vesting of the Specified Customer Warrant. See “Risk Factors—Lion’s constating documents permit it to issue an unlimited number of Common Shares without additional shareholder approval.” Failure by Lion to meet such obligations under the MPA with the Specified Customer, especially if the volume of purchases made by the Specified Customer thereunder increases significantly, could affect Lion’s profitability or otherwise materially and adversely affect its business, results of operations or financial condition.

Risks Related to Cyber Security, Intellectual Property and Technology

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

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

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

 

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

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

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

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

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

Lion’s vehicles rely on software and hardware, including software and hardware developed or maintained by third parties, that is highly technical and complex and will require modification and updates over the life of the vehicle. In addition, the performance of the software solutions included in Lion’s vehicles depends on the

 

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

Interruption or failure of Lion information technology and communications systems could impact Lion’s ability to effectively provide Lion’s services.

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

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

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

 

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

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

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

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

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

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

 

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products, potentially resulting in the loss of some of Lion’s competitive advantage and a decrease in its revenue, which would adversely affect its business, prospects, financial condition and operating results.

Lion may need to defend itself against intellectual property infringement or trade secret misappropriation claims, which may be time-consuming, could cause it to incur substantial costs and could prevent Lion from developing or commercializing future products.

Companies, organizations or individuals, including Lion’s competitors, may own or obtain patents, trademarks or other intellectual property or proprietary rights that would prevent or limit Lion’s ability to make, use, develop or sell its vehicles or components, which could make it more difficult for Lion to operate its business. Lion may receive inquiries from owners of intellectual property rights inquiring whether it infringes their proprietary rights. Lion may also be the subject of allegations that it has misappropriated a third party’s trade secrets or other proprietary rights. Companies owning patents or other intellectual property rights relating to the operation of Lion’s business, including in respect of battery packs, electric motors, fuel cells or electronic power management systems may allege infringement or misappropriation of such rights. In response to a determination that Lion has infringed or misappropriated upon a third party’s intellectual property rights, Lion may be required to do one or more of the following:

 

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cease development, sales, or use of vehicles that incorporate the asserted intellectual property;

 

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establish and maintain alternative branding for its products and services;

 

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pay substantial damages;

 

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obtain a license from the owner of the asserted intellectual property right, which license may not be available on commercially reasonable terms or at all; or

 

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redesign one or more aspects or systems of its vehicles.

Any litigation or claims against Lion, whether valid or invalid, could result in substantial costs and diversion of resources or otherwise materially adversely affect its business, prospects, results of operations and financial condition.

Lion also licenses patents and other intellectual property from third parties, including its third-party vendors and suppliers, and Lion may face claims that the use by it of this in-licensed technology infringes the intellectual property rights of others. In such cases, Lion would seek indemnification from its licensors. However, Lion’s rights to indemnification may be unavailable or insufficient to cover Lion’s costs and losses, which could materially adversely affect Lion’s business, prospects, results of operations and financial condition. As well, Lion cannot be certain that such licensed intellectual property will afford protection against competitors with similar technology as the scope of protection of issued patent claims is often difficult to determine. The claims under any licensed patents may not be broad enough to prevent others from developing technologies that are similar or that achieve results similar to the patented technology.

Risks Related to the Ownership of Lion Common Shares

The share price of Lion Common Shares may be volatile, and the market price of Lion Common Shares following completion of the Business Combination may drop below its initial listing price.

Following completion of the Business Combination, the market price of Lion Common Shares could be subject to significant fluctuations. Some of the factors that may cause the market price of Lion Common Shares to fluctuate include:

 

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volatility in the market price and trading volume of comparable companies;

 

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actual or anticipated changes or fluctuations in Lion’s operating results or in the expectations of market analysts;

 

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short sales, hedging and other derivative transactions in Lion Common Shares;

 

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publication of research reports or news stories about Lion, its competitors or its industry;

 

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litigation or regulatory action against Lion;

 

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positive or negative recommendations or withdrawal of research coverage by securities analysts;

 

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adverse market reaction to any indebtedness it may incur or securities it may issue in the future;

 

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investors’ general perception of Lion and the public’s reaction to its press releases, other public announcements and filings with U.S. and Canadian securities regulators, including its financial statements;

 

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changes in general political, economic, industry and market conditions and trends;

 

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sales of Lion Common Shares by existing shareholders;

 

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recruitment or departure of key personnel;

 

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significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving Lion or its competitors; and

 

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the other risk factors described in this section of this proxy statement/prospectus.

Additionally, these factors, as well as other related factors, may cause decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. Certain institutional investors may base their investment decisions on consideration of Lion’s environmental, governance and social practices and performance against such institutions’ respective investment guidelines and criteria, and failure to satisfy such criteria may result in limited or no investment in Lion Common Shares by those institutions, which could materially adversely affect the trading price of Lion Common Shares. There can be no assurance that fluctuations in price and volume will not occur. If such increased levels of volatility and market turmoil continue for a protracted period of time, Lion’s business, results of operations or financial condition and the trading price of Lion Common Shares may be materially adversely affected.

In addition, broad market and industry factors may harm the market price of Lion Common Shares. Hence, the price of Lion Common Shares could fluctuate based upon factors that have little or nothing to do with it, and these fluctuations could materially reduce the price of Lion Common Shares regardless of Lion’s operating performance. In the past, following a significant decline in the market price of a company’s securities, there have been instances of securities class action litigation having been instituted against that company. If Lion is involved in any similar litigation, it could incur substantial costs, its management’s attention and resources could be diverted and Lion’s business, results of operations and financial condition could be materially adversely affected.

There can be no assurance that a market will develop for Lion Common Shares or that Lion will be able to comply with the continued listing standards of the NYSE or the TSX.

In connection with the closing of the Business Combination, Lion intends to list the Lion Common Shares on the NYSE and the TSX under the symbol “LEV.” There is currently no public trading market for Lion Common Shares, and Lion cannot assure that one will develop or be sustained following completion of the Business Combination. If a market does not develop or is not sustained, it may be difficult for investors to sell their Lion Common Shares. This may affect the pricing of Lion Common Shares in the secondary market, the transparency and availability of trading prices, the liquidity of the Lion Common Shares and the extent of regulation applicable to Lion. In addition, if, after completion of the Business Combination, the NYSE and/or the TSX delists the Lion Common Shares from trading on its exchange for failure to meet the listing standards, Lion and its shareholders could face significant material adverse consequences including, limited availability of market quotations for Lion’s securities, a limited amount of analyst coverage, and a decreased ability to issue additional securities or obtain additional financing in the future.

 

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Lion will incur significant expenses and devote other significant resources and management time as a result of being a public company, which may negatively impact its financial performance and could cause its results of operations and financial condition to suffer.

Lion will incur significant legal, accounting, insurance and other expenses as a result of being a public company. The Sarbanes-Oxley Act, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Act and the rules and regulations promulgated thereunder and the NYSE, impose additional reporting and other obligations on public companies. Lion expects that compliance with these laws, rules and regulations will substantially increase its expenses, including its legal and accounting costs, and make some activities more time-consuming and costly, and these new obligations will require attention from its management team and could divert their attention away from the day-to-day management of Lion’s business.

Lion also expects these laws, rules and regulations to make it more expensive for it to obtain director and officer liability insurance, and it may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for Lion to attract and retain qualified persons to serve on its board of directors or as officers. As a result of the foregoing, Lion expects a substantial increase in legal, accounting, insurance and certain other expenses in the future, which will negatively impact its financial performance and could cause Lion’s results of operations and financial condition to suffer. Furthermore, if Lion is unable to satisfy its obligations as a public company, it could be subject to delisting of the Lion Common Shares, fines, sanctions and other regulatory action and potentially civil litigation.

Lion’s senior management team has limited experience managing a public company, and regulatory compliance may divert its attention from the day-to-day management of the business.

The individuals who now constitute Lion’s senior management team have limited experience managing a publicly traded company and limited experience complying with the increasingly complex regulatory environment pertaining to public companies. Lion’s senior management team may not successfully or efficiently manage Lion’s transition to being a public company subject to significant regulatory oversight and reporting obligations under U.S. and Canadian securities laws.

Lion’s management will have broad discretion in the use of Lion’s net proceeds from the Business Combination and PIPE Financing.

