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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/11/24 SolarBank Corp. 40FR12B 123:120M M2 Compliance LLC/FA |
Document/Exhibit Description Pages Size 1: 40FR12B Registration Statement by a Canadian Issuer HTML 181K 2: EX-99.1 Miscellaneous Exhibit HTML 30K 11: EX-99.10 Miscellaneous Exhibit HTML 466K 101: EX-99.100 Miscellaneous Exhibit HTML 45K 102: EX-99.101 Miscellaneous Exhibit HTML 38K 103: EX-99.102 Miscellaneous Exhibit HTML 39K 104: EX-99.103 Miscellaneous Exhibit HTML 39K 105: EX-99.104 Miscellaneous Exhibit HTML 39K 106: EX-99.105 Miscellaneous Exhibit HTML 37K 107: EX-99.106 Miscellaneous Exhibit HTML 39K 108: EX-99.107 Miscellaneous Exhibit HTML 37K 109: EX-99.108 Miscellaneous Exhibit HTML 29K 110: EX-99.109 Miscellaneous Exhibit HTML 780K 12: EX-99.11 Miscellaneous Exhibit HTML 25K 111: EX-99.110 Miscellaneous Exhibit HTML 351K 112: EX-99.111 Miscellaneous Exhibit HTML 25K 113: EX-99.112 Miscellaneous Exhibit HTML 25K 114: EX-99.113 Miscellaneous Exhibit HTML 45K 115: EX-99.114 Miscellaneous Exhibit HTML 53K 116: EX-99.115 Miscellaneous Exhibit HTML 31K 117: EX-99.116 Miscellaneous Exhibit HTML 32K 118: EX-99.117 Miscellaneous Exhibit HTML 171K 119: EX-99.118 Miscellaneous Exhibit HTML 100K 120: EX-99.119 Miscellaneous Exhibit HTML 37K 13: EX-99.12 Miscellaneous Exhibit HTML 32K 121: EX-99.120 Miscellaneous Exhibit HTML 28K 122: EX-99.121 Miscellaneous Exhibit HTML 25K 123: EX-99.122 Miscellaneous Exhibit HTML 25K 14: EX-99.13 Miscellaneous Exhibit HTML 25K 15: EX-99.14 Miscellaneous Exhibit HTML 26K 16: EX-99.15 Miscellaneous Exhibit HTML 2.17M 17: EX-99.16 Miscellaneous Exhibit HTML 34K 18: EX-99.17 Miscellaneous Exhibit HTML 267K 19: EX-99.18 Miscellaneous Exhibit HTML 35K 20: EX-99.19 Miscellaneous Exhibit HTML 46K 3: EX-99.2 Miscellaneous Exhibit HTML 36K 21: EX-99.20 Miscellaneous Exhibit HTML 25K 22: EX-99.21 Miscellaneous Exhibit HTML 25K 23: EX-99.22 Miscellaneous Exhibit HTML 39K 24: EX-99.23 Miscellaneous Exhibit HTML 35K 25: EX-99.24 Miscellaneous Exhibit HTML 39K 26: EX-99.25 Miscellaneous Exhibit HTML 39K 27: EX-99.26 Miscellaneous 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Exhibit 99.109
| SOLARBANK CORPORATION | ||
| (Formerly Abundant Solar Energy Inc.) | ||
| Condensed Interim Consolidated Financial Statements | ||
| (Expressed in Canadian Dollars) | ||
| (Unaudited) | ||
| For the three and six months ended December 31,2023 and 2022 |
SOLARBANK CORPORATION
Condensed Interim Consolidated Statements of Financial Position
(Expressed in Canadian dollars)
(Unaudited)
| Notes | December 31, 2023 | June 30, 2023 | ||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash | $ | 24,914,920 | $ | 749,427 | ||||||
| Short-term investment | 3 | 220,000 | 6,550,000 | |||||||
| Trade and other receivables | 4 | 3,493,337 | 3,837,207 | |||||||
| Unbilled revenue | 3,125,019 | 7,405,866 | ||||||||
| Prepaid expenses and deposits | 5 | 4,686,482 | 3,054,678 | |||||||
| Inventory | 7 | 1,045,254 | 448,721 | |||||||
| 37,485,012 | 22,045,899 | |||||||||
| Non-current assets | ||||||||||
| Property, plant and equipment | 6 | 2,283,215 | 950,133 | |||||||
| Right-of-use assets | 11 | 895,041 | 144,487 | |||||||
| Development asset | 8 | 6,595,639 | 1,106,503 | |||||||
| Goodwill | 16 | 5,689,227 | - | |||||||
| Investment | 18 | 3,187,515 | 722,515 | |||||||
| 18,650,637 | 2,923,638 | |||||||||
| Total assets | $ | 56,135,649 | $ | 24,969,537 | ||||||
| Liabilities and Shareholder’s equity | ||||||||||
| Current liabilities: | ||||||||||
| Trade and other payables | 9 | $ | 11,747,280 | $ | 4,713,497 | |||||
| Unearned revenue | 10 | 16,286,018 | 1,150,612 | |||||||
| Current portion of long-term debt | 12 | 345,785 | 151,111 | |||||||
| Loan payables | 42,816 | - | ||||||||
| Tax payable | - | 929,944 | ||||||||
| Current portion of lease liability | 11 | 112,258 | 44,961 | |||||||
| Current portion of tax equity | 13 | 79,758 | 93,751 | |||||||
| Non-current liabilities: | 28,613,915 | 7,083,876 | ||||||||
| Long-term debt | 12 | 2,811,979 | 759,259 | |||||||
| Lease liability | 11 | 823,992 | 128,350 | |||||||
| Tax equity | 13 | 327,487 | 366,856 | |||||||
| 3,963,458 | 1,254,465 | |||||||||
| Total liabilities | $ | 32,577,373 | $ | 8,338,341 | ||||||
| Shareholders’ equity: | ||||||||||
| Share capital | 15 | 8,984,448 | 6,855,075 | |||||||
| Contributed surplus | 3,652,023 | 3,001,924 | ||||||||
| Accumulated other comprehensive income | (218,547 | ) | (116,759 | ) | ||||||
| Retained earnings | 8,734,132 | 6,652,551 | ||||||||
| Equity attributable to shareholders of the company | 21,152,056 | 16,392,791 | ||||||||
| Non-controlling interest | 17 | 2,406,220 | 238,405 | |||||||
| Total equity | 23,558,276 | 16,631,196 | ||||||||
| Total liabilities and shareholders’ equity | $ | 56,135,649 | $ | 24,969,537 | ||||||
Approved and authorized for issuance on behalf of the Board of Directors on February 21, 2024 by:
| “Richard Lu” | “Sam Sun” | |
| Richard Lu, CEO, and Director | Sam Sun, CFO |
See accompanying notes to these condensed interim consolidated financial statements.
