Earnings call transcript: SolarBank sees revenue decline but improves gross margin in Q4 2025

SolarBank Corp (SUNN) reported its fourth-quarter earnings for 2025, revealing a significant drop in revenue but an improvement in gross margin. The company’s stock remained unchanged at $58.85, near its 52-week high of $64.31. According to InvestingPro analysis, SolarBank appears overvalued at current levels, with a market capitalization of $4.3 billion. Despite a challenging market environment, SolarBank’s strategic initiatives and partnerships signal a focus on future growth.

Key Takeaways

• SolarBank’s total revenue fell by 29% year-over-year to $41.5 million.
• The company improved its gross margin from 20% to 25%.
• SolarBank’s net loss amounted to $31.1 million, or $0.97 per share.
• The company reported a substantial increase in its cash position, up 140% from the previous year.
• SolarBank is targeting $10 million in annual recurring revenue from its recent acquisition.

Company Performance

SolarBank’s performance in the fourth quarter of 2025 was marked by a notable decrease in revenue, primarily driven by a 57% decline in EPC services revenue. However, the company’s IPP revenue showed a significant increase, rising from $0.6 million to $9.3 million. InvestingPro data reveals the company maintains a healthy gross margin of 59% and an overall Financial Health Score of "GOOD," suggesting operational resilience. The renewable energy sector faced a downturn, with industry indices dropping over 60%, impacting SolarBank’s results. Nevertheless, the company has been actively expanding its project pipeline and exploring new markets, which could bolster future performance. Subscribers to InvestingPro can access 12 additional key metrics and exclusive ProTips about SolarBank’s financial health.

Financial Highlights

• Total Revenue: $41.5 million (29% decrease from the previous year)
• EPC Services Revenue: $23.3 million (57% decline)
• IPP Revenue: $9.3 million (increased from $0.6 million)
• Gross Margin: Improved to 25% from 20%
• Net Loss: $31.1 million ($0.97 per basic share)
• Cash Position: $15 million (140% improvement from the previous year)

Outlook & Guidance

Looking ahead, SolarBank has set ambitious targets, including $10 million in annual recurring revenue from its acquisition of the Solar Flow-Through Fund. Analyst consensus from InvestingPro suggests potential upside, with price targets ranging from $45.13 to $81.49. The company’s comprehensive Pro Research Report, available to InvestingPro subscribers, provides detailed analysis of growth prospects and valuation metrics. The company is also focusing on battery storage and alternative technologies, aiming to leverage the Investment Tax Credit until 2030. SolarBank’s strategic expansion into data center power solutions and community solar projects in Nova Scotia are expected to contribute to its growth.

Executive Commentary

Dr. Richard Lu, CEO of SolarBank, expressed optimism about the company’s future, stating, "The future is bright." He emphasized the company’s strategy to build assets and strengthen its financial position, noting, "We build assets to increase our bank strength." Dr. Lu also highlighted the importance of kilowatt-hours in the energy sector, saying, "At the end of the day, all the coins are a sum of kilowatt-hours."

Risks and Challenges

• The renewable energy market’s significant downturn poses ongoing challenges.
• Increasing electricity prices could impact consumer demand and project costs.
• The company faces risks associated with its geographical expansion and diversification strategy.
• SolarBank’s financial performance may be affected by macroeconomic pressures and changes in regulatory policies.

SolarBank’s focus on strategic partnerships and technological innovation positions it for potential recovery and growth. However, the company must navigate market challenges and capitalize on emerging opportunities to achieve its long-term objectives.

Full transcript - SolarBank Corp (SUNN) Q4 2025:

Megan Haley, Investor Relations, PowerBank: Alright, hello everyone. Thank you so much for standing by. Good afternoon and welcome to the PowerBank Fiscal Year End 2025 Financial Results and Corporate Update Conference Call. My name is Megan Haley. At this time, all participants are in a listen-only mode. After today’s presentation, there will be a question and answer session which will feature previously received questions. Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately one hour after the end of the call and accessible on the Investor Relations portion of our website for access for 30 days. Today, the company issued a press release for its financial results for the fiscal year ended June 2025.

A copy of that press release can be found on the company’s website at powerbancorp.com under the Investors tab. Joining me on today’s earnings call from PowerBank’s management team are Dr. Richard Lu, Chief Executive Officer, and Sam Sun, Chief Financial Officer. During this call, management will be making forward-looking statements, including statements that address PowerBank’s expectations for future performance or operational results. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in PowerBank’s annual information form, the most recently filed annual report on Forms 40-F and subsequent periodic reports filed with the SEC, CDAR, and PowerBank’s press release that accompanies this call, particularly the cautionary statements made in it. The content of this call contains time-sensitive information that is accurate only as of today, October 2, 2025.

Except as required by law, PowerBank disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to CEO Dr. Richard Lu.

Dr. Richard Lu, Chief Executive Officer, PowerBank: Hi, thank you, Megan. Good afternoon, everyone, on the call. Prior to turning the call over to our CFO, Sam, I’d like to highlight some of our existing progress to accompany our filing in the financial report for the year to date and the fiscal third quarter 2025. We are going to focus our presentation today on our fiscal year-end results. As of today, we are sitting with projects representing approximately 84 megawatts of solar and 44 megawatt-hour of battery storage that are expected to reach notice to proceed within the next 12 months, which we believe has the potential to grow by an order of magnitude in the coming years. Solar power is undeniably a source of energy that has unique, significant cost and environmental benefits to power producers and consumers alike. As technologies continue, people, solar proliferation across the globe.

For the full 12 months of fiscal 2025, we reported $41.5 million of revenue. This is $16.9 million lower than last year for the same period. Our EPC services was the most area that has the reduction of $30.8 million to $23.3 million. Right? This is, as we discussed previously, PowerBank went public for the purpose of being able to own more assets and grow its IPP business. This strategy is going to provide a very high margin, recurring revenue over a long time, and the historical development to sell the model has been successful because we were looking for working capital, we’re looking for revenue growth, but those revenues are very lumpy and only one time when the project is sold and then there’s no more revenue, right?

Keeping more of the asset that we are developing is necessarily going to mean a reduction in EPC revenue, and you will see the correlation in the financials. This strategy is starting to show results as though even though the revenue was down, our gross profit actually was only $1.2 million less than last year. I think about the significant drop in revenue and think about the not so much drop on the gross profit, right? The first fiscal year and the gross margin improved by 5% to 25%. The profitability is increasing on the projects. Our IPP production generated $9.3 million of high-margin revenue, and last year at this time, we only had $0.6 million of recurring revenue. Now we are at $9.3. This revenue presents recurring asset-based revenue for zero emitting electricity supply to our customers, such as the electrical system operators and municipal governments.

I will say to underscore, we believe our IPP revenue will grow over time in lockstep with the solar power plants we build that we choose to own upon completion. I would like to also highlight some of the announcements, events, and milestones in the fiscal year that support the conviction that we are well positioned for growth. As you know, we closed our acquisition of the Solar Flow-Through Fund for a total value of $45 million at all stock transactions, so it’s closed. As you also remember, the CIM Group, which is a real estate and infrastructure owner-operator, land and developer, and us, have entered into a mandate letter providing up to $100 million in project-based financing for a portion portfolio of 97 megawatts of solar projects located in the United States. That portfolio is going very well and moving projects to construction.

I would say start construction before July 3, 2026. We continue to execute on the company’s development pipeline for a solar project that currently is about 942 megawatts. The battery is at 864 megawatt-hours. We categorize our pipeline into the following: end of construction means already in construction, advanced development means that we’ll reach notice to proceed within the next 6 to 12 months, and the development is greater than 12 months. Those are in our corporate presentation on the website, as clearly illustrated. The next update is really about our relationship with Qcells. As you see, we have announced a relationship with Qcells in Upstate New York. That represents about 25.58 megawatts, total transaction of $49.5 million. Those contracts are under construction. We also expect we will retain an operation maintenance contract for those projects following completion.

Currently, two of the four are under construction and two of them are in late stage permitting. We also announced a strategic expansion into the data market. We do not have an actual contract in terms of being a power supplier to a data center yet, but the conversations are going fairly well. You will see continued effort for us to provide the needed power in a timely fashion to data centers, whether it’s more power from the grid through our insight of getting power from the grid or building behind-the-meter power solutions. We have a 3.26 megawatts Camellus solar project, and that project, as usual, as always, you know, every year we have one or two projects going to Charties, which is one of the subsidiaries called Solar Advocate, and that one is also under construction for Charties, demonstrating the year-after-year satisfactory customers returning business for us.

The company closed a registered direct offering with a single institutional investor for $8.5 million and marked the first time after the IPO that we raised capital on the capital market. We are very active in the U.S. However, we started in Canada, so we always have active activities in Canada. The company announced that we have three community solar projects in Nova Scotia that not only we get the contract, we also have $1.74 million of funding through the Nova Scotia Department of Environment and Climate Change provided to us and also from the Net Zero Atlantic Program. Those contracts are now in the permitting and design stage. We expect construction in 2026, so it’s commercial operation in 2026. Continued development of the best project in Ontario. Two of them are backed by Royal Bank of Canada’s financing of $25.8 million.

The SF06 is under construction, which we have announced already, and then the other ones are being permitted and we’ll continue to bring them to commercial operation. Having given you those single individual items, and before I hand it to Sam, I will say I want to highlight that the One Big Beautiful Build Act has also created an opportunity for PowerBank Corp. to accelerate our development pipeline based on the new deadline. We have prioritized our development possibly in the key U.S. states where site control, interconnection, and permitting are sufficiently advanced to qualify for the full ITC treatment and the new rules.

In other words, we will have projects starting before December this year, so there will be no foreign entity concern issues, and the majority of our project will start construction past the physical work test before July 3, 2026, that we can execute to deliver to commercial operation by the end of 2030. I can have a clear visual about our policy solar in the States till 2030. Having said so, as you also know, you know we have diversified our footprint across Canada, you know, to counter the, I would say, the policy risk. We are now in the ISO’s LT2 procurement. We have hundreds of megawatts of solar into the LT2 procurement filing end of this month. We also have gigawatt-hours of battery bid into the capacity market in Ontario filing by the end of December.

Taking this parallel approach in both markets, right, I would say gives us tremendous ability not only sitting on a reasonable number of cash, but also opens doors to, I would say, given the current market condition in the U.S., harvesting what we have done before 2030. In the meantime, grow the battery storage and other technologies because in the U.S. we need all forms of power to counter electricity price increasing, counter the demand of data centers or digital economy. In Canada, we are focusing on key markets such as Nova Scotia, Ontario, Alberta, and BC. Those will enable us to hold significant market share and we are actively expanding. Even though our top revenue reduced, as a client, you know, we now focus on asset building versus top line, and we are both doing the same in the U.S. and Canada.

Now I’d like to turn the call over to Sam, who will review our financial results in more detail for you. Sam, please.

Sam Sun, Chief Financial Officer, PowerBank: Thank you, Richard. First, please note that all the figures are in Canadian dollars, and again, we are going to cover the 12-month numbers with the quarterly numbers available in filings. That’s what’s submitted today. Our total revenue for the 12 months was approximately $41.5 million compared to the $58.4 million in the prior year, a decrease of about 29%. Debt to revenue increased significantly, rising from $2 million to $7 million, driven by the sale of five community solar projects in fiscal 2025 versus the three lower margin projects in fiscal 2024. The EPC services revenue declined by about 57% to $23.3 million in fiscal 2025 compared to the $54.1 million in fiscal 2024. This decrease was primarily due to the lower construction activity, reflecting the timing differences. The sixth project totaling 36 megawatts in fiscal 2025 versus the fourth project totaling 24 megawatts in fiscal 2024.

Our IPP revenue increased by $8.7 million, reaching $9.3 million in the current fiscal year following the acquisition of Solar Flow-Through Fund at the beginning of this year. The other service revenue remained relatively unchanged. The gross margin improved to approximately 25% in the current fiscal year compared to 20% in the last year. The improvement was driven by a favorable shift in our revenue mix with a large proportion coming from IPP, which generates more stable and higher margin revenue. In the current year, gross margin for IPP includes approximately $2.8 million in depreciation expenses. In addition, the gross margin for EPC service revenue improved from 18% to 30% year over year. Operating expenses were around $49.6 million in the current year compared to $16.1 million in the prior year.

The big increase was mainly due to the non-cash impairment losses, totaling about $30.4 million related to the well and long-lived assets in the IPP segment, as well as approximately $3.5 million of additional expenses related to the Solar Flow-Through Fund acquisition. While lower sales in this year increased operating expenses as a percentage of revenue, we expect this ratio to decline going forward as we continue scaling both the business and asset base. As noted in today’s press release, I just added out what’s negative about $0.7 million compared to positive $0.8 million in the prior fiscal year. Net loss for the year was around $31.1 million or $0.97 per basic share compared with a net loss of $3.6 million or $0.13 per basic share in the prior year.

Net loss was primarily the result of non-recourse impairment losses and the higher cost associated with the Solar Flow-Through Fund acquisition. As of June 30, 2025, current assets totaled $41.3 million and increased to only $3.7 million or 1.134% from the end of fiscal year 2024, primarily driven by higher cash, receivable, and inventory. Current liability was $43.1 million, up to only $9.7 million from the prior year, mainly reflecting higher payables and the current portion of long-term debt, which is almost entirely non-recourse project-level debt assumed in the Solar Flow-Through Fund acquisition. Long-term debt was $63 million, an increase of around $58.2 million year over year, also driven by the acquisition of more than 70 projects from the Solar Flow-Through Fund acquisition. Importantly, our debt is primarily non-recourse project debt, and we believe the current level is manageable. Our largest lenders are leading North America financial institutions.

For example, as announced last November, Royal Bank of Canada (RBC) provided a $25 million loan to support the construction, operation, and maintenance of the 4.99 megawatt battery storage system project in Ontario. We continue to secure highly variable financing terms relative to our size, which are detailed in our filings. Our cash, restricted cash, and short-term investments total around $15 million as of June 30, 2025, compared to last year’s $6 million. A portion of this cash balance is restricted under the credit agreement assumed with the Solar Flow-Through Fund acquisition. We remain confident in our ability to execute our strategy for the next fiscal year and beyond, with a focus on continued growth of the Independent Power Producer (IPP) portfolio and advancing our development pipelines. Okay, that’s everything from me, and we’re back to you, Richard. Thank you.

Dr. Richard Lu, Chief Executive Officer, PowerBank: Wonderful. Thank you, Sam. I will say, before we open up the call to questions and answers, I’d like to make some remarks on the market. As we know, not only the microcap have endured sustained difficulties in the market, specifically the clean and renewable energy market also endured continued headwind. If you look at the industry index, most companies have dropped values more than 60%, including PowerBank. A lot of companies hit the market for sale. You’re kind of looking at a very discouraging environment. On the other hand, not only every time when I speak to the market, I tell people the future is bright, and we do see a very, I would say, stabilization of the market. You can see that from the low of the industry, probably we improved by 30% and continue trending up. The fact is supply-demand. The fact is cost of electricity.

From my perspective, I will say, how is this company doing? Is this company going to continue to deliver shareholder values? Is this company going to be very stable, or is this company going to follow the rest of the players? I would say this company is not only going to stabilize, but also trending up for three reasons. As you can see, I shared with you, our IPP grew about 1,500% at the cost of reducing our top revenue. Top revenue, in my view, when renewables and clean energy are not the topic of the day, it will not convert into capital market values. We build assets to increase our bank strength. Our gross margin is 25% and continues to improve. Our cash at this moment is about 140% better than last year. How much cash I’m sitting? I’m sitting on about $15 million cash at this moment.

That will last years from a burn rate perspective for PowerBank. Also, most significantly, as I mentioned, we have been talking about the things going to public that we are going to gradually increase our asset value. Our asset increased by 250%. It was $40 million, and now it’s $138 million. Those are the things we do. So what? You do all of those things. I will say the so what reflecting three things. The number one is the strategy. I think in this turmoil market, the company needs to have a clear strategy to share with our investors, our shareholders, what’s the path to profitability? What’s the path for long-term sustainable competitive profitability? You can see we are executing the strategy, even risking the perceptions of the revenue reduction. I think the second thing is that this company is looking for long-term stability.

We did not go out to spend all the cash for promotions, for marketing, for just to grow the top line, so on and so forth, because we might have to endure another two or three years of difficulties, and we are prepared for it. Together with industry, as the market already stabilizes, we are certainly going to the upside of growing this company out of the stitch created by this, I would say, OBVBA, right? Shall we say? The so what also reflects our third, I would say, comment is about execution. PowerBank is built by the people who are veterans in the power industry: developers, builders, financiers, and we are proud of our ability to execute. I would love to have you visit our office someday.

You wouldn’t see lots of people sitting around because most of us are very, very mobile, and because we know our customers need us, the project needs us, and the industry, the demand is there for us. That’s why I would say this company certainly has a bright future, and I would say, stay tuned. With $15 million in hand, we wouldn’t be going to market at such a lower time for capital raise, should I say? I think I might get into trouble with my lawyer now for telling you this, but the future is bright. Thank you. Now I will turn to the questions.

Megan Haley, Investor Relations, PowerBank: All right, thank you, Richard. Everyone, we are now just going to take a minute to conduct a question and answer session. Please allow us a moment to pause and collect all of the questions and put them to management for comment. All right, Richard, our first question is, we saw a major increase in IPP revenue year over year. Are you able to provide a bit more color on how you see this revenue mix shaping up over the next year and resulting impact on margins? How has the regulatory environment in the U.S. changed your medium-term growth plans from a U.S. and Canadian perspective?

Dr. Richard Lu, Chief Executive Officer, PowerBank: There are two questions. One is about IPP forward-looking, and hopefully you don’t get me into trouble. The second is about the OBVBA. Let me not tell you what we have announced. Right? We have the acquisition of Solar Flow-Through Fund. Since the acquisition, the team has strengthened our operation maintenance functions. In the past, we contracted out and had less hands-on, but now we are taking a very hands-on approach. That’s the foundation. I would say we’ll bring $10 million Canadian dollars every year for the remaining 15 years. Right? The residual value after that, even though in this time, even the valuation, we cut it into a very low forecast, which, you know, I am not on board, but should I audition to say this is the industry is going, we may be okay.

Even at such a low future energy curve post-fit contract that the government already started considering a local generation program in Ontario, that’s where most of the projects are, to renew or continue the contract. Right? That’s the foundation there, $10 million a year, let’s say. The second, as you can see, is that we have the Royal Bank of Canada already backing two of the three energy storage, and those are the capacity payment, $1,500 per megawatt per day for 21 years. One of them, SF06, should be commissioned before the end of the year, commercial operation, start generating revenue, and the other two in the years to follow. Right? That’s another layer. On top of that, we own two municipal PPAs in the United States. We also own one community solar in the United States.

In addition to that, there’s a CIM Group mandate letter for $100 million of project financing to enable us to build the 97 megawatts of community solar in New York and other states. That’s a T-flip that, as we people on this call understand, at the end of the day, we’ll be owning them. Right? If I look at those things, from now till 2030, you will say probably a similar % of the increase of our IPP revenue. Right? In terms of IPP, you can see we are executing what we’re telling the market, that we will only sell if our customers, such as Honeywell, such as Qcells, such as Charties, and so on and so forth, want us to. The rest of them, we will try our best to keep it for the long-term recurring profitability to our shareholders. Okay?

If I turn into the OBVBA, it comes down to two things. Number one is the incentive, ITC. Number two is down to the tariff. What is the ITC? The investment tax credit is said that we finished, you know, if we don’t start construction by July 3, 2026. As I mentioned, we have, I would say, a significant pipeline will pass the physical work test before July 3. That will last till 2030. The tax credit will continue to play till 2030, even I assume there’s no policy change, which is a big assumption because, you know, Mr. President is known for, you know, directing new approaches. Right? Now we have focused our development team in the States on batteries, battery storage, and other technologies, and those ITC applications will continue till 2036.

We do have a clear path forward on the first impact of the OBVBA in terms of the tax credits. The second impact is on tariff. The tariff does increase cost. They increase our cost too. Right? However, as you know, our income, you know, from a community solar perspective is a stack that of many components. A major stack there is the commodity cost, which is electricity. You know, probably see today on Bloomberg somewhere saying that the electricity price in certain areas, you know, grew significantly, 30%, 40%, 50%. Right? What does that do to us? It actually increased my profitability for the community solar program we are building. Right? In the meantime, we understand there is demand for domestic products and that, you know, we have a very good working relationship with Qcells. Why we choose Qcells?

Because Qcells has a huge production facility in the States and we are turning to them for domestic content, you know, module supplies. We also turn into domestic content of the inverter and the battery and let alone the racking we have always been using made in the U.S. batteries. Right? Those are the two impacts from the OBVBA and this is how we see it and how we modify our own, I would say, tactic and moving forward in the States. Again, I know it’s a long answer. Hopefully, I don’t, I’m not leaving too little time for everyone. Yeah, so.

Sam Sun, Chief Financial Officer, PowerBank: Sorry, I wanted to add the one point here. In terms of the, on top of what Richard just mentioned, in terms of EPC service revenue, please keep in mind that we still have around $30 million U.S. dollars unrealized contract value for the Qcells. Also, as mentioned by Richard, because of the OBVBA, the impact, the NTP project from PowerBank becoming a harder commodity in this industry. Our clients are trying to secure the project from us as soon as possible so that can speed up our cash out and monetization of this project in the U.S. and to speed up our IPP strategy in Canada. Thank you.

Megan Haley, Investor Relations, PowerBank: All right, thank you both so much. Moving on to our next question, how do you view the integration and synergies following the acquisition of Solar Flow-Through Fund? Additionally, could you explain the significant impairment loss recorded in relation to the Solar Flow-Through Fund acquisition?

Dr. Richard Lu, Chief Executive Officer, PowerBank: That’s a very good question. A lot of people are asking me, you know, why I paid so much for Solar Flow-Through Fund. I started this company as a developer. You know, we have to sell. You know, you have to grind every day, you know, make development costs, development profit. I know the margins are very good. That’s how we grew this company from nothing, you know, a million dollars a year all the way to $58 million a year in, let’s say, 12 years. Right? If we’re happy with it, we wouldn’t be going to public. You know, we’re going to public because our shareholders are saying that, you know, where’s the recurring revenue? Right? That’s the foundation we made a deal with the Solar Flow-Through Fund.

Since the closing of last year, over the last year, we are getting very, very hands-on enhancement and so on and so forth. Right? For me, this is strategic and profitable from a long-term perspective. You know, it produces $10 million. We don’t burn $10 million. After paying everything, it’s become a foundation for this company to survive on. Right? Let alone the other, the battery storage, the CIM Group portfolio. Right? You can see not only we have a base to survive no matter what happens in this industry, but also give us a foundation to grow. Right? Now, if you look at this one, if that’s such a valuable thing, why, you know, your filings are seeing a different picture? I’m a Master of Business Administration. I think I understand the management content, accounting, but I certainly, you know, not understand everything in the, you know, auditing world.

They have a lot of consideration. They do a lot of working. I really appreciate everyone on the team can pull this through, you know, in such a complex item. Having said complex, I think the significant accounting treatment is coming from three areas. First of all, you know, given the industry’s volatility, you know, everyone is in a turmoil here. Our auditors and the management team discussed that they decided to take a, I would say, you know, a very conservative approach, including using a higher discount rate. You know, when you have a long asset, when you’re changing the discount rate, I think mathematically we know what it will result. Okay? The second reason is that, you know, the future projection is based on the past history.

You know, the past history, as we see that is before the acquisition, that we have a contract out of operation maintenance. Okay? Since the acquisition, we are taking it in-house. We continue to work through our original team there, bettering the financing conditions. The production is improving. However, the historical production was just meeting the coverage ratios, meeting the agreements, but not necessarily driving for bonus payment. When you’re using historical data, looking at the future, not taking into consideration the operation maintenance approach going forward, it certainly would deliver a less valuable picture. That’s the second reason. The third reason was also compliance, I should say, is the energy curve. We had an energy curve from our advisors when acquisition about more than 12 months ago, giving us the valuation of $41 million. This time, the energy curve was different.

When you’re pushing for difference, the major difference is the post-fit contract revenue. Could it be $0.18? Could it be $0.23? Or could it be $0.06? Could it be $0.08? The decision was, regardless of the major McKinsey’s forecast, regardless of other industry forecasts, regardless of the data center, things on and so forth, and the data curve was taken with very low post-contract revenue. You can see the layers and the layers and the layers of this conservatism got us here. I’m not unhappy because we do value assets on an annual basis. The fact is, we have a very good contract. We have a very good operation. We shall see a correction, I would say, by next year this time. That’s another long answer to your second question.

Megan Haley, Investor Relations, PowerBank: That’s great. Thank you so much. I think the next question here is our last question. Can you please provide any updates on the company’s plans for data center expansion and its crypto treasury strategy?

Dr. Richard Lu, Chief Executive Officer, PowerBank: Okay. This is more of a, you know, I would say, action and progress. We announced our interest in data center in the beginning of the year, and we have been in discussion with a lot of data center developers, including tenants. I think, you know, at this moment, we do not have an actual contract working with a data center, but I will say we have reiterated our approach and to a point now we are comfortable moving forward. At the very beginning, we said, you know, we’re going to build a large microgrid, you know, in Arizona, for example, providing data centers, so on and so forth. Now we’re realizing that probably is not going to happen in five to seven years’ timeframe.

We thought about this one, what if we actually, you know, buy a data center, probably already built, so on and so forth, and run it, and realizing that we may not be the ones that are actually running those NVIDIA racks and so on and so forth. Now what we landed is become the power partner to the data centers. In other words, we stay outside of the shell, providing power from the grid because we know how to send the power to the grid. We also know how to get the power from the grid. In addition to that, because of the reliability requirement, we will build for reliability purposes behind the meter, generation wherever possible. We have done combined heat and power gas turbines.

I understand this will take five years now, so probably it was not as immediate as possible, but solar is certainly possible immediately in, I would say, six to twelve months. Solar is not significant if you don’t have land to put the solar panels. We put battery storage, giving, for example, in Ontario, they have this ultra-low rate in the night, and let’s say the $0.02 in the day could shot up to the top teens, so on and so forth. There’s a certain way to not only arbitrage, but also provide backup power, certain areas, because I think about 50% of the power is used for conditioning of the shell, and that can be solved by geothermal and other technologies, energy efficiency. Those are the ones that we are moving forward on the data center part.

We start getting tractions, even so much so now we are in discussion about a distributed data center or distributed AI versus centralized AI. For the interest of speedy delivery of an actionable data center, instead of having hundreds of megawatts a site, we might have to do more of this distributed 10, 20 megawatts each in a shorter timeframe. That is where we are in data centers. The crypto side is actually moving more significantly. As you can see, the agreements we entered with Intelliscope Technologies, ISTK, what we are doing now there is really to avoid making PowerBank Corp. a crypto treasury company because we do have real business. We do have assets. We do have revenue, and we love to be a power producer. Right? We do see the future of the digital assets.

At the end of the day, all the coins are a sum of kilowatt-hours. We produce kilowatt-hours. We are here to bridge the traditional power business with the future financial instruments. Number one is we announced the GEDIUS project. Now its commissioning is running. Sam, I’m looking forward to you telling me how much money I have at the end of the day so I can buy a few coins. That is going very well. That is the first thing you need: custodian, you need this and that. Intelliscope team will provide that. The second thing is that everyone is talking about the AI application. As you know, this company is vertically integrated. We have development, we have Engineering, Procurement, and Construction (EPC) services, we have asset management, we also have operation maintenance. So far, as a traditional power company, we do it manually. We do it with human noise.

We have analysts, including you, Megan, that have to read a lot of policies and so on and so forth to eventually identify a short list of sites so that our field people can go to secure them for future construction. Those things can actually be more efficiently done by a PowerBank-specific AI agent. I can tell you, we are in the midst of one of them. I think you probably saw the announcement that we are in beta testing. That is the second thing along the crypto digital venture. Obviously, lastly, we have not done it yet. We will continue to watch the industry, listen to experts from Wall Street, Bay Street, and so on and so forth. It is about real-world assets, about the tokenization of either physical or financial assets. I shall keep everyone posted going forward. That is the answer for the last question.

Megan Haley, Investor Relations, PowerBank: Great. Thank you so much. Thank you all for your questions, and the team is available for further questions over email or phone. Please feel free to reach out to us at any time.

Dr. Richard Lu, Chief Executive Officer, PowerBank: I really appreciate everyone showed up, and you know my email, you know my phone. I’m certainly looking forward to speaking with every one of you. I tell you, the future is bright. Thank you.

Sam Sun, Chief Financial Officer, PowerBank: Thank you.

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