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 February, 2025.
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 |
February 14, 2025 |
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 and Six Months End December 31, 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 February 12, 2025 and was reviewed and
approved by the Board of Directors. The following discussion of performance, financial condition and future prospects should be read
in conjunction with the interim consolidated financial statements of the Company and notes thereto for the three and six months ended
December 31st, 2024. The information provided herein supplements but does not form part of the financial statements. All amounts
are stated in Canadian dollars unless otherwise indicated.
Overview
Business
Profile
SolarBank
Corporation is incorporated in Ontario, Canada with its registered 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 operates in the growing renewable energy sector 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 (“IPP”). The Company focuses on organic growth and also evaluates M&A opportunities.
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 megawatts of direct current (“MW DC”) project that the Company intends to retain ownership
of, by Q3 FY2025 and reach PTO for three projects for Honeywell, totaling 21 MW DC by Q4 FY2025. Approximately 40 projects are under
utility interconnection studies and permitting. 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
development of the 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 during FY2025. In addition, six projects
in Nova Scotia are under utility interconnection studies and development work is ongoing. The company is actively developing the potential
projects in Ontario, Alberta, and Nova Scotia.
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 focusing on small Feed-in-Tariff (“FIT”)
solar projects, rooftop and ground mount installations.
After
acquisition of Solar Flow-Through Funds Ltd. (“SFF”), including its pipeline of Battery Energy Storage System (“BESS”)
projects, on July 8, 2024, the Company became the owner of the three separate BESS projects in Ontario. The three projects are expected
to reach Notice to Proceed (“NTP”) in the third and fourth quarter of fiscal 2025.
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. In November 2024, the Company secured financial closing of a combined project loan in a principal amount of $25.8
million for two of the three BESS projects. The Company remains in discussion with a project finance lender for the financing for the
third BESS project. The Company has commenced construction on one of the three BESS projects known as SFF-06. The other two BESS projects
require final permits for construction.
Evlo
Energy Storage Inc. (“Evlo”), a subsidiary of Hydro-Québec, 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 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 fully draw down on the $25.8 million loan, and secure a financing for the third BESS project
to provide financing to make required payments 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 also 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 expand into ownership of battery energy storage projects and electric vehicle
charging stations, both are key components of net zero energy transition.
The
Company closed the acquisition of SFF on July 8, 2024.
Recent
Developments
Since
the commencement of fiscal 2025, the Company achieved the following business objectives:
| |
● |
July
2024: The Company closed its acquisition of 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 the third quarter of fiscal year 2025. |
| |
|
|
| |
● |
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 does not presently have
any contracts to develop or power a data center but it 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. The development of any data
center project is subject to identification of a suitable project site, receipt of required permits, entry into contracts for construction
and the use of the data center, the availability of third-party financing arrangements for the Company and the risks associated with
the construction of a data center. In addition, governments may revise, reduce or eliminate incentives and policy support schemes
for renewable energy, which could result in future projects no longer being economic. |
| |
|
|
| |
● |
November
2024: The Company secured project financing in the form of a loan in a principal amount of $3 million. |
| |
|
|
| |
● |
November
2024: The Company secured financial closing of a combined project loan in a principal amount of $25.8 million with Royal Bank of
Canada (“RBC”) as Lenders, Administrative Agent and Collateral Agent for the Lenders. The loan, on a non-recourse basis,
will be used for the construction, operation and maintenance of two 4.99 MW BESS projects to be located in Ontario. |
| |
|
|
| |
● |
December
2024: The Company entered into agreement with Qcells, through an affiliate, to sell four ground-mount solar power projects that are
under development in upstate New York representing 25.58 MW. The projects will be developed as four separate solar power projects.
The Company will now continue to build the Projects for Qcells to commercial operation via EPC agreements. The sale of the projects
and EPC agreement have a total value of approximately US$49.5 million. The Company also expects that it will retain an operations
and maintenance contract for the projects following the completion of construction. |
| |
|
|
| |
● |
January
2025: The Company announced that first BESS project located in Ontario is expected to commence construction during the week of February
10, 2025. The project is known as SFF-06 and is located in Cramahe, Ontario. |
| |
|
|
| |
|
February
2025: The Company announced an update on the development of two projects located on industrial brownfield sites located in Skaneateles,
New York which is in the Finger Lakes Region of New York, in Onnodaga County. The Company intends to develop two ground-mount community
solar projects across this site with a capacity of 14.4 MW DC. The projects have achieved a development milestone in receiving positive
interconnection results via a completed Coordinated Electric System Interconnection Review (CESIR). Now that the Company has received
a positive interconnection determination, the next step is completing the permitting process for the Projects which is already underway. |
Selected
Quarterly Information
The
following table shows selected financial information for the Company for the three and six month periods ended December 31, 2024 and
2023 and should be read in conjunction with the Company’s unaudited condensed interim consolidated financial statements as at December
31, 2024 and audited consolidated financial statements as at June 30, 2024, and related notes.
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 December 31 | |
2024 $ | | |
2023 $ | |
| Revenue | |
| 4,096,264 | | |
| 18,643,805 | |
| Revenue – EPC | |
| 520,642 | | |
| 18,429,025 | |
| Revenue – development | |
| 2,171,457 | | |
| 67,668 | |
| Revenue – IPP production | |
| 1,390,665 | | |
| 122,622 | |
| Revenue – O&M and other services | |
| 13,500 | | |
| 24,490 | |
| Cost of goods sold | |
| (2,787,774 | ) | |
| (16,142,366 | ) |
| Net income | |
| (2,098,553 | ) | |
| (15,507 | ) |
| Earning (loss) per share | |
| (0.07 | ) | |
| (0.00 | ) |
| For the six months ended December 31 | |
2024 $ | | |
2023 $ | |
| Revenue | |
| 20,101,585 | | |
| 26,325,066 | |
| Revenue – EPC | |
| 12,475,031 | | |
| 24,042,040 | |
| Revenue – development | |
| 2,171,457 | | |
| 2,079,418 | |
| Revenue – IPP production | |
| 5,422,481 | | |
| 137,518 | |
| Revenue – O&M and other services | |
| 32,616 | | |
| 66,090 | |
| Cost of goods sold | |
| (14,241,730 | ) | |
| (21,486,425 | ) |
| Net income | |
| (1,857,441 | ) | |
| 2,023,461 | |
| Earning (loss) per share | |
| (0.06 | ) | |
| 0.08 | |
| | |
December 31, 2024 $ | | |
June 30, 2024 $ | |
| Total assets | |
| 185,344,598 | | |
| 39,225,861 | |
| Total current liabilities | |
| 34,743,453 | | |
| 13,388,850 | |
| Total non-current liabilities | |
| 87,752,194 | | |
| 7,112,710 | |
The
following discussion addresses the operating results and financial condition of the Company for the three and six months ended December
31, 2024 compared with the three and six months ended December 31, 2023.
Result
of Operations
Three
and six months ended December 31, 2024 compared with the three and six months ended December 31, 2023
Trend
In
fiscal 2025, the Company continues 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 December 31, 2024 decreased by $2,083,026 compared to the net income for the three months ended
December 31, 2023 with $2,098,533 net loss recognized during the second quarter of 2025 as compared to a net loss of $15,507 for the
second quarter of 2024.
The
net income for the six months ended December 31, 2024 decreased by $3,880,902 compared to the net income for the six months ended December
31, 2023 with $1,857,441 net loss recognized during the period in 2025 as compared to a net income of $2,023,461 for the same period
in fiscal 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 US solar project to date to be owned by the Company |
| Settling
Basins - 1 |
|
New
York, USA |
|
7.0 |
|
Q4
FY2025 |
|
Reach
PTO
(permission
to operate) |
|
EPC
project. Construction started in November 2023 |
| Settling
Basins - 2 |
|
New
York, USA |
|
7.0 |
|
Q4
FY2025 |
|
Reach
PTO
(permission
to operate) |
|
EPC
project. Construction started in November 2023 |
| Settling
Basins - 3 |
|
New
York, USA |
|
7.0 |
|
Q4
FY2025 |
|
Reach
PTO
(permission
to operate) |
|
EPC
project. Construction started in November 2023 |
| 261
Township |
|
Alberta,
Canada |
|
1.4 |
|
Q3
FY2025 |
|
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.
|
SFF06
(BESS) |
|
Ontario,
Cananda |
|
Discharge:
4.74
Storage:
18.96 |
|
Q1
FY2026 |
|
Reach
PTO
(permission
to operate) and secure financing for construction. |
|
EPC
project. EPC agreement entered Oct. 3, 2023. Mobilization is expected to start in February 2025 |
| ● | 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
|
|
|
-
|
|
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 |
|
February
2024 |
|
NTP |
|
|
1,450,000
|
|
|
1,458,961 |
|
Equity
financing, working capital |
|
The
project has been sold to Qcells in December 2024. |
| 6882
Rice Road |
|
New
York, USA |
|
6.4 |
|
February
2024 |
|
NTP |
|
|
3,500,000 |
|
|
1,823,604 |
|
Equity
financing, working capital |
|
The
project has been sold to Qcells in December 2024. |
| Gainesville |
|
New
York, USA |
|
7.0 |
|
April
2025 |
|
NTP |
|
|
2,700,000 |
|
|
258,164 |
|
Equity
financing, working capital |
|
The
project has been sold to Qcells in December 2024. |
| SUNY |
|
New
York, USA |
|
28.0 |
|
December
2025 |
|
Completion
of interconnection studies, engineering and permitting, along with interconnection deposit, and procurement bid application fee |
|
|
2,900,000
|
|
|
212,310 |
|
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 |
|
|
198,990 |
|
Equity
financing, working capital |
|
The
Company is preparing the application package for the Community Solar Program. |
| Oak
Orchard |
|
New
York, USA |
|
7.0 |
|
June
2025 |
|
NTP |
|
|
1,900,000 |
|
|
1,151 |
|
Equity
financing, working capital |
|
The
project is under interconnection study. |
| Boyle |
|
New
York, USA |
|
5.4 |
|
June
2025 |
|
NTP |
|
|
1,150,000 |
|
|
16,619 |
|
Equity
financing, working capital |
|
The
project is under interconnection study |
| Camillus |
|
New
York USA |
|
3.2 |
|
March
2025 |
|
NTP |
|
|
2,775,500 |
|
|
2,853,545 |
|
Equity
financing, working capital |
|
The
project received interconnection approval and is in the final stage of the permitting process. |
| Hwy
28 |
|
New
York USA |
|
7.0 |
|
May
2025 |
|
NTP |
|
|
1,600,000 |
|
|
1,007,611 |
|
Equity
financing, working capital |
|
The
project has been sold to Qcells in December 2024. |
| Silver
Springs |
|
New
York USA |
|
2.9 |
|
December
2025 |
|
NTP |
|
|
1,300,000 |
|
|
15,468 |
|
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 |
|
7.0 |
|
December
2025 |
|
NTP |
|
|
1,250,000 |
|
|
1,079 |
|
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 |
|
|
14,389 |
|
Equity
financing, working capital |
|
The
project is under interconnection study. |
| Skaneateles |
|
New
York, USA |
|
14.4 |
|
June
2025 |
|
NTP |
|
|
2,330,000 |
|
|
383,270 |
|
Equity
financing, working capital |
|
The
project received interconnection approval and is in the final stage of the permitting process. |
During
the quarter certain projects that were previously disclosed were cancelled as follows:
| |
● |
The
site in Black Creek, NY representing 3.2 MW DC that was announced on May 6 2024. Development was discontinued due to high interconnection
costs, which impacted the project’s overall financial viability. |
| |
● |
Projects
in the Orleans County representing 30 MW that were announced on April 22, 2024. These projects were cancelled due to the costs associated
with the Coordinated Electric System Interconnection Review (CESIR), which rendered these projects financially unsustainable. |
Revenue
The
Company’s revenue is mainly from EPC services, Development fees and O&M services.
| | |
Three Months Ended December 31 | | |
Six Months Ended December 31 | |
| | |
2024 | | |
2023 | | |
Change | | |
2024 | | |
2023 | | |
Change | |
| EPC services | |
| 520,642 | | |
| 18,429,025 | | |
| (17,908,383 | ) | |
| 12,475,031 | | |
| 24,042,040 | | |
| (11,567,009 | ) |
| Development fees | |
| 2,171,457 | | |
| 67,668 | | |
| 2,103,789 | | |
| 2,171,457 | | |
| 2,079,418 | | |
| 92,039 | |
| IPP Production | |
| 1,390,665 | | |
| 122,622 | | |
| 1,390,665 | | |
| 5,422,481 | | |
| 137,518 | | |
| 5,284,963 | |
| O&M and other services | |
| 13,500 | | |
| 24,490 | | |
| (10,990 | ) | |
| 32,616 | | |
| 66,090 | | |
| (33,474 | ) |
| Total Revenue | |
| 4,096,264 | | |
| 18,643,805 | | |
| (14,547,541 | ) | |
| 20,101,585 | | |
| 26,325,066 | | |
| (6,223,481 | ) |
The
following table shows the significant changes in revenue from 2023
| | |
Three months | | |
Six months | | |
Explanation |
| EPC services | |
| (17,908,383 | ) | |
| (11,567,009 | ) | |
EPC revenue is recognized based on percentage of completion method. Decrease due to later part of construction stage reached for the Settling Basins projects in Q2.
In FY25, $9.3M earned from Settling Basins projects and $2.3M earned from 261 Township. In Q2 FY25, $599k earned from 261 Township.
