Filed Pursuant to Rule 424(b)(3)
Registration No. 333-257292
PROSPECTUS
ELECTRAMECCANICA
VEHICLES CORP.
$750,000,000
Common Shares
Preferred Shares
Warrants
Units
We
may offer, from time to time, in one or more offerings, common shares, preferred shares, warrants or units, which we collectively refer
to as the “securities”. The aggregate initial offering price of the securities that we may offer and sell under this prospectus
will not exceed $750,000,000. We may offer and sell any combination of the securities described
in this prospectus in different series, at times, in amounts, at prices and on terms to be determined at, or prior to, the time of each
offering. This prospectus describes the general terms of these securities and the general manner in which these securities will be offered.
We will provide the specific terms of these securities in supplements to this prospectus. The prospectus supplements will also describe
the specific manner in which these securities will be offered and may also supplement, update or amend information contained in this prospectus.
This prospectus may not be used to consummate a sale of securities unless accompanied by the applicable prospectus supplement. You should
read this prospectus and any applicable prospectus supplement before you invest.
The securities covered
by this prospectus may be offered through one or more underwriters, dealers and agents or directly to purchasers. The names of any underwriters,
dealers or agents, if any, will be included in a supplement to this prospectus. For general information about the distribution of securities
offered, please see “Plan of Distribution” herein.
Our common shares are
traded on the Nasdaq Capital Market under the symbol “SOLO” and our warrants issued pursuant to a registration statement on
Form F-1 (No. 333-222814) (the “Registered Warrants”) are traded on the Nasdaq Capital Market under the symbol “SOLOW”.
On June 21, 2021, the closing price of our common shares and Registered Warrants as reported by the Nasdaq Capital Market was $4.27
per common share and $2.19 per Registered Warrant, respectively. As of June 21, 2021, the aggregate market value of our outstanding
common shares held by non-affiliates using the closing price on the Nasdaq Capital Market of $4.27 was approximately $442,783,914
based on 112,990,024 outstanding common shares, of which approximately 103,696,467 common shares were held by non-affiliates.
We are an “emerging growth
company” as defined in section 3(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
are therefore eligible for certain exemptions from various reporting requirements applicable to reporting companies under the Exchange
Act. See “Implications of Being an Emerging Growth Company” herein.
Unless otherwise specified in an applicable prospectus
supplement, our preferred shares, warrants and units will not be listed on any securities or stock exchange or on any automated dealer
quotation system.
In reviewing this prospectus
and the documents incorporated herein by reference you should carefully consider the matters described under “Risk Factors”
herein.
This investment involves a
high degree of risk. You should purchase securities only if you can afford a complete loss.
Neither the Securities and
Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
The date
of this Prospectus is June 30, 2021.
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TABLE OF CONTENTS
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ABOUT THIS PROSPECTUS
This
prospectus is a part of a registration statement that we have filed with the SEC utilizing a “shelf” registration process.
Under this shelf registration process, we may sell any combination of the securities described in this prospectus in one or more offerings
up to an aggregate initial offering price of $750,000,000.
Each time we sell securities, we will provide
a supplement to this prospectus that contains specific information about the securities being offered and the specific terms of that offering.
The supplement may also add, update or change information contained in this prospectus. If there is any inconsistency between the information
in this prospectus and any prospectus supplement, you should rely on the prospectus supplement.
We may offer and sell securities to, or through,
underwriting syndicates or dealers, through agents or directly to purchasers. The prospectus supplement for each offering of securities
will describe in detail the plan of distribution for that offering.
In connection with any offering of securities
(unless otherwise specified in a prospectus supplement), the underwriters or agents may over-allot or effect transactions which stabilize
or maintain the market price of the securities offered at a higher level than that which might exist in the open market. Such transactions,
if commenced, may be interrupted or discontinued at any time. See “Plan of Distribution” herein.
Please carefully read both this prospectus and
any prospectus supplement together with the documents incorporated herein by reference under “Incorporation by Reference”
and the additional information described below under “Where You Can Get More Information” herein.
Prospective investors should be aware that the
acquisition of the securities described herein may have tax consequences. You should read the tax discussion contained in the applicable
prospectus supplement and consult your tax advisor with respect to your own particular circumstances.
You should rely only on the information contained
or incorporated by reference in this prospectus and any prospectus supplement. We have not authorized anyone to provide you with different
information. The distribution or possession of this prospectus in or from certain jurisdictions may be restricted by law. This prospectus
is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or
sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted
to make such offer or sale. The information contained in this prospectus is accurate only as of the date of this prospectus and any information
incorporated by reference is accurate as of the date of the applicable document incorporated by reference, regardless of the time of delivery
of this prospectus or of any sale of the securities. Our business, financial condition, results of operations and prospects may have changed
since those dates.
In this prospectus and in any prospectus supplement,
unless the context otherwise requires, references to:
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the term(s) “we”, “us”, “our”, “Company”, “our company”, “Electrameccanica” and “our business” refer to Electrameccanica Vehicles Corp., either alone or together with our subsidiaries as the context requires;
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“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
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“Securities Act” refers to the Securities Act of 1933, as amended;
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“FINRA” refers to the Financial Industry Regulatory Authority;
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“Nasdaq” refers to the Nasdaq Capital Market;
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“SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and
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“prospectus” includes this document and any information incorporated herein by reference.
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All dollar amounts in this prospectus are expressed
in United States dollars unless otherwise indicated. Our accounts and our financial statements are maintained and presented in United
States dollars and our financial statements are prepared in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board. All references to “CAD dollars”, “CAD”, or to “CAD$” are
to Canadian dollars.
ABOUT
THE COMPANY
General
We are a development-stage electric vehicle, or
“EV”, manufacturer company located in Vancouver, British Columbia, Canada. Our initial product line targets urban commuters,
commercial fleets/deliveries and shared mobility seeking to commute in an efficient, cost-effective and environmentally friendly manner.
Our
first flagship EV is the “SOLO”, a single seat vehicle, of which we have built 64 prototype
vehicles in-house as of June 21, 2021and 60 pre-production vehicles with our manufacturing partner, Chongqing Zongshen Automobile
Industry Co., Ltd. (“Zongshen”). We have used some of these pre-mass production vehicles as prototypes and for certification
purposes, have delivered some to customers and have used others as test drive models in our showroom. We believe our schedule to mass
produce EVs, combined with our subsidiary, Intermeccanica International Inc.’s (“Intermeccanica”), 62-year history
of automotive design, manufacturing and deliveries of motor vehicles to customers, significantly differentiates us from other early and
development stage EV companies.
We launched commercial production of our SOLO
on August 26, 2020. For the quarter ended March 31, 2021, we have produced 23 SOLOs for a total of 53 SOLOs since we launched
production. We currently have 19 retail stores located in California, Arizona, Oregon, Washington and Colorado. Deliveries will be made
to key markets along the U.S. west coast as the Company continues to expand. The Company has targeted sometime in 2021 for initial deliveries
to customers.
On September 16, 2020, we announced plans
to produce an alternative “utility and fleet” version of our flagship SOLO EV.
To support our production, we have entered into
a “Manufacturing Agreement” with Zongshen, acting through its wholly-owned subsidiary. Zongshen is an affiliate of Zongshen
Power Machinery Co., Ltd., a large-scale scientific and technical enterprise which designs, develops, manufactures and sells a diverse
range of motorcycles and motorcycle engines in China. Zongshen has previously purchased common shares and warrants to purchase common
shares from us, and beneficially owns approximately 2.4% of our common shares.
On March 16, 2021, we announced that we had
selected Mesa, Arizona, as the site for the establishment of our U.S. based assembly facility and engineering technical center. On May 12,
2021, we celebrated the official groundbreaking of the assembly facility and engineering technical center. The intended 235,000 square
foot facility is to be located on 18 acres of land adjacent to the Phoenix-Mesa Gateway airport. The building is expected to include an
assembly and manufacturing plant, a research center, 22,000 square feet of office space and 19,000 square feet of lab space. In this respect
we plan to use an asset-light model in the facility’s development, whereby the building will be leased from the land owner and developer.
The building is being designed by the architectural firm, Ware Malcomb, and is being engineered by Hunter Engineering with Willmeng Construction
acting as the facility’s general contractor. When operational, it is expected that facility will have a production capacity of up
to 20,000 vehicles per year and employ upwards of 200 to 500 people. The current completion date is targeted for some time during 2022.
We have another EV candidate in early design development
stage, the “Tofino”, an all-electric, two-seater roadster.
We have devoted substantial resources to create
an affordable EV which brings significant performance and value to our customers. To this end, we envision the SOLO carrying a manufacturer’s
suggested retail price of $18,500, prior to any surcharge to cover tariffs (discussed below), and being powered by a high-performance
electric rear drive motor which enables the SOLO to achieve:
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a top speed of 80 mph and an attainable cruise speed of 68 mph resulting from its lightweight aerospace
composite chassis;
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acceleration from 0 mph to 60 mph in approximately ten seconds; and
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a range of up to 100 miles generated from a lithium-ion battery system that
requires up to four hours of charging time on a 220-volt charging station (up to eight hours from a 110-volt outlet) that utilizes approximately
8.64 kW/h..
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Unique to Canada, the SOLO is under the three-wheeled
vehicle category and is subject to the safety standards listed in Schedule III of the Canadian Motor Vehicle Safety Regulations. See “Government
Regulation” herein.
For sale into the United States, we and our vehicles
must meet the applicable provisions of the U.S. Code of Federal Regulations (“CFR”) Title 49 —Transportation.
Since the U.S. regulations do not have a specific class for three-wheeled “autocycles”, the SOLO falls under the definition
of a motorcycle pursuant to Sec. 571.3 of 49 CFR Part 571. However, currently a motorcycle license is not required to drive them
in all but the States of Alaska, Florida, New York and Massachusetts. Motorcycle helmets must be worn while operating in the States of
New York and Massachusetts. Helmets are also required if the driver is under 18 years old in the States of Alaska, Montana, Colorado and
New Hampshire. See “Government Regulation” herein.
Potential Impact of the COVID-19 Pandemic
In December 2019, a strain of novel coronavirus
(now commonly known as COVID-19) was reported to have surfaced in Wuhan, China. COVID-19 has since spread rapidly throughout many countries,
and, on March 11, 2020, the World Health Organization declared COVID-19 to be a pandemic. In an effort to contain and mitigate the
spread of COVID-19, many countries, including the United States, Canada and China, have imposed unprecedented restrictions on travel,
and there have been business closures and a substantial reduction in economic activity in countries that have had significant outbreaks
of COVID-19.
Our manufacturing partner, Zongshen, reports that
its operations have not been materially affected at this point, and with our partner Zongshen we have begun producing the SOLO for targeted
deliveries to customers sometime in 2021. However, significant uncertainty remains as to the potential impact of the COVID-19 pandemic
on our and Zongshen’s operations, and on the global economy as a whole. Government-imposed restrictions on travel and other “social-distancing”
measures, such as restrictions on assemblies of groups of persons, have potential to disrupt supply chains for parts and sales channels
for our products, and may result in labor shortages.
It is currently not possible to predict how long
the pandemic will last or the time that it will take for economic activity to return to prior levels. We will continue to monitor the
COVID-19 situation closely, and intend to follow health and safety guidelines as they evolve.
Potential Impact of Tariffs
An ongoing trade dispute between the United States
and China could increase the proposed sales price of our products or decrease our profits, if any. In June 2018, the previous U.S.
administration imposed tariffs on $34 billion of Chinese exports, including a 25% duty on cars built in China and shipped to the
United States. Following the imposition of these tariffs, China imposed additional tariffs on U.S. goods manufactured in the United States
and exported to China. Subsequently, the U.S. administration indicated that it may impose tariffs on up to US$500 billion of goods manufactured
in China and imported into the United States. These tariffs may escalate a nascent trade war between China and the United States. This
trade conflict could affect our business because we intend to mass produce the SOLO in China and our intended principal market is the
west coast of North America. If a trade war were to escalate, or if tariffs were imposed on any of our products, we could be forced to
increase the proposed sales price of such products or reduce the margins, if any, on such products.
Recently, U.S. Customs and Border Protection ruled
that the SOLO has a classification under the Harmonized Tariff Schedule of the United States that applies to passenger vehicles for less
than 10 people with only electric motors. The total applicable duty for this classification was recently raised to 27.5% (2.5% is a “most-favored-nation”
tariff for this classification and 25% derives from this classification being on the China 301 List 1). As indicated above, we envision
that the base purchase price for our SOLO will be approximately US$18,500. As the landscape for tariffs involving imports to the United
States from the People’s Republic of China (the “PRC”) has been changing over the past year, and may change again, we
have not determined how to adjust the base purchase price in the United States in response to the recent tariff increase.
On January 15, 2020, the United States and
the PRC signed an Economic and Trade Agreement commonly referred to as the “Phase 1 Trade Agreement”, which came into force
on February 14, 2020. Notwithstanding the coming into force of the Phase 1 Trade Agreement, the United States will maintain its tariffs
on cars built in China and shipped to the United States.
Corporate Structure and Principal Executive
Offices
We were incorporated on February 16, 2015
under the laws of British Columbia, Canada, and have a December 31st fiscal year end. As of June 21, 2021, we had 112,990,024
common shares outstanding.
Our principal executive offices are located at
102 East 1st Avenue, Vancouver, British Columbia, Canada, V5T 1A4. Our telephone number is (604) 428-7656. Our website address is www.electrameccanica.com.
Our registered and records office is located at Suite 1500, 1055 West Georgia Street, P.O. Box 11117, Vancouver, British Columbia,
Canada, V6E 4N7.
We have five subsidiaries: Intermeccanica, a British
Columbia, Canada, corporation; EMV Automotive USA Inc., a Nevada corporation; SOLO EV LLC, a Michigan limited liability company; ElectraMeccanica
USA LLC, an Arizona limited liability company; and EMV Automotive Technology (Chongqing) Ltd., a People’s Republic of China corporation.
Additional information related to us is available
on SEDAR at www.sedar.com and www.electrameccanica.com. We do not incorporate the contents of our website or of sedar.com
into this prospectus or the Registration Statement. Information on our website does not constitute part of this prospectus or the Registration
Statement.
Strategy
Our near-term goal is to commence and expand sales
of the SOLO while continuing to develop our other EVs. We intend to achieve this goal by:
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Began commercial production of the SOLO: Zongshen, our manufacturing partner, began production
of the SOLO on August 26, 2020 with targeted deliveries to customers during 2021;
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Increasing orders for our EVs: We have an online reservation system
which allows a potential customer to reserve a SOLO by paying a refundable $250 deposit and a Tofino by paying a refundable CAD$1,000
deposit. Once reserved, the potential customer is allocated a reservation number and, although we cannot guarantee that such pre-orders
will become binding and result in sales, we intend to fulfill the reservations as the respective vehicles are produced. We maintain certain
refundable deposits from various individuals for SOLOs and Tofinos;
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Having sales and services supported by local corporate stores: We will monitor all cars in real
time via telematics which provides early warning of potential maintenance issues; and
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Expanding our product offering: In parallel with the production and
sale of the SOLO, we aim to continue the development of our other proposed products, including the Tofino, a two-seater sports car in
the expected price range of $50,000 to $60,000.
