Nature of Operations (Note 1)
Commitments (Note 19)
(The accompanying notes are an integral part of
these consolidated financial statements)
PACIFIC GREEN TECHNOLOGIES INC.
Consolidated Statements of Operations and Comprehensive Income
(Expressed in U.S. Dollars)
| |
Year Ended March 31, 2022 $ | | |
Year Ended March 31, 2021
(As
restated -
note 2) $ | |
| |
| | |
| |
Sales (Note 12) | |
| | |
| |
Products | |
| 12,680,103 | | |
| 50,728,436 | |
Services | |
| 2,759,096 | | |
| 1,890,042 | |
Total Revenues | |
| 15,439,199 | | |
| 52,618,478 | |
Cost of goods sold (Note 12) | |
| | | |
| | |
Products | |
| 2,505,579 | | |
| 40,815,715 | |
Services | |
| 2,051,261 | | |
| 1,180,641 | |
Total Cost of goods sold | |
| 4,556,840 | | |
| 41,996,356 | |
Gross profit | |
| 10,882,359 | | |
| 10,622,122 | |
| |
| | | |
| | |
Expenses | |
| | | |
| | |
Advertising and promotion | |
| 599,520 | | |
| 902,014 | |
Amortization of intangible assets (Note 7) | |
| 697,126 | | |
| 674,455 | |
Bad debts expense | |
| (36,526 | ) | |
| 705,454 | |
Depreciation (Note 6) | |
| 210,292 | | |
| 184,975 | |
Foreign exchange loss | |
| 1,005,418 | | |
| 235,758 | |
Impairment of goodwill (Note 8 and 9) | |
| 4,419,315 | | |
| – | |
Impairment of intangible assets (Note 7) | |
| 2,641,639 | | |
| 37,700 | |
Management and technical consulting | |
| 3,366,903 | | |
| 2,815,871 | |
Operating lease expense (Note 19) | |
| 485,087 | | |
| 489,796 | |
Office and miscellaneous | |
| 1,770,341 | | |
| 1,576,044 | |
Professional fees | |
| 1,803,435 | | |
| 1,970,945 | |
Research and development | |
| – | | |
| 62,943 | |
Salaries and wage expenses | |
| 4,993,145 | | |
| 4,823,978 | |
Transfer agent and filing fees | |
| 232,365 | | |
| 258,777 | |
Travel and accommodation | |
| 654,563 | | |
| 383,675 | |
Warranty and related expense (Note 14) | |
| (731,529 | ) | |
| 1,228,092 | |
Total expenses | |
| 22,111,094 | | |
| 16,350,477 | |
(Loss) income before other income (expense) | |
| (11,228,735 | ) | |
| (5,728,355 | ) |
Other income (expense) | |
| | | |
| | |
Financing interest income | |
| 456,761 | | |
| 628,330 | |
Gain (loss) on change in fair value of derivative liability | |
| – | | |
| (134,472 | ) |
Gain on termination of lease and derecognition of subsidiary | |
| – | | |
| 242,193 | |
Gain on reduction in acquisition costs of subsidiary (Note 8) | |
| – | | |
| 3,240,250 | |
Interest income (expense) and other | |
| 19,516 | | |
| (58,371 | ) |
Total other income | |
| 476,277 | | |
| 3,917,930 | |
| |
| | | |
| | |
Net (loss) / income for the year | |
| (10,752,458 | ) | |
| (1,810,425 | ) |
| |
| | | |
| | |
Other comprehensive income | |
| | | |
| | |
| |
| | | |
| | |
Foreign currency translation gain | |
| 1,142,934 | | |
| 685,715 | |
| |
| | | |
| | |
Comprehensive (loss) / income for the year | |
| (9,609,524 | ) | |
| (1,124,710 | ) |
Net (loss) / income per share, basic and diluted | |
| (0.23 | ) | |
| (0.04 | ) |
Net (loss) / income per share, diluted | |
| (0.23 | ) | |
| (0.04 | ) |
Weighted average number of shares outstanding, basic1 | |
| 47,302,746 | | |
| 46,543,758 | |
Weighted average number of shares outstanding, diluted | |
| 47,302,746 | | |
| 46,618,758 | |
(1) | The period ended March 31, 2022, includes 312,500 stock options (March 31, 2021 – 337,500) that are exercisable at any time and for nominal cash consideration. |
(The accompanying notes are an integral part of
these consolidated financial statements)
PACIFIC GREEN TECHNOLOGIES INC.
Consolidated Statement of Stockholders’ Equity
(Expressed in U.S. Dollars)
| |
| | |
| | |
| | |
Accumulated | | |
| | |
| | |
| | |
| |
| |
| | |
| | |
Additional | | |
Other | | |
| | |
| | |
| | |
| |
| |
Common Stock | | |
Paid-in | | |
Comprehensive | | |
Treasury | | |
Noncontrolling | | |
| | |
Stockholder’s | |
| |
Shares | | |
Amount | | |
Capital | | |
Income | | |
Stock | | |
Interest | | |
Deficit | | |
Equity | |
| |
# | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance March 31, 2020, as previously reported | |
| 45,659,971 | | |
| 45,660 | | |
| 90,653,018 | | |
| 207,017 | | |
| – | | |
| – | | |
| (75,321,335 | ) | |
| 15,584,360 | |
Effect of restatement (Note 2) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 2,353,912 | | |
| 2,353,912 | |
Balance March 31, 2020, as restated | |
| 45,659,971 | | |
| 45,660 | | |
| 90,653,018 | | |
| 207,017 | | |
| – | | |
| – | | |
| (72,967,423 | ) | |
| 17,938,272 | |
Fair value of options granted | |
| – | | |
| – | | |
| 207,350 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 207,350 | |
Shares issued for option exercise (Note 16) | |
| 175,000 | | |
| 175 | | |
| 1,575 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 1,750 | |
Shares issued for commissions (Note 16) | |
| 95,238 | | |
| 96 | | |
| 95,143 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 95,239 | |
Shares issued for employee settlement and investor relations (Note 16) | |
| 256,375 | | |
| 256 | | |
| 391,568 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 391,824 | |
Shares issued on debt conversion (Note 16) | |
| 278,981 | | |
| 279 | | |
| 401,463 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 401,742 | |
Shares issued for acquisition (Note 16) | |
| 525,000 | | |
| 525 | | |
| 576,975 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 577,500 | |
Foreign exchange translation | |
| – | | |
| – | | |
| – | | |
| 685,715 | | |
| – | | |
| – | | |
| – | | |
| 685,715 | |
Net income for the year (restated) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (1,810,425 | ) | |
| (1,810,425 | ) |
Balance March 31, 2021(as restated) | |
| 46,990,565 | | |
| 46,991 | | |
| 92,327,092 | | |
| 892,732 | | |
| – | | |
| – | | |
| (74,777,848 | ) | |
| 18,488,967 | |
Fair value of options granted | |
| – | | |
| – | | |
| 77,897 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 77,897 | |
Shares issued for option exercise (Note 17) | |
| 25,000 | | |
| 25 | | |
| 225 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 250 | |
Shares issued for employee services (Note 16) | |
| 11,321 | | |
| 11 | | |
| 23,989 | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 24,000 | |
Common stock repurchases (Note 16) | |
| – | | |
| – | | |
| – | | |
| – | | |
| (99,754 | ) | |
| – | | |
| – | | |
| (99,754 | ) |
Noncontrolling interest (Note 11) | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| 10,361,701 | | |
| – | | |
| 10,361,701 | |
Foreign exchange translation | |
| – | | |
| – | | |
| – | | |
| 1,142,934 | | |
| – | | |
| – | | |
| – | | |
| 1,142,934 | |
Net loss for the year | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| – | | |
| (10,752,458 | ) | |
| (10,752,458 | ) |
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 | |
(The accompanying notes are an integral part of
these consolidated financial statements)
PACIFIC GREEN TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
| |
| | |
Year Ended | |
| |
Year Ended
March 31, | | |
March 31,
2021
(As Restated | |
| |
2022 | | |
- note 2) | |
| |
$ | | |
$ | |
Operating Activities | |
| | |
| |
Net (loss) income for the year | |
| (10,752,458 | ) | |
| (1,810,425 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
Amortization of intangible assets (Note 7) | |
| 1,574,594 | | |
| 1,601,222 | |
Bad debt expense | |
| (36,526 | ) | |
| 705,454 | |
Depreciation (Note 6) | |
| 210,292 | | |
| 184,975 | |
Fair value of stock options granted | |
| 77,897 | | |
| 207,350 | |
Financing interest | |
| (456,761 | ) | |
| (591,538 | ) |
Gain on derecognition of subsidiary | |
| – | | |
| (242,193 | ) |
Gain on reduction of acquisition costs of subsidiary (Note 8) | |
| – | | |
| (3,240,250 | ) |
Impairment of goodwill (Note 8 and 9) | |
| 4,419,315 | | |
| – | |
Impairment of intangible assets (Note 7) | |
| 2,641,639 | | |
| 37,700 | |
Loss on unrealized foreign exchange | |
| (105,112 | ) | |
| 134,434 | |
Lease finance charge | |
| – | | |
| 36,733 | |
Loss (gain) on change in fair value of derivative liability | |
| – | | |
| 134,472 | |
Operating lease expense (Note 19) | |
| 485,087 | | |
| 489,796 | |
Shares issued for services (Note 16) | |
| 24,000 | | |
| 487,012 | |
Changes in operating assets and liabilities: | |
| | | |
| | |
Short-term investments and amounts held in trust | |
| (805,595 | ) | |
| 507,151 | |
Accounts receivable and other receivables | |
| 9,509,143 | | |
| (2,573,486 | ) |
Accrued Revenue | |
| 1,042,637 | | |
| 28,354,719 | |
Prepaid expenses and parts inventory | |
| 37,110 | | |
| (134,881 | ) |
Lease payments | |
| (524,197 | ) | |
| (536,114 | ) |
Prepaid manufacturing costs | |
| 1,027,455 | | |
| 8,832,429 | |
Accounts payable and accrued liabilities | |
| (19,156,391 | ) | |
| (20,575,906 | ) |
Warranty provision | |
| (1,559,656 | ) | |
| 1,335,751 | |
Contract liabilities | |
| (3,437,785 | ) | |
| (10,074,382 | ) |
Due to related parties | |
| (170,587 | ) | |
| 132,696 | |
Net Cash (Used in) Provided by Operating Activities | |
| (15,955,899 | ) | |
| 3,402,719 | |
| |
| | | |
| | |
Investing Activities: | |
| | | |
| | |
Acquisition of businesses, net of cash acquired | |
| – | | |
| 114,013 | |
Asset acquisition | |
| – | | |
| (681,957 | ) |
Additions of property and equipment | |
| (110,496 | ) | |
| (76,005 | ) |
Projects under development | |
| (1,854,676 | ) | |
| – | |
Short-term investments | |
| – | | |
| (915,779 | ) |
Net Cash Used in Investing Activities | |
| (1,965,172 | ) | |
| (1,559,728 | ) |
| |
| | | |
| | |
Financing Activities | |
| | | |
| | |
Proceeds from exercise of stock options (Note 16) | |
| 250 | | |
| 1,750 | |
Treasury stock (Note 16) | |
| (99,754 | ) | |
| – | |
Noncontrolling Interest (Note 11) | |
| – | | |
| – | |
Net Cash (Used in) Provided by Financing Activities | |
| (99,504 | ) | |
| 1,750 | |
Effect of Foreign Exchange Rate Changes on Cash | |
| 870,626 | | |
| 204,742 | |
Change in Cash and Cash Equivalents | |
| (17,149,949 | ) | |
| 2,049,483 | |
Cash and Cash Equivalents, Beginning of Year | |
| 23,436,417 | | |
| 21,386,934 | |
Cash and Cash Equivalents, End of Year | |
| 6,286,468 | | |
| 23,436,417 | |
| |
| | | |
| | |
Non-Cash Investing and Financing Activities, excluded in above: | |
| | | |
| | |
Common stock issuable in acquisition | |
| – | | |
| 525,000 | |
Consideration accrued for acquisition, net of imputed discount | |
| – | | |
| 1,516,985 | |
Right of use assets and lease obligations recognized | |
| – | | |
| – | |
Supplemental Disclosures: | |
| | | |
| | |
Interest paid | |
| – | | |
| – | |
Income taxes paid | |
| – | | |
| 9,632 | |
(The accompanying notes are an integral part of
these consolidated financial statements)
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
1. |
Nature of Operations and Basis of presentation |
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.