In FY24, $6.5M earned from Manlius, $9.6M earned from Settling Basins, and $7.5M earned from BESS projects. In Q2 FY24, $9.6M earned from Settling Basins and $7M earned from BESS projects. |
| Development fees | |
| 2,103,789 | | |
| 92,039 | | |
In Q2 FY25, all revenue earned from membership interest for 4 projects sold. In FY24, $68k earned from BESS development work in Q2 and $2M earned from Settling Basins in Q1. |
| IPP Production | |
| 1,390,665 | | |
| 5,284,963 | | |
The revenue for the six months ended December 31, 2024 consists of $5.0M earned from SFF facilities and $0.4M from OFIT GM & OFIT RT. For comparative period ended December 31, 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.
|
| O&M and other services | |
| (10,990 | ) | |
| (33,474 | ) | |
No significant changes |
| Total | |
| (14,547,541 | ) | |
| (6,223,481 | ) | |
|
Expenses
Expenses
consist of expenditures related to cost of services provided and costs to develop new projects, as well as corporate business development
and administrative expenses.
| Expenses | |
Three Months Ended December 31 | | |
Six Months Ended December 31 | |
| | |
2024 | | |
2023 | | |
Change | | |
2024 | | |
2023 | | |
Change | |
| Cost of goods sold | |
| (2,787,774 | ) | |
| (16,142,366 | ) | |
| 13,354,592 | | |
| (14,241,730 | ) | |
| (21,486,425 | ) | |
| 7,244,695 | |
| Operating expense: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Advertising and promotion | |
| (138,661 | ) | |
| (974,893 | ) | |
| 836,232 | | |
| (587,011 | ) | |
| (1,478,702 | ) | |
| 891,691 | |
| Consulting fees | |
| (913,325 | ) | |
| (449,624 | ) | |
| (463,701 | ) | |
| (1,848,329 | ) | |
| (756,674 | ) | |
| (1,091,655 | ) |
| Depreciation | |
| (17,527 | ) | |
| (16,840 | ) | |
| (687 | ) | |
| (42,066 | ) | |
| (29,325 | ) | |
| (12,741 | ) |
| Insurance | |
| (193,207 | ) | |
| (88,012 | ) | |
| (105,195 | ) | |
| (405,066 | ) | |
| (127,258 | ) | |
| (277,808 | ) |
| Listing fee | |
| (12,744 | ) | |
| - | | |
| (12,744 | ) | |
| (12,744 | ) | |
| - | | |
| (12,744 | ) |
| Office, rent and utilities | |
| (165,478 | ) | |
| (131,195 | ) | |
| (34,283 | ) | |
| (459,264 | ) | |
| (210,388 | ) | |
| (248,876 | ) |
| Professional fees | |
| (596,927 | ) | |
| (483,216 | ) | |
| (113,711 | ) | |
| (1,683,436 | ) | |
| (627,357 | ) | |
| (1,056,079 | ) |
| Repairs and maintenance | |
| (38,191 | ) | |
| (41,796 | ) | |
| 3,605 | | |
| (78,631 | ) | |
| (46,847 | ) | |
| (31,784 | ) |
| Salary and Wages | |
| (484,421 | ) | |
| (275,335 | ) | |
| (209,086 | ) | |
| (908,382 | ) | |
| (477,416 | ) | |
| (430,966 | ) |
| Stock based compensation | |
| (42,684 | ) | |
| (220,519 | ) | |
| 177,835 | | |
| (155,932 | ) | |
| (650,099 | ) | |
| 494,167 | |
| Travel and events | |
| (284,144 | ) | |
| (126,971 | ) | |
| (157,173 | ) | |
| (341,688 | ) | |
| (171,234 | ) | |
| (170,454 | ) |
| Total operating expenses | |
| (2,887,309 | ) | |
| (2,808,401 | ) | |
| (78,908 | ) | |
| (6,522,549 | ) | |
| (4,575,300 | ) | |
| (1,947,249 | ) |
| Total Expenses | |
| (5,675,083 | ) | |
| (18,950,767 | ) | |
| 13,275,684 | | |
| (20,764,279 | ) | |
| (26,061,725 | ) | |
| 5,297,446 | |
The
following table shows the significant changes in expenses from 2023:
| | |
Three months | | |
Six months | | |
Management Commentary |
| Cost of goods sold | |
| 13,354,592 | | |
| 7,244,695 | | |
Consistent with the decrease in revenues. |
| Operating expense: | |
| | | |
| | | |
|
| Advertising and promotion | |
| 836,232 | | |
| 891,691 | | |
Reduced marketing expense during the first half of FY2025 comparing to increase in spending in FY2024 preparing for Nasdaq listing. |
| Consulting fees | |
| (463,701 | ) | |
| (1,091,655 | ) | |
Consulting rates were increased and one additional internal consultant hired as the Controller. In additional payments to Advisory Board members starting FY2025. |
| Depreciation | |
| (687 | ) | |
| (12,741 | ) | |
Increase related to additional office space rented starting Dec. 2023. |
| Insurance | |
| (105,195 | ) | |
| (277,808 | ) | |
Insurance was higher due to increased activity and higher director and officer insurance premiums following completion of the Nasdaq listing. Increase also affected by higher revenue and new companies acquired. |
| Listing fees | |
| (12,744 | ) | |
| (12,744 | ) | |
Cboe costs. |
| Office, rent and utilities | |
| (34,283 | ) | |
| (248,876 | ) | |
Increase in rent and maintenance costs due to new IPP facilities acquired. |
| Professional fees | |
| (113,711 | ) | |
| (1,056,079 | ) | |
Increase due to audit fees, consulting fees relating to exploring investor markets, due diligence work on acquisitions (in particular the SFF acquisition), and filing fees. |
| Repairs and maintenance | |
| 3,605 | | |
| (31,784 | ) | |
Repair work on OFIT GM and OFIT RT facilities. |
| Salary and Wages | |
| (209,086 | ) | |
| (430,966 | ) | |
Increase in employee salaries at various rates and payment of board remuneration. |
| Stock based compensation | |
| 177,835 | | |
| 494,167 | | |
Employee stock compensation all vested Nov 2024. |
| Travel and events | |
| (157,173 | ) | |
| (170,454 | ) | |
Increase due to more travel and seminars activities in FY2025 to grow the Company’s pipeline. |
| Total operating expenses | |
| (78,908 | ) | |
| (1,947,249 | ) | |
|
| Total Expenses | |
| 13,275,684 | | |
| 5,297,446 | | |
|
Other
Income (Expense)
For
the three months ended December 31, 2024, the Company had other loss of $13,702 compared to other income of $363,853 for the three months
ended December 31, 2023. Other loss for the three months ended December 31, 2024 consists mainly of a foreign exchange loss of $22,432
and other income of $8,730. Other income for the three months ended December 31, 2023 consists mainly of bad debt recovery of $267,740,
gain from acquisition of non-controlling interest of Solar Alliance Energy DevCo of $195,893, foreign exchange loss of $111,865 and other
income of $12,084.
For
the six months ended December 31, 2024, the Company had other income of $80,988 compared to other income of $1,735,690 for the six months
ended December 31, 2023. Other income for the six months ended December 31, 2024 consists mainly of foreign exchange gain of $13,132
and other income of $67,856. Other income for the six months ended December 31, 2023 consists mainly of bad debt recovery of $1,462,752,
gain from acquisition of non-controlling interest of $195,893, foreign exchange gain of $30,317 and other gain of $46,728.
Net
Income (Loss)
The
net loss for the three months ended December 31, 2024 was $2,098,533 for loss per share of $0.07 based on 30,989,790 outstanding shares
versus net income of $15,508 for loss per share of $0.00 based on 27,039,075 outstanding shares for the comparative period.
The
net loss for the six months ended December 31, 2024 was $1,857,441 for loss per share of $0.06 based on 30,724,579 outstanding shares
versus net income of $2,023,459 for earning per share of $0.08 based on 26,922,629 outstanding shares for the comparative period.
Legal
Matters and Contingencies
The
Company is subject to the following legal matters and contingencies:
| (1) |
In
June 2022, a group of residents filed an Article 78 lawsuit against the Town of Manlius, New York, over 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. The Petitioners still have time to appeal the second dismissal, but an injunction against the on-going construction of
the solar project was denied in the second proceeding. Due to the Petitioners failure to succeed in any of the proceedings to date,
management has assessed that 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. If the claim is successful, 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 the interim consolidated 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 the interim consolidated 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 $400,000 to the roofers. SFF cannot install the system until it receives confirmation that the
structural integrity is sufficient for the system. SFF had been planning to move forward with examinations for discovery this fall
but have delayed this due to recent health concerns and commitments of its team members who will attend the examinations. |
| |
|
| (6) |
The
Landlord of a SFF solar power project in Ontario refused to give SFF the access to the site for regular maintenance. SFF and the
landlord attended a court hearing on June 5, 2023. The landlord requested that the hearing be adjourned so that he would have more
time to retain counsel, and the judge issued a court order so that SFF could access the property on June 9, 2023 for maintenance
activities. Since then, respective counsel has been in correspondence so that SFF could schedule semi-annual maintenance, the most
recent of which occurred on June 27, 2024. |
Summary
of Quarterly Results
| Description | |
Q2 December 31, 2024 ($) | | |
Q1 September 30, 2024 ($) | | |
Q4 June 30, 2024 ($) | | |
Q3 March 31, 2024 ($) | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
| 4,096,264 | | |
| 16,005,321 | | |
| 7,977,121 | | |
| 24,074,947 | |
| Income (Loss) for the period | |
| (2,098,533 | ) | |
| 241,092 | | |
| (9,099,845 | ) | |
| 3,499,241 | |
Earning (Loss) per share
(basic and diluted) | |
| (0.07)
(basic and diluted) | | |
| 0.01 (basic) 0.01 (diluted) | | |
| (0.34)
(basic and diluted) | | |
| 0.13 (basic) 0.09 (diluted) | |
| Description | |
Q2 December 31, 2023 ($) | | |
Q1 September 30, 2023 ($) | | |
Q4 June 30, 2023 ($) | | |
Q3 March 31, 2023 ($) | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
| 18,643,805 | | |
| 7,681,261 | | |
| 9,245,267 | | |
| 706,856 | |
| Income (Loss) for the period | |
| (15,507 | ) | |
| 2,038,968 | | |
| (1,076,836 | ) | |
| 3,064,872 | |
Income (Loss) per share
(basic and diluted) | |
| (0.00)
(basic and diluted) | | |
| 0.08 (basic) 0.05 (diluted) | | |
| (0.06)
(basic and diluted) | | |
| 0.11 (basic) 0.09 (diluted) | |
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 and lead to reduce solar power generation; however, this can fluctuate based on project
locations and development timelines. 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 . The revenues for the quarter ended
December 31, 2024 was lower due to reduced revenue from EPC services as projects were substantially completed and new projects that have
been sold did not yet achieve revenue recognition. The closing of the transaction with Qcells concluded during the quarter will provide
revenue from EPC services that will be recognized over the next several quarters. Refer to “Results of Operations” for additional
discussion.
Liquidity
and Capital Resources
The
following table summarizes the Company’s liquidity position:
| As at | |
December 31, 2024
$ | | |
June 30, 2024
$ | |
| Cash | |
| 13,762,703 | | |
| 5,270,405 | |
| Working capital(1) | |
| (1,109,987 | ) | |
| 4,240,999 | |
| Total assets | |
| 185,344,598 | | |
| 39,225,861 | |
| Total liabilities | |
| 122,495,647 | | |
| 20,501,560 | |
| Shareholders’ equity | |
| 62,848,951 | | |
| 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”. |
To
date, the Company’s operations have been financed from cash flows from operations, debt financing and equity financing. While the
Company presently has a working capital deficit it has assessed that based on its reasonable assumptions, it will have sufficient working
capital to continue operation for the next twelve months. The assumptions are based on forecasts related to revenues, expenditures and
financing activities.
As
it relates to revenues, the main components are revenue from IPP operations, revenue from EPC operations and revenue from development
fees for projects that are sold. The Company is able to predict its revenue from IPP operations based on past performance of its existing
asset base. The transaction with Qcells and current project schedule allow the Company to reasonably predict its revenues from EPC operation
and development fees.
As
it relates to operating expenses, the Company is able to forecast its expenses based on historical operations and assumptions about future
activities. The Company has estimated operating expenses at an average of approximately $820,000 per month.
As
it relates to financing the Company has access to equity financing (as disclosed below) and debt financing (as disclosed below). 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.
As
it relates to debt financing, as disclosed above, the Company has secured a $25.8 million debt facility for two of the three BESS projects
and it has assumed it will be able to draw down on this facility. The Company is in discussions with a project finance lender for the
financing for the third BESS project and has assumed this will be concluded and financing will be available during the current fiscal
year. The Company has also secured from Seminole Financial Services, LLC an initial US$2,600,000 construction to mini-perm loan for the
Geddes Project and it has assumed it will be able to draw down on this loan during the current fiscal year. Finally, the Company has
secured a US$1 million line of credit with M&T Bank that is available to draw down on a revolving basis.
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 six months ended | |
December 31, 2024
$ | | |
December 31, 2023
$ | |
| Net cash provided by (used in) | |
| | | |
| | |
| Operating activities | |
| 1,305,247 | | |
| 26,744,582 | |
| Investing activities | |
| (1,086,162 | ) | |
| (1,858,720 | ) |
| Financing activities | |
| 8,213,141 | | |
| (192,364 | ) |
| Increase (decrease) in cash, cash equivalents, and restricted cash | |
| 8,492,298 | | |
| 24,165,493 | |
Cash
flow from operating activities
The
Company has positive cash flow of $1,305,247 from operating activities during the six months ended December 31, 2024, while the Company
generated $26,744,582 in cash from operating activities during the same period ended December 31, 2023. The Company generated cash of
$1,706,854 from the operational activities and used $401,607 for the change of working capital during the six months ended December
31, 2024, while the Company generated cash of $2,559,616 from the operational activities and generated $24,184,966 for the change of
working capital during the six months ended December 31, 2023.
Cash
flow from financing activities
The
Company generated cash of $8,213,141 from financing activities during the six months ended December 31, 2024, while the Company used
cash of $192,364 cash during the same period ended December 31, 2023. The cash generated in financing activities for the six months ended
December 31, 2024 was driven by reception of long-term loan of $8,352,232 and short-term loans of $4,399,000, proceeds from broker warrants
exercised of $41,250, proceeds from stock options exercise of $39,375, and proceeds from issuance of common shares of $314,618. This
was offset by repayment of lease obligation of $483,733, long-term loan principal payment of $2,549,608 and long-term loans interest
payment of $1,899,993. The cash usage in financing activities for the six months ended December 31, 2023 was driven by repayment of long-term
debt of $203,223 and payment of lease obligation of $52,050. This was offset by cash generation from issuance of common shares for net
proceeds of $21,659 and proceeds from broker warrants exercised of $41,250.
Cash
flow from investing activities
The
Company generated cash of $1,086,162 in investing activities during the six months ended December 31, 2024, while the Company generated
cash of $3,199,165 from investing activities during the same period ended December 31, 2023. The cash generated for the six months ended
December 31, 2024 consists of cash from SFF of $9,810,570 and GIC redemption of $1,920,000. Offset by cash used in development asset
of $11,016,732, GIC purchase of $1,300,000 and related parties of $500,000. The cash used for the six months ended December 31, 2023
includes acquisition of property, plant and equipment of $42,908, acquisition of development asset of $5,596,634, purchase of partnership
units of $2,465,000, and purchase of non-controlling interest of $95,333, offset by net cash of $11,155 received from acquisition and
redemption of GIC of $6,330,000.