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We have achieved our pre-order book through an
online “direct sales to customers and corporate sales” platform, as well as a showroom at our headquarters in Vancouver, British
Columbia, Canada. Additionally, we have a service and distribution center in Studio City, California. We plan on expanding the corporate
retail stores model and will be opening retail stores in key urban areas. We currently have 19 retail stores located in California, Arizona,
Oregon, Washington and Colorado.
We will continue to identify other retail targets
in additional regions. The establishment of stores will depend on regional demand, available candidates and local regulations. Our vehicles
will initially be available directly from us. We plan to only establish and operate corporate stores in those states in the United States
that do not restrict or prohibit certain retail sales models by vehicle manufacturers.
Marketing and Sales Plan
We recognize that marketing efforts must be focused
on customer education and establishing brand presence and visibility which is expected to allow our vehicles to gain traction and subsequently
gain increases in orders. Our marketing and promotional efforts emphasize the SOLO’s image as an efficient, clean and attainable
EV for the masses to commute on a daily basis, for commercial fleets/deliveries and for shared mobility.
A key point to the marketing plan is to target
metropolitan areas with high population density, expensive real estate, high commuter traffic load and pollution levels which are becoming
an enormous concern. Accordingly, our management has identified California, Washington, Oregon, Arizona, Colorado and Southern Florida
as areas with cities that fit the aforementioned criteria, and we have plans to seek out suitable locations for additional stores there.
We plan to develop a marketing strategy that will
generate interest and media buzz based on the SOLO’s selling points. Key aspects of our marketing plan include:
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Digital marketing: Organic engagement and paid digital marketing media with engaging posts aimed
to educate the public about EVs and develop interest in our SOLO;
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Earned media: We have already received press coverage from several traditional media sources and
expect these features and news stories to continue as we embark on our commercial launch;
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Investor Relations/Press Releases: Our in-house investor relations team will provide media releases/kits
for updates and news on our progress;
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Industry shows and events: We displayed the SOLO at the Vancouver International Autoshow in March 2017,
the Consumer Electronics Show in Las Vegas in January 2018 and the Vancouver International Autoshow in March 2018 and 2019.
Promotional merchandise giveaways are expected to enhance and further solidify our branding in consumer minds. In October 2020 we
hosted the “First Look & Drive” media event in Santa Monica, California, and during March 2021 we showcased
the SOLO at Barrett Jackson in Scottsdale, Arizona. Computer stations and payment processing software will be readily on hand at such
events to accept SOLO reservations; and
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First-hand experience: Test-drives and/or public viewings are available at our existing stores
in the Vancouver downtown core, Arizona, California, Oregon and soon in Colorado and Washington.
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We anticipate that our marketing strategy and
tactics will evolve over time as our SOLO gains momentum and we identify appropriate channels and media that align with our long-term
objectives. In all of our efforts we plan to focus on the features that differentiate our SOLO from the existing EVs in the market.
SOLO
We created the SOLO’s first prototype in
September of 2016. Since the completion of the prototype, our engineers and designers have devoted significant efforts to provide
the SOLO with an appealing design and have engaged in proprietary research and development leading to a high-performance electric rear
drive motor.
The
SOLO has a suggested retail purchase price of $18,500 and features a lightweight chassis to
allow for a top speed of 80/mph, an attainable cruise speed of 68/mph and is able to go from 0/mph to 60/mph in approximately 10 seconds.
Our SOLO features a lithium-ion battery system that requires only up to four hours of charging time on a 220-volt charging station or
up to eight hours from a 110-volt outlet. The lithium battery system utilizes approximately 8.64 kW/h for up to 100 miles in range. We
will be offering a warranty package for two years for the SOLO and potentially two to five years for the battery. Standard equipment in
the SOLO includes, but is not limited to the following:
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LCD Digital Instrument Cluster;
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Power Windows, Power Steering and Power Brakes;
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AM/FM Stereo with Bluetooth/CD/USB;
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Rear view backup camera;
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Heater and defogger; and
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SOLO Utility
In September 2020 we announced our plans
to produce an alternative “utility and fleet” version of our flagship SOLO EV, however, at this time we do not know when such
will become available. This modified vehicle is being developed based on direct input from potential commercial and fleet partners and
will be equipped with a stylish and functional cargo “cap”, offering additional capacity and versatility to suit a variety
of different, single-occupant commercial and utility fleet applications. Our engineers and designers have devoted efforts to provide the
“SOLO Utility” with an appealing design and have engaged in proprietary research and development leading to a high-performance
electric rear drive motor.
The SOLO Utility is expected to have the similar
features as the SOLO; however, we anticipate that there will be some additional fleet technology and features that the customer would
be able to add to the SOLO Utility. In addition, the terms of any warranty for the SOLO Utility have not been determined at this time.
The Tofino
We announced on March 28, 2017, at the Vancouver
International Auto Show, that we intended to build the Tofino; an all-electric, two-seater roadster representing an evolution of the Intermeccanica
Roadster. We are designing the Tofino to be equipped with a high-performance, all-electric motor. The Tofino is still in early design
stage development.
Sources and Availability of Raw Materials
We continue to source duplicate suppliers for
all of our components and, in particular, we are currently sourcing our lithium batteries from Panasonic, Samsung and LT Chem. Lithium
is subject to commodity price volatility which is not under our control and could have a significant impact on the price of lithium batteries.
At present we are subject to the supply of our
chassis from one supplier for the production of the SOLO. We are exploring additional suppliers of the chassis to mitigate the risk of
depending on only one supplier.
Patents and Licenses
We have filed patent and design applications for
inventions and designs that our legal counsel deems necessary to protect our products. We do not rely on any licenses from third-party
vendors at this time.
Our success depends, at least in part, on our
ability to protect our core technology and intellectual property. To accomplish this we rely on a combination of patent and design applications
and registrations, trade secrets, including know-how, employee and third-party non-disclosure agreements, copyright, trademarks and other
contractual rights to establish and protect our proprietary rights in our technology and other intellectual property. As at June 21,
2021, we have 14 issued design registrations, 16 pending invention patent applications, two allowed invention patent applications and
one granted invention patent in specific countries which we consider core to our business in a broad range of areas related to the design
of the SOLO and its powertrain. Additionally, and pursuant to our Manufacturing Agreement with Zongshen, an agreement has been completed
pursuant to which legal title has transferred for 24 pending Chinese design applications and six granted Chinese design registrations
from Chongqing Zongshen Institute of Innovation and Technology Co., Ltd. to EMV Automotive Technology (Chongqing) Inc., our wholly-owned
subsidiary. We intend to continue to file additional patent and design applications with respect to our technology and designs. Examination
is proceeding with our pending patent applications, but it is not yet clear whether these applications will result in the issuance of
patents or whether the examination process will require us to narrow our claims such that, even if patents are granted, they might not
provide us with adequate protection.
Trademarks
We have recently revised our Brand
Guidelines, removing the space between “ELECTRA” and “MECCANICA”, such that, with the next generation SOLO vehicle
we will operate under the trademark “ELECTRAMECCANICA SOLO.” Now that the Brand Guidelines have been used on SOLO vehicles
placed into U.S. commerce, we have filed applications for registration of ElectraMeccanica, SOLO and the stylized design of: ELECTRA MECCANICA
(with the “ELECTRA” above the “MECCANICA” as it appears on the side of the SOLO vehicle). Those U.S. trademark
applications are pending.
We will continue to maintain the
mark “ELECTRA MECCANICA SOLO” which is registered in Canada, China, the European Union and Japan, and which is the subject
of pending applications in the United States. We have also registered the trademark “ELECTRA MECCANICA TOFINO” in Canada,
Japan, the European Union and China, and we have applied to register the trademark in the United States.
We have filed “intent-to-use”
trademark applications in the United States for ELECTRAMECCANICA RETRO E, SOLO SHARE, SOLO SHARE PODS, SOLO SHARING PODS, SOLO SHARING
and SOLO ECOSYSTEM. These applications are pending with the U.S. Patent and Trademark Office.
We have additional trademark registrations
and pending applications for trademarks (other than those noted above) in Canada, China, Japan, the United States and the European Union.
As of June 21, 2021, there is one pending application in Canada, three pending applications in China and ten pending applications
in the United States. There is also an additional registration in each of the European Union, China and Japan for the trademark “MONSTERRA”.
We also own six registrations in each of the European Union and Japan and we own 41 registrations in China.
This prospectus contains references
to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred
to in this prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we
will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks
and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship
with, or endorsement or sponsorship of us by, any other companies.
Industry Overview
Investment in clean technology has been trending
upwards for several years as nations, governments and societies overall become more aware of the damaging effects that pollution and greenhouse
gas emissions have on the environment. In an attempt to prevent and/or slow-down these damaging effects and create a more sustainable
environment, consumers have taken to exploring and purchasing clean technology while nations and government agencies have undertaken programs
to reduce greenhouse gas emissions, contribute funding into research and development in clean technology and offer incentives/rebates
for clean technology investments by businesses and consumers. EVs are a growing segment of this clean technology movement.
EV is a broad term for vehicles that do not solely
operate on gas or diesel. Within this alternative vehicle group there are sub-categories of alternative vehicles that utilize different
innovative technologies such as: (i) battery electric vehicles (“BEV”s); (ii) fuel-cell electric vehicles (“FCV”s)
and (iii) plug-in hybrid electric vehicles (“PHEV”s).
BEVs draw on power from battery management systems
to power electric motors instead of from an internal combustion engine, a fuel cell or a fuel tank. The Nissan Leaf, Tesla Model S and
our vehicles are BEVs.
FCVs typically utilize a hydrogen fuel cell that,
along with oxygen from the air, converts chemical energy into electricity which powers the vehicle’s motor. Emissions from FCVs
are water and heat, hence making FCVs true zero-emission vehicles. The Honda Clarity, Hyundai Tucson and Toyota Mirai are examples of
FCVs.
PHEVs are the hybrid vehicles that have both an
electric motor and an internal combustion engine. A PHEV can alternate between using electricity while in its all-electric range and relying
on its gas-powered engine. The Chevrolet Volt and the Toyota Prius are examples of PHEVs.
The popularity of EVs have also been met with
difficulties in charging convenience. There are far more gas stations available than public EV charging stations. The convenience and
availability of public EV charging stations may prove to be an obstacle of mass adoption of EVs.
Consumers may be afraid that their EVs may run
out of charge while they are out on the road and this fear is recognized by the public and has been popularized with the term “range
anxiety”. Despite this fear, the distance travelled by most urban commuters is a lot lower than the typical range of an EV. Data
from Statistics Canada’s National Household Survey in 2011 reported the average Canadian takes 25 minutes to commute to work.
There currently exists different categories of charging stations depending
on the voltage they provide. EV owners can often charge at home on a regular 110-volt outlet which may take between 10 hours to 20 hours
depending on the model and make of the EV. This type of outlet and charging is termed level 1 charging. Level 2 charging means the voltage
at the charging station is typically around 240 volts and this type of outlet is usually available at public charging stations, shopping
malls and big box retailer parking lots, and even located in certain residential hi-rises. Charging at a level 2 station typically cuts
down the level 1 charge time in half and may require a small fee for the service which may vary depending on the provider and the location.
Global EV Market
EVs have been around for over 100 years but have
only recently gained widespread adoption and public interest due to open discussions of greenhouse gas emission levels, government and
international policies on climate change and pollution, increased literature on EVs, fluctuating fuel costs and improved battery management
systems and EV range. In addition, the market for electric vehicles has experienced significant growth in recent years due to consumer
demand for vehicles that achieve greater fuel efficiency and lower environmental emissions without sacrificing performance.
Traditional automotive manufacturers have entered
into the EV market to capitalize on its growth. The majority of growth in the EV market has been led by the following EV models: the Nissan
Leaf, the Honda Clarity (PHEV), the Toyota Prius (PHEV), the Tesla Model 3 and the Mitsubishi Outlander (PHEV). Four of the five models
above are made by traditional automotive manufacturers, and the fifth is made by Tesla Motors, one of several manufacturers that are solely
devoted to the manufacturing of EVs.
Oil was the predominant energy source in the transport
sector, providing 92% of final energy over the past decade, down only two percentage points from 1973. Increased demand for transport
for people and goods called for more oil use, which was accompanied by increased carbon dioxide (CO2) emissions. Today the transport sector
is responsible for nearly one-quarter of global energy-related direct CO2 emissions and is a significant contributor to air pollution.
Global and local objectives and commitments to improve climate and air quality underscore that the transport sector has a critical role
to play.
Even with the ongoing dominance of oil products
in transport, these drivers drove rapid change. Over the last decade momentum accelerated to deploy a range of powertrains and alternative
fuels. The 2010s were ground breaking for the introduction of electric vehicles and to shape a promising nascent market. Electrification
is a key technological strategy to reduce air pollution in densely populated areas and a promising option to contribute to countries’
energy diversification and greenhouse gas (“GHG”) emissions reduction objectives. Electric vehicle benefits include zero
tailpipe emissions, better efficiency than internal combustion engine vehicles and large potential for GHG emissions reduction when coupled
with a low-carbon electricity sector.
Prospects for Electric Mobility Deployment to 2030
Below is an outlook for electrification of road
transport to 2030. It considers deployment of electric vehicles and charging infrastructure, battery capacity and related materials demand
as well as the implications for energy demand and GHG emissions.
The projections in this analysis rely on the gross
domestic product (“GDP”) assumptions in the World Energy Outlook 2019 (IEA, 2019) as at the time of writing there was not
yet an updated GDP projection. Given the economic disruption related to the Covid-19 crisis, the assumption in this outlook implies an
economic recovery following the pandemic that leads to a similar level of economic activity over the next few years as was previously
estimated, which means a relatively speedy global recovery. The analysis also assumes that policy targets that were in place by end-2019
for transport in general and EVs in particular remain in the context of the Covid-19 pandemic and its economic repercussions.
The global EV stock (excluding
two/three-wheelers) expands from around 8 million in 2019 to 50 million by 2025 and close to 140 million vehicles by 2030,
corresponding to an annual average growth rate close to 30%. Thanks to this continuous increase in sales share, EVs are expected to
account for about 7% of the global vehicle fleet by 2030. EV sales reach almost 14 million in 2025 and 25 million vehicles in 2030,
representing 10% and 16%, respectively, of all road vehicle sales.
North American EV Market
Our primary market is North America, with a focus
on the west coast of the United States – especially California. As of December 2019, cumulative registrations of plug-in electric
passenger cars totaled 668,827 units, making California the leading plug-in market in the U.S. While the state represents about 10% of
nationwide new car sales, California has accounted for almost half of cumulative plug-in sales in the American market. Plug-in electric
cars represented about 0.5% of the passenger fleet on California's roads by September 2015.
Until December 2014, California not only
had more plug-in electric vehicles than any other American state but also more than any other country in the world. In 2015 only two countries,
Norway (22.4%) and the Netherlands (9.7%), achieved a higher plug-in market share than California. Sales of plug-in electric cars in the
state passed the 200,000 unit milestone in March 2016. By November 2016, with about 250,000 plug-in cars sold in the state since
2010, China was the only country market that exceeded California in cumulative plug-in electric car sales. Cumulative plug-in car registrations
achieved the 500,000 unit milestone by the end of November 2018.
