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 November, 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
Exhibits
99.1 and 99.2 to this report on Form 6-K furnished to the SEC are 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
November 14, 2024 |
Solarbank
Corporation |
| |
|
| |
By: |
/s/
“Sam Sun” |
| |
|
Sam
Sun |
| |
|
Chief
Financial Officer & Corporate Secretary |
Exhibit
Index
Exhibit
99.1
Management’s
Discussion and Analysis
For
the Three Months End September 30, 2024
| |
Contact
Information : |
| |
SolarBank
Corporation |
| |
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 November 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 months ended September
30th, 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 office located at 199 Bay Street, Suite 4000, Toronto, Ontario M5L
1A9 and head office located 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 continues to shift 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 expects to reach Permission to Operate
(“PTO”) for a 3.7 MW DC project that the Company intends to retain ownership of, by Q2 FY2025 and reach PTO for three projects
for Honeywell, totaling 21 MW DC in FY2025. Approximately 50 projects are under utility interconnection studies. In addition, the Company
is working on site origination for 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. In Pennsylvania, the
Company has a three-project plan totalling 24.8 MW DC. The Company has secured a lease over the project sites in Pennsylvania and will
continue to work to complete the next steps in permitting, interconnection and securing the necessary financing for construction of the
projects. The development of these projects community solar projects will be subject to the final approval of House Bill 1842 by the
State government of Pennsylvania.
Canada
The
Company is expected to finish the construction on a 1.4MW DC rooftop solar project in Alberta in the second quarter of FY2025. In addition,
two projects in Alberta and three 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.
The
Company became the owner of the three separate Battery Energy Storage System (“BESS”) projects in Ontario. The three projects
are expected to reach NTP in the second and third quarter of FY2025.
The
BESS Projects were awarded as part of a procurement process with the Ontario IESO known as “E-LT1”. Projects under the E-LT1
are expected to be operational no later than April 30, 2026. Each BESS Project is expected to operate under a long term contract with
guaranteed capacity payments from the IESO, provided all contract obligations are met. The Projects will also earn revenue from the energy
and ancillary markets in Ontario. Each has a 4.74 MW discharge capacity with a four-hour duration using lithium-iron-phosphate technology.
With
the acquisition of SFF, the Company is now responsible for securing the permits and financing required to complete the construction of
the BESS Projects. The Company is in discussions with several project finance lenders but has not yet secured the necessary financing
to complete the construction of the BESS Projects. In addition, the Company has not yet secured the final permits for the construction
of the BESS Projects.
Evlo
Energy Storage Inc. (“Evlo”) is providing its EVLOFLEX battery energy storage systems (the “BESS Equipment”)
for the three separate BESS Projects. As a result of the delays in obtaining financing and permits for the BESS Projects, the Company
has requested that Evlo delay the delivery of the BESS Equipment. Evlo has informed the Company that such delay will adversely affect
Evlo’s performance under the agreement for the BESS Equipment and increases the cost of the BESS Equipment. The final implications
of these delays on the contract price and schedule have not yet been ascertained. If the project schedule is delayed, it is possible
that certain incentives from the Ontario government for completion of the BESS Projects by a target date will not be received. In addition,
if the Company is unable to secure financing to make required payment to Evlo, Evlo may provide the Company with a notice of default
which would have an adverse effect on the project schedule and costs.
Acquisitions
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 closed on July 8, 2024. Under the terms of the SFF Transaction, the Company has agreed to issue up to 5,859,561 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
consideration for the SFF Transaction consisted of an upfront payment of approximately 3,575,632 SolarBank Shares and a contingent payment
representing up to an additional 2,283,929 SolarBank Shares 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, the independent valuator 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 the independent valuator, 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.
The
acquisition of SFF continues the Company’s strategy of creating value for all stakeholders by growing its portfolio of cash-generating
independent power producer assets. The Company will also expend into ownership of battery energy storage projects and electric vehicle
charging stations, both are key components of net zero energy transition.
Recent
Developments
Since
the commencement of the quarter ended September 30, 2024, the Company achieved the following business objectives:
| ● | July
2024: The Company closed its acquisition of Solar Flow-Through Funds Ltd. (“SFF”).
This transaction values SFF at up to $45M but the consideration payable excludes the common
shares of SFF currently held by the Company. |
| | | |
| ● | July
2024: The Company announced an update on its 3.25 MW DC ground-mount solar power project
located in the Town of Camillus, New York on a closed landfill. The project has now received
its plan approval and special use permit from the town of Camillus. |
| | | |
| ● | July
2024: The Company advanced construction on the 1.4MW DC rooftop solar project in Alberta.
Construction of the project is expected to be completed in November 2024. |
| | | |
| ● | August
2024: The Company announced that it intends to develop a 7 MW DC ground-mount solar power
project known as the Oak Orchard project located in Clay, New York. |
| | | |
| ● | August
2024: The Company announced that it intends to develop a 6.41 MW DC ground-mount solar power
project known as the East Bloomfield project located in East Bloomfield, New York. |
| | | |
| ● | September
2024: The Company announced that it intends to develop a 5.4 MW DC ground-mount solar power
project known as the Boyle project located in Broome County, New York. The project is expected
to employ agrivoltaics (the dual use of land for solar energy production and agriculture)
including sheep grazing with a local agricultural partner. |
| | | |
| ● | September
2024: The Company announced that it intends to develop a 7 MW DC ground-mount solar power
project known as the Hwy 28 project on a 45 acre site located in Middletown, Delaware County,
New York. |
| | | |
| ● | October
2024: The Company announced its plans to develop a 2.9 MW DC ground-mount solar power project
known as the Silver Springs project on a site located in Gainesville, New York. |
| | | |
| ● | October
2024: The Company announced its plans to develop a 13.8 MW DC ground-mount solar power project
known as the Grandview project on a site located in Lancaster Country, Pennsylvania. |
| | | |
| ● | October
2024: The Company announced its plans to develop a 7 MW DC ground-mount solar power project
known as the Stauffer project on a site located in Lancaster Country, Pennsylvania. |
| | | |
| ● | October
2024: The Company announced its plans to develop a 7.2 MW DC ground-mount solar power project
known as the North Main project on a site located in Wyoming County, New York |
| | | |
| ● | November
2024: The Company announced its plans to develop a 3.1 MW DC ground-mount solar power project
known as West Petpeswick project (the “Project”) on a site located in Nova Scotia |
| | | |
| ● | November
2024: The Company announced its strategic expansion into the rapidly growing data center
market. The Company is in discussions with various other parties regarding potential data
center opportunities and will provide details if an agreement to acquire or develop a data
center is concluded. |
Selected
Quarterly Information
The
following table shows selected financial information for the Company for the three months period ended September 30, 2024 and 2023 and
should be read in conjunction with the Company’s consolidated financial statements as at September 30, 2024 and June 30, 2024,
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 September 30 | |
2024 $ | | |
2023 $ | |
| Revenue | |
| 16,005,321 | | |
| 7,681,261 | |
| Revenue – EPC | |
| 11,954,389 | | |
| 5,613,015 | |
| Revenue – development | |
| - | | |
| 2,011,750 | |
| Revenue – IPP production | |
| 4,031,816 | | |
| 14,896 | |
| Revenue – O&M
and other services | |
| 19,116 | | |
| 41,600 | |
| Cost of goods sold | |
| (11,453,956 | ) | |
| (5,334,566 | ) |
| Net income | |
| 241,092 | | |
| 2,038,968 | |
| Earning (loss) per share | |
| 0.01 | | |
| 0.08 | |
| | |
September
30,
2024 $ | | |
June
30,
2024 $ | |
| Total assets | |
| 180,996,924 | | |
| 39,225,861 | |
| Total current liabilities | |
| 36,132,728 | | |
| 13,388,850 | |
| Total non-current liabilities | |
| 81,462,720 | | |
| 7,112,710 | |
The
following discussion addresses the operating results and financial condition of the Company for the three months ended September 30th,
2024 compared with the three months ended September 30th, 2023.
Result
of Operations
Three
months ended September 30, 2024 compared to the three months ended September 30, 2023
Trend
In
fiscal 2025, 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 fiscal 2025 as three projects (total of 21 MW DC) in the US progress to PTO this fiscal year. In addition, the Geddes Project
(currently owned by the Company) and phase 1 of 261 Township (owned by a third party) are expected to finish construction and reach PTO
in fiscal 2025.
The
net income for the three months ended September 30, 2024 decreased by $1,797,876 compared to the net income for the three months
ended September 30, 2023 with $241,092 net income recognized during the first quarter of 2025 as compared to a net income of $2,038,968
for the first quarter of 2024. See below for further details on the quarterly variations.
Key
business highlights and projects updates in FY2025
| Name |
|
Location |
|
Size
(MWdc/MWh) |
|
Timeline |
|
Milestone |
|
Current
Status |
| Geddes |
|
New
York,
USA |
|
3.7
|
|
Q3
FY2025 |
|
Reach
PTO
(permission
to operate) |
|
Construction
started in September 2023. This is the largest project to date to be owned by the Company |
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 |
261
Township |
|
Alberta,
Canada |
|
1.4 |
|
Q2FY2025 |
|
Reach
PTO
(permission
to operate) |
|
It’s
the first phase of a total 4.2MW project. Engineering and procurement started in April 2024, and construction started in July 2024.
|
| BESS |
|
Ontario,
Cananda |
|
Discharge:4.74
Storage:
18.96 |
|
Q1FY2026 |
|
Reach
PTO
(permission
to operate) and secure financing for construction. |
|
EPC
project. EPC agreement entered Oct. 3, 2023 for the construction of 3 separate BESS projects. The Company is working to secure financing
for the construction of the 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
|
|
Q3
FY2025 |
|
NTP |
|
800,000
|
|
155,697 |
|
Equity
financing, working capital |
|
Phase
1 construction started in July 2024. Interconnection for Phase 2 is being prepared to submit after the interconnection agreement
is executed for phase 1 with Fortis. |
| Hardie |
|
New
York,
USA |
|
7.0
|
|
December
2024 |
|
NTP |
|
1,450,000
|
|
1,368,720 |
|
Equity
financing, working capital |
|
The
project received interconnection approval and is in the final stage of permitting process. |
6882
Rice
Road
(East Bloomfield) |
|
New
York,
USA |
|
5.2 |
|
December
2024 |
|
NTP |
|
2,580,000 |
|
1,707,912 |
|
Equity
financing, working capital |
|
The
project received interconnection approval and is in the final stage of permitting process. |
| SUNY |
|
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
|
|
195,971 |
|
Equity
financing, working capital |
|
The
interconnection application to New York Independent System Operator has been accepted into the new cluster study program. The project
will move on to the customer engagement window, which will list any project physical infeasibility screens and a scooping meeting
for the phase 1 study. |
| NS
Projects |
|
Nova
Scotia,
Canada |
|
31.0 |
|
December
2025 |
|
NTP |
|
900,000 |
|
180,292 |
|
Equity
financing, working capital |
|
The
Company is preparing the application package for the Community Solar Program. |
Black
Creek |
|
New
York,
USA |
|
3.2 |
|
December
2025 |
|
NTP |
|
700,000 |
|
24,188 |
|
Equity
financing, working capital |
|
The
project is under interconnection study |
Orleans
Projects |
|
New
York,
USA |
|
30 |
|
December
2024 |
|
NTP |
|
9,150,000 |
|
57,048 |
|
Equity
financing, working capital |
|
The
project is under interconnection study. |
Oak
Orchard |
|
New
York,
USA |
|
7 |
|
June
2025 |
|
NTP |
|
1,900,000 |
|
27,982 |
|
Equity
financing, working capital |
|
The
project is under interconnection study. |
| Boyle |
|
New
York,
USA |
|
5.4 |
|
June
2025 |
|
NTP |
|
1,150,000 |
|
15,591 |
|
Equity
financing, working capital |
|
The
project is under interconnection study |
| Camillus |
|
New
York
USA |
|
3.15 |
|
March
2025 |
|
NTP |
|
2,575,500 |
|
2,308,032 |
|
Equity
financing, working capital |
|
The
project received interconnection approval and is in the final stage of the permitting process. |
| Hwy
28 |
|
New
York
USA |
|
7 |
|
March
2025 |
|
NTP |
|
1,050,000 |
|
702,112 |
|
Equity
financing, working capital |
|
The
project received interconnection approval and is in the final stage of the permitting process. |
Silver
Springs |
|
New
York
USA |
|
2.9 |
|
December
2025 |
|
NTP |
|
500,000 |
|
10,750 |
|
Equity
financing, working capital |
|
The
project is under interconnection study. |
| Grandview |
|
Pennsylvania,
USA |
|
13.8 |
|
December
2025 |
|
NTP |
|
1,500,000 |
|
- |
|
Equity
financing, working capital |
|
The
Company has secured a lease over the project site and will continue to work to complete the next steps in permitting, interconnection
and securing the necessary financing for construction of the project. |
| Stauffer |
|
Pennsylvania,
USA |
|
7 |
|
December
2025 |
|
NTP |
|
1,250,000 |
|
750 |
|
Equity
financing, working capital |
|
The
Company has secured a lease over the project site and will continue to work to complete the next steps in permitting, interconnection
and securing the necessary financing for construction of the project. |
| North
Main |
|
New
York,
USA |
|
7.2 |
|
December
2025 |
|
NTP |
|
1,250,000 |
|
- |
|
Equity
financing, working capital |
|
The
project is under interconnection study. |
During
the quarter certain projects that were previously disclosed were cancelled as follows:
| ● | The
closed landfill site in Lewiston, NY representing 4.8 MW DC that was announced on February
8, 2024. Development was discontinued due to high interconnection costs, which impacted the
project’s overall financial viability. |
| | | |
| ● | Two
projects representing 14.4 MW that were announced as part of the Orleans County projects
on April 22, 2024. These projects were cancelled due to the costs associated with the Coordinated
Electric System Interconnection Review (CESIR), which rendered this projects financially
unsustainable. |
Revenue
Revenue
for the three months ended September 30, 2024 was $16,005,321 compared to $7,681,261 in the comparative period.
The
EPC service revenue for the year ended September 30, 2024 was $11,954,389 compared to $5,613,015 in the comparative period, increasing
by $6,341,374, or 113%. The revenue for the period ended September 30, 2024 consists of progress in Settling Basins ($9.4M) and 261 Township
($1.7M). The Company reached significant progress in Manlius project ($5.3M) for the period ended September 30, 2023.