Contractual
Obligations
Below
is a tabular disclosure of the Company’s contractual obligations as at December 31, 2024:
| | |
Total | | |
Less than one year | | |
1 to 3 years | | |
3 to 5 years | | |
More than 5 years | |
| Long-Term Debt Obligations | |
$ | 62,974,941 | | |
$ | 4,968,457 | | |
$ | 12,576,382 | | |
$ | 23,102,969 | | |
$ | 22,327,133 | |
| Operating Lease Obligations | |
| 10,892,476 | | |
| 487,896 | | |
| 1,884,850 | | |
| 1,858,697 | | |
| 6,661,033 | |
| Loan payable | |
| 5,880,105 | | |
| 5,880,105 | | |
| - | | |
| - | | |
| - | |
| Other Long-term liabilities | |
| 6,307,159 | | |
| - | | |
| 6,307,159 | | |
| - | | |
| - | |
| Due to related parties | |
| 934,328 | | |
| 934,328 | | |
| | | |
| | | |
| | |
| Purchase Obligations | |
| 1,694,526 | | |
| 1,694,526 | | |
| - | | |
| - | | |
| - | |
| Accounts Payable and Accrued Liabilities | |
| 19,510,980 | | |
| 19,510,980 | | |
| - | | |
| - | | |
| - | |
| Total | |
$ | 108,194,515 | | |
$ | 33,476,292 | | |
$ | 20,768,391 | | |
$ | 24,961,666 | | |
$ | 28,988,166 | |
Capital
Transactions
During
the six months ended December 31, 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. |
| |
|
|
|
| |
|
|
|
| |
iii. |
|
On
October 7, 2024, 41,707 Common Shares issued to former SFF directors after closing of acquisition. |
| |
|
|
|
| |
iv. |
|
On
October 11, 2024, 120,000 employee stock options exercised resulting in issuance of 110,448 Common Shares. |
| |
|
|
|
| |
|
|
|
| |
v. |
|
On
December 19, 2024, 7,500 RSU’s were exercised to convert to 7,500 common shares. |
| |
|
|
|
| |
vi. |
|
During
October to December 2024, the Company sold a total of 86,293 Common Shares through at-the-market offerings at an average price of
US$2.59 ($3.79) per share for gross proceed of $327,294. |
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 December 31, 2024 and as of the date of this MD&A:
| Security Description | |
December 31, 2024 | | |
Date of report | |
| Common shares | |
| 31,067,655 | | |
| 31,805,701 | |
| Warrants | |
| 7,818,000 | | |
| 7,698,000 | |
| Stock options | |
| 2,639,000 | | |
| 2,639,000 | |
| Restricted share units | |
| 257,500 | | |
| 407,500 | |
| Contingent value rights(1) | |
| 2,283,929 | | |
| 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 | | |
| 198,000 | |
| 01-Mar-2023 | |
01-Mar-2028 | |
$ | 0.50 | | |
| 5,000,000 | |
| | |
| |
| | | |
| 7,698,000 | |
| 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-2023 | |
| 250,000 | |
| 13-Mar-2023 | |
12-Mar-2025 | |
| 7,500 | |
| 13-Jan-2025 | |
15-Feb-2025 | |
| 50,000 | |
| 13-Jan-2025 | |
15-Mar-2025 | |
| 50,000 | |
| 13-Jan-2025 | |
15-Apr-2025 | |
| 50,000 | |
| | |
| |
| 407,500 | |
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:
| | |
December 31, 2024 | | |
June 30, 2024 | |
| Long-term debt -non-current portion | |
$ | 58,006,484 | | |
$ | 4,379,169 | |
| Shareholders’ Equity | |
$ | 62,848,951 | | |
$ | 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. See “Liquidity and Capital Resources” above
for a discussion regarding the Company’s working capital position.
No
changes have occurred 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
As
at December 31, 2024, included in trade and other payable was $48,506 (June 30, 2024- $124,125) due to directors and other members of
key management personnel.
As
at December 31, 2024, included in Due to related parties balance was $934,328 relating to amount due to Berkley Renewables Inc which
has a director that is also a director for the Company.
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 consist of members of the Company’s Board of
Directors and corporate officers, including the Company’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer
and Chief Administrative Officer.
The
remuneration of directors and other members of key management personnel, for the three and six months ended December 31, 2024 and 2023
were as follows:
| | |
Three Months Ended December 31, | |
| | |
2024 | | |
2023 | |
| Short-term employee benefits | |
$ | 619,161 | | |
$ | 303,029 | |
| Share-based compensation | |
$ | 72,160 | | |
$ | 105,938 | |
| | |
Six Months Ended December 31, | |
| | |
2024 | | |
2023 | |
| Short-term employee benefits | |
$ | 1,322,387 | | |
$ | 610,628 | |
| Share-based compensation | |
$ | 144,321 | | |
$ | 286,484 | |
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 interim 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
New
accounting policies adopted subsequent to the audited consolidated financial statements for the year ended June 30, 2024 is as follows:
(a)
Segment reporting
An
operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses
and for which discrete financial information is available. The Company’s chief executive officer regularly reviews the operating
results of each operating segment to make decisions about resources to be allocated to the segment and assess its performance. In determining
operating segments, the Company considers the nature of product and services provided. Refer to note 24 to the accompanying financial
statements for more details.
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. 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.
Six months ended December 31, 2024 | |
Revenue | | |
% of Total Revenue | |
| Customer A | |
$ | 9,253,582 | | |
| 64 | % |
| Customer B | |
$ | 2,414,445 | | |
| 12 | % |
| Customer G | |
$ | 2,495,197 | | |
| 12 | % |
| Customer H | |
$ | 2,171,457 | | |
| 11 | % |
Six months ended December 31, 2023 | |
Revenue | | |
% of Total Revenue | |
| Customer A | |
$ | 11,659,809 | | |
| 44 | % |
| Customer C | |
$ | 5,024,401 | | |
| 19 | % |
| Customer D | |
$ | 2,507,976 | | |
| 10 | % |
| Customer E | |
$ | 6,550,519 | | |
| 25 | % |
Three months ended December 31, 2024 | |
Revenue | | |
% of Total Revenue | |
| Customer B | |
$ | 626,948 | | |
| 15 | % |
| Customer G | |
$ | 670,228 | | |
| 16 | % |
| Customer H | |
$ | 2,171,457 | | |
| 53 | % |
Three months ended December 31, 2023 | |
Revenue | | |
% of Total Revenue | |
| Customer A | |
$ | 9,648,059 | | |
| 52 | % |
| Customer C | |
$ | 5,081,531 | | |
| 27 | % |
| Customer D | |
$ | 2,531,928 | | |
| 14 | % |
| December 31, 2024 | |
Account Receivable | | |
% of Account Receivable | |
| Customer A | |
$ | 1,165,579 | | |
| 12 | % |
| Customer H | |
$ | 5,952,071 | | |
| 62 | % |
| 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 $13,884 (USD$9,649).
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 | |
December 31, 2024 | | |
June 30, 2024 | |
| | |
| $ | | |
| $ | |
| Current assets | |
| 33,633,466 | | |
| 17,629,849 | |
| Current liabilities | |
| 34,743,453 | | |
| 13,388,850 | |
| Working capital | |
| (1,109,987 | ) | |
| 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 non-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-recurring activities.
Other companies may calculate Adjusted EBITDA differently.
| | |
Three months ended December 31, | | |
Six months ended December 31, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| | |
| $ | | |
| $ | | |
| $ | | |
| $ | |
| Net income (loss) per financial statements | |
| (2,098,533 | ) | |
| (15,507 | ) | |
| (1,857,441 | ) | |
| 2,023,461 | |
| Add: | |
| | | |
| | | |
| | | |
| | |
| Depreciation expense | |
| 17,527 | | |
| 16,840 | | |
| 42,066 | | |
| 29,325 | |
| Depreciation included in COGS | |
| 1,524,968 | | |
| 32,480 | | |
| 3,008,283 | | |
| 41,973 | |
| Interest (income)/expense, net | |
| 696,477 | | |
| 50,645 | | |
| 1,279,358 | | |
| (8,443 | ) |
| Income tax and Deferred income tax expense | |
| (164,413 | ) | |
| 21,753 | | |
| 641,065 | | |
| (15,987 | ) |
| Fair value change (gain)/loss | |
| (26,052 | ) | |
| - | | |
| (644,688 | ) | |
| - | |
| Other (income)/expense | |
| 13,702 | | |
| (363,853 | ) | |
| (80,988 | ) | |
| (1,735,690 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Adjusted EBITDA | |
| (36,324 | ) | |
| (257,642 | ) | |
| 2,387,655 | | |
| 334,639 | |
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 December 31, 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 December 31, 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 and United States 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 sufficiency of working capital for the next twelve months of operations; the Company’s growth
strategies the expected energy production from the solar power and BESS projects mentioned in this MD&A; the reduction of carbon
emissions; the receipt of incentives for the projects; the details of the transaction with Qcells; the timelines and milestones associated
with the Company’s development pipeline; the details of the Company’s planned expansion into the data center industry; 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 represent 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 ability to secure
a contract with a data center partner; 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 any public health threats; 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 and six months ended December 31, 2024 and 2023
SOLARBANK
CORPORATION
Condensed
Consolidated Interim Statements of Financial Position
(Expressed
in Canadian dollars)
(Unaudited)
| | |
Notes | | |
December
31, 2024 | | |
June
30, 2024 | |
| Assets | |
| | | |
| | | |
| | |
| Current assets: | |
| | | |
| | | |
| | |
| Cash | |
| | | |
$ | 13,762,703 | | |
$ | 5,270,405 | |
| Short-term investments | |
| 4 | | |
| 1,016,097 | | |
| 920,000 | |
| Trade and other receivables | |
| 5 | | |
| 9,623,459 | | |
| 1,115,217 | |
| Unbilled revenue | |
| 8 | | |
| 290,268 | | |
| 666,748 | |
| Prepaid expenses and
deposits | |
| 6 | | |
| 1,384,046 | | |
| 3,126,829 | |
| Inventory | |
| 9 | | |
| 7,556,893 | | |
| 6,530,650 | |
| |
| | | |
| 33,633,466 | | |
| 17,629,849 | |
| Non-current assets: | |
| | | |
| | | |
| | |
| Property, plant and
equipment | |
| 7 | | |
| 38,436,225 | | |
| 3,454,923 | |
| Right-of-use assets | |
| 13 | | |
| 7,757,317 | | |
| 1,085,128 | |
| Development assets | |
| 10 | | |
| 31,052,386 | | |
| 8,909,371 | |
| Derivative assets | |
| 19(a) | | |
| 693,423 | | |
| 152,990 | |
| Tax equity assets | |
| 17 | | |
| 375,075 | | |
| 401,373 | |
| Goodwill | |
| 27 | | |
| 37,586,213 | | |
| 438,757 | |
| Intangible assets | |
| 15 | | |
| 35,046,003 | | |
| 2,001,447 | |
| Investment | |
| 18 | | |
| - | | |
| 5,152,023 | |
| Other assets | |
| 6 | | |
| 764,490 | | |
| - | |
| | |
| | | |
| 151,711,132 | | |
| 21,596,012 | |
| Total
assets | |
| | | |
$ | 185,344,598 | | |
$ | 39,225,861 | |
| Liabilities and Shareholders’
equity | |
| | | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | | |
| | |
| Trade and other payables | |
| 11 | | |
$ | 19,510,980 | | |
$ | 4,690,261 | |
| Unearned revenue | |
| 12 | | |
| 2,785,755 | | |
| 4,600,491 | |
| Current portion of long-term
debt | |
| 16 | | |
| 4,968,457 | | |
| 448,229 | |
| Loan payables | |
| 14 | | |
| 5,880,105 | | |
| 1,309,884 | |
| Tax payable | |
| | | |
| 909,425 | | |
| 2,112,606 | |
| Current portion of lease
liability | |
| 13 | | |
| 610,832 | | |
| 148,787 | |
| Current portion of tax
equity | |
| 17 | | |
| 77,899 | | |
| 78,592 | |
| |
| | | |
| 34,743,453 | | |
| 13,388,850 | |
| Non-current liabilities: | |
| | | |
| | | |
| | |
| Long-term debt | |
| 16 | | |
| 58,006,484 | | |
| 4,379,169 | |
| Other long-term liabilities | |
| 18(3) | | |
| 6,307,159 | | |
| 366,369 | |
| Due to related parties | |
| 22 | | |
| 934,328 | | |
| - | |
| Deferred tax liabilities | |
| | | |
| 14,924,808 | | |
| 1,073,835 | |
| Lease liabilities | |
| 13 | | |
| 7,301,029 | | |
| 992,687 | |
| Tax equities | |
| 17 | | |
| 278,386 | | |
| 300,650 | |
| | |
| | | |
| 87,752,194 | | |
| 7,112,710 | |
| Total
liabilities | |
| | | |
$ | 122,495,647 | | |
$ | 20,501,560 | |
| | |
| | | |
| | | |
| | |
| Shareholders’
equity: | |
| | | |
| | | |
| | |
| Share capital | |
| 20 | | |
| 38,918,760 | | |
| 9,025,698 | |
| Contributed surplus | |
| | | |
| 3,645,782 | | |
| 4,059,175 | |
| Accumulated other comprehensive
income | |
| | | |
| 779,476 | | |
| 99,681 | |
| Retained earnings | |
| | | |
| 3,109,198 | | |
| 3,178,814 | |
| Equity attributable
to shareholders of the company | |
| | | |
| 46,453,216 | | |
| 16,363,368 | |
| Non-controlling interest | |
| 21 | | |
| 16,395,735 | | |
| 2,360,933 | |
| Total
equity | |
| | | |
| 62,848,951 | | |
| 18,724,301 | |
| Total
liabilities and shareholders’ equity | |
| | | |
$ | 185,344,598 | | |
$ | 39,225,861 | |
Approved
and authorized for issuance on behalf of the Board of Directors on February 12, 2025 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 (Loss) Income and Comprehensive (Loss) Income
(Expressed
in Canadian dollars)
(Unaudited)
| | |
Notes | | |
Three
months ended December 31 | | |
Six
months ended
December
31 | |
| | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Revenue
from development fees | |
| | | |
$ | 2,171,457 | | |
$ | 67,668 | | |
$ | 2,171,457 | | |
$ | 2,079,418 | |
| Revenue from EPC services | |
| | | |
| 520,642 | | |
| 18,429,025 | | |
| 12,475,031 | | |
| 24,042,040 | |
| Revenue from IPP production | |
| | | |
| 1,390,665 | | |
| 122,622 | | |
| 5,422,481 | | |
| 137,518 | |
| Revenue from O&M and
other services | |
| | | |
| 13,500 | | |
| 24,490 | | |
| 32,616 | | |
| 66,090 | |
| | |
| | | |
| 4,096,264 | | |
| 18,643,805 | | |