Annual registrations of plug-in electric vehicles
in California increased from 6,964 units in 2011 to 20,093 in 2012, and reached 42,545 units in 2013. In 2014, California's plug-in car
market share reached 3.2% of total new car sales in the state, up from 2.5% in 2013, while the national plug-in market share in 2014 was
0.71%. The state's plug-in market share fell to 3.1% in 2015, with the plug-in hybrid segment dropping from 1.6% in 2014 to 1.4%, while
the all-electric segment increased to 1.7% from 1.6% in 2014. Still, California's market share was 4.7 times higher than the U.S. market
(0.66%), and registrations of plug-in electric cars in the state in 2015 represented 54.5% of total plug-in car sales in the U.S. that
year.
California's plug-in car market share rose to
3.5% of new car sales in 2016, while the U.S. take-rate was 0.90%. In 2017, California's plug-in market share reached 4.8%, while the
national share was 1.13%. Also, in 2017, the state's plug-in segment market share surpassed the take-rate of conventional hybrids (4.6%)
for the first time.
The plug-in market share rose to 7.8% in 2018,
again ahead of conventional hybrids (4.2%), with the all-electric segment reaching for the first time a higher share than conventional
hybrids. In addition, the combined market share of pure electrics and plug-in hybrids surpassed the maximum share ever achieved by conventional
hybrids by 6.9% in 2013. The electrified segment attained a record 11.9% market share, passing the 10% mark for the first time. The combined
take-rate of plug-in cars in California slightly declined to 7.7% in 2019, while the market share of conventional hybrids rose to 5.5%
from 4.2% in 2018. While the share of all electric cars rose to 5.3%, the rate of plug-in hybrids fell to 2.4% from 3.1% in 2018.
The following table presents annual registrations
and market share of new car sales for all-electric and plug-in hybrids sold in California between 2010 and 2019.
Data Sources: International Energy Agency,
Wikipedia, Alliance of Automobile Manufacturers; National Automobile Dealers Association, California Energy Commission
Chart:
International Energy Agency, Wikipedia
Fleet and Urban Driving market
We designed the SOLO with a view to redefining
SOLO mobility for fleets in terms of car share, deliveries and other mobility purposes; and for urban drivers who use a personal vehicle
by cutting their commuting costs and reducing their environmental footprint. We believe that a substantial number of fleets and urban
drivers will find the capacity of our EVs attractive in comparison to cars designed to carry more people. As cars designed to carry between
four and eight people generally weigh substantially more than those that carry one or two people, they require more fuel or energy to
operate. This significant mismatch between capacity and utilization leads to a significant excess of traffic and pollution and higher
operating costs.
Although consumers may be afraid that their EVs
may run out of charge while they are out on the road, the average U.S. one-way commute was only 27 minutes in 2018. The 100-mile range
of our SOLO on a full charge would more than cover such a round-trip commute. [Data Source: United States Consensus Bureau]
Government Support
There has been a growing trend for governments
as a matter of public policy to favor EVs. This has taken the form of initiatives aimed at improving transit, financial incentives for
the purchase of EVs and financial incentives for the manufacture of EVs.
Initiatives to Improve Transit
Many localities try to reduce or regulate traffic,
and particularly in places where there is high population density, chronic congestion, narrow roads and limited urban space. While these
initiatives might be onerous to owners of traditional internal combustion engine vehicles, they often exempt or partially exclude EVs.
These initiatives include various forms of congestion charging (which often exempt or provide discounts for EVs), priority lanes for high-occupancy
vehicles and EVs, restrictions on new registrations of vehicles (excluding EVs) and subsidies for the installation of public charging
stations for EVs.
Going further than restrictions on cars fueled
by petrol or diesel, several European countries and cities are formulating programs that would actually ban them. Norway’s Minister
for the Environment has expressed an indication that they expect to implement a ban on the sale of cars that are not EVs by 2025. President
Macron of France has expressed an indication that they will eliminate the sale of cars with internal combustion engines in France by 2040,
and city hall in Paris has expressed an indication calling for a ban on all cars with traditional combustion engines from its streets
by 2030. In the United Kingdom the government has announced a strategy that calls for sales of new gas and diesel cars and vans to end
by 2030.
Purchaser Incentives
To promote the purchase of EVs, many state and
local governments offer financial incentives to purchasers. These incentives can take the form of rebates, tax credits or the elimination
or reduction of sales tax. Financial incentives available in selected North American jurisdictions for the purchase of EVs are set out
in the following table:
|
U.S.
Federal
|
California
|
New
York
|
British
Columbia
|
Ontario
|
Quebec
|
Tax credit
|
$7,500
|
-
|
-
|
-
|
-
|
-
|
Rebate
|
-
|
$2,500
|
$2,000
|
CAD$5,000
|
CAD$14,000
|
CAD$8,000
|
Although these financial incentives may not continue
at this level or at all, we believe that our SOLO would currently qualify for these tax credits and rebates in the States of California
and Oregon. As of March 12, 2020, we have passed the CARB test for the State of California, and are currently waiting for the $750
rebate and $1,500 credit to be posted on the Clean Vehicle Rebate Project website and a $2,500 rebate from the State of Oregon.
Several jurisdictions offer similar financial
incentives for the purchase and installation of home charging stations for EVs.
Manufacturing Incentives
To promote the manufacture and development of
EVs, many federal, state and local governments provide financial incentives to EV companies. These incentives can take the form of tax
credits or grants. In 2020, we received CAD$187,421 in a Scientific Research and Experimental Development (“SR&ED”) grant
and CAD$176,088 from the Innovation Assistance Program administered by the National Research Council. In 2019, we received CAD$797,002
in a SR&ED grant. In 2018, we received CAD$559,872 in a SR&ED grant and CAD$6,659 from Canada’s Industrial Research Assistance
Program (“IRAP”) administered by the National Research Council. In 2017, we received CAD$149,273 from the IRAP and CAD$85,907
in a SR&ED grant. We will continue to apply for grants where we believe warranted.
Competitive Factors
The EV market is evolving and companies within
it must be able to adapt without jeopardizing the timing, quality or quantity of their products. Other manufacturers have entered the
electric vehicle market and we expect additional competitors to enter this market within the next several years. As they do, we expect
that we will experience significant competition. With respect to the SOLO, we face strong competition from established automobile manufacturers,
including manufacturers of EVs such as the Tesla Model 3, the Chevrolet Bolt and the Nissan Leaf.
Most of our current and potential competitors
have significantly greater financial, technical, manufacturing, marketing and other resources than we do, and may be able to devote greater
resources to the design, development, manufacturing, distribution, promotion, sale and support of their products. Virtually all of our
competitors have more extensive customer bases and broader customer and industry relationships than we do. In addition, almost all of
these companies have longer operating histories and greater name recognition than we do.
Furthermore, certain large manufacturers offer
financing and leasing options on their vehicles and also have the ability to market vehicles at a substantial discount; provided that
the vehicles are financed through their affiliated financing company. We do not currently offer any form of direct financing on our vehicles.
The lack of our direct financing options and the absence of customary vehicle discounts could put us at a competitive disadvantage.
We expect competition in our industry to intensify
in the future in light of increased demand for alternative fuel vehicles, continuing globalization and consolidation in the worldwide
automotive industry. Our ability to successfully compete in our industry will be fundamental to our future success in the EV market and
our market share. We might not be able to compete successfully in our market. Increased competition could result in price reductions and
revenue shortfalls, loss of customers and loss of market share, which could harm our business, prospects, financial condition and operating
results.
We believe that our extensive managerial and automotive
experience, production capability and unique product offering give us the ability to successfully operate in the EV market in a way that
many of our competitors cannot. In particular, we believe that our competitive advantages include:
|
·
|
Extensive in-house development capabilities: Our acquisition of Intermeccanica in 2017 enables
us to leverage Intermeccanica’s extensive 62 years of experience in vehicle design, manufacture, sales and customer support. Intermeccanica
was founded in Turin, Italy, in 1959, as a speed parts provider and soon began producing in-house designed, complete vehicles like
the Apollo GT, Italia, Murena, Indira and the Porsche 356 replica. Intermeccanica’s former owner, Henry Reisner, is our
Executive Vice-President and one of our directors, and, together with his family, is the second largest shareholder in our Company. We
have integrated Intermeccanica’s staff with the research and development team that we had prior to the acquisition to develop and
enhance current and future model offerings;
|
|
·
|
In-house production capabilities: We have the ability to manufacture our own products on a non-commercial
scale. As of June 21, 2021, we have produced 64 prototype SOLOs at our facilities in Vancouver, British Columbia, and 60 pre-production
SOLOs with our manufacturing partner, Zongshen;
|
|
·
|
Commercial production of the SOLO commenced August 26, 2020: As at March 31, 2021, in
accordance with our Manufacturing Agreement, Zongshen has produced a total of 60 pre-production vehicles and 53 production vehicles;
|
|
·
|
Unique product offering: The SOLO’s manufacturer suggested retail price of $18,500, prior
to any surcharge for tariffs, is far below the retail price of EVs offered by those who we consider to be our principal competitors and,
as a consequence, we believe that the SOLO compares favorably against them; and
|
|
·
|
Management expertise: We have selected our management with an eye towards providing us with the
business and technical expertise needed to be successful. They include Paul Rivera, our President and Chief Executive Officer, Bal Bhullar,
our Chief Financial Officer, Kevin Pavlov, our Chief Operating Officer, Henry Reisner, our Executive Vice-President and President of Intermeccanica,
and Isaac Moss, our Chief Administrative Officer and Corporate Secretary. A number of these key employees and consultants have significant
experience in the automobile manufacturing and technology industries. We have supplemented additional expertise by adding consultants
and directors with corporate, accounting, legal and other strengths.
|
Government Regulation
As
a vehicle manufacturer we are required to ensure that all vehicle production meets applicable safety and environmental standards. Issuance
of the National Safety Mark (the “NSM”) by the Minister of Transport for Canada will be our authorization to manufacture
vehicles in Canada for the Canadian market. Receipt of the NSM is contingent on us demonstrating that our vehicles are designed and manufactured
to meet or exceed the applicable sections of the Canadian Motor Vehicle Safety Act (C.R.C. Chapter 1038) and that appropriate records
are maintained. Unique to Canada, the SOLO is under the three-wheeled vehicle category and is subject to the safety standards listed
in Schedule III of the Canadian Motor Vehicle Safety Regulations (“CMVSR”), which can be found at (http://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,c.1038/section-sched3.html).
For
sales into the United States, we and our vehicles must meet the applicable provisions of the U.S. Code of Federal Regulations (“CFR”)
Title 49 — Transportation. This includes providing manufacture identification information (49 CFR Part 566),
VIN-deciphering information (49 CFR Part 565),and certifying that our vehicles meet or exceeds the applicable sections of the Federal
Motor Vehicle Safety Standards (40 CFR Part 571) and Environmental Protection Agency noise emission standards (40 CFR 205). Since
the U.S. regulations do not have a specific class for three-wheeled “autocycles”, the SOLO falls under the definition of a
motorcycle pursuant to Sec. 571.3 of 49 CFR Part 571. However, currently a motorcycle license is not required to drive them
in all but the States of Alaska, Florida, New York and Massachusetts. Motorcycle helmets must be worn while operating in the States of
New York and Massachusetts. Helmets are also required if the driver is under 18 years old in the States of Alaska, Montana, Colorado and
New Hampshire.
We certified the SOLO for compliance with the
applicable U.S. requirements in the first quarter of 2018. Results from third party vehicle testing at a facility in Quebec, Canada, were
used for this certification. We continue to use third party facilities for certification testing to ensure that any changes to the SOLO’s
design continue to meet safety requirements. Compliance certification of the SOLO for Canada began in 2018.
Within the three-wheel vehicle classification
in Canada, CMVSR Standard 305 sets out the regulation for prevention of injury to the occupant during and after a crash as related to
the vehicle’s batteries. Under this standard, the security and integrity of electric drive system components and their isolation
from the occupant are evaluated in the course of a frontal barrier crash test in accordance with Technical Standard Document No. 305.
The equivalent U.S standard, FMVSS No. 305, is not applicable to the motorcycle category under the U.S. regulations.
Implications of Being a Foreign Private Issuer
We qualify as a “foreign private issuer”,
as such term is defined in Rule 405 under the Securities Act, and Rule 3b-4 under the Exchange Act. In our capacity as a foreign
private issuer, we are exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural
requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders
are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the
rules under the Exchange Act with respect to their purchases and sales of our securities. Moreover, we are not required to file periodic
reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the
Exchange Act. In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information
(although we are subject to the requirement to make timely disclosure of material information under the Nasdaq Marketplace Rules).
We may take advantage of these exemptions until
such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as more than 50% of
our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority
of our executive officers or directors are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United
States; or (iii) our business is administered principally in the United States.
We have taken advantage of certain reduced reporting
and other requirements in this prospectus that are available to foreign private issuers and not to U.S. companies. Accordingly, the information
contained herein may be different than the information you receive from other public companies in which you hold equity securities.
Implications of Being an Emerging Growth Company
We qualify as an “emerging growth company”
as defined in the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act”. An emerging growth company may take advantage
of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
|
·
|
the ability to include only two years of audited financial statements and only two years of related management’s
discussion and analysis of financial condition and results of operations disclosure; and
|
|
·
|
an exemption from the auditor attestation requirement in the assessment of our internal control over financial
reporting pursuant to the Sarbanes-Oxley Act of 2002.
|
We may take advantage of these provisions until
December 31, 2022 (being the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common
shares under our registration statement on Form F-1 (SEC File No. 333-214067), as filed with the SEC under the Securities Act
on October 12, 2016 and subsequently amended), or such earlier time that we are no longer an emerging growth company. We would cease
to be an emerging growth company if we have more than $1.07 billion in annual revenue, have more than $700 million in market value of
our common shares held by non-affiliates or issue more than $1 billion of non-convertible debt over a three-year period.
Research and Development
We have allocated substantial resources in developing
our first vehicles. We expended CAD$7,854,866 during the fiscal year ended December 31, 2020, and CAD$7,179,646 during the fiscal
year ended December 31, 2019, on research and development costs which include labor and materials.
Intermeccanica Business
In October 2017, we acquired Intermeccanica.
In addition to the manufacturing and design experience that the acquisition provided us, we acquired a business of custom car manufacturing.
Intermeccanica, throughout its operating history, has built approximately 2,500 vehicles. We intend to continue the legacy business of
Intermeccanica, but we do not envision that it will be central to our operations, or represent a material portion of our revenue if we
develop our business as planned, or account for a material portion of our expenses.
Employees
As of June 21, 2021, we employed a total
of 175 full-time and 16 part-time people. None of our employees are covered by a collective bargaining agreement.