| 2 |
SOLARBANK CORPORATION
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Expressed in Canadian dollars)
(Unaudited)
| Three Months Ended December 31 | Six Months Ended December 31 | |||||||||||||||||
| Notes | 2023 | 2022 | 2023 | 2022 | ||||||||||||||
| Revenue from EPC services | $ | 18,429,025 | $ | 2,932,635 | $ | 24,042,040 | $ | 8,398,177 | ||||||||||
| Revenue from development fees | 67,668 | - | 2,079,418 | - | ||||||||||||||
| Revenue from other services | 147,112 | 32,299 | 203,608 | 47,209 | ||||||||||||||
| 18,643,805 | 2,964,934 | 26,325,066 | 8,445,386 | |||||||||||||||
| Cost of goods sold | (16,109,886 | ) | (1,926,479 | ) | (21,444,452 | ) | (6,844,012 | ) | ||||||||||
| Gross profit | 2,533,919 | 1,038,455 | 4,880,614 | 1,601,374 | ||||||||||||||
| Operating expense: | ||||||||||||||||||
| Advertising and promotion | (974,893 | ) | (38,613 | ) | (1,478,702 | ) | (38,613 | ) | ||||||||||
| Consulting fees | (150,600 | ) | (153,960 | ) | (301,200 | ) | (327,429 | ) | ||||||||||
| Depreciation | (49,320 | ) | (13,593 | ) | (71,298 | ) | (23,339 | ) | ||||||||||
| Insurance | (88,012 | ) | (34,002 | ) | (127,258 | ) | (57,788 | ) | ||||||||||
| Office, rent and utilities | (172,991 | ) | (63,467 | ) | (257,235 | ) | (149,129 | ) | ||||||||||
| Professional fees | (782,240 | ) | (145,246 | ) | (1,082,831 | ) | (191,049 | ) | ||||||||||
| Salary and Wages | (275,335 | ) | (349,062 | ) | (477,416 | ) | (415,965 | ) | ||||||||||
| Stock based compensation | (220,519 | ) | - | (650,099 | ) | - | ||||||||||||
| Travel and accommodation | (126,971 | ) | (92,019 | ) | (171,234 | ) | (112,902 | ) | ||||||||||
| Total operating expenses | (2,840,881 | ) | (889,962 | ) | (4,617,273 | ) | (1,316,214 | ) | ||||||||||
| Other income (loss) | ||||||||||||||||||
| Interest income | 75,567 | 34,363 | 158,736 | 34,363 | ||||||||||||||
| Interest expense | (126,212 | ) | (44,006 | ) | (150,293 | ) | (76,788 | ) | ||||||||||
| Other income (expense) | 4,16 | 363,853 | (12,308 | ) | 1,735,690 | 109,764 | ||||||||||||
| Net income before taxes | $ | 6,246 | $ | 126,542 | $ | 2,007,474 | $ | 352,499 | ||||||||||
| Income tax refund (expense) | (21,753 | ) | - | 15,987 | - | |||||||||||||
| Net income (loss) | $ | (15,507 | ) | $ | 126,542 | $ | 2,023,461 | $ | 352,499 | |||||||||
| Current translation adjustments, net of tax of $nil | (188,554 | ) | (37,074 | ) | (101,788 | ) | (98,549 | ) | ||||||||||
| Net income (loss) and comprehensive income (loss) | $ | (204,061 | ) | $ | 89,468 | $ | 1,921,673 | $ | 253,950 | |||||||||
| Net income attributable to: | ||||||||||||||||||
| Shareholders of the company | 39,872 | 126,542 | 2,074,491 | 352,499 | ||||||||||||||
| Non-controlling interest | (55,379 | ) | - | (51,030 | ) | - | ||||||||||||
| Net Income (loss) | $ | (15,507 | ) | $ | 126,542 | $ | 2,023,461 | $ | 352,499 | |||||||||
| Total income (loss) and comprehensive income (loss) attributable to: | ||||||||||||||||||
| Shareholders of the company | (153,031 | ) | 89,468 | 1,927,703 | 253,950 | |||||||||||||
| Non-controlling interest | (51,030 | ) | - | (51,030 | ) | - | ||||||||||||
| Total income (loss) and comprehensive income (loss) | $ | (204,061 | ) | $ | 89,468 | $ | 1,921,673 | $ | 253,950 | |||||||||
| Earning (loss) per share | ||||||||||||||||||
| Basic | (0.00 | ) | 0.01 | 0.08 | 0.02 | |||||||||||||
| Diluted | (0.00 | ) | 0.01 | 0.05 | 0.02 | |||||||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||||
| Basic | 27,039,075 | 16,000,000 | 26,922,629 | 16,000,000 | ||||||||||||||
| Diluted | 37,466,187 | 16,000,000 | 37,448,058 | 16,000,000 | ||||||||||||||
See accompanying notes to these condensed interim consolidated financial statements
| 3 |
SOLARBANK CORPORATION
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity
(Expressed in Canadian Dollars)
(Unaudited)
| Note | No. of Shares | Share Capital | Share Option Reserve | Retained Earnings | Accumulated
OCI | Total Shareholders’ Equity | Non-Controlling Interest | Total Equity | ||||||||||||||||||||||||||
| Balance at June 30, 2022 | 16,000,000 | $ | 1,000 | $ | - | $ | 4,410,565 | $ | 73,767 | $ | 4,485,332 | $ | (44,717 | ) | $ | 4,440,615 | ||||||||||||||||||
| Net income for the period | - | - | 352,499 | - | 352,499 | - | 352,499 | |||||||||||||||||||||||||||
| Convertible debentures – equity component | 113,636 | 113,636 | 113,636 | |||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | - | (98,549 | ) | (98,549 | ) | - | (98,549 | ) | ||||||||||||||||||||||||
| Balance at December 31,2022 | 16,000,000 | $ | 1,000 | $ | 113,636 | $ | 4,763,064 | $ | (24,782 | ) | $ | 4,852,918 | $ | (44,717 | ) | $ | 4,808,201 | |||||||||||||||||
| Balance at June 30, 2023 | 26,800,000 | $ | 6,855,075 | $ | 3,001,924 | $ | 6,652,551 | $ | (116,759 | ) | $ | 16,392,791 | $ | 238,405 | $ | 16,631,196 | ||||||||||||||||||
| Net income for the period | - | - | - | 2,074,491 | - | 2,074,491 | (51,030 | ) | 2,023,461 | |||||||||||||||||||||||||
| Common shares issued, net of costs | 2,200 | 21,659 | - | - | - | 21,659 | - | 21,659 | ||||||||||||||||||||||||||
| Warrant exercised | 15(c) | 55,000 | 41,250 | - | - | - | 41,250 | - | 41,250 | |||||||||||||||||||||||||
| RSU granted | 15(e) | - | - | 48,181 | - | - | 48,181 | - | 48,181 | |||||||||||||||||||||||||
| Share-based compensation | 15(d) | - | - | 601,918 | - | - | 601,918 | - | 601,918 | |||||||||||||||||||||||||
| Other comprehensive income | - | - | - | - | (101,788 | ) | (101,788 | ) | 8,172 | (93,616 | ) | |||||||||||||||||||||||
| OFIT GM and OFIT RT acquisition | 16 | 278,875 | 2,066,464 | - | - | - | 2,066,464 | 2,508,989 | 4,575,453 | |||||||||||||||||||||||||
