UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to__________
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
|
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ |
| Smaller Reporting Company | |
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 20, 2023, ordinary shares, par value $0.0001 per share, were issued and outstanding.
TABLE OF CONTENTS
| 2 |
PART I
Item 1. Financial Statements
SPI ENERGY CO., LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
September 30, 2023 | December 31, 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Contract asset | ||||||||
| Inventories | ||||||||
| Project assets held for sale | ||||||||
| Prepaid expenses and other current assets, net | ||||||||
| Amount due from related parties | ||||||||
| Current assets of discontinued operations | ||||||||
| Total current assets | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Restricted cash, noncurrent | ||||||||
| Other receivable, noncurrent | ||||||||
| Property and equipment, net | ||||||||
| Consideration receivable from a related party, noncurrent | ||||||||
| Project assets, noncurrent | ||||||||
| Investment in an affiliate | ||||||||
| Operating lease right-of-use assets | ||||||||
| Deferred tax assets, net | ||||||||
| Noncurrent assets of discontinued operations | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Amount due to related parties | ||||||||
| Income taxes payable | ||||||||
| Advance from customers | ||||||||
| Short-term borrowings and current portion of long-term borrowings | ||||||||
| Amount due to an affiliate | ||||||||
| Convertible bonds, current | ||||||||
| Derivative liability | ||||||||
| Accrued warranty reserve | ||||||||
| Operating lease liabilities, current | ||||||||
| Consideration payable | ||||||||
| Current liabilities of discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Long-term borrowings, excluding current portion | ||||||||
| Deferred tax liabilities, net | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Noncurrent Liabilities of discontinued operations | ||||||||
| Total liabilities | ||||||||
| Equity: | ||||||||
| Ordinary shares, par $, shares authorized, and shares issued and outstanding as of September 30, 2023, and December 31, 2022, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total equity attributable to the shareholders of SPI Energy Co., Ltd. | ||||||||
| Noncontrolling interests | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
SPI ENERGY CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for share and per share data)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit (loss) | ( | ) | ||||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Sales, marketing and customer service | ||||||||||||||||
| Impairment charges on long-lived assets | ||||||||||||||||
| (Reversal) provision for credit losses | ( | ) | ( | ) | ( | ) | ||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss on extinguishment of convertible bonds | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Net foreign exchange gain | ||||||||||||||||
| Employee retention credit (“ERC”) tax refund | ||||||||||||||||
| Gain on early termination of leases | ||||||||||||||||
| Gain on PPP loan forgiveness | ||||||||||||||||
| Others | ( | ) | ||||||||||||||
| Total other income (expense), net | ( | ) | ||||||||||||||
| Net income (loss) before income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) from continuing operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss from discontinued operations, net of income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net income (loss) from continuing operations | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Less: Net income attributable to noncontrolling interests from continuing operations | ||||||||||||||||
| Net income (loss) from continuing operations attributable to shareholders of SPI Energy Co., Ltd. | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net loss from discontinued operations | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Less: loss attributable to noncontrolling interests of discontinued operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss from discontinued operations attributable to shareholders of SPI Energy Co., Ltd. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss attributable to shareholders of SPI Energy Co., Ltd. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) from continuing operation per ordinary share – Basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net income (loss) from continuing operation per ordinary share – Diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net loss from discontinued operation per ordinary share – Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss from discontinued operation per ordinary share – Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per ordinary share – Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per ordinary share – Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding – Basic | ||||||||||||||||
| Weighted average shares outstanding – Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
SPI ENERGY CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to noncontrolling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to shareholder of SPI Energy Co., Ltd. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
SPI ENERGY CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except for share and per share data)
| Ordinary Shares | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Equity Attributable to Shareholders of SPI Energy | Noncontrolling | Total | |||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Co., Ltd. | Interests | Equity | ||||||||||||||||||||||||
| Balances at December 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Foreign currency translation adjustments | – | ( | ) | ||||||||||||||||||||||||||||
| Issuance of common stock of Phoenix for standby equity purchase agreement of Phoenix | – | ||||||||||||||||||||||||||||||
| Share-based compensation expense | – | ||||||||||||||||||||||||||||||
| Balances at March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Foreign currency translation adjustments | – | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Issuance of common stock of Phoenix for standby equity purchase agreement of Phoenix | – | ||||||||||||||||||||||||||||||
| Share-based compensation expense | – | ||||||||||||||||||||||||||||||
| Balances at June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Foreign currency translation adjustments | – | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Share-based compensation expense | |||||||||||||||||||||||||||||||
| Deconsolidation of Phoenix (Note 4) | – | ( | ) | ||||||||||||||||||||||||||||
| Issuance of restricted share units to employees | |||||||||||||||||||||||||||||||
| Settlement of convertible debt with ordinary shares | |||||||||||||||||||||||||||||||
| Balances at September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||
| 6 |
| Ordinary Shares | Additional Paid-In | Accumulated | Accumulated Other Comprehensive | Equity Attributable to Shareholders of SPI Energy | Noncontrolling | Total | |||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Co., Ltd. | Interests | Equity | ||||||||||||||||||||||||
| Balances at December 31, 2021 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
| Net loss | – | $ | ( |
) | $ | ( |
) | ( |
) | ||||||||||||||||||||||
| Foreign currency translation adjustments | – | ( |
) | ||||||||||||||||||||||||||||
| Issuance of common stock of Phoenix for standby equity purchase agreement of Phoenix | |||||||||||||||||||||||||||||||
| Settlement of convertible debt with ordinary shares | |||||||||||||||||||||||||||||||
| Issuance of ordinary shares for settlement of consideration related to Acquisition of Phoenix | |||||||||||||||||||||||||||||||
| Share-based compensation expense | – | ||||||||||||||||||||||||||||||
| Balances at March 31, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
| Net loss | – | $ | ( |
) | $ | ( |
) | ( |
) | ||||||||||||||||||||||
| Foreign currency translation adjustments | – | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
| Settlement of convertible debt with ordinary shares | |||||||||||||||||||||||||||||||
| Issuance of common stock of Phoenix for standby equity purchase agreement of Phoenix | – | ||||||||||||||||||||||||||||||
| Share-based compensation expense | – | ||||||||||||||||||||||||||||||
| Balances at June 30, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
| Net loss | – | ( |
） | ( |
( |
( |
|||||||||||||||||||||||||
| Foreign currency translation adjustments | – | ( |
) | ( |
( |
( |
) | ||||||||||||||||||||||||
| Settlement of convertible debt with ordinary shares | |||||||||||||||||||||||||||||||
| Share-based compensation expense | – | ||||||||||||||||||||||||||||||
| Exercise of vested options by employees of Phoenix | – | ||||||||||||||||||||||||||||||
| Issuance of ordinary shares of Phoenix in its IPO | – | ||||||||||||||||||||||||||||||
| Balances at September 30, 2022 | $ | $ | $ | ( |
) | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
SPI ENERGY CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| For the Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net cash provided by operating activities of continuing operations | $ | $ | ||||||
| Net cash used in operating activities of discontinued operations | ( | ) | ( | ) | ||||
| Total net cash provided by (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of property and equipment | ||||||||
| Loan lent to a related party | ( | ) | ||||||
| Proceeds from repayment from a related party | ||||||||
| Spin-off off a subsidiary | ( | ) | ||||||
| Net cash used in investing activities of continuing operations | ( | ) | ( | ) | ||||
| Net cash used in investing activities of discontinued operations | ( | ) | ( | ) | ||||
| Total net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayment of borrowings | ( | ) | ( | ) | ||||
| Proceeds from borrowings | ||||||||
| Proceeds from issuance of convertible bond, net of original issuance discount | ||||||||
| Repayment of convertible bond | ( | ) | ||||||
| Net cash used in financing activities of continuing operations | ( | ) | ( | ) | ||||
| Net cash provided by financing activities of discontinued operations | ||||||||
| Total net cash (used in) provided by financing activities | ( | ) | ||||||
| Effect of exchange rate changes | ( | ) | ||||||
| Decrease in cash, cash equivalents and restricted cash | ( | ) | ( | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Less: cash of discontinued operations at September 30 | ||||||||
| Cash, cash equivalents and restricted cash at September 30 for continuing operations | $ | $ | ||||||
| Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents, and restricted cash | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income tax paid | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Right of use assets obtained in exchange for operating lease obligations | $ | $ | ||||||
| Inventories transferred to PPE | $ | $ | ||||||
| Settlement of convertible debt with ordinary shares | $ | $ | ||||||
| Derecognition of ROU assets and lease liabilities upon lease termination | $ | $ | ||||||
| Issuance of restricted share units to employees | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 8 |
SPI ENERGY CO., LTD.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in US$ thousands, except share and per share data)
| 1. | Description of Business and Organization |
Description of Business
SPI Energy Co., Ltd. (“SPI Energy” or the “Company”) and its subsidiaries (collectively the “Group”) is engaged in the provision of photovoltaic (“PV”), and roofing and solar energy systems installation solutions for business, residential, government and utility customers and investors. The Group is also starting to assemble solar modules for sale in the United States in 2022.
Organization
The major subsidiaries of the Group as of September 30, 2023, are summarized as below:
| Major Subsidiaries | Abbreviation | Location | ||
| SolarJuice Co., Ltd | ||||
| Solar Juice Pty Ltd. | ||||
| Solarjuice American Inc. | ||||
| Sloar4america Technology Inc. (formerly named Solarjuice Technology Inc.) | ||||
| Italsolar S.r.l. | ||||
| SPI Solar Japan G.K. | ||||
| Solar Power Inc UK Service Limited | ||||
| SPI Solar Inc. | ||||
| Heliostixio S.A. | ||||
| Heliohrisi S.A. | ||||
| Thermi Sun S.A. | ||||
| Knight Holding Corporation | ||||
| Edisonfuture Inc. |
On January 1, 2017, the Group deconsolidated one of the major subsidiaries, Sinsin Renewable Investment Limited (“Sinsin”) due to loss of control and recognized the investment in Sinsin at the carrying amount of $69,606. Both the Group and the former shareholders of Sinsin, Sinsin Europe Solar Asset Limited Partnership and Sinsin Solar Capital Limited Partnership (collectively, the “Sinsin Group”), failed to fulfill the obligation under the share sale and purchase agreement of Sinsin, which led to that both parties filed petitions to each other. The petitions directly affected the Group’s ability to effectively control Sinsin and make any direct management decisions or have any direct impact on Sinsin’s polices, operations or assets without the agreement of Sinsin Group. On October 29, 2020, an arbitration decision was made in Malta that the Group will need to pay the unpaid consideration of EUR 38,054, together with interest at 6% accruing from November 20, 2015 on half of the unpaid consideration and from June 30, 2016 on the remaining half of the unpaid consideration to the date of eventual payment. The Group filed an application for appeals but was turned down by the court of Malta on November 12, 2021. The Group furtherly filed an application of retrial and suspension of the enforcement of the awards but was rejected by the court of Malta on March 30, 2022. On November 2, 2022, Sinsin filed an action to confirm these arbitral awards pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (“New York Convention”) as implemented by the Federal Arbitration Act (“FAA”) before U.S. District Court Eastern District of California. On April 27, 2023, Sinsin filed amended petition to add a request for an award of attorneys’ fees incurred in connection with the petition, add detail on the allegedly owed costs and liabilities, and request that the court issue an injunction against asset dissipation pending satisfaction of the requested judgment.
| 9 |
On October 2, 2023, the United States District Court Eastern District of California filed an order dated September 29, 2023 about the action. Pursuant to the order, (i) SPI shall pay Sinsin the amounts no less than $60.4 million, subject to a continuing interest rate of six percent accruing from November 30, 2015 on half of the outstanding balance owed under the parties’ Share Sale and Purchase Agreement dated September 6, 2014 (“SPA”) (€19million), and accruing from June 20, 2016 on the remaining half of the outstanding amount owed under the SPA (€19million); (ii) Sinsin’ request for a worldwide asset freeze to prevent SPI from dissipating its assets was denied by the Court without prejudice to renewal as necessary should SPI fail to comply with the Court’s orders; and (iii) Sinsin’ motion for an award of attorneys’ fees and costs was granted by the Court. On October 2, 2023, the Court entered a judgement in accordance with such order. The Group is currently negotiating with Sinsin on the settlement plan.
As of September 30, 2023, investment
in Sinsin was $
On September 26, 2023, the Group
transferred
| 2. | Going concern |
The Group’s condensed consolidated
financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of the business. The Group had recurring losses from operations. The Group has incurred a net loss of
$
| 3. | Summary of Significant Accounting Policies |
| (a) | Basis of Presentation |
The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted.
| 10 |
In the opinion of management, the information reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. Quarterly results are not necessarily indicative of results for the full year. The condensed consolidated balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements at that date but does not include all information and footnotes required by U.S. GAAP for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
| (b) | Use of Estimates |
The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Group to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Group’s unaudited condensed consolidated financial statements include the allowance for doubtful accounts receivable and other receivable, the impairment of goodwill and long-lived assets, fair value of derivative liability and share based compensation. Changes in facts and circumstances may result in revised estimates. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.
| (c) | Revenue Recognition |
The Group’s accounting practices under Accounting Standards Codification (“ASC”) No. 606 are as followings:
The Group generates revenue from sales of PV components, sales of self-assembled solar modules, roofing and solar energy systems installation, electricity revenue with Power Purchase Agreements (“PPAs”), sales of PV project assets, and others for the nine months ended September 30, 2023 and 2022.
Sale of PV components
Revenue on sale of PV components includes one performance obligation of delivering the products and the revenue is recognized at a point in time following the transfer of control of such products to the customer, which typically occurs upon shipment or acceptance of the customer depending on the terms of the underlying contracts.
Sales of self-assembled solar modules
Revenue on sale of self-assembled solar modules includes one performance obligation of delivering the products and the revenue is recognized at a point in time following the transfer of control of such products to the customer, which typically occurs upon the delivery to the customer.
Revenue from roofing and solar energy systems installation
Revenue from roofing and solar energy system installation is recognized over time.
For revenue from solar energy system installation, the Group’s only performance obligation is to design and install a customized solar energy system, sometimes, reinstall the customer’s existing solar energy system. For revenue from roofing the Group’s only performance obligation is to design and build roof system per customer specifications.
| 11 |
The Group’s roofing projects involve the construction of a specific roof systems in accordance with each customer’s selection; the Group’s solar energy system installations involve solar modules being retrofitted to existing consumer roofs using rails, then connected to the utility using an inverter system. For both solar energy system installation and roofing, typically jobs are completed within three months, the specific timing depends on the size of the job and the complexity of the job site, and the contract price includes all material and labor needed, and payments are collected based on specific milestones.
The Group provides solar energy systems and roofing installation for various customers, such as homeowners and real estate developers, but the design and installation for each customer differs substantially on the basis of each customer’s needs and the type of shingle or roof that is placed with the solar energy system. The asset consequently has no alternative use to the Group because the customer specific design limits the Group’s practical ability to readily direct the solar energy system to another customer. As such the Group’s performance does not create an asset with an alternative use to the Group. Pursuant to the contract, the customers agree to pay for any costs, expenses and losses incurred by the Group upon termination, and therefore, revenue is recognized over time according to ASC 606-10-25-27(c).
For both solar energy system installation and roofing, all costs to obtain and fulfill contracts associated with system sales and other product sales are expensed to cost of revenue when the corresponding revenue is recognized.
The Group recognizes revenue using a cost-based input method that recognizes revenue and gross profit as work is performed based on the relationship between actual costs incurred compared to the total estimated cost of the contract, to determine the Group’s progress towards contract completion and to calculate the corresponding amount of revenue and gross profit to recognize. The total estimated cost of the contract constitutes of material cost and labor cost and are developed based on the size and specific situation of different jobs. Changes in estimates are mainly due to: (i) unforeseen field conditions that impacts the estimated workload, and (ii) change of the unit price of material or labor cost.
If the estimated total costs on any contract are greater than the net contract revenues, the Group recognizes the entire estimated loss in the period the loss becomes known.
Electricity revenue with PPAs
The Group sells energy generated by PV solar power systems under PPAs. For energy sold under PPAs, the Group recognizes revenue each period based on the volume of energy delivered to the customer (i.e., the PPAs off-taker) and the price stated in the PPAs. The Group has determined that none of the PPAs contains a lease since (i) the purchaser does not have the rights to operate the PV solar power systems, (ii) the purchaser does not have the rights to control physical access to the PV solar power systems, and (iii) the price that the purchaser pays is at a fixed price per unit of output.
Sale of PV project asset
The Group’s sales arrangements for PV projects do not contain any forms of continuing involvement that may affect the revenue or profit recognition of the transactions, nor any variable considerations for energy performance guarantees, minimum electricity end subscription commitments. The Group therefore determined its single performance obligation to the customer is the sale of a completed solar project. The Group recognizes revenue for sales of solar projects at a point in time after the solar project has been grid connected and the customer obtains control of the solar project.
Other revenue
Other revenue mainly consists of sales of self-assembled solar modules, sales of component and charging stations, sales of forklifts, engineering and maintenance service, shipping and delivery service, sales of pre-development solar projects and others. Other revenues are recognized at a point in time following the transfer of control of such service or products to the customer, which typically occurs upon shipment of product or acceptance of the customer depending on the terms of the underlying contracts.
| 12 |
Disaggregation of revenues from continuing operations
The following table illustrates the disaggregation of revenue by revenue stream and by geographical location for the three and nine months ended September 30, 2023 and 2022:
| By revenue stream | For the nine months ended September 30, 2023 (Unaudited) | |||||||||||||||||||||||||||
| Sales of PV components | Sales of self-assembled solar modules | Revenue from roofing and solar systems installation | Electricity revenue with PPAs | Sales of pre-development solar projects | Others | Total | ||||||||||||||||||||||
| Australia | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| United States | ||||||||||||||||||||||||||||
| Japan | ||||||||||||||||||||||||||||
| Italy | ||||||||||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||||
| Greece | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| By revenue stream | For the three months ended September 30, 2023 (Unaudited) | |||||||||||||||||||||||||||
| Sales of PV components | Sales of self-assembled solar modules | Revenue from roofing and solar systems installation | Electricity revenue with PPAs | Sales of pre-development solar projects | Others | Total | ||||||||||||||||||||||
| Australia | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| United States | ||||||||||||||||||||||||||||
| Japan | ||||||||||||||||||||||||||||
| Italy | ||||||||||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||||
| Greece | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| By revenue stream | For the nine months ended September 30, 2022 (Unaudited) | |||||||||||||||||||||||||||
| Sales of PV components | Revenue from roofing and solar systems installation | Electricity revenue with PPAs | Sales of self-assembled solar modules | Sales of pre-development solar projects | Others | Total | ||||||||||||||||||||||
| Australia | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Italy | ||||||||||||||||||||||||||||
| United States | ||||||||||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||||
| Greece | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| 13 |
| By revenue stream | For the three months ended September 30, 2022 (Unaudited) | |||||||||||||||||||||||||||
| Sales of PV components | Revenue from roofing and solar systems installation | Electricity revenue with PPAs | Sales of self-assembled solar modules | Sales of pre-development solar projects | Others | Total | ||||||||||||||||||||||
| Australia | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Italy | ||||||||||||||||||||||||||||
| United States | ||||||||||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||||
| Greece | ||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| By timing of revenue recognition | For the nine months ended September 30, 2023 (Unaudited) | |||||||||||||||||||||||
| Sales of PV components | Sales of self-assembled solar modules | Revenue from roofing and solar systems installation | Electricity revenue with PPAs | Others | Total | |||||||||||||||||||
| Goods transferred at a point in time | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Service transferred over time | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| By timing of revenue recognition | For the three months ended September 30, 2023 (Unaudited) | |||||||||||||||||||||||
| Sales of PV components | Sales of self-assembled solar modules | Revenue from roofing and solar systems installation | Electricity revenue with PPAs | Others | Total | |||||||||||||||||||
| Goods transferred at a point in time | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Service transferred over time | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| By timing of revenue recognition | For the nine months ended September 30, 2022 (Unaudited) | |||||||||||||||||||||||
| Sales of PV components | Revenue from roofing and solar systems installation | Electricity revenue with PPAs | Sales of self-assembled solar modules | Others | Total | |||||||||||||||||||
| Goods transferred at a point in time | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Service transferred over time | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| 14 |
| By timing of revenue recognition | For the three months ended September 30, 2022 (Unaudited) | |||||||||||||||||||||||
| Sales of PV components | Revenue from roofing and solar systems installation | Electricity revenue with PPAs | Sales of self-assembled solar modules | Others | Total | |||||||||||||||||||
| Goods transferred at a point in time | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Service transferred over time | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Contract balance
The following table provides information about accounts receivable, contract assets and contract liabilities from contracts with customers:
September 30, 2023 (Unaudited) | December 31, 2022 | |||||||
| Accounts Receivable | $ | $ | ||||||
| Contract assets | ||||||||
| Advance from customers | ||||||||
The contract assets primarily relate to the Group’s rights to consideration for work completed but not billed at the reporting date, primarily for the revenue from roofing and solar energy systems installation in the United States. The contract assets are transferred to receivables when the rights become unconditional after billing is issued.
Advance from customers, which represent
a contract liability, represent mostly unrecognized amount received for customers. Advance from customers is recognized as (or when)
the Group performs under the contract. During the nine months ended September 30, 2023 and 2022, the Group recognized $
| (d) | Discontinued operations |
A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results when any of the following occurs:
| (1) | the component of an entity or group of components of an entity meets the criteria to be classified as held for sale; | |
| (2) | the component of an entity or group of components of an entity is disposed of by sale; | |
| (3) | the components of an entity or group of components of an entity is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spinoff). |
| 15 |
For any component classified as held for sale or disposed of by sale or other than by sale that qualify for presentation as a discontinued operation in the period, the Group has reported the assets and labilities of the discontinued operations as current and non-current assets of discontinued operations, and current and non-current liabilities of discontinued operations in the consolidated balance sheets as of December 31, 2022. The results of operations of discontinued operation for the nine and three months ended September 30, 2023 and 2022 have been reflected separately in the consolidated statements of operations as a single line item for all periods presented in accordance with U.S.GAAP. Cash flows from discontinued operations of the three categories for the nine months ended September 30, 2023 and 2022 were separately presented in the consolidated statements of cash flows for all periods presented in accordance with U.S. GAAP.
For the disposal under common control, the Group records the impacts on deconsolidation in additional paid in capital based on the difference on the deconsolidation date between (i) the aggregate of (a) the consideration received, (b) the carrying amount of non-controlling interest in the deconsolidated subsidiaries, and (c) the carrying amount of the remaining interests in the deconsolidated subsidiaries less (ii) the carrying amount of the deconsolidated subsidiaries’ assets and liabilities.
| (e) | Recent Accounting Pronouncements |
Recently adopted accounting pronouncements
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers (“ASC 606”). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. ASU 2021-08 is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. The Group adopted ASU 2021-08 effective January 1, 2023 and apply the guidance to subsequent acquisitions. The adoption of ASU 2021-08 will only impact the accounting for the Group’s future acquisitions.
Accounting Pronouncements Issued But Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides elective amendments for entities that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. These amendments were effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), to expand and clarify the scope of Topic 848 to include derivative instruments on discounting transactions. The amendments in this ASU are effective in the same timeframe as ASU 2020-04. In December 2022, the FASB issued ASU 2022-06, Reference Rate reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the sunset date of Topic 848, Reference Rate Reform to December 31, 2024. The Group is currently evaluating the impact this guidance will have on its consolidated financial statements.
The Group does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the unaudited condensed consolidated balance sheets, statements of operations and cash flows.
| 16 |
| 4. |
Discontinued Operations |
On September 26, 2023, the
Group’s subsidiary, Edison Future, sold
The consideration of $
As Phoenix used to be a reportable segment of the Group and the disposal of Phoenix is considered as a strategic shift, the Group disclosed the results of the business of Phoenix as discontinued operations. As the disposal of Phoenix is considered as a spin-off, there is no gain or loss recognized because of the disposal and the difference between consideration received, the carrying amount of the remaining interests, the carrying amount of the non-controlling interest derecognized, over the carrying amount of the net asset of Phoenix disposed were recorded in APIC.
The assets and liabilities of Phoenix are included in the captions "Current assets of discontinued operations”, “Non-current assets of discontinued operations”, “Current liabilities of discontinued operations” and “Non-current liabilities of discontinued operations”, in the accompanying balance sheets at December 31, 2022 and consist of the following:
| December 31, 2022 | ||||
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | |||
| Accounts receivable, net | ||||
| Inventories | ||||
| Prepaid expenses and other current assets | ||||
| Amount due from related party | ||||
| Total current assets of discontinued operations | ||||
| Restricted cash, non current | ||||
| Property and equipment, net | ||||
| Security deposits | ||||
| Right-of-use assets | ||||
| Intangible assets, net | ||||
| Goodwill | ||||
| Total non-current assets of discontinued operations | ||||
| Total assets of discontinued operations | $ | |||
| Liabilities | ||||
| Current liabilities | ||||
| Accounts payable | $ | |||
| Accrued liabilities | ||||
| Advance from customers | ||||
| Deferred revenue | ||||
| Warranty reserve | ||||
| Lease liabilities - Current portion | ||||
| Long-term borrowing, current portion | ||||
| Total current liabilities of discontinued operations | ||||
| Lease liabilities - Non-current portion | ||||
| Long-term borrowings | ||||
| Total non-current liabilities of discontinued operations | ||||
| Total liabilities of discontinued operations | $ | |||
| 17 |
The comparative condensed consolidated statements of operations have been represented to show the discontinued operations separately from continuing operations. Details of the results from discontinued operations, net of tax are set out below:
| Schedule of income from discontinued operations | For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
| 2023* | 2022 | 2023* | 2022 | |||||||||||||
| USD’000 | USD’000 | USD’000 | USD’000 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross (loss) profit | ( | ) | ||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Total operating expense | ||||||||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Loss from discontinued operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ( | ) | ( | ) | ||||||||||||
| Loss from discontinued operations, net of income tax | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| * | The result of discontinued operations included those of discontinued operations from January 1, 2023 to September 26, 2023. |
| 5. | Accounts Receivable, Net |
The accounts receivable, net as of September 30, 2023 and December 31, 2022 consisted of the following:
September 30, 2023 (Unaudited) | December 31, 2022 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: Allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
For the nine months ended September
30, 2023, the Group recorded credit losses with amount of $
| 18 |
| 6. | Inventories |
Inventories as of September 30, 2023 and December 31, 2022 consisted of the following:
September 30, 2023 (Unaudited) | December 31, 2022 | |||||||
| Finished goods | $ | $ | ||||||
| Goods in transit | ||||||||
| Work in process | ||||||||
| Raw materials | ||||||||
| Total inventories | $ | $ | ||||||
For the nine months ended
September 30, 2023 and 2022, the Group recorded $
| 7. | Share-based Compensation |
The following table summarizes the consolidated share-based compensation expense, by type of awards:
| For the three months Ended | For the nine months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Employee stock options | $ | $ | $ | $ | ||||||||||||
| Restricted share units grants (See Note 8) | ||||||||||||||||
| Total share-based compensation expense | $ | $ | $ | $ | ||||||||||||
The following table summarizes the consolidated share-based compensation by line items:
| For the three months Ended | For the nine months Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| General and administrative | $ | $ | $ | $ | ||||||||||||
| Sales, marketing and customer service | ||||||||||||||||
| Total share-based compensation expense, net of nil income taxes | $ | $ | $ | $ | ||||||||||||
| 19 |
| 8. | Equity |
During the three months ended September 30, 2023, the Board of Directors approved the grants of restricted share units to core management members and other management, pursuant to the terms of the 2015 Plan. The total number of restricted stock units granted was units. The vesting schedules are % vested at the grant date for all the grants subject to 180 days lock-up period. All these restricted stock units were issued to the management on August 30, 2023. The Group used the market price of its shares at the grant date as the fair value of the stock units in calculating the share-based compensation expense.
During the nine months ended September
30, 2023 and 2022, the Group issued and ordinary shares of the Company
to settle partial principal and accrued interests of certain convertible bonds, resulting in loss on extinguishment of convertible bonds
of $
| 9. | Net Income (Loss) Per Share |
| Reconciliation of earnings per share | ||||||||||||||||
For the three months Ended (Unaudited) | For the nine months Ended (Unaudited) | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income (loss) from continuing operations attributable to SPI’s ordinary shareholders | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net loss from discontinued operations attributable to SPI’s ordinary shareholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to SPI’s ordinary shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Weighted average number of ordinary shares – Basic | ||||||||||||||||
| Weighted average number of ordinary shares – Diluted | ||||||||||||||||
| Net income (loss) from continuing operation attributable to SPI’s ordinary shareholders per ordinary share – Basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net income (loss) from continuing operation attributable to SPI’s ordinary shareholders per ordinary share – Diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Net loss from discontinued operation attributable to SPI’s ordinary shareholders per ordinary share | ||||||||||||||||
| – Basic | $ | ( | ) | $ | ( | ) | $ | ( | ||||||||