Lion cannot specify with certainty the particular uses of the net proceeds it will receive from the Business Combination and PIPE Financing. Accordingly, an investor in the Lion Common Shares will have to rely upon the judgment of Lion’s management with respect to the use of proceeds, with only limited information concerning management’s specific intentions. Lion’s management may spend a portion or all of the net proceeds from the Business Combination and PIPE Financing in ways that Lion’s shareholders might not desire, that might not yield a favorable return and that might not increase the value of a purchaser’s investment. The failure by Lion’s management to apply these funds effectively could have a material adverse effect on Lion’s business, results of operations or financial condition. Pending their use, Lion may invest the net proceeds from the Business Combination and PIPE Financing in a manner that does not produce income or that loses value.

Lion’s failure to timely and effectively implement controls and procedures required by the Sarbanes-Oxley Act and Canadian securities laws that will be applicable to it following completion of the Business Combination could have a material adverse effect on its business, results of operations or financial condition.

As a foreign private issuer listed on the NYSE, Lion will incur legal, accounting and other expenses that it did not previously incur. Lion will be subject to the requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing rules of the NYSE (the “NYSE Listing Rules”), NYSE listing requirements, and

 

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other applicable securities rules and regulations, as well as the Foreign Corrupt Practices Act. Compliance with these rules and regulations will increase Lion’s legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on its systems and resources. The Exchange Act requires that, as a public company, Lion file or furnish annual and certain other reports with respect to its business, financial condition and results of operations.

Effective internal control over financial reporting is necessary for Lion to provide reliable financial reports. Effective internal controls, together with adequate disclosure controls and procedures, are designed to prevent or detect material misstatements due to fraud or error and to provide reasonable assurance as to the reliability of financial reporting. Deficiencies in Lion’s internal controls may adversely affect its management’s ability to record, process, summarize, and report financial data on a timely basis. As a public company, Lion will be required to comply with applicable Canadian securities laws, including National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings. Beginning with its second annual report, Lion will be obligated to include a report of management’s assessment on its internal control over financial reporting and, after Lion ceases to qualify as an emerging growth company, an independent auditor’s attestation report on its internal control over financial reporting in its annual reports on Form 20-F, subject to certain exceptions. Prior to completion of the Business Combination, Lion has never been required to test its internal controls within a specified period and, as a result, it may experience difficulty in meeting these reporting requirements in a timely manner.

Lion anticipates that the process of building its accounting and financial functions and infrastructure will require significant additional professional fees, internal costs and management efforts. Lion expects that it will need to adapt its current internal system to combine and streamline the management of its financial, accounting, human resources and other functions. However, such a system would likely require Lion to complete many processes and procedures for the effective use of the system or to run its business using the system, which may result in substantial costs. Any disruptions or difficulties in implementing or using such a system could adversely affect Lion’s controls and materially adversely affect its business, results of operations or financial condition. Moreover, such disruption or difficulties could result in unanticipated costs and diversion of management’s attention. In addition, Lion may discover weaknesses in its system of internal financial and accounting controls and procedures that could result in a material misstatement of its financial statements. Lion’s internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

Certain of Lion’s existing shareholders will continue to have significant influence over Lion following completion of the Business Combination.

Upon Closing, PEC will, directly or indirectly, own or control approximately 38.0% of Lion’s issued and outstanding Lion Common Shares, and 9368-2672 will, directly or indirectly, own or control approximately 14.6% of Lion’s issued and outstanding Lion Common Shares (in each case, on a non-diluted basis and assuming no redemption by NGA stockholders). Each of PEC and 9368-2672 will therefore continue to have significant influence over Lion’s management and affairs after completion of the Business Combination, which could limit a shareholder’s ability to influence the outcome of matters submitted to shareholders for a vote, including election of directors and significant corporate transactions. In addition, as per the terms of the Business Combination Agreement, effective as of Closing, Lion will enter into the Nomination Rights Agreement, pursuant to which, subject to the terms and conditions contained therein, each of PEC and 9368-2672 will be granted certain rights to nominate members of Lion’s Board (including, in certain cases, members of committees of Lion’s Board) for so long as it holds a requisite percentage of the total voting power of Lion. For more information about the Nomination Rights Agreement, see the section entitled “Description of Share Capital—Nomination Rights.”

 

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Following completion of the Business Combination, each of PEC and 9368-2672 will be able to influence Lion’s decisions. The market price of Lion Common Shares could be adversely affected due to the significant influence and voting power of PEC and 9368-2672. Moreover, the significant influence and voting interest of PEC and 9368-2672 may discourage transactions involving a change of control, including transactions in which an investor, as a holder of Lion Common Shares, might otherwise receive a premium for Lion Common Shares over the then-current market price, or discourage competing proposals if a going private transaction is proposed.

Additionally, PEC’s interests may not align with the interests of Lion’s other shareholders. PEC (or its affiliates or related entities) is in the business of making investments in companies and may acquire and hold interests in businesses that compete directly or indirectly with Lion. PEC (or its affiliates or related entities) may also pursue acquisition opportunities that may be complementary to Lion’s business, and, as a result, those acquisition opportunities may not be available to Lion.

Lion does not expect to declare any dividends in the foreseeable future.

After the completion of the Business Combination, Lion anticipates reinvesting earnings to finance the growth of its business, and does not anticipate declaring any cash dividends to holders of Lion Common Shares in the foreseeable future. Consequently, investors may need to rely on sales of their shares after price appreciation, which may never occur, as the only way to realize any future gains on their investment.

Lion will qualify as an “emerging growth company” within the meaning of the Securities Act, and if it takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, it could make Lion’s securities less attractive to investors and may make it more difficult to compare Lion’s performance to the performance of other public companies.

Lion will qualify as an “emerging growth company” as defined in the Securities Act, as amended by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, Lion will be eligible for and intends to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as it continues to be an emerging growth company, including (a) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements. Lion will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of Lion Common Shares that are held by non-affiliates exceeds $700 million as of the last business day of the second quarter of that fiscal year, (ii) the last day of the fiscal year in which it has total annual gross revenue of $1.07 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which it has issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the Closing. Investors may find Lion Common Shares less attractive because Lion will rely on these exemptions, which may result in a less active trading market for Lion Common Shares and its price may be more volatile.

Lion is a foreign private issuer within the meaning of the SEC rules, and as such is exempt from certain provisions applicable to U.S. domestic public companies.

Because Lion qualifies as a foreign private issuer under the Exchange Act, Lion is exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

 

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the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

 

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the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

 

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the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

 

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the selective disclosure rules by issuers of material nonpublic information under Regulation FD.

Lion will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, Lion intends to publish its results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the NYSE. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information Lion is required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

As a foreign private issuer, Lion is permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NYSE Listing Rules; these practices may afford less protection to shareholders than they would enjoy if Lion complied fully with the NYSE Listing Rules.

As a corporation incorporated under the Business Corporations Act (Québec) listed on the NYSE, Lion is subject to the NYSE Listing Rules. However, the NYSE Listing Rules permit a foreign private issuer like Lion to follow the corporate governance practices of its home country. Certain corporate governance practices in Canada, which is Lion’s home country, may differ significantly from the NYSE Listing Rules. Lion may rely on home country practice with respect to its corporate governance after completion of the Business Combination, and Lion currently intends to do so with respect to certain corporate governance requirements. As a result, Lion’s shareholders may be afforded less protection than they otherwise would enjoy under the NYSE Listing Rules applicable to U.S. domestic issuers.

If securities or industry analysts do not publish or cease publishing research or reports about Lion, its business or market, or if they change their recommendations regarding Lion Common Shares adversely, the price and trading volume of Lion Common Shares could decline.

The trading market for Lion Common Shares is influenced by the research and reports that industry or securities analysts publish about Lion, its business, its market or its competitors. If any of the analysts who cover Lion or may cover Lion in the future change their recommendation regarding Lion Common Shares adversely, or provide more favorable relative recommendations about its competitors, the price of Lion Common Shares would likely decline. If any analyst who covers Lion or may cover it in the future were to cease coverage of Lion or fail to regularly publish reports on it, Lion could lose visibility in the financial markets, which in turn could cause the price or trading volume of Lion Common Shares to decline.

A significant portion of Lion’s total outstanding Lion Common Shares are restricted from immediate resale but may be sold into the market in the near future. Future sales of Lion’s securities by existing shareholders or by Lion could cause the market price of Lion Common Shares to drop significantly, even if its business is doing well.

