POWERBANK Corp 6-K, filed May 14, 2024
POWERBANK Corp (PBK)
About this 6-K
POWERBANK Corp filed this 6-K on May 14, 2024.
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 May, 2024.
Commission File Number 001-41976
Solarbank Corporation
(Translation of registrant’s name into English)
505 Consumers Rd., Suite 803
Toronto, Ontario, M2J 4Z2 Canada
(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 ☐ Form 40-F ☒
INCORPORATION BY REFERENCE
Each of the Exhibits 99.1-99.6 to this report on Form 6-K furnished to the SEC is expressly incorporated by reference into the Registration Statement on Form F-10 of SOLARBANK CORPORATION (File No. 333-279027), as amended and supplemented.
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.
| Date May 14, 2024 | Solarbank Corporation | |
| By: | /s/ “Sam Sun” | |
| Sam Sun | ||
| Chief Financial Officer & Corporate Secretary | ||
| 2 |
Exhibit Index
| 3 |
Exhibit 99.1
Management’s Discussion and Analysis
For the Three and Nine Months End March 31, 2024
| Contact Information : | |
SolarBank Corporation (Formerly Abundant Solar Energy Inc.) | |
| 505 Consumers Road, Suite 803 | |
| Toronto, ON M2J 4V8 | |
| Contact Person: Mr. Sam Sun, CFO | |
| Email: info@solarbankcorp.com |
The following Management Discussion and Analysis (“MD&A”) of the financial condition and results of operations of SolarBank Corporation. (“SUNN” or the “Company”) was prepared by management as of May 13, 2024 and was reviewed and approved by the Board of Directors. The following discussion of performance, financial condition and future prospects should be read in conjunction with the interim consolidated financial statements of the Company and notes thereto for the three and nine months ended March 31st, 2024. The information provided herein supplements but does not form part of the financial statements. All amounts are stated in Canadian dollars unless otherwise indicated.
Overview
Business Profile
SolarBank Corporation is incorporated in Ontario, Canada with its registered and head office at 505 Consumers Road, Suite 803, Toronto, Ontario, M2J 4V8. The Company was originally founded in Canada in 2013 as Abundant Solar Energy Inc, and in 2017 established a 100% owned U.S. subsidiary, Abundant Solar Power Inc., to meet the demand for renewable energy in both countries. The company commenced trading its common shares on the Canadian Securities Exchange (the “CSE”) under the symbol “SUNN” on March 2, 2023. On February 14, 2024, the Company migrated its listing to Cboe Canada Exchange Inc. under the existing trading symbol “SUNN”. On April 8, 2024, the Company’s common shares commenced trading on the Nasdaq Global Market (“Nasdaq”) under the symbol “SUUN”.
The Company is a growing renewable energy sector Company that specializes in delivering solar and other renewable energy power plants in Canada and the United States of America. Throughout its years in business, the Company has worked to provide safe, reliable and low-cost solar power plants that would generate solar renewable electricity to: (a) address the growing requirements to reduce carbon emissions in the form of Solar Renewable Energy Credits (“SREC”); and (b) provide a cost competitive alternative to conventional electricity generation to further decarbonize the electricity grid.
As an established independent renewable and clean energy project developer and asset operator, the Company is engaged in the site origination, development, engineering, procurement and construction (“EPC”), operation and maintenance (“O&M”), and asset management of a solar power plants, whether electricity grid interconnected or behind-the-meter (“BTM”) solar photovoltaic power plants on roofs of commercial and/or industrial buildings, or ground-mount solar farms, community-scale or utility-scale in size. The solar power plants could be net metered or virtual net metered to supply renewable energy to a specific commercial and industrial customer, or supply the green energy to community solar subscribers, or sell the renewable power or SREC to utilities in order to meet their Renewable Procurement Standard (“RPS”) compliance requirement or large corporations in meeting their carbon emission reduction limits or Net-Zero targets, such as NZ2050 or NZ2035.
The Company is shifting its business model from a “develop to sell” strategy to the ownership of renewable projects as an Independent Power Producer. The Company will accelerate its portfolio growth via organic growth and M&A.
Development of the Business
USA
The Company is focused on its key markets in New York, Maryland and California. In New York, the Company has 3 projects that reached Notice to Proceed (“NTP”) stage and construction started in November 2023. The Company reached Permission to Operate (“PTO”) for 1 project in New York in January 2024. The Company also expects to reach PTO for a 3.7 MW project by the end of FY2024; this project is to be owned by the Company subject to receipt of financing. Around 20 projects are under utility interconnection studies. In addition, the Company is working on sites origination of potential community solar and utility scale solar projects.
Community solar needs state-level polices in order to thrive. The Company is monitoring certain potential markets such as Illinois, Pennsylvania, Michigan, Ohio and Virginia where legislation for community solar programs has been passed or is being proposed.
Canada
The Company entered into an EPC agreement for the construction of three separate Battery Energy Storage System (“BESS”) projects in October 2023 in Ontario.
The Company commenced construction on a 1.4MW DC rooftop solar project in Alberta. In addition, 2 projects in Alberta and 3 projects in Nova Scotia are under utility interconnection studies and development work is ongoing.
The Company, in addition to its on-going business in Canada to provide operation and maintenance services of solar projects, is developing solutions to assist the real estate sector to achieve net zero greenhouse gas emissions.
Acquisitions
The Company acquired control of two corporations, OFIT GM Inc. (“OFIT GM”) and OFIT RT Inc. (“OFIT RT,”), (the “Purchased Entities”) as a result of Share Purchase Agreements entered into on October 23, 2023 (the “SPAs”). The Purchased Entities hold solar projects located in Ontario with a combined capacity of 2.5 MW and have been operating since 2017. The transaction closed on November 1, 2023. The shares of the Purchased Entities were acquired from N. Fine Investments Limited and Linden Power Inc. Pursuant to the terms of the SPAs, the Company acquired 49.9% ownership of OFIT RT Inc. and 49.9% ownership of OFIT GM Inc.
The Company also acquired 100% interest in the US1 Project and VC1 Project on December 5, 2023, both located in New York (the “Projects)”. The Company previously held a 67% interest in the Projects and has now acquired the remaining 33% from the minority interest shareholder. The Projects have a combined installed capacity of 687.6 kW DC.
The Company acquired a development stage solar project located in the Town of Camillus, New York on a closed landfill. The Company intends to develop a 3.15 MW DC ground-mount solar power project on the site that will operate as a community solar project.
Recent Developments
Since the commencement of the quarter ended March 31, 2024, the Company achieved the following business objectives:
| ● | January 2024: The 3.7 MW Geddes project completed mechanical construction. This is the largest project to date to be owned by the Company (subject to financing). The next step is completion of final electrical work and acceptance testing. The Project is expected to become operational during the second quarter of 2024. |
| ● | January 2024: The Company executed a lease agreement on a site in Greenville, New York. The Company intends to develop two 7 MW DC ground-mount solar power projects on the site. The Company also executed a lease agreement on a 3 MW DC ground mount site in Nasau, New York. |
| ● | January 2024: The Manlius, New York community solar project has reached permission to operate stage (PTO) on January 24, 2024. National Grid has confirmed that the Manlius Project has been formally accepted, successfully commissioned and it is authorized to produce power. |
| ● | February 2024: The Company executed lease agreements on two closed landfill sites located in Skaneateles, New York and Lewiston, New York. The Company intends to develop three ground-mount solar power projects on the sites with a capacity of 19.3 MW DC. |
| ● | February 2024: The Company received approval to list its common shares (the “Shares”) on the Cboe Canada stock exchange with trading commencing on February 14, 2024. The Shares were concurrently delisted from the Canadian Securities Exchange. |
| ● | February 2024: Renewable energy professional Chelsea L. Nickles is appointed to the Company’s Board of Directors as an independent director. |
| ● | March 2024: The Company entered into a definitive agreement with Solar Flow-Through Funds Ltd. (“SFF”) to acquire all of the issued and outstanding common shares of SFF through a plan of arrangement for an aggregate consideration of up to $41.8M in an all stock deal. This transaction values SFF at up to $45M but the consideration payable excludes the common shares of SFF currently held by the Company. |
| ● | March 2024: The Company acquired a development stage solar project located in the Town of Camillus, New York on a closed landfill. The Company intends to develop a 3.15 MW DC ground-mount solar power project on the site that will operate as a community solar project. The acquisition deal closed in April 2024. |
| ● | April 2024: The Company commenced trading on the Nasdaq Global Market at opening of Monday, April 8, 2024 under the symbol “SUUN”. |
| ● | April 2024: The Company reached mechanical completion on the SB-1, SB-2 and SB-3 Community Solar Projects acquired by Honeywell International Inc. (“Honeywell”). The projects are being constructed under an engineering, procurement, and construction (“EPC”) Contract with SolarBank. SolarBank also expects that it will retain an operations and maintenance contract for the projects following the completion of construction |
| ● | April 2024: The Company commenced construction on a 1.4 MW DC rooftop solar project in Alberta as a pilot project. This project received interconnection approval in December 2023, full permitting in March 2024, and is currently undergoing the process of engineering and final design. Construction is expected to be completed in November 2024. |
| ● | April 2024: The Company partnered with TriMac Engineering of Sydney, Nova Scotia to develop a 10 MW DC community solar garden in the rural community of Enon, Nova Scotia, and three 7 MW DC projects in Sydney, Halifax and Annapolis, Nova Scotia respectively (the “NS Projects”). The NS Projects are being developed under a Community Solar Program that was announced by the Government of Nova Scotia on March 1, 2024 and owned by AI Renewable Fund. |
| ● | May 2024: The Company announced that it has executed a lease agreement on a 29.6 acre site in Black Creek, New York. SolarBank intends to develop a 3.2 MW DC ground-mount solar power project on the site. |
Selected Quarterly Information
The following table shows selected financial information for the Company for the three and nine months period ended March 31, 2024 and 2023 and should be read in conjunction with the Company’s consolidated financial statements as at March 31, 2024 and June 30, 2023, and related notes thereto for such periods.
The condensed interim consolidated financial statements of the Company have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) and are expressed in Canadian dollars.
| For the three months ended March 31 | 2024 $ | 2023 $ | ||||||
| Revenue | 24,074,947 | 706,856 | ||||||
| Revenue – EPC | 23,435,444 | 684,296 | ||||||
| Revenue – development | 27,207 | - | ||||||
| Revenue – IPP production | 121,761 | - | ||||||
| Revenue – O&M | 20,220 | 22,560 | ||||||
| Revenue – other services | 470,315 | - | ||||||
| Cost of goods sold | (18,686,509 | ) | (51,601 | ) | ||||
| Net income (loss) | 3,499,241 | 3,074,090 | ||||||
| Earning (loss) per share | 0.13 | 0.11 | ||||||
| For the nine months ended March 31 | 2024 $ | 2023 $ | ||||||
| Revenue | 50,400,013 | 9,152,242 | ||||||
| Revenue – EPC | 47,477,484 | 9,082,473 | ||||||
| Revenue – development | 2,106,625 | - | ||||||
| Revenue – IPP production | 259,279 | - | ||||||
| Revenue – O&M | 86,310 | 69,769 | ||||||
| Revenue – other services | 470,315 | - | ||||||
| Cost of goods sold | (40,130,961 | ) | (6,895,613 | ) | ||||
| Net income | 5,522,702 | 3,426,589 | ||||||
| Earning per share | 0.20 | 0.13 | ||||||
March 31, 2024 $ | June 30, 2023 $ | |||||||
| Total assets | 39,456,583 | 24,969,537 | ||||||
| Total current liabilities | 8,184,142 | 7,083,876 | ||||||
| Total non-current liabilities | 3,929,978 | 1,254,465 | ||||||
The following discussion addresses the operating results and financial condition of the Company for the three and nine months ended March 31st, 2024 compared with the three and nine months ended March 31st, 2023.
Result of Operations
Three and nine months ended March 31, 2024 compared to the three and nine months ended March 31, 2023
Trend
In fiscal 2024, the Company continued to focus on scaling its business model by growing its pipeline and advancing its EPC projects in the US and continued development activities for projects in both US and Canada. It is expected that the Company’s revenue will keep growing in the fiscal 2024 as three projects (total of 21MW) in the US sold to Honeywell International started construction this quarter. Total EPC contract value is US$41 million. The Company acts as EPC contractor. In addition, the Geddes Project (currently owned by the Company) are expected to finish the construction and reach PTO in 2024.
The net income for the three months ended March 31, 2024 increased by $425,151 compared to the net income for the three month ended March 31, 2023 with $3,499,241 net income recognized during the third quarter of 2024 as compared to a net income of $3,074,090 for the third quarter of 2023.
The net income for the nine months ended March 31, 2024 increased by $2,096,113 compared to the net income for the nine month ended March 31, 2023 with $5,522,702 net income recognized during the period as compared to a net income of $3,426,589 for the same period in fiscal 2023.
Key business highlights and projects updates in FY2024
| ● | Existing projects |
| Name | Location | Size
(MWdc/MWh) |
Timeline | Milestone | Current Status | |||||
| US1 | New York, USA | 0.4 | December 2022 | Reach
PTO (permission to operate) |
EPC project. It reached substantial completion in December 2022. The Company acquired 100% of the project in December 2023 | |||||
| VC1 | New York, USA | 0.3 | December 2022 | Reach
PTO (permission to operate) |
EPC project. It reached PTO in December 2022. The Company acquired 100% of the project in December 2023 | |||||
| Manlius | New York, USA | 5.7 | January 2024 | Reach
PTO (permission to operate) |
EPC project. It reached PTO in January 2024 | |||||
| Geddes | New York, USA | 3.7 | Q1 FY2025 | Reach
PTO (permission to operate) |
Construction started in September 2023. This is the largest project to date to be owned by the Company (subject to financing). | |||||
| Settling Basins - 1 | New York, USA | 7.0 | Q4FY2025 | Reach
PTO (permission to operate) |
EPC project. Construction started in November 2023 | |||||
| Settling Basins - 2 | New York, USA | 7.0 | Q4FY2025 | Reach
PTO (permission to operate) |
EPC project. Construction started in November 2023 | |||||
| Settling Basins - 3 | New York, USA | 7.0 | Q4FY2025 | Reach
PTO (permission to operate) |
EPC project. Construction started in November 2023 | |||||
| BESS | Ontario, Cananda | Discharge: 4.74 Storage: 18.96 |
Q1FY2026 | Reach
PTO (permission to operate) |
EPC project. EPC agreement entered Oct. 3, 2023 for the construction of 3 separate BESS projects |
| ● | Projects under development |
| Name | Location | Size
(MWDC) |
Timeline | Milestone | Expected Cost | Cost Incurred |
Sources of Funding | Current Status | ||||||||
| 261 Township |
Alberta, Canada |
4.2 | June 2024 |
Completion of engineering work and placement of orders for main project components | 800,000 | 31,428 | Equity financing, working capital | Phase 1 is expected to have a construction start date of June 2024. Interconnection for Phase 2 will be filed with the utility pending the final results of Phase 1. The Alberta Utilities Commission (“AUC”) has announced a pause on approvals of new renewable electricity generation projects over one megawatt until Feb. 29, 2024. This pause has impacted the Company’s receipt of interconnection approval for the project from the AUC. | ||||||||
| Richmond 2 | New York, USA | 7.0 | December 2025 |
NTP | 400,000 | 10,642 | Equity financing, working capital | The four projects are under utility interconnection study. The design work will be after the completion of the interconnection study. | ||||||||
| Hardie | New York, USA | 7.0 | December 2024 |
NTP | 300,000 | 22,250 | Equity financing, working capital | |||||||||
| Gainsville | New York, USA | 7.0 | December 2024 | NTP | 400,000 | 10,750 | Equity financing, working capital | |||||||||
| 6882 Rice Road | New York, USA | 5.2 | December 2024 | NTP | 800,000 | 34,150 | Equity financing, working capital | |||||||||
| SUNNY | New York, USA | 28.0 | December
2025 |
Completion of interconnection studies, engineering and permitting, along with interconnection deposit, and procurement bid application fee | 900,000 | 127,174 | Equity financing, working capital | The Company submitted an interconnection request to New York Independent System Operator. The company signed a lease agreement with the landowner in 2022. It has also qualified to submit a Proposal under NYSERDA’s RESRFP22-1 for Renewable Energy Credits (RECs). | ||||||||
| Camillus | New York USA | 3.15 | September 2024 | NTP | 100,000 | - | Equity financing, working capital | The project received interconnection approval and is in the final stage of permitting process. |
Revenue
The Company’s revenue is mainly from EPC services, Development fees and O&M services.
