UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2021June 30, 2022
☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [ ] to [ ]
Commission file number 000-54756
| PACIFIC GREEN TECHNOLOGIES INC. |
| (Exact name of registrant as specified in its charter) |
| Delaware | 36-4966163 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Suite 10212, 8 The Green Dover, DE | 19901 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (302) 601-4659
| N/A |
| (Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock | PGTK | OTC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ ☒YES YES ☐ NO
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ YES ☐ NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ YES ☒ NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐ YES ☐ NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
47,026,886 common shares issued and outstanding as of February 14,August 22, 2022.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Our unaudited condensed consolidated interim financial statements for the three months ended December 31, 2021June 30, 2022 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.
1
PACIFIC GREEN TECHNOLOGIES INC.
Condensed Consolidated Interim Financial Statements
December 31, 2021
(Unaudited)June 30, 2022
(Expressed in USU.S. dollars)
(unaudited)
F-1
PACIFIC GREEN TECHNOLOGIES INC.
Condensed Consolidated Interim Balance Sheets
(Unaudited)
(Expressed in U.S. dollars)
| December 31, 2021 $ | March 31, 2021 $ | |||||||
| ASSETS | ||||||||
| Cash and cash equivalent | 9,797,768 | 23,436,417 | ||||||
| Short-term investments and amounts in escrow (Note 3) | 1,089,279 | 1,126,728 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $1,566,406 and $1,559,757, respectively | 7,996,480 | 10,996,220 | ||||||
| Prepaid expenses and parts inventory | 763,003 | 932,948 | ||||||
| Contract assets (Note 10) | 3,339,968 | 4,329,607 | ||||||
| Lease receivable (Note 4) | 64,247 | 406,366 | ||||||
| Total Current Assets | 23,050,745 | 41,228,286 | ||||||
| Long term receivable | 65,139 | 2,735,415 | ||||||
| Project under development (Note 9) | 2,350,083 | 2,001,116 | ||||||
| Property and equipment (Note 5) | 1,168,765 | 1,229,828 | ||||||
| Intangible assets (Note 6) | 10,115,947 | 11,180,524 | ||||||
| Goodwill (Note 7 and 8) | 4,399,091 | 4,293,789 | ||||||
| Right of use asset | 831,124 | 1,118,949 | ||||||
| Security deposit | 1,019,450 | 635,870 | ||||||
| Total Assets | 43,000,344 | 64,423,777 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities (Note 12) | 12,185,211 | 24,486,138 | ||||||
| Warranty provision (Note 13) | 1,831,554 | 2,425,107 | ||||||
| Contract liabilities (Note 10) | 18,006,220 | 13,603,559 | ||||||
| Current portion of lease obligation (Note 18) | 486,442 | 490,947 | ||||||
| Due to related parties (Note 14) | – | 174,837 | ||||||
| Total Current Liabilities | 32,509,427 | 41,180,588 | ||||||
| Long-term accounts payable and accrued liabilities (Note 12) | 539,611 | 3,294,342 | ||||||
| Long-term lease obligation (Note 18) | 452,810 | 822,289 | ||||||
| Total Liabilities | 33,501,848 | 45,297,219 | ||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, 10,000,000 shares authorized, $0.001 par value nil and nil shares issued and outstanding, respectively | – | – | ||||||
| Common stock, 500,000,000 shares authorized, $0.001 par value 47,026,886 and 46,990,565 shares issued and outstanding, respectively | 47,027 | 46,991 | ||||||
| Additional paid-in capital | 92,392,824 | 92,327,092 | ||||||
| Accumulated other comprehensive income | 1,242,560 | 892,732 | ||||||
| Deficit | (84,084,161 | ) | (74,140,257 | ) | ||||
| Total stockholders’ equity before treasury stock | 9,598,250 | 19,126,558 | ||||||
| Treasury stock, at cost, 56,162 shares at Dec 31, 2021 and nil shares at March 31, 2021 | (99,754 | ) | – | |||||
| Total Stockholders’ Equity | 9,498,496 | 19,126,558 | ||||||
| Total Liabilities and Stockholders’ Equity | 43,000,344 | 64,423,777 | ||||||
| Nature of Operations (Note 1) | ||||||||
| Commitment (Note 18) | ||||||||
(unaudited)
| June 30, 2022 $ | March 31, | |||||||
| ASSETS | ||||||||
| Cash and cash equivalent | 4,497,514 | 6,286,468 | ||||||
| Short-term investments and amounts in escrow (Note 3) | 2,382,475 | 1,932,323 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $781,079 and $828,461 at June 30, 2022 and March 31, 2022, respectively | 2,513,372 | 4,884,101 | ||||||
| Other receivable, net of allowance for doubtful accounts of $1,431 and $1,512 at June 30, 2022 and March 31, 2022, respectively | 677,987 | 10,599,746 | ||||||
| Accrued revenue (Note 8) | 312,389 | 531,947 | ||||||
| Prepaid expenses and parts inventory | 1,248,385 | 582,063 | ||||||
| Prepaid manufacturing costs (Note 8) | 78,917 | 38,010 | ||||||
| Total Current Assets | 11,711,039 | 24,854,658 | ||||||
| Project under development (Note 6) | 10,825,726 | 3,855,792 | ||||||
| Property and equipment (Note 4) | 1,072,433 | 1,166,241 | ||||||
| Intangible assets (Note 5) | 6,879,228 | 7,099,748 | ||||||
| Right of use asset | 628,353 | 739,091 | ||||||
| Security deposits and other advances | 913,793 | 949,644 | ||||||
| Total Assets | 32,030,572 | 38,665,174 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities (Note 9) | 6,357,706 | 9,594,787 | ||||||
| Warranty provision (Note 10) | 931,296 | 865,451 | ||||||
| Contract liabilities (Note 8) | 8,445,145 | 8,143,109 | ||||||
| Current portion of lease obligations (Note 14(a)) | 429,259 | 472,068 | ||||||
| Due to related parties (Note 11) | 83,196 | 4,250 | ||||||
| Total Current Liabilities | 16,246,602 | 19,079,665 | ||||||
| Non – current portion of lease obligation (Note 14(a)) | 99,209 | 341,972 | ||||||
| Total Liabilities | 16,345,811 | 19,421,637 | ||||||
| Stockholders’ Equity | ||||||||
| Preferred stock, 10,000,000 shares authorized, $0.001 par value nil and nil shares issued and outstanding at June 30, 2022 and March 31, 2022, respectively | – | – | ||||||
| Common stock, 500,000,000 shares authorized, $0.001 par value 47,026,886 and 47,026,886 shares issued and outstanding at June 30, 2022 and March 31, 2022, respectively | 47,027 | 47,027 | ||||||
| Additional paid-in capital | 92,446,921 | 92,429,203 | ||||||
| Accumulated other comprehensive income | 1,650,831 | 2,035,666 | ||||||
| Deficit | (88,789,536 | ) | (85,530,306 | ) | ||||
| Total stockholders’ equity before treasury stock | 5,355,243 | 8,981,590 | ||||||
| Treasury stock, at cost, 56,162 shares and 56,162 shares at June 30, 2022 and March 31, 2022, respectively | (99,754 | ) | (99,754 | ) | ||||
| Total Stockholders’ Equity | 5,255,489 | 8,881,836 | ||||||
Noncontrolling interest (Note 7(a) and (b)) | 10,429,272 | 10,361,701 | ||||||
| Total Equity | 15,684,761 | 19,243,537 | ||||||
| Total Liabilities and Stockholders’ Equity | 32,030,572 | 38,665,174 | ||||||
Nature of Operations (Note 1)
Commitments (Note 14)
(The accompanying notes are an integral part of these consolidated financial statements)
F-2
PACIFIC GREEN TECHNOLOGIES INC.
Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(Expressed in U.S. dollars)
(unaudited)
| Three Months Ended December 31, 2021 $ | Three Months Ended December 31, 2020 $ | Nine Months Ended December 31, 2021 $ | Nine Months Ended December 31, 2020 $ | |||||||||||||
| Sales (Note 10) | 2,642,184 | 4,658,466 | 5,535,004 | 42,128,892 | ||||||||||||
| Cost of goods sold (Note 10) | 1,328,338 | 3,625,204 | 3,137,247 | 25,515,248 | ||||||||||||
| Gross profit | 1,313,846 | 1,033,262 | 2,397,757 | 16,613,644 | ||||||||||||
| Expenses | ||||||||||||||||
| Advertising and promotion | 170,870 | 152,172 | 488,088 | 510,748 | ||||||||||||
| Amortization of intangible assets (Note 6) | 396,539 | 389,703 | 1,178,217 | 1,169,039 | ||||||||||||
| Bad Debts Expense | 21,012 | – | 21,012 | – | ||||||||||||
| Depreciation (Note 5) | 52,519 | 47,807 | 152,062 | 144,457 | ||||||||||||
| Foreign exchange loss (gain) | 34,791 | (41,959 | ) | 86,369 | 2,577 | |||||||||||
| Management and technical consulting | 1,026,808 | 1,238,962 | 3,072,262 | 9,583,143 | ||||||||||||
| Office and miscellaneous | 525,009 | 460,338 | 1,318,839 | 1,396,263 | ||||||||||||
| Operating lease expense (Note 18) | 117,350 | 93,910 | 360,717 | 342,077 | ||||||||||||
| Professional fees | 390,866 | 601,790 | 1,338,544 | 1,494,425 | ||||||||||||
| Research and development | – | – | – | 4,368 | ||||||||||||
| Salaries and wage expenses | 1,234,243 | 1,187,967 | 4,029,737 | 4,510,241 | ||||||||||||
| Transfer agent and filing fees | 91,865 | (34,007 | ) | 253,088 | 106,758 | |||||||||||
| Travel and accommodation | 249,338 | 129,470 | 473,953 | 302,040 | ||||||||||||
| Warranty and related (Note 13) | 16,795 | 160,125 | (4,853 | ) | 1,407,420 | |||||||||||
| Total expenses | 4,328,005 | 4,386,278 | 12,768,035 | 20,973,556 | ||||||||||||
| Income (loss) before other income (expenses) | (3,014,159 | ) | (3,353,016 | ) | (10,370,278 | ) | (4,359,912 | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Gain on de-consolidation of subsidiary and termination of lease | – | – | – | 242,193 | ||||||||||||
| Gain (loss) on change in fair value of derivative liability (Note 11) | – | (50,869 | ) | – | (1,306 | ) | ||||||||||
| Gain on reduction of acquisition costs of subsidiary (Note 7) | – | – | – | 3,240,250 | ||||||||||||
| Financing interest income | 85,889 | 247,253 | 378,840 | 548,543 | ||||||||||||
| Interest income (expense) and other | (53,198 | ) | (24,015 | ) | 47,534 | (41,725 | ) | |||||||||
| Total other income (expense) | 32,691 | 172,369 | 426,374 | 3,987,955 | ||||||||||||
| Net (loss) income for the period | (2,981,468 | ) | (3,180,647 | ) | (9,943,904 | ) | (371,957 | ) | ||||||||
| Other comprehensive income | ||||||||||||||||
| Foreign currency translation gain | 132,503 | 606,849 | 349,828 | 690,893 | ||||||||||||
| Comprehensive (loss) income for the period | (2,848,965 | ) | (2,573,798 | ) | (9,594,076 | ) | 318,936 | |||||||||
| Net income (loss) per share, basic and diluted | (0.06 | ) | (0.07 | ) | (0.21 | ) | (0.01 | ) | ||||||||
| Weight average number of common shares outstanding, basic (1) | 47,321,207 | 46,598,183 | 47,309,134 | 46,305,661 | ||||||||||||
| Weight average number of dilutive shares outstanding, diluted | 47,321,207 | 46,598,183 | 47,309,134 | 46,305,661 | ||||||||||||
| Three Months Ended June 30, 2022 $ | Three Months Ended June 30, 2021 (As restated- Note 2) $ | |||||||
| Sales (Note 8) | ||||||||
| Products | 1,655,158 | 742,290 | ||||||
| Services | 368,718 | 580,960 | ||||||
| Total Revenues | 2,023,876 | 1,323,250 | ||||||
| Cost of goods sold (Note 8) | ||||||||
| Products | 987,207 | 1,230,119 | ||||||
| Services | 241,336 | 290,890 | ||||||
| Total Cost of goods sold | 1,228,543 | 1,521,009 | ||||||
| Gross profit / (loss) | 795,333 | (197,759 | ) | |||||
| Expenses | ||||||||
| Advertising and promotion | 143,267 | 168,895 | ||||||
| Amortization of intangible assets (Note 5) | 688 | 171,124 | ||||||
| Depreciation (Note 4) | 53,584 | 49,766 | ||||||
| Foreign exchange loss | 497,696 | 11,873 | ||||||
| Management and technical consulting | 989,084 | 745,552 | ||||||
| Operating lease expense (Note 14) | 109,737 | 123,155 | ||||||
| Office and miscellaneous | 462,769 | 378,263 | ||||||
| Professional fees | 287,025 | 276,669 | ||||||
| Research and development | 13,772 | – | ||||||
| Salaries and wage expenses | 982,914 | 1,255,206 | ||||||
| Transfer agent and filing fees | 13,754 | 13,175 | ||||||
| Travel and accommodation | 190,767 | 66,113 | ||||||
| Warranty and related expense (Note 10) | 181,600 | (39,807 | ) | |||||
| Total expenses | 3,926,657 | 3,219,984 | ||||||
| (Loss) / income before other income (expense) | (3,131,324 | ) | (3,417,743 | ) | ||||
| Other income (expense) | ||||||||
| Financing interest income | 46,269 | 97,626 | ||||||
| Interest income (expense) and other | (38,351 | ) | 58,414 | |||||
| Total other income | 7,918 | 156,040 | ||||||
| Net (loss) / income for the period before noncontrolling interest | (3,123,406 | ) | (3,261,703 | ) | ||||
Net income attributable to noncontrolling interest (Note 7(a) and (b)) | 135,824 | – | ||||||
| Net (loss) / income for the period | (3,259,230 | ) | (3,261,703 | ) | ||||
| Other comprehensive income | ||||||||
| Foreign currency translation (loss) / gain | (384,835 | ) | 176,116 | |||||
| Comprehensive loss for the period | (3,644,065 | ) | (3,085,587 | ) | ||||
| Net loss per share, basic and diluted | (0.07 | ) | (0.07 | ) | ||||
| Net loss per share, diluted | (0.07 | ) | (0.07 | ) | ||||
| Weighted average number of shares outstanding, basic1 | 47,339,386 | 47,328,065 | ||||||
| Weighted average number of shares outstanding, diluted | 47,339,386 | 47,328,065 | ||||||
| (1) | The period ended |
(The accompanying notes are an integral part of these consolidated financial statements)
F-3
PACIFIC GREEN TECHNOLOGIES INC.