The
development fees revenue for the period ended September 30, 2024 was $nil compared to $2,011,750 in the comparative period. No development
revenue earned during the three months ended September 30, 2024. For comparative period ended September 30, 2023, development revenue
mainly from the sale of Settling Basins projects to Honeywell.
For
the period ended September 30, 2024, the Company generated IPP production revenue of $4,031,816 compared to $14,896 in the comparative
period. The revenue for the period ended September 30, 2024 consists of $3.7M earned from SFF facilities and $297k from OFIT GM &
OFIT RT. For comparative period ended September 30, 2023 the only IPP production revenue was from US1 and VC1. With the closing of the
SFF Transaction the Company’s recurring IPP production revenue has increased significantly.
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.
| | |
Three
months ended September 30, | | |
| |
| | |
2024 | | |
2023 | | |
Change | | |
Management
Commentary |
| Cost of goods
sold | |
| (11,453,956 | ) | |
| (5,334,566 | ) | |
| (6,119,390 | ) | |
Consistent
with the increase in revenue. |
| Operating expense: | |
| | | |
| | | |
| | | |
|
| Advertising and promotion | |
| (448,350 | ) | |
| (503,809 | ) | |
| 55,459 | | |
Additional spending in prior year to increase
visibility in the market for the Nasdaq listing. |
| Consulting fees | |
| (935,004 | ) | |
| (307,050 | ) | |
| (627,954 | ) | |
Increase due to 2024 rate increase catch-up
paid in Q1 FY25 of $157k and fees to Board Members starting July 2024 of $120k. $267k incurred in SFF which was acquired in FY25. |
| Depreciation | |
| (24,539 | ) | |
| (21,978 | ) | |
| (2,561 | ) | |
No significant changes. |
| Insurance | |
| (211,859 | ) | |
| (39,246 | ) | |
| (172,613 | ) | |
Insurance was higher due to increased activity
and higher director and officer insurance premiums. |
| Office, rent and utilities | |
| (293,786 | ) | |
| (79,193 | ) | |
| (214,593 | ) | |
In FY25, additional filing fees of $35k
and printing fees of $25k. $143k incurred in SFF which was acquired in FY25. |
| Professional fees | |
| (1,086,509 | ) | |
| (144,141 | ) | |
| (942,368 | ) | |
Increase due to Nasdaq related cost of $379k,
additional audit fees ($103k), tax fees ($72k), Investor relates ($45k) and valuation fees ($11k). $272k incurred in SFF which was
acquired in FY25. |
| Repairs and maintenances | |
| (40,440 | ) | |
| (5,051 | ) | |
| (35,389 | ) | |
Increase due to IPP facilities acquired
in Oct. 2023. |
| Salary and Wages | |
| (423,961 | ) | |
| (202,081 | ) | |
| (221,880 | ) | |
Increase due to 2024 rate increase catch-up
paid in Q1 FY25. $94k incurred in SFF which was acquired in FY25. |
| Stock based compensation | |
| (113,248 | ) | |
| (429,580 | ) | |
| 316,332 | | |
50% of employee stock options vested in
Nov. 2023 |
| Travel
and events | |
| (57,544 | ) | |
| (44,263 | ) | |
| (13,281 | ) | |
More travel and seminars
activities in FY2025 to increase visibility of the Company in the market and explore project opportunities. |
| Total operating expenses | |
| (3,635,240 | ) | |
| (1,776,392 | ) | |
| (1,858,848 | ) | |
|
| Total Expenses | |
| (15,089,196 | ) | |
| (7,110,958 | ) | |
| (7,978,238 | ) | |
|
Other
Income (Expense)
For
the three months ended September 30, 2024, the Company had other income of $94,690 compared to other income of $1,371,837 for the three
months ended September 30, 2023. Other income for the three months ended September 30, 2024 consists mainly of foreign exchange gain
of $35,564 and other income of $59,126. Other income for the three months ended September 30, 2023 consists mainly of bad
debt recovery of $1,195,012, foreign exchange gain of $148,969, and other income of $27,856.
Net
Income
The
net income for the three months ended September 30, 2024 was $241,092 for income per share of $0.01 based on 30,459,369 outstanding shares
versus income of $2,038,968 for an income per share of $0.08 based on 26,806,183 outstanding shares for the comparative period. While
the Company’s gross profit was higher in the current quarter, there was a decrease in net income as a result of increased
operating expenses, a significant reduction in other income and higher income tax expense.
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 town of Manlius, New
York, over solar panel project on town property. The lawsuit was filed challenging the approval
of the Manlius landfill. The Company, in cooperation with the town, is vigorously defending
this suit. Two proceedings were filed and both proceedings were dismissed, but the Petitioners
have appealed the first proceeding. Petitioner still has time to appeal the second dismissal,
but an injunction against the on-going construction of the solar project was denied in the
second proceeding. The cases do not represent a material threat to the Company. |
| | |
| (2) | On
December 2, 2020, a Statement of Claim was filed by the Company’s subsidiary, 2467264
Ontario Inc, and SFF (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 SFF (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
December 2, 2020, SFF. filed a legal claim to seek damages in the amount of $15 million for
breach of contract against the IESO. Discovery and examinations for the legal claim occurred
in November 2021. This matter has been settled for a payment of $1,000,000 paid from IESO
to SFF. |
| | |
| (5) | On
June 16, 2022, approximately 165 modules were damaged by windstorm and will be replaced by
new ones. 4 inverters were damaged and will be replaced by new ones. SFF received a letter
from the 328 Passmore landlord’s counsel in August 2023 that the rooftop is 95% repaired,
but that they still owe $400,000 to the roofers. SFF cannot install the system until it receives
confirmation that the structural integrity is sufficient for the system. SFF had been planning
to move forward with examinations for discovery this fall but have delayed this due to recent
health concerns and commitments of its team members who will attend the examinations. |
| (6) | The
Landlord of a SFF solar power project in Ontario refused to give SFF the access to the site
for regular maintenance. SFF and the landlord attended a court hearing on June 5, 2023. The
landlord requested that the hearing be adjourned so that he would have more time to retain
counsel, and the judge issued a court order so that SFF could access the property on June
9, 2023 for maintenance activities. Since then, respective counsel has been in correspondence
so that SFF could schedule semi-annual maintenance, the most recent of which occurred on
October 17, 2023. |
Summary
of Quarterly Results
| Description | |
Q1 September
30,
2024 ($) | | |
Q4 June
30,
2024 ($) | | |
Q3 March
31,
2024 ($) | | |
Q2 December
31,
2023 ($) | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
| 16,005,321 | | |
| 7,977,121 | | |
| 24,074,947 | | |
| 18,643,804 | |
| Income (Loss) for the period | |
| 241,092 | | |
| (9,099,845 | ) | |
| 3,499,241 | | |
| (15,508 | ) |
Earning (Loss) per
share
(basic and diluted) | |
| 0.01
(basic) 0.01
(diluted) | | |
| (0.34)
(basic) | | |
| 0.13
(basic) 0.09
(diluted) | | |
| (0.00)
(basic) | |
| Description | |
Q1 September
30,
2023 ($) | |
Q4 June
30,
2023 ($) | |
Q3 March
31,
2023 ($) | |
Q2 December
31,
2022 ($) |
| | |
| |
| |
| |
|
| Revenue | |
| 7,681,261 | | |
| 9,245,267 | | |
| 706,856 | | |
| 2,964,934 | |
| Income (Loss) for the period | |
| 2,038,968 | | |
| (1,076,836 | ) | |
| 3,064,872 | | |
| 89,468 | |
Income (Loss) per share
(basic and diluted) | |
| 0.08
(basic) 0.05
(diluted) | | |
| (0.06)
(basic) | | |
| 0.11
(basic) 0.09
(diluted) | | |
| 0.01 | |
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 but in general it has
been increasing on average over the last eight quarters. The net income for the quarter ended September 30, 2024 was low
as a result of high expenses from acquisition of SFF. Refer to “Results of Operations” for additional discussion.
Liquidity
and Capital Resources
The
following table summarizes the Company’s liquidity position:
| As at | |
September
30, 2024
$ | |
June
30, 2024
$ |
| Cash | |
| 14,250,082 | | |
| 5,270,405 | |
| Working capital(1) | |
| (3,339,133 | ) | |
| 4,240,999 | |
| Total assets | |
| 180,996,924 | | |
| 39,225,861 | |
| Total liabilities | |
| 117,595,448 | | |
| 20,501,560 | |
| Shareholders’
equity | |
| 63,401,476 | | |
| 18,724,301 | |
| (1) | Working
capital is a non-IFRS financial measure with no standardized meaning under IFRS, and therefore
it may not be comparable to similar measures presented by other issuers. For further information
and detailed reconciliations of non-IFRS financial measures to the most directly comparable
IFRS measures see “Non-IFRS Financial Measures”. |
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 three
months ended | |
September
30, 2024
$ | |
September
30, 2023
$ |
| Net cash provided by (used in) | |
| | | |
| | |
| Operating activities | |
| 8,115,251 | | |
| 676,858 | |
| Investing activities | |
| 3,199,165 | | |
| (710,008 | ) |
| Financing activities | |
| (2,284,270 | ) | |
| 11,967 | |
| Increase (decrease)
in cash, cash equivalents, and restricted cash | |
| 8,979,677 | | |
| (128,276 | ) |
Cash
flow from operating activities
The
Company has positive cash flow of $8,115,251 from operating activities during the three months ended September 30, 2024, while the Company
generated $676,858 cash during the same period ended September 30, 2023. The Company generated cash of $2,237,344 from the operational
activities and generated $5,877,907 for the change of working capital during the three months ended September 30, 2024, while the Company
generated cash of $2,470,491 from the operational activities and used $1,793,633 for the change of working capital during the three months
ended September 30, 2023.
Cash
flow from financing activities
The
Company used cash of $2,284,270 from financing activities during the three months ended September 30, 2024, while the Company generated
$11,967 cash during the same period ended September 30, 2023. The cash generated in financing activities for the three months ended September
30, 2024 was driven by proceeds from broker warrants exercised of $41,250, offset by repayment of lease obligation of $249,860, long-term loan principal payment of $1,382,272, and long-term loans interest payment of $693,388. The
cash generated in financing activities for the three months ended September 30, 2023 was driven by issuance of common shares of $21,659
and proceeds from broker warrants exercised of $41,250. Offset by repayment of lease obligation of $14,484, long-term loan principal
payment of $27,778, and long-term loans interest payment of $8,680.
Cash
flow from investing activities
The
Company generated cash of $3,199,165 in investing activities during the three months ended September 30, 2024, while the Company used
cash of $710,008 investing activities during the same period ended September 30, 2023. The cash generated for the three months ended
September 30, 2024 consists of cash from SFF of $9,886,679 and GIC redemption of 1,350,000. Offset by cash used in development asset
of $6,661,405 and GIC purchase of $1,376,109. The cash used for the three months ended September 30, 2023 includes acquisition of development
asset of $3,675,008 and purchase of partnership units of $2,465,000, offset by redemption of GIC of $5,430,000.
Capital
Transactions
During
the three-months ended September 30, 2024, the Company issued the following shares:
| i. | On
July 8, 2024, the Company closed the acquisition of SFF with payment of 3,575,632 SolarBank
common shares. |
| | | |
| ii. | On
September 24, 2024, 55,000 broker warrants were exercised to purchase common shares at $0.75
per share. |
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 September 30, 2024 and as of the date of this MD&A:
| Security Description | |
September
30, 2024 | |
Date
of report |
| | |
| |
|
| Common shares | |
| 30,821,707 | | |
| 31,001,593 | |
| Warrants | |
| 7,818,000 | | |
| 7,818,000 | |
| Stock options | |
| 2,759,000 | | |
| 2,639,000 | |
| Restricted share units | |
| 265,000 | | |
| 265,000 | |
| Contingent value rights(1) | |
| - | | |
| 2,283,929 | |
| (1) | See
description of the Contingent Value Rights under the heading “Overview – Development
of the Business – Acquisitions”. |
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 | | |
| 318,000 | |
| 01-Mar-2023 | |
01-Mar-2028 | |
$ | 0.50 | | |
| 5,000,000 | |
| | |
| |
| | | |
| 7,818,000 | |
| 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 |
| 04-Nov-2022 | |
04-Nov-2027 | |
$ | 0.75 | | |
| 2,639,000 | |
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:
| | |
September
30,
2024 | | |
June
30,
2024 | |
| Long-term debt -non-current portion | |
$ | 50,737,450 | | |
| 4,379,169 | |
| Shareholder Equity | |
$ | 63,401,476 | | |
| 18,724,301 | |
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 have occured 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 months ended September 30, 2024 and 2023 were
as follows:
| | |
Three
Month Ended
September
30, | |
| | |
2024 | | |
2023 | |
| Short-term employee benefits | |
$ | 703,227 | | |
$ | 299,599 | |
| Share-based compensation | |
| 72,160 | | |
| 180,546 | |
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.
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, 2024.
Changes
in Accounting Policies
The
Company has not adopted any new or revised accounting standards for the current fiscal year.
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. |
The Company has variable interest rate loans with
interest rate swap to effectively hedge the floating rate term loans into fixed rate arrangements by receiving floating rate and paying
fixed rate payments (Note 16(2)). The fair value of the interest rate swap is based on discounting estimate of future floating rate and
fixed rate cash flows for the remaining term of the interest rate swap. The fair value estimate is subject to a credit risk adjustment
that reflects the credit risk of the Company and of the counterparty. The fair value of the interest rate swap are determined using Level
2 inputs.
The
carrying amounts of cash, short-term investments, trade and other receivables, unbilled revenue, trade and other payables
and loan payable approximate their fair values due to the short-term maturities of these items. The carrying amounts of long
term debt, lease liabilities and other long-term liabilities 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.
Three
months ended September
30, 2024 | |
Revenue | | |
%
of Total Revenue | |
| Customer A | |
$ | 9,359,888 | | |
| 58 | % |
| Customer B | |
$ | 1,787,498 | | |
| 11 | % |
| September
30, 2023 | |
Revenue | | |
%
of Total Revenue | |
| Customer A | |
$ | 5,318,304 | | |
| 69 | % |
| Customer C | |
$ | 2,011,750 | | |
| 27 | % |
| September
30, 2024 | |
Account
Receivable | | |
%
of Account Receivable | |
| Customer A | |
$ | 915,063 | | |
| 24 | % |
| Customer E | |
$ | 498,388 | | |
| 13 | % |
| June
30, 2024 | |
Account
Receivable | | |
%
of Account Receivable | |
| Customer
F | |
$ | 531,456 | | |
| 48 | % |
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’s long-term loan, obtained from acquisition of OFIT GM, OFIT RT and SFF, have a fixed rate which is
achieved by entering into interest rate swap agreement.
