美国
证券和交易委员会
华盛顿特区20549
表格
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根据1934年证券交易法第13或15(d)节的季度报告 |
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截至季度结束日期的财务报告 |
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或者 |
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根据1934年证券交易法第13或15(d)节的转型报告书 |
在__________至__________的过渡期间
委员会文件号
(根据其章程规定的注册人准确名称)
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（设立或组织的其他管辖区域） |
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（纳税人识别号码） |
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（总部地址） |
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(邮政编码) |
(
公司电话号码，包括区号
Not Applicable
如果自上次报告以来公司更改了名称、地址或财政年度，请注明旧名称、旧地址和旧财政年度。
在法案第12(b)条的规定下注册的证券：
每个类别的标题 |
交易标的 |
在其上注册的交易所的名称 |
请在勾选标志处表示注册人是否（1）已经提交了《1934年证券交易法》第13或15（d）条要求提交的所有报告，(2）在过去90天内一直受到提交要求的影响。
在检查标记中表明注册人是否已经在过去的12个月内（或者为注册人需要提交这些文件的较短期间）根据S-T法规405规定，递交了每个互动数据文件。
请用复选标记指示注册公司是否为大型加速文件提交者、加速文件提交者、非加速文件提交者、较小的报告公司还是新兴成长公司。请参阅《交易所法》第120亿.2条中“大型加速文件提交者”、“加速文件提交者”、“较小的报告公司”和“新兴成长公司”的定义。
大型加速报告人 |
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非加速文件提交人 |
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较小的报告公司 |
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新兴成长公司 |
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如果是新兴增长型企业，请勾选复选框，表示注册人已决定不使用延长过渡期来遵守根据《证券交易法》第13(a)条规定提供的任何新的或修订后的财务会计准则。
请通过勾选的方式表明登记人是否为空壳公司（根据该法第120亿.2条的定义）。
截至2024年10月31日，
目录
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页面 |
第一部分 - 财务信息 |
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1 |
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项目1。 |
2 |
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2 |
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3 |
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4 |
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6 |
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7 |
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项目2。 |
23 |
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项目3。 |
40 |
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项目4。 |
41 |
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第二部分- 其他信息 |
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项目1。 |
43 |
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项目1A。 |
43 |
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项目2。 |
44 |
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项目3。 |
45 |
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项目4。 |
45 |
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项目5。 |
45 |
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项目6。 |
46 |
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47 |
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前瞻性声明
本季度报告表格 10-Q（"季度报告"）包含前瞻性陈述。所有陈述以外的历史或当前事实的陈述都可能是前瞻性陈述。关于我们未来业绩和财务状况、业务策略以及管理层未来运营的计划和目标的陈述，包括流动性、增长和盈利能力策略以及影响我们业务的因素和趋势，都是前瞻性陈述。在某些情况下，可以通过使用“相信”、“can”、“could”、“潜在”、“计划”、“预测”、“目标”、“寻求”、“应该”、“可能”、“可能有”、“会”、“估计”、“继续”、“预期”、“打算”、“期待”，这些词的否定形式、其他类似表达或通过战略、计划或意图的讨论来识别前瞻性陈述。
本季度报告中的前瞻性声明仅为预测。我们主要基于对未来事件和财务趋势的当前预期和展望，这些事件和趋势可能影响我们的业务、财务状况和运营结果。前瞻性声明涉及已知和未知的风险、不确定性和其他重要因素，可能导致我们的实际结果、业绩或成就，或行业业绩与前瞻性声明中明示或暗示的未来结果有很大不同。我们认为这些因素包括，但不限于，本季度报告第II部分第1A项下列出的因素。风险因素本季度报告中的“Risk Factors”中更全面地在我们2023年12月31日终止的年度报告10-k表格第I部分第1A项中包含的因素。由于前瞻性声明天然受到风险和不确定性的影响，其中一些风险和不确定性无法预测或量化，因此您不应将这些前瞻性声明视为未来事件的预测。在我们的前瞻性声明中反映的事件和情况可能无法实现或发生，实际结果可能与前瞻性声明中预测的有很大不同。
此外，"我们相信"等类似陈述反映了我们对相关主题的信念和观点。这些陈述基于我们在本季度报告日期之日可以获取的信息，尽管我们认为这些信息为这些陈述提供了合理的基础，但这些信息可能是有限或不完整的，我们的陈述不应被视为表明我们已对所有可能可获得的相关信息进行了详尽调查或审查。这些陈述具有不确定性，投资者应警惕不要过度依赖这些陈述。
您应该以理解我们实际未来的结果可能与我们预期的有实质性不同的情况下阅读本季度报告。 所有归因于我们或代表我们行事的人的前瞻性陈述均以这些警示性声明为完全的明示限定。
这些含有前瞻性声明的言论仅限于本季度报告的日期。除非适用法律要求，我们没有计划公开更新或修订本季度报告中包含的任何前瞻性声明，不论是受到任何新信息、未来事件或其他因素的影响。
1
项目 1。 基本报表
FTC 太阳能公司
精简的综合损益表调整后的资产负债表
(未经审计)
(以千为单位，除每股数据外) |
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2024年9月30日 |
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2023年12月31日 |
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资产 |
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流动资产 |
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现金及现金等价物 |
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$ |
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$ |
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应收账款，净额 |
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存货 |
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预付款和其他流动资产 |
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总流动资产 |
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经营租赁使用权资产 |
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物业和设备，净值 |
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无形资产-净额 |
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商誉 |
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权益法投资 |
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其他资产 |
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总资产 |
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$ |
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$ |
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负债和股东权益 |
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流动负债 |
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应付账款 |
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$ |
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$ |
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应计费用 |
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应付所得税 |
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递延收入 |
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其他流动负债 |
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总流动负债 |
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运营租赁负债，扣除当前部分 |
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其他非流动负债 |
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总负债 |
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股东权益 |
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优先股面值为$ |
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每股的普通股面值为$ |
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即期收购库藏股；截至2022年9月25日，共计157,773股，截至2022年6月26日，共计157,087股。 |
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追加实收资本 |
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累计其他综合损失 |
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累积赤字 |
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股东权益总额 |
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总负债和股东权益 |
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$ |
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$ |
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附注是本简明合并财务报表的组成部分。
2
FTC 太阳能公司
合并简式 全面损失报表
(未经审计)
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截至9月30日的三个月 |
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截至9月30日的九个月 |
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(以千为单位，除股份及每股数据外) |
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2024 |
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2023 |
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2024 |
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2023 |
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营业收入: |
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产品 |
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$ |
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$ |
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$ |
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$ |
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服务 |
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总营业收入 |
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营业成本： |
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产品 |
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服务 |
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总成本费用 |
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毛利润（亏损） |
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营业费用 |
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研究和开发 |
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销售和 marketing |
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一般管理费用 |
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总营业费用 |
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运营损失 |
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利息收入（费用），净额 |
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处置未合并子公司的收益 |
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其他收入（费用），净额 |
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未合并子公司的损失 |
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税前亏损 |
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所得税准备 |
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净损失 |
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其他全面收益（损失）： |
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外币翻译调整 |
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综合损失 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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每股净亏损: |
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基本和稀释 |
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$ |
( |
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$ |
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$ |
( |
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$ |
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加权平均流通普通股: |
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基本和稀释 |
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附注是本简明合并财务报表的组成部分。
3
FTC 太阳能公司
压缩合并股东权益变动表股东权益
(未经审计)
截至2024年9月30日的三个月和九个月：
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优先股 |
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普通股 |
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库存股 |
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(以千为单位，除股份外) |
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股份 |
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金额 |
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股份 |
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金额 |
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股份 |
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金额 |
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额外 |
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累计其他综合损失 |
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累计亏损 |
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总计 |
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截至2023年12月31日的余额 |
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$ |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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在归属限制性股票奖励期间发行的股份 |
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— |
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基于股票的补偿 |
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净损失 |
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其他综合损失 |
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截至2024年3月31日的余额 |
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在本期内发行的已归属限制性股票奖励的股份 |
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行使期权时发行的普通股 |
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基于股票的补偿 |
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净损失 |
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其他综合收益 |
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截至2024年6月30日的余额 |
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在本期内发行的已归属限制性股票奖励的股份 |
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行使期权时发行的普通股 |
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基于股票的补偿 |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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||
净损失 |
|
|
— |
|
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— |
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— |
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— |
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— |
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— |
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— |
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|
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— |
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( |
) |
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( |
) |
其他综合收益 |
|
|
— |
|
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|
— |
|
|
|
— |
|
|
|
— |
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— |
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— |
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|
|
— |
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|
|
|
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— |
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|
|
|
||
截至2024年9月30日的余额 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
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||||||||
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|
|
||||||||||
附注是本简明合并财务报表的组成部分。
4
FTC 太阳能公司
合并股东权益变动的简明财务报表（续）
(未经审计)
截至2023年9月30日的三个月和九个月：
|
|
优先股 |
|
|
普通股 |
|
|
库存股 |
|
|
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|
|
|
|
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|
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|||||||||||||||||||
(以千为单位，除股份外) |
|
股份 |
|
|
金额 |
|
|
股份 |
|
|
金额 |
|
|
股份 |
|
|
金额 |
|
|
额外 |
|
|
累计 |
|
|
累计 |
|
|
总计 |
|
||||||||||
截至2022年12月31日的余额 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||||
在期间发行的已授予限制性股票奖励的股份 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
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|
|
— |
|
|
|
— |
|
|
|
|
|||
行使期权时发行普通股 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
因法律和解而发行的股份 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
股份出售 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
股票发行费用 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
基于股票的补偿 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
净损失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
其他综合损失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
截至2023年3月31日的余额 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||||||
在归属的限制性股票奖励期间发行的股份 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
在行使期权时发行普通股 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
股份销售 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
股票发行费用 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
基于股票的补偿 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
净损失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
其他综合损失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
截至2023年6月30日的余额 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||||||
在本期间为已经授予受限股票奖励而发行的股份 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
根据期权行使而发行的普通股 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
股份出售 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
股票发行费用 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
股份回购和养老 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
基于股票的补偿 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
净损失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
其他综合损失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
截至2023年9月30日的余额 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
附注是本简明合并财务报表的组成部分。
5
FTC 太阳能公司
合并简式 现金流量表
(未经审计)
|
|
截至9月30日的九个月 |
|
|||||
(以千为单位) |
|
2024 |
|
|
2023 |
|
||
经营活动产生的现金流 |
|
|
|
|
|
|
||
净损失 |
|
$ |
( |
) |
|
$ |
( |
) |
调整净损失与经营活动中现金使用的调节： |
|
|
|
|
|
|
||
基于股票的补偿 |
|
|
|
|
|
|
||
折旧和摊销 |
|
|
|
|
|
|
||
处置资产和设备的收益 |
|
|
|
|
|
( |
) |
|
债务发行成本的摊销 |
|
|
|
|
|
|
||
过时和滞销库存的准备金 |
|
|
|
|
|
|
||
未合并子公司的损失 |
|
|
|
|
|
|
||
处置未合并子公司的收益 |
|
|
( |
) |
|
|
( |
) |
保修和补救准备金 |
|
|
|
|
|
|
||
可向制造商索回的保修 |
|
|
|
|
|
|
||
信用损失准备金 |
|
|
|
|
|
|
||
递延所得税 |
|
|
|
|
|
|
||
租赁费用及其他 |
|
|
|
|
|
|
||
经营资产和负债变动对现金的影响： |
|
|
|
|
|
|
||
应收账款 |
|
|
|
|
|
( |
) |
|
存货 |
|
|
( |
) |
|
|
|
|
预付账款及其他流动资产 |
|
|
( |
) |
|
|
( |
) |
其他资产 |
|
|
( |
) |
|
|
|
|
应付账款 |
|
|
|
|
|
( |
) |
|
应计费用及其他流动负债 |
|
|
( |
) |
|
|
|
|
递延收入 |
|
|
|
|
|
( |
) |
|
其他非流动负债 |
|
|
( |
) |
|
|
( |
) |
租赁付款及其他，净额 |
|
|
( |
) |
|
|
( |
) |
经营活动中使用的净现金 |
|
|
( |
) |
|
|
( |
) |
投资活动的现金流： |
|
|
|
|
|
|
||
购买房产和设备 |
|
|
( |
) |
|
|
( |
) |
Alpha钢铁的权益法投资 |
|
|
( |
) |
|
|
( |
) |
处置对未合并子公司的投资的收益 |
|
|
|
|
|
|
||
投资活动提供的（使用的）净现金 |
|
|
|
|
|
( |
) |
|
融资活动产生的现金流: |
|
|
|
|
|
|
||
普通股出售 |
|
|
|
|
|
|
||
股票发行费用 |
|
|
|
|
|
( |
) |
|
股票期权行使的收入 |
|
|
|
|
|
|
||
融资活动提供的净现金 |
|
|
|
|
|
|
||
汇率变化对现金及现金等价物的影响 |
|
|
|
|
|
( |
) |
|
现金及现金等价物减少 |
|
|
( |
) |
|
|
( |
) |
期初的现金及现金等价物 |
|
|
|
|
|
|
||
期末现金及现金等价物 |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
现金流信息的补充披露： |
|
|
|
|
|
|
||
期末应付账款和应计费用中包含的固定资产和设备购买 |
|
$ |
|
|
$ |
|
||
已发行股票用于已计提的法律和解 |
|
$ |
|
|
$ |
|
||
新租赁的使用权资产和租赁负债确认 |
|
$ |
|
|
$ |
|
||
期间支付的利息现金 |
|
$ |
|
|
$ |
|
||
期间支付的现金用于税款，扣除退款 |
|
$ |
|
|
$ |
|
||
附注是本简明合并财务报表的组成部分。
6
FTC 太阳能公司
C的注释简明综合财务报表
(未经审计)
1. 业务描述
FTC Solar, Inc.（“公司”，“我们”，“我们的”或“我们”）成立于2017年，并在特拉华州注册。我们于2021年4月完成了首次公开募股（"IPO"），我们普通股目前在纳斯达克资本市场以“FTCI”为标的交易。
我们是全球太阳能追踪系统的供应商，拥有专有软件和增值工程服务的支持。太阳能追踪系统在一天内移动太阳能电池板，以保持相对于太阳的最佳方向，从而增加太阳能电站产生的太阳能量。我们最初的双面portrait太阳能追踪系统当前以Voyager品牌名称（“Voyager”）进行市场营销，而我们在2023年获得认证的一模组portrait（"1P"）太阳能追踪系统则以Pioneer品牌名称（"Pioneer"）进行市场营销。我们还有一种安装解决方案，以支持项目所有者安装和使用美国制造的薄膜组件。我们的主要软件产品包括SUNPATH，旨在帮助客户优化太阳能追踪以增加能源生产，还有SUNOPS实时运营管理平台以及基于网页的ATLAS投资组合管理软件。此外，我们还拥有一支可协助美国和全球客户进行现场布局、结构设计、桩基测试及其他需求的可再生能源专业团队，服务于太阳能项目开发和施工周期。公司总部位于德克萨斯州奥斯汀，并在澳洲、中国、印度、南非和西班牙拥有国际子公司。
我们是一家新兴成长公司，符合《跳跃我们的业务创业法案》（JOBS Act）的定义。根据JOBS Act，我们选择利用允许的延长过渡期，推迟采用新或修订的会计标准，直到这些标准适用于私营公司为止。
2. 重要会计政策摘要
财务报表的呈报基础和合并原则
附带的未经审计的精简合并基本报表包含了公司及其全资子公司的结果，并已根据美国公认会计原则（“U.S. GAAP”）为中期基本报表准备，并根据10-Q表格及S-X规章第10条进行披露。管理层认为，已做出所有正常经常性调整，以便在2024年9月30日及2023年12月31日公正地陈述我们的财务状况，以及截至2024年和2023年9月30日的三个月和九个月经营成果，以及截至2024年和2023年9月30日的九个月现金流量。2023年12月31日的精简合并资产负债表是基于公司的经审计合并基本报表得出的，但未包括美国公认会计原则所要求的所有披露。2024年9月30日的三个月和九个月的经营成果不一定表明2024年12月31日结束的年度的预期结果。合并中已消除集团内部的余额和交易。
根据美国公认会计原则（U.S. GAAP）通常包括在年度财务报表附注中的某些信息和披露已根据证券交易委员会（“SEC”）的规则和条例从这些中期基本报表中省略。因此，这些未经审计的精简合并基本报表应与公司2023年12月31日结束的年度的10-K表格合并基本报表及相关附注一并阅读（我们的"2023年年度报告"）。
我们目前在一个业务板块中运营，即太阳能追踪系统的制造和服务。
流动性
自成立以来，我们累积了亏损，并且有经营现金流出历史。到2024年9月30日，我们有 $
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我们能够卖出这些股票的价格，以及根据ATM计划出售我们普通股的任何销售可能会导致现有股东的进一步稀释。
在2023年12月22日，我们收到了来自纳斯达克证券市场有限责任公司（“纳斯达克”）的通知，告知我们未能遵守保持最低收盘买盘价格$的要求。
截至2024年4月30日，我们的高级担保循环信用设施（"信用设施"）在未被使用的情况下到期，截至2024年9月30日尚未被替代。 如第18条注释中进一步描述的"后续事件"，我们于2024年11月8日与一位机构投资者签署了具有约束力的条款清单，以发行$
截至2024年9月30日，我们有一项合同义务，可能要求我们额外出资最多 $
此外，我们在2024年努力增强和加强我们的管理领导团队。在2024年8月，我们聘请了Yann Brandt作为新的首席执行官，在此之前，我们任命了Tamara Mullings，董事会的前成员，担任北美销售高级副总裁，以及前首席执行官和STI Norland董事会执行成员Alberto Echeverria担任国际销售高级副总裁。
根据会计标准编码（"ASC"）205-40，即持续经营，我们评估了一年内，我们的简式合并财务报表发布后，是否存在组合考虑的条件和事件，可能对我们继续作为持续经营实体的能力产生重大怀疑。
管理层计划通过以下措施解决公司的流动性需求：（i）执行上述$
这些计划的成功执行取决于各种风险和不确定性。这些风险包括但不限于市场条件、公司实现预计成本节约和营业收入目标的能力，以及以优惠条件获得融资的能力。不能保证这些计划会按预期实现，实际结果可能与预期结果存在重大差异。
估计的使用
准备 按照美国公认会计原则编制合并财务报表需要管理层做出影响资产和负债报告金额、在财务报表日期披露或有资产和负债，以及在期间报告的营业收入和费用的估计和假设。估计用于计算进展度的衡量标准。
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的 我们的太阳能跟踪器项目及在确定营业收入时推导各项履约义务的独立销售价格、预计信用损失和慢速及过时库存的准备金、确定长期资产的使用年限以及这些资产的公允价值评估进行减值评估、估计投资、公允补偿奖励、质保负债以及联邦和州税，包括税务估值准备和其他或有事项等。我们根据历史经验和预期结果、趋势以及我们认为在该情况下合理的各种其他假设，包括对未来事件的假设，来进行估计。由于风险和不确定性，实际结果可能与这些估计有所不同。
信用风险集中
可能使公司面临信用风险集中风险的金融工具主要是现金和应收账款。
我们定期在各种金融机构中维护的现金余额超过了联邦保险金额，但迄今为止我们没有经历与这些金额相关的损失。我们在2023年初采取行动，根据对某些金融机构财务健康状况的评估，在不同金融机构之间重新分配现金余额。
我们在正常的业务过程中向客户提供信用，通常不需要抵押品。我们还进行信用分析并监控客户的财务健康状况，以降低信用风险。
公司的应收账款主要来源于位于美国和澳洲的客户所创造的营业收入。 在本季度报告中，包括在美国以外的公司位置的营业收入未占超过比例。
现金及现金等价物
我们认为所有购买原始到期期限在三个月或更短时间的高流动性投资都是现金等价物。我们的一些现金等价物包括投资于主要由美国政府或其机构及工具发行或担保的短期证券的货币市场基金的存款，并且没有对立即赎回的限制。这些存款总计 $
应收账款，净额
应收账款按开票金额记录，扣除信用损失准备金，并不计利息。我们通常不要求客户提供担保；但在某些情况下，我们可能会要求信用证、其他担保、额外保证或预付款。
信用损失准备金是基于客户账户的终身预期信用损失。为了评估终身预期信用损失，我们采用一种损失率方法，该方法考虑历史经验以及其他适当因素，如信用质量和可能影响客户支付能力的当前经济或其他条件。信用损失准备金的计提作为我们的销售和市场费用的组成部分。
因已确认的营业收入超过开票的应收款项，代表我们在客户开票之前，因在合同中采购和交付追踪系统及相关设备的进度所获得的无条件对对价的权利。更多信息可在我们的 营业收入确认政策中找到.
存货
存货以成本或可变现净值中的较低者计价，成本采用先进先出法计算。公司定期审查存货，检查是否有过剩和过时的项目，并在确定其低于成本时，将账面成本调整为预计的可变现净值。
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Impairment
We review our long-lived assets that are held for use for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable or that its useful life may be shorter than previously expected. If such impairment indicators are present or other factors exist that indicate the carrying amount of the asset may not be recoverable, we determine whether an impairment has occurred through the use of an undiscounted cash flow analysis of the asset at the lowest level for which identifiable cash flows exist. If an impairment has occurred, we recognize a loss for the difference between the carrying amount and the fair value of the asset, which in most cases is estimated based upon Level 3 unobservable inputs. If the asset is determined to have a remaining useful life shorter than previously expected, an adjustment for the shorter remaining life will be made for purposes of recognizing future depreciation expense. Assets are classified as held for sale when we have a plan, approved by the appropriate levels of management, for disposal of such assets, as well as other considerations, and those assets are stated at the lower of carrying value or estimated fair value less estimated costs to sell.
Intangible assets, net
Intangible assets are recorded at fair value when acquired in connection with a business combination and consist of developed technology in the form of software tools, licenses, and intellectual property, which are amortized over the period of their estimated useful lives, generally
Goodwill
We recognize goodwill as the excess of the purchase price over the estimated fair value of the identified assets and liabilities acquired in a business combination accounted for using the acquisition method. Goodwill is not amortized but is subject to a periodic assessment for impairment at least annually, or whenever events and circumstances indicate an impairment may exist. Our assessments may include qualitative factors such as current or expected industry and market conditions, our overall financial performance, share price trends, market capitalization and other company-specific events.
We operate in one segment, being the consolidated entity, which we have also determined is the reporting unit for goodwill impairment.
Equity method investment
We use the equity method of accounting for investments in which we have the ability to exercise significant influence, but not control, over operating and financial policies of the investee. Our proportionate share of the net income or loss of these investees is included in our condensed consolidated statements of comprehensive loss. Judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest, legal form of the investee, representation on the board of directors or managers, participation in policy-making decisions and material intra-entity transactions.
We account for distributions received from equity method investees under the “nature of the distribution” approach based on the nature of the activity or activities of the investee that generated the distribution as either a return on investment (classified as cash inflows from operating activities) or a return of investment (classified as cash inflows from investing activities).
We evaluate equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time and the extent to which the fair value of the equity method investment has been less than its cost, the investee’s financial condition and near-term prospects and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than temporary is recognized in the period identified.
We made an accounting policy election that, upon the sale of our equity method investments, we will recognize contractual contingent gains arising from earnout provisions and project escrow releases when such amounts are realizable in periods subsequent to the disposal date.
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Warranty
Typically, the sale of solar tracker projects includes parts warranties to customers as part of the overall price of the product.
While we periodically monitor our warranty activities and claims, if actual costs incurred were to be different from our estimates, we would recognize adjustments to our warranty reserves in the period in which those differences arise or are identified.
Stock-based compensation
We recognize compensation expense for all share-based payment awards made, including stock options and restricted stock units ("RSUs"), based on the estimated fair value of the award on the grant date. We calculate the fair value of stock options using the Black-Scholes option pricing model for awards with service-based vesting or through use of a lattice model or a Monte Carlo simulation for stock option and RSU awards with market conditions. The fair value of RSUs with service or performance-based vesting is based on the estimated fair value of the Company's common stock on the date of grant. We consider the closing price of our stock, as reported on the Nasdaq Capital Market, to be the fair value of our stock on the grant date.
Forfeitures are accounted for as they occur. For service-based awards, stock-based compensation is recognized using the straight-line attribution approach over the requisite service period. For performance-based awards, stock-based compensation is recognized based on graded vesting over the requisite service period when the performance condition is probable of being achieved. Stock compensation expense for market-based awards is recognized over the derived service period determined in the valuation model, inclusive of any vesting conditions.
Revenue recognition
Product revenue is derived from the sale of solar tracker systems and customized components for those systems, individual part sales for certain specific transactions and the sale of term-based software licenses. Term-based licensed software is deployed on the customers’ own servers and has significant standalone functionality.
Service revenue includes revenue from shipping and handling services, engineering consulting and pile testing services, our subscription-based enterprise licensing model and maintenance and support services in connection with the term-based software licenses. Our subscription-based enterprise licensing model typically has contract terms ranging from to
We recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which we expect to be entitled to in exchange for those goods or services by following a five-step process: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when or as the Company satisfies a performance obligation, as further described below.
Identify the contract with a customer: A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the products and services to be transferred and identifies the payment terms related to these products and services, (ii) the contract has commercial substance, and (iii) the Company determines that collection of substantially all consideration for products and services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. In assessing the recognition of revenue, we also evaluate whether two or more contracts should be combined and accounted for as one contract and if the combined or single contract should be accounted for as multiple performance obligations which could change the amount of revenue and profit (loss) recorded in a period. Change orders may include changes in specifications or design, manner of
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performance, equipment, materials, scope of work, and/or the period of completion of the project. We analyze change orders to determine if they should be accounted for as a modification to an existing contract or a new stand-alone contract.
Contracts we enter into with our customers for sale of solar tracker systems are generally under two different types of arrangements: (1) purchase agreements and equipment supply contracts (“Purchase Agreements”), and (2) sale of individual parts for those systems.
Change orders from our customers are generally modifications to existing contracts and are included in the total estimated contract revenue when it is probable that the change order will result in additional value that can be reliably estimated and realized.
Identify the performance obligations in the contract: We enter into contracts that can include various combinations of products and services, which are either capable of being distinct and accounted for as separate performance obligations or as one performance obligation since the majority of tasks and services are part of a single project or capability. However, determining whether products or services are considered distinct performance obligations that should be accounted for separately versus together may sometimes require significant judgment.
Our Purchase Agreements typically include two performance obligations: 1) our solar tracker systems or customized components of those systems, and 2) shipping and handling services. The deliverables included as part of our solar tracker systems are predominantly accounted for as one performance obligation, as these deliverables are part of a combined promise to deliver a project.
The revenue for shipping and handling services will be recognized over time based on progress in meeting shipping terms of the arrangements, as this faithfully depicts the Company’s performance in transferring control. Revenue for stand-alone engineering consulting and pile testing services is recognized at a point in time upon completion of the services performed.
Sales of individual parts of our solar tracker systems for certain specific transactions include multiple performance obligations consisting of individual parts of those systems. Revenue is recognized for parts sales at a point in time when the obligations under the terms of the contract with our customer are satisfied. Generally, this occurs with the transfer of control of the asset, which is in line with shipping terms.
Determine the transaction price: The transaction price is determined based on the consideration to which we will be entitled in exchange for transferring services to the customer. Such amounts are typically stated in the customer contract, and to the extent that we identify variable consideration, we will estimate the variable consideration at the onset of the arrangement as long as it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The majority of our contracts do not contain variable consideration provisions as a continuation of the original contract. None of our contracts contain a significant financing component. Taxes collected from customers and remitted to governmental authorities are not included in revenue.
Allocate the transaction price to performance obligations in the contract: Once we have determined the transaction price, we allocate the total transaction price to each performance obligation in a manner depicting the amount of consideration to which we expect to be entitled in exchange for transferring the good(s) or service(s) to the customer. We allocate the transaction price to each performance obligation identified in the contract on a relative standalone selling price basis.
We use the expected cost-plus margin approach based on hardware, labor, and related overhead cost to estimate the standalone selling price of our solar tracker systems, customized components of those systems, and individual parts for certain specific transactions. We also use the expected cost-plus margin approach based on expected third-party shipping and transportation costs to estimate the standalone selling price of our shipping, handling and logistics performance obligations. We use the adjusted market assessment approach for all other performance obligations.
Recognize revenue when or as the Company satisfies a performance obligation: For each performance obligation identified, we determine at contract inception whether we satisfy the performance obligation over time or at a point in time. The performance obligations in the contracts for our solar tracker systems and customized components of those systems are satisfied over time as work progresses, utilizing an input measure of progress determined by cost-to-cost measures on these projects as this faithfully depicts our performance in transferring control. Additionally, our performance does not create an asset with an alternative use, due to the highly customized nature of the product, and we have an enforceable right to payment for performance completed to date. Our performance obligations for individual part sales for certain specific transactions are recognized at a point in time as and when control transfers based on the terms for the contract. Our performance obligations for engineering consulting and pile testing services are recognized at a point in time upon completion of the
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services. Our performance obligations for term-based software licenses are recognized at a point in time as and when control transfers, either upon delivery to the customer or the software license start date, whichever is later. Our performance obligations for shipping and handling services are satisfied over time as the services are delivered over the term of the contract. We recognize revenue for subscription and other services on a straight-line basis over the contract period. With regard to support revenue, a time-elapsed method is used to measure progress because we transfer control evenly over the contractual period. Accordingly, the fixed consideration related to support revenue is generally recognized on a straight-line basis over the contract term.
Contract assets and liabilities: The timing of revenue recognition, billing, and cash collection results in the recognition of accounts receivable, unbilled receivables for revenue recognized in excess of billings, and deferred revenue in the condensed consolidated balance sheets. We have elected to use the practical expedient of expensing incremental costs of obtaining a contract for our contracts of less than one year in duration. We may receive advances or deposits from our customers before revenue is recognized, resulting in contract liabilities, which are reflected as “deferred revenue” in our condensed consolidated balance sheets. Customer deposits are short term as the related performance obligations are typically fulfilled within 12 months. Changes in deferred revenue relate to fluctuations in the timing of customer deposits and completion of performance obligations. Revenue recognized during the three and nine months ended September 30, 2024, from amounts included in deferred revenue at December 31, 2023, totaled $
Cost of revenue consists primarily of costs related to raw materials, equipment manufacturing activities, freight and delivery, product warranty, remediation and personnel costs (salaries, bonuses, benefits, and stock-based compensation). Personnel costs in cost of revenue include both direct labor costs, as well as costs attributable to any individuals whose activities relate to the procurement, installment and delivery of the finished product and services. Cost of revenue owed but not yet paid is recorded as accrued cost of revenue in the accompanying condensed consolidated balance sheets. Deferred cost of revenue, a component of our prepaid and other current assets, results from the timing differences between the costs incurred in advance of the satisfaction of all revenue recognition criteria consistent with our revenue recognition policy.
Recent accounting and regulatory pronouncements not yet adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07 - Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), which will become effective for us for our year end 2024 financial reporting and our interim reporting beginning January 1, 2025. ASU 2023-07 requires public companies to disclose significant segment expenses and other segment items on an annual and interim basis and will require interim disclosures about a reportable segment's profit or loss and assets that are currently required annually. As noted above, we operate in one segment. We are currently evaluating the impact of ASU 2023-07 on our existing disclosures. ASU 2023-07 will be applied retrospectively to all periods when presented in our consolidated financial statements for the year ending December 31, 2024.
In December 2023, the FASB issued ASU No. 2023-09 - Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"). ASU 2023-09 requires companies to disclose (i) additional categories of information about federal, state and foreign income taxes above a quantitative threshold in their rate reconciliation table and (ii) income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual periods, as well as other disclosure changes. As an emerging growth company, we are not required to adopt ASU 2023-09 prior to 2026, although earlier adoption is permitted. We are currently evaluating the impact of ASU 2023-09 on our existing income tax disclosures.
In March 2024, the U.S. Securities and Exchange Commission ("SEC") adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule would require registrants to disclose certain climate-related information in registration statements and annual reports. In April 2024, the SEC issued a stay of the final rules pending a judicial review of the validity of the rules by the Eighth Circuit Court of Appeals. We are currently evaluating the final rule to determine its impact on our disclosures.
Other standards or regulatory requirements that have been issued but not yet adopted as of September 30, 2024, are either not applicable to us or are not expected to have any material impact upon adoption.
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Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation. There was no impact on our financial condition or results of operations as a result of the reclassification.
3. Equity method investment
On February 9, 2023, we entered into a limited liability company agreement (the "LLC Agreement") with Taihua New Energy (Thailand) Co., LTD ("Taihua"), a steel fabricator and an existing vendor, and DAYV LLC, for the creation of Alpha Steel LLC ("Alpha Steel"), a Delaware limited liability company dedicated to producing steel components, including torque tubes, for utility-scale solar projects. The Alpha Steel facility, which is located outside of Houston in Sealy, Texas, began commercial production late in the fourth quarter of 2023.
We entered into amendment no. 1 to the Alpha Steel LLC Agreement with Taihua and DAYV LLC on July 28, 2023, to allow for members at their option, and with the approval of the Board of Managers, to make payments in respect of Alpha Steel’s contractual obligations in the event that Alpha Steel does not or is not able to make such payments from its own resources (“Credit Support Payments”). Any such Credit Support Payments will be treated as capital contributions by the members to Alpha Steel, with any member funding more than its ratable share of Credit Support Payments being deemed to have loaned such excess to each underfunding member at the U.S. prime rate plus
Alpha Steel is intended to enhance our domestic supply chain, our ability to support our customers and the growth of the U.S. solar market, with domestic manufacturing utilizing U.S. steel. We have a
During 2023, we made a required initial capital contribution of $
In connection with the creation of Alpha Steel, we also entered into a three-year equipment supply agreement (the "Supply Agreement") with Alpha Steel, the terms of which will apply to our equipment purchase orders.
At September 30, 2024, in addition to our requirement to meet the remaining minimum purchase obligations for the remainder of the year, as described above, we were contingently liable for unpaid vendor obligations, including issued but unsatisfied purchase orders, of Alpha Steel totaling approximately $
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4. ATM program
On September 14, 2022, we filed a prospectus supplement and entered into an equity distribution agreement (as amended, the "EDA") under which we may from time to time, in one or more transactions, offer and sell newly issued shares of our common stock having an aggregate offering price of up to $
Barclays Capital Inc. ("Barclays") is our sales agent under the EDA. The offering of our common stock under the EDA will terminate upon the earlier of (1) the sale of all common stock subject to the EDA or (2) the termination of the EDA by us or by Barclays as permitted therein. The EDA contains customary representations, covenants and indemnification provisions.
We sold
5. Accounts receivable, net
Accounts receivable consisted of the following:
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September 30, 2024 |
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December 31, 2023 |
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Trade receivables |
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$ |
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$ |
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Related party receivables |
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Revenue recognized in excess of billings |
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Other receivables |
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Total |
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Allowance for credit losses |
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Accounts receivable, net |
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$ |
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$ |
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On April 3, 2024, we entered into a First Amendment ("the Amendment") to Master Project Supply Agreements dated October 11, 2021 with a customer and major solar project developer that owed us approximately $
Pursuant to the Amendment, we received a cash payment of $
Information about our related party receivables at September 30, 2024, may be found below in Note 16, "Related party transactions".
We had
Activity in the allowance for credit losses during the three and nine months ended September 30, 2024 and 2023 was as follows:
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Three months ended September 30, |
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Nine months ended September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Balance at beginning of period |
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$ |
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$ |
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$ |
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$ |
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Impact of adoption of ASU 2016-13, effective January 1, 2023 |
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N/A |
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N/A |
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N/A |
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Amounts charged (credited) to earnings during the period |
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Write-offs of accounts |
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Balance at end of period |
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$ |
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$ |
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$ |
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$ |
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6. Inventories
Inventories consisted of the following:
(in thousands) |
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September 30, 2024 |
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December 31, 2023 |
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Finished goods |
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$ |
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$ |
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Allowance for slow-moving and obsolete inventory |
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( |
) |
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( |
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Total |
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$ |
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$ |
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The increase in our finished goods inventory is primarily related to completed project equipment retained by us pursuant to the agreement reached with a major customer described further in Note 5, "Accounts receivable, net" above.
7. Prepaid and other current assets
Prepaid and other current assets consisted of the following:
(in thousands) |
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September 30, 2024 |
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December 31, 2023 |
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Vendor deposits |
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$ |
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$ |
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Vendor deposits with related party |
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Prepaid expenses |
|
|
|
|
|
|
||
Prepaid taxes |
|
|
|
|
|
|
||
Deferred cost of revenue |
|
|
|
|
|
|
||
Surety collateral |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
At September 30, 2024, other current assets included $
8. Leases
We lease office and warehouse space in various locations, including our corporate headquarters in Austin, Texas. Additionally, we lease space for an applications laboratory in Austin, Texas and a research and development facility in Seguin, Texas. All of our manufacturing is outsourced to contract manufacturing partners, and we currently do not own or lease any manufacturing facilities.
16
Our expense for our operating leases consisted of the following:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Short-term lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reported in: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Future remaining operating lease payment obligations were as follows:
(in thousands) |
|
September 30, |
|
|
Remainder of 2024 |
|
$ |
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
Total lease payments |
|
|
|
|
Less: imputed interest |
|
|
( |
) |
Present value of operating lease liabilities |
|
$ |
|
|
|
|
|
|
|
Current portion of operating lease liability |
|
$ |
|
|
Operating lease liability, net of current portion |
|
|
|
|
Present value of operating lease liabilities |
|
$ |
|
|
9. Property and equipment, net
Property and equipment consisted of the following:
(in thousands) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Leasehold improvements |
|
$ |
|
|
$ |
|
||
Field equipment |
|
|
|
|
|
|
||
Information technology equipment |
|
|
|
|
|
|
||
Tooling |
|
|
|
|
|
|
||
Capitalized software |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
Property and equipment, net |
|
$ |
|
|
$ |
|
||
Depreciation expense for the three months ended September 30, 2024 and 2023, totaled $
17
10. Intangible assets, net and goodwill
Intangible assets consisted of the following:
(in thousands) |
|
Estimated Useful Lives (Years) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Developed technology |
|
|
$ |
|
|
$ |
|
|||
Total |
|
|
|
|
|
|
|
|
||
Accumulated amortization |
|
|
|
|
( |
) |
|
|
( |
) |
Intangible assets, net |
|
|
|
$ |
|
|
$ |
|
||
Amortization expense for the three months ended September 30, 2024 and 2023, totaled $
During the nine months ended September 30, 2024 and 2023, activity in our goodwill balance was as follows:
|
|
|
|
Nine months ended September 30, |
|
|||||
(in thousands) |
|
|
|
2024 |
|
|
2023 |
|
||
Balance at beginning of period |
|
|
|
$ |
|
|
$ |
|
||
Translation |
|
|
|
|
|
|
|
( |
) |
|
Balance at end of period |
|
|
|
$ |
|
|
$ |
|
||
11. Debt
Our Credit Facility, entered into in 2021 with various lenders, including Barclays Bank PLC, as issuing lender, the swingline lender and as administrative agent, expired unused on April 30, 2024. The Credit Facility has not currently been replaced.
Interest expense for the three months ended September 30, 2024 was
12. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consisted of the following:
(in thousands) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Accrued cost of revenue |
|
$ |
|
|
$ |
|
||
Related party accrued cost of revenue |
|
|
|
|
|
|
||
Accrued compensation |
|
|
|
|
|
|
||
Other accrued expenses |
|
|
|
|
|
|
||
Total accrued expenses |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Warranty reserves |
|
$ |
|
|
$ |
|
||
Current portion of operating lease |
|
|
|
|
|
|
||
Non-federal tax obligations |
|
|
|
|
|
|
||
Total other current liabilities |
|
$ |
|
|
$ |
|
||
Information relating to our related party accrued cost of revenue at September 30, 2024 and December 31, 2023 may be found below in Note 16, "Related party transactions".
Other accrued expenses primarily include amounts due for (i) legal costs associated with outstanding corporate or legal matters and (ii) other professional services.
18
Activity by period in the Company's warranty accruals was as follows:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Warranties issued and remediation added during the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Settlements made during the period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Changes in liability for pre-existing warranties |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warranty accruals are reported in: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Balance at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
13. Income taxes
For the three months ended September 30, 2024 and 2023, we recorded income tax expense of $
We have had
14. Commitments and contingencies
We may become involved in various claims, lawsuits, investigations, and other proceedings, arising in the normal course of business. We accrue a liability when information available prior to the issuance of our financial statements indicates it is probable a loss has been incurred as of the date of the financial statements and the amount of loss can be reasonably estimated. If the reasonable estimate of the probable loss is a range, we record an accrual for the most likely estimate of the loss, or the low end of the range if there is no one best estimate. We adjust our accruals to reflect the impact of negotiation, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Legal costs are expensed as incurred.
In March of 2023, CBP issued notices of tariff assessment that indicated an action taken at the Import Specialist (i.e., the port) level with respect to merchandise imported from Thailand under entry number 004-1058562-5 (the “625 Assessment”) and entry number 004-1063793-9 (the “Original 939 Assessment”, and collectively with the 625 Assessment, the “Original CBP Assessments”). The Original CBP Assessments related to certain torque beams that are used in our Voyager+ product that were imported in 2022. In the Original CBP Assessments, CBP asserted that Section 301 China tariffs, Section 232 steel and aluminum tariffs, and antidumping and countervailing duties applied to the merchandise. Based on correspondence received to date from CBP and our calculations based on applicable duty and tariff rates, the 625 Assessment is currently for approximately $
Upon review of the facts involved, and in consultation with outside legal counsel, we believe that the remaining amounts claimed in the Revised CBP Assessments are incorrect.
19
CBP Assessments, we believe that the goods in question were properly classified as parts of structures at the time of importation and that when properly classified, the beams and other materials are not subject to Section 232 duties applicable to more basic steel products.
CBP has legally finalized both Revised CBP Assessments. We filed a formal protest for the 625 Assessment in September of 2023 and for the Revised 939 Assessment in March of 2024. Based on the above, and under the relevant accounting guidance related to loss contingencies, we have made no accrual for the amounts claimed by CBP as of September 30, 2024, as we do not consider these amounts to be a probable obligation, as such term is defined and interpreted under the relevant accounting guidance, for us at this time. However, because matters of this nature are subject to inherent uncertainties, and unfavorable rulings or developments, including future assessments of additional duties or tariffs owed in respect of other shipments or other materials beyond what is presently included in the Revised CBP Assessments, could occur despite our belief that the tariffs and duties asserted are incorrect, there can be no certainty that the Company may not ultimately incur charges that are not currently recorded as liabilities. Since the outcome of these matters cannot be predicted with certainty, the costs associated with them could have a material adverse effect on our consolidated results of operations, financial position, or liquidity.
15. Stock-based compensation
Stock-based compensation expense for each period was as follows:
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Cost of revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
16. Related party transactions
Transaction with Ayna.AI LLC
In February 2022, we engaged Ayna.AI LLC (as successor in interest to Fernweh Engaged Operator Company LLC) (“Ayna”) to support us with improvements to our processes and performance in various areas including design, sourcing, logistics, pricing, software and standard configuration. The foregoing engagement constituted a related party transaction as South Lake One LLC, an entity affiliated with Isidoro Quiroga Cortés, a member of our board of directors at the time of the engagement, and a holder at that time of more than
For the three and nine months ended September 30, 2023, we incurred $
Related party receivables and payables
We have related party receivables at September 30, 2024 and December 31, 2023, totaling $
20
We also have related party liabilities to Alpha Steel at September 30, 2024 and December 31, 2023, totaling $
During the three and nine months ended September 30, 2024, we made vendor deposits of $
17. Net loss per share
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net loss (in thousands) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted average shares outstanding for calculating basic and diluted loss per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic and diluted loss per share |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
For purposes of computing diluted loss per share, weighted average common shares outstanding do not include potentially dilutive securities that are anti-dilutive, as shown below.
|
|
For the three and nine months ended September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Anti-dilutive securities excluded from calculating dilutive loss per share: |
|
|
|
|
|
|
||
Shares of common stock issuable under stock option plans outstanding |
|
|
|
|
|
|
||
Shares of common stock issuable upon vesting of RSUs |
|
|
|
|
|
|
||
Potential common shares excluded from diluted net loss per share calculation |
|
|
|
|
|
|
||
18. Subsequent events
On November 8, 2024, we entered into a binding term sheet with an institutional investor (the “Investor”) to issue to the Investor, in a private placement, senior secured promissory notes (the “Notes”) in an aggregate principal amount of $
The Notes will bear interest at a rate of
The Warrants are immediately exercisable at an exercise price of $
We have also agreed that the Investor shall be entitled to nominate one (1) person for election to our board of directors at our annual stockholder meeting. We have also agreed to reimburse the Investor for expenses incurred in connection with the transaction in an amount equal to three percent (
21
The issuance of the Notes and Warrants will be subject to customary closing conditions and the preparation and negotiation of definitive documents. We currently expect that the issuance of the Notes and Warrants will occur on or prior to November 30, 2024.
22
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of this Form 10-Q and along with information included in our 2023 Annual Report. In addition to historical financial information, the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in Part I, Item 1A. "Risk Factors" included in our 2023 Annual Report. Additionally, our historical results are not necessarily indicative of the results that may be expected in any future period.
This discussion and analysis of our financial condition and results of operations contain the presentation of Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS, which are not presented in accordance with U.S. GAAP. Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS are being presented because they provide the Company and readers of this Form 10-Q with additional insight into our operational performance relative to earlier periods and relative to our competitors. We do not intend Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS to be substitutes for any U.S. GAAP financial information. Readers of this Form 10-Q should use Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS only in conjunction with Net Loss and Net Loss per Share, the most comparable U.S. GAAP financial measures. Reconciliations of Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS to Net Loss and Net Loss per Share, the most comparable U.S. GAAP measures, are provided in "Non-GAAP Financial Measures" below.
Overview
FTC Solar, Inc. (the “Company”, “we”, “our”, or “us”) was founded in 2017 and is incorporated in the state of Delaware. In April 2021, we completed an initial public offering ("IPO"), and our common stock currently trades on the Nasdaq Capital Market under the symbol “FTCI”.
We are a global provider of solar tracker systems, supported by proprietary software and value-added engineering services. Solar tracker systems move solar panels throughout the day to maintain an optimal orientation relative to the sun, thereby increasing the amount of solar energy produced at a solar installation. Our original two-panel in-portrait solar tracker system is currently marketed under the Voyager brand name (“Voyager”) and our one module-in-portrait ("1P") solar tracker system, which became certified in 2023, is marketed under the Pioneer brand name ("Pioneer"). We also have a mounting solution to support the installation and use of U.S.-manufactured thin-film modules by project owners. Our primary software offerings include SUNPATH which is intended to help customers optimize solar tracking for increased energy production, our SUNOPS real-time operations management platform and our web-based ATLAS portfolio management software. In addition, we have a team of renewable energy professionals available to assist our U.S. and worldwide clients in site layout, structural design, pile testing and other needs across the solar project development and construction cycle. The Company is headquartered in Austin, Texas, and has international subsidiaries in Australia, China, India, South Africa and Spain.
We are an emerging growth company, as defined in the Jumpstart Our Business Startups (JOBS) Act. Under the JOBS Act, we elected to use the allowed extended transition period to delay adopting new or revised accounting standards until such time as those standards apply to private companies.
Key Factors Affecting Our Performance
Project Timing. Our level of manufacturing and logistics activity, and thus our revenue, can be significantly impacted by delays or changes in the expected timing of customer project development activity. In recent periods our customers have encountered delays in beginning or continuing project development caused by interconnection issues, including permit delays, equipment shortages, obtaining project financing at acceptable levels and addressing uncertainty in changes in government regulations, as described further below. Due to our limited number of large customers, such delays in project development activity can have a material impact on our quarterly and annual consolidated financial results.
Government Regulations. Changes in the U.S. trade environment, including the imposition of import tariffs, increases in existing tariffs, AD/CVD investigations and the UFLPA, which became effective in June 2022, can have an impact on the timing of developer projects. The UFLPA resulted in new rules for module importers and reviews by CBP. There is currently uncertainty in the market around achieving full compliance with UFLPA, whether related to sufficient traceability of materials or other factors. Escalating trade tensions,
23
particularly between the United States and China, have led to increased tariffs and trade restrictions, including tariffs applicable to certain raw materials and components for our products. We have taken measures with the intention of mitigating the effect of tariffs and the impact of AD/CVD and UFLPA on our business by reducing our reliance on China and enhancing our U.S.-based supply chain, including through our investment in Alpha Steel, as described further in Note 3, "Equity method investment" in Part I, Item 1 of this Form 10-Q. As an example, we have reduced our reliance on suppliers in China in terms of meeting our supply chain requirements from 90% in 2019 to less than 20% as of the date of this Quarterly Report. As of September 30, 2024, we have qualified suppliers outside of China for certain of our commodities and we continue to work to have second-source capability for all Chinese-manufactured components to help reduce the extent to which our supply chain for U.S.-based projects is subject to existing tariffs and to be able to quickly address potential future regulatory and governmental policy changes. We have entered into partnerships with manufacturers based in the United States, India, South Africa, Spain, Turkey, Thailand and Vietnam to diversify our supply chain and optimize costs. On June 6, 2022, President Biden issued an Executive Order allowing U.S. solar deployers to import solar modules and cells from Cambodia, Malaysia, Thailand and Vietnam free from certain duties for 24 months, along with other incentives designed to accelerate U.S. domestic production of clean energy technologies. However, on December 29, 2023, Auxin Solar, Inc. and Concept Clean Energy, Inc. filed suit in the U.S. Court of International Trade challenging the legal basis for the moratorium and implementing regulations. If the suit proves successful, solar module importers could owe retroactive duties on goods that have already cleared customs.
The most notable incentive program impacting our U.S. business has historically been the ITC for solar energy projects, which allows taxpayers to offset their U.S. federal income tax liability by a certain percentage of their cost basis in solar energy systems placed in service for commercial use. The Inflation Reduction Act of 2022, passed by the U.S. Congress and signed into law by President Biden on August 16, 2022, expanded and extended the tax credits and other tax benefits available to solar energy projects and the solar energy supply chain. ITCs have been extended for such projects through at least 2032 and, depending on the location of a particular project and its ability to satisfy certain labor and domestic content requirements, the ITC percentage can range between 30% and 50%. U.S. manufacturers of specific solar components are now eligible to claim production tax credits as an alternative to the ITC. Implementing regulations for this law are, in certain cases, still being finalized and the impact of these regulations continue to be evaluated by developers of new solar projects and manufacturers of solar components. We believe our investment in and commitments made to Alpha Steel will allow us to obtain certain benefits as a result of the production tax credit program, subject to our level of purchases from Alpha Steel. We believe this law will bolster and extend future demand for our products in the United States, however as the implementing regulations for this law are not completely finalized, this creates uncertainty about the extent of its impact on our Company and the solar energy industry.
Disruptions in Transportation and Supply Chain. Our costs are affected by the costs of certain components and materials, such as steel, motors and micro-chips, as well as transportation costs. Current market conditions and international conflicts that constrain the supply of materials and disrupt the flow of materials from international vendors can impact the cost of our products and services, along with overall rates of inflation in the global economy, which have been higher than pre-COVID 19 pandemic historical rates. While certain costs have moderated compared to pre-pandemic rates, domestic fuel prices continue to be elevated. Although we don't believe inflation has had a material impact on our results as presented in this report, such cost increases and decreases could impact our future operating margins, if material.
We have taken steps to expand and diversify our manufacturing partnerships and have adjusted our modes of transportation to mitigate the impact of headwinds that might arise in the global supply chain and logistics markets. As an example, we modified our ocean freight from previously using charter shipments to now using containerized shipments as costs in the container market began to decrease starting in 2022, but more recently have begun to increase. However, we have been able to mitigate some of this increase as a result of increasing our domestic production capabilities. We continue to monitor the logistics markets and will continue to evaluate our use of various modes of transportation when warranted to optimize our transportation costs. Additionally, from February 2022 to September 2023, we utilized a related-party consulting firm to support us in making improvements to our processes and performance in various areas, including design, sourcing, logistics, pricing, software and our distributed generation business. For further information regarding this consulting firm, see Note 16, "Related party transactions" included in our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. We also intend to maintain a sharp focus on our design-to-value initiative to continue to improve margins by reducing manufacturing and material costs of our products.
Megawatts ("MW") Produced and MW Shipped and Average Selling Price ("ASP"). The primary operating metrics we use to evaluate our sales performance and to track market acceptance of our products are the change in quantity of MW produced and MW shipped from period to period. MW are measured for each individual project and are calculated based on the expected output of that project once installed and fully operational. We also utilize metrics related to price and cost of goods sold per watt, including the change in ASP from period to period and cost per watt. ASP is calculated by dividing product and service revenue by total watts produced or shipped and product and service cost per watt is calculated by dividing product or service costs of goods sold by total watts produced or shipped. These metrics enable us to evaluate trends in pricing, manufacturing and logistics costs and profitability. Events such as the COVID-19 pandemic, global
24
inflation rates, high interest rates and international conflicts have in the past impacted and may continue to impact the U.S. economy, global supply chains, and our business. These impacts can cause significant project development and shipping delays and cost increases, as well as offsetting ASP increases, and also raise the price of inputs like steel and logistics, affecting our cost per watt.
Investment in Technology and Personnel. We invest in both the people and technology behind our products. We intend to continue making significant investments in the technology for our products and expansion of our patent portfolio to attract and retain customers, expand the capabilities and scope of our products, and enhance user experience. As an example, in August 2023, we introduced SUNOPS, a cloud-based, tracker-agnostic solar asset monitoring solution allowing asset owners and managers to evaluate the operation and performance of their solar deployments. Additionally, in May 2024, we announced the launch of our Automated Hail Stow Solution, aimed at minimizing solar panel damage caused by hail storms. This solution integrates advanced technology with meteorological data to automatically adjust the positioning of solar panels, reducing the risk of hail-related damage.
We also intend over time to make significant investments to attract and retain employees in key positions, including sales leads, engineers, software developers, quality assurance personnel, supply chain personnel, product management, and operations personnel, to help us drive additional efficiencies across our marketplace and, in the case of sales leads, to continue to enhance and diversify our sales capabilities, including international expansion. For example, in May 2024, we announced the appointment of Tamara Mullings, a former member of our Board of Directors, to be our Senior Vice President, North American Sales and Alberto Echeverria, a tracker industry veteran and the former Chief Executive Officer and Executive Member of the Board of STI Norland, to be our Senior Vice President, International Sales. Additionally, effective August 19, 2024, we hired Yann Brandt as our new President and Chief Executive Officer and as a new member of our Board of Directors.
Impact of Climate Change. Climate change has primarily impacted our business operations by increasing demand for solar power generation and, as a result, for use of our products. According to the August 2024 Short-Term Energy Outlook published by the U.S. Energy Information Administration, solar power is the fastest-growing source of electricity in the United States.
While climate change has not resulted in any material negative impact to our operations to date, we recognize the risk of disruptions to our supply chain due to extreme weather events. This, among other things, has led us to expand the diversity of our supplier base and to partner with more local suppliers to reduce shipping and transportation needs. We are also increasingly partnering with larger scale steel producers rather than smaller suppliers to facilitate scaling of our operations while remaining conscious of the environmental impacts of steel manufacturing as the regulatory landscape around these high-emitting industries evolves. An example of this strategy is our investment in Alpha Steel, a U.S.-based manufacturing partnership with Taihua, a leading steel fabricator.
We also attempt to mitigate the climate-related risks from the use of our products by designing our equipment and systems to have a high-slope tolerance and wind mitigation capabilities, while at the same time reducing the required foundation/pile count needed. This allows our trackers to be installed in increasingly hostile environments with minimal disturbance to the surrounding land.
Liquidity. See "Liquidity and Capital Resources" below for a discussion of the impact of the items above on our liquidity position.
Key Components of Our Results of Operations
The following discussion describes certain line items in our condensed consolidated statements of comprehensive loss.
Revenue
Revenue from the sale of our solar tracker systems and customized components of those systems is recognized over time, as work progresses, utilizing an input measure of progress determined by cost incurred to date relative to total expected cost on these projects to correlate with our performance in transferring control over the tracker systems and their components. Revenue from the sale of individual parts is recognized at a point in time as and when control transfers based on the terms of the contract. Revenue from sale of term-based software licenses is recognized upon transfer of control to the customer. Revenue for shipping and handling services is recognized over time based on progress in meeting shipping terms of the arrangements. Revenue for stand-alone engineering consulting and pile testing services is recognized at a point in time upon completion of the services performed. Subscription revenue, which is derived from our subscription-based enterprise licensing model, and support revenue, which is derived from ongoing security updates and maintenance, are generally recognized on a straight-line basis over the term of the contract.
25
Our customers include project developers, solar asset owners and EPC contractors that design and build solar energy projects. For each individual solar project, we enter into a contract with our customers covering the price, specifications, delivery dates and warranty for the products being purchased, among other things. Our contractual delivery period for our solar tracker systems and related parts can vary depending on size of the project and availability of vessels and other means of delivery. Contracts can range in value from tens of thousands to tens of millions of dollars.
Our revenue is affected by changes in the volume and ASP of our solar tracking systems purchased by our customers and volume of sales of software products and engineering services, among other things. The ASP of our solar tracker systems and quarterly volume of sales is driven by the supply of, and demand for, our products, changes in product mix, geographic mix of our customers, strength of competitors’ product offerings, tariff and import restrictions, supply chain issues and availability of government incentives to the end-users of our products. Additionally, our revenue may be impacted by seasonality due to cold weather, which can cause variability in site construction activity.
For the periods included in this Quarterly Report, no company locations other than those in the United States accounted for more than 10% of our consolidated revenue. Our revenue growth is dependent on continued growth in the number of solar tracker projects and engineering services we win in competitive bidding processes and growth in our software sales each year, as well as our ability to increase our market share in each of the geographies in which we currently compete, expand our global footprint to new emerging markets, grow our sources of production to meet demand and continue to develop and introduce new and innovative products that address the changing technology and performance requirements of our customers, among other things.
Cost of revenue and gross profit (loss)
We subcontract with third-party companies to manufacture and deliver our products directly to our customers. Our product costs are affected by the underlying cost of raw materials procured by these contract manufacturers, including steel and aluminum; component costs, including electric motors and gearboxes; technological innovation in manufacturing processes; and our ability to achieve economies of scale resulting in lower component costs. We do not currently hedge against changes in the price of raw materials, but we continue to explore opportunities to mitigate the risks of foreign currency and commodity fluctuations through the use of hedges and foreign exchange lines of credit. Some of these costs, primarily personnel, are not directly affected by sales volume.
We have made changes to our headcount in recent years as we initially scaled up our business following our IPO and, more recently, reduced our headcount on certain occasions in response to declines in project activity levels. Our gross profit may vary period-to-period due to changes in our headcount, ASP, product costs, product mix, customer mix, geographical mix, shipping methods, warranty costs and seasonality.
Operating expenses
Operating expenses consist of research and development expenses, selling and marketing expenses and general and administrative expenses. Personnel-related costs are the most significant component of our operating expenses and include salaries, benefits, bonuses, commissions and stock-based compensation expenses.
We implemented reductions in our global workforce at the end of 2022 and in August 2023, in response to regulatory and other issues that were negatively impacting our solar project activity levels. We also had certain executive departures near the end of 2023, as well as additions of certain new executives during 2024, including a new Chief Executive Officer. In addition, our operating costs have been impacted by (i) our level of research activities to originate, develop and enhance our products, (ii) our sales and marketing efforts as we expand our development activities in other parts of the world, and (iii) variations in legal and professional fees, compliance costs, insurance, facility costs and other costs associated with strategic changes in response to changing market conditions and other matters.
26
Results of Operations - Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023
|
|
Three months ended September 30, |
|
|||||||||||||
|
|
2024 |
|
|
2023 |
|
||||||||||
(in thousands, except percentages) |
|
Amounts |
|
|
Percentage of revenue |
|
|
Amounts |
|
|
Percentage of revenue |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
7,411 |
|
|
|
73.1 |
% |
|
$ |
27,274 |
|
|
|
89.3 |
% |
Service |
|
|
2,725 |
|
|
|
26.9 |
% |
|
|
3,274 |
|
|
|
10.7 |
% |
Total revenue |
|
|
10,136 |
|
|
|
100.0 |
% |
|
|
30,548 |
|
|
|
100.0 |
% |
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
|
11,798 |
|
|
|
116.4 |
% |
|
|
22,775 |
|
|
|
74.6 |
% |
Service |
|
|
2,644 |
|
|
|
26.1 |
% |
|
|
4,394 |
|
|
|
14.4 |
% |
Total cost of revenue |
|
|
14,442 |
|
|
|
142.5 |
% |
|
|
27,169 |
|
|
|
88.9 |
% |
Gross profit (loss) |
|
|
(4,306 |
) |
|
|
(42.5 |
%) |
|
|
3,379 |
|
|
|
11.1 |
% |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
1,467 |
|
|
|
14.5 |
% |
|
|
1,921 |
|
|
|
6.3 |
% |
Selling and marketing |
|
|
2,406 |
|
|
|
23.7 |
% |
|
|
6,324 |
|
|
|
20.7 |
% |
General and administrative |
|
|
6,797 |
|
|
|
67.1 |
% |
|
|
11,411 |
|
|
|
37.4 |
% |
Total operating expenses |
|
|
10,670 |
|
|
|
105.3 |
% |
|
|
19,656 |
|
|
|
64.3 |
% |
Loss from operations |
|
|
(14,976 |
) |
|
|
(147.8 |
%) |
|
|
(16,277 |
) |
|
|
(53.3 |
%) |
Interest income (expense), net |
|
|
24 |
|
|
|
0.2 |
% |
|
|
(108 |
) |
|
|
(0.4 |
%) |
Other income (expense), net |
|
|
93 |
|
|
|
0.9 |
% |
|
|
(50 |
) |
|
|
(0.2 |
%) |
Loss from unconsolidated subsidiary |
|
|
(256 |
) |
|
|
(2.5 |
%) |
|
|
(336 |
) |
|
|
(1.1 |
%) |
Loss before income taxes |
|
|
(15,115 |
) |
|
|
(149.1 |
%) |
|
|
(16,771 |
) |
|
|
(54.9 |
%) |
Provision for income taxes |
|
|
(244 |
) |
|
|
(2.4 |
%) |
|
|
(166 |
) |
|
|
(0.5 |
%) |
Net loss |
|
$ |
(15,359 |
) |
|
|
(151.5 |
%) |
|
$ |
(16,937 |
) |
|
|
(55.4 |
%) |
Revenue
We generate our revenue in two streams – Product revenue and Service revenue. Product revenue is derived from the sale of solar tracker systems and customized components for those systems, individual part sales for certain specific transactions and the sale of term-based software licenses. Service revenue includes revenue from shipping and handling services, engineering consulting and pile testing services, our subscription-based enterprise licensing model and maintenance and support services in connection with the term-based software licenses.
|
|
Three months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Product |
|
$ |
7,411 |
|
|
$ |
27,274 |
|
|
$ |
(19,863 |
) |
|
|
(72.8 |
)% |
Service |
|
|
2,725 |
|
|
|
3,274 |
|
|
|
(549 |
) |
|
|
(16.8 |
)% |
Total revenue |
|
$ |
10,136 |
|
|
$ |
30,548 |
|
|
$ |
(20,412 |
) |
|
|
(66.8 |
)% |
Product revenue
The decrease in product revenue for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily due to a decrease of 82% in the amount of MW produced as activity has been adversely impacted by customer project delays. This was partially offset by an increase in ASP for the three months ended September 30, 2024, as a result of better pricing and project mix changes as compared to the three months ended September 30, 2023.
Service revenue
The decrease in service revenue for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily resulted from (i) a decrease of 29% in ASP as compared to the three months ended September 30, 2023 and (ii) lower engineering consulting revenues. This was partially offset by an increase of 18% in the amount of MW delivered as a result of timing of project deliveries.
27
Cost of revenue and gross profit (loss)
Cost of revenue consists primarily of costs related to raw materials, equipment manufacturing activities, freight and delivery, product warranty, remediation and personnel costs (salaries, bonuses, benefits, and stock-based compensation). Personnel costs in cost of revenue include both direct labor costs, as well as costs attributable to any individuals whose activities relate to the procurement, installment and delivery of the finished product and services.
Gross profit may vary from period-to-period and is primarily affected by our ASP, product costs, timing of tracker production and delivery, customer mix, geographical mix, shipping method, logistics costs, warranty costs, indirect cost control efforts and seasonality.
|
|
Three months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Product |
|
$ |
11,798 |
|
|
$ |
22,775 |
|
|
$ |
(10,977 |
) |
|
|
(48.2 |
)% |
Service |
|
|
2,644 |
|
|
|
4,394 |
|
|
|
(1,750 |
) |
|
|
(39.8 |
)% |
Total cost of revenue |
|
$ |
14,442 |
|
|
$ |
27,169 |
|
|
$ |
(12,727 |
) |
|
|
(46.8 |
)% |
Gross profit (loss) |
|
$ |
(4,306 |
) |
|
$ |
3,379 |
|
|
$ |
(7,685 |
) |
|
|
(227.4 |
)% |
Gross profit (loss) percentage of revenue |
|
|
(42.5 |
%) |
|
|
11.1 |
% |
|
|
|
|
|
|
||
The decrease in cost of revenue for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily driven by (i) a decrease of 82% in MW produced. This was partially offset by higher remediation costs.
Our gross margin percentage of revenue for the three months ended September 30, 2024 was a negative 42.5%, as compared to a positive 11.1% for the three months ended September 30, 2023.
We had negative gross margin for the three months ended September 30, 2024 primarily due to the impact of lower revenue levels on our ability to cover certain relatively fixed overhead costs.
We had positive gross margin for the three months ended September 30, 2023 largely due to (i) higher production activity allowing us to cover certain relatively fixed overhead costs, (ii) a mix of higher margin product revenue as compared to service revenue, and (iii) improvements in our direct cost structure due to our design-to-value efforts, lower levels of remediation and warranty costs, as well as reduced overhead spending resulting from our other cost control efforts.
Research and development
Research and development expenses consist primarily of salaries, employee benefits, stock-based compensation expense and travel expense related to our engineers performing research and development activities to originate, develop and enhance our products. Additional expenses include consulting charges, component purchases and other costs for performing research and development on our software products.
|
|
Three months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Research and development |
|
$ |
1,467 |
|
|
$ |
1,921 |
|
|
$ |
(454 |
) |
|
|
(23.6 |
%) |
The decrease in research and development expenses for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily attributable to (i) lower spending on lab and other research activities of $0.2 million, (ii) lower payroll costs of $0.2 million due to severance costs recognized during the three months ended September 30, 2023, and (iii) lower professional service costs of $0.1 million resulting from cost reduction initiatives. Research and development expenses as a percentage of revenue were 14.5% for the three months ended September 30, 2024, as compared to 6.3% for the three months ended September 30, 2023. The increase in the percentage research and development costs to revenue for the three months ended September 30, 2024, is largely a function of the lower level of revenue.
28
Selling and marketing
Selling and marketing expenses consist primarily of salaries, employee benefits, stock-based compensation expense and travel expense related to our sales and marketing and business development personnel. Additionally, selling and marketing expenses include costs associated with professional fees and support charges for software subscriptions and licenses, trade shows and conventions.
|
|
Three months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Selling and marketing |
|
$ |
2,406 |
|
|
$ |
6,324 |
|
|
$ |
(3,918 |
) |
|
|
(62.0 |
%) |
The decrease in selling and marketing expenses for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily attributable to (i) lower provisions for credit losses of $3.4 million, mainly related to charges associated with specific individual customer accounts during each period, (ii) lower marketing costs of $0.2 million associated with reduced trade show attendance and advertising, and (iii) lower payroll costs of $0.1 million due to severance costs recognized during the three months ended September 30, 2023. Lower travel and stock-based compensation expense accounted for the remaining decrease. Selling and marketing costs as a percentage of revenue were 23.7% for the three months ended September 30, 2024, compared to 20.7% for the three months ended September 30, 2023.
General and administrative
General and administrative expenses consist primarily of salaries, employee benefits, stock-based compensation expense and travel expense related to our executives, finance team, and administrative employees. It also consists of legal, consulting, and professional fees, rent and lease expense pertaining to our headquarters and international offices, business insurance costs and certain other costs.
|
|
Three months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
General and administrative |
|
$ |
6,797 |
|
|
$ |
11,411 |
|
|
$ |
(4,614 |
) |
|
|
(40.4 |
%) |
The decrease in general and administrative expenses for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily attributable to (i) a nonrecurring charge of $3.2 million in September 2023 as we fully amortized the remaining prepaid balance upon termination of the Service Agreement with a related party consultant, and (ii) lower payroll costs of $1.5 million largely as a result of severance costs recognized during the three months ended September 30, 2023. General and administrative expenses as a percentage of revenue were 67.1% for the three months ended September 30, 2024, compared to 37.4% for the three months ended September 30, 2023, largely due to the lower level of revenue.
Interest income (expense), net
|
|
Three months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Interest income (expense), net |
|
$ |
24 |
|
|
$ |
(108 |
) |
|
$ |
132 |
|
|
|
122.2 |
% |
Interest income earned on our cash equivalents and interest expense incurred during the three months ended September 30, 2024 were not significant. Interest income and interest expense for the three months ended September 30, 2023 was approximately $0.2 million and nearly $0.4 million, respectively. Interest expense during the three months ended September 30, 2023, primarily consisted of letter of credit and commitment fees on our Credit Facility, along with associated debt issue cost amortization.
Loss from unconsolidated subsidiary
|
|
Three months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Loss from unconsolidated subsidiary |
|
$ |
256 |
|
|
$ |
336 |
|
|
$ |
(80 |
) |
|
|
(23.8 |
%) |
The losses from unconsolidated subsidiary for the three months ended September 30, 2024 and 2023, represent our share of the net operating losses incurred by Alpha Steel during each period.
29
Results of Operations - Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
|
|
Nine months ended September 30, |
|
|||||||||||||
|
|
2024 |
|
|
2023 |
|
||||||||||
(in thousands, except percentages) |
|
Amounts |
|
|
Percentage of revenue |
|
|
Amounts |
|
|
Percentage of revenue |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
27,092 |
|
|
|
79.3 |
% |
|
$ |
80,927 |
|
|
|
78.0 |
% |
Service |
|
|
7,061 |
|
|
|
20.7 |
% |
|
|
22,874 |
|
|
|
22.0 |
% |
Total revenue |
|
|
34,153 |
|
|
|
100.0 |
% |
|
|
103,801 |
|
|
|
100.0 |
% |
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
|
34,632 |
|
|
|
101.4 |
% |
|
|
73,694 |
|
|
|
71.0 |
% |
Service |
|
|
8,278 |
|
|
|
24.2 |
% |
|
|
22,492 |
|
|
|
21.7 |
% |
Total cost of revenue |
|
|
42,910 |
|
|
|
125.6 |
% |
|
|
96,186 |
|
|
|
92.7 |
% |
Gross profit (loss) |
|
|
(8,757 |
) |
|
|
(25.6 |
%) |
|
|
7,615 |
|
|
|
7.3 |
% |
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
4,441 |
|
|
|
13.0 |
% |
|
|
5,716 |
|
|
|
5.5 |
% |
Selling and marketing |
|
|
6,830 |
|
|
|
20.0 |
% |
|
|
9,887 |
|
|
|
9.5 |
% |
General and administrative |
|
|
19,374 |
|
|
|
56.7 |
% |
|
|
31,053 |
|
|
|
29.9 |
% |
Total operating expenses |
|
|
30,645 |
|
|
|
89.7 |
% |
|
|
46,656 |
|
|
|
44.9 |
% |
Loss from operations |
|
|
(39,402 |
) |
|
|
(115.4 |
%) |
|
|
(39,041 |
) |
|
|
(37.6 |
%) |
Interest expense, net |
|
|
(111 |
) |
|
|
(0.3 |
%) |
|
|
(194 |
) |
|
|
(0.2 |
%) |
Gain from disposal of investment in unconsolidated subsidiary |
|
|
4,085 |
|
|
|
12.0 |
% |
|
|
898 |
|
|
|
0.9 |
% |
Other income (expense), net |
|
|
122 |
|
|
|
0.4 |
% |
|
|
(265 |
) |
|
|
(0.3 |
%) |
Loss from unconsolidated subsidiary |
|
|
(767 |
) |
|
|
(2.2 |
%) |
|
|
(336 |
) |
|
|
(0.3 |
%) |
Loss before income taxes |
|
|
(36,073 |
) |
|
|
(105.6 |
%) |
|
|
(38,938 |
) |
|
|
(37.5 |
%) |
Provision for income taxes |
|
|
(298 |
) |
|
|
(0.9 |
%) |
|
|
(175 |
) |
|
|
(0.2 |
%) |
Net loss |
|
$ |
(36,371 |
) |
|
|
(106.5 |
%) |
|
$ |
(39,113 |
) |
|
|
(37.7 |
%) |
Revenue
|
|
Nine months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Product |
|
$ |
27,092 |
|
|
$ |
80,927 |
|
|
$ |
(53,835 |
) |
|
|
(66.5 |
)% |
Service |
|
|
7,061 |
|
|
|
22,874 |
|
|
|
(15,813 |
) |
|
|
(69.1 |
)% |
Total revenue |
|
$ |
34,153 |
|
|
$ |
103,801 |
|
|
$ |
(69,648 |
) |
|
|
(67.1 |
)% |
Product revenue
The decrease in product revenue for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to a decrease of 73% in the amount of MW produced as activity has been adversely impacted by customer project delays. This was partially offset by an increase in ASP for the nine months ended September 30, 2024, as a result of better pricing and project mix changes as compared to the nine months ended September 30, 2023.
Service revenue
The decrease in service revenue for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily resulted from (i) a decrease of 63% in the amount of MW delivered as a result of timing and lower volume of projects available for delivery, and (ii) a decrease of 16% in ASP as compared to the nine months ended September 30, 2023, and (iii) lower engineering consulting and software revenues.
30
Cost of revenue and gross profit (loss)
|
|
Nine months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Product |
|
$ |
34,632 |
|
|
$ |
73,694 |
|
|
$ |
(39,062 |
) |
|
|
(53.0 |
)% |
Service |
|
|
8,278 |
|
|
|
22,492 |
|
|
|
(14,214 |
) |
|
|
(63.2 |
)% |
Total cost of revenue |
|
$ |
42,910 |
|
|
$ |
96,186 |
|
|
$ |
(53,276 |
) |
|
|
(55.4 |
)% |
Gross profit (loss) |
|
$ |
(8,757 |
) |
|
$ |
7,615 |
|
|
$ |
(16,372 |
) |
|
|
(215.0 |
)% |
Gross profit (loss) percentage of revenue |
|
|
(25.6 |
%) |
|
|
7.3 |
% |
|
|
|
|
|
|
||
The decrease in cost of revenue for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily driven by (i) a decrease of 73% in MW produced, (ii) a decrease of 63% in shipping and logistics activity, and (iii) by lower obsolete and slow-moving inventory provisions. Partially offsetting the decrease were higher warranty and remediation costs.
Our gross margin percentage of revenue for the nine months ended September 30, 2024 was a negative 25.6%, as compared to a positive 7.3% for the nine months ended September 30, 2023.
We had negative gross margin for the nine months ended September 30, 2024 as (i) production volumes were not sufficient to cover certain relatively fixed overhead costs, and (ii) our service revenue was not sufficient to fully cover our warehousing and certain other costs.
We had positive gross margin for the nine months ended September 30, 2023 largely due to (i) sufficiently high production activity levels allowing us to cover certain relatively fixed overhead costs, (ii) a mix of higher margin product revenue as compared to service revenue, (iii) good product ASP, as well as (iv) improvements in our direct costs due to our design-to-value efforts, low levels of remediation and warranty costs, and reduced overhead spending compared to prior periods resulting from our other cost control efforts, including headcount reductions.
Research and development
|
|
Nine months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Research and development |
|
$ |
4,441 |
|
|
$ |
5,716 |
|
|
$ |
(1,275 |
) |
|
|
(22.3 |
%) |
The decrease in research and development expenses for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily attributable to (i) lower spending on lab and other research activities of $0.4 million, (ii) lower payroll costs of $0.4 million, due mainly to severance costs recognized during the nine months ended September 30, 2023, (iii) lower stock-based compensation costs of $0.2 million, and (iv) lower software licensing and subscription costs of approximately $0.2 million. Research and development expenses as a percentage of revenue were 13.0% for the nine months ended September 30, 2024, as compared to 5.5% for the nine months ended September 30, 2023. The increase in the percentage research and development costs to revenue for the nine months ended September 30, 2024, is largely a function of the lower level of revenue.
Selling and marketing
|
|
Nine months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Selling and marketing |
|
$ |
6,830 |
|
|
$ |
9,887 |
|
|
$ |
(3,057 |
) |
|
|
(30.9 |
%) |
The decrease in selling and marketing expenses for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily attributable to lower provisions for credit losses of $3.0 million related mainly to charges associated with specific individual customer accounts during each period. We also had lower stock-based compensation costs of $0.6 million, which were mostly offset by higher payroll expense of $0.6 million due to higher average headcount. Selling and marketing costs as a percentage of revenue were 20.0% for the nine months ended September 30, 2024, compared to 9.5% for the nine months ended September 30, 2023.
31
General and administrative
|
|
Nine months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
General and administrative |
|
$ |
19,374 |
|
|
$ |
31,053 |
|
|
$ |
(11,679 |
) |
|
|
(37.6 |
%) |
The decrease in general and administrative expenses for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily attributable to $3.5 million of lower stock-based compensation expense related primarily to (i) forfeiture of awards in connection with the September 2023 termination of the Service Agreement with a related party as described further in Note 16, "Related party transactions" in Part I, Item 1 above, (ii) forfeiture of awards in connection with our reduction in force in August 2023 and executive terminations during the fourth quarter of 2023, and (iii) the absence of stock-based incentive compensation awards during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. In connection with the termination of the Service Agreement with a related party consultant, we recognized a nonrecurring charge of $3.2 million during the nine months ended September 30, 2023. In addition, the employee and executive terminations described above contributed to lower payroll expense of $2.8 million during the nine months ended September 30, 2024 and we were able to lower our insurance costs by $1.4 million, our legal costs by $0.4 million and our accounting and audit fees by $0.5 million as compared to the nine months ended September 30, 2023, through our cost control initiatives. General and administrative expenses as a percentage of revenue were 56.7% for the nine months ended September 30, 2024, compared to 29.9% for the nine months ended September 30, 2023, largely due to the lower level of revenue.
Interest expense, net
|
|
Nine months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Interest expense, net |
|
$ |
111 |
|
|
$ |
194 |
|
|
$ |
(83 |
) |
|
|
(42.8 |
)% |
Interest expense totaled approximately $0.4 million and $1.0 million during the nine months ended September 30, 2024 and 2023, respectively, and primarily consisted of letter of credit and commitment fees on the Credit Facility, along with associated debt issue cost amortization. Our Credit Facility expired unused on April 30, 2024. Interest income earned on our cash equivalents was approximately $0.3 million and $0.8 million during the nine months ended September 30, 2024 and 2023, respectively.
Gain from disposal of investment in unconsolidated subsidiary
|
|
Nine months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Gain from disposal of investment in unconsolidated subsidiary |
|
$ |
4,085 |
|
|
$ |
898 |
|
|
$ |
3,187 |
|
|
|
354.9 |
% |
We sold our interest in our unconsolidated subsidiary, Dimension Energy LLC ("Dimension"), on June 24, 2021. Dimension is a community solar developer based in Atlanta, Georgia that provides renewable energy solutions for local communities in the United States. The sales agreement with Dimension included an earnout provision which provides the potential to receive additional contingent consideration of up to approximately $14.0 million through December 2024, based on Dimension achieving certain performance milestones. The sales agreement also includes a projects escrow release which is an additional contingent consideration to receive $7 million based on Dimension’s completion of certain construction projects in progress at the time of the sale. We made an accounting policy election to account for the contingent gains arising from earnout payments and project escrow releases only when those amounts become realizable in the periods subsequent to the disposal date. During the nine months ended September 30, 2024 and 2023, we received earnout and escrow release payments of $4.1 million and $0.9 million, respectively, that were recognized in accordance with our policy election. Since the sale of our interest in Dimension, we have received a total of $7.4 million in contingent earnout and escrow release payments through September 30, 2024.
Loss from unconsolidated subsidiary
|
|
Nine months ended September 30, |
|
|||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
$ Change |
|
|
% Change |
|
||||
Loss from unconsolidated subsidiary |
|
$ |
767 |
|
|
$ |
336 |
|
|
$ |
431 |
|
|
|
128.3 |
% |
32
The losses from unconsolidated subsidiary for the nine months ended September 30, 2024 and 2023, represent our share of the net operating losses incurred by Alpha Steel during each period.
Liquidity and Capital Resources
Liquidity
Since our inception, we have financed our operations primarily through sales of shares of common stock, including our IPO in April 2021, issuance of debt and payments from our customers. Our ability to generate positive cash flow from operations is dependent on our level of production, contract payment terms, timely collections from our customers and the strength of our gross margins.
We have incurred cumulative losses since inception and have a history of cash outflows from operations. As of September 30, 2024, we had $8.3 million of cash on hand, $18.9 million of working capital and approximately $64.9 million of remaining capacity available for future sales of our common stock under our ATM program as defined and described further in Note 4, "ATM program" in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. There can be no assurance that we will be able to sell any additional shares of our common stock under the ATM program and no assurance regarding the price at which we will be able to sell such shares, and any sales of our common stock under the ATM program may be at prices that result in additional dilution to our existing stockholders.
On December 22, 2023, we received notification from The Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with the requirement to maintain a minimum closing bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5450(a)(1), because the closing bid price of the Company’s common stock was below $1.00 per share for 30 consecutive business days. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were initially given a period of 180 calendar days from the date of notification, or until June 19, 2024, to regain compliance with the minimum bid price requirement, which was not achieved. Effective May 31, 2024, trading in our common stock transferred from the Nasdaq Global Market to the Nasdaq Capital Market. On June 21, 2024, we received notification from Nasdaq that we were approved for an additional 180-day period, or until December 17, 2024, to cure the bid price deficiency in accordance with Nasdaq Listing Rule 5810(c)(3)(A). In order to achieve compliance with the Nasdaq requirements for continued listing, on November 8, 2024, our stockholders approved an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split at a ratio ranging from 1-for-5 to 1-for 25, with the exact ratio to be determined by our Board of Directors. At this time, our common stock continues to trade on the Nasdaq Capital Market under the symbol "FTCI". If at any time before December 17, 2024, the bid price of our common stock closes at or above $1.00 per share for a minimum of ten consecutive business days, Nasdaq will provide written notification that we have achieved compliance with this minimum bid price requirement. If we fail to regain compliance with the minimum bid price requirement during this second 180-day period, then Nasdaq will notify us that our common stock is subject to delisting.
Effective April 30, 2024, our Senior Secured Revolving Credit Facility ("Credit Facility) expired unused and has not been replaced as of September 30, 2024. As described further in Note 18, "Subsequent events" in the notes to consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report, we signed a binding term sheet on November 8, 2024, with an institutional investor, for the issuance of $15 million in long-term senior secured promissory notes, along with warrants to purchase 17.5 million shares of our common stock at an exercise price of $0.01 per share. Closing on the transaction is expected on or before November 30, 2024.
At September 30, 2024, we had a contractual obligation that could require us to make additional capital contributions of up to $0.8 million to Alpha Steel, as well as make a minimum level of purchases from Alpha Steel, as described further in Note 3, "Equity method investment" in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. In the event we were to fail to meet our minimum required purchase commitments during a specified period, including the current period from January 1, 2024 to June 30, 2025, we may be required to make a cash payment for the net profit attributable to any unfilled requirements, calculated as specified in the agreement, in an amount not to exceed $4.0 million in the aggregate.
In addition, we have made efforts during 2024 to enhance and strengthen our management leadership team. In August 2024, we hired Yann Brandt as our new Chief Executive Officer and, prior to that, we named Tamara Mullings, a former member of our Board of Directors, as our Senior Vice President, North America Sales and Alberto Echeverria, a former Chief Executive Officer and Executive Member of the Board of STI Norland, as our Senior Vice President, International Sales.
In accordance with Accounting Standards Codification ("ASC") 205-40, Going Concern, we have evaluated whether there are conditions and events, considered in the aggregate, which raise substantial doubt about our ability to continue as a going concern within one year after the date our condensed consolidated financial statements are issued.
33
Management plans to address the liquidity needs of the Company by (i) executing the aforementioned $15 million issuance of long-term senior secured notes, (ii) utilizing receipt of additional contingent earnout payments from our investment in Dimension that we sold in 2021, (iii) implementing additional cost savings steps, which could impact the level of services currently provided by third parties and our existing headcount, and (iv) utilizing capacity available for future sales of our common stock under the ATM program. We believe execution of these plans will allow us to fund our operations for at least one year from the date of issuance of our condensed consolidated financial statements.
The successful execution of these plans is subject to various risks and uncertainties. These include, but are not limited to, market conditions, the Company's ability to achieve projected cost savings and revenue targets and access to financing on favorable terms. There can be no assurance that these plans will be realized as anticipated and actual results may differ materially from those projected.
Statements of cash flows
The following table shows our cash flows from operating activities, investing activities and financing activities for the stated periods:
|
|
Nine months ended September 30, |
|
|||||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Net cash used in operations |
|
$ |
(18,008 |
) |
|
$ |
(46,383 |
) |
Net cash provided by (used in) investing activities |
|
|
930 |
|
|
|
(462 |
) |
Net cash provided by financing activities |
|
|
3 |
|
|
|
34,133 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
95 |
|
|
|
(153 |
) |
Decrease in cash and cash equivalents |
|
$ |
(16,980 |
) |
|
$ |
(12,865 |
) |
Operating activities
During the nine months ended September 30, 2024, we used approximately $26.3 million of cash to fund a portion of our current period expenditures for personnel and facilities, legal and professional fees, insurance, research and development and various other operating activities. This compares to approximately $18.6 million of cash used during the nine months ended September 30, 2023, also to fund a portion of our prior period expenditures for various operating activities as described above.
Approximately $8.3 million of cash was generated from working capital and other decreases during the nine months ended September 30, 2024, primarily as a result of production activity levels and the timing of customer receipts, including the settlement reached with a major customer as described further in Note 5, "Accounts receivable, net" in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report, and payments to our vendors. During the nine months ended September 30, 2023, we used approximately $27.8 million of cash for working capital and other increases as a result of production activity and the timing of customer receipts and vendor payments, net of inventory utilization.
Our working capital decreased by approximately $35.0 million from $53.8 million at December 31, 2023 to $18.9 million at September 30, 2024. The decrease was largely attributable to (i) the use of cash to fund current period expenditures as described above and (ii) the impact of lower activity levels on the amount of billed and unbilled accounts receivables during the nine months ended September 30, 2024.
Investing activities
During the nine months ended September 30, 2024, we made additional equity investments of $1.8 million in Alpha Steel, a manufacturing partnership with Taihua, in which we hold a 45% interest. Pursuant to our agreement with Alpha Steel, we could be required to make up to $0.8 million in future additional capital contributions as Alpha Steel continues to expand production. We also spent nearly $1.4 million, mainly for tooling and new computer and IT equipment, as well as leasehold improvements, during the nine months ended September 30, 2024. In addition, we received $4.1 million of contingent earnout payments in connection with the June 2021 sale of our equity interest in Dimension.
During the nine months ended September 30, 2023, we made (i) an initial equity investment of $0.9 million in Alpha Steel, (ii) received $0.9 million in contingent payments from escrow in connection with the sale of our equity interest in Dimension as described above, and (iii) spent nearly $0.5 million for leasehold improvements, tooling, software, and new computer and IT equipment.
34
Financing activities
During the nine months ended September 30, 2023, we sold newly issued shares of our common stock in various daily transactions under our ATM program, receiving cash proceeds of $34.0 million. We also received $0.2 million of proceeds from employee exercises of stock options.
Revolving line of credit
Our Credit Facility, entered into in 2021 with various lenders, including Barclays Bank PLC, as issuing lender, the swingline lender and as administrative agent, expired unused on April 30, 2024. The Credit Facility has not currently been replaced.
Critical Accounting Policies and Significant Management Estimates
Preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenue and expenses during the period. Estimates are used for calculating the measure of progress of our solar tracker projects and deriving the standalone selling prices of the individual performance obligations when determining amounts to recognize for revenue, estimating allowances for credit losses and slow-moving and obsolete inventory, determining useful lives of long-lived assets and the estimated fair value of those assets for impairment assessments, and estimating the fair value of investments, stock compensation awards, warranty liabilities and federal and state taxes, including tax valuation allowances, as well as other contingencies. We base our estimates on historical experience and anticipated results, trends, and various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates due to risks and uncertainties.
To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. Critical accounting policies and estimates are those that we consider the most important to the portrayal of our financial condition and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.
We believe that the accounting policies described below involve a significant degree of judgment and complexity. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our condensed consolidated financial condition and results of operations.
Revenue recognition
Our accounting policy on revenue recognition may be found in Note 2, "Summary of significant accounting policies" in our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Judgments and assumptions
The timing and amounts of revenue and cost of revenue recognition, as well as recording of related receivables and deferred revenue, is highly dependent on our identification of performance obligations in each contract and our estimates by contract of total project cost and our progress toward project completion as of each period end. Certain estimates are subject to factors outside of our control that may impact our suppliers and the global supply chain. As an example, we began to experience increases in steel prices and shipping and logistics costs, as well as delays in delivery of our products to customers during 2021, which negatively impacted our results of operations as we were not able to recover all of the additional costs under certain of our fixed fee contracts. In addition, regulatory, tariff and import concerns such as those caused by the UFLPA and the Solar Circumvention Investigation have in the past, and may continue to, affect our ability to obtain project materials and may delay the timing of customer project activity which has had in the past, and may continue to have, an adverse impact on our results of operations, including the expected timing of the recognition of revenue needed to cover our relatively fixed overhead costs. We base our estimates on the best information available at each period end, but future events and their effects cannot be determined with certainty, and actual results could differ materially from our assumptions and estimates.
35
Accounts receivable, net
Our accounting policy relating to our accounts receivable and allowance for credit losses may be found in Note 2, "Summary of significant accounting policies" in our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Judgments and assumptions
The allowance for credit losses is based on the lifetime expected credit loss of our customer accounts. To assess the lifetime expected credit loss, we utilize a loss rate method that takes into consideration historical experience and certain other factors, as appropriate, such as credit quality and current economic or other conditions that may affect a customer's ability to pay. This method accelerates the recognition of expected credit losses as compared to the incurred loss model used prior to 2023 and may result in material differences between our estimates and actual collection results. We may also have greater fluctuations in our credit loss expense over time based on changes in our historical experience or changes in estimates of future economic conditions which may not adequately reflect future actual customer payment activity.
Adjustments to the allowance are largely dependent on historical experience involving amounts previously collected from our customers in recent years or based on specific changes in a customer's ability to pay. As an example, during the nine months ended September 30, 2024 and 2023, we recognized credit loss provisions of $1.3 million and $4.3 million, respectively, in our selling and marketing expenses, primarily related to a specific customer's inability to fully pay amounts owed. Historical experience, when used in making such adjustments, may not reflect current actual experience.
Warranty
Our accounting policy relating to our warranty obligations may be found in Note 2, "Summary of significant accounting policies" in our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Judgments and assumptions
We base our estimated warranty obligations on available industry data relating to the nature and frequency of product failure rates and, where possible, on our historical experience, to make estimates of costs to address future claims. These estimates are inherently uncertain given our relatively short history of sales, and changes to our historical or projected warranty experience or fluctuations in available industry data may result in material changes to our warranty reserves in the future. Additionally, we make estimates of what costs we believe will be recoverable from the manufacturers of our products that we use to offset our obligations to our customers.
While we periodically monitor our warranty activities and claims, if actual costs incurred were to be different from our estimates, we would recognize adjustments to our warranty reserves in the period in which those differences arise or are identified. Such adjustments could be material to cost of revenue in our results of operations in the period the adjustments are made.
Stock-based compensation
Our accounting policy relating to our stock-based compensation may be found in Note 2, "Summary of significant accounting policies" in our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Judgments and assumptions
The Black-Scholes model and Monte Carlo simulations rely on various assumptions, in addition to the exercise price of an option award and the value of our common stock on the date of grant. These assumptions include:
Expected Term: The expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is calculated for option grants as the average of the option vesting and contractual terms, based on the simplified method, as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for options granted. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. The contractual life of an option may be up to 10 years. Monte Carlo simulations, as described below, estimate the derived service period of awards with market conditions.
36
Expected Volatility: Since the Company did not have a trading history of its common stock prior to our IPO and since such trading history subsequent to our IPO is limited and may be less than the expected term of an award, the expected volatility is derived from a weighted average of (i) our historical volatility over our entire trading history, with respect to certain more recent awards, and (ii) the average historical stock volatilities of several public companies within the Company’s industry that it considers to be comparable to its business over a period equivalent to the expected term of the stock option grants, or awards granted with market conditions.
Risk-Free-Interest-Rate: The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term or derived service or performance period.
Expected Dividend: The Company has not issued any dividends in its history and does not expect to issue dividends over the life of option grants or awards with market conditions and, therefore, has estimated the dividend yield to be zero.
We used Monte Carlo simulations for certain awards granted with market conditions which provided an estimated average present value for each award based on a simulation assuming Geometric Brownian Motion in a risk-neutral framework using up to 250,000 simulation paths to determine the derived service and vesting periods.
Our use of the simplified method for estimating the expected outstanding term of our options may differ significantly from future actual exercise patterns of our option holders. Estimates of the outstanding term of our options that are less than the actual exercise patterns of our option holders, may result in lower recognized expense. Alternatively, our recognized expense may be higher if our option holders exercise their options sooner than our estimates project.
Similarly, our use of a volatility estimate based on historical stock volatilities of a peer group of other public companies may differ significantly from the actual future volatility of our stock over the term options or awards with market conditions are held. Higher estimated volatility compared to future actual results may result in higher recognized expense and alternatively, lower expected volatility compared to future actual results may result in lower recognized expense.
Changes to any of our assumptions, but particularly our estimates of expected term or derived service period and volatility, could change the fair value of our options or awards with market conditions and impact the amount of stock-based compensation expense we report each period.
Impairment
Our accounting policies relating to impairment of our long-lived assets held for use, including intangible assets, and of goodwill may be found in Note 2, "Summary of significant accounting policies" in our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Judgments and assumptions
Key judgments and assumptions involving our assessment of impairment of our long-lived and intangible assets, as well as goodwill, may include:
37
In estimating the fair value of the consolidated company, we used our market capitalization based on our closing stock price on the Nasdaq Capital Market at September 30, 2024. Our daily closing stock price is affected by numerous factors, some of which may not directly involve the operations of the company and, historically, has demonstrated high volatility.
We did not identify any impairments of our long-lived assets, intangible assets or goodwill during the nine months ended September 30, 2024 and 2023.
JOBS Act accounting election
We are an emerging growth company, as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We elected to use the allowed extended transition period for adopting new or revised accounting standards.
Non-GAAP Financial Measures
Adjusted EBITDA, adjusted net loss and adjusted earnings per share ("EPS")
We utilize Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS as supplemental measures of our performance. We define Adjusted EBITDA as net loss plus (i) provision for (benefit from) income taxes, (ii) interest expense, net, (iii) depreciation expense, (iv) amortization of intangibles, (v) stock-based compensation, and (vi) Chief Executive Officer ("CEO") transition costs, non-routine legal fees, severance and certain other costs (credits). We also deduct the contingent gains arising from earnout payments and project escrow releases relating to the disposal of our investment in an unconsolidated subsidiary from net loss in arriving at Adjusted EBITDA. We define Adjusted Net Loss as net loss plus (i) amortization of debt issue costs and intangibles, (ii) stock-based compensation, (iii) CEO transition costs, non-routine legal fees, severance and certain other costs (credits), and (iv) the income tax expense (benefit) of those adjustments, if any. We also deduct the contingent gains arising from earnout payments and project escrow releases relating to the disposal of our investment in an unconsolidated subsidiary in arriving at Adjusted Net Loss. Adjusted EPS is defined as Adjusted Net Loss on a per share basis using our weighted average diluted shares outstanding.
Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS are intended as supplemental measures of performance that are neither required by, nor presented in accordance with, U.S. GAAP. We present Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS, because we believe they assist investors and analysts in comparing our performance across reporting periods on an ongoing basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA, Adjusted Net Loss and Adjusted EPS to evaluate the effectiveness of our business strategies.
Among other limitations, Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS do not reflect (i) our cash expenditures, or future requirements, for capital expenditures or contractual commitments, and (ii) the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations. Further, the adjustments noted in Adjusted EBITDA do not reflect the impact of any income tax expense or benefit. Additionally, other companies in our industry may calculate Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS differently than we do, which limits its usefulness as a comparative measure.
Because of these limitations, Adjusted EBITDA, Adjusted Net Loss, and Adjusted EPS should not be considered in isolation or as substitutes for performance measures calculated in accordance with U.S. GAAP, and you should not rely on any single financial measure to evaluate our business. These non-GAAP financial measures, when presented, are reconciled to the most closely applicable U.S. GAAP measure as disclosed below:
38
|
|
Three months ended September 30, |
|
|||||||||||||
|
|
2024 |
|
|
2023 |
|
||||||||||
(in thousands, except shares and per share data) |
|
Adjusted EBITDA |
|
|
Adjusted Net Loss |
|
|
Adjusted EBITDA |
|
|
Adjusted Net Loss |
|
||||
Net loss per U.S. GAAP |
|
$ |
(15,359 |
) |
|
$ |
(15,359 |
) |
|
$ |
(16,937 |
) |
|
$ |
(16,937 |
) |
Reconciling items - |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for (benefit from) income taxes |
|
|
244 |
|
|
|
— |
|
|
|
166 |
|
|
|
— |
|
Interest (income) expense, net |
|
|
(24 |
) |
|
|
— |
|
|
|
108 |
|
|
|
— |
|
Amortization of debt issue costs in interest expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
177 |
|
Depreciation expense |
|
|
284 |
|
|
|
— |
|
|
|
205 |
|
|
|
— |
|
Amortization of intangibles |
|
|
133 |
|
|
|
133 |
|
|
|
133 |
|
|
|
133 |
|
Stock-based compensation |
|
|
1,319 |
|
|
|
1,319 |
|
|
|
1,192 |
|
|
|
1,192 |
|
CEO transition(a) |
|
|
1,229 |
|
|
|
1,229 |
|
|
|
— |
|
|
|
— |
|
Non-routine legal fees(b) |
|
|
— |
|
|
|
— |
|
|
|
98 |
|
|
|
98 |
|
Severance costs(c) |
|
|
— |
|
|
|
— |
|
|
|
2,088 |
|
|
|
2,088 |
|
Other costs(d) |
|
|
— |
|
|
|
— |
|
|
|
3,241 |
|
|
|
3,241 |
|
Adjusted Non-GAAP amounts |
|
$ |
(12,174 |
) |
|
$ |
(12,678 |
) |
|
$ |
(9,706 |
) |
|
$ |
(10,008 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. GAAP net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
N/A |
|
|
$ |
(0.12 |
) |
|
N/A |
|
|
$ |
(0.14 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted Non-GAAP net loss per share (Adjusted EPS): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
N/A |
|
|
$ |
(0.10 |
) |
|
N/A |
|
|
$ |
(0.08 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
N/A |
|
|
|
127,380,292 |
|
|
N/A |
|
|
|
119,793,821 |
|
||
(a) |
We incurred one-time incremental recruitment fees in connection with hiring a new CEO in August 2024. In addition, we agreed to upfront and incremental sign-on bonuses (collectively, the "sign-on bonuses"), a portion of which will be paid to our CEO in 2024, with clawback provisions over the next two years, and a portion of which will be paid annually over the next two years, all contingent upon continued employment. These sign-on bonuses will be expensed over the next two years, ending on October 1, 2026, to reflect the required service periods. We do not view these sign-on bonuses as being part of the normal on-going compensation arrangements for our CEO. |
(b) |
Non-routine legal fees represent legal fees and other costs incurred for specific matters that were not ordinary or routine to the operations of the business. |
(c) |
Severance costs in 2023 were due to restructuring changes. |
(d) |
Other costs in 2023 included the write-off of remaining prepaid costs resulting from termination of our consulting agreement with a related party. |
39
|
|
Nine months ended September 30, |
|
|||||||||||||
|
|
2024 |
|
|
2023 |
|
||||||||||
(in thousands, except shares and per share data) |
|
Adjusted EBITDA |
|
|
Adjusted Net Loss |
|
|
Adjusted EBITDA |
|
|
Adjusted Net Loss |
|
||||
Net loss per U.S. GAAP |
|
$ |
(36,371 |
) |
|
$ |
(36,371 |
) |
|
$ |
(39,113 |
) |
|
$ |
(39,113 |
) |
Reconciling items - |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for (benefit from) income taxes |
|
|
298 |
|
|
|
— |
|
|
|
175 |
|
|
|
— |
|
Interest expense, net |
|
|
111 |
|
|
|
— |
|
|
|
194 |
|
|
|
— |
|
Amortization of debt issue costs in interest expense |
|
|
— |
|
|
|
236 |
|
|
|
— |
|
|
|
532 |
|
Depreciation expense |
|
|
828 |
|
|
|
— |
|
|
|
595 |
|
|
|
— |
|
Amortization of intangibles |
|
|
401 |
|
|
|
401 |
|
|
|
409 |
|
|
|
409 |
|
Stock-based compensation |
|
|
4,243 |
|
|
|
4,243 |
|
|
|
9,044 |
|
|
|
9,044 |
|
Gain from disposal of investment in unconsolidated subsidiary(a) |
|
|
(4,085 |
) |
|
|
(4,085 |
) |
|
|
(898 |
) |
|
|
(898 |
) |
CEO transition(b) |
|
|
1,229 |
|
|
|
1,229 |
|
|
|
— |
|
|
|
— |
|
Non-routine legal fees(c) |
|
|
66 |
|
|
|
66 |
|
|
|
181 |
|
|
|
181 |
|
Severance costs(d) |
|
|
— |
|
|
|
— |
|
|
|
2,075 |
|
|
|
2,075 |
|
Other costs(e) |
|
|
— |
|
|
|
— |
|
|
|
3,241 |
|
|
|
3,241 |
|
Adjusted Non-GAAP amounts |
|
$ |
(33,280 |
) |
|
$ |
(34,281 |
) |
|
$ |
(24,097 |
) |
|
$ |
(24,529 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. GAAP net loss per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
N/A |
|
|
$ |
(0.29 |
) |
|
N/A |
|
|
$ |
(0.35 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted Non-GAAP net loss per share (Adjusted EPS): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
N/A |
|
|
$ |
(0.27 |
) |
|
N/A |
|
|
$ |
(0.22 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted |
|
N/A |
|
|
|
126,234,997 |
|
|
N/A |
|
|
|
112,794,562 |
|
||
(a) |
We exclude the gain from collections of contingent contractual amounts arising from the sale in 2021 of our investment in an unconsolidated subsidiary as these amounts are not considered part of our normal ongoing operations. |
(b) |
We incurred one-time incremental recruitment fees in connection with hiring a new CEO in August 2024. In addition, we agreed to upfront and incremental sign-on bonuses (collectively, the "sign-on bonuses"), a portion of which will be paid to our CEO in 2024, with clawback provisions over the next two years, and a portion of which will be paid annually over the next two years, all contingent upon continued employment. These sign-on bonuses will be expensed over the next two years, ending on October 1, 2026, to reflect the required service periods. We do not view these sign-on bonuses as being part of the normal on-going compensation arrangements for our CEO. |
(c) |
Non-routine legal fees represent legal fees and other costs incurred for specific matters that were not ordinary or routine to the operations of the business. |
(d) |
Severance costs in 2023 were due to restructuring changes. |
(e) |
Other costs in 2023 included the write-off of remaining prepaid costs resulting from termination of our consulting agreement with a related party. |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of customer concentrations and fluctuations in steel, aluminum and logistics/transportation prices. We do not hold or issue financial instruments for trading purposes.
Fair value of financial instruments
Our financial instruments consist of cash, cash equivalents, accounts receivable, short-term loans and accounts payable. Cash, cash equivalents, accounts receivable, short-term loans and accounts payable are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.
40
We had $8.3 million of cash and cash equivalents on hand, the vast majority of which was located in the United States, and no debt outstanding as of September 30, 2024. We regularly maintain cash balances with various financial institutions that exceed federally insured amounts, but we have experienced no losses associated with these amounts to date. We also took action in early 2023 to reallocate cash balances between different financial institutions based on our assessment as to the financial health of certain institutions.
Certain of our cash equivalents include deposits in money market funds that invest primarily in short-term securities issued or guaranteed by the U.S. government or its agencies or instrumentalities and contain no restrictions on immediate redemption. The carrying value for these money market fund deposits approximates fair value based on quoted prices in active markets for units held (Level 1 classification) and totaled $1.8 million at September 30, 2024 and $13.9 million at December 31, 2023.
We have no other financial instruments as of September 30, 2024 or December 31, 2023, other than cash equivalents, short-term loans and certain non-functional currency intercompany and third-party receivables and payables, which are subject to foreign exchange, interest rate or market risks.
Concentrations of major customers
Our customers include project developers, solar asset owners and EPC contractors that design and build solar energy projects. We extend credit to customers in the normal course of business, often without requiring collateral. We also perform credit analyses and monitor the financial health of our customers to reduce credit risk.
We typically rely on a small number of customers that account for a large portion of our revenue each period and our outstanding receivables at each period end.
Further, our accounts receivables are from companies within or serving the solar industry and, as such, we are exposed to normal industry credit risks. We continually evaluate our reserves for potential credit losses and establish initial reserves based on our expectation of lifetime expected credit losses.
Commodity Price Risk
We subcontract to various contract manufacturers, who manufacture and deliver products directly to our customers. We, therefore, do not procure raw materials and commodities directly, except for items added to our inventory. We are subject to indirect risk from fluctuating market prices of certain commodity raw materials, including steel and aluminum, which are used in our products, through our contract manufacturers, as increases in these commodity prices would increase our cost of procuring subcontracting services. Prices of these raw materials may be affected by supply restrictions or other market factors from time to time. Significant price increases for these raw materials could reduce our operating margins if we are unable to recover such increases in costs from our customers, and could harm our business, financial condition and results of operations.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act") as of the end of the period covered by this Quarterly Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024 in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
41
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We hired a new President and Chief Executive Officer effective August 19, 2024, who assumed the duties of evaluating the effectiveness of our disclosure controls and procedures previously performed by our Chairman of the Board of Directors.
42
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various claims, lawsuits, investigations, and other proceedings, arising in the normal course of business.
In March of 2023, CBP issued notices of tariff assessment that indicated an action taken at the Import Specialist (i.e., the port) level with respect to merchandise imported from Thailand under entry number 004-1058562-5 (the “625 Assessment”) and entry number 004-1063793-9 (the “Original 939 Assessment”, and collectively with the 625 Assessment, the “Original CBP Assessments”). The Original CBP Assessments related to certain torque beams that are used in our Voyager+ product that were imported in 2022. In the Original CBP Assessments, CBP asserted that Section 301 China tariffs, Section 232 steel and aluminum tariffs, and antidumping and countervailing duties applied to the merchandise. Based on correspondence received to date from CBP and our calculations based on applicable duty and tariff rates, the 625 Assessment is currently for approximately $2.84 million. In September of 2023, CBP informed us (the "Revised 939 Assessment", and together with the 625 Assessment, the "Revised CBP Assessments") that the amount owed under the Original 939 Assessment was being revised downward to approximately $2.01 million. In particular, CBP accepted our position that the Section 301 tariffs of 25% or 7.5% of the value of the merchandise, depending on tariff classification, as well as the antidumping and countervailing duties, previously assessed under the Original 939 Assessment are not applicable as they are only applicable to articles that originate in China and that, in this case, the finished goods are products of Thailand.
Upon review of the facts involved, and in consultation with outside legal counsel, we believe that the remaining amounts claimed in the Revised CBP Assessments are incorrect. In particular, the Section 301 tariffs of 25% or 7.5% of the value of the merchandise, depending on tariff classification, as well as the antidumping and countervailing duties, are not applicable under the 625 Assessment for the same reason stated above with respect to the Revised 939 Assessment, which has been accepted by CBP. Moreover, with respect to both Revised CBP Assessments, we believe that the goods in question were properly classified as parts of structures at the time of importation and that when properly classified, the beams and other materials are not subject to Section 232 duties applicable to more basic steel products.
CBP has legally finalized both Revised CBP Assessments. We filed a formal protest for the 625 Assessment in September of 2023 and for the Revised 939 Assessment in March of 2024. Based on the above, and under the relevant accounting guidance related to loss contingencies, we have made no accrual for the amounts claimed by CBP as of September 30, 2024, as we do not consider these amounts to be a probable obligation, as such term is defined and interpreted under the relevant accounting guidance, for us at this time. However, because matters of this nature are subject to inherent uncertainties, and unfavorable rulings or developments, including future assessments of additional duties or tariffs owed in respect of other shipments or other materials beyond what is presently included in the Revised CBP Assessments, could occur despite our belief that the tariffs and duties asserted are incorrect, there can be no certainty that the Company may not ultimately incur charges that are not currently recorded as liabilities. Since the outcome of these matters cannot be predicted with certainty, the costs associated with them could have a material adverse effect on our consolidated results of operations, financial position, or liquidity.
ITEM 1A. RISK FACTORS
We are subject to a number of risks that if realized could adversely affect our business, strategies, prospects, financial condition, results of operations and cash flows. Some of the more significant risks and uncertainties we face include those summarized below. The summary below is not exhaustive and is qualified by reference to the full set of risk factors set forth in Item 1A. "Risk Factors" in our 2023 Annual Report. Please carefully consider all of the information in this Quarterly Report and our 2023 Annual Report, including the full set of risks set forth in Item 1A. "Risk Factors" of our 2023 Annual Report, and in our other filings with the SEC before making an investment decision regarding us.
43
As described further in Note 2 in Part I, Item 1 under the section "Liquidity" and in Part I, Item 2 of this Quarterly Report under the section "Liquidity and Capital Resources", we have a history of cash outflows to fund operations.
In addition, on October 11, 2024, we filed a definitive proxy for a special meeting of stockholders scheduled for November 8, 2024, to seek approval of an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split. We may not receive approval from our stockholders for the amendment to our Amended and Restated Certificate of Incorporation, or if approval is given, our Board of Directors may choose not to proceed with the reverse stock split in time to regain compliance with Nasdaq's minimum bid price requirement. Also, if a reverse stock split is effected, there can be no assurance that the market price per share of our common stock will increase in proportion to the reduction in the number of shares of common stock outstanding before the reverse stock split. If we fail to regain compliance with the minimum bid price requirement before December 17, 2024, then Nasdaq will notify us that our common stock is subject to delisting.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
None.
Use of Proceeds
None.
Issuer Purchases of Equity Securities
None.
44
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On November 8, 2024, we entered into a binding term sheet with an institutional investor (the “Investor”) to issue to the Investor, in a private placement, senior secured promissory notes (the “Notes”) in an aggregate principal amount of $15 million and common stock purchase warrants (the “Warrants”) to purchase 17,500,000 shares of our common stock.
The Notes will bear interest at a rate of 11% per annum if payable in cash or, at our options, 13% per annum if paid-in-kind and will mature five (5) years from the date of issuance. The Notes will be secured by a first priority lien on substantially all of our assets and will be guaranteed by all of our direct and indirect subsidiaries. The Notes will contain customary covenants for a transaction of this nature, including financial covenants and restrictive covenants. If we prepay the Notes in full within a specified period of time after issuance, we will be required to pay a make-whole payment to the Investor representing a portion of the undiscounted interest payments that otherwise would have been payable to the Investor, the calculation for which will be specified in the definitive documents.
The Warrants are immediately exercisable at an exercise price of $0.01 per share, subject to certain customary adjustments to be set forth in the definitive documentation, and will expire ten (10) years from the date of issuance. At the option of the Investor, the Warrants will also be exercisable on a cashless basis using a customary cashless exercise formula.
We have also agreed that the Investor shall be entitled to nominate one (1) person for election to our board of directors at our annual stockholder meeting. We have also agreed to reimburse the Investor for expenses incurred in connection with the transaction in an amount equal to three percent (3%) of the principal amount of the Notes.
The issuance of the Notes and Warrants will be subject to customary closing conditions and the preparation and negotiation of definitive documents. We currently expect that the issuance of the Notes and Warrants will occur on or prior to November 30, 2024.
None
None of our directors or officers
45
ITEM 6. EXHIBITS
The following exhibits are filed as part of this report:
Exhibit Number |
|
Description |
3.1 |
** |
|
3.2 |
** |
|
3.3 |
** |
|
4.1 |
** |
|
10.1 |
** |
|
10.2 |
** |
|
31.1 |
* |
|
31.2 |
* |
|
32.1 |
* |
|
32.2 |
* |
|
101.INS |
* |
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. |
101.SCH |
* |
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
104 |
* |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* |
Filed herewith |
** |
Incorporated herein by reference |
46
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
FTC SOLAR, INC. |
|
|
|
|
Date: November 12, 2024 |
/s/ Cathy Behnen |
|
Cathy Behnen, Chief Financial Officer |
|
|
47