| 20,101,585 | | |
| 26,325,066 | |
| Cost of goods sold | |
| | | |
| (2,787,774 | ) | |
| (16,142,366 | ) | |
| (14,241,730 | ) | |
| (21,486,425 | ) |
| Gross profit | |
| | | |
| 1,308,490 | | |
| 2,501,439 | | |
| 5,859,855 | | |
| 4,838,641 | |
| Operating expense: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Advertising and promotion | |
| | | |
| (138,661 | ) | |
| (974,893 | ) | |
| (587,011 | ) | |
| (1,478,702 | ) |
| Consulting fees | |
| | | |
| (913,325 | ) | |
| (449,624 | ) | |
| (1,848,329 | ) | |
| (756,674 | ) |
| Depreciation | |
| 7,
13 | | |
| (17,527 | ) | |
| (16,840 | ) | |
| (42,066 | ) | |
| (29,325 | ) |
| Insurance | |
| | | |
| (193,207 | ) | |
| (88,012 | ) | |
| (405,066 | ) | |
| (127,258 | ) |
| Listing fees | |
| | | |
| (12,744 | ) | |
| - | | |
| (12,744 | ) | |
| - | |
| Office, rent and utilities | |
| | | |
| (165,478 | ) | |
| (131,195 | ) | |
| (459,264 | ) | |
| (210,388 | ) |
| Professional fees | |
| | | |
| (596,927 | ) | |
| (483,216 | ) | |
| (1,683,436 | ) | |
| (627,357 | ) |
| Repairs and maintenance | |
| | | |
| (38,191 | ) | |
| (41,796 | ) | |
| (78,631 | ) | |
| (46,847 | ) |
| Salary and wages | |
| | | |
| (484,421 | ) | |
| (275,335 | ) | |
| (908,382 | ) | |
| (477,416 | ) |
| Share-based compensation | |
| 20 | | |
| (42,684 | ) | |
| (220,519 | ) | |
| (155,932 | ) | |
| (650,099 | ) |
| Travel and events | |
| | | |
| (284,144 | ) | |
| (126,971 | ) | |
| (341,688 | ) | |
| (171,234 | ) |
| Total operating expenses | |
| | | |
| (2,887,309 | ) | |
| (2,808,401 | ) | |
| (6,522,549 | ) | |
| (4,575,300 | ) |
| Other income | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest income | |
| | | |
| 109,162 | | |
| 75,567 | | |
| 328,612 | | |
| 158,736 | |
| Interest expenses | |
| | | |
| (805,639 | ) | |
| (126,212 | ) | |
| (1,607,970 | ) | |
| (150,293 | ) |
| Fair value change gain | |
| 16(2),
18(4) | | |
| 26,052 | | |
| - | | |
| 644,688 | | |
| - | |
| Other income (expense) | |
| | | |
| (13,702 | ) | |
| 363,853 | | |
| 80,988 | | |
| 1,735,690 | |
| Net (loss) income before taxes | |
| | | |
$ | (2,262,946 | ) | |
$ | 6,246 | | |
$ | (1,216,376 | ) | |
$ | 2,007,474 | |
| Current tax (expense) recovery | |
| 25 | | |
| (213,437 | ) | |
| (21,753 | ) | |
| (910,977 | ) | |
| 15,987 | |
| Deferred tax recovery | |
| | | |
| 377,850 | | |
| - | | |
| 269,912 | | |
| - | |
| Net (loss) income | |
| | | |
$ | (2,098,533 | ) | |
$ | (15,507 | ) | |
$ | (1,857,441 | ) | |
$ | 2,023,461 | |
| Items that are or may
be reclassified subsequently to profit or loss | |
| | | |
| | | |
| | | |
| | | |
| | |
| Current translation adjustments | |
| | | |
| 853,476 | | |
| (188,554 | ) | |
| 679,795 | | |
| (101,788 | ) |
| Other comprehensive income | |
| | | |
| 853,476 | | |
| (188,554 | ) | |
| 679,795 | | |
| (101,788 | ) |
| Net (loss) income and
comprehensive (loss) income | |
| | | |
$ | (1,245,057 | ) | |
$ | (204,061 | ) | |
$ | (1,177,646 | ) | |
$ | 1,921,673 | |
| Net (loss) income attributable
to: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shareholders of the company | |
| | | |
| (911,508 | ) | |
| 39,872 | | |
| (69,616 | ) | |
| 2,074,491 | |
| Non-controlling interest | |
| 21 | | |
| (1,187,025 | ) | |
| (55,379 | ) | |
| (1,787,825 | ) | |
| (51,030 | ) |
| Net (loss) income | |
| | | |
$ | (2,098,533 | ) | |
$ | (15,507 | ) | |
$ | (1,857,441 | ) | |
$ | 2,023,461 | |
| Total (loss) income and
comprehensive (loss) income attributable to: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shareholders of the company | |
| | | |
| (58,032 | ) | |
| (153,031 | ) | |
| 610,179 | | |
| 1,972,703 | |
| Non-controlling interest | |
| 21 | | |
| (1,187,025 | ) | |
| (51,030 | ) | |
| (1,787,825 | ) | |
| (51,030 | ) |
| Total (loss) income and
comprehensive (loss) income | |
| | | |
$ | (1,245,057 | ) | |
$ | (204,061 | ) | |
$ | (1,177,646 | ) | |
$ | 1,921,673 | |
| Net (loss) income per share | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 26 | | |
| (0.07 | ) | |
| (0.00 | ) | |
| (0.06 | ) | |
| 0.08 | |
| Diluted | |
| 26 | | |
| (0.07 | ) | |
| (0.00 | ) | |
| (0.06 | ) | |
| 0.05 | |
| Weighted average number of common shares
outstanding | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 26 | | |
| 30,989,790 | | |
| 27,039,075 | | |
| 30,724,579 | | |
| 26,922,629 | |
| Diluted | |
| 26 | | |
| 30,989,790 | | |
| 27,039,075 | | |
| 30,724,579 | | |
| 37,448,058 | |
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 | |
| | | |
| - | | |
| - | | |
| - | | |
| (69,616 | ) | |
| - | | |
| (69,616 | ) | |
| (1,787,825 | ) | |
| (1,857,441 | ) |
| Other comprehensive loss | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 679,795 | | |
| 679,795 | | |
| 8,172 | | |
| 687,967 | |
| Total comprehensive loss | |
| | | |
| - | | |
| - | | |
| - | | |
| (69,616 | ) | |
| 679,795 | | |
| 610,179 | | |
| (1,779,653 | ) | |
| (1,169,474 | ) |
| Common shares issued, net of costs | |
| | | |
| 86,293 | | |
| 314,618 | | |
| - | | |
| - | | |
| - | | |
| 314,618 | | |
| - | | |
| 314,618 | |
| Warrant exercised | |
| | | |
| 55,000 | | |
| 41,250 | | |
| - | | |
| - | | |
| - | | |
| 41,250 | | |
| - | | |
| 41,250 | |
| RSU granted | |
| 20(e) | | |
| - | | |
| - | | |
| 3,163 | | |
| - | | |
| - | | |
| 3,163 | | |
| - | | |
| 3,163 | |
| RSU exercised | |
| | | |
| 7,500 | | |
| 23,325 | | |
| (23,325 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Share-based compensation | |
| 20(d) | | |
| 41,707 | | |
| 287,682 | | |
| 152,769 | | |
| - | | |
| - | | |
| 440,451 | | |
| - | | |
| 440,451 | |
| Stock option exercised | |
| | | |
| 110,448 | | |
| 585,375 | | |
| (546,000 | ) | |
| - | | |
| - | | |
| 39,375 | | |
| - | | |
| 39,375 | |
| Acquisition of Solar Flow-Through
Funds | |
| 18 | | |
| 3,575,632 | | |
| 28,640,812 | | |
| - | | |
| - | | |
| - | | |
| 28,640,812 | | |
| 15,814,455 | | |
| 44,455,267 | |
| Balance at December 31,
2024 | |
| | | |
| 31,067,655 | | |
$ | 38,918,760 | | |
$ | 3,645,782 | | |
$ | 3,109,198 | | |
$ | 779,476 | | |
$ | 46,453,216 | | |
$ | 16,395,735 | | |
$ | 62,848,951 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 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 | |
| | | |
| - | | |
| - | | |
| - | | |
| 2,074,491 | | |
| - | | |
| 2,074,491 | | |
| (51,030 | ) | |
| 2,023,461 | |
| Other comprehensive loss | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (101,788 | ) | |
| (101,788 | ) | |
| 8,172 | | |
| (93,616 | ) |
| Total comprehensive loss | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (101,788 | ) | |
| 1,972,703 | | |
| (42,858 | ) | |
| 1,929,845 | |
| 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 | |
| | | |
| - | | |
| - | | |
| 601,918 | | |
| - | | |
| - | | |
| 601,918 | | |
| - | | |
| 601,918 | |
| Other comprehensive loss | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (101,788 | ) | |
| (101,788 | ) | |
| 8,172 | | |
| (93,616 | ) |
| OFIT GM and OFIT RT acquisition | |
| | | |
| 278,875 | | |
| 2,066,464 | | |
| - | | |
| | | |
| - | | |
| 2,066,464 | | |
| 2,508,989 | | |
| 4,575,453 | |
| Solar Alliance DevCo NCI
acquisition | |
| | | |
| - | | |
| - | | |
| - | | |
| 7,090 | | |
| - | | |
| 7,090 | | |
| (298,316 | ) | |
| (291,226 | ) |
| Balance at December 31,
2023 | |
| | | |
| 27,136,075 | | |
$ | 8,984,448 | | |
$ | 3,652,023 | | |
$ | 8,734,132 | | |
$ | (218,547 | ) | |
$ | 21,152,056 | | |
$ | 2,406,220 | | |
$ | 23,558,276 | |
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 | | |
Six
months ended December 31 | |
| | |
| | |
2024 | | |
2023 | |
| Operating activities: | |
| | | |
| | | |
| | |
| Net Income (loss) | |
| | | |
$ | (1,857,441 | ) | |
$ | 2,023,461 | |
| | |
| | | |
| | | |
| | |
| Adjustments for: | |
| | | |
| | | |
| | |
| Depreciation and amortization | |
| | | |
| 3,050,350 | | |
| 71,298 | |
| Fair value gain | |
| 16(2) | | |
| (644,688 | ) | |
| - | |
| Other income related to
tax equity | |
| 17 | | |
| (7,827 | ) | |
| (69,821 | ) |
| Interest accretion | |
| 13,
17 | | |
| 361,565 | | |
| 80,477 | |
| Income tax expense | |
| | | |
| 910,977 | | |
| - | |
| Deferred income tax expenses | |
| | | |
| (269,912 | ) | |
| - | |
| Gain from acquisition of
NCI | |
| | | |
| - | | |
| (194,402 | ) |
| Loss on fixed asset disposal | |
| | | |
| 7,898 | | |
| - | |
| Share-based compensation | |
| 20 | | |
| 155,932 | | |
| 650,099 | |
| | |
| | | |
| 1,706,854 | | |
| 2,561,112 | |
| Changes in: | |
| | | |
| | | |
| | |
| Trade and other receivables | |
| | | |
| (5,387,832 | ) | |
| (1,563,741 | ) |
| Unbilled revenue | |
| | | |
| 692,422 | | |
| 5,586,004 | |
| Inventories | |
| | | |
| (622,306 | ) | |
| (605,824 | ) |
| Prepaid expenses and deposits | |
| | | |
| 1,140,207 | | |
| (1,667,871 | ) |
| Trade and other payables | |
| | | |
| 7,956,928 | | |
| 7,077,273 | |
| Income taxes payable | |
| | | |
| 986 | | |
| 734,656 | |
| Unearned revenue | |
| | | |
| (1,864,352 | ) | |
| 15,466,463 | |
| Cash generated from operating activities | |
| | | |
| 3,622,907 | | |
| 27,588,072 | |
| Income tax paid | |
| | | |
| (2,317,660 | ) | |
| (933,063 | ) |
| Net cash generated from
operating activities | |
| | | |
| 1,305,247 | | |
| 26,655,009 | |
| | |
| | | |
| | | |
| | |
| Investing activities: | |
| | | |
| | | |
| | |
| Acquisition of property,
plant and equipment | |
| | | |
| - | | |
| (42,908 | ) |
| Purchase of GIC | |
| | | |
| (1,300,000 | ) | |
| - | |
| Redemption of GIC | |
| | | |
| 1,920,000 | | |
| 6,330,000 | |
| Investment in SFF Shares | |
| | | |
| -- | | |
| (2,453,845 | ) |
| Cash from SFF acquisition | |
| 18 | | |
| 9,810,570 | | |
| - | |
| Acquisition of NCI | |
| | | |
| - | | |
| (94,607 | ) |
| Addition in development asset | |
| | | |
| (11,016,732 | ) | |
| (5,610,412 | ) |
| Repayment to related parties | |
| | | |
| (500,000 | ) | |
| - | |
| Cash generated from (used
in) investing activities | |
| | | |
$ | (1,086,162 | ) | |
$ | (1,871,772 | ) |
| Financing activities: | |
| | | |
| | | |
| | |
| Proceeds from issuance
of common shares, net transaction costs | |
| | | |
| 314,618 | | |
| 21,659 | |
| Net proceeds from stock
option exercised | |
| | | |
| 39,375 | | |
| - | |
| Proceeds from broker warrants
exercised | |
| | | |
| 41,250 | | |
| 41,250 | |
| Repayment of lease obligation | |
| | | |
| (483,733 | ) | |
| (52,050 | ) |
| Cash received from short-term
loans | |
| | | |
| 4,399,000 | | |
| - | |
| Cash received from long-term
loans | |
| | | |
| 8,352,232 | | |
| - | |
| Repayment from long-term
debts – principal | |
| | | |
| (2,549,608 | ) | |
| (203,223 | ) |
| Repayment from long-term
debts – interest | |
| | | |
| (1,899,993 | ) | |
| (69,029 | ) |
| Cash generated from (used
in) financing activities | |
| | | |
| 8,213,141 | | |
| (261,393 | ) |
| Increase in cash | |
| | | |
| 8,432,226 | | |
| 24,521,844 | |
| Effect of changes in exchange rates on cash | |
| | | |
| 60,072 | | |
| (356,351 | ) |
| Cash, beginning | |
| | | |
| 5,270,405 | | |
| 749,427 | |
| Cash, ending | |
| | | |
$ | 13,762,703 | | |
$ | 24,914,920 | |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 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 IAS 34, Interim Financial
Reporting as issued by the International Accounting Standards Board (“IASB”) and do not include all of the information required
for full annual financial statements by IFRS® Accounting Standards as issued by the IASB.
These
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 understanding the Company’s business
and financial statement presentation. In particular, the Company’s material accounting policies are presented as Note 3 in the
Company’s audited consolidated financial statements for the year ended June 30, 2024 and have been consistently applied in the
preparation of these interim financial statements.
The
board of directors approved these unaudited condensed interim consolidated financial statements for issue on February 12, 2025.
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.
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 2. | Basis
of presentation (continued) |
| c. | Basis
of consolidation: |
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.
Balances,
transactions, income and expenses between the Company and its subsidiaries are eliminated on consolidation.
Details
of the Company’s significant subsidiaries are as follows:
| |
Country of | |
Ownership
interest |
| Name | |
Incorporation | |
31-Dec-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 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 1010 LLC | |
USA | |
100% | |
100% |
| SUNN (203 Fuller Rd) LLC | |
USA | |
100% | |
100% |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 2. | Basis
of presentation (continued) |
| |
Country of | |
Ownership
interest |
| Name | |
Incorporation | |
31-Dec-24 | |
30-Jun-24 |
| SUNN 1001 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 (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 Project #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% | |
- |
| 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 VA LLC | |
Canada | |
100% | |
- |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 2. | Basis
of presentation (continued) |
| (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 in 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.
