Filed
Pursuant to General Instruction II.L of Form F-10
File No. 333-279027
No
securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise.
This
amended and restated prospectus supplement (the “prospectus supplement”), together with the accompanying short form
base shelf prospectus dated May 2, 2023 to which it relates (the “prospectus”), as amended or supplemented, and each
document incorporated or deemed to be incorporated by reference into this prospectus supplement and the prospectus, 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.
Information
has been incorporated by reference in this prospectus supplement and the prospectus to which it relates from documents filed with securities
commissions or similar authorities in each of the provinces of Canada. Copies of the documents incorporated herein by
reference may be obtained on request without charge from the Corporate Secretary of SolarBank Corporation at Suite 501, 543 Granville
Street, Vancouver, British Columbia, Canada V6C 1X8, telephone (604) 696-4241, and are also available electronically at www.sedarplus.ca.
AMENDED
AND RESTATED PROSPECTUS SUPPLEMENT
amending
and restating the prospectus supplement dated June 29, 2023
to
the short form base shelf prospectus dated May 2, 2023
SOLARBANK
CORPORATION
Up
to US$15,000,000 Common Shares
This
document amends and restates the prospectus supplement of SolarBank Corporation (the “Company” or “SolarBank”,
“we” or “us”) dated June 29, 2023, and accordingly, the information in this amended and restated
prospectus supplement supersedes the information contained in the prospectus supplement of the Company dated June 29, 2023. This prospectus
supplement, together with the prospectus, hereby qualifies the distribution (the “Offering”) of common shares (the
“Offered Shares”) in the capital of the Company having an aggregate offering amount of up to US$15,000,000 (or the
equivalent in Canadian dollars, determined using the daily exchange rate posted by the Bank of Canada on the date the Offered Shares
are sold). See “Plan of Distribution” and “Description of Share Capital”.
The
common shares of the Company (the “Common Shares”) are listed and posted for trading on Cboe Canada under the symbol
“SUNN” and on the Nasdaq Global Market (“Nasdaq”) under the symbol “SUUN”. On May 22, 2024,
the last trading day prior to the date hereof, the closing price of the Common Shares on Cboe Canada was $8.30 and on Nasdaq was US$6.19.
The Company has provided notice to Cboe Canada to list the Offered Shares for trading on Cboe Canada and has submitted a notification
of listing to list the Offered Shares on Nasdaq. Listing will be subject to the Company fulfilling all of the listing requirements of
Cboe Canada and Nasdaq, respectively.
The
Company is permitted, under a multi-jurisdictional disclosure system (the “MJDS”) adopted by the securities regulatory authorities
in Canada and the United States, to prepare this prospectus supplement and the accompanying prospectus in accordance with Canadian disclosure
requirements. The Company is subject to certain informational requirements of the U.S. Securities Exchange Act of 1934, as amended (the
“U.S. Exchange Act”), in addition to applicable Canadian requirements. Consequently, the Company files reports and other
information with the United States Securities and Exchange Commission (the “SEC”), in addition to securities regulatory authorities
in Canada. Under MJDS, documents and other information that the Company files with the SEC may be prepared in accordance with the disclosure
requirements of Canada, which are different from those of the United States. As a “foreign private issuer” (as defined under
United States securities laws), the Company is exempt from the rules under the U.S. Exchange Act prescribing the furnishing and content
of proxy statements, and the Company’s officers, directors and principal shareholders are exempt from the reporting and short-swing
profit recovery provisions contained in Section 16 of the U.S. Exchange Act.
Financial
statements included or incorporated by reference herein have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and subject to Canadian auditing
and auditor independence standards and may not be comparable to financial statements of United States companies prepared in accordance
with United States generally accepted accounting principles.
SolarBank
has entered into an amended and restated equity distribution agreement dated May 23, 2024 (the “Distribution Agreement”)
with Research Capital Corporation (the “Agent”) and Research Capital USA Inc. (the “U.S. Agent”
and together with the Agent, the “Agents”) pursuant to which the Company may distribute up to US$15,000,000 (or the
equivalent in Canadian dollars, determined using the daily exchange rate posted by the Bank of Canada on the date the Offered Shares
are sold) of Offered Shares in the Offering from time to time through the Agents, as agents, in accordance with the terms of the
Distribution Agreement. The Offering is being made concurrently in each of the provinces of Canada under the terms of this prospectus
supplement and in the United States under the terms of the Company’s registration statement on Form F-10 (File No. 333-279027)
(the “Registration Statement”), filed with the SEC under the U.S. Securities Act of 1933, as amended (the “U.S.
Securities Act”), of which this prospectus supplement forms a part. The Distribution Agreement supersedes and replaces the
distribution agreement dated June 29, 2023 between the Company and the Agent. See “Plan of Distribution”.
Sales
of Offered Shares, if any, under this prospectus supplement will only be made in transactions that are deemed to be “at-the-market
distributions” as defined in National Instrument 44-102 — Shelf Distributions (“NI 44-102”) and
an “at-the-market offering” as defined in Rule 415 under the U.S. Securities Act, involving sales made directly on Cboe Canada,
Nasdaq or on any other trading market for the Common Shares in Canada or the United States. The Offered Shares will be distributed at
market prices prevailing at the time of the sale. As a result, prices may vary as between purchasers and during the period of distribution.
The Agents are not required to sell any specific number or dollar amount of Offered Shares, but will use its commercially reasonable
efforts to sell the Offered Shares pursuant to the terms and conditions of the Distribution Agreement. There is no minimum amount
of funds that must be raised under the Offering. This means that the Offering may terminate after only raising a small portion of the
offering amount set out above, or none at all. The Agents will only sell Offered Shares on marketplaces in Canada and the United States.
See “Plan of Distribution”.
The
enforcement by investors of civil liabilities under United States federal securities laws may be adversely affected by the fact that
the Company is a corporation existing under the laws of the Province of Ontario, Canada, and the Company’s executive offices, administrative
activities and some of its assets are located outside the United States. In addition, the directors and executive officers of the Company,
the Agent, and certain experts named in this prospectus supplement and in the accompanying prospectus, or a document incorporated by
reference herein or therein, are residents of jurisdictions other than the United States and all or a substantial portion of the assets
of those persons are or may be located outside the United States. Purchasers are advised that it may not be possible for investors to
enforce judgements obtained in Canada against any person or company that resides outside of Canada or is incorporated, continued or otherwise
organized under the laws of a foreign jurisdiction, even if the party has appointed an agent for service of process.
THE
OFFERED SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR ANY STATE OR CANADIAN SECURITIES COMMISSION OR REGULATORY AUTHORITY
NOR HAS THE SEC OR ANY STATE OR CANADIAN SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE SHELF PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
SolarBank
will pay the Agents a commission for their services in acting as agents in connection with the sale of Offered Shares pursuant to the
Distribution Agreement (the “Commission”) in an amount equal to 2% of the gross sales price per Offered Share sold.
The Company estimates that the total expenses that it will incur related to the commencement of the Offering, excluding compensation
payable to the Agents under the terms of the Distribution Agreement and the expenses of the Agents that the Company will reimburse under
the terms of the Distribution Agreement, will be approximately $300,000. See “Plan of Distribution”.
It
is anticipated that sales of Offered Shares in Canada will be settled through the facilities of CDS Clearing and Depository Services
Inc. (“CDS”) or by such other means as permitted by the Distribution Agreement and sales of Offered Shares in the
United States will be settled through the facilities of The Depository Trust Company (“DTC”) or by such other means
as permitted by the Distribution Agreement. A purchaser of Offered Shares will only receive a customer confirmation from the Agents or
another registered dealer from or through which the Offered Shares are purchased. No definitive certificates will be issued unless specifically
requested or required. See “Plan of Distribution”.
Purchasers
of the Offered Shares should be aware that the acquisition of the Offered Shares may have tax consequences both in Canada and the United
States. Such consequences for investors who are resident in, or citizens of, the United States, or who are resident in Canada may not
be described fully herein. Purchasers of the Offered Shares should read the tax discussion contained in this prospectus supplement
and consult their own tax advisors. See “Certain Canadian Federal Income Tax Considerations” and “Certain
U.S. Federal Income Tax Considerations”.
Investing
in the Offered Shares is highly speculative and involves significant risks that you should consider before purchasing such Offered Shares.
The risks outlined in this prospectus supplement, the prospectus and in the documents incorporated by reference herein and therein should
all be carefully reviewed and considered by prospective investors in connection with an investment in the Offered Shares. See “Risk
Factors”.
As
sales agents, the Agents will not engage in any transactions to stabilize or maintain the price of the Common Shares. Neither the Agents
nor any person or company acting jointly or in concert with an underwriter, may, in connection with the distribution, enter into any
transaction that is intended to stabilize or maintain the market price of the Common Shares, including selling an aggregate number or
principal amount of securities that would result in the Agents creating an over-allocation position in the Common Shares. See “Plan
of Distribution”.
Paul
Pasalic and Chelsea L. Nickles, each a director of the Company, reside outside of Canada and have appointed DLA Piper (Canada) LLP, Suite
2700, 1133 Melville St, Vancouver, British Columbia, V6E 4E5, Canada. Purchasers are advised that it may not be possible for investors
to enforce judgments obtained in Canada against any person or company that resides outside of Canada, even if the party has appointed
an agent for service of process.
The
Company’s head office and registered office is located at 505 Consumers Road, Suite 803, Toronto, Ontario, M2J 4Z2.
Unless
otherwise indicated, all references in this prospectus supplement to “$”, “C$” or “dollars” are to
Canadian dollars and references to “US$” are to United States dollars. See “Exchange Rate Information”.
TABLE
OF CONTENTS OF THE PROSPECTUS SUPPLEMENT
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
document is in two parts. The first part is this prospectus supplement, which describes the specific terms of the Offered Shares being
offered and also adds to and updates information contained in the prospectus and the documents incorporated by reference herein and therein.
The second part, the prospectus, gives more general information, some of which may not apply to the Offering. If the information varies
between this prospectus supplement and the prospectus, the information in this prospectus supplement supersedes the information in the
prospectus. This prospectus supplement is deemed to be incorporated by reference into the prospectus solely for the purposes of the Offering
constituted by this prospectus supplement.
No
person is authorized by the Company to provide any information or to make any representation other than as contained in this prospectus
supplement or the prospectus in connection with the issue and sale of the Offered Shares hereunder. Investors should rely only on
the information contained or incorporated by reference in this prospectus supplement, the prospectus and any documents incorporated by
reference herein and therein. If the description of the Offered Shares or any other information varies between this prospectus supplement
and the prospectus (including the documents incorporated by reference herein and therein on the date hereof), the investor should rely
on the information in this prospectus supplement. We have not, and the Agents have not, authorized anyone to provide you with different
or additional information and the Company and the Agents take no responsibility for, and can provide no assurance as to the reliability
of, any other information that others may give you. If anyone provides you with any different, additional, inconsistent or other information,
you should not rely on it. Neither the Company nor the Agents are making an offer to sell or seeking an offer to buy the Offered Shares
in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus
supplement, the prospectus and the documents incorporated by reference herein and therein is accurate as of any date other than the date
on the front of this prospectus supplement, the prospectus or the respective dates of the documents incorporated by reference herein
and therein, as applicable, regardless of the time of delivery of this prospectus supplement or of any sale of the Offered Shares pursuant
hereto. Our business, financial condition, results of operations and prospects may have changed since those dates. Information contained
on the Company’s website should not be deemed to be a part of this prospectus supplement, the prospectus or incorporated by reference
herein and should not be relied upon by prospective investors for the purpose of determining whether to invest in the Offered Shares.
This
prospectus supplement, the prospectus and the documents incorporated therein by reference include references to the Company’s
trademarks, including, without limitation, the “SolarBank” trademark on the face page of this prospectus supplement, which
are protected under applicable intellectual property laws and are the Company’s property. The Company’s trademarks and
trade names referred to in this prospectus supplement, the prospectus and the documents incorporated therein by reference may
appear without the ® or ™ symbol, but references to the Company’s trademarks and trade names in the absence of such
symbols are not intended to indicate, in any way, that the Company will not assert, to the fullest extent under applicable law,
its rights to these trademarks and trade names. All other trademarks and trade names used in this prospectus supplement, the prospectus
or in documents incorporated therein by reference are the property of their respective owners.
Market
data and industry forecasts used throughout this prospectus supplement, the prospectus and the documents incorporated by reference therein
were obtained from various publicly available sources. Although the Company believes that these independent sources are generally reliable,
the accuracy and completeness of the information from such sources are not guaranteed and have not been independently verified by the
Company or the Agents and neither the Company nor the Agents make any representation as to the accuracy of such information.
This
prospectus supplement shall not be used by anyone for any purpose other than in connection with the Offering.
Unless
otherwise noted or the context otherwise requires, references to “we”, “us”, “our” or similar terms,
as well as references to “SolarBank” or the “Company”, refer to SolarBank Corporation together with our subsidiaries.
EXCHANGE
RATE INFORMATION
The
consolidated financial statements of the Company incorporated by reference in this prospectus supplement have been prepared in accordance
with IFRS and are reported in Canadian dollars, and the audit of such financial statements are subject to Canadian auditing and auditor
independence standards.
Unless
otherwise indicated, all references in this prospectus supplement to “$”, “C$” or “dollars” are to
Canadian dollars and references to “US$” are to United States dollars.
The
following table sets out, for the period indicated, certain exchange rates based upon the rate published by the Bank of Canada during
the respective periods. The rates are set out as United States dollars per C$1.00.
| | |
| Year ended June 30, | | |
| Three Month Period Ended March 31, 2024 | |
| | |
| 2023 | | |
| 2022 | | |
| 2021 | | |
| | |
| Low | |
| US$0.7217 | | |
| US$0.7669 | | |
| US$0.7344 | | |
| US$0.7357 | |
| High | |
| US$0.7841 | | |
| US$0.8111 | | |
| US$0.8306 | | |
| US$0.7510 | |
| Average | |
| US$0.7467 | | |
| US$0.7901 | | |
| US$0.7807 | | |
| US$0.7414 | |
On
May 22, 2024, the daily exchange rate for the U.S. dollar in terms of Canadian dollars, as quoted by the Bank of Canada, was US$1.00
= C$1.3674.
CAUTION
REGARDING PRO FORMA FINANCIAL STATEMENTS
This
prospectus supplement contains certain unaudited pro forma financial statements of SolarBank (the “SolarBank Pro Forma Financial
Statements”) comprised of the pro forma consolidated balance sheet as at March 31, 2024, and the pro forma consolidated statement
of income of the Company for the financial year ended June 30, 2023 and the three and nine month period ended March 31, 2024, giving
effect to the completion of the Acquisition (as defined below). Such SolarBank Pro Forma Financial Statements have been prepared using
certain of SolarBank’s financial statements and the respective historical financial statements of SFF (as defined below) and the
Predecessor LPs (as defined below), as more particularly described in the notes to such SolarBank Pro Forma Financial Statements. In
preparing such SolarBank Pro Forma Financial Statements, the Company has had limited access to the books and records of SFF and the Predecessor
LPs and is not in a position to independently assess or verify information related to SFF and the Predecessor LPs that was used to prepare
the SolarBank Pro Forma Financial Statements or the financial statements of SFF and the Predecessor LPs that are included in this prospectus
supplement. Such SolarBank Pro Forma Financial Statements are not necessarily indicative of results of operations and financial condition
that would actually have occurred for the periods presented had the Acquisition and the related financing been effective at the beginning
of such periods, nor of the future results of operations and financial condition of the Company. Since the SolarBank Pro Forma Financial
Statements have been developed to retroactively show the effect of a transaction that has or is expected to occur at a later date (even
though this was accomplished by following generally accepted practice using reasonable assumptions), there are limitations inherent in
the very nature of pro forma data. The data contained in the SolarBank Pro Forma Financial Statements represents only a simulation of
the potential financial impact of the Company’s acquisition of SFF. Undue reliance should not be placed on such SolarBank Pro Forma
Financial Statements. There is no guarantee that the Acquisition will be completed on the terms set forth herein and in the prior disclosure
of SolarBank or at all. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors –
Risks Related to the Acquisition”.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement and the prospectus, including the documents incorporated by reference herein, contain “forward-looking information”
or “forward-looking statements” within the meaning of applicable securities legislation (collectively, “forward-looking
statements”). The forward-looking statements in this prospectus supplement are provided as of the date of this prospectus
supplement and forward-looking statements incorporated by reference are made as of the date of those documents. The Company does
not intend to and does not assume any obligation to update forward-looking statements, except as required by applicable law. For
this reason and the reasons set forth below, investors should not place undue reliance on forward-looking statements.
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. 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 supplement, 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 supplement.
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:
| ● |
the
use of the net proceeds from the Offering; |
| ● |
any
decision not to sell Offered Shares if the sales cannot be effected at or above the price designated by the Company; |
| ● |
expectations
regarding completion of the Acquisition and timing thereof; |
| ● |
the
expected impact of the Acquisition on the Company’s operations, prospects, opportunities, financial condition, cash flow and
overall strategy; |
| ● |
the
intentions, plans and future actions of the Company; |
| ● |
statements
relating to the business and future activities of the Company; |
| ● |
intended
or anticipated developments in the operations of the Company; |
| ● |
the
Company’s financial results after giving effect to the Acquisition; |
| ● |
the
anticipated power generation from the US1/VC1 Projects (as defined herein); |
| ● |
market
position, ability to compete and future financial or operating performance of the Company; |
| ● |
the
timing and amount of funding required to execute the Company’s business plans; |
| ● |
capital
expenditures; |
| ● |
the
effect on the Company of any changes to existing or new legislation or policy or government regulation; |
| ● |
the
availability of labour; |
| ● |
requirements
for additional capital; |
| ● |
goals,
strategies and future growth; |
| ● |
the
adequacy of financial resources; |
| ● |
expectation
that the Common Shares will continue to be listed on Cboe Canada and Nasdaq; |
| ● |
expectations
regarding revenues, expenses and anticipated cash needs; and |
| ● |
the
impact of any resurgence of COVID-19 on the business and operations of the Company. |
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 supplement, 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 satisfaction of all conditions of closing and the successful completion of the Acquisition; (vi) the realization of the anticipated
benefits of the Acquisition in the timeframe anticipated; (vii) the absence of significant undisclosed costs or liabilities associated
with the Acquisition; (viii) the availability of financing on reasonable terms; (ix) the Company’s ability to attract and retain
skilled staff; (x) market competition; (xi) the products and services offered by the Company’s competitors; (xii) that the Company’s
current good relationships with its service providers and other third parties will be maintained; and (xiii) 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 provide any assurance 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 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” in this prospectus supplement, in the prospectus and in documents incorporated herein and
therein by reference, which include:
| ● |
failure
to complete the Acquisition in all material respects in accordance with the Arrangement Agreement; |
| ● |
failure
to realize the anticipated benefits of the Acquisition in the timeframe anticipated, or at all; |
| ● |
potential
unforeseen difficulties in integrating the SFF business into the Company’s systems and operations; |
| ● |
the
discovery of significant undisclosed costs or liabilities associated with the Acquisition; |
| ● |
reliance
on information provided by SFF and the risk of inaccurate or incomplete information, historical and/or stand-alone financial information
may not be representative of future performance, and uncertainty as to expected financial condition and economic performance following
the completion of the Acquisition; |
| ● |
the
Company may be adversely affected by volatile solar power market and industry conditions; in particular, the demand for its services
may decline, which may reduce its revenues and earnings; |
| ● |
the
execution of the Company’s growth strategy depends upon the continued availability of third-party financing arrangements for
the Company and its customers; |
| ● |
the
Company’s future success depends partly on its ability to expand the pipeline of its energy business in several key markets; |
| ● |
governments
may revise, reduce or eliminate incentives and policy support schemes for solar and battery storage power, which could cause demand
for the Company’s services to decline; |
| ● |
general
global economic conditions may have an adverse impact on our operating performance and results of operations; |
| ● |
the
Company’s project development and construction activities may not be successful; |
| ● |
developing
and operating solar projects exposes the Company to various risks; |
| ● |
the
Company faces a number of risks involving power purchase agreements (“PPAs”) and project-level financing arrangements,
including failure or delay in entering into PPAs, defaults by counterparties and contingent contractual terms; |
| ● |
the
Company is subject to numerous laws, regulations and policies at the national, regional and local levels of government in the markets
where it does business. Any changes to these laws, regulations and policies may present technical, regulatory and economic barriers
to the purchase and use of solar power and battery storage products, solar projects and solar electricity; |
| ● |
the
markets in which the Company competes are highly competitive and evolving quickly; |
| ● |
an
anti-circumvention investigation could adversely affect the Company by potentially raising the prices of key supplies for the construction
of solar power projects; |
| ● |
the
Company’s quarterly operating results may fluctuate from period to period; |
| ● |
foreign
exchange rate fluctuations; |
| ● |
risks
related to the Company’s foreign private issuer status; |
| ● |
risks
related to the Company’s “passive foreign investment company” status within the meaning of Section 1297 of the
U.S. Internal Revenue Code of 1986, as amended; a change in the Company’s effective tax rate can have a significant adverse
impact on its business; |
| ● |
seasonal
variations in demand linked to construction cycles and weather conditions may influence the Company’s results of operations; |
| ● |
the
Company may be unable to generate sufficient cash flows or have access to external financing necessary to fund planned operations
and make adequate capital investments in solar project development; |
| ● |
the
Company may incur substantial additional indebtedness in the future; |
| ● |
the
Company is subject to risks from supply chain issues; |
| ● |
risks
related to inflation; |
| ● |
unexpected
warranty expenses that may not be adequately covered by the Company’s insurance policies; |
| ● |
if
the Company is unable to attract and retain key personnel, it may not be able to compete effectively in the renewable energy market; |
| ● |
there
are a limited number of purchasers of utility-scale quantities of electricity and entities that have the ability to interconnect
projects to the grid, which exposes the Company and its utility scale solar projects to additional risk; |
| ● |
compliance
with environmental laws and regulations can be expensive; |
| ● |
corporate
responsibility, specifically related to Environmental, Social and Governance matters and unsuccessful management of such matters
may adversely impose additional costs and expose the Company to new risks; |
| ● |
the
long-term impact of a resurgence of COVID-19 on the Company is unknown at this time and the financial consequences of this situation
causes uncertainty as to the future and its effects on the economy and the Company; |
| ● |
the
Company has limited insurance coverage; |
| ● |
the
Company will be reliant on information technology systems and may be subject to damaging cyberattacks; |
| ● |
the
Company does not anticipate paying cash dividends; |
| ● |
the
Company may become subject to litigation; |
| ● |
discretion
of the Company on the use of the net proceeds of the Offerings; |
| ● |
no
guarantee on how the Company will use its available funds; |
| ● |
the
Company is subject to additional regulatory burden resulting from its public listing on Cboe Canada and the Nasdaq; |
| ● |
the
market price for Common Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are
beyond our control; |
| ● |
future
sales of Common Shares by existing shareholders could reduce the market price of the Common Shares; |
| ● |
the
Company will continue to sell securities for cash to fund operations, capital expansion, mergers and acquisitions that will dilute
the current shareholders; and |
| ● |
future
dilution as a result of financings. |
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 supplement is provided as of the date of this prospectus supplement, 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.