In connection with preparing consolidated
financial statements for each annual and interim reporting period, the Company is required to evaluate whether there are conditions or
events, considered in aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within
one year after the date that the financial statements are issued. Substantial doubt exists when conditions and events, considered in aggregate,
indicate that it is probable that a company will be unable to meet its obligations as they become due within one year after the date that
the consolidated financial statements are issued. This evaluation initially does not take into consideration the potential mitigating
effect of management’s plans and actions that have not been fully implemented as of the date that the financial statements are
issued. When substantial doubt exists, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial
doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is
only considered if both: (1) it is probable that the plans will be effectively implemented within one year after the date that the financial
statements are issued; and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise
substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements
are issued.
Generally, to be considered probable
of being effectively implemented, the plans must have been approved before the date that the financial statements are issued.
Management’s evaluation has concluded
that there are no known or currently foreseeable conditions or events that raise substantial doubt about the Company’s ability to
continue as a going concern within one year after the date these consolidated financial statements are issued. These consolidated financial
statements have therefore been prepared on the basis that the Company will continue as a going concern.
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.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
2. |
Restatement of financial statements |
Revenue recognition and cost of
goods sold
In 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 revenue recognition
accounting policy. In previous accounting periods, the Company identified three distinct performance obligations for the sale of marine
scrubbers: certified design and engineering work, acceptance of delivered equipment to customers, and acceptance of commissioned equipment.
These three components were determined to be separately identifiable within the contracts. However, based on further analysis of our marine
scrubber sale contracts and a review of the five-step revenue recognition model, the Company has now concluded that the three components
do not meet the definition of being “distinct” according to ASC 606-10-25-14. Customers purchase the entire marine scrubber
system and do not benefit from the separate components on their own. Therefore, a single performance obligation is appropriate.
According 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 under English law, the customers are contractually and legally obliged to pay for performance
completed to date that covers cost plus a reasonable profit margin. Therefore, the Company concluded that revenue from the sale of marine
scrubbers should be recognized over time versus at points in time for the original three performance obligations. The Company recognizes
revenue based on the input method and it is the change in the cost of goods sold (using a percentage of costs to complete) that has driven
the change in revenues.
As
part of our analysis of our revenue recognition and cost of goods sold for previous periods, we also identified $2,233,792 of prepaid
manufacturing costs that had remained on our balance sheet after contract modifications in February 2021. These amounts have been written
off and included in cost of goods sold for the year ended March 31, 2021.
The impact of the change to revenue
recognition resulted in a change to the timing of recognition of revenues and related cost of goods for scrubber sales. The impact on
the opening deficit at March 31, 2020 was a reduction of $2,353,912. For the year ended, March 31, 2021, revenues decreased by $8,795,042
and the related cost of goods sold decreased by $5,803,538 for a net reduction of $2,991,504 to net income.
Reclassification of cost of goods
sold
The Company has reassessed its presentation
of cost of goods sold.
The Company has reassessed its presentation
of cost of goods sold and has identified the following costs that should be presented as part of costs of goods
sold as they relate to either obtaining or fulfilling revenue contracts with customers:
| - | amortization expenses associated with patents and technical information; |
| | |
| - | marine sales commission costs previously included in Management and technical consulting fees related
to initiating its revenue contracts; |
| | |
| - | certain salaries previously included in Salaries and wages and
technical consulting fees previously included in Management and technical consulting fees that it has determined are appropriate to
present within cost of goods sold as they are considered to relate to personnel assisting in the fulfillment of the Company’s
obligations under its revenue contracts. |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
2. |
Restatement
of financial statements (continued) |
Effects of adjustments on the restated
financial statements
The correction of these errors and
the restatement adjustments for these changes to the Company’s previously issued audited annual consolidated financial statements
are shown in the table below, and the previously issued unaudited quarterly consolidated financial statements are shown in Note 22 to
the financial statements.
The impact of the change to revenue
recognition resulted in earlier recognition of revenues and related cost of goods sold for scrubber sales. The impact on the opening deficit
at March 31, 2020 was a reduction of $ 2,353,912. For the year-ended March 31, 2021, revenues decreased by $8,795,042 and the related
cost of goods sold decreased by $5,803,538 for a net reduction of $2,991,504 to net income.
CONSOLIDATED BALANCE SHEET(S) | |
As Previously Reported $ | | |
Adjustments
$ | | |
As Restated
$ | |
AS AT MARCH 31, 2021 | |
| | |
| | |
| |
Accrued revenue* | |
| – | | |
| 1,574,584 | | |
| 1,574,584 | |
Prepaid manufacturing costs** | |
| 4,329,607 | | |
| (3,264,142 | ) | |
| 1,065,465 | |
Total Current Assets | |
| 41,228,286 | | |
| (1,689,558 | ) | |
| 39,538,728 | |
Total Assets | |
| 64,423,777 | | |
| (1,689,558 | ) | |
| 62,734,219 | |
Accounts payable and accrued liability | |
| 24,486,138 | | |
| 970,698 | | |
| 25,456,836 | |
Contract liabilities | |
| 13,603,559 | | |
| (2,022,665 | ) | |
| 11,580,894 | |
Total Current Liabilities | |
| 41,180,588 | | |
| (1,051,967 | ) | |
| 40,128,621 | |
Total Liabilities | |
| 45,297,219 | | |
| (1,051,967 | ) | |
| 44,245,252 | |
Deficit | |
| (74,140,257 | ) | |
| (637,591 | ) | |
| (74,777,848 | ) |
Total Stockholders’ Equity | |
| 19,126,558 | | |
| (637,591 | ) | |
| 18,488,967 | |
Total Liabilities and Stockholders’ Equity | |
| 64,423,777 | | |
| (1,689,558 | ) | |
| 62,734,219 | |
AS AT MARCH 31, 2020 | |
| | | |
| | | |
| | |
Deficit | |
| (75,321,335 | ) | |
| 2,353,912 | | |
| (72,967,423 | ) |
| |
| | | |
| | | |
| | |
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME | |
| | |
| | |
| |
YEAR ENDED MARCH 31, 2021 | |
| | |
| | |
| |
Sales | |
| 61,413,520 | | |
| (8,795,042 | ) | |
| 52,618,478 | |
Cost of sales | |
| 39,828,410 | | |
| 2,167,946 | | |
| 41,996,356 | |
Gross profit | |
| 21,585,110 | | |
| (10,962,988 | ) | |
| 10,622,122 | |
Expenses | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 1,601,222 | | |
| (926,767 | ) | |
| 674,455 | |
Management and technical consulting | |
| 8,319,910 | | |
| (5,504,039 | ) | |
| 2,815,871 | |
Salaries and wages | |
| 6,364,656 | | |
| (1,540,678 | ) | |
| 4,823,978 | |
Net income (loss) for the period | |
| 1,181,078 | | |
| (2,991,503 | ) | |
| (1,810,425 | ) |
Net income (loss) per share, basic and diluted | |
| 0.03 | | |
| | | |
| (0.04 | ) |
| |
| | | |
| | | |
| | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |
| | | |
| | | |
| | |
YEAR ENDED MARCH 31, 2021 | |
| | | |
| | | |
| | |
Net income (loss) for the period | |
| 1,181,078 | | |
| (2,991,503 | ) | |
| (1,810,425 | ) |
Bad debt expense | |
| – | | |
| 705,454 | | |
| 705,454 | |
Finance interest | |
| – | | |
| (591,538 | ) | |
| (591,538 | ) |
Changes in operating assets and liabilities: | |
| | | |
| | | |
| | |
Accounts receivable and other receivable | |
| 4,868,895 | | |
| (7,442,381 | ) | |
| (2,573,486 | ) |
Accrued revenue* | |
| – | | |
| 28,354,719 | | |
| 28,354,719 | |
Contract asset | |
| 20,274,732 | | |
| (20,274,732 | ) | |
| – | |
Prepaid manufacturing costs** | |
| – | | |
| 8,832,429 | | |
| 8,832,429 | |
Accounts payable and accrued liability | |
| (14,108,132 | ) | |
| (6,467,774 | ) | |
| (20,575,906 | ) |
Contract liabilities | |
| (9,949,708 | ) | |
| (124,674 | ) | |
| (10,074,382 | ) |
Net cash flows provided by operations | |
| 3,402,719 | | |
| – | | |
| 3,402,719 | |
| * | Previously included within “Accounts receivable and other
receivable”. |
| ** | This balance was previously reported as “Contract assets”
which was defined in the financial statements as being payments to our manufacturing partners which are recorded as contract assets until
the equipment is manufactured to specifications and accepted by the customer. |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
3. |
Significant Accounting Policies |
| (a) | Basis of Presentation |
These consolidated 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. (“PGTESL”) | | 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 PGBEP |
All inter-company balances and transactions
have been eliminated upon consolidation.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
3. |
Significant Accounting
Policies (continued) |
The preparation of these consolidated
financial statements in conformity with United 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, prepaid manufacturing
costs, and contract 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.