The breakdown of full-time employees by main category
of activity is as follows:
Activity
|
|
Number of
Employees
|
|
Engineering/R&D
|
|
|
77
|
|
Sales & Marketing
|
|
|
81
|
|
General & Administration
|
|
|
12
|
|
Executives
|
|
|
5
|
|
Property, Plants and Equipment
We operate from our head office located in Vancouver,
Canada. We do not own any real property. We have leased the following properties:
Location
|
|
Area
(In square
feet)
|
|
|
2020 Gross Monthly
Rent
|
|
Lease
Expiration Date
|
|
Use
|
Vancouver BC, Canada
|
|
|
7,235
|
|
|
$
|
10,342
|
|
|
CAD
|
|
October 31, 2021
|
|
Head office
|
New Westminster BC, Canada
|
|
|
10,803
|
|
|
$
|
11,220
|
|
|
CAD
|
|
July 31, 2022
|
|
Development office
|
Studio City, CA, USA
|
|
|
9,600
|
|
|
$
|
30,766
|
|
|
US
|
|
August 31, 2021
|
|
Sales office
|
Santa Monica, CA, USA
|
|
|
300
|
|
|
$
|
6,250
|
|
|
US
|
|
November 30, 2021
|
|
Retail kiosk
|
Sherman Oaks, CA, USA
|
|
|
298
|
|
|
$
|
5,443
|
|
|
US
|
|
September 30, 2023
|
|
Retail kiosk
|
Portland, OR, USA
|
|
|
200
|
|
|
$
|
10,000
|
|
|
US
|
|
December 31, 2020
|
|
Retail kiosk
|
Scottsdale Fashion Square, AZ, USA
|
|
|
200
|
|
|
$
|
10,225
|
|
|
US
|
|
December 31, 2020
|
|
Retail kiosk
|
San Diego, CA, USA
|
|
|
180
|
|
|
$
|
3,500
|
|
|
US
|
|
January 31, 2022
|
|
Retail kiosk
|
Brea, CA, USA
|
|
|
200
|
|
|
$
|
5,909
|
|
|
US
|
|
April 19, 2021
|
|
Retail kiosk
|
Kierland Commons, Scottsdale, AZ, USA
|
|
|
200
|
|
|
$
|
7,820
|
|
|
US
|
|
January 31, 2021
|
|
Retail kiosk
|
Glendale, AZ, USA
|
|
|
200
|
|
|
$
|
6,549
|
|
|
US
|
|
November 14, 2021
|
|
Retail kiosk
|
Walnut Creek, CA, USA
|
|
|
200
|
|
|
$
|
9,000
|
|
|
US
|
|
March 31, 2021
|
|
Retail kiosk
|
Santa Clara, CA, USA
|
|
|
300
|
|
|
$
|
7,500
|
|
|
US
|
|
December 31, 2021
|
|
Retail kiosk
|
We believe that our current facilities are adequate
to meet our ongoing needs and that, if we require additional space, we will be able to obtain additional facilities on commercially reasonable
terms.
Legal Proceedings
We are not involved in, or aware of, any legal
or administrative proceedings contemplated or threatened by any governmental authority or any other party that is likely to have a material
adverse effect on our business. As of the date of this prospectus, no director, officer or affiliate is a party adverse to us in any legal
proceeding, or has an adverse interest to us in any legal proceeding.
MATERIAL AGREEMENTS
The following summary of our material agreements,
all of which have been previously filed with the SEC, does not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of those agreements. There are no material contracts, other than those contracts entered into in the
ordinary course of business, currently in place or to which we or any member of our group is a party, from the two years immediately preceding
the publication of this prospectus, except as follows:
SOLO Manufacturing Agreement
On October 2, 2017, we announced a Manufacturing
Agreement with Zongshen to support the production of our SOLO all-electric vehicles. The production commenced on August 26, 2020,
but deliveries to customers will be during 2021. Under the Manufacturing Agreement we agreed to reimburse Zongshen for: (i) the cost
of the prototype tooling and molds estimated to be CAD$1.4 million, which was due on or before March 18, 2018 and which had been
postponed to complete until the second quarter of 2019 due to Zongshen not then completing the prototype of the tooling and molds; and
(ii) the mass production tooling and molds estimated to be CAD$4.3 million, which shall be payable 50% when Zongshen commences manufacturing
the tooling and molds, 40% when Zongshen completes manufacturing the tooling and molds and 10% upon delivery to the Company of the first
production vehicle. At December 31, 2020, the Company had completed the prototype tooling and molds with an actual cost of CAD$1.7
million, as inspected and assessed by the Company, most of the prototype tooling and molds will be used for the mass production and the
Company has completed the mass production tooling and molds with an actual cost of CAD$6.2 million. The Company has paid 100% of prototype
tooling and molds and 80% of the mass production tooling and molds.
RECENT
DEVELOPMENTS
On March 27, 2020, we contracted with Stifel,
Nicolaus & Company, Incorporated and Roth Capital Partners, LLC (“Roth”; and each, an “Agent”, and
collectively, the “Agents”) to sell common shares of the Company (the “Shares”) having an aggregate offering price
of up to $30,000,000 through the Agents (the “Sales Agreement”). On July 13, 2020, we and the Agents amended the Sales
Agreement to increase the aggregate offering price to up to $59,500,000.
On December 23, 2020, we contracted with
the Agents to sell Shares having an aggregate offering price of up to $100,000,000 through the Agents (the “December Sales
Agreement”).
In accordance with the terms of the Sales Agreement
and the December Sales Agreement, we may offer and sell Shares from time to time through the Agent selected by us (the “Designated
Agent”), acting as sales agent or, with our consent, as principal. The Shares may be offered and sold by any method permitted by
law deemed to be an “at the market” (“ATM”) offering as defined in Rule 415 promulgated under the Securities
Act, including sales made directly on or through Nasdaq or on any other existing trading market for the Shares, and, if expressly authorized
by us, in negotiated transactions.
From March 30, 2020 to September 25,
2020, the Company issued 28,978,936 common shares pursuant to the ATM offering under the Sales Agreement for gross proceeds of $59,500,000,
which completed the ATM offering.
In addition, on June 10, 2020, we entered
into a Placement Agency Agreement with Roth pursuant to which Roth acted as the placement agent for us, on a commercially reasonable best
efforts basis, in connection with the proposed placement of 10,000,000 common shares pursuant to a registered direct offering (the “Registered
Direct Offering”). On the same date we entered into securities purchase agreements with accredited investors for the sale of 10,000,000
common shares at a price of $2.00 per share for aggregate proceeds of $20 million. The closing of the Registered Direct Offering took
place on June 12, 2020.
During the year ended December 31, 2020,
we issued the following common shares pursuant to the ATM offering as well as pursuant to the Registered Direct Offering:
Issuance of Shares
|
|
Number of
Shares Issued
|
|
|
Cash
Proceeds
|
|
ATM offerings
|
|
|
28,978,936
|
|
|
$
|
79,824,390
|
|
Registered Direct Offering
|
|
|
10,000,000
|
|
|
$
|
27,174,615
|
|
Share issuance costs
|
|
|
|
|
|
$
|
(4,692,115
|
)
|
On October 5, 2020, we filed a registration
statement on Form S-8 to register 29,683,880 common shares, without par value, issuable directly by us under our 2020 Stock Incentive
Plan or pursuant to the exercise of options that had been granted under our 2015 Stock Option Plan, which our 2020 Stock Incentive Plan
supersedes and replaces our 2015 Stock Option Plan.
During the period from January 2, 2021 to
June 21, 2021, we have issued: (i) 40,000 common shares upon the exercise of warrants by investors who participated in the November 9,
2018 registered offering and who received warrants in the concurrent private placement; (ii) 643 common shares upon the exercise
of broker warrants by the brokers involved in the November 9, 2018 registered offering and which received broker warrants on a private
placement basis; (iii) 2,193,574 common shares upon the exercise of warrants by investors in previous private placements; (iv) 1,080,552
common shares upon the exercise of stock options granted to eligible persons under our 2020 Stock Incentive Plan; and (v) 20,365,495
common shares pursuant to the ATM Offering under the December Sales Agreement.
RISK
FACTORS
Prospective investors should carefully consider
the following risks, as well as the other information contained in this prospectus and in the documents incorporated by reference herein,
including the risks described in our Annual Report on Form 20-F and our Quarterly Reports filed on Form 6-K, before investing
in our securities. We have identified the following material risks and uncertainties which reflect our outlook and conditions known to
us as of the date of this prospectus. These material risks and uncertainties should be carefully reviewed by our shareholders and any
potential investors in evaluating the Company, our business and the market value of our common stock. Furthermore, any one of these material
risks and uncertainties has the potential to cause actual results, performance, achievements or events to be materially different from
any future results, performance, achievements or events implied, suggested or expressed by any forward-looking statements made by us or
by persons acting on our behalf. Refer to “Cautionary Note Regarding Forward-Looking Statements” herein.
You should read this prospectus and the
documents incorporated herein by reference to see if there are additional risks that have arisen since the date of this prospectus or
are specific to the terms of an offering.
There is no assurance that we will be successful
in preventing the material adverse effects that any one or more of the following material risks and uncertainties may cause on our business,
prospects, financial condition and operating results, which may result in a significant decrease in the market price of our common stock.
Furthermore, there is no assurance that these material risks and uncertainties represent a complete list of the material risks and uncertainties
facing us. There may be additional risks and uncertainties of a material nature that, as of the date of this prospectus, we are unaware
of or that we consider immaterial that may become material in the future, any one or more of which may result in a material adverse effect
on us. You could lose all or a significant portion of your investment due to any one of these material risks and uncertainties.
Risks Related to our Business and Industry
We have limited cash on hand and we will
require a significant amount of capital to carry out our proposed business plan to develop, manufacture, sell and service electric vehicles;
there is no assurance that any amount raised will be sufficient to continue to fund operations of our Company.
We incurred a net loss and comprehensive loss
of $180,664 and $188,523, respectively, during the three months ended March 31, 2021, and a net loss and comprehensive loss of $63,046,905
and $58,832,999, respectively, during the year ended December 31, 2020. Although we had a cash and cash equivalents and a working
capital surplus of $260,365,630 and $270,835,789, respectively, as at March 31, 2021, and of $129,450,676 and $130,755,823, respectively,
at December 31, 2020, we believe that we will need significant additional equity financing to continue operations, among other things:
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we have begun the commercial production of our flagship vehicle, the SOLO, and we expect to incur significant ramp-up in costs and expenses through the launch of the vehicle;
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we anticipate that the gross profit generated from the sale of the SOLO will not be sufficient to cover our operating expenses, and our achieving profitability will depend, in part, on our ability to materially reduce the bill of materials and per unit manufacturing cost of our products; and
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we do not anticipate that we will be eligible to obtain bank loans, or other forms of debt financing on terms that would be acceptable to us.
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We anticipate generating a significant loss for
the next fiscal year.
We have minimal revenue and expect significant
increases in costs and expenses to forestall profits for the foreseeable future, even if we generate revenues in the near term. Even though
we have recently launched the SOLO into commercial production, and even if we launch the Tofino or other intended EVs, they might not
become commercially successful. If we are to ever achieve profitability, we must have a successful commercial introduction and acceptance
of our vehicles, which may not occur. We expect that our operating losses will increase substantially in 2021, and thereafter, and we
also expect to continue to incur operating losses and to experience negative cash flows for the next several years.
We have a limited operating history and
have generated minimal revenues.
Our limited operating history makes evaluating
our business and future prospects difficult. We were formed in February 2015, and we have begun production but not the commercial
delivery of our first electric vehicle. To date we have no revenues from the sale of electric vehicles as any amounts received from the
sale of our pre-production electric vehicles were netted off against research and development costs as cost recovery and have had minimal
revenue from the sale of non-electric custom cars. We intend to derive revenues from the sales of our SOLO vehicle, our Tofino vehicle
and other intended EVs. The Tofino is still in the early design development stage, and the first commercially-produced SOLOs are targeted
to be delivered to our customers sometime in 2021. Our vehicles require significant investment prior to commercial introduction and may
never be successfully developed or commercially successful.
We have a history of operating losses and
we expect our operating losses to accelerate and materially increase for the foreseeable future.
We generated net loss of $180,664 for the three
months ended March 31, 2021, bringing our accumulated deficit to $110,507,823. Without a gain related to changes in the fair values
of derivative liabilities of $8,672,615 we would have had a more significant net loss. Our loss before income taxes for the three months
ended March 31, 2021 decreased to $180,664, as compared to $1,441,785 for the corresponding period in 2020. We anticipate generating
a significant loss for the current fiscal year.
We have minimal revenue and expect significant
increases in costs and expenses to forestall profits for the foreseeable future, even if we generate revenues in the near term. We have
begun the commercial production but not yet the delivery of our flagship vehicle, the SOLO, and we expect to incur significant additional
costs and expenses through the launch of the vehicle. Even with the launch of the SOLO into commercial production, and even if we are
able to launch the Tofino or other intended EVs, they might not become commercially successful. If we are to ever achieve profitability,
we must have a successful commercial introduction and acceptance of our vehicles, which may not occur. We expect that our operating losses
will increase substantially in 2021 and thereafter, and we also expect to continue to incur operating losses and to experience negative
cash flows for the next several years.
We expect the rate at which we will incur losses
to increase significantly in future periods from current levels as we:
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design, develop and manufacture our vehicles and their components;
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develop and equip our manufacturing facility;
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build up inventories of parts and components for the SOLO, the Tofino and other intended EVs;
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open Electrameccanica stores;
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expand our design, development, maintenance and repair capabilities;
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develop and increase our sales and marketing activities; and
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develop and increase our general and administrative functions to support our growing operations.
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Because we will incur the costs
and expenses from these efforts before we receive any revenues with respect thereto, our losses in future periods will be significantly
greater than the losses we would incur if we developed the business more slowly. In addition, we may find that these efforts are more
expensive than we currently anticipate or that these efforts may not result in profits or even revenues, which would further increase
our losses.
Our ability to achieve profitability
will depend, in part, on our ability to materially reduce the bill of materials and per unit manufacturing cost of our products.
We anticipate that the gross profit generated
from the sale of the SOLO will not be sufficient to cover our operating expenses. To achieve our operating and strategic goals while remaining
competitive, we will, among other things, need to reduce the bill of materials and the per-unit manufacturing cost of the SOLO. We expect
the primary factors to contribute to a reduced bill of materials and per unit manufacturing cost to include:
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continued product development to make the SOLO easier and cheaper to mass produce commercially;
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our ability to utilize less expensive suppliers and components that meet the requirements for the SOLO;
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increasing the volume of components that we purchase in order to take advantage of volume-based pricing discounts;
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improving assembly efficiency;
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enhancing the automation of our strategic manufacturing partner’s facility to increase volume and reduce labor costs; and
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increasing our volume to leverage manufacturing overhead costs.
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Continued product development
is subject to feasibility and engineering risks. Any increase in manufacturing volumes is dependent upon a corresponding increase in sales.
The occurrence of one or more factors that negatively impact the manufacturing or sales of the SOLO, or reduce our manufacturing efficiency,
may prevent us from achieving our desired reduction in manufacturing costs, which would negatively affect our operating results and may
prevent us from attaining profitability.
We currently have negative
operating cash flows, and if we are unable to generate positive operating cash flows in the future our viability as an operating business
will be adversely affected.
We have made significant up-front
investments in research and development, sales and marketing and general and administrative expenses to rapidly develop and expand our
business. We are currently incurring expenditures related to our operations that have generated a negative operating cash flow. Operating
cash flow may decline in certain circumstances, many of which are beyond our control. We might not generate sufficient revenues in the
near future. Because we continue to incur such significant future expenditures for research and development, sales and marketing and general
and administrative expenses, we may continue to experience negative cash flow until we reach a sufficient level of sales with positive
gross margins to cover operating expenses. An inability to generate positive cash flow until we reach a sufficient level of sales with
positive gross margins to cover operating expenses or raise additional capital on reasonable terms will adversely affect our viability
as an operating business.