Prospective
purchasers of securities of the Company should carefully consider the risk factors described in a document incorporated by reference
in this prospectus supplement (including subsequently filed documents incorporated by reference) and those described in a prospectus.
Discussions of certain risks affecting the Company in connection with its business are provided in the Company’s disclosure documents
filed with the various securities regulatory authorities which are incorporated by reference in this prospectus supplement.
All
of the forward-looking statements contained in this prospectus supplement are expressly qualified by the foregoing cautionary statements.
Investors should read this entire prospectus supplement and consult their own professional advisors to assess the income tax, legal,
risk factors and other aspects of their investment.
DOCUMENTS
INCORPORATED BY REFERENCE
This
prospectus supplement is deemed to be incorporated by reference in the prospectus solely for the purpose of the distribution of the Offered
Shares. Information has been incorporated by reference in this prospectus supplement from documents filed with the securities commissions
or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge
from the Corporate Secretary of the Company at 505 Consumers Road, Suite 803, Toronto, Ontario, M2J 4Z2, telephone (416) 494-9559 or
by accessing the disclosure documents through the internet on the System for Electronic Document Analysis and Retrieval + (“SEDAR+”),
under the Company’s profile at www.sedarplus.ca. Our filings through SEDAR+ are not incorporated by reference in this prospectus
supplement except as specifically set forth herein. Documents filed with, or furnished to, the SEC are available through the SEC’s
Electronic Data Gathering and Retrieval System (“EDGAR”) at www.sec.gov. Except as expressly provided herein,
documents filed on EDGAR are not, and should not be considered, part of this prospectus supplement or the prospectus.
The
following documents, filed by the Company with the securities commissions or similar authorities in each of the provinces of Canada,
are specifically incorporated by reference into, and form an integral part of, this prospectus supplement and the prospectus:
| |
(a) |
the
Company’s revised annual information form dated October 27, 2023 for the year ended June 30, 2023 (the “AIF”); |
| |
|
|
| |
(b) |
the
amended and restated audited financial statements of the Company for the years ended June 30, 2023 and 2022 (the “Annual
Financial Statements”); |
| |
|
|
| |
(c) |
the
amended and restated management’s discussion and analysis of the Company for the year ended June 30, 2023; |
| |
|
|
| |
(d) |
the
management information circular dated November 7, 2023 in connection with the Company’s annual general and special meeting
of shareholders held on December 14, 2023; |
| |
|
|
| |
(e) |
the
unaudited condensed consolidated interim financial statements of the Company for the three and nine months ended March 31, 2024 (the
“Interim Financial Statements”); |
| |
|
|
| |
(f) |
the
management’s discussion and analysis of the Company for the three and nine months ended March 31, 2024; |
| |
|
|
| |
(g) |
the
material change report dated March 27, 2024, in connection with the Company entering into a definitive agreement (the “Arrangement
Agreement”) with Solar Flow-Through Funds Ltd. (“SFF” or “Solar Flow-Through”) to
acquire all of the issued and outstanding common shares of SFF through a plan of arrangement for an aggregate consideration of up
to $41.8 million in an all stock deal (the “Acquisition”); |
| |
(h) |
the
material change report dated October 26, 2023, in connection with the Company entering into share purchase agreements (the “OFIT
SPAs”) dated October 23, 2023 to acquire control of two corporations that hold solar projects located in Ontario with a
combined capacity of 2.5 megawatt (“MW”) for consideration of 278,875 Common Shares; |
| |
|
|
| |
(i) |
the
material change report dated October 13, 2023, in connection with the Company entering into engineering, procurement, and construction
(“EPC”) agreements for the construction of three separate Battery Energy Storage System (“BESS”)
projects with a total contract value of approximately $36 million; |
| |
|
|
| |
(j) |
the
material change report dated September 28, 2023, in connection with the acquisition by Honeywell International (“Honeywell”)
of the Company’s proposed 21 MW direct current (“DC”) groundmount solar power projects that are under development
in upstate New York; and |
| |
|
|
| |
(k) |
the
material change report dated July 6, 2023, in connection with the Company’s establishment of an at-the-market equity program
pursuant to an equity distribution agreement (the “Original Distribution Agreement”) with the Agent. |
Any
document of the type referred to in item 11.1 of Form 44-101F1 – Short Form Prospectus of National Instrument 44-101 –
Short Form Prospectus Distributions of the Canadian Securities Administrators (other than confidential material change reports,
if any) filed by the Company with any securities commissions or similar regulatory authorities in Canada after the date of this prospectus
supplement and prior to the termination of the Offering shall be deemed to be incorporated by reference in this prospectus supplement
and the prospectus. These documents will be available on SEDAR+, which can be accessed under the Company’s profile at www.sedarplus.ca.
Documents referenced in this prospectus supplement, the prospectus or any of the documents incorporated by reference herein or therein,
but not expressly incorporated by reference herein or therein and not otherwise required to be incorporated by reference herein
or therein, are not incorporated by reference in this prospectus supplement.
If
SolarBank disseminates a news release in respect of previously undisclosed information that, in SolarBank’s determination, constitutes
a “material fact” (as such term is defined under applicable Canadian securities laws), SolarBank will identify such news
release as a “designated news release” for the purposes of this prospectus supplement and the prospectus in writing on the
face page of the version of such news release that SolarBank files on SEDAR+ (each such news release, a “Designated News Release”),
and each such Designated News Release shall be deemed to be incorporated by reference into this prospectus supplement and the prospectus
for the purposes of the Offering.
In
addition, to the extent that any document or information incorporated by reference into this prospectus supplement is filed with, or
furnished to, the SEC pursuant to the U.S. Exchange Act, after the date of this prospectus supplement and prior to the termination
or completion of the Offering, such document or information will be deemed to be incorporated by reference as an exhibit to the
registration statement of which this prospectus supplement forms a part (in the case of any report on Form 6-K only to the extent
expressly provided therein).
The
documents incorporated or deemed to be incorporated herein by reference contain meaningful information relating to the Company and readers
should review all information contained in this prospectus supplement, the prospectus and the documents incorporated or deemed to be
incorporated herein or therein by reference.
Any
statement contained in this prospectus supplement, the prospectus or in a document incorporated or deemed to be incorporated by reference
herein or therein shall be deemed to be modified or superseded, for purposes of this prospectus supplement and the prospectus, to the
extent that a statement contained herein or therein, or in any other subsequently filed document that also is, or is deemed to be, incorporated
by reference herein or therein, modifies or supersedes such prior statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this prospectus supplement or the accompanying prospectus. The modifying
or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth
in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for
any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material
fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in
light of the circumstances in which it was made. Any statement so modified or superseded shall thereafter neither constitute, nor be
deemed to constitute, a part of this prospectus supplement or the prospectus, except as so modified or superseded.
When
the Company files an annual information form (or equivalent disclosure document), audited consolidated financial statements and related
management’s discussion and analysis and, where required, they are accepted by the applicable securities regulatory authorities
during the time that this prospectus supplement is valid, the previous audited consolidated financial statements and related management’s
discussion and analysis and all unaudited interim condensed consolidated financial statements and related management’s discussion
and analysis for such periods, all material change reports and any business acquisition report filed prior to the commencement of the
Company’s financial year in which the annual information form (or equivalent disclosure document) is filed will be deemed no longer
to be incorporated by reference in this prospectus supplement for purposes of future offers and sales of Offered Shares under this prospectus
supplement. Upon new unaudited interim condensed consolidated financial statements and related management’s discussion and analysis
being filed by the Company with the applicable securities regulatory authorities during the term of this prospectus supplement, all unaudited
interim condensed consolidated financial statements and related management’s discussion and analysis filed prior to the filing
of the new unaudited interim condensed consolidated financial statements shall be deemed no longer to be incorporated by reference into
this prospectus supplement for purposes of future offers and sales of securities hereunder. Upon a management information circular in
connection with an annual meeting being filed by the Company with the appropriate securities regulatory authorities during the currency
of this prospectus, the management information circular filed in connection with the previous annual meeting (unless such management
information circular also related to a special meeting) will be deemed no longer to be incorporated by reference in this prospectus supplement
for purposes of future offers and sales of securities hereunder.
References
to the Company’s website in any documents that are incorporated by reference into this prospectus supplement and the prospectus
do not incorporate by reference the information on such website into this prospectus supplement and the prospectus and the Company disclaims
any such incorporation by reference.
THE
COMPANY
The
following description of the Company does not contain all of the information about the Company and its assets and business that you should
consider before investing in the Offered Shares. You should carefully read the entire prospectus supplement and the prospectus, including
the sections titled “Risk Factors”, as well as the documents incorporated by reference herein and therein before making an
investment decision.
Overview
of the Company
The
Company is an independent renewable and clean energy project developer, power producer 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, BESS, and EV-Charging 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 renewable power assets that have economic
and technical value. The Company originates, develops, designs and builds solar power projects, BESS and EV-Charging stations. The Company
is also gaining expertise in other clean and renewable technologies that will enable greater penetration of clean energy.
Principal
Operations
The
Company focuses on grid connected solar PV electricity power plants, BESS and EV-Charging stations. With its full in-house development,
engineering and construction expertise, the Company’s capabilities span the value chain from development, EPC, financing, and operating
as an Independent Power Producer (“IPP”). The Company’s core business consists of:
| ● |
Development:
The Company identifies, evaluates and secures control of suitable solar, BESS and other renewable development sites; obtains
grid interconnection from utilities; acquires permits from government authorities; and engages solar energy subscribers and/or PPA
clients as off-takers. A PPA, also referred to as an off-take agreement, is a contract between two parties, one which generates
electricity (the seller) and one which is looking to purchase electricity (the buyer or off-taker). The PPA defines all of the
commercial terms for the sale of electricity between the two parties, including when the project will begin commercial
operation, schedule for delivery of electricity, penalties for under delivery, payment terms, and termination. A PPA requires
active management to reconcile monthly deliveries, penalties and payment for electricity. |
| |
|
| ● |
EPC:
The Company engineers, procures and constructs safe, efficient, eco-friendly, solar and other renewable power plants for industrial,
commercial, community and utility electricity market, using high engineering standards and the latest technology. |
| ● |
Financing:
The Company assists with securing, or secures directly for its own IPP projects, sponsor equity, tax equity, long-term debt, and
construction financing to deploy BESS, solar and other renewable power plants. |
| |
|
| ● |
Independent
Power Producer: The Company commenced operating as an IPP in 2023. Previously, the Company operated and maintained solar power
plants for maximized production and supervised solar power subscribers through two customer support centers in Boston and Chicago.
The Company also manages PPA and off-take agreements as an asset manager. |
Operations
and Maintenance (O&M) refers to activities which enable power plants to produce energy at or above the expected level of performance,
in compliance with applicable regulations. O&M encompasses several ongoing maintenance processes, such as preventative maintenance,
reactive maintenance, including rapid identification, analysis, and resolution of issues and problems and comprehensive monitoring and
transparent reporting, along with the replacement and disabling of broken and damaged system and structural components. O&M is essential
to ensuring that BESS, solar and other renewable power plants sustain themselves for their expected system life.
Recent
Developments
Strategic
Investment
On
July 10, 2023, the Company announced that it made a strategic investment in a Canadian solar project developer and operator by acquiring
from existing limited partners an aggregate of 42,500 limited partnership units of Solar Flow-Through 2016-I Limited Partnership, a partnership
that is part of the group of Predecessor LPs, for a purchase price of $2,465,000, which was based on an independent valuation report
that was prepared for SFF.
Interconnection
Results
On
July 19, 2023, the Company announced that it has received positive interconnection results on 7 MW ground mount site (Hardie) in upstate
New York.
Manlius
and Geddes Projects
On
July 26, 2023, the Company announced that it awarded a contract to Polar Racking, a North American supplier and manufacturer of solar
mounting solutions, to supply its CORE fixed tilt ground mount solar mounting solution, and ballasted foundations to the Manlius project
(the “Manlius Project”) in the Town of Manlius, Onondaga County, New York, and the Geddes project (the “Geddes
Project”) in Geddes, New York, that are being developed by the Company for Solar Advocate Development LLC. Subject to receipt
of financing, the Company intends to own and operate the Geddes Project.
On
September 26, 2023 the Company announced that it completed mechanical construction of the Manlius Project. The Manlius Project was constructed
for Solar Advocate Development LLC under the terms of the Manlius EPC Agreement. On January 25, 2024, the Company announced that the
Manlius Project has reached permission to operate stage, and National Grid confirmed that the Manlius Project was formally accepted,
successfully commissioned and authorized to produce power. The Manlius Project repurposed a landfill with a community solar ground mount
sizing at 4.35MW AC/5.728 MW DC. The Company performed engineering, construction and procurement work under the terms of the Manlius
EPC Agreement, which has a total value of approximately US$11.35 million. Incentives for the Manlius Project have been secured from the
New York State Energy Research and Development Authority (“NYSERDA”).
On
October 2, 2023, the Company announced that it commenced major construction on the Geddes Project. On August 3, 2023, the Company announced
that it awarded a contract to Hewitt Young Electric, LLC to provide electrical subcontracting work for the Geddes Project and on January
11, 2024, the Company announced that it completed mechanical construction on the Geddes Project. The Geddes Project, which has a designed
capacity of 3.7 megawatts MW DC, is fulfilling two critical challenges: supplying clean energy and transforming contaminated sites into
energy assets.
Honeywell
Transaction
On
August 21, 2023, the Company announced that it secured funding of up to US$20 million from Honeywell to advance 21 MW DC ground-mount
solar power projects that are under development in upstate New York (the “SB Projects”). The SB Projects are known
as SB-1, SB-2 and SB-3.
On
September 19, 2023, the Company and Honeywell entered into a Membership Interest Purchase Agreement (the “Honeywell MIPA”)
and an EPC agreement (the “Honeywell EPC Agreement”) pursuant to which Honeywell acquired the SB Projects and retained
the Company for their construction, with a total transaction value of US$41 million.
On
April 11, 2024, the Company announced that it completed mechanical construction on the previously announced SB Projects that are under
development in upstate New York for Honeywell in a US$41 million transaction. The next step is completion of final electrical work and
acceptance testing.
Alberta
Lease
On
September 21, 2023 the Company announced that it has executed a lease agreement on a proposed 7MW ground mount solar project site in
Upstate New York and 16.817MW ground mount solar project site in Alberta. The Alberta Utilities Commission (“AUC”)
has announced a pause on approvals of new renewable electricity generation projects over one megawatt until February 29, 2024, and that
it will review policies and procedures for the development of renewable electricity generation. This pause impacted the Company’s
receipt of interconnection approval for the project from the AUC. With the pause expiring on February 27, the Alberta Government has
formally announced the direction its new policy on renewables will take. The Minister of Affordability and Utilities, in a letter to
the AUC, directed the AUC to develop policy for the approval of renewable energy developments. As a result of the restrictive terms of
the new policy the Company has determined that the Alberta project is no longer feasible . As a result it will no longer be proceeding
with the Alberta project.
EPC
Agreements for BESS Projects
On
October 3, 2023, the Company entered into three EPC agreements for the construction of three separate BESS projects (the “BESS
Projects”) that were previously announced in June 2023, with a total contract value of approximately $36 million. The Bess
Projects are owned by SFF, two First Nations communities, and a third party developer in Ontario through holding companies. The BESS
Projects are known as 903, OZ-1 and SFF 06 and are subject to the following agreements:
| |
(i) |
Engineering,
Procurement & Construction Agreement dated October 3, 2023 between 1000234763 Ontario Inc. and the Company for 903 Project (the
“903 EPC Agreement”); |
| |
|
|
| |
(ii) |
Engineering,
Procurement & Construction Agreement dated October 3, 2023 between 1000234813 Ontario Inc. and the Company for OZ-1 Project (the
“OZ-1 EPC Agreement”); and |
| |
|
|
| |
(iii) |
Engineering,
Procurement & Construction Agreement dated October 3, 2023 between 1000234763 Ontario Inc. and the Company for SFF 06 Project
(the “SFF 06 EPC Agreement”). |
The
BESS Projects were awarded as part of a procurement process with the Ontario IESO known as “ELT1”. Projects under the E-LT1
are expected to be operational no later than April 30, 2026, but the Company intends to have them completed for operation by the summer
of 2025. Each Bess Project has a 4.74 MW discharge capacity with a four-hour duration using lithium-iron-phosphate technology, which
allows for the greatest number of charge/discharge cycles, making it the optimal selection for stationary energy storage systems.
OFIT
Share Purchase Agreements
On
October 23, 2023, the Company acquired control of two corporations that hold solar projects located in Ontario with a combined capacity
of 2.5 MW (the “OFIT Projects”) for consideration of 278,875 Common Shares for a total value of $2.15 million (the
“OFIT Transaction”). OFIT GM Inc. and OFIT RT Inc. (the “Purchased Entities”), have been operating
the OFIT Projects since 2017. Dr. Richard Lu, the President & Chief Executive Officer and a director of the Company is indirectly
a shareholder of the Purchased Entities and has indirectly received one-third of the Common Shares issued as consideration pursuant to
the OFIT Transaction. As a result, the transaction is considered a related party transaction.
US1/VC1
Projects Acquisition
On
December 4, 2023, the Company acquired a 100% interest in the US1 Project and VC1 Project, each located in New York (the “US1/VC1
Projects”). The Company previously held a 67% interest in the US1/VC1 Projects and has now acquired the remaining 33% from
the minority partner for a cash purchase price of US$70,000. The first project is the US1 Project which is a ground-mount solar power
project located at a municipally-owned utility campus in the Village of Union Springs, N.Y. Pursuant to the PPA with the municipality,
the project, with an installed capacity of 389.7kW DC, will sell electricity to the municipality via remote net metering. The second
project is the VC1 Project which is a ground-mount solar power project located at a municipally-owned utility campus in the Village of
Cazenovia, N.Y. Pursuant to the PPA with the municipality, the project, with an installed capacity of 297.9kW DC, will sell electricity
to the municipality via remote net metering. .
Cboe
Canada Listing
On
February 13, 2024, the Company announced that the Cboe Canada stock exchange (“Cboe Canada”) granted final approval
of the Company’s listing application. The Common Shares were listed and available for trading on Cboe Canada at the start of trading
on February 14, 2024. The Company’s existing trading symbol “SUNN” remained unchanged, and its Common Shares were delisted
from the Canadian Securities Exchange at the close of market on February 13, 2024.
Proposed
Acquisition of Solar Flow-Through
On
March 19, 2024, the Company entered into the Arrangement Agreement with SFF to acquire all of the issued and outstanding common shares
of SFF (each, a “SFF Share”) that it does not already own through a plan of arrangement for an aggregate consideration
of up to $41.8 million in an all stock deal. The completion of the Acquisition is subject to certain required approvals and the satisfaction
of certain conditions. There can be no assurance that the Company will complete the Acquisition.
NASDAQ
Listing
On
April 8, 2024, the Company’s Common Shares commenced trading on the Nasdaq under the symbol “SUUN,” while its
Common Shares continued to trade on the Cboe Canada under the symbol “SUNN”.
Storke
Project Acquisition
On
April 10, 2024, the Company announced that it closed its previously announced acquisition from Storke Renewables, LLC of a development
stage solar project located in the Town of Camillus, New York on a closed landfill (the “Storke Project”). The Company
intends to develop a 3.15 MW DC ground-mount solar power project on the site that will operate as a community solar project. The Storke
Project is expected to be eligible for incentives under the NYSERDA NY-Sun Program.
The
Storke Project has received interconnection approval and is in the final stage of the permitting process. The Company intends to advance
the Storke Project through the permitting process and secure the necessary financing for construction which is expected to commence in
the third quarter of 2024 and become operational in the second quarter of 2025.
Fiera
Real Estate Contract Awarded
On
April 15, 2024, the Company announced that it commenced construction on a 1.4 MW DC rooftop solar project for Fiera Real Estate (“Fiera”)
in Alberta (the “Fiera Project”) as a pilot project. The Fiera Project is expected to operate as a “Small Scale
Generator” and received interconnection approval in December 2023, full permitting in March 2024 and is currently undergoing the
process of engineering, procurement and final design. Construction of the Fiera Project is expected to be completed in November 2024.
The Company, with the support of Zathura Investments, is providing development and EPC services under an EPC agreement with Fiera and
expects to complete additional projects for Fiera in the future.
TriMac
Partnership
On
April 26, 2024, the Company announced that it has partnered with TriMac Engineering of Sydney, Nova Scotia (“TriMac”)
to develop a 10 MW DC community solar garden in the rural community of Enon, and three 7 MW DC projects in Sydney, Halifax and Annapolis,
Nova Scotia respectively (the “TriMac Projects”). The TriMac Projects are being developed under a Community Solar
Program that was announced by the Government of Nova Scotia on March 1, 2024 and are owned by AI Renewable Fund. TriMac and the Company
are currently planning to apply for Community Solar Program Contract from Nova Scotia by July 2024. If approved, construction is expected
to commence in 2025.
Community
Solar Subscribers
The
Company works with 3rd party subscriber organizations in Boston and Chicago to manage community solar subscribers. As of June 30, 2023
the number of subscribers was approximately 2,300. As of the date of this prospectus supplement, the current number of community solar
subscribers is over 3,000 and additional subscribers are expected to be added as the Company’s development projects begin operation.
Development
Pipeline
The
Company has an existing development pipeline of solar PV projects that totals approximately 1,142 MW and BESS projects that totals approximately
162 MW. The Company categorizes its development pipeline into the following three categories: (1) “Under Construction” means
the commercial operation date for the project is expected to occur within the next six to twelve months; (2) “Advanced Development”
means the project is expected to reach notice to proceed (“NTP”) stage within the next six to twelve months; and (3)
“Development” means the project is expected to reach NTP stage in greater than twelve months. The existing development pipeline
is broken down as follows:
| Stage |
|
Solar
PV Projects |
|
BESS
Projects |
| Under
Construction |
|
25
MW |
|
60
MW |
| Advanced
Development |
|
138
MW |
|
2
MW |
| Development |
|
979
MW |
|
100
MW |
| Total |
|
1,142
MW |
|
162
MW |
The
statements noted above are “forward looking statements” and there are several risks associated with the development of the
project disclosed and the execution of the Company’s development pipeline. The development of any project is subject to receipt
of interconnection approval, required permits, successful award of request for proposal processes, execution of contractual agreements
and the continued availability of third-party financing arrangements for the Company and the risks associated with the construction of
a solar power project. In addition, governments may revise, reduce or eliminate incentives and policy support schemes for solar power,
which could result in future projects no longer being economic. Please refer to “Cautionary Note Regarding Forward-Looking Statements”
for additional discussion of the assumptions and risk factors associated with the statements in this section.
PROBABLE
ACQUISITION
Securities
regulations in Canada require that an issuer describe any proposed acquisition by the issuer in a prospectus if the proposed acquisition
(a) has progressed to a state where a reasonable person would believe that the likelihood of the issuer completing the acquisition is
high and (b) would be a “significant acquisition” for the purposes of Part 8 of National Instrument 51-102 – Continuous
Disclosure Obligations (“NI 51-102”) if completed as of the date of such prospectus.
The
Acquisition is considered a significant probable acquisition under the significance tests set out in Part 8 of NI 51-102 as of the date
of this prospectus supplement. There can be no assurance the Acquisition will be completed. See “Risk Factors – Risks
Related to the Acquisition”.
