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1015-00001 · Graymont Brothers Inc · Internal Memoranda

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CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588

MEMORANDUM

June 20, 2022

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I. Executive Summary

On June 17, 2022, Calloway-Briggs Renewables Inc. ("CBR" or the "Company") and the underwriters, led by Hargrove Keating & Co. as lead-left book-running manager, mutually decided to postpone the proposed initial public offering of the Company's common stock on the New York Stock Exchange (proposed ticker symbol: CBRI). The offering, which contemplated gross proceeds of approximately $600,000,000, was postponed in light of deteriorating market conditions in the renewables sector, broader macroeconomic headwinds including rising interest rates and inflationary pressures, and the effective closure of the IPO window for the near term. The decision to place the offering in dormant status was communicated to the full working group by Sandra Haverford, CBR's General Counsel, during a conference call held at 4:30 p.m. Eastern Time on June 17, 2022.

The registration statement on Form S-1 (SEC CIK: 0001948372) was confidentially submitted to the U.S. Securities and Exchange Commission (the "SEC") on April 11, 2022, as the initial confidential draft registration statement (DRS-1, EDGAR Accession No. 0001948372-22-000001), pursuant to the confidential submission process available to emerging growth companies under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Amendment No. 1 to the DRS was filed on May 20, 2022 (Accession No. 0001948372-22-000002) in response to the SEC's first-round comment letter, and Amendment No. 2 was filed on June 10, 2022 (Accession No. 0001948372-22-000003) in response to the SEC's second-round comment letter.

On June 14, 2022, the staff of the SEC's Division of Corporation Finance indicated oral clearance of Amendment No. 2, subject to the filing of a pricing amendment. The registration statement was never declared effective, no public filing of the S-1 has been made on EDGAR, and no pricing of the offering has occurred. As of the date of this memorandum, the registration statement remains in confidential draft status with the SEC.

This memorandum has been prepared to provide a comprehensive analysis of the following matters arising from the dormancy of the offering:

(a) the staleness rules governing financial statements included in the S-1 under Regulation S-X, including the applicable periods and trigger dates at which currently included financial statements will become stale and require updating;

(b) other non-financial content in the registration statement that will require updating upon reactivation of the offering, including business and operating disclosures, risk factors, executive compensation, capitalization, use of proceeds, and related-party transactions;

(c) the regulatory timeline and procedural steps for relaunching the offering, including SEC review considerations, NYSE listing application status, FINRA corporate financing review, lender consents, and other third-party approvals; and

(d) recommended preservation and monitoring actions during the dormancy period to ensure the working group can execute a rapid and efficient reactivation when market conditions improve.

Key Takeaway. The current draft S-1 contains audited consolidated financial statements for fiscal years ended December 31, 2019, December 31, 2020, and December 31, 2021 (collectively, "FY 2019," "FY 2020," and "FY 2021") and unaudited condensed consolidated interim financial statements for the quarter ended March 31, 2022 ("Q1 2022"). Under Rule 8-08 of Regulation S-X, which governs the age of financial statements in registration statements on Form S-1, these financial statements will become stale and require updating at various trigger points depending on when the offering is relaunched. Most critically, if the offering is relaunched after 135 days following the end of FY 2022 — that is, after approximately May 15, 2023 — the registration statement will require inclusion of audited FY 2022 annual financial statements. Separately, the unaudited Q1 2022 interim financial statements will become stale approximately 134 days after March 31, 2022, or approximately August 12, 2022, meaning that any reactivation after that date will require, at minimum, updated Q2 2022 interim financial statements reviewed by the Company's independent auditors, Ashford & Pemberton LLP.

The staleness calendar set forth in Section III.D below should be treated as the primary planning tool for reactivation timing decisions, and early coordination with Ashford & Pemberton LLP regarding interim review and audit timelines is essential to preserving optionality.

II. Background — Current Status of the Registration Statement

A. Filing History

The following is a chronological summary of the key events in the transaction from engagement through the decision to place the offering in dormant status:

March 10, 2022. Engagement letter executed between CBR and Calderwood & Harkness LLP, pursuant to which the firm was engaged as issuer's counsel in connection with the proposed IPO. The engagement was authorized by Sandra Haverford, General Counsel of CBR, and countersigned by Jennifer Kwon on behalf of the firm.

March 14–18, 2022. Organizational meeting held at CBR's corporate headquarters located at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746. The meeting was attended by representatives of the Company (including Garrett Calloway, Chairman and CEO; Marcus Yoon, President and COO; Priya Anand, SVP, Finance & Treasurer; and Sandra Haverford, General Counsel), Calderwood & Harkness LLP (Jennifer Kwon, Brendan Walsh, and Natasha Forbes), Hargrove Keating & Co. (Oliver Marchetti, Managing Director, ECM, and Sonia Tran, Vice President, ECM), Prescott, Danforth & Yee LLP (Margaret Yee and Scott Halverson), Ashford & Pemberton LLP (Gregory Sondheim and Irene Valdez), and Broadmark Strategic Communications Inc. (Jason Eklund, IR advisor). During the organizational meeting, the parties discussed the proposed transaction structure, timeline, key risk factors, accounting and financial reporting considerations, due diligence procedures, and the anticipated SEC review process.

March 21 – April 29, 2022. Initial due diligence, drafting of the registration statement on Form S-1, and preparation of related transaction documents. Due diligence included review of material contracts, project-level financing documents, tax-equity partnership agreements, management services agreement with Pinnacle Vista Capital Partners III, LP, intellectual property licenses, environmental and regulatory permits, and related-party transactions. The due diligence request list (Document 12) comprised 247 individual line items across 16 categories. The initial S-1 draft was circulated to the full working group on April 4, 2022 (Document 31), with subsequent revisions through April 10, 2022 (Document 38).

April 11, 2022. Confidential submission of DRS-1 to the SEC under the JOBS Act. CBR qualifies as an emerging growth company, as its FY 2021 annual gross revenues of $487.3 million are below the $1.235 billion EGC revenue threshold established under Section 2(a)(19) of the Securities Act of 1933, as amended (the "Securities Act"). The confidential submission process permits an EGC to submit a draft registration statement for non-public review by the SEC staff prior to public filing.

May 6, 2022. The SEC's Division of Corporation Finance issued its first-round comment letter, which contained eighteen (18) comments. The comments addressed the following areas: revenue recognition policies, particularly as they relate to power purchase agreements ("PPAs") with fixed and variable pricing components; segment reporting under ASC 280 and the basis for the Company's single reportable segment determination; specificity and tailoring of risk factors; the Company's tax-equity accounting methodology, including the application of the hypothetical liquidation at book value ("HLBV") method under ASC 323 for investments in tax-equity partnerships; MD&A discussion of key operating metrics and trends; related-party transactions disclosure, particularly regarding the management-services agreement with Pinnacle Vista; and the presentation and reconciliation of non-GAAP financial measures, specifically Adjusted EBITDA.

May 20, 2022. The Company filed its response letter to the SEC's first-round comments and concurrently submitted Amendment No. 1 to the DRS (Accession No. 0001948372-22-000002). The response letter addressed each of the eighteen comments and described the corresponding changes made to the registration statement. Material revisions included expanded revenue recognition disclosures, additional risk factor specificity regarding project-level construction risks and commodity price exposure, enhanced HLBV methodology disclosure, and a revised non-GAAP reconciliation table.

June 3, 2022. The SEC issued its second-round comment letter, which contained seven (7) comments. These comments were more targeted and addressed: further clarification of the HLBV methodology and the allocation of income and loss among tax-equity partnership members; additional detail regarding PPA revenue, including the distinction between contracted and merchant revenue; refinement of the non-GAAP Adjusted EBITDA reconciliation to address certain adjustments identified by the staff as potentially misleading; and disclosure of the lock-up agreement carve-outs permitting certain transfers for estate planning purposes.

June 10, 2022. The Company filed its response letter to the SEC's second-round comments and concurrently submitted Amendment No. 2 to the DRS (Accession No. 0001948372-22-000003). All seven comments were substantively addressed in the response letter and corresponding revisions to the registration statement.

June 14, 2022. The SEC staff indicated oral clearance of Amendment No. 2. The oral clearance was communicated by the assigned SEC staff attorney to Brendan Walsh by telephone at approximately 11:15 a.m. Eastern Time, and was subject to the filing of a pricing amendment reflecting the final offering terms. The SEC staff confirmed that it had no further comments at that time.

June 17, 2022. Following discussions among CBR management, Pinnacle Vista, and Hargrove Keating regarding market conditions, the working group collectively determined to place the offering in dormant status. The decision was communicated to the full working group during the conference call referenced above. No pricing amendment was filed, no effectiveness order was issued, and the offering was not publicly announced.

B. Financial Statements Currently Included in the Draft S-1

The current draft registration statement (as reflected in Amendment No. 2) includes the following financial statements:

Audited Consolidated Financial Statements. Audited consolidated balance sheets as of December 31, 2021 and December 31, 2020, and the related audited consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three fiscal years ended December 31, 2021, December 31, 2020, and December 31, 2019, together with the notes thereto and the report of independent registered public accounting firm. The audit was performed by Ashford & Pemberton LLP, with Gregory Sondheim, CPA, as the lead engagement partner and Irene Valdez, CPA, as the audit manager. The audit report is dated March 15, 2022, and contains an unqualified opinion. Although CBR, as an EGC, is required to include only two years of audited financial statements rather than three, the Company elected to include all three years (FY 2019, FY 2020, and FY 2021) to provide investors with a more complete picture of the Company's financial trajectory.

Unaudited Interim Condensed Consolidated Financial Statements. Unaudited condensed consolidated balance sheet as of March 31, 2022, and the related unaudited condensed consolidated statements of operations, comprehensive income, and cash flows for the three-month periods ended March 31, 2022 and March 31, 2021, together with the notes thereto. These interim financial statements were reviewed by Ashford & Pemberton LLP in accordance with applicable standards.

Key Financial Metrics. The following key financial metrics are reflected in the current draft S-1:

These financial metrics reflect the Company's rapid growth trajectory, driven by the expansion of its operating portfolio from approximately 1.8 GW of installed capacity at the end of FY 2019 to approximately 3.1 GW at the end of FY 2021, with an additional approximately 770 MW under construction or in late-stage development as of Q1 2022.

C. Key Parties and Documents

The following is a summary of the key parties to the transaction and the status of the principal transaction documents:

Issuer. Calloway-Briggs Renewables Inc., a Delaware corporation (EIN 83-4027615), with its principal executive offices at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746. The Company was incorporated in Delaware on January 14, 2018, in connection with the acquisition of certain renewable energy assets by Pinnacle Vista Capital Partners III, LP.

Pre-IPO Majority Stockholder. Pinnacle Vista Capital Partners III, LP, a Delaware limited partnership, holds approximately 62% of the outstanding common stock of CBR on a pre-IPO basis. Pinnacle Vista Capital Management LLC serves as the general partner. The investment in CBR represents one of the largest platform investments in Pinnacle Vista's Fund III portfolio. Whitfield Archer & Doss LLP (Christine Navarro, Partner) serves as counsel to Pinnacle Vista in connection with the offering.

Lead-Left Book-Running Manager. Hargrove Keating & Co., with Oliver Marchetti, Managing Director, Equity Capital Markets, serving as the lead banker, and Sonia Tran, Vice President, ECM, serving as the day-to-day transaction manager. Prescott, Danforth & Yee LLP (Margaret Yee, Partner, and Scott Halverson, Counsel) serves as underwriters' counsel.

Independent Auditor. Ashford & Pemberton LLP, with Gregory Sondheim, CPA, as the lead engagement partner and Irene Valdez, CPA, as the audit manager.

Tax Advisor. Kessler McBride & Associates LLP, providing tax advisory services in connection with the offering, including analysis of the tax-equity partnership structures and ITC/PTC recapture considerations.

Transaction Document Status. The underwriting agreement exists in a near-final draft form (Document 127, dated June 15, 2022), reflecting the terms negotiated among the parties through the most recent markup session, but the agreement was never executed due to the postponement of the offering. The pricing agreement template (Document 128) remains blank — no pricing terms were ever inserted. With respect to lock-up agreements, fifteen (15) of the eighteen (18) required signatories had executed their lock-up agreements as of June 17, 2022. The three outstanding lock-up agreements are those of: (i) Douglas Pemberton, independent director nominee; (ii) Reginald Sato, SVP, Project Development; and (iii) Samantha Kirsch, VP, Investor Relations. These three individuals were expected to execute their lock-up agreements during the week of June 20, 2022, prior to the anticipated roadshow launch, but execution was suspended upon the decision to postpone.

III. Financial Statement Staleness Rules — Regulation S-X

A. Overview of Applicable Rules

The age requirements for financial statements included in a registration statement on Form S-1 are governed principally by Regulation S-X, promulgated under the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The relevant rules are:

• Rule 8-08 of Regulation S-X (17 C.F.R. § 210.8-08), which governs the age of annual and interim financial statements required in registration statements filed by smaller reporting companies and emerging growth companies. Because CBR is an EGC, Rule 8-08 — rather than Rule 3-12, which applies to non-EGC registrants — is the operative provision.

• Rule 8-03 of Regulation S-X (17 C.F.R. § 210.8-03), which sets forth the requirements for interim financial statements of smaller reporting companies and EGCs, including the content requirements and the period for which interim financial statements must be presented.

• SEC Staff Accounting Bulletin ("SAB") Topic 11.A, which provides interpretive guidance on the age of financial statements in filings, and various Division of Corporation Finance staff interpretive positions and compliance and disclosure interpretations ("C&DIs"), which address specific questions arising under the staleness framework.

Because CBR has a December 31 fiscal year-end and qualifies as an EGC — having annual gross revenues below the $1.235 billion threshold and not having completed its IPO — the analysis below is conducted under the EGC-specific provisions of Rules 8-03 and 8-08, including the accommodation that permits an EGC to present only two years (rather than three years) of audited financial statements. As noted above, CBR has voluntarily included three years of audited financial statements in its current draft S-1.

It is important to note that the staleness rules apply at the time the registration statement is filed, amended, or declared effective. Since CBR's registration statement has not been declared effective and has been filed only in confidential draft form, the relevant trigger will be the date on which the Company files an amendment to the DRS or the date on which the SEC declares the registration statement effective in connection with reactivation.

B. Rule 8-08 — Annual Financial Statement Requirements

Rule 8-08(a) of Regulation S-X provides that a registration statement on Form S-1 filed by an EGC must include audited financial statements for the registrant's two most recently completed fiscal years. As noted, CBR has elected to include three years of audited financial statements (FY 2019, FY 2020, and FY 2021), which exceeds the minimum requirement.

The critical timing provision is contained in Rule 8-08(b), commonly referred to as the "135-Day Rule." Under this rule, the audited financial statements for the most recently completed fiscal year must be included in the registration statement no later than 135 days after the end of that fiscal year. The 135-day period functions as a grace period: during the first 135 days of a new fiscal year, the registrant may rely on audited financial statements for the prior fiscal year (supplemented by interim financial statements, as discussed below), without needing to include audited financial statements for the just-completed fiscal year.

The application of the 135-Day Rule to CBR is as follows:

FY 2021 Year-End (December 31, 2021). The 135-day period following December 31, 2021, expired on approximately May 15, 2022. The DRS-1 was filed on April 11, 2022, and included audited FY 2021 financial statements, well within the 135-day window. Accordingly, the FY 2021 audited financial statements were current at the time of the initial filing and through the date of SEC oral clearance on June 14, 2022.

FY 2022 Year-End (December 31, 2022). The 135-day period following December 31, 2022, will expire on approximately May 15, 2023. This means that if the registration statement is filed, amended, or declared effective on or before approximately May 15, 2023, the existing audited FY 2021 financial statements (together with appropriate interim financial statements, as discussed in Section III.C below) will satisfy the annual financial statement requirement. However, if the registration statement is filed, amended, or declared effective after approximately May 15, 2023, the Company must include audited financial statements for FY 2022 (the fiscal year ended December 31, 2022). At that point, the FY 2022 audited financial statements would replace the FY 2019 audited financial statements (if the Company continues to present three years of audits) or would simply be required alongside the FY 2021 audited financial statements (if the Company reverts to the two-year EGC minimum).

Implication for Reactivation Planning. The May 15, 2023 date represents the most significant hard deadline in the staleness calendar. If CBR can reactivate the offering before May 15, 2023, the existing audited financial statements for FY 2019–2021 may be sufficient for annual statement purposes, subject to the interim update requirements discussed in Section III.C below. After May 15, 2023, audited FY 2022 financial statements become mandatory, which will require a completed annual audit by Ashford & Pemberton LLP. Based on prior experience, the FY 2022 audit would likely require a minimum of eight to ten weeks following year-end, with the earliest realistic availability of audited FY 2022 financial statements being mid-to-late March 2023, assuming Ashford & Pemberton commences audit fieldwork promptly after December 31, 2022.

C. Interim Financial Statement Requirements

Rule 8-03 of Regulation S-X sets forth the requirements for interim financial statements. In the context of a registration statement on Form S-1, interim financial statements must be included if the registration statement is filed or declared effective more than 134 days after the end of the registrant's most recently completed fiscal quarter, with the exception of the fourth fiscal quarter (Q4), during which the annual audited financial statements serve as the primary source of financial information.

The current draft S-1 includes unaudited interim condensed consolidated financial statements for Q1 2022, covering the three-month period ended March 31, 2022. The question is when these interim financial statements will become stale and require updating.

The following analysis sets forth the staleness triggers under four hypothetical reactivation scenarios:

Scenario 1: Reactivation in Q3 2022 (July–September 2022)

The Q1 2022 interim financial statements (reflecting the period ended March 31, 2022) will become stale approximately 134 days after March 31, 2022, which is approximately August 12, 2022. If the registration statement is amended or declared effective on or before approximately August 12, 2022, the Q1 2022 interim financial statements remain current and no update is required.

However, if the registration statement is amended or declared effective after approximately August 12, 2022, it must include interim financial statements for Q2 2022 (the six-month period ended June 30, 2022), together with comparable prior-period interim financial statements for the six-month period ended June 30, 2021. These Q2 2022 interim financial statements would need to be reviewed (but not audited) by Ashford & Pemberton LLP in accordance with PCAOB interim review standards (AU-C Section 930 / PCAOB AS 4105). In addition, the MD&A section would need to be updated to cover the Q2 2022 period, including discussion of interim trends, liquidity, and results of operations.

As a practical matter, if the Company were to target reactivation in late August or September 2022, it should plan to have Q2 2022 interim financial statements reviewed and available no later than approximately mid-August 2022. Based on the Company's financial reporting cycle, the Q2 2022 close process would likely conclude in late July 2022, with the interim review requiring approximately two to three weeks thereafter.

Scenario 2: Reactivation in Q4 2022 (October–December 2022)

Assuming Q2 2022 interim financial statements are included in the amended S-1, those interim financial statements (reflecting the six-month period ended June 30, 2022) will become stale approximately 134 days after June 30, 2022, which is approximately November 11, 2022.

If the registration statement is amended or declared effective after approximately November 11, 2022, it must include nine-month interim financial statements for Q3 2022 (the nine-month period ended September 30, 2022), together with comparable prior-period interim financial statements for the nine-month period ended September 30, 2021. These Q3 2022 interim financial statements would also require review by Ashford & Pemberton LLP.

A reactivation targeting a late-November or December 2022 effectiveness date would therefore require the Company to prepare and have reviewed nine-month interim financial statements through September 30, 2022. The Q3 2022 close process would likely conclude in late October 2022, with the interim review completed by mid-to-late November 2022.

Scenario 3: Reactivation in Q1 2023 (January–March 2023)

This scenario presents a more complex interplay between the interim staleness rules and the annual financial statement requirements. During the period from approximately January 1, 2023, through May 15, 2023, the Company may rely on the FY 2021 annual audited financial statements as its most recent audited annual financials, because the 135-day grace period for FY 2022 has not yet expired. However, the Company must also satisfy the interim financial statement requirements.

The nine-month Q3 2022 interim financial statements (reflecting the period ended September 30, 2022) will themselves become stale approximately 134 days after September 30, 2022, which is approximately February 11, 2023. After approximately February 11, 2023, the Q3 2022 interim financials are no longer current. The SEC staff's interpretive position is that during the Q4 window — that is, the period after the fiscal year-end but before audited annual financial statements are required — the registrant is not required to include Q4 interim financial statements (since Q4 is effectively subsumed into the annual audit). However, the staleness of the Q3 interim financial statements creates a gap.

In practice, after approximately February 11, 2023, the Company would need to either: (a) include audited FY 2022 annual financial statements (if the audit has been completed and such financial statements are available), which would eliminate the need for any interim update; or (b) rely on the 135-day grace period, which permits the registration statement to rely on FY 2021 audited financials through May 15, 2023, while including the most recently available interim data. The SEC staff has generally taken the position that if the annual audit for the most recently completed fiscal year is not yet available during the 135-day grace period, the registrant should include the most current interim data available, even if such data is technically stale, along with appropriate disclosure regarding the timing of the annual financial statements.

As a practical matter, if the Company seeks to reactivate in Q1 2023, the most efficient approach would be to coordinate with Ashford & Pemberton LLP to accelerate the FY 2022 audit so that audited FY 2022 annual financial statements can be included in the amended S-1, thereby avoiding the complexity of the interim staleness gap and positioning the Company with the most current financial information for the roadshow and marketing process.

Scenario 4: Reactivation After May 15, 2023

If the offering is not relaunched until after approximately May 15, 2023, audited FY 2022 annual financial statements are mandatory and must be included in the registration statement. In addition, the Company will need to include interim financial statements for the applicable FY 2023 period(s), depending on how late in 2023 the offering is relaunched:

• If relaunched before approximately August 12, 2023, Q1 2023 interim financial statements (three-month period ended March 31, 2023) may be sufficient.

• If relaunched between approximately August 12, 2023, and approximately November 11, 2023, Q2 2023 interim financial statements (six-month period ended June 30, 2023) will be required.

• If relaunched after approximately November 11, 2023, Q3 2023 interim financial statements (nine-month period ended September 30, 2023) will be required.

• If the offering extends into 2024, the cycle will repeat with the FY 2023 annual financial statements becoming required 135 days after December 31, 2023 (approximately May 15, 2024).

In addition, if audited FY 2022 financial statements are included, the Company will need to present audited comparative balance sheets as of December 31, 2022, and December 31, 2021, and statements of operations, comprehensive income, stockholders' equity, and cash flows for FY 2022 and FY 2021 (or FY 2022, FY 2021, and FY 2020, if the Company continues to present three years). The FY 2019 audited financial statements could be dropped at that point.

D. Summary Staleness Calendar

The following table summarizes the financial statement update requirements based on the approximate reactivation date:

This calendar should be maintained as a living reference document and updated as circumstances change. We recommend that the calendar be reviewed during each quarterly check-in with CBR management (see Section X.B below).

E. Impact on Ashford & Pemberton LLP Audit and Review Engagement

The financial statement staleness framework has direct implications for the engagement of Ashford & Pemberton LLP, the Company's independent registered public accounting firm, as follows:

Interim Reviews. Any updated interim financial statements (Q2 2022, Q3 2022, or subsequent periods) included in the registration statement must be reviewed by Ashford & Pemberton LLP in accordance with PCAOB Auditing Standard AS 4105 (Review of Interim Financial Information). The firm's review involves performing analytical procedures, making inquiries of management, and evaluating whether the interim financial information conforms with generally accepted accounting principles. The review does not constitute an audit and does not provide the same level of assurance. Based on prior experience with Ashford & Pemberton's review of the Q1 2022 interim financial statements, we estimate that the review of any subsequent interim period would require approximately two to three weeks following the Company's completion of its quarterly close process.

FY 2022 Annual Audit. If audited FY 2022 financial statements are required — either because the offering extends past May 15, 2023, or because the Company elects to include them earlier to provide the most current information — Ashford & Pemberton will need adequate lead time to complete the audit. The existing audit engagement letter between CBR and Ashford & Pemberton LLP (Document 84) covers the audit of FY 2019, FY 2020, and FY 2021 only. A separate engagement letter, or an amendment to the existing engagement letter, will be required to cover the FY 2022 audit. We recommend engaging with Gregory Sondheim promptly to: (a) confirm that Ashford & Pemberton has the resources and staffing to conduct the FY 2022 audit on an expedited basis if needed; (b) discuss the expected timeline for audit fieldwork and completion; and (c) negotiate the terms of the updated engagement letter, including fees.

SAS 72 / AU-C 920 Comfort Letters. As discussed in Section IV below, updated comfort letters will be required upon reactivation. The scope of the comfort letter procedures will need to cover the financial information in the updated registration statement, including any new interim or annual financial periods.

IV. Comfort Letter Considerations

A. Current Status

As of the date of this memorandum, the status of the comfort letters from Ashford & Pemberton LLP is as follows:

A draft initial comfort letter was received from Ashford & Pemberton LLP, dated June 8, 2022 (Document 139). The draft initial comfort letter was prepared in accordance with AU-C Section 920 (Letters for Underwriters and Certain Other Requesting Parties) and PCAOB AS 6101, and covered the financial statements and certain financial information included in the draft S-1 as of that date. The draft was circulated to Hargrove Keating's ECM team (Oliver Marchetti and Sonia Tran) and to Prescott, Danforth & Yee LLP (Margaret Yee and Scott Halverson) for review and comment.

Three comfort letters were planned in connection with the offering, consistent with standard IPO practice: (i) an initial comfort letter, to be delivered at the time of filing the publicly available registration statement; (ii) a bring-down comfort letter, to be delivered on the pricing date; and (iii) a pricing comfort letter (or second bring-down), to be delivered on the closing date. Of these three, only the initial comfort letter had been prepared in draft form. The bring-down and pricing comfort letters were never drafted or finalized because the offering was placed in dormant status before the roadshow commenced.

The draft initial comfort letter included procedures and findings covering: (i) the independence of Ashford & Pemberton with respect to CBR; (ii) the compliance of the audited financial statements with the Securities Act and Regulation S-X; (iii) the compliance of the unaudited interim financial statements with the requirements of Rule 8-03 of Regulation S-X; (iv) agreed-upon procedures covering certain financial data, percentages, and amounts derived from the Company's accounting records that appear in the registration statement outside the financial statements (including in the MD&A, capitalization table, dilution section, and selected financial data); and (v) a negative assurance statement regarding subsequent changes during the "change period" — the period from the latest balance sheet date (March 31, 2022) through a date within a few business days of the comfort letter date (approximately June 5, 2022).

B. Requirements Upon Reactivation

Upon reactivation of the offering, the draft initial comfort letter dated June 8, 2022, will be stale and cannot be used. A new comfort letter framework will need to be established, taking into account the following considerations:

New Initial Comfort Letter. A new initial comfort letter will need to be prepared and delivered by Ashford & Pemberton LLP that covers the updated financial statements included in the amended S-1. The scope of the new comfort letter will need to reflect: (a) the financial periods included in the updated registration statement (which may include additional interim periods or audited FY 2022 annual financial statements, depending on the reactivation timing); (b) a refreshed change period extending from the latest balance sheet date in the updated S-1 through a date within a few business days of the new comfort letter delivery date; and (c) updated agreed-upon procedures covering the numerical data, percentages, and financial information appearing outside the financial statements in the updated S-1.

Bring-Down and Pricing Comfort Letters. As with the original planned timeline, bring-down and pricing comfort letters will be required as of the pricing date and closing date, respectively. These letters typically cover the change period from the latest balance sheet date through a date within a few business days of the pricing and closing dates, and provide negative assurance regarding subsequent changes during such periods.

Updated Comfort Letter Request. The comfort letter request from the underwriters' counsel (Prescott, Danforth & Yee LLP) to Ashford & Pemberton LLP will need to be refreshed to reflect the updated financial information in the amended S-1 and any changes in the scope of the agreed-upon procedures. We recommend early coordination among Ashford & Pemberton (Gregory Sondheim and Irene Valdez), Hargrove Keating (Oliver Marchetti and Sonia Tran), Prescott, Danforth & Yee (Margaret Yee and Scott Halverson), and our team to ensure alignment on the scope and timing of the updated comfort letter request.

Lead Time. Based on prior experience, the preparation of a new initial comfort letter typically requires approximately two to three weeks from the date on which the final draft of the updated registration statement is circulated to Ashford & Pemberton, assuming the underlying financial statements have already been audited or reviewed. This timeline should be factored into the overall reactivation schedule.

V. SEC Review Considerations Upon Reactivation

A. Prior Oral Clearance

As described in Section II.A above, the SEC staff indicated oral clearance of Amendment No. 2 on June 14, 2022, subject to the filing of a pricing amendment reflecting the final offering terms. It is important to understand the legal and practical significance of this oral clearance in the context of a potential reactivation.

Oral clearance from the SEC staff is an informal indication that the staff has completed its review of the registration statement and has no further comments at that time. It is not a formal order of the Commission, it does not have binding legal effect, and it does not guarantee that the staff will not revisit the filing in the future. Oral clearance is typically communicated by telephone and is not memorialized in any written communication from the SEC. The clearance is understood to be conditioned on the filing of a pricing amendment (which triggers the Commission's declaration of effectiveness), and it is also implicitly conditioned on the absence of material changes in the registration statement or the registrant's business that would require additional disclosure or revision.

In the context of a dormant offering, the staff's prior oral clearance may provide some comfort that the core disclosure framework of the S-1 was acceptable to the SEC as of June 2022. However, the passage of time, the inclusion of updated financial statements, and any material changes in the Company's business, operations, or risk profile may prompt the staff to conduct a supplemental review of the amended registration statement upon reactivation.

B. Likelihood of Additional SEC Review

The SEC's Division of Corporation Finance maintains the authority to review any registration statement at any time prior to effectiveness, and the filing of a material amendment to a previously cleared registration statement may trigger additional staff review. The likelihood and scope of such additional review will depend on several factors:

(a) Scope of Amendments. If the amended S-1 includes updated financial statements for new periods, revised MD&A, updated risk factors, and other material changes, the staff may determine that a full or limited re-review is warranted. The more extensive the amendments, the greater the likelihood of additional comments.

(b) Passage of Time. The longer the dormancy period, the more likely the staff is to conduct a supplemental review. If the offering is reactivated within a few months, the staff may be more willing to rely on the prior clearance. If the dormancy extends for a year or more, the staff is more likely to treat the amended filing as effectively a new submission warranting fresh review.

(c) Regulatory and Accounting Developments. If new SEC rules, staff guidance, or accounting standards have been adopted during the dormancy period that affect the Company's disclosure obligations, the staff may issue comments to ensure compliance with the new requirements. For example, changes in non-GAAP measure guidance, climate-related disclosure rules, or amendments to Regulation S-X could trigger supplemental comments.

(d) Staff Turnover. If the SEC staff attorney or accountant assigned to CBR's filing has changed since the prior review, the new reviewer may take a different approach or identify issues that the prior reviewer did not raise.

We note that all twenty-five (25) prior SEC comments (eighteen in the first round and seven in the second round) were resolved through the response letters and corresponding amendments. The tracking matrix maintained by Natasha Forbes (Document 61, the "SEC Comment Tracking Matrix") should be updated upon reactivation to reflect any new issues arising from updated disclosures and to document the basis for any changes made to the registration statement during the dormancy period.

C. Confidential Submission Status

The registration statement was filed confidentially under the JOBS Act EGC accommodation, which permits an EGC to submit a draft registration statement for non-public review by the SEC staff. Under Section 6(e)(1) of the Securities Act, as amended by the JOBS Act, the EGC must publicly file its registration statement (and all prior confidential submissions) at least fifteen (15) days before the date on which the issuer conducts a "road show," as defined in Rule 433(h)(4) under the Securities Act.

Upon reactivation, the following public filing requirements will apply:

(a) All three prior confidential submissions (DRS-1, Amendment No. 1, and Amendment No. 2) must be publicly filed on EDGAR at least 15 days before any roadshow activity commences.

(b) Any new amendment(s) filed in connection with the reactivation — including the amendment incorporating updated financial statements and other revised disclosures — must also be publicly filed.

(c) If the Company files additional amendments after the initial public filing but before the roadshow, each such amendment must also be publicly filed on EDGAR.

The 15-day public filing requirement should be built into the reactivation timeline, as it represents a minimum lead time that cannot be compressed. The roadshow cannot begin until at least 15 days after the public filing of the registration statement.

VI. Non-Financial Content Requiring Updates Upon Reactivation

In addition to the financial statement updates described in Section III above, a number of non-financial sections of the registration statement will require revision upon reactivation to reflect developments during the dormancy period. The following is a section-by-section analysis of the anticipated updates.

A. Business Section and Risk Factors

The business section of the S-1 includes detailed descriptions of CBR's operating portfolio, development pipeline, and growth strategy. Several material developments are expected to occur during the dormancy period that will require disclosure updates:

Operating Portfolio Updates. The current draft S-1 describes two projects that were under construction at the time of the most recent amendment:

• Mesquite Wind (420 MW, Oldham County, Texas): The S-1 disclosed an expected commercial operations date ("COD") in Q3 2022. Upon reactivation, the status of this project must be updated to reflect whether COD has been achieved, any construction delays, final project costs, and the commencement of revenue generation under the project's offtake arrangements.

• Cimarron Solar (350 MW, Doña Ana County, New Mexico): The S-1 disclosed an expected COD in Q1 2023. Depending on the reactivation timing, the status of this project must be updated to reflect construction progress, any schedule or budget changes, permitting developments, and the current expected COD.

Additionally, the Brazos Storage project (200 MW / 800 MWh, Fort Bend County, Texas), which achieved COD in Q4 2021, has now been operational for several quarters. Operational performance data — including capacity factor, revenue generation, availability, and any warranty or performance issues — should be updated in the business section and in MD&A.

Development Pipeline. The S-1 describes a 6.2 GW development pipeline, including the Silverleaf Wind and Copper Basin Solar + Storage projects, among others. The pipeline may have changed materially during the dormancy period due to new project origination, project dispositions, changes in permitting status, or changes in interconnection queue positions. The pipeline description must be updated to reflect the current state of development activities.

Risk Factors. The risk factors section must be refreshed to reflect any new or changed risks that have emerged during the dormancy period. This includes, without limitation:

• Legislative developments, including the potential enactment of the Inflation Reduction Act of 2022 (or similar legislation), which could materially affect the investment tax credit ("ITC") and production tax credit ("PTC") framework applicable to the Company's projects and development pipeline. If such legislation is enacted before reactivation, the risk factors should be updated to address the implications for the Company's business, including any changes in tax-equity partnership economics, development returns, and competitive dynamics.

• Changes in the macroeconomic environment, including inflation, interest rate increases, supply chain disruptions affecting solar panels, wind turbine components, and battery storage systems, and labor market conditions.

• The market conditions that precipitated the postponement of the offering should be addressed in the risk factors, including any disclosure regarding the Company's ability to access the public capital markets on favorable terms.

• Any new litigation, regulatory proceedings, or enforcement actions involving the Company or its subsidiaries.

• Developments in the regulatory environment applicable to renewable energy, including state-level renewable portfolio standards, interconnection policies, and environmental permitting requirements.

B. MD&A

The Management's Discussion and Analysis of Financial Condition and Results of Operations section must be updated for all new interim or annual financial periods included in the amended S-1. This includes:

• Discussion of results of operations for the new period(s), including revenue, cost of revenue, gross margin, operating expenses, and net income, with comparison to the corresponding prior-period results and explanation of material variances.

• Updated liquidity and capital resources discussion, reflecting changes in cash flows, borrowings, capital expenditures, and available liquidity.

• Refreshed non-GAAP reconciliation for Adjusted EBITDA, including any changes in the adjustments used to derive Adjusted EBITDA. The non-GAAP presentation must comply with any updated SEC guidance on non-GAAP financial measures, including Regulation G, Item 10(e) of Regulation S-K, and applicable C&DIs. Given that several of the SEC's prior comments related to the Company's non-GAAP measures, particular care should be taken to ensure that any changes in the Adjusted EBITDA reconciliation are fully supported and clearly presented.

• Updated critical accounting estimates discussion, reflecting any changes in the Company's significant estimates or accounting judgments, particularly with respect to the HLBV methodology, PPA revenue recognition, and asset impairment assessments.

• Discussion of any known trends, demands, commitments, events, or uncertainties that have arisen during the dormancy period and are reasonably likely to have a material effect on the Company's financial condition or results of operations.

C. Capitalization and Dilution

The capitalization table in the S-1 must be updated to reflect the Company's capitalization as of the most recent balance sheet date included in the amended registration statement. Material changes that may have occurred during the dormancy period include:

• Equity grants from the 2022 Omnibus Equity Incentive Plan (which has a 12,727,273-share reserve) or the 2022 Employee Stock Purchase Plan (which has a 2,545,455-share reserve). If options have been granted, restricted stock units ("RSUs") have been awarded, or other equity-based awards have been made during the dormancy period, the capitalization table must be updated to reflect the dilutive impact.

• Exercise of stock options or vesting and settlement of RSUs that may have occurred during the dormancy period, which would change the number of shares of common stock outstanding.

• The pre-IPO common stock share count of 100,000,000 shares outstanding must be verified as of the most recent practicable date prior to reactivation.

• The dilution section must be updated to reflect the pro forma net tangible book value per share based on the updated financial statements and the proposed offering terms.

D. Executive Compensation

The executive compensation tables in the S-1 must be updated for the most recently completed fiscal year. If the offering is reactivated after April 1, 2023 (i.e., after the end of FY 2022), the Summary Compensation Table and related tables will need to include FY 2022 compensation data for the named executive officers. In addition:

• Any changes in the Company's named executive officers or directors during the dormancy period must be reflected in the executive compensation disclosure and biographical information.

• Any new employment agreements, change-in-control arrangements, severance agreements, or equity-based compensation awards granted during the dormancy period must be disclosed.

• The independence analysis for directors (including any independent director nominees) should be reviewed and updated.

• The "Compensation Discussion and Analysis" section (to the extent included on a voluntary basis by the Company, as EGCs are exempt from the CD&A requirement) should be reviewed for accuracy.

E. Related-Party Transactions

The related-party transactions section must be updated to reflect any new or modified related-party transactions during the dormancy period. In particular:

• The status of the Pinnacle Vista management-services agreement must be confirmed. Under the terms of this agreement, CBR pays Pinnacle Vista Capital Management LLC $2.4 million per year for management, consulting, and advisory services. The agreement terminates automatically upon the consummation of the IPO. If the agreement has been modified, renewed, or supplemented during the dormancy period, such changes must be disclosed.

• Any new transactions between CBR and Pinnacle Vista, its affiliated entities, or its portfolio companies must be identified and, if material, disclosed.

• Any transactions between CBR and its executive officers, directors, or their affiliates must be identified and disclosed if they meet the disclosure thresholds under Item 404 of Regulation S-K.

F. Description of Indebtedness

The S-1 includes a detailed description of the Company's material indebtedness, which must be updated upon reactivation to reflect current outstanding balances, any amendments or refinancings, and any new financing arrangements. The key instruments requiring updated disclosure are:

• Corporate Revolving Credit Facility. $400 million commitment from Veltrano National Bank, maturing January 2027. The outstanding balance and available capacity must be updated as of the most recent practicable date.

• Term Loan B. $650 million commitment, with $612.5 million outstanding as of December 31, 2021, maturing January 2029. The current outstanding balance must be updated, reflecting any mandatory or voluntary prepayments, and any amendments to the credit agreement must be described.

• Mesquite Wind Construction Facility. $165 million facility from Prairie Commercial Bank, with a conversion date of December 2024. The status of this facility must be updated, particularly if Mesquite Wind has achieved COD and the facility has been converted to a term loan.

• Cimarron Solar Construction Facility. $143 million facility from Prairie Commercial Bank, with a conversion date of March 2025. The current drawn balance and construction financing status must be updated.

• Solaris West Tax-Equity Partnership. $280 million commitment from Veltara Basin Financial LLC, with a tax-equity flip expected in 2028. The status of this partnership, including any allocations of income, loss, and tax benefits, must be updated.

• Any new financing arrangements entered into during the dormancy period — including new credit facilities, project-level debt, tax-equity partnerships, or capital market transactions — must be described in the registration statement.

G. Use of Proceeds

The proposed use of proceeds in the current draft S-1 allocates the estimated net proceeds of the offering as follows: approximately $200 million for repayment of a portion of the outstanding Term Loan B balance; approximately $100 million for Cimarron Solar construction costs; and approximately $71.7 million for general corporate purposes (after deducting the estimated underwriting discounts, commissions, and offering expenses).

Upon reactivation, the use of proceeds section must be reassessed in light of the Company's updated capital needs, debt balances, and strategic priorities. If the Term Loan B balance has changed, the proposed repayment amount should be adjusted accordingly. If Cimarron Solar construction has progressed and construction financing has been drawn, the capital requirements for that project may have changed. The general corporate purposes allocation should also be revisited in light of any new capital investment plans or liquidity needs.

H. Selling Stockholder Information

Pinnacle Vista Capital Partners III, LP is identified in the S-1 as a selling stockholder. The selling stockholder information, including the number of shares beneficially owned before and after the offering, the percentage of outstanding shares represented by such ownership, and any material relationships between Pinnacle Vista and the Company, must be verified and updated upon reactivation.

In particular, we should confirm that no changes in the beneficial ownership of Pinnacle Vista have occurred during the dormancy period — including any transfers of limited partnership interests, changes in the general partner, or changes in the control persons of Pinnacle Vista Capital Management LLC. The pre-IPO ownership stake of approximately 62% must be reverified as of the most recent practicable date.

I. Offering Terms

The offering terms set forth in the current draft S-1 — including the proposed offering size of $600,000,000, the pricing midpoint of $22.00 per share, the underwriter allocation, and the gross underwriting spread of 5.50% — will need to be reassessed with Hargrove Keating & Co. in light of then-current market conditions at the time of reactivation. The renewables sector IPO market may have evolved significantly during the dormancy period, and comparable company valuations, sector multiples, and investor appetite may have changed.

The implied valuation metrics in the current draft S-1 — including the pre-money equity valuation of approximately $2.2 billion and the enterprise value-to-EBITDA multiple of approximately 19.4x based on FY 2021 Adjusted EBITDA — will change with updated financial results and market conditions. Hargrove Keating should prepare an updated valuation analysis and comparable company benchmarking study as part of the reactivation process, and the proposed offering terms should be adjusted accordingly.

VII. Underwriting Agreement and Lock-Up Considerations

A. Underwriting Agreement

The underwriting agreement for the offering exists in a near-final draft form (Document 127, dated June 15, 2022), reflecting the terms negotiated among CBR, Pinnacle Vista, and Hargrove Keating & Co. (on behalf of the underwriters) through the most recent markup session. However, the underwriting agreement was never executed because the offering was placed in dormant status before pricing.

Upon reactivation, the underwriting agreement will need to be updated to reflect the following, among other things:

(a) Updated Financial Periods. References to financial statements and financial periods throughout the agreement — including in the representations and warranties regarding financial statements, the conditions to closing, and the definitions — must be updated to reflect the financial periods included in the amended S-1.

(b) Representations and Warranties. The issuer's representations and warranties regarding the accuracy and completeness of the registration statement, the absence of material adverse changes, the absence of undisclosed liabilities, and similar matters must be reviewed and, where necessary, revised to reflect developments during the dormancy period. Any new material contracts, litigation, regulatory matters, or other developments must be addressed in the representations and warranties.

(c) Conditions to Closing. The conditions to the obligations of the underwriters, including the delivery of legal opinions, comfort letters, officer's certificates, and good-standing certificates, must be updated to reflect the current transaction timeline and the parties' expectations.

(d) Material Adverse Effect Definition. The definition of "Material Adverse Effect" and the associated carve-outs should be reviewed in light of developments during the dormancy period. In particular, carve-outs for general market conditions, industry-wide developments, and changes in law or accounting standards may need to be refined based on the circumstances at the time of reactivation.

(e) Underwriter Allocations and Economics. The underwriter syndicate composition, individual allocations, and economic terms (including the gross spread of 5.50%) must be confirmed or revised with Hargrove Keating based on then-current market conditions and any changes in the underwriter group.

Prescott, Danforth & Yee LLP (Margaret Yee and Scott Halverson) will need to re-engage on the underwriters' counsel work stream, including review and revision of the underwriting agreement, preparation of updated legal opinions and negative assurance letters, and coordination on the comfort letter request to Ashford & Pemberton LLP.

B. Lock-Up Agreements

The offering contemplates 180-day lock-up agreements from all directors, executive officers, and certain significant stockholders, restricting transfers of the Company's common stock for 180 days following the date of the final prospectus. As of June 17, 2022, fifteen (15) of the eighteen (18) required lock-up agreements had been executed, with three (3) remaining outstanding (as identified in Section II.C above).

Upon reactivation, several issues relating to the lock-up agreements must be addressed:

(a) Effectiveness of Executed Lock-Up Agreements. The fifteen previously executed lock-up agreements must be reviewed to determine whether they remain effective. The lock-up agreements in the current form reference the date of the final prospectus as the commencement date for the 180-day lock-up period. Because the final prospectus was never issued, the lock-up period was never triggered. However, depending on the specific language of the lock-up agreements, there may be a question as to whether the agreements remain binding or whether they have lapsed due to the passage of time or the failure of the offering to close. We recommend reviewing the lock-up agreement form (Document 119) carefully and, if there is any ambiguity, obtaining reconfirmation or re-execution from all fifteen signatories.

(b) Outstanding Lock-Up Agreements. The three outstanding lock-up agreements (Douglas Pemberton, Reginald Sato, and Samantha Kirsch) must be executed upon reactivation.

(c) Amendment or Re-Execution. Given the passage of time and the potential need to adjust the offering timeline, it may be prudent to amend or re-execute all eighteen lock-up agreements to clearly reflect the actual offering timeline and eliminate any ambiguity regarding the commencement and expiration of the lock-up period.

(d) Early Release Mechanism. Under the terms of the lock-up agreements, Hargrove Keating & Co. has the sole discretion to waive or release any loc

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and constitutes attorney work product prepared in anticipation of litigation or in connection with the provision of legal advice. This document and the information contained herein are strictly confidential and may not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP. Any inadvertent disclosure does not constitute a waiver of any applicable privilege or protection.
CALDERWOOD & HARKNESS LLP 599 Lexington Avenue New York, New York 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
MEMORANDUM
June 20, 2022
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I. Executive Summary
On June 17, 2022, Calloway-Briggs Renewables Inc. ("CBR" or the "Company") and the underwriters, led by Hargrove Keating & Co. as lead-left book-running manager, mutually decided to postpone the proposed initial public offering of the Company's common stock on the New York Stock Exchange (proposed ticker symbol: CBRI). The offering, which contemplated gross proceeds of approximately $600,000,000, was postponed in light of deteriorating market conditions in the renewables sector, broader macroeconomic headwinds including rising interest rates and inflationary pressures, and the effective closure of the IPO window for the near term. The decision to place the offering in dormant status was communicated to the full working group by Sandra Haverford, CBR's General Counsel, during a conference call held at 4:30 p.m. Eastern Time on June 17, 2022.
The registration statement on Form S-1 (SEC CIK: 0001948372) was confidentially submitted to the U.S. Securities and Exchange Commission (the "SEC") on April 11, 2022, as the initial confidential draft registration statement (DRS-1, EDGAR Accession No. 0001948372-22-000001), pursuant to the confidential submission process available to emerging growth companies under the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Amendment No. 1 to the DRS was filed on May 20, 2022 (Accession No. 0001948372-22-000002) in response to the SEC's first-round comment letter, and Amendment No. 2 was filed on June 10, 2022 (Accession No. 0001948372-22-000003) in response to the SEC's second-round comment letter.
On June 14, 2022, the staff of the SEC's Division of Corporation Finance indicated oral clearance of Amendment No. 2, subject to the filing of a pricing amendment. The registration statement was never declared effective, no public filing of the S-1 has been made on EDGAR, and no pricing of the offering has occurred. As of the date of this memorandum, the registration statement remains in confidential draft status with the SEC.
This memorandum has been prepared to provide a comprehensive analysis of the following matters arising from the dormancy of the offering:
(a) the staleness rules governing financial statements included in the S-1 under Regulation S-X, including the applicable periods and trigger dates at which currently included financial statements will become stale and require updating;
(b) other non-financial content in the registration statement that will require updating upon reactivation of the offering, including business and operating disclosures, risk factors, executive compensation, capitalization, use of proceeds, and related-party transactions;
(c) the regulatory timeline and procedural steps for relaunching the offering, including SEC review considerations, NYSE listing application status, FINRA corporate financing review, lender consents, and other third-party approvals; and
(d) recommended preservation and monitoring actions during the dormancy period to ensure the working group can execute a rapid and efficient reactivation when market conditions improve.
Key Takeaway. The current draft S-1 contains audited consolidated financial statements for fiscal years ended December 31, 2019, December 31, 2020, and December 31, 2021 (collectively, "FY 2019," "FY 2020," and "FY 2021") and unaudited condensed consolidated interim financial statements for the quarter ended March 31, 2022 ("Q1 2022"). Under Rule 8-08 of Regulation S-X, which governs the age of financial statements in registration statements on Form S-1, these financial statements will become stale and require updating at various trigger points depending on when the offering is relaunched. Most critically, if the offering is relaunched after 135 days following the end of FY 2022 — that is, after approximately May 15, 2023 — the registration statement will require inclusion of audited FY 2022 annual financial statements. Separately, the unaudited Q1 2022 interim financial statements will become stale approximately 134 days after March 31, 2022, or approximately August 12, 2022, meaning that any reactivation after that date will require, at minimum, updated Q2 2022 interim financial statements reviewed by the Company's independent auditors, Ashford & Pemberton LLP.
The staleness calendar set forth in Section III.D below should be treated as the primary planning tool for reactivation timing decisions, and early coordination with Ashford & Pemberton LLP regarding interim review and audit timelines is essential to preserving optionality.
II. Background — Current Status of the Registration Statement
A. Filing History
The following is a chronological summary of the key events in the transaction from engagement through the decision to place the offering in dormant status:
March 10, 2022. Engagement letter executed between CBR and Calderwood & Harkness LLP, pursuant to which the firm was engaged as issuer's counsel in connection with the proposed IPO. The engagement was authorized by Sandra Haverford, General Counsel of CBR, and countersigned by Jennifer Kwon on behalf of the firm.
March 14–18, 2022. Organizational meeting held at CBR's corporate headquarters located at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746. The meeting was attended by representatives of the Company (including Garrett Calloway, Chairman and CEO; Marcus Yoon, President and COO; Priya Anand, SVP, Finance & Treasurer; and Sandra Haverford, General Counsel), Calderwood & Harkness LLP (Jennifer Kwon, Brendan Walsh, and Natasha Forbes), Hargrove Keating & Co. (Oliver Marchetti, Managing Director, ECM, and Sonia Tran, Vice President, ECM), Prescott, Danforth & Yee LLP (Margaret Yee and Scott Halverson), Ashford & Pemberton LLP (Gregory Sondheim and Irene Valdez), and Broadmark Strategic Communications Inc. (Jason Eklund, IR advisor). During the organizational meeting, the parties discussed the proposed transaction structure, timeline, key risk factors, accounting and financial reporting considerations, due diligence procedures, and the anticipated SEC review process.
March 21 – April 29, 2022. Initial due diligence, drafting of the registration statement on Form S-1, and preparation of related transaction documents. Due diligence included review of material contracts, project-level financing documents, tax-equity partnership agreements, management services agreement with Pinnacle Vista Capital Partners III, LP, intellectual property licenses, environmental and regulatory permits, and related-party transactions. The due diligence request list (Document 12) comprised 247 individual line items across 16 categories. The initial S-1 draft was circulated to the full working group on April 4, 2022 (Document 31), with subsequent revisions through April 10, 2022 (Document 38).
April 11, 2022. Confidential submission of DRS-1 to the SEC under the JOBS Act. CBR qualifies as an emerging growth company, as its FY 2021 annual gross revenues of $487.3 million are below the $1.235 billion EGC revenue threshold established under Section 2(a)(19) of the Securities Act of 1933, as amended (the "Securities Act"). The confidential submission process permits an EGC to submit a draft registration statement for non-public review by the SEC staff prior to public filing.
May 6, 2022. The SEC's Division of Corporation Finance issued its first-round comment letter, which contained eighteen (18) comments. The comments addressed the following areas: revenue recognition policies, particularly as they relate to power purchase agreements ("PPAs") with fixed and variable pricing components; segment reporting under ASC 280 and the basis for the Company's single reportable segment determination; specificity and tailoring of risk factors; the Company's tax-equity accounting methodology, including the application of the hypothetical liquidation at book value ("HLBV") method under ASC 323 for investments in tax-equity partnerships; MD&A discussion of key operating metrics and trends; related-party transactions disclosure, particularly regarding the management-services agreement with Pinnacle Vista; and the presentation and reconciliation of non-GAAP financial measures, specifically Adjusted EBITDA.
May 20, 2022. The Company filed its response letter to the SEC's first-round comments and concurrently submitted Amendment No. 1 to the DRS (Accession No. 0001948372-22-000002). The response letter addressed each of the eighteen comments and described the corresponding changes made to the registration statement. Material revisions included expanded revenue recognition disclosures, additional risk factor specificity regarding project-level construction risks and commodity price exposure, enhanced HLBV methodology disclosure, and a revised non-GAAP reconciliation table.
June 3, 2022. The SEC issued its second-round comment letter, which contained seven (7) comments. These comments were more targeted and addressed: further clarification of the HLBV methodology and the allocation of income and loss among tax-equity partnership members; additional detail regarding PPA revenue, including the distinction between contracted and merchant revenue; refinement of the non-GAAP Adjusted EBITDA reconciliation to address certain adjustments identified by the staff as potentially misleading; and disclosure of the lock-up agreement carve-outs permitting certain transfers for estate planning purposes.
June 10, 2022. The Company filed its response letter to the SEC's second-round comments and concurrently submitted Amendment No. 2 to the DRS (Accession No. 0001948372-22-000003). All seven comments were substantively addressed in the response letter and corresponding revisions to the registration statement.
June 14, 2022. The SEC staff indicated oral clearance of Amendment No. 2. The oral clearance was communicated by the assigned SEC staff attorney to Brendan Walsh by telephone at approximately 11:15 a.m. Eastern Time, and was subject to the filing of a pricing amendment reflecting the final offering terms. The SEC staff confirmed that it had no further comments at that time.
June 17, 2022. Following discussions among CBR management, Pinnacle Vista, and Hargrove Keating regarding market conditions, the working group collectively determined to place the offering in dormant status. The decision was communicated to the full working group during the conference call referenced above. No pricing amendment was filed, no effectiveness order was issued, and the offering was not publicly announced.
B. Financial Statements Currently Included in the Draft S-1
The current draft registration statement (as reflected in Amendment No. 2) includes the following financial statements:
Audited Consolidated Financial Statements. Audited consolidated balance sheets as of December 31, 2021 and December 31, 2020, and the related audited consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three fiscal years ended December 31, 2021, December 31, 2020, and December 31, 2019, together with the notes thereto and the report of independent registered public accounting firm. The audit was performed by Ashford & Pemberton LLP, with Gregory Sondheim, CPA, as the lead engagement partner and Irene Valdez, CPA, as the audit manager. The audit report is dated March 15, 2022, and contains an unqualified opinion. Although CBR, as an EGC, is required to include only two years of audited financial statements rather than three, the Company elected to include all three years (FY 2019, FY 2020, and FY 2021) to provide investors with a more complete picture of the Company's financial trajectory.
Unaudited Interim Condensed Consolidated Financial Statements. Unaudited condensed consolidated balance sheet as of March 31, 2022, and the related unaudited condensed consolidated statements of operations, comprehensive income, and cash flows for the three-month periods ended March 31, 2022 and March 31, 2021, together with the notes thereto. These interim financial statements were reviewed by Ashford & Pemberton LLP in accordance with applicable standards.
Key Financial Metrics. The following key financial metrics are reflected in the current draft S-1:
These financial metrics reflect the Company's rapid growth trajectory, driven by the expansion of its operating portfolio from approximately 1.8 GW of installed capacity at the end of FY 2019 to approximately 3.1 GW at the end of FY 2021, with an additional approximately 770 MW under construction or in late-stage development as of Q1 2022.
C. Key Parties and Documents
The following is a summary of the key parties to the transaction and the status of the principal transaction documents:
Issuer. Calloway-Briggs Renewables Inc., a Delaware corporation (EIN 83-4027615), with its principal executive offices at 4200 Ridgeline Parkway, Suite 1100, Austin, Texas 78746. The Company was incorporated in Delaware on January 14, 2018, in connection with the acquisition of certain renewable energy assets by Pinnacle Vista Capital Partners III, LP.
Pre-IPO Majority Stockholder. Pinnacle Vista Capital Partners III, LP, a Delaware limited partnership, holds approximately 62% of the outstanding common stock of CBR on a pre-IPO basis. Pinnacle Vista Capital Management LLC serves as the general partner. The investment in CBR represents one of the largest platform investments in Pinnacle Vista's Fund III portfolio. Whitfield Archer & Doss LLP (Christine Navarro, Partner) serves as counsel to Pinnacle Vista in connection with the offering.
Lead-Left Book-Running Manager. Hargrove Keating & Co., with Oliver Marchetti, Managing Director, Equity Capital Markets, serving as the lead banker, and Sonia Tran, Vice President, ECM, serving as the day-to-day transaction manager. Prescott, Danforth & Yee LLP (Margaret Yee, Partner, and Scott Halverson, Counsel) serves as underwriters' counsel.
Independent Auditor. Ashford & Pemberton LLP, with Gregory Sondheim, CPA, as the lead engagement partner and Irene Valdez, CPA, as the audit manager.
Tax Advisor. Kessler McBride & Associates LLP, providing tax advisory services in connection with the offering, including analysis of the tax-equity partnership structures and ITC/PTC recapture considerations.
Transaction Document Status. The underwriting agreement exists in a near-final draft form (Document 127, dated June 15, 2022), reflecting the terms negotiated among the parties through the most recent markup session, but the agreement was never executed due to the postponement of the offering. The pricing agreement template (Document 128) remains blank — no pricing terms were ever inserted. With respect to lock-up agreements, fifteen (15) of the eighteen (18) required signatories had executed their lock-up agreements as of June 17, 2022. The three outstanding lock-up agreements are those of: (i) Douglas Pemberton, independent director nominee; (ii) Reginald Sato, SVP, Project Development; and (iii) Samantha Kirsch, VP, Investor Relations. These three individuals were expected to execute their lock-up agreements during the week of June 20, 2022, prior to the anticipated roadshow launch, but execution was suspended upon the decision to postpone.
III. Financial Statement Staleness Rules — Regulation S-X
A. Overview of Applicable Rules
The age requirements for financial statements included in a registration statement on Form S-1 are governed principally by Regulation S-X, promulgated under the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The relevant rules are:
• Rule 8-08 of Regulation S-X (17 C.F.R. § 210.8-08), which governs the age of annual and interim financial statements required in registration statements filed by smaller reporting companies and emerging growth companies. Because CBR is an EGC, Rule 8-08 — rather than Rule 3-12, which applies to non-EGC registrants — is the operative provision.
• Rule 8-03 of Regulation S-X (17 C.F.R. § 210.8-03), which sets forth the requirements for interim financial statements of smaller reporting companies and EGCs, including the content requirements and the period for which interim financial statements must be presented.
• SEC Staff Accounting Bulletin ("SAB") Topic 11.A, which provides interpretive guidance on the age of financial statements in filings, and various Division of Corporation Finance staff interpretive positions and compliance and disclosure interpretations ("C&DIs"), which address specific questions arising under the staleness framework.
Because CBR has a December 31 fiscal year-end and qualifies as an EGC — having annual gross revenues below the $1.235 billion threshold and not having completed its IPO — the analysis below is conducted under the EGC-specific provisions of Rules 8-03 and 8-08, including the accommodation that permits an EGC to present only two years (rather than three years) of audited financial statements. As noted above, CBR has voluntarily included three years of audited financial statements in its current draft S-1.
It is important to note that the staleness rules apply at the time the registration statement is filed, amended, or declared effective. Since CBR's registration statement has not been declared effective and has been filed only in confidential draft form, the relevant trigger will be the date on which the Company files an amendment to the DRS or the date on which the SEC declares the registration statement effective in connection with reactivation.
B. Rule 8-08 — Annual Financial Statement Requirements
Rule 8-08(a) of Regulation S-X provides that a registration statement on Form S-1 filed by an EGC must include audited financial statements for the registrant's two most recently completed fiscal years. As noted, CBR has elected to include three years of audited financial statements (FY 2019, FY 2020, and FY 2021), which exceeds the minimum requirement.
The critical timing provision is contained in Rule 8-08(b), commonly referred to as the "135-Day Rule." Under this rule, the audited financial statements for the most recently completed fiscal year must be included in the registration statement no later than 135 days after the end of that fiscal year. The 135-day period functions as a grace period: during the first 135 days of a new fiscal year, the registrant may rely on audited financial statements for the prior fiscal year (supplemented by interim financial statements, as discussed below), without needing to include audited financial statements for the just-completed fiscal year.
The application of the 135-Day Rule to CBR is as follows:
FY 2021 Year-End (December 31, 2021). The 135-day period following December 31, 2021, expired on approximately May 15, 2022. The DRS-1 was filed on April 11, 2022, and included audited FY 2021 financial statements, well within the 135-day window. Accordingly, the FY 2021 audited financial statements were current at the time of the initial filing and through the date of SEC oral clearance on June 14, 2022.
FY 2022 Year-End (December 31, 2022). The 135-day period following December 31, 2022, will expire on approximately May 15, 2023. This means that if the registration statement is filed, amended, or declared effective on or before approximately May 15, 2023, the existing audited FY 2021 financial statements (together with appropriate interim financial statements, as discussed in Section III.C below) will satisfy the annual financial statement requirement. However, if the registration statement is filed, amended, or declared effective after approximately May 15, 2023, the Company must include audited financial statements for FY 2022 (the fiscal year ended December 31, 2022). At that point, the FY 2022 audited financial statements would replace the FY 2019 audited financial statements (if the Company continues to present three years of audits) or would simply be required alongside the FY 2021 audited financial statements (if the Company reverts to the two-year EGC minimum).
Implication for Reactivation Planning. The May 15, 2023 date represents the most significant hard deadline in the staleness calendar. If CBR can reactivate the offering before May 15, 2023, the existing audited financial statements for FY 2019–2021 may be sufficient for annual statement purposes, subject to the interim update requirements discussed in Section III.C below. After May 15, 2023, audited FY 2022 financial statements become mandatory, which will require a completed annual audit by Ashford & Pemberton LLP. Based on prior experience, the FY 2022 audit would likely require a minimum of eight to ten weeks following year-end, with the earliest realistic availability of audited FY 2022 financial statements being mid-to-late March 2023, assuming Ashford & Pemberton commences audit fieldwork promptly after December 31, 2022.
C. Interim Financial Statement Requirements
Rule 8-03 of Regulation S-X sets forth the requirements for interim financial statements. In the context of a registration statement on Form S-1, interim financial statements must be included if the registration statement is filed or declared effective more than 134 days after the end of the registrant's most recently completed fiscal quarter, with the exception of the fourth fiscal quarter (Q4), during which the annual audited financial statements serve as the primary source of financial information.
The current draft S-1 includes unaudited interim condensed consolidated financial statements for Q1 2022, covering the three-month period ended March 31, 2022. The question is when these interim financial statements will become stale and require updating.
The following analysis sets forth the staleness triggers under four hypothetical reactivation scenarios:
Scenario 1: Reactivation in Q3 2022 (July–September 2022)
The Q1 2022 interim financial statements (reflecting the period ended March 31, 2022) will become stale approximately 134 days after March 31, 2022, which is approximately August 12, 2022. If the registration statement is amended or declared effective on or before approximately August 12, 2022, the Q1 2022 interim financial statements remain current and no update is required.
However, if the registration statement is amended or declared effective after approximately August 12, 2022, it must include interim financial statements for Q2 2022 (the six-month period ended June 30, 2022), together with comparable prior-period interim financial statements for the six-month period ended June 30, 2021. These Q2 2022 interim financial statements would need to be reviewed (but not audited) by Ashford & Pemberton LLP in accordance with PCAOB interim review standards (AU-C Section 930 / PCAOB AS 4105). In addition, the MD&A section would need to be updated to cover the Q2 2022 period, including discussion of interim trends, liquidity, and results of operations.
As a practical matter, if the Company were to target reactivation in late August or September 2022, it should plan to have Q2 2022 interim financial statements reviewed and available no later than approximately mid-August 2022. Based on the Company's financial reporting cycle, the Q2 2022 close process would likely conclude in late July 2022, with the interim review requiring approximately two to three weeks thereafter.
Scenario 2: Reactivation in Q4 2022 (October–December 2022)
Assuming Q2 2022 interim financial statements are included in the amended S-1, those interim financial statements (reflecting the six-month period ended June 30, 2022) will become stale approximately 134 days after June 30, 2022, which is approximately November 11, 2022.
If the registration statement is amended or declared effective after approximately November 11, 2022, it must include nine-month interim financial statements for Q3 2022 (the nine-month period ended September 30, 2022), together with comparable prior-period interim financial statements for the nine-month period ended September 30, 2021. These Q3 2022 interim financial statements would also require review by Ashford & Pemberton LLP.
A reactivation targeting a late-November or December 2022 effectiveness date would therefore require the Company to prepare and have reviewed nine-month interim financial statements through September 30, 2022. The Q3 2022 close process would likely conclude in late October 2022, with the interim review completed by mid-to-late November 2022.
Scenario 3: Reactivation in Q1 2023 (January–March 2023)
This scenario presents a more complex interplay between the interim staleness rules and the annual financial statement requirements. During the period from approximately January 1, 2023, through May 15, 2023, the Company may rely on the FY 2021 annual audited financial statements as its most recent audited annual financials, because the 135-day grace period for FY 2022 has not yet expired. However, the Company must also satisfy the interim financial statement requirements.
The nine-month Q3 2022 interim financial statements (reflecting the period ended September 30, 2022) will themselves become stale approximately 134 days after September 30, 2022, which is approximately February 11, 2023. After approximately February 11, 2023, the Q3 2022 interim financials are no longer current. The SEC staff's interpretive position is that during the Q4 window — that is, the period after the fiscal year-end but before audited annual financial statements are required — the registrant is not required to include Q4 interim financial statements (since Q4 is effectively subsumed into the annual audit). However, the staleness of the Q3 interim financial statements creates a gap.
In practice, after approximately February 11, 2023, the Company would need to either: (a) include audited FY 2022 annual financial statements (if the audit has been completed and such financial statements are available), which would eliminate the need for any interim update; or (b) rely on the 135-day grace period, which permits the registration statement to rely on FY 2021 audited financials through May 15, 2023, while including the most recently available interim data. The SEC staff has generally taken the position that if the annual audit for the most recently completed fiscal year is not yet available during the 135-day grace period, the registrant should include the most current interim data available, even if such data is technically stale, along with appropriate disclosure regarding the timing of the annual financial statements.
As a practical matter, if the Company seeks to reactivate in Q1 2023, the most efficient approach would be to coordinate with Ashford & Pemberton LLP to accelerate the FY 2022 audit so that audited FY 2022 annual financial statements can be included in the amended S-1, thereby avoiding the complexity of the interim staleness gap and positioning the Company with the most current financial information for the roadshow and marketing process.
Scenario 4: Reactivation After May 15, 2023
If the offering is not relaunched until after approximately May 15, 2023, audited FY 2022 annual financial statements are mandatory and must be included in the registration statement. In addition, the Company will need to include interim financial statements for the applicable FY 2023 period(s), depending on how late in 2023 the offering is relaunched:
• If relaunched before approximately August 12, 2023, Q1 2023 interim financial statements (three-month period ended March 31, 2023) may be sufficient.
• If relaunched between approximately August 12, 2023, and approximately November 11, 2023, Q2 2023 interim financial statements (six-month period ended June 30, 2023) will be required.
• If relaunched after approximately November 11, 2023, Q3 2023 interim financial statements (nine-month period ended September 30, 2023) will be required.
• If the offering extends into 2024, the cycle will repeat with the FY 2023 annual financial statements becoming required 135 days after December 31, 2023 (approximately May 15, 2024).
In addition, if audited FY 2022 financial statements are included, the Company will need to present audited comparative balance sheets as of December 31, 2022, and December 31, 2021, and statements of operations, comprehensive income, stockholders' equity, and cash flows for FY 2022 and FY 2021 (or FY 2022, FY 2021, and FY 2020, if the Company continues to present three years). The FY 2019 audited financial statements could be dropped at that point.
D. Summary Staleness Calendar
The following table summarizes the financial statement update requirements based on the approximate reactivation date:
This calendar should be maintained as a living reference document and updated as circumstances change. We recommend that the calendar be reviewed during each quarterly check-in with CBR management (see Section X.B below).
E. Impact on Ashford & Pemberton LLP Audit and Review Engagement
The financial statement staleness framework has direct implications for the engagement of Ashford & Pemberton LLP, the Company's independent registered public accounting firm, as follows:
Interim Reviews. Any updated interim financial statements (Q2 2022, Q3 2022, or subsequent periods) included in the registration statement must be reviewed by Ashford & Pemberton LLP in accordance with PCAOB Auditing Standard AS 4105 (Review of Interim Financial Information). The firm's review involves performing analytical procedures, making inquiries of management, and evaluating whether the interim financial information conforms with generally accepted accounting principles. The review does not constitute an audit and does not provide the same level of assurance. Based on prior experience with Ashford & Pemberton's review of the Q1 2022 interim financial statements, we estimate that the review of any subsequent interim period would require approximately two to three weeks following the Company's completion of its quarterly close process.
FY 2022 Annual Audit. If audited FY 2022 financial statements are required — either because the offering extends past May 15, 2023, or because the Company elects to include them earlier to provide the most current information — Ashford & Pemberton will need adequate lead time to complete the audit. The existing audit engagement letter between CBR and Ashford & Pemberton LLP (Document 84) covers the audit of FY 2019, FY 2020, and FY 2021 only. A separate engagement letter, or an amendment to the existing engagement letter, will be required to cover the FY 2022 audit. We recommend engaging with Gregory Sondheim promptly to: (a) confirm that Ashford & Pemberton has the resources and staffing to conduct the FY 2022 audit on an expedited basis if needed; (b) discuss the expected timeline for audit fieldwork and completion; and (c) negotiate the terms of the updated engagement letter, including fees.
SAS 72 / AU-C 920 Comfort Letters. As discussed in Section IV below, updated comfort letters will be required upon reactivation. The scope of the comfort letter procedures will need to cover the financial information in the updated registration statement, including any new interim or annual financial periods.
IV. Comfort Letter Considerations
A. Current Status
As of the date of this memorandum, the status of the comfort letters from Ashford & Pemberton LLP is as follows:
A draft initial comfort letter was received from Ashford & Pemberton LLP, dated June 8, 2022 (Document 139). The draft initial comfort letter was prepared in accordance with AU-C Section 920 (Letters for Underwriters and Certain Other Requesting Parties) and PCAOB AS 6101, and covered the financial statements and certain financial information included in the draft S-1 as of that date. The draft was circulated to Hargrove Keating's ECM team (Oliver Marchetti and Sonia Tran) and to Prescott, Danforth & Yee LLP (Margaret Yee and Scott Halverson) for review and comment.
Three comfort letters were planned in connection with the offering, consistent with standard IPO practice: (i) an initial comfort letter, to be delivered at the time of filing the publicly available registration statement; (ii) a bring-down comfort letter, to be delivered on the pricing date; and (iii) a pricing comfort letter (or second bring-down), to be delivered on the closing date. Of these three, only the initial comfort letter had been prepared in draft form. The bring-down and pricing comfort letters were never drafted or finalized because the offering was placed in dormant status before the roadshow commenced.
The draft initial comfort letter included procedures and findings covering: (i) the independence of Ashford & Pemberton with respect to CBR; (ii) the compliance of the audited financial statements with the Securities Act and Regulation S-X; (iii) the compliance of the unaudited interim financial statements with the requirements of Rule 8-03 of Regulation S-X; (iv) agreed-upon procedures covering certain financial data, percentages, and amounts derived from the Company's accounting records that appear in the registration statement outside the financial statements (including in the MD&A, capitalization table, dilution section, and selected financial data); and (v) a negative assurance statement regarding subsequent changes during the "change period" — the period from the latest balance sheet date (March 31, 2022) through a date within a few business days of the comfort letter date (approximately June 5, 2022).
B. Requirements Upon Reactivation
Upon reactivation of the offering, the draft initial comfort letter dated June 8, 2022, will be stale and cannot be used. A new comfort letter framework will need to be established, taking into account the following considerations:
New Initial Comfort Letter. A new initial comfort letter will need to be prepared and delivered by Ashford & Pemberton LLP that covers the updated financial statements included in the amended S-1. The scope of the new comfort letter will need to reflect: (a) the financial periods included in the updated registration statement (which may include additional interim periods or audited FY 2022 annual financial statements, depending on the reactivation timing); (b) a refreshed change period extending from the latest balance sheet date in the updated S-1 through a date within a few business days of the new comfort letter delivery date; and (c) updated agreed-upon procedures covering the numerical data, percentages, and financial information appearing outside the financial statements in the updated S-1.
Bring-Down and Pricing Comfort Letters. As with the original planned timeline, bring-down and pricing comfort letters will be required as of the pricing date and closing date, respectively. These letters typically cover the change period from the latest balance sheet date through a date within a few business days of the pricing and closing dates, and provide negative assurance regarding subsequent changes during such periods.
Updated Comfort Letter Request. The comfort letter request from the underwriters' counsel (Prescott, Danforth & Yee LLP) to Ashford & Pemberton LLP will need to be refreshed to reflect the updated financial information in the amended S-1 and any changes in the scope of the agreed-upon procedures. We recommend early coordination among Ashford & Pemberton (Gregory Sondheim and Irene Valdez), Hargrove Keating (Oliver Marchetti and Sonia Tran), Prescott, Danforth & Yee (Margaret Yee and Scott Halverson), and our team to ensure alignment on the scope and timing of the updated comfort letter request.
Lead Time. Based on prior experience, the preparation of a new initial comfort letter typically requires approximately two to three weeks from the date on which the final draft of the updated registration statement is circulated to Ashford & Pemberton, assuming the underlying financial statements have already been audited or reviewed. This timeline should be factored into the overall reactivation schedule.
V. SEC Review Considerations Upon Reactivation
A. Prior Oral Clearance
As described in Section II.A above, the SEC staff indicated oral clearance of Amendment No. 2 on June 14, 2022, subject to the filing of a pricing amendment reflecting the final offering terms. It is important to understand the legal and practical significance of this oral clearance in the context of a potential reactivation.
Oral clearance from the SEC staff is an informal indication that the staff has completed its review of the registration statement and has no further comments at that time. It is not a formal order of the Commission, it does not have binding legal effect, and it does not guarantee that the staff will not revisit the filing in the future. Oral clearance is typically communicated by telephone and is not memorialized in any written communication from the SEC. The clearance is understood to be conditioned on the filing of a pricing amendment (which triggers the Commission's declaration of effectiveness), and it is also implicitly conditioned on the absence of material changes in the registration statement or the registrant's business that would require additional disclosure or revision.
In the context of a dormant offering, the staff's prior oral clearance may provide some comfort that the core disclosure framework of the S-1 was acceptable to the SEC as of June 2022. However, the passage of time, the inclusion of updated financial statements, and any material changes in the Company's business, operations, or risk profile may prompt the staff to conduct a supplemental review of the amended registration statement upon reactivation.
B. Likelihood of Additional SEC Review
The SEC's Division of Corporation Finance maintains the authority to review any registration statement at any time prior to effectiveness, and the filing of a material amendment to a previously cleared registration statement may trigger additional staff review. The likelihood and scope of such additional review will depend on several factors:
(a) Scope of Amendments. If the amended S-1 includes updated financial statements for new periods, revised MD&A, updated risk factors, and other material changes, the staff may determine that a full or limited re-review is warranted. The more extensive the amendments, the greater the likelihood of additional comments.
(b) Passage of Time. The longer the dormancy period, the more likely the staff is to conduct a supplemental review. If the offering is reactivated within a few months, the staff may be more willing to rely on the prior clearance. If the dormancy extends for a year or more, the staff is more likely to treat the amended filing as effectively a new submission warranting fresh review.
(c) Regulatory and Accounting Developments. If new SEC rules, staff guidance, or accounting standards have been adopted during the dormancy period that affect the Company's disclosure obligations, the staff may issue comments to ensure compliance with the new requirements. For example, changes in non-GAAP measure guidance, climate-related disclosure rules, or amendments to Regulation S-X could trigger supplemental comments.
(d) Staff Turnover. If the SEC staff attorney or accountant assigned to CBR's filing has changed since the prior review, the new reviewer may take a different approach or identify issues that the prior reviewer did not raise.
We note that all twenty-five (25) prior SEC comments (eighteen in the first round and seven in the second round) were resolved through the response letters and corresponding amendments. The tracking matrix maintained by Natasha Forbes (Document 61, the "SEC Comment Tracking Matrix") should be updated upon reactivation to reflect any new issues arising from updated disclosures and to document the basis for any changes made to the registration statement during the dormancy period.
C. Confidential Submission Status
The registration statement was filed confidentially under the JOBS Act EGC accommodation, which permits an EGC to submit a draft registration statement for non-public review by the SEC staff. Under Section 6(e)(1) of the Securities Act, as amended by the JOBS Act, the EGC must publicly file its registration statement (and all prior confidential submissions) at least fifteen (15) days before the date on which the issuer conducts a "road show," as defined in Rule 433(h)(4) under the Securities Act.
Upon reactivation, the following public filing requirements will apply:
(a) All three prior confidential submissions (DRS-1, Amendment No. 1, and Amendment No. 2) must be publicly filed on EDGAR at least 15 days before any roadshow activity commences.
(b) Any new amendment(s) filed in connection with the reactivation — including the amendment incorporating updated financial statements and other revised disclosures — must also be publicly filed.
(c) If the Company files additional amendments after the initial public filing but before the roadshow, each such amendment must also be publicly filed on EDGAR.
The 15-day public filing requirement should be built into the reactivation timeline, as it represents a minimum lead time that cannot be compressed. The roadshow cannot begin until at least 15 days after the public filing of the registration statement.
VI. Non-Financial Content Requiring Updates Upon Reactivation
In addition to the financial statement updates described in Section III above, a number of non-financial sections of the registration statement will require revision upon reactivation to reflect developments during the dormancy period. The following is a section-by-section analysis of the anticipated updates.
A. Business Section and Risk Factors
The business section of the S-1 includes detailed descriptions of CBR's operating portfolio, development pipeline, and growth strategy. Several material developments are expected to occur during the dormancy period that will require disclosure updates:
Operating Portfolio Updates. The current draft S-1 describes two projects that were under construction at the time of the most recent amendment:
• Mesquite Wind (420 MW, Oldham County, Texas): The S-1 disclosed an expected commercial operations date ("COD") in Q3 2022. Upon reactivation, the status of this project must be updated to reflect whether COD has been achieved, any construction delays, final project costs, and the commencement of revenue generation under the project's offtake arrangements.
• Cimarron Solar (350 MW, Doña Ana County, New Mexico): The S-1 disclosed an expected COD in Q1 2023. Depending on the reactivation timing, the status of this project must be updated to reflect construction progress, any schedule or budget changes, permitting developments, and the current expected COD.
Additionally, the Brazos Storage project (200 MW / 800 MWh, Fort Bend County, Texas), which achieved COD in Q4 2021, has now been operational for several quarters. Operational performance data — including capacity factor, revenue generation, availability, and any warranty or performance issues — should be updated in the business section and in MD&A.
Development Pipeline. The S-1 describes a 6.2 GW development pipeline, including the Silverleaf Wind and Copper Basin Solar + Storage projects, among others. The pipeline may have changed materially during the dormancy period due to new project origination, project dispositions, changes in permitting status, or changes in interconnection queue positions. The pipeline description must be updated to reflect the current state of development activities.
Risk Factors. The risk factors section must be refreshed to reflect any new or changed risks that have emerged during the dormancy period. This includes, without limitation:
• Legislative developments, including the potential enactment of the Inflation Reduction Act of 2022 (or similar legislation), which could materially affect the investment tax credit ("ITC") and production tax credit ("PTC") framework applicable to the Company's projects and development pipeline. If such legislation is enacted before reactivation, the risk factors should be updated to address the implications for the Company's business, including any changes in tax-equity partnership economics, development returns, and competitive dynamics.
• Changes in the macroeconomic environment, including inflation, interest rate increases, supply chain disruptions affecting solar panels, wind turbine components, and battery storage systems, and labor market conditions.
• The market conditions that precipitated the postponement of the offering should be addressed in the risk factors, including any disclosure regarding the Company's ability to access the public capital markets on favorable terms.
• Any new litigation, regulatory proceedings, or enforcement actions involving the Company or its subsidiaries.
• Developments in the regulatory environment applicable to renewable energy, including state-level renewable portfolio standards, interconnection policies, and environmental permitting requirements.
B. MD&A
The Management's Discussion and Analysis of Financial Condition and Results of Operations section must be updated for all new interim or annual financial periods included in the amended S-1. This includes:
• Discussion of results of operations for the new period(s), including revenue, cost of revenue, gross margin, operating expenses, and net income, with comparison to the corresponding prior-period results and explanation of material variances.
• Updated liquidity and capital resources discussion, reflecting changes in cash flows, borrowings, capital expenditures, and available liquidity.
• Refreshed non-GAAP reconciliation for Adjusted EBITDA, including any changes in the adjustments used to derive Adjusted EBITDA. The non-GAAP presentation must comply with any updated SEC guidance on non-GAAP financial measures, including Regulation G, Item 10(e) of Regulation S-K, and applicable C&DIs. Given that several of the SEC's prior comments related to the Company's non-GAAP measures, particular care should be taken to ensure that any changes in the Adjusted EBITDA reconciliation are fully supported and clearly presented.
• Updated critical accounting estimates discussion, reflecting any changes in the Company's significant estimates or accounting judgments, particularly with respect to the HLBV methodology, PPA revenue recognition, and asset impairment assessments.
• Discussion of any known trends, demands, commitments, events, or uncertainties that have arisen during the dormancy period and are reasonably likely to have a material effect on the Company's financial condition or results of operations.
C. Capitalization and Dilution
The capitalization table in the S-1 must be updated to reflect the Company's capitalization as of the most recent balance sheet date included in the amended registration statement. Material changes that may have occurred during the dormancy period include:
• Equity grants from the 2022 Omnibus Equity Incentive Plan (which has a 12,727,273-share reserve) or the 2022 Employee Stock Purchase Plan (which has a 2,545,455-share reserve). If options have been granted, restricted stock units ("RSUs") have been awarded, or other equity-based awards have been made during the dormancy period, the capitalization table must be updated to reflect the dilutive impact.
• Exercise of stock options or vesting and settlement of RSUs that may have occurred during the dormancy period, which would change the number of shares of common stock outstanding.
• The pre-IPO common stock share count of 100,000,000 shares outstanding must be verified as of the most recent practicable date prior to reactivation.
• The dilution section must be updated to reflect the pro forma net tangible book value per share based on the updated financial statements and the proposed offering terms.
D. Executive Compensation
The executive compensation tables in the S-1 must be updated for the most recently completed fiscal year. If the offering is reactivated after April 1, 2023 (i.e., after the end of FY 2022), the Summary Compensation Table and related tables will need to include FY 2022 compensation data for the named executive officers. In addition:
• Any changes in the Company's named executive officers or directors during the dormancy period must be reflected in the executive compensation disclosure and biographical information.
• Any new employment agreements, change-in-control arrangements, severance agreements, or equity-based compensation awards granted during the dormancy period must be disclosed.
• The independence analysis for directors (including any independent director nominees) should be reviewed and updated.
• The "Compensation Discussion and Analysis" section (to the extent included on a voluntary basis by the Company, as EGCs are exempt from the CD&A requirement) should be reviewed for accuracy.
E. Related-Party Transactions
The related-party transactions section must be updated to reflect any new or modified related-party transactions during the dormancy period. In particular:
• The status of the Pinnacle Vista management-services agreement must be confirmed. Under the terms of this agreement, CBR pays Pinnacle Vista Capital Management LLC $2.4 million per year for management, consulting, and advisory services. The agreement terminates automatically upon the consummation of the IPO. If the agreement has been modified, renewed, or supplemented during the dormancy period, such changes must be disclosed.
• Any new transactions between CBR and Pinnacle Vista, its affiliated entities, or its portfolio companies must be identified and, if material, disclosed.
• Any transactions between CBR and its executive officers, directors, or their affiliates must be identified and disclosed if they meet the disclosure thresholds under Item 404 of Regulation S-K.
F. Description of Indebtedness
The S-1 includes a detailed description of the Company's material indebtedness, which must be updated upon reactivation to reflect current outstanding balances, any amendments or refinancings, and any new financing arrangements. The key instruments requiring updated disclosure are:
• Corporate Revolving Credit Facility. $400 million commitment from Veltrano National Bank, maturing January 2027. The outstanding balance and available capacity must be updated as of the most recent practicable date.
• Term Loan B. $650 million commitment, with $612.5 million outstanding as of December 31, 2021, maturing January 2029. The current outstanding balance must be updated, reflecting any mandatory or voluntary prepayments, and any amendments to the credit agreement must be described.
• Mesquite Wind Construction Facility. $165 million facility from Prairie Commercial Bank, with a conversion date of December 2024. The status of this facility must be updated, particularly if Mesquite Wind has achieved COD and the facility has been converted to a term loan.
• Cimarron Solar Construction Facility. $143 million facility from Prairie Commercial Bank, with a conversion date of March 2025. The current drawn balance and construction financing status must be updated.
• Solaris West Tax-Equity Partnership. $280 million commitment from Veltara Basin Financial LLC, with a tax-equity flip expected in 2028. The status of this partnership, including any allocations of income, loss, and tax benefits, must be updated.
• Any new financing arrangements entered into during the dormancy period — including new credit facilities, project-level debt, tax-equity partnerships, or capital market transactions — must be described in the registration statement.
G. Use of Proceeds
The proposed use of proceeds in the current draft S-1 allocates the estimated net proceeds of the offering as follows: approximately $200 million for repayment of a portion of the outstanding Term Loan B balance; approximately $100 million for Cimarron Solar construction costs; and approximately $71.7 million for general corporate purposes (after deducting the estimated underwriting discounts, commissions, and offering expenses).
Upon reactivation, the use of proceeds section must be reassessed in light of the Company's updated capital needs, debt balances, and strategic priorities. If the Term Loan B balance has changed, the proposed repayment amount should be adjusted accordingly. If Cimarron Solar construction has progressed and construction financing has been drawn, the capital requirements for that project may have changed. The general corporate purposes allocation should also be revisited in light of any new capital investment plans or liquidity needs.
H. Selling Stockholder Information
Pinnacle Vista Capital Partners III, LP is identified in the S-1 as a selling stockholder. The selling stockholder information, including the number of shares beneficially owned before and after the offering, the percentage of outstanding shares represented by such ownership, and any material relationships between Pinnacle Vista and the Company, must be verified and updated upon reactivation.
In particular, we should confirm that no changes in the beneficial ownership of Pinnacle Vista have occurred during the dormancy period — including any transfers of limited partnership interests, changes in the general partner, or changes in the control persons of Pinnacle Vista Capital Management LLC. The pre-IPO ownership stake of approximately 62% must be reverified as of the most recent practicable date.
I. Offering Terms
The offering terms set forth in the current draft S-1 — including the proposed offering size of $600,000,000, the pricing midpoint of $22.00 per share, the underwriter allocation, and the gross underwriting spread of 5.50% — will need to be reassessed with Hargrove Keating & Co. in light of then-current market conditions at the time of reactivation. The renewables sector IPO market may have evolved significantly during the dormancy period, and comparable company valuations, sector multiples, and investor appetite may have changed.
The implied valuation metrics in the current draft S-1 — including the pre-money equity valuation of approximately $2.2 billion and the enterprise value-to-EBITDA multiple of approximately 19.4x based on FY 2021 Adjusted EBITDA — will change with updated financial results and market conditions. Hargrove Keating should prepare an updated valuation analysis and comparable company benchmarking study as part of the reactivation process, and the proposed offering terms should be adjusted accordingly.
VII. Underwriting Agreement and Lock-Up Considerations
A. Underwriting Agreement
The underwriting agreement for the offering exists in a near-final draft form (Document 127, dated June 15, 2022), reflecting the terms negotiated among CBR, Pinnacle Vista, and Hargrove Keating & Co. (on behalf of the underwriters) through the most recent markup session. However, the underwriting agreement was never executed because the offering was placed in dormant status before pricing.
Upon reactivation, the underwriting agreement will need to be updated to reflect the following, among other things:
(a) Updated Financial Periods. References to financial statements and financial periods throughout the agreement — including in the representations and warranties regarding financial statements, the conditions to closing, and the definitions — must be updated to reflect the financial periods included in the amended S-1.
(b) Representations and Warranties. The issuer's representations and warranties regarding the accuracy and completeness of the registration statement, the absence of material adverse changes, the absence of undisclosed liabilities, and similar matters must be reviewed and, where necessary, revised to reflect developments during the dormancy period. Any new material contracts, litigation, regulatory matters, or other developments must be addressed in the representations and warranties.
(c) Conditions to Closing. The conditions to the obligations of the underwriters, including the delivery of legal opinions, comfort letters, officer's certificates, and good-standing certificates, must be updated to reflect the current transaction timeline and the parties' expectations.
(d) Material Adverse Effect Definition. The definition of "Material Adverse Effect" and the associated carve-outs should be reviewed in light of developments during the dormancy period. In particular, carve-outs for general market conditions, industry-wide developments, and changes in law or accounting standards may need to be refined based on the circumstances at the time of reactivation.
(e) Underwriter Allocations and Economics. The underwriter syndicate composition, individual allocations, and economic terms (including the gross spread of 5.50%) must be confirmed or revised with Hargrove Keating based on then-current market conditions and any changes in the underwriter group.
Prescott, Danforth & Yee LLP (Margaret Yee and Scott Halverson) will need to re-engage on the underwriters' counsel work stream, including review and revision of the underwriting agreement, preparation of updated legal opinions and negative assurance letters, and coordination on the comfort letter request to Ashford & Pemberton LLP.
B. Lock-Up Agreements
The offering contemplates 180-day lock-up agreements from all directors, executive officers, and certain significant stockholders, restricting transfers of the Company's common stock for 180 days following the date of the final prospectus. As of June 17, 2022, fifteen (15) of the eighteen (18) required lock-up agreements had been executed, with three (3) remaining outstanding (as identified in Section II.C above).
Upon reactivation, several issues relating to the lock-up agreements must be addressed:
(a) Effectiveness of Executed Lock-Up Agreements. The fifteen previously executed lock-up agreements must be reviewed to determine whether they remain effective. The lock-up agreements in the current form reference the date of the final prospectus as the commencement date for the 180-day lock-up period. Because the final prospectus was never issued, the lock-up period was never triggered. However, depending on the specific language of the lock-up agreements, there may be a question as to whether the agreements remain binding or whether they have lapsed due to the passage of time or the failure of the offering to close. We recommend reviewing the lock-up agreement form (Document 119) carefully and, if there is any ambiguity, obtaining reconfirmation or re-execution from all fifteen signatories.
(b) Outstanding Lock-Up Agreements. The three outstanding lock-up agreements (Douglas Pemberton, Reginald Sato, and Samantha Kirsch) must be executed upon reactivation.
(c) Amendment or Re-Execution. Given the passage of time and the potential need to adjust the offering timeline, it may be prudent to amend or re-execute all eighteen lock-up agreements to clearly reflect the actual offering timeline and eliminate any ambiguity regarding the commencement and expiration of the lock-up period.
(d) Early Release Mechanism. Under the terms of the lock-up agreements, Hargrove Keating & Co. has the sole discretion to waive or release any loc

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