Pacific Green Technologies Inc. - Quarter Report: 2021 December (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from [ ] to [ ]

Commission file number 000-54756

PACIFIC GREEN TECHNOLOGIES INC.

(Exact name of registrant as specified in its charter)

Delaware		36-4966163
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Suite 10212, 8 The Green

Dover, DE

19901

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (302) 601-4659

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		PGTK		OTC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ YES ☐ NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ YES ☐ NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ☐ YES ☒ NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐ YES ☐ NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

47,026,886 common shares issued and outstanding as of February 14, 2022.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	1
ITEM 1. FINANCIAL STATEMENTS	1
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	11
ITEM 4. CONTROLS AND PROCEDURES	11
PART II – OTHER INFORMATION	13
ITEM 1. LEGAL PROCEEDINGS	13
ITEM 1A. RISK FACTORS	13
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES	13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	13
ITEM 4. MINE SAFETY DISCLOSURES	13
ITEM 5. OTHER INFORMATION	13
ITEM 6. EXHIBITS	14

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited condensed consolidated interim financial statements for the three months ended December 31, 2021 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.

PACIFIC GREEN TECHNOLOGIES INC.

Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in US dollars)

		Index

Condensed Consolidated Interim Balance Sheets		F–2

Condensed Consolidated Interim Statements of Operations and Comprehensive Loss		F–3

Condensed Consolidated Interim Statements of Stockholders Equity		F–4

Condensed Consolidated Interim Statements of Cash Flows		F–6

Notes to the Condensed Consolidated Interim Financial Statements		F–7

F-1

PACIFIC GREEN TECHNOLOGIES INC.

Condensed Consolidated Interim Balance Sheets

(Unaudited)

(Expressed in U.S. dollars)

	December 31, 2021 $			March 31, 2021 $

ASSETS

Cash and cash equivalent		9,797,768			23,436,417
Short-term investments and amounts in escrow (Note 3)		1,089,279			1,126,728
Accounts receivable, net of allowance for doubtful accounts of $1,566,406 and $1,559,757, respectively		7,996,480			10,996,220
Prepaid expenses and parts inventory		763,003			932,948
Contract assets (Note 10)		3,339,968			4,329,607
Lease receivable (Note 4)		64,247			406,366

Total Current Assets		23,050,745			41,228,286

Long term receivable		65,139			2,735,415
Project under development (Note 9)		2,350,083			2,001,116
Property and equipment (Note 5)		1,168,765			1,229,828
Intangible assets (Note 6)		10,115,947			11,180,524
Goodwill (Note 7 and 8)		4,399,091			4,293,789
Right of use asset		831,124			1,118,949
Security deposit		1,019,450			635,870

Total Assets		43,000,344			64,423,777

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts payable and accrued liabilities (Note 12)		12,185,211			24,486,138
Warranty provision (Note 13)		1,831,554			2,425,107
Contract liabilities (Note 10)		18,006,220			13,603,559
Current portion of lease obligation (Note 18)		486,442			490,947
Due to related parties (Note 14)		–			174,837

Total Current Liabilities		32,509,427			41,180,588

Long-term accounts payable and accrued liabilities (Note 12)		539,611			3,294,342

Long-term lease obligation (Note 18)		452,810			822,289

Total Liabilities		33,501,848			45,297,219

Stockholders’ Equity

Preferred stock, 10,000,000 shares authorized, $0.001 par value nil and nil shares issued and outstanding, respectively		–			–

Common stock, 500,000,000 shares authorized, $0.001 par value 47,026,886 and 46,990,565 shares issued and outstanding, respectively		47,027			46,991

Additional paid-in capital		92,392,824			92,327,092

Accumulated other comprehensive income		1,242,560			892,732

Deficit		(84,084,161	)		(74,140,257	)

Total stockholders’ equity before treasury stock		9,598,250			19,126,558

Treasury stock, at cost, 56,162 shares at Dec 31, 2021 and nil shares at March 31, 2021		(99,754	)		–

Total Stockholders’ Equity		9,498,496			19,126,558

Total Liabilities and Stockholders’ Equity		43,000,344			64,423,777

Nature of Operations (Note 1)
Commitment (Note 18)

(The accompanying notes are an integral part of these consolidated financial statements)

F-2

PACIFIC GREEN TECHNOLOGIES INC.

Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(Expressed in U.S. dollars)

	Three Months Ended December 31, 2021 $			Three Months Ended December 31, 2020 $			Nine Months Ended December 31, 2021 $			Nine Months Ended December 31, 2020 $

Sales (Note 10)		2,642,184			4,658,466			5,535,004			42,128,892
Cost of goods sold (Note 10)		1,328,338			3,625,204			3,137,247			25,515,248

Gross profit		1,313,846			1,033,262			2,397,757			16,613,644

Expenses

Advertising and promotion		170,870			152,172			488,088			510,748
Amortization of intangible assets (Note 6)		396,539			389,703			1,178,217			1,169,039
Bad Debts Expense		21,012			–			21,012			–
Depreciation (Note 5)		52,519			47,807			152,062			144,457
Foreign exchange loss (gain)		34,791			(41,959	)		86,369			2,577
Management and technical consulting		1,026,808			1,238,962			3,072,262			9,583,143
Office and miscellaneous		525,009			460,338			1,318,839			1,396,263
Operating lease expense (Note 18)		117,350			93,910			360,717			342,077
Professional fees		390,866			601,790			1,338,544			1,494,425
Research and development		–			–			–			4,368
Salaries and wage expenses		1,234,243			1,187,967			4,029,737			4,510,241
Transfer agent and filing fees		91,865			(34,007	)		253,088			106,758
Travel and accommodation		249,338			129,470			473,953			302,040
Warranty and related (Note 13)		16,795			160,125			(4,853	)		1,407,420

Total expenses		4,328,005			4,386,278			12,768,035			20,973,556

Income (loss) before other income (expenses)		(3,014,159	)		(3,353,016	)		(10,370,278	)		(4,359,912	)

Other income (expenses)

Gain on de-consolidation of subsidiary and termination of lease		–			–			–			242,193
Gain (loss) on change in fair value of derivative liability (Note 11)		–			(50,869	)		–			(1,306	)
Gain on reduction of acquisition costs of subsidiary (Note 7)		–			–			–			3,240,250
Financing interest income		85,889			247,253			378,840			548,543
Interest income (expense) and other		(53,198	)		(24,015	)		47,534			(41,725	)

Total other income (expense)		32,691			172,369			426,374			3,987,955

Net (loss) income for the period		(2,981,468	)		(3,180,647	)		(9,943,904	)		(371,957	)

Other comprehensive income

Foreign currency translation gain		132,503			606,849			349,828			690,893

Comprehensive (loss) income for the period		(2,848,965	)		(2,573,798	)		(9,594,076	)		318,936

Net income (loss) per share, basic and diluted		(0.06	)		(0.07	)		(0.21	)		(0.01	)

Weight average number of common shares outstanding, basic ⁽¹⁾		47,321,207			46,598,183			47,309,134			46,305,661

Weight average number of dilutive shares outstanding, diluted		47,321,207			46,598,183			47,309,134			46,305,661

(1)

The period ended December 31, 2021, includes 312,500 (2020 – 312,500) stock options as they are exercisable at any time and for nominal cash consideration.

(The accompanying notes are an integral part of these consolidated financial statements)

F-3

PACIFIC GREEN TECHNOLOGIES INC.

Condensed Consolidated Interim Statements of Stockholders’ Equity

(Unaudited)

(Expressed in U.S. dollars)

	Common stock				Additional Paid-in		Accumulated Other Comprehensive								Stockholders’
	Shares #		Amount $		Capital $		Income $		Treasury Stock			Deficit $			Equity $
Balance, March 31, 2021		46,990,565		46,991		92,327,092		892,732		–			(74,140,257	)		19,126,558

Fair value of options granted (Note 16)		–		–		13,788		–		–			–			13,788
Foreign exchange translation gain		–		–		–		176,116		–			–			176,116
Net income (loss) for the period		–		–		–		–		–			(2,787,926	)		(2,787,926	)

Balance June 30, 2021		46,990,565		46,991		92,340,880		1,068,848		–			(76,928,183	)		16,528,536

Fair value of options granted (Note 16)		–		–		13,941		–		–			–			13,941
Shares issue for service		11,321		11		23,989		–		–			–			24,000
Shares issued on the exercise of stock options		25,000		25		225		–		–			–			250
Foreign exchange translation		–		–		–		41,209		–			–			41,209
Net income (loss) for the period		–		–		–		–		–			(4,174,510	)		(4,174,510	)

Balance September 30, 2021		47,026,886		47,027		92,379,035		1,110,057		–			(81,102,693	)		12,433,426

Fair value of options granted (Note 16)		–		–		13,789		–		–			–			13,789
Common stock repurchases (Note 16)								–		(99,754	)		–			(99,754	)
Foreign exchange translation		–		–		–		132,503		–			–			132,503
Net income (loss) for the period		–		–		–		–		–			(2,981,468	)		(2,981,468	)

Balance December 31, 2021		47,026,886		47,027		92,392,824		1,242,560		(99,754	)		(84,084,161	)		9,498,496

(The accompanying notes are an integral part of these consolidated financial statements)

F-4

PACIFIC GREEN TECHNOLOGIES INC.