Definitive
Agreement and Consideration
On
March 19, 2024, the Company entered into the Arrangement Agreement with SFF to acquire all of the issued and outstanding SFF Shares that
it does not already own for consideration of up to $41.8 million.
Under
the terms of the Arrangement Agreement, the Company agreed to issue up to 5,859,567 Common Shares as consideration for the aggregate
purchase price of up to $41.8 million, representing $4.50 per SFF Share acquired. The number of Common Shares was determined using a
90-trading day volume weighted average trading price as of the date of the Arrangement Agreement which is equal to $7.14 (the “Agreement
Date VWAP”). Through the Acquisition, the Company will acquire SFF’s 70 operating solar power sites, along with its pipeline
of BESS and electric vehicle charging stations.
The
consideration for the Acquisition consists of an upfront payment of 3,575,638 Common Shares (valued at $25.53 million) and a contingent
payment of up to an additional 2,283,929 Common Shares (valued at $16.31 million) that will be issued in the form of contingent value
rights (“CVRs”). The Common Shares underlying the CVRs will be issued once the final contract pricing terms have been
determined between SFF, the Ontario Independent Electricity System Operator (“IESO”) and the major suppliers for the
SFF BESS portfolio and the binding terms of the 2-debt financing for the BESS portfolio have been agreed (the “CVR Conditions”).
On satisfaction of the CVR Conditions, Evans & Evans, Inc. (“Evans & Evans”) will revalue the BESS portfolio,
following which the Company has agreed to issue Common Shares in the aggregate value equal to the lesser of (i) $16.31 million and (ii)
the final valuation of the BESS portfolio determined by Evans & Evans plus the sale proceeds of any portion of the BESS portfolio
that was sold, in either case divided by the Agreement Date VWAP. The maximum number of additional Common Shares issued for the CVRs
will be 2,283,929 Common Shares.
The
Acquisition will be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia)
and will require approval at a special meeting scheduled to be held in June 2024 (the “SFF Meeting”) by: (i) 66 2/3%
of the votes cast by holders of SFF Shares and 66 2/3% of votes cast by holders of SFF tracking shares (the “SFF Tracking Shares”)
present in person or represented by proxy, voting together as a single class; (ii) 66 2/3% of the votes cast by holders of SFF Shares
present in person or represented by proxy, voting together as a separate class; and (iii) 66 2/3% of the votes cast by holders of SFF
Tracking Shares present in person or represented by proxy, voting together as one separate class.
There
are three classes of SFF Tracking Shares. Each class of SFF Tracking Shares is linked to a separate lawsuit where SFF is plaintiff seeking
to recover damages for the termination of certain solar power project development contracts. If the lawsuit that is linked to a class
of SFF Tracking Shares is successful, the shareholder of such SFF Tracking Shares will have the option to receive its pro-rata share
of the net settlement award or to convert such amount into SFF Shares, which assuming the closing of the Acquisition (“Closing”),
would instead convert into Common Shares. Under the terms of the Acquisition, SFF shareholders will receive consideration of (i) $25.53
million, representing approximately $2.75 per SFF Share or 0.3845938 of a Common Share for every SFF Share; and (ii) up to $16.31 million
in CVRs that may, on satisfaction of the CVR Conditions, be exchanged for Common Shares representing up to approximately $1.75 per SFF
Share or up to 0.2456582 of a Common Share for every SFF Share.
Prior
to the SFF Meeting, the Company has converted $4.7 million of a receivable that is due from SFF to the Company into 1,052,599 SFF Shares
for the purpose of voting such shares in favor of the Acquisition at the SFF Meeting. If the Arrangement Agreement is terminated, then
the Company shall have the option to return the SFF Shares to SFF for cancellation and thereafter the receivable shall again be due and
owing by SFF to the Company. After conversion of the receivable, the Company holds 1,755,419 SFF Shares of a total of 11,052,599 SFF
Shares.
All
Common Shares issued in the Acquisition, including Common Shares issued on conversion of the CVRs or SFF Tracking Shares, if any, will
be subject to transfer restrictions pursuant to a release schedule as set forth in the table below:
| Release
Date |
|
Percentage |
| Closing |
|
0% |
| 6
Months from Closing |
|
5% |
| 12
Months from Closing |
|
5% |
| 18
Months from Closing |
|
5% |
| 24
Months from Closing |
|
5% |
| 27
Months from Closing |
|
20% |
| 30
Months from Closing |
|
20% |
| 33
Months from Closing |
|
20% |
| 36
Months from Closing |
|
20% |
Holders
of approximately 71% of the issued and outstanding SFF Shares have entered into voting support agreements with the Company and have agreed
to vote in favour of the Acquisition at the SFF Meeting.
The
Company and SFF have provided representations and warranties customary for a transaction of this nature and SFF has provided customary
interim period covenants regarding the operation of its business in the ordinary course. The Arrangement Agreement also provides for
customary deal-protection measures, including non-solicitation covenants on the part of SFF and a right to match in favour of the Company.
SFF may, under certain circumstances, terminate the Arrangement Agreement in favour of an unsolicited superior proposal, subject to a
termination payment by SFF to the Company.
Upon
closing of the Acquisition, Mr. Matthew Wayrynen, the current CEO of SFF, is expected to join the Board and Mr. Olen Aasen is expected
to step down from the Board but remain as General Counsel to the Company.
The
completion of the Acquisition is subject to certain required approvals and the satisfaction of certain conditions set out in the Arrangement
Agreement. Subject to the satisfaction of these conditions, the Company expects that the Acquisition will be completed during the third
quarter of 2024. There can be no assurance that the Company will complete the Acquisition. See “Risk Factors – Risks Related
to the Acquisition”.
Nature
of the Business of Solar-Flow Though
SFF
owns 70 operating solar sites located in Ontario with a combined capacity of 28.8 megawatts (“MW”) operating under
long term contracts with the Ontario IESO, and owns and is constructing three battery energy storage system projects in Ontario with
an aggregate discharge capacity of 14.97 MW and are expected to operate under long term guaranteed capacity contracts from the Ontario
IESO. SFF and the Company will have a combined capacity of approximately 47 MW, including the Company’s IPP assets. The Acquisition
is expected to add recurring revenue from existing IPP assets of SFF: $9.2 million for SFF calendar year 2023; and $9.4 million for SFF
calendar year 2022.
SFF
was incorporated on August 11, 2023, under the laws of the Province of British Columbia. On October 23, 2023 (the “SFF Consolidation
Date”), SFF underwent the process of consolidating nine limited partnerships (the “Predecessor LPs”) and
their respective general partnerships into one corporation.
Expected
Effect of the Acquisition on the Company’s Financial Position
The
Company does not currently have any plans or proposals for material changes in the business of SFF that may have a significant impact
on the financial performance and financial position of the Company, including any proposal to sell, lease or exchange all or substantially
all or a substantial part of the business of SFF or to make any material changes to the Company’s business.
Prior
Valuations
To
the knowledge of the Company, there has not been any valuation opinion obtained within the last 12 months by the Company or SFF required
by securities legislation or a Canadian exchange or market to support the consideration to be paid by SFF in connection with the Arrangement.
Parties
to the Acquisition
As
of the date hereof, and prior to giving effect to the conversion of the receivable, the Company beneficially owns, directly or indirectly,
or exercises control or direction over, 1,755,419 SFF Shares, representing 15.9% of the issued and outstanding SFF Shares. Accordingly,
SFF is considered an associate of the Company.
Financial
Statements Disclosure
Attached
to this prospectus supplement are the following financial statements: (a) audited combined special purpose financial statements of Solar
Flow-Through Limited Partnership for the financial years ended December 31, 2022 and December 31, 2021 (prepared in accordance with IFRS);
(b) audited combined consolidated financial statements of SFF from January 1, 2023 to the SFF Consolidation Date and for the year ended
December 31, 2022 (prepared in accordance with IFRS); (c) audited consolidated financial statements of SFF from August 11, 2023, the
date of incorporation, to December 31, 2023 (prepared in accordance with IFRS); (d) unaudited condensed interim consolidated financial
statements of SFF for the three months ended March 31, 2024; and (e) unaudited pro forma consolidated financial statements of the Company
that give effect to the Acquisition, consisting of (i) unaudited pro forma consolidated financial statements of financial position as
at March 31, 2024; and (ii) unaudited pro forma consolidated statements of income and comprehensive income for the nine months ended
March 31, 2024 and the year ended June 30, 2023, in each case, together with the notes thereto and other information required by
Part 8 of NI 51-102. The unaudited pro forma consolidated financial statements have been prepared to give effect to the Acquisition during
the periods presented, and may not be indicative of either the results that actually would have occurred if the Acquisition was completed
during such periods, or of the future financial position or results of operations of the Company.
RISK
FACTORS
Investing
in the Offered Shares is speculative and involves a high degree of risk due to the nature of our business and the present stage
of its development. Before deciding to invest in the Offered Shares, investors should carefully consider all of the information contained
in, and incorporated or deemed to be incorporated by reference in, this prospectus supplement and the prospectus. An investment in the
Offered Shares is subject to certain risks, including risks related to the business of the Company, risks related to renewable projects
and risks related to the Company’s securities described in this prospectus supplement, the prospectus and the documents incorporated
or deemed to be incorporated by reference in the prospectus and herein. SEE THE RISK FACTORS BELOW AND THE “RISK FACTORS”
SECTION OF THE PROSPECTUS AND THE DOCUMENTS INCORPORATED OR DEEMED TO BE INCORPORATED BY REFERENCE HEREIN AND THEREIN, INCLUDING THE
AIF WHICH MAY BE ACCESSED ON THE COMPANY’S SEDAR+ PROFILE AT WWW.SEDARPLUS.CA AND THROUGH EDGAR AT WWW.SEC.GOV. Each of the
risks described in these sections and in the documents incorporated by reference herein could materially and adversely affect our
business, financial condition, results of operations and prospects, could cause them to differ materially from the estimates described
in forward-looking statements relating to the Company, or its business, property or financial results, and could result in a loss
of your investment. These risks are not the only risks we face. Additional risks and uncertainties not known to us or that we currently
deem immaterial may also impair our business, financial condition, results of operations and prospects.
Risks
Related to the Offering
No
certainty regarding the net proceeds to the Company
There
is no certainty that US$15,000,000 will be raised under the Offering. The Agents have agreed to use commercially reasonable efforts to
sell, on the Company’s behalf, the Offered Shares designated by the Company, but the Company is not required to request the sale
of the maximum amount offered or any amount and, if the Company requests a sale, the Agents are not obligated to purchase any Offered
Shares as principal. As a result of the Offering being made on a commercially reasonable efforts basis with no minimum, and only as requested
by the Company, the Company may raise substantially less than the maximum total offering amount or nothing at all.
Discretion
in the use of proceeds
The
Company currently intends to allocate the net proceeds, if any, received from the Offering as described under “Use of Proceeds
and Business Objectives and Milestones”; however, the Company will have discretion in the actual application of such net
proceeds, and may elect to allocate net proceeds differently from that described under “Use of Proceeds and Business Objectives
and Milestones” if determined by the Board to be in the Company’s best interests to do so. Shareholders may not
agree with the manner in which the Board and management choose to allocate and spend the net proceeds. The Company may pursue acquisitions,
collaborations or other opportunities that do not result in an increase in the market value of our securities, including the market value
of the Common Shares, and that may increase our losses. The failure by the Company to apply these funds effectively could have a material
adverse effect on the Company’s business.
Dilution
from future offerings
The
Company may sell additional Common Shares or other securities that are convertible or exchangeable into Common Shares in subsequent
offerings or may issue additional Common Shares or other securities to finance future acquisitions outside of the Offering. The
Company cannot predict the size or nature of future sales or issuances of securities or the effect, if any, that such future sales
and issuances will have on the market price of the Common Shares. Sales or issuances of substantial numbers of Common Shares or
other securities that are convertible or exchangeable into Common Shares, or the perception that such sales or issuances could occur,
may adversely affect prevailing market prices of the Common Shares. With any additional sale or issuance of Common Shares or other
securities that are convertible or exchangeable into Common Shares, investors will suffer dilution to their voting power and economic
interest in the Company. Furthermore, to the extent holders of the Company’s stock options or other convertible securities
convert or exercise their securities and sell the Common Shares they receive, the trading price of the Common Shares on Cboe Canada
and/or Nasdaq may decrease due to the additional amount of Common Shares available in the market.
Return
on investment not guaranteed / Loss of entire investment
An
investment in the Offered Shares is speculative and may result in the loss of an investor’s entire investment. Only potential investors
who are experienced in high-risk investments and who can afford to lose their entire investment should consider an investment in the
Company. There is no guarantee that an investment in the securities described herein will provide any positive return in the short
term or long term. An investment in the securities of the Company is speculative and involves a high degree of risk and should be undertaken
only by investors whose financial resources are sufficient to enable them to assume such risks and who have no need for immediate liquidity
in their investment.
At-the-market
offering
Investors
who purchase Offered Shares in this Offering at different times will likely pay different prices, and so may experience different outcomes
in their investment results. The Company will have discretion, subject to market demand, to vary the timing, prices and numbers of Offered
Shares sold, and there is no minimum or maximum sales price. Investors may experience a decline in the value of their Offered Shares
as a result of Common Share sales made at prices lower than the prices they paid.
The
market price of the Common Shares may be volatile after this Offering
The
market price of the Common Shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which
are beyond the Company’s control. This volatility may affect the ability of holders of Common Shares to sell their securities
at an advantageous price. Market price fluctuations in the Common Shares may be due to the Company’s operating results failing
to meet expectations of securities analysts or investors in any period, downward revision in securities analysts’ estimates,
adverse changes in general market conditions or economic trends, acquisitions, dispositions or other material public announcements
by the Company or its competitors, along with a variety of additional factors, and other risk factors described in this prospectus
supplement and the prospectus, including the documents incorporated by reference herein and therein. These broad market fluctuations
may adversely affect the market price of the Common Shares.
Financial
markets historically at times have experienced significant price and volume fluctuations that have particularly affected the market
prices of equity securities of companies and that have often been unrelated to the operating performance, underlying asset values
or prospects of such companies. Accordingly, the market price of the Common Shares may decline even if the Company’s operating
results have not changed. There can be no assurance that continuing fluctuations in price and volume will not occur. If such increased
levels of volatility and market turmoil continue, the Company’s operations could be adversely impacted and the trading price
of the Common Shares may be materially adversely affected.
Liquidity
risk
Shareholders
of the Company may be unable to sell significant quantities of Common Shares into the public trading markets without a significant
reduction in the price of their Common Shares, as applicable, or at all. There can be no assurance that there will be sufficient
liquidity of the Common Shares on the trading market, and that the Company will continue to meet the listing requirements of Cboe
Canada or the Nasdaq, or otherwise achieve listing on any other public listing exchange.
Forward-looking
statements may be inaccurate
Investors
are cautioned not to place undue reliance on forward-looking statements. By their nature, forward-looking statements involve numerous
assumptions, known and unknown risks and uncertainties, of both a general and specific nature, that could cause actual results to differ
materially from those suggested by the forward-looking statements or contribute to the possibility that predictions, forecasts or projections
will prove to be materially inaccurate. Additional information on the risks, assumptions and uncertainties are found in this prospectus
supplement and the prospectus under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Caution
Regarding Forward-Looking Statements”, respectively.
Difficulty
for United States investors to effect service of process on the Company or to obtain judgements in the United States
The
Company is incorporated under the laws of the Province of Ontario, most of the Company’s officers and directors are not U.S. residents,
and all or a substantial portion of the assets of the Company or the foregoing persons are located outside of the U.S. Consequently,
it may be difficult for United States investors to effect service of process within the United States upon us or upon such persons
who are not residents of the United States, or to realize in the United States upon judgments of United States courts predicated
upon civil liabilities under United States securities laws. A judgment of a United States court predicated solely upon such civil
liabilities may be enforceable in Canada by a Canadian court if the United States court in which the judgment was obtained had jurisdiction,
as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully
in Canada against any of such persons or us predicated solely upon such civil liabilities.
Loss
of Foreign Private Issuer Status in the Future
The
Company may in the future lose its foreign private issuer status if a majority of the Common Shares are owned of record in the United
States and the Company fails to meet the additional requirements necessary to avoid loss of foreign private issuer status. The regulatory
and compliance costs to the Company under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs
the Company incurs as a Canadian foreign private issuer eligible to use the MJDS. If the Company is not a foreign private issuer, it
would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports and registration
statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private
issuer.
Passive
Foreign Investment Company Status
Generally,
if for any taxable year, 75% or more of the Company’s gross income is passive income, or at least 50% of the average quarterly
value of the Company’s assets are held for the production of, or produce, passive income, the Company would be characterized as
a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes. For purposes of the above calculations,
the Company will be treated as if it holds its proportionate share of the assets of, and receive directly its proportionate share of
the income of, any other corporation in which it directly or indirectly own at least 25%, by value, of the shares of such corporation.
Passive income includes, among other things, dividends, interest, certain non-active rents and royalties, net gains from the sale or
exchange of property producing such income and net foreign currency gains. Assets that produce or are held for the production of passive
income generally include cash, even if held as working capital or raised in a public offering, marketable securities, and other assets
that may produce passive income.
The
determination as to whether a non-U.S. corporation is a PFIC is a factual determination made on an annual basis after the close of
each taxable year. This determination is based on the application of complex U.S. federal income tax rules, which are subject to differing
interpretations, and the determination will depend on, among other things, the composition of the non-U.S. corporation’s income,
expenses and assets, as well as the relative value of its assets (which may fluctuate with the non-U.S. corporation’s market capitalization),
from time to time and the nature of its activities. Accordingly, there can be no assurance that the Company will not be classified
as a PFIC for the current taxable year or for any future taxable year. If the Company is a PFIC for any taxable year during which
a U.S. Holder (as defined below under the heading “Certain U.S. Federal Income Tax Considerations”) holds its Common Shares,
the Company would continue to be treated as a PFIC with respect to that U.S. Holder for such taxable year and, unless the U.S. Holder
makes certain elections, for future years even if the Company ceases to be a PFIC. If the Company is characterized as a PFIC, U.S.
Holders of its Common Shares may suffer adverse U.S. federal income tax consequences, including the treatment of all or a portion
of any gains realized on the sale of the Company’s Common Shares as ordinary income, rather than as capital gain, the loss
of the preferential income tax rate applicable to dividends received on the Company’s Common Shares by individuals who are U.S.
Holders, the addition of interest charges to the tax on such gains and certain distributions, and required compliance with certain reporting
requirements. A U.S. shareholder of a PFIC generally may mitigate certain of these adverse U.S. federal income tax consequences
by making a qualified electing fund (“QEF”) election or a mark-to-market election. There can be no assurances that
the Company will provide the information necessary for U.S. Holders to make QEF elections if it is classified as a PFIC.
Prospective
U.S. Holders contemplating an investment in the Offered Shares are urged to consult their tax advisors regarding the Company’s
status as a PFIC and the U.S. federal income tax consequences that may apply if the Company is determined to be a PFIC in any taxable
year.
Risks
Related to the Acquisition
The
Acquisition may not be completed or may be delayed
The
closing of the Acquisition is subject to the receipt of required approvals and the satisfaction of certain conditions. There is no certainty,
nor can the Company provide any assurance, that these conditions will be satisfied or, if satisfied when they will be satisfied. There
are risks to the Company if the Acquisition is not completed, including the costs to the Company incurred in pursuing the Acquisition,
the consequences and opportunity costs of the suspension of strategic pursuits of the Company in accordance with the terms of the
Arrangement Agreement and the risks associated with the temporary diversion of the Company’s attention away from the conduct
of the Company’s business in the ordinary course. If the Acquisition is not completed as contemplated, the Company could suffer
adverse consequences, including: (a) the loss of investor confidence; (b) the market price of the Common Shares may be impacted to the
extent that the market price reflects a market assumption that the Acquisition will be completed; (c) certain costs related to the Acquisition,
such as legal, accounting and other fees, must be paid by the Company even if the Acquisition is not completed; and (d) the Company may
not be successful in finding another business opportunity that is of equal or greater benefit to the Company.
The
Arrangement Agreement may be terminated in certain circumstances
Each
of the Company and Solar Flow-Though has the right to terminate the Arrangement Agreement in certain circumstances. Accordingly, there
is no certainty, nor can the Company provide any assurance, that the Arrangement Agreement will not be terminated by either party
thereto before the completion of the Acquisition. In addition, the completion of the Acquisition is subject to several conditions,
certain of which are outside the control of the Company and Solar Flow-Though, including the approval of Solar Flow-Through’s shareholders
and a final order being granted by the Supreme Court of British Columbia. There is no certainty, nor can the Company provide
any assurance that these conditions will be satisfied or waived. If the Arrangement Agreement is terminated and the Acquisition is not
completed, the Company could suffer adverse consequences.
Unexpected
costs or liabilities related to the Acquisition
Although
the Company is conducting due diligence in connection with the proposed Acquisition and SFF has provided a number of representations
and warranties under the Arrangement Agreement in favour of the Company in connection with the Acquisition, an unavoidable level of risk
remains regarding any undisclosed or unknown liabilities of, or issues concerning, the SFF. In connection with the Acquisition, there
may be liabilities that the Company failed to discover or was unable to quantify in the Company’s due diligence which the Company
will conduct and the Company may not be indemnified for some or all of these liabilities. In addition, following the closing of the Acquisition,
the Company may discover that certain of the representations made by SFF were untrue. The discovery or quantification of any material
liabilities could have a material adverse effect on the Company’s business, financial condition or future prospects.
Realization
of the anticipated benefits of the Acquisition
The
Company believes that the Acquisition will result in a number of benefits. However, there is a risk that some or all of the expected
benefits of the Acquisition may fail to materialize, may cost more to achieve or may not occur within the time periods the Company anticipates.
The realization of such benefits may be affected by a number of factors, many of which are beyond the Company’s control.
Risks
related to the integration of the businesses of the Company and Solar Flow-Though
The
ability to realize the benefits of the Acquisition will depend in part on successfully consolidating functions and integrating operations,
procedures and personnel in a timely and efficient manner. This integration will require the dedication of substantial management effort,
time and resources which may divert focus and resources from other strategic opportunities of the Company following completion of
the Acquisition, and from operational matters during this process which may have an adverse effect on the profitability, results
of operations and financial condition of the Company following completion of the Acquisition. If the Company is unable to successfully
combine and integrate SFF’s business with its own businesses in an efficient and effective manner, the anticipated benefits of
the Acquisition may not be realized fully, or at all, or it may take longer to realize them and at a significantly greater cost than
expected. An inability to realize the full extent of the anticipated benefits of the Acquisition, as well as any delays encountered in
the integration process, could have a material adverse effect on the revenues, level of expenses and operating results of the Company.
Dilution
If
the Acquisition is completed, and subject to the terms of the Arrangement Agreement, the holders of SFF Shares will be issued 3,575,638
Common Shares and a contingent payment of up to an additional 2,283,929 Common Shares that will be issued in the form of CVRs. The issuance
of these Common Shares, and the sale of Common Shares in the public market from time to time, including in connection with the Offering,
could depress the market price for Common Shares.
