Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the section of this Annual Report on Form 10-K captioned “Business” and our consolidated financial statements and the related notes to those statements included elsewhere in this Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, results of operations, cash flows, financial condition and prospects based on current expectations that involve risks, uncertainties and assumptions. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” included elsewhere in this Annual Report on Form 10-K. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Business Overview and 2025 Full Year Results
Our mission is to deliver smart systems solutions, combining hardware and software, which enhance safety, increase energy yield, and lower operating costs of residential, commercial, and utility-scale solar systems. We believe we are a worldwide leader in the development and delivery of products and solutions that are flexible and dependable, increase the energy generation of solar energy systems and address the need for change. We primarily offer products and services through distributors and solar installers. We have a worldwide footprint with product installations in over 100 countries and on all seven continents.
Further information regarding our business is provided in “Part 1, Item 1. Business” of this Annual Report on Form 10-K.
Recent Developments
Direct Offering.On February 24, 2026, we entered into a Purchase Agreement with certain Investors, pursuant to which we issued and sold, in a registered direct offering (the “Offering”), an aggregate of 5,000,000 shares of common stock, for gross proceeds of $15.0 million, before deducting placement agent fees and offering expenses. The closing of the Offering occurred on February 26, 2026.
The Shares were offered by us pursuant to our effective shelf registration statement on Form S-3 (File No. 333-282013) that was filed with the SEC on September 9, 2024, and declared effective on September 17, 2024. A prospectus supplement and accompanying base prospectus describing the terms of the Offering has been filed with the SEC.
Convertible Promissory Notes Extinguishment. On December 17, 2025, we extinguished our Convertible Promissory Notes. As a result, we recorded a loss on extinguishment on Convertible Promissory Notes of $1.1 million, which is included in other (income) expense, net in the in the consolidated statements of operations and comprehensive loss. The loss primarily reflects the difference between the cash paid to extinguish the note and the note’s net carrying amount at the extinguishment date, including the write-off of unamortized debt issuance costs. See Note 7, “Debt,” of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
Key Factors that May Influence Future Results of Operations
Our financial results of operations may not be comparable from period to period due to several factors. Key factors affecting our results of operations are summarized below.
Patent Sale. On December 16, 2025, we entered into a patent purchase agreement involving the sale of certain patent rights. Under the terms of the patent purchase agreement, total consideration is expected to be between $15.0 million and $18.0 million. We received $15.0 million at the initial closing, and an additional holdback amount of up to $3.0 million is contingent on the satisfaction of specified conditions. As of December 31, 2025, these conditions had not been met. Additionally, seller-retained royalties under the purchase patent agreement, which entitles us to receive up to $5.0 million of future license proceeds, represent contingent income and will be recognized in other (income) expenses, net when and if earned.
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Trade Tariffs. It is uncertain what impact new or existing tariffs, trade restrictions, or retaliatory actions, may have on us, our business, the solar industry, and our customers. U.S. net revenue represented 23.3% of our total net revenue for the year ended December 31, 2025. Substantially all of our MLPE products, which represented 68.9% of U.S. net revenues during the year ended December 31, 2025, were manufactured in Thailand. Our GO Energy Storage Systems (“GO ESS”) products represented 23.1% of U.S. net revenues during the year ended December 31, 2025. Beginning in October 2025, we transitioned production of our GO ESS product line for the U.S. market from China to Vietnam. As of December 31, 2025, we were subject to tariffs on all products imported into the United States from the countries in which we manufacture our products.
While we are actively evaluating alternative sourcing strategies, the global supply chain for key hardware components necessary to manufacture our products remains concentrated in regions affected by these trade measures, and identifying qualified suppliers outside of these regions with sufficient capacity and technical expertise remains challenging.
Any escalation in trade tensions, new or expanded tariffs, or broader geopolitical instability could impact our sourcing flexibility, product pricing, cost structure, and/or customer demand for our product lines. These factors, combined with potential economic softening, could lead to elevated inventory levels and reduced leverage in supplier pricing negotiations. Any of these outcomes could negatively affect our operations, financial performance, and cash flows.
Managing Supply Chain. We rely on contract manufacturers and suppliers to produce our components, with a significant portion of our supply chain originating in Thailand and China. As noted above, we transitioned production of our GO ESS product line for the U.S. market from China to Vietnam in October 2025. Our ability to grow depends, in part, on the ability of our contract manufacturers and suppliers to provide high quality services and deliver components and finished products on time and at reasonable costs. While we have diversified our supply chain, some of our suppliers and contract manufacturers are sole-source suppliers. Our concentration of suppliers could lead to supply shortages, long lead times for components and supply changes. In the event we are unable to mitigate the impact of delays and/or price increases in raw materials, electronic components and freight, as a result of new or existing tariffs, trade restrictions, retaliatory actions, or otherwise, it could delay the manufacturing and delivery of our products, which would adversely impact our cash flows and results of operations, including revenue and gross margin. In addition, in a slowing economic environment in the U.S. and worldwide, our inventory levels may continue to increase due to existing purchase commitments and our ability to negotiate volume pricing discounts may be impaired.
One Big Beautiful Bill Act of 2025.In July 2025, the OBBB was signed into law, introducing significant changes to clean energy tax credit programs that may impact our financial condition, results of operations and future prospects. The law phases out the Investment Tax Credit (“ITC”) under Section 25D of the Internal Revenue Code of 1986, as amended (the “Code”), for residential solar and storage systems purchased through cash or loans, with the credit now set to expire on December 31, 2025.
Additionally, the OBBB imposes new timing requirements for ITCs under Section 48E of the Code, which governs ITCs for solar and storage systems. Solar-only projects that do not commence construction within 12 months of the OBBB’s enactment must now be placed in service by December 31, 2027, to retain eligibility. While energy storage systems are exempt from this specific deadline, the ITC under Section 48E of the Code generally begins to phase down in 2034. The ITCs decline to 75% for projects beginning construction in 2034, 50% for projects beginning construction in 2035, and phases out entirely for projects beginning construction in or after 2036.
The legislation also raises the domestic content threshold for bonus ITC eligibility under Section 48E of the Code to match the thresholds under Section 45Y of the Code, increasing the required domestic cost share to 45% for projects beginning construction on or after June 16, 2025, and before January 1, 2026. The percentage increases to 50% for projects beginning construction during calendar year 2026 and 55% for projects beginning construction after December 31, 2026. In parallel, the OBBB introduces new compliance requirements under the Foreign Entity of Concern (“FEOC”) provisions applicable to both Section 48E of the Code and the Advanced Manufacturing Production Tax Credit (“AMPTC”) under Section 45X of the Code. These provisions establish escalating content sourcing restrictions and other restrictions, generally applicable to taxable years beginning after the date of enactment of the OBBB, for qualifying solar and storage projects and for manufactured components.
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On July 7, 2025, the President issued an Executive Order directing the Treasury Department to provide updated guidance within 45 days regarding the “beginning of construction” rules for Section 48E of the Code and to implement the FEOC restrictions.
These legislative and regulatory developments may negatively impact our eligibility for certain tax credits, the competitiveness of our offerings to solar and storage system lease providers, and the overall demand for our products. If we are unable to meet the revised domestic content or FEOC requirements, our ability to qualify for these incentives could be impaired, which may adversely affect our business and results of operations.
Demand for Products. Demand for our products continued to increase in 2025 following the industry-wide slow down that began in the second half of 2023 and continued into the 2024.We continued to see a recovery across the major markets we serve, particularly in Europe and the United States, which contributed to revenue growth of 91.7% for the year ended December 31, 2025 compared to the same period 2024. We believe this improvement was driven by a combination of strengthening market conditions and our ability to gain market share in the markets we serve.
Macroeconomic and Market Conditions. The global macroeconomic and market uncertainty has adversely impacted the U.S. and global economies and may continue to do so. As our global footprint expands, we are increasingly exposed to the effects of this evolving environment, including inflation and input-cost pressures, interest rate levels and volatility, tariffs and changes in trade policy, foreign currency fluctuations, potential economic slowdowns or recessions, geopolitical tensions, and regulatory changes stemming from current and future trade policies. A tighter credit market for consumer and business spending could, in turn, adversely affect the spending levels of installers and end users and lead to increased price competition for our products. In addition, a tighter credit environment could adversely affect installer and end-customer demand, increase price sensitivity, and lead to greater price competition for our products. Reductions in customer spending in response to unfavorable or uncertain macroeconomic and market conditions, globally or in a particular region where we operate, have adversely affected, and could continue to adversely affect, our business, results of operations and financial condition.
Expansion of Sales, Customers, and Product Offerings. Our ability to grow revenue, in part, depends on expanding both our product and service offerings and our customer base. We primarily acquire new customers through collaboration with industry partners and distributors, and while we expect near-term revenue to remain concentrated among existing customers, we plan to expand our presence in the residential markets in the U.S. and EMEA. While the majority of our North American revenue is currently generated from commercial and industrial markets, we are actively working to grow our presence in the U.S. residential market through offerings with residential solar providers. Internationally, we continue to evaluate and invest in new market opportunities, particularly in the EMEA region, where we have begun offering our residential solutions in Italy and Germany.
Additionally, we have made, and plan to continue to make, substantial investments in research and development initiatives to support new product introductions. Although a significant portion of our revenue is derived from our MLPE products, we are continuing to develop and promote additional offerings such as our GO ESS product line and Predict+ service, which we believe will help contribute to long-term revenue growth and market leadership. We believe that our entry into new markets will facilitate revenue growth and customer diversification.
