UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of August 2020

Commission File Number 001-39476

GreenPower Motor Company Inc.

(Translation of registrant's name into English)

#240 - 209 Carrall Street, Vancouver, British Columbia  V6B 2J2

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.   
Form 20-F  [X]  Form 40-F  [  ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)  [  ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [  ]


- 2- 

SUBMITTED HEREWITH

99.1 Financial Statements for June 30, 2020
   
99.2 Management's Discussion and Analysis for June 30, 2020
   
99.3 CEO Certification for June 30, 2020
   
99.4 CFO Certification for June 30, 2020
   
99.5 Press release dated August 31, 2020

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GreenPower Motors Inc.

/s/ Michael Sieffert
_____________________________________________
Michael Sieffert, Chief Financial Officer
Date:  August 31, 2020


GreenPower Motor Company Inc.: Exhibit 99.1 - Filed by newsfilecorp.com

 

 

GREENPOWER MOTOR COMPANY INC.

CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS

 

For the Three Months Ended June 30, 2020 and June 30, 2019

(Expressed in US dollars)

(Unaudited - Prepared by Management)

 

 


GREENPOWER MOTOR COMPANY INC.
Consolidated Condensed Interim Financial Statements
(Expressed in US Dollars)

(Unaudited - Prepared by Management)

June 30, 2020

Notice of no Auditor Review of Interim Financial Statements 3
   
Consolidated Condensed Statements of Financial Position 4
   
Consolidated Condensed Interim Statements of Operations and Comprehensive Loss 5
   
Consolidated Condensed Interim Statements of Changes in Equity 6
   
Consolidated Statements of Cash Flows 7
   
Notes to the Consolidated Financial Statements 8 - 32


 


NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3(a)), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

The accompanying unaudited interim financial statements of GreenPower Motor Company Inc. (the "Company") have been prepared by and are the responsibility of the Company's management.

The Company's independent auditor has not performed a review of these interim financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity's auditor.


GREENPOWER MOTOR COMPANY INC.
Consolidated Condensed Interim Statements of Financial Position
As at June 30, 2020 and March 31, 2020
(Expressed in US Dollars)
(Unaudited - Prepared by Management)


    June 30, 2020     March 31, 2020  
    (Unaudited)     (Audited)  
Current            
   Cash and restricted cash (Note 3) $ 310,458   $ 451,605  
   Accounts receivable (Note 4)   2,300,550     943,812  
   GST receivable   39,851     33,393  
   Current portion of finance lease receivables (Note 5)   109,764     82,501  
   Inventory (Note 6)   6,169,096     6,590,600  
   Prepaids and deposits   22,227     22,083  
    8,951,946     8,123,994  
Non-current            
   Promissory note receivable (Note 7)   409,659     384,261  
   Finance lease receivables (Note 5)   1,905,412     1,247,790  
   Right of use assets (Note 8)   553,938     620,191  
   Property and equipment (Note 9)   1,711,298     1,739,529  
   Non current portion of prepaids and deposits   46,692     46,692  
   Deferred financing fees (Note 13)   894,713     1,045,221  
   Other assets   1     1  
  $ 14,473,657   $ 13,207,679  
             
Liabilities            
Current            
   Line of credit (Note 10) $ 7,012,294   $ 5,469,944  
   Accounts payable and accrued liabilities (Note 19)   1,715,839     1,021,738  
   Note payable (Notes 14 and 19)   10,574     10,574  
   Deferred revenue (Note 16)   267,839     426,157  
   Current portion of warranty liability (Note 22)   316,146     121,944  
   Current portion of promissory note payable (Note 15)   58,328     58,038  
   Current portion of lease liabilities (Note 8)   278,499     272,468  
    9,659,519     7,380,863  
             
Non-current            
   Loans payable to related parties (Note 19)   2,683,067     2,700,625  
   Government Grant - Payroll Protection Program Loan   362,065     -  
   Convertible debentures (Notes 14 and 19)   3,092,633     2,995,136  
   Lease liabilities (Note 8)   314,873     386,650  
   Warranty liability (Note 22)   426,731     573,203  
   Promissory note payable (Note 15)   331,474     346,158  
    16,870,364     14,382,635  
             
Equity (Deficit)            
   Share capital (Note 11)   16,967,211     16,892,725  
   Equity portion of convertible debentures (Note 14)   372,604     379,506  
   Reserves   5,647,671     5,515,639  
   Accumulated other comprehensive loss   (102,222 )   (110,192 )
   Accumulated deficit   (25,281,971 )   (23,852,634 )
    (2,396,707 )   (1,174,956 )
  $ 14,473,657   $ 13,207,679  
             
Nature and Continuance of Operations - Note 1            
Subsequent Events - Note 23            

Approved on behalf of the Board on August 30, 2020

/s/ Fraser Atkinson   /s/ Mark Achtemichuk
Director   Director

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


GREENPOWER MOTOR COMPANY INC.
Consolidated Statements of Operations and Comprehensive Loss
For the Three Months Ended June 30, 2020 and 2019

(Expressed in US dollars)            
(Unaudited - Prepared by Management)            
    June 30,     June 30,  
    2020     2019  
             
Revenue (Note 21) $ 2,272,255   $ 2,449,951  
Cost of Sales   1,653,672     1,726,555  
Gross Profit   618,583     723,396  
             
Sales, general and administrative costs            
Administrative fees (Note 19)   857,930     668,903  
Depreciation (Notes 8 and 9)   114,761     143,586  
Product development costs   221,109     214,413  
Office expense   50,959     57,483  
Professional fees (Note 19)   96,426     60,692  
Sales and marketing (Note 19)   (9,530 )   97,158  
Share-based payments (Notes 12 and 19)   132,032     93,544  
Transportation costs (Note 19)   26,741     61,980  
Travel, accommodation, meals and entertainment (Note 19)   36,853     88,347  
Allowance for credit losses (Note 4)   (33,552 )   -  
Total sales, general and administrative costs   1,493,728     1,486,106  
             
Loss from operations before interest, accretion and foreign exchange   (875,145 )   (762,710 )
             
Interest and accretion   (555,319 )   (500,612 )
Foreign exchange gain/(loss)   1,126     (162 )
             
Loss for the period   (1,429,337 )   (1,263,484 )
             
Other comprehensive income / (loss)            
Cumulative translation reserve   7,970     (4,511 )
             
Total comprehensive loss for the period $ (1,421,367 ) $ (1,267,995 )
             
Loss per common share, basic and diluted $ (0.01 ) $ (0.01 )
             
Weighted average number of common shares outstanding, basic and diluted   108,440,218     102,112,335  

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


GREENPOWER MOTOR COMPANY INC.
Consolidated Condensed Interim Statements of Changes in Equity (Deficit)
For the Three Months ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited - prepared by Management)

    Share Capital     Equity portion           Accumulated other              
    Number of           of convertible           comprehensive     Accumulated        
    Common shares     Amount     debentures     Reserves     gain (loss)     Deficit     Total  
                                           
Balance, March 31, 2019   94,207,453   $ 12,984,796   $ 383,094   $ 5,342,510   $ (89,368 ) $ (18,706,668 ) $ (85,636 )
                                           
Shares issued for cash at USD $0.305 per share unit   13,114,754     4,000,000     -     -     -     -     4,000,000  
                                           
Share issuance costs   -     (367,247 )   -     -     -     -     (367,247 )
                                           
Fair value assigned to the warrants on issuance of Share Units   -     (132,146 )   -     199,226     -     -     67,080  
                                           
Share-based payments   -     -     -     93,544     -     -     93,544  
                                           
Cumulative translation reserve   -     -     -     -     (4,511 )   -     (4,511 )
                                           
Net loss for the period   -     -     -     -     -     (1,263,484 )   (1,263,484 )
                                           
Balance, June 30, 2019   107,322,207     16,485,403     383,094     5,635,280     (93,879 )   (19,970,152 )   2,439,746  
                                           
Balance, March 31, 2020   108,407,251   $ 16,892,725   $ 379,506   $ 5,515,639   $ (110,192 ) $ (23,852,634 ) $ (1,174,956 )
                                           
Share issuance costs   -     12,075     -     -     -     -     12,075  
                                           
Shares issued for conversion of debentures   250,000     62,411     (6,902 )   -     -     -     55,509  
                                           
Share-based payments   -     -     -     132,032     -     -     132,032  
                                           
Cumulative translation reserve   -     -     -     -     7,970     -     7,970  
                                           
Net loss for the period   -     -     -     -     -     (1,429,337 )   (1,429,337 )
                                           
Balance, June 30, 2020   108,657,251     16,967,211     372,604     5,647,671     (102,222 )   (25,281,971 )   (2,396,707 )

 


GREENPOWER MOTOR COMPANY INC.
Consolidated Statements of Cash Flows
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited - Prepared by Management)

    June 30, 2020     June 30, 2019  
Cash flows from (used in) operating activities            
  Loss for the year $ (1,429,337 ) $ (1,263,484 )
  Items not affecting cash            
    Allowance for credit losses   (33,552 )   -  
    Depreciation   114,761     143,586  
    Share-based payments   132,032     93,544  
    Accretion and accrued interest   237,988     79,609  
    Amortization of deferred financing fees   150,507     156,732  
    Foreign exchange gain   1,126     162  
Cash flow used in operating activities before changes in non-cash items   (826,475 )   (789,851 )
             
  Changes in non-cash items:            
    Accounts receivable   (1,356,738 )   (852,722 )
    GST receivable   (6,458 )   4,052  
    Inventory   421,504     (2,739,801 )
    Prepaids and deposits   (144 )   11,605  
    Promissory note receivable   (25,398 )   (21,434 )
    Finance lease receivables   (684,885 )   (177,567 )
    Deposits from customers   (169,079 )   (10,000 )
    Accounts payable and accrued liabilities   694,101     812,231  
    Deferred revenue   (158,318 )   (225,000 )
    Warranty liability   47,730     38,864  
    (2,064,160 )   (3,949,624 )
             
Cash flows from (used in) investing activities            
  Government grant proceeds   361,500     -  
  Purchase of property and equipment   (21,953 )   (37,018 )
    339,547     (37,018 )
             
Cash flows from (used in) financing activities            
  Repayment of loans payable to related parties   (112,635 )   (286,249 )
  Loans from related parties   137,074     149,893  
  Proceeds from line of credit   1,542,350     521,248  
  Principal payments on promissory note   (14,401 )   (14,162 )
  Principal payments on lease liabilities, net of interest expense   (65,746 )   (45,851 )
  Proceeds from private placement of units   -     4,000,000  
  Proceeds from private placements of convertible debentures   55,509     -  
  Private placement costs   12,075     (346,436 )
    1,554,226     3,978,443  
             
Foreign exchange on cash   29,240     32,848  
             
Net (decrease) increase in cash and restricted cash   (141,147 )   24,649  
Cash and restricted cash, beginning of year   451,605     198,920  
Cash and restricted cash, end of year $ 310,458   $ 223,569  
             
Supplemental Cash Flow Disclosure:            
Interest paid $ 278,894   $ 264,271  
Taxes paid $ -   $ -  

 


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

1. 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 in the business of manufacturing and distributing all-electric transit, school and charter buses.

The corporate office is located at Suite 240 - 209 Carrall St., Vancouver, Canada.

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards with the assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. 

The Company's continuing operations are dependent upon its ability to raise capital and generate cash flows. At June 30, 2020, the Company had working capital of $(707,573) and an accumulated deficit of $(25,281,971). On August 28th, 2020 the Company priced its U.S. initial public offering (the "Offering") to 1,860,000 post-consolidation common shares of the Company (each, a "Share") at a price  of $20 per Share. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 279,000 Shares at the initial public offering price, less the underwriting discounts and commissions. The gross proceeds from the Offering, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, are expected to be approximately US$37.2 million, excluding any exercise of the underwriters' option to purchase additional common shares. The Offering is expected to close on September 1, 2020, subject to the satisfaction of customary closing conditions.

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. To this end, the Company has now delivered and received payment for buses to customers, has a backlog of orders for delivery, has inventory of approximately $6.2 million and has a line of credit with a credit limit of up to $8 million to meet funding requirements. The Company's ability to achieve its business objectives is subject to material uncertainty which may cast significant doubt upon the Company's ability to continue as a going concern.

