美國
證券和交易委員會
華盛頓特區20549
表格
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根據1934年證券交易法第13或15(d)節的季度報告 |
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截至季度結束日期的財務報告 |
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或者 |
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根據1934年證券交易法第13或15(d)節的轉型報告書 |
在__________至__________的過渡期間
委員會文件號
(根據其章程規定的註冊人準確名稱)
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（設立或組織的其他管轄區域） |
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（納稅人識別號碼） |
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（總部地址） |
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(郵政編碼) |
(
公司電話號碼，包括區號
Not Applicable
如果自上次報告以來公司更改了名稱、地址或財政年度，請註明舊名稱、舊地址和舊財政年度。
在法案第12(b)條的規定下注冊的證券：
每個類別的標題 |
交易標的 |
在其上註冊的交易所的名稱 |
請在勾選標誌處表示註冊人是否（1）已經提交了《1934年證券交易法》第13或15（d）條要求提交的所有報告，(2）在過去90天內一直受到提交要求的影響。
在檢查標記中表明註冊人是否已經在過去的12個月內（或者爲註冊人需要提交這些文件的較短期間）根據S-T法規405規定，遞交了每個互動數據文件。
請用複選標記指示註冊公司是否爲大型加速文件提交者、加速文件提交者、非加速文件提交者、較小的報告公司還是新興成長公司。請參閱《交易所法》第120億.2條中「大型加速文件提交者」、「加速文件提交者」、「較小的報告公司」和「新興成長公司」的定義。
大型加速報告人 |
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非加速文件提交人 |
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較小的報告公司 |
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新興成長公司 |
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如果是新興增長型企業，請勾選複選框，表示註冊人已決定不使用延長過渡期來遵守根據《證券交易法》第13(a)條規定提供的任何新的或修訂後的財務會計準則。
請通過勾選的方式表明登記人是否爲空殼公司（根據該法第120億.2條的定義）。
截至2024年10月31日，
目錄
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頁面 |
第一部分 - 財務信息 |
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1 |
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項目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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項目2。 |
23 |
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項目3。 |
40 |
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項目4。 |
41 |
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第二部分- 其他信息 |
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項目1。 |
43 |
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項目1A。 |
43 |
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項目2。 |
44 |
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項目3。 |
45 |
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項目4。 |
45 |
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項目5。 |
45 |
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項目6。 |
46 |
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47 |
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前瞻性聲明
本季度報告表格 10-Q（"季度報告"）包含前瞻性陳述。所有陳述以外的歷史或當前事實的陳述都可能是前瞻性陳述。關於我們未來業績和財務狀況、業務策略以及管理層未來運營的計劃和目標的陳述，包括流動性、增長和盈利能力策略以及影響我們業務的因素和趨勢，都是前瞻性陳述。在某些情況下，可以通過使用「相信」、「can」、「could」、「潛在」、「計劃」、「預測」、「目標」、「尋求」、「應該」、「可能」、「可能有」、「會」、「估計」、「繼續」、「預期」、「打算」、「期待」，這些詞的否定形式、其他類似表達或通過戰略、計劃或意圖的討論來識別前瞻性陳述。
本季度報告中的前瞻性聲明僅爲預測。我們主要基於對未來事件和財務趨勢的當前預期和展望，這些事件和趨勢可能影響我們的業務、財務狀況和運營結果。前瞻性聲明涉及已知和未知的風險、不確定性和其他重要因素，可能導致我們的實際結果、業績或成就，或行業業績與前瞻性聲明中明示或暗示的未來結果有很大不同。我們認爲這些因素包括，但不限於，本季度報告第II部分第1A項下列出的因素。風險因素本季度報告中的「Risk Factors」中更全面地在我們2023年12月31日終止的年度報告10-k表格第I部分第1A項中包含的因素。由於前瞻性聲明天然受到風險和不確定性的影響，其中一些風險和不確定性無法預測或量化，因此您不應將這些前瞻性聲明視爲未來事件的預測。在我們的前瞻性聲明中反映的事件和情況可能無法實現或發生，實際結果可能與前瞻性聲明中預測的有很大不同。
此外，"我們相信"等類似陳述反映了我們對相關主題的信念和觀點。這些陳述基於我們在本季度報告日期之日可以獲取的信息，儘管我們認爲這些信息爲這些陳述提供了合理的基礎，但這些信息可能是有限或不完整的，我們的陳述不應被視爲表明我們已對所有可能可獲得的相關信息進行了詳盡調查或審查。這些陳述具有不確定性，投資者應警惕不要過度依賴這些陳述。
您應該以理解我們實際未來的結果可能與我們預期的有實質性不同的情況下閱讀本季度報告。 所有歸因於我們或代表我們行事的人的前瞻性陳述均以這些警示性聲明爲完全的明示限定。
這些含有前瞻性聲明的言論僅限於本季度報告的日期。除非適用法律要求，我們沒有計劃公開更新或修訂本季度報告中包含的任何前瞻性聲明，不論是受到任何新信息、未來事件或其他因素的影響。
1
項目 1。 基本報表
FTC 太陽能公司
精簡的綜合損益表調整後的資產負債表
(未經審計)
(以千爲單位，除每股數據外) |
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2024年9月30日 |
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2023年12月31日 |
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資產 |
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流動資產 |
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現金及現金等價物 |
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$ |
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$ |
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應收賬款，淨額 |
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存貨 |
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預付款和其他流動資產 |
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總流動資產 |
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經營租賃使用權資產 |
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物業和設備，淨值 |
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無形資產-淨額 |
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商譽 |
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權益法投資 |
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其他資產 |
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總資產 |
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$ |
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$ |
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負債和股東權益 |
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流動負債 |
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應付賬款 |
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$ |
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$ |
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應計費用 |
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應付所得稅 |
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遞延收入 |
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其他流動負債 |
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總流動負債 |
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運營租賃負債，扣除當前部分 |
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其他非流動負債 |
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總負債 |
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股東權益 |
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優先股面值爲$ |
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每股的普通股面值爲$ |
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即期收購庫藏股；截至2022年9月25日，共計157,773股，截至2022年6月26日，共計157,087股。 |
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追加實收資本 |
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累計其他綜合損失 |
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( |
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( |
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累積赤字 |
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( |
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( |
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股東權益總額 |
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總負債和股東權益 |
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$ |
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$ |
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附註是本簡明合併財務報表的組成部分。
2
FTC 太陽能公司
合併簡式 全面損失報表
(未經審計)
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截至9月30日的三個月 |
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截至9月30日的九個月 |
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(以千爲單位，除股份及每股數據外) |
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2024 |
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2023 |
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2024 |
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2023 |
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營業收入: |
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產品 |
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$ |
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$ |
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$ |
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$ |
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服務 |
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總營業收入 |
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營業成本： |
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產品 |
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服務 |
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總成本費用 |
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毛利潤（虧損） |
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( |
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( |
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營業費用 |
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研究和開發 |
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銷售和 marketing |
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一般管理費用 |
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總營業費用 |
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運營損失 |
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( |
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( |
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( |
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( |
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利息收入（費用），淨額 |
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( |
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( |
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( |
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處置未合併子公司的收益 |
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其他收入（費用），淨額 |
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( |
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( |
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未合併子公司的損失 |
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( |
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( |
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( |
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( |
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稅前虧損 |
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( |
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( |
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( |
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( |
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所得稅準備 |
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( |
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( |
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( |
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( |
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淨損失 |
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( |
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( |
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( |
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( |
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其他全面收益（損失）： |
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外幣翻譯調整 |
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( |
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( |
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綜合損失 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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每股淨虧損: |
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基本和稀釋 |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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加權平均流通普通股: |
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基本和稀釋 |
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附註是本簡明合併財務報表的組成部分。
3
FTC 太陽能公司
壓縮合並股東權益變動表股東權益
(未經審計)
截至2024年9月30日的三個月和九個月：
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優先股 |
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普通股 |
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庫存股 |
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(以千爲單位，除股份外) |
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股份 |
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金額 |
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股份 |
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金額 |
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股份 |
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金額 |
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額外 |
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累計其他綜合損失 |
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累計虧損 |
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總計 |
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截至2023年12月31日的餘額 |
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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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在歸屬限制性股票獎勵期間發行的股份 |
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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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基於股票的補償 |
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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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淨損失 |
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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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( |
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其他綜合損失 |
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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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( |
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截至2024年3月31日的餘額 |
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( |
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( |
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在本期內發行的已歸屬限制性股票獎勵的股份 |
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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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行使期權時發行的普通股 |
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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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基於股票的補償 |
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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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淨損失 |
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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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其他綜合收益 |
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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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— |
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— |
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截至2024年6月30日的餘額 |
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在本期內發行的已歸屬限制性股票獎勵的股份 |
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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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— |
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行使期權時發行的普通股 |
|
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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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— |
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— |
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基於股票的補償 |
|
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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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||
淨損失 |
|
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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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( |
) |
其他綜合收益 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
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— |
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|
— |
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— |
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— |
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|
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||
截至2024年9月30日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
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$ |
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$ |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
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||||||||
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||||||||||
附註是本簡明合併財務報表的組成部分。
4
FTC 太陽能公司
合併股東權益變動的簡明財務報表（續）
(未經審計)
截至2023年9月30日的三個月和九個月：
|
|
優先股 |
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普通股 |
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庫存股 |
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|||||||||||||||||||
(以千爲單位，除股份外) |
|
股份 |
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金額 |
|
|
股份 |
|
|
金額 |
|
|
股份 |
|
|
金額 |
|
|
額外 |
|
|
累計 |
|
|
累計 |
|
|
總計 |
|
||||||||||
截至2022年12月31日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||||
在期間發行的已授予限制性股票獎勵的股份 |
|
|
— |
|
|
|
— |
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|
|
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— |
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|
|
— |
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|
— |
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|
|
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|
|
— |
|
|
|
— |
|
|
|
|
|||
行使期權時發行普通股 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
因法律和解而發行的股份 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
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|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
股份出售 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
股票發行費用 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
基於股票的補償 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
淨損失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
其他綜合損失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
截至2023年3月31日的餘額 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||||||
在歸屬的限制性股票獎勵期間發行的股份 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
在行使期權時發行普通股 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
股份銷售 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
股票發行費用 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
基於股票的補償 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
淨損失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
其他綜合損失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
截至2023年6月30日的餘額 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||||||||
在本期間爲已經授予受限股票獎勵而發行的股份 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
根據期權行使而發行的普通股 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
股份出售 |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
股票發行費用 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
股份回購和養老 |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
基於股票的補償 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
淨損失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
其他綜合損失 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
截至2023年9月30日的餘額 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
附註是本簡明合併財務報表的組成部分。
5
FTC 太陽能公司
合併簡式 現金流量表
(未經審計)
|
|
截至9月30日的九個月 |
|
|||||
(以千爲單位) |
|
2024 |
|
|
2023 |
|
||
經營活動產生的現金流 |
|
|
|
|
|
|
||
淨損失 |
|
$ |
( |
) |
|
$ |
( |
) |
調整淨損失與經營活動中現金使用的調節： |
|
|
|
|
|
|
||
基於股票的補償 |
|
|
|
|
|
|
||
折舊和攤銷 |
|
|
|
|
|
|
||
處置資產和設備的收益 |
|
|
|
|
|
( |
) |
|
債務發行成本的攤銷 |
|
|
|
|
|
|
||
過時和滯銷庫存的準備金 |
|
|
|
|
|
|
||
未合併子公司的損失 |
|
|
|
|
|
|
||
處置未合併子公司的收益 |
|
|
( |
) |
|
|
( |
) |
保修和補救準備金 |
|
|
|
|
|
|
||
可向製造商索回的保修 |
|
|
|
|
|
|
||
信用損失準備金 |
|
|
|
|
|
|
||
遞延所得稅 |
|
|
|
|
|
|
||
租賃費用及其他 |
|
|
|
|
|
|
||
經營資產和負債變動對現金的影響： |
|
|
|
|
|
|
||
應收賬款 |
|
|
|
|
|
( |
) |
|
存貨 |
|
|
( |
) |
|
|
|
|
預付賬款及其他流動資產 |
|
|
( |
) |
|
|
( |
) |
其他資產 |
|
|
( |
) |
|
|
|
|
應付賬款 |
|
|
|
|
|
( |
) |
|
應計費用及其他流動負債 |
|
|
( |
) |
|
|
|
|
遞延收入 |
|
|
|
|
|
( |
) |
|
其他非流動負債 |
|
|
( |
) |
|
|
( |
) |
租賃付款及其他，淨額 |
|
|
( |
) |
|
|
( |
) |
經營活動中使用的淨現金 |
|
|
( |
) |
|
|
( |
) |
投資活動的現金流： |
|
|
|
|
|
|
||
購買房產和設備 |
|
|
( |
) |
|
|
( |
) |
Alpha鋼鐵的權益法投資 |
|
|
( |
) |
|
|
( |
) |
處置對未合併子公司的投資的收益 |
|
|
|
|
|
|
||
投資活動提供的（使用的）淨現金 |
|
|
|
|
|
( |
) |
|
融資活動產生的現金流: |
|
|
|
|
|
|
||
普通股出售 |
|
|
|
|
|
|
||
股票發行費用 |
|
|
|
|
|
( |
) |
|
股票期權行使的收入 |
|
|
|
|
|
|
||
融資活動提供的淨現金 |
|
|
|
|
|
|
||
匯率變化對現金及現金等價物的影響 |
|
|
|
|
|
( |
) |
|
現金及現金等價物減少 |
|
|
( |
) |
|
|
( |
) |
期初的現金及現金等價物 |
|
|
|
|
|
|
||
期末現金及現金等價物 |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
現金流信息的補充披露： |
|
|
|
|
|
|
||
期末應付賬款和應計費用中包含的固定資產和設備購買 |
|
$ |
|
|
$ |
|
||
已發行股票用於已計提的法律和解 |
|
$ |
|
|
$ |
|
||
新租賃的使用權資產和租賃負債確認 |
|
$ |
|
|
$ |
|
||
期間支付的利息現金 |
|
$ |
|
|
$ |
|
||
期間支付的現金用於稅款，扣除退款 |
|
$ |
|
|
$ |
|
||
附註是本簡明合併財務報表的組成部分。
6
FTC 太陽能公司
C的註釋簡明綜合財務報表
(未經審計)
1. 業務描述
FTC Solar, Inc.（「公司」，「我們」，「我們的」或「我們」）成立於2017年，並在特拉華州註冊。我們於2021年4月完成了首次公開募股（"IPO"），我們普通股目前在納斯達克資本市場以「FTCI」爲標的交易。
我們是全球太陽能追蹤系統的供應商，擁有專有軟件和增值工程服務的支持。太陽能追蹤系統在一天內移動太陽能電池板，以保持相對於太陽的最佳方向，從而增加太陽能電站產生的太陽能量。我們最初的雙面portrait太陽能追蹤系統當前以Voyager品牌名稱（「Voyager」）進行市場營銷，而我們在2023年獲得認證的一模組portrait（"1P"）太陽能追蹤系統則以Pioneer品牌名稱（"Pioneer"）進行市場營銷。我們還有一種安裝解決方案，以支持項目所有者安裝和使用美國製造的薄膜組件。我們的主要軟件產品包括SUNPATH，旨在幫助客戶優化太陽能追蹤以增加能源生產，還有SUNOPS實時運營管理平台以及基於網頁的ATLAS投資組合管理軟件。此外，我們還擁有一支可協助美國和全球客戶進行現場佈局、結構設計、樁基測試及其他需求的可再生能源專業團隊，服務於太陽能項目開發和施工週期。公司總部位於德克薩斯州奧斯汀，並在澳洲、中國、印度、南非和西班牙擁有國際子公司。
我們是一家新興成長公司，符合《跳躍我們的業務創業法案》（JOBS Act）的定義。根據JOBS Act，我們選擇利用允許的延長過渡期，推遲採用新或修訂的會計標準，直到這些標準適用於私營公司爲止。
2. 重要會計政策摘要
財務報表的呈報基礎和合並原則
附帶的未經審計的精簡合併基本報表包含了公司及其全資子公司的結果，並已根據美國公認會計原則（「U.S. GAAP」）爲中期基本報表準備，並根據10-Q表格及S-X規章第10條進行披露。管理層認爲，已做出所有正常經常性調整，以便在2024年9月30日及2023年12月31日公正地陳述我們的財務狀況，以及截至2024年和2023年9月30日的三個月和九個月經營成果，以及截至2024年和2023年9月30日的九個月現金流量。2023年12月31日的精簡合併資產負債表是基於公司的經審計合併基本報表得出的，但未包括美國公認會計原則所要求的所有披露。2024年9月30日的三個月和九個月的經營成果不一定表明2024年12月31日結束的年度的預期結果。合併中已消除集團內部的餘額和交易。
根據美國公認會計原則（U.S. GAAP）通常包括在年度財務報表附註中的某些信息和披露已根據證券交易委員會（「SEC」）的規則和條例從這些中期基本報表中省略。因此，這些未經審計的精簡合併基本報表應與公司2023年12月31日結束的年度的10-K表格合併基本報表及相關附註一併閱讀（我們的"2023年年度報告"）。
我們目前在一個業務板塊中運營，即太陽能追蹤系統的製造和服務。
流動性
自成立以來，我們累積了虧損，並且有經營現金流出歷史。到2024年9月30日，我們有 $
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我們能夠賣出這些股票的價格，以及根據ATM計劃出售我們普通股的任何銷售可能會導致現有股東的進一步稀釋。
在2023年12月22日，我們收到了來自納斯達克證券市場有限責任公司（「納斯達克」）的通知，告知我們未能遵守保持最低收盤買盤價格$的要求。
截至2024年4月30日，我們的高級擔保循環信用設施（"信用設施"）在未被使用的情況下到期，截至2024年9月30日尚未被替代。 如第18條註釋中進一步描述的"後續事件"，我們於2024年11月8日與一位機構投資者簽署了具有約束力的條款清單，以發行$
截至2024年9月30日，我們有一項合同義務，可能要求我們額外出資最多 $
此外，我們在2024年努力增強和加強我們的管理領導團隊。在2024年8月，我們聘請了Yann Brandt作爲新的首席執行官，在此之前，我們任命了Tamara Mullings，董事會的前成員，擔任北美銷售高級副總裁，以及前首席執行官和STI Norland董事會執行成員Alberto Echeverria擔任國際銷售高級副總裁。
根據會計標準編碼（"ASC"）205-40，即持續經營，我們評估了一年內，我們的簡式合併財務報表發佈後，是否存在組合考慮的條件和事件，可能對我們繼續作爲持續經營實體的能力產生重大懷疑。
管理層計劃通過以下措施解決公司的流動性需求：（i）執行上述$
這些計劃的成功執行取決於各種風險和不確定性。這些風險包括但不限於市場條件、公司實現預計成本節約和營業收入目標的能力，以及以優惠條件獲得融資的能力。不能保證這些計劃會按預期實現，實際結果可能與預期結果存在重大差異。
估計的使用
準備 按照美國公認會計原則編制合併財務報表需要管理層做出影響資產和負債報告金額、在財務報表日期披露或有資產和負債，以及在期間報告的營業收入和費用的估計和假設。估計用於計算進展度的衡量標準。
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的 我們的太陽能跟蹤器項目及在確定營業收入時推導各項履約義務的獨立銷售價格、預計信用損失和慢速及過時庫存的準備金、確定長期資產的使用年限以及這些資產的公允價值評估進行減值評估、估計投資、公允補償獎勵、質保負債以及聯邦和州稅，包括稅務估值準備和其他或有事項等。我們根據歷史經驗和預期結果、趨勢以及我們認爲在該情況下合理的各種其他假設，包括對未來事件的假設，來進行估計。由於風險和不確定性，實際結果可能與這些估計有所不同。
信用風險集中
可能使公司面臨信用風險集中風險的金融工具主要是現金和應收賬款。
我們定期在各種金融機構中維護的現金餘額超過了聯邦保險金額，但迄今爲止我們沒有經歷與這些金額相關的損失。我們在2023年初採取行動，根據對某些金融機構財務健康狀況的評估，在不同金融機構之間重新分配現金餘額。
我們在正常的業務過程中向客戶提供信用，通常不需要抵押品。我們還進行信用分析並監控客戶的財務健康狀況，以降低信用風險。
公司的應收賬款主要來源於位於美國和澳洲的客戶所創造的營業收入。 在本季度報告中，包括在美國以外的公司位置的營業收入未佔超過比例。
現金及現金等價物
我們認爲所有購買原始到期期限在三個月或更短時間的高流動性投資都是現金等價物。我們的一些現金等價物包括投資於主要由美國政府或其機構及工具發行或擔保的短期證券的貨幣市場基金的存款，並且沒有對立即贖回的限制。這些存款總計 $
應收賬款，淨額
應收賬款按開票金額記錄，扣除信用損失準備金，並不計利息。我們通常不要求客戶提供擔保；但在某些情況下，我們可能會要求信用證、其他擔保、額外保證或預付款。
信用損失準備金是基於客戶帳戶的終身預期信用損失。爲了評估終身預期信用損失，我們採用一種損失率方法，該方法考慮歷史經驗以及其他適當因素，如信用質量和可能影響客戶支付能力的當前經濟或其他條件。信用損失準備金的計提作爲我們的銷售和市場費用的組成部分。
因已確認的營業收入超過開票的應收款項，代表我們在客戶開票之前，因在合同中採購和交付追蹤系統及相關設備的進度所獲得的無條件對對價的權利。更多信息可在我們的 營業收入確認政策中找到.
存貨
存貨以成本或可變現淨值中的較低者計價，成本採用先進先出法計算。公司定期審查存貨，檢查是否有過剩和過時的項目，並在確定其低於成本時，將賬面成本調整爲預計的可變現淨值。
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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 |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Allowance for credit losses |
|
|
( |
) |
|
|
( |
) |
Accounts receivable, net |
|
$ |
|
|
$ |
|
||
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:
15
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Balance at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Impact of adoption of ASU 2016-13, effective January 1, 2023 |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
|
|
||||
Amounts charged (credited) to earnings during the period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Write-offs of accounts |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Balance at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
6. Inventories
Inventories consisted of the following:
(in thousands) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Finished goods |
|
$ |
|
|
$ |
|
||
Allowance for slow-moving and obsolete inventory |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
|
|
$ |
|
||
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) |
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||
Vendor deposits |
|
$ |
|
|
$ |
|
||
Vendor deposits with related party |
|
|
|
|
|
|
||
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. |
|
|
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Date: November 12, 2024 |
/s/ Cathy Behnen |
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Cathy Behnen, Chief Financial Officer |
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