We may require additional capital to carry
out our proposed business plan for the next 12 months if our cash on hand and revenues from the sale of our cars are not sufficient to
cover our cash requirements.
If our cash on hand, revenue from the sale of
our cars, if any, and cash received upon the exercise of outstanding warrants, if any are exercised, are not sufficient to cover our cash
requirements, we will need to raise additional funds through the sale of our equity securities, in either private placements or registered
offerings and/or shareholder loans. If we are unsuccessful in raising enough funds through such capital-raising efforts we may review
other financing possibilities such as bank loans. Financing might not be available to us or, if available, may not be available on terms
that are acceptable to us.
Our ability to obtain the necessary financing
to carry out our business plan is subject to a number of factors, including general market conditions and investor acceptance of our business
plan. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable
to raise sufficient funds, we will have to significantly reduce our spending, delay or cancel our planned activities or substantially
change our current corporate structure. We might not be able to obtain any funding, and we might not have sufficient resources to conduct
our business as projected, both of which could mean that we would be forced to curtail or discontinue our operations.
Terms of future financings may adversely
impact your investment.
We may have to engage in common equity, debt or
preferred stock financing in the future. Your rights and the value of your investment in our securities could be reduced. Interest on
debt securities could increase costs and negatively impacts operating results. Preferred stock could be issued in series from time to
time with such designation, rights, preferences and limitations as needed to raise capital. The terms of preferred stock could be more
advantageous to those investors than to the holders of common shares. In addition, if we need to raise equity capital from the sale of
common shares, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms of your investment.
Common shares which we sell could be sold into any market which develops, which could adversely affect the market price.
Our future growth depends upon consumers’
willingness to adopt three-wheeled single-seat electric vehicles.
Our growth highly depends upon the adoption by
consumers of, and we are subject to an elevated risk of, any reduced demand for alternative fuel vehicles in general and electric vehicles
in particular. If the market for three-wheeled single seat electric vehicles does not develop as we expect, or develops more slowly than
we expect, our business, prospects, financial condition and operating results will be negatively impacted. 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, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles;
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perceptions about vehicle safety in general and, in particular, safety issues that may be attributed to the use of advanced technology, including vehicle electronics and 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;
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concerns about electric grid capacity and reliability, which could derail our efforts to promote electric vehicles as a practical solution to vehicles which require gasoline;
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the availability of alternative fuel vehicles, including plug-in hybrid electric vehicles;
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improvements in the fuel economy of the internal combustion engine;
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the availability of service for electric vehicles;
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the environmental consciousness of consumers;
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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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access to charging stations, standardization of electric vehicle charging systems and consumers’ perceptions about convenience and cost to charge an electric vehicle;
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the availability of tax and other governmental incentives to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles; and
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perceptions about and the actual cost of alternative fuel.
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The influence of any of the factors
described above may cause current or potential customers not to purchase our electric vehicles, which would materially adversely affect
our business, operating results, financial condition and prospects.
The range of our electric vehicles on a
single charge declines over time which may negatively influence potential customers’ decisions whether to purchase our vehicles.
The range of our electric vehicles on a single
charge declines principally as a function of usage, time and charging patterns. For example, a customer’s use of their vehicle as
well as the frequency with which they charge the battery of their vehicle can result in additional deterioration of the battery’s
ability to hold a charge. We currently expect that our battery pack will retain approximately 85% of its ability to hold its initial charge
after approximately 3,000 charge cycles and eight years, which will result in a decrease to the vehicle’s initial range. Such battery
deterioration and the related decrease in range may negatively influence potential customer decisions whether to purchase our vehicles,
which may harm our ability to market and sell our vehicles.
Developments in alternative technologies
or improvements in the internal combustion engine may materially adversely affect the demand for our electric vehicles.
Significant developments in alternative technologies,
such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion
engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. For example, fuel which
is abundant and relatively inexpensive in North America, such as compressed natural gas, may emerge as consumers’ preferred alternative
to petroleum-based propulsion. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing
technologies, could materially delay our development and introduction of new and enhanced electric vehicles, which could result in the
loss of competitiveness of our vehicles, decreased revenue and a loss of market share to competitors.
If we are unable to keep up with advances
in electric vehicle technology, we may suffer a decline in our competitive position.
We may be unable to keep up with changes in electric
vehicle technology and, as a result, may suffer a decline in our competitive position. Any failure to keep up with advances in electric
vehicle technology would result in a decline in our competitive position which would materially and adversely affect our business, prospects,
operating results and financial condition. Our research and development efforts may not be sufficient to adapt to changes in electric
vehicle technology. As technologies change, we plan to upgrade or adapt our vehicles and introduce new models to continue to provide vehicles
with the latest technology and, in particular, battery cell technology. However, our vehicles may not compete effectively with alternative
vehicles if we are not able to source and integrate the latest technology into our vehicles. For example, we do not manufacture battery
cells which makes us depend upon other suppliers of battery cell technology for our battery packs.
If we are unable to design, develop, market
and sell new electric vehicles and services that address additional market opportunities, our business, prospects and operating results
will suffer.
We may not be able to successfully develop new
electric vehicles and services, address new market segments or develop a significantly broader customer base. To date, we have focused
our business on the sale of the SOLO, a three-wheeled single seat electric vehicle, and have targeted mainly urban residents of modest
means and fleets. We will need to address additional markets and expand our customer demographic to further grow our business. Our failure
to address additional market opportunities would harm our business, financial condition, operating results and prospects.
Demand in the vehicle industry is highly
volatile.
Volatility of demand in the vehicle industry may
materially and adversely affect our business, prospects, operating results and financial condition. The markets in which we will be competing
have been subject to considerable volatility in demand in recent periods. Demand for automobile sales depends to a large extent on general,
economic, political and social conditions in a given market and the introduction of new vehicles and technologies. As a new start-up manufacturer,
we will have fewer financial resources than more established vehicle manufacturers to withstand changes in the market and disruptions
in demand.
We depend on a third-party for our near-term
manufacturing needs.
In October 2017, we entered into a Manufacturing
Agreement with Zongshen, a wholly-owned subsidiary of Zongshen Industrial Group Co. Ltd., an affiliate of Zongshen Power Machinery Co., Ltd.,
located in Chongqing, China. The delivery of SOLO vehicles to our future customers and the revenue derived therefrom depends on Zongshen’s
ability to fulfil its obligations under that Manufacturing Agreement. Zongshen’s ability to fulfil its obligations is outside of
our control and depends on a variety of factors, including Zongshen’s operations, Zongshen’s financial condition and geopolitical
and economic risks that could affect China. Our Manufacturing Agreement with Zongshen provides that non-performance by either us or Zongshen
shall be excused to the extent that such performance is rendered impossible by strike, fire, flood, earthquake or governmental acts, orders
or restrictions; provided that either we or Zongshen, as applicable, use commercially reasonable efforts to mitigate the impact of such
non-performance. Notwithstanding any such efforts, any such non-performance by either us or Zongshen shall be cause for termination of
the Manufacturing Agreement by the other party if the non-performance continues for more than six months. The novel coronavirus (COVID-19)
pandemic or measures taken by the Chinese government relating thereto may result in non-performance by Zongshen under our Manufacturing
Agreement. If Zongshen is unable to fulfil its obligations or is only able to partially fulfil its obligations under our existing Manufacturing
Agreement with them, or if Zongshen either voluntarily or is forced to terminate our agreement with them, either as a result of the coronavirus
outbreak, the Chinese government’s measures relating thereto or otherwise, we will not be able to produce or sell our SOLO vehicle
in the volumes anticipated and on the timetable that we anticipate, if at all.
The impact of the novel coronavirus (COVID-19)
pandemic on the global economy and our operations remains uncertain, which could have a material adverse impact on our business, results
of operations and financial condition and on the market price of our common shares.
In December 2019, a strain of novel coronavirus
(now commonly known as COVID-19) was reported to have surfaced in Wuhan, China. COVID-19 has since spread rapidly throughout many countries,
and, on March 11, 2020, the World Health Organization declared COVID-19 to be a pandemic. In an effort to contain and mitigate the
spread of COVID-19, many countries, including the United States, Canada and China, have imposed unprecedented restrictions on travel,
and there have been business closures and a substantial reduction in economic activity in countries that have had significant outbreaks
of COVID-19. Although our manufacturing partner, Zongshen, reports that its operations have not been materially affected at this point,
significant uncertainty remains as to the potential impact of the COVID-19 pandemic on our and Zongshen’s operations (including,
without limitation, staffing levels), supply chains for parts and sales channels for our products, and on the global economy as a whole.
It is currently not possible to predict how long the pandemic will last or the time that it will take for economic activity to return
to prior levels. The COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent months. A continuation
or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to
access capital, on our business, results of operations and financial condition, and on the market price of our common shares.
We do not currently have all arrangements
in place that are required to allow us to fully execute our business plan.
To sell our vehicles as envisioned we will need
to enter into certain additional agreements and arrangements that are not currently in place. These include entering into agreements with
distributors, arranging for the transportation of the commercially-produced SOLOs to be delivered pursuant to our Manufacturing Agreement
with Zongshen and obtaining battery and other essential supplies in the quantities that we require. If we are unable to enter into such
agreements, or are only able to do so on terms that are unfavorable to us, we may not be able to fully carry out our business plans.
We depend on certain key personnel, and
our success will depend on our continued ability to retain and attract such qualified personnel.
Our success depends on the efforts, abilities
and continued service of Paul Rivera, our President and Chief Executive Officer, Bal Bhullar, our Chief Financial Officer, Kevin Pavlov,
our Chief Operating Officer, Henry Reisner, our Executive Vice-President and President of Intermeccanica, and Isaac Moss, our Chief Administrative
Officer and Corporate Secretary. A number of these key employees and consultants have significant experience in the automobile manufacturing
and technology industries. A loss of service from any one of these individuals may adversely affect our operations, and we may have difficulty
or may not be able to locate and hire suitable replacements. We have obtained “key person” insurance on certain key personnel.
Since we have little experience in mass-producing
electric vehicles, any delays or difficulties in transitioning from producing custom vehicles to mass-producing vehicles may have a material
adverse effect on our business, prospects and operating results.
Our management team has experience in producing
custom designed vehicles and is now switching focus to mass producing electric vehicles in a rapidly evolving and competitive market.
If we are unable to implement our business plans in the timeframe estimated by management and successfully transition into a mass-producing
electric vehicle manufacturing business, then our business, prospects, operating results and financial condition will be negatively impacted
and our ability to grow our business will be harmed.
We are subject to numerous environmental
and health and safety laws and any breach of such laws may have a material adverse effect on our business and operating results.
We are subject to numerous environmental and health
and safety laws, including statutes, regulations, bylaws and other legal requirements. These laws relate to the generation, use, handling,
storage, transportation and disposal of regulated substances, including hazardous substances (such as batteries), dangerous goods and
waste, emissions or discharges into soil, water and air, including noise and odors (which could result in remediation obligations), and
occupational health and safety matters, including indoor air quality. These legal requirements vary by location and can arise under federal,
provincial, state or municipal laws. Any breach of such laws and/or requirements would have a material adverse effect on our Company and
its operating results.
Our vehicles are subject to motor vehicle
standards and the failure to satisfy such mandated safety standards would have a material adverse effect on our business and operating
results.
All vehicles sold must comply with federal, state
and provincial motor vehicle safety standards. In both Canada and the United States vehicles that meet or exceed all federally mandated
safety standards are certified under the federal regulations. In this regard, Canadian and U.S. motor vehicle safety standards are substantially
the same. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving federal certification.
Failure by us to have the SOLO, the Tofino or any future model EV satisfy motor vehicle standards would have a material adverse effect
on our business and operating results.
If we are unable to reduce and adequately
control the costs associated with operating our business, including our costs of manufacturing, sales and materials, our business, financial
condition, operating results and prospects will suffer.
If we are unable to reduce and/or maintain a sufficiently
low level of costs for designing, manufacturing, marketing, selling and distributing and servicing our electric vehicles relative to their
selling prices, our operating results, gross margins, business and prospects could be materially and adversely impacted.
If our vehicles fail to perform as expected,
our ability to develop, market and sell our electric vehicles could be harmed.
Our vehicles may contain defects in design and
manufacture that may cause them not to perform as expected or that may require repair. For example, our vehicles use a substantial amount
of software code to operate. Software products are inherently complex and often contain defects and errors when first introduced. While
we have performed extensive internal testing, we currently have a very limited frame of reference by which to evaluate the performance
of our SOLO in the hands of our customers and currently have no frame of reference by which to evaluate the performance of our vehicles
after several years of customer driving. With the Tofino we are still in early design development phase, whereby the similar evaluations
are further behind.
We have very limited experience servicing
our vehicles. If we are unable to address the service and warranty requirements of our future customers our business will be materially
and adversely affected.
If we are unable to successfully address the service
requirements of our future customers our business and prospects will be materially and adversely affected. In addition, we anticipate
the level and quality of the service we will provide our customers will have a direct impact on the success of our future vehicles. If
we are unable to satisfactorily service our customers, our ability to generate customer loyalty, grow our business and sell additional
vehicles could be impaired.
We have very limited experience servicing our
vehicles. We have begun production of the SOLO vehicles for targeted customer deliveries sometime during 2021. The total number of production
SOLOs that we have produced as at March 31, 2021 is 53. The total number of SOLOs that we have produced as pre-production as of March 31,
2021 is 124 (64 from Canada and 60 from Zongshen). Throughout its history, our subsidiary, Intermeccanica, has produced approximately
2,500 cars, which include providing after sales support and servicing. We only have limited experience servicing the SOLO as a limited
number of SOLOs have been produced. Servicing electric vehicles on a mass scale is different than servicing electric vehicles and vehicles
with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques on a mass scale.
In addition, we presently expect that our warranty
covering the SOLO will cover 24 months, however, the final details on such coverage have not yet been completed. Furthermore, the SOLO
battery pack is potentially a two to five year warranty period, however, the final details on the exact warranty specifications is still
being determined and is being developed in conjunction with our battery pack and cell suppliers.
We may not succeed in establishing, maintaining
and strengthening the ElectraMeccanica brand, which would materially and adversely affect customer acceptance of our vehicles and components
and our business, revenues and prospects.
Our business and prospects heavily depend on our
ability to develop, maintain and strengthen the ElectraMeccanica brand. Any failure to develop, maintain and strengthen our brand may
materially and adversely affect our ability to sell our planned electric vehicles. If we are not able to establish, maintain and strengthen
our brand, we may lose the opportunity to build a critical mass of customers. Promoting and positioning our brand will likely depend significantly
on our ability to provide high quality electric cars and maintenance and repair services, and we have very limited experience in these
areas. In addition, we expect that our ability to develop, maintain and strengthen the ElectraMeccanica brand will also depend heavily
on the success of our marketing efforts. To date we have limited experience with marketing activities as we have relied primarily on the
internet, word of mouth and attendance at industry trade shows to promote our brand. To further promote our brand, we may be required
to change our marketing practices, which could result in substantially increased advertising expenses, including the need to use traditional
media such as television, radio and print. The automobile industry is intensely competitive, and we may not be successful in building,
maintaining and strengthening our brand. Many of our current and potential competitors, particularly automobile manufacturers headquartered
in Detroit, Japan and the European Union, have greater name recognition, broader customer relationships and substantially greater
marketing resources than we do. If we do not develop and maintain a strong brand, our business, prospects, financial condition and operating
results will be materially and adversely impacted.