Condensed Consolidated Interim Statements of Stockholders’Stockholders Equity
(Unaudited)
(Expressed in U.S. dollars)
(unaudited)
| Common stock | Additional Paid-in | Accumulated Other Comprehensive | Stockholders’ | |||||||||||||||||||||||||
| Shares # | Amount $ | Capital $ | Income $ | Treasury Stock | Deficit $ | Equity $ | ||||||||||||||||||||||
| Balance, March 31, 2021 | 46,990,565 | 46,991 | 92,327,092 | 892,732 | – | (74,140,257 | ) | 19,126,558 | ||||||||||||||||||||
| Fair value of options granted (Note 16) | – | – | 13,788 | – | – | – | 13,788 | |||||||||||||||||||||
| Foreign exchange translation gain | – | – | – | 176,116 | – | – | 176,116 | |||||||||||||||||||||
| Net income (loss) for the period | – | – | – | – | – | (2,787,926 | ) | (2,787,926 | ) | |||||||||||||||||||
| Balance June 30, 2021 | 46,990,565 | 46,991 | 92,340,880 | 1,068,848 | – | (76,928,183 | ) | 16,528,536 | ||||||||||||||||||||
| Fair value of options granted (Note 16) | – | – | 13,941 | – | – | – | 13,941 | |||||||||||||||||||||
| Shares issue for service | 11,321 | 11 | 23,989 | – | – | – | 24,000 | |||||||||||||||||||||
| Shares issued on the exercise of stock options | 25,000 | 25 | 225 | – | – | – | 250 | |||||||||||||||||||||
| Foreign exchange translation | – | – | – | 41,209 | – | – | 41,209 | |||||||||||||||||||||
| Net income (loss) for the period | – | – | – | – | – | (4,174,510 | ) | (4,174,510 | ) | |||||||||||||||||||
| Balance September 30, 2021 | 47,026,886 | 47,027 | 92,379,035 | 1,110,057 | – | (81,102,693 | ) | 12,433,426 | ||||||||||||||||||||
| Fair value of options granted (Note 16) | – | – | 13,789 | – | – | – | 13,789 | |||||||||||||||||||||
| Common stock repurchases (Note 16) | – | (99,754 | ) | – | (99,754 | ) | ||||||||||||||||||||||
| Foreign exchange translation | – | – | – | 132,503 | – | – | 132,503 | |||||||||||||||||||||
| Net income (loss) for the period | – | – | – | – | – | (2,981,468 | ) | (2,981,468 | ) | |||||||||||||||||||
| Balance December 31, 2021 | 47,026,886 | 47,027 | 92,392,824 | 1,242,560 | (99,754 | ) | (84,084,161 | ) | 9,498,496 | |||||||||||||||||||
| Common stock | Additional Paid-in | Accumulated Other Comprehensive | Stockholders’ | |||||||||||||||||||||
| Shares # | Amount $ | Capital $ | Income $ | Deficit $ | Equity $ | |||||||||||||||||||
| Balance, March 31, 2021 | 46,990,565 | 46,991 | 92,327,092 | 892,732 | (74,777,848 | ) | 18,488,967 | |||||||||||||||||
| Fair value of options granted (Note 12) | – | – | 13,788 | – | – | 13,788 | ||||||||||||||||||
| Foreign exchange translation gain | – | – | – | 176,116 | – | 176,116 | ||||||||||||||||||
| Net (loss) for the period | – | – | – | – | (3,261,703 | ) | (3,261,703 | ) | ||||||||||||||||
| Balance June 30, 2021 | 46,990,565 | 46,991 | 92,340,880 | 1,068,848 | (78,039,551 | ) | 15,417,168 | |||||||||||||||||
| Common stock | Additional Paid-in | Accumulated Other Comprehensive | Treasury | Noncontrolling | Stockholders’ | |||||||||||||||||||||||||||
| Shares # | Amount $ | Capital $ | Income $ | Stock $ | Interest $ | Deficit $ | Equity $ | |||||||||||||||||||||||||
| Balance, March 31, 2022 | 47,026,886 | 47,027 | 92,429,203 | 2,035,666 | (99,754 | ) | 10,361,701 | (85,530,306 | ) | 19,243,537 | ||||||||||||||||||||||
| Fair value of options granted (Note 12) | – | – | 17,718 | – | – | – | – | 17,718 | ||||||||||||||||||||||||
| Noncontrolling interest (Note 7(a) and (b)) | – | – | – | – | – | 67,571 | – | 67,571 | ||||||||||||||||||||||||
| Foreign exchange translation gain | – | – | – | (384,835 | ) | – | – | – | (384,835 | ) | ||||||||||||||||||||||
| Net (loss) for the period | – | – | – | – | – | – | (3,259,230 | ) | (3,259,230 | ) | ||||||||||||||||||||||
| Balance June 30, 2022 | 47,026,886 | 47,027 | 92,446,921 | 1,650,831 | (99,754 | ) | 10,429,272 | (88,789,536 | ) | 15,684,761 | ||||||||||||||||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-4
PACIFIC GREEN TECHNOLOGIES INC.
Condensed Consolidated Interim Statements of Stockholders’ Equity
(Unaudited)
(Expressed in U.S. dollars)
| Common stock | Additional Paid-in | Accumulated Other Comprehensive | Stockholders’ | |||||||||||||||||||||
| Shares # | Amount $ | Capital $ | Income $ | Deficit $ | Equity $ | |||||||||||||||||||
| Balance, March 31, 2020 | 45,659,971 | 45,660 | 90,653,018 | 207,017 | (75,321,335 | ) | 15,584,360 | |||||||||||||||||
| Fair value of options granted (Note 16) | – | – | 60,822 | – | – | 60,822 | ||||||||||||||||||
| Foreign exchange translation gain | – | – | – | (55,797 | ) | – | (55,797 | ) | ||||||||||||||||
| Net income (loss) for the period | – | – | – | – | 1,488,681 | 1,488,681 | ||||||||||||||||||
| Balance June 30, 2020 | 45,659,971 | 45,660 | 90,713,840 | 151,220 | (73,832,654 | ) | 17,078,066 | |||||||||||||||||
| Shares issued for commissions | 95,238 | 95 | 95,143 | – | – | 95,238 | ||||||||||||||||||
| Shares for employment settlement | 50,000 | 50 | 69,450 | – | – | 69,500 | ||||||||||||||||||
| Shares issued on the exercise of stock options | 175,000 | 175 | 1,575 | – | – | 1,750 | ||||||||||||||||||
| Foreign exchange translation | – | – | – | 139,842 | – | 139,842 | ||||||||||||||||||
| Shares issued on debt conversion | 50,000 | 50 | 62,450 | – | – | 62,500 | ||||||||||||||||||
| Net income (loss) for the period | – | – | – | – | 1,320,009 | 1,320,009 | ||||||||||||||||||
| Balance September 30, 2020 | 46,030,209 | 46,030 | 90,942,458 | 291,062 | (72,512,645 | ) | 18,766,905 | |||||||||||||||||
| Shares issued for acquisition | 525,000 | 525 | 576,975 | – | – | 577,500 | ||||||||||||||||||
| Shares issued for settlement | 100,000 | 100 | 99,900 | – | – | 100,000 | ||||||||||||||||||
| Foreign exchange translation | – | – | – | 606,849 | – | 606,849 | ||||||||||||||||||
| Net income (loss) for the period | – | – | – | – | (3,180,647 | ) | (3,180,647 | ) | ||||||||||||||||
| Balance December 31, 2020 | 46,655,209 | 46,655 | 91,619,333 | 897,911 | (75,693,292 | ) | 16,870,607 | |||||||||||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
PACIFIC GREEN TECHNOLOGIES INC.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
(Expressed in U.S. dollars)
(unaudited)
| Nine months Ended December 31, 2021 $ | Nine months Ended December 31, 2020 $ | |||||||
| Operating Activities | ||||||||
| Net income (loss) for the period | (9,943,904 | ) | (371,957 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of intangible assets (Note 6) | 1,178,217 | 1,169,039 | ||||||
| Gain on reduction of acquisition costs of subsidiary | – | (3,240,250 | ) | |||||
| Gain on disposition of subsidiary | – | (242,193 | ) | |||||
| Lease expense | 360,717 | 342,077 | ||||||
| Depreciation (Note 5) | 152,062 | 144,457 | ||||||
| Lease finance charge | 11,881 | 29,748 | ||||||
| Loss (gain) on change in fair value of derivative liability (Note 11) | – | 1,306 | ||||||
| Unrealized loss (gain) on foreign exchange | (71,970 | ) | 166,478 | |||||
| Fair value of stock options granted (Note 16) | 41,519 | 60,822 | ||||||
| Shares issued for services | 23,999 | 264,688 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Short-term investments and amounts held in trust | 37,449 | 257,170 | ||||||
| Accounts receivable | 6,000,254 | 1,306,949 | ||||||
| Prepaid expenses and deposits | (213,635 | ) | 154,672 | |||||
| Contract assets | 989,639 | 6,814,648 | ||||||
| Project under development | (348,967 | ) | – | |||||
| Lease payments | (406,870 | ) | (379,820 | ) | ||||
| Due from related parties | 0 | (42,346 | ) | |||||
| Accounts payable and accrued liabilities | (15,055,658 | ) | (9,991,783 | ) | ||||
| Warranty provision | (593,553 | ) | 483,077 | |||||
| Loan payable | – | 3,329 | ||||||
| Contract liabilities | 4,402,661 | (7,110,602 | ) | |||||
| Due to related parties | (174,837 | ) | – | |||||
| Net Cash Provided by (Used in) Operating Activities | (13,610,996 | ) | (10,180,491 | ) | ||||
| Investing Activities | ||||||||
| Acquisition of business, net of cash acquired (Note 8) | – | 114,014 | ||||||
| Additions of property and equipment | (49,540 | ) | (99,999 | ) | ||||
| Net Cash Provided by (Used in) Investing Activities | (49,540 | ) | 14,015 | |||||
| Financing Activities | ||||||||
| Repurchases of common stock | (99,754 | ) | – | |||||
| Proceeds on option exercise | 250 | 1,750 | ||||||
| Net Cash Provided by (Used in) Financing Activities | (99,504 | ) | 1,750 | |||||
| Effect of Foreign Exchange Rate Changes on Cash | 121,391 | 209,921 | ||||||
| Change in Cash and Cash Equivalents | (13,638,649 | ) | (9,954,805 | ) | ||||
| Cash and Cash Equivalents, Beginning of Period | 23,436,417 | 21,386,934 | ||||||
| Cash and Cash Equivalents, End of Period | 9,797,768 | 11,432,129 | ||||||
| Non-cash Investing and Financing Activities, excluded in above | ||||||||
| Common stock issuable in business acquisition | – | 525,000 | ||||||
| Consideration accrued for business acquisition (Note 8) net of imputed discount | – | 23,921 | ||||||
| Supplemental Disclosures: | – | – | ||||||
| Interest paid | ||||||||
| Income taxes paid | – | – | ||||||
| Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 (As restated- Note 2) | |||||||
| $ | $ | |||||||
| Operating Activities | ||||||||
| Net (loss) / income for the period | (3,259,230 | ) | (3,261,703 | ) | ||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of intangible assets (Note 5) | 220,055 | 390,490 | ||||||
| Depreciation (Note 4) | 53,584 | 49,766 | ||||||
| Fair value of stock options granted | 17,718 | 13,788 | ||||||
| Financing interest | (46,269 | ) | (97,626 | ) | ||||
| Gain / (loss) on unrealized foreign exchange | 737,833 | (7,962 | ) | |||||
| Lease finance charge | – | 5,486 | ||||||
| Operating lease expense (Note 14) | 109,737 | 123,155 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Short-term investments and amounts held in trust | (450,152 | ) | 76,325 | |||||
| Accounts receivable and other receivables | 12,406,327 | 1,712,301 | ||||||
| Accrued revenue | 219,558 | 1,473,730 | ||||||
| Prepaid expenses and parts inventory | (666,321 | ) | (530,284 | ) | ||||
| Security deposit | 35,851 | – | ||||||
| Lease payments | (235,502 | ) | (128,795 | ) | ||||
| Prepaid manufacturing costs | (40,907 | ) | 82,171 | |||||
| Accounts payable and accrued liabilities | (3,237,082 | ) | (5,052,017 | ) | ||||
| Warranty provision | 65,845 | (141,644 | ) | |||||
| Contract liabilities | 302,036 | (19,313 | ) | |||||
| Due to related parties | 78,946 | (174,837 | ) | |||||
| Net Cash Provided by / (Used in) Operating Activities | 6,312,027 | (5,486,969 | ) | |||||
| Investing Activities | ||||||||
| Additions of property and equipment | (9,052 | ) | (24,005 | ) | ||||
| Projects under development | (6,969,934 | ) | – | |||||
| Net Cash Used in Investing Activities | (6,978,986 | ) | (24,005 | ) | ||||
| Effect of Foreign Exchange Rate Changes on Cash | (1,121,995 | ) | 43,056 | |||||
| Change in Cash and Cash Equivalents | (1,788,954 | ) | (5,467,918 | ) | ||||
| Cash and Cash Equivalents, Beginning of Period | 6,286,468 | 23,436,417 | ||||||
| Cash and Cash Equivalents, End of Period | 4,497,514 | 17,968,499 | ||||||
(The accompanying notes are an integral part of these consolidated financial statements)
F-5
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021June 30, 2022
(Unaudited)(unaudited)
(Expressed in U.S. Dollars)
1. Nature of Operations
| 1. | Nature of Operations |
Pacific Green Technologies Inc. (the “Company”) was incorporated in the state of Delaware, USA on March 10, 1994. The Company is in the business of acquiring, developing, and marketing environmental technologies, with a focus on emission control technologies. On December 20, 2019, the Company acquired Shanghai Engin Digital Technology Co. Ltd., a company incorporated and registered in China (“Engin”). Engin is a solar design, development, and engineering company (Note 7). On June 19, 2020, Engin was changed to Pacific Green Technologies (Shanghai) Co. Ltd. On October 19, 2020, the Company acquired Innoergy Limited (“Innoergy”). Innoergy is a designer of battery energy storage systems and registered in the United Kingdom (Note 8). In connection with the acquisition, Innoergy adopted the name Pacific Green Innoergy Technologies Limited. On March 18, 2021, the Company acquired Richborough Energy Park Ltd. (“Richborough”), a company in the business of battery energy storage systems and registered in the United Kingdom (Note 9).