The
Company held the Geddes loan which is subject to interest rate risk due to variable rate. A change of 100 basis points in interest rates
would have increased or decreased interest amount (added to the loan principal balance) of $12,806 (USD$9,391).
Non-IFRS
Financial Measures
The
Company has disclosed certain non-IFRS financial measures and ratios in this MD&A, as discussed below. These non-IFRS financial measures
and non-IFRS ratios are widely reported in the renewable energy industry as benchmarks for performance and are used by management to
monitor and evaluate the Company’s operating performance and ability to generate cash. The Company believes that, in addition to
financial measures and ratios prepared in accordance with IFRS, certain investors use these non-IFRS financial measures and ratios to
evaluate the Company’s performance. However, the measures do not have a standardized meaning under IFRS and may not be comparable
to similar financial measures disclosed by other companies. Accordingly, non-IFRS financial measures and non-IFRS ratios should not be
considered in isolation or as a substitute for measures and ratios of the Company’s performance prepared in accordance with IFRS.
Non-IFRS
financial measures are defined in National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure (“NI
52-122”) as a financial measure disclosed that (a) depicts the historical or expected future financial performance, financial position
or cash flow of an entity, (b) with respect to its composition, excludes an amount that is included in, or includes an amount that is
excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the
entity, (c) is not disclosed in the financial statements of the entity, and (d) is not a ration, fraction, percentage or similar representation.
A
non-IFRS ratio is defined by NI 52-112 as a financial measure disclosed that (a) is in the form of a ratio, fraction, percentage, or
similar representation, (b) has a non-IFRS financial measure as one or more of its components, and (c) is not disclosed in the financial
statements.
Working
Capital
Working
capital is a non-IFRS measure that is a common measure of liquidity but does not have any standardized meaning. The most directly comparable
measure prepared in accordance with IFRS is current assets net of current liabilities. Working capital is calculated by deducting current
liabilities from current assets. Working capital should not be considered in isolation or as a substitute from measures prepared in accordance
with IFRS. The measure is intended to assist readers in evaluating the Company’s liquidity.
| As at | |
September
30, 2024 | | |
June
30, 2024 | |
| | |
$ | | |
$ | |
| Current assets | |
| 32,793,595 | | |
| 17,629,849 | |
| Current liabilities | |
| 36,132,728 | | |
| 13,388,850 | |
| Working capital | |
| (3,339,133 | ) | |
| 4,240,999 | |
Adjusted
EBITDA
Adjusted
EBITDA is a non-IFRS financial measure, which excludes the following from net earnings:
| ● | Income
tax expense; |
| | | |
| ● | Finance
costs; |
| | | |
| ● | Amortization
and depletion; |
| | | |
| ● | Fair
value gain/loss; |
| | | |
| ● | Unrealized
foreign exchange gain/loss; |
| | | |
| ● | Non-recurrent
gain/loss |
Adjusted
EBITDA is intended to provide additional information to investors and analysts. It does not have any standardized definition under IFRS
and should not be considered in isolation or as a substitute for measures of operating performance prepared in accordance with IFRS.
Adjusted EBITDA excludes the impact of cash costs of financing activities, income taxes, depreciation of property, plant and equipment,
amortization of intangible asset, fair value gain on derivative contracts, unrealized foreign exchange, and other non-recurrent activities.
Other companies may calculate Adjusted EBITDA differently.
| Three
months ended | |
September
30, 2024 | | |
September
30, 2023 | |
| | |
$ | | |
$ | |
| Net income (loss) per financial
statements | |
| 241,092 | | |
| 2,038,968 | |
| Add: | |
| | | |
| | |
| Depreciation expense | |
| 1,507,854 | | |
| 21,978 | |
| Interest (income)/expense,
net | |
| 582,881 | | |
| (59,088 | ) |
| Income tax and Deferred
income tax expense | |
| 805,478 | | |
| (37,740 | ) |
| Fair value change (gain)/loss | |
| (618,636 | ) | |
| - | |
| Other
(income)/expense | |
| (94,690 | ) | |
| (1,371,837 | ) |
| | |
| | | |
| | |
| Adjusted EBITDA | |
| 2,423,979 | | |
| 592,281 | |
Disclosure
Controls and Internal Controls Over Financial Reporting
Disclosure
Controls and Procedures
Management,
including the Chief Executive Officer and the Chief Financial Officer, are responsible for the design of the Company’s disclosure
controls and procedures in order to provide reasonable assurance that information required to be disclosed by the Company in its annual
filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and
reported within the time periods specified in the securities legislation.
The
Chief Executive Officer and Chief Financial Officer have certified that they have designed disclosure controls and procedures (or caused
them to be designed under their supervision) and they are operating effectively to provide reasonable assurance that material information
relating to the Company and its consolidated subsidiaries is made known to them by others within those entities as of September 30, 2024.
Internal
Control Over Financial Reporting
The
Company maintains a system of internal controls over financial reporting, as defined by National Instrument 52- 109 - Certification of
Disclosure in Issuers’ Annual and Interim Filings in order to provide reasonable assurance that assets are safe-guarded and financial
information is accurate and reliable and in accordance with IFRS. During the period ended September 30, 2024, there were no changes in
the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting.
Limitation
of Controls and Procedures
Our
management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial
reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only
reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to
error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system
of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness
of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with policies or procedures.
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, 2024 and filed on SEDAR+ at www.sedarplus.ca.
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
Condensed
Consolidated Interim Financial Statements
(Expressed
in Canadian Dollars)
(Unaudited)
For
the three months ended September 30, 2024 and 2023
SOLARBANK
CORPORATION
Condensed
Consolidated Interim Statements of Financial Position
(Expressed
in Canadian dollars)
| | |
Notes | |
(Unaudited)
September 30, 2024 | | |
(Audited)
June 30, 2024 | |
| Assets | |
| |
| | | |
| | |
| Current
assets: | |
| |
| | | |
| | |
| Cash | |
| |
$ | 14,250,082 | | |
$ | 5,270,405 | |
| Short-term
investment | |
4 | |
| 1,586,097 | | |
| 920,000 | |
| Trade
and other receivables | |
5 | |
| 3,800,064 | | |
| 1,115,217 | |
| Unbilled
revenue | |
8 | |
| 3,358,129 | | |
| 666,748 | |
| Prepaid
expenses and deposits | |
6 | |
| 1,402,168 | | |
| 3,126,829 | |
| Inventory | |
9 | |
| 8,397,055 | | |
| 6,530,650 | |
| | |
| |
| 32,793,595 | | |
| 17,629,849 | |
| Non-current
assets: | |
| |
| | | |
| | |
| Property,
plant and equipment | |
7 | |
| 39,177,567 | | |
| 3,454,923 | |
| Right-of-use
assets | |
13 | |
| 7,947,990 | | |
| 1,085,128 | |
| Development
assets | |
10 | |
| 25,987,448 | | |
| 8,909,371 | |
| Derivative
assets | |
19(a) | |
| 667,374 | | |
| 152,990 | |
| Tax
equity assets | |
17 | |
| 373,868 | | |
| 401,373 | |
| Goodwill | |
18 | |
| 37,586,213 | | |
| 438,757 | |
| Intangible
assets | |
15 | |
| 35,652,371 | | |
| 2,001,447 | |
| Investment | |
| |
| - | | |
| 5,152,023 | |
| Other
assets | |
6 | |
| 810,498 | | |
| - | |
| | |
| |
| 148,203,329 | | |
| 21,596,012 | |
| Total
assets | |
| |
$ | 180,996,924 | | |
$ | 39,225,861 | |
| | |
| |
| | | |
| | |
| Liabilities
and Shareholders’ equity | |
| |
| | | |
| | |
| Current
liabilities: | |
| |
| | | |
| | |
| Trade
and other payables | |
11 | |
$ | 27,038,344 | | |
$ | 4,690,261 | |
| Unearned
revenue | |
12 | |
| 1,106,915 | | |
| 4,600,491 | |
| Current
portion of long-term debt | |
16 | |
| 5,525,871 | | |
| 448,229 | |
| Loan
payables | |
14 | |
| 1,321,648 | | |
| 1,309,884 | |
| Tax
payable | |
| |
| 442,947 | | |
| 2,112,606 | |
| Current
portion of lease liability | |
13 | |
| 621,597 | | |
| 148,787 | |
| Current
portion of tax equity | |
17 | |
| 75,406 | | |
| 78,592 | |
| Non-current
liabilities: | |
| |
| 36,132,728 | | |
| 13,388,850 | |
| Long-term
debt | |
16 | |
| 50,737,450 | | |
| 4,379,169 | |
| Other
long-term liabilities | |
| |
| 361,336 | | |
| 366,369 | |
| Due
to related parties | |
18,
22 | |
| 7,357,228 | | |
| - | |
| Deferred
tax liabilities | |
25 | |
| 15,300,694 | | |
| 1,073,835 | |
| Lease
liabilities | |
13 | |
| 7,428,212 | | |
| 992,687 | |
| Tax
equities | |
17 | |
| 277,800 | | |
| 300,650 | |
| | |
| |
| 81,462,720 | | |
| 7,112,710 | |
| Total
liabilities | |
| |
$ | 117,595,448 | | |
$ | 20,501,560 | |
| | |
| |
| | | |
| | |
| Shareholders’
equity: | |
| |
| | | |
| | |
| Share
capital | |
20 | |
| 37,707,760 | | |
| 9,025,698 | |
| Contributed
surplus | |
| |
| 4,172,422 | | |
| 4,059,175 | |
| Accumulated
other comprehensive income | |
| |
| (74,000 | ) | |
| 99,681 | |
| Retained
earnings | |
| |
| 4,020,706 | | |
| 3,178,814 | |
| Equity
attributable to shareholders of the company | |
| |
| 45,826,888 | | |
| 16,363,368 | |
| Non-controlling
interest | |
21 | |
| 17,574,588 | | |
| 2,360,933 | |
| Total
equity | |
| |
| 63,401,476 | | |
| 18,724,301 | |
| Total
liabilities and shareholders’ equity | |
| |
$ | 180,996,924 | | |
$ | 39,225,861 | |
Approved
and authorized for issuance on behalf of the Board of Directors on November 13, 2024 by:
“Richard Lu” |
|
“Sam Sun” |
| Richard
Lu, CEO, and Director |
|
Sam
Sun, CFO |
See
accompanying notes to these condensed consolidated interim financial statements.
SOLARBANK
CORPORATION
Condensed
Consolidated Interim Statements of Income (loss) and Comprehensive Income (loss)
(Expressed
in Canadian dollars)
(Unaudited)
| | |
Notes | |
Three
months ended September 30 | |
| | |
| |
2024 | | |
2023 | |
| Revenue
from development fees | |
| |
$ | - | | |
$ | 2,011,750 | |
| Revenue
from EPC services | |
| |
| 11,954,389 | | |
| 5,613,015 | |
| Revenue
from IPP production | |
| |
| 4,031,816 | | |
| 14,896 | |
| Revenue
from O&M and other services | |
| |
| 19,116 | | |
| 41,600 | |
| | |
| |
| 16,005,321 | | |
| 7,681,261 | |
| Cost
of goods sold | |
| |
| (11,453,956 | ) | |
| (5,334,566 | ) |
| Gross
profit | |
| |
| 4,551,365 | | |
| 2,346,695 | |
| Operating
expense: | |
| |
| | | |
| | |
| Advertising
and promotion | |
| |
| (448,350 | ) | |
| (503,809 | ) |
| Consulting
fees | |
| |
| (935,004 | ) | |
| (307,050 | ) |
| Depreciation | |
7,13 | |
| (24,539 | ) | |
| (21,978 | ) |
| Insurance | |
| |
| (211,859 | ) | |
| (39,246 | ) |
| Office,
rent and utilities | |
| |
| (293,786 | ) | |
| (79,193 | ) |
| Professional
fees | |
| |
| (1,086,509 | ) | |
| (144,141 | ) |
| Repairs
and maintenance | |
| |
| (40,440 | ) | |
| (5,051 | ) |
| Salary
and wages | |
| |
| (423,961 | ) | |
| (202,081 | ) |
| Stock
based compensation | |
20 | |
| (113,248 | ) | |
| (429,580 | ) |
| Travel
and events | |
| |
| (57,544 | ) | |
| (44,263 | ) |
| Total
operating expenses | |
| |
| (3,635,240 | ) | |
| (1,776,392 | ) |
| Other
income | |
| |
| | | |
| | |
| Interest
income | |
| |
| 219,450 | | |
| 83,169 | |
| Interest
expenses | |
| |
| (802,331 | ) | |
| (24,081 | ) |
| Fair
value change gain | |
16(2),
18(4) | |
| 618,636 | | |
| - | |
| Other
income | |
| |
| 94,690 | | |
| 1,371,837 | |
| Net
income before taxes | |
| |
$ | 1,046,570 | | |
$ | 2,001,228 | |
| Current
tax (expense) recovery | |
25 | |
| (697,540 | ) | |
| 37,740 | |
| Deferred
tax expenses | |
25 | |
| (107,938 | ) | |
| - | |
| Net
income | |
| |
$ | 241,092 | | |
$ | 2,038,968 | |
| Items
that are or may be reclassified subsequently to profit or loss Current translation adjustments | |
| |
| (173,681 | ) | |
| 86,766 | |
| Other
comprehensive income | |
| |
| (173,681 | ) | |
| 86,766 | |
| Net
income (loss) and comprehensive income (loss) | |
| |
$ | 67,411 | | |
$ | 2,125,734 | |
| | |
| |
| | | |
| | |
| Net
income (loss) attributable to: | |
| |
| | | |
| | |
| Shareholders
of the company | |
| |
| 841,892 | | |
| 2,034,619 | |
| Non-controlling
interest | |
21 | |
| (600,800 | ) | |
| 4,349 | |
| Net
income (loss) | |
| |
$ | 241,092 | | |
$ | 2,038,968 | |
| Total
income (loss) and comprehensive income (loss) attributable to: | |
| |
| | | |
| | |
| Shareholders
of the company | |
| |
| 668,211 | | |
| 2,125,734 | |
| Non-controlling
interest | |
21 | |
| (600,800 | ) | |
| - | |
| Total
income (loss) and comprehensive income (loss) | |
| |
$ | 67,411 | | |
$ | 2,125,734 | |
| Net
income (loss) per share | |
| |
| | | |
| | |
| Basic | |
26 | |
| 0.01 | | |
| 0.08 | |
| Diluted | |
26 | |
| 0.01 | | |
| 0.05 | |
| Weighted
average number of common shares outstanding | |
| |
| | | |
| | |
| Basic | |
26 | |
| 30,459,369 | | |
| 26,806,183 | |
| Diluted | |
26 | |
| 40,527,524 | | |
| 37,122,800 | |
The
accompanying notes are an integral part of these condensed consolidated interim financial statements.
