Annual Report for Fiscal Year Ending March 31, 2024 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management's Discussion and Analysis of Financial Condition and Results of Operations provides information that management believes is relevant to an assessment and understanding of our audited consolidated financial statements and results of operations and should be read in conjunction with our audited consolidated financial statements and the related notes for the years ended March 31, 2024, and 2023 that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include but are not limited to those discussed below and elsewhere in this annual report, particularly in section Item 1A "Risk Factors" of this annual report, and the section entitled "Statement on Forward Looking Information".

Our audited consolidated financial statements are stated in United States dollars and are prepared in accordance with US GAAP.

Our fiscal year begins on April 1 and ends on March 31. References to "fiscal year 2022", "fiscal year 2023" and "fiscal year 2024" refer to the fiscal years ended March 31, 2022, March 31, 2023 and March 31, 2024, respectively.

Key Operating Metrics

BESS project pipeline

BESS project pipeline represents our uncontracted, potential proceeds from sale of BESS projects, which have a reasonable likelihood of contract execution within 48 months. Pipeline is an internal management metric that we construct from market information reported by our business development team. Pipeline is monitored by management to understand the anticipated growth of our Company and our estimated future proceeds from customer contracts for our BESS. Our pipeline is further divided into Early Stage and Mid-Late Stage projects, with Mid-Late Stage projects being all projects with an anticipated sale within 24 months, and Early Stage projects being all other projects that the where the Company has a clear intent to proceed with development activity beyond initial evaluation. Prospects under initial evaluation are excluded from the pipeline.

We cannot guarantee that our pipeline will result in actual sale proceeds in the timeframe indicated, or at all. Pipeline may not generate margins equal to our historical operating results. Our expectations of project profitability may change over time as circumstances on the project and our understanding of the project evolve. External market factors and economic or other factors beyond our control may affect our development cost, or our customers' interest in buying projects from the pipeline. If our pipeline fails to result in proceeds as anticipated or in a timely manner, we could experience a reduction in profitability and liquidity.

The following table presents our total BESS project pipeline of projects at the development stage:

			Year Ended March 31,								Change
			2024 MW				2023 MW				MW				%
BESS project development pipeline:
Australia	Early stage			1,250				-				1,250
	Mid-late stage			250				-				250
Europe	Early stage			500				-				500
	Mid-late stage			-				349				(349	)
Total				2,000				349				1,651				473	%

Additions to the pipeline in fiscal year 2024 include:

●

Portland Energy Park, a 1 GW/ 1.5 GWh new grid-scale battery project to be developed in Victoria, Australia and is planned to be the largest Battery Energy Storage System in Australia. The energy park will deliver a major increase in energy storage capacity in Victoria, strengthening the region's energy stability and supporting its net-zero transition. Once operational, the energy park will provide critical support for existing and proposed renewable energy projects within the Southwest Renewable Energy Zone (as designated by the Australian Energy Market Operator and the Victorian Government), and heavy electricity users and energy generation facilities in this area.

●

Limestone Coast Energy Park regional South East Australia, comprising two grid-scale co-located battery assets - Limestone Coast North and Limestone Coast West, combined 500 MW / 1.0 GWh. The projects will enhance the state's energy stability and supporting its transition to net-zero emissions. Strategically located near the 275kV South East Substation, the facilities will aid stabilizing the grid and lowering energy costs. The parks will store up to 60% of South Australia's residential solar output, preventing an average of 80,000 tonnes of carbon dioxide emissions annually. On February 20, 2025, the Company announced it has signed binding documentation for the sale of 100% of the shares in its Limestone Coast North Energy Park, a 250 MW / 500 MWh battery energy storage development in the Limestone Coast region of South Australia, which expects to begin commercial operations in 2027, to Intera Renewables (Intera). The sale completed on March 19, 2025.

●

On September 27, 2023, the Company acquired 51% interest in five development BESS projects in Italy from Sphera Energy S.r.l ("Sphera"), total 500 MW. These five projects are held within Sphera Australe S.r.l., Sphera Levante S.r.l., Sphera Ponente S.r.l., and Sphera Boreale S.r.l. (the "Italy Project Companies"). The Company has also agreed to acquire the remaining 49% capital in each of the Italy Project Companies upon achievement of ready to build status, targeted for 2026-2027.

Additions to the pipeline since the end of fiscal year 2024 include:

●

On October 23, 2024, Pacific Green Energy Parks Holdings (Europe) Limited, a wholly owned UK subsidiary of the Company, entered into a framework development agreement with a European renewable energy developer to develop BESS projects in Poland with the aim to develop a portfolio of projects with total capacity of at least 400 MW. Initial development funding was provided by the Company in the form of loans, with the option to convert to an equity investment.

BESS project sales

During fiscal year 2024, the Company sold two BESS projects in the UK:

●

On June 26, 2023, the Company sold Richborough Energy Park ("REP"), a 100MW BESS project of energy storage in Kent, UK to Sosteneo Fund 1 HoldCo S.à.r.l ("Sosteneo"). REP completed construction and testing in December 2023, and began operating under a 10-year energy optimization agreement for Shell Europe Limited to purchase the battery capacity from REP.

●

On December 22, 2023, the Company sold Sheaf, its BESS development project to deliver 249MW of energy storage in Sandwich, Kent, UK to Sosteneo. Sheaf holds an energy optimization agreement with SSE whereby SSE purchases the capacity and have the exclusive right to provide optimization services for a ten year period from the start of commercial operations. The project is currently in construction phase.

Project sales since the end of fiscal year 2024 include:

●

On March 19, 2025, the Company sold 100% of the shares in its Limestone Coast North Energy Park, 250MW / 500MWh battery energy storage development in the Limestone Coast region of South Australia, to Intera Renewables ("Intera"), at Ready to Build ("RtB") stage. The project is in construction phase.

BESS project services

For BESS projects sold at RtB stage, the Company is often retained to provide to our customers project management support during construction and operations phases.

The following table presents our total portfolio of BESS projects where we are retained to provide ongoing services:

		Year Ended March 31,								Change
		2024 MW				2023 MW				MW				%
BESS project services:
Construction management			250				-				250
Procurement support			-				-				-
Asset management			100				-				100
Total			350				-				350				-	%

Fees for these services are included in revenue. This is separate from proceeds from sale of BESS projects recorded in gain on derecognition of BESS project subsidiaries.

Revenue

Revenue from products increased $4.2 million to $8.9 million, primarily due to the lapsing of a postponed contract for a marine scrubbers pursuant to a settlement agreement, resulting in $8,0 million revenue recognized during the current fiscal year from receipts collected in a previous fiscal year which was non-refundable. Revenue from services increased $2.7 million to $5.6 million due to new revenue streams for BESS CMA and MSA contracts following sale of BESS projects and growth in Marine services.

		Year Ended March 31,								Change
		2024 $'000				2023 $'000				$'000				%
Revenue:
Products			8,888				4,718				4,170				88.4	%
Services			5,658				2,921				2,737				93.7	%
Total			14,546				7,639				6,907				90.4	%

Gross Profit

The gross profit for products increased by $6.5 million to $7.4 million in FY24 due to lapse of the postponement contract. Cost of goods sold for products decreased from $3.8 million to $1.5 million due to lower activity and underlying sales excluding the postponement contract, The gross profit for services increased by $0.4 million to $1.3 million due to new revenue streams for BESS CMA and MSA contracts following sale of BESS projects and growth in Marine services. Cost of sales for services increased from $2.1 million to $4.4 million, with a disproportionate increase in Marine cost of sales due to inflationary margin reduction. Overall, the gross profit for the year ended March 31, 2024 was $8.7 million (2023 - $1.8 million).

		Year Ended March 31,								Change
		2024 $'000				2023 $'000				$'000				%
Gross Profit:
Products			7,436				942				6,494
Services			1,256				865				391
Total			8,692				1,807				6,885				381	%

Gain on derecognition of BESS projects subsidiaries

The net gain on derecognition of BESS project subsidiaries relates to the sale of the following projects sold at ready to build stage:

		Year Ended March 31,								Change
		2024 $'000				2023 $'000				$'000				%
Gain on derecognition of BESS projects subsidiaries:
Richborough			17,420				-				17,420
Sheaf			24,912				-				24,912
Total			42,332				-				42,332				-	%

The net gain on derecognition of BESS project subsidiaries comprises the following elements:

											$000
Project		Sale Date		MW				MWh				Consideration (1) (2)				Projects Under Development Sold (3)				Other net assets sold and disposal costs (4)				Gain on derecognition of BESS projects subsidiaries				Backlog consideration(2)
Richborough		June 2023			100				100				59,503				(43,152	)			1,069				17,420				1,918
Sheaf		Dec 2023			250				250				81,927				(44,801	)			(12,214	)			24,912				17,069
Total					350				350				141,430				(87,953	)			(11,145	)			42,332				18,987

(1)

Consideration for sale includes cash, and in the case of Richborough, includes $23.6 million net debt assumed by the buyer and $15.5 million of noncontrolling interests derecognized. In the case of Sheaf, consideration also includes $66.4 million net debt assumed by the buyer.

(2)

Consideration only includes variable consideration where it is highly likely that the proceeds will be collected in the near term. This amounts to $3.1 million for Richborough and nil for Sheaf as at March 31, 2024. Other post sale proceeds subject to construction execution milestones are included in backlog consideration at the end of the reporting period, for potential recognition in future reporting periods as further net gain on derecognition of BESS project subsidiaries, subject to meeting the required milestones.

(3)

Projects under Development comprises the capitalized development costs incurred in relation to the BESS projects by the Company until the project sale. Depending on the exact timing of the sale, this may include some early construction costs even though the project is sold at ready to build stage.

(4)

Includes other net assets sold, recycle of currency translation adjustment, disposal costs.

On June 23, 2023, a subsidiary of the Company, and Green Power Reserves Ltd ("GPR"), a third party investor sold their 50% controlling interest and 50% nonredeemable noncontrolling interest respectively in Richborough Energy Park Ltd, a 100 MW BESS project in the United Kingdom, to Sosteneo Fund 1 Holdco Sarl ("Sosteneo"). Total consideration recognized by the Company at sale and during the remainder of fiscal year 2024 for completion of post-sale milestones amounted to $20.4 million. This includes $3.1 million receivables at March 31, 2024 where the Company is highly confident of collection of proceeds in the near term without offset.

After accounting for the derecognition of sold net assets including $43.1 million capitalized development costs, $40.2 million loans, NCI and other net liabilities sold and disposal costs, the Company made a gain on derecognition of BESS project sales of $17.4 million in fiscal year 2024.

On December 22, 2023, the Company sold a 100% controlling interest in Sheaf Energy Limited, a 250 MW BESS project in the United Kingdom, also to Sosteneo. Consideration comprised $15.6 million cash on closing and $66.4 million net debt assumed by the buyer.

After accounting for the derecognition of sold net assets including $44.8 million capitalized development costs, $12.2 million other net assets sold and disposal costs, the Company made a gain on derecognition of BESS project sales of $24.9 million in fiscal year 2024.

BESS backlog consideration

Backlog consideration for BESS projects is a management estimate of contracted variable consideration that is assessed to be probable of being collected in future reporting periods, but which hasn't yet met the recognition criteria under ASC 606-10-32-11-14 to include within the gain or loss on derecognition in the current period, typically met on achievement of construction milestones.

There is no guarantee that backlog consideration will convert into further net gain on derecognition of BESS project subsidiaries in future reporting periods.

Backlog consideration may vary in future reporting periods from both recognition of consideration under ASC 606-10-32-11-14 once milestones are met, but also re-evaluation of future milestones within the overall contracted variable consideration, as to probability of being achieved.

		Year Ended March 31,								Change
		2024 $'000				2023 $'000				$'000				%
Backlog consideration:
Richborough			1,918				-				1,918
Sheaf			17,069				-				17,069
Total			18,987				-				18,987				-	%

Post sale milestones for Richborough Energy Park of $1.9 million are included within backlog consideration as at March 31, 2024. Of the backlog amount, $1.3 million was received by March 31, 2025 and the balance released, leaving no further backlog consideration remaining to collect for Richborough Energy Park after March 31, 2025.

Further variable consideration of $17.1 million on sale of Sheaf, payable upon achieving certain post sale construction milestones, is included within backlog consideration as at March 31, 2024. No receipts were achieved from this backlog by March 31, 2025.

Level of confidence of meeting remaining milestones will be re-assessed in future reporting periods.

Non-GAAP Financial Measures

This section contains references to Adjusted EBITDA non-GAAP financial measure.

Adjusted EBITDA is calculated from the consolidated statements of operations using net income (loss) adjusted for (i) net interest expense, (ii) income taxes, (iii) depreciation and amortization, (iv) impairments, (v) stock-based compensation, and (vi) other non-recurring income or expenses.

This non-GAAP measure is intended as a supplemental measure of performance and/or liquidity that are neither required by, nor presented in accordance with, GAAP. We believe that such a non-GAAP measure, when read in conjunction with our operating results presented under GAAP, can be used to better assess our performance from period to period and relative to performance of other companies in our industry, without regard to financing methods, historical cost basis or capital structure.

This non-GAAP measure should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP and may not be comparable to similar measures presented by other entities. Readers are cautioned that this non-GAAP measure should not be construed as an alternative to other measures of financial performance calculated in accordance with GAAP. This non-GAAP measure and its reconciliation to GAAP financial measures are shown below.

The following tables present our non-GAAP measure for the periods indicated.

		Year Ended March 31,								Change
		2024 $000				2023 $000				$000				%
Net income (loss)			31				(11,794	)			11,825				(100.0	)%
Add (deduct):
Net interest expense			5,578				909				4,669				513.6	%
Income tax charge			2,370				-				2,370				-
Depreciation and amortization			1,124				1,071				53				4.9	%
Asset impairments			4,693				49				4,644				9,477.6	%
Stock based compensation			5,020				191				4,829				2,528.3	%
Other non-recurring expenses (1)			-				256				(256	)			(100.0	)%
Adjusted EBITDA			18,816				(9,318	)			28,134				(301.9	)%

(1)	Amount for the fiscal year 2023 relates to loss on acquisition of a subsidiary.

Results of Operations

Revenue

Revenue for the year ended March 31, 2024, was $14,546,000 versus $7,639,000 for the year ended March 31, 2023. During the year ended March 31, 2024, the Company generated revenue from the sale of its marine scrubber units which contributed to revenue of $8,888,000 (2023 - $4,718,000). The increase in Marine scrubber revenue resulted from cash received in a prior year for a postponed contract with one customer for thirteen vessels. The contract postponement lapsed in December 2023, resulting in $8,039,000 revenue recognized during the current year. Revenue from services, including services provided under BESS construction management agreements, BESS management service agreements, specific services performed in the marine business sector and design and engineering services in the solar business sector, was $5,658,000 (2023 - $2,921,000).

Gross Profit

During the year ended March 31, 2024, the gross profit margins for products and services were 84% (2023 - 20%) and 22% (2023 - 30%), respectively. The gross profit margin for products increased in 2024 due to lapse of the postponement contract as mentioned above. Overall, the gross profit margin for the year ended March 31, 2024, was approximately 60% (2023 - 24%).

Gain on de-recognition of BESS project subsidiaries

The Company recognized a $42,332,000 gain on derecognition of Richborough Energy Park and Sheaf Energy BESS projects. The consideration and the carrying value of net assets disposed associated with these BESS project sales are outlined in the Key Operating Metrics discussion above.

Expenses

Expenses comprise primarily of technical consultants, management, salaries and wages, professional fees, transfer agent fees and general office expenses. The professional fees relate to matters such as contract review, business acquisitions, regulatory filings, patent maintenance, and general legal, accounting and auditing fees. Expenses for the year ended March 31, 2024 were $34,741,000 as compared to $12,436,000. This increase was driven largely by cash bonuses paid to the Company's CEO of approximately $8,071,000 during the year and bonuses paid to the Company's CEO settled in shares in the Company of approximately $4,910,000. The Company also recorded an impairment to intangible assets of $4,693,000 in 2024 (2023 - nil).

Other income and expenses

Other expenses for the year ended March 31, 2024 was $13,882,000 compared to other expenses of $1,165,000 for the year ended March 31, 2023.

The increase resulted from an $8,304,000 loss on fair value of derivatives prior to sale of Sheaf Energy (2023 - nil) and $5,578,000 interest expense (2023 - $999,000) from increased short-term lending to finance development expenditure on Richborough Energy Park and Sheaf Energy BESS projects prior to sale.

Tax charge

The tax charge for the year ended March 31, 2024 was $2,370,000 (2023 - nil) resulting in a 98.7% effective tax charge. The tax charge was driven by US subpart F income relating to the disposals of the REP and Sheaf BESS projects in the UK, the US tax limitations around executive compensation under s162(m) and a change in valuation allowance of following the reassessment of the use of US net operating losses generated in previous years.

Net profit

For the year ended March 31, 2024, our Company had a net profit of $31,000 ($0.01 profit per share) compared to a net loss of $11,794,000 ($0.24 loss per share) for the year ended March 31, 2023.

Our financial results for the years ended March 31, 2024 and 2023 are summarized as follows:

		Year Ended March 31,								Change
		2024 $000				2023 $000				$000				%
Revenues
Products			8,888				4,718				4,170				88.4	%
Services			5,658				2,921				2,737				93.7	%
Total Revenues			14,546				7,639				6,907				90.4	%
Cost of goods sold
Products			1,452				3,776				(2,324	)			(61.5	)%
Services			4,402				2,056				2,346				114.1	%
Total Cost of goods sold			5,854				5,832				22				0.4	%
Gross profit			8,692				1,807				6,885				381.0	%
Gain on de-recognition of BESS project subsidiaries			42,332				-				42,332				-
Expenses
General and administrative			25,791				9,477				16,314				172.1	%
Depreciation, amortization and impairments			4,854				243				4,611				1,897.5	%
Property leases and office expenses			3,434				2,194				1,240				56.5	%
Advertising and promotion			500				508				(8	)			(1.6	)%
Research and development			162				14				148				1,057.1	%
Total expenses			34,741				12,436				20,672				166.2	%
Operating income (loss)			16,283				(10,629	)			26,912				253.2	%
Other income (expense)
Loss on acquisition of subsidiary			-				(256	)			256				-
Change in fair value of derivatives			(8,304	)			-				(8,304	)			-
Net interest expense			(5,578	)			(909	)			(4,669	)			513.6	%
Total other (expense) income			(13,882	)			(1,165	)			(12,717	)			(1,091.6	)%
Income (loss) before income taxes			2,401				(11,794	)			14,195				(120.3	)%
Income tax charge			(2,370	)			-				(2,370	)			-
Net income (loss) for the year			31				(11,794	)			11,825				(100.0	)%

Liquidity and Capital Resources

Working Capital

		At March 31, 2024 $000				At March 31, 2023 $000
Current Assets			12,724				3,758
Current Liabilities			20,943				15,538
Working Capital			(8,219	)			(11,780	)

Cash Flows

		Year Ended March 31, 2024 $000				Year Ended March 31, 2023 $000
Net Cash Provided by (Used in) Operating Activities			(18,342	)			7,998
Net Cash (Used in) Investing Activities			(31,285	)			(42,859	)
Net Cash Provided by (Used in) Financing Activities			52,003				28,912
Effect of Exchange Rate Changes on Cash			572				936
Net Change in Cash and Cash Equivalents			2,948				(5,013	)

As of March 31, 2024, we had $4,221,000 in cash and cash equivalents, $12,724,000 in total current assets, $20,943,000 in total current liabilities, and a negative working capital of $8,219,000 compared to negative working capital of $11,780,000 as at March 31, 2023. The Company's working capital increased as a result of milestone receivables recognized relating to sale of REP and an increase in cash balances.

During the year ended March 31, 2024, we used $18,342,000 of cash in operating activities, whereas we generated $7,998,000 in operating activities for the year ended March 31, 2023. Operating cash flows for the year ended March 31, 2024 primarily consist of expenses, deposits and installments received from customers and our corresponding service provision outlays. The negative operating cash flow for the year ended March 31, 2024 mainly resulted from the increase in expenses for the year, including staff and consulting costs related to the REP and Sheaf BESS projects.

During the year ended March 31, 2024, we used $31,285,000 in investing activities, whereas we used $42,859,000 in investing activities during the year ended March 31, 2023. Our investing activities for the year ended March 31, 2024 were primarily driven by the development of the REP and Sheaf BESS projects up to their respective sales. These outflows have been offset by the net proceeds from the disposal of the REP and Sheaf BESS projects.

During the year ended March 31, 2024, we generated $52,003,000 related to financing activities, whereas we generated $28,912,000 in financing activities during the year ended March 31, 2023. Our financing activity for the year ended March 31, 2024 was primarily related to the debt raising within REP and Sheaf prior to disposal, to fund project under development costs. This was partially offset by the repayment of other debt and interest throughout the year.

Liquidity and Capital Resources

As at March 31, 2024, our principal sources of liquidity were our cash and cash equivalents from operations, short-term borrowings, and supply chain financing. The Company is also in discussions to obtain a new development loan facility. We believe these sources of liquidity will be sufficient to meet our expense and capital requirements for at least the next 12 months following the filing of this Annual Report.

We had approximately $4.2 million of cash and cash equivalents on hand at March 31, 2024. Cash and cash equivalents on hand at March 31, 2025 were $6.2 million.

Since March 31, 2024 the Company has entered into a number of loan agreements to increase liquidity and provide working capital for BESS project development and periodic sales:

Corporate short term loans

Pacific Green Energy Parks (UK) Limited, a wholly owned subsidiary of the Company, entered into four separate loan agreements with a group of independent third party lenders for a total £900,000 between May 15 and May 28, 2024. The Company also entered into a loan agreement with an independent third-party lender in the same group for $1,270,000 on May 28, 2024. The five loans are identical in terms. The loans incur a fixed premium of 20% of principal, payable in full on repayment of principal. The loans were repayable on December 31, 2024, or earlier if certain liquidity events occur (whose conditions were not met).

On November 15, 2024, the Company entered into a new loan agreement to borrow a further £5,210,000 from this group of lenders and one new lender, and also refinance certain of the existing loans received in May 2024 into this new loan agreement, novating all refinanced loans for the Company to be the borrower, instead of Pacific Green Energy Parks (UK) Limited in some cases.

The refinancing redenominated the previous US dollar $1,270,000 loan to sterling £1,000,000. Two lenders did not participate in the refinancing and £200,000 of principal plus 20% fixed premium were repaid between December 31, 2024 and January 2, 2025, giving a total of £1,700,000 from original lenders contributing to the refinancing. The fixed 20% premium on these original loans was capitalized into the principal upon refinancing, giving a net increase to principal of £340,000 on these loans. The new funds lent £5,210,000 and refinanced original loans £2,040,000 give a total new principal under this loan agreement of £7,250,000.

Both the refinanced loans and the new loans are due 20 business days after Pacific Green Energy Parks (UK) Limited receives its first payment milestone from Sosteneo relating to its sale of the Sheaf project, as detailed within Note 9. This payment milestone is for £7,260,000 and is expected to be received in late 2025. The loan incurs a fixed premium of 20% of the new loan principal, payable when the loan principal is repaid. The lenders hold security over the first Sheaf payment milestone and over a new bank account set up by Pacific Green Energy Parks (UK) Limited to receive this milestone payment.

Should the Company default on the loan(s), the lender(s) can elect to convert up to 100% of the amounts outstanding to the equivalent value of ordinary shares in the Company at the Default Conversion Strike Price (defined as 0.7 x the Company's average share price on the 10 business days before and after the Event of Default).

Australia loan

On August 15, 2024, Pacific Green Technologies (Australia) Limited ("PGTA"), a wholly owned subsidiary of the Company, entered into a AUD 11,000,000 loan agreement with an independent third party lender to fund further development of our Australian BESS portfolio. The loan does not bear interest but incurs a fixed premium of 20% of the loan principal, payable in full upon repayment of the principal. The loan principal is to be repaid in full at the earlier of six months or the sale of one of the Company's Australian BESS projects.

The loan is secured against PGTA's direct or indirect shareholdings in the Company's Australian BESS projects. The Company has also provided the lender a guarantee in the event of default.

On December 19, 2024, PGTA entered into a new loan arrangement with the same lender which effectively refinanced the previous AUD 11,000,000 loan agreement. This new loan became effective on February 26, 2025 and due to mature ten months from this date. This resulted in the payment of AUD $2,200,000 repayment premium from the last loan on March 21, 2025 following the completion of the sale of the Limestone Coast North BESS project. As the repayment premium of the previous loan was repaid after the new loan became effective, PGTA was charged an additional 1.67% per month interest charge on the AUD $2,200,000 repayment premium.

The new loan does not bear interest but, similar to the previous loan, incurs a fixed premium of 20% of the loan principal which is payable in full upon repayment of the principal. However, the loan's ten-month maturity date is conditional on the PGTA receiving either receiving two non-binding offers ("NBO") on the Limestone Coast West BESS project or receiving a NBO from the purchaser of the Limestone Coast North BESS project within a six-week period from March 19, 2025. If the NBOs are not received, then the loan becomes repayable following the sale of the Limestone Coast North project. Whilst awaiting NBOs to be received, PGTA will be charged an additional 1.67% interest per month on the AUD 11,000,000 principal amount.

Other loans

The Company entered into five separate loan agreements between August 12, 2024 and September 24, 2024 with four third-party lenders and one related party as follows:

●

The related party loan was agreed on August 13, 2024 with Shead Group Pty Ltd, an entity controlled by Alex Shead, for the Company to borrow AUD 200,000.

●

The other loans with independent third parties were for a total AUD 750,000 and GBP 75,000.

●

The loans all incur a fixed 20% premium payable upon repayment of principal. The loans were all repaid between January 8, 2025 and March 31, 2025.

Going Concern

The consolidated financial statements have been prepared on a going concern basis.

The assessment of liquidity and going concern requires the Company to make judgments about its ability to meet its obligations as they fall due for at least one year after the date that the consolidated financial statements are issued. The directors have reviewed a fiscal year 2026 budget extended through twelve months from the date the financial statements are issued, based on management's operating plan and anticipated financing arrangements.

In order for the Company to meet its ongoing obligations, including repayment of short-term debt of principal $16.7 million due for repayment within the next 12 months, and also develop BESS projects from its pipeline at scale, management have been in discussion with several parties, including the existing AUD 11.0 million lender to Pacific Green Technologies Australia, to establish a larger development loan facility. This facility is anticipated to be approximately AUD 50 million. The facility will ensure the Company can meet its obligations as they fall due until at least twelve months from the date the financial statements are issued and increase its pace of pipeline development and cash generation from BESS project sales at Ready to Build stage. The fact that the additional funding required has not yet been fully secured indicates the existence of an event that may cause substantial doubt on their ability to continue as a going concern.

Whilst the funding has not yet been secured, the Company is confident that it will be successful, based on:

●

Existing loan relationship with one of the prospective lenders, supportive of the Company's growth plans.

●

Positive interest in the loan facility from prospective lenders.

●

An independent study confirming the current value of the Australian BESS project pipeline sufficient to act at as loan security.

The Company also notes that Limestone Coast West BESS project does not yet have any firm sale offers. This project is currently budgeted to be sold in the second half of fiscal year 2026, and is a major component of overall cash receipts through twelve months from the date the financial statements are issued. The lack of firm offers indicates the existence of an event that may cause substantial doubt on their ability to continue as a going concern.

Management are confident of completing this sale effectively and timely, based on:

●

Recent success in the sale of Limestone North project.

●

Interest has already received from prospective buyers.

●

The project has secured a fixed price 7-year offtake agreement for 50% of the battery capacity.

The directors have also reviewed possible downside scenarios to test the Company's liquidity in the event of adverse circumstances.

Based on the above, the Directors have concluded that the Company remains a going concern and these financial statements have therefore been prepared on the going concern basis.

Off-Balance Sheet Arrangements

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

Critical Accounting Estimates

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

Impairment of Long-lived Assets

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

We applied an undiscounted cash flow method reflecting current assumptions and inputs, including our revised forecasts for scrubber sales under a new licensed model, which resulted in the determination that the fair value of capitalized patents and technical information was less than its carrying amount. As a result, we recorded a non-cash impairment charge of $4,693,000 on capitalized patents and technical information during the year ended March 31, 2024 (2023 - $nil).

The asset value was approximately $5,738,000 prior to the recognition of this impairment charge. If all other assumptions were to remain unchanged, we expect the impairment charge would decrease or increase by approximately $120,000 if forecasted sales volumes or prices increased or decreased by 10% across all categories of customers respectively. See Note 7 to the consolidated financial statements for additional information.

We recorded an impairment charge of $nil on tangible assets during the year ended March 31, 2024 (2023 - $49,000).

Revenue Recognition

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

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

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

Revenue from services includes services provided under BESS construction management agreements, specific services provided to marine scrubber systems as well as design and engineering services for CSP. Contracts for specific services provided to marine scrubber systems represent maintenance services which are recognized at a point in time when services are completed. Contracts for CSP include design and engineering services provided to clients which are recognized over time as the service is completed. Contracts for services provided under BESS construction management agreements is recognized over time as the service is provided.

Any changes to our conclusions around single or multiple performance obligations for either or products or services could result in a timing difference in our revenue recognition.

Restatement of Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's previously issued Form 10-Q for the quarter ended June 30, 2023.

The tables and narrative below show the effects of restatements to Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's previously issued Form 10-Q for the quarter ended June 30, 2023. See Note 24 of the consolidated financial statements for further information on the restatements.

Results of Operations

The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the three months ended June 30, 2023, and 2022.

Revenue for the three months ended June 30, 2023, was $1,189,000 versus $2,024,000 for the three months ended June 30, 2022. The Company's revenues were mainly derived from the delivery obligations under service agreements and ad hoc aftersales.

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

The Company recognized a gain on derecognition of Richborough Energy Park project during the three months ended June 30, 2023.

Expenses for the three months ended June 30, 2023, were $6,913,000 as compared to $3,927,000 for the three months ended June 30, 2022. Management and technical consulting fees increased due to increased activity resulting from the sale of PGBEP 1 and REP in June 2023. Management and technical consulting fees were comprised of fees paid to our directors, officers and advisors for business development efforts and advisory services. Office-based costs, travel expenses, bonuses and professional fees also increased due to increased business activities. The impact of various international factors on foreign exchange rates caused fluctuations which saw the Company's foreign exchange losses increase significantly.

The three months ended June 30, 2023, our company recorded a net profit of $3,043,000 ($0.06 per share) compared to net loss of $3,259,000 ($0.07 per share) for the three months ended June 30, 2022.

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

		Three Months Ended
		June 30,
		(As Restated) 2023 $000				2022 $000
Revenues
Products			-				1,655
Services			1,189				369
Total revenues			1,189				2,024
Cost of goods sold
Products			192				987
Services			1,026				241
Total cost of goods sold			1,218				1,228
Gross (loss) profit			(29	)			796
Gain on de-recognition of BESS project subsidiaries			11,252				-
Expenses
Advertising and promotion			104				143
Amortization of intangible assets			1				1
Bad debts expense (recovery)			11				-
Depreciation			37				54
Foreign exchange loss			812				497
Management and technical consulting			4,325				989
Operating lease expense			124				110
Office and miscellaneous expense			434				463
Professional fees			36				287
Research and development			32				14
Salaries and wages			897				983
Transfer agent and filing fees			16				14
Travel and accommodation			119				191
Warranty and related (income) expense			(35	)			181
Total expenses			6,913				3,927
Other income (expense)
Financing interest income			1				46
Change in fair value of derivatives			67				-
Interest (expense) and other			(1,309	)			(38	)
Income tax benefit (charge)			(351	)			-
Net income (loss) for the period before noncontrolling interest			2,718				(3,123	)
Net (loss) income attributable to noncontrolling interest			(325	)			136
Net income (loss) for the period			3,043				(3,259	)

Restatement of Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's previously issued Form 10-Q for the quarter ended September 30, 2023.

The tables and narrative below show the effects of these restatements to Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's previously issued Form 10-Q for the quarter ended September 30, 2023. See Note 24 of the consolidated financial statements for further information on the restatements.

Results of Operations

The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the three and six months ended September 30, 2023, and 2022.

Revenue for the three and six months ended September 30, 2023 was $1,165,000 and $2,354,000 versus $1,195,000 and $3,219,000 for the three and six months ended September 30, 2022. The Company's revenues were derived from and from service agreement revenue. During the three months ended September 30, 2023, the Company was in the process of commissioning 1 (2022 - 2) marine scrubber units which contributed to revenue of $nil (2022 - $699,000). During the three and six months ended September 30, 2023, revenue from environmental technology services in the marine and solar businesses was $1,165,000 and $2,354,000 as compared to $496,000 and $865,000 for the three and six months ended September 30, 2022.

During the six months ended September 30, 2023, the gross profit margin for products and services were nil (2022 - 28%) and negative 1% (2022 - 33%), respectively. Overall, the gross profit margin for the six months ended September 30, 2023 was approximately negative 20% (2022 - 29%).

The Company recognized a gain on derecognition of Richborough Energy Park project during the three and six months ended September 30, 2023.

Expenses for the three and six months ended September 30, 2023, were $7,126,000 and $14,039,000 as compared to $2,462,000 and $6,389,000 for the three and six months ended September 30, 2022. Management and technical consulting fees increased due to increased activity in arising from the sale of REP/ BEP1 BESS Projects. Management and technical consulting fees were comprised of fees paid to our directors, officers and advisors for business development efforts and advisory services. Office-based costs, travel expenses, and professional fees also increased due to increased business activities and increased bonuses paid following the sale of REP/BEP1.

The three and six months ended September 30, 2023, our company recorded a net loss of $2,736,000 ($0.06 per share) and profit of $307,000 ($0.01 per share) as compared to net loss of $2,242,000 ($0.05 per share) and $5,501,000 ($0.12 per share) for the three and six months ended September 30, 2022.

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

		Three Months Ended								Six Months Ended
		September 30,								September 30,
		(As Restated) 2023 $000				2022 $000				(As Restated) 2023 $000				2022 $000
Revenues
Products			-				699				-				2,354
Services			1,165				496				2,354				865
Total revenues			1,165				1,195				2,354				3,219
Cost of goods sold
Products			252				713				444				1,700
Services			1,348				342				2,374				583
Total cost of goods sold			1,600				1,055				2,818				2,283
Gross profit (loss)			(435	)			140				(464	)			936
Gain on de-recognition of BESS project subsidiaries			5,504				-				16,756				-
Expenses
Advertising and promotion			99				158				203				302
Amortization of intangible assets			1				1				1				1
Bad debts expense (recovery)			45				(46	)			56				(47	)
Depreciation			38				49				76				103
Foreign exchange (gain) loss			252				(393	)			1,064				104
Management and technical consulting			4,053				315				8,378				1,304
Office and miscellaneous expense			521				527				955				990
Operating lease expense			93				99				217				209
Professional fees			227				461				263				748
Research and development			112				0				144				14
Salaries and wages			1,546				1,066				2,443				2,049
Transfer agent and filing fees			21				17				36				31
Travel and accommodation			118				208				238				399
Warranty and related (income) expense			-				-				(35	)			182
Total expenses			7,126				2,462				14,039				6,389
Other income (expense)
Financing interest income			-				10				1				57
Change in fair value of derivatives			-				-				67				-
Interest (expense) and other			(713	)			(39	)			(2,022	)			(78	)
Income tax benefit (expense)			-				-				(351	)			-
Net income (loss) for the period before noncontrolling interest			(2,770	)			(2,351	)			(52	)			(5,474	)
Net (loss) income attributable to noncontrolling interest			(34	)			(109	)			(359	)			27
Net income (loss) for the period			(2,736	)			(2,242	)			307				(5,501	)

Restatement of Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's previously issued Form 10-Q for the quarter ended December 31, 2023.

The tables and narrative below show the effects of these restatements to Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company's previously issued Form 10-Q for the quarter ended December 31, 2023. See Note 24 of the consolidated financial statements for further information on the restatements.

Results of Operations

The following summary of our results of operations should be read in conjunction with our unaudited interim financial statements for the three and nine months ended December 31, 2023, and 2022.

Revenue for the three and nine months ended December 31, 2023 was $10,258,000 and $12,611,000 versus $3,640,000 and $6,859,000 for the three and nine months ended December 31, 2022. The Company's revenues were derived from BESS construction management services, scrubber sales, and scrubber services. During the three months ended December 31, 2023, the Company was in the process of commissioning 2 (2022 - 2) marine scrubber units which contributed to revenue of $314,000 (2022 - $699,000). During the three and nine months ended December 31, 2023, revenue from environmental technology services in the BESS, marine and solar businesses was $1,905,000 and $4,258,000 as compared to $1,387,000 and $2,251,000 for the three and nine months ended December 31, 2022.

During the nine months ended December 31, 2023, the gross profit margin for products and services were 90% (2022- 20%) and 8% (2022- 28%), respectively. Overall, the gross profit margin for the nine months ended December 31, 2023 was approximately 62% (2022 - 23%).

The Company recognized gains on derecognition of Richborough Energy Park and Sheaf Energy BESS projects during the three and nine months ended December 31, 2023.

Expenses for the three and nine months ended December 31, 2023, were $11,594,000 and $25,634,000 as compared to $2,666,000 and $9,054,000 for the three and nine months ended December 31, 2022. Management and technical consulting fees increased due to increased activity in arising from the sale of REP/ BEP1 and SHEAF/BEP2 BESS Projects. Management and technical consulting fees were comprised of fees paid to our directors, officers and advisors for business development efforts and advisory services. Office-based costs, travel expenses, and professional fees also increased due to increased business activities and increased bonuses paid following the sale of REP/BEP1 and SHEAF/BEP2.

During the three and nine months ended December 31, 2023, our company recorded a net income of $11,267,000 ($0.21 per share) and $11,573,000 ($0.23 per share) as compared to net loss of $2,224,000 ($0.05 per share) and $7,725,000 ($0.16 per share) for the three and nine months ended December 31, 2022.

Our financial results for the three months and nine months ended December 31, 2023 and 2022 are summarized as follows:

		Three Months Ended								Nine Months Ended
		December 31,								December 31,
		(As Restated) 2023 $000				2022 $000				(As Restated) 2023 $000				2022 $000
Revenues
Products			8,353				2,253				8,353				4,608
Services			1,905				1,387				4,258				2,251
Total revenues			10,258				3,640				12,611				6,859
Cost of goods sold
Products			420				1,987				864				3,687
Services			1,551				1,031				3,925				1,614
Total cost of goods sold			1,971				3,018				4,789				5,301
Gross profit (loss)			8,287				622				7,822				1,558
Gain on de-recognition of BESS project subsidiaries			25,397				-				42,153
Expenses
Advertising and promotion			131				120				334				422
Amortization of intangible assets			1				1				2				2
Bad debts expense (recovery)			4				36				60				(10	)
Depreciation			40				46				115				149
Foreign exchange (gain) loss			330				(5	)			1,395				97
Management and technical consulting			8,265				803				16,643				2,107
Office and miscellaneous expense			615				510				1,569				1,500
Operating lease expense			816				232				1,033				441
Professional fees			563				547				826				1,295
Research and development			111				-				257				14
Salaries and wages			382				909				2,825				2,958
Transfer agent and filing fees			111				15				149				46
Travel and accommodation			208				197				445				596
Warranty and related (income) expense			17				(745	)			(19	)			(563	)
Total expenses			11,594				2,666				25,634				9,054
Other income (expense)															-
Provision for loan or debt			(1	)			-				(1	)			-
Financing interest income			(1	)			33				-				89
Change in fair value of derivatives			(8,372	)			-				(8,305	)			-
Interest (expense) and other			(3,922	)			(220	)			(5,944	)			(298	)
Income tax benefit			1,439				-				1,089				-
Net income (loss) for the period before noncontrolling interest			11,233				(2,231	)			11,180				(7,705	)
Net (loss) income attributable to noncontrolling interest			(34	)			(7	)			(393	)			20
Net income (loss) for the period			11,267				(2,224	)			11,573				(7,725	)

Liquidity and Capital Resources

Working Capital

		(As Restated) December 31, 2023 $000				March 31, 2023 $000
Current assets			20,694				3,757
Current liabilities			18,609				15,538
Working capital (deficit)			2,085				(11,781	)

Cash Flows

		(As Restated) Nine Months Ended December 31, 2023 $000				Nine Months Ended December 31, 2022 $000
Net cash used in operating activities			(17,794	)			(6,094	)
Net cash used in investing activities			(29,695	)			(31,902	)
Net cash provided by financing activities			58,269				34,948
Effect of exchange rate changes on cash			1,010				(737	)
Net change in cash and cash equivalents			11,790				(3,786	)

As of December 31, 2023, we had $13,064,000 in cash and cash equivalents, $20,694,000 in total current assets, $18,609,000 in total current liabilities and a working capital of $2,085,000 compared to a working capital deficit of $11,781,000 as at March 31, 2023. The Company's working capital increased primarily due to generation of cash and receivables from sale of REP and Sheaf projects.

During the nine months ended December 31, 2023, we used $17,794,000 in operating activities, whereas we used $6,094,000 from operating activities for the nine months period ended December 31, 2022. The operating cash flow for the nine months ended December 31, 2023, resulted primarily from the increase in total expenses.

During the nine months ended December 31, 2023, we used $29,695,000 in investing activities, whereas we used $31,902,000 in investing activities during the nine months ended December 31, 2022. Our investing activities for the nine months ended December 31, 2023, comprised primarily additions of projects under development for Sheaf and Australian projects, also investment in Italian Project Companies, offset by proceeds from disposal of REP and Sheaf projects.

During the nine months ended December 31, 2023, we received $58,269,000 in financing activities, whereas we received $34,948,000 in financing activities for the nine months ended December 31, 2022. Our financing activities for the nine months ended December 31, 2023 were related to drawdown on debt facilities for REP and Sheaf projects prior to project sales, proceeds from short term loans, offset by repayment of short-term loans.