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SolarBank Corp. – ‘40FR12B’ on 3/11/24 – ‘EX-99.8’

On:  Monday, 3/11/24, at 10:49am ET   ·   Accession #:  1493152-24-9502   ·   File #:  1-41976

Previous ‘40FR12B’:  None   ·   Next:  ‘40FR12B/A’ on 3/21/24   ·   Latest:  ‘40FR12B/A’ on 3/28/24   ·   2 References:   By:  SolarBank Corp. – Latest ‘40FR12B/A’ on 3/28/24 By:  SolarBank Corp. – Next ‘40FR12B/A’ on 3/21/24 

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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  
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 3: EX-99.2     Miscellaneous Exhibit                               HTML     36K 
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28: EX-99.27    Miscellaneous Exhibit                               HTML    854K 
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30: EX-99.29    Miscellaneous Exhibit                               HTML    223K 
 4: EX-99.3     Miscellaneous Exhibit                               HTML    279K 
31: EX-99.30    Miscellaneous Exhibit                               HTML     25K 
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36: EX-99.35    Miscellaneous Exhibit                               HTML     43K 
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38: EX-99.37    Miscellaneous Exhibit                               HTML     41K 
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40: EX-99.39    Miscellaneous Exhibit                               HTML    475K 
 5: EX-99.4     Miscellaneous Exhibit                               HTML    127K 
41: EX-99.40    Miscellaneous Exhibit                               HTML     25K 
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44: EX-99.43    Miscellaneous Exhibit                               HTML     36K 
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46: EX-99.45    Miscellaneous Exhibit                               HTML     40K 
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48: EX-99.47    Miscellaneous Exhibit                               HTML    331K 
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 6: EX-99.5     Miscellaneous Exhibit                               HTML    623K 
51: EX-99.50    Miscellaneous Exhibit                               HTML     40K 
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53: EX-99.52    Miscellaneous Exhibit                               HTML    243K 
54: EX-99.53    Miscellaneous Exhibit                               HTML    357K 
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57: EX-99.56    Miscellaneous Exhibit                               HTML    579K 
58: EX-99.57    Miscellaneous Exhibit                               HTML    941K 
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66: EX-99.65    Miscellaneous Exhibit                               HTML    437K 
67: EX-99.66    Miscellaneous Exhibit                               HTML    379K 
68: EX-99.67    Miscellaneous Exhibit                               HTML     41K 
69: EX-99.68    Miscellaneous Exhibit                               HTML     40K 
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 8: EX-99.7     Miscellaneous Exhibit                               HTML    319K 
71: EX-99.70    Miscellaneous Exhibit                               HTML     45K 
72: EX-99.71    Miscellaneous Exhibit                               HTML    372K 
73: EX-99.72    Miscellaneous Exhibit                               HTML     38K 
74: EX-99.73    Miscellaneous Exhibit                               HTML   1.01M 
75: EX-99.74    Miscellaneous Exhibit                               HTML   1.01M 
76: EX-99.75    Miscellaneous Exhibit                               HTML   1.01M 
77: EX-99.76    Miscellaneous Exhibit                               HTML     40K 
78: EX-99.77    Miscellaneous Exhibit                               HTML     40K 
79: EX-99.78    Miscellaneous Exhibit                               HTML     25K 
80: EX-99.79    Miscellaneous Exhibit                               HTML     43K 
 9: EX-99.8     Miscellaneous Exhibit                               HTML   1.90M 
81: EX-99.80    Miscellaneous Exhibit                               HTML    314K 
82: EX-99.81    Miscellaneous Exhibit                               HTML    314K 
83: EX-99.82    Miscellaneous Exhibit                               HTML    306K 
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10: EX-99.9     Miscellaneous Exhibit                               HTML    337K 
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98: EX-99.97    Miscellaneous Exhibit                               HTML     45K 
99: EX-99.98    Miscellaneous Exhibit                               HTML     39K 
100: EX-99.99    Miscellaneous Exhibit                               HTML     26K  

Exhibit 99.8

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.

This Prospectus (as hereinafter defined) constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. These securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons unless exemptions from the registration requirement of the U.S. Securities Act and applicable state securities laws are available. This Prospectus does not constitute an offer to sell or a solicitation or an offer to buy any of the securities offered hereby within the United States or to, or for the benefit of, U.S. persons. See “Plan of Distribution”.

PROSPECTUS

SOLARBANK CORPORATION

Up to 7,000,000 Common Shares

Price: $0.75 per Common Share

This prospectus (this “Prospectus”) qualifies the distribution of up to 7,000,000 common shares (the “Offered Shares”) in the capital of SolarBank Corporation‎ (the “Company” or “SolarBank”) at a price of $0.75 per Offered Share (the “Offering Price”) for total gross proceeds of up to $5,250,000 (the “Offering”).

The Offered Shares are being offered on a “commercially reasonable efforts” basis without underwriter liability pursuant to the terms and conditions of an agency agreement (the “Agency Agreement”) to be entered by and among the Company and Research Capital Corporation, as lead agent and sole bookrunner (the “Agent”). The Offering Price for the Offered Shares was determined based upon arm’s length negotiations between the Company and the Agent, in the context of the market. See “Plan of Distribution”.

Notes:

The following table sets out the number of securities that may be issued by the Company to the Agent in connection with the Offering:

Notes:

There is currently no market through which the Offered Shares may be sold and purchasers may not be able to resell the securities purchased under this Prospectus. This may affect the pricing of the securities offered under this Prospectus in the secondary market, the transparency and availability of trading prices, the liquidity of the such securities, and the extent of issuer regulation. Investment in the Offered Shares is highly speculative due to various factors, including the nature and early stage of the Company’s business. An investment in these securities should only be made by persons who can afford the total loss of their investment. See “Risk Factors”.

Unless the context otherwise requires, in this Prospectus all references to “Offered Shares” include the Additional Shares and to the “Offering” includes the Over-Allotment Option.

The Canadian Securities Exchange (“CSE”) has conditionally approved the listing of the Company’s common shares (“Common Shares”). Listing is subject to the Company fulfilling all of the requirements of the CSE on or before August 2, 2023. See “Plan of Distribution”.

No minimum amount of funds must be raised under the Offering. This means that the Company could complete the Offering after raising only a small proportion of the Offering amount set out above. See “Risk Factors”.

Potential investors are advised to consult their own legal counsel and other professional advisers in order to assess income tax, legal, and other aspects of this investment. Prospective investors should be aware that the acquisition, holding and disposition of the securities described herein may have income and other tax consequences in Canada and in other jurisdictions. Except as expressly noted, this Prospectus does not describe these tax consequences fully. You should consult and rely on your own tax advisor as to any income or tax implications with respect to your own particular circumstances.

The Agent conditionally offers the Offered Shares for sale on a “commercially reasonable efforts” basis and subject to prior sale, if, as and when issued by the Company, in accordance with the conditions contained in the Agency Agreement referred to under “Plan of Distribution”. Subscriptions will be received subject to rejection or allotment in whole or in part and the right is reserved to close the subscription books at any time without notice. The Offering is expected to close on or about February 23, 2023 (the “Closing Date”) or such other date as the Company and the Agent may agree.

If subscriptions representing the Offering are not received within 90 days of the issuance of a receipt for the final prospectus in respect of the Offering, or if a receipt has been issued for an amendment to the final prospectus, within 90 days of the issuance of such receipt and in any event not later than 180 days from the date of receipt for the final prospectus in respect of the Offering, the Offering will cease. The Agent, pending closing of the Offering, will hold in trust all subscription funds received pursuant to the provisions of the Agency Agreement. If the Offering is not completed, the subscription proceeds received by the Agent in connection with the Offering will be returned to the subscribers without interest or deduction, unless the subscribers have otherwise instructed the Agent. See “Plan of Distribution”.

Other than in respect of the Offered Shares sold to certain purchasers in the United States and to, or for the account or benefit of, certain U.S. persons or certain persons in the United States, which will be represented by individual certificates, and other than pursuant to certain exceptions, it is expected that one or more global certificates for the Offered Shares distributed by this Prospectus will be issued in registered and definitive form to CDS Clearing and Depository Services Inc. (“CDS”) and will be deposited with CDS on the Closing Date. Purchasers of the Offered Shares will receive only a customer confirmation from the registered dealer from or through whom the Offered Shares, are purchased.

The Company is neither a “connected issuer” nor a “related issuer” of the Agent, as defined in National Instrument 33-105 – Underwriting Conflicts.

Certain legal matters related to the Offering have been reviewed on behalf of the Company by DLA Piper (Canada) LLP and on behalf of the Agent by MLT Aikins LLP.

Paul Pasalic, a director of the Company, resides outside of Canada. This director has appointed DLA Piper (Canada) LLP, Suite 2800, Park Place, 666 Burrard St., Vancouver, British Columbia, V6C 2Z7, Canada, as agent for service of process in Canada. Investors are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.

The Company’s head and registered office is located at 505 Consumers Road, Suite 803, Toronto, Ontario, M2J 4Z2.

TABLE OF CONTENTS

Page

GLOSSARY OF TERMS

The following is a glossary of certain defined terms used throughout this Prospectus. This is not an exhaustive list of defined terms used in this Prospectus and additional terms are defined throughout. Terms and abbreviations used in the financial statements of the Company are defined therein.

Defined Terms

Table of Abbreviations

GENERAL MATTERS

About this Prospectus

Investors should rely only on the information contained in this Prospectus and are not entitled to rely on certain parts of the information contained in this Prospectus to the exclusion of others. Neither the Company nor the Agent have authorized anyone to provide investors with additional or different information. The information contained on www.abundant.solar or any affiliated website is not intended to be included in or incorporated by reference into this Prospectus and prospective investors should not rely on such information when deciding whether or not to purchase the Offered Shares. Any graphs, tables or other information demonstrating our historical performance contained in this Prospectus are intended only to illustrate past performance and are not necessarily indicative of the Company’s future performance. Neither the Company nor the Agent are offering to sell these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this Prospectus is accurate only as of the date of this Prospectus or the date otherwise indicated, regardless of the time of delivery of this Prospectus or any sale of the Offered Shares. The Company’s business, financial condition, results of operations and prospects may have changed since the date of this Prospectus.

If, after the date that this Prospectus is filed but before the filing of a final prospectus, a material adverse change occurs, the Company will be required to file an amendment to the Prospectus as soon as practicable, but in any event, within 10 days after the material adverse change occurs. If, after the date that a final prospectus is filed but before the completion of the distribution under the final prospectus, a material change occurs, the Company will be required to file and deliver to investors an amendment to the final prospectus as soon as practicable, but in any event within 10 days after the material change occurs.

The Agent is not offering to sell the Offered Shares in any jurisdiction where the offer or sale of such securities is not permitted. For investors outside Canada, neither the Company nor the Agent have done anything that would permit the Offering or distribution of this Prospectus in any jurisdiction where action for that purpose is required, other than in Canada. Investors are required to inform themselves about and to observe any restrictions relating to the Offering and the distribution of this Prospectus.

Interpretation

Unless otherwise noted or the context indicates otherwise “we”, “us”, “our”, “SolarBank” or the “Company” refer to SolarBank Corporation together with its direct and indirect subsidiaries, as the context requires.