Condensed Consolidated Interim Statements of Stockholders’ Equity

(Unaudited)

(Expressed in U.S. dollars)

	Common stock				Additional Paid-in		Accumulated Other Comprehensive						Stockholders’
	Shares #		Amount $		Capital $		Income $			Deficit $			Equity $
Balance, March 31, 2020		45,659,971		45,660		90,653,018		207,017			(75,321,335	)		15,584,360

Fair value of options granted (Note 16)		–		–		60,822		–			–			60,822
Foreign exchange translation gain		–		–		–		(55,797	)		–			(55,797	)
Net income (loss) for the period		–		–		–		–			1,488,681			1,488,681

Balance June 30, 2020		45,659,971		45,660		90,713,840		151,220			(73,832,654	)		17,078,066

Shares issued for commissions		95,238		95		95,143		–			–			95,238
Shares for employment settlement		50,000		50		69,450		–			–			69,500
Shares issued on the exercise of stock options		175,000		175		1,575		–			–			1,750
Foreign exchange translation		–		–		–		139,842			–			139,842
Shares issued on debt conversion		50,000		50		62,450		–			–			62,500
Net income (loss) for the period		–		–		–		–			1,320,009			1,320,009

Balance September 30, 2020		46,030,209		46,030		90,942,458		291,062			(72,512,645	)		18,766,905

Shares issued for acquisition		525,000		525		576,975		–			–			577,500
Shares issued for settlement		100,000		100		99,900		–			–			100,000
Foreign exchange translation		–		–		–		606,849			–			606,849
Net income (loss) for the period		–		–		–		–			(3,180,647	)		(3,180,647	)

Balance December 31, 2020		46,655,209		46,655		91,619,333		897,911			(75,693,292	)		16,870,607

(The accompanying notes are an integral part of these consolidated financial statements)

F-5

PACIFIC GREEN TECHNOLOGIES INC.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

(Expressed in U.S. dollars)

	Nine months Ended December 31, 2021 $			Nine months Ended December 31, 2020 $

Operating Activities

Net income (loss) for the period		(9,943,904	)		(371,957	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets (Note 6)		1,178,217			1,169,039
Gain on reduction of acquisition costs of subsidiary		–			(3,240,250	)
Gain on disposition of subsidiary		–			(242,193	)
Lease expense		360,717			342,077
Depreciation (Note 5)		152,062			144,457
Lease finance charge		11,881			29,748
Loss (gain) on change in fair value of derivative liability (Note 11)		–			1,306
Unrealized loss (gain) on foreign exchange		(71,970	)		166,478
Fair value of stock options granted (Note 16)		41,519			60,822
Shares issued for services		23,999			264,688

Changes in operating assets and liabilities:
Short-term investments and amounts held in trust		37,449			257,170
Accounts receivable		6,000,254			1,306,949
Prepaid expenses and deposits		(213,635	)		154,672
Contract assets		989,639			6,814,648
Project under development		(348,967	)		–
Lease payments		(406,870	)		(379,820	)
Due from related parties		0			(42,346	)
Accounts payable and accrued liabilities		(15,055,658	)		(9,991,783	)
Warranty provision		(593,553	)		483,077
Loan payable		–			3,329
Contract liabilities		4,402,661			(7,110,602	)
Due to related parties		(174,837	)		–

Net Cash Provided by (Used in) Operating Activities		(13,610,996	)		(10,180,491	)

Investing Activities
Acquisition of business, net of cash acquired (Note 8)		–			114,014
Additions of property and equipment		(49,540	)		(99,999	)

Net Cash Provided by (Used in) Investing Activities		(49,540	)		14,015

Financing Activities
Repurchases of common stock		(99,754	)		–
Proceeds on option exercise		250			1,750

Net Cash Provided by (Used in) Financing Activities		(99,504	)		1,750

Effect of Foreign Exchange Rate Changes on Cash		121,391			209,921

Change in Cash and Cash Equivalents		(13,638,649	)		(9,954,805	)

Cash and Cash Equivalents, Beginning of Period		23,436,417			21,386,934

Cash and Cash Equivalents, End of Period		9,797,768			11,432,129

Non-cash Investing and Financing Activities, excluded in above
Common stock issuable in business acquisition		–			525,000
Consideration accrued for business acquisition (Note 8) net of imputed discount		–			23,921

Supplemental Disclosures:		–			–
Interest paid
Income taxes paid		–			–

(The accompanying notes are an integral part of these consolidated financial statements)

F-6

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

1. Nature of Operations

Pacific Green Technologies Inc. (the “Company”) was incorporated in the state of Delaware, USA on March 10, 1994. The Company is in the business of acquiring, developing, and marketing environmental technologies, with a focus on emission control technologies. On December 20, 2019, the Company acquired Shanghai Engin Digital Technology Co. Ltd., a company incorporated and registered in China (“Engin”). Engin is a solar design, development, and engineering company (Note 7). On June 19, 2020, Engin was changed to Pacific Green Technologies (Shanghai) Co. Ltd. On October 19, 2020, the Company acquired Innoergy Limited (“Innoergy”). Innoergy is a designer of battery energy storage systems and registered in the United Kingdom (Note 8). In connection with the acquisition, Innoergy adopted the name Pacific Green Innoergy Technologies Limited. On March 18, 2021, the Company acquired Richborough Energy Park Ltd. (“Richborough”), a company in the business of battery energy storage systems and registered in the United Kingdom (Note 9).

The condensed consolidated interim financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021. In the opinion of management, the accompanying condensed consolidated interim financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.

The preparation of these condensed consolidated interim financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.

F-7

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

2. Significant Accounting Policies

(a)

Basis of Presentation

These unaudited interim condensed consolidated interim financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States of America, and are expressed in U.S. dollars. The following accounting policies are consistently applied in the preparation of the consolidated financial statements. These consolidated financial statements include the accounts of the Company and the following entities:

Pacific Green Innoergy Technologies Ltd. (“Innoergy”) (Formerly Innoergy Ltd.)		Wholly-owned subsidiary
Pacific Green Marine Technologies Group Inc. (“PGMG”)		Wholly-owned subsidiary
Pacific Green Marine Technologies Inc. (PGMT US)		Wholly-owned subsidiary of PGMG
Pacific Green Technologies (UK) Ltd. (Formerly Pacific Green Marine Technologies Ltd.) (“PGTU”)		Wholly-owned subsidiary of PGMG
Pacific Green Technologies (Middle East) Holdings Ltd. (“PGTME”)		Wholly-owned subsidiary
Pacific Green Technologies Arabia LLC (“PGTAL”)		70% owned subsidiary of PGTME
Pacific Green Marine Technologies (USA) Inc. (inactive)		Wholly-owned subsidiary of PGMG
Pacific Green Technologies (Canada) Inc. (“PGT Can”) (Formerly Pacific Green Marine Technologies Inc.		Wholly-owned subsidiary
Pacific Green Solar Technologies Inc. (“PGST”)		Wholly-owned subsidiary
Pacific Green Corporate Development Inc. (“PGCD”) (formerly Pacific Green Hydrogen Technologies Inc.)		Wholly-owned subsidiary
Pacific Green Wind Technologies Inc (“PGWT”)		Wholly-owned subsidiary
Pacific Green Technologies International Ltd. (“PGTIL”)		Wholly-owned subsidiary
Pacific Green Technologies Asia Ltd. (“PGTA”)		Wholly-owned subsidiary of PGTIL
Pacific Green Technologies China Ltd. (“PGTC”)		Wholly-owned subsidiary of PGTA
Pacific Green Technologies (Australia) Pty Ltd. (“PGTAPL”)		Wholly-owned subsidiary of PGTA
Pacific Green Environmental Technologies (Asia) Ltd. (“PGETA”)		50.1% owned subsidiary
Pacific Green Technologies (Shanghai) Co. Ltd. (“Engin”) (Formerly Shanghai Engin Digital Technology Co. Ltd)		Wholly-owned subsidiary
Guangdong Northeast Power Engineering Design Co. Ltd. (“GNPE”)		Wholly-owned subsidiary of ENGIN
Pacific Green Energy Parks Inc. (“PGEP”)		Wholly-owned subsidiary
Pacific Green Energy Storage Technologies Inc. (“PGEST”)		Wholly-owned subsidiary of PGEP
Pacific Green Energy Storage (UK) Ltd. (“PGESU”) (Formerly Pacific Green Marine Technologies Trading Ltd.)		Wholly-owned subsidiary of PGEP
Richborough Energy Park Ltd. (“Richborough”)		Wholly-owned subsidiary of PGESU

All inter-company balances and transactions have been eliminated upon consolidation.

F-8

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

2. Significant Accounting Policies (continued)

(b)

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses. The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. As a smaller reporting company, this ASU is effective for fiscal years beginning after January 1, 2023, including interim periods within those fiscal years. The Company is currently assessing the impact of the adoption of this ASU on its Consolidated Financial Statements.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and management does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

3. Short-term Investments and amounts in escrow

At December 31, 2021, the Company has a $59,433 (March 31, 2021 – $60,408) Guaranteed Investment Certificate (“GIC”) held as security against a corporate credit card. The GIC bears interest at 0.5% per annum and matures December 13, 2022.

At December 31, 2021, the Company has $nil (March 31, 2021 – $915,779) in short term investment.

At December 31, 2021, the Company’s solicitor is holding $1,029,846 (March 31, 2021 – $150,541) relating to proceeds under customer contracts.