Sales of a substantial number of Lion Common Shares in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of Lion Common Shares or securities convertible into Lion Common Shares intend to sell Lion Common Shares, could reduce the market price of Lion Common Shares. Following the completion of the Business Combination, the Lion Common Shares issued in exchange for the NGA Founder Shares will be subject to a 365-day lock-up with Lion, and the Lion Common Shares held by shareholders of Lion prior to the Business Combination Agreement will be subject to a 180-day lock-up with Lion, in each case subject to certain exceptions thereto. For more information about the Lion Lock-Up Agreements, see the sections entitled “Proposal No. 1—Related Agreement—Stockholder Support and Lock-Up Agreement” and “Proposal No. 1—Related Agreement—Lion Lock-Up Agreements.” All of these Lion

 

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Common Shares will, however, be able to be resold after the expiration of the applicable lock-up period, as well as pursuant to customary exceptions thereto or upon the waiver of the lock-up agreement by Lion. As restrictions on resale end, the market price of Lion Common Shares could decline if the holders of currently restricted Lion Common Shares sell them or are perceived by the market as intending to sell them.

Moreover, upon completion of the Business Combination, Lion will enter into the Registration Rights Agreement pursuant to which, subject to the terms and conditions contained therein, each of PEC and 9368-2672 will be granted certain rights with respect to the registration or qualification by prospectus in the United States and/or Canada of the sale of the Lion Common Shares held by them. For more information about the Registration Rights Agreement, see the section entitled “Description of Share Capital—Registration Rights.” Further, Lion cannot predict the size of future issuances of Lion Common Shares or the effect, if any, that future issuances and sales of Lion Common Shares will have on the market price of Lion Common Shares. Sales of a substantial number of Lion Common Shares, or the perception that such sales could occur, may adversely affect prevailing market prices for Lion Common Shares.

Any issuance of preferred shares could make it difficult for another company to acquire Lion or could otherwise adversely affect holders of Lion Common Shares, which could depress the price of Lion Common Shares.

Upon Closing, Lion’s Board will have the authority to issue Lion Preferred Shares and to determine the preferences, limitations and relative rights of Lion Preferred Shares and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by its shareholders. Any such Lion Preferred Shares could be issued with liquidation, dividend and other rights superior to the rights of Lion Common Shares. The potential issuance of Lion Preferred Shares may delay or prevent a change in control of Lion, discourage bids for Lion Common Shares at a premium over the market price and adversely affect the market price and other rights of the holders of Lion Common Shares.

Lion’s constating documents permit it to issue an unlimited number of Lion Common Shares without additional shareholder approval.

Lion’s articles to be in effect following completion of the Business Combination will permit it to issue an unlimited number of Lion Common Shares. Lion may, from time to time, issue additional Lion Common Shares in the future. Subject to the requirements of the NYSE and the TSX, Lion will not be required to obtain the approval of shareholders for the issuance of additional Lion Common Shares. Any further issuances of Lion Common Shares will result in immediate dilution to existing shareholders and may have an adverse effect on the value of their shareholdings.

Assuming the completion of the Business Combination (following the Lion Pre-Closing Reorganization), (i) as of December 31, 2020, the vested portion of the Specified Customer Warrant is exercisable for a number of Lion Common Shares that represents approximately 2.7% of all Lion Common Shares issued and outstanding on a partially-diluted basis, and (ii) the Specified Customer Warrant would, if fully vested, represent approximately 15.8% of all Lion Common Shares issued and outstanding on a partially-diluted basis. Any exercise by the Warrantholder (as defined below) of its right to acquire Lion Common Shares will dilute the ownership interests of Lion’s then-existing shareholders and reduce Lion’s earnings per share. In addition, any sales by the Warrantholder in the public market of any Lion Common Shares issuable upon the exercise of the Specified Customer Warrant could adversely affect prevailing market prices of the Lion Common Shares. For more information about the Specified Customer Warrant, see the section entitled “Business of Lion—Contractual Arrangements with Affiliates of Amazon.com, Inc.”

 

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Lion’s constating documents to be in effect following completion of the Business Combination and certain Canadian legislation contain provisions that may have the effect of delaying or preventing certain change in control transactions or shareholder proposals.

Certain provisions of Lion’s bylaws to be in effect following completion of the Business Combination and certain Canadian legislation, together or separately, could discourage or delay certain change in control transactions or shareholder proposals. Lion’s bylaws to be in effect following completion of the Business Combination will contain provisions that establish certain advance notice procedures for nomination of candidates for election as directors at shareholders’ meetings. The Business Corporations Act (Québec) requires that any shareholder proposal that includes nominations for the election of directors must be signed by one or more holders of shares representing in the aggregate not less than 5% of the shares or 5% of the shares of a class or series of shares of the corporation entitled to vote at the meeting to which the proposal is to be presented.

The Investment Canada Act requires that a non-Canadian must file an application for review with the Minister responsible for the Investment Canada Act and obtain approval of the Minister prior to acquiring control of a “Canadian business” within the meaning of the Investment Canada Act, where prescribed financial thresholds are exceeded. Furthermore, limitations on the ability to acquire and hold Lion Common Shares may be imposed by the Competition Act (Canada). This legislation permits the Commissioner of Competition, or Commissioner, to review any acquisition or establishment, directly or indirectly, including through the acquisition of shares, of control over or of a significant interest in Lion. Otherwise, there will be no limitations either under the laws of Canada or Québec, or in Lion’s articles on the rights of non-Canadians to hold or vote its Lion Common Shares.

Any of these provisions may discourage a potential acquirer from proposing or completing a transaction that may have otherwise presented a premium to Lion’s shareholders.

Lion’s constating documents will provide that any derivative actions, actions relating to breach of fiduciary duties and other matters relating to its internal affairs will be required to be litigated in Canada, other than complaints asserting a cause of action arising under the Securities Act or the Exchange Act, and that the U.S. federal district courts will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the Exchange Act, which could limit shareholders’ ability to obtain a favorable judicial forum for disputes with Lion.

Lion’s by-laws to be in effect following completion of the Business Combination will include a forum selection provision that provides that, unless Lion consents in writing to the selection of an alternative forum, the Superior Court of Justice of the Province of Québec, Canada and the appellate courts therefrom, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on Lion’s behalf; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of Lion’s directors, officers, or other employees to Lion; (iii) any action or proceeding asserting a claim arising pursuant to any provision of the Business Corporations Act (Québec) or Lion’s by-laws; or (iv) any action or proceeding asserting a claim otherwise related to the relationships among Lion, its affiliates and their respective shareholders, directors and/or officers, but excluding claims related to Lion’s business or such affiliates. The forum selection provision also provides that Lion’s securityholders are deemed to have consented to personal jurisdiction in the Province of Québec and to service of process on their counsel in any foreign action initiated in violation of the foregoing provisions. For more information about the choice of forum, see the section entitled “Description of Share Capital—Important Provisions and Constating Documents—Choice of Forum.”

In addition, Lion’s by-laws will provide that the U.S. federal district courts will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act and the Exchange Act. The enforceability of similar exclusive forum provisions (including exclusive federal forum provisions for actions, suits or proceedings asserting a cause of action arising under the Securities Act) in other companies’ organizational documents has been challenged in legal proceedings, and there is uncertainty as to whether courts

 

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would enforce the exclusive forum provisions in Lion’s by-laws. Additionally, Lion’s securityholders cannot waive compliance with the U.S. federal securities laws and the rules and regulations thereunder.

The forum selection provision may impose additional litigation costs on shareholders in pursuing any such claims. Additionally, the forum selection provision may limit shareholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with Lion or its directors, officers or employees, which may discourage the filing of lawsuits against Lion and its directors, officers and employees, even though an action, if successful, might benefit its shareholders. The courts of the Province of Québec may also reach different judgments or results than would other courts, including courts where a shareholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to Lion than to its shareholders. If a court were to find either choice of forum provision contained in Lion’s by-laws to be inapplicable or unenforceable in an action, Lion may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect Lion’s business, results of operations and financial condition.

Lion may be treated as a passive foreign investment company (“PFIC”), which could result in adverse U.S. federal income tax consequences to U.S. investors.

If Lion is treated as a PFIC for any taxable year in which a U.S. Holder (as defined in the section entitled “Material U.S. Federal Income Tax Considerations”) holds Lion Common Shares or warrants (regardless of whether Lion remains a PFIC for subsequent taxable years), such U.S. Holder may be subject to certain adverse U.S. federal income tax consequences and may be subject to additional reporting requirements.

