UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
OR
For the fiscal year ended
OR
For the transition period from _______________ to _______________
OR
Date of event requiring this shell company report _______________
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(Exact name of Registrant specified in its charter)
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(Address of principal executive offices)
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
(Title of Class)
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Common Shares Without Par Value
(Title of Class)
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| Large Accelerated Filer ☐ | Accelerated Filer ☐ |
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Emerging Growth Company |
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Item 17 ☐ Item 18 ☐
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(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
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TABLE OF CONTENTS
Explanatory Note
GreenPower Motor Company Inc. ("GreenPower", "we", "our", "us", "the Company") is a Canadian issuer that is permitted to prepare this Annual Report on Form 20-F (this "Annual Report") pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in accordance with Canadian disclosure requirements, which are different from those of the United States. The Company is a "foreign private issuer" as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the Securities Act of 1933, as amended (the "Securities Act"). Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 thereunder. The Company's common shares are listed on the Nasdaq Stock Exchange (the "Nasdaq") under the trading symbol "GP" and on the Toronto Stock Exchange under the trading symbol "GPV".
All amounts presented are in United States dollars unless otherwise indicated.
In this Annual Report, references to "GreenPower", "we", "our", "us", "the Company" or similar terms refer to GreenPower Motor Company Inc. and our subsidiaries, on a consolidated basis.
Forward-Looking Statements
This Annual Report on Form 20-F may contain forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements in this Annual Report on Form 20-F may include, but are not limited to statements involving estimates, assumptions or judgements, and these statements may be identified by words such as "believe", "expect", "expectation", "aim", "achieve", "intend", "commit", "goal", "plan", "strive" and "objective", and similar expressions of future or conditional verbs such as "will", "may", "might", "should", "could" or "would". By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our expectations or conclusions will not prove to be accurate, that our assumptions may not be correct, and that our plans, goals, expectations and objectives will not be achieved. We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. These statements are only predictions and involve known and unknown risks, including the risks in the section entitled "Risk Factors", uncertainties and other factors, which may cause our company's or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.
Forward-looking statements are based on the reasonable assumptions, estimates, analysis and opinions made in light of our experience and our perception of trends, current conditions and expected developments, as well as other factors that we believe to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Management believes that the assumption and expectations reflected in such forward-looking statements are reasonable. Assumptions have been made regarding, among other things: the Company's ability to maintain projected production deliveries within certain timelines; expected expansion of the Company's production capacity; labor costs and material costs remaining consistent with the Company's current expectations; production of electric buses meeting customer expectations and at an expected cost; equipment operating as anticipated; there being no material variations in the current regulatory environment; the Company's ability to produce Buy America compliant vehicles; and the Company's ability to obtain financing as and when required and on reasonable terms. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used.
The Company faces risks that are discussed in Item 3.D "Risk Factors". In particular, without limiting the generality of the foregoing disclosure, the statements contained in Item 4.B - "Business Overview", Item 5 - "Operating and Financial Review and Prospects" and Item 11 - "Quantitative and Qualitative Disclosures About Market Risk" are inherently subject to a variety of risks and uncertainties that could cause actual results, performance or achievements to differ significantly. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States and Canada, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
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PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. Reserved
Not Applicable
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the offer and use of proceeds
Not applicable.
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D. Risk Factors
Risk Factors
An investment in our common shares involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this annual report in evaluating our company and our business before making an investment decision about our company. Our business, operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of these risks.
Risks Related to Our Business
We have not reached profitability and currently have negative operating cash flows
For the fiscal year ended March 31, 2024, we generated a loss of $18.3 million bringing our accumulated deficit to $79.0 million.
During the year ended March 31, 2024 we generated annual revenue of $39.3 million and expect significant increases in costs and expenses as we invest in expanding our production and operations. Even if we are successful in increasing revenues from sales of our products, we may be unable to achieve positive cash flow or profitability for a number of reasons, including but not limited to, an inability to control production costs, increases or inflation in our selling general and administrative expenses, and a reduction in our product sales price due to competitive or other factors. An inability to generate positive cash flow and profitability until we reach a sufficient level of sales with positive gross margins that cover operating expenses, or an inability to raise additional capital on reasonable terms, will adversely affect our viability as an operating business. Based on these factors, the Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern.
We operate in a capital-intensive industry and will require a significant amount of capital to continue operations
If the revenue from the sale of our electric vehicles is not sufficient to cover our cash requirements, we will need to raise additional funds through the sale of equity or other securities, or the issuance of additional debt. Financing may not be available at terms that are acceptable to us, if at all.
Our ability to obtain the necessary financing for our business is subject to a number of factors, including general market conditions and investor acceptance of our business plan. These factors may make the timing, amount, terms and conditions of such financing unattractive or unavailable to us. If we are unable to raise sufficient funds, we will have to significantly reduce our spending, delay or cancel our planned activities, or substantially change our current operations and plans in order to reduce our cost structure. Our competitors, some of which have raised or have access to significant capital, may be able to compete more effectively in our markets given their access to capital, if our access to capital does not improve or is further limited. We might not be able to obtain any funding, and we might not have sufficient resources to conduct our business as projected, both of which could mean that we would be forced to curtail or discontinue our operations.
There is uncertainty about our ability to continue as a "going concern"
There is substantial doubt about our ability to continue as a going concern. If we are unable to raise sufficient capital when needed, our business, financial condition and results of operations will be materially and adversely affected, and we will need to significantly modify our operational plans to continue as a going concern. If we are unable to continue as a going concern, we might have to liquidate our assets and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our consolidated financial statements. Our potential inability to continue as a going concern may materially adversely affect our share price and our ability to raise new capital or to enter into critical contractual relations with third parties.
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The reduction or elimination of government and economic incentives, funding approval or the delay in the timing of advancing funding that has been approved, in particular in the state of California, could have a material adverse effect on our business, financial condition, operating results and prospects.
Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives for electric vehicles ("EV's") may result in the diminished competitiveness of the alternative fuel vehicle industry generally or our electric vehicles in particular. This could materially and adversely affect the growth of the alternative fuel automobile markets and our business, prospects, financial condition and operating results.
Our vehicles are eligible for vouchers from specific government programs, including the Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project ("HVIP") from the California Air Resources Board ("CARB") in partnership with Calstart, the New Jersey Zero-Emission Incentive program ("NJZIP"), the New York Truck Voucher Incentive Program ("NYTVIP"), or the Specialty-Use Vehicle Incentive Program ("SUVI") funded by the Province of British Columbia, Canada. The ability for potential purchasers to receive funding from these programs is subject to the risk of the programs being funded by governments, and the risk of the delay in the timing of advancing funds to the specific programs. To the extent that program funding is not approved, or if the funding is approved but timing of advancing of funds is delayed, subject to cancellation, or otherwise uncertain, this could have a material adverse effect on our business, financial condition, operating results and prospects.
To date the majority of our electric vehicle sales have been in the state of California, in part due to subsidies and grants for electric vehicles and electric charging infrastructure available from the California state government. In some cases these grants or subsidies have covered the entire vehicle cost, and in many cases the grants or subsidies have reduced the net cost to our customers to a point that the vehicle is less expensive than purchasing a comparable diesel powered vehicle. Any reduction or elimination of the grants or incentives in the state of California would have a material negative impact on our business, financial condition, operating results and prospects.
We may in be involved in litigation or legal proceedings that are deemed to be material and may require recognition as a provision or a contingent liability on our financial statements.
We may in the future be involved in litigation or legal proceedings that are material and may require recognition as a provision or contingent liability on our consolidated financial statements. We have filed a civil claim against the prior CEO and a director of our company in the Province of British Columbia, and he has filed a response with a counterclaim for wrongful dismissal in the Province of British Columbia. He has also filed a similar claim in the state of California in regards to this matter, and this claim has been stayed pending the outcome of the claim in British Columbia. In addition, a company owned and controlled by a former employee who provided services to a subsidiary company of GreenPower until August 2013 filed a claim for breach of confidence against GreenPower in July 2020. During April 2023, we repossessed 27 EV Stars and 10 EV Star CC's which were previously on lease, after the leases were terminated following a notice of default that was not cured. In addition, we repossessed 1 EV Star from the same customer due to nonpayment. During May 2023, this customer filed a claim in the state of California against us and one of our subsidiaries to which we have filed a response. We do not expect the outcomes of our claims, or the claims filed against us, to be material, and as of the date of this Report the resolution of these claims, including the potential timing or financial impact of these claims is inherently uncertain. However, we may in the future determine that these claims become material or we may be subject to other claims that alone or in addition to other claims are considered to be material, and require recognition as a provision or contingent liability on our consolidated financial statements.
We may be materially adversely affected by cybersecurity risks
Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business. The Company has not experienced a cybersecurity incident and has therefore not been affected by its exposure to cybersecurity risks. However, our business and operations may be materially adversely affected in the event of computer system failures or security or breaches due to cyber-attacks or cyber intrusions, including ransomware, phishing attacks and other malicious intrusions.
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The majority of our manufacturing is currently contracted out to third party manufacturers and we are dependent on these manufacturers to operate competitively
We currently contract out the majority of the manufacturing of our vehicles to third party manufacturers in Asia, with final assembly performed by our employees in North America. As a result, we are dependent on third party manufacturers to manufacture our vehicles according to our specifications and quality, at a competitive cost and within agreed upon timeframes. If our chosen manufacturing vendors are unable or unwilling to perform these functions then our financial results and reputation may suffer, which may prevent us from being able to continue as a going concern. In addition, we are subject to inherent risks involved in shipping our vehicles from these primary manufacturers to our facilities in North America. During the shipping process our vehicles are subject to theft, loss or damage due to a number of factors, some of which we may be unable to insure cost-effectively, if at all.
Developments in alternative technologies or improvements in the internal combustion engine may materially adversely affect the demand for our electric vehicles
Significant developments in alternative technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. For example, fuel which is abundant and relatively inexpensive in North America, such as compressed natural gas, may emerge as consumers' preferred alternative to petroleum-based propulsion. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced electric vehicles, which could result in the loss of competitiveness of our vehicles, decreased revenue and a loss of market share to competitors.
If we are unable to keep up with advances in electric vehicle technology, we may suffer a decline in our competitive position
We may be unable to keep up with changes in electric vehicle technology and, as a result, may suffer a decline in our competitive position. Any failure to keep up with advances in electric vehicle technology would result in a decline in our competitive position which would materially and adversely affect our business, prospects, operating results and financial condition. Our research and development efforts may not be sufficient to adapt to changes in electric vehicle technology. As technologies change we plan to upgrade or adapt our vehicles and introduce new models to continue to provide vehicles with the latest technology. However, our vehicles may not compete effectively with alternative vehicles if we are not able to source and integrate the latest technology into our vehicles at a competitive price. For example, we do not manufacture battery cells or drive motors which makes us dependent upon suppliers of these products for our vehicles.
We may need to defend ourselves against intellectual property infringement claims, which may be time-consuming and could cause us to incur substantial costs.
Others, including our competitors, may hold or obtain patents, copyrights, trademarks or other proprietary rights that could prevent, limit or interfere with our ability to make, use, develop, sell or market our products and services, which could make it more difficult for us to operate our business. From time to time, the holders of such intellectual property rights may assert their rights and urge us to take licenses, and/or may bring suits alleging infringement or misappropriation of such rights. We may consider the entering into licensing agreements with respect to such rights, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur, and such licenses could significantly increase our operating expenses. In addition, if we are determined to have infringed upon a third party's intellectual property rights, we may be required to cease making, selling or incorporating certain components or intellectual property into the goods and services we offer, to pay substantial damages and/or license royalties, to redesign our products and services, and/or to establish and maintain alternative branding for our products and services. In the event that we were required to take one or more such actions, our business, prospects, operating results and financial condition could be materially adversely affected. In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention.
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We depend on certain key personnel, and our success will depend on our continued ability to retain and attract such qualified personnel
Our success depends on the efforts, abilities and continued service of our executive officers and management. A number of these key employees have significant experience in the electric vehicle industry, and valuable relationships with our suppliers, customers, and other industry participants. A loss of service from any one of these individuals may adversely affect our operations, and we may have difficulty or may be unable to locate and hire a suitable replacement. We have not obtained any "key person" insurance on any of our executives or managers.
We are subject to numerous environmental and health and safety laws and any breach of such laws may have a material adverse effect on our business and operating results
We are subject to numerous environmental and health and safety laws, including statutes, regulations, bylaws and other legal requirements. These laws relate to the generation, use, handling, storage, transportation and disposal of regulated substances, including hazardous substances (such as batteries), dangerous goods and waste, emissions or discharges into soil, water and air, including noise and odors (which could result in remediation obligations), and occupational health and safety matters, including indoor air quality. These legal requirements vary by location and can arise under federal, provincial, state or municipal laws. Any breach of such laws, regulations or requirements would have a material adverse effect on our company and its operating results.
Our vehicles are subject to motor vehicle standards and the failure to satisfy such mandated safety standards would have a material adverse effect on our business and operating results.
All vehicles sold must comply with federal, state and provincial motor vehicle safety standards. In both Canada and the United States vehicles that meet or exceed all federally mandated safety standards are certified under the federal regulations. In this regard, Canadian and U.S. motor vehicle safety standards are substantially the same. Rigorous testing and the use of approved materials and equipment are among the requirements for achieving federal certification. Failure by us to have our current or future electric vehicles satisfy motor vehicle standards would have a material adverse effect on our business and operating results.
If our vehicles fail to perform as expected, our ability to continue to develop, market and sell our electric vehicles could be harmed
Our vehicles may contain defects in design and manufacture that may cause them not to perform as expected or that may require repair. For example, our vehicles use technologically complex battery management software to operate. Given the inherent complexity of this software, it may contain defects and errors which would adversely impact the operation of our vehicles. While we have performed extensive testing of our vehicles, we currently have a limited frame of reference to evaluate the performance of our vehicles in the hands of our customers under a range of operating conditions.
We may not succeed in establishing, maintaining and strengthening the GreenPower brand, which would materially and adversely affect customer acceptance of our vehicles and components and our business, revenues and prospects.
Our business and prospects heavily depend on our ability to develop, maintain and strengthen the GreenPower brand. Any failure to develop, maintain and strengthen our brand may materially and adversely affect our ability to sell our planned electric vehicles. If we are not able to establish, maintain and strengthen our brand, we may lose the opportunity to expand our customer base. Promoting and positioning our brand will depend significantly on our ability to provide high quality electric vehicles and maintenance and repair services, and we have limited experience in these areas. In addition, we expect that our ability to develop, maintain and strengthen the GreenPower brand will also depend heavily on the success of our marketing efforts. To date we have limited experience with marketing activities as we have relied primarily on the internet, word of mouth and attendance at industry trade shows to promote our brand. To further promote our brand, we may be required to change our marketing practices, which could result in substantially increased advertising expenses. We operate in a competitive industry, and we may not be successful in building, maintaining and strengthening our brand. Many of our current and potential competitors, particularly automobile manufacturers headquartered in the United States, Japan and the European Union have greater name recognition, broader customer relationships and substantially greater marketing resources than we do. If we do not develop and maintain a strong brand, our business, prospects, financial condition and operating results will be materially and adversely impacted.
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We are dependent on our suppliers, many of which are single-source suppliers, and the inability of these suppliers to deliver necessary components of our products according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these components, could have a material adverse effect on our financial condition and operating results.
Our products contain numerous purchased parts which we source globally directly from suppliers, many of which are single-source suppliers, although we attempt to qualify and obtain components from multiple sources whenever feasible. Any significant increases in our production may require us to procure additional components in a short amount of time, and in the past we have also replaced certain suppliers because of their failure to provide components that met our quality control standards or our timing requirements. If any of our single source suppliers is unable to deliver components to us there is no assurance that we will be able to secure additional or alternate sources of supply for our components or develop our own replacements in a timely manner, if at all. If we encounter unexpected difficulties with key suppliers, and if we are unable to fill these needs from other suppliers, we could experience production delays and potential loss of access to important technology and parts for producing, servicing and supporting our products.
This limited, and in many cases single source, supply chain exposes us to multiple potential sources of delivery failure or component shortages for production of our products. Furthermore, unexpected changes in business conditions, materials pricing, labor issues, wars, governmental changes, and natural disasters could also affect our suppliers' ability to deliver components to us on a timely basis. The loss of any single or limited source supplier or the disruption in the supply of components from these suppliers could lead to product design changes and delays in product deliveries to our customers, which could hurt our relationships with our customers and result in negative publicity, damage to our brand and a material and adverse effect on our business, prospects, financial condition and operating results.
