GREENPOWER MOTOR Co INC 20-F for FY2023
GREENPOWER MOTOR Co INC. (GP)
About this 20-F
GREENPOWER MOTOR Co INC filed this 20-F on July 24, 2023, covering the fiscal year ended March 31, 2023 (FY2023).
Headline figures
Fiscal year ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $39.7M
- up 130.3% from $17.24M a year earlier
- Net loss
- $15.04M
- compared with a net loss of $15.01M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
OR
For the fiscal year ended
OR
For the transition period from _______________ to _______________
OR
Date of event requiring this shell company report _______________
Commission file number
(Exact name of Registrant specified in its charter)
Not Applicable
(Translation of Registrant's name into English)
(Jurisdiction of incorporation or organization)
#
(Address of principal executive offices)
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
(Title of Class)
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Common Shares Without Par Value
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
Common Shares Without Par Value
(Title of Class)
Number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of business of the period covered by the annual report.
Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.
Yes ☐
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Yes ☐
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "accelerated filer," "large accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ |
| Emerging Growth Company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b) by the registered public accounting firm that prepared or issued its audit report.
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Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| U.S. GAAP ☐ | Other ☐ | |
| by the International Accounting Standards Board ☒ |
If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b 2 of the Exchange Act):
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(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Not applicable.
TABLE OF CONTENTS
Explanatory Note
GreenPower Motor Company Inc. (“GreenPower”, “we”, “our”, “us”, “the Company”) is a Canadian issuer that is permitted to prepare this Annual Report on Form 20-F (this “Annual Report”) pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”). Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 thereunder. The Company’s common shares are listed on the Nasdaq Stock Exchange (the “Nasdaq”) under the trading symbol “GP” and on the Toronto Stock Exchange under the trading symbol “GPV”.
All amounts presented are in United States dollars unless otherwise indicated.
In this Annual Report, references to "GreenPower", "we", "our", "us", "the Company" or similar terms refer to GreenPower Motor Company Inc. and our subsidiaries, on a consolidated basis.
Forward-Looking Statements
This Annual Report on Form 20-F may contain forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements in this Annual Report on Form 20-F may include, but are not limited to statements involving estimates, assumptions or judgements, and these statements may be identified by words such as "believe", "expect", "expectation", "aim", "achieve", "intend", "commit", "goal", "plan", "strive" and "objective", and similar expressions of future or conditional verbs such as "will", "may", "might", "should", "could" or "would". By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our expectations or conclusions will not prove to be accurate, that our assumptions may not be correct, and that our plans, goals, expectations and objectives will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These statements are only predictions and involve known and unknown risks, including the risks in the section entitled "Risk Factors", uncertainties and other factors, which may cause our company's or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.
Forward-looking statements are based on the reasonable assumptions, estimates, analysis and opinions made in light of our experience and our perception of trends, current conditions and expected developments, as well as other factors that we believe to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Management believes that the assumption and expectations reflected in such forward-looking statements are reasonable. Assumptions have been made regarding, among other things: the Company's ability to maintain projected production deliveries within certain timelines; expected expansion of the Company's production capacity; labor costs and material costs remaining consistent with the Company's current expectations; production of electric buses meeting customer expectations and at an expected cost; equipment operating as anticipated; there being no material variations in the current regulatory environment; the Company's ability to produce Buy America compliant vehicles; and the Company's ability to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used.
The Company faces risks that are discussed in Item 3.D "Risk Factors". In particular, without limiting the generality of the foregoing disclosure, the statements contained in Item 4.B - "Business Overview", Item 5 - "Operating and Financial Review and Prospects" and Item 11 - "Quantitative and Qualitative Disclosures About Market Risk" are inherently subject to a variety of risks and uncertainties that could cause actual results, performance or achievements to differ significantly. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States and Canada, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. Reserved
Not Applicable
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the offer and use of proceeds
Not applicable.
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D. Risk Factors
Risk Factors
An investment in our common shares involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this annual report in evaluating our company and our business before making an investment decision about our company. Our business, operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of these risks.
Risks Related to Our Business
We have not reached profitability and currently have negative operating cash flows
For the fiscal year ended March 31, 2023, we generated a loss of $15.0 million bringing our accumulated deficit to $60.8 million.
During the year ended March 31, 2023 we generated annual revenue of $39.7 million and expect significant increases in costs and expenses as we invest in expanding our production and operations. Even if we are successful in increasing revenues from sales of our products, we may be unable to achieve positive cash flow or profitability for a number of reasons, including but not limited to, an inability to control production costs, increases or inflation in our selling general and administrative expenses, and a reduction in our product sales price due to competitive or other factors. An inability to generate positive cash flow and profitability until we reach a sufficient level of sales with positive gross margins that cover operating expenses, or an inability to raise additional capital on reasonable terms, will adversely affect our viability as an operating business. Based on these factors, the Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern.
We operate in a capital-intensive industry and will require a significant amount of capital to continue operations
If the revenue from the sale of our electric buses is not sufficient to cover our cash requirements, we will need to raise additional funds through the sale of equity or other securities, or the issuance of additional debt. Financing may not be available at terms that are acceptable to us, if at all.
Our ability to obtain the necessary financing for our business is subject to a number of factors, including general market conditions and investor acceptance of our business plan. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable to raise sufficient funds, we will have to significantly reduce our spending, delay or cancel our planned activities, or substantially change our current operations and plans in order to reduce our cost structure. Our competitors, many of which have raised or who have access to significant capital, may be able to compete more effectively in our markets given their access to capital, if our access to capital does not improve or is further limited. We might not be able to obtain any funding, and we might not have sufficient resources to conduct our business as projected, both of which could mean that we would be forced to curtail or discontinue our operations.
The reduction or elimination of government and economic incentives, funding approval or the delay in the timing of advancing funding that has been approved, in particular in the state of California, could have a material adverse effect on our business, financial condition, operating results and prospects.
Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives for electric vehicles (“EV’s”) may result in the diminished competitiveness of the alternative fuel vehicle industry generally or our electric vehicles in particular. This could materially and adversely affect the growth of the alternative fuel automobile markets and our business, prospects, financial condition and operating results.
3
Our vehicles are eligible for vouchers from specific government programs, including the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project ("HVIP") from the California Air Resources Board ("CARB") in partnership with Calstart, the New Jersey Zero-Emission Incentive program ("NJZIP"), the New York Truck Voucher Incentive Program ("NYTVIP"), or the Specialty-Use Vehicle Incentive Program ("SUVI") funded by the Province of British Columbia, Canada. The ability for potential purchasers to receive funding from these programs is subject to the risk of the programs being funded by governments, and the risk of the delay in the timing of advancing funds to the specific programs. To the extent that program funding is not approved, or if the funding is approved but timing of advancing of funds is delayed, subject to cancellation, or otherwise uncertain, this could have a material adverse effect on our business, financial condition, operating results and prospects.
To date the vast majority of our electric vehicle sales have been in the state of California, in part due to subsidies and grants for electric vehicles and electric charging infrastructure available from the California state government. In some cases these grants or subsidies have covered the entire vehicle cost, and in many cases the grants or subsidies have reduced the net cost to our customers to a point that the vehicle is less expensive than purchasing a comparable diesel powered vehicle. Any reduction or elimination of the grants or incentives in the state of California would have a material negative impact on our business, financial condition, operating results and prospects.
We may in be involved in litigation or legal proceedings that are deemed to be material and may require recognition as a provision or a contingent liability on our financial statements.
We may in the future be involved in litigation or legal proceedings that are material and may require recognition as a provision or contingent liability on our financial statements. The Company is not currently a party to any litigation or legal proceedings which are material, either individually or in the aggregate. The Company has filed a civil claim against the prior CEO and Director of the Company in the Province of British Columbia, and the prior CEO and Director of the Company has filed a response with a counterclaim for wrongful dismissal in the Province of British Columbia. The prior CEO and Director of the Company also filed a similar claim in the state of California in regards to this matter, and this claim has been stayed pending the outcome of the claim in British Columbia. There has not been a resolution on the British Columbia claim or counterclaim, or the California claim as at March 31, 2023. In addition, a company owned and controlled by a former employee who provided services to a subsidiary company of GreenPower until August 2013 filed a claim for breach of confidence against GreenPower in July 2020, and this claim has not been resolved as at March 31, 2023. The Company has not booked a provision for the claims or the counterclaim as it does not believe there is a remote or estimable material financial impact as at March 31, 2023. During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC’s which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, the Company repossessed 1 EV Star from the same customer due to nonpayment. During May 2023 this customer filed a claim in the state of California against the Company and a subsidiary of the Company. However, we may in the future determine that these claims become material or we may be subject to other claims that alone or in addition to other claims are considered to be material, and require recognition as a provision or contingent liability on our financial statements.
The majority of our manufacturing is currently contracted out to third party manufacturers and we are dependent on these manufacturers to operate competitively
We currently contract out the majority of the manufacturing of our vehicles to third party manufacturers in Asia, with final assembly performed by our employees in North America. As a result, we are dependent on third party manufacturers to manufacture our vehicles according to our specifications and quality, at a competitive cost and within agreed upon timeframes. If our chosen manufacturing vendors are unable or unwilling to perform these functions then our financial results and reputation may suffer, which may prevent us from being able to continue as a going concern. In addition, we are subject to inherent risks involved in shipping our vehicles from these primary manufacturers to our facilities in North America. During the shipping process our vehicles are subject to theft, loss or damage due to a number of factors, some of which we may be unable to insure cost-effectively, if at all.
4
Developments in alternative technologies or improvements in the internal combustion engine may materially adversely affect the demand for our electric vehicles
Significant developments in alternative technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. For example, fuel which is abundant and relatively inexpensive in North America, such as compressed natural gas, may emerge as consumers' preferred alternative to petroleum-based propulsion. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced electric vehicles, which could result in the loss of competitiveness of our vehicles, decreased revenue and a loss of market share to competitors.
If we are unable to keep up with advances in electric vehicle technology, we may suffer a decline in our competitive position
We may be unable to keep up with changes in electric vehicle technology and, as a result, may suffer a decline in our competitive position. Any failure to keep up with advances in electric vehicle technology would result in a decline in our competitive position which would materially and adversely affect our business, prospects, operating results and financial condition. Our research and development efforts may not be sufficient to adapt to changes in electric vehicle technology. As technologies change we plan to upgrade or adapt our vehicles and introduce new models to continue to provide vehicles with the latest technology. However, our vehicles may not compete effectively with alternative vehicles if we are not able to source and integrate the latest technology into our vehicles at a competitive price. For example, we do not manufacture battery cells or drive motors which makes us dependent upon suppliers of these products for our vehicles.
We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs.
Others, including our competitors, may hold or obtain patents, copyrights, trademarks or other proprietary rights that could prevent, limit or interfere with our ability to make, use, develop, sell or market our products and services, which could make it more difficult for us to operate our business. From time to time, the holders of such intellectual property rights may assert their rights and urge us to take licenses, and/or may bring suits alleging infringement or misappropriation of such rights. We may consider the entering into licensing agreements with respect to such rights, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur, and such licenses could significantly increase our operating expenses. In addition, if we are determined to have infringed upon a third party's intellectual property rights, we may be required to cease making, selling or incorporating certain components or intellectual property into the goods and services we offer, to pay substantial damages and/or license royalties, to redesign our products and services, and/or to establish and maintain alternative branding for our products and services. In the event that we were required to take one or more such actions, our business, prospects, operating results and financial condition could be materially adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.
We depend on certain key personnel, and our success will depend on our continued ability to retain and attract such qualified personnel
Our success depends on the efforts, abilities and continued service of our executive officers and management. A number of these key employees have significant experience in the electric vehicle industry, and valuable relationships with our suppliers, customers, and other industry participants. A loss of service from any one of these individuals may adversely affect our operations, and we may have difficulty or may be unable to locate and hire a suitable replacement. We have not obtained any "key person" insurance on any of our executives or managers.
We are subject to numerous environmental and health and safety laws and any breach of such laws may have a material adverse effect on our business and operating results
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We are subject to numerous environmental and health and safety laws, including statutes, regulations, bylaws and other legal requirements. These laws relate to the generation, use, handling, storage, transportation and disposal of regulated substances, including hazardous substances (such as batteries), dangerous goods and waste, emissions or discharges into soil, water and air, including noise and odors (which could result in remediation obligations), and occupational health and safety matters, including indoor air quality. These legal requirements vary by location and can arise under federal, provincial, state or municipal laws. Any breach of such laws, regulations or requirements would have a material adverse effect on our company and its operating results.
Our vehicles are subject to motor vehicle standards and the failure to satisfy such mandated safety standards would have a material adverse effect on our business and operating results.
All vehicles sold must comply with federal, state and provincial motor vehicle safety standards. In both Canada and the United States vehicles that meet or exceed all federally mandated safety standards are certified under the federal regulations. In this regard, Canadian and U.S. motor vehicle safety standards are substantially the same. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving federal certification. Failure by us to have our current or future electric vehicles satisfy motor vehicle standards would have a material adverse effect on our business and operating results.
If our vehicles fail to perform as expected, our ability to continue to develop, market and sell our electric vehicles could be harmed
Our vehicles may contain defects in design and manufacture that may cause them not to perform as expected or that may require repair. For example, our vehicles use technologically complex battery management software to operate. Given the inherent complexity of this software, it may contain defects and errors which would adversely impact the operation of our vehicles. While we have performed extensive testing of our vehicles, we currently have a limited frame of reference to evaluate the performance of our vehicles in the hands of our customers under a range of operating conditions.
We may not succeed in establishing, maintaining and strengthening the GreenPower brand, which would materially and adversely affect customer acceptance of our vehicles and components and our business, revenues and prospects.
Our business and prospects heavily depend on our ability to develop, maintain and strengthen the GreenPower brand. Any failure to develop, maintain and strengthen our brand may materially and adversely affect our ability to sell our planned electric vehicles. If we are not able to establish, maintain and strengthen our brand, we may lose the opportunity to expand our customer base. Promoting and positioning our brand will depend significantly on our ability to provide high quality electric vehicles and maintenance and repair services, and we have limited experience in these areas. In addition, we expect that our ability to develop, maintain and strengthen the GreenPower brand will also depend heavily on the success of our marketing efforts. To date we have limited experience with marketing activities as we have relied primarily on the internet, word of mouth and attendance at industry trade shows to promote our brand. To further promote our brand, we may be required to change our marketing practices, which could result in substantially increased advertising expenses. We operate in a competitive industry, and we may not be successful in building, maintaining and strengthening our brand. Many of our current and potential competitors, particularly automobile manufacturers headquartered in the United States, Japan and the European Union have greater name recognition, broader customer relationships and substantially greater marketing resources than we do. If we do not develop and maintain a strong brand, our business, prospects, financial condition and operating results will be materially and adversely impacted.
We are dependent on our suppliers, many of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components, could have a material adverse effect on our financial condition and operating results.
6
Our products contain numerous purchased parts which we source globally directly from suppliers, many of which are single-source suppliers, although we attempt to qualify and obtain components from multiple sources whenever feasible. Any significant increases in our production may require us to procure additional components in a short amount of time, and in the past we have also replaced certain suppliers because of their failure to provide components that met our quality control standards or our timing requirements. If any of our single source suppliers is unable to deliver components to us there is no assurance that we will be able to secure additional or alternate sources of supply for our components or develop our own replacements in a timely manner, if at all. If we encounter unexpected difficulties with key suppliers, and if we are unable to fill these needs from other suppliers, we could experience production delays and potential loss of access to important technology and parts for producing, servicing and supporting our products.
This limited, and in many cases single source, supply chain exposes us to multiple potential sources of delivery failure or component shortages for production of our products. Furthermore, unexpected changes in business conditions, materials pricing, labor issues, wars, governmental changes, and natural disasters could also affect our suppliers' ability to deliver components to us on a timely basis. The loss of any single or limited source supplier or the disruption in the supply of components from these suppliers could lead to product design changes and delays in product deliveries to our customers, which could hurt our relationships with our customers and result in negative publicity, damage to our brand and a material and adverse effect on our business, prospects, financial condition and operating results.
Changes in our supply chain may lead to an increased cost for our products. We have also experienced cost increases from certain of our suppliers in order to meet our quality targets and timelines as well as due to our design changes, and we may experience similar cost increases in the future. Certain suppliers have sought to renegotiate the terms of supply arrangements. Additionally, we are negotiating with existing suppliers for cost reductions and are seeking new and less expensive suppliers for certain parts. If we are unsuccessful in our efforts to control and reduce supplier costs, our operating results will suffer.
There is no assurance that our suppliers will be able to sustainably and timely meet our cost, quality and volume needs. Furthermore, if the scale of our vehicle production increases, we will need to accurately forecast, purchase, warehouse and transport to our manufacturing facilities components at much higher volumes. If we are unable to accurately match the timing and quantities of component purchases to our actual needs, or successfully manage our inventory to accommodate the increased complexity in our supply chain, we may incur unexpected production disruption, storage, transportation and write-off costs, which could have a material adverse effect on our financial condition and operating results.
If we fail to manage future growth effectively, we may not be able to market and sell our vehicles successfully.
Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition. We are expecting significant growth in sales, and are currently expanding our employees, facilities and infrastructure in order to accommodate this growth. Our future operating results depend to a large extent on our ability to manage this expansion and growth successfully. Risks that we face in undertaking this expansion include:
• | training new personnel; |
• | forecasting production and revenue; |
• | controlling expenses and investments in anticipation of expanded operations; |
• | establishing or expanding manufacturing, sales and service facilities; |
• | implementing and enhancing administrative infrastructure, systems and processes; |
• | addressing new markets; and |
• | establishing international operations. |
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We intend to continue to hire a number of additional personnel, including manufacturing personnel and service technicians for our electric vehicles. There is significant competition for individuals with experience manufacturing and servicing electric vehicles, and we may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business and prospects.
Our business may be adversely affected by labor and union activities.
Although none of our employees are currently represented by a labor union, it is common throughout the automobile industry for employees to belong to a union. Having a unionized workforce may result in higher employee costs and increased risk of work stoppages. Additionally, we are in the process of expanding our in-house manufacturing capabilities and increasing the number of employees in this area. If our employees engaged in manufacturing were to unionize, this may increase our future production costs and negatively impact our gross margins and financial results.
We also directly and indirectly depend upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have a material adverse impact on our business, financial condition or operating results. If a work stoppage occurs within our business, or in one of our key suppliers, it could delay the manufacture and sale of our electric vehicles and have a material adverse effect on our business, prospects, operating results and financial condition.
We may become subject to product liability or warranty claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
We may become subject to product liability or warranty claims, which could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected or malfunction resulting in personal injury or death. Our risks in this area are particularly pronounced given our vehicles have only been operating for a short period of time. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our vehicles and business which would have a material adverse effect on our brand, business, prospects and operating results.
Global economic conditions could materially adversely impact demand for our products and services.
Our operations and performance depend significantly on economic conditions. Uncertainty about global economic conditions could result in customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our products and services and, accordingly, on our business, results of operations or financial condition.
The trade agreement with China includes tariffs on goods imported to the US from China, and these tariffs negatively impact our financial performance, financial position, and financial results
The United States and China signed a trade agreement in January 2020 that led to the implementation of tariffs on several hundred billion dollars of annual Chinese imports to the United States. GreenPower's vehicles include parts and components imported from China, and tariffs are applied to imports of these products to the United States. These tariffs have increased the cost of GreenPower's buses imported to the United States and have had and will continue to have a negative impact on our gross margins, profitability, financial performance and financial position. Any escalation of the tariffs on imported goods from China to the United States will cause further negative impacts to our gross margin, profitability, financial performance and financial position.
8
We rely on global shipping for our vehicles that are produced at contract manufacturers, and for certain parts and components sourced from our global network of suppliers. We have experienced increased shipping costs and have experienced shipping constraints which increased our costs and prevented us from delivering vehicles to customers on a timely basis. A continuation or escalation of these trends may negatively impact our financial results and ability to grow our business
Shipping costs have grown significantly since the fall of 2020 due to a number of factors, including strong international trade growth, imbalances in global trade, port congestion, port closures, vessel delays and other factors.
We rely on global shipping for vehicles that we produce at contract manufacturers, and for certain parts and components sourced from our global network of suppliers. We have experienced an increase in shipping costs and have experienced delays of deliveries of parts and components from our global suppliers, and on vehicles arriving from our contract manufacturers. While these delays and cost increases are not currently at a level that they have caused a material disruption or negative impact to our profitability, these delays and costs may increase to a point that they may negatively impact our financial results and ability to grow our business.
Our line of credit contains covenant restrictions that may limit our ability to access funds on the line of credit or engage in other commercial activities.
The terms of our line of credit contains, and future debt agreements we enter into may contain, covenant restrictions that limit our ability to incur additional debt or issue guarantees, create liens, and make certain dispositions of property or assets. As a result of these covenants, our ability to respond to changes in business and economic conditions and engage in beneficial transactions, including obtaining additional financing as needed, may be restricted. Furthermore, our failure to comply with our debt covenants could result in a default under our line of credit, which would permit the lender to demand repayment.
The demand for commercial zero-emission electric vehicles depends, in part, on the continuation of current trends resulting from historical dependence on fossil fuels. Extended periods of low diesel or other petroleum-based fuel prices could adversely affect demand for electric vehicles, which could adversely affect our business, prospects, financial condition and operating results.
We believe that much of the present and projected demand for commercial zero-emission electric vehicles results from concerns about volatility in the cost of petroleum-based fuel, the dependency of the United States on oil from unstable or hostile countries, government regulations and economic incentives promoting fuel efficiency and alternative forms of energy, as well as the belief that poor air quality and climate change results in part from the burning of fossil fuels. If the cost of petroleum-based fuel decreased significantly, or the long-term supply of oil in the United States improved, the government may eliminate or modify its regulations or economic incentives related to fuel efficiency and alternative forms of energy. If there is a change in the perception that the burning of fossil fuels does not negatively impact the environment, the demand for commercial zero-emission electric vehicles could be reduced, and our business and revenue may be harmed. Diesel and other petroleum-based fuel prices have been extremely volatile, and we believe this continuing volatility will persist. Lower diesel or other petroleum-based fuel prices over extended periods of time may lower the current perception in government and the private sector that cheaper, more readily available energy alternatives should be developed and produced. If diesel or other petroleum-based fuel prices remain at deflated levels for extended periods of time, the demand for commercial electric vehicles may decrease, which could have an adverse effect on our business, prospects, financial condition and operating results.
We may be compelled to undertake product recalls.
Any product recall in the future may result in adverse publicity, damage to our brand and may adversely affect our business, prospects, operating results and financial condition. We may at various times, voluntarily or involuntarily, initiate a recall if any of our electric vehicle components prove to be defective. Such recalls, voluntary or involuntary, involve significant expense and diversion of management attention and other resources, which would adversely affect our brand image in our target markets and could adversely affect our business, prospects, financial condition and results of operations.
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Security breaches and other disruptions to our information technology networks and systems could substantially interfere with our operations and could compromise the confidentiality of our proprietary information, notwithstanding the fact that no such breaches or disruptions have materially impacted us to date.
We rely upon information technology systems and networks, some of which are managed by third-parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities, including supply chain management, manufacturing, invoicing and collection of payments from our customers. Additionally, we collect and store sensitive data, including intellectual property, proprietary business information, the proprietary business information of our suppliers, as well as personally identifiable information of our employees, in data centers and on information technology systems. The secure operation of these information technology systems, and the processing and maintenance of this information, is critical to our business operations and strategy. Despite security measures and business continuity plans, our information technology systems and networks may be vulnerable to damage, disruptions or shutdowns due to attacks by hackers or breaches due to errors or malfeasance by employees, contractors and others who have access to our networks and systems, or other disruptions during the process of upgrading or replacing computer software or hardware, hardware failures, software errors, third-party service provider outages, power outages, computer viruses, telecommunication or utility failures or natural disasters or other catastrophic events. The occurrence of any of these events could compromise our systems and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupt operations and reduce the competitive advantage we hope to derive from our investment in technology. Our insurance coverage may not be available or adequate to cover all the costs related to significant security attacks or disruptions resulting from such attacks.
Our electric vehicles make use of lithium-ion battery cells, which, if not appropriately managed and controlled, have occasionally been observed to catch fire or vent smoke and flames. If such events occur in our electric vehicles, we could face liability associated with our warranty, for damage or injury, adverse publicity and a potential safety recall, any of which would adversely affect our business, prospects, financial condition and operating results.
The battery packs in our electric vehicles use lithium-ion cells, which have been used for years in laptop computers and cell phones. Highly publicized incidents of laptop computers and cell phones bursting into flames have focused consumer attention on the safety of these cells. These events also have raised questions about the suitability of these lithium-ion cells for automotive applications. There can be no assurance that a field failure of our battery packs will not occur, which would damage the vehicle or lead to personal injury or death and may subject us to lawsuits. Furthermore, there is some risk of electrocution if individuals who attempt to repair battery packs on our vehicles do not follow applicable maintenance and repair protocols. Any such damage or injury would likely lead to adverse publicity and potentially a safety recall. Any such adverse publicity could adversely affect our business, prospects, financial condition and operating results.
Risks Related to Our Company
It may be difficult for non-Canadian investors to obtain and enforce judgments against us because of our Canadian incorporation and presence.
We are a corporation existing under the laws of British Columbia, Canada. Some of our directors and officers, and the experts named in this prospectus, are residents of Canada, and all or a substantial portion of their assets, and a substantial portion of our assets, are located outside the United States. Consequently, although we have appointed an agent for service of process in the United States, it may be difficult for holders of our common shares who reside in the United States to effect service within the United States upon our directors and officers and experts who are not residents of the United States. It may also be difficult for holders of our common shares who reside in the United States to realize in the United States upon judgments of courts of the United States predicated upon our civil liability and the civil liability of our directors, officers and experts under the United States federal securities laws. Investors should not assume that Canadian courts (i) would enforce judgments of United States courts obtained in actions against us or our directors, officers or experts predicated upon the civil liability provisions of the United States federal securities laws or the securities or "blue sky" laws of any state within the United States or (ii) would enforce, in original actions, liabilities against us or our directors, officers or experts predicated upon the United States federal securities laws or any such state securities or "blue sky" laws.
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We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common shares less attractive to investors.
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the "JOBS Act". For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We will cease to be an emerging growth company upon the earliest of:
• | the last day of the fiscal year during which we have total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every five years by the Securities and Exchange Commission or more); | |
• | the last day of our fiscal year following the fifth anniversary of the completion of our first sale of common equity securities pursuant to an effective registration statement under the Securities Act of 1933; | |
• | the date on which we have, during the previous three-year period, issued more than $1,000,000,000 in non- convertible debt; or | |
• | the date on which we are deemed to be a "large accelerated filer", as defined in Rule 12b-2 of the Securities Exchange Act of 1934. |
We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.
As a foreign private issuer, we are not subject to certain United States securities law disclosure requirements that apply to a domestic United States issuer, which may limit the information that would be publicly available to our shareholders.
As a foreign private issuer, we will be exempt from certain rules under the Securities Exchange Act of 1934 that impose disclosure requirements as well as procedural requirements for proxy solicitations under Section 14 of the Securities Exchange Act of 1934 if our common shares are registered pursuant to Section 12 of the Securities Exchange Act of 1934. In addition, our officers, directors and principal shareholders will be exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Securities Exchange Act of 1934 if our common shares are registered pursuant to Section 12 of the Securities Exchange Act of 1934. Moreover, we are not required to file periodic reports and financial statements with the Securities and Exchange Commission as frequently or as promptly as a company that files as a U.S. domestic issuer whose securities are registered under the Securities Exchange Act of 1934, nor are we generally required to comply with the Securities and Exchange Commission's Regulation FD, which restricts the selective disclosure of material non-public information. For as long as we are a "foreign private issuer" we intend to file our annual financial statements on Form 20-F and furnish our quarterly updates on Form 6-K to the Securities and Exchange Commission for so long as we are subject to the reporting requirements of Section 13(g) or 15(d) of the Securities Exchange Act of 1934. However, the information we file or furnish is not the same as the information that is required in annual and quarterly reports on Form 10-K or Form 10-Q for U.S. domestic issuers. Accordingly, there may be less information publicly available concerning us than there is for a company that files as a U.S. domestic issuer.
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Risks Related to Our Common Shares
Because we can issue additional common shares or preferred shares, our shareholders may experience dilution in the future.
We are authorized to issue an unlimited number of common shares without par value and an unlimited number of preferred shares without par value. Our board of directors has the authority to cause us to issue additional common shares or preferred shares and to determine the special rights and restrictions of the shares of one or more series of our preferred shares, without consent of our shareholders. The issuance of any such securities may result in a reduction of the book value or market price of our common shares. Given the fact that we have not achieved profitability or generated positive cash flow historically, and we operate in a capital-intensive industry with significant working capital requirements, we may be required to issue additional common equity or securities that are dilutive to existing common shares in the future in order to continue its operations. Our efforts to fund our intended business plan may result in dilution to existing shareholders. Further, any such issuances could result in a change of control or a reduction in the market price for our common shares.
The market price of our common shares may be volatile and may fluctuate in a way that is disproportionate to our operating performance.
Our common shares are quoted on Nasdaq and listed on the TSXV. Trading of shares on Nasdaq or TSXV is often characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects.
The price of our common shares has fluctuated significantly. This volatility could depress the market price of our common shares for reasons unrelated to operating performance. The market price of our common shares could decline due to the impact of any of the following factors upon the market price of our common shares:
• | sales or potential sales of substantial amounts of our common shares; |
• | announcements about us or about our competitors; |
• | litigation and other developments relating to our company or those of our suppliers or our competitors; |
• | conditions in the automobile industry; |
• | governmental regulation and legislation; |
• | variations in our anticipated or actual operating results; |
• | change in securities analysts' estimates of our performance, or our failure to meet analysts' expectations; |
• | change in general economic conditions or trends; |
• | changes in capital market conditions or in the level of interest rates; and |
• | investor perception of our industry or our prospects. |
Many of these factors are beyond our control. The stock markets in general, and the market price of common shares of vehicle companies in particular, have historically experienced extreme price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. These broad market and industry factors could reduce the market price of our common shares, regardless of our actual operating performance.
A prolonged and substantial decline in the price of our common shares could affect our ability to raise further working capital, thereby adversely impacting our ability to continue operations.
A prolonged and substantial decline in the price of our common shares could result in a reduction in the liquidity of our common shares and a reduction in our ability to raise capital. Because we plan to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common shares could be detrimental to our liquidity and our operations because the decline may cause investors not to choose to invest in our shares. If we are unable to raise the funds we require for all our planned operations and to meet our existing and future financial obligations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and we may go out of business.
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Because we do not intend to pay any cash dividends on our common shares in the near future, our shareholders will not be able to receive a return on their shares unless they sell them.
We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common shares in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of our board of directors, and will depend upon, among other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. Unless we pay dividends, our shareholders will not be able to receive a return on their shares unless they sell them.
We may be classified as a "passive foreign investment company," which may have adverse U.S. federal income tax consequences for U.S. shareholders.
Generally, for any taxable year in which 75% or more of our gross income is passive income, or at least 50% of the average quarterly value of our assets (which may be determined in part by the market value of our common shares, which is subject to change) are held for the production of, or produce, passive income, we would be characterized as a passive foreign investment company ("PFIC") for U.S. federal income tax purposes. Our status as a PFIC is a fact-intensive determination made on an annual basis, and we cannot provide any assurance regarding our PFIC status for the taxable year ending March 31, 2023 or for future taxable years.
If we are a PFIC for any year during a non-corporate U.S. shareholder's holding period of our common shares, then such non-corporate U.S. shareholder generally will be required to treat any gain realized upon a disposition of our common shares, or any so-called "excess distribution" received on our common shares, as ordinary income, rather than as capital gain, and the preferential tax rate applicable to dividends received on our common shares would not be available. Interest charges would also be added to the taxes on gains and distributions realized by all U.S. holders.
A U.S. shareholder may avoid these adverse tax consequences by making a timely and effective "qualified electing fund" election ("QEF election"). A U.S. shareholder who makes a QEF election generally must report, on a current basis, its share of our ordinary earnings and net capital gains, whether or not we distribute any amounts to our shareholders. The QEF election is available only if our company characterized as a PFIC provides a U.S. shareholder with certain information regarding its earnings and capital gains as required under applicable U.S. Treasury regulations. In the event we become a PFIC, U.S. Holders should be aware that we might not satisfy the recordkeeping requirements that apply to a QEF or supply U.S. Holders with information such U.S. Holders require to report under the QEF rules in the event that our company is a PFIC for any tax year.
A U.S. shareholder may also mitigate the adverse tax consequences by timely making a mark-to-market election. A U.S. shareholder who makes the mark-to-market election generally must include as ordinary income each year the increase in the fair market value of the common shares and deduct from gross income the decrease in the value of such shares during each of its taxable years. A mark-to-market election may be made and maintained only if our common shares are regularly traded on a qualified exchange, including Nasdaq. Whether our common shares are regularly traded on a qualified exchange is an annual determination based on facts that, in part, are beyond our control. Accordingly, a U.S. shareholder might not be eligible to make a mark-to-market election to mitigate the adverse tax consequences if we are characterized as a PFIC.
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Each U.S. shareholder should consult their own tax advisors with respect to the possibility of making these elections and the U.S. federal income tax consequences of the acquisition, ownership and disposition of our common shares. In addition, our PFIC status may deter certain U.S. investors from purchasing our common shares, which could have an adverse impact on the market price of our common shares.
ITEM 4. INFORMATION ON THE COMPANY
Summary
We are a corporation incorporated under the Business Corporations Act (British Columbia) in British Columbia, Canada under the name "GreenPower Motor Company Inc." with an authorized share structure of unlimited number of common shares and preferred shares without par value. Our principal place of business is located at Suite 240-209 Carrall Street, Vancouver, British Columbia V6J 2B2, Canada and our telephone number is (604) 563-4144.