Lion expects to take the position that it is not a PFIC for the taxable year of the Business Combination, but such position will not be free from doubt. Lion’s PFIC status for the taxable year of the Business Combination or any subsequent taxable year will not be determinable until after the end of such taxable year, and Lion cannot assure that it will not be a PFIC in the taxable year of the Business Combination or in any future taxable year. If Lion were later determined to be a PFIC, you may be unable to make certain advantageous elections with respect to your ownership of Lion Securities that would mitigate the adverse consequences of Lion’s PFIC status, or making such elections retroactively could have adverse tax consequences to you. Lion is not representing to you that Lion will not be treated as a PFIC for the taxable year of the Business Combination or in any future taxable years. The PFIC rules are complex and unclear. Holders should consult with, and rely solely upon, their tax advisors to determine the application of the PFIC rules to them and any resultant tax consequences. For more information about the tax considerations with respect to PFIC classification to Holders, see the section entitled “Proposal No. 1—The Business Combination Proposal—Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations in Respect of Ownership of Lion Common Shares or Lion Warrants—Considerations for U.S. Holders—Passive Foreign Investment Company Rules.”

Risks Related to NGA in Relation to the Business Combination

NGA is a newly formed company with little operating history, and you have no basis on which to evaluate its ability to successfully consummate the Business Combination.

NGA is a newly formed company with limited operating history, formed for the purpose of completing an initial business combination. As such, you have no basis upon which to evaluate its ability to complete the Business Combination, and it may be unable to do so.

Past performance by members of NGA’s management team may not be indicative of an ability to complete a business combination or of future performance of an investment in Lion.

Past acquisition and operational experience of NGA’s management team and their affiliates is not a guarantee of NGA’s ability to complete the Business Combination nor, if consummated, a guarantee that the intended benefits of the Business Combination will be achieved. None of NGA’s officers or directors has prior experience with blank check or special purpose acquisition companies. No members of the NGA management

 

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team are expected to continue as part of the Lion executive management team following the Business Combination. Two members of the NGA management team will be directors of Lion immediately following the Business Combination, but there is no assurance that such individuals will continue as directors of Lion or that their views will prevail in relation to any decisions or actions taken by Lion’s Board. You should not rely on the historical record of NGA’s management team or their affiliates’ performance as indicative of the future performance of Lion or of an investment in the Lion Common Shares.

The Sponsor and certain of NGA’s directors and officers have interests in the Business Combination that are different from, or in addition to, the interests of the NGA stockholders generally, and NGA’s officers and directors may have conflicts that could have a negative impact on NGA’s ability to complete the Business Combination.

The Sponsor and certain of NGA’s directors and officers have interests in the Business Combination that are different from, or in addition to, the interests of the NGA stockholders generally. For more information about the interests of certain persons in the Business Combination, see the section entitled “Proposal No. 1—The Business Combination—Interests of Certain Persons in the Business Combination.”

In addition, NGA’s officers and directors are not required to, and do not, commit their full time to NGA’s affairs, and each is engaged in other business endeavors in which they may receive substantial compensation or otherwise have significant financial interests. These additional commitments and activities may limit the availability of a particular officer or director and negatively impact the ability of NGA to complete the Business Combination.

The Sponsor controls a substantial interest in NGA and thus may influence certain actions requiring a stockholder vote, including the approval of the Business Combination.

The Sponsor owns approximately 20% of NGA’s issued and outstanding shares of common stock. Although neither the Sponsor nor any of NGA’s officers or directors have indicated an intention to purchase any additional NGA Units or shares of NGA Common Stock prior to the Business Combination, NGA’s officers, directors, initial stockholders or their affiliates could determine in the future to make purchases in the open market or in private transactions, to the extent permitted by law, in order to influence the vote or magnitude of the number of stockholders seeking to tender their shares to NGA for redemption. The Sponsor has agreed to vote all shares of NGA Common Stock owned by it in favor of the Business Combination.

NGA’s ability to complete the Business Combination may be materially adversely affected by the COVID-19 pandemic or other events beyond NGA’s control.

NGA may be unable to complete the Business Combination if concerns relating to COVID-19 continue to restrict travel, limit the ability to have meetings with potential investors or Lion’s personnel, or consultants and other advisors and other services providers are unavailable to assist NGA or Lion with consummation of the Business Combination in a timely manner. The extent to which COVID-19 impacts NGA and the Business Combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and actions taken to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) continue for an extensive period of time, NGA’s ability to consummate the Business Combination, or the operations of either or both of NGA and Lion, may be materially adversely affected.

NGA has and will continue to incur significant transaction costs in connection with the negotiation of the Business Combination Agreement and consummation of the Business Combination.

NGA has incurred and expects to continue to incur significant, non-recurring costs in connection with the consummation of the Business Combination. All expenses incurred in connection with the Business Combination

 

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Agreement and the transactions contemplated thereby, including all legal, accounting, consulting, investment banking and other fees, expenses and costs, will be for the account of the party incurring such fees, expenses and costs. If the Business Combination is not consummated, NGA may not have sufficient funds to seek an alternative business combination and may be forced to voluntarily liquidate and subsequently dissolve.

If NGA is unable to complete the Business Combination and is unable to arrange another business combination prior to August 20, 2022, its Public Stockholders may receive only approximately US$10.00 per share on redemption of its NGA Public Shares, or less than such amount in certain circumstances, and its warrants will expire worthless.

If NGA does not complete an initial business combination prior to August 20, 2022 and the NGA stockholders do not approve an extension of such deadline, NGA will be forced to cease operations and liquidate its Trust Account. In such event, the NGA Public Stockholders would receive only $10.00 per share, or possibly less than $10.00 per share, on the resulting redemption of the NGA Public Shares, and NGA’s warrants would expire worthless.

The Business Combination Agreement cannot be terminated by either party, except in limited circumstances, prior to May 30, 2021 (subject to extension for the duration of any increase in the HSR review period pursuant to a change in law), and unless and until terminated, prohibits NGA from, among other things, soliciting, initiating, discussing or otherwise cooperating with any person regarding, any alternative business combination transaction, limiting the amount of remaining time that NGA would have available to identify, negotiate, and consummate an alternative business combination in the event that the Business Combination does not close. NGA’s ability to arrange and consummate an initial business combination within the remaining prescribed period of time may be adversely affected by a number of factors, including an inability to identify a suitable target business, competition from other acquirors having a business objective similar to its own, NGA being competitively disadvantaged by the right of NGA’s Public Stockholders to exercise redemption rights with respect to a large portion of NGA’s common stock, a lack of sufficient funds for costs and expenses necessary to identify an appropriate target business and complete a business combination, and other factors.

NGA stockholders have no rights or interests in funds from NGA’s Trust Account, except under certain limited circumstances, and as a result such stockholders may be forced to sell their NGA Common Stock and/or warrants, potentially at a loss, to liquidate their investment.

NGA’s Public Stockholders are entitled to receive funds from NGA’s Trust Account only upon the earlier to occur of: (i) NGA’s completion of the Business Combination (or other initial business combination), and then only in connection with those shares of NGA Common Stock that such stockholder properly elects to redeem, subject to the limitations described herein, and (ii) the redemption of NGA’s common stock if NGA is unable to complete its business combination by August 20, 2022, subject to applicable law and as further described herein. Accordingly, to liquidate their investment, such stockholders may be forced to sell their NGA Common Stock and/or warrants, potentially at a loss.

NGA Warrants will automatically be converted into Lion Warrants upon the completion of the Business Combination and Lion will continue to have the right to redeem the Public Warrants prior to their exercise, including at times that may be disadvantageous to holders of such securities.

Pursuant to the existing terms of the Public Warrants, Lion will have the right, following the automatic conversion of the Public Warrants into Lion Warrants upon the completion of the Business Combination, to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Public Warrant, provided that the last reported sales price of Lion Common Shares equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of common stock and equity-linked securities) for any 20 trading days within a 30 trading-day period commencing once the Public Warrants become exercisable and ending on the third trading

 

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day prior to the date on which Lion gives proper notice of such redemption and provided certain other conditions are met. If and when the Public Warrants become redeemable, Lion may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

Redemption of the outstanding Public Warrants could force the holders of such Public Warrants (i) to exercise their Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so, (ii) to sell their Public Warrants at the then-current market price when they might otherwise wish to hold their Public Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of such warrants. None of NGA’s Private Placement Warrants or NGA Working Capital Warrants will be redeemable by Lion so long as they are held by the Sponsor or its permitted transferees.