| Acquisition of NCI of Solar alliance DevCo | 16 | - | - | - | 7,090 | - | 7,090 | (298,316 | ) | (291,226 | ) | |||||||||||||||||||||||
| Balance at September 30,2023 | 27,136,075 | $ | 8,984,448 | $ | 3,652,023 | $ | 8,734,132 | $ | (218,547 | ) | $ | 21,152,056 | $ | 2,406,220 | $ | 23,558,276 | ||||||||||||||||||
See accompanying notes to condensed interim consolidated financial statements
| 4 |
SOLARBANK CORPORATION
Condensed Interim Consolidated Statements of Cash Flows
(Expressed in Canadian Dollars)
Unaudited
| Six months ended December 31, | ||||||||
| In Canadian Dollars | 2023 | 2022 | ||||||
| Operating activities: | ||||||||
| Net income (loss) | $ | 2,023,461 | $ | 352,499 | ||||
| Items not involving cash: | ||||||||
| Depreciation | 71,298 | 23,339 | ||||||
| Interest accretion on convertible debentures | - | 28,409 | ||||||
| Interest expenses | 80,472 | 17,243 | ||||||
| Changes in ITC Distribution | (69,821 | ) | - | |||||
| Gain from acquisition of NCI | (195,893 | ) | - | |||||
| Share-based compensation | 601,918 | - | ||||||
| Warrants and RSU vested | 48,181 | - | ||||||
| 2,559,616 | 421,490 | |||||||
| Changes in non-cash working capital balances: | ||||||||
| Trade and other receivable | 3,867,066 | (3,452,992 | ) | |||||
| Contract fulfilment costs | 3,011 | 3,660,468 | ||||||
| Inventory | (605,118 | ) | (348,735 | ) | ||||
| Prepaids | (1,652,808 | ) | (111,511 | ) | ||||
| Trade and other payables | 7,049,299 | (183,549 | ) | |||||
| Advance from customer | 15,560,451 | - | ||||||
| Income tax payable | 12,826 | 18,363 | ||||||
| Changes in due to related parties | (49,761 | ) | 750,053 | |||||
| Cash provided by operating activities | 26,744,582 | 753,587 | ||||||
| Investing activities: | ||||||||
| Acquisition of property, plant and equipment | (42,908 | ) | - | |||||
| Acquisition of development asset | (5,596,634 | ) | - | |||||
| Redemption of GIC | 6,330,000 | - | ||||||
| Net cash acquired from acquisition | 11,155 | - | ||||||
| Acquisition of NCI | (95,333 | ) | ||||||
| Investment in partnership units | (2,465,000 | ) | - | |||||
| Cash used in investing activities | (1,858,720 | ) | - | |||||
| Financing activities: | ||||||||
| Net proceeds from convertible loan | - | 1,250,000 | ||||||
| Proceeds from issuance of common shares, net transaction costs | 21,659 | - | ||||||
| Net proceeds from broker warrants exercised | 41,250 | - | ||||||
| Repayment of lease obligation | (52,050 | ) | (8,991 | ) | ||||
| Repayment of short-term loans | - | (595,712 | ) | |||||
| Repayment of long-term debts | (203,223 | ) | (388,666 | ) | ||||
| Cash provided by (used in) financing activities | (192,364 | ) | 256,631 | |||||
| Effect of changes in exchange rates on cash | (528,005 | ) | (53,138 | ) | ||||
| Increase (decrease) in cash | 24,165,493 | 957,080 | ||||||
| Cash and cash equivalents, beginning | 749,427 | 931,977 | ||||||
| Cash and cash equivalents, ending | 24,914,920 | 1,889,057 | ||||||
| Supplementary of cash flow provided by operating activities: | ||||||||
| Interest received | 158,736 | - | ||||||
| Interest paid | 69,028 | 19,319 | ||||||
| Income tax paid | 928,627 | - | ||||||
See accompanying notes to condensed interim consolidated financial statements.
| 5 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 1. | Nature of operations: |
SolarBank Corporation (formerly Abundant Solar Energy Inc.) (the “Company”) was formed under the laws of the province of Ontario on September 23, 2013. The Company is engaged in the development and operation of solar photovoltaic power generation projects in the province of Ontario and New York state. The Company changed its name from Abundant Solar Energy Inc. to SolarBank Corporation on October 7, 2022.
The address of the Company and the principal place of the business is 505 Consumers Rd, Suite 803, Toronto, ON, M2J 4Z2.
On March 1, 2023, the Company closed its initial public offering (the “Offering”) of common shares. With completion of the Offering, the Company commenced trading its common shares on the Canadian Securities Exchange (the “CSE”) under the symbol “SUNN” on March 2, 2023.
| 2. | Material accounting policy information |
| (a) | Statement of compliance and basis of preparation: |
These condensed interim consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting (“IAS 34”), and should be read in conjunction with the Company’s annual consolidated financial statements for the year ended June 30, 2023.
These condensed interim consolidated financial statements were prepared on a going concern basis.
The board approved these condensed interim consolidated financial statements of directors for issue on February 21, 2024.
| (b) | Basis of consolidation: |
These condensed interim consolidated financial statements include the accounts of the Company and its wholly or partially owned subsidiaries.
Subsidiaries are consolidated from the date on which the Company obtains control up to the date of the disposition of control. Control is achieved when the Company has power over the subsidiary, is exposed or has rights to variable returns from its involvement with the subsidiary and has the ability to use its power to affect its returns. For non-wholly owned subsidiaries over which the Company has control, the net assets attributable to outside equity shareholders are presented as “non-controlling interests” in the equity section of the consolidated statement of financial position. Net income or loss for the period that is attributable to the non-controlling interests is calculated based on the ownership of the non-controlling interest shareholders in the subsidiary.
Balance, transactions, income and expenses between the Company and its subsidiaries are eliminated on consolidation.