The condensed consolidated interim financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021.2022. In the opinion of management, the accompanying condensed consolidated interim financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.
The preparation of these condensed consolidated interim financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021
(Unaudited)
(Expressed in U.S. Dollars)
2. Significant Accounting Policies
| 2. | Significant Accounting Policies |
| (a) | Basis of Presentation |
These unaudited interim condensed consolidated interim financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America and are expressed in U.S. dollars. The following accounting policies are consistently applied in the preparation of the consolidated financial statements. These consolidated financial statements include the accounts of the Company and the following entities:
| Pacific Green Innoergy Technologies Ltd. (“Innoergy”) (Formerly Innoergy Ltd.) | Wholly-owned subsidiary | |
| Pacific Green Marine Technologies Group Inc. (“PGMG”) | Wholly-owned subsidiary | |
| Pacific Green Marine Technologies Inc. (PGMT US) | Wholly-owned subsidiary of PGMG | |
| Pacific Green Technologies (UK) Ltd. (Formerly Pacific Green Marine Technologies Ltd.) (“PGTU”) | Wholly-owned subsidiary of PGMG | |
| Pacific Green Technologies (Middle East) Holdings Ltd. (“PGTME”) | Wholly-owned subsidiary | |
Pacific Green Technologies Arabia LLC (“PGTAL”) | 70% owned subsidiary of PGTME | |
| Pacific Green Marine Technologies (USA) Inc. (inactive) | Wholly-owned subsidiary of PGMG | |
| Pacific Green Technologies (Canada) Inc. (“PGT Can”) (Formerly Pacific Green Marine Technologies Inc. | Wholly-owned subsidiary | |
| Pacific Green Solar Technologies Inc. (“PGST”) | Wholly-owned subsidiary | |
| Pacific Green Corporate Development Inc. (“PGCD”) (formerly Pacific Green Hydrogen Technologies Inc.) | Wholly-owned subsidiary | |
| Pacific Green Wind Technologies Inc (“PGWT”) | Wholly-owned subsidiary | |
| Pacific Green Technologies International Ltd. (“PGTIL”) | Wholly-owned subsidiary | |
| Pacific Green Technologies Asia Ltd.(“PGTA”) | Wholly-owned subsidiary of PGTIL | |
| Pacific Green Technologies Engineering Services Limited (Formally Pacific Green Technologies China Ltd. (“ | Wholly-owned subsidiary of PGTA | |
| Pacific Green Technologies (Australia) Pty Ltd. (“PGTAPL”) | Wholly-owned subsidiary of PGTA | |
| Pacific Green Environmental Technologies (Asia) Ltd. (“PGETA”) | 50.1% owned subsidiary | |
| Pacific Green Technologies (Shanghai) Co. Ltd. (“Engin”) (Formerly Shanghai Engin Digital Technology Co. Ltd) | Wholly-owned subsidiary | |
| Guangdong Northeast Power Engineering Design Co. Ltd. (“GNPE”) | Wholly-owned subsidiary of ENGIN | |
| Pacific Green Energy Parks Inc. (“PGEP”) | Wholly-owned subsidiary | |
| Pacific Green Energy Storage Technologies Inc. (“PGEST”) | Wholly-owned subsidiary of PGEP | |
| Pacific Green Energy Storage (UK) Ltd. (“PGESU”) (Formerly Pacific Green Marine Technologies Trading Ltd.) | Wholly-owned subsidiary of PGEP | |
| Pacific Green Battery Energy Parks 1 Ltd. (“PGBEP”) | 50% owned subsidiary of PGESU | |
| Richborough Energy Park Ltd. (“Richborough”) | Wholly-owned subsidiary of |
All inter-company balances and transactions have been eliminated upon consolidation.
F-6
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021June 30, 2022
(Unaudited)(unaudited)
(Expressed in U.S. Dollars)
| 2. |
| (b) | Restatement of financial statements |
In June 2022, while preparing the financial statements for the year-ending March 31, 2022, the Company identified errors in previously issued unaudited quarterly financial statements. Refer to Note 2 and Note 22 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended March 31, 2022, for additional information regarding the impact of the restatement on the Company’s unaudited condensed consolidated statement of operations and certain note presentation.
- Revenue and cost of sales has been adjusted to record revenue on marine scrubber contracts as a single performance obligation recognized over time.
- Cost of sales has been adjusted to include amortization of certain intangible assets, commission amounts, salaries and wages, and technical consulting costs that had previously been included within other expense captions in the financial statements.
The impact on the interim consolidated statement of cash flows has been reclassifications within the operating activities for all periods presented.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
| Three months ended June 30, 2021 | ||||||||||||
| As Previously Reported $ | Adjustments $ | As Restated $ | ||||||||||
| Revenue | 2,653,439 | (1,330,189 | ) | 1,323,250 | ||||||||
| Cost of goods sold | 1,702,480 | (181,471 | ) | 1,521,009 | ||||||||
| Gross profit (loss) | 950,959 | (1,148,717 | ) | (197,758 | ) | |||||||
| Amortization of intangible assets | 390,490 | (219,367 | ) | 171,123 | ||||||||
| Consulting fees, technical support, and commissions | 1,054,353 | (308,801 | ) | 745,552 | ||||||||
| Salaries and wage expenses | 1,401,980 | (146,773 | ) | 1,255,207 | ||||||||
| Operating expenses | 3,894,925 | (674,942 | ) | 3,219,983 | ||||||||
| Net income / (loss) for the period | (2,787,926 | ) | (473,776 | ) | (3,261,703 | ) | ||||||
| Comprehensive income / (loss) for the period | (2,611,810 | ) | (473,776 | ) | (3,085,586 | ) | ||||||
| Basic and diluted income (loss) per share | (0.06 | ) | (0.07 | ) | ||||||||
F-7
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
June 30, 2022
(unaudited)
(Expressed in U.S. Dollars)
| 2. |
| (c) | Recent Accounting Pronouncements |
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. As a smaller reporting company, this ASU is effective for fiscal years beginning after January 1, 2023, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this ASU on its Consolidated Financial Statements.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and management does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3. Short-term Investments and amounts in escrow
| 3. | Short-term Investments and amounts in escrow |
At December 31, 2021,June 30, 2022, the Company has a $59,433$58,999 (March 31, 2021 – $60,408)2022 - $60,837) Guaranteed Investment Certificate (“GIC”) held as security against a corporate credit card. The GIC bears interest at 0.5% per annum and matures on December 13, 2022.
At December 31, 2021, the Company has $nil (March 31, 2021 – $915,779) in short term investment.
At December 31, 2021,June 30, 2022, the Company’s solicitor is holding $1,029,846$2,323,476 (March 31, 2021 – $150,541)2022 - $1,871,486) relating to relating to proceeds under customer contracts.contracts to be released upon satisfying performance obligations.
| 4. | Property and Equipment |
4. Lease Receivable
| Cost $ | Accumulated depreciation $ | June 30, 2022 Net carrying value $ | March 31, 2022 Net carrying value $ | |||||||||||||
| Building | 974,973 | (184,978 | ) | 789,994 | 857,922 | |||||||||||
| Furniture and equipment | 371,425 | (178,103 | ) | 193,322 | 202,764 | |||||||||||
| Computer equipment | 16,347 | (13,513 | ) | 2,834 | 4,368 | |||||||||||
| Leasehold improvements | 109,849 | (97,084 | ) | 12,766 | 19,401 | |||||||||||
| Testing equipment- Scrubber system | 138,599 | (65,082 | ) | 73,517 | 81,786 | |||||||||||
| Total | 1,611,193 | (538,760 | ) | 1,072,433 | 1,166,241 | |||||||||||
On December 12, 2017, the Company completed the sale of a constructed ENVI-Marine scrubber system under an energy management lease arrangement. The Company’s lease receivable as at December 31, 2021 and March 31, 2020, consists of an amount due from the customer under a long-term lease arrangement.
The payments to the Company under the lease arrangement are based on a quarterly payment of $118,000 per quarter and a final balancing payment through March 2022. The current portion presented below reflects the minimum expected payments per the lease arrangement for the next twelve months.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021
(Unaudited)
(Expressed in U.S. Dollars)
4.Lease Receivable (continued)
At the completion of the minimum required lease payments, the title of the asset transfers to the customer. No amount has been allocated to the residual value. Moreover, there are no other variable amounts involved in this lease arrangement.
| December 31, 2021 $ | March 31, 2020 $ | |||||||
| Current portion, expected within twelve months | 64,247 | 406,366 | ||||||
Future lease payments forecasted in calendar year end period is as follows:
| $ | ||||
| 2022 | 65,144 | |||
| Interest deemed hereunder | (897 | ) | ||
| Total | 64,247 | |||
| The Company recorded $53,584 in depreciation expense on property and equipment for the three months ended June 30, 2022 (2021 – $49,766). |
F-8
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021June 30, 2022
(Unaudited)(unaudited)
(Expressed in U.S. Dollars)
| 5. | Intangible Assets |
5. Property and Equipment
| Cost $ | Accumulated amortization $ | December 31, 2021 Net carrying value $ | March 31, 2021 Net carrying value $ | |||||||||||||
| Building | 1,024,774 | (152,212 | ) | 872,561 | 904,897 | |||||||||||
| Furniture and equipment | 320,816 | (146,603 | ) | 174,213 | 186,186 | |||||||||||
| Computer equipment | 17,182 | (11,283 | ) | 5,899 | 10,040 | |||||||||||
| Leasehold improvements | 109,849 | (83,812 | ) | 26,037 | 45,944 | |||||||||||
| Testing equipment- Scrubber system | 138,599 | (48,544 | ) | 90,055 | 82,761 | |||||||||||
| Total | 1,611,219 | (442,454 | ) | 1,168,765 | 1,229,828 | |||||||||||
| Cost $ | Accumulated amortization $ | Cumulative impairment $ | June 30, 2022 Net carrying value $ | March 31, 2022 Net carrying value $ | ||||||||||||||||
| Patents and technical information | 35,852,556 | (8,523,780 | ) | (20,457,255 | ) | 6,871,521 | 7,090,887 | |||||||||||||
| Software licensing | 12,143 | (4,436 | ) | – | 7,707 | 8,861 | ||||||||||||||
| Total | 35,864,699 | (8,528,216 | ) | (20,457,255 | ) | 6,879,228 | 7,099,748 | |||||||||||||
ForThe Company recorded $220,055 of amortization expense on intangible assets for the three and nine months ended December 31, 2021, the Company recorded $52,519 (2020June 30, 2022 (2021 – $47,807) and $152,062 (2020 – $144,457) in depreciation expense on property and equipment.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021
(Unaudited)
(Expressed in U.S. Dollars)
6. Intangible Assets$390,490).
| Cost $ | Accumulated amortization $ | Cumulative impairment $ | December 31, 2021 Net carrying value $ | March 31, 2021 Net carrying value $ | ||||||||||||||||
| Patents and technical information | 35,852,556 | (8,085,047 | ) | (20,457,255 | ) | 7,310,254 | 7,968,355 | |||||||||||||
| Backlogs | 98,599 | (60,899 | ) | (37,700 | ) | – | – | |||||||||||||
| Customer lists | 246,053 | (80,028 | ) | – | 166,025 | 190,052 | ||||||||||||||
| Patents and certifications | 3,897,938 | (1,267,798 | ) | – | 2,630,140 | 3,010,769 | ||||||||||||||
| Software licensing | 12,763 | (3,235 | ) | – | 9,528 | 11,348 | ||||||||||||||
| Total | $ | 40,107,909 | (9,497,007 | ) | (20,494,955 | ) | 10,115,947 | 11,180,524 | ||||||||||||
For the threeThe Company has allocated $219,367 (2021 - $219,367) of amortization of patents and nine months ended December 31, 2021, the Company recorded $396,539 (2020 – $389,703) and $1,178,217 (2020 – $1,169,039)technical information to cost of goods sold. The amount remaining in amortization expense on intangible assets.is $688 (2021 - $171,124).
Future amortization of intangible assets is as follows based on calendarfiscal year:
| $ | $ | |||||||
| 2022 | 1,579,173 | |||||||
| 2023 | 1,579,173 | 660,099 | ||||||
| 2024 | 1,579,173 | 880,132 | ||||||
| 2025 | 1,577,981 | 880,132 | ||||||
| 2026 | 877,790 | |||||||
| 2027 | 877,452 | |||||||
| Thereafter | 3,800,447 | 2,703,623 | ||||||
| Total | 10,115,947 | |||||||
| Total future minimum lease payments | 6,879,228 | |||||||
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021
(Unaudited)
(Expressed in U.S. Dollars)
7. Acquisition of Shanghai Engin Digital Technology Co. Ltd
On December 20, 2019, the Company acquired all the issued and outstanding stock of Shanghai Engin Digital Technology Co. Ltd., a solar design, development and engineering company and its subsidiary. Engin’s expertise in solar technologies provides the Company another green technology to market and develop internationally alongside our manufacturing. The acquisition was concluded concurrently with two groups. The first purchase of the 75% interest was acquired for consideration of $5,864,234 (¥41,000,000) upon signing (paid), plus a further $2,145,002 (¥15,000,000) due by March 20, 2020 (paid) and a final conditional payment of $2,860,002 (¥20,000,000) (not paid). The remaining 25% interest was acquired for consideration of 125,000 new shares of the Company (issued after year ended March 31, 2020), plus a further conditional $286,000 (¥2,000,000) (not paid). The required conditions for the final payment were not met by the selling party. As a result, the Company derecognized the liability and recorded a gain of $3,240,250 (¥22,000,000) for the quarter ended September 30, 2020. On June 19, 2020, Engin’s name was changed to Pacific Green Technologies (Shanghai) Co. Ltd.