Key Operating and Financial Metrics
We regularly review a number of metrics, including the following key operating and financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. We believe the operating and financial metrics presented are useful in evaluating our operating performance, as they are similar to measures used by our public competitors and are regularly used by securities analysts, institutional investors, and other interested parties in analyzing operating performance and prospects.
The following table sets forth these metrics for the periods presented:
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Year Ended December 31, Change in
(in thousands, except percentages) 2025 2024 $ %
Gross margin 42.8 % (7.7 %)
Gross Profit (Loss) and Gross Margin
We define gross profit (loss) as total net revenue less cost of revenue, and define gross margin expressed as a percentage, as the ratio of gross profit to revenue. Gross profit (loss) and margin can be used to understand our financial performance and efficiency and allow investors to evaluate its pricing strategy and compare it against competitors. We use these metrics to make strategic decisions identifying areas for improvement, set targets for future performance and make informed decisions about how to allocate resources going forward.
Key Components and Comparison of Results of Operations
Net Revenue
We generate revenue primarily through the sale of our hardware products, SaaS platform, Predict+, our web-based monitoring services and royalties. Our revenue model is structured around the delivery of fully functional hardware products at the time of shipment, requiring no further modification for customer use. These products are sold primarily to distributors who then resell to end users, with our revenue recognition practices ensuring that revenue is recognized when control of the products is transferred to the customer.
Our revenue is influenced by changes in the sales volume of our products and services, market supply and demand, promotional incentives and the offerings of our competitors. The growth of our revenue is dependent on the following factors:
•
our ability to grow our sales with existing customers and the addition of new customers in current and new markets;
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our ability to expand upon our current product and service offerings;
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our ability to manage our supply chain effectively;
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our ability to sustain our market competitiveness through cost efficiency and continuous innovation in our technology;
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our ability to navigate macroeconomic trends and the global regulatory environment; and
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our capability to consistently promote our product and service portfolio, thereby enhancing our brand visibility and establishing a distinct market position.
Years endedDecember 31, 2025 and 2024
Year Ended December 31, Change in
(in thousands, except percentages) 2025 2024 $ %
Net revenue increased by $49.5 million or 91.7% for the year ended December 31, 2025, as compared to the same period in 2024. The increase is driven primarily by an increase of $42.1 million or 87.2% in net revenue from our MLPE product line, compared to the same period in 2024, which is primarily attributable to the continued market recovery that began in the first quarter of 2024 and increased market acceptance of our products. Additionally, our GO ESS product line increased by $6.2 million or 178.6% in net revenue for the year ended December 31, 2025, compared to the same period in 2024, which is primarily attributable to increased solar repowering activities. Please
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see the section below for a discussion of the factors influencing the fluctuations in net revenue for each of our geographic regions.
Year Ended December 31, Change in
(in thousands, except percentages) 2025 2024 $ %
•
EMEA – Net revenue for the EMEA region increased by $36.9 million or 113.2% for the year ended December 31, 2025, as compared to the same period in 2024. The increase is driven primarily by an increase of $33.1 million and $3.2 million in net revenue from our MLPE and GO ESS product lines, respectively. This growth was primarily driven by higher demand of our MLPE products in Germany, the Czech Republic, the United Kingdom, Italy and Poland, in addition to the sale of $3.1 million of our GO ESS products to a customer in Italy.
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Americas – Net revenue for the Americas region increased by $13.4 million or 102.0% for the year ended December 31, 2025, as compared to the same period in 2024. The increase is driven primarily by increases of $9.7 million, $2.9 million, and $0.5 million in net revenue from our MLPE product line, GO ESS product lines and royalty revenue, respectively. This growth was primarily attributable to increased demand in the United States, including demand related to repowering activity, driven by higher sales of our MLPE product line, increased promotional activities for our GO ESS product line, and increased royalty revenue resulting from a new royalty agreement entered into during the year ended December 31, 2025.
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APAC – Net revenue for the APAC region decreased by $0.8 million or 9.2% for the year ended December 31, 2025, as compared to the same period in 2024. The change is driven primarily by a decrease of $0.7 million in net revenue from our MLPE product line in Australia, the Philippines, Thailand and Singapore.
Cost of Revenues and Gross Profit
Our cost of revenues consists primarily of product costs, warranty costs, and logistics costs, as well as inventory write-downs, shipping and handling costs, hosting service costs related to the monitoring service, and depreciation and amortization of manufacturing test equipment. We outsource our manufacturing to third-party contract manufacturers and negotiate product pricing on a quarterly basis. Our product costs are affected by the advancement of technology in both our hardware and services, economies of scale resulting in lower component costs, and improvements in our overall manufacturing and production processes.
Key components of our logistics supply channel consist of third-party distribution centers in the U.S., Europe, and China. Finished goods are either shipped to our customers directly from our contract manufacturers or shipped to third-party distribution centers and then distributed to our customers.
Gross profit may fluctuate from one reporting period to the next as the components of net revenue and cost of revenue are affected by market price fluctuations whose changes impact our average selling prices, product cost, product mix, customer mix, warranty costs and freight costs.
Year Ended December 31, Change in
(in thousands, except percentages) 2025 2024 $ %
Gross margin 42.8 % (7.7 )%
Years endedDecember 31, 2025 and 2024
Cost of revenue increased by $1.0 million or 1.7% for the year ended December 31, 2025, as compared to the same period in 2024. The increase is primarily driven by a 91.7% increase in net revenue for the year ended
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December 31, 2025, compared to the same period in 2024. In addition to higher net revenue, the increase was driven by higher product warranty expense, primarily due to an increased number of units sold during the period, as well as a change in estimated future service delivery costs. The change was also driven by an increase of $1.5 million in customs fees primarily associated with the tariffs that were enacted in 2025. The increase was partially offset by the sale of GO ESS inventory in 2025 that had been previously reserved in 2024. During the year ended December 31, 2024, the Company recorded $23.5 million of inventory reserve charges, primarily related to excess and slow-moving GO ESS inventory and lower sales volumes driven by unfavorable macroeconomic and market conditions in the second half of 2024.
Gross profit increased by $48.5 million or 1,167.2% from a gross loss of $4.2 million for the year ended December 31, 2024, to a gross profit of $44.4 million for the year ended December 31, 2025. Gross margin increased by 50.5 percentage points for the year ended December 31, 2025, as compared to the same period in 2024. The increases were primarily driven by an 88.8% decrease in excess and obsolete inventory expense, in addition to higher-margin sales of previously reserved GO ESS inventory, resulting from reserves established in the second half of 2024.
Operating Expenses
Operating expenses consist of research and development, sales and marketing and general and administrative expenses. Personnel-related costs are the most significant component of each of these expense categories and include salaries, benefits, payroll taxes, sales commissions, incentive compensation and stock-based compensation. Refer below for further details on the separate components of operating expenses.
Research and Development
Research and development expenses consist of personnel-related expenses and facility-related expenses. Research and development employees are primarily engaged in the design and development of our MLPE, GO ESS solutions and Predict+ products. We devote substantial resources to research and development programs that focus on enhancements to, and cost efficiencies in, our existing products or services and timely development of new products and services that utilize technological innovation to drive down product costs, improve functionality and enhance reliability. We intend to continue to invest appropriate resources in our research and development efforts because we believe they are critical to maintaining our competitive position.
Year Ended December 31, Change in
(in thousands, except percentages) 2025 2024 $ %
Percentage of net revenue 8.9 % 18.3 %
Years endedDecember 31, 2025 and 2024
Research and development expense decreased by $0.6 million or 6.2% for the year ended December 31, 2025, as compared to the same period in 2024. The decrease is attributed to reduced payroll expense resulting from lower headcount during the year ended December 31, 2025, compared to the same period in 2024, primarily due to workforce reductions of 10% in April 2024 that were implemented in response to the industry-wide slowdown in 2023.
The amount of research and development expenses may fluctuate from period to period due to differing levels and stages of development activity.
Sales and Marketing
Sales and marketing expense consist primarily of personnel-related expenses, as well as advertising, travel, trade shows, marketing, customer support and other indirect costs. We expect to continue to make investments in this area to enable us to execute our strategy to increase our market penetration geographically and enter into new markets by expanding our customer base of distributors.
Year Ended December 31, Change in
(in thousands, except percentages) 2025 2024 $ %
Percentage of net revenue 16.8 % 31.3 %
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Years endedDecember 31, 2025 and 2024
Sales and marketing expense increased by $0.5 million or 3.0% for the year ended December 31, 2025, as compared to the same period in 2024. The increase was primarily due to increased payroll costs for the year ended December 31, 2025, compared to the prior year ended December 31, 2024. The increase was primarily attributable to higher incentive compensation, sales commissions and stock-based compensation expense. These increases were partially offset by lower payroll expense due to decreased headcount during the year ended December 31, 2025, compared to 2024 following the workforce reduction noted above. The increase was also partially offset by a decrease in professional service costs for the year ended December 31, 2025, compared to the same period in 2024.
General and Administrative
General and administrative expense consist primarily of personnel-related expenses for our executive, finance, human resources, information technology and legal organizations, facilities costs, and fees for professional services. Fees for professional services consist primarily of outside legal, accounting and information technology consulting costs.
