UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 |
(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 |
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Trading Symbol |
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Name of each exchange on which registered |
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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, smaller reporting company, or an emerging growth company. See the 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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 August 2, 2024, the registrant had
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains statements that are “forward-looking looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for future operations. These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. When the Company discusses its strategies or plans, the Company is making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as assumptions made by and information currently available to, the Company’s management.
Forward-looking statements in this Quarterly Report on Form 10-Q may include, for example, statements about:
The Company cautions you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q. These forward-looking statements are only predictions based on the Company’s current expectations and projections about future events and are subject to a number of risks, uncertainties and assumptions, including those described in this Quarterly Report on Form 10-Q, in particular the risks described in Part II, Item 1A, “Risk Factors” of this Quarterly Report and in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 21, 2024 (the “2023 Annual Report”) and the Company’s other filings with the SEC. It is not possible for the
i
management of the Company to predict all risks, nor can the Company assess the impact of all factors on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements the Company may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements in this Quarterly Report on Form 10-Q.
The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date hereof. You should not rely upon forward-looking statements as predictions of future events. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, the Company cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. The Company does not undertake any obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in expectations, except as required by law. You should read this Quarterly Report on Form 10-Q and the documents that have been filed as exhibits hereto with the understanding that the actual future results, levels of activity, performance, events and circumstances of the Company may be materially different from what is expected.
ii
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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Item 1. |
1 |
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Condensed Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023 |
1 |
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2 |
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3 |
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Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2024, and 2023 |
5 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
25 |
Item 3. |
32 |
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Item 4. |
32 |
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PART II. OTHER INFORMATION |
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Item 1. |
33 |
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Item 1A. |
33 |
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Item 2. |
33 |
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Item 3. |
33 |
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Item 4. |
33 |
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Item 5. |
33 |
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Item 6. |
34 |
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35 |
iii
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TIGO ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
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June 30, |
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December 31, |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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— |
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Marketable securities, short-term |
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Accounts receivable, net of allowances for credit losses of $ |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating right-of-use assets |
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Marketable securities, long-term |
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— |
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Intangible assets, net |
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Other assets |
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Goodwill |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Deferred revenue, current portion |
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Warranty liability, current portion |
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Operating lease liabilities, current portion |
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Total current liabilities |
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Warranty liability, net of current portion |
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Deferred revenue, net of current portion |
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Long-term debt, net of unamortized debt discount and issuance costs |
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Operating lease liabilities, net of current portion |
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Total liabilities |
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(see Note 10) |
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Stockholders’ equity |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
1
TIGO ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net revenue |
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$ |
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$ |
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$ |
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$ |
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Cost of revenue |
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Gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Total operating expenses |
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(Loss) income from operations |
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( |
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( |
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Other expenses (income): |
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Change in fair value of preferred stock warrant and contingent shares liability |
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( |
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Change in fair value of derivative liability |
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— |
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— |
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Loss on debt extinguishment |
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— |
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— |
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— |
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Interest expense |
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Other income, net |
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( |
) |
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( |
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( |
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( |
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Total other expenses, net |
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Loss before income tax expense |
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( |
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( |
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( |
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( |
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Income tax expense (benefit) |
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( |
) |
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( |
) |
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Net loss |
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( |
) |
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( |
) |
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( |
) |
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( |
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Unrealized gain (loss) resulting from change in fair value of marketable securities |
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$ |
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$ |
( |
) |
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$ |
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$ |
( |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
Cumulative dividends on convertible preferred stock |
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— |
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( |
) |
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— |
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( |
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Net loss attributable to common stockholders |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Loss per common share |
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Basic |
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$ |
( |
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$ |
( |
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$ |
( |
) |
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$ |
( |
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Diluted |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Weighted-average shares of common stock outstanding |
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Basic |
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Diluted |
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See accompanying notes to condensed consolidated financial statements.
2
TIGO ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share data)
(Unaudited)
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Stockholders’ equity |
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Common stock |
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Shares |
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Amount |
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Additional |
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Accumulated |
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Accumulated other comprehensive (loss) income |
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Total |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Issuance of common stock in connection with the acquisition of fSight (see Note 4) |
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— |
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— |
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— |
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Issuance of common stock in connection with employee incentive stock awards |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain resulting from change in fair value of marketable securities |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance at March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Unrealized gain resulting from change in fair value of marketable securities |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Balance at June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
) |
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$ |
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3
TIGO ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share data)
(Unaudited)
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Stockholders’ (deficit) equity |
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Convertible preferred stock |
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Common stock |
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Shares (1) |
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Amount |
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Shares (1) |
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Amount |
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Additional |
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Accumulated |
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Accumulated other comprehensive income (loss) |
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Total |
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Balance at December 31, 2022 |
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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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Retroactive application (Note 3) |
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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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Balance at December 31, 2022, as converted |
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( |
) |
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( |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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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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Issuance of common stock in connection with the acquisition of fSight |
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— |
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— |
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— |
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— |
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— |
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Unrealized gain resulting from change in fair value of marketable securities |
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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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Net income |
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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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Balance at March 31, 2023, as converted |
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( |
) |
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( |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Forfeitures of restricted stock and restricted stock surrendered in lieu of withholding taxes |
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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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( |
) |
Stock-based compensation expense |
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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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Unrealized loss resulting from change in fair value of marketable securities |
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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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( |
) |
Convertible preferred stock dividends |
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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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||
Issuance of preferred stock upon exercise of preferred warrants |
|
|
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Conversion of convertible preferred stock into common stock in connection with the Business Combination (Note 3) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Issuance of common stock upon exercise of common warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Purchase price adjustment in connection with the fSight acquisition |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
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|
||||
Issuance of common stock upon Business Combination |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance at June 30, 2023, as converted |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
See accompanying notes to condensed consolidated financial statements.
4
TIGO ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Six Months Ended June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Cash Flows from Operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Reserve for inventory obsolescence |
|
|
|
|
|
|
||
Change in fair value of preferred stock warrant and contingent shares liability |
|
|
( |
) |
|
|
|
|
Change in fair value of derivative liability |
|
|
— |
|
|
|
|
|
Deferred tax benefit |
|
|
— |
|
|
|
( |
) |
Non-cash interest expense |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Allowance for credit losses |
|
|
( |
) |
|
|
|
|
Loss on debt extinguishment |
|
|
— |
|
|
|
|
|
Non-cash lease expense |
|
|
|
|
|
|
||
Accretion of interest on marketable securities |
|
|
( |
) |
|
|
( |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
( |
) |
|
Inventory |
|
|
|
|
|
( |
) |
|
Prepaid expenses and other assets |
|
|
|
|
|
|
||
Accounts payable |
|
|
( |
) |
|
|
|
|
Accrued expenses and other liabilities |
|
|
( |
) |
|
|
|
|
Deferred revenue |
|
|
|
|
|
( |
) |
|
Warranty liability |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
$ |
( |
) |
|
$ |
( |
) |
Investing activities: |
|
|
|
|
|
|
||
Purchase of marketable securities |
|
|
— |
|
|
|
( |
) |
Acquisition of fSight |
|
|
— |
|
|
|
( |
) |
Purchase of intangible assets |
|
|
— |
|
|
|
( |
) |
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
Disposals of property and equipment |
|
|
— |
|
|
|
|
|
Sales and maturities of marketable securities |
|
|
|
|
|
— |
|
|
Net cash provided by (used in) investing activities |
|
$ |
|
|
$ |
( |
) |
|
Financing activities: |
|
|
|
|
|
|
||
Proceeds from Convertible Promissory Note |
|
|
— |
|
|
|
|
|
Repayment of from Series 2022-1 Notes |
|
|
— |
|
|
|
( |
) |
Payment of financing costs |
|
|
— |
|
|
|
( |
) |
Proceeds from Business Combination |
|
|
— |
|
|
|
|
|
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Payment of tax withholdings on stock options |
|
|
— |
|
|
|
( |
) |
Net cash provided by financing activities |
|
$ |
|
|
$ |
|
||
Net increase (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 |
|
$ |
|
|
$ |
|
||
See accompanying notes to condensed consolidated financial statements.
5
|
|
Six Months Ended June 30, |
|
|||||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
$ |
|
|
$ |
|
||
Supplemental schedule of non-cash investing and financing activities: |
|
|
|
|
|
|
||
Operating lease right of use assets obtained in exchange for operating lease liabilities |
|
$ |
|
|
$ |
|
||
Property and equipment in accounts payable |
|
$ |
|
|
$ |
|
||
Non-cash consideration paid for the acquisition of fSight |
|
$ |
|
|
$ |
|
||
Contingent shares liability from fSight acquisition |
|
$ |
|
|
$ |
|
||
Unrealized gain (loss) resulting from change in fair value of marketable securities |
|
$ |
|
|
$ |
( |
) |
|
Net assets acquired from Roth CH Acquisition IV Co. |
|
$ |
— |
|
|
$ |
|
|
Fair value of derivative note liability at issuance |
|
$ |
— |
|
|
$ |
|
|
Convertible preferred stock dividends (Note 3) |
|
$ |
— |
|
|
$ |
|
|
Reclassification of deferred issuance costs to additional paid in capital |
|
$ |
— |
|
|
$ |
|
|
Conversion of convertible preferred stock into common stock in connection with the Business Combination (Note 3) |
|
$ |
— |
|
|
$ |
|
|
Issuance of preferred stock upon exercise of preferred warrants |
|
$ |
— |
|
|
$ |
|
|
See accompanying notes to condensed consolidated financial statements.
6
TIGO ENERGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Tigo Energy, Inc. (f/k/a Roth CH Acquisition IV Co.) and subsidiaries (together, the “Company”) consists of Tigo Energy, Inc. (“Tigo”), its wholly-owned direct subsidiary: Tigo Energy MergeCo, Inc. (f/k/a Tigo Energy, Inc.) (“Legacy Tigo”), and its wholly-owned indirect subsidiaries: Tigo Energy Israel Ltd., Foresight Energy, Ltd. (“fSight”), Tigo Energy Italy SRL, Tigo Energy Systems Trading (Suzhou) and Tigo Energy Australia Pty Ltd. Prior to the consummation of the Business Combination (as defined below), the operations of the Company were conducted through Legacy Tigo. Legacy Tigo was incorporated in Delaware in 2007 and commenced operations in 2010.
The Company provides solar and energy storage solutions, including module level power electronics (“MLPE”) designed to maximize the energy output of individual solar modules, delivering more energy, active management, and enhanced safety for utility, commercial, and residential solar arrays. The Company is headquartered in Campbell, California with offices in Europe, Asia and the Middle East.
Entry into a Material Definitive Agreement
On December 5, 2022, Roth CH Acquisition IV Co., a Delaware corporation (“ROCG”), Roth IV Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of ROCG (“Merger Sub”), and Legacy Tigo, entered into an Agreement and Plan of Merger, as amended on April 6, 2023 (the “Merger Agreement”), pursuant to which, among other transactions, on May 23, 2023 (the “Closing Date”), Merger Sub merged with and into Legacy Tigo (the “Merger”), with Legacy Tigo surviving the Merger as a wholly-owned subsidiary of ROCG (the Merger, together with the other transactions described in the Merger Agreement, the “Business Combination”). In connection with the closing of the Business Combination, ROCG changed its name to “Tigo Energy, Inc.”
Please refer to Note 3 “Merger with Roth CH Acquisition IV Co.” for additional details regarding the Business Combination.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Pursuant to the Business Combination, the merger between ROCG and Legacy Tigo was accounted for as a reverse recapitalization in accordance with U.S. GAAP (the “Reverse Recapitalization”). Under this method of accounting, ROCG was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Reverse Recapitalization was treated as the equivalent of Legacy Tigo issuing stock for the net assets of ROCG, accompanied by a recapitalization. The net assets of ROCG are stated at historical cost, with no goodwill or other intangible assets recorded. The consolidated assets, liabilities and results of operations prior to the Reverse Recapitalization are those of Legacy Tigo. The shares and corresponding capital amounts and earnings per share available for common stockholders, prior to the Closing Date, have been retroactively recasted as shares reflecting the exchange ratio established in the Business Combination. Please refer to Note 3 “Merger with Roth CH Acquisition IV Co.” for additional details regarding the Business Combination.
The Company has determined the functional currency of the subsidiaries to be the U.S. dollar. The Company remeasures monetary assets and liabilities of its foreign operations at exchange rates in effect at the balance sheet date and nonmonetary assets and liabilities at their historical exchange rates. Expenses are remeasured at the weighted-average exchange rates during the relevant reporting period. These remeasurement gains and losses are recorded in other income, net in the condensed consolidated statements of operations and comprehensive loss and were not material for the three and six months ended June 30, 2024, and 2023.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the unaudited condensed consolidated financial statements) considered necessary to present fairly Tigo’s condensed consolidated balance sheet as of June 30, 2024 and its condensed consolidated statements of operations and comprehensive loss, cash flows, and convertible preferred stock and changes stockholders’ equity (deficit) for the three and six months ended June 30, 2024, and 2023. Operating results for the three and six months
7
Tigo Energy, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
ended June 30, 2024, are not necessarily indicative of the results that may be expected for the full year ending December 31, 2024. The unaudited condensed consolidated financial statements, presented herein, do not contain all of the required disclosures under GAAP for annual consolidated financial statements. The condensed consolidated balance sheet as of December 31, 2023, has been derived from the audited consolidated balance sheet as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 21, 2024.
The Company’s significant accounting policies are described in Note 2 to its audited consolidated financial statements for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the SEC on March 21, 2024.
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical information and various other assumptions that are believed to be reasonable under the circumstances. Examples of such estimates include, among other things, the valuation of share-based awards, the recoverability of long-lived assets, the assessment of intangible assets and goodwill for impairment, provisions for warranty and expected credit losses, inventory obsolescence, sales returns, future price concessions, valuation allowances and the estimated useful lives of plant and equipment and acquired intangible assets. Actual results may materially differ from these estimates. On an ongoing basis, the Company reviews its estimates to ensure that these estimates appropriately reflect changes in its business or new information as it becomes available.
Recently Issued Accounting Pronouncements not yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (CODM) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). This ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, although retrospective application is permitted. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2025.
In March 2024, the SEC adopted final rules that would require registrants to provide certain climate-related information in their registration statements and annual reports. The new rules require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The rules also require disclosure of certain climate-related financial metrics in registrant’s audited financial statements, and, for certain registrants, disclosure regarding such registrant’s greenhouse gas emissions. In April 2024, the SEC voluntarily stayed the rules pending completion of a judicial review that
8
Tigo Energy, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
is currently pending in the U.S. Court of Appeals for the Eighth Circuit. The Company is currently evaluating the impact of these rules on the Company’s financial statements and related disclosures.
The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, ROCG was treated as the “acquired” company and Legacy Tigo was considered the “acquirer” for financial reporting purposes. This determination was primarily based on Legacy Tigo stockholders comprising a majority of the voting power of the Company, Legacy Tigo’s senior management comprising substantially all of the senior management of the Company, Legacy Tigo’s relative size compared to ROCG, and Legacy Tigo’s operations prior to the acquisition comprising the only ongoing operations of the Company. Accordingly, for accounting purposes, the financial statements of the Company represent a continuation of the financial statements of Legacy Tigo with the Business Combination being treated as the equivalent of Legacy Tigo issuing stock for the net assets of ROCG, accompanied by a recapitalization. The net assets of ROCG are stated at historical costs, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are presented as those of Legacy Tigo. All periods prior to the Business Combination have been retrospectively adjusted using the exchange ratio established in the Business Combination of
As part of the reverse recapitalization, Legacy Tigo acquired $
Immediately prior to the closing of the Business Combination:
At the effective time of the Business Combination, each share of Legacy Tigo common stock issued and outstanding immediately prior to the closing (including the shares of Legacy Tigo common stock issued in connection with the foregoing) were canceled and converted into the right to receive a pro rata portion of the merger consideration based on the Exchange Ratio.
In connection with the Business Combination, the Company issued
Immediately following the Business Combination, there were
On January 25, 2023 (“Acquisition Closing Date”), Legacy Tigo acquired
Under the terms of the purchase agreement, total consideration amounted to $
9
Tigo Energy, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Combination) issued at closing with a fair value of approximately $
Pursuant to the terms of the purchase agreement, the Contingent Shares are subject to adjustment based on certain indemnification obligations, liabilities or settlements that may arise during the contingency period, which ends 18 months following the Acquisition Closing Date. During the year ended December 31, 2023, there was an adjustment recorded against the Contingent Shares related to an unrecorded liability that was not present as of the opening balance sheet date of January 25, 2023, and the number of Contingent Shares was adjusted downward by
The Contingent Shares were recorded as a liability at a fair value of approximately $
On January 25, 2024, consistent with the terms of the purchase agreement, the Company issued the 12-month tranche of Contingent Shares,
At June 30, 2024, the remaining liability was revalued to $
The transaction was accounted for as a business combination pursuant to ASC Topic 805, Business Combinations, using the acquisition method of accounting and in conjunction with the acquisition, Legacy Tigo recognized $
10
Tigo Energy, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
The assets acquired and liabilities assumed were recorded at fair value as follows (in thousands):
Consideration transferred: |
|
|
|
|
Fair value of common stock issued |
|
$ |
|
|
Fair value of contingent shares |
|
|
|
|
Deemed settlement of loan payable |
|
|
|
|
Total consideration |
|
$ |
|
|
|
|
|
|
|
Assets acquired: |
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
Accounts receivable |
|
|
|
|
Property and equipment |
|
|
|
|
Developed technology |
|
|
|
|
Customer relationships |
|
|
|
|
Goodwill |
|
|
||