Pacific Green Technologies Inc. - Quarter Report: 2023 June (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 June 30, 2023

☐ 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.

49,970,724 common shares issued and outstanding as of August 14, 2023.

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		12
ITEM 1.	LEGAL PROCEEDINGS	12
ITEM 1A.	RISK FACTORS	12
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES	12
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	12
ITEM 4.	MINE SAFETY DISCLOSURES	12
ITEM 5.	OTHER INFORMATION	12
ITEM 6.	EXHIBITS	12

PART I – FINANCIAL INF3ORMATION

Item 1. Financial Statements

Our unaudited condensed consolidated interim financial statements for the three months ended June 30, 2023 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

June 30, 2023

(Expressed in U.S. dollars)

(unaudited)

	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–5

Notes to the Condensed Consolidated Interim Financial Statements	F–6

F-1

PACIFIC GREEN TECHNOLOGIES INC.

Condensed Consolidated Interim Balance Sheets

(Expressed in U.S. dollars)

(unaudited)

	June 30, 2023 $			March 31, 2023 $

ASSETS

Cash and cash equivalents		8,268,995			1,160,358
Short-term investments and amounts in escrow (Note 3)		–			56,483
Accounts receivable, net of allowance for doubtful accounts of $28,733 and $97,640 at June 30, 2023 and March 31, 2023, respectively		1,327,538			886,663
Other receivables, net of allowance for doubtful accounts of $nil and $3,951 at June 30, 2023 and March 31, 2023, respectively		27,356			359,461
Accrued revenue (Note 11)		515,294			504,766
Prepaid expenses and parts inventory		811,541			325,788
Prepaid manufacturing costs (Note 11)		565,284			463,815
Total Current Assets		11,516,008			3,757,334

Asset held for sale (Note 4)		–			18,569,060
Project under development (Note 4)		522,293			39,970
Property and equipment (Note 5)		778,145			849,209
Intangible assets (Note 6)		6,452,739			6,706,484
Right of use asset		258,925			350,429
Security deposits and other advances		218,958			293,680
Total Assets		19,747,068			30,566,166

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Liabilities held for sale (Note 4)		285,111			–
Accounts payable and accrued liabilities (Note 12)		4,822,089			3,388,733
Warranty provision (Note 15)		443,300			580,530
Contract liabilities (Note 10)		9,935,889			8,751,125
Loans payable (Note 14)		–			2,459,146
Current portion of lease obligations		46,543			145,437
Due to related parties (Note 16)		259,773			213,020
Total Current Liabilities		15,792,705			15,537,991

Other long-term obligation		65,906			127,974
Long-term operating lease obligation		31,876			84,621
Total Liabilities		15,890,487			15,750,586

Stockholders’ Equity

Preferred stock, 10,000,000 shares authorized, $0.001 par value nil and nil shares issued and outstanding at June 30, 2023 and March 31, 2023, respectively		–			–
Common stock, 500,000,000 shares authorized, $0.001 par value 49,970,724 and 47,276,886 shares issued and outstanding at June 30, 2023 and March 31, 2023, respectively		49,971			47,277
Additional paid-in capital		94,517,998			93,107,946
Accumulated other comprehensive income		3,099,993			2,944,086
Deficit		(93,662,668	)		(96,847,650	)

Total stockholders’ equity before treasury stock		4,005,294			(748,341	)

Treasury stock, at cost, nil shares and 56,162 shares at June 30, 2023 and March 31, 2023, respectively		–			(99,754	)

Total Stockholders’ Equity		4,005,294			(848,095	)

Noncontrolling interest (Note 9)		(148,713	)		15,663,675

Total Equity		3,856,581			14,815,580

Total Liabilities and Stockholders’ Equity		19,747,068			30,566,166

Nature of Operations (Note 1)

Commitments (Note 19)

(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)

(Expressed in U.S. dollars)

(unaudited)

	Three Months Ended June 30, 2023 $			Three Months Ended June 30, 2022 $

Sales (Note 10)
Products		–			1,655,158
Services		1,188,838			368,718
Total Revenues		1,188,838			2,023,876
Cost of goods sold (Note 10)
Products		191,856			987,207
Services		1,025,907			241,336
Total Cost of goods sold		1,217,763			1,228,543
Gross (loss) / profit		(28,925	)		795,333

Expenses
Advertising and promotion		104,150			143,267
Amortization of intangible assets (Note 6)		679			688
Bad Debts Expense (recovery)		11,477			–
Depreciation (Note 5)		37,120			53,584
Foreign exchange loss		812,372			497,696
Management and technical consulting		5,231,250			989,084
Operating lease expense (Note 19)		123,923			109,737
Office and miscellaneous		433,494			462,769
Professional fees		36,014			287,025
Research and development		32,197			13,772
Salaries and wage expenses		897,008			982,914
Transfer agent and filing fees		15,734			13,754
Travel and accommodation		119,358			190,767
Warranty and related (income) / expense (Note 15)		(35,320	)		181,600
Total expenses		7,819,456			3,926,657
(Loss) before other income (expense)		(7,848,381	)		(3,131,324	)
Other income (expense)
Financing interest income		1,039			46,269
Gain on derecognition of a subsidiary		12,119,097			–
Interest (expense) and other		(1,308,970	)		(38,351	)
Total other income		10,811,166			7,918

Net income /(loss) for the period before noncontrolling interest		2,962,785			(3,123,406	)

Net (loss) /income attributable to noncontrolling interest (Note 9)		(325,454	)		135,824

Net income /(loss) for the period		3,288,239			(3,259,230	)

Other comprehensive income

Foreign currency translation gain /(loss)		155,907			(384,835	)

Comprehensive income/(loss) for the period		3,444,146			(3,644,065	)
Net earnings / (loss) per share, basic and diluted		0.06			(0.07	)
Net earnings / (loss) per share, diluted		0.06			(0.07	)
Weighted average number of shares outstanding, basic¹		47,654,627			47,339,386
Weighted average number of shares outstanding, diluted		47,654,627			47,339,386

(1)	The period ended June 30, 2023, includes 210,000 (2022 – 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

(Expressed in U.S. dollars)

(unaudited)

	Common stock				Additional Paid-in		Accumulated Other Comprehensive			Treasury			Noncontrolling					Stockholders’
	Shares #		Amount $		Capital $		Income $			Stock $			Interest $		Deficit $			Equity $
Balance, March 31, 2022		47,026,886		47,027		92,429,203		2,035,666			(99,754	)		10,361,701		(85,530,306	)		19,243,537

Fair value of options granted		–		–		17,718		–			–			–		–			17,718
Noncontrolling interest		–		–		–		–			–			67,571		–			67,571
Foreign exchange translation gain		–		–		–		(384,835	)		–			–		–			(384,835	)
Net (loss) for the period		–		–		–		–			–			–		(3,259,230	)		(3,259,230	)

Balance June 30, 2022		47,026,886		47,027		92,446,921		1,650,831			(99,754	)		10,429,272		(88,789,536	)		15,684,761