Total purchase consideration was estimated at $11,052,307, inclusive of the fair value of the conditional payments, which were considered probable at the acquisition date. The 125,000 shares in the Company have been estimated to have a fair value of $368,750 or $2.95 per share. This share price is determined on the basis of the closing market price of the Company’s common shares at the date of acquisition.
The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition. The purchase consideration has been applied to cash of $2,063,358, other net working capital of Engin of $1,024,461, property and equipment of $911,330, and intangible assets of $3,897,747. The residual value of consideration after applying it to the carrying values of assets and liabilities acquired and fair value adjustments, resulted in a goodwill allocation of $3,524,161. The goodwill paid as part of the acquisition is expected to be tax deductible.
8. Acquisition of Innoergy Limited
On October 19, 2020, the Company entered into a Share Purchase Agreement for the acquisition of a 100% interest in Innoergy Limited and immediately changed its name to Pacific Green Innoergy Technologies Limited. Innoergy is a designer of battery energy storage systems registered in the United Kingdom. The acquisition marks the Company’s entry into the battery energy storage system market in conjunction with its joint venture partner, PowerChina SPEM.
In consideration of all the issued and outstanding securities of Innoergy, the Company has issued to the selling shareholders of Innoergy an aggregate of 525,000 common shares of the Company. The Company paid $32,490 (£25,000) to a selling shareholder on completion of the transaction and will pay an equal amount when Innoergy achieves battery storage sales equivalent to 50 megawatts. The common shares of the Company issued to the sellers are subject to a sales volume restriction of 65,625 shares per calendar quarter. As a further condition of the acquisition, Pacific Green will make available to Innoergy a working capital credit facility of approximately $455,000 (£350,000) (at an interest rate of eight percent (8%) above the Bank of England base rate per annum), which will be due on demand and secured by a floating charge and debenture against the assets of Innoergy.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021
(Unaudited)
(Expressed in U.S. Dollars)
8. Acquisition of Innoergy Limited (continued)
Total purchase consideration is estimated at $633,911, inclusive of the fair value of the conditional payments, which were considered 75% probable at the acquisition date. The conditional payments are not made yet. Total purchase consideration also includes 525,000 shares with fair value of $577,500 or $1.10 per share. This share price is determined on the basis of the closing market price of the Company’s common shares at the date of acquisition. The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition. The purchase consideration has been applied to cash of $146,503, other net working capital of $2,758, property and equipment of $540, and loan payable of $64,981. The residual value of $549,091 has been allocated to goodwill, which is expected to be partially or completely tax deductible.
9. Acquisition of Richborough Energy Park Ltd.
| 6. | Acquisition of Richborough Energy Park Ltd. |
On March 18, 2021, the Company acquired all the issued and outstanding stock of Richborough Energy Park Ltd., a United Kingdom company in the business of battery energy storage systems.
The purchase consideration included cash payments of $681,957 (£494,351) made on March 18, 2021 and three conditional payments of $515,622 (£374,500) each on specified dates according to the share purchase agreement. The first conditional payment was made in May 2021. The second conditional payment was made in June 2022. The third and third payments arefinal payment is planned to be made during the year ended March 31, 2022 and 2023.
The Company accounted for the transaction as an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable group of similar identifiable assets. Accordingly, the consideration was allocated on a relative fair value basis to the assets acquired and liabilities assumed.2024.
Total purchase consideration was estimated at $2,166,452, inclusive of the fair value of the conditional payments, which were considered probable at the acquisition date. The value attributed to the identifiable assets acquired and liabilities assumed are cash of $1, other net working capital of $535, security deposit of $164,799, and project under development of $2,001,116. SinceThe consideration was allocated on a relative fair value basis to the acquisition, $348,967 has been incurredassets acquired and capitalized asliabilities assumed. For the year ended March 31, 2022, additions of $1,854,676 to project under development.development were recorded. For the three months ended June 30, 2022, additions of $6,969,934 to project under development were recorded.
F-9
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
June 30, 2022
(unaudited)
(Expressed in U.S. Dollars)
| 7. | Noncontrolling Interest |
| (a) | On March 30, 2022, the Company entered into an agreement with Green Power Reserves Limited (“GPR”), wherein GPR agreed to make an equity investment of $16.0 million (£13.0 million) for a 50 percent shareholding in Pacific Green Battery Energy Parks 1 Limited (“PGBEP”). The Company retains control over PGBEP by virtue of holding 65% of the voting rights and appointing two of the three directors. The Company received $7.0 million (£5.35 million) on April 1, 2022, $1.9 million (£1.43 million) during May 2022 and a further $0.5 million (£0.41 million) in June 2022. It will receive the remaining $7.6 million (£5.81 million) demand in July and August 2022 as project cash requirements demand. |
Details of the carrying amount of the noncontrolling interests are as follows:
| $ | ||||
| Non-redeemable noncontrolling interest, March 31, 2022 | 10,361,701 | |||
| Noncontrolling interest coupon distribution | 115,240 | |||
| Net income attributable to noncontrolling interest, June 30, 2022 | 24,464 | |||
| Non-redeemable noncontrolling interest, June 30, 2022 | 10,501,405 | |||
| (b) | On December 2, 2020, the Company signed a Joint-Venture Agreement with Amr Khashoggi Trading Company Limited (“Amkest Group”) to incorporate a company in the Kingdom of Saudi Arabia for the sale of Pacific Green’s environmental technologies within the region. The Company holds 70% interest in the joint venture. The Company incorporated Pacific Green Technologies Arabia LLC on November 23, 2021. The Company has paid in share capital and loans amounting to $419,849 to fund operational expenses from April 1, 2022. |
Details of the carrying amount of the noncontrolling interests are as follows:
| $ | ||||
| Redeemable noncontrolling interest, March 31, 2022 | – | |||
| Redeemable noncontrolling interest receivable from Amkest Group | (68,253 | ) | ||
| Net income / (loss) attributable to noncontrolling interest, June 30, 2022 | (3,880 | ) | ||
| Redeemable noncontrolling interest, June 30, 2022 | (72,133 | ) | ||
F-10
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
June 30, 2022
(unaudited)
(Expressed in U.S. Dollars)
| 8. | Sales, Prepaid Manufacturing Costs, Cost of Goods Sold, and Contract Liabilities |
The Company derives revenue from the sale of products and delivery of services. Revenue disaggregated by type for the three months ended June 30, 2022, and 2021 is as follows:
| Three Months Ended June 30, 2022 $ | Three Months Ended June 30, 2021 $ | |||||||
| Products | 1,655,158 | 742,290 | ||||||
| Services | 368,718 | 580,960 | ||||||
| Total | 2,023,876 | 1,323,250 | ||||||
Revenue from services include specific services provided to marine scrubber systems as well as design and engineering services for Concentrated Solar Power. Contracts for specific services provided to marine scrubber systems represent maintenance services. Contracts for Concentrated Solar Power include design and engineering services provided to clients. Revenue for service contracts is recognized as the services are provided.
Service revenue by type for the three months ended June 30, 2022, and 2021 is as follows:
| Three Months Ended June 30, 2022 $ | Three Months Ended June 30, 2021 $ | |||||||
| Specific services provided to marine scrubber systems | 288,904 | 368,793 | ||||||
| Design and engineering services for Concentrated Solar Power | 74,814 | 212,167 | ||||||
| Total | 368,718 | 580,960 | ||||||
The Company has analyzed its sales contracts under ASC 606 and has identified that the percentage of completion of the contract often is not directly correlated with contractual billing terms with customers. As a result of the timing differences between customer sales invoices and percentage of completion of the contract, contractual assets and contractual liabilities have been recognized.
F-11
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021June 30, 2022
(Unaudited)(unaudited)
(Expressed in U.S. Dollars)
10. Sales, Contract Assets and Contract Liabilities
The Company has analyzed its sales contracts under ASC 606 and has identified performance conditions that are not directly correlated with contractual payment terms with customer. As a result of the timing differences between customer payments and satisfaction of performance conditions, contractual assets and contractual liabilities have been recognized.
Contracts are unique to customers’ requirements. However, the Company’s performance obligations can generally be identified as:
| ||
|
For the three and nine months ended December 31, 2021, and 2020, the Company’s recognized sales revenues in proportion to performance obligations as noted below:
| Three Months Ended December 31, 2021 $ | Three Months Ended December 31, 2020 $ | |||||||
| Specified service works | 597,365 | 397,572 | ||||||
| Certified design and engineering works | – | – | ||||||
| Acceptance of delivered equipment to customers | 1,128,222 | 1,994,601 | ||||||
| Acceptance of commissioned equipment | – | 1,922,166 | ||||||
| Solar power contracts | 916,597 | 344,127 | ||||||
| Total | 2,642,184 | 4,658,466 | ||||||
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021
(Unaudited)
(Expressed in U.S. Dollars)
10. Sales, Contract Assets and Contract Liabilities (continued)
| Nine months Ended December 31, 2021 $ | Nine months Ended December 31, 2020 $ | |||||||
| Specified service works | 1,005,832 | 817,618 | ||||||
| Certified design and engineering works | – | 3,575,629 | ||||||
| Acceptance of delivered equipment to customers | 2,262,617 | 21,498,217 | ||||||
| Acceptance of commissioned equipment | 1,038,929 | 15,754,070 | ||||||
| Concentrated solar power contracts | 1,227,626 | 483,358 | ||||||
| Total | 5,535,004 | 42,128,892 | ||||||
Changes in the Company’s contract assets and liabilities for the periods are noted as below:
| Contract Assets $ | Sales (Cost of sales) $ | Contract Liabilities $ | ||||||||||
| Balance, March 31, 2020 | 24,604,339 | (23,553,267 | ) | |||||||||
| Customer receipts and receivables | – | – | (51,463,812 | ) | ||||||||
| Sales recognized in earnings | 61,413,520 | 61,413,520 | ||||||||||
| Payments under contracts | 19,553,678 | – | – | |||||||||
| Costs recognized in earnings | (39,828,410 | ) | (39,828,410 | ) | – | |||||||
| Balance, March 31, 2021 | 4,329,607 | (13,603,559 | ) | |||||||||
| Customer receipts and receivables | – | – | (9,937,665 | ) | ||||||||
| Sales recognized in earnings | 5,535,004 | 5,535,004 | ||||||||||
| Payments and accruals under contracts | 2,147,608 | – | – | |||||||||
| Costs recognized in earnings | (3,137,247 | ) | (3,137,247 | ) | ||||||||
| Balance, December 31, 2021 | 3,339,968 | (18,006,220 | ) | |||||||||
Accrued Revenue $ | Prepaid Manufacturing Costs $ | Sales (Cost of Goods Sold) $ | Contract Liabilities $ | |||||||||||||
| Balance, March 31, 2021 | 1,574,584 | 1,065,465 | (11,580,894 | ) | ||||||||||||
| Customer receipts and receivables | – | – | – | (9,242,318 | ) | |||||||||||
| Scrubber sales recognized in revenue | – | 12,680,103 | 12,680,103 | |||||||||||||
| Payments and accruals under contracts | (1,042,637 | ) | 1,478,124 | – | – | |||||||||||
| Cost of goods sold recognized in earnings | – | (2,505,579 | ) | (2,505,579 | ) | – | ||||||||||
| Balance, March 31, 2022 | 531,947 | 38,010 | (8,143,109 | ) | ||||||||||||
| Customer receipts and receivables | – | – | – | (1,957,194 | ) | |||||||||||
| Scrubber sales recognized in revenue | – | 1,655,158 | 1,655,158 | |||||||||||||
| Payments and accruals under contracts | (219,558 | ) | 1,028,114 | – | – | |||||||||||
| Cost of goods sold recognized in earnings | – | (987,207 | ) | (987,207 | ) | – | ||||||||||
| Balance, June 30, 2022 | 312,389 | 78,917 | (8,445,145 | ) | ||||||||||||
Cost of goods sold for the period ended June 30, 2022 and 2021 is comprised as follows:
| Three Months Ended June 30, 2022 $ | Three Months Ended June 30, 2021 $ | |||||||
| Scrubber costs recognized | 623,166 | 584,287 | ||||||
| Salaries and wages | 62,379 | 164,432 | ||||||
| Amortization of intangibles | 219,366 | 219,366 | ||||||
| Commission type costs | 82,296 | 262,034 | ||||||
| Design and engineering services for CSP | 98,968 | 162,954 | ||||||
| Specific services provided to marine scrubber systems | 142,368 | 127,936 | ||||||
| Total | 1,228,543 | 1,521,009 | ||||||
As of December 31, 2021, contract liabilityJune 30, 2022, Contract liabilities included $16,917,629$8,038,674 (March 31, 20212022 - $13,439,126)$8,098,009) aggregate cash receipts from one customer to relating to nineteen vessels. At March 31, 2021 all nineteen had been postponed under the terms of a Postponement Agreement dated February 9,2, 2021, with an option to either proceed or cancel. Under a subsequent Option Agreement dated August 9, 2021, six of these vessels were contracted by the customer to proceed and these are due to be commissioned on various dates between January and April 2022. $8,886,827proceed. $Nil of the total contract liability at December 31, 2021June 30, 2022 relates to these six vessels and will be released in full to revenue between January and April 2022, as the revenue milestones are achieved on each vessel.vessels. The remaining contract liability balance was mainly related to the other sixteenthirteen postponed vessels in the Postponement Agreement.Agreement, which is due to expire on February 9, 2023. Should the thirteen vessels that are currently postponed remain as such at the expiry date, since there is no obligation to return the funds to the client, the contract liability would be recognized as revenue in full at that point in time.
F-12
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021
(Unaudited)
(Expressed in U.S. Dollars)
11. Convertible Debenture and Derivative Liability
As at December 31, 2021, the carrying value of the debenture was $nil (March 31, 2021 – $nil) and interest expense on the debenture for the three and nine months ended December 31, 2021 was recorded as $nil (2020 – $833) and $nil (2020 – $2,333). During the three and nine months ended December 31, 2021, the Company recorded gain on the change in fair value of derivative liability of $nil (2020 –$58,380) and $nil (2020 –$49,563) respectively.
