LeddarTech (LDTC) 6-K Leddartech Management’s Discussion and Analysis of Financial Condition and Results of Operations

Exhibit 99.2

Interim condensed consolidated financial statements of 

LeddarTech Holdings Inc.

(Unaudited)

For the three and six months ended March 31, 2024 and 2023

Unaudited interim condensed consolidated statements of financial position	3
Unaudited interim condensed consolidated statements of changes in shareholders’ equity (deficiency)	4
Unaudited interim condensed consolidated statements of loss and comprehensive loss	6
Unaudited interim condensed consolidated statements of cash flows	7
Notes to the unaudited interim condensed consolidated financial statements	8–26

2

LeddarTech Holdings Inc.

Interim condensed consolidated statements of financial position

(in Canadian dollars)
(Unaudited)
[going concern uncertainty – note 1]

		March 31, 2024			September 30, 2023
	Notes	$			$
Assets
Current assets
Cash			14,322,794			5,056,040
Trade receivable and other receivables			2,519,673			3,689,475
Government assistance and R&D tax credits receivable			886,851			2,179,423
Inventories			1,787,446			1,246,946
Prepaid expenses			4,355,070			1,325,991
Total current assets			23,871,834			13,497,875
Property and equipment			1,618,277			2,071,457
Right-of-use assets			2,474,243			3,180,318
Intangible assets	5		56,185,756			45,838,108
Prepaids financing fees			—			264,523
Goodwill			7,318,126			7,318,126
Total non-current assets			67,596,402			58,672,532
Total assets			91,468,236			72,170,407
Liabilities and shareholders’ equity (deficiency)
Current liabilities
Accounts payable and accrued liabilities			13,759,327			13,570,905
Provisions	6		—			878,144
Conversion option	7		3,396,826			737,974
Warrant liability	8		2,914,346			—
Current portion of lease liabilities			941,352			722,675
Current portion of government grant liabilities	9		570,069			568,807
Total current liabilities			21,581,920			16,478,505
Long-term debt	7		74,191,479			47,725,583
Redeemable stock options	11		—			6,102,496
Lease liabilities			2,046,288			3,058,558
Government grant liabilities	9		1,029,036			899,489
Total non-current liabilities			77,266,803			57,786,126
Total liabilities			98,848,723			74,264,631
Shareholders’ equitsy (deficiency)
Capital stock	10		542,695,821			452,246,204
Reserve – warrants			2,314,417			670,703
Reserve – stock options			2,994,648			31,659,392
Other component of equity			944,274			2,869,188
Deficit			(556,329,647	)		(480,333,695	)
Equity (deficiency) attributable to owners of the capital stock of the parent			(7,380,487	)		7,111,792
Non-controlling interests	10		—			(9,206,016	)
Total shareholders’ equity (deficiency)			(7,380,487	)		(2,094,224	)
Total liabilities and shareholders’ equity (deficiency)			91,468,236			72,170,407
Commitments (Note 17); Subsequent event (Note 18)
See accompanying notes
On behalf of the Board:
Director	Director

3

LeddarTech Holdings Inc.

Interim condensed consolidated statements of changes in shareholders’ equity (deficiency)

(in Canadian dollars)

(Unaudited)

[going concern uncertainty – note 1]

For the six months ended March 31, 2024

		Capital stock		Reserve – warrants		Reserve – stock options			Other component of equity			Deficit			Equity (deficiency) attributable to owners of the capital stock of the parent			Non- controlling interests			Total shareholders’ equity (deficiency)
	Notes	$		$		$			$			$			$			$			$
Balance as of September 30, 2023			452,246,204		670,703		31,659,392			2,869,188			(480,333,695	)		7,111,792			(9,206,016	)		(2,094,224	)
Shares issued upon exercise of PIPE warrants	7		2,059,081		—		—			—			—			2,059,081			—			2,059,081
Dividend in share	10		22,960,000		—		—			—			(22,960,000	)		—						—
Business combination	3-10		65,372,812		—		117,246			—			—			65,490,058			—			65,490,058
Stock-based compensation	11		—		—		2,877,402			506,774			—			3,384,176			—			3,384,176
Closing of previous equity incentive plan	11		—		—		(31,659,392	)					31,659,392			—			—			—
Financing fees – credit facilities modification	7		—		1,643,714		—			—			—			1,643,714			—			1,643,714
Net loss and comprehensive loss			—		—		—			—			(77,560,980	)		(77,560,980	)		(302,312	)		(76,258,385	)
Exercise of call option	10		57,724		—		—			(2,431,688	)		(7,134,364	)		(9,508,328	)		9,508,328			—
Balance as of March 31, 2024			542,695,821		2,314,417		2,994,648			944,274			(556,329,647	)		(7,380,487	)		—			(5,775,580	)

See accompanying notes

4

LeddarTech Holdings Inc.

Interim condensed consolidated statements of changes in shareholders’ equity (deficiency)

(in Canadian dollars)

(Unaudited)

[going concern uncertainty – note 1]

For the six months ended March 31, 2023

		Capital stock		Reserve – warrants		Reserve – stock options		Other component of equity		Deficit			Equity attributable to owners of the capital stock of the parent			Non- controlling interests			Total shareholders’ equity (deficiency)
	Note	$		$		$		$		$			$			$			$
Balance as of September 30, 2022			433,689,768		670,703		28,708,766		2,431,688		(432,341,598	)		33,159,327			(5,901,084	)		27,258,243
Stock-based compensation			—		—		1,183,304		—		—			1,183,304			—			1,183,304
Net loss and comprehensive loss for the period			—		—		—		—		(32,686,873	)		(32,686,873	)		(2,207,680	)		(34,894,553	)
Balance as of March 31, 2023			433,689,768		670,703		29,892,070		2,431,688		(465,028,471	)		1,655,758			(8,108,764	)		(6,453,006	)

See accompanying notes

5

LeddarTech Holdings Inc.

