Business Context and Reporting Period
Company: GREENPOWER MOTOR Co INC.
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended March 31, 2020
Business Overview: The Company designs, builds, and distributes all-electric transit, school, and charter buses. It operates as an Original Equipment Manufacturer (OEM) with final assembly in Porterville, California, and utilizes contract manufacturers in Asia for major components. The Company is incorporated in British Columbia, Canada, and trades on the TSX Venture Exchange (GPV) and OTCQB (GPVRF).
Key Financial Metrics
| Metric | Year Ended Mar 31, 2020 | Year Ended Mar 31, 2019 |
|---|---|---|
| Revenue | $13,500,403 | $6,082,561 |
| Gross Profit | $4,052,825 | $1,858,142 |
| Gross Margin | 30.0% | 30.5% |
| Net Loss | $(5,145,966) | $(4,544,151) |
| Loss Per Share (Basic/Diluted) | $(0.05) | $(0.05) |
| Cash and Restricted Cash | $451,605 | $198,920 |
| Working Capital | $743,131 | $(155,176) |
| Total Assets | $13,207,679 | $11,910,299 |
| Total Liabilities | $14,382,635 | $11,995,935 |
| Shareholders' Equity (Deficit) | $(1,174,956) | $(85,636) |
| Accumulated Deficit | $(23,852,634) | $(18,706,668) |
Debt and Liquidity: As of March 31, 2020, the Company had approximately $5.5 million drawn on its line of credit (limit increased to $8 million) and approximately CDN$5.6 million in convertible debentures outstanding. Net cash used in operating activities was $5.1 million.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 122% to $13.5 million, driven by the delivery of 68 buses (including 38 EV Stars and 4 Synapse school buses) and lease income from 24 EV Stars.
- Cost of Sales: Increased to $9.4 million. Freight and customs costs rose significantly to $1.1 million (12.1% of COGS) due to tariffs on goods imported from China.
- Operating Expenses: Total expenses rose to $9.0 million. Administrative fees increased to $3.7 million due to headcount growth (48 employees vs. 24 in 2019). Interest and accretion expense increased to $2.1 million.
- Balance Sheet: The Company moved from a working capital deficit of $(155k) in 2019 to a positive working capital of $743k in 2020, though it remains in a shareholders' equity deficit.
Guidance, Outlook, Risks, and Unusual Items
Outlook and Management Commentary: The Company anticipates needing to raise additional capital to fund growth, develop new products, and meet "Buy America" standards. Management has taken steps to manage the impact of the COVID-19 pandemic, including temporary salary reductions and securing a $361,900 loan under the U.S. Small Business Administration's Paycheck Protection Program (PPP) in April 2020. The EV Star passed the Federal Transit Administration's Altoona Test with a score of 92.2 in April 2020.
Key Risks:
- Going Concern: The Company has an accumulated deficit of $23.9 million and recurring losses. Continuation as a going concern is dependent on future cash flows and obtaining necessary financing.
- COVID-19 Impact: The pandemic has negatively impacted customer purchasing ability, supply chain delivery, and public transit ridership. The Company expects continued negative impacts on financial results and liquidity.
- Government Incentives: Sales are heavily dependent on government subsidies (e.g., California's HVIP program). The HVIP program paused new voucher requests in late 2019, negatively impacting sales prospects in California.
- Trade Tariffs: Tariffs on Chinese imports have increased costs and negatively impacted gross margins.
- Debt Covenants: The line of credit contains covenants, including a current ratio requirement (temporarily reduced to 1.0:1 for Q1 and Q2 2020).
Investor Verification Checklist
- Capital Adequacy: Verify the Company's ability to secure additional financing given the $23.9 million accumulated deficit and reliance on related party loans and convertible debentures.
- Subsidy Dependency: Assess the impact of the suspension of California's HVIP program on future revenue, as the vast majority of sales have historically been in California.
- Supply Chain Resilience: Evaluate the risk of production delays due to reliance on single-source suppliers in Asia and the impact of ongoing trade tariffs.
- Related Party Transactions: Review the significant volume of loans and convertible debentures held by directors and officers (e.g., CEO/Chairman guarantees and loans).
- Going Concern Status: Monitor cash burn rates and the effectiveness of cost-cutting measures implemented in response to the pandemic.