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, revenues and expenses.
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 Note 3 of the audited consolidated financial statements for the year ended June 30, 2024.
New
accounting policies adopted subsequent to the audited consolidated financial statements for the year ended June 30, 2024 is as follows:
An
operating segment is a component of the Company that engages in business activities from which it may earn revenue and incur expenses
and for which discrete financial information is available. The Company’s chief executive officer regularly reviews the operating
results of each operating segment to make decisions about resources to be allocated to the segment and assess its performance. In determining
operating segments, the Company considers the nature of product and services provided. Refer to note 24.
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
As
at December 31, 2024, the Company has eight GICs in short-term investment totalling $1,016,097.
Three
GICs totalling $300,000 were acquired in the prior year. The GICs have one year terms with interest rates of 4.7%-5.2% (June 30, 2024
- $920,000 with one year terms and interest rates of 4.25%-4.95%).
The
Company obtained another five GICs, through acquisition of Solar Flow-Through Funds Ltd. (“SFF”), totalling $716,097. These
GICs have one year terms with interest rates of 3.85% - 4.65%.
| 5. | Trade
and other receivables |
| | |
December
31, 2024 | | |
June
30, 2024 | |
| | |
| | |
| |
| Accounts receivable | |
$ | 7,568,464 | | |
$ | 966,150 | |
| Other receivables | |
| 45,446 | | |
| 323,293 | |
| GST/HST receivable | |
| 2,149,789 | | |
| - | |
| Credit
loss allowance (1) | |
| (140,240 | ) | |
| (174,226 | ) |
| | |
$ | 9,623,459 | | |
$ | 1,115,217 | |
| (1) | The
Company’s changes in credit loss allowance for the six months ended December 31, 2024
and year ended June 30, 2024 are as follows: |
| | |
December
31, 2024 | | |
June
30, 2024 | |
| | |
| | |
| |
| Credit loss allowance, beginning
of the period | |
$ | (174,226 | ) | |
$ | (6,486,838 | ) |
| Recognition of credit loss | |
| - | | |
| (174,226 | ) |
| Recovery of credit loss | |
| 33,986 | | |
| 4,839,438 | |
| Written-off of credit
loss | |
| - | | |
| 1,647,400 | |
| Credit loss allowance,
end of the period | |
$ | (140,240 | ) | |
$ | (174,226 | ) |
| 6. | Prepaid
expenses and deposits |
| | |
December
31, 2024 | | |
June
30, 2024 | |
| | |
| | |
| |
| Construction in
progress deposits (1) | |
$ | 722,593 | | |
$ | 2,543,120 | |
| Security deposits | |
| 27,035 | | |
| 12,352 | |
| Prepaid rent (2) | |
| 85,583 | | |
| - | |
| Prepaid insurance | |
| 274,917 | | |
| 128,285 | |
| Prepaid marketing expenses | |
| - | | |
| 341,825 | |
Other prepaids and
deposits
Interconnection deposits | |
| 269,407 4,511 | | |
| 96,956 4,291 | |
| | |
$ | 1,384,046 | | |
$ | 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 December 31, 2024, the non-current portion of prepaid rent of $764,490 (June 30, 2024
- $nil) is presented as other assets. |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 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 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Additions from acquisition | |
| - | | |
| - | | |
| - | | |
| 36,405,337 | | |
| 79,244 | | |
| 36,484,581 | |
| Dispositions | |
| (19,256 | ) | |
| (50,253 | ) | |
| - | | |
| - | | |
| - | | |
| (69,509 | ) |
| Foreign
currency impact | |
| - | | |
| - | | |
| - | | |
| 24,530 | | |
| - | | |
| 24,530 | |
| Balance, December 31,
2024 | |
$ | - | | |
| 7,300 | | |
| 35,608 | | |
| 40,008,134 | | |
| 79,244 | | |
$ | 40,130,286 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accumulated amortization: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, June 30, 2024 | |
$ | 16,192 | | |
| 44,830 | | |
| 4,216 | | |
| 170,523 | | |
| - | | |
$ | 235,761 | |
| Dispositions | |
| (16,944 | ) | |
| (44,667 | ) | |
| - | | |
| - | | |
| - | | |
| (61,611 | ) |
| Depreciation(3) | |
| 752 | | |
| 1,220 | | |
| 3,011 | | |
| 1,510,526 | | |
| 3,044 | | |
| 1,518,553 | |
| Foreign
currency impact | |
| - | | |
| - | | |
| - | | |
| 1,358 | | |
| - | | |
| 1,358 | |
| Balance, December 31,
2024 | |
$ | - | | |
| 1,383 | | |
| 7,227 | | |
| 1,682,407 | | |
| 3,044 | | |
$ | 1,694,061 | |
Net
Book Value,
December 31, 2024 | |
$ | - | | |
| 5,917 | | |
| 28,381 | | |
| 38,325,727 | | |
| 76,200 | | |
$ | 38,436,225 | |
| | |
Computer
equipment | | |
Furniture
and equipment | | |
Vehicle | | |
IPP
facilities (1) | | |
Total | |
Cost: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, June 30, 2023 | |
$ | 19,256 | | |
| 50,253 | | |
| - | | |
| 937,194 | | |
$ | 1,006,703 | |
| Additions | |
| - | | |
| 7,300 | | |
| 35,608 | | |
| 3,100,000 | | |
| 3,142,908 | |
| Reclass
to tax equity asset(4) | |
| - | | |
| - | | |
| - | | |
| (474,547 | ) | |
| (474,547 | ) |
| Foreign
currency impact | |
| - | | |
| - | | |
| - | | |
| 15,620 | | |
| 15,620 | |
| Balance, June 30, 2024 | |
$ | 19,256 | | |
| 57,553 | | |
| 35,608 | | |
| 3,578,267 | | |
$ | 3,690,684 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Accumulated amortization: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, June 30, 2023 | |
$ | 13,876 | | |
| 42,694 | | |
| - | | |
| - | | |
$ | 56,570 | |
| Depreciation(3) | |
| 2,316 | | |
| 2,136 | | |
| 4,216 | | |
| 170,140 | | |
| 178,808 | |
| Foreign
currency impact | |
| - | | |
| - | | |
| - | | |
| 383 | | |
| 383 | |
| Balance, June 30, 2024 | |
$ | 16,192 | | |
| 44,830 | | |
| 4,216 | | |
| 170,523 | | |
$ | 235,761 | |
Net
Book Value,
June 30, 2024 | |
$ | 3,064 | | |
| 12,723 | | |
| 31,392 | | |
| 3,407,744 | | |
$ | 3,454,923 | |
| (1) | Addition
of IPP facilities for the six months ended December 31, 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 of collateral for long-term loan guarantee (Note 16 (2)). |
| (2) | Addition
of royalty contract asset for the six months ended December 31, 2024 relate to business acquisitions
of Solar Flow-Through Funds Ltd. |
| (3) | Total
depreciation expense of $758,915 and $1,513,570 for IPP facilities and royalty contract assets
are recorded in cost of goods sold for the three and six months ended December 31, 2024 (2023-
$30,752 and $30,752). The remaining $2,412 and $4,983 depreciation expense for the three
and six months ended December 31, 2024 is recorded under operating expenses (2023- $1,913
and $2,991). |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 7. | Property,
plant and equipment (continued) |
| (4) | Tax
equity asset of $474,547 acquired from the acquisition of Solar Alliance DevCo LLC (Note
17) was included in IPP facilities for the year ended June 30, 2023. This asset is reclassified
and disclosed separately in the consolidated statements of financial position for the year
ended June 30, 2024. |
For
the six months ending December 31, 2024 and fiscal year ending June 30, 2024, the Company’s unbilled revenue mostly consists of
invoices not yet issued for EPC projects where revenue recognized through percentage of completion.
| | |
December
31, 2024 | | |
June
30, 2024 | |
| Beginning of the period | |
$ | 666,748 | | |
$ | 7,405,866 | |
| Amounts invoices included in the beginning
balance | |
| (666,748 | ) | |
| (7,405,866 | ) |
| Net increase in unbilled revenue recognized
during the year | |
| 290,268 | | |
| 666,722 | |
| Foreign currency impact | |
| - | | |
| 26 | |
| End of the period | |
$ | 290,268 | | |
$ | 666,748 | |
As
of December 31, 2024 and June 30, 2024, the Company’s inventory is comprised of development costs for the solar projects.
| | |
December
31, 2024 | | |
June
30, 2024 | |
| Beginning of the period | |
$ | 6,530,650 | | |
$ | 448,721 | |
| Additions: development costs | |
| 990,438 | | |
| 6,903,079 | |
| Minus: recognized as cost of goods sold upon
revenue recognition | |
| (231,106 | ) | |
| (338,118 | ) |
| Minus: costs expensed due
to project cancellation (1) | |
| (93,329 | ) | |
| (496,147 | ) |
| Foreign currency impact | |
| 360,240 | | |
| 13,115 | |
| End of the period | |
$ | 7,556,893 | | |
$ | 6,530,650 | |
| (1) | Inventory
provision for the six months ending December 31 and year ending June 30, 2024: |
| | |
December
31, 2024 | | |
June
30, 2024 | |
| Balance, opening | |
$ | (548,815 | ) | |
$ | (47,664 | ) |
| Additions: cost expensed due to project cancellation | |
| (93,329 | ) | |
| (496,147 | ) |
| Foreign currency impact | |
| (22,149 | ) | |
| (5,004 | ) |
| Balance, closing | |
$ | (664,293 | ) | |
$ | (548,815 | ) |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
Development
projects are depreciated over the useful lives of the assets once they become operational. The balance in development assets include
costs incurred on self-owned projects. Detail of costs as at December 31, 2024 and June 30, 2024 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 | |
| 391,552 | | |
| 20,736,522 | | |
| 541,666 | | |
| 21,669,739 | |
| Foreign
currency impact | |
| 473,276 | | |
| - | | |
| - | | |
| 473,276 | |
| Balance, December 31,
2024 | |
$ | 9,774,199 | | |
| 20,736,522 | | |
| 541,666 | | |
$ | 31,052,386 | |
| | |
| | | |
| | | |
| | | |
| | |
| Balance, June 30, 2023 | |
$ | 1,106,503 | | |
| - | | |
| - | | |
$ | 1,106,503 | |
| Additions | |
| 7,688,162 | | |
| - | | |
| - | | |
| 7,688,162 | |
| Foreign
currency impact | |
| 114,706 | | |
| - | | |
| - | | |
| 114,706 | |
| Balance, June 30, 2024 | |
$ | 8,909,371 | | |
| - | | |
| - | | |
$ | 8,909,371 | |
| (1) | Addition
of Battery energy storage systems for the six months ended December 31, 2024 relate to business
acquisition of Solar Flow-Through Funds Ltd. (Note 18). |
| (2) | Addition
of EV charge point systems for the six months ended December 31, 2024 relate to business
acquisition of Solar Flow-Through Funds Ltd. (Note 18). |
| 11. | Trade
and other payables |
| | |
December
31, 2024 | | |
June
30, 2024 | |
| Accounts payable and accrued liabilities | |
$ | 13,138,490 | | |
$ | 2,996,308 | |
| Due to related party (Note 22) | |
| 48,506 | | |
| 124,125 | |
| GST/HST payable | |
| 4,656,215 | | |
| - | |
| Other
payable (1) | |
| 1,667,769 | | |
| 1,569,828 | |
| | |
$ | 19,510,980 | | |
$ | 4,690,261 | |
| (1) | Balance
includes $1,059,388 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 and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
As
of December 31, 2024 and June 30, 2024, the Company’s unearned revenue consists of payments received for EPC projects not started
yet.
| | |
December
31, 2024 | | |
June
30, 2024 | |
| Beginning of the period | |
$ | 4,600,491 | | |
$ | 1,150,612 | |
| Recognition of revenue included in the beginning
balance | |
| (4,398,580 | ) | |
| (16,281 | ) |
| Net increase in unearned revenue recognized
during the period | |
| 2,482,485 | | |
| 3,445,757 | |
| Foreign currency impact | |
| 101,359 | | |
| 20,403 | |
| End of the period | |
$ | 2,785,755 | | |
$ | 4,600,491 | |
| 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”), collectively
the “OFIT companies”. 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 and $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%.
The
continuity of the right-of-use as of December 31, 2024 and June 30, 2024 is as follows:
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 13. | Right-of-use
assets and lease liabilities (continued) |
| Right-of-use assets | |
Office | | |
IPP
Facilities | | |
Total | |
| Cost: | |
| | | |
| | | |
| | |
| Balance, June 30, 2024 | |
$ | 313,887 | | |
| 946,943 | | |
| 1,260,830 | |
| Addition from acquisition | |
| - | | |
| 7,042,994 | | |
| 7,042,994 | |
| Deduction | |
| (17,394 | ) | |
| - | | |
| (17,394 | ) |
| Balance, December 31, 2024 | |
$ | 296,493 | | |
| 7,989,937 | | |
| 8,286,430 | |
| | |
| | | |
| | | |
| | |
| Accumulated Depreciation: | |
| | | |
| | | |
| | |
| Balance, June 30, 2024 | |
$ | 123,501 | | |
| 52,201 | | |
| 175,702 | |
| Depreciation (1) | |
| 42,354 | | |
| 316,327 | | |
| 358,681 | |
| Deduction | |
| (5,270 | ) | |
| | | |
| (5,270 | ) |
| Balance, December 31, 2024 | |
$ | 160,585 | | |
| 368,528 | | |
| 529,113 | |
| Net Book Value, December 31, 2024 | |
$ | 135,908 | | |
| 7,621,409 | | |
| 7,757,317 | |
| Right-of-use assets | |
Office | | |
IPP
Facilities | | |
Total | |
| Cost: | |
| | | |
| | | |
| | |
| Balance, June 30, 2023 | |
$ | 197,719 | | |
| - | | |
| 197,719 | |
| Addition | |
| 116,168 | | |
| 946,943 | | |
| 1,063,111 | |
| Balance, June 30, 2024 | |
| 313,887 | | |
| 946,943 | | |
| 1,260,830 | |
| | |
| | | |
| | | |
| | |
| Accumulated Depreciation: | |
| | | |
| | | |
| | |
| Balance, June 30, 2023 | |
$ | 53,232 | | |
| - | | |
| 53,232 | |
| Depreciation (1) | |
| 70,269 | | |
| 52,201 | | |
| 122,470 | |
| Balance, June 30, 2024 | |
$ | 123,501 | | |
| 52,201 | | |
| 175,702 | |
| Net Book Value, June 30, 2024 | |
$ | 190,386 | | |
| 894,742 | | |
| 1,085,128 | |
| (1) | IPP
facilities depreciation expense is recorded in cost of goods sold for the three and six months
ended December 31, 2024 of $158,163 and $316,327 respectively (2023 - $11,221 and $11,221).