Interim condensed consolidated statements of loss and comprehensive loss

(in Canadian dollars)

(Unaudited)

[going concern uncertainty – note 1]

		For the three months ended March 31,						For the six months ended March 31,
		2024			2023			2024			2023
	Notes	$			$			$			$
Revenues
Products			1,721,000			457,394			3,357,731			2,565,549
Services			136,071			17,650			204,512			165,683
			1,857,071			475,044			3,562,243			2,731,232
Cost of sales	3		1,693,860			1,299,769			2,094,685			4,143,708
Gross profit (loss)			163,211			(824,719	)		1,467,558			(1,412,476	)
Operating expenses
Marketing and product management			1,125,519			1,416,839			2,324,004			2,246,961
Selling			890,138			886,783			1,642,642			1,963,140
General and administrative			5,502,593			4,450,235			9,922,830			9,021,731
Stock-based compensation	11		2,803,357			540,920			(3,181,893	)		1,119,610
Research and development costs	14		1,946,725			3,009,831			4,830,094			8,599,038
Listing expense	3		—			—			59,139,572			—
Restructuring costs	4		—			587,973			—			1,552,529
Transactions costs	3		646,230			788,776			2,407,977			870,603
Impairment loss related to intangible assets	4-5		—			—			—			5,791,439
			12,914,562			11,681,357			77,085,226			31,165,051
Loss from operations			(12,751,351	)		(12,506,076	)		(75,617,668	)		(32,577,527	)
Other (income) costs
Grant revenue			(90,065	)		(119,280	)		(90,065	)		(119,280	)
Finance costs, net	15		4,741,237			1,170,870			2,318,678			2,436,306
Loss before income taxes			(17,402,523	)		(13,557,666	)		(77,846,281	)		(34,894,553	)
Income taxes			17,011			—			17,011			—
Net loss and comprehensive loss			(17,419,534	)		(13,557,666	)		(77,863,292	)		(34,894,553	)
Net loss and comprehensive loss attributable to:
Non-controlling interests	10		—			(978,778	)		(302,312	)		(2,207,680	)
Equity holders of the parent			(17,419,534	)		(12,578,888	)		(77,560,980	)		(32,686,873	)
Net loss per common share, basic and diluted	12		(0.61	)		(75.05	)		(4.81	)		(195.02	)
Weighted average common shares outstanding, basic and diluted	12		28,770,930			167,610			16,110,444			167,610

See accompanying notes

6

LeddarTech Holdings Inc.

Interim condensed consolidated statements of cash flows

(in Canadian dollars)

(Unaudited)

[going concern uncertainty – note 1]

		For the six months ended March 31,
		2024			2023
	Notes	$			$
Operating activities
Net loss			(77,863,292	)		(34,894,553	)
Adjustments to reconcile loss before tax to net cash flows:
Write-down (write-down reversal) of inventories			607,451			422,957
Depreciation of property and equipment			346,822			774,940
Depreciation of right-of-use assets			253,449			324,236
Amortization of intangible assets			317,360			86,336
Impairment loss related to intangible assets	4-5		—			5,791,439
Finance costs, net	15		2,375,698			2,181,989
Stock-based compensation			(3,181,893	)		1,119,610
Transactions costs			431,458			—
Listing expense	3		59,139,572			—
Foreign exchange gain (loss)			818,251			(23,767	)
			(16,755,124	)		(24,216,813	)
Net change in non-cash working capital items	13		(15,516,438	)		4,436,121
Net cash flows related to operating activities			(32,271,562	)		(19,780,692	)
Investing activities
Additions to property and equipment			(102,170	)		(276,025	)
Additions to intangible assets			(6,562,491	)		(5,961,196	)
Grants received related to intangible assets and property and equipment			13,713			141,156
R&D tax credit received			1,522,306			—
Finance income received			242,666			68,090
Net cash flows related to investing activities			(4,885,976	)		(6,027,975	)
Financing activities
Debt issuance	7		29,463,494			—
Interest paid on credit facility and other loan	7		(1,824,605	)		(2,196,586	)
Exercise of warrants	10		337			—
Debt issuance cost	7		(9,645	)		—
Cash acquired from a reverse asset acquisition	3		19,477,645			—
Repayment principal amount of lease liabilities			(571,630	)		(331,197	)
Interest paid on lease liability			39,788			(237,360	)
Net cash flows related to financing activities			46,575,384			(2,765,143	)
Effect of foreign exchange on cash			(151,092	)		11,692
Net increase (decrease) in cash			9,266,754			(28,562,118	)
Cash, beginning of period			5,056,040			32,025,899
Cash, end of period			14,322,794			3,463,781

See accompanying notes

7

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

1. Reporting entity, nature of operations and going concern uncertainty

Reporting entity

On June 12, 2023, LeddarTech Holdings Inc., a company incorporated under the laws of Canada entered into the Business Combination Agreement, as amended on September 25, 2023 (the “BCA”), by and among LeddarTech Holdings Inc., Prospector Capital Corp., a Cayman Islands exempted company (“Prospector”), and LeddarTech Inc., a corporation existing under the laws of Canada.