| (c) | Property and Equipment |
Property and equipment is recorded at
cost. Depreciation is recorded at the following annual rates, net of any residual value determined.
Furniture and equipment |
|
5 years straight-line |
Leasehold improvements |
|
3 years straight-line |
Test Scrubber system |
|
20 years straight-line |
Computer equipment |
|
5 years straight-line |
Building |
|
20 years straight-line |
Intangible assets are stated at cost
less accumulated amortization and include patents, customer relationships, plant designs, and software licensing. The patents, which were
acquired in 2013, are being amortized on a straight-line over the estimated useful life of 17 years. The other intangible assets, which
were acquired in December 2019, are being amortized according to the following table. Intangible assets are reviewed annually for impairment.
Patents and technical information |
|
17 years straight-line |
Customer relationships |
|
6 years straight-line |
Plant designs |
|
6 years straight-line |
Software licensing |
|
10 years straight-line |
| (e) | Impairment of Long-lived Assets |
Our company reviews 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. If 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.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
3. |
Significant Accounting Policies (continued) |
| (f) | Financial Instruments and Fair Value Measurements |
ASC 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 1
Level 1 applies to assets or liabilities
for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 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 3
Level 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.
The Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash equivalents. As of March 31, 2022, and 2021, the
Company held $1,932,323 and $1,126,728, respectively in short term investment and amount in escrow. Accounts held in each U.S. institution
are insured by the Federal Deposit Insurance Company (“FDIC”) up to $250,000. At March 31, 2022 and March
31, 2021 the Company had $3,696,760 and $nil in excess of the FDIC insured limit, respectively.
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. A significant portion of our accounts receivable
is concentrated with a few major customers, For the year ended March 31, 2022, 90% (2021 – 98%) of the Company’s
accounts receivable was from one customer.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
3. |
Significant Accounting Policies (continued) |
The Company derives revenue from the
sale of products and delivery of services. Product revenue is generated from sale of marine scrubbers. Service revenue includes specific
services provided to marine scrubber systems as well as design and engineering services for Concentrated Solar Power (“CSP”).
Irrespective of the types of revenue 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, based on percent completion of the contract.
The Company determines revenue
recognition through the following five steps:
|
● |
Identification
of the contract, or contracts, with a customer |
|
● |
Identification
of the performance obligations in the contract |
|
● |
Determination
of the transaction price |
|
● |
Allocation
of the transaction price to the performance obligations in the contract |
|
● |
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 substance and collectability of consideration is probable.
Revenue recognition requires significant
judgements from management in regard to the determination of accounting treatment for contracts with customers. Management is required
to assess contracts with customers to the identify whether performance obligations in the contract are distinct and to determine whether
contract terms provide the Company with a basis to recognize revenue over time. As discussed in Note 2, the Company restated the March
31, 2021 financial statements to correctly account for its contracts with customers.
In previous accounting periods, the
Company identified three distinct performance obligations for the sale of marine scrubbers: certified design and engineering work, acceptance
of delivered equipment to customers, and acceptance of commissioned equipment. These three components were determined to be separately
identifiable from the contracts. However, based on further analysis of our marine scrubber sale contracts and a review of the five-step
revenue recognition model, the Company has now concluded that the three components do not meet the definition of being “distinct”
according to ASC 606-10-25-14. Customers purchase the entire marine scrubber system and do not benefit from the separate components on
their own. Therefore, as further described in Note 2, a single performance obligation is appropriate.
Contracts for the sale of products (marine
scrubbers) include a single performance obligation for revenue recognition as the separate components identified in the revenue contracts
are not considered distinct as the customer does not benefit from the separate components on their own. The single performance obligation
is recognized over time, based on percentage completion of the contract, due to the unique nature of the assets and the Company’s
ability to obtain payment for performance to date. The Company recognizes revenue based on the input method and records balances as Accrued
revenue to the extent that revenue has been recognized but the Company has not yet billed the customer.
In the case of settlement agreements
with customers where no continued performance obligation is required, the Company recognizes revenue based on consideration settled according
to the agreement.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
3. |
Significant Accounting Policies (continued) |
|
(g) |
Revenue Recognition (continued) |
A contract signed with one customer
has a significant financing component. 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 installments 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.
Contracts for specific services provided to marine scrubber
systems represent maintenance services. Contracts for CSP include design and engineering services provided to clients. Performance obligations
vary depending on the service contracts. All contracts are analyzed, and revenue recorded in accordance with the five-step revenue recognition
model.
The cost of providing services to our
customers is included in the cost of goods sold on the statement of operations and comprehensive income. Our cost of goods sold includes
direct costs associated with creating products and services. In addition, we have included within cost of goods sold other related costs
associated with obtaining or fulfilling our obligations in our revenue contracts, including sales commission, salaries and wages, technical
consulting costs, and amortization. We have adopted the practical expedient whereby costs associated with obtaining a revenue contract
can be expensed as incurred so long as the amortization period of the asset that the entity otherwise would have recognized is one year
or less.
| (i) | Contract Liabilities, Prepaid Manufacturing Costs, and Accrued Revenue |
Contractual arrangements with customers
for the sale of a scrubber unit generally provide for deposits and installments through the procurement and design phases of equipment
manufacturing. Amounts received from customers, which are not yet recorded as revenues under the Company’s revenue recognition policy
are presented as contract liabilities.
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 presented as prepaid manufacturing costs.
The Company presents the contract liabilities
and prepaid manufacturing costs on its balance sheet when one of the parties to the revenue contract and supply contract, respectively,
has performed before the other.
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.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
3. |
Significant Accounting Policies (continued) |
The Company reserves a 2% warranty provision
on the completion of a contract following the commissioning of marine 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 delivery 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.
The Company accounts for income
taxes using the asset and liability method. The asset and liability method provides that deferred income tax assets and liabilities
are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of
assets and liabilities, and for operating loss and tax credit carry-forwards. Deferred income tax assets and liabilities are
measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The
Company records a valuation allowance to reduce deferred income tax assets to the amount that is believed more likely than not to be
realized.
The Company provides for interest and
potential administrative penalties where management has assessed that the probability of assessment is greater than 50%. Interest and
penalties assessed or expected to be assessed by tax authorities are included in other expenses for the period of $50,553 (2021 - $nil).
| (l) | Noncontrolling Interest |
The Company owns a 50% controlling interest
in its subsidiary Pacific Green Battery Energy Parks 1 Ltd. Green Power Reserves Limited owns the remaining 50% nonredeemable noncontrolling
interests. Noncontrolling interests are recorded as a separate component of equity. Net income attributable to noncontrolling interests
is a component of consolidated net income.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
3. |
Significant Accounting Policies (continued) |
| (m) | Foreign Currency Translation |
The Company’s functional and reporting
currency is the United States dollar. The functional currencies of PGCD, PGEP, PGEST, PGETA, PGMG, PGMT US, PGTA, PGTESL, PGTME,
PGST, PGTAL, PGT Can, PGTIL, PGTU, and PGWT are United States dollar. The functional currency of ENGIN and GNPE is Chinese Yuan. PGESU,
PGBEP, Innoergy, and Richborough use the United Kingdom Pound as their functional currency. The functional currency of PGTAPL is Australian
dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance
sheet date. Non-monetary assets, liabilities, and items recorded in income arising from transactions denominated in foreign currencies
are translated at rates of exchange in effect at the date of the transaction. Gains and losses arising on translation or settlement of
foreign currency denominated transactions or balances are included in the determination of income.
The accounts of ENGIN, GNPE, PGESU,
PGBEP, PGTAPL, Innoergy, and Richborough are translated to United States dollars using the current rate method. Accordingly, assets and
liabilities are translated into United States dollars at the period end exchange rate while revenue and expenses are translated at the
average exchange rates during the period. Related exchange gains and losses are included in a separate component of stockholders’
equity as accumulated other comprehensive income.
| (n) | Research and Development |
Research and development costs are charged
as operating expenses as incurred.
| (o) | Stock-based compensation |
The 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. The Company accounts for forfeitures
in share-based compensation expense as they occur.
Subsequent to the adoption of ASU 2018-07
- Improvements to Nonemployee Share-Based Payment Accounting, the accounting for employee and non-employee stock options is now aligned.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
3. |
Significant Accounting Policies (continued) |
| (p) | Earnings (Loss) Per Share |
The Company computes net income (loss)
per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS)
on the face of the consolidated statement of operations. Basic EPS is computed by dividing net income (loss) (numerator) by the weighted
average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential options and warrants
outstanding during the period using the treasury stock method and convertible debenture using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock
options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at March 31, 2022, the Company
had 225,000 (2021 – 2,890,000) anti-dilutive shares outstanding.
| (q) | Comprehensive Income (Loss) |
Comprehensive income (loss) consists
of net income (loss) and items in other comprehensive income (loss) that are excluded from net income or loss. As at March 31, 2022 and
2021, other comprehensive income (loss) includes cumulative translation adjustments for changes in foreign currency exchange rates during
the period.