Our registered records office is located at Suite 900 - 885 West Georgia Street, Vancouver, BC V6C 3H1, Canada and its telephone number is (604) 687-5700, attention Mr. Virgil Z. Hlus.
Our registered agent in the United States is GKL Corporate/Search, Inc., located at One Capitol Mall, Suite 660, Sacramento, California 95814 and its telephone number is (800) 446-5455.
Additional information related to us is available on SEDAR at www.sedar.com and www.greenpowermotor.com. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, and the Company's filings can be found on this site at http://www.sec.gov. We do not incorporate the contents of our website or of sedar.com into this Annual Report. Information on our website does not constitute part of this Annual Report.
A. History and Development of Our Company
Our company was incorporated under the Business Corporations Act (British Columbia) on March 30, 2010 as "Oakmont Capital Corp." Oakmont Capital Corp.'s authorized capital consisted of an unlimited number of common and preferred shares. On June 17, 2011, Oakmont Capital Corp. completed an initial public offering of 4,000,000 common shares for gross proceeds of CDN$400,000 and the Oakmont Capital Corp. shares began trading on the TSX Venture Exchange on June 21, 2011 under the symbol "OMK.P". Prior to completing its Qualifying Transaction (as defined in the policies of the TSX Venture Exchange), Oakmont Capital Corp. was a capital pool company listed for trading on the TSX Venture Exchange in Canada. A capital pool company is a company with no assets other than cash and no commercial operations. The capital pool company uses its funds to seek out an investment opportunity.
On October 25, 2012, Oakmont Capital Corp. entered into a share exchange agreement with 0939181 B.C. Ltd., pursuant to which Oakmont Capital Corp. agreed to acquire 0939181 B.C. Ltd., which would constitute Oakmont Capital Corp.'s Qualifying Transaction. On July 3, 2013, the TSX Venture Exchange accepted Oakmont Capital Corp.'s Qualifying Transaction. Oakmont Capital Corp. then became a Tier 2 Mining Issuer on the TSX Venture Exchange. On July 3, 2013, Oakmont Capital Corp. also changed its name to "Oakmont Minerals Corp." The common shares of Oakmont Minerals Corp. began trading on the TSX Venture Exchange under the symbol "OMK" on July 8, 2013. Oakmont Minerals Corp. was then a natural resource company engaged in the acquisition and exploration of resource properties, with its focus on the Utah Manganese Properties, which included four separate properties (known as Duma Point, Dubinky Well, Moab Fault and Flat Iron) consisting of 150 mineral claims totaling 1,250 hectares held 100% by Utah Manganese Inc., a wholly-owned subsidiary of 0939181 B.C. Ltd. Oakmont Minerals corp. was engaged in the exploration of the Utah Manganese Properties to determine the presence of geo-chemical characteristics that could support small-to-medium scale extraction of minerals suitable for use in specialty high strength steel production. Oakmont Minerals Corp. remained in the exploration stage and did not generate revenues or income from operations.
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On December 23, 2014, 0999314 B.C. Ltd., a British Columbia corporation and a wholly-owned subsidiary of Oakmont Minerals Corp. completed an amalgamation with GreenPower Motor Company Inc., a British Columbia corporation, pursuant to an amalgamation agreement between Oakmont Minerals Corp., 0999314 B.C. Ltd., and GreenPower Motor Company Inc. dated April 14, 2014. The amalgamated company (with the name "0999314 B.C. Ltd.") became a wholly-owned subsidiary of Oakmont Minerals Corp. and Oakmont Minerals Corp. changed its name to "GreenPower Motor Company Inc." and the common shares of GreenPower Motor Company Inc. (formerly Oakmont Minerals Corp.) were consolidated on the basis of two pre-consolidation shares for each post-consolidation share. And our common shares began trading under the symbol "GPV" on the TSX Venture Exchange effective December 30, 2014. For accounting purposes, this amalgamation was considered a reverse take-over whereby GreenPower Motor Company Inc. was considered the acquiring company of Oakmont Minerals Corp. Subsequent to the completion of the amalgamation, the business of GreenPower Motor Company Inc. became the business of the amalgamated company.
Prior to the amalgamation on December 23, 2014, GreenPower Motor Company Inc., the acquiring company of Oakmont Minerals Corp. for accounting purposes, was incorporated on September 18, 2007 as "Blackrock Resources Ltd." under the Business Corporations Act (British Columbia), with an authorized share structure of unlimited number of common shares and preferred shares without par value. Pursuant to share purchase agreements dated September 30, 2013, Blackrock Resources Ltd. completed a reverse takeover transaction with GP GreenPower Industries Inc., whereby it acquired all of the issued and outstanding shares of GP GreenPower Industries Inc. in exchange for the issuance of 47,534,402 common shares of Blackrock Resources Ltd. In connection with the reverse takeover transaction with GP GreenPower Industries Inc., Blackrock Resources Ltd. changed its name from "Blackrock Resources Ltd." to its then name, "GreenPower Motor Company Inc.", on July 22, 2013.
In May 2015, our common shares were approved for trading on the OTCQB in the United States under the trading symbol "GPVRF".
In November 2015, we entered into a letter of intent with the Greater Victoria Harbour Authority and CVS Cruise Victoria Ltd. to lease our EV 550 double decker buses, which were delivered to CVS Cruise Victoria Ltd. in February 2018. By mid-2016, our company was offering a suite of transit buses ranging in length from 30 feet to 45 feet, a 45-foot coach bus, a 45-foot double decker, and a school bus.
In December 2016, we announced that the California Air Resources Board had awarded $9.5 million to the City of Porterville to deploy 10 GreenPower EV 350 40-foot transit buses and to install 11 charging stations on its transit routes. Two EV 350 buses were delivered to the City of Porterville in the year ended March 31, 2018, and another 6 buses were delivered in the year ended March 31, 2019. The 9th bus was delivered during the quarter ended June 30, 2019 and the final bus was delivered to the City of Porterville during the quarter ended September 30, 2019.
In June 2018, our company appointed Creative Bus Sales ("CBS") as our exclusive sales agent. Creative Bus Sales is the largest bus dealer in the United States, with 18 physical locations, a 75-person sales team and more than 200 service and support staff. Upon the expiry of this contract in 2021 it was not renewed. In June 2022 GreenPower entered into a dealership agreement with CBS under which they are the exclusive dealer of GreenPower BEAST Type D and Nano BEAST Type A school buses in the state of California.
During the year ended March 31, 2019, we delivered 14 buses to customers, pursuant to vehicle leases and vehicle sales. The customers were all located in the state of California, and include Sacramento Regional Transit, the University of California San Francisco, the Port of Oakland, Airline Coach Services and the City of Porterville. On November 14, 2018, Utah Manganese Inc., the wholly-owned subsidiary of 0939181 B.C. Ltd., the company with which Oakmont Capital Corp. effected its Qualifying Transaction in 2013, changed its name from "Utah Manganese Inc." to "San Joaquin Valley Equipment Leasing Inc." and San Joaquin Valley Equipment Leasing Inc. is now used by GreenPower Motor Company Inc. to enter into lease agreements to lease its buses.
During the year ended March 31, 2020, we completed and delivered a total of 68 buses, including 62 EV Stars, 4 Synapse school buses, and 2 EV 350s. Of this total, the Company provided lease financing for 24 EV Stars, 2 with San Diego Airport Parking, and 22 with Green Commuter. Beginning in March 2020, GreenPower's business and operations began adapting in response to the COVID-19 global pandemic. As an essential business manufacturing on behalf of the transit industry, we maintained production, although at reduced levels compared to prior to the pandemic. Some of our suppliers and contract manufacturers temporarily suspended or reduced their production levels, and our internal staffing levels in production were temporarily reduced in order to comply with government regulations and maintain physical distancing in order to protect the health of our staff, customers and other stakeholders. While we were able to maintain sales and production during this period, we did so at a reduced rate in order to comply with physical distancing requirements and government health regulations.
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During April 2020 GreenPower received the final report for the EV Star's Federal Transit Bus Test performed for the Federal Transit Administration at the Altoona Bus Testing site at Penn State University. This tests the maintainability, reliability, safety and performance of transit vehicles, and is required by the FTA for transit properties looking to purchase vehicles with federal funds. The EV Star passed the Altoona Test with an overall score of 92.2 which, as of the date of the test, makes the EV Star the highest scoring medium or heavy-duty vehicle that has completed the Altoona test, and the only all-electric Class 4 vehicle to have passed the Altoona test. Management believes the combination of Altoona certification and the ability to manufacture a Buy America compliant vehicle offer significant competitive advantages to GreenPower in successfully deploying vehicles to transit authorities based in the US.
On August 28, 2020 the Company completed a consolidation of its common shares on the basis of seven pre-consolidation shares for one post-consolidation common share, and the uplisting of the Company's shares to the Nasdaq stock exchange. Management also announced the pricing of its U.S. initial public offering of 1,860,000 common shares and concurrent private placement of 25,000 common shares, raising gross proceeds of $37.7 million before underwriting discounts and other costs.
During the year ended March 31, 2021, the Company delivered a total of 74 buses, including 35 EV Stars and 5 EV 250s for which the Company provided lease financing, 30 EV Stars that had previously been on lease and whose leases were cancelled and the vehicles subsequently sold, and the sale of 1 Synapse school bus, 1 EV Star Cargo Plus, 1 EV Star Plus, and 1 EV Star. Included in the 30 EV Stars that had previously been on lease and whose leases were cancelled and the vehicles subsequently sold were 13 EV Stars where the leases were originally entered into during the year ended March 31, 2020.
During the year ended March 31, 2022 GreenPower delivered a total of 93 vehicles, including 18 BEAST school buses, 11 EV Stars, 4 EV Star + and 21 EV Star cab and chassis, as well as 1 EV Star and 10 EV Star CC's for which the Company provided lease financing, and 28 EV Stars that had previously been on lease and whose leases were cancelled and the vehicles were subsequently sold.
During the year ended March 31, 2022 GreenPower completed a significant partnership through the signing of a Memorandum of Understanding ("MOU") with the state of West Virginia. Following the MoU, GreenPower entered into a lease purchase agreement with the state for an 80,000 square foot facility on six acres of land to manufacture all-electric school buses for the US market. As part of this partnership the state will provide worker training and hiring support, up to $3.5 million in employment incentive payments in exchange for meeting hiring targets, and has agreed to purchase up to $15 million of GreenPower vehicles produced at the facility. In February 2022 GreenPower signed a contract to sell 1,500 EV Star CC's to Workhorse Group, Inc. which they will use to produce Workhorse branded panel vans for the North American market.
During the year ended March 31, 2023, the Company delivered a total of 299 vehicles, which were comprised of 226 EV Star CC's, 40 EV Star 22 foot cargo, 3 EV Star Cargo Plus, 19 EV Stars, 7 BEAST Type D school buses, 2 Nano BEAST Type A school buses, and 2 EV 250's, and generated record annual revenue of $39.7 million, which was an increase of 130% over the prior year. GreenPower completed the acquisition of Lion Truck Body ("Lion") during July 2022. Lion manufactures and installs a complete line of truck bodies including dry-freight aluminum, refrigerated box, aluminum beds, stake bed, flat bed and service body. This acquisition allows GreenPower to vertically integrate an important component of its supply chain, and GreenPower intends to leverage the business's capabilities to capture new lines of business and improve its product offering for customers. Over the course of the year GreenPower has brought in changes in management, key staff, and has implemented operational improvements. In addition, we developed two new products: an all-electric reefer body, and a lightweight aluminum stake bed, both built on the EV Star cab and chassis platform.
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In September 2022 the Company filed a prospectus supplement to its short form base shelf prospectus, pursuant to which the Company may, at its discretion and from time to time, sell common shares of the Company for aggregate gross proceeds of up to $20 million. The sale of common shares is to be made through "at-the-market distributions" ("ATM") on the NASDAQ stock exchange. During the year ended March 31, 2023, the Company sold 1,565,268 common shares under the ATM program for gross proceeds of approximately $4.9 million.
The principal capital expenditures of our company have been in electric buses, EV equipment, automobiles and tools and equipment, the carrying value of which is $2.6 million as at March 31, 2023. During the year ended March 31, 2023, GreenPower sold a 9.3 acre parcel of land in the City of Porterville for gross proceeds of $950,000. To date, our principal capital expenditures have been funded with capital which has been sourced from our company's sale of common shares, convertible debentures, warrants, proceeds from the exercise of warrants and options for common shares, loans from related parties, and from our company's $8 million operating credit line with the Bank of Montreal.
There have been no indications of any public takeover offers by third parties in respect of our company's shares or by our company in respect of other companies' shares which have occurred during the last and current financial year.
B. Business Overview
GreenPower designs, builds and distributes a full suite of high-floor and low-floor all-electric medium and heavy-duty vehicles, including transit buses, school buses, shuttles, cargo van, and a cab and chassis. GreenPower employs a clean-sheet design to manufacture all-electric vehicles that are purpose built to be battery powered with zero emissions while integrating global suppliers for key components. This OEM platform allows GreenPower to meet the specifications of various operators while providing standard parts for ease of maintenance and accessibility for warranty requirements. GreenPower was founded in Vancouver, Canada with primary operational facilities in southern California. Listed on the TSX Venture exchange since November 2015, GreenPower completed its U.S. IPO and NASDAQ listing in August 2020.
We believe our battery-electric commercial vehicles offer fleet operators significant benefits, which include:
• | low total cost-of-ownership vs. conventional gas or diesel-powered vehicles; |
• | lower maintenance costs; |
• | reduced fuel expenses; |
• | satisfaction of government mandates to move to zero-emission vehicles; and |
• | decreased vehicle emissions and reduction in carbon footprint. |
We currently sell and lease our vehicles to customers directly and through a network of dealers in different regions of the United States, and directly to customers in Canada. GreenPower's all-electric zero-emission vehicles are eligible for various funding programs, vouchers and incentives, including:
• | the California HVIP program; |
• | the British Columbia Specialty Use Vehicle Program; |
• | the Transport Canada iMHZEV Program |
• | the New York State voucher program; |
• | the New Jersey Zero Emission Program; |
• | the EPA's Clean School Bus Program; |
• | the VW Mitigation Trust Fund; |
• | CARES ACT United States federal funding; and |
• | California Air Quality Management District funding. |
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Products
EV Star
The GreenPower EV Star is a purpose built, zero-emission, multi-utility vehicle capable of a range of up to 150 miles. The 25-ft EV Star is designed from the ground up to be battery electric and is offered in 6 configurations. This includes the base model which seats up to 19 passengers, a Right Hand Drive ("RHD") version of the base model and the EV Star Plus, which features a wider body and seats up to 24. These models can be used for paratransit, employee shuttles, micro transit, and vanpool services. The EV Star is the only class 4 electric vehicle that can be built to meet Buy America Compliance and is Altoona tested. The seating layout is customizable to an operator's needs with multiple configurations and multiple positions, including with disability lifts. Additionally, the EV Star CarGo and the EV Star CarGo Plus are both commercially available, zero-emissions transport and delivery vehicles. The EV Star CarGo is a van with a capacity of 570 cubic feet and a payload of up to 6,000 pounds. The CarGo plus has a payload of up to 5,000 pounds and 833 cubic feet of storage with an optional lift gate. For customers that wish to use their own body, the EV Star cab and chassis is a purpose-built all electric platform that can be configured with a range of options to serve markets, such as last mile delivery, refuse trucks, and many more. All EV Star platforms are equipped with both J1772-2 and CCS DC Fast charging. They can fully charge in as little as 2 hours or overnight. The EV Star platform can also be configured with an autonomous option and wireless charging.
EV Transit Bus Line
Launched in 2014, our EV battery-electric transit bus line features multiple models that include the 30-ft EV250, the 40-ft EV350, and the double decker EV550. Our electric buses do not have heavy battery storage or battery charging systems on the roof of the bus which enhances the user experience due to the bus's low center of gravity for steering and maneuvering around corners. This design also offers ease-of-access for maintenance due to the low positioned stainless-steel battery trays that can be accessed without removing panels or the use of elaborate hoist systems to maintain the battery boxes.
EV250
The EV250 is our battery-electric 30-ft low floor transit bus with a passenger capacity of 26 seats plus standees. It features a monocoque body with a stainless-steel chassis, a GreenPower battery management system, and component integration with quality global suppliers. The EV250 features a Siemens traction motor, a 260-kWh battery capacity, and a range of up to 160 miles on a single charge. It is designed to charge using standard chargers that are readily available on the open market and capable of ultra-fast charging.
EV350
The EV350 is our battery-electric 40-ft low floor transit bus with a passenger capacity of 40 seats plus standees. It features a monocoque body with a stainless-steel chassis, a GreenPower battery management system, and component integration with quality global suppliers. The EV350 features a Siemens traction motor, battery capacity of up to 400 kwh, and a range of up to 212 miles on a single charge. It is designed to charge using SAE standard chargers that are readily available on the open market and capable of CCS ultra-fast charging.
EV550
The EV550 is our battery-electric 45-ft double-decker bus with a passenger capacity of 100 seats plus standees. It features a monocoque body with a stainless-steel chassis, a GreenPower battery management system, and component integration with quality global suppliers. The EV550 features a Siemens traction motor, a 500-kWh battery capacity, and a range of up to 175 miles on a single charge. It is designed to charge using SAE standard chargers that are readily available on the open market and capable of CCS ultra-fast charging.
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BEAST Type-D and Nano-BEAST Type A School Bus
GreenPower's Type-D School Bus and Nano-BEAST Type A School Bus are marketed under the trade name Battery Electric Automotive School Transportation, or the BEAST, features a clean sheet build that was designed from the ground-up around its electric drive and battery systems. The body and chassis are integrated together to form the composite monocoque structure which provides the benefits of increased strength and a significant weight advantage in comparison to other school buses. Additionally, the design is not limited to the inner frame rails like conventional "body on chassis" school buses which allows for the maximization of interior space.
The GreenPower BEAST is offered in a 40-ft 90 passenger design that features a flat tracked floor that gives the end-user complete seating customization that can be modified with ease. The tracked flooring also allows the end-user to customize how many wheelchair positions are located on the bus and their location. Standard features include vehicle control stability, air ride suspension, and ABS brakes. With the 193.5-kWh advanced battery system, the BEAST has a reliable range of up to 150 miles on a single charge. This is paired with a state of the art TM4 electric drivetrain that is rated maintenance free for one million kilometers. The standard J1772 Level 2 charging of the BEAST will fully charge the electric school bus in under 7 hours.
The GreenPower Nano BEAST a 25-ft Type A school bus with seating for 24 passengers design with optional wheelchair seating. Standard features include vehicle control stability, air ride suspension, and ABS brakes. With the 118-kWh advanced battery system, the Nano BEAST has a reliable range of up to 150 miles on a single charge. This is paired with a state of the art TM4 electric drivetrain that is rated maintenance free for one million kilometers. With J1772 Level 2 charging and DC fast charging with rates up to 61 kw.
Technology
Batteries
The battery pack is a key component with the design, development, and manufacture of advanced electric-vehicle powertrains. Where some other EV manufacturers build their own battery packs we purchase the batteries in a plug-and-play pack from our designs. This provides us with the flexibility to use different cell manufacturers with different battery chemistries. We believe that the underlying battery cells are a commodity and consequently have designed our products to take full advantage of the best batteries that are available at the time we manufacture our products.
Powertrains
Our powertrains encompass the complete motor assemblies, computers, and software required for vehicle electrification. We use off-the-shelf proven components such as Siemens for the drive motors for our low floor transit buses and TM4 for our EV Stars or BEAST school buses.
Telematics
The telematics system and associated hardware installed in almost all of our vehicles is designed to monitor the controller area network traffic for specific signals. These signals are uploaded along with GPS data to a server facility. The real-time data is stored in a database as it arrives and delivers updates to clients connected through the web interface. The information transmitted to the cloud and stored onboard the vehicle include: vehicle location, vehicle speed, vehicle energy usage, the amount of charge remaining in the battery, vehicle range, general status of the health of vehicle systems, using onboard diagnostics and driver habits monitoring.
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Locations and Facilities
Our primary production and assembly facility is located at 90 W Poplar, Porterville, California, where we occupy a 50,000 sq. ft. facility that is used for the production, assembly, maintenance and service of our products. We also have additional space in Porterville, CA with approximately 20,000 sq. ft. that we use for production, storage, and that includes offices.
During July 2022 GreenPower assumed the lease of an 18,000 square foot truck body manufacturing facility in Torrance CA as part of the Lion Truck Body acquisition. In August 2022 GreenPower took possession of an 80,000 square foot manufacturing facility in South Charleston West Virginia which will be used for GreenPower's North American school bus manufacturing operations.
Our U.S. operations, sales and marketing office is located at 8885 Haven Avenue, Rancho Cucamonga, California.
Our corporate office is located at Suite #240 - 209 Carrall Street, Vancouver, British Columbia, Canada.
Marketing
Our sales team is focused on the goal of securing purchase orders from commercial transportation companies, transit properties, government agencies and school districts. We also maintain a network of dealers across our core markets in the US.
Our priority is to generate customers across all of the sectors we are targeting including transit, shuttle, schools, government and commercial. Our current core products are the six models under our EV Star platform, our two models of all-electric school buses, being the Type D BEAST and the TYPE A Nano BEAST. Our sales plan is to meet with the top potential customers and obtain purchase orders for sales of GreenPower all-electric vehicles.
Strategic Relationships
GreenPower maintains a network of vehicle dealers across the United States. As at March 31, 2023 GreenPower established dealership arrangements include dealers in Arizona, Massachusetts, Nevada, New Jersey, NY State, Oregon, Rhode Island, Washington State, West Virginia, and several specialized dealership relationships in the state of California. GreenPower is actively seeking to expand its dealer network into new markets across North America.
GreenPower has established a significant partnership with the state of West Virginia under which GreenPower entered into a lease purchase agreement with the state for an 80,000 square foot facility on six acres of land to manufacture all-electric school buses for the US market. As part of this partnership the state will provide worker training and hiring support, up to $3.5 million in employment incentive payments in exchange for meeting hiring targets and has agreed to purchase up to $15 million of GreenPower vehicles produced at the facility. Finally, GreenPower has a contract in place to sell 1,500 EV Star CC's to Workhorse.
GreenPower utilizes a proprietary network of contract manufacturers for the majority of its production and has established relationships with multiple contract manufacturers for different vehicle models and for different stages of production,. In addition, GreenPower maintains important relationships with parts and component suppliers both in North America and internationally.
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Research and Development
The majority of our research and development is conducted in-house. Additionally, we contract with engineering firms to assist with validation and certification requirements as well as specific vehicle integration tasks.
Competitive Companies
Competition varies by sector with EV manufacturers that solely offer all-electric buses (such as BYD, Proterra or Lion) or traditional manufacturers of heavy-duty buses who are entering the market with all-electric buses (such as New Flyer or Blue Bird). In addition, companies such as Workhorse (Nasdaq: WKHS), Chanje, Lightning and XOS are competing with GreenPower in the commercial cargo and delivery van market. We compete with Motiv in the OEM electric cab and chassis market, and GreenPower is the only company that offers a purpose built electric cab and chassis as opposed to a gasoline or diesel cab and chassis that has been converted to an electric cab and chassis.
| Transit buses | ||
| GreenPower | 30', 40', 45'DD and EV Star | |
| BYD | 30', 35', 40', 60' and 45'DD | |
| Gillig | 29', 35' and 40' | |
| New Flyer | 35', 40' and 60' | |
| Proterra | 35' and 40' | |
| Bluebird | Class 7 and 8, 40' to 59' | |
| Eldorado | 30' to 39' | |
| School Buses | ||
| GreenPower | BEAST Type D, Nano BEAST Type A | |
| Blue Bird | Type C and Type D | |
| Lion | Type C and Type D | |
| MicroBird | Type A on E450 platform | |
| Motiv | Type A on Ford E450 platform | |
| Motiv | Type C on Ford F59 platform | |
| Phoenix Motors | Type A | |
| Thomas Built | Type C | |
| Navistar | Type C | |
| Shuttle Buses | ||
| GreenPower | EV Star and EV 250 | |
| MicroBird | On E450 platform | |
| Motiv | On Ford E450 platform | |
| Phoenix Motors | Zeus 300 and 400 cutaway | |
| Zenith Motors | Passenger Van | |
| SEA Electric | E-450 EV | |
| Lightning | E-450 shuttle bus | |
| Cargo Van | ||
| GreenPower | EV Star Cargo | |
| Chanje | V8100 panel van | |
| Lightning Systems | Ford transit 350HD cutaway | |
| Zenith Motors | Cargo Van |
Some of the key differences between our company and many of our competitors in the heavy-duty bus market is that we use a clean sheet design to offer customers purpose-built solutions. Many of our competitors use an existing layout and then determine where to place the batteries or the drive motor or in some cases retrofit an existing design and build. Several of GreenPower's competitors have raised significantly more capital than GreenPower and have access to capital well in excess of the current financial resources of GreenPower.
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We believe that the primary competitive factors within the medium and heavy-duty commercial vehicle market are:
• | the difference in the initial purchase prices of electric vehicles and comparable vehicles powered by internal combustion engines, both including and excluding the impact of government and other subsidies and incentives designed to promote the purchase of electric vehicles; |
• | the total cost of vehicle ownership over the vehicle's expected life, which includes the initial purchase price and ongoing fuel, operational and maintenance costs; |
• | vehicle quality, performance and safety; |
• | access to capital in order to fund the ongoing working capital requirements and growth of the business; |
• | government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; and |
• | the quality and availability of service and parts for the vehicle. |
Government Regulation
Our electric vehicles are designed to comply with a significant number of governmental regulations and industry standards in Canada and the United States, some of which are evolving as new technologies are deployed. Government regulations regarding the manufacture, sale and implementation of products and systems similar to our electric vehicles are subject to future change. We cannot predict what impact, if any, such changes may have upon our business.
Emission and fuel economy standards
California legislature has adopted a zero-emission bus program for all California public transit properties called the Innovative Clean Transit Regulation (ICT). The ICT regulation was adopted in December 2018 and requires all public transit agencies to gradually transition to a 100 percent zero-emission bus (ZEB) fleet. Beginning in 2029, 100% of new purchases by transit agencies must be ZEBs, with a goal for full transition by 2040. It applies to all transit agencies that own, operate, or lease buses with a gross vehicle weight rating (GVWR) greater than 14,000 lbs. It includes standard, articulated, over-the-road, double-decker, and cutaway buses.
During 2019, the California Air Resources Board ("CARB") approved a rule that will require fixed route airport shuttles serving the state's 13 largest airports to transition to 100 percent zero-emission vehicles by 2035. The regulation affects public and private fleets, including parking facilities, rental car agencies and hotels. This applies to about 1000 Buses and Shuttles.
During 2020 California Governor Newsom announced an executive order that requires that by 2035 all new cars and passenger trucks sold in California must be zero-emission vehicles and announced that the Air Resources Board will develop regulations requiring that require that by 2045 all operations of medium and heavy duty vehicles shall be zero-emission vehicles, and during the year the Air Resources Board approved new regulations that requires truck manufacturers to transition to electric zero-emission trucks by 2024.
Government regulation related to climate change is in effect at the U.S. federal and state levels. The U.S. Environmental Protection Agency ("EPA") and the National Highway Traffic Safety Administration ("NHTSA") issued a final rule for greenhouse gas emissions and fuel economy requirements for trucks and heavy-duty engines on August 9, 2011, which is applicable in model years 2018 through 2020. NHTSA and EPA also issued a final rule on August 16, 2016 increasing the stringency of these standards for model years 2021 through 2027.
The rules provide emission standards for CO2 and fuel consumption standards for three main categories of vehicles: (i) combination tractors, (ii) heavy-duty pickup trucks and vans and (iii) vocational vehicles. We believe that our buses and EV Star Cargo Van would be considered "vocational vehicles" and "heavy-duty pickup trucks and vans" under the rules. According to the EPA and NHTSA, vocational vehicles consist of a wide variety of truck and bus types, including delivery, refuse, utility, dump, cement, transit bus, shuttle bus, school bus, emergency vehicles, motor homes and tow trucks, and are characterized by a complex build process, with an incomplete chassis often built with an engine and transmission purchased from other manufacturers, then sold to a body manufacturer.
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The Clean Air Act requires that we obtain a Certificate of Conformity issued by the EPA and a California Executive Order issued by the CARB with respect to emissions for our vehicles. The Certificate of Conformity is required for vehicles sold in states covered by the Clean Air Act's standards and the Executive Order is required for vehicles sold in states that have sought and received a waiver from the EPA to utilize California standards. The California standards for emissions control for certain regulated pollutants for new vehicles and engines sold in California are set by CARB. States that have adopted the California standards as approved by EPA also recognize the Executive Order for sales of vehicles.
Manufacturers who sell vehicles in states covered by federal requirements under the Clean Air Act without a Certificate of Conformity may be subject to fines and be required to recall and remedy any vehicles sold with emissions in excess of Clean Air Act standards.
Vehicle safety and testing
The National Traffic and Motor Vehicle Safety Act of 1966 (the "Safety Act") regulates motor vehicles and motor vehicle equipment in the United States in two primary ways. First, the Safety Act prohibits the sale in the United States of any new vehicle or equipment that does not conform to applicable motor vehicle safety standards established by NHTSA. Meeting or exceeding many safety standards is costly, in part because the standards tend to conflict with the need to reduce vehicle weight in order to meet emissions and fuel economy standards. Second, the Safety Act requires that defects related to motor vehicle safety be remedied through safety recall campaigns. A manufacturer is obligated to recall vehicles if it determines that the vehicles do not comply with a safety standard. Should we or NHTSA determine that either a safety defect or noncompliance exists with respect to any of our vehicles, the cost of such recall campaigns could be substantial.
There is a body of legislation that requires that new model buses be tested before they can be purchased with funds from the US Federal Transportation Authority ("FTA"), and that defines the required testing and provides funding for these federally mandated tests. This legislation includes The Surface Transportation and Uniform Relocation Assistance Act of 1987, Section 317: Bus Testing; the Intermodal Surface Transportation Efficiency Act of 1991; the Transportation Equity Act for the 21st Century (Public Law 105-178); and the Fixing America's Surface Transportation ("FAST") Act. The Larson Transportation Institute's Bus Research and Testing Center, located in Altoona, Pennsylvania is a federally funded bus testing site that administers the required bus tests, covering areas including safety, structural integrity, durability, performance, maintainability, noise, and fuel economy. GreenPower's EV Star completed the Altoona Test in April 2020, and received an overall score of 92.2, which is one of the highest scores ever for a medium-duty bus.
Battery safety and testing
Our battery pack configurations are designed to conform to mandatory regulations that govern transport of "dangerous goods," which includes lithium-ion batteries, which may present a risk in transportation. The governing regulations, which are issued by the Pipeline and Hazardous Safety Administration and are based on the UN Recommendations on the Safe Transport of Dangerous Goods Model Regulations, and related UN Manual of Tests and Criteria. The requirements for shipments of these goods vary by mode of transportation, such as ocean vessel, rail, truck and air.
Vehicle dealer and distribution regulation
Certain states' laws require motor vehicle manufacturers and dealers to be licensed in such states in order to conduct manufacturing and sales activities. To date, we are registered as a motor vehicle manufacturer in California and as a dealer in California. We have sold and intend to continue to sell, vehicles in other states both directly and through licensed dealers across the US.
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Legal Proceedings
We are not currently a party to any litigation or legal proceedings which are material, either individually or in the aggregate. The Company has filed a civil claim against the prior CEO and Director of the Company in the Province of British Columbia, and the prior CEO and Director of the Company has filed a response with a counterclaim for wrongful dismissal in the Province of British Columbia. The prior CEO and Director of the Company also filed a similar claim in the state of California in regards to this matter, and this claim has been stayed pending the outcome of the claim in British Columbia. There has not been a resolution on the British Columbia claim or counterclaim, or the California claim as at March 31, 2023. In addition, a company owned and controlled by a former employee who provided services to a subsidiary company of GreenPower until August 2013 filed a claim for breach of confidence against GreenPower in July 2020, and this claim has not been resolved as at March 31, 2023. The Company has not booked a provision for the claims or the counterclaim as it does not believe there is a remote and estimable material financial impact as at March 31, 2023. During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC's which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, the Company repossessed 1 EV Star from the same customer due to non-payment. During May 2023 this customer filed a claim in the state of California against the Company and a subsidiary of the Company, and the Company is evaluating its response to this claim.
Plan of Operations
As of March 31, 2023 we had a cash balance of $0.6 million, working capital of $27.7 million, total assets of $63.5 million, total liabilities of $35.9 million, and an operating line of credit with a credit limit of up to $8 million, subject to margining requirements, with a drawn balance of $6.6 million as at March 31, 2023.
We are currently producing various models of EV Stars with contract manufacturers in Asia, with final assembly in Porterville, CA. GreenPower's EV star completed the federally sponsored Altoona test in April 2020. This structural and durability test, along with Buy America manufacturing capabilities, is required for the use of Federal Transit Administration funding. GreenPower completed its first two deliveries of Buy America built EV Stars during the year ended March 31, 2023. GreenPower utilizes multiple contract manufacturers in Asia to manufacture its other vehicle models and is currently building out its school bus manufacturing facility in South Charleston West Virginia, where it will manufacture its Type A Nano BEAST and Type D BEAST school buses.
Our primary production and assembly facility is located at 90 W Poplar, Porterville, California, where we occupy a 50,000 sq. ft. facility that is used for the production, assembly, maintenance and service of our vehicles, as well as parts inventory and distribution. We also have additional space in Porterville, CA with approximately 20,000 sq. ft. that we use for production, storage, and that includes offices.