	Common stock						Additional Paid-in			Accumulated Other Comprehensive		Treasury			Noncontrolling						Stockholders’
	Shares #			Amount $			Capital $			Income $		Stock $			Interest $			Deficit $			Equity $
Balance, March 31, 2023		47,276,886			47,277			93,107,946			2,944,086		(99,754	)		15,663,675			(96,847,650	)		14,815,580
Shares issued for employee services		2,750,000			2750			1,509,750														1,512,500
Cancellation of treasury stock		(56,162	)		(56	)		(99,698	)		–		99,754			–			–			–
Elimination of Noncontrolling interest		–			–			–			–		–			(15,590,191	)		–			(15,590,191	)
Transfer		–			–			–			–		–			103,257			(103,257	)		–
Foreign exchange translation gain/ (loss)		–			–			–			155,907		–			–			–			155,907
Net (loss) for the period		–			–			–			–		–			(325,454	)		3,288,239			2,962,785

Balance June 30, 2023		49,970,724			49,971			94,517,998			3,099,993		–			(148,713	)		(93,662,668	)		3,856,581

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

F-4

PACIFIC GREEN TECHNOLOGIES INC.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in U.S. dollars)

(unaudited)

	Three Months Ended June 30, 2023			Three Months Ended June 30, 2022
	$			$
Operating Activities
Net income / (loss) for the period		3,288,239			(3,259,230	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of intangible assets (Note 6)		253,473			220,055
Bad debt expense/ (recovery)		11,477			–
Depreciation (Note 5)		37,120			53,584
Fair value of stock options granted		–			17,718
Financing interest		1,020,815			(46,269	)
(Gain)/ loss on unrealized foreign exchange		(6,196	)		737,833
Operating lease expense		70,971			109,737
Other adjustments relating to disposal of subsidiary		(682,917	)		–
Gain on disposal of REP and BEP1		(12,119,097	)		–
Share based payments		1,512,500			–

Changes in operating assets and liabilities:
Short-term investments and amounts held in trust		56,483			(450,152	)
Accounts receivable and other receivables		(1,195,285	)		12,406,327
Accrued revenue		(10,528	)		219,558
Prepaid expenses and parts inventory		(615,048	)		(666,321	)
Security deposit		60,602			35,851
Lease payments		(160,561	)		(235,502	)
Prepaid manufacturing costs		(101,469	)		(40,907	)
Accounts payable and accrued liabilities		1,380,452			(3,237,082	)
Warranty provision		(137,230	)		65,845
Contract liabilities		1,184,764			302,036
Due to related parties		46,753			78,946
Net Cash (Used in) / Provided by Operating Activities		(6,104,682	)		6,312,027

Investing Activities
Additions of property and equipment		(3,215	)		(9,052	)
Projects under development		(7,709,269	)		(6,969,934	)
Proceeds from disposal of subsidiaries		13,978,850			–

Net Cash Provided by / (Used in) Investing Activities		6,266,366			(6,978,986	)

Financing Activities
Loans Paid - Principal		(2,359,654	)		–
Loans Paid – Interest		(479,919	)		–
Long term obligations – Disposal of debt through sale of assets (Note 8)		9,517,372			–
Net Cash Provided by Financing Activities		6,677,799			–

Effect of Foreign Exchange Rate Changes on Cash		199,535			(1,121,995	)
Change in Cash and Cash Equivalents		7,039,018			(1,788,954	)
Cash and Cash Equivalents, Beginning of Period		1,273,738			6,286,468
Cash and Cash Equivalents, End of Period		8,312,756			4,497,514

Cash and Cash Equivalent comprises:
Cash and Cash Equivalent		8,268,995			4,497,514
Cash classified as available for sale		43,761			–
		8,312,756			4,497,514

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

F-5

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(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.

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, 2023. 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-6

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

2.	Significant Accounting Policies

(a)

Basis of Presentation

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

Pacific Green Innoergy Technologies Ltd. (“Innoergy”) (Formerly Innoergy Ltd.)		Wholly-owned subsidiary
Pacific Green Marine Technologies Group Inc. (“PGMG”)		Wholly-owned subsidiary
Pacific Green Marine Technologies Inc. (“PGMT US”)		Wholly-owned subsidiary of PGMG
Pacific Green Technologies (UK) Ltd. (Formerly Pacific Green Marine Technologies Ltd.) (“PGTU”)		Wholly-owned subsidiary of PGMG
Pacific Green Technologies (Canada) Inc. (“PGT Can”) (Formerly Pacific Green Marine Technologies Inc.)		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)		Dissolved, December 21, 2022
Pacific Green Solar Technologies Inc. (“PGST”)		Wholly-owned subsidiary
Pacific Green Corporate Development Inc. (“PGCD”) (Formerly Pacific Green Hydrogen Technologies Inc.)		Dissolved, December 21, 2022
Pacific Green Wind Technologies Inc (“PGWT”)		Dissolved, December 21, 2022
Pacific Green Technologies International Ltd. (“PGTIL”)		Wholly-owned subsidiary
Pacific Green Technologies Asia Ltd.(“PGTA”)		Wholly-owned subsidiary of PGTIL
Pacific Green Technologies Engineering Services Limited (Formerly Pacific Green Technologies China Ltd. (“PGTESL”)		Wholly-owned subsidiary of PGTA
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 Technologies (Australia) Pty Ltd. (“PGTAPL”)		Wholly-owned subsidiary of PGEP
Pacific Green Energy Storage (UK) Ltd. (“PGESU”) (Formerly Pacific Green Marine Technologies Trading Ltd.)		Wholly-owned subsidiary of PGEP
Pacific Green Energy Parks (UK) Ltd. (“PGEPU”)		Wholly-owned subsidiary of PGEP
Pacific Green Battery Energy Parks 2 Ltd. (“PGBEP2”)		Wholly-owned subsidiary of PGEPU
Sheaf Energy Ltd. (“Sheaf”)		Wholly-owned subsidiary of PGBEP2
Pacific Green Portland West Pty Ltd. (“PGPW”)		Wholly-owned subsidiary of PGTAPL
Pacific Green Portland East Pty Ltd. (“PGPE”)		Wholly-owned subsidiary of PGTAPL
Pacific Green Energy Park Portland Pty Ltd. (“PGEPP”)		Wholly-owned subsidiary of PGTAPL
Pacific Green Energy Parks Australia Pty Ltd. (“PGEPA”)		Wholly-owned subsidiary of PGTAPL
Pacific Green Energy Park Limestone Coast North Pty Ltd. (“PGEPLCN”)		Wholly-owned subsidiary of PGTAPL
Pacific Green Energy Park Limestone Coast West Pty Ltd. (“PGEPLCW”)		Wholly-owned subsidiary of PGTAPL
Pacific Green Limestone Coast Pty Ltd. (“PGLC”)		Wholly-owned subsidiary of PGTAPL
Pacific Green Battery Energy Parks 1 Ltd. (“PGBEP1”)		Wholly-owned subsidiary until June 26, 2023. Operations were consolidated until disposal date
Richborough Energy Park Ltd. (“Richborough”)		Wholly-owned subsidiary until June 26, 2023. Operations were consolidated until disposal date

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

F-7

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(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 calculated an effect of $28,000 upon adoption of this guidance on April 1, 2023. Given the immaterial nature of the effect, the adoption was booked as an expense in the current period statement of income rather than a cumulative effect through retained earnings.