Increases in costs, disruption of supply
or shortage of raw materials, in particular lithium-ion cells, could harm our business.
We may experience increases in the cost or a sustained
interruption in the supply or shortage of raw materials. Any such increase or supply interruption could materially negatively impact our
business, prospects, financial condition and operating results. We use various raw materials in our business including aluminum, steel,
carbon fiber and non-ferrous metals such as copper and cobalt. The prices for these raw materials fluctuate depending on market conditions
and global demand for these materials and could adversely affect our business and operating results. For instance, we are 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 or plug-in hybrid 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; and
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an increase in the cost of raw materials, such as cobalt, used in lithium-ion cells.
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Our business depends on the continued supply of
battery cells for our vehicles. We do not currently have any agreements for the supply of batteries and depend upon the open market for
their procurement. Any disruption in the supply of battery cells from our supplier could temporarily disrupt the planned production of
our vehicles until such time as a different supplier is fully qualified. Moreover, battery cell manufacturers may choose to refuse to
supply electric vehicle manufacturers to the extent they determine that the vehicles are not sufficiently safe. Furthermore, current fluctuations
or shortages in petroleum and other economic conditions may cause us to experience significant increases in freight charges and raw material
costs. Substantial increases in the prices for our raw materials would increase our operating costs, and could reduce our margins if we
cannot recoup the increased costs through increased electric vehicle prices. We might not be able to recoup increasing costs of raw materials
by increasing vehicle prices. We have also already announced an estimated price for the base model of our SOLO, and the Tofino. However,
any attempts to increase the announced or expected prices in response to increased raw material costs could be viewed negatively by our
potential customers, result in cancellations of SOLO and Tofino reservations and could materially adversely affect our brand, image, business,
prospects and operating results.
The unavailability, reduction or elimination
of government and economic incentives could have a material adverse effect on our business, financial condition, operating results and
prospects.
Any reduction, elimination or discriminatory application
of government subsidies and economic incentives that are offered to purchasers of EVs or persons installing home charging stations, the
reduced need for such subsidies and incentives due to the perceived success of the electric vehicle, fiscal tightening or other reasons
may result in the diminished competitiveness of the alternative fuel vehicle industry generally or our electric vehicles in particular.
This could materially and adversely affect the growth of the alternative fuel automobile markets and our business, prospects, financial
condition and operating results.
If we fail to manage future growth effectively,
we may not be able to market and sell our vehicles successfully.
Any failure to manage our growth effectively could
materially and adversely affect our business, prospects, operating results and financial condition. We plan to expand our operations in
the near future in connection with the planned production of our vehicles. Our future operating results depend to a large extent on our
ability to manage this expansion and growth successfully. Risks that we face in undertaking this expansion include:
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training new personnel;
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forecasting production and revenue;
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controlling expenses and investments in anticipation of expanded operations;
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establishing or expanding design, manufacturing, sales and service facilities;
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implementing and enhancing administrative infrastructure, systems and processes;
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addressing new markets; and
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establishing international operations.
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We intend to continue to hire a number of additional
personnel, including design and manufacturing personnel and service technicians, for our electric vehicles. Competition for individuals
with experience in designing, manufacturing and servicing electric vehicles is intense, and we may not be able to attract, assimilate,
train or retain additional highly qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these
additional employees could seriously harm our business and prospects.
Our business may be adversely affected by
labor and union activities.
Although none of our employees are currently represented
by a labor union, it is common throughout the automobile industry generally for many employees at automobile companies to belong to a
union, which can result in higher employee costs and increased risk of work stoppages. We have a Manufacturing Agreement with Zongshen
to produce SOLO vehicles. Zongshen’s workforce is not currently unionized, though they may become so in the future or industrial
stoppages could occur in the absence of a union. We also directly and indirectly depend upon other companies with unionized work
forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could
have a material adverse impact on our business, financial condition or operating results. If a work stoppage occurs within our business,
or that of Zongshen or our key suppliers, it could delay the manufacture and sale of our electric vehicles and have a material adverse
effect on our business, prospects, operating results or financial condition. Additionally, if we expand our business to include full in-house
manufacturing of our vehicles, our employees might join or form a labor union and we may be required to become a union signatory.
We may become subject to product liability
claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
We may become subject to product liability claims,
which could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product
liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected or malfunction resulting
in personal injury or death. Our risks in this area are particularly pronounced given we have limited field experience of our vehicles.
A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim
could generate substantial negative publicity about our vehicles and business and inhibit or prevent commercialization of other future
vehicle candidates which would have a material adverse effect on our brand, business, prospects and operating results. We plan to maintain
product liability insurance for all our vehicles on a claims-made basis, but any such insurance might not be sufficient to cover all potential
product liability claims. Any lawsuit seeking significant monetary damages either in excess of our coverage or outside of our coverage
may have a material adverse effect on our reputation, business and financial condition. We may not be able to secure additional product
liability insurance coverage on commercially acceptable terms or at reasonable costs when needed, particularly if we do face liability
for our products and are forced to make a claim under our policy.
Our patent applications may not result in
issued patents, which may have a material adverse effect on our ability to prevent others from interfering with our commercialization
of our products.
The registration and enforcement of patents involves
complex legal and factual questions and the breadth and effectiveness of patented claims is uncertain. We cannot be certain that we are
the first to file patent applications on these inventions, nor can we be certain that our pending patent applications will result in issued
patents or that any of our issued patents will afford sufficient protection against someone creating competing products, or as a defensive
portfolio against a competitor who claims that we are infringing its patents. In addition, patent applications filed in foreign countries
are subject to laws, rules and procedures that differ from those of the United States, and thus we cannot be certain that foreign
patent applications, if any, will result in issued patents in those foreign jurisdictions or that such patents can be effectively enforced,
even if they relate to patents issued in the United States.
We may need to defend ourselves
against patent or trademark infringement claims, which may be time-consuming and would cause us to incur substantial costs.
Companies, organizations or individuals,
including our competitors, may hold or obtain patents, trademarks or other proprietary rights that would prevent, limit or interfere with
our ability to make, use, develop, sell or market our vehicles or components, which could make it more difficult for us to operate our
business. From time to time we may receive communications from third parties that allege our products are covered by their patents or
trademarks or other intellectual property rights. Companies holding patents or other intellectual property rights may bring suits alleging
infringement of such rights or otherwise assert their rights. If we are determined to have infringed upon a third party’s intellectual
property rights, we may be required to do things that include one or more of the following:
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cease making, using, selling or offering to sell processes, goods or services that incorporate or use the third-party intellectual property;
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pay substantial damages;
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seek a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms or at all;
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redesign our vehicles or other goods or services to avoid infringing the third-party intellectual property; or
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establish and maintain alternative branding for our products and services.
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In the event of a successful claim
of infringement against us and our failure or inability to obtain a license to the infringed technology or other intellectual property
right, our business, prospects, operating results and financial condition could be materially adversely affected. In addition, any litigation
or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.
You may face difficulties in protecting
your interests, and your ability to protect your rights through the U.S. federal courts may be limited because we are incorporated
under the laws of the Province of British Columbia, a substantial portion of our assets are in Canada and all of our executive officers
and most of our directors reside outside the United States
We are organized pursuant to the laws of the Province
of British Columbia under the Business Corporations Act (British Columbia), and our executive offices are located outside of the
United States in Vancouver, British Columbia. Three of our five officers, our auditor and all but four of our directors reside outside
the United States. In addition, a substantial portion of their assets and our assets are located outside of the United States. As a result,
you may have difficulty serving legal process within the United States upon us or any of these persons. You may also have difficulty enforcing,
both in and outside of the United States, judgments you may obtain in U.S. courts against us or these persons in any action, including
actions based upon the civil liability provisions of U.S. federal or state securities laws. Furthermore, there is substantial doubt as
to the enforceability in Canada against us or against any of our directors, officers and any experts named in this Quarterly Report who
are not residents of the United States, in original actions or in actions for enforcement of judgments of U.S. courts, of liabilities
based solely upon the civil liability provisions of the U.S. federal securities laws. In addition, shareholders in British Columbia companies
may not have standing to initiate a shareholder derivative action in U.S. federal courts. As a result, our public shareholders may have
more difficulty in protecting their interests through actions against us, our management, our directors or our major shareholders than
would shareholders of a corporation incorporated in a jurisdiction in the United States.
Global economic conditions could materially
adversely impact demand for our products and services.
Our operations and performance depend significantly
on economic conditions. Uncertainty about global economic conditions could result in customers postponing purchases of our products and
services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic
factors, which could have a material negative effect on demand for our products and services and, accordingly, on our business, results
of operations or financial condition.
We are vulnerable to an ongoing trade dispute
between the United States and China.
An ongoing trade dispute between the United States
and China could increase the proposed sales price of our products or decrease our profits, if any. In June 2018, the previous U.S.
administration imposed tariffs on $34 billion of Chinese exports, including a 25% duty on cars built in China and shipped to the
United States. Following the imposition of these tariffs, China has imposed additional tariffs on U.S. goods manufactured in the United
States and exported to China. Subsequently, the U.S. administration indicated that it may impose tariffs on up to US$500 billion on goods
manufactured in China and imported into the United States. These tariffs may escalate a nascent trade war between China and the United
States. This trade conflict could affect our business because we intend to mass produce the SOLO in China and our intended principal market
is the west coast of North America. If a trade war were to escalate, or if tariffs were imposed on any of our products, we could be forced
to increase the proposed sales price of such products or reduce the margins, if any, on such products.
Recently, U.S. Customs and Border Protection ruled
that the SOLO has a classification under the Harmonized Tariff Schedule of the United States that applies to passenger vehicles for less
than 10 people with only electric motors. The total applicable duty for this classification was recently raised to 27.5% (2.5% is a “most-favored-nation”
tariff for this classification and 25% derives from this classification being on the China 301 List 1). We envision that the suggested
retail purchase price for our SOLO will be US$18,500. As the landscape for tariffs involving imports to the United States from the PRC
has been changing over the past year and may change again, we have not determined how to adjust the purchase price in the United States
in response to the recent tariff increase.
On January 15, 2020, the United States and
the PRC signed the Phase 1 Trade Agreement which came into force on February 14, 2020. Notwithstanding the coming into force of the
Phase 1 Trade Agreement, the United States will maintain its tariffs on cars built in China and shipped to the United States.
Uncertainties in the interpretation and
enforcement of Chinese laws and regulations could limit the legal protections available to you and us.
The legal system in the PRC is based on written
statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s the PRC government
began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation
over the past three decades has significantly increased the protections afforded to various production services in the PRC. Zongshen,
our manufacturing partner, is subject to various PRC laws and regulations generally applicable to companies in China. However, since these
laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations
and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties.
From time to time, we may have to resort to administrative
and court proceedings to enforce our legal rights or Zongshen may have to resort to administrative and court proceedings to fulfill its
obligations under the Manufacturing Agreement. However, since PRC administrative and court authorities have significant discretion in
interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and
court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is
based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have
retroactive effect. As a result, we or Zongshen may not be aware of our violation of these policies and rules until sometime after
the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual
property) and procedural rights, and any failure to respond to changes in the regulatory environment in China, could materially and adversely
affect our business and impede our ability to continue our operations.
Risks Related to Our Common
Shares
Our executive officers and
directors beneficially own a large controlling percentage of our common shares.
As of June 21 2021, our executive officers
and directors beneficially owned, in the aggregate, approximately 15.82% of our common shares, which includes shares that our executive
officers and directors have the right to acquire pursuant to warrants, stock options, restricted stock units and deferred stock units
which have vested. As a result, they will be able to exercise a significant level of control over all matters requiring shareholder approval,
including the election of directors, amendments to our Articles and approval of significant corporate transactions. This control could
have the effect of delaying or preventing a change of control of our Company or changes in management and will make the approval of certain
transactions difficult or impossible without the support of these shareholders.
The continued sale of our
equity securities will dilute the ownership percentage of our existing shareholders and may decrease the market price for our common shares.
Our Notice of Articles authorize the issuance
of an unlimited number of common shares and the issuance of preferred shares. Our Board of Directors has the authority to issue additional
shares of our capital stock to provide additional financing in the future and designate the rights of the preferred shares, which may
include voting, dividend, distribution or other rights that are preferential to those held by the common shareholders. The issuance of
any such common or preferred shares may result in a reduction of the book value or market price, if one exists at the time, of our outstanding
common shares. Given our lack of revenues, we will likely have to issue additional equity securities to obtain working capital we require
for the next 12 months. Our efforts to fund our intended business plans will therefore result in dilution to our existing shareholders.
If we do issue any such additional common shares, such issuance also will cause a reduction in the proportionate ownership and voting
power of all other shareholders. As a result of such dilution, if you acquire common shares your proportionate ownership interest and
voting power could be decreased. Furthermore, any such issuances could result in a change of control or a reduction in the market price
for our common shares.
Additionally, we had 12,942,432 options and 12,414,628
warrants outstanding as of June 21, 2021. The exercise price of some of these options and warrants is below our current market price,
and you could purchase shares in the market at a price in excess of the exercise price of our outstanding warrants or options. If the
holders of these options and warrants elect to exercise them, your ownership position will be diluted and the per share value of the common
shares you have or acquire could be diluted as well. As a result, the market value of our common shares could significantly decrease as
well.
Issuances of our preferred
stock may adversely affect the rights of the holders of our common shares and reduce the value of our common shares.
Our Notice of Articles authorize
the issuance of an unlimited number of shares of preferred stock. Our Board of Directors has the authority to create one or more series
of preferred stock and, without shareholder approval, issue shares of preferred stock with rights superior to the rights of the holders
of common shares. As a result, shares of preferred stock could be issued quickly and easily, adversely affecting the rights of holder
of common shares and could be issued with terms calculated to delay or prevent a change in control or make removal of management more
difficult. Although we currently have no plans to create any series of preferred stock and have no present plans to issue any shares of
preferred stock, any creation and issuance of preferred stock in the future could adversely affect the rights of the holders of common
shares and reduce the value of our common shares.
The market price of our
common shares may be volatile and may fluctuate in a way that is disproportionate to our operating performance.
Our common shares began trading on the Nasdaq
Capital Market in August 2018, and before that it had been trading on the OTCQB starting in September 2017. The historical volume
of trading has been low (within the past year, the fewest number of our shares that were traded on Nasdaq was 28,706 shares daily), and
the share price has fluctuated significantly (since trading began on Nasdaq our closing price has been as low as $0.91 and as high as
$10.81). The share price for our common shares could decline due to the impact of any of the following factors:
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sales or potential sales of substantial amounts of our common shares;
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announcements about us or about our competitors;
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litigation and other developments relating to our patents or other proprietary rights or those of our competitors;
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conditions in the automobile industry;
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governmental regulation and legislation;
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variations in our anticipated or actual operating results;
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change in securities analysts’ estimates of our performance, or our failure to meet analysts’ expectations;
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change in general economic trends; and
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investor perception of our industry or our prospects.
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Many of these factors are beyond
our control. The stock markets in general, and the market for automobile companies in particular, have historically experienced extreme
price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these
companies. These broad market and industry factors could reduce the market price of our common shares regardless of our actual operating
performance.
We do not intend to pay
dividends and there will thus be fewer ways in which you are able to make a gain on your investment.
We have never paid any cash or
stock dividends and we do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding
currently not provided for in our financing plan, our funding sources may prohibit the payment of any dividends. Because we do not intend
to declare dividends, any gain on your investment will need to result from an appreciation in the price of our common shares. There will
therefore be fewer ways in which you are able to make a gain on your investment.
FINRA sales practice requirements
may limit your ability to buy and sell our common shares, which could depress the price of our shares.
FINRA rules require broker-dealers
to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer.
Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts
to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations
of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least
some customers. Thus, FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy our common
shares, which may limit your ability to buy and sell our common shares, have an adverse effect on the market for our common shares and,
thereby, depress their market prices.
Our common shares have been
thinly traded, and you may be unable to sell at or near ask prices or at all if you need to sell your common shares to raise money or
otherwise desire to liquidate your shares.
From October 2017 until August 2018,
our common shares were quoted on the OTCQB where they were “thinly-traded”, meaning that the number of persons interested
in purchasing our common shares at or near bid prices at any given time was relatively small or non-existent. Since we listed on Nasdaq
in August 2018, the volume of our common shares traded has increased, but that volume could decrease until we are thinly-traded again.
That could occur due to a number of factors, including that we are relatively unknown to stock analysts, stock brokers, institutional
investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of
such persons, they tend to be risk-averse and might be reluctant to follow an unproven company such as ours or purchase or recommend the
purchase of our common shares until such time as we became more seasoned. As a consequence, there may be periods of several days or more
when trading activity in our common shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume
of trading activity that will generally support continuous sales without an adverse effect on share price. Broad or active public trading
market for our common shares may not develop or be sustained.
Volatility in our common
shares or warrant price may subject us to securities litigation.
The market for our common shares
may have, when compared to seasoned issuers, significant price volatility, and we expect that our share or warrant prices may continue
to be more volatile than that of a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities
class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future,
be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s
attention and resources.
We are a foreign private
issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United
States domestic public companies.
We are a foreign private issuer
within the meaning of the rules under the Exchange Act. As such, we are exempt from certain provisions applicable to United States
domestic public companies. For example:
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we are not required to provide as many Exchange Act reports, or as frequently, as a domestic public company;
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for interim reporting we are permitted to comply solely with our home country requirements, which are less rigorous than the rules that apply to domestic public companies;
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we are not required to provide the same level of disclosure on certain issues, such as executive compensation;
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we are exempt from provisions of Regulation FD aimed at preventing issuers from making selective disclosures of material information;
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we are not required to comply with the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; and
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we are not required to comply with Section 16 of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” trading transaction.
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Our shareholders may not have
access to certain information they may deem important and are accustomed to receive from U.S. reporting companies.
As an “emerging growth
company” under applicable law, we will be subject to lessened disclosure requirements. Such reduced disclosure may make our common
shares less attractive to investors.
For as long as we remain an “emerging
growth company”, as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not “emerging growth companies” and including, but not limited to,
not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports, exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Because of these lessened
regulatory requirements our shareholders would be left without information or rights available to shareholders of more mature companies.
If some investors find our common shares less attractive as a result, there may be a less active trading market for such securities and
their market prices may be more volatile.
We incur significant costs
as a result of being a public company, which costs will grow after we cease to qualify as an “emerging growth company.”
We incur significant legal, accounting and other
expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act, as well as rules subsequently implemented
by the SEC and Nasdaq, impose various requirements on the corporate governance practices of public companies. We are an “emerging
growth company”, as defined in the JOBS Act, and will remain an emerging growth company until the earlier of : (1) the
last day of the fiscal year (a) following May 23, 2022, (b) in which we have total annual gross revenue of at least $1.07
billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common shares that is
held by non-affiliates exceeds $700 million as of the prior June 30th; and (2) the date on which we have issued more
than $1.0 billion in non-convertible debt during the prior three-year period. An emerging growth company may take advantage of specified
reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption
from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act in the assessment of the emerging growth company’s
internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those
standards apply to private companies.
Compliance with these rules and regulations
increases our legal and financial compliance costs and makes some corporate activities more time-consuming and costlier. After we are
no longer an emerging growth company, we expect to incur significant expenses and devote substantial management effort toward ensuring
compliance with the requirements of Section 404 and the other rules and regulations of the SEC. For example, as a public company
we have been required to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls
and procedures. We have incurred additional costs in obtaining director and officer liability insurance. In addition, we incur additional
costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve
on our Board of Directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and
regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing
of such costs.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus (and any prospectus supplement),
including the documents incorporated by reference herein, contains statements that constitute “forward-looking statements”.
Any statements that are not statements of historical facts may be deemed to be forward-looking statements. These statements appear in
a number of different places in this prospectus and, in some cases, can be identified by words such as “anticipates”, “estimates”,
“projects”, “expects”, “contemplates”, “intends”, “believes”, “plans”,
“may”, “will”, or their negatives or other comparable words, although not all forward-looking statements contain
these identifying words. Forward-looking statements in this prospectus may include, but are not limited to, statements and/or information
related to: strategy, future operations, the size and value of the order book and the number of orders, the number and timing of building
pre-mass production vehicles, the projection of timing and delivery of SOLOs, or Tofinos, if developed, in the future, projected costs,
expected production capacity, expectations regarding demand and acceptance of our products, estimated costs of machinery to equip a new
production facility, and trends in the market in which we operate, plans and objectives of management.
Forward-looking statements are based on the reasonable
assumptions, estimates, analysis and opinions made in light of our experience and our perception of trends, current conditions and expected
developments, as well as other factors that we believe to be relevant and reasonable in the circumstances at the date that such statements
are made, but which may prove to be incorrect. Management believes that the assumption and expectations reflected in such forward-looking
statements are reasonable. Assumptions have been made regarding, among other things: our ability to build pre-mass production vehicles
and to begin production deliveries within certain timelines; our expected production capacity; prices for machinery to equip a new production
facility, labor costs and material costs, remaining consistent with our current expectations; production of SOLOs and Tofinos, if developed,
meeting expectations and being consistent with estimates; equipment operating as anticipated; there being no material variations in the
current regulatory environment; and our ability to obtain financing as and when required and on reasonable terms. Readers are cautioned
that the foregoing list is not exhaustive of all factors and assumptions which may have been used.
The forward-looking statements, including the
statements contained in this prospectus and documents incorporated herein by reference, are subject to known and unknown risks, uncertainties
and other factors that may cause actual results to be materially different from those expressed or implied by such forward-looking statements.
Such risks, uncertainties and other factors include but are not limited to:
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general economic and business conditions, including changes in interest rates;
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prices of other electric vehicles, costs associated with manufacturing electric vehicles and other economic
conditions;
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natural phenomena (including the current COVID-19 pandemic);
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actions by government authorities, including changes in government regulation;
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uncertainties associated with legal proceedings;
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changes in the electric vehicle market;
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future decisions by management in response to changing conditions;
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our ability to execute prospective business plans;
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misjudgments in the course of preparing forward-looking statements;
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our ability to raise sufficient funds to carry out our proposed business plan;
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consumers’ willingness to adopt three-wheeled single passenger electric vehicles;
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declines in the range of our electric vehicles on a single charge over time may negatively influence potential
customers’ decisions to purchase such vehicles;
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developments in alternative technologies or improvements in the internal combustion engine;
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inability to keep up with advances in electric vehicle technology;
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inability to design, develop, market and sell new electric vehicles and services that address additional
market opportunities;
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dependency on certain key personnel and any inability to retain and attract qualified personnel;
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inexperience in mass-producing electric vehicles;
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inability to reduce and adequately control operating costs;
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failure of our vehicles to perform as expected;
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inexperience in servicing electric vehicles;
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inability to succeed in establishing, maintaining and strengthening the ElectraMeccanica brand;
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disruption of supply or shortage of raw materials;
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the unavailability, reduction or elimination of government and economic incentives;
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failure to manage future growth effectively; and
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labor and employment risks.
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Although management has attempted to identify
important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be
other factors that cause results not to be as anticipated, estimated or intended. Forward-looking statements might not prove to be accurate,
as actual results and future events could differ materially from those anticipated in such forward-looking statements. Accordingly, readers
should not place undue reliance on forward-looking statements. We wish to advise you that these cautionary remarks expressly qualify,
in their entirety, all forward-looking statements attributable to our Company or persons acting on our Company’s behalf. We do not
undertake to update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting
such statements, except as, and to the extent required by, applicable securities laws. You should carefully review the cautionary statements
and risk factors contained in this prospectus and other documents that we may file from time to time with the securities regulators.
PRESENTATION
OF FINANCIAL INFORMATION AND EXCHANGE RATE DATA
Unless indicated otherwise, financial information
in this prospectus, including the documents incorporated by reference herein, has been prepared in accordance with International Financial
Reporting Standards, which differs in some significant respects from generally accepted accounting principles in the United States, or
U.S. GAAP, and thus this financial information may not be comparable to the financial statements of U.S. companies.
All dollar amounts in this prospectus are expressed
in United States dollars unless otherwise indicated. Our accounts and our financial statements are maintained and presented in United
States dollars and our financial statements are prepared in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board. All references to “CAD dollars”, “CAD”, or to “CAD$” are
to Canadian dollars.
The following table sets forth, for each period
indicated, the high and low exchange rate for U.S. dollars expressed in Canadian dollars, and the average exchange rate for the periods
indicated. Averages for year-end periods are calculated by using the exchange rates on the last day of each full month during the relevant
period. These rates are based on the noon-buying rate certified for custom purposes by the U.S. Federal Reserve Bank of New York set forth
in the H.10 statistical release of the Federal Reserve Board. These rates are provided solely for your convenience and are not necessarily
the exchange rates that we used in preparation of our consolidated financial statements, pro forma financial statements or elsewhere in
this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you. We make no representation
that any Canadian dollar or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars
or Canadian dollars, as the case may be, at any particular rate or at all.
|
|
Period End
|
|
|
Period Average
Rate
|
|
|
High Rate
|
|
|
Low Rate
|
|
Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
$
|
1.2962
|
|
|
$
|
1.3269
|
|
|
$
|
1.3591
|
|
|
$
|
1.2962
|
|
December 31, 2020
|
|
$
|
1.2753
|
|
|
$
|
1.3422
|
|
|
$
|
1.4539
|
|
|
$
|
1.2727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
$
|
1.2753
|
|
|
$
|
1.2809
|
|
|
$
|
1.2958
|
|
|
$
|
1.2727
|
|
January 31, 2021
|
|
$
|
1.2776
|
|
|
$
|
1.2725
|
|
|
$
|
1.2812
|
|
|
$
|
1.2633
|
|
February 28, 2021
|
|
$
|
1.2698
|
|
|
$
|
1.2696
|
|
|
$
|
1.2830
|
|
|
$
|
1.2528
|
|
March 31, 2021
|
|
$
|
1.2571
|
|
|
$
|
1.2569
|
|
|
$
|
1.2672
|
|
|
$
|
1.2434
|
|
April 30, 2021
|
|
$
|
1.2291
|
|
|
$
|
1.2494
|
|
|
$
|
1.2614
|
|
|
$
|
1.2291
|
|
May 31, 2021
|
|
$
|
1.2087
|
|
|
$
|
1.2125
|
|
|
$
|
1.2320
|
|
|
$
|
1.2049
|
|
USE
OF PROCEEDS
Unless we otherwise indicate in a prospectus supplement,
we currently intend to use the net proceeds from the sale of our securities on sales and marketing expenditures, capital expenditures,
further product development expenditures, operational expenditures and working capital for general corporate and administrative purposes.
More detailed information regarding the use of
proceeds from the sale of securities, including any determinable milestones at the applicable time, will be described in any applicable
prospectus supplement. We may also, from time to time, issue securities otherwise than pursuant to a prospectus supplement to this prospectus.
DIVIDEND
POLICY
Our dividend policy is set forth under the heading
“Item 8.A. Consolidated Statements and Other Financial Information” in our Annual Report on Form 20-F for the year ended
December 31, 2020, which is incorporated in this prospectus by reference, as updated by our subsequent filings under the Exchange
Act.
OFFER
AND LISTING DETAILS
We may offer and issue from time to time common
shares, preferred shares, warrants to purchase common shares and units, or any combination thereof, up to an aggregate initial offering
price of up to $750,000,000 in one or more transactions under this shelf prospectus. The price of securities offered will depend on a
number of factors that may be relevant at the time of offer. See “Plan of Distribution” herein.
The common shares and Registered Warrants have
been listed on Nasdaq under the symbol “SOLO” and “SOLOW” since August 9, 2018. Our common shares were traded
previously on the OTC Market Group Inc.’s Venture Market (OTCQB) under the symbol “ECCTF” since September 2017.
The following tables sets forth, for the periods
indicated, the high and low trading prices of the common shares as reported on Nasdaq prior to the filing of this prospectus.
Common Shares (symbol: “SOLO”)
|
|
NASDAQ
(U.S. Dollars)
|
|
Period
|
|
High
|
|
|
Low
|
|
Quarter ended
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
3.00
|
|
|
|
0.90
|
|
September 30, 2020
|
|
|
6.00
|
|
|
|
2.05
|
|
December 31, 2020
|
|
|
13.60
|
|
|
|
2.40
|
|
March 31, 2021
|
|
|
9.23
|
|
|
|
4.24
|
|
|
|
|
|
|
|
|
|
|
Last Nine Months
|
|
|
|
|
|
|
|
|
September 2020
|
|
|
2.95
|
|
|
|
2.34
|
|
October 2020
|
|
|
3.35
|
|
|
|
2.40
|
|
November 2020
|
|
|
13.60
|
|
|
|
2.73
|
|
December 2020
|
|
|
8.15
|
|
|
|
5.80
|
|
January 2021
|
|
|
9.21
|
|
|
|
6.26
|
|
February 2021
|
|
|
9.74
|
|
|
|
5.30
|
|
March 2021
|
|
|
6.54
|
|
|
|
4.24
|
|
April 2021
|
|
|
5.30
|
|
|
|
3.79
|
|
May 2021
|
|
|
4.18
|
|
|
|
2.97
|
|
DESCRIPTION
OF SHARE CAPITAL
Common Shares
We
are authorized to issue an unlimited number of common shares, without par value. As of March 31, 2021, the date of the most recent
balance sheet included in our financial statements, there were 112,929,422 common shares issued
and outstanding and 25,343,298 common shares issuable upon exercise of outstanding stock options and
warrants. As of June 21, 2021, there were 112,990,024 common
shares issued and outstanding and 25,357,060 common shares issuable upon exercise of outstanding stock
options and warrants.
The holders of our common shares are entitled
to vote at all meetings of shareholders, to receive dividends if, as and when declared by the directors and to participate pro rata in
any distribution of property or assets upon our liquidation, winding-up or other dissolution. Our common shares carry no pre-emptive rights,
conversion or exchange rights, redemption, retraction, repurchase, sinking fund or purchase fund provisions. There are no provisions requiring
the holder of our common share to contribute additional capital and no restrictions on the issuance of additional securities by us. There
are no restrictions on the repurchase or redemption of common shares by us except to the extent that any such repurchase or redemption
would render us insolvent pursuant to the B.C. Business Corporations Act.