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.
| (s) | Goodwill |
| | |
| | The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business, with the residual purchase price recorded as goodwill. Goodwill is not amortized but is evaluated annually for impairment at the reporting unit level or when indicators of a potential impairment are present. When goodwill is reviewed for impairment, the Company may elect to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Alternatively, the Company may bypass this step and use a fair value approach to identify potential goodwill impairment and, when necessary, measure the amount of impairment. The Company uses a discounted cash flow model to determine the fair value of reporting units, unless there is a readily determinable fair market value. |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
3. |
Significant Accounting Policies (continued) |
| (t) | 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.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
4. |
Short-term Investments and amounts in escrow |
At March 31, 2022, the Company has
a $60,837 (CAD $76,013) (March 31, 2021 – $60,408 (CAD $75,938)) 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 March 31, 2022, the Company has
$nil (March 31, 2021 – 915,779 (RMB – 6,000,000)) in short term investment.
At March 31, 2022, the Company’s
solicitor is holding $1,871,486 (March 31, 2021 – $150,541) relating to proceeds under customer contracts to be released upon satisfying
performance obligations.
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 March 31, 2021, 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 through fiscal 2022. The current portion presented below reflects
the minimum expected payments per the lease arrangement for the next twelve months for the year ended March 31, 2021.
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.
| |
March 31,
2022
$ | | |
March 31,
2021
$ | |
| |
| | | |
| | |
Current portion, expected within twelve months | |
| – | | |
| 406,366 | |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
6. |
Property and Equipment |
| |
Cost $ | | |
Accumulated amortization $ | | |
March 31, 2022 Net
carrying value $ | | |
March 31, 2021 Net
carrying value $ | |
| |
| | |
| | |
| | |
| |
Building | |
| 1,030,156 | | |
| (172,234 | ) | |
| 857,922 | | |
| 904,897 | |
Furniture and equipment | |
| 362,373 | | |
| (159,609 | ) | |
| 202,764 | | |
| 186,186 | |
Computer equipment | |
| 17,273 | | |
| (12,905 | ) | |
| 4,368 | | |
| 10,040 | |
Leasehold improvements | |
| 109,849 | | |
| (90,448 | ) | |
| 19,401 | | |
| 45,944 | |
Test scrubber system | |
| 138,599 | | |
| (56,813 | ) | |
| 81,786 | | |
| 82,761 | |
| |
| | | |
| | | |
| | | |
| | |
Total | |
| 1,658,250 | | |
| (492,009 | ) | |
| 1,166,241 | | |
| 1,229,828 | |
The company recorded $210,292 in depreciation
expense on property and equipment for the year ended March 31, 2022 (2021 – $184,975).
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
| |
Cost $ | | |
Accumulated amortization $ | | |
Cumulative impairment $ | | |
March 31, 2022 Net
carrying value $ | | |
March 31, 2021 Net
carrying value $ | |
| |
| | |
| | |
| | |
| | |
| |
Patents and technical information | |
| 35,852,556 | | |
| (8,304,414 | ) | |
| (20,457,255 | ) | |
| 7,090,887 | | |
| 7,968,355 | |
Backlogs | |
| 98,599 | | |
| (60,899 | ) | |
| (37,700 | ) | |
| – | | |
| – | |
Customer relationships | |
| 247,345 | | |
| (90,495 | ) | |
| (156,850 | ) | |
| – | | |
| 190,052 | |
Plant designs | |
| 3,918,414 | | |
| (1,433,625 | ) | |
| (2,484,789 | ) | |
| – | | |
| 3,010,769 | |
Software licensing | |
| 12,830 | | |
| (3,969 | ) | |
| – | | |
| 8,861 | | |
| 11,348 | |
Total | |
| 40,129,744 | | |
| (9,893,402 | ) | |
| (23,136,594 | ) | |
| 7,099,748 | | |
| 11,180,524 | |
The Company recorded $1,574,594 of
amortization expense on intangible assets for the year ended March 31, 2022 (2021 – $1,601,222). Due to the Covid-19 situation in
China being both prolonged and severe, the Company’s Chinese subsidiary (“Engin”) was unable to pursue business development
and selling opportunities throughout fiscal years 2021 and 2022 as it had originally envisaged. Despite downsizing its engineering team,
Engin was unable to avoid making losses. The losses provided an impairment trigger event, and Engin’s intangible assets were assessed
using an undiscounted cash forecast based on management’s realistic projections of Engin’s revised sales opportunities. The
Company concluded that the fair value of the undiscounted net cash receipts was less than the carrying value, and so also recorded an
impairment of $2,641,639 on customer relationships and plant designs for the year ended March 31, 2022 (2021 – $37,700 impairment
charge on backlogs). The Company recorded this impairment in expenses, rather than cost of goods sold, as there were no associated sales
to the customers comprising the customer relationships nor of the specific plant designs owned by Engin. (Engin’s goodwill was also
impaired – see Note 8.)
The Company has allocated $877,468
(2021 - $926,767) of amortization of patents and technical information to cost of goods sold. The amount remaining in amortization
expense is $697,126 (2021 - 674,455).
Future amortization of intangible assets
is as follows:
Fiscal year | |
$ | |
| |
| |
2023 | |
| 880,132 | |
2024 | |
| 880,132 | |
2025 | |
| 880,132 | |
2026 | |
| 878,272 | |
2027 | |
| 877,452 | |
Thereafter | |
| 2,703,628 | |
Total | |
| 7,099,748 | |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
8. | 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. 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 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).
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.
Due to the Covid-19 situation in China being both prolonged
and severe, Engin was unable to pursue business development and selling opportunities throughout fiscal years 2021 and 2022 as it had
originally envisaged. Despite downsizing its engineering team, Engin was unable to avoid making losses. The losses provided an impairment
trigger event, and Engin’s goodwill was assessed using a discounted cash forecast based on management’s realistic projections
of Engin’s revised sales opportunities. For the year ended March 31, 2022, the Company recorded a $3,870,224 impairment charge on
the full amount of Engin goodwill as management’s estimated fair value of the reporting unit was less than its carrying value determined
during impairment testing. Engin’s goodwill was translated at exchange rate as of March 31, 2022. (Engin’s intangible assets
were also impaired – see Note 7.)
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
9. |
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.
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. 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. Innoergy was originally acquired to provide a strategic access to the
UK battery energy storage system (“BESS”) market, with the aim of purchasing batteries from China and selling to BESS developers
in the UK, and possibly the European mainland. Due to many factors, including developers’ lack of funding and delays in planning
permission, Innoergy failed to gain traction in that particular market and the Innoergy managers and the sales team left the business.
For the year ended March 31, 2022, the Company took the decision to cease further sales and development activity in Innoergy and recorded
an impairment charge on the full amount of Innoergy goodwill of $549,091 as management’s estimated fair value of the reporting unit was
less than its carrying value determined during impairment testing. The Company also de-recognized the liability for the fair value of
the conditional payment of $23,920, as the conditions for which are no longer achievable.
Despite management recognizing the
specific impairments in Innoergy, as noted above, the Company continues to make significant progress in the BESS market, in the role of
developer, through its Pacific Green Energy Storage (UK) Limited, Pacific Green Battery Energy Parks 1 Limited and Richborough Energy
Park Limited subsidiaries.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
10. |
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 and third payments
are planned to be made during the years ended March 31, 2023 and 2024, respectively.
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. The consideration was allocated on a relative fair value basis to the assets
acquired and liabilities assumed. For the year ended March 31, 2022, additions of $1,854,676 to project under development were recorded.
11. |
Noncontrolling
Interest |
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 fifty 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 30, 2022 | |
| 10,361,701 | |
Net income attributable to noncontrolling interest, March 31,2022 | |
| nil | |
| |
| | |
Non-redeemable noncontrolling interest, March 31, 2022 | |
| 10,361,701 | |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
12. |
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 year ended March 31, 2022 and March 31, 2021 is as follows:
|
|
2022 $ |
|
|
2021
(As Restated –
note 2) $ |
|
|
|
|
|
|
|
|
Products |
|
|
12,680,103 |
|
|
|
50,728,436 |
|
Services |
|
|
2,759,096 |
|
|
|
1,890,042 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
15,439,199 |
|
|
|
52,618,478 |
|
Revenue from services include specific
services provided to marine scrubber systems as well as design and engineering services for CSP. Contracts for specific services provided
to marine scrubber systems represent maintenance services. Contracts for CSP 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 year
ended March 31, 2022 and 2021 is as follows:
| |
2022
$ | | |
2021
$ | |
| |
| | |
| |
Specific services provided to marine scrubber systems | |
| 1,478,127 | | |
| 1,421,777 | |
Design and engineering services for CSP | |
| 1,280,969 | | |
| 468,265 | |
| |
| | | |
| | |
Total | |
| 2,759,096 | | |
| 1,890,042 | |
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
payment terms with customers. As a result of the timing differences between customer payments and percentage of completion of the contract,
contractual assets and contractual liabilities have been recognized.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
12. | Sales,
Prepaid Manufacturing Costs, Cost of Goods Sold, and Contract Liabilities (continued) |
Changes in the Company’s accrued
revenue, prepaid manufacturing costs, and contract liabilities for the year are noted as below:
| |
Accrued Revenue $ | | |
Prepaid Manufacturing Costs $ | | |
Sales (Cost of Goods Sold) $ | | |
Contract Liabilities $ | |
| |
| | |
| | |
| | |
| |
Balance, March 31, 2020 * | |
| 29,929,300 | | |
| 9,897,894 | | |
| | | |
| (21,655,276 | ) |
| |
| | | |
| | | |
| | | |
| | |
Customer receipts and receivables* | |
| – | | |
| – | | |
| – | | |
| (40,654,054 | ) |
Scrubber sales recognized in revenue* | |
| | | |
| | | |
| 50,728,436 | | |
| 50,728,436 | |
Payments and accruals under contracts* | |
| (28,354,716 | ) | |
| 31,983,286 | | |
| – | | |
| – | |
Cost of goods sold recognized in earnings * | |
| – | | |
| (40,815,715 | ) | |
| (40,815,715 | ) | |
| – | |
| |
| | | |
| | | |
| | | |
| | |
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 | ) |
Cost of goods sold for the year ended
March 31, 2022 and 2021 is comprised as follows:
| |
2022
$ | | |
2021 (As restated – note
2)
$ | |
| |
| | |
| |
Scrubber costs recognized | |
| 485,019 | | |
| 32,844,231 | |
Salaries and wages | |
| 478,217 | | |
| 1,772,761 | |
Amortization of intangibles | |
| 877,468 | | |
| 926,767 | |
Commission type costs | |
| 664,875 | | |
| 5,271,956 | |
Design and engineering services for CSP | |
| 815,911 | | |
| 333,939 | |
Specific services provided to marine scrubber systems | |
| 1,235,350 | | |
| 846,702 | |
| |
| | | |
| | |
Total | |
| 4,556,840 | | |
| 41,996,356 | |
As of March 31, 2022, Contract liabilities
included $8,098,009 (March 31, 2021 - $11,450,485) aggregate cash receipts from one customer relating to nineteen vessels. At March 31,
2021 all nineteen had been postponed under the terms of a Postponement Agreement dated February 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.