The Company faces risks from the COVID-19 global pandemic which has had, and will continue to have, a material adverse impact on our business and financial condition. The future impact of the COVID-19 global pandemic is inherently uncertain, and is expected to negatively impact the financial ability of our customers to purchase vehicles from us, of our suppliers' ability to deliver products used in the manufacture of our all-electric vehicles in a timely manner, if at all, in our employees' ability to manufacture our vehicles and to carry out their other duties in order to sustain our business, and in our ability to collect certain receivables owing to us, among other factors. In addition, COVID-19 has caused a significant reduction in public transit ridership, which is one of the primary market segments served by Greenpower, which may lead to reduced future sales to this segment, as transit properties adjust to changing demand for their services. We have taken steps to modify our business and staffing levels in order to manage impacts caused by the COVID-19 global pandemic and resulting government and regulatory health orders, these factors are expected to continue to have a negative impact on our financial results, operations, outlook, goals, growth prospects, cash flows, liquidity and share price, and the potential timing and ultimate duration of these negative impacts is uncertain.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

2. Significant Accounting Policies

(a) Basis of presentation

Statement of Compliance with IFRS

The Consolidated Condensed Interim Financial Statements of the Company are prepared in accordance with International Financial Reporting Standards ("IFRS") applicable to interim financial information, as outlined in International Accounting Standard ("IAS") 34, Interim Financial Reporting, and using the accounting policies consistent with those in the audited consolidated financial statements as at and for the year ended March 31, 2020.

These Consolidated Condensed Interim Financial Statements were prepared under the historical cost convention, except for certain items not carried at historical cost as discussed below. All amounts are expressed in US dollars, unless otherwise stated.

(b) Basis of consolidation

These consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries:

Name of

Country of

Ownership

Ownership

Principal

Subsidiary

Incorporation

30-Jun-20 

31-Mar-20

Activity

GP GreenPower Industries Inc.

Canada

100%

100%

Holding company

GreenPower Motor Company, Inc.

United States

100%

100%

Electric bus manufacturing and distribution

0939181 BC Ltd.

Canada

100%

100%

Electric bus sales and leasing

San Joaquin Valley Equipment Leasing, Inc.

 

 

 

 

(formerly Utah Manganese, Inc.)

United States

100%

100%

Electric bus leasing

0999314 BC Ltd.

Canada

100%

100%

Inactive

All intercompany balances, transactions, revenues and expenses are eliminated upon consolidation. Certain information and note disclosures which are considered material to the understanding of the Company's consolidated financial statements are provided below.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

(c) Financial instruments

IFRS 9 requires a company to classify its financial instruments based on the way they are measured, into one of three categories: Amortized Cost, FVTPL, and FVOCI.  The Company did not have any financial instruments measured at FVTPL or FVOCI as at June 30, 2020. All of the Company's financial instruments, initially recognized at fair value, are subsequently measured at amortized cost using the effective interest rate method. Transaction costs are included in the initial fair value measurement of the financial instruments. 

Subsidiaries are consolidated from the date of acquisition, being the date on which the Company obtains control, and continue to be consolidated until the date when such control ceases. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

2. Significant Accounting Policies (continued)

(d) Cash and cash equivalents

Cash and cash equivalents usually consist of highly liquid investments which are readily convertible into cash with maturity of three months or less and are subject to an insignificant risk of change in value. As at June 30, 2020, and March 31, 2020 the Company had no cash equivalents.

(e) Revenue recognition

The Company recognizes revenue from contracts with customers when a customer obtains control of the goods or services, and the Company satisfies its performance obligation to customers in exchange for consideration the Company expects to receive, net of discounts and taxes. Revenue is allocated to each performance obligation.

Most of the Company's contracts have a single performance obligation as the promise to transfer the individual goods. Revenues from the sale of products are recognized when the goods are shipped or accepted by the customer, depending on the delivery conditions, and title and risk have passed to the customer.  Revenues from services such as supporting and training relating to the sale of products are recognized as the services are performed.

The Company enters into a few transactions that represent multiple-element arrangements, which may include any combination of products, support and training services, and extended warranty. The allocation of consideration to the multiple-element is dependent on the explicit stand-alone selling price stipulated in the contract term.

(f) Impairment of long-lived assets

At the end of each reporting period, the Company's assets are reviewed to determine whether there is any indication that those assets may be impaired. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment, if any. The recoverable amount is the higher of fair value less costs to sell and value in use. Fair value is determined as the amount that would be obtained from the sale of the asset in an arm's length transaction between knowledgeable and willing parties. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the Consolidated Statements of Operations for the period. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but to an amount that does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in the Consolidated Statements of Operations.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

2. Significant Accounting Policies (continued)

(g) Foreign currency translation

The consolidated entities and their respective functional currencies are as follows:

Entity

Functional Currency

GreenPower Motor Company Inc. (parent)

Canadian Dollar

GP GreenPower Industries Inc.

Canadian Dollar

GreenPower Motor Company, Inc.

U.S. Dollar

0939181 BC Ltd.

Canadian Dollar

San Joaquin Valley Equipment Leasing, Inc. (formerly Utah Manganese, Inc.)

U.S. Dollar

0999314 B.C. Ltd.

Canadian Dollar

Translation to functional currency

Foreign currency transactions are translated into U.S. dollars using exchange rates in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate in effect at the measurement date. Non-monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the historical exchange rate or the exchange rate in effect at the measurement date for items recognized at FVTPL. Gains and losses arising from foreign exchange are included in the Consolidated Statements of Operations.

Translation to presentation currency

The results and financial position of those entities with a functional currency different from the presentation currency are translated into the presentation currency as follows:

- assets and liabilities are translated at the closing rate at the date of the Statements of Financial Position;

- income and expenses are translated at average exchange rates; and

- all resulting exchange differences are recognized in accumulated other comprehensive income/loss.

(h) Inventory

Inventory is recorded at the lower of cost and net realizable value with cost determined on a specific item basis. The Company's inventory consists of electric buses in process, production supplies, and finished goods. In determining net realizable value for new buses, the Company primarily considers the age of the vehicles along with the timing of annual and model changeovers. For used buses, the Company considers recent market data and trends such as loss histories along with the current age of the inventory.

(i) Property, plant, and equipment

Property, plant and equipment ("PPE") are carried at cost, less accumulated depreciation and accumulated impairment losses. The cost of an item of PPE consists of the purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for its intended use and an initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Depreciation is provided at rates calculated to write off the cost of PPE, less their estimated residual value, using the following rates/estimated lives and methods:


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

2. Significant Accounting Policies (continued)

(i) Property, plant, and equipment (Continued)

Leasehold improvements

Over term of lease, straight line method

Computers

3 years, straight line method

EV equipment

3 years, straight line method

Furniture

7 years, straight line method

Automobile

10 years, straight line method

Leased asset

12 years, straight line method

Diesel and Electric buses

12 years, straight line method

An item of PPE is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset, determined as the difference between the net disposal proceeds and the carrying amount of the asset, is recognized in profit or loss in the Consolidated Statements of Operations. Where an item of PPE comprises major components with different useful lives, the components are accounted for as separate items of PPE. Expenditures incurred to replace a component of an item of PPE is accounted for separately, including major inspection and overhaul expenditures are capitalized.

(j) Loss per share

The Company presents basic and diluted loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted loss per share does not adjust the loss attributable to common shareholders or the weighted average number of common shares outstanding when the effect is anti-dilutive.

(k) Share capital

Common shares are classified as equity. Finders fees and other related share issue costs, such as legal, regulatory, and printing, on the issue of the Company's shares are charged directly to share capital, net of any tax effects. During the three months ended June 30, 2020, and June 30, 2019 the Company recorded $(12,075), and $346,436 respectively, in share issuance costs on its Consolidated Condensed Interim Statements of Changes in Equity in regards to the issuance of shares (Note 10).

(l) Income taxes

Income tax expense comprises current and deferred tax. Current and deferred tax are recognized in net income/loss except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive loss/income.

Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current period and any adjustment to income taxes payable in respect to previous years. Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year end date.

Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for taxable temporary differences arising on the initial recognition of goodwill and temporary differences arising on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

2. Significant Accounting Policies (continued)

(l) Income taxes (Continued)

Recognition of deferred tax assets for unused tax losses, tax credits, and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized. At the end of each reporting period the Company reassesses deferred tax assets. The Company recognizes a previously unrecognized deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

(m) Critical accounting estimates and judgments

The preparation of these consolidated financial statements requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. These consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to critical accounting estimates are recognized in the period in which the estimate is revised and future periods if the revision affects both current and future periods. These estimates are based on historical experience, current and future economic conditions and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the inputs used in the Black-Scholes option pricing model to measure stock-based compensation and warrants, determination of the useful life of equipment, net realizable value of inventory, provision for warranty expense, and the $nil provision for income taxes.

Effective January 1, 2019, management changed its estimated useful life for diesel and electric buses (including some categorized under Leased Assets in note 9) from 7 years to 12 years.

Critical accounting judgments

i. the determination of the discount rate to use to discount the promissory note receivable, finance lease receivable and lease liabilities;

ii. the determination of the functional currency of each entity within the consolidated Company;

iii. the Company's ability to continue as a going concern.

iv. The classification of leases as either financial leases or operating leases; and

v. The identification of performance obligations in revenue contracts and the determination of when they are satisfied.

(n)  Share-based payment transactions

The Company grants share-based awards to certain officers, employees, directors and other eligible persons. The fair value of the equity-settled awards is determined at the date of the grant.  In calculating fair value, no account is taken of any vesting conditions, other than conditions linked to the price of the shares of the Company.  Each tranche in an award is considered a separate award with its own vesting period and grant date fair value.  The fair value is determined by using the Black-Scholes option pricing model.  At each financial reporting date, the cumulative expense representing the extent to which the vesting period has expired and management's best estimate of the awards that are ultimately expected to vest is computed.  The movement in cumulative expense is recognized in the Consolidated Statements of Operations with a corresponding entry against the related equity settled share-based payments reserve account over the vesting period.  No expense is recognized for awards that do not ultimately vest.  If the awards expire unexercised, the related amount remains in share-option reserve.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

2. Significant Accounting Policies (continued)

(n)  Share-based payment transactions (Continued)

Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in the Consolidated Statements of Operations, unless they are related to the issuance of shares.  Amounts related to the issuance of shares are recorded as a reduction of share capital.  When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model.  The fair value of stock options granted to non-employees is re-measured at the earlier of each financial reporting or vesting date, and any adjustment is charged or credited to operations upon re-measurement.

(o) Valuation of equity units issued in private placements

The Company has adopted a residual value method with respect to the measurement of shares and warrants issued as private placement units.  The residual value method first allocates value to the more easily measurable component based on fair value and then the residual value, if any, to the less easily measurable component. 

The fair value of the common shares issued in the private placement during the three months ended June 30, 2020 was determined to be the more easily measurable component and were valued at their fair value, as determined by the closing quoted bid price on the announcement date less a discount to the public trading price typical of a private placement for similarly sized public companies. The balance, if any, is allocated to the attached warrants. Any fair value attributed to the warrants is recorded as warrant reserve. If the warrants are exercised, the related amount is reclassified as share capital. If the warrants expire unexercised, the related amount remains in warrant reserve.

(p) Government grants

The Company receives grants from government agencies related to sales and leases of its electric buses. The accounting for these grants depends on whether the carrying amount of the vehicle remains with the Company, which is the case for operating leases where the Company is the lessor. For government grants associated with leased vehicles under operating leases, the grant reduces the value of the asset.

(q) Provisions and contingent liabilities

Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Provisions are discounted when the time value of money is significant.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

2. Significant Accounting Policies (continued)

(r) Leases

Effective April 1, 2018, the Company adopted IFRS 16 using the modified retrospective approach and accordingly the information presented for the year ended March 31, 2018 has not been restated. The cumulative effect of the initial application, if any, is recognized in deficit at April 1, 2018. Comparative amounts up to March 31, 2018 remain as previously reported under IAS 17 and related interpretations.

Definition of a lease

At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company has elected to apply the practical expedient to account for leases for which the lease term ends within 12 months of the date of initial application and leases of low value assets as short-term leases. The lease payments associated with these leases are recognized as expenses on a straight-line basis over the lease term.

The Company has also elected to apply the practical expedient for excluding the initial direct costs for the measurement of right of use assets at the date of initial application, as well as for using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

As a lessee

The Company recognizes a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost, based on the initial amount of the lease liability. The assets are depreciated to the earlier of the end of the useful life of the right of use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, at the Company's incremental borrowing rate.

The ongoing lease liability is measured at amortized cost using the effective interest method. It is re-measured when there is a change in future lease payments, if there is a change in the Company's estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is premeasured in this way a corresponding adjustment is made to the carrying amount of the right of use asset or is recorded in profit or loss if the carrying amount of the right of use asset has been reduced to zero.

As a lessor

When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

2. Significant Accounting Policies (continued)

(r) Leases (Continued)

If an arrangement contains lease and non-lease components, the Company applies IFRS 15 to allocate the consideration in the contract.

The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term, included in Revenue in the consolidated statements of operations.

Impact on adoption

On initial application, the Company has elected to record right of use assets based on the corresponding lease liabilities, as described more fully in Note 8. Lease liabilities have been measured by discounting future lease payments at the incremental borrowing rate of 8% per annum, and represents the Company's best estimate of the rate of interest that it would expect to pay to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in the current economic environment. As of March 31, 2019, the remaining non-cancelable period of one of the two leases is 29 months, and the other is 42 months.

The application of IFRS 16 to leases previously classified as operating leases under IAS 17, resulted in the recognition of right of use assets and lease liabilities as at April 1, 2018. The following table summarizes the Right of Use Assets of the Company for the year ended March 31, 2019:

Right of Use Assets, March 31, 2018 $ -  
Additions to Right of Use Assets during the year   787,326  
Depreciation during the year   (87,752 )
Right of Use Assets, March 31, 2019 $ 699,574  

During the year ended March 31, 2019, the Company entered into two transactions as lessor, one which was accounted for as an operating lease, and the other as a finance lease (Note 5). The adoption of IFRS 16 did not have a material impact on the financial results for the year ended March 31, 2019 for either of these transactions.

(s) Adoption of accounting standards

The following new or amended standards were adopted during the year ended March 31, 2020:

IAS 23 Borrowing Costs

The amendment to IAS 23 Borrowing Costs clarifies that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowings.

The amendment to IAS 23 Borrowing Costs did not have an impact on the Consolidated Financial Statements of the Company for the year ended March 31, 2020.

(t) Future accounting pronouncements

Certain new accounting standards and interpretations have been published by the IASB or the IFRS Interpretations Committee that are not mandatory for the March 31, 2020 reporting period.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

2. Significant Accounting Policies (continued)

(t) Future accounting pronouncements (Continued)

The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Company has not early adopted any of these standards and is currently evaluating the impact, if any, that these standards might have on its consolidated financial statements.

2. Restricted Cash

The Company has a restricted cash balance of $151,913 as at June 30, 2020 (March 31, 2020 - $151,909) on deposit at a major financial institution in the United States. The funds relate to a contract for the sale of vehicles and will be returned to the Company within 30 days of acceptance of the vehicles by the customer.

4. Accounts Receivable

The Company has evaluated the carrying value of accounts receivable as at June 30, 2020 in accordance with IFRS 9 and has determined that an allowance against accounts receivable of $(33,552) as at June 30, 2020 (March 31, 2020 - $46,447) is warranted.

5. Finance Lease Receivable

Greenpower's wholly owned subsidiary San Joaquin Valley Equipment Leasing Inc. ("SJVEL") leases vehicles to several customers, and as at June 30, 2020 the Company had a total of 43 (March 31, 2020 - 25) vehicles on lease that were determined to be finance leases, and the Company had a total of 2 (March 31, 2020 - 2) vehicles on lease that were determined to be operating leases. During the three months ended June 30, 2020, the Company entered into 18 finance leases, with payments under the leases scheduled to begin in December 2020. For operating leases, lease payments are recognized in revenue when earned.

For the three months ended June 30, 2020, selling profit on finance leases was $597,087 (March 31, 2020 - $865,009). The following table shows changes in Finance Lease Receivables during the three months ended June 30, 2020 and the year ended March 31, 2020:

    June 30, 2020     March 31, 2020     
Year 1 $ 297,294   $ 208,104  
Year 2   357,875     236,712  
Year 3   491,047     378,298  
Year 4, including unguaranteed residual   1,248,087     685,449  
Year 5, including unguaranteed residual   51,281     51,281  
Remainder, including unguaranteed residual   163,176     175,997  
less: amount representing interest income   (593,584 )   (405,550 )
Finance Lease Receivable $ 2,015,176   $ 1,330,291  
Current Portion of Finance Lease Receivable $ 109,764   $ 82,501  
Long Term Portion of Finance Lease Receivable $ 1,905,412   $ 1,247,790  

 


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

6. Inventory

The following is a listing of inventory as at June 30, 2020 and March 31, 2020:

    Jun 30, 2020     March 31, 2020  
             
Work in Process $ 3,237,762   $ 2,812,935  
Finished Goods   2,931,334     3,777,665  
             
Total $ 6,169,096   $ 6,590,600  

7. Promissory Note Receivable

On January 23, 2018, the Company entered into multiple lease agreements (the "Agreements") with a third party (the "Customer") for the purpose of leasing EV 550's for a period of five years. On January 30, 2018, these lease payments, except for the final payment to be made by the Customer of CDN$1,000,000 to the Company, were purchased by and transferred to an independent third party (the "Purchaser") in exchange for a lump sum payment of CDN$1,492,611 to the Company. The Purchaser was granted a first priority security interest in the EV550's. Both the lump sum and the discounted final payment were included in Revenue in the Consolidated Statements of Operations.

The CDN$1,000,000 due at the end of the lease term is classified as a Promissory Note Receivable on the Consolidated Statements of Financial Position.  The Promissory Note Receivable has been discounted over the five-year lease term at a rate of 6.4%. 

The Company evaluated the carrying value of the promissory note receivable as at March 31, 2020 in accordance with IFRS 9 and determined there was a significant increase in credit risk. The Company aggregated the present value of expected payments of the promissory note receivable under three probability weighted scenarios and determined that a write down of the asset of CDN$297,883 or $223,919 as at March 31, 2020 was warranted.

8. Right of Use Assets and Lease Liabilities

The Company has recorded Right of Use Assets and Lease Liabilities in its statement of financial position related to three properties in California for which the Company has entered into lease agreements that expire in more than one year. The carrying value of Right of Use Assets as at June 30, 2020 is $553,938. Rental payments on the Right of Use Assets are discounted using an 8% rate of interest and capitalized on the Consolidated Statement of Financial Position as Lease Liabilities. The value of the Right of Use Assets is determined at lease inception and include the capitalized lease liabilities, incorporate upfront costs incurred and incentives received, and the value is depreciated over the term of the lease. For the three months ended June 30, 2020, the Company incurred interest expense of $11,770 on the Lease Liabilities, recognized depreciation expense of $66,253 on the Right of Use Assets and made total rental payments of $77,516. There were no additions to Right of Use Assets during the quarter ended June 30, 2020.

For one of the leases there is an option to extend the lease for a further 36 months.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

8. Right of Use Assets and Lease Liabilities (continued)

The following table summarizes payments on GreenPower's Lease Liabilities (undiscounted):

1 year $ 312,643  
2 years $ 272,513  
thereafter $ 56,010  
less amount representing interest expense $ (47,793 )
Lease liability $ 593,372  
Current Portion of Lease Liabilities $ 278,499  
Long Term Portion of Lease Liabilities $ 314,873  

Payments on one lease that is classified as a short-term lease totaled $8,446 for the quarter ended June 30, 2020 and were recognized in rent and maintenance expense. This lease was extended for a period of three months during the quarter and is scheduled to expire in October 2020. The remaining minimum lease payments until the end of the lease are $15,173.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

9. Property and Equipment

The following is a summary of activities for three months ended June 30, 2020:

                      Demonstration     Leased     EV           Leasehold        
Cost   Computers     Furniture     Automobiles     Electric Buses     Asset     Equipment     Land     Improvements     Total  
                                                       
Balance, March 31, 2019   14,116     35,514     51,283     320,723     971,001     641,663     794,431     33,688     2,862,419  
Additions   38,112     8,121     42,973     -     -     50,040     6,286     16,328     161,860  
Transfers from/(to) inventory   -     -     -     511,740     (298,850 )   -     -     -     212,890  
Foreign exchange translation   (379 )   (577 )   -     -     -     -     -     -     (956 )
Balance, March 31, 2020 $ 51,849   $ 43,058   $ 94,256   $ 832,463   $ 672,151   $ 691,703   $ 800,717   $ 50,016   $ 3,236,213  
Additions   1,769     1,941     1,853     -     -     16,165     -     225     21,953  
Transfers from/(to) inventory   -     -     -     -     -     -     -     -     -  
Foreign exchange translation   249     114     -     -     -     -     -     -     363  
Balance, June 30, 2020 $ 53,867   $ 45,113   $ 96,109   $ 832,463   $ 672,151   $ 707,868   $ 800,717   $ 50,241   $ 3,258,529  
                                                       
Depreciation and impairment losses                                                      
                                                       
Balance, March 31, 2019   8,081     11,403     13,481     70,303     598,588     465,403     -     3,033     1,170,292  
Depreciation   9,223     5,604     6,645     79,320     41,084     172,881           12,011     326,768  
Transfers   -     -     -     14,052     (14,052 )   -     -     -     -  
Foreign exchange translation   (380 )   4     -     -     -     -     -     -     (376 )
Balance, March 31, 2020 $ 16,924   $ 17,011   $ 20,126   $ 163,675   $ 625,620   $ 638,284   $ -   $ 15,044   $ 1,496,684  
Depreciation   3,861     1,557     3,477     21,516     10,271     6,389           3,577     50,648  
Transfers   -     -     -     -     -     -     -     -     -  
Foreign exchange translation   163     (264 )   -     -     -     -     -     -     (101 )
Balance, June 30, 2020 $ 20,948   $ 18,304   $ 23,603   $ 185,191   $ 635,891   $ 644,673   $ -   $ 18,621   $ 1,547,231  
                                                       
Carrying amounts                                                      
                                                       
As at March 31, 2020 $ 34,925   $ 26,047   $ 74,130   $ 668,788   $ 46,531   $ 53,419   $ 800,717   $ 34,972   $  1,739,529  
                                                       
As at June 30, 2020 $ 32,919   $ 26,809   $ 72,506   $ 647,272   $ 36,260   $ 63,195   $ 800,717   $ 31,620   $ 1,711,298  

GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

9. Property and Equipment (continued)

During the year ended March 31, 2020 the Company transferred two EV Stars from inventory that are being used for demonstration and testing purposes.

During the year ended March 31, 2019, the Company wrote down the value of two diesel buses from $78,231 to $nil, leased one EV 350 to a customer for a period of 3 years which was determined to be an operating lease and leased one EV 250 to a customer for a period of 7 years which was determined to be a finance lease (Note 5). The EV 250 was previously held in inventory. The carrying value of electric buses was reduced by $319,635 to reflect the Company's receipt of government grants for two EV 350s.

10. Line of Credit

As at June 30, 2020 the Company's Line of Credit had a credit limit of up to $8,000,000 (March 31, 2020 - $8,000,000). The line of Credit bears interest at the bank's US Base Rate (June 30, 2020 - 3.75%, March 31, 2020 - 3.75% ) plus 1.5%.

The Line of Credit is secured by a general floating charge on the Corporation's assets and the assets of one of its subsidiaries, and one of the Company's subsidiaries has provided a corporate guarantee. Two directors of the Company have also provided personal guarantees for a total of $5,020,000. The Line of Credit contains customary business covenants such as maintenance of security, maintenance of corporate existence, and other covenants typical for a corporate operating line of credit, and the Line of Credit has one financial covenant, to maintain a current ratio greater than 1.2:1, and the bank approved a temporary reduction in the current ratio to 1.0:1 as at March 31, 2020 and June 30, 2020. In addition, the availability of the credit limit over $5,000,000 is subject to margin requirements of a percentage of finished goods inventory and accounts receivable, and these margins are tested on a monthly basis. As of June 30, 2020 the credit limit on the Company's Line was $6,982,544 and funds available under the line of credit were approximately $6,560.

11. Share Capital

Authorized

Unlimited number of common shares without par value

Unlimited number of preferred shares without par value

Issued

During the three months ended June 30, 2020, the Company issued a total of 250,000 shares pursuant to the conversion of debentures.

During the year ended March 31, 2020 the Company issued a total of 14,199,798 shares pursuant to the exercise of 835,044 options, the exercise of 125,000 warrants, conversion of debentures for 125,000 shares and 13,114,754 shares issued in a private placement of unit securities during May 2019.

In May 2019, the Company completed a brokered private placement of units for gross proceeds of USD $4.0 million. Under the offering the Company sold 13,114,754 Units at a price of USD $0.305 per unit, with each unit being comprised of one GreenPower common share and one-half share purchase warrant. Each full warrant is exercisable into one share for a period of four years at an exercise price of USD $0.3811 per share, and the warrants contain terms whereby if the share price is above CAD $1.20 per share for ten (10) consecutive trading days then the Company may issue an acceleration notice to accelerate the expiry of the warrants by thirty (30) days from the date of the acceleration notice.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

11. Share Capital (Continued)

As at June 30, 2020 and March 31, 2020 the Company had no shares held in escrow.

12. Stock Options

The Company has an incentive stock option plan whereby it grants options to directors, officers, employees, and consultants of the Company. On May 14, 2019, the Company replaced its Fixed Stock Option Plan (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 allowed for the issuance of up to 10,440,790 shares (the "2016 Plan").

On March 30, 2017, the shareholders approved an increase in the number of common shares available for issuance under the 2016 Plan from 10,440,790 to 13,656,367. On May 4, 2018, the number available for issuance was further increased to 14,909,992.

The Company had the following incentive stock options granted under the 2019 Plan, 2016 Plan, and Plan that are issued and outstanding as at June 30, 2020:

    Exercise     Balance                 Forfeited     Balance  
Expiry Date   Price (CDN$)     March 31, 2020     Granted     Exercised     or Expired     June 30, 2020  
May 26, 2020 $ 0.60     150,000     -     -     (150,000 )   -  
July 10, 2020 ¹ $ 0.55     50,000     -     -     -     50,000  
February 4, 2021 $ 0.35     400,000     -     -     -     400,000  
May 6, 2021 $ 0.35     520,000     -     -     (80,000 )   440,000  
October 27, 2021 $ 0.62     500,000     -     -     -     500,000  
February 2, 2022 $ 0.75     457,000     -     -     -     457,000  
May 26, 2022 $ 0.75     1,037,500     -     -     -     1,037,500  
December 18, 2022 $ 0.45     175,000     -     -     -     175,000  
May 4, 2023 $ 0.50     530,000     -     -     -     530,000  
November 30, 2023 $ 0.43     350,000     -     -     -     350,000  
February 12, 2024 $ 0.50     550,000     -     -     -     550,000  
January 30, 2022 $ 0.37     175,000     -     -     -     175,000  
January 30, 2025 $ 0.37     2,235,000     -     -     -     2,235,000  
Total outstanding         7,129,500     -     -     (230,000 )   6,899,500  
Total exercisable         4,408,250                       4,834,500  
Weighted Average                                    
Exercise Price (CDN$)       $ 0.50     N/A     N/A   $ 0.51   $ 0.49  
Weighted Average Remaining Life         3.0 years                       2.8 years  

1. 50,000 stock options exercisable at CAD$0.55 per share expired unexercised on July 10, 2020.

As at June 30, 2020, there were 3,966,225 stock options available for issuance under the 2019 plan.

During the three months ended June 30, 2020, the Company incurred share-based compensation expense with a measured fair value of $132,032. The fair value of the options granted and vested were recorded as share-based payments on the Consolidated Statements of Operations.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

13. Warrants

As at June 30, 2020, the Company had outstanding warrants, enabling the holders to acquire common shares as follows:

  Exercise   Balance                       Balance  
Expiry Date Price   March 31, 2020     Issued     Exercised     Expired     June 30, 2020  
May 17, 2020 CDN $0.75   2,922,200     -     -     (2,922,200 )   -  
May 31, 2020 CDN $0.75   384,500     -     -     (384,500 )   -  
October 17, 2020 CDN $1.10   311,497     -     -     -     311,497  
June 29, 2021 CDN $0.65   4,400,000     -     -     -     4,400,000  
September 25, 2021 CDN $0.50   3,690,000     -     -     -     3,690,000  
October 12, 2021 CDN $0.50   5,425,000     -     -     -     5,425,000  
March 14, 2022 CDN $0.60   4,800,000     -     -     -     4,800,000  
May 6, 2023 USD $0.3811   6,065,568     -     -     -     6,065,568  
May 8, 2023 USD $0.3811   491,803     -     -     -     491,803  
Total outstanding     28,490,568     -     -     (3,306,700 )   25,183,868  
Weighted Average                                
Exercise Price (CDN$)   $ 0.58     NA     NA   $ 0.75   $ 0.56  
Weighted Average Life     1.7 years                       1.7 years  

In May 2019 the Company completed a brokered private placement of units for gross proceeds of USD $4.0 million. Under the offering the Company sold 13,114,754 Units at a price of USD $0.305 per unit, with each unit being comprised of one GreenPower common share and one-half share purchase warrant. 6,557,371 warrants were issued in the brokered private placement where each full warrant is exercisable into one share for a period of four years at an exercise price of USD $0.3811 per share, and the warrants contain terms whereby if the share price is above CAD $1.20 per share for ten (10) consecutive trading days then the Company may issue an acceleration notice to accelerate the expiry of the warrants by thirty (30) days from the date of the acceleration notice.

14. Convertible Debentures

As at June 30, 2020, the Company had the following outstanding convertible debentures all with an 8% interest rate and a term of four years, other than the Dec 11, 2015 issuance, which had a term of 3 years and matured on December 11, 2018. The Convertible Debentures have effective rates ranging from 28.3% - 38.5%.

 

Issue Date

Amount
($CDN)

Converted
Amount
($CDN)

Matured
Amount
($CDN)

Outstanding
Amount
($CDN)

Conversion
Price ($CDN)

Shares on
Conversion

17-May-17

1,900,000

 

 

1,900,000

0.65

2,923,077

31-May-17

250,000

-

 

250,000

0.65

384,615

25-Sep-17

1,476,000

-

 

1,476,000

0.40

3,690,000

12-Oct-17

1,970,000

(100,000)

 

1,870,000

0.40

4,675,000

Total

5,596,000

(100,000)

-

5,496,000

 

11,672,692

 


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

14. Convertible Debentures (continued)

$CDN

May 17 & 31, 2017

Sep 25, 2017

Oct 16, 2017

Proceeds bifurcated to carrying value of the loan

$1,169,370

$660,360

$938,557

Proceeds bifurcated to equity

247,744

139,904

198,843

Transaction costs related to the Debentures

30,789

11,536

83,600

Fair value assigned to the issuance of warrants

702,097

664,200

999,000

Proceeds on issuance of Convertible Debentures

$2,150,000

$1,476,000

$2,220,000

On June 18, 2020 CDN$100,000 worth of debentures (issued on October 12, 2017) were converted into 250,000 common shares with a conversion price of CDN$0.40.

On July 7, 2020 the Company issued 112,500 common shares pursuant to the conversion of a CAD$45,000 convertible debenture (issued on October 12, 2017) which was converted at a price of CAD$0.40 per share.

On August 6, 2020, we issued 125,000 common shares pursuant to the conversion of a CAD$50,000 convertible debenture (issued on October 12, 2017) which was converted at a price of CAD$0.40 per share.

On August 7, 2020, we issued 230,769 common shares pursuant to the conversion of a CAD$150,000 convertible debenture (issued on May 31, 2017) which was converted at a price of CAD$0.65 per share.On August 12, 2020, we issued 15,000 common shares pursuant to the exercise of 15,000 warrants at a price of CAD$1.10 per share, for gross proceeds of $16,500.

On August 26, 2020, we issued 687,500 common shares pursuant to the conversion of a CAD$275,000 convertible debenture (issued on October 12, 2017) which was converted at a price of CAD$0.40 per share.

During the period ended June 30, 2020, the Company paid interest of $82,791 (June 30, 2019 - $86,394) and recognized accretion of $153,006 (June 30, 2019 - $129,989) related to the convertible debentures listed above.

15. Promissory Note Payable

During the year ended March 31, 2017, the Company issued a $594,000 promissory note (the "Note") to the City of Porterville to acquire land (Note 8). The Note bears interest at 2.0% per annum and is payable in blended monthly installments of $5,463, which began on November 1, 2016.  The monthly installments will occur for five years, at which point a balloon payment of $311,764 is due and payable. The Note is secured by an interest in the land in favour of the City of Porterville.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

15. Promissory Note Payable (continued)

A summary of the remaining principal payments until maturity of the promissory note are as follows:

Principal Payments   
Year 1 $ 58,328  
Year 2   331,474  
       
Total   389,802  
       
Current portion   (58,328 )
       
Long-term portion $ 331,474  

During the three months ended June 30, 2020, the Company incurred $1,997 (June 30, 2019 - $2,227) of interest on the Note. This amount is included in Interest and accretion on the Consolidated Statements of Operations.

16. Deferred Revenue

The Company recorded Deferred Revenue of $267,839 for invoices issued to customers for the sale of all-electric buses which were not delivered as at June 30, 2020 (March 31,2020 - $426,157).

    June 30, 2020     March 31, 2020  
Deferred Revenue, beginning of period $ 426,157   $ 823,904  
Additions to deferred revenue during the period   169,079     252,443  
Deposits returned   -     (335,000 )
Revenue recognized from deferred revenue during the period   (327,397 )   (303,353 )
FX Changes         (11,837 )
             
Deferred Revenue, end of period $ 267,839   $ 426,157  

17. Financial Instruments

The Company's financial instruments consist of cash and restricted cash, accounts receivable, finance lease receivable, promissory note receivable, line of credit, accounts payable and accrued liabilities, note payable, loans payable to related parties, promissory note payable, convertible debentures and lease liabilities.

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values.  The three levels of the fair value hierarchy are:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities;

Level 2: Inputs other than quoted prices that are observable for the asset or liabilities either directly or indirectly; and

Level 3: Inputs that are not based on observable market data

The Company does not currently hold any financial instruments measured at fair value on the Consolidated Statements of Financial Position.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

17. Financial Instruments (continued)

The fair value of these financial instruments approximates their carrying value, unless otherwise noted.

Overview

The Company has exposure to the following financial instrument related risks.

Credit risk

The Company's exposure to credit risk is on its cash, accounts receivable, promissory note receivable, and on its finance lease receivables. The maximum exposure to credit risk is their carrying amounts in the consolidated statement of Financial Statements. 

Cash and restricted cash consists of cash bank balances held in major financial institutions in Canada and the United States with a high credit quality and therefore the Company is exposed to minimal risk. The Company assesses the credit risk of its account receivable, finance lease receivables and promissory note receivable at each reporting period end and on an annual basis. As at June 30, 2020 the Company recognized an allowance for credit losses of $(33,552), against its accounts receivable (Note 4).

Liquidity risk

The Company tries to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company's cash balances and available liquidity on the Company's $8 million operating line of credit. The Company's cash is invested in bank accounts at major financial institutions in Canada and the United States and is available on demand. The Company will continue to rely on additional financings to further its operations and meet its capital requirements.

Market risks

Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange. The Company is exposed to interest rate risk with respect to its Line of Credit (Note 10).

The Company is exposed to foreign exchange risk as it conducts business in both the United States and Canada.  Management monitors its foreign currency balances, but the Company does not engage in any hedging activities to reduce its foreign currency risk.

At June 30, 2020, the Company was exposed to currency risk through the following financial assets and liabilities in CDN Dollars.

Cash $ 40,813  
Accounts Receivable   6,822  
Promissory Notes Receivable   650,000  
Accounts Payable and Accrued Liabilities   (383,619 )
Loans Payable to Related Parties   (3,235,000 )
Convertible Debentures   (5,496,000 )
Note Payable $ (15,000 )

The CDN/USD exchange rate as at June 30, 2020 was $0.7338 (March 31, 2020 - $0.7049). Based on the net exposure and assuming all other variables remain constant, a 10% change in the appreciation or depreciation of the Canadian dollar relative to the US dollar would result in a change of approximately $619,000 to other comprehensive income/loss.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

18. Capital Management

The Company is actively engaged in selling its electric vehicles and expanding its business however the company has not achieved profitability to date. The Company's capital management objective is to obtain sufficient capital to develop new business opportunities for the benefit of its shareholders. To meet these objectives, management monitors the Company's ongoing capital requirements on specific business opportunities on a case-by-case basis. The capital structure of the Company consists of cash, operating line of credit, secured and unsecured promissory notes and convertible debentures and equity attributable to common shareholders, consisting of issued share capital and deficit. There was no change to the Company's approach to capital management during the year. The Company is subject to externally imposed capital requirements with respect to its line of credit (Note 10).

In May 2019 the Company completed a brokered private placement of units for gross proceeds of approximately $4.0 million. Under the offering the Company sold 13,114,754 Units at a price of $0.305 per unit, with each unit being comprised of one GreenPower common share and one-half share purchase warrant.

Subsequent to the quarter ended June 30, 2020 (Note 23) the Company completed a consolidation of its common shares on the basis of seven (7) pre-consolidation common shares for one (1) post-consolidation common share, and completed its U.S. initial public offering (the "Offering") by issuing 1,860,000 post-consolidation common shares of the Company (each, a "Share") at a price to the public of US$20 per Share. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 279,000 Shares at the initial public offering price, less the underwriting discounts and commissions. The gross proceeds from the Offering, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, are expected to be approximately US$37.2 million, excluding any exercise of the underwriters' option to purchase additional common shares. The Offering is expected to close on September 1, 2020, subject to the satisfaction of customary closing conditions. The Company intends to use the net proceeds from this offering for the production of all-electric vehicles, including EV Stars, EV Star plus, EV Star cab and chassis, and B.E.A.S.T. school buses, EV250 thirty foot low floor transit style buses, product development and geographic expansion with the remainder, if any, for working capital. Subject to market conditions and other factors the Company intends to raise additional capital in the future to fund and grow its business for the benefit of shareholders.

19. Related Party Transactions

A summary of compensation and other amounts paid to directors, officers and key management personnel is as follows:

    For the Three Months Ended  
    June 30, 2020     June 30, 2019  
             
Salaries and Benefits (1) $ 91,208   $ 103,404  
Consulting fees (2)   64,166     90,000  
Accommodation (3)   -     762  
Truck and Trailer Rentals (4)   5,748     32,642  
Options Vested (5)   98,825     82,228  
Total $ 259,947   $ 309,036  

 


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

19. Related Party Transactions

1) Salaries and benefits incurred with directors, officers and a former officer are included in Administrative fees on the Consolidated Statements of Operations.

2) Consulting fees included in professional fees and sales and marketing on the Consolidated Statements of Operations are paid to the directors, the Chairman, to the CEO and to the former CEO of the Company to provide accounting, management consulting and director services.

3) Accommodation expense paid to Stage Coach Landing, Inc., a company that the CEO and Chairman of GreenPower and the former CEO are officers and directors. These costs are expensed on the Consolidated Statements of Operations.

4) Truck and trailer rental fees paid to Maple Leaf Equipment Aircraft and Recovery Inc., a company that the CEO and Chairman of GreenPower and the former CEO are officers and directors. These costs are included in Transportation costs on the Consolidated Statements of Operations.

5) Amounts recognized for related party stock-based compensation are included in Share-based payments on the Consolidated Statements of Operations.

Accounts payable and accrued liabilities at June 30, 2020 included CAD $103,916 and USD $49,917 (March 31, 2020 - $71,697) owed to officers, directors, and companies controlled by officers and directors, and shareholders, which is non-interest bearing, unsecured and has no fixed terms of repayment.

As at June 30, 2020, a company beneficially owned by the CEO and Chairman of the Company had loans outstanding to the Company with a total value of CAD $3,235,000 and USD $220,000 (March 31, 2020 - CAD $3,185,000 and USD $120,000). These loans were renewals of all outstanding loans to the two companies beneficially owned by the CEO and Chairman on December 30, 2019 and have a maturity date that is the earlier of (i) the date that the GreenPower completes an equity financing of more than Five Million US Dollars (US$5,000,000) (ii) from receipt of proceeds on the sale of buses in excess of Ten Million US Dollars (US$10,000,000) or (iii) July 15th, 2021, and bear interest at a rate of 12.0% per annum. During June 2020, a company beneficially owned by the Chairman loaned the Company an additional CAD$50,000 and USD$100,000. The Company has agreed to grant the lender in each of these loans a general security assignment on the assets of GreenPower Motor Company Inc., which will be subordinated to the BMO Bank of Montreal.   

Loans payable to related parties of $2,683,067 (March 31, 2020 - $2,700,625) include the loans with terms described above, including accrued interest, and other loans payable to directors and officers, companies controlled by directors and officers, which are unsecured, are non-interest bearing and have no fixed terms of repayment.

A director of the Company and the Company's CEO and Chairman have both provided personal guarantees of USD $2,510,000, or $5,020,000 in total to support the Company's $8 million operating line of credit. In consideration for these guarantees, the Company agreed to issue 4,400,000 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $0.65 per share that expire on June 29, 2021 and 4,800,000 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $0.60 per share that expire on March 14, 2022.

The outstanding balance of unconverted convertible debentures at June 30, 2020 (Note 14), includes CDN$3,125,000 (March 31, 2020 - CDN$3,125,000) principal balance owed to officers, directors and companies controlled by directors.  These transactions were measured at the exchange amount, which is the amount agreed upon by the transacting parties.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

20. Income Taxes

Income tax expense is recognized based on management's best estimate of weighted average annual income tax rate for the full financial year applied to the pre-tax income of the reporting period. The Company's effective tax rate for the year ended March 31, 2020 was.

As at June 30, 2020 and March 31, 2020 the Company has approximately $8,400,000 and $7,700,000 respectively, of non-capital losses carry forwards available to reduce Canadian taxable income for future years. As at June 30, 2020 and March 31, 2020 the Company has approximately $8,900,000 and $8,500,000, respectively, of net operating losses carry forwards available to reduce future taxable income in the United States. The losses in Canada and United States expire between 2030 and 2040 if unused.

The potential benefits of these carry-forward non-capital losses h consolidated financial statements as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered.

21. Segmented Information and Other Additional Disclosures

The Company operates in one reportable operating segment, being the manufacture and distribution of all-electric transit, school and charter buses.

During the period ended June 30, 2020, the Company was economically dependent on one (June 30, 2019 - three) customer(s) who accounted for more than 10% of revenue from continuing operations and accounted for approximately 93% (June 30, 2019: 97%).

The Company's revenues allocated by geography for the three months ended June 30, 2020 and 2019 are as follows:

    For the Three Months Ended  
    June 30, 2020     June 30, 2019  
             
United States of America $ 2,255,465   $ 2,440,229  
Canada   16,790     9,722  
             
Total $ 2,272,255   $ 2,449,951  

As at June 30, 2020 and March 31, 2020 the majority of the Company's consolidated non-current assets, being property and equipment, are located in the United States.

22. Warranty Liability

The Company generally provides its customers with a base warranty on the entire transit, school or charter bus. The Company also provides certain extended warranties, including those covering brake systems, lower level components, fleet defect provisions and battery-related components, covering a warranty period of approximately one to five years, depending on the contract. Management estimates the related provision for future warranty claims based on historical warranty claim information as well as recent trends that might suggest past cost information may differ from future claims. It is expected that some of these costs will be incurred in the 2021 fiscal year and the remaining will be incurred beyond two years of the reporting date. The warranty provision is recorded at 3.5% of revenue from product sales.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

22. Warranty Liability (continued)

 

Warranty Liability, March 31, 2020 $ 695,147  
Warranty accrual   77,377  
Warranty disbursements   (32,083 )
Foreign exchange translation   2,436  
Warranty Liability, June 30, 2020 $ 742,877  
       
Current portion $ 316,146  
Long term portion   426,731  
Total $ 742,877  

23. Subsequent Events

On July 3, 2020 the Company announced that it will no longer be proceeding with its previously announced request to the TSX Venture Exchange for a temporary reduction of the conversion price of its convertible debentures for a thirty-day period.

On July 3, 2020 the Company granted 360,000 incentive stock options to employees and 100,000 stock options to an Investor Relations consultant, all of which are exercisable at a price of CAD$0.70 per share. For the consultant, the stock options have a term of two years and vest 25% after each of 3 months, 6 months, 9 months and 12 months. For employees, the incentive stock options have a term of five years,

and 25% vest 4 months after the grant date, 25% vest one year after the grant date, 25% two years after the grant date and 25% three years after the grant date.

On July 7, 2020 the Company issued 112,500 common shares pursuant to the conversion of a CAD$45,000 convertible debenture (issued on October 12, 2017) which was converted at a price of CAD$0.40 per share.

On July 8, 2020 the Company issued 750,000 common shares pursuant to the exercise of 750,000 warrants at a price of CAD$0.50 per share, for gross proceeds of CAD$375,000.

On July 30, 2020, we issued 50,000 common shares pursuant to the exercise of 50,000 warrants at a price of $0.3811 per share, for gross proceeds of $19,055.

On August 4, 2020, we issued 100,000 common shares pursuant to the exercise of 100,000 warrants at a price of $0.3811 per share, for gross proceeds of $38,110.

On August 5, 2020, we issued 245,901 common shares pursuant to the exercise of 245,901 warrants at a price of $0.3811 per share, for gross proceeds of $93,713.

On August 6, 2020, we issued 300,000 common shares pursuant to the exercise of 300,000 warrants at a price of CAD$0.50 per share, for gross proceeds of CAD$150,000.

On August 6, 2020, we issued 125,000 common shares pursuant to the conversion of a CAD$50,000 convertible debenture (issued on October 12, 2017) which was converted at a price of CAD$0.40 per share.

On August 7, 2020, we issued 375,832 common shares pursuant to the exercise of 375,832 warrants at a price of $0.3811 per share, for gross proceeds of $143,230.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

23.   Subsequent Events (Continued)

On August 7, 2020, we issued 230,769 common shares pursuant to the conversion of a CAD$150,000 convertible debenture (issued on May 31, 2017) which was converted at a price of CAD$0.65 per share.

On August 12, 2020, we issued 15,000 common shares pursuant to the exercise of 15,000 warrants at a price of CAD$1.10 per share, for gross proceeds of $16,500.

On August 12, 2020, we issued 76,923 common shares pursuant to the conversion of a CAD$50,000 convertible debenture (issued on May 31, 2017) which was converted at a price of CAD$0.65 per share.

On August 14, 2020, we issued 1,562,500 common shares pursuant to the exercise of 1,562,500 warrants at a price of CAD $0.50 per share, for gross proceeds of $781,250.

On August 14, 2020, we issued 107,700 common shares pursuant to the exercise of 107,700 warrants at a price of $0.3811 per share, for gross proceeds of $41,044.

On August 14, 2020, we issued 40,983 common shares pursuant to the exercise of 40,983 warrants at a price of $0.3811 per share, for gross proceeds of $15,619.

On August 17, 2020, we issued 103,900 common shares pursuant to the exercise of 103,900 warrants at a price of $0.3811 per share, for gross proceeds of $39,596.

On August 20, 2020, we issued 245,901 common shares pursuant to the exercise of 245,901 warrants at a price of $0.3811 per share, for gross proceeds of $93,713.

On August 21, 2020, we issued 259,836 common shares pursuant to the exercise of 259,836 warrants at a price of $0.3811 per share, for gross proceeds of $99,024.

On August 21, 2020, we issued 25,000 common shares pursuant to the exercise of 25,000 warrants at a price of $0.3811 per share, for gross proceeds of $9,528.

On August 24, 2020, we issued 57,377 common shares pursuant to the exercise of 57,377 warrants at a price of $0.3811 per share, for gross proceeds of $21,866.

On August 26, 2020, we issued 50,00 common shares pursuant to the exercise of 50,000 warrants at a price of $0.3811 per share, for gross proceeds of $19,055.

On August 26, 2020, we issued 687,500 common shares pursuant to the conversion of a CAD$275,000 convertible debenture (issued on October 12, 2017) which was converted at a price of CAD$0.40 per share.

On August 26, 2020, we issued 16,650 common shares pursuant to the exercise of 16,650 warrants at a price of CAD$1.10 per share, for gross proceeds of $18,315.

On August 26, 2020, we issued 81,393 common shares pursuant to the exercise of 81,393 warrants at a price of $0.3811 per share, for gross proceeds of $31,019.

On August 26, 2020, we issued 131,147 common shares pursuant to the exercise of 131,147 warrants at a price of $0.3811 per share, for gross proceeds of $49,980.


GREENPOWER MOTOR COMPANY INC.
Notes to the Consolidated Condensed Interim Financial Statements
For the Three Months Ended June 30, 2020 and 2019
(Expressed in US Dollars)
(Unaudited – Prepared by Management)

23. Subsequent Events (Continued)

On August 26, 2020, we issued 250,000 common shares pursuant to the exercise of 250,000 warrants at a price of $0.3811 per share, for gross proceeds of $95,275.

On August 26, 2020, we issued 50,00 common shares pursuant to the exercise of 50,000 warrants at a price of $0.3811 per share, for gross proceeds of $19,055.

On August 26, 2020, we issued 82,000 common shares pursuant to the exercise of 82,000 warrants at a price of $0.3811 per share, for gross proceeds of $31,250.

On August 28, 2020 the Company completed a consolidation of its common shares on the basis of seven (7) pre-consolidation common shares for one (1) post-consolidation common share.

On August 28th, 2020 the Company priced its U.S. initial public offering (the "Offering") of 1,860,000 post-consolidation common shares of the Company (each, a "Share") at a price of $20 per Share. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 279,000 Shares at the initial public offering price, less the underwriting discounts and commissions. The gross proceeds expected from the Offering, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, are expected to be approximately US$37.2 million, excluding any exercise of the underwriters' option to purchase additional common shares. The Offering is expected to close on September 1, 2020, subject to the satisfaction of customary closing conditions. The Company intends to use the net proceeds from this offering for the production of all-electric vehicles, including EV Stars, EV Star plus, EV Star cab and chassis, and B.E.A.S.T. school buses, EV250 thirty foot low floor transit style buses, product development and geographic expansion with the remainder, if any, for working capital.

Concurrently with the closing of the Offering, in a separate private placement, the Company plans to sell common shares for proceeds of up to US$500,000 to the Company's executive chairman and chief executive officer, Fraser Atkinson, at the price per share equal to the price of the offering, and without payment by the Company of any underwriting discount or commission.



GreenPower Motor Company Inc.: Exhibit 99.2 - Filed by newsfilecorp.com

GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

Introduction

This Management's Discussion and Analysis ("MD&A") is dated as of August 30, 2020 unless otherwise indicated and should be read in conjunction with the unaudited consolidated financial statements of GreenPower Motor Company Inc. ("GreenPower", "the Company", "we", "our" or "us") for the three months ended June 30, 2020 and the related notes. This MD&A was written to comply with the requirements of National Instrument 51-102 - Continuous Disclosure Obligations. Results are reported in US dollars, unless otherwise noted. In the opinion of management, all adjustments (which consist only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results presented for the three months ended June 30, 2020 are not necessarily indicative of the results that may be expected for any future period. The consolidated financial statements are prepared in compliance with International Financial Reporting Standards.

For the purposes of preparing this MD&A, management, in conjunction with the Board of Directors, considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of the Company's common shares; or (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) if it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board of Directors, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity.

Further information about the Company and its operations can be obtained from the offices of the Company or from www.sedar.com.

Cautionary Note Regarding Forward-Looking Information

Certain statements contained in the following MD&A constitute forward-looking statements. Such forward looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements.

Description of Business

GreenPower designs, builds and distributes a full suite of high-floor and low-floor vehicles, including transit buses, school buses, shuttles, cargo vans and double-deckers. GreenPower employs a clean-sheet design to manufacture all-electric buses that are purpose built to be battery powered with zero emissions. GreenPower integrates global suppliers for key components, such as Siemens or TM4 for the drive motors, Knorr for the brakes, ZF for the axles and Parker for the dash and control systems. 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. For further information go to www.greenpowerbus.com.

Operations

The following is a description of GreenPower's business activities during the three months ended June 30, 2020. During the quarter, the Company's operations continued to be negatively impacted by the COVID-19 pandemic. However, in spite of these conditions the Company was able to achieve two important strategic milestones being the completion of Altoona testing for the EV Star, and the launch of the EV Star Cab and Chassis ("EV Star CC") product. In addition, during the quarter the Company completed and delivered a total of 18 EV Stars for which the Company provided lease financing, and which were accounted for as finance leases.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

Beginning in March 2020, GreenPower's business and operations began adapting to the COVID-19 global pandemic. As an essential business manufacturing on behalf of the transit industry, we have 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 maintained sales and production during the quarter, this was done so at a reduced rate in order to comply with physical distancing requirements and government health regulations.

Management took several steps to mitigate the negative financial impacts of the COVID-19 pandemic, including actively pursuing government business grants and loans in both Canada and the US in order to help support our business through this period. We were successful in securing government grants in Canada and the US, as well as $361,900 in financing under the U.S. Small Business Administration's Paycheck Protection Program, for which we entered into a two-year promissory note with East West Bank. During the quarter, our CEO and Chairman took a 30% salary reduction, and the salaries of certain employees working from home were also reduced. Management continued to monitor and adapt to the economic realities that have resulted from the COVID-19 pandemic, however the ultimate impacts and duration of these conditions continues to remain uncertain.

In 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 report covers seven tests covering 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 aggregate 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. Vehicles that are built to Buy America compliant standards and have passed the Altoona test are eligible for FTA funding of up to 80% of the capital cost of a transit vehicle for transit properties that are eligible to receive FTA funding. Vehicle buyers, both in transit and in other sectors, rely heavily on Altoona reports when making purchasing decisions.

In May 2020, Greenpower announced the launch of the EV Star CC model. The EV Star CC is a purpose built, battery electric, multi utility cab and chassis that can be used by cargo and delivery companies who wish to use their body design while transitioning to a zero emissions fleet, and can be outfitted with a wide range of body types for a broad range of uses. The 25' EV Star CC chassis has a payload of up to 6,000lbs and can be configured with a range of options including a lift gate, wireless charging, and autonomous capabilities.

In June, GreenPower announced that it completed the delivery of 18 EV Stars to Green Commuter. After this delivery, Green Commuter had approved California HVIP vouchers totaling $4.5 million in its remaining order for 52 Greenpower EV Stars. During the month, the Antelope Valley Transit Authority announced that it had deployed six EV Stars to serve its new micro transit system, and Greenpower's national distributor Creative Bus Sales received an order for two EV Stars from UCLA.

Greenpower currently has Buy America compliant domestic production capacity of 15 EV Stars per month, which is expected to increase to 30 by the end of the calendar year 2020, and current production capacity through contract manufacturing partners of 50 additional EV Stars per month, which is expected to increase to 100 by the end of the calendar year 2020.

As at June 30, 2020 the Company had:


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

Share Consolidation, Nasdaq Uplisting, and Financing

The Company completed a consolidation of its common shares on the basis of seven (7) pre-consolidation common shares for one (1) post-consolidation share effective the opening of the market on August 28, 2020.

As announced on August 28th, 2020 and filed with the SEC and on SEDAR, the Company priced its U.S. initial public offering (the "Offering") for 1,860,000 post-consolidation common shares of the Company (each, a "Share") at a price of $20 per Share. In addition, the Company granted the underwriters a 30-day option to purchase up to an additional 279,000 Shares at the initial public offering price, less the underwriting discounts and commissions. The gross proceeds from the Offering, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, are expected to be approximately $37.2 million, excluding any exercise of the underwriters' option to purchase additional common shares. The Offering is expected to close on September 1, 2020, subject to the satisfaction of customary closing conditions. The Company intends to use the net proceeds from this offering for the production of all-electric vehicles, including EV Stars, EV Star plus, EV Star cab and chassis, and B.E.A.S.T. school buses, EV250 thirty foot low floor transit style buses, product development and geographic expansion with the remainder, if any, for working capital. Concurrently with the closing of the Offering, in a separate private placement, the Company plans to sell common shares for proceeds of up to $500,000 to the Company's executive chairman and chief executive officer, Fraser Atkinson, at the price per share equal to the price to the offering, and without payment by the Company of any underwriting discount or commission.

The Company's shares commenced trading on the Nasdaq Capital Market on August 28, 2020 under the symbol "GP."  The Shares continue to be listed for trading on the TSX Venture Exchange under the symbol "GPV". The shares of the Company traded on the OTCQB under the symbol "GPVRF" and as of August 28, 2020 were no longer quoted for trading on the OTCQB.

Trends

The Company does not know of any trends, commitments, events, or uncertainty that are expected to have a material effect on the Company's business, financial condition, or results of operations other than as disclosed herein under "Risk Factors" and the paragraph below.

Results of Operations

For the three-month period ended June 30, 2020

For the three-month period ended June 30, 2020 the Company recorded revenues of $2,272,255 and cost of revenues of $1,653,672 generating a gross profit of $618,583 or 27.2% of revenues. Revenue was generated from the sale of 18 EV Stars for which the Company provided lease financing and which were accounted for as finance leases, as well as revenue from finance and operating leases and other sources. Operating costs  consisted  of  administrative  fees of $857,930 relating to salaries, project management, accounting, and administrative services; transportation costs of $26,741 which relate to the use of trucks, trailers, contractors as well as other operational costs needed to transport company products around North America; travel, accommodation, meals and entertainment costs of $36,853 related to travel for project management, demonstration of company products, and trade shows; product development costs of $221,109; sales and marketing costs of $(9,530); professional fees of $96,426 consisting of legal and audit fees; and office expense of $50,959 consisting of rent and other office expenses, as well as non-cash expenses including $132,032 of share-based compensation expense and depreciation of $114,761, generating a loss from operations before interest, accretion and foreign exchange of $875,145.

Interest and accretion on the line of credit, convertible debentures and promissory notes totalled $555,319, and a foreign exchange gain of $1,126 resulted in a loss for the period of $1,429,337. Non-cash expenses consisting of depreciation, accretion and accrued interest, share-based compensation, warranty accrual and amortization of deferred financing fees totaled $627,683 in the three-month period.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

The consolidated total comprehensive loss for the three-month period was impacted by $7,970 of other comprehensive loss as a result of the translation of the entities with a different functional currency than presentation currency.

For the three-month period ended June 30, 2019

For the three-month period ended June 30, 2019 the Company recorded revenues of $2,449,951 and cost of revenues of $1,726,555 generating a gross profit of $723,396 or 30% of revenues. Revenue from vehicle sales and vehicle leases was generated from the sale of one EV 350 and 5 EV Stars, two of which were accounted for as finance leases, and revenue from other sources was primarily from sales of chargers. Operating costs  consisted  of  administrative  fees  of $668,903 relating to salaries, project management, accounting, and administrative services; transportation costs of $61,980 which relate to the use of trucks, trailers, contractors as well as other operational costs needed to transport company products around North America; travel, accommodation, meals and entertainment costs of $88,347 related to travel for project management, demonstration of company products, and trade shows; product development costs of $214,413; sales and marketing costs of $97,158; interest and accretion on the convertible debentures and promissory note of $500,612; professional fees of $60,692 consisting of legal and audit fees; as well as $93,544 of non-cash share-based compensation expense and depreciation of $143,586. The remaining operating costs for the period amounted to $57,645 in general corporate expenses resulting in a consolidated net loss of $1,263,484. Non-cash expenses consisting of depreciation, share-based compensation, accretion, warranty accrual and amortization of deferred financing fees totaled $562,715 in the three-month period.

The consolidated total comprehensive loss for the three-month period was impacted by $(4,511) of other comprehensive income as a result of the translation of the entities with a different functional currency than presentation currency.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

The following tables provide a summary of selected information for the last eight quarters:

    Three Months Ended  
    June 30,     March 31,     December 31,     September 30,  
    2020     2020     2019     2019  
Financial results                        
Revenues $ 2,272,255   $ 642,401   $ 4,977,548   $ 5,430,503  
Net income (loss) for the period   (1,429,337 )   (2,114,027 )   (1,056,087 )   (712,368 )
Basic and diluted earnings/(loss) per share* $ (0.01 ) $ (0.02 ) $ (0.01 ) $ (0.01 )
Balance sheet data                        
Working capital (deficit)   (707,573 )   743,131     2,319,481     1,648,610  
Total assets   14,473,657     13,207,679     16,811,834     14,515,250  
Shareholders' equity   (2,396,707 )   (1,174,956 )   876,200     1,951,725  
                   
    Three Months Ended  
    June 30,     March 31,     December 31,     September 30,  
    2019     2019     2018     2018  
Financial results                        
Revenues $ 2,449,951   $ 2,486,611   $ 1,106,530   $ 9,008  
Net income (loss) for the period   (1,263,484 )   (1,553,824 )   (915,734 )   (1,445,472 )
Basic and diluted earnings/(loss) per share* $ (0.01 ) $ (0.02 ) $ (0.01 ) $ (0.02 )
Balance sheet data                        
Working capital (deficit)   2,775,679     (155,176 )   (80,804 )   824,357  
Total assets   15,620,864     11,910,299     12,843,812     11,698,365  
Shareholders' equity   2,439,746     (85,636 )   414,804     1,264,228  

* Based upon the weighted average number of shares issued and outstanding for the period

The following table summarizes vehicle deliveries pursuant to vehicle leases and vehicle sales for the last four quarters:

    For the three months ended   
    June 30,     March 31,     December 31,     September 30,  
    2020     2020     2019     2019  
Vehicle Sales                        
EV 350   0     0     0     1  
EV Star¹   0     8     3     24  
Synapse school bus   0     0     2     2  
Total   0     8     5     27  
Vehicle Leases                        
EV Star¹   18     0     22     0  
Total   18     0     22     0  
                         
Total Deliveries   18     8     27     27  

Note 1 - Leases associated with 8 EV Stars entered into during the quarter ended December 31,  2019 were cancelled during the quarter ended March 31, 2020 and the vehicles were subsequently sold.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

The following table summarizes cash expenses for the last four quarters:

    For the three months ended  
    June 30,     March 31,     December 31,     September 30,  
    2020     2020     2019     2019  
                         
Total Expenses $ 2,047,920   $ 2,361,841   $ 2,521,645   $ 2,104,506  
Less:                        
    Depreciation   (114,761 )   (116,338 )   (157,970 )   (160,661 )
    Accretion and accrued interest   (153,006 )   (232,543 )   (151,525 )   (133,373 )
    Share-based payments   (132,032 )   (126,652 )   (34,885 )   (53,025 )
    Amortization of deferred financing fees   (150,507 )   (149,864 )   (157,915 )   (154,883 )
    Warranty Accrual   (77,377 )   20,494     (166,662 )   (136,307 )
    Allowance for credit losses   33,552     (46,447 )   -     -  
                         
Total Cash Expenses (1) $ 1,453,789   $ 1,710,491   $ 1,852,688   $ 1,466,257  

The following table summarizes adjusted EBITDA for the last four quarters:

    For the three months ended  
    June 30,     March 31,     December 31,     September 30,  
    2020     2020     2019     2019  
                         
Net loss for the period $ (1,429,337 ) $ (2,114,027 ) $ (1,056,087 ) $ (712,368 )
Plus:                        
    Depreciation   114,761     116,338     157,970     160,661  
    Interest and accretion   555,319     549,139     574,031     510,042  
    Share-based payments   132,032     126,652     34,885     53,025  
    Warranty Accrual   77,377     (20,494 )   166,662     136,307  
                         
Adjusted EBITDA (1) $ (549,848 ) $ (1,342,392 ) $ (122,539 ) $ 147,667  

(1) Non-IFRS Financial Measures: "Total Cash Expenses", as defined above, and "Adjusted EBITDA" reflects net income or loss before interest, taxes, share-based payments, depreciation and amortization, and warranty accrual. Adjusted EBITDA is a measure used by analysts and investors as an indicator of operating cash flow since it excludes the impact of movements in working capital items, non-cash charges and financing costs. Therefore, Adjusted EBITDA gives the investor information as to the cash generated from the operations of a business. However, Adjusted EBITDA is not a measure of financial performance under IFRS and should not be considered a substitute for other financial measures of performance. Adjusted EBITDA as calculated by GreenPower may not be comparable to Adjusted EBITDA as calculated and reported by other companies. The most comparable IFRS measure to Adjusted EBITDA is net income.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

Liquidity

At June 30, 2020, the Company had a cash and restricted cash balance of $310,458 and working capital of ($707,573). 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 June 30, 2020 available funds on the  line of credit was $6,560. The Company manages its capital structure and makes adjustments to it based on available funds to the Company. The Company will 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.

Capital Resources

Three months ended June 30, 2020 and up to the date of this report

Authorized: Unlimited number of common shares without par value
Authorized: Unlimited number of preferred shares without par value

As at June 30, 2020, the Company had the following outstanding convertible debentures all with an 8% interest rate and a term of four years. The Convertible Debentures have effective rates ranging from 28.3% - 38.5%.

On June 18, 2020 CDN$100,000 worth of debentures (issued on October 12, 2017) were converted into 250,000 common shares with a conversion price of CDN$0.40.

During the period ended June 30, 2020, the Company paid interest of $82,791 (June 30, 2019 - $86,394) and recognized accretion of $153,006 (June 30, 2019 - $129,989) related to the convertible debentures listed above.

The Company has an incentive stock option plan whereby it grants options to directors, officers, employees, and consultants of the Company. On May 14, 2019, the Company replaced its Fixed Stock Option Plan (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 allowed for the issuance of up to 10,440,790 shares (the "2016 Plan").

On March 30, 2017, the shareholders approved an increase in the number of common shares available for issuance under the 2016 Plan from 10,440,790 to 13,656,367. On May 4, 2018, the number available for issuance was further increased to 14,909,992.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

The Company had the following incentive stock options granted under the 2019 Plan, 2016 Plan, and Plan that are issued and outstanding as at June 30, 2020:

    Exercise     Balance                 Forfeited     Balance  
Expiry Date   Price (CDN$)     March 31, 2020     Granted     Exercised     or Expired     June 30, 2020  
May 26, 2020 $ 0.60     150,000     -     -     (150,000 )   -  
July 10, 2020 ¹ $ 0.55     50,000     -     -     -     50,000  
February 4, 2021 $ 0.35     400,000     -     -     -     400,000  
May 6, 2021 $ 0.35     520,000     -     -     (80,000 )   440,000  
October 27, 2021 $ 0.62     500,000     -     -     -     500,000  
February 2, 2022 $ 0.75     457,000     -     -     -     457,000  
May 26, 2022 $ 0.75     1,037,500     -     -     -     1,037,500  
December 18, 2022 $ 0.45     175,000     -     -     -     175,000  
May 4, 2023 $ 0.50     530,000     -     -     -     530,000  
November 30, 2023 $ 0.43     350,000     -     -     -     350,000  
February 12, 2024 $ 0.50     550,000     -     -     -     550,000  
January 30, 2022 $ 0.37     175,000     -     -     -     175,000  
January 30, 2025 $ 0.37     2,235,000     -     -     -     2,235,000  
Total outstanding         7,129,500     -     -     (230,000 )   6,899,500  
Total exercisable         4,408,250                       4,834,500  
Weighted Average                                    
Exercise Price (CDN$)       $ 0.50     N/A     N/A   $ 0.51   $ 0.49  
Weighted Average Remaining Life         3.0 years                       2.8 years  

1. 50,000 stock options exercisable at CAD$0.55 per share expired unexercised on July 10, 2020.

As at June 30, 2020, there were 3,966,225 stock options available for issuance under the 2019 plan.

During the three months ended June 30, 2020, the Company incurred share-based compensation expense with a measured fair value of $132,032. The fair value of the options granted and vested were recorded as share-based payments on the Consolidated Statements of Operations.

As at June 30, 2020, the Company had outstanding warrants, enabling the holders to acquire common shares as follows:

 


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

Off-Balance Sheet Arrangements

As of the date of this filing, the Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the results of operations or financial condition of the Company including, without limitation, such considerations as liquidity and capital resources that have not previously been discussed.

Related Party Transactions

A summary of compensation for directors, officers and key management personnel is as follows:

    For the Three Months Ended  
    June 30, 2020     June 30, 2019  
             
Salaries and Benefits (1) $ 91,208   $ 103,404  
Consulting fees (2)   64,166     90,000  
Accommodation (3)   -     762  
Truck and Trailer Rentals (4)   5,748     32,642  
Options Vested (5)   98,825     82,228  
Total $ 259,947   $ 309,036  

1) Salaries and benefits incurred with officers and a former officer are included in Administrative fees on the Consolidated Statements of Operations.

2) Consulting fees included in professional fees and sales and marketing on the Consolidated Statements of Operations are paid to, management service companies of the CEO and Chairman, and to the former CEO of the Company to provide accounting, management and consulting services.

3) Accommodation expense paid to Stage Coach Landing, Inc., a company that the CEO and Chairman of GreenPower and the former CEO are officers and directors. These costs are expensed on the Consolidated Statements of Operations.

4) Truck and trailer rental fees paid to Maple Leaf Equipment Aircraft and Recovery Inc., a company that the CEO and Chairman of GreenPower and the former CEO are officers and directors. These costs are included in Transportation costs on the Consolidated Statements of Operations.

5) Amounts recognized for related party stock-based compensation are included in Share-based payments on the Consolidated Statements of Operations.

Accounts payable and accrued liabilities at June 30, 2020 included CAD $103,916 and USD $49,917 (March 31, 2020 - $71,697) owed to officers, directors, and companies controlled by officers and directors, and shareholders, which is non-interest bearing, unsecured and has no fixed terms of repayment.

As at June 30, 2020, one company beneficially owned by the CEO and Chairman of the Company had loans outstanding to the Company with a total value of CAD $3,235,000 and USD $220,000 (March 31, 2020 - CAD $3,185,000 and USD $120,000). These loans were renewals of all outstanding loans to the two companies beneficially owned by the CEO and Chairman on December 30, 2019 and have a maturity date that is the earlier of (i) the date that the GreenPower completes an equity financing of more than Five Million US Dollars (US$5,000,000) (ii) from receipt of proceeds on the sale of buses in excess of Ten Million US Dollars (US$10,000,000) or (iii) July 15th, 2021, and bear interest at a rate of 12.0% per annum. During June 2020, a company beneficially owned by the Chairman loaned the Company an additional CAD$50,000 and USD$100,000. 


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

The Company has agreed to grant the lender in each of these loans a general security assignment on the assets of GreenPower Motor Company Inc., which will be subordinated to the BMO Bank of Montreal.   

Loans payable to related parties of $2,683,067 (March 31, 2020 - $2,700,625) include the loans with terms described above, including accrued interest, and other loans payable to directors and officers, companies controlled by directors and officers, which are unsecured, are non-interest bearing and have no fixed terms of repayment.

A director of the Company and the Company's CEO and Chairman have both provided personal guarantees of USD $2,510,000, or $5,020,000 in total to support the Company's $8 million operating line of credit. In consideration for these guarantees, the Company agreed to issue 4,400,000 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $0.65 per share that expire on June 29, 2021 and 4,800,000 non-transferrable common share purchase warrants exercisable at an exercise price of CDN $0.60 per share that expire on March 14, 2022.

The outstanding balance of unconverted convertible debentures at June 30, 2020 (Note 14), includes CDN$3,125,000 (March 31, 2020 - CDN$3,125,000) principal balance owed to officers, directors and companies controlled by directors.

These transactions were measured at the exchange amount, which is the amount agreed upon by the transacting parties.

New and Amended Standards

Adoption of accounting standards

The following new or amended standards were adopted during the year ended March 31, 2020:

IFRS 15 Revenue from Contracts with Customers provides a single principle-based framework to be applied to all contracts with customers. IFRS 15 replaces the previous revenue standard IAS 18, Revenue, and the related Interpretations on revenue recognition. The standard scopes out contracts that are considered to be lease contracts, insurance contracts and financial instruments. The new standard is a control-based model as compared to the existing revenue standard which is primarily focused on risks and rewards. Under the new standard, revenue is recognized when a customer obtains control of a good or service. Transfer of control occurs when the customer has the ability to direct the use of and obtain the benefits of the good or service. This standard is effective for reporting periods beginning on or after January 1, 2018.

IFRS 9 Financial Instruments replaces the current standard IAS 39 Financial Instruments: Recognition and Measurement, replacing the current classification and measurement criteria for financial assets and liabilities with only two classification categories: amortized cost and fair value. This standard has an effective date of January 1, 2018.

IFRS 16 Leases was issued in January 2016 and specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17. This standard is effective for reporting periods beginning on or after January 1, 2019.

The adoption of the above accounting policies impacted the consolidated financial statements for the three months ended December 31, 2019 as described in the respective notes.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

Future accounting pronouncements

Certain new accounting standards and interpretations have been published by the IASB or the IFRS Interpretations Committee that are not mandatory for the December 31, 2019 reporting period.

The Company has reviewed new and revised accounting pronouncements that have been issued but are not yet effective. The Company has not early adopted any of these standards and is currently evaluating the impact, if any, that these standards might have on its consolidated financial statements.

Critical Accounting Estimates

Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the inputs used in the Black-Scholes option pricing model to measure stock-based compensation and warrants, determination of the liability portion of convertible debentures, determination of the useful life of equipment, net realizable value of inventory, provision for warranty expense, and the $nil provision for income taxes. Critical estimates used in the preparation of these accounting statements include but are not limited to the following:

Critical accounting judgments

i. the determination of the discount rate to use to discount the promissory note receivable, finance lease receivable and lease liabilities;

ii. the determination of the functional currency of each entity within the consolidated Company;

iii. the Company's ability to continue as a going concern;

iv. The classification of leases as either financial leases or operating leases; and

v. The identification of performance obligations in revenue contracts and the determination of when they are satisfied.

Financial Instruments

The Company's financial instruments consist of cash and restricted cash, accounts receivable, finance lease receivable, promissory note receivable, line of credit, accounts payable and accrued liabilities, note payable, loans payable to related parties, promissory note payable, convertible debentures and lease liabilities. As at June 30, 2020, the Company had working capital $(707,573). The Company's continuing operations are dependent upon its ability to raise capital and generate cash flows from operations.

The Company has exposure to the following financial instrument related risks.

Credit risk

The Company's exposure to credit risk is on its cash, finance lease, and promissory note receivable. Cash consists of cash bank balances held in major financial institutions in Canada and the United States with a high credit quality and therefore the Company is exposed to minimal risk. The Company assesses the credit risk of its promissory note receivable counterparty and lease counterparty on an annual basis and believes it is exposed to minimal credit risk.

Liquidity risk

The Company tries to ensure that there is sufficient capital in order to meet short-term business requirements, after taking into account the Company's cash balances and available liquidity on the Company's $8 million operating line of credit. The Company's cash is invested in bank accounts at major financial institutions in Canada and the United States and is available on demand. The Company will continue to rely on additional financings to further its operations and meet its capital requirements.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

Trade Tariffs

The Company manufactures and imports key components from overseas that are subject to tariffs on importation into the United States, and for which the Company is currently paying tariffs. In particular, the Company is subject to tariffs on goods imported from China, which increases the cost of these goods and negatively impacts the company's profitability and financial position.

Market risks

Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange. The Company believes interest rate risk is not material.

The Company is exposed to foreign exchange risk as it conducts business in both the United States and Canada. Management monitors its foreign currency balances but the Company does not engage in any hedging activities to reduce its foreign currency risk.

At June 30, 2020, the Company was exposed to currency risk through the following monetary assets and liabilities in CDN Dollars.

Cash $ 40,813  
Accounts Receivable   6,822  
Promissory Notes Receivable   650,000  
Accounts Payable and Accrued Liabilities   (383,619 )
Loans Payable to Related Parties   (3,235,000 )
Convertible Debentures   (5,496,000 )
Note Payable $ (15,000 )

Based on the net exposure and assuming all other variables remain constant, a 10% change in the appreciation or depreciation of the Canadian dollar relative to the US dollar would result in a change of approximately $619,000 to other comprehensive income/loss.

Capital Management

The capital structure of the Company consists of cash, operating line of credit, secured and unsecured promissory notes and convertible debentures and equity attributable to common shareholders, consisting of issued share capital and deficit. There was no change to the Company's approach to capital management during the year. The Company is not subject to externally imposed capital requirements.

Outlook

For the immediate future, the Company plans to:


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

Capitalization and Outstanding Security Data

The total number of common shares issued and outstanding is 108,657,251 as of June 30, 2020. There are no preferred shares issued and outstanding.

An incentive stock option plan was established for the benefit of directors, officers, employees and consultants of the Company. As of June 30, 2020, there are 6,899,500 options granted and outstanding. The total number of common share warrants outstanding as of the same date is 25,183,868.

As at August 30, 2020, the company had 114,791,063 issued shares, 7,309,500 options outstanding and 20,282,748 warrants outstanding.

Disclosure of Internal Controls

Management has established processes to provide them sufficient knowledge to support representations that they have exercised reasonable diligence that (i) the financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the financial statements, and (ii) the financial statements fairly present in all material respects the financial condition, results of operations and cash flow of the Company, as of the date of and for the periods presented.

In contrast to the certificate required for non-venture issuers under National Instrument 52-109, Certification of Disclosure in Issuers' Annual and Interim Filings ("NI 52-109"), the Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures ("DC&P") and internal control over financial reporting ("ICFR"), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of:

i. controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii. a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP (IFRS).

The issuer's certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in the certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

Risk Factors

Investing in the common shares of the Company involves risk. Prospective investors should carefully consider the risks described below, together with all of the other information included in this MD&A before making an investment decision. If any of the following risks actually occurs, the business, financial condition or results of operations of the Company could be harmed. In such an event, the trading price of the common shares could decline and prospective investors may lose part or all of their investment.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

No Operating History

The Company has not paid any dividends and may not produce earnings or pay dividends in the immediate or foreseeable future.

Reliance on Management

The Company is relying solely on the past business success of its directors and officers. The success of the Company is dependent upon the efforts and abilities of its directors, officers and employees. The loss of any of its directors, officers or employees could have a material adverse effect upon the business and prospects of the Company.

Operational Risk

The Company is exposed to many types of operational risks that affect all companies. Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and/or systems. Operational risk is present in all of the Company's business activities, and incorporates exposure relating to fiduciary breaches, product liability claims, product recalls, regulatory compliance failures, legal disputes, business disruption, technology failures, business integration, damage to physical assets, employee safety, dependence on suppliers, foreign exchange fluctuations, insurance coverage and rising insurance costs. Such risks also include the risk of misconduct, theft or fraud by employees or others, unauthorized transactions by employees, operational or human error or not having sufficient levels or quality of staffing resources to successfully achieve the Company's strategic or operational objectives.

The occurrence of an event caused by an operational risk that is material could have a material adverse effect on the Company's business, financial condition, liquidity and operating results.

Volatile Operating Results

Our orders with our customers generally require time-consuming customization and specification. We incur significant operating expenses when we are building a bus prior to sale or designing and testing a new bus. If there are delays in the sale of buses to customers, such delays may lead to significant fluctuations in results of operations from quarter to quarter, making it difficult to predict our financial performance on a quarterly basis.

Competition in the industry

The Company competes against a number of existing manufacturers of all-electric buses, traditional diesel buses and other buses with various models based on size, purpose or performance features. The Company competes in the non-diesel or alternative fuel segment of this market. There are existing competitors in the various market segments with the potential for future competitors.

Provision for Warranty Costs

The Company offers warranties on the transit, charter and school buses it sells. Management estimates the related provision for future warranty claims based on historical warranty claim information as well as recent trends that might suggest past cost information may differ from future claims. Factors that could impact the estimated claim information include the success of the Company's productivity and quality initiatives as well as parts and labour costs. Actual warranty expense will differ from the provisions which are estimated by management.


GreenPower Motor Company Inc.
Management’s Discussion and Analysis
For the period ended June 30, 2020
Discussion dated: as of August 30, 2020

 

Sales and Marketing

Presently, the initial price of the Company's products are higher than a traditional diesel bus and certain grants and subsidies are available to offset these higher prices. Sales of Company products may also be impacted by the current market price of diesel fuel, along with the values placed on avoiding other ancillary costs such as noise and vehicle emissions. The Company's products are based on emerging technologies which seek to provide operators and users with vehicles that are all-electric, emission free, and with reduced noise. A reduction or cancellation of these grants would negatively impact our sales program.

Current requirements and regulations may change or become more onerous

The Company's products must comply with local regulatory and safety requirements in order to be allowed to operate within the relevant jurisdiction or to qualify for funding. These requirements are subject to change and one regulatory environment is not indicative of another.

 


GreenPower Motor Company Inc.: Exhibit 99.3 - Filed by newsfilecorp.com

Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate

I, Fraser Atkinson, Chief Executive Officer of GreenPower Motor Company Inc. certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of GreenPower Motor Company Inc. (the "issuer") for the interim period ended June 30, 2020.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: August 31, 2020

"Fraser Atkinson"

Fraser Atkinson

Chief Executive Officer

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate.  Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

 

1


GreenPower Motor Company Inc.: Exhibit 99.4 - Filed by newsfilecorp.com

Form 52-109FV2
Certification of Interim Filings
Venture Issuer Basic Certificate

I, Michael Sieffert, Chief Financial Officer of GreenPower Motor Company Inc. certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of GreenPower Motor Company Inc. (the "issuer") for the interim period ended June 30, 2020.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: August 31, 2020

"Michael Sieffert"

Michael Sieffert

Chief Financial Officer

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate.  Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52- 109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

 

 

1


GreenPower Motor Company Inc.: Exhibit 99.5 - Filed by newsfilecorp.com
Press Release

GreenPower Reports Fiscal First Quarter 2021 Financial Results

Vancouver, Canada / August 31, 2020 / GreenPower Motor Company Inc. (Nasdaq:GP) (TSXV:GPV) ("GreenPower"), a leading manufacturer and distributor of zero emission electric powered vehicles serving the cargo and delivery, shuttle, transit and school bus markets, today announced financial results for its fiscal first quarter ended June 30, 2020.

"We commenced trading on Nasdaq on August 28th, 2020. We're excited that this provides us access to a broader market and will increase the exposure to GreenPower and its suite of products," said Fraser Atkinson, CEO of GreenPower. "We continue to make great progress on our strategic objectives and have reached numerous key milestones identified over the past year. GreenPower will continue to focus on the six models within our proven EV Star platform that we can leverage to address a variety of lucrative markets that demonstrate high demand. We now have an even greater ability to pursue these markets aggressively and put additional vehicles on the road."

Highlights of the first quarter:

Highlights subsequent to the first fiscal quarter ended June 30th, 2020 include:

"I am proud of our team and our ability to continue delivering units during the first fiscal quarter while the economy regains its footing," stated Brendan Riley, President of GreenPower.  "As the world continues to adapt to the current environment, we expect momentum to further accelerate into the back end of the calendar year and well beyond.  The reality is that we are in the early stages of a global transition to EV.  Greenpower's proven, tested products with real world customer testimonials validate the value proposition GreenPower offers, and puts us in an ideal position to take full advantage of the opportunity in front of us."


Results for the three months ended June 30, 2020

For the three-month period ended June 30, 2020 GreenPower recorded revenues of $2,272,255 and cost of revenues of $1,653,672 generating a gross profit of $618,583 or 27.2% of revenues. Revenue was generated from the sale of 18 EV Stars for which the Company provided lease financing and which were accounted for as finance leases, as well as revenue from finance and operating leases and other sources. Operating costs  consisted  of  administrative fees of $857,930 relating to salaries, project management, accounting, and administrative services; transportation costs of $26,741 which relate to the use of trucks, trailers, contractors as well as other operational costs needed to transport company products around North America; travel, accommodation, meals and entertainment costs of $36,853 related to travel for project management, demonstration of company products, and trade shows; product development costs of $221,109; sales and marketing costs of $(9,530); professional fees of $96,426 consisting of legal and audit fees; and office expense of $50,959 consisting of rent and other office expenses, as well as non-cash expenses including $132,032 of share-based compensation expense and depreciation of $114,761, generating a loss from operations before interest, accretion and foreign exchange of $875,145. Interest and accretion on the line of credit, convertible debentures and promissory notes totalled $555,319, and a foreign exchange gain of $1,126 resulted in a loss for the period of $1,429,337.

Non-cash expenses consisting of depreciation, accretion and accrued interest, share-based compensation, warranty accrual and amortization of deferred financing fees totaled $627,683 in the three-month period resulting in total cash expenses of $1,453,789

For further information contact

Fraser Atkinson, CEO and Chairman

(604) 220-8048

Brendan Riley, President

(510) 910-3377

Michael Sieffert, CFO

(604) 563-4144

Mike Cole

Investor Relations

(949) 444-1341

About GreenPower Motor Company Inc.

GreenPower designs, builds and distributes a full suite of high-floor and low-floor vehicles, including transit buses, school buses, shuttles, a cargo van and a double decker.  GreenPower employs a clean-sheet design to manufacture all-electric buses that are purpose built to be battery powered with zero emissions.  GreenPower integrates global suppliers for key components, such as Siemens or TM4 for the drive motors, Knorr for the brakes, ZF for the axles and Parker for the dash and control systems. 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. For further information go to www.greenpowerbus.com


Forward-Looking Statements

This document contains forward-looking statements relating to, among other things, GreenPower's business and operations and the environment in which it operates, which are based on GreenPower's operations, estimates, forecasts and projections. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. These statements generally can be identified by the use of forward-looking words such as "upon", "may", "should", "will", "could", "intend", "estimate", "plan", "anticipate", "expect", "believe" or "continue", or the negative thereof or similar variations. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict such as whether the TONY solution can be easily integrated into GreenPower's EV Star at assembly, or are beyond GreenPower's control, such as the ease with which new technologies will be able to integrate with PRI's solution. A number of important factors including those set forth in other public filings (filed under the Company's profile on www.sedar.com) could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. GreenPower disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. All amounts in U.S. dollars.© 2020 GreenPower Motor Company Inc. All rights reserved.