Certain capitalized terms and phrases used in this prospectus are defined under “Glossary of Terms”. Words importing the singular number include the plural, and vice versa, and words importing any gender include all genders.

Currency Presentation

Unless stated otherwise or as the context otherwise requires, all references to $, C$ or dollar amounts in this Prospectus are references to the lawful currency of Canada, and all references to US$ or United States Dollars are to the lawful currency of the United States.

FINANCIAL STATEMENT PRESENTATION IN THIS PROSPECTUS

‎The following financial statements of the Company and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and are included in this Prospectus (see “Financial Statements”):

FORWARD-LOOKING STATEMENTS

This Prospectus contains “forward-looking statements” or “forward-looking information” (collectively “forward-looking statements”) within the meaning of applicable securities laws. Forward-looking statements contained herein are based on current expectations, estimates, forecasts, projections, beliefs and assumptions made by management of the Company about the industry in which it operates. Such statements include, in particular, statements about the Company’s plans, strategies and prospects under the headings “Summary”, “Risk Factors”, and “Management’s Discussion and Analysis”. In some cases, these forward-looking statements can be identified by words or phrases such as “may”, “might”, “will”, “expect”, “anticipate”, “estimate”, “intend”, “plan”, “indicate”, “seek”, “believe”, “predict” or “likely”, or the negative of these terms, or other similar expressions intended to identify forward-looking statements. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. The Company does not intend, and disclaims any obligation, to update any forward-looking statements after it files this Prospectus, whether as a result of new information, future events or otherwise, except as required by the securities laws. These forward looking statements are made as of the date of this Prospectus.

The Company has based these forward-looking statements on its current expectations and projections about future events and financial trends that it believes might affect its financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, among other things, statements relating to:

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 Prospectus, the Company has made various material assumptions, including but not limited to: (i) obtaining the necessary regulatory approvals; (ii) that regulatory requirements will be maintained; (iii) general business and economic conditions; (iv) the Company’s ability to successfully execute its plans and intentions; (v) the availability of financing on reasonable terms; (vi) the Company’s ability to attract and retain skilled staff; (vii) market competition; (viii) the products and services offered by the Company’s competitors; (ix) that the Company’s current good relationships with its service providers and other third parties will be maintained; and (x) 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, prospective purchasers of Offered Shares 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 “Risk Factors”, which include:

These factors should not be considered exhaustive. If any of these risks or uncertainties materialize, or if assumptions underlying the forward-looking statements prove incorrect, actual results might vary materially from those anticipated in those forward-looking statements.

Information contained in forward-looking statements in this Prospectus is provided as of the date of this Prospectus, and we disclaim any obligation to update any forward-looking statements, whether as a result of new information or future events or results, except to the extent required by applicable securities laws. Accordingly, potential investors should not place undue reliance on forward-looking statements or the information contained in those statements.

All of the forward-looking statements contained in this Prospectus are expressly qualified by the foregoing cautionary statements. Investors should read this entire Prospectus and consult their own professional advisors to assess the income tax, legal, risk factors and other aspects of their investment.

MARKET AND INDUSTRY DATA

Unless otherwise indicated, information contained in this Prospectus concerning the Company’s industry and the markets in which it operates, including general expectations and market position, market opportunities and market share, is based on information from independent industry organizations, other third-party sources (including industry publications, surveys and forecasts) and management studies and estimates.

Unless otherwise indicated, the Company’s estimates are derived from publicly available information released by independent industry analysts and third-party sources as well as data from the Company’s internal research and knowledge of the renewable energy market and economy, and include assumptions made by the Company which management believes to be reasonable based on their knowledge of the Company’s industry and markets. The Company’s internal research and assumptions have not been verified by any independent source, and it has not independently verified any third-party information. While the Company believes the market position, market opportunity and market share information included in this Prospectus is generally reliable, such information is inherently imprecise. In addition, projections, assumptions and estimates of the Company’s future performance and the future performance of the industry and markets in which it operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the heading “Forward-Looking Statements” and “Risk Factors”. For the avoidance of doubt, nothing stated in this paragraph operates to relieve any party from liability for any misrepresentation contained in this Prospectus under applicable Canadian securities laws.

MARKETING MATERIALS

A “template version” of the following “marketing materials” (each such term as defined in NI 41-101) for the Offering has been filed with the Securities Commissions, and are specifically incorporated by reference into this Prospectus:

The Investor Presentation referred to above are available under the Company’s profile on SEDAR at www.sedar.com.

In addition, any template version of any other marketing materials filed in connection with this Offering, after the date hereof but prior to the termination of the distribution of the Offered Shares under this Prospectus (including any amendments to, or an amended version of, any template version of any marketing materials), is deemed to be incorporated by reference herein. Any template version of any marketing materials utilized in connection with this Offering are not part of this Prospectus to the extent that the contents of the template version of the marketing materials have been modified or superseded by a statement contained in this Prospectus.

CORPORATE STRUCTURE

Name, Address and Incorporation

The Company was incorporated under the OBCA on September 23, 2013 as 2389017 Ontario Inc. On October 11, 2013 its name was changed to Abundant Solar Energy Inc. On October 17, 2022, it amended its Articles to establish an authorized capital consisting of an unlimited number of Common Shares. On October 17, 2022 its name was changed to SolarBank Corporation. On October 7, 2022 it completed a share split on a 1:160 basis.

The Company’s head and registered office is located at 505 Consumers Road, Suite 803, Toronto, Ontario, M2J 4Z2.

Intercorporate Relationships

The corporate structure of the Company is outlined in the diagram below and is current as at the date of filing of this Prospectus.

Subsidiaries

The Company’s subsidiary Abundant Solar Power Inc. (“Abundant USA”) was incorporated in the State of Delaware on December 15, 2016. The registered address of Abundant USA is 850 New Burton Road, Suite 201, City of Dover, County of Kent, Delaware, 19904 United States. Abundant USA was incorporated to carry out the Company’s operations in the United States.

The Company’s subsidiary Abundant Construction Inc. (“ACI”) was incorporated in the Province of Ontario on November 8, 2018. The registered address of ACI is 505 Consumers Road, Suite 803, Toronto, Ontario, M2J 4Z2. ACI was incorporated to act as the counter-party for certain of the Company’s construction agreements.

The Company’s subsidiary 2467264 Ontario Inc. (“246 Ontario”) was incorporated in the Province of Ontario on May 21, 2015. The registered address of 505 Consumers Road, Suite 803, Toronto, Ontario, M2J 4Z2. ACI was incorporated to develop solar power projects in the Province of Ontario with the support of 2543154 Ontario Inc., an arm’s length third party, who holds the remaining 51.1% of 246 Ontario. 2543154 Ontario Inc. is a corporation that is owned 50% by the MoCreebec Eeyoud and 50% by the Aroland First Nation, both First Nations Communities.

GENERAL DEVELOPMENT AND BUSINESS OF THE COMPANY

Overview

The Company is an independent renewable and clean energy project developer and asset operator based in Canada and the United States. The Company is engaged in the development and operation of solar photovoltaic (“PV”) power generation projects in Canada and the United States. The Company’s mission is to support the energy transition in North America through deployment of clean energy at a distributed scale closer to where consumption occurs. Its objective is to scale-up as a leading developer, owner and operator of a significant fleet of distributed solar power assets that have economic and technical value. The Company originates, develops, designs and builds solar power projects. The Company is also gaining expertise in battery storage, co-generation and other technologies that will enable greater penetration of clean energy.

The Company was originally founded in Canada in 2013 as Abundant Solar Energy Inc., and in 2016 established a 100% owned U.S. subsidiary, Abundant Solar Power Inc., to meet the demand for renewable energy in both countries.

The Company’s success started with the renewable Feed-In-Tariff (“FIT”) program for rooftop and ground mount solar arrays in Ontario, Canada. Since then, the Company has established itself as a trusted developer, engineer and asset operator that enables the proliferation of renewable and clean energy in the pursuit of Net Zero carbon emission goals in the fight against climate change and global warming.

The Company’s core competency is in deeply understanding and mastering the ‘local playbook’ of standard offer programs in numerous energy markets in North America allowing it to successfully gain market share while maintaining low overhead and capital-at-risk. The Company provides simple, reliable, and energy-resilient solutions to its customers that significantly reduce their carbon footprint. The Company has extensive experience working with 1,000+ customers including municipalities, First Nations, community co-operatives, regional economic planning authorities, commercial and industrial businesses, and landowners that value the numerous benefits of resilient renewable energy solutions.

The Company’s leadership team has over 100 years of combined expertise in the renewable and clean energy industry coupled with a strongly defined philosophy and financial vision for successful growth. The team brings expertise in site origination, utility grid interconnection, permitting, financing, Engineering, Procurement and Construction (“EPC”), Operation & Maintenance, and asset management of solar PV power plants to the renewable and clean energy industry. As a total solution provider, the Company brings certainty at speed and scale in site control, government relations, grid interconnection, global supply chain and project financing to bring grid-connected solar power plants to productive operation.

The Company focuses on grid connected solar PV electricity power plants. With its full in-house development, engineering and construction expertise, the Company’s capabilities span the value chain from development, EPC, financing, and, while not yet an Independent Power Producer (“IPP”), performs asset management which is a core function of an IPP. The Company’s core business consists of:

O&M stands for Operations and Maintenance. It refers to the set of activities, most of them technical in nature, which enable power plants to perform their task of producing energy at or above the expected level of performance, in compliance with applicable regulations. It encompasses several ongoing maintenance processes along with the replacement and disabling of broken and damaged system and structural components. O&M is essential to ensuring that solar power plants sustain themselves for their expected system life. O&M consists of three fundamental and principal functions:

In the C&I solar segment, most solar companies perform O&M for their own systems, working with local electrical contractors and groundskeepers.

In carrying out its O&M services, the Company’s service standards are set out in its O&M contracts. These service standards have been developed over time based on ‎experience and industry best practices. ‎Referring to government agencies and industry associations ‎such the ‎National Renewable Energy Laboratory in ‎the United States and Solar Power Europe, the ‎standards ‎have been developed based on industry experience, reliability, ‎resilience and ‎maximizing system output. Afterwards ‎experience in the field and the close monitoring of system ‎‎performance has allowed the standards to develop as to ‎adapt to site specific conditions and ‎achieve the highest ‎system output and up time possible.‎ Some references used in the development of the Company’s service standards are as follows: (i) Best Practices for Operation and Maintenance of Photovoltaic and Energy Storage Systems, 3rd ‎Edition ‎‎National Renewable Energy Laboratory, Sandia National Laboratory, SunSpec ‎Alliance, and (ii) the SunShot ‎‎National Laboratory Multiyear Partnership PV O&M ‎Best Practices Working Group ‎Operations and ‎Maintenance Best practices guidelines version 5.0 by Solar power Europe.‎

The scope of work covers all electrical inspections and ‎preventive measures which are comparable to any other electrical system such as a substation or ‎a commercial or industrial building’s electrical connection infrastructure. The scope of work or ‎service standards involve retorquing of electrical connections, testing of electrical components, ‎testing of transformer oil to determine any degradation and mechanical inspections and ‎adjustment of the racking system. ‎

The O&M contract services standards are negotiated mainly on the preventive and reactive maintenance ‎components. For preventive maintenance the standards or scope of work are common and little ‎negotiation takes place aside from increasing frequency of inspections. For the reactive side, ‎negotiation involves rates and response times to unforeseen operational issues.‎

The measurement of the O&M provider’s performance is usually verified by the customer through ‎the performance factor of the system, as well as the monthly report which includes system ‎output and allows for a comparison between predicted performance (e.g., through PVsyst simulation) and ‎actual performance. For reactive maintenance the customer will measure response time and ‎remediation time or “up time”.‎ To date there have been no customer complaints under any of the Company’s O&M contracts.‎

The Company generates revenues via a diverse portfolio of distributed and community solar projects across multiple solar markets including projects with host off-takers, community solar, and net metering projects under programs such as FIT, Value of Distributed Energy Resources (“VDER”), Net Metering Credit Agreements (“NMCAs”), and PPAs. The Company develops solar projects that sell electricity to commercial, industrial, municipal, residential and utility off-takers.