| 6 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
Details of the Company’s significant subsidiaries which are consolidated are as follows:
| 2. | Material accounting policy information (continued) |
| Name | Method of accounting | Ownership interest | ||||
| Abundant Solar Power Inc. | Consolidation | 100 | % | |||
| Abundant Construction Inc. | Consolidation | 100 | % | |||
| Abundant Energy Solutions Ltd. | Consolidation | 100 | % | |||
| 2467264 Ontario Inc. | Consolidation | 49.9 | % | |||
| OFIT GM Inc. | Consolidation | 49.9 | % | |||
| OFIT RT Inc. | Consolidation | 49.9 | % | |||
| Solar Alliance Energy DevCo LLC(1) | Consolidation | 100 | % | |||
| Solar Alliance TE HoldCo 1, LLC(1) | Consolidation | 100 | % | |||
| Solar Alliance VC1 LLC(1) | Consolidation | 100 | % | |||
| Abundant Solar Power (US1) LLC(1) | Consolidation | 100 | % | |||
| Abundant Solar Power (New York) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (Maryland) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (RP) LLC | Consolidation | 100 | % | |||
| SUNN 1011 LLC | Consolidation | 100 | % | |||
| SUNN 1012 LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (CNY) LLC | Consolidation | 100 | % | |||
| SUNN 1016 LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (TZ1) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (M1) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (J1) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (Steuben) LLC | Consolidation | 100 | % | |||
| ABUNDANT SOLAR POWER (USNY- MARKHAM HOLLOW RD-001) LLC | Consolidation | 100 | % | |||
| SUNN 1015 LLC | Consolidation | 100 | % | |||
| SUNN 1002 LLC | Consolidation | 100 | % | |||
| SUNN 1003 LLC | Consolidation | 100 | % | |||
| ABUNDANT SOLAR POWER (USNY-Richmond-002) LLC | Consolidation | 100 | % | |||
| ABUNDANT SOLAR POWER (USNY-Richmond-003) LLC | Consolidation | 100 | % | |||
| SUNN 1006 LLC | Consolidation | 100 | % | |||
| SUNN 1007 LLC | Consolidation | 100 | % | |||
| SUNN 1008 LLC | Consolidation | 100 | % | |||
| SUNN 1009 LLC | Consolidation | 100 | % | |||
| SUNN 1010 LLC | Consolidation | 100 | % | |||
| SUNN (203 Fuller Rd) LLC | Consolidation | 100 | % | |||
| SUNN 1001 LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (USNY-6882 Rice Road-001) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (LCP) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (SB13W) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (SB13N) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (Dutch Hill 2) LLC | Consolidation | 100 | % | |||
| Abundant Solar Power (Dutch Hill 3) LLC | Consolidation | 100 | % | |||
| SUNN 1004 LLC | Consolidation | 100 | % | |||
| (1) | The Company acquired the remaining shares from the non-controlling interest shareholders during the three months ended December 31, 2023 and owns 100% interest of these subsidiaries. |
| 7 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 2. | Material accounting policy information (continued) |
| (c) | New standards and amendments adopted by the Company: |
The accounting policies adopted in the preparation of the condensed interim consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended June 30, 2023, except for the adoption of new standards effective as of July 1, 2023. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
The amendments below apply for the first time effective July 1, 2023, but do not have an impact on the condensed interim consolidated financial statements of the Company.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
In February 2021, the IASB issued amendments to IAS 8 to clarify how reporting entities should distinguish changes in accounting policies from changes in accounting estimates. The amendments include a definition of “accounting estimates” as well as other amendments to IAS 8 that will help entities distinguish changes in accounting policies from changes in accounting estimates. This distinction between these two types of changes is important as changes in accounting policies are normally applied retrospectively to past transactions and events, whereas changes in accounting estimates are applied prospectively to future transactions and events.
IAS 1 – Presentation of Financial Statements
In February 2021, the IASB issued amendments to IAS 1 “Presentation of Financial Statements” and IFRS Practice Statement 2 “Making Materiality Judgements” aiming to improve accounting policy disclosures. The amendments to IAS 1 require reporting entities to disclose their material accounting policy information rather than their significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept of materiality to accounting policy disclosures.
| 8 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 3. | Short-term investments |
Short-term investments consist of investments with market values closely approximating book values and original maturities between three and twelve months at the time of purchase.
As at December 31, 2023, the Company has one GIC in short-term investment of $220,000. The GIC has one year term and with interest rate of 4.95%.
As at June 30, 2023, the Company has two GICs in short-term investment totaling $6,550,000. The GIC of $2,980,000 has one year term and with interest rate of 4.7%. The GIC of $3,570,000 has one year term and with interest rate of 4.95%.
| 4. | Trade and other receivables |
| December 31, 2023 | June 30, 2023 | |||||||
| Accounts receivable, net | $ | 3,304,767 | $ | 1,978,834 | ||||
| Receivable from Solar Flow-Through (1) | - | 1,537,357 | ||||||
| Other receivable | 188,571 | 321,016 | ||||||
| $ | 3,493,337 | $ | 3,837,207 | |||||
| (1) | In 2017, the Company entered into a sales contract with a group of limited partnerships known as Solar Flow-Through Funds (“SFT”) to provide development services for solar photovoltaic projects. The aged receivable of $1,457,489 from SFT as at June 30, 2023 was collected during the six months ended December 31, 2023. Additional $1,462,752 was collected and recorded in other income as accounts receivable recovery for the six months ended December 31, 2023. The Company owns partnership units in SFT, see Note 18. |
| 5. | Prepaid expenses and deposits |
| December 31, 2023 | June 30, 2023 | |||||||
| Interconnection deposits(1) | $ | - | $ | 469,725 | ||||
| Construction in progress deposit(2) | 4,240,359 | 1,623,209 | ||||||
| Security deposits | 12,352 | 12,352 | ||||||
| Prepaid insurance | 277,850 | 74,373 | ||||||
| Prepaid marketing expenses(3) | 28,109 | 782,101 | ||||||
| Other prepaids and deposits | 127,812 | 92,918 | ||||||
| $ | 4,686,482 | $ | 3,054,678 | |||||
| (1) | Interconnection deposits are made to the utility companies for the connection cost of each project that completes a CESIR report (Coordinated Electric System Interconnection Review) with that utility. The utility companies complete their analysis and provide an estimated cost to connect the project to the grid when ready. To hold the place in the utility line and reserve grid capacity for said project, the estimated connection cost must be paid ahead of time which is what comprises the interconnection deposits amount. The Interconnection deposit would become a part of the cost of sales once the projects reach commercial operation. | |
| (2) | Deposits related prepayments made on the purchase of raw materials required for construction of Independent Power Producer projects, Geddes and Settling Basins, located in New York, USA. | |
| (3) | The Company hired investor relations and marketing consultant companies to increase the Company’s visibility in the market and to explore over-seas markets. The balance is related to the payment made to these marketing consultant companies. |
| 9 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 6. | Property, Plant and Equipment |
| Computer equipment | Furniture and equipment | Vehicle | IPP facilities | Total | ||||||||||||||||
| Cost: | ||||||||||||||||||||
| Balance, June 30, 2022 | $ | 59,984 | 83,706 | - | - | $ | 143,690 | |||||||||||||
| Additions | - | - | - | - | - | |||||||||||||||
| Balance, December 31, 2022 | $ | 59,984 | 83,706 | - | - | $ | 143,690 | |||||||||||||
| Accumulated amortization: | ||||||||||||||||||||
| Balance, June 30, 2022 | $ | 49,973 | 68,603 | - | - | $ | 118,576 | |||||||||||||
| Amortization | 2,838 | 1,489 | - | - | 4,327 | |||||||||||||||
| Balance, December 31, 2022 | $ | 52,811 | 70,092 | - | - | $ | 122,903 | |||||||||||||
| Net Book Value, December 31, 2022 | $ | 7,173 | 13,614 | - | - | $ | 20,787 | |||||||||||||
| Cost: | ||||||||||||||||||||
| Balance, June 30, 2023 | $ | 19,256 | 50,253 | - | 937,194 | $ | 1,006,703 | |||||||||||||
| Additions | - | 7,300 | 35,608 | 1,324,499 | 1,367,407 | |||||||||||||||
| Balance, December 31, 2023 | $ | 19,256 | 57,553 | 35,608 | 2,261,693 | $ | 2,374,110 | |||||||||||||
| Accumulated amortization: | ||||||||||||||||||||
| Balance, June 30, 2023 | $ | 13,876 | 42,694 | - | - | $ | 56,570 | |||||||||||||
| Amortization | 1,320 | 786 | 885 | 30,752 | 33,743 | |||||||||||||||
| Foreign currency impact | - | - | - | 582 | 581 | |||||||||||||||
| Balance, December 31, 2023 | $ | 15,196 | 43,480 | 885 | 31,334 | $ | 90,895 | |||||||||||||
| Net Book Value, December 31, 2023 | $ | 4,060 | 14,073 | 34,723 | 2,230,359 | $ | 2,283,215 | |||||||||||||
| 10 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 7. | Inventory |
As of December 31, 2023 and 2022, the Company’s inventory is comprised of development costs for the solar projects.