4. Lease Receivable

On December 12, 2017, the Company completed the sale of a constructed ENVI-Marine scrubber system under an energy management lease arrangement. The Company’s lease receivable as at December 31, 2021 and March 31, 2020, consists of an amount due from the customer under a long-term lease arrangement.

The payments to the Company under the lease arrangement are based on a quarterly payment of $118,000 per quarter and a final balancing payment through March 2022. The current portion presented below reflects the minimum expected payments per the lease arrangement for the next twelve months.

F-9

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

4. Lease Receivable (continued)

At the completion of the minimum required lease payments, the title of the asset transfers to the customer. No amount has been allocated to the residual value. Moreover, there are no other variable amounts involved in this lease arrangement.

	December 31, 2021 $		March 31, 2020 $

Current portion, expected within twelve months		64,247		406,366

Future lease payments forecasted in calendar year end period is as follows:

	$

2022		65,144
Interest deemed hereunder		(897	)

Total		64,247

F-10

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

5. Property and Equipment

	Cost $		Accumulated amortization $			December 31, 2021 Net carrying value $		March 31, 2021 Net carrying value $

Building		1,024,774		(152,212	)		872,561		904,897
Furniture and equipment		320,816		(146,603	)		174,213		186,186
Computer equipment		17,182		(11,283	)		5,899		10,040
Leasehold improvements		109,849		(83,812	)		26,037		45,944
Testing equipment- Scrubber system		138,599		(48,544	)		90,055		82,761

Total		1,611,219		(442,454	)		1,168,765		1,229,828

For the three and nine months ended December 31, 2021, the Company recorded $52,519 (2020 – $47,807) and $152,062 (2020 – $144,457) in depreciation expense on property and equipment.

F-11

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

6. Intangible Assets

	Cost $		Accumulated amortization $			Cumulative impairment $			December 31, 2021 Net carrying value $		March 31, 2021 Net carrying value $

Patents and technical information		35,852,556		(8,085,047	)		(20,457,255	)		7,310,254		7,968,355
Backlogs		98,599		(60,899	)		(37,700	)		–		–
Customer lists		246,053		(80,028	)		–			166,025		190,052
Patents and certifications		3,897,938		(1,267,798	)		–			2,630,140		3,010,769
Software licensing		12,763		(3,235	)		–			9,528		11,348

Total	$	40,107,909		(9,497,007	)		(20,494,955	)		10,115,947		11,180,524

For the three and nine months ended December 31, 2021, the Company recorded $396,539 (2020 – $389,703) and $1,178,217 (2020 – $1,169,039) in amortization expense on intangible assets.

Future amortization of intangible assets is as follows based on calendar year:

	$

2022		1,579,173
2023		1,579,173
2024		1,579,173
2025		1,577,981
Thereafter		3,800,447

Total		10,115,947

F-12

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

7. Acquisition of Shanghai Engin Digital Technology Co. Ltd

On December 20, 2019, the Company acquired all the issued and outstanding stock of Shanghai Engin Digital Technology Co. Ltd., a solar design, development and engineering company and its subsidiary. Engin’s expertise in solar technologies provides the Company another green technology to market and develop internationally alongside our manufacturing. The acquisition was concluded concurrently with two groups. The first purchase of the 75% interest was acquired for consideration of $5,864,234 (¥41,000,000) upon signing (paid), plus a further $2,145,002 (¥15,000,000) due by March 20, 2020 (paid) and a final conditional payment of $2,860,002 (¥20,000,000) (not paid). The remaining 25% interest was acquired for consideration of 125,000 new shares of the Company (issued after year ended March 31, 2020), plus a further conditional $286,000 (¥2,000,000) (not paid). The required conditions for the final payment were not met by the selling party. As a result, the Company derecognized the liability and recorded a gain of $3,240,250 (¥22,000,000) for the quarter ended September 30, 2020. On June 19, 2020, Engin’s name was changed to Pacific Green Technologies (Shanghai) Co. Ltd.

Total purchase consideration was estimated at $11,052,307, inclusive of the fair value of the conditional payments, which were considered probable at the acquisition date. The 125,000 shares in the Company have been estimated to have a fair value of $368,750 or $2.95 per share. This share price is determined on the basis of the closing market price of the Company’s common shares at the date of acquisition.

The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition. The purchase consideration has been applied to cash of $2,063,358, other net working capital of Engin of $1,024,461, property and equipment of $911,330, and intangible assets of $3,897,747. The residual value of consideration after applying it to the carrying values of assets and liabilities acquired and fair value adjustments, resulted in a goodwill allocation of $3,524,161. The goodwill paid as part of the acquisition is expected to be tax deductible.

8. Acquisition of Innoergy Limited

On October 19, 2020, the Company entered into a Share Purchase Agreement for the acquisition of a 100% interest in Innoergy Limited and immediately changed its name to Pacific Green Innoergy Technologies Limited. Innoergy is a designer of battery energy storage systems registered in the United Kingdom. The acquisition marks the Company’s entry into the battery energy storage system market in conjunction with its joint venture partner, PowerChina SPEM.

In consideration of all the issued and outstanding securities of Innoergy, the Company has issued to the selling shareholders of Innoergy an aggregate of 525,000 common shares of the Company. The Company paid $32,490 (£25,000) to a selling shareholder on completion of the transaction and will pay an equal amount when Innoergy achieves battery storage sales equivalent to 50 megawatts. The common shares of the Company issued to the sellers are subject to a sales volume restriction of 65,625 shares per calendar quarter. As a further condition of the acquisition, Pacific Green will make available to Innoergy a working capital credit facility of approximately $455,000 (£350,000) (at an interest rate of eight percent (8%) above the Bank of England base rate per annum), which will be due on demand and secured by a floating charge and debenture against the assets of Innoergy.

F-13

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

8. Acquisition of Innoergy Limited (continued)

Total purchase consideration is estimated at $633,911, inclusive of the fair value of the conditional payments, which were considered 75% probable at the acquisition date. The conditional payments are not made yet. Total purchase consideration also includes 525,000 shares with fair value of $577,500 or $1.10 per share. This share price is determined on the basis of the closing market price of the Company’s common shares at the date of acquisition. The results of operations of the acquired business and the fair value of the acquired assets and assumed liabilities are included in the Company’s consolidated financial statements with effect from the date of the acquisition. The purchase consideration has been applied to cash of $146,503, other net working capital of $2,758, property and equipment of $540, and loan payable of $64,981. The residual value of $549,091 has been allocated to goodwill, which is expected to be partially or completely tax deductible.

9. Acquisition of Richborough Energy Park Ltd.

On March 18, 2021, the Company acquired all the issued and outstanding stock of Richborough Energy Park Ltd., a United Kingdom company in the business of battery energy storage systems.

The purchase consideration included cash payments of $681,957 (£494,351) made on March 18, 2021 and three conditional payments of $515,622 (£374,500) each on specified dates according to the share purchase agreement. The first conditional payment was made in May 2021. The second and third payments are planned to be made during the year ended March 31, 2022 and 2023.

The Company accounted for the transaction as an asset acquisition as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable group of similar identifiable assets. Accordingly, the consideration was allocated on a relative fair value basis to the assets acquired and liabilities assumed.

Total purchase consideration was estimated at $2,166,452, inclusive of the fair value of the conditional payments, which were considered probable at the acquisition date. The value attributed to the identifiable assets acquired and liabilities assumed are cash of $1, other net working capital of $535, security deposit of $164,799, and project under development of $2,001,116. Since the acquisition, $348,967 has been incurred and capitalized as project under development.

F-14

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

10. Sales, Contract Assets and Contract Liabilities

The Company has analyzed its sales contracts under ASC 606 and has identified performance conditions that are not directly correlated with contractual payment terms with customer. As a result of the timing differences between customer payments and satisfaction of performance conditions, contractual assets and contractual liabilities have been recognized.

Contracts are unique to customers’ requirements. However, the Company’s performance obligations can generally be identified as:

●

Specified service works

●

Certified design and engineering works

●

Acceptance of delivered equipment to customers

●

Acceptance of commissioned equipment

●

Solar power contracts

For the three and nine months ended December 31, 2021, and 2020, the Company’s recognized sales revenues in proportion to performance obligations as noted below:

	Three Months Ended December 31, 2021 $		Three Months Ended December 31, 2020 $

Specified service works		597,365		397,572
Certified design and engineering works		–		–
Acceptance of delivered equipment to customers		1,128,222		1,994,601
Acceptance of commissioned equipment		–		1,922,166
Solar power contracts		916,597		344,127

Total		2,642,184		4,658,466

F-15

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

10. Sales, Contract Assets and Contract Liabilities (continued)

	Nine months Ended December 31, 2021 $		Nine months Ended December 31, 2020 $

Specified service works		1,005,832		817,618
Certified design and engineering works		–		3,575,629
Acceptance of delivered equipment to customers		2,262,617		21,498,217
Acceptance of commissioned equipment		1,038,929		15,754,070
Concentrated solar power contracts		1,227,626		483,358

Total		5,535,004		42,128,892

Changes in the Company’s contract assets and liabilities for the periods are noted as below:

	Contract Assets $			Sales (Cost of sales) $			Contract Liabilities $

Balance, March 31, 2020		24,604,339						(23,553,267	)

Customer receipts and receivables		–			–			(51,463,812	)
Sales recognized in earnings					61,413,520			61,413,520
Payments under contracts		19,553,678			–			–
Costs recognized in earnings		(39,828,410	)		(39,828,410	)		–

Balance, March 31, 2021		4,329,607						(13,603,559	)

Customer receipts and receivables		–			–			(9,937,665	)
Sales recognized in earnings					5,535,004			5,535,004
Payments and accruals under contracts		2,147,608			–			–
Costs recognized in earnings		(3,137,247	)		(3,137,247	)

Balance, December 31, 2021		3,339,968						(18,006,220	)

As of December 31, 2021, contract liability included $16,917,629 (March 31, 2021 - $13,439,126) aggregate cash receipts from one customer to relating to nineteen vessels. At March 31, 2021 all nineteen had been postponed under the terms of a Postponement Agreement dated February 9, 2021, with an option to either proceed or cancel. Under a subsequent Option Agreement dated August 9, 2021, six of these vessels were contracted by the customer to proceed and these are due to be commissioned on various dates between January and April 2022. $8,886,827 of the total contract liability at December 31, 2021 relates to these six vessels and will be released in full to revenue between January and April 2022, as the revenue milestones are achieved on each vessel. The remaining contract liability balance was mainly related to the other sixteen postponed vessels in the Postponement Agreement.