Since incorporation, the Company’s team delivered value in Ontario’s FIT program with the completion of over 150 projects, New York’s Community Solar Program, and an RFP issued by the Maryland Department of Transportation. As a developer, full-service EPC contractor, and asset O&M manager, the Company has been successful in the renewable and clean energy industry working with 1,000 plus stakeholders including property owners, municipalities, indigenous people, co-operatives, electric utilities and regulatory agencies. The Company designed and constructed 100 plus solar power plants, including C&I rooftop installations and ground mount solar farms of varying scale. The Company’s management team has developed, financed and built over 600 C&I projects in Ontario, Minnesota and New York. Through its contracted customer care centers in Boston and Chicago the Company serves more than 5,000 retail electricity customers as community solar subscribers.

The Company’s success in the solar energy market is a result of its creativity, innovation, and ability to think outside of the box, in designing responses to the growing challenges facing the power industry. The Company has managed over $70 million in project financing to-date and has access to low-cost development financing by collaborating with tax-advantaged investment funds seeking CRCE in Canada or federal ITCs in the United States. A tax advantaged investment fund is an investment fund that passes through tax credits to its investors providing investors with tax benefits that allow such funds to offer lower returns to investors. This in turn means that the Company can access funding from such investment funds at a lower cost of capital. An example of a tax-advantaged investment fund is the SFT Group. There is a risk that if tax credits are eliminated or reduced in the future that such investment funds will have difficulty raising capital and as a result the Company may no longer have access to this form of financing.

Three-year history

Financings

On August 1, 2020, the Company entered into a promissory note agreement of $248,081 (US$200,000) with Central New York Enterprise Development Corporation (“CNY”) for a loan with a fixed interest rate of 5% per annum and principal and interest are payable on February 1, 2022. This loan is secured by the following collateral clause: all of the Company’s inventory, equipment, fixtures, accounts, contract rights, chattel paper, security agreements, instruments, deposit accounts, reserves, documents and general intangibles; and all judgements, claims, insurance policies and payments owed or made, accessories, accessions, returns, repossessions, exchanges, substitutions and replacements. Subsequently, the Company has fully repaid the loan in December 2021.

On July 31, 2020, the Company entered into a secured note agreement with TGC Fund III, LP (“TGC”), a customer of the Company, for a loan of $2,483,775 (US$2,000,000). The term loan has an interest rate of 10% per annum to pay for 75% of the interconnection deposits of three projects. Upon TGC purchasing these projects from the Company, the principal and interest amounts are due. TGC purchased two projects as of June 30, 2021 and the third project was expected to close six months after. The third project has been closed subsequently and outstanding term loan has been fully repaid in July 2021.

On January 7, 2021, the Company entered into a term loan agreement with a shareholder for a loan of $656,859 (US$517,017) that comprised of a fixed interest rate of 10% for the first month and 1% for the remaining 11 months, compound monthly. The loan had a maturity date of January 7, 2022 and was secured by the following collateral: all accounts and accounts receivable, all equipment, furniture and fixtures, all inventory, all intangibles, all investments property and securities, all rights to the payment of money, all chattel paper, all deposit accounts, all interconnection security amounts, all properties, accessories, accessions, returns, repossessions, exchanges, substitutions and replacements and all proceeds. In September 2022, the Company fully repaid the shareholder’s loan.

On May 3, 2021, the Company received a Highly Affected Sectors Credit Availability Program loan for a total of $1,000,000 at an interest rate of 4% per annum from the Bank of Montreal. The loan has a ten-year amortization period with interest payments only for the first year. Principal payments commenced in May 2022.

The Company received a Canada Emergency Business Account 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 December 31, 2023. If $40,000 is repaid in full on or before December 31, 2023 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.

On October 3, 2022 the Company completed a convertible bridge loan financing for gross proceeds of $1,250,000 (the “Convertible Loan”). Each Convertible Loan is convertible at the option of the holder thereof into Conversion Units at a conversion price of $0.50 per Conversion Unit at any time. The Convertible Loans mature on the 12 month anniversary of the date of issuance of the Convertible Loans and do not bear interest at any time. Upon the closing of the Offering, the proceeds of the Convertible Loan shall covert into Conversion Units at a conversion price of $0.50 per Conversion Unit. Each Conversion Unit consists of one Common Share, one Series A Warrant and one Series B Warrant.

Other Developments of the Business

On December 21, 2020, the Company entered into Purchase Order with Honeywell International Inc. for the construction of a solar energy facility in New York State in consideration for cash in the amount of US$1,413,694.52. To date the Company has completed six community and net metering solar projects in collaboration with Honeywell in New York State.

On February 9, 2021, the Company entered into an Engineering, Procurement, and Construction Agreement ‎with Solar Troupsburg LLC‎ for the construction and operation of 14.0 MW-DC solar energy facilities located in the Town of Richmond, Ontario County, New York and the Town of Portland, Chautauqua County, New York in consideration for cash in the amount of US$16,269,500. This project was placed into service on October 12, 2022.

On November 15, 2021, the Company entered into an Engineering, Procurement, and Construction Agreement with Abundant Solar Power (VC1) LLC for the construction and operation of 298 kW-DC solar energy facilities located in the Village of Cazenovia, Madison County, New York in consideration for cash in the amount of US$488,321.

On November 15, 2021, the Company entered into a Membership Interest Purchase and Sale Agreement with Solar Alliance Energy DevCo LLC, for the sale of its interest in the Cazenovia Facility. This transaction closed in December 2022.

On January 31 2022, the Company entered into an Engineering, Procurement, and Construction Agreement with Solar Alliance Energy DevCo LLC (US1) for construction and operation of 278 kW-DC solar energy facilities located in the Village of Union Springs, New York ‎in consideration for cash in the amount of US$802,383.20.

Changes in current financial year

Building upon its solid core competencies in full-service development, the Company will deliver an integrated growth solution that has the capacity to generate revenue and grow the business in different revenue streams and that is discussed in this paragraph. For C&I end users, the Company will extend its expertise in rooftop solar to behind-the-meter (“BTM”) solar projects, carports, and building-integrated photovoltaics enabling large property management firms and C&I customers like Honeywell International to achieve corporate Net-Zero commitments. The Company has been in negotiations with C&I customers to achieve this goal. The Company also intends to extend its success in FIT ground mount solar gardens and Community Solar farms to large Utility Scale solar farms with a targeted size of up to 100 MWp. In this regard, the Company has site control of a potential 30 MWp utility solar project and is actively searching for suitable sites that could allow for a solar project of up to 100 MWp. The Company’s track record in operations, maintenance, and asset management create a strong foundation for it to become a successful Independent Power Producer (“IPP”) delivering long-term, sustainable, and profitable growth. The Company’s pipeline has been growing in all aspects of what is being discussed above which is the result of an integrated growth solution.

To achieve this strategic growth goal, the Company will strengthen its team of professionals to increase volume. In 2022 it added additional employees with professional credentials in engineering and accounting. An existing team of 12 professionals with experienced and committed core members will be supplemented by outsourcing certain EPC services to meet a growing volume of business as the Company expects to complete projects with more total MWp in the current fiscal year than were completed in the fiscal year ended June 30, 2022. The Company will continue its tradition in project execution with simplicity, focus, and speed to enhance its leading position in cost competitiveness, with time to COD as a key measure of operation excellence.

Overview of Business and Services

Industry Overview

People need energy for nearly everything they do. The majority of the energy sources on earth are still coal and natural gas, representing close to 60% of global electricity supply.¹ However, fossil fuel reserves are limited.

Conversely, the sun has all the energy our civilization needs. About 173,000,000 GW of Solar energy continue to reach the Earth’s surface.² The US Department of Energy revealed that about 430 quintillion Joules (1.19e+14 kWh) of solar energy strikes the earth every hour.³ A single hour of solar energy could provide enough energy to power the planet for a year. Unlike conventional energy sources, it will take 5 billion years for the sun to run out of fuel.⁴

¹ International Energy Agency. Global Energy Review 2020. https://www.iea.org/reports/global-energy-review-2020/renewables

² Pierce, E.R. (2016). Top 6 Things You Didn’t Know About Solar Energy. U.S. Department of Energy. ‎ www.energy.gov/articles/top-6-things-you-didnt-know-about-solar-energy.

³ Ashrafun Nushra Oishi, A.N., Meer Shadman Shafkat Tanjim and M. Tanseer Ali (2019). Loss Analysis of Market Available Solar Cells and Possible Solutions. Journal of Scientific & Engineering Research, Volume 10, Issue 9, September-2019 ISSN 2229-5518.

⁴ Scudder, J. (2015). The sun won’t die for 5 billion years, so why do humans have only 1 billion years left on Earth? https://phys.org/news/2015-02-sun-wont-die-billion-years.html

93% of the global population lives in countries that have an average daily solar PV potential between 3.0 and 5.0 kWh/kWp.⁵ Because of this abundance of solar power, we only need a small percentage of the planet’s surface to harvest enough energy to power the planet. For example, in Ethiopia just 0.005% of the country’s land area could generate sufficient power to cover existing needs, and in Mexico that figure is just 0.1%.⁶

Solar PV potential varies across Canada, with the highest insolation in southern Saskatchewan, Alberta, Manitoba, and Ontario, and the lowest in northern and coastal regions.⁷ The National Energy Board of Canada expects that by 2040, solar power will generate 13% of the country’s electricity.⁸

Solar power is more affordable, accessible, and prevalent in the United States than ever before. From just 0.34 GW in 2008, U.S. solar power capacity has grown to an estimated 97.2 GW today.⁹ This is enough to power the equivalent of 18 million American homes at average consumption.¹⁰ Today, over only a small percentage of U.S. electricity comes from solar energy. According to the US Department of Energy, with aggressive cost reductions, enabling policies, and large-scale electrification, solar could account for as much as 40% of the nation’s electricity supply by 2035 and as much as 45% by 2050.¹¹

Products and Services

The Company recognizes revenue from project development service and EPC services. The Company provides solar energy solutions by developing, permitting, designing and building BTM solar power generation and transmission or distribution electricity grid connected community solar gardens and utility scale solar farms. While the Company’s focus is on delivering solar power plants from site origination to commercial operation, and the operation and management of the solar power assets, the Company also provides renewable and clean energy project development, EPC, O&M and asset management services for a fee.