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 June 30, 2023, the Company has $nil (March 31, 2023 - $56,483) Guaranteed Investment Certificate (“GIC”) held as security against a corporate credit card. The GIC bore interest at 0.5% per annum and matures on December 13, 2023. The account was closed on May 30, 2023.

At June 30, 2023, the Company’s solicitor is holding $nil (March 31, 2023 – $nil) as all the proceeds under customer contracts has been released after satisfying performance obligations.

4.	Assets held for Sale

At June 30 2023, the Company reallocated $285,111 of liabilities related to the BESS projects for PGBEP2 and Sheaf, to Assets held for Sale as the result of the agreement with JLL.

To clarify, the Assets held for Sale fulfilled the requirements on March 17, 2023, when all the criteria were satisfied.

F-8

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

4.	Assets held for Sale (continued)

As at June 30, 2023 the Company was in an exclusive negotiation with a potential buyer of Sheaf Energy Limited.

		June 30, 2023			March 31, 2023

Cash			43,761			113,380
Prepaid expenses, parts inventory, and advances			–			4,454
Other receivables			66,835			61,576
Projects under development			10,258,377			46,674,258
Security Deposits & Other Advances			88,370			495,602
Rights of use asset			–			2,302,049
Accounts payable and accrued liabilities			(111,740	)		(638,156	)
Loans payable			(10,630,714	)		(10,312,906	)
Long term loan payable			–			(17,771,173	)
Long-term operating lease obligation			–			(2,360,024	)
(Liabilities) /Assets held for Sale	Total		(285,111	)		18,569,060

After the amount has been reallocated to Assets held for Sale the account “Projects under development” shows a total of $522,293 which is split between $53,648 related to the capitalization of FOWE (Fuel Oil Water Emulsification) development and $468,645 related to capitalization of BESS project in Australia.

5.	Property and Equipment

	Cost $		Accumulated depreciation $			June 30, 2023 Net carrying value $		March 31, 2023 Net carrying value $

Building		900,617		(247,425	)		653,192		708,979
Furniture and equipment		375,429		(252,729	)		122,699		137,352
Computer equipment		15,101		(14,342	)		759		885
Leasehold improvements		9,963		(8,469	)		1,495		1,993

Total		1,301,110		(522,965	)		778,145		849,209

The Company recorded $37,120 in depreciation expense on property and equipment for the three months ended June 30, 2023 (2022 – $53,584).

F-9

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

6.	Intangible Assets

	Cost $		Accumulated amortization $			Cumulative impairment $			June 30, 2023 Net carrying value $		March 31, 2023 Net carrying value $

Patents and technical information		36,340,057		(9,434,674	)		(20,457,256	)		6,448,127		6,700,921
Software licensing		11,216		(6,604	)		–			4,612		5,563
Total		36,351,273		(9,441,278	)		(20,457,256	)		6,452,739		6,706,484

The Company recorded $253,473 of amortization expense on intangible assets for the three months ended June 30, 2023 (2022 – $220,055).

The Company has allocated $252,794 (2022 - $219,367) of amortization of patents and technical information to cost of goods sold. The amount remaining in amortization expense is $679 (2022 - $688).

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

	$

2024		694,953
2025		948,697
2026		946,220
2027		946,018
2028		946,018
Thereafter		1,970,833

Total		6,452,739

F-10

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

7.	Acquisition of Sheaf Energy Ltd.

(a)

Acquisition of Sheaf Energy Ltd

On December 6, 2022, the Company acquired all the issued and outstanding stock of Sheaf Energy Ltd., a United Kingdom company in the business of battery energy storage systems. The purchase consideration included cash payments of a deposit of $415,855 (£373,500) made on July 26, 2021 and $8,710,145 (£7,126,500) made on December 15, 2022.

Total purchase consideration was therefore $9,126,000 (£7,500,000). The value attributed to the identifiable assets acquired and liabilities assumed are net working capital of $0, and project under development of $9,126,000 (£7,500,000).

(b)

Potential sale of Sheaf Energy Ltd.

On January 26, 2023, the Company entered into an agreement with Jones Lang LaSalle Limited (“JLL”) for JLL to act as a broker for the sale of the 249MW Battery Storage Project within Sheaf Energy Limited.

As at June 30, 2023 the Company was in an exclusive negotiation with a potential buyer of Sheaf Energy Limited.

8.	Disposal of Subsidiaries (REP & PGBEP1)

On June 9, 2023, PGES (UK), a subsidiary of the Company, entered into a sale and purchase agreement (“SPA”), jointly with Green Power Reserves Ltd. (“GPR”) with Sosteneo Fund 1 Holdco Sarl (“Buyer”) to sell the shares of PGBEP 1 to the Buyer. PGBEP 1 is 50% owned by PGES (UK) as a controlling interest subsidiary, while GPR owns the remaining 50% nonredeemable noncontrolling interest. The disposal became unconditional on June 26, 2023.

The purchase price paid by the Buyer to PGES (UK) and GPR consisted of £29.9 million ($37.4 million) in initial consideration and an additional £15.1 million ($18.9 million) in performance milestone payments upon successful completion and operations of the BESS projects. The Company does not have a history of completing these types of BESS projects and does not have the information needed to reasonably estimate whether or not performance milestones will be met, accordingly any gain related to these milestone payments will be recorded in the period the consideration is determined to be realizable.

As a result of the sale, the Company recognized a net gain on disposal of $12.1million during the quarter ended June 30, 2023. The sale of PGBEP 1 did not represent a strategic shift that would have a major effect on the Company’s operations or financial results, therefore PGBEP 1 is not presented as a discontinued operation. The net income of PGBEP 1 is included in the consolidated statement of operations through the June 26, 2023, disposal date. The assets, liabilities and equity (including non-controlling interest) of PGBEP 1 were deconsolidated effective June 26, 2023.

F-11

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

8.	Disposal of Subsidiaries (REP & PGBEP1) (continued)

The Company also incurred £0.3 million ($0.4 million) of legal fees and £0.4 million ($0.5 million) of broker fees related to the sale.

The gain on sale of PGBEP 1 shares is calculated as follows:

	GBP		FX		USD
Consideration received (A)		11,258,370		1.2519		14,094,907

Net assets:
Cash						116,057
Projects under development						43,642,826
Other assets						3,992,999
Long term AP and accruals						(24,830,942	)
Other liabilities & Non-controlling interest						(23,406,419	)
Total (B)						(485,479	)

Initial Investment in PGBEP (C)						2,461,289

Gain (A)-(B)-(C)						12,119,097

In addition to the derecognition of the balances sold and recognition of the gain on sale of subsidiary, as discussed above, the SPA also includes certain contingent assets and liabilities which have not been recorded in the statement of financial position due to their remote nature. Contingent assets of £15.1 million ($18.9 million) relate to performance milestone payments as discussed above. Contingent liabilities relate to potential liquidated damages for each day that REP 1 and REP 2 are late in achieving energization target dates. The daily amounts are £12,500 ($15,650) and £ 7,500 ($9,390) for REP 1 and REP 2 respectively, up to a maximum of £7.7 million ($9.6 million). Management have noted that liquidated damages under the SPA have been invoked, effective from August 1, 2023 as disclosed in Note 21(b).

9.	Noncontrolling Interest

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.

