Mr. Myke Clark reports

SOLAR ALLIANCE SIGNS LETTER OF INTENT TO ACQUIRE CANADIAN SOLAR COMPANY IN TRANSFORMATIVE TRANSACTION

Solar Alliance Energy Inc. has entered into an arm's-length letter of intent dated May 16, 2023, to acquire a growing, profitable Canadian solar company (the target) in a predominantly share-based transaction.

The target is a growing commercial and utility solar company based in Alberta with year-to-date unaudited 2023 fiscal year (July 31, 2023, year-end) revenue of $5,801,023.

The target has a backlog of contracted projects totalling more than $5.6-million and expects continued revenue growth this year and beyond.

"This acquisition is financially transformative for Solar Alliance and will drive improved top- and bottom-line results," said chief executive officer Myke Clark. "The acquisition target is profitable, is experiencing strong growth and is well respected in the Alberta solar industry. The transaction is expected to significantly increase the scale of Solar Alliance, be immediately accretive to Solar Alliance, provide access to the rapidly expanding Canadian solar market and create operational synergies while positioning the company to be cash flow positive posttransaction. With the recent introduction of a 30-per-cent investment tax credit for renewable energy projects in Canada, the timing for expansion into Canada is ideal.

"The consideration for the transaction totals $6-million and is predominantly share-based, which creates long-term alignment with current shareholders. We are also aligned in our business models and desire to drive profitable growth as opposed to growth for growth's sake. The combined management team, board and insiders will own approximately 54 per cent moving forward. The addition of an experienced management team will also complement Solar Alliance's competitive advantage when targeting increasingly larger solar projects to drive continued growth in Canada and the United States," concluded Mr. Clark.

Transaction highlights:

• Target is a Western Canadian leader in solar for commercial and utility customers, with more than 33 megawatts of commercial and utility solar projects installed.
• Experience in commercial and institutional design and installation of solar systems since 2013.
• Strong forecasted growth supported by a strong sales pipeline and a contracted backlog of projects.
• Favourable timing for the Canadian solar market with the recent introduction of a 30-per-cent investment tax credit in the March, 2023, federal budget.
• Opportunities for operational synergies, including shared engineering services, administrative and accounting services, and procurement optimization.
• Projected financing savings over time through increased buying leverage, decreased bonding costs and decreased debt facility costs, owing to larger scale.
• Posttransaction, on a fully diluted basis, the target shareholders would hold approximately 25 per cent of the issued common stock in Solar Alliance.

The non-binding LOI provides 90 days of exclusivity to complete due diligence, determine the final structure of the transaction (based on advice from legal, tax and professional advisers and in accordance with applicable corporate, tax and securities laws) and to enter into a binding, definitive agreement. For commercial and confidentiality reasons, Solar Alliance will not disclose the name of the target until definitive agreements have been executed.

Total consideration to be paid by the company in connection with the transaction is $6-million, consisting of the following components:

• $500,000 cash;
• $700,000 in unsecured convertible debt (five-year term, 10-per-cent interest per annum, convertible at a price of 16 cents per share);
• $4.8-million in common shares of the company, at a deemed price of eight cents per share, for a total of 60 million common shares;
• One-half share purchase warrant for each common share issued, at a price of 20 cents per share for a period of two years, for a total of 30 million warrants.

Closing of the proposed transaction remains subject to a number of conditions, including satisfactory completion of due diligence, the execution of a binding definitive agreement, shareholder approval and the approval of the TSX Venture Exchange.

About Solar Alliance Energy Inc.

Solar Alliance is an energy solutions provider focused on the commercial, utility and community solar sectors. Its experienced team of solar professionals reduces or eliminates customers' vulnerability to rising energy costs, offers an environmentally friendly source of electricity generation, and provides affordable, turnkey clean energy solutions. Solar Alliance's strategy is to build, own and operate its own solar assets while also generating stable revenue through the sale and installation of solar projects to commercial and utility customers. The technical and operational synergies from this combined business model supports sustained growth across the solar project value chain from design, engineering, installation, ownership and operations/maintenance.

We seek Safe Harbor.