⁵ Solar Photovoltaic Power Potential by County (2020). https://www.worldbank.org/en/topic/energy/publication/solar-photovoltaic-power-potential-by-country

⁶ Solar Photovoltaic Power Potential by County (2020). https://www.worldbank.org/en/topic/energy/publication/solar-photovoltaic-power-potential-by-country

⁷ Market Snapshot: Which cities have the highest solar potential in Canada? (2018) https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/market-snapshots/2018/market-snapshot-which-cities-have-highest-solar-potential-in-canada.html

⁸ National Energy Board. Canada’s Energy Future 2017: Energy Supply and Demand Projections to 2040 (2017) https://www.cer-rec.gc.ca/en/data-analysis/canada-energy-future/archive/2017/2017nrgftr-eng.pd

⁹ U.S. Department of Energy. Solar Energy in the United States. https://www.energy.gov/eere/solar/solar-energy-united-states

¹⁰ U.S. Department of Energy. Solar Energy in the United States. https://www.energy.gov/eere/solar/solar-energy-united-states

¹¹ U.S. Department of Energy. Solar Futures Study (2021) https://www.energy.gov/sites/default/files/2021-09/Solar%20Futures%20Study.pdf

A description of the Company’s three focus areas: BTM solar power generation, community solar and utility scale solar farms are as follows:

Behind-the-Meter (BTM) Solar Power Generation

The most effective method to achieve Net-Zero carbon emissions from buildings is to build them all electric, with grid electricity coming from renewable sources such as solar (long-term) and BTM solar power plants to generate zero emission renewable solar power onsite for the building’s self-use (immediate).

The term “behind-the-meter” refers to energy production and storage systems that directly supply homes and buildings with electricity. Residential and commercial solar panels are considered to be behind-the-meter, as are residential and commercial solar batteries—the energy that is produced or stored by these systems is separate from the grid and does not need to be counted by a meter before being used, so they are positioned behind the meter. Behind-the-meter, however, is not the same as “off-grid”. Most behind-the-meter solar energy systems are still grid-tied, which means they maintain a connection to the electrical grid. The energy the solar PV systems provide do not pass through an electricity meter before it is used by the home or business, but, when the panels are not in use (when there is no sunlight), energy from the grid is sent to the home or business, and that energy must pass through a meter first so that it can be accounted for by the utility.

All electricity end customers sit behind the meter. A BTM solar power plant can be net metered, through which the excess solar energy produced by the plant can be sent back to the grid in return for a credit or money from the local utility. BTM solar power plants have the following benefits:

All provinces and territories in Canada offer net metering program though the details may differ.¹² Forty-one States in the US, in addition to Washington, D.C., American Samoa, U.S. Virgin Islands and Puerto Rico offer net metering programs.¹³ The BTM solar projects are reasonable in size (average 300 kWp) as rooftop, carport or ground mount systems, and could be profitable with a targeted 15% gross margin. The Company can be a turn-key service provider to commercial and industrial (“C&I”) customers for them to own BTM solar power plants on-site. The Company can also invest and own the BTM solar projects where local policies allow commercial aggregation and third party ownership.

There has been an increased interest in BTM solar projects. Existing buildings are responsible for 18% of Canada’s GHG emissions, BTM solar power generation provides a readily available solution toward the goal of Net-Zero by 2050.¹⁴

¹² Alberta: https://www.epcor.com/products-services/power/micro-generation/Pages/net-metering.aspx; British Columbia: https://app.bchydro.com/accounts-billing/electrical-connections/net-metering.html; Saskatchewan: https://www.saskpower.com/Our-Power-Future/Powering-2030/Generating-Power-as-an-Individual/Using-the-Power-You-Make/Net-Metering; Manitoba: https://www.hydro.mb.ca/accounts_and_services/generating_your_own_electricity/?_ga=2.88824211.949710914.1666383471-1665874008.1666383471; Ontario: https://www.hydroone.com/business-services/generators/net-metering; Quebec: http://www.hydroquebec.com/residential/customer-space/account-and-billing/understanding-bill/residential-rates/net-metering-option.html; PEI: https://www.maritimeelectric.com/services/articles/net-metering/; Nova Scotia: https://energy.novascotia.ca/renewables/programs-and-projects/enhanced-net-metering; New Brunswick: https://www.nbpower.com/en/products-services/net-metering/; Newfoundland: https://www.newfoundlandpower.com/My-Account/Usage/Electricity-Rates/Net-Metering; Yukon: https://yukon.ca/en/micro-generation-program; Northwest Territories: https://www.inf.gov.nt.ca/en/NetMetering; Nunavut: https://www.qec.nu.ca/customer-care/generating-power/net-metering-program.

¹³ National Renewable Energy Laboratory. Net Metering. https://www.nrel.gov/state-local-tribal/basics-net-metering.html

¹⁴ Natural Resources Canada. Green Buildings. https://www.nrcan.gc.ca/energy-efficiency/green-buildings/24572

Community Solar Gardens

Solar power can help reduce CO₂ emissions mainly by being a clean and renewable source of electricity. Solar power is not dependent on burning fossil fuels or other products; instead, it uses electrons captured from the sun’s energy for electricity creation. Therefore, solar energy does not create greenhouse gases for energy production at residential or C&I subscribers’ locations. Community Solar farms provide opportunities for the subscribers to do their part in achieving the Net-Zero goal.

Community solar is a group of solar panels with access to the local electricity grid. Once the panels are turned on and generating electricity, clean energy from the site feeds into the local power grid. Depending on the size and number of panels the project has, dozens or even hundreds of renters and homeowners can save money from the electricity that is generated by the project. By subscribing to a project, a homeowner earn credits on their electric bill every month from their portion of the solar that’s generated by the project, accessing the benefits of solar without installing panels on their home.

Community solar projects are usually 3 – 7 MWp each in size (see below a Company developed 3 MWp solar farm in Portland, NY, USA) subject to State regulation. Community solar capacity has increased because more projects have come online and because projects have generally become larger over time. Economies of scale enable cost-effective construction of a renewable energy system at a site with optimal renewable resource availability.

Community solar farm projects leverage economies of scale and often offer quick to market solutions for scales of approximately 1,000 homes/7 MWp. Additional advantages include, shared transaction costs often make this procurement option less expensive than self-supply, and customers are generally not responsible for maintenance and upkeep.

Utility Scale Solar Farms

A utility-scale solar farm is one which generates solar power and feeds it into the grid, supplying a customer with renewable solar energy. A ‘utility-scale’ solar project is usually defined as such if it is 10 MW or bigger in capacity of energy production. For comparison, the average American household uses approximately 900 kWh. A utility-scale solar power plant can utilize several solar technologies including primary PV, tracking (rotate to track the sun’s movement) or fixed racking (does not track the sun’s movement).

What distinguishes utility-scale solar from distributed generation is both project size and the fact that the electricity is sold to wholesale energy buyers, not end-use consumers. Virtually every utility-scale solar facility has a PPA with a corporation, an IPP or a utility, guaranteeing a market for its energy for a fixed term of time. Utility scale systems also participate in monthly and spot auction markets for energy, capacity, and ancillary services.

Utility-scale solar has become a growing source of electricity in the world. Many utility-scale solar designs can also include energy storage capacity that provides power when the sun is not shining and increases grid reliability and resiliency.

To reach NZ2050, every industry requires power and every business needs to decarbonize. Many companies will need to partner with solutions providers such as the Company to help put them on a net-zero trajectory, and utility scale solar farm is a commercially viable decarbonization solution for reaching the Net-Zero carbon emission goal.

Customers and Sales Channels

The pursuit of Net-Zero carbon emissions comes a rising demand for renewable energy. Customers are increasingly capitalizing on the climate benefits of renewables; they are looking for renewable energy to meet rising energy needs; they want to benefit from the improving economics of renewable energy via subsidies; and they want to move their businesses away from fossil fuel dependency. Based on application, the Company has customers in the following market segments: BTM, Community Solar, Corporate PPA, and Utility solar PPA.

Behind the Meter (BTM) Solar for C&I Customers

Corporate Net-Zero goals boost BTM solar growth. The C&I BTM solar market, which consists of on-site solar power generation primarily for self use has grown rapidly in recent years. Net-Zero adoption by businesses, non-for-profits and governments will help continue to increase the demand for BTM solar segments. Many C&I customers are becoming more interested in making sustainability-focused choices. With little more than 1% of commercial electricity demand served by on-site solar, there remains significant opportunity for growth in the BTM solar segment.

All subnational jurisdictions in Canada and the United States have net metering programs for BTM solar projects.¹⁵ The Company delivers BTM projects to C&I customers with in-house expertise, enabling economic progress on Net-Zero goals. A residential BTM market segment also exists; however, the Company sees Community Solar as its strongest opportunity to serve mass market residential customers.

Community Solar for Mass Market Subscribers

A Community solar subscription is tied to an offsite solar farm, or solar garden and allows homeowners, renters, small businesses, religious organizations, and other not-for-profits to purchase solar energy without the need to install panels on their property. Rather than purchasing energy solely sourced from utility-scale generators, such as coal and natural gas power plants, some or all electricity is sourced from the community solar project. Subscribers are billed for the solar energy and are credited on their utility bill. In many cases, this creates a discount over conventional electricity purchases. Community solar is especially appealing to those customers who are unable or unwilling to install a renewable energy generator at their residence or commercial facility but still seek the economic and environmental benefits of solar energy.

As of December 2021, Community solar projects are located in 39 states, plus Washington, D.C. 22 states, plus Washington, D.C., have policies that support community solar. Community solar projects represent more than 3,200 MWac of total installed capacity.¹⁶ The Biden Administration wants community solar to reach 5 million households by 2025 and create $1 billion in energy bill savings.¹⁷

Community Choice Aggregation (“CCA”) is an alternative to the investor-owned utility energy supply system in which local entities in the United States aggregate the buying power of individual customers within a defined jurisdiction to secure an alternative energy supply contract. The CCA chooses the power generation source on behalf of the consumers; and thus have the potential to be a major source of viable customers for community solar projects, representing very large contracts for community solar generators. The main goals of CCAs have been to either lower costs for consumers or to allow consumers greater control of their energy mix, mainly by offering cleaner generation portfolios than many local utilities.

¹⁵ See notes 12 and 13.

¹⁶ National Renewable Energy Laboratory. Community Solar. https://www.nrel.gov/state-local-tribal/community-solar.html

¹⁷ U.S. Department of Energy. DOE Sets 2025 Community Solar Target to Power 5 Million Homes.https://www.energy.gov/articles/doe-sets-2025-community-solar-target-power-5-million-homes

Seven states in the United States have enacted CCA-enabling laws.¹⁸ CCAs have set national green power and climate protection records while reducing power bills. CCAs have won National Renewable Energy Laboratory and Environmental Protection Agency recognition for supplying significantly higher amounts of renewable energy while maintaining rates that are competitive with conventional fossil fuel and nuclear-based utility power.¹⁹ CCAs are therefore already conspicuous leaders in green power innovation, receiving the U.S. Environmental Protection Agency’s “green power leadership awards” for achievements in renewable energy. The Company has existing intends to in the future establish relationships with CCAs as a primary method of entry into the Community Solar project market.