A summary of the changes in derivative liabilities for the three months is shown below:
| Three Months Ended December 31, 2021 $ | Three Months Ended December 31, 2020 $ | Nine Months Ended December 31, 2021 $ | Nine Months Ended December 31, 2020 $ | |||||||||||||
| Balance, beginning of period | – | (82,371 | ) | – | (174,484 | ) | ||||||||||
| Conversion | – | – | – | 42,550 | ||||||||||||
| Mark to market adjustment | – | (50,869 | ) | – | (1,306 | ) | ||||||||||
| Balance, end of period | – | (133,240 | ) | – | (133,240 | ) | ||||||||||
12. Accounts payable and accruals
| December 31, 2021 $ | March 31, 2021 $ | |||||||
| Accounts payable | 716,328 | 3,961,965 | ||||||
| Accrued liabilities | 11,247,980 | 20,290,390 | ||||||
| Loan payable | 60,052 | 68,975 | ||||||
| Payroll liabilities | 160,851 | 164,808 | ||||||
| Total short-term accounts payable and accrued liabilities | 12,185,211 | 24,486,138 | ||||||
| Long term accrued liabilities | 539,611 | 3,294,342 | ||||||
| Balance, end of period | 12,724,822 | 27,780,480 | ||||||
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Condensed Consolidated Interim Financial Statements
December 31, 2021June 30, 2022
(Unaudited)(unaudited)
(Expressed in U.S. Dollars)
Accounts payable and accrued liabilities During the three A summary of the changes in the warranty F-13 PACIFIC GREEN TECHNOLOGIES INC. Notes to the Condensed Consolidated Interim Financial Statements June 30, 2022 (unaudited) (Expressed in U.S. Dollars) The following table summarizes the continuity of stock options: Additional information regarding stock options outstanding as at June 30, 2022 is as follows: The estimated fair value of the stock options was being recorded over the requisite service period to vesting. For the three months ended June 30, 2022, the fair value of $17,718 (2021 - $13,788) was recorded as salaries expense. The fair values were estimated using the Black-Scholes option pricing model assuming no expected dividends or forfeitures and the following weighted average assumptions: F-14 PACIFIC GREEN TECHNOLOGIES INC. Notes to the Condensed Consolidated Interim Financial Statements (Expressed in U.S. Dollars) The Company is located and operates in North America and its subsidiaries are primarily located and operating in Europe and Asia. For the three months ended June 30, 2022, 90% (2021 – 59%) of the Company’s revenues were derived from the largest customer. F-15 PACIFIC GREEN TECHNOLOGIES INC. Notes to the Condensed Consolidated Interim Financial Statements (Expressed in U.S. Dollars) Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As the Company’s operating lease does not provide an implicit rate, the discount rate used to determine the present value of the lease payments is the collateralized incremental borrowing rate based on the remaining lease term. The operating lease asset excludes lease incentives. The operating leases do not contain an option to extend or terminate the lease term at the Company’s discretion, therefore no probable renewal has been added to the expiry date when determining lease term. Operating lease expense is recognized on a straight-line basis over the lease term. Lease cost for the three The Company has entered into premises lease agreements with minimum annual lease payments expected over the next five On July 14, 2017, the Company entered into a new memorandum of understanding to establish a new joint venture company in China with a non-related party (the “Supplier”) wherein the Supplier would receive and process orders, manufacture, and install products for the Company’s customers. In return, the Company agreed to design the product, provide strategic pricing, sales and marketing direction, as well as provide technology licenses and technical support (the “Technology”) to the Supplier. During the term of the agreement, the Company will provide the Supplier with a non-transferrable right and license to use the Technology to manufacture and install the product within the Asia and Russia region. The parties will fund the venture proportionately, 50.1% by the Company and 49.9% by the Supplier, and excess operating cash flows will be distributed on a quarterly basis. Neither party have funded the joint venture to date and there has been no revenue and expense associated with it. F-16 PACIFIC GREEN TECHNOLOGIES INC. Notes to the Condensed Consolidated Interim Financial Statements (Expressed in U.S. Dollars) The majority of our revenues from international sales are invoiced from and collected by our U.S. entity and recognized as a component of income before taxes in the United States as opposed to a foreign jurisdiction. The following table reconciles the income tax expense (benefit) at the statutory rates to the income tax (benefit) at the Company’s effective tax rate. At June 30, 2022, the Company is current with statutory corporate income tax filings. Certain of the amounts presented above are based on estimates and what management believes are prudent filing positions. The actual losses available could differ from these estimates upon assessment and review by taxation authorities. U.S. federal and state income tax returns filed by us remain subject to examination for income tax years 2013 and subsequent. Canadian federal and provincial income tax returns filed by us remain subject to examination for income tax years 2018 and subsequent. Income tax returns associated with our operations located in the United Kingdom and China are subject to examination for income tax years 2017 and subsequent. Tax positions are evaluated for recognition using a more-likely than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. The Company estimates that F-17 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock. As used in this quarterly report and unless otherwise indicated, the terms “we”, “us”, “our”, the “Company”, and “our company” mean Pacific Green Technologies Inc., a Delaware corporation, and our wholly owned subsidiaries, (1) Pacific Green Innoergy Technologies Ltd., a United Kingdom company, (2) Pacific Green Marine Technologies Group Inc., a Delaware corporation, (3) Pacific Green Marine Technologies Inc., a Delaware corporation, (4) Pacific Green Technologies (UK) Ltd. (Formerly Pacific Green Marine Technologies Ltd.), a United Kingdom company, (5) Pacific Green Technologies (Middle East) Holdings Ltd., a United Arab Emirates company, (6) Pacific Green Technologies Arabia LLC, 70% owned, a Kingdom of Saudi Arabia company, (7) Pacific Green Marine Technologies (USA) Inc., a Delaware corporation (inactive), (8) Pacific Green Technologies (Canada) Inc. (Formerly Pacific Green Marine Technologies Inc.), a Canadian corporation, (9) Pacific Green Solar Technologies Inc., a Delaware corporation, (10) Pacific Green Corporate Development Inc. (formerly Pacific Green Hydrogen Technologies Inc.), a Delaware corporation, (11) Pacific Green Wind Technologies Inc., a Delaware corporation, (12) Pacific Green Technologies International Ltd., a British Virgin Islands company, (13) Pacific Green Technologies Asia Ltd., a Hong Kong company, (14) Pacific Green Technologies Engineering Services Limited (Formally Pacific Green Technologies China Ltd.), a Hong Kong company, (15) Pacific Green Technologies (Australia) Pty Ltd., an Australia company, (16) Pacific Green Environmental Technologies (Asia) Ltd., 50.1% owned, a Chinese company, (17) Pacific Green Technologies (Shanghai) Co. Ltd. (Formerly Shanghai Engin Digital Technology Co. Ltd.), a Chinese company, (18) Guangdong Northeast Power Engineering Design Co. Ltd., a Chinese company, (19) Pacific Green Energy Parks Inc., a Delaware corporation, (20) Pacific Green Energy Storage Technologies Inc., a Delaware corporation, (21) Pacific Green Energy Storage (UK) Ltd. (Formerly Pacific Green Marine Technologies Trading Ltd.), a United Kingdom company, (22) Pacific Green Battery Energy Parks 1 Ltd., 50% owned, a United Kingdom company, (23) Richborough Energy Park Ltd., 50% owned, a United Kingdom company, unless otherwise indicated. Corporate History Our company was incorporated in Delaware on March 10, 1994, under the name of Beta Acquisition Corp. In September 1995, we changed our name to In-Sports International, Inc. In August 2002, we changed our name from In-Sports International, Inc. to ECash, Inc. In 2007, due to limited financial resources, we discontinued our operations. Over the course of the ensuing five years, we sought out new business opportunities. On June 13, 2012, we changed our name to Pacific Green Technologies Inc. and effected a reverse split of our common stock following which we had 27,002 shares of common stock outstanding with $0.001 par value. 2 Effective December 4, 2012, we filed with the Delaware Secretary of State a Certificate of Amendment of Certificate of Incorporation, wherein we increased our authorized share capital to 510,000,000 shares of stock as follows: The increase of authorized capital was approved by our board of directors on July 1, 2012 and by a majority of our stockholders by a resolution dated July 1, 2012. Original Strategy and Recent Business Since 2012, the Company has focused on marketing, developing and acquiring technologies designed to improve the environment by reducing pollution. The Company has acquired technologies, patents and intellectual property from EnviroTechnologies Inc. through share transfer, assignment and representation agreements entered into during 2012 and 2013. Following those acquisitions, management has expanded the registration of intellectual property rights around the world and pursued opportunities globally for the development and marketing of the emission control technologies. Working with a worldwide network of agents to market the ENVI-Systems™ emission control technologies, the Company has focused on three applications of the technology: ENVI-Marine TM Diesel exhaust from ships, ferries and tankers includes ash and soot as particulate components and ENVI-Pure TM Increasing legislation relating to landfill of municipal solid waste has led to the emergence of increasing numbers of waste to energy plants (“WtE”). A WtE plant obviates the need for landfill, burning municipal waste for conversion to electricity. A WtE plant is typically 45-100MW. The ENVI-Clean™ system is particularly suited to WtE as it cleans multiple pollutants in a single system. ENVI-Clean TM EnviroTechnologies Inc. has successfully conducted 3 Vision & Strategy Pacific Green envisions a world of rapidly growing demand for renewable energy technological solutions to address the challenges presented by a changing climate. Having achieved success in marine emission control technologies we have now In all the above areas, In support of this dual strategy, we have adopted a Human Resource Strategy that seeks to hire the best talent in the core areas of our business. At June 30, 2022, the Company employed approximately 51 staff excluding full time consultants and contractors across a network of offices around the world. Our hiring plan includes the addition of sales and project execution specialists. Strategic Partnerships Pacific Green has forged global partnerships with private and state-owned energy providers and owners. This strategic alignment with leading energy industry platforms empowers Pacific Green to provide quickly scalable solutions in the core areas of our business, to gather unique insights on cutting-edge trends and leverage recurring revenue opportunities that enable us to cross-sell products and services. The Company has entered into several partnership and framework agreements in the core areas of our business. On December 23, 2019, the Company entered into a International Strategic Alliance Agreement with (1) Beijing Shouhang IHW Resources Saving Technology Company Ltd. (“Shouhang”), a company listed on the Shenzhen Stock Exchange in China, and (2) PowerChina. The Strategic Alliance Agreement provides for the development of CSP plants whereby (1) the Company provides the Intellectual Property, the technical know-how, design and engineering, (2) Shouhang, with annual revenues of approximately USD$157 million, provides manufacturing of the solar field and molten salt tank services, and (3) PowerChina provides the EPC role worldwide. On January 14, 2021, the Company signed a framework agreement with Shanghai Electric Gotion New Energy Technology Co., Ltd (“SEG”). The agreement provides for the supply of lithium-ion BESS. SEG is a joint-venture between Shanghai Electric Group Co., Ltd. (“Shanghai Electric”) and Guoxuan High-tech Co., Ltd. With multiple production facilities and a long-established history in technology manufacturing and supply-chain management, SEG is well-positioned to provide lithium-ion BESS technology around the world. Shanghai Electric has operating revenues in excess of USD$20bn. 4 On March 18, 2021, the Company signed a framework agreement with TUPA Energy Limited (“TUPA”) to gain exclusive rights to 1.1GW of BESS projects in the UK. TUPA is a UK based company with expertise in planning, grid connections and land acquisition. The Company has to date executed 100MW in relation to the Richborough Energy Park In addition to supply agreements, on December 2, 2020, the Company signed a joint venture and marketing agreement with AMKEST to assist with the promotion of the Company’s core business platform in the Kingdom of Saudi Arabia and the wider Middle East. Amkest Group is overseen by its founder, Amr Khashoggi, who holds board positions in numerous influential companies and government bodies across the Kingdom and is currently serving as Strategic Advisor to the Kingdom’s prominent new development city, King Abdullah Economic City (KAEC). Amkest Group’s leadership team is led by Chief Executive Officer, Salman Alireza, whose background includes various founding, executive and director-level positions in the business development sector within the Kingdom of Saudi Arabia, in addition to an MBA from London Business School. Significant Events On May 25, 2022, the Company announced it had entered into a contract with Shanghai Electric Gotion New Energy Technology Co., Ltd for the supply of the battery energy storage system at the 99.98MW battery energy storage system (“BESS”) Richborough facility in Kent, United Kingdom. On May 31, 2022, the Company announced it had entered into a contract with Instalcom Limited to act as the principal contractor during the construction phase, and subsequently as operations and maintenance contractor during the commercial operations phase of the 99.98MW BESS Richborough facility in Kent, United Kingdom. On June 21, 2022, the Company announced it had reached Financial Close for $34.90 million (£28.25 million) of senior debt for the 99.98MW battery energy storage system (“BESS”) Richborough facility in Kent, United Kingdom. Results of Operations The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the three months ended Revenue for the three During the Expenses for the 5 Additionally, the delivery of units resulted in warranty provision being recorded for possible maintenance and claim issues within a prescribed period. For the The three months ended June 30, 2022, our company recorded a net loss of $3,259,230 ($0.07 per share) compared to net loss of $3,261,703 ($0.07 per share) for the three months ended June 30, 2021. Our financial results for the three 6 Liquidity and Capital Resources Working Capital June 30, $ March 31, $ Cash Flows Nine Months Ended June 30, 2022 $ March 31, 2022 $ As of During the During the Anticipated Cash Requirements Our cash requirement estimates may change significantly depending on the nature of our business activities and our ability to raise capital from our shareholders or other sources. We currently have office locations in the United States, Canada, United Kingdom, China, Hong Kong, 7 Should we require additional funding over the next twelve months, we would intend to raise new cash requirements from private placements, shareholder loans or possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time, we do not have a commitment from any broker-dealer to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable to us. As of Going Concern Our financial statements for the quarter ended The assessment of the liquidity and going concern requires the Company to make judgments about the existence of conditions or events that raise substantial doubt about the ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. This includes judgments about the Company’s future activities and the timing thereof and estimates of future cash flows. Significant assumptions used in the Company’s forecasted model of liquidity include forecasted sales, costs, and capital expenditures. Changes in the assumptions could have a material impact on the forecasted liquidity and going concern assessment. Off-Balance Sheet Arrangements We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders. Critical Accounting The preparation of these consolidated financial statements in conformity with Useful lives of Intangible Assets 8 Impairment of Long-lived Assets We recorded an impairment charge of $2,641,639 on intangible assets during the year ended March 31, 2022 (March 31, 2021- $37,700) as management’s estimated fair value of the assets were less than its carrying value. Goodwill We allocate the cost of acquired companies to the identifiable tangible and intangible assets and liabilities acquired, with the remaining amount being classified as goodwill. The allocation of the purchase price of acquired companies requires certain judgments and estimates. Goodwill is not amortized but is evaluated annually for impairment at the reporting unit level or when indicators of a potential impairment are present. The process of evaluating the potential impairment of goodwill requires significant judgment and are based upon existing contracts, historical experience, financial forecasts, and general economic conditions We recorded an impairment charge of $3,870,223 on Engin goodwill and $549,092 on Innoergy goodwill during the year ended March 31, 2022 as management’s estimated fair value of the reporting unit was less than its carrying value determined during impairment testing. Revenue Recognition delivery of services. Irrespective of the In the case of settlement 9 Accrued Revenue We have analyzed our sales contracts under ASC 606 and Contractual arrangements with customers for the sale of a scrubber unit generally provide for deposits and Similarly, contractual arrangements with suppliers and manufacturers normally involved with the manufacturing of scrubber units may require advances and deposits at various stages of the manufacturing process. Payments to our manufacturing partners, which are not yet recorded as costs of goods sold under the Company’s revenue recognition policy, are recorded as The Company presents the contract liabilities and Accrued revenue is revenue that has been earned by providing a good or service, but for which the Company has not yet billed the customer. Accounts Receivable We assess the collectability of accounts receivable and long-term receivable on an ongoing basis and establish an allowance for doubtful accounts when collection is no longer reasonably assured. In establishing the allowance, we consider factors such as known troubled accounts, historical experience, age, financial information that is publicly accessible and other currently available evidence. Warranty Provision The Company reserves a 2% warranty provision on the completion of a contract following the commissioning of marine Item 3. Quantitative and Qualitative Disclosures About Market Risk As a “smaller reporting company”, we are not required to provide the information required by this Item. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures 10 Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of June 30, 2022 due to the two material weaknesses identified and described below. Management’s Report on Internal Control Over Financial Reporting Under the supervision and with the participation of our management, including our Chief Executive Officer Changes in Internal Control over Financial Reporting There has been no significant change in the Company’s internal control over financial reporting during the quarter ended 11 PART II– OTHER INFORMATION Item 1. Legal Proceedings We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest. Item 1A. Risk Factors As a “smaller reporting company” we are not required to provide the information required by this Item. Item 2. Unregistered Sales of Equity Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information None. Item 6. Exhibits 12 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Chief Financial Officer (Principal Financial Officer and Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Chief Financial Officer (Principal Financial Officer and 13. Warranty provision9. June 30,
2022
$ March 31,
2022
$ Accounts payable 1,516,080 757,102 Accrued liabilities 4,603,994 8,567,795 Loan payable 48,271 55,003 Payroll liabilities 189,361 214,887 Balance, end of period 6,357,706 9,594,787 10. Warranty costs and nine months ended December 31, 2021,June 30, 2022, the Company recorded a non-cash warranty expense of $16,795 (2020 – $160,125) and$181,600 (2021 - warranty recovery of $4,853 (2020 – expense of $1,407,420) respectively$39,807) as the Company provides warranties to customers for the design, materials, and installation of scrubber units. Product warranty is recorded at the time of sale and will be revised based on new information as system performance data becomes available.provisioncosts is shown below: December 31,
2021
$ March 31,
2021
$ June 30,
2022
$ March 31,
2022
$ Balance, beginning of period 2,425,107 1,089,356 865,451 2,425,107 Provision for warranty, net of expirations (4,853 ) 1,228,092 181,600 (731,529 ) Expenses recoveries (costs) (588,700 ) 107,659 Warranty recoveries (costs) (115,755 ) (828,127 ) Balance, end of period 1,831,554 2,425,107 931,296 865,451 14. Related Party Transactions11. Related Party Transactions (a) As at December 31, 2021,June 30, 2022, the Company owed $nil$83,196 to (March 31, 2021 –$174,837)2022 – $4,250) companies controlled by a director and officer of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.(b) During the three and nine months ended December 31, 2021,June 30, 2022, the Company incurred $297,723 (2020$220,838 (2021 – $330,025) and $756,861 (2020 – $1,099,756)$205,752) in consulting fees, salaries, and commissions to companies controlled by a director of the Company.(c) During the three and nine months ended December 31, 2021,June 30, 2022, the Company incurred $nil (2020 – $60,000) and $nil (2020 – $120,000)$54,866 (2021– $12,750) in consulting fees to a director, or companies controlled by a director of the Company.(d) During the three and nine months ended December 31, 2021,June 30, 2022, the Company incurred $12,750 (2020 – $12,750) and $38,250 (2020 – $38,250)$250,368 (2021– $nil) in consulting fees to a director, or companies controlled by a director of a Subsidiary of the Company.12. Stock Options Number of
options Weighted
average
exercise
price
$ Weighted
average
remaining
contractual
life (years) Aggregate
intrinsic
value
$ Balance, March 31, 2021 3,302,500 1.52 0.72 2,300,425 Granted 125,000 1.14 Exercised (25,000 ) 0.01 Forfeited (2,865,000 ) 1.70 Balance, March 31, 2022 and June 30, 2022 537,500 0.56 1.18 105,625 Balance, June 30, 2022, vested and exercisable 472,500 0.49 0.95 126,725 Issued and Outstanding Number of shares Weighted average
remaining contractual
life (years) Exercise price
$ 312,500 0.50 0.01 25,000 0.04 2.26 25,000 1.55 1.03 50,000 1.75 1.50 25,000 2.80 0.90 20,000 2.96 1.20 40,000 2.96 1.20 40,000 3.34 1.20 537,500 Three months ended
June 30,
2022Risk-free interest rate 1.90 % Expected life (in years) 3.12 Expected volatility 129 % December 31, 2021June 30, 2022(Unaudited)(Expressed in U.S. Dollars) 15. Share Purchase Warrants Number of
warrants Weighted average exercise price
$ Balance, March 31, 2020 3,300,000 2.50 Expired (3,300,000 ) 2.50 Balance, March 31, 2021 and December 31, 2021 – – On July 1, 2020, 3,300,000 share purchase warrants expired unexercised.PACIFIC GREEN TECHNOLOGIES INC.Notes to the Condensed Consolidated Interim Financial StatementsDecember 31, 2021(Unaudited)(unaudited)16. Stock Options and Share RepurchaseThe following table summarizes the continuity of stock options: Number of
options Weighted average exercise price
$ Weighted average remaining contractual life (years) Aggregate intrinsic value
$ Balance, March 31, 2020 3,377,500 1.46 1.49 6,045,000 Exercised (175,000 ) 0.01 Granted 100,000 1.01 Balance, March 31, 2021 3,302,500 1.52 0.72 2,300,425 Exercised (25,000 ) 0.01 Forfeited (2,865,000 ) 1.70 Balance, December 31, 2021 412,500 0.39 0.93 231,500 Additional information regarding stock options outstanding as at December 31, 2021 is as follows: Exercisable Number of shares Weighted
average
remaining
contractual life
(years) Exercise price
$ 312,500 0.67 0.01 25,000 0.54 2.26 25,000 2.04 1.03 50,000 2.25 1.50 412,500 The estimated fair value of the stock options was being recorded over the requisite service period to vesting. For the three and nine months ended December 31, 2021, the fair value was $13,789 (2020 – $nil) and $41,519 (2020 – $60,822) and was recorded as salaries expense. For the period ended Dec 31, 2021, the Company implemented a share repurchase program and repurchased 56,162 shares with total value of $99,754.PACIFIC GREEN TECHNOLOGIES INC.Notes to the Condensed Consolidated Interim Financial StatementsDecember 31, 2021(Unaudited)(Expressed in U.S. Dollars) 17. Segmented Information13. Segmented Information Significant long-term assets are geographically located as follows: December 31, 2021 North America
$ Europe
$ Asia
$ Total
$ Property and equipment 120,769 169,536 878,460 1,168,765 Intangible Assets 7,310,254 – 2,805,693 10,115,947 Right of use assets 20,029 609,116 201,979 831,124 7,451,052 778,652 3,886,132 12,115,836 Three months ended December 31, 2021 South America
$ Europe
$ Asia
$ Total
$ Revenues by customer region 418,982 1,725,587 497,615 2,642,184 June 30, 2022 North America
$ Europe
$ Asia
$ Total
$ Property and equipment 90,429 189,176 792,828 1,072,433 Intangible Assets 6,871,521 – 7,707 6,879,228 Right of use assets 958 456,836 170,559 628,353 6,962,908 646,012 971,094 8,580,014 Three months ended December 31, 2021 Marine
$ Solar
$ Total
$ Revenues by revenue type 1,725,587 916,597 2,642,184 Expense by revenue type 5,352,324 271,328 5,623,652 Net income by revenue type (3,626,737 ) 645,269 (2,981,468 ) March 31, 2022 North
America
$ Europe
$ Asia
$ Total
$ Property and equipment 105,599 198,352 862,290 1,166,241 Intangible Assets 7,090,887 – 8,861 7,099,748 Right of use assets 10,462 532,976 195,653 739,091 7,206,948 731,328 1,066,804 9,005,080 Nine months ended December 31, 2021 South America
$ Europe
$ Asia
$ Total
$ Revenues by customer region 573,482 4,307,378 654,144 5,535,004 Three months ended June 30, 2022 North
America
$ Europe
$ Asia
$ South
America
$ Total
$ Revenues by customer region 19,673 1,904,494 94,709 5,000 2,023,876 COGS by customer region (9,695 ) (1,110,076 ) (104,940 ) (3,832 ) (1,228,543 ) Gross Profit by customer region 9,978 794,418 (10,231 ) 1,168 795,333 GP% by customer region 51 % 42 % -11 % 23 % 39 % Nine months ended December 31, 2021 Marine
$ Solar
$ Total
$ Revenues by revenue type 4,307,378 1,227,626 5,535,004 Expense by revenue type 13,604,280 1,874,628 15,478,908 Net income by revenue type (9,296,902 ) (647,002 ) (9,943,904 ) Three months ended June 30, 2021 Europe
$ Asia
$ South
America
$ Total
$ Revenues by customer region 1,106,141 119,609 97,500 1,323,250 COGS by customer region (1,356,340 ) (135,559 ) (29,109 ) (1,521,009 )) Gross Profit by customer region (250,199 ) (15,950 ) 68,391 (197,759 ) GP% by customer region -23 % -13 % 70 % -15 % December 31, 2021June 30, 2022(Unaudited)(unaudited)17. Segmented Information (continued) December 31, 2020 North America
$ Europe
$ Asia
$ Total
$ Property and equipment 134,666 212,982 939,225 1,286,873 Intangible Assets 8,187,723 – 3,434,262 11,621,985 Right of use assets 58,864 913,673 245,034 1,217,571 8,381,253 1,126,655 4,618,521 14,126,429 Three months ended December 31, 2020 Europe
$ Asia
$ Total
$ Revenues by customer region 4,314,339 344,127 4,658,466 Three months ended December 31, 2020 Marine
$ Solar
$ Total
$ Revenues by revenue type 4,314,339 344,127 4,658,466 Expense by revenue type 7,065,036 774,076 7,839,112 Net income by revenue type (2,750,697 ) (429,949 ) (3,180,646 ) Nine months ended December 31, 2020 Europe
$ Asia
$ Total
$ Revenues by customer region 41,645,534 483,358 42,128,892 Nine months ended December 31, 2020 Marine
$ Solar
$ Total
$ Revenues by revenue type 41,645,534 483,358 42,128,892 Expense by revenue type 40,852,732 1,648,116 42,500,849 Net income by revenue type 792,802 (1,164,758 ) (371,957 ) For the three and nine months ended December 31, 2021, 51% (2020 – 87%) and 69% (2020 – 98%) of the Company’s revenues were derived from two customers that are under the same common ownership and control. For the three and nine months ended December 31, 2021, 0% (2020 – 0%) and 31% (2020 – 0%) of the Company’s revenues were derived from another customer.PACIFIC GREEN TECHNOLOGIES INC.Notes to the Condensed Consolidated Interim Financial StatementsDecember 31, 2021(Unaudited)(Expressed in U.S. Dollars)18. Commitment14. Commitments (a) The Company’s subsidiaries have entered into three long-term operating leases for office premises in London, United Kingdom, Shanghai, China, and North Vancouver, Canada. These lease assets are categorized as right of use assets under ASU No. 2016-02. Long-term premises lease Lease
commencement Lease
expiry Term
(years) Discount rate* Lease
commencement Lease
expiry Term
(years) Discount
rate* London, United Kingdom April 1, 2019 December 25, 2023 3.75 4.50 % April 1, 2019 December 25, 2023 3.75 4.50 % North Vancouver, Canada December 1, 2019 August 31, 2022 1.75 4.50 % December 1, 2019 August 31, 2022 1.75 4.50 % Shanghai, China March 1, 2020 May 31, 2025 5.25 4.75 % March 1, 2020 May 31, 2025 5.25 4.65 % * The Company determined the discount rate with reference to mortgages of similar tenure and terms. and nine months are summarized as follows: Three Months
Ended
December 31,
2021
$ Three Months
Ended
December 31,
2020
$ Nine Months
Ended
December 31,
2021
$ Nine Months
Ended
December 31
2020
$ Operating lease expense * 117,350 93,910 360,717 342,077 June 30,
2022
$ June 30
2021
$ Operating lease expense * 109,737 123,155 * Including right of use amortization and imputed interest. Lease payments include maintenance, operating expense, and tax. calendarfiscal years of the lease as follows: $ $ 2022 520,627 2023 386,742 334,584 2024 65,907 148,216 2025 16,477 47,759 Total future minimum lease payments 989,753 530,559 Imputed interest (50,501 ) (2,091 ) Operating lease obligations 939,252 528,468 (b) Neither party have funded the joint venture to date and there has been no revenue and expense associated with it.(c)On December 2, 2020, the Company signed a Joint-Venture Agreement with Amr Khashoggi Trading Company Limited (“Amkest Group”) to incorporate a company in the Kingdom of Saudi Arabia for the sale of Pacific Green’s environmental technologies within the region. The Company holds 70% interest in the joint venture. The Company incorporated Pacific Green Technologies Arabia LLC on November 23rd, 2021.December 31, 2021June 30, 2022(Unaudited)(unaudited)15. Income Taxes 19. Income TaxesNetThe components of income (loss) before income taxes for the nine months ended December 31, by U.S. and foreign jurisdictions waswere as follows: December 31,
2021
$ December 31,
2020
$ June 30,
2022
$ June 30,
2021
$ United States (12,392,312 ) 1,831,428 (2,113,373 ) (2,617,343 ) Foreign 2,448,408 (2,203,385 ) (1,010,033 ) (644,360 ) Net income (loss) before taxes (9,943,904 ) (371,957 ) Net loss before taxes (3,123,406 ) (3,261,703 ) June 30,
2022
$ June 30
2021
$ Net income (loss) before taxes (3,123,406 ) (3,261,703 ) Statutory tax rate 21 % 21 % Expected income tax expense (recovery) (655,915 ) (684,958 ) Permanent differences and other 121,545 47,704 Foreign tax rate difference (861 ) (23,282 ) Change in valuation allowance 535,231 660,536 Income tax provision – – Current – – Deferred – – Income tax provision – – December 31,
2021
$ December 31
2020
$ Net income (loss) before taxes (9,943,904 ) (371,957 ) Statutory tax rate 21 % 21 % Expected income tax expense (recovery) (2,088,220 ) (78,111 ) Permanent differences and other 94,035 502,105 Foreign tax rate difference 12,482 37,233 Change in valuation allowance 1,981,704 (461,227 ) Income tax provision – – Current – – Deferred – – Income tax provision – – itis has accumulated estimated net operating losses of approximately $22.3$25.7 million which were incurred mainly in the U.S, and which don’t begin to expire until 2033. In addition, the Company estimates that it has $2.6approximately $4.0 million in losses available in the United Kingdom. Historical losses in the U.S., are subject to limitations on use due to deemed changes in control for tax purposes. This impacts the timing and opportunity to use certain losses. ● 500,000,000 shares of common stock with a par value of $0.001; and ● 10,000,000 shares of preferred stock with a par value of $0.001. sulphursulfur dioxide as an acid gas. Testing has been conducted on diesel shipping to confirm the application of seawater as a neutralizing agent for sulphursulfur emissions as well as capturing particulate matter. In addition to marine applications, these tests also showed applicability of the system for large displacement engines such as stationary generators, compressors, container handling, heavy construction and mining equipment.sulphursulfur dioxide demonstration tests at the American Bituminous Coal Partners power plant in Grant Town, West Virginia. The testing achieved a three test average of 99.3% removal efficiency. The implementation of US Clean Air regulations in July 2010 has created additional demand for sulphursulfur dioxide removal in all industries emitting sulphursulfur pollution. Furthermore, China consumes approximately one half of the world’s coal, but introduced measures designed to reduce energy and carbon intensity in its 14th12th Five Year Plan. Applications include regional power facilities and heating for commercial buildings and greenhouses. Typical applications range in size from 1 to 20 megawatts (MW) with power generation occupying the larger end of the range. The ENVI-Clean™ system removes most of the sulphursulfur dioxide, particulate matter, greenhouse gases and other hazardous air pollutants from the flue gases produced by the combustion of coal, biomass, municipal solid waste, diesel and other fuels.broadeneddiversified our business to provide turnkey and scalable end-to-end environmental and renewable technology solutions in the renewable energy sector. Our technological platform now has fourthree main components:divisions: ● Emission Control Systems (“ECS”); ● Concentrated Solar Power (“CSP”); and ● Battery Energy Storage Systems (“BESS”); and●Electric Vehicle Charging Stations (“EVCS”).the CompanyPacific Green plans to execute this vision by a dual strategy of equipment sales and proactive infrastructure development and ownership, each to beis led by acquisitions of technology capabilities and project investment opportunities, highlighted to date by the following events: ● on December 20, 2019, the Company closed the acquisition of Shanghai Engin Digital Technology Co. Ltd. (“Engin”) a solar design, development and engineering company. Engin is a design and engineering business focused primarily on CSP, desalination and waste to energy technologies. Engin’s CSP reference plants in China comprise over 150MW and we are now in talks to provide CSP alongside future ammonia and hydrogen production facilities in Asia and South America; ● on October 20, 2020, the Company closed the acquisition of Innoergy Limited (“Innoergy”), a UK based designer of BESS whose clients includeincluded Osaka Gas Co. Ltd, in Japan, and Limejump Limited in the UK, a subsidiary of Royal Dutch Shell plc. The acquisition underpins our entry into the BESS market; and ● on March 18, 2021, the Company acquired Richborough Energy Park Limited (“Richborough”), a BESS development project to deliver 100MW of energy in Kent, UK. ECSThe Company has a joint venture with PowerChina SPEM Limited (the “JV”Concentrated Solar Power (“CSP”). The JV has successfully provided manufacturing, installation and logistical support on over USD$200m of ECS business, particularly in the marine industry. PowerChina is one of the largest EPC contractors in the world with annual revenues of approximately USD$50bn.CSPBESSBattery Energy Storage Systems (“BESS”)project mentioned in the M&A section above.project.EVCSThe agreement with SEG will extend to EVCS.December 31, 2021,June 30, 2022, and 2020.2021.and nine months ended December 31, 2021June 30, 2022 was $2,642,184 and $5,535,004$2,023,876 versus $4,658,466 and $37,470,425$1,323,250 for the three and nine months ended December 31, 2020.June 30, 2021. The Company’s revenues were mainly derived from the sale of marine scrubber units and related services. During the ninethree months ended December 31, 2021,June 30, 2022, the Company recognized revenue for 9 (2020was in the process of commissioning 4 (2021 – 46)2) marine scrubber units and thesewhich contributed to revenue of $1,655,158 (2021 – $742,290). In February 2021 a major client deferred 32 marine scrubber units. Of these, 6 units have proceeded (2 commissioned in year ended March 31, 2022 and 4 commissioned in quarter ended June 30, 2022), while 13 were in various stages of engineering, delivery, and commissioning. Forcancelled. The remainder are still postponed with an option to either proceed or cancel, which expires on February 9, 2023. During the three and nine months ended December 31, 2021,June 30, 2022, revenue from services, including specific services performed in the marine business sector and design and engineering services in the solar business sector, was $916,597 and $1,227,626 as compared to $2,371 and $139,231 for the three and nine months ended December 31, 2020. During the nine months ended December 31, 2021, the Company recognized revenue for 11 (2020$368,718 (2021 – 7) solar projects.$580,960).ninethree months ended June 30, 2022, the Company realized a gross profit margin for products and services were 40% (2021- negative 66%) and 35% (2021 – 50%), respectively. The gross profit margin for products increased in 2022 because of 43% (2020 - 40%higher contract value and consistent cost of goods sold for marine scrubbers delivered in 2022. Overall, the gross profit margin for the quarter ended June 30, 2022 was approximately 39% (2021 – negative 15%). Gross margin increased mainly due to higher gross margin on sale of scrubber units.ninethree months ended December 31, 2021,June 30, 2022, were $12,764,679$3,926,657 as compared to $20,973,556$3,219,984 for the ninethree months ended December 31, 2020, as the Company reduced its operations for the nine months period.June 30, 2021. Management and technical consulting fees decreased significantly alsoincreased due to lower sales.increased activity in business development and the management of the BESS development. Management and technical consulting fees were comprised of fees paid to third partiesour directors, officers and advisors for business development efforts and advisory services, as well as amounts paid to the directors of the Company. Advertising, office-basedservices. Office-based costs, travel expenses, and professional fees also decreasedincreased due to reducedincreased business activities.nine months ended December 31, 2021, the Company recorded a warranty expense recovery of $4,853 (2020 – expense of $1,407,420) related to the estimated expectation of warranty costs.Expenses for the three months ended December 31, 2021, were $4,324,649 as compared to $4,386,278 for the three months ended December 31, 2020. Management and technical consulting fees decreased due to lower sales and were comprised of fees paid to third parties for business development efforts, advisory services, as well as amounts paid to the directors of the Company. Professional fee decreased due to less contract and acquisition work. For the three months ended December 31, 2021,period, the Company recorded a warranty expense of $16,795 (2020$181,600 as a result of four vessels being commissioned and commencing their warranty period (2021 - $160,125) related torecovery of $39,807). The impact of various international factors on foreign exchange rates caused fluctuations which saw the estimated expectation of warranty costs.Company’s foreign exchange losses increase significantly.and nine months ended December 31,June 30, 2022 and 2021 and 2020 are summarized as follows: Three Months Ended Nine Months Ended Three Months Ended December 31, December 31, June 30, 2021 2020 2021 2020 2022
$ 2021
(As restated- Note 2)
$ Revenues $ 2,642,184 $ 4,658,466 $ 5,535,004 $ 42,128,892 Products 1,655,158 742,290 Services 368,718 580,960 Total Revenues 2,023,876 1,323,250 Cost of goods sold $ 1,328,338 $ 3,625,204 $ 3,137,247 $ 25,515,248 Gross Profit $ 1,313,846 $ 1,033,262 $ 2,397,757 $ 16,613,644 Products 987,207 1,230,119 Services 241,336 290,890 Total Cost of goods sold 1,228,543 1,521,009 Gross profit 795,333 (197,759 ) Expenses Advertising and promotion $ 170,870 $ 152,172 $ 488,088 $ 510,748 143,267 168,895 Amortization of intangible assets $ 396,539 $ 389,703 $ 1,178,217 $ 1,169,039 688 171,124 Bad debts expense $ 21,012 $ – $ 21,012 $ – Depreciation $ 52,519 $ 47,807 $ 152,062 $ 144,457 53,584 49,766 Foreign exchange loss $ 34,791 $ (41,959 ) $ 86,369 $ 2,577 Lease expense $ 117,350 $ 93,910 $ 360,717 $ 342,077 Foreign exchange loss (gain) 497,696 11,873 Management and technical consulting $ 1,026,808 $ 1,238,962 $ 3,072,262 $ 9,583,143 989,084 745,552 Office and miscellaneous $ 525,009 $ 460,338 $ 1,318,839 $ 1,396,263 Operating lease expense 109,737 123,155 Office and miscellaneous expense 462,769 378,263 Professional fees $ 390,866 $ 601,790 $ 1,338,544 $ 1,494,425 287,025 276,669 Research and development $ – $ – $ – $ 4,368 13,772 – Salaries and wages $ 1,234,243 $ 1,187,967 $ 4,029,737 $ 4,510,241 982,914 1,255,206 Transfer agent and filing fees $ 91,865 $ (34,007 ) $ 253,088 $ 106,758 13,754 13,175 Travel and accommodation $ 249,338 $ 129,470 $ 473,953 $ 302,040 190,767 66,113 Warranty costs $ 16,795 $ 160,125 $ (4,853 ) $ 1,407,420 Warranty and related 181,600 (39,807 ) Total expenses $ 4,328,005 $ 4,386,278 $ 12,768,035 $ 20,973,556 3,926,657 3,219,984 Other income (expense) Gain on derecognition of subsidiary and termination of lease $ – $ – $ – $ 242,193 Gain (loss) on change in fair value of derivative liability $ – $ (50,869 ) $ – $ (1,306 ) Gain on reduction of acquisition costs of subsidiary $ – $ – $ – $ 3,240,250 Other Income Financing interest income $ 85,889 $ 247,253 $ 378,840 $ 548,543 46,269 97,626 Gain (loss) on change in fair value of derivative liability $ (53,198 ) $ (24,015 ) $ 47,534 $ (41,725 ) Net Income (Loss) $ (2,981,468 ) $ (3,180,647 ) $ (9,943,904 ) $ (371,957 ) Interest income (expense) and other (38,351 ) 58,414 Net (Loss) / Income for the period before noncontrolling interest (3,123,406 ) (3,261,703 ) Share of (Loss)/Income attributable to noncontrolling interest 135,824 – Net (loss)/ Income for the period (3,259,230 ) (3,261,703 ) December 31,
2021 March 31,
2021
2022
2022 Current Assets $ 23,050,745 $ 41,228,286 11,711,039 24,854,658 Current Liabilities $ 32,509,427 $ 41,180,588 16,246,602 19,079,665 Working Capital (Deficiency) $ (9,458,683 ) $ 47,698 Working Capital (Deficit) (4,535,563 ) 5,774,993 Nine Months Ended
December 31,
2021
December 31,
2020 Net Cash Used in Operating Activities $ (13,610,996 ) $ (5,937,101 ) Net Cash Used in Investing Activities $ (49,540 ) $ (85,683 ) Net Cash Provided by (Used in) Financing Activities $ (99,504 ) $ 1,750 Effect of Exchange Rate Changes on Cash $ 121,391 $ 73,182 Net Change in Cash and Cash Equivalents $ (13,638,649 ) $ (5,947,852 ) Net Cash (Used in) Provided by Operating Activities 6,312,027 (5,486,969 ) Net Cash (Used in) Investing Activities (6,978,986 ) (24,005 ) Effect of Exchange Rate Changes on Cash (1,121,996 ) 43,056 Net Change in Cash and Cash Equivalents (1,788,955 ) (5,467,918 ) December 31, 2021,June 30, 2022, we had $9,797,768$4,497,514 in cash and cash equivalent, $23,050,745equivalents, $11,711,039 in total current assets, $32,509,427$16,246,602 in total current liabilities and a working capital deficit of $9,458,683$4,535,563 compared to working capital of $47,698$5,774,993 as at March 31, 2021.2022. The Company’s working capital reduced as less revenue was recognized from marine scrubbers and paydowndue to reduction of accounts payable. In addition, the Company’s contract assets, contract liabilities, and accruals change from period to period, depending on the status of equipment deliveries, customer receipts and payments to third party manufacturers.other receivables.ninethree months ended December 31, 2021,June 30, 2022, we used $13,610,996generated $6,312,027 in operating activities, whereas we used $5,937,101$5,486,969 from operating activities for the ninethree months period ended December 31, 2020.June 30, 2021. The negative operating cash flow for the ninethree months ended December 31, 2020,June 30, 2022, was mainly resulted from reduction in revenue.increased sales and collection of payments.ninethree months ended December 31, 2021,June 30, 2022, we used $49,540$6,978,986 in investing activities, whereas we used $85,683$24,005 in investing activities during the ninethree months ended December 31, 2020.June 30, 2021. Our investing activities for the ninethree months ended December 31, 2021,June 30, 2022, were primarily related to additions of project under development and equipment.During the nine months ended December 31, 2021, we used $99,504 in financing activities, whereas we received $1,750 in financing activities for the nine months ended December 31, 2020. Our financing activities for the nine months ended December 31, 2021, were related to stock option exercise.TheWe do not anticipate requiring additional funds to fund our forecast normal operating expenditure over the next 12 months. We do require funds to construct our first BESS 99.98MW facility project at Richborough Energy Park in Kent, United Kingdom. On May 11, 2022 the Company is developingannounced it had entered into a battery energy storage system “BESS” facility inSubscription and Shareholders Agreement with a third party investor, who has committed $16 million (£13 million) of equity funds to the UK. Atproject. On June 21, 2022 the date of filing the 10Q, there are no contractual commitments to proceed since the preconditions required to achieveCompany announced it had reached financial close have not yet been reached. To part-fund(“Financial Close”) for $34.90 million (£28.25 million) of senior debt for the projectRichborough project. The senior debt, in conjunction with the equity investment, will provide the Company is currently negotiating a subordinatedwith the funding to bring the battery park to commercial operations in June 2023. The senior debt facility agreement is entered into with Close Leasing Limited (“CLL”), pursuant to which is anticipatedCLL will provide a development loan to fund the construction, which will be concluded contemporaneously withutilized in stages following the financial close.expenditure of the equity investment. The development loan will then be refinanced into a 10-year amortized term loan upon the start of commercial operations.SpainAbu Dhabi, Kingdom of Saudi Arabia, and Australia. We have hired staff in various regions and rely heavily upon the use of contractors and consultants. Our general and administrative expenses for the yearperiod will consist primarily of technical consultants, management, salaries and wages, professional fees, transfer agent fees, bank and interest charges and general office expenses. The professional fees relate to matters such as contract review, business acquisitions, regulatory filings, patent maintenance, and general legal, accounting and auditing fees.December 31, 2021,June 30, 2022, we had $9,797,768$4,497,514 in cash on hand. Our realized and anticipated profits derived from sales of ENVI marine units plus anticipated sales of products and services in our new Batteries and Solar businesses are expected to fund our planned expenditure levels. After careful consideration we believe current operations, anticipated deliveries and expected profit from such deliveries to be sufficient to cover expected cash operating expenses over the next 12 months.December 31, 2021,June 30, 2022 have been prepared on a going concern basis.Contractual ObligationsAs a “smaller reporting company”, we are not required to provide tabular disclosure obligations.PoliciesUse of EstimatesU.S. generally accepted accounting principlesUnited States Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of property and equipment and intangible assets, contract assets and liabilities associated with revenue contracts in progress, contingent consideration on asset acquisition, warranty accruals, going concern, and deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments and uncertainties.IntangibleThe carrying value of our intangible assets are statedrepresents its original cost at costthe time of purchase, less accumulated amortization and are comprised of patents, customer relationships, plant designs, and software licensing.amortization. We depreciate our intangible assets using the straight-line method over their estimated useful lives. The patents, which were acquired in 2013, are being amortized on a straight-line over the estimated useful life of 17 years. The otherour intangible assets which were acquiredare listed in December 2019, are being amortized according to the following table. Intangible assets are reviewed annually for impairment.table below.Patents 17 years straight-lineCustomer relationships6 years straight-linePlant designs6 years straight-lineSoftware licensing 10 years straight-line Our company reviewsWe review long-lived assets such as property and equipment and intangible assets with finite useful lives for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. The determination of whether impairment indicators exist requires significant judgment in evaluating underlying significant assumptions including expected sales contracts, operating costs, and current market value of assets. If an indication is identified, and the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset.To date, the Company has derivedWe derive revenue from the sale of emission control equipmentproducts and related services as well as providing design and engineering services for Concentrated Solar Power.linetypes of businessrevenue described above, revenue is recognized when control of products or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those promised products or services. The Company’s marine scrubber sales contracts contain a single performance obligation satisfied over time.The Company determines revenueRevenue recognition throughrequires significant judgements from management in regard to the following five steps:●identification of the contract, or contracts, with a customer;●identification of thedetermination of accounting treatment for contracts with customers. Management is required to assess contracts with customers to identify whether performance obligations in the contract;●determination of the transaction price;●allocation of the transaction price to the performance obligations in the contract; and●recognition of revenue when, or as, performance obligations are satisfied.The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substanceare distinct and collectability of consideration is probable.to determine whether contract terms provide the Company with a basis to recognize revenue over time.As ourAccording to ASC 606-10-25-27, if the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date, revenue should be recognized over time. The Company’s scrubber system is customized to each vessel at the detailed design level, so the performance under the contract does not create an asset with an alternative use. According to the Company’s contracts signed with customers include multipleunder English law, the customers are contractually and legally obliged to pay for performance obligations, judgment is requiredcompleted to determine whether performance obligations specified in these contracts are distinct anddate that covers cost plus a reasonable profit margin. Therefore, the Company concluded that revenue should be accounted for as separaterecognized over time. The Company recognizes revenue transactions for recognition purposes. For such arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices chargedinput method using a percentage of costs to customers or using expected cost-plus margin.complete.agreementagreements with customers where no continued performance obligation is required, the Company recognizeswe recognize revenue based on consideration settled according to the agreement.ContractsA contract signed with one customer has a significant financing component. The Company provides design, production, and installation services of scrubber units to this customer. 20% of the contract price is payable at least 6 calendar months prior to the dry dock date. The remaining 80% is payable in 24 equal monthly instalmentsinstallments starting at the end of the calendar month following the installation date on a vessel-by-vessel basis. As 80% of the contract price is payable after the last performance obligation towards the scrubber, a significant financing component is separated from revenue and interest income at 5.4% is recorded when payments are received from the customer.Accounts ReceivableAccounts receivables consist of trade receivables arising in the normal course of business. The Company establishes an allowance for doubtful accounts that reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, age, financial information that is publicly accessible and other currently available evidence.Financial Instruments and Fair Value MeasurementsASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:Level 1Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.Level 2Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.Level 3Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.The Company’s financial instruments consist principally of cash, short term investments, accounts receivable, lease receivable, amounts due from and to related parties, accounts payable and accrued liabilities, and operating lease liability. The recorded values of all financial instruments are at amortized cost which approximate their current fair values because of their nature and respective maturity dates or durations.Stock-based compensationThe Company records share-based payment transactions for acquiring goods and services from employees and nonemployees in accordance with ASC 718, Compensation – Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are measured at grant-date fair value of the equity instruments issued.The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period. The majority of the Company’s awards vest upon issuance.Subsequent to the adoption of ASU 2018-07 - Improvements to Nonemployee Share-Based Payment Accounting, the accounting for employeeContract Liabilities, Prepaid Manufacturing Costs, and non-employee stock options is now aligned.Contract LiabilitiesContract Assetsidentified performance conditions that are not directly correlated with contractual billing terms with customers. As a result of the timing differences between customer sales invoices and satisfaction of performance conditions, contractual assets and contractual liabilities have been recognized.instalmentsinstallments through the procurement and design phases of equipment manufacturing. Amounts received frominvoiced to customers, which are not yet recorded as revenues under the Company’s revenue recognition policy, are presented as contract liabilities.contract assets until the equipment is manufactured to specifications and accepted by the customer.prepaid manufacturing costs.contract assetsprepaid manufacturing costs on its balance sheet when one of the parties to the revenue contract and supply contract, respectively, has performed before the other.scrubbers, there being a number of milestone-based stage payments.scrubbers. The specific terms and conditions of those warranties vary depending upon the product sold and geography of sale. The Company’s product warranties generally start from the deliverycommissioning date and continue for up to twelve to twenty-four months. The Company provides warranties to customers for the design, materials, and installation of scrubber units. The Company has a back-to-back manufacturing guarantee from its major supplier, which covers materials, production, and installation. Factors that affect the Company’s warranty obligation include product failure rates, anticipated hours of product operations and costs of repair or replacement in correcting product failures. These factors are estimates that may change based on new information that becomes available each period. Similarly, the Company also accrues the estimated costs to address reliability repairs on products no longer in warranty when, in the Company’s judgment, and in accordance with a specific plan developed by the Company, it is prudent to provide such repairs. The Company intends to assess the adequacy of recorded warranty liabilities quarterly and adjusts the liability as necessary.Lease Leases classified as operating leases, where the Company is the lessee, are recorded as lease liabilities based on the present value of minimum lease payments over the lease term, discounted using the lessor’s rate implicit in the lease for each individual lease arrangement or the Company’s incremental borrowing rate, if the lessor’s implicit rate is not readily determinable. Corresponding right-of-use assets are recognized consisting of the lease liabilities, initial direct costs and any lease incentive payments. Lease liabilities are drawn down as lease payments are made and right-of-use assets are depreciated over the term of the lease. Operating lease expenses are recognized over the term of the lease, consisting of interest accrued on the lease liability and depreciation of the right-of-use asset.We maintainUnder the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act) of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act as of 1934 (the “Exchange Act”),June 30, 2022.by us in theour reports that we filefiled or submitsubmitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’sSEC’s rules and formsforms. Disclosure controls and procedures include controls and procedures designed to ensure that such information required to be disclosed in our company’s reports filed under the Exchange Act is accumulated and communicated to our management, including our chief executive officer (our principal executive officer)Chief Executive Officer and chief financial officer (principal financial officer and principal accounting officer), as appropriateChief Financial Officer, to allow timely decisions regarding required disclosure. ManagementOur management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act Rule 13a-15(f)Act). Our company’s internalInternal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.Because of its inherent limitations,U.S. GAAP. Our internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subjectincludes those policies and procedures that: (i) pertain to the riskmaintenance of records that, controls may become inadequate becausein reasonable detail, accurately and fairly reflect the transactions and dispositions of changesour assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conditions,accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the degree of compliance with the policies or procedures may deteriorate.financial statements. (our principal executive officer) and chief financial officer (principal financial officer and principal accounting officer), our companyChief Financial Officer, we conducted an evaluation of the effectiveness of our company’s internal control over financial reporting as of December 31, 2021 usingJune 30, 2022, based on the criteria establishedframework in “Internal Control - Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”)(COSO) (2013 framework).This evaluation included reviewIn June 2022, while preparing the financial statements for the year ending March 31, 2022, the Company identified an error with respect to the application of the documentationrevenue recognition accounting policy. The Company has two material weaknesses; firstly, it lacked adequate controls to correctly recognize revenue and cost of goods sold and, secondly, Certain amortization expenses, sales commissions, salaries and wages, and technical consulting fees should have been presented within cost of goods. The control deficiency relates to the ineffective design of controls evaluationto analyze revenue contracts appropriately on a timely basis and to identify certain costs as relating to the initiation and fulfilment of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation.its revenue contracts.For the year-ended March 31, 2021,Based on this evaluation our Chief Executive Officer and Chief Financial Officer have concluded that as of June 30, 2022, the Company assessed that there was a material weakness in the internal control over financial reporting which had resulted fromhas not having an audit committee in place for the full financial year. The Company established an audit committee in March 2021 and it had its inaugural meeting on March 25, 2021 and since then has been fully-functioning and involved in accordance with its charter in overseeing the financial reporting and audit processes. Due to the implementation of this over-arching control, management has concluded that the Company has maintained effective internal control over financial reporting as of December 31, 2021 based on the criteria established in Internal Control – Integrated Framework issued by COSO.reporting.December 31, 2021,June 30, 2022, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.Exhibit
NumberDescription(14)Code of Ethics, Whistle-Blower Policy, and Insider Trading Policy14.1Code of Ethics and Business Conduct (incorporated by reference to our Annual Report on Form 10-K filed on June 29, 2021)14.2Whistle-Blower Policy (incorporated by reference to our Annual Report on Form 10-K filed on June 29, 2021)14.3Insider Trading Policy (incorporated by reference to our Annual Report on Form 10-K filed on June 29, 2021)(21)Subsidiaries of the Registrant21.1Pacific Green Technologies Limited, a United Kingdom corporation (wholly owned);Pacific Green Energy Parks Limited, a British Virgin Islands corporation (wholly owned);Energy Park Sutton Bridge, a United Kingdom corporation (wholly owned by Pacific Green Energy Parks Limited).(31) Rule 13a-14 (d)/15d-14d) Certifications 31.1* Section 302 Certification by the Principal Executive Officer 31.2* Section 302 Certification by the Principal Financial Officer and Principal Accounting Officer (32) Section 1350 Certifications 32.1* Section 906 Certification by the Principal Executive Officer 32.2* Section 906 Certification by the Principal Financial Officer and Principal Accounting Officer (99)Additional Exhibits99.1Peterborough Renewable Energy Limited Directors’ Report and Financial Statements for the period ended December 31, 2012 (incorporated by reference to our Current Report on Form 8-K filed on December 12, 2013)101* Interactive Data Files 101.INS101.INS* Inline XBRL Instance Document. 101.SCH101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). * Filed herewith. PACIFIC GREEN TECHNOLOGIES INC. (Registrant) Dated: February 14,August 22, 2022By: /s/ Scott Poulter Scott Poulter Chief Executive Officer and Director (Principal Executive Officer) Dated: February 14,August 22, 2022By: /s/ Richard Fraser-Smith Richard Fraser-Smith
Principal Accounting Officer)Dated: February 14,August 22, 2022By: /s/ Scott Poulter Scott Poulter Chief Executive Officer and Director (Principal Executive Officer) Dated: February 14,August 22, 2022By: /s/ Richard Fraser-Smith Richard Fraser-Smith
Principal Accounting Officer)1713