Risks Related to the Business Combination and its Effects

NGA’s due diligence investigation of Lion and factors affecting its business may not surface all material issues, including issues or circumstances that could have a significant negative effect on Lion’s financial condition, results of operations and stock price, which could cause NGA stockholders to lose some or all of their continuing investment.

NGA cannot guarantee that its extensive due diligence investigation of Lion has or will surface all issues that may be material to an investment in Lion. Lion is a private company that has not been exposed to significant public investor scrutiny, and information that may be relevant to the Business Combination is limited. In addition, factors affecting Lion’s business that are outside of the control of Lion and NGA may later arise, and risks identified by NGA may materialize in a manner or to an extent that diverges from NGA’s expectations. Such factors may include those that would negatively impact Lion’s liquidity, or require that Lion write-down or write-off assets, restructure operations, or incur impairment or other charges that could result in reported losses. Charges of this nature could contribute to negative market perception about Lion or its securities and could cause Lion to violate net worth or other debt financing or similar covenants to which it may be subject. In such an event, the continued investment of NGA stockholders may be negatively impacted.

NGA’s assessment of the capabilities of Lion’s management to continue Lion’s growth transition may prove to be incorrect, which could negatively impact the value of the continuing investment of NGA stockholders.

The individuals who constitute Lion’s senior management team have limited experience managing a publicly traded company and limited experience complying with the increasingly complex regulatory environment pertaining to public companies. If NGA’s assessment of the capabilities of Lion’s management to successfully execute upon Lion’s cross-border growth strategy, transition to management of a public company, and continue to attract qualified personnel proves to be incorrect, the operations and profitability of the post-combination business and the value of the continued investment of NGA stockholders may be negatively impacted.

NGA did not obtain an opinion from an unaffiliated third party as to the fairness of the Business Combination to the NGA stockholders.

NGA is not required to and did not obtain an opinion from an unaffiliated third party that the consideration to be received by the NGA stockholders in connection with the Business Combination is fair to NGA’s stockholders from a financial point of view. Although NGA engaged and took into account the analysis and views of Barclays based on Barclays’ experience and sector expertise, such analysis and views do not constitute a fairness opinion and were for NGA’s reference only. NGA’s stockholders, therefore, must rely solely on the judgment of NGA’s officers and directors that the consideration to be received by the NGA stockholders in connection with the Business Combination is fair to NGA’s stockholders from a financial point of view.

 

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The success of the combined enterprise following the Business Combination depends solely on the business operations of Lion, which exposes investors to a concentration of risk in the limited sectors in which Lion’s business is focused.

Although the Business Combination is intended to accelerate Lion’s growth, expansion and transition, the Business Combination does not result in immediately diversification of Lion’s business and, as such, the combined enterprise will be dependent upon the continued development and market acceptance of a limited number of products and services. As a result, investors will be subject to the economic, competitive and regulatory risks attendant to the relatively narrow industry in which Lion operates, any or all of which could have a substantial adverse impact on Lion.

Given the cross-border nature of the Business Combination, the combined enterprise will become subject to a variety of additional risks that may negatively impact the post-merger business’s operations.

Although one of the intended benefits of the Business Combination is to facilitate and accelerate growth of Lion in both Canadian and U.S. markets, the cross-border nature of the transaction and of Lion’s future operations will be subject to special considerations and risks associated with companies operating in an international setting, including any of the following:

 

•

higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;

 

•

rules and regulations regarding currency redemption;

 

•

complex corporate withholding taxes on individuals;

 

•

laws governing the manner in which future business combinations may be affected;

 

•

tariffs and trade barriers;

 

•

regulations related to customs and import/export matters;

 

•

longer payment cycles and challenges in collecting accounts receivable;

 

•

tax issues, such as tax law changes and differences between Canadian and U.S. tax laws;

 

•

currency fluctuations and exchange controls;

 

•

rates of inflation;

 

•

cultural and language differences;

 

•

employment regulations;

 

•

crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters, pandemics and wars;

 

•

deterioration of political relations between Canada and the United States; and

 

•

government appropriations of assets.

Lion may not be able to adequately address these additional risks. If it is unable to do so, its operations might suffer, which may adversely impact its results of operations and financial condition.

Lion’s results of operations may differ significantly from the unaudited pro forma financial data included in this document.

This document includes unaudited pro forma consolidated financial statements for Lion following the Business Combination. The unaudited pro forma consolidated financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma consolidated financial statements are not necessarily indicative

 

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of the results of operations and financial position that would be achieved if the Business Combination were consummated. Lion’s post-combination consolidated business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma consolidated financial statements included in this document.

During the pre-closing period, NGA and Lion are prohibited from evaluating and entering into certain transactions that might otherwise be beneficial to NGA, Lion or their respective stockholders.

Until the earlier of consummation of the Business Combination or termination of the Business Combination Agreement, NGA and Lion are subject to certain limitations on the operations of their businesses, each as summarized under the heading “—The Business Combination Agreement—Other Covenants and Agreements” including, subject to specified exceptions, limitations on:

 

•

soliciting, negotiating or entering into transactions alternative to the Business Combination;

 

•

acquiring other entities and assets (whether by merger, amalgamation, or other methods) or dispose of any assets in excess of certain thresholds;

 

•

operating outside the ordinary course of business;

 

•

paying dividends;

 

•

reclassifying, repurchasing, and issuing any of its securities, subject to certain exceptions; and

 

•

certain other business activities.

The limitations on NGA’s and Lion’s conduct of their businesses during this period could have the effect of delaying or preventing other strategic transactions and may, in some cases, make it impossible to pursue business opportunities that are available only for a limited time.

The consummation of the Business Combination is subject to certain material conditions, some of which are outside the control of NGA and Lion, which may be difficult or costly to satisfy and which may impede the closing of the Business Combination or reduce the intended benefits of the Business Combination.

Consummation of the Business Combination is conditioned upon, among other things, the approval of the Business Combination Proposal by NGA stockholders and receipt of certain governmental and NYSE approvals, any of which may delay or prevent consummation of the Business Combination or result in additional costs. In addition, the obligation of either party to consummate the Business Combination is conditioned on, among other matters, the representations and warranties of the other party in the Business Combination Agreement being true and correct, subject to specified materiality thresholds, as of the closing of the Business Combination, and material compliance by the other party of its covenants and agreements in the Business Combination Agreement. The obligation of Lion to consummate the Business Combination is further subject to the closing of the PIPE Financing immediately before consummation of the Business Combination and to the condition that the proceeds thereof, plus the amount of NGA’s then existing net cash (including NGA trust funds not required for redemptions of NGA Common Stock), be at least $200 million. Further, neither party is obligated to consummate the Business Combination in the event that a material adverse effect occurs with respect to the other party following the execution of the Business Combination Agreement and remains unresolved.

If any condition to the closing of the Business Combination is not satisfied by May 30, 2021, either party may terminate the Business Combination Agreement, unless the failure of any such condition to be satisfied was materially caused by a breach or violation of the Business Combination Agreement by such party.

 

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Each of NGA and Lion may be obligated to close the Business Combination notwithstanding to occurrence of certain events or circumstances that have a material adverse effect on the other party and the combined enterprise.

Although the Business Combination Agreement generally makes a party’s obligation to consummate the Business Combination contingent upon the other party not suffering a material adverse effect to its business, condition (financial or otherwise), assets, liabilities or operations, or to its ability to consummate the Business Combination, certain events and circumstances that may have such an effect are excluded from this condition. Excluded events and circumstances include (i) any change in law, conditions generally affecting the industries or geographic areas in which such other party operates, or any downturn in general economic conditions, except in the case of any of the foregoing to the extent that such other party is materially disproportionally affected as compared to other participants in its industry, (ii) any changes in political conditions, outbreak of hostilities, natural disasters or other force majeure events, (iii) actions taken or not taken as requested or approved by the other party or as required by the Business Combination Agreement, (iv) any effect attributable to the execution, announcement or consummation of the Business Combination, or (v) any epidemic, pandemic or disease outbreak (including COVID-19) or governmental requirements or guidelines relating thereto. In the event that either party suffers an actual material adverse effect due to any of the foregoing, the parties may remain obligated to consummate the Business Combination, notwithstanding that the combined enterprise and the intended benefits of the Business Combination may be materially and adversely affected.