During July 2022 GreenPower assumed the lease of an 18,000 square foot truck body manufacturing facility in Torrance CA as part of the Lion Truck Body acquisition. In August 2022 GreenPower took possession of an 80,000 square foot manufacturing facility in South Charleston West Virginia which will be used for GreenPower's North American school bus manufacturing operations. Our U.S. operations, sales and marketing office is located at 8885 Haven Avenue, Rancho Cucamonga, California. Our corporate office is located at Suite #240 - 209 Carrall Street, Vancouver, British Columbia, Canada.
We have expanded our personnel over the past year, primarily from the acquisition of Lion Truck Body, and from the hiring of new employees in the state of West Virginia to be based out of the West Virginia manufacturing facility.
To date, we have funded our operations and business expansion with capital which has been sourced from our company's sale of common shares, convertible debentures, warrants, proceeds from the exercise of warrants and options for common shares, related party loans, and from our company's operating line of credit with the Bank of Montreal. We anticipate that we will need to raise additional capital in the near-term to meet our growth objectives, including for working capital investments, for expanding our business operations, and to hire and retain employees for this growth. We will continue to evaluate capital and bank market conditions, and may seek to raise debt or equity capital, depending on overall market conditions and pricing.
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C. Organizational Structure
GreenPower Motor Company Inc. is incorporated in the Province of British Columbia, Canada and has the following wholly-owned subsidiaries as of the date of this report:
1. GP GreenPower Industries Inc. (incorporated in the Province of British Columbia, Canada)
2. GreenPower Motor Company, Inc. (incorporated in the State of Delaware, and registered to do business in the State of California)
3. 0939181 B.C. Ltd. (incorporated in the Province of British Columbia, Canada)
4. San Joaquin Valley Equipment Leasing Inc. (formerly, Utah Manganese, Inc.) (incorporated in the State of Utah and registered to do business in the State of California)
5. 0999314 B.C. Ltd. (incorporated in the Province of British Columbia, Canada)
6. Electric Vehicle Logistics Inc. (incorporated in the State of Nevada)
7. GreenPower Manufacturing WV Inc. (incorporated in the State of West Virginia)
8. Lion Truck Body Incorporated (incorporated in the State of Nevada)
9. EA Green-Power Private Ltd. (incorporated in India)
10. Gerui New Energy Vehicle (Nanjing) Co. Ltd. (incorporated in China)
D. Property, Plant and Equipment
We maintain our corporate office at a leased property at 240-209 Carrall Street, Vancouver, British Columbia V6B 2J2, Canada. We first entered into a lease of this office in January, 2014, and have entered into subsequent leases of this same space, including our current lease which expires on October 31, 2023. The office space is 869 square feet, and the current annual rent is CDN$30.50 per square foot plus a pro-rata share of operating costs and property taxes. We are not allowed to assign or sub-lease the premises without the written consent of the landlord.
We maintain an office for the U.S. operations, sales, marketing and support at a leased property at 8885 Haven Avenue, Rancho Cucamonga, CA 91730. The current lease expires in January 2025 and the monthly rent is $18,012 per month, plus a pro-rata share of operating costs and property taxes.
We maintain two leased properties in the City of Porterville that are used for assembly and manufacturing. One facility is approximately 20,000 square feet and is located at 2011 Wildcat Way, Porterville, CA 93527. Rent is currently $6,250 per month, and the lease expires on July 31, 2023. We also lease a facility of approximately 50,000 square feet located at 90 West Poplar, Porterville, CA, 93257 where we are engaged in the assembly, maintenance and service of our vehicles, and where we maintain a vehicle parts inventory and distribution. The current monthly rent is $18,144 per month plus a pro-rata portion of operating costs and property taxes. This lease is month to month and can be cancelled by the lessor or the lessee with no less than 60 days notice.
During July 2022 GreenPower assumed the lease of an 18,000 square foot truck body manufacturing facility in Torrance CA as part of the Lion Truck Body acquisition. This lease expires in December 2024 and has a current lease rate of $16,711 per month.
In August 2022 GreenPower took possession of an 80,000 square foot manufacturing facility in South Charleston West Virginia which will be used for GreenPower’s North American school bus manufacturing operations. Under the terms of this lease, GreenPower is required to make $50,000 monthly payments, and GreenPower is eligible forgiveness on the lease of up to $1.3 million for meeting the initial employment target at the property by December 31, 2024, and then $500,000 for every 100 employees hired after meeting the initial employment target. Title to the property will transfer to GreenPower once the lease and incentive payments total $6.7 million.
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The principal capital expenditures of our company have been in electric buses, EV equipment, automobiles and tools and equipment, the carrying value of which is $2.6 million as at March 31, 2023. During the year ended March 31, 2023, GreenPower sold a 9.3 acre parcel of land in the City of Porterville for gross proceeds of $950,000. To date, our principal capital expenditures have been funded with capital which has been sourced from our company's sale of common shares, convertible debentures, warrants, proceeds from the exercise of warrants and options for common shares, loans from related parties, and from our company's $8 million operating credit line with the Bank of Montreal.
ITEM 4.A. UNRESOLVED STAFF COMMENTS
N/A
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
General
This Annual Report should be read in conjunction with the accompanying consolidated financial statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").
The preparation of the consolidated financial statements in conformity with these accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis we review our estimates and assumptions. The estimates were based on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results are likely to differ from those estimates or other forward-looking statements under different assumptions or conditions, but we do not believe such differences will materially affect our financial position or results of operations. Our actual results may differ materially as a result of many factors, including those set forth under the headings entitled "Forward-Looking Statements" and "Risk Factors" herein.
Critical accounting policies, the policies we believe are most important to the presentation of our consolidated financial statements and require the most difficult, subjective and complex judgments, are outlined below under the heading "Critical Accounting Policies and Estimates".
Nature and Continuance of Operations
GreenPower Motor Company Inc. ("GreenPower" or the "Company") was incorporated in the Province of British Columbia on September 18, 2007. The Company is a manufacturer and distributor of purpose-built, all-electric, zero-emission medium and heavy-duty vehicles serving the cargo and delivery market, shuttle and transit space and school bus sector.
The Company's corporate office is located at Suite 240-209 Carrall St., Vancouver, Canada.
The consolidated financial statements were approved by the Board of Directors on July 13, 2023.
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and interpretations, as issued by the International Accounting Standards Board on the basis that the Company is a going concern, meaning that the Company will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of operations.
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The Company’s operations are dependent upon its ability to raise capital and generate cash flows. As at March 31, 2023, the Company had a cash balance of $600,402, working capital, defined as current assets less current liabilities, of $27,655,892, accumulated deficit of ($60,790,972), and shareholders’ equity of $27,662,006, and the Company recorded a loss of ($15,043,857) for the year ended March 31, 2023. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. The continuation of the Company as a going concern is dependent on future cash flows from operations including the successful sale and manufacture of electric buses to achieve a profitable level of operations and obtaining necessary financing to fund ongoing operations. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company’s ability to continue as a going concern. Management plans to address this material uncertainty by selling vehicles in inventory, collecting accounts receivable, utilizing the Company’s operating line of credit and, from time to time, and at its discretion, selling common shares through the Company’s At the Market Equity offering (“ATM”).
A. Operating Results
The following table compares the annual results of GreenPower for the years ended March 31, 2023, 2022 and 2021. The information in this table should be read in conjunction with the Audited consolidated financial statements and notes beginning on page F-1.
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| For the years ended | Percentage Change | $ Change | |||||||||||||||||||
| March 31, | March 31, | March 31, | 2023 to | 2022 to | 2023 to | 2022 to | |||||||||||||||
| 2023 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | |||||||||||||||
| Revenue | $ | 39,695,890 | $ | 17,236,773 | $ | 13,286,184 | 130.3% | 29.7% | $ | 22,459,117 | $ | 3,950,589 | |||||||||
| Cost of sales | 32,445,836 | 13,360,068 | 9,706,044 | 142.9% | 37.6% | 19,085,768 | 3,654,024 | ||||||||||||||
| Gross Profit | 7,250,054 | 3,876,705 | 3,580,140 | 87.0% | 8.3% | 3,373,349 | 296,565 | ||||||||||||||
| Gross profit margin¹ | 18.3% | 22.5% | 26.9% | -4.2% | -4.5% | ||||||||||||||||
| Sales, general and administrative costs | |||||||||||||||||||||
| Salaries and administration | 7,394,085 | 5,807,744 | 3,747,761 | 27.3% | 55.0% | 1,586,341 | 2,059,983 | ||||||||||||||
| Depreciation | 1,219,223 | 661,958 | 437,263 | 84.2% | 51.4% | 557,265 | 224,695 | ||||||||||||||
| Product development costs | 2,090,338 | 1,381,101 | 939,949 | 51.4% | 46.9% | 709,237 | 441,152 | ||||||||||||||
| Office expense | 920,468 | 419,398 | 325,324 | 119.5% | 28.9% | 501,070 | 94,074 | ||||||||||||||
| Insurance | 1,801,665 | 1,244,505 | 596,932 | 44.8% | 108.5% | 557,160 | 647,573 | ||||||||||||||
| Professional fees | 1,477,094 | 1,207,920 | 486,425 | 22.3% | 148.3% | 269,174 | 721,495 | ||||||||||||||
| Sales and marketing | 818,289 | 686,544 | 234,445 | 19.2% | 192.8% | 131,745 | 452,099 | ||||||||||||||
| Share-based payments | 3,645,893 | 5,771,475 | 2,098,761 | -36.8% | 175.0% | (2,125,582 | ) | 3,672,714 | |||||||||||||
| Transportation costs | 324,773 | 231,472 | 161,017 | 40.3% | 43.8% | 93,301 | 70,455 | ||||||||||||||
| Travel, accomodation, meals and entertainment | 748,299 | 641,500 | 217,023 | 16.6% | 195.6% | 106,799 | 424,477 | ||||||||||||||
| Allowance for credit losses | 95,153 | 8,940 | 333,929 | 964.4% | -97.3% | 86,213 | (324,989 | ) | |||||||||||||
| Total sales, general and administrative costs | 20,535,280 | 18,062,557 | 9,578,829 | 13.7% | 88.6% | 2,472,723 | 8,483,728 | ||||||||||||||
| Loss from operations before interest, accretion and foreign exchange | (13,285,226 | ) | (14,185,852 | ) | (5,998,689 | ) | -6.3% | 136.5% | 900,626 | (8,187,163 | ) | ||||||||||
| Interest and accretion | (1,549,769 | ) | (515,668 | ) | (1,598,588 | ) | 200.5% | -67.7% | (1,034,101 | ) | 1,082,920 | ||||||||||
| Other Income | 72,867 | 364,296 | - | NM | NM | (291,429 | ) | 364,296 | |||||||||||||
| Foreign exchange loss | (30,897 | ) | (65,117 | ) | (193,798 | ) | -52.6% | -66.4% | 34,220 | 128,681 | |||||||||||
| Loss from operations for the year | (14,793,025 | ) | (14,402,341 | ) | (7,791,075 | ) | 2.7% | 84.9% | (390,684 | ) | (6,611,266 | ) | |||||||||
| Other item | |||||||||||||||||||||
| Write down of assets | (250,832 | ) | (607,579 | ) | (45,679 | ) | -58.7% | NM | 356,747 | (561,900 | ) | ||||||||||
| Loss for the year | (15,043,857 | ) | (15,009,920 | ) | (7,836,754 | ) | 0.2% | 91.5% | (33,937 | ) | (7,173,166 | ) | |||||||||
| Other comprehensive income / (loss) | |||||||||||||||||||||
| Cumulative translation reserve | (13,007 | ) | (39,413 | ) | 21,169 | NM | NM | 26,406 | (60,582 | ) | |||||||||||
| Total comprehensive loss for the year | $ | (15,056,864 | ) | $ | (15,049,333 | ) | $ | (7,815,585 | ) | NM | NM | $ | (7,531 | ) | $ | (7,233,748 | ) | ||||
| Loss per common share, basic and diluted | $ | (0.64 | ) | $ | (0.69 | ) | $ | (0.43 | ) | -7.2% | 60.5% | $ | 0.05 | $ | (0.26 | ) | |||||
| Weighted average number of common shares outstanding, basic | 23,522,755 | 21,877,488 | 18,116,129 | 7.5% | 20.8% | 1,645,267 | 3,761,359 | ||||||||||||||
(1) Gross profit margin, a supplementary financial metric, is calculated as gross profit divided by revenue. Gross profit margin is not a defined term under IFRS.
Change in Revenue
The annual increase in revenue for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $22,459,117 or 130.3%. This increase was the result of an additional 206 vehicles delivered during the year ended March 31, 2023 compared to the prior year.
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The annual increase in revenue for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $3,950,589 or 29.7%. This increase was the result of an additional 31 vehicles delivered during the year ended March 31, 2022 compared to the prior year.
Change in Cost of Sales and Gross Profit and Gross Profit Margin
The annual increase in cost of sales for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $19,085,768 or 142.9%, resulting in an increase in gross profit of $3,373,349 or 87.0%. During the year ended March 31, 2023 GreenPower delivered a total of 299 vehicles compared to 93 in the prior year, an increase of 206 vehicle deliveries. The increase in cost of sales and gross profit over the year was due to the increase in unit sales, which was primarily comprised of lower cost vehicle models, as well as an increase in shipping and other conversion costs included in cost of sales.
The annual increase in cost of sales for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $3,654,024 or 37.6%, resulting in an increase in gross profit of $296,565 or 8.3%. During the year ended March 31, 2022 GreenPower delivered a total of 93 vehicles compared to 62 in the prior year, an increase of 31 vehicle deliveries. The increase in cost of sales and gross profit over the year was due to the increase in unit sales.
Gross profit margin (defined as gross profit over sales) for the years ended March 2023, 2022 and 2021 was 18.3%, 22.5% and 26.9% respectively. Gross profit margin declined by 4.2% between March 31, 2023 and March 31, 2022 due to increased sales under a high volume contract, which were at a lower gross profit margin than sales in the prior year, which were primarily comprised of lower volume sales at a higher gross profit margin. In addition, the decline in gross profit margin during the year ended March 31, 2023 compared to the prior year was due to an increase in shipping costs that was driven by a higher percentage of sales outside of the state of California, compared to the prior year. Gross profit margin declined by 4.5% between March 31, 2022 and March 31, 2021 due to the product mix of sales, including sales of BEAST school buses and EV Star Cargos at a lower margin than sales during the year ended March 31, 2021.
Change in Salaries and Administration
The annual increase in salaries and administration expense for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $1,586,341 or 27.3%. There were 112 employees at March 31, 2023 and 69 employees at March 31, 2022 due to the expansion of our business in West Virginia, and in California primarily due to the acquisition of Lion Truck Body, which increased salary expense. In addition, the increase was also due to salary increases for existing employees, and due to the implementation of a defined contribution retirement plan for US employees.
The annual increase in salaries and administration expense for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $2,059,983 or 55.0%. There were 69 employees at March 31, 2022 and 55 employees at March 31, 2021, and the increase in salary and administration expense was due to an increase in the number of employees, due to salary increases, commissions and bonuses paid to existing employees, due to the implementation of a defined contribution retirement plan for US employees, and due to an increase in other administration costs.
Change in Depreciation
The annual increase in depreciation for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $557,265 or 84.2%. Approximately $340,000 of this increase was from an increase in depreciation on right of use assets, with the remainder from an increase in depreciation expense on GreenPower's property, plant and equipment acquired during the year, including assets acquired in the Lion Truck Body acquisition.
The annual increase in depreciation for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $224,695 or 51.4%. The increase in depreciation during the year was due to increased depreciation of property, plant and equipment, which was partially offset by a reduction in depreciation on right of use assets.
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Change in Product Development Costs
The annual increase in product development costs for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $709,237 or 51.4%. This increase was due to increased warranty expense accrual, which is a fixed percentage of sales, offset by a reduction in other product development costs primarily comprised of vehicle parts and related expenses used in product development activities.
The annual increase in product development costs for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $441,152 or 46.9%. This increase was primarily due to increased warranty expense accrual, which is a fixed percentage of sales, as well as an increase in other product development costs primarily comprised of vehicle parts and related expenses used in product development activities.
Change in Share-Based Payments
Share based payments for the year ended March 31, 2023 compared to the prior year declined by $2,125,582 or 36.8%. For the year ended March 31, 2022 there was an increase in share based payments expense of $3,672,714 or 175.0%. Share based payment expense is for non-cash stock option grants, where the value of stock option grants are calculated on the date of the grant and recognized in earnings over the stock option's vesting period. The reduction in share based payment expense during the year ended March 31, 2023 compared to the prior year was due to a lower stock option expense recognized during the year ended March 31, 2023 compared to the year ended March 31, 2022, and due to an increase in forfeited stock options during the year ended March 31, 2023, which reduced share based payments expense. The increase in share-based payment expense during the year ended March 31, 2022 compared to the prior year was from an increase in stock option expense recognized compared to the prior year, primarily from stock options granted during the year ended March 31, 2022 and during the year ended March 31, 2021.
Change in Transportation Costs
The annual increase in transportation costs for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $93,301 or 40.3%. This increase was due to increased costs related to shipping vehicles for non-sales purposes, as well as for expenses associated with company vehicles and transportation.
The annual increase in transportation costs for the year ended March 31, 2022 compared to the year ended March 31, 2021 was $70,455 or 43.8%. This increase was primarily due to increased company vehicle expenses during the year ended March 31, 2022, which was driven by increased business activity compared to the year ended March 31, 2021, which was negatively impacted by COVID related factors.
Change in Interest and Accretion
Interest and accretion increased in the year ended March 31, 2023 compared to the year ended March 31, 2022 by $1,034,101, or 200.5%, and decreased by $1,082,920 or 67.7% in the year ended March 31, 2022 compared to the year ended March 31, 2021. The increase in interest and accretion expense in the year ended March 31, 2023 compared to the prior year was due to an increase in interest bearing debt during the year, including loans from related parties, the term loan assumed in the acquisition of Lion Truck Body, as well as due to the increase on the variable rate of interest on the Company's $8 million operating line of credit, which increased by 4.0% over the year. In addition, the increase was due to non-cash interest expense associated with deferred revenue. The decrease in interest and accretion expense in the year ended March 31, 2022 compared to the prior year was due to a reduction in the average daily outstanding balance of interest bearing debt and due to a reduction in deferred financing fees included in interest and accretion during the year ended March 31, 2022 compared to the prior year.
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Change in Other Income
During the years ended March 31, 2023, GreenPower recognized other income of $72,867 from the gain on a sale of property during the year and recognized $364,296 in other income during the year ended March 31, 2022 from the forgiveness of a payroll protection loan during the year. GreenPower did not recognize other income during the year ended March 31, 2021. Changes in other income recognized during each of these years was due to these non-recurring events in each period.
Change in Office Expense
Office expense increased by $501,070 or 119.5% during the year ended March 31, 2023 compared to the prior year, and $94,074 or 28.9% during the year ended March 31, 2022 compared to the prior year. The increase in office expense during the year ended March 31, 2023 was due to increases in rental expense as well as an increase in maintenance and utilities expense both of which were primarily due to the increased number of properties leased by the Company compared to the prior year. The increase in office expense during the year ended March 31, 2022 compared to the prior year was primarily due to an increase in rental expense and building, maintenance and utilities expense due to an increase in leased office space and leased vehicle storage space.
Change in Insurance Expense
Insurance expense increased by $557,160 or 44.8% during the year ended March 31, 2023 compared to the prior year due to increased insurance requirements from a growth in GreenPower's business and operations, including from the acquisition of Lion Truck Body, from the new property lease and business expansion in West Virginia, and from growth in the Company's core business and operations.
Insurance expense increased by $647,573 or 108.5% during the year ended March 31, 2022 compared to the prior year from increases in the Company's insurance coverage requirements due to general business growth, and due to an increase in directors and officers insurance, which increased after GreenPower's Nasdaq uplisting.
Change in Professional Fees
Professional fees increased by $269,174, or 22.3%, during the year ended March 31, 2023 compared to the prior year, primarily due to an increase in audit and accounting fees. Professional fees increased by $721,495 or 148.3% during the year ended March 31, 2022 compared to the prior year due to increased legal costs associated with general corporate matters and litigation, as well as due to an increase in audit and accounting fees.
Change in Sales and Marketing and Travel, Accommodation, Meals and Entertainment
The annual increase in sales and marketing costs for the year ended March 31, 2023 compared to the prior year was $131,745 or 19.2% and was caused by a general expansion of the Company's sales and marketing activities year over year. The annual increase in sales and marketing expense for the year ended March 31, 2022 compared to the prior year was $452,099 or 192.8%, due to a return to normal levels of sales and marketing activities as Covid-19 restrictions were lifted.
Travel, accommodation, meals and entertainment expenses increased by $106,799 or 16.6% during the year ended March 31, 2023 compared to the prior year, and increased by $424,477 or 195.6% during the year ended March 31, 2022 compared to the prior year. The annual increases in both years were caused by the same factors that increased sales and marketing costs in each year.
Change in Other Costs
Annual changes in allowance for credit losses represents allowances booked against accounts receivable, net of allowances from prior periods collected in the current period.
Annual changes in foreign exchange loss is caused by the Company's exposure to changes in foreign currency exchange rates due to financial assets and liabilities in foreign currency. The Company is exposed to foreign currency risk from assets and liabilities in CDN dollars, as described in the Market risks section.
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Change in Write Down of Assets
During the year ended March 31, 2023, the Company had a write down of assets of $250,832 from the write down of goodwill recognized on the acquisition of Lion Truck Body which was unrelated to the write down of assets in the prior year. The annual increase in the write down of assets for the year ended March 31, 2022 compared to the prior year was $561,900, and was due to increased write downs of all-electric buses held as Property, Plant and Equipment.
Change in Loss for the Year and Loss per Common Share
The loss for the year ended March 31, 2023 increased by $33,937, or 0.2% compared to the prior year, and was due to an increase in the Company's gross profit, which more than offset increases in the Company's selling, general and administrative costs and other expenses. The loss for the year ended March 31, 2022 increased by $7,173,166 compared to the prior year, due to an increase in the Company's selling, general and administrative costs and other expenses, which were partially offset by an increase in the Company's gross profit compared to the prior year.
Loss per common share for the year ended March 31, 2023 declined by $0.05 per share, or 7.2%, due to the increase in the weighted average number of shares outstanding. Loss per common share for the year ended March 31, 2022 increased by $0.26 per share, or 60.5%, due to the increase in the loss for the year which was partially offset by the increase in the weighted average number of shares outstanding.
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Changes in Consolidated Statements of Financial Position
The table below illustrates changes in selected components of GreenPower's consolidated financial position as of March 31, 2023 and March 31, 2022, and an explanation of changes in these components.
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| (Expressed in US Dollars) | March 31, 2023 | March 31, 2022 | Annual Change ($) | Explanation | |||||
| Cash and restricted cash | $ | 600,402 | $ | 6,888,322 | (6,287,920 | ) | See liquidity and capital resources sections of this report | ||
| Accounts receivable, net of allowances | 10,273,376 | 2,916,991 | 7,356,385 | Increase due to higher sales volumes in fiscal 2023 compared to fiscal 2022. | |||||
| Inventory | 41,609,234 | 32,254,854 | 9,354,380 | Increase is primarily comprised of investments in vehicle WIP and finished goods to support higher sales volumes, as well as vehicle parts inventory. | |||||
| Current assets | 54,156,170 | 43,095,077 | 11,061,093 | Increase is primarily due to increases in accounts receivable and inventory, net of a reduction in cash and restricted cash. | |||||
| Finance lease receivables | 2,970,356 | 3,395,739 | (425,383 | ) | Reduction due to lease payments received net of interest income recognized. | ||||
| Right of use assets | 4,845,738 | 116,678 | 4,729,060 | Increase primarily related to addition of West Virginia lease and addition in Lion Truck Body acquistion, net of depreciation. | |||||
| Property and equipment | 2,604,791 | 3,443,317 | (838,526 | ) | Reduction primarily related to sale of property in California | ||||
| Total assets | 63,525,183 | 49,606,932 | 13,918,251 | Primarily related to increases in current assets and right of use assets, net of reductions in finance lease receivables and property and equipment | |||||
| Line of credit | 6,612,232 | 5,766,379 | 845,853 | See liquidity and capital resources sections of this report | |||||
| Accounts payable and accrued liabilities | 7,316,267 | 1,734,225 | 5,582,042 | Primarily related to amounts due to suppliers for investments in inventory. | |||||
| Current portion of deferred revenue | 8,059,769 | 3,578,877 | 4,480,892 | Primarily related to deposits received from Workhorse | |||||
| Loans payable to related parties | 3,287,645 | - | 3,287,645 | See Related Party Transactions section of this report. | |||||
| Current liabilities | 26,500,278 | 11,513,607 | 14,986,671 | Primarily related to increases in accounts payable, current portion of deferred revenue, and loans payable to related parties. | |||||
| Long term portion of Deferred revenue | 1,938,840 | 2,935,835 | (996,995 | ) | Primarily related to deferred revenue received in prior year that was recognized in revenue during the year ended March 31, 2023 for vehicle deliveries. | ||||
| Lease liabilities | 5,239,851 | 120,609 | 5,119,242 | Increase due to increases in Right of Use Assets. | |||||
| Term loan | 610,218 | - | 610,218 | Term loan assumed in acquisition of Lion Truck Body. | |||||
| Deferred benefit on government grant | 686,341 | - | 686,341 | Present value of low interest rate benefit on assumed term loan to be recognized in income over the term of | |||||
| Warranty liability | 2,077,749 | 1,042,983 | 1,034,766 | Increase due to warranty accrual on sales, net of warranty disbursements, during the year ended March 31, 2023. | |||||
| Total liabilities | 35,863,177 | 15,221,739 | 20,641,438 | Due to increases in accounts payable, deferred revenue, loans payable to related parties, lease liabilities, term loan and contingent gain. | |||||
| Shareholder's equity | $ | 27,662,006 | $ | 34,385,193 | (6,723,187 | ) | Reduction due to increase in accumulated deficit, partially offset by increases in share capital from shares sold through the At the Market Equity offering and increases in reserves from stock options. |
B. Liquidity and capital resources
Liquidity
The Company's capital management objective is to obtain sufficient capital to develop new business opportunities for the benefit of its shareholders. To meet these objectives, management monitors the Company's ongoing capital requirements on specific business opportunities on a case-by-case basis. The capital structure of the Company consists of cash, operating line of credit, the term loan, loans from related parties and equity attributable to common shareholders, consisting of issued share capital and deficit. On September 16, 2022 the Company established an at the market equity program (the ATM program) under which the Company may issue, at its discretion, up to $20 million of common shares from treasury to the public. During the period ended March 31, 2023 the Company issued a total of 1,565,268 shares under the ATM program for gross proceeds of $4,895,826. The ATM offering remains open and future shares may be issued up to the total remaining offering amount, at management's discretion.
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At March 31, 2023, the Company has a cash balance of $600,402 and working capital, defined as current assets minus current liabilities, of $27,655,892. The Company's line of credit has a maximum credit limit of up to $8,000,000 and amounts available on the line of credit in excess of $5,000,000 are subject to margining requirements, and as at March 31, 2023 the Line of Credit had a drawn balance of $6,612,232. The Company manages its capital structure and makes adjustments to it based on available funds to the Company. The Company may continue to rely on additional financings and the sale of its inventory to further its operations and meet its capital requirements to manufacture EV vehicles, expand its production capacity and further develop its sales, marketing, engineering, and technical resources.
As at July 21, 2023, the Company has a drawn balance of approximately $1.0 million on its operating line of credit, and a cash balance of approximately $1.5 million. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company’s ability to continue as a going concern. The Company will continue to rely on additional financings to further its operations and meet its capital requirements.
Capital Resources
Year ended March 31, 2023 and up to the date of this report
Authorized Share Capital
Unlimited number of common shares without par value
Unlimited number of preferred shares without par value
Issued Share Capital:
During the year ended March 31, 2023, the Company issued a total of 1,568,590 common shares, including 1,565,268 shares issued under the At the Market Offering (ATM), and 3,322 shares from the exercise of options.
During the year ended March 31, 2022, the Company issued a total of 2,255,478 common shares, including 1,925,656 shares from the exercise of warrants, and 329,822 shares from the exercise of options.
As at March 31, 2023 and March 31, 2022 the Company had no shares held in escrow.
At the Market Offering
In September 2022 the Company filed a prospectus supplement to its short form base shelf prospectus, pursuant to which the Company may, at its discretion and from time to time, sell common shares of the Company for aggregate gross proceeds of up to $20,000,000. The sale of common shares is to be made through "at-the-market distributions" ("ATM") on the NASDAQ stock exchange. During the year ended March 31, 2023, the Company sold 1,565,268 common shares under the ATM program for gross proceeds of $4,895,826.
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The Company incurred approximately $217,000 in professional fees and other direct expenses in connection with the prospectus offering and the ATM, which was included in share issuance costs for the year ended March 31, 2023 (2022 - $Nil).
Between April 1, 2023 and April 17, 2023 the Company issued a total of 188,819 shares under the ATM program at a weighted average price of $2.7587 per share for gross proceeds of $520,892 before transaction fees.
The Company has two incentive stock option plans whereby it grants options to directors, officers, employees, and consultants of the Company, the 2023 Equity Incentive Plan (the "2023 Plan") which was adopted in order to grant awards to people in the United States, and the 2022 Equity Incentive Plan (the "2022 Plan").
2023 Plan
Effective February 21, 2023 GreenPower adopted the 2023 Plan which was approved by shareholders at our AGM on March 28, 2023 in order to grant stock options or non-stock option awards to people in the United States. Under the 2023 Plan GreenPower can issue stock options that are considered incentive stock options, which are stock options that qualify for certain favorable tax treatment under U.S. tax laws. Nonqualified stock options are stock options that are not incentive stock options. The aggregate fair market value on the date of grant of Shares with respect to which incentive stock options are exercisable for the first time by an optionee subject to tax in the United States during any calendar year must not exceed US$100,000, or such other limit as may be prescribed by the Internal Revenue Code. Non-stock option awards means a right granted to an award recipient under the 2023 Plan, which may include the grant of stock appreciation rights, restricted awards or other equity-based awards. No stock options have been issued under the 2023 Plan as at March 31, 2023.
2022 Plan
Effective April 19, 2022 GreenPower adopted the 2022 Equity Incentive Plan (the "2022 Plan"), which was further ratified on February 21, 2023, and which replaced the 2019 Plan. Under the 2022 Plan the Company can grant equity-based incentive awards in the form of stock options ("Options"), restricted share units ("RSUs"), performance share units ("PSUs") and deferred share units ("DSUs"). RSU's, DSU's and PSU's are collectively referred to as "Performance Based Awards". The 2022 Plan is a Rolling Plan for Options and a fixed-plan for Performance-Based Awards such that the aggregate number of Shares that: (i) may be issued upon the exercise or settlement of Options granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements), shall not exceed 10% of the Company's issued and outstanding Shares from time to time, and (ii) may be issued in respect of Performance-Based Awards granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements) shall not exceed 2,467,595. No performance based awards have been issued as at March 31, 2023 or as at March 31, 2022. The 2022 Plan is considered an "evergreen" plan, since Options which have been exercised, cancelled, terminated, surrendered, forfeited or expired without being exercised shall be available for subsequent grants under the 2022 Plan and the number of awards available to grant increases as the number of issued and outstanding Shares increases.
Stock Option Plans from Prior Periods
On May 14, 2019, the Company replaced the 2016 Plan with a Rolling Stock Option Plan (the "2019 Plan"). Under the terms of the 2019 Plan, the aggregate number of Options that can be granted under the 2019 Plan cannot exceed ten (10%) of the total number of issued and outstanding Shares, calculated on a non-diluted basis. The exercise price of options granted under the 2019 Plan may not be less than the minimum prevailing price permitted by the TSXV policies with a maximum term of 10 years. On March 9, 2016, the shareholders approved the previous stock option plan which initially allowed for the issuance of up to 1,491,541 shares and which was subsequently further increased to allow up to 2,129,999 shares to be issued under the plan (the "2016 Plan"). Prior to the adoption of the 2016 Plan, the Company had adopted an incentive stock option plan (the "Plan"), whereby it could grant options to directors, officers, employees, and consultants of the Company.
