FTC Solar Inc
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
FTCI$1.56+21.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0000950170-24-093388
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000950170-24-125440
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 149 previous paragraphs and 147 current paragraphs.
88 unchanged; 52 reworded; 6 added; 6 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 22 previous and 22 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
Project Timing. Our level of manufacturing and logistics activity, and thus our revenue, can be significantly impacted by delays or changes in the expected timing of customer project development activity. In recent periods our customers have encountered delays in beginning or continuing project development caused by interconnection issues, including permit delays, equipment shortages, obtaining project financing at acceptable levels and addressing uncertainty in changes in government regulations, as described further below. Due to our limited number of large customers, such delays in project development activity can have a material impact on our quarterly and annual consolidated financial results.
Current report
Interest income (expense), net
Current report
Results of Operations - Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
We had positive gross margin for the nine months ended September 30, 2023 largely due to (i) sufficiently high production activity levels allowing us to cover certain relatively fixed overhead costs, (ii) a mix of higher margin product revenue as compared to service revenue, (iii) good product ASP, as well as (iv) improvements in our direct costs due to our design-to-value efforts, low levels of remediation and warranty costs, and reduced overhead spending compared to prior periods resulting from our other cost control efforts, including headcount reductions.
Current report
Management plans to address the liquidity needs of the Company by (i) executing the aforementioned $15 million issuance of long-term senior secured notes, (ii) utilizing receipt of additional contingent earnout payments from our investment in Dimension that we sold in 2021, (iii) implementing additional cost savings steps, which could impact the level of services currently provided by third parties and our existing headcount, and (iv) utilizing capacity available for future sales of our common stock under the ATM program. We believe execution of these plans will allow us to fund our operations for at least one year from the date of issuance of our condensed consolidated financial statements.
Current report
The successful execution of these plans is subject to various risks and uncertainties. These include, but are not limited to, market conditions, the Company's ability to achieve projected cost savings and revenue targets and access to financing on favorable terms. There can be no assurance that these plans will be realized as anticipated and actual results may differ materially from those projected.
Removed paragraphs (6)
Previous report
Results of Operations - Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
We had positive gross margin for the six months ended June 30, 2023 due to (i) better product ASP, (ii) improvements in our direct costs due to our design-to-value efforts and the impact of our cost control initiatives on indirect costs, (iii) higher production activity and (iv) positive margins on our shipping and logistics services.
Previous report
Interest expense, net
Previous report
Similar to previous periods, we continue to evaluate additional opportunities in 2024 to address existing market challenges, our cost structure and our historical use of cash. In 2023, (i) we introduced a new mounting solution to support the installation and use of U.S.-manufactured thin-film modules, (ii) Pioneer, our 1P solar tracker solution, became certified, and (iii) we introduced SUNOPS, a cloud-based, tracker agnostic solar asset monitoring solution allowing asset owners and managers to evaluate the operation and performance of their solar deployments. We have continued to enhance our customer offerings in 2024, including the launch of our Automated Hail Stow Solution which is aimed at minimizing solar panel damage caused by hail storms. As described elsewhere in this Quarterly Report, we also have recently added experienced and accomplished leadership talent to head our North America and International sales organizations and have named a new President and Chief Executive Officer with significant experience in the solar industry who will join us on August 19, 2024.
Previous report
Management believes that our existing cash on hand, as well as the continuing impact of certain of the actions described within this memo and our expectations of (i) the expected timing of future customer project activity, including activity related to certain large project awards previously received, and (ii) the positive results in recent periods from our efforts to increase our direct product margins and lower our cost structure, will allow us to grow profitably and generate positive cash flow from operations during the next twelve months in amounts that will be sufficient, along with our other available resources such as our existing working capital and, the remaining capacity available for future sales of our common stock under our ATM program, to fund our operations for at least one year from the date of issuance of our condensed consolidated financial statements.
Previous report
While there are already many underlying drivers of growth in the solar industry, the expected positive impact on demand for our products from these drivers of growth could take longer than expected to occur because the timing of construction activity by existing customers and solar project developers can be uncertain. As an example, we have experienced in recent periods customer delays caused by interconnection issues, equipment shortages and the timing and ability of obtaining financing at acceptable levels. In addition, domestic and international market conditions, including differences between margins on international and U.S. projects, could deteriorate significantly from what we currently expect, and regulatory and international trade policies could become more stringent as a result of (i) findings from an ongoing Solar Circumvention Investigation in response to a petition by Auxin Solar, Inc. of claims related to alleged circumvention of AD/CVD by solar manufacturers in certain Southeast Asian countries, (ii) enforcement of the UFLPA passed by the U.S. Congress and signed into law by President Biden on December 23, 2021, by CBP, and (iii) other factors, which may result in a need for us to issue additional debt or obtain new equity financing to adequately fund our existing operations beyond the next twelve months. We continue to actively explore options to obtain additional sources of capital through the issuance of new debt, asset financing or other potential measures for our longer-term needs. However, we may be unable to obtain any desired additional financing on terms favorable to us, or at all, depending on market and other conditions, which could result in curtailment of our current operations and our ability to further invest in our products and new technology. The ability to raise additional financing depends on numerous factors, some of which are outside of our control, including macroeconomic factors such as the impact of inflation, the level of interest rates, supply chain or other effects from the ongoing conflicts in the Ukraine and the Middle East, general market conditions, the health of financial institutions (including recent bankruptcies and financial difficulties involving certain regional banks and related impacts that have occurred and continue to occur in the banking industry), investors' and lenders' assessments of our prospects and the prospects of the solar industry in general and the ability of our common stock to continue to trade in active markets.
Reworded paragraphs (52)
Previous wording
Government Regulations. Changes in the U.S. trade environment, including the imposition of import tariffs, AD/CVD investigations and the UFLPA, which became effective in June 2022, can have an impact on the timing of developer projects. The UFLPA resulted in new rules for module importers and reviews by CBP. There is currently uncertainty in the market around achieving full compliance with UFLPA, whether related to sufficient traceability of materials or other factors. Escalating trade tensions, particularly between the United States and China, have led to increased tariffs and trade restrictions, including tariffs applicable to certain raw materials and components for our products. We have taken measures with the intention of mitigating the effect of tariffs and the impact of AD/CVD and UFLPA on our business by reducing our reliance on China and enhancing our U.S.-based supply chain, including through our investment in Alpha Steel, as described further in Note 3, "Equity method investment" in Part I, Item 1 of this Form 10-Q. As an example, we have reduced our reliance on suppliers in China in terms of meeting our supply chain requirements from 90% in 2019 to less than 20% as of the date of this Quarterly Report. As of June 30, 2024, we have qualified suppliers outside of China for certain of our commodities and we continue to work to have second-source capability for all Chinese-manufactured components to help reduce the extent to which our supply chain for U.S.-based projects is subject to existing tariffs and to be able to quickly address potential future regulatory and governmental policy changes. We have entered into partnerships with manufacturers based in the United States, Hong Kong, India, South Africa, Spain, Turkey, Thailand and Vietnam to diversify our supply chain and optimize costs. On June 6, 2022, President Biden issued an Executive Order allowing U.S. solar deployers to import solar modules and cells from Cambodia, Malaysia, Thailand and Vietnam free from certain duties for 24 months, along with other incentives designed to accelerate U.S. domestic production of clean energy technologies. However, on December 29, 2023, Auxin Solar, Inc. and Concept Clean Energy, Inc. filed suit in the U.S. Court of International Trade challenging the legal basis for the moratorium and implementing regulations. If the suit proves successful, solar module importers could owe retroactive duties on goods that have already cleared customs.
Current wording
Government Regulations. Changes in the U.S. trade environment, including the imposition of import tariffs, increases in existing tariffs, AD/CVD investigations and the UFLPA, which became effective in June 2022, can have an impact on the timing of developer projects. The UFLPA resulted in new rules for module importers and reviews by CBP. There is currently uncertainty in the market around achieving full compliance with UFLPA, whether related to sufficient traceability of materials or other factors. Escalating trade tensions, particularly between the United States and China, have led to increased tariffs and trade restrictions, including tariffs applicable to certain raw materials and components for our products. We have taken measures with the intention of mitigating the effect of tariffs and the impact of AD/CVD and UFLPA on our business by reducing our reliance on China and enhancing our U.S.-based supply chain, including through our investment in Alpha Steel, as described further in Note 3, "Equity method investment" in Part I, Item 1 of this Form 10-Q. As an example, we have reduced our reliance on suppliers in China in terms of meeting our supply chain requirements from 90% in 2019 to less than 20% as of the date of this Quarterly Report. As of September 30, 2024, we have qualified suppliers outside of China for certain of our commodities and we continue to work to have second-source capability for all Chinese-manufactured components to help reduce the extent to which our supply chain for U.S.-based projects is subject to existing tariffs and to be able to quickly address potential future regulatory and governmental policy changes. We have entered into partnerships with manufacturers based in the United States, India, South Africa, Spain, Turkey, Thailand and Vietnam to diversify our supply chain and optimize costs. On June 6, 2022, President Biden issued an Executive Order allowing U.S. solar deployers to import solar modules and cells from Cambodia, Malaysia, Thailand and Vietnam free from certain duties for 24 months, along with other incentives designed to accelerate U.S. domestic production of clean energy technologies. However, on December 29, 2023, Auxin Solar, Inc. and Concept Clean Energy, Inc. filed suit in the U.S. Court of International Trade challenging the legal basis for the moratorium and implementing regulations. If the suit proves successful, solar module importers could owe retroactive duties on goods that have already cleared customs.
Previous wording
The most notable incentive program impacting our U.S. business has historically been the ITC for solar energy projects, which allows taxpayers to offset their U.S. federal income tax liability by a certain percentage of their cost basis in solar energy systems placed in service for commercial use. The Inflation Reduction Act of 2022, passed by the U.S. Congress and signed into law by President Biden on August 16, 2022, expanded and extended the tax credits and other tax benefits available to solar energy projects and the solar energy supply chain. ITCs have been extended for such projects through at least 2032 and, depending on the location of a particular project and its ability to satisfy certain labor and domestic content requirements, the ITC percentage can range between 30% and 50%. U.S. manufacturers of specific solar components are now eligible to claim production tax credits as an alternative to the ITC. Implementing regulations for this law are, in certain cases, still being finalized and the impact of these regulations continue to be evaluated by developers of new solar projects and manufacturers of solar components. Our investment in and commitments made to Alpha Steel will allow us to obtain certain benefits as a result of this new production tax credit program. We believe this law will bolster and extend future demand for our products in the United States, however as the implementing regulations for this law are not completely finalized, this creates uncertainty about the extent of its impact on our Company and the solar energy industry.
Current wording
The most notable incentive program impacting our U.S. business has historically been the ITC for solar energy projects, which allows taxpayers to offset their U.S. federal income tax liability by a certain percentage of their cost basis in solar energy systems placed in service for commercial use. The Inflation Reduction Act of 2022, passed by the U.S. Congress and signed into law by President Biden on August 16, 2022, expanded and extended the tax credits and other tax benefits available to solar energy projects and the solar energy supply chain. ITCs have been extended for such projects through at least 2032 and, depending on the location of a particular project and its ability to satisfy certain labor and domestic content requirements, the ITC percentage can range between 30% and 50%. U.S. manufacturers of specific solar components are now eligible to claim production tax credits as an alternative to the ITC. Implementing regulations for this law are, in certain cases, still being finalized and the impact of these regulations continue to be evaluated by developers of new solar projects and manufacturers of solar components. We believe our investment in and commitments made to Alpha Steel will allow us to obtain certain benefits as a result of the production tax credit program, subject to our level of purchases from Alpha Steel. We believe this law will bolster and extend future demand for our products in the United States, however as the implementing regulations for this law are not completely finalized, this creates uncertainty about the extent of its impact on our Company and the solar energy industry.
Previous wording
We have taken steps to expand and diversify our manufacturing partnerships and have adjusted our modes of transportation to mitigate the impact of headwinds that might arise in the global supply chain and logistics markets. As an example, we modified our ocean freight from previously using charter shipments to now using containerized shipments as costs in the container market began to decrease starting in 2022, but more recently have begun to increase. However, we have been able to mitigate some of this increase as a result of increasing our domestic production capabilities. We continue to monitor the logistics markets and will continue to evaluate our use of various modes of transportation when warranted to optimize our transportation costs. Additionally, from February 2022 to September 2023, we utilized a related-party consulting firm to support us in making improvements to our processes and performance in various areas, including design, sourcing, logistics, pricing, software and our distributed generation business. For further information regarding this consulting firm, see Note 16, "Related party transactions" included in our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report with regard to the related-party consulting firm. We also intend to maintain a sharp focus on our design-to-value initiative to continue to improve margins by reducing manufacturing and material costs of our products.
Current wording
We have taken steps to expand and diversify our manufacturing partnerships and have adjusted our modes of transportation to mitigate the impact of headwinds that might arise in the global supply chain and logistics markets. As an example, we modified our ocean freight from previously using charter shipments to now using containerized shipments as costs in the container market began to decrease starting in 2022, but more recently have begun to increase. However, we have been able to mitigate some of this increase as a result of increasing our domestic production capabilities. We continue to monitor the logistics markets and will continue to evaluate our use of various modes of transportation when warranted to optimize our transportation costs. Additionally, from February 2022 to September 2023, we utilized a related-party consulting firm to support us in making improvements to our processes and performance in various areas, including design, sourcing, logistics, pricing, software and our distributed generation business. For further information regarding this consulting firm, see Note 16, "Related party transactions" included in our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. We also intend to maintain a sharp focus on our design-to-value initiative to continue to improve margins by reducing manufacturing and material costs of our products.
Previous wording
Megawatts ("MW") Produced and MW Shipped and Average Selling Price ("ASP"). The primary operating metrics we use to evaluate our sales performance and to track market acceptance of our products are the change in quantity of MW produced and MW shipped from period to period. MW are measured for each individual project and are calculated based on the expected output of that project once installed and fully operational. We also utilize metrics related to price and cost of goods sold per watt, including the change in ASP from period to period and cost per watt. ASP is calculated by dividing product and service revenue by total watts produced or shipped and product and service cost per watt is calculated by dividing product or service costs of goods sold by total watts produced or shipped. These metrics enable us to evaluate trends in pricing, manufacturing and logistics costs and profitability. Events such as the COVID-19 pandemic, global inflation rates and international conflicts have in the past impacted and may continue to impact the U.S. economy, global supply chains, and our business. These impacts can cause significant shipping delays and cost increases, as well as offsetting ASP increases, and also raise the price of inputs like steel and logistics, affecting our cost per watt.
Current wording
Megawatts ("MW") Produced and MW Shipped and Average Selling Price ("ASP"). The primary operating metrics we use to evaluate our sales performance and to track market acceptance of our products are the change in quantity of MW produced and MW shipped from period to period. MW are measured for each individual project and are calculated based on the expected output of that project once installed and fully operational. We also utilize metrics related to price and cost of goods sold per watt, including the change in ASP from period to period and cost per watt. ASP is calculated by dividing product and service revenue by total watts produced or shipped and product and service cost per watt is calculated by dividing product or service costs of goods sold by total watts produced or shipped. These metrics enable us to evaluate trends in pricing, manufacturing and logistics costs and profitability. Events such as the COVID-19 pandemic, global inflation rates, high interest rates and international conflicts have in the past impacted and may continue to impact the U.S. economy, global supply chains, and our business. These impacts can cause significant project development and shipping delays and cost increases, as well as offsetting ASP increases, and also raise the price of inputs like steel and logistics, affecting our cost per watt.
Previous wording
We also intend over time to make significant investments to attract and retain employees in key positions, including sales leads, engineers, software developers, quality assurance personnel, supply chain personnel, product management, and operations personnel, to help us drive additional efficiencies across our marketplace and, in the case of sales leads, to continue to enhance and diversify our sales capabilities, including international expansion. For example, in May 2024, we announced the appointment of Tamara Mullings, a former member of our Board of Directors, to be our Senior Vice President, North American Sales and Alberto Echeverria, a tracker industry veteran and the former CEO and Executive Member of the Board of STI Norland, to be our Senior Vice President, International Sales. Additionally, in July 2024, we announced that we had hired Yann Brandt as our new President and Chief Executive Officer and as a new member of our Board of Directors, effective August 19, 2024.
Current wording
We also intend over time to make significant investments to attract and retain employees in key positions, including sales leads, engineers, software developers, quality assurance personnel, supply chain personnel, product management, and operations personnel, to help us drive additional efficiencies across our marketplace and, in the case of sales leads, to continue to enhance and diversify our sales capabilities, including international expansion. For example, in May 2024, we announced the appointment of Tamara Mullings, a former member of our Board of Directors, to be our Senior Vice President, North American Sales and Alberto Echeverria, a tracker industry veteran and the former Chief Executive Officer and Executive Member of the Board of STI Norland, to be our Senior Vice President, International Sales. Additionally, effective August 19, 2024, we hired Yann Brandt as our new President and Chief Executive Officer and as a new member of our Board of Directors.
Previous wording
Impact of Climate Change. Climate change has primarily impacted our business operations by increasing demand for solar power generation and, as a result, for use of our products. According to the Federal Energy Regulatory Commission's Energy Infrastructure Update for May 2024, solar has become the largest energy source for new capacity in the first five months of 2024 in the United States.
Current wording
Impact of Climate Change. Climate change has primarily impacted our business operations by increasing demand for solar power generation and, as a result, for use of our products. According to the August 2024 Short-Term Energy Outlook published by the U.S. Energy Information Administration, solar power is the fastest-growing source of electricity in the United States.
Previous wording
The vast majority of our revenue in the periods presented was attributable to sales by our locations in the United States and Australia. Our revenue growth is dependent on continued growth in the number of solar tracker projects and engineering services we win in competitive bidding processes and growth in our software sales each year, as well as our ability to increase our market share in each of the geographies in which we currently compete, expand our global footprint to new emerging markets, grow our sources of production to meet demand and continue to develop and introduce new and innovative products that address the changing technology and performance requirements of our customers, among other things.
Current wording
For the periods included in this Quarterly Report, no company locations other than those in the United States accounted for more than 10% of our consolidated revenue. Our revenue growth is dependent on continued growth in the number of solar tracker projects and engineering services we win in competitive bidding processes and growth in our software sales each year, as well as our ability to increase our market share in each of the geographies in which we currently compete, expand our global footprint to new emerging markets, grow our sources of production to meet demand and continue to develop and introduce new and innovative products that address the changing technology and performance requirements of our customers, among other things.
Previous wording
We have made changes to our headcount in recent years as we initially scaled up our business and, more recently, made adjustments at the end of 2022 and in August 2023 in response to current project activity levels. Our gross profit may vary period-to-period due to changes in our headcount, ASP, product costs, product mix, customer mix, geographical mix, shipping methods, warranty costs and seasonality.
Current wording
We have made changes to our headcount in recent years as we initially scaled up our business following our IPO and, more recently, reduced our headcount on certain occasions in response to declines in project activity levels. Our gross profit may vary period-to-period due to changes in our headcount, ASP, product costs, product mix, customer mix, geographical mix, shipping methods, warranty costs and seasonality.
Previous wording
We implemented reductions in our workforce at the end of 2022 and in August 2023, in response to regulatory and other issues that were negatively impacting our solar project activity levels. We also had certain executive departures near the end of 2023. In addition, our operating costs have been impacted by (i) our level of research activities to originate, develop and enhance our products, (ii) our sales and marketing efforts as we expand our development activities in other parts of the world, and (iii) variations in legal and professional fees, compliance costs, insurance, facility costs and other costs associated with strategic changes in response to changing market conditions and other matters.
Current wording
We implemented reductions in our global workforce at the end of 2022 and in August 2023, in response to regulatory and other issues that were negatively impacting our solar project activity levels. We also had certain executive departures near the end of 2023, as well as additions of certain new executives during 2024, including a new Chief Executive Officer. In addition, our operating costs have been impacted by (i) our level of research activities to originate, develop and enhance our products, (ii) our sales and marketing efforts as we expand our development activities in other parts of the world, and (iii) variations in legal and professional fees, compliance costs, insurance, facility costs and other costs associated with strategic changes in response to changing market conditions and other matters.
Previous wording
The decrease in product revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to a decrease of 62% in the amount of MW produced as activity was adversely impacted by customer project delays during the latter part of 2023, and continuing into 2024, as compared to the same periods in 2022 and 2023. However, we also had an increase of 10% in ASP for the three months ended June 30, 2024, as a result of better pricing as compared to the three months ended June 30, 2023, which partially offset some of the impact of the decline in activity.
Current wording
The decrease in product revenue for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily due to a decrease of 82% in the amount of MW produced as activity has been adversely impacted by customer project delays. This was partially offset by an increase in ASP for the three months ended September 30, 2024, as a result of better pricing and project mix changes as compared to the three months ended September 30, 2023.
Previous wording
The decrease in service revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily resulted from (i) a decrease of 77% in the amount of MW delivered as a result of timing of project deliveries, as well as lower production levels, and (ii) lower engineering consulting and software revenues. This has been partially offset by an increase of 4% in ASP as compared to the three months ended June 30, 2023.
Current wording
The decrease in service revenue for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily resulted from (i) a decrease of 29% in ASP as compared to the three months ended September 30, 2023 and (ii) lower engineering consulting revenues. This was partially offset by an increase of 18% in the amount of MW delivered as a result of timing of project deliveries.
Previous wording
The decrease in cost of revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily driven by (i) a decrease of 62% in MW produced, (ii) a decrease of 77% in shipping and logistics activity, and (iii) lower remediation costs.
Current wording
The decrease in cost of revenue for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily driven by (i) a decrease of 82% in MW produced. This was partially offset by higher remediation costs.
Previous wording
Our gross margin percentage of revenue for the three months ended June 30, 2024 was a negative 20.5%, as compared to a positive 6.8% for the three months ended June 30, 2023.
Current wording
Our gross margin percentage of revenue for the three months ended September 30, 2024 was a negative 42.5%, as compared to a positive 11.1% for the three months ended September 30, 2023.
Previous wording
We had negative gross margin for the three months ended June 30, 2024 due to (i) the impact of lower revenue levels on our ability to cover certain relatively fixed overhead costs, and (ii) insufficient service revenue to fully cover our warehousing costs.
Current wording
We had negative gross margin for the three months ended September 30, 2024 primarily due to the impact of lower revenue levels on our ability to cover certain relatively fixed overhead costs.
Previous wording
We had positive gross margin for the three months ended June 30, 2023 largely due to (i) improvements in our direct costs due to our design-to-value efforts and the impact of our cost control initiatives on indirect costs, as well as (ii) higher production activity.
Current wording
We had positive gross margin for the three months ended September 30, 2023 largely due to (i) higher production activity allowing us to cover certain relatively fixed overhead costs, (ii) a mix of higher margin product revenue as compared to service revenue, and (iii) improvements in our direct cost structure due to our design-to-value efforts, lower levels of remediation and warranty costs, as well as reduced overhead spending resulting from our other cost control efforts.
Previous wording
The decrease in research and development expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily attributable to (i) lower spending on lab and other research activities of $0.1 million, (ii) lower payroll costs of $0.1 million due to lower average headcount, and (iii) lower professional service costs of $0.1 million resulting from cost reduction initiatives. Research and development expenses as a percentage of revenue were 13.4% for the three months ended June 30, 2024, as compared to 5.8% for the three months ended June 30, 2023. The increase in the percentage research and development costs to revenue for the three months ended June 30, 2024, is largely a function of the lower level of revenue.
Current wording
The decrease in research and development expenses for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily attributable to (i) lower spending on lab and other research activities of $0.2 million, (ii) lower payroll costs of $0.2 million due to severance costs recognized during the three months ended September 30, 2023, and (iii) lower professional service costs of $0.1 million resulting from cost reduction initiatives. Research and development expenses as a percentage of revenue were 14.5% for the three months ended September 30, 2024, as compared to 6.3% for the three months ended September 30, 2023. The increase in the percentage research and development costs to revenue for the three months ended September 30, 2024, is largely a function of the lower level of revenue.
Previous wording
The increase in selling and marketing expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily attributable to (i) higher payroll costs of $0.3 million due to higher average headcount, and (ii) higher marketing costs of $0.2 million associated with increased trade show attendance and advertising. This was partially offset by lower provisions for credit losses of $0.3 million. Selling and marketing costs as a percentage of revenue were 17.8% for the three months ended June 30, 2024, compared to 5.7% for the three months ended June 30, 2023.
Current wording
The decrease in selling and marketing expenses for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily attributable to (i) lower provisions for credit losses of $3.4 million, mainly related to charges associated with specific individual customer accounts during each period, (ii) lower marketing costs of $0.2 million associated with reduced trade show attendance and advertising, and (iii) lower payroll costs of $0.1 million due to severance costs recognized during the three months ended September 30, 2023. Lower travel and stock-based compensation expense accounted for the remaining decrease. Selling and marketing costs as a percentage of revenue were 23.7% for the three months ended September 30, 2024, compared to 20.7% for the three months ended September 30, 2023.
Previous wording
The decrease in general and administrative expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily attributable to (i) $1.4 million of lower stock-based compensation expense related primarily to (a) forfeiture of awards in connection with our reduction in force in August 2023 and executive terminations during the fourth quarter of 2023, and (b) forfeiture of awards in connection with the September 2023 termination of the Service Agreement with a related party as described further in Note 16, "Related party transactions" in Part I, Item 1 above, (ii) lower professional service fees of $0.5 million, (iii) lower insurance costs of $0.5 million, and (iv) lower payroll costs of $0.4 million as a result of lower average headcount. General and administrative expenses as a percentage of revenue were 52.6% for the three months ended June 30, 2024, compared to 27.3% for the three months ended June 30, 2023, largely due to the lower level of revenue.
Current wording
The decrease in general and administrative expenses for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, was primarily attributable to (i) a nonrecurring charge of $3.2 million in September 2023 as we fully amortized the remaining prepaid balance upon termination of the Service Agreement with a related party consultant, and (ii) lower payroll costs of $1.5 million largely as a result of severance costs recognized during the three months ended September 30, 2023. General and administrative expenses as a percentage of revenue were 67.1% for the three months ended September 30, 2024, compared to 37.4% for the three months ended September 30, 2023, largely due to the lower level of revenue.
Previous wording
Interest expense totaled approximately $0.1 million and $0.3 million during the three months ended June 30, 2024 and 2023, respectively, and primarily consisted of letter of credit and commitment fees on the Credit Facility, along with associated debt issue cost amortization. Interest income earned on our cash equivalents was approximately $0.1 million and $0.3 million during the three months ended June 30, 2024 and 2023, respectively.
Current wording
Interest income earned on our cash equivalents and interest expense incurred during the three months ended September 30, 2024 were not significant. Interest income and interest expense for the three months ended September 30, 2023 was approximately $0.2 million and nearly $0.4 million, respectively. Interest expense during the three months ended September 30, 2023, primarily consisted of letter of credit and commitment fees on our Credit Facility, along with associated debt issue cost amortization.
Previous wording
The loss from unconsolidated subsidiary for the three months ended June 30, 2024, represents our share of the net operating losses incurred by Alpha Steel during the period.
Current wording
The losses from unconsolidated subsidiary for the three months ended September 30, 2024 and 2023, represent our share of the net operating losses incurred by Alpha Steel during each period.
Previous wording
The decrease in product revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to a decrease of 68% in the amount of MW produced as activity was adversely impacted by customer project delays during the latter part of 2023, and continuing into 2024, as compared to the same periods in 2022 and 2023. However, we also had an increase of 16% in ASP for the six months ended June 30, 2024, as a result of better pricing as compared to the six months ended June 30, 2023, which partially offset some of the impact of the decline in activity.
Current wording
The decrease in product revenue for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily due to a decrease of 73% in the amount of MW produced as activity has been adversely impacted by customer project delays. This was partially offset by an increase in ASP for the nine months ended September 30, 2024, as a result of better pricing and project mix changes as compared to the nine months ended September 30, 2023.
Previous wording
The decrease in service revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily resulted from (i) a decrease of 76% in the amount of MW delivered as a result of timing of project deliveries, as well as lower production levels, (ii) lower engineering consulting and software revenues, and (iii) a decrease of 6% in ASP as compared to the six months ended June 30, 2023.
Current wording
The decrease in service revenue for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily resulted from (i) a decrease of 63% in the amount of MW delivered as a result of timing and lower volume of projects available for delivery, and (ii) a decrease of 16% in ASP as compared to the nine months ended September 30, 2023, and (iii) lower engineering consulting and software revenues.
Previous wording
The decrease in cost of revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily driven by (i) a decrease of 68% in MW produced, (ii) a decrease of 76% in shipping and logistics activity, and (iii) by lower (a) remediation costs, (b) obsolete and slow-moving inventory provisions, and (c) stock-based compensation expense during the current period.
Current wording
The decrease in cost of revenue for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily driven by (i) a decrease of 73% in MW produced, (ii) a decrease of 63% in shipping and logistics activity, and (iii) by lower obsolete and slow-moving inventory provisions. Partially offsetting the decrease were higher warranty and remediation costs.
Previous wording
Our gross margin percentage of revenue for the six months ended June 30, 2024 was a negative 18.5%, as compared to a positive 5.8% for the six months ended June 30, 2023.
Current wording
Our gross margin percentage of revenue for the nine months ended September 30, 2024 was a negative 25.6%, as compared to a positive 7.3% for the nine months ended September 30, 2023.
Previous wording
We had negative gross margin for the six months ended June 30, 2024 as (i) production volumes were not sufficient to cover certain relatively fixed overhead costs, and (ii) our service revenue was not sufficient to fully cover our warehousing and certain other costs.
Current wording
We had negative gross margin for the nine months ended September 30, 2024 as (i) production volumes were not sufficient to cover certain relatively fixed overhead costs, and (ii) our service revenue was not sufficient to fully cover our warehousing and certain other costs.
Previous wording
The decrease in research and development expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily attributable to (i) lower stock-based compensation costs of $0.2 million, largely due to (a) award forfeitures resulting from a reduction in force in August 2023, as well as (b) the absence of stock award grants during the six months ended June 30, 2024 for incentive compensation, as compared to the issuance of such awards for incentive compensation earned during the six months ended June 30, 2023, (ii) lower spending on lab and other research activities of $0.2 million, (iii) lower payroll costs of $0.2 million due to lower average headcount, and (iv) lower software licensing and subscription costs of approximately $0.2 million. Research and development expenses as a percentage of revenue were 12.4% for six months ended June 30, 2024, as compared to 5.2% for the six months ended June 30, 2023. The increase in the percentage research and development costs to revenue for the six months ended June 30, 2024, is largely a function of the lower level of revenue.
Current wording
The decrease in research and development expenses for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily attributable to (i) lower spending on lab and other research activities of $0.4 million, (ii) lower payroll costs of $0.4 million, due mainly to severance costs recognized during the nine months ended September 30, 2023, (iii) lower stock-based compensation costs of $0.2 million, and (iv) lower software licensing and subscription costs of approximately $0.2 million. Research and development expenses as a percentage of revenue were 13.0% for the nine months ended September 30, 2024, as compared to 5.5% for the nine months ended September 30, 2023. The increase in the percentage research and development costs to revenue for the nine months ended September 30, 2024, is largely a function of the lower level of revenue.
Previous wording
The increase in selling and marketing expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily attributable to (i) higher payroll expense of $0.7 million due to higher average headcount, (ii) higher provisions for credit losses of $0.4 million related mainly to a charge associated with a specific customer account during the six months ended June 30, 2024, and (iii) higher marketing, travel and professional service costs. These increased costs were partially offset by lower stock-based compensation costs of $0.5 million. Selling and marketing costs as a percentage of revenue were 18.4% for the six months ended June 30, 2024, compared to 4.9% for the six months ended June 30, 2023.
Current wording
The decrease in selling and marketing expenses for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily attributable to lower provisions for credit losses of $3.0 million related mainly to charges associated with specific individual customer accounts during each period. We also had lower stock-based compensation costs of $0.6 million, which were mostly offset by higher payroll expense of $0.6 million due to higher average headcount. Selling and marketing costs as a percentage of revenue were 20.0% for the nine months ended September 30, 2024, compared to 9.5% for the nine months ended September 30, 2023.
Previous wording
The decrease in general and administrative expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily attributable to $3.6 million of lower stock-based compensation expense related primarily to (i) forfeiture of awards in connection with the September 2023 termination of the Service Agreement with a related party as described further in Note 16, "Related party transactions" in Part I, Item 1 above, (ii) forfeiture of awards in connection with our reduction in force in August 2023 and executive terminations during the fourth quarter of 2023, and (iii) the absence of stock-based incentive compensation awards during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. In addition, the terminations described above contributed to lower payroll expense of $1.3 million during the six months ended June 30, 2024 and we were able to lower our insurance costs by $1.3 million and our legal costs by $0.6 million as compared to the six months ended June 30, 2023. General and administrative expenses as a percentage of revenue were 52.4% for the six months ended June 30, 2024, compared to 26.8% for the six months ended June 30, 2023, largely due to the lower level of revenue.
Current wording
The decrease in general and administrative expenses for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, was primarily attributable to $3.5 million of lower stock-based compensation expense related primarily to (i) forfeiture of awards in connection with the September 2023 termination of the Service Agreement with a related party as described further in Note 16, "Related party transactions" in Part I, Item 1 above, (ii) forfeiture of awards in connection with our reduction in force in August 2023 and executive terminations during the fourth quarter of 2023, and (iii) the absence of stock-based incentive compensation awards during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. In connection with the termination of the Service Agreement with a related party consultant, we recognized a nonrecurring charge of $3.2 million during the nine months ended September 30, 2023. In addition, the employee and executive terminations described above contributed to lower payroll expense of $2.8 million during the nine months ended September 30, 2024 and we were able to lower our insurance costs by $1.4 million, our legal costs by $0.4 million and our accounting and audit fees by $0.5 million as compared to the nine months ended September 30, 2023, through our cost control initiatives. General and administrative expenses as a percentage of revenue were 56.7% for the nine months ended September 30, 2024, compared to 29.9% for the nine months ended September 30, 2023, largely due to the lower level of revenue.
Previous wording
Interest expense totaled approximately $0.4 million and $0.6 million during the six months ended June 30, 2024 and 2023, respectively, and primarily consisted of letter of credit and commitment fees on the Credit Facility, along with associated debt issue cost amortization. Interest income earned on our cash equivalents was approximately $0.3 million and $0.5 million during the six months ended June 30, 2024 and 2023, respectively.
Current wording
Interest expense totaled approximately $0.4 million and $1.0 million during the nine months ended September 30, 2024 and 2023, respectively, and primarily consisted of letter of credit and commitment fees on the Credit Facility, along with associated debt issue cost amortization. Our Credit Facility expired unused on April 30, 2024. Interest income earned on our cash equivalents was approximately $0.3 million and $0.8 million during the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
We sold our interest in our unconsolidated subsidiary, Dimension Energy LLC ("Dimension"), on June 24, 2021. Dimension is a community solar developer based in Atlanta, Georgia that provides renewable energy solutions for local communities in the United States. The sales agreement with Dimension included an earnout provision which provides the potential to receive additional contingent consideration of up to approximately $14.0 million through December 2024, based on Dimension achieving certain performance milestones. The sales agreement also includes a projects escrow release which is an additional contingent consideration to receive $7 million based on Dimension’s completion of certain construction projects in progress at the time of the sale. We made an accounting policy election to account for the contingent gains arising from earnout payments and project escrow releases only when those amounts become realizable in the periods subsequent to the disposal date. During the six months ended June 30, 2024 and 2023, we received earnout and escrow release payments of $4.1 million and $0.9 million, respectively, that were recognized in accordance with our policy election. Since the sale of our interest in Dimension, we have received a total of $7.4 million in contingent earnout and escrow release payments through June 30, 2024.
Current wording
We sold our interest in our unconsolidated subsidiary, Dimension Energy LLC ("Dimension"), on June 24, 2021. Dimension is a community solar developer based in Atlanta, Georgia that provides renewable energy solutions for local communities in the United States. The sales agreement with Dimension included an earnout provision which provides the potential to receive additional contingent consideration of up to approximately $14.0 million through December 2024, based on Dimension achieving certain performance milestones. The sales agreement also includes a projects escrow release which is an additional contingent consideration to receive $7 million based on Dimension’s completion of certain construction projects in progress at the time of the sale. We made an accounting policy election to account for the contingent gains arising from earnout payments and project escrow releases only when those amounts become realizable in the periods subsequent to the disposal date. During the nine months ended September 30, 2024 and 2023, we received earnout and escrow release payments of $4.1 million and $0.9 million, respectively, that were recognized in accordance with our policy election. Since the sale of our interest in Dimension, we have received a total of $7.4 million in contingent earnout and escrow release payments through September 30, 2024.
Previous wording
The loss from unconsolidated subsidiary for the six months ended June 30, 2024, represents our share of the net operating losses incurred by Alpha Steel during the period.
Current wording
The losses from unconsolidated subsidiary for the nine months ended September 30, 2024 and 2023, represent our share of the net operating losses incurred by Alpha Steel during each period.
Previous wording
We have incurred cumulative losses since inception and have a history of cash outflows from operations. As of June 30, 2024, we had $10.8 million of cash on hand, $33.0 million of working capital and approximately $64.9 million of remaining capacity available for future sales of our common stock under our ATM program as defined and described further in Note 4, "ATM program" in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. There can be no assurance that we will be able to sell any additional shares of our common stock under the ATM program and no assurance regarding the price at which we will be able to sell such shares, and any sales of our common stock under the ATM program may be at prices that result in additional dilution to our existing stockholders.
Current wording
We have incurred cumulative losses since inception and have a history of cash outflows from operations. As of September 30, 2024, we had $8.3 million of cash on hand, $18.9 million of working capital and approximately $64.9 million of remaining capacity available for future sales of our common stock under our ATM program as defined and described further in Note 4, "ATM program" in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. There can be no assurance that we will be able to sell any additional shares of our common stock under the ATM program and no assurance regarding the price at which we will be able to sell such shares, and any sales of our common stock under the ATM program may be at prices that result in additional dilution to our existing stockholders.
Previous wording
On December 22, 2023, we received notification from The Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with the requirement to maintain a minimum closing bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5450(a)(1), because the closing bid price of the Company’s common stock was below $1.00 per share for 30 consecutive business days. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were initially given a period of 180 calendar days from the date of notification, or until June 19, 2024, to regain compliance with the minimum bid price requirement, which was not achieved. Effective May 31, 2024, trading in our common stock transferred from the Nasdaq Global Market to the Nasdaq Capital Market. On June 21, 2024, we received notification from Nasdaq that we were approved for an additional 180-day period, or until December 17, 2024, to cure the bid price deficiency in accordance with Nasdaq Listing Rule 5810(c)(3)(A). We are currently evaluating all of our options to achieve compliance with Nasdaq requirements for continued listing, which may include effecting a reverse stock split, if necessary, at least 10 days prior to December 17, 2024. At this time, our common stock continues to trade on the Nasdaq Capital Market under the symbol "FTCI". If at any time before December 17, 2024 the bid price of our common stock closes at or above $1.00 per share for a minimum of ten consecutive business days, Nasdaq will provide written notification that we have achieved compliance with this minimum bid price requirement. If we fail to regain compliance with the minimum bid price requirement during this second 180-day period, then Nasdaq will notify us that our common stock is subject to delisting.
Current wording
On December 22, 2023, we received notification from The Nasdaq Stock Market LLC (“Nasdaq”) that we were not in compliance with the requirement to maintain a minimum closing bid price of $1.00 per share, as set forth in Nasdaq Listing Rule 5450(a)(1), because the closing bid price of the Company’s common stock was below $1.00 per share for 30 consecutive business days. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were initially given a period of 180 calendar days from the date of notification, or until June 19, 2024, to regain compliance with the minimum bid price requirement, which was not achieved. Effective May 31, 2024, trading in our common stock transferred from the Nasdaq Global Market to the Nasdaq Capital Market. On June 21, 2024, we received notification from Nasdaq that we were approved for an additional 180-day period, or until December 17, 2024, to cure the bid price deficiency in accordance with Nasdaq Listing Rule 5810(c)(3)(A). In order to achieve compliance with the Nasdaq requirements for continued listing, on November 8, 2024, our stockholders approved an amendment to our Amended and Restated Certificate of Incorporation to effect a reverse stock split at a ratio ranging from 1-for-5 to 1-for 25, with the exact ratio to be determined by our Board of Directors. At this time, our common stock continues to trade on the Nasdaq Capital Market under the symbol "FTCI". If at any time before December 17, 2024, the bid price of our common stock closes at or above $1.00 per share for a minimum of ten consecutive business days, Nasdaq will provide written notification that we have achieved compliance with this minimum bid price requirement. If we fail to regain compliance with the minimum bid price requirement during this second 180-day period, then Nasdaq will notify us that our common stock is subject to delisting.
Previous wording
Effective April 30, 2024, our Senior Secured Revolving Credit Facility ("Credit Facility) expired unused and has not been replaced as of June 30, 2024. We continue to evaluate additional opportunities to obtain financing.
Current wording
Effective April 30, 2024, our Senior Secured Revolving Credit Facility ("Credit Facility) expired unused and has not been replaced as of September 30, 2024. As described further in Note 18, "Subsequent events" in the notes to consolidated condensed financial statements in Part I, Item 1 of this Quarterly Report, we signed a binding term sheet on November 8, 2024, with an institutional investor, for the issuance of $15 million in long-term senior secured promissory notes, along with warrants to purchase 17.5 million shares of our common stock at an exercise price of $0.01 per share. Closing on the transaction is expected on or before November 30, 2024.
Previous wording
During the six months ended June 30, 2024, we used approximately $17.1 million of cash to fund a portion of our current period expenditures for personnel and facilities, legal and professional fees, insurance, research and development and various other operating activities. This compares to approximately $9.2 million of cash used during the six months ended June 30, 2023, also to fund a portion of our prior period expenditures for various operating activities as described above.
Current wording
During the nine months ended September 30, 2024, we used approximately $26.3 million of cash to fund a portion of our current period expenditures for personnel and facilities, legal and professional fees, insurance, research and development and various other operating activities. This compares to approximately $18.6 million of cash used during the nine months ended September 30, 2023, also to fund a portion of our prior period expenditures for various operating activities as described above.
Previous wording
Approximately $1.5 million of cash was generated from working capital and other decreases during the six months ended June 30, 2024, primarily as a result of production activity and the timing of customer receipts, including the settlement reached with a major customer as described further in Note 5, "Accounts receivable, net" in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report, and payments to our vendors. During the six months ended June 30, 2023, we used approximately $21.6 million of cash for working capital and other increases as a result of production activity and the timing of customer receipts, net of vendor payments.
Current wording
Approximately $8.3 million of cash was generated from working capital and other decreases during the nine months ended September 30, 2024, primarily as a result of production activity levels and the timing of customer receipts, including the settlement reached with a major customer as described further in Note 5, "Accounts receivable, net" in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report, and payments to our vendors. During the nine months ended September 30, 2023, we used approximately $27.8 million of cash for working capital and other increases as a result of production activity and the timing of customer receipts and vendor payments, net of inventory utilization.
Previous wording
Our working capital decreased by $20.8 million from $53.8 million at December 31, 2023 to $33.0 million at June 30, 2024. The decrease was largely attributable to (i) the use of cash to fund current period expenditures as described above and (ii) the impact of lower activity levels on the amount of billed and unbilled accounts receivables during the six months ended June 30, 2024.
Current wording
Our working capital decreased by approximately $35.0 million from $53.8 million at December 31, 2023 to $18.9 million at September 30, 2024. The decrease was largely attributable to (i) the use of cash to fund current period expenditures as described above and (ii) the impact of lower activity levels on the amount of billed and unbilled accounts receivables during the nine months ended September 30, 2024.
Previous wording
During the six months ended June 30, 2024, we made additional equity investments of $1.8 million in Alpha Steel, a manufacturing partnership with Taihua, in which we hold a 45% interest. Pursuant to our agreement with Alpha Steel, we could be required to make up to $0.8 million in future additional capital contributions as Alpha Steel continues to expand production. We also spent nearly $1.1 million, mainly for tooling and new computer and IT equipment, as well as leasehold improvements, during the six months ended June 30, 2024. In addition, we received $4.1 million of contingent earnout payments in connection with the June 2021 sale of our equity interest in Dimension.
Current wording
During the nine months ended September 30, 2024, we made additional equity investments of $1.8 million in Alpha Steel, a manufacturing partnership with Taihua, in which we hold a 45% interest. Pursuant to our agreement with Alpha Steel, we could be required to make up to $0.8 million in future additional capital contributions as Alpha Steel continues to expand production. We also spent nearly $1.4 million, mainly for tooling and new computer and IT equipment, as well as leasehold improvements, during the nine months ended September 30, 2024. In addition, we received $4.1 million of contingent earnout payments in connection with the June 2021 sale of our equity interest in Dimension.
Previous wording
During the six months ended June 30, 2023, we made an initial equity investment of $0.9 million in Alpha Steel and received $0.9 million in contingent payments from escrow in connection with the sale of our equity interest in Dimension as described above.
Current wording
During the nine months ended September 30, 2023, we made (i) an initial equity investment of $0.9 million in Alpha Steel, (ii) received $0.9 million in contingent payments from escrow in connection with the sale of our equity interest in Dimension as described above, and (iii) spent nearly $0.5 million for leasehold improvements, tooling, software, and new computer and IT equipment.
Previous wording
During the six months ended June 30, 2023, we began selling newly issued shares of our common stock in various daily transactions under our ATM program, receiving cash proceeds of $20.6 million. We also received $0.1 million of proceeds from employee exercises of stock options.
Current wording
During the nine months ended September 30, 2023, we sold newly issued shares of our common stock in various daily transactions under our ATM program, receiving cash proceeds of $34.0 million. We also received $0.2 million of proceeds from employee exercises of stock options.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
In addition, we have made efforts during 2024 to enhance and strengthen our management leadership team. In August 2024, we hired Yann Brandt as our new Chief Executive Officer and, prior to that, we named Tamara Mullings, a former member of our Board of Directors, as our Senior Vice President, North America Sales and Alberto Echeverria, a former Chief Executive Officer and Executive Member of the Board of STI Norland, as our Senior Vice President, International Sales.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Gross profit may vary from period-to-period and is primarily affected by our ASP, product costs, timing of tracker production and delivery, customer mix, geographical mix, shipping method, logistics costs, warranty costs, indirect cost control efforts and seasonality.
Previous report — wording carried elsewhere
The most notable incentive program impacting our U.S. business has historically been the ITC for solar energy projects, which allows taxpayers to offset their U.S. federal income tax liability by a certain percentage of their cost basis in solar energy systems placed in service for commercial use. The Inflation Reduction Act of 2022, passed by the U.S. Congress and signed into law by President Biden on August 16, 2022, expanded and extended the tax credits and other tax benefits available to solar energy projects and the solar energy supply chain. ITCs have been extended for such projects through at least 2032 and, depending on the location of a particular project and its ability to satisfy certain labor and domestic content requirements, the ITC percentage can range between 30% and 50%. U.S. manufacturers of specific solar components are now eligible to claim production tax credits as an alternative to the ITC. Implementing regulations for this law are, in certain cases, still being finalized and the impact of these regulations continue to be evaluated by developers of new solar projects and manufacturers of solar components. Our investment in and commitments made to Alpha Steel will allow us to obtain certain benefits as a result of this new production tax credit program.
Previous report — wording carried elsewhere
We have taken steps to expand and diversify our manufacturing partnerships and have adjusted our modes of transportation to mitigate the impact of headwinds that might arise in the global supply chain and logistics markets. As an example, we modified our ocean freight from previously using charter shipments to now using containerized shipments as costs in the container market began to decrease starting in 2022, but more recently have begun to increase. However, we have been able to mitigate some of this increase as a result of increasing our domestic production capabilities. We continue to monitor the logistics markets and will continue to evaluate our use of various modes of transportation when warranted to optimize our transportation costs. Additionally, from February 2022 to September 2023, we utilized a related-party consulting firm to support us in making improvements to our processes and performance in various areas, including design, sourcing, logistics, pricing, software and our distributed generation business. For further information regarding this consulting firm, see Note 16, "Related party transactions" in the notes to condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. These steps, and others, have allowed us to improve our business processes and lower our product cost structure, thus improving our direct product margins in recent periods. As an example, we generated positive gross profit during each quarter in 2023. Additionally, we have made substantial progress in lowering our operating costs, showing significant improvement since becoming a public company, as well as in comparison to the prior year periods included in this Quarterly Report. These combined factors have allowed us to significantly lower the estimated quarterly revenue level that we believe is required to break even. However, our low revenue levels for the three and six months ended June 30, 2024, have prevented us from continuing to show positive quarterly gross profit in 2024, similar to 2023, as revenues have not been sufficient to fully cover our indirect costs.