NGA or Lion may waive one or more of the conditions to the Business Combination set forth in the Business Combination Agreement, resulting in the consummation of the Business Combination notwithstanding divergence from assumptions on which the Business Combination was evaluated and approved.

NGA or Lion may agree to waive, in whole or in part, one or more of the conditions to their respective obligations to complete the Business Combination, to the extent permitted by their governing documents and applicable laws and subject to compliance with the Subscription Agreements. For example, it is a condition to each party’s obligation to consummate the Business Combination that representations and warranties of the other party in the Business Combination Agreement be true and correct, subject to specified materiality thresholds, as of the closing of the Business Combination. However, if the board of either party determines that it is in the best interests of such party to proceed with the Business Combination notwithstanding the failure of such a condition to be satisfied, the board of that party may elect to waive that condition and consummate the Business Combination. As a result of any such waiver, the Business Combination may be consummated notwithstanding divergence from assumptions on which the Business Combination was evaluated and approved.

If the Business Combination does not qualify as a “reorganization” under Section 368(a) of the Code, or results in gain recognition to holders of NGA Common Stock or NGA Warrants pursuant to Section 367(a) of the Code, the stockholders and warrantholders of NGA may be required to pay substantial U.S. federal income taxes.

Lion and NGA intend that, for U.S. federal income tax purposes, (i) the Business Combination qualify as a “reorganization” within the meaning of Section 368(a) of the Code and (ii) the Business Combination not result in gain recognition to holders of NGA Common Stock or NGA Warrants pursuant to Section 367(a) of the Code (subject to a U.S. Holder (as defined in the first section of this proxy statement/prospectus under the caption “Material U.S. Federal Income Tax Considerations”) that is a “five percent transferee shareholder” entering into a “gain recognition agreement” (as defined for such purposes)). These rules are complex and guidance regarding their application is unclear and incomplete. Although Husch Blackwell LLP, NGA’s tax counsel, is currently of the opinion that the Business Combination more likely than not qualifies as a reorganization within in the meaning of Section 368(a) of the Code (including that it is not excluded from the application of such provision pursuant to Section 367 of the Code), and Lion and NGA currently expect to file tax returns consistent with this intended tax treatment, this tax treatment is not free from doubt. There is significant uncertainty as to whether the exchange of NGA Common Stock and NGA Warrants for Lion Common Shares and Lion Warrants in the

 

58

Business Combination would be treated as a taxable exchange and, as a result, there is significant risk that you could be subject to tax in respect of the Business Combination. For further discussion regarding the qualification of the Business Combination as a reorganization and the uncertainty related thereto, see the section entitled “—Material U.S. Federal Income Tax Consequences—Material U.S. Federal Income Tax Considerations in Respect of Engaging in the Business Combination for Holders of NGA Common Stock and NGA Warrants— Tax Characterization of the Business Combination for Holders of NGA Securities.” No assurance can be given that your tax advisor will agree with our intended tax treatment or that the IRS would not assert, or that a court would not sustain, a contrary position. Further, the application of these rules must be finally determined after completion of the Business Combination, by which time there could be adverse changes to the relevant facts, law, and other circumstances. Neither Lion nor NGA has sought or will seek any rulings from the IRS as to such tax treatment, and the closing of the Business Combination is not conditioned upon achieving, or receiving a ruling from any tax authority or opinion from any tax advisor in regards to, any particular tax treatment. Thus, the intended reporting position of Lion described herein is not free from doubt.

If the Business Combination were not a “reorganization” within the meaning of Section 368(a) of the Code (including exclusion by reason of Section 367 of the Code), a holder of NGA Common Stock or NGA Warrants would generally recognize taxable gain (or in some circumstances loss) upon the exchange of such NGA Common Stock or NGA Warrants for Lion Common Shares or Lion Warrants pursuant to the Business Combination. If the Business Combination is excluded from reorganization treatment pursuant to Section 367(a) of the Code, a relevant holder of NGA Common Stock or NGA Warrants would generally recognize taxable gain, but not loss, upon the exchange of NGA Common Stock or NGA Warrants for Lion Common Shares or Lion Warrants pursuant to the Business Combination. For more information about the tax considerations with respect to such matters, see the section entitled “—Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations in Respect of Engaging in the Business Combination for Holders of NGA Common Stock and NGA Warrants—Tax Characterization of the Business Combination for Holders of NGA Securities.” In addition, recognition of taxable gain could result in sales of Lion Common Shares and/or Lion Warrants by former holders of NGA Common Stock or NGA Warrants in order to satisfy such taxes, including by the Sponsor or its transferees (as permitted by an exception to the transfer restrictions under the Stockholder Support and Lock-up Agreement), which could adversely impact the price of NGA’s or Lion’s stock or warrants.

In light of the significant uncertainty regarding the tax treatment of the Business Combination, you are strongly urged to read the section entitled “Proposal No. 1—The Business Combination—Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations in Respect of Engaging in the Business Combination for Holders of NGA Common Stock and NGA Warrants—Tax Characterization of the Business Combination for Holders of NGA Securities,” and to consult with, and rely solely upon, your tax advisors to determine the particular U.S. federal, state, local, or foreign income or other tax consequences of the Business Combination to you.

The Business Combination could result in Lion being treated as a U.S. corporation for U.S. federal income tax purposes.

Under current U.S. federal income tax law, a corporation organized under Canadian law is not treated as a U.S. corporation and, therefore, is treated as a non-U.S. corporation. Section 7874 of the Code and the Treasury Regulations promulgated thereunder, however, contain rules that may cause a non-U.S. corporation that acquires the stock of a U.S. corporation to be treated as a U.S. corporation for U.S. federal income tax purposes under certain circumstances. If Lion were treated as a U.S. corporation for U.S. federal income tax purposes, among other consequences, it would generally be subject to U.S. federal income tax on its worldwide income, and its dividends would be treated as dividends from a U.S. corporation. Regardless of the application of Section 7874 of the Code, Lion is expected to be treated as a Canadian tax resident for Canadian tax purposes. Consequently, if Lion were to be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code, it could be liable for both U.S. and Canadian taxes and dividends paid by Lion to its shareholders could be subject to both U.S. and Canadian withholding taxes.

 

59

Lion does not expect to be treated as a U.S. corporation for U.S. federal income tax purposes, and Lion intends to take this position on its tax returns. Lion has not sought and will not seek any rulings from the IRS as to such tax treatment, and the closing of the Business Combination is not conditioned upon achieving, or receiving a ruling from any tax authority or opinion from any tax advisor in regards to, any particular tax treatment. Further, there can be no assurance that your tax advisor, the IRS, or a court will agree with the position that Lion is not treated as a U.S. corporation pursuant to Section 7874 of the Code. Lion is not representing to you that Lion will not be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code. The rules for determining whether a non-U.S. corporation is treated as a U.S. corporation for U.S. federal income tax purposes are complex, unclear, and the subject of ongoing regulatory change. Lion’s intended position is not free from doubt. Further, the application of such rules must be finally determined after completion of the Business Combination, by which time there could be adverse changes to the relevant facts, law, and other circumstances. For more information about the application of Section 7874 of the Code to the Business Combination, see the section entitled “—Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations in Respect of Engaging in the Business Combination for Holders of NGA Common Stock and NGA Warrants—Tax Residence of Lion for U.S. Federal Income Tax Purposes.”

If, as a result of the Business Combination, Lion were treated as an inverted domestic corporation under the Homeland Security Act or other relevant state and local rules, the U.S. federal government and certain state and local governments may cease doing business with Lion, which could substantially decrease the value of Lion’s business and, accordingly, the value of the Lion Common Shares.

The Federal Acquisition Regulation (“FAR”) prohibits U.S. federal government agencies from using appropriated (or otherwise made available) funds for contracts with a foreign incorporated entity, or a subsidiary of such an entity, that is an “inverted domestic corporation,” as defined in the Homeland Security Act at 6 U.S.C. § 395(b). Further, at the state and local level, certain jurisdictions have adopted similar restrictions or may adopt similar restrictions in the future. Accordingly, U.S. federal government agencies and certain state and local government agencies may be prohibited from entering into new contracts with an inverted domestic corporation and may be prohibited from paying for contractor activities on existing contracts after the date of the “inversion.” If the future expansion of Lion’s business in the United States becomes dependent upon its ability to enter into contracts with U.S. federal government agencies or state and local governments agencies in the United States, the treatment of Lion as an inverted domestic corporation could substantially decrease the value of its business following the Business Combination.