| Three Months Ended March 31 | Nine Months Ended March 31 | |||||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||||||||
| EPC services | 23,435,444 | 684,296 | 22,751,148 | 47,477,484 | 9,082,473 | 38,395,011 | ||||||||||||||||||
| Development fees | 27,207 | - | 27,207 | 2,106,625 | - | 2,106,625 | ||||||||||||||||||
| IPP Production | 121,761 | - | 121,761 | 259,279 | - | 259,279 | ||||||||||||||||||
| O&M services | 20,220 | 22,560 | (2,340 | ) | 86,310 | 69,769 | 16,541 | |||||||||||||||||
| Other services | 470,315 | - | 470,315 | 470,315 | - | 470,315 | ||||||||||||||||||
| Total Revenue | 24,074,947 | 706,856 | 23,368,091 | 50,400,013 | 9,152,242 | 41,247,771 | ||||||||||||||||||
The following table shows the significant changes in revenue from 2023
| Three months | Nine months | Explanation | ||||||||
| EPC services | 22,751,148 | 38,395,011 | Increase due to $.6.M earned from Manlius and $32.2M earned from Settling Basins projects in FY24, $22.6M from Settling Basins earned in Q3. In FY23, $6.0M earned from Richmond and Portland projects, $1.4M earned from US1&VC1, and $0.7M from SCA project. $516k earned from BESS in FY23 Q3. | |||||||
| Development fees | 27,207 | 2,106,625 | In FY24, $2M earned from Settling Basins projects in Q1. No project has been sold at NTP in FY2023. | |||||||
| IPP Production | 121,761 | 259,279 | IPP production from US1 & VC1 acquired June 2023 and OFIT GM & OFIT RT acquired November 2023 | |||||||
| O&M services | (2,340 | ) | 16,541 | No significant changes | ||||||
| Other services | 470,315 | 470,315 | Canadian Renewable Conservation Expenditure (“CRCE”) Solar Project started Q3 FY2024. | |||||||
| Total | 23,368,091 | 41,247,771 | ||||||||
Expenses
Expenses consist of expenditures related to cost of services provided and costs to develop new projects, as well as corporate business development and administrative expenses.
| Expenses | Three Months Ended March 31 | Nine Months Ended March 31 | ||||||||||||||||||||||
| 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||||||||
| Cost of goods sold | (18,686,509 | ) | (51,601 | ) | (18,634,908 | ) | (40,130,961 | ) | (6,895,613 | ) | (33,235,348 | ) | ||||||||||||
| Operating expense: | ||||||||||||||||||||||||
| Advertising and promotion | (1,879,006 | ) | (47,719 | ) | (1,831,287 | ) | (3,357,708 | ) | (86,332 | ) | (3,271,376 | ) | ||||||||||||
| Consulting fees | (320,117 | ) | (448,673 | ) | 128,556 | (1,076,791 | ) | (781,435 | ) | (295,356 | ) | |||||||||||||
| Depreciation | (47,370 | ) | (12,846 | ) | (34,525 | ) | (118,668 | ) | (36,185 | ) | (82,483 | ) | ||||||||||||
| Insurance | (89,752 | ) | (29,391 | ) | (60,361 | ) | (217,010 | ) | (87,179 | ) | (129,831 | ) | ||||||||||||
| Listing fees | (183,711 | ) | (68,517 | ) | (115,194 | ) | (183,711 | ) | (99,491 | ) | (84,220 | ) | ||||||||||||
| Office, rent and utilities | (127,156 | ) | (75,704 | ) | (51,452 | ) | (337,544 | ) | (222,983 | ) | (114,561 | ) | ||||||||||||
| Professional fees | (244,341 | ) | (482,659 | ) | 238,318 | (871,698 | ) | (637,401 | ) | (234,297 | ) | |||||||||||||
| Repairs and maintenance | (65,014 | ) | (15,449 | ) | (49,565 | ) | (111,861 | ) | (17,299 | ) | (94,562 | ) | ||||||||||||
| Salary and Wages | (389,902 | ) | (160,888 | ) | (229,014 | ) | (867,318 | ) | (576,853 | ) | (290,465 | ) | ||||||||||||
| Stock based compensation | (108,408 | ) | (2,621,451 | ) | 2,513,043 | (758,507 | ) | (2,621,451 | ) | 1,862,944 | ||||||||||||||
| Travel and events | (53,019 | ) | (21,022 | ) | (31,997 | ) | (224,253 | ) | (113,924 | ) | (90,329 | ) | ||||||||||||
| Total operating expenses | (3,507,796 | ) | (3,984,319 | ) | (476,523 | ) | (8,125,069 | ) | (5,300,533 | ) | (2,824,536 | ) | ||||||||||||
| Total Expenses | (22,194,305 | ) | (4,035,920 | ) | (18,158,385 | ) | (48,256,030 | ) | (12,196,146 | ) | (36,059,884 | ) | ||||||||||||
The following table shows the significant changes in expenses from 2023:
| Three months | Nine months | Management Commentary | ||||||||
| Cost of goods sold | (18,634,908 | ) | (33,235,348 | ) | Consistent with increase in revenue. | |||||
| Operating expense: | ||||||||||
| Advertising and promotion | (1,831,287 | ) | (3,271,376 | ) | Additional costs incurred in FY24 relating to marketing expenditure to build the awareness of the Company | |||||
| Consulting fees | 128,556 | (295,356 | ) | $207k bonus paid in FY23 Q3 for completion of Richmond and Portland projects. In first 2 quarters of FY24, there were increased consulting fees relating to exploring investor markets and preparation for Cboe and Nasdaq listings. | ||||||
| Depreciation | (34,525 | ) | (82,483 | ) | Increase related to depreciation of IPP facilities acquired in June and October 2023. | |||||
| Insurance | (60,361 | ) | (129,831 | ) | Insurance was higher due to increased activity and higher director and officer insurance premiums following completion of the IPO. Increase also affected by higher revenue and new companies acquired. | |||||
| Listing fees | (115,194 | ) | (84,220 | ) | $184k listing fees for Cboe and Nasdaq in FY24. | |||||
| Office, rent and utilities | (51,452 | ) | (114,561 | ) | Increase in rent costs due to new IPP facilities acquired. | |||||
| Professional fees | 238,318 | (234,297 | ) | Increase due to audit fees, due diligence work on acquisitions, tax preparations, and fees for new hires. Decrease in Q3 due to $211k legal fees accrued due to accumulation of unbilled legal fees in FY23 Q3. | ||||||
| Repairs and maintenance | (49,565 | ) | (94,562 | ) | Increase in maintenance costs due to new car and IPP facilities acquired. | |||||
| Salary and Wages | (229,014 | ) | (290,465 | ) | Increase in salary due to 4 new employees hired in FY24 and $120k bonus paid in FY24 Q3. | |||||
| Stock based compensation | 2,513,043 | 1,862,944 | Employee stock compensation started March 2023 and 50% vested November 2023. $1.8M advisory warrants also vested March 2023. | |||||||
| Travel and events | (31,997 | ) | (90,329 | ) | More travel and seminars activities in FY2024 to grow the company’s pipeline | |||||
| Total operating expenses | (476,523 | ) | (2,824,536 | ) | ||||||
| Total Expenses | (18,158,385 | ) | (36,059,884 | ) | ||||||
Other Income (Expense)
For the three months ended March 31, 2024, the Company had other income of $3,534,692 compared to other income of $6,363,363 for the three months ended March 31, 2023. Other income for the three months ended March 31, 2024 consists mainly of bad debt recovery of $3,376,686, foreign exchange gain of $65,715 and other income of $92,271. Other income for the three months ended March 31, 2023 consists mainly of Pre-Construction Development Costs recovered from IESO of $6,338,640, CESIR refund of $18,327, and other income of $6,396.
For the nine months ended March 31, 2024, the Company had other income of $5,270,382 compared to other income of $6,473,127 for the nine months ended March 31, 2023. Other income for the nine months ended March 31, 2024 consists mainly of bad debt recovery of $4,839,438, gain from acquisition of non-controlling interest of $195,893, foreign exchange gain of $160,748 and other gain of $74,758. Other income for the nine months ended March 31, 2023 consists mainly of Pre-Construction Development Costs recovered from IESO of $6,338,640, foreign exchange gain of $114,900, CESIR refund of $18,327, government subsidies of $2,808, offsetting by interest expense of $1,548.
Impairment Loss
The impairment loss of $1,124,791 determined on March 31, 2024 relates to 702,820 SFF shares acquired prior to March 27, 2024. After the Company entered a definitive agreement with SFF on March 20, 2024 to acquire all issued and outstanding common shares of SFF, the Company determined that the shares previously acquired were overvalued based on the terms of the acquisition agreement. An impairment loss was recorded to reflect the contingent portion of the acquisition agreement. See point (4) under Legal Matters and Contingent Assets section for more detail on the agreement.
Net Income
The net income for the three months ended March 31, 2024 was $3,499,241 for income per share of $0.13 based on 27,136,075 outstanding shares versus $3,074,090 for an income per share of $0.11 based on 26,800,000 outstanding shares for the comparative period.
The net income for the nine months ended March 31, 2024 was $5,522,702 for earning per share of $0.20 based on 26,993,260 outstanding shares versus $3,426,589 for a income per share of $0.13 based on 26,800,000 outstanding shares for the comparative period.
Legal Matters and Contingent Assets
The Company is subject to the following legal matters and contingencies:
| (1) | In June 2022, a group of residents filed an Article 78 lawsuit against the town of Manlius, New York, over a solar panel project on town property that is being developed by SolarBank. The lawsuit was filed challenging the approval of the Manlius landfill. SolarBank is not named in the lawsuit; however, in cooperation with the town, SolarBank is vigorously defending this suit. On October 5, 2022 by decision of the State of New York Supreme Court, the lawsuit was dismissed. However, on October 19, 2022 an appeal was filed by the petitioners in the Appellate Division of the State of New York Supreme Court. On March 15, 2024 the Appellate Division of the State of New York Supreme Court dismissed the appeal. The petitioners having remaining appeal rights the timelines of which have not yet expired. The likelihood of success in these lawsuits cannot be reasonably predicted. |
| (2) | On December 2, 2020, a Statement of Claim was filed by the Company’s subsidiary, 2467264 Ontario Inc, and seven independent solar project developers (collectively the “Plaintiffs”) against the Ontario Ministry of Energy, Northern Development and Mines (“MOE”), the IESO, and John Doe (collectively the “Defendants”). Plaintiffs seek damages from the Defendants in the amount of $240 million in lost profits, $17.8 million in development costs, and $50 million in punitive damages for misfeasance of public office, breach of contract, inducing the breach of contract, breach of the duty of good faith and fair dealing, and conspiracy resulting in the wrongful termination of 111 FIT Contracts. 2467264 Ontario Inc. will receive its proportionate entitlement of any net legal award based on its economic entitlement of 8.3% to the legal claim. This lawsuit was previously subject to a leave requirement under s. 17 of the Crown Liability and Proceedings Act, 2019. However, a recent decision of the Ontario Superior Court of Justice has deemed s. 17 of no force and effect (see Poorkid Investments v. HMTQ 2022 ONSC 883). Accordingly, the lawsuit will continue to move forward through the normal course. We expect statements of defence to be served following the determination of some preliminary motions. No amounts are recognized in these consolidated special purpose financial statements with respect to this claim. |
| (3) | On January 29, 2021, a second Statement of Claim was filed by the Company’s subsidiary, 2467264 Ontario Inc, and fourteen independent solar project developer (collectively the “Plaintiffs”) against the MOE, the IESO, and Greg Rickford, as Minister of the MOE (collectively the “Defendants”). The Plaintiffs seek damages from the Defendants in the amount of $260 million in lost profits, $26.9 million in development costs, and $50 million in punitive damages for breach of contract and breach of duty of good faith and fair dealing resulting in the wrongful termination of 133 FIT contracts. 2467264 Ontario Inc. will receive its proportionate entitlement of any net legal award based on its economic entitlement of 0.7% to the legal claim. This second Statement of Claim is separate and in addition to the first Statement of Claim filed. This lawsuit was previously subject to a leave requirement under s. 17 of the Crown Liability and Proceedings Act, 2019. However, a recent decision of the Ontario Superior Court of Justice has deemed s. 17 of no force and effect (see Poorkid Investments v. HMTQ 2022 ONSC 883). Accordingly, the lawsuit will continue to move forward through the normal course. We expect statements of defence to be served following the determination of some preliminary motions, including a motion to consolidate the two actions into a single action. No amounts are recognized in these combined special purpose financial statements with respect to this claim. |
| (4) | On March 20, 2024, the Company entered into a definitive agreement with Solar Flow-Through Funds Ltd. (“SFF”) to acquire all of the issued and outstanding common shares of SFF through a plan of arrangement for an aggregate consideration of up to $41.8 million in an all stock deal (the “SFF Transaction”). The SFF Transaction values SFF at up to $45 million but the consideration payable excludes the common shares of SFF currently held by SolarBank. |
Under the terms of the SFF Transaction, the Company has agreed to issue up to 5,859,567 common shares of SolarBank (“SolarBank Shares”) for an aggregate purchase price of up to $41.8 million, representing $4.50 per SFF common share acquired. The number of SolarBank Shares was determined using a 90 trading day volume weighted average trading price as of the date of the Agreement which is equal to $7.14 (the “Agreement Date VWAP”). The SFF Transaction represents a 7% premium to a valuation report prepared by Evans & Evans, Inc. on SFF and its assets.