$59,335 of the total contract liability at March 31, 2022 relates to these six vessels and will be released in full to revenue during
the year ended March 31, 2023, as the revenue is recognized on each vessel. The remaining contract liability balance was mainly related
to the other thirteen postponed vessels in the Postponement 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.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
13. | Accounts
payable and accrued liabilities |
| |
March 31, 2022 $ | | |
March 31, 2021 (As restated –
note 2) $ | |
| |
| | |
| |
Accounts payable | |
| 757,102 | | |
| 3,961,965 | |
Accrued liabilities | |
| 8,567,795 | | |
| 21,261,088 | |
Loan payable | |
| 55,003 | | |
| 68,975 | |
Payroll liabilities | |
| 214,887 | | |
| 164,808 | |
Total short-term accounts payable and accrued liabilities | |
| 9,594,787 | | |
| 25,456,836 | |
Long term accrued liabilities | |
| – | | |
| 3,294,342 | |
Balance, end of year | |
| 9,594,787 | | |
| 28,751,178 | |
During the year ended March 31, 2022,
the Company recorded a non-cash warranty recovery of $731,529 (March 31, 2021 – expense of $1,228,092) 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. During the year ended March 31, 2022, the Company used
2% to calculate warranty provision (2021 – 2%) based on management’s best estimate.
| |
March 31, 2022 $ | | |
March 31, 2021 $ | |
| |
| | |
| |
Balance, beginning of year | |
| 2,425,107 | | |
| 1,089,356 | |
Warranty expense | |
| (731,529 | ) | |
| 1,228,092 | |
Expenses (recoveries) / costs | |
| (828,127 | ) | |
| 107,659 | |
| |
| | | |
| | |
Balance, end of year | |
| 865,451 | | |
| 2,425,107 | |
15. |
Related Party Transactions |
| (a) | As
at March 31, 2022, the Company owed $4,250 (March 31, 2021 – $174,837) to directors or companies controlled by directors of the
Company. The amount owing is unsecured, non-interest bearing, and due on demand. |
| (b) | During
the year ended March 31, 2022, the Company incurred $260,479 (March 31, 2021 – $1,124,099) in commissions to companies controlled
by a director of the Company. These were presented in cost of goods sold. |
| (c) | During the year ended March 31, 2022, the Company incurred
$679,000 (March 31, 2021 – $623,405) in consulting fees and bonus to companies controlled by a director of the Company. These were
presented in expenses. |
| (d) | During
the year ended March 31, 2022, the Company incurred $164,973 (March 31, 2021 – $231,090) in consulting fees to directors or companies
controlled by directors of the Company. These were presented in expenses. |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
Common stock issued and repurchased
during the year ended March 31, 2022:
| (a) | On
August 25, 2021, 25,000 stock options were exercised by an employee of the Company at the exercise price of $0.01 per share with an aggregate
value of $250. The Company issued 25,000 shares of common stock. |
| (b) | On
August 31, 2021, 11,321 common shares of the Company were issued to an employee in the Company’s as compensation with a fair value
of $2.12 per share totaling $24,000. |
| (c) | For
the year ended March 31, 2022, the Company implemented a share repurchase program and repurchased 56,162 shares with total value of $99,754. |
Common stock issued during the
year ended March 31, 2021:
| (a) | On
July 17, 2020, the Company issued 50,000 shares of common stock with an aggregate value of $69,500 to a former officer of the Company
as per the terms of an employment settlement agreement. |
| (b) | On
August 6, 2020, the Company issued 50,000 shares of common stock with a fair value of $62,500 pursuant to a conversion of $20,000 in
principal and $42,550 in derivative liability relating to the November 10, 2015 convertible debenture. The fair value of the common stock
was determined based on closing price of the Company’s common stock of $1.25 per share. This transaction resulted in a gain on
extinguishment of debt of $50. |
| (c) | On
August 31, 2020, 175,000 stock options were exercised by a director of the Company at the exercise price of $0.01 per share with an aggregate
value of $1,750. The Company issued 175,000 shares of common stock from the treasury. |
| (d) | On
September 28, 2020, the Company issued 95,239 shares of common stock with an aggregate value of $95,239 under the terms of a sales commission
agreement. |
| (e) | On October 19, 2020, the Company issued 525,000 shares of
common stock with an aggregate value of $577,500 as part of the acquisition of Innoergy. (f)
On October 19, 2020, the Company issued 100,000 shares of common stock with an aggregate value of $100,000 to a former director in recognition
of his service. |
| (g) | On
January 11, 2021, the Company issued 228, 980 shares of common stock with a fair value of $354,921 pursuant to a conversion of $10,000
in principal and $344,921 in derivative liability relating to the November 10, 2015 convertible debenture. The fair value of the common
stock was determined based on closing price of the Company’s common stock of $1.55 per share. This transaction resulted in a gain
of debt of $3,077. |
| (h) | On
March 30, 2021, the Company issued 106,375 shares of common stock with a fair value of $222,304 for investor relations. |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
The 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 | |
| |
| | | |
| | | |
| | | |
| | |
Granted | |
| 100,000 | | |
| 1.01 | | |
| | | |
| | |
Exercised | |
| (175,000 | ) | |
| 0.01 | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
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 | |
| 537,500 | | |
| 0.56 | | |
| 1.43 | | |
| 170,125 | |
Balance, March 31, 2022, vested and Exercisable | |
| 472,500 | | |
| 0.49 | | |
| 1.20 | | |
| 183,425 | |
Additional information regarding stock options outstanding
as at March 31, 2022 is as follows:
Issued and Outstanding | |
Number of shares | | |
Weighted average remaining contractual life (years) | | |
Exercise price $ | |
| | |
| | |
| |
312,500 | | |
| 0.75 | | |
| 0.01 | |
25,000 | | |
| 0.29 | | |
| 2.26 | |
25,000 | | |
| 1.79 | | |
| 1.03 | |
50,000 | | |
| 2.00 | | |
| 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 | | |
| | | |
| | |
Unless otherwise noted, the Company
estimates the fair value of its stock options using the Black-Scholes option pricing model, assuming no expected dividends.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
17. | Stock
Options (continued) |
The Company agreed to an extension
of 312,500 stock options issued to the Company’s former President which were due to expire August 31, 2021. The stock options have
an exercise price of $0.01 per share and have been extended to December 31, 2022. The extension of the stock options has not resulted
in any material incremental fair value to be recorded.
On August 25, 2021, 25,000 stock options
were exercised by an employee of the Company at the exercise price of $0.01 per share with an aggregate value of $250. The Company issued
25,000 shares of common stock from the treasury.
On January 15, 2022, the Company granted
25,000 stock options to an officer of the Company. These options are exercisable at a 25% discount to the average of the 30 trading days
immediately prior to January 15, 2022. The options are exercisable on January 15, 2023 for a period of 3 years or 12 months following
the termination of officer’s employment contract dated January 15, 2020, whichever is earlier.
On March 15, 2022, the Company granted
100,000 stock options to a director at the exercise price of $1.20. 60,000 options are exercisable on March 15, 2022 for a period of 3
years. 40,000 options are exercisable on August 1, 2022 for a period of 3 years.