Unless otherwise indicated and unless the context otherwise requires, “LeddarTech” or “the Company”, at all times prior to consummation of the Business Combination, refers to LeddarTech Inc. and its consolidated subsidiaries, and at all times following consummation of the Business Combination, refers to LeddarTech Holdings Inc. and its consolidated subsidiaries.

Refer to Note 3, Acquisition of Prospector Capital Corp., for additional information on the amalgamation of the Company on December 21, 2023.

These unaudited condensed interim consolidated financial statements are comprised of the accounts of LeddarTech and its wholly owned subsidiaries and the prior period amounts are those of LeddarTech, which continued as the operating entity under the same name following the amalgamation.

The Company’s subsidiaries are as follows:

	Place of incorporation	Proportion of ownership interest held by the Company
Name of subsidiary	and operation	March  31, 2024			September 30, 2023
LeddarTech USA Inc	U.S.		100	%		100	%
LeddarTech (Shenzhen) Sensing Technology Co., Ltd	China		100	%		100	%
Vayavision Sensing, Ltd. (“Vayavision”)	Israel		100	%		60	%
LeddarTech Germany GmbH	Germany		100	%		100	%

The Company’s head office is located at 240-4535, boul. Wilfrid-Hamel, Québec City, Québec,

G1P 2J7, Canada.

Nature of operations

The Company develops services and products targeted at the Advanced Driver Assistance Systems (“ADAS”) market and manufactures and commercializes advanced detection and ranging systems and solutions based on light (“LIDAR”) for the mobility market. The Company operates under one operating segment.

8

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

1. Reporting entity, nature of operations and going concern uncertainty (continued)

Going concern uncertainty

These interim condensed consolidated financial statements were prepared on a going concern basis, which presumes the Company will continue its operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. In its assessment to determine if the going concern assumption is appropriate, management considers all data available regarding the future for at least, without limiting to, the next twelve months from the date of the interim condensed consolidated financial statements.

The Company has an accumulated deficit of $556,329,647 as of March 31 2024, and, for the six months ended March 31, 2024, incurred a net loss of $77,863,292 and net cash outflows related to operating and investing activities amounting to $32,271,562 and $4,885,976 respectively. As of March 31, 2024, the Company had a cash balance of $14,322,794 and an outstanding credit facility of $30,000,000 with a maturity date of January 31, 2026.

Based on cash flow projections, the Company does not expect to have sufficient cash resources in the coming year ending September 30, 2024, to develop its technology, to fund its operations and to comply with its credit facility covenants as renewed.

The ability of the Company to fulfill its obligations and finance its future activities depends on its ability to raise capital and the continuous support of its creditors. The Company has historically been successful in raising capital through issuances of equity and debt and refinancing its credit facilities (refer to Note 7). Consequently, the Company believes its effort to raise sufficient funds to support its activities will be successful. However, there can be no certainty as to the ability of the Company to achieve successful outcomes to these matters. This indicates the existence of a material uncertainty that raises substantial doubt about the ability of the Company to continue as a going concern.

The accompanying interim condensed consolidated financial statements do not purport to give effect to adjustments, if any, to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern and be required to realize its assets and liquidate its liabilities in other than normal course of business.

These interim consolidated financial statements were approved for issue by the Company’s Audit Committee of the Company on May 13^th, 2024.

9

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

2. Summary of significant accounting policies

Statement of compliance

These unaudited interim condensed consolidated financial statements for the three and six months ended March 31, 2024 have been prepared in accordance with IAS 34, “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”). The same accounting policies and methods of computation are followed in the unaudited interim condensed financial statements as compared with the most recent annual financial statements. They do not include all of the financial statement disclosures required for annual financial statements and should be read in conjunction with the Company’s audited consolidated financial statements for the year ended September 30, 2023, and 2022, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the IASB. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual financial statements.

3. Acquisition of Prospector Capital Corp.

On December 21, 2023, the Company completed a plan of arrangement pursuant to a BCA with Prospector and LeddarTech Holdings Inc. Pursuant to the plan of arrangement and BCA, Prospector amalgamated with LeddarTech Holdings Inc., a wholly owned subsidiary of the Company which was incorporated for the purpose of effecting the business combination, to form “Amalco”. Also pursuant to the plan of arrangement, after the preferred shares of LeddarTech converted into common shares of LeddarTech, Amalco acquired all of the issued and outstanding common shares of LeddarTech from LeddarTech’s shareholders in exchange for common shares of Amalco, and LeddarTech and Amalco amalgamated. The Transactions are accounted for as a reverse asset acquisition in accordance with IFRS 2, Share-Based Payment (“IFRS 2”) since Prospector does not meet the definition of a business in accordance with IFRS 3, Business Combinations (“IFRS 3”).

On closing, the Company accounted for the fair value of the common shares issued to Prospector shareholders at the market price of Prospector's publicly traded common shares on December 21, 2023. The fair value of the Class A non-voting special shares was determined using an option pricing model that considers the vesting terms of the instruments issued, which are subject to a seven-year vesting pursuant to which such Class A non-voting special shares will vest and convert into common shares, in equal thirds upon the volume weighted average price of the common shares exceeding US$12.00, US$14.00 and US$16.00, respectively, for any 20 trading days within any consecutive 30 trading day period commencing at least 150 days following the closing. As part of the amalgamation, the Company acquired cash, accounts payable and accrued liabilities and warrant liabilities. The difference between the fair value of the consideration paid over the fair value of the identifiable net assets of Prospector represents a service for the listing of the Company and is recognized as a listing expense in the interim condensed consolidated statement of loss and comprehensive loss.