The consideration for the SFF Transaction consists of an upfront payment of approximately 3,575,638 SolarBank Shares (Cdn$25.53 million) and a contingent payment representing up to an additional 2,283,929 SolarBank Shares ($16.31 million) that will be issued in the form of contingent value rights (“CVRs”). The SolarBank Shares underlying the CVRs will be issued once the final contract pricing terms have been determined between SFF, the Ontario Independent Electricity System Operator (“IESO”) and the major suppliers for the SFF BESS portfolio and the binding terms of the debt financing for the BESS portfolio have been agreed (the “CVR Conditions”). On satisfaction of the CVR Conditions, Evans & Evans, Inc. shall revalue the BESS portfolio and SolarBank shall then issue SolarBank Shares having an aggregate value that is equal to the lesser of (i) Cdn$16.31 million and (ii) the final valuation of the BESS portfolio determined by Evans & Evans, Inc. plus the sale proceeds of any portion of the BESS portfolio that may be sold, in either case divided by the Agreement Date VWAP. The maximum number of additional shares issued for the CVRs will be 2,283,929 SolarBank Shares.
Summary of Quarterly Results
| Description | Q3 March 31, 2024 ($) | Q2 December 31, 2023 ($) | Q1 September 30, 2023 ($) | Q4 June 30, 2023 ($) | ||||||||||||
| Revenue | 24,074,947 | 18,643,804 | 7,681,261 | 9,245,267 | ||||||||||||
| Income (Loss) for the period | 3,499,241 | (15,508 | ) | 2,038,968 | (1,076,836 | ) | ||||||||||
| Earning (Loss) per share (basic and diluted) | 0.13 (basic) 0.09 (diluted) | (0.00) (basic)
| 0.08 (basic) 0.05 (diluted) | (0.06) (basic)
| ||||||||||||
| Description | Q3 March 31, 2023 ($) | Q2 December 31, 2022 ($) | Q1 September 30, 2022 ($) | Q4 June 30, 2022 ($) | ||||||||||||
| Revenue | 706,856 | 2,964,934 | 5,480,452 | 388,369 | ||||||||||||
| Income (Loss) for the period | 3,064,872 | 89,468 | 225,957 | (880,801 | ) | |||||||||||
| Income (Loss) per share (basic and diluted) | 0.11 (basic) 0.09 (diluted) | 0.01 | 0.01 | (0.06 | ) |
Historical quarterly results of operations and income per share data do not necessarily reflect any recurring expenditure patterns or predictable trends except for the fact that seasonally the Company’s third quarter typically has the smallest amount of revenue due to winter conditions that are less favorable for construction. The Company’s revenues fluctuate from quarter to quarter based on the timing of recognition of revenue which is dependent on the stage of the various solar power projects under development. However, generally the Company has seen increased revenues over the last four quarters as its greater access to capital following its March 2023 initial public offering has provided it with more resources to develop, construct, operate and/or own solar power projects. Refer to “Results of Operations” for additional discussion.
Liquidity and Capital Resources
The following table summarizes the Company’s liquidity position:
| As at | March 31, 2024 $ | June 30, 2023 $ | ||||||
| Cash | 6,091,112 | 749,427 | ||||||
| Working capital | 9,396,704 | 14,962,023 | ||||||
| Total assets | 39,456,583 | 24,969,537 | ||||||
| Total liabilities | 12,114,120 | 8,338,341 | ||||||
| Shareholders’ equity | 27,342,462 | 16,631,196 | ||||||
The Company is working on securing financing to support continuation of its operations and progression on a growing number of projects but it does not presently have sufficient working capital to continue operating for the next twelve months. To date, the Company’s operations have been financed from cash flows from operations, debt financing and equity financing. The Company will continue to identify financing opportunities, including equity issuances, in order to provide additional financial flexibility and execute on the Company’s growth plans. While the Company has been successful raising the necessary funds in the past, there can be no assurance it can do so in the future.
To assist with potential liquidity needs, the Company has filed a final short form base shelf prospectus (the “Shelf Prospectus”) with the securities regulatory authorities in each of the provinces of Canada. The Shelf Prospectus will enable the Company to make offerings of up to $200 million of common shares, warrants, subscription receipts, units and share purchase contracts or a combination thereof of the Company from time to time, separately or together, in amounts, at prices and on terms to be determined based on market conditions at the time of the offering and as set out in an accompanying prospectus supplement, during the 25-month period that the Shelf Prospectus remains valid.
The nature, size and timing of any such financings (if any) will depend, in part, on the Company’s assessment of its requirements for funding and general market conditions. Unless otherwise specified in the prospectus supplement relating to a particular offering of securities, the net proceeds from any sale of any securities will be used for to advance the Company’s business objectives and for general corporate purposes, including funding ongoing operations or working capital requirements, repaying indebtedness outstanding from time to time, discretionary capital programs and potential future acquisitions. The specific terms of any future offering will be established in a prospectus supplement to the Shelf Prospectus, which supplement will be filed with the applicable Canadian securities regulatory authorities.
In addition. The Company has entered into an equity distribution agreement (the “Distribution Agreement”) with Research Capital Corporation (the “Agent”) to establish an at-the-market equity program (the “ATM Program”). The Company may issue up to $15,000,000 of common shares of the Company (the “ATM Offered Shares”) from treasury under the ATM Program. The ATM Offered Shares will be issued by the Company to the public from time to time, through the Agent, at the Company’s discretion. The ATM Offered Shares sold under the ATM Program, if any, will be sold at the prevailing market price at the time of sale. Since the ATM Offered Shares will be distributed at trading prices prevailing at the time of the sale, prices may vary between purchasers and during the period of distribution. The Company intends to use the net proceeds from any sales of ATM Offered Shares under the ATM Program, if any, to advance the Company’s business objectives and for general corporate purposes, including, without limitation, funding ongoing operations or working capital requirements, repaying indebtedness outstanding from time to time, discretionary capital programs and potential future acquisitions.
The Company’s cash is held in highly liquid accounts. No amounts have been or are invested in asset-backed commercial paper.
The chart below highlights the Company’s cash flows:
| For nine months ended | March 31, 2024 $ | March 31, 2023 $ | ||||||
| Net cash provided by (used in) | ||||||||
| Operating activities | 10,919,336 | 4,653,394 | ||||||
| Investing activities | (5,078,827 | ) | (4,680,000 | ) | ||||
| Financing activities | (310,121 | ) | 4,546,451 | |||||
| Increase (decrease) in cash, cash equivalents, and restricted cash | 5,341,685 | 4,698,622 | ||||||
Cash flow from operating activities
The Company has positive cash flow of $10,919,336 from operating activities during the nine months ended March 31, 2024, while the Company generated $4,653,394 cash during the same period ended March 31, 2023. The Company generated cash of $4,294,116 from the operational activities and generate $6,625,220 for the change of working capital during the nine months ended March 31, 2024, while the Company generated cash of $6,084,225 from the operational activities and used $1,430,831 for the change of working capital for the same period ended March 31, 2023.
Cash flow from financing activities
The Company used cash of $310,121 from financing activities during the nine months ended March 31, 2024, while the Company generated $4,546,451 cash during the same period ended March 31, 2023. The cash usage in financing activities for the nine months ended March 31, 2024 was driven by repayment of long-term debt of $271,001 and payment of lease obligation of $102,029. This was offset by cash generation from issuance of common shares for net proceeds of $21,659 and proceeds from broker warrants exercised of $41,250. The cash generated in financing activities for the nine months ended March 31, 2023 was the result of net proceeds of $1,250,000 received from debenture financing completed in October 2022 and net proceed from the issuance of common shares of $5,611,802, offset by the issuance of notes receivable of $1,284,393, repayment of short-term loans of $593,167, long-term loans of $417,996.
Cash flow from investing activities
The Company used cash of $5,078,827 in investing activities during the nine months ended March 31, 2024, while the Company used $4,680,000 cash in investing activities during the same period ended March 31, 2023. The cash used for the nine months ended March 31, 2024 includes acquisition of property, plant and equipment of $42,908, acquisition of development asset of $6,316,741, purchase of partnership units of $2,465,000, and purchase of non-controlling interest of $95,333, offset by net cash of $11,155 received from acquisition and redemption of GIC of $3,830,000. The cash used in investing activities for the nine months ended March 31, 2023 was the result of purchase of ST GIC of $4,680,000.
Capital Transactions
During the nine months ended March 31, 2024, the Company issued the following shares:
| i. | On September 20, 2023, 55,000 broker warrants were exercised to purchase common shares at $0.75 per share. | |
| ii. | On September 21, 2023, the Company sold 1,000 Common Shares through at-the-market offerings at an average price of $10 per share for gross proceeds of $10,000. | |
| iii. | On September 22, 2023, the Company sold 1,200 Common Shares through at-the-market offerings at an average price of $10 per share for gross proceeds of $12,004. | |
| iv. | The Company has entered into the SPAs dated October 23, 2023 to acquire control of OFIT GM and OFIT RT for consideration of 278,875 common shares of the Company that were issued November 1, 2023. |
Capital Structure
The Corporation is authorized to issue an unlimited number of common shares. The table below sets out the Company’s outstanding common share and convertible securities as of March 31, 2024 and as of the date of this MD&A:
| Security Description | March 31, 2024 | Date of report | ||||||
| Common shares | 27,136,075 | 27,191,075 | ||||||
| Warrants | 7,928,000 | 7,873,000 | ||||||
| Stock options | 2,766,500 | 2,766,500 | ||||||
| Restricted share units | 265,000 | 265,000 | ||||||
The following table reflects the details of warrants issued and outstanding as of the date of this MD&A:
| Date granted | Expiry | Exercise price (CAD) | Outstanding warrants | |||||||||
| 03-Oct-2022 | 10-Jun-2027 | $ | 0.10 | 2,500,000 | ||||||||
| 01-Mar-2023 | 01-Mar-2026 | $ | 0.75 | 373,000 | ||||||||
| 01-Mar-2023 | 01-Mar-2028 | $ | 0.50 | 5,000,000 | ||||||||
| 7,873,000 | ||||||||||||
| Weighted average exercise price | $ | 0.38 | ||||||||||
The following table reflects the details of options issued and outstanding as of the date of this MD&A:
| Date granted | Expiry | Exercise price (CAD) | Outstanding options | |||||||||
| 10-Feb-2023 | 04-Nov-2027 | $ | 0.75 | 2,759,000 | ||||||||
| 04-Dec-2023 | 04-Dec-2028 | $ | 6.60 | 7,500 | ||||||||
| 2,766,500 | ||||||||||||
| Weighted average exercise price | $ | 0.77 | ||||||||||
The following table reflects the details of RSUs issued and outstanding as of the date of this MD&A:
| Date granted | Vesting Date | Outstanding RSUs | ||||
| 4-Nov-2022 | 02-Aug-20 | 250,000 | ||||
| 13-Mar-2023 | 12-Mar-2024 | 7,500 | ||||
| 13-Mar-2023 | 12-Mar-2025 | 7,500 | ||||
| 265,000 | ||||||
Capital Management
The Company’s objectives in managing liquidity and capital are to safeguard the Company’s ability to continue as a going concern and to provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of the following:
| March 31, 2024 | June 30, 2023 | |||||||
| Long-term debt -non-current portion | $ | 2,819,904 | 759,259 | |||||
| Shareholder Equity | $ | 27,342,463 | 16,631,196 | |||||
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the strategies employed by the Company may include the issuance or repayment of debt, dividend payments, issuance of equity, or sale of assets. The Company has determined it will have sufficient funds to meet its current operating and development obligations for at least 12 months from the reporting date.
No changes to capital management from the prior year.
Off-Balance Sheet Arrangements
The Company is not a party to any off-balance sheet arrangements or transactions.
Transactions Between Related Parties
Key management compensation
Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of members of the Company’s Board of Directors and corporate officers, including the Company’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Administrative Officer.
The remuneration of directors and other members of key management personnel, for the three and nine months ended March 31, 2024 and 2023 were as follows:
| Three Month Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Short-term employee benefits | $ | 409,599 | $ | 280,016 | ||||
| Share-based compensation | 59,473 | 83,531 | ||||||
| Advisory warrants | - | 445,361 | ||||||
| Nine Month Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Short-term employee benefits | $ | 1,020,227 | $ | 1,020,355 | ||||
| Share-based compensation | 345,957 | 83,531 | ||||||
| Advisory warrants | - | 445,361 | ||||||
Short-term employee benefits include consulting fees and salaries made to key management.
Transactions with related parties, are described above, were for services rendered to the Company in the normal course of operations, and were measured based on the consideration established and agreed to by the related parties. Related party transactions are made without stated terms of repayment or interest. The balances with related parties are unsecured and due on demand.
The Company acquired control of OFIT GM and OFIT RT on November 1, 2023. Dr. Richard Lu, the President & Chief Executive Officer and a director of the Company is indirectly a shareholder of the Purchased Entities and indirectly received one-third of the Consideration Shares. As a result, the Transaction is considered a related party transaction.
Critical Accounting Estimates and Policies
The preparation of the consolidated financial statements in accordance with IFRS as issued by IASB requires management to make estimates and assumptions that affect the amounts reported on the consolidated financial statements. These critical accounting estimates represent management’s estimates that are uncertain and any changes in these estimates could materially impact the Company’s consolidated financial statements. Management continuously reviews its estimates and assumptions using the most current information available. The Company’s critical accounting policies and estimates are described in Note 3 of the audited consolidated financial statements for the year ended June 30, 2023.
Financial Instruments and Other Instruments (Management of Financial Risks)
Fair value
The Company’s financial assets and liabilities carried at fair value are measured and recognized according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy are as follows:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. |
| ● | Level 2: Inputs other than quoted prices that are observable for the asset or liability. |
| ● | Level 3: Inputs for the asset or liability that are not based on observable market data. |
Cash is carried at fair value using a Level 1 fair value measurement. Investment in partnership units is carried at fair value using a Level 3 fair value measurement. Significant unoberservable inputs are used in discount cash flows method to determine the fair value of the investment in SFF shares, There were no transfers into or out of Level 3 during the period ended March 31, 2024.
The carrying amounts of trade and other receivables, trade and other payables approximate their fair values due to the short-term maturities of these items. The carrying amounts of loan payable, lease liabilities, tax equity liabilities and long-term debt approximate their fair value as they are discounted at the current market rate of interest.
Credit risk
Credit risk is the risk of financial loss associated with the counterparty’s inability to fulfill its payment obligations. The Company has no significant credit risk with its counterparties. The carrying amount of financial assets net of impairment, if any, represents the Company’s maximum exposure to credit risk.
The Company has assessed the creditworthiness of its trade and other receivables and amount determined the credit risk to be low. Utility deposits are made to local government utility with high creditworthiness. Cash has low credit risk as it is held by internationally recognized financial institutions.
Concentration risk and economic dependence
The outstanding accounts receivable balance is relatively concentrated with a few large customers representing majority of the value. See table below showing a few customers who account for over 10% of total revenue as well as customers who account for over 10% percentage of outstanding Accounts Receivable.
| Nine months ended March 31, 2024 | Revenue | % of Total Revenue | ||||||
| Customer B | $ | 5,343,090 | 11 | % | ||||
| Customer E | $ | 34,518,159 | 68 | % | ||||
| Customer F | $ | 6,550,519 | 13 | % | ||||
| Nine months ended March 31, 2023 | Revenue | % of Total Revenue | ||||||
| Customer A | $ | 5,919,270 | 65 | % | ||||
| Three months ended March 31, 2024 | Revenue | % of Total Revenue | ||||||
| Customer E | $ | 22,858,350 | 95 | % | ||||
| Three months ended March 31, 2023 | Revenue | % of Total Revenue | ||||||
| Customer A | $ | 105,180 | 15 | % | ||||
| Customer B | $ | 264,572 | 37 | % | ||||
| Customer C | $ | 151,696 | 21 | % | ||||
| Customer D | $ | 100,000 | 14 | % | ||||
| March 31, 2024 | Account Receivable | % of Account Receivable | ||||||
| Customer E | $ | 2,494,047 | 72 | % | ||||
| June 30, 2023 | Account Receivable | % of Account Receivable | ||||||
| Customer F | $ | 1,179,132 | 31 | % | ||||
| Customer G | $ | 1,537,357 | 40 | % | ||||
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due by maintaining adequate reserves, banking facilities, and borrowing facilities. All of the Company’s financial liabilities are subject to normal trade terms.
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not carry debt at a variable rate and is exposed to interest rate risk on its cash which is not considered significant.
Subsequent Events
Not significant subsequent events to note.
Risk Factors
Readers are cautioned that the risk factors discussed above in this MD&A are not exhaustive. Readers should also carefully consider the matters discussed under the heading, “Forward Looking Information”, in this MD&A and under the heading, “Risk Factors”, in the Company’s Annual Information Form for the year ended June 30, 2023 and filed on SEDAR+ at www.sedarplus.com.
Forward-Looking Statements
This MD&A contains forward-looking statements and forward-looking information within the meaning of Canadian securities legislation (collectively, “forward-looking statements”) that relate to the Company’s current expectations and views of future events. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will likely result”, “are expected to”, “expects”, “will continue”, “is anticipated”, “anticipates”, “believes”, “estimated”, “intends”, “plans”, “forecast”, ”projection”, “strategy”, “objective” and “outlook”) are not historical facts and may be forward-looking statements and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. In particular and without limitation, this MD&A contains forward-looking statements pertaining to the Company’s expectations regarding its industry trends and overall market growth; the Company’s expectations about its liquidity and sufficient of working capital for the next twelve months of operations; the Company’s growth strategies the expected energy production from the solar power projects mentioned in this MD&A; the reduction of carbon emissions; the receipt of incentives for the projects; the expected value of EPC Contracts; and the size of the Company’s development pipeline. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon. These statements speak only as of the date of this MD&A.
Forward-looking statements are based on certain assumptions and analyses made by the Company in light of the experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate, and are subject to risks and uncertainties. In making the forward looking statements included in this MD&A, the Company has made various material assumptions, including but not limited to: obtaining the necessary regulatory approvals; that regulatory requirements will be maintained; general business and economic conditions; the Company’s ability to successfully execute its plans and intentions; the availability of financing on reasonable terms; the Company’s ability to attract and retain skilled staff; market competition; the products and services offered by the Company’s competitors; that the Company’s current good relationships with its service providers and other third parties will be maintained; and government subsidies and funding for renewable energy will continue as currently contemplated. Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect, and the Company cannot assure that actual results will be consistent with these forward-looking statements. Given these risks, uncertainties and assumptions, investors should not place undue reliance on these forward-looking statements.
Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, including those listed under “Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Information Form, and other public filings of the Company, which include: the Company may be adversely affected by volatile solar power market and industry conditions; the execution of the Company’s growth strategy depends upon the continued availability of third-party financing arrangements; the Company’s future success depends partly on its ability to expand the pipeline of its energy business in several key markets; governments may revise, reduce or eliminate incentives and policy support schemes for solar and battery storage power; general global economic conditions may have an adverse impact on our operating performance and results of operations; the Company’s project development and construction activities may not be successful; developing and operating solar projects exposes the Company to various risks; the Company faces a number of risks involving Power Purchase Agreements (“PPAs”) and project-level financing arrangements; any changes to the laws, regulations and policies that the Company is subject to may present technical, regulatory and economic barriers to the purchase and use of solar power; the markets in which the Company competes are highly competitive and evolving quickly; an anti-circumvention investigation could adversely affect the Company by potentially raising the prices of key supplies for the construction of solar power projects; foreign exchange rate fluctuations; a change in the Company’s effective tax rate can have a significant adverse impact on its business; seasonal variations in demand linked to construction cycles and weather conditions may influence the Company’s results of operations; the Company may be unable to generate sufficient cash flows or have access to external financing; the Company may incur substantial additional indebtedness in the future; the Company is subject to risks from supply chain issues; risks related to inflation; unexpected warranty expenses that may not be adequately covered by the Company’s insurance policies; if the Company is unable to attract and retain key personnel, it may not be able to compete effectively in the renewable energy market; there are a limited number of purchasers of utility-scale quantities of electricity; compliance with environmental laws and regulations can be expensive; corporate responsibility may adversely impose additional costs; the future impact of COVID-19 on the Company is unknown at this time; the Company has limited insurance coverage; the Company will be reliant on information technology systems and may be subject to damaging cyberattacks; the Company may become subject to litigation; there is no guarantee on how the Company will use its available funds; the Company will continue to sell securities for cash to fund operations, capital expansion, mergers and acquisitions that will dilute the current shareholders; and future dilution as a result of financings.
The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. New factors emerge from time to time, and it is not possible for the Company to predict all of them, or assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements contained in this MD&A are expressly qualified in their entirety by this cautionary statement.
Approval
The Board of Directors of the Company has approved the disclosure contained in this MD&A.
Exhibit 99.2
SOLARBANK CORPORATION
(Formerly Abundant Solar Energy Inc.)
Condensed Interim Consolidated Financial Statements
(Expressed in Canadian Dollars)
(Unaudited)
For the three and nine months ended March 31, 2024 and 2023
SOLARBANK CORPORATION
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian dollars)
(Unaudited)
| Notes | March 31, 2024 | June 30, 2023 | ||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash | $ | 6,091,112 | $ | 749,427 | ||||||||
| Short-term investments | 3 | 2,720,000 | 6,550,000 | |||||||||
| Trade and other receivables | 4 | 3,451,994 | 3,837,207 | |||||||||
| Unbilled revenue | 539,008 | 7,405,866 | ||||||||||
| Prepaid expenses and deposits | 5 | 2,003,586 | 3,054,678 | |||||||||
| Inventory | 7 | 2,775,146 | 448,721 | |||||||||
| 17,580,846 | 22,045,899 | |||||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | 6 | 2,293,167 | 950,133 | |||||||||
| Right-of-use assets | 11 | 860,152 | 144,487 | |||||||||
| Development asset | 8 | 7,881,168 | 1,106,503 | |||||||||
| Goodwill | 17 | 5,689,227 | - | |||||||||
| Investment | 18 | 5,152,023 | 722,515 | |||||||||
| 21,875,737 | 2,923,638 | |||||||||||
| Total assets | $ | 39,456,583 | $ | 24,969,537 | ||||||||
| Liabilities and Shareholder’s equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Trade and other payables | 9 | $ | 5,954,513 | $ | 4,713,497 | |||||||
| Unearned revenue | 10 | 1,672,548 | 1,150,612 | |||||||||
| Current portion of long-term debt | 12 | 303,882 | 151,111 | |||||||||
| Loan payables | 42,816 | - | ||||||||||
| Tax payable | 10,983 | 929,944 | ||||||||||
| Current portion of lease liability | 11 | 119,797 | 44,961 | |||||||||
| Current portion of tax equity | 13 | 79,603 | 93,751 | |||||||||
| Non-current liabilities: | 8,184,142 | 7,083,876 | ||||||||||
| Long-term debt | 12 | 2,819,904 | 759,259 | |||||||||
| Lease liability | 11 | 793,342 | 128,350 | |||||||||
| Tax equity | 13 | 316,732 | 366,856 | |||||||||
| 3,929,978 | 1,254,465 | |||||||||||
| Total liabilities | $ | 12,114,120 | $ | 8,338,341 | ||||||||
| Shareholders’ equity: | ||||||||||||
| Share capital | 15 | 8,984,448 | 6,855,075 | |||||||||
| Contributed surplus | 3,760,431 | 3,001,924 | ||||||||||
| Accumulated other comprehensive income | (42,009 | ) | (116,759 | ) | ||||||||
| Retained earnings | 12,247,821 | 6,652,551 | ||||||||||
| Equity attributable to shareholders of the company | 24,950,690 | 16,392,791 | ||||||||||
| Non-controlling interest | 17 | 2,391,772 | 238,405 | |||||||||
| Total equity | 27,342,462 | 16,631,196 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 39,456,583 | $ | 24,969,537 | ||||||||
Approved and authorized for issuance on behalf of the Board of Directors on May 13, 2024 by:
| “Richard Lu” | “Sam Sun” | |
| Richard Lu, CEO, and Director | Sam Sun, CFO |
See accompanying notes to these condensed interim consolidated financial statements.
| 2 |
SOLARBANK CORPORATION
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Expressed in Canadian dollars)
(Unaudited)
| Three Months Ended March 31 | Nine Months Ended March 31 | |||||||||||||||||||
| Notes | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||
| Revenue from EPC services | $ | 23,435,444 | $ | 684,296 | $ | 47,477,484 | $ | 9,082,473 | ||||||||||||
| Revenue from development fees | 27,207 | - | 2,106,625 | - | ||||||||||||||||
| Revenue from IPP production | 121,761 | - | 259,279 | - | ||||||||||||||||
| Revenue from O&M services | 20,220 | 22,560 | 86,310 | 69,769 | ||||||||||||||||
| Revenue from other services | 470,315 | - | 470,315 | - | ||||||||||||||||
| 24,074,947 | 706,856 | 50,400,013 | 9,152,242 | |||||||||||||||||
| Cost of goods sold | (18,686,509 | ) | (51,601 | ) | (40,130,961 | ) | (6,895,613 | ) | ||||||||||||
| Gross profit | 5,388,438 | 655,255 | 10,269,052 | 2,256,629 | ||||||||||||||||
| Operating expense: | ||||||||||||||||||||
| Advertising and promotion | (1,879,006 | ) | (47,719 | ) | (3,357,708 | ) | (86,332 | ) | ||||||||||||
| Consulting fees | (320,117 | ) | (448,673 | ) | (1,076,791 | ) | (781,435 | ) | ||||||||||||
| Depreciation | (47,370 | ) | (12,846 | ) | (118,668 | ) | (36,185 | ) | ||||||||||||
| Insurance | (89,752 | ) | (29,391 | ) | (217,010 | ) | (87,179 | ) | ||||||||||||
| Listing fees | (183,711 | ) | (68,517 | ) | (183,711 | ) | (99,491 | ) | ||||||||||||
| Office, rent and utilities | (127,156 | ) | (75,704 | ) | (337,544 | ) | (222,983 | ) | ||||||||||||
| Professional fees | (244,341 | ) | (482,659 | ) | (871,698 | ) | (637,401 | ) | ||||||||||||
| Repairs and maintenance | (65,014 | ) | (15,449 | ) | (111,861 | ) | (17,299 | ) | ||||||||||||
| Salary and wages | (389,902 | ) | (160,888 | ) | (867,318 | ) | (576,853 | ) | ||||||||||||
| Stock based compensation | (108,408 | ) | (2,621,451 | ) | (758,507 | ) | (2,621,451 | ) | ||||||||||||
| Travel and accommodation | (53,019 | ) | (21,022 | ) | (224,253 | ) | (133,924 | ) | ||||||||||||
| Total operating expenses | (3,507,796 | ) | (3,984,319 | ) | (8,125,069 | ) | (5,300,533 | ) | ||||||||||||
| Other income (loss) | ||||||||||||||||||||
| Interest income | 103,449 | 78,427 | 262,185 | 78,427 | ||||||||||||||||
| Interest expense | (128,103 | ) | (22,126 | ) | (278,396 | ) | (64,551 | ) | ||||||||||||
| Other income | 4,16 | 3,534,692 | 6,363,363 | 5,270,382 | 6,473,127 | |||||||||||||||
| Change in fair value | 18 | (1,124,791 | ) | - | (1,124,791 | ) | - | |||||||||||||
| Net income before taxes | $ | 4,265,889 | $ | 3,090,600 | $ | 6,273,363 | 3,443,099 | |||||||||||||
| Income tax expense | (766,648 | ) | (16,510 | ) | (750,661 | ) | (16,510 | ) | ||||||||||||
| Net income | $ | 3,499,241 | $ | 3,074,090 | $ | 5,522,702 | $ | 3,426,589 | ||||||||||||
| Current translation adjustments, net of tax of $nil | 176,538 | (9,218 | ) | 74,750 | (107,767 | ) | ||||||||||||||
| Net income and comprehensive income | $ | 3,675,779 | $ | 3,064,872 | $ | 5,597,452 | $ | 3,318,822 | ||||||||||||
| Net income attributable to: | ||||||||||||||||||||
| Shareholders of the company | 3,513,689 | 3,074,090 | 5,588,180 | 3,426,589 | ||||||||||||||||
| Non-controlling interest | (14,448 | ) | - | (65,478 | ) | - | ||||||||||||||