Corporate America and IPP Customers

Regulation, investor activism, and rising consumer interest are among the factors pushing companies to benchmark and improve the sustainability performance of their offerings. Both governments and consumers are demanding companies reduce emissions and their environmental footprint. As a result, a growing demand exists for renewable electricity generation from large corporations. Globally, thousands of companies have set or are in the process of setting commitments to emissions reduction. In addition, hundreds of large US-based companies have committed to net-zero targets, many of which have set ambitious emissions reductions targets by 2030 or sooner.

Solar PPAs continue to evolve, with corporations increasingly procuring solar generation offsite. Major customers include renewable investment funds, RE100 corporations, and government administrations. Corporate solar PPAs can be classified as follows:

Corporate solar PPA prices vary widely from state to state. From 2020 to 2021, there were reductions in levelized electricity costs for commercial and utility-scale PV plus-storage systems. The levelized cost of electricity of utility-scale stand-alone PV fell from 4.6 cents/kWh in Q1 2020 to 4.1 cents/kWh in Q1 2021.²⁰ State-by-state variance in contract prices is a function of avoided cost, resource availability and state incentives. PPA rates continue to decline, increasing viability and market opportunity in more jurisdictions. Falling component and build costs and attractive financing make solar the lowest-cost generation alternative in many states. Corporate customers are also negotiating shorter PPA terms to maximize future flexibility.

Traditional Energy Utilities as Customers

For the United States, the path to NZ2050 entails a comprehensive and rapid effort to decarbonize the economy. America’s annual GHG emissions come from a variety of sources, spanning every sector. Demand from utilities for renewable energy is expected to continue to grow in line with the broader economy. Utilities form the largest share of demand globally, particularly in the Americas, as they are required by law to meet RPS. They also have increased exposure to the merchant market (non-PPA), which will start to account for a larger share of solar PV installations.

¹⁸ National Renewable Energy Laboratory. Community Choice Aggregation (CCA) Helping Communities Reach Renewable Energy Goals. https://www.nrel.gov/state-local-tribal/blog/posts/community-choice-aggregation-cca-helping-communities-reach-renewable-energy-goals.html

¹⁹ See note 18.

²⁰ Vignesh Ramasamy, David Feldman, Jal Desai, and Robert Margolis. U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks: Q1 2021, https://www.nrel.gov/docs/fy22osti/80694.pdf

Customers Buy Solar Renewable Energy Certificate (“REC”) Off-Sets

One way that the decarbonization effort is being pursued by lawmakers is the creation of RPS at the subnational level. An RPS makes it law for utilities to source a certain percentage of the electricity they sell to customers from renewable energy sources. This is done via REC trading systems.

To facilitate compliance with RPS requirements, states have adopted a market-based system of tradable RECs that represent the legal property rights to the environmental benefits of one MWh of renewable electricity generation. A REC is issued for every MWh of electricity generated and delivered to the electric grid from a renewable energy resource.

In the REC state markets, various RPS regimes require electricity suppliers to secure a portion of their electricity from renewable power plants. Utilities must generate RECs themselves via self-owned renewable generation, purchase them from renewable generators, or else pay a penalty that is generally higher than the market rate for RECs.

All green power supply options involve the generation and retirement of RECs. Renewable energy providers can unbundle energy from RECs - selling energy as “brown” power and the RECs on the open market. REC sales involve no physical delivery of electricity to customers. One way to think of RECs is that they represent the “solar” aspect of the electricity that was produced.

REC generation and sales are a key revenue stream for utility-scale renewable projects owned by IPPs. In many cases, it is the value of RECs that make these large projects financially viable. REC markets vary by state in line with RPS requirements. As governments more aggressively pursue their carbon emissions targets in the lead up to 2030 and 2050, the Company expects RPS requirements to escalate accordingly and REC prices to increase.

Operations Process

Leveraging the Company’s development expertise means that it can finish turnkey solar projects in an efficient and timely manner. The Company’s process has five phases: Site Origination; Development; Financing; Engineering, Procurement and Construction; Operation & Maintenance and Asset Management. This process has been tested and verified and has brought the Company success.

Phase 1 - Site Origination to Bankable Lease

Phase 2 - Development to Notice To Proceed (NTP)

Phase 3 - Financing

Phase 4 - Delivery: Engineering, Procurement and Construction to COD/PTO

Phase 5 - O&M, Subscriber Management, and Asset Management

Employees, Specialized Skill and Knowledge

As of June 30, 2022, the Company has nine employees and an additional four contracted service providers. The operations of the Company are managed by its directors and officers.

The nature of the Company’s business requires specialized knowledge and technical skill around procurement, construction, management, financing and regulations of the solar industry. The required skills and knowledge to succeed in this industry are available to the Company through certain members of the Company’s management, directors, officers, and advisory teams. The Company’s employees and consultants have extensive experience working with municipalities, First Nations, community co-operatives, regional planning authorities, commercial businesses, and landowners that value the numerous benefits of resilient renewable energy solutions. The Company’s team also has extensive experience developing, financing, building, permitting, commissioning, operating and maintaining renewable and clean power plants in Canada and the US with collectively over 100 years of direct experience profitably originating and executing on projects. Many members of the team have a long track record working together at major North American renewable energy companies such as Potentia, Solar Power Networks, Sky Solar and ARISE Technologies. Most of the team built its track record developing, financing, conducting EPC and O&M, executing both ground mount and rooftop FIT solar projects in Canada and in the US. See “Directors and Executive Officers”.

Competitive Conditions

The global solar market remains highly fragmented. Fragmentation will continue as barriers to entry remain low for residential, community, commercial, and industrial applications and annual installations continue to grow driven by Net-Zero policy initiatives. As a result, the Company predicts significant price competition among solar power competitors.

The Company competes with peers in development, EPC, O&M, and IPP Asset Management. Solar companies are not disrupting or undermining the solar energy industry by selling new products or services that may replace the Company’s. The Company competes on cost and volume via operational excellence. Certain companies in the segment could be vulnerable due to limited scope. The Company addresses this through exposure to the whole renewable energy value chain. Scale may hinder an operator’s ability to meet increasing market demand. Successful solar companies in the Company’s segment are successful because of their ability to access capital markets to fund volume.

Solar Developers

A solar developer is a company that shepherds a solar power plant from ideation to construction readiness, also known as Notice to Proceed (“NTP”) A developer can employ just a few employees or up to thousands. Some developers specialize in certain sizes of projects or in specific regions.

The process of developing a solar power plant can take years. Developers must secure a project site, find an customer for the electricity the power plant will produce (a utility, an electric cooperative in rural areas, a corporation that wants the energy for its own use, or community solar subscribers); conduct technical, geological and other studies on the land, study how the energy generated by the power plant will be connected to the electric grid; apply for a variety of permits from local, state, and sometimes federal agencies; secure financing for the construction of the solar power plant; negotiate equipment purchases; and contract with an EPC firm for the build. All of this must happen before construction begins.

Competitors in solar development in markets relevant to the Company are presented in the table below, with information from Solar Power World. The number one developer in Utah (UT), AES Clean Energy has delivered 526MW utility scale solar in 2020; Nexamp in Massachusetts’ (MA) C&I market delivered 128MW; and Enerlogics in Ohio’s (OH) C&I market delivered 1MW. The Company delivered 12MW in 2020 with more than 100MW delivered since the Company’s founding. The Company could be ranked within the top 20 solar developers on this list.

Solar EPC Companies

Solar EPC companies provide engineering, procurement, and construction of a full solar system. A solar EPC company is more sophisticated and holistic in the products and services they provide compared to a typical solar installer. These include:

A list of competitors in the Company’s solar EPC segment is presented in the table below based on information from Solar Power World. The number one solar contractor is SOLVE Energy from California (CA), which installed 8.7 GW with 901 employees since founding. The last one in the table, Renewable Energy Outfitters in Colorado (CO), delivered 593 kW with only 3 employees. The Company has installed more than 100MW since its founding.

Solar O&M Service Providers

Many of the large IPPs that own utility-scale solar PV portfolios in the U.S. rely on the plant developer or EPC firm for operations and maintenance, except for those that develop their own projects. Greentech Media (GTM) Research’s O&M and asset management report identified the top 5 O&M providers managing U.S. utility-scale PV plants in the table below. One of the firms, Sempra, is also an IPP.

Asset Management service – an IPP World

GTM Research defines asset management as the ongoing management of financial, commercial, and administrative tasks that are necessary to ensure the financial performance of a solar PV plant or a portfolio of plants. GTM Research and SoliChamba Consulting recently released a report, ‘Megawatt-Scale PV O&M and Asset Management 2016-2021’ which features a list of asset managers of U.S. utility-scale PV plants. The table below identifies the top five players:

IPPs who own solar power plants and typically perform asset management in-house dominate the top of the rankings, and make up four of the top five utility-scale PV asset managers in the U.S (based on reporting by SoliChamba Consulting outlined above). Most IPPs and financial investors; however, only manage the assets they invest in. The market for third-party asset management services remains small in the U.S. and its growth is probably limited by the dominance of IPPs and large portfolio owners who tend to self-service. The top third-party asset managers include project developers like Recurrent Energy and affiliated service providers like Bay4 Energy Services and EDF Renewable Services, as well as independent service providers like Radian Generation and CAMS.

Company Competitive Advantage

The Company has grown through participating in standard offering programs such as the Ontario Feed-In-Tariff program and New York’s NYSERDA NY-Sun Community Solar Program and has completed 70 Community solar projects in collaboration with Central New York Regional Planning and Development Board in New York. It has a good track record in developing and building renewable and clean energy projects in Canada and the USA. The Company has succeeded at delivering value at non-utility solar projects as a developer and a full-service EPC contractor; however, it has been evaluating opportunities for more growth in solar project volumes. Becoming an IPP aiming at long-term sustainable investment returns is the Company’s natural next step. To meet the desire for growth, the Company must re-position itself to deliver integrated growth solutions that expand from developer to an IPP in the C&I, Community, and Utility solar PV market segments.

The Company’s competitive advantage lies in its people, processes and experience. The Company’s team is skilled in translating customer needs into value-add solutions. The Company’s solar power plant delivery process is safe, reliable and low cost; and the Company provides a customer experience that is simple and focused with speed in implementation.

Third Party Suppliers

The Company procures all plant components on the open market. The Company qualifies suppliers’ products based on three factors: bankability, availability, and cost.

Product is considered bankable if lenders are willing to finance it. Component bankability is a key factor in projects being offered non-recourse debt financing by lenders. Products must also be available to meet construction schedules at a competitive price. Though China is the most cost-competitive location for the manufacture of all solar PV system components, Chinese solar products still must be bankable and available in order to be procured for the Company’s solar power plants.

Bloomberg NEF has developed a tiering system for PV module products based on bankability, creating a transparent differentiation between the hundreds of manufacturers of solar modules on the market. Tier 1 solar panels, such as those from Canadian Solar, ZNShine, and Jinko are built to higher standards and have the strongest reputation within the solar industry for quality and service. These panels last longer and produce more energy. Tier 1 manufacturers can be expected to honor product warranties. The Company primarily sources Tier 1 panels.