10

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

3. Acquisition of Prospector Capital Corp. (continued)

The following table reconciles the fair value of elements of the Transactions:

	$
Fair value of consideration transferred
8,770,930 common shares		55,257,187
2,031,250 Class A non-voting special shares		10,115,625
		65,372,812
Fair value of assets acquired and liabilities assumed
Cash		19,477,645
Accounts payable and accrued liabilities		(11,497,830	)
Warrant liability (1)		(1,746,575	)
Balance, as of September 30, 2023		6,233,240
Listing expense		59,139,572

⁽¹⁾ Warrant liability includes Public Warrants, Private Warrants and Vesting Sponsor Warrants. See Note 8 for additional information.

For the three and six months ended March 31, 2024, the Company expensed respectively $646,230 and $2,407,977 in transaction costs (six months ended March 31, 2023 - $870,603).

11

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

4. Restructuring costs and others

Restructuring mainly involves two components of the Company, referred to as “Components” and “Modules”.

In October 2022, LeddarTech announced restructuring initiatives driven by a change in the focus of the Company’s operations, now focused on services and products targeted at the ADAS market. These initiatives, consisting of the reduction of the workforce, have mostly been completed over the fiscal year ending September 30, 2023. For the three and six months ended March 31, 2023, restructuring costs of $587,973 and $1,552,529 respectively were incurred.

Although our Modules business has been actively commercialized for many months, no potential buyer has been identified and the underlying assets have not shown to be attractive on the current market. There is no Letter of Intention or any other indication that the sale of our Modules business or of any of the underlying asset could be highly probable. Thus, we determined that it is not highly probable that a sale will be completed within the next 12 months.

For the Components business, LeddarTech originally had the intention of selling the business; however, in September 2022, it was determined that Components business would be wound down. All assets related to the Components business were deemed impaired as of September 30, 2022, except for $4.3 million related to one contract under negotiation at that time, which did not culminate in a project and were subsequently deemed impaired in the first quarter of 2023 (Note 5).

Also, in the context of this change of focus in the LeddarTech’s operations, the Company revised its revenues forecasts for certain programs. Consequently, a write-down on inventories of $408,652 was recognized during the six months ended March 31, 2023 (three months ended March 31, 2023 – nil) on the interim condensed consolidated statements of loss, under cost of sales. For the three months and six months ended March 31, 2023, an onerous contract loss of $602,906 and $1,653,068 was also recorded under cost of sales.

12

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

5. Intangible assets

	Patents		Licenses		Software		Development costs2			Others		Total
	$		$		$		$			$		$
Cost
September 30, 2023		3,450,455		1,186,337		575,719		45,075,873			94,810		50,383,194
Additions		294,827		—		—		6,795,543			—		7,090,370
Borrowing costs1		—		—		—		3,870,571			—		3,870,571
R&D tax credits (Note 14)		—		—		—		(181,003	)		—		(181,003	)
Grants (Note 14)		—		—		—		(13,713	)		—		(13,713	)
March 31, 2024		3,745,282		1,186,337		575,719		55,547,271			94,810		61,149,419
Accumulated amortization and impairment
September 30, 2023		1,059,007		1,183,761		520,998		1,708,264			73,056		4,545,086
Amortization		330,760		2,576		17,891		64,715			2,635		418,577
Write-offs3		—		—		—		—			—		—
March 31, 2024		1,389,767		1,186,337		538,889		1,772,979			75,691		4,963,663
Net book value
March 31, 2024		2,355,515		—		36,830		53,774,292			19,119		56,185,756

¹ The capitalization rates used to determine the amount of general borrowing costs eligible for capitalization during the three and six months ended March 31, 2024 were 22% and 38% respectively.

² Including $51,043,884 not yet available for use for which amortization begins when development is completed, and the asset is available for use. Such development costs are related to projects to develop and enhance the technology and capabilities with respect to autonomous driving and ADAS applications.

³ During the first quarter of fiscal year 2023, an impairment expense amounting to $5,791,439 was recognized:

^i. During that period, the Company reviewed its September 30,2022 transition plan resulting in certain development costs and licenses no longer expected to be used. Consequently, certain intangible assets were no longer expected to be used and the test was performed at the asset level. These assets had a carrying amount of $5,791,439 and were completely written-off, resulting in an impairment expense of the same amount, including the license related to the development of Components technology projects for $1,424,196.

13

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

6. Provisions

The following table details the changes in provisions between September 30 and March 31, 2024:

	Onerous contracts
	$
Balance, as of September 30, 2023		878,144
Revision of estimations		(8,736	)
Provisions utilized		(869,408	)
Balance, as of March 31, 2024		—

7. Long-term debt

The following table details the maturities and weighted average interest rates related to long-term debt as of September 30, 2023 and March 31, 2024:

	Final	Weighted average effective interest rate		March 31, 2024		September 30, 2023
	maturity	%		$		$
Convertible loan (a)	2028		23.27		36,977,491		11,258,950
Credit facility (b)	2026		20.11		28,097,538		28,747,705
Term loan	2030		33.65		9,116,450		7,718,928
Long-term debt			23.37		74,191,479		47,725,583
Current portion of long-term debt					—		—
Long-term debt					74,191,479		47,725,583

a) Convertible loan

On June 12, 2023, concurrently with the execution of the BCA described in Note 3, LeddarTech entered into a subscription agreement (the “Subscription Agreement”) with certain investors, including investors who subsequently joined the Subscription Agreement (the “PIPE Investors”), pursuant to which the PIPE Investors agreed to purchase secured convertible notes of LeddarTech (the “PIPE Convertible Notes”) in an aggregate principal amount of at least US$43.0 million (the “PIPE Financing”).