| Net Income | $ | 3,499,241 | $ | 3,074,090 | $ | 5,522,702 | $ | 3,426,589 | ||||||||||||
| Total income and comprehensive income attributable to: | ||||||||||||||||||||
| Shareholders of the company | 3,690,227 | 3,064,872 | 5,662,930 | 3,318,822 | ||||||||||||||||
| Non-controlling interest | (14,448 | ) | - | (65,478 | ) | - | ||||||||||||||
| Total income and comprehensive income | $ | 3,675,779 | $ | 3,064,872 | $ | 5,597,452 | $ | 3,318,822 | ||||||||||||
| Earning per share | ||||||||||||||||||||
| Basic | 0.13 | 0.11 | 0.20 | 0.13 | ||||||||||||||||
| Diluted | 0.09 | 0.09 | 0.15 | 0.10 | ||||||||||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||||
| Basic | 27,136,075 | 26,800,000 | 26,993,260 | 26,800,000 | ||||||||||||||||
| Diluted | 37,372,195 | 35,915,942 | 37,247,965 | 35,915,942 | ||||||||||||||||
See accompanying notes to these condensed interim consolidated financial statements
| 3 |
SOLARBANK CORPORATION
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian Dollars)
(Unaudited)
| Note | No. of Shares | Share Capital | Share Option Reserve | Retained Earnings | Accumulated
OCI | Total Shareholders’ Equity | Non-Controlling Interest | Total Equity | ||||||||||||||||||||||||||||
| Balance at June 30, 2022 | 16,000,000 | $ | 1,000 | $ | - | $ | 4,410,565 | $ | 73,767 | $ | 4,485,332 | $ | (44,717 | ) | $ | 4,440,615 | ||||||||||||||||||||
| Net income for the period | - | - | - | 3,426,589 | - | 3,426,589 | - | 3,426,589 | ||||||||||||||||||||||||||||
| Conversion of convertible debentures | 2,500,000 | 1,250,000 | - | - | - | 1,250,000 | - | 1,250,000 | ||||||||||||||||||||||||||||
| Common shares issued, net of costs | 8,050,000 | 5,611,802 | - | - | - | 5,611,802 | - | 5,611,802 | ||||||||||||||||||||||||||||
| Broker warrants issued | - | (242,575 | ) | 242,575 | - | - | - | - | - | |||||||||||||||||||||||||||
| RSU granted | 250,000 | 187,500 | 55,666 | - | - | 243,166 | - | 243,166 | ||||||||||||||||||||||||||||
| Share-based compensation | - | - | 596,842 | - | - | 596,842 | - | 596,842 | ||||||||||||||||||||||||||||
| Advisory warrants issued | - | - | 1,781,443 | - | - | 1,781,443 | - | 1,781,443 | ||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | - | (107,767 | ) | (107,767 | ) | - | (107,767 | ) | |||||||||||||||||||||||||
| Balance at March 31,2023 | 26,800,000 | $ | 6,807,727 | $ | 2,676,526 | $ | 7,837,154 | $ | (34,000 | ) | $ | 17,287,407 | $ | (44,717 | ) | $ | 17,242,690 | |||||||||||||||||||
| Balance at June 30, 2023 | 26,800,000 | $ | 6,855,075 | $ | 3,001,924 | $ | 6,652,551 | $ | (116,759 | ) | $ | 16,392,791 | $ | 238,405 | $ | 16,631,196 | ||||||||||||||||||||
| Net income for the period | - | - | - | 5,588,180 | - | 5,588,180 | (65,478 | ) | 5,522,702 | |||||||||||||||||||||||||||
| Common shares issued, net of costs | 2,200 | 21,659 | - | - | - | 21,659 | - | 21,659 | ||||||||||||||||||||||||||||
| Broker warrants | 15(c) | 55,000 | 41,250 | - | - | - | 41,250 | - | 41,250 | |||||||||||||||||||||||||||
| RSU granted | 15(e) | - | - | 62,514 | - | - | 62,514 | - | 62,514 | |||||||||||||||||||||||||||
| Share-based compensation | 15(d) | - | - | 695,993 | - | - | 695,993 | - | 695,993 | |||||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | 74,750 | 74,750 | 8,172 | 82,922 | ||||||||||||||||||||||||||||
| OFIT GM and OFIT RT acquisition | 16 | 278,875 | 2,066,464 | - | - | - | 2,066,464 | 2,508,989 | 4,575,453 | |||||||||||||||||||||||||||
| Acquisition of NCI of Solar alliance DevCo | 16 | - | - | - | 7,090 | - | 7,090 | (298,316 | ) | (291,226 | ) | |||||||||||||||||||||||||
| Balance at March 31, 2024 | 27,136,075 | $ | 8,984,448 | $ | 3,760,431 | $ | 12,247,821 | $ | (42,009 | ) | $ | 24,950,691 | $ | 2,391,772 | $ | 27,342,463 | ||||||||||||||||||||
See accompanying notes to condensed interim consolidated financial statements
| 4 |
SOLARBANK CORPORATION
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
Unaudited
| Nine months ended March 31, | ||||||||
| In Canadian Dollars | 2024 | 2023 | ||||||
| Operating activities: | ||||||||
| Net income | $ | 5,522,702 | $ | 3,426,589 | ||||
| Items not involving cash: | ||||||||
| Depreciation | 118,668 | 36,185 | ||||||
| Interest expenses | 150,257 | - | ||||||
| Changes in ITC Distribution | (95,617 | ) | - | |||||
| Gain from acquisition of NCI | (195,893 | ) | - | |||||
| Change in fair value | 1,124,791 | - | ||||||
| AR recovery through shares settlement | (3,089,299 | ) | - | |||||
| Share-based compensation | 758,507 | 2,621,451 | ||||||
| 4,294,116 | 6,084,225 | |||||||
| Changes in non-cash working capital balances: | ||||||||
| Trade and other receivable | 6,811,150 | (5,007,642 | ) | |||||
| Contract fulfilment costs | 3,011 | 3,594,531 | ||||||
| Inventory | (2,323,738 | ) | (275,979 | ) | ||||
| Prepaids | 1,154,729 | (395,066 | ) | |||||
| Trade and other payables | 1,427,018 | 379,982 | ||||||
| Advance from customer | 499,839 | 255,212 | ||||||
| Interest expense | 128,139 | - | ||||||
| Interest paid | (128,139 | ) | - | |||||
| Income tax expense | 750,661 | 18,131 | ||||||
| Income tax paid | (1,697,450 | ) | - | |||||
| Cash provided by operating activities | 10,919,336 | 4,653,394 | ||||||
| Investing activities: | ||||||||
| Acquisition of property, plant and equipment | (42,908 | ) | - | |||||
| Acquisition of development asset | (6,316,741 | ) | - | |||||
| Redemption (investment) of GIC | 3,830,000 | (4,680,000 | ) | |||||
| Net cash acquired from acquisition | 11,155 | - | ||||||
| Acquisition of NCI | (95,333 | ) | ||||||
| Investment in partnership units | (2,465,000 | ) | - | |||||
| Cash used in investing activities | (5,078,827 | ) | (4,680,000 | ) | ||||
| Financing activities: | ||||||||
| Net proceeds from convertible loan | - | 1,250,000 | ||||||
| Proceeds from issuance of common shares, net transaction costs | 21,659 | 5,611,802 | ||||||
| Note receivable | - | (1,284,393 | ) | |||||
| Net proceeds from broker warrants exercised | 41,250 | - | ||||||
| Repayment of lease obligation | (102,029 | ) | (19,795 | ) | ||||
| Repayment of short-term loans | - | (593,167 | ) | |||||
| Repayment of long-term debts | (271,001 | ) | (417,996 | ) | ||||
| Cash provided by (used in) financing activities | (310,121 | ) | 4,546,451 | |||||
| Effect of changes in exchange rates on cash | (188,703 | ) | 178,777 | |||||
| Increase (decrease) in cash | 5,341,685 | 4,698,622 | ||||||
| Cash and cash equivalents, beginning | 749,427 | 931,977 | ||||||
| Cash and cash equivalents, ending | 6,091,112 | 5,630,599 | ||||||
See accompanying notes to condensed interim consolidated financial statements.
| 5 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 1. | Nature of operations: |
SolarBank Corporation (formerly Abundant Solar Energy Inc.) (the “Company”) was formed under the laws of the province of Ontario on September 23, 2013. The Company is engaged in the development and operation of solar photovoltaic power generation projects in the province of Ontario and New York state. The Company changed its name from Abundant Solar Energy Inc. to SolarBank Corporation on October 7, 2022.
The address of the Company and the principal place of the business is 505 Consumers Rd, Suite 803, Toronto, ON, M2J 4Z2.
On March 1, 2023, the Company closed its initial public offering (the “Offering”) of common shares. With completion of the Offering, the Company commenced trading its common shares on the Canadian Securities Exchange (the “CSE”) under the symbol “SUNN” on March 2, 2023. On February 14, 2024, the Company migrated its listing to the Cboe Canada Exchange Inc. under the existing trading symbol “SUNN”. On April 8, 2024, the Company’s common shares commenced trading on the Nasdaq Global market under the symbol “SUUN”.
| 2. | Material accounting policy information |
| (a) | Statement of compliance and basis of preparation: |
These condensed interim consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting (“IAS 34”), and should be read in conjunction with the Company’s annual consolidated financial statements for the year ended June 30, 2023.
These condensed interim consolidated financial statements were prepared on a going concern basis.
The board approved these condensed interim consolidated financial statements of directors for issue on May 13, 2024.
| (b) | Basis of consolidation: |
These condensed interim consolidated financial statements include the accounts of the Company and its wholly or partially owned subsidiaries.
Subsidiaries are consolidated from the date on which the Company obtains control up to the date of the disposition of control. Control is achieved when the Company has power over the subsidiary, is exposed or has rights to variable returns from its involvement with the subsidiary and has the ability to use its power to affect its returns. For non-wholly owned subsidiaries over which the Company has control, the net assets attributable to outside equity shareholders are presented as “non-controlling interests” in the equity section of the consolidated statement of financial position. Net income or loss for the period that is attributable to the non-controlling interests is calculated based on the ownership of the non-controlling interest shareholders in the subsidiary.
Balance, transactions, income and expenses between the Company and its subsidiaries are eliminated on consolidation.
| 6 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 2. | Material accounting policy information (continued) |
Details of the Company’s significant subsidiaries which are consolidated are as follows:
| Name | Method of accounting | Ownership interest | ||
| Abundant Solar Power Inc. | Consolidation | 100% | ||
| Abundant Construction Inc. | Consolidation | 100% | ||
| Abundant Energy Solutions Ltd. | Consolidation | 100% | ||
| 2467264 Ontario Inc. | Consolidation | 49.9% | ||
| OFIT GM Inc. | Consolidation | 49.9% | ||
| OFIT RT Inc. | Consolidation | 49.9% | ||
| Solar Alliance Energy DevCo LLC(1) | Consolidation | 100% | ||
| Solar Alliance TE HoldCo 1, LLC(1) | Consolidation | 100% | ||
| Solar Alliance VC1 LLC(1) | Consolidation | 100% | ||
| Abundant Solar Power (US1) LLC(1) | Consolidation | 100% | ||
| Abundant Solar Power (New York) LLC | Consolidation | 100% | ||
| Abundant Solar Power (Maryland) LLC | Consolidation | 100% | ||
| Abundant Solar Power (RP) LLC | Consolidation | 100% | ||
| SUNN 1011 LLC | Consolidation | 100% | ||
| SUNN 1012 LLC | Consolidation | 100% | ||
| Abundant Solar Power (CNY) LLC | Consolidation | 100% | ||
| SUNN 1016 LLC | Consolidation | 100% | ||
| Abundant Solar Power (TZ1) LLC | Consolidation | 100% | ||
| Abundant Solar Power (M1) LLC | Consolidation | 100% | ||
| Abundant Solar Power (J1) LLC | Consolidation | 100% | ||
| Abundant Solar Power (Steuben) LLC | Consolidation | 100% | ||
| ABUNDANT
SOLAR POWER (USNY- MARKHAM HOLLOW RD-001) LLC |
Consolidation | 100% | ||
| SUNN 1015 LLC | Consolidation | 100% | ||
| SUNN 1002 LLC | Consolidation | 100% | ||
| SUNN 1003 LLC | Consolidation | 100% | ||
| ABUNDANT SOLAR POWER (USNY-Richmond-002) LLC | Consolidation | 100% | ||
| ABUNDANT SOLAR POWER (USNY-Richmond-003) LLC | Consolidation | 100% | ||
| SUNN 1006 LLC | Consolidation | 100% | ||
| SUNN 1007 LLC | Consolidation | 100% | ||
| SUNN 1008 LLC | Consolidation | 100% | ||
| SUNN 1009 LLC | Consolidation | 100% | ||
| SUNN 1010 LLC | Consolidation | 100% | ||
| SUNN (203 Fuller Rd) LLC | Consolidation | 100% | ||
| SUNN 1001 LLC | Consolidation | 100% | ||
| Abundant Solar Power (USNY-6882 Rice Road-001) LLC | Consolidation | 100% | ||
| Abundant Solar Power (LCP) LLC | Consolidation | 100% | ||
| Abundant Solar Power (SB13W) LLC | Consolidation | 100% | ||
| Abundant Solar Power (SB13N) LLC | Consolidation | 100% | ||
| Abundant Solar Power (Dutch Hill 2) LLC | Consolidation | 100% | ||
| Abundant Solar Power (Dutch Hill 3) LLC | Consolidation | 100% | ||
| SUNN 1004 LLC | Consolidation | 100% |
| (1) | The Company acquired the remaining shares from the non-controlling interest shareholders in December 2023 and owns 100% interest of these subsidiaries. |
| 7 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 2. | Material accounting policy information (continued) |
| (c) | New standards and amendments adopted by the Company: |
The accounting policies adopted in the preparation of the condensed interim consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended June 30, 2023, except for the adoption of new standards effective as of July 1, 2023. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
The amendments below apply for the first time effective July 1, 2023, but do not have an impact on the condensed interim consolidated financial statements of the Company.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
In February 2021, the IASB issued amendments to IAS 8 to clarify how reporting entities should distinguish changes in accounting policies from changes in accounting estimates. The amendments include a definition of “accounting estimates” as well as other amendments to IAS 8 that will help entities distinguish changes in accounting policies from changes in accounting estimates. This distinction between these two types of changes is important as changes in accounting policies are normally applied retrospectively to past transactions and events, whereas changes in accounting estimates are applied prospectively to future transactions and events.
IAS 1 – Presentation of Financial Statements
In February 2021, the IASB issued amendments to IAS 1 “Presentation of Financial Statements” and IFRS Practice Statement 2 “Making Materiality Judgements” aiming to improve accounting policy disclosures. The amendments to IAS 1 require reporting entities to disclose their material accounting policy information rather than their significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept of materiality to accounting policy disclosures.
| 8 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 3. | Short-term investments |
Short-term investments consist of investments with market values closely approximating book values and original maturities between three and twelve months at the time of purchase.
As at March 31, 2024, the Company has three GICs in short-term investments totaling $2,720,000. The GIC of $220,000 has one year term and with interest rate of 4.95%. The GIC of $1,500,000 has one year term and with interest rate of 5.2%. The GIC of $1,000,000 has one year term and with interest rate of 5.2%.
As at June 30, 2023, the Company has two GICs in short-term investment totaling $6,550,000. The GIC of $2,980,000 has one year term and with interest rate of 4.7%. The GIC of $3,570,000 has one year term and with interest rate of 4.95%.
| 4. | Trade and other receivables |
| March 31, 2024 | June 30, 2023 | |||||||
| Accounts receivable, net | $ | 3,339,027 | $ | 1,978,834 | ||||
| Receivable from Solar Flow-Through (1) | - | 1,537,357 | ||||||
| Other receivable | 112,968 | 321,016 | ||||||
| $ | 3,451,994 | $ | 3,837,207 | |||||
| (1) | In 2017, the Company entered into a sales contract with a group of limited partnerships now known as Solar Flow-Through Funds Ltd. (“SFF”) to provide development services for solar photovoltaic projects. All aged receivable from SFF as at June 30, 2023 was collected during the nine months ended March 31, 2024. In addition, a total of $6,486,838 previously written off accounts receivable was recovered from SFF. $1,750,143 was collected in cash and $4,736,699 was settled by SFF through issuance of 1,052,599 common shares valued at $2.93 per share on settlement date. Refer to note 18 for details. For the nine months ended March 31, 2024, the Company recorded $4,839,438 accounts receivable recovery in other income. |
| 5. | Prepaid expenses and deposits |
| March 31, 2024 | June 30, 2023 | |||||||
| Interconnection deposits(1) | $ | 4,248 | $ | 469,725 | ||||
| Construction in progress deposit(2) | 1,666,395 | 1,623,209 | ||||||
| Security deposits | 12,352 | 12,352 | ||||||
| Prepaid insurance | 212,922 | 74,373 | ||||||
| Prepaid marketing expenses(3) | - | 782,101 | ||||||
| Other prepaids and deposits | 107,669 | 92,918 | ||||||
| $ | 2,003,586 | $ | 3,054,678 | |||||
| (1) | Interconnection deposits are made to the utility companies for the connection cost of each project that completes a CESIR report (Coordinated Electric System Interconnection Review) with that utility. The utility companies complete their analysis and provide an estimated cost to connect the project to the grid when ready. To hold the place in the utility line and reserve grid capacity for said project, the estimated connection cost must be paid ahead of time which is what comprises the interconnection deposits amount. The Interconnection deposit would become a part of the cost of sales once the projects reach commercial operation. | |
| (2) | Deposits related prepayments made on the purchase of raw materials required for construction of Independent Power Producer projects, Geddes and Settling Basins, located in New York, USA. | |
| (3) | The Company hired investor relations and marketing consultant companies to increase the Company’s visibility in the market and to explore over-seas markets. The balance is related to the payment made to these marketing consultant companies. |
| 9 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 6. | Property, Plant and Equipment |
| Computer equipment | Furniture and equipment | Vehicle | IPP facilities | Total | ||||||||||||||||
| Cost: | ||||||||||||||||||||
| Balance, June 30, 2022 | $ | 59,984 | 83,706 | - | - | $ | 143,690 | |||||||||||||
| Additions | - | - | - | - | - | |||||||||||||||
| Balance, March 31, 2023 | $ | 59,984 | 83,706 | - | - | $ | 143,690 | |||||||||||||
| Accumulated amortization: | ||||||||||||||||||||
| Balance, June 30, 2022 | $ | 49,973 | 68,603 | - | - | $ | 118,576 | |||||||||||||
| Amortization | 3,588 | 2,178 | - | - | 5,766 | |||||||||||||||
| Balance, March 31, 2023 | $ | 53,561 | 70,781 | - | - | $ | 124,342 | |||||||||||||
| Net Book Value, March 31, 2023 | $ | 6,423 | 12,925 | - | - | $ | 19,348 | |||||||||||||
Cost: | ||||||||||||||||||||
| Balance, June 30, 2023 | $ | 19,256 | 50,253 | - | 937,194 | $ | 1,006,703 | |||||||||||||
| Additions | - | 7,300 | 35,608 | 1,324,499 | 1,367,407 | |||||||||||||||
| Foreign currency impact | - | - | - | 21,943 | 21,943 | |||||||||||||||
| Balance, March 31, 2024 | $ | 19,256 | 57,553 | 35,608 | 2,283,636 | $ | 2,396,053 | |||||||||||||
| Accumulated amortization: | ||||||||||||||||||||
| Balance, June 30, 2023 | $ | 13,876 | 42,694 | - | - | $ | 56,570 | |||||||||||||
| Amortization | 1,853 | 1,478 | 2,593 | 40,299 | 46,233 | |||||||||||||||
| Foreign currency impact | - | - | - | 93 | 93 | |||||||||||||||
| Balance, March 31, 2024 | $ | 15,729 | 44,172 | 2,593 | 40,392 | $ | 102,886 | |||||||||||||
| Net Book Value, March 31, 2024 | $ | 3,527 | 13,381 | 33,015 | 2,243,244 | $ | 2,293,167 | |||||||||||||
| 10 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 7. | Inventory |
As of March 31, 2024 and 2023, the Company’s inventory is comprised of development costs for the solar projects.
| Balance, June 30, 2022 | 195,920 | |||
| Additions: development costs | 455,376 | |||
| Minus: development costs expensed to cost of goods sold | (12,724 | ) | ||
| FX Impact | 10,260 | |||
| Balance, March 31, 2023 | $ | 648,832 |
| Balance, June 30, 2023 | 448,721 | |||
| Additions: development costs | 2,952,085 | |||
| Minus: development costs expensed to cost of goods sold | (642,020 | ) | ||
| FX Impact | 16,360 | |||
| Balance, March 31, 2024 | $ | 2,775,146 |
| 8. | Development asset |
Development projects are depreciated over the useful lives of the resulting assets once they become operational. The balance in development assets include costs incurred on self-owned projects. Detail of costs as at March 31, 2024 are as follows:
| March 31, 2024 | June 30, 2023 | |||||||
| Interconnection and permitting | $ | 1,671,017 | $ | 1,060,119 | ||||
| Construction material | 3,117,224 | - | ||||||
| Construction and labour | 3,067,648 | 46,384 | ||||||
| Other | 25,279 | - | ||||||
| $ | 7,881,168 | $ | 1,106,503 | |||||
| 11 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 9. | Trade and other payables |
| March 31, 2024 | June 30, 2023 | |||||||
| Accounts payable and accrued liabilities | $ | 5,479,970 | $ | 1,542,849 | ||||
| Due to related party | 11,760 | 63,754 | ||||||
| Other payable | 462,783 | 3,106,894 | ||||||
| $ | 5,954,513 | $ | 4,713,497 | |||||
| 10. | Unearned revenue |
As of March 31, 2024, the Company’s unearned revenue mostly consists of payments received for EPC projects not started yet.
| Balance, June 30, 2023 | $ | 1,150,612 | ||
| Additional payments received | 34,800,046 | |||
| Recognized to revenue | (34,279,715 | ) | ||
| FX Impact | 1,605 | |||
| Balance, March 31, 2024 | $ | 1,672,548 |
| 11. | Right of use assets and lease liabilities |
The Company leases office space in 2022 in Canada. The lease started on May 1, 2022, with a five-year lease term. The monthly lease payment is $4,697 starting from September 1, 2022, which will be adjusted on annual basis. On December 1, 2023, the Company leased additional office space, which increased monthly rent to $5,091. The right of use (“ROU”) and lease obligation were measured at the present value of the lease payment and discounted using an incremental borrowing rate of 10%.
On November 1, 2023, the Company acquired shares of OFIT GM Inc. (“OFIT GM”) and OFIT RT Inc. (“OFIT RT”) (see Note 16). The OFIT companies leased five properties where independent power producer (“IPP”) facilities are located. The leases commenced during the period from August 28, 2017 to October 6, 2017, each with a 20 year lease term. Two leases are paid on a monthly basis and three leases are paid on a quarterly basis. The monthly lease payments are in the range of $502 to $2,456 and quarterly lease payments are in the range of $1,250 to $8,125. The right of use asset and lease liabilities were treated as new assets and liabilities starting from acquisition date of November 1, 2023 in accordance to IFRS 3. The ROU and lease obligation were measured at the present value of the lease payment and discounted using an incremental borrowing rate of 12.5%.
| 12 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 11. | Right of use assets and lease liabilities (continued) |
The continuity of the right-of-use as of March 31, 2024 is as follows:
| Right-of- use assets | Office | IPP Facilities | Total | |||||||||
| Cost: | ||||||||||||
| Balance, June 30, 2023 | $ | 197,719 | - | 197,719 | ||||||||
| Addition | 116,168 | 671,941 | 788,109 | |||||||||
| Balance, March 31, 2024 | $ | 313,887 | 671,941 | 985,828 | ||||||||
| Accumulated amortization: | ||||||||||||
| Balance, June 30, 2023 | $ | 53,232 | - | 53,232 | ||||||||
| Amortization: | 48,302 | 24,142 | 72,444 | |||||||||
| Balance, March 31, 2024 | $ | 101,534 | 24,142 | 125,676 | ||||||||
| Net Book Value, March 31, 2024 | $ | 212,353 | 647,799 | 860,152 | ||||||||
The continuity of the lease liabilities as of March 31, 2024 is as follows:
| Lease liabilities | Office | IPP Facilities | Total | |||||||||
| Balance, June 30, 2023 | $ | 173,311 | - | 173,311 | ||||||||
| New obligations | 116,168 | 671,941 | 788,109 | |||||||||
| Payments: | (56,089 | ) | (45,938 | ) | (102,027 | ) | ||||||
| Interest accretion: | 15,748 | 37,998 | 53,746 | |||||||||
| Balance, March 31, 2024 | $ | 249,138 | 664,001 | 913,139 | ||||||||
| Current | 89,510 | 30,287 | 119,797 | |||||||||
| Long term | 159,628 | 633,714 | 793,342 | |||||||||
| Balance, March 31, 2024 | $ | 249,183 | 664,001 | 913,139 |
The maturity analysis of the Company’s contractual undiscounted lease liabilities as of March 31, 2024 is as follows:
| 2024 | $ | 52,690 | ||
| 2025 | 218,013 | |||
| 2026 | 226,104 | |||
| 2027 | 124,389 | |||
| 2027 onward | 956,545 | |||
| Total | $ | 1,577,741 |
| 13 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 12. | Long-term debt |
| March 31, 2024 | June 30, 2023 | |||||||
| Highly Affected Sectors Credit Availability Program (1) | $ | 787,037 | $ | 870,370 | ||||
| Canadian Emergency Business Account (2) | - | 40,000 | ||||||
| Long-term loans(3) | 2,336,749 | - | ||||||
| Total | 3,123,786 | 910,370 | ||||||
| Less: current portion | 303,882 | 151,111 | ||||||
| Long-term portion | $ | 2,819,904 | $ | 759,259 | ||||
| (1) | In 2021, the Company received a Highly Affected Sectors Credit Availability Program (HASCAP) loan for a total of $1,000,000 at 4% annual interest rate from Bank of Montreal. The loan has a ten-year amortization period with interest payment only for the first year. Principal payments are to commence in May 2022. During the three months and nine month ended March 31, 2024, the interest recorded and paid was $8,005 and $25,081 (3-month and 9-month period ended March 31, 2023 - $9,803 and $28,354). | |
| (2) | The Company received a Canada Emergency Business Account (“CEBA”) interest-free loan for a total of $60,000 from the Government of Canada. The loan bears interest at 0% per annum and is repayable by January 18, 2024. If $40,000 is repaid in full on or before January 18, 2024 and certain conditions are met, which include the use of funds for non-deferrable operating expenses only, $20,000 of the loan will be forgiven. Alternatively, on December 31, 2023, the Company can exercise the option to extend the loan for a two-year term which bears interest at 5% per annum. | |
| Accordingly, the forgiveness portion of the $20,000 was recognized as government grant income during the year ended June 30, 2021 when the Company received the loan. The Company repaid the loan on January 8, 2024. | ||
| (3) | The Company obtained these loans as a result of acquisition of OFIT GM and OFIT RT. The loans were originally obtained on December 19, 2017 for a total principal amount of $4,248,495 and used interest rate swap agreements to fix the annual interest rate at 4.75%. The loans are guaranteed by Panasonic Corporation North America and collateralized by the solar projects, including related contracts such as FIT contract, EPC contract, site leases and similar contracts. The carrying value of solar projects was $6.45 million upon entering the loan agreements and the carrying value of solar projects as at March 31, 2024 was $1.31 million. The loans will mature on December 19, 2035 with interest payable quarterly commencing on March 19, 2018 and principal payments payable semi-annually commencing on June 19, 2018. The fair value of the loans recorded at acquisition date of November 1, 2023 were determined by using a discount rate of 12.5%. During the period from the acquisition date to March 31, 2024, the interest recorded and paid was $102,265 and interest accretion on fair value of the loans was $67,137. |
Estimated principal repayments are as follows:
| 2024 | $ | 208,133 | ||
| 2025 | 448,229 | |||
| 2026 | 457,740 | |||
| 2027 | 467,687 | |||
| 2027 onwards | 3,453,742 | |||
| Total | $ | 5,035,531 |
| 14 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 13. | Tax equity |
On June 20, 2023, the Company acquired 67% membership interest in an entity which owns and operates certain solar facilities in the US under subsidiaries that are set up as tax equity structures to finance the capital cost of the solar facilities. Amounts paid by the TEIs for their equity stakes are classified as debt on the consolidated statements of financial position and are measured at amortized cost using the effective interest rate (“EIR”) method. Amortized cost is affected by the allocation of ITCs, taxable income, and accelerated tax depreciation. Financing expenses represent the interest accretion using the EIR. The EIR of the tax equity was determined to be 9%, the loan value was $549,061 (USD 414,699), with a maturity date (representing the expected flip point as estimated) of 2028 and the percentage of ownership between 99%, reflecting the allocation of taxable income or loss prior to the flip date.
Tax equity investors in US solar projects generally require sponsor guarantees as a condition to their investment. To support the tax equity investments, the Company executed guarantees indemnifying the tax equity investors against certain breaches of project level representations, warranties and covenants and other events. The Company believe these indemnifications cover matters which are substantially under its control and are very unlikely to occur.
| 14. | Financial instruments |
The Company as part of its operations carries financial instruments consisting of cash, short term investment, trade receivables, accounts payable and accruals, loan payable, lease liabilities, tax equity and long-term debt.
| (a) | Fair value: |
The Company’s financial assets and liabilities carried at fair value are measured and recognized according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices. Iin active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy are as follows:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2: Inputs other than quoted prices that are observable for the asset or liability. | |
| ● | Level 3: Inputs for the asset or liability that are not based on observable market data. |
Cash is carried at fair value using a Level 1 fair value measurement. Investment in partnership units is carried at fair value using a Level 3 fair value measurement. Significant unoberservable inputs are used in discount cash flows method to determine the fair value of investment in SFF, There were no transfers into or out of Level 3 during the period ended March 31, 2024.
The carrying amounts of trade and other receivables, trade and other payables approximate their fair values due to the short-term maturities of these items. The carrying amounts of loan payable, lease liabilities, tax equity liabilities and long-term debt approximate their fair value as they are discounted at the current market rate of interest.
| (b) | Financial risk management: |
| (i) | Credit risk and economic dependence: |
Credit risk is the risk of financial loss associated with the counterparty’s inability to fulfill its payment obligations. The Company has no significant credit risk with its counterparties. The carrying amount of financial assets net of impairment, if any, represents the Company’s maximum exposure to credit risk.
The Company has assessed the creditworthiness of its trade and other receivables and amount determined the credit risk to be low. Utility deposits are made to local government utility with high creditworthiness. Cash has low credit risk as it is held by internationally recognized financial institutions.
| 15 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 14. | Financial instruments (continued) |
| (ii) | Concentration risk and economic dependence: |
The outstanding accounts receivable balance is relatively concentrated with a few large customers representing majority of the value. See table below showing a few customers who account for over 10% of total revenue as well as customers who account for over 10% percentage of outstanding Accounts Receivable.
Nine months ended March 31, 2024 | Revenue | % of Total Revenue | ||||||
| Customer B | $ | 5,343,090 | 11 | % | ||||
| Customer E | $ | 34,518,159 | 68 | % | ||||
| Customer F | $ | 6,550,519 | 13 | % | ||||
Nine months ended March 31, 2023 | Revenue | % of Total Revenue | ||||||
| Customer A | $ | 5,919,270 | 65 | % | ||||
Three months ended March 31, 2024 | Revenue | % of Total Revenue | ||||||
| Customer E | $ | 22,858,350 | 95 | % | ||||
Three months ended March 31, 2023 | Revenue | % of Total Revenue | ||||||
| Customer A | $ | 105,180 | 15 | % | ||||
| Customer B | $ | 264,572 | 37 | % | ||||
| Customer C | $ | 151,696 | 21 | % | ||||
| Customer D | $ | 100,000 | 14 | % | ||||
| March 31, 2024 | Account Receivable | % of Account Receivable | ||||||
| Customer E | $ | 2,494,047 | 72 | % | ||||
| June 30, 2023 | Account Receivable | % of Account Receivable | ||||||
| Customer F | $ | 1,179,132 | 31 | % | ||||
| Customer G | $ | 1,537,357 | 40 | % | ||||
| 16 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 14. | Financial instruments (continued) |
| (iii) | Liquidity risk: |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due by maintaining adequate reserves, banking facilities, and borrowing facilities. All of the Company’s financial liabilities are subject to normal trade terms.
| (iv) | Interest rate risk: |
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not carry debt at a variable rate and is exposed to interest rate risk on its cash which is not considered significant.
| 15. | Share Capital |
| (a) | Authorized |
Unlimited number of common shares with no par value.
| (b) | Issued and outstanding share capital |
At March 31, 2024, the Company had 27,136,075 common shares issued and outstanding. A summary of changes in share capital and contributed surplus is contained on the consolidated statements of changes in shareholders’ equity.
During the nine-months ended March 31, 2024, the Company issued the following shares:
| i. | On September 20, 2023, 55,000 broker warrants were exercised to purchase common shares at $0.75 per share. | |
| ii. | In September, 2023, the Company sold a total of 2,200 Common Shares through at-the-market offerings at an average price of $10 per share for gross proceeds of $22,000. | |
| iii. | The Company has entered into share purchase agreements (the “SPAs”) dated October 23, 2023 to acquire control of OFIT GM and OFIT RT for consideration of 278,875 common shares of the Company that were issued on November 1, 2023. See Note 16 for more detail. |
| (c) | Warrants |
The following table reflects the warrants issued and outstanding as of March 31, 2024:
| Date granted | Expiry | Exercise price (CAD) | Issued | Exercised | Balance at March 31, 2024 | |||||||||||||
| 03-Oct-2022 | 10-Jun-2027 | $ | 0.10 | 2,500,000 | - | 2,500,000 | ||||||||||||
| 01-Mar-2023 | 01-Mar-2026 | $ | 0.75 | 483,000 | 55,000 | 428,000 | ||||||||||||
| 01-Mar-2023 | 01-Mar-2028 | $ | 0.50 | 5,000,000 | - | 5,000,000 | ||||||||||||
| 7,983,000 | - | 7,928,000 | ||||||||||||||||
| Weighted average exercise price | $ | 0.39 | ||||||||||||||||
| 17 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 15. | Share Capital (continued) |
| (d) | Stock Options |
The Board of Directors has adopted the Share Compensation Plan on November 4, 2022. Under this plan, the aggregate number of common shares that may be reserved and available for grant and issuance pursuant to the exercise of options and settlement of RSUs, each under the Share Compensation Plan, shall not exceed 20% (in the aggregate) of the issued and outstanding Common Shares at the time of granting. The exercise price per common share for an option and RSU granted shall not be less than the market price. Every option and RSU shall have a term not exceeding and shall expire no later than 5 years after the date of grant.
Details of the stock option outstanding as at March 31, 2024 are as follows:
| Date issued | Expiry | Exercise price (CAD) | Balance at July 1, 2023 | Granted | Exercised | Expired/Cancelled | Balance at March 31, 2024 | |||||||||||||||||||||
| 10-Feb-2023 | 04-Nov-2027 | $ | 0.75 | 2,759,000 | - | - | - | 2,759,000 | ||||||||||||||||||||
| 04-Dec-2023 | 04-Dec-2028 | $ | 6.60 | - | 82,500 | - | (75,000 | ) | 7,500 | |||||||||||||||||||
| 2,759,000 | 82,500 | - | (75,000 | ) | 2,766,500 | |||||||||||||||||||||||
| Weighted average exercise price | $ | 0.77 | ||||||||||||||||||||||||||
| Weighted average remaining contractual life | 3.60 years | |||||||||||||||||||||||||||
As at March 31, 2024, no stock options were exercisable.
| (e) | Restricted Stock Units |
Details of the Restricted Stock Units (RSU) outstanding as at March 31, 2024 are as follows:
| Date granted | Vesting Date | Granted | Distributed | Forfeited | Balance at March 31, 2024 | |||||||||||||
| 4-Nov-2022 | 02-Aug-2023 | 250,000 | - | - | 250,000 | |||||||||||||
| 13-Mar-2023 | 12-Mar-2024 | 7,500 | - | - | 7,500 | |||||||||||||
| 13-Mar-2023 | 12-Mar-2025 | 7,500 | - | - | 7,500 | |||||||||||||
| 265,000 | - | - | 265,000 | |||||||||||||||
The weight average grant date price per share is $0.86.
| 18 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 16. | Acquisitions |
Solar Alliance DevCo LLC
Abundant Solar Power (“ASP”) has an EPC agreement with Solar Alliance Energy Inc (“Solar Alliance”) to be engaged in the development, engineering, procurement, construction, and operations of solar energy facilities (US1 & VC1 projects). The US1 & VC1 projects reached PTO (permission to operation) in December 2022. According to the EPC agreement, ASP had fulfilled its performance obligation and was able to recognize EPC services revenue at the amount of $1,340,765 CAD ($1,082,345 USD) when US1 & VC1 projects were reached PTO.
On December 28, 2022, the Company entered into a promissory note with Solar Alliance converting a series of overdue accounts receivables of $1,206,004 (USD $891,158) since August 2022 to a note receivable. The promissory note bears interest rate of 15% per annum and was payable on a monthly basis.
On June 20, 2023, the Company settled the outstanding promissory note of $1,206,004 (USD $891,158) plus accrued interest of $111,821 (USD $82,203) through the acquisition of 67% of in Solar Alliance DevCo, a wholly-owned subsidiary of Solar Alliance, under the terms of membership interest purchase agreement. As a result of the acquisition, Solar Alliance DevCo operates as a subsidiary of ASP. Solar Alliance DevCo holds two solar energy facilities (US1 & VC1) which have reached commercial operation stage. As a result, the Company has determined that this transaction is a business combination as the assets acquired and liabilities assumed constitute a business. The transaction was accounted for using the acquisition method of accounting whereby the assets acquired, and liabilities assumed were recorded at their estimated fair values at the acquisition date.
The provisional allocation of the purchase consideration to the total fair value of net assets acquired is as follows:
| Fair value of net assets acquired | $ | |||
| Accounts receivable | 407,210 | |||
| Capital assets | 937,194 | |||
| Accounts payable | (25,851 | ) | ||
| Tax equity liability | (460,607 | ) | ||
| Identifiable net assets acquired | 857,946 | |||
| Non-controlling interest | (283,122 | ) | ||
| Purchase consideration transferred | 574,824 | |||
On acquisition, the purchase consideration transferred of $574,824 is the fair value of the promissory note plus accrued interest as of June 20, 2023. Hence, the Company recognized an impairment loss of $724,205 (USD $539,204) from the remeasurement of promissory note to its fair value as of the acquisition date. The impairment loss was recognized in profit and loss in the fiscal year ended June 30, 2023.
On December 4, 2023, ASP acquired the remaining 33% of Solar Alliance DevCo for $95,333 (USD $70,000). The 33% non-controlling interest was originally valued at $283,122 (USD $213,838) on acquisition date. Accordingly, a gain of $195,893 (USD $143,838) is recognized as other income in the statement of income and comprehensive income for the nine months period ended March 31, 2024.
| 19 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 16. | Acquisitions (continued) |
OFIT GM Inc. and OFIT RT Inc.
The Company entered into share purchase agreements (the “SPAs”) dated October 23, 2023 to acquire control of two corporations that hold solar projects located in Ontario with a combined capacity of 2.5 MW (the “Projects”) for consideration of $432,510 cash and 278,875 common shares (the “Consideration Shares”) of the Company (the “OFIT Transaction”). The corporations OFIT GM and OFIT RT (the “Purchased Entities”) have been operating the Projects since 2017. The transaction closed on November 1, 2023. The shares of the Purchased Entities were acquired from N. Fine Investments Limited and Linden Power Inc. Pursuant to the terms of the SPAs, the Company acquired 49.9% ownership of OFIT RT Inc. where Whitesand First Nation owns the remaining shares of OFIT RT Inc. The Company also acquired 49.9% ownership of OFIT GM Inc. where the Town of Kapuskasing owns the remaining shares of OFIT GM Inc. The shares owned by the Town of Kapuskasing have no voting right, hence, the Company controls and consolidate the Purchased Entities.
The acquisition of the Purchased Entities is considered a business combination as the assets acquired and liabilities assumed constitute a business. The transaction was accounted for using the acquisition method of accounting whereby the assets acquired, and liabilities assumed were recorded at their estimated fair value at the acquisition date.
Due to the timing of the acquisition and the ongoing collection of data necessary to value the acquired assets and liabilities, the identified assets acquired and liabilities assumed have been determined provisionally and purchase price allocation has not yet been finalized. Changes in the assumptions used in the valuation of these assets may affect the fair value resulting in a reallocation of purchase price to or from the amount recognized for goodwill. Any changes in these amounts will also result in a change in the relevant deferred tax liabilities recognized on the intangibles. The Company expects to finalize its purchase price allocation by the fourth quarter of fiscal 2024.
The President & Chief Executive Officer and a director of the Company is indirectly a shareholder of the Purchased Entities and indirectly received one-third of the Consideration Shares. As a result, the Transaction is considered a related party transaction.
| 20 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 16. | Acquisitions (continued) |
The preliminary fair value of consideration transferred from the acquisition of OFIT GM and OFIT RT Inc. consists of the following:
| Fair value of net assets (liabilities) acquired | $ | $ | $ | |||||||||
| OFIT GM | OFIT RT | Net | ||||||||||
| Cash | 242,885 | 200,780 | 443,665 | |||||||||
| Accounts receivable | 6,454 | 26,611 | 33,065 | |||||||||
| Prepaid | 11,210 | 5,297 | 16,507 | |||||||||
| Capital assets | 951,749 | 372,750 | 1,324,499 | |||||||||
| Current liabilities | (29,716 | ) | (52,006 | ) | (81,721 | ) | ||||||
| Long-term loans | (1,759,062 | ) | (658,217 | ) | (2,417,279 | ) | ||||||
| Identifiable net liabilities assumed at fair value | (576,480 | ) | (104,785 | ) | (681,265 | ) | ||||||
| Goodwill arising on acquisition | 4,247,318 | 1,441,909 | 5,689,227 | |||||||||
| Non-controlling interest at fair value | (1,839,090 | ) | (669,899 | ) | (2,508,989 | ) | ||||||
| Purchase consideration transferred | 1,831,748 | 667,225 | 2,498,973 | |||||||||
| Consideration paid in cash | 232,263 | 200,247 | 432,510 | |||||||||
| Consideration paid in common shares | 1,599,486 | 466,978 | 2,066,464 | |||||||||
| Total consideration | 1,831,748 | 667,225 | 2,498,973 | |||||||||
| 17. | Non-Controlling Interest |
The following items affects non-controlling interest for the year ended March 31, 2024:
Solar Alliance DevCo LLC
On June 20, 2023, the Company (through ASP) acquired a 67% membership interest in two solar facilities. The remaining 33% membership was acquired on December 4, 2023. For the period of July 1 to December 4, 2023 33% of net income or $7,023 was allocated to non-controlling interest.
OFIT GM and OFIT RT
On November 1, 2023, the Company acquired 49.9% interest in OFIT GM and OFIT RT. For the period of November 2, 2023 to March 31, 2024, net loss of $53,279 in OFIT GM and $19,222 in OFIT RT were allocated to non-controlling interest.
| 21 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 18. | Investment |
On June 1, 2023, the Company acquired 200 limited partnership units of Solar Flow-Through 2012-I Limited Partnership from former partner unitholders for an aggregate purchase price of $4,200, and 31,230 limited partnership units of Solar Flow-Through 2013-I Limited Partnership for an aggregate purchase price of $718,290. On July 5, 2023, the Company acquired 42,500 limited partnership units of Solar Flow-Through 2016 Limited Partnership for an aggregate purchase price of $2,465,000.
During the nine months period ended March 31, 2024, the group of Solar Flow-Through Limited Partnerships completed a reorganization into a corporate entity named Solar Flow-Through Funds Ltd. (“SFF”). As a result, 73,930 limited partnership units owned by the Company have been converted to 702,820 common shares of SFF. On March 20, 2024, the Company entered into a definitive agreement with SFF to acquire all of the issued and outstanding common shares in an all-stock deal. The transaction is not closed and SFF shares not yet received as at March 31, 2024, thus the Company does not have significant influence over SFF. See note 22 for details on the acquisition agreement.
During previous years, the Company had written off $6,486,838 aged accounts receivable due from SFF. The accounts receivable was related to EPC projects commenced in 2017 and that were later cancelled by the Progressive Conservative Party of Ontario who was sworn in as the new provincial government in 2018. SFF was able to recover certain costs from Independent Electricity System Operator (IESO) and repaid $1,750,143 in cash during the nine months period ended March 31, 2024, On March 27, 2024, the two parties entered into agreement to settle the remaining $4,736,699 receivable in SFF shares. The Company received 1,052,599 common shares of SFF at the originally agreed share price at $4.50 per share and then revalued at $2.93 per share on the settlement date.
As at March 31, 2024, management revalued the share price of SFF held by the Company at $2.96 per share. Accordingly, $1,124,791 of loss on fair value was recorded in the statement of income and comprehensive income.
| 22 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 19. | Related Party Transactions |
Related party transactions are made without stated terms of repayment or interest. The balances with related parties are unsecured and due on demand.
Compensation of key management personnel
The remuneration of directors and other members of key management personnel, who are those having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, for the three months ended March 31, 2024 and 2023 were as follows:
| Three Month Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Short-term employee benefits | $ | 409,599 | $ | 280,016 | ||||
| Share-based compensation | 59,473 | 83,531 | ||||||
| Advisory warrants | - | 445,361 | ||||||
| Nine Month Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Short-term employee benefits | $ | 1,020,227 | $ | 1,020,355 | ||||
| Share-based compensation | 345,957 | 83,531 | ||||||
| Advisory warrants | - | 445,361 | ||||||
Short-term employee benefits include consulting fees and salaries made to key management personnel.
Related parties transactions
The OFIT transaction is considered a related party transaction due to the President & Chief Executive Officer and a director of the Company is indirectly a shareholder of the Purchased Entities and indirectly received one-third of the Consideration Shares. See note 16.
| 23 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 20. | Capital Management |
The Company’s objectives in managing liquidity and capital are to safeguard the Company’s ability to continue as a going concern and to provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of the following:
| March 31, 2024 | June 30, 2023 | |||||||
| Long-term debt -non-current portion (note 12) | $ | 2,819,904 | 759,259 | |||||
| Shareholders’ equity | $ | 27,342,463 | 16,631,196 | |||||
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the strategies employed by the Company may include the issuance or repayment of debt, dividend payments, or sale of assets. The Company has determined it will have sufficient funds to meet its current operating and development obligations for at least 12 months from the reporting date.