Solar panel mounts and racks are the equipment that secures solar panels in place. Racking is used to attach solar panels to a rooftop, ground, or another surface. With proper installation, an effective mount secures the solar panels against all weather conditions and ultimately protects the investment. Choosing the right racking system depends on the site, local climate, and installer preference (bankable, available, and low cost). Additional information on the Company’s key supplies are below:

Pricing and Marketing

The Company strives to ensure its operational excellence. In the pursuit of Net-Zero there is an increasing willingness among customers to purchase renewable and clean energy such as solar power. Commercial customers are price sensitive in that they need to balance Net-Zero preferences and operational costs to remain competitive in their core businesses. Like with all utility economics, regulatory policy is a primary driver of revenue. Electricity prices are set largely by regulatory bodies like Public Service Commissions or Energy Boards. A PPA has to be equal to or lower than the regulated electricity price, in addition to providing renewable energy credits. The Company and its competitors generally have the same electricity price point (economic oligopoly). The Company gains economic value by managing project cost (the larger the project, the lower cost per watt installed), and driving business volume through a portfolio approach with large partners like Honeywell and large property management companies.

The Company prices its community and utility solar project and services competitively, and aligns itself with market pricing forecasts. The Company prices BTM solar projects to offer the host C&I customers a lower electricity cost, while securing a required return to its investors. BTM project pricing works the best in the Northeast USA where the retail electricity prices are high enough to enable a healthy margin in every BTM project the Company does.

With respect to promotion and marketing to secure customers:

Sales Team

Marketing Communications Plan with a promotion budget of 5% of gross revenue

Messaging customers with key messages

Regulatory Environment

Achieving Net-Zero by 2050 (“NZ2050”) is widely seen as the best way to halt climate change. “Net zero” means our total carbon dioxide emissions are equal to or less than the emissions we remove from the environment. NZ2050 will require new policies, investments, participation and commitment by government, industry, and individuals. The most feasible pathways to net-zero emissions include four main strategies:

Policymakers are increasingly recognizing that renewable energy is the key to net-zero. Governments must build frameworks and reform bureaucracies to level the playing field for renewables as, in many countries, the bureaucracies still favour fossil fuels, giving the fossil fuel industry large subsidies. To date more than 140 countries have now set or are considering a target of NZ2050.²¹ United Nations Secretary-General António Guterres called on the world to “end fossil fuel pollution and accelerate the renewable energy transition, before we incinerate our only home”.²²

Fighting climate change is good business. Renewables such as wind and solar are readily available and in most cases, are cheaper than coal and other fossil fuels. Solar and battery energy storage costs have plummeted in the past decade. Despite the headwinds presented by ongoing cost inflation and supply chain challenges, demand for clean energy sources has never been higher, and the Company expects that the global energy crisis will continue to act as an accelerant for the clean energy transition.

Since the International Energy Agency’s (“IEA”) last in-depth review in 2015, Canada has made a series of international and domestic commitments, putting it on a path toward achieving an ambitious energy system transformation and climate transition. The Canadian Net-Zero Emissions Accountability Act, which became law on June 29, 2021, enshrines in legislation Canada’s commitment to achieve net-zero emissions by 2050. The majority of Canadians already depend on clean, reliable electricity to power their everyday lives. Canada has accelerated the phase-out of coal, implemented natural gas regulations and put a price on carbon pollution. The Government will connect regions with clean power through Regional Strategic Initiatives.²³ The Greenhouse Gas Pollution Pricing Act encourages the reduction of GHG emissions. The Liberal Party of Canada has signaled its intention to continue the annual price increases until the price on emissions reaches $170 per tonne of CO2e by 2030.²⁴

²¹ Climate Action Tracker. CAT net zero target evaluations. https://climateactiontracker.org/global/cat-net-zero-target-evaluations/#:~:text=As%20of%2020%20September%202022,zero%20goal%20in%20November%202021

²² António Guterres. UN Secretary-General Remarks. https://media.un.org/en/asset/k1q/k1qn00cy8a

²³ Government of Canada. Regional Tables Launched to Collaboratively Drive Economic Opportunities in a Prosperous Net-Zero Future. www.canada.ca/en/natural-resources-canada/news/2022/06/regional-tables-launched-to-collaboratively-drive-economic-opportunities-in-a-prosperous-net-zero-future.html

²⁴ Government of Canada. Update to the Pan-Canadian Approach to Carbon Pollution Pricing 2023-2030. https://www.canada.ca/en/environment-climate-change/services/climate-change/pricing-pollution-how-it-will-work/carbon-pollution-pricing-federal-benchmark-information/federal-benchmark-2023-2030.html

With the United States’ announcement of targets to halve US GHG emissions and to reach net-zero emissions by 2050, the world’s largest economy (and second-largest emitter) has joined some 130 nations in its intention to act on climate change.

The Biden infrastructure plan (“American Jobs Plan”) is expected to result in very favorable federal policy environment for renewable energy development in the US with a goal towards a 100% emission free power sector by 2035 and economy wide net zero emissions by 2050.

The Inflation Reduction Act of 2022 (“IRA”) is a bill passed by the 117th United States Congress in August 2022 that aims to curb inflation by reducing the deficit, lowering prescription drug prices, and investing into domestic energy production while promoting clean energy solutions. The IRA includes long-term solar and energy storage tax incentives and other critical provisions that will help decarbonize the electric grid with significant clean energy deployment. The legislation earmarks $369 billion for U.S. energy security and fighting climate change. It is expected to cut annual U.S. greenhouse gas emissions by about 1 billion metric tons by 2030 mainly by speeding up the deployment of clean electricity and electric vehicles.²⁵ The IRA extends the solar ITC by 10 years at 30%. The existing federal ITC has been fundamental to incentivizing the growth of American solar. The credit applies to residential, commercial, and utility-scale developers and will create an effective discount of 30% on the capital cost of solar installations for ten years (until 2033). The credit will decline to 26% in 2033 and to 22% in 2034. The reinvigorated ITC will come with a variety of “adders,” which could push the tax credit to as high as 50% for some projects. Additionally, the credit is equipped with a direct pay provision, allowing developers with little to no tax liability to treat it as a tax overpayment, resulting in a cash refund.

The IRA also provides ITCs for Standalone Storage and Interconnection Upgrades. Until now, battery storage was only eligible for the ITC if it was directly charged by solar. With respect to interconnection upgrades, a significant portion of the cost of solar projects is to pay for utilities to upgrade the grid so that the solar project can connect to it. With the IRA, standalone storage and interconnection upgrades are eligible for ITC.

²⁵ Jesse D. Jenkins, Erin N. Mayfield, Jamil Farbes, Ryan Jones, Neha Patankar, Qingyu Xu, and Greg Schivley. Preliminary Report: The Climate and Energy Impacts of the Inflation Reduction Act of 2022. https://repeatproject.org/docs/REPEAT_IRA_Prelminary_Report_2022-09-21.pdf

To promote a diversified resource mix and encourage deployment of renewable energy, most States have established RPS. The policies require that a specified percentage of the electricity sold by utilities comes from renewable resources. RPS policies help drive the United States market for wind, solar and other renewable energy. Roughly half of the growth in U.S. renewable energy generation since the beginning of the 2000s can be attributed to State renewable energy requirements.

In addition, the Company is subject to a variety of laws and regulations in the markets where its does business. These laws and regulations include energy regulations, export and import restrictions, tax laws and regulations, environmental regulations, labor laws, supply chain laws and regulations and other government requirements, approvals, permits and licenses. The Company also faces trade barriers and trade remedies such as export requirements, tariffs, taxes and other restrictions and expenses, including antidumping and countervailing duty orders, which could increase the prices of our supplies.

In the countries where we do business, the market for solar power, solar projects and solar electricity is heavily influenced by national, state and local government regulations and policies concerning the electric utility industry, as well as policies disseminated by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity generation. The Company expects that our solar power projects and their installation will continue to be subject to national, state and local regulations and policies relating to safety, utility interconnection and metering, construction, environmental protection, and other related matters. See “Risk Factors”.

Impact of Environmental Laws and Regulations

Compliance with environmental laws and regulations can be expensive, and noncompliance with these regulations may result in adverse publicity and potentially significant monetary damages, fines and the suspension or even termination of the Company’s business operations.

The Company is required to comply with all national and local environmental regulations. The Company’s business generates noise, wastewater and other industrial waste in our operations and the risk of incidents with a potential environmental impact has increased as its business has expanded. The Company believes that it substantially complies with all relevant environmental laws and regulations and has all necessary and material environmental permits to conduct its business as it is presently conducted. However, if more stringent regulations are adopted in the future, the costs of complying with these new regulations could be substantial. If the Company fails to comply with present or future environmental regulations, it may be required to pay substantial fines, suspend production or cease operations.

The Company’s solar power projects must comply with the environmental regulations of the jurisdictions in which they are installed, and the Company may incur expenses to comply with such regulations. If compliance is unduly expensive or unduly difficult, the Company may lose market share and its financial results may be adversely affected. Any failure by the Company to control its use or to restrict adequately the discharge, of hazardous substances could subject the Company to potentially significant monetary damages, fines or suspensions of its business operations.

Intellectual Property

The Company is not dependent on intellectual property rights for its business. The Company has no registered trademarks, patents or patent applications; however, the Company has applied in Canada and the United States to trademark the term “SOLARBANK”. The Company asserts copyright ownership generally in its written works, but has no formal copyright registration process in place.

Cycles

The Company’s business is subject to seasonal variations in demand linked to construction cycles and weather conditions. Demand for solar power and battery storage products and services from some markets, such as the U.S., may also be subject to significant seasonality due to adverse weather conditions that can complicate the installation of solar power systems and negatively impact the construction schedules of solar projects. Seasonal variations could adversely affect our results of operations and make them more volatile and unpredictable.

Foreign Operations

Currently the Company’s only foreign operations are in the United States which are detailed above. The Company intends to continue to focus on developing solar projects in Canada and the United States but will evaluate expanding into other countries based on the regulatory environment, demand and financial metrics of opportunities.

Economic Dependence

Except as disclosed under “Management’s Discussion and Analysis - Financial Instruments and Other Instruments (Management of Financial Risks) - Concentration risk and economic dependence” the Company’s business is not substantially dependent on any one contract for the products and services that is provides or the sourcing of the materials, labour and supplies it requires to provide its services.

Social or Environmental Policies

The Company has not yet implemented any formal social or environmental policies that are fundamental to its operations. It is currently evaluating the implementation of such policies based on current trends related to environment, social and governance initiatives.

Reorganizations

There has not been any material reorganization of the Company or any of its subsidiaries within the three most recently completed financial years or completed during or proposed for the current financial year.

USE OF PROCEEDS

Use of Proceeds

The net proceeds of the Offering, after deducting the Agent’s Fee, the remaining balance of the Corporate Finance Fee in the amount of $16,750 (inclusive of applicable taxes) and the estimated expenses of the Offering of $200,000, are estimated to be $4,718,250 before giving effect to any exercise of the Over-Allotment Option. All subscription funds received by the Agent will be held in trust, pending the closing of the Offering. If the Offering is not completed, the Agent shall promptly return the proceeds of the subscription to the purchasers without interest or deduction. There is no minimum amount of funds that must be raised pursuant to the Offering. This means the Company could complete the Offering after raising only a small proportion of the Offering amount set out herein. The net proceeds of the Offering are currently intended to be used for company expansion and general corporate purposes. Specifically, the Company expects to use the net proceeds of the Offering for the following purposes:

An interconnection study is a study that determines whether a solar project can be connected to an electricity grid. These studies assess the addition of a solar project and its impact on the power system, as well as identify any interconnection facilities or network upgrades needed for interconnecting the solar project safely, in compliance with reliability requirements. Each interconnection study will include a system impact study which is an engineering study that evaluates the impact of the proposed interconnection on the safety and reliability of the transmission system. It is also likely to include a facilities study that determines the equipment and electrical switching configuration necessary to accomplish the interconnection and estimates the cost, construction, and installation times.

An interconnection deposit is provided to a utility after a positive interconnection study determination and in order for a utility to proceed with completing the interconnection of the solar power project to the electricity grid.

If the Offering is fully subscribed and the Over-Allotment Option is exercised in full, the net proceeds to the Company from the Offering, after deducting Agent’s Fee, the balance of the Corporate Finance Fee and estimated expenses of the Offering will be $5,458,500. Any additional proceeds received from the exercise of the Over-Allotment Option will be used for working capital.

Upon completion of the Offering, it is expected that the Company will have sufficient non-contingent financial resources to fund ongoing operations and achieve its business objectives and milestones for at least 12 months. The Company intends to spend the net funds available to it as stated in this Prospectus. However, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary. The management of the Company will have broad discretion in applying the net proceeds from the Offering. See “Risk Factors”.

The Company has incurred losses since inception. Although the Company expects to become profitable, there is no guarantee that will happen, and the Company may never become profitable. The Company anticipates it will continue to have negative cash flow from operating activities unless and until commercial production is achieved. The Company expects to use proceeds from the Offering to fund negative cash flow from operating activities in future periods. See “Risk Factors”.

Total Funds Available

Assuming completion of the maximum Offering, the Company will have approximately $7,829,046 in available funds (net proceeds of the Offering and approximately $3,110,796 in estimated working capital as at January 31, 2023). Based upon management’s current intentions, the estimated expenditures for which the total available funds will be used in the 12 months after the date hereof are as follows:

Notes:

The Company intends to spend the funds available to it as stated in this Prospectus. There may be circumstances however, where, for sound business reasons, a reallocation of funds may be necessary. Accordingly, while it is currently intended by management that the available funds will be expended as set forth above, actual expenditures may in fact differ from these amounts and allocations.

Pending the use of proceeds outlined above, the net proceeds will be held as cash balances in the Company’s bank account or invested in certificates of deposit and other short-term investment products. The Chief Financial Officer of the Company is responsible for executing the Company’s investment policies. See “Risk Factors”.

Business Objectives and Milestones

The primary business objectives for the Company over the next 12 months are:

While the Company believes it has the skills and resources necessary to accomplish these business objections and milestones, there is no guarantee that the Company will be able to do so within the time frames indicated above, or at all. See “Risk Factors”.

Current Status of Business Objectives and Potential Barriers to Completion

New United States Projects

The project currently has completed an interconnection agreement with the utility, and obtained permits from the local authority having jurisdiction. Engineering and initial construction have started and the Company is about to initiate procurement of major equipment. The Company may have to delay the completion of the project to commercial operation based on the timing of the closing of the Offering which will provide the funds to procure the components and hire local crews to build the project.

The project currently has completed an interconnection agreement with the utility, and obtained permits from the local authority having jurisdiction. Engineering and initial construction have started and the Company is about to initiate procurement of major equipment. The Company may have to delay the completion of the project to commercial operation based on the timing of the closing of the Offering which will provide the funds to procure the components and hire local crews to build the project.

The Company has submitted of an interconnection request to New York Independent System Operator. It has secured site control via an executed lease with the landowner. It has also qualified to submit a Proposal under NYSERDA’s RESRFP22-1 for Renewable Energy Credits (RECs). The barrier to completion is the timing and result of the interconnection request could delay the progress of engineering, permitting and interconnection deposit.

Existing Canadian Project

The project has received notice to proceed from the property owner. A site visit is scheduled, engineering has started and the Company is in discussion with the local utility on net metering interconnection, and with local authority having jurisdiction on the building permit. The Company may have to delay the completion of the project to commercial operation based on the timing of the closing of the Offering which will provide the funds to procure the components and hire local crews to build the project.

Business Development ‎Initiatives

The three projects are under utility interconnection study. The design work will be after the completion of the interconnection study.

The three projects are under utility interconnection study. The design work will be after the completion of the interconnection study.

Human Resources and General & Administrative Expenses

These expenditures are to support the completion of the business objectives detailed above. The only relevant barrier related to these items is if the Company is unable to recruit sufficient new hires to support its business objectives.

For additional risks related to all of the business objectives please see “Risk Factors”.

Costs Incurred to Date

New United States Projects

$93,540

$59,816

No cost has been incurred so far. All tasks have been finished internally.

Existing Canadian Project

No cost has been incurred so far. All tasks have been finished internally.

Business Development ‎Initiatives

No cost has been incurred so far. All tasks have been finished internally.

Human Resources and General & Administrative Expenses

The costs associated with these matters will be incurred in the future.

DIVIDENDS OR DISTRIBUTIONS

The Company has not declared dividends on any of their shares in the past and does not intend to pay any in the foreseeable future. Any future determination to pay dividends will be at the discretion of the Board of Directors and will depend on the financial condition, business environment, operating results, capital requirements, tax considerations, any contractual restrictions on the payment of dividends and any other factors that the Board of Directors deems relevant. See “Risk Factors”.

SELECTED FINANCIAL INFORMATION

The following table sets forth selected financial information for the Company, summarized from the SolarBank Financial Statements, attached as Schedule “A”.

This table is presented and should be read in conjunction with the SolarBank Financial Statements and the related notes and auditor’s reports included in this Prospectus, together with the information included under “General Matters”, “Risk Factors”, “Capitalization”, “Management’s Discussion and Analysis”. The selected historical financial information has been prepared in accordance with IFRS. Investors are cautioned that historical results are not indicative of future results.

Note:

annual MANAGEMENT’S DISCUSSION AND ANALYSIS

The following Management Discussion and Analysis (“MD&A”) of the financial condition and results of operations of the Company for the year ended June 30, 2022 was prepared by management as of November 4, 2022 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 audited consolidated financial statements of the Company and notes thereto for the year ended June 30, 2022. See “Risk Factors”. The information provided herein supplements but does not form part of the financial statements. All amounts are stated in Canadian dollars unless otherwise indicated.

Certain information included in the MD&A is forward-looking and based upon assumptions and anticipated results that are subject to uncertainties. Should one or more of these uncertainties materialize or should the underlying assumptions prove incorrect, actual results may vary significantly from those expected. See “Forward-Looking Statements” for further details.

Overall Performance

The Company is incorporated in Ontario, Canada with its registered and head office at 505 Consumers Road, Suite 803, Toronto, Ontario, M2J 4V8. The Company was originally founded in Canada in 2013 as Abundant Solar Energy Inc., and in 2016 established a 100% owned U.S. subsidiary, Abundant Solar Power Inc., to meet the demand for renewable energy in both countries.

The Company is a growing renewable energy sector Company that specializes in delivering solar and other renewable energy power plants in Canada and the United States of America. Throughout its years in business, the Company has worked to provide safe, reliable and low-cost solar power plants that would generate solar renewable electricity to: (a) address the growing requirements to reduce carbon emissions in the form of Solar Renewable Energy Credits (“SREC”); and (b) provide a cost competitive alternative to conventional electricity generation to further decarbonize the electricity grid.

As an established independent renewable and clean energy project developer and asset operator, the Company is engaged in the site origination, development, engineering, procurement, construction, operation and maintenance, 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.

The Company is shifting its business model from a “develop to sell” strategy to the ownership of renewable projects as an Independent Power Producer. The Company will accelerate its portfolio growth of its close to 1GW solar photovoltaic (“PV”) power plant development and acquisition.

Selected Annual Information

Comparative information for annual periods from June 30, 2020, 2021 and 2022 has been presented in accordance with IFRS.

The following discussion addresses the operating results and financial condition of the Company for the year ended June 30, 2022 compared with the year ended June 30, 2021. The MD&A should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes for the year ended June 30, 2022.

Results of operations for the year ended June 30^th, 2022 as compared to the year ended June 30^th, 2021

In 2022, the Company continued to focus on scaling its business model by growing its pipeline and advancing its projects in EPC in US and development in both US and Canada. The two large New York-based projects contributed the majority of the revenue there were four smaller-sized projects in New York that started construction in 2022. It is expected that the Company’s revenue will keep growing in 2023 as two projects in the US reached NTP and many projects in the US are approaching NTP.

The net loss for the year ended June 30, 2022 increased by $31,326 compared to the year ended June 30, 2021 with $188,393 net loss recognized in 2022 as compared to a net loss of $157,067 recognized in 2021.

Key business highlights and projects updates in 2022

Revenue

Revenue for the year ended June 30, 2022 was $10,197,619 compared to $7,346,581 in the comparative period. The revenue increase was mainly the result of EPC services provided with respect to two significant projects in New York, USA.

The EPC service revenue for the year ended June 30, 2022 was $9,791,511 compared to $3,230,366 in the comparative period, increasing by $6,561,145, or 203%. The revenue increase was mainly because the significant project started in the fourth quarter of the year ended June 30, 2021 while the Company worked on the project throughout the year ended June 30, 2022.

For the year ended June 30, 2022, the Company generated $406,108 in development revenue from the sales of two small-size projects developed by the Company, compared to $4,116,216 for the year ended June 30, 2021 from the sales of five projects developed by the Company.

Expenses

For the year ended June 30, 2022, the Company incurred cost of goods sold of $8,231,476 compared to $4,814,144 in the comparative period, increasing by $3,417,332, or 71%. The cost of goods sold increased by $3,417,332 is mainly due to two reasons. First, the Company completed more EPC services. The company recognize both revenue and cost based on the complete rate of the projects. Second, the gross margin of development revenue is higher than EPC services revenue.

The operating expenses were $2,326,689 in the year ended June 30, 2022 compared to $2,395,610 in the comparative period. During the year ended June 30, 2022, the Company incurred accounting and legal expenses of $143,937 compared to $79,599 in the comparative period mainly due to the Company required audit services for initial public offering in 2022. The rent expense for the year ended June 30, 2022 was $82,955 compared to $161,704 in the comparative period mainly due to several rent agreements have expired in 2022. The office and miscellaneous expenses for the year ended June 30, 2022 was $123,498 compared to $79,983 in the comparative period mainly due to the Company incurred $34,095 business tax in New York city and $17,500 recruiting expenses in 2022, whereas no such expenses incurred in 2021. The Company incurred $1,774,583 salary and wages for the year ended June 30, 2022 compared to $1,937,458 in the comparative period mainly due to the Company have 8 employees worked full year in 2022, whereas there were 11 employees worked full year in 2021. Overall, general and administrative expenses were consistent in the prior two fiscal years.