F-16

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

11. Convertible Debenture and Derivative Liability

As at December 31, 2021, the carrying value of the debenture was $nil (March 31, 2021 – $nil) and interest expense on the debenture for the three and nine months ended December 31, 2021 was recorded as $nil (2020 – $833) and $nil (2020 – $2,333). During the three and nine months ended December 31, 2021, the Company recorded gain on the change in fair value of derivative liability of $nil (2020 –$58,380) and $nil (2020 –$49,563) respectively.

A summary of the changes in derivative liabilities for the three months is shown below:

	Three Months Ended December 31, 2021 $		Three Months Ended December 31, 2020 $			Nine Months Ended December 31, 2021 $		Nine Months Ended December 31, 2020 $

Balance, beginning of period		–		(82,371	)		–		(174,484	)
Conversion		–		–			–		42,550
Mark to market adjustment		–		(50,869	)		–		(1,306	)

Balance, end of period		–		(133,240	)		–		(133,240	)

12. Accounts payable and accruals

	December 31, 2021 $		March 31, 2021 $

Accounts payable		716,328		3,961,965
Accrued liabilities		11,247,980		20,290,390
Loan payable		60,052		68,975
Payroll liabilities		160,851		164,808

Total short-term accounts payable and accrued liabilities		12,185,211		24,486,138

Long term accrued liabilities		539,611		3,294,342

Balance, end of period		12,724,822		27,780,480

F-17

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

13. Warranty provision

During the three and nine months ended December 31, 2021, the Company recorded a non-cash warranty expense of $16,795 (2020 – $160,125) and warranty recovery of $4,853 (2020 – expense of $1,407,420) respectively as the Company provides warranties to customers for the design, materials, and installation of scrubber units. Product warranty is recorded at the time of sale and will be revised based on new information as system performance data becomes available.

A summary of the changes in the warranty provision is shown below:

	December 31, 2021 $			March 31, 2021 $

Balance, beginning of period		2,425,107			1,089,356
Provision for warranty, net of expirations		(4,853	)		1,228,092
Expenses recoveries (costs)		(588,700	)		107,659

Balance, end of period		1,831,554			2,425,107

14. Related Party Transactions

(a)

As at December 31, 2021, the Company owed $nil to (March 31, 2021 –$174,837) companies controlled by a director and officer of the Company. The amounts owing are unsecured, non-interest bearing, and due on demand.

(b)

During the three and nine months ended December 31, 2021, the Company incurred $297,723 (2020 – $330,025) and $756,861 (2020 – $1,099,756) in consulting fees, salaries, and commissions to companies controlled by a director of the Company.

(c)

During the three and nine months ended December 31, 2021, the Company incurred $nil (2020 – $60,000) and $nil (2020 – $120,000) in consulting fees to a director, or companies controlled by a director of the Company.

(d)

During the three and nine months ended December 31, 2021, the Company incurred $12,750 (2020 – $12,750) and $38,250 (2020 – $38,250) in consulting fees to a director of the Company.

F-18

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

15. Share Purchase Warrants

	Number of warrants			Weighted average exercise price $

Balance, March 31, 2020		3,300,000			2.50

Expired		(3,300,000	)		2.50

Balance, March 31, 2021 and December 31, 2021		–			–

On July 1, 2020, 3,300,000 share purchase warrants expired unexercised.

F-19

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

16. Stock Options and Share Repurchase

The following table summarizes the continuity of stock options:

	Number of options			Weighted average exercise price $		Weighted average remaining contractual life (years)		Aggregate intrinsic value $

Balance, March 31, 2020		3,377,500			1.46		1.49		6,045,000

Exercised		(175,000	)		0.01
Granted		100,000			1.01

Balance, March 31, 2021		3,302,500			1.52		0.72		2,300,425

Exercised		(25,000	)		0.01
Forfeited		(2,865,000	)		1.70

Balance, December 31, 2021		412,500			0.39		0.93		231,500

Additional information regarding stock options outstanding as at December 31, 2021 is as follows:

Exercisable
Number of shares		Weighted average remaining contractual life (years)		Exercise price $
	312,500		0.67		0.01
	25,000		0.54		2.26
	25,000		2.04		1.03
	50,000		2.25		1.50

	412,500

The estimated fair value of the stock options was being recorded over the requisite service period to vesting. For the three and nine months ended December 31, 2021, the fair value was $13,789 (2020 – $nil) and $41,519 (2020 – $60,822) and was recorded as salaries expense.

For the period ended Dec 31, 2021, the Company implemented a share repurchase program and repurchased 56,162 shares with total value of $99,754.

F-20

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

17. Segmented Information

The Company is located and operates in North America and its subsidiaries are primarily located and operating in Europe and Asia. Significant long-term assets are geographically located as follows:

	December 31, 2021
	North America $		Europe $		Asia $		Total $

Property and equipment		120,769		169,536		878,460		1,168,765
Intangible Assets		7,310,254		–		2,805,693		10,115,947
Right of use assets		20,029		609,116		201,979		831,124

		7,451,052		778,652		3,886,132		12,115,836

	Three months ended December 31, 2021
	South America $		Europe $		Asia $		Total $

Revenues by customer region		418,982		1,725,587		497,615		2,642,184

	Three months ended December 31, 2021
	Marine $			Solar $		Total $

Revenues by revenue type		1,725,587			916,597		2,642,184
Expense by revenue type		5,352,324			271,328		5,623,652
Net income by revenue type		(3,626,737	)		645,269		(2,981,468	)

	Nine months ended December 31, 2021
	South America $		Europe $		Asia $		Total $

Revenues by customer region		573,482		4,307,378		654,144		5,535,004

	Nine months ended December 31, 2021
	Marine $			Solar $			Total $

Revenues by revenue type		4,307,378			1,227,626			5,535,004
Expense by revenue type		13,604,280			1,874,628			15,478,908
Net income by revenue type		(9,296,902	)		(647,002	)		(9,943,904	)

F-21

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

17. Segmented Information (continued)

	December 31, 2020
	North America $		Europe $		Asia $		Total $

Property and equipment		134,666		212,982		939,225		1,286,873
Intangible Assets		8,187,723		–		3,434,262		11,621,985
Right of use assets		58,864		913,673		245,034		1,217,571

		8,381,253		1,126,655		4,618,521		14,126,429

Three months ended December 31, 2020

Europe
$

Asia
$

Total
$

Revenues by customer region

4,314,339

344,127

4,658,466

	Three months ended December 31, 2020
	Marine $			Solar $			Total $

Revenues by revenue type		4,314,339			344,127			4,658,466
Expense by revenue type		7,065,036			774,076			7,839,112
Net income by revenue type		(2,750,697	)		(429,949	)		(3,180,646	)

Nine months ended December 31, 2020

Europe
$

Asia
$

Total
$

Revenues by customer region

41,645,534

483,358

42,128,892

	Nine months ended December 31, 2020
	Marine $		Solar $			Total $

Revenues by revenue type		41,645,534		483,358			42,128,892
Expense by revenue type		40,852,732		1,648,116			42,500,849
Net income by revenue type		792,802		(1,164,758	)		(371,957	)

For the three and nine months ended December 31, 2021, 51% (2020 – 87%) and 69% (2020 – 98%) of the Company’s revenues were derived from two customers that are under the same common ownership and control. For the three and nine months ended December 31, 2021, 0% (2020 – 0%) and 31% (2020 – 0%) of the Company’s revenues were derived from another customer.

F-22

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

18. Commitment

(a)

The Company’s subsidiaries have entered into three long-term operating leases for office premises in London, United Kingdom, Shanghai, China, and North Vancouver, Canada.

Long-term premises lease	Lease commencement	Lease expiry	Term (years)	Discount rate*

London, United Kingdom	April 1, 2019	December 25, 2023	3.75	4.50	%
North Vancouver, Canada	December 1, 2019	August 31, 2022	1.75	4.50	%
Shanghai, China	March 1, 2020	May 31, 2025	5.25	4.75	%

*	The Company determined the discount rate with reference to mortgages of similar tenure and terms.