Year Ended December 31, Change in
(in thousands, except percentages) 2025 2024 $ %
Percentage of net revenue 21.4 % 39.0 %
Years endedDecember 31, 2025 and 2024
General and administrative expense increased by $1.1 million or 5.3% for the year ended December 31, 2025, as compared to the same period in 2024. This was driven primarily by an increase in payroll-related incentive compensation in 2025 compared to the same period in 2024. Additionally, the increase was driven in part by a less favorable impact from credit reserves, as 2024 benefited from collections on certain customer balances previously reserved during late 2023 and early 2024 amid the industry-wide slowdown. These increases were partially offset by decreases in legal and facilities expense for the year ended December 31, 2025, compared to the same period in 2024.
Other (Income) Expenses, Net
Other expenses, net, primarily consist of interest income earned on our cash and short term investments, realized gains and losses on short-term and long-term marketable securities, interest expense and fees under our convertible note, non-cash interest expense related to the amortization of debt issuance costs, and non-cash charges recognized for the change in fair value of our contingent share liability, losses or gains on sale intangible assets and losses or gains on debt extinguishment. Refer below for further details on the separate components of other (income) expenses, net.
Year Ended December 31, Change in
(in thousands, except percentages) 2025 2024 $ %
Change in fair value of contingent shares liability — $ (152 ) $ 152 100.0 %
Gain on sale of intangible assets (14,637 ) — (14,637 ) NM
Loss on extinguishment of Convertible Promissory Note 1,132 — 1,132 NM
Years endedDecember 31, 2025 and 2024
The change in fair value of contingent shares liability was attributable to the revaluation of contingent shares issued in connection with the acquisition of Tigo Energy AI Ltd. (f/k/a Foresight Energy, Ltd. (“fSight”)) at each reporting period based on the Company’s share price as of the revaluation date. The final release of the contingent shares occurred on July 25, 2024.
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The gain on sale of intangible assets was attributable to the patent sale which occurred on December 16, 2025. See Note 14, “Patent Sale,” of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
The loss on extinguishment of Convertible Promissory Note was attributable to the loss recognized on the repayment of the L1 Energy Capital Management note on December 17, 2025. See Note 7, “Debt,” of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
Interest expense decreased by $0.4 million or 3.6% for the year ended December 31, 2025, as compared to the same period in 2024. The decrease was primarily driven the extinguishment of the Company’s Convertible Promissory Note on December 17, 2025, which reduced the period over which interest was accrued, and issuance costs were amortized during 2025.
Interest income increased by a de minimis amount for the year ended December 31, 2025, as compared to the same period in 2024.
Other expenses, net of decreased by a de minimis amount for the year ended December 31, 2025, as compared to the same period in 2024.
Income Tax Expense
Year Ended December 31, Change in
(in thousands, except percentages) 2025 2024 $ %
Years endedDecember 31, 2025 and 2024
Income tax expense increased by $0.5 million or 485.4% for the year ended December 31, 2025, as compared to the same period in 2024. The increase was primarily driven by a settlement of a foreign tax examination during the year ended December 31, 2025. See Note 13, “Income Taxes,” of the notes to consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.
Liquidity, Going Concern and Capital Resources
In accordance with ASU No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“Subtopic 205-40”), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents of $7.7 million and total working capital, which we define as current assets less current liabilities, of $19.2 million. Our principal uses of cash are for funding our operations, capital expenditures, other working capital requirements and other investments. On December 17, 2025, the Company repaid the full principal balance and accrued interest of its Convertible Promissory Note (see Note 7, “Debt”). As described above in the section entitled “Recent Developments,” on February 26, 2026, we closed the Offering resulting in gross proceeds of $15.0 million, before deducting placement agent fees and offering expenses, and net proceeds of approximately $14.0 million, after deducing placement agent fees and estimated offering expenses (see Note 15, “Subsequent Events”). We believe that our cash provided by operations, as well as the gross proceeds received from the Offering, will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments for at least the next 12 months from the issuance date of this Form 10-K for the year ended December 31, 2025.
At-the-market offering. In November 2024, we entered into an ATM Agreement with the Sales Agent, pursuant to which we may offer and sell shares of our common stock from time to time, through the Sales Agent in transactions deemed to be “at-the-market” offerings under federal securities laws (the “2024 ATM Program”). The program concluded in October 2025.
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During the year ended December 31, 2025, a total of 8,309,168 shares of common stock were issued pursuant to the ATM Agreement for aggregate gross proceeds of approximately $14.2 million, before deducting commissions and offering expenses payable by us. As of December 31, 2025, the 2024 ATM Program was fully utilized, and there are no additional shares available for issuance under the program. Refer to Note 9, in Part II, Item 8 of this Annual Report on Form 10-K for more information on the at-the-market offering.
Patent Sale. On December 16, 2025, we entered into a patent purchase agreement involving the sale of certain patent rights. Under the terms of the patent purchase agreement, total consideration could amount between $15.0 million and $18.0 million. We received $15.0 million at the initial closing, and an additional holdback amount of up to $3.0 million is contingent on the satisfaction of specified conditions. As of December 31, 2025, these conditions had not been met. Refer to Note 14, in Part II, Item 8 of this Annual Report on Form 10-K for more information on the at-the-market offering.
Convertible Note.On December 17, 2025, we extinguished our Convertible Promissory Notes by paying $51.3 million in cash, which included principal, accrued interest and fees associated with the extinguishment. As of December 31, 2025, we had no outstanding debt obligations. Refer to Note 7, in Part II, Item 8 of this Annual Report on Form 10-K for more information on our Convertible Promissory Notes and extinguishment.
Operating Leases. We have entered into various non-cancelable operating leases primarily for our facilities with original lease periods expiring through the year 2029, with our most significant leases relating to our facilities in Los Gatos, California and Ra’anana, Israel. As of December 31, 2025, we had total lease obligations of $2.7 million recorded on our consolidated balance sheet.
Cash Flows
The following table summarizes our cash flows for the periods presented:
Year Ended December 31,
Net cash provided by (used in) operating activities $ 10,299 $ (12,354 )
Net cash provided by investing activities 22,616 19,756
Net cash used in financing activities (36,991 ) (61 )
Net (decrease) increase in cash and cash equivalents $ (4,076 ) $ 7,341
Management closely monitors expenditures and is focused on obtaining new customers and continuing to develop our products. Cash from operations and our liquidity could also be affected by various risks and uncertainties, including, but not limited to, economic concerns related to interest rates, inflation or the supply chain, including timing of cash collections from customers and other risks which are detailed in the section entitled “Risk Factors” in Part I, Item 1A to this Annual Report on Form 10-K.
Cash Flows Provided by (Used in) Operating Activities
Operating cash flows consisted of net loss adjusted for certain non-cash reconciling items, such as non-cash interest expense, stock-based compensation expense, provision to write down inventories to net realizable value, depreciation and amortization, and non-cash lease expense, and changes in our operating assets and liabilities. Cash provided by operating activities increased by $22.7 million in the year ended December 31, 2025, as compared to the same period in 2024.
Cash Flows Provided by Investing Activities
Net cash provided by investing activities was $22.6 million for the year ended December 31, 2025, which is primarily attributable to the sale and maturities of marketable securities, in addition to proceeds from the sale of intangible assets. The cash provided was partially offset by the purchase of additional marketable securities and property and equipment. Net cash provided by investing activities was $19.8 million for the year ended December 31, 2024, which is primarily attributable to the sale and maturities of marketable securities, and was partially offset by the purchase of additional marketable securities and property and equipment.
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Cash Flows Used in Financing Activities
Net cash used in financing activities increased by $37.0 million for the year ended December 31, 2025, compared to the same period in 2024 which is primarily attributable to the repayment of principal and accrued interest on our Convertible Promissory Notes, and was partially offset by proceeds from our at-the-market offering during the year ended December 31, 2025.
Off-Balance Sheet Arrangements
During the periods presented, we did not have any off-balance sheet arrangements.
Critical Accounting Estimates
The preparation of our audited consolidated financial statements and related notes requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
We have based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates due to risks and uncertainties, including uncertainty in the current economic environment due to the global impact of inflation, interest rate fluctuations, new regulations, and geopolitical conflicts. As of the date of issuance of these financial statements, we are not aware of any specific event or circumstance that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities. For a description of our significant accounting policies, see Note 2. “Summary of Significant Accounting Policies,” in Part II, Item 8 of this Annual Report on Form 10-K. An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. We believe the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of our consolidated financial statements.
Inventory
Our inventories are comprised of sellable finished goods, raw materials bought on behalf of our contract manufacturers, and defective units returned under our warranty policy.
Sellable finished goods and raw material inventories are valued at the lower of cost or net realizable value, based on the first-in, first-out (“FIFO”) method. Certain factors could affect the realizable value of our inventories, including market and economic conditions, technological changes, existing product changes (mainly due to cost reduction activities) and new product introductions. We consider historic usage, expected demand, anticipated sales price, the effect of new product introductions, product obsolescence, and other factors when evaluating the net realizable value of inventories. Inventory write-downs are equal to the difference between the cost of inventories and their estimated net realizable value. Inventory write downs are recorded as cost of revenues in the accompanying consolidated statements of operations and comprehensive loss.
If estimates regarding customer demand are inaccurate or changes in technology affect demand for certain products in an unforeseen manner, we may be exposed to potential losses.
See Note 2 and Note 8 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to inventory valuation.