SOLARBANK
CORPORATION
Condensed
Consolidated Interim Statements of Changes in Shareholders’ Equity
(Expressed
in Canadian Dollars)
(Unaudited)
| | |
Note | |
Number
of shares | | |
Share
Capital | | |
Contributed
Surplus | | |
Retained
Earnings | | |
Accumulated
OCI | | |
Total
Shareholders’ Equity | | |
Non-Controlling
Interest | | |
Total
Equity | |
| Balance
at June 30, 2024 | |
| |
| 27,191,075 | | |
$ | 9,025,698 | | |
$ | 4,059,175 | | |
$ | 3,178,814 | | |
$ | 99,681 | | |
$ | 16,363,368 | | |
$ | 2,360,933 | | |
$ | 18,724,301 | |
| Net
loss | |
| |
| - | | |
| - | | |
| - | | |
| 841,892 | | |
| - | | |
| 841,892 | | |
| (600,800 | ) | |
| 241,092 | |
| Warrant
exercised | |
| |
| 55,000 | | |
| 41,250 | | |
| - | | |
| - | | |
| - | | |
| 41,250 | | |
| - | | |
| 41,250 | |
| RSU
granted | |
20(e) | |
| - | | |
| - | | |
| 2,580 | | |
| - | | |
| - | | |
| 2,580 | | |
| - | | |
| 2,580 | |
| Share-based
compensation | |
20(d) | |
| - | | |
| - | | |
| 110,667 | | |
| - | | |
| - | | |
| 110,667 | | |
| - | | |
| 110,667 | |
| Other
comprehensive loss | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| (173,681 | ) | |
| (173,681 | ) | |
| - | | |
| (173,681 | ) |
| Acquisition
of Solar Flow-Through Funds | |
18 | |
| 3,575,632 | | |
| 28,640,812 | | |
| - | | |
| - | | |
| - | | |
| 28,640,812 | | |
| 15,814,455 | | |
| 44,455,267 | |
| Balance
at September 30, 2024 | |
| |
| 30,821,707 | | |
$ | 37,707,760 | | |
$ | 4,172,422 | | |
$ | 4,020,706 | | |
$ | (74,000 | ) | |
$ | 45,826,888 | | |
$ | 17,574,588 | | |
$ | 63,401,476 | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 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 | |
| |
| - | | |
| - | | |
| - | | |
| 2,034,619 | | |
| - | | |
| 2,034,619 | | |
| 4,349 | | |
| 2,038,968 | |
| Common
shares issued, net of costs | |
| |
| 2,200 | | |
| 21,659 | | |
| - | | |
| - | | |
| - | | |
| 21,659 | | |
| - | | |
| 21,659 | |
| Warrant
exercised | |
| |
| 55,000 | | |
| 41,250 | | |
| - | | |
| - | | |
| - | | |
| 41,250 | | |
| - | | |
| 41,250 | |
| RSU
granted | |
| |
| - | | |
| - | | |
| 48,181 | | |
| - | | |
| - | | |
| 48,181 | | |
| - | | |
| 48,181 | |
| Share-based
compensation | |
| |
| - | | |
| - | | |
| 381,398 | | |
| - | | |
| - | | |
| 381,398 | | |
| - | | |
| 381,398 | |
| Other
comprehensive loss | |
| |
| - | | |
| - | | |
| - | | |
| - | | |
| 86,766 | | |
| 86,766 | | |
| - | | |
| 86,766 | |
| Balance
at September 30, 2023 | |
| |
| 26,857,200 | | |
$ | 6,917,984 | | |
$ | 3,431,503 | | |
$ | 8,687,170 | | |
$ | (29,993 | ) | |
$ | 19,006,664 | | |
$ | 242,754 | | |
$ | 19,249,418 | |
The
accompanying notes are an integral part of these condensed consolidated interim financial statements.
SOLARBANK
CORPORATION
Condensed
Consolidated Interim Statements of Cash Flows
(Expressed
in Canadian Dollars)
(Unaudited)
| | |
Note | |
Three
months ended September 30 | |
| | |
| |
2024 | | |
2023 | |
| | |
| |
| | |
| |
| Operating
activities: | |
| |
| | | |
| | |
| Net
Income (loss) | |
| |
$ | 241,092 | | |
$ | 2,038,968 | |
| | |
| |
| | | |
| | |
| Adjustments
for: | |
| |
| | | |
| | |
| Depreciation
and amortization | |
| |
| 1,507,854 | | |
| 21,978 | |
| Fair
value change loss | |
16(2) | |
| (618,636 | ) | |
| - | |
| Other
income related to tax equity | |
17 | |
| (3,863 | ) | |
| (34,643 | ) |
| Interest
accretion | |
13,
17 | |
| 192,172 | | |
| 14,608 | |
| Income
tax expense | |
| |
| 697,540 | | |
| - | |
| Deferred
income tax expenses | |
| |
| 107,938 | | |
| - | |
| Share-based
compensation | |
20 | |
| 113,247 | | |
| 429,580 | |
| | |
| |
| 2,237,344 | | |
| 2,470,491 | |
| Changes
in: | |
| |
| | | |
| | |
| Trade
and other receivables | |
| |
| 1,211,918 | | |
| (1,266,621 | ) |
| Unbilled
revenue | |
| |
| (2,707,396 | ) | |
| (448,756 | ) |
| Contract
fulfilment costs | |
| |
| - | | |
| (194,781 | ) |
| Inventories | |
| |
| (1,974,730 | ) | |
| (349,550 | ) |
| Prepaid
expenses and deposits | |
| |
| 2,404,401 | | |
| (2,045,404 | ) |
| Trade
and other payables | |
| |
| 12,765,795 | | |
| 1,576,693 | |
| Income
taxes payable | |
| |
| 220,103 | | |
| (84,608 | ) |
| Unearned
revenue | |
| |
| (3,486,043 | ) | |
| 1,593,413 | |
| Cash
generated from operating activities | |
| |
| 10,671,392 | | |
| 1,250,877 | |
| Income
tax paid | |
| |
| (2,556,141 | ) | |
| (574,019 | ) |
| Net
cash generated from operating activities | |
| |
| 8,115,251 | | |
| 676,858 | |
| | |
| |
| | | |
| | |
| Investing
activities: | |
| |
| | | |
| | |
| Purchase
of GIC | |
| |
| (1,376,109 | ) | |
| - | |
| Redemption
of GIC | |
| |
| 1,350,000 | | |
| 5,430,000 | |
| Investment
in SFF Shares | |
| |
| - | | |
| (2,465,000 | ) |
| Cash
from SFF acquisition | |
18 | |
| 9,886,679 | | |
| - | |
| Acquisition
of development asset | |
| |
| (6,661,405 | ) | |
| (3,675,008 | ) |
| Cash
generated from (used in) investing activities | |
| |
$ | 3,199,165 | | |
$ | (710,008 | ) |
| | |
| |
| | | |
| | |
| Financing
activities: | |
| |
| | | |
| | |
| Proceeds
from issuance of common shares, net transaction costs | |
| |
| - | | |
| 21,659 | |
| Proceeds
from broker warrants exercised | |
| |
| 41,250 | | |
| 41,250 | |
| Repayment
of lease obligation | |
| |
| (249,860 | ) | |
| (14,484 | ) |
| Repayment
from long-term debts – principal | |
| |
| (1,382,272 | ) | |
| (27,778 | ) |
| Repayment
from long-term debts – interest | |
| |
| (693,388 | ) | |
| (8,680 | ) |
| Cash
generated from (used in) financing activities | |
| |
| (2,284,270 | ) | |
| 11,967 | |
| | |
| |
| | | |
| | |
| Increase
(decrease) in cash | |
| |
| 9,030,146 | | |
| (21,183 | ) |
| Effect
of changes in exchange rates on cash | |
| |
| (50,469 | ) | |
| (107,093 | ) |
| Cash,
beginning | |
| |
| 5,270,405 | | |
| 749,427 | |
| Cash,
ending | |
| |
$ | 14,250,082 | | |
$ | 621,151 | |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
SolarBank
Corporation (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 Canada and the United States with a geographic focus
in the province of Ontario, Canada and New York state, USA. 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”.
| (a) | Statement
of compliance: |
These
accompanying unaudited 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”) and have been
prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. They are condensed as they do not include
all of the information required for full annual financial statements, and they should be read in conjunction with the audited consolidated
financial statements of the company for the year ended June 30, 2024.
The
board of directors approved these unaudited condensed interim consolidated financial statements for issue on November 13, 2024.
These
unaudited condensed interim consolidated financial statements were prepared on a going concern basis and historical cost basis with the
exception of certain financial instruments as disclosed in Note 19.
| (c) | Basis
of consolidation: |
These
unaudited 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.
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 2. | Basis
of presentation (continued) |
Details
of the Company’s significant subsidiaries are as follows:
| |
Country
of | |
Ownership
interest | |
| Name | |
Incorporation | |
30-Sep-24 | | |
30-Jun-24 | |
| Abundant
Solar Power Inc. | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Construction Inc. | |
Canada | |
| 100 | % | |
| 100 | % |
| Abundant
Energy Solutions Ltd. | |
Canada | |
| 100 | % | |
| 100 | % |
| 2467264
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| 49.90 | % |
| OFIT
GM Inc. | |
Canada | |
| 49.90 | % | |
| 49.90 | % |
| OFIT
RT Inc. | |
Canada | |
| 49.90 | % | |
| 49.90 | % |
| Solar
Alliance Energy DevCo LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Solar
Alliance TE HoldCo 1, LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Solar
Alliance VC1 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (US1) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (New York) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (Maryland) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (RP) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1011 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1012 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (CNY) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1016 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (TZ1) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (M1) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (J1) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (Steuben) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| ABUNDANT
SOLAR POWER (USNY- MARKHAM HOLLOW RD-001) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1015 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1002 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1003 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| ABUNDANT
SOLAR POWER (USNY-Richmond-002) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| ABUNDANT
SOLAR POWER (USNY-Richmond-003) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1006 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1007 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1008 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1009 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1010 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
(203 Fuller Rd) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1001 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (USNY-6882 Rice Road-001) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (LCP) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (R1) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1005 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1013 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1014 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| ABUNDANT
SOLAR POWER (USNY-327 Hardie Rd-001) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (Dutch Hill) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (Dutch Hill 2) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Abundant
Solar Power (Dutch Hill 3) LLC | |
USA | |
| 100 | % | |
| 100 | % |
| SUNN
1004 LLC | |
USA | |
| 100 | % | |
| 100 | % |
| Solar
Flow-Through Funds Ltd. | |
Canada | |
| 100 | % | |
| - | |
| Solar
High Yield Projects #1 Ltd. | |
Canada | |
| 100 | % | |
| - | |
| 2344215
Ontario Inc. | |
Canada | |
| 100 | % | |
| - | |
| SHY1
2012 FIT2 Ltd. | |
Canada | |
| 100 | % | |
| - | |
| 2343461
Ontario Inc. | |
Canada | |
| 100 | % | |
| - | |
| Icarus
Whitesand Solar Limited Partnership | |
Canada | |
| 85.00 | % | |
| - | |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 2. | Basis
of presentation (continued) |
| |
Country
of | |
Ownership
interest | |
| Name | |
Incorporation | |
30-Sep-24 | | |
30-Jun-24 | |
| 2387276
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| 2387280
Ontario Inc. | |
Canada | |
| 24.95 | % | |
| - | |
| 2387281
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| 2387282
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| 2391395
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| SPN
LP 7 | |
Canada | |
| 49.90 | % | |
| - | |
| 1000234763
Ontario Inc. | |
Canada | |
| 50.00 | % | |
| - | |
| 1000234813
Ontario Inc. | |
Canada | |
| 50.00 | % | |
| - | |
| Solar
Flow-Through Project #1 (2013) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| 2405402
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| 2405514
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| 2467260
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| Solar
Flow-Through (2014) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| Solar
Flow-Through Projects (2014 Subco F2) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| Solar
Flow-Through (2015) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| 2405372
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| 2469780
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| 2405799
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| SFF
Solar (2015) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| Solar
Flow-Through (2016) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| 2503072
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| 2503225
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| 2503903
Ontario Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| Northern
Development Solar 2016 Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| Sunshine
Solar Ontario 2016 Inc. | |
Canada | |
| 49.90 | % | |
| - | |
| Solar
Flow-Through (2017-I) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| Solar
Flow-Through (2017-A) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| Solar
Flow-Through (2018-I) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| Solar
Flow-Through (2018-A) Ltd. | |
Canada | |
| 100 | % | |
| - | |
| 15155355
Canada Inc. | |
Canada | |
| 100 | % | |
| - | |
| Sustainable
Energies Corporation | |
Canada | |
| 100 | % | |
| - | |
| Sustainable
Energies OR LLC | |
Canada | |
| 100 | % | |
| - | |
| Sustainable
Energies CA LLC | |
Canada | |
| 100 | % | |
| - | |
| Sustainable
Energies VA LLC | |
Canada | |
| 100 | % | |
| - | |
| (ii) | Functional
and presentation currency: |
The
Company’s unaudited condensed interim consolidated financial statements are presented in Canadian dollars. The functional currency
of Canadian parent company and its Canadian subsidiaries is the Canadian dollar. The functional currency of its subsidiaries in the United
States is the US dollar.
| 3. | Significant
accounting policies and use of judgements and estimates |
These
unaudited condensed interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated
financial statements for the year ended June 30, 2024 which includes information necessary or useful to understand the Company’s
business and financial statement presentation. In particular, the Company’s significant accounting policies are presented as Note
3 in the audited consolidated financial statements for the year ended June 30, 2024 and have been consistently applied to all periods
presented in the preparation of these unaudited condensed interim consolidated financial statements.
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 3. | Significant
accounting policies and use of judgements and estimates (continued) |
In
preparing these unaudited condensed interim consolidated financial statements, management has made judgements and estimates
about the future that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
The
significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty
were the same as those described in the last annual financial statements.