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The Company had the following incentive stock options granted under the 2022 Plan, the 2019 Plan, and 2016 Plan that are issued and outstanding as at March 31, 2023:
| Exercise | Balance | Forfeited | Balance | ||||||||||||||||
| Expiry Date | Price | March 31, 2022 | Granted | Exercised | or Expired | March 31, 2023 | |||||||||||||
| May 26, 2022 | CDN | $ | 5.25 | 5,357 | - | - | (5,357 | ) | - | ||||||||||
| December 18, 2022 | CDN | $ | 3.15 | 14,286 | - | - | (14,286 | ) | - | ||||||||||
| May 4, 2023 | CDN | $ | 3.50 | 68,571 | - | (2,857 | ) | (8,570 | ) | 57,144 | |||||||||
| November 30, 2023 | CDN | $ | 3.01 | 50,000 | - | - | - | 50,000 | |||||||||||
| February 12, 2024 | CDN | $ | 3.50 | 73,214 | - | - | (1,427 | ) | 71,787 | ||||||||||
| January 30, 2025 | CDN | $ | 2.59 | 281,787 | - | (465 | ) | (26,682 | ) | 254,640 | |||||||||
| February 11, 2025 | CDN | $ | 8.32 | 50,000 | - | - | - | 50,000 | |||||||||||
| July 3, 2025 | CDN | $ | 4.90 | 41,787 | - | - | (25,716 | ) | 16,071 | ||||||||||
| November 19, 2025 | US | $ | 20.00 | 300,000 | - | - | - | 300,000 | |||||||||||
| December 4, 2025 | US | $ | 20.00 | 20,000 | - | - | - | 20,000 | |||||||||||
| May 18, 2026 | CDN | $ | 19.62 | 139,650 | - | - | (66,375 | ) | 73,275 | ||||||||||
| December 10, 2026 | CDN | $ | 16.45 | 658,000 | - | - | (104,500 | ) | 553,500 | ||||||||||
| July 4, 2027 | CDN | $ | 4.25 | - | 15,000 | - | - | 15,000 | |||||||||||
| November 2, 2027 | US | $ | 2.46 | - | 60,000 | - | (50,000 | ) | 10,000 | ||||||||||
| February 14, 2028 | CDN | $ | 3.80 | - | 660,000 | - | (15,000 | ) | 645,000 | ||||||||||
| March 28, 2028 | CDN | $ | 2.85 | - | 100,000 | - | - | 100,000 | |||||||||||
| Total outstanding | 1,702,652 | 835,000 | (3,322 | ) | (317,913 | ) | 2,216,417 | ||||||||||||
| Total exercisable | 700,957 | 1,265,128 | |||||||||||||||||
| Weighted Average | |||||||||||||||||||
| Exercise Price (CDN$) | $ | 12.94 | $ | 3.66 | $ | 3.37 | $ | 11.16 | $ | 10.72 | |||||||||
| Weighted Average Remaining Life | 3.5 years | 3.4 years | |||||||||||||||||
As at March 31, 2023, there were 255,246 stock options available for issuance under the 2023 and 2022 plan and 2,467,595 performance based awards available for issuance under the 2023 Plan and the 2022 Plan. During the year ended March 31, 2023, 317,913 options were forfeited or expired.
On July 4, 2022, the Company granted 15,000 options to an employee with a term of five years and an exercise price of CDN$4.25 per share which vest 25% after 4 months, and after years 1, 2, and 3.
On November 2, 2022, the Company granted 60,000 options to employees with a term of five years and an exercise price of US$2.46 per share which vest 25% after 4 months, and after years 1, 2, and 3.
On February 14, 2023, the Company granted 660,000 options with a term of five years and an exercise price of CDN$3.80 per share, comprised of:
• | 420,000 stock options to officers and directors which vest 25% after 4 months, and then 25% after six months, nine months and twelve months; |
• | 225,000 stock options to employees which vest 25% after 4 months, and then 25% after years 1, 2, and 3; |
• | 15,000 stock options to a consultant which vest 25% 25% after 4 months, and then 25% after six months, nine months and twelve months; |
On March 28, 2023 the Company granted 100,000 stock options to employees. The stock options have an exercise price of CDN$2.85 per share, a term of 5 years, and are exercisable after 4 months, and then 25% after years 1, 2, and 3.
During the year ended March 31, 2023, 3,322 common shares were issued pursuant to the exercise of stock options and 317,913 options were forfeited or expired.
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During the year ended March 31, 2023, the Company incurred share-based compensation expense with a measured fair value of $3,645,893. The fair value of the options granted and vested were recorded as share-based payments on the Consolidated Statements of Operations.
Subsequent to the end of the reporting period:
• | Between April 13, 2023 and May 1, 2023 the Company issued 42,858 common shares pursuant to the exercise of stock options at an exercise price of CDN$3.50 per share for gross proceeds of CDN$150,003. |
• | On May 4, 2023 14,286 stock options exercisable at CDN$3.50 per share expired unexercised. |
• | Between April 1 2023 and June 30, 2023, 74,761 stock options exercisable at a weighted average share price of $5.54 were forfeited. |
As at March 31, 2023 and as at March 31, 2022 the Company had an outstanding warrant balance of nil.
Cash Flows
| For the years ended | |||||||||
| March 31 | |||||||||
| 2023 | 2022 | 2021 | |||||||
| Cash flow from (used in) operations | $ | (14,757,939 | ) | $ | (20,343,748 | ) | $ | (16,392,222 | ) |
| Cash flow from (used in) investing | $ | 303,191 | $ | (536,093 | ) | $ | (352,682 | ) | |
| Cash flow from (used in) financing | $ | 8,189,280 | $ | 12,664,774 | $ | 31,523,631 | |||
| Foreign exchange on cash and restricted cash | $ | (22,452 | ) | $ | (104,559 | ) | $ | (22,384 | ) |
| Net (decrease) increase in cash and restricted cash | $ | (6,287,920 | ) | $ | (8,319,626 | ) | $ | 14,756,343 | |
Operating activities
Cash flow used in operating activities amounted to $14.8 million for the year ended March 31, 2023. The Company generated a loss for the year of $15.0 million, which included approximately $6.0 million in non-cash depreciation, share based payments, accretion and accrued interest, amortization of deferred financing fees, foreign exchange loss, allowance for credit losses, other income and write down of assets. In addition, we made investments in working capital, including inventory of $8.9 million, accounts receivable of $7.3 million, which were partially offset by an increase in accounts payable of $5.8 million, and an increase in deferred revenue of $3.2 million.
Cash flow used in operating activities amounted to $20.3 million for the year ended March 31, 2022. GreenPower generated a loss for the year of $15.0 million, which included approximately $7.6 million in non-cash depreciation, share based payments, accretion and accrued interest, amortization of deferred financing fees, foreign exchange loss, allowance for credit losses, and write down of assets. In addition, we made investments in working capital, including inventory of $20.9 million, accounts receivable of $1.5 million, which were partially offset by an increase in accounts payable of $192,973, and an increase in deferred revenue of $6.4 million.
Cash flow used in operating activities amounted to $16.4 million for the year ended March 31, 2021. We generated a loss for the year of $7.8 million, which included approximately $3.9 million in non-cash depreciation, share based payments, accretion and accrued interest, amortization of deferred financing fees, foreign exchange loss, allowance for credit losses, and write down of assets. In addition, we made investments in working capital, primarily comprised of inventory investments of $20.9 million, which was partially offset by collection of accounts receivable of $1.5 million, an increase in accounts payable of $272,318, and an increase in the warranty liability of $254,604.
Investing activities
Cash flow from investing activities was $303,191 for the year ended March 31, 2023. During the year the Company received proceeds from the disposal of property totaling $874,184, net of fees, purchases of property and equipment totaled $355,993, and the Company's cash investment in the acquisition of Lion Truck Body totaled $215,000.
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Cash flow used in investing activities was $536,093 for the year ended March 31, 2022 and was comprised of investments in EV equipment, automobiles, computers, furniture, leasehold improvements and other items. Net cash used in investing activities was $352,682 for the year ended March 31, 2021 and was comprised of investments in EV equipment, automobiles, computers, furniture, leasehold improvements and other items.
Financing activities
Cash flow from financing activities amounted to $8.2 million for the year-ended March 31, 2023. During the year the Company received gross proceeds from the issuance of shares on its ATM program of $4.9 million, received loans from related parties that totaled $3.0 million, drew $845,853 on the Company's line of credit, which were partially offset by equity offering costs and principal payments on the Company's lease liabilities.
Cash flow from financing activities amounted to $12.7 million for the year-ended March 31, 2022 due to $5.8 million from the company's operating line of credit, $6.3 million from the exercise of warrants, $1.2 million from the exercise of stock options, which were partially offset by principal payments on the Company's promissory note, principal payments on lease liabilities and other factors.
Cash flow from financing activities amounted to $31.5 million for the year-ended March 31, 2021 primarily due to gross proceeds of $37.7 million from the Company's initial public offering on the Nasdaq stock exchange and concurrent private placement, offset by issuance costs and other factors, as well as proceeds from the exercise of warrants, which were partially offset by repayment of loans from related parties and repayment of the Company's line of credit, and other factors.
C. Research and development, patents and licenses, etc.
We have invested significant resources in developing our suite of all-electric buses. Our buses were developed using a clean-sheet proprietary design and use key components from established third-party suppliers. We have a patent on a proprietary designed parking pawl for electric vehicles, and may choose to obtain patents and licenses on our designs, processes or inventions in the future.
We have expended $2,090,338, $1,381,101, and $939,949 on product development costs during the years ended March 31, 2023, March 31, 2022, and March 31, 2021 respectively.
D. Trend information
We do not know of any trends, commitments, events, or uncertainty that are expected to have a material effect on our company's business, financial condition, or results of operations other than as described in the section "Risk Factors" and in the section entitled "Quantitative and Qualitative Disclosures About Market Risk".
E. Critical Accounting Estimates
Not applicable
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth the name, office held, age, and functions and areas of experience in our company of each of our directors and senior management:
| Name, Office Held, Age | Area of Experience and Functions in Our Company |
| Fraser Atkinson Chief Executive Officer, Chairman and Director Age: 66 | As our Chief Executive Officer and Chairman, Mr. Atkinson is responsible for strategic planning and operations, as well as managing our relations with our lawyers, regulatory authorities and investor community; as a director, Mr. Atkinson participates in management oversight and helps to ensure compliance with our corporate governance policies and standards. Mr. Atkinson is also a member of the Nominating Committee. |
| Brendan Riley President and Director Age: 53 | As our President, Mr. Riley is responsible for developing and implementing our company's strategy, sales and marketing plan, product development, human resources and manufacturing. Mr. Riley provides leadership and oversight of our company's North American operations and maintains relationships with key customers, suppliers, investors and other stakeholders. |
| Michael Sieffert Chief Financial Officer and Secretary Age: 48 | As our Chief Financial Officer and Secretary, Mr. Sieffert is responsible for the management and supervision of all of the financial aspects of our business and maintains our corporate records. Mr. Sieffert assists in strategic planning, oversees capital planning and capital raising, budgeting, financial reporting and risk management. In performing his duties, Mr. Sieffert maintains relationships with our company's auditors, legal counsel, banks, analysts and investors. |
| Mark Achtemichuk Director Age: 47 | Mr. Achtemichuk is an independent director and helps to ensure compliance with our corporate governance policies and standards. Mr. Achtemichuk is also a member of the the Nominating Committee. |
| Malcolm Clay Director Age: 81 | As an independent director, Mr. Clay supervises our management and helps to ensure compliance with our corporate governance policies and standards. Mr. Clay is a member and the chair of the Audit Committee, and the Nominating Committee and is a member of the Compensation Committee. |
| Cathy McLay Director Age: 66 | As an independent director, Ms. McLay supervises our management and helps to ensure compliance with our corporate governance policies and standards. Ms. McLay is a member of our Audit committee and of our Compensation committee. Ms. McLay is a member and Chair and member of the Compensation Committee and is a member of the Audit Committee. |
| David Richardson Director Age: 71 | As an independent director, Mr. Richardson supervises our management and helps to ensure compliance with our corporate governance policies and standards. Mr. Richardson is a member of our Audit Committee and the Compensation Committee. |
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| Name, Office Held, Age | Area of Experience and Functions in Our Company |
| Yanyan Zhang Vice President of Program Management Age: 37 | As the Vice President of Program Management, Ms. Zhang oversees planning and development in line with strategic business objectives. In this role Yanyan manages manufacturing and logistics, and developing contracts for these projects. In performing her duties, Ms. Zhang manages relationships with manufacturing partners, suppliers, and service providers. |
| Claus Tritt Vice President of Medium Duty and Commercial Vehicle Sales Age: 59 | As the Vice President of Medium Duty and Commercial Vehicle Sales, Claus Tritt oversees the commercial and medium duty vehicle sales strategies and activities of the Company, including the truck body division. Claus is responsible for managing GreenPower's internal sales managers, managing and developing the Company's medium duty and commercial vehicle dealer network, setting sales goals and developing pricing strategies. |
The following is a brief account of the business experience of each of our directors and senior management.
Fraser Atkinson - Chief Executive Officer, Chairman and Director
Mr. Atkinson was one of the founders of our company. Mr. Atkinson was appointed as our Chief Executive Officer, Executive Chairman and a director of our company on February 11, 2011, and is currently a member of the Nominating Committee. He was our President, Secretary and Chief Financial Officer of our company from February 11, 2011 to February 22, 2011. He resigned as our Chief Executive Officer on December 23, 2014. He was again appointed as our Chief Executive Officer on June 12, 2019. Mr. Atkinson holds a Bachelor of Commerce degree from the University of British Columbia (1980) and his designation as a CPA, CA from the Chartered Professional Accountants, British Columba (1982). He is a director of Equus Total Return, Inc., a public company listed on the New York Stock Exchange that has been a Business Development Corporation since May 2010. He served as a director of Grizzly Discoveries Inc., a public company with gold and potash properties listed on the TSX Venture Exchange from March 2011 to February 2018. Mr. Atkinson served as the Chief Financial Officer of Versatile Systems Inc., a public technology services company listed on the TSX Venture Exchange from February 2003 to December 31, 2013 and as a director from November 2003 to January 14, 2014. Mr. Atkinson was also involved in both technology and corporate finance as a partner at KPMG, LLP for 14 years, until September 2002.
Brendan Riley - President and Director
Mr. Riley has been our President since October 27, 2016 and a director of our company since July 3, 2019. He has 23 years of experience in the areas of Business Development, Sales Strategy and Operations. Prior to joining our company, Mr. Riley was North American Vice President of Fleet Sales for BYD Motors, where he ran multiple electric vehicle business units, including the material handling, the truck and the bus groups. It was at BYD Motors that Mr. Riley secured the largest privately funded electric bus contract in North America two years in a row (for 25 and 36 electric buses respectively). Mr. Riley was also instrumental in negotiating the purchase and setup of two manufacturing facilities for BYD Motors - one electric bus assembly plant, and one EV battery assembly plant, both located in California. Mr. Riley served two terms as the President of the Southern California Chapter of the America Vacuum Society for Science and Technology of Materials, Interfaces and Processing, and is currently serving as an advisor on the Electric Power Research Institute's Bus and Truck Charging Interface Group. He holds a Bachelor of Arts degree in Philosophy from the University of St. Thomas Aquinas in Rome, Italy and is bilingual in English and Italian.
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Michael Sieffert - Chief Financial Officer and Secretary
Mr. Sieffert was appointed as our Chief Financial Officer and Secretary on December 1, 2018. From 2011 to 2018, Mr. Sieffert worked in progressively senior finance positions at Seaspan Corporation, a New York Stock Exchange-listed company engaged in containership leasing, most recently as Director of Corporate Finance. Between 2006 and 2011, Mr. Sieffert worked in Deloitte's Financial Advisory Services practice where he assisted clients, primarily in the transportation, manufacturing and industrials sectors, on corporate finance and valuation mandates. Previously, Mr. Sieffert was a buy-side equity analyst at HSBC Investments Canada. Mr. Sieffert has significant capital markets experience as well as a background in a broad range of corporate finance activities, including investor relations, treasury, and mergers and acquisitions. Mr. Sieffert holds a Bachelor of Arts degree and a Masters of Business Administration (Finance) degree, both from the University of British Columbia. Mr. Sieffert also holds a Chartered Financial Analyst designation from the CFA Institute.
Mark Achtemichuk - Director
Mr. Achtemichuk was appointed as the Chief Financial Officer and Secretary and a director of our company on February 22, 2011. Mr. Achtemichuk ceased to be our Chief Financial Officer and Secretary on December 1, 2018, but continues to serve as a director, and is a member of the Nominating Committee. Mr. Achtemichuk was previously a Senior Vice President and Managing Director at CMLS Financial Ltd. until his retirement in 2021 and has been the principal of MSA Holdings Inc., a private consulting company, since July 2007. He was Chief Financial Officer and a director of Driven Capital Corp. from 2010 to May 2014. Previously, Mr. Achtemichuk was self-employed as a Real Estate Finance Consultant from November 2004 to July 2007 and a manager with KPMG, LLP's Mergers and Acquisitions practice until November 2004. Mr. Achtemichuk obtained a Bachelor of Commerce from the University of British Columbia in 1998, his designations a Chartered Professional Accountant from the Institute of Chartered Accountants of British Columbia in 2001, and his Chartered Financial Analyst designation from the CFA Institute in 2010.
Malcolm Clay - Director
Mr. Clay has been a director of our company since February 22, 2011. Mr. Clay is a member and the chair of the Audit Committee, Compensation Committee and Nominating Committee. Mr. Clay holds a Bachelor of Arts degree from the University of British Columbia (1965) and his designation as a CPA, CA from the Chartered Professional Accountants, British Columbia (1969), and an FCA from the Chartered Professional Accountants, British Columbia (1992). Mr. Clay is currently retired, and since retirement has been an active as a financial consultant and corporate director. He was a Partner with KPMG LLP from September 1975 to September 2002. Mr. Clay has been a director of Minco Capital Corporation since 2007, and between 2007 and 2012 he was a director of Zongshen PEM Power Systems Inc., a large manufacturer of motorcycles and battery powered scooters based in China.
Cathy McLay - Director
Ms. McLay has been a director of our company since January 20, 2020, and is a member of our Audit Committee and Compensation Committee. Ms. McLay worked at TransLink from September 2008 to March 2018, most recently as the Chief Financial Officer and Executive Vice President Finance and Corporate Services. Previously, Ms. McLay worked in the forest sector in several senior executive roles at Canfor and Howe Sound Pulp and Paper. Ms. McLay . She currently serves on the boards of the Insurance Corporation of British Columbia (Chair of the audit committee), Vancouver Fraser Port Authority (Chair Major Capital Committee), British Columbia Hydro Authority (Chair Site C Commercial Committee) and British Columbia Ferry Services Ms. McLay is an International Certified Business Coach, a fellow of the Chartered Professional Accountants of British Columbia and a graduate of the Institute of Corporate Directors Education Program.
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David Richardson - Director
Mr. Richardson has been a director of our company since March 26, 2015 and is a member of the Audit Committee and the Compensation Committee. Mr. Richardson has been the President and Chief Executive Officer of Octaform Systems Inc. since May 1997. Mr. Richardson is currently a Director of ZS2 Technologies Ltd. since October 2020 and a member of the Board of Trustees for AIP Realty Trust since December 2021 Mr. Richardson was a founding member and director of the Asia Pacific Foundation and a leader on various government trade missions to Asia. In addition, he was a director of the Canada China Trade Council and Chairman of the Agriculture Committee. Mr. Richardson has served on a number of public and private boards throughout his career and continues to hold several other directorship positions. Mr. Richardson has received the ICD.D designation from the Institute of Corporate Directors.
Yanyan Zhang, Vice President of Program Management
Yanyan Zhang joined GreenPower in March of 2017 as Project Manager and was promoted to Vice President of Program Management in May of 2021. Yanyan is responsible for planning and development of manufacturing projects in line with strategic business initiatives and deliverables. Yanyan began her career in the electric vehicle industry at BYD, where she successfully managed over 10 international vehicle manufacturing projects for clients including LA Metro and Denver RTD. Yanyan received her Masters degree in Industrial and Systems Engineering from USC.
Claus Tritt - Vice President of Medium Duty and Commercial Vehicle Sales
Claus Tritt joined GreenPower in December of 2022 as Vice President of Medium Duty and Commercial Vehicle Sales, and in this role he oversees the commercial and medium duty vehicle sales strategies and activities of the Company. Claus spent over 30 years moving through progressively senior roles at various divisions within Dailmler/Mercedes Benz North America, including overseeing the company's commercial van division in North America. After nearly 30 years at Mercedes Benz, Claus spent time operating a luxury car dealership, and served in a sales and business development role at Canoo.
Family Relationships
There are no family relationships between any of our directors and senior management.
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B. Compensation
Management and Director Compensation
The following table sets forth all direct and indirect compensation paid, payable, awarded, granted, given or otherwise provided, directly or indirectly, by our company or any subsidiary thereof to members of our management and directors of our company, in any capacity, including, for greater certainty, all plan and non-plan compensation, direct and indirect pay, remuneration, economic or financial award, reward, benefit, gift or perquisite paid, payable, awarded, granted, given or otherwise provided to the members of our management or directors of our company for services provided and for services to be provided, directly or indirectly, to our company or any subsidiary thereof for the year ended March 31, 2023, other than stock options and other compensation securities:
| Name and Position | Year | Salary, Consulting Fee, Retainer or Commission ($)(1) | Bonus ($) | Committee or Meeting Fees ($) | Value of All Other Compensation ($) | Total Compensation ($) |
| Fraser Atkinson(2) Chief Executive Officer, Chairman & Director | 2023 | $225,000(5) | $75,750 | Nil | Nil | $300,750 |
| Brendan Riley(3) President & Director | 2023 | $275,000 | $82,500 | Nil | $9,273 | $366,773 |
| Michael Sieffert Chief Financial Officer & Secretary | 2023 | $188,975 | $18,898 | Nil | $846 | $208,719 |
| Mark Achtemichuk Director | 2023 | $25,000 | Nil | Nil | Nil | $25,000 |
| Malcolm Clay Director | 2023 | $35,000 | Nil | Nil | Nil | $35,000 |
| David Richardson Director | 2023 | $25,000 | Nil | Nil | Nil | $25,000 |
| Cathy McLay(4) Director | 2023 | $30,000 | Nil | Nil | Nil | $30,000 |
| Yanyan Zhang Vice President of Program Management | 2023 | $150,000 | Nil | Nil | $3,917 | $153,610 |
| Claus Tritt Vice President of Medium Duty and Commercial Vehicle Sales | 2023 | $49,045 | Nil | Nil | $761 | $49,806 |
Notes:
(1) Salary, consulting fee, retainer or commission paid to Michael Sieffert has been converted from CDN$ to US$ at an exchange rate of 0.7559. This exchange rate is the average exchange rates used for financial reporting purposes for the twelve months ended March 31, 2023.
(2) Fraser Atkinson was appointed our Chief Executive Officer on June 12, 2019.
(3) Brendan Riley was appointed as a director of our company on July 3, 2019.
(4) Cathy McLay was appointed as a director of our Company on January 20, 2020.
(5) This consulting fee was paid to Koko Financial Services Ltd., a private company owned by Mr. Atkinson as compensation for Mr. Atkinson's provision of services of Koko Financial Services Ltd. per the amended Management Services Agreement between GreenPower Motor Company Inc. and Koko Financial Services Inc. dated February 26, 2020.
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Employment, Consulting and Management Agreements
Fraser Atkinson
On February 26, 2020, we entered into a management services agreement with Koko Financial Services Inc. which was effective starting June 12, 2019 for a term of one year, however if neither party has provided the other party with a notice of termination then the agreement automatically renews on a month to month basis. Pursuant to this agreement, Koko Financial Services Inc. accepted the appointment with the designated personnel Fraser Atkinson acting as the Chief Executive Officer of our company and all of our company's subsidiary companies. Mr. Atkinson's current duties are to lead in conjunction with the board, in the development of GreenPower's strategy, and to oversee the implementation of the strategy; to ensure the Company is appropriately staffed and organized, to assess business risks and ensure effective controls and systems are in place; to work with the management team to execute on the strategic direction of GreenPower, including overseeing the material undertakings and activities of GreenPower and ensure that the directors are properly informed so they can form appropriate judgments. So long as this management services agreement remains in effect, we agreed to pay Koko Financial Services Inc. a base fee of $18,750 per month (plus applicable taxes) for carrying out the services payable on the last day of each month. The base fee does not include any bonuses that might be paid to Koko Financial Services Inc. for carrying out the services. Fraser Atkinson is eligible to participate in our company's stock option plan and any bonus plan our company makes available to the management team.
Brendan Riley
On September 19, 2016, we entered into an employment agreement with Brendan Riley. Pursuant to this agreement, Mr. Riley agreed to be employed as the President of our company and agreed to fulfil any and all duties, roles and responsibilities relevant to this position as set out in the employment agreement. Mr. Riley's employment commenced on November 1, 2016 and his current base salary is $275,000 per annum. During the year ended March 31, 2022 Mr. Riley received an annual bonus of $82,500. Mr. Riley is eligible for stock option grants from the company's incentive stock option plan as part of his overall compensation.
Michael Sieffert
On November 15, 2018, we entered into an employment agreement with Michael Sieffert. Pursuant to this agreement, Mr. Sieffert agreed to be employed as the Chief Financial Officer of our company and agreed to fulfil any and all duties, roles and responsibilities relevant to this position as set out in the employment agreement. Mr. Sieffert's employment commenced on November 20, 2018, and his current base salary is CDN$250,000 per annum. During the year ended March 31, 2023 Mr. Sieffert received an annual bonus of $18,898. Mr. Sieffert is eligible for stock option grants from the company's incentive stock option plan as part of his overall compensation.
Yanyan Zhang
On March 28, 2017, we entered into an employment agreement with Yanyan Zhang for the position of Project Manager. Ms. Zhang, agreed to accept the role of Project Manager for our company and agreed to fulfil any and all duties, roles and responsibilities relevant to this position as set out in the employment agreement. Ms. Zhang was subsequently promoted to Director of Project Management during 2020 and was promoted to the position of Vice President of Program Management in May 2021. Pursuant to the employment agreement, we agreed to pay Ms. Zhang an annual base salary of $72,000 for the position of Project Manager, which was subsequently increased, and her current salary is $150,000. Ms. Zhang is eligible for bonuses and for stock option grants from GreenPower's stock option plan.
Claus Tritt
During November 2022, we entered into an employment agreement with Claus Tritt for the position of Vice President of Medium Duty / Commercial vehicles. In this role Mr. Tritt is responsible for managing the sales staff and setting targets and strategies for the sales team, including within GreenPower's truck body division. Pursuant to the employment agreement, we agreed to pay Mr. Tritt an annual base salary of $150,000 and he is eligible for bonuses and for stock option grants from GreenPower's stock option plan.
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Benefits Upon Termination
We have no contract, agreement, plan or arrangement, whether written or unwritten, that provides for benefits to our directors or members of our management upon termination of employment of our directors or members of our management.
Stock Options and Other Compensation Securities
The following table sets out all compensation securities granted or issued to members of our management and directors of our company during the year ended March 31, 2023 for services provided, or to be provided, directly or indirectly, to our company or any subsidiary thereof:
| Name and Position | Type of Compensation Security | Number of Compensation Securities, Number of Underlying Securities | Date of Issue or Grant | Issue, Conversion or Exercise Price | Closing Price of Security or Underlying Security on Date of Grant | Closing Price of Security or Underlying Security at March 31, 2023 | Expiry Date |
| Fraser Atkinson Chief Executive Officer, Chairman & Director | Stock Options to purchase Common Shares | 60,000(1) | February 14, 2023 | CDN$3.80 | CDN$3.80 | CDN$3.13 | February 14, 2028 |
| Brendan Riley President & Director | Stock Options to purchase Common Shares | 60,000(1) | February 14, 2023 | CDN$3.80 | CDN$3.80 | CDN$3.13 | February 14, 2028 |
| Michael Sieffert Chief Financial Officer & Secretary | Stock Options to purchase Common Shares | 60,000(1) | February 14, 2023 | CDN$3.80 | CDN$3.80 | CDN$3.13 | February 14, 2028 |
| Mark Achtemichuk Director and Former Chief Financial Officer & Secretary | Stock Options to purchase Common Shares | 60,000(1) | February 14, 2023 | CDN$3.80 | CDN$3.80 | CDN$3.13 | February 14, 2028 |
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| Name and Position | Type of Compensation Security | Number of Compensation Securities, Number of Underlying Securities | Date of Issue or Grant | Issue, Conversion or Exercise Price | Closing Price of Security or Underlying Security on Date of Grant | Closing Price of Security or Underlying Security at March 31, 2023 | Expiry Date |
| Malcolm Clay Director | Stock Options to purchase Common Shares | 60,000(1) | February 14, 2023 | CDN$3.80 | CDN$3.80 | CDN$3.13 | February 14, 2028 |
| David Richardson Director | Stock Options to purchase Common Shares | 60,000(1) | February 14, 2023 | CDN$3.80 | CDN$3.80 | CDN$3.13 | February 14, 2028 |
| Cathy McLay Director | Stock Options to purchase Common Shares | 60,000(1) | February 14, 2023 | CDN$3.80 | CDN$3.80 | CDN$3.13 | February 14, 2028 |
| Yanyan Zhang Vice President of Program Management | Stock Options to purchase Common Shares | 20,000(2) | February 14, 2023 | CDN$3.80 | CDN$3.80 | CDN$3.13 | February 14, 2028 |
| Claus Tritt | Stock Options to purchase Common Shares | 50,000(2) | February 14, 2023 | CDN$3.80 | CDN$3.80 | CDN$3.13 | February 14, 2028 |
Notes:
(1) Stock options vest 25% three months after the grant date, 25% six months after the grant date, 25% nine months after the grant date, and 25% one year after the grant date.
(2) Stock options vest 25% four months after the grant date, 25% one year after the grant date, 25% two years after the grant date and 25% three years after the grant date.
Pension, Retirement or Similar Benefits
We have not set aside or accrued any amounts to provide pension, retirement or similar benefits for our directors or members of our management during the year ended March 31, 2023.
C. Board Practices
Term of Office
Each director of our company holds office until the next annual general meeting of our company or until his successor is elected or appointed, unless his office is earlier vacated in accordance with the articles of our company or the provisions of the Business Corporations Act (British Columbia). Each officer of our company is appointed to serve at the discretion of our board of directors.
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Committees
We have three committees: the nominating committee, the compensation committee and the audit committee.
Nominating Committee
On August 23 2020, we adopted a Board of Director Nomination Process and is comprised of Malcolm Clay, Fraser Atkinson and Mark Achtemichuk. In general, when the Board determines that expansion of the board or replacement of a director is necessary or appropriate, the Company's independent directors will be responsible for identifying one or more candidates to fill such directorship, investigating each candidate, evaluating his/her suitability for service on the Board and recommending for selection suitable candidates for nomination to the Board. The Company's independent directors are authorized to use any methods they deems appropriate for identifying candidates for Board membership, including recommendations from current members of the Board, senior management or other third parties (including recommendations from stockholders). The Company's independent directors may engage outside search firms to identify suitable candidates. The Company's independent directors are also authorized to engage in whatever investigation and evaluation processes it deems appropriate, including a thorough review of the candidate's background, characteristics, qualities and qualifications, and personal interviews with all or some of the Company's independent directors, the Company's management or one or more other members of the Board. While diversity may contribute to an evaluation, it is not considered by the Board as a separate or independent factor in identifying board of director nominees. In formulating its recommendation, the Company's independent directors will consider not only the findings and conclusions of the investigation and evaluation process, but also the current composition of the Board; the diversity of the board, including the gender diversity; the attributes and qualifications of serving members of the Board; additional attributes, capabilities or qualifications that should be represented on the Board; and whether the candidate could provide those additional attributes, capabilities or qualifications. The Company's independent directors will not recommend any candidate unless that candidate has indicated a willingness to serve as a director and has agreed to comply, if elected, with the expectations and requirements of serving as a member of the Board. In considering whether to recommend directors who are eligible to stand for re-election, the Company's independent directors may consider a variety of factors, including, without limitation, a director's contributions to the Board and ability to continue to contribute productively; attendance at Board and committee meetings and compliance with the Company corporate governance policies; whether the director continues to possess the attributes, capabilities and qualifications considered necessary or desirable for continued service on the Board; the independence of the director; and the nature and extent of the director's non-Company activities.
Compensation Committee
We have a compensation committee comprised of the Chair, Cathy McLay, Malcolm Clay and David Richardson. We adopted a formal Compensation Committee Charter on August 23, 2020. Our compensation committee, in consultation with the Board, conducts reviews with regards to the compensation of our directors and officers once a year. To make its recommendations on such compensation, our compensation committee take into account the types of compensation and the amounts paid to directors and officers of comparable publicly traded Canadian companies.
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Audit Committee
The following are the members of the Audit Committee as at the date hereof:
| Malcolm Clay(1) | Independent(2) | Financially Literate(2) |
| Cathy Mclay | Independent(2) | Financially Literate(2) |
| David Richardson | Independent(2) | Financially Literate(2) |
Notes:
(1) Chairman of the Audit Committee
(2) As defined by NI 52-110
Each member of the Audit Committee has:
• | an understanding of the accounting principles used by the Company to prepare its financial statements, and the ability to assess the general application of those principles in connection with estimates, accruals and reserves; | |
• | experience with analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company's financial statements, or experience actively supervising individuals engaged in such activities; and | |
• | an understanding of internal controls and procedures for financial reporting. |
At no time since the commencement of the Company's financial year ending March 31, 2023 was a recommendation of the Committee to nominate or compensate an external auditor not adopted by the Board.
The Audit Committee is authorized by the Board to review the performance of the Company's external auditors and approve in advance provision of services other than auditing and to consider the independence of the external auditors, including reviewing the range of services provided in the context of all consulting services bought by the Company. The Audit Committee is authorized to approve any non-audit services or additional work which the Chairman of the Audit Committee deems as necessary who will notify the other members of the Audit Committee of such non-audit or additional work.
D. Employees
As of March 31, 2023, 2022, and 2021 we had 112, 69, and 55 employees, respectively. Our employees are not members of a labor union. Our workforce is based out of our corporate office in Vancouver, British Columbia, Canada, our sales office in Rancho Cucamonga, California and our manufacturing facilities based in Porterville, California and South Charleston, WV.
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E. Share Ownership
As of July 21, 2023, our directors and management beneficially owned the following common shares and options of our company:
| Name and Office Held | Number of Common Shares Owned and Percent of Total Outstanding Common Shares | Common Shares that the individual has the right to acquire within 60 days | ||
| # of Shares(1) | % of Class(2) | Stock Options | Warrants | |
| Fraser Atkinson Chief Executive Officer, Chairman and Director | 2,903,121(3) | 11.6% | 197,857(3) | Nil |
| Brendan Riley President and Director | 81,716(4) | * | 205,000(4) | Nil |
| Michael Sieffert Chief Financial Officer and Secretary | 30,416(5) | * | 223,571(5) | Nil |
| Mark Achtemichuk Director | 82,078(6) | * | 142,143(6) | Nil |
| Malcolm Clay Director | 604,129(7) | 2.4% | 127,857(7) | Nil |
| Cathy McLay Director | 9,715(8) | * | 127,857(8) | Nil |
| David Richardson Director | 2,873,097(9) | 11.5% | 127,857(9) | Nil |
| Yanyan Zhang Vice President of Program Management | 12,073(10) | * | 39,107(10) | Nil |
| Claus Tritt Vice President of Sales | * | * | 12,500(11) | Nil |
* denotes less than 1% of class of shares owned.
Notes
(1) The information about common shares of our company beneficially owned, as at July 21, 2023 is based upon information available on the System for Electronic Disclosure by Insiders (SEDI), operated by the Canadian Securities Administrators.
(2) Based on 24,948,305 common shares of our company issued and outstanding as at July 21, 2023.
(3) Mr. Atkinson holds 1,325,052 common shares of our company directly, 28,571 common shares of our company in the Atkinson Family Trust, 35,716 common shares of our company indirectly through trust accounts for two family members, 804,854 common shares of our company with Koko Financial Services Ltd., a private company owned by Mr. Atkinson, and 708,928 common shares with KFS Capital LLC, a private company held by Mr. Atkinson. Mr. Atkinson also beneficially holds 252,857 stock options, each of which entitles Mr. Atkinson to purchase one Share, 14,286 stock options are exercisable at a price of CDN$3.50 per Share until February 12, 2024, 28,571 stock options are exercisable at a price of CDN$2.59 per Share until January 30, 2025, and 50,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026, all of which have fully vested as of June 30, 2023. In addition, Mr.Atkinson owns 100,000 stock options that are exercisable at a price of $20.00 per Share until November 19, 2025 and 75,000 of these 100,000 options will have vested within 60 days of July 21, 2023, and 60,000 stock options that are exercisable at a price of CDN$3.80 per share until February 14, 2028 and 30,000 of these 60,000 options will have vested within 60 days of July 21, 2023.
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(4) Mr. Riley holds 81,716 Shares directly. Mr. Riley also beneficially holds 260,000 stock options, each of which entitles Mr. Riley to purchase one Share, 14,286 stock options are exercisable at a price of CDN$3.50 per Share until February 12, 2024, 35,714 stock options are exercisable at a price of CDN$2.59 per Share until January 30, 2025, and 50,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026, all of which have fully vested as of June 27, 2023. In addition, Mr. Riley owns 100,000 stock options that are exercisable at a price of $20.00 per Share until November 19, 2025 and 75,000 of these 100,000 options will have vested within 60 days of July 21, 2023, and 60,000 stock options that are exercisable at a price of CDN$3.80 per Share until February 14, 2028 and 30,000 of these 60,000 stock options will have vested within 60 days of July 21, 2023.
(5) Mr. Sieffert holds 21,527 common shares of our company directly. Mr. Sieffert also owns 500 common shares of our company in his TFSA account and 8,489 shares indirectly in a spousal RSP. Mr. Sieffert also holds 278,571 stock options, each of which entitle Mr. Sieffert to purchase one common share of our company, of which 50,000 stock options are exercisable at a price of CDN$3.01 per share until November 30, 2023, 18,571 of which are exercisable at a price of CDN$2.59 per share until January 30, 2025, and 50,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026, all of which have fully vested as of June 27, 2023. In addition, Mr. Sieffert owns 100,000 stock options that are exercisable at a price of $20.00 per Share until November 19, 2025 and 75,000 of these 100,000 options will have vested within 60 days of July 21, 2023, and 60,000 stock options that are exercisable at a price of CDN$3.80 per Share until February 14, 2028 and 30,000 of these 60,000 stock options will have vested within 60 days of July 21, 2023.
(6) Mr. Achtemichuk holds 72,505 Shares directly, 3,696 Shares through his TFSA account, 2,600 shares in his RSP account and 3,277 Shares through his RESP account. Mr. Achtemichuk also beneficially holds 172,143 stock options, each of which entitles Mr. Achtemichuk to purchase one Share, of which 14,286 stock options are exercisable at a price of CDN$3.50 per Share until February 12, 2024, 42,857 stock options are exercisable at a price of CDN$2.59 per Share until January 30, 2025, 5,000 stock options that are exercisable at a price of $20.00 per Share until December 4, 2025, and 50,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026, all of which have fully vested as of July 21, 2023. In addition, Mr. Achtemichuk owns 60,000 stock options that are exercisable at a price of CDN$3.80 per Share until February 14, 2028 and 30,000 of these stock options will have vested within 60 days of July 21, 2023.
(7) Mr. Clay holds 583,134 Shares directly, 17,070 Shares through his RRIF account and 3,925 Shares through his TFSA account. Mr. Clay also beneficially holds 157,857 stock options, each of which entitles Mr. Clay to purchase one Share, of which 14,286 stock options are exercisable at a price of CDN$3.50 per Share until February 12, 2024, 28,571 stock options are exercisable at a price of CDN$2.59 per Share until January 30, 2025, 5,000 stock options that are exercisable at a price of $20.00 per Share until December 4, 2025, and 50,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026, all of which have fully vested as of June 27, 2023. In addition, Mr. Clay owns 60,000 stock options that are exercisable at a price of CDN$3.80 per Share until February 14, 2028 and 30,000 of these 60,000 stock options will have vested within 60 days of July 21, 2023.
(8) Ms. McLay holds 9,715 Shares directly. Ms. McLay also directly holds 157,857 stock options, 42,857 of which entitles Ms. McLay to purchase one Share which are exercisable at a price of CDN$2.59 per Share until January 30, 2025, 5,000 stock options that are exercisable at a price of $20.00 per Share until December 4, 2025, and 50,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026, all of which have fully vested as of July 21, 2023. In addition, Ms. McLay owns 60,000 stock options that are exercisable at a price of CDN$3.80 per Share until February 14, 2028 and 30,000 of these 60,000 stock options will have vested within 60 days of July 21, 2023.
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(9) Mr. Richardson holds 115,000 Shares directly and 2,758,097 Shares indirectly through Countryman Investments Ltd. ("Countryman"). Mr. Richardson also directly holds 157,857 stock options, each of which entitles Mr. Richardson to purchase one Share, of which 14,286 stock options are exercisable at a price of CDN$3.50 per Share until February 12, 2024, 28,571 stock options are exercisable at a price of CDN$2.59 per Share until January 30, 2025, 5,000 stock options that are exercisable at a price of $20.00 per Share until December 4, 2025, and 50,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026, all of which have fully vested as of June 18, 2023. In addition, Mr. Richardson owns 60,000 stock options that are exercisable at a price of CDN$3.80 per Share until February 14, 2028 and 30,000 of these 60,000 stock options will have vested within 60 days of July 21, 2023.
(10) Ms. Zhang owns 12,073 common shares of our company directly. In addition, Ms. Zhang holds 70,357 stock options each of which entitles Ms. Zhang to purchase one common share of our company, of which 357 stock options are exercisable at a price of CDN$3.50 per share until February 12, 2024, 7,143 stock options that are exercisable at a price of CDN$2.59 per share until January 30, 2025, and 2,857 stock options that are exercisable at a price of CDN$4.90 per share until July 3, 2025, all of which have fully vested as of July 21, 2023. In addition, Ms. Zhang owns 15,000 stock options that are exercisable at a price of CDN$19.62 per share until May 18, 2026 and 11,250 of these 15,000 stock options will have vested within 60 days of July 21, 2023, 25,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026 and 12,500 of these 25,000 stock options will have vested within 60 days of July 21, 2023, and 20,000 stock options that are exercisable at a price of CDN$3.80 per Share until February 14, 2028 and 5,000 of these 20,000 stock options will have vested within 60 days of July 21, 2023.
(11) Claus Tritt holds 50,000 stock options that are exercisable at a price of CDN$3.80 per Share until February 14, 2028 and 12,500 of these 50,000 stock options will have vested within 60 days of July 21, 2023.
The voting rights attached to the common shares owned by our directors and management do not differ from those voting rights attached to shares owned by people who are not directors or management of our company.
Stock Option Plans
The Company has two incentive stock option plans whereby it grants options to directors, officers, employees, and consultants of the Company, the 2023 Equity Incentive Plan (the "2023 Plan") which was adopted in order to grant awards to people in the United States, and the 2022 Equity Incentive Plan (the "2022 Plan").
2023 Plan
Effective February 21, 2023 GreenPower adopted the 2023 Plan which was approved by shareholders at our AGM on March 28, 2023 in order to grant stock options or non-stock option awards to people in the United States. Under the 2023 Plan GreenPower can issue stock options that are considered incentive stock options, which are stock options that qualify for certain favorable tax treatment under U.S. tax laws. Nonqualified stock options are stock options that are not incentive stock options. The aggregate fair market value on the date of grant of Shares with respect to which incentive stock options are exercisable for the first time by an optionee subject to tax in the United States during any calendar year must not exceed US$100,000, or such other limit as may be prescribed by the Internal Revenue Code. Non-stock option awards means a right granted to an award recipient under the 2023 Plan, which may include the grant of stock appreciation rights, restricted awards or other equity-based awards. No stock options have been issued under the 2023 Plan as at March 31, 2023.
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2022 Plan
Effective April 19, 2022 GreenPower adopted the 2022 Equity Incentive Plan (the "2022 Plan"), which was further ratified on February 21, 2023, and which replaced the 2019 Plan. Under the 2022 Plan the Company can grant equity-based incentive awards in the form of stock options ("Options"), restricted share units ("RSUs"), performance share units ("PSUs") and deferred share units ("DSUs"). RSU's, DSU's and PSU's are collectively referred to as "Performance Based Awards". The 2022 Plan is a Rolling Plan for Options and a fixed-plan for Performance-Based Awards such that the aggregate number of Shares that: (i) may be issued upon the exercise or settlement of Options granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements), shall not exceed 10% of the Company's issued and outstanding Shares from time to time, and (ii) may be issued in respect of Performance-Based Awards granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements) shall not exceed 2,467,595. No performance-based awards have been issued as at March 31, 2023 or as at March 31, 2022. The 2022 Plan is considered an "evergreen" plan, since Options which have been exercised, cancelled, terminated, surrendered, forfeited or expired without being exercised shall be available for subsequent grants under the 2022 Plan and the number of awards available to grant increases as the number of issued and outstanding Shares increases.
Stock Option Plans from Prior Periods
On May 14, 2019, the Company replaced the 2016 Plan with a Rolling Stock Option Plan (the "2019 Plan"). Under the terms of the 2019 Plan, the aggregate number of Options that can be granted under the 2019 Plan cannot exceed ten (10%) of the total number of issued and outstanding Shares, calculated on a non-diluted basis. The exercise price of options granted under the 2019 Plan may not be less than the minimum prevailing price permitted by the TSXV policies with a maximum term of 10 years. On March 9, 2016, the shareholders approved the previous stock option plan which initially allowed for the issuance of up to 1,491,541 shares and which was subsequently further increased to allow up to 2,129,999 shares to be issued under the plan (the "2016 Plan"). Prior to the adoption of the 2016 Plan, the Company had adopted an incentive stock option plan (the "Plan"), whereby it could grant options to directors, officers, employees, and consultants of the Company.
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
To the best of our knowledge, the following table sets forth, as of June 30, 2023, certain information regarding our major shareholders, which means shareholders that are the beneficial owners of 5% or more of our common shares:
| Name of Shareholder | Number of Common Shares Owned and Percent of Total Outstanding Common Shares | Common Shares that the individual has the right to acquire within 60 days | ||
| # of Shares | % of Class(1) | Stock Options | Warrants | |
| Fraser Atkinson | 2,903,121(2) | 11.6% | 197,857(2) | Nil |
| David Richardson | 2,873,097(3) | 11.5% | 127,857(3) | Nil |
(1) Based on 24,948,305 common shares of our company issued and outstanding as at July 21, 2023.
(2) Mr. Atkinson holds 1,325,052 common shares of our company directly, 28,571 common shares of our company in the Atkinson Family Trust, 35,716 common shares of our company indirectly through trust accounts for two family members, 804,854 common shares of our company with Koko Financial Services Ltd., a private company owned by Mr. Atkinson, and 708,928 common shares with KFS Capital LLC, a private company held by Mr. Atkinson. Mr. Atkinson also beneficially holds 252,857 stock options, each of which entitles Mr. Atkinson to purchase one Share, 14,286 stock options are exercisable at a price of CDN$3.50 per Share until February 12, 2024, 28,571 stock options are exercisable at a price of CDN$2.59 per Share until January 30, 2025, and 50,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026, all of which have fully vested as of June 30, 2023. In addition, Mr.Atkinson owns 100,000 stock options that are exercisable at a price of $20.00 per Share until November 19, 2025 and 75,000 of these 100,000 options will have vested within 60 days of July 21, 2023, and 60,000 stock options that are exercisable at a price of CDN$3.80 per share until February 14, 2028 and 30,000 of these 60,000 options will have vested within 60 days of July 21, 2023.
(3) Mr. Richardson holds 115,000 Shares directly and 2,758,097 Shares indirectly through Countryman Investments Ltd. ("Countryman"). Mr. Richardson also directly holds 157,857 stock options, each of which entitles Mr. Richardson to purchase one Share, of which 14,286 stock options are exercisable at a price of CDN$3.50 per Share until February 12, 2024, 28,571 stock options are exercisable at a price of CDN$2.59 per Share until January 30, 2025, 5,000 stock options that are exercisable at a price of $20.00 per Share until December 4, 2025, and 50,000 stock options that are exercisable at a price of CDN$16.45 per share until December 10, 2026, all of which have fully vested as of June 30, 2023. In addition, Mr. Richardson owns 60,000 stock options that are exercisable at a price of CDN$3.80 per Share until February 14, 2028 and 30,000 of these 60,000 stock options will have vested within 60 days of July 21, 2023.
The voting rights of our major shareholders do not differ from the voting rights of holders of our common shares who are not our major shareholders.
As at June 30, 2023 the registrar and transfer agent for our company reported that there were 24,948,305 common shares of our company issued and outstanding. Of these, 16,827,861 were registered to Canadian residents, including 13,269,596 shares registered to CDS & Co., which is a nominee of the Canadian Depository for Securities Limited. The 16,785,861 shares were registered to 37 shareholders in Canada, one of which is CDS & Co. 8,120,444 of our shares were registered to residents of the United States, including 8,016,742 shares registered to CEDE & Co., which is a nominee of Depository Trust Company. The 8,120,444 shares were registered to 8 shareholders in the United States, one of which is CEDE & Co. None of our shares were registered to residents of other foreign countries.
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To the best of our knowledge, our company is not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person severally or jointly, except as disclosed in the above table regarding our major shareholders.
There are no arrangements known to us, the operation of which may at a subsequent date result in a change in control of our company.
B. Related Party Transactions
Other than as disclosed below, since the beginning of our preceding three financial years ended March 31, 2023 there have been no transactions or loans between our company and:
(a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, our company;
(b) associates, meaning unconsolidated enterprises in which we have a significant influence or which have significant influence over our company;
(c) individuals owning, directly or indirectly, an interest in the voting power of our company that gives them significant influence over our company, and close members of any such individual's family (close members of an individual's family are those that may be expected to influence, or be influenced by, that person in their dealings with our company);
(d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of our company, including directors and senior management of our company and close members of such individuals' families; and
(e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence, including enterprises owned by directors or major shareholders of our company and enterprises that have a member of key management in common with our company.
| For the Years Ended | |||||||||
| March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||
| Salaries and Benefits (1) | $ | 580,774 | $ | 575,255 | $ | 473,841 | |||
| Consulting fees (2) | 396,250 | 396,456 | 251,007 | ||||||
| Non-cash Options Vested (3) | 2,100,717 | 3,242,528 | 1,698,487 | ||||||
| Accomodation and Rentals (4) | - | - | 5,749 | ||||||
| Total | $ | 3,077,741 | $ | 4,214,239 | $ | 2,429,084 | |||
1) Salaries and benefits incurred with directors and officers are included in Administrative fees on the Consolidated Statements of Operations.
2) Consulting fees included in professional fees and sales and marketing on Consolidated Statements of Operations are paid to the current Chairman and CEO, the previous CEO and Director, and the previous CFO and current Director of the Company to provide accounting and management consulting services, and includes Director's fees paid to GreenPower's four independent directors.
3) Amounts recognized for related party stock-based compensation are included in Share-based payments on the Consolidated Statements of Operations.
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4) Includes accommodation expense paid to Stage Coach Landing, Inc., a company that the CEO and Chairman of GreenPower was previously an officer and director, and truck and trailer rental fees paid to Maple Leaf Equipment Aircraft and Recovery Inc., a company that the CEO and Chairman of GreenPower was previously an officer and director and the former CEO of GreenPower is an officer and director. These costs are expensed on the Consolidated Statements of Operations.
Accounts payable and accrued liabilities at March 31, 2023 included $208,215 (March 31, 2022 - $243,773) owed to officers, directors, and companies controlled by officers and directors, and shareholders, which is non-interest bearing, unsecured and has no fixed terms of repayment.
During the year ended March 31, 2023, the Company received loans totaling CAD$3,670,000 and US$25,000 from a company that is beneficially owned by the CEO and Chairman of the Company, and CAD$250,000 was loaned to the Company from a company beneficially owned by a Director of the Company. The loans bear interest at 12.0% per annum plus such additional bonus interest, if any, as may be agreed to and approved by GreenPower's Board of Directors at a later date. The loans from a company that is beneficially owned by the CEO and Chairman of the Company matured on March 31, 2023, and the loan from a company beneficially owned by a Director of the Company was repaid during June 2023.
The Company has agreed to grant the lenders a general security assignment on the assets of GreenPower Motor Company Inc., which will be subordinated to any security assignment of senior lenders.
A director of the Company and the Company's CEO and Chairman have each provided personal guarantees of $2,510,000, or $5,020,000 in total to support the Company's $8 million operating line of credit. In consideration for these guarantees, in June 2018 the Company issued 628,571 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $4.55 per share and in March 2019 the Company issued 685,714 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $4.20 per share. During the year ended March 31, 2022 the director of the Company and the Company's CEO and Chairman exercised all of these warrants for 1,314,285 common shares of the Company.
These transactions were measured at the exchange amount, which is the amount agreed upon by the transacting parties.
Compensation
For information regarding compensation for our directors and senior management, see "Compensation."
C. Interests of Experts and Counsel
Not applicable
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ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
Financial Statements
The consolidated financial statements of the Company for the years ended March 31, 2023, 2022, and 2021 have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board, or IASB, and are included under Item 18 of this Annual Report. The consolidated financial statements including related notes are accompanied by the report of the Company's independent registered public accounting firm, BDO Canada LLP for the 2023 fiscal year and Crowe Mackay LLP for the 2022 and 2021 fiscal years.
Legal Proceedings
As of the date of this Annual Report, in the opinion of management, the Company is not currently a party to any litigation or legal proceedings which are material, either individually or in the aggregate. The Company has filed a civil claim against the prior CEO and Director of the Company in the Province of British Columbia, and the prior CEO and Director of the Company has filed a response with a counterclaim for wrongful dismissal in the Province of British Columbia. The prior CEO and Director of the Company also filed a similar claim in the state of California in regards to this matter, and this claim has been stayed pending the outcome of the claim in British Columbia. There has not been a resolution on the British Columbia claim or counterclaim, or the California claim as at March 31, 2023. In addition, a company owned and controlled by a former employee who provided services to a subsidiary company of GreenPower until August 2013 filed a claim for breach of confidence against GreenPower in July 2020, and this claim has not been resolved as at March 31, 2023. The Company has not booked a provision for the claims or the counterclaim as it does not believe there is a remote and estimable material financial impact as at March 31, 2023. During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC's which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, the Company repossessed 1 EV Star from the same customer due to non-payment. During May 2023 this customer filed a claim in the state of California against the Company and a subsidiary of the Company, and the Company is evaluating its response to this claim.
Dividends
We have not paid any dividends on our common shares since incorporation. Our management anticipates that we will retain all future earnings and other cash resources for the future operation and development of our business. We do not intend to declare or pay any cash dividends in the foreseeable future. Payment of any future dividends will be at the Board of Directors' discretion, subject to applicable law, after taking into account many factors including our operating results, financial condition and current and anticipated cash needs.
B. Significant Changes
We have not experienced any significant changes since the date of the consolidated financial statements included with this Annual Report except as disclosed in this Annual Report.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing
Our common shares have been listed for trading on the TSX Venture Exchange under the symbol "GPV" since December 30, 2014. From July 8, 2013 to December 29, 2014, our common shares were listed for trading on the TSX Venture Exchange under the symbol "OMK."
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From March 28, 2017 to November 8, 2019, our common shares were quoted on the OTCQX under the symbol "GPVRF". From May 6, 2015 to March 27, 2017, and from November 9, 2019 to August 27, 2020, our common shares were quoted on the OTCQB under the symbol "GPVRF." On August 28, 2020 our shares began trading on the Nasdaq Capital Market under the symbol "GP" and ceased trading on the OTCQB.
Our common shares are in registered form and the transfer of our common shares is managed by our transfer agent, Computershare Investor Services Inc., located at 3rd Floor, 510 Burrard Street, Vancouver, British Columbia V6C 3B9, Canada (Tel: (604) 661-9400; Fax: (604) 661-9549).
B. Plan of Distribution
Not applicable.
C. Markets
Please see Item 9.A above.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
Incorporation
We are incorporated under the Business Corporations Act (British Columbia). Our British Columbia incorporation number is BC0877385.
Objects and Purposes of Our Company
Our articles do not contain a description of our objects and purposes.
Voting on Certain Proposal, Arrangement, Contract or Compensation by Directors
Our articles do not restrict directors' power to (a) vote on a proposal, arrangement or contract in which the directors are materially interested or (b) to vote compensation to themselves or any other members of their body in the absence of an independent quorum. Any such conflicts of interest will be subject to the procedures and remedies as provided under the Business Corporations Act (British Columbia).
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Borrowing Powers of Directors
Our articles provide that we, if authorized by our directors, may from time to time on behalf of our company:
• borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;
• issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of our company or any other person and at any discount or premium and on such other terms as they consider appropriate;
• guarantee the repayment of money by any other person or the performance of any obligation of any other person; and
• mortgage or charge, whether by way of specific or floating charge, or give other security on the whole or any part of the present and future assets and undertaking of our company.
Qualifications of Directors
Under our articles, there is no mandatory retirement age for our directors and our directors are not required to own securities of our company in order to serve as directors.
Share Rights
Our authorized capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value.
Holders of our common shares are entitled to vote one vote for each share held at all meetings of our shareholders, to receive any dividend declared by our board of directors and, to receive the remaining property of our company upon dissolution. None of our common shares are subject to any call or assessment nor pre-emptive or conversion rights. There are no provisions attached to our common shares for redemption, purchase for cancellation, surrender or sinking or purchase funds.
Our preferred shares may include one or more series and, subject to the Business Corporations Act (British Columbia), the directors of our company may, by resolution, if none of the shares of any particular series are issued, alter articles of our company and authorize the alteration of the notice of articles of our company, as the case may be, to do one or more of the following:
• determine the maximum number of shares of that series that our company is authorized to issue, determine that there is no such maximum number, or alter any such determination;
• create an identifying name for the shares of that series, or alter any such identifying name; and
• attach special rights or restrictions to the shares of that series, or alter any such special rights or restrictions.
The holders of our preferred shares are entitled, on the liquidation or dissolution of our company, whether voluntary or involuntary, or on any other distribution of the assets of our company among shareholders of our company for the purpose of winding up its affairs, to receive, before any distribution is made to the holders of our common shares or any other shares of our company ranking junior to our preferred shares with respect to the repayment of capital on the liquidation or dissolution of our company, whether voluntary or involuntary, or on any other distribution of the assets of our company among shareholders of our company for the purpose of winding up its affairs, the amount paid up with respect to each preferred share held by them, together with the fixed premium (if any) thereon, all accrued and unpaid cumulative dividends (if any and if preferential) thereon, which for such purpose will be calculated as if such dividends were accruing on a day-to-day basis up to the date of such distribution, whether or not earned or declared, and all declared and unpaid non-cumulative dividends (if any and if preferential) thereon. After payment to the holders of our preferred shares of the amounts so payable to them, they will not, as such, be entitled to share in any further distribution of the property or assets of our company, except as specifically provided in the special rights and restrictions attached to any particular series. All assets remaining after payment to the holders of our preferred shares as aforesaid will be distributed rateably among the holders of our common shares.
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Except for such rights relating to the election of directors on a default in payment of dividends as may be attached to any series of the preferred shares by the directors, holders of our preferred shares are not entitled, as such, to receive notice of, or to attend or vote at, any general meeting of shareholders of our company.
Meetings
Each director holds office until our next annual general meeting, or until his or her office is earlier vacated in accordance with our articles or with the provisions of the Business Corporations Act (British Columbia). A director appointed or elected to fill a vacancy on our board also holds office until our next annual general meeting.
Our articles provide that our annual meetings of shareholders must be held at such time in each calendar year and not more than 15 months after the last annual general meeting and at such place as our board of directors may from time to time determine. Our directors may, at any time, call a meeting of our shareholders.
The holders of not less than five percent of our issued shares that carry the right to vote at a meeting may requisition our directors to call a meeting of shareholders for the purposes stated in the requisition.
Under our articles, the quorum for the transaction of business at a meeting of our shareholders is two persons who are, or who represent by proxy, shareholders who, in the aggregate, hold at least 5% of the issued shares entitled to be voted at the meeting. However, if there is only one shareholder entitled to vote at a meeting of shareholders, (a) the quorum is one person who is, or who represents by proxy, that shareholder, and (b) that shareholder, present in person or by proxy, may constitute the meeting.
Our articles state that in addition to those persons who are entitled to vote at a meeting of our shareholders, the only other persons entitled to be present at the meeting are the directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for our company, the auditor of our company, any persons invited to be present at the meeting by our directors or by the chair of the meeting and any person entitled or required under the Business Corporations Act (British Columbia) or our articles to be present at the meeting.
Limitations on Ownership of Securities
Except as provided in the Investment Canada Act, there are no limitations specific to the rights of non-Canadians to hold or vote our common shares under the laws of Canada or British Columbia, or in our charter documents.
Change in Control
There are no provisions in our articles or in the Business Corporations Act (British Columbia) that would have the effect of delaying, deferring or preventing a change in control of our company, and that would operate only with respect to a merger, acquisition or corporate restructuring involving our company or our subsidiaries.
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Ownership Threshold
Our articles or the Business Corporations Act (British Columbia) do not contain any provisions governing the ownership threshold above which shareholder ownership must be disclosed. Securities legislation in Canada, however, requires that we disclose in our information circular for our annual general meeting, holders who beneficially own more than 10% of our issued and outstanding shares. Most state corporation statutes do not contain provisions governing the threshold above which shareholder ownership must be disclosed. However, we expect that the United States federal securities laws will require us to disclose, in our annual report on Form 20-F, holders who own 5% or more of our issued and outstanding shares.
C. Material Contracts
With the exception of the contracts listed below and contracts entered into in the ordinary course of business, we have not entered into any material contracts during the last two years:
On February 28, 2022 we entered into a Purchase and Supply agreement with Workhorse to supply them with 1,500 GreenPower EV Star Cab and Chassis vehicles.
We entered into a Contract of Lease-Purchase that became effective on August 1, 2022 with the South Charleston Development Authority for a property located in South Charleston, West Virginia.
For information regarding Employment, Consulting and Management Agreements involving our directors and senior management, see "Compensation" for additional information.
D. Exchange Controls
Our company is incorporated in and subject to the laws of the Province of British Columbia, Canada. There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares, other than withholding tax requirements. Any such remittances to United States residents are generally subject to withholding tax, however no such remittances are likely in the foreseeable future. See "Taxation" below.
There is no limitation imposed by Canadian law or by the charter or other constituent documents of our company on the right of a non-resident to hold or vote common shares of our company. However, the Investment Canada Act (Canada) has rules regarding certain acquisitions of shares by non-residents, along with other requirements under that legislation.
The following discussion summarizes the principal features of the Investment Canada Act (Canada) for a non-resident who proposes to acquire common shares of our company. The discussion is general only; it is not a substitute for independent legal advice from an investor's own advisor; and it does not anticipate statutory or regulatory amendments.
The Investment Canada Act (Canada) is a Canadian federal statute of broad application regulating the establishment and acquisition of Canadian businesses by non-Canadians, including individuals, governments or agencies thereof, corporations, partnerships, trusts or joint ventures. Investments by non-Canadians to acquire control over existing Canadian businesses or to establish new ones are either reviewable or notifiable under the Investment Canada Act (Canada). If an investment by a non-Canadian to acquire control over an existing Canadian business is reviewable under the Investment Canada Act (Canada), the Investment Canada Act (Canada) generally prohibits implementation of the investment unless, after review, the Minister of Industry, is satisfied that the investment is likely to be of net benefit to Canada.
A non-Canadian would acquire control of our company for the purposes of the Investment Canada Act (Canada) through the acquisition of common shares if the non-Canadian acquired a majority of the common shares of our company.
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Further, the acquisition of less than a majority but one-third or more of the common shares of our company would be presumed to be an acquisition of control of our company unless it could be established that, on the acquisition, our company was not controlled in fact by the acquirer through the ownership of common shares.
For a direct acquisition that would result in an acquisition of control of our company, subject to the exception for "WTO Investors" that are controlled by persons who are resident in World Trade Organization ("WTO") member nations, a proposed investment would be reviewable where the value of the acquired assets is CDN$5 million or more, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada's cultural heritage or national identity, where the value of the acquired assets is less than CDN$5 million.
For a proposed indirect acquisition that is not a so-called WTO transaction and that would result in an acquisition of control of our company through the acquisition of a non-Canadian parent entity, the investment would be reviewable where (a) the value of the Canadian assets acquired in the transaction is CDN$50 million or more, or (b) the value of the Canadian assets is greater than 50% of the value of all of the assets acquired in the transaction and the value of the Canadian assets is CDN$5 million or more.
In the case of a direct acquisition by or from a WTO Investor, the threshold is significantly higher. The 2016 threshold was CDN$600 million, which threshold was increased to CDN$800 million in April 2017 for an intended period of two years. Starting January 1, 2019, and for subsequent years, the threshold level became adjusted annually based on growth in nominal gross domestic product in accordance with a formula set out in the Investment Canada Act (Canada) (i.e., the growth in the nominal gross domestic product at market prices multiplied by the threshold amount determined for the previous year). In keeping with this formula, in 2019, the review threshold was increased to CDN$1.045 billion. Other than the exception noted below, an indirect acquisition involving a WTO Investor is not reviewable under the Investment Canada Act (Canada).
The higher WTO threshold for direct investments and the exemption for indirect investments do not apply where the relevant Canadian business is carrying on a "cultural business". The acquisition of a Canadian business that is a "cultural business" is subject to lower review thresholds under the Investment Canada Act (Canada) because of the perceived sensitivity of the cultural sector.
In 2009, amendments were enacted to the Investment Canada Act (Canada) concerning investments that may be considered injurious to national security. If the Industry Minister has reasonable grounds to believe that an investment by a non-Canadian "could be injurious to national security," the Industry Minister may send the non-Canadian a notice indicating that an order for review of the investment may be made. The review of an investment on the grounds of national security may occur whether or not an investment is otherwise subject to review on the basis of net benefit to Canada or otherwise subject to notification under the Investment Canada Act. To date, there is neither legislation nor guidelines published, or anticipated to be published, on the meaning of "injurious to national security." Discussions with government officials suggest that very few investment proposals will cause a review under these new sections.
Certain transactions, except those to which the national security provisions of the Investment Canada Act (Canada) may apply, relating to common shares of our company are exempt from the Investment Canada Act (Canada), including:
(a) acquisition of common shares of our company by a person in the ordinary course of that person's business as a trader or dealer in securities,
(b) acquisition of control of our company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions on the Investment Canada Act (Canada), and
(c) acquisition of control of our company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of our company, through the ownership of common shares, remained unchanged.
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E. Taxation
Certain Canadian Federal Income Tax Considerations for United States Residents
The following is a summary of certain Canadian federal income tax considerations generally applicable to the holding and disposition of our securities acquired by a holder who, at all relevant times, (a) for the purposes of the Income Tax Act (Canada) (i) is not resident, or deemed to be resident, in Canada, (ii) deals at arm's length with us, and is not affiliated with us, (iii) holds our common shares as capital property, (iv) does not use or hold the common shares in the course of carrying on, or otherwise in connection with, a business carried on or deemed to be carried on in Canada and (v) is not a "registered non-resident insurer" or "authorized foreign bank" (each as defined in the Income Tax Act (Canada)), or other holder of special status, and (b) for the purposes of the Canada-U.S. Tax Convention (the "Tax Treaty"), is a resident of the United States, has never been a resident of Canada, does not have and has not had, at any time, a permanent establishment or fixed base in Canada, and who otherwise qualifies for the full benefits of the Tax Treaty. Holders who meet all the criteria in clauses (a) and (b) above are referred to herein as "U.S. Holders", and this summary only addresses such U.S. Holders.
This summary does not deal with special situations, such as the particular circumstances of traders or dealers, tax exempt entities, insurers or financial institutions, or other holders of special status or in special circumstances. Such holders, and all other holders who do not meet the criteria in clauses (a) and (b) above, should consult their own tax advisors.
This summary is based on the current provisions of the Income Tax Act (Canada), the regulations thereunder in force at the date hereof, the current provisions of the Tax Treaty, and our understanding of the administrative and assessing practices of the Canada Revenue Agency published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the Income Tax Act (Canada) and regulations thereunder publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the "Proposed Amendments") and assumes that such Proposed Amendments will be enacted in the form proposed. However, such Proposed Amendments might not be enacted in the form proposed, or at all. This summary does not otherwise take into account or anticipate any changes in law or administrative or assessing practices, whether by legislative, governmental or judicial decision or action, nor does it take into account tax laws of any province or territory of Canada or of any other jurisdiction outside Canada, which may differ significantly from those discussed in this summary.