Lease cost for the three and nine months are summarized as follows:

		Three Months Ended December 31, 2021 $				Three Months Ended December 31, 2020 $				Nine Months Ended December 31, 2021 $				Nine Months Ended December 31 2020 $
Operating lease expense *			117,350				93,910				360,717				342,077

Including right of use amortization and imputed interest. Lease payments include maintenance, operating expense, and tax.

The Company has entered into premises lease agreements with minimum annual lease payments expected over the next five calendar years of the lease as follows:

	$

2022		520,627
2023		386,742
2024		65,907
2025		16,477

Total future minimum lease payments		989,753

Imputed interest		(50,501	)

Operating lease obligations		939,252

(b)

On July 14, 2017, the Company entered into a new memorandum of understanding to establish a new joint venture company in China with a non-related party (the “Supplier”) wherein the Supplier would receive and process orders, manufacture, and install products for the Company’s customers. In return, the Company agreed to design the product, provide strategic pricing, sales and marketing direction, as well as provide technology licenses and technical support (the “Technology”) to the Supplier. During the term of the agreement, the Company will provide the Supplier with a non-transferrable right and license to use the Technology to manufacture and install the product within the Asia and Russia region.

The parties will fund the venture proportionately, 50.1% by the Company and 49.9% by the Supplier, and excess operating cash flows will be distributed on a quarterly basis. Neither party have funded the joint venture to date and there has been no revenue and expense associated with it.

(c)

On December 2, 2020, the Company signed a Joint-Venture Agreement with Amr Khashoggi Trading Company Limited (“Amkest Group”) to incorporate a company in the Kingdom of Saudi Arabia for the sale of Pacific Green’s environmental technologies within the region. The Company holds 70% interest in the joint venture. The Company incorporated Pacific Green Technologies Arabia LLC on November 23rd, 2021.

Neither party have funded the joint venture to date and there has been no revenue and expense associated with it.

F-23

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

December 31, 2021

(Unaudited)

(Expressed in U.S. Dollars)

19. Income Taxes

The majority of our revenues from international sales are invoiced from and collected by our U.S. entity and recognized as a component of income before taxes in the United States as opposed to a foreign jurisdiction. Net income (loss) before taxes for the nine months ended December 31, by U.S. and foreign jurisdictions, was as follows:

	December 31, 2021 $			December 31, 2020 $

United States		(12,392,312	)		1,831,428
Foreign		2,448,408			(2,203,385	)

Net income (loss) before taxes		(9,943,904	)		(371,957	)

The following table reconciles the income tax expense (benefit) at the statutory rates to the income tax (benefit) at the Company’s effective tax rate.

	December 31, 2021 $			December 31 2020 $

Net income (loss) before taxes		(9,943,904	)		(371,957	)
Statutory tax rate		21	%		21	%

Expected income tax expense (recovery)		(2,088,220	)		(78,111	)
Permanent differences and other		94,035			502,105
Foreign tax rate difference		12,482			37,233
Change in valuation allowance		1,981,704			(461,227	)

Income tax provision		–			–

Current		–			–
Deferred		–			–

Income tax provision		–			–

Tax positions are evaluated for recognition using a more-likely than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information.

The Company estimates that it has accumulated estimated net operating losses of approximately $22.3 million which were incurred mainly in the U.S, and which don’t begin to expire until 2033. In addition, the Company estimates that it has $2.6 million in losses available in the United Kingdom. Historical losses in the U.S., are subject to limitations on use due to deemed changes in control for tax purposes. This impacts the timing and opportunity to use certain losses.

F-24

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this quarterly report and unless otherwise indicated, the terms “we”, “us”, “our”, the “Company”, and “our company” mean Pacific Green Technologies Inc., a Delaware corporation, and our wholly owned subsidiaries, (1) Pacific Green Innoergy Technologies Ltd., a United Kingdom company, (2) Pacific Green Marine Technologies Group Inc., a Delaware corporation, (3) Pacific Green Marine Technologies Inc., a Delaware corporation, (4) Pacific Green Technologies (UK) Ltd. (Formerly Pacific Green Marine Technologies Ltd.), a United Kingdom company, (5) Pacific Green Technologies (Middle East) Holdings Ltd., a United Arab Emirates company, (6) Pacific Green Technologies Arabia LLC, 70% owned, a Kingdom of Saudi Arabia company, (7) Pacific Green Marine Technologies (USA) Inc., a Delaware corporation (inactive), (8) Pacific Green Technologies (Canada) Inc. (Formerly Pacific Green Marine Technologies Inc.), a Canadian corporation, (9) Pacific Green Solar Technologies Inc., a Delaware corporation, (10) Pacific Green Corporate Development Inc. (formerly Pacific Green Hydrogen Technologies Inc.), a Delaware corporation, (11) Pacific Green Wind Technologies Inc., a Delaware corporation, (12) Pacific Green Technologies International Ltd., a British Virgin Islands company, (13) Pacific Green Technologies Asia Ltd., a Hong Kong company, (14) Pacific Green Technologies China Ltd., a Hong Kong company, (15) Pacific Green Technologies (Australia) Pty Ltd., an Australia company, (16) Pacific Green Environmental Technologies (Asia) Ltd., 50.1% owned, a Chinese company, (17) Pacific Green Technologies (Shanghai) Co. Ltd. (Formerly Shanghai Engin Digital Technology Co. Ltd.), a Chinese company, (18) Guangdong Northeast Power Engineering Design Co. Ltd., a Chinese company, (19) Pacific Green Energy Parks Inc., a Delaware corporation, (20) Pacific Green Energy Storage Technologies Inc., a Delaware corporation, (21) Pacific Green Energy Storage (UK) Ltd. (Formerly Pacific Green Marine Technologies Trading Ltd.), a United Kingdom company, (22) Richborough Energy Park Ltd., a United Kingdom company, unless otherwise indicated.

Corporate History

Our company was incorporated in Delaware on March 10, 1994, under the name of Beta Acquisition Corp. In September 1995, we changed our name to In-Sports International, Inc. In August 2002, we changed our name from In-Sports International, Inc. to ECash, Inc. In 2007, due to limited financial resources, we discontinued our operations. Over the course of the ensuing five years, we sought out new business opportunities.

On June 13, 2012, we changed our name to Pacific Green Technologies Inc. and effected a reverse split of our common stock following which we had 27,002 shares of common stock outstanding with $0.001 par value.

Effective December 4, 2012, we filed with the Delaware Secretary of State a Certificate of Amendment of Certificate of Incorporation, wherein we increased our authorized share capital to 510,000,000 shares of stock as follows:

	●	500,000,000 shares of common stock with a par value of $0.001; and

	●	10,000,000 shares of preferred stock with a par value of $0.001.

The increase of authorized capital was approved by our board of directors on July 1, 2012 and by a majority of our stockholders by a resolution dated July 1, 2012.

Original Strategy and Recent Business

Since 2012, the Company has focused on marketing, developing and acquiring technologies designed to improve the environment by reducing pollution. The Company has acquired technologies, patents and intellectual property from EnviroTechnologies Inc. through share transfer, assignment and representation agreements entered into during 2012 and 2013. Following those acquisitions, management has expanded the registration of intellectual property rights around the world and pursued opportunities globally for the development and marketing of the emission control technologies.

Working with a worldwide network of agents to market the ENVI-Systems™ emission control technologies, the Company has focused on three applications of the technology:

ENVI-Marine ^TM

Diesel exhaust from ships, ferries and tankers includes ash and soot as particulate components and sulphur dioxide as an acid gas. Testing has been conducted on diesel shipping to confirm the application of seawater as a neutralizing agent for sulphur emissions as well as capturing particulate matter. In addition to marine applications, these tests also showed applicability of the system for large displacement engines such as stationary generators, compressors, container handling, heavy construction, and mining equipment.

ENVI-Pure ^TM

Increasing legislation relating to landfill of municipal solid waste has led to the emergence of increasing numbers of waste to energy plants (“WtE”). A WtE plant obviates the need for landfill, burning municipal waste for conversion to electricity. A WtE plant is typically 45-100MW. The ENVI-Clean™ system is particularly suited to WtE as it cleans multiple pollutants in a single system.

ENVI-Clean ^TM

EnviroTechnologies Inc. has successfully conducted sulphur dioxide demonstration tests at the American Bituminous Coal Partners power plant in Grant Town, West Virginia. The testing achieved a three test average of 99.3% removal efficiency. The implementation of US Clean Air regulations in July 2010 has created additional demand for sulphur dioxide removal in all industries emitting sulphur pollution. Furthermore, China consumes approximately one half of the world’s coal, but introduced measures designed to reduce energy and carbon intensity in its 14th Five Year Plan. Applications include regional power facilities and heating for commercial buildings and greenhouses. Typical applications range in size from 1 to 20 megawatts (MW) with power generation occupying the larger end of the range. The ENVI-Clean™ system removes most of the sulphur dioxide, particulate matter, greenhouse gases and other hazardous air pollutants from the flue gases produced by the combustion of coal, biomass, municipal solid waste, diesel and other fuels.

Vision & Strategy

Pacific Green envisions a world of rapidly growing demand for renewable energy technological solutions to address the challenges presented by a changing climate. Having achieved success in marine emission control technologies we have now broadened our business to provide turnkey and scalable end-to-end technology solutions in the renewable energy sector. Our technological platform now has four main components:

●

Emission Control Systems (“ECS”);

●

Concentrated Solar Power (“CSP”);

●

Battery Energy Storage Systems (“BESS”); and

●

Electric Vehicle Charging Stations (“EVCS”).

In all the above areas, the Company plans to execute this vision by a dual strategy of equipment sales and proactive infrastructure ownership, each to be led by acquisitions of technology capabilities and project investment opportunities, highlighted to date by the following events:

●

on December 20, 2019, the Company closed the acquisition of Shanghai Engin Digital Technology Co. Ltd. (“Engin”) a solar design, development and engineering company. Engin is a design and engineering business focused primarily on CSP, desalination and waste to energy technologies. Engin’s CSP reference plants in China comprise over 150MW and we are now in talks to provide CSP alongside future ammonia and hydrogen production facilities in Asia and South America;

●

on October 20, 2020, the Company closed the acquisition of Innoergy Limited (“Innoergy”), a UK based designer of BESS whose clients include Osaka Gas Co. Ltd, in Japan, and Limejump Limited in the UK, a subsidiary of Royal Dutch Shell plc. The acquisition underpins our entry into the BESS market; and

●

on March 18, 2021, the Company acquired Richborough Energy Park Limited (“Richborough”), a BESS development project to deliver 100MW of energy in Kent, UK.

In support of this dual strategy, we have adopted a Human Resource Strategy that seeks to hire the best talent in the core areas of our business.

Strategic Partnerships

Pacific Green has forged global partnerships with private and state-owned energy providers and owners. This strategic alignment with leading energy industry platforms empowers Pacific Green to provide quickly scalable solutions in the core areas of our business, to gather unique insights on cutting-edge trends and leverage recurring revenue opportunities that enable us to cross-sell products and services.

The Company has entered into several partnership and framework agreements in the core areas of our business.

ECS

The Company has a joint venture with PowerChina SPEM Limited (the “JV”). The JV has successfully provided manufacturing, installation and logistical support on over USD$200m of ECS business, particularly in the marine industry. PowerChina is one of the largest EPC contractors in the world with annual revenues of approximately USD$50bn.

CSP

On December 23, 2019, the Company entered into a International Strategic Alliance Agreement with (1) Beijing Shouhang IHW Resources Saving Technology Company Ltd. (“Shouhang”), a company listed on the Shenzhen Stock Exchange in China, and (2) PowerChina.

The Strategic Alliance Agreement provides for the development of CSP plants whereby (1) the Company provides the Intellectual Property, the technical know-how, design and engineering, (2) Shouhang provides manufacturing of the solar field and molten salt tank services, and (3) PowerChina provides the EPC role worldwide.

BESS

On January 14, 2021, the Company signed a framework agreement with Shanghai Electric Gotion New Energy Technology Co., Ltd (“SEG”). The agreement provides for the supply of lithium-ion BESS. SEG is a joint-venture between Shanghai Electric Group Co., Ltd. (“Shanghai Electric”) and Guoxuan High-tech Co., Ltd. With multiple production facilities and a long-established history in technology manufacturing and supply-chain management, SEG is well-positioned to provide lithium-ion BESS technology around the world. Shanghai Electric has operating revenues in excess of USD$20bn.

On March 18, 2021, the Company signed a framework agreement with TUPA Limited (“TUPA”) to gain exclusive rights to 1.1GW of BESS projects in the UK. TUPA is a UK based company with expertise in planning, grid connections and land acquisition. The Company has to date executed 100MW in relation to the Richborough Energy Park project mentioned in the M&A section above.

EVCS

The agreement with SEG will extend to EVCS.

In addition to supply agreements, on December 2, 2020, the Company signed a joint venture and marketing agreement with AMKEST to assist with the promotion of the Company’s core business platform in the Kingdom of Saudi Arabia and the wider Middle East. Amkest Group is overseen by its founder, Amr Khashoggi, who holds board positions in numerous influential companies and government bodies across the Kingdom and is currently serving as Strategic Advisor to the Kingdom’s prominent new development city, King Abdullah Economic City (KAEC). Amkest Group’s leadership team is led by Chief Executive Officer, Salman Alireza, whose background includes various founding, executive and director-level positions in the business development sector within the Kingdom of Saudi Arabia, in addition to an MBA from London Business School.

Results of Operations

The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the three months ended December 31, 2021, and 2020.

Revenue for the three and nine months ended December 31, 2021 was $2,642,184 and $5,535,004 versus $4,658,466 and $37,470,425 for the three and nine months ended December 31, 2020. The Company’s revenues were mainly derived from the sale of marine scrubber units and related services. During the nine months ended December 31, 2021, the Company recognized revenue for 9 (2020 – 46) marine scrubber units and these marine scrubber units were in various stages of engineering, delivery, and commissioning. For the three and nine months ended December 31, 2021, revenue from solar business sector was $916,597 and $1,227,626 as compared to $2,371 and $139,231 for the three and nine months ended December 31, 2020. During the nine months ended December 31, 2021, the Company recognized revenue for 11 (2020 – 7) solar projects.

During the nine months, the Company realized a gross margin of 43% (2020 - 40%). Gross margin increased mainly due to higher gross margin on sale of scrubber units.

Expenses for the nine months ended December 31, 2021, were $12,764,679 as compared to $20,973,556 for the nine months ended December 31, 2020, as the Company reduced its operations for the nine months period. Management and technical consulting fees decreased significantly also due to lower sales. Management and technical consulting fees were comprised of fees paid to third parties for business development efforts, advisory services, as well as amounts paid to the directors of the Company. Advertising, office-based costs, and professional fees also decreased due to reduced business activities. Additionally, the delivery of units resulted in warranty provision being recorded for possible maintenance and claim issues within a prescribed period. For the nine months ended December 31, 2021, the Company recorded a warranty expense recovery of $4,853 (2020 – expense of $1,407,420) related to the estimated expectation of warranty costs.

Expenses for the three months ended December 31, 2021, were $4,324,649 as compared to $4,386,278 for the three months ended December 31, 2020. Management and technical consulting fees decreased due to lower sales and were comprised of fees paid to third parties for business development efforts, advisory services, as well as amounts paid to the directors of the Company. Professional fee decreased due to less contract and acquisition work. For the three months ended December 31, 2021, the Company recorded a warranty expense of $16,795 (2020 - $160,125) related to the estimated expectation of warranty costs.

Our financial results for the three and nine months ended December 31, 2021 and 2020 are summarized as follows:

	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2021			2020			2021			2020
Revenues	$	2,642,184		$	4,658,466		$	5,535,004		$	42,128,892
Cost of goods sold	$	1,328,338		$	3,625,204		$	3,137,247		$	25,515,248

Gross Profit	$	1,313,846		$	1,033,262		$	2,397,757		$	16,613,644

Expenses
Advertising and promotion	$	170,870		$	152,172		$	488,088		$	510,748
Amortization of intangible assets	$	396,539		$	389,703		$	1,178,217		$	1,169,039
Bad debts expense	$	21,012		$	–		$	21,012		$	–
Depreciation	$	52,519		$	47,807		$	152,062		$	144,457
Foreign exchange loss	$	34,791		$	(41,959	)	$	86,369		$	2,577
Lease expense	$	117,350		$	93,910		$	360,717		$	342,077
Management and technical consulting	$	1,026,808		$	1,238,962		$	3,072,262		$	9,583,143
Office and miscellaneous	$	525,009		$	460,338		$	1,318,839		$	1,396,263
Professional fees	$	390,866		$	601,790		$	1,338,544		$	1,494,425
Research and development	$	–		$	–		$	–		$	4,368
Salaries and wages	$	1,234,243		$	1,187,967		$	4,029,737		$	4,510,241
Transfer agent and filing fees	$	91,865		$	(34,007	)	$	253,088		$	106,758
Travel and accommodation	$	249,338		$	129,470		$	473,953		$	302,040
Warranty costs	$	16,795		$	160,125		$	(4,853	)	$	1,407,420

Total expenses	$	4,328,005		$	4,386,278		$	12,768,035		$	20,973,556

Other income (expense)
Gain on derecognition of subsidiary and termination of lease	$	–		$	–		$	–		$	242,193
Gain (loss) on change in fair value of derivative liability	$	–		$	(50,869	)	$	–		$	(1,306	)
Gain on reduction of acquisition costs of subsidiary	$	–		$	–		$	–		$	3,240,250
Financing interest income	$	85,889		$	247,253		$	378,840		$	548,543
Gain (loss) on change in fair value of derivative liability	$	(53,198	)	$	(24,015	)	$	47,534		$	(41,725	)

Net Income (Loss)	$	(2,981,468	)	$	(3,180,647	)	$	(9,943,904	)	$	(371,957	)

Liquidity and Capital Resources

Working Capital

	December 31, 2021			March 31, 2021
Current Assets	$	23,050,745		$	41,228,286
Current Liabilities	$	32,509,427		$	41,180,588

Working Capital (Deficiency)	$	(9,458,683	)	$	47,698

Cash Flows

	Nine Months Ended December 31, 2021			Nine Months Ended December 31, 2020
Net Cash Used in Operating Activities	$	(13,610,996	)	$	(5,937,101	)
Net Cash Used in Investing Activities	$	(49,540	)	$	(85,683	)
Net Cash Provided by (Used in) Financing Activities	$	(99,504	)	$	1,750
Effect of Exchange Rate Changes on Cash	$	121,391		$	73,182

Net Change in Cash and Cash Equivalents	$	(13,638,649	)	$	(5,947,852	)

As of December 31, 2021, we had $9,797,768 in cash and cash equivalent, $23,050,745 in total current assets, $32,509,427 in total current liabilities and a working capital deficit of $9,458,683 compared to working capital of $47,698 as at March 31, 2021. The Company’s working capital reduced as less revenue was recognized from marine scrubbers and paydown of accounts payable. In addition, the Company’s contract assets, contract liabilities, and accruals change from period to period, depending on the status of equipment deliveries, customer receipts and payments to third party manufacturers.

During the nine months ended December 31, 2021, we used $13,610,996 in operating activities, whereas we used $5,937,101 from operating activities for the nine months period ended December 31, 2020. The negative operating cash flow for the nine months ended December 31, 2020, mainly resulted from reduction in revenue.

During the nine months ended December 31, 2021, we used $49,540 in investing activities, whereas we used $85,683 in investing activities during the nine months ended December 31, 2020. Our investing activities for the nine months ended December 31, 2021, were primarily related to additions of equipment.

During the nine months ended December 31, 2021, we used $99,504 in financing activities, whereas we received $1,750 in financing activities for the nine months ended December 31, 2020. Our financing activities for the nine months ended December 31, 2021, were related to stock option exercise.

Anticipated Cash Requirements

The Company is developing a battery energy storage system “BESS” facility in the UK. At the date of filing the 10Q, there are no contractual commitments to proceed since the preconditions required to achieve financial close have not yet been reached. To part-fund the project equity, the Company is currently negotiating a subordinated debt facility which is anticipated to be concluded contemporaneously with the financial close.

Our cash requirement estimates may change significantly depending on the nature of our business activities and our ability to raise capital from our shareholders or other sources.

We currently have office locations in the United States, Canada, United Kingdom, China, Hong Kong, Spain and Australia. We have hired staff in various regions and rely heavily upon the use of contractors and consultants. Our general and administrative expenses for the year will consist primarily of technical consultants, management, salaries and wages, professional fees, transfer agent fees, bank and interest charges and general office expenses. The professional fees relate to matters such as contract review, business acquisitions, regulatory filings, patent maintenance, and general legal, accounting and auditing fees.

Should we require additional funding over the next twelve months, we would intend to raise new cash requirements from private placements, shareholder loans or possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time, we do not have a commitment from any broker-dealer to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable to us.

As of December 31, 2021, we had $9,797,768 cash on hand. Our realized and anticipated profits derived from sales of ENVI marine units plus anticipated sales of products and services in our new Batteries and Solar businesses are expected to fund our planned expenditure levels. After careful consideration we believe current operations, anticipated deliveries and expected profit from such deliveries to be sufficient to cover expected cash operating expenses over the next 12 months.

Going Concern

Our financial statements for the quarter ended December 31, 2021, have been prepared on a going concern basis.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Critical Accounting Policies

Use of Estimates

The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of property and equipment and intangible assets, contract assets and liabilities associated with revenue contracts in progress, contingent consideration on asset acquisition, warranty accruals, going concern, and deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Intangible Assets

Intangible assets are stated at cost less accumulated amortization and are comprised of patents, customer relationships, plant designs, and software licensing. The patents, which were acquired in 2013, are being amortized on a straight-line over the estimated useful life of 17 years. The other intangible assets, which were acquired in December 2019, are being amortized according to the following table. Intangible assets are reviewed annually for impairment.

Patents		17 years straight-line
Customer relationships		6 years straight-line
Plant designs		6 years straight-line
Software licensing		10 years straight-line

Impairment of Long-lived Assets

Our company reviews long-lived assets such as property and equipment and intangible assets with finite useful lives for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset.

Revenue Recognition

To date, the Company has derived revenue from the sale of emission control equipment and related services as well as providing design and engineering services for Concentrated Solar Power.

Irrespective of the line of business described above, revenue is recognized when control of products or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those promised products or services.

The Company determines revenue recognition through the following five steps:

●

identification of the contract, or contracts, with a customer;

●

identification of the performance obligations in the contract;

●

determination of the transaction price;

●

allocation of the transaction price to the performance obligations in the contract; and

●

recognition of revenue when, or as, performance obligations are satisfied.

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

As our contracts with customers include multiple performance obligations, judgment is required to determine whether performance obligations specified in these contracts are distinct and should be accounted for as separate revenue transactions for recognition purposes. For such arrangements, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are generally determined based on the prices charged to customers or using expected cost-plus margin.

In the case of settlement agreement with customers where no continued performance obligation is required, the Company recognizes revenue based on consideration settled according to the agreement.

Contracts signed with one customer has a significant financing component. The Company provides design, production, and installation services of scrubber units to this customer. 20% of the contract price is payable at least 6 calendar months prior to the dry dock date. The remaining 80% is payable in 24 equal monthly instalments starting at the end of the calendar month following the installation date on a vessel-by-vessel basis. As 80% of the contract price is payable after the last performance obligation towards the scrubber, a significant financing component is separated from revenue and interest income at 5.4% is recorded when payments are received from the customer.

Accounts Receivable

Accounts receivables consist of trade receivables arising in the normal course of business. The Company establishes an allowance for doubtful accounts that reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on known troubled accounts, historical experience, age, financial information that is publicly accessible and other currently available evidence.

Financial Instruments and Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company’s financial instruments consist principally of cash, short term investments, accounts receivable, lease receivable, amounts due from and to related parties, accounts payable and accrued liabilities, and operating lease liability. The recorded values of all financial instruments are at amortized cost which approximate their current fair values because of their nature and respective maturity dates or durations.

Stock-based compensation

The Company records share-based payment transactions for acquiring goods and services from employees and nonemployees in accordance with ASC 718, Compensation – Stock Compensation, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are measured at grant-date fair value of the equity instruments issued.

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period. The majority of the Company’s awards vest upon issuance.

Subsequent to the adoption of ASU 2018-07 - Improvements to Nonemployee Share-Based Payment Accounting, the accounting for employee and non-employee stock options is now aligned.

Contract Liabilities and Contract Assets

Contractual arrangements with customers for the sale of a scrubber unit generally provide for deposits and instalments through the procurement and design phases of equipment manufacturing. Amounts received from customers, which are not yet recorded as revenues under the Company’s revenue recognition policy are presented as contract liabilities.

Similarly, contractual arrangements with suppliers and manufacturers normally involved with the manufacturing of scrubber units may require advances and deposits at various stages of the manufacturing process. Payments to our manufacturing partners are recorded as contract assets until the equipment is manufactured to specifications and accepted by the customer.

The Company presents the contract liabilities and contract assets on its balance sheet when one of the parties to the revenue contract has performed before the other.

Warranty Provision

The Company reserves a 2% warranty provision on the completion of a contract following the commissioning of marine scrubbers, there being a number of milestone-based stage payments. The specific terms and conditions of those warranties vary depending upon the product sold and geography of sale. The Company’s product warranties generally start from the delivery date and continue for up to twelve to twenty-four months. The Company provides warranties to customers for the design, materials, and installation of scrubber units. The Company has a back-to-back manufacturing guarantee from its major supplier, which covers materials, production, and installation. Factors that affect the Company’s warranty obligation include product failure rates, anticipated hours of product operations and costs of repair or replacement in correcting product failures. These factors are estimates that may change based on new information that becomes available each period. Similarly, the Company also accrues the estimated costs to address reliability repairs on products no longer in warranty when, in the Company’s judgment, and in accordance with a specific plan developed by the Company, it is prudent to provide such repairs. The Company intends to assess the adequacy of recorded warranty liabilities quarterly and adjusts the liability as necessary.

Lease

Leases classified as operating leases, where the Company is the lessee, are recorded as lease liabilities based on the present value of minimum lease payments over the lease term, discounted using the lessor’s rate implicit in the lease for each individual lease arrangement or the Company’s incremental borrowing rate, if the lessor’s implicit rate is not readily determinable. Corresponding right-of-use assets are recognized consisting of the lease liabilities, initial direct costs and any lease incentive payments. Lease liabilities are drawn down as lease payments are made and right-of-use assets are depreciated over the term of the lease. Operating lease expenses are recognized over the term of the lease, consisting of interest accrued on the lease liability and depreciation of the right-of-use asset.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and chief financial officer (principal financial officer and principal accounting officer), as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Our company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Because of its inherent limitations, 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.

Under the supervision and with the participation of management, including our Chief Executive Officer (our principal executive officer) and chief financial officer (principal financial officer and principal accounting officer), our company conducted an evaluation of the effectiveness of our company’s internal control over financial reporting as of December 31, 2021 using the criteria established in “Internal Control - Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation.

For the year-ended March 31, 2021, the Company assessed that there was a material weakness in the internal control over financial reporting which had resulted from not having an audit committee in place for the full financial year. The Company established an audit committee in March 2021 and it had its inaugural meeting on March 25, 2021 and since then has been fully-functioning and involved in accordance with its charter in overseeing the financial reporting and audit processes. Due to the implementation of this over-arching control, management has concluded that the Company has maintained effective internal control over financial reporting as of December 31, 2021 based on the criteria established in Internal Control – Integrated Framework issued by COSO.