As
at September 30, 2024, the Company has three GICs in short-term investment totalling $870,000. The GICs have one year term with interest
rate of 4.7%-5.2% (June 30, 2024 - $920,000 with one year term and interest rate of 4.25%-4.95%).
The
Company obtained another five GICs, through acquisition of Solar Flow-Through Funds Ltd. (“SFF”), totalling $716,097. The
GICs have one year term with interest rate of 3.85% - 4.65%.
| 5. | Trade
and other receivables |
| | |
September
30, 2024 | | |
June
30, 2024 | |
| | |
| | |
| |
| Accounts
receivable | |
$ | 1,101,743 | | |
$ | 966,150 | |
| Other
receivables | |
| 122,594 | | |
| 323,293 | |
| GST/HST
receivable | |
| 2,749,952 | | |
| - | |
| Credit
loss allowance (1) | |
| (174,226 | ) | |
| (174,226 | ) |
| | |
$ | 3,800,064 | | |
$ | 1,115,217 | |
| (1) | The
Company’s changes in credit loss allowance for the three months ended September 30,
2024 and 2023 are as follows: |
| | |
Three
months ended September 30 | |
| | |
2024 | | |
2023 | |
| | |
| | |
| |
| Credit
loss allowance, beginning of the period | |
$ | (174,226 | ) | |
$ | (6,486,838 | ) |
| Recovery
(recognition) of credit loss | |
| - | | |
| 1,195,012 | |
| Credit
loss allowance, end of the period | |
$ | (174,226 | ) | |
$ | (5,291,826 | ) |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 6. | Prepaid
expenses and deposits |
| | |
September
30, 2024 | | |
June
30, 2024 | |
| | |
| | |
| |
| Interconnection
deposits | |
$ | 4,232 | | |
$ | 4,291 | |
| Construction
in progress deposits (1) | |
| 608,677 | | |
| 2,543,120 | |
| Security
deposits | |
| 27,035 | | |
| 12,352 | |
| Prepaid
rent (2) | |
| 69,656 | | |
| - | |
| Prepaid
insurance | |
| 479,169 | | |
| 128,285 | |
| Prepaid
marketing expenses (3) | |
| - | | |
| 341,825 | |
| Other
prepaids and deposits | |
| 213,399 | | |
| 96,956 | |
| | |
$ | 1,402,168 | | |
$ | 3,126,829 | |
| (1) | Deposits
related to prepayments made on the purchase of raw materials required for construction of
EPC projects located in New York, USA. |
| (2) | As
at September 30, 2024, the non-current portion of prepaid rent of $810,498 (2023 - $nil)
is presented as other assets. |
| (3) | The
Company hired investor relations and marketing consultant companies to increase the Company’s
visibility in the market and to explore international markets. The balance is related to
the payment made to these marketing consultant companies. |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 7. | Property,
Plant and Equipment |
| | |
Computer
equipment | | |
Furniture
and equipment | | |
Vehicle | | |
IPP
facilities (1) | | |
Royalty
contract assets (2) | | |
Total | |
Cost: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance,
June 30, 2024 | |
$ | 19,256 | | |
| 57,553 | | |
| 35,608 | | |
| 3,578,267 | | |
| - | | |
$ | 3,690,684 | |
| Additions
(dispositions) | |
| - | | |
| - | | |
| - | | |
| 36,405,337 | | |
| 79,244 | | |
| 36,484,581 | |
| Foreign
currency impact | |
| - | | |
| - | | |
| - | | |
| (6,570 | ) | |
| - | | |
| (6,570 | ) |
| Balance,
September 30, 2024 | |
$ | 19,256 | | |
| 57,553 | | |
| 35,608 | | |
| 39,977,034 | | |
| 79,244 | | |
$ | 40,168,695 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accumulated
amortization: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance,
June 30, 2024 | |
$ | 16,192 | | |
| 44,830 | | |
| 4,216 | | |
| 170,523 | | |
| - | | |
$ | 235,761 | |
| Depreciation(3) | |
| 402 | | |
| 626 | | |
| 1,544 | | |
| 751,611 | | |
| 1,522 | | |
| 755,705 | |
| Foreign
currency impact | |
| - | | |
| - | | |
| - | | |
| (338 | ) | |
| - | | |
| (338 | ) |
| Balance,
September 30, 2024 | |
$ | 16,594 | | |
| 45,456 | | |
| 5,760 | | |
| 921,796 | | |
| 1,522 | | |
$ | 991,128 | |
| Net
Book Value, September 30, 2024 | |
$ | 2,662 | | |
| 12,097 | | |
| 29,848 | | |
| 39,055,238 | | |
| 77,722 | | |
$ | 39,177,567 | |
| | |
Computer
equipment | | |
Furniture
and equipment | | |
Vehicle | | |
IPP
facilities | | |
Royalty
contract assets (2) | | |
Total | |
Cost: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance,
June 30, 2023 | |
$ | 19,256 | | |
| 50,253 | | |
| - | | |
| 937,194 | | |
| - | | |
$ | 1,006,703 | |
| Additions
(dispositions) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Balance,
September 30, 2023 | |
$ | 19,256 | | |
| 50,253 | | |
| - | | |
| 937,194 | | |
| - | | |
$ | 1,006,703 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accumulated
amortization: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance,
June 30, 2023 | |
$ | 13,876 | | |
| 42,694 | | |
| - | | |
| - | | |
| - | | |
$ | 56,570 | |
| Depreciation | |
| 706 | | |
| 372 | | |
| - | | |
| 9,493 | | |
| - | | |
| 10,571 | |
| Foreign
currency impact | |
| - | | |
| - | | |
| - | | |
| 78 | | |
| - | | |
| 78 | |
| Balance,
September 30, 2023 | |
$ | 14,582 | | |
| 43,066 | | |
| - | | |
| 9,571 | | |
| - | | |
| 67,219 | |
| Net
Book Value, September 30, 2023 | |
$ | 4,674 | | |
| 7,187 | | |
| - | | |
| 927,623 | | |
| | | |
$ | 939,484 | |
| (1) | Addition
of IPP facilities for the three months ended September 30, 2024 relate to business acquisitions
of Solar Flow-Through Funds Ltd. (Note 18). The IPP facilities held by OFIT GM and OFIT RT
totaling $3,100,000 are part collateral for long-term loan guarantee (Note 16 (2)). |
| (2) | Addition
of royalty contract asset for the three months ended September 30, 2024 relate to business
acquisitions of Solar Flow-Through Funds Ltd. |
| (3) | Total
depreciation expense of $753,133 for IPP facilities and royalty contract assets are recorded
in cost of goods sold for the three months ended September 30, 2024 (2023- $9,493). The remaining
$2,572 depreciation expense is recorded under operating expenses (2023- $1,078). |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
As
of September 30, 2024 and 2023, the Company’s unbilled revenue mostly consists of invoices not yet issued for EPC projects where
revenue recognized through percentage of completion.
| | |
Three
months ended September | |
| | |
2024 | | |
2023 | |
| Beginning
of the period | |
$ | 666,748 | | |
$ | 7,405,866 | |
| Amounts
invoices included in the beginning balance | |
| (666,738 | ) | |
| (4,881,346 | ) |
| Net
increase in unbilled revenue recognized during the year | |
| 3,374,135 | | |
| 6,512,725 | |
| Foreign
currency impact | |
| (16,016 | ) | |
| 169,797 | |
| End
of the period | |
$ | 3,358,129 | | |
$ | 9,207,041 | |
As
of September 30, 2024 and 2023, the Company’s inventory is comprised of development costs for the solar projects.
| | |
2024 | | |
2023 | |
| Balance,
June 30 | |
| 6,530,650 | | |
| 448,721 | |
| Additions:
development costs | |
| 2,173,040 | | |
| 484,496 | |
| Minus:
recognized as cost of goods sold upon revenue recognition | |
| (195,241 | ) | |
| (109,040 | ) |
| Minus:
costs expensed due to project cancellation (1) | |
| (3,068 | ) | |
| (25,907 | ) |
| Foreign
currency impact | |
| (108,326 | ) | |
| 10,632 | |
| Balance,
September 30 | |
$ | 8,397,055 | | |
$ | 808,902 | |
| (1) | Inventory
provision for the three months ending September 30: |
| | |
2024 | | |
2023 | |
| Balance,
opening | |
$ | (548,815 | ) | |
| (47,664 | ) |
| Additions:
cost expensed due to project cancellation | |
| (3,068 | ) | |
| (25,907 | ) |
| Foreign
currency impact | |
| 5,389 | | |
| (1,217 | ) |
| Balance,
closing | |
$ | (546,494 | ) | |
| (74,788 | ) |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
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 September 30, 2024 and 2023 are as follows:
| | |
IPP
facilities | | |
Battery
energy storage systems (1) | | |
EV
charge point systems (2) | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Balance,
June 30, 2024 | |
$ | 8,909,371 | | |
| - | | |
| - | | |
$ | 8,909,371 | |
| Additions | |
| 337,089 | | |
| 16,321,698 | | |
| 541,666 | | |
| 17,200,453 | |
| Foreign
currency impact | |
| (122,376 | ) | |
| - | | |
| - | | |
| (122,376 | ) |
| Balance,
September 30, 2024 | |
$ | 9,124,084 | | |
| 16,321,698 | | |
| 541,666 | | |
$ | 25,987,448 | |
| | |
| | | |
| | | |
| | | |
| | |
| Balance,
June 30, 2023 | |
$ | 1,106,503 | | |
| - | | |
| - | | |
$ | 1,106,503 | |
| Additions | |
| 3,704,693 | | |
| - | | |
| - | | |
| 3,704,693 | |
| Foreign
currency impact | |
| 23,400 | | |
| - | | |
| - | | |
| 23,400 | |
| Balance,
September 30, 2023 | |
$ | 4,834,596 | | |
| - | | |
| - | | |
$ | 4,834,596 | |
| (1) | Addition
of Battery energy storage systems for the three months ended September 30, 2024 relate to
business acquisitions of Solar Flow-Through Funds Ltd. (Note 18). |
| (2) | Addition
of EV charge point systems for the three months ended September 30, 2024 relate to business
acquisitions of Solar Flow-Through Funds Ltd. (Note 18). |
| 11. | Trade
and other payables |
| | |
September
30, 2024 | | |
June
30, 2024 | |
| Accounts
payable and accrued liabilities | |
$ | 16,669,177 | | |
$ | 2,996,308 | |
| Due
to related party (Note 22) | |
| 1,312,331 | | |
| 124,125 | |
| GST/HST
payable | |
| 4,468,187 | | |
| - | |
| Other
payable (1) | |
| 4,588,649 | | |
| 1,569,828 | |
| | |
$ | 27,038,344 | | |
$ | 4,690,261 | |
| (1) | Balance
includes $4,158,947 NYSERDA (New York State Energy Research and Development Authority) grants
(June 30, 2024 - $1,097,452) to be paid to various customers for related projects sold in
prior years. |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
As
of September 30, 2024 and 2023, the Company’s unearned revenue mostly consists of payments received for EPC projects not started
yet.
| | |
Three
months ended September 30 | |
| | |
2024 | | |
2023 | |
| Beginning
of the year | |
$ | 4,600,491 | | |
| 1,150,612 | |
| Recognition
of revenue included in the beginning balance | |
| (3,772,894 | ) | |
| - | |
| Net
increase in unearned revenue recognized during the year | |
| 286,850 | | |
| 1,606,283 | |
| Foreign
currency impact | |
| (7,532 | ) | |
| - | |
| End
of the year | |
$ | 1,106,915 | | |
| 2,756,895 | |
| 13. | Right-of-use
assets and lease liabilities |
The
Company commenced leasing its current 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 an annual basis. 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 December 1, 2023, the Company leased additional office space, which increased monthly rent to $8,510.
On
November 1, 2023, the Company acquired shares of OFIT GM Inc. (“OFIT GM”) and OFIT RT Inc. (“OFIT RT”). The OFIT
companies leased five properties where 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 $502 to $2,456 respectively 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 liabilities were measured at the present value of the lease payments and discounted using an incremental borrowing
rate of 5.74%. The leases are part collateral for long-term loan guarantee (Note 16(2)).
On
July 8, 2024, the Company acquired all of the shares of Solar Flow-Through Funds Ltd. (“SFF”) (Note 18). SFF leases 70 properties
where IPP facilities are located. The leases started during the period from May 1, 2015 to December 15, 2020 with terms ending in the
periods from May 2033 to December 2045. The right of use asset and lease liabilities were treated as new assets and liabilities starting
from acquisition date of July 8, 2024 in accordance to IFRS 3. The ROU and lease liabilities were measured at the present value of the
lease payments and discounted using an incremental borrowing rate of 5.69%.