Preferred Shares
We may issue our preferred shares from time to
time in one or more series. The terms of each series of preferred shares, including the number of shares, the designation, rights, preferences,
privileges, priorities, restrictions, conditions and limitations, will be determined at the time of creation of each such series by our
board of directors, without shareholder approval, provided that all preferred shares will rank equally within their class as to dividends
and distributions in the event of our dissolution, liquidation or winding-up. We do not have any preferred shares outstanding as of the
date of this prospectus.
Transfer Agent
Our stock transfer agent and warrant agent for
our securities is VStock Transfer, LLC, located at 18 Lafayette Place, Woodmere, New York, U.S.A., 11598, and its telephone number
is (212) 828-8436.
DESCRIPTION
OF WARRANTS
General
This section describes the general terms that
will apply to any warrants for the purchase of common shares. We will not offer warrants for sale separately to any member of the public
in Canada unless the offering is in connection with and forms part of the consideration for an acquisition or merger transaction or unless
an applicable prospectus andor prospectus supplement containing the specific terms of the warrants to be offered separately is first
approved for filing by the securities commissions or similar regulatory authorities in each of the provinces and territories of Canada
where the warrants will be offered for sale.
Subject to the foregoing, we may issue warrants
independently or together with other securities, and warrants sold with other securities may be attached to or separate from the other
securities. Warrants may be issued under one or more warrant indentures or warrant agency agreements to be entered into by us and one
or more banks or trust companies acting as warrant agent.
This summary of some of the provisions of the
warrants is not complete. The statements made in this prospectus relating to any warrant agreement and warrants to be issued under this
prospectus are summaries of certain anticipated provisions thereof and do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all provisions of the applicable warrant agreement. You should refer to the warrant indenture or warrant
agency agreement relating to the specific warrants being offered for the complete terms of the warrants. A copy of any warrant indenture
or warrant agency agreement relating to an offering or warrants will be filed by us with the securities regulatory authorities in Canada
and the United States after we have entered into it.
The applicable prospectus supplement relating
to any warrants that we offer will describe the particular terms of those warrants and include specific terms relating to the offering.
Original purchasers are further advised that in
certain Canadian provinces and territories the statutory right of action in connection with a prospectus misrepresentation limits damages
to the amount paid for the security that was purchased under a prospectus, and therefore a further payment at the time of exercise may
not be recoverable in a statutory action for damages. A Canadian purchaser should refer to any applicable provisions of the securities
legislation of the purchaser’s province or territory for the particulars of these rights, or consult with a legal advisor.
The particular terms of each issue of warrants
will be described in the applicable prospectus supplement. This description will include, where applicable:
|
·
|
the designation and aggregate number of warrants;
|
|
·
|
the price at which the warrants will be offered;
|
|
·
|
the currency or currencies in which the warrants will be offered;
|
|
·
|
the date on which the right to exercise the warrants will commence and the date on which the right will expire;
|
|
·
|
the number of common shares that may be purchased upon exercise of each warrant and the price at which and currency or currencies in which the common shares may be purchased upon exercise of each warrant;
|
|
·
|
the terms of any provisions allowing or providing for adjustments in (i) the number and/or class of shares that may be purchased, (ii) the exercise price per share or (iii) the expiry of the warrants;
|
|
·
|
whether we will issue fractional shares;
|
|
·
|
whether we have applied to list the warrants or the underlying shares on a stock exchange;
|
|
·
|
the designation and terms of any securities with which the warrants will be offered, if any, and the number of the warrants that will be offered with each security;
|
|
·
|
the date or dates, if any, on or after which the warrants and the related securities will be transferable separately;
|
|
·
|
whether the warrants will be subject to redemption and, if so, the terms of such redemption provisions;
|
|
·
|
material US and Canadian federal income tax consequences of owning the warrants; and
|
|
·
|
any other material terms or conditions of the warrants.
|
DESCRIPTION
OF UNITS
The following description sets forth certain general
terms and provisions of units to which any prospectus supplement may relate.
We may issue units comprised of one or more of
the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of the unit is also
the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each
included security. The unit agreement under which a unit is issued, if any, may provide that the securities included in the unit may not
be held or transferred separately, at any time or at any time before a specified date.
The applicable prospectus supplement may describe:
|
·
|
the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
|
|
·
|
any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and
|
|
·
|
whether the units will be issued in fully registered or global form.
|
The applicable prospectus supplement will describe
the terms of any units. The preceding description and any description of units in the applicable prospectus supplement does not purport
to be complete and is subject to and is qualified in its entirety by reference to the unit agreement and, if applicable, collateral arrangements
and depositary arrangements relating to such units.
INCOME
TAX CONSIDERATIONS
The applicable prospectus supplement may describe
certain Canadian federal income tax consequences to an investor who is a non-resident of Canada or to an investor who is a resident of
Canada acquiring, owning and disposing of any of our securities offered thereunder.
The applicable prospectus supplement may also
describe certain U.S. federal income tax consequences of the acquisition, ownership and disposition of any of our securities offered thereunder
by an initial investor who is a U.S. person (within the meaning of the U.S. Internal Revenue Code), including, to the extent applicable,
such consequences relating to debt securities payable in a currency other than the U.S. dollar, issued at an original issue discount for
U.S. federal income tax purposes or containing early redemption provisions or other special items.
PLAN
OF DISTRIBUTION
We may sell securities to or through underwriters
or dealers, and also may sell securities to one or more other purchasers directly or through agents, including sales pursuant to ordinary
brokerage transactions and transactions in which a broker-dealer solicits purchasers or may issue securities in whole or in partial payment
of the purchase price of assets acquired by us or our subsidiaries, or any other method pursuant to applicable law. Each prospectus supplement
will set forth the terms of the offering or issue, including the name or names of any underwriters, agents or selling securityholders,
the purchase price or prices of the securities, the proceeds to us from the sale of the securities and any commissions, fees, discounts
and other items constituting underwriters', dealers' or agents' compensation.
The securities may be sold, from time to time
in one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices, including sales in transactions that are deemed to be “at-the-market
distributions” as defined in accordance with Rule 415(a)(4) under the Securities Act, including sales made directly on
the Nasdaq or other existing trading markets for the securities. The prices at which the securities may be offered may vary as between
purchasers and during the period of distribution. If, in connection with the offering of securities at a fixed price or prices, the underwriters
have made a bona fide effort to sell all of the securities at the initial offering price fixed in the applicable prospectus supplement,
the public offering price may be decreased and thereafter further changed, from time to time, to an amount not greater than the initial
public offering price fixed in such prospectus supplement, in which case the compensation realized by the underwriters will be decreased
by the amount that the aggregate price paid by purchasers for the securities is less than the gross proceeds paid by the underwriters
to us.
Underwriters, dealers and agents who participate
in the distribution of the securities may be entitled to, under agreements to be entered into with us, indemnification by us against certain
liabilities, including liabilities under the Securities Act and applicable Canadian provincial securities legislation, or to contribution
with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof. Such underwriters, dealers
and agents may be customers of, engage in transactions with, or perform services for, us in the ordinary course of business.
In connection with any offering of our securities,
other than an “at-the-market distribution,” the underwriters may over-allot or effect transactions which stabilize or maintain
the market price of our securities offered at a level above that which might otherwise prevail in the open market. Such transactions,
if commenced, may be discontinued at any time. Each prospectus supplement will set forth the terms of such transactions.
In compliance with the guidelines of FINRA, the
aggregate maximum discount, commission or agency fees or other items constituting underwriting compensation to be received by any FINRA
member or independent broker-dealer will not exceed 8% of any offering pursuant to this prospectus and any applicable prospectus supplement
or pricing supplement, as the case may be; however, it is anticipated that the maximum commission or discount to be received in any particular
offering of securities will be less than this amount.
EXPENSES
The following table sets forth the estimated costs
and expenses, other than underwriting discounts and commissions, payable by us in connection with the offering of the securities being
registered. All the amounts shown are estimates, except for the SEC registration fee.
SEC registration fee
|
|
US$
|
81,825 .00
|
|
FINRA fee
|
|
US$
|
5,000 .00
|
(*)
|
Legal fees and expenses
|
|
US$
|
100,000 .00
|
(*)
|
Accounting fees and expenses
|
|
US$
|
25,000 .00
|
(*)
|
Printing fees and expenses
|
|
US$
|
5,000 .00
|
(*)
|
Miscellaneous
|
|
US$
|
5,000
.00
|
(*)
|
Total
|
|
US$
|
221,825 .00
|
(*)
|
|
(*)
|
Estimated expenses are not presently known. The foregoing sets forth
the general categories of expenses (other than underwriting discounts and commissions) that the Company anticipates it will incur in connection
with the offering of securities under the registration statement. An estimate of the aggregate expenses in connection with the issuance
and distribution of the securities being offered will be included in the applicable prospectus supplement.
|
WHERE
YOU CAN GET MORE INFORMATION
We have filed with the SEC a registration statement
on Form F-3 under the Securities Act with respect to the securities described in this prospectus and any accompanying prospectus
supplement, as applicable. This prospectus and any accompanying prospectus supplement, which constitute a part of that registration statement,
do not contain all of the information set forth in that registration statement and its exhibits. For further information with respect
to us and our securities, you should consult the registration statement and its exhibits.
We are required to file with the securities commission
or authority in each of the applicable provinces of Canada annual and quarterly reports, material change reports and other information.
In addition, we are subject to the informational requirements of the Exchange Act, and, in accordance with the Exchange Act, we also must
file reports with, and furnish other information to, the SEC. As a foreign private issuer, we are exempt from the rules under the
Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt
from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not
required to publish financial statements as promptly as U.S. companies. However, we file with the SEC an annual report on Form 20-F
containing financial statements audited by an independent registered public accounting firm, and we submit to the SEC, on Form 6-K,
unaudited quarterly financial information.
The SEC maintains an internet site (www.sec.gov)
that makes available reports and other information that we file or furnish electronically with it.
INCORPORATION
BY REFERENCE
The SEC allows us to “incorporate by reference”
into this prospectus the documents we file with, or furnish to, it, which means that we can disclose important information to you by referring
you to these documents. The information that we incorporate by reference into this prospectus forms a part of this prospectus, and information
that we file later with the SEC automatically updates and supersedes any information in this prospectus. We incorporate by reference into
this prospectus the documents listed below:
|
·
|
|
our Annual Report on Form 20-F for the fiscal year ended December 31, 2020, filed with the SEC on March 23, 2021;
|
|
·
|
|
our Quarterly Report included as exhibit 99.1 to our Report of Foreign Private Issuer on Form 6-K for our fiscal quarter ended March 31, 2021, filed with the SEC on May 13, 2021; and
|
|
·
|
|
our Reports of Foreign Private Issuer on Form 6-Ks that we furnished to the SEC on each of January 5, 2021, January 15, 2021, February 2, 2021, February 8, 2021, February 17, 2021, March 16, 2021, March 24, 2021, April 13, 2021, May 12, 2021, May 12, 2021, May 13, 2021, May 14, 2021 and June 15, 2021.
|
All documents filed by us pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus and prior to the termination of the offering
of the securities offered by this prospectus are incorporated by reference into this prospectus and form part of this prospectus from
the date of filing or furnishing of these documents. Any documents that we furnish to the SEC on Form 6-K subsequent to the date
of this prospectus will be incorporated by reference into this prospectus only to the extent specifically set forth in the Form 6-K.
Any statement contained in a document that is
incorporated by reference into this prospectus will be deemed to be modified or superseded for the purposes of this prospectus to the
extent that a statement contained in this prospectus, or in any other subsequently filed document which also is or is deemed to be incorporated
by reference into this prospectus, modifies or supersedes that statement. The modifying or superseding statement does not need to state
that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes.
Upon request, we will provide, without charge,
to each person who receives this prospectus, a copy of any or all of the documents incorporated by reference (other than exhibits to the
documents that are not specifically incorporated by reference in the documents). Please direct written or oral requests for copies to
our Corporate Secretary at 102 East 1st Avenue, Vancouver, British Columbia, Canada, V5T 1A4 or by calling 1-604-428-7656.
ENFORCEABILITY
OF CIVIL LIABILITIES
We are organized under the laws of the Province
of British Columbia, Canada pursuant to the B.C. Business Corporations Act and our executive offices are located outside of the United
States in Vancouver, British Columbia. Three of four of our officers, our auditor and four of eight of our directors reside outside
the United States. In addition, a substantial portion of their assets and our assets are located outside of the United States. As
a result, it may be difficult to serve legal process within the United States upon us or any of these persons. It may also be difficult
to enforce, both in and outside of the United States, judgments of U.S. courts against us or these persons in any action, including actions
based upon the civil liability provisions of U.S. Federal or state securities laws. Furthermore, there is substantial doubt as to the
enforceability in Canada against us or against any of our directors, officers and the expert named in this prospectus who are not residents
of the United States, in original actions or in actions for enforcement of judgments of U.S. courts, of liabilities based solely upon
the civil liability provisions of the U.S. federal securities laws. In addition, shareholders in British Columbia companies may not have
standing to initiate a shareholder derivative action in U.S. federal courts.
MATERIAL CHANGES
There
have been no material changes in our affairs since the end of our last fiscal year on December 31, 2020 to the date of this prospectus,
other than those changes that have been described in: our Annual Report on Form 20-F for our fiscal year ended December 31,
2020 that was filed with the SEC on March 13, 2021; our Quarterly Report included as exhibit 99.1 to our Report of Foreign Private
Issuer on Form 6-K for our fiscal quarter ended March 31, 2021 that was filed with the SEC on May 13, 2021; our Reports
of Foreign Private Issuer on Form 6-K that we furnished to the SEC on each of January 5, 2021, January 15, 2021,
February 2, 2021, February 8, 2021, February 17, 2021, March 16, 2021, March 24, 2021, April 13, 2021, May 12,
2021, May 12, 2021, May 13, 2021, May 14, 2021 and June 15, 2021.
LEGAL
MATTERS
McMillan LLP is acting as counsel to our company regarding Canadian
and U.S. securities law matters. The current address of McMillan LLP is Royal Centre, 1055 W. Georgia Street, Suite 1500, PO Box
11117, Vancouver, British Columbia, Canada, V6E 4N7.
EXPERTS
Our consolidated financial statements appearing
in our Annual Report on Form 20-F as of December 31, 2020 and 2019 and for each of the years in the three-year period ended
December 31, 2020 have been incorporated by reference herein in reliance upon the report of KPMG LLP, independent registered public
accounting firm, and upon the authority of said firm as experts in accounting and auditing. The audit report refers to a change in presentation
currency from Canadian dollars to US dollars, and a change in the accounting policies for leases on the adoption of IFRS 16, Leases.
KPMG LLP has offices at 777 Dunsmuir Street, Vancouver, British Columbia, Canada, V7Y 1K3. Such consolidated financial statements are
incorporated herein by reference.
ELECTRAMECCANICA
VEHICLES CORP.
US$750,000,000
Common Shares
Preferred
Shares
Warrants
Units
PROSPECTUS
June 30, 2021
We have not
authorized any dealer, salesperson or other person to give any information or represent anything not contained in or incorporated by reference
into this Prospectus. You must not rely on any unauthorized information. If anyone provides you with different or inconsistent information,
you should not rely on it. This Prospectus does not offer to sell any shares in any jurisdiction where it is unlawful. Neither the delivery
of this Prospectus, nor any sale made hereunder, shall create any implication that the information in this Prospectus is correct after
the date hereof.
__________
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