Product Warranties
We provide a standard limited product warranty for our solar products against defects in materials and workmanship under normal use and service conditions. Our standard warranty period is 25 years for our MLPE devices, 12.5 years for our inverters, and 11 years for our batteries. Other products are sold with standard limited
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warranties that typically range in duration from five to ten years. In addition, customers in the United States can purchase extended warranties for inverters that extend the warranty period up to 25 years.
Our products are designed to meet the warranty periods, and our reliability procedures cover component selection, design, accelerated life cycle tests, and end-of-manufacturing line testing. However, since our history in selling MLPE devices, batteries, inverters and other hardware is shorter than the warranty period, the calculation of warranty provisions is inherently uncertain.
We accrue estimated warranty costs at the time of sale based on anticipated warranty claims, which are estimated based on actual historical warranty claims experience. Warranty provisions, computed on a per-unit sold basis, are based on our best estimate of such costs and are included in our cost of revenues. The warranty obligation is determined based on actual and predicted failure rates of the products, cost of replacement and service and delivery costs incurred to correct a defective product. Our warranty obligation requires management to make assumptions regarding estimated failure rates and replacement costs. If actual warranty costs differ significantly from these estimates, adjustments may be required in the future, which could adversely affect our gross profit and results of operations. Warranty obligations are classified as short-term and long-term warranty obligations, based on the period in which the warranty is expected to be claimed. The product warranty liability (short and long-term) was $9.3 million and $5.8 million, for the years ended December 31, 2025, and 2024, respectively.
See Note 2 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to product warranty.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination, including identifiable intangible assets and liabilities assumed, and is evaluated for impairment at the reporting unit level. Given the Company operates as a single reporting unit, goodwill is assessed on a consolidated basis.
Goodwill is not amortized and is tested for impairment at least on an annual basis. The goodwill impairment test is performed according to the following principles:
1.
An initial qualitative assessment may be performed to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount;
2.
If we conclude it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative fair value test is performed. An impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value is recognized.
As we operate as a single reporting unit, with a centralized business model, we used the market approach to estimate the fair value of the reporting unit. The market approach allows the use of the market price of an individual equity security at the assessment date to calculate the fair value of the reporting unit. We used the closing stock price at the date of assessment to calculate our fair value. As we are considered one reporting unit, we used the consolidated balance sheet to derive the carrying amount of the reporting unit, with the inclusion of goodwill.
We complete the required annual testing of goodwill impairment for the reporting unit in the fourth quarter of each year to determine if goodwill should be impaired. During the year ended December 31, 2025, no impairment of goodwill has been identified. For the annual test impairment test that was conducted in the fourth quarter of 2025, fair value exceeded the carrying value by 257.9%.
The valuation of goodwill inherently involves a degree of uncertainty, particularly as it relates to our stock price and the calculation of our fair value. We closely monitor all conditions and are prepared to perform interim impairment tests should there be indications that the fair value of the reporting unit may have declined below its carrying amount.
See Note 2 and 12 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to goodwill.
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Income Taxes
Income taxes are accounted for under the asset-and-liability method as required by ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period corresponding to the enactment date.
Valuation Allowance
We establish an income tax valuation allowance when available evidence indicates that it is more likely than not that all or a portion of a deferred tax asset will not be realized. In assessing the need for a valuation allowance, we consider the amounts and timing of expected future deductions or carryforwards and sources of taxable income that may enable utilization. We maintain an existing valuation allowance until enough positive evidence exists to support its reversal. Changes in the amount or timing of expected future deductions or taxable income may have a material impact on the level of income tax valuation allowances. Our assessment of the realizability of the deferred tax assets requires judgment about our future results. Inherent in this estimation is the requirement for us to estimate future book and taxable income and possible tax planning strategies. These estimates require us to exercise judgment about our future results, the prudence and feasibility of possible tax planning strategies, and the economic environment in which we do business. It is possible that the actual results will differ from the assumptions and require adjustments to the allowance. Adjustments to the allowance would affect future net income.
As of December 31, 2025, our net DTA balance on a consolidated basis was $0.3 million, net of a valuation allowance of $37.1 million. Significant domestic DTAs were generated, primarily due to net operating losses, research and development tax credits, along with capitalized expenditures including research and development. We assessed the ability to realize the benefits of our DTAs in each reporting period by evaluating all available positive and negative evidence, objective and subjective in nature, including, but not limited to, (1) cumulative results of operations in recent years, (2) sources of recent pre-tax income, (3) estimates of future taxable income, (4) respective carryback and/or carryforward periods of tax attributes available to date, and (5) limitation on NOL utilization against taxable income. We measured our current DTA balances against estimates of future income based on objectively verifiable operating results from our recent history, and concluded that sufficient future taxable income will not be generated to realize the benefits of our federal, state and certain foreign DTAs. Therefore, we continue to maintain a valuation allowance against our domestic and certain foreign net deferred tax assets.
Uncertain Tax Positions
We follow ASC Topic 740 that prescribes a financial statement recognition threshold and measurement process for uncertain tax positions taken or expected to be taken on our income tax returns. We recognize income tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. We include interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statements of operations.
The calculation of our current provision for income taxes involves the use of estimates, assumptions and judgments while taking into account current tax laws, interpretation of current tax laws and possible outcomes of future tax audits. We have established reserves to address potential exposures related to tax positions that could be challenged by tax authorities. Although we believe our estimates, assumptions and judgments to be reasonable, any changes in tax law or interpretation of tax law and the resolutions of potential tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements.
See Note 2 and 13 to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information related to income taxes.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is not required to provide the information required under this Item.
Item 8. Financial Statements and Supplementary Data.
TABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) 72
Consolidated Balance Sheets as of December 31, 2025, and 2024 73
Notes to Consolidated Financial Statements 79
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Report of Independent Registered Public Accounting Firm
To the stockholders and the Board of Directors of Tigo Energy, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Tigo Energy, Inc. and subsidiaries (collectively the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the U.S. Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
San Jose, California
March 19, 2026
We have served as the Company’s auditor since 2023.
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TIGO ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
December 31,
ASSETS
Current assets
Marketable securities, short-term — 8,156
Prepaid expenses and other current assets 5,148 3,533
Operating lease right of use assets 2,338 1,576
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accrued expenses and other current liabilities 7,129 7,361
Deferred revenue, current portion 961 525
Warranty liability, current portion 626 496
Operating lease liabilities, current portion 856 649
Warranty liability, net of current portion 8,718 5,302
Deferred revenue, net of current portion 860 644
Long-term debt, net of unamortized debt discount and issuance costs — 40,511
Operating lease liabilities, net of current portion 1,817 961
Other long-term liabilities 251 —
Commitments and Contingencies (Note 8)
Stockholders’ equity
Accumulated other comprehensive income — 2
Total liabilities and stockholders’ equity $ 78,037 $ 72,911
See accompanying notes to consolidated financial statements.
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TIGO ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share data)
Year Ended December 31,
Operating expenses:
Other (income) expenses, net:
Change in fair value of contingent shares liability — (152 )
Gain on sale of intangible assets (14,637 ) —
Loss on extinguishment of Convertible Promissory Note 1,132 —
Total other (income) expenses, net (3,222 ) 10,646
Loss before income tax expense (1,277 ) (62,643 )
Other comprehensive loss:
Total comprehensive loss $ (1,882 ) $ (62,685 )
Loss per common share
Weighted-average common shares outstanding
See accompanying notes to consolidated financial statements.
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TIGO ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
Stockholders’ equity
Common stock
Issuance of common stock upon exercise of stock options 342,044 — 157 — — 157
Stock-based compensation expense — — 7,863 — — 7,863
Shares withheld for taxes upon options exercised (43,077 ) — — — — —
See accompanying notes to consolidated financial statements.
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TIGO ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
Stockholders’ equity
Common stock
Issuance of common stock upon exercise of stock options 789,097 — 272 — — 272
Stock-based compensation expense — — 7,721 — — 7,721
See accompanying notes to consolidated financial statements.
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TIGO ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
Cash flows from operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,266 1,219
Provision to write down inventories to net realizable value 1,481 23,108
Change in fair value of contingent shares liability — (152 )
Change in allowance for credit losses (17 ) (1,684 )
Accretion of interest on marketable securities (467 ) (354 )
Loss on disposal of property and equipment 12 —
Gain on sale of intangible assets (14,637 ) —
Loss on extinguishment of Convertible Promissory Note 1,132 —
Changes in operating assets and liabilities:
Prepaid expenses and other assets (1,818 ) 1,658
Accrued expenses and other liabilities (232 ) (793 )
Operating lease liabilities (605 ) (1,169 )
Other long-term liabilities 251 $ —
Net cash provided by (used in) operating activities $ 10,299 $ (12,354 )
Cash flows from investing activities:
Purchase of marketable securities (31,319 ) (10,976 )
Purchase of property and equipment (642 ) (1,286 )
Sales and maturities of marketable securities 39,940 32,018
Proceeds from sale of intangible assets 14,637 —
Net cash provided by investing activities $ 22,616 $ 19,756
Cash flows from financing activities:
Proceeds from exercise of stock options 157 272
Proceeds from at-the-market offering 13,467 16
Payment of offering costs related to at-the-market offering — (227 )
Payment of tax withholdings on restricted stock awards (367 ) (122 )
Repayment of Convertible Note (50,248 ) —
Net cash used in financing activities $ (36,991 ) $ (61 )
Net (decrease) increase in cash (4,076 ) 7,341
Cash and cash equivalents at beginning of period 11,746 4,405
Cash and cash equivalents at end of period $ 7,670 $ 11,746
See accompanying notes to consolidated financial statements.