The remaining $21,968 and $42,354 for the three and six months ended December 31, 2024 relate
to office lease depreciation expense, which is recorded under operating expenses (2023 -
$11,407 and $26,334). |
The
continuity of the lease liabilities as of December 31, 2024 and June 30, 2024 is as follows:
| Lease liabilities | |
Office | | |
IPP
Facilities | | |
Total | |
| Balance, June 30, 2024 | |
$ | 229,676 | | |
| 911,798 | | |
| 1,141,474 | |
| Additions from acquisition | |
| - | | |
| 7,042,994 | | |
| 7,042,994 | |
| Deduction | |
| (17,394 | ) | |
| - | | |
| (17,394 | ) |
| Payments | |
| (52,706 | ) | |
| (414,071 | ) | |
| (466,777 | ) |
| Interest accretion | |
| 8,648 | | |
| 202,916 | | |
| 211,564 | |
| Balance, December 31, 2024 | |
$ | 168,224 | | |
| 7,743,637 | | |
| 7,911,861 | |
| Current | |
| 96,198 | | |
| 514,634 | | |
| 610,832 | |
| Long term | |
| 72,026 | | |
| 7,229,003 | | |
| 7,301,029 | |
| Balance, December 31, 2024 | |
$ | 168,224 | | |
| 7,743,637 | | |
| 7,911,861 | |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 13. | Right-of-use
assets and lease liabilities (continued) |
| Lease liabilities | |
Office | | |
IPP
Facilities | | |
Total | |
| Balance, June 30, 2023 | |
$ | 173,311 | | |
| - | | |
| 173,311 | |
| New obligations | |
| 116,168 | | |
| 946,943 | | |
| 1,063,111 | |
| Payments: | |
| (81,619 | ) | |
| (73,098 | ) | |
| (154,717 | ) |
| Interest accretion: | |
| 21,816 | | |
| 37,953 | | |
| 59,769 | |
| Balance, June 30, 2024 | |
$ | 229,676 | | |
| 911,798 | | |
| 1,141,474 | |
| Current | |
| 95,420 | | |
| 53,367 | | |
| 148,787 | |
| Long term | |
| 134,256 | | |
| 858,431 | | |
| 992,687 | |
| Balance, June 30, 2024 | |
$ | 229,676 | | |
| 911,798 | | |
| 1,141,474 | |
The
maturity analysis of the Company’s contractual undiscounted lease payments as of December 31, 2024 is as follows:
| 2025 | |
$ | 487,896 | |
| 2026 | |
| 988,723 | |
| 2027 | |
| 896,127 | |
| 2028 | |
| 877,439 | |
| 2028 onward | |
| 7,642,291 | |
| Total | |
$ | 10,892,476 | |
Geddes
Construction Loan
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 receipt, 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 December 31, 2024, the loan payable balance included the principal payable of $1,315,757 (USD $914,418), accrued interest payable
of $67,893 (USD $47,184) 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 December 31, 2024, the Geddes project has a total value of $9,774,198 (June 30, 2024 - $8,909,371) which
was recorded as Development Asset.
Line
of Credit
On
December 3, 2024, the Company’s subsidiary obtained a line of credit for USD$1,000,000. The principal balance shall bear interest
at a per annum rate of 2.5% above the greater of (a) the applicable Variable Interest Rate), or (b) 0.0% (the “Index Floor”).
The line of credit is guaranteed by the Company.
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 14. | Loans
payable (continued) |
Solar
High Yield Project #1 Ltd.
On
November 13, 2024, the Company’s subsidiary (Solar High Yield Project #1 Ltd.) entered into a loan agreement for a principal amount
of $3,000,000. The loan has a maturity date of November 26, 2025. Interest on the loan shall accrue at the rate of 11% per annum, compounded
and payable quarterly.
| | |
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, December 31, 2024 | |
$ | 31,430,877 | | |
| 4,925,500 | | |
| 36,356,377 | |
| | |
| | | |
| | | |
| | |
| Accumulated amortization: | |
| | | |
| | | |
| | |
| Balance, June 30, 2024 | |
$ | 108,553 | | |
| - | | |
$ | 108,553 | |
| Amortization | |
| 1,201,821 | | |
| - | | |
| 1,201,821 | |
| Balance, December 31, 2024 | |
$ | 1,310,374 | | |
| - | | |
$ | 1,310,374 | |
| Net Book Value, December
31, 2024 | |
$ | 30,120,503 | | |
| 4,925,500 | | |
$ | 35,046,003 | |
| | |
FIT
contracts | | |
Total | |
| Cost: | |
| | | |
| | |
| Balance, June 30, 2023 | |
$ | - | | |
$ | - | |
| Additions | |
| 2,110,000 | | |
| 2,110,000 | |
| Balance, June 2024, 2024 | |
$ | 2,110,000 | | |
$ | 2,110,000 | |
| | |
| | | |
| | |
| Accumulated amortization: | |
| | | |
| | |
| Balance, June 30, 2023 | |
$ | - | | |
$ | - | |
| Amortization | |
| 108,553 | | |
| 108,553 | |
| Balance, June 30, 2024 | |
$ | 108,553 | | |
| 108,553 | |
| Net Book Value, June
30, 2024 | |
$ | 2,001,447 | | |
$ | 2,001,447 | |
| (1) | Addition
of Feed-in Tariff (“FIT”) and battery energy storage system (“BESS”)
contracts for the six months ended December 31, 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). Total amortization expenses of $606,368 and
$1,201,821 are recorded in cost of goods sold for the three and six months ended December 31, 2024 (2023- $Nil).
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| | |
December
31, 2024 | | |
June
30, 2024 | |
| Highly Affected
Sectors Credit Availability Program (1) | |
$ | 703,704 | | |
$ | 759,259 | |
| Long-term loans (2) | |
| 53,919,005 | | |
| 4,068,139 | |
| Credit
agreement (3) | |
| 8,352,232 | | |
| | |
| Total | |
| 62,974,941 | | |
| 4,827,398 | |
| Less: current portion | |
| 4,968,457 | | |
| 448,229 | |
| Long-term portion | |
$ | 58,006,484 | | |
$ | 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 and six months ended December 31, 2024, the interest recorded
and paid was $7,258 and $14,793 (2023 - $8,397 and $17,077). |
| | |
| (2) | The
Company assumed these loans from the acquisition of OFIT GM and OFIT RT (2 loans totalling
$4,068,139 on November 1, 2023) and SFF (51 loans totalling $52,685,837 on July 8, 2024)
(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 and six months ended December 31, 2024, the interest recorded and paid was $48,478 and $97,335. During the period from the
acquisition date of November 1, 2024 to June 30, 2024, the interest recorded and paid was $153,237.
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 and six months ended December 31, 2024, the Company recorded
fair value change gain of $6,867 and loss of $123,784 in the statements of income and comprehensive income.
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% to 3.34% plus Canadian Overnight Repo Rate Average (“CORRA”)
and with fixed interest rates ranging from 4.45% to 6.06%. The remaining term range of the loans are 3 to 16 years maturing between 2026
and 2040.
During
the three and six months ended December 31, 2024, the interest recorded and paid was $621,104 and $1,257,839.
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 and six months ended December 31, 2024, the Company recorded
fair value change gain of $19,185 and loss of $862,989 in the statements of income and comprehensive income.
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 16. | Long-term
debt (continued) |
| (3) | On
December 13, 2024, the Company entered into a credit agreement with Royal Bank of Canada
(“RBC”) as Lenders, Administrative Agent and Collateral Agent for the Lenders,
and obtained an advancement of $8,352,254 for the construction of certain BESS projects in
Ontario. RBC retained an upfront fee amount of $258,575. The Company also paid other fees
totalling $385,580. The Company entered into interest rate swap agreement on the loan to
fixed the annual interest rate at 5.085%. There were no gain//loss on derivative asset for
this loan during the second quarter of fiscal 2025. |
Estimated
principal repayments are as follows:
| 2025 | |
$ | 4,968,457 | |
| 2026 | |
| 6,331,424 | |
| 2027 | |
| 6,244,958 | |
| 2028 | |
| 10,500,531 | |
| 2028 onwards | |
| 34,929,571 | |
| Total | |
$ | 62,974,941 | |
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 Tax Equity Investors (“TEIs”) for their equity stakes are classified as liabilities 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 of 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 $3,964 and $7,827 related to ITC distribution as other income on the consolidated statements of income for the three
and six months ended December 31, 2024 (2023: $12,990 and $25,783). $8,126 and $16,515 interest accretion was recognized for the three
and six months ended December 31, 2024 (2023: $9,896 and $20,255)
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 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, the BESS portfolio shall be revalued 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.
The
Company closed the acquisition of SFF on July 8, 2024.
On
July 10, 2023, resolutions were passed at SFF’s special meetings of the limited partners, which included approval for SFF to pay
past and current directors a success bonus in the aggregate amount of $1.3 million upon completion of a going public transaction. This
payment will be paid in securities of SFF, cash or a combination thereof. After closing of SFF acquisition on July 8, 2024, the success
bonus was approved and 41,707 SolarBank common shares (totalling $287,682) were issued to the SFF directors on October 7, 2024.
As
at June 30, 2024, the Company held 15% equity interest in SFF valued at a total of $5,152,023. This investment did not provide the Company
with significant influence over SFF, and as such, was classified as a financial asset at fair value through profit or loss.
For
the period during July 8, 2024 – December 31, 2024, SFF contributed revenue of $4,975,621 and net loss of $1,808,171.
Had
the acquisition occurred on July 1, 2024, management estimates that the consolidated revenue would have been $18,242,795 and net loss
would have been $3,775,163 for the six months ended December 31, 2024.
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 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 Company expects to finalize its purchase price allocation by the fourth
quarter of fiscal 2025. 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 | |
$ | 9,810,572 | |
| Trade and other receivables | |
| 3,906,143 | |
| Short-term investment | |
| 716,097 | |
| 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 (5) | |
| 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 share, 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 other long-term liabilities
as at December 31, 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 six months ended December 31, 2024. |
| (5) | Intangible
assets consists of FIT and BESS contracts. These are amortized on a straight-line basis over
their estimated useful lives that are the remaining terms of the underlying contracts. |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 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 and six months ended December 31, 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.
Six
months ended December
31, 2024 | |
Revenue | | |
%
of Total Revenue | |
| Customer A | |
$ | 9,253,582 | | |
| 64 | % |
| Customer B | |
$ | 2,414,445 | | |
| 12 | % |
| Customer G | |
$ | 2,495,197 | | |
| 12 | % |
| Customer H | |
$ | 2,171,457 | | |
| 11 | % |
Six
months ended December
31, 2023 | |
Revenue | | |
%
of Total Revenue | |
| Customer A | |
$ | 11,659,809 | | |
| 44 | % |
| Customer C | |
$ | 5,024,401 | | |
| 19 | % |
| Customer D | |
$ | 2,507,976 | | |
| 10 | % |
| Customer E | |
$ | 6,550,519 | | |
| 25 | % |
Three
months ended December
31, 2024 | |
Revenue | | |
%
of Total Revenue | |
| Customer B | |
$ | 626,948 | | |
| 15 | % |
| Customer G | |
$ | 670,228 | | |
| 16 | % |
| Customer H | |
$ | 2,171,457 | | |
| 53 | % |
Three
months ended December
31, 2023 | |
Revenue | | |
%
of Total Revenue | |
| Customer A | |
$ | 9,648,059 | | |
| 52 | % |
| Customer C | |
$ | 5,081,531 | | |
| 27 | % |
| Customer D | |
$ | 2,531,928 | | |
| 14 | % |
| December
31, 2024 | |
Account
Receivable | | |
%
of Account Receivable | |
| Customer A | |
$ | 1,165,579 | | |
| 12 | % |
| Customer H | |
$ | 5,952,071 | | |
| 62 | % |
| 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 and six months ended December 31, 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 December 31, 2024
| | |
Total | | |
Less
than one year | | |
1
to 3 years | | |
3
to 5 years | | |
More
than 5 years | |
| Long-Term Debt Obligations | |
$ | 62,974,941 | | |
$ | 4,968,457 | | |
$ | 12,576,382 | | |
$ | 23,102,969 | | |
$ | 22,327,133 | |
| Operating Lease Obligations | |
| 10,892,476 | | |
| 487,896 | | |
| 1,884,850 | | |
| 1,858,697 | | |
| 6,661,033 | |
| Loan payable | |
| 5,880,105 | | |
| 5,880,105 | | |
| - | | |
| - | | |
| - | |
| Other Long-term liabilities | |
| 6,307,159 | | |
| - | | |
| 6,307,159 | | |
| - | | |
| - | |
| Due to related parties | |
| 934,328 | | |
| 934,328 | | |
| | | |
| - | | |
| - | |
| Purchase Obligations | |
| 1,694,526 | | |
| 1,694,526 | | |
| - | | |
| - | | |
| - | |
| Accounts Payable and Accrued
Liabilities | |
| 19,510,980 | | |
| 19,510,980 | | |
| - | | |
| - | | |
| - | |
| Total | |
$ | 108,194,515 | | |
$ | 33,476,292 | | |
$ | 20,768,391 | | |
$ | 24,961,666 | | |
$ | 28,988,166 | |
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 the interest amount (added to the loan principal balance) by $13,884 (June 30, 2024
- $13,100).
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
Unlimited
number of common shares with no par value.
| (b) | Issued
and outstanding share capital |
On
December 31, 2024, the Company had 31,067,655 common shares issued and outstanding (2023- 27,136,075). A summary of changes in share
capital and contributed surplus is contained on the consolidated statements of changes in shareholders’ equity. The Company entered
into a second amended and restated equity distribution agreement during the fiscal year. Under the Amended Distribution Agreement, the
Company may issue common shares of the Company having an aggregate offering price of up to US$15,000,000 (the “Offered Shares”)
under the at-the-market program “(ATM Program”). The Offered Shares will be issued by the Company to the public from time
to time, through the Agents, at the Company’s discretion. The Offered Shares sold under the ATM Program, if any, will
be sold at the prevailing market price at the time of sale. Since the 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.
During
the six months ended December 31, 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. |
| iii. | On
October 7, 2024, 41,707 Common Shares issued to former SFF directors after closing of acquisition.
Refer to note 18. |
| iv. | On
October 11, 2024, 120,000 employee stock options exercised resulting in issuance of 110,448
Common Shares after reductions for a cashless exercise component. |
| v. | On
December 19, 2024, 7,500 RSU’s were exercised to convert to 7,500 common shares. |
| vi. | During
October to December 2024, the Company sold a total of 86,293 Common Shares through at-the-market
offerings at an average price of US$2.59 ($3.79) per share for gross proceed of $327,294. |
During
the six months ended December 31, 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. |
| iii. | The
Company has entered into share purchase agreements (the “SPAs”) dated October
23, 2023 to acquire control of OFIT GM and OFIT RT for consideration of 278,875 common shares
of the Company that were issued on November 1, 2023. See Note 16 for more detail. |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 20. | Share
Capital (continued) |
| | |
Six
months ended December 31 | |
| | |
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 December 31, 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 | |
| | | |
| | | |
| 2.85
years | |
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 options outstanding as at December 31, 2024 and 2023 are as follows:
| | |
Six
months ended | |
| | |
December
31, 2024 | | |
December
31, 2023 | |
| Beginning of the period | |
| 2,759,000 | | |
| 2,759,000 | |
| Granted | |
| - | | |
| 82,500 | |
| Exercised | |
| (120,000 | ) | |
| - | |
| End of the period | |
| 2,639,000 | | |
| 2,841,500 | |
| Date
granted | |
Expiry | |
Exercise
price (CAD) | | |
Outstanding
number of options at December 31, 2024 | | |
Exercisable
number of options at December 31, 2024 | |
| 04-Nov-2022 | |
04-Nov-2027 | |
$ | 0.75 | | |
| 2,639,000 | | |
| 1,259,500 | |
During
the three and six months ended December 31, 2024, compensation expense related to stock options was $42,102 and $152,769 (2023 - $220,519
and $601,918)
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 20. | Share
Capital (continued) |
| (e) | Restricted
Stock Units |
| | |
Six
months ended | |
| | |
December
31, 2024 | | |
December
31, 2023 | |
| Beginning and end of the period | |
| 265,000 | | |
| 265,000 | |
| Exercised | |
| (7,500 | ) | |
| - | |
| End of the period | |
| 257,500 | | |
| 265,000 | |
| Date
granted | |
Vesting
Date | | |
Numbers
outstanding and exercisable at December 31, 2024 | |
| 4-Nov-2022 | |
| 02-Aug-2023 | | |
| 250,000 | |
| 13-Mar-2023 | |
| 12-Mar-2025 | | |
| 7,500 | |
| | |
| | | |
| 257,500 | |
During
the three and six months ended December 31, 2024, compensation expense related to RSU was $583 and $3,163 (2023 - $6,675 and $6,675)
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 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 December
31, 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 | |
| 318,688 | | |
| 4,277,170 | | |
| (541,847 | ) | |
| (3,997,285 | ) | |
| 56,726 | | |
| (1,648,138 | ) |
| OFIT RT | |
| 120,455 | | |
| 1,816,821 | | |
| (95,677 | ) | |
| (1,579,410 | ) | |
| 262,189 | | |
| (565,875 | ) |
| 2503072 Ontario Inc. | |
| 141,674 | | |
| 5,548,791 | | |
| (395,823 | ) | |
| (3,693,984 | ) | |
| 1,600,658 | | |
| 801,928 | |
| 2503225 Ontario Inc. | |
| 990,593 | | |
| 4,347,131 | | |
| (710,361 | ) | |
| (3,846,902 | ) | |
| 780,461 | | |
| 391,012 | |
| 2503903 Ontario Inc. | |
| 171,587 | | |
| - | | |
| (219,929 | ) | |
| (814,792 | ) | |
| (863,135 | ) | |
| (434,936 | ) |
| Northern Development Solar 2016 | |
| 81,934 | | |
| 1,413,517 | | |
| (542,918 | ) | |
| (1,169,868 | ) | |
| (217,334 | ) | |
| (108,884 | ) |
| Sunshine Solar Ontario 2016 Inc. | |
| 72,136 | | |
| - | | |
| (157,107 | ) | |
| (56,455 | ) | |
| (141,425 | ) | |
| (70,854 | ) |
| 2469780 Ontario Inc. | |
| 100,697 | | |
| 1,352,866 | | |
| (5,559 | ) | |
| (1,399,126 | ) | |
| 48,878 | | |
| 24,488 | |
| 2405372 Ontario Inc. | |
| 26,693 | | |
| 55,779 | | |
| (42,271 | ) | |
| (21,965 | ) | |
| 18,236 | | |
| 9,136 | |
| 2405402 Ontario Inc. | |
| 93,639 | | |
| 2,170,209 | | |
| (701,956 | ) | |
| (568,404 | ) | |
| 993,488 | | |
| 477,697 | |
| 2405514 Ontario Inc | |
| 45,985 | | |
| 4,322,339 | | |
| (168,744 | ) | |
| (2,175,341 | ) | |
| 2,024,240 | | |
| 1,014,144 | |
| 2405799 Ontario Inc. | |
| 286,783 | | |
| 1,430,496 | | |
| (155,567 | ) | |
| (1,900,017 | ) | |
| (338,305 | ) | |
| (169,491 | ) |
| 2467260 Ontario Inc. | |
| 44,425 | | |
| 35,110 | | |
| - | | |
| (88,839 | ) | |
| (9,304 | ) | |
| (4,662 | ) |
| Icarus Whitesand Solar Limited Partnership | |
| 372,846 | | |
| 3,609,560 | | |
| (25,002 | ) | |
| (2,555,016 | ) | |
| 1,402,387 | | |
| 210,358 | |
| 1000234763 Ontario Inc. | |
| 2,252,293 | | |
| 18,602,780 | | |
| (2,850,227 | ) | |
| (13,083,350 | ) | |
| 4,921,497 | | |
| 2,451,984 | |
| 1000234813 Ontario Inc. | |
| 699,604 | | |
| 7,329,880 | | |
| (1,787,302 | ) | |
| (5,332,863 | ) | |
| 909,319 | | |
| 455,669 | |
| SPN LP7 | |
| 1,598,443 | | |
| 10,034,805 | | |
| (130,058 | ) | |
| (5,951,758 | ) | |
| 5,551,432 | | |
| 2,781,270 | |
| 2387276 Ontario Inc. | |
| 1,314,645 | | |
| 9,703,216 | | |
| (236,573 | ) | |
| (7,180,651 | ) | |
| 3,600,637 | | |
| 1,803,919 | |
| 2387282 Ontario Inc. | |
| 1,550,864 | | |
| 16,995,841 | | |
| (605,063 | ) | |
| (11,235,001 | ) | |
| 6,706,642 | | |
| 3,363,034 | |
| 2387281 Ontario Inc. | |
| 647,994 | | |
| 3,887,319 | | |
| (91,404 | ) | |
| (2,976,358 | ) | |
| 1,467,551 | | |
| 735,243 | |
| 2387280 Ontario Inc. | |
| 589,909 | | |
| 2,874,351 | | |
| (49,733 | ) | |
| (2,436,094 | ) | |
| 978,433 | | |
| 734,924 | |
| 2391395 Ontario Inc. | |
| 317,150 | | |
| 2,117,861 | | |
| (2,541 | ) | |
| (1,491,148 | ) | |
| 941,322 | | |
| 471,603 | |
| | |
$ | 11,842,272 | | |
$ | 101,925,842 | | |
$ | (10,444,450 | ) | |
$ | (73,554,627 | ) | |
$ | 29,769,040 | | |
$ | 12,768,286 | |
| 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 | | |
| 4,237,485 | | |
| (770,469 | ) | |
| (4,039,128 | ) | |
| (11,355 | ) | |
| (1,766,009 | ) |
| OFIT RT | |
| 159,990 | | |
| 1,767,508 | | |
| (98,215 | ) | |
| (1,569,411 | ) | |
| 259,872 | | |
| (639,641 | ) |
| | |
$ | 723,090 | | |
$ | 6,004,993 | | |
$ | (1,796,474 | ) | |
$ | (5,608,539 | ) | |
$ | (676,930 | ) | |
$ | (2,360,933 | ) |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 21. | Non-Controlling
Interest (continued) |
| | |
Three
months ended December 31, 2024 | | |
Six
months ended December 31, 2024 | |
| | |
Net
(loss) income and comprehensive (loss) income | | |
Allocated
to NCI | | |
Net
(loss) income and comprehensive (loss) income | | |
Allocated
to NCI | |
| | |
| | |
| | |
| | |
| |
| 2467264 Ontario Inc. | |
$ | - | | |
$ | - | | |
$ | (106 | ) | |
$ | - | |
| OFIT GM | |
| (187,622 | ) | |
| (93,999 | ) | |
| (221,120 | ) | |
| (110,781 | ) |
| OFIT RT | |
| (114,581 | ) | |
| (57,405 | ) | |
| (147,238 | ) | |
| (73,766 | ) |
| 2503072 Ontario Inc. (1) | |
| (189,469 | ) | |
| (94,924 | ) | |
| (292,998 | ) | |
| (146,792 | ) |
| 2503225 Ontario Inc. (1) | |
| (263,779 | ) | |
| (132,153 | ) | |
| (405,690 | ) | |
| (203,250 | ) |
| 2503903 Ontario Inc. (1) | |
| 68 | | |
| 34 | | |
| 148 | | |
| 74 | |
| Northern Development Solar
2016 (1) | |
| (142,816 | ) | |
| (71,551 | ) | |
| (235,783 | ) | |
| (118,128 | ) |
| Sunshine Solar Ontario 2016
Inc. (1) | |
| (1,683 | ) | |
| (843 | ) | |
| (1,490 | ) | |
| (746 | ) |
| 2469780 Ontario Inc. (1) | |
| (96,898 | ) | |
| (48,546 | ) | |
| (149,279 | ) | |
| (74,789 | ) |
| 2405372 Ontario Inc. (1) | |
| 120 | | |
| 60 | | |
| 261 | | |
| 131 | |
| 2405402 Ontario Inc. (1) | |
| (149,091 | ) | |
| (74,695 | ) | |
| (264,301 | ) | |
| (132,415 | ) |
| 2405514 Ontario Inc. (1) | |
| (213,863 | ) | |
| (107,145 | ) | |
| (337,102 | ) | |
| (168,888 | ) |
| 2405799 Ontario Inc. (1) | |
| (101,788 | ) | |
| (50,996 | ) | |
| (148,226 | ) | |
| (74,262 | ) |
| 2467260 Ontario Inc. (1) | |
| 39 | | |
| 19 | | |
| 86 | | |
| 43 | |
| Icarus Whitesand Solar Limited
Partnership (1) | |
| (68,798 | ) | |
| (10,320 | ) | |
| (186,688 | ) | |
| (28,003 | ) |
| 1000234763 Ontario Inc. (1) | |
| (45,116 | ) | |
| (22,558 | ) | |
| (84,672 | ) | |
| (42,336 | ) |
| 1000234813 Ontario Inc. (1) | |
| (11,671 | ) | |
| (5,836 | ) | |
| (63,625 | ) | |
| (31,813 | ) |
| SPN LP7 (1) | |
| (182,368 | ) | |
| (91,367 | ) | |
| (440,594 | ) | |
| (220,738 | ) |
| 2387276 Ontario Inc. (1) | |
| (200,958 | ) | |
| (100,680 | ) | |
| (329,289 | ) | |
| (164,974 | ) |
| 2387282 Ontario Inc. (1) | |
| (252,682 | ) | |
| (126,594 | ) | |
| (64,885 | ) | |
| (32,508 | ) |
| 2387281 Ontario Inc. (1) | |
| (81,048 | ) | |
| (40,605 | ) | |
| (158,338 | ) | |
| (79,327 | ) |
| 2387280 Ontario Inc. (1) | |
| (41,653 | ) | |
| (31,260 | ) | |
| (39,412 | ) | |
| (29,579 | ) |
| 2391395
Ontario Inc. (1) | |
| (51,222 | ) | |
| (25,661 | ) | |
| (109,739 | ) | |
| (54,978 | ) |
| | |
$ | (2,396,879 | ) | |
$ | (1,187,025 | ) | |
$ | (3,680,080 | ) | |
$ | (1,787,825 | ) |
| (1) | Entity
acquired through SFF acquisition. Net income (loss) considered above is for the acquired
period of July 8 to December 31, 2024. |
| | |
Three
months ended December 31, 2023 | | |
Six
months ended December 31, 2023 | |
| | |
Net
(loss) income and comprehensive (loss) income | | |
Allocated
to NCI | | |
Net
(loss) income and comprehensive (loss) income | | |
Allocated
to NCI | |
| | |
| | |
| | |
| | |
| |
| 2467264 Ontario Inc. | |
$ | 2,084 | | |
$ | - | | |
$ | (6,422 | ) | |
$ | - | |
| OFIT GM | |
| (92,207 | ) | |
| (46,195 | ) | |
| (92,207 | ) | |
| (46,195 | ) |
| OFIT RT | |
| (23,668 | ) | |
| (11,858 | ) | |
| (23,668 | ) | |
| (11,858 | ) |
| Solar Alliance DevCo LLC | |
| 34,192 | | |
| 7,023 | | |
| 47,371 | | |
| 7,023 | |
| | |
$ | (79,599 | ) | |
$ | (51,030 | ) | |
$ | (74,926 | ) | |
$ | (51,030 | ) |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 22. | Related
Party Balances and Transactions |
As
at December 31, 2024, included in trade and other payable was $48,506 (June 30, 2024- $124,125) due to directors and other members of
key management personnel (Note 11).
As
at December 31, 2024, the Company has due to related parties balance of $934,328 relating to amount owed to Berkley Renewables Inc.,
which has a director that is also a director for the Company. This payable balance is not due within one year from December 31, 2024.
Key
management compensation
Key
management personnel include those persons having authority and responsibility for planning, directing and controlling the activities
of the Company as a whole. The Company has determined that key management personnel consists of members of the Company’s Board
of Directors and corporate officers, including the Company’s Chief Executive Officer, Chief Financial Officer, Chief Operating
Officer and Chief Administrative Officer.
The
remuneration of directors and other members of key management personnel, for the three and six months ended December 31, 2024 and 2023,
were as follows:
| | |
Three
Months Ended December 31, | |
| | |
2024 | | |
2023 | |
| Short-term employee benefits | |
$ | 619,161 | | |
$ | 303,029 | |
| Share-based compensation | |
$ | 72,160 | | |
$ | 105,938 | |
| | |
Six
Months Ended December 31, | |
| | |
2024 | | |
2023 | |
| Short-term employee benefits | |
$ | 1,322,387 | | |
$ | 610,628 | |
| Share-based compensation | |
$ | 144,321 | | |
$ | 286,484 | |
Short-term
employee benefits include consulting fees and salaries made to key management.
Transactions
with related parties, included in trade and other payable, 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 and six months ended December 31, 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:
| | |
December
31, 2024 | | |
June
30, 2024 | |
| Long-term debt -non-current portion
(Note 16) | |
$ | 58,006,484 | | |
$ | 4,379,169 | |
| Shareholders’
Equity | |
$ | 62,848,951 | | |
$ | 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.
As
a result of the acquisition of SFF earlier in the year, management has reassessed the determination of its operating and reportable segments.
Effective December 31, 2024, the chief operating decision maker, the CEO, evaluates the Company’s financial performance and allocates
capital resources based on the following operating and reportable segments: Development and EPC, IPP Production, and Corporate and other
activities (previous reportable and operating segments were by geography). The comparative periods have been recast for the change in
reportable segments.