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 13. | Right-of-use
assets and lease liabilities (continued) |
The
continuity of the right-of-use as of September 30, 2024 and 2023 is as follows:
| Right-of-use assets | |
Office | | |
IPP Facilities | | |
Total | |
| Cost: | |
| | | |
| | | |
| | |
| Balance, June 30, 2024 | |
$ | 313,887 | | |
| 946,943 | | |
| 1,260,830 | |
| Addition | |
| - | | |
| 7,042,994 | | |
| 7,042,994 | |
| Balance, September 30, 2024 | |
$ | 313,887 | | |
| 7,989,937 | | |
| 8,303,824 | |
| | |
| | | |
| | | |
| | |
| Accumulated Depreciation: | |
| | | |
| | | |
| | |
| Balance, June 30, 2024 | |
$ | 123,501 | | |
| 52,201 | | |
| 175,702 | |
| Depreciation (1) | |
| 21,968 | | |
| 158,164 | | |
| 180,132 | |
| Balance, September 30, 2024 | |
$ | 145,469 | | |
| 210,365 | | |
| 355,834 | |
| Net Book Value, September 30, 2024 | |
$ | 168,418 | | |
| 7,779,572 | | |
| 7,947,990 | |
| Right-of-use assets | |
Office | | |
IPP Facilities | | |
Total | |
| Cost: | |
| | | |
| | | |
| | |
| Balance, June 30, 2023 | |
$ | 197,719 | | |
| - | | |
| 197,719 | |
| Addition | |
| - | | |
| - | | |
| - | |
| Balance, September 30, 2023 | |
| 197,719 | | |
| - | | |
| 197,719 | |
| | |
| | | |
| | | |
| | |
| Accumulated Depreciation: | |
| | | |
| | | |
| | |
| Balance, June 30, 2023 | |
$ | 53,232 | | |
| - | | |
| 53,232 | |
| Depreciation (1) | |
| 11,407 | | |
| - | | |
| 11,407 | |
| Balance, September 30, 2023 | |
$ | 64,639 | | |
| - | | |
| 64,639 | |
| Net Book Value, September 30, 2023 | |
$ | 133,080 | | |
| - | | |
| 133,080 | |
| (1) | Depreciation
expense of $158,164 for IPP facilities is recorded in cost of goods sold for the three months
ended September 30, 2024 (2023 - $Nil). The remaining $21,968 depreciation expense is recorded
under operating expenses (2023 - $11,407). |
The
continuity of the lease liabilities as of September 30, 2024 and 2023 is as follows:
| Lease liabilities | |
Office | | |
IPP Facilities | | |
Total | |
| Balance, June 30, 2024 | |
$ | 229,676 | | |
| 911,798 | | |
| 1,141,474 | |
| Additions | |
| - | | |
| 7,042,994 | | |
| 7,042,994 | |
| Payments | |
| (26,737 | ) | |
| (215,164 | ) | |
| (241,901 | ) |
| Interest accretion | |
| 5,577 | | |
| 101,665 | | |
| 107,242 | |
| Balance, September 30, 2024 | |
$ | 208,516 | | |
| 7,841,293 | | |
| 8,049,809 | |
| Current | |
| 100,839 | | |
| 520,758 | | |
| 621,597 | |
| Long term | |
| 107,677 | | |
| 7,320,535 | | |
| 7,428,212 | |
| Balance, September 30, 2024 | |
$ | 208,516 | | |
| 7,841,293 | | |
| 8,049,809 | |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 13. | Right-of-use
assets and lease liabilities (continued) |
| Lease liabilities | |
Office | | |
Total | |
| Balance, June 30, 2023 | |
$ | 173,311 | | |
| 173,311 | |
| Payments | |
| (14,484 | ) | |
| (14,484 | ) |
| Interest accretion | |
| 4,252 | | |
| 4,252 | |
| Balance, September 30, 2023 | |
$ | 163,079 | | |
| 163,079 | |
| Current | |
| 47,203 | | |
| 47,203 | |
| Long term | |
| 115,876 | | |
| 115,876 | |
| Net Book Value, September 30, 2023 | |
$ | 163,079 | | |
| 163,079 | |
The
maturity analysis of the Company’s contractual undiscounted lease payments as of September 30, 2024 is as follows:
| 2025 | |
$ | 734,730 | |
| 2026 | |
| 999,724 | |
| 2027 | |
| 898,009 | |
| 2028 | |
| 877,439 | |
| 2028 onward | |
| 7,642,291 | |
| Total | |
$ | 11,152,193 | |
On
June 20, 2024, the Company entered into a Construction Loan Agreement for the construction of the Geddes project (the “Geddes Construction
Loan”). The Geddes Construction Loan is for a principal amount of up to USD $2,600,000, depending on the actual cost of the project.
The
Geddes Construction Loan advancement amount shall accrue interest, which is to be added to the outstanding principal balance starting
from the date of reception, at a variable rate per annum equal to the One Month CME Term SOFR (Secured Overnight Financing Rate) Reference
Rate plus a margin of 4%. Upon receiving permission to operate the Geddes Project, the loan advancement shall convert into a 6-year long-term
loan with a fixed interest rate to be determined upon the conversion.
As
at September 30, 2024, the loan payable balance included principal payable of $1,234,373 (USD $914,418), accrued interest payable of
$33,279 (USD $24,653) and legal retainer of $53,996 (USD $40,000). As at June 30, 2024, the loan payable balance included principal payable
of $1,251,565 (USD $914,418), accrued interest payable of $3,571 (USD $2,609) and $54,748 (USD $40,000) legal retainer.
The
Geddes Construction Loan is secured against the assets associated with the Geddes Project and the Company has provided a guarantee of
completion and payment. As at September 30, 2024, the Geddes project has a total value of $9,124,084 (June 30, 2024 - $8,909,371) which
was recorded as Development Asset.
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| | |
FIT contracts | | |
BESS contracts | | |
Total | |
| Cost: | |
| | | |
| | | |
| | |
| Balance, June 30, 2024 | |
$ | 2,110,000 | | |
| - | | |
$ | 2,110,000 | |
| Additions (1) | |
| 29,320,877 | | |
| 4,925,500 | | |
| 34,246,377 | |
| Balance, September 30, 2024 | |
$ | 31,430,877 | | |
| 4,925,500 | | |
| 36,356,377 | |
| | |
| | | |
| | | |
| | |
| Accumulated amortization: | |
| | | |
| | | |
| | |
| Balance, June 30, 2024 | |
$ | 108,553 | | |
| - | | |
$ | 108,553 | |
| Amortization | |
| 595,453 | | |
| - | | |
| 595,453 | |
| Balance, September 30, 2024 | |
$ | 704,006 | | |
| - | | |
$ | 704,006 | |
| Net Book Value, September 30, 2024 | |
$ | 30,726,871 | | |
| 4,925,500 | | |
$ | 35,652,371 | |
| (1) | Addition
of FIT and BESS contracts for the three months ended September 30, 2024 is related to the
business acquisitions of SFF (Note 18). |
Intangible
asset acquired from OFIT GM and OFIT RT (on November 1, 2023) and SFF (on July 8, 2024). No comparable intangible assets transactions
during the three months ended September 30, 2023. Total amortization expenses of $595,453 are recorded in cost of goods sold for the
three months ended September 30, 2024 (2023- $Nil).
| | |
September 30,
2024 | | |
June 30,
2024 | |
| Highly Affected Sectors Credit Availability Program (1) | |
$ | 731,481 | | |
$ | 759,259 | |
| Long-term loans (2) | |
| 55,531,840 | | |
| 4,068,139 | |
| Total | |
| 56,263,321 | | |
| 4,827,398 | |
| Less: current portion | |
| 5,525,871 | | |
| 448,229 | |
| Long-term portion | |
$ | 50,737,450 | | |
$ | 4,379,169 | |
| (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 from Bank of Montreal. The loan has a ten-year
amortization period with interest payment only for the first year. Principal payments commenced
in May 2022. During the three months ended September 30, 2024, the interest recorded and
paid was $7,534 (2023 - $8,680). |
| | | |
| (2) | The
Company assumed these loans from the acquisition of OFIT GM and OFIT RT (2 loans totalling
$4,068,139) and SFF (51 loans totalling $49,323,661) (Note 18). |
OFIT
GM and OFIT RT Loans
The
OFIT GM and OFIT RT loans were originally obtained on December 19, 2017 for a total principal amount of $6,070,839 with a variable interest
rate based on Three Month Banker’s Acceptance Rate plus 1.98% which OFIT GM and OFIT RT have entered into interest rate swap agreements
on the same loan grant date to fix the annual interest rate at 4.75%. The loans will mature on December 19, 2029. The interests are payable
quarterly and principal are payable semi-annually, both commenced on March 19, 2018.
During
the three months ended September 30, 2024, the interest recorded and paid was $48,857.
Interest
rate swaps are accounted for as derivatives assets (liabilities) and recorded at fair value on the consolidated statements of financial
position with change in fair value recorded in profit or loss. For the three months ended September 30, 2024, the Company recorded fair
value change loss of $130,651 in the statements of income and comprehensive income.
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 16. | Long-term
debt (continued) |
The
loans are guaranteed by Panasonic Corporation North America and collateralized by the solar projects owned by OFIT GM and OFIT RT, including
related contracts such as FIT contracts, site leases and similar contracts.
SFF
Loans
The
Company assumed 51 term loans from SFF acquisition, which are secured by the underlying solar power system assets. The loans have interest
payable quarterly with variable interest rates ranging from 1.56% plus Canadian Overnight Repo Rate Average (“CORRA”) to
3.34% plus CORRA and with fixed interest rates ranging from 4.45% to 6.06%. The remaining term range of the loans are 3 to 17 years maturing
between 2026 and 2040.
During
the three months ended September 30, 2024, the interest recorded and paid was $636,235.
Interest
rate swaps are accounted for as derivatives assets or liabilities and recorded at fair value on the consolidated statements of financial
position with change in fair value recorded in profit or loss. For the three months ended September 30, 2024, the Company recorded fair
value change loss of $882,174 in the statements of income and comprehensive income.
Estimated
principal repayments are as follows:
| 2025 | |
$ | 4,442,600 | |
| 2026 | |
| 5,727,874 | |
| 2027 | |
| 5,785,141 | |
| 2028 | |
| 8,829,344 | |
| 2028 onwards | |
| 33,061,672 | |
| Total | |
$ | 57,846,631 | |
On
June 20, 2023 (the “acquisition date”) the Company acquired 67% membership interest in Solar Alliance DevCo, 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
(in tax equity assets), 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 $460,607 at acquisition date, 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. The corresponding tax equity asset acquired on acquisition date was $474,547.
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 unlikely to occur.
The
Company recognized $3,863 related to ITC distribution as other income on the consolidated statements of income for the three months ended
September 30, 2024 (2023: $12,793). $8,388 interest accretion was recognized for the three months ended September 30, 2024 (2023: $10,358)
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
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 issuance of up to 5,859,561 common shares of SolarBank (“SolarBank
Shares”) for an aggregate purchase price of up to $41.8 million. 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
consideration for the SFF Transaction consisted of an upfront payment of approximately 3,575,632 SolarBank Shares and a contingent payment
representing up to an additional 2,283,929 SolarBank Shares 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.
For
the period during July 8, 2024 – September 30, 2024, SFF contributed revenue of $3,708,752 and net loss of $721,743.
Had
the acquisition occurred on July 1, 2024, management estimates that the consolidated revenue would have been $16,317,988 and net income
would have been $335,338 for the three months ended September 30, 2024.
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 18. | Acquisitions
(continued) |
The
initial purchase price was provisionally allocated based on the Company’s estimated fair value of the identifiable assets acquired
and the liabilities assumed on the acquisition date. The values assigned, including the related goodwill and deferred tax assets and
liabilities, are therefore preliminary and subject to change. The allocation of the purchase consideration to the total fair value of
net assets acquired is as follows:
| Preliminary Fair value of net identified assets acquired | |
| | |
| Cash and cash equivalent | |
| 9,886,679 | |
| Trade and other receivables | |
| 3,906,143 | |
| Short-term investment | |
| 639,990 | |
| Prepaid expenses and deposits | |
| 683,597 | |
| Right of use assets | |
| 7,042,994 | |
| Property, plant and equipment | |
| 36,484,581 | |
| Development assets | |
| 10,312,122 | |
| Intangible assets | |
| 34,246,377 | |
| Other assets | |
| 813,910 | |
| Derivative assets | |
| 1,527,208 | |
| Accounts payable and accruals | |
| (8,819,904 | ) |
| Long-term debt | |
| (52,685,837 | ) |
| Lease obligations | |
| (7,042,994 | ) |
| Deferred tax liabilities | |
| (14,119,673 | ) |
| Due to related parties | |
| (1,497,524 | ) |
| Subtotal identifiable net assets | |
| 21,377,669 | |
| | |
| | |
| Goodwill arising on acquisition (2) | |
| 37,147,456 | |
| Non-controlling interest | |
| (15,814,455 | ) |
| Total Net Assets | |
| 42,710,670 | |
| | |
| | |
| Common shares issued (1) | |
| 28,640,812 | |
| Fair value CVR (3) | |
| 5,922,000 | |
| Payable due to the Company | |
| 1,364,374 | |
| Fair value of SFF shares owned prior to the acquisition(4) | |
| 6,783,484 | |
| Total fair value of consideration | |
| 42,710,670 | |
| (1) | Consideration
paid in the Company’s common shares was valued at $8.01 per shared, which is the closing
market value as at July 8, 2024. |
| (2) | The
goodwill is attributable to the synergies expected to be achieved from integrating the Company
into SFF IPP operations. |
| (3) | Additional
shares for CVRs are to be issued to former SFF shareholders, now the Company’s shareholders,
upon determination of final value. This balance is accrued under Due to related parties as
at September 30, 2024. |
| (4) | Gain
of $1,631,461 from increase in fair value of SFF shares owned by the Company
prior to acquisition is recognized under Fair value change gain for the three months ended
September 30, 2024. |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
The
Company as part of its operations carries financial instruments consisting of cash, trade and other receivables, unbilled revenue, derivative
assets, investment, trade and other payables, loan payables, long-term debt, lease obligations, and other long-term liabilities.
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. |
The
Company has variable interest rate loans with interest rate swap to effectively hedge the floating rate term loans into fixed rate arrangements
by receiving floating rate and paying fixed rate payments (Note 16(2)). The fair value of the interest rate swap is based on discounting
estimate of future floating rate and fixed rate cash flows for the remaining term of the interest rate swap. The fair value estimate
is subject to a credit risk adjustment that reflects the credit risk of the Company and of the counterparty. The fair value of the interest
rate swap are determined using Level 2 inputs.
The
carrying amounts of cash, short-term investments, trade and other receivables, unbilled revenue, trade and other payables and loan payable
approximate their fair values due to the short-term maturities of these items. The carrying amounts of long term debt, lease liabilities
and other long-term liabilities 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. Receivables
from projects are from reputable customers with past working relations with the Company. IPP revenues are due from local government utility
with high creditworthiness. Cash and short-term investment have low credit risk as it is held by internationally recognized financial
institutions.
The
Company conducts business in Canada and United States and have subsidiaries operating in the same countries. The Company, and its subsidiaries,
do not hold significant asset and liabilities denominated in foreign currencies. As a result, the Company has low currency risk.
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 19. | Financial
instruments (continued) |
| (iii) | 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. Outstanding accounts payable balance is relatively concentrated with a few large customers representing
majority of the value. See table below showing a few vendors who account for over 10% of total purchases as well as vendors who account
for over 10% of outstanding accounts payable.
Three months ended September 30, 2024 | |
Revenue | | |
% of Total Revenue | |
| Customer A | |
$ | 9,359,888 | | |
| 58 | % |
| Customer B | |
$ | 1,787,498 | | |
| 11 | % |
| September 30, 2023 | |
Revenue | | |
% of Total Revenue | |
| Customer A | |
$ | 5,318,304 | | |
| 69 | % |
| Customer C | |
$ | 2,011,750 | | |
| 27 | % |
| September 30, 2024 | |
Account Receivable | | |
% of Account Receivable | |
| Customer A | |
$ | 915,063 | | |
| 24 | % |
| Customer D | |
$ | 498,388 | | |
| 13 | % |
| June 30, 2024 | |
Account Receivable | | |
% of Account Receivable | |
| Customer F | |
$ | 531,456 | | |
| 48 | % |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 19. | Financial
instruments (continued) |
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.
