Tigo Energy, Inc. (TYGO) came out with a quarterly loss of $0.22 per share versus the Zacks Consensus Estimate of a loss of $0.17. This compares to loss of $0.89 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -29.41%. A quarter ago, it was expected that this company would post a loss of $0.17 per share when it actually produced a loss of $0.19, delivering a surprise of -11.76%.Over the last four quarters, the company has surp ...

(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2024 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: 001-40710 | --- | --- | |------------------------------------|------------------------------------| | UNITED STATES WASHINGTON, DC 20549 | SECURITIES AND EXCHANGE COMMISSION | | | FORM 10-Q | Tigo ...

CAMPBELL, Calif., Aug. 15, 2024 (GLOBE NEWSWIRE) -- Tigo Energy, Inc. (NASDAQ: TYGO) ("Tigo", or the "Company"), a leading provider of intelligent solar and energy storage solutions, is confirmed to present at the 2024 Annual Gateway Conference, which is being held September 4-5, at the Four Seasons Hotel in San Francisco, CA. Tigo Energy's management team is scheduled to present on Thursday, September 5th at 8:30 a.m. Pacific Time (PT). In addition to the presentation, Tigo Energy executives will be availa ...

Financial Performance - Net revenue for the three months ended June 30, 2024, decreased by $56.1 million or 81.5% compared to the same period in 2023, primarily due to a slowdown in the solar industry in both the U.S. and European markets [111]. - Gross profit for the three months ended June 30, 2024, was $3.9 million, a decrease of $22.0 million or 85.1% from $25.9 million in the same period in 2023 [114]. - The gross margin for the three months ended June 30, 2024, was 30.4%, down from 37.6% in the same period in 2023 [114]. - The EMEA region experienced a net revenue decrease of $48.1 million or 87.3% for the three months ended June 30, 2024, compared to the same period in 2023 [113]. - The Americas region saw a net revenue decline of $8.3 million or 74.6% for the three months ended June 30, 2024, attributed to higher interest rates and changes in net metering policies [113]. - The APAC region reported a net revenue increase of $0.3 million or 11.9% for the three months ended June 30, 2024, although it decreased by $1.2 million or 22.3% for the six months ended June 30, 2024 [113]. - For the three months ended June 30, 2024, net revenues decreased by 81.5% compared to the same period in 2023, leading to a gross profit decrease of $22.0 million or 85.1% [115]. Expenses and Cost Management - Research and development expenses increased by $0.5 million or 11.6% for the six months ended June 30, 2024, with R&D expenses as a percentage of net revenue rising to 23.0% from 3.9% in the same period of 2023 [118]. - Sales and marketing expenses decreased by $1.1 million or 21.5% for the three months ended June 30, 2024, with the percentage of net revenue increasing by 24.4% due to lower net revenues [120]. - General and administrative expenses decreased by $4.1 million or 42.9% for the three months ended June 30, 2024, primarily due to reduced legal expenses related to a prior business combination [123]. - Interest expense increased by $1.3 million or 80.3% for the three months ended June 30, 2024, primarily due to the amortization of a debt discount recorded during a business combination [128]. - The change in fair value of preferred stock warrant and contingent shares liability decreased by $2.6 million or 98.4% for the three months ended June 30, 2024, compared to the same period in 2023 [126]. - Total other expenses, net decreased by $38.9 million or 93.1% for the three months ended June 30, 2024, compared to the same period in 2023 [125]. - Research and development expenses for the three months ended June 30, 2024, remained consistent at $2.7 million, but as a percentage of net revenue, it increased significantly to 21.3% from 3.5% in the same period of 2023 [117]. - Sales and marketing expenses for the six months ended June 30, 2024, decreased by $1.3 million or 12.9%, with the percentage of net revenue increasing by 30.1% due to lower revenues [121]. Cash Flow and Financing - As of June 30, 2024, the company held $20.4 million in cash, cash equivalents, restricted cash, and marketable securities, with working capital decreasing by $10.7 million to $67.6 million compared to December 31, 2023 [133]. - Cash used in operating activities increased by $7.9 million in the six months ended June 30, 2024, primarily due to an increased net loss compared to the same period in 2023 [136]. - Net cash provided by investing activities was $23.4 million for the six months ended June 30, 2024, primarily from the sale and maturities of marketable securities [138]. - Net cash provided by financing activities increased by $30.8 million in the six months ended June 30, 2024, with proceeds of $0.3 million from the exercise of stock options [139]. - The company may need to seek additional equity or debt financing to sustain operations and invest in new technologies, influenced by revenue growth and product development success [134]. - The net cash used in operating activities for the six months ended June 30, 2024, was $(12,872) thousand, compared to $(4,934) thousand for the same period in 2023 [140]. - The net increase in cash, cash equivalents, and restricted cash was $10.7 million for the six months ended June 30, 2024, compared to a decrease of $(25.99) million in the same period in 2023 [140]. - The company has not had any off-balance sheet arrangements during the periods presented [141]. Strategic Initiatives - The company reduced staffing levels by approximately 15% in December 2023 and 10% in April 2024, expecting to save about $7.3 million in cash expenditures in 2024 [103]. - The company plans to expand its presence in the U.S. residential market and invest in new market opportunities internationally to drive future revenue growth [106]. - Significant investments have been made in research and development for new products, including GO Energy Storage Systems and Predict+ product lines [107]. - The company faces challenges from elevated inventory levels and macroeconomic conditions, which may continue to adversely affect revenues in 2024 [102]. - Inventory levels were reduced by $10.1 million in the first half of 2024, with expectations for lower inventory levels and positive working capital cash conversion throughout the remainder of 2024 [133].

Tigo Energy, Inc. (NASDAQ:TYGO) Q1 2024 Earnings Conference Call May 14, 2024 4:30 PM ET Company Participants Zvi Alon - Chairman and Chief Executive Officer Bill Roeschlein - Chief Financial Officer Conference Call Participants Philip Shen - ROTH Capital Partners Eric Stine - Craig-Hallum Capital Group Gus Richard - Northland Capital Markets Sameer Joshi - HC Wainwright Operator Good afternoon. Welcome to Tigo Energy's Fiscal First Quarter 2024 Earnings Conference Call. At this time, all participants are i ...

[Executive Summary and Management Commentary](index=1&type=section&id=Executive%20Summary%20and%20Management%20Commentary) Tigo Energy's Q1 2024 reported $9.8 million revenue and a $6.3 million adjusted EBITDA loss, alongside new product launches and break-even targets [Management Commentary](index=1&type=section&id=Management%20Commentary) Tigo Energy's CEO noted Q1 2024 progress in inventory reduction and new product launches, with CFO outlining cash and adjusted EBITDA break-even targets - Meaningful progress in reducing industry-wide inventory overhang challenges persisting since Q2 2023[4](index=4&type=chunk) - Introduced **TS4-X product family** for high-current and high-power panel requirements in C&I and utility markets, with multi-factor rapid shutdown capability[4](index=4&type=chunk) - **GO ESS products** accounted for approximately **14% of Q1 revenues**[5](index=5&type=chunk) | Metric | Q1 2024 (in millions) | Guidance (Quarterly Revenue, in millions) | | :----- | :-------------------- | :---------------------------------------- | | Revenue | $9.8 | N/A | | Adjusted EBITDA Loss | $6.3 | N/A | | Cash Break-even | N/A | ~$17 - $19 | | Adjusted EBITDA Break-even | N/A | ~$33 - $35 | [Recent Financial and Operational Highlights](index=1&type=section&id=Recent%20Financial%20and%20Operational%20Highlights) Tigo Energy reported Q1 2024 revenue of $9.8 million, a GAAP gross margin of 28.2%, and an adjusted EBITDA loss of $6.3 million, while shipping 249,000 MLPE units and launching new products | Metric | Q1 2024 (in millions) | | :----- | :-------------------- | | Quarterly Revenue | $9.8 | | GAAP Gross Margin | 28.2% | | GAAP Operating Loss | $9.1 | | GAAP Net Loss | $11.5 | | Adjusted EBITDA Loss | $6.3 | - Shipped **249,000 MLPE units**, approximately **100MW DC** (assuming an average panel size of 400W)[6](index=6&type=chunk) - Launched the **TS4-X Family** (TS4-X-O, TS4-X-S, and TS4-X-F MLPE) with enhanced safety features, a **25A current rating**, and a max power rating of **800W**[6](index=6&type=chunk) - Introduced the **Tigo GO EV Charger** residential solar solution for the Italian market[6](index=6&type=chunk) [First Quarter 2024 Financial Results and Second Quarter 2024 Outlook](index=2&type=section&id=First%20Quarter%202024%20Financial%20Results%20and%20Second%20Quarter%202024%20Outlook) Tigo Energy's Q1 2024 reported significant revenue decline and net loss, with Q2 2024 revenue projected at $12.0-$16.0 million [First Quarter 2024 Financial Results Summary](index=2&type=section&id=First%20Quarter%202024%20Financial%20Results) Tigo Energy's Q1 2024 revenue significantly decreased by 80.4% year-over-year to $9.8 million but showed a 6.0% sequential increase, resulting in a net loss of $11.5 million and an adjusted EBITDA loss of $6.3 million | Metric | Q1 2024 (in millions) | Q1 2023 (in millions) | YoY Change | QoQ Change | | :---------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Revenues | $9.8 | $50.1 | -80.4% | +6.0% | | Gross Profit | $2.8 | $18.4 | -84.9% | N/A | | Gross Margin | 28.2% | 36.7% | -8.5 percentage points | N/A | | Total Operating Expenses | $11.9 | $10.6 | +12.4% | N/A | | Net (Loss) Income | $(11.5) | $6.9 | N/A | N/A | | Adjusted EBITDA (Loss) | $(6.3) | $8.6 | N/A | N/A | - Cash, cash equivalents, and marketable securities totaled **$21.9 million** at March 31, 2024[12](index=12&type=chunk) - Accounts payable decreased **$9.7 million** to **$6.0 million** at the end of the first quarter compared to **$15.7 million** at the beginning of the quarter[12](index=12&type=chunk) [Second Quarter 2024 Outlook](index=2&type=section&id=Second%20Quarter%202024%20Outlook) For Q2 2024, Tigo Energy anticipates revenues to be between $12.0 million and $16.0 million, with an expected adjusted EBITDA loss ranging from $5.5 million to $8.0 million | Metric | Q2 2024 Guidance (in millions) | | :----------------- | :----------------------------- | | Revenues | $12.0 - $16.0 | | Adjusted EBITDA Loss | $5.5 - $8.0 | [Conference Call Information](index=2&type=section&id=Conference%20Call) Tigo management hosted a conference call on May 14, 2024, to discuss Q1 results, with replay information provided [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) Tigo management hosted a conference call on May 14, 2024, at 4:30 p.m. ET to discuss the Q1 results, with CEO Zvi Alon and CFO Bill Roeschlein - Conference call held on **May 14, 2024**, at **4:30 p.m. Eastern Time** (1:30 p.m. Pacific Time)[9](index=9&type=chunk) - Hosted by Company CEO Zvi Alon and CFO Bill Roeschlein[9](index=9&type=chunk) - Conference call broadcast live and available for replay via the Investor Relations section of Tigo's website[11](index=11&type=chunk) [About Tigo Energy, Inc.](index=3&type=section&id=About%20Tigo%20Energy%2C%20Inc.) Tigo Energy, founded in 2007, is a global leader in smart hardware and software solutions for solar systems, enhancing safety and energy yield [Company Overview](index=3&type=section&id=Company%20Overview) Founded in 2007, Tigo is a global leader in smart hardware and software solutions that enhance safety, increase energy yield, and lower operating costs of residential, commercial, and utility-scale solar systems - Founded in **2007**, Tigo is a worldwide leader in the development and manufacture of smart hardware and software solutions for solar systems[13](index=13&type=chunk) - Solutions enhance safety, increase energy yield, and lower operating costs of residential, commercial, and utility-scale solar systems[13](index=13&type=chunk) - Combines **Flex MLPE** and solar optimizer technology with intelligent, cloud-based software capabilities for advanced energy monitoring and control[13](index=13&type=chunk) - Develops and manufactures products such as inverters and battery storage systems for the residential solar-plus-storage market[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding Tigo's future performance, subject to significant business, economic, and competitive uncertainties [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section contains forward-looking statements regarding Tigo's future performance, including break-even points, industry recovery, market penetration, product expansion, and financial results, which are subject to significant business, economic, and competitive uncertainties - Statements include expectations about reaching cash flow and adjusted EBITDA break-even, long-term growth prospects, industry recovery, inventory levels, market penetration, product portfolio expansion, and future financial and operating results[14](index=14&type=chunk) - Forward-looking statements are based on current beliefs and expectations but are inherently subject to significant business, economic, and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond control[14](index=14&type=chunk) - Factors causing material differences in actual results include ability to develop and sell products, competition, seasonal trends, customer base growth, new product development, demand timing, government subsidies, acquisitions, liquidity, foreign currency fluctuations, political unrest, regulatory changes, personnel retention, and strategic relationships[15](index=15&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) Tigo Energy uses Adjusted EBITDA as a non-GAAP measure for internal decision-making and performance assessment, with investor relations contacts provided [Non-GAAP Financial Measures Definition and Rationale](index=4&type=section&id=Non-GAAP%20Financial%20Measures%20Definition%20and%20Rationale) Tigo Energy uses Adjusted EBITDA as a non-GAAP financial measure to supplement GAAP statements, defining it as earnings (loss) before interest, taxes, depreciation, amortization, stock-based compensation, and merger transaction expenses - Adjusted EBITDA is used to supplement consolidated financial statements prepared in accordance with GAAP, not as a substitute[17](index=17&type=chunk) - Defined as earnings (loss) before interest and other expenses, net, income tax expense (benefit), depreciation and amortization, as adjusted to exclude stock-based compensation and merger transaction related expenses[18](index=18&type=chunk) - Used for financial and operational decision-making, evaluating period-to-period comparisons, and assessing performance by excluding items not indicative of recurring core business operating results[18](index=18&type=chunk) - A reconciliation for adjusted EBITDA provided as guidance is not provided due to the high variability, complexity, and difficulty of estimating certain items[21](index=21&type=chunk) [Investor Relations Contacts](index=4&type=section&id=Investor%20Relations%20Contacts) Investor relations inquiries can be directed to Matt Glover or Chris Adusei-Poku at Gateway Group, Inc - Investor Relations Contacts: Matt Glover or Chris Adusei-Poku at Gateway Group, Inc[22](index=22&type=chunk) - Contact information: (949) 574-3860, TYGO@gateway-grp.com[22](index=22&type=chunk) [Condensed Consolidated Financial Statements](index=5&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Tigo Energy's Q1 2024 financial statements show total assets of $109.1 million, a net loss of $11.5 million, and $11.3 million cash used in operations [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2024, Tigo Energy reported total assets of $109.1 million, down from $127.8 million at December 31, 2023, with total liabilities decreasing to $54.8 million and stockholders' equity at $54.3 million | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | :-------------------- | | Total Assets | $109,121 | $127,777 | $(18,656) | | Current Assets | $88,396 | $104,710 | $(16,314) | | Cash and cash equivalents | $9,025 | $4,405 | $4,620 | | Marketable securities, short-term | $12,920 | $26,806 | $(13,886) | | Inventory, net | $55,757 | $61,401 | $(5,644) | | Total Liabilities | $54,797 | $64,953 | $(10,156) | | Accounts payable | $6,030 | $15,685 | $(9,655) | | Total Stockholders' Equity | $54,324 | $62,824 | $(8,500) | [Condensed Consolidated Statement of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statement%20of%20Operations) For Q1 2024, Tigo Energy's net revenue was $9.8 million, a substantial decrease from $50.1 million in Q1 2023, leading to a gross profit of $2.8 million and a net loss of $11.5 million | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | YoY Change | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :--------- | | Net revenue | $9,802 | $50,058 | -80.4% | | Cost of revenue | $7,036 | $31,689 | -77.8% | | Gross profit | $2,766 | $18,369 | -84.9% | | Gross margin | 28.2% | 36.7% | -8.5 percentage points | | Total operating expenses | $11,854 | $10,549 | +12.4% | | (Loss) income from operations | $(9,088) | $7,820 | N/A | | Net (loss) income | $(11,506) | $6,910 | N/A | | (Loss) earnings per common share (Diluted) | $(0.19) | $0.05 | N/A | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2024, Tigo Energy reported net cash used in operating activities of $11.3 million, with investing activities generating $15.6 million and financing activities providing $0.3 million, resulting in a $4.6 million increase in cash and cash equivalents | Cash Flow Activity | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash used in operating activities | $(11,266) | $(5,087) | | Net cash provided (used) by investing activities | $15,636 | $(10,655) | | Net cash provided by financing activities | $250 | $28,631 | | Net increase in cash and cash equivalents | $4,620 | $12,889 | | Cash and cash equivalents at end of period | $9,025 | $50,606 | - Investing activities in Q1 2024 were primarily driven by sales and maturities of marketable securities (**$16.0 million**)[28](index=28&type=chunk) - Financing activities in Q1 2023 included **$50.0 million** from Convertible Promissory Note proceeds, which was not present in Q1 2024[28](index=28&type=chunk) [Reconciliation of Net (Loss) Income (GAAP) to Adjusted EBITDA (Non-GAAP)](index=8&type=section&id=Reconciliation%20of%20Net%20(Loss)%20Income%20(GAAP)%20to%20Adjusted%20EBITDA%20(Non-GAAP)) For Q1 2024, Tigo Energy reported a GAAP net loss of $11.5 million, which reconciles to an Adjusted EBITDA loss of $6.3 million after specific adjustments, contrasting with Q1 2023's net income and positive Adjusted EBITDA | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net (loss) income (GAAP) | $(11,506) | $6,910 | | Adjustments: | | | | Total other expenses, net | $2,418 | $910 | | Depreciation and amortization | $310 | $242 | | Stock-based compensation | $2,505 | $366 | | M&A transaction expenses | — | $133 | | Adjusted EBITDA (Non-GAAP) | $(6,273) | $8,561 |

PART I. FINANCIAL INFORMATION This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section details the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position at specific dates, detailing assets, liabilities, and equity Key Balance Sheet Metrics | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (vs Dec 31, 2023) | | :-------------------------------- | :------------------------------ | :------------------------------- | :----------------------- | | Cash and cash equivalents | $9,025 | $4,405 | +$4,620 | | Marketable securities, short-term | $12,920 | $26,806 | -$13,886 | | Inventory, net | $55,757 | $61,401 | -$5,644 | | Total current assets | $88,396 | $104,710 | -$16,314 | | Total assets | $109,121 | $127,777 | -$18,656 | | Total current liabilities | $14,159 | $26,419 | -$12,260 | | Total liabilities | $54,797 | $64,953 | -$10,156 | | Total stockholders' equity | $54,324 | $62,824 | -$8,500 | [Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20(Loss)%20Income) This section details the company's financial performance, including revenue, expenses, and net income or loss Statements of Operations Summary | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :--------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Net revenue | $9,802 | $50,058 | -$40,256 | | Gross profit | $2,766 | $18,369 | -$15,603 | | (Loss) income from operations | $(9,088) | $7,820 | -$16,908 | | Net (loss) income | $(11,506) | $6,910 | -$18,416 | | Basic (Loss) earnings per common share | $(0.19) | $0.09 | -$0.28 | | Diluted (Loss) earnings per common share | $(0.19) | $0.05 | -$0.24 | [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) This section tracks changes in the company's equity, including convertible preferred stock and stockholders' equity - Total stockholders' equity **decreased from $62,824 thousand** at December 31, 2023, to **$54,324 thousand** at March 31, 2024[19](index=19&type=chunk) - Stock-based compensation expense for the three months ended March 31, 2024, was **$2,505 thousand**[19](index=19&type=chunk) - Net loss for the three months ended March 31, 2024, was **$(11,506) thousand**, contributing to the accumulated deficit[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports cash generated and used by the company across operating, investing, and financing activities Cash Flow Summary | Metric | Three Months Ended March 31, 2024 (in thousands) | Three Months Ended March 31, 2023 (in thousands) | Change (YoY) | | :------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :----------- | | Net cash used in operating activities | $(11,266) | $(5,087) | -$(6,179) | | Net cash provided (used) by investing activities | $15,636 | $(10,655) | +$26,291 | | Net cash provided by financing activities | $250 | $28,631 | -$28,381 | | Net increase in cash and cash equivalents | $4,620 | $12,889 | -$8,269 | | Cash and cash equivalents at end of period | $9,025 | $50,606 | -$41,581 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Nature of Operations](index=10&type=section&id=1.%20Nature%20of%20Operations) This note describes the company's business, primary activities, and the accounting treatment of the business combination - Tigo Energy, Inc. provides solar and energy storage solutions, including module level power electronics (MLPE) designed to maximize energy output and enhance safety for utility, commercial, and residential solar arrays[28](index=28&type=chunk) - The Business Combination with Roth CH Acquisition IV Co. was accounted for as a reverse recapitalization, treating Legacy Tigo as the accounting acquirer for financial reporting purposes[31](index=31&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements - The Company is an emerging growth company and has elected to use the extended transition period for complying with new or revised accounting standards[37](index=37&type=chunk) - The Company is evaluating ASU No. 2023-07 (Improvements to Reportable Segment Disclosures) and ASU No. 2023-09 (Improvements to Income Tax Disclosures), both expected to be adopted for the year ending December 31, 2024[39](index=39&type=chunk)[40](index=40&type=chunk) [3. Merger with Roth CH Acquisition IV Co.](index=14&type=section&id=3.%20Merger%20with%20Roth%20CH%20Acquisition%20IV%20Co.) This note details the accounting for the business combination with Roth CH Acquisition IV Co. as a reverse recapitalization - The Business Combination was accounted for as a reverse recapitalization, with Legacy Tigo treated as the accounting acquirer[44](index=44&type=chunk) - Legacy Tigo acquired **$2.2 million in cash** and **$0.6 million in prepaid expenses**, while assuming **$3,400 in accrued expenses** and **$61,000 in income tax payable**[45](index=45&type=chunk) - Transaction costs of **$6.1 million** were incurred, with **$3.9 million** charged to general and administrative expenses[45](index=45&type=chunk) [4. Acquisition of Foresight Energy, Ltd.](index=14&type=section&id=4.%20Acquisition%20of%20Foresight%20Energy%20%2C%20Ltd.) This note describes the acquisition of fSight, its strategic rationale, total consideration, and contingent share revaluation - On January 25, 2023, Legacy Tigo acquired 100% of fSight to expand its capabilities in smart management of electrical energy and actionable system performance data[48](index=48&type=chunk) - Total consideration for fSight amounted to **$13.2 million**, consisting of common stock and contingent shares, plus an additional **$0.5 million** related to a loan[49](index=49&type=chunk)[51](index=51&type=chunk) - The 12-month tranche of Contingent Shares (**166,271 shares**) was issued on January 25, 2024, and the remaining contingent shares liability was revalued to **$0.1 million** as of March 31, 2024[54](index=54&type=chunk)[55](index=55&type=chunk) [5. Net (Loss) Earnings Per Share](index=17&type=section&id=5.%20Net%20(Loss)%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted net loss or earnings per common share Earnings Per Share Summary | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net (loss) income attributable to common stockholders – basic | $(11,506) thousand | $582 thousand | | Net (loss) earnings per share of common stock – basic | $(0.19) | $0.09 | | Net (loss) income attributable to common stockholders – diluted | $(11,506) thousand | $582 thousand | | Net (loss) earnings per share of common stock – diluted | $(0.19) | $0.05 | - Weighted-average shares of common stock outstanding (basic

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 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 001-40710 Tigo Energy, Inc. (Exact name of Registrant as specified in its Charter) Delaware 83-3583873 (State or other jurisdiction of in ...

Financial Data and Key Metrics Changes - Revenue for the full year 2023 increased by 79% to $145.2 million from $81.3 million in the prior year [9][95] - Fourth quarter revenue decreased by 70% to $9.2 million from $30.9 million in the prior-year period [14] - Gross profit for the fourth quarter was $2.9 million or 31.1% of revenue compared to $10 million or 32.2% in the prior year [29] - Adjusted EBITDA loss in the fourth quarter totaled $11.6 million compared to adjusted EBITDA of $2.7 million in the prior year [32] - Net loss for the fourth quarter totaled $14.8 million compared to a net income of $900,000 in the prior year [100] Business Line Data and Key Metrics Changes - GO ESS solution represented 9% of total revenues for 2023, compared to 4% in 2022 [10][95] - TS4 revenue grew by 69% to $119 million compared to $70 million in 2022 [24] - GO ESS represented 14% of total revenues in the fourth quarter, up from 8.4% in the previous quarter [14] Market Data and Key Metrics Changes - EMEA revenue was $109.3 million or 75% of total revenues for the full year 2023, while Americas revenue was $25.2 million or 17% [95] - In the fourth quarter, EMEA revenue was $3.7 million or 40% of total revenues, Americas revenue was $3.4 million or 37%, and APAC was $2.1 million or 23% [14] - The international expansion was successful, with EMEA business more than doubling in revenue and APAC business growing more than 50% in 2023 [47] Company Strategy and Development Direction - The company aims to continue expanding its product portfolio, particularly in the GO ESS and EI solutions [22][27] - The strategy for 2024 includes focusing on cost-effectiveness, market expansion, and product suite expansion [50][99] - The company is cautiously optimistic about nearing the end of the industry-wide inventory rebalancing cycle [12] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the business turning around in different regions, with expectations of normalizing inventory levels by the end of Q1 2024 [49] - The company is managing its business to be both cautious and responsive to the macroeconomic environment [12] - Management noted that high interest rates and net metering policies could delay recovery in the Americas until the second half of the year [26] Other Important Information - Total operating expenses for the full year 2023 were $59.6 million compared to $25.7 million in the prior year, driven by higher headcount expenses [31] - Cash, cash equivalents, and marketable securities totaled $33.2 million at December 31, 2023 [55] - The company reduced staff levels by 15% to better align its cost structure with the current environment [23] Q&A Session Summary Question: What is the destocking outlook? - Management indicated that they expect to normalize inventory levels by the end of Q1 2024 and noted that their rate of installations remains steady [37] Question: What is the cash flow outlook? - Management discussed three factors for liquidity: improved economic environment, reduced purchases from contract manufacturers, and discussions around credit facilities [38] Question: How is the competitive landscape evolving? - Management acknowledged the presence of Chinese competitors but expressed confidence in maintaining their market position due to the unique advantages of their products [64][66] Question: What is the outlook for revenue in Q2 and Q3? - Management refrained from providing specific guidance but indicated that they expect a more promising outlook as the market stabilizes [70] Question: How has market share changed? - Management noted that they have gained market share within the MLPE segment and expect to continue this trend, particularly with new product offerings [75]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section provides key administrative details about the company's quarterly report filing, including registrant information, securities registered, filer status, and outstanding shares [Registrant Information](index=1&type=section&id=Registrant%20Information) Tigo Energy, Inc. filed its quarterly report for the period ended September 30, 2023, registered in Delaware and headquartered in Campbell, California - Company name: Tigo Energy, Inc. (formerly Roth CH Acquisition IV Co.)[2](index=2&type=chunk) - Jurisdiction of incorporation: Delaware[2](index=2&type=chunk) - Principal executive offices: 655 Campbell Technology Parkway, Suite 150, Campbell, California 95008[2](index=2&type=chunk) [Securities Registered](index=1&type=section&id=Securities%20Registered) The company's common stock is listed and traded on The Nasdaq Stock Market LLC under the ticker symbol TYGO Registered Securities Information | Title of each class | Trading Symbol | Name of each exchange on which registered | | :------------------ | :------------- | :---------------------------------------- | | Common Stock, par value $0.0001 per share | TYGO | The Nasdaq Stock Market LLC | [Filer Status](index=1&type=section&id=Filer%20Status) The company is designated as a non-accelerated filer, a smaller reporting company, and an emerging growth company, having submitted all required reports and interactive data files Filer Classification | Large accelerated filer | ☐ | | :-------------------- | :-- | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☒ | - The company has filed all required reports in the past 12 months and has complied with filing requirements in the past 90 days[4](index=4&type=chunk) - The company has electronically submitted all required interactive data files in the past 12 months[4](index=4&type=chunk) [Outstanding Shares](index=1&type=section&id=Outstanding%20Shares) As of November 3, 2023, the company had 58,735,987 shares of common stock outstanding with a par value of $0.0001 per share - As of November 3, 2023, the number of common shares outstanding was **58,735,987**, with a par value of **$0.0001 per share**[5](index=5&type=chunk) [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS SUMMARY](index=2&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS%20AND%20RISK%20FACTORS%20SUMMARY) This section outlines the nature of forward-looking statements within the report and provides a summary of the principal risks the company faces [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This quarterly report contains forward-looking statements regarding the company's financial condition, business strategy, and future operational objectives, which are subject to risks and uncertainties - Forward-looking statements involve financial condition, business strategy, and future operational objectives, and are not guarantees of performance[6](index=6&type=chunk) - These statements are based on management's current estimates and projections of future results or trends[6](index=6&type=chunk) - Actual results or performance may differ materially from forward-looking statements due to various risks, uncertainties, and assumptions[7](index=7&type=chunk) [Summary of Principal Risks](index=2&type=section&id=Summary%20of%20Principal%20Risks) The company faces diverse risks, including business and industry challenges, legal and operational compliance issues, competitive pressures, intellectual property concerns, financial stability, and securities ownership risks - Business and industry risks include: inability to achieve or maintain profitability if revenue growth is insufficient while expenses increase; slow growth in demand for solar solutions; adverse impact from alternative technology development; cyclicality and current downturn in the solar industry; and potential lack of broader market acceptance for MLPE products[11](index=11&type=chunk) - Legal, compliance, and operational risks include: product liability lawsuits; loss of key personnel; failure of the energy intelligence solutions market to develop; reduction in government subsidies and economic incentives; management's lack of public company operating experience; significant international operational risks; litigation or administrative proceedings; impact of seasonal trends and construction cycles; product defects, recalls, or manufacturing issues; inaccurate estimates of energy storage system useful life; and R&D cost investments that may not generate revenue[11](index=11&type=chunk) - Other risks include: loss of major customers; long sales and installation cycles; reliance on monitoring service subscription renewals; supply chain competition; rapid evolution of the solar industry; patent applications and intellectual property protection; personal information breaches; product pricing pressure; inaccurate demand forecasts; common stock price volatility; securities litigation; internal control failures; Nasdaq continued listing standard compliance; impact of securities analyst reports; and future common stock sales[14](index=14&type=chunk) [TABLE OF CONTENTS](index=4&type=section&id=TABLE%20OF%20CONTENTS) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, income statements, equity statements, and cash flow statements, along with detailed notes on key accounting policies and financial disclosures [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets grew to **$143.1 million** from **$88.1 million**, with significant increases in marketable securities and inventory, while cash decreased and stockholders' equity turned positive Condensed Consolidated Balance Sheets Key Data (in $ thousand) | Indicator | September 30, 2023 | December 31, 2022 | Change Amount | Change Rate | | :----------------------- | :------------- | :------------- | :----- | :----- | | Cash and cash equivalents | $2,240 | $36,194 | $(33,954) | -93.8% | | Marketable securities, short-term | $34,440 | — | $34,440 | N/A | | Accounts receivable, net | $20,358 | $15,816 | $4,542 | 28.7% | | Inventory, net | $57,437 | $24,915 | $32,522 | 130.5% | | Total assets | $143,141 | $88,078 | $55,063 | 62.5% | | Total liabilities | $67,314 | $56,630 | $10,684 | 18.9% | | Stockholders' equity (deficit) | $75,827 | $(55,692) | $131,519 | N/A | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) For the three months ended September 30, 2023, revenue decreased by **25%**, but net income reached **$29.1 million** due to derivative liability fair value changes; for the nine months, revenue grew by **170%**, with net income of **$13.8 million** Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Key Data (in $ thousand, except per share data) | Indicator | September 30, 2023 (3 months) | September 30, 2022 (3 months) | Change Amount (3 months) | Change Rate (3 months) | September 30, 2023 (9 months) | September 30, 2022 (9 months) | Change Amount (9 months) | Change Rate (9 months) | | :----------------------- | :--------------------- | :--------------------- | :-------------- | :-------------- | :--------------------- | :--------------------- | :-------------- | :-------------- | | Revenue, net | $17,104 | $22,824 | $(5,720) | -25.1% | $135,988 | $50,382 | $85,606 | 170.0% | | Cost of revenues | $12,946 | $16,236 | $(3,290) | -20.3% | $87,555 | $35,579 | $51,976 | 146.1% | | Gross profit | $4,158 | $6,588 | $(2,430) | -36.9% | $48,433 | $14,803 | $33,630 | 227.2% | | Total operating expenses | $15,376 | $8,681 | $6,695 | 77.1% | $43,166 | $17,858 | $25,308 | 141.7% | | Operating income (loss) | $(11,218) | $(2,093) | $(9,125) | -435.9% | $5,267 | $(3,055) | $8,322 | N/A | | Other income (expense), net | $(51,236) | $328 | $(51,564) | N/A | $(8,552) | $4,885 | $(13,437) | N/A | | Income tax expense | $10,962 | — | $10,962 | N/A | $29 | — | $29 | N/A | | Net income (loss) | $29,056 | $(2,421) | $31,477 | N/A | $13,790 | $(7,940) | $21,730 | N/A | | Basic net income per share | $0.50 | $(0.92) | $1.42 | N/A | $0.19 | $(2.51) | $2.70 | N/A | | Diluted net income per share | $(0.27) | $(0.92) | $0.65 | N/A | $0.04 | $(2.51) | $2.55 | N/A | [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) As of September 30, 2023, stockholders' equity transitioned from a **$55.7 million** deficit to a **$75.8 million** positive balance, driven by the business combination's conversion of preferred stock and increased additional paid-in capital Stockholders' Equity (Deficit) Changes (in $ thousand) | Indicator | September 30, 2023 | December 31, 2022 | | :----------------------- | :------------- | :------------- | | Common stock | $6 | $1 | | Additional paid-in capital | $136,983 | $6,522 | | Accumulated deficit | $(61,006) | $(62,215) | | Accumulated other comprehensive loss | $(156) | — | | Total stockholders' equity (deficit) | $75,827 | $(55,692) | - The business combination resulted in the conversion of convertible preferred stock into common stock and an increase in additional paid-in capital[24](index=24&type=chunk) - As of September 30, 2023, all convertible preferred stock had been converted into common stock, with no preferred stock outstanding[20](index=20&type=chunk)[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, operating cash outflow increased to **$29.4 million**, investing cash outflow significantly rose to **$40.9 million**, and financing cash inflow decreased to **$34.8 million**, leading to a net decrease in cash of **$35.5 million** Condensed Consolidated Statements of Cash Flows Key Data (in $ thousand) | Cash Flow Activity | September 30, 2023 (9 months) | September 30, 2022 (9 months) | Change Amount | Change Rate | | :----------------------- | :--------------------- | :--------------------- | :----- | :----- | | Net cash from operating activities | $(29,379) | $(13,248) | $(16,131) | -121.8% | | Net cash from investing activities | $(40,919) | $(662) | $(40,257) | -6081.1% | | Net cash from financing activities | $34,821 | $49,987 | $(15,166) | -30.3% | | Net increase (decrease) in cash and restricted cash | $(35,477) | $36,077 | $(71,554) | -198.3% | | Cash and restricted cash, end of period | $2,240 | $43,551 | $(41,311) | -94.9% | - The increase in cash outflow from operating activities was primarily due to increased inventory purchases, lower sales volume in the third quarter, and an increase in days sales outstanding[225](index=225&type=chunk) - The significant increase in cash outflow from investing activities was mainly due to purchases of marketable securities and property and equipment, partially offset by proceeds from sales and maturities of marketable securities[226](index=226&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The financial statement notes provide detailed disclosures on the company's operations, accounting policies, business combinations, EPS, fair value of financial instruments, revenue, debt, commitments, equity, leases, goodwill, intangibles, and income taxes, also explaining accounting choices as an emerging growth company [1. Nature of Operations](index=12&type=section&id=1.%20Nature%20of%20Operations) Tigo Energy, Inc. and its subsidiaries provide solar and energy storage solutions, including MLPE and EI solutions, to maximize energy output and enhance safety, with its business combination accounted for as a reverse recapitalization - The company provides solar and energy storage solutions, including MLPE and EI solutions, to maximize energy output and enhance safety[35](index=35&type=chunk) - The company is headquartered in Campbell, with offices in Europe, Asia, Australia, and the Middle East[35](index=35&type=chunk) - The company's business combination with ROCG was accounted for as a reverse recapitalization, with ROCG considered the acquired entity[38](index=38&type=chunk) [2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) As an emerging growth company, the company has opted to delay the adoption of new accounting standards, preparing its GAAP financial statements by consolidating Tigo and its subsidiaries, making necessary estimates and judgments - As an emerging growth company, the company has elected to delay the adoption of new or revised accounting standards[41](index=41&type=chunk) - Financial statements include accounts of Tigo and its wholly-owned subsidiaries in Israel, Italy, China, and Australia, with all intercompany transactions and balances eliminated[42](index=42&type=chunk) - The company has adopted new accounting standards such as ASU No. 2016-13 (CECL), ASU No. 2016-02 (Leases), and ASU No. 2020-06 (Convertible Instruments), with no significant impact on the financial statements[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) [3. Merger with Roth CH Acquisition IV Co.](index=15&type=section&id=3.%20Merger%20with%20Roth%20CH%20Acquisition%20IV%20Co.) The business combination with Roth CH Acquisition IV Co. was completed on May 23, 2023, treated as a reverse recapitalization with Legacy Tigo as the accounting acquirer, resulting in **58,144,543** common shares outstanding - The business combination was completed on May 23, 2023, and accounted for as a reverse recapitalization, with Legacy Tigo as the accounting acquirer[60](index=60&type=chunk) - Prior to the merger, all Legacy Tigo convertible preferred stock and warrants were converted into Legacy Tigo common stock[67](index=67&type=chunk) - Post-merger, the total common stock outstanding was **58,144,543 shares**[63](index=63&type=chunk) [4. Acquisition of Foresight Energy, Ltd.](index=16&type=section&id=4.%20Acquisition%20of%20Foresight%20Energy,%20Ltd.) On January 25, 2023, the company acquired **100%** of fSight for **$13.1 million**, aiming to expand intelligent energy management capabilities, which resulted in **$13.079 million** in goodwill - The company acquired **100%** of fSight, an AI-based energy intelligence software platform, on January 25, 2023[64](index=64&type=chunk) - Total consideration was **$13.1 million**, including **$11.0 million** in common stock and **$2.1 million** in contingent shares[65](index=65&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk) - The acquisition generated **$13.079 million** in goodwill, primarily attributed to anticipated synergies, the value of the assembled workforce, and management team experience[68](index=68&type=chunk)[70](index=70&type=chunk) [5. Net Income (Loss) Per Share](index=19&type=section&id=5.%20Net%20Income%20(Loss)%20Per%20Share) Basic and diluted net income (loss) per share are calculated using the two-class method, with diluted EPS equaling basic EPS during net loss periods due to anti-dilutive shares Basic and Diluted Net Income (Loss) Per Share | Indicator | September 30, 2023 (3 months) | September 30, 2022 (3 months) | September 30, 2023 (9 months) | September 30, 2022 (9 months) | | :----------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Basic net income (loss) per share | $0.50 | $(0.92) | $0.19 | $(2.51) | | Diluted net income (loss) per share | $(0.27) | $(0.92) | $0.04 | $(2.51) | | Basic weighted-average common shares | 58,408,441 | 4,908,232 | 31,070,476 | 4,852,696 | | Diluted weighted-average common shares | 68,368,758 | 4,908,232 | 40,487,517 | 4,852,696 | - During net loss periods, diluted net loss per share is the same as basic net loss per share because dilutive shares are considered anti-dilutive[77](index=77&type=chunk) [6. Fair Value of Financial Instruments](index=20&type=section&id=6.%20Fair%20Value%20of%20Financial%20Instruments) The company measures financial assets and liabilities using a three-level fair value hierarchy, holding **$38.775 million** in available-for-sale marketable securities as of September 30, 2023, with certain liabilities reclassified Fair Value Measurements as of September 30, 2023 (in $ thousand) | Indicator | Level 1 | Level 2 | Level 3 | | :----------------------- | :------ | :------ | :------ | | Cash equivalents: Money market accounts | $108 | — | — | | Marketable securities: Corporate bonds | — | $20,377 | — | | Marketable securities: U.S. agency securities | — | $18,398 | — | | Contingent share liability | $1,809 | — | — | - As of September 30, 2023, total available-for-sale marketable securities were **$38.775 million**, primarily comprising corporate bonds and U.S. agency securities[83](index=83&type=chunk) - Convertible note derivative liabilities were reclassified to equity on September 24, 2023, and recorded in additional paid-in capital[54](index=54&type=chunk)[86](index=86&type=chunk) [7. Revenue Recognition](index=22&type=section&id=7.%20Revenue%20Recognition) For the nine months ended September 30, 2023, EMEA contributed **$105.6 million** in revenue, Americas **$21.8 million**, and APAC **$8.6 million**, with deferred revenue of **$0.46 million** and product warranty liability of **$5.8 million** Net Revenue by Geographic Region (in $ thousand) | Region | September 30, 2023 (3 months) | September 30, 2022 (3 months) | September 30, 2023 (9 months) | September 30, 2022 (9 months) | | :--- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | EMEA | $10,241 | $13,999 | $105,595 | $30,861 | | Americas | $3,576 | $6,681 | $21,776 | $15,818 | | APAC | $3,287 | $2,144 | $8,617 | $3,703 | | Total | $17,104 | $22,824 | $135,988 | $50,382 | - As of September 30, 2023, the deferred revenue balance was **$0.46 million**, expected to be recognized over the next **3.2 years**[92](index=92&type=chunk) - As of September 30, 2023, product warranty liability was **$5.8 million**, an increase from **$4.351 million** on December 31, 2022[95](index=95&type=chunk) [8. Selected Financial Data](index=23&type=section&id=8.%20Selected%20Financial%20Data) As of September 30, 2023, net inventory was **$57.4 million**, primarily finished goods, with net property and equipment at **$2.8 million**, and accrued expenses increasing to **$8.7 million** due to contingent share liabilities Inventory, Net (in $ thousand) | Indicator | September 30, 2023 | December 31, 2022 | | :----------- | :------------- | :------------- | | Raw materials | $1,063 | $1,869 | | Work-in-process | — | $31 | | Finished goods | $57,448 | $23,293 | | Inventory reserve | $(1,074) | $(278) | | Inventory, net | $57,437 | $24,915 | Property and Equipment, Net (in $ thousand) | Indicator | September 30, 2023 | December 31, 2022 | | :----------------- | :------------- | :------------- | | Machinery and equipment | $5,297 | $3,881 | | Accumulated depreciation | $3,783 | $3,192 | | Property and equipment, net | $2,763 | $1,652 | - As of September 30, 2023, accrued expenses and other current liabilities were **$8.7 million**, with **$2.0 million** primarily related to contingent share liabilities from the fSight acquisition[98](index=98&type=chunk) [9. Long-Term Debt](index=24&type=section&id=9.%20Long-Term%20Debt) As of September 30, 2023, long-term debt primarily consisted of **$50.0 million** in convertible promissory notes, bearing **5.0%** annual interest and maturing on January 9, 2026, with prior notes fully repaid Long-Term Debt Composition (in $ thousand) | Indicator | September 30, 2023 | December 31, 2022 | | :----------------------- | :------------- | :------------- | | Convertible promissory notes | $50,000 | — | | Series 2022-1 notes | — | $20,833 | | Less: Unamortized debt discount and issuance costs | $(20,666) | $(191) | | Less: Current portion | — | $(10,000) | | Long-term debt, net | $29,334 | $10,642 | - The convertible promissory notes have a principal of **$50.0 million**, an annual interest rate of **5.0%**, and mature on January 9, 2026[100](index=100&type=chunk) - In January 2023, the company fully repaid the Series 2022-1 notes using proceeds from the convertible promissory notes[106](index=106&type=chunk) [10. Commitments and Contingencies](index=25&type=section&id=10.%20Commitments%20and%20Contingencies) The company has employment agreements with key personnel and may face litigation in the normal course of business, providing indemnification to directors and officers with minimal estimated fair value - The company has entered into employment agreements with key personnel, providing compensation and severance in specific circumstances[109](index=109&type=chunk) - The company may be involved in litigation or legal disputes in the normal course of business, but potential outcomes are difficult to quantify[110](index=110&type=chunk) - The company provides indemnification to its directors and officers to the extent permitted by law, but as of September 30, 2023, the estimated fair value is minimal, and no liabilities have been recognized[112](index=112&type=chunk)[113](index=113&type=chunk) [11. Common Stock and Convertible Preferred Stock](index=26&type=section&id=11.%20Common%20Stock%20and%20Convertible%20Preferred%20Stock) The company is authorized to issue **150 million** shares of common stock, with **16,296,952** shares reserved for future issuance, and all convertible preferred stock converted to common stock as of September 30, 2023 - The company is authorized to issue **150 million** shares of common stock, each with one vote[114](index=114&type=chunk) - As of September 30, 2023, **16,296,952** shares of common stock were reserved for future issuance, including for stock options, restricted stock units, L1 convertible note conversions, fSight contingent shares, and awards under the 2023 Equity Incentive Plan[115](index=115&type=chunk) - All Legacy Tigo warrants were exercised or redeemed by September 8, 2023, and all convertible preferred stock was converted into common stock in the business combination, with no preferred stock outstanding as of September 30, 2023[116](index=116&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) [12. Stock-Based Compensation](index=27&type=section&id=12.%20Stock-Based%20Compensation) The company grants stock-based compensation through equity incentive plans, with **$11.9 million** in unrecognized stock option expense and **$10.2 million** in unrecognized RSU expense as of September 30, 2023, to be recognized over **3.4** and **2.7 years**, respectively Stock-Based Compensation Expense (in $ thousand) | Expense Category | September 30, 2023 (3 months) | September 30, 2022 (3 months) | September 30, 2023 (9 months) | September 30, 2022 (9 months) | | :--------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Research and development | $180 | $67 | $292 | $79 | | Sales and marketing | $455 | $97 | $901 | $106 | | Cost of revenues | $59 | $30 | $113 | $35 | | General and administrative | $580 | $147 | $831 | $173 | | Total stock-based compensation expense | $1,274 | $341 | $2,137 | $393 | - As of September 30, 2023, unrecognized stock option compensation expense was **$11.9 million**, expected to be recognized over **3.4 years**[134](index=134&type=chunk) - As of September 30, 2023, unrecognized restricted stock unit (RSU) compensation expense was **$10.2 million**, expected to be recognized over **2.7 years**[137](index=137&type=chunk) [13. Leases](index=29&type=section&id=13.%20Leases) The company leases office space and vehicles globally, with all leases classified as operating leases, a weighted-average remaining lease term of **3.0 years**, and total future minimum lease payments of **$3.0 million** as of September 30, 2023 - All company leases are classified as operating leases, with no finance or sales-type leases[138](index=138&type=chunk) Lease-Related Information | Indicator | September 30, 2023 | December 31, 2022 | | :----------------------- | :------------- | :------------- | | Weighted-average remaining lease term (years) | 3.0 | 2.7 | | Weighted-average discount rate | 5.0% | 5.4% | Future Lease Liability Maturities (in $ thousand) | Period | Operating Leases | | :--------- | :------- | | Remainder of 2023 | $328 | | 2024 | $1,300 | | 2025 | $549 | | 2026 | $385 | | 2027 | $335 | | Thereafter | $64 | | Total | $2,961 | [14. Goodwill and Intangible Assets](index=30&type=section&id=14.%20Goodwill%20and%20Intangible%20Assets) As of September 30, 2023, goodwill totaled **$13.1 million** from the fSight acquisition, and net amortizable intangible assets were **$2.3 million**, with amortization expected over **4 to 10 years** - As of September 30, 2023, the company's goodwill balance was **$13.1 million**, primarily from the fSight acquisition[141](index=141&type=chunk) Intangible Asset Composition (in $ thousand) | Asset Class | Weighted-Average Useful Life (Years) | Gross Carrying Amount | Accumulated Amortization | Net Book Value | | :--------------- | :--------------------- | :------- | :------- | :--------- | | Patents | 6.7 | $450 | $(48) | $402 | | Customer relationships | 10.0 | $170 | $(11) | $159 | | Developed technology | 10.0 | $1,820 | $(121) | $1,699 | | Total intangible assets | | $2,440 | $(180) | $2,260 | Future Amortization Expense (in $ thousand) | Period | Amount | | :--------- | :--- | | Remainder of 2023 | $70 | | 2024 | $270 | | 2025 | $270 | | 2026 | $270 | | 2027 | $262 | | Thereafter | $1,118 | | Total | $2,260 | [15. Income Taxes](index=31&type=section&id=15.%20Income%20Taxes) In Q3 2023, the company recorded an **$11.0 million** income tax expense and a valuation allowance against U.S. federal net deferred tax assets due to significant industry outlook changes, while nine-month income tax expense was **$29 thousand** - In the third quarter of 2023, the company recorded a valuation allowance against its U.S. federal net deferred tax assets due to significant changes in industry outlook, including installer bankruptcies, order cancellations, slower installation rates, increased channel inventory, and macroeconomic slowdown[146](index=146&type=chunk) - For the three months ended September 30, 2023, income tax expense was **$11.0 million**; for the nine months, income tax expense was **$29 thousand**[148](index=148&type=chunk) - For the three months ended September 30, 2023, the effective tax rate was **27.4%**, primarily impacted by discrete tax expenses from the valuation allowance against U.S. net deferred tax assets[149](index=149&type=chunk) [16. Related Party Transactions](index=32&type=section&id=16.%20Related%20Party%20Transactions) In December 2022, a **$0.1 million** full recourse promissory note from the CEO and a former director was waived, with a similar related party note receivable existing as of September 30, 2022 - As of September 30, 2022, the company's CEO and a former director had a **$0.1 million** full recourse promissory note, which was waived in December 2022[153](index=153&type=chunk) [17. Subsequent Events](index=32&type=section&id=17.%20Subsequent%20Events) The company has evaluated subsequent events up to the financial statement issuance date and identified no material events requiring adjustment or disclosure - The company did not identify any material subsequent events requiring adjustment or disclosure[154](index=154&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition and operating results for the period ended September 30, 2023, covering its overview, recent developments, key metrics, influencing factors, and cash flow analysis [Overview](index=33&type=section&id=Overview) Tigo Energy, Inc. is a global leader in smart hardware and software solutions, enhancing safety, energy yield, and operational cost reduction for solar systems across residential, commercial, and utility-scale applications worldwide - The company is a global leader in smart hardware and software solutions, focused on enhancing the safety, energy yield, and operational cost reduction of solar systems[157](index=157&type=chunk) - The company offers Flex MLPE and solar optimizer technology, combined with intelligent cloud-based software for advanced energy monitoring and control[158](index=158&type=chunk) - The company's products are sold in over **100 countries**, covering residential, commercial, industrial, and utility systems[160](index=160&type=chunk) [Recent Developments](index=33&type=section&id=Recent%20Developments) The company recently completed the redemption of common stock warrants, with most exercised, and finalized its business combination with Roth CH Acquisition IV Co. on May 23, 2023, converting all Legacy Tigo preferred stock and warrants into common stock [Common Stock Warrant Redemption](index=33&type=section&id=Common%20Stock%20Warrant%20Redemption) The company announced the redemption of all outstanding public and private warrants on August 9, 2023, resulting in **$3.7 million** net proceeds from exercised warrants and **$0.1 million** paid for redeemed warrants - The company announced the redemption of all outstanding public and private warrants on August 9, 2023[161](index=161&type=chunk) - As of September 8, 2023, **324,546** warrants were exercised, generating **$3.7 million** in net proceeds[162](index=162&type=chunk) - The remaining unexercised warrants were redeemed, for which the company paid **$0.1 million**[162](index=162&type=chunk) [The Business Combination](index=34&type=section&id=The%20Business%20Combination) The company completed its business combination with Roth CH Acquisition IV Co. on May 23, 2023, with Legacy Tigo becoming a wholly-owned subsidiary and **58,144,543** new Tigo common shares outstanding - The business combination was completed on May 23, 2023, with Legacy Tigo becoming a wholly-owned subsidiary of ROCG[163](index=163&type=chunk)[168](index=168&type=chunk) - Prior to the merger, all Legacy Tigo preferred stock and warrants were converted into Legacy Tigo common stock[164](index=164&type=chunk) - Post-merger, ROCG was renamed Tigo Energy, Inc., with **58,144,543** new Tigo common shares outstanding[168](index=168&type=chunk) [Accounting Impact of the Business Combination](index=34&type=section&id=Accounting%20Impact%20of%20the%20Business%20Combination) The business combination was accounted for as a reverse recapitalization, with Legacy Tigo as the accounting acquirer, and the most significant financial change was the conversion of convertible preferred stock to common stock and additional paid-in capital - The business combination was accounted for as a reverse recapitalization, with Legacy Tigo considered the accounting acquirer[169](index=169&type=chunk) - ROCG's net assets were reported at historical cost, with no goodwill or other intangible assets recorded[169](index=169&type=chunk) - The most significant changes in financial position post-merger were the conversion of convertible preferred stock to common stock and additional paid-in capital[170](index=170&type=chunk) [Critical Accounting Estimates](index=35&type=section&id=Critical%20Accounting%20Estimates) Details of the company's critical accounting estimates are provided in Note 2, "Summary of Significant Accounting Policies," within the condensed consolidated financial statements - Details of critical accounting estimates are available in Note 2, "Summary of Significant Accounting Policies," to the condensed consolidated financial statements[171](index=171&type=chunk) [Public Company Costs](index=35&type=section&id=Public%20Company%20Costs) As a public company, Tigo Energy, Inc. anticipates incurring substantial additional legal, accounting, and compliance expenses, requiring increased personnel and new processes to meet regulatory requirements - The company expects to incur substantial additional legal, accounting, and compliance expenses, including for directors' and officers' liability insurance, board fees, internal control compliance, and investor relations[172](index=172&type=chunk) - The company will hire additional staff and implement new processes to meet public company requirements[172](index=172&type=chunk) [Key Operating and Financial Metrics](index=35&type=section&id=Key%20Operating%20and%20Financial%20Metrics) The company regularly reviews key operating and financial metrics such as revenue, gross profit, gross margin, operating income (loss), and net income (loss) to assess business performance, identify trends, and inform strategic decisions Key Operating and Financial Metrics (in $ thousand, except percentages) | Indicator | September 30, 2023 (3 months) | September 30, 2022 (3 months) | September 30, 2023 (9 months) | September 30, 2022 (9 months) | | :----------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Revenue, net | $17,104 | $22,824 | $135,988 | $50,382 | | Gross profit | $4,158 | $6,588 | $48,433 | $14,803 | | Gross margin | 24% | 29% | 36% | 29% | | Operating income (loss) | $(11,218) | $(2,093) | $5,267 | $(3,055) | | Net income (loss) | $29,056 | $(2,421) | $13,790 | $(7,940) | - Gross profit and gross margin are used to understand financial performance and efficiency, evaluate pricing strategies, and compare with competitors[175](index=175&type=chunk) [Key Factors that May Influence Future Results of Operations](index=35&type=section&id=Key%20Factors%20that%20May%20Influence%20Future%20Results%20of%20Operations) The company's future operating results are influenced by slowing product demand, unfavorable macroeconomic conditions, supply chain challenges, U.S. residential sales expansion, new product development, and customer acquisition strategies [Demand for Products](index=35&type=section&id=Demand%20for%20Products) Demand for the company's products has generally slowed in Europe and the U.S. due to high interest rates and net metering policy changes, leading to increased distributor and installer inventory, which is expected to adversely affect revenue for the remainder of 2023 - Demand for the company's products has generally slowed in the European and U.S. markets, primarily due to high interest rates and changes in net metering policies[177](index=177&type=chunk) - This has led to elevated inventory levels for distributors and installers[177](index=177&type=chunk) - Revenue is expected to be adversely affected for the remainder of 2023[177](index=177&type=chunk) [Unfavorable Macroeconomic and Market Conditions](index=35&type=section&id=Unfavorable%20Macroeconomic%20and%20Market%20Conditions) Global macroeconomic uncertainties, including high interest rates and inflation, may disrupt financial markets, causing customers to delay or cancel purchases and intensifying price competition, thereby adversely impacting the company's business and financial condition - Global macroeconomic and market uncertainties, including high interest rates and inflation, have caused disruptions in financial markets[178](index=178&type=chunk) - Customers may delay or cancel product and service purchases, and tightening credit markets may lead to increased price competition[178](index=178&type=chunk) - These factors may adversely impact the company's business, operating results, and financial condition[178](index=178&type=chunk) [Managing Supply Chain](index=35&type=section&id=Managing%20Supply%20Chain) The company's reliance on sole-source contract manufacturers and suppliers, particularly in Thailand and China, creates risks of supply shortages, extended lead times, and increased costs, which could harm cash flow and operating results, especially during economic slowdowns - The company relies on contract manufacturers and suppliers for component production, some of which are sole-source[179](index=179&type=chunk) - Supply chain concentration may lead to shortages, extended lead times, and increased costs, particularly in Thailand and China[179](index=179&type=chunk)[180](index=180&type=chunk) - Failure to mitigate delays and price increases could harm cash flow and operating results, and economic slowdowns may lead to increased inventory levels[180](index=180&type=chunk) [Expansion of U.S. Residential Sales](index=36&type=section&id=Expansion%20of%20U.S.%20Residential%20Sales) Future revenue growth depends partly on expanding products and services in the U.S. residential market, where the company plans to partner with solar providers and evaluate new international opportunities, as current North American revenue is primarily from commercial and industrial sectors - The company's future revenue growth partly depends on expanding products and services in the U.S. residential market[181](index=181&type=chunk) - Currently, North American revenue primarily comes from commercial and industrial markets[181](index=181&type=chunk) - The company plans to expand its presence in the residential market by partnering with U.S. solar providers and continues to evaluate and invest in new international market opportunities[181](index=181&type=chunk) [Expansion of New Products and Services](index=36&type=section&id=Expansion%20of%20New%20Products%20and%20Services) The company has invested significantly in R&D and sales and marketing to enhance existing products and plans to continue developing its Energy Intelligence (EI) solutions, which saw revenue grow to **$12.1 million** in the first nine months of 2023 - The company has invested significantly in R&D and sales and marketing to expand the capabilities of existing products and solutions[182](index=182&type=chunk) - The company plans to continue developing and promoting its Energy Intelligence (EI) solutions[182](index=182&type=chunk) EI Solutions Revenue (in $ million) | Period | September 30, 2023 (9 months) | September 30, 2022 (9 months) | Change Amount | Change Rate | | :--- | :--------------------- | :--------------------- | :----- | :----- | | EI solutions revenue | $12.1 | $1.0 | $11.1 | 1110% | [Adding New Customers and Expansion of Sales with Existing Customers](index=36&type=section&id=Adding%20New%20Customers%20and%20Expansion%20of%20Sales%20with%20Existing%20Customers) The company aims to acquire new customers in the U.S. residential market through partnerships and industry collaborations, while also investing in sales and marketing to expand coverage among existing U.S. residential and European customers - The company plans to target new customers in the U.S. residential market by partnering with residential solar providers[183](index=183&type=chunk) - The company primarily acquires new customers through collaboration with industry partners and distributors[183](index=183&type=chunk) - The company expects to invest in sales and marketing to expand coverage among U.S. residential and European customers[183](index=183&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section analyzes the company's operating results for the three and nine months ended September 30, 2023, detailing changes in revenue, cost of revenues, gross profit, and various operating expenses, along with their primary drivers [Revenue, net](index=36&type=section&id=Revenue,%20net) For the three months ended September 30, 2023, net revenue decreased by **25%** due to delayed orders and macroeconomic slowdown, while for the nine months, it increased by **170%** driven by market acceptance and marketing efforts Net Revenue (in $ thousand, except percentages) | Period | September 30, 2023 (3 months) | September 30, 2022 (3 months) | Change Amount | Change Rate | | :--- | :--------------------- | :--------------------- | :----- | :----- | | Revenue, net | $17,104 | $22,824 | $(5,720) | -25% | | Period | September 30, 2023 (9 months) | September 30, 2022 (9 months) | Change Amount | Change Rate | | :--- | :--------------------- | :--------------------- | :----- | :----- | | Revenue, net | $135,988 | $50,382 | $85,606 | 170% | - Three-month revenue decline was primarily due to customer requests for delayed order delivery, order cancellations, and macroeconomic slowdown[185](index=185&type=chunk) - Nine-month revenue growth was primarily due to increased sales volume, improved product market acceptance, and increased marketing activities[186](index=186&type=chunk) Net Revenue Change by Geographic Region (in $ thousand, except percentages) | Region | September 30, 2023 (3 months) | September 30, 2022 (3 months) | Change Amount | Change Rate | September 30, 2023 (9 months) | September 30, 2022 (9 months) | Change Amount | Change Rate | | :--- | :--------------------- | :--------------------- | :----- | :----- | :--------------------- | :--------------------- | :----- | :----- | | EMEA | $10,241 | $13,999 | $(3,758) | -27% | $105,595 | $30,861 | $74,734 | 242% | | Americas | $3,576 | $6,681 | $(3,105) | -46% | $21,776 | $15,818 | $5,958 | 38% | | APAC | $3,287 | $2,144 | $1,143 | 53% | $8,617 | $3,703 | $4,914 | 133% | [Cost of Revenues and Gross Profit](index=38&type=section&id=Cost%20of%20Revenues%20and%20Gross%20Profit) For the three months ended September 30, 2023, cost of revenues decreased by **20%**, gross profit by **37%**, and gross margin fell to **24%**; for the nine months, cost of revenues grew by **146%**, gross profit by **227%**, and gross margin rose to **36%** Cost of Revenues and Gross Profit (in $ thousand, except percentages) | Indicator | September 30, 2023 (3 months) | September 30, 2022 (3 months) | Change Amount | Change Rate | September 30, 2023 (9 months) | September 30, 2022 (9 months) | Change Amount | Change Rate | | :----------- | :--------------------- | :--------------------- | :----- | :----- | :--------------------- | :--------------------- | :----- | :----- | | Cost of revenues | $12,946 | $16,236 | $(3,290) | -20% | $87,555 | $35,579 | $51,976 | 146% | | Gross profit | $4,158 | $6,588 | $(2,430) | -37% | $48,433 | $14,803 | $33,630 | 227% | | Gross margin | 24% | 29% | -5% | | 36% | 29% | 6% | | - Three-month gross margin decline was primarily due to increased inventory write-off expenses, partially offset by product cost reductions and lower freight costs[192](index=192&type=chunk) - Nine-month gross margin increase was primarily due to product cost reductions and lower freight costs[193](index=193&type=chunk) [Research and Development](index=38&type=section&id=Research%20and%20Development) For the three and nine months ended September 30, 2023, R&D expenses increased by **50%** and **58%**, respectively, primarily due to higher personnel costs and headcount growth, with fluctuations expected based on development activities Research and Development Expenses (in $ thousand, except percentages) | Period | September 30, 2023 (3 months) | September 30, 2022 (3 months) | Change Amount | Change Rate | September 30, 2023 (9 months) | September 30, 2022 (9 months) | Change Amount | Change Rate | | :--------------- | :--------------------- | :--------------------- | :----- | :----- | :--------------------- | :--------------------- | :----- | :----- | | Research and development expenses | $2,425 | $1,621 | $804 | 50% | $7,063 | $4,476 | $2,587 | 58% | | Percentage of net revenue | 14% | 7% | | | 5% | 9% | | | - R&D expense increase was primarily due to increased personnel costs and headcount growth[195](index=195&type=chunk)[196](index=196&type=chunk) [Sales and Marketing](index=39&type=section&id=Sales%20and%20Marketing) For the three and nine months ended September 30, 2023, sales and marketing expenses increased by **86%** and **111%**, respectively, driven by higher personnel costs, stock-based compensation, and travel expenses to support company growth Sales and Marketing Expenses (in $ thousand, except percentages) | Period | September 30, 2023 (3 months) | September 30, 2022 (3 months) | September 30, 2023 (9 months) | September 30, 2022 (9 months) | | :--------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Sales and marketing expenses | $5,601 | $3,007 | $15,536 | $7,348 | | Percentage of net revenue | 33% | 13% | 11% | 15% | - Sales and marketing expense increase was primarily due to increased personnel costs, stock-based compensation expense, and travel expenses[198](index=198&type=chunk)[199](index=199&type=chunk) [General and Administrative](index=39&type=section&id=General%20and%20Administrative) For the three and nine months ended September 30, 2023, general and administrative expenses increased by **81%** and **241%**, respectively, driven by higher credit loss allowances, personnel costs, legal fees, and M&A-related expenses General and Administrative Expenses (in $ thousand, except percentages) | Period | September 30, 2023 (3 months) | September 30, 2022 (3 months) | September 30, 2023 (9 months) | September 30, 2022 (9 months) | | :--------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | General and administrative expenses | $7,350 | $4,053 | $20,567 | $6,034 | | Percentage of net revenue | 43% | 18% | 15% | 12% | - Three-month increase was primarily due to higher allowance for credit losses, increased personnel and facility costs, and higher legal fees[201](index=201&type=chunk) - Nine-month increase was primarily due to M&A-related business combination expenses, legal fees, increased allowance for credit losses, increased personnel and facility costs, and higher insurance expenses[202](index=202&type=chunk) [Other Expenses, Net](index=40&type=section&id=Other%20Expenses,%20Net) For the three and nine months ended September 30, 2023, other expenses, net, significantly decreased (turned into income) due to a substantial gain from derivative liability fair value changes, which were reclassified to equity Other Expenses, Net (in $ thousand) | Indicator | September 30, 2023 (3 months) | September 30, 2022 (3 months) | Change Amount | Change Rate | September 30, 2023 (9 months) | September 30, 2022 (9 months) | Change Amount | Change Rate | | :--------------------------------------- | :--------------------- | :--------------------- | :----- | :----- | :--------------------- | :--------------------- | :----- | :----- | | Fair value change of preferred stock warrants and contingent share liability | $(2,977) | $(45) | $(2,932) | 6516% | $143 | $(37) | $180 | -486% | | Fair value change of derivative liability | $(50,498) | — | $(50,498) | 100% | $(12,247) | — | $(12,247) | 100% | | Loss on debt extinguishment | — | — | — | —% | $171 | $3,613 | $(3,442) | -95% | | Interest expense | $2,875 | $392 | $2,483 | 633% | $5,240 | $1,241 | $3,999 | 322% | | Other income (expense), net | $(636) | $(19) | $(617) | 3247% | $(1,859) | $68 | $(1,927) | -2834% | | Total other expenses, net | $(51,236) | $328 | $(51,564) | -15721% | $(8,552) | $4,885 | $(13,437) | -275% | - Fair value changes in derivative liabilities resulted in significant gains for both three-month and nine-month periods, with the liability reclassified to equity on September 24, 2023[206](index=206&type=chunk)[210](index=210&type=chunk) - Interest expense significantly increased due to interest on convertible promissory notes and amortization of deferred debt issuance costs[207](index=207&type=chunk)[212](index=212&type=chunk) - Other income, net, increased due to interest income from higher cash and marketable securities holdings[208](index=208&type=chunk)[213](index=213&type=chunk) [Non-GAAP Financial Measures](index=41&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes Adjusted EBITDA as a non-GAAP financial metric to assess business operations and financial performance, facilitating comparisons within the industry by excluding specific non-operating and non-cash items - Adjusted EBITDA is defined as net income (loss) excluding interest and other expenses, net, income tax expense, depreciation and amortization, stock-based compensation, and M&A expenses[216](index=216&type=chunk) - The company uses Adjusted EBITDA as an internal performance measure to achieve more relevant comparisons of operating results[215](index=215&type=chunk)[216](index=216&type=chunk) Adjusted EBITDA (in $ thousand, except percentages) | Indicator | September 30, 2023 (3 months) | September 30, 2022 (3 months) | September 30, 2023 (9 months) | September 30, 2022 (9 months) | | :----------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net income (loss) | $29,056 | $(2,421) | $13,790 | $(7,940) | | Adjustments: | | | | | | Total other income (expense), net | $(51,236) | $328 | $(8,552) | $4,885 | | Income tax expense | $10,962 | — | $29 | — | | Depreciation and amortization | $284 | $178 | $820 | $404 | | Stock-based compensation | $1,274 | $341 | $2,137 | $393 | | M&A expenses | $152 | $2,000 | $4,399 | $2,000 | | Adjusted EBITDA (loss) | $(9,508) | $426 | $12,623 | $(258) | [Liquidity, Capital Resources, and Going Concern](index=41&type=section&id=Liquidity,%20Capital%20Resources,%20and%20Going%20Concern) As of September 30, 2023, the company's liquidity sources include cash, marketable securities, debt financing, and operating income, with an accumulated deficit of **$61.0 million**, and management expects existing resources to sustain operations until November 2024, though additional financing may be required - As of September 30, 2023, the company's primary liquidity sources were cash and cash equivalents, marketable securities, debt financing, and operating revenues[218](index=218&type=chunk) - As of September 30, 2023, the company's accumulated deficit was **$61.0 million**[220](index=220&type=chunk) - Management believes existing cash, cash equivalents, and marketable securities, along with a growing customer base and appropriate expenditure management, are sufficient to sustain operations until November 2024, but cannot guarantee that additional financing will not be needed[222](index=222&type=chunk) [Cash Flows](index=42&type=section&id=Cash%20Flows) For the nine months ended September 30, 2023, operating cash outflow increased by **$16.1 million**, investing cash outflow rose by **$40.3 million**, and financing cash inflow decreased by **$15.2 million**, primarily due to inventory purchases, marketable securities, and debt repayment Cash Flow Summary (in $ thousand) | Cash Flow Activity | September 30, 2023 (9 months) | September 30, 2022 (9 months) | | :----------------------- | :--------------------- | :--------------------- | | Net cash from operating activities | $(29,379) | $(13,248) | | Net cash from investing activities | $(40,919) | $(662) | | Net cash from financing activities | $34,821 | $49,987 | | Net increase (decrease) in cash and restricted cash | $(35,477) | $36,077 | - Cash outflow from operating activities increased by **$16.1 million**, primarily due to increased inventory purchases, lower sales volume in the third quarter, and an increase in days sales outstanding[225](index=225&type=chunk) - Cash outflow from investing activities increased by **$40.3 million**, mainly for purchasing marketable securities and property and equipment[226](index=226&type=chunk) - Cash inflow from financing activities decreased by **$15.2 million**, primarily due to **$50.0 million** in proceeds from convertible promissory notes and **$3.7 million** from warrant redemptions, partially offset by the repayment of **$20.8 million** in Series 2022-1 notes[227](index=227&type=chunk) [Contractual Obligations](index=43&type=section&id=Contractual%20Obligations) The company's contractual obligations primarily include convertible promissory notes, operating lease obligations, and inventory component purchases, with no material changes since the proxy statement/prospectus filed on April 26, 2023 - The company's contractual obligations primarily include convertible promissory notes, operating lease obligations, and inventory component purchases[230](index=230&type=chunk) - As of September 30, 2023, there were no material changes compared to the disclosures in the proxy statement/prospectus filed on April 26, 2023[230](index=230&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk under Rule 12b-2 of the Securities Exchange Act of 1934 - As a "smaller reporting company," the company is not required to provide quantitative and qualitative disclosures about market risk[231](index=231&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) As of September 30, 2023, the company's disclosure controls and procedures were deemed ineffective due to a material internal control weakness related to convertible promissory notes, prompting a remediation plan, though prior weaknesses were remediated by June 30, 2023 [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) As of September 30, 2023, the company's management assessed its disclosure controls and procedures as ineffective due to identified material weaknesses in internal control - As of September 30, 2023, the company's disclosure controls and procedures were deemed ineffective[233](index=233&type=chunk) - The ineffectiveness is due to identified material weaknesses in internal control related to the accounting treatment of complex financial instruments[233](index=233&type=chunk)[234](index=234&type=chunk) [Material Weakness in Internal Control over Financial Reporting](index=43&type=section&id=Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) The company has a material weakness in internal control over financial reporting concerning the accounting treatment of conversion features in convertible promissory notes, yet believes its unaudited financial statements are fairly presented in accordance with GAAP - A material weakness exists related to the accounting treatment of embedded conversion features in convertible promissory notes[234](index=234&type=chunk) - Despite the material weakness, the company believes the unaudited financial statements in this quarterly report are fairly presented in all material respects in accordance with GAAP[234](index=234&type=chunk) [Remediation and Plan for Remediation of the Material Weakness in Internal Control over Financial Reporting](index=43&type=section&id=Remediation%20and%20Plan%20for%20Remediation%20of%20the%20Material%20Weakness%20in%20Internal%20Control%20over%20Financial%20Reporting) Management has initiated a remediation plan, including engaging external consultants, formalizing risk assessment, evaluating additional accounting personnel, and enhancing access to accounting literature, with prior material weaknesses remediated by June 30, 2023 - Remediation measures include engaging external consultants, formalizing risk assessment procedures, evaluating additional accounting and finance personnel, and enhancing accounting and finance personnel access to accounting literature and research materials[236](index=236&type=chunk)[237](index=237&type=chunk) - Previous material weaknesses regarding accrued expenses and cash flow statements were remediated by June 30, 2023[238](index=238&type=chunk) [Changes in Internal Control over Financial Reporting](index=44&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Aside from the disclosed remediation efforts and remediated material weaknesses, no other significant changes in internal control over financial reporting occurred during the three months ended September 30, 2023 - Except for the disclosed remediation measures and remediated material weaknesses, no other significant changes in the company's internal control over financial reporting occurred[239](index=239&type=chunk) [Limitations on the Effectiveness of Disclosure Controls and Procedures](index=44&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) Management acknowledges that any control system provides only reasonable, not absolute, assurance, as inherent limitations include judgment errors, simple mistakes, individual acts, collusion, or management override - Any control system can only provide reasonable, not absolute, assurance that its objectives will be met[240](index=240&type=chunk) - Control systems have inherent limitations, including the possibility of judgment errors, simple errors or mistakes, and individual acts, collusion, or management override of controls[240](index=240&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) The company may be involved in various claims, lawsuits, and legal proceedings in the normal course of business, with uncertain outcomes that could lead to damages, fines, or non-monetary sanctions - The company may be involved in various claims, lawsuits, and other legal and administrative proceedings in the normal course of business[242](index=242&type=chunk) - These proceedings vary in complexity, and their outcomes are uncertain, potentially leading to damages, fines, or non-monetary sanctions[242](index=242&type=chunk) - The company will actively def