Lion intends to take the position that it is not an “inverted domestic corporation.” The application of the “inverted domestic corporation” definition is somewhat unclear due to the lack of detailed regulations or other guidance promulgated with respect to the relevant provisions of the Homeland Security Act (and similar state and local rules). Section 7874 of the Code, discussed above, includes substantially similar provisions regarding the determination of whether a foreign incorporated corporation is treated as a U.S. domestic corporation for U.S. federal income tax purposes. While the regulatory provisions and other guidance issued by the IRS and the U.S. Treasury Department with respect to such provisions provide more detailed guidance providing for expansive application, these regulations do not explicitly apply for the purposes of determining whether a corporation is an inverted domestic corporation under the Homeland Security Act (and similar state and local rules), and it is unclear to what extent they should be viewed as interpretive guidance for such purposes. There can be no assurance that the relevant government agencies, or a court or administrative tribunal, will agree with Lion’s position that it should not be treated as an inverted domestic corporation under the Homeland Security Act (or similar state or local rules), and, in addition, changes in facts or law might cause Lion to be treated as an inverted domestic corporation for such purposes. New statutory or regulatory provisions, or other guidance under the Homeland Security Act or other relevant rules, could be enacted or promulgated that would adversely affect Lion’s status with regard to the FAR prohibition or other relevant prohibitions, all of which could have retroactive application.

 

60

Risks Related to Redemption of NGA Common Stock

The ability of NGA’s Public Stockholders to redeem their shares for cash and the fact that NGA does not have a specified maximum redemption threshold may make it difficult or impossible for NGA to consummate the Business Combination.

The Business Combination Agreement requires as a closing condition that NGA have a minimum amount of cash assets on hand. If too many of NGA’s Public Stockholders exercise their redemption rights, NGA may not be able to satisfy this closing condition and, as a result, Lion would not be obligated to proceed with the Business Combination. Furthermore, in no event will NGA redeem its NGA Public Shares unless its net tangible assets are at least $5,000,001 either immediately prior to or upon consummation of the Business Combination (so that NGA is not subject to the SEC’s “penny stock” rules). Consequently, if accepting all properly submitted redemption requests would cause NGA’s net tangible assets to be less than $5,000,001, or would result in NGA not being able to satisfy the minimum cash closing condition as described above, NGA would not proceed with such redemption and the Business Combination.

If the Business Combination is unsuccessful, the NGA stockholders will continue to bear the risk of ownership of NGA Common Stock and NGA Warrants, including the risks attendant to an alternative business combination and the risk that NGA may not be able to consummate another business combination before August 20, 2022. In such an event, NGA’s Public Stockholders will have no right to receive any pro rata portion of the NGA Trust Account unless and until NGA liquidates the Trust Account, at which time all NGA Warrants would expire worthless. No assurance can be given as to the market or price available to a stockholder that wishes to liquidate its investment NGA’s common stock or NGA Warrants prior to such time, NGA Common Stock may trade at a discount to the pro rata amount per share in the Trust Account. In any such cases, NGA stockholders may suffer substantial losses.

There is no guarantee that an NGA stockholder’s decision to invest in Lion through the Business Combination or, alternatively, to redeem its NGA Common Stock for a pro rata portion of the trust account will put the stockholder in a better future economic position.

NGA can give no assurance as to the price at which an NGA stockholder may be able to sell, in the future, the securities issued to or otherwise held by the NGA stockholders following a business combination, including the Business Combination. A stockholder that does not redeem its NGA Common Stock will, following the Business Combination, bear the risk of ownership of the Lion Common Shares issued in exchange for NGA Common Stock, and there can be no assurance that a stockholder will be able to sell such Lion Common Shares in the future for a greater amount than the redemption price set forth herein. Similarly, events following the consummation of the business combination may cause an increase in the public price for the Lion Common Shares issued to the NGA stockholders following the Business Combination. A stockholder should consult the stockholder’s own tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.

If NGA stockholders fail to comply with the redemption requirements specified herein, they will not be entitled to redeem their NGA Common Stock for a pro rata portion of the funds held in the NGA Trust Account.

In order to exercise their redemption rights, holders of NGA Public Shares are required to submit a request in writing and deliver their shares (either physically or electronically) to NGA’s transfer agent at least two business days prior to the Special Meeting. NGA’s stockholders electing to redeem their shares will receive their pro rata portion of the Trust Account, including interest not previously released to NGA to pay its franchise and income taxes, calculated as of two business days prior to the anticipated consummation of the Business Combination. For more information about how NGA stockholders may exercise their redemption rights, see the section entitled “The NGA Special Meeting—Redemption Rights.”

 

61

If third parties bring claims against NGA, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by NGA shareholders may be less than $10.00 per share.

NGA’s deposit of funds in the Trust Account may not protect those funds from third-party claims against NGA. NGA generally has required that all vendors, service providers and other persons and entities to which NGA has contractual obligations, including Lion, agree in writing to waive any right, title, interest or claim of any kind in or to any funds held in the Trust Account for the benefit of NGA’s Public Stockholders. Although NGA expects to continue to impose this requirement, certain parties with which NGA needs to conduct business may not execute such agreements, and the execution of such agreements may not prevent such parties from bringing certain claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against NGA’s assets, including the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the funds held in the Trust Account, NGA’s management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to NGA than any alternative. In addition, upon certain redemptions of NGA Public Shares, including if NGA is unable to complete an initial business combination within the prescribed timeframe, NGA will be required to provide for payment of claims of creditors against NGA that were not waived and that are then outstanding or are likely to arise within ten years following such redemption. Accordingly, the per-share redemption amount received by NGA’s Public Stockholders could be less than the $10.00 per share initially held in the Trust Account, due to claims of creditors.

The Sponsor has agreed that it will be liable to NGA if and to the extent any claims by a vendor for services rendered or products sold to NGA, or a prospective target business with which NGA has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below $10.00 per public share (or such lesser amount per public share held in the Trust Account as of the date of the liquidation), subject to certain exceptions. NGA has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believes that the Sponsor’s only material assets are securities of NGA. The Sponsor may not have sufficient funds available to satisfy those obligations. NGA has not asked the Sponsor to reserve for such eventuality, and therefore, no funds are currently set aside to cover any such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available for redemptions could be reduced to less than $10.00 per public share.

The securities in which NGA invest the funds held in the NGA Trust Account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by Public Stockholders may be less than $10.00 per share.

The proceeds held in the Trust Account are invested only in U.S. government treasury obligations with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that NGA is unable to complete its initial business combination or make certain amendments to the NGA Certificate, its Public Stockholders are entitled to receive their pro-rata share of the proceeds held in the Trust Account, plus any interest income not released to NGA, net of taxes payable. Negative interest rates could impact the per-share redemption amount that may be received by Public Stockholders.

 

62

The U.S. federal income tax treatment of the redemption of NGA Common Stock as a sale of such NGA Common Stock depends on a stockholder’s specific facts.

The U.S. federal income tax treatment of a redemption of NGA Common Stock will depend on whether the redemption qualifies as a sale of such NGA Common Stock under Section 302(a) of the Code, which will depend largely on the total number of shares of NGA Common Stock treated as held by the stockholder electing to redeem NGA Common Stock (including any stock constructively owned by the holder, including as a result of owning Private Placement Warrants or Public Warrants) relative to all of the stock of NGA outstanding before and after the redemption. If such redemption is not treated as a sale of NGA Common Stock for U.S. federal income tax purposes, the redemption will instead be treated as a corporate distribution. For more information about the U.S. federal income tax treatment of the redemption of NGA Common Stock, see the section entitled “—Material U.S. Federal Income Tax Considerations—Material U.S. Federal Income Tax Considerations for Holders in Respect of the Redemption of NGA Common Stock.”

 

63

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

Defined terms included in this section have the same meaning as terms defined and included elsewhere in this proxy statement/prospectus.

The following unaudited pro forma consolidated financial statements of Lion give effect to the Business Combination and related transactions summarized below. The Business Combination does not constitute a business combination pursuant to IFRS 3 – Business Combinations as NGA is a non-operating entity and does not meet the definition of a business under IFRS 3 – Business Combinations. As a result, the Business Combination will be accounted for as a capital transaction of Lion equivalent to the issuance of shares by Lion in exchange for the net monetary assets of NGA.

The unaudited pro forma consolidated statement of financial position has been prepared to give effect to the Business Combination and related transactions summarized below as if they had been consummated on December 31, 2020. The unaudited pro forma consolidated statement of net loss for the year ended December 31, 2020 gives effect to the Business Combination and related transactions summarized below as if they had been consummated on January 1, 2020:

 

•

the merger of NGA with and into Merger Sub, a wholly-owned subsidiary of Lion, with NGA surviving the merger as a wholly-owned subsidiary of Lion;

 

•

the completion of the Lion Pre-Closing Reorganization, which will include a split of the Lion Common Shares, whereby each Lion Common Share immediately prior to such share split will be converted into 4.1289 Lion Common Shares immediately following such share split;

 

•

the issuance and sale of 20,040,200 Lion Common Shares, for a purchase price of $10.00 per share and an aggregate purchase price of $200,402,000, in the PIPE Financing; and

 

•

the repayment, effective as of Closing, of the Convertible Loan and the Convertible Debenture with Investissement Québec.

The unaudited pro forma consolidated statement of financial position and consolidated statement of net loss have been prepared to give effect to the Business Combination and related transactions summarized above and the assumptions and adjustments discussed further below. The historical financial statements have been adjusted to give pro forma effect to events that are (i) directly attributable to the Business Combination, (ii) factually supportable, and (iii) expected to have a continuing impact on the results of the post-combined entity. No adjustments have been made with regards to any issuance of NGA Working Capital Warrants.

The following unaudited pro forma consolidated financial statements have been prepared from the information derived from, and should be read in conjunction with:

 

•

the audited consolidated financial statements of Lion as of and for the year ended December 31, 2020; and

 

•

the audited financial statements of NGA as of December 31, 2020 and for the period from May 27, 2020 (inception) through December 31, 2020;

together with, in each case, the notes accompanying such financial statements and the notes accompanying the unaudited pro forma consolidated financial statements, and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Lion” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of NGA” as well as the other information relating to Lion and NGA contained in this proxy statement/prospectus, including the Business Combination Agreement and the description of certain terms thereof set forth herein.

Pursuant to the NGA Certificate, NGA is providing the Public Stockholders with the opportunity to redeem, upon the Closing, NGA Public Shares then held by them for cash at the applicable redemption price per

 

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share equal to the quotient obtained by dividing (a) the aggregate amount on deposit in the Trust Account that holds the proceeds (including interest not previously released to NGA to pay its franchise and income taxes) from the NGA IPO and concurrent private placement of Private Placement Warrants to the Sponsor, by (b) the total number of shares of NGA Common Stock issued in the NGA IPO; provided that NGA will not redeem any NGA Public Shares to the extent that such redemption would result in NGA having net tangible assets (as determined in accordance with Rule 3a51 1(g)(1) of the Exchange Act) of less than $5,000,001. For illustrative purposes, based on the fair value of marketable securities held in the Trust Account as of March 17, 2021 of $319,605,157, the estimated per share redemption price would have been approximately $10.00.

NGA cannot predict how many of its Public Stockholders will elect to redeem their NGA Public Shares. The unaudited pro forma consolidated financial statements present two redemption scenarios as follows:

 

•

Assuming No Redemptions: This scenario assumes that no shares of NGA Common Stock are redeemed from the NGA Public Stockholders.

 

•

Assuming Maximum Redemptions: This scenario assumes that approximately 29.7 million shares of NGA Common Stock are redeemed, resulting in an aggregate payment of approximately $296.7 million out of the Trust Account.

Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma consolidated financial statements are described in the accompanying notes. The unaudited pro forma consolidated financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the Business Combination occurred on the dates indicated. Further, the unaudited pro forma consolidated financial statements do not purport to project the future operating results or financial position of Lion following the completion of the Business Combination. These unaudited pro forma consolidated financial statements do not take into account any synergies or cost savings which may, or are expected to, occur as a result of the Business Combination. The unaudited pro forma adjustments represent Lion’s management’s estimates based on information available as of the date of these unaudited pro forma consolidated financial statements and are subject to change as additional information becomes available and analyses are performed.

 

65

Unaudited Pro Forma Consolidated Statement of Financial Position

As of December 31, 2020

 

 

 

																														Pro forma
																		Pro forma								Additional				consolidated
																		consolidated								pro forma				December 31,
														Pro forma				December 31,								adjustments				2020
		Lion				NGA								adjustments				2020								(Assuming				(Assuming
		December 31,				December 31,								(Assuming no				(Assuming no								maximum				maximum
		2020				2020				Notes				Redemptions)				Redemptions)				Notes				Redemptions)				Redemptions)
		$				$								$				$								$				$
Assets
Current
Cash			—				624,283				(a	)			468,022,255				468,646,538				(r	)			(296,735,405	)			171,911,133
Inventories			38,073,303				—								—				38,073,303								—				38,073,303
Accounts receivable			18,505,072				—								—				18,505,072								—				18,505,072
Prepaid expenses			1,078,148				145,771								—				1,223,919								—				1,223,919
Current assets			57,656,523				770,054								468,022,255				526,448,832								(296,735,405	)			229,713,427
Non-current
Cash and marketable securities held in Trust Account			—				319,577,125				(b	)			(319,577,125	)			—								—				—
Property, plant and equipment			5,446,807				—								—				5,446,807								—				5,446,807
Right-of-use assets			7,498,724				—								—				7,498,724								—				7,498,724
Intangible assets			42,090,843				—								—				42,090,843								—				42,090,843
Contract asset			14,327,709				—								—				14,327,709								—				14,327,709
Non-current assets			69,364,083				319,577,125								(319,577,125	)			69,364,083								—				69,364,083
Total assets			127,020,606				320,347,179								148,445,130				595,812,915								(296,735,405	)			299,077,510
Liabilities
Current
Bank indebtedness and other indebtedness			28,733,983				—								—				28,733,983								—				28,733,983
Trade and other payables			12,404,614				1,087,789								—				13,492,403								—				13,492,403
Current portion of share-based compensation liability			35,573,558				—								—				35,573,558								—				35,573,558
Current portion of long-term debt			26,699,276				—								—				26,699,276								—				26,699,276
Current portion of lease liabilities			1,814,635				—								—				1,814,635								—				1,814,635
Current liabilities			105,226,066				1,087,789								—				106,313,855								—				106,313,855
Non-current
Share-based compensation liability			35,126,025				—								—				35,126,025								—				35,126,025
Long-term debt			118,539				—								—				118,539								—				118,539
Convertible debt instruments			18,866,890				—				(g	)			(18,866,890	)			—								—				—
Lease liabilities			5,904,473				—								—				5,904,473								—				5,904,473
Share warrant obligation			31,549,033				—								—				31,549,033								—				31,549,033
Common shares, retractable			25,855,509				—				(i	)			(25,855,509	)			—								—				—
Deferred underwriting fee payable			—				11,180,870				(c	)			(11,180,870	)			—								—				—
Common stock subject to possible redemption			—				—				(j	)			303,078,515				—								—				—
											(k	)			(303,078,515	)
Non-current liabilities			117,420,469				11,180,870								(55,903,269	)			72,698,070								—				72,698,070
Total liabilities			222,646,535				12,268,659								(55,903,269	)			179,011,925								—				179,011,925
Common stock subject to possible redemption			—				303,078,515				(j	)			(303,078,515	)			—								—				—
Shareholders' equity (deficiency)
Share capital / common stock			32,562,541				963				(h	)			506,223,325				538,786,829				(r	)			(296,735,405	)			242,051,424
Additional paid-in capital			—				6,511,411				(n	)			(6,511,411	)			—								—				—
Warrants			—				—				(p	)			24,111,741				24,111,741								—				24,111,741
Conversion options on convertible debt instruments, net of tax			1,472,520				—				(g	)			(1,472,520	)			—								—				—
Deficit			(126,430,406	)			(1,512,369	)			(q	)			(14,924,221	)			(142,866,996	)							—				(142,866,996	)
Cumulative translation adjustment			(3,230,584	)			—								—				(3,230,584	)							—				(3,230,584	)
Total equity (deficiency)			(95,625,929	)			5,000,005								507,426,914				416,800,990								(296,735,405	)			120,065,585
Total equity (deficiency) and liabilities			127,020,606				320,347,179								148,445,130				595,812,915								(296,735,405	)			299,077,510

 

 

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

 

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