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Years Ended December 31,
Supplemental disclosure of cash flow information:
Cash paid for income taxes, net
Foreign:
Cash paid for income taxes, net $ 263 $ 575
Supplemental schedule of non-cash investing and financing activities:
Property and equipment in accounts payable $ 206 $ —
Non-cash consideration paid for fSight acquisition $ — $ 375
See accompanying notes to consolidated financial statements.
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TIGO ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
Nature of Operations
Tigo Energy, Inc. and subsidiaries (together, the “Company”) consists of Tigo Energy, Inc. (“Tigo”), its wholly-owned direct and indirect subsidiaries: Tigo Energy MergeCo, Inc. (f/k/a Tigo Energy, Inc.) (“Legacy Tigo”), Tigo Energy Brasil Ltda., Tigo Energy Philippines Inc., Tigo Energy Israel Ltd., Tigo Energy AI Ltd. (f/k/a Foresight Energy, Ltd. (“fSight”)), Tigo Energy Italy SRL, Tigo Energy Equipment Trading (Suzhou) Co., Ltd. and Tigo Energy Australia Pty Ltd. Prior to the consummation of the Business Combination (as defined below), the operations of the Company were conducted through Legacy Tigo. Legacy Tigo was incorporated in Delaware in 2007 and commenced operations in 2010.
The Company provides solar and energy storage solutions, including module level power electronics (“MLPE”) designed to maximize the energy output of individual solar modules, delivering more energy, active management, and enhanced safety for utility, commercial, and residential solar arrays. By combining its MLPE and solar optimizer technology with intelligent, cloud-based software capabilities, the Company enables advanced energy monitoring, system diagnostics, and real-time control. These smart hardware and software solutions enhance system performance, lower operating costs, and ensure compliance with safety regulations, including rapid shutdown requirements. In addition to MLPE, the Company develops and manufactures inverters and battery energy storage systems for the residential solar-plus storage market, further expanding its suite of solutions for efficient and reliable energy management. The Company is headquartered in Los Gatos, California, with offices in Europe, Asia, and the Middle East.
Basis of Presentation
The accompanying audited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
The Company has determined the functional currency of the subsidiaries to be the U.S. dollar. The Company remeasures monetary assets and liabilities of its foreign operations at exchange rates in effect at the balance sheet date and nonmonetary assets and liabilities at their historical exchange rates. Net revenue and expenses are remeasured at the weighted-average exchange rates during the relevant reporting period. These remeasurement gains and losses are recorded in other (income) expenses, net in the consolidated statements of operations and comprehensive loss and were not material for the years ended December 31, 2025, and 2024.
2.
Summary of Significant Accounting Policies
Liquidity and Going Concern
In accordance with ASU No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern” (“Subtopic 205-40”), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
As of December 31, 2025, the Company had cash and cash equivalents of $7.7 million and total net working capital, which we define as current assets less current liabilities, of $19.2 million. On December 17, 2025, the Company repaid the full principal balance and accrued interest of its Convertible Promissory Note (see Note 7, “Debt”). Additionally, on February 24, 2026, we issued and sold, in the Offering (as defined above), an aggregate of 5,000,000 shares of the Company’s common stock, par value $0.0001 per share, at a purchase price of $3.00 per share, resulting in gross proceeds of $15.0 million to the Company, before deducting placement agent fees and offering expenses (see Note 15, “Subsequent Events”). We believe that our cash provided by operations, as well as the gross proceeds received from the Offering, will provide adequate liquidity for ongoing operations, planned capital
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expenditures and other investments for at least the next 12 months from the issuance date of this Form 10-K for the year ended December 31, 2025.
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Use of Estimates
The preparation of the consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Key estimates in the consolidated financial statements include revenue recognition, fair value of investments, allowance for credit allowances, inventory valuation, impairment of long-lived assets, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, product warranty liabilities, incremental borrowing rate for right of use assets and lease liability, valuation allowance on deferred tax assets, assessment of probability of vesting of performance-based equity awards and stock-based compensation, including the underlying fair value of the common stock. These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ materially from those estimates due to risks and uncertainties.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash, marketable securities and accounts receivable. The Company maintains deposits in federally insured financial institutions, which, at times, may exceed federally insured limits. The Company believes it is not exposed to significant credit risk beyond the normal credit risk associated with commercial banking relationships as the Company’s cash is deposited with major financial institutions in the U.S., Europe, the Middle East and Asia. The Company does not believe it is exposed to any significant credit risk due to the high credit quality of the financial instruments in which the money is held. At December 31, 2025, and 2024, the Company held immaterial cash in foreign bank accounts. To date, the Company has not experienced any losses on its deposits of cash.
For the year ended December 31, 2025, no customer accounted for 10% or more of total revenue.
At times, a portion of the Company’s accounts receivable are due from customers whose individual balances represent 10% or more of total accounts receivable. Customers accounting for 10% or more of total accounts receivable were as follows:
Year Ended December 31,
Customer A 22.5 %
Customer B 10.6 %
No other customer accounted for 10% or more of total accounts receivable as of December 31, 2025.
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Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer (the “CEO”). The Company has one business activity — the design, development and sale of solar energy optimization solutions. There are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level. Accordingly, management has determined that the Company has a single operating and reportable segment. The CODM assesses performance for the Company, monitors budget versus actual results and determines how to allocate resources based on consolidated net loss as reported in the consolidated statements of operations and comprehensive loss. There are no other significant expense categories regularly provided to the CODM that are not already included in the primary financial statements herein.
Fair Value of Financial Instruments
The Company uses a three-level hierarchy, which prioritizes, within the measurement of fair value, the use of market-based information over entity-specific information for fair value measurement based on the nature of inputs used in the valuation of an asset or liability as of the measurement date. Fair value focuses on an exit price and is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The inputs or methodology used to estimate the fair value of financial instruments are not necessarily an indication of the risk associated with those financial instruments. The three-level hierarchy for fair value measurement is defined as follows:
•
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
•
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.
•
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
Management believes that the carrying amounts of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accrued expenses and accounts payable approximate fair value due to the short-term nature of these instruments.
Cash and Cash Equivalents
The Company’s cash and cash equivalents include short-term highly-liquid investments with an original maturity of 90 days or less when purchased and are carried at fair value in the accompanying consolidated balance sheets. The Company considers all highly-liquid investments with a remaining maturity of three months or less at the date of purchase to be cash. Cash consists primarily of amounts in checking and savings accounts.
Marketable Securities
The Company’s marketable securities consist of investments in U.S. agency securities and corporate bonds that are classified as available-for-sale. The securities are carried at fair value with the unrealized gains and losses included in other comprehensive loss, a component of stockholders’ equity. Realized gains, losses, and declines in value determined to be other than temporary are included in the Company’s consolidated statements of operations and comprehensive loss. If any adjustment to fair value reflects a decline in the value of the investment that the Company considers to be “other than temporary,” the Company reduces the investment to fair value through a charge to the consolidated statements of operations and comprehensive loss. No such adjustments were necessary during the periods presented.
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Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the invoiced amount, do not bear interest, and are typically due 30 days from the invoice date. The Company generally does not require collateral from its customers and maintains an allowance for anticipated credit losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical bad debts, current customer receivable balances, age of customer receivable balances and the customers’ financial condition, all of which are subject to change. Additionally, the Company monitors activities and considers future reasonable and supportable forecasts of economic conditions to adjust all general and customer specific reserve percentages, as necessary. Balances recorded for estimated credit losses are written-off when they are determined to be uncollectible. The following table sets forth activities in the allowance for credit losses for the periods indicated:
Year Ended December 31,
Allowance for credit losses, beginning balance $ 2,239 $ 4,011
Net charges to expense or (recovery) 236 (1,629 )
Allowance for credit losses, ending balance $ 356 $ 2,239
Inventory
In accordance with ASC Topic 330, “Inventory”, inventory is valued at the lower of cost or net realizable value (“NRV”) with cost determined under the first-in, first-out (“FIFO”) method. The determination of NRV involves numerous judgments, including estimated average selling prices based upon recent sales volumes, industry trends, existing customer orders, current contract price, future demand, pricing for the Company’s products and technological obsolescence of the Company’s products. Inventory that is obsolete, in excess of the Company’s forecasted demand or is anticipated to be sold at a loss is written down to its NRV based on expected demand and selling prices.
Property and equipment, net
Property and equipment is stated at cost, less accumulated depreciation. Cost includes amounts paid to acquire or construct the asset as well as any expenditure that substantially adds to the value of or significantly extends the useful life of an existing asset. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, which ranges from 1 to 25 years. Leasehold improvements are amortized over the shorter of the lease term or expected useful life of the improvements.
Leases
The Company determines if an arrangement is or contains a lease at inception. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments over the lease term.
Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments discounted using the Company’s incremental borrowing rate. Operating lease assets also include initial direct costs incurred and prepaid lease payments, minus any lease incentives. The Company’s lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.
The Company combines the lease and non-lease components in determining the operating lease assets and liabilities. The Company elected to not record right of use (“ROU”) assets or corresponding lease liabilities on the Company’s consolidated balance sheet for short term leases with an initial lease term of 12 months or less and purchase options the Company is not reasonably certain will be exercised.
Long-Lived Assets
The Company reviews its long-lived assets, which consist of property and equipment, net and operating lease right of use assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount
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of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of their carrying cost amount or fair value less cost to sell. No impairment losses were identified for the years ended December 31, 2025, and 2024.
Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price over the identifiable tangible and intangible assets acquired in addition to liabilities assumed arising from the acquisition of Tigo Energy AI Ltd (f/k/a Foresight Energy, Ltd. (“fSight”)) in 2023. Initially the Company measures goodwill based upon the value of the consideration paid plus or minus net assets assumed. The goodwill arising from the Company’s acquisition is attributable to the value of the potential expanded market opportunity with new customers.
Intangible assets have either an identifiable or indefinite useful life. Intangible assets are recorded at cost or when acquired as part of a business combination at estimated fair value. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist primarily of patents, developed technology, and customer relationships. The useful life of these intangible assets ranges from 6.7 to 10 years. We evaluate the recoverability of finite-lived intangible assets for impairment whenever there are triggering events or circumstances that may indicate the carrying amount of such assets may not be recoverable.
Goodwill is not amortized but is subject to annual impairment testing in the fourth quarter unless circumstances dictate more frequent assessments. The Company will perform an annual impairment assessment for goodwill and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount.
Customer Deposits
Customer deposits consist of deposits received by the Company, as required on certain contracts and agreements, which are refundable at the termination of the contract. Customer deposits are recorded in deferred revenue, current portion within the consolidated balance sheet.
Product Warranties
The Company estimates the cost of its warranty obligations based on several key estimates: the warranty period (which can vary from 5 to 25 years depending on the product), its historical experience of known product failure rates, costs of materials to repair or replace defective products and parts, and service delivery costs incurred in correcting product failures. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. Should the actual experience relative to these factors differ from the estimates, the Company may be required to record additional warranty reserves. Product warranty costs are recorded as expense to cost of revenue based on customer history, historical information and current trends.
The following table summarizes the changes in product warranty liability:
Year Ended December 31,
Balance at the beginning of the period $ 5,798 $ 5,632
Provision for warranty issued during period 2,968 1,284
Balance at the end of the period $ 9,344 $ 5,798
Convertible Promissory Note and Debt Extinguishment
On January 9, 2023, the Company entered into a convertible promissory note purchase agreement (the “Note Purchase Agreement”) with L1 Energy Capital Management S.a.r.l (“L1 Energy”) pursuant to which the Company
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issued a convertible promissory note in an aggregate principal amount of $50.0 million (the “Convertible Promissory Note”).
On December 17, 2025, the Company extinguished the Convertible Promissory Note. The Company recognized a loss on extinguishment of the Convertible Promissory Note of $1.1 million during the year ended December 31, 2025, which is included in other (income) expense, net in the consolidated statements of operations and comprehensive loss. Gains and losses on extinguishment of debt are recognized upon extinguishment of debt instruments and are measured as the difference between the reacquisition price and the net carrying amount of the debt at the extinguishment date. Please refer to Note 7, “Debt,” for additional details regarding the Convertible Promissory Note and the extinguishment transaction.
Revenue Recognition
The Company complies with ASC Topic 606, “Revenue from Contracts with Customers” (“ASC Topic 606”) for revenue recognition. In accounting for contracts with customers:
The Company determines revenue recognition through the following steps:
•
Identification of the contract, or contracts, with a customer
•
Identification of the performance obligations in the contract
•
Determination of the transaction price
•
Allocation of the transaction price to the performance obligations in the contract
•
Recognition of revenue when, or as, the Company satisfies a performance obligation
Revenues are recognized when control of the promised goods or services are transferred to the Company’s customers in an amount that reflects the consideration that is expected to be received in exchange for those goods or services. The Company generates all of its revenue from contracts with its customers. A description of the principal activities from which the Company generates revenue are as follows:
•
Products Delivered at a Point in Time. The Company’s primary source of revenue is the sale of its hardware products. The Company’s hardware products are fully functional at the time of shipment and do not require modification or customization for customers to use the products. The Company sells its products primarily to distributors that resell the Company’s products to end users. Distributors do not have general rights of return and generally order goods for immediate resale to end customers. The Company uses present right to payment and transfer of title as indicators to determine the transfer of control to the customer. The Company recognizes revenue at a point in time when its performance obligation has been satisfied and control of the product is transferred to the customer, which generally aligns with shipping terms. Contract shipping terms include ExWorks (“EXW”), FOB Shipping Point and FOB Destination incoterms. Under EXW (meaning the seller fulfills its obligation to deliver when it makes goods available at its premises, or another specified location, for the buyer to collect), the performance obligation is satisfied and control is transferred at the point when the customer is notified that their order is available for pickup. Under FOB Shipping Point, control is transferred to the customer at the time the good is transferred to the shipper and under FOB Destination, at the time the customer receives the goods. We deduct sales returns to arrive at net revenue. Sales tax and other similar taxes are excluded from revenues. The Company has made the election to account for shipping and handling as activities to fulfill the promise to transfer the product and as such records amounts charged to customers for shipping and handling as revenue and the related costs are included in cost of revenues.
•
Services Delivered Over Time. Revenue recognized from services delivered over time, including monitoring services and Predict+ SaaS services, represented 1.8% of total net revenue for the year ended December 31, 2025. The balance was immaterial for the year ended December 31, 2024. Sales of the Company’s hardware products can include the Company’s free or premium web-based monitoring service. These monitoring services represent a single performance obligation and is deferred at the sale date. The free monitoring service revenue is recognized ratably over an estimated service period of approximately 5 years as the service is performed. The premium monitoring service is recognized ratably
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over the contracted service period, up to 20 years, as the service is performed. The full consideration of monitoring service revenue represented less than 1% of the total net revenue during the years ended December 31, 2025, and 2024. The allocation of revenue between the hardware and monitoring service deliverables is based on the Company’s best estimate of the standalone selling price determined by considering multiple factors, including internal costs, gross margin and historical selling practices. Additionally, the Company provides software as a service (“SaaS”) platform for our Predict+ technology. The Predict+ service revenue is recognized ratably over a contract service period up to 11 years, as the service is performed.
The Company typically incurs incremental costs to acquire customer contracts related to the Company’s hardware sales in the form of sales commissions; however, because the expected benefit from these contracts is one year or less, the Company follows the ASC Topic 606 practical expedient and expenses these amounts as incurred.
The Company records certain contra revenue promotions as variable consideration and recognizes these promotions at the time the related revenue is recorded.
Deferred revenue or contract liabilities consists of payments received from customers in advance of revenue recognition for the Company’s products and service. The current portion of deferred revenue represents the unearned revenue that will be earned within 12 months of the balance sheet date. Correspondingly, noncurrent deferred revenue represents the unearned revenue that will be earned after 12 months from the balance sheet date.
See Note 5 for additional information.
Cost of Revenue
The Company includes the following in cost of revenue: product costs, warranty costs, operation personnel and logistics costs, inventory reserve charges, shipping and handling costs, hosting service costs related to the monitoring service, depreciation and amortization of manufacturing test equipment, and employee-related expenses which primarily consists of employees’ salaries and health insurance expense.
Stock-Based Compensation
The Company measures the cost of employee and non-employee services received in exchange for stock-based awards based on the grant-date fair value of the award. The Company uses the Black-Scholes option pricing model to value its stock option awards. The fair value of restricted stock units (“RSU”) granted is determined based on the price of the Company’s common stock on the date of grant. The fair value of non-market‐based performance stock units (“PSUs”) granted is determined based on the market value of the Company’s common stock at the closing market price on the grant date, and the expense is recognized based on whether achievement of performance-based vesting conditions are probable. The Company recognizes compensation expense of its awards over the requisite service period, which is typically the vesting period, for the entire award using the straight-line attribution method. The Company accounts for forfeitures as they occur.
Estimating the fair value of options requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the options, stock price volatility, the risk-free interest rate and expected dividends. The assumptions used in the Company’s Black-Scholes option-pricing model represent management’s best estimates and involve a number of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective.
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Research and Development
Research and development expenses are comprised of costs to design, develop, test or significantly improve our solar energy hardware and software solutions and primarily include personnel costs and facility-related expenses.
Advertising Costs
All advertising costs are expensed as incurred and included in sales and marketing expenses. Advertising expenses incurred by the Company were $0.6 million and $0.6 million for the years ended December 31, 2025, and 2024, respectively.
Income Taxes
Income taxes are accounted for under the asset-and-liability method as required by ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period corresponding to the enactment date. Under ASC Topic 740, a valuation allowance is required when it is more likely than not that all or some portion of the deferred tax assets will not be realized through generating sufficient future taxable income.
ASC Topic 740 defines the criterion an individual tax position must meet for any part of the benefit of the tax position to be recognized in financial statements prepared in conformity with GAAP. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not such tax position will be sustained on examination by the taxing authorities, based solely on the technical merits of the respective tax position. The tax benefits recognized in the consolidated financial statements from such a tax position should be measured based on the largest benefit having a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. In accordance with the disclosure requirements of ASC Topic 740, the Company’s policy on income statement classification of interest and penalties related to income tax obligations is to include such items as part of income tax expense.
The Tax Cuts and Jobs Act (“TCJA”) subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. Under GAAP, the Company can make an accounting policy election to either treat taxes due on the GILTI inclusion as a current period expense or factor such amounts into the Company’s measurement of deferred taxes. The Company elected to treat the GILTI inclusion as a period expense.
Comprehensive Loss
Comprehensive loss consists of two components, net loss and other comprehensive loss. Other comprehensive loss refers to gains and losses that are recorded as an element of stockholders’ equity but are excluded from net loss. The Company’s other comprehensive loss consists of the change in net unrealized gain on marketable securities.
Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures” (“Topic 740”). This ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024, although retrospective application is permitted. We have adopted and applied the guidance under the ASU for the year ended December 31, 2025, using the prospective method. See enhanced disclosures in our consolidated statement of cash flows and Note 13. “Income Taxes” in the accompanying notes to the consolidated financial statements for further detail.
Recently issued accounting pronouncements not yet adopted
In July 2025, the FASB issued ASU No. 2025-05 — Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which added a practical expedient that
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assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. The guidance is effective for annual periods beginning after December 15, 2025. The Company plans to adopt this ASU on the effective date and does not expect it to have a material impact on the Company’s financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (“Subtopic 220-40”): Disaggregation of Income (Loss) Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires disaggregation of certain costs and expenses included in each relevant expense caption on the Company’s consolidated statements of operations and comprehensive loss in a separate note to the financial statements at each interim and annual reporting period, including amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization. ASU 2024-04 is effective fiscal years beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.
In September 2025, the FASB issued ASU No. 2025-06—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removed the language around project stages that was used to assess when costs could be capitalized for an internal-use software. The update also requires internal-use software to be disclosed under the ASC 360 Property, Plant, and Equipment guidance. The guidance is effective for annual periods beginning after December 15, 2027. The Company is currently assessing the impact of this ASU on the Company’s accounting policies and the financial statements.
3.
Net Loss Per Share
Basic net loss per share of common stock is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period, without consideration for potential dilutive shares of common stock. Diluted net loss per share of common stock is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method and if-converted method, as applicable. In periods in which the Company reports a net loss, diluted net loss per share will be the same as basic net loss per share since dilutive shares are not assumed to have been issued if their effect is antidilutive. As a result, for the periods in which the Company experienced a net loss, the weighted-average shares used to calculate both basic and diluted net loss per share are the same.
For following table sets forth the computation of basic and diluted net loss per share to common stockholders:
Year Ended December 31,
(in thousands, except share and per share data) 2025 2024
Numerator:
Denominator:
Net loss per share of common stock – basic and diluted $ (0.03 ) $ (1.04 )
The Company excluded the effect of the below elements from our calculation of diluted loss per share, as their inclusion would have been anti-dilutive. These amounts represent the number of instruments outstanding at the end of the period.
As of December 31,
Outstanding stock options and restricted stock units 4,457,053 4,673,638
Convertible promissory note — 5,305,861
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4.
Fair Value of Financial Instruments
Fair Value Measurements
The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis:
Fair value measurement atreporting date using
(in thousands) (Level 1) (Level 2) (Level 3)
Assets:
Cash equivalents:
Money market accounts $ 126 $ — $ —
Assets:
Cash equivalents:
Money market accounts $ 6,839 $ — $ —
U.S. agency securities $ — $ 499 $ —
Marketable securities:
Corporate bonds $ — $ 2,018 $ —
U.S. agency securities $ — $ 6,138 $ —
During the year ended December 31, 2025, the Company sold all of its available-for-sale marketable securities. Accordingly, the Company held no marketable securities as of December 31, 2025. The proceeds from the sales of marketable securities were used to fund the extinguishment of the Company’s Convertible Promissory Note. The following is a summary of the changes in fair value of the Company’s marketable securities as of December 31, 2024:
(in thousands) Amortized cost Unrealized gain Unrealized loss Fair value
Available-for-sale marketable securities:
Current assets
Total available-for-sale marketable securities $ 8,154 $ 3 $ (1 ) $ 8,156
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, restricted cash, marketable securities, accounts receivable, accounts payable, and customer deposits approximate fair value due to their short-term nature.
5.
Net Revenue
Geographic Net Revenues
The Company sells its products in the Americas (North and South America), EMEA (Europe, Middle East, and Africa), and APAC (Asia-Pacific) regions.
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The following table summarizes net revenue by major geographic region, based on customers’ location (in millions):
Year Ended December 31,
(1)
Our net revenues generated from the Germany, Czech Republic, the United Kingdom and Italy and represented 15.5%, 15.2%, 15.1%, and 10.3% of our total net revenue for the year ended December 31, 2025, respectively. Our net revenues generated from Germany and the Czech Republic represented 16.3% and 11.8% of our total net revenue for the year ended December 31, 2024, respectively.
(2)
Our net revenues generated from the United States represented 23.3% and 20.7% of our total net revenue for the years ended December 31, 2025, and 2024, respectively.
Deferred Revenue
Deferred revenue or contract liabilities consists of payments received from customers in advance of revenue recognition for the Company’s products and service. The current portion of deferred revenue represents the unearned revenue that will be earned within 12 months of the balance sheet date. Correspondingly, noncurrent deferred revenue represents the unearned revenue that will be earned after 12 months from the balance sheet date.
The following table summarizes the changes in deferred revenue:
Year Ended December 31,
Balance at the beginning of the period $ 1,169 $ 801
Recognition of unearned revenue (17,086 ) (7,217 )
Balance at the end of the period $ 1,821 $ 1,169
As of December 31, 2025, the Company expects to recognize $1.8 million from remaining performance obligations over a weighted-average term of 2.9 years. The Company recognized approximately $0.5 million and $1.0 million in revenue that was included in the beginning deferred revenue balance during the years ended December 31, 2025, and 2024, respectively.
6.
Supplementary Balance Sheet and Geographic Information
Selected financial data as of the dates presented below is as follows (in thousands, except useful life data):
Inventory reserves were $14.3 million and $24.1 million as of December 31, 2025, and 2024, respectively.
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Furniture and fixtures 5 years 222 216
Construction-in-process 140 —
Less: Accumulated depreciation 5,609 4,765
Property and equipment, net $ 2,652 $ 2,812
For the years ended December 31, 2025, and 2024 the Company recorded depreciation expense of $1.0 million and $0.9 million, respectively in the consolidated statements of operations.
Accrued expenses and other current liabilities December 31,2025 December 31,2024
Accrued interest — 1,187
Accrued professional fees 429 894
Accrued warehouse and freight 43 917
Other current liabilities 101 547
Accrued expenses and other current liabilities $ 7,129 $ 7,361
(1)
Accrued other as of December 31, 2025, and December 31, 2024, primarily consist of accrued expenses related to legal and tax expense.
Long-lived assets by Geographic Region
The following table presents the Company’s long-lived assets, which consist of tangible property and equipment, net of depreciation, and operating ROU assets, by geographic region (in thousands):
(1)
As of December 31, 2025, and 2024, 18.4% and 26.6% of the Company’s total long-lived assets were located in Israel.
(2)
As of December 31, 2025, and 2024, 45.1% and 16.4% of the Company's total long-lived assets were located in the U.S.
(3)
As of December 31, 2025, 21.1% and 10.8% of the Company's total long-lived assets were located in Thailand and China, respectively. As of December 31, 2024, 35.5% and 13.0% of the Company’s total long-lived assets were located in Thailand and China, respectively.
7.
Debt
Convertible Promissory Notes and Debt Extinguishment
On January 9, 2023, the Company entered into a convertible promissory note purchase agreement (“Note Purchase Agreement”) with L1 Energy Capital Management S.a.r.l in exchange for cash of $50.0 million (“Convertible Promissory Notes”). Outstanding borrowings under the Convertible Promissory Notes bear interest at a rate of 5.0% per year. The principal amount was due at the maturity date of January 9, 2026, and interest is payable semiannually beginning in July 2023.
Under the terms of the Note Purchase Agreement, the Convertible Promissory Note may be converted at the option of the note holder into the Company’s common stock or an equivalent equity instrument resulting from a public company event. The conversion price is based on a pre-money valuation divided by the aggregate number of the Company’s outstanding shares at the issuance date and adjusted for any cash dividends paid on the Company’s capital
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stock. The conversion price and number of conversion shares are subject to standard anti-dilution adjustments. Upon a change of control event the note holder may (i) convert the Convertible Promissory Note immediately prior to the event into the Company’s common stock at a conversion price equal to the lesser of the Convertible Promissory Note’s original conversion price or the price per share of the Company’s common stock implied by the change of control event transaction agreement or (ii) require the redemption of the Convertible Promissory Note in cash, including the payment of a make-whole amount of all unpaid interest that would have otherwise been payable had the Convertible Promissory Note remained outstanding through the maturity date. The Company’s obligations under the Note Purchase Agreement may be accelerated, subject to customary grace and cure periods, upon the occurrence of an event of default. The Note Purchase Agreement defines events of default as the occurrence of any one of the following; 1) a default in payment of any part of principal or unpaid accrued interest on the Convertible Promissory Note when due and payable; 2) the Company issues a written statement that it is unable to pay its debts as they become due, or the Company files a voluntary petition for bankruptcy or insolvency proceeding, the Company, or its directors or majority stockholders take action looking to the dissolution or liquidation of the Company; 3) the involuntary bankruptcy of the Company defined as the commencement of any proceeding against the Company seeking any bankruptcy reorganization; 4) the Company defaults on any of its performance obligations under the Note Purchase Agreement; 5) any material portion of the assets of the Company or any subsidiary of the Company is seized or a levy is filed against such assets; 6) a default that remains uncured on any other agreement evidencing the indebtedness of the Company or its subsidiaries for an amount of $10 million or more whose terms allow for the acceleration of the repayment of such indebtedness due to the consummation of the transactions contemplated in this Note Purchase Agreement.
On December 17, 2025, the Company extinguished the Convertible Promissory Notes by paying $51.3 million in cash which included principal, accrued interest and fees associated with the extinguishment. The reacquisition price of the debt was higher than the related carrying value at the extinguishment date, therefore resulting in a loss on extinguishment of Convertible Promissory Notes of $1.1 million. The loss on extinguishment of the Convertible Promissory Note is included in other (income) expense, net in the consolidated statements of operations and comprehensive loss.
The Company had no outstanding debt as of December 31, 2025. Long-term debt consisted of the following as of December 31, 2024 (in thousands):
Convertible Promissory Note $ 50,000
Less: unamortized debt discount and issuance costs (9,489 )
Long-term debt, net of unamortized debt discount and issuance costs $ 40,511
8.
Commitments and Contingencies
Employment Agreements
The Company entered into employment agreements with key personnel providing compensation and severance in certain circumstances, as defined in the respective employment agreements.
Legal
The Company is subject to legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. Some litigation or legal disputes may not be covered by insurance. While the Company intends to vigorously defend itself with respect to such disputes, any potential outcomes resulting from such claims would be inherently difficult to quantify. The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred, and the amount of the loss can be reasonably estimated. During the year ended December 31, 2025, the Company has not recorded a material loss with respect to any legal claims or other legal matters arising in the normal course of business.
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Indemnification Agreements
From time to time, in its normal course of business, the Company may indemnify other parties with which it enters into contractual relationships, including customers, lessors and parties to other transactions with the Company. The Company may agree to hold other parties harmless against specific losses, such as those that could arise from third-party claims or a breach of representation or covenant. It may not be possible to determine the maximum potential amount of liability under such indemnification agreements due to the unique facts and circumstances that are likely to be involved in each particular claim and indemnification provision. In addition, we believe the likelihood is remote that payments under any indemnification agreements described above will have a material effect on the Company’s consolidated financial statements.
The Company has also indemnified its Directors and Executive Officers, to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a Director or Executive Officer.
The Company believes the current estimated fair value of any obligation from these indemnification agreements is minimal; therefore, these consolidated financial statements do not include a liability for potential indemnification-related obligations at December 31, 2025.
9.
Common and Preferred Stock
Common Stock and Preferred Stock
The Company is authorized to issue 150,000,000 shares of common stock. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.
The Company is authorized to issue 10,000,000 shares of Preferred Stock. As of December 31, 2025, there was no Preferred Stock outstanding.
Common Stock Reserved for Future Issuance
Shares of common stock reserved for future issuance were as follows:
Stock options issued and outstanding 4,707,635
Restricted stock units issued and outstanding 3,530,813
Performance stock units issued and outstanding 1,760,048
Shares available for grant under 2023 Equity Incentive Plan 550,227
Total shares reserved for future issuance 10,548,723
At-The-Market Offering Program
In November 2024, we entered into an At-The-Market Offering Agreement (the “ATM Agreement”) with Craig-Hallum Capital Group LLC (the “Sales Agent”), allowing for the sale of common stock with an aggregate gross offering price of up to $14.2 million (the “2024 ATM Program”). Under the ATM Agreement, the Sales Agent may sell shares in an “at-the-market” offering under Rule 415(a)(4) of the Securities Act, including sales on Nasdaq or other trading markets, to or through market makers, directly to the Sales Agent as principal, or in negotiated transactions at prevailing market prices. The offering of Shares pursuant to the ATM Agreement will terminate upon (a) five business days’ advance notice from the Company to the Sales Agent or five business days’ advance notice from the Sales Agent to the Company or (b) otherwise by mutual agreement of the parties pursuant to the terms of the ATM Agreement. Sales under the 2024 ATM Program are subject to a maximum commission of up to 3.0% of the gross proceeds per share sold through the Sales Agent. As of December 31, 2025, the 2024 ATM Program was fully utilized, and there are no additional shares available for issuance under the program.
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The following is a summary of the shares issued under our 2024 ATM Program during the year ended December 31, 2025 (in thousands except average price per share):
(1)
Represents the average price per share after commission.
10.
Stock-Based Compensation
The Company adopted the 2008 Stock Plan (“2008 Plan”) under which it may issue stock options to purchase shares of common stock, and award restricted stock and stock appreciation rights to employees, Directors and consultants. The 2008 Plan expired in March 2018 and all award issuance therefore ceased. Options generally vest over a four-year period with a one-year cliff. The option term is no longer than five years for incentive stock options for which the grantee owns greater than 10% of the Company’s capital stock and no longer than 10 years for all other options. The Company has a repurchase option on unvested restricted stock exercisable upon the voluntary or involuntary termination of the purchaser’s employment with the Company for any reason. The Company’s repurchase right lapses in accordance with the vesting terms. Options outstanding under the 2008 Plan will remain outstanding until they are exercised, canceled or expire.
In May 2018, the Company adopted the 2018 Stock Plan (“2018 Plan”) under which the Company may issue stock options to purchase shares of common stock, and award restricted stock and stock appreciation rights to employees, Directors and consultants.
Under the 2018 Plan, the Board of Directors may grant incentive stock options or nonqualified stock options. Incentive stock options may only be granted to Company employees. The 2018 Plan expired in May 2023 and all award issuance therefore ceased. The exercise price of incentive stock options and non-qualified stock options cannot be less than 100% of the fair value per share of the Company’s common stock on the grant date. If an individual owns more than 10% of the Company’s outstanding capital stock, the price of each share incentive stock option will be at least 110% of the fair value. Fair value was determined by the Board of Directors. Options generally vest over a four-year period with a one-year cliff. The option term is no longer than five years for incentive stock options for which the grantee owns greater than 10% of the Company’s capital stock and no longer than 10 years for all other options. The Company has a repurchase option on unvested restricted stock exercisable upon the voluntary or involuntary termination of the purchaser’s employment with the Company for any reason. The Company’s repurchase right lapses in accordance with the vesting terms. Options outstanding under the 2018 Plan will remain outstanding until they are exercised, canceled or expire.
In May 2023, the Company adopted the 2023 Equity Incentive Plan (“2023 Plan”) under which the Company may issue stock options to purchase shares of common stock, award restricted stock, restricted stock units (“RSU”), performance stock units (“PSUs”), dividend equivalents, stock appreciation rights, and other stock-based or cash-based awards to employees, Directors and consultants.
Stock options granted to newly hired employees generally vest over a four-year period, following the date of grant, with 25% vesting on the first anniversary of the grant date and the remaining vesting in equal monthly installments thereafter, and grants of additional stock options to employees generally vest in equal monthly installments over a four-year period with no cliff vesting. As of December 31, 2025, 844,406 stock options granted under the 2023 Plan had vested and were exercisable. There have been 3,825 stock options exercised under the 2023 Plan. The RSUs generally vest over a three-year period, following the date of grant, with a third of the award vesting on each year on the annual anniversary of the grant date.
Collectively, the 2008 Stock Plan, 2018 Stock Plan and the 2023 Equity Incentive Plan are referred to as “the Plans”.
The Company measures stock-based awards at their grant-date fair value and records compensation expense on a straight-line basis over the vesting period of the awards. The Company also measures the PSU awards at their
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grant-date fair value. If the performance goals are not met, no compensation expense is recognized and any recognized compensation expense is reversed. The Company recorded stock-based compensation expense in the following expense categories in its accompanying consolidated statements of operations and comprehensive loss:
Year Ended December 31,
Total stock-based compensation(1) $ 7,863 $ 7,721
(1)
A portion of the stock-based compensation in the table above pertains to Incentive Stock Options, which are nondeductible and the balance that is related to stock-based compensation is offset by valuation allowance. Therefore, we have excluded the income tax effect associated with the stock-based compensation in the calculation above.
Stock Options
The following table summarizes stock option activity for the Plans for the year ended December 31, 2025:
As of December 31, 2025, the total unrecognized compensation expense related to unvested stock option awards was $4.0 million, which the Company expects to recognize over a weighted-average period of 2.2 years.
The fair value of options is estimated using the Black-Scholes option pricing model, which takes into account inputs such as the exercise price, the value of the underlying common stock at the grant date, expected term, expected volatility, risk-free interest rate and dividend yield. The fair value of each grant of options was determined using the methods and assumptions discussed below.
•
The expected term of employee options with service-based vesting is determined using the “simplified” method, as prescribed in the U.S. Securities and Exchange Commission’s Staff Accounting Bulletin (“SAB”) No. 107, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company’s lack of sufficient historical data. The expected term of non-employee options is equal to the contractual term.
•
The expected volatility is based on historical volatilities of similar entities within the Company’s industry which were commensurate with the expected term assumption as described in SAB No. 107.
•
The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term.
•
The expected dividend yield is 0% because the Company has not historically paid and does not expect for the foreseeable future to pay a dividend on its common stock.
•
As Legacy Tigo’s common stock was not publicly traded prior to the Business Combination, its Board of Directors periodically estimated the fair value of the Company’s common stock considering, among other things, contemporaneous valuations of its common stock prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.
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The Company did not grant options during the year ended December 31, 2025. For the year ended December 31, 2024, the fair value of each stock option was estimated on the date of grant using the weighted-average assumptions in the table below: