Pacific Green Technologies : Non Reliance on Previously Issued Financial Report Form 8 K

Item 4.02(a). Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

a.

On July 3, 2024, the Audit Committee of the Board of Directors (the "Audit Committee") of Pacific Green Technologies Inc. (the "Company"), based on discussions with management, determined that the unaudited condensed financial statements for the quarter ended December 31, 2023, included in the Company's Quarterly Report on Form 10-Q, filed with the SEC on February 20, 2024, should no longer be relied upon, due to the identification of a material error. Whilst the error had no impact on reported net income, cash balance or net assets, certain line items within the income statement were materially impacted.

The Company did not recognize a change in the fair value of interest rate swaps and foreign currency forward contracts that a subsidiary of the Company entered into during the quarter ended December 31, 2023. The Company sold the subsidiary during the quarter and the purchaser assumed the interest rate swap and foreign currency forward contracts, so the restatement of the financial statements for the quarter will not affect reported net income, cash balance or net assets. However, the Company will recognize an $8.4 million increase in derivative expense for the loss on the interest rate swap and foreign currency forward contracts and an offsetting $8.4 million increase in revenue on the sale of the Sheaf project, and a related $2.1 million increase to cost of sales and an offsetting $2.1 million deferred tax credit.

In addition to the correction of the error relating to accounting for derivatives, the Company has reassessed its presentation of $1.0 million consulting costs in expenses to $0.8 million in cost of sales and $0.2 million in gain on sale of subsidiary, $2.6 million loan fees as interest expense rather than cost of sales, and $2.1 million debt issuance costs as revenue reduction rather than cost of sales. The change in classification of such costs will not affect reported net income, cash balance or net assets. The restated financial statements for the quarter ended December 31, 2023 will be reported in the 10-K for the fiscal year ended March 31, 2024.

The Company concluded that its disclosure controls and procedures as of December 31, 2023 are ineffective as a result of a material weakness that existed in the Company's internal control over financial reporting related to accounting for non-routine transactions. This will be reported in the 10-K for the fiscal year ended March 31, 2024.

The Company's management and its Audit Committee have discussed the matters disclosed in this Current Report on Form 8-K pursuant to this Item 4.02(a) with Grant Thornton UK LLP, the Company's independent registered public accounting firm.