The Tranche A subscription was completed in June 2023 and July 2023. Tranche B-1 was completed in October 2023 with the remaining Tranche B-2 completed at closing of the BCA.

PIPE Investors in certain tranches of the PIPE Convertible Notes received at the time of issuance of such notes warrants to acquire Class D-1 preferred shares of LeddarTech (the “Class D-1 Preferred Shares” and the warrants, the “PIPE Warrants”). All of the PIPE Warrants were exercised, and the Class D-1 Preferred Shares issued upon exercise of the PIPE Warrants entitled the PIPE Investors to receive approximately 8,553,434 Common Shares upon the closing of the Business Combination.

14

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

7. Long-term debt (continued)

a) Convertible loan (continued)

The Agreement contains customary covenants that provide for, among other things, limitations on indebtedness and fundamental changes, and reporting requirements.

Issuance of Tranches B-1 and B-2:

On October 27, 2023, upon initial recognition, the $5,617,611 of Tranche B-1 financing was allocated to its component is as follows:

● The debt portion of Tranche B-1 was recorded at amortized cost at a carrying value of US$1,873,523 ($2,596,141), net of transaction costs of $48,743, resulting in an effective interest rate of 28.01%.

● The conversion option was initially recognized at the fair value, determined using a Black-Scholes valuation model, for an amount of US$ 694,758 ($962,726). The conversion option is a liability classified embedded derivative whose fair value is recorded in the interim condensed Consolidated statements of financial position under Conversion options within the Company’s liabilities. This embedded derivative is separated from the host contract and recognized as of fair value through profit or loss, with changes in its fair value recorded in the interim condensed Consolidated statements of loss under Finance costs.

● The 24,322 warrants to acquire 24,322 D-1 Preferred Shares were recognized at their fair value of US$1,260,107 ($2,059,081), determined using a Black-Scholes valuation model.

The fair value of the conversion option and the warrants at initial recognition were determined using the Black-Scholes option pricing model and the following assumptions:

	Conversion option			Warrants
Fair value of the underlying share	US$	4.74		US$	61.09
Exercise price	US$	10.00		US$	0.01
Risk-free interest rate		4.05	%		4.89	%
Expected volatility		60	%		60	%
Expected life		5.00 years			0.04 years
Dividend yield		0	%		0	%

On December 21, 2023, upon initial recognition, the $23,888,643 of Tranche B-2 financing was allocated to its component as follows:

● The debt portion of Tranche B-2 was recorded at amortized cost at a carrying value of US$14,952,605 ($19,903,413), net of transaction costs of $297,833, resulting in an effective interest rate of 15.87%.

● The conversion option was initially recognized at the fair value, determined using a Black-Scholes valuation model, for an amount of US$2,933,937 ($3,985,230). The conversion option is a liability classified embedded derivative whose fair value is recorded in the interim Consolidated statements of financial position under Conversion options within the Company’s liabilities. This embedded derivative is separated from the host contract and recognized as of fair value through profit or loss, with changes in its fair value recorded in the interim condensed Consolidated statements of loss under Finance costs.

15

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

7. Long-term debt (continued)

b) Amendments to the Credit Facility

A series of amendments were made to the Credit Facility on October 13, 2023, October 20, 2023, October 31, 2023 and December 8, 2023. These amendments modify the existing terms in order to (i) extend the latest date on which the Tranche B of the SPAC Offering must be funded to December 22, 2023, (ii) extend the date on which the payment of interest for the months of October and November 2023 may be made, (iii) reduce the Available Cash requirement for the period from the date of the disbursement of the Tranche A of the SPAC Offering until October 31, 2023 from $2,500,000 to $1,500,000, to $Nil until the DE-SPAC date and from $10,000,000 to $5,000,000 at all times after the DE-SPAC date and (iv) to increase the aggregate principal amount of the PIPE financing to a minimum of $44,000,000.

In conjunction with the Credit Facility October 2023 Amendments, the Company issued warrants to purchase Company Common Shares at $0.01 per share, which warrants will be assumed by the Company and exercisable for 250,000 Company Common Shares at $0.01 per share.

The warrants may be exercised, in whole or in part, for a period of five years following completion of the Business Combination and will be subject to a lock-up with one third being released four months after closing, another third being released eight months after closing and the final third being released 12 months after closing.

The warrants were recorded as a reduction of the Credit Facility, with a corresponding increase in Reserve – Warrants in Equity of $1,643,714.

8. Warrant liability

	As of March 31, 2024
	Number		$
Public and Private Warrants		16,049,080		2,772,679
Vesting Sponsor Warrants		1,416,670		141,667
		17,465,750		2,914,346

Upon close of the acquisition of Prospector, the Company assumed through the Transactions, public warrants, private warrants and vesting sponsor warrants (“Public Warrants”, “Private Warrants” and “Vesting Sponsor Warrants”, collectively "the Prospector Warrants") in connection with the BCA and plan of arrangement (Note 3).

The Warrants each entitle their holders to purchase one common share at an exercise price of US$11.17 per common share, which is variable in $CDN. Accordingly, they are classified as a liability rather than equity as the Warrants do not meet the ‘fixed for fixed’ requirement. The Public and Private Warrants are exercisable and will expire on December 21, 2030. The Vesting Sponsor Warrants are identical to the Public and Private Warrants, except that the Vesting Sponsor Warrants will be deemed vested in equal thirds upon the volume weighted average price of the common shares exceeding US$12.00, US$14.00 and US$16.00, respectively, for any 20 trading days within any consecutive 30 trading day period commencing at least 150 days following the closing. None of the Vesting Sponsor Warrants are redeemable by the Company.