Diversion
of management’s attention
The
proposed Acquisition could cause the attention of the Company’s management to be diverted from the day-to-day operations of the
business. These disruptions could be exacerbated by a delay in the completion of the Acquisition and could have an adverse effect on
the business, operating results or prospects of the Company.
CONSOLIDATED
CAPITALIZATION
Except
as described in the Interim Financial Statements and as outlined under “Prior Sales”, there have been no material
changes in the share and loan capital of the Company, on a consolidated basis, since March 31, 2024. As a result of the Offering,
the shareholder’s equity of the Company will increase by the amount of the net proceeds of the Offering and the number of
issued and outstanding Common Shares will increase by the number of Offered Shares actually distributed under the Offering.
USE
OF PROCEEDS AND BUSINESS OBJECTIVES AND MILESTONES
The
net proceeds from the Offering, if any, are not determinable in light of the nature of the distribution. Sales of Offered Shares, if
any, will be made in transactions that are deemed to be “at-the-market distributions” as defined in NI 44-102, and an “at-the-market
offering” as defined in Rule 415 under the U.S. Securities Act, involving sales made directly on Cboe Canada, Nasdaq or on any
other trading market for the Common Shares in Canada or the United States. Any proceeds that the Company receives will depend on the
number of Offered Shares actually sold and the offering price of such Offered Shares. The net proceeds to the Company of any
given distribution of Offered Shares through the Agents in an “at-the-market distribution” under the Distribution Agreement
will represent the gross proceeds of the Offering, after deducting the Commission, any transaction or filing fees imposed by any governmental,
regulatory, or self-regulatory organization in connection with any such sales of Offered Shares and the expenses of the Offering,
including the expenses of the Agents, as provided in the Distribution Agreement. The gross proceeds of the Offering will be up to US$15,000,000
(or the equivalent in Canadian dollars, determined using the daily exchange rate posted by the Bank of Canada on the date the Offered
Shares are sold). The Agents will receive the Commission of 2% of the gross proceeds from the sale of the Offered Shares. Any Commission
paid to the Agents will be paid out of the proceeds from the sale of Offered Shares. There is no minimum amount of funds that must be
raised under the Offering. This means that the Offering may terminate after raising only a portion of the Offering amount set out above,
or none at all. See “Plan of Distribution”.
The
Company intends to use the net proceeds from the Offering, if any, to advance the Company’s business objectives and for general
corporate purposes (discussed further below), including funding ongoing operations or working capital requirements, repaying indebtedness
outstanding from time to time, discretionary capital programs and potential future acquisitions.
The
Company focuses on grid connected solar PV electricity power plants, BESS and EV-Charging stations. With its full in-house development,
engineering and construction expertise, the Company’s capabilities span the value chain from development, EPC, financing, and operating
as an Independent Power Producer. Under the heading “Description and General Development of the Business – Operations
Process” in the AIF, the Company described the five phases of its business model:
| ● |
Phase
1 – Site Origination to Bankable Lease |
| ● |
Phase
2 – Development to Notice to Proceed |
| ● |
Phase
3 – Financing |
| ● |
Phase
4 – Delivery: Engineering, Procurement and Construction to Commercial Operations Date/Permission to Operate |
| ● |
Phase
5 – Operations and Management, Subscriber Management and Asset Management |
In
order to continue to grow as an Independent Power Producer, the Company would need to make an adjustment in Phase 3. Instead of bringing
in a project sponsor to finance and own the relevant project, the Company would be the sponsor by financing the project itself and retaining
ownership. The process and costs associated with project ownership are the same as the Company’s existing business model, except
for the requirement to fund the development costs. As a result, the Company needs additional capital to cover the equity portion of project
development costs. Absent additional capital, the Company will continue with its “develop to sell” strategy and take smaller
ownership interests in smaller projects. The ability to access financing through this prospectus supplement will allow the Company to
retain a larger ownership in larger projects and accelerate its development pipeline. The Company has not identified any specific projects
that financing from this prospectus supplement would be allocated towards for project ownership purposes or accelerated development and
any determination is subject to the availability and amount of any future financing.
In
order to advance the business objectives of project ownership or acceleration of the development pipeline, the Company would use funds
raised from the Offering for project development costs including:
| ● |
completion
of design and submission of zoning and interconnection documents; |
| ● |
interconnection
studies; |
| ● |
engineering
and permitting; |
| ● |
interconnection
deposits; |
| ● |
procurement
bid application fees; |
| ● |
lease
payments on the project sites; |
| ● |
contractor
costs; and |
| ● |
equipment
purchases including orders of solar panels, inverters, racking, and transformers necessary for the projects. |
Up
to 25% of the proceeds raised from this prospectus supplement may be allocated to general and administrative costs including contractor
costs, professional fees, rent, travel and conference, insurance, investor relations and marketing, and general office expenses.
Until
applied, some or all of the net proceeds of the Offering, if any, may be held as cash balances in the Company’s bank account or
invested at the discretion of the Company, including in certificates of deposit and other instruments issued by banks or obligations
of or guaranteed by the Government of Canada or any province thereof or the Government of the United States or any state thereof.
Although
the Company intends to expend the net proceeds from the Offering as set forth above, there may be circumstances where, for sound business
reasons, a reallocation of funds may be prudent or necessary, and may vary materially from that set forth above. In addition, management
of the Company will have broad discretion with respect to the actual use of the net proceeds from the Offering. See “Risk Factors”.
PLAN
OF DISTRIBUTION
The
Company has entered into the Distribution Agreement with the Agents under which the Company may issue and sell from time to time Offered
Shares having an aggregate sale price of up to US$15,000,000 (or the equivalent in Canadian dollars, determined using the daily exchange
rate posted by the Bank of Canada on the date the Offered Shares are sold) in each of the provinces of Canada and in the United
States pursuant to placement notices delivered by the Company to the Agent from time to time in accordance with the terms of the Distribution
Agreement. Sales of Offered Shares, if any, will be made in transactions that are deemed to be “at-the-market distributions”
as defined in NI 44-102 and an “at-the-market offering” as defined in Rule 415 under the U.S. Securities Act, including sales
made directly on Cboe Canada, Nasdaq or on any other trading market for the Common Shares in Canada or the United States. Subject to
the pricing parameters in a placement notice, the Offered Shares will be distributed at the market prices prevailing at the time of the
sale. As a result, prices may vary as between purchasers and during the period of distribution. The Company cannot predict the number
of Offered Shares that it may sell under the Distribution Agreement on the Cboe Canada, Nasdaq or on any other trading market for the
Common Shares in Canada or the United States, or if any Offered Shares will be sold.
The
Agents will offer the Offered Shares subject to the terms and conditions of the Distribution Agreement from time to time as agreed upon
by the Company and the Agent or U.S. Agent, as applicable. The Company will designate the maximum amount of Offered Shares to be sold
pursuant to any single placement notice to the Agent or U.S. Agent, as applicable. Subject to the terms and conditions of the Distribution
Agreement, the Agents will use their commercially reasonable efforts to sell, on the Company’s behalf, all of the Offered Shares
requested to be sold by the Company. The Company may instruct the Agent or U.S. Agent, as applicable, not to sell Offered Shares if the
sales cannot be effected at or above the price designated by the Company in a particular placement notice. Any placement notice delivered
to the Agent or U.S. Agent, as applicable, shall be effective upon delivery unless and until (i) the Agent or U.S. Agent, as applicable,
declines to accept the terms contained in the placement notice or the Agent or U.S. Agent, as applicable, does not promptly confirm the
acceptability of such placement notice, (ii) the entire amount of Offered Shares under the placement notice are sold, (iii) the Company
suspends or terminates the placement notice in accordance with the terms of the Distribution Agreement, (iv) the Company issues a subsequent
placement notice with parameters superseding those of the earlier placement notice, or (v) the Distribution Agreement is terminated in
accordance with its terms. The Agents will not be required to purchase Offered Shares on a principal basis pursuant to the Distribution
Agreement.
Either
the Company or the Agents may suspend the Offering upon proper notice to the other party. The Company and the Agents each have the right,
by giving written notice as specified in the Distribution Agreement, to terminate the Distribution Agreement in each party’s sole
discretion at any time.
The
Company will pay the Agents the Commission for their services in acting as agents in connection with the sale of Offered Shares pursuant
to the Distribution Agreement. The amount of the Commission will be 2% of the gross sales price per Offered Share sold, provided however,
that the Company shall not be obligated to pay the Agents any Commission on any sale of Offered Shares that it is not possible to settle
due to (i) a suspension or material limitation in trading in securities generally on Cboe Canada or the Nasdaq, as applicable, (ii) a
material disruption in securities settlement or clearance services in Canada or the United States, as applicable, or (iii) failure by
the Agent or U.S. Agent, as applicable, to comply with its obligations under the terms of the Distribution Agreement. The sales proceeds
remaining after payment of the Commission and after deducting any expenses payable by the Company, including the expenses of the Agents
as provided in the Distribution Agreement and any transaction or filing fees imposed by any governmental, regulatory, or self-regulatory
organization in connection with the sales, will equal the net proceeds to the Company from the sale of any such Offered Shares.
The
Agent or U.S. Agent, as applicable, will provide written confirmation to the Company following close of trading on the trading day on
which the Agent or U.S. Agent, as applicable, has made sales of the Offered Shares under the Distribution Agreement setting forth (i)
the number of Offered Shares sold on such day (including the number of Offered Shares sold on the Cboe Canada, Nasdaq or on any other
trading market for the Common Shares in Canada or the United States), (ii) the average price of the Offered Shares sold on such day (including
the average price of Offered Shares sold on the Cboe Canada, Nasdaq or on any other trading market for the Common Shares in Canada or
the United States), (iii) the gross proceeds, (iv) the commission payable by the Company to the Agent or U.S. Agent, as applicable, with
respect to such sales, and (v) the net proceeds payable to the Company.
The
Company will disclose the number and average price of the Offered Shares sold under this prospectus supplement, as well as the gross
proceeds, Commission and net proceeds from sales hereunder in the Company’s annual and interim financial statements and related
management’s discussion and analysis and annual information forms, filed on www.sedarplus.ca, for any quarters or annual periods
in which sales of Offered Shares occur.
Settlement
for sales of Offered Shares will occur, unless the parties agree otherwise, on the second trading day on the applicable exchange following
the date on which any sales were made in return for payment of the gross proceeds (less the Commission and any expenses of the Agents
payable under the Distribution Agreement) to the Company. There is no arrangement for funds to be received in an escrow, trust or similar
arrangement. Sales of Offered Shares through Cboe Canada or another Canadian marketplace will be settled through the facilities of CDS
or by such other means as the Company and the Agent may agree and sales of Offered Shares in through the Nasdaq or another United States
marketplace will be settled through the facilities of DTC or by such other means as the Company and the U.S. Agent may agree
upon.
The
Agents will only sell Offered Shares on marketplaces in Canada and the United States.
In
connection with the sales of the Offered Shares on our behalf, the U.S. Agent may be deemed to be an “underwriter” within
the meaning of the U.S. Securities Act, and the compensation paid to the U.S. Agent may be deemed to be underwriting commissions or discounts.
The Company has agreed in the Distribution Agreement to provide indemnification and contribution to the Agents against certain liabilities,
including liabilities under the U.S. Securities Act and Canadian securities laws. In addition, the Company has agreed to pay the reasonable
expenses of the Agents in connection with the Offering, pursuant to the terms of the Distribution Agreement.
The
Agents, and any person or company acting jointly or in concert with the Agents, may not, in connection with the distribution, enter into
any transaction that is intended to stabilize or maintain the price of the securities or securities of the same class as the securities
distributed under this prospectus supplement, including selling an aggregate number or principal amount of securities that would result
in the Agents creating an over-allocation position in the securities.
The
Agents and their affiliates have provided, and may in the future provide, various investment banking, commercial banking, fiduciary and
advisory services for us from time to time for which they have received, and may in the future receive, customary fees and expenses.
The Agents and their affiliates may, from time to time, engage in other transactions with and perform services for us in the ordinary
course of their business. To the extent required by Regulation M under the U.S. Exchange Act, the U.S. Agent will not engage in any market
making activities involving the Common Shares while the Offering is ongoing under this prospectus supplement. The total expenses related
to the commencement of the Offering to be paid by the Company, excluding the Commission payable to the Agents and the expenses of the
Agents to be reimbursed by the Company under the Distribution Agreement, are estimated to be approximately $300,000.
Pursuant
to the Distribution Agreement, the Company has the right to terminate the Distribution Agreement in its sole discretion at any time by
giving written notice, and the Agents have the right to terminate their obligations under the Distribution Agreement in their sole discretion
at any time by giving written notice. In addition, the Distribution Agreement shall automatically terminate upon the issuance and sale
of all of the Offered Shares on the terms and subject to the conditions set forth in the Distribution Agreement.
The
Common Shares are listed on Cboe Canada and on the Nasdaq. The Company has provided notice to Cboe Canada to list the Offered Shares
for trading on Cboe Canada and has submitted a notification of listing to list the Offered Shares on Nasdaq. Listing will be subject
to the Company fulfilling all of the listing requirements of Cboe Canada and Nasdaq, respectively.
DESCRIPTION
OF SHARE CAPITAL
The
Company is authorized to issue an unlimited number of Common Shares. As of May 22, 2024, there were 27,191,075 Common Shares issued and
outstanding.
In
addition, as of the date of this prospectus supplement, there are: 2,766,500 Common Shares issuable upon the exercise of outstanding
stock options, each with an exercise price of $0.75 per Common Share; 265,000 Common Shares issuable upon the conversion of outstanding
restricted share units; and 7,873,000 Common Shares issuable upon the exercise of outstanding warrants. In addition, if the Acquisition
is completed, and subject to the terms of the Arrangement Agreement, the holders of SFF Shares will be issued 3,575,638 Common Shares
and a contingent payment of up to an additional 2,283,929 Common Shares that will be issued in the form of CVRs.
All
of the issued and outstanding Common Shares have been fully paid for and none are subject to any future call or assessment. Holders of
Common Shares are entitled to receive notice of, and to attend and vote at, all meetings of the shareholders of the Company and to receive
all notices and other documents required to be sent to share holders in accordance with the Company’s articles, corporate law and
the rules of any applicable stock exchange. On a poll, every shareholder has one vote for each Common Share held. The holders of Common
Shares are entitled to dividends if, as and when declared by the board of directors of the Company and, upon the liquidation, dissolution
or winding-up of its affairs or other distribution of its assets for the purpose of winding-up its affairs, to receive, on a pro rata
basis, all of the remaining assets of the Company. The Common Shares do not carry any pre-emptive, subscription, redemption or conversion
rights, nor do they contain any sinking fund or purchase fund provisions.
PRIOR
SALES
During
the 12-month period before the date of this prospectus supplement, the Company has issued the following Common Shares and securities
convertible into Common Shares.
| Date of Issuance | |
Type of Security | |
Number of
Securities | | |
Issue / Exercise /
Conversion Price | |
| 2023-09-20 | |
Common Shares | |
| 55,000 | | |
$ | 0.75 | |
| 2023-09-27 | |
Common Shares | |
| 2,200 | | |
$ | 10.002 | |
| 2023-11-01 | |
Common Shares | |
| 185,917 | | |
$ | 7.70 | |
| 2023-11-01 | |
Common Shares | |
| 92,958 | | |
$ | 7.70 | |
| 2024-04-15 | |
Common Shares | |
| 55,000 | | |
$ | 0.75 | |
TRADING
PRICE AND VOLUME
The
Common Shares are currently listed and posted for trading on Cboe Canada under the trading symbol “SUNN” and on the Nasdaq
under the trading symbol “SUUN”. The following tables set for the high and low and monthly trading volumes of the Common
Shares for the 12-month period prior to the date of this prospectus supplement.
| Canadian Exchange (Cboe Canada and Canadian Securities Exchange) |
| Month | |
High ($) | | |
Low ($) | | |
Trading Volume | |
| May 1 – 22, 2024 | |
$ | 8.75 | | |
$ | 7.75 | | |
| 199,314 | |
| April 2024 | |
$ | 8.50 | | |
$ | 6.70 | | |
| 314,473 | |
| March 2024 | |
$ | 7.15 | | |
$ | 5.90 | | |
| 55,327 | |
| February 2024 | |
$ | 8.20 | | |
$ | 6.50 | | |
| 71,998 | |
| January 2024 | |
$ | 8.88 | | |
$ | 6.35 | | |
| 201,300 | |
| December 2023 | |
$ | 6.94 | | |
$ | 6.05 | | |
| 87,600 | |
| November 2023 | |
$ | 7.55 | | |
$ | 6.10 | | |
| 143,000 | |
| October 2023 | |
$ | 9.40 | | |
$ | 7.35 | | |
| 254,100 | |
| September 2023 | |
$ | 10.20 | | |
$ | 6.90 | | |
| 605,816 | |
| August 2023 | |
$ | 8.28 | | |
$ | 5.91 | | |
| 116,000 | |
| July 2023 | |
$ | 8.77 | | |
$ | 6.26 | | |
| 146,200 | |
| June 2023 | |
$ | 9.25 | | |
$ | 6.60 | | |
| 430,500 | |
| May 2023 | |
$ | 7.27 | | |
$ | 6.02 | | |
| 162,200 | |
Note:
(1)
Source: Yahoo! Finance and The Globe and Mail.
On
May 22, 2024, the last trading day prior to the date of this prospectus supplement, the closing price of the Common Shares on Cboe Canada
was $8.30.
| Nasdaq |
| Month | |
High (US$) | | |
Low (US$) | | |
Trading Volume | |
| May 1 – 22, 2024 | |
$ | 6.87 | | |
$ | 5.59 | | |
| 652,075 | |
| April 8 – 30, 2024 | |
$ | 7.50 | | |
$ | 4.83 | | |
| 1,031,700 | |
Note:
(1)
Source: Yahoo! Finance.
(2)
The Common Shares commenced trading on the Nasdaq on April 8, 2024.
On
May 22, 2024, the last trading day prior to the date of this prospectus supplement, the closing price of the Common Shares on the Nasdaq
was US$6.19.
CERTAIN
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
In
the opinion of DLA Piper (Canada) LLP, Canadian counsel to the Company, and MLT Aikins LLP, Canadian counsel to the Agent, the
following is, as of the date hereof, a general summary of the principal Canadian federal income tax considerations under the Income
Tax Act (Canada) and the regulations thereunder (the “Tax Act”) generally applicable
to a holder who acquires the Offered Shares as beneficial owner pursuant to the Offering and who, at all relevant times, for
purposes of the Tax Act, deals at arm’s length with the Company and the Agent, is not affiliated with the Company or the Agent,
and will acquire and hold such Offered Shares as capital property (each, a “Holder”), all
within the meaning of the Tax Act. Offered Shares will generally be considered to be capital property to a Holder unless the Holder
acquires, holds or uses the Offered Shares or is deemed to acquire, hold or use the Offered Shares in the course of carrying on
a business of trading or dealing in securities or has acquired them or been deemed to have acquired them in one or more transactions
considered to be an adventure or concern in the nature of trade.
This
summary does not apply to a Holder (a) that is a “financial institution” (as defined in the Tax Act)
for purposes of the “mark-to-market property” rules in the Tax Act, (b) an interest in which
is or would constitute a “tax shelter investment” (as defined in the Tax Act), (c) that is a “specified
financial institution” (as defined in the Tax Act), (d) that has elected to report its “Canadian
tax results” for purposes of the Tax Act in a currency other than Canadian currency, (e) that is exempt from
tax under the Tax Act, (f) that has entered into, or will enter into, a “synthetic disposition arrangement”
or a “derivative forward agreement” (as those terms are defined in the Tax Act) with respect
to the Offered Shares, (g) that receives dividends on Common Shares under or as part of a “dividend rental arrangement”
(as defined in the Tax Act), or (h) that is a corporation resident in Canada (for purposes of the Tax Act) or a corporation
that does not deal at arm’s length (for purposes of the Tax Act) with a corporation resident in Canada, and that is or becomes
as part of a transaction or event or series of transactions or events that includes the acquisition of the Common Shares, controlled
by a non-resident person, or group of non-resident persons not dealing with each other at arm’s length, for the purposes of
the foreign affiliate dumping rules in section 212.3 of the Tax Act. Any such Holders should consult their own tax advisors to determine
the particular Canadian federal income tax consequences to them of acquiring Offered Shares pursuant to the Offering.
This
summary does not address the deductibility of interest by a Holder who has borrowed money or otherwise incurred debt in connection
with the acquisition of Offered Shares.
This
summary is based on the facts set out in this prospectus supplement, the current provisions of the Tax Act in force as of the date
hereof, specific proposals to amend the Tax Act which have been announced by or on behalf the Minister of Finance (Canada)
prior to the date hereof (the “Tax Proposals”), and counsel’s understanding of the current published
administrative policies and assessing practices of the Canada Revenue Agency (the “CRA”). This
summary assumes that the Tax Proposals will be enacted in the form proposed and does not take into account or anticipate any
other changes in law or in the administrative policies or assessing practices of the CRA, whether by way of judicial, legislative
or governmental decision or action, nor does it take into account provincial, territorial or foreign income tax legislation
or considerations, which may differ from the Canadian federal income tax considerations discussed herein. No assurances can
be given that the Tax Proposals will be enacted as proposed or at all, or that legislative, judicial or administrative changes
will not modify or change the statements expressed herein.
This
summary is not exhaustive of all possible Canadian federal income tax considerations applicable to an investment in Offered
Shares. This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or income
tax advice to any particular Holder. The tax consequences of acquiring, holding and disposing of Offered Shares will vary according
to the Holder’s particular circumstances. Holders should consult their own income tax advisors with respect to the tax consequences
applicable to them based on their own particular circumstances.
Residents
of Canada
This
portion of the summary is generally applicable to a Holder who, for the purposes of the Tax Act and any applicable tax treaty or convention,
is resident or deemed to be resident in Canada at all relevant times (a “Resident Holder”).
Certain Resident Holders whose Offered Shares might not otherwise qualify as capital property may be entitled to make an irrevocable
election pursuant to subsection 39(4) of the Tax Act to have the Offered Shares, and every other “Canadian
security” (as defined by the Tax Act) owned by such Resident Holder in the taxation year of the election and
in all subsequent taxation years, deemed to be capital property. Resident Holders should consult their own tax advisors for
advice as to whether an election under subsection 39(4) of the Tax Act is available or advisable in their particular circumstances.
Taxation
of Dividends
Dividends
received or deemed to be received on the Offered Shares will be included in computing a Resident Holder’s income.
In the case of a Resident Holder that is an individual (including certain trusts), dividends (including deemed dividends) received
on the Offered Shares will be included in the Resident Holder’s income and be subject to the gross-up and dividend tax
credit rules normally applicable to taxable dividends received by an individual from “taxable Canadian corporations”,
as defined in the Tax Act, including the enhanced gross-up and dividend tax credit for “eligible dividends”
properly designated as such by the Company. There may be limitations on the Company’s ability to designate any particular
dividend as an “eligible dividend” and the Company has made no commitments in this regard.
Dividends
received by a Resident Holder who is an individual (including certain trusts) may result in such Resident Holder being liable for
alternative minimum tax under the Tax Act. Resident Holders who are individuals should consult their own tax advisors in this regard.
In
the case of a Resident Holder that is a corporation, dividends (including deemed dividends) received on the Offered Shares will
be included in the Resident Holder’s income but will normally be deductible in computing such Resident Holder’s taxable
income, subject to all of the rules and restrictions under the Tax Act in that regard. In certain circumstances, subsection 55(2) of
the Tax Act will treat a taxable dividend received by a Resident Holder that is a corporation as proceeds of disposition or
a capital gain. Resident Holders that are corporations should consult their own tax advisors having regard to their own circumstances.
A
Resident Holder that is a “private corporation” or “subject corporation” (as
those terms are defined in the Tax Act) may be liable to pay an additional tax (refundable under certain circumstances)
under Part IV of the Tax Act on dividends received or deemed to be received on the Offered Shares to the extent that such dividends
are deductible in computing the Resident Holder’s taxable income for the year. A “subject corporation” is
generally a corporation (other than a private corporation) resident in Canada and controlled directly or indirectly by or for the
benefit of an individual (other than a trust) or a related group of individuals (other than trusts).
Disposition
of Offered Shares
A
Resident Holder who disposes of, or is deemed to have disposed of, an Offered Share (other than to the Company, unless purchased
by the Company in the open market in the manner in which shares are normally purchased by any member of the public in the open market)
will realize a capital gain (or incur a capital loss) equal to the amount by which the proceeds of disposition in respect of the
Offered Share exceed (or are exceeded by) the aggregate of the adjusted cost base to the Resident Holder of such Offered Share immediately
before the disposition or deemed disposition and any reasonable expenses incurred for the purpose of making the disposition.
The adjusted cost base to a Resident Holder of an Offered Share will be determined by averaging the cost of that Offered Share with
the adjusted cost base of all other Common Shares held as capital property at that time, if any, by the Resident Holder. The tax
treatment of capital gains and capital losses is discussed in greater detail below under the subheading “Residents
of Canada - Taxation of Capital Gains and Capital Losses”.
Taxation
of Capital Gains and Capital Losses
Generally,
one-half of any capital gain (a “taxable capital gain”) realized by a Resident Holder must be
included in the Resident Holder’s income for the taxation year in which the disposition occurs. Subject to and in accordance
with the provisions of the Tax Act, one-half of any capital loss incurred by a Resident Holder (an “allowable
capital loss”) must be deducted from taxable capital gains realized by the Resident Holder in the taxation year
in which the disposition occurs. Allowable capital losses in excess of taxable capital gains for the taxation year of disposition
generally may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent
year against net taxable capital gains realized in such years (but not against other income), in the circumstances and to the extent
provided in the Tax Act.
For
capital gains realized on or after June 25, 2024, Tax Proposals in the Federal Budget released on April 16, 2024 (the “2024
Budget Proposals”) would generally increase the capital gains inclusion rate from one-half to two-thirds for corporations
and trusts, and from one-half to two-thirds for individuals on the portion of capital gains realized, including capital gains
realized indirectly through a trust or partnership, in a taxation year that exceed $250,000. Under the 2024 Budget Proposals,
two-thirds of capital losses realized prior to 2024 will be deductible against capital gains included in income at the two-thirds
inclusion rate such that a capital loss will offset an equivalent capital gain regardless of the inclusion rate. The 2024 Budget
Proposals do not include comprehensive rules (including draft legislation) implementing these changes and state that additional
details related to the change of the capital gains inclusion rate are forthcoming. Holders who may be subject to the increased
inclusion rate for capital gains as a result of the 2024 Budget Proposals should consult their own tax advisors.
A
capital loss realized on the disposition of an Offered Share by a Resident Holder that is a corporation may in certain circumstances
be reduced by the amount of dividends which have been previously received or deemed to have been received by the Resident Holder
on the Offered Share (or a share substituted for such Offered Share). Similar rules may apply where a corporation is, directly or
indirectly through a trust or partnership, a member of a partnership or a beneficiary of a trust that owns Offered Shares. Resident
Holders to whom these rules may be relevant are urged to consult their own tax advisors.
A
Resident Holder that is throughout the relevant taxation year a “Canadian-controlled private corporation”
(as defined in the Tax Act) may be liable to pay an additional refundable tax on its “aggregate investment
income” (as defined in the Tax Act) for the year, which is defined to include an amount in respect of taxable
capital gains. Tax Proposals released on August 9, 2022, are intended to extend this additional tax and refund mechanism in
respect of “aggregate investment income” to “substantive CCPCs” as defined in such Tax Proposals. Resident
Holders are advised to consult their own tax advisors regarding the possible implications of these Tax Proposals in their particular
circumstances.
Capital
gains realized by a Resident Holder who is an individual (including certain trusts) may result in such Resident Holder being liable
for alternative minimum tax under the Tax Act. Resident Holders who are individuals should consult their own tax advisors in this
regard.
Non-Residents
of Canada
The
following portion of this summary is generally applicable to a Holder who, for purposes of the Tax Act and any applicable tax treaty
or convention and at all relevant times, is neither resident nor deemed to be resident in Canada and does not acquire, use or hold,
and will not be deemed to acquire, use or hold, Offered Shares in the course of carrying on, or otherwise in connection with, a
business in Canada (a “Non-Resident Holder”).
Special
considerations, which are not discussed in this summary, may apply to a Non-Resident Holder that is an insurer that is carrying
on an insurance business in Canada and elsewhere or that is an “authorized foreign bank” (as defined in the Tax
Act). Such Non-Resident Holders should consult their own advisors.
Taxation
of Dividends
Dividends
paid or credited, or deemed to be paid or credited, to a Non-Resident Holder on the Offered Shares will be subject to Canadian withholding
tax under the Tax Act at the rate of 25% of the gross amount of the dividend unless reduced by the terms of an applicable tax
treaty or convention between Canada and the country in which the Non-Resident Holder is resident. For example, under the Canada-United
States Tax Convention (1980) as amended (the “Treaty”), the rate of withholding tax on dividends paid or
credited to a Non-Resident Holder who is resident in the U.S. for purposes of the Treaty, is the beneficial owner of the dividends,
and is entitled to full benefits under the Treaty (a “U.S. Holder”) is generally reduced to 15% of the gross
amount of the dividend (or 5% in the case of a U.S. Holder that is a company beneficially owning at least 10% of the Company’s
voting shares). Non-Resident Holders should consult their own tax advisors in this regard.
Disposition
of Offered Shares
A
Non-Resident Holder will not be subject to tax under the Tax Act in respect of any capital gain realized by such Non-Resident Holder
on a disposition or deemed disposition of Offered Shares, nor will capital losses arising therefrom be recognized under the Tax Act,
unless the Offered Shares constitute “taxable Canadian property” (as defined in the Tax Act)
of the Non-Resident Holder at the time of the disposition and the Non-Resident Holder is not entitled to an exemption pursuant to
the terms of an applicable tax treaty or convention between Canada and the country in which the Non-Resident Holder is resident.
Provided
the Offered Shares are listed on a “designated stock exchange” (as defined in the Tax Act) (which
currently includes Cboe Canada and Nasdaq) at the time of the disposition, the Offered Shares will not constitute taxable Canadian
property of a Non-Resident Holder at that time, unless at any time during the 60-month period immediately preceding the disposition
the following two conditions are met concurrently: (a) the Non-Resident Holder, persons with whom the Non-Resident Holder does not
deal at arm’s length, partnerships whose members include, either directly or indirectly through one or more partnerships,
the Non-Resident Holder or persons who do not deal at arm’s length with the Non-Resident Holder, or any combination of them,
owned 25% or more of the issued shares of any class or series of shares of the capital stock of the Company; and (b) more
than 50% of the fair market value of the Offered Shares was derived directly or indirectly from one or any combination of real or
immovable property situated in Canada, “Canadian resource properties” (as defined in the Tax Act), “timber
resource properties” (as defined in the Tax Act), and options in respect of or interests in, or for civil law rights
in, any such property (whether or not such property exists).
Notwithstanding
the foregoing, an Offered Share may otherwise be deemed to be taxable Canadian property to a Non-Resident Holder for purposes of
the Tax Act in particular circumstances.
If
Offered Shares are taxable Canadian property (or deemed to be taxable Canadian property) of a Non-Resident Holder and the Non-Resident
Holder is not entitled to an exemption pursuant to the terms of an applicable tax treaty or convention, the consequences above
under “Residents of Canada — Disposition of Offered Shares” and “Residents
of Canada — Taxation of Capital Gains and Capital Losses” will generally apply.
Non-Resident
Holders whose Offered Shares are taxable Canadian property should consult their own advisors.
CERTAIN
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The
following is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below)
arising from and relating to the acquisition, ownership, and disposition of Offered Shares, that was prepared by Hodgson Russ LLP,
counsel to the Company with respect to U.S. federal income tax matters.
This
summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal
income tax considerations that may apply to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition
of Offered Shares. In addition, this summary does not take into account the individual facts and circumstances of any particular
U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including, without limitation, specific
tax consequences to a U.S. Holder under an applicable income tax treaty. Accordingly, this summary is not intended to be, and should
not be construed as. legal or U.S. federal income tax advice with respect to any U.S. Holder. Except as set forth below, this summary
does not address the U.S. federal net investment income. U.S. federal alternative minimum. U.S. federal estate and gift. U.S. state and
local, and non-U.S. tax consequences to U.S. Holders of the acquisition, ownership, and disposition of Offered Shares, nor any applicable
tax reporting requirements. Each prospective U.S. Holder should consult their own tax advisors regarding the U.S. federal. U.S. federal
net investment income. U.S. federal alternative minimum. U.S. federal estate and gift. U.S. state and local. and non-U.S. tax consequences
and tax reporting requirements relating to the acquisition. ownership. and disposition of Offered Shares.
No
legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested,
or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of Offered
Shares. This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from. and
contrary to, the positions taken in this summary. In addition, because the authorities on which this summary are based are subject
to various interpretations, the IRS and the U.S. courts could disagree with one or more of the conclusions described in this summary.
Scope
of this Summary
Authorities
This
summary is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”). Treasury Regulations (whether
final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, the Treaty, and U.S.
court decisions that are applicable, and, in each case, as in effect and available, as of the date of this prospectus supplement.
Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such
change could be applied retroactively or prospectively. This summary does not discuss the potential effects, whether adverse or
beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.
U.S.
Holders
For
purposes of this summary, the term “U.S. Holder” means a beneficial owner of Offered Shares that is for U.S. federal
income tax purposes:
| |
● |
an
individual who is a citizen or resident of the United States; |
| |
● |
a
corporation (or other entity treated as a corporation for U.S. federal income tax purposes) organized in or under the laws of the
United States, any state thereof or the District of Columbia. |
| |
● |
an
estate whose income is subject to U.S. federal income taxation regardless of its source; or |
| |
● |
a
trust that (1) is subject to the primary supervision of a court within the United States and is under the control of one or more
U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury Regulations to be
treated as a U.S. person. |
Non-U.S.
Holders
For
purposes of this summary, a “non-U.S. Holder” is a beneficial owner of Offered Shares that is not a U.S. Holder. This
summary does not address the U.S. federal income tax consequences applicable to non-U.S. Holders. Accordingly, a non-U.S. Holder
should consult its own tax advisor regarding the tax consequences (including the potential application of and operation of any income
tax treaties) related to the acquisition, ownership and disposition of Offered Shares.
U.S.
Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed
This
summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions
under the Code, including, but not limited to, U.S. Holders that: (a) are tax-exempt organizations, qualified retirement plans, individual
retirement accounts, or other tax-deferred accounts; (b) are financial institutions, underwriters, insurance companies, real estate investment
trusts, or regulated investment companies; (c) are broker-dealers, dealers, or traders in securities or currencies that elect to apply
a mark-to-market accounting method; (d) have a “functional currency” other than the U.S. dollar; (e) own Offered Shares as
part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one
position; (f) acquire Offered Shares in connection with the exercise of employee stock options or otherwise as compensation for
services; (g) hold Offered Shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property
held for investment purposes); (h) are required to accelerate the recognition of any item of gross income with respect to Offered
Shares as a result of such income being recognized on an applicable financial statement; or (i) own, have owned or will own (directly,
indirectly, or by attribution) 10% or more of the total combined voting power or value of the outstanding shares of the Company.
This
summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are: (a) U.S. expatriates or
former long-term residents of the U.S.; (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for
purposes of the Tax Act; (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold the Offered
Shares in connection with carrying on a business in Canada; (d) persons whose Offered Shares constitute “taxable Canadian
property” under the Tax Act or (e) persons that have a permanent establishment in Canada for the purposes of the Treaty and
that use or hold Offered Shares in connection with such permanent establishment.
U.S.
Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders described immediately above,
should consult their own tax advisors regarding the U.S. federal, U.S. federal net investment income, U.S. federal alternative minimum,
U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences relating to the acquisition, ownership and disposition
of Offered Shares.
If
an entity or arrangement that is classified as a partnership (or other “pass-through” entity) for U.S. federal income tax
purposes holds Offered Shares, the U.S. federal income tax consequences to such entity and the partners (or other owners) of such
entity generally will depend on the activities of the entity and the status of such partners (or owners). This summary does not
address the tax consequences to any such partner (or owner). Partners (or other owners) of entities or arrangements that are classified
as partnerships or as “pass-through” entities for U.S. federal income tax purposes should consult their own tax advisors
regarding the U.S. federal income tax consequences arising from and relating to the acquisition, ownership, and disposition of Offered
Shares.
In
addition, this summary assumes that the Company is not a “controlled foreign corporation” for U.S. federal income tax purposes.
THIS
DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. PROSPECTIVE U.S. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE, LOCAL,
AND NON-U.S. TAX CONSEQUENCES AND REPORTING REQUIREMENTS TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OFFERED SHARES.
Ownership
and Disposition of Offered Shares (Assuming the Company is not a PFIC)
The
following discussion is subject in its entirety to the rules described below under the heading “Passive Foreign Investment Company
Rules”.
Distributions
on Offered Shares
A
U.S. Holder that receives a distribution, including a constructive distribution, with respect to an Offered Share will be required to
include the amount of such distribution in gross income as a dividend (without reduction for any foreign income tax withheld from
such distribution) to the extent of the current or accumulated “earnings and profits” of the Company, as computed for
U.S. federal income tax purposes. To the extent that a distribution exceeds the current and accumulated “earnings and profits”
of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder’s tax
basis in the Offered Shares and thereafter as gain from the sale or exchange of such Offered Shares (see “Sale or Other
Taxable Disposition of Offered Shares” below). However, the Company may not maintain the calculations of its earnings
and profits in accordance with U.S. federal income tax principles, and each U.S. Holder may have to assume that any distribution
by the Company with respect to the Offered Shares will constitute dividend income. Dividends received on Offered Shares by corporate
U.S. Holders generally will not be eligible for the “dividends received deduction”. Subject to applicable limitations
and provided the Company is eligible for the benefits of the Treaty or the Offered Shares are readily tradable on a United States
securities market, dividends paid by the Company to non-corporate U.S. Holders, including individuals, generally will be eligible
for the preferential tax rates applicable to qualified dividends, provided certain holding period and other conditions are satisfied,
including that the Company not be classified as a PFIC in the tax year of distribution or in the preceding tax year.
For
U.S. federal income tax purposes, U.S. Holders will be treated as having received the amount of any Canadian taxes withheld by the Company,
and as then having paid over the withheld taxes to the Canadian taxing authorities. As a result of this rule, the amount of dividend
income included in gross income for U.S. federal income tax purposes by a U.S. Holder with respect to a payment of dividends may
be greater than the amount of cash actually received (or receivable) by the U.S. Holder from the Company with respect to the payment.
The
dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.
Sale
or Other Taxable Disposition of Offered Shares
A
U.S. Holder will recognize gain or loss on the sale or other taxable disposition of Offered Shares in an amount equal to the difference,
if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. Holder’s tax
basis in such Offered Shares sold or otherwise disposed of. Any such gain or loss generally will be capital gain or loss, which
will be long-term capital gain or loss if, at the time of the sale or other disposition, such Offered Shares are held for more than
one year. If the consideration a U.S. Holder receives for the Offered Shares is not paid in U.S. dollars, the amount realized will
be determined using the rules described under “Additional Considerations — Use of Foreign Currency to Acquire Offered
Shares or Receipt of Foreign Currency”. A U.S. Holder’s tax basis in its Offered Shares generally will equal the
U.S. dollar cost of such Offered Shares. If a U.S. Holder uses foreign currency to acquire Offered Shares, the cost of the Offered
Shares will be determined using the rules described under ”Additional Considerations — Use of Foreign Currency
to Acquire Offered Shares or Receipt of Foreign Currency”.
Preferential
tax rates apply to long-term capital gains of a U.S. Holder that is an individual, estate, or trust. There are currently no preferential
tax rates for long-term capital gains of a U.S. Holder that is a corporation. Deductions for capital losses are subject to significant
limitations under the Code.
Passive
Foreign Investment Company Rules
U.S.
Holders generally would be subject to a special, adverse tax regime that would differ in certain respects from the tax treatment described
above if the Company is, or were to become, a PFIC for U.S. federal income tax purposes. The determination as to whether a non-U.S.
corporation is a PFIC is based on the application of complex U.S. federal income tax rules, which are subject to differing interpretations,
and on many factors that can change from time to time. The general rule is that the Company would be a PFIC if, for a tax year,
(a) 75% or more of its gross income for such tax year is passive income or (b) 50% or more of the value of its gross assets either
produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such
assets. “Gross income” generally includes all sales revenues less the cost of goods sold, plus income from investments and
from incidental or outside operations or sources, and “passive income” generally includes dividends, interest, certain
rents and royalties, and certain types of gains (such as from the sale of stock and securities). For purposes of determining whether
the Company is a PFIC, the Company will be treated as holding its proportionate share of the assets and receiving directly its proportionate
share of the income of any other corporation in which it owns, directly or indirectly, 25% or more (by value) of the stock of such
other corporation. If the Company owns less than a 25% interest by value in another non-U.S. corporation, it is possible such other
corporation could also be considered a PFIC with respect to a U.S. Holder of Offered Shares.
The
Company has not made any determination of its PFIC status for the current year. The Company also has not made a PFIC determination
for any prior taxable year. Therefore, there is no assurance that the Company has not been a PFIC in prior taxable years, nor that
the Company will not be a PFIC in its current taxable year or become a PFIC in any future taxable year. No opinion is expressed
with respect to the Company’s PFIC status for prior, current or future taxable years. If the Company is or becomes a PFIC with
respect to a particular U.S. Holder, it will always be considered a PFIC with respect to such U.S. Holder even if the Company may not
otherwise qualify as a PFIC in future years.
If
the Company is a PFIC with respect to a U.S. Holder, and the U.S. Holder does not make either of the elections described below, gain
from the disposition of Offered Shares and certain distributions classified as “excess distributions” (generally, those
that are in excess of 125% of the average amount of distributions in the three prior tax years) would be subject to ordinary
income treatment and allocated ratably to days in a U.S. Holder’s holding period in computing the U.S. Holder’s tax
liability. The amounts allocated to the taxable year during which the gain is realized or excess distribution is made, and to any
taxable years in such U.S. Holder’s holding period that are before the first taxable year in which the Company is treated
as a PFIC with respect to that U.S. Holder, would be included in the U.S. Holder’s gross income as ordinary income for the
taxable year of the gain or excess distribution. The amount allocated to each other taxable year would be taxed as ordinary income
in the taxable year during which the gain is realized or excess distribution is made at the highest tax rate in effect for the U.S.
Holder in that other taxable year and would be subject to an interest charge as if the income tax liabilities had been due with
respect to each such prior year. Under proposed Treasury Regulations, gifts, exchanges pursuant to corporate reorganizations and
pledging or use of Offered Shares as security for a loan would be treated as a taxable disposition of such Offered Shares and subject
to the foregoing tax treatment.
If
the Company is a PFIC the U.S. Holder may be able to mitigate the adverse tax effects of the PFIC rules described above if the U.S. Holder
makes a “qualified electing fund” (“QEF”) or a “mark-to-market” election with respect to its
Offered Shares. If a U.S. Holder makes a timely QEF election for the first tax year in which its holding period of its Offered Shares
begins, such U.S. Holder generally will not be subject to the PFIC rules described above with respect to such Offered Shares. However,
under the QEF regime, in each taxable year that the Company is considered a PFIC the U.S. Holder must include in gross income (i)
as ordinary income, the U.S. Holder’s pro rata share of the ordinary earnings of the Company and (ii) as capital gain, the
U.S. Holder’s pro rata share of the net capital gain of the Company, regardless of whether the Company makes a distribution
on the Offered Shares. Distributions of income that had previously been taxed under the QEF regime will not be taxed again when
such distributions are made to the U.S. Holder. Subject to certain restrictions, a U.S. Holder may elect to defer payment of current
U.S. federal income tax on such amounts included in income under the QEF regime, but a non-deductible interest charge would be applied.
Under the QEF rules, the electing U.S. Holder must supply certain information to the IRS that the U.S. Holder would need to obtain
from the Company. A U.S. Holder should be aware that there can be no assurances that the Company will satisfy the record keeping
requirements that apply to a QEF, or that the Company will supply U.S. Holders with the information necessary to make a QEF election
with respect to the Company or any subsidiary that also is classified as a PFIC. As a result, there can be no assurances that U.S.
Holders will be able to make a QEF election.
If
the Company is a PFIC, a U.S. Holder may make a “mark-to-market” election as an alternative to a QEF election, as long as
the Offered Shares are treated as regularly traded on a qualified exchange or other market within the meaning of the applicable
Treasury Regulations. The consequence of a mark-to-market election is that a U.S. Holder must include in his gross income, as ordinary
income, an amount equal to the excess, if any, of the fair market value of the U.S. Holder’s Offered Shares at the close of
the taxable year over the U.S. Holder’s adjusted tax basis in the Offered Shares. If the fair market value of the U.S. Holder’s
Offered Shares at the end of the taxable year is less than the adjusted tax basis of the U.S. Holder in the Offered Shares, an ordinary
loss deduction may be claimed, but only to the extent of any mark-to-market gains previously included in income. The U.S. Holder’s
tax basis in the Offered Shares will be adjusted to reflect such inclusions or deductions. Gain or loss on disposition of the Offered
Shares will be ordinary income or loss.
During
any taxable year in which the Company or any of its subsidiaries is treated as a PFIC with respect to a U.S. Holder, that U.S. Holder
may be required to file IRS Form 8621 (“Information Return by a Shareholder of a Passive Foreign Investment Company or qualified
Electing Fund”).
A
U.S. Holder should consult their own tax advisor regarding the potential applicability of the PFIC rules to an investment in the Offered
Shares, as well as the potential availability, and advisability, of making a QEF election (including on a protective basis) or a mark-to-market
election, and any applicable U.S. reporting obligations.
Additional
Considerations
Additional
Tax on Passive Income
Certain
individuals, estates and trusts whose income exceeds certain thresholds will be required to pay a 3.8% Medicare surtax on “net
investment income” including, among other things, dividends and net gain from disposition of property (other than property
held in certain trades or businesses). U.S. Holders should consult their own tax advisors regarding the application, if any, of
this tax on their ownership and disposition of Offered Shares.
Use
of Foreign Currency to Acquire Offered Shares
A
U.S. Holder’s tax basis in its Offered Shares generally will equal the U.S. dollar cost of such Offered Shares. If a U.S. Holder
uses foreign currency to purchase Offered Shares, the cost of the Offered Shares will be the U.S. dollar value of the foreign currency
purchase price determined by reference to the spot rate of exchange on the date of purchase. However, if the Offered Shares are
treated as traded on an established securities market and the U.S. Holder is either a cash basis taxpayer or an accrual basis taxpayer
who has made a special election (which must be applied consistently from year to year and cannot be changed without the consent
of the IRS), such U.S. Holder will determine the U.S. dollar value of the cost of such Offered Shares by translating the amount
paid at the spot rate of exchange on the settlement date of the purchase.
The
amount of any distribution paid to a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of Offered
Shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date
of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time). However, in the case of sale,
exchange, or other taxable disposition of Offered Shares, if the Offered Shares are treated as traded on an “established securities
market” and the U.S. Holder is either a cash basis taxpayer or an accrual basis taxpayer that has made a special election
(which must be applied consistently from year to year and cannot be changed without the consent of the IRS), such U.S. Holder will
determine the U.S. dollar value of the amount realized in a foreign currency by translating the amount received at the spot rate of exchange
on the settlement date of the sale.
A
U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. Holder who converts
or otherwise disposes of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would
be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes. Different rules
apply to U.S. Holders who use the accrual method of tax accounting. Each U.S. Holder should consult its own U.S. tax advisor regarding
the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.
Foreign
Tax Credit
Subject
to the PFIC rules discussed above, a U.S. Holder that pays (whether directly or through withholding) Canadian income tax with respect
to dividends paid on the Offered Shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction
or a credit for such Canadian income tax. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability
on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income that is subject to U.S. federal income
tax. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding)
by a U.S. Holder during a year. The foreign tax credit rules are complex and involve the application of rules that depend on a U.S.
Holder’s particular circumstances. Accordingly, each U.S. Holder should consult its own U.S. tax advisor regarding the foreign
tax credit rules.
Backup
Withholding and Information Reporting
Under
U.S. federal income tax law and Treasury Regulations, certain categories of U.S. Holders must file information returns with respect to
their investment in, or involvement in, a foreign corporation. For example, there may be a requirement to file an IRS Form 8938
(“Statement of Specified Foreign Financial Assets”), with a U.S. Holder’s U.S. tax return, under special
rules that impose U.S. return disclosure obligations (and related penalties) on individuals who are U.S. Holders that hold certain
specified foreign financial assets in excess of certain threshold amounts. The definition of specified foreign financial assets
includes not only financial accounts maintained in foreign financial institutions, but also may include assets such as the Offered
Shares. Other IRS information reporting on various IRS Forms may also be required with respect to a U.S. Holder. Penalties for failure
to file required information returns are substantial. U.S. Holders should consult their own tax advisors regarding the requirements
of filing information returns.
Payments
made within the U.S. or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition
of, Offered Shares will generally be subject to information reporting and backup withholding tax (currently at a rate of 24%) if
a U.S. Holder (a) fails to furnish such U.S. Holder’s correct U.S. taxpayer identification number (generally on Form W-9),
(b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously
failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such
U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it
is subject to backup withholding tax. However, certain exempt persons generally are excluded from these information reporting and
backup withholding rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding tax rules
will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such
U.S. Holder furnishes required information to the IRS in a timely manner.
During
any taxable year in which the Company or any of its subsidiaries is treated as a PFIC with respect to a particular U.S. Holder, that
U.S. Holder generally may have additional U.S. reporting requirements, as described above under “Passive Foreign Investment
Company Rules”.
The
discussion of reporting requirements set forth above is not intended to constitute a complete description of all reporting requirements
that may apply to a U.S. Holder. A failure to satisfy certain reporting requirements may result in an extension of the time period
during which the IRS can assess a tax, and under certain circumstances, such an extension may apply to assessments of amounts unrelated
to any unsatisfied reporting requirement. Each U.S. Holder should consult its own tax advisor regarding the information reporting
and backup withholding rules.
The
above summary is not intended to constitute a complete analysis of all tax considerations applicable to U.S. Holders with respect to
the acquisition, ownership, and disposition of Offered Shares. U.S. Holders should consult their own tax advisors as to the tax
considerations applicable to them in their own particular circumstances.
AGENT
FOR SERVICE OF PROCESS
Paul
Pasalic and Chelsea L. Nickles, each a director of the Company, reside outside of Canada and have appointed DLA Piper (Canada) LLP, Suite
2700, 1133 Melville St, Vancouver, British Columbia, V6E 4E5, Canada, as agent for service of process in Canada.
Purchasers
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.
LEGAL
MATTERS
Certain
Canadian legal matters relating to the Offering hereby will be passed upon on behalf of the Company by DLA Piper (Canada) LLP, and on
behalf of the Agent by MLT Aikins LLP.
As
of the date of this prospectus supplement, the designated professionals (as such terms is defined in item 16.2(1.1) of Form 51-102F2
– Annual Information Form of NI 51-102) of each of DLA Piper (Canada) LLP and MLT Aikins LLP, as a group, beneficially own,
directly or indirectly, less than 1% of the Company’s outstanding securities.
Certain
legal matters relating to United States law will be passed upon on behalf of the Company by Hodgson Russ LLP and on behalf of the U.S.
Agent by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
INTEREST
OF EXPERTS
The
Company’s external auditor, ZH CPA, LLC, confirmed that it is independent of each of the Company, Solar Flow-Through, and the Predecessor
LPs within the meaning of the rules of professional conduct of the Colorado State Board of Accountancy and the Public Company Accounting
Oversight Board. The Company’s former external auditor, MSLL CPA LLP, Chartered Professional Accountants, confirmed that it was
independent of the Company, Solar Flow-Through, and the Predecessor LPs within the meaning of the rules of professional conduct of the
Chartered Professional Accountants of British Columbia until April 25, 2024.
Grant
Thornton LLP, the external auditor of both Solar Flow-Through and the Predecessor LPs, has confirmed that it is independent of the Company,
Solar Flow-Through, and the Predecessor LPs within the meaning of the rules of professional conduct of the Chartered Professional Accountants
of British Columbia.
As
of the date of this prospectus supplement, ZH CPA, LLC, MSLL CPA LLP, Chartered Professional Accountants, and Grant Thornton LLP, each,
beneficially own, directly or indirectly, less than 1% of the Company or Solar Flow-Through’s outstanding securities.
Evans
& Evans is named herein, and in certain documents incorporated by reference herein, as providing the fairness opinion regarding the
Acquisition and a valuation in respect of SFF and its assets. As at the date of this prospectus supplement, the “designated professionals”
of Evans & Evans beneficially own, directly and indirectly, less than 1% of the Company’s outstanding securities.
AUDITORS,
REGISTRAR AND TRANSFER AGENT
ZH
CPA LLP is the external auditor of the Company at its principal offices located at 999 18th Street, Suite 3000, Denver, Colorado,
U.S.A.
MSLL
CPA LLP, Chartered Professional Accountants, is the former external auditor of the Company at its principal offices located at 2110-1177
West Hastings Street, Vancouver, British Columbia, Canada.
Grant
Thornton LLP is the external auditor of Solar Flow-Through and the Predecessor LPs at its principal offices located at 333 Seymour Street,
Suite 1600, Vancouver, British Columbia, Canada.
The
registrar and transfer agent for the Common Shares is Endeavor Trust Corporation at its principal offices in Vancouver, British Columbia.
PROMOTERS
Except
for Dr. Richard Lu, the Chief Executive Officer of the Company, no person or company has, within the two years immediately preceding
the date of this prospectus supplement, been a promoter of the Company, within the meaning of applicable securities laws. Dr. Lu holds,
directly and indirectly, 803,146 Common Shares representing 2.95% of the issued and outstanding Common Shares and 550,000 stock options
to acquire Common Shares at an exercise price of $0.75 per Common Share and expiring on November 4, 2027.
Other
than as disclosed in this section or elsewhere in this prospectus supplement, including the prospectus and any documents incorporated
by reference therein or herein, no person who was a Promoter of the Company within the last two years:
| ● |
received
anything of value directly or indirectly from the Company or a subsidiary; |
| ● |
sold
or otherwise transferred any asset to the Company or a subsidiary within the last two years; |
| ● |
has
been a director, chief executive officer or chief financial officer of any company that during the past 10 years was the subject
of a cease trade order or similar order or an order that denied the company access to any exemptions under securities legislation
for a period of more than 30 consecutive days or became bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver or receiver
manager or trustee appointed to hold its assets; |
| ● |
has
been subject to any penalties or sanctions imposed by a court relating to Canadian securities legislation or by a Canadian securities
regulatory authority or has entered into a settlement agreement with a Canadian securities regulatory authority; |
| ● |
has
been subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important
to a reasonable investor making an investment decision; or |
| ● |
has
within the past 10 years become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or been subject
to or instituted any proceedings, arrangement or compromise with creditors or had a receiver or receiver manager or trustee appointed
to hold its assets. |
ELIGIBILITY
FOR INVESTMENT
In
the opinion of DLA Piper (Canada) LLP, counsel to the Company, and MLT Aikins LLP, counsel to the Agent, based on the current
provisions of the Tax Act in force as of the date hereof, the Offered Shares, if issued on the date hereof, would be “qualified
investments” under the Tax Act for trusts governed by a “registered retirement savings plan”, “registered
retirement income fund”, “tax-free savings account”, “first home savings account”, “registered
education savings plan”, “registered disability savings plan” (collectively referred to as “Registered
Plans”) and a “deferred profit sharing plan”, provided that the Offered Shares are listed on a “designated
stock exchange” (as defined in the Tax Act) (which currently includes Cboe Canada and Nasdaq) or the Company is otherwise
a “public corporation” (as defined in the Tax Act).
Notwithstanding
that an Offered Share may be a qualified investment for a Registered Plan, if the Offered Share is a “prohibited investment”
within the meaning of the Tax Act for the Registered Plan, the holder, annuitant or subscriber of the Registered Plan, as the case
may be, will be subject to penalty taxes as set out in the Tax Act. The Offered Shares will not generally be a “prohibited
investment” for a Registered Plan if the holder, annuitant or subscriber, as the case may be, (i) deals at arm’s
length with the Company for the purposes of the Tax Act, and (ii) does not have a “significant interest” (as defined
in the Tax Act) in the Company. In addition, the Offered Shares will not be a “prohibited investment” if the Offered
Shares are “excluded property” (as defined in the Tax Act) for the Registered Plan.
Prospective
purchasers of Offered Shares who intend to hold such Offered Shares in a Registered Plan are urged to consult their own tax advisors
to ensure the Offered Shares would not be a prohibited investment, including whether the Offered Shares would be excluded property,
in their particular circumstances.
STATUTORY
EXEMPTIONS
Pursuant
to a decision of the Autorité des marchés financiers dated March 16, 2023, the Company was granted a permanent exemption
from the requirement to translate into French the prospectus as well as the documents incorporated by reference therein and any
prospectus supplement in connection therewith to be filed in relation to an “at-the-market distribution”. This exemption
was granted on the condition that the prospectus and any prospectus supplement (other than in relation to an “at-the-market
distribution”) be translated into French if the Company offers Securities to Québec purchasers in connection with an
offering other than in relation to an “at-the-market distribution”.
PURCHASERS’
STATUTORY RIGHTS
The
following is a description of a purchaser’s statutory rights in connection with any purchase of Offered Shares pursuant to the
Offering, which supersedes and replaces the statement of purchasers’ rights in the prospectus under the heading “Purchaser’s
Statutory Rights” solely with regard to the Offering.
Securities
legislation in some provinces of Canada provides purchasers of securities with the right to withdraw from an agreement to purchase securities
and with remedies for rescission or, in some jurisdictions, revisions of the price, or damages if the prospectus, prospectus supplement
and any amendment relating to securities purchased by a purchaser are not sent or delivered to the purchaser. However, purchasers of
Offered Shares distributed under an at-the-market distribution by the Company do not have the right to withdraw from an agreement to
purchase the Offered Shares and do not have remedies of rescission or, in some jurisdictions, revisions of the price, or damages for
non-delivery of the prospectus, prospectus supplement and any amendment relating to the Offered Shares purchased by such purchaser because
the prospectus, prospectus supplement and any amendment relating to the Offered Shares purchased by such purchaser will not be sent or
delivered, as permitted under Part 9 of NI 44-102.
Securities
legislation in some provinces of Canada further provides purchasers with remedies for rescission or, in some jurisdictions, revisions
of the price or damages if the prospectus, prospectus supplement and any amendment relating to securities purchased by a purchaser contains
a misrepresentation. Those remedies must be exercised by the purchaser within the time limit prescribed by securities legislation. Any
remedies under securities legislation that a purchaser of Offered Shares distributed under an at-the-market distribution by the Company
may have against the Company or the Agent for rescission or, in some jurisdictions, revisions of the price, or damages if the prospectus,
prospectus supplement and any amendment relating to securities purchased by a purchaser contain a misrepresentation will remain unaffected
by the non-delivery of the prospectus referred to above.
A
purchaser should refer to applicable securities legislation for the particulars of these rights and should consult a legal adviser.
ADDITIONAL
INFORMATION
The
Company is subject to certain informational requirements of the U.S. Exchange Act, in addition to applicable Canadian requirements. Consequently,
the Company files reports and other information with the SEC, in addition to securities regulatory authorities in Canada. Under
MJDS, documents and other information that the Company files with the SEC may be prepared in accordance with the disclosure requirements
of Canada, which are different from those of the United States. As a foreign private issuer, the Company is exempt from the rules
under the U.S. Exchange Act prescribing the furnishing and content of proxy statements, and the Company’s officers, directors
and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the
U.S. Exchange Act.
The
reports and other information filed by the Company with, or furnished to, the SEC may be accessed on the SEC’s website at
www.sec.gov. Copies of reports, statements and other information that the Company files with Canadian securities regulatory authorities
are available electronically on the Company’s profile on SEDAR+ at www.sedarplus.ca.
INDEX
TO FINANCIAL STATEMENTS
SEE
ATTACHED
INDEX
TO FINANCIAL STATEMENTS
The
following financial statements are incorporated by reference into this prospectus supplement:
| |
1. |
Audited Combined Special Purpose Financial Statements for Solar Flow-Through Limited Partnership for the financial years ended December 31, 2022 and 2021. |
| |
|
|
| |
2. |
Audited Combined Consolidated Financial Statements for SFF from January 1, 2023 to the SFF Consolidation Date (October 23, 2023) and for the year ended December 31, 2022. |
| |
|
|
| |
3. |
Audited Consolidated Financial Statements for SFF from August 11, 2023 (the date of incorporation) to December 31, 2023. |
| |
|
|
| |
4. |
Unaudited Condensed Interim Consolidated Financial Statements for SFF for the three months ended March 31, 2024. |
| |
|
|
| |
5. |
Unaudited Pro Forma Consolidated Statement of Financial Position for the Company as at March 31, 2024 and the Pro Forma Consolidated Statements of Income and Comprehensive Income for the Company for the nine months ended March 31, 2024 and the year ended June 30, 2023. |
No
securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form
base shelf prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered
for sale and only by persons permitted to sell these securities.
Information
has been incorporated by reference in this short form base shelf prospectus from documents filed with securities commissions or similar
authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request, without charge
from the Corporate Secretary of SolarBank Corporation at Suite 501, 543 Granville Street, Vancouver, British Columbia, Canada V6C 1X8,
telephone (604) 696-4241, and are also available electronically at www.sedar.com.
short
form base shelf prospectus
| NEW
ISSUE AND/OR SECONDARY OFFERING |
May
2, 2023 |
SOLARBANK
CORPORATION
C$200,000,000
Common
Shares
Debt
Securities
Warrants
Subscription
Receipts
Share
Purchase Contracts
Units
SolarBank
Corporation (the “Company” or “SolarBank”) may offer (the “Offerings”) and sell,
from time to time, common shares of the Company (the “Common Shares”), debt securities (“Debt Securities”),
warrants to purchase securities (“Warrants”), subscription receipts (“Subscription Receipts”),
share purchase contracts (“Share Purchase Contracts”), or any combination of such securities (“Units”)
(all of the foregoing, collectively, the “Securities”) up to an aggregate initial offering price of C$200,000,000
(or the equivalent thereof, at the date of issue, in any other currency or currencies, as the case may be) at any time during the 25-month
period that this short form base shelf prospectus (including any amendments hereto) (the “Prospectus”), remains effective.
The Securities may be sold by the Company or certain of the Company’s security holders (“Selling Securityholders”
and each, a “Selling Securityholder”). Securities offered hereby may be offered separately or together, in separate
series, in amounts, at prices and on terms to be determined based on market conditions at the time of sale, including potentially by
way of an “at-the-market distribution” (as defined under applicable Canadian securities legislation), and set forth in one
or more prospectus supplements (collectively or individually, as the case may be, “Prospectus Supplements”). In addition,
Securities may be offered and issued in consideration for the acquisition of other businesses, assets or securities by the Company or
one of its subsidiaries. The consideration for any such acquisition may consist of any of the Securities separately, a combination of
Securities or any combination of, among other things, Securities, cash and assumption of liabilities.
The
Securities may be sold from time to time in one or more transactions at a fixed price or prices which may be changed or at market prices
prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The prices at which the Securities
may be offered and sold may vary as between purchasers and during the period of distribution. If, in connection with the offering of
Securities at a fixed price or prices, the underwriters have made a bona fide effort to sell all of the Securities at the initial offering
price fixed in the applicable Prospectus Supplement, the public offering price may be decreased and thereafter further changed, from
time to time, to an amount not greater than the initial offering price fixed in such Prospectus Supplement, in which case the compensation
realized by the underwriters will be decreased by the amount that the aggregate price paid by purchasers for the Securities is less than
the gross proceeds paid by the underwriters to the Company or any Selling Securityholder. See “Plan of Distribution”.
The
specific terms of the Securities with respect to a particular Offering will be set out in the applicable Prospectus Supplement and
may include, where applicable (i) in the case of Common Shares, the number of Common Shares offered, the offering price, whether
the Common Shares are being offered for cash, and any other terms specific to the Common Shares being offered, (ii) in the case
of Debt Securities, the specific designation, the aggregate principal amount, the currency or the currency unit for which the Debt
Securities may be purchased, the maturity, the interest provisions, the authorized denominations, the offering price, where the
Debt Securities are being offered for cash, the covenants, the events of default, any terms for redemption or retraction, any exchange
or conversion rights attached to the Debt Securities and any other terms specific to the Debt Securities being offered, (iii) in
the case of Warrants, the number of such Warrants offered, the offering price, whether the Warrants are being offered for cash,
the designation, the number and the terms of the Common Shares or Debt Securities purchasable upon exercise of the Warrants, any
procedures that will result in the adjustment of these numbers, the exercise price, the dates and periods of exercise, the currency
in which the Warrants are issued and any other terms specific to the Warrants being offered, (iv) in the case of Subscription Receipts,
the number of Subscription Receipts being offered, the offering price, whether the Subscription Receipts are being offered for cash,
the procedures for the exchange of the Subscription Receipts for Common Shares, Debt Securities or Warrants, as the case may be,
and any other terms specific to the Subscription Receipts being offered, (v) in the case of Share Purchase Contracts, the number and
terms of the Common Shares subject to such contracts, and (vi) in the case of Units, the designation, number and terms of the Common
Shares, Warrants, Subscription Receipts, Share Purchase Contracts or Debt Securities comprising the Units. Where required by statute,
regulation or policy, and where Securities are offered in currencies other than Canadian dollars, appropriate disclosure of foreign
exchange rates applicable to the Securities will be included in the Prospectus Supplement describing the Securities.
All
shelf information permitted under applicable laws to be omitted from this Prospectus will be contained in one or more Prospectus Supplements
that will be delivered to purchasers together with this Prospectus, except in cases where an exemption from such delivery requirements
has been obtained. Each Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of securities legislation
as of the date of the Prospectus Supplement and only for the purposes of the distribution of the Securities to which the Prospectus Supplement
pertains.
This
Prospectus constitutes a public offering of the Securities only in those jurisdictions where they may be lawfully offered for sale and
only by persons permitted to sell the Securities in such jurisdictions. We may offer and sell Securities to, or through, underwriters
or dealers purchasing as principals, directly to one or more other purchasers, or through agents pursuant to applicable statutory exemptions.
A Prospectus Supplement relating to each issue of Securities will set forth the names of any underwriters, dealers or agents involved
in the Offering and sale of the Securities and will set forth the terms of the Offering, the method of distribution of the Securities,
including, to the extent applicable, the proceeds to us and any fees, discounts, concessions or other compensation payable to the underwriters,
dealers or agents, and any other material terms of the plan of distribution.
The
Company or any Selling Securityholder may sell the Securities to or through underwriters or dealers purchasing as principals and may
also sell the Securities to one or more purchasers directly, through applicable statutory exemptions, or through agents designated by
the Company or any Selling Securityholder from time to time. The Prospectus Supplement relating to a particular offering of Securities
will identify each underwriter, dealer or agent engaged in connection with the offering and sale of the Securities, as well as the method
of distribution and the terms of the offering of such Securities, including the net proceeds to the Company or any Selling Securityholder
and, to the extent applicable, any fees, discounts, concessions or any other compensation payable to underwriters, dealers or agents
and any other material terms. See “Plan of Distribution”.
This
Prospectus may qualify an “at-the-market distribution”.
In
connection with any offering of Securities, other than an “at-the-market distribution”, subject to applicable laws, unless
otherwise specified in a Prospectus Supplement, the underwriters, dealers or agents, as the case may be, may over-allot or effect transactions
which stabilize, maintain or otherwise affect the market price of the Securities at a level other than those which otherwise might prevail
on the open market. Such transactions may be commenced, interrupted or discontinued at any time. A purchaser who acquires Securities
forming part of the underwriters’, dealers’ or agents’ over-allocation position acquires those securities under this
Prospectus and the Prospectus Supplement relating to the particular offering of Securities, regardless of whether the over-allocation
position is ultimately filled through the exercise of the over-allotment option or secondary market purchases. See “Plan of
Distribution”.
The
outstanding Common Shares are listed and posted for trading on the Canadian Securities Exchange (the “CSE”) under
the symbol “SUNN”. The closing price of the Common Shares on the CSE on May 1, 2023, the last trading day of the Common Shares
prior to the date of this Prospectus, was $6.35.
Unless
otherwise specified in the applicable Prospectus Supplement, the Debt Securities, the Warrants, the Subscription Receipts, the Share
Purchase Contracts and the Units will not be listed on any securities exchange. There is no market through which the Securities, other
than the Common Shares, may be sold and purchasers may not be able to resell these Securities purchased under this Prospectus. This
may affect the pricing of these Securities in the secondary market, the transparency and availability of trading prices, the liquidity
of these Securities, and the extent of issuer regulation (see “Risk Factors”).
Prospective
investors should be aware that the acquisition of the Securities may have tax consequences that may not be fully described in this Prospectus
or in any Prospectus Supplement, and should carefully review the tax discussion, if any, contained in the applicable Prospectus Supplement
with respect to a particular Offering and consult their own tax advisors with respect to their own particular circumstances.
Investing
in the Securities involves significant risks. Prospective investors should carefully consider the risk factors described under the heading
“Risk Factors” in this Prospectus, in the applicable Prospectus Supplement with respect to a particular Offering and
in the documents incorporated by reference herein and therein.
No
underwriter, dealer or agent has been involved in the preparation of this Prospectus or performed any review of the content of this Prospectus.
This
Prospectus does not qualify for issuance Debt Securities, or Securities convertible or exchangeable into Debt Securities, in respect
of which the payment of principal or interest may be determined, in whole or in part, by reference to one or more underlying interests,
including, for example, an equity or debt security, or a statistical measure of economic or financial performance (including, but
not limited to, any currency, consumer price or mortgage index, or the price or value of one or more commodities, indices or other
items, or any other item or formula, or any combination or basket of the foregoing items). For greater certainty, this Prospectus
may qualify for issuance Debt Securities, or Securities convertible or exchangeable into Debt Securities, in respect of which the
payment of principal or interest may be determined, in whole or in part, by reference to published rates of a central banking authority
or one or more financial institutions, such as a prime rate or bankers’ acceptance rate, or to recognized market benchmark
interest rates such as CORRA (the Canadian Overnight Repo Rate Average), SOFR (Secured Overnight Financing Rate), EURIBOR (the Euro
Interbank Offered Rate) or a U.S. federal funds rate.
The
Company’s head office and registered office is located at 505 Consumers Road, Suite 803, Toronto, Ontario, M2J 4Z2.
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. Purchasers 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.
Unless
otherwise indicated, all references to “$” or “C$” in this Prospectus refer to Canadian dollars and all references
to “US$” in this Prospectus refer to United States dollars. See “Currency Presentation and Exchange Rate Information”.
On May 1, 2023, the average exchange rate for Canadian dollars, as quoted by the Bank of Canada was US$1.00 = C$1.3546, or C$1.00
= US$0.7382.
TABLE
OF CONTENTS
Base
Prospectus
About
this Prospectus
In
this Prospectus and any Prospectus Supplement, unless the context otherwise requires, the terms “we”, “our”,
“us” and the “Company” refer to SolarBank and our direct and indirect subsidiaries.
This
Prospectus is a base shelf prospectus that the Company has filed with the securities commissions in each of the provinces in Canada in
order to qualify the offering of the Securities described in this Prospectus in accordance with National Instrument 44-102–Shelf
Distributions (“NI 44-102”).
Under
this shelf registration process, SolarBank may sell any combination of the Securities described in this Prospectus in one or more offerings
up to an aggregate offering price of $200,000,000. This Prospectus provides you with a general description of the Securities that the
Company may offer. Each time the Company sells Securities under this Prospectus, the Company will provide a Prospectus Supplement that
will contain specific information about the terms of that specific offering. The specific terms of the Securities in respect of which
this Prospectus is being delivered will be set forth in the Prospectus Supplement. Each shelf prospectus supplement will be incorporated
by reference into this Prospectus for the purposes of securities legislation as of the date of the Prospectus Supplement and only for
the purposes of the distribution of the securities to which the shelf Prospectus Supplement pertains.
You
should rely only on the information contained in or incorporated by reference in this Prospectus and any applicable Prospectus Supplement
in connection with an investment in the Securities. We have not authorized anyone to provide you with different information. We are not
making an offer of the Securities in any jurisdiction where such offer is not permitted. You should assume that the information appearing
in this Prospectus or any Prospectus Supplement is accurate only as of the date on the front of those documents and that information
contained in any document incorporated by reference herein or therein is accurate only as of the date of that document unless specified
otherwise. Our business, financial condition, financial performance and prospects may have changed since those dates.
CAUTION
REGARDING FORWARD-LOOKING STATEMENTS
This
Prospectus, including the documents incorporated by reference herein, contains “forward-looking information” or “forward-looking
statements” within the meaning of applicable securities legislation (collectively, “forward-looking statements”).
The forward-looking statements in this Prospectus are provided as of the date of this Prospectus and forward-looking statements incorporated
by reference are made as of the date of those documents. The Company does not intend to and does not assume any obligation to update
forward-looking statements, except as required by applicable law. For this reason and the reasons set forth below, investors should not
place undue reliance on forward-looking statements.
This
Prospectus, including the documents incorporated by reference herein, 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. 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:
| ● | the
completion, size, pricing, expenses and timing of the closing of any Offerings; |
| | | |
| ● | the
Company’s discretion in the use of net proceeds from Offerings; |
| | | |
| ● | the
Company’s expectations regarding its revenue, expenses and operations; |
| ● | industry
trends and overall market growth; |
| | | |
| ● | the
Company’s growth strategies; |
| | | |
| ● | expectations
relating to director and executive officer compensation levels; |
| | | |
| ● | the
Company’s anticipated cash needs and its needs for additional financing; |
| | | |
| ● | the
Company’s intention to grow the business and its operations; |
| | | |
| ● | expectations
with respect to future costs; |
| | | |
| ● | the
Company’s competitive position and the regulatory environment in which the Company
operates; |
| | | |
| ● | the
Company’s expectation that revenues derived from its operations, together with fund-raising
activities, will be sufficient to cover its expenses during 2022 and over the next 12 months; |
| | | |
| ● | the
Company’s expected business objectives for the next 12 months; |
| | | |
| ● | the
Company’s ability to obtain additional funds through the sale of equity or debt commitments;
and |
| | | |
| ● | the
effect of the Novel Coronavirus (“COVID-19”) outbreak on the ability of
the Company to carry on business. |
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:
| ● | the
Company may be adversely affected by volatile solar power market and industry conditions;
in particular, the demand for its services may decline, which may reduce its revenues and
earnings; |
| | | |
| ● | the
execution of the Company’s growth strategy depends upon the continued availability
of third-party financing arrangements for the Company and its customers; |
| | | |
| ● | the
Company’s future success depends partly on its ability to expand the pipeline of its
energy business in several key markets; |
| | | |
| ● | governments
may revise, reduce or eliminate incentives and policy support schemes for solar and battery
storage power, which could cause demand for the Company’s services to decline; |
| | | |
| ● | general
global economic conditions may have an adverse impact on our operating performance and results
of operations; |
| | | |
| ● | the
Company’s project development and construction activities may not be successful; |
| | | |
| ● | developing
and operating solar projects exposes the Company to various risks; |
| | | |
| ● | the
Company faces a number of risks involving power purchase agreements (“PPAs”)
and project-level financing arrangements, including failure or delay in entering into PPAs,
defaults by counterparties and contingent contractual terms; |
| | | |
| ● | the
Company is subject to numerous laws, regulations and policies at the national, regional and
local levels of government in the markets where it does business. Any changes to these laws,
regulations and policies may present technical, regulatory and economic barriers to the purchase
and use of solar power and battery storage products, solar projects and solar electricity; |
| | | |
| ● | the
markets in which the Company competes are highly competitive and evolving quickly; |
| | | |
| ● | an
anti-circumvention investigation could adversely affect the Company by potentially raising
the prices of key supplies for the construction of solar power projects; |
| | | |
| ● | the
Company’s quarterly operating results may fluctuate from period to period; |
| | | |
| ● | foreign
exchange rate fluctuations; |
| | | |
| ● | a
change in the Company’s effective tax rate can have a significant adverse impact on
its business; |
| | | |
| ● | seasonal
variations in demand linked to construction cycles and weather conditions may influence the
Company’s results of operations; |
| ● | the
Company may be unable to generate sufficient cash flows or have access to external financing
necessary to fund planned operations and make adequate capital investments in solar project
development; |
| | | |
| ● | the
Company may incur substantial additional indebtedness in the future; |
| | | |
| ● | the
Company is subject to risks from supply chain issues; |
| | | |
| ● | risks
related to inflation; |
| | | |
| ● | unexpected
warranty expenses that may not be adequately covered by the Company’s insurance policies; |
| | | |
| ● | if
the Company is unable to attract and retain key personnel, it may not be able to compete
effectively in the renewable energy market; |
| | | |
| ● | there
are a limited number of purchasers of utility-scale quantities of electricity and entities
that have the ability to interconnect projects to the grid, which exposes the Company and
its utility scale solar projects to additional risk; |
| | | |
| ● | compliance
with environmental laws and regulations can be expensive; |
| | | |
| ● | corporate
responsibility, specifically related to Environmental, Social and Governance matters and
unsuccessful management of such matters may adversely impose additional costs and expose
the Company to new risks; |
| | | |
| ● | the
impact of COVID-19 on the Company is unknown at this time and the financial consequences
of this situation cause uncertainty as to the future and its effects on the economy and the
Company; |
| | | |
| ● | the
Company has limited insurance coverage; |
| | | |
| ● | the
Company will be reliant on information technology systems and may be subject to damaging
cyberattacks; |
| | | |
| ● | the
Company does not anticipate paying cash dividends; |
| | | |
| ● | the
Company may become subject to litigation; |
| | | |
| ● | discretion
of the Company on use the net proceeds of the Offerings; |
| | | |
| ● | no
guarantee on how the Company will use its available funds; |
| | | |
| ● | the
Company is subject to additional regulatory burden resulting from its public listing on the
CSE; |
| | | |
| ● | the
market price for Common Shares may be volatile and subject to wide fluctuations in response
to numerous factors, many of which are beyond our control; |
| | | |
| ● | future
sales of Common Shares by existing shareholders could reduce the market price of the Company’s
Common Shares; |
| | | |
| ● | the
Company will continue to sell securities for cash to fund operations, capital expansion,
mergers and acquisitions that will dilute the current shareholders; and |
| | | |
| ● | future
dilution as a result of financings. |
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.
Prospective
purchasers of Securities should carefully consider the risk factors described in a document incorporated by reference in this Prospectus
(including subsequently filed documents incorporated by reference) and those described in a Prospectus Supplement relating to a specific
offering of Securities. Discussions of certain risks affecting the Company in connection with its business are provided in the Company’s
disclosure documents filed with the various securities regulatory authorities which are incorporated by reference in this Prospectus.
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.
CURRENCY
PRESENTATION AND EXCHANGE RATE INFORMATION
Unless
stated otherwise or the context otherwise requires, all references to dollar amounts in this Prospectus are references to Canadian dollars.
All references to “$” or “C$” are to Canadian dollars and references to “US$” are to United States
dollars.
The
Company presents its financial statements in Canadian dollars. The audited financial statements of the Company for the year ended
June 30, 2022 as well as the unaudited condensed consolidated interim financial statements of the company for the three and six months
ended December 31, 2023 have been prepared in accordance with International Financial Reporting Standards. Certain financial information
incorporated by reference in this Prospectus is derived from such financial statements.
The
following table sets forth the rate of exchange for the Canadian dollar expressed in United States dollars in effect at the end of each
of the periods indicated, the average of the exchange rates in effect on the last day of each month during each of the periods indicated,
and the high and low exchange rates during each of the periods indicated, in each case based on the daily average rate of exchange as
reported by the Bank of Canada for the conversion of Canadian dollars into United States dollars.
| | |
Year
Ended June 30, | |
| | |
2022 | | |
2021 | |
| High
for period | |
| 0.8111 | | |
| 0.8306 | |
| Low
for period | |
| 0.7669 | | |
| 0.7344 | |
| Average
for period | |
| 0.7901 | | |
| 0.7807 | |
| Rate
at end of period | |
| 0.7760 | | |
| 0.8068 | |
The
rate of exchange on May 1, 2023 as reported by the Bank of Canada for the conversion of Canadian dollars into United States dollars was
C$1.00 equals US$1.3546.
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.
DOCUMENTS
INCORPORATED BY REFERENCE
Information
has been incorporated by reference in this Prospectus from documents filed with securities commissions or similar authorities in the
provinces of Canada (collectively, the “Commissions”). Copies of the documents incorporated herein by reference may
be obtained on request without charge from the Chief Administrative Officer of the Company at 505 Consumers Road, Suite 803, Toronto,
Ontario, M2J 4Z2, telephone (416) 494-9559. These documents are also available through the internet on SEDAR, which can be accessed online
at www.sedar.com.
The
following documents of the Company, filed by the Company with the Commissions, are specifically incorporated by reference into, and form
an integral part of, this Prospectus:
| (a) | the
Company’s long form prospectus for its initial public offering dated February 10, 2023
(the “IPO Prospectus”); |
| | | |
| (b) | the
audited financial statements of the Company for the year ended June 30, 2022 (the “Annual
Financial Statements”) which are contained within the IPO Prospectus; |
| | | |
| (c) | the
management’s discussion and analysis of the Company for the year ended June 30, 2022
which is contained within the IPO Prospectus; |
| | | |
| (d) | the
unaudited condensed consolidated interim financial statements of the Company for the three
and six months ended December 31, 2022 (the “Interim Financial Statements”); |
| | | |
| (e) | the
management’s discussion and analysis of the Company for the three and six months ended
December 31, 2022; and |
| | | |
| (f) | the
material change report dated March 6, 2023 with respect to the announcement of the completion
of the Company’s initial public offering to raise gross proceeds of $6,037,500 and
listing on the CSE. |
Any
document of the types referred to in the preceding paragraph (excluding press releases and confidential material change reports) or of
any other type required to be incorporated by reference into a short form prospectus pursuant to National Instrument 44-101 - Short
Form Prospectus Distributions that are filed by us with a Commission after the date of this Prospectus and prior to the termination
of the Offering under any Prospectus Supplement shall be deemed to be incorporated by reference in this Prospectus.
Any
statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. The modifying
or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth
in the document it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any
purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact
or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light
of the circumstances in which it was made. Any statement so modified or superseded shall not constitute a part of this Prospectus, except
as so modified or superseded.
A
Prospectus Supplement containing the specific terms of an Offering will be delivered to purchasers of such Securities together with this
Prospectus and will be deemed to be incorporated by reference into this Prospectus as of the date of such Prospectus Supplement, but
only for the purposes of the Offering covered by that Prospectus Supplement.
Any
template version of any “marketing materials” (as such term is defined in NI 44-101) filed after the date of a Prospectus
Supplement and before the termination of the distribution of the Securities offered pursuant to such Prospectus Supplement (together
with this Prospectus) is deemed to be incorporated by reference in such Prospectus Supplement.
Reference
to the Company’s website in any documents that are incorporated by reference into this Prospectus do not incorporate by reference
the information on such website into this Prospectus, and the Company disclaims any such incorporation by reference.
BUSINESS
OF THE COMPANY
Overview
of the Company
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.
Principal
Operations
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, engineering, procurement and construction (“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:
| ● | Development:
The Company identifies, evaluates and secures control of suitable solar development sites;
obtains grid interconnection from utilities; acquires permits from government authorities;
and engages solar energy subscribers or PPA clients as off-takers. A PPA, also referred to
as an off-take agreement, is a contract between two parties, one which generates electricity
(the seller) and one which is looking to purchase electricity (the buyer or off-taker).
The PPA defines all of the commercial terms for the sale of electricity between the
two parties, including when the project will begin commercial operation, schedule for
delivery of electricity, penalties for under delivery, payment terms, and termination.
A PPA requires active management to reconcile monthly deliveries, penalties and payment
for electricity. |
| ● | EPC:
The Company engineers, procures and constructs efficient, eco-friendly, renewable solar
power plants for industrial, commercial, community and utility electricity market, using
high engineering standards and the latest technology. |
| ● | Financing:
The Company assists with securing sponsor equity, tax equity, long-term debt, and construction
financing to deploy solar power plants. |
| ● | Independent
Power Producer: The Company is not yet an IPP. However, the Company does carry out one
of the core functions of an IPP as it operates and maintains solar power plants for maximized
production (O&M services described further below) and oversees solar power subscribers
through two customer support centers in Boston and Chicago. The Company manages PPA and off-take
agreements as an asset manager. |
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:
| ● | Preventative
maintenance. |
| ● | Reactive
maintenance: rapid identification, analysis, and resolution of issues and problems. |
| ● | Comprehensive
and detailed monitoring and reporting with adequate and requisite transparency. |
Recent
Developments
Commercial
Operation at Union Springs, NY Solar Project
On
March 7, 2023, the Company announced completion of construction on a ground-mount solar power project located at a municipally-owned
utility campus in the Village of Union Springs, N.Y. The power plant passed its final New York State Energy Research and Development
Authority (“NYSERDA”) NY-Sun Program inspection and has been placed into commercial operation. Upon final closing,
SolarBank will assume a majority ownership stake in the system. Per the PPA with the municipality, the system will sell electricity to
the municipality via remote net metering. The system has an installed capacity of 389.7kW DC and is expected to generate an estimated
578,000 kWh of clean, renewable energy in its first year of operation.
Recovery
of Pre-Construction Development Costs
The
Company’s subsidiary 2467264 Ontario Inc. (the “Subsidiary”) has now concluded agreements for the repayment
of $6.38 million of Pre-Construction Development Costs (“PCDC”). The PCDC were incurred in connection with certain
FIT Contracts in Ontario. PCDC are defined as reasonable costs incurred in development of a project from contract award date to termination
date. The Subsidiary is owned 49.9% by the Company; however, based on an arrangement between the Subsidiary and the Company, the Company
will receive the full amount of the PCDC recoveries from the Subsidiary.
Extension
of Promissory Note
On
December 28, 2022, the Company entered into a promissory note with a customer to convert a series of overdue accounts receivables of
$1,206,984 (USD $891,158) since August 2022 to note receivable. The promissory note bears interest rate of 15% per annum and is payable
on a monthly basis. The promissory note was expected to be repaid in March 2023 but subsequently the repayment date was ended to April
30, 2023.
RISK
FACTORS
Prospective
purchasers of Securities should carefully consider the risk factors described in a document incorporated by reference in this Prospectus
(including the IPO Prospectus and subsequently filed documents incorporated by reference) and those described in a Prospectus Supplement
relating to a specific offering of Securities. Discussions of certain risks affecting the Company in connection with its business are
provided in the Company’s disclosure documents filed with the various securities regulatory authorities which are incorporated
by reference in this Prospectus.
USE
OF PROCEEDS
Unless
otherwise specified in the applicable Prospectus Supplement, the net proceeds from the sale of Securities will be used to advance the
Company’s business objectives and for general corporate purposes, including funding ongoing operations or working capital requirements,
repaying indebtedness outstanding from time to time, discretionary capital programs and potential future acquisitions. At this time,
the Company does not have any proposed acquisitions.
As
disclosed in the IPO Prospectus, the Company is shifting its business model from a “develop to sell” strategy to the ownership
of renewable projects as an Independent Power Producer. Under the heading “General Development and Business of the Company –
Operations Process” in the IPO Prospectus, the Company described the five phases of its business model:
| ● | Phase
1 – Site Origination to Bankable Lease |
| ● | Phase
2 – Development to Notice to Proceed (NTP) |
| ● | Phase
4 – Delivery: Engineering, Procurement and Construction to COD/PTO |
| ● | Phase
5 – O&M, Subscriber Management and Asset Management |
In
order to become an Independent Power Producer, the Company would need to make an adjustment in Phase 3. Instead of bringing in a project
sponsor to finance and own the relevant project, the Company would be the sponsor by financing the project itself and retaining ownership.
The process and costs associated with project ownership are the same as the Company’s existing business model, except for the requirement
to fund the development costs. As a result, in order to accomplish this, the Company needs additional capital to cover the equity portion
of project development costs. Absent additional capital, the Issuer will continue with its “develop to sell” strategy and
take smaller ownership interests in smaller projects. However, the ability to access financing through a Prospectus Supplement will allow
the Issuer to retain a larger ownership in larger projects and accelerate its development pipeline. The Company has not identified any
specific projects that financing from a Prospectus Supplement would be allocated towards for project ownership purposes and any determination
is subject to the availability and amount of any future financing.
The
current COVID-19 pandemic as well as future developments in the Company’s solar power projects under development or unforeseen
events may also impact the ability of the Company to use the proceeds from the sale of the Securities as intended or disclosed in
each Prospectus Supplement. See “Risk Factors”.
Each
Prospectus Supplement will contain specific information concerning the use of proceeds from that sale of Securities.
During
the most recent financial year ended June 30, 2022, the Company had negative cash flow from operating activities. To the extent that
the Company has negative cash flow in future periods, it may need to allocate a portion of its cash reserves to fund such negative cash
flow. If necessary, proceeds from the sale of Securities may be used to fund negative cash flow from operating activities in future periods
which will be indicated in a Prospectus Supplement as applicable. There can be no assurance that the Company will be able to generate
a positive cash flow from its operations, that additional capital or other types of financing will be available when needed or that these
financings will be on terms favourable to the Company. All expenses relating to an Offering and any compensation paid to underwriters,
dealers or agents, as the case may be, will be paid out of the proceeds from the sale of such Securities, unless otherwise stated in
the applicable Prospectus Supplement.
The
Company will not receive any proceeds from any sale of Securities by any Selling Securityholder.
CONSOLIDATED
CAPITALIZATION
Since
the date of the Interim Financial Statements, which are incorporated by reference in this Prospectus, there has been no material change
to the share and loan capital of the Company on a consolidated basis, other than as disclosed in this Prospectus or in any document incorporated
by reference herein. See “Prior Sales”.
DESCRIPTION
OF MATERIAL INDEBTEDNESS
In
2021, the Company received a Highly Affected Sectors Credit Availability Program (HASCAP) loan for a total of $1,000,000 at 4% annual
from Bank of Montreal. The loan has a ten-year amortization period with interest payment only for the first year. Principal payments
are to commence 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. The Company intends to repay the loan on or before December 31, 2023. Accordingly, the forgiveness portion of the $20,000
was recognized as government grant income during the year ended June 30, 2021 when the Company received the loan. The Company remains
contingently liable as the Company will be required to repay the forgiven amount if the conditions are not met.
On
April 8, 2022, the Company entered into a promissory note agreement with Energy Line Investment Ltd. 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. The interest of loan is payable on a quarterly basis beginning July 8, 2022. The full amount in principal and in interest has been
fully repaid on October 6, 2022.
PLAN
OF DISTRIBUTION
The
Company or any Selling Securityholder may sell the Securities, separately or together: (a) to one or more underwriters or dealers; (b)
through one or more agents; or (c) directly to one or more other purchasers. Each Prospectus Supplement relating to a particular offering
of Securities will set forth the terms of the applicable Offering, including the (a) terms of the Securities to which the Prospectus
Supplement relates, including the type of Security being offered, and the method of distribution; (b) the name or names of any underwriters,
dealers or agents involved in the offering of Securities; (c) the purchase price or prices of the Securities offered thereby and the
proceeds to, and the expenses borne by, the Company from the sale of the Securities; (d) any commission, underwriting discount and other
items constituting compensation payable to underwriters, dealers or agents; and (e) any discounts or concessions allowed or re-allowed
or paid to underwriters, dealers or agents. In addition, Securities may be offered and issued in consideration for the acquisition (an
“Acquisition”) of other businesses, assets or securities by the Company or its subsidiaries. The consideration for
any such Acquisition may consist of any of the Securities separately, a combination of Securities or any combination of, among other
things, securities, cash and assumption of liabilities.
The
Securities may be sold from time to time in one or more transactions at a fixed price or prices which may be changed or at market prices
prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices, including sales in transactions
that are deemed to be “at-the-market distributions” as defined in National Instrument 44-102 – Shelf Distributions,
including sales made directly on the CSE or other existing trading markets for the securities, and sales pursuant to a dividend
reinvestment plan. The prices at which the Securities may be offered may vary as between purchasers and during the period of distribution.
If, in connection with an offering of Securities at a fixed price or prices, the underwriters have made a bona fide effort to sell all
of the Securities at the initial offering price fixed in the applicable Prospectus Supplement, the public offering price may be decreased
and thereafter further changed, from time to time, to an amount not greater than the initial public offering price fixed in such Prospectus
Supplement, in which case the compensation realized by the underwriters will be decreased by the amount that the aggregate price paid
by purchasers for the Securities is less than the gross proceeds paid by the underwriters to the Company or any Selling Securityholder.
The Selling Securityholders will not engage in any “at-the-market distributions.”
Only
underwriters, dealers or agents so named in the Prospectus Supplement are deemed to be underwriters, dealers or agents in connection
with the Securities offered thereby. If underwriters are used in an offering, the Securities offered thereby will be acquired by the
underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the underwriters to purchase
Securities will be subject to the conditions precedent agreed upon by the parties and the underwriters will be obligated to purchase
all Securities under that offering if any are purchased. If agents are used in an offering, unless otherwise indicated in the applicable
Prospectus Supplement, such agents will be acting on a “best efforts” basis for the period of their appointment. Any public
offering price and any discounts or concessions allowed or re-allowed or paid to underwriters, dealers or agents may be changed from
time to time.
Underwriters,
dealers or agents who participate in the distribution of Securities may be entitled under agreements to be entered into with the Company
or any Selling Securityholder to indemnification by the Company or any Selling Securityholder against certain liabilities, including
liabilities under securities legislation, or to contribution with respect to payments which such underwriters, dealers or agents may
be required to make in respect thereof. Such underwriters, dealers or agents with whom the Company or any Selling Securityholder enters
into agreements may be customers of, engage in transactions with, or perform services for, the Company or any Selling Securityholder
in the ordinary course of business.
Any
offering of Debt Securities, Subscription Receipts, Share Purchase Contracts, Warrants or Units will be a new issue of securities with
no established trading market. Unless otherwise specified in the applicable Prospectus Supplement, the Debt Securities, Subscription
Receipts, Share Purchase Contracts, Warrants or Units will not be listed on any securities exchange. Unless otherwise specified in the
applicable Prospectus Supplement, there is no market through which the Debt Securities, Subscription Receipts, Share Purchase Contracts,
Warrants or Units may be sold and purchasers may not be able to resell Debt Securities, Subscription Receipts, Share Purchase Contracts,
Warrants or Units purchased under this Prospectus or any Prospectus Supplement. This may affect the pricing of the Debt Securities,
Subscription Receipts, Share Purchase Contracts, Warrants or Units in the secondary market, the transparency and availability of
trading prices, the liquidity of the Securities, and the extent of issuer regulation. Subject to applicable laws, certain dealers
may make a market in these Securities, but will not be obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given that any dealer will make a market in these Securities or as to the liquidity of the trading market,
if any, for these Securities.
No
underwriter of the “at-the-market distribution” as defined under applicable Canadian securities legislation, and no
person or company acting jointly or in concert with an underwriter, may, in connection with the distribution, enter into any transaction
that is intended to stabilize or maintain the market price of the Securities or Securities of the same class as the Securities distributed
under the at-the-market prospectus, including selling an aggregate number or principal amount of Securities that would result in the
underwriter creating an over-allocation position in the Securities.
In
connection with any offering of Securities, other than an “at-the-market distribution”, subject to applicable laws, the underwriters
or agents may over-allot or effect transactions that stabilize or maintain the market price of the offered Securities at a level above
that which might otherwise prevail in the open market. Such transactions, if commenced, may be interrupted or discontinued at any time.
A
purchaser who acquires Common Shares, Debt Securities, Warrants, Subscription Receipts, Share Purchase Contracts, or Units forming part
of the underwriters’ over-allocation position acquires those securities under this short form prospectus, regardless of whether
the over-allocation position is ultimately filled through the exercise of the overallotment option or secondary market purchases.
The
Securities have not been, and will not be, registered under the U.S. Securities Act or the securities laws of any state of the United
States, and may not be offered or sold or otherwise transferred or disposed of, directly or indirectly, in the United States or
to or for the account or benefit of U.S. Persons absent registration under the U.S. Securities Act and all applicable state securities
laws, or pursuant to applicable exemption therefrom. In addition, until 40 days after closing of an offering of Securities, an offer
or sale of the Securities within the United States by any dealer (whether or not participating in such offering) may violate the
registration requirement of the U.S. Securities Act if such offer or sale is made other than in accordance with an exemption under
the U.S. Securities Act.
SELLING
SECURITYHOLDERS
Securities
may be sold under this Prospectus by way of secondary offering by Selling Securityholders. The Prospectus Supplement for or including
any offering of Securities by Selling Securityholders will include the following information, to the extent required by applicable securities
laws: (i) the name or names of the Selling Securityholders (if a Selling Securityholder is not an individual, the name of each individual
who is a principal securityholder of the Selling Securityholder); (ii) the number or amount of Securities owned, controlled or directed
by each Selling Securityholder; (iii) the number or amount of Securities being distributed for the account of each Selling Securityholder;
(iv) the number or amount of Securities to be owned, controlled or directed by the Selling Securityholders after the distribution and
the percentage that number or amount represents of the total number of outstanding Securities; (v) whether the Securities are owned by
the Selling Securityholders both of record and beneficially, of record only, or beneficially only; (vi) if any Selling Securityholder
acquired any Securities in the 12 months preceding the date of the applicable Prospectus Supplement, the date or dates on which such
Selling Securityholder acquired such Securities and the cost thereof to such Selling Securityholder in the aggregate and on an average
cost per security basis; (vii) if applicable, the disclosure required by Item 1.11 of Form 44-101F1, and, if applicable, the Selling
Securityholders will file a non-issuer’s submission to jurisdiction form with the corresponding Prospectus Supplement; and (viii)
all other information that is required to be included in the applicable Prospectus Supplement.
PRIOR
SALES
Information
in respect of the Common Shares issued by the Company within the previous twelve (12) month period, including Common Shares that the
Company issued either upon the exercise of options or warrants, will be provided as required in a Prospectus Supplement with respect
to the issuance of the Securities pursuant to such Prospectus Supplement.
PRICE
RANGE AND TRADING VOLUME
The
outstanding Common Shares are traded on the CSE under the trading symbol “SUNN”. Trading price and volume of the Common Shares
will be provided in each Prospectus Supplement.
DIVIDEND
POLICY
We
have not declared any dividends or distributions on the Common Shares since our incorporation. Any future determination to pay dividends
or make distributions will be at the discretion of the board of directors and will depend on our capital requirements, financial performance
and such other factors as the board of directors considers relevant.
DESCRIPTION
OF COMMON SHARES
The
Company is authorized to issue an unlimited number of Common Shares. As of the close of business on May 2, 2023, there were 26,800,000
Common Shares issued and outstanding.
All
of the issued and outstanding Common Shares have been fully paid for and none are subject to any future call or assessment. Holders of
Common Shares are entitled to receive notice of, and to attend and vote at, all meetings of the shareholders of the Company and to receive
all notices and other documents required to be sent to shareholders in accordance with the Company’s articles, corporate law and
the rules of any applicable stock exchange. On a poll, every shareholder has one vote for each Common Share. The holders of Common Shares
are entitled to dividends if, as and when declared by the board of directors of the Company and, upon the liquidation, dissolution or
winding-up of its affairs or other distribution of its assets for the purpose of winding-up its affairs, to receive, on a pro rata basis,
all of the remaining assets of the Company. The Common Shares do not carry any pre-emptive, subscription, redemption or conversion rights,
nor do they contain any sinking fund or purchase fund provisions.
DESCRIPTION
OF DEBT SECURITIES
The
following sets forth certain general terms and provisions of Debt Securities. The particular terms and provisions of Debt Securities
offered by a Prospectus Supplement, and the extent to which the general terms and provisions described below may apply to such Debt Securities,
will be described in such Prospectus Supplement.
The
Debt Securities will be issued in series under one or more trust indentures to be entered into between the Company and a financial institution
to which the Trust and Loan Companies Act (Canada) applies or a financial institution organized under the laws of any province
of Canada and authorized to carry on business as a trustee. Each such trust indenture, as supplemented or amended from time to time,
will set out the terms of the applicable series of Debt Securities. The statements in this Prospectus relating to any trust indenture
and the Debt Securities to be issued under it are summaries of anticipated provisions of an applicable trust indenture and do not purport
to be complete and are subject to, and are qualified in their entirety by reference to, all provisions of such trust indenture, as applicable.
Each
trust indenture may provide that Debt Securities may be issued thereunder up to the aggregate principal amount which may be authorized
from time to time by the Company. Any Prospectus Supplement for Debt Securities will contain the terms and other information with respect
to the Debt Securities being offered, including (i) the designation, aggregate principal amount and authorized denominations of such
Debt Securities, (ii) the currency for which the Debt Securities may be purchased and the currency in which the principal and any interest
is payable (in either case, if other than Canadian dollars), (iii) the percentage of the principal amount at which such Debt Securities
will be issued, (iv) the date or dates on which such Debt Securities will mature, (v) the rate or rates at which such Debt Securities
will bear interest (if any), or the method of determination of such rates (if any), (vi) the dates on which any such interest will be
payable and the record dates for such payments, (vii) any redemption term or terms under which such Debt Securities may be defeased,
(viii) any exchange or conversion terms, and (ix) any other specific terms.
Each
series of Debt Securities may be issued at various times with different maturity dates, may bear interest at different rates and may
otherwise vary.
The
Debt Securities will be direct obligations of the Company. The Debt Securities will be senior or subordinated indebtedness of the Company
as described in the relevant Prospectus Supplement.
DESCRIPTION
OF WARRANTS
We
may issue Warrants to purchase Common Shares, Debt Securities or other securities of the Company. This section describes the general
terms that will apply to any Warrants issued pursuant to this Prospectus.
Warrants
may be offered separately or together with other Securities and may be attached to or separate from any other Securities. Unless the
applicable Prospectus Supplement otherwise indicates, each series of Warrants will be issued under a separate warrant indenture to be
entered into between us and one or more banks or trust companies acting as Warrant agent. The Warrant agent will act solely as our agent
and will not assume a relationship of agency with any holders of Warrant certificates or beneficial owners of Warrants. The applicable
Prospectus Supplement will include details of the Warrant indentures, if any, governing the Warrants being offered. The specific terms
of the Warrants, and the extent to which the general terms described in this section apply to those Warrants, will be set out in the
applicable Prospectus Supplement.
Notwithstanding
the foregoing, we will not offer Warrants for sale separately to any member of the public in Canada unless the Offering is in connection
with and forms part of the consideration for an acquisition or merger transaction or unless the Prospectus Supplement containing the
specific terms of the Warrants to be offered separately is first approved for filing by the securities regulators in Canada, if applicable,
where the Warrants will be offered for sale.
The
Prospectus Supplement relating to any Warrants that we offer will describe the Warrants and the specific terms relating to the Offering.
The description will include, where applicable:
| ● | the
designation and aggregate number of Warrants; |
| ● | the
price at which the Warrants will be offered; |
| ● | the
currency or currencies in which the Warrants will be offered; |
| ● | the
date on which the right to exercise the Warrants will commence and the date on which the
right will expire; |
| ● | the
designation, number and terms of the Common Shares, Debt Securities or other securities,
as applicable, that may be purchased upon exercise of the Warrants, and the procedures that
will result in the adjustment of those numbers; |
| ● | the
exercise price of the Warrants; |
| ● | the
designation and terms of the Securities, if any, with which the Warrants will be offered,
and the number of Warrants that will be offered with each Security; |
| ● | if
the Warrants are issued as a Unit with another Security, the date, if any, on and after which
the Warrants and the other Security will be separately transferable; |
| ● | any
minimum or maximum amount of Warrants that may be exercised at any one time; |
| ● | any
terms, procedures and limitations relating to the transferability, exchange or exercise of
the Warrants; |
| ● | whether
the Warrants will be subject to redemption or call and, if so, the terms of such redemption
or call provisions; |
| ● | material
United States and Canadian federal income tax consequences of owning the Warrants; and |
| ● | any
other material terms or conditions of the Warrants. |
Warrant
certificates will be exchangeable for new Warrant certificates of different denominations at the office indicated in the Prospectus Supplement.
Prior to the exercise of their Warrants, holders of Warrants will not have any of the rights of holders of the Securities subject to
the Warrants. We may amend the Warrant indenture(s) and the Warrants, without the consent of the holders of the Warrants, to cure any
ambiguity, to cure, correct or supplement any defective or inconsistent provision or in any other manner that will not prejudice the
rights of the holders of outstanding Warrants, as a group.
DESCRIPTION
OF SUBSCRIPTION RECEIPTS
We
may issue Subscription Receipts, separately or together, with Common Shares, Debt Securities or Warrants, as the case may be. The Subscription
Receipts will be issued under a subscription receipt agreement. This section describes the general terms that will apply to any Subscription
Receipts that we may offer pursuant to this Prospectus.
The
applicable Prospectus Supplement will include details of the subscription receipt agreement covering the Subscription Receipts being
offered. We will file a copy of the subscription receipt agreement relating to an Offering with securities regulatory authorities in
Canada after we have entered into it. The specific terms of the Subscription Receipts, and the extent to which the general terms described
in this section apply to those Subscription Receipts, will be set forth in the applicable Prospectus Supplement. This description will
include, where applicable:
| ● | the
number of Subscription Receipts; |
| ● | the
price at which the Subscription Receipts will be offered and whether the price is payable
in instalments; |
| ● | conditions
to the exchange of Subscription Receipts into Common Shares, Debt Securities or Warrants,
as the case may be, and the consequences of such conditions not being satisfied; |
| ● | the
procedures for the exchange of the Subscription Receipts into Common Shares, Debt Securities
or Warrants; |
| ● | the
number of Common Shares or Warrants that may be exchanged upon exercise of each Subscription
Receipt; |
| ● | the
aggregate principal amount, currency or currencies, denominations and terms of the series
of Debt Securities that may be exchanged upon exercise of the Subscription Receipts; |
| ● | the
designation and terms of any other Securities with which the Subscription Receipts will be
offered, if any, and the number of Subscription Receipts that will be offered with each Security; |
| ● | the
dates or periods during which the Subscription Receipts may be exchanged into Common Shares,
Debt Securities or Warrants; |
| ● | terms
applicable to the gross or net proceeds from the sale of the Subscription Receipts plus any
interest earned thereon; |
| ● | material
United States and Canadian federal income tax consequences of owning the Subscription Receipts; |
| ● | any
other rights, privileges, restrictions and conditions attaching to the Subscription Receipts;
and |
| ● | any
other material terms and conditions of the Subscription Receipts. |
Subscription
Receipt certificates will be exchangeable for new Subscription Receipt certificates of different denominations at the office indicated
in the Prospectus Supplement. Prior to the exchange of their Subscription Receipts, holders of Subscription Receipts will not have any
of the rights of holders of the Securities subject to the Subscription Receipts.
Under
the subscription receipt agreement, a Canadian purchaser of Subscription Receipts will have a contractual right of rescission following
the issuance of Common Shares, Debt Securities or Warrants, as the case may be, to such purchaser, entitling the purchaser to receive
the amount paid for the Subscription Receipts upon surrender of the Common Shares, Debt Securities or Warrants, as the case may be, if
this Prospectus, the applicable Prospectus Supplement, and any amendment thereto, contains a misrepresentation, provided such remedy
for rescission is exercised within 180 days of the date the Subscription Receipts are issued. This right of rescission does not extend
to holders of Subscription Receipts who acquire such Subscription Receipts from an initial purchaser, on the open market or otherwise,
or to initial purchasers who acquire Subscription Receipts in the United States or other jurisdictions outside Canada.
Such
subscription receipt agreement will also specify that we may amend any subscription receipt agreement and the Subscription Receipts,
to cure any ambiguity, to cure, correct or supplement any defective or inconsistent provision or in any other manner that will not materially
and adversely affect the interests of the holder.
DESCRIPTION
OF SHARE PURCHASE CONTRACTS
The
Company may issue share purchase contracts, representing contracts obligating holders to purchase from or sell to the Company, and obligating
the Company to purchase from or sell to the holders, a specified number of Common Shares at a future date or dates, and including by
way of instalment.
The
price per Common Share and the number of Common Shares may be fixed at the time the share purchase contracts are issued or may be determined
by reference to a specific formula or method set forth in the share purchase contracts. The Company may issue share purchase contracts
in accordance with applicable laws and in such amounts and in as many distinct series as it may determine.
The
share purchase contracts may be issued separately or as part of units consisting of a share purchase contract and beneficial interests
in debt obligations of third parties, securing the holders’ obligations to purchase the Common Shares under the share purchase
contracts, which are referred to in this prospectus as share purchase units. The share purchase contracts may require the Company to
make periodic payments to the holders of the share purchase units or vice versa, and these payments may be unsecured or refunded and
may be paid on a current or on a deferred basis. The share purchase contracts may require holders to secure their obligations under those
contracts in a specified manner.
Holders
of share purchase contracts are not shareholders of the Company. The particular terms and provisions of share purchase contracts offered
by any Prospectus Supplement, and the extent to which the general terms and provisions described below may apply to them, will be described
in the applicable Prospectus Supplement filed in respect of such share purchase contracts. This description will include, where applicable:
(i) whether the share purchase contracts obligate the holder to purchase or sell, or both purchase and sell, Common Shares and the nature
and amount of those securities, or the method of determining those amounts; (ii) whether the share purchase contracts are to be
prepaid or not or paid in instalments; (iii) any conditions upon which the purchase or sale will be contingent and the consequences
if such conditions are not satisfied; (iv) whether the share purchase contracts are to be settled by delivery, or by reference or
linkage to the value or performance of Common Shares; (v) any acceleration, cancellation, termination or other provisions relating
to the settlement of the share purchase contracts; (vi) the date or dates on which the sale or purchase must be made, if any;
(vii) whether the share purchase contracts will be issued in fully registered or global form; (viii) the material income tax consequences
of owning, holding and disposing of the share purchase contracts; and (ix) any other material terms and conditions of the share
purchase contracts including, without limitation, transferability and adjustment terms and whether the share purchase contracts will
be listed on a securities exchange or automated interdealer quotation system.
Original
purchasers of share purchase contracts will be granted a contractual right of rescission against the Company in respect of the conversion,
exchange or exercise of such share purchase contract. The contractual right of rescission will entitle such original purchasers to receive
the amount paid upon conversion, exchange or exercise, upon surrender of the underlying securities gained thereby, in the event that
this prospectus (as supplemented or amended) contains a misrepresentation, provided that: (i) the conversion, exchange or exercise takes
place within 180 days of the date of the purchase of the convertible, exchangeable or exercisable security under this prospectus; and
(ii) the right of rescission is exercised within 180 days of the date of the purchase of the convertible, exchangeable or exercisable
security under this prospectus. This contractual right of rescission will be consistent with the statutory right of rescission described
under section 130 of the Securities Act (Ontario), and is in addition to any other right or remedy available to original purchasers
under section 130 of the Securities Act (Ontario) or otherwise at law.
DESCRIPTION
OF UNITS
We
may issue Units comprised of one or more of the other Securities described in this Prospectus in any combination. Each Unit will be issued
so that the holder of the Unit is also the holder of each of the Securities included in the Unit. Thus, the holder of a Unit will have
the rights and obligations of a holder of each included Security. The unit agreement, if any, under which a Unit is issued may provide
that the Securities included in the Unit may not be held or transferred separately, at any time or at any time before a specified date.
The particular terms and provisions of Units offered by any Prospectus Supplement, and the extent to which the foregoing general terms
and provisions may apply thereto, will be described in the Prospectus Supplement filed in respect of such Units.
CERTAIN
FEDERAL INCOME TAX CONSIDERATIONS
The
applicable Prospectus Supplement will describe certain Canadian and U.S. federal income tax consequences to investors described therein
of acquiring any Securities offered thereunder, as may be required by applicable securities laws.
EXEMPTION
FROM TRANSLATION REQUIREMENTS
Pursuant
to a decision of the Autorité des marchés financiers dated March 16, 2023, the Company was granted a permanent exemption
from the requirement to translate into French this Prospectus, as well as the documents incorporated by reference herein, and any Prospectus
Supplement to be filed in relation to an “at-the-market” distribution. This exemption is granted on the condition that this
Prospectus and any Prospectus Supplement (other than in relation to an “at-the-market” distribution) be translated into French
if the Company offers Securities to Québec purchasers in connection with an offering other than in relation to an “at-the-market”
distribution.
LEGAL
MATTERS
Certain
legal matters related to the Securities offered by this Prospectus will be passed upon by DLA Piper (Canada) LLP on behalf of the Company.
TRANSFER
AGENT AND REGISTRAR
The
transfer agent and registrar for the Common Shares is Endeavor Trust Corporation at its principal office in the City of Vancouver, British
Columbia.
INTEREST
OF EXPERTS
The
following are persons or companies whose profession or business gives authority to a statement made in this Prospectus as having prepared
or certified a part of that document or report described in this Prospectus:
| ● | MSLL
CPA LLP, Chartered Professional Accountants is the external auditor of the Company. |
To
the knowledge of management of the Company, as of the date hereof, no expert, nor any associate or affiliate of such person has any beneficial
interest, direct or indirect, in the securities or property of the Company or of an associate or affiliate of any of them, and no such
person is or is expected to be elected, appointed or employed as a director, officer or employee of the Company or of an associate or
affiliate thereof.
promoters
Except
for Dr. Richard Lu, the Chief Executive Officer of the Company, no person or company has, within the two years immediately preceding
the date of this Prospectus, been a promoter of the Company, within the meaning of applicable securities laws. Dr. Lu holds 781,000 Common
Shares representing 2.91% of the issued and outstanding Common Shares and 550,000 stock options to acquire Common Shares at an exercise
price of $0.75 per Common Share and expiring on November 4, 2027.
Other
than as disclosed in this section or elsewhere in this Prospectus, no person who was a Promoter of the Company within the last two years:
| ● | received
anything of value directly or indirectly from the Company or a subsidiary; |
| ● | sold
or otherwise transferred any asset to the Company or a subsidiary within the last two years; |
| ● | has
been a director, chief executive officer or chief financial officer of any company that during
the past 10 years was the subject of a cease trade order or similar order or an order that
denied the company access to any exemptions under securities legislation for a period of
more than 30 consecutive days or became bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement
or compromise with creditors or had a receiver or receiver manager or trustee appointed to
hold its assets; |
| ● | has
been subject to any penalties or sanctions imposed by a court relating to Canadian securities
legislation or by a Canadian securities regulatory authority or has entered into a settlement
agreement with a Canadian securities regulatory authority; |
| ● | has
been subject to any other penalties or sanctions imposed by a court or regulatory body that
would be likely to be considered important to a reasonable investor making an investment
decision; or |
| ● | has
within the past 10 years become bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement
or compromise with creditors or had a receiver or receiver manager or trustee appointed to
hold its assets. |
SolarBank (NASDAQ:SUUN)
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De May 2024 a Jun 2024
SolarBank (NASDAQ:SUUN)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024