Changes in our supply chain may lead to an increased cost for our products. We have also experienced cost increases from certain of our suppliers in order to meet our quality targets and timelines as well as due to our design changes, and we may experience similar cost increases in the future. Certain suppliers have sought to renegotiate the terms of supply arrangements. Additionally, we are negotiating with existing suppliers for cost reductions and are seeking new and less expensive suppliers for certain parts. If we are unsuccessful in our efforts to control and reduce supplier costs, our operating results will suffer.
There is no assurance that our suppliers will be able to sustainably and timely meet our cost, quality and volume needs. Furthermore, if the scale of our vehicle production increases, we will need to accurately forecast, purchase, warehouse and transport to our manufacturing facilities components at much higher volumes. If we are unable to accurately match the timing and quantities of component purchases to our actual needs, or successfully manage our inventory to accommodate the increased complexity in our supply chain, we may incur unexpected production disruption, storage, transportation and write-off costs, which could have a material adverse effect on our financial condition and operating results.
If we fail to manage future growth effectively, we may not be able to market and sell our vehicles successfully.
Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition. We are expecting significant growth in sales, and are currently expanding our employees, facilities and infrastructure in order to accommodate this growth. Our future operating results depend to a large extent on our ability to manage this expansion and growth successfully. Risks that we face in undertaking this expansion include:
• training new personnel;
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• forecasting production and revenue;
• controlling expenses and investments in anticipation of expanded operations;
• establishing or expanding manufacturing, sales and service facilities;
• implementing and enhancing administrative infrastructure, systems and processes;
• addressing new markets; and
• establishing international operations.
We intend to continue to hire a number of additional personnel, including manufacturing personnel and service technicians for our electric vehicles. There is significant competition for individuals with experience manufacturing and servicing electric vehicles, and we may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business and prospects.
Our business may be adversely affected by labor and union activities.
Although none of our employees are currently represented by a labor union, it is common throughout the automobile industry for employees to belong to a union. Having a unionized workforce may result in higher employee costs and increased risk of work stoppages. Additionally, we are in the process of expanding our in-house manufacturing capabilities and increasing the number of employees in this area. If our employees engaged in manufacturing were to unionize, this may increase our future production costs and negatively impact our gross margins and financial results.
We also directly and indirectly depend upon other companies with unionized work forces, such as parts suppliers and trucking and freight companies, and work stoppages or strikes organized by such unions could have a material adverse impact on our business, financial condition or operating results. If a work stoppage occurs within our business, or in one of our key suppliers, it could delay the manufacture and sale of our electric vehicles and have a material adverse effect on our business, prospects, operating results and financial condition.
We may become subject to product liability or warranty claims, which could harm our financial condition and liquidity if we are not able to successfully defend or insure against such claims.
We may become subject to product liability or warranty claims, which could harm our business, prospects, operating results and financial condition. The automobile industry experiences significant product liability claims and we face inherent risk of exposure to claims in the event our vehicles do not perform as expected or malfunction resulting in personal injury or death. Our risks in this area are particularly pronounced given our vehicles have only been operating for a short period of time. A successful product liability claim against us could require us to pay a substantial monetary award. Moreover, a product liability claim could generate substantial negative publicity about our vehicles and business which would have a material adverse effect on our brand, business, prospects and operating results.
Global economic conditions could materially adversely impact demand for our products and services.
Our operations and performance depend significantly on economic conditions. Uncertainty about global economic conditions could result in customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our products and services and, accordingly, on our business, results of operations or financial condition.
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Goods imported to the U.S. from China are subject to significant import tariffs, which are expected to increase, and these tariffs negatively impact our financial performance, financial position, and financial results.
GreenPower sources components and parts to build its all-electric vehicles from suppliers globally, utilizes contract manufacturers located outside of North America for a portion of its all-electric vehicle production, and the importation of these parts, components and vehicles to North America are subject to tariffs which are planned to increase. Electric vehicles and certain parts and components used in the manufacture of electric vehicles that are imported from China to the United States are subject to tariffs currently, and recent announcements have stated that these tariffs could increase to over 100% by August 2024. GreenPower has suppliers and contract manufacturers located in China, and the increase in these tariffs will increase GreenPower's costs and negatively impact the financial results of the Company. While GreenPower's management is taking steps to mitigate the impact of planned tariff increases, including sourcing new manufacturers and contract manufacturers for certain products, this transition will take time, is subject to a number of risks, and GreenPower may not be able to mitigate the impact of any change in tariffs due to these risks.
We rely on global shipping for our vehicles that are produced at contract manufacturers, and for certain parts and components sourced from our global network of suppliers. We have experienced increased shipping costs and have experienced shipping constraints which increased our costs and prevented us from delivering vehicles to customers on a timely basis. A continuation or escalation of these trends may negatively impact our financial results and ability to grow our business
Shipping costs have grown significantly since the fall of 2020 due to a number of factors, including strong international trade growth, imbalances in global trade, port congestion, port closures, vessel delays and other factors. In addition, shipping costs are volatile, and are subject to sudden and significant changes from these same economic factors.
We rely on global shipping for vehicles that we produce at contract manufacturers, and for certain parts and components sourced from our global network of suppliers. We have experienced an increase in shipping costs and have experienced delays of deliveries of parts and components from our global suppliers, and on vehicles arriving from our contract manufacturers. While these delays and cost increases are not currently at a level that they have caused a material disruption or negative impact to our profitability, these delays and costs may increase to a point that they may negatively impact our financial results and ability to grow our business.
Our line of credit and loan facility contain covenant restrictions that may limit our ability to access funds on the line of credit and loan facility, or engage in other commercial activities.
The terms of our line of credit and loan facility contain, and future debt agreements we enter into may contain, covenant restrictions that limit our ability to incur additional debt or issue guarantees, create liens, and make certain dispositions of property or assets. As a result of these covenants, our ability to respond to changes in business and economic conditions and engage in beneficial transactions, including obtaining additional financing as needed, may be restricted. Furthermore, our failure to comply with our debt covenants could result in a default under our line of credit, which would permit the lender to demand repayment.
The demand for commercial zero-emission electric vehicles depends, in part, on the continuation of current trends resulting from historical dependence on fossil fuels. Extended periods of low diesel or other petroleum-based fuel prices could adversely affect demand for electric vehicles, which could adversely affect our business, prospects, financial condition and operating results.
We believe that much of the present and projected demand for commercial zero-emission electric vehicles results from concerns about volatility in the cost of petroleum-based fuel, the dependency of the United States on oil from unstable or hostile countries, government regulations and economic incentives promoting fuel efficiency and alternative forms of energy, as well as the belief that poor air quality and climate change results in part from the burning of fossil fuels. If the cost of petroleum-based fuel decreased significantly, or the long-term supply of oil in the United States improved, the government may eliminate or modify its regulations or economic incentives related to fuel efficiency and alternative forms of energy. If there is a change in the perception that the burning of fossil fuels does not negatively impact the environment, the demand for commercial zero-emission electric vehicles could be reduced, and our business and revenue may be harmed. Diesel and other petroleum-based fuel prices have been extremely volatile, and we believe this continuing volatility will persist. Lower diesel or other petroleum-based fuel prices over extended periods of time may lower the current perception in government and the private sector that cheaper, more readily available energy alternatives should be developed and produced. If diesel or other petroleum-based fuel prices remain at deflated levels for extended periods of time, the demand for commercial electric vehicles may decrease, which could have an adverse effect on our business, prospects, financial condition and operating results.
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We may be compelled to undertake product recalls.
Any product recall in the future may result in adverse publicity, damage to our brand and may adversely affect our business, prospects, operating results and financial condition. We may at various times, voluntarily or involuntarily, initiate a recall if any of our electric vehicle components prove to be defective. Such recalls, voluntary or involuntary, involve significant expense and diversion of management attention and other resources, which would adversely affect our brand image in our target markets and could adversely affect our business, prospects, financial condition and results of operations.
Security breaches and other disruptions to our information technology networks and systems could substantially interfere with our operations and could compromise the confidentiality of our proprietary information, notwithstanding the fact that no such breaches or disruptions have materially impacted us to date.
We rely upon information technology systems and networks, some of which are managed by third-parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities, including supply chain management, manufacturing, invoicing and collection of payments from our customers. Additionally, we collect and store sensitive data, including intellectual property, proprietary business information, the proprietary business information of our suppliers, as well as personally identifiable information of our employees, in data centers and on information technology systems. The secure operation of these information technology systems, and the processing and maintenance of this information, is critical to our business operations and strategy. Despite security measures and business continuity plans, our information technology systems and networks may be vulnerable to damage, disruptions or shutdowns due to attacks by hackers or breaches due to errors or malfeasance by employees, contractors and others who have access to our networks and systems, or other disruptions during the process of upgrading or replacing computer software or hardware, hardware failures, software errors, third-party service provider outages, power outages, computer viruses, telecommunication or utility failures or natural disasters or other catastrophic events. The occurrence of any of these events could compromise our systems and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, disrupt operations and reduce the competitive advantage we hope to derive from our investment in technology. Our insurance coverage may not be available or adequate to cover all the costs related to significant security attacks or disruptions resulting from such attacks.
Our electric vehicles make use of lithium-ion battery cells, which, if not appropriately managed and controlled, have occasionally been observed to catch fire or vent smoke and flames. If such events occur in our electric vehicles, we could face liability associated with our warranty, for damage or injury, adverse publicity and a potential safety recall, any of which would adversely affect our business, prospects, financial condition and operating results.
The battery packs in our electric vehicles use lithium-ion cells, which have been used for years in laptop computers and cell phones. Highly publicized incidents of laptop computers and cell phones bursting into flames have focused consumer attention on the safety of these cells. These events also have raised questions about the suitability of these lithium-ion cells for automotive applications. There can be no assurance that a field failure of our battery packs will not occur, which would damage the vehicle or lead to personal injury or death and may subject us to lawsuits. Furthermore, there is some risk of electrocution if individuals who attempt to repair battery packs on our vehicles do not follow applicable maintenance and repair protocols. Any such damage or injury would likely lead to adverse publicity and potentially a safety recall. Any such adverse publicity could adversely affect our business, prospects, financial condition and operating results.
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Risks Related to Our Company
It may be difficult for non-Canadian investors to obtain and enforce judgments against us because of our Canadian incorporation and presence.
The enforcement by investors of civil liabilities under the United States federal or state securities laws may be adversely affected by the fact that we are governed by the Business Corporations Act (British Columbia), that several of our officers and directors are residents of Canada and that all, or a substantial portion, of their assets and a portion of our assets are located outside the United States. It may not be possible for an investor to effect service of process within the United States on, or enforce judgments obtained in the United States courts against, us or certain of our directors and officers based upon the civil liability provisions of United States federal securities laws or the securities laws of any state of the United States.
In light of the above, there is doubt as to whether (i) a judgment of a United States court based solely upon the civil liability provisions of United States federal or state securities laws would be enforceable in Canada against us or our directors and officers and (ii) an original action could be brought in Canada (or otherwise outside the United States) against us or our directors and officers to enforce liabilities based solely upon United States federal or state securities laws.
We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common shares less attractive to investors.
We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the "JOBS Act". For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
We will cease to be an emerging growth company upon the earliest of:
• the last day of the fiscal year during which we have total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every five years by the Securities and Exchange Commission or more);
• the last day of our fiscal year following the fifth anniversary of the completion of our first sale of common equity securities pursuant to an effective registration statement under the Securities Act of 1933;
• the date on which we have, during the previous three-year period, issued more than $1,000,000,000 in non- convertible debt; or
• the date on which we are deemed to be a "large accelerated filer", as defined in Rule 12b-2 of the Securities Exchange Act of 1934.
We cannot predict if investors will find our common shares less attractive because we may rely on these exemptions. If some investors find our common shares less attractive as a result, there may be a less active trading market for our common shares and our share price may be more volatile.
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As a foreign private issuer, we are not subject to certain United States securities law disclosure requirements that apply to a domestic United States issuer, which may limit the information that would be publicly available to our shareholders.
As a foreign private issuer, we will be exempt from certain rules under the Securities Exchange Act of 1934 that impose disclosure requirements as well as procedural requirements for proxy solicitations under Section 14 of the Securities Exchange Act of 1934 if our common shares are registered pursuant to Section 12 of the Securities Exchange Act of 1934. In addition, our officers, directors and principal shareholders will be exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Securities Exchange Act of 1934 if our common shares are registered pursuant to Section 12 of the Securities Exchange Act of 1934. Moreover, we are not required to file periodic reports and financial statements with the Securities and Exchange Commission as frequently or as promptly as a company that files as a U.S. domestic issuer whose securities are registered under the Securities Exchange Act of 1934, nor are we generally required to comply with the Securities and Exchange Commission's Regulation FD, which restricts the selective disclosure of material non-public information. For as long as we are a "foreign private issuer" we intend to file our annual financial statements on Form 20-F and furnish our quarterly updates on Form 6-K to the Securities and Exchange Commission for so long as we are subject to the reporting requirements of Section 13(g) or 15(d) of the Securities Exchange Act of 1934. However, the information we file or furnish is not the same as the information that is required in annual and quarterly reports on Form 10-K or Form 10-Q for U.S. domestic issuers. Accordingly, there may be less information publicly available concerning us than there is for a company that files as a U.S. domestic issuer.
Risks Related to Our Common Shares
Because we can issue additional common shares or preferred shares, our shareholders may experience dilution in the future.
We are authorized to issue an unlimited number of common shares without par value and an unlimited number of preferred shares without par value. Our board of directors has the authority to cause us to issue additional common shares or preferred shares and to determine the special rights and restrictions of the shares of one or more series of our preferred shares, without consent of our shareholders. The issuance of any such securities may result in a reduction of the book value or market price of our common shares. Given the fact that we have not achieved profitability or generated positive cash flow historically, and we operate in a capital-intensive industry with significant working capital requirements, we may be required to issue additional common equity or securities that are dilutive to existing common shares in the future in order to continue its operations. Our efforts to fund our intended business plan may result in dilution to existing shareholders. Further, any such issuances could result in a change of control or a reduction in the market price for our common shares.
The market price of our common shares may be volatile and may fluctuate in a way that is disproportionate to our operating performance.
Our common shares are quoted on Nasdaq and listed on the TSXV. Trading of shares on Nasdaq or TSXV is often characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects.
The price of our common shares has fluctuated significantly. This volatility could depress the market price of our common shares for reasons unrelated to operating performance. The market price of our common shares could decline due to the impact of any of the following factors upon the market price of our common shares:
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Many of these factors are beyond our control. The stock markets in general, and the market price of common shares of vehicle companies in particular, have historically experienced extreme price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. These broad market and industry factors could reduce the market price of our common shares, regardless of our actual operating performance.
A prolonged and substantial decline in the price of our common shares could affect our ability to raise further capital, thereby adversely impacting our ability to continue operations.
A prolonged and substantial decline in the price of our common shares could result in a reduction in the liquidity of our common shares and a reduction in our ability to raise capital. Because we plan to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common shares could be detrimental to our liquidity and our operations because the decline may cause investors not to choose to invest in our shares. If we are unable to raise the funds we require for all our planned operations and to meet our existing and future financial obligations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and we may go out of business.
Because we do not intend to pay any cash dividends on our common shares in the near future, our shareholders will not be able to receive a return on their shares unless they sell them.
We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our common shares in the near future. The declaration, payment and amount of any future dividends will be made at the discretion of our board of directors, and will depend upon, among other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. Unless we pay dividends, our shareholders will not be able to receive a return on their shares unless they sell them.
We may be classified as a "passive foreign investment company," which may have adverse U.S. federal income tax consequences for U.S. shareholders.
We will be a "passive foreign investment company," or "PFIC," if, in any particular taxable year, either (a) 75% or more of our gross income for such year consists of certain types of "passive" income or (b) 50% or more of the average quarterly value of our assets (as determined on the basis of fair market value) during such year produce or are held for the production of passive income (the "asset test"). In determining whether we are a PFIC, we are permitted to take into account the assets and income of our wholly owned subsidiaries because we own 100% of their stock. However, even if we take into account the assets and income of our subsidiaries, we may still be considered a PFIC for this year and possibly later years, depending on a number of factors, including the composition of our income and assets, how quickly we use our liquid assets, including the cash raised pursuant to this offering (if we determine not to, or are unable to, deploy significant amounts of cash for active purposes our risk of being a PFIC will substantially increase), the market price of our common shares, and fluctuations in that price. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for this year or any future taxable year. Please refer to the paragraph titled "Taxation - Certain United States Federal Income Tax Considerations".
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If we are a PFIC in any taxable year, a U.S. holder may incur significantly increased United States income tax on gain recognized on the sale or other disposition of the common shares or warrants and on the receipt of distributions on the common shares to the extent such gain or distribution is treated as an "excess distribution" under the United States federal income tax rules. A U.S. holder may also be subject to burdensome reporting requirements. Further, if we are a PFIC for any year during which a U.S. holder holds our common shares or warrants, we generally will continue to be treated as a PFIC with respect to that U.S. Holder for all succeeding years during which such U.S. holder holds our common shares or warrants. Please refer to the paragraph titled "Taxation - Certain United States Federal Income Tax Considerations".
ITEM 4. INFORMATION ON THE COMPANY
Summary
We are a corporation incorporated under the Business Corporations Act (British Columbia) in British Columbia, Canada under the name "GreenPower Motor Company Inc." with an authorized share structure of unlimited number of common shares and preferred shares without par value. Our principal place of business is located at Suite 240-209 Carrall Street, Vancouver, British Columbia V6J 2B2, Canada and our telephone number is (604) 563-4144.
Our registered records office is located at Suite 900 - 885 West Georgia Street, Vancouver, BC V6C 3H1, Canada and its telephone number is (604) 687-5700, attention Mr. Virgil Z. Hlus.
Our registered agent in the United States is GKL Corporate/Search, Inc., located at One Capitol Mall, Suite 660, Sacramento, California 95814 and its telephone number is (800) 446-5455.
Additional information related to us is available on SEDAR at www.sedar.com and www.greenpowermotor.com. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, and the Company's filings can be found on this site at http://www.sec.gov. We do not incorporate the contents of our website or of sedar.com into this Annual Report. Information on our website does not constitute part of this Annual Report.
A. History and Development of Our Company
Our company was incorporated under the Business Corporations Act (British Columbia) on March 30, 2010 as "Oakmont Capital Corp." Oakmont Capital Corp.'s authorized capital consisted of an unlimited number of common and preferred shares. On June 17, 2011, Oakmont Capital Corp. completed an initial public offering of 4,000,000 common shares for gross proceeds of CDN$400,000 and the Oakmont Capital Corp. shares began trading on the TSX Venture Exchange on June 21, 2011 under the symbol "OMK.P". Prior to completing its Qualifying Transaction (as defined in the policies of the TSX Venture Exchange), Oakmont Capital Corp. was a capital pool company listed for trading on the TSX Venture Exchange in Canada. A capital pool company is a company with no assets other than cash and no commercial operations. The capital pool company uses its funds to seek out an investment opportunity.
On October 25, 2012, Oakmont Capital Corp. entered into a share exchange agreement with 0939181 B.C. Ltd., pursuant to which Oakmont Capital Corp. agreed to acquire 0939181 B.C. Ltd., which would constitute Oakmont Capital Corp.'s Qualifying Transaction. On July 3, 2013, the TSX Venture Exchange accepted Oakmont Capital Corp.'s Qualifying Transaction. Oakmont Capital Corp. then became a Tier 2 Mining Issuer on the TSX Venture Exchange. On July 3, 2013, Oakmont Capital Corp. also changed its name to "Oakmont Minerals Corp." The common shares of Oakmont Minerals Corp. began trading on the TSX Venture Exchange under the symbol "OMK" on July 8, 2013. Oakmont Minerals Corp. was then a natural resource company engaged in the acquisition and exploration of resource properties, with its focus on the Utah Manganese Properties, which included four separate properties (known as Duma Point, Dubinky Well, Moab Fault and Flat Iron) consisting of 150 mineral claims totaling 1,250 hectares held 100% by Utah Manganese Inc., a wholly-owned subsidiary of 0939181 B.C. Ltd. Oakmont Minerals corp. was engaged in the exploration of the Utah Manganese Properties to determine the presence of geo-chemical characteristics that could support small-to-medium scale extraction of minerals suitable for use in specialty high strength steel production. Oakmont Minerals Corp. remained in the exploration stage and did not generate revenues or income from operations.
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On December 23, 2014, 0999314 B.C. Ltd., a British Columbia corporation and a wholly-owned subsidiary of Oakmont Minerals Corp. completed an amalgamation with GreenPower Motor Company Inc., a British Columbia corporation, pursuant to an amalgamation agreement between Oakmont Minerals Corp., 0999314 B.C. Ltd., and GreenPower Motor Company Inc. dated April 14, 2014. The amalgamated company (with the name "0999314 B.C. Ltd.") became a wholly-owned subsidiary of Oakmont Minerals Corp. and Oakmont Minerals Corp. changed its name to "GreenPower Motor Company Inc." and the common shares of GreenPower Motor Company Inc. (formerly Oakmont Minerals Corp.) were consolidated on the basis of two pre-consolidation shares for each post-consolidation share. And our common shares began trading under the symbol "GPV" on the TSX Venture Exchange effective December 30, 2014. For accounting purposes, this amalgamation was considered a reverse take-over whereby GreenPower Motor Company Inc. was considered the acquiring company of Oakmont Minerals Corp. Subsequent to the completion of the amalgamation, the business of GreenPower Motor Company Inc. became the business of the amalgamated company.
Prior to the amalgamation on December 23, 2014, GreenPower Motor Company Inc., the acquiring company of Oakmont Minerals Corp. for accounting purposes, was incorporated on September 18, 2007 as "Blackrock Resources Ltd." under the Business Corporations Act (British Columbia), with an authorized share structure of unlimited number of common shares and preferred shares without par value. Pursuant to share purchase agreements dated September 30, 2013, Blackrock Resources Ltd. completed a reverse takeover transaction with GP GreenPower Industries Inc., whereby it acquired all of the issued and outstanding shares of GP GreenPower Industries Inc. in exchange for the issuance of 47,534,402 common shares of Blackrock Resources Ltd. In connection with the reverse takeover transaction with GP GreenPower Industries Inc., Blackrock Resources Ltd. changed its name from "Blackrock Resources Ltd." to its then name, "GreenPower Motor Company Inc.", on July 22, 2013.
In May 2015, our common shares were approved for trading on the OTCQB in the United States under the trading symbol "GPVRF".
In November 2015, we entered into a letter of intent with the Greater Victoria Harbour Authority and CVS Cruise Victoria Ltd. to lease our EV 550 double decker buses, which were delivered to CVS Cruise Victoria Ltd. in February 2018. By mid-2016, our company was offering a suite of transit buses ranging in length from 30 feet to 45 feet, a 45-foot coach bus, a 45-foot double decker, and a school bus.
In December 2016, we announced that the California Air Resources Board had awarded $9.5 million to the City of Porterville to deploy 10 GreenPower EV 350 40-foot transit buses and to install 11 charging stations on its transit routes. Two EV 350 buses were delivered to the City of Porterville in the year ended March 31, 2018, and another 6 buses were delivered in the year ended March 31, 2019. The 9th bus was delivered during the quarter ended June 30, 2019 and the final bus was delivered to the City of Porterville during the quarter ended September 30, 2019.
In June 2018, our company appointed Creative Bus Sales ("CBS") as our exclusive sales agent. Creative Bus Sales is the largest bus dealer in the United States, with 18 physical locations, a 75-person sales team and more than 200 service and support staff. Upon the expiry of this contract in 2021 it was not renewed. In June 2022 GreenPower entered into a dealership agreement with CBS under which they are the exclusive dealer of GreenPower BEAST Type D and Nano BEAST Type A school buses in the state of California.
During the year ended March 31, 2019, we delivered 14 buses to customers, pursuant to vehicle leases and vehicle sales. The customers were all located in the state of California, and include Sacramento Regional Transit, the University of California San Francisco, the Port of Oakland, Airline Coach Services and the City of Porterville. On November 14, 2018, Utah Manganese Inc., the wholly-owned subsidiary of 0939181 B.C. Ltd., the company with which Oakmont Capital Corp. effected its Qualifying Transaction in 2013, changed its name from "Utah Manganese Inc." to "San Joaquin Valley Equipment Leasing Inc." and San Joaquin Valley Equipment Leasing Inc. is now used by GreenPower Motor Company Inc. to enter into lease agreements to lease its buses.
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During the year ended March 31, 2020, we completed and delivered a total of 68 buses, including 62 EV Stars, 4 Synapse school buses, and 2 EV 350s. Of this total, the Company provided lease financing for 24 EV Stars, 2 with San Diego Airport Parking, and 22 with Green Commuter. Beginning in March 2020, GreenPower's business and operations began adapting in response to the COVID-19 global pandemic. As an essential business manufacturing on behalf of the transit industry, we maintained production, although at reduced levels compared to prior to the pandemic. Some of our suppliers and contract manufacturers temporarily suspended or reduced their production levels, and our internal staffing levels in production were temporarily reduced in order to comply with government regulations and maintain physical distancing in order to protect the health of our staff, customers and other stakeholders. While we were able to maintain sales and production during this period, we did so at a reduced rate in order to comply with physical distancing requirements and government health regulations.
During April 2020 GreenPower received the final report for the EV Star's Federal Transit Bus Test performed for the Federal Transit Administration at the Altoona Bus Testing site at Penn State University. This tests the maintainability, reliability, safety and performance of transit vehicles, and is required by the FTA for transit properties looking to purchase vehicles with federal funds. The EV Star passed the Altoona Test with an overall score of 92.2 which, as of the date of the test, makes the EV Star the highest scoring medium or heavy-duty vehicle that has completed the Altoona test, and the only all-electric Class 4 vehicle to have passed the Altoona test. Management believes the combination of Altoona certification and the ability to manufacture a Buy America compliant vehicle offer significant competitive advantages to GreenPower in successfully deploying vehicles to transit authorities based in the US.
On August 28, 2020 the Company completed a consolidation of its common shares on the basis of seven pre-consolidation shares for one post-consolidation common share, and the uplisting of the Company's shares to the Nasdaq stock exchange. Management also announced the pricing of its U.S. initial public offering of 1,860,000 common shares and concurrent private placement of 25,000 common shares, raising gross proceeds of $37.7 million before underwriting discounts and other costs.
During the year ended March 31, 2021, the Company delivered a total of 74 buses, including 35 EV Stars and 5 EV 250s for which the Company provided lease financing, 30 EV Stars that had previously been on lease and whose leases were cancelled and the vehicles subsequently sold, and the sale of 1 Synapse school bus, 1 EV Star Cargo Plus, 1 EV Star Plus, and 1 EV Star. Included in the 30 EV Stars that had previously been on lease and whose leases were cancelled and the vehicles subsequently sold were 13 EV Stars where the leases were originally entered into during the year ended March 31, 2020.
During the year ended March 31, 2022 GreenPower delivered a total of 93 vehicles, including 18 BEAST school buses, 11 EV Stars, 4 EV Star + and 21 EV Star cab and chassis, as well as 1 EV Star and 10 EV Star CC's for which the Company provided lease financing, and 28 EV Stars that had previously been on lease and whose leases were cancelled and the vehicles were subsequently sold.
During the year ended March 31, 2022 GreenPower completed a significant partnership through the signing of a Memorandum of Understanding ("MOU") with the state of West Virginia. Following the MoU, GreenPower entered into a lease purchase agreement with the state for an 80,000 square foot facility on six acres of land to manufacture all-electric school buses for the US market. As part of this partnership the state will provide worker training and hiring support, up to $3.5 million in employment incentive payments in exchange for meeting hiring targets, and has agreed to purchase up to $15 million of GreenPower vehicles produced at the facility. In February 2022 GreenPower signed a contract to sell 1,500 EV Star CC's to Workhorse Group, Inc. which they will use to produce Workhorse branded panel vans for the North American market.
During the year ended March 31, 2023, the Company delivered a total of 299 vehicles, which were comprised of 226 EV Star CC's, 40 EV Star 22 foot cargo, 3 EV Star Cargo Plus, 19 EV Stars, 7 BEAST Type D school buses, 2 Nano BEAST Type A school buses, and 2 EV 250's, and generated record annual revenue of $39.7 million, which was an increase of 130% over the prior year. GreenPower completed the acquisition of Lion Truck Body ("Lion") during July 2022. Lion manufactures and installs a complete line of truck bodies including dry-freight aluminum, refrigerated box, aluminum beds, stake bed, flat bed and service body. This acquisition allows GreenPower to vertically integrate an important component of its supply chain, and GreenPower intends to leverage the business's capabilities to capture new lines of business and improve its product offering for customers. Over the course of the year GreenPower has brought in changes in management, key staff, and has implemented operational improvements. In addition, we developed two new products: an all-electric reefer body, and a lightweight aluminum stake bed, both built on the EV Star cab and chassis platform.
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In September 2022 the Company filed a prospectus supplement to its short form base shelf prospectus, pursuant to which the Company may, at its discretion and from time to time, sell common shares of the Company for aggregate gross proceeds of up to $20 million. The sale of common shares is to be made through "at-the-market distributions" ("ATM") on the NASDAQ stock exchange. During the year ended March 31, 2023, the Company sold 1,565,268 common shares under the ATM program for gross proceeds of approximately $4.9 million.
During the year ended March 31, 2024, the Company delivered a total of 222 vehicles, which were comprised of 122 EV Star CC's, 18 EV Star 22 foot cargo, 6 EV Star Cargo Plus, 32 EV Stars, 31 BEAST Type D school buses, 10 Nano BEAST Type A school buses, and 2 EV 250's, and generated annual revenue of $39.3 million, which was a decline of 1.1% from the prior year. During the year ended March 31, 2024 GreenPower sales included 105 EV Star CC's to Workhorse, a key customer of GreenPower, which was a decline of over 50% compared to 220 EV Star CC's to Workhorse during the year-ended March 31, 2023. Importantly, the sales in the current year represent a transition to a more diverse group of end customers in a range of new markets in the US and Canada. As well, the Company experienced significant growth in sales of all-electric BEAST and Nano BEAST school buses, which increased to 41 in the current year from 9 in the prior year.
During the year ended March 31, 2024 GreenPower sold 188,819 common shares under the ATM program for gross proceeds of approximately $0.5 million. In November 2023 the ATM was no longer effective due to the expiry of the base shelf, and a new base shelf was filed in January 2024. In January 2024 GreenPower entered into a revolving loan facility with Export Development Canada ("EDC") which is used to finance working capital investments for all-electric vehicles pursuant to purchase orders. The loan allows advances over a 24 month period, has a term of 36 months, and bears interest at a floating rate of US Prime + 5% per annum.
Subsequent to the year end, on May 9, 2024, GreenPower completed an underwritten offering of 1,500,000 common shares and warrants to purchase 1,575,000 common shares for gross proceeds of $2,325,750 before deducting underwriting discounts and offering expenses. The warrants have an exercise price of $1.82 per share and a three-year term.
The principal capital expenditures of our company have been in the manufacturing of electric vehicles, the purchase of EV equipment, automobiles and tools and equipment, the carrying value of which is $2.8 million as at March 31, 2024. During the year ended March 31, 2023, GreenPower sold a 9.3 acre parcel of land in the City of Porterville for gross proceeds of $950,000. To date, our principal capital expenditures have been funded with capital which has been sourced from our company's sale of common shares, convertible debentures, warrants, proceeds from the exercise of warrants and options for common shares, loans from related parties, from our company's $8 million operating credit line with the Bank of Montreal, and from our term loan facility.
There have been no indications of any public takeover offers by third parties in respect of our company's shares or by our company in respect of other companies' shares which have occurred during the last and current financial year.
B. Business Overview
GreenPower designs, builds and distributes a full suite of high-floor and low-floor all-electric medium and heavy-duty vehicles, including transit buses, school buses, shuttles, cargo van, and a cab and chassis. GreenPower employs a clean-sheet design to manufacture all-electric vehicles that are purpose built to be battery powered with zero emissions while integrating global suppliers for key components. This OEM platform allows GreenPower to meet the specifications of various operators while providing standard parts for ease of maintenance and accessibility for warranty requirements. GreenPower was founded in Vancouver, Canada with primary operational facilities in southern California and West Virginia. Listed on the TSX Venture exchange since November 2015, GreenPower completed its U.S. IPO and NASDAQ listing in August 2020.
We believe our battery-electric commercial vehicles offer fleet operators significant benefits, which include:
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• low total cost-of-ownership vs. conventional gas or diesel-powered vehicles;
• lower maintenance costs;
• reduced fuel expenses;
• satisfaction of government mandates to move to zero-emission vehicles; and
• decreased vehicle emissions and reduction in carbon footprint.
We currently sell and lease our vehicles to customers directly and through a network of dealers in different regions of the United States, and directly to customers in Canada. GreenPower's all-electric zero-emission vehicles are eligible for various funding programs, vouchers and incentives, including:
Products
School Bus Line - Type D BEAST, Type D Mega BEAST and Type A Nano BEAST
GreenPower's Type-D BEAST, TYPE D Mega BEAST and Nano-BEAST Type A School Bus are marketed under the trade name Battery Electric Automotive School Transportation, or the BEAST. These vehicles feature a clean sheet build that was designed from the ground-up around its electric drive and battery systems. The body and chassis are integrated together to form the composite monocoque structure which provides the benefits of increased strength and a significant weight advantage in comparison to other school buses. Additionally, the design is not limited to the inner frame rails like conventional "body on chassis" school buses which allows for the maximization of interior space.
The GreenPower BEAST is offered in a 40-ft 90 passenger design that features a flat tracked floor that gives the end-user complete seating customization that can be modified with ease. The tracked flooring also allows the end-user to customize how many wheelchair positions are located on the bus and their location. Standard features include vehicle control stability, air ride suspension, and ABS brakes. With the 193.5-kWh advanced battery system, the BEAST has a reliable range of up to 150 miles on a single charge. This is paired with a state of the art TM4 electric drivetrain that is rated maintenance free for one million kilometers. The standard J1772 Level 2 charging of the BEAST will fully charge the electric school bus in under 7 hours.
The GreenPower Mega-BEAST is built on the same platform as the BEAST but provides a range of up to 300 miles due to its 387 kwh battery pack. The Mega BEAST also offers vehicle to grid technology which allows the BEAST to provide backup power to the electric grid, providing a source of electric grid stability and sustainability.
The GreenPower Nano BEAST a 25-ft Type A school bus with seating for 24 passengers design with optional wheelchair seating. Standard features include vehicle control stability, air ride suspension, and ABS brakes. With the 118-kWh advanced battery system, the Nano BEAST has a reliable range of up to 150 miles on a single charge. This is paired with a state of the art TM4 electric drivetrain that is rated maintenance free for one million kilometers. With J1772 Level 2 charging and DC fast charging with rates up to 61 kw.
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Commercial Goods Line
The Commercial Goods line is comprised of several models of electric vehicles built on GreenPower's EV Star platform that are designed for a wide range of commercial application. These are currently comprised of the EV Star Cab and Chassis, also available in a right hand drive configuration, the EV Star Cargo, EV Star Cargo Plus, EV Star Stakebed Truck, EV Star Utility Truck, EV Star Cargo Plus Refrigerated Truck, EV Star Cargo Refrigerated Van, and the EV Star REEFERX. These vehicles are built on GreenPower's EV Star platform, and are purpose built, zero-emission vehicles capable of a range of up to 150 miles. The EV Star is the only class 4 electric vehicle that can be built to meet Buy America Compliance and is Altoona tested. All EV Star vehicles are equipped with both J1772-2 and CCS DC Fast charging. They can fully charge in as little as 2 hours or overnight. The EV Star platform can also be configured with an autonomous option and wireless charging.
Commercial Passenger Line
Our EV Commercial Passenger line features multiple models that include the EV Star Passenger Van, the EV Star Mobility Plus, the 30-ft EV250, the 40-ft EV350, and the double decker EV550. Our electric buses do not have heavy battery storage or battery charging systems on the roof of the bus which enhances the user experience due to the bus's low center of gravity for steering and maneuvering around corners. This design also offers ease-of-access for maintenance due to the low positioned stainless-steel battery trays that can be accessed without removing panels or the use of elaborate hoist systems to maintain the battery boxes.
EV Star Passenger Van
The EV Star Passenger Van is a multi-purpose, zero-emission vehicle with a range of up to 150 miles and offers dual charging capabilities as a standard feature. It is purpose-built to be an all-electric vehicle and has the most versatile seating configurations and carrying capacity in its class to meet an operator's needs. The vehicle comes with an electric bus door for easy accessibility and offers options for BraunAbility ADA lifts and Q'STRAINT wheelchair securement positions.
EV Star Mobility Plus
The EV Star Mobility Plus is a cutaway bus with a wider, lightweight body construction allowing for flexibility in seating configuration due the effective use of its interior space. It comes with a vented HVAC system throughout the vehicle and offers options for BraunAbility ADA lifts and Q'STRAINT wheelchair securement positions.
EV250
The EV250 is our battery-electric 30-ft low floor transit bus with a passenger capacity of 26 seats plus standees. It features a monocoque body with a stainless-steel chassis, a GreenPower battery management system, and component integration with quality global suppliers. The EV250 features a Siemens traction motor, a 260-kWh battery capacity, and a range of up to 160 miles on a single charge. It is designed to charge using standard chargers that are readily available on the open market and capable of ultra-fast charging.
EV350
The EV350 is our battery-electric 40-ft low floor transit bus with a passenger capacity of 40 seats plus standees. It features a monocoque body with a stainless-steel chassis, a GreenPower battery management system, and component integration with quality global suppliers. The EV350 features a Siemens traction motor, battery capacity of up to 400 kwh, and a range of up to 212 miles on a single charge. It is designed to charge using SAE standard chargers that are readily available on the open market and capable of CCS ultra-fast charging.
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EV550
The EV550 is our battery-electric 45-ft double-decker bus with a passenger capacity of 100 seats plus standees. It features a monocoque body with a stainless-steel chassis, a GreenPower battery management system, and component integration with quality global suppliers. The EV550 features a Siemens traction motor, a 500-kWh battery capacity, and a range of up to 175 miles on a single charge. It is designed to charge using SAE standard chargers that are readily available on the open market and capable of CCS ultra-fast charging.
Technology
Batteries
The battery pack is a key component with the design, development, and manufacture of advanced electric-vehicle powertrains. Where some other EV manufacturers build their own battery packs we purchase the batteries in a plug-and-play pack from our designs. This provides us with the flexibility to use different cell manufacturers with different battery chemistries. We believe that the underlying battery cells are a commodity and consequently have designed our products to take full advantage of the best batteries that are available at the time we manufacture our products.
Powertrains
Our powertrains encompass the complete motor assemblies, computers, and software required for vehicle electrification. We use off-the-shelf proven components such as Siemens for the drive motors for our low floor transit buses and TM4 for our EV Stars or BEAST school buses.
Telematics
The telematics system and associated hardware installed in almost all of our vehicles is designed to monitor the controller area network traffic for specific signals. These signals are uploaded along with GPS data to a server facility. The real-time data is stored in a database as it arrives and delivers updates to clients connected through the web interface. The information transmitted to the cloud and stored onboard the vehicle include: vehicle location, vehicle speed, vehicle energy usage, the amount of charge remaining in the battery, vehicle range, general status of the health of vehicle systems, using onboard diagnostics and driver habits monitoring.
Locations and Facilities
Our primary production and assembly facility is located at 90 W Poplar, Porterville, California, where we occupy a 50,000 sq. ft. facility that is used for the production, assembly, maintenance and service of our products. We also have additional space in Porterville, CA with approximately 20,000 sq. ft. that we use for production, storage, and that includes offices.
During July 2022 GreenPower assumed the lease of an 18,000 square foot truck body manufacturing facility in Torrance, CA. This facility is the center of operations for GreenPower's truck body manufacturing business, GP Truck Body Inc.
In August 2022 GreenPower took possession of an 80,000 square foot manufacturing facility in South Charleston West Virginia which houses GreenPower's North American school bus manufacturing operations and hub for our East Coast commercial activities.
Our U.S. operations, sales and marketing office is located at #200 - 8885 Haven Avenue, Rancho Cucamonga, California.
Our corporate office is located at Suite #240 - 209 Carrall Street, Vancouver, British Columbia, Canada.
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Marketing
Our sales team is focused on the goal of securing purchase orders from commercial transportation companies, transit properties, government agencies and school districts. We also maintain a network of dealers across our core markets in the US.
Our priority is to generate customers across all of the sectors we are targeting including transit, shuttle, schools, government and commercial. Our current core products are the six models under our EV Star platform, our two models of all-electric school buses, being the Type D BEAST and the TYPE A Nano BEAST. Our sales plan is to meet with the top potential customers and obtain purchase orders for sales of GreenPower all-electric vehicles.
Strategic Relationships
GreenPower maintains a network of vehicle dealers across the United States. As at March 31, 2024 GreenPower's established dealership arrangements include dealers in Arizona, Massachusetts, Nevada, New Jersey, NY State, Oregon, Rhode Island, Oregon State, Washington State, Texas, Colorado, North Carolina, West Virginia, and several specialized dealership relationships in the state of California. GreenPower is actively seeking to expand its dealer network into new markets across North America.
GreenPower has established a significant partnership with the state of West Virginia under which GreenPower entered into a lease purchase agreement with the state for an 80,000 square foot facility on six acres of land to manufacture all-electric school buses for the US market. As part of this partnership the state will provide worker training and hiring support, up to $3.5 million in employment incentive payments in exchange for meeting hiring targets, and has entered into a contract to purchase 41 BEAST and Nano BEAST all-electric school buses produced at the facility, under which GreenPower has delivered 4 Nano BEAST as of March 31, 2024.
GreenPower utilizes a proprietary network of contract manufacturers for the majority of its production and has established relationships with multiple contract manufacturers for different vehicle models and for different stages of production,. In addition, GreenPower maintains important relationships with parts and component suppliers both in North America and internationally.
Research and Development
The majority of our research and development is conducted in-house. Additionally, we contract with engineering firms to assist with validation and certification requirements as well as specific vehicle integration tasks.
Competitive Companies
Competition varies by sector with EV manufacturers that solely offer all-electric buses (such as BYD, Proterra or Lion) or traditional manufacturers of heavy-duty buses who are entering the market with all-electric buses (such as New Flyer or Blue Bird). In addition, companies such as Workhorse (Nasdaq: WKHS), Chanje, Lightning and XOS are competing with GreenPower in the commercial cargo and delivery van market. We compete with Motiv in the OEM electric cab and chassis market, and GreenPower is the only company that offers a purpose built electric cab and chassis as opposed to a gasoline or diesel cab and chassis that has been converted to an electric cab and chassis.
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| Transit buses | ||
| GreenPower | 30', 40', 45'DD and EV Star | |
| BYD | 30', 35', 40', 60' and 45'DD | |
| Gillig | 29', 35' and 40' | |
| New Flyer | 35', 40' and 60' | |
| Bluebird | Class 7 and 8, 40' to 59' | |
| Eldorado | 30' to 39' | |
| School Buses | ||
| GreenPower | BEAST Type D, Nano BEAST Type A | |
| Blue Bird | Type C and Type D | |
| Lion | Type C and Type D | |
| MicroBird | Type A on E450 platform | |
| Motiv | Type A on Ford E450 platform | |
| Motiv | Type C on Ford F59 platform | |
| Navistar | Type C | |
| Thomas Built | Type C | |
| Shuttle Buses | ||
| GreenPower | EV Star and EV 250 | |
| MicroBird | On E450 platform | |
| Motiv | On Ford E450 platform | |
| Phoenix Motors | Z 400 | |
| Zenith Motors | Passenger Van | |
| SEA Electric | E-450 EV | |
| Cargo Van | ||
| GreenPower | EV Star Cargo | |
| Chanje | V8100 panel van | |
| Zenith Motors | Cargo Van |
Some of the key differences between our company and many of our competitors in the heavy-duty bus market is that we use a clean sheet design to offer customers purpose-built solutions. Many of our competitors use an existing layout and then determine where to place the batteries or the drive motor or in some cases retrofit an existing design and build. Several of GreenPower's competitors have raised significantly more capital than GreenPower and have access to capital well in excess of the current financial resources of GreenPower.
We believe that the primary competitive factors within the medium and heavy-duty commercial vehicle market are:
• the difference in the initial purchase prices of electric vehicles and comparable vehicles powered by internal combustion engines, both including and excluding the impact of government and other subsidies and incentives designed to promote the purchase of electric vehicles;
• the total cost of vehicle ownership over the vehicle's expected life, which includes the initial purchase price and ongoing fuel, operational and maintenance costs;
• vehicle quality, performance and safety;
• access to capital in order to fund the ongoing working capital requirements and growth of the business;
• government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; and
• the quality and availability of service and parts for the vehicle.
Government Regulation
Our electric vehicles are designed to comply with a significant number of governmental regulations and industry standards in Canada and the United States, some of which are evolving as new technologies are deployed. Government regulations regarding the manufacture, sale and implementation of products and systems similar to our electric vehicles are subject to future change. We cannot predict what impact, if any, such changes may have upon our business.
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Emission and fuel economy standards
California legislature has adopted a zero-emission bus program for all California public transit properties called the Innovative Clean Transit Regulation (ICT). The ICT regulation was adopted in December 2018 and requires all public transit agencies to gradually transition to a 100 percent zero-emission bus (ZEB) fleet. Beginning in 2029, 100% of new purchases by transit agencies must be ZEBs, with a goal for full transition by 2040. It applies to all transit agencies that own, operate, or lease buses with a gross vehicle weight rating (GVWR) greater than 14,000 lbs. It includes standard, articulated, over-the-road, double-decker, and cutaway buses.
During 2019, the California Air Resources Board ("CARB") approved a rule that will require fixed route airport shuttles serving the state's 13 largest airports to transition to 100 percent zero-emission vehicles by 2035. The regulation affects public and private fleets, including parking facilities, rental car agencies and hotels. This applies to about 1000 Buses and Shuttles.
During 2020 California Governor Newsom announced an executive order that requires that by 2035 all new cars and passenger trucks sold in California must be zero-emission vehicles and announced that the Air Resources Board will develop regulations requiring that require that by 2045 all operations of medium and heavy duty vehicles shall be zero-emission vehicles, and during the year the Air Resources Board approved new regulations that requires truck manufacturers to transition to electric zero-emission trucks by 2024.
Government regulation related to climate change is in effect at the U.S. federal and state levels. The U.S. Environmental Protection Agency ("EPA") and the National Highway Traffic Safety Administration ("NHTSA") issued a final rule for greenhouse gas emissions and fuel economy requirements for trucks and heavy-duty engines on August 9, 2011, which is applicable in model years 2018 through 2020. NHTSA and EPA also issued a final rule on August 16, 2016 increasing the stringency of these standards for model years 2021 through 2027.
The rules provide emission standards for CO2 and fuel consumption standards for three main categories of vehicles: (i) combination tractors, (ii) heavy-duty pickup trucks and vans and (iii) vocational vehicles. We believe that our buses and EV Star Cargo Van would be considered "vocational vehicles" and "heavy-duty pickup trucks and vans" under the rules. According to the EPA and NHTSA, vocational vehicles consist of a wide variety of truck and bus types, including delivery, refuse, utility, dump, cement, transit bus, shuttle bus, school bus, emergency vehicles, motor homes and tow trucks, and are characterized by a complex build process, with an incomplete chassis often built with an engine and transmission purchased from other manufacturers, then sold to a body manufacturer.
The Clean Air Act requires that we obtain a Certificate of Conformity issued by the EPA and a California Executive Order issued by the CARB with respect to emissions for our vehicles. The Certificate of Conformity is required for vehicles sold in states covered by the Clean Air Act's standards and the Executive Order is required for vehicles sold in states that have sought and received a waiver from the EPA to utilize California standards. The California standards for emissions control for certain regulated pollutants for new vehicles and engines sold in California are set by CARB. States that have adopted the California standards as approved by EPA also recognize the Executive Order for sales of vehicles.
Manufacturers who sell vehicles in states covered by federal requirements under the Clean Air Act without a Certificate of Conformity may be subject to fines and be required to recall and remedy any vehicles sold with emissions in excess of Clean Air Act standards.
Vehicle safety and testing
The National Traffic and Motor Vehicle Safety Act of 1966 (the "Safety Act") regulates motor vehicles and motor vehicle equipment in the United States in two primary ways. First, the Safety Act prohibits the sale in the United States of any new vehicle or equipment that does not conform to applicable motor vehicle safety standards established by NHTSA. Meeting or exceeding many safety standards is costly, in part because the standards tend to conflict with the need to reduce vehicle weight in order to meet emissions and fuel economy standards. Second, the Safety Act requires that defects related to motor vehicle safety be remedied through safety recall campaigns. A manufacturer is obligated to recall vehicles if it determines that the vehicles do not comply with a safety standard. Should we or NHTSA determine that either a safety defect or noncompliance exists with respect to any of our vehicles, the cost of such recall campaigns could be substantial.
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There is a body of legislation that requires that new model buses be tested before they can be purchased with funds from the US Federal Transportation Authority ("FTA"), and that defines the required testing and provides funding for these federally mandated tests. This legislation includes The Surface Transportation and Uniform Relocation Assistance Act of 1987, Section 317: Bus Testing; the Intermodal Surface Transportation Efficiency Act of 1991; the Transportation Equity Act for the 21st Century (Public Law 105-178); and the Fixing America's Surface Transportation ("FAST") Act. The Larson Transportation Institute's Bus Research and Testing Center, located in Altoona, Pennsylvania is a federally funded bus testing site that administers the required bus tests, covering areas including safety, structural integrity, durability, performance, maintainability, noise, and fuel economy. GreenPower's EV Star completed the Altoona Test in April 2020, and received an overall score of 92.2, which is one of the highest scores ever for a medium-duty bus.
Battery safety and testing
Our battery pack configurations are designed to conform to mandatory regulations that govern transport of "dangerous goods," which includes lithium-ion batteries, which may present a risk in transportation. The governing regulations, which are issued by the Pipeline and Hazardous Safety Administration and are based on the UN Recommendations on the Safe Transport of Dangerous Goods Model Regulations, and related UN Manual of Tests and Criteria. The requirements for shipments of these goods vary by mode of transportation, such as ocean vessel, rail, truck and air.
Vehicle dealer and distribution regulation
Certain states' laws require motor vehicle manufacturers and dealers to be licensed in such states in order to conduct manufacturing and sales activities. We are registered as a motor vehicle manufacturer in California and as a dealer in California. We have sold and intend to continue to sell, vehicles in other states both directly and through licensed dealers across the US.
Legal Proceedings
We are not currently a party to any litigation or legal proceedings which are material, either individually or in the aggregate. The Company filed a civil claim against the prior CEO and Director of the Company in the Province of British Columbia in 2019, and the prior CEO and Director of the Company has filed a response with a counterclaim for wrongful dismissal in the Province of British Columbia. The prior CEO and Director of the Company also filed a similar claim in the state of California in regards to this matter, and this claim has been stayed pending the outcome of the claim in British Columbia. There has not been a resolution on the British Columbia claim or counterclaim, or the California claim as at March 31, 2024.
In addition, a company owned and controlled by a former employee who provided services to a subsidiary company of GreenPower until August 2013 filed a claim for breach of confidence against GreenPower in July 2020, and this claim has not been resolved as at March 31, 2024.
During April 2023 the Company repossessed 27 EV Stars and 10 EV Star CC's after a lease termination due to non-payment. In addition, the Company repossessed 1 EV Star from the same customer due to non-payment. During May 2023 this customer filed a claim in the state of California against the Company and a subsidiary, and this matter has not been resolved as at March 31, 2024. The Company has not booked a provision for the claims or the counterclaim as it does not believe there is a remote or estimable material financial impact as at March 31, 2024.
Plan of Operations
As of March 31, 2024 we had a cash balance of $1.1 million, working capital of $15.6 million, total assets of $45.2 million, and total liabilities of $33.6 million. Liabilities as at March 31, 2024 include an operating line of credit with a credit limit of up to $8 million, subject to margining requirements, with a drawn balance of $7.5 million, and a term loan facility with a credit limit of up to $5 million, with a drawn balance of $2.3 million.
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We are currently producing various models of EV Stars and BEAST Type D school buses with contract manufacturers in Asia, in our school bus manufacturing facility in West Virginia, and with final assembly at Porterville, CA. GreenPower's EV star completed the federally sponsored Altoona test in April 2020. This structural and durability test, along with Buy America manufacturing capabilities, is required for the use of Federal Transit Administration funding. GreenPower completed its first two deliveries of Buy America built EV Stars during the year ended March 31, 2023. GreenPower utilizes multiple contract manufacturers in Asia to manufacture its electric vehicles and components, and is currently manufacturing BEAST school buses at its facility in South Charleston West Virginia.
GreenPower leases a 50,000 sq. foot facility located at 90 W Poplar, Porterville, California, that is used for the production, assembly, maintenance and service of our vehicles, as well as for parts inventory and distribution. We also have additional space in Porterville, CA with approximately 20,000 sq. ft. that we use for production, storage, and that includes offices.
During July 2022 GreenPower assumed the lease of an 18,000 square foot truck body manufacturing facility in Torrance, CA. This facility is the center of operations for GreenPower's truck body manufacturing business, GP Truck Body Inc.
In August 2022 GreenPower took possession of an 80,000 square foot manufacturing facility in South Charleston West Virginia which houses GreenPower's North American school bus manufacturing operations and hub for our East Coast commercial activities. Our U.S. operations, sales and marketing office is located at #200 - 8885 Haven Avenue, Rancho Cucamonga, California. Our corporate office is located at Suite #240 - 209 Carrall Street, Vancouver, British Columbia, Canada.
We have expanded our personnel over the past year, primarily from the hiring of new employees in the state of West Virginia to be based out of the West Virginia manufacturing facility.
To date, we have funded our operations and business expansion with capital which has been sourced from our company's sale of common shares, convertible debentures, warrants, proceeds from the exercise of warrants and options for common shares, related party loans, from our company's operating line of credit with the Bank of Montreal, and from our term loan facility with EDC. We anticipate that we will need to raise additional capital in the near-term to meet our growth objectives, including for working capital investments, for expanding our business operations, and to hire and retain employees for this growth. We will continue to evaluate capital and bank market conditions, and may seek to raise debt or equity capital, depending on overall market conditions and pricing.
C. Organizational Structure
GreenPower Motor Company Inc. is incorporated in the Province of British Columbia, Canada and has the following wholly-owned subsidiaries as of the date of this report:
1. GP GreenPower Industries Inc. (incorporated in the Province of British Columbia, Canada)
2. GreenPower Motor Company, Inc. (incorporated in the State of Delaware, and registered to do business in the State of California)
3. 0939181 B.C. Ltd. (incorporated in the Province of British Columbia, Canada)
4. San Joaquin Valley Equipment Leasing Inc. (formerly, Utah Manganese, Inc.) (incorporated in the State of Utah and registered to do business in the State of California)
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5. 0999314 B.C. Ltd. (incorporated in the Province of British Columbia, Canada)
6. Electric Vehicle Logistics Inc. (incorporated in the State of Nevada)
7. GreenPower Manufacturing WV Inc. (incorporated in the State of West Virginia)
8. GP Truck Body Inc. (incorporated in the State of Nevada)
9. Lion Truck Body Incorporated (incorporated in the State of Nevada)
10. EA Green-Power Private Ltd. (incorporated in India)
11. Gerui New Energy Vehicle (Nanjing) Co. Ltd. (incorporated in China)
D. Property, Plant and Equipment
We maintain our corporate office at a leased property at 240-209 Carrall Street, Vancouver, British Columbia V6B 2J2, Canada. We first entered into a lease of this office in January, 2014, and have entered into subsequent leases of this same space, including our current lease, which expires on October 31, 2024. The office space is 869 square feet, and we are not allowed to assign or sub-lease the premises without the written consent of the landlord.
We maintain an office for the U.S. operations, sales, marketing and support at a leased property at Suite 200 - 8885 Haven Avenue, Rancho Cucamonga, CA 91730 and the current lease on this property expires in January 2025.
We maintain two leased properties in the City of Porterville that are used for assembly and manufacturing. One facility is approximately 20,000 square feet and is located at 2011 Wildcat Way, Porterville, CA 93527 and is currently on a month to month lease. We also lease a facility of approximately 50,000 square feet located at 90 West Poplar, Porterville, CA, 93257 where we are engaged in the assembly, maintenance and service of our vehicles, and where we maintain a vehicle parts inventory and distribution. The lease for this property is month to month and can be cancelled by the lessor or the lessee with no less than 60 days notice.
During July 2022 GreenPower assumed the lease of an 18,000 square foot truck body manufacturing facility in Torrance CA. This facility is the center of operations for GreenPower's truck body manufacturing business, GP Truck Body Inc. The lease on this property expires in December 2024.
In August 2022 GreenPower took possession of an 80,000 square foot manufacturing facility in South Charleston West Virginia which will be used for GreenPower's North American school bus manufacturing operations. Under the terms of this lease, GreenPower is required to make $50,000 monthly payments, and is eligible for forgiveness on the lease of up to $1.3 million for meeting the initial employment target at the property by December 31, 2024, and then $500,000 for every 100 employees hired after meeting the initial employment target. Title to the property will transfer to GreenPower once the lease and incentive payments total $6.7 million.
The principal capital expenditures of our company have been in the manufacturing of electric vehicles, the purchase of EV equipment, automobiles and tools and equipment, the carrying value of which is $2.8 million as at March 31, 2024. During the year ended March 31, 2023, GreenPower sold a 9.3 acre parcel of land in the City of Porterville for gross proceeds of $950,000. To date, our principal capital expenditures have been funded with capital which has been sourced from our company's sale of common shares, convertible debentures, warrants, proceeds from the exercise of warrants and options for common shares, loans from related parties, from our company's $8 million operating credit line with the Bank of Montreal, and from our term loan facility.
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ITEM 4.A. UNRESOLVED STAFF COMMENTS
N/A
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
General
This Annual Report should be read in conjunction with the accompanying audited consolidated financial statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").
The preparation of the consolidated financial statements in conformity with these accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis we review our estimates and assumptions. The estimates were based on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results are likely to differ from those estimates or other forward-looking statements under different assumptions or conditions, but we do not believe such differences will materially affect our financial position or results of operations. Our actual results may differ materially as a result of many factors, including those set forth under the headings entitled "Forward-Looking Statements" and "Risk Factors" herein.
Critical accounting policies, the policies we believe are most important to the presentation of our consolidated financial statements and require the most difficult, subjective and complex judgments, are outlined below under the heading "Critical Accounting Policies and Estimates".
Nature and Continuance of Operations
GreenPower Motor Company Inc. ("GreenPower" or the "Company") was incorporated in the Province of British Columbia on September 18, 2007. The Company is a manufacturer and distributor of purpose-built, all-electric, zero-emission medium and heavy-duty vehicles serving the cargo and delivery market, shuttle and transit space and school bus sector.
The Company's corporate office is located at Suite 240-209 Carrall St., Vancouver, Canada and the Company maintains its primary operational facilities in southern California and a manufacturing facility in West Virginia.
The consolidated financial statements were approved by the Board of Directors on June 28, 2024.
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and interpretations, as issued by the International Accounting Standards Board on the basis that the Company is a going concern, meaning that the Company will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the normal course of operations.
The Company’s operations are dependent upon its ability to raise capital and generate cash flows. As at March 31, 2024, the Company had a cash balance of $1,150,891, working capital, defined as current assets less current liabilities, of $15,561,765, accumulated deficit of ($79,020,920), shareholders’ equity of $11,566,819, and the Company recorded a loss of ($18,342,796) for the year ended March 31, 2024. These consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. The continuation of the Company as a going concern is dependent on future cash flows from operations including the successful sale and manufacture of electric buses to achieve a profitable level of operations and obtaining necessary financing to fund ongoing operations. The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company’s ability to continue as a going concern. Management plans to address this material uncertainty by selling vehicles in inventory, collecting accounts receivable, accessing funds available from its operating line of credit and term loan facility with EDC and, from time to time, and by seeking potential new sources of financing.
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A. Operating Results
The following table compares the annual results of GreenPower for the years ended March 31, 2024, 2023 and 2022. The information in this table should be read in conjunction with the Audited consolidated financial statements and notes beginning on page F-1.
| For the years ended | Percentage Change | $ Change | |||||||||||||||||||
| March 31, | March 31, | March 31, | 2024 to | 2023 to | 2024 to | 2023 to | |||||||||||||||
| 2024 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Revenue | $ | 39,271,839 | $ | 39,695,890 | $ | 17,236,773 | -1.1% | 130.3% | $ | (424,051 | ) | $ | 22,459,117 | ||||||||
| Cost of sales | 33,914,237 | 32,445,836 | 13,360,068 | 4.5% | 142.9% | 1,468,401 | 19,085,768 | ||||||||||||||
| Gross Profit | 5,357,602 | 7,250,054 | 3,876,705 | -26.1% | 87.0% | (1,892,452 | ) | 3,373,349 | |||||||||||||
| Gross profit margin¹ | 13.6% | 18.3% | 22.5% | -4.6% | -4.2% | ||||||||||||||||
| Sales, general and administrative costs | |||||||||||||||||||||
| Salaries and administration | 8,814,561 | 7,394,085 | 5,807,744 | 19.2% | 27.3% | 1,420,476 | 1,586,341 | ||||||||||||||
| Depreciation | 1,858,458 | 1,219,223 | 661,958 | 52.4% | 84.2% | 639,235 | 557,265 | ||||||||||||||
| Product development costs | 1,811,472 | 2,090,338 | 1,381,101 | -13.3% | 51.4% | (278,866 | ) | 709,237 | |||||||||||||
| Office expense | 1,607,459 | 920,468 | 419,398 | 74.6% | 119.5% | 686,991 | 501,070 | ||||||||||||||
| Insurance | 1,716,157 | 1,801,665 | 1,244,505 | -4.7% | 44.8% | (85,508 | ) | 557,160 | |||||||||||||
| Professional fees | 1,925,938 | 1,477,094 | 1,207,920 | 30.4% | 22.3% | 448,844 | 269,174 | ||||||||||||||
| Sales and marketing | 661,426 | 818,289 | 686,544 | -19.2% | 19.2% | (156,863 | ) | 131,745 | |||||||||||||
| Share-based payments | 1,502,112 | 3,645,893 | 5,771,475 | -58.8% | -36.8% | (2,143,781 | ) | (2,125,582 | ) | ||||||||||||
| Transportation costs | 212,263 | 324,773 | 231,472 | -34.6% | 40.3% | (112,510 | ) | 93,301 | |||||||||||||
| Travel, accomodation, meals and entertainment | 599,169 | 748,299 | 641,500 | -19.9% | 16.6% | (149,130 | ) | 106,799 | |||||||||||||
| Allowance for credit losses | 1,450,962 | 95,153 | 8,940 | 1424.9% | 964.4% | 1,355,809 | 86,213 | ||||||||||||||
| Total sales, general and administrative costs | 22,159,977 | 20,535,280 | 18,062,557 | 7.9% | 13.7% | 1,624,697 | 2,472,723 | ||||||||||||||
| Loss from operations before interest, accretion and foreign exchange | (16,802,375 | ) | (13,285,226 | ) | (14,185,852 | ) | 26.5% | -6.3% | (3,517,149 | ) | 900,626 | ||||||||||
| Interest and accretion | (1,554,858 | ) | (1,549,769 | ) | (515,668 | ) | 0.3% | 200.5% | (5,089 | ) | (1,034,101 | ) | |||||||||
| Other Income | 306,288 | 72,867 | 364,296 | 320.3% | -80.0% | 233,421 | (291,429 | ) | |||||||||||||
| Foreign exchange gain / (loss) | 131,416 | (30,897 | ) | (65,117 | ) | -525.3% | -52.6% | 162,313 | 34,220 | ||||||||||||
| Loss from operations for the year | (17,919,529 | ) | (14,793,025 | ) | (14,402,341 | ) | 21.1% | 2.7% | (3,126,504 | ) | (390,684 | ) | |||||||||
| Other item | - | - | |||||||||||||||||||
| Write down of assets | (423,267 | ) | (250,832 | ) | (607,579 | ) | 68.7% | NM | (172,435 | ) | 356,747 | ||||||||||
| Loss for the year | (18,342,796 | ) | (15,043,857 | ) | (15,009,920 | ) | 21.9% | 0.2% | (3,298,939 | ) | (33,937 | ) | |||||||||
| Other comprehensive income / (loss) | |||||||||||||||||||||
| Cumulative | |||||||||||||||||||||
| translation reserve | 29,547 | (13,007 | ) | (39,413 | ) | NM | NM | 42,554 | 26,406 | ||||||||||||
| Total comprehensive loss for the year | $ | (18,313,249 | ) | $ | (15,056,864 | ) | $ | (15,049,333 | ) | 21.6% | 0.1% | $ | (3,256,385 | ) | $ | (7,531 | ) | ||||
| Loss per common share, basic and diluted | $ | (0.74 | ) | $ | (0.64 | ) | $ | (0.69 | ) | 15.6% | -7.2% | $ | (0.10 | ) | $ | 0.05 | |||||
| Weighted average number of common shares outstanding, basic and diluted | 24,950,961 | 23,522,755 | 21,877,488 | 6.1% | 7.5% | 1,428,206 | 1,645,267 | ||||||||||||||
(1) Gross profit margin, a supplementary financial metric, is calculated as gross profit divided by revenue. Gross profit margin is not a defined term under IFRS.
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Change in Revenue
The annual decrease in revenue for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $424,051 or 1.1%. This decrease was the result of 77 fewer vehicles delivered during the year ended March 31, 2024 compared to the prior year, which was almost entirely offset by sales of a higher number of vehicles with a higher per unit price, including Type D BEAST and Type A Nano BEAST.
The annual increase in revenue for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $22,459,117 or 130.3%. This increase was the result of an additional 206 vehicles delivered during the year ended March 31, 2023 compared to the prior year.
Change in Cost of Sales and Gross Profit and Gross Profit Margin
The annual increase in cost of sales for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $1,468,401 or 4.5%, resulting in a decrease in gross profit of $1,892,452 or 26.1%. During the year ended March 31, 2024 GreenPower delivered a total of 222 vehicles compared to 299 in the prior year, a decrease of 77 vehicle deliveries. The increase in cost of sales and reduction in gross profit over the year was due to an increase of inventory writedowns included in cost of sales of $886,854, and due to the application of overhead costs from our West Virginia facility. The application of overhead costs in West Virginia was applied to levels of production that are below capacity, and it is anticipated that allocated costs on a per unit basis will decline as production at the facility increases.
The annual increase in cost of sales for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $19,085,768 or 142.9%, resulting in an increase in gross profit of $3,373,349 or 87.0%. During the year ended March 31, 2023 GreenPower delivered a total of 299 vehicles compared to 93 in the prior year, an increase of 206 vehicle deliveries. The increase in cost of sales and gross profit over the year was due to the increase in unit sales, which was primarily comprised of lower cost vehicle models, as well as an increase in shipping and other conversion costs included in cost of sales.
Gross profit margin (defined as gross profit over sales) for the years ended March 2024, 2023 and 2022 was 13.6%, 18.3%, and 22.5% respectively. Gross profit margin declined by 4.6% between March 31, 2024 and March 31, 2023 due to an increase of inventory writedowns included in cost of sales of $886,854, which accounted for 2.3% of the decline, due to the application of overhead costs from our West Virginia facility, and due to below target gross margins at GP Truck Body. Gross profit margin declined by 4.2% between March 31, 2023 and March 31, 2022 due to increased sales under a high volume contract, which were at a lower gross profit margin than sales in the prior year, which were primarily comprised of lower volume sales at a higher gross profit margin. In addition, the decline in gross profit margin during the year ended March 31, 2023 compared to the prior year was due to an increase in shipping costs that was driven by a higher percentage of sales outside of the state of California, compared to the prior year.
Change in Salaries and Administration
The annual increase in salaries and administration expense for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $1,420,476 or 19.2%. The increase over the period was due to salary increases for executive officers and existing employees, and an increase in the number of employees over the period to 116 employees at March 31, 2024 compared to 112 employees at March 31, 2023.
The annual increase in salaries and administration expense for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $1,586,341 or 27.3%. There were 112 employees at March 31, 2023 and 69 employees at March 31, 2022 due to the expansion of our business in West Virginia, and in California primarily due to the acquisition of Lion Truck Body, which increased salary expense. In addition, the increase was also due to salary increases for existing employees, and due to the implementation of a defined contribution retirement plan for US employees.
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Change in Depreciation
The annual increase in depreciation for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $639,235 or 52.4%. Approximately $210,000 of this increase was from an increase in depreciation on right of use assets, with the remainder from an increase in depreciation expense on GreenPower's property, plant and equipment acquired during the year and depreciation expense on assets transferred to property, plant and equipment from inventory during the year.
The annual increase in depreciation for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $557,265 or 84.2%. Approximately $340,000 of this increase was from an increase in depreciation on right of use assets, with the remainder from an increase in depreciation expense on GreenPower's property, plant and equipment acquired during the year, including assets acquired in the Lion Truck Body acquisition.
Change in Product Development Costs
Product development costs declined by $278,866 or 13.3% between March 31, 2024 and March 31, 2023. This decrease was primarily due to a reduction in other product development costs primarily comprised of vehicle parts and related expenses used in product development activities and to a small reduction in warranty accrual, which is a fixed percentage of sales.
The annual increase in product development costs for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $709,237 or 51.4%. This increase was due to increased warranty expense accrual, which is a fixed percentage of sales, offset by a reduction in other product development costs primarily comprised of vehicle parts and related expenses used in product development activities.
Change in Share-Based Payments
Share based payment expense for the year ended March 31, 2024 compared to the year ended March 31, 2023 declined by $2,143,781 or 58.8% and declined by $2,125,582 or 36.8% for the year ended March 31, 2023 compared to March 31, 2022.
Share based payment expense is for non-cash stock option grants, where the value of stock option grants are calculated on the date of the grant using the Black Scholes method and recognized in earnings over the stock option's vesting period. The reduction in share-based payment expense during the years ended March 31, 2024 and March 31, 2023 compared to the prior years was due to a lower stock option expense recognized during each year and due to forfeited stock options during both periods.
Change in Transportation Costs
The annual decrease in transportation costs for the year ended March 31, 2024 compared to the year ended March 31, 2023 was $112,510 or 34.6%. This decrease was due to a reduction in costs related to shipping vehicles for non-sales purposes.
The annual increase in transportation costs for the year ended March 31, 2023 compared to the year ended March 31, 2022 was $93,301 or 40.3%. This increase was due to increased costs related to shipping vehicles for non-sales purposes, as well as for expenses associated with company vehicles and transportation.
Change in Interest and Accretion
Interest and accretion increased in the year ended March 31, 2024 compared to the year ended March 31, 2023 by $5,089 or 0.3% and increased in the year ended March 31, 2023 compared to the year ended March 31, 2022 by $1,034,101, or 200.5%. The change in interest and accretion expense in the year ended March 31, 2024 compared to the prior year was due to a reduction in interest and accretion on loans from related parties, which was partially offset by interest expense incurred on the term loan facility during the final quarter of the year.
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The increase in interest and accretion expense in the year ended March 31, 2023 compared to the prior year was due to an increase in interest bearing debt during the year, including loans from related parties, the term loan assumed in the acquisition of Lion Truck Body, as well as due to the increase on the variable rate of interest on the Company's $8 million operating line of credit, which increased by 4.0% over the year. In addition, the increase was due to non-cash interest expense associated with deferred revenue.
Change in Other Income
Other Income of $306,288 during the year ended March 31, 2024 was the result of a non cash gain from loans from related parties. During the year ended March 31, 2023, GreenPower recognized other income of $72,867 from the gain on a sale of property and recognized $364,296 in other income during the year ended March 31, 2022 from the forgiveness of a payroll protection loan during the year. Changes in other income during each of these years was due to these unrelated non-recurring events.
Change in Office Expense
Office expense increased by $686,991 or 74.6% during the year ended March 31, 2024 compared to the prior year and increased by $501,070 or 119.5% during the year ended March 31, 2023 compared to the prior year. The increase in office expense during the year ended March 31, 2024 was due to general inflation increases in maintenance and utilities expense, as well as full year of expense associated with the West Virginia property during the current year. The increase in the year ended March 31, 2023 compared to the prior year well as due to the increased number of properties leased by the Company in the year compared to the prior year.
Change in Insurance Expense
Insurance expense decreased by $85,508 or 4.7% during the year ended March 31, 2024 compared to the prior year primarily due to a reduction in premiums charged on the Company's insurance policies. Insurance expense increased by $557,160 or 44.8% during the year ended March 31, 2023 compared to the prior year due to increased insurance requirements from growth in GreenPower's business and operations, including from the acquisition of Lion Truck Body, from the new property lease and business expansion in West Virginia, and from growth in the Company's core business and operations.
Change in Professional Fees
Professional fees increased by $448,844 or 30.4% during the year ended March 31, 2024 compared to the prior year, and increased by $269,174, or 22.3%, during the year ended March 31, 2023 compared to the prior year. The increase in the year ended March 31, 2024 was primarily due to increased legal costs associated with general corporate matters and litigation, and the increase in the year ended March 31, 2023 was primarily due to an increase in audit and accounting fees.
Change in Sales and Marketing and Travel, Accommodation, Meals and Entertainment
Sales and marketing expense for the year ended March 31, 2024 decreased by $156,863 or 19.2% and travel, accommodation, meals and entertainment expenses decreased by $149,130 or 19.9% compared to the prior year. The decrease in both of these expenses was due to a general reduction in the Company's attendance at trade shows and sales and marketing events compared to the prior year.
Sales and marketing expense for the year ended March 31, 2023 increased by $131,745 or 19.2% and travel, accommodation, meals and entertainment expenses increased by $106,799 or 16.6% compared to the prior year. The increase in both of these expenses was due to a general expansion of the Company's sales and marketing activities year over year.
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Change in Other Costs
The allowance for credit losses in the year ended March 31, 2024 increased by $1,355,809 or 1,424.9% compared to the prior year primarily due to allowances associated with accounts receivable and a promissory note receivable owed by a lease customer, and to accounts receivable from other customers that is over 90 days past due. The allowance for credit losses in the year ended March 31, 2023 increased by $86,213 or 964.4% due to an increase in allowances on overdue accounts receivable.
Annual changes in foreign exchange loss is caused by the Company's exposure to changes in foreign currency exchange rates due to financial assets and liabilities in foreign currency. The Company is exposed to foreign currency risk from assets and liabilities in CDN dollars, as described in the Market risks section.
Change in Write Down of Assets
The allowance for credit losses in the year ended March 31, 2024 increased by $1,355,809 or 1,424.9% compared to the prior year primarily due to allowances associated with accounts receivable and a promissory note receivable owed by a lease customer, and to accounts receivable from other customers that is over 90 days past due. The allowance for credit losses in the year ended March 31, 2023 increased by $86,213 or 964.4% due to an increase in allowances on overdue accounts receivable.
Change in Loss for the Year and Loss per Common Share
The loss for the year ended March 31, 2024 increased by $3,298,939 or 21.9% compared to the prior year. The majority of this loss was due to a reduction of $1,892,452 in gross profit earned in the current year, with the remainder caused by an increase in selling, general and administrative costs, partially offset by a reduction in interest and accretion.
The loss for the year ended March 31, 2023 increased by $33,937, or 0.2% compared to the prior year, and was due to an increase in the Company's gross profit, which more than offset increases in the Company's selling, general and administrative costs and other expenses.
Loss per common share for the year ended March 31, 2024 increased by $0.10, or 15.6%, due to an increased loss for the year which was partially offset by the increase in the weighted average number of shares outstanding. Loss per common share for the year ended March 31, 2023 declined by $0.05 per share, or 7.2%, due to the reduction in the loss for the year and the increase in the weighted average number of shares outstanding.
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Changes in Consolidated Statements of Financial Position
The table below illustrates changes in selected components of GreenPower's consolidated financial position as of March 31, 2024 and March 31, 2023, and an explanation of changes in these components.
| March 31, 2024 | March 31, 2023 | Annual Change ($) | Explanation(Expressed in US Dollars) | |
| Cash and restricted cash | $ 1,150,891 | $ 600,402 | 550,489 | See liquidity and capital resources sections of this report |
| Accounts receivable, net of allowances | 2,831,942 | 10,273,376 | (7,441,434) | Decrease due to accounts receivable collected during the year and an increase in allowance for doubtful accounts. |
| Inventory | 32,010,631 | 41,609,234 | (9,598,603) | Reduction due to sales of March 31, 2023 finished goods inventory during the year, lower work in process at March 31, 2024, and inventory transferred to fixed assets. |
| Current assets | 36,853,355 | 54,156,170 | (17,302,815) | Primarily due to reductions in accounts receivable and inventory. |
| Finance lease receivables | 1,158,384 | 2,970,356 | (1,811,972) | Reduction due to de-recognition of finance leases, impairment on finance leases, and lease payments received during the year ended March 31, 2024. |
| Right of use assets | 4,124,563 | 4,845,738 | (721,175) | Reduction due to depreciation on right of use assets. |
| Property and equipment | 2,763,525 | 2,604,791 | 158,734 | Increase due to investments in property and equipment and inventory transferred to property and equipment, net of depreciation. |
| Total assets | 45,203,284 | 63,525,183 | (18,321,899) | Due to reductions in accounts receivable, inventory, finance lease receivables and right of use assets net of increases in cash and property and equipment. |
| Line of credit | 7,463,206 | 6,612,232 | 850,974 | See liquidity and capital resources sections of this report |
| Accounts payable and accrued liabilities | 2,977,251 | 7,316,267 | (4,339,016) | Due to payments to suppliers for investments in inventory. |
| Deferred revenue | 9,942,385 | 9,998,609 | (56,224) | Primarily related to reductions in deferred revenue associated with deposits from Workhorse. |
| Loans payable to related parties | 2,432,180 | 3,287,645 | (855,465) | Due to repayments of principal and accrued interest and the notional non-cash gain on loans to related parties. |
| Term loan facility | 2,267,897 | - | 2,267,897 | Term loan facility entered into during the year. |
| Current liabilities | 21,291,590 | 26,500,278 | (5,208,688) | Due to a reduction in accounts payable partially offset by an increase in other current liabilities. |
| Lease liabilities | 4,636,211 | 5,239,851 | (603,640) | Reduction due to regularly scheduled payments on lease liabilities, including $0.6 million in payments made on West Virginia lease during the year ended March 31, 2024. |
| Contingent liability | 1,391,746 | - | 1,391,746 | Reclassification of loan associated with acquisition |
| Term loan | - | 610,218 | (610,218) | Reclassification of loan associated with acquisition |
| Deferred benefit of gov't assistance | - | 686,341 | (686,341) | Reclassification of loan associated with acquisition |
| Warranty liability | 2,499,890 | 2,077,749 | 422,141 | Increase due to warranty accrual on sales, net of warranty disbursements, during the year ended March 31, 2024. |
| Total liabilities | 33,636,465 | 35,863,177 | (2,226,712) | Due to the reduction in accounts payable and loans to related parties, partially offset by increases in other liabilities. |
| Shareholder's equity | $11,566,819 | $27,662,006 | (16,095,187) | Due to increase in accumulated deficit, partially offset by increases in share capital from shares sold through the At the Market Equity offering and increases in reserves from stock options. |
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B. Liquidity and capital resources
Liquidity
At March 31, 2024, the Company has a cash balance of $1,150,891 and working capital, defined as current assets minus current liabilities, of $15,561,765. The Company's line of credit has a maximum credit limit of up to $8,000,000 and amounts available on the line of credit in excess of $5,000,000 are subject to margining requirements, and as at March 31, 2024 the Line of Credit had a drawn balance of $7,463,206. In addition, the Company has a revolving term loan facility of up to $5 million which can be used to fund payments to suppliers to build inventory pursuant to customer orders. Subsequent to the end of the year, on May 9, 2024, the Company completed an underwritten offering of 1,500,000 common shares and warrants to purchase 1,575,000 common shares for gross proceeds of $2,325,750 before deducting underwriting discounts and offering expenses. The warrants have an exercise price of $1.82 per share and expire three years from the date of issuance. The Company manages its capital structure and makes adjustments to it based on available funds to the Company. The Company may continue to rely on additional financings and the sale of its inventory to further its operations and meet its capital requirements to manufacture EV vehicles, expand its production capacity and further develop its sales, marketing, engineering, and technical resources.
The Company's ability to achieve its business objectives is subject to material uncertainty which casts substantial doubt upon the Company's ability to continue as a going concern. The Company will continue to rely on additional financings to further its operations and meet its capital requirements.
Capital Resources
Year ended March 31, 2024 and up to the date of this report
Authorized Share Capital
Unlimited number of common shares without par value
Unlimited number of preferred shares without par value
Issued Share Capital:
During the year ended March 31, 2024, the Company issued a total of 274,534 common shares, including 188,819 shares issued under the At the Market Offering (ATM), and 85,715 shares from the exercise of options.
During the year ended March 31, 2023, the Company issued a total of 1,568,590 common shares, including 1,565,268 shares issued under the At the Market Offering (ATM), and 3,322 shares from the exercise of options.
At the Market Offering
In September 2022, the Company filed a prospectus supplement to its short form base shelf prospectus, pursuant to which the Company may, at its discretion and from time to time, sell common shares of the Company for aggregate gross proceeds of up to US$20,000,000. The base shelf prospectus was filed in October 2021, and was effective for a period of 25 months until November 2023. The Company filed a new base shelf prospectus in January 2024.
The sale of common shares under the prospectus supplement was made through ATM distributions on the NASDAQ stock exchange. During the year ended March 31, 2024, the Company sold 188,819 common shares under the ATM program for gross proceeds of $520,892 before transaction fees. The ATM expired in November 2023 due to the expiry of the base shelf prospectus.
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The Company incurred approximately $14,904 in professional fees and other direct expenses in connection with the ATM, which was included in share issuance costs for the year ended March 31, 2024 ($216,803, 2023).
Offering subsequent to year-end
On May 9, 2024 the Company completed an underwritten offering of 1,500,000 common shares and warrants to purchase 1,575,000 common shares for gross proceeds of $2,325,750 before deducting underwriting discounts and offering expenses. The warrants have an exercise price of $1.82 per share and expire three years from the date of issuance.
The Company has two incentive stock option plans whereby it grants options to directors, officers, employees, and consultants of the Company, the 2023 Equity Incentive Plan (the "2023 Plan") which was adopted in order to grant awards to people in the United States, and the 2022 Equity Incentive Plan (the "2022 Plan").
2023 Plan
Effective February 21, 2023 GreenPower adopted the 2023 Plan which was approved by shareholders at our AGM on March 28, 2023 in order to grant stock options or non-stock option awards to people in the United States. Under the 2023 Plan GreenPower can issue stock options that are considered incentive stock options, which are stock options that qualify for certain favorable tax treatment under U.S. tax laws. Nonqualified stock options are stock options that are not incentive stock options. The aggregate fair market value on the date of grant of Shares with respect to which incentive stock options are exercisable for the first time by an optionee subject to tax in the United States during any calendar year must not exceed US$100,000, or such other limit as may be prescribed by the Internal Revenue Code. Non-stock option awards means a right granted to an award recipient under the 2023 Plan, which may include the grant of stock appreciation rights, restricted awards or other equity-based awards. No stock options have been issued under the 2023 Plan as at March 31, 2023.
Effective February 21, 2023 GreenPower adopted the 2023 Plan which was approved by shareholders at our AGM on March 28, 2023 in order to grant stock options or non-stock option awards to people in the United States. Under the 2023 Plan GreenPower can issue stock options that are considered incentive stock options, which are stock options that qualify for certain favorable tax treatment under U.S. tax laws. Nonqualified stock options are stock options that are not incentive stock options. The aggregate fair market value on the date of grant of Shares with respect to which incentive stock options are exercisable for the first time by an optionee subject to tax in the United States during any calendar year must not exceed US$100,000, or such other limit as may be prescribed by the Internal Revenue Code. Non-stock option awards mean a right granted to an award recipient under the 2023 Plan, which may include the grant of stock appreciation rights, restricted awards or other equity-based awards.
2022 Plan
Effective April 19, 2022 GreenPower adopted the 2022 Equity Incentive Plan (the "2022 Plan"), which was further ratified and re-approved by shareholders at our AGM on March 27, 2024, and which replaced the 2019 Plan. Under the 2022 Plan the Company can grant equity-based incentive awards in the form of stock options ("Options"), restricted share units ("RSUs"), performance share units ("PSUs") and deferred share units ("DSUs"). RSU's, DSU's and PSU's are collectively referred to as "Performance Based Awards". The 2022 Plan is a Rolling Plan for Options and a fixed-plan for Performance-Based Awards such that the aggregate number of Shares that: (i) may be issued upon the exercise or settlement of Options granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements), shall not exceed 10% of the Company's issued and outstanding Shares from time to time, and (ii) may be issued in respect of Performance-Based Awards granted under the 2022 Plan (and all of the Company's other Security-Based Compensation Arrangements) shall not exceed 2,499,116. No performance-based awards have been issued as at March 31, 2024 or as at March 31, 2023. The 2022 Plan is considered an "evergreen" plan, since Options which have been exercised, cancelled, terminated, surrendered, forfeited or expired without being exercised shall be available for subsequent grants under the 2022 Plan and the number of awards available to grant increases as the number of issued and outstanding Shares increases.
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Stock Option Plans from Prior Periods
On May 14, 2019, the Company replaced the 2016 Plan with a Rolling Stock Option Plan (the "2019 Plan"). Under the terms of the 2019 Plan, the aggregate number of Options that can be granted under the 2019 Plan cannot exceed ten (10%) of the total number of issued and outstanding Shares, calculated on a non-diluted basis. The exercise price of options granted under the 2019 Plan may not be less than the minimum prevailing price permitted by the TSXV policies with a maximum term of 10 years. On March 9, 2016, the shareholders approved the previous stock option plan which initially allowed for the issuance of up to 1,491,541 shares and which was subsequently further increased to allow up to 2,129,999 shares to be issued under the plan (the "2016 Plan").
The Company had the following incentive stock options granted under the 2023 Plan, the 2022 Plan, the 2019 Plan, and 2016 Plan that are issued and outstanding as at March 31, 2024:
| Exercise | Balance | Forfeited | Balance | ||||||||||||||||
| Expiry Date | Price | March 31, 2023 | Granted | Exercised | or Expired | March 31, 2024 | |||||||||||||
| May 4, 2023 | CDN | $ | 3.50 | 57,144 | - | (42,858 | ) | (14,286 | ) | - | |||||||||
| November 30, 2023 | CDN | $ | 3.01 | 50,000 | - | (15,000 | ) | (35,000 | ) | - | |||||||||
| February 12, 2024 | CDN | $ | 3.50 | 71,787 | - | (14,643 | ) | (57,144 | ) | - | |||||||||
| January 30, 2025 | CDN | $ | 2.59 | 254,640 | - | (10,714 | ) | (5,714 | ) | 238,212 | |||||||||
| February 11, 2025 | CDN | $ | 8.32 | 50,000 | - | - | - | 50,000 | |||||||||||
| July 3, 2025 | CDN | $ | 4.90 | 16,071 | - | - | (1,072 | ) | 14,999 | ||||||||||
| November 19, 2025 | US | $ | 20.00 | 300,000 | - | - | - | 300,000 | |||||||||||
| December 4, 2025 | US | $ | 20.00 | 20,000 | - | - | - | 20,000 | |||||||||||
| May 18, 2026 | CDN | $ | 19.62 | 73,275 | - | - | (9,575 | ) | 63,700 | ||||||||||
| December 10, 2026 | CDN | $ | 16.45 | 553,500 | - | - | (30,250 | ) | 523,250 | ||||||||||
| July 4, 2027 | CDN | $ | 4.25 | 15,000 | - | - | - | 15,000 | |||||||||||
| November 2, 2027 | US | $ | 2.46 | 10,000 | - | - | - | 10,000 | |||||||||||
| February 14, 2028 | CDN | $ | 3.80 | 645,000 | - | (2,500 | ) | (10,000 | ) | 632,500 | |||||||||
| March 28, 2028 | CDN | $ | 2.85 | 100,000 | - | - | (100,000 | ) | - | ||||||||||
| March 27, 2029 | CDN | $ | 2.72 | - | 605,000 | - | - | 605,000 | |||||||||||
| Total outstanding | 2,216,417 | 605,000 | (85,715 | ) | (263,041 | ) | 2,472,661 | ||||||||||||
| Total exercisable | 1,265,128 | 1,711,798 | |||||||||||||||||
| Weighted Average | |||||||||||||||||||
| Exercise Price (CDN$) | $ | 10.72 | $ | 2.72 | $ | 3.31 | $ | 5.26 | $ | 9.62 | |||||||||
| Weighted Average Remaining Life | 3.4 years | 3.2 years | |||||||||||||||||
As at March 31, 2024, there were 26,455 stock options available for issuance under the 2023 and 2022 plan and 2,499,116 performance based awards available for issuance under the 2023 Plan and the 2022 Plan. During the year ended March 31, 2024, 263,041 options were forfeited or expired.
On March 27, 2024, the Company granted 605,000 options with a term of five years and an exercise price of CDN$2.72 per share, comprised of:
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On March 28, 2023 the Company granted 100,000 stock options to employees. The stock options have an exercise price of CDN$2.85 per share, a term of 5 years, and are exercisable after 4 months, and then 25% after years 1, 2, and 3.
During the year ended March 31, 2023, 3,322 common shares were issued pursuant to the exercise of stock options and 317,913 options were forfeited or expired.
During the year ended March 31, 2023, the Company incurred share-based compensation expense with a measured fair value of $3,645,893. The fair value of the options granted and vested were recorded as share-based payments on the Consolidated Statements of Operations.
Subsequent to the end of the reporting period:
During the year ended March 31, 2024, 85,715 common shares were issued pursuant to the exercise of stock options and 263,041 options were forfeited or expired.
During the year ended March 31, 2024, the Company incurred share-based compensation expense with a measured fair value of $1,502,112. The fair value of the options granted and vested were recorded as share-based payments on the Consolidated Statements of Operations.
Subsequent to the end of the reporting period:
As at March 31, 2024 and as at March 31, 2023 the Company had an outstanding warrant balance of nil.
Cash Flows
| For the years ended | |||||||||
| March 31 | |||||||||
| 2024 | 2023 | 2022 | |||||||
| Cash flow (used in) operations | $ | (1,132,248 | ) | $ | (14,757,939 | ) | $ | (20,343,748 | ) |
| Cash flow from (used in) investing | $ | (761,533 | ) | $ | 303,191 | $ | (536,093 | ) | |
| Cash flow from financing | $ | 2,323,833 | $ | 8,189,280 | $ | 12,664,774 | |||
| Foreign exchange on cash and restricted cash | $ | 120,437 | $ | (22,452 | ) | $ | (104,559 | ) | |
| Net (decrease) increase in cash and restricted cash | $ | 550,489 | $ | (6,287,920 | ) | $ | (8,319,626 | ) | |
Operating activities
Cash flow used in operating activities amounted to $1.1 million for the year ended March 31, 2024. The Company generated a loss for the year of $18.3 million, which included approximately $6.6 million in non-cash depreciation, share based payments, accretion and accrued interest, foreign exchange gain, allowance for credit losses, other income, and write down of assets. In addition, cash flow was generated from changes in working capital, including inventory of $8.8 million, and accounts receivable of $6.3 million, which were partially offset by a decrease in accounts payable of $4.3 million, and other factors.
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Cash flow used in operating activities amounted to $14.8 million for the year ended March 31, 2023. The Company generated a loss for the year of $15.0 million, which included approximately $5.5 million in non-cash depreciation, share based payments, accretion and accrued interest, amortization of deferred financing fees, foreign exchange loss, allowance for credit losses, and write down of assets. In addition, we made investments in working capital, including inventory of $8.9 million, accounts receivable of $7.3 million, which were partially offset by an increase in accounts payable of $5.8 million, and an increase in deferred revenue of $3.2 million.
Cash flow used in operating activities amounted to $20.3 million for the year ended March 31, 2022. GreenPower generated a loss for the year of $15.0 million, which included approximately $7.6 million in non-cash depreciation, share based payments, accretion and accrued interest, amortization of deferred financing fees, foreign exchange loss, allowance for credit losses, and write down of assets. In addition, we made investments in working capital, including inventory of $20.9 million, accounts receivable of $1.5 million, which were partially offset by an increase in accounts payable of $192,973, and an increase in deferred revenue of $6.4 million.
Investing activities
Cash flow used in investing activities was $761,533 for the year ended March 31, 2024 resulting from a $400,000 restricted deposit investment for a surety bond and the purchase of $361,533 of property, plant and equipment.
Cash flow from investing activities was $303,191 for the year ended March 31, 2023. During the year the Company received proceeds from the disposal of property totaling $874,184, net of fees, purchases of property and equipment totaled $355,993, and the Company's cash investment in the acquisition of Lion Truck Body totaled $215,000. Cash flow used in investing activities was $536,093 for the year ended March 31, 2022 and was comprised of investments in EV equipment, automobiles, computers, furniture, leasehold improvements and other items.
Financing activities
Cash flow from financing activities amounted to $2.3 million for the year-ended March 31, 2024. During the year the Company received gross proceeds from the issuance of shares on its ATM program of $0.5 million, drew $850,974 on the Company's line of credit, drew $2.2 million on its term loan facility, and these amounts were partially offset by $0.4 million repayments on loans to related parties, and principal payments on the Company's lease liabilities.
Cash flow from financing activities amounted to $8.2 million for the year-ended March 31, 2023. During the year the Company received gross proceeds from the issuance of shares on its ATM program of $4.9 million, received loans from related parties that totaled $3.0 million, drew $845,853 on the Company's line of credit, which were partially offset by equity offering costs and principal payments on the Company's lease liabilities.
Cash flow from financing activities amounted to $12.7 million for the year-ended March 31, 2022 due to $5.8 million from the company's operating line of credit, $6.3 million from the exercise of warrants, $1.2 million from the exercise of stock options, which were partially offset by principal payments on the Company's promissory note, principal payments on lease liabilities and other factors.
C. Research and development, patents and licenses, etc.
We have invested significant resources in developing our suite of all-electric vehicles. Our vehicles were developed using a clean-sheet proprietary design and use key components from established third-party suppliers. We have a patent on a proprietary designed parking pawl for electric vehicles and may choose to obtain patents and licenses on our designs, processes or inventions in the future.
We have expended $1,811,472, $2,090,338, and $1,381,101 on product development costs during the years ended March 31, 2024, March 31, 2023, and March 31, 2022 respectively.
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D. Trend information
We do not know of any trends, commitments, events, or uncertainty that are expected to have a material effect on our company's business, financial condition, or results of operations other than as described in the section "Risk Factors" and in the section entitled "Quantitative and Qualitative Disclosures About Market Risk".
E. Critical Accounting Estimates
Not applicable
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth the name, office held, age, and functions and areas of experience in our company of each of our directors and senior management:
| Name, Office Held, Age |
Area of Experience and Functions in Our Company |
| Fraser Atkinson Chief Executive Officer, Chairman and Director Age: 67 |
As our Chief Executive Officer and Chairman, Mr. Atkinson is responsible for strategic planning and operations, as well as managing our relations with our lawyers, regulatory authorities and investor community; as a director, Mr. Atkinson participates in management oversight and helps to ensure compliance with our corporate governance policies and standards. Mr. Atkinson is also a member of the Nominating Committee. |
| Brendan Riley President and Director Age: 54 |
As our President, Mr. Riley is responsible for developing and implementing our company's strategy, sales and marketing plan, product development, human resources and manufacturing. Mr. Riley provides leadership and oversight of our company's North American operations and maintains relationships with key customers, suppliers, investors and other stakeholders. |
| Michael Sieffert Chief Financial Officer and Secretary Age: 49 |
As our Chief Financial Officer and Secretary, Mr. Sieffert is responsible for the management and supervision of all of the financial aspects of our business and maintains our corporate records. Mr. Sieffert assists in strategic planning, oversees capital planning and capital raising, budgeting, financial reporting and risk management. In performing his duties, Mr. Sieffert maintains relationships with our company's auditors, legal counsel, banks, analysts and investors. |
| Mark Achtemichuk Director Age: 48 |
Mr. Achtemichuk is an independent director and helps to ensure compliance with our corporate governance policies and standards. Mr. Achtemichuk is also a member of the the Nominating Committee. |
| Malcolm Clay Director Age: 82 |
As an independent director, Mr. Clay supervises our management and helps to ensure compliance with our corporate governance policies and standards. Mr. Clay is a member and the chair of the Audit Committee, and the Nominating Committee and is a member of the Compensation Committee. |
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| Name, Office Held, Age |
Area of Experience and Functions in Our Company |
| Cathy McLay Director Age: 67 |
As an independent director, Ms. McLay supervises our management and helps to ensure compliance with our corporate governance policies and standards. Ms. McLay is a member of our Audit committee and of our Compensation committee. Ms. McLay is a member and Chair and member of the Compensation Committee and is a member of the Audit Committee. |
| David Richardson Director Age: 72 |
As an independent director, Mr. Richardson supervises our management and helps to ensure compliance with our corporate governance policies and standards. Mr. Richardson is a member of our Audit Committee and the Compensation Committee. |
| Yanyan Zhang Vice President of Program Management Age: 38 |
As the Vice President of Program Management, Ms. Zhang oversees planning and development in line with strategic business objectives. In this role Yanyan manages manufacturing and logistics, and developing contracts for these projects. In performing her duties, Ms. Zhang manages relationships with manufacturing partners, suppliers, and service providers. |
| Claus Tritt Vice President of Medium Duty and Commercial Vehicle Sales Age: 60 |
As the Vice President of Medium Duty and Commercial Vehicle Sales, Claus Tritt oversees the commercial and medium duty vehicle sales strategies and activities of the Company, including the truck body division. Claus is responsible for managing GreenPower's internal sales managers, managing and developing the Company's medium duty and commercial vehicle dealer network, setting sales goals and developing pricing strategies. |
The following is a brief account of the business experience of each of our directors and senior management.
Fraser Atkinson - Chief Executive Officer, Chairman and Director
Mr. Atkinson was one of the founders of our company. Mr. Atkinson was appointed as our Chief Executive Officer, Executive Chairman and a director of our company on February 11, 2011, and is currently a member of the Nominating Committee. He was our President, Secretary and Chief Financial Officer of our company from February 11, 2011 to February 22, 2011. He resigned as our Chief Executive Officer on December 23, 2014. He was again appointed as our Chief Executive Officer on June 12, 2019. Mr. Atkinson holds a Bachelor of Commerce degree from the University of British Columbia (1980) and his designation as a CPA, CA from the Chartered Professional Accountants, British Columba (1982). He is a director of Equus Total Return, Inc., a public company listed on the New York Stock Exchange that has been a Business Development Corporation since May 2010. He served as a director of Grizzly Discoveries Inc., a public company with gold and potash properties listed on the TSX Venture Exchange from March 2011 to February 2018. Mr. Atkinson served as the Chief Financial Officer of Versatile Systems Inc., a public technology services company listed on the TSX Venture Exchange from February 2003 to December 31, 2013 and as a director from November 2003 to January 14, 2014. Mr. Atkinson was also involved in both technology and corporate finance as a partner at KPMG, LLP for 14 years, until September 2002.
Brendan Riley - President and Director
Mr. Riley has been our President since October 27, 2016 and a director of our company since July 3, 2019. He has 23 years of experience in the areas of Business Development, Sales Strategy and Operations. Prior to joining our company, Mr. Riley was North American Vice President of Fleet Sales for BYD Motors, where he ran multiple electric vehicle business units, including the material handling, the truck and the bus groups. It was at BYD Motors that Mr. Riley secured the largest privately funded electric bus contract in North America two years in a row (for 25 and 36 electric buses respectively). Mr. Riley was also instrumental in negotiating the purchase and setup of two manufacturing facilities for BYD Motors - one electric bus assembly plant, and one EV battery assembly plant, both located in California. Mr. Riley served two terms as the President of the Southern California Chapter of the America Vacuum Society for Science and Technology of Materials, Interfaces and Processing, and is currently serving as an advisor on the Electric Power Research Institute's Bus and Truck Charging Interface Group. He holds a Bachelor of Arts degree in Philosophy from the University of St. Thomas Aquinas in Rome, Italy and is bilingual in English and Italian.
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Michael Sieffert - Chief Financial Officer and Secretary
Mr. Sieffert was appointed as our Chief Financial Officer and Secretary on December 1, 2018. From 2011 to 2018, Mr. Sieffert worked in progressively senior finance positions at Seaspan Corporation, a New York Stock Exchange-listed company engaged in containership leasing, most recently as Director of Corporate Finance. Between 2006 and 2011, Mr. Sieffert worked in Deloitte's Financial Advisory Services practice where he assisted clients, primarily in the transportation, manufacturing and industrials sectors, on corporate finance and valuation mandates. Previously, Mr. Sieffert was a buy-side equity analyst at HSBC Investments Canada. Mr. Sieffert has significant capital markets experience as well as a background in a broad range of corporate finance activities, including investor relations, treasury, and mergers and acquisitions. Mr. Sieffert holds a Bachelor of Arts degree and a Masters of Business Administration (Finance) degree, both from the University of British Columbia. Mr. Sieffert also holds a Chartered Financial Analyst designation from the CFA Institute.
Mark Achtemichuk - Director
Mr. Achtemichuk was appointed as the Chief Financial Officer and Secretary and a director of our company on February 22, 2011. Mr. Achtemichuk ceased to be our Chief Financial Officer and Secretary on December 1, 2018, but continues to serve as a director, and is a member of the Nominating Committee. Mr. Achtemichuk was previously a Senior Vice President and Managing Director at CMLS Financial Ltd. until his retirement in 2021 and has been the principal of MSA Holdings Inc., a private consulting company, since July 2007. He was Chief Financial Officer and a director of Driven Capital Corp. from 2010 to May 2014. Previously, Mr. Achtemichuk was self-employed as a Real Estate Finance Consultant from November 2004 to July 2007 and a manager with KPMG, LLP's Mergers and Acquisitions practice until November 2004. Mr. Achtemichuk obtained a Bachelor of Commerce from the University of British Columbia in 1998, his designations a Chartered Professional Accountant from the Institute of Chartered Accountants of British Columbia in 2001, and his Chartered Financial Analyst designation from the CFA Institute in 2010.
Malcolm Clay - Director
Mr. Clay has been a director of our company since February 22, 2011. Mr. Clay is a member and the chair of the Audit Committee, Compensation Committee and Nominating Committee. Mr. Clay holds a Bachelor of Arts degree from the University of British Columbia (1965) and his designation as a CPA, CA from the Chartered Professional Accountants, British Columbia (1969), and an FCA from the Chartered Professional Accountants, British Columbia (1992). Mr. Clay is currently retired, and since retirement has been an active as a financial consultant and corporate director. He was a Partner with KPMG LLP from September 1975 to September 2002. Mr. Clay has been a director of Minco Capital Corporation since 2007, and between 2007 and 2012 he was a director of Zongshen PEM Power Systems Inc., a large manufacturer of motorcycles and battery powered scooters based in China.
Cathy McLay - Director
Ms. McLay has been a director of our company since January 20, 2020, and is a member of our Audit Committee and Compensation Committee. Ms. McLay worked at TransLink from September 2008 to March 2018, most recently as the Chief Financial Officer and Executive Vice President Finance and Corporate Services. Previously, Ms. McLay worked in the forest sector in several senior executive roles at Canfor and Howe Sound Pulp and Paper. Ms. Mclay currently serves on the boards of the Insurance Corporation of British Columbia (Chair of the audit committee), Vancouver Fraser Port Authority (Chair Major Capital Committee), British Columbia Hydro Authority (Chair Site C Commercial Committee) and British Columbia Ferry Services. Ms. McLay is an International Certified Business Coach, a fellow of the Chartered Professional Accountants of British Columbia and a graduate of the Institute of Corporate Directors Education Program.
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David Richardson - Director
Mr. Richardson has been a director of our company since March 26, 2015 and is a member of the Audit Committee and the Compensation Committee. Mr. Richardson has been the President and Chief Executive Officer of Octaform Systems Inc. since May 1997. Mr. Richardson is currently a Director of ZS2 Technologies Ltd. since October 2020 and a member of the Board of Trustees for AIP Realty Trust since December 2021 Mr. Richardson was a founding member and director of the Asia Pacific Foundation and a leader on various government trade missions to Asia. In addition, he was a director of the Canada China Trade Council and Chairman of the Agriculture Committee. Mr. Richardson has served on a number of public and private boards throughout his career and continues to hold several other directorship positions. Mr. Richardson has received the ICD.D designation from the Institute of Corporate Directors.
Yanyan Zhang, Vice President of Program Management
Yanyan Zhang joined GreenPower in March of 2017 as Project Manager and was promoted to Vice President of Program Management in May of 2021. Yanyan is responsible for planning and development of manufacturing projects in line with strategic business initiatives and deliverables. Yanyan began her career in the electric vehicle industry at BYD, where she successfully managed over 10 international vehicle manufacturing projects for clients including LA Metro and Denver RTD. Yanyan received her Masters degree in Industrial and Systems Engineering from USC.
Claus Tritt - Vice President of Medium Duty and Commercial Vehicle Sales
Claus Tritt joined GreenPower in December of 2022 as Vice President of Medium Duty and Commercial Vehicle Sales, and in this role he oversees the commercial and medium duty vehicle sales strategies and activities of the Company. Claus spent over 30 years moving through progressively senior roles at various divisions within Daimler/Mercedes Benz North America, including overseeing the company's commercial van division in North America. After nearly 30 years at Mercedes Benz, Claus spent time operating a luxury car dealership, and served in a sales and business development role at Canoo.
Family Relationships
There are no family relationships between any of our directors and senior management.
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B. Compensation
Management and Director Compensation
The following table sets forth all direct and indirect compensation paid, payable, awarded, granted, given or otherwise provided, directly or indirectly, by our company or any subsidiary thereof to members of our management and directors of our company, in any capacity, including, for greater certainty, all plan and non-plan compensation, direct and indirect pay, remuneration, economic or financial award, reward, benefit, gift or perquisite paid, payable, awarded, granted, given or otherwise provided to the members of our management or directors of our company for services provided and for services to be provided, directly or indirectly, to our company or any subsidiary thereof for the year ended March 31, 2024, other than stock options and other compensation securities:
| Name and Position | Year |
Salary, Consulting Fee, Retainer or Commission ($)(1) |
Bonus ($) |
Committee or Meeting Fees |
Value of All Compensation |
Total Compensation |
| Fraser Atkinson Chief Executive Officer, Chairman & Director |
2024 |
$450,000(2) | Nil(3) | Nil | Nil | $450,000 |
| Brendan Riley President & Director |
2024 | $350,000 | Nil(3) | Nil | $12,706 | $362,706 |
| Michael Sieffert Chief Financial Officer & Secretary |
2024 |
$222,420 | Nil(3) |
Nil | $2,831 | $225,251 |
| Mark Achtemichuk Director |
2024 | $25,000 | Nil | Nil | Nil | $25,000 |
| Malcolm Clay Director |
2024 | $35,000 | Nil | Nil | Nil | $35,000 |
| David Richardson Director |
2024 | $25,000 | Nil | Nil | Nil | $25,000 |
| Cathy McLay Director |
2024 | $30,000 | Nil | Nil | Nil | $30,000 |
| Yanyan Zhang Vice President of Program Management |
2024 | $150,000 | Nil | Nil | $4,473 | $154,473 |
| Claus Tritt c |
2024 | $150,000 | Nil | Nil | $2,282 | $152,282 |
Notes:
(1) Salary, consulting fee, retainer or commission paid to Michael Sieffert has been converted from CDN$ to US$ at an exchange rate of 0.7414. This exchange rate is the average exchange rates used for financial reporting purposes for the twelve months ended March 31, 2024.
(2) This consulting fee was paid to Koko Financial Services Ltd., a private company owned by Mr. Atkinson as compensation for Mr. Atkinson's provision of services of Koko Financial Services Ltd. per the amended Management Services Agreement between GreenPower Motor Company Inc., Koko Financial Services Inc. and Fraser Atkinson dated September 29, 2023.
(3) As of the date of this report the Compensation Committee has not approved an annual bonus for the CEO, President or CFO for the year ended March 31, 2024.
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Employment, Consulting and Management Agreements
Fraser Atkinson
On September 29, 2023, we entered into an employment agreement with Koko Financial Services Inc. and Fraser Atkinson, which was effective as of April 1, 2023. Under the terms of the employment agreement, Koko Financial Services Inc. accepted the appointment with the designated personnel, Fraser Atkinson, to serve as the Chief Executive Officer of our company for a term of one year from the effective date, which will be automatically extended for one year if not otherwise terminated pursuant to the terms of the employment agreement. Under the terms of the employment agreement, Koko Financial Services Inc. will be paid a base fee of US$450,000 per year, plus applicable taxes, and will be eligible for cash bonuses of up to 125% of the annual base fee. In addition, and pursuant to the employment agreement, Fraser Atkinson is eligible for stock option grants and equity incentive grants.
Brendan Riley
On September 29, 2023, we entered into an employment agreement with Brendan Riley, which was effective as of April 1, 2023. Under the terms of the employment agreement, Brendan Riley agreed to serve as the President of our company for a term of one year from the effective date, which will be automatically extended for one year if not otherwise terminated pursuant to the terms of the employment agreement. Under the terms of the employment agreement Brendan Riley will be paid a base salary of US$350,000 per year and will be eligible for cash bonuses of up to 100% of his annual base salary. In addition, and pursuant to the employment agreement, Brendan Riley is eligible for stock option grants and equity incentive grants.
Michael Sieffert
On September 29, 2023, we entered into an employment agreement with Michael Sieffert, which was effective as of April 1, 2023. Under the terms of the employment agreement, Michael Sieffert agreed to serve as the Chief Financial Officer of our company for a term of one year from the effective date, which will be automatically extended for one year if not otherwise terminated pursuant to the terms of the employment agreement. Under the terms of the employment agreement, Michael Sieffert will be paid a base salary of CDN300,000 per year, and will be eligible for cash bonuses of up to 75% of his annual base salary. In addition, and pursuant to the employment agreement, Michael Sieffert is eligible for stock option grants and equity incentive grants.
Yanyan Zhang
On March 28, 2017, we entered into an employment agreement with Yanyan Zhang for the position of Project Manager. Ms. Zhang, agreed to accept the role of Project Manager for our company and agreed to fulfil any and all duties, roles and responsibilities relevant to this position as set out in the employment agreement. Ms. Zhang was subsequently promoted to Director of Project Management during 2020 and was promoted to the position of Vice President of Program Management in May 2021. Pursuant to the employment agreement, we agreed to pay Ms. Zhang an annual base salary of $72,000 for the position of Project Manager, which was subsequently increased, and her current salary is $150,000. Ms. Zhang is eligible for bonuses and for stock option grants from GreenPower's stock option plan.
Claus Tritt
During November 2022, we entered into an employment agreement with Claus Tritt for the position of Vice President of Medium Duty / Commercial vehicles. In this role Mr. Tritt is responsible for managing the sales staff and setting targets and strategies for the sales team, including within GreenPower's truck body division. Pursuant to the employment agreement, we agreed to pay Mr. Tritt an annual base salary of $150,000 and he is eligible for bonuses and for stock option grants from GreenPower's stock option plan.
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Benefits Upon Termination
We have no contract, agreement, plan or arrangement, whether written or unwritten, that provides for benefits to our directors or members of our management upon termination of employment of our directors or members of our management.
Stock Options and Other Compensation Securities
The following table sets out all compensation securities granted or issued to members of our management and directors of our company during the year ended March 31, 2024 for services provided, or to be provided, directly or indirectly, to our company or any subsidiary thereof:
| Name and Position |
Type of Compensation Security |
Number of Compensation Securities, Number of Underlying Securities |
Date of Issue or Grant |
Issue, Conversion or Exercise Price |
Closing Price of Security or Underlying Security on Date of Grant |
Closing Price of Security or Underlying Security at March 28, 2024 |
Expiry Date |
| Fraser Atkinson Chief Executive Officer, Chairman & Director |
Stock Options to purchase Common Shares | 60,000(1) | March 27, 2024 | CDN$2.72 | CDN$2.72 | CDN$2.70 | March 27, 2029 |
| Brendan Riley President & Director |
Stock Options to purchase Common Shares | 60,000(1) | March 27, 2024 | CDN$2.72 | CDN$2.72 | CDN$2.70 | March 27, 2029 |
| Michael Sieffert Chief Financial Officer & Secretary |
Stock Options to purchase Common Shares | 60,000(1) | March 27, 2024 | CDN$2.72 | CDN$2.72 | CDN$2.70 | March 27, 2029 |
| Mark Achtemichuk Director and Former Chief Financial Officer & Secretary |
Stock Options to purchase Common Shares | 60,000(1) | March 27, 2024 | CDN$2.72 | CDN$2.72 | CDN$2.70 | March 27, 2029 |
| Malcolm Clay Director |
Stock Options to purchase Common Shares | 60,000(1) | March 27, 2024 | CDN$2.72 | CDN$2.72 | CDN$2.70 | March 27, 2029 |
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| Name and Position |
Type of Compensation Security |
Number of Compensation Securities, Number of Underlying Securities |
Date of Issue or Grant |
Issue, Conversion or Exercise Price |
Closing Price of Security or Underlying Security on Date of Grant |
Closing Price of Security or Underlying Security at March 28, 2023 |
Expiry Date |
| David Richardson Director |
Stock Options to purchase Common Shares | 60,000(1) | March 27, 2024 | CDN$2.72 | CDN$2.72 | CDN$2.70 | March 27, 2029 |
| Cathy McLay Director | Stock Options to purchase Common Shares | 60,000(1) | March 27, 2024 | CDN$2.72 | CDN$2.72 | CDN$2.70 | March 27, 2029 |
| Yanyan Zhang Vice President of Program Management |
Stock Options to purchase Common Shares | 20,000(3) | March 27, 2024 | CDN$2.72 | CDN$2.72 | CDN$2.70 | March 27, 2029 |
| Claus Tritt Vice President of Medium Duty and Commercial Vehicle Sales |
Stock Options to purchase Common Shares | 10,000(2) | March 27, 2024 |