There has not been any significant change in capital management from the prior year.
| 21. | Segment reporting |
The Company’s reportable operating segments are components of the Company where separate financial information is available that is evaluated regularly by the Company’s Chief Executive Officer who is the Chief Operating Decision Maker (“CODM”). The operational segments are determined based on the Company’s management and internal reporting structure. The Company and its subsidiaries engage in one main business activity being the commercial, industrial, and residential solar business, hence, operating segment information is not provided.
The Company is currently operating development and construction of solar photovoltaic power generation projects in two principal geographical areas - Canada and United States. The revenues from external customers and non-current assets by country for the three and nine months ended and as at March 31, 2024 and 2023 are as follows:
| Revenue from external customers | ||||||||||||||||
| Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Canada | $ | 1,183,031 | 559,082 | $ | 9,285,960 | 1,082,343 | ||||||||||
| United States | 22,891,916 | 147,774 | 41,114,053 | 8,069,899 | ||||||||||||
| $ | 24,074,947 | 706,856 | $ | 50,400,013 | 9,152,242 | |||||||||||
| 24 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended March 31, 2024, and 2023
(Expressed in Canadian Dollars)
(Unaudited)
| 21. | Segment reporting (continued) |
| Non-current assets | ||||||||
| March 31, 2024 | June 30, 2023 | |||||||
| Canada | $ | 12,186,000 | 879,941 | |||||
| United States | 9,689,737 | 2,043,697 | ||||||
| $ | 21,875,736 | 2,923,638 | ||||||
| Total assets | Total liabilities | |||||||||||||||
| March 31, 2024 | June 30, 2023 | March 31, 2024 | June 30, 2023 | |||||||||||||
| Canada | $ | 18,078,124 | 11,230,409 | $ | 5,708,730 | 2,613,812 | ||||||||||
| United States | 21,378,459 | 13,739,128 | 6,405,390 | 5,724,529 | ||||||||||||
| $ | 39,456,583 | 24,969,537 | $ | 12,114,120 | 8,338,341 | |||||||||||
| 22. | Acquisition of Solar Flow-Through Funds Ltd. |
On March 20, 2024, the Company entered into a definitive agreement with SFF to acquire all of the issued and outstanding common shares of SFF through a plan of arrangement for an aggregate consideration of up to $41.8 million in an all stock deal (the “SFF Transaction”). The SFF Transaction values SFF at up to $45 million but the consideration payable excludes the common shares of SFF currently held by SolarBank.
Under the terms of the SFF Transaction, the Company has agreed to issue up to 5,859,567 common shares of SolarBank (“SolarBank Shares”) for an aggregate purchase price of up to $41.8 million, representing $4.50 per SFF common share acquired. The number of SolarBank Shares was determined using a 90 trading day volume weighted average trading price as of the date of the Agreement which is equal to $7.14 (the “Agreement Date VWAP”). The SFF Transaction represents a 7% premium to a valuation report prepared by Evans & Evans, Inc. on SFF and its assets.
The consideration for the SFF Transaction consists of an upfront payment of approximately 3,575,638 SolarBank Shares ($25.53 million) and a contingent payment representing up to an additional 2,283,929 SolarBank Shares ($16.31 million) that will be issued in the form of contingent value rights (“CVRs”). The SolarBank Shares underlying the CVRs will be issued once the final contract pricing terms have been determined between SFF, the Ontario IESO and the major suppliers for the SFF BESS portfolio and the binding terms of the debt financing for the BESS portfolio have been agreed (the “CVR Conditions”). On satisfaction of the CVR Conditions, Evans & Evans, Inc. shall revalue the BESS portfolio and SolarBank shall then issue SolarBank Shares having an aggregate value that is equal to the lesser of (i) $16.31 million and (ii) the final valuation of the BESS portfolio determined by Evans & Evans, Inc. plus the sale proceeds of any portion of the BESS portfolio that may be sold, in either case divided by the Agreement Date VWAP. The maximum number of additional shares issued for the CVRs will be 2,283,929 SolarBank Shares.
| 23. | Provisions and contingent liabilities |
| a) | In June 2022, a group of residents filed an Article 78 lawsuit against the town of Manlius, New York, over a solar panel project on town property that is being developed by SolarBank. The lawsuit was filed challenging the approval of the Manlius landfill. SolarBank is not named in the lawsuit; however, in cooperation with the town, SolarBank is vigorously defending this suit. On October 5, 2022 by decision of the State of New York Supreme Court, the lawsuit was dismissed. However, on October 19, 2022 an appeal was filed by the petitioners in the Appellate Division of the State of New York Supreme Court. On March 15, 2024 the Appellate Division of the State of New York Supreme Court dismissed the appeal. The petitioners having remaining appeal rights the timelines of which have not yet expired. The likelihood of success in these lawsuits cannot be reasonably predicted. |
| 25 |
Exhibit 99.7
Form 52-109F2 – IPO/RTO
Certification of Interim Filings Following
an Initial Public Offering, Reverse Takeover or
Becoming a Non-Venture Issuer
I, Richard Lu, Chief Executive Officer of SolarBank Corporation certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of SolarBank Corporation (the “issuer”) for the interim period ended March 31, 2024. |
| 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: May 13, 2024 | |
| “Richard Lu” | |
| Richard Lu | |
| Chief Executive Officer |
NOTE TO READER
In contrast to the usual certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), namely, Form 52-109F2, this Form 52-109F2 – IPO/RTO 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 an issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 in the first financial period following
| ● | completion of the issuer’s initial public offering in the circumstances described in s. 5.3 of NI 52-109; |
| ● | completion of a reverse takeover in the circumstances described in s. 5.4 of NI 52-109; or |
| ● | the issuer becoming a non-venture issuer in the circumstances described in s. 5.5 of 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 |
Exhibit 99.8
Form 52-109F2 – IPO/RTO
Certification of Interim Filings Following
an Initial Public Offering, Reverse Takeover or
Becoming a Non-Venture Issuer
I, Sam Sun, Chief Financial Officer of SolarBank Corporation certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of SolarBank Corporation (the “issuer”) for the interim period ended March 31, 2024. |
| 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: May 13, 2024 | |
| /s/ “Sam Sun” | |
| Sam Sun | |
| Chief Financial Officer |
NOTE TO READER
In contrast to the usual certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), namely, Form 52-109F2, this Form 52-109F2 – IPO/RTO 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 an issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 in the first financial period following
| ● | completion of the issuer’s initial public offering in the circumstances described in s. 5.3 of NI 52-109; |
| ● | completion of a reverse takeover in the circumstances described in s. 5.4 of NI 52-109; or |
| ● | the issuer becoming a non-venture issuer in the circumstances described in s. 5.5 of 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 |
Exhibit 99.9
SolarBank Announces $50.4 million of Revenue for Third Quarter
| ● | $50.4 million in Revenue for the nine month period | |
| ● | $5.5 million of Net Income for the nine month period or $0.20 per share (undiluted) | |
| ● | Update revenue guidance of $56 million to $61 million for the full fiscal year ended June 30, 2024 |
Toronto, Ontario, May 14, 2024 — SolarBank Corporation (Nasdaq: SUUN) (Cboe CA: SUNN) (FSE: GY2) (“SolarBank” or the “Company”) reports third quarter 2024 interim financial results. All financial figures are in Canadian dollars and in accordance with International Financial Reporting Standards (IFRS) as presented in the interim consolidated financial statements.
Fiscal Year to Date Highlights (All Amounts are for the Nine Month Period)
| ● | Revenue of $50.4 million: | |
| ● | Net income of $5.5 million; | |
| ● | Net income of $0.20 per share (undiluted); | |
| ● | $41 million USD transaction with Honeywell International Inc. (“Honeywell”) sees mechanical completion reached on the SB-1, SB-2 and SB-3 Community Solar Projects acquired by Honeywell. The projects are being constructed under an engineering, procurement, and construction (“EPC”) Contract with SolarBank; | |
| ● | Nasdaq Global Market listing completed; and | |
| ● | Cboe Canada stock exchange listing completed. |
Dr. Richard Lu, President and CEO of SolarBank commented: “The fantastic numbers demonstrated again our ability to execute and in nine months we have already exceeded the top end of the Company’s revenue guidance for fiscal 2024. With major milestones such as mechanical completion on the Honeywell projects, Nasdaq Global Market listing and Cboe Canada listing, the Company is continuing to deliver.”
Summary of Quarterly Results (All Amounts are for the Nine Month Period)
| Quarter Ended | March 31, 2024 | March 31, 2023 | ||||||
| Statement of Income and Comprehensive Income | ||||||||
| Total Revenue | $ | 50,400,013 | $ | 9,152,242 | ||||
| Cash flow from operating activities | $ | 10,929,336 | $ | 4,653,394 | ||||
| Net income | $ | 5,522,702 | $ | 3,426,589 | ||||
| Basic earnings per share | $ | 0.20 | $ | 0.13 | ||||
| Diluted earnings per share | $ | 0.15 | $ | 0.10 | ||||
The Company ended the third quarter of fiscal 2024 with $17.58 million in current assets, as compared to $22.05 million in current assets as of year end June 30, 2023. The decrease is mainly due to a decrease in unbilled revenue.
Current liabilities increased from $7.08 million as of year ended June 30, 2023 to $8.18 million in the current quarter, mainly due to an increase in trade and other payables.
For complete details please refer to the unaudited condensed interim consolidated financial statements and associated Management Discussion and Analysis for the nine months ended March 31, 2024, available on SEDAR+ (www.sedarplus.com).
2024 Year End Outlook
The Company is updating its guidance of expected full year revenue in fiscal 2024 of between $56 million and $61 million. The purpose of the financial outlook is to assist investors, shareholders, and others in understanding certain financial metrics relating to expected 2024 financial results for evaluating the performance of the Company’s business and is dated as of the date of this press release. This information may not be appropriate for other purposes. Information about the Company’s guidance, including the various assumptions underlying it, is forward-looking and should be read in conjunction with “Forward-Looking Statements” in this press release and the related disclosure and information about various economic, competitive, and regulatory assumptions, factors, and risks that may cause the Company’s actual future financial and operating results to differ from what it currently expects.
The Company notes that the execution of the Company’s growth strategy depends upon the continued availability of third-party financing arrangements for the Company and its customers and the Company’s future success depends partly on its ability to expand the pipeline of its energy business in several key markets. In addition, governments may revise, reduce or eliminate incentives and policy support schemes for solar and battery storage power, which could cause demand for the Company’s services to decline. Further the forecasted MW capacity of a solar project may not be reached. Please refer to “Forward-Looking Statements” for additional discussion of the assumptions and risk factors associated with the statements in this press release.
About SolarBank Corporation
SolarBank Corporation is an independent renewable and clean energy project developer and owner focusing on distributed and community solar projects in Canada and the USA. The Company develops solar projects that sell electricity to utilities, commercial, industrial, municipal and residential off-takers. The Company maximizes returns via a diverse portfolio of projects across multiple leading solar markets including projects with utilities, host off-takers, community solar, and virtual net metering projects. The Company has a potential development pipeline of over one gigawatt and has developed renewable and clean energy projects with a combined capacity of over 70 megawatts built. To learn more about SolarBank, please visit www.solarbankcorp.com.
For further information, please contact:
SolarBank Corporation
Tracy Zheng
Email: tracy.zheng@solarbankcorp.com
Phone: 416.494.9559
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements and forward-looking information within the meaning of Canadian securities legislation (collectively, “forward-looking statements”) that relate to the Company’s current expectations and views of future events. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “will likely result”, “are expected to”, “expects”, “will continue”, “is anticipated”, “anticipates”, “believes”, “estimated”, “intends”, “plans”, “forecast”, ”projection”, “strategy”, “objective” and “outlook”) are not historical facts and may be forward-looking statements and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. In particular and without limitation, this press release contains forward-looking statements pertaining to the Company’s expectations regarding its industry trends and overall market growth; the Company’s growth strategies; the expected energy production from the solar power project mentioned in this press release; the megawatt capacity and type of future solar projects; the size of the Company’s development pipeline and future revenue guidance. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release.
Forward-looking statements are based on certain assumptions and analyses made by the Company in light of the experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate, and are subject to risks and uncertainties. In making the forward looking statements included in this press release, the Company has made various material assumptions, including but not limited to: obtaining the necessary regulatory approvals; that regulatory requirements will be maintained; general business and economic conditions; the Company’s ability to successfully execute its plans and intentions; the availability of financing on reasonable terms; the Company’s ability to attract and retain skilled staff; market competition; the products and services offered by the Company’s competitors; that the Company’s current good relationships with its service providers and other third parties will be maintained; and government subsidies and funding for renewable energy will continue as currently contemplated. Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect, and the Company cannot assure that actual results will be consistent with these forward-looking statements. Given these risks, uncertainties and assumptions, investors should not place undue reliance on these forward-looking statements.
Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, including those listed under “Forward-Looking Statements” and “Risk Factors” in the Company’s most recently completed Annual Information Form, and other public filings of the Company, which include: the Company may be adversely affected by volatile solar power market and industry conditions; the execution of the Company’s growth strategy depends upon the continued availability of third-party financing arrangements; the Company’s future success depends partly on its ability to expand the pipeline of its energy business in several key markets; governments may revise, reduce or eliminate incentives and policy support schemes for solar and battery storage power; general global economic conditions may have an adverse impact on our operating performance and results of operations; the Company’s project development and construction activities may not be successful; developing and operating solar projects exposes the Company to various risks; the Company faces a number of risks involving Power Purchase Agreements (“PPAs”) and project-level financing arrangements; any changes to the laws, regulations and policies that the Company is subject to may present technical, regulatory and economic barriers to the purchase and use of solar power; the markets in which the Company competes are highly competitive and evolving quickly; an anti-circumvention investigation could adversely affect the Company by potentially raising the prices of key supplies for the construction of solar power projects; foreign exchange rate fluctuations; a change in the Company’s effective tax rate can have a significant adverse impact on its business; seasonal variations in demand linked to construction cycles and weather conditions may influence the Company’s results of operations; the Company may be unable to generate sufficient cash flows or have access to external financing; the Company may incur substantial additional indebtedness in the future; the Company is subject to risks from supply chain issues; risks related to inflation; unexpected warranty expenses that may not be adequately covered by the Company’s insurance policies; if the Company is unable to attract and retain key personnel, it may not be able to compete effectively in the renewable energy market; there are a limited number of purchasers of utility-scale quantities of electricity; compliance with environmental laws and regulations can be expensive; corporate responsibility may adversely impose additional costs; the future impact of a resurgence of COVID-19 on the Company is unknown at this time; the Company has limited insurance coverage; the Company will be reliant on information technology systems and may be subject to damaging cyberattacks; the Company may become subject to litigation; there is no guarantee on how the Company will use its available funds; the Company will continue to sell securities for cash to fund operations, capital expansion, mergers and acquisitions that will dilute the current shareholders; and future dilution as a result of financings. In addition, there are difficulties in forecasting the Company’s financial results and performance for future periods, particularly over longer periods, given changes in technology and the Company’s business strategy, evolving industry standards, intense competition and government regulation that characterize the industries in which the Company operates.
The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law. New factors emerge from time to time, and it is not possible for the Company to predict all of them, or assess the impact of each such factor or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement.