UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(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, 2022

☐	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: 0-30351

SPI ENERGY CO., LTD.

(Exact Name of Registrant as Specified in Its Charter)

Cayman Islands

20-4956638

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification No.)

4803 Urbani Ave., Mc Clellan Park, CA		95652
(Address of Principal Executive Offices)		(Zip Code)

(408) 919-8000

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Ordinary Shares, par value $0.0001 per share		SPI		NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☒
Non-Accelerated Filer ☐	Smaller Reporting Company ☒
	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 14, 2022, 28,841,236 ordinary shares, par value $0.0001 per share, were issued and outstanding.

TABLE OF CONTENTS

		Page
Part I.	Financial Information	3
	Item 1. Interim Financial Statements	3
	Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	3
	Unaudited Condensed Consolidated Statements of Operations for the Nine and Three Months Ended September 30, 2022 and 2021	4
	Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Nine and Three Months Ended September 30, 2022 and 2021	5
	Unaudited Condensed Consolidated Statements of Equity for the Nine and Three Months Ended September 30, 2022 and 2021	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine months Ended September 30, 2022 and 2021	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	28
	Item 4. Controls and Procedures	28
Part II.	Other Information	30
	Item 1. Legal Proceedings	30
	Item 1A. Risk Factors	30
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
	Item 3. Defaults Upon Senior Securities	30
	Item 4. Mine Safety Disclosures	30
	Item 5. Other Information	31
	Item 6. Exhibits	31
Signatures		32

PART I

Item 1. Financial Statements

SPI ENERGY CO., LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)


	September 30, 2022			December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	6,104		$	9,765
Restricted cash		6,693			8,080
Accounts receivable, net		19,418			22,599
Contract asset		1,625			1,621
Inventories		25,966			23,242
Project assets held for sale		10,423			8,946
Prepaid expenses and other current assets, net		12,418			9,584
Amount due from related parties		332			230
Total current assets		82,979			84,067
Intangible assets, net		2,894			3,433
Goodwill		4,896			4,896
Prepayment for purchase of equipment		6,706			268
Property and equipment, net		30,615			35,750
Project assets, noncurrent		15,188			15,969
Investment in affiliates		69,606			69,606
Operating lease right-of-use assets		11,277			13,923
Deferred tax assets, net		81			168
Total assets	$	224,242		$	228,080
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	30,657		$	25,612
Accrued liabilities		16,494			10,094
Income taxes payable		2,671			1,684
Advance from customers		6,749			4,924
Short-term borrowings and current portion of long-term borrowings		7,055			9,120
Amount due to an affiliate		10,447			10,603
Convertible bonds		45,418			48,603
Accrued warranty reserve		481			628
Amount due to related parties		1,113			–
Operating lease liabilities, current		1,762			1,351
Consideration payable		56,989			61,219
Total current liabilities		179,836			173,838
Long-term borrowings, excluding current portion		6,397			12,800
Deferred tax liabilities, net		2,570			2,970
Operating lease liabilities, non-current		11,250			12,522
Total liabilities		200,053			202,130
Equity:
Ordinary shares, par $0.0001, 500,000,000 shares authorized, 28,841,236 and 25,352,060 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		3			3
Additional paid in capital		717,341			695,073
Accumulated other comprehensive loss		(39,102	)		(35,257	)
Accumulated deficit		(659,987	)		(637,390	)
Total equity attributable to the shareholders of SPI Energy Co., Ltd.		18,255			22,429
Noncontrolling interests		5,934			3,521
Total equity		24,189			25,950
Total liabilities and equity	$	224,242		$	228,080

The accompany notes are an integral part of these condensed consolidated financial statements.

SPI ENERGY CO., LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share data)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Net revenues	$	43,212		$	38,964		$	130,331		$	118,404
Cost of revenue		(45,501	)		(40,066	)		(126,039	)		(112,139	)
Gross (loss) profit		(2,289	)		(1,102	)		4,292			6,265
Operating expenses:
General and administrative		8,847			9,506			25,600			26,775
Sales, marketing and customer service		1,080			3,172			3,691			5,418
Impairment charges on long-lived assets		1,809			–			1,809			–
(Reversal) provision of credit losses		(262	)		2,184			(471	)		2,503
Total operating expenses		11,474			14,862			30,629			34,696
Operating loss		(13,763	)		(15,964	)		(26,337	)		(28,431	)

Other income (expense):
Interest expense, net		(1,282	)		(880	)		(4,320	)		(3,582	)
Loss on extinguishment of convertible bonds		(422	)		–			(2,634	)		–
Net foreign exchange gain		2,603			870			5,927			1,580
Others		71			(9	)		6,278			743
Total other income (expense), net		970			(19	)		5,251			(1,259	)
Net loss before income taxes		(12,793	)		(15,983	)		(21,086	)		(29,690	)
Income tax expense		700			496			1,411			1,356
Net loss	$	(13,493	)	$	(16,479	)	$	(22,497	)	$	(31,046	)
Less: Net (loss) income attributable to noncontrolling interests		(54	)		103			100			445
Net loss attributable to shareholders of SPI Energy Co., Ltd.	$	(13,439	)	$	(16,582	)	$	(22,597	)	$	(31,491	)

Net loss per ordinary share: Basic and Diluted	$	(0.48	)	$	(0.69	)	$	(0.83	)	$	(1.32	)

Weighted average shares outstanding: Basic and Diluted		28,090,018			24,164,636			27,230,553			23,850,830

The accompany notes are an integral part of these unaudited condensed consolidated financial statements.

SPI ENERGY CO., LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Net loss	$	(13,493	)	$	(16,479	)	$	(22,497	)	$	(31,046	)
Other comprehensive loss, net of tax of nil:
Foreign currency translation adjustments		(2,195	)		(1,039	)		(4,557	)		(1,325	)
Total comprehensive loss		(15,688	)		(17,518	)		(27,054	)		(32,371	)
Comprehensive (loss) income attributable to noncontrolling interests		(77	)		90			(612	)		179
Comprehensive loss attributable to shareholder of SPI Energy Co., Ltd.	$	(15,611	)	$	(17,608	)	$	(26,442	)	$	(32,550	)

The accompany notes are an integral part of these unaudited condensed consolidated financial statements.

SPIENERGY CO., LTD.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In thousands, except for share and per share data)


	Ordinary Shares				Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Equity Attributable to Shareholders of SPI Energy			Noncontrolling			Total
	Shares		Amount		Capital		Deficit			Loss			Co., Ltd.			Interests			Equity
Balances at December 31, 2021		25,352,060	$	3	$	695,073	$	(637,390	)	$	(35,257	)	$	22,429		$	3,521		$	25,950
Net loss		–		–		–		(6,845	)		–			(6,845	)		59			(6,786	)
Foreign currency translation adjustments		–		–		–		–			728			728			(663	)		65
Issuance of restricted share units to employees		229,888		–		623		–			–			623			–			623
Settlement of convertible debt with ordinary shares		752,393		–		1,750		–			–			1,750			–			1,750
Issuance of ordinary shares for settlement of consideration related to Acquisition of Phoenix		42,442		–		–		–			–			–			–			–
Share-based compensation expense		–		–		595		–			–			595			–			595
Balances at March 31, 2022		26,376,783	$	3	$	698,041	$	(644,235	)	$	(34,529	)	$	19,280		$	2,917		$	22,197
Net loss		–		–		–		(2,313	)		–			(2,313	)		95			(2,218	)
Foreign currency translation adjustments		–		–		–		–			(2,401	)		(2,401	)		(26	)		(2,427	)
Settlement of convertible debt with ordinary shares		1,615,784		–		5,337		–			–			5,337			–			5,337
Issuance of ordinary shares of Phoenix in its IPO		–		–		11,344		–			–			11,344			2,094			13,438
Share-based compensation expense		–		–		340		–			–			340			–			340
Balances at June 30, 2022		27,992,567	$	3	$	715,062	$	(646,548	)	$	(36,930	)	$	31,587		$	5,080		$	36,667
Net loss		–		–		–		(13,439	)		–			(13,439	)		(54	)		(13,493	)
Foreign currency translation losses		–		–		–		–			(2,172	)		(2,172	)		(23	)		(2,195	)
Settlement of convertible debt with ordinary shares		848,669		–		1,572		–			–			1,572			–			1,572
Issuance of unrestricted shares to the managements of Phoenix		–		–		–		–			–			–			793			793
Exercise of vested options by employees of Phoenix		–		–		–		–			–			–			138			138
Stock based compensation		–		–		707		–			–			707			–			707
Balances at September 30, 2022		28,841,236	$	3	$	717,341	$	(659,987	)	$	(39,102	)	$	18,255		$	5,934		$	24,189

	Ordinary Shares				Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Equity Attributable to Shareholders of SPI Energy			Noncontrolling			Total
	Shares		Amount		Capital		Deficit			Loss			Co., Ltd.			Interests			Equity
Balances as of December 31, 2020		22,340,689	$	2	$	670,101	$	(591,899	)	$	(32,947	)	$	45,257		$	3,129		$	48,386
Net loss		–		–		–		(8,339	)		–			(8,339	)		239			(8,100	)
Foreign currency translation adjustments		–		–		–		–			34			34			(248	)		(214	)
Issuance of ordinary shares in offering		1,365,375		–		13,591		–			–			13,591			–			13,591
Share-based compensation		–		–		3,074		–			–			3,074			–			3,074
Exercise of share option		157,000		–		600		–			–			600			–