Changes in Internal Control over Financial Reporting

There has been no significant change in the Company’s internal control over financial reporting during the quarter ended December 31, 2021, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II– OTHER INFORMATION

Item 1. Legal Proceedings

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors

As a “smaller reporting company” we are not required to provide the information required by this Item.

Item 2. Unregistered Sales of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number		Description
(2)		Plan of Acquisition, Reorganization, Arrangement Liquidation or Succession
2.1		Assignment and Share Transfer Agreement dated June 14, 2012 between our company, Pacific Green Technologies Limited and Pacific Green Group Limited (incorporated by reference to our Registration Statement on Form 10 filed on July 3, 2012)
(3)		Articles of Incorporation and Bylaws
3.1		Articles of Incorporation filed on July 3, 2012 (incorporated by reference to our Registration Statement on Form 10 filed on July 3, 2012)
3.2		Certificate of Amendment filed on August 15, 1995 (incorporated by reference to our Registration Statement on Form 10 filed on July 3, 2012)
3.3		Certificate of Amendment filed on August 5, 1998 (incorporated by reference to our Registration Statement on Form 10 filed on July 3, 2012)
3.4		Certificate of Amendment filed on October 15, 2002 (incorporated by reference to our Registration Statement on Form 10 filed on July 3, 2012)
3.5		Certificate of Amendment filed on May 8, 2006 (incorporated by reference to our Registration Statement on Form 10 filed on July 3, 2012)
3.6		Certificate of Amendment filed on May 29, 2012 (incorporated by reference to our Registration Statement on Form 10 filed on July 3, 2012)
3.7		Bylaws filed on July 3, 2012 (incorporated by reference to our Registration Statement on Form 10 filed on July 3, 2012)
3.8		Certificate of Amendment filed on November 30, 2012 (incorporated by reference to our Current Report on Form 8-K filed on December 11, 2012)
(4)		Instruments Defining the Rights of Security Holders, Including Indentures
4.1		Share Certificate relating to shares held by our company in the Ordinary Share Capital of Peterborough Renewable Energy Limited (incorporated by reference to our Current Report on Form 8-K filed on December 12, 2013)
(10)		Material Contracts
10.1		Consulting Agreement dated May 1, 2010 between our company and Sichel Limited (incorporated by reference to our Registration Statement on Form 10, filed on July 3, 2012)
10.2		Representation Agreement dated June 7, 2010 between Pacific Green Group Limited and EnviroTechnologies, Inc. (incorporated by reference to our Registration Statement on Form 10, filed on July 3, 2012)
10.3		Peterborough Agreement dated October 5, 2011 between EnviroResolutions, Inc., Peterborough Renewable Energy Limited and Green Energy Parks Limited (incorporated by reference to our Registration Statement on Form 10, filed on July 3, 2012)
10.4		Promissory Note dated June 2012 between our company and Pacific Green Group Limited (incorporated by reference to our Registration Statement on Form 10, filed on July 3, 2012)
10.5		Assignment and Share Transfer Agreement dated June 14, 2012 between our company, Pacific Green Technologies Limited and Pacific Green Group Limited (incorporated by reference to our Registration Statement on Form 10, filed on July 3, 2012)
10.6		Non-Executive Director Agreement dated December 18, 2012 between our company and Neil Carmichael (incorporated by reference to our Current Report on Form 8-K filed on December 19, 2012)

Exhibit Number		Description
10.7		Supplemental Agreement dated March 5, 2013 between EnviroResolutions, Inc., Peterborough Renewable Energy Limited and Green Energy Parks Limited (incorporated by reference to our Annual Report on Form 10-K filed on July 1, 2013)
10.8		Supplemental Agreement dated March 5, 2013 between our company, EnviroTechnologies Inc. and EnviroResolutions Inc. (incorporated by reference to our Current Report on Form 8-K filed on March 13, 2013)
10.9		Form of Share Exchange Agreement dated April 3, 2013 between our company and Shareholders of EnviroTechnologies Inc. (incorporated by reference to our Current Report on Form 8-K filed on April 8, 2013)
10.10		Form of Share Exchange Agreement dated April 25, 2013 between our company and Shareholders of EnviroTechnologies Inc. (incorporated by reference to our Current Report on Form 8-K filed on April 30, 2013)
10.11		Stock Purchase Agreement dated May 16, 2013 between our company and Shareholders of Pacific Green Energy Parks (incorporated by reference to our Current Report on Form 8-K/A filed on June 3, 2013)
10.12		Debt Settlement Agreement dated May 17, 2013 between our company, EnviroResolutions, Inc. and EnviroTechnologies, Inc. (incorporated by reference to our Current Report on Form 8-K/A filed on June 3, 2013)
10.13		Form of Share Exchange Agreement between our company and Shareholders of EnviroTechnologies, Inc. (incorporated by reference to our Current Report on Form 8-K filed on August 9, 2013)
10.14		Form of Share Exchange Agreement between our company and Shareholders of EnviroTechnologies, Inc. (incorporated by reference to our Current Report on Form 8-K filed on August 30, 2013)
10.15		Agreement dated September 26, 2013 between our company and Andrew Jolly (incorporated by reference to our Current Report on Form 8-K filed on October 3, 2013)
10.16		Form of Share Exchange Agreement between our company and Shareholders of EnviroTechnologies, Inc. (incorporated by reference to our Current Report on Form 8-K filed on October 22, 2013)
10.17		Agreement dated October 22, 2013 between our company and Chris Williams (incorporated by reference to our Current Report on Form 8-K filed on December 5, 2013)
10.18		Form of Subscription Agreement between our company and the subscribers (incorporated by reference to our Current Report on Form 8-K filed on December 24, 2013)
10.19		Form of Share Exchange Agreement between our company and certain shareholders of EnviroTechnologies, Inc. (incorporated by reference to our Current Report on Form 8-K filed on December 27, 2013)
10.20		Agreement dated January 27, 2014 between our company and Pöyry Management Consulting (UK) Limited (incorporated by reference to our Quarterly Report on Form 10-Q filed on February 19, 2014)
10.21		Form of Subscription Agreement between our company and the subscribers (incorporated by reference to our Current Report on Form 8-K filed on March 11, 2014)
10.22		Loan Agreement between our company and Intrawest Overseas Limited dated May 27, 2014 (incorporated by reference to our Quarterly Report on Form 10-Q filed on August 19, 2014)
10.23		Put Option Agreement between our company and Intrawest Overseas Limited dated May 27, 2014 (incorporated by reference to our Quarterly Report on Form 10-Q filed on August 19, 2014)
10.24		Investor Relations Agreement dated September 22, 2015 between Pacific Green Technologies Inc. and Midam Ventures, LLC (incorporated by reference to our Current Report on Form 8-K filed on December 8, 2015).
10.25		Investor Relations Agreement dated October 24, 2015 between Pacific Green Technologies Inc. and Red Rock Marketing Media, Inc. (incorporated by reference to our Current Report on Form 8-K filed on December 21, 2015)
10.26		Convertible Note dated November 10, 2015 issued to Tangiers Investment Group, LLC (incorporated by reference to our Current Report on Form 8-K filed on November 24, 2015).
10.27		Commercial Joint Venture Agreement between PowerChina SPEM Company Limited and Pacific Green Technologies China Limited dated November 17, 2015 (incorporated by reference to our Current Report on Form 8-K filed on December 21, 2015).

Exhibit Number		Description
(14)		Code of Ethics, Whistle-Blower Policy, and Insider Trading Policy
14.1		Code of Ethics and Business Conduct (incorporated by reference to our Annual Report on Form 10-K filed on June 29, 2021)
14.2		Whistle-Blower Policy (incorporated by reference to our Annual Report on Form 10-K filed on June 29, 2021)
14.3		Insider Trading Policy (incorporated by reference to our Annual Report on Form 10-K filed on June 29, 2021)
(21)		Subsidiaries of the Registrant
21.1		Pacific Green Technologies Limited, a United Kingdom corporation (wholly owned);
		Pacific Green Energy Parks Limited, a British Virgin Islands corporation (wholly owned);
		Energy Park Sutton Bridge, a United Kingdom corporation (wholly owned by Pacific Green Energy Parks Limited).
(31)		Rule 13a-14 (d)/15d-14d) Certifications
31.1*		Section 302 Certification by the Principal Executive Officer
31.2*		Section 302 Certification by the Principal Financial Officer and Principal Accounting Officer
(32)		Section 1350 Certifications
32.1*		Section 906 Certification by the Principal Executive Officer
32.2*		Section 906 Certification by the Principal Financial Officer and Principal Accounting Officer
(99)		Additional Exhibits
99.1		Peterborough Renewable Energy Limited Directors’ Report and Financial Statements for the period ended December 31, 2012 (incorporated by reference to our Current Report on Form 8-K filed on December 12, 2013)
101*		Interactive Data Files
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PACIFIC GREEN TECHNOLOGIES INC.
	(Registrant)

Dated: February 14, 2022	By:	/s/ Scott Poulter
		Scott Poulter
		Chief Executive Officer and Director
		(Principal Executive Officer)

Dated: February 14, 2022	By:	/s/ Richard Fraser-Smith
		Richard Fraser-Smith
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: February 14, 2022	By:	/s/ Scott Poulter
		Scott Poulter
		Chief Executive Officer and Director
		(Principal Executive Officer)

Dated: February 14, 2022	By:	/s/ Richard Fraser-Smith
		Richard Fraser-Smith
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)