16

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024

8. Warrant liability (continued)

The Warrants were initially recorded at their fair value (Note 3). The fair value of the Warrants is reassessed at the end of each reporting period with subsequent changes in fair value recognized through profit or loss. The Public Warrants are considered a level 1 financial instrument as the valuations at the end of each reporting period are based on the trading price of the Public Warrants on the Nasdaq, which are quoted and observable market prices. The Private Warrants are a level 2 financial instrument, as the valuations are based on the quoted and observable market prices of the Public Warrants. The Vesting Sponsor Warrants are a level 3 financial instrument, as the valuations are based on the quoted and observable market prices of the Public Warrants but also unobservable data.

The following table details the changes in warrant liability between December 21 and March 31, 2024:

	Warrant liability
	$
Balance, as of December 21, 2023 (issuance date)		1,746,575
Revaluation of warrant liability		1,167,771
Balance, as of March 31, 2024		2,914,346

9. Government grant liabilities

	$
Balance, as of September 30, 2023		1,468,296
Accretion interest expense		127,642
Foreign exchange loss (gain)		3,167
Balance, as of March 31, 2024		1,599,105
Current		570,069
Non-current		1,029,036

10. Capital stock

The Company is authorized to issue an unlimited number of common shares, without par value, an unlimited number of Class A Non-Voting Special Shares, Class B Non-Voting Special Shares, Class C Non-Voting Special Shares, Class D Non-Voting Special Shares, Class E Non-Voting Special Shares and Class F Non-Voting Special Shares and an unlimited number of preferred shares issuable in series.

Following the consummation of the Business Combination, there were approximately (i) 28,770,930 Common Shares outstanding; (ii) 2,031,250 Class A Non-Voting Special Shares outstanding, (iii) 999,963 Class B Non-Voting Special Shares outstanding, (iv) 999,963 Class C Non-Voting Special Shares outstanding, (v) 999,963 Class D Non-Voting Special Shares outstanding, (vi) 999,963 Class E Non-Voting Special Shares outstanding, (vii) 999,963 Class F Non-Voting Special Shares outstanding, and (viii) no preferred shares outstanding.

17

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024 

10. Capital stock (continued)

Common shares

	Number of Shares			Amount $
Balance, as of September 30, 2023		167,610			9,894,326
Issuance of common shares upon exercise of the call option		66,550			57,724
Class A, B, C, D-1 and D-2 preferred shares exchange for common shares		239,766,119			444,410,959
Common shares converted per business combination		(240,000,279	)		(454,361,009	)
Issuance of new common shares per business combination		20,000,000			454,361,009
Issuance to Prospector shareholders (note 3)		8,770,930			55,257,187
Balance, as of March 31, 2024		28,770,930			509,620,196

Exercise of call option

As of November 1, 2023, the Company exercised its call option to acquire its remaining participation in VayaVision. Per the original Share Purchase Agreement (“SPA”) conditions, the purchase of the VayaVision of Common shares was paid in exchange of Common Shares of the Company, based on a determined ratio and already detailed in the SPA.

This transaction resulted in an increase in the Company’s interest in VayaVision from 60.0% to 100.0% and was accounted for as an equity transaction. The purchase price of $57,724 was equity-settled. As a result, the carrying value of (i) non-controlling interests of $9,508,328 and (ii) the related other component of equity of $2,431,688 were reversed leading to a reduction of deficit of $7,134,364.

Special Shares

Upon close of the acquisition of Prospector, the Company issued through the Transactions, 2,031,250 Class A non-voting special shares having a value of $10,115,625 to Prospector Sponsor in connection with the BCA and plan of arrangement (Note 3).

The Class A non-voting special shares will vest and convert into common shares, in equal thirds upon the volume weighted average price of the common shares exceeding US$12.00, US$14.00 and US$16.00, respectively, for any 20 trading days within any consecutive 30 trading day period commencing at least 150 days following the closing.

On December 21, 2023, LeddarTech shareholders were issued 4,999,815 Earnout Non-Voting Special Shares of an aggregate fair value of $22,960,000 consisting of the following:

● 999,963 Class B Non-Voting Special Shares all of which shall automatically convert to an equal number of Common Shares if (y) on any twenty (20) Trading Days within any thirty (30) consecutive Trading Day period commencing at least one hundred and fifty (150) days following the Closing Date, the Common Shares achieve a VWAP of greater than $12.00; or (z) there occurs any Change of Control Transaction with a valuation of the Common Shares that is greater than $12.00 per Common Share;

18

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024 

10. Capital stock (continued)

● 999,963 Class C Non-Voting Special Shares all of which shall automatically convert to an equal number of Common Shares if (y) on any twenty (20) Trading Days within any thirty (30) consecutive Trading Day period commencing at least one hundred and fifty (150) days following the Closing Date, the Common Shares achieve a VWAP of greater than $14.00 or (z) there occurs any Change of Control Transaction with a valuation of the Common Shares that is greater than $14.00 per Common Share;

● 999,963 Class D Non-Voting Special Shares all of which shall automatically convert to an equal number of Common Shares if (y) on any twenty (20) Trading Days within any thirty (30) consecutive Trading Day period commencing at least one hundred and fifty (150) days following the Closing Date, the Common Shares achieve a VWAP of greater than $16.00 or (z) there occurs any Change of Control Transaction with a valuation of the Common Shares that is greater than $16.00 per Common Share;