Development
and EPC consists of development and construction of solar photovoltaic power generation projects and BESS. IPP consists of the operation
of solar photovoltaic power facilities. Corporate and other includes corporate activities and the operation and maintenance of power
facilities, repairs and reinstallation of power facilities, and non-recurrent solar photovoltaic power generation project related work
engaged by customers. None of these operating segments met the quantitative thresholds for reportable segments in fiscal year 2024 and
2025.
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 24. | Segment
Information (continued) |
The
revenues from external customers and expenses for the three and six months ended December 31, 2024 and 2023 are as follows:
| | |
| | |
Three months ended
December 31, 2024 | |
| | |
Development
& EPC | | |
IPP
Production(1) | | |
Corporate
and other activities | | |
Intersegment
Elimination | | |
Total | |
| Revenues | |
| | | |
| | | |
| | | |
| | | |
| | |
| Revenue from
external customers | |
$ | 2,692,099 | | |
$ | 1,390,665 | | |
$ | 13,500 | | |
$ | - | | |
$ | 4,096,264 | |
| Intersegment revenue | |
| 3,617,997 | | |
| - | | |
| - | | |
| (3,617,997 | ) | |
| - | |
| Total Revenue | |
| 6,310,096 | | |
| 1,390,665 | | |
| 13,500 | | |
| (3,617,997 | ) | |
| 4,096,264 | |
| Cost of sales | |
| (4,263,158 | ) | |
| (2,000,392 | ) | |
| (142,221 | ) | |
| 3,617,997 | | |
| (2,787,774 | ) |
| Gross profit | |
| 2,046,938 | | |
| (609,727 | ) | |
| (128,721 | ) | |
| - | | |
| 1,308,490 | |
| Operating expenses | |
| (1,690,334 | ) | |
| (618,773 | ) | |
| (578,202 | ) | |
| - | | |
| (2,887,309 | ) |
| Results from operating activities | |
| 356,604 | | |
| (1,228,500 | ) | |
| (706,923 | ) | |
| - | | |
| (1,578,819 | ) |
| Interest income | |
| | | |
| | | |
| | | |
| | | |
| 109,162 | |
| Interest expense | |
| | | |
| | | |
| | | |
| | | |
| (805,639 | ) |
| Other expense | |
| | | |
| | | |
| | | |
| | | |
| (13,702 | ) |
| Fair value change gain | |
| | | |
| | | |
| | | |
| | | |
| 26,052 | |
| Current tax expense | |
| | | |
| | | |
| | | |
| | | |
| (213,437 | ) |
| Deferred income tax recovery | |
| | | |
| | | |
| | | |
| | | |
| 377,850 | |
| Net loss | |
| | | |
| | | |
| | | |
| | | |
$ | (2,098,533 | ) |
| | |
| | |
Three months ended
December 31, 2023 | |
| | |
Development
& EPC | | |
IPP
Production(1) | | |
Corporate
and other activities | | |
Intersegment
Elimination | | |
Total | |
| Revenues | |
| | | |
| | | |
| | | |
| | | |
| | |
| Revenue
from external customers | |
$ | 18,496,693 | | |
$ | 122,622 | | |
$ | 24,490 | | |
$ | - | | |
$ | 18,643,805 | |
| Intersegment revenue | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Total Revenue | |
| 18,496,693 | | |
| 122,622 | | |
| 24,490 | | |
| - | | |
| 18,643,805 | |
| Cost of sales | |
| (16,073,064 | ) | |
| (32,480.00 | ) | |
| (36,822.00 | ) | |
| - | | |
| (16,142,366 | ) |
| Gross profit | |
| 2,423,629 | | |
| 90,142 | | |
| (12,332 | ) | |
| - | | |
| 2,501,439 | |
| Operating expenses | |
| (1,674,447 | ) | |
| (1,592 | ) | |
| (1,132,362 | ) | |
| - | | |
| (2,808,401 | ) |
| Results from operating activities | |
| 749,182 | | |
| 88,550 | | |
| (1,144,694 | ) | |
| - | | |
| (306,962 | ) |
| Interest income | |
| | | |
| | | |
| | | |
| | | |
| 75,567 | |
| Interest expense | |
| | | |
| | | |
| | | |
| | | |
| (126,212 | ) |
| Other income | |
| | | |
| | | |
| | | |
| | | |
| 363,853 | |
| Current tax expense | |
| | | |
| | | |
| | | |
| | | |
| (21,753 | ) |
| Net loss | |
| | | |
| | | |
| | | |
| | | |
$ | (15,507 | ) |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 24. | Segment
Information (continued) |
| | |
| | |
Six months ended
December 31, 2024 | |
| | |
Development
& EPC | | |
IPP
Production(1) | | |
Corporate
and other activities | | |
Intersegment
Elimination | | |
Total | |
| Revenues | |
| | | |
| | | |
| | | |
| | | |
| | |
| Revenue from
external customers | |
$ | 14,646,488 | | |
$ | 5,422,481 | | |
$ | 32,616 | | |
$ | - | | |
$ | 20,101,585 | |
| Intersegment revenue | |
| 10,641,387 | | |
| - | | |
| 45,000 | | |
| (10,686,387 | ) | |
| - | |
| Total Revenue | |
| 25,287,875 | | |
| 5,422,481 | | |
| 77,616 | | |
| (10,686,387 | ) | |
| 20,101,585 | |
| Cost of sales | |
| (20,567,948 | ) | |
| (4,126,318 | ) | |
| (233,851 | ) | |
| 10,686,387 | | |
| (14,241,730 | ) |
| Gross profit | |
| 4,719,927 | | |
| 1,296,163 | | |
| (156,235 | ) | |
| - | | |
| 5,859,855 | |
| Operating expenses | |
| (3,425,792 | ) | |
| (1,479,997 | ) | |
| (1,616,760 | ) | |
| - | | |
| (6,522,549 | ) |
| Results from operating activities | |
| 1,294,135 | | |
| (183,834 | ) | |
| (1,772,995 | ) | |
| - | | |
| (662,694 | ) |
| Interest income | |
| | | |
| | | |
| | | |
| | | |
| 328,612 | |
| Interest expense | |
| | | |
| | | |
| | | |
| | | |
| (1,607,970 | ) |
| Other income | |
| | | |
| | | |
| | | |
| | | |
| 80,988 | |
| Fair value change gain | |
| | | |
| | | |
| | | |
| | | |
| 644,688 | |
| Current tax expense | |
| | | |
| | | |
| | | |
| | | |
| (910,977 | ) |
| Deferred income tax recovery | |
| | | |
| | | |
| | | |
| | | |
| 269,912 | |
| Net loss | |
| | | |
| | | |
| | | |
| | | |
$ | (1,857,441 | ) |
| | |
| | |
Six months ended
December 31, 2023 | |
| | |
Development
& EPC | | |
IPP
Production(1) | | |
Corporate
and other activities | | |
Intersegment
Elimination | | |
Total | |
| Revenues | |
| | | |
| | | |
| | | |
| | | |
| | |
| Revenue from
external customers | |
$ | 26,121,458 | | |
$ | 137,518 | | |
$ | 66,090 | | |
$ | - | | |
$ | 26,325,066 | |
| Intersegment revenue | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Total Revenue | |
| 26,121,458 | | |
| 137,518 | | |
| 66,090 | | |
| - | | |
| 26,325,066 | |
| Cost of sales | |
| (21,375,536 | ) | |
| (41,973 | ) | |
| (68,916 | ) | |
| - | | |
| (21,486,425 | ) |
| Gross profit | |
| 4,475,922 | | |
| (95,545 | ) | |
| (2,826 | ) | |
| - | | |
| 4,838,641 | |
| Operating expenses | |
| (2,631,982 | ) | |
| (1,592 | ) | |
| (1,941,726 | ) | |
| - | | |
| (4,575,300 | ) |
| Results from operating activities | |
| 2,113,940 | | |
| 93,953 | | |
| (1,944,552 | ) | |
| | | |
| 263,341 | |
| Interest income | |
| | | |
| | | |
| | | |
| | | |
| 158,736 | |
| Interest expense | |
| | | |
| | | |
| | | |
| | | |
| (150,293 | ) |
| Other income | |
| | | |
| | | |
| | | |
| | | |
| 1,735,690 | |
| Current tax refund | |
| | | |
| | | |
| | | |
| | | |
| 15,987 | |
| Net income | |
| | | |
| | | |
| | | |
| | | |
$ | 2,023,461 | |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 2024 and 2023 (Expressed in Canadian Dollars) (Unaudited) |
| 24. | Segment
Information (continued) |
The
segment assets, segment liabilities, and other material segment items as at December 31, 2024 and June 30, 2024 are as follows:
| As at December
31, 2024 | |
Development
& EPC | | |
IPP
Production | | |
Corporate
and other activities | | |
Total | |
| Total asset | |
$ | 8,292,531 | | |
$ | 167,717,464 | | |
$ | 9,334,603 | | |
$ | 185,344,598 | |
| Total liabilities | |
| 3,170,914 | | |
| 98,719,839 | | |
| 20,604,894 | | |
| 122,495,647 | |
| Property, plant and equipment | |
| - | | |
| 38,401,928 | | |
| 34,297 | | |
| 38,436,225 | |
| As at June
30, 2024 | |
Development
& EPC | | |
IPP
Production | | |
Corporate
and other activities | | |
Total | |
| Total asset | |
$ | 9,909,412 | | |
$ | 16,996,182 | | |
$ | 13,139,266 | | |
$ | 39,225,861 | |
| Total liabilities | |
| 4,600,491 | | |
| 6,468,548 | | |
| 9,432,521 | | |
| 20,501,560 | |
| Property, plant and equipment | |
| - | | |
| 3,407,744 | | |
| 47,179 | | |
| 3,454,923 | |
| |
(1) | Seasonality
of operations |
The
Company’s IPP Production segment is subject to seasonal fluctuations as a result of weather conditions and sunlight. In particular,
the amount of sunlight absorbed by the solar panels is adversely affected by winter weather conditions and snow coverings, which occur
primarily from November to February. This segment typically has lower revenues and results for the second and third quarters of the year.
| (b) | 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 and six months ended December 31, 2024 and 2023 are as follows:
| | |
Revenue
from external customers | | |
Revenue
from external customers | |
| | |
Three
months ended December 31, | | |
Six
months ended December 31, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Canada | |
$ | 2,018,603 | | |
$ | 7,743,618 | | |
$ | 8,637,785 | | |
$ | 8,079,929 | |
| United
States | |
| 2,077,661 | | |
| 10,900,187 | | |
| 11,463,800 | | |
| 18,245,137 | |
| | |
$ | 4,096,264 | | |
$ | 18,643,805 | | |
$ | 20,101,585 | | |
$ | 26,325,066 | |
| | |
Non-current
assets | |
| | |
December
31, 2024 | | |
June
30, 2024 | |
| Canada | |
$ | 141,089,231 | | |
$ | 6,528,325 | |
| United
States | |
| 10,621,901 | | |
| 9,762,674 | |
| | |
$ | 151,711,132 | | |
$ | 16,290,999 | |
SOLARBANK CORPORATION Notes to Condensed Consolidated Interim Financial Statements For the three and six months ended December 31, 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 and six months
ended December 31, 2024 was 26.5% (June 30, 2024 - 26.5%).
The
calculation of earnings per share for the three and six months ended December 31, 2024 and 2023 are as follows:
| Three months ended | |
December
31, 2024 | | |
December
31, 2023 | |
| | |
| | |
| |
| Net income (loss) | |
$ | (2,098,533 | ) | |
$ | (15,507 | ) |
| | |
| | | |
| | |
| Basic weighted average number of shares outstanding | |
| 30,989,790 | | |
| 27,039,075 | |
| Dilution of securities | |
| - | | |
| - | |
| Diluted weighted average number of shares outstanding | |
| 30,989,790 | | |
| 27,039,075 | |
| | |
| | | |
| | |
| Loss per share | |
| | | |
| | |
| Basic | |
$ | (0.07 | ) | |
$ | (0.00 | ) |
| Diluted | |
$ | (0.07 | ) | |
$ | (0.00 | ) |
| Six months ended | |
December
31, 2024 | | |
December
31, 2023 | |
| | |
| | |
| |
| Net income (loss) | |
$ | (1,857,441 | ) | |
$ | 2,023,461 | |
| | |
| | | |
| | |
| Basic weighted average number of shares outstanding | |
| 30,724,579 | | |
| 26,922,629 | |
| Dilution of securities | |
| - | | |
| 10,525,428 | |
| Diluted weighted average number of shares outstanding | |
| 30,724,579 | | |
| 37,448,058 | |
| | |
| | | |
| | |
| Loss per share | |
| | | |
| | |
| Basic | |
$ | (0.06 | ) | |
$ | 0.08 | |
| Diluted | |
$ | (0.06 | ) | |
$ | 0.05 | |
The
Company’s goodwill balance all arise from acquisition of the below subsidiaries.
| Entity | |
Acquisition
Date | | |
Goodwill
Balance | |
| OFIT GM | |
| November
1, 2023 | | |
$ | 289,202 | |
| OFIT RT | |
| November
1, 2023 | | |
| 149,555 | |
| Solar
Flow-Through Funds Ltd | |
| July
8, 2024 | | |
| 37,147,456 | |
| | |
| | | |
$ | 37,586,213 | |
Refer
to note 18 for acquisition of Solar Flow-Through Funds Ltd.
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 December 31, 2024. |
| |
|
|
|
| 2. |
No
misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any
untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| |
|
|
|
| 3. |
Fair
presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the
other financial information included in the interim filings fairly present in all material respects the financial condition, financial
performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| |
|
|
|
| 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. |
| |
|
|
|
| 5.2 |
N/A. |
| |
|
|
|
| 5.3 |
N/A. |
| |
|
|
|
| 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 October 1, 2024 and ended on December 31, 2024 that has materially affected, or is reasonably likely to materially
affect, the issuer’s ICFR. |
| Date:
|
February
14, 2025 |
|
| |
|
| /s/
“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 December 31, 2024. |
| |
|
|
|
| 2. |
No
misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any
untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement
not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| |
|
|
|
| 3. |
Fair
presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the
other financial information included in the interim filings fairly present in all material respects the financial condition, financial
performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| |
|
|
|
| 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. |
| |
|
|
|
| 5.2 |
N/A. |
| |
|
|
|
| 5.3 |
N/A. |
| |
|
|
|
| 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 October 1, 2024 and ended on December 31, 2024 that has materially affected, or is reasonably likely to materially
affect, the issuer’s ICFR. |
| Date: |
February
15, 2025 |
|
| |
|
| /s/ “Sam
Sun” |
|
| Sam
Sun |
|
| Chief
Financial Officer |
|
SolarBank (NASDAQ:SUUN)
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SolarBank (NASDAQ:SUUN)
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