Details of the carrying amount of the noncontrolling interests are as follows:

	June 30, 2023 $			March 31, 2023 $

Non-redeemable noncontrolling interest		–			16,140,339
Net income attributable to noncontrolling interest (BESS)		–			(354,987	)
Net income attributable to noncontrolling interest (JV)		(148,713	)		(121,677	)
Non-controlling interest		(148,713	)		15,663,675

During the period June 30, 2023, Net income attributable to noncontrolling interest was ($325, 454) split as follows; Net income attributable to noncontrolling interest (BESS) was ($298,418) and ($27,036) was attributable to non-controlling interest (JV).

F-12

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

10.

Sales, Prepaid Manufacturing Costs, Cost of Goods Sold, and Contract Liabilities

The Company derives revenue from the sale of products and delivery of services. Revenue disaggregated by type for the three months ended June 30, 2023, and 2022 is as follows:

	Three Months Ended June 30, 2023 $		Three Months Ended June 30, 2022 $

Products		–		1,655,158
Services		1,188,838		368,718

Total		1,188,838		2,023,876

Revenue from services includes specific services provided to marine scrubber systems as well as design and engineering services for Concentrated Solar Power. Contracts for specific services provided to marine scrubber systems represent maintenance services. Contracts for Concentrated Solar Power include design and engineering services provided to clients. Revenue for service contracts is recognized as the services are provided.

Service revenue by type for the three months ended June 30, 2023, and 2022 is as follows:

	Three Months Ended June 30, 2023 $		Three Months Ended June 30, 2022 $

Specific services provided to marine scrubber systems		1,047,754		288,904
Design and engineering services for Concentrated Solar Power		141,084		79,814

Total		1,188,838		368,718

The Company has analyzed its sales contracts under ASC 606 and has identified that the percentage of completion of the contract often is not directly correlated with contractual billing terms with customers. As a result of the timing differences between customer sales invoices and percentage of completion of the contract, contractual assets and contractual liabilities have been recognized.

F-13

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

11.

Sales, Prepaid Manufacturing Costs, Cost of Goods Sold, and Contract Liabilities (continued)

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

	Accrued Revenue $			Prepaid Manufacturing Costs $			Sales (Cost of Goods Sold) $			Contract Liabilities $

Balance, March 31, 2022		531,947			38,010						(8,143,109	)

Customer receipts and receivables		–			–			–			(5,325,921	)
Scrubber sales recognized in revenue								4,717,905			4,717,905
Payments and accruals under contracts		(27,181	)		4,202,264			–			–
Cost of goods sold recognized in earnings		–			(3,776,459	)		(3,776,459	)		–

Balance, March 31, 2023		504,766			463,815						(8,751,125	)

Customer receipts and receivables		–			–			–			(1,184,764	)
Payments and accruals under contracts		10,528			293,324			–			–
Cost of goods sold recognized in earnings		–			(191,855	)		(191,855	)		–

Balance, June 30, 2023		515,294			565,284						(9,935,889	)

Cost of goods sold for the period ended June 30, 2023 and 2022 is comprised as follows:

	Three Months Ended June 30, 2023 $			Three Months Ended June 30, 2022 $

Scrubber (accrual reduction) /costs recognized		(90,267	)		623,166
Salaries and wages		121,049			62,379
Amortization of intangibles		252,794			219,366
Commission type costs		25,853			82,296
Design and engineering services for CSP		58,764			98,968
Specific services provided to marine scrubber systems		849,570			142,368

Total		1,217,763			1,228,543

As of June 30, 2023, Contract liabilities included $8,038,674 (March 31, 2023 - $8,038,674) aggregate cash receipts from one customer relating to thirteen vessels.

F-14

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

12.

Accounts payable and accrued liabilities

	June 30, 2023 $		March 31, 2023 $

Accounts payable		2,791,167		692,526
Accrued liabilities		1,677,205		2,349,083
Other liabilities		125,596		127,973
Payroll liabilities		228,121		219,151
Total short-term accounts payable and accrued liabilities		4,822,089		3,388,733

Balance, end of period		4,822,089		3,388,733

13.

Loans Payable

On June 16, 2022, the Company signed a Facilities Agreement with Close Leasing Limited, for a total of £28.25 million ($34.90 million) for the Richborough project. The Facilities Agreement, governed by English law, is secured by debentures containing fixed and floating charges entered into by one of the Company’s subsidiaries, Richborough Energy Park Limited and its immediate parent Pacific Green Battery Energy Parks 1 Limited, as well as a debt service reserve guarantee entered into by the Company. The Facilities Agreement comprises a development facility at 4.5% above bank base rate until December 31, 2023 at which point it will be reclassified as a 5-year term loan on a 10-year amortization profile, until maturity on December 31, 2028. The term loan will bear interest at 4.5% above bank base rate for 20% of the balance, and a fixed rate of 7.173% for the 5-year period on the remaining 80% of the balance. There is also a revolving credit facility of up to £1.19 million ($1.47 million) available until March 31, 2024. The loan was disposed along with Richborough Energy Park Limited on June 26, 2023.

On November 5, 2022, the Company signed an unsecured Loan Agreement with a related party, Alexander Group & Co. Pty Ltd, for a total of $123,690 (£100,000) to partially fund the acquisition of Sheaf Energy Ltd. This constitutes a loan facility bearing interest at 20% per annum until the repayment date of February 4, 2023. On February 7, 2023, the original agreement was extended to August 31, 2023. Upon repayment of the loan, a minimum repayment fee of 20% will be due and payable. At March 31, 2023, repayment fee accrued of $12,162 (£9,833). The loan principal and repayment fee were paid in full on June 20, 2023.

On November 5, 2022, the Company signed an unsecured Loan Agreement with Cherryoak Investments Pty Ltd, for a total of $123,690 (£100,000) to partially fund the acquisition of Sheaf Energy Ltd. This constitutes a loan facility bearing interest at 20% per annum until the repayment date of February 3, 2023, after which point interest shall accrue at a rate 2% above the Bank of England base rate. Upon repayment of the loan, a minimum repayment fee of 20% will be due and payable. The loan principal and repayment fee were paid in full on February 2, 2023.

On November 5, 2022, the Company signed an unsecured Loan Agreement with a related party, D&L Milne Pty Ltd, for a total of $123,690 (£100,000) to partially fund the acquisition of Sheaf Energy Ltd. This constitutes a loan facility bearing interest at 20% per annum until the repayment date of February 4, 2023. On February 7, 2023, the original agreement was extended to August 31, 2023. Upon repayment of the loan, a minimum repayment fee of 20% will be due and payable. At March 31, 2023, repayment fee accrued of $12,162 (£9,833). The loan principal and repayment fee were paid in full on June 20, 2023.

F-15

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

13.

Loans Payable (continued)

On November 5, 2022, the Company signed an unsecured Loan Agreement with a related party, Gerstle Consulting Pty Ltd, for a total of $123,690 (£100,000) to partially fund the acquisition of Sheaf Energy Ltd. This constitutes a loan facility bearing interest at 20% per annum until the repayment date of February 4, 2023. On February 7, 2023, the original agreement was extended to August 31, 2023. Upon repayment of the loan, a minimum repayment fee of 20% will be due and payable. At March 31, 2023, repayment fee accrued of $12,162 (£9,833). The loan principal and repayment fee were paid in full on June 20, 2023.