Other Income (Expenses)

For the year ended June 30, 2022, the Company had other income of $53,822 compared to other expense of $244,807 for the year ended June 30, 2021. Other income for the year ended June 30, 2022 consisted mainly of interest expense of $150,910 compared to $332,203 in 2021, a fair value adjustment on accounts receivable of $nil compared to $212,779 in 2021, a foreign exchange gain of $87,956 compared to a foreign exchange loss of $51,327 in 2021, and a government Covid subsidy income of $133,506 compared to $386,537 in 2021.

Net Income (Loss)

The net loss for the year ended June 30, 2022 was $188,391 for a loss per share of $0.01 based on 16,000,000 outstanding shares for the year versus $157,067 for a loss per share of $0.01 based on 16,000,000 outstanding shares for the previous year. While revenues increased in the year ended June 30, 2022, the net loss was higher due to increases in cost of goods sold.

Total Assets

Total assets for the year ended June 30, 2022 were $9,194,537 compared to $10,283,255 in the comparative period. The decrease in assets was due to a decrease in cash and trade and other receivables, which was partially offset by an increase in inventory.

Total Liabilities

Total liabilities for the year ended June 30, 2022 were $4,753,922 compared to $5,873,953 in the comparative period. The decrease in liabilities was due to a decrease in trade and other payables and a decrease in loan payables.

Cash flow from operating activities

The Company generated cash of $171,212 from operating activities during the year ended June 30, 2022, while the Company used $2,684,859 cash during the same period ended June 30, 2021. The Company generated cash of $14,830 from the operational activities and generated $156,382 from the change of working capital during the year ended June 30, 2022, while the Company generated cash of $45,020 from the operating activities and used $2,729,879 due to the change of working capital for the same period ended June 30, 2021.

Cash flow from financing activities

The Company used cash of $679,271 in financing activities during the year ended June 30, 2022, while the Company generated $2,323,933 cash during the same period ended June 30, 2021. The cash used in financing activities for the year ended June 30, 2022 was mainly driven by the net proceeds received from long-term debts of $316,450, offset by the repayment of short-term loans of $982,642. The cash generated from financing activities for the year ended June 30, 2021 was mainly driven by the net proceeds received from long-term debt of $1,020,000 and the net proceeds received from short-term loans of $3,495,867, offset by the repayment of short-term loans of $2,147,436.

Cash flow from investing activities

The Company used cash of $10,970 in plant, property and equipment during the year ended June 30, 2022, while the Company used $3,194 in plant, property and equipment during the same period ended June 30, 2021.

Discussion of Operations and Outlook

Solar PV Technology

The Company is in the business of developing solar PV projects. PV devices generate electricity directly from sunlight via an electronic process that occurs naturally in certain types of material, called semiconductors. Electrons in these materials are freed by solar energy and can be induced to travel through an electrical circuit, powering electrical devices or sending electricity to the grid.

Solar power is not dependent on burning fossil fuels or other products; instead, it uses electrons captured from the sun’s energy for electricity creation. Therefore, solar energy does not create greenhouse gases for energy production. Most modern solar cells are made from crystalline silicon semiconductor material. Silicon cells are more efficient at converting sunlight to electricity, but generally have higher manufacturing costs.

The cost of PV has dropped dramatically as the industry has scaled up manufacturing and incrementally improved the technology with new materials. Installation costs have come down too with more experienced and trained installers.

Using the PV technology the Company develops, builds, and operates behind-the-meter (BTM) solar power plants, electricity grid connected community solar gardens, and utility scale solar farms

BTM Solar Power Plants

The Company is a turn-key service provider to commercial and industrial customers for them to own BTM solar power plant on-site. The Company can also invest and own the BTM solar projects where local policies allow commercial aggregation and 3rd party ownership.

The most effective method to achieve Net-Zero carbon emissions from buildings is to build them all electric, with BTM solar power plants on-site to generate zero emission renewable solar power for the building’s self-use. The BTM solar power plants are reasonable in size (average 300 kWp) as rooftop, carport or ground mount systems. A BTM solar power plant can be net metered, through which the excess solar energy produced by the plant can be sent back to the grid in return for a credit or money from the local utility. BTM solar power plants have the following benefits:

BTM solar power generation provides a readily available solution toward the goal of Net-Zero by 2050. There has been an increased interest in BTM solar power plants as an effective way to halt climate change. The Company is experienced in BTM solar and currently manages a number of BTM solar power plants. It is anticipated that the Company will be able to develop and build 10 MWp BTM solar power plants in 2023 in Canada and the USA.

Community Solar Farms

Community solar refers to local solar PV facilities shared by multiple community subscribers who receive credit on their electricity bills for their share of the power produced. Community solar provides homeowners, renters, and businesses equal access to the economic and environmental benefits of solar energy generation regardless of the physical attributes or ownership of their home or business. Community solar expands access to solar for all, including in particular low-to-moderate income customers most impacted by a lack of access, all while building a stronger, distributed, and more resilient electric grid. Community solar power plants are usually less than seven (7) megawatts (MWdc) of electrical capacity, and it could power about 1,000 homes (the average American household uses approximately 10,000 kWh per year).

The Company works with 3^rd party subscriber organizations in Boston and Chicago to manage its current 4,000 or so community solar subscribers. It is anticipated that the Company will deliver 20 MWp community solar farms with an additional 3,000 subscribers in year 2023.

Utility Solar Farms

A utility-scale solar farm is one which generates solar power and feeds it into the grid, supplying a customer with renewable solar energy. A ‘utility-scale’ solar project is usually defined as such if it is 10 MW or bigger in capacity of energy production.

What distinguishes utility-scale solar from distributed generation is both project size and the fact that the electricity is sold to wholesale energy buyers, not end-use consumers. Virtually every utility-scale solar facility has a power purchase Agreement (PPA) with a corporation, an IPP or a utility, guaranteeing a market for its energy for a fixed term of time.

Utility-scale solar farm has become a growing source of electricity in the world. Many companies will need to partner with solutions providers such as the Company to help put them on a net-zero trajectory. The Company is actively advancing its utility scale solar farms pipeline of 200 MWp and anticipates to deliver a 20 MWp utility scale solar farm in 2023.

Battery Energy Storage Systems (BESS)

The Company is actively participating with a development partner in the Ontario IESO Expedited Process Competitive RFP Procurement of Battery Energy Storage Systems (BESS). Up to 20 BESS projects, all located in Ontario, Canada, are expected to be bid on by end of year 2022, with 5 MW and minimum of 20 MWh for each of the BESS projects.²⁶

Legal Matters and Contingent Assets

The Company is subject to the following legal matters and contingencies:

²⁶ Independent Electricity System Operator. https://www.ieso.ca/en/Sector-Participants/Resource-Acquisition-and-Contracts/Long-Term-RFP-and-Expedited-Process

Summary of Quarterly Results

The Company has not previously prepared quarterly financial statements and as a result is not providing a tabular comparison of the eight most recently completed quarters.

Results of operations for the three months ended June 30, 2022

During the fourth quarter of 2022, the Company generated $196,872 in revenue mainly from the four New York-based projects which represent 2MW capacity. The slowdown of the revenue was due to the change of a major vendor for the two large EPC projects in New York. The change has been completed and the Company expects to complete the two projects in the first half of 2023.

The Company reported a comprehensive loss from operations for the three months ended June 30, 2022 of $369,268

Reviews of the major expenditures items in the fourth quarter of 2022 are as follows:

Liquidity

As at June 30, 2022, the Company had a cash balance of $931,977 (June 30, 2021 - $1,400,073) with working capital surplus of $5,617,200 (June 30, 2021 - $5,524,025).

The Company believes that with the proceeds of the Offering, along with its expected operating income and cash flows it has sufficient working capital to continue its operations for the next twelve months. To date, the Company’s operations have been financed from cash flows from operations and debt financing. The Company will continue to identify financing opportunities 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.

The Company’s cash is held in highly liquid accounts. No amounts have been or are invested in asset-backed commercial paper.

Capital Resources

Share Capital Transactions

On April 8, 2022, the Company entered into a promissory note agreement with Energy Line Investment Ltd. (ELI) for a loan of $320,273 (US$250,000) with an interest rate of 8% compounded annually. The principal of loan is unsecured and payable on a quarterly basis beginning July 8, 2023 with the amount of $40,034. The interest of loan is payable on a quarterly basis beginning July 8, 2022 of amount of $6,329. The loan is fully repaid in 8 equal quarterly instalments.

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:

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.

Capital Structure

The Corporation is authorized to issue an unlimited number of common shares. As of the date of this MD&A, there were (i) 16,000,000 common shares issued and outstanding; and (ii) $1,250,000 principal amount of convertible debt that is convertible into 2,500,000 common shares, 2,500,000 Series A Warrants and 2,500,000 Series B Warrants; and (iii) 2,500,000 Advisory Warrants.

Off-Balance Sheet Arrangements

The Company is not a party to any off-balance sheet arrangements or transactions.

Transactions Between Related Parties

At June 30, 2022, included in accounts payable and accrued liabilities was $104,545 (2021 - $211,404) owing to certain officers and director (Richard Lu) of the Company regarding the accrued salary and bonus for services provided to the Company.

At June 30, 2022, included in trade and other receivable was $121,704 (2021 - $57,610) due from Sustainable Investment Ltd., who has a director (Richard Lu) in common, for a short-term bridge funding to cover working capital and project development expenses.

At June 30, 2022, included in trade and other receivables was $86,000 (2021 - $57,610) due from Renewable Sun Energy Co-Op, who has a director (Richard Lu) in common, for the payment made to a vendor on behalf of Renewable Sun Energy Co-Op.

At June 30, 2022, included in loan payable was $567,664 (2021 - $641,309) shareholder loan advance from a shareholder (Richard Lu). This loan is secured and was for short-term bridge funding to cover working capital and project development expenses.

Except as noted above with respect to the loan payable from Richard Lu, the amounts due to related parties are unsecured, non-interest bearing and have no stated terms of repayment. All transactions entered into with related parties are on terms equivalent to those that each related party charges to arm’s length parties.

Key management compensation

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consists of members of the Company’s Board of Directors and corporate officers, including the Company’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Administrative Officer.

The remuneration of directors and other members of key management personnel, for the year ended June 30, 2022 and 2021 were as follows:

Short-term employee benefits include consulting fees and bonus.

Critical Accounting Estimates

Revenue recognition:

The Company recognizes revenue for project development services, engineering, procurement, and construction (“EPC”) services and operation and maintenance (“OM”) services.

The Company applies the five-step model to contracts when it is probable that the Company will collect the consideration that it is entitled to in exchange for the services transferred to the customer.

At contract inception, the Company assesses services promised within each contract that falls under the scope of IFRS 15, to identify distinct performance obligations.

Project development services

Project development service contract with customers has a single performance obligation which is for the Company to deliver a fully permitted project which is ready for construction. The performance obligation is said to be satisfied at a point in time when development is considered complete. Therefore, the revenue from development contract is recognized when a solar project is fully permitted and ready for construction.

OM services

OM service contract with customers has a single performance obligation which is for the Company to provide hourly maintenance services as needed for the solar sites. The performance obligation is said to be satisfied over a period of time. Therefore, the Company recognizes revenue monthly which is when service is rendered and based on the hours spent times pre-determined hourly rate outline in the contract.

EPC services