| Balance, June 30, 2022 | 195,920 | |||
| Additions: development costs | 428,191 | |||
| Minus: development costs expensed to cost of goods sold | - | |||
| FX Impact | 11,168 | |||
| Balance, December 31, 2022 | $ | 635,279 |
| Balance, June 30, 2023 | 448,721 | |||
| Additions: development costs | 775,122 | |||
| Minus: development costs expensed to cost of goods sold | (170,155 | ) | ||
| FX Impact | (8,434 | ) | ||
| Balance, December 31, 2023 | $ | 1,045,254 |
| 8. | Development asset |
Development projects are depreciated over the useful lives of the resulting assets once they become operational. The balance in development assets include costs incurred on self-owned projects. Detail of costs as at December 31, 2023 are as follows:
| Interconnection and permitting | $ | 1,080,093 | ||
| Modules | 2,019,964 | |||
| Inverter | 175,033 | |||
| Racking | 847,690 | |||
| Datalogger | 23,613 | |||
| Engineering | 77,604 | |||
| Installation | 2,255,663 | |||
| Balance of system | 110.424 | |||
| Construction | 5,555 | |||
| $ | 6,595,639 |
| 11 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 9. | Trade and other payables |
| December 31, 2023 | June 30, 2023 | |||||||
| Accounts payable and accrued liabilities | $ | 9,214,373 | $ | 1,542,849 | ||||
| Due to related party | - | 63,754 | ||||||
| Other payable (1) | 2,532,907 | 3,106,894 | ||||||
| $ | 11,747,280 | $ | 4,713,497 | |||||
| (1) | Balance includes $2,168,122 NYSERDA grants to be paid to various projects. |
| 10. | Unearned revenue |
As of December 31, 2023, the Company’s unearned revenue mostly consists of payments received for EPC projects not started yet.
| Balance, June 30, 2023 | $ | 1,150,612 | ||
| Additional payments received | 15,135,406 | |||
| Recognized to revenue | - | |||
| Balance, December 31, 2023 | $ | 16,286,018 |
| 11. | Right of use assets and lease liabilities |
The Company leases office space in 2022 in Canada. The lease started on May 1, 2022, with a five-year lease term. The monthly lease payment is $4,697 starting from September 1, 2022, which will be adjusted on annual basis. On December 1, 2023, the Company leased additional office space, which increased monthly rent to $5,091. The right of use (“ROU”) and lease obligation were measured at the present value of the lease payment and discounted using an incremental borrowing rate of 10%.
On November 1, 2023, the Company acquired shares of OFIT GM Inc. (“OFIT GM”) and OFIT RT Inc. (“OFIT RT”) (see Note 16). The OFIT companies leased five properties where independent power producer (“IPP”) facilities are located. The leases commenced during the period from August 28, 2017 to October 6, 2017, each with a 20 year lease term. Two leases are paid on a monthly basis and three leases are paid on a quarterly basis. The monthly lease payments are in the range of $502 to $2,456 and quarterly lease payments are in the range of $1,250 to $8,125. The right of use asset and lease liabilities were treated as new assets and liabilities starting from acquisition date of November 1, 2023 in accordance to IFRS 3. The ROU and lease obligation were measured at the present value of the lease payment and discounted using an incremental borrowing rate of 12.5%.
| 12 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 11. | Right of use assets and lease liabilities (continued) |
The continuity of the right-of-use as of December 31, 2023 is as follows:
| Right-of- use assets | Office | IPP Facilities | Total | |||||||||
| Cost: | ||||||||||||
| Balance, June 30, 2023 | $ | 197,719 | - | 197,719 | ||||||||
| Addition | 116,168 | 671,941 | 788,109 | |||||||||
| Balance, December 31, 2023 | $ | 313,887 | 671,941 | 985,828 | ||||||||
| Accumulated amortization: | ||||||||||||
| Balance, June 30, 2023 | $ | 53,232 | - | 53,232 | ||||||||
| Amortization: | 26,334 | 11,221 | 37,555 | |||||||||
| Balance, December 31, 2023 | $ | 79,566 | 11,221 | 90,787 | ||||||||
| Net Book Value, December 31, 2023 | $ | 234,321 | 660,720 | 895,041 | ||||||||
The continuity of the lease liabilities as of December 31, 2023 is as follows:
| Lease liabilities | Office | IPP Facilities | Total | |||||||||
| Balance, June 30, 2023 | $ | 173,311 | - | 173,311 | ||||||||
| New obligations | 116,168 | 671,941 | 788,109 | |||||||||
| Payments: | (30,560 | ) | (21,490 | ) | (52,050 | ) | ||||||
| Interest accretion: | 9,203 | 17,677 | 26,880 | |||||||||
| Balance, December 31, 2023 | $ | 268,122 | 668,128 | 936,250 | ||||||||
| Current | 83,746 | 28,512 | 112,258 | |||||||||
| Long term | 184,376 | 639,616 | 823,992 | |||||||||
| Net Book Value, December 31, 2023 | $ | 268,122 | 668,128 | 936,250 | ||||||||
The maturity analysis of the Company’s contractual undiscounted lease liabilities as of December 31, 2023 is as follows:
| 2024 | $ | 102,667 | ||
| 2025 | 218,013 | |||
| 2026 | 226,104 | |||
| 2027 | 124,389 | |||
| 2027 onward | 956,545 | |||
| Total | $ | 1,627,717 |
| 13 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 12. | Long-term debt |
| December 31, 2023 | June 30, 2023 | |||||||
| Highly Affected Sectors Credit Availability Program (1) | $ | 814,815 | $ | 870,370 | ||||
| Canadian Emergency Business Account (2) | 40,000 | 40,000 | ||||||
| Long-term loans(3) | 2,302,949 | - | ||||||
| Total | 3,157,764 | 910,370 | ||||||
| Less: current portion | 345,785 | 151,111 | ||||||
| Long-term portion | $ | 2,811,979 | $ | 759,259 | ||||
| (1) | In 2021, the Company received a Highly Affected Sectors Credit Availability Program (HASCAP) loan for a total of $1,000,000 at 4% annual interest rate from Bank of Montreal. The loan has a ten-year amortization period with interest payment only for the first year. Principal payments are to commence in May 2022. During the three months and six month ended December 31, 2023, the interest recorded and paid was $8,397 and $17,077 (3-month and 6-month period ended December 31, 2022 - $9,803 and $19,325). | |
| (2) | The Company received a Canada Emergency Business Account (“CEBA”) interest-free loan for a total of $60,000 from the Government of Canada. The loan bears interest at 0% per annum and is repayable by January 18, 2024. If $40,000 is repaid in full on or before January 18, 2024 and certain conditions are met, which include the use of funds for non-deferrable operating expenses only, $20,000 of the loan will be forgiven. Alternatively, on December 31, 2023, the Company can exercise the option to extend the loan for a two-year term which bears interest at 5% per annum. | |
| The Company repaid the loan on January 8, 2024. Accordingly, the forgiveness portion of the $20,000 was recognized as government grant income during the year ended June 30, 2021 when the Company received the loan. The Company remains contingently liable as the Company will be required to repay the forgiven amount if the conditions are not met. | ||
| (3) | The Company obtained these loans as a result of acquisition of OFIT GM and OFIT RT. The loans were originally obtained on December 19, 2017 for a total principal amount of $4,248,495 and used interest rate swap agreements to fix the annual interest rate at 4.75%. The loans are guaranteed by Panasonic Corporation North America and collateralized by the solar projects, including related contracts such as FIT contract, EPC contract, site leases and similar contracts. The carrying value of solar projects was $6.45 million upon entering the loan agreements and the carrying value of solar projects as at December 31, 2023 was $1.31 million. The loans will mature on December 19, 2035 with interest payable quarterly commencing on March 19, 2018 and principal payments payable semi-annually commencing on June 19, 2018. The fair value of the loans recorded at acquisition date of November 1, 2023 were determined by using a discount rate of 12.5%. During the period from the acquisition date to December 31, 2023, the interest recorded and paid was $81,297 and interest accretion on fair value of the loans was $33,339. |
Estimated principal repayments are as follows:
| 2024 | $ | 653,543 | ||
| 2025 | 634,714 | |||
| 2026 | 628,086 | |||
| 2027 | 427,157 | |||
| 2027 onwards | 3,810,152 | |||
| Total | $ | 6,153,653 |
| 14 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 13. | Tax equity |
On June 20, 2023, the Company acquired 67% membership interest in an entity which owns and operates certain solar facilities in the US under subsidiaries that are set up as tax equity structures to finance the capital cost of the solar facilities. Amounts paid by the TEIs for their equity stakes are classified as debt on the consolidated statements of financial position and are measured at amortized cost using the effective interest rate (“EIR”) method. Amortized cost is affected by the allocation of ITCs, taxable income, and accelerated tax depreciation. Financing expenses represent the interest accretion using the EIR. The EIR of the tax equity was determined to be 9%, the loan value was $549,061 (USD 414,699), with a maturity date (representing the expected flip point as estimated) of 2028 and the percentage of ownership between 99%, reflecting the allocation of taxable income or loss prior to the flip date.
Tax equity investors in US solar projects generally require sponsor guarantees as a condition to their investment. To support the tax equity investments, the Company executed guarantees indemnifying the tax equity investors against certain breaches of project level representations, warranties and covenants and other events. The Company believe these indemnifications cover matters which are substantially under its control and are very unlikely to occur.
| 14. | Financial instruments |
The Company as part of its operations carries financial instruments consisting of cash, short term investment, trade receivables, accounts payable and accruals, loan payable, lease liabilities, tax equity and long-term debt.
| (a) | Fair value: |
The Company’s financial assets and liabilities carried at fair value are measured and recognized according to a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices. Iin active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy are as follows:
| ● | Level 1: Quoted prices in active markets for identical assets or liabilities. | |
| ● | Level 2: Inputs other than quoted prices that are observable for the asset or liability. | |
| ● | Level 3: Inputs for the asset or liability that are not based on observable market data. |
Cash is carried at fair value using a Level 1 fair value measurement. Investment in partnership units is carried at fair value using a Level 3 fair value measurement. Significant unoberservable inputs are used in discount cash flows method to determine the fair value of the partnership units, There were no transfers into or out of Level 3 during the period ended December 31, 2023.
The carrying amounts of trade and other receivables, trade and other payables approximate their fair values due to the short-term maturities of these items. The carrying amounts of loan payable, lease liabilities, tax equity liabilities and long-term debt approximate their fair value as they are discounted at the current market rate of interest.
| (b) | Financial risk management: |
| (i) | Credit risk and economic dependence: |
Credit risk is the risk of financial loss associated with the counterparty’s inability to fulfill its payment obligations. The Company has no significant credit risk with its counterparties. The carrying amount of financial assets net of impairment, if any, represents the Company’s maximum exposure to credit risk.
The Company has assessed the creditworthiness of its trade and other receivables and amount determined the credit risk to be low. Utility deposits are made to local government utility with high creditworthiness. Cash has low credit risk as it is held by internationally recognized financial institutions.
| 15 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 14. | Financial instruments (continued) |
| (ii) | Concentration risk and economic dependence: |
The outstanding accounts receivable balance is relatively concentrated with a few large customers representing majority of the value. See table below showing a few customers who account for over 10% of total revenue as well as customers who account for over 10% percentage of outstanding Accounts Receivable.
| Six months
ended December 31, 2023 | Revenue | % of Total Revenue | ||||||
| Customer B | $ | 5,024,401 | 19 | % | ||||
| Customer C | $ | 2,507,976 | 10 | % | ||||
| Customer D | $ | 6,550,519 | 25 | % | ||||
| Customer E | $ | 11,659,809 | 44 | % | ||||
| Six months
ended December 31, 2022 | Revenue | % of Total Revenue | ||||||
| Customer A | $ | 5,783,272 | 68 | % | ||||
| Three months
ended December 31, 2023 | Revenue | % of Total Revenue | ||||||
| Customer B | $ | 5,081,531 | 27 | % | ||||
| Customer C | $ | 2,531,928 | 14 | % | ||||
| Customer E | $ | 9,648,059 | 52 | % | ||||
| Three months
ended December 31, 2022 | Revenue | % of Total Revenue | ||||||
| Customer A | $ | 1,851,848 | 62 | % | ||||
| December 31, 2023 | Account Receivable | % of Account Receivable | ||||||
| Customer D | $ | 2,545,465 | 73 | % | ||||
| Customer E | $ | 565,412 | 16 | % | ||||
| June 30, 2023 | Account Receivable | % of Account Receivable | ||||||
| Customer D | $ | 1,179,132 | 31 | % | ||||
| Customer F | $ | 1,537,357 | 40 | % | ||||
| 16 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 14. | Financial instruments (continued) |
| (iii) | Liquidity risk: |
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due by maintaining adequate reserves, banking facilities, and borrowing facilities. All of the Company’s financial liabilities are subject to normal trade terms.
| (iv) | Interest rate risk: |
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company does not carry debt at a variable rate and is exposed to interest rate risk on its cash which is not considered significant.
| 15. | Share Capital |
| (a) | Authorized |
Unlimited number of common shares with no par value.
| (b) | Issued and outstanding share capital |
At December 31, 2023, the Company had 27,136,075 common shares issued and outstanding. A summary of changes in share capital and contributed surplus is contained on the consolidated statements of changes in shareholders’ equity.
During the 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. |
| (c) | Warrants |
The following table reflects the warrants issued and outstanding as of December 31, 2023:
| Date granted | Expiry | Exercise price (CAD) | Issued | Exercised | Balance at December 31, 2023 | |||||||||||||
| 03-Oct-2022 | 10-Jun-2027 | $ | 0.10 | 2,500,000 | - | 2,500,000 | ||||||||||||
| 01-Mar-2023 | 01-Mar-2026 | $ | 0.75 | 483,000 | 55,000 | 428,000 | ||||||||||||
| 01-Mar-2023 | 01-Mar-2028 | $ | 0.50 | 5,000,000 | - | 5,000,000 | ||||||||||||
| 7,983,000 | - | 7,928,000 | ||||||||||||||||
| Weighted average exercise price | $ | 0.39 | ||||||||||||||||
| 17 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 15. | Share Capital (continued) |
| (d) | Stock Options |
The Board of Directors has adopted the Share Compensation Plan on November 4, 2022. Under this plan, the aggregate number of common shares that may be reserved and available for grant and issuance pursuant to the exercise of options and settlement of RSUs, each under the Share Compensation Plan, shall not exceed 20% (in the aggregate) of the issued and outstanding Common Shares at the time of granting. The exercise price per common share for an option and RSU granted shall not be less than the market price. Every option and RSU shall have a term not exceeding and shall expire no later than 5 years after the date of grant.
Details of the stock option outstanding as at December 31, 2023 are as follows:
| Date issued | Expiry | Exercise price (CAD) | Balance at July 1, 2023 | Granted | Balance at December 31, 2023 | |||||||||||||
| 10-Feb-2023 | 04-Nov-2027 | $ | 0.75 | 2,759,000 | - | 2,759,000 | ||||||||||||
| 04-Dec-2023 | 04-Dec-2028 | $ | 6.60 | - | 82,500 | 82,500 | ||||||||||||
| 2,759,000 | 82,500 | 2,841,500 | ||||||||||||||||
| Weighted average exercise price | $ | 0.92 | ||||||||||||||||
| Weighted average remaining contractual life | 3.88 years | |||||||||||||||||
As at December 31, 2023, no stock options were exercisable.
| (e) | Restricted Stock Units |
Details of the Restricted Stock Units (RSU) outstanding as at September 30, 2023 are as follows:
| Date granted | Vesting Date | Granted | Distributed | Forfeited | Balance at December 31, 2023 | |||||||||||||
| 4-Nov-2022 | 02-Aug-2023 | 250,000 | - | - | 250,000 | |||||||||||||
| 13-Mar-2023 | 12-Mar-2024 | 7,500 | - | - | 7,500 | |||||||||||||
| 13-Mar-2023 | 12-Mar-2025 | 7,500 | - | - | 7,500 | |||||||||||||
| 265,000 | - | - | 265,000 | |||||||||||||||
The weight average grant date price per share is $0.86.
| 18 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 16. | Acquisitions |
Solar Alliance DevCo LLC
Abundant Solar Power (“ASP”) has an EPC agreement with Solar Alliance Energy Inc (“Solar Alliance”) to be engaged in the development, engineering, procurement, construction, and operations of solar energy facilities (US1 & VC1 projects). The US1 & VC1 projects reached PTO (permission to operation) in December 2022. According to the EPC agreement, ASP had fulfilled its performance obligation and was able to recognize EPC services revenue at the amount of $1,340,765 CAD ($1,082,345 USD) when US1 & VC1 projects were reached PTO.
On December 28, 2022, the Company entered into a promissory note with Solar Alliance converting a series of overdue accounts receivables of $1,206,004 (USD $891,158) since August 2022 to a note receivable. The promissory note bears interest rate of 15% per annum and was payable on a monthly basis.
On June 20, 2023, the Company settled the outstanding promissory note of $1,206,004 (USD $891,158) plus accrued interest of $111,821 (USD $82,203) through the acquisition of 67% of in Solar Alliance DevCo, a wholly-owned subsidiary of Solar Alliance, under the terms of membership interest purchase agreement. As a result of the acquisition, Solar Alliance DevCo operates as a subsidiary of ASP. Solar Alliance DevCo holds two solar energy facilities (US1 & VC1) which have reached commercial operation stage. As a result, the Company has determined that this transaction is a business combination as the assets acquired and liabilities assumed constitute a business. The transaction was accounted for using the acquisition method of accounting whereby the assets acquired, and liabilities assumed were recorded at their estimated fair values at the acquisition date.
The provisional allocation of the purchase consideration to the total fair value of net assets acquired is as follows:
| Fair value of net assets acquired | $ | |||
| Accounts receivable | 407,210 | |||
| Capital assets | 937,194 | |||
| Accounts payable | (25,851 | ) | ||
| Tax equity liability | (460,607 | ) | ||
| Identifiable net assets acquired | 857,946 | |||
| Non-controlling interest | (283,122 | ) | ||
| Purchase consideration transferred | 574,824 |
On acquisition, the purchase consideration transferred of $574,824 is the fair value of the promissory note plus accrued interest as of June 20, 2023. Hence, the Company recognized an impairment loss of $724,205 (USD $539,204) from the remeasurement of promissory note to its fair value as of the acquisition date. The impairment loss was recognized in profit and loss in the fiscal year ended June 30, 2023.
On December 4, 2023, ASP acquired the remaining 33% of Solar Alliance DevCo for $95,333 (USD $70,000). The 33% non-controlling interest was originally valued at $283,122 (USD $213,838) on acquisition date. Accordingly, a gain of $195,893 (USD $143,838) is recognized as other income in the statement of income (loss) and comprehensive income (loss) for the six months period ended December 31, 2023.
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SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 16. | Acquisitions (continued) |
OFIT GM Inc. and OFIT RT Inc.
The Company entered into share purchase agreements (the “SPAs”) dated October 23, 2023 to acquire control of two corporations that hold solar projects located in Ontario with a combined capacity of 2.5 MW (the “Projects”) for consideration of $432,510 cash and 278,875 common shares (the “Consideration Shares”) of the Company (the “OFIT Transaction”). The corporations OFIT GM and OFIT RT (the “Purchased Entities”) have been operating the Projects since 2017. The transaction closed on November 1, 2023. The shares of the Purchased Entities were acquired from N. Fine Investments Limited and Linden Power Inc. Pursuant to the terms of the SPAs, the Company acquired 49.9% ownership of OFIT RT Inc. where Whitesand First Nation owns the remaining shares of OFIT RT Inc. The Company also acquired 49.9% ownership of OFIT GM Inc. where the Town of Kapuskasing owns the remaining shares of OFIT GM Inc. The shares owned by the Town of Kapuskasing have no voting right, hence, the Company controls and consolidate the Purchased Entities.
The acquisition of the Purchased Entities is considered a business combination as the assets acquired and liabilities assumed constitute a business. The transaction was accounted for using the acquisition method of accounting whereby the assets acquired, and liabilities assumed were recorded at their estimated fair value at the acquisition date.
Due to the timing of the acquisition and the ongoing collection of data necessary to value the acquired assets and liabilities, the identified assets acquired and liabilities assumed have been determined provisionally and purchase price allocation has not yet been finalized. Changes in the assumptions used in the valuation of these assets may affect the fair value resulting in a reallocation of purchase price to or from the amount recognized for goodwill. Any changes in these amounts will also result in a change in the relevant deferred tax liabilities recognized on the intangibles. The Company expects to finalize its purchase price allocation by the fourth quarter of fiscal 2024.
The President & Chief Executive Officer and a director of the Company is indirectly a shareholder of the Purchased Entities and indirectly received one-third of the Consideration Shares. As a result, the Transaction is considered a related party transaction.