The
following are the remaining contractual obligations as at September 30, 2024
| | |
Total | | |
Less than
one year | | |
1 to 3 years | | |
3 to 5 years | | |
More than
5 years | |
| Long-Term Debt Obligations | |
$ | 57,846,631 | | |
$ | 4,442,600 | | |
$ | 11,513,015 | | |
$ | 17,548,096 | | |
$ | 24,342,920 | |
| Operating Lease Obligations | |
| 11,152,193 | | |
| 734,730 | | |
| 1,897,733 | | |
| 1,754,878 | | |
| 6,764,852 | |
| Loan payable | |
| 1,321,648 | | |
| 1,321,648 | | |
| - | | |
| - | | |
| - | |
| Other Long-term liabilities | |
| 361,336 | | |
| 361,336 | | |
| - | | |
| - | | |
| - | |
| Purchase Obligations | |
| 1,687,757 | | |
| 1,687,757 | | |
| - | | |
| - | | |
| - | |
| Accounts Payable and Accrued Liabilities | |
| 27,038,344 | | |
| 27,038,344 | | |
| - | | |
| - | | |
| - | |
| Total | |
$ | 99,407,909 | | |
$ | 35,586,415 | | |
$ | 13,410,748 | | |
$ | 19,302,974 | | |
$ | 31,107,772 | |
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’s long-term loan, obtained from acquisition of OFIT GM, OFIT RT and SFF, have a fixed rate which is
achieved by entering into interest rate swap agreement.
The
Company held the Geddes loan which is subject to interest rate risk due to variable rate charged (Note 14). A change of 100 basis points
in interest rates would have increased or decreased interest amount (added to the loan principal balance) of $12,806 (June 30, 2024 -
$13,100).
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
(a)
Authorized
Unlimited
number of common shares with no par value.
(b)
Issued and outstanding share capital
On
September 30, 2024, the Company had 30,821,707 common shares issued and outstanding (2023- 26,857,200). A summary of changes in share
capital and contributed surplus is contained on the consolidated statements of changes in shareholders’ equity.
During
the three months ended September 30, 2024, the Company issued the following shares:
| i. | On
July 8, 2024, the Company closed the acquisition of SFF with payment of 3,575,632 SolarBank
common shares (Note 18). |
| | | |
| ii. | On
September 24, 2024, 55,000 broker warrants were exercised to purchase common shares at $0.75
per share. |
During
the three months ended September 30, 2023, 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. |
(c) Warrants
| | |
Three months ended September 30 | |
| | |
2024 | | |
2023 | |
| Beginning of the period | |
| 7,873,000 | | |
| 7,983,000 | |
| Exercised | |
| (55,000 | ) | |
| (55,000 | ) |
| End of the period | |
| 7,818,000 | | |
| 7,928,000 | |
| Date granted | |
Expiry | |
Exercise price (CAD) | | |
Balance outstanding and exercisable at September 30, 2024 | |
| 03-Oct-2022 | |
10-Jun-2027 | |
$ | 0.10 | | |
| 2,500,000 | |
| 01-Mar-2023 | |
01-Mar-2026 | |
$ | 0.75 | | |
| 318,000 | |
| 01-Mar-2023 | |
01-Mar-2028 | |
$ | 0.50 | | |
| 5,000,000 | |
| | |
| |
| | | |
| 7,818,000 | |
| Weighted average exercise price | | |
$ | 0.38 | |
| Weighted average remaining contractual life | | |
| 3.11 years | |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 20. | 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 September 30, 2024 and 2023 are as follows:
| | |
Three months ended | |
| | |
September 30, 2024 | | |
September 30, 2023 | |
| Beginning of the period | |
| 2,759,000 | | |
| 7,759,000 | |
| Granted | |
| - | | |
| - | |
| Forfeited | |
| - | | |
| - | |
| End of the period | |
| 2,759,000 | | |
| 7,759,000 | |
| Date granted | |
Expiry | |
Exercise price (CAD) | | |
Outstanding number of options at
September 30, 2024 | | |
Exercisable number of options at
September 30, 2024 | |
| 04-Nov-2022 | |
04-Nov-2027 | |
$ | 0.75 | | |
| 2,759,000 | | |
| 1,379,500 | |
During
the three months ended September 30, 2024, compensation expense related to stock options was $110,667 (2023 - $381,398)
(e)
Restricted Stock Units
| | |
Three months ended | |
| | |
September 30, 2024 | | |
September 30, 2023 | |
| Beginning and end of the period | |
| 265,000 | | |
| 265,000 | |
| Date granted | |
Vesting Date | |
Numbers outstanding
and exercisable at
September 30, 2024 | |
| 4-Nov-2022 | |
02-Aug-2023 | |
| 250,000 | |
| 13-Mar-2023 | |
12-Mar-2024 | |
| 7,500 | |
| 13-Mar-2023 | |
12-Mar-2025 | |
| 7,500 | |
| | |
| |
| 265,000 | |
During
the three months ended September 30, 2024, compensation expense related to RSU was $2,580 (2023 - $6,675)
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 21. | Non-Controlling
Interest |
Summarized
financial information for the Company’s subsidiaries that have non-controlling interests is set out below. The amounts are before
intercompany eliminations.
| As at September 30, 2024 | |
Current
assets | | |
Non-current assets | | |
Current liabilities | | |
Non-current liabilities | | |
Net assets
(liabilities) | | |
Carrying amount of NCI | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| 2467264 Ontario Inc. | |
$ | 3,235 | | |
$ | - | | |
$ | (928,788 | ) | |
$ | - | | |
$ | (925,553 | ) | |
$ | 44,717 | |
| OFIT GM | |
| 752,325 | | |
| 4,351,855 | | |
| (832,326 | ) | |
| (4,027,504 | ) | |
| 244,350 | | |
| (1,749,227 | ) |
| OFIT RT | |
| 233,554 | | |
| 1,848,257 | | |
| (139,637 | ) | |
| (1,565,403 | ) | |
| 376,771 | | |
| (623,280 | ) |
| 2503072 Ontario Inc. | |
| 255,321 | | |
| 5,666,191 | | |
| (377,385 | ) | |
| (3,724,080 | ) | |
| 1,820,046 | | |
| (896,852 | ) |
| 2503225 Ontario Inc. | |
| 1,064,593 | | |
| 4,469,192 | | |
| (696,752 | ) | |
| (3,792,793 | ) | |
| 1,044,241 | | |
| (523,165 | ) |
| 2503903 Ontario Inc. | |
| 171,519 | | |
| - | | |
| (219,929 | ) | |
| (814,792 | ) | |
| (863,202 | ) | |
| 434,970 | |
| Northern Development Solar 2016 | |
| 110,793 | | |
| 1,472,217 | | |
| (538,384 | ) | |
| (1,119,144 | ) | |
| (74,518 | ) | |
| 37,334 | |
| Sunshine Solar Ontario 2016 Inc. | |
| 73,819 | | |
| - | | |
| (157,107 | ) | |
| (56,455 | ) | |
| (139,742 | ) | |
| 70,010 | |
| 2469780 Ontario Inc. | |
| 102,458 | | |
| 1,396,528 | | |
| (395 | ) | |
| (1,352,815 | ) | |
| 145,777 | | |
| (73,034 | ) |
| 2405372 Ontario Inc. | |
| 26,693 | | |
| 55,779 | | |
| (42,391 | ) | |
| (21,965 | ) | |
| 18,116 | | |
| (9,076 | ) |
| 2405402 Ontario Inc. | |
| 121,886 | | |
| 2,231,165 | | |
| (696,972 | ) | |
| (513,500 | ) | |
| 1,142,579 | | |
| (552,392 | ) |
| 2405514 Ontario Inc | |
| 108,930 | | |
| 4,415,184 | | |
| (159,340 | ) | |
| (2,126,670 | ) | |
| 2,238,102 | | |
| (1,121,289 | ) |
| 2405799 Ontario Inc. | |
| 280,443 | | |
| 1,484,418 | | |
| (151,477 | ) | |
| (1,849,901 | ) | |
| (236,517 | ) | |
| 118,495 | |
| 2467260 Ontario Inc. | |
| 44,386 | | |
| 35,110 | | |
| - | | |
| (88,839 | ) | |
| (9,343 | ) | |
| 4,681 | |
| Icarus Whitesand Solar Limited Partnership | |
| 425,091 | | |
| 3,665,936 | | |
| (43,632 | ) | |
| (2,551,594 | ) | |
| 1,495,802 | | |
| (220,678 | ) |
| 1000234763 Ontario Inc. | |
| 1,154,495 | | |
| 15,356,369 | | |
| (135,159 | ) | |
| (12,886,666 | ) | |
| 3,489,040 | | |
| (1,748,137 | ) |
| 1000234813 Ontario Inc. | |
| 656,782 | | |
| 7,055,560 | | |
| (748,520 | ) | |
| (6,042,831 | ) | |
| 920,991 | | |
| (461,505 | ) |
| SPN LP7 | |
| 1,747,444 | | |
| 10,138,665 | | |
| (235,442 | ) | |
| (5,916,867 | ) | |
| 5,733,800 | | |
| (2,872,637 | ) |
| 2387276 Ontario Inc. | |
| 1,465,296 | | |
| 9,853,253 | | |
| (254,925 | ) | |
| (7,262,030 | ) | |
| 3,801,594 | | |
| (1,904,599 | ) |
| 2387282 Ontario Inc. | |
| 1,640,405 | | |
| 17,205,393 | | |
| (533,802 | ) | |
| (11,352,673 | ) | |
| 6,959,323 | | |
| (3,489,627 | ) |
| 2387281 Ontario Inc. | |
| 701,327 | | |
| 3,942,852 | | |
| (88,276 | ) | |
| (3,007,303 | ) | |
| 1,548,599 | | |
| (775,848 | ) |
| 2387280 Ontario Inc. | |
| 675,083 | | |
| 2,916,290 | | |
| (58,090 | ) | |
| (2,513,197 | ) | |
| 1,020,085 | | |
| (766,184 | ) |
| 2391395 Ontario Inc. | |
| 412,256 | | |
| 2,150,339 | | |
| (54,702 | ) | |
| (1,515,348 | ) | |
| 992,545 | | |
| (497,265 | ) |
| | |
$ | 12,228,134 | | |
$ | 99,710,553 | | |
$ | (7,093,431 | ) | |
$ | (74,102,370 | ) | |
$ | 30,742,886 | | |
$ | (17,574,588 | ) |
| As at June 30, 2024 | |
Current
assets | | |
Non-current assets | | |
Current liabilities | | |
Non-current liabilities | | |
Net assets
(liabilities) | | |
Carrying amount of NCI | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| 2467264 Ontario Inc. | |
$ | 2,343 | | |
$ | - | | |
$ | (927,790 | ) | |
$ | - | | |
$ | (925,447 | ) | |
$ | 44,717 | |
| OFIT GM | |
| 560,757 | | |
| 4,526,687 | | |
| (770,469 | ) | |
| (4,039,128 | ) | |
| 277,846 | | |
| (1,758,919 | ) |
| OFIT RT | |
| 159,990 | | |
| 1,917,063 | | |
| (98,215 | ) | |
| (1,569,411 | ) | |
| 409,428 | | |
| (639,641 | ) |
| | |
| 723,090 | | |
| 6,443,750 | | |
| (1,796,474 | ) | |
| (5,608,539 | ) | |
| (238,173 | ) | |
| (2,353,842 | ) |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 21. | Non-Controlling
Interest (continued) |
| Three months ended September 30, 2024 | |
Net loss and comprehensive loss | | |
Allocated to NCI | |
| | |
| | |
| |
| 2467264 Ontario Inc. | |
$ | (106 | ) | |
$ | - | |
| OFIT GM | |
| (33,498 | ) | |
| (16,782 | ) |
| OFIT RT | |
| (32,657 | ) | |
| (16,361 | ) |
| 2503072 Ontario Inc. (1) | |
| (103,529 | ) | |
| (51,868 | ) |
| 2503225 Ontario Inc. (1) | |
| (141,910 | ) | |
| (71,097 | ) |
| 2503903 Ontario Inc. (1) | |
| 81 | | |
| 40 | |
| Northern Development Solar 2016 (1) | |
| (92,967 | ) | |
| (46,577 | ) |
| Sunshine Solar Ontario 2016 Inc. (1) | |
| 193 | | |
| 97 | |
| 2469780 Ontario Inc. (1) | |
| (52,380 | ) | |
| (26,243 | ) |
| 2405372 Ontario Inc. (1) | |
| 141 | | |
| 71 | |
| 2405402 Ontario Inc. (1) | |
| (115,210 | ) | |
| (57,720 | ) |
| 2405514 Ontario Inc. (1) | |
| (123,240 | ) | |
| (61,743 | ) |
| 2405799 Ontario Inc. (1) | |
| (46,438 | ) | |
| (23,266 | ) |
| 2467260 Ontario Inc. (1) | |
| 47 | | |
| 24 | |
| Icarus Whitesand Solar Limited Partnership (1) | |
| (117,890 | ) | |
| (17,683 | ) |
| 1000234763 Ontario Inc. (1) | |
| (39,556 | ) | |
| (19,778 | ) |
| 1000234813 Ontario Inc. (1) | |
| (51,954 | ) | |
| (25,977 | ) |
| SPN LP7 (1) | |
| (258,226 | ) | |
| (129,371 | ) |
| 2387276 Ontario Inc. (1) | |
| (128,332 | ) | |
| (64,294 | ) |
| 2387282 Ontario Inc. (1) | |
| 187,796 | | |
| 94,086 | |
| 2387281 Ontario Inc. (1) | |
| (77,290 | ) | |
| (38,722 | ) |
| 2387280 Ontario Inc. (1) | |
| 2,240 | | |
| 1,681 | |
| 2391395 Ontario Inc. (1) | |
| (58,517 | ) | |
| (29,317 | ) |
| | |
$ | (1,283,202 | ) | |
$ | (600,800 | ) |
| (1) | Entity
acquired through SFF acquisition. Net income (loss) considered above is for the acquired
period of July 8 to September 30, 2024. |
| Three months ended September 30, 2023 | |
Net loss and comprehensive loss | | |
Allocated to NCI | |
| | |
| | |
| |
| 2467264 Ontario Inc. | |
$ | (8,506 | ) | |
$ | - | |
| | |
| (8,506 | ) | |
| - | |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
| 22. | Related
Party Balances and Transactions |
As
at September 30, 2024, included in trade and other payable was $1,312,331 (June 30, 2024- $124,125) due to directors and other members
of key management personnel (Note 11).