The following weighted average assumptions
were used in the determination of fair value using the Black-Scholes option pricing model:
| |
2022 | | |
2021 | |
| |
| | |
| |
Risk-free interest rate | |
| 1.90 | % | |
| 1.54 | % |
Expected life (in years) | |
| 3.12 | | |
| 3.00 | |
Expected volatility | |
| 129 | % | |
| 134 | % |
The fair value of stock options vested
and recognized during the year ended March 31, 2022 was $77,897 (2021 – $207,350), which was recorded as additional paid-in capital
and charged to salaries.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(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.
| |
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 | |
| |
Year Ended March 31, 2022 | |
| |
North America $ | | |
Europe $ | | |
Asia $ | | |
South America $ | | |
Other $ | | |
Total $ | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Revenues by customer region | |
| 3,450 | | |
| 13,919,100 | | |
| 873,755 | | |
| 606,219 | | |
| 36,675 | | |
| 15,439,199 | |
COGS by customer region | |
| (2,883 | ) | |
| (3,541,076 | ) | |
| (801,242 | ) | |
| (180,988 | ) | |
| (30,651 | ) | |
| (4,556,840 | ) |
Gross Profit by customer region | |
| 567 | | |
| 10,378,024 | | |
| 72,513 | | |
| 425,231 | | |
| 6,024 | | |
| 10,882,359 | |
GP% by customer region | |
| 16 | % | |
| 75 | % | |
| 8 | % | |
| 70 | % | |
| 16 | % | |
| 70 | % |
| |
March 31, 2021 | |
| |
North
America $ | | |
Europe $ | | |
Asia $ | | |
Total $ | |
| |
| | |
| | |
| | |
| |
Property and equipment | |
| 134,594 | | |
| 180,304 | | |
| 914,930 | | |
| 1,229,828 | |
Intangible Assets | |
| 7,968,355 | | |
| – | | |
| 3,212,169 | | |
| 11,180,524 | |
Right of use assets | |
| 49,278 | | |
| 837,533 | | |
| 232,138 | | |
| 1,118,949 | |
| |
| | | |
| | | |
| | | |
| | |
| |
| 8,152,227 | | |
| 1,017,837 | | |
| 4,359,237 | | |
| 13,529,301 | |
| |
Year Ended March 31, 2021
(As restated – note 2) | |
| |
Europe
$ | | |
Asia
$ | | |
Total
$ | |
| |
| | |
| | |
| |
Revenues by customer region | |
| 52,147,703 | | |
| 470,775 | | |
| 52,618,478 | |
COGS by customer region | |
| (41,660,922 | ) | |
| (335,434 | ) | |
| (41,996,356 | ) |
Gross Profit by customer region | |
| 10,486,781 | | |
| 135,341 | | |
| 10,622,122 | |
GP% by customer region | |
| 20 | % | |
| 29 | % | |
| 20 | % |
For the year ended March 31, 2022,
82% (2021 – 84%) of the Company’s revenues were derived from the largest customer. 6% (2021 – 13%) of the Company’s
revenues were derived from the second largest customer.
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
| (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. |
Effective
July 1, 2020, the Company terminated its operating lease in Lysaker, Norway as the company has ceased operations of its Norway subsidiary
Long-term
premises lease |
|
Lease
commencement |
|
Lease
expiry |
|
Term
(years) |
|
Discount rate* |
|
|
|
|
|
|
|
|
|
London, United Kingdom |
|
April 1, 2019 |
|
December 25, 2023 |
|
3.75 |
|
4.50% |
North Vancouver, Canada |
|
December 1, 2019 |
|
August 31, 2022 |
|
1.75 |
|
4.50% |
Shanghai, China |
|
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. |
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 year ended March 31, 2022: | |
| |
Operating lease expense * | |
$ | 485,087 | |
* | Including
right of use amortization and imputed interest. Lease payments include maintenance, operating expense, and tax. |
The Company has entered into premises lease agreements with
minimum annual lease payments expected over the next five years of the lease as follows:
Fiscal Year | |
$ | |
| |
| |
2023 | |
| 501,906 | |
2024 | |
| 276,296 | |
2025 | |
| 67,919 | |
2026 | |
| 11,320 | |
Total future minimum lease payments | |
| 857,441 | |
Imputed interest | |
| (43,401 | ) |
Operating lease obligations | |
| 814,040 | |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
19. | Commitments
(continued) |
| (b) | 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. |
| (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 23, 2021. |
Neither party had funded the joint venture
at March 31, 2022 and there has been no revenue and expense associated with it for the year ending March 31, 2022. Since then, the Company
has paid in share capital and loans amounting to $110,000 to fund operational expenses from April 1, 2022.
| (d) | On May 11, 2022 the Company announced it had entered into a Subscription and Shareholders Agreement with a third party investor, who has committed $16 million (£13 million) of equity funds to the 99.98MW Richborough Energy Park BESS project. On June 21, 2022 the Company announced it had reached Financial Close for $34.90 million (£28.25 million) of senior debt for the Richborough project. The senior debt, in conjunction with the equity investment, will provide the Company with the funding to bring the battery park to commercial operations in June 2023. 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. 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. On June 8, 2022 the Company announced it had entered an energy optimization agreement with Shell Energy Europe Limited to operate the facility during commercial operations phase. |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(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 components of income before income taxes by U.S. and foreign jurisdictions were as follows:
| |
2022
$ | | |
2021 (As restated –
note 2) $ | |
| |
| | |
| |
United States | |
| (11,158,236 | ) | |
| 532,343 | |
Foreign | |
| 405,778 | | |
| (2,342,768 | ) |
Net income (loss) before taxes | |
| (10,752,458 | ) | |
| (1,810,425) | |
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.
| |
2022
$ | | |
2021 (As restated –
note 2) $ | |
| |
| | |
| |
Net income (loss) before taxes | |
| (10,752,458 | ) | |
| (1,810,425 | ) |
Statutory tax rate | |
| 21 | % | |
| 21 | % |
| |
| | | |
| | |
Expected income tax expense (recovery) | |
| (2,258,016 | ) | |
| (380,189 | ) |
Permanent differences and other | |
| 545,959 | | |
| 2,289,528 | |
Foreign tax rate difference | |
| 17,390 | | |
| (28,961 | ) |
Change in valuation allowance | |
| 1,694,667 | | |
| (1,880,378 | ) |
| |
| | | |
| | |
Income tax provision | |
| – | | |
| – | |
| |
| | | |
| | |
Current | |
| – | | |
| – | |
Deferred | |
| – | | |
| – | |
| |
| | | |
| | |
Income tax provision | |
| – | | |
| – | |
As at March 31, 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. Deferred income taxes reflect the tax effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes. Deferred income tax assets and liabilities at March 31,
2022 and 2021 are primarily comprised of the following:
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
20. | Income
Taxes (continued) |
| |
2022
$ | | |
2021 (As restated –
note 2) $ | |
| |
| | |
| |
Net operating losses carried forward | |
| 4,883,996 | | |
| 3,459,282 | |
Tax basis of intangibles and depreciable assets in excess of book value | |
| (257,948 | ) | |
| (230,624 | ) |
Lease receivable without tax basis | |
| (143,127 | ) | |
| (286,254 | ) |
Warranty and accruals timing differences | |
| 339,931 | | |
| 185,781 | |
Deferred tax asset | |
| 4,822,852 | | |
| 3,128,185 | |
Valuation allowance | |
| (4,822,852 | ) | |
| (3,128,185 | ) |
| |
| | | |
| | |
Net deferred tax asset | |
| – | | |
| – | |
On December 22, 2017, the US federal
tax legislation commonly known as the Tax Cut and Jobs Act (TCJA) was signed into law. The TCJA made major changes to the Internal Revenue
Code, including reducing the US federal income corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. Under
the TCJA, for net operating losses (“NOLs”) arising in taxable years beginning after December 31, 2017, the TCJA limits a
US corporate taxpayer’s ability to utilize NOL carryforwards to 80% of the taxpayer’s taxable income (as modified by the CARES
Act, as described below). In addition, NOLs arising in taxable years beginning after December 31, 2017 can be carried forward indefinitely,
with no carryback. NOLs generated in tax years beginning before January 1, 2018 are not subject to the taxable income limitation and generally
has a 20 year carryforward. On March 27, 2020 the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the
CARES Act). The CARES Act introduced various tax changes, including granting a five-year carry back period for NOLs arising in taxable
years beginning after December 31, 2017 and before January 1, 2021, temporary suspension of the 80% taxable income limitation on the use
of NOLs arising in tax years beginning after December 31, 2017 but before January 1, 2021.
The Company estimates that is has accumulated
net operating losses of approximately $23,249,000, which were mainly incurred in the U.S. and United Kingdom and expire as follows:
| |
U.S. | | |
UK and Other | | |
Total | |
| |
$ | | |
$ | | |
$ | |
| |
| | |
| | |
| |
2036 | |
| 2,033,000 | | |
| – | | |
| 2,033,000 | |
2038 | |
| 897,000 | | |
| – | | |
| 897,000 | |
No expiration | |
| 15,427,000 | | |
| 4,892,000 | | |
| 20,319,000 | |
Total estimated tax losses | |
| 18,357,000 | | |
| 4,892,000 | | |
| 23,249,000 | |
We do not provide deferred taxes related
to the United States Generally Accepted Accounting Principles basis in excess of the outside tax basis in the investment in our foreign
subsidiaries to the extent such amounts relate to indefinitely reinvested earnings and profits of such foreign subsidiaries. Our indefinite
reinvestment determination is based on the future operational and capital requirements of our domestic and foreign operations. We expect
our international cash and cash equivalents will continue to be used for our foreign operations and therefore do not anticipate repatriating
these funds. We have estimated deferred tax liabilities relating to the outside tax basis of $nil.
| (a) | 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. |
| (b) | 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. |
| (c) | 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. |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
22. | Effects
of corrections of errors and restatement of quarterly financial statements (unaudited) |
Further to Note 2, the tables below
show the effects of correction of errors in the Company’s previously issued unaudited quarterly financial statements. The adjustments
for the periods presented relate to the same matters discussed in Note 2. Specifically, for each period:
| - | 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.
BALANCE SHEET
| |
June 30, 2021 | | |
June 30, 2020 | |
| |
As
Previously Reported $ | | |
Adjustments $ | | |
As
Restated $ | | |
As
Previously Reported $ | | |
Balance
sheet reclassification $ | | |
Adjustments $ | | |
As
Restated $ | |
ASSETS | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Accrued revenue (1) | |
| – | | |
| – | | |
| – | | |
| – | | |
| 1,826,287 | | |
| 15,142,142 | | |
| 16,968,429 | |
Prepaid manufacturing costs (2) | |
| 3,853,677 | | |
| (2,769,529 | ) | |
| 1,084,148 | | |
| 18,961,455 | | |
| – | | |
| (9,824,493 | ) | |
| 9,136,962 | |
Total Current Assets | |
| 35,533,308 | | |
| (2,769,529 | ) | |
| 32,763,779 | | |
| 55,141,251 | | |
| – | | |
| 5,317,650 | | |
| 60,458,901 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
(1) previously included within “Accounts
receivable and other receivable” | |
(2) previously described as “Contract
assets” | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Assets | |
| 56,927,908 | | |
| (2,769,529 | ) | |
| 54,158,379 | | |
| 78,342,418 | | |
| – | | |
| 5,317,650 | | |
| 83,660,068 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Current Liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accounts payable and accrued liabilities | |
| 21,690,414 | | |
| 364,495 | | |
| 22,054,909 | | |
| 35,915,513 | | |
| – | | |
| 4,616,593 | | |
| 40,532,106 | |
Contract liabilities | |
| 13,584,240 | | |
| (2,022,657 | ) | |
| 11,561,583 | | |
| 18,853,138 | | |
| – | | |
| 1,669,072 | | |
| 20,522,210 | |
Total Current Liabilities | |
| 38,056,285 | | |
| (1,658,162 | ) | |
| 36,398,123 | | |
| 56,906,612 | | |
| – | | |
| 6,285,666 | | |
| 63,192,278 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Liabilities | |
| 40,399,372 | | |
| (1,658,162 | ) | |
| 38,741,210 | | |
| 61,264,352 | | |
| – | | |
| 6,285,666 | | |
| 67,550,018 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Stockholders’ Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Deficit | |
| (76,928,183 | ) | |
| (1,111,367 | ) | |
| (78,039,550 | ) | |
| (73,832,654 | ) | |
| – | | |
| (968,016 | ) | |
| (74,800,670 | ) |
Total Stockholders’ Equity | |
| 16,528,536 | | |
| (1,111,367 | ) | |
| 15,417,169 | | |
| 17,078,066 | | |
| – | | |
| (968,016 | ) | |
| 16,110,050 | |
Total Liabilities and Stockholders’ Equity | |
| 56,927,908 | | |
| (2,769,529 | ) | |
| 54,158,379 | | |
| 78,342,418 | | |
| – | | |
| 5,317,650 | | |
| 83,660,068 | |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
22. | Effects
of corrections of errors and restatement of quarterly financial statements (unaudited) (continued) |
CONSOLIDATED
STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
| |
Three months ended June 30, 2021 | | |
Three months ended June 30, 2020 | |
| |
As
Previously Reported $ | | |
Adjustments $ | | |
As
Restated $ | | |
As
Previously Reported $ | | |
Adjustments $ | | |
As
Restated $ | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Revenue | |
| 2,653,439 | | |
| (1,330,189 | ) | |
| 1,323,250 | | |
| 28,496,361 | | |
| (5,285,955 | ) | |
| 23,210,406 | |
Cost of Goods Sold | |
| 1,702,480 | | |
| (181,471 | ) | |
| 1,521,009 | | |
| 16,456,899 | | |
| 3,351,725 | | |
| 19,808,624 | |
Gross Profit (Loss) | |
| 950,959 | | |
| (1,148,717 | ) | |
| (197,758 | ) | |
| 12,039,462 | | |
| (8,637,680 | ) | |
| 3,401,782 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 390,490 | | |
| (219,367 | ) | |
| 171,123 | | |
| 389,661 | | |
| (230,966 | ) | |
| 158,695 | |
Consulting fees, technical support, and commissions | |
| 1,054,353 | | |
| (308,801 | ) | |
| 745,552 | | |
| 5,510,011 | | |
| (4,699,616 | ) | |
| 810,395 | |
Salaries and wage expenses | |
| 1,401,980 | | |
| (146,773 | ) | |
| 1,255,207 | | |
| 2,202,387 | | |
| (385,169 | ) | |
| 1,817,218 | |
Operating Expenses | |
| 3,894,925 | | |
| (674,942 | ) | |
| 3,219,983 | | |
| 10,610,955 | | |
| (5,315,751 | ) | |
| 5,295,204 | |
Net Income / (Loss) for the period | |
| (2,787,926 | ) | |
| (473,776 | ) | |
| (3,261,702 | ) | |
| 1,488,681 | | |
| (3,321,928 | ) | |
| (1,833,247 | ) |
Comprehensive Income / (Loss) for the period | |
| (2,611,810 | ) | |
| (473,776 | ) | |
| (3,085,586 | ) | |
| 1,432,884 | | |
| (3,321,928 | ) | |
| (1,889,044 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted income (loss) per share | |
| (0.06 | ) | |
| | | |
| (0.07 | ) | |
| 0.03 | | |
| | | |
| (0.04 | ) |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
22. | Effects
of corrections of errors and restatement of quarterly financial statements (unaudited) (continued) |
BALANCE SHEET
| |
September 30, 2021 | | |
September 30, 2020 | |
| |
As
Previously Reported $ | | |
Adjustments $ | | |
As
Restated $ | | |
As Previously Reported
$ | | |
Balance
sheet reclassification $ | | |
Adjustments $ | | |
As
Restated $ | |
ASSETS | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Accrued revenue (1) | |
– | | |
– | | |
– | | |
– | | |
468,006 | | |
15,016,012 | | |
15,484,017 | |
Prepaid manufacturing costs (2) | |
| 3,868,678 | | |
| (2,828,375 | ) | |
| 1,040,303 | | |
| 18,409,820 | | |
| – | | |
| (11,322,288 | ) | |
| 7,087,532 | |
Total Current Assets | |
| 30,909,147 | | |
| (2,828,375 | ) | |
| 28,080,772 | | |
| 47,232,323 | | |
| – | | |
| 3,693,724 | | |
| 50,926,047 | |
(1) previously included
within “Accounts receivable and other receivable” | | |
| | |
(2) previously described
as “Contract assets” | | |
| | |
Total Assets | |
| 51,303,726 | | |
| (2,828,375 | ) | |
| 48,475,351 | | |
| 69,494,891 | | |
| – | | |
| 3,693,724 | | |
| 73,188,615 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Current Liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accounts payable and accrued liabilities | |
| 15,628,689 | | |
| 492,325 | | |
| 16,121,014 | | |
| 28,691,182 | | |
| – | | |
| 2,800,967 | | |
| 31,492,149 | |
Contract liabilities | |
| 19,038,435 | | |
| (2,022,658 | ) | |
| 17,015,777 | | |
| 15,879,562 | | |
| – | | |
| 500,363 | | |
| 16,379,925 | |
Total Current Liabilities | |
| 37,307,526 | | |
| (1,530,332 | ) | |
| 35,777,194 | | |
| 46,724,689 | | |
| – | | |
| 3,301,329 | | |
| 50,026,018 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Liabilities | |
| 38,870,300 | | |
| (1,530,332 | ) | |
| 37,339,968 | | |
| 50,727,986 | | |
| – | | |
| 3,301,329 | | |
| 54,029,315 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Stockholders’ Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Deficit | |
| (81,102,693 | ) | |
| (1,298,043 | ) | |
| (82,400,736 | ) | |
| (72,512,645 | ) | |
| – | | |
| 392,395 | | |
| (72,120,250 | ) |
Total Stockholders’ Equity | |
| 12,433,426 | | |
| (1,298,043 | ) | |
| 11,135,383 | | |
| 18,766,905 | | |
| – | | |
| 392,395 | | |
| 19,159,300 | |
Total Liabilities and Stockholders’ Equity | |
| 51,303,726 | | |
| (2,828,375 | ) | |
| 48,475,351 | | |
| 69,494,891 | | |
| – | | |
| 3,693,724 | | |
| 73,188,615 | |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
22. | Effects
of corrections of errors and restatement of quarterly financial statements (unaudited) (continued) |
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
| |
Three months ended September 30, 2021 | | |
Three months ended September 30, 2020 | |
| |
As
Previously Reported | | |
Adjustments | | |
As
Restated | | |
As
Previously Reported | | |
Adjustments | | |
As
Restated | |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Revenue | |
| 239,381 | | |
| (100,845 | ) | |
| 138,536 | | |
| 8,974,063 | | |
| 1,751,174 | | |
| 10,725,237 | |
Cost of Goods Sold | |
| 106,429 | | |
| 577,632 | | |
| 684,061 | | |
| 5,433,145 | | |
| 3,172,780 | | |
| 8,605,925 | |
Gross Profit (Loss) | |
| 132,952 | | |
| (678,476 | ) | |
| (545,524 | ) | |
| 3,540,918 | | |
| (1,421,606 | ) | |
| 2,119,312 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 391,188 | | |
| (219,367 | ) | |
| 171,821 | | |
| 389,675 | | |
| (230,966 | ) | |
| 158,709 | |
Consulting fees, technical support, and commissions | |
| 991,101 | | |
| (208,400 | ) | |
| 782,701 | | |
| 2,834,170 | | |
| (2,165,881 | ) | |
| 668,289 | |
Salaries and wage expenses | |
| 1,393,514 | | |
| (64,034 | ) | |
| 1,329,480 | | |
| 1,119,887 | | |
| (385,169 | ) | |
| 734,718 | |
Operating Expenses | |
| 4,545,105 | | |
| (491,801 | ) | |
| 4,053,304 | | |
| 5,976,320 | | |
| (2,782,016 | ) | |
| 3,194,304 | |
Net Income / (Loss) for the period | |
| (4,174,510 | ) | |
| (186,675 | ) | |
| (4,361,185 | ) | |
| 1,320,009 | | |
| 1,360,410 | | |
| 2,680,419 | |
Comprehensive Income / (Loss) for the period | |
| (4,133,301 | ) | |
| (186,675 | ) | |
| (4,319,976 | ) | |
| 1,459,851 | | |
| 1,360,410 | | |
| 2,820,261 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted income (loss) per share | |
| (0.09 | ) | |
| | | |
| (0.09 | ) | |
| 0.03 | | |
| | | |
| 0.06 | |
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
| |
Six months ended September 30, 2021 | | |
Six months ended September 30, 2020 | |
| |
As
Previously Reported | | |
Adjustments | | |
As
Restated | | |
As
Previously Reported | | |
Adjustments | | |
As
Restated | |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Revenue | |
| 2,892,820 | | |
| (1,431,033 | ) | |
| 1,461,787 | | |
| 37,470,424 | | |
| (3,534,781 | ) | |
| 33,935,643 | |
Cost of Goods Sold | |
| 1,808,909 | | |
| 396,160 | | |
| 2,205,069 | | |
| 21,890,044 | | |
| 6,524,505 | | |
| 28,414,549 | |
Gross Profit (Loss) | |
| 1,083,911 | | |
| (1,827,194 | ) | |
| (743,283 | ) | |
| 15,580,380 | | |
| (10,059,286 | ) | |
| 5,521,094 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 781,678 | | |
| (438,734 | ) | |
| 342,944 | | |
| 779,336 | | |
| (461,932 | ) | |
| 317,404 | |
Consulting fees, technical support, and commissions | |
| 2,045,454 | | |
| (517,201 | ) | |
| 1,528,253 | | |
| 8,344,181 | | |
| (6,865,497 | ) | |
| 1,478,684 | |
Salaries and wage expenses | |
| 2,795,494 | | |
| (210,808 | ) | |
| 2,584,686 | | |
| 3,322,274 | | |
| (770,339 | ) | |
| 2,551,935 | |
Operating Expenses | |
| 8,440,030 | | |
| (1,166,742 | ) | |
| 7,273,288 | | |
| 16,587,275 | | |
| (8,097,768 | ) | |
| 8,489,507 | |
Net Income / (Loss) for the period | |
| (6,962,436 | ) | |
| (660,451 | ) | |
| (7,622,887 | ) | |
| 2,808,690 | | |
| (1,961,518 | ) | |
| 847,172 | |
Comprehensive Income / (Loss) for the period | |
| (6,745,111 | ) | |
| (660,451 | ) | |
| (7,405,562 | ) | |
| 2,892,735 | | |
| (1,961,518 | ) | |
| 931,217 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted income (loss) per share | |
| (0.15 | ) | |
| | | |
| (0.16 | ) | |
| 0.06 | | |
| | | |
| 0.02 | |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
22. | Effects
of corrections of errors and restatement of quarterly financial statements (unaudited) (continued) |
BALANCE SHEET
| |
December 31, 2021 | | |
December 31, 2020 | |
| |
As
Previously Reported | | |
Adjustments | | |
As
Restated | | |
As
Previously Reported | | |
Balance
sheet reclassification | | |
Adjustments | | |
As
Restated | |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
ASSETS | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accrued revenue (1) | |
| – | | |
| – | | |
| – | | |
| – | | |
| 3,369,853 | | |
| 12,034,846 | | |
| 15,404,699 | |
Prepaid manufacturing costs (2) | |
| 3,339,968 | | |
| (3,037,138 | ) | |
| 302,830 | | |
| 17,789,691 | | |
| – | | |
| (11,395,507 | ) | |
| 6,394,184 | |
Total Current Assets | |
| 23,050,745 | | |
| (3,037,138 | ) | |
| 20,013,607 | | |
| 45,958,263 | | |
| – | | |
| 639,339 | | |
| 46,597,602 | |
(1) previously included within “Accounts
receivable and other receivable” | | |
| | |
(2) previously described as “Contract
assets” | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Assets | |
| 43,000,344 | | |
| (3,037,138 | ) | |
| 39,963,206 | | |
| 66,981,557 | | |
| – | | |
| 639,339 | | |
| 67,620,896 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Current Liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Accounts payable and accrued liabilities | |
| 12,185,211 | | |
| 334,489 | | |
| 12,519,700 | | |
| 28,699,844 | | |
| – | | |
| 570,038 | | |
| 29,269,882 | |
Contract liabilities | |
| 18,006,220 | | |
| (4,604,663 | ) | |
| 13,401,557 | | |
| 16,442,665 | | |
| – | | |
| (718,412 | ) | |
| 15,724,253 | |
Total Current Liabilities | |
| 32,509,427 | | |
| (4,270,174 | ) | |
| 28,239,253 | | |
| 47,412,017 | | |
| – | | |
| (148,374 | ) | |
| 47,263,643 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total Liabilities | |
| 33,501,848 | | |
| (4,270,174 | ) | |
| 29,231,674 | | |
| 50,110,950 | | |
| – | | |
| (148,374 | ) | |
| 49,962,576 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Stockholders’ Equity | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Deficit | |
| (84,084,161 | ) | |
| 1,233,036 | | |
| (82,851,125 | ) | |
| (75,693,292 | ) | |
| – | | |
| 787,713 | | |
| (74,905,579 | ) |
Total stockholders’ equity before treasury stock | |
| 9,598,250 | | |
| 1,233,036 | | |
| 10,831,286 | | |
| 16,870,607 | | |
| – | | |
| 787,713 | | |
| 17,658,320 | |
Total Stockholders’ Equity | |
| 9,498,496 | | |
| 1,233,036 | | |
| 10,731,532 | | |
| 16,870,607 | | |
| – | | |
| 787,713 | | |
| 17,658,320 | |
Total Liabilities and Stockholders’ Equity | |
| 43,000,344 | | |
| (3,037,138 | ) | |
| 39,963,206 | | |
| 66,981,557 | | |
| – | | |
| 639,339 | | |
| 67,620,896 | |
PACIFIC GREEN TECHNOLOGIES INC.
Notes to the Consolidated Financial Statements
Years Ended March 31, 2022 and 2021
(Expressed in U.S. Dollars)
22. | Effects
of corrections of errors and restatement of quarterly financial statements (unaudited) (continued) |
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE
INCOME
| |
Three months ended December 31, 2021 | | |
Three months ended December 31, 2020 | |
| |
As
Previously
Reported | | |
Adjustments | | |
As
Restated | | |
As
Previously
Reported | | |
Adjustments | | |
As
Restated | |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Revenue | |
| 2,642,184 | | |
| 2,610,624 | | |
| 5,252,808 | | |
| 4,658,466 | | |
| (1,018,121 | ) | |
| 3,640,345 | |
Cost of Goods Sold | |
| 1,328,338 | | |
| 654,921 | | |
| 1,983,259 | | |
| 3,625,204 | | |
| (145,318 | ) | |
| 3,479,886 | |
Gross Profit (Loss) | |
| 1,313,846 | | |
| 1,955,703 | | |
| 3,269,549 | | |
| 1,033,262 | | |
| (872,803 | ) | |
| 160,459 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 396,539 | | |
| (219,367 | ) | |
| 177,172 | | |
| 389,703 | | |
| (230,966 | ) | |
| 158,737 | |
Consulting fees, technical support, and commissions | |
| 1,026,808 | | |
| (262,429 | ) | |
| 764,379 | | |
| 1,238,962 | | |
| (651,985 | ) | |
| 586,977 | |
Salaries and wage expenses | |
| 1,234,243 | | |
| (93,580 | ) | |
| 1,140,663 | | |
| 1,187,967 | | |
| (385,169 | ) | |
| 802,798 | |
Operating Expenses | |
| 4,328,005 | | |
| (575,376 | ) | |
| 3,752,629 | | |
| 4,386,278 | | |
| (1,268,121 | ) | |
| 3,118,157 | |
Net Income / (Loss) for the period | |
| (2,981,468 | ) | |
| 2,531,078 | | |
| (450,390 | ) | |
| (3,180,647 | ) | |
| 395,318 | | |
| (2,785,329 | ) |
Comprehensive Income / (Loss) for the period | |
| (2,848,965 | ) | |
| 2,531,078 | | |
| (317,887 | ) | |
| (2,573,798 | ) | |
| 395,318 | | |
| (2,178,480 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted loss per share | |
| (0.06 | ) | |
| | | |
| (0.01 | ) | |
| (0.07 | ) | |
| | | |
| (0.06 | ) |
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
| |
Nine months ended December 31, 2021 | | |
Nine months ended December 31, 2020 | |
| |
As
Previously
Reported | | |
Adjustments | | |
As
Restated | | |
As
Previously
Reported | | |
Adjustments | | |
As
Restated | |
| |
$ | | |
$ | | |
$ | | |
$ | | |
$ | | |
$ | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Revenue | |
| 5,535,004 | | |
| 1,179,590 | | |
| 6,714,594 | | |
| 42,128,890 | | |
| (4,552,902 | ) | |
| 37,575,988 | |
Cost of Goods Sold | |
| 3,137,247 | | |
| 1,051,081 | | |
| 4,188,328 | | |
| 25,515,248 | | |
| 6,379,187 | | |
| 31,894,435 | |
Gross Profit (Loss) | |
| 2,397,757 | | |
| 128,509 | | |
| 2,526,266 | | |
| 16,613,642 | | |
| (10,932,088 | ) | |
| 5,681,554 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Amortization of intangible assets | |
| 1,178,217 | | |
| (658,101 | ) | |
| 520,116 | | |
| 1,169,039 | | |
| (692,898 | ) | |
| 476,141 | |
Consulting fees, technical support, and commissions | |
| 3,072,262 | | |
| (779,630 | ) | |
| 2,292,632 | | |
| 9,583,143 | | |
| (7,517,483 | ) | |
| 2,065,660 | |
Salaries and wage expenses | |
| 4,029,737 | | |
| (304,388 | ) | |
| 3,725,349 | | |
| 4,510,241 | | |
| (1,155,508 | ) | |
| 3,354,733 | |
Operating Expenses | |
| 12,768,035 | | |
| (1,742,118 | ) | |
| 11,025,917 | | |
| 20,973,553 | | |
| (9,365,888 | ) | |
| 11,607,665 | |
Net Income / (Loss) for the period | |
| (9,943,904 | ) | |
| 1,870,627 | | |
| (8,073,277 | ) | |
| (371,957 | ) | |
| (1,566,200 | ) | |
| (1,938,157 | ) |
Comprehensive Income / (Loss) for the period | |
| (9,594,076 | ) | |
| 1,870,627 | | |
| (7,723,449 | ) | |
| 318,937 | | |
| (1,566,200 | ) | |
| (1,247,263 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted loss per share | |
| (0.21 | ) | |
| | | |
| (0.17 | ) | |
| (0.01 | ) | |
| | | |
| (0.04 | ) |