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SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 16. | Acquisitions (continued) |
The preliminary fair value of consideration transferred from the acquisition of OFIT GM and OFIT RT Inc. consists of the following:
| Fair value of net assets (liabilities) acquired | $ | $ | $ | |||||||||
| OFIT GM | OFIT RT | Net | ||||||||||
| Cash | 242,885 | 200,780 | 443,665 | |||||||||
| Accounts receivable | 6,454 | 26,611 | 33,065 | |||||||||
| Prepaid | 11,210 | 5,297 | 16,507 | |||||||||
| Capital assets | 951,749 | 372,750 | 1,324,499 | |||||||||
| Current liabilities | (29,716 | ) | (52,006 | ) | (81,721 | ) | ||||||
| Long-term loans | (1,759,062 | ) | (658,217 | ) | (2,417,279 | ) | ||||||
| Identifiable net liabilities assumed at fair value | (576,480 | ) | (104,785 | ) | (681,265 | ) | ||||||
| Goodwill arising on acquisition | 4,247,318 | 1,441,909 | 5,689,227 | |||||||||
| Non-controlling interest at fair value | (1,839,090 | ) | (669,899 | ) | (2,508,989 | ) | ||||||
| Purchase consideration transferred | 1,831,748 | 667,225 | 2,498,973 | |||||||||
| Consideration paid in cash | 232,263 | 200,247 | 432,510 | |||||||||
| Consideration paid in common shares | 1,599,486 | 466,978 | 2,066,464 | |||||||||
| Total consideration | 1,831,748 | 667,225 | 2,498,973 | |||||||||
| 17. | Non-Controlling Interest |
The following items affects non-controlling interest for the year ended December 31, 2023:
Solar Alliance DevCo LLC
On June 20, 2023, the Company (through ASP) acquired a 67% membership interest in two solar facilities. The remaining 33% membership was acquired on December 4, 2023. For the period of July 1 to December 4, 33% of net income or $7,023 was allocated to non-controlling interest.
OFIT GM and OFIT RT
On November 1, 2023, the Company acquired 49.9% interest in OFIT GM and OFIT RT. For the period of November 2 to December 31, 2023, net loss of $46,195 in OFIT GM and $11,858 in OFIT RT were allocated to non-controlling interest.
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SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 18. | Investment |
On June 1, 2023, the Company acquired 200 limited partnership units of Solar Flow-Through 2012-I Limited Partnership from former partner unitholders for an aggregate purchase price of $4,200, and 31,230 limited partnership units of Solar Flow-Through 2013-I Limited Partnership for an aggregate purchase price of $718,290. On July 5, 2023, the Company acquired 42,500 limited partnership units of Solar Flow-Through 2016 Limited Partnership for an aggregate purchase price of $2,465,000.
The Company does not have significant influence over Solar Flow-Through Limited Partnerships subsequent to the purchase of units. No fair value adjustment is required as at December 31, 2023.
| 19. | Related Party Transactions |
Related party transactions are made without stated terms of repayment or interest. The balances with related parties are unsecured and due on demand.
Compensation of key management personnel
The remuneration of directors and other members of key management personnel, who are those having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, for the three months ended December 31, 2023 and 2022 were as follows:
| Three Month Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Short-term employee benefits | $ | 303,029 | $ | 504,357 | ||||
| Share-based compensation | 105,938 | - | ||||||
| Six Month Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Short-term employee benefits | $ | 610,628 | $ | 740,339 | ||||
| Share-based compensation | 286,484 | - | ||||||
Short-term employee benefits include consulting fees and salaries made to key management personnel.
Related parties transactions
The OFIT transaction is considered a related party transaction due to the President & Chief Executive Officer and a director of the Company is indirectly a shareholder of the Purchased Entities and indirectly received one-third of the Consideration Shares. See note 16.
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SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 20. | Capital Management |
The Company’s objectives in managing liquidity and capital are to safeguard the Company’s ability to continue as a going concern and to provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of the following:
| December 31, 2023 | June 30, 2023 | |||||||
| Long-term debt -non-current portion (note 12) | $ | 2,811,979 | 759,259 | |||||
| Shareholders’ equity | $ | 23,558,276 | 16,631,196 | |||||
The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the strategies employed by the Company may include the issuance or repayment of debt, dividend payments, or sale of assets. The Company has determined it will have sufficient funds to meet its current operating and development obligations for at least 12 months from the reporting date.
There has not been any significant change in capital management from the prior year.
| 21. | Segment reporting |
The Company’s reportable operating segments are components of the Company where separate financial information is available that is evaluated regularly by the Company’s Chief Executive Officer who is the Chief Operating Decision Maker (“CODM”). The operational segments are determined based on the Company’s management and internal reporting structure. The Company and its subsidiaries engage in one main business activity being the commercial, industrial, and residential solar business, hence, operating segment information is not provided.
The company is currently operating development and construction of solar photovoltaic power generation projects in two principal geographical areas - Canada and United States. The revenues from external customers and non-current assets by country for the three and six months ended and as at December 31, 2023 and 2022 are as follows:
| Revenue from external customers | ||||||||||||||||
Three Months Ended December 31, | Six Months Ended | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Canada | $ | 7,743,618 | 508,351 | $ | 8,079,929 | 523,261 | ||||||||||
| United States | 10,900,187 | 2,456,583 | 18,245,137 | 7,922,125 | ||||||||||||
| $ | 18,643,805 | 2,964,934 | $ | 26,325,066 | 8,445,386 | |||||||||||
| 23 |
SOLARBANK CORPORATION
Notes to Condensed Interim Consolidate Financial Statements
For the period ended December 31, 2023, and 2022
(Expressed in Canadian Dollars)
(Unaudited)
| 21. | Segment reporting (continued) |
| Non-current assets | ||||||||
| December 31, 2023 | June 30, 2023 | |||||||
| Canada | $ | 10,259,314 | 879,941 | |||||
| United States | 8,391,323 | 2,043,697 | ||||||
| $ | 18,650,637 | 2,923,638 | ||||||
| Total assets | Total liabilities | |||||||||||||||
| December 31, 2023 | June 30, 2023 | December 31, 2023 | June 30, 2023 | |||||||||||||
| Canada | $ | 19,310,094 | 11,219,868 | $ | 4,981,132 | 2,603,271 | ||||||||||
| United States | 36,825,555 | 13,739,128 | 27,596,241 | 5,724,529 | ||||||||||||
| $ | 56,135,649 | 24,958,996 | $ | 32,577,373 | 8,327,800 | |||||||||||
| 22. | Provisions and contingent liabilities |
In June 2022, a group of residents filed an Article 78 lawsuit against town of Manlius, New York, over solar panel project on town property. The lawsuit was filed challenging the approval of the Manlius landfill. The Company, in cooperation with the town, is vigorously defending this suit. Two proceedings were filed and both proceedings were dismissed, but the Petitioners have appealed the first proceeding. Petitioner still has time to appeal the second dismissal, but an injunction against the on-going construction of the solar project was denied in the second proceeding. The cases do not represent a material threat to the Company.
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| This ‘40FR12B’ Filing | Date | Other Filings | ||
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| 12/19/35 | None on these Dates | |||
| Filed on: | 3/11/24 | |||
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| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 5/14/24 SolarBank Corp. 6-K 5/14/24 6:1.4M M2 Compliance LLC/FA 4/30/24 SolarBank Corp. F-10 5/01/24 4:431K M2 Compliance LLC/FA 3/28/24 SolarBank Corp. 40FR12B/A 3/27/24 4:2M M2 Compliance LLC/FA 3/21/24 SolarBank Corp. 40FR12B/A 2:588K M2 Compliance LLC/FA |