● 999,963 Class E Non-Voting Special Shares all of which shall automatically convert to an equal number of Common Shares if (y) the Company enters into its first customer contract with an OEM (or with a Tier-1 who has a contract with an OEM and meets the same conditions) that represents a design win for the Company for an OEM series production vehicle that will create at least 150,000 units a year in volume for its fusion and perception products or (z) there occurs any Change of Control Transaction with a valuation of the Common Shares that is greater than $10.00 per Common Share; and

● 999,963 Class F Non-Voting Special Shares all of which shall automatically convert to an equal number of Common Shares if (y) the Company (i) sends out its first undisputed invoice for payment for product delivery for OEM installation against a contract with an OEM (or with a Tier-1 who has a contract with an OEM) needing in excess of 150,000 units a year in volume for its fusion and perception products and (ii) appropriately books that invoice as revenue in accordance with IFRS requirements or (z) there occurs any Change of Control Transaction with a valuation of the Common Shares that is greater than $10.00 per Common Share.

The Earnout Non-Voting Special Shares are valued at per share amounts ranging from $3.78 (US$2.84) to $5.22 (US$3.93) based on option pricing models that considers the vesting terms of the instruments issued and the following weighted average assumptions:

Fair value of the underlying share	US$	4.74
Exercise price		—
Risk-free interest rate		3.23	%
Expected volatility		60	%
Expected life		7.00 years
Dividend yield		0	%

19

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024 

10. Capital stock (continued)

As of March 31, 2024, the following shares were issued and outstanding:

	Number of Shares		Amount $
Common shares		28,770,930		509,620,196
Class A non-voting special shares		2,031,250		10,115,625
Class B Non-Voting Special Shares		999,963		5,220,000
Class C Non-Voting Special Shares		999,963		4,970,000
Class D Non-Voting Special Shares		999,963		4,740,000
Class E Non-Voting Special Shares		999,963		4,250,000
Class F Non-Voting Special Shares		999,963		3,780,000
		35,801,995		542,695,821

11. Stock-based compensation

M-option

Preceding closing of the acquisition of Prospector (Note 3), pursuant to the Plan of Arrangement, each of 18,647 M-Options have been exchanged for an option to purchase one common shares of the Company.

The replacement options have an exercise price of $0.01. The M-option redemption feature was not carried to the replacement option and as a result, the replacement options are classified as equity. Upon replacement of the award, the fair value of the option of $117,246 was recognized in reserve – stock option and the redeemable stock option liability of $6,102,496 was reversed, resulting in a gain on modification of stock options of $5,985,250 in the interim condensed consolidated statement of loss.

Stock-based compensation related to the BCA

On May 1st, 2023, the Company entered into an agreement with a service provider regarding the BCA described in note 3. The agreement implies, upon the completion of the BCA, a transaction fee payable in exchange of a number of common shares of the Company equivalent to US$700,000. During the first quarter of 2024, a portion ($506,774) of the transaction fee was recognized as transaction costs in the interim condensed Consolidated statement of loss, with a counterparty in Other components of equity.

Equity Incentive Plan

Immediately prior to the acquisition of Prospector, the Company adopted an Equity Incentive Plan (the “Plan”) for certain qualified directors, executive officers, employees and consultants. This Plan continues in full force and effect as the Company equity incentive plan following the Company Amalgamation. The number of shares available for issuance under the Plan shall not exceed at any time 5,000,000 shares.

20

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024 

11. Stock-based compensation (continued)

The Plan provide for the grant of unvested Company Common Shares, (i) share options (“options”), (ii) restricted share units (“RSUs”), (iii) deferred share units (“DSUs”) and (iv) performance share units (“PSUs”). Various vesting conditions may apply to each award and may include continued service, performance and/or other conditions.

Following the adoption of the new equity incentive and the grants of the first awards of this Plan, the Company closed off the reserve stock option balance related to the previous equity incentive plan, in the deficit.

(i) Options

The Company has a stock option plan as part of the incentive plan in which options to purchase common shares are issued to officers and key employees. Under this plan the options will vest between the grant date and March 2028.

Options are expensed on an earned basis. The related compensation expense is included in the stock-based compensation expense.

For the six months ended March 31, 2024, movements in outstanding options were as follow:

	Six months ended March 31, 2024 Number of stock options		Exercise price(1) $
Balance as of September 30, 2023		—		—
Granted		1,438,600		2,12
Balance, as of March 31, 2024		1,438,600		2,12

⁽¹⁾ Weighted average exercise price

The compensation expense with respect to the Options plan amount to $388,514.

(ii) RSUs

The Company has an RSU as part of the incentive plan for management and key employees. Under this plan, RSUs will vest between the grant date and March 2028 to employees who are still employed by the Company on the exercise date.

RSUs are expensed on an earned basis. The related compensation expense is included in stock-based compensation expense.

21

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024 

11. Stock-based compensation (continued)

For the six months ended March 31, 2024, movements in outstanding RSUs were as follow:

	Six months ended March 31, 2024 Number of units
Balance, as of September 30, 2023		—
Granted		1,438,600
Balance, as of March 31, 2024		1,438,600

The fair value of vested outstanding units, at the end of the six months period ended March 31, 2024 is $3.52. The compensation expense with respect to the RSU plan amount to $2,198,457.

(iii) PSUs

The Company has a PSU plan as part of the incentive plan for management and key employees. Under this plan, PSUs generally vest over a period of four years to employee who are still employed by the Company on the exercise date.

PSUs are expensed on an earned basis. The related compensation expense is included in stock-based compensation expense.

For the six months ended March 31, 2024, movements in outstanding PSUs were as follow:

	Six months ended March 31, 2024 Number of units
Balance, as of September 30, 2023		—
Granted		733,080
Balance, as of March 31, 2024		733,080

The fair value of vested outstanding units, at the end of the six months period ended March 31, 2024 is $3.38. The compensation expense with respect to the PSU plan amount to $290,431.

22

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024 

12. Loss per share

Basic loss per share is calculated by dividing the loss attributable to equity holders of the parent by the weighted average number of common shares outstanding.

The potential effect of dilution from outstanding stock options, convertible preferred stocks, warrants, and put and call options were excluded from the calculation of the diluted loss per common share since the Company incurred losses and the inclusion of these instruments would have an antidilutive effect.

13. Additional information included in the interim condensed consolidated statement of cash flows

Changes in non-cash working capital items:

	Six months ended March 31,
	2024			2023
	$			$
Trade receivable and other receivables		1,169,802			1,622,576
Government assistance and R&D tax credits receivable		(48,731	)		1,032,024
Inventories		(1,147,951	)		(384,787	)
Prepaid expenses		(3,029,079	)		258,154
Accounts payable and accrued liabilities		(11,582,335	)		292,286
Provisions		(878,144	)		1,615,868
		(15,516,438	)		4,436,121

23

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024 

14. Government grants

	Total R&D tax credits
	Recognized in interim condensed statements of loss		Recognized against carrying amount of intangible assets (Note 5)		Total grant
	$		$		$
Three months ended March 31, 2024
Grants		90,065		13,713		103,778
R&D tax credit		-		92,399		92,399
Total grants and R&D tax credits		90,065		106,112		196,177
Six months ended March 31, 2024
Grants		90,065		13,713		103,778
R&D tax credit		82,176		181,003		263,179
Total grants and R&D tax credits		172,241		194,716		366,957

	Total R&D tax credits
	Recognized in interim condensed statements of loss		Recognized against carrying amount of intangible assets (Note 5)		Total grant
	$		$		$
Three months ended March 31, 2023
Grants		119,280		141,156		260,436
R&D tax credit		31,226		36,953		68,179
Total grants and R&D tax credits		150,506		178,109		328,615
Six months ended March 31, 2023
Grants		119,280		141,156		260,436
R&D tax credit		47,440		56,126		103,566
Total grants and R&D tax credits		166,720		197,282		364,002

The R&D tax credit is recognized as a reduction of research and development costs in the interim condensed consolidated statements of loss and comprehensive loss.

24

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024 

15. Finance costs, net

	Three months ended March 31,						Six months ended March 31,
	2024			2023			2024			2023
	$			$			$			$
Interest expenses (income)
Interest income		(132,859	)		(33,880	)		(242,666	)		(68,090	)
Interest expense on term loan (Note 7)		724,048			457,590			1,397,523			915,180
Interest expense on lease liabilities		95,139			116,416			166,178			237,360
Interest expense on credit  facility (Note 7)		1,651,529			1,151,207			2,818,151			2,278,593
Interest expense on convertible notes (Note 7)		2,050,132			—			3,254,360			—
Interest expense on other loan (note 7)		—			59,688			—			133,282
Accretion and remeasurement of government grant liability (Note 9)		65,662			70,571			127,642			279,178
Capitalized borrowing costs (Note 5)		(1,550,038	)		(854,232	)		(3,870,571	)		(1,593,514	)
		2,903,613			967,360			3,650,617			2,181,989
Loss (gain) on revaluation of financial instruments carried at fair value
Warrant liability (Note 8)		1,408,507			—			1,167,771			—
Conversion option (Note 7)		476,179			—			(2,246,368	)		—
		1,884,686			—			(1,078,597	)		—
Other
Gain on lease modification (Note 16)		(39,305	)		—			(205,966	)		—
Modification costs of convertible loans Note 7)		—			—			9,645			—
Bank charges		5,430			18,841			23,882			41,250
Foreign exchange loss (gain)		(13,187	)		184,669			(80,903	)		213,067
		(47,062	)		203,510			(253,342	)		254,317
Finance costs, net		4,741,237			1,170,870			2,318,678			2,436,306

25

LeddarTech Holdings Inc.

Notes to the unaudited interim condensed consolidated financial statements

(in Canadian dollars)

Three and six months ended March 31, 2024 

16. Lease modification

On October 31, 2023, December 6, 2023, and February 29, 2024, the Company entered into lease modifications for its Toronto and Québec city locations, in order to reduce the rented square footage. As per the amendments, during the first and second quarter of 2024, a gain on lease modification of $205,966 was recorded in the six months ended March 31, 2024.

17. Commitments

Other than commitments related to the leases and the long-term debts, the Company is committed to minimum amounts under long-term agreements for license and telecommunications and office equipment, which expire at the latest in 2025. The commitments are detailed in the annual consolidated financial statements for the year ended September 30, 2023.

18. Subsequent event

On April 8, 2024, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd. (“Yorkville”). Pursuant to the SEPA, assuming satisfaction of certain conditions and subject to the limitations set forth in the SEPA, the Company will have the right from time to time, but not the obligation, to issue and sell to Yorkville up to $50.0M (the "Commitment Amount”) of its common shares. The Company may also require Yorkville to purchase Common share under the SEPA up to 500,000 Shares of Common Stock. The Company also agreed to pay Yorkville a commitment fee equal to 0.75% of the Commitment Amount.

26