On November 7, 2022, the Company signed an unsecured Loan Agreement with a related party, Wahnarn 2 Pty Ltd, for a total of $123,690 (£100,000) to partially fund the acquisition of Sheaf Energy Ltd. This constitutes a loan facility bearing interest at 20% per annum until the repayment date of February 4, 2023. On February 7, 2023, the original agreement was extended to August 31, 2023. Upon repayment of the loan, a minimum repayment fee of 20% will be due and payable. At March 31, 2023, repayment fee accrued of $12,077 (£9,764). The loan principal and repayment fee were paid in full on June 20, 2023.

On November 8, 2022, the Company signed an unsecured Loan Agreement with a related party, Distributed Generation LLC, for a total of $226,000 (£182,714) to partially fund the acquisition of Sheaf Energy Ltd. This constitutes a loan facility bearing interest at 20% per annum until the repayment date of February 7, 2023. On February 7, 2023, the original agreement was extended to August 31, 2023. Upon repayment of the loan, a minimum repayment fee of 20% will be due and payable. At March 31, 2023, repayment fee accrued of $22,338 (£18,060). The loan principal and repayment fee were paid in full on June 21, 2023.

On December 15, 2022, the Company signed a Loan Agreement with Sheaf Storage Limited, for a total of $9,261,789 (£7,500,000) for the acquisition of Sheaf Energy Ltd. The loan is secured on a share pledge over the entire share capital of Sheaf Energy Limited. This constitutes a loan facility bearing no interest until the repayment date of September 15, 2023, at which point interest accrues at 22%. Upon repayment of the loan, a minimum repayment fee of 20% will be due and payable. Upon the sale of Sheaf Energy Ltd, the lender (Sheaf Storage Limited) is entitled to 8% of the net equity proceeds received by the Company.

The Company entered into five separate loan agreements under English law with five independent third party lenders: $803,985 (£650,000), $309,225 (£250,000), $247,380 (£200,000) and $154,612 (£125,000) each dated March 9, 2023 and $123,690 (£100,000) dated March 28, 2023. The loans are identical, except for the lenders’ names and date of Agreement. The loans do not bear interest but instead have a “Repayment Fee” being 20% of the loan principal. The Repayment Fee is payable in full at the point the loan principal is repaid. The “Longstop Date” is defined as October 31, 2023 though should the Company enter into a Liquidity Event yielding at least $6.2 million (£5 million) before then, the loans are repayable in full at that earlier date. Upon repayment of the loan(s) the lender(s) can elect to convert 50% of the amount repaid to the equivalent value of ordinary shares in the Company at the Repayment Conversion Strike Price (defined as the Company’s average share price on the 10 business days before and after the Repayment Date). Should the Company default on the loan(s) the lender(s) can elect to convert up to 100% of the amounts outstanding to the equivalent value of ordinary shares in the Company at the Default Conversion Strike Price (defined as 0.7 x the Company’s average share price on the 10 business days before and after the Event of Default). The loan principal and repayment fee for all five loans were paid in full on June 21, 2023.

F-16

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

14.

Loans Payable (continued)

	June 30, 2023 $		March 31, 2023 $

Loans payable (*)		–		1,667,484
Related Party Loan		–		791,662
Balance, end of period		–		2,459,146

(*)

The amount related to loans payable is the balance after $10.6 million has been reallocated to Assets held for Sale (see Note 4).

15.

Warranty costs

During the three months ended June 30, 2023, the Company recorded a non-cash warranty recovery of $35,320 comprising of $23,500 credited to warranty provision on the commission of one vessel, offset by a recovery from a supplier of $58,820 debited to accounts payable and accrued liabilities, (March 31,2023 – non-cash warranty recovery of $625,664). 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 costs is shown below:

	June 30, 2023 $			March 31, 2023 $

Balance, beginning of period		580,530			865,451
Warranty expense / (recovery)		23,500			(625,664	)
Warranty (invoiced costs) / recovery		(160,730	)		340,743

Balance, end of period		443,300			580,530

16.

Related Party Transactions

(a)

As at June 30, 2023, the Company owed $259,773 to (March 31, 2023 – $213,020) 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 months ended June 30, 2023, the Company incurred $14,996 (2022 – $220,838) in commissions to companies controlled by a director of the Company.

(c)

During the three months ended June 30, 2023, the Company incurred $2,153,690 (2022 – $54,866) in consulting fees to a director, or companies controlled by a director of the Company. This includes $1,957,340 (2022 - $nil) bonus paid to a director, or companies controlled by a director of the Company.

(d)

During the three months ended June 30, 2023, the Company incurred $311,385 (2022 – $250,368) in consulting fees to a director, or companies controlled by a director of a Subsidiary of the Company.

F-17

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

17.

Stock Options

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, 2022		537,500			0.56		1.43		170,125

Granted		285,000			0.66		–		–

Forfeited		(337,500	)		0.18		––

Balance, March 31, 2023 and June 30, 2023, vested and exercisable		485,000			0.89		1.41		84,900	*

(*)	Value represents weighted average of those options in-the-money as at June 30, 2023.

Additional information regarding stock options outstanding as at June 30, 2023 is as follows:

Issued and Outstanding
Number of shares		Weighted average remaining contractual life (years)		Exercise price $

	25,000		0.55		1.03
	50,000		0.75		1.50
	25,000		1.55		0.90
	20,000		1.71		1.20
	40,000		1.71		1.20
	40,000		2.09		1.20
	10,000		1.25		0.01
	25,000		1.25		2.50
	25,000		1.25		3.75
	200,000		1.34		0.10
	25,000		2.64		0.50
	485,000

Unless otherwise noted, the Company estimates the fair value of its stock options using the Black-Scholes option pricing model, assuming no expected dividends.

F-18

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

18.

Segmented Information

The Company is located and operates in North America and its subsidiaries are primarily located and operating in Europe, Asia and Australia.

	June 30, 2023
	North America $		Europe $		Asia $		Total $

Property and equipment		4,580		119,614		653,951		778,145
Intangible Assets		6,448,127		–		4,612		6,452,739
Right of use assets		–		155,397		103,528		258,925

		6,452,707		275,011		762,091		7,489,809

	March 31, 2023
	North America $		Europe $		Asia $		Total $

Property and equipment		5,343		134,001		709,865		849,209
Intangible Assets		6,700,921		–		5,563		6,706,484
Right of use assets		–		226,860		123,569		350,429

		6,706,264		360,861		838,997		7,906,122

	North America $			Europe $			Asia $			Total $

Revenues by customer region		16,947			673,711			498,180			1,188,838
COGS by customer region		(16,272	)		(613,038	)		(588,452	)		(1,217,762	)
Gross Profit by customer region		675			60,673			(90,272	)		(28,924	)
GP% by customer region		4	%		9	%		(18	%)		(2	%)

For the three months ended June 30, 2023, 35% (2022 – 90%) of the Company’s revenues were derived from the largest customer.

F-19

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

19.

Commitments

(a)

The Company’s subsidiaries have entered into two long-term operating leases for office premises in London, United Kingdom and Shanghai, China. These lease assets are categorized as right of use assets under ASU No. 2016-02.

Long-term
premises lease

Lease
commencement

Lease
expiry

Term
(years)

Discount rate*

London, United Kingdom

April 1, 2019

December 25, 2023

3.75

4.50

Shanghai, China

March 1, 2020

May 31, 2025

5.25

4.65

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

Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As the Company’s operating lease does not provide an implicit rate, the discount rate used to determine the present value of the lease payments is the collateralized incremental borrowing rate based on the remaining lease term. The operating lease asset excludes lease incentives. The operating leases do not contain an option to extend or terminate the lease term at the Company’s discretion, therefore no probable renewal has been added to the expiry date when determining lease term. Operating lease expense is recognized on a straight-line basis over the lease term.

Lease cost for the three months are summarized as follows:

		June 30, 2023 $				June 30 2022 $
Operating lease expense *			123,923				109,737

*	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 fiscal years of the lease as follows:

	$
2024		37,352
2025		45,577
2026		–
2027		–
Thereafter		–
Total future minimum lease payments		82,929
Imputed interest		(4,510	)
Operating lease obligations		78,419

(b)

Neither party had funded the joint venture at March 31, 2022 and there had been no revenue and expense associated with it for the year ending March 31, 2022. Since April 1, 2022 the Company has paid in share capital and intercompany loans and accrued interest amounting to $675,083 to fund operational expenses to June 30, 2023.

F-20

PACIFIC GREEN TECHNOLOGIES INC.

Notes to the Condensed Consolidated Interim Financial Statements

June 30, 2023

(unaudited)

(Expressed in U.S. Dollars)

20.

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. The components of income before income taxes by U.S. and foreign jurisdictions were as follows:

	June 30, 2023 $			June 30, 2022 $

United States		(5,539,280	)		(2,113,373
Foreign		8,502,065			(1,010,033	)

Net loss before taxes		2,962,785			(3,123,406	)

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.

	June 30, 2023 $			June 30 2022 $

Net income (loss) before taxes		2,962,785			(3,123,406	)
Statutory tax rate		21	%		21	%

Expected income tax expense (recovery)		622,185			(655,915	)
Permanent differences and other		213,650			121,545
Foreign tax rate difference		318,709			(861	)
Change in valuation allowance		(1,154,544	)		535,231

Income tax provision		–			–

Current		–			–
Deferred		–			–

Income tax provision		–			–

At June 30, 2023, the Company is current with statutory corporate income tax filings. Certain of the amounts presented above are based on estimates and what management believes are prudent filing positions. The actual losses available could differ from these estimates upon assessment and review by taxation authorities. U.S. federal and state income tax returns filed by us remain subject to examination for income tax years 2013 and subsequent. Canadian federal and provincial income tax returns filed by us remain subject to examination for income tax years 2018 and subsequent. Income tax returns associated with our operations located in the United Kingdom and China are subject to examination for income tax years 2017 and subsequent.

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

The Company estimates that it has accumulated estimated net operating losses of approximately $18.9 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 approximately $7.5 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.

21.

Subsequent events

(a)

On July 3, 2023, the board of directors approved a performance-related bonus for Scott Poulter, Chief Executive Officer, which comprises 2,250,000 shares in the Company which are issuable immediately and $2,567,200 (£2,000,000) in cash, of which $1,797,040 (£1,400,000) is payable immediately and $770,160 (£600,000) payable pro rata with the remaining consideration of the Richborough sale.

(b)

The Richborough Energy Park project did not achieve the Interim Operation Notification (“ION”) milestone on August 1, 2023 as originally planned, which results in liquidated damages being invoked on a daily basis at a daily rate of £7,500 (approximately $9,525) until the matter is resolved. The project engineering team are focused on resolving the technical delay by performing software simulation studies on the entire generation facility, and fully expect the ION to be issued and enacted by National Grid during August 2023. The sum of the resultant liquidated damages will be set off against future milestone receipts payable by the Buyer (Sosteneo Fund 1 HoldCo Sarl) to the Company.

F-21

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

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

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

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

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

As used in this quarterly report and unless otherwise indicated, the terms “we”, “us”, “our”, the “Company”, and “our company” mean Pacific Green Technologies Inc., a Delaware corporation, and our wholly owned subsidiaries, (1) Pacific Green Innoergy Technologies Ltd., a United Kingdom company, (2) Pacific Green Marine Technologies Group Inc., a Delaware corporation, (3) Pacific Green Marine Technologies Inc., a Delaware corporation, (4) Pacific Green Technologies (UK) Ltd. (Formerly Pacific Green Marine Technologies Ltd.), a United Kingdom company, (5) Pacific Green Technologies (Middle East) Holdings Ltd., a United Arab Emirates company, (6) Pacific Green Technologies Arabia LLC, 70% owned, a Kingdom of Saudi Arabia company, (7) Pacific Green Marine Technologies (USA) Inc., a Delaware corporation (inactive), (8) Pacific Green Technologies (Canada) Inc. (Formerly Pacific Green Marine Technologies Inc.), a Canadian corporation, (9) Pacific Green Solar Technologies Inc., a Delaware corporation, (10) Pacific Green Corporate Development Inc. (formerly Pacific Green Hydrogen Technologies Inc.), a Delaware corporation, (11) Pacific Green Wind Technologies Inc., a Delaware corporation, (12) Pacific Green Technologies International Ltd., a British Virgin Islands company, (13) Pacific Green Technologies Asia Ltd., a Hong Kong company, (14) Pacific Green Technologies Engineering Services Limited (Formally Pacific Green Technologies China Ltd.), a Hong Kong company, (15) Pacific Green Technologies (Australia) Pty Ltd., an Australia company, (16) Pacific Green Technologies (Shanghai) Co. Ltd. (Formerly Shanghai Engin Digital Technology Co. Ltd.), a Chinese company, (17) Guangdong Northeast Power Engineering Design Co. Ltd., a Chinese company, (18) Pacific Green Energy Parks Inc., a Delaware corporation, (19) Pacific Green Energy Storage Technologies Inc., a Delaware corporation, (20) Pacific Green Energy Storage (UK) Ltd. (Formerly Pacific Green Marine Technologies Trading Ltd.), a United Kingdom company, (21) Pacific Green Portland West Pty Ltd., an Australian company, (22) Pacific Green Portland East Pty Ltd., an Australian company, (23) Pacific Green Energy Park Portland Pty Ltd., an Australian company, (24) Pacific Green Energy Parks Australian Pty Ltd., an Australian company, (25) Pacific Green Energy Park Limestone Coast North Pty Ltd., an Australian company, (26) Pacific Green Energy Park Limestone Coast West Pty Ltd., an Australian company, (27) Pacific Green Energy Park Limestone Pty Ltd., an Australian company, (28) Pacific Green Battery Energy Parks 2 Ltd., a United Kingdom company, (29) Sheaf Energy 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 sulfur dioxide as an acid gas. Testing has been conducted on diesel shipping to confirm the application of seawater as a neutralizing agent for sulfur 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 sulfur 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 sulfur dioxide removal in all industries emitting sulfur pollution. Furthermore, China consumes approximately one half of the world’s coal, but introduced measures designed to reduce energy and carbon intensity in its 12th 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 sulfur 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 diversified our business to provide turnkey and scalable end-to-end environmental and renewable technology solutions in the energy sector. Our technological platform now has three main divisions:

●

Emission Control Systems (“ECS”);

●

Concentrated Solar Power (“CSP”); and

●

Battery Energy Storage Systems (“BESS”);

In all the above areas, Pacific Green plans to execute this vision by a dual strategy of equipment sales and proactive infrastructure development and ownership, each is 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 included Osaka Gas Co. Ltd, in Japan, and Limejump Limited in the UK, a subsidiary of Shell plc. The acquisition underpins our entry into the BESS market;

●

on March 18, 2021, the Company acquired Richborough Energy Park Limited (“Richborough”), a BESS development project to deliver 99MW of energy in Kent, UK and subsequently sold the entity under the terms of a Sale and Purchase Agreement on June 26, 2023 (see Note 8); and

●

On December 6, 2022 the Company acquired Sheaf Energy Limited for $9,126,000 (£7,500,000) which will be developed into our second BESS 249MW facility project. The acquisition was funded with a secured loan from a third-party investor, Sheaf Storage Limited, which is repayable in September 2023 (or earlier if Sheaf Energy Limited is sold earlier) along with a repayment fee of 20%.

In support of this dual strategy, we have adopted a Human Resource Strategy that seeks to hire the best talent in the core areas of our business. At June 30, 2023, the Company employed approximately 45 staff excluding full time consultants and contractors across a network of offices around the world. Our hiring plan includes the addition of sales and project execution specialists.

Strategic Partnerships

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

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

Concentrated Solar Power (“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, with annual revenues of approximately USD$157 million, provides manufacturing of the solar field and molten salt tank services, and (3) PowerChina provides the EPC role worldwide.

Battery Energy Storage Systems (“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 Energy Limited (“TUPA”) to gain exclusive rights to 1.1GW of BESS projects in the UK. TUPA is a UK based company with expertise in planning, grid connections and land acquisition. The Company has to date executed 100MW in relation to the Richborough Energy Park project and 249MW in relation to the Sheaf Energy project. The framework agreement was terminated after the completion of the Sheaf Energy acquisition in December 2022.

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

Significant Events

On January 16, 2023, a postponement agreement with a major client, in which 13 marine scrubber units had been deferred, was extended from the original expiration date of February 9, 2023, to December 31, 2023.

On January 26, 2023, the Company entered into an agreement with Jones Lang LaSalle Ltd for the sale of the 99MW Battery Storage Project within Richborough Energy Parks, and the 249MW Battery Storage Project within Sheaf Energy Limited.

On February 6, 2023, 250,000 ordinary shares in the Company were issued to McClelland Management Inc. at a price of $0.73 as part of the consideration for intellectual property transferred from McClelland Management Inc. to the Company under the terms of an IP transfer deed dated January 4, 2023. A further 250,000 shares will be issued in January 2024 and 250,000 shares in January 2025.

On June 8, 2023, the Company approved the cancellation of 56,162 shares of Treasury stock it had previously repurchased during the year ended March 31, 2022 under an authorized share buy-back program

On June 9, 2023 Pacific Green Technologies, Inc. entered into a sale and purchase agreement to sell 100% of the shares in Pacific Green Battery Energy Parks 1 Limited (“PGBEP1”) to Sosteneo Fund 1 HoldCo S.à.r.l. for £74 million ($93 million). PGBEP1 is the holding company for 100% subsidiary, Richborough Energy Park Limited, Pacific Green’s 99MW battery energy storage system (“BESS”) at Richborough Energy Park (“REP”) which begins operations later this summer. Under the terms of the Agreement entered into, the consideration is payable pursuant to operational milestones related to the battery park as it connects to the grid and becomes operational. The buyer paid an advance of £20m upon signing of the Agreement, of which £7.1m was received by Pacific Green (before fees), the balance being received by the Company’s equity partner. On June 26, 2023 the transaction was formally completed and the buyer paid a further £9.9m, of which £4.2m was received by Pacific Green (before fees), the balance being received by the Company’s equity partner.

On June 9, 2023, the board of directors approved a performance-related bonus for Scott Poulter, Chief Executive Officer, which comprises 2,750,000 shares in the Company, $1,957,340 (£1,550,000) in cash and a 10% increase in salary backdated to April 1, 2023. The shares are issuable and cash payable immediately. The cash bonus was paid on June 15, 2023. The shares were issued on June 23, 2023.

On June 20 and 21, 2023 certain loans were repaid in full along with the repayment fee. These are detailed in Note 13.

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 June 30, 2023, and 2022.

Revenue for the three months ended June 30, 2023, was $1,188,838 versus $2,023,876 for the three months ended June 30, 2022. The Company’s revenues were mainly derived from the delivery obligations under service agreements and ad hoc aftersales.

During the three months ended June 30, 2023, the gross profit margin for products and services were negative nil (2022 – 40%) and 14% (2022 – 35%), respectively. The gross profit margin for products decreased significantly as there were no sales of scrubbers in the period. Overall, the gross profit margin for the quarter ended June 30, 2023, was approximately negative 2% (2022 – 39%).

Expenses for the three months ended June 30, 2023, were $7,819,456 as compared to $3,926,657 for the three months ended June 30, 2022. Management and technical consulting fees increased due to increased activity resulting from the sale of PGBEP 1 and REP in June 2023. Management and technical consulting fees were comprised of fees paid to our directors, officers and advisors for business development efforts and advisory services. Office-based costs, travel expenses, bonuses and professional fees also increased due to increased business activities. The impact of various international factors on foreign exchange rates caused fluctuations which saw the Company’s foreign exchange losses increase significantly.

The three months ended June 30, 2023, our company recorded a net profit of $3,288,239 ($0.06 per share) compared to net loss of $3,259,230 ($0.07 per share) for the three months ended June 30, 2022.

Our financial results for the three months ended June 30, 2023, and 2022 are summarized as follows:

	Three Months Ended
	June 30,
	2023 $			2022 $
Revenues
Products		–			1,655,158
Services		1,188,838			368,718
Total Revenues		1,188,838			2,023,876
Cost of goods sold
Products		191,856			987,207
Services		1,025,907			241,336
Total Cost of goods sold		1,217,763			1,228,543
Gross (loss) / profit		(28,925	)		795,333

Expenses
Advertising and promotion		104,150			143,267
Amortization of intangible assets		679			688
Bad Debts Expense (recovery)		11,477			–
Depreciation		37,120			53,584
Foreign exchange loss		812,372			497,696
Management and technical consulting		5,231,250			989,084
Operating lease expense		123,923			109,737
Office and miscellaneous expense		433,494			462,769
Professional fees		36,014			287,025
Research and development		32,197			13,772
Salaries and wages		897,008			982,914
Transfer agent and filing fees		15,734			13,754
Travel and accommodation		119,358			190,767
Warranty and related (income) / expense		(35,320	)		181,600
Total expenses		7,819,456			3,926,657

Other income (expense)
Financing interest income		1,039			46,269
Finance interest on loans		–			–
Gain on derecognition of a subsidiary		12,119,097			–
Interest (expense) and other		(1,308,970	)		(38,351	)
Net income /(loss) for the period before noncontrolling interest		2,962,785			(3,123,406	)
Net (loss) /income attributable to noncontrolling interest		(325,454	)		135,824
Net income /(loss) for the period		3,288,239			(3,259,230	)

Liquidity and Capital Resources

Working Capital

	June 30, 2023 $			March 31, 2023 $
Current Assets		11,516,008			3,757,334
Current Liabilities		15,792,705			15,537,991

Working Capital (Deficit)		(4,276,697	)		(11,780,657	)

Cash Flows

	June 30, 2023 $			June 30, 2022 $
Net Cash (Used in) / Provided by Operating Activities		(6,104,682	)		6,312,027
Net Cash Provided by/ (Used in) Investing Activities		6,266,366			(6,978,986	)
Net Cash Provided by Financing Activities		6,677,799			–
Effect of Exchange Rate Changes on Cash		199,535			(1,121,996	)

Net Change in Cash and Cash Equivalents		7,039,018			(5,012,730	)

As of June 30, 2023, we had $8,268,995 in cash and cash equivalents, $11,388,918 in total current assets, $15,665,615 in total current liabilities and a working capital deficit of $4,276,697 compared to working capital deficit of $11,780,657 as at March 31, 2023. The Company’s working capital deficit was reduced due to increased cash resulting mainly from the sale of Pacific Green Battery Energy Parks 1 Ltd and its subsidiary Richborough Energy Park Ltd.

During the three months ended June 30, 2023, we used $6,104,682 in operating activities in comparison to $6,312,027 generated from operating activities for the three months period ended June 30, 2022. The operating cash flow for the three months ended June 30, 2023, was mainly resulted from increased receivables and other operating expenses during the period.

During the three months ended June 30, 2023, we generated $6,266,366 in investing activities, whereas we used $6,978,986 in investing activities during the three months ended June 30, 2022. Our investing activities for the three months ended June 30, 2023, were primarily related to sales proceeds from the disposal of Pacific Green Battery Energy Parks 1 Ltd and its subsidiary Richborough Energy Park Ltd.

During the three months ended June 30, 2023, we generated $6,677,799 in financing activities, whereas we used $nil in financing activities during the three months ended June 30, 2022. Our financing activities for the three months ended June 30, 2023, were primarily related to additional loans in the period, which then formed part of the net liabilities used to derive the gain from the sale of the disposal of the subsidiary.

Anticipated Cash Requirements

On December 6, 2022 the Company acquired Sheaf Energy Limited for $9,126,000 (£7,500,000) which will be developed into our second BESS 250MW facility project. The acquisition was funded with a secured loan from a third party investor, Sheaf Storage Limited. We anticipate reaching financial close during the second half of 2023. We are funding our Sheaf project expenditure prior to financial close with cash proceeds from the sale in June 2023 of Pacific Green Battery Energy Parks 1 Ltd and its subsidiary Richborough Energy Park Ltd. These funds raised will also cover our normal operating expenditure over the next 12 months. We are currently negotiating with several parties to raise sufficient debt funding from third parties to cover development expenditure on our Australia energy park projects and other renewable energy opportunities.

As of June 30, 2023, we had $8,268,995 cash on hand. After careful consideration we believe current operations, anticipated deliveries and expected profit from such deliveries, sales of products in our Batteries business and the raising of short-term funds to be sufficient to cover expected cash operating expenses over the next 12 months.

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, Abu Dhabi, Kingdom of Saudi Arabia, and Australia. We have hired staff in various regions and rely heavily upon the use of contractors and consultants. Our general and administrative expenses for the period 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.

Going Concern

Our financial statements for the quarter ended June 30, 2023 have been prepared on a going concern basis.

The assessment of the liquidity and going concern requires the Company to make judgments about the existence of conditions or events that raise substantial doubt about the ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. This includes judgments about the Company’s future activities and the timing thereof and estimates of future cash flows. Significant assumptions used in the Company’s forecasted model of liquidity include forecasted sales, costs, and capital expenditures. Changes in the assumptions could have a material impact on the forecasted liquidity and going concern assessment.

Off-Balance Sheet Arrangements

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

Critical Accounting Estimates

The preparation of these consolidated financial statements in conformity with United States Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Our company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant judgments and uncertainties.

Impairment of Long-lived Assets

We review long-lived assets such as property and equipment and intangible assets with finite useful lives for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. The determination of whether impairment indicators exist requires significant judgment in evaluating underlying significant assumptions including expected sales contracts, operating costs, and current market value of assets. If an indication is identified, and the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the excess of the carrying amount over the fair value of the asset.

Revenue Recognition

We account for revenue under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”) using the five step approach. The most significant estimates and assumptions within the five-step approach are related to identification of performance obligations in the contract and the calculations inherent in the revenue recognition as or when performance obligations are satisfied.

Our marine scrubber sales contracts contain a single performance obligation satisfied over time, based on percentage of completion of the contract. The conclusion for a single performance obligation is based on management’s assessment of these contracts, whereby customers purchase the entire marine scrubber system and do not benefit from the separate components on their own. Revenue is recognized over time based on the percentage of completion of the contract, using the input method.

According to ASC 606-10-25-27, if the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date, revenue should be recognized over time. Our scrubber system is customized to each vessel at the detailed design level, so the performance under the contract does not create an asset with an alternative use. According to our contracts signed with customers under English law, the customers are contractually and legally obliged to pay for performance completed to date that covers cost plus a reasonable profit margin. Therefore, the revenue is recognized over time based on the input method and it is the change in cost of goods sold (using a percentage of costs to complete) that has driven the change in revenues. Significant estimates are involved in using the input method as it relates to estimation of total costs and overall gross margins, and any change in these factors could lead to a difference in timing or amount of revenue and profit.

Any changes to our conclusions around single or multiple performance obligations for either or products or services could result in a timing difference in our revenue recognition. For example, in 2022 we re-assessed our contracts for the sale of marine scrubbers and determined there was only one performance obligation, which had previously been recognized as three distinct performance obligations. As a result, we restated the March 31, 2021 financial statements, with adjustments to revenue, accrued revenue, and prepaid manufacturing costs. Additionally, we have one contract with a significant financing component, where assumptions and estimates are made to separate the financing from revenue and record interest. Any changes in the discount rate or payment schedules could impact the timing of revenue recognized.

Warranty Provision

The Company reserves a 2% warranty provision on the completion of a contract following the commissioning of marine scrubbers. The specific terms and conditions of those warranties vary depending upon the product sold and geography of sale. The Company’s product warranties generally start from the commissioning 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.

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

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act) of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Exchange Act as of June 30, 2023.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2023.

Management’s Report on Internal Control Over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). 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 U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2023, based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013 framework). Based on this evaluation our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2023, the Company has maintained effective internal control over financial reporting.

This Quarter Report on Form 10-Q does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting pursuant to an exemption for non-accelerated filers from the internal control audit requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002.

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 June 30, 2023, 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

(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
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: August 14, 2023	By:	/s/ Scott Poulter
		Scott Poulter
		Chief Executive Officer and Director
		(Principal Executive Officer)

Dated: August 14, 2023	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: August 14, 2023	By:	/s/ Scott Poulter
		Scott Poulter
		Chief Executive Officer and Director
		(Principal Executive Officer)

Dated: August 14, 2023	By:	/s/ Richard Fraser-Smith
		Richard Fraser-Smith
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)