For the purposes of the Income Tax Act (Canada), all amounts relating to the acquisition, holding or disposition of our securities must generally be expressed in Canadian dollars. Amounts denominated in United States currency generally must be converted into Canadian dollars using the rate of exchange that is acceptable to the Canada Revenue Agency.
This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular U.S. Holder, and no representation with respect to the Canadian federal income tax consequences to any particular U.S. Holder or prospective U.S. Holder is made. This summary is not exhaustive of all Canadian federal income tax considerations. Accordingly, all prospective purchasers (including U.S. Holders as defined above) should consult with their own tax advisors for advice with respect to their own particular circumstances.
Withholding Tax on Dividends
Amounts paid or credited or deemed to be paid or credited as, on account or in lieu of payment of, or in satisfaction of, dividends on our common shares to a U.S. Holder will be subject to Canadian withholding tax. Under the Tax Treaty, the rate of Canadian withholding tax on dividends paid or credited by us to a U.S. Holder that beneficially owns such dividends and substantiates eligibility for the benefits of the Tax Treaty is generally 15% (unless the beneficial owner is a company that owns at least 10% of our voting stock at that time, in which case the rate of Canadian withholding tax is generally reduced to 5%).
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Dispositions
A U.S. Holder will not be subject to tax under the Income Tax Act (Canada) on a capital gain realized on a disposition or deemed disposition of a security, unless the security is "taxable Canadian property" to the U.S. Holder for purposes of the Income Tax Act (Canada) and the U.S. Holder is not entitled to relief under the Tax Treaty.
Generally, our common shares will not constitute "taxable Canadian property" to a U.S. Holder at a particular time unless, at any time during the 60 month period immediately preceding the disposition, more than 50% of the fair market value of such security was derived, directly or indirectly, from one or any combination of: (i) real or immoveable property situated in Canada, (ii) "Canadian resource properties" (as defined in the Income Tax Act (Canada)), (iii) "timber resource properties" (as defined in the Income Tax Act (Canada)), and (iv) options in respect of, or interests in, or for civil law rights in, property described in any of the foregoing whether or not the property exists. Notwithstanding the foregoing, in certain other circumstances set out in the Income Tax Act (Canada), common shares could also be deemed to be "taxable Canadian property".
If our common shares become listed on a "designated stock exchange" as defined in the Income Tax Act (Canada) and are so listed at the time of disposition, our common shares generally will not constitute "taxable Canadian property" of a U.S. Holder at that time unless, at any time during the 60 month period immediately preceding the disposition, the following two conditions are met: (i) the U.S. Holder, persons with whom the U.S. Holder did not deal at arm's length, partnerships in which the U.S. Holder or such non-arm's length person holds a membership interest (either directly or indirectly through one or more partnerships), or the U.S. Holder together with all such persons, owned 25% or more of the issued shares of any class or series of shares of our company; and (ii) more than 50% of the fair market value of the shares of the company was derived directly or indirectly from one or any combination of real or immovable property situated in Canada, Canadian resource properties (as defined in the Income Tax Act (Canada)), timber resource properties (as defined in the Income Tax Act (Canada)) or options in respect of, or interests in, or for civil law rights in, property described in any of the foregoing whether or not the property exists. Notwithstanding the foregoing, in certain other circumstances set out in the Income Tax Act (Canada), common shares could also be deemed to be "taxable Canadian property".
U.S. Holders who may hold common shares as "taxable Canadian property" should consult their own tax advisors with respect to the application of Canadian capital gains taxation, any potential relief under the Tax Treaty, and special compliance procedures under the Income Tax Act (Canada), none of which is described in this summary.
Certain Material United States Federal Income Tax Considerations
The following is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from the acquisition, ownership and disposition of our securities. This summary applies only to U.S. Holders that acquire securities pursuant to this prospectus and does not apply to any subsequent U.S. Holder of our common shares.
This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder as a result of the acquisition, ownership and disposition of our common shares. In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty. Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any particular U.S. Holder. In addition, this summary does not address the U.S. federal alternative minimum, net investment income, U.S. federal estate and gift, U.S. Medicare contribution, U.S. state and local, or non-U.S. tax consequences of the acquisition, ownership or disposition of our common shares. Except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. Each U.S. Holder should consult its own tax advisor regarding all U.S. federal, U.S. state and local and non-U.S. tax consequences of the acquisition, ownership and disposition of our common shares.
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No opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the "IRS") has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership or disposition of our common shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, or contrary to, any position taken in this summary. In addition, because the authorities upon which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.
Scope of This Disclosure
Authorities
This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations (whether final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the "Canada-U.S. Tax Convention"), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date hereof. Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis, which could affect the U.S. federal income tax considerations described in this summary. This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.
U.S. Holders
For purposes of this summary, the term "U.S. Holder" means a beneficial owner of our common shares that is for U.S. federal income tax purposes:
• an individual who is a citizen or resident of the U.S.;
• a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S., any state thereof or the District of Columbia;
• an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
• a trust that
a. is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions; or
b. has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.
Transactions Not Addressed
This summary does not address the tax consequences of transactions effected prior or subsequent to, or concurrently with, any purchase of common shares pursuant to this prospectus (whether or not any such transactions are undertaken in connection with the purchase of common shares pursuant to this prospectus).
U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
This summary does not address the U.S. federal income tax considerations of the acquisition, ownership or disposition of our securities by U.S. Holders that are subject to special provisions under the Code, including, but not limited to, the following: (a) tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) broker-dealers, dealers, or traders in securities or currencies that elect to apply a "mark-to-market" accounting method; (d) U.S. Holders that have a "functional currency" other than the U.S. dollar; (e) U.S. Holders that own our securities as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquire our securities in connection with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold our securities other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); and (h) U.S. Holders that own directly, indirectly, or by attribution, 10% or more, by voting power, of our outstanding stock.
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This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are: (a) U.S. expatriates or former long-term residents of the U.S.; (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes of the Income Tax Act (Canada); (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold our securities in connection with carrying on a business in Canada; (d) persons whose securities in our company constitute "taxable Canadian property" under the Income Tax Act (Canada); or (e) persons that have a permanent establishment in Canada for purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisors regarding all U.S. federal, U.S. state and local, and non-U.S. tax consequences (including the potential application and operation of any income tax treaties) relating to the acquisition, ownership or disposition of our common shares.
If an entity or arrangement that is classified as a partnership (or other "pass-through" entity) for U.S. federal income tax purposes holds our common shares, the U.S. federal income tax consequences to such partnership and the partners (or other owners) of such partnership of the acquisition, ownership or disposition of our common shares generally will depend on the activities of the partnership and the status of such partners (or other owners). This summary does not address the U.S. federal income tax considerations for any such partner or partnership (or other "pass-through" entity or its owners). Owners of entities and arrangements that are classified as partnerships (or other "pass-through" entities) for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences of the acquisition, ownership or disposition of our common shares.
Acquisition of Our Securities
A U.S. Holder generally will not recognize gain or loss upon the acquisition of our securities for cash pursuant to this prospectus. A U.S. Holder's holding period for such common shares will begin on the day after the acquisition.
Ownership and Disposition of Our Common Shares
Distributions on Our Common Shares
Subject to the "passive foreign investment company" ("PFIC") rules discussed below (see "Tax Consequences if Our Company is a PFIC"), a U.S. Holder that receives a distribution, including a constructive distribution, with respect to our common shares will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated "earnings and profits" of our company, as computed for U.S. federal income tax purposes. To the extent that a distribution exceeds the current and accumulated "earnings and profits" of our company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder's tax basis in our common shares and thereafter as gain from the sale or exchange of such common shares (see "Sale or Other Taxable Disposition of Our Common Shares" below). However, we may not maintain calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should therefore assume that any distribution by our company with respect to our common shares will constitute a dividend. Dividends received on our common shares generally will not be eligible for the "dividends received deduction" available to U.S. corporate shareholders receiving dividends from U.S. corporations. If our company is eligible for the benefits of the Canada-U.S. Tax Convention or our common shares is readily tradable on an established securities market in the U.S., dividends paid by our company to non-corporate U.S. Holders generally will be eligible for the preferential tax rates applicable to long-term capital gains, provided certain holding period and other conditions are satisfied, including that our company not be classified as a PFIC in the tax year of distribution or in the preceding tax year. The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.
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Sale or Other Taxable Disposition of Our Common Shares
Subject to the PFIC rules discussed below, upon the sale or other taxable disposition of our common shares, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount of cash plus the fair market value of any property received and such U.S. Holder's tax basis in the common shares sold or otherwise disposed of. Such capital gain or loss will be long-term capital gain or loss if, at the time of the sale or other taxable disposition, the U.S. Holder's holding period for such security is more than one year. Preferential tax rates apply to long-term capital gains of non-corporate U.S. Holders. There are currently no preferential tax rates for long-term capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant limitations under the Code.
PFIC Status of Our Company
If our company is or becomes a PFIC, the preceding sections of this summary may not describe the U.S. federal income tax consequences to U.S. Holders of the ownership and disposition of our common shares. The U.S. federal income tax consequences of owning and disposing of our common shares if our company is or becomes a PFIC are described below under the heading "Tax Consequences if Our Company is a PFIC."
A non-U.S. corporation is a PFIC for each tax year in which (i) 75% or more of its gross income is passive income (as defined for U.S. federal income tax purposes) (the "income test") or (ii) on average for such tax year, 50% or more (by value) of its assets either produces or is held for the production of passive income (the "asset test"). For purposes of the PFIC provisions, "gross income" generally includes sales revenues less cost of goods sold, plus income from investments and from incidental or outside operations or sources, and "passive income" generally includes dividends, interest, certain rents and royalties, and certain gains from commodities or securities transactions. In determining whether or not it is a PFIC, a non-U.S. corporation is required to take into account its pro rata portion of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value). If certain conditions are met, a start-up non-U.S. corporation is not a PFIC in the first year that it has gross income, but could be a PFIC in one or more earlier years in which it has no gross income but satisfies the asset test.
Under certain attribution and indirect ownership rules, if our company is a PFIC, U.S. Holders will generally be deemed to own their proportionate shares of our company's direct or indirect equity interest in any company that is also a PFIC (a "Subsidiary PFIC").
The Company does not know if it currently is a PFIC or was a PFIC in a prior year and, based on current business plans and financial projections, does not know if it will be a PFIC in subsequent tax years. The determination of PFIC status is inherently factual, is subject to a number of uncertainties, and can be determined only annually after the close of the tax year in question. Additionally, the analysis depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. We might be determined to be a PFIC for the current tax year or any prior or future tax year, and no opinion of legal counsel or ruling from the IRS concerning the status of our company as a PFIC has been obtained or will be requested. U.S. Holders should consult their own U.S. tax advisors regarding the PFIC status of our company.
Tax Consequences if Our Company is a PFIC
If our company is a PFIC for any tax year during which a U.S. Holder owns our common shares, special rules may increase such U.S. Holder's U.S. federal income tax liability with respect to the ownership and disposition of such common shares. If our company meets the income test or the asset test for any tax year during which a U.S. Holder owns our common shares, our company will be treated as a PFIC with respect to such U.S. Holder for that tax year and for all subsequent tax years, regardless of whether our company meets the income test or the asset test for such subsequent tax years, unless the U.S. Holder elects to recognize any unrealized gain in such common shares or makes a timely and effective QEF Election or, if applicable, Mark-to-Market Election.
Under the default PFIC rules:
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• any gain realized on the sale or other disposition (including dispositions and certain other events that would not otherwise be treated as taxable events) of our common shares (including an indirect disposition of the stock of any Subsidiary PFIC) and any "excess distribution" (defined as a distribution to the extent it, together with all other distributions received in the relevant tax year, exceeds 125% of the average annual distribution received during the preceding three years) received on our common shares or with respect to the stock of a Subsidiary PFIC will be allocated ratably to each day of such U.S. Holder's holding period for our common shares;
• the amount allocated to the current tax year and any year prior to the first year in which our company was a PFIC will be taxed as ordinary income in the current year;
• the amount allocated to each of the other tax years (the "Prior PFIC Years") will be subject to tax at the highest ordinary income tax rate in effect for the applicable class of taxpayer for that year;
• an interest charge will be imposed with respect to the resulting tax attributable to each Prior PFIC Year, which interest charge is not deductible by non-corporate U.S. Holders; and
• any loss realized on the disposition of our common shares generally will not be recognized.
A U.S. Holder that makes a timely and effective "mark-to-market" election under Section 1296 of the Code (a "Mark-to-Market Election") or a timely and effective election to treat our company and each Subsidiary PFIC as a "qualified electing fund" (a "QEF") under Section 1295 of the Code (a "QEF Election") may generally mitigate or avoid the PFIC consequences described above with respect to our common shares.
If a U.S. Holder makes a timely and effective QEF Election, the U.S. Holder must include currently in gross income each year its pro rata share of our company's ordinary income and net capital gains, regardless of whether such income and gains are actually distributed. Thus, a U.S. Holder could have a tax liability with respect to such ordinary income or gains without a corresponding receipt of cash from our company. If our company is a QEF with respect to a U.S. Holder, the U.S. Holder's basis in our common shares will be increased to reflect the amount of the taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding reduction of basis in our common shares and will not be taxed again as a distribution to a U.S. Holder. Taxable gains on the disposition of our common shares by a U.S. Holder that has made a timely and effective QEF Election are generally capital gains. A U.S. Holder must make a QEF Election for our company and each Subsidiary PFIC if it wishes to have this treatment. To make a QEF Election, a U.S. Holder will need to have an annual information statement from our company setting forth the ordinary income and net capital gains for the year. U.S. Holders should be aware that we might not satisfy the recordkeeping requirements that apply to a QEF or supply U.S. Holders with information such U.S. Holders require to report under the QEF rules in the event that our company is a PFIC for any tax year.
In general, a U.S. Holder must make a QEF Election on or before the due date for filing its income tax return for the first year to which the QEF Election applies. Under applicable Treasury Regulations, a U.S. Holder will be permitted to make retroactive elections in particular circumstances, including if it had a reasonable belief that our company was not a PFIC and filed a protective election. If a U.S. Holder owns PFIC stock indirectly through another PFIC, separate QEF Elections must be made for the PFIC in which the U.S. Holder is a direct shareholder and the Subsidiary PFIC for the QEF rules to apply to both PFICs. Each U.S. Holder should consult its own tax advisor regarding the availability and desirability of, and procedure for, making a timely and effective QEF Election for our company and any Subsidiary PFIC.
A Mark-to-Market Election may be made with respect to stock in a PFIC if such stock is "regularly traded" on a "qualified exchange or other market" (within the meaning of the Code and the applicable Treasury Regulations). A class of stock that is traded on one or more qualified exchanges or other markets is considered to be "regularly traded" for any calendar year during which such class of stock is traded in other than de minimis quantities on at least 15 days during each calendar quarter. If our common shares are considered to be "regularly traded" within this meaning, then a U.S. Holder generally will be eligible to make a Mark-to-Market Election with respect to such security but not with respect to a Subsidiary PFIC. Upon closing our common shares will be listed or posted for trading on a stock quotation system and therefore considered to be "regularly traded" for this purpose.
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When these securities become "regularly traded," a U.S. Holder that makes a timely and effective Mark-to-Market Election with respect to such securities generally will be required to recognize as ordinary income in each tax year in which our company is a PFIC an amount equal to the excess, if any, of the fair market value of such stock as of the close of such taxable year over the U.S. Holder's adjusted tax basis in such stock as of the close of such taxable year. A U.S. Holder's adjusted tax basis in our securities generally will be increased by the amount of ordinary income recognized with respect to such stock. If the U.S. Holder's adjusted tax basis in our securities as of the close of a tax year exceeds the fair market value of such stock as of the close of such taxable year, the U.S. Holder generally will recognize an ordinary loss, but only to the extent of net mark-to-market income recognized with respect to such stock for all prior taxable years. A U.S. Holder's adjusted tax basis in our securities generally will be decreased by the amount of ordinary loss recognized with respect to such stock. Any gain recognized upon a disposition of our common shares or warrants generally will be treated as ordinary income, and any loss recognized upon a disposition generally will be treated as ordinary loss to the extent of the net mark-to-market income recognized for all prior taxable years. Any loss recognized in excess thereof will be taxed as a capital loss. Capital losses are subject to significant limitations under the Code. Each U.S. Holder should consult its own tax advisor regarding the availability and desirability of, and procedure for, making a timely and effective Mark-to-Market Election with respect to our common shares.
Foreign Tax Credit
A U.S. Holder that pays (whether directly or through withholding) Canadian income tax in connection with the ownership or disposition of our common shares may be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S. Holder's U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder's income subject to U.S. federal income tax. This election is made on a year-by-year basis and applies to all creditable foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.
Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder's U.S. federal income tax liability that such U.S. Holder's "foreign source" taxable income bears to such U.S. Holder's worldwide taxable income. In applying this limitation, a U.S. Holder's various items of income and deduction must be classified, under complex rules, as either "foreign source" or "U.S. source." Generally, dividends paid by a non-U.S. corporation should be treated as foreign source for this purpose, and gains recognized on the sale of securities of a non-U.S. corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code. However, the amount of a distribution with respect to our common shares that is treated as a "dividend" may be lower for U.S. federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder. In addition, this limitation is calculated separately with respect to specific categories of income. The foreign tax credit rules are complex, and each U.S. Holder should consult its own U.S. tax advisor regarding the foreign tax credit rules.
Special rules apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution, including a constructive distribution, from a PFIC. Subject to such special rules, non-U.S. taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit. The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and a U.S. Holder should consult its own tax advisor regarding their application to the U.S. Holder.
Receipt of Foreign Currency
The amount of any distribution or proceeds paid in Canadian dollars to a U.S. Holder in connection with the ownership, sale or other taxable disposition of our common shares, will be included in the gross income of a U.S. Holder as translated into U.S. dollars calculated by reference to the exchange rate prevailing on the date of actual or constructive receipt of the payment, regardless of whether the Canadian dollars are converted into U.S. dollars at that time. If the Canadian dollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the Canadian dollars equal to their U.S. dollar value on the date of receipt. Any U.S. Holder who receives payment in Canadian dollars and engages in a subsequent conversion or other disposition of the Canadian dollars may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules apply to U.S. Holders who use the accrual method with respect to foreign currency. Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of Canadian dollars.
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Information Reporting; Backup Withholding
Under U.S. federal income tax law, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a non-U.S. corporation. For example, U.S. return disclosure obligations (and related penalties) are imposed on individuals who are U.S. Holders that hold certain specified foreign financial assets in excess of certain threshold amounts. The definition of "specified foreign financial assets" includes not only financial accounts maintained in non-U.S. financial institutions, but also, if held for investment and not in an account maintained by certain financial institutions, any stock or security issued by a non-U.S. person, any financial instrument or contract that has an issuer or counterparty other than a U.S. person and any interest in a non-U.S. entity. A U.S. Holder may be subject to these reporting requirements unless such U.S. Holder's shares of our common shares are held in an account at certain financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns on IRS Form 8938 for specified foreign financial assets, filing obligations relating to the PFIC rules including possible reporting on IRS Form 8621, and any other applicable reporting requirements.
Payments made within the U.S. or by a U.S. payor or U.S. middleman of (a) distributions on our common shares, and (b) proceeds arising from the sale or other taxable disposition of our common shares generally will be subject to information reporting. In addition, backup withholding, currently at a rate of 24%, may apply to such payments if a U.S. Holder (a) fails to furnish such U.S. Holder's correct U.S. taxpayer identification number ("TIN") (generally on Form W-9), (b) furnishes an incorrect U.S. TIN, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. TIN and that the IRS has not notified such U.S. Holder that it is subject to backup withholding. Certain exempt persons generally are excluded from these information reporting and backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the U.S. backup withholding rules are allowed as a credit against a U.S. Holder's U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner. The information reporting and backup withholding rules may apply even if, under the Canada-U.S. Tax Convention, payments are exempt from dividend withholding tax or otherwise eligible for a reduced withholding rate.
The discussion of reporting requirements set forth above is not intended to constitute an exhaustive description of all reporting requirements that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax, and, under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.
Certain Reporting Requirements
A U.S. Holder that acquires common shares generally will be required to file Form 926 with the IRS if (1) immediately after the acquisition such U.S. Holder, directly or indirectly, owns at least 10% of the common shares, or (2) the amount of cash transferred in exchange for common shares during the 12-month period ending on the date of the acquisition exceeds US$100,000. Significant penalties may apply for failing to satisfy these filing requirements. U.S. Holders are urged to contact their tax advisors regarding these filing requirements.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL U.S. TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE ACQUISITION, OWNERSHIP OR DISPOSITION OF OUR COMMON SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.
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F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
The documents concerning us which are referred to in this Annual Report may be inspected at our offices located at Suite 240 - 209 Carrall Street, Vancouver, BC, V6B 2J2.
In addition, we have filed with the SEC a registration statement on Form F-1 under the Securities Act and the documents referred to in this Annual Report have been filed as exhibits to such Form F-1 with the SEC and may be inspected and copied at the public reference facility maintained by the SEC at 100F. Street NW, Washington, D.C. 20549. In addition, the SEC maintains a website at www.sec.gov that contains copies of documents that we have filed with the SEC using its EDGAR system.
I. Subsidiary Information
GreenPower Motor Company Inc. is incorporated in the Province of British Columbia, Canada and has the following wholly-owned subsidiaries as of the date of this report:
1. GP GreenPower Industries Inc. (incorporated in the Province of British Columbia, Canada)
2. GreenPower Motor Company, Inc. (incorporated in the State of Delaware, and registered to do business in the State of California)
3. 0939181 B.C. Ltd. (incorporated in the Province of British Columbia, Canada)
4. San Joaquin Valley Equipment Leasing Inc. (formerly, Utah Manganese, Inc.) (incorporated in the State of Utah and registered to do business in the State of California)
5. 0999314 B.C. Ltd. (incorporated in the Province of British Columbia, Canada)
6. Electric Vehicle Logistics Inc. (incorporated in the State of Nevada)
7. GreenPower Manufacturing WV Inc. (incorporated in the State of West Virginia)
8. Lion Truck Body Incorporated (incorporated in the State of Nevada)
9. EA Green-Power Private Ltd. (incorporated in India)
10. Gerui New Energy Vehicle (Nanjing) Co. Ltd. (incorporated in China)
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Credit risk
The Company's exposure to credit risk is on its cash and restricted cash, accounts receivable, promissory note receivable, and on its finance lease receivables. The maximum exposure to credit risk is their carrying amounts in the consolidated statement of Financial Statements.
Cash and restricted cash consists of cash bank balances held in major financial institutions in Canada and the United States with a high credit quality and therefore the Company is exposed to minimal risk. The Company assesses the credit risk of its accounts receivable, finance lease receivables and promissory note receivable at each reporting period end and on an annual basis. As at March 31, 2023 the Company recognized an allowance for credit losses of $139,370 (2022 - $44,579) against its accounts receivable. During the year ended March 31, 2023 the Company recognized an impairment of nil on accounts receivable related to one finance lease (2022 - $43,261).
Market risks
Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange.
Interest Rate Risk
The Company is exposed to interest rate risk with respect to its Line of Credit. As at March 31, 2023 the Line of Credit had a credit limit of up to $8,000,000, and which bears interest at the bank's US Base Rate, which was 8.0% as at March 31, 2023, plus 1.5%. As at March 31, 2023 the company had a drawn balance of $6,612,232 on its Line of Credit. Assuming the drawn balance as at March 31, 2023 remains unchanged and all other variables remain constant, a 5.0% change in the US Base Rate would result in a change of approximately $331,000 to other comprehensive income/loss.
Foreign exchange risk
The Company is exposed to foreign exchange risk as it conducts business in both the United States and Canada. Management monitors its foreign currency balances, but the Company does not engage in any hedging activities to reduce its foreign currency risk.
At March 31, 2023, the Company was exposed to currency risk through the following monetary assets and liabilities in CDN Dollars:
| Cash | $ | 138,869 | |
| Accounts Receivable | $ | 89,944 | |
| Sales tax receivable | $ | 42,526 | |
| Prepaids and deposits | $ | 10,988 | |
| Finance Lease Receivable | $ | 82,000 | |
| Accounts Payable and Accrued Liabilities | $ | (410,321 | ) |
| Related Party Loan & Interests Payable | $ | (4,242,071 | ) |
The CDN/USD exchange rate as at March 31, 2023 was $0.7389 (March 31, 2022 was $0.8003 and March 31, 2021 - $0.7952). Based on the net exposure and assuming all other variables remain constant, a 10% change in the appreciation or depreciation of the Canadian dollar relative to the US dollar would result in a change of approximately $428,000 to other comprehensive income/loss.
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ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUINCIES
There have not been any defaults with respect to dividends, arrearages or delinquencies since the amalgamation of Oakmont Minerals Corp. and GreenPower Motor Company Inc. on December 23, 2014.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
There have been no material modifications to the rights of our security holders since the amalgamation of Oakmont Minerals Corp. and GreenPower Motor Company Inc. on December 23, 2014.
Use of Proceeds
Over the last three years the Company has completed the following offering of securities with the Use of Proceeds as follows.
During September 2020 the Company closed its initial public offering on the Nasdaq stock exchange and concurrent private placement for gross proceeds of $37.7 million less underwriting discounts and offering costs. Under the initial public offering the Company sold 1,860,000 common shares at a price of $20.00 per common share, and in the concurrent private placement the Company sold 25,000 common shares at a price of $20.00 per share. The Company used the net proceeds from the offering for the production of all-electric vehicles including EV Stars, EV Star plus, EV Star cab and chassis, BEAST school buses, EV 250 thirty-foot low-floor transit style buses, product development and geographic expansion with the remainder, if any, for working capital.
During the year ended March 31, 2023 the Company issued 1,565,268 shares for gross proceeds of $4,895,826 with the Company’s At the Market (ATM) on Nasdaq. The Company intends to use the net proceeds of any sales of Common Shares under the ATM for the production of all-electric vehicles, including EV Star cab and chassis, EV Star cargo, EV Stars and school buses, as well as for product development with the remainder, if any, for general corporate purposes. The Company intends to use the net proceeds of any sales of Common Shares under the ATM for the production of all-electric vehicles, including EV Star cab and chassis, EV Star cargo, EV Stars and school buses, as well as for product development with the remainder, if any, for general corporate purposes.
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ITEM 15. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management, with the participation of our Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining disclosure controls and procedures (DC&P) (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the U.S. Securities and Exchange Act of 1934 and under National Instrument 52-109). Management evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2023.
Based on the evaluation performed as of March 31, 2023, as a result of the material weaknesses in internal control over financial reporting that are described below in Management's Report on Internal Control Over Financial Reporting, our Chief Executive Officer and Chief Financial Officer determined that our disclosure controls and procedures were not effective as of such date.
Management's Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the U.S. Securities and Exchange Act of 1934 and under National Instrument 52-109.
The Company acquired Lion Truck Body Inc. ("Lion") effective July 7, 2022. The financial information for this acquisition is included in this MD&A and in Note 21 to the annual consolidated financial statements. Since the date of the acquisition to March 31, 2023 Lion contributed $1,897,605 in revenue and its impact to consolidated earnings for the period was ($864,996), including a writedown of $250,832 in goodwill that was recorded on the acquisition. National Instrument 52-109 and the U.S. Securities and Exchange Commission provide an exemption whereby companies undergoing acquisitions can exclude the acquired business in the year of acquisition from the scope of testing and assessment of design and operational effectiveness of controls over financial reporting. Due to the complexity associated with assessing internal controls during integration of the business, the Company has utilized the scope exemption as it relates to this acquisition in its management report on internal controls over financial reporting for the year ended March 31, 2023.
A company's internal control over financial reporting is a process designed by, or under the supervision of, its Chief Executive Officer and Chief Financial Officer, and effected by such company's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company's annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
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Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2023, based on the framework set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has concluded that the Company’s internal control over financial reporting as of March 31, 2023 was not effective. The ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses in its internal control over financial reporting:
• We did not design and maintain effective controls over revenues or the bank reconciliation process.
• We did not design and maintain effective controls to account for transactions related to inventory and capital asset and to ensure that transactions were recorded in the correct period.
• We did not design and maintain effective controls over the accounting treatment relating to complex transactions and for business combinations.
Accordingly, management has concluded that these control deficiencies constitute material weaknesses.
Remediation Efforts
Management is focused on developing, designing and implementing effective internal controls measures to improve our internal control over financial reporting and remediate the material weaknesses we identified. Our internal control remediation efforts include the following:
• | We are improving internal controls and processes over revenue and the bank reconciliation process | |
• | We are designing and implementing controls to account for transactions related to inventory and capital assets and to ensure that transactions were recorded in the correct period. | |
• | We have retained an external financial controls consultant to assist (i) reviewing our current processes, procedures, and systems and assessing the design of controls to identify opportunities to enhance the design of controls that would address relevant risks identified by management, and (ii) enhancing and implementing protocols to retain sufficient documentary evidence of operating effectiveness of such controls; | |
• | We are in the process of hiring additional qualified accounting resources and professionals to manage the implementation of improved internal controls over financial reporting; |
In preparing our consolidated financial statements as of March 31, 2022 and 2021 and for the fiscal years ended March 31, 2022, 2021 and 2020, a material weakness was identified in our control environment related to errors that were made in determining the components of revenue and cost of sales at lease inception for leases that were determined to be finance leases, and in the calculation of revenue and cost of sales associated with cancelled leases. We corrected these errors and restated the presentation of revenue and cost of sales in our consolidated revenue and cost of sales in the consolidated statements of operations for the years ended March 31, 2021 and 2020. Management has taken steps to ensure the control deficiencies contributing to the material weakness will be remediated, including hiring of additional financial reporting and accounting staff, however management identified that as at March 31, 2023 a material weakness existed in that we did not design and maintain effective controls over the accounting treatment relating to complex transactions and for business combinations, which indicates this material weakness has not been remediated as at March 31, 2023.
Management intends to focus on the internal control remediation efforts identified above in order to address and resolve the material weaknesses in internal controls over financial reporting that existed as at March 31, 2023.
Attestation Report of the Registered Public Accounting Firm
This Annual Report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report is not subject to attestation by the Company's registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management's report in this Annual Report.
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Changes In Internal Control Over Financial Reporting
During our fourth quarter and year ended March 31, 2023, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act and NI 52-109) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitation on Effectiveness Controls and Procedures
The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but there can be no assurance that such improvements will be sufficient to provide us with effective internal control over financial reporting.
ITEM 16 A. AUDIT COMMITTEE FINANCIAL EXPERT
As disclosed above, as of the date hereof, our Audit Committee is comprised of Malcolm Clay, Cathy McLay and David Richardson, each of whom meets the independence standards under Rule 10A-3 under the Exchange Act and is financially literate under applicable Canadian laws.
Our Board of Directors has determined that Malcolm Clay qualifies as an audit committee financial expert pursuant to Items 16A(b) and (c) of Form 20-F.
ITEM 16B. CODE OF ETHICS
We have adopted a Code of Ethics and Business Conduct (the "Code of Ethics") that applies to all of our directors, senior officers, and employees. The Code of Ethics meets the requirements for a "code of ethics" within the meaning of that term in Item 16B of Form 20-F. A copy of our Code of Ethics will be provided to any person without charge, upon request. All requests for a copy of our Code of Ethics should be directed in writing to the attention of Michael Sieffert, CFO, at Suite 240 - 209 Carrall Street, Vancouver, BC, V6B 2J2.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
BDO Canada LLP, PCAOB ID #1227 was the principal accountant for the audit of GreenPower's consolidated financial statements during the year ended March 31, 2023.
Crowe MacKay was the principal accountant for the audit of GreenPower's consolidated financial statements during the year ended March 31, 2022 and March 31, 2021.
The following table sets forth information regarding the amount billed and accrued for audit fees, other fees and tax fees for the fiscal years ended March 31, 2023 and March 31, 2022.
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| March 31, 2023 | March 31, 2022 | |||||
| Audit fees | $ | 267,450 | $ | 125,000 | ||
| Audit related fees | - | 64,565 | ||||
| Tax fees | - | 6,000 | ||||
| Total | $ | 267,450 | $ | 195,565 |
Fees summarized in the table above include fees billed by BDO Canada LLP during the year ended March 31, 2023, and fees billed by Crowe Mackay during the year ended March 31, 2022.
Audit fees includes services provided by our principal accountants, or associated or affiliated firms, related to audits and reviews, and other services provided by the principal accountant in connection with statutory and regulatory filings or engagements.
Audit related fees includes assurance and related services that traditionally are performed by the principal accountant and are outside of the scope of the engagement letter for the audit which are reasonably related to the performance of the audit or review of the consolidated financial statements.
Tax fees includes the aggregate fees for services performed by the principal accountant's tax division except those related to the audit, such as preparation of tax returns, tax compliance, and similar services.
Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors
The policy of our Audit Committee is to pre-approve all audit and permissible non-audit services to be performed by our independent auditors during the fiscal year.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
On November 23, 2022 Crowe Mackay LLP, the former certifying accountant of the Company, resigned on their own initiative. The audit committee of the Company and the board of directors of the Company considered and approved the resignation of its former certifying accountant and the appointment of BDO Canada LLP as successor certifying accountant of the Company, effective on the same date.
The report of Crowe Mackay LLP on the Company’s financial statements as of and for the fiscal year ended March 31, 2022, did not contain an adverse opinion or disclaimer of opinion, did not contain a qualification or modification as to uncertainty, audit scope, or accounting principles.
During the fiscal year ended March 31, 2022 and the subsequent interim period preceding the resignation of Crowe Mackay LLP, (i) there were no disagreements with the Company’s former certifying accountant on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which disagreements, if not resolved to the satisfaction of the Company’s former certifying accountant, would have caused the Company’s former certifying accountant to reference the subject matter of the disagreements in its audit report, and (ii) there were no “reportable events” (as described in Item 16F(a)(1)(v) of Form 20-F) other than the material weakness related to the Company’s accounting analysis of finance leases, which was caused by the limited technical accounting resources of the Company at the time of the error, as reported in the Company’s Form 20-F filed with the U.S. Securities and Exchange Commission on July 29th, 2022.
The Company has provided Crowe Mackay LLP with a copy of the disclosures herein and required under Item 16F of Form 20-F and have requested from Crowe Mackay LLP a letter addressed to the SEC indicating whether it agrees with this disclosure. A copy of Crowe Mackay LLP’s letter dated July 21, 2023 is attached as Exhibit 10.31.
During the fiscal year ended March 31, 2022 and the subsequent interim period prior to engaging BDO Canada LLP, neither the Company nor anyone acting on behalf of the Company has consulted with BDO Canada LLP regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report nor oral advice was provided to the Company that BDO Canada LLP concluded was an important factor considered by the Company in reaching the Company’s decision as to any accounting, audit, or financial reporting issue, (ii) any matter that was the subject of a disagreement, as described in the instructions to Item 16F(a)(1)(iv) of Form 20-F, or (ii) any reportable event pursuant to Item 16F(a)(1)(v) of Form 20-F.
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ITEM 16G. CORPORATE GOVERNANCE
Not applicable.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JUSRIDISCTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
GreenPower has not adopted insider trading policies or procedures that govern the purchase, sale and other dispositions of the registrant's securities by directors, senior management, and employees. The Company's shares are listed on the Nasdaq Stock Exchange and the TSX Venture Exchange, and neither stock exchange requires its listed companies to adopt an insider trading policy.
PART III
ITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
Our consolidated financial statements were prepared in accordance with IFRS, as issued by the IASB, and are presented in US dollars.
Consolidated financial statements filed as part of this Annual Report:
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GREENPOWER MOTOR COMPANY INC.
CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended March 31, 2023, 2022 and 2021
(Expressed in US dollars)
GREENPOWER MOTOR COMPANY INC.
Consolidated Financial Statements
(Expressed in US Dollars)
For the Years Ended March 31, 2023, 2022, and 2021
 |
Tel: (604) 688-5421 | BDO Canada LLP |
| Fax: (604) 688-5132 | 1100 Royal Centre | |
| www.bdo.ca | 1055 West Georgia Street, P.O. Box 11101 | |
| Vancouver, British Columbia | ||
| V6E 3P3 | ||
| Report of Independent Registered Public Accounting Firm |
Shareholders and Board of Directors
GreenPower Motor Company Inc.
Vancouver, Canada
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of financial position of GreenPower Motor Company Inc. (the "Company") as of March 31, 2023, the related consolidated statements of operations and comprehensive loss, changes in equity and cash flows for the year ended March 31, 2023, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2023, and the results of its operations and its cash flows for the year ended March 31, 2023 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Going Concern Uncertainty
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms
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Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
Chartered Professional Accountants
We have served as the Company's auditor since fiscal 2023.
July 14, 2023
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| Crowe MacKay LLP 1100 - 1177 West Hastings Street Vancouver, BC V6E 4T5 Main +1 (604) 687-4511 Fax +1 (604) 687-5805 www.crowemackay.ca |
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of GreenPower Motor Company Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of financial position of GreenPower Motor Company Inc. and subsidiaries (the "Company") as of March 31, 2022, the related consolidated statements of operations and comprehensive loss, changes in equity (deficit) and cash flows for the years ended March 31, 2022 and 2021, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at March 31, 2022 and 2021, and the results of its operations and its cash flows for the years ended March 31, 2022 and 2021, and in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Emphasis of Matter Regarding Going Concern Uncertainty
We draw attention to Note 1 to the consolidated financial statements which describes the material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
Chartered Professional Accountants
We have served as the Company's auditor since 2011.
June 30, 2022
Page 5 of 44
| GREENPOWER MOTOR COMPANY INC. Consolidated Statements of Financial Position As of March 31, 2023 and 2022 (Expressed in US Dollars) |
||||||
| March 31, 2023 | March 31, 2022 | |||||
| Assets | ||||||
| Current | ||||||
| Cash and restricted cash (Note 4) | $ | $ | ||||
| Accounts receivable, net of allowances (Note 5) | ||||||
| Sales tax receivable | ||||||
| Current portion of finance lease receivables (Note 6) | ||||||
| Promissory note receivable (Note 7) | ||||||
| Inventory (Note 8) | ||||||
| Prepaids and deposits | ||||||
| Non-current | ||||||
| Finance lease receivables (Note 6) | ||||||
| Right of use assets (Note 9) | ||||||
| Property and equipment (Note 10, Note 21) | ||||||
| Other assets | ||||||
| $ | $ | |||||
| Liabilities | ||||||
| Current | ||||||
| Line of credit (Note 11) | $ | $ | ||||
| Accounts payable and accrued liabilities (Note 18) | ||||||
| Current portion of deferred revenue (Note 15) | ||||||
| Current portion of warranty liability (Note 19) | ||||||
| Loans payable to related parties (Note 18) | ||||||
| Current portion of lease liabilities (Note 9) | ||||||
| Current portion of deferred benefit of government assistance (Note 21) | ||||||
| Current portion of term loan (Note 21) | ||||||
| Non-current | ||||||
| Deferred revenue (Note 15) | ||||||
| Lease liabilities (Note 9) | ||||||
| Other liabilities | ||||||
| Term loan (Note 21) | ||||||
| Deferred benefit of government assistance (Note 21) | ||||||
| Warranty liability (Note 19) | ||||||
| Equity | ||||||
| Share capital (Note 12) | ||||||
| Reserves | ||||||
| Accumulated other comprehensive loss | ( |
) | ( |
) | ||
| Accumulated deficit | ( |
) | ( |
) | ||
| $ | $ | |||||
| Nature and Continuance of Operations and Going Concern - Note 1 | ||||||
| Events After the Reporting Period - Note 25 | ||||||
Approved on behalf of the Board on July 13, 2023
| /s/ Fraser Atkinson | /s/ Mark Achtemichuk | |
| Director | Director |
(The accompanying notes are an integral part of these consolidated financial statements)
Page 6 of 44
| GREENPOWER MOTOR COMPANY INC. |
| Consolidated Statements of Operations and Comprehensive Loss For the Years Ended March 31, 2023, 2022, and 2021 (Expressed in US Dollars) |
|||||||||
| March 31, | March 31, | March 31, | |||||||
| 2023 | 2022 | 2021 | |||||||
| Revenue (Note 22) | $ | $ | $ | ||||||
| Cost of Sales | |||||||||
| Gross Profit | |||||||||
| Sales, general and administrative costs | |||||||||
| Salaries and administration (Note 18) | |||||||||
| Depreciation (Notes 9 and 10) | |||||||||
| Product development costs | |||||||||
| Office expense | |||||||||
| Insurance | |||||||||
| Professional fees | |||||||||
| Sales and marketing | |||||||||
| Share-based payments (Notes 13 and 18) | |||||||||
| Transportation costs (Note 18) | |||||||||
| Travel, accomodation, meals and entertainment (Note 18) | |||||||||
| Allowance for credit losses (Notes 5 and 8) | |||||||||
| Total sales, general and administrative costs | |||||||||
| Loss from operations before interest, accretion and foreign exchange | ( |
) | ( |
) | ( |
) | |||
| Interest and accretion | ( |
) | ( |
) | ( |
) | |||
| Other Income (Note 10) | |||||||||
| Foreign exchange (loss) | ( |
) | ( |
) | ( |
) | |||
| Loss from operations for the year | ( |
) | ( |
) | ( |
) | |||
| Other item | |||||||||
| Write down of assets (Note 5, 10 and 21) | ( |
) | ( |
) | ( |
) | |||
| Loss for the year | ( |
) | ( |
) | ( |
) | |||
| Other comprehensive income / (loss) | |||||||||
| Cumulative translation reserve | ( |
) | ( |
) | |||||
| Total comprehensive loss for the year | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Loss per common share, basic and diluted | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Weighted average number of common shares outstanding, basic and diluted | |||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
Page 7 of 44
Consolidated Statements of Changes in Equity
For the Years ended March 31, 2023, 2022 and 2021
(Expressed in US Dollars)
| Share Capital | Equity portion | Accumulated other | |||||||||||||||||||
| Number of | of convertible | comprehensive | Accumulated | ||||||||||||||||||
| Common shares | Amount | debentures | Reserves | income (loss) | Deficit | Total | |||||||||||||||
| Balance, March 31, 2020 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||
| Shares issued for cash | - | - | - | - | |||||||||||||||||
| Share issuance costs | - | ( |
) | - | - | - | - | ( |
) | ||||||||||||
| Shares issued for exercise of warrants | - | ( |
) | - | - | ||||||||||||||||
| Shares issued for conversion of debentures | ( |
) | - | - | - | ||||||||||||||||
| Reclassify matured convertible debentures not converted | - | - | ( |
) | - | - | - | ||||||||||||||
| Shares issued for exercise of options | - | ( |
) | - | - | ||||||||||||||||
| Share-based payments | - | - | - | - | - | ||||||||||||||||
| Cumulative translation reserve | - | - | - | - | - | ||||||||||||||||
| Net loss for the year | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Net fractional shares as a result of share consolidation | - | - | - | - | - | - | |||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||
| Share issuance costs | - | ( |
) | - | - | - | - | ( |
) | ||||||||||||
| Shares issued for exercise of warrants | - | ( |
) | - | - | ||||||||||||||||
| Shares issued for exercise of options | - | ( |
) | - | - | ||||||||||||||||
| Fair value of stock options forfeited | - | - | - | ( |
) | - | - | ||||||||||||||
| Share-based payments | - | - | - | - | - | ||||||||||||||||
| Cumulative translation reserve | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
| Net loss for the year | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||
| Shares issued for cash | - | - | - | - | |||||||||||||||||
| Share issuance costs | - | ( |
) | - | - | - | - | ( |
) | ||||||||||||
| Shares issued for exercise of options | - | ( |
) | - | - | ||||||||||||||||
| Fair value of stock options forfeited | - | - | - | ( |
) | - | - | ||||||||||||||
| Share-based payments | - | - | - | - | - | ||||||||||||||||
| Cumulative translation reserve | - | - | - | - | ( |
) | - | ( |
) | ||||||||||||
| Net loss for the year | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||
(The accompanying notes are an integral part of these consolidated financial statements)
Page 8 of 44
|
GREENPOWER MOTOR COMPANY INC. Consolidated Statements of Cash Flows |
|||||||||
| March 31, | March 31, | March 31, | |||||||
| 2023 | 2022 | 2021 | |||||||
| Cash flows from (used in) operating activities | |||||||||
| Loss for the year | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Items not affecting cash | |||||||||
| Allowance for credit losses | |||||||||
| Depreciation | |||||||||
| Share-based payments | |||||||||
| Accretion and accrued interest | ( |
) | |||||||
| Amortization of deferred financing fees | |||||||||
| Write down of assets | |||||||||
| Other income | ( |
) | ( |
) | |||||
| Foreign exchange loss | |||||||||
| ( |
) | ( |
) | ( |
) | ||||
| Changes in non-cash items: | |||||||||
| Accounts receivable | ( |
) | ( |
) | |||||
| Sales tax receivable | ( |
) | ( |
) | |||||
| Inventory | ( |
) | ( |
) | ( |
) | |||
| Prepaids and deposits | ( |
) | ( |
) | |||||
| Finance lease receivables | |||||||||
| Accounts payable and accrued liabilities | |||||||||
| Deferred revenue | ( |
) | |||||||
| Warranty liability | |||||||||
| ( |
) | ( |
) | ( |
) | ||||
| Cash flows from (used in) investing activities | |||||||||
| Proceeds from disposal of property and equipment, net of fees | |||||||||
| Purchase of property and equipment | ( |
) | ( |
) | ( |
) | |||
| Lion truck body business combination | ( |
) | |||||||
| ( |
) | ( |
) | ||||||
| Cash flows from (used in) financing activities | |||||||||
| Paycheck protection program proceeds | |||||||||
| Repayment of loans payable to related parties | ( |
) | |||||||
| Loans from related parties | |||||||||
| Proceeds from (repayment of) line of credit | ( |
) | |||||||
| Proceeds from promissory note | |||||||||
| Principal payments on promissory note | ( |
) | ( |
) | |||||
| Principal payments on lease liabilities | ( |
) | ( |
) | ( |
) | |||
| Proceeds from issuance of common shares | |||||||||
| Repayment of note payable and convertible debentures, net of conversion | ( |
) | |||||||
| Repayment of other liabilities | ( |
) | |||||||
| Equity offering costs | ( |
) | ( |
) | ( |
) | |||
| Proceeds from exercise of stock options | |||||||||
| Proceeds from exercise of warrants | |||||||||
| Foreign exchange on cash and restricted cash | ( |
) | ( |
) | ( |
) | |||
| Net increase (decrease) in cash and restricted cash | ( |
) | ( |
) | |||||
| Cash and restricted cash, beginning of year | |||||||||
| Cash and restricted cash, end of year | $ | $ | $ | ||||||
Supplemental Cash Flow Disclosure Note 24
(The accompanying notes are an integral part of these consolidated financial statements)
Page 9 of 44
|
GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Financial Statements For the Years Ended March 31, 2023, 2022 and 2021 (Expressed in US Dollars) |
1. Nature and Continuance of Operations and Going Concern
GreenPower Motor Company Inc. ("GreenPower" or the "Company") was incorporated in the Province of British Columbia on September 18, 2007. The Company is a manufacturer and distributor of purpose-built, all-electric, zero-emission medium and heavy-duty vehicles serving the cargo and delivery market, shuttle and transit space and school bus sector.
The Company's corporate office is located at Suite 240-209 Carrall St., Vancouver, Canada.
The consolidated financial statements were approved by the Board of Directors on July 13, 2023.
These consolidated financial statements have been prepared on the basis that the Company is a going concern, meaning that the Company will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities inthe normal course of operations.
The Company's operations are dependent upon its ability to raise capital and generate cash flows. As at March 31, 2023, the Company had a cash balance of $
Page 10 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies
(a) Basis of presentation
Statement of Compliance with IFRS
These annual consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), and the interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"). These consolidated financial statements are presented on a historical cost basis, except for financial instruments classified as fair value through profit or loss ("FVTPL") or as fair value through other comprehensive income ("FVOCI"), in U.S. dollars. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting,except for cash flow information. The preparation of these consolidated financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Company's accounting policies.
(b) Basis of consolidation
These consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries:
| Name of | Country of | Ownership | Ownership | Principal |
| Subsidiary | Incorporation | 31-Mar-23 | 31-Mar-22 | Activity |
| GP GreenPower Industries Inc. | ||||
| GreenPower Motor Company, Inc. | ||||
| 0939181 BC Ltd. | ||||
| San Joaquin Valley Equipment Leasing, Inc. | ||||
| 0999314 BC Ltd. | ||||
| Electric Vehicle Logistics Inc. | ||||
| GreenPower Manufacturing WV Inc. | ||||
| Lion Truck Body Incorporated | ||||
| Gerui New Energy Vehicle (Nanjing) Co., Ltd. | N/A | |||
| EA Green-Power Private Ltd. |
All intercompany balances, transactions, revenues and expenses are eliminated upon consolidation. Certain information and note disclosures which are considered material to the understanding of the Company's consolidated financial statements are provided below.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
Page 11 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(c) Financial instruments
Classification
IFRS 9 requires a company to classify its financial instruments based on the way they are measured, into one of three categories: Amortized Cost, FVTPL, and FVOCI. In determining the appropriate category for financial assets, a company must consider whether it intends to hold the financial assets and collect the contractual cash flows or to collect the cash flows and sell financial assets (the "business model test") and whether the contractual cash flows of an asset are solely payments of principal and interest (the "SPPI test").
i. Amortized Cost
All of the Company's financial instruments, initially recognized at fair value, are subsequently measured at amortized cost using the effective interest method. Transaction costs are included in the initial fair value measurement of the financial instruments, and the Company incorporates the expected creditloss in financial assets on a forward-looking basis. The Company will, at a minimum, recognize 12 month expected losses in profit or loss, and if a significant increase in credit risk occurs after initial recognition, lifetime expected losses will be recognized.
Subsequent to the initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition. Interest, dividends, losses and gains relating to the financial liability are recognized in profit or loss. When the conversion option is exercised, the carrying amount of the liability is recorded as share capital and the equity component of the compound financial instrument is transferred to share capital.
ii. FVTPL
Financial liabilities classified as FVTPL are measured at fair value with unrealized gains and losses recognized through the Consolidated Statements of Operations. The Company did not have any liabilities classified as FVTPL as at March 31, 2023 and March 31, 2022.
Page 12 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(c) Financial instruments (continued)
Derivative financial assets and liabilities are initially recognized at their fair value on the date the derivative contract is entered into and are subsequently re-measured at their fair value at each reporting period with changes in the fair value recognized in profit and loss. Derivative financial assets and liabilities include warrants purchased or issued by the Company denominated in a currency other than the Company's functional currency. As at March 31, 2023 and March 31, 2022, the Company did not have any derivative financial assets or liabilities.
iii. FVOCI
Certain debt instrument assets must be classified as FVOCI unless the option to FVTPL is taken and the FVOCI classification is an election for equity assets. The Company did not have any debt or equity assets classified as FVOCI as at March 31, 2023 and March 31, 2022.
For debt instruments measured at FVOCI, interest income (calculated using the effective interest method), foreign currency gains or losses and impairment gains or losses are recognized directly in profit or loss. The difference between cumulative fair value gains or losses and the cumulative amounts recognized in profit or loss is recognized in OCI until derecognition, when the amounts in OCI are reclassified to profit or loss. For equity instruments designated as FVOCI only dividend income is recognized in profit or loss with all other gains and losses recognized in OCI and there is no reclassification on derecognition.
Measurement
All of the Company's financial instruments, initially recognized at fair value, are subsequently measured at amortized cost using the effective interest rate method. Transaction costs are included in the initial fair value measurement of the financial instruments.
Impairment
The Company assesses on a forward-looking basis the expected credit loss associated with financial assets measured at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Company applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables, which is recorded as an allowance for credit losses. Losses are recognized in profit or loss and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. As at March 31, 2023 the Company recognized an allowance for credit losses of $
For financial assets that are measured at amortized cost, the Company will, at a minimum, recognize 12 month expected losses in profit or loss, calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate.
Lifetime expected losses will be recognized on assets for which there is a significant increase in credit risk after initial recognition. During the year ended March 31, 2023 the Company recognized an impairment of
Page 13 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(d) Cash and cash equivalents
Cash and cash equivalents usually consist of highly liquid investments which are readily convertible into cash with maturity of three months or less and are subject to an insignificant risk of change in value. As at March 31, 2023 and March 31, 2022 the Company had no cash equivalents.
(e) Revenue recognition
The majority of the Company's contracts have a single performance obligation, which is the delivery and acceptance of goods, including electric vehicles, vehicle parts, and completed truck bodies. The Company recognizes revenue from these contracts with customers when a customer obtains control of the goods or services, and the Company satisfies its performance obligation to customers in exchange for consideration the Company expects to receive, net of discounts and taxes. Revenue for these contracts is allocated to the single performance obligation, which is the transfer and acceptance of the asset, including vehicles, vehicle parts, and completed truck bodies.
The Company has also recognized revenue from a contract under which the Company was reimbursed for certain costs incurred on a project over time. This revenue was recognized over the period earned, in accordance with the terms of the Contract. The Company has also earned vehicle transportation revenue, which is recognized when the transportation is completed. The Company is a lessor under certain lease contracts involving GreenPower all-electric vehicles. The recognition of lease revenue is discussed in note 2. (q).
When the period between the receipt of consideration and revenue recognition is greater than one year, the Company determines whether the financing component is significant to the contract. Where a contract is determined to have a significant financing component, the transaction price is adjusted to reflect the financing. The discount rate used in adjusting the promised amount of consideration is the rate that would be reflected in a separate financing transaction between the Company and the customer at contract inception. This rate is not subsequently adjusted for any other changes over the contract term.
The Company would recognize an asset for the incremental costs of obtaining a contract with a customer if it expects the costs to be recoverable and has determined that such costs meet the requirements to be capitalized. Capitalized contract acquisition costs are amortized consistent with the pattern of transfer to the customer for the goods and services to which the asset relates. The Company does not capitalize incremental costs of obtaining contracts if the amortization period is one year or less.
(f) Impairment of long-lived assets
At the end of each reporting period, the Company's assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the Consolidated Statements of Operations for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
Page 14 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(f) Impairment of long-lived assets (continued)
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Consolidated Statements of Operations.
(g) Foreign currency translation
The consolidated entities and their respective functional currencies are as follows:
| Entity | Functional Currency |
| GreenPower Motor Company Inc. (parent) | U.S. Dollar |
| GP GreenPower Industries Inc. | Canadian Dollar |
| GreenPower Motor Company, Inc. | U.S. Dollar |
| 0939181 BC Ltd. | Canadian Dollar |
| San Joaquin Valley Equipment Leasing, Inc. | U.S. Dollar |
| 0999314 B.C. Ltd. | Canadian Dollar |
| Electric Vehicle Logistics Inc. | U.S. Dollar |
| GreenPower Manufacturing WV Inc. | U.S. Dollar |
| Lion Truck Body Incorporated | U.S. Dollar |
| EA GreenPower Private Ltd. | U.S. Dollar |
| Gerui New Energy Vehicle (Nanjing) Co. Ltd. | RMB |
Translation to functional currency
Foreign currency transactions are translated into U.S. dollars using exchange rates in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate in effect at the measurement date. Non-monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the historical exchange rate or the exchange rate in effect at the measurement date for items recognized at FVTPL. Gains and losses arising from foreign exchange are included in the Consolidated Statements of Operations.
Translation to presentation currency
The results and financial position of those entities with a functional currency different from the presentation currency are translated into the presentation currency as follows:
- assets and liabilities are translated at the closing rate at the date of the Statements of Financial Position;
- income and expenses are translated at average exchange rates; and
- all resulting exchange differences are recognized in accumulated other comprehensive income/loss.
Page 15 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(g) Foreign currency translation (continued)
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising on translation of foreign operations are recognized in accumulated other comprehensive income / loss. On disposal of a foreign operation (that is, a disposal of the Company's entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation) all exchange differences accumulated in equity in respect of that operation attributable to the equity holders of the Company are reclassified from accumulated other comprehensive income/loss to net income/loss for the period.
(h) Inventory
Vehicle inventory is recorded at the lower of average cost and net realizable value with cost determined by vehicle model in accordance with standard input costs which are reviewed and updated over time based on actual costs. Parts inventory is valued at the lower of cost and net realizable value. WIP inventory is valued based on actual costs incurred to bring the WIP to its current state of completion. The Company's inventory consists of work in process (including electric vehicles and truck bodies), parts, and finished goods. In determining net realizable value for new vehicles, the Company considers the cost, the average age of the vehicles, and recent sales of the same or similar models from inventory. For used vehicles, the Company considers the value of new inventory and compares this to the age and condition of used inventory, as well as sales (including leases) of same or similar used inventory, where available.
(i) Property, plant, and equipment
Property, plant and equipment ("PPE") are carried at cost, less accumulated depreciation and accumulated impairment losses. The cost of an item of PPE consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Depreciation is provided at rates calculated to write off the cost of PPE, less their estimated residual value, using the following rates/estimated lives and methods:
| Leasehold improvements | |
| Computers | |
| EV equipment | |
| Furniture | |
| Automobiles | |
| Leased asset | |
| Buses |
An item of PPE is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the Consolidated Statements of Operations. Where an item of PPE comprises major components with different useful lives, the components are accounted for as separate items of PPE. Expenditures incurred to replace a component of an item of PPE is accounted for separately, including major inspection and overhaul expenditures are capitalized.
Page 16 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(j) Loss per share
The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti- dilutive. GreenPower's loss per common share, basic and diluted, for the year ended March 31, 2023 was $(
(k) Share capital
Common shares are classified as equity. Finder's fees and other related share issue costs, such as legal, regulatory, and printing, on the issue of the Company's shares are charged directly to share capital, net of any tax effects.
(l) Income taxes
Income tax expense comprises current and deferred tax. Current and deferred tax are recognized in net income/loss except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive loss/income.
Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current period and any adjustment to income taxes payable in respect to previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year end date.
Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.
Recognition of deferred tax assets for unused tax losses, tax credits, and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting period the Company will reassess deferred tax assets. The Company will recognize a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
(m) Share-based payment transactions
The Company grants share-based awards to certain officers, employees, directors and other eligible persons. The fair value of the equity-settled awards is determined at the date of the grant. In calculating fair value, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. The fair value is determined by using the Black-Scholes option pricing model. At each financial reporting date, the cumulative expense representing the extent to which the vesting period has expired and management's best estimate of the awards that are ultimately expected to vest is computed. The movement in cumulative expense is recognized in the Consolidated Statements of Operations with a corresponding entry against the related equity settled share-based payments reserve account over the vesting period. No expense is recognized for awards that do not ultimately vest. If the awards expire unexercised, the related amount remains in share-option reserve.
Page 17 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(m) Share-based payment transactions (continued)
Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in the Consolidated Statements of Operations, unless they are related to the issuance of shares. Amounts related to the issuance of shares are recorded as a reduction of share capital. When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model. The fair value of stock options granted to non-employees is re-measured at the earlier of each financial reporting or vesting date, and any adjustment is charged or credited to operations upon re-measurement.
(n) Government grants and vouchers
Government vouchers are recognized in revenue when there is reasonable assurance that the voucher will be received and the Company will comply with all required conditions. Those vouchers without specified future performance conditions are recognized in income when the voucher proceeds are receivable.
A grant that imposes specified future performance conditions is recognized in income when those conditions are met. Government grants in the form of forgivable loans, or other forms of government grants or assistance, are evaluated in accordance with IAS 20 and are recognized when there is reasonable assurance that the Company will meet the terms of the government grant or assistance.
(o) Provisions and contingent liabilities
Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted when the time value of money is significant.
(p)Leases
Definition of a lease
At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has elected to apply the practical expedient to account for leases for which the lease term ends within 12 months of the date of initial application and leases of low value assets as short-term leases. The lease payments associated with these leases are recognized as expenses on a straight-line basis over the lease term.
Page 18 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(p) Leases (continued)
As a lessee
The Company recognizes a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, based on the initial amount of the lease liability. The assets are depreciated to the earlier of the end of the useful life of the right of use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readilydetermined, at the Company's incremental borrowing rate.
The ongoing lease liability is measured at amortized cost using the effective interest method. It is re- measured when there is a change in future lease payments, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way a corresponding adjustment is made to the carrying amount of the right of use asset or is recorded in profit or loss if the carrying amount of the right of use asset has been reduced to zero.
As a lessor
When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset. If an arrangement contains non-lease components, the Company applies IFRS 15 to allocate the consideration in the contract.
Amounts due from lessees under finance leases are recorded as finance lease receivables at the amount of the Company's net investment in the leases. Finance lease income is recognized as revenue by allocating the lease income to accounting periods so as to reflect a constant periodic rate of return on the Company's net investment in the lease. The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term, included in Revenue in the consolidated statements of operations and comprehensive loss.
(q) Goodwill and Impairment
The Company is required to test, on an annual basis, whether goodwill has suffered any impairment. The recoverable amount is determined based on value in use calculations. The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows. During the year, GreenPower acquired Lion Truck Body Inc., and recorded goodwill of $
Page 19 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
2. Significant Accounting Policies (continued)
(r) Adoption of accounting standards
Certain new accounting standards have been published by the IASB or the IFRS Interpretations Committee that are effective for annual reporting periods beginning on or after January 1, 2022. These changes were reviewed by management and did not cause a change to the Company's financial statements.
(s) Future accounting pronouncements
Certain new accounting standards and interpretations have been published by the IASB that are not mandatory for the March 31, 2023 reporting period, as summarized in the following table:
| Mandatorily effective for periods beginning on or after January 1, 2023 | Mandatorily effective for periods beginning on or after January 1, 2024 |
| IFRS 17 - Insurance Contracts | IFRS 16 - Leases (liability in a sale and leaseback) |
| IAS 1 - Presentation of Financial Statements and IFRS Practice Statement 2 (Disclosure of Accounting Policies) | IAS 1 - Presentation of Financial Statements (classification of liabilities as current or non current) |
| IAS 8 - Accounting policies, Changes in Accounting Estimates and Errors (Definition of Accounting Estimates) | IAS 1 - Presentation of Financial Statements (Non current liabilities with covenants) |
| IAS 12 - Income taxes (Deferred tax related to assets and liabilities arising from a single transaction) |
The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Company has not early adopted any of these standards and is currently evaluating the impact, if any, that these standards might have on its consolidated financial statements.
Page 20 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
3. Critical accounting estimates and judgements
The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to critical accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions, and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting judgements
i. The determination of the functional currency the Company and of each entity within the consolidated Company (Note 2. g.).
ii. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern (Note 1).
Critical accounting estimates and assumptions
i. The determination of the discount rates used to discount the promissory note receivable (Note 7), term loan (Note 21), the deferred benefit of government assistance (Note 21), finance lease receivables (Note 6) and lease liabilities (Note 8)
ii. The estimated accrual rate for the warranty provision on the sale of all-electric vehicles (Note 19)
iii. The classification of leases as either financial leases or operating leases (Note 9, Note 2 p.).
iv. The determination that the Company is not involved in any legal matters that require a provision (Note 23)
v. The determination of an allowance for doubtful accounts on the Company's trade receivables (Note 5)
vi. The valuation of tangible assets and financial liabilities acquired in the Lion Truck Body (LTB) Inc. transaction and the determination that $
vii. The estimate of the useful life of equipment (Note 2.i, Note 10)
viii. The estimate of the net realizable value of inventory (Note 8)
ix. The estimated value of the deferred benefit of government assistance (Note 21)
x. Estimates underlying the recognition of proceeds from government vouchers and grants (Note 2. n.)
xi. Estimates underlying the determination of the carrying value of the West Virginia lease liability and right of use asset (Note 9)
xii. Estimates underlying the calculation of deferred income tax assets and deferred income tax recovery (Note 20)
xiii. The determination of overheads to be allocated to inventory and charged to cost of sales (Note 8)
Page 21 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
4. Cash and Restricted Cash
As at March 31, 2023 the Company has a cash balance of $
5. Accounts Receivable
The Company has evaluated the carrying value of accounts receivable as at March 31, 2023 in accordance with IFRS 9 and has determined that an allowance against accounts receivable of $
| March 31, 2023 | March 31, 2022 | |||||
| Allowance for doubtful accounts, beginning of year | $ | $ | ||||
| plus: new allowance recognized | ||||||
| less: allowance collected | ( |
) | ( |
) | ||
| Allowance for doubtful accounts, end of year | $ | $ |
6. Finance Lease Receivables
GreenPower's wholly owned subsidiary San Joaquin Valley Equipment Leasing Inc. ("SJVEL") leases vehicles to several customers, and as at March 31, 2023 the Company had a total of 45 (2022 - 48) vehicles on lease that were determined to be finance leases, and the Company had a total of 1 (2022 - 1) vehicle on lease that was determined to be an operating lease. During the year ended March 31, 2023 finance leases for three vehicles reached their maturity date and the lessee purchased two of the vehicles. The lessee did not pay for one of the three vehicles, and subsequent to the end of the year this vehicle was repossessed (Note 24).
During the year ended March 31, 2022, the Company entered into a mutual release agreement with the lessee of 28 vehicles which were accounted for as finance leases, where SJVEL subsequently sold the vehicles to a third party, and one mutual release for an EV 250 (2021-nil) that is now classified as Property Plant and Equipment. For operating leases, lease payments are recognized in revenue when earned.
Subsequent to the year ended March 31, 2023 GreenPower provided a notice of default to a lessee of 37 vehicles, and the defaults were not cured so the leases were terminated and the vehicles were repossessed (Note 25).
For the year ended March 31, 2023, selling profit on finance leases was $
Page 22 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
6. Finance lease receivables (continued)
The following table illustrates Finance Lease Receivables as at March 31, 2023 and as at March 31, 2022:
| March 31, 2023 | March 31, 2022 | |||||
| Finance lease receivable, beginning of year | $ | $ | ||||
| Investment recognized | ||||||
| Investment derecognized | ( |
) | ||||
| Lease payments received | ( |
) | ( |
) | ||
| Interest income recognized | ||||||
| Finance lease receivable, end of year | $ | $ | ||||
| Current portion of Finance Lease Receivable | $ | $ | ||||
| Long Term Portion of Finance Lease Receivable | $ | $ |
Payments to be received on Finance Lease Receivables (undiscounted):
| 31-Mar-23 | |||
| Year 1 | $ | ||
| Year 2 | |||
| Year 3 | |||
| Year 4 | |||
| Year 5 | |||
| Year 6 | |||
| less: amount representing interest income | ( |
) | |
| Finance Lease Receivable | $ | ||
| Current Portion of Finance Lease Receivable | $ | ||
| Long Term Portion of Finance Lease Receivable | $ |
| * Includes unguaranteed residual |
7. Promissory Note Receivable
On February 1, 2023, the Company entered into a promissory note with a customer for a principal amount of $
Page 23 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
8. Inventory
The following is a listing of inventory as at March 31, 2023 and 2022:
| March 31, 2023 | March 31, 2022 | |||||
| Work in Process and Parts | $ | $ | ||||
| Finished Goods | ||||||
| Total | $ | $ |
During the year ended March 31, 2023, management wrote down the value of inventory by $
9. Right of Use Assets and Lease Liabilities
The Company has recorded Right of Use Assets and Lease Liabilities in its consolidated statement of financial position related to properties for which the Company has entered into lease agreements that expire in more than one year at the inception of the leases. These leases are in a single class of Right of Use Assets, whose carrying value at March 31, 2023 was $
During the year ended March 31, 2023 the Company entered into four property leases that are accounted for as Right of Use Assets and lease liabilities under IFRS 16, as follows:
• a two-year lease of an office in California that commenced in February 2023;
• a one-year lease that commenced in August 2022;
• a twelve-year lease on a property in West Virginia that commenced in August 2022 (see below), and;
• a lease that was assumed in the acquisition of Lion Truck Body (Note 21) that expires in December 2024.
Page 24 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
9. Right of use assets and lease liabilities (continued)
GreenPower entered into a Contract of Lease-Purchase with the South Charleston Development Authority for a property located in South Charleston, West Virginia during the year ended March 31, 2023. The terms of the lease required no cash up front and monthly lease payments that start May 1, 2023. GreenPower is eligible for up to $
The following table summarizes remaining payments on GreenPower's Lease Liabilities (undiscounted) as at March 31, 2023:
| 1 year | $ | ||
| thereafter | |||
| less amount representing interest expense | ( |
) | |
| Lease liability | |||
| Current Portion of Lease Liabilities | |||
| Long Term Portion of Lease Liabilities | $ |
Payments on leases that were classified as short-term leases for the year ended March 31, 2023 totaled $
Page 25 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
The following is a summary of activities for the years ended March 31, 2023, and March 31, 2022:
| Demonstration | Tools and | Leasehold | |||||||||||||||||||||||||
| Computers | Furniture | Automobiles | Electric Buses | Leased Asset | Equipment | Land | Improvements | Total | |||||||||||||||||||
| Cost | |||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Additions | |||||||||||||||||||||||||||
| Acquired in Acquisition | |||||||||||||||||||||||||||
| Asset sold | ( |
) | ( |
) | |||||||||||||||||||||||
| Foreign exchange translation | |||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Depreciation and impairment losses | |||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Depreciation | |||||||||||||||||||||||||||
| Foreign exchange translation | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Carrying amounts | |||||||||||||||||||||||||||
| As at, March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| As at, March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Page 26 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
10. Property and Equipment (continued)
During the year ended March 31, 2023 the Company completed the sale of land owned by the Company In Porterville California for gross proceeds of $
During the year ended March 31, 2022 the Company transferred eight EV Stars from Inventory to PPE that were being used as demonstration vehicles, and one of these EV Stars was subsequently transferred to inventory and sold. The Company also transferred one EV 350 bus from inventory to PPE, that is being leased to a customer under a short term lease, and one EV 250 that was previously on finance lease where the Company and the Lessee entered into a mutual release on the finance lease. During the year ended March 31, 2022 the Company wrote down the value of PPE to its estimated recoverable amount by a total of $
11. Line of Credit
The Company's primary bank account denominated in US dollars is linked to its Line of Credit such that funds deposited to the bank account reduce the outstanding balance on the Line of Credit. As at March 31, 2023 the Company's Line of Credit had a credit limit of up to $
The Line of Credit is secured by a general floating charge on the Corporation's assets and the assets of one of its subsidiaries, and one of the Company's subsidiaries has provided a corporate guarantee. Two directors of the Company have provided personal guarantees for a total of $
12. Share Capital
Authorized
Unlimited number of common shares without par value
Unlimited number of preferred shares without par value
Issued
During the year ended March 31, 2023, the Company issued a total of
During the year ended March 31, 2022, the Company issued a total of
During the year ended March 31, 2021, the Company issued a total of
Page 27 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
12. Share Capital (continued)
On August 28, 2020 the Company announced the pricing of its U.S. initial public offering of
As at March 31, 2023 and March 31, 2022 the Company had no shares held in escrow.
At the Market Offering
In September 2022, the Company filed a prospectus supplement to its short form base shelf prospectus, pursuant to which the Company may, at its discretion and from time to time, sell common shares of the Company for aggregate gross proceeds of up to $
The Company incurred approximately $
13. Stock Options
The Company has
2023 Plan
Effective February 21, 2023 GreenPower adopted the 2023 Plan which was approved by shareholders at our AGM on March 28, 2023 in order to grant stock options or non-stock option awards to people in the United States. Under the 2023 Plan GreenPower can issue stock options that are considered incentive stock options, which are stock options that qualify for certain favorable tax treatment under U.S. tax laws. Nonqualified stock options are stock options that are not incentive stock options. The aggregate fair market value on the date of grant of Shares with respect to which incentive stock options are exercisable for the first time by an optionee subject to tax in the United States during any calendar year must not exceed US$
2022 Plan
Effective April 19, 2022 GreenPower adopted the 2022 Equity Incentive Plan (the "2022 Plan"), which was further ratified on February 21, 2023, and which replaced the 2019 Plan. Under the 2022 Plan the Company can grant equity-based incentive awards in the form of stock options ("Options"), restricted share units ("RSUs"), performance share units ("PSUs") and deferred share units ("DSUs"). RSU's, DSU's and PSU's are collectively referred to as "Performance Based Awards". The 2022 Plan is a Rolling Plan for Options and a fixed-plan for Performance-Based Awards such that the aggregate number of Shares that: (i) may be issued upon the exercise or settlement of Options granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements), shall not exceed 10% of the Company's issued and outstanding Shares from time to time, and (ii) may be issued in respect of Performance-Based Awards
Page 28 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
13. Stock Options (continued)
granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements) shall not exceed
Stock Option Plans from Prior Periods
On May 14, 2019, the Company replaced the 2016 Plan with a Rolling Stock Option Plan (the "2019 Plan"). Under the terms of the 2019 Plan, the aggregate number of Options that can be granted under the 2019 Plan cannot exceed ten (10%) of the total number of issued and outstanding Shares, calculated on a non- diluted basis. The exercise price of options granted under the 2019 Plan may not be less than the minimum prevailing price permitted by the TSXV policies with a maximum term of 10 years. On March 9, 2016, the shareholders approved the previous stock option plan which initially allowed for the issuance of up to
The Company had the following incentive stock options granted under the 2022 Plan, the 2019 Plan, and 2016 Plan that are issued and outstanding as at March 31, 2023:
| Expiry Date |
Exercise Price |
Balance March 31, 2022 |
Granted | Exercised |
Forfeited or Expired |
Balance March 31, 2023 |
|||||||||||||
| May 26, 2022 | CDN | $ | ( |
) | |||||||||||||||
| December 18, 2022 | CDN | $ | ( |
) | |||||||||||||||
| May 4, 2023 | CDN | $ | ( |
) | ( |
) | |||||||||||||
| November 30, 2023 | CDN | $ | |||||||||||||||||
| February 12, 2024 | CDN | $ | ( |
) | |||||||||||||||
| January 30, 2025 | CDN | $ | ( |
) | ( |
) | |||||||||||||
| February 11, 2025 | CDN | $ | |||||||||||||||||
| July 3, 2025 | CDN | $ | ( |
) | |||||||||||||||
| November 19, 2025 | US | $ | |||||||||||||||||
| December 4, 2025 | US | $ | |||||||||||||||||
| May 18, 2026 | CDN | $ | ( |
) | |||||||||||||||
| December 10, 2026 | CDN | $ | ( |
) | |||||||||||||||
| July 4, 2027 | CDN | $ | |||||||||||||||||
| November 2, 2027 | US | $ | ( |
) | |||||||||||||||
| February 14, 2028 | CDN | $ | ( |
) | |||||||||||||||
| March 28, 2028 | CDN | $ | |||||||||||||||||
| Total outstanding | ( |
) | ( |
) | |||||||||||||||
| Total exercisable | |||||||||||||||||||
| Weighted Average | |||||||||||||||||||
| Exercise Price (CDN$) | $ | $ | $ | $ | $ | ||||||||||||||
| Weighted Average Remaining Life | |||||||||||||||||||
Page 29 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
13. Stock Options (continued)
As at March 31, 2023, there were
On July 4, 2022, the Company granted
On November 2, 2022, the Company granted
On February 14, 2023, the Company granted
a.
b.
c.
On March 28, 2023 the Company granted
During the year ended March 31, 2023,
During the year ended March 31, 2023, the Company incurred share-based compensation expense with a measured fair value of $
Subsequent to the end of the reporting period:
• Between April 13, 2023 and May 1, 2023 the Company issued
• On May 4, 2023
• Between April 1 2023 and June 30, 2023,
Page 30 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
13. Stock Options (continued)
The Company had the following incentive stock options granted under the 2019 Plan, and 2016 Plan that are issued and outstanding as at March 31, 2022:
| Exercise | Balance | Forfeited | Balance | ||||||||||||||||
| Expiry Date | Price | March 31, 2021 | Granted | Exercised | or Expired | March 31, 2022 | |||||||||||||
| October 27, 2021 | CDN | $ | ( |
) | |||||||||||||||
| February 2, 2022 | CDN | $ | ( |
) | ( |
) | |||||||||||||
| May 26, 2022 | CDN | $ | ( |
) | |||||||||||||||
| December 18, 2022 | CDN | $ | ( |
) | |||||||||||||||
| May 4, 2023 | CDN | $ | ( |
) | |||||||||||||||
| November 30, 2023 | CDN | $ | |||||||||||||||||
| February 12, 2024 | CDN | $ | ( |
) | |||||||||||||||
| January 30, 2022 | CDN | $ | ( |
) | ( |
) | |||||||||||||
| January 30, 2025 | CDN | $ | ( |
) | ( |
) | |||||||||||||
| July 3, 2022 | CDN | $ | ( |
) | |||||||||||||||
| February 11, 2025 | CDN | $ | |||||||||||||||||
| July 3, 2025 | CDN | $ | ( |
) | ( |
) | |||||||||||||
| November 19, 2025 | US | $ | |||||||||||||||||
| December 4, 2025 | US | $ | |||||||||||||||||
| May 18, 2026 | CDN | $ | ( |
) | |||||||||||||||
| December 10, 2026 | CDN | $ | ( |
) | |||||||||||||||
| Total outstanding | ( |
) | ( |
) | |||||||||||||||
| Total exercisable | |||||||||||||||||||
| Weighted Average | |||||||||||||||||||
| Exercise Price (CDN$) | $ | $ | $ | $ | $ | ||||||||||||||
| Weighted Average Remaining Life | |||||||||||||||||||
As at March 31, 2022, there were
On May 18, 2021 the Company granted
On December 10, 2021 the Company granted
On February 11, 2022 the Company granted
During the year ended March 31, 2022,
During the year ended March 31, 2022, the Company incurred share-based compensation expense with a measured fair value of $
Page 31 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
13. Stock Options (continued)
The Company had the following incentive stock options granted under the 2019 Plan, and 2016 Plan that are issued and outstanding as at March 31, 2021:
| Expiry Date |
Exercise |
Balance March 31, 2020 |
Granted |
Exercised |
Forfeited or Expired |
Balance March 31, 2021 |
|||||||||||||
| May 26, 2020 | CDN | $ | ( |
) | |||||||||||||||
| July 10, 2020 | CDN | $ | ( |
) | |||||||||||||||
| February 4, 2021 | CDN | $ | ( |
) | |||||||||||||||
| May 6, 2021 | CDN | $ | ( |
) | ( |
) | |||||||||||||
| October 27, 2021 | CDN | $ | |||||||||||||||||
| February 2, 2022 | CDN | $ | |||||||||||||||||
| May 26, 2022 | CDN | $ | |||||||||||||||||
| December 18, 2022 | CDN | $ | |||||||||||||||||
| May 4, 2023 | CDN | $ | ( |
) | |||||||||||||||
| November 30, 2023 | CDN | $ | |||||||||||||||||
| February 12, 2024 | CDN | $ | |||||||||||||||||
| January 30, 2022 | CDN | $ | ( |
) | |||||||||||||||
| January 30, 2025 | CDN | $ | ( |
) | ( |
) | |||||||||||||
| July 3, 2022 | CDN | $ | ( |
) | |||||||||||||||
| July 3, 2025 | CDN | $ | ( |
) | |||||||||||||||
| November 19, 2025 | US | $ | |||||||||||||||||
| December 4, 2025 | US | $ | |||||||||||||||||
| Total outstanding | ( |
) | ( |
) | |||||||||||||||
| Total exercisable | |||||||||||||||||||
|
Weighted Average |
|||||||||||||||||||
| Exercise Price (CDN$) | $ | $ | $ | $ | $ | ||||||||||||||
| Weighted Average Remaining Life |
As at March 31, 2021, there were
During the year ended March 31, 2021,
On July 3, 2020 the Company granted:
On November 19, 2020 the Company granted an aggregate of
Page 32 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
13. Stock Options (continued)
On December 4, 2020 the Company granted an aggregate of
During the year ended March 31, 2021,
During the year ended March 31, 2021, the Company incurred share-based compensation expense with a measured fair value of $
The weighted average share price on the exercise dates for the years ending March 31, 2023, 2022, and 2021 respectively were CDN $
The following weighted-average assumptions were used for the Black-Scholes valuation of stock option grants:
| For the year ended | March 31, 2023 | March 31, 2022 | March 31, 2021 |
| Share price on grant date | CDN $ |
CDN $ |
$ |
| Exercise price | CDN $ |
CDN $ |
$ |
| Risk-free interest rate | |||
| Expected life of options | |||
| Annualized volatility | |||
| Forfeiture rate | |||
| Dividend rate | N/A | N/A | N/A |
14. Warrants
As at March 31, 2023 and March 31, 2022 the Company had an outstanding warrant balance of nil.
The following table summarizes GreenPower's warrant activity during the year ended March 31, 2022:
| Exercise | Balance | Balance | ||||||||||||||
| Expiry Date | Price | March 31, 2021 | Issued | Exercised | Expired | March 31, 2022 | ||||||||||
| June 29, 2021 | CDN $ |
( |
) | |||||||||||||
| September 25, 2021 | CDN $ |
( |
) | ( |
) | |||||||||||
| October 12, 2021 | CDN $ |
( |
) | |||||||||||||
| March 14, 2022 | CDN $ |
( |
) | |||||||||||||
| May 6, 2023 | USD $ |
( |
) | ( |
) | |||||||||||
| May 8, 2023 | USD $ |
( |
) | |||||||||||||
| Total outstanding | ( |
) | ( |
) | ||||||||||||
| Weighted Average | ||||||||||||||||
| Exercise Price (CDN$) | NA | $ | $ | NA |
During the year ended March 31, 2022, the Company did not issue any warrants and a total of
Page 33 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
14. Warrants (continued)
During the year ended March 31, 2022 the Company issued the following common shares from the exercise of warrants:
•
•
•
•
The following table summarizes deferred financing fees for the years ended March 31, 2023 and March 31, 2022, which relates to deferred financing fees for issued warrants, amortized during the period:
| March 31, 2023 | March 31, 2022 | |||||
| Deferred financing fees, beginning of year | $ | $ | ||||
| less: Amortization of Deferred Financing Fees | ( |
) | ||||
| Deferred financing fees, end of year | $ | $ |
15. Deferred Revenue
The Company recorded Deferred Revenue of $
The Company expects to recognize revenue from amounts held in the current portion of deferred revenue within the next twelve months, based on expected deliveries of vehicles and from completed sales of vehicle parts. The Company expects to recognized revenue from amounts held in the long-term portion of deferred revenue more than twelve months after the reporting date. As at March 31, 2023 the current portion of deferred revenue includes a financing component of $
| March 31, 2023 | March 31, 2022 | |||||
| Deferred Revenue, beginning of year | $ | $ | ||||
| Additions to deferred revenue during the year | ||||||
| Deposits returned | ( |
) | ||||
| Revenue recognized from deferred revenue during the year | ( |
) | ( |
) | ||
| Deferred Revenue, end of year | $ | $ | ||||
| Current portion | $ | $ | ||||
| Long term portion | ||||||
| $ | $ |
Page 34 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
16. Financial Instruments
The Company's financial instruments consist of cash, accounts receivable, promissory note receivable, finance lease receivables, line of credit, loans payable to related parties, term loan, accounts payable and accrued liabilities, other liabilities, and lease liabilities.
Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:
Level 1:Unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2:Inputs other than quoted prices that are observable for the asset or liabilities either directly or indirectly; and
Level 3:Inputs that are not based on observable market data
The fair value of the Company's financial instruments approximates their carrying value, unless otherwise noted.
The Company has exposure to the following financial instrument related risks.
Credit risk
The Company's exposure to credit risk is on its cash, accounts receivable, promissory note receivable, and on its finance lease receivables. The maximum exposure to credit risk is their carrying amounts in the consolidated statement of Financial Position.
Cash consists of cash bank balances held in major financial institutions in Canada and the United States with a high credit quality and therefore the Company is exposed to minimal risk. The Company assesses the credit risk of its account receivable, finance lease receivables and promissory note receivable at each reporting period end and on an annual basis. As at March 31, 2023 the Company recognized an allowance for credit losses of $
Liquidity risk
The Company tries to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company's cash balances and available liquidity on the Company's $
Page 35 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
16. Financial Instruments (continued)
The following table summarizes the Company's financial commitments by maturity as at March 31, 2023:
| March 31, 2023 | Less than 3 months | 3 to 12 months | One to five years | Thereafter | ||||||||
| Line of credit (Note 1) | $ | $ | $ | $ | ||||||||
| Accounts payable and accrued liabilities | ||||||||||||
| Loans payable to related parties | ||||||||||||
| Lease liabilities | ||||||||||||
| Term loan | ||||||||||||
| Other liabilities | ||||||||||||
| $ | $ | $ | $ |
(1) GreenPower's operating line of credit with the Bank of Montreal is repayable on demand and is therefore recorded as a current liability with less than 3 months to maturity. GreenPower remains in compliance with the financial covenant under the facility and since inception of the loan the Bank of Montreal has not demanded repayment of the facility, however there is no guarantee that the Bank of Montreal will not do so in the future.
As part of the acquisition of Lion Truck Body Inc. that closed on July 7, 2022, the Company agreed to assume a term loan from the seller, with principal outstanding of approximately of approximately $
Market risks
Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange. The Company is exposed to interest rate risk with respect to its Line of Credit (Note 10). The Company is exposed to foreign exchange risk as it conducts business in both the United States and Canada. Management monitors its foreign currency balances, but the Company does not engage in any hedging activities to reduce its foreign currency risk.
At March 31, 2023, the Company was exposed to currency risk through the following financial assets and liabilities in CDN Dollars.
| CAD | |||
| Cash | $ | ||
| Accounts Receivable | $ | ||
| Sales tax receivable | $ | ||
| Prepaids and deposits | $ | ||
| Finance Lease Receivable | $ | ||
| Accounts Payable and Accrued Liabilities | $ | ( |
) |
| Related Party Loan & Interests Payable | $ | ( |
) |
The CDN/USD exchange rate as at March 31, 2023 was $
Page 36 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
17. Capital Management
The Company's capital management objective is to obtain sufficient capital to develop new business opportunities for the benefit of its shareholders. To meet these objectives, management monitors the Company's ongoing capital requirements on specific business opportunities on a case-by-case basis. The capital structure of the Company consists of cash, operating line of credit, the term loan, loans from related parties and equity attributable to common shareholders, consisting of issued share capital and deficit. On September 16, 2022 the Company established an at the market equity program (the ATM program) under which the company may issue, at its discretion, up to $
The ATM offering remains open and future shares may be issued up to the total remaining offering amount, at management's discretion. As at March 31, 2023, the Company had a cash balance of $
18. Related Party Transactions
A summary of compensation and other amounts paid to directors, officers and key management personnel is as follows:
| For the Years Ended | |||||||||
|
March 31, 2023 |
March 31, 2022 |
March 31, 2021 |
|||||||
| Salaries and Benefits (1) | $ | $ | $ | ||||||
| Consulting fees (2) | |||||||||
| Non-cash Options Vested (3) | |||||||||
| Accomodation and Rentals (4) | |||||||||
| Total | $ | $ | $ | ||||||
1) Salaries and benefits incurred with directors and officers are included in Salaries and administration on the Consolidated Statements of Operations and Comprehensive Loss.
2) Consulting fees included in Salaries and administration on the Consolidated Statements of Operations and Comprehensive Loss are paid to the Chairman and CEO for management consulting services, and includes Director's Fees paid to GreenPower's four independent directors.
3) Amounts recognized for related party stock-based compensation are included in Share-based payments on the Consolidated Statements of Operations.
4) Includes accommodation expense paid to Stage Coach Landing, Inc., a company that the CEO and Chairman of GreenPower was previously an officer and director, and truck and trailer rental fees paid to Maple Leaf Equipment Aircraft and Recovery Inc., a company that the CEO and Chairman of GreenPower was previously an officer and director. These costs are expensed on the Consolidated Statements of Operations and Comprehensive Loss.
Page 37 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
18. Related Party Transactions (continued)
Accounts payable and accrued liabilities at March 31, 2023 included $
During the year ended March 31, 2023, the Company received loans totaling CAD$
The Company has agreed to grant the lenders a general security assignment on the assets of GreenPower Motor Company Inc., which will be subordinated to any security assignment of senior lenders.
A director of the Company and the Company's CEO and Chairman have each provided personal guarantees of $
19. Warranty Liability
The Company provides its customers with a base warranty on its vehicles including those covering brake systems, lower-level components, fleet defect provisions and battery-related components. The majority of warranties cover periods of five years, with some variation depending on the contract. Management estimates the related provision for future warranty claims based on historical warranty claim information as well as recent trends that might suggest past cost information may differ from future claims. This assessment relies on estimates and assumptions about expenditures on future warranty claims. Actual warranty disbursements are inherently uncertain, and differences may impact cash expenditures on these claims. It is expected that the Company will incur approximately $
Page 38 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
19. Warranty liability (continued)
| Year ended | Year ended | |||||
|
March 31, 2023 |
March 31, 2022 |
|||||
| Opening balance | $ | $ | ||||
| Warranty additions | ||||||
| Warranty disbursements | ( |
) | ( |
) | ||
| Warranty expiry | ( |
) | ||||
| Foreign exchange translation | ( |
) | ||||
| Total | $ | $ | ||||
| Current portion | $ | $ | ||||
| Long term portion | ||||||
| Total | $ | $ |
20. Income Taxes
Income tax expense is recognized based on the combined BC and Federal income tax rate for the full financial year applied to the pre-tax income of the reporting period. The Company's effective tax rate for the years ended March 31, 2023, 2022 and 2021 was
The difference between tax expenses for the years and the expected income taxes based on the statutory rate are as follows:
| For the year ended | |||||||||
| March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||
| Combined statutory tax rate | % | % | % | ||||||
| Expected income tax expense (recovery) | $ | ( |
) | $ | ( |
) | $ | ( |
) |
| Items not deductible for tax purposes | |||||||||
| Difference in tax rate in other jurisdictions | ( |
) | ( |
) | ( |
) | |||
| Unrecognized deductible temporary differences and loss carryforwards | |||||||||
| Deferred income tax expense (recovery) | $ | $ | $ | ||||||
Page 39 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
20. Income taxes (continued)
The nature and effect of the temporary differences giving rise to the deferred income tax assets as of March 31, 2023 and March 31, 2022 are summarized below:
| As at | ||||||
| Deferred income tax assets | March 31, 2023 | March 31, 2022 | ||||
| Non-capital loss carry-forwards | $ | $ | ||||
| Investment in subsidiary | ||||||
| Accounts receivable, inventory, and promissory note receivable | ||||||
| Capital assets | ||||||
| Right of use assets and lease liabilities | ||||||
| Warranty provision | ||||||
| Other carryforward balances | ||||||
| Share issue costs | ||||||
| Unrecognized deferred tax assets | ( |
) | ( |
) | ||
| Net deferred income tax asset | $ | $ | ||||
21. Acquisition of Lion Truck Body
On July 7, 2022 GreenPower entered into an asset purchase agreement with Lion Truck Body Inc., a truck body manufacturer located in Torrance, CA, under which Greenpower has purchased all of the assets of the business through its wholly owned subsidiary, Lion Truck Body Incorporated. GreenPower completed the acquisition in order to offer a broader product offering and to reduce the time for customers looking for a completed truck body and has accounted for the acquisition of the assets of Lion Truck Body Inc. as a business combination under IFRS 3. The purchase price of $
As part of the acquisition GreenPower assumed a term loan issued by an agency of the US federal government, with a principal balance of approximately $
Page 40 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
21. Acquisition of Lion Truck Body (continued)
Since the date of acquisition the impact on revenues for the period ending March 31, 2023 was $
The table below reflects management's determination of the fair value of major categories of assets acquired, liabilities assumed and consideration transferred as at the acquisition date.
| Fair value of consideration transferred | |||
| Purchase price | $ | ||
| less: Working capital adjustment | ( |
) | |
| Cash purchase price | $ | ||
| Fair value of net assets acquired | |||
| Accounts receivables | $ | ||
| Inventory | |||
| Equipment | |||
| Right of use asset | |||
| Goodwill | |||
| Accounts payable | ( |
) | |
| Lease liabilities | ( |
) | |
| Deferred benefit of government assistance | ( |
) | |
| Loans | ( |
) | |
| Total | $ |
Page 41 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
22. Segmented Information
The Company operates in one reportable operating segment, being the manufacture and distribution of all- electric commercial vehicles and transit, school and charter buses.
The Company's disaggregated revenue for the years ended March 31, 2023, 2022, and 2021 is summarized in the following table. Included in Vehicle sales and in Revenue from operating and finance leases for the year ended March 31, 2023 is $
| For the Years Ended | |||||||||
| March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||
| Vehicle and parts sales | $ | $ | $ | ||||||
| Revenue from operating and finance leases | |||||||||
| Accretion on promissory note | |||||||||
| Finance income | |||||||||
| $ | $ | $ | |||||||
The Company's revenues allocated by geography based on the customer's country of domicile,for the years ended March 31, 2023, 2022, and 2021, is as follows:
| For the Years Ended | |||||||||
| March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||
| United States of America | $ | $ | $ | ||||||
| Canada | |||||||||
| Total | $ | $ | $ | ||||||
The Company's property and equipment allocated by geography for the years ended March 31, 2023, and
2022 is as follows:
| For the Years Ended | ||||||
| March 31, 2023 | March 31, 2022 | |||||
| United States of America | $ | $ | ||||
| Canada | ||||||
| Total | $ | $ | ||||
Page 42 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
23. Litigation and Legal Proceedings
The Company has filed a civil claim against the prior CEO and Director of the Company in the Province of British Columbia, and the prior CEO and Director of the Company has filed a response with a counterclaim for wrongful dismissal in the Province of British Columbia. The prior CEO and Director of the Company also filed a similar claim in the state of California in regards to this matter, and this claim has been stayed pending the outcome of the claim in British Columbia. There has not been a resolution on the British Columbia claim or counterclaim, or the California claim as at March 31, 2023. In addition, a company owned and controlled by a former employee who provided services to a subsidiary company of GreenPower until August 2013 filed a claim for breach of confidence against GreenPower in July 2020, and this claim has not been resolved as at March 31, 2023. The Company has not booked a provision for the claims or the counterclaim as it does not believe there is a remote or estimable material financial impact as at March 31, 2023. During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC's which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, the Company repossessed 1 EV Star from the same customer due to non- payment. During May 2023 this customer filed a claim in the state of California against the Company and a subsidiary of the Company, and the Company is evaluating its response to this claim (Note 25).
The following table provides additional detail regarding the Company's cash flow:
| For the Years Ended | |||||||||||
| March 31, 2023 | March 31, 2022 | March 31, 2021 | |||||||||
| Non-cash investing and financing transactions: | |||||||||||
| Fair value of stock options exercised | $ | $ | $ | ||||||||
| Fair value of warrants exercised | $ | $ | $ | ||||||||
| Shares issued for conversion of debentures | $ | $ | $ | ||||||||
| Right of use asset acquired | $ | $ | $ | ||||||||
| Right of use asset from business combination | $ | $ | $ | ||||||||
| Equipment acquired in business combination | $ | $ | $ | ||||||||
| Accounts receivables acquired in business combination | $ | $ | $ | ||||||||
| Inventory acquired in business combination | $ | $ | $ | ||||||||
| Goodwill acquired in business combination | $ | $ | $ | ||||||||
| Accounts payable assumed in business combination | $ | $ | $ | ||||||||
| Lease liabilities assumed in business combination | $ | $ | $ | ||||||||
| Loans assumed in business combination | $ | $ | $ | ||||||||
| Deferred benefit of government assistance from business combination | $ | $ | $ | ||||||||
| Accrued value of inventory included in AP | $ | $ | $ | ||||||||
| Accrued financing cost included in deferred revenue | $ | $ | $ | ||||||||
| Accretion income on promissory note receivable | $ | $ | $ | ( |
) | ||||||
| Accretion expense on convertible debt | $ | $ | $ | ||||||||
| Accrued interest on paycheck protection program loan | $ | $ | $ | ||||||||
| Property and equipment through financing | $ | $ | $ | ||||||||
| Assets transferred from Inventory to Property and equipment | $ | $ | $ | ||||||||
Page 43 of 44
GREENPOWER MOTOR COMPANY INC. (Expressed in US Dollars) |
25. Events After the Reporting Period
Subsequent to the end of the reporting period:
• Between April 1, 2023 and April 17, 2023 the Company issued a total of
• Between April 13, 2023 and May 1, 2023 the Company issued
• On May 4, 2023
• Between April 1 2023 and June 30, 2023,
• During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC's which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, the Company repossessed 1 EV Star from the same customer due to non- payment. During May 2023 this customer filed a claim in the state of California against the Company and a subsidiary of the Company (Note 23).
• On June 2, 2023, GreenPower repaid a CAD $
Page 44 of 44
Exhibits
*Previously Filed.
SIGNATURES
The registrant certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
GreenPower Motor Company Inc.
Date: July 21, 2023
| By: | /s/ Michael Sieffert | |
| Michael Sieffert | ||
| Chief Financial Officer |
 |
Crowe MacKay LLP 1100 - 1177 West Hastings Street Vancouver, BC V6E 4T5 Main +1 (604) 687 4511 Fax +1 (604) 687 5805 www.crowemackay.ca |
Securities and Exchange Commission
Washington, DC 20549 - 0405
U.S.A.
We are the former independent auditors for GreenPower Motor Company Inc. (the "Company") and, under the date of June 30, 2022, we reported on the consolidated financial statements of the Company. We have read the Company's disclosure regarding "Change in Registrant's Certifying Accountant" as included in Item 16F of the Form 20-F and are in agreement with the disclosure in that section, insofar as it pertains to our firm. We have no basis to agree or disagree with other statements of the Company contained therein.
/s/ Crowe MacKay LLP
Chartered Professional Accountants
Vancouver, Canada
July 21, 2023
 |
Tel: (604) 688-5421 |
BDO Canada LLP |
|
|
Fax: (604) 688-5132 |
1100 Royal Centre |
||
|
www.bdo.ca |
1055 West Georgia Street, P.O. Box 11101 |
||
|
|
Vancouver, British Columbia |
||
|
|
V6E 3P3 |
||
Consent of Independent Registered Public Accounting Firm
GreenPower Motor Company Inc.
Vancouver, Canada
We hereby consent to the incorporation by reference in the Registration Statements on Form F-10 (File No. 333-258099) and Form S-8 (No. 333-261422) of GreenPower Motor Company Inc. ("the Company") of our report dated July 14, 2023 relating to the consolidated financial statements of the Company appearing in this Annual Report on Form 20-F for the year ended March 31, 2023. Our report contains an explanatory paragraph regarding the Company's ability to continue as a going concern.
/s/ BDO Canada LLP
Vancouver, Canada
July 21, 2023
BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms
 |
Crowe MacKay LLP 1100 - 1177 West Hastings Street Vancouver, BC V6E 4T5 Main +1 (604) 687 4511 Fax +1 (604) 687 5805 www.crowemackay.ca |
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statement on Form F-10 (File No. 333-258099) and Form S-8 (No. 333-261422) of GreenPower Motor Company Inc. of our report dated June 30, 2022, relating to the consolidated financial statements, which appears in this Annual Report on Form 20-F.
/s/ Crowe MacKay LLP
Chartered Professional Accountants
Vancouver, Canada
July 21, 2023
EXHIBIT 10.34
CERTIFICATIONS
I, Fraser Atkinson, certify that:
1. I have reviewed this annual report on Form 20-F of GreenPower Motor Company Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
July 21, 2023
/s/ Fraser Atkinson
Fraser Atkinson
Chief Executive Officer
(Principal Executive Officer)
EXHIBIT 10.35
CERTIFICATIONS
I, Michael Sieffert, certify that:
1. I have reviewed this annual report on Form 20-F of GreenPower Motor Company Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and
5. The company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company's internal control over financial reporting.
July 21, 2023
/s/ Michael Sieffert
Michael Sieffert
Chief Financial Officer
(Principal Financial Officer)
Exhibit 10.36
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of GreenPower Motor Company Inc. (the "Company") on Form 20-F for the fiscal year ended March 31, 2023 filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/Fraser Atkinson Fraser Atkinson |
| Chief Executive Officer |
| (Principal Executive Officer) July 21, 2023 |
Exhibit 10.37
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of GreenPower Motor Company Inc. (the "Company") on Form 20-F for the fiscal year ended March 31, 2023 filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
|
(1) |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Michael Sieffert Michael Sieffert |
| Chief Financial Officer |
| (Principal Financial Officer) July 21, 2023 |