As
at September 30, 2024, included in Due to related parties balance was $5,922,000 relating to fair value of CVR (Note 18(3)).
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 months ended September 30, 2024 and 2023 were
as follows:
| | |
2024 | | |
2023 | |
| Short-term employee benefits | |
$ | 703,227 | | |
$ | 299,599 | |
| Share-based compensation | |
$ | 72,160 | | |
$ | 180,546 | |
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.
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
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:
| | |
September 30, 2024 | | |
June 30, 2024 | |
| Long-term debt -non-current portion (Note 16) | |
$ | 50,737,450 | | |
| 4,379,169 | |
| Shareholders’ Equity | |
$ | 63,401,476 | | |
| 18,724,301 | |
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.
Segmented
information is reviewed by the Company’s chief decision maker to assess performance and allocate resources within the Company.
The Company has one operating segment, principally being development and operation of solar photovoltaic power generation projects.
| (a) | Geographic
Information |
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 exclusive of financial instruments (i.e.
investment in SFF and the derivative asset) by country for the three months ended September 30, 2024 and 2023 are as follows:
| | |
Revenue from external customers | | |
Non-current assets | |
| | |
Three months ended September 30, | | |
| |
| | |
2024 | | |
2023 | | |
September 30, 2024 | | |
June 30, 2024 | |
| Canada | |
$ | 6,619,182 | | |
| 336,311 | | |
$ | 138,257,264 | | |
| 6,528,325 | |
| United States | |
| 9,386,139 | | |
| 7,344,950 | | |
| 9,946,065 | | |
| 9,762,674 | |
| | |
$ | 16,005,321 | | |
| 7,681,261 | | |
$ | 148,203,329 | | |
| 16,290,999 | |
SOLARBANK
CORPORATION
Notes
to Condensed Consolidated Interim Financial Statements
For
the three months ended September 30, 2024 and 2023
(Expressed
in Canadian Dollars)
(Unaudited)
The
income tax charge is a result of profits and withholding tax in two jurisdictions which are taxable and cannot be offset by accumulated
tax benefits in other jurisdictions. Income tax expense is recognized based on management’s best estimate of the weighted average
annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the three months ended September
30, 2024 was 26.5% (June 30, 2024 - 26.5%).
The
calculation of earnings per share for the three months ended September 30, 2024 and 2023 are as follows:
| | |
September 30, 2024 | | |
September 30, 2023 | |
| | |
| | |
| |
| Net income (loss) | |
| 241,092 | | |
| 2,038,968 | |
| | |
| | | |
| | |
| Basic weighted average number of shares outstanding | |
| 30,459,369 | | |
| 26,806,183 | |
| Dilution of securities | |
| 10,068,155 | | |
| 10,316,617 | |
| Diluted weighted average number of shares outstanding | |
| 40,527,524 | | |
| 37,122,800 | |
| | |
| | | |
| | |
| Earnings per share | |
| | | |
| | |
| Basic | |
| 0.01 | | |
| 0.08 | |
| Diluted | |
| 0.01 | | |
| 0.05 | |
Exhibit
99.3
Form
52-109F2
Certification
of Interim Filings
Full
Certificate
I,
Dr. 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 September 30, 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. |
| |
|
| 4. |
Responsibility:
The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined
in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| |
|
| 5. |
Design:
Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and
I have, as at the end of the period covered by the interim filings: |
| |
(a) |
designed
DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that: |
| |
(i) |
material
information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are
being prepared; and |
| |
|
|
| |
(ii) |
information
required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities
legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| |
(b) |
designed
ICFR, or caused it to be designed under our supervision, 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. |
| 5.1 |
Control
framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR
is Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. |
| 6. |
Reporting
changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during
the period beginning on July 1, 2024 and ended on September 30, 2024 that has materially affected, or is reasonably likely to materially
affect, the issuer’s ICFR. |
Date:
November 14, 2024
| “Dr.
Richard Lu” |
|
| Dr.
Richard Lu |
|
| Chief
Executive Officer |
|
Exhibit
99.4
Form
52-109F2
Certification
of Interim Filings
Full
Certificate
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 September 30, 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. |
| | |
| 4. | Responsibility:
The issuer’s other certifying officer and I are responsible for establishing
and maintaining disclosure controls and procedures (“DC&P”) and internal
control over financial reporting (“ICFR”), as those terms are defined in National
Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings,
for the issuer. |
| | |
| 5. | Design:
Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s
other certifying officer and I have, as at the end of the period covered by the interim filings: |
| (a) | designed
DC&P, or caused it to be designed under our supervision, to provide reasonable assurance
that: |
| (i) | material
information relating to the issuer is made known to us by others, particularly during the
period in which the interim filings are being prepared; and |
| | | |
| (ii) | information
required to be disclosed by the issuer in its annual filings, interim filings or other reports
filed or submitted by it under securities legislation is recorded, processed, summarized
and reported within the time periods specified in securities legislation; and |
| (b) | designed
ICFR, or caused it to be designed under our supervision, 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. |
| 5.1 | Control
framework: The control framework the issuer’s other certifying officer and
I used to design the issuer’s ICFR is Internal Control – Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission. |
| 6. | Reporting
changes in ICFR: The issuer has disclosed in its interim MD&A any change in the
issuer’s ICFR that occurred during the period beginning on July 1, 2024 and ended on
September 30, 2024 that has materially affected, or is reasonably likely to materially affect,
the issuer’s ICFR. |
Date:
November 14, 2024
| “Sam Sun” |
|
| Sam Sun |
|
| Chief Financial Officer |
|
Exhibit
99.5
SolarBank
Announces First Quarter Results
108%
increase in revenues to $16.0 million of revenue for the quarter compared to $7.7 million in Q1 2024
361%
growth in assets to $181.0 million following Solar Flow-Through Funds Ltd. Acquisition
This
news release constitutes a “designated news release” for the purposes of the Company’s prospectus supplement dated
May 23, 2024 to its short form base shelf prospectus dated May 2, 2023
Toronto,
Ontario, November 14, 2024 — SolarBank Corporation (Nasdaq: SUUN) (Cboe CA: SUNN) (FSE: GY2) (“SolarBank” or the “Company”)
reports first quarter fiscal 2025 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 Three Month Period)
| ● | 108%
increase in revenue to $16.0 million of revenue compared to $7.7 million in 2024; |
| ● | 1,099%
increase in cash flow from operating activities to $8.1 million compared to $0.7 million
in 2024; |
| ● | 361%
growth in assets to $181.0 million following Solar Flow-Through Funds Ltd. Acquisition, as
compared to $39.2 million as at June 30, 2024; |
| ● | Adjusted
EBITDA(1) of $2.4 million compared to $0.6 million for 2024; |
| ● | Net
income of $0.2 million, or $0.01 per basic share, compared to net income of $2.0 million,
or $0.08 per basic share in in 2024. The decrease in net income includes major items below: |
| ○ | Depreciation
expense of $1.5 million, compared to $22 thousand in 2024 |
| ○ | Interest
expense of $0.8 million following as compared to $0.02 million in 2024; |
| ○ | Expense
of $1.1 million in professional fees that were higher principally due to the acquisition
of Solar Flow-Through Funds Ltd. that closed during the quarter; and |
| ○ | Current
and deferred income tax expense of $0.8 million, compared to an income tax recovery of $0.04
million in 2024. |
| ● | $45.0
million valued acquisition of Solar Flow-Through Funds Ltd. (“SFF”) completed
during the quarter (valuation includes shares that were previously held by the Company). |
Dr.
Richard Lu, President and CEO of SolarBank commented: “When SolarBank completed its IPO in March 2023 one of the primary goals
was growth of the independent power producer (IPP) portfolio. This quarter marked a major milestone with the closing of the SFF acquisition
which has a resulted in a significant increase in SolarBank’s IPP assets and recurring revenues. I am expecting another exciting
year of growth for SolarBank. I fully agree with Elon Musk’s statement on November 12th – Solar power will be
the vast majority of power generation in the future.”
(1)EBITDA
and Adjusted EBITDA are non-IFRS financial measures with no standardized meaning under IFRS, and therefore they may not be comparable
to similar measures presented by other issuers. For further information and detailed reconciliations of Non-IFRS financial measures to
the most directly comparable IFRS measures see “Non-IFRS Financial Measures” in this News Release.
Summary
of Quarterly Results (All Amounts are for the Three Month Period)
| Quarter
Ended | |
September
30, 2024 | |
September
30, 2023 |
| Statement
of Income and Comprehensive Income | |
| |
|
| Total Revenue | |
$ | 16,005,321 | | |
$ | 7,681,261 | |
| Cash flow from operating
activities | |
$ | 8,115,251 | | |
$ | 676,858 | |
| Adjusted EBITDA (a
non-IFRS measure) | |
$ | 2,423,979 | | |
$ | 676,858 | |
| Net income | |
$ | 241,092 | | |
$ | 2,125,734 | |
| Basic earnings per
share | |
$ | 0.01 | | |
$ | 0.08 | |
| Diluted earnings per
share | |
$ | 0.01 | | |
$ | 0.05 | |
The Company ended the first quarter of fiscal 2025 with $32.8 million in current assets, as compared to $17.6 million in current assets
as of year end June 30, 2024. The increase is principally the result of the closing of the acquisition of SFF.
Current
liabilities increased from $13.4 million as of year ended June 30, 2024 to $36.1 million in the current quarter, mainly due to an increase
in trade and other payables and the current portion of long-term debt.
For
complete details please refer to the unaudited condensed interim consolidated financial statements and associated Management Discussion
and Analysis for the three months ended September 30, 2024, available on SEDAR+ (www.sedarplus.ca).
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.
Conference
Call November 14, 2024 at 4:30PM ET
The
Company will review financial results and provide a business update. Interested parties can register for the webinar using the information
below:
https://events.teams.microsoft.com/event/5c8f3799-f6e0-4f7f-b881-6d6015e2044a@f90ea049-87a1-4082-95af-7e4e24c02cb4
After
registering, you will receive a confirmation email containing information about joining the webinar.
Non-IFRS
Financial Measures
The
Company has disclosed certain non-IFRS financial measures and ratios in this press, as discussed below. These non-IFRS financial measures
and non-IFRS ratios are widely reported in the renewable energy industry as benchmarks for performance and are used by management to
monitor and evaluate the Company’s operating performance and ability to generate cash. The Company believes that, in addition to
financial measures and ratios prepared in accordance with IFRS, certain investors use these non-IFRS financial measures and ratios to
evaluate the Company’s performance. However, the measures do not have a standardized meaning under IFRS and may not be comparable
to similar financial measures disclosed by other companies. Accordingly, non-IFRS financial measures and non-IFRS ratios should not be
considered in isolation or as a substitute for measures and ratios of the Company’s performance prepared in accordance with IFRS.
Non-IFRS
financial measures are defined in National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure (“NI 52-112”)
as a financial measure disclosed that (a) depicts the historical or expected future financial performance, financial position or cash
flow of an entity, (b) with respect to its composition, excludes an amount that is included in, or includes an amount that is excluded
from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the entity,
(c) is not disclosed in the financial statements of the entity, and (d) is not a ration, fraction, percentage or similar representation.
A
non-IFRS ratio is defined by NI 52-112 as a financial measure disclosed that (a) is in the form of a ratio, fraction, percentage, or
similar representation, (b) has a non-IFRS financial measure as one or more of its components, and (c) is not disclosed in the financial
statements.
Adjusted
EBITDA
Adjusted
EBITDA is a non-IFRS financial measure, which excludes the following from net earnings:
| ● | Income
tax expense; |
| | | |
| ● | Finance
costs; |
| | | |
| ● | Amortization
and depreciation. |
| | | |
| ● | Non-operating
income or expenses; |
| | | |
| ● | Non-recurring
gains or losses; |
| | | |
| ● | Impairment
charges or reversals; |
| | | |
| ● | Listing
fees or costs related to equity offerings; |
| | | |
| ● | Foreign
exchange gains or losses |
Management
believes Adjusted EBITDA is a valuable indicator of the Company’s ability to generate liquidity by producing operating cash flow
to fund working capital needs, service debt obligations, and fund capital expenditures. Management uses Adjusted EBITDA for this purpose.
EBITDA is also frequently used by investors and analysts for valuation purposes whereby Adjusted EBITDA is multiplied by a factor or
“EBITDA multiple” based on an observed or inferred relationship between Adjusted EBITDA and market values to determine the
approximate total enterprise value of a Company. Management also believes that Adjusted EBITDA provides useful information to investors
and others in understanding and evaluating our operating results because it is consistent with the indicators management uses internally
to measure the Company’s performance and is an indicator of the performance of the Company’s renewable energy project development
and operations.
Adjusted
EBITDA is intended to provide additional information to investors and analysts. It does not have any standardized definition under IFRS
and should not be considered in isolation or as a substitute for measures of operating performance prepared in accordance with IFRS.
Adjusted EBITDA excludes the impact of cash costs of financing activities and taxes, and the effects of changes in operating working
capital balances, and therefore is not necessarily indicative of operating profit or cash flow from operations as determined by IFRS.
Other companies may calculate Adjusted EBITDA differently.
| Three
months ended | |
September
30, 2024 | |
September
30, 2023 |
| | |
| $ | | |
| $ | |
| Net income (loss) per financial
statements | |
| 241,092 | | |
| 2,038,967 | |
| Add: | |
| | | |
| | |
| Depreciation expense | |
| 1,507,854 | | |
| 21,978 | |
| Interest (income)/expense, net | |
| 582,881 | | |
| (59,088 | ) |
| Income tax and Deferred income tax expense | |
| 805,478 | | |
| (37,740 | ) |
| Fair value change (gain)/loss | |
| (618,636 | ) | |
| — | |
| Other (income)/expense | |
| (94,690 | ) | |
| (1,371,837 | ) |
| | |
| | | |
| | |
| Adjusted EBITDA | |
| 2,423,979 | | |
| 592,280 | |
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, Battery Energy Storage System (BESS) and EV Charging 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 North America 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 100 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 projects mentioned in this press release; the megawatt capacity
and type of future solar projects; continued growth of the Company; 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 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